EXHIBIT 10.2
MEMORANDUM OF UNDERSTANDING DATED JANUARY 8, 2001
BETWEEN XXXXXX.XXX, INC. AND POWERNET USA LTD.
MEMORANDUM OF UNDERSTANDING
Made and entering into effect on January 8th, 2001
This agreement was signed in Montreal, on the 8th day of January, 2001.
BETWEEN: POWERNET USA LTD., a corporation incorporated under the
laws of the State of Delaware with its registered office
and principal place of business at 000, Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxx, Xxxxxxx, represented in this agreement
by Xx. Xxxxx X. Xxxxxx, duly authorized to act for these
purposes by a resolution adopted by the Board of
Directors on December 30th, 2000, a certified copy of
which is appended as Schedule A.
(Hereinafter called "Powernet")
AND: XXXXXX.xxx Inc., a corporation incorporated under the
laws of the State of Delaware, with its registered
office and principal place of business at 000 Xxxxx
Xxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxxxxx, X.X.X.,
00000, represented in this agreement by Mr. Weigo Lang,
duly authorized to act for these purposes by a
resolution adopted by its directors on December 8, 2000,
a certified copy of which is appended as Schedule B.
(Hereinafter called "QinNet")
Powernet and QinNet are hereinafter called "Party" individually
and jointly called "Parties".
PREAMBLE
WHEREAS Powernet is a "Thin Client" architecture, server-based
computing information technology company that has developed and is
providing systems and services in eight countries,
WHEREAS Powernet is interested in establishing and providing its
Powernet server-based services in the People's Republic of China.
WHEREAS QinNet carries on business in the value added telecom and
information technology (ISP, ASP, e-Commerce, SOHO, VOIP, e-
Publishing) sectors, is solidly established in China and is
interested in establishing the Powernet server-based service in
China (the "Project").
-2-
WHEREAS the Parties have the experience and complementary
knowledge required to carry out the Project, and wish to undertake
initially two (2) pilot projects:
* City of Beijing: with China Telecom, China Netcom, China Unicom
or any other mutually agreed upon Telco, with such Pilot
Project consisting of one (1) operational centre with one (1)
server capable of serving 2000 End Users or 2000 terminals
("Beijing Pilot Project")
* City of Tianjin: with China Telecom, China Netcom, China Unicom
or any other mutually agreed upon Telco, with such Pilot
Project consisting of one (1) operational centre with one (1)
server capable of serving 2000 End Users or 2000 terminals
("Tianjin Pilot Project")
WHEREAS the Parties wish to combine their efforts, to collaborate
on an exclusive basis and to associate themselves in a Consortium
to promote the Project and the two Pilot Projects under a formula
of license for use, purchase-installation of the technology, and
commercial use of the Powernet server-based services in the City
of Tianjin and the City of Beijing (the "Territory"); the Parties
wish their collaboration to be in accordance with the terms and
conditions set out in the following, which is agreed to by the
Parties.
WHEREAS the Parties declare that they are willing, where
applicable, to extend their collaboration to other territories in
China but do not wish to make any undertakings with respect to
such future collaboration at this time. Subject to the success of
the pilot projects, other territories may be developed on a case-
by-case scenario.
WHEREAS the Parties wish to set out the terms of their
collaboration and define their respective rights and obligations
with regard to carrying out the Project.
NOW, THEREFORE, the Parties agree as follows:
1. STAGES OF PROJECT IMPLEMENTATION AND TIMETABLE
1.1 At this time, the Parties wish to carry out the Project
together and exclusively in China and the Territory,
including the Beijing Pilot Project and the Tianjin Pilot
Project in accordance with the following stages and timetable
on a "go-no go" basis:
STAGE 1
-------
For the Beijing Pilot Project and for the Tianjin Pilot Project:
* Identification of clientele: institutions, government services,
government organizations, non-profit organizations, social
organizations, large corporations, individuals, industries,
Soho market, small and medium-sized businesses, commercial
sector and private sector or any other potential customer that
would be a client (the "Clients");
-3-
* Identification of local key-suppliers, including, but not
limited to, Telco's, Cable operators and manufacturers of
hardware,
* Presentation of the Project and the Beijing and Tianjin Pilot
Projects to local suppliers, competent authorities including,
but not limited to, Telco's, China Telecom, China Unicom and
China Netcom, Banks and Utility Co's;
* Elaboration of a programme of activities for subsequent Stages
and adoption of a Consortium budget.
* Invitation schedule for visiting the Powernet offices in
Montreal and/or Miami.
* Timetable: January 2001.
STAGE 2
-------
For the Beijing Pilot Project and for the Tianjin Pilot Project:
* Technical feasibility studies (location, Identification of
potential clients).
* Business plan, marketing plan, access to human resource,
offices, costs and capital requirements, with financing jointly
conducted by the parties.
* Timetable: January and March 2001
STAGE 3
-------
For the Beijing Pilot Project and for the Tianjin Pilot Project:
* Securing financing and setting up the Chinese company that will
be owned, contingent upon Chinese regulatory approval, 100% by
a Canadian corporation, the negotiation and execution of the
shareholders' agreement between Powernet and QinNet for the
Canadian corporation.
* Conclusion of the license for use of the Powernet system in the
Territory and royalties, and of all undertakings and
commercial, technical and financial contracts for carrying out
the Beijing and Tianjin Pilot Projects (for example, the
Chinese Telco's, ISP's, Cable companies, local and
international banks, billing agreements, service agreements
with Clients).
* Timetable: April and May 2001
STAGE 4
-------
For the Beijing Pilot Project and for the Tianjin Pilot Project:
* Engineering/installation and commercialization of the Powernet
service
-4-
* Timetable: June and July 2001
STAGE 5
-------
* Operational Service for the Beijing and Tianjin Pilot Projects
to be carried out.
* Timetable: from 15 June 2001.
STAGE 6
-------
From 15 June 2001 to 15 August 2001, the Parties to the Pilot
Projects and the subsequent co-operative efforts contemplated,
shall use their best efforts to complete the evaluation and
facilitate the acceptance of a viable business plan, marketing
plan, content application and advertisement and financing for the
Project.
2. NAME AND ADDRESS OF CONSORTIUM
The Consortium shall be known as QinPowernet or any other
mutually agreed branding.
The location of the office of the Consortium is to be
determined by the Management Committee that is to be set
forth in Section 4.
3. FINANCIAL INTEREST OF PARTIES
The respective equity interests and revenue sharing of each
of the Parties for the Canadian Corporation under this agreement
shall be in the following ratios:
Equity Interest Revenue Sharing
Powernet: 51% 50%
QinNet: 49% 50%
4. MANAGEMENT COMMITTEE
4.1 The Parties hereby create a management committee (hereinafter
called the "Management Committee). Each Party shall appoint 2
representatives to the Management Committee, which shall
consist of 4 members. The Management Committee will therefore
consist of the following persons representing the Parties:
Powernet: Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx
-5-
QinNet: Xx Xx
Weigo Lang
Each Party may by written notice to the other remove and
replace its representatives. The new representative will become a
member of the Management Committee without any further
formalities.
The Management Committee shall meet, as needed, at the most
suitable location in U.S.A., Canada or in China depending on the
circumstances, or may hold any meetings in a manner such that a
representative or representatives participate(s) by telephone or
other communications facilities as permit all persons
participating in the meeting to hear one another. Quorum of the
Management Committee shall consist of a representative or
alternative representative of each Party.
The chairman of the Management Committee shall be Xx. Xxxxx
Xxxxxx. The chairman shall be responsible for convening meetings
of the Management Committee at the request of any two members of
the Management Committee and for preparing the agenda.
The Parties agree that the Management Committee shall have
the following responsibilities and that the decisions of the
Management Committee must be unanimous:
i) Carrying out follow-up of the Stages and business
opportunities
ii) Preparing a development budget for the Beijing and
Tianjin Pilot Projects and the Project as a whole.
iii) Preparing the division of responsibilities and duties
between the Parties for the carrying out of each Pilot Project and
deciding on the most appropriate moment for the conversion of the
Consortium into a corporate entity (the "Company") or another form
agreed upon by the Parties, and negotiating in good faith any
"shareholders agreements", "Corporate policies" between them, as
well as deciding on the structure of the new Chinese Company.
iv) Finalizing the conditions of participation of any new
enterprise of the Consortium where the Management Committee
decides that the participation of the Consortium in the enterprise
would be useful.
v) Represent the Consortium as agent and act in its name with
public authorities.
vi) Negotiate and enter into contracts and leases, notably
with firms and professionals providing services for the Project.
5. BANKING
-6-
If required by the Management Committee, the Consortium shall
open a bank account. Two representatives shall share signing
authority, one from each Party.
6. CONTRIBUTION TO THE CONSORTIUM
The Parties agree to provide their share of working capital
as required by the Management Committee, in accordance with their
respective interests as set out in Section 3.
7. EXPENSES INCURRED
Notwithstanding Section 6, expenses incurred by the Parties
for carrying out Stages 1, 2 and 3 described in Section 1 will be
borne by the Party having incurred them and neither Party shall be
liable to the other for the payment of such expenses. Such
expenses shall include, but not be limited to, travel expenses,
such as air transportation, hotels, meals, and other such expenses
incurred attendant to the parties efforts hereunder.
8. DURATION
This agreement shall come into force on the date it is signed
by all Parties and shall be terminated upon the occurrence of any
of the following events:
a) If one Party becomes insolvent or is adjudged a bankrupt;
b) If QinNet decides not to continue its participation at any
point during the stages of the Project and the two (2) Pilot
Projects (Beijing and Tianjin) or decides not to sign the
"shareholders agreement" or to adopt the Corporate Policies
referred to in Section 4 (iii). QinNet and or any of it's
affiliates employees, consultants, partners or any individual
related to QinNet shall then not be able to continue the Project
in China and the two Pilot Projects or claim reimbursement of the
costs it has incurred. In this case Powernet shall be non-
exclusive to Qinnet and may choose to continue the Project in
China and the Pilot Projects either on its own or with another or
other parties.
c) Upon the mutual execution of the QinPowernet "shareholders
agreement" referred to in Section 4 (iii), the terms of which
shall supersede the terms of this Memorandum of Understanding.
d) On the 1st of June 2001.
9. CONFIDENTIALITY
The Parties hereto shall, during and after the term of this
agreement, keep in strict confidence and consider as proprietary,
all information of a commercial nature, including business and
financial information of each Party and agreements and
arrangements between the Parties
-7-
(including this agreement) and all information of a technical nature
provided or disclosed by or to any Party, except such commercial or
technical information which is in or becomes part of the public domain,
or which a Party already had in its possession Or as may be compelled
by any Court of competent jurisdiction over the parties hereto. Any
disclosure, Press Release, Media coverage or information that is
to be disseminated publicly requires mutual consent from the
Parties.
10. RELATIONSHIP OF THE PARTIES
10.1 The Parties agree that this agreement shall only apply to the
Project and that each Party shall be and act as an
independent contractor. Nothing in this agreement shall be
interpreted as authorizing one Party to act as agent of the
other Party or to make commitments on behalf of the other
Party without first obtaining a written resolution of the
Management Committee signed by both Parties.
10.2 Nothing in this agreement shall be interpreted as creating
any commitment or continuing relationship between the Parties
other than for the Project and for the term to which the
Parties have hereby agreed.
11. ASSIGNMENT
No party shall sell, assign or in any manner transfer, in
whole or in part, its rights, interests, or obligations herein
without first obtaining the written consent of the other Party.
12. SUCCESSORS AND ASSIGNS
This agreement binds the Parties and shall enure to the
benefit of, and is binding upon the successors and permitted
assigns of the Parties.
13. NOTICE
Any notice required to be made hereunder shall be deemed to
have been properly made if hand-delivered to the Party to whom it
is addressed, or delivered by registered letter, or to the
following addresses:
Powernet: 000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx
X.X.X. 00000
-8-
Attention: Xxxxx X. Xxxxxx
QinNet: 000 Xxxxx Xxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxx
X.X.X. 91203
Attention: Weigo Lang, Chairman
14. GOVERNING LAW
This agreement shall be governed by and interpreted under the
applicable laws of the State of Delaware.
15. DISPUTE RESOLUTION
A delay in the completion of any of the Stages or components
of any Stage contemplated herein shall not constitute a breach of
this entire Agreement.
The parties agree that any dispute concerning the formation,
interpretation, performance or consequences of non-performance of
this agreement and the second agreement referred to in Section 4
(iii) that is not resolved by the Chairmen of the Parties shall be
submitted to mediation. The mediation will be in conformity with
the Rules respecting commercial mediation of the relevant
Mediation authority in the US, serving as the advisors in disputes
and litigation, in force at the time of the dispute. Unless the
Parties decide otherwise, the mediator shall be chosen from the
list of professionals of the relevant US Mediation authority
referred to above. If no agreement is reached in the thirty (30)
days following the appointment of the mediator, the dispute shall
be submitted to binding arbitration. The arbitration shall take
place in Wilmington, Delaware before an arbitrator in conformity
with the Rules of the American Arbitration Association (AAA) in
force at the time of the dispute. The arbitration award shall be
final, enforceable, without appeal, and shall bind the parties
upon being made.
16. ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the
Parties. It supersedes all prior written and oral agreements and
understanding, and may be amended only in writing by the Parties.
17. PREAMBLE
-9-
The preamble is an integral part of this agreement.
INTENDING TO BE LEGALLY BOUND, the Parties have signed this
agreement on the 8th day of January, 2001, in Montreal.
POWERNET USA LTD. XXXXXX.xxx Inc.
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx Xxxx
__________________________ __________________________
Xxxxx X. Xxxxxx Weigo Lang, Chairman
Witness: /s/ Unknown Witness: /s/ Xxxx Xxxxxxxx
Witness:
