EXHIBIT 4.16
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EQUITY JOINT VENTURE CONTRACT
BETWEEN
SKY COMMUNICATIONS GROUP COMPANY LIMITED
AND
ASIA SATELLITE TELECOMMUNICATIONS COMPANY LIMITED
FOR THE ESTABLISHMENT OF
BEIJING ASIA SKY TELECOMMUNICATIONS TECHNOLOGY COMPANY LIMITED
DATED Xxxxx 00xx, 0000
XXXXXXX, XXXXX
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TABLE OF CONTENTS
CLAUSE PAGE
CHAPTER 1 - GENERAL PROVISION..................................................1
CHAPTER 2 - PARTIES TO THIS JOINT VENTURE CONTRACT.............................1
CHAPTER 3 - PURPOSE AND BUSINESS SCOPE OF THE JOINT VENTURE COMPANY............1
CHAPTER 4 - TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL..................2
CHAPTER 5 - OBLIGATIONS OF THE PARTIES TO THE JOINT VENTURE COMPANY.............
CHAPTER 6 - THE BOARD OF DIRECTORS.............................................6
CHAPTER 7 - GENERALMANAGER AND SENIOR MANAGEMENT PERSONNEL.....................9
CHAPTER 8 - TAXES, FINANCE AND AUDIT..........................................10
CHAPTER 9 - TERM OF THE JOINT VENTURE COMPANY.................................11
CHAPTER 10 - INTELLECTUAL PROPERTY AND CONFIDENTIALITY........................12
CHAPTER 11 - LABOR MANAGEMENT.................................................13
CHAPTER 12 - TRANSFER OF EQUITY INTEREST......................................14
CHAPTER 13 - INSURANCE........................................................17
CHAPTER 14 - TERMINATION AND LIQUIDATION......................................17
CHAPTER 15 - FORCE MAJEURE....................................................21
CHAPTER 16 - SETTLEMENT OF DISPUTES...........................................22
CHAPTER 17 - GOVERNING LAW....................................................23
CHAPTER 18 - LANGUAGES AND COUNTERPARTS.......................................23
CHAPTER 19 - LIABILITY FOR BREACH OF CONTRACT.................................24
CHAPTER 20 - REPRESENTATIONS AND WARRANTIES...................................25
CHAPTER 21 - NOTICE AND MISCELLANEOUS.........................................27
CHAPTER 1 - GENERAL PROVISION
In accordance with the Law of the People's Republic of China on Chinese-Foreign
Equity Joint Ventures and its Implementing Regulations (as amended) as well as
other applicable laws and regulations, SKY COMMUNICATIONS GROUP COMPANY LIMITED
and ASIA SATELLITE TELECOMMUNICATIONS COMPANY LIMITED, adhering to the
principles of equality and mutual benefit and through friendly consultation,
agree unanimously to enter into this Joint Venture Contract (the "JOINT VENTURE
CONTRACT") for the establishment of BEIJING ASIA SKY TELECOMMUNICATIONS
TECHNOLOGY COMPANY LIMITED (the "JOINT VENTURE COMPANY") in the People's
Republic of China ("CHINA" or the "PRC").
This Joint Venture Contract is executed by the Parties (as defined below) on the
29th day of March, 2004 in Beijing.
CHAPTER 2 - PARTIES TO THIS JOINT VENTURE CONTRACT
ARTICLE 1
The Parties to this Joint Venture Contract are as follows:
(a) SKY COMMUNICATIONS GROUP COMPANY LIMITED ("PARTY A"), a company
incorporated in the PRC with its legal address at Room 209 Lujiazui
Software Park, Xx. 00, Xxxx 00, Xxxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxxx,
the PRC, postal code: 200127; telephone No.: (8621) 0000 0000;
facsimile No.: (8621) 5873 0937.
(b) ASIA SATELLITE TELECOMMUNICATIONS COMPANY LIMITED ("PARTY B"), a
company incorporated under the laws of the Hong Kong Special
Administrative Region of the PRC ("HONG KONG") with its registered
office situated at Floor 23, East Exchange Tower, 38 Leighton Road,
Causeway Bay, Hong Kong, the PRC; telephone No.: (000) 0000 0000;
facsimile No.: (000) 0000 0000.
In this Joint Venture Contract, Party A and Party B are each referred
to as a "PARTY" and collectively as the "PARTIES."
CHAPTER 3 - PURPOSE AND BUSINESS SCOPE OF THE JOINT VENTURE COMPANY
ARTICLE 2
The purpose of the Joint Venture Company shall be as follows: in accordance with
the principle of enhancing economic co-operation and technical exchange, and by
adopting international advanced and applicable technology and scientific
management methods, to provide Chinese domestic users with quality satellite
communications technical services and related value-added services.
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ARTICLE 3
The business scope of the Joint Venture Company shall be the research,
development of network telecommunication technology; manufacture of network
telecommunication equipment, sale of self-produced products; provision of
telecommunication technology service, technical consultancy and transfer of
self-developed technology.
ARTICLE 4
The name of the Joint Venture Company is [CHINES CHARACTERS OMITTED] in Chinese
and BEIJING ASIA SKY TELECOMMUNICATIONS TECHNOLOGY COMPANY LIMITED in English.
The registered address of the Joint Venture Company is at Xx.00 Xxxxxxx Xxxxxx,
Xxxxxxx Economic Technological Development Area, Beijing, The PRC.
ARTICLE 5
All the activities of the Joint Venture Company shall comply with the laws,
decrees and applicable rules and regulations of the PRC.
ARTICLE 6
The corporate form of the Joint Venture Company is a limited liability company.
Each Party shall be liable for the losses of Joint Venture Company only up to
the amount of its respective subscribed capital contribution to the registered
capital. The profits of the Joint Venture Company shall be shared by the Parties
in proportion to their respective contributions to the registered capital of the
Joint Venture Company.
CHAPTER 4 - TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
ARTICLE 7
The total amount of investment of the Joint Venture Company is [
].
ARTICLE 8
The registered capital of the Joint Venture Company is [ ],
of which:
(a) Party A shall contribute the VSAT equipment set forth in Appendix 1
hereof ("PARTY A'S CONTRIBUTED Assets") equivalent to [ ]
as its contribution in kind, representing 51% of the registered
capital; and
(b) Party B shall contribute foreign exchange cash in an amount equivalent
to [ ], representing 49% of the registered capital.
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ARTICLE 9
The Parties shall make their respective contributions in accordance with Article
11 hereof. If additional funds are required for working capital or any other
purpose, the Joint Venture Company may borrow from banks or other institutions
with the consent of the Board (as defined below).
ARTICLE 10
This Joint Venture Contract shall become effective from the date on which the
approval is obtained from the relevant government authority that has the right
to approve this Joint Venture Contract and the articles of association of the
Joint Venture Company (the "ARTICLES") pursuant to the applicable laws and
regulations of the PRC (the "EXAMINATION AND APPROVAL AUTHORITY").
ARTICLE 11
(a) Subject to Article 11(c) and (d), Party A shall make 30% of its
contribution to the registered capital of the Joint Venture Company
within 30 days after the date on which the Joint Venture Company has
obtained its business license. Party A shall contribute the balance of
70% in one lump sum payment within 90 days after the date on which the
Joint Venture Company has obtained its business license.
(b) Subject to Article 11(c) and (d), Party B shall make 30% of its
contribution to the registered capital of the Joint Venture Company
within 30 days after the date on which the Joint Venture Company has
obtained its business license. Party B shall contribute the balance of
70% in one lump sum payment within 90 days after the date on which the
Joint Venture Company has obtained its business license.
(c) The Parties shall be obligated to make their contributions to the
registered capital of the Joint Venture Company only after all of the
following conditions have been satisfied or waived in writing by the
Parties:
(i) following execution by the Parties, this Joint Venture
Contract and the Articles having been approved by the
Examination and Approval Authority without substantive
amendments thereto;
(ii) the Joint Venture Company having been issued its business
license without substantial amendments to the business scope
of the Joint Venture Company set forth in Article 3 hereof;
(iii) the Joint Venture Company having received all necessary
rights, licenses, permits, approvals, waivers and
authorizations to engage in the business activities
contemplated in Article 3 hereof;
(iv) the Joint Venture Company having entered into the Consulting
and Billing Services Contract and the Intellectual Property
Rights License Contract (collectively, the "PARTY A SUBSIDIARY
Contracts") with a subsidiary of Party A ("PARTY A
SUBSIDIARY") in form and substance satisfactory to the
Parties;
(v) Party A Subsidiary having received all necessary rights,
licenses, permits, approvals, waivers and authorizations to
engage in the operation of a VSAT communications business;
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(vi) Party A having entered into a facilities purchase contract
("FACILITIES PURCHASE CONTRACT") with Party A Subsidiary with
respect to the purchase by Party A Subsidiary of Party A's
VSAT hub and related facilities in form and substance
satisfactory to the Parties;
(vii) Party B having entered into a Transponder Lease Agreement with
Party A Subsidiary with respect to the lease of transponder
capacity by Party B to Party A Subsidiary in form and
substance satisfactory to the Parties;
(viii) Party A having entered into a transfer contract with Party A
Subsidiary in form and substance satisfactory to the Parties
in accordance with which Party A shall transfer all satellite
hub service contracts entered into with its Affiliates (as
defined below) to Party A Subsidiary at no consideration. The
transfer contract shall also provide that Party A Subsidiary
may transfer such satellite hub service contracts to the
foreign-invested telecommunications enterprise that will be
established by Party A and Party B in accordance with the
applicable PRC laws and regulations and approved to engage in
the operation of VSAT communications business;
(ix) Party A having terminated or having caused its Affiliates to
terminate the employment contracts with the employees to be
seconded to the Joint Venture Company and having released in
writing the non-competition and confidentiality obligations of
such employees under such employment contracts or any other
documents, except as otherwise agreed by the parties.
(x) Party B having received a legal opinion from Party A's PRC
counsel to Party A in form and substance satisfactory to Party
B; and
(xi) all of the respective representations and warranties made by
Party A in Articles 51(a) and (b) being true and correct in
every respect.
(d) After the Parties have made their contributions to the Joint Venture
Company, a Chinese registered accountant satisfactory to the Parties
shall verify the capital contribution made by each Party and issue a
capital contribution verification report. Thereupon the Joint Venture
Company shall issue investment certificates to the Parties, in which
the following items shall be included:
(i) the name of the Joint Venture Company;
(ii) the date of the establishment of the Joint Venture Company;
(iii) the names of the Parties and their capital contributions;
(iv) the date on which the contributions were made; and
(v) the date on which the investment certificate is issued.
The investment certificates shall be signed by the Chairman (as defined below)
and the Vice-Chairman (as defined below).
ARTICLE 12
If a Party fails to make its contribution to the registered capital of the Joint
Venture Company in accordance with Articles 8 and 11, such Party (the
"CONTRIBUTION DEFAULTING PARTY") shall pay to the other Party default interest
on the unpaid contribution accruing at the rate of 0.02% per day from the tenth
day after the due date set forth in Article 11 until the date on which the
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contribution is paid in full. For the avoidance of any doubt, a Party who does
not make its contribution due to the non-fulfillment of the conditions set forth
in Article 11 shall not be regarded as a Contribution Defaulting Party under
this Article 12 and Article 13.
ARTICLE 13
If the Contribution Defaulting Party fails to make its contribution to the
registered capital of the Joint Venture Company within 60 days after the due
date, the other Party may apply to the original Examination and Approval
Authority for approval to terminate the Joint Venture Company and cancel this
Joint Venture Contract.
ARTICLE 14
The difference between the total amount of investment and the registered capital
stipulated herein shall be made up by the Parties jointly by fund raising.
CHAPTER 5 OBLIGATIONS OF THE PARTIES TO THE JOINT VENTURE COMPANY
ARTICLE 15
The obligations of each Party are as follows:
(a) The obligations of Party A include:
(i) submitting this Joint Venture Contract, the Articles and other
relevant documents of the Joint Venture Company to the
Examination and Approval Authority in accordance with the
requirements of the applicable PRC laws and regulations and
using its best endeavors to obtain the prompt approval of the
application;
(ii) promptly making its contribution to the registered capital as
stipulated in Articles 8 and 11 hereof;
(iii) handling the registration matters of the Joint Venture
Company, obtaining the business license from the relevant PRC
government department, providing assistance in respect of the
opening of the bank accounts of the Joint Venture Company and
other matters related to the establishment of the Joint
Venture Company;
(iv) recommending a suitable person who will serve as the first
deputy general manager (the "DEPUTY GENERAL MANAGER") of the
Joint Venture Company upon the approval of the Board;
(v) causing Party A Subsidiary (1) to enter into the Party A
Subsidiary Contracts with the Joint Venture Company on the
date of establishment of the Joint Venture Company; (2) to
accept the services and the license of intellectual property
rights provided by the Joint Venture Company in accordance
with the Party A Subsidiary Contracts; and (3) to pay promptly
all payments due under the Party A Subsidiary Contracts to the
Joint Venture Company;
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(vi) causing Party A Subsidiary to enter into a three-party
customer contract with the Joint Venture Company and each
customer of Party A Subsidiary's VSAT communications business,
pursuant to which Party A Subsidiary shall provide such
customers with services for which a company is required to
have a VSAT communication business operating permit in order
to provide and the Joint Venture Company shall provide other
services relating to the VSAT communications business for
which such permit is not required;
(vii) assisting the Joint Venture Company in developing the domestic
market;
(viii) advising the Joint Venture Company on the laws and policies of
PRC and coordinating the relationship between the Joint
Venture Company and relevant PRC government agencies;
(ix) providing the Joint Venture Company with administrative and
logistic support and assistance;
(x) handling other matters reasonably entrusted to it by the
Board; and
(xi) fulfilling other obligations set forth in this Joint Venture
Contract.
(b) The obligations of Party B include:
(i) promptly making its contribution to the registered capital as
stipulated in Articles 8 and 11 hereof; (ii) assisting Party A
in handing the registration matters of the Joint Venture
Company;
(iii) recommending suitable persons who will serve as the first
general manager of the Joint Venture Company (the "GENERAL
MANAGER") and the first financial controller of the Joint
Venture Company (the "FC") upon the approval of the Board;
(iv) assisting the Joint Venture Company in obtaining advanced
marketing and promotion experience of the international
market;
(v) assisting the Joint Venture Company in its ordinary operation;
(vi) providing managerial and technical support and personnel
training to the Joint Venture Company;
(xii) handling other matters reasonably entrusted to it by the
Board; and
(xiii) fulfilling other obligations set forth in this Joint Venture
Contract.
ARTICLE 16
As permitted by PRC law and upon the approval and request of the Board, each
Party shall have the obligation to assist the Joint Venture Company in applying
for permission to carry out new businesses.
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CHAPTER 6 - THE BOARD OF DIRECTORS
ARTICLE 17
(a) The board of directors of the Joint Venture Company (the "BOARD") shall
be established on the date on which the business license of the Joint
Venture Company is issued. The Board shall be the highest authority of
the Joint Venture Company and shall direct the overall management,
supervision and control of the business of the Joint Venture Company.
All major matters of the Joint Venture Company shall be decided by the
Board. The Board shall adopt resolutions in accordance with this Joint
Venture Contract, the Articles and the applicable laws and regulations
of the PRC.
(b) To the extent that the laws and regulations of the PRC in effect as of
the date of the adoption of the relevant resolution require, decisions
with respect to the following matters shall require the unanimous
approval of the directors present and voting in person or by proxy at a
Board meeting:
(i) any amendment to the Articles;
(ii) termination and dissolution of the Joint Venture Company;
(iii) increases or decreases in the registered capital of the Joint
Venture Company or any transfer (other than transfers pursuant
to Chapter 12) of either Party's interest in the Joint Venture
Company;
(iv) division of the Joint Venture Company or merger of the Joint
Venture Company with other economic organizations; and
(v) other matters requiring unanimous approval of the Board as
provided in officially promulgated and implemented laws and
regulations of the PRC.
(c) Decisions with respect to all other matters that require the approval
of the Board shall be adopted if they receive the affirmative vote of a
simple majority of the directors present and voting in person or by
proxy, including at least one director or its proxy appointed
respectively by each Party.
ARTICLE 18
(a) The Board shall consist of six directors, of whom three directors shall
be appointed by Party A and three directors shall be appointed by Party
B. Each of the directors shall have one vote.
(b) One of the directors nominated by Party A shall be appointed as the
chairman of the Board (the "Chairman") and shall preside over Board
meetings. One of the directors nominated by Party B shall be appointed
as the vice-chairman of the Board (the "VICE-CHAIRMAN"). In the absence
of the Chairman, the Vice Chairman will chair the Board meeting.
(c) The term of office of the directors shall be four years, renewable upon
reappointment by the appointing Party. Upon approval of the Board, any
director may serve as a senior manager of the Joint Venture Company.
(d) If there is a vacancy on the Board due to a director retiring,
resigning, falling ill, becoming incapacitated, dying, being removed by
its appointing Party or otherwise ceasing to be a director, the Party
that appointed such director shall appoint a successor to serve for the
remainder of the term of office of such director.
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ARTICLE 19
(a) Except as otherwise set forth in Article 19(b), four directors, present
in person or by their officially authorized proxies shall constitute a
quorum for any Board meeting.
(b) If such a quorum is not present within one hour after the time
appointed for the meeting or if at any time during the meeting a quorum
is no longer present for any reason, the meeting shall adjourn to a
second meeting, at such place and time (which is at least 15 days
later) as those directors who attended the first meeting shall decide
or, if no such decision is reached, at the same place and time 15 days
later. If a quorum is not present within 20 minutes after the time
appointed for the second meeting or if at any time during the second
meeting a quorum is no longer present for any reason, the number of
directors present shall be deemed to constitute a quorum for the
purpose of that second meeting; PROVIDED THAT not less than 10 days'
notice of the second meeting is given to all directors. For the purpose
of determining whether a quorum is present, directors participating in
person or by proxy shall be deemed as directors present at the meeting.
ARTICLE 20
Subject to Article 27(a), if the Board fails to adopt a resolution regarding the
matters set forth in Articles 17(b) or 17(c) by unanimous vote or simple
majority vote (as the case may be), a deadlock will be deemed to have occurred
(the "DEADLOCK") and the Chairman shall not have a casting vote. If a Deadlock
occurs, the General Manager of the Joint Venture Company shall draft and submit
to Party A and Party B a detailed report on such matter within 30 days after the
occurrence of the Deadlock. From the date of receipt of the above report, the
Parties shall attempt to reach a successful resolution of the matter in another
30 days (or a longer period agreed by the Parties). If the Parties fail to do so
within the aforesaid period,
(a) either Party, the Purchasing Party (as defined below), may purchase or
designate another person to purchase the interest of the other Party,
the Non-Purchasing Party (as defined below) pursuant to the procedures
set forth in Article 40(b). If both Parties issue Invocation Notices
(as defined below) pursuant to Article 40(b), the valuation procedures
set forth in Article 40(b)(i) through (viii) shall not be implemented
and instead the Party willing to pay the highest price per percentage
interest of the Joint Venture Company shall have the right to purchase
or designate another party to purchase the interest of the
Non-Purchasing Party at such purchase price in accordance with the
provisions of Article 40(b)(ix) and (x),
(b) the provisions of Article 41 shall apply in the event that neither
Party is willing to carry on the business of the Joint Venture Company
as a going concern.
During the Deadlock period, the Parties shall continue to perform their
obligations under this Joint Venture Contract.
ARTICLE 21
Regular meetings of the Board shall be convened at least twice every year, of
which at least one regular meeting shall be convened within three months after
the completion of each financial year. Special meetings of the Board shall be
convened by the Chairman at any time on a motion of any two directors. The
minutes of all Board meetings shall be kept on file by the Joint Venture Company
for reference.
ARTICLE 22
The detailed powers and procedures of the Board, the scope of authority and
responsibilities of the Chairman and the Vice Chairman, and the rights and
obligations of the directors shall be as set forth in the Articles.
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CHAPTER 7 GENERAL MANAGER AND SENIOR MANAGEMENT PERSONNEL
ARTICLE 23
(a) The management organization of the Joint Venture Company shall consist
of the following senior management personnel (the "SENIOR MANAGEMENT
PERSONNEL"): one General Manager, one Deputy General Manager, one FC
and other officers that the Board may appoint as being necessary for
the operation of the Joint Venture Company. The Senior Management
Personnel shall be appointed or dismissed by the Board.
(b) Party B shall nominate the candidates for the positions of the first
General Manager and the first FC, and Party A shall nominate the
candidate for the position of the first Deputy General Manager.
Subsequent General Managers, Deputy General Managers and FCs shall be
nominated and appointed by the Board. If any candidate nominated by
Party A or Party B for the positions of the initial Senior Management
Personnel is not appointed by the Board, the original nominating Party
shall have the right to nominate another candidate for the relevant
position for appointment by the Board. The General Manager, the Deputy
General Manager and the FC shall each serve for a term of three years.
The Board shall have the right to remove the General Manager, the
Deputy General Manager, the FC and other Senior Management Personnel at
any time for any reasonable reason, but in the case of the initial
Senior Management Personnel the replacement candidate for the position
of such Senior Management Personnel shall be nominated by the original
nominating Party for appointment by the Board and shall serve the
remainder of the term of the Senior Management Personnel whom he or she
is replacing..
ARTICLE 24
(a) The duties of the General Manager shall be to implement the decisions
of the Board and to organize and lead the daily operations and
management of the Joint Venture Company in every respect within the
scope authorized by the Board. The General Manager shall use all his
efforts to ensure that the Joint Venture Company does not suffer losses
in the course of its operation. The General Manager shall submit the
relevant monthly or annual report at each Board meeting.
(b) The duties of the Deputy General Manager shall be to assist the General
Manager in his work and he shall be responsible for the daily operation
work of the Joint Venture Company. The duties of the FC shall be to
organize and lead all financial and accounting affairs of the Joint
Venture Company. The FC shall report to both the General Manager and
the Board.
(c) The detailed scope of authority and duties of the Senior Management
Personnel shall be as set forth in the Articles.
ARTICLE 25
Without the written approval of the Board, none of the Senior Management
Personnel may concurrently serve in any operations management position at any
other economic organizations, except in the Parties or their Affiliates or the
subsidiaries or Affiliates of the Joint Venture Company.
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CHAPTER 8 - TAXES, FINANCE AND AUDIT
ARTICLE 26
(a) The financial and accounting matters of the Joint Venture Company shall
be handled in accordance with the applicable laws and regulations of
the PRC. The Joint Venture Company shall establish an independent
financial and accounting system in light of the special conditions of
the Joint Venture Company and international accounting principles,
which shall be implemented upon the approval of the Board.
(b) The fiscal year of the Joint Venture Company (the "FISCAL YEAR") shall
begin on January 1 and end on December 31 of each year and a financial
report shall be prepared every year. All financial reports and
management reports of the Joint Venture Company shall be written in
Chinese and English. The cost of translation shall be borne by the
Joint Venture Company. Such financial reports will be prepared by using
the accounting records prepared in accordance with the applicable laws
and regulations.
(c) The major financial reports of the Joint Venture Company (the
"FINANCIAL REPORTS") shall be prepared strictly in accordance with the
applicable laws and regulations of the PRC. The Joint Venture Company
shall prepare a quarterly management report, which will include
quarterly financial reports (the "QUARTERLY REPORTS"). The form and
content of the Quarterly Reports shall comply with the requirements of
the Board. All annual Financial Reports and Quarterly Reports shall be
completed and submitted to the Board from time to time in accordance
with the reporting schedule adopted by the Board. All Financial Reports
shall be written in Chinese and English. The costs of preparing and
translating the Financial Reports shall be borne by the Joint Venture
Company.
(d) The Joint Venture Company shall select an independent auditor to audit
the Financial Reports of the Company and perform such other accounting
and financial duties as required by PRC law and the Board. The
independent auditor selected by the Board shall preferably be a
Chinese-foreign joint venture firm of accountants registered in the PRC
that is capable of performing accounting work meeting both PRC domestic
and international accounting standards and the foreign party of such
joint venture shall be an accounting firm of international standing and
repute. The Financial Reports shall be audited by such independent
auditor. If required, the Board may select a Chinese investment
independent auditor in view of the situation provided that such
independent auditor should be a reputable and impartial independent
auditor recognized in the industry.
(e) Furthermore, each Party shall have the right to retain independent
auditors to audit the Financial Reports of the Joint Venture Company at
its own expense (unless the results of any such audit are significantly
different from that conducted by the independent auditor and are
accepted by the Board, in which case the expense shall be borne by the
Joint Venture Company). The Joint Venture Company and each Party shall
extend full cooperation to any audit.
(f) The Joint Venture Company shall use Renminbi as its accounting unit.
The conversion of Renminbi into other currencies shall be made in
accordance with the relevant exchange rate published by the People's
Bank of China. The Joint Venture Company shall open Renminbi and
foreign currency accounts with banks duly licensed to operate Renminbi
and foreign currency business. All accounts opened by the Joint Venture
Company shall be managed and supervised in accordance with the
financial and accounting system of the Joint Venture Company; PROVIDED
THAT all accounts shall have the FC as one of the authorized
signatories.
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ARTICLE 27
(a) No later than three months prior to the end of each Fiscal Year, the
General Manager shall, in conjunction with the Deputy General Manager
and the FC, prepare and submit to the Board for approval, a capital and
operating budget and a business plan for the next Fiscal Year in
accordance with the requirements of the Board and within the framework
of the business plan adopted by the Board. These budgets and plans
shall provide for the development of activities of the Joint Venture
Company that are in line with the business scope and major tasks of the
Joint Venture Company specified in Articles 2 and 3. The Board may
approve the budget and business plan submitted by the General Manager
or require amendments to be made prior to its approval. If the Board
fails to approve the capital and operating budget and business plan of
the next Fiscal Year prior to the commencement of the next Fiscal Year,
the General Manager shall, in conjunction with the Deputy General
Manager and the FC, be responsible for preparing a provisional plan to
ensure the ongoing operation of the Joint Venture Company based on the
capital and operating budget and business plan of the previous Fiscal
Year and the framework of the business plan already adopted by the
Board taking into consideration factors such as inflation.
(b) The profit distribution plan of the Joint Venture Company shall be
determined at the discretion of the Board. The profit distribution plan
and the amount of profits to be distributed to the Parties shall be
announced within three months after approval by the Board. The profit
share payable to Party B shall be paid in United States dollars.
(c) If the Joint Venture Company suffers losses in any Fiscal Year, the
profit of the next Fiscal Year shall be used first to make up such
losses. No profit shall be distributed unless the losses from the
previous Fiscal Years have been made up.
ARTICLE 28
The Joint Venture Company shall pay taxes in accordance with the applicable laws
and regulations of the PRC. The personnel of the Joint Venture Company shall pay
individual income tax in accordance with the laws and regulations of the PRC.
The Parties shall apply to obtain for the benefit of the Joint Venture Company,
the Parties and all of their personnel, all of the applicable tax exemptions,
reductions, privileges and preferences that are now or in the future become
obtainable under the laws and regulations of the PRC and under any applicable
treaties or international agreements to which the PRC may now be or may
hereafter become a party.
CHAPTER 9 - TERM OF THE JOINT VENTURE COMPANY
ARTICLE 29
The Joint Venture Company shall be established on the date on which the Joint
Venture Company is issued its business license. The term of the Joint Venture
Company shall be 30 years.
ARTICLE 30
Prior to the expiration of the term of the Joint Venture Company or any
extension thereof, the Parties may agree to extend such term, subject to
approval by the Examination and Approval Authority and provided that such
extension is handled in accordance with applicable laws and regulations.
Negotiations with respect to the extension of such term shall begin not later
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than one year prior to expiration of the original joint venture term (or
extension thereof) and, subject to the successful conclusion of such
negotiations, the Joint Venture Company shall submit the application to extend
the joint venture term to the Examination and Approval Authority six months
prior to the expiration of the term of the Joint Venture Company or any
extensions thereof. Upon approval of the application for the extension of the
term of the Joint Venture Company, procedures for change in registration shall
be handled in accordance with the applicable laws and regulations of the PRC.
CHAPTER 10 - INTELLECTUAL PROPERTY AND CONFIDENTIALITY
ARTICLE 31
When the Board determines that it is necessary, each Party shall, and shall
cause its Affiliates to, enter into technology transfer or license, trademark
license, technical services or management consultancy services contracts with
the Joint Venture Company in order to provide for the transfer of technology or
the provision of license, trademark license, technical services or management
consultancy services to the Joint Venture Company in accordance with the terms
and conditions requested by the Board. The Joint Venture Company shall handle
all necessary examination and approval, registration or filing procedures with
the government authorities in accordance with the applicable laws and
regulations of the PRC.
ARTICLE 32
(a) All technology, know-how, techniques, software, proprietary databases,
trade secrets, trade practices, methods, specifications, designs and
other proprietary information disclosed by any Party to the Joint
Venture Company under the terms of this Joint Venture Contract or
otherwise, or developed by the Joint Venture Company, as well as the
terms of this Joint Venture Contract and other confidential business
and technical information (collectively, the "CONFIDENTIAL
INFORMATION") shall be used by the Joint Venture Company and the
Parties, and such companies' personnel solely and only for the purposes
envisaged in this Joint Venture Contract. The Joint Venture Company and
each Party shall maintain the secrecy of all Confidential Information
that may be disclosed or furnished to it by the Joint Venture Company
or the other Party, and it shall not disclose or reveal any such
Confidential Information to any third party absent explicit written
authorization from the Board or the relevant Party, as the case may be,
except as herein provided.
(b) Confidential Information obtained by a Party that is restricted
hereunder may be disclosed by that Party only to its designated
employees whose duties require such disclosure for the implementation
of this Joint Venture Contract. In that event, the receiving Party
shall take all reasonable precautions, including the conclusion of
confidentiality contracts with each such employee or the inclusion of
confidentiality clauses in the individual labor contract with each such
employee, to prevent such employees from using Confidential Information
for their personal benefit and to prevent any unauthorized disclosure
of such Confidential Information to any third party.
(c) The Parties shall, and shall ensure that the Joint Venture Company
will, take all necessary security measures and precautions to protect
the confidentiality of the Confidential Information. Such security
measures and precautions shall be commensurate with the measures and
precautions that each Party respectively takes for the protection of
corresponding sensitive information of its own, which shall in any
event be at least of the standard that would be applied by a reasonable
business entity for the protection of its own highly confidential
information and trade secrets.
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(d) Notwithstanding the foregoing, the Parties and the Joint Venture
Company may reveal Confidential Information to government personnel to
the extent necessary to obtain any governmental approval required for
the Joint Venture Company to conduct its operations, and to outside and
internal lawyers, accountants and consultants to the extent necessary
for them to provide their professional assistance; PROVIDED THAT
Confidential Information so revealed in written form is marked
confidential and that such government personnel and outside individuals
shall be requested to undertake to respect the confidentiality
provisions of this Joint Venture Contract. The Parties and the Joint
Venture Company may also disclose Confidential Information if
disclosure is required by applicable law, regulation or legal process
or by judicial order or by the rules of regulations of any applicable
stock exchange.
(e) Nothing in this Article 32 shall prevent a Party or the Joint Venture
Company from using or disclosing any Confidential Information which:
(i) is already known by the Joint Venture Company or such Party at the
time it is disclosed to it; (ii) has been rightfully received by such
Party or the Joint Venture Company, as the case may be, from a third
party without a breach of an obligation of confidentiality; (iii) is in
the public domain through no wrongful act of such Party or the Joint
Venture Company; or (iv) is independently developed by such Party or
the Joint Venture Company without use, directly or indirectly, of the
Confidential Information.
ARTICLE 33
(a) Any intellectual property rights, including, without limitation,
inventions, patent rights, design rights, copyright and rights in trade
names, trademarks and service marks, created by a staff member or
worker of the Joint Venture Company in the performance of his or her
responsibilities or primarily using the material means of the Joint
Venture Company shall belong to, and the right to apply for
registration of any such right in respect thereof shall belong to, the
Joint Venture Company. Any improvements to, or developments in, the
Confidential Information made in the course of the Joint Venture
Company's operations shall also be owned by the Joint Venture Company.
(b) Without the written permission of the other Party, neither Party shall
use the trademarks of the other Party or of the Joint Venture Company.
CHAPTER 11 - LABOR MANAGEMENT
ARTICLE 34
(a) Matters relating to the recruitment, employment, dismissal,
resignation, wages, welfare and other matters concerning the staff and
workers of the Joint Venture Company shall be handled in accordance
with the provisions of the applicable PRC laws and regulations.
(b) The Parties agree the percentage and amount to be set aside for the
following funds:
(i) the reserve fund;
(ii) the enterprise expansion fund; and
(iii) the bonus and welfare fund for workers and staff
shall be decided by the Board at its discretion in accordance with the relevant
regulations of the PRC and will only be paid out of the after-tax profits of the
Joint Venture Company.
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Management and application of the above funds shall at all times be under the
control of the Board.
CHAPTER 12 - TRANSFER OF EQUITY INTEREST
ARTICLE 35
(a) Except as provided in, and subject to, the provisions of this Chapter
12, during the term of this Joint Venture Contract, no Party may sell,
assign, pledge, give or otherwise dispose of (each, a "TRANSFER") all
or part of its equity interest in the Joint Venture Company without the
prior written consent of the other Party and the approval of the
Examination and Approval Authority.
(b) Without the consent of the other Party, no Party shall make a Transfer
of all or part of its equity interest in the Joint Venture Company to a
Competitor (as defined below) of the other Party, the Joint Venture
Company or the joint ventures that the Parties have established or will
establish. In this Joint Venture Contract, a "COMPETITOR" of a person
shall mean any individual, corporation, joint venture, enterprise,
partnership, trust, unincorporated association, limited liability
company or any other entity and its Affiliate and successors that
directly or indirectly engages in or operates a business that is the
same as or that is competitive with such person's business.
(c) Notwithstanding any other provisions in this Joint Venture Contract,
the Parties agree that any Party (a "TRANSFEROR") may make a Transfer
of all or part of its equity interest in the Joint Venture Company to
its Affiliates (that is not Competitor of the other Party) (a
"PERMITTED TRANSFEREE") and not be subject to the right of consent,
right of first offer and tag-along right of the other Party (a
"NON-TRANSFERRING PARTY") set forth in Articles 35, 36 and 37. If such
Permitted Transferee ceases to be an Affiliate of the original
Transferor, the original Transferor shall procure that such Permitted
Transferee shall Transfer all of the equity interest it holds in the
Joint Venture Company pursuant to a Transfer under this Article 35(c)
to such original Transferor or another Affiliate thereof prior to the
date of such cessation. In this Joint Venture Contract, an "AFFILIATE"
of a person shall mean any individual, corporation, joint venture,
enterprise, partnership, trust, unincorporated association, limited
liability company or any other entity that directly or indirectly owns
a Controlling interest in or exercises Control over such person, or in
or over which such person directly or indirectly owns a Controlling
interest or exercises Control, or that is otherwise directly or
indirectly under common ownership or Control with such person; the term
"CONTROL" shall mean ownership of 50% or more of the registered capital
or voting stock, or the power to direct or appoint the management of a
company and "CONTROLLING" or "CONTROLLED" shall have correlative
meanings.
(d) Each Party shall use its best endeavors to assist the other Party in
applying to the Examination and Approval Authority with regard to the
approval of any Transfer that is permitted pursuant to this Chapter 12.
(e) Subject to the provisions of paragraph (c) above, the Non-Transferring
Party may require, as a condition precedent to any Transfer, that any
Permitted Transferee of an equity interest in the Joint Venture Company
shall assume the corresponding obligations of the Transferor as
stipulated in this Joint Venture Contract and shall explicitly
stipulate to such assumption in its Transfer contract with the
Transferor, a copy of which must be provided to the Non-Transferring
Party at least 14 days prior to the Transfer in order for the Transfer
to be effective.
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(f) Upon any Transfer by a Party of all or any part of its equity interest
in the Joint Venture Company pursuant to this Chapter 12, the
Transferor shall turn in to the Joint Venture Company for cancellation
its investment certificate issued by the Joint Venture Company, and the
Joint Venture Company shall issue in its place a new investment
certificate or certificates, as appropriate.
ARTICLE 36
(a) If any Transferor desires to Transfer all or any of its equity interest
in the Joint Venture Company (other than pursuant to Article 35 (c)),
the other Party shall have the right of first offer (the "RIGHT OF
FIRST OFFER") with respect to the Transfer under this Article 36. Such
Transferor shall send written notice (the "TRANSFER NOTICE") to the
Non-Transferring Party, which notice shall state (i) the percentage of
equity to be Transferred (the "OFFERED INTEREST"), (ii) the proposed
purchase price of the Offered Interest that the Transferor is willing
to accept (the "OFFER PRICE") and (iii) other conditions and terms of
the proposed Transfer.
(b) For a period of 30 days after the giving of a Transfer Notice, the
Non-Transferring Party shall have the right to purchase the Offered
Interest at a purchase price equal to the Offer Price and upon the
terms and conditions set forth in the Transfer Notice. The
Non-Transferring Party may exercise the Right of First Offer by
delivering a written notice to the Transferor prior to the expiration
of the 30-day period. The failure of the Non-Transferring Party to give
such notice within such 30-day period shall be deemed to be a waiver by
such Non-Transferring Party of the Right of First Offer, and the
Non-Transferring Party shall cause its directors on the Board to vote
in favor of a resolution approving the Transfer to be carried out by
the Transferor pursuant to paragraph (c) below.
(c) Unless the Non-Transferring Party purchases all of the Offered Interest
pursuant to paragraph (b) above, the Transferor may Transfer all the
Offered Interest to a third-party purchaser at the Offered Price and on
the terms and conditions set forth in the Transfer Notice; PROVIDED,
HOWEVER, THAT (i) such Transfer is bona fide, (ii) the price for such
Transfer is not less than the price set forth in the Transfer Notice
and other conditions and terms for such Transfer are not more favorable
to the third party purchaser than the other conditions and terms set
forth in the Transfer Notice and (iii) such Transfer is made pursuant
to a contract entered into and completed within four months after the
giving of the Transfer Notice. If such a contract is not entered into
and completed within such four-month period for any reason, the
restrictions provided for herein shall again become effective, and no
Transfer of such Offered Interest may be made thereafter (other than
pursuant to Article 35 (c)) without again making an offer to the other
Party in accordance with this Article 36. Furthermore, the third party
accepting the Offered Interest shall be bound by the conditions and
terms of this Joint Venture Contract, and shall enter into an amended
and restated Joint Venture Contract and Articles with other
shareholders of the Joint Venture Company.
ARTICLE 37
(a) Except for a Transfer permitted by Article 35(c) and subject to the
provisions of Article 36, if a Transferor intends to Transfer all or
part of its interest in the Joint Venture Company to a third party
pursuant to this Chapter 12, such Transferor shall give notice to the
Non-Transferring Party of such proposed Transfer at least 30 days prior
to the proposed consummation of such Transfer, setting forth (i) the
proposed percentage of equity interest to be Transferred, (ii) the
percentage of equity interest the Transferor then owns, (iii) the name
and address of the proposed Transferee, (iv) the proposed amount and
payment form of the price and terms and conditions offered by such
Transferee, (v) the date of consummation of the proposed Transfer, (vi)
a representation that the proposed Transferee has been informed of the
terms of the "tag-along" right provided for in this Article 37 and has
agreed to purchase all
15
equity interest required to be so purchased in accordance with the
terms of this Article 37 and (vii) a representation that all
consideration, tangible or intangible, is being provided to the
Transferor that is reflected in the price and amount paid to the
Non-Transferring Party exercising its Tag-Along Right (as defined
below) hereunder. Such notice shall be accompanied by a true and
complete copy of all agreements executed by the Transferor and the
proposed Transferee in connection with the proposed Transfer.
(b) Subject to compliance with applicable laws and regulations, the
Non-Transferring Party shall have the right (the "TAG-ALONG RIGHT") but
not the obligation to require the proposed Transferee in Article 37(a)
to purchase from such Non-Transferring Party a portion of its equity
interest in the Joint Venture Company upon the same terms and
conditions offered to the Transferor by the proposed Transferee. The
proportion of the Non-Transferring Party's equity interest that it has
a right to Transfer to the Transferee shall be same as the proportion
of the Transferring Party's equity interest to be Transferred to the
Transferee; that is the Non-Transferring Party may Transfer up to a
total of all the interest in the Joint Venture Company held by the
Non-Transferring Party multiplied by a fraction, the numerator of which
is the proposed percentage of equity interest to be Transferred by the
Transferor, and the denominator of which is the percentage of all the
equity interest held by the Transferor. The unit price for the purchase
of such equity interest from the Non-Transferring Party by the proposed
Transferee shall be the same as the unit price the proposed Transferee
intends to pay to the Transferor for the purchase of the equity
interest from the Transferor.
(c) Within 20 days after receipt of the notice referred to in Article
37(a), the Non-Transferring Party that elects to exercise its Tag-Along
Right shall deliver a written notice of such election to the
Transferor, specifying the proposed percentage of equity interest it
has elected to sell in accordance with Article 37 (b). Such notice
shall be irrevocable and shall constitute a binding agreement by such
Non-Transferring Party to Transfer such equity interest on the terms
and conditions set forth in the Transfer notice. In order to be
entitled to exercise its Tag-Along Right, the Non-Transferring Party
must make substantially the same representations, warranties ,
covenants and indemnities as the Transferor makes in connection with
its proposed Transfer of equity interest; PROVIDED, HOWEVER, THAT no
Party exercising its Tag-Along Right shall be obligated to pay any
amount with respect to any liabilities arising from the
representations, and warranties made by the Transferor in excess of the
total price paid by the proposed Transferee to it.
(d) Where the proposed Transferee fails to purchase the relevant equity
interest from the Non-Transferring Party that (i) has properly
exercised its Tag-Along-Right or (ii) has failed to properly exercise
such right due to non-compliance with the provisions hereof by the
Transferor, unless such failure to purchase the Non-Transferring
Party's interest resulted from legal or regulatory restrictions, the
Transferor shall not make the proposed Transfer, and if purported to be
made, such Transfer shall be null and void. If the Non-Transferring
Party fails to give notice in accordance with Article 37(c) not due to
non-compliance of this Article 37 by the Transferor, the
Non-Transferring Party shall be deemed to have waived its
Tag-Along-Right and the Non-Transferring Party shall cause its Board to
vote in favor of the resolution approving the Transfer by the
Transferor to the proposed Transferee.
(e) The proposed Transferee shall be bound by the terms and conditions of
this Joint Venture Contract and shall enter into an amended and
restated Joint Venture Contract and Articles with the other
shareholders of the Joint Venture Company.
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CHAPTER 13 - INSURANCE
ARTICLE 38
(a) The basic social insurance scheme for the workers and staff of the
Joint Venture Company shall be implemented in accordance with the
applicable laws and regulations of the PRC. The type of insurance
coverage, the amount and term of insurance of other commercial
insurance shall be determined by the Board.
(b) All types of insurance of the Joint Venture Company shall be purchased
from insurance companies authorized to do business in the PRC, unless
adequate coverage as determined by the Board cannot at any time and
from time to time be obtained from such companies on internationally
competitive terms, in which case the Joint Venture Company shall apply
to purchase such insurance from other insurance companies outside of
the PRC in accordance with the applicable laws and regulations of the
PRC.
CHAPTER 14 - TERMINATION AND LIQUIDATION
ARTICLE 39
(a) If any of the conditions or events set forth below shall occur and be
continuing, the Party not encountering such conditions or events shall
have the right to issue a written notice to the other Party and the
Joint Venture Company (a "TERMINATION NOTICE") and apply directly to
the Examination and Approval Authority to terminate this Joint Venture
Contract and dissolve the Joint Venture Company:
(i) either Party fails to perform any of its material obligations
under this Joint Venture Contract, the Articles or other
contracts entered into by the Parties and such failure is not
cured within one month of written notice by the non-breaching
Party to the breaching Party stating specifically the manner
in which the breaching Party has failed to perform and if, in
the reasonable opinion of the non-breaching Party, such
non-performance defeats the economic objectives of this Joint
Venture Contract and of the establishment of the Joint Venture
Company or creates a material risk of loss to such
non-breaching Party or the Joint Venture Company, or
materially and adversely affects the value of the
non-breaching Party's equity interest in the Joint Venture
Company;
(ii) a change of Control in either Party such that the shareholder
or entity obtaining Control of such Party is a Competitor of
the other Party or the Joint Venture Company, or such that
such Party is not able to provide financial, management,
policy and promotional support to the Joint Venture Company as
set forth in this Joint Venture Contract, Articles or other
contracts entered into by the Parties, or a change in the
shareholding in either Party such that Competitor(s) of the
other Party or the Joint Venture Company hold(s) more than 10%
of the equity interest or share capital of such Party; or
(iii) either Party becomes bankrupt, is the subject of proceedings
for liquidation or dissolution, ceases to carry on business or
becomes unable to pay its debts as they become due, or all or
a material portion of its assets or property in the PRC is
expropriated or requisitioned with the effect that the
operations of the Joint Venture Company are adversely
affected.
17
(b) If any of the conditions or events set forth below shall occur and be
continuing, either Party shall have the right to issue a Termination
Notice to the other Party and the Joint Venture Company and make a
motion to the Board to dissolve the Joint Venture Company:
(i) the Joint Venture Company sustains losses significantly in
excess of those estimated in the business plan and annual
budget approved by the Board in five consecutive years;
(ii) the Joint Venture Company fails to conduct the operations
contemplated in this Joint Venture Contract owing to any
amendment to the central or local laws, regulations, decrees
or provisions made by a central or local government authority
of the PRC, or any approval, permit, license, certificate,
waiver or right materially affecting the Joint Venture
Company's ability to conduct the full scope of activities
contemplated in this Joint Venture Contract is not obtained,
declared void, rescinded or is amended in a materially adverse
manner;
(iii) the Joint Venture Company becomes bankrupt, is the subject of
proceedings for liquidation or dissolution, ceases to carry on
business or becomes unable to pay its debts as they become
due, or all or a material portion of the assets or property of
the Joint Venture Company in the PRC is expropriated or
requisitioned; or
(iv) the expiration of the term of the Joint Venture Company or any
extension thereof is not extended in accordance with the
provisions of Chapter 9 or the Parties mutually agree to
dissolve the Joint Venture Company.
(c) If any of the conditions or events set forth below shall occur and be
continuing, Party B shall have the right to issue a Termination Notice
to Party A and the Joint Venture Company and make a motion to the Board
to dissolve the Joint Venture Company:
(i) Party A's Subsidiary does not obtain or no longer holds all
permits, licenses, consents, authorizations and approvals that
are necessary to operate a VSAT communications business or is
otherwise no longer permitted to operate such business;
(ii) Party A Subsidiary fails to perform any of its material
obligations under any Party A Subsidiary Contract or any other
agreement that Party A Subsidiary enters into with the Joint
Venture Company or is in material breach of any Party A
Subsidiary Contract or any other agreement that Party A
Subsidiary enters into with the Joint Venture Company and such
failure or breach is not cured within one month after written
notice from the Joint Venture Company; or
(iii) Less than 80% interest of Party A Subsidiary is hold by Party
A.
If any of the conditions or events set forth in Article 39(a),
(b) or (c) shall occur and be continuing and if the Party
entitled to issue a Termination Notice as provided for in the
relevant provision issues a Termination Notice and makes a
motion to terminate this Joint Venture Contract and to
dissolve the Joint Venture Company, both Parties shall cause
their representatives on the Board to unanimously adopt a
resolution to dissolve the Joint Venture
18
Company and to apply to the Examination and Approval Authority
for approval of such dissolution.
ARTICLE 40
(a) If either Party has the right to issue a Termination Notice pursuant to
Article 39, such Party (the "PURCHASING PARTY") shall have the right to
choose not to issue a Termination Notice but instead to purchase or
designate a person to purchase the interest of the other Party (the
"NON-PURCHASING PARTY") in the Joint Venture Company pursuant to the
following procedures:
(b) The Purchasing Party shall first deliver a notice (an "INVOCATION
NOTICE") to the Non-Purchasing Party stating that it has chosen to
purchase or designate a person to purchase the interest of the
Non-Purchasing Party in the Joint Venture Company and it has chosen to
invoke the valuation procedures set forth in this Article 40(b):
(i) Within 30 days after the date of delivery of the relevant
Invocation Notice, Party A and Party B shall each deliver a
notice (an "APPOINTMENT NOTICE") to each other appointing an
independent and reputable appraiser (an "APPRAISER") to
determine the fair market value (the "FMV") of the Joint
Venture Company, attached to which Appointment Notice shall be
documentation evidencing that the Appraiser has accepted such
appointment.
(ii) If each Party has delivered an Appointment Notice to the other
Party within such 30-day period, within 10 business days after
the date on which the last Appointment Notice was delivered,
the two Appraisers appointed by the Parties shall appoint a
third Appraiser. If the two Appraisers are unable to agree on
a third Appraiser in such 10 business day period, each
Appraiser shall designate two Appraisers and on or before the
15th business day after the date on which the last Appointment
Notice was delivered, one Appraiser shall be randomly selected
(through a computerized or other random-selection process
mutually satisfactory to the Parties) from among the four
Appraisers so designated.
(iii) If at the time the appraisal is undertaken, the appraisal is
required to be made by a valuation company that is approved to
issue valuations of State-owned assets, each Appraiser
appointed shall be such a valuation company.
(iv) Each Appraiser shall calculate and present to each of the
Parties its appraisal of the FMV of the Joint Venture Company.
In the case of an appraisal of the FMV of the Joint Venture
Company, each appraisal shall take into account the value of
PRC companies that are providing services that are similar to
the services provided by the Joint Venture Company as of the
date of the appraisal.
(v) Each appraiser shall submit its appraisal report to both of
the Parties within 30 days after the date of the appointment
of the third Appraiser.
(vi) If either Party has not delivered an Appointment Notice to the
other Party within 30 days after the date of the delivery of
the relevant Invocation Notice, the appraisal of the Appraiser
appointed by the other Party shall be the final FMV of the
Joint Venture Company (the "FINAL FMV"). If each Party
delivered an Appointment Notice to the other Party within 30
days after the date of delivery of the relevant Invocation
Notice, but one Appraiser fails to submit its appraisal report
to both of the Parties within 30 days after the date
19
of the appointment of the third Appraiser, the Final FMV shall
be the average of the two appraisals that have been submitted.
If each Party delivered an Appointment Notice to the other
Party within 30 days after the date of delivery of the
relevant Invocation Notice and all three Appraisers submit
their appraisal reports to both of the Parties within 30 days
after the date of the appointment of the third Appraiser, the
Final FMV shall be the average of the two appraisals that are
closest in value or the average of all three appraisals if the
difference between the two highest appraisals and the
difference between the two lowest appraisals is equal.
(vii) The determination of the Final FMV in accordance with this
Article 40 shall (in the absence of fraud) be final and
binding on the Parties for the purposes of this Joint Venture
Contract.
(viii) The Purchasing Party or the person designated by it to
purchase the interest of the Non-Purchasing Party
(collectively, the "PURCHASER") shall purchase the interest of
the Non-Purchasing Party at a purchase price of the FMV of the
Joint Venture Company multiplied by the percentage of the
interest then held by the Non-Purchasing Party in the
registered capital of the Joint Venture Company.
(ix) After the purchase price has been determined, the Purchaser
and the Non-Purchasing shall sign an equity interest transfer
agreement and they shall use their best efforts to secure all
necessary governmental approvals to validate the agreement
within 30 days after the date of the execution thereof. Such
purchase shall be completed within 15 days after the relevant
equity interest transfer agreement is approved. However,
unless the purchase price is paid in full to the
Non-Purchasing Party in the legal currency of the
Non-Purchasing Party's home place or in a freely convertible
currency that can be remitted to the Non-Purchasing Party's
home place, the Non-Purchasing Party is not required to
complete the sale as set forth in this Article 40.
(x) After the equity interest transfer agreement has been approved
and the purchase price has been paid as provided in the above
paragraph, the Parties shall cause representatives duly
authorized by each of them to execute a written document to
amend this Joint Venture Contract to delete the Non-Purchasing
Party as a Party and to add the Purchaser as a Party.
(c) If both Parties issue Invocation Notices pursuant to Article 40(b), the
valuation procedures set forth in Article 40(b)(i) through (viii) shall
not be implemented and instead the Party willing to pay the highest
price per percentage interest of the Joint Venture Company shall have
the right to purchase or designate another party to purchase the
interest of the Non-Purchasing Party at such purchase price in
accordance with the provisions of Article 40(b)(ix) and (x).
(d) Prior to the completion of the procedures set forth in Article
40(b)(x), the Parties must continue to perform their obligations under
this Joint Venture Contract.
ARTICLE 41
(a) Upon the expiration of the term or early termination of the Joint
Venture Company, if in accordance with Article 40 neither Party wishes
to acquire the Joint Venture
20
Company as a going concern, or if a Party wishes to acquire the Joint
Venture Company as a going concern but it fails to obtain necessary
approvals from the relevant PRC authorities, the Board must liquidate
the existing assets and nominate candidates for the liquidation
committee. The specific liquidation methods and procedures shall be
determined in accordance with the relevant PRC laws and regulations and
the Articles. The liquidation expenses and remuneration to members of
the liquidation committee shall be paid in priority from the existing
assets of the Joint Venture Company.
(b) During the process of liquidation, the liquidation committee shall
represent the Joint Venture Company in suing and being sued. The
liquidation committee shall, in valuing and selling the tangible assets
and goodwill of the Joint Venture Company, use its best efforts to
obtain the highest possible price for such assets. After liquidation,
the remaining assets after payment of the liabilities of the Joint
Venture Company shall be distributed in proportion to the capital
contribution of each Party in the registered capital.
(c) After the liquidation of the Joint Venture Company is completed, the
liquidation committee shall submit a liquidation report to the Board
for adoption and shall submit the report to the Examination and
Approval Authority for approval. In addition, the liquidation committee
shall handle the formalities for the cancellation of registration with
the original registration authority and return the business license of
the Joint Venture to the original issuing authority.
ARTICLE 42
(a) After the termination of this Joint Venture Contract, neither Party
shall use the name (whether in whole or in part) of the Joint Venture
Company, except for the part to which such Party has the proprietary
right.
(b) The rights or remedies of any Party arising in respect of any breach of
this Joint Venture Contract by the other Party occurring prior to the
date of the Joint Venture Company's dissolution or liquidation shall
remain in full force and effect.
CHAPTER 15 - FORCE MAJEURE
ARTICLE 43
(a) A Party that cannot perform its obligations to the Joint Venture
Company (the "HINDERED PARTY") in full or in part as a direct result of
an event that is unforeseeable and of which the occurrence and
consequences cannot be prevented or avoided, such as earthquakes,
typhoons, floods, fires and other natural disasters, wars,
insurrections and similar military actions, civil unrest and strikes,
slowdowns, embargoes, expropriation, injunctions or other restraints
and actions of government, or other causes that are uncontrollable by
the Parties and are obviously deemed as force majeure (an "EVENT OF
FORCE MAJEURE"), shall not be deemed to be in breach of this Joint
Venture Contract if all of the following conditions are met:
(i) the Event of Force Majeure was the direct cause of the
stoppage, impediment or delay encountered by the Hindered
Party in performing its obligations under this Joint Venture
Contract;
(ii) the Hindered Party used its best endeavors to perform its
obligations under the Joint Venture Contract and to reduce the
losses to the other Party or to the Joint Venture Company
arising from the Event of Force Majeure; and
21
(iii) at the time of the occurrence of the Event of Force Majeure,
the Hindered Party informed the other Party and the Joint
Venture Company immediately, providing written information on
such event within 15 days of its occurrence, including a
statement of the reasons for the delay in implementing or
partially implementing this Joint Venture Contract.
(b) If an Event of Force Majeure shall occur, the Parties shall decide
whether this Joint Venture Contract should be amended or terminated in
light of the impact of the event upon the implementation hereof, and
whether the Hindered Party should be partially or fully freed from its
obligations hereunder.
CHAPTER 16 - SETTLEMENT OF DISPUTES
ARTICLE 44
(a) Any dispute, controversy or claim arising out of, or relating to, this
Joint Venture Contract, or the performance, interpretation, breach,
termination or validity hereof, shall be resolved through friendly
consultation. Such consultation shall begin immediately after one Party
has delivered to the other Party a written request for such
consultation stating specifically the nature of the dispute,
controversy or claim. If within 30 days following the date on which
such notice is given the dispute cannot be resolved, the dispute shall
be referred to, and finally resolved by, arbitration upon the request
of any Party with notice to the other Party.
(b) The arbitration shall be conducted by the Singapore International
Arbitration Centre (the "ARBITRATION CENTER") under its rules (the
"RULES") save as modified by this Joint Venture Contract. The
arbitration tribunal shall consist of three arbitrators. Each Party
shall select one arbitrator and the third arbitrator shall be jointly
appointed by the arbitrators designated by the Parities. The award of
the arbitration tribunal shall be final and binding upon the Parties.
(c) After the Party requesting arbitration has appointed its arbitrator, it
shall inform the other Party in writing of the information regarding
the arbitrator and shall also request in the written notice that the
other Party appoint an arbitrator within 14 days from the delivery date
of such notice. The notice shall also indicate that if the other Party
fails to designate an arbitrator within the above 14-day period, then
without further notice to the other Party, the arbitrator designated by
the Party requesting arbitration shall be the sole arbitrator. After
the sole arbitrator has been designated, the Party requesting
arbitration shall correspondingly inform the other Party thereof. The
award of the sole arbitrator shall be final and binding upon the
Parties.
(d) The arbitration proceedings shall be conducted in English and Chinese.
(e) The arbitrators shall decide any such dispute or claim strictly in
accordance with the governing law specified in Article 46. Judgment
upon any arbitral award rendered hereunder may be entered in any court
having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the
case may be.
(f) The costs and expenses of the arbitration, including without limitation
the fees of the arbitration, the fees of translators, costs of the
venue and facilities, transcript
22
providers or live note transcribers, the fees of the arbitration
tribunal, shall be borne equally by the Parties, and each Party shall
pay its own fees, disbursements and other charges of its counsel.
(g) Any award made by the arbitration tribunal shall be final and binding
on each of the Parties that were parties to the dispute. The Parties
expressly agree to waive the applicability of any laws and regulations
that would otherwise give the right to appeal the decisions of the
arbitration tribunal so that there shall be no appeal to any court of
law for the award of the arbitration tribunal, and a Party shall not
challenge or resist the enforcement action taken by any other Party in
favor of which an award of the arbitration tribunal was given.
(h) Each Party irrevocably consents to the service of process, notices or
other paper in connection with or in any way arising from the
arbitration or the enforcement of any arbitral award, by use of any of
the methods and to the addresses set forth for the giving of notices in
Article 52. Nothing contained herein shall affect the right of any
Party to serve such processes, notices or other papers in any other
manner permitted by applicable law.
(i) In order to preserve its rights and remedies, any Party shall be
entitled to seek preservation of property in accordance with law from
any court of competent jurisdiction or from the arbitration tribunal
pending the final decision or award of the arbitration tribunal.
ARTICLE 45
During the period when a dispute is being resolved, except for the matter being
disputed, the Parties shall in all other respects continue their implementation
of this Joint Venture Contract.
CHAPTER 17 - GOVERNING LAW
ARTICLE 46
The formation, validity, interpretation and execution of this Joint Venture
Contract shall all be governed by the publicly promulgated and implemented laws
and regulations of the PRC. When the publicly promulgated and implemented laws
of the PRC do not cover a certain matter, international legal principles and
practices shall apply.
CHAPTER 18 - LANGUAGES AND COUNTERPARTS
ARTICLE 47
(a) This Joint Venture Contract is written in Chinese and English. Both the
Chinese and English language texts shall have equal validity and legal
effect. Each Party acknowledges that it has reviewed both language
texts of this Joint Venture Contract and that they are the same in all
material respects.
(b) Six original copies of this Joint Venture Contract shall be signed in
each languages respectively. Each Party shall retain one original copy
in each language, the Joint Venture Company shall retain one original
copy in each language and three original
23
xxxxx in each language shall be submitted to the Examination and
Approval Authority and the registration authority.
ARTICLE 48
Any amendments to this Joint Venture Contract shall be subject to a written
agreement in Chinese and English executed by the Parties. The two versions shall
have the equal validity and legal effect and become effective only upon approval
by the Examination and Approval Authority.
CHAPTER 19 - LIABILITY FOR BREACH OF CONTRACT
ARTICLE 49
Subject to the provisions of Chapter 15, a Party shall be in breach of this
Joint Venture Contract (a) if it fails to perform, or suspends its performance
of, its obligations under this Joint Venture Contract, and if it does not
commence correction of such failure within one month of receipt of written
notice thereof from the other Party or the Joint Venture Company, which notice
must specify the nature of the alleged breach in reasonable detail; or (b) if
any of the representations and warranties made by such Party is untrue or
inaccurate in any material respects.
ARTICLE 50
(a) If the Joint Venture Company or a Party suffers any cost, liability or
loss, including lost of profits of the Joint Venture Company but not
including any other consequential losses of whatever nature, as a
result of a breach of this Joint Venture Contract by either Party, the
Party in breach shall indemnify and hold the Joint Venture Company and
the Non-Defaulting Party harmless in respect of any such cost,
liability or loss, including but not limited to interest paid or lost
as a result thereof and attorneys' fees.
(b) Without limiting the generality of the foregoing, each Party (the
"INDEMNIFYING PARTY") shall indemnify, defend and hold harmless the
other Party and the Joint Venture Company (each, an "INDEMNIFIED
PARTY") from and against all claims, losses, liabilities, damages,
judgments, assessments, fines, costs or expenses (including interest,
penalties and fees, loss of profits by the Joint Venture Company,
expenses and disbursements of attorneys, experts, personnel and
consultants incurred by any Indemnified Party in any action or
proceeding between the Indemnifying Party and any Indemnified Party or
between any Indemnified Party and any third party, or otherwise) based
upon, arising out of, relating to or otherwise in respect of any
inaccuracy in or any breach of any representation, warranty, covenant
or agreement of the Indemnifying Party contained in this Joint Venture
Contract or in any documents or other evidence delivered by the
Indemnifying Party pursuant to this Joint Venture Contract.
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CHAPTER 20 - REPRESENTATIONS AND WARRANTIES
ARTICLE 51
(a) Each Party represents and warrants to the other Party, with respect to
itself, as follows:
(i) Party A is a company limited by shares that is duly organized,
validly existing and in good standing under the laws of the
PRC, and Party B is a limited liability company duly
organized, validly existing and in good standing under the
laws of Hong Kong. Each Party has the corporate power and
lawful authority to own or possess, lease and operate its
assets and to carry on its business as now being and as
previously conducted.
As of the date hereof, Party A has delivered the following
documents to Party B (1) a copy of the business license and
articles of association of Party A (as amended) as in effect
on the date hereof, (2) a copy of signed written resolutions
of Party A's board of directors approving Party A's entry into
this Joint Venture Contract and the establishment of the Joint
Venture Company within, and (3) a copy of the signed written
resolutions of Party A's shareholders approving Party A's
entry into this Joint Venture Contract and establishment of
the Joint Venture Company with Party B.
Party B shall provide (1) a copy of the certificate of
incorporation of Party B as in effect on the date hereof, (2)
a copy of business registration certificate of Party B as in
effect on the date hereof, and (3) a copy of signed written
resolution of Party B's board approving Party B's entry into
this Joint Venture Contract and the establishment of the Joint
Venture Company with Party A.
(ii) Each Party has the full legal right, power and authority
required to enter into this Joint Venture Contract and to
perform fully its obligations hereunder. This Joint Venture
Contract has been duly authorized, executed and delivered by
each Party and, assuming the due authorization, execution and
delivery by the other Party and approval by the Examination
and Approval Authority and constitutes the valid and binding
obligation of each Party enforceable in accordance with its
terms.
(iii) Except for the requirements for the issuance of the business
license and as otherwise set forth in this Joint Venture
Contract, no filings with, notices to, or license, permits,
consents, authorizations, qualifications, orders or other
approvals of any governmental body or any other person are
necessary to be obtained by such Party for its execution,
delivery and performance of this Joint Venture Contract or for
the establishment of the Joint Venture Company.
(iv) Each Party is, has been and will continue to be in compliance
with all applicable laws and regulations of its home
jurisdiction and does not know of any circumstances which
would be a breach of such laws or regulations. Each Party
agrees to indemnify the other Party and the Joint Venture
Company for any and all liabilities, obligations, losses,
damages, penalties, judgments, suits, costs, expenses and
disbursements which may be imposed upon, incurred by or
asserted against the other Party or the Joint Venture Company
arising from or related to any inaccuracy contained in this
Article 51.
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(v) Neither the execution of this Joint Venture Contract, nor the
performance of such Party's obligations hereunder, will
conflict with, or result in a breach of, or constitute a
default under, any provision of the memorandum and articles of
association, business license or bylaws of such Party, as the
case may be, or any law, rule, regulation, authorization or
approval of any government agency or body, or of any contract
or agreement to which such Party is a party or is subject.
(vi) There is no lawsuit, arbitration or legal, administrative or
other proceeding or governmental investigation pending or, to
the best knowledge of such Party, threatened against such
Party with respect to the subject matter of this Joint Venture
Contract or that would affect in any way such Party's ability
to enter into or perform this Joint Venture Contract.
(vii) All documents, statements and information of or derived from
any governmental body in the possession of such Party relating
to the transactions contemplated in this Joint Venture
Contract have been disclosed to the other Party, and no
document previously provided by such Party to the other Party
contains any untrue statement of material fact or omits to
state any material fact necessary in order to make the
statements contained therein not misleading.
(b) Party A hereby further represents and warrants to Party B as follows:
(i) Party A has procured all requisite permits and approvals from
the relevant governmental departments to cooperate with the
Joint Venture Company and Party B in accordance with the
provisions of this Joint Venture Contract and that such
permits and approvals shall be valid and in full force and
effect during the term of this Joint Venture Contract;
(ii) Party A is the full and unrestricted legal, beneficial and
record owner or possessor of all the assets contributed by
Party A to the Joint Venture Company and the assets under the
Facilities Purchase Contract, free and clear of all claims,
liens and encumbrances of third parties;
(iii) Party A was established on November 27, 1997 with its
enterprise legal person registration with Hebei AIC (the
"ORIGINAL PARTY A"). Original Party A relocated to Shanghai on
December 31, 2002 and was registered with Shanghai AIC (the
"CURRENT PARTY A") by obtaining an enterprise legal person
business licensee issued on the same date. Such business
license lists December 31, 2003 as the establishment date of
the Current Party A. Party A hereby represents and warrants
that the Original Party A's enterprise legal person
registration number with Hebei AIC has been officially
canceled and that the Current Party A is the legal successor
or lawful assignee of all of the Original Party A's lawful
interest, rights, licenses, permits, consents, approvals and
authorizations; and
(iv) Party A agrees to indemnify and hold Party B, Party B's
Affiliates and the Joint Venture Company harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, judgments, suits, costs, expenses and disbursements
(collectively, "CLAIMS") which may be imposed upon, incurred
by or asserted against Party B, Party B's Affiliates and the
Joint Venture Company arising from or related to any
inaccuracy of the representations and warranties contained in
this Article 51. Such Claim includes, without limitation,
litigation or other administrative and legal actions
instituted by
26
any person or entity which questions or challenges the right
of Party A to transfer the assets contributed by Party A to
the Joint Venture Company or Party A's ownership of such
assets.
CHAPTER 21 - NOTICE AND MISCELLANEOUS
ARTICLE 52
Each notice, demand or other communication given or made under this Joint
Venture Contract shall be in writing in English or Chinese and delivered or sent
to the above addresses or fax numbers (or such other address or fax number as
the addressee has by 10 days' prior written notice specified to the other
Party). Any notice, demand or other communication given or made by letter
between countries shall be delivered by airmail. Any notice, demand or other
communication addressed to the relevant Party shall be deemed to have been
delivered (1) if delivered in person or by messenger, when proof of delivery is
obtained by the delivering Party; (2) if sent by post within the same country,
on the third day following posting, and if sent by post to another country, on
the seventh day following posting; (3) if given or made by fax, upon dispatch
and the receipt of a transmission report confirming dispatch.
ARTICLE 53
The headings in this Joint Venture Contract are used only for reference, do not
constitute the contents of this Joint Venture Contract and do not give meaning
or explanation to the provisions of this Joint Venture Contract.
ARTICLE 54
In the event any one or more of the provisions contained in this Joint Venture
Contract should be held under any applicable law or regulation to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. The Parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
ARTICLE 55
A Party that in a particular situation waives its rights in respect of a breach
of contract by the other Party shall not be deemed to have waived its rights
against the Defaulting Party for a similar breach of contract in other
situations.
ARTICLE 56
In any case in which the Parties have agreed pursuant to this Joint Venture
Contract (a) to cause the directors appointed by them to the Board to take any
action or (b) to take any action that requires a resolution of the Board, each
Party shall use its best efforts to cause each director appointed by it to the
Board to approve the relevant resolution and if any director appointed by such
Party does not approve the relevant resolution, such Party shall promptly remove
such director and replace him with a director who will approve the relevant
resolution.
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IN WITNESS WHEREOF, the Parties have executed this Joint Venture Contract as of
the date first above written and therefore this Joint Venture Contract shall be
binding upon the Parties.
SKY COMMUNICATIONS GROUP COMPANY LIMITED
/s/ Xxxx Xxxxxxxx
---------------------------------
Authorized Representative:
Name: Xxxx Xxxxxxxx
Title: Chairman Of Board Of Directors
And President
ASIA SATELLITE TELECOMMUNICATIONS COMPANY LIMITED
/s/ Xxxxx Xxxxxxx
---------------------------------
Authorized Representative:
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
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APPENDIX 1
LIST OF ASSETS TO BE CONTRIBUTED BY PARTY A
Sky Star Advantage VSAT Terminal Equipment
(including indoor & outdoor units): 781 Sets
Total Value: [ ]
29
