Document:

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                                                                   EXHIBIT 10.25

                         ----------------------------

                           STOCK PURCHASE AGREEMENT

                         ----------------------------

                         dated as of January 31, 2000

                                 by and among

                                 WILLIAM MCKAY
                                   as Buyer

                                      and

                       SMITH ACQUISITION COMPANY, INC.,
                    d/b/a SOUTHWEST PRODUCTS COMPANY, INC.
                                  as Company

                                      and

                              SUNBASE ASIA, INC.
                                   as Parent

                                      and

                                 SAMUEL T. MOK
                               as Voting Trustee
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                               TABLE OF CONTENTS
<TABLE>
                                                                                                               Page
<S>                                                                                                            <C>
ARTICLE I......................................................................................................   1
         PURCHASE AND SALE OF COMPANY SHARES...................................................................   1
                  1.1      Sale of Company Shares by Seller....................................................   1
                  1.2      Time and Place of Closing...........................................................   1
                  1.3      No Implied Representations or Warranties............................................   2

ARTICLE II.....................................................................................................   2
         PURCHASE PRICE........................................................................................   2
                  2.1      Purchase Price......................................................................   2

ARTICLE III....................................................................................................   2
         SELLER REPRESENTATIONS AND WARRANTIES.................................................................   2
                  3.1      Organization; Title to Company Shares...............................................   2
                  3.2      Certificate of Incorporation and Bylaws.............................................   3
                  3.3      Authority...........................................................................   3
                  3.4      No Conflict; Required Filings and Consents..........................................   3
                  3.5      Absence of Litigation...............................................................   3
                  3.6      Brokers.............................................................................   4

ARTICLE IV.....................................................................................................   4
         COMPANY REPRESENTATIONS AND WARRANTIES................................................................   4
                  4.1      Organization........................................................................   4
                  4.2      Capital Stock.......................................................................   4
                  4.3      Certificate of Incorporation and Bylaws.............................................   4
                  4.4      No Conflict; Required Filings and Consents..........................................   4
                  4.5      Absence of Litigation...............................................................   4
                  4.6      Absence of Obligation...............................................................   4

ARTICLE V......................................................................................................   5
         BUYER REPRESENTATIONS AND WARRANTIES..................................................................   5
                  5.1      Organization; Approvals.............................................................   5
                  5.2      Authority...........................................................................   5
                  5.3      No Conflict; Required Filings and Consents..........................................   5
                  5.4      Absence of Litigation...............................................................   5
                  5.5      Brokers.............................................................................   6
                  5.6      Status of Buyer.....................................................................   6

ARTICLE VI.....................................................................................................   6
         CERTAIN COVENANTS.....................................................................................
                  6.1      Expenses............................................................................   6
                  6.2      Retention of Records................................................................   6
</TABLE>

                                       i
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<TABLE>
<S>                                                                                                             <C>
ARTICLE VII....................................................................................................   6
         ADDITIONAL AGREEMENTS.................................................................................   6
                  7.1      Notification of Certain Matters.....................................................   6
                  7.2      Public Announcements................................................................   6
                  7.3      Indemnification by Buyer............................................................   7
                  7.4      Mutual Release between Buyer, Seller and the Company................................   7
                  7.5      Release of Service Providers........................................................   7
                  7.6      Consent and Release of Corporate Guarantee from Seller's Debenture Holders .........   7
                  7.7      Liquidated Damages..................................................................   7
                  7.8      Cooperation.........................................................................   7

ARTICLE VIII CONDITIONS OF CLOSING.............................................................................   8
                  8.1      Conditions to Obligations of Each Party.............................................   8
                  8.2      Additional Conditions to Obligations of Buyer.......................................   8
                  8.3      Additional Conditions to Obligations of the Seller..................................   9

ARTICLE IX.....................................................................................................  10
         GENERAL PROVISIONS....................................................................................  10
                  9.1      No Survival of Representations, Warranties, Covenants and Agreements................  10
                  9.2      Notices.............................................................................  10
                  9.3      Certain Definitions.................................................................  11
                  9.4      Headings............................................................................  11
                  9.5      Severability........................................................................  12
                  9.6      Entire Agreement....................................................................  12
                  9.7      Assignment..........................................................................  12
                  9.8      Parties In Interest.................................................................  12
                  9.9      Governing Law.......................................................................  12
                  9.10     Counterparts........................................................................  12
                  9.11     Amendment...........................................................................  12
                  9.12     Waiver of Jury Trial................................................................  12
</TABLE>

                                      ii
<PAGE>

                           STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT dated as of January 31, 2000 (the
"Agreement") between William McKay ("Buyer") and SMITH ACQUISITION COMPANY,
INC., D/B/A SOUTHWEST PRODUCTS COMPANY, INC., a California corporation (the
"Company"), SUNBASE ASIA, INC., a Nevada corporation (the "Seller"), and SAMUEL
T. MOK, as voting trustee for all of the issued and outstanding shares of
capital stock of the Company (the "Trustee").

                                   RECITALS:

         WHEREAS, Buyer desires to acquire all of the issued and outstanding
shares (the "Company Shares") of capital stock of the Company upon the terms and
conditions set forth herein; and

         WHEREAS, the Company is a wholly-owned subsidiary of Seller; and

         WHEREAS, voting rights with respect to all of the Company Shares have
been transferred to a trust administered by the Trustee pursuant to that certain
Voting Trust Agreement (the "Trust Agreement") dated as of December 31, 1998 by
and between the Company, Seller and Trustee; and

         WHEREAS, the Seller and Trustee desire to sell the Company Shares upon
the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:

                                   ARTICLE I

                      PURCHASE AND SALE OF COMPANY SHARES

         1.1   Sale of Company Shares by Seller. Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, at the Closing (as defined
in Section 1.2), Seller shall sell, assign, transfer, convey and deliver to
Buyer, and Buyer shall purchase and accept from Seller, all of the Company
Shares, free and clear of all restrictions on transfer (subject, however, to
restrictions on the transferability thereof under all applicable securities laws
and regulations thereunder), liens, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands (other than the rights of
Buyer under this Agreement).

         1.2   Time and Place of Closing.

               (a) The closing of the transactions contemplated hereby (the
"Closing") will take place on April 10, 2000, or as such other time as the
parties agree at or prior to 60 days after the date of execution of the
Agreement. (the "Closing Date"). The Closing shall be held at the offices of
Jenkens & Gilchrist, 1919 Pennsylvania Ave., N.W., Suite 600, Washington, D.C.
20006, or such location as may be agreed upon by the parties.

                                       1
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               (b)  At the Closing:

                    (i)    Buyer shall deliver Seller (A) immediately available
funds by wire transfer to an account specified by Seller in an amount equal to
the Purchase Price (as defined in Section 2.1), offset as provided in Section
2.1, and (B) the certificates and other agreements and documents set forth in
Article VIII; and

                    (ii)   Seller shall deliver to Buyer (A) the certificate or
certificates representing all of the Company Shares, either duly endorsed for
transfer to Buyer or accompanied by appropriate duly executed stock powers and
with all requisite stock transfer stamps and taxes attached or provided for, (B)
the certificates and other documents set forth in Article VIII, and (C)
resignations from each member of the Company's Board of Directors.

         1.3   No Implied Representations or Warranties. William McKay, the
Buyer, has been the chief executive officer of the Company since 1991. It is the
intention of the parties that the sole representations and warranties of Seller
and/or the Company are set forth in Article III and Article IV hereof and that
except as specifically provided in Article III or Article IV, the Company Shares
and the Company are being purchased "WHERE IS, AS IS."

                                  ARTICLE II

                                PURCHASE PRICE

         2.1   Purchase Price. The aggregate purchase price for the Company
Shares shall be Three Million Five Hundred Thousand United States Dollars (US
$3,500,000) (the "Purchase Price"). On the date of this Agreement, Buyer shall

deliver to the Voting Trustee the amount of One Hundred Thousand United States
Dollars (US $100,000) as earnest money. At Closing, the earnest money shall be
offset against the Purchase Price, the balance of which shall be delivered by
Buyer to Seller at Closing by wire transfer in immediately available federal
funds to an account designated by Seller by written notice to Buyer given at
least two days prior to the Closing Date.

                                  ARTICLE III

                     SELLER REPRESENTATIONS AND WARRANTIES

         Seller represents and warrants to Buyer as follows:

         3.1   Organization; Title to Company Shares. Seller is a corporation
validly existing and in good standing under the laws of the State of Nevada.
Seller is, and on the Closing Date will be, the record and beneficial owner of
the Company Shares, and Seller owns, and on the Closing Date will own, the
Company Shares free and clear of all restrictions on transfer, liens, options,
warrants, purchase rights, contracts, commitments, equities, claims and demands
(other than restrictions on transferability under applicable securities laws and
regulations thereunder and the rights of Buyer under this Agreement). The
delivery on the Closing Date of the certificates representing the Company Shares
purchased hereunder to Buyer will transfer to Buyer good, valid and marketable
title to the Company

                                       2
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Shares, free and clear of all restrictions on transfer (other than restrictions
on transferability under applicable securities laws and regulations thereunder),
liens, options, warrants, purchase rights, contracts, commitments, equities,
claims and demands.

         3.2   Certificate of Incorporation and Bylaws. Seller has made
available to Buyer a true, complete and accurate copy of its Certificate of
Incorporation and Bylaws, as amended or restated (the "Seller Certificate and
                                                       ----------------------
Bylaws"). Such Seller Certificate and Bylaws are in full force and effect.
------
Seller is not in violation of any of the provisions of the Seller Certificate
and Bylaws.

         3.3   Authority. Each of Seller and Trustee has the requisite power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Seller are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby (other than applicable stockholder
approvals). This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Seller and, assuming due
authorization, execution and delivery by Buyer, is enforceable against Seller in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.

         3.4   No Conflict; Required Filings and Consents. The execution and
delivery of this Agreement by Seller does not, and the performance of this
Agreement and the transactions contemplated hereby by Seller shall not, (i)
conflict with or violate the Seller Certificate and Bylaws (ii) conflict with or
violate any federal or state law, statute, ordinance, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to Seller or by which it or
any of its properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration, cancellation of, or result in the creation of a lien on
Seller or any of its assets pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Seller is a party, except for any such conflicts,
violations, breaches, defaults or other occurrences that have been waived or
that individually or in the aggregate, would not, or be reasonably likely to
have, have a Material Adverse Effect with respect to Seller.

         3.5   Absence of Litigation. Seller is not a party to any, and there
are no pending or, to the knowledge of Seller, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Seller challenging the
validity or propriety of the transactions contemplated by this Agreement which
if unfavorably determined would prevent the consummation of the transactions
contemplated hereby, except where such events would not have, or be reasonably
likely to have, a Material Adverse Effect with respect to Seller or the Company.

                                       3
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         3.6   Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller, except as provided in that certain agreement between Seller
and Trustee and that certain agreement between Seller and Friedman, Billings,
Ramsey & Co., Inc. regarding such fees, which fees are the sole responsibility
of, and are to be paid by, Seller.

                                  ARTICLE IV

                    COMPANY REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Buyer with respect to both Seller and the
Company, as follows:

         4.1   Organization. The Company is a corporation validly existing and
in good standing under the laws of the State of California.

         4.2   Capital Stock. As of the Closing Date, the authorized capital
stock of the Company consists of 10,000,000 shares of common stock, no par
value, and 4,000,000 shares of preferred stock, no par value. As of the Closing
Date, the only issued and outstanding shares of common stock are the Company
Shares, all of which are, duly authorized, validly issued, fully paid and
nonassessable, and the issuance thereof was in compliance with all applicable
Laws.

         4.3   Certificate of Incorporation and Bylaws. The Company has made
available to Buyer a true, complete and accurate copy of its Certificate of
Incorporation and Bylaws, as amended or restated (the "Company Certificate and
                                                       -----------------------
Bylaws"). Such Company Certificate and Bylaws are in full force and effect.
------

         4.4   No Conflict; Required Filings and Consents. The transactions
contemplated hereby by the Company shall not, (i) conflict with or violate the
Company Certificate and Bylaws or (ii) conflict with or violate any Laws
applicable to the Company or by which it or any of its properties are bound or
affected, except for any such conflicts, violations, breaches, defaults or other
occurrences that individually or in the aggregate, would not have a Material
Adverse Effect with respect to the Company.

         4.5   Absence of Litigation. To the knowledge of Seller, the Company is
not a party to any, and there are no pending or, to the knowledge of the
Company, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against the Company challenging the validity or propriety of the transactions
contemplated by this Agreement which if unfavorably determined would prevent the
consummation of the transactions contemplated hereby. This representation does
not purport to apply to the pending ITAR investigation.

         4.6   Absence of Obligations. Except as set forth on Schedule 4.6
hereto, Seller has not executed any agreement creating any obligation for the
Company (other than in connection with those obligations set forth in Section
8.2(f), which obligations will be discharged on the Closing Date).

                                       4
<PAGE>

                                   ARTICLE V

                     BUYER REPRESENTATIONS AND WARRANTIES

         Buyer represents and warrants to the Company and Seller as follows:

         5.1   Organization; Approvals. Buyer has the requisite power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Buyer Approvals") necessary to own, lease and operate its properties and to
  ---------------
carry on its business as it is now being conducted, and Buyer has not received
any notice of proceedings relating to the revocation or modification of any
Buyer Approvals, except where the failure to be so organized, existing and in
good standing or to have such power, authority, Buyer Approvals and revocations
or modifications would not, individually or in the aggregate, have a Material
Adverse Effect with respect to Buyer.

         5.2   Authority. Buyer has the requisite power and authority to execute
and deliver this Agreement, to perform its obligations under this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Buyer and the consummation by Buyer of the transaction
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or to consummate the transaction
contemplated hereby. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Buyer and, assuming due
authorization, execution and delivery by the Company and Seller, is enforceable
against Buyer in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.

         5.3   No Conflict; Required Filings and Consents. The execution and
delivery of this Agreement by Buyer does not, and the performance of this
Agreement and the transaction contemplated hereby by Buyer shall not, (i)
conflict with or violate any Laws applicable to Buyer or by which it or any of
its properties are bound or affected, or (ii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of Buyer pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Buyer is a party or by which it or any
of its properties is bound or affected, except in the case of clauses (ii) and
(iii) for any such conflicts, violations, breaches, defaults or other
occurrences that individually or in the aggregate, would not have a Material
Adverse Effect with respect to Buyer.

         5.4   Absence of Litigation. Buyer is not a party to any, and there are
no pending or, to the knowledge of Buyer, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Buyer challenging the validity or propriety
of the transactions contemplated by this Agreement which if unfavorably
determined would prevent the consummation of the transaction contemplated
hereby.

                                       5
<PAGE>

         5.5   Brokers. There is no broker, finder or investment banker who is
entitled to any brokerage, finder's or other fee or commission from Seller or
any of its affiliates in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Buyer.

         5.6   Status of Buyer. Buyer is knowledgeable and experienced in making
business investments, and able to bear the economic risk of loss of its
investment in the Company Shares.

                                  ARTICLE VI

                               CERTAIN COVENANTS

         6.1   Expenses. All Expenses (as defined below) incurred by Buyer, on
the one hand, and Seller, on the other hand, shall be borne solely and entirely
by Buyer, on the one hand, and Seller, on the other hand. "Expenses" as used in
                                                           --------
this Agreement shall include all reasonable fees and out-of-pocket expenses
(including without limitation all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to the party and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation and execution of this Agreement, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated hereby. Seller shall be liable for and assume and pay
the broker's fees owed to Friedman, Billings, Ramsey & Co., Inc.

         6.2   Retention of Records. Buyer shall retain all books and records of
the Company that Buyer receives from the Company for a period of six years
following the Closing Date. After the Closing, Seller and its representatives
shall have reasonable access to all such books and records during normal
business hours. In addition, Buyer shall upon reasonable request furnish to
Seller, at Seller's expense, copies of any such books or records.

                                  ARTICLE VII

                             ADDITIONAL AGREEMENTS

         7.1   Notification of Certain Matters. Seller and the Company shall
give prompt notice to Buyer, and Buyer shall give prompt notice to Seller and
the Company, of (i) the occurrence or non-occurrence of any event, the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of Seller or the Company or Buyer, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.

         7.2   Public Announcements. Buyer and Seller shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the transaction contemplated hereby and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by Law.

                                       6
<PAGE>

         7.3   Indemnification by Buyer. Buyer and the Company shall indemnify
and hold harmless Seller, its affiliates and the officers, directors and
shareholders of Seller and its affiliates, from any and all claims, losses,
damages or other amounts (including reasonable attorneys fees and expenses)
relating to any claims by any party relating to or arising out of the Seller's
purchase of the Company from its former shareholders, including without
limitation Seller's alleged failure to issue certain capital stock in a timely
fashion.

         7.4   Mutual Release between Buyer, Seller and the Company. At Closing,
Buyer and Seller shall execute a mutual release pursuant to which each party
shall release the other (together with its affiliates, agents, officers,
directors and shareholders) from any and all claims and causes of action,
whether now existing or hereafter arising, relating to any event or matter,
including, without limitation, the employment agreement between the Company,
Seller and Buyer. The mutual release shall exclude obligations under this
Agreement and shall be in a form mutually acceptable to Buyer and Seller.

         7.5   Release of Service Providers. At Closing, the Company shall
execute a release pursuant to which it releases the Voting Trustee, Friedman,
Billings, Ramsey & Co., Inc., Jenkens & Gilchrist and Oppenheimer, Wolff,
Donnelly and Bayh (together with their affiliates, officers, directors and
shareholders) from any and all claims and causes of action, whether now existing
or hereafter arising, relating to any event or matter. The release shall be in a
form mutually acceptable to the Company and the person being released.

         7.6   Consent and Release of Corporate Guarantee from Seller's
Debenture Holders. Prior to Closing, Seller shall use its best efforts to obtain
the written consent of its debenture holders to the transactions contemplated
hereby and a release by its debenture holders of the Company, which release
shall be effective upon the debenture holders' receipt of immediately available
funds in the amount of U.S. $2.6 million at Closing.

         7.7   Liquidated Damages. In the event that Buyer shall fail to close
the purchase of the Company for any reason other than a breach of this Agreement
by Seller or the fact that a condition to Buyer's obligations to close set forth
in Section 8.1 or Section 8.2 shall not have been satisfied, Seller shall be
entitled to keep the $100,000 earnest money and Buyer shall promptly pay Seller
the additional amount of $900,000. Such amounts shall constitute liquidated
damages and not a penalty. Buyer's obligations under this Section shall be
personally guaranteed by William McKay pursuant to a guaranty executed on the
date hereof in form acceptable to Seller.

         7.8   Cooperation. No party to this Agreement shall take any action
that materially impairs the ability of such party or the ability of the parties
to consummate the transactions contemplated hereby.

                                       7
<PAGE>

                                 ARTICLE VIII

                             CONDITIONS OF CLOSING

         8.1   Conditions to Obligations of Each Party. The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing Date of the following
condition:

               (a)  No Order. No federal or state governmental or regulatory
                    --------
authority or other agency or commission, or federal or state court of competent
jurisdiction, shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which restricts, prevents or
prohibits consummation of the transactions contemplated by this Agreement.

         8.2   Additional Conditions to Obligations of Buyer. The obligations of
Buyer to effect the transactions contemplated hereby are also subject to the
following conditions:

               (a)  Representations and Warranties. Each of the representations
                    ------------------------------
and warranties of the Company and Seller contained in this Agreement shall be
true and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects).

               (b)  Trust Agreement. The Trustee shall have provided Buyer
                    ---------------
evidence as to the termination of the Trust Agreement upon the Closing.

               (c)  Agreements and Covenants. The Company shall have performed
                    ------------------------
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.

               (d)  Consents Obtained. All consents, waivers, approvals,
                    -----------------
authorizations or orders required to be obtained and all filings required to be
made by Seller or the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by Seller and the Company, except those
for which failure to obtain such approvals or make such filings would not
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company.

               (e)  No Challenge. There shall not be pending any action,
                    ------------
proceeding or investigation before any court or administrative agency or by a
government agency (i) challenging or seeking material damages in connection
with, the transactions hereby contemplated or (ii) seeking to restrain, prohibit
or limit the exercise of full rights of ownership or operation by Buyer of all
or any portion of the Company.

               (f)  Certain Obligations. Any obligations of the Company to the
                    -------------------
Voting Trustee, Friedman, Billings, Ramsey & Co., Jenkens & Gilchrist and
Oppenheimer, Wolff, Donnelly and Bayh

                                       8
<PAGE>

shall have been paid and discharged by the Company. The Company shall have been
released from any obligations to Seller (including any amounts owing as
intercompany loans or capital investment) and to Seller's debenture holders,
such release is to be effective upon the debenture holders' receipt of
immediately available funds in the amount of U.S. $2.6 million at Closing.

               (g)  Material Adverse Effect. Neither the Seller or the Voting
                    -----------------------
Trustee shall have executed a contract or agreement dated after the date hereof
that has a Material Adverse Effect on the Company.

               8.3  Additional Conditions to Obligations of the Seller. The
obligations of Seller to effect the transactions contemplated hereby are also
subject to the following conditions:

               (a)  Representations and Warranties. Each of the representations
                    ------------------------------
and warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall have
been true and correct in all respects).

               (b)  Agreements and Covenants. Buyer shall have performed or
                    ------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.

               (c)  Consents Under Agreements. All consents, waivers, approvals,
                    -------------------------
authorizations or orders required to be obtained, and all filings required to be
made by Buyer for the authorization, execution and delivery of this Agreement
and the consummation by it of the transactions contemplated hereby shall have
been obtained and made by Buyer, except where failure to obtain any consents,
waivers, approvals, authorizations or orders required to be obtained or any
filings required to be made would not have a Material Adverse Effect with
respect to Buyer.

               (d)  No Challenge. There shall not be pending any action,
                    ------------
proceeding or investigation before any court or administrative agency or by a
government agency (i) challenging or seeking material damages in connection
with, transactions hereby contemplated or (ii) seeking to restrain, prohibit or
limit the exercise of full rights of ownership or operation by Buyer of all or
any portion of the Company, which in either case would have a Material Adverse
Effect with respect to the Company.

               (e)  Required Consents. At or prior to Closing, Seller shall have
received all material governmental approvals and governmental consents
contemplated by this transaction and the written consent of Seller's debenture
holders to this transaction.

                                       9
<PAGE>

                                  ARTICLE IX

                              GENERAL PROVISIONS

         9.1   No Survival of Representations, Warranties, Covenants and
Agreements. The representations and warranties of the parties shall expire at
Closing.

         9.2   Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed given if
delivered personally, telecopied (with confirmation), mailed by certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be effective upon receipt:

               (a)  If to Seller or the Trustee:

                    Samuel T. Mok, Voting Trustee
                    1001 Connecticut Avenue, N.W.
                    Suite 1035
                    Washington, D.C.  20036
                    Attention: Samuel T. Mok

               With copies to:

                    Jenkens & Gilchrist, a Professional Corporation
                    1445 Ross Ave., Suite 3200
                    Dallas, Texas  75202

                    1919 Pennsylvania Avenue, NW
                    Suite 600
                    Washington, D.C. 20006-3404
                    Telecopier:  (202) 326-1555
                    Attention: Andrew Lynch

               (b)  If to Buyer:

                    William McKay
                    Southwest Products
                    2240 Buena Vista
                    Irwindale, CA 91706
                    Telecopier: (626) 303-6141
                    Attention: William McKay

                                      10
<PAGE>

               With a copy to:

                    ______________________________

                    ______________________________

                    ______________________________

                    Telecopier:  _________________

                    Attention:  __________________

         9.3   Certain Definitions.  For purposes of this Agreement, the term:

               (a)  "Law" shall have the meaning set forth in Section 3.4.
                     ---

               (b)  "Lien" shall mean any conditional sale agreement, default of
                     ----
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) liens for current property taxes not yet due
and payable, and (ii) liens which do not materially impair the use of, or title
to, or value of the assets subject to such lien.

               (c)  "Material Adverse Effect" means, with respect to Buyer,
                     -----------------------
Seller, the Company or Company, (i) any adverse effect on the assets,
properties, liabilities, results of operations or financial condition of, and
which is material with respect to, such party (or the Company), or (ii) any
effect that materially impairs the ability of such party to consummate the
transactions contemplated hereby; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (A) actions contemplated by
this Agreement, (B) changes in laws and regulations or interpretations thereof
that are generally applicable to the manufacturing industry and (C) changes in
generally accepted accounting principles that are generally applicable to the
manufacturing industry.

               (d)  "person" means an individual, corporation, partnership,
                     ------
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act); and

               (e)  "subsidiary" or "subsidiaries" of the Company, Seller, Buyer
                     ----------      ------------
or any other person, means any corporation, partnership, joint venture or other
legal entity of which either the Company, Seller, Buyer, or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.

         9.4   Headings. The headings contained in this Agreement are for
               --------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

                                      11
<PAGE>

         9.5   Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.

         9.6   Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.

         9.7   Assignment. This Agreement shall not be assigned by operation of
law or otherwise, without the prior written consent of each of Buyer, Seller and
Trustee.

         9.8   Parties In Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party and nothing in this Agreement, express
or implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

         9.9   Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws.

         9.10  Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

         9.11  Amendment. This Agreement may be amended by the agreement in
writing of all of the parties and in accordance with their applicable charter
documents and applicable Law.

         9.12  Waiver of Jury Trial. Each of Seller and Buyer waives rights to a
trial by jury of any claim or cause of action based upon or arising out of or
related to this Agreement, any assignment or the transactions contemplated
hereby, in any action, proceeding or other litigation of any type brought by any
party against the other parties, whether with respect to contract claims, tort
claims or otherwise. Each of Seller and Buyer agrees that any such claim or
cause of action shall be tried without a jury. Without limiting the foregoing,
the parties further agree that their respective rights to a trial by jury is
waived by operation of this Section as to any action, counterclaim or other
proceeding which seeks, in whole or in part, to challenge the validity or
enforceability of this Agreement, any assignment or any provision hereof or
thereof. This waiver shall apply to any subsequent amendments, renewals,
supplements or modifications to this Agreement or any assignment.

                                      12
<PAGE>

                            [Signature page follows.]

                                      13
<PAGE>

         IN WITNESS WHEREOF, the Company, Buyer and Trustee have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

                              SMITH ACQUISITION COMPANY INC.,
                              d/b/a SOUTHWEST PRODUCTS COMPANY,
                              INC. ("Company")

                              By: /s/ Samuel T. Mok
                                 ----------------------------------
                              Name:   SAMUEL T. MOK
                                   --------------------------------
                              Title: CHAIRMAN
                                    -------------------------------

                              /S/ William McKay
                              -------------------------------------
                              WILLIAM MCKAY

                              SUNBASE ASIA, INC. ("Seller")

                              By: /S/ Li Yuen Fai (Roger)
                                 ----------------------------------
                              Name: LI YUEN FAI
                                   --------------------------------
                              Title: CHIEF FINANCIAL OFFICER
                                    -------------------------------

                              /s/ Samuel T. Mok
                                 ----------------------------------
                                 SAMUEL T. MOK, AS TRUSTEE
<PAGE>

                     ACTIONS BY UNANIMOUS WRITTEN CONSENT
                           OF THE BOARD OF DIRECTORS
                                      OF
                               SUNBASE ASIA INC.

       ----------------------------------------------------------------

               The undersigned, being all the directors of Sunbase
          Asia Inc., a Nevada Corporation (the "Corporation"), in
          accordance with Section 78.315 (2) of the Nevada General
          Corporation Law and Article III, Section 15 of the By-laws
          of the Corporation, hereby consent to the adoption of the
          following resolution without a meeting.

               RESOLVED to dispose the equity interest of Southwest
          Products Company to William Mckay at a consideration of
          US$3,500,000. It was further resolved that the attached stock
          purchase agreement in relation to the disposal of the equity
          increase of Southwest Products Company was approved.

               RESOLVED to authorize Mr. Roger Li to sign on the stock
          purchase agreement in regarding to the disposal of Southwest
          Products Company on behalf of the company.

--------------------------------------------------------------------------------

          Dated : 2 FEB 2000                      /s/ Gunter Gao
                 ---------------------------      ---------------------------
                                                       Gunter Gao

          Dated : 2 FEB 2000                     /s/ Li Yuen Fai (Roger)
                 ---------------------------     ---------------------------
                                                      Li Yuen Fai (Roger)

          Dated : 2 Feb 2000                     /s/ Hongfei Chen
                 ---------------------------     ---------------------------
                                                      Hongfei Chen<PAGE>

                                                                   EXHIBIT 10.26

                             Dated 1st March, 2000
                             ---------------------

                 (1)     CHINA BEARING HOLDINGS LIMITED
                                      and
                 (2)     ASEAN CAPITAL LIMITED
                                      and
                 (3)     CHINA INTERNATIONAL BEARING
                         HOLDINGS LIMITED
                                      and
                 (4)     SUNBASE ASIA, INC.
                                      and
                 (5)     SMITH ACQUISITION COMPANY, INC.
                                      and
                 (6)     SUNBASE INTERNATIONAL (HOLDINGS) LIMITED
                                      and
                 (7)     EXTENSIVE RESOURCES LIMITED
                                      and
                 (8)     GLORY MANSION LIMITED
                                      and
                 (9)     WARDLEY CHINA INVESTMENT TRUST
                                      and
                 (10)    MC PRIVATE EQUITY PARTNERS ASIA LIMITED
                                      and
                 (11)    CHINE INVESTISSEMENT 2000

                 ________________________________________________

                            SUPPLEMENTAL AGREEMENT

                            in respect of certain
                           arrangements relating to

                        CHINA BEARING HOLDINGS LIMITED

                 ________________________________________________

                                Chao and Chung

<PAGE>

                               Table of Contents
                               -----------------

<TABLE>
<CAPTION>

             Description                     Page No.
             -----------                     --------
<S>                                          <C>
1.           INTERPRETATION                         2

2.           CONDITION                              3

3.           AGREEMENT                              4

4.           COMPLETION                             4

5.           EFFECT OF THIS AGREEMENT               6

6.           COSTS AND EXPENSES                     6

7.           GOVERNING LAW AND JURISDICTION         6

8.           GENERAL PROVISIONS                     6

9.           COUNTERPARTS                           7

SCHEDULE 1                                          8

Form of the New Share Mortgage                      8

SCHEDULE 2                                         19

Form of the Release                                19

SIGNATURE PAGES                                    24

ANNEXURE 1

FORM OF THE ESCROW LETTER

ANNEXURE 2

FORM OF THE CONSENT
</TABLE>
<PAGE>

THIS AGREEMENT is made on the 1/st/ day of March, 2000.

(1)  CHINA BEARING HOLDINGS LIMITED, the registered office of which is at Cedar
     House, 41 Cedar Avenue Hamilton HM12, Bermuda (the "Company");

(2)  ASEAN CAPITAL LIMITED, the registered office of which is at Omar Hodge
     Building, Wickhams Cay I, P.O. Box 362, Road Town, Tortola, British Virgin
     Islands ("ACL");

(3)  CHINA INTERNATIONAL BEARING HOLDINGS LIMITED, the registered office of
     which is at 19th Floor, 51-57 Gloucester Road, Wanchai, Hong Kong
     ("CIBHL");

(4)  SUNBASE ASIA, INC., the registered office of which is at 1280 Terminal Way,
     Suite 3, Reno Nevada 89502, United States of America ("SAI");

(5)  SMITH ACQUISITION COMPANY, INC., a California corporation doing business as
     Southwest Products Company, the registered office of which is at 2240 Buena
     Vista, Irwindale, CA 91706, United States of America ("SPC");

(6)  SUNBASE INTERNATIONAL (HOLDINGS) LIMITED the registered office of which is
     at 19th Floor, 51-57 Gloucester Road, Wanchai, Hong Kong ("SIHL");

(7)  EXTENSIVE RESOURCES LIMITED, the registered office of which is at P.O. Box
     71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands ("ERL");

(the parties at (1), (2), (3), (4), (5), (6) and (7) hereinafter collectively
referred to as "Sunbase Parties");

(8)  GLORY MANSION LIMITED, the registered office of which is at Craigmuir
     Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands ("GML");

(9)  WARDLEY CHINA INVESTMENT TRUST, the registered office of which is at c/o
     Suite 1610, P.O. Box 1016, 885 West Georgia Street, Vancouver B.C., V6C
     3E8, Canada ("WCIT");

(10) MC PRIVATE EQUITY PARTNERS ASIA LIMITED the registered office of which is
     at P.O. Box 309, Ugland House, South Church Street, Grand Cayman, Cayman
     Islands, British West Indies ("MC Partners"); and

(11) CHINE INVESTISSEMENT 2000, a Luxembourg-registered Unit Trust, the
     registered office of which is at L1118 Luxembourg, 14 Rue Aldringen ("CI
     2000");
<PAGE>

(the parties at (8), (9), (10) and (11) hereinafter collectively referred to as
the "Investors" and each an "Investor")

WHEREAS:-

(A)  The parties hereto (except SIHL and ERL) entered into the Subscription
     Agreement (as defined below) under which the Investors subscribed for
     Debentures of an aggregate principal value of  $11,500,000.

(B)  The Sunbase Parties (except SIHL and ERL) breached certain of their
     obligations under the Subscription Agreement and the Investors agreed not
     to exercise their rights under the Subscription Agreement in relation
     thereto subject to and upon the terms and conditions set out in the
     Settlement Agreement (as defined below).

(C)  Certain obligations of the Sunbase Parties under the Settlement Agreement
     have not been complied with.

(D)  SAI and SPC have entered into an agreement with William McKay as purchaser
     and with Samuel T. Mok as voting trustee for all of the issued and
     outstanding shares of capital stock of SPC whereby SAI will sell its entire
     interests in its subsidiary, SPC.

(E)  The parties hereto agree to supplement the repayment arrangements
     contemplated in the Settlement Agreement on the terms and conditions set
     out herein.

NOW IT IS HEREBY AGREED as follows:-

1.  INTERPRETATION
    --------------

(A)  In this Agreement:-

     "Completion"         means performance by the parties hereto of their
                          respective obligations set out in Clause 4;

     "Completion Amount"  means the sum of $2,600,000 payable by the Company to
                          the Investors at Completion;

     "Consent"            means a letter of consent in the form annexed hereto
                          as Annexure 2 in connection with the Sale;

     "Escrow Agent"       means Jenkens & Gilchrist of 1919 Pennsylvania Avenue,
                          NW Suite 600, Washington D.C. 20006-3404;

                                       2
<PAGE>

     "Escrow Letter"               means an escrow letter in the form annexed
                                   hereto as Annexure 1 given or to be given by
                                   the Investors to the Escrow Agent in
                                   connection with, inter alia, the Completion
                                   Amount;

     "Existing Share Mortgage"     means the Deed of Mortgage dated 16/th/
                                   October, 1998 relating to 1,000,000 issued
                                   shares in the capital of Tianjin Development
                                   Holdings Limited executed by ERL in favour of
                                   Brilliant Future Holdings Limited pursuant to
                                   the Settlement Agreement;

     "New Share Mortgage"          means the form of share mortgage set out in
                                   Schedule 1;

     "Release"                     means the release of the Guarantee in the
                                   form as set out in Schedule 2;

     "Sale"                        the sale by SAI of its entire interests in
                                   SPC in accordance with the agreement referred
                                   to in Recital (D);

     "Settlement Agreement"        means an agreement dated 16/th/ October, 1998
                                   made between the parties hereto in respect of
                                   the Debentures issued by the Company;

     "Subscription Agreement"      means an agreement dated 2nd August, 1996
                                   relating to the subscription by the Investors
                                   for the Debentures issued by the Company; and

     "$"                           means United States dollars, the lawful
                                   currency of the United States of America.

(B)  In this Agreement, unless otherwise defined, words and expressions defined
     in the Settlement Agreement (including the schedules thereto) or in the
     Subscription Agreement as adopted for use in the Settlement Agreement, when
     used in this Agreement, bear the same respective meanings in this
     Agreement.

2.   CONDITION
     ---------

     The obligations of the respective parties hereto under this Agreement are
     conditional on (i) the Consent being duly executed by the parties thereto
     upon signing of this Agreement; (ii) the Release being duly executed by the
     parties thereto upon signing of this Agreement and the same having been
     delivered to the Escrow Agent by GML (as hereby expressly authorised by all
     parties

                                       3
<PAGE>

     hereto) pursuant to the Escrow Letter; and (iii) the Sale being completed
     on or before 10/th/ April, 2000 (or such later date as may be agreed by the
     Investors in writing), to the intent that none of the parties shall be
     bound by any provisions herein unless the Sale is completed on or before
     the said date.

3.   AGREEMENT
     ---------

3.1  The parties hereto agree to supplement the terms and conditions of the
     Settlement Agreement as follows:-

     (A)  the Company shall pay to the Investors on Completion the Completion
          Amount in settlement of such part of the principal amount and interest
          as equivalent to the Completion Amount comprised in those outstanding
          repayment instalments specified in the Repayment Schedule which are
          overdue for repayment as at the date of Completion (the "Overdue
          Amount");

     (B)  the remaining balance of the outstanding overdue repayment instalments
          shall remain immediately repayable and all subsequent repayment
          instalments set out in the Repayment Schedule respectively falling due
          for payment by the Company thereafter shall remain due and payable on
          the respective dates specified therefor in the Repayment Schedule;

     (C)  ERL shall execute the New Share Charge in favour of Brilliant Future
          Holdings Limited (as trustee for an on behalf of the Investors) in
          replacement of the Existing Share Mortgage on Completion; and

     (D)  upon receipt of the New Share Charge duly executed, the Investors will
          execute the Release, and will send by courier the Release to the
          Escrow Agent in accordance with the terms of the Escrow Letter.

4.   COMPLETION
     ----------

(A)  Completion shall take place at the offices of Chao and Chung at Suites
     2601-5, Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong
     Kong on the second Business Day (or such other day as the Company, SAI and
     the Investors may agree) following the last to occur (i) completion of the
     Sale; (ii) receipt by the Investors from the Escrow Agent of the Completion
     Amount pursuant to the Escrow Letter; and (iii) release of the Release by
     the Escrow Agent pursuant to the Escrow Letter.

(B)  At Completion, the following transactions shall take place:-

     (1)  the Company shall:-

          (i)  deliver to the Investors a certified copy of the board resolution

                                       4
<PAGE>

                 of the Company approving and authorising execution and
                 completion of this Agreement and resolving to effect and do all
                 that is necessary to give effect to this Agreement;

          (ii)   deliver to the Investors a certified copy of the board
                 resolution of SAI approving and authorising execution and
                 completion of this Agreement and resolving to effect and do all
                 that is necessary to give effect to this Agreement and the
                 Guarantee;

          (iii)  deliver to the Investors a certified copy of the board
                 resolution of CIBHL approving and authorising the execution and
                 completion of this Agreement and resolving to effect and do all
                 that is necessary to give effect to this Agreement and the
                 Guarantee;

          (iv)   deliver to the Investors a certified copy of the board
                 resolution of ACL approving and authorising the execution and
                 completion of this Agreement and resolving to effect and do all
                 that is necessary to give effect to this Agreement and the ACL
                 Undertaking;

          (v)    deliver to the Investors a certified copy of the board
                 resolution of SIHL approving and authorising the execution and
                 completion of this Agreement and resolving to effect and do all
                 that is necessary to give effect to this Agreement; and

          (vi)   deliver evidence satisfactory to the Investors that the Company
                 has effected payment by cashier order to Chao and Chung in
                 respect of all the costs and expenses referred to in Clause 6
                 hereof, the amount of which shall be notified to the Company by
                 the Investors prior to Completion;

     (2)  ERL shall execute and deliver to Brilliant Future Holdings Limited the
          New Share Mortgage and the board resolution of ERL approving and
          authorising the execution and completion of this Agreement and the New
          Share Charge and resolving to effect and do all that is necessary to
          give effect to this Agreement and the New Share Charge; and

(C)  All the events which are to take place at Completion shall take place
     simultaneously and no party shall be obliged to complete this Agreement
     unless the other parties simultaneously comply with their respective
     obligations contained in sub-clause (B) of this clause.

(D)  For the avoidance of doubt, the continuing obligations of the Sunbase
     Parties under the Settlement Agreement shall not cease as a result of
     Completion other than for SPC, whose continuing obligations under the
     Settlement Agreement are released by the operation and effect of the
     Release after Completion.

                                       5
<PAGE>

5.   EFFECT OF THIS AGREEMENT
     ------------------------

     Provided that Completion takes place as provided in Clause 4 the Settlement
     Agreement shall thenceforth be read and construed and will continue to take
     effect subject only to the express modification provided herein and for
     this purpose each of the Sunbase Parties hereby agrees, acknowledges and
     declares that it shall continue to be bound of each and all of the
     undertakings, covenants, obligations and agreements on its part undertaken
     in (as the case may be) the Settlement Agreement, the Guarantee, the ACL
     undertaking and the Existing Share Mortgage as the same is (and to the
     extent) expressly modified by this Agreement.  But if Completion shall fail
     to take place as herein provided, all of the rights, obligations and
     liabilities of the respective parties under and pursuant to the Settlement
     Agreement, the Guarantee, the Undertaking and the Existing Share Mortgage
     shall be preserved.

6.   COSTS AND EXPENSES
     ------------------

     The legal costs incurred in connection with the preparation and negotiation
     of this Agreement and ancillary documentation shall be borne by the
     Company.

7.   GOVERNING LAW AND JURISDICTION
     ------------------------------

7.1  This Agreement shall be governed by and construed in accordance with the
     laws of Hong Kong and each party hereby submits to the non-exclusive
     jurisdiction of the courts of Hong Kong as regards any claim or matter
     arising under this Agreement.

7.2  Each of the parties hereto irrevocably agrees for the benefit of each of
     the Investors that the courts of Hong Kong shall have jurisdiction to hear
     and determine any suit, action or proceeding, and to settle any disputes,
     which may arise out of or in connection with this Agreement and, for such
     purposes, irrevocably submits to the jurisdiction of such courts.

7.3  Each of the parties hereto irrevocably waives any objection it might now
     or hereinafter have to the courts referred to in Clause 7.1 above nominated
     as the forum to hear and determine any suit, action or proceeding, and to
     settle any disputes, which may arise out of or in connection with this
     Agreement and agrees not to claim that any of such courts is not a
     convenient or appropriate forum.

8.   GENERAL PROVISIONS
     ------------------

8.1  As regards any date or period time shall be of the essence of this
     Agreement.

                                       6
<PAGE>

8.2  This Agreement shall be binding on and enure for the benefit of the
     successors of each of the parties and shall not be assignable.

8.3  The exercise of or failure to exercise any right to remedy in respect of
     any breach of this Agreement shall not, save as provided herein, constitute
     a waiver by such party of any other right or remedy it may have in respect
     of that breach.

8.4  Any right or remedy conferred by this Agreement on any party for breach of
     this Agreement shall be in addition and without prejudice to all other
     rights and remedies available to it in respect of that breach.

8.5  The Settlement Agreement as expressly modified by this Agreement
     constitutes the entire agreement between the parties with respect to its
     subject matter and shall (including the Repayment Schedule as modified as a
     result of the application of the Completion Amount as provided in Clause
     3.1(A) above) remain binding on and enforceable against the parties
     thereto, and no variation of the Settlement Agreement as so modified shall
     be effective unless made in writing and signed by all of the parties.

8.6  Save and except the Subscription Agreement, the Settlement Agreement, the
     ACL Undertaking and the Guarantee or any other signed agreements in
     connection with the aforesaid, this Agreement supersedes all and any
     previous agreements, arrangement or understanding between the parties
     relating to the matters referred to in this Agreement and all such previous
     agreements, understanding or arrangements (if any) shall cease and
     determine with effect from this date hereof.

8.7  If at any time any provision of this Agreement is or becomes illegal, void
     or unenforceable in any respect, the remaining provisions hereof shall in
     no way be affected or impaired thereby.

9.   COUNTERPARTS
     ------------

     This Agreement may be executed by the parties hereto in any number of
     counterparts and on separate counterparts, each of which when so executed
     shall be deemed an original but all of which shall constitute one and the
     same instrument and is binding on all parties.

AS WITNESS whereof this Agreement has been duly executed on the date first above
written.

                                       7
<PAGE>

                                  SCHEDULE 1
                                  ----------

                        Form of the New Share Mortgage
                        ------------------------------

                                       8
<PAGE>

                                                                EXHIBIT 10.26(a)

                          Dated   1st March,     2000
                          ---------------------------

                          Extensive Resources Limited

                                      AND

                       Brilliant Future Holdings Limited

                      ___________________________________

                               Deed of Mortgage
                                  relating to
                Shares in Tianjin Development Holdings Limited

                      ___________________________________

                                Chao and Chung
                                   Hong Kong

                                       9
<PAGE>

     THIS DEED  is made on the  1st    day of    March        2000

     BETWEEN

     (1)  Extensive Resources Limited, a company incorporated in British Virgin
          Islands and having its registered address at P.O. Box 71, Craigmuir
          Chambers, Road Town, Tortola, British Virgin Islands (hereinafter
          referred to as the Chargor); and

     (2)  Brilliant Future Holdings Limited, a company incorporated in British
          Virgin Islands and having its registered address at the offices of
          Offshore Incorporations Limited, P.O. Box 957, Offshore Incorporations
          Centre, Road Town, Tortola, British Virgin Islands (hereinafter
          referred to as the "Chargee").

     WHEREAS:-

     (A)  The Chargor is the beneficial owner of the Mortgaged Shares (as
          defined hereinafter).

     (B)  The Chargor agreed pursuant to the Settlement Agreement to charge in
          favour of the Chargee the Mortgaged Shares and executed the Existing
          Share Mortgage.

     (C)  The Chargor has agreed pursuant to the Supplemental Agreement to
          execute this Deed in replacement of the Existing Share Mortgage.

     IT IS HEREBY AGREED as follows:-

     1.   Interpretation
          --------------

     1.1  Except as otherwise expressly provided, terms defined in the
          Supplemental Agreement shall have the same respective meanings when
          used in this Deed.

     1.2  In this Deed the following expressions shall have the following
          meanings respectively:-

          "Disposal" means, any sale, assignment, exchange, transfer,
          concession, loan, lease, surrender of lease, tenancy, licence, direct
          or indirect reservation, waiver, compromise, release, dealing with or
          in or granting of any option, right of first refusal or other right or
          interest whatsoever or any agreement for any of the same and Dispose
          shall be construed accordingly;

          "Encumbrance" means any mortgage, charge, pledge, lien (other than a
          lien arising by statute or operation of law) or other encumbrance,
          priority or security interest, deferred purchase, title retention,
          leasing, sale-and repurchase

                                      10
<PAGE>

          or sale-and leaseback arrangement whatsoever or in any assets, rights
          or interest of whatsoever nature and includes any agreement for any of
          the same;

          "Mortgaged Shares" means the 1,000,000 shares in the capital of
          Tianjin Development held by the Chargor to be mortgaged hereunder and
          for the time being subject to the charge created hereunder;

          "Settlement Agreement" means a settlement agreement dated 16th
          October, 1999 as modified by a supplemental agreement dated 1st March,
          2000 relating to certain repayment arrangements of the Company; and

          "Tianjin Development" means Tianjin Development Holdings Limited, a
          company incorporated in Hong Kong and listed on The Stock Exchange of
          Hong Kong Limited.

     1.3  In this Deed, unless the context otherwise requires:-

          (a)  words and expressions defined in the Companies Ordinance (Cap.
               32) of the Laws of Hong Kong shall bear the same meanings when
               used herein;

          (b)  references to any statutes or statutory provision shall include
               any statute or statutory provision which amends, replaces or re-
               enacts, or has amended, replaced or re-enacted, it, and vice
               versa, and shall include any statuary instrument, order,
               regulation or other subordinate legislation made thereunder.

          (c)  references to Clauses, paragraphs, Recitals and Schedules are to
               clauses and paragraphs of, and recitals and schedules to, this
               Agreement and references to sub-clauses are to sub-clauses of the
               clause in which the reference appears;

          (d)  references to a "company' shall be construed so as to include any
               company, corporation or other body corporate, wherever and
               however incorporated or established;

          (e)  references to a "person" shall be construed so as to include any
               individual, firm, company, government, state or agency of a
               state, local or municipal authority or government body or any
               joint venture, association or partnership (whether or not having
               separate legal personality); and

          (f)  words importing the singular include the plural and vice versa,
               words importing one gender include every gender.

                                      11
<PAGE>

2.   Share Mortgage
     --------------

2.1  The Chargor, as beneficial owner, mortgages and agrees to mortgage to the
     Chargee (as trustee for and on behalf of the Investors) by way of first
     mortgage all of  the Mortgaged Shares as a continuing security for the
     discharge of such obligations of the Company under the Settlement Agreement
     as shall fall to be performed.

2.2  In furtherance of the security constituted by this Deed the Chargor shall
     deliver to the Chargee the share certificates representing the Mortgaged
     Shares (and the Chargee hereby acknowledge receipt thereof) together with
     duly executed but undated sold notes, instruments of transfer in respect of
     the Mortgaged Shares in favour of the Chargee and/or its nominees.

3.   Covenants
     ---------

3.1  The Chargor covenants with the Chargee:-

     (a)  to reimburse to the Chargee all costs, charges and expenses which may
          be incurred by it under or arising out of this Deed or in connection
          with the Mortgaged Shares (but excluding any costs, charges and
          expenses incurred by the Chargee in connection with the preparation
          and negotiation of this Deed);

     (b)  at all times to comply in all respects with any law or directive and
          any conditions in relation to this Deed and the Settlement Agreement;
          and

     (c)  on demand made at any time after the security constituted by this Deed
          becomes enforceable, procure that the Mortgaged Shares are transferred
          into and registered in the share register of  Tianjin Development in
          the name of the Chargee and/or its nominees.

3.2  The Chargor covenant with the Chargee that it will not create or permit to
     subsist any Encumbrance over or Dispose of the Mortgaged Shares (or the
     equity of redemption in relation to the same) except with the prior consent
     of the Chargee.

4.   Share Rights
     ------------

4.1  Until the security constituted by this Deed becomes enforceable, the
     Chargor shall be entitled to exercise any voting rights in respect of the
     Mortgaged Shares provided that the Chargor will not exercise, or permit the
     exercise of, voting rights in respect of any of the Mortgaged Shares in
     such manner as will, in the opinion of the Chargee, contravene any of the
     provisions of, or jeopardise any of the security created by this Deed and
     the Settlement Agreement.

                                      12
<PAGE>

4.2  Upon the security constituted by this Deed becoming enforceable the Chargee
     or its nominees, may (to the entire exclusion of the Chargor) at any time,
     at the  Chargee's discretion, exercise any voting rights in respect of the
     Mortgaged Shares and all the powers given to trustees by Section 11(4) and
     (5) of the Trustee Ordinance (Cap.29) in respect of securities subject to a
     trust and all powers or rights which may be exercised by the person or
     persons in whose name or names the Mortgaged Shares are registered under
     the terms hereof or otherwise.

4.3  The Chargor (or as appropriate his nominee) shall be entitled to retain for
     its own benefit any dividends, distributions or other monies paid (and
     which the Chargee has agreed should be paid) on or in respect of the
     Mortgaged Shares prior to the security constituted by this Deed becoming
     enforceable.  All dividends, distributions or other monies paid or payable
     on or in respect of the Mortgaged Shares at any other time or without the
     prior approval of the Chargee, if received by the Chargor or its nominee,
     shall be paid over to (and pending such payment shall be held on trust for)
     the Chargee.

5.   Enforcement
     -----------

5.1  The Chargee shall be entitled to declare all or any part of the security
     constituted by this Deed enforceable at any time immediately upon the
     breach of any of the obligations of the Company under the Settlement
     Agreement as the same is certified in writing by the Chargee.

5.2  Upon or at any time after the security constituted by this Deed has become
     enforceable, the Chargee shall have the right, at any time, without notice
     or any other action with respect to the Chargor, to take such steps as are
     necessary to effect a transfer of the Mortgaged Shares to itself (and/or
     its nominees) and/or sell the Mortgaged Shares or any of them in such
     manner, at such price or prices, without being responsible for any loss, as
     the Chargee may at its absolute discretion deem expedient, and the Chargee
     shall not be responsible for any loss from or through brokers or others
     employed in the sale of the Mortgaged Shares or for any loss or
     depreciation in value of any of the Mortgaged Shares arising from or
     through any cause whatsoever.  The Chargee shall be entitled to reimburse
     itself out of the proceeds of sale all costs, charges and expenses incurred
     by it in such sale and is authorised to apply any net proceeds of the
     Mortgaged Shares towards payment of the outstanding principal and interest
     due from the Company to the Investors under the Settlement Agreement in
     proportion to the principal amounts of the Debentures held by each of the
     Investors respectively.

5.3  The Chargor agrees that upon any Disposal of the Mortgaged Shares or any
     other rights under this Deed, the Chargee may make or purport to make a
     statement in writing signed by the Chargee that this Deed is enforceable
     and that the power of sale has become exercisable which statement shall be
     conclusive evidence of the fact in favour of any purchaser or other person
     acquiring any of the Mortgaged Shares or other rights and every purchaser
     will

                                      13
<PAGE>

     take the same free of any rights of the Chargor. The Chargor shall
     indemnify the Chargee against any claims or demands which may be made
     against the Chargee by such purchaser and any liability, loss, cost or
     expense which the Chargee may suffer or incur by reason of any defect in
     the Chargor's title to the Mortgaged Shares.

5.4  The Chargor agrees to waive any right to require that, prior to the
     enforcement of the security constituted by this Deed, proceedings be taken
     against the Chargor so that action be taken to realize the security held
     pursuant to this Deed.

6.   Power of Attorney
     -----------------

6.1  The Chargor, by way of security, irrevocably appoints the Chargee and each
     of its directors, officers and managers for the time being, with full power
     of substitution and delegation, to be his attorney acting singly or
     together and in his name, on his behalf to do all such assurances, acts or
     things as he ought to do under the covenants and provisions contained in
     this Deed and generally in his name and on his behalf to exercise all or
     any of the powers, authorities and discretions conferred by or pursuant to
     this Deed on the Chargee and generally to execute, seal and deliver and
     otherwise perfect any deed, assignment, transfer, assurance, agreement,
     instrument, or act which may in the opinion of the Chargee (or any
     substitute attorney) be required or considered proper, necessary or
     desirable for any of the purposes of this Deed.

6.2  The Chargor ratifies and confirms and agrees to ratify and confirm whatever
     any attorney mentioned in this clause does in the exercise or purported
     exercise of all or any of the powers, authorities and discretions under
     this clause.

7.   Termination
     -----------

     This Deed shall terminate automatically upon performance of all the
     obligations of the Company under the Settlement Agreement whereupon the
     Chargee shall:-

     (a)  redeliver to the Chargor the share certificates and instruments of
          transfer in respect of the Mortgaged Shares or the remainder of them
          (if any);

     (b)  generally take such other action as may be reasonably required at the
          cost of the Chargor to release the Chargor from and to discharge this
          Deed.

8.   Indulgence
     ----------

     This Deed and the rights of the Chargee under it shall not be discharged or
     in any way affected by:-

                                      14
<PAGE>

     (a)  any time, indulgence, waiver or consent at any time given to, or any
          compromise or composition entered into or made with, the Chargor or
          any other person or any other release (conditional or otherwise) of
          the Chargor or any other person;

     (b)  any amendment, variation, supplement or notation, to or of the
          Settlement Agreement or any of them (whether or not the change
          effected by such amendment, variation, supplement or notation is
          material);

     (c)  any assignment by the Chargee of their rights and obligations under
          the Settlement Agreement;

     (d)  any defect, irregularity or deficiency in any provision of any of the
          Settlement Agreement, or the obligations of any party thereunder being
          or becoming terminated, invalid, illegal or unenforceable at any time
          and/or for any reason (whether or not known to the Subscriber);

     (e)  any party thereto not being bound by the terms of the Settlement
          Agreement, whether as a result of any failure to execute, or any
          deficiency in the execution of, the same or as a result of any defect
          in or insufficiency or want of the necessary powers or any irregular
          or improper exercise thereof, whether or not known to the Chargee or
          for any other reason whatsoever; or

     (f)  the insolvency, bankruptcy, dissolution, winding-up, liquidation,
          amalgamation, reconstruction, reorganization, charge in constitution,
          death or incapacity of  the Chargor.

9.   General
     -------

9.1  The rights and remedies provided in this Deed are cumulative and not
     exclusive of any rights or remedies provided by law or under the Settlement
     Agreement.

9.2  Any provision of this Deed may be amended only if the Chargor and the
     Chargee agree in writing.

9.3  (A)  Any notice or other communication given or made under this Agreement
          shall be in writing.

     (B)  Any such notice or other communication shall be addressed as provided
          in sub-clause (C) and, if so addressed, shall be deemed to have been
          duly given or made as follows:-

          (i)  if sent by personally delivery, upon delivery at the address of
               the relevant party;

                                      15
<PAGE>

          (ii)  if sent by post, two clear Business Days (if within Hong Kong)
                or 7 Business Days (if overseas) after the date of posting; and

          (iii) if sent by facsimile, when despatched;

          PROVIDED THAT if, in accordance with the above provisions, any such
          notice or other communication would otherwise be deemed to be given or
          made outside working hours, such notice or other communication shall
          be deemed to be given or made at the start of working hours on the
          next Business Day. "Working hours" means 9:00a.m. to 5:30p.m. on the
          Business Day.

(C)  The relevant addressee, address and facsimile number of each party for the
     purposes of this Agreement are:-

     (i)  in the case of the Chargor:-

          Address:   c/o China International Bearing Holdings Limited
                         19th Floor, First Pacific Bank Centre
                         51-57 Gloucester Road, Hong Kong

          Facsimile: (852) 2865 4293
          Attention: Mr. Roger Li / Mr. Chen Hong Fei

     (ii) in the case of the Chargee:-

          Address:   c/o HPEM, Level 17, 1 Queen's Road,
                         Central, Hong Kong

          Facsimile: (852) 2845 9992
          Attention: Mr. George Raffini/Ms. Glory Gunawan

     or in each case at or to such other address, facsimile number of individual
     as the receiving party may have notified the sending party provided that
     such notification shall only be effective on the date specified in the
     notification as the date on which the change is to take place or if no date
     is specified or the date specified is fewer than five clear Business Days
     after the date on which notice if given, the date falling five clear
     Business Days after notice of any change has been given.

9.4  The illegality, invalidity or unenforceablility of any provision of this
     Deed under the law of any jurisdiction shall not affect its legality,
     validity or enforceability under the law of any other jurisdiction nor the
     legality, validity or enforceability of any other provision.

                                      16
<PAGE>

9.5  This Deed shall enure to the benefit of the parties hereto and their
     respective permitted successors, assignees and transferees.

9.6  The Chargor and the Chargee may not assign or transfer any or all of their
     rights or obligations under this Deed.

10.  Law
     ---

     This Deed shall be governed by and construed in accordance with the laws of
     Hong Kong.

AS WITNESS whereof this Deed has been duly executed on the date first above
written.

                                      17
<PAGE>

SEALED WITH THE COMMON SEAL     )
OF EXTENSIVE RESOURCES LIMITED  )
in the presence of:-            )

SIGNED BY Tien-yo Chao             )
AS DULY AUTHORISED ATTORNEY        )
FOR AND ON BEHALF OF               )
BRILLIANT FUTURE HOLDINGS LIMITED  )
in the presence of:-               )

                                      18
<PAGE>

                                  SCHEDULE 2
                                  ----------

                              Form of the Release
                              -------------------

                                      19
<PAGE>

                                                                Exhibit 10.26(b)

                  Dated           1st March               2000
                  --------------------------------------------

               (1)       Glory Mansion Limited

                                   and

               (2)       Wardley China Investment Trust

                                   and

               (3)       MC Private Equity Partners Asia Limited

                                   and

               (4)       Chine Investissement 2000

                                   and

               (5)       Sunbase Asia, Inc.

                                   and

               (6)       China International Bearing Holdings Limited

                                   and

               (7)       Smith Acquisition Company, Inc

               _____________________________________

                              RELEASE

               _____________________________________

                                      20
<PAGE>

THIS RELEASE is made this 1st day of March 2000

BY:

(1)  Glory Mansion Limited, the registered office of which is at Craigmuir
     Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands ("GML");

(2)  Wardley China Investment Trust, the registered office of which is at c/o
     Suite 1610, P.O. Box 1016, 885 West Georgia Street, Vancouver B.C., V6C
     3E8, Canada ("WCIT");

(3)  MC Private Equity Partners Asia Limited, the registered office of which is
     at P.O. Box 309, Ugland House, South Church Street, Grand Cayman, Cayman
     Islands, British West Indies ("MC Partners");

(4)  Chine Investissement 2000, a Luxembourg-registered Unit Trust, the
     registered office of which is at L1118 Luxembourg, 14 Rue Aldringen ("CI
     2000");

     (The parties referred to at (1), (2), (3) and (4) hereinafter collectively
     referred to as "Investors" and each an "Investor")

(5)  Sunbase Asia, Inc., the registered office of which is at 1280 Terminal Way,
     Suite 3, Reno Nevada 89502, United States of America ("SAI");

(6)  China International Bearing Holdings Limited, the registered office of
     which is at 19th Floor, 51-57 Gloucester Road, Wanchai, Hong Kong
     ("CIBHL");

     (The parties referred to at (5) and (6) hereinafter collectively referred
     to as "Continuing Guarantors" and each a "Continuing Guarantor").

(7)  Smith Acquisition Company, Inc., a California corporation doing business as
     Southwest Products Company, the registered office of which is at 2240 Buena
     Vista, Irwindale, CA 91706, United States of America ("SPC");

WHEREAS:-

(A)  SPC and the Continuing Guarantors signed a guarantee in favour of the
     Investors dated 16/th/ October, 1998 (the "Guarantee") securing payment of
     certain amounts (the "Debt") and performance of certain obligations.

(B)  In consideration of the Debt being partially discharged pursuant to a
     Supplemental Agreement dated 1/st/ March, 2000 executed between, inter
     alia, SPC, the Continuing Guarantors, the Investors and certain other
     parties, the Investors have agreed to discharge and release the obligations
     of SPC under the Guarantee on the terms and conditions contained herein.

                                      21
<PAGE>

NOW THIS RELEASE WITNESSETH that:

1.   In consideration of the Debt being partially discharged pursuant to the
     Supplemental Agreement as referred to in Recital (B) above, the Investors
     hereby discharge and release SPC from all liabilities and obligations due
     and owing as at the date hereof by SPC to the Investors under the Guarantee
     or any other documents in connection with the Debt including without limit
     the Settlement Agreement dated 16/th/ October, 1998 and the Supplemental
     Agreement (the "Debt Documents").

2.   Each of the Continuing Guarantors hereby acknowledges that its continuing
     obligations under the Guarantee shall remain notwithstanding the execution
     of this Release and that it shall have no rights against SPC under the
     Guarantee upon signing of this Release.

3.   This Release is governed by the laws of the Hong Kong Special
     Administrative Region of the People's Republic of China.

IN WITNESS WHEREOF this Release has been executed this 1st day of March 2000

SIGNED by Tien-yo Chao                       )
duly authorised attorney for and on behalf   )
of GLORY MANSION LIMITED                     )
in the presence of:-                         )

SIGNED by Tien-yo Chao                       )
duly authorised attorney for and on behalf   )
of WARDLEY CHINA                             )
INVESTMENT TRUST                             )
in the presence of:-                         )

                                      22
<PAGE>

SIGNED by Mr. Yasushi Okahisa                )
duly authorised for and on behalf            )
of MC PRIVATE EQUITY PARTNERS                )
ASIA LIMITED                                 )
in the presence of:-                         )

SIGNED by Tien-yo Chao                       )
duly authorised attorney                     )
for and on behalf                            )
of CHINE INVESTISSEMENT 2000                 )
in the presence of:-                         )

The Common Seal of                           )
SUNBASE ASIA, INC.                           )
was hereunto affixed                         )
in the presence of:-                         )

The Common Seal of                           )
CHINA INTERNATIONAL                          )
BEARING HOLDINGS LIMITED                     )
was hereunto affixed                         )
in the presence of:-                         )

SIGNED by                                    )
duly authorised for and on behalf            )
of SMITH ACQUISITION                         )
COMPANY, INC.                                )
in the presence of:-                         )

                                      23
<PAGE>

                                SIGNATURE PAGES
                                ---------------

SIGNED by  /s/ Roger Li                 )
duly authorised for and on behalf       )
of CHINA BEARING                        )    /s/ Roger Li
HOLDINGS LIMITED                        )
in the presence of:- /s/ Hongfei Chen   )

SIGNED by  /s/ Roger Li                 )
duly authorised for and on behalf       )    /s/ Roger Li
of ASEAN CAPITAL LIMITED                )
in the presence of:- /s/ Hongfei Chen   )

SIGNED by  /s/ Roger Li                 )
duly authorised for and on behalf       )
of  CHINA INTERNATIONAL                 )    /s/ Roger Li
BEARING HOLDINGS LIMITED                )
in the presence of:- /s/ Hongfei Chen   )

SIGNED by  /s/ Roger Li                 )
duly authorised for and on behalf       )    /s/ Roger Li
of SUNBASE ASIA, INC.                   )
in the presence of:- /s/ Hongfei Chen   )

SIGNED by                               )
duly authorised for and on behalf       )
SMITH ACQUISITION COMPANY, INC.         )    /s/ Samuel Mok Trustee
in the presence of:-                    )

                                      24
<PAGE>

SIGNED by Tien-yo Chao                       )
duly authorised attorney for and on behalf   )    /s/ Tien-yo Chao
of GLORY MANSION LIMITED                     )
in the presence of:- /s/ Desmond Chow        )
                       Desmond Chow
                        Solicitor
                      Hong Kong SAR

SIGNED by Tien-yo Chao                       )
duly authorised attorney for and on behalf   )
of WARDLEY CHINA                             )    /s/ Tien-yo Chao
INVESTMENT TRUST                             )
in the presence of:- /s/ Desmond Chow        )
                       Desmond Chow
                        Solicitor
                      Hong Kong SAR

SIGNED by Mr. Yasushi Okahisa                )
duly authorised for and on behalf            )
of MC PRIVATE EQUITY PARTNERS                )    /s/ Mr. Yasushi Okahisa
ASIA LIMITED                                 )
in the presence of:- /s/ Desmond Chow        )
                       Desmond Chow
                        Solicitor
                      Hong Kong SAR

SIGNED by Tien-yo Chao                       )
duly authorised attorney                     )
for and on behalf                            )    /s/ Tien-yo Chao
of CHINE INVESTISSEMENT 2000                 )
in the presence of:- /s/ Desmond Chow        )
                       Desmond Chow
                        Solicitor
                      Hong Kong SAR

SIGNED by /s/ Roger Li                       )
duly authorised for and on behalf            )
of EXTENSIVE RESOURCES                       )    /s/ Roger Li
LIMITED                                      )
in the presence of:- /s/ Hengfei Chen        )

                                      25
<PAGE>

SIGNED by /s/ Roger Li                  )
duly authorised for and on behalf       )
of  SUNBASE INTERNATIONAL               )    /s/ Roger Li
(HOLDINGS) LIMITED                      )
in the presence of:- /s/ Hongtei Chen   }

                                      26
<PAGE>

                                  ANNEXURE 1
                                  ----------

                           FORM OF THE ESCROW LETTER
                           -------------------------
<PAGE>

BY COURIER AND BY FAX (002-1-202-3261555)
-----------------------------------------

                                                               1/st/ March, 2000

Jenkens & Gilchrist
1919 Pennsylvania Avenue, NW
Suite 600
Washington D.C. 200060

Attn: Mr. Andrew C. Lynch / Mr. Christopher E. Ondeck
-----------------------------------------------------

Dear Sirs,

                        Re: Monies to be held in Escrow
                        -------------------------------

1.   We refer to (i) the Stock Purchase Agreement dated 31/st/ January entered
     into between Sunbase Asia, Inc ("SAI"), Samuel T. Mok, an investment group
     led by William McKay (the "Buyer") and Smith Acquisition Company Inc
     ("SPC") in connection with the sale and purchase of shares of capital stock
     of SPC (the "Sale"); and (ii) the Supplemental Agreement dated 1/st/ March,
     2000 entered into between SAI, ourselves and certain other parties in
     connection with certain supplemental arrangements relating to repayments
     prescribed in a Settlement Agreement dated 16/th/ October, 1998.

2.   For the purpose of facilitating completion of the Sale, we enclose a duly
     executed release (the "Release"), to be dated the day as mentioned in
     paragraph 4 below, in relation to the release of SPC from its obligations
     under the Guarantee dated 16th October, 1998.

3.   You are instructed to hold the Release in escrow pending the transfer by
     you (solely from the proceeds of the Closing (as "Closing" is referred to
     and defined in the said Stock Purchase Agreement)) of the following
     respective amounts by telegraphic transfer into the following bank
     accounts:-

     The HSBC Private Equity Fund, L.P.
     ----------------------------------

     --------------------------------------------------------------------------
     Bank:                    HSBC Bank USA, New York
                              140 Broadway
                              New York NY10015
                              U.S.A.
                              SWIFT: MRMD US 33
     --------------------------------------------------------------------------
     Account name:            HSBC International Trustee Limited a/c HPEF
                              (General)
     --------------------------------------------------------------------------
     Account no:              000-05073-3
     --------------------------------------------------------------------------
     Amount:                  US$1,356,522
     --------------------------------------------------------------------------
<PAGE>

     Wardley China Investment Trust
     ------------------------------

     --------------------------------------------------------------------------
     Bank:                       Brown Brothers Harriman and Co., New York
     --------------------------------------------------------------------------
     Account name:               Royal Trust Corporation of Canada, London
     --------------------------------------------------------------------------
     Account no:                 7027436
     --------------------------------------------------------------------------
     SWIFT CODE:                 BBHCUS33
     --------------------------------------------------------------------------
     For further credit to:      Wardley China Investment Trust
     --------------------------------------------------------------------------
     Account no:                 877653
     --------------------------------------------------------------------------
     Amount:                     US$452,174
     --------------------------------------------------------------------------

     MC Private Equity Partners Asia
     -------------------------------

     --------------------------------------------------------------------------
     Bank:                       Bangkok Bank Public Company Ltd Singapore
     --------------------------------------------------------------------------
                                 180 Cecil Street, Singapore 069546
     --------------------------------------------------------------------------
     Account no:                 0700-388629-412
     --------------------------------------------------------------------------
     Account holder              MC Private Equity Partners Asia
     --------------------------------------------------------------------------
     Currency Type               US$ ACU Call
     --------------------------------------------------------------------------
     PIC of Bank                 Ms Sumalee (Tel: 65-229-7429)
     --------------------------------------------------------------------------
     Amount:                     US$452,174
     --------------------------------------------------------------------------

     Chine Investissement 2000
     -------------------------

     --------------------------------------------------------------------------
     Bank:                       Bank of America New York
     --------------------------------------------------------------------------
     SWIFT:                      BWORFRPP
     --------------------------------------------------------------------------
     Account name:               Banque Worms, Paris
     --------------------------------------------------------------------------
     For further credit to:      Chine Investissement 2000
     --------------------------------------------------------------------------
     Account no.:                0356631361P
     --------------------------------------------------------------------------
     IBAN Code:                  FR60-3099-8000-0303-5663-1361-P76
     --------------------------------------------------------------------------
     Amount:                     US$339,130
     --------------------------------------------------------------------------

4.   Upon our receipt of the respective amounts and in the manner set out in
     paragraph 3 which should not be later than 15/th/ April, 2000 and subject
     to paragraph 5 below, we shall promptly notify you in writing and you may
     release and deliver the Release to the Buyer and insert as the date of the
     Release (which you are hereby authorised to do on our behalf) the day on
     which the Release is so released and delivered to the Buyer. Save as
     aforesaid, you shall not release or otherwise deal with the Release.

5.   If we do not receive the sum and in the manner set out in paragraphs 3 on
     or before 15/th/ April, 2000, we shall have the right by written notice to
     you to demand the prompt return of the Release to us, whereupon you are
     obliged to return the Release by courier to Glory Mansion Limited (on
     behalf of itself and the rest of us), care of HSBC Private Equity (Asia)
     Limited at Level 17, 1 Queen's Road Central, Hong Kong.  If the Release is
     not released pursuant to
<PAGE>

     this letter by April 30, 2000, you have the option of returning the Release
     to us (by returning it to Glory Mansion Limited in the manner
     aforementioned), and upon such return of the Release the obligations of you
     arising from this letter shall cease and terminate.

6.   You need to have no regard to the sufficiency, accuracy or genuineness of
     any notice or confirmation received by you in your capacity as escrow agent
     hereunder of any incapacity and limitation upon the powers of any person
     signing and issuing such notice or confirmation which appears on its face
     to be in order and may assume such notice or confirmation which appears on
     its face to be in order is correct and properly made.

7.   This letter shall be governed by and construed in accordance with the laws
     of The Hong Kong Special Administrative Region of the People's Republic of
     China ("Hong Kong").  All disputes in connection with this letter shall be
     subject to the non-exclusive jurisdiction of the courts of Hong Kong.

8.   This letter shall not be amended or varied except by written notification
     duly executed by all parties hereto.

9.   By signing and acknowledging the terms of this letter, you irrevocably
     agree to strictly abide by and adhere to the provisions of this letter.

10.  Please countersign below to acknowledge your agreement to the above.

<TABLE>
<CAPTION>
                               Yours faithfully,
<S>                                             <C>

/s/ Tien-yo Chao                                /s/ Tien-yo Chao
------------------------------------            ---------------------------------
Tien-yo Chao                                    Tien-yo Chao
Duly authorised attorney                        Duly authorised attorney
for and on behalf                               for and on behalf
of Glory Mansion Limited                        of Wardley China Investment Trust

/s/ Yasushi Okahisa                             /s/ Tien-yo Chao
------------------------------------            ----------------------------------------
Mr. Yasushi Okahisa                             Tien-yo Chao
for and on behalf                               Duly authorised attorney
of MC Private Equity Partners                   for and on behalf
Asia Limited                                    of Chine Investissement 2000
</TABLE>
<PAGE>

We hereby acknowledge and
agree to the above terms.

/s/ Nikelars F. Schalbame
-------------------------------
For and on behalf of
Jenkens & Gilchrist

Date:
<PAGE>

                                  ANNEXURE 2
                                  ----------

                              FORM OF THE CONSENT
                              -------------------
<PAGE>

                                    CONSENT
                                    -------

THIS CONSENT (the "Consent") dated as of 1/st/ March, 2000 is delivered pursuant
                   -------
to that certain Stock Purchase Agreement (the "Stock Purchase Agreement"), dated
                                               ------------------------
January 31, 2000, by and among SMITH ACQUISITION COMPANY D/B/A SOUTHWEST
PRODUCTS COMPANY, INC., (the "Company"), SAMUEL T. MOK, as voting trustee,
                              -------
SUNBASE ASIA, INC., and WILLIAM MCKAY ("Buyer"), as such agreement may be
                                        -----
amended.

     Subject to (i) the Supplemental Agreement dated 1st March, 2000 entered
into among, inter alia, China Bearing Holdings Limited and several other parties
            ----------
with respect to certain supplemental repayment arrangements and (ii) our receipt
of an aggregate sum of U.S. Two Million Six Hundred Thousand Dollars (U.S.
$2,600,000) pursuant to an escrow letter signed between ourselves and Jenkens &
Gilchrist in connection with the above matter, the signatories hereto consent to
the sale of the Company to the Buyer, for a purchase price of not less than U.S.
Three Million Five Hundred Thousand Dollars (U.S. $3,500,000).

     IN WITNESS WHEREOF, this Consent has been duly executed under seal by the
parties hereto effective as of the date first above written.

                                             GLORY MANSION LIMITED

                                             /s/ Tien-yo Chao
                                             ---------------------------------
                                             By: Tien-yo Chao
                                                 Duly authorised attorney
                                                 for an on behalf of
                                                 GLORY MANSION LIMITED

                                             WARDLEY CHINA INVESTMENT TRUST

                                             /s/ Tien-yo Chao
                                             ----------------------------------
                                             By: Tien-yo Chao
                                                 Duly authorised attorney
                                                 for an on behalf of
                                                 WARDLEY CHINA INVESTMENT TRUST
<PAGE>

                                        MC PRIVATE EQUITY PARTNERS ASIA LIMITED

                                        /s/ Yasushi Okahisa
                                        ---------------------------------------
                                        By: Mr. Yasushi Okahisa
                                            Duly authorised
                                            for an on behalf of
                                            MC PRIVATE EQUITY PARTNERS ASIA
                                            LIMITED

                                        CHINE INVESTISSEMENT 2000

                                        /s/ Tien-yo Chao
                                        ---------------------------------------
                                        By: Tien-yo Chao
                                            Duly authorised attorney
                                            for an on behalf of
                                            CHINE INVESTISSEMENT 2000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]