EXHIBIT E
To the Credit Agreement
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT, entered into as of this 6th day of July, 2001, by and
between Beijing Chinet Information Technology Company ("CHINET"), a limited
enterprise company formed under the laws of the People's Republic of China (the
"Company") and CBCOM CHINA, a wholly foreign-owned enterprise formed under the
laws of the People's Republic of China (the "Contractor").
W I T N E S S E T H:
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WHEREAS, the Company is engaged in the business of designing,
developing, manufacturing, marketing and distributing peripheral equipment,
appliances and software for use with personal computers including, without
limitation, modems (the "Business of the Company");
WHEREAS, the Company desires to provide internet services to various
users in the People's Republic of China (the "Project");
WHEREAS, the Company desires to engage the Contractor, as an
independent contractor and not as an employee, in connection with the
formulation and execution of the Project and the Contractor desires to accept
such engagement by the Company, on the terms and conditions set forth herein;
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
a. "Cause" shall mean (1) conduct by the Contractor in
connection with the performance of the Consulting Services (as hereinafter
defined) that amounts to fraud, dishonesty or willful misconduct in the
performance of its duties and responsibilities hereunder; or (2) the failure by
the Contractor to provide the Consulting Services in the manner and to the
extent required under this Agreement or the breach by the Contractor of any
other obligation owed by the Contractor to the Company under this Agreement.
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b. "Consulting Services" shall mean the services described
in Schedule I to this Agreement to be provided by the Contractor to and on
behalf of the Company.
c. "Renminbi" or "RMB" shall mean the lawful currency of
the People's Republic of China.
d. "Users" shall mean the number of internet subscribers
serviced either directly or indirectly through the Company.
2. Scope of Consulting Services.
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a. The Company hereby retains the Contractor, and the
Contractor hereby accepts engagement by the Company, in a consulting and
advisory position in connection with the Project. In such capacity, the
Contractor will be responsible for planning and effecting certain component
activities of the Project under the direction of the Company as may from time to
time be needed, including but not limited to providing technical support,
equipment leases, software leasing and maintenance, sales and marketing services
and management consultation services, and will determine, and set the time
frames for completion of such activities as set forth in Schedule I to this
Agreement.
b. The Contractor shall submit to the President of the
Company or its designee such reports describing the performance of its
activities hereunder as may be required by the President of the Company or its
designee from time to time.
c. Anything herein to the contrary notwithstanding, the
parties hereto acknowledge and agree that the Company shall have no right to
control the manners means or methods by which the Contractor performs the
Consulting Services. Rather, the Company shall be authorized hereunder only to:
(1) direct the Contractor as to the elements of the particular Consulting
Services to be performed, the result desired by the Company to be achieved and
when the Project and activities comprising the Project are to be completed; (2)
inform the Contractor as to where and when such Consulting Services are desired
by the Company to be performed; and (3) supervise and assess the performance of
the Consulting Services by the Contractor for the limited purposes of assuring
that the Consulting Services have been performed and determining the results of
the Contractor's efforts.
3. Compensation.
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a. In consideration for the Consulting Services made
available or rendered by the Contractor, the Company shall pay to the Contractor
compensation on a monthly basis, based upon the number of Users and the Revenue
collected as set forth below:
Eighty Percent (80%) of total revenue collected per Month
Aggregate compensation for Consulting Services, however, may be adjusted upwards
from time to time in order to more accurately reflect the value of Contractor's
services by written agreement signed by the Company and Contractor.
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b. The Company will furnish the Contractor with such office space, secretarial
and clerical assistance, telephone service and other facilities, services and
supplies as may be necessary or appropriate in order for the Contractor to
perform the Consulting Services. Such services, facilities and supplies shall
not be used other than for the performance of the Consulting Services, unless
such other use (1) is first approved by the President of the Company or its
designee, or (2) will not result in a substantial increase in the cost to the
Company.
c. In addition to the compensation set forth in Section 3(a) of this Agreement,
all actual expenses incurred by the Contractor on behalf of the Company which
are reasonably necessary and appropriate in performing the Consulting Services,
shall be reimbursed to the Contractor by the Company; provided, however, that
such reimbursement shall not be obtained unless such expense is approved in
accordance with the terms and conditions of the Company's independent contractor
expense report policy in effect at the time such expense is incurred or in
advance and in writing by the President of the Company or its designee. The
Contractor must itemize all expenses for which it requests reimbursement on the
invoices required in Section 3(a), which must be accompanied by the original
receipts for any single item of expense that exceeds RMB 5000. Contractor shall
have the right to review and examine the books and records of the Company on a
monthly basis.
4. Term.
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The term of this Agreement shall commence from the date of this
Agreement for [twenty] years until the Contractor certifies, in its sole
discretion, that the Project is completed, or unless sooner terminated as
provided herein in Section 5. Except as provided in the preceding sentence, the
Company shall have no right to terminate this Agreement and hereby agrees to pay
liquidated damages of RMB 20,000,000 if the Company unilaterally terminates this
Agreement. Upon termination, all rights and obligations of the parties under
this Agreement shall immediately cease and terminate (except for the rights of
the Company and the obligations of the Contractor pursuant to Section 9 which
shall survive such termination), and the parties shall have no further
obligation to each other, except that Company shall pay Contractor compensation
and reimbursable expenses accrued and unpaid at the date of termination. If at
termination, the Contractor shall have only partially completed the Consulting
Services, the compensation accrued shall be equal to the product of the total
amount of compensation due under this Agreement multiplied by the percentage of
the corresponding Consulting Services that the Contractor can demonstrate it has
completed as of the termination date.
5. Termination.
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The engagement of the Contractor by the Company under this Agreement
may be terminated only as follows:
a. At any time by mutual agreement of the parties hereto;
b. At any time by the Contractor upon fifteen (15) days prior
written notice of termination delivered to the Company in accordance with the
provisions of Section 7 hereof;
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c. For Cause by the Company upon written notice of termination
delivered to the Contractor personally or in accordance with the provisions of
Section 7 hereof, such Cause being specified in the notice, provided that the
Contractor shall have one month to remedy such Cause; and
d. By the Contractor upon a breach of this Agreement by the Company and
failure by the Company to remedy such breach within fifteen (15) days after
notification thereof delivered in accordance with the provisions of Section 7
hereof.
6. Severability.
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In case one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
the same shall not affect any other provision in this Agreement, but this
Agreement shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein.
7. Notices.
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Any notice required or permitted to be given to the Contractor pursuant
to this Agreement shall be given in writing, and personally delivered or mailed
to the Contractor by certified mail, return receipt requested, at the address
set forth below its signature on this Agreement or at such other address as it
shall designate by written notice to the Company given in accordance with this
Section 7, and any notice required or permitted to be given to the Company shall
be given in writing, and personally delivered or mailed to the Company by
certified mail, return receipt requested, addressed to the Company at the
address set forth under the signature of the President of the Company or its
designee on this Agreement or at such other address as the Company shall
designate by written notice to the Contractor given in accordance with this
Section 7. Any notice complying with this Section 7 shall be deemed received
upon actual receipt by the addressee.
8. Assignment.
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This Agreement, and the rights and obligations of the parties
hereunder, may be assigned only upon the prior written approval of the parties
hereto. The rights and obligations of the parties hereto shall inure to the
benefit of, shall be binding upon, and shall be enforceable by the parties
hereto and their lawful successors, representatives and assigns.
9. Independent Contractor; Indemnification.
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The Contractor is an independent contractor and this Agreement does not
constitute or appoint the Contractor as an employee or agent of the Company. The
Company shall not be liable for the Contractor's debts, accounts, obligations or
other liabilities including, without limitation, the Contractor s obligation to
withhold social security and income taxes. The Contractor will indemnify and
hold harmless the Company of, from and against any loss, liability, damage,
action, cause of action, cost or expense (including, without limitation,
attorneys' fees) arising out of or with respect to (1) the payment by the
Company of any debt, account, obligation or other liability of the Contractor;
(2) any unauthorized act of the Contractor which may be determined to be binding
on the Company, and (3) any claims of third parties made by reason of such
unauthorized act.
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10. Entire Agreement.
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This Agreement, when executed, embodies the entire agreement of the
parties hereto relating to the subject matter hereof. No amendment or
modification of this Agreement shall be valid or binding upon the Company or the
Contractor unless made in writing and signed by the parties hereto.
11. Waiver.
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The waiver by one party of a breach of any provision of this Agreement
by the other party shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision by the other party.
12. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the People's Republic of China.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
The Company:
CHINET
By:
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Title:
---------------------------------
Address:
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The Contractor:
CBCom China
By:
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Title:
---------------------------------
Address:
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SCHEDULE I
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SCOPE OF CONSULTING SERVICES
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Contractor shall provide:
All equipment, software and engineering services in respect of the internet
network for selling services to end users which shall include but not be limited
to:
The engineering design, the integration, the installation and the
testing of the internet network, the customization of the internet network
protocol and of the network management software; the development of end user
interface software and user applications software; the technical support to the
internet network and advisory services on maintenance; the supply of equipment
and instruments to the internet network.
Consulting services regarding bookkeeping, accounting, banking and financial
consulting services related to the collection of revenue from end users for
internet services.
Consulting services regarding marketing and selling of prepaid internet service
cards to end users for the purpose of dialing and obtaining access into the
Company's internet network.
Any and all other consulting services as may be agreed between the parties, from
time to time.
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