EXHIBIT 10.4
SALES, MARKETING AND OPERATIONS AGREEMENT BETWEEN
BEIJING GOLDVISION TECHNOLOGIES LTD. AND
STRATEGIC COMMUNICATIONS PARTNERS, INC.
DATED DECEMBER 18, 2002
Sales, Marketing, and Operations Agreement
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SALES, MARKETING, AND OPERATIONS AGREEMENT
THIS AGREEMENT made as of the 18th day of December 2002
BETWEEN: Beijing Goldvision Technologies Ltd. (Chinese characters
omitted), a Chinese company, having an office at Xxxx 000, Xxxx
Xxxxxxxx, Xxxxxxx Tower, 00 Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx,
Xxxxxx'x Xxxxxxxx of China 100036
(hereinafter called "Goldvision")
OF THE FIRST PART
AND:
Strategic Communications Partners, Inc., a US company having its
office at 0000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx,
Xxxxxx Xxxxxx of America 80122
(hereinafter called "SCP")
OF THE SECOND PART
WHEREAS:
1. Goldvision is in the business of providing satellite communication,
broadband Internet, content, wireless access and transport in Beijing,
China;
2. SCP is in the business of providing financial, technical and marketing
services based in Colorado, USA;
3. Goldvision and SCP are both parties to an investment contract dated
December 18, 2002; and
4. The parties intend to cooperate to make best use of their respective
strengths and resources.
1. DEFINITIONS
In this Agreement,
(1) "Contract" means the investment contract between Goldvision and
SCP signed on December 18, 2002;
(2) "Control" is defined as SCP having the final authority via the
required secondary seal and preparation of disbursements,
receipts, and accounting records;
(3) "Exclusive" is defined as the total right to sell a product or
service in defined geographical areas, specific customer types, or
industries by
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mutual agreement in advance. This means that for each product or
service a sales plan defining SCP's sales assignment will be
developed with the above details defined exactly.
(4) "Failing" is defined as an inability to generate revenue in a
given area in a given period of time. Goldvision and SCP will
mutually negotiate this (the definition of an inability to
generate revenue) based on the targeted customer or product;
(5) "Goldinfo" refers to Beijing TianGuang Information Services Ltd.
(Chinese characters omitted);
(6) "Goldtel" refers to Beijing TianZhao Information Services Ltd.
(Chinese characters omitted);
(7) "Goldvision's Sale" means sales by Goldvision, Goldinfo, Goldtel,
or any of Goldvision's Subsidiaries (controlled by Goldvision),
joint ventures, associates, employees, agents, partners,
distributors, dealers, wholesalers, and retailers;
(8) "Industry Standard" is defined as equal to other competitors in
the Chinese market with similar services and / or products;
(9) "Products" shall be deemed to be those items of products and
services from Goldvision and its subsidiaries (controlled by
Goldvision);
(10) "Separate Sales Account" means the bank account to be set up by
Goldvision for the exclusive use and management by SCP over sales,
revenues, direct sales costs, direct product costs, , investments,
and profits or any other financial activities of SCP in the
cooperation with Goldvision or its Subsidiaries (only subsidiaries
controlled by SCP);
(11) "Subsidiaries" means any or all of Goldinfo, Goldtel, or any other
entities that are controlled, owned or invested in by Goldvision;
and
(12) "Territory" shall refer to China and worldwide areas.
(13) "Lasting" is greater than 1 year and the offended party issues a
letter giving 60 days notice and the issue or breach or default is
not cured within the additional 90 day period.
(14) "GoldVision" refers to GoldVison or GoldTel, GoldInfo, or any
future subsidiaries (controlled by GoldVision);
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(15) "Active Involvement" implies that SCP shall actively sell all or
part of Goldvision products or Goldvision Subsidiaries (controlled
by Goldvision) products in the various market segments.
(16) "Net Profit" as defined in schedule B.
2. GRANT OF EXCLUSIVE MARKETING RIGHT
(1) Exclusive Grant: Goldvision grants to SCP the exclusive right to
distribute, sell and market the Products in the Territory and
appoints SCP as its exclusive distributor for this purpose in
accordance with the terms of this Agreement and as limited by the
provided definition of "Exclusive";
(2) SCP accepts such grant and appointment; and
(3) Goldvision warrants that there are no other grants of exclusive
right to distribute, sell and market the Products in the Territory
and no other appointment of exclusive distributors for this
purpose. Goldvision further covenants with SCP that Goldvision
shall not grant such exclusive right to any third party or appoint
any third party as the exclusive or non-exclusive distributor
except according to terms mutually negotiated with SCP or if SCP
chooses not to distribute this product or not to distribute to a
particular industry or not to distribute to a particular
geographical area as defined in the exclusivity agreement.
3. SUB-DISTRIBUTION
SCP may appoint sub-distributor for the Products within the Territory
as it deems appropriate from time to time.
4. TERM OF AGREEMENT
(1) Subject to the provisions for early termination as set out in this
Agreement, this Agreement shall remain in full force and effect
for a period of 20 years and shall expire on December 31, 2022.
The contract is assumed to automatically renew for an additional
20 years, such renewals to be granted in perpetuity given SCP's
continued existence and active involvement in the business;
(2) The parties may renew this Agreement 6 months before termination
or expiration of this Agreement; and
(3) The parties agree to an annual contract review for the first three
years and every fifth year anniversary thereafter to amend the
contract to realistically fit actual business conditions and
requirements. This annual review is not
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an opportunity to terminate this Agreement. It is an opportunity
to more effectively meet the needs of both businesses.
5. DEVELOPMENT PERFORMANCE
Goldvision and SCP will develop mutual performance milestones.
6. OBLIGATIONS OF GOLDVISION
Goldvision shall:
(1) refer to SCP all queries, orders or requests for the Products
originating from and intended for delivery within the Territory;
(2) provide logistics support for SCP as needed;
(3) execute all network planning, design, installation, operation, and
maintenance;
(4) provide all customer service functions;
(5) provide all necessary cost information to properly account for
cost of goods sold;
(6) provide necessary network capacity at Industry Standard or greater
reliability to satisfy Goldvision, SCP and any other sales
activities service delivery needs;
(7) create and maintain Separate Sales Accounts within appropriate
Goldvision or its Subsidiaries (controlled by GoldVision) to
receive revenue and disburse cash for costs, profits and
investmenti(pound)
7. OBLIGATIONS OF SCP
SCP shall:
(1) provide all financial resources as outlined in the investment
contract to build out the network as per reasonable mutually
agreed timeframe and services;
(2) provide financial resources for all sales and marketing including
the effort by SCP (as an investment to Goldvision and repaid from
revenues and / or invested capital) and Goldvision until such time
as the costs are self financed by the revenue of SCP sold services
minus costs to Goldvision;
(3) provide all financial resources to build mutually approved
secondary investment opportunities to a point of profitability or
following investment
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once mutual agreed upon secondary agreements are completed and
sealed by all parties;
(4) diligently and effectively market, distribute and sell the
Products in the Territory;
(5) use its best efforts to advertise and promote the sale of the
Products in the Territory and to make regular and sufficient
contact with its present and potential customers;
(6) maintain adequate sales and administrative facilities to ensure
prompt service to customers of SCP;
(7) devote its best efforts to promote the sale of the Products within
the Territory;
(8) advise Goldvision of any defective Products immediately to allow
Goldvision to rectify the situation;
(9) process all bills and xxxx payments for Goldvision;
(10) deduct (mutually agreed) upon cost of sales from billing;
(11) establish and operate a multinational sales team headquartered in
Beijing;
(12) provide product marketing support and training for Goldvision
sales team; and
(13) provide technical support and advice as appropriate to Goldvision.
8. COVENANT OF GOLDVISION
Goldvision covenants with SCP that it will not:
(1) claim intellectual property rights to such assets in SCP's shell,
or its assigns; and
(2) disclose any confidential or proprietary information of SCP as
specified and agreed upon in Schedule B.
9. OTHER PROJECTS
The parties agree:
(1) other projects are those that are not funded by Goldvision's
profits or SCP's investment;
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(2) SCP shall not receive a contractual share of profit in the other
projects if SCP is not a party to such contractual arrangement;
(3) SCP shall have the first right of refusal to participate in other
projects and the first right to be informed of such other
projects, and the right to participate in the implementation of
such other projects; and
(4) SCP may receive in some projects share of profit different from
its proportionate equity ownership holding in Goldvision if
Goldvision and SCP mutually agree that this different share of
profit is appropriate based on other contributions than capital.
10. NON-COMPETITION
The right to market and sell the products and services remains the
exclusive right and property of SCP according to the agreement definition of
exclusivity. Goldvision may not:
(1) set up a separate marketing scheme in competition with SCP;
(2) sell or promote the sale of or market in any manner the Products
to any person or persons;
(3) promote or advocate the use or application of the Products to any
persons;
(4) hold itself out as having any sales or marketing right over the
Products except as required by Chinese telecommunications laws and
in these cases SCP will act as a sales agent for these products;
or
(5) communicate or disclose to any persons any knowledge or
information it may receive from SCP about the business and affairs
of SCP, including their sales and marketing techniques and
strategies, their customers or suppliers, the uses and
applications of the Products, or any other matter concerning SCP
not generally known to the public, all of which information
Goldvision acknowledges is proprietary or confidential and the
disclosure of which would injure SCP.
(6) SCP and Goldvision will require senior management to sign a non-competition
agreement with a minimum two year term.
(7) Pei Xxxxx Xxx cannot be party to a competing enterprise or participating in
competing activities; and
11. EXCLUSIVE MANAGEMENT RIGHT OVER MARKETING AND REVENUE
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Unless Chinese law prohibits or restricts, SCP shall through its own
employees or employees of Goldvision:
(1) handle all marketing and sales activities of Goldvision or its
Subsidiaries (controlled by Goldvision) resulting from
Goldvision's or its Subsidiaries (controlled by Goldvision)' Sale,
including sales remuneration to appropriate sale forces as defined
by the definition of exclusive;
(2) receive all payments from sales of services or products of
Goldvision or it's Subsidiaries (controlled by Goldvision) through
Tiangui's special accounts managed by SCP and controlled through
SCP's second seal as defined by the definition of exclusivity; and
(3) SCP must allow Goldvision to setup sales channels if it is unable
to do so itself for certain products, markets, or types of
customers.
(4) SCP and Goldvision must mutually agree to any other sales forces,
agents, or parties selling Goldvision products.
12. SEPARATE SALES ACCOUNTS
The parties agree on the setup and maintenance of Separate Sales
Accounts for all Goldvision and subsidiary investments participated in by SCP:
(1) Goldvision or its Subsidiaries (controlled by Goldvision) shall
set up Separate Sales Accounts at a bank selected by SCP and
accepted as reasonable by Goldvision to receive all exclusive
revenues from Goldvision's or its Subsidiaries (controlled by
Goldvision) Sale;
(2) SCP shall have final signature seal on the Separate Sales
Accounts, including all revenues, product costs investments, and
profits;
(3) Goldvision or its Subsidiaries (controlled by Goldvision) shall
not interfere with the management of such Separate Sales Accounts
by SCP;
(4) Goldvision or its Subsidiaries (controlled by Goldvision) shall
give SCP exclusive control of these Separate Sales Accounts by
making SCP the second seal necessary to disburse funds from these
Separate Sales Accounts;
(5) SCP shall disburse from the Separate Sales Accounts the product
costs and profit share of Goldvision or its Subsidiaries
(controlled by Goldvision) prior to netting out accounts among SCP
and Goldvisionto the general accounts of Goldvision or its
Subsidiaries (controlled by Goldvision) or SCP conforming to tax
regulations and accounted for as a direct sales cost;
(6) SCP shall accrue its own profit share, and sales cost in these
Separate Sales Accounts through the corporate fiscal year;
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(7) SCP shall accrue Goldvision or its Subsidiaries (controlled by
Goldvision) product costs and profit shares in the Separate Sales
Accounts throughout each corporate fiscal year;
(8) Goldvision or its Subsidiaries (controlled by Goldvision) shall
be :
(a) Not closing the Separate Sales Accounts;
(b) Goldvision shall set up this account in a bank approved by
SCP.
(c) Not creating additional obstacles or difficulties for SCP in
the use of Separate Sales Accounts; or
(d) Not interfering with the setup, management or maintenance of
the Separate Sales Accounts; and
(9) Goldvision or its Subsidiaries (controlled by Goldvision) shall
guarantee the normal use of the Separate Sales Accounts by SCP by
doing the following:
(a) appoint one financial stamp/seal/chop keeper and one
alternate financial stamp/seal/chop keeper; and
(b) make available the use of financial stamp/seal/chop by SCP
during normal business hours.
13. REVENUE AND PROFIT
At fiscal year end, SCP and Goldvision or its Subsidiaries (controlled
by Goldvision) shall net out the difference between the Separate SCP sales
accounts of Goldvision or its Subsidiaries and SCP Accounts so that the cash
transfer is minimized between SCP and Goldvision.
Profit share shall be forty nine (49%) per definition of exclusivity
SCP shall provide sales and marketing support for all ongoing Goldvision sales,
marketing, and customer relationship support activities for all existing
capabilities. If SCP chooses not to provide this support or SCP and Goldvision
determine this support would harm an opportunity the profit share will be
according to ownership.
Profit sharing is post reinvestment of funds in Goldvision and/or its
subsidiaries.
For future city markets and other business opportunities participated,
SCP shall receive a 20% profit share until investment exceeds 20% and 49%
thereafter unless SCP
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and Goldvision negotiate a different formula in advance or if it is formally
renegotiated in the future.
For projects not funded internally, SCP will have first right of
refusal to invest in whole or in part in these projects for delivery if
possible. If SCP cannot service a product, because SCP cannot provide funds or
SCP does not have like resources to deliver the project services, SCP will
participate on an ownership share basis of profits.
14. PRODUCT WARRANTY
Goldvision or its Subsidiaries (controlled by Goldvision) shall provide
a manufacturer's warranty on the Products delivered to SCP in conformity with
the prevailing standards in the telecom service industry. The period of the
warranty shall extend for one year after the date of sale of the Products to a
customer and for a period of ninety days from the date of sale of replacement or
spare parts to a customer. Goldvision or its Subsidiaries (controlled by
Goldvision) warrants to SCP that the Products shall be of merchantable quality.
Goldvision or its Subsidiaries (controlled by Goldvision), at its or their
option and at its or their cost, shall replace any Products, which fail to
comply with such warranty.
15. EXCUSABLE DELAY
Neither party shall be responsible for the failure or delay in
performing any of its obligations due, directly or indirectly, by act of God, by
act of public enemy, acts of government bodies or agencies foreign or domestic
(including inability to procure materials or to manufacture or ship ordered
goods because of governmental priority orders or allocations or restrictions
upon the use of materials or manpower), port congestion, nuclear incidents,
sabotage, riot, fire, floods, typhoons or unusually severe weather, earthquakes,
explosions, terrorist attacks or other catastrophes, epidemics or quarantine
restrictions, strikes, labour unrest or labour shortages, accident, freight
embargoes, delays occasioned by carriers or delays of a supplier of materials,
components, facilities, energy, fuel, transpiration, governmental authorizations
or instructions, material or information required from one of the parties to the
other, or because of any other causes beyond either party's control , in whole
or in part.
16. RELATIONSHIP OF THE PARTIES
The relationship between SCP and Goldvision and its Subsidiaries
(controlled by Goldvision) is intended to be and shall be that of partners and
agents.
17. RETURN OF EXCLUSIVE MARKETING RIGHT
Under the following circumstances, the exclusive marketing right
granted under this Agreement shall be returned to Goldvision if SCP:
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(1) chooses not to sell a product, quits selling a product or fails to
sell a product;
(2) chooses not to sell to an industry, quits selling to an industry, or
fails selling to an industry;
(3) chooses not to sell to a specific geographic area;
(4) chooses not to sell to a customer, quits selling to a customer, or
fails selling to a customer; or
(5) fails selling in total or quits selling.
18. RIGHT TO CHOOSE
SCP shall in its absolute discretion have the right to choose whether
to sell or not sell a product or line of products or to an industry / customer
or any combination of them.
SCP always shall have the first right of refusal to sell new product or
lines of products or to new industry / customer or any combination of them.
The parties agree that the products and services that are not subject
to this Agreement shall be listed in Schedule C which will be revised, updated,
and ratified from time to time as required.
19. TERMINATION
Either party may terminate this Agreement with a six (6) month notice
or other act if,
(1) the other party is in default in any material respect in the
performance of any of its obligations under this Agreement or
otherwise commits any material breach of this Agreement;
(2) the other party is bankrupt or insolvent; or
(3) any frustration of this Agreement by the occurrence of an excusable
delay of a lasting nature.
20. EVENTS UPON TERMINATION
Upon termination of this Agreement for any cause whatsoever, the
following shall apply:
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(1) all rights and privileges granted by Goldvision to SCP shall be either
continued or discontinued; and
(2) if requested by Goldvision, SCP shall return all of the Products
delivered by Goldvision to SCP and on hand in SCP's place of business
or in the possession or the control of SCP at the time of termination
of this Agreement.
This section shall survive the termination of this Agreement.
(1) SCP shall turn over to Goldvision all sales inquiries and unfilled
orders and the parties shall negotiate the amount of compensation; and
(2) SCP shall cease trading in the Products and shall notify all dealers
and other interested parties of the termination. SCP shall further
cease to make any representations to the public that it is an
authorized distributor of the Products.
Notwithstanding any such termination:
(1) all warranties set out in this Agreement and all obligations of
indemnification shall survive and continue to bind the parties for
five years after the date of termination of this Agreement;
(2) SCP and Goldvision shall honour any remaining payment obligations set
out in this Agreement; and
(3) SCP shall be permitted to sell all Products manufactured prior to the
termination, provided such sales are completed by delivery of goods
and receipt of payment therefor within six months of the date of such
termination and are subject to the payment obligations as set out in
this Agreement.
21. ASSIGNMENT
The marketing and distribution right under this Agreement may be sold
or assigned or disposed of by SCP with notice to Goldvision.
22. CONFORMITY WITH LOCAL LAWS
The rights and obligations of the parties under this Agreement shall be
subject to all applicable laws, orders regulations, directions, restrictions
and limitations of the governments having jurisdiction of the parties.
23. DISPUTE RESOLUTION
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All disputes arising in connection with this Agreement, shall be
determined by arbitration in accordance with the Arbitration Rules of the
Singapore International Arbitration Centre and the place of arbitration shall be
Singapore.
24. APPLICABLE LAW
This Agreement is made, executed, and delivered in Beijing, China, and
any controversy arising hereunder or in relation to this Agreement shall be
governed by and construed in accordance with the laws of China.
25. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of all the parties with
respect to the subject-matter hereof and, except as stated in this Agreement and
in the instruments and documents to be executed and delivered pursuant to it,
contains all of the representations, undertakings and agreements of all parties
respecting the subject-matter hereof. There are no representations, undertakings
or agreements of any kind between all the parties respecting the subject-matter
hereof except those contained in this Agreement.
26. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity of enforceability of any other provision.
27. NOTICES
(1) Any notice or other documents required or permitted to be given under
this Agreement shall be in writing and shall be delivered, mailed by
pre-paid registered mail, return receipt requested or sent by
facsimile transmission addressed to the party or parties to whom it is
to be given at the address shown below or at such other address or
addresses as the party or parties to whom such writing or document is
to be given shall have last notified all other parties in accordance
with the provisions of this paragraph:
(a) If to Goldvision at: Central TV Tower Xx. 00-00, Xx. 00 Xx Xxx Xxxx
Xxxxx Xxxx, Xxxxxxx, Xxxxx 000000.
(b) if to SCP at: 0000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000,
Xxxxxx Xxxxxx of America
(2) Any such notice or other document shall:
(a) if delivered, be deemed to have been given and received at the place
of receipt on the date of delivery, provided that if such date is a
day other than a business day in the place of receipt, such notice
or document shall
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be deemed to have been given and received at the place of receipt on
the first business day in the place of receipt, thereafter;
(b) if transmitted by facsimile transmission, be deemed to have been given
and received at the place of receipt on the next business day in the
place of receipt, following the day of sending;
(c) if mailed, be deemed to have been given and received at the place of
receipt on the date of actual receipt; and
(d) if e-mailed, be deemed to have been given and received at the place of
receipt on the next business day in the place of receipt, following
the day of sending.
28. AMENDMENT OF AGREEMENT
None of the terms, conditions or provisions of this Agreement shall be
held to have been changed, waived, varied, modified or altered by any act or
knowledge of either party, their respective agents, or employees unless done so
in writing signed by both parties.
29. WAIVER OF BREACH
No waiver on behalf of any part of any breach of the provisions shall
be effective or binding on such party unless the same shall be expressed in
writing and any waiver so expressed shall not limit or affect such party's
rights with respect to any future breach of any of the provisions of this
Agreement.
30. FURTHER ASSURANCES
Each of the parties covenants that they will execute such further
documents and do and perform or cause to be done and performed such further and
other acts as may be necessary or desirable from time to time in order to give
full effect to the provisions of this Agreement.
31. PREVAILING OF THE CONTRACT
If there is conflict between this Agreement and the Contract, the
Contract shall prevail over this Agreement.
32. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and enure to the benefit of the
successors and assigns of both parties and all persons or corporations
succeeding to or acquiring the business now carried on by Goldvision or SCP.
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33. LANGUAGE
This Agreement is written in both Chinese and English languages and
each language shall be equally authoritative.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on
the date written above
The Corporate Seal of STRATEGIC )
COMMUNICATIONS PARTNERS, INC. )
was hereunto affixed in the presence of: )
)
) c/s
-------------------------------------- )
Authorized Signatory )
-------------------------------------- )
Date )
The Corporate Seal of BEIJING GOLDVISION )
TECHNOLOGIES INC. )
was hereunto affixed in the presence of: )
)
) c/s
-------------------------------------- )
Authorized Signatory )
-------------------------------------- )
Date )
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SCHEDULE A
DEVELOPMENT PERFORMANCE MILESTONES
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Goldvision will develop government sales at a rate SCP will develop multinational and other sales
defined in this Agreement. Goldvision may choose to assignments made to it by Goldvision at a rate
use SCP sales and marketing experience to achieve defined in the final contract.
this.
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Goldvision will seek to develop new market license SCP will provide capital 120 days prior to
anticipated requirements on a sliding schedule
agreements with other provinces and cities on a updated mutually by SCP and Goldvision every 60
schedule defined in the agreement. days.
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Goldvision will guarantee network performance and / SCP will agree to maintain required resources for
or customer satisfaction measures per a mutually partnership assistance in Beijing or other future
defined schedule and standards. markets on a mutually defined schedule.
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Goldvision agrees to meet network build-out SCP agrees to provide on a mutually agreed upon
basis, support to develop OSS requirements and to
performance objectives on a mutually defined schedule. install OSS needs when mutually agreed by SCP and
Goldvision.
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SCHEDULE B
NET PROFITS AGREEMENT
The parties to the...agreement, date December 18, 2002, hereby both agree that
in the event this section of the agreement is activated, that the party doing so
will be treated as owning an undivided interest in Goldvision, a Chinese limited
liability company and to the licenses that the company operates with today, for
as long as they remain in affect.
This agreement is subject to the definitions incorporated herein and shown
below.
This carried interest holder shall be paid in cash its "net profits" interest,
quarterly, thereafter. This agreement shall be in perpetuity or for as long as
the licenses that the company operates with today remain in affect.
The party whom elects to be treated as a "Carried Interests Holder" understands
that Tian Gui or its successor will be operating using the licenses previously
identified. They will derive cash revenues from operating the property and
equipment necessary to deliver the services. The carried interest holder shall
receive quarterly net profits distributions.
The following description of the Net Proceeds distributions is subject to and
qualified by the more detailed provisions of this calculation, which will be the
Carried Interest Holders Agreement, which both parties agree to finalize no
later than 90 days from the date of this agreement.
Senior management operating these licensees understands that it shall have a
fiduciary responsibility to collect these revenues. It shall make reasonable
investments to grow the revenues derived from the licenses and make sufficient
capital investment to grow and maintain the property and equipment to deliver
the services. It shall also make minimum cash distributions to the net profits
interest.
It shall calculate the Net Proceeds payable to the carried interest holder, as
follows:
GROSS PROCEEDS
LESS: COST OF SALES, GENERAL AND ADMINISTRATIVE EXPENSE, EXPENSES APPLICABLE
ONLY TO THE CARRIED INTEREST HOLDER, PROPERTY AND EQUIPMENT COSTS AND INCOME AND
OTHER TAXES SHALL EQUAL THE NET PROCEEDS TO BE PAID
The cost to audit the net proceeds paid the carried interest holder calculated
by the company shall be borne by the carried interest holder and the company,
equally.
The Net Proceeds are to be determined and reported to the carried interest
holder on a monthly basis. The calendar year shall be followed. The Company
books and records, for this calculation shall be maintained following generally
accepted accounting principles. The Net Proceeds calculation shall be done
entirely on a cash basis, except as defined.
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The carried interest holder shall have full and complete access to the books and
records of the Company.
Actual cash distributions, form the Net Profits interest held by the carried
interest holder shall be made quarterly, no later than the distribution date,
which is 45 days after each calendar quarter. This quarterly distribution
amount, shall be paid from the cash on hand.
Periodic reports will be provided to the carried interest holder. The can be no
amendments to this agreement except by the parties to this agreement in writing.
The carried interest holder shall maintain its board representation on the
Company.
DEFINITIONS
ACCRUED INTEREST
MINIMUM DISTRIBUTION
"Net Proceeds" - are determined monthly on a license-by-license basis. They are
proceeds received by the Company as the owner of an undivided interest in
Goldvision. This is calculated as gross proceeds less costs of sales, general
and administrative expenses, expenses applicable only to the carried interest
holder, property and equipment costs and Income and other taxes.
"Gross Proceeds" - means the amounts received by the Company from sales of and
and all services derived under its licenses, after deducting: all general
property (ad valorem) and sales taxes.
"Cost of Sales" - means, on a cash basis, generally the sum of: the cost of
delivering the sales, costs paid by the carried interest holder under any joint
operating agreement; all other costs, expenses and liabilities of selling,
marketing the services delivered under the licenses held, amounts previously
included in gross proceeds but subsequently paid as a refund, interest or
penalty, costs and expenses for renewals or extensions of rents.
"Property and Equipment Costs" - the Property and Equipment may undergo
development activities intended to increase or maintain both the level and
capacity of services delivered under the licenses. The party electing to be
treated as a carried interest holder will not be liable for any such cost to
increase the Property and Equipment, but the amount of such development costs
reduces the Net Proceeds payable. Significant increases in development costs
could materially reduce distributions, but not below the minimum distribution.
If Property and Equipment development and maintenance costs for a particular
license exceed the cash revenues generated, the carried interests holder will
not receive the Net Proceeds for those licenses until future proceeds from that
license exceed the total of the excess costs and expenses plus accrued interest
during the deficit period.
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Sales, Marketing, and Operations Agreement
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"General and Administrative Expenses" - to come... As is customary in the
industry, the Company charges an overhead fee to operate. The operating
activities include various engineering, accounting and administrative functions.
The fee is based on a monthly charge per customer by type of customer for each
service the Company delivers services for under the licenses held.
"Voting rights of the Carried Interest Holder" - the carried interest holder
shall always maintain at least one-third (1/3 of 100%) of the board seats for
Goldvision or its successor entity that operates and runs the licenses discussed
in the contract.
"Senior Management and their Fiduciary Responsibility and Liability" - The
Company is a fiduciary for the carried interest holder and is required to act in
the best interests of the carried interest holder at all times. Senior
Management must exercise the same judgment and care in supervising and managing
the carried interest holder's assets as persons of ordinary prudence, discretion
and intelligence would exercise under Chinese law. Senior Management duties to
the carried interest holder are similar to the duty of care owed by a corporate
director to the corporation and its shareholders. The primary difference between
these duties and a corporate director's duties is the absence of the legal
presumption protecting decisions which directly affect the carried interest
holder from challenge. The Company, acting in good faith and as a reasonably
prudent operator, may enter into carried interest arrangements, sub-contracts,
joint venture and other similar agreements covering the carried interest holder.
The Net Profits Interests held by the carried interest holder would then be
calculated on the interest retained by the Company under the agreement and not
on the Company's original interest before any modification resulting from the
agreement. At the request of the Company, the Board may consider and sell
Property and Equipment, that burden the Company, which might be referred to as
marginal of inefficient parts of the Company's Property and Equipment, provided
the sale does not involve a material part of the Company's assets and is in the
best interests of the carried interest holders. The Company will distribute pro
rata the net proceeds from any such sale to the carried interest holder.
"Expenses applicable only to the carried interest holder" - The Company shall be
reimbursed for actual reasonable expenditures made on account of any unusual
duties in connection with matters pertaining to the carried interest holder. In
the event of litigation involving the carried interest holder, audits or
inspection of the records of the Company pertaining to the transactions
affecting the carried interest holder or any other unusual or extraordinary
services rendered in connection with the administration towards the carried
interest holder, the Company shall be entitled to receive reasonable
compensation for the services rendered.
"Fiscal Year and Accounting Method" - The fiscal year shall be the calendar
year. Senior Management shall maintain its books in accordance with generally
accepted accounting principles or such other method as will provide appropriate
financial data responsive to the needs of the party electing to be treated as a
net profits interest. Gross Proceeds and costs are calculated on a cash basis,
except that certain costs, primarily ad valorem and
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Sales, Marketing, and Operations Agreement
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other taxes and expenditures of a material amount, may be determined on an
accrual basis. Net Proceeds are calculated separately for each license
"Income and other Taxes" - Senior Management will file and pay all required
Chinese income, sales and other tax information returns.
"Review of Books and Records" - the carried interest holder and his
representatives may examine, for any proper purpose, during reasonable business
hours the records of Goldvision. The Company must maintain books and records
sufficient to determine the amounts payable for the carried interest holder. The
company must deliver a statement detailing the computation of the amounts
payable to the carried interest holder Quarterly and Annually. The Company must
also deliver to the carried interest holder a statement of the computation of
the Net Proceeds for each Computation Period. The Company will cause the annual
computation of Net Proceeds to be audited. The audit cost will be borne by the
party holding the carried interest and the Company, equally.
"Amendment of the Agreement for the Carried Interest Holder" - Only the parties
to the Carried Interest Holder agreement of this date may change this agreement.
"Computation Of Net Proceeds" - the provisions governing the computation of the
Net Proceeds are detailed and extensive. The computation of Net Proceeds shall
be monthly, in arrears, the previous months computation being due at the
beginning of the following month. (For example, the computation for June, would
be completed and reported to the carried interest holder by July 31st). The
first cash distribution shall be made no later than the first full calendar
quarter, following the quarter in which one party elects to become a carried
interest holder.
"Distribution Date" means the date of a distribution, which shall be on or
before forty-five Business Days after the Quarterly Record Date.
"Net Profits Interests" - the carried interest holder has a Net Profits
Interests in Goldvision and the licenses operated. The amounts paid to the
carried interest holder for the Net Profits Interests are based on the
definitions of "gross proceeds" and "net proceeds" set forth as described below.
Under the agreement, Net Proceeds are computed monthly.
"Cash Distributions" - Senior Management shall determine the Quarterly
Distribution Amount for each quarter and shall establish a cash reserve equal to
such amount on the Quarterly Record Date for such Quarter. On the Distribution
Date for such Quarter, Senior Management will distribute the Quarterly
Distribution Amount.
"Periodic Reports" - Senior Management shall provide the carried interest holder
with reports mailed to it at the address of record.
"Cash on Hand" - The cash held by the Company as a reserve to distribute for
each calendar quarters distribution on the next distribution date must be
invested in: interest
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Sales, Marketing, and Operations Agreement
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bearing obligations of the Chinese government; repurchase agreements secured by
interest-bearing obligations of the Chinese government or bank certificates of
deposit.
"Quarterly Distribution Amount" means for each Quarterly Period an amount
determined by Senior Management to be equal to the excess, if any, of (a) the
cash received during the Monthly Computation Period attributable to the carried
interest holder, plus any other cash receipts of the Company during the Monthly
Period including any cash received from interest earned on deposits of the
Monthly Distribution Amount for any prior Monthly Period pending distribution of
such amount, over (b) the liabilities of the Trust paid during the Monthly
Period, plus the amount of any cash used to establish or increase a cash reserve
for the payment of any accrued tax attributed to the carried interest holder. If
any Monthly Distribution Amount determined in accordance this the Net Profits
interest calculation shall for any Monthly Period be a negative amount, then the
Monthly Distribution Amount shall be zero, and such negative amount shall reduce
the next Monthly Distribution Amount.
As ratified by
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Name (Goldvision) Name (SCP)
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Signature (Goldvision) Signature (SCP)
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Seal (Goldvision) Seal (SCP)
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Date Date
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Sales, Marketing, and Operations Agreement
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EXCLUDED PRODUCTS AND SERVICES (FOR PROFIT SHARING)
NONE AT TIME OF THE SIGNING OF THIS CONTRACT.
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