EXHIBIT 10.17
CONFIDENTIAL TREATMENT REQUESTED BY NINETOWNS DIGITAL WORLD TRADE HOLDINGS
LIMITED. THIS EXHIBIT HAS BEEN REDACTED. REDACTED MATERIAL IS MARKED WITH "*"
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
FRANCHISE AGREEMENT
Beijing Ninetowns Ports Software and Technology Co., Ltd. (hereinafter
referred to as "Party A") and Shenzhen Ninetowns Xxxx Software Technology Co.,
Ltd. (hereinafter referred to as "Party B") have made the following agreement in
respect of the establishment of a strategic cooperative partnership relationship
between two parties and Party B becoming Party A's franchisee:
I. Company Briefs
Party A: Beijing Ninetowns Ports Software and Technology Co., Ltd.
Address: 0xx Xxxxx, Xxxxx Xxxxx, 00 Xxxxxxx Xxxxxx, Xxxxxxxx District, Beijing
100020, The People's Republic of China
Zip code: 100020 Telephone: 000-00000000
The business orientation of Beijing Ninetowns Ports Software and
Technology Co., Ltd. is " trade management service for government and government
service for trade." The company concentrates its efforts mainly on the two major
fields of "providing B2G e-commerce software and service to the import/export
supply chain" and "providing integrated products for e-government of trade
management." It was the first in the import/export industry to provide and
achieve the brand new B2G (business to government) e-commerce model, and to
develop and propose the iCSP core technology framework. On this basis, it has
marketed four major series of more than ten kinds of software products, which
have widespread applications in 529 inspection and quarantine agencies and
nearly 40,000 import/export-related enterprises throughout China, and it has
made an outstanding contribution to the development of China's e-government and
foreign trade digitization.
Beijing Ninetowns Ports Software and Technology Co., Ltd. currently has
over 400 staff members, and it has set up its own branches in 36 different
regions throughout China. Through many years of pleasant cooperation, Ninetowns
Ports has formed longstanding mutual trust and a good tacit understanding with
such government agencies such as the State Administration for Quality
Supervision and Inspection and Quarantine of the PRC ("PRC Inspections
Administration"), inspection and quarantine bureaus in all areas, and PRC
Customs in all areas. It has spent its full effort to undertake the technical
research and development and market promotion work for the "Three Digitizations
Project" and it has participated actively in national key projects to improve
and enhance the government's digital service functions, such as the "Golden
Quality Project" (the second stage of the PRC Inspections Administration "Three
Digitizations Project"), and the "Golden Customs Project" and "Paperless Great
Customs Clearance" that are now being promoted by law enforcement agents on
behalf of PRC Customs. It has played a decisive role in the domestic fields of
import/export B2G e-commerce and "e-government of trade management."
Party B: Shenzhen Ninetowns Xxxx Software Technology Co., Ltd.
Address: B203, Shenzhen Tech-Innovation International, Science & Technology
Park, Nanshan District, Shenzhen, Guangdong Province, The People's
Republic of China
Zip code: 518057 Telephone: 0000-00000000
Shenzhen Ninetowns Xxxx Software Technology Co., Ltd. is a specialty
software company that engages in computer network software, network technology
development and technical consultancy. It is a high-tech enterprise approved by
Shenzhen Science & Technology Bureau, and a resident enterprise in the Shenzhen
Software Park. Ninetowns Xxxx has recruited many high quality software experts
and project
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management talents from both China and abroad, has introduced advanced software
development technology and software engineering standards from abroad, and has a
solid management and technical background. Ninetowns Xxxx develops mostly
Internet-based commercial application software and software services, and it
provides e-government applications, enterprise informatized products, and
industrial application products with independent intellectual property rights.
It has independently developed and completed the "Inspection Regulation Service
System for Industrial Goods" and the "Inspection Application Credentials Test
Center" system for the Shenzhen Entry-Exit Inspection and Quarantine Bureau.
Ninetowns Xxxx has made more and newer achievements in the area of providing
government and enterprises with informatized management means and products,
while actively promoting the use of information technology by the software
information industry, individuals, enterprises, government, and all types of
public institutions, which has consequently promoted the national software
industry.
II. Franchise Products:
The "iDeclare.CIQ" enterprise software that was developed independently by
Party A and certified through evaluation by the PRC Inspections Administration,
including a number of functions such as electronic certification of Origin
Certificate and electronic inspection application.
III. Franchise Requirements:
In order to increase Party B's reputation, and in consideration of the
degree of acceptance of software sales companies by import/export enterprises in
Shenzhen region, Party A consents to Party B's revision of the company name and
use of the Ninetowns business name, but it is agreed that Party B may not use
the said business name to engage in business activities that are unrelated to
the import/export business.
IV. Franchise Scope:
Southern China Region.
V. Franchise Period:
Two years from the signing date of this agreement.
VI. External Uniform Selling Price:
The standard price of the product is RMB3,000 per set. The first year
standard service price is RMB1,500 per year.
VII. Obligations of Both Parties:
Obligations of Party A:
1. Party A guarantees that the products that it provides have undergone
the administrative authorization of the PRC Inspections
Administration.
2. In consideration of the fact that the poorer degree of acceptance of
Party B by import/export enterprise customers in Southern China
Region in the initial period of Party B's agency business is adverse
to the start of the work, and in order to increase Party B's
reputation, Party A consents to Party B's revision of the company
name and use of the Ninetowns business name, but Party B promises
not to use the said business name to engage in business activities
that are unrelated to the import/export business.
3. Party A guarantees that during the effective period of this
agreement, it will obtain Party B's prior consent before developing
other agencies within the franchise region.
4. Party A is responsible for providing qualified products promptly in
accordance with Party B's ordering program.
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AND CONFIDENTIAL TERMS HAVE BEEN
OMITTED
5. Party A is responsible for applying for inspection and quarantine
electronic service platform communication account numbers for users
developed by Party B.
6. Party A is responsible for providing all product-related publicity
and training materials.
7. Party A is responsible for providing the corresponding product and
technical training to Party B.
8. Telephone technical support service.
Obligations of Party B:
9. Party B is responsible for work such as sales, service, and
technical support of Party A's products in Southern China Region.
10. Party B guarantees that it will observe the relevant national and
industrial laws and regulations in the process of product sales.
11. Party B guarantees that it will not be the franchisee for any other
products that have a competitive relationship with Party A in
Southern China Region during the effective period of this agreement.
12. Party B guarantees that the products that it sells are the official
versions of Party A's products, and Party B guarantees that it will
not engage in any form of pirating activities.
13. Party B guarantees that it will provide users with after-sales
service and technical support in accordance with Party A's service
standards and service contents.
14. Party B guarantees that it will make the product payments to Party A
within prescribed time limit.
VIII. Product Quotas
Party B guarantees that within two years of the signing date of this
agreement, the amount of the products sales and service sales will be no less
than RMB50 million.
IX. Product Settlement Price:
The specific settlement price is as follows:
1. Party B will charge new customers a lump sum software fee and
service fee of *********. Party A will share software fee of
*********, and Party B will share service fee of *********.
2. Party B will continue to provide service to Party A's old customers.
It will charge an annual service fee of *********, of which each
party will receive *********.
Note: The settlement prices of both parties are provisional prices, which may be
revised in future by agreeing supplementary agreements by both parties.
X. Settlement Period:
Both parties agree that the settlement period is three months, that is the
products payments and service fees for that month will be deposited into Party
A's account before the 15th day of the fourth month after the products are
delivered or after the customers sign the service contract. The settlement basis
is the quantity of products actually purchased from Party A and delivered to
Party B for that month (the "signed receipts" will prevail).
XI. Agreement Modification
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When either party to the agreement asks to modify the agreement, it should
notify the other party in writing, and the other party should respond within one
week. All modifications of the agreement must be approved in writing by both
parties, and they will be regarded as inseverable parts of this agreement.
XII. Rights of Both Parties To Terminate the Agreement Unilaterally
In the event of any of the circumstances listed below, Party A is entitled
to terminate this agreement unilaterally without assuming any liability for
breach of agreement:
1. Without Party A's consent, Party B is the franchisee for any other
products that have a competitive relationship with Party A in
Southern China Region during the effective period of this agreement.
2. Party B fails to settle with Party A within prescribed time limit
and is more than 30 days in arrears on products payments.
3. Party B fails to meet the sales quotas for the stage as agreed in
the agreement.
4. Party B fails to observe the relevant national or industrial laws
and regulations, which damages Party A's products and reputation.
5. Party B engages in any form of pirating activities in respect to
Party A's products.
6. Party B fails to provide after-sales service and technical support
to product users in accordance with Party A's service standards and
service contents, which results in complaints by a large number of
users.
In the event of any of the circumstances listed below, Party B is entitled
to terminate this agreement unilaterally without assuming any liability for
breach of agreement:
1. Party A develops new franchisee in Southern China Region during the
effective period of the agreement without Party B's consent.
2. Party A fails to provide qualified products to Party B on schedule
in accordance with Party B's ordering program, and the delivery time
is more than 30 days past the agreed delivery time.
3. Party A fails to promptly apply for inspection and quarantine
electronic service platform communication account numbers for users
developed by Party B as agreed in the agreement, and the account
opening time is more than 20 days past Party B's application time.
4. Party A refuses to provide all product-related publicity and
training materials and the corresponding product and technical
training to Party B.
XIII. Termination of the Agreement
This agreement is automatically terminated in the event of the
circumstances listed below:
1. The agreement expires.
2. During the effective period of the agreement, with the unanimous
consent of both parties through consultation.
3. Both parties fail to reach consensus on a request by one party to
the agreement to modify the agreement, which makes the continued
performance of this agreement impossible.
XIV. Renewal of the Agreement
120 days before the expiration of the agreement, either party to the
agreement should notify the other party in writing whether they wish to renew
this agreement. If both parties reach unanimity through consultation, this
agreement will be renewed. The failure of either party to notify the other party
within the prescribed time limit will be regarded as its termination of this
agreement, and the other party is entitled to take any measures without assuming
any liability for breach of agreement.
XV. Force Majeure
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Force majeure refers to events that both parties could not foresee when
they made the agreement, and for which they cannot prevent the occurrence and
cannot overcome the consequences.
If it is impossible for one party to perform this agreement due to force
majeure, it should promptly notify the other party of the reasons why it is
impossible to perform or needs to delay the performance or perform part of this
agreement, and it should provide legally valid supporting documents. Through
consultation by both parties, the delay of the performance or the performance of
part of the agreement or the non-performance of this agreement is permitted, and
part or all of the liability for breach of agreement may be exempted in
accordance with the particular circumstances. If a force majeure event occurs
after the party concerned has delayed the performance, it may not be exempted
from all liability for breach of agreement.
XVI. Liability for Breach of Agreement
1. If the continued performance of this agreement is impossible due to
the fault of either party to the agreement, the defaulting party
should pay a corresponding breach penalty to the other party. The
amount of the breach penalty will be 10 percent of the amount of the
agreement.
2. If Party B fails to settle with Party A within prescribed time
limit, Party B should pay a late charge to Party A at a rate
calculated in accordance with the bank lending interest rate for the
corresponding period. The calculation basis is the amount of the
products payments arrears and the time period.
3. If Party A fails to provide qualified products to Party B within
prescribed time limit, Party A should pay a late charge to Party B
at a rate calculated in accordance with the bank lending interest
rate for the corresponding period. The calculation basis is the
amount of the goods settlement arrears and the delayed delivery
period.
XVII. Resolution of Disputes
If a dispute arises in the course of the performance of this agreement,
both parties should engage in friendly consultation. If it is impossible for
both parties to reach unanimity through consultation, they may apply for
arbitration, and either party who is not satisfied with the arbitral awards may
appeal to the People's Court.
XVIII. Matters not covered by this agreement will be settled through
consultation by both parties and confirmed in the form of agreement attachments
signed by both parties. The attachments are inseverable parts of this agreement,
and they have same legal effect as the agreement.
The original of this agreement and its attachments consist of four
identical copies, and each party keeps two copies. This agreement takes effect
after being signed and sealed by both parties.
Party A : Beijing Ninetowns Ports Software Party B : Shenzhen Ninetowns Xxxx
and Technology Co., Ltd. Software Technology
Co., Ltd.
[Seal] [Seal]
Party A's representative (Seal): Party B's representative (Seal):
Xxxxxxx Xxxx
[Seal]
Date: February 14, 2004 Date: February 14, 2004
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