EXHIBIT 6.5
JOINT VENTURE AGREEMENT BETWEEN
SHENZHEN XUN XXX XXX DA ELECTRONICS CO. LTD.
AND REGENT LUCK HOLDINGS LTD. FOR
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD.
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD
SUPPLEMENTAL ARTICLES
Shenzhen Xxx Xxx Da Electronics Co. Ltd. and Regent Luck Holdings Limited
signed the "Shenzhen Global Net Computer Information Co. Ltd. Articles"
(hereinafter called the "Articles") on 13th May 1997 and established equity
joint venture enterprise, Shenzhen Global Net Computer Information Co. Ltd.
(hereinafter called the "JV") in accordance with the PRC Sino-foreign Equity
Joint Venture Enterprise Law and the approval on 8th June 1998 by Shenzhen
Foreign Investment Bureau (Shenwaizhifu No. [1998]0520). The scope of business
of JV are: develop computer software, develop industrial products and related
technology and information service and computer network construction.
For the purpose of clarification of both parties' rights and obligation,
Shenzhen Xxx Xxx Da Electronics Co. Ltd. and Regent Luck Holdings Limited,
through friendly discussions, agree to enter into this Supplemental Article
and amend and supplement the Articles.
Article 1 The parties to this Supplemental Articles are:
(1) Party A: SHENZHEN XXX XXX DA ELECTRONICS CO. LTD.,
registered in Shenzhen, PRC having its
legal address at Xxxxx X, 00/X, Xxxxx
Xxxxx, Xxxxxxx Huayuan Daxia, Fulian
District, Shenzhen City
Legal representative: Liu Xxx Xxxxx
Occupation: General Manager
Nationality: Chinese
Phone Number: 377 6634
(2) Party B: REGENT LUCK HOLDINGS LIMITED, registered
in Hong Kong, PRC having its registered
address at 1601 Causeway Bay Plaza I, 489
Xxxxxxxx Road, Hong Kong.
Legal representative: Xx Xxxx Wah
Nationality: Chinese (Hong Kong)
Phone Number: 00852-917 86281
Article 2 The words "Annual production of $4,000,000" in paragraph (1) of
Article 8
of the Articles is replaced by the words "Annual production of
approximately $4,000,000."
Article 3 Article 11 of the Articles is replaced by the following:
"The Parties shall contribute by means of the following:
Party A: HK$1,000,000 in cash and equipment.
Party B: HK$9,000,000 in cash and equipment."
Article 4 Article 19 of the Articles is amended. The number of directors of
the Board is changed from 6 directors to 4 directors. The number
of directors appointed by Party A is changed from 4 directors to
1 director and the number of directors appointed by Party B is
changed from 2 directors to 3 directors. Other terms of Article
19 of the Articles remain unchanged.
Article 5 Article 20 of the Articles is amended. The number of Deputy
Managing Director is changed from 3 Deputy Managing Directors to
1 Deputy Managing Director and such Deputy Managing Director
shall be appointed by Party A. Other terms of Article 20 of the
Articles remain unchanged.
Article 6 This Supplemental Articles is signed by authorised
representatives of both parties and chopped by their company's
chop on 1998. This Supplemental Articles shall become
effective after the approval by the original approving authority.
Party A: sign and chop
Party B: sign and chop
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD
ARTICLES
CHAPTER 1 GENERAL PRINCIPLES
Article 1 Shenzhen Xxx Xxx Da Electronics Co. Ltd. (hereinafter called
"Party A") and Regent Luck Holdings Limited (hereinafter called
"Party B") agree to enter into the Joint Venture Contract in
accordance with the PRC Sino-foreign Equity Joint Venture
Enterprise Law and other relevant laws and rules and jointly
invest and establish equity joint venture enterprise and compile
this Articles.
Article 2 The joint venture enterprise is called: Shenzhen Global Net
Computer Information Co. Ltd. (hereinafter called the "JV")
having its legal address at Xxxx 0000, Xxxxx X, Xxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxx.
Article 3 The names, addresses and legal representatives of parties to this
Articles are:
(1) Party A: SHENZHEN XXX XXX DA ELECTRONICS CO. LTD.
Legal address: Xxxx X, 00xx Xxxxx, Xxxxx Xxxxx, Xxxxxxx
Huayuan Daxia, Futian District, Shenzhen
(illegible)
Legal representative: Liu Xxx Xxxxx
Occupation: General Manager
Nationality: Chinese
(2) Party B: REGENT LUCK HOLDINGS LIMITED
Legal Address: 0000 Xxxxxxxx Xxx Xxxxx I, 489 Xxxxxxxx
Road, Hong Kong.
Legal representative: Xx Xxxx Wah
Occupation: Managing Director
Nationality: Chinese (Hong Kong)
Article 4 The JV is a limited liability company.
Article 5 The JV is a Chinese legal entity which shall obey all the PRC laws,
directives and relevant regulations and shall be governed by and
be protected by PRC laws.
CHAPTER 2 OBJECTS, SCOPE AND BUSINESS OF THE JV
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Article 6 The objects of the JV are: the JV strives to improve quality of
products and develop new products through advance and applicable
technology and scientific management so that the products can be
more competitive in international market in terms of quality and
price, increase economic efficiency so that the investors shall
have satisfactory economic return.
Article 7 Scope of business of JV: develop computer software, develop
industrial products and related technology and information
service, computer network construction.
Article 8 (1) The annual production capacity of the JV after it commences
production: Annual production of $4,000,000.
(2) The sale of production can be increased along with the
development of productivity and operation.
The choice of location of the factory and the environmental
protection plan and fire precaution action during production and
operation must be approved by environmental protection department
and fire regulation department of Shenzhen.
Article 9 The ratio between sales of JV products within China and abroad:
sales abroad amounts to 70%, sales within China amounts to 30%.
CHAPTER 3 TOTAL INVESTMENT AND REGISTERED CAPITAL
Article 10 Total investment of the JV is HK$10,000,000 and the Registered
Capital of the JV is HK$10,000,000:
Party A contributes HK$1,000,000, amounts to 10%
Party B contributes HK$9,000,000, amounts to 90%
Article 11 The parties shall contribute by means of the following:
Party A: HK$1,000,000 in cash
Party B: HK$9,000,000 in cash
Article 12 Parties to the JV shall contribute their respective registered
capital in accordance with the timing as stated in the JV
Contract.
Article 13 Within 30 days after the contribution of capital by each party, a
capital verification report shall be prepared by Chinese
registered accountant firm and capital injection certificates
shall be issued by the JV accordingly. The capital injection
certificates shall include: the name of the JV, the date
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of establishment, the parties to the JV, information about
capital contribution by both parties together with relevant
appendices, the capital contribution amount, the date of capital
contribution, the serial number and the approval date of the
capital injection certificates, etc. Capital injection
certificates shall be recorded by the original approving
authority and the Administration for Industry and Commerce
Department.
Article 14 During the continuance of the JV period, parties to the JV cannot
retrieve the registered capital.
Article 15 If any party wishes to transfer all or part of its registered
capital to any third party, it has to obtain consent from the
other JV party. If any JV party transfers all or part of its
registered capital, the other JV party has a right of first
refusal.
Article 16 Any change of business, extension of scope of business,
separation of business, merger of business, increase and transfer
in registered capital, and changes in other important matters of
the JV shall be effective upon obtaining unanimous approval by
the Board of Directors and each of the parties to the JV,
approval by the original approval authority and completion of the
procedures for registration of amendments with administration for
industry and commerce bureau, taxation authority, customs
department and relevant authorities, etc.
CHAPTER 4 BOARD OF DIRECTORS
Article 17 The JV shall set up a Board of Directors (the "Board"). The Board
is the body with highest authority in the JV.
Article 18 The Board shall decide all important matters of the JV, including:
(1) the information and amendment of the structure of the JV and the
personnel planning;
(2) the appointment of the General Manager, Deputy General Manager,
Chief Engineer, Chief Accountant, Auditor and any other senior
executives, and their rights, responsibilities and salary;
(3) the central direction of the JV, development plan, production and
management proposal and implementation of any building plan (of
infrastructure), approval of the proposals of General Manager or
management department;
(4) the amendment of the Articles of the JV;
(5) the inspection of the operation status of the JV, the approval of
the annual financial proposal and report (including the balance
sheet and the profit and loss account, etc.);
(6) the proposals concerning enterprise expansion fund, reserve fund,
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employee benefit and bonus fund;
(7) annual proposals for distribution of profit and the remedy of
loss;
(8) approving the labour contract of the JV and any important rules
and regulations;
(9) the increase or transfer of capital, the division, merger of
business, cessation of business, continuation, termination and
dismissal of the JV;
(10) responsible for the audit at termination or at the end of the
term of the JV;
(11) any other important matters which shall be decided by the Board.
Article 19 The Board shall consist of 6 directors. Party A shall appoint 4
directors and Party B shall appoint 2 directors. The term of
service for directors is 4 years. However, consecutive term maybe
served if directors or Managing Directors continued to be
appointed by their respective appointing party.
Article 20 The Board has 1 Managing Director and 3 Deputy Managing
Directors. The Managing Director shall be appointed by Party B.
Party A shall appoint 2 Deputy Managing Directors while Party B
shall appoint 1. The Board shall be informed in writing of any
appointment and change of directors by either parties.
Article 21 Board Meetings shall be convened at least once every year.
Provisional Board Meetings may be called if petitioned by more
than 1/3 of the directors.
Article 22 Generally, Board Meetings shall be held in the legal address of
the JV.
Article 23 Board Meetings shall be called and chaired by the Managing
Director. If the Managing Director is absent, Board Meetings
shall be called and chaired by the Deputy Managing Director.
Article 24 Managing Director shall give Notice of Board Meetings which shall
include the agenda, time and venue of the Board Meetings to each
director five days before the Board Meetings.
Article 25 If a director is not able to attend a Board Meeting, he can
appoint a representative by an appointment letter to represent
him. But above-mentioned representative cannot represent two or
more than two directors. If a director cannot be present and
cannot appoint a representative to represent him at the Board
Meetings, he shall be regarded as giving up his right.
Article 26 Board Meetings may only be convened if more than 2/3 of the
directors are present. Any resolution passed in a meeting which
is convened by less than 2/3 of the directors shall be invalid.
Article 27 Minutes of meeting shall be taken and signed by all the directors
present in the meeting (or representative of the directors, if
any). Minutes of meeting shall be recorded in Chinese or both
Chinese and English. A copy of
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minutes of meeting and resolution, after signing by the
representative of the meeting, shall be copied to each director.
The minutes of meeting and resolution together with any
appointment letter shall be subsequently filed for record and
kept by the person specified by the Board. During the term of the
JV, no one may amend or destroy any of the above documents.
During the vacation of the Board Meetings, any matters which
require the decision of the Board shall be resolved by the Board
through electronic communication and writing. Any resolution
passed in writing by directors shall be treated as a resolution
duly passed at a Board Meeting.
Article 28 The following important issues have to be resolved by all
directors present in the Board Meeting:
(a) amendments to the JV articles;
(b) termination or dissolution of the JV;
(c) increase, transfer or adjustment of registered capital of
the JV;
(d) the charge of the assets of the JV; and
(e) merger with any other economic entity by the JV, division of
the the JV or change in its form of establishment.
Article 29 Matters other than those specified in Article 28 shall be
resolved by 2/3 majority of the Board.
CHAPTER 5 MANAGEMENT ORGANISATION
Article 30 The JV shall set up a management organisation ("Management
Organisation"). The details of its set up shall be decided by the
Board.
Article 31 The JV shall have a General Manager and a Deputy General Manager.
The General Manager and the Deputy General Manager shall be
recruited by the Board. The first General Manager shall be
appointed by Party B and the first Deputy General Manager shall
be appointed by Party A.
Article 32 The General Manager shall be directly responsible to the Board.
The duty of the General Manager is to execute all resolutions of
the Board, organises and to lead the daily production, technology
and management of the JV. The Deputy General Manager shall assist
the General Manager. If the General Manager is absent or is not
able to work, the Deputy General Manager shall be responsible for
the duty of the General Manager.
Article 33 Decision on all important matters of daily operation of the JV
shall be valid after signing by both the General Manager and
Deputy General Manager. Those matters which require signature of
the General Manager and the Deputy General Manager shall be
decided by the Board.
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Article 34 The General Manager and Deputy General Manager shall be recruited
by the Board for a term of 4 years. Consecutive term maybe served
if the General Manager and the Deputy General Manager continued to
be appointed by the Board.
Article 35 If appointed by the Board, members of the Board can also act as
the General Manager or Deputy General Manager or any senior post
of the JV.
Article 36 The General Manager and Deputy General Manager shall always live
in the accommodations provided by the JV. They shall not become
the general manager, deputy general manager or any senior
executives of any economic organisation. They shall not
participate in any commercial activity of any economic
organisation which is in competition with the JV.
If any staff works for his own benefits, engages in fraud or is
grossly negligent when performing the duties, the Board can
resolve to or according to the managing rules and regulations
dismiss him at any time. Such staff shall be economically or
legally responsible for any economic losses or legal liability of
the JV.
Article 37 The JV shall have 1 Chief Engineer, 1 Chief Accountant and 1
Auditor and they shall be recruited by the Board.
Article 38 Chief Engineer, Chief Accountant and Auditor shall be led by the
General Manager.
The duty of the Chief Accountant is to lead all the financial and
account operation of the JV, to organise the financial audit of
the JV and to implement the economic responsibility system.
The Auditor is responsible for the internal audit of the JV, and
the inspection and audit of the financial income account of the
JV. The auditor shall report to the General Manager and the
Board.
Article 39 The resignation of the General Manager, Deputy General Manager,
Chief Engineer, Chief Accountant or Auditor shall be in writing. The
resignation letter shall be given to the Board 60 days before the
date of resignation. The resignation is subject to the approval
of the Board.
CHAPTER 6 FINANCIAL ACCOUNT
Article 40 The JV's financial accounts should be formulated in accordance
with the PRC Rules on Accounting System and Financial
Administration of Foreign Investment Enterprises promulgated by
the Department of Finance as well as relevant rules and
regulations of the Shenzhen Special Economic Zone.
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The JV shall file the statistic report concerning with the use of
foreign investment in accordance with the rules and regulations
of the statistics and the statistic system concerning with the
use of foreign investment of the PRC and Shenzhen City.
Article 41 The financial year of the JV shall use the Gregorian calendar
which shall commence from 1st January of a year to 31st December of
the same year.
Article 42 Any evidence, account book or report shall be written in Chinese.
English may be added upon request.
Article 00 XXX shall be used as the unit in the account book of the JV. The
exchange rate declared by the State Administration of Foreign
Exchange on the actual date of exchange shall be used as the
exchange rate.
Article 44 The JV shall open a RMB account and a foreign currency account at
the Bank of China or other banks which are approved by the State
Administration of Foreign Exchange.
Article 45 The JV shall use international rights and obligations occurrence
system and loans recording method to record the account.
Article 46 The JV shall record the following matters in the financial
account book:
(1) all the income and expenses in cash of the JV;
(2) the sale and purchase status of all the assets of the JV;
(3) the registered capital and indebtedness status of the JV; and
(4) the time of contribution, increase and transfer of the registered
capital of the JV.
Article 47 The management department of the JV shall, within first three
months of a financial year, prepare the balance sheet and the
profit and loss account of the JV of the previous financial year
which shall, upon the inspection and signing by the auditor, be
presented to and passed by the Board.
Article 48 Each party shall have the right to employ its own auditor to
inspect the account book of the JV on its own cost. The JV shall
assist during the inspection.
Article 49 The JV shall pay taxes in accordance with "PRC Foreign Investment
Enterprises and Foreign Enterprises Income Tax Law" and the Board
shall decide the depreciation period of the fixed assets of the
JV.
Article 50 All the foreign exchange matters of the JV shall be in accordance
with the "PRC Foreign Exchange Regulation", relevant control
rules and rules in the JV Contract.
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CHAPTER 7 PROFITS DISTRIBUTION
Article 51 The JV shall draw the reserve fund, enterprise development fund
and employee benefit and bonus fund in accordance with relevant
laws and regulations of the PRC. The above fund shall be drawn
from the profit of the JV after the payment of income taxes by
the JV. The drawing ratio shall be decided by the Board.
Article 52 The profit of the JV, after the payment of income taxes of the JV
in accordance with the laws and the drawing of the above funds,
shall be distributed to the parties to the JV according to the
ratio of their respective contribution of registered capital.
Article 53 The JV shall distribute profit once every year. The JV shall
declare the proposal of profit distribution and the amount of
profit for each party within the first three months of every
financial year.
Article 54 Before the remedy of loss of the previous financial year of the
JV, no profit may be distributed. The non-distributed profit of
the previous year shall be distributed together with the profit
of this financial year.
CHAPTER 8 LABOUR
Article 55 The JV shall decide its departmental and personal structure in
accordance with the production and operation requirement. The JV
shall, in accordance with the recruitment plan approved by the
Department of Labour, recruit, interview and select the required
staff.
Article 56 The JV shall recruit staff within the territories of the PRC. The
JV and the staff shall obey the "PRC Labour Law" and other
relevant PRC laws, regulations and relevant rules of Shenzhen
City and shall enter into labour contract in accordance with the
laws. The labour contract shall specify the duties, the term of
the labour contract, the labour conditions and protections,
labour disciplines, salaries, social insurance, benefit and the
dismissal, resignation, amendment, termination and dissolution of
the contract, the liability in case of breach of the contract and
other agreed terms, etc. After signing of the labour contract,
the contract shall be filed to Labour Bureau for record and all
related procedures for employment shall be attended to.
Article 57 The JV shall have the rights to warn, record the fraud and reduce
the salary of the staff who has breached the rules and labour
discipline of the JV. If the case is serious, the staff can be
dismissed by the JV. The name of the staff who has been dismissed
or disciplined shall be recorded in the Shenzhen Labour Bureau.
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Article 58 The salary and benefit of the staff shall comply with the
relevant regulations of Shenzhen Special Economic Zone and shall
be confirmed by the Board in accordance with the circumstances
and shall be specified in the labour contract.
The JV shall increase the salary along the line with the
development in production, the improvement of the ability and
technology of the employees.
Article 59 The JV shall set up rules for staff benefit, bonus, labour
protection and labour insurance in order to ensure that the staff
can work properly under normal circumstances.
CHAPTER 9 LABOUR TRADE UNION
Article 60 Staff of the JV can set up grass-root level labour trade union
according to the "PRC Trade Union Law" and carry out activities
of trade union.
Article 61 Labour trade union is the representative of the staff and its
mission is: according to the laws and regulations of the PRC, to
protect the legitimate right of the staff, to assist the JV in
the arrangement and reasonable use of the benefit and bonus fund,
to assist the JV and the staff in conflict mediation, to
organise the staff to study, to develop culture and sport
activities, to teach the staff to obey the labour discipline, to
work hard in order to complete the economic mission of the JV.
Article 62 Labour trade union of the JV can advise and assists the staff in
signing the labour contract with the JV, or represent the staff
to sign a collective labour contract with the JV and supervise
the execution of the contract.
Article 63 When the JV discusses and decides issues relating to personal
benefit of the employees such as the bonus and penalty of the
staff, salary system, living benefit, labour protection and
insurance, etc., representatives of the labour trade union shall
have the right to be present at the meeting (with no voting
right) in order to reflect the suggestion and request of the
staff.
Article 64 The JV shall provide 2% of the actual salary of the staff to the
labour trade union as the operation fund. The labour trade union
shall use the operation fund in accordance with the relevant
rules concerning with the management of trade union operation
fund of the PRC National Trade Union.
CHAPTER 10 TERM, TERMINATION AND DISSOLUTION
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Article 65 The term of the JV shall be 15 years from the date of the
issuance of the business licence.
Article 66 Each of the parties of the JV can propose to extend the term of
the JV. If such proposal is unanimously resolved by the Board of
Directors, the JV can apply in writing to the original approval
authority for approval of extension of its term. The JV shall
register the amendment at relevant industrial and commercial,
taxation and customs authority.
Article 67 If the parties to the JV unanimously believe that termination is
the most beneficial to both parties to the JV, the parties can
propose early termination of the JV.
The decision of early termination of the JV shall be resolved by
all members in Board Meeting and shall be approved by the
original approval authority.
Article 68 In any of the following cases, the JV shall be dissolved:
(1) the term of the JV expires;
(2) the JV suffers serious loss or the JV becomes unable to conduct
its business because of the serious loss due to force majeure;
(3) one or more than one party to the JV fails to perform its
obligation under the JV Contract or this Articles and causes the
JV unable to conduct its business;
(4) the JV cannot achieve its business goals and does not have any
possibility to develop its business in future;
(5) the occurrence of dissolution events as specified in the JV
Contract or this Articles;
(6) the JV terminates in accordance with order made according to law
because the JV breaches the laws or administration rules.
The events stated in paragraph (2), paragraph (4) and paragraph
(5) of this article shall be decided by the Board and approved by
the original approval authority. In case of paragraph (3) of this
article, the party in breach shall be responsible for any loss
suffered by the innocent party and the innocent party shall also
be entitled to apply to the original approval authority for
approval to early terminate the JV.
Article 69 When the term of the JV comes to an end or the JV period
terminates before the expiry of its term, the JV shall publicise
its termination. The JV shall form a winding up committee to wind
up the JV in accordance with PRC Sino-foreign Equity Joint
Venture Enterprise Law, relevant foreign investment enterprise
winding up rules and relevant rules of Shenzhen Special Economic
Zone. The investors shall not transfer any capital of the JV
outside PRC and shall not deal with any assets of the JV.
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Article 70 The duty of the winding up committee is to audit the assets,
indebtedness, creditors' right, and also compile the balance
sheet, the list of assets and winding up proposal and execute
such proposal upon approval by the Board.
Article 71 Within the period of winding up, the winding up committee shall
represent the JV and the representative of the JV to bring or
defend any action.
Article 72 The cost of winding up and the salary of the member of the
winding up committee shall be paid from the present assets of
the JV in priority of other debts.
Article 73 In winding up, the assets of the JV shall depreciate according to
the book value of the assets and shall be re-valued according to
the market price.
Article 74 After the settlement of all the debts and liabilities of the JV,
the remaining assets shall be distributed to each parties to the
JV in accordance with the ratio of their contribution to the
registered capital.
Article 75 After the winding up, the winding up committee shall compile a
winding up report and, upon the confirmation by the Board, shall
be filed to the original approval authority. It shall also
register the dissolution of the JV with administration of
industry and commerce, taxation and customs authority, and revoke
the business licence and publicise the dissolution.
Article 76 After the dissolution of the JV, any account books and documents
shall be kept by the original Chinese party of the JV.
CHAPTER 11 REGULATIONS
Article 77 The JV shall pass the following regulations which are compiled by
the Board:
(1) operation and management regulations including the regulations
which manage the duties and running rules of each department;
(2) staff regulations;
(3) labour salary system;
(4) staff examination, promotions, bonus and penalty system;
(5) staff benefit system;
(6) financial system;
(7) winding up procedures of the JV; and
(8) other necessary rules and regulations.
CHAPTER 12 MISCELLANEOUS
Article 78 Any amendments and supplement to this Articles shall, upon the
unanimous
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approval of the Board of Directors be approved by the original
approval authority.
Article 79 This Article is written in Chinese.
Article 80 If there is any inconsistency between this Articles and the PRC
laws and regulations, the PRC laws and regulations shall prevail.
Article 81 This Articles shall be effective after the approval of the
approval authority of the Shenzhen People's Government.
Article 82 This Articles is executed by the legal representative of each of
the JV parties for and on their behalf in Shenzhen, Guangdong,
the PRC on 13th May 1998.
Party A: signed by legal representative and chop
Party B: signed by legal representative and chop
In Shenzhen on 13th May 1998.
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