PRELIMINARY AGREEMENT TO FORM A
CONTRACTUAL JOINT VENTURE BETWEEN
CHANGSHA GUANG DA TELEVISION BROADCASTING BROADBAND NETWORK LTD. AND
BIG SKY NETWORK CANADA LTD.
In accordance with the "Law of the People's Republic of China on Contractual
Joint Ventures" and other relevant laws and regulations of Hunan province,
adhering to the principle of equality and mutual benefits and the spirit of
friendship and cooperation, Changsha Guang Da Television Broadcasting Broadband
Network Ltd. ("Party A") and Big Sky Network Canada Ltd. ("Party B"), have
reached an agreement to form a Contractual Joint Venture (the Company) at the
City of Changsha in the Province of Hunan. The Parties have agreed to sign this
Agreement before signing a formal contract:
1. The Contractual Joint Venture shall be established at the City of
Changsha, in Hunan Province, the People's Republic of China. The
name of the Company will be decided in the future.
2. The objective of the Company is to provide Internet technology
services for data transmission and Internet related business in the
Hunan Province. This will be accomplished by economic cooperation
and technical exchanges as well as through adopting advanced
technology and scientific management expertise, in order to achieve
reasonable economic results and ensure a maximum rate of return for
both Parties.
3. The Scope of Business of the Company shall include the provision of
broadband data network technology services including, without
limitation, the purchase, processing, upgrading, development,
installation, operation, maintenance and management of network
platform for broadband data transmission, network based data
transmission and value-added business; application software
development; and technical, consulting, management and training
services.
4. Terms and Conditions of the Cooperation: Party A ensures that the
Company shall be the exclusive provider of the Internet technology
services in relation to the Network (the ownership of the Network
belongs to Party A) and enable Party A to use the HFC Network,
Facilities and Frequencies to provide Internet connectivity services
to Party A's customers; and obtain all regulatory approvals,
licenses and permits that either the Company or Party A may require
to perform this
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Contract, including obtaining an Internet operating permit from the
Ministry of Information Industries. Party B shall provide funds,
technology and equipment required by the project. Party A shall own
the network. The Contractual Joint Venture shall not be involved in
the basic telecommunication and Party A's broadcasting and
television business.
5. Party A and Party B will form a Joint Venture Company and to build a
Data Transmission Platform. Party B will not own shares of Party A.
The net income will be distributed in accordance with Article 8 of
this Agreement.
6. Party B's budget of investment for this project, based on the
450,000 registered cable TV customers of Party A, is US$18,000,000.
Party B shall contribute the investment in accordance with the
regulatory requirements and the Contract of the Contractual Joint
Venture. If the project requires new capital investment, the Parties
will consult to each other and Party B will be responsible for
raising new capital.
7. The term of the Contractual Joint Venture shall be eighteen (18)
years from the Date of Establishment. Upon the expiration of the
contract, the fixed assets of the Contractual Joint Venture shall
belong to Party A, in accordance with the relevant laws and
regulations of the People's Republic of China. After the Company
pays all taxes, fees and statutory duties as required by applicable
laws and regulations of the People's Republic of China, the net
income shall be distributed as follows:
Party A Party B
Phase I (2001*-2006): 35% 65%
Phase II (2007-2012): 50% 50%
Phase III (2013-2018): 60% 40%
*Or Effective Date which ever comes earlier.
8. The Board of Directors of the Contractual Joint Venture shall
consist of seven (7) Directors. The Chairman of the Board of
Directors shall be designated by Party A. The distribution of
Directors shall be as follows:
Party A Party B
Phase I (2001*-2006): 3 4
Phase II (2007-2012): 4 3
Phase III (2013-2018): 4 3
*Or Effective Date which ever comes earlier.
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9. All documents (including the Contractual Joint Venture Contract and
Articles of Incorporation) required for formal establishment of the
Contractual Joint Venture, in accordance with the relevant laws and
regulations of the People's Republic of China, shall be completed
and submitted to the relevant authorities for approval after signing
of this Agreement. This agreement will have its full legal effects
after completing of all required documentation and necessary
approvals. This Agreement will be no legal effect, If the Contract
and Article of Incorporation for the Joint Venture are not signed by
the Parties within sixty (60) days after signing of this Agreement.
10.This Agreement is written in Chinese and each Party shall be
provided for Two (2) copies.
11.This Agreement shall be signed by the authorized representatives of
the Parties and shall be legally effective on the date of signing.
IN WITNESS WHEREOF, the Parties hereto have signed this Agreement on March 8,
2001.
Party A Party B
(Authorized Representative): (Authorized Representative):
/s/ QIUCHENG XXXX /s/ XXX XXXX
--------------- ----------------
Name: Xxxxxxxx Xxxx Name: Xxx Xxxx
Title: Chairman Title: Vice President
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[AGREEMENT WRITTEN IN CHINESE LANGUAGE APPEARS HERE]
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[AGREEMENT WRITTEN IN CHINESE LANGUAGE APPEARS HERE]
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[AGREEMENT WRITTEN IN CHINESE LANGUAGE APPEARS HERE]
[BIG SKY NETWORK CANADA LTD.
XXXX APPEARS NEXT TO SIGNATURE
PARTY B]
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