AGREEMENT
To Establish and Operate
Coin Communications Ltd., a Co-operative Joint Venture
This AGREEMENT, signed this 10th day of April, A.D. 2000,
BETWEEN: ZHONG-XXX XXXX COMPANY, a privately owned company in China
(hereinafter called ZNT),
OF THE FIRST PART
AND
CHINA COHY COMMUNICATIONS CORPORATION, a USA corporation
incorporated in Delaware (hereinafter called CCCC),
OF THE SECOND PART
AND
CHINA ENTERPRISE INVESTMENT COMPANY, a privately-owned company
in China (hereinafter called CEIC),
OF THE THIRD PART
WHEREAS the parties hereto desire to establish a co-operative joint venture in
China, to be named COHY COMMUNICATIONS LTD. (hereinafter called CCL);
NOW THEREFORE THIS AGREEMENT WITNESSETH in consideration of the mutual
covenants and agreements hereinafter contained, the parties hereto mutually
covenant and agree together as follows:
1. The parties hereto covenant and agree to cause to be incorporated a
cooperative China (10%) - USA (90%) joint venture with authorized capital of
$2,500,000 under the laws of China, with its operations in China, with articles
of incorporation and bylaws to be agreed upon, named CCL. Its life shall be 25
years.
2. The parties hereto covenant and agree that the primary purpose for
establishing the joint venture is to assume the Railway TV System's development,
production and sale project from CEIC who has funded its concept development
stage.
3. The parties hereto covenant and agree that the business of CCL will be
to: develop manufacture and market wireless controlled closed-circuit TV
communications systems and equipment for Chinese railway trains and stations,
and, fibre optic exchange equipment for telecom installations in China together
with related business activities, some of which are yet to be identified.
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4. The parties hereto covenant and agree to establish a strategic alliance
with Cohy Enterprise Investment Co. Ltd. (CEIC) for the purposes of providing
CCL with the documentation, test results, contracts, facilities and personnel
required to manage and operate its business in an effective and profitable
manner.
5. The parties hereto covenant and agree that a Board of Directors of three
(3) or more members will be responsible for managing CCL. The parties further
covenant and agree that CCCC will appoint the majority of Board members and
select the Chairman/CEO and Chief Financial Officer. ZNT will select the Vice
Chairman/General Manager and Chief Engineer.
6. The parties hereto covenant and agree that, for the Board of CCL, the
respective representatives of ZNT are: Chairperson Xx. Xxxxx Min and Patent
Co-Holder Xx. Xxxxx Xxxx; and, for CCCC: Chairman Xxxxx Xxx Hua, Vice-Chairman &
CEO Xxx Xxxxx, President and COO Xx Xxxx Guang and Executive Vice President
Xxxxx Xxxxx. Others may be substituted or added on approval by TNT and CCCC.
7. The parties hereto covenant and agree that 80% of CCL's net profit will
be distributed to its joint venture partners, and, that 20% of net profit will
be retained for statutory and contingency reserves.
8. ZNT covenants and agrees to contribute $250,000 on the closing date, in
exchange for a 10% ownership interest in CCL.
9. CCCC covenants and agrees to contribute $2,250,000 from a planned
private placement or public offering, on the closing date, in exchange for a 90%
ownership interest in CCL. Furthermore, CCCC covenants and agrees to manage the
newly established joint venture company, and to acquire the Railway TV project
documentation, test results, contracts and business arrangements from CEIC for
an amount equal to CEIC's costs, up to $550,000, which, is payable in common
shares of CCCC valued at the same price as is proposed to be offered to the
public.
10. CEIC and ZNT covenants and agrees to provide CCL with the rights to use
its patented wireless, closed-circuit TV system together with all of the
agreements that they have organized to become the exclusive supplier of the
wireless TV system to the railways of China, and, all other markets.
Furthermore, CEIC covenants and agrees to provide CCL with the required
facilities, documentation, test results, contracts and personnel to effectively
manage and operate the business of CCL. Accordingly, CEIC will deliver to CCL
all management and control of the patented TV system; supply facilities and
production employees to CCL on a contractual basis at cost; and, provide CCL
with the rights to manufacture and sell, without restriction, its self-designed
inter-exchange telecom equipment, digital exchange equipment and fibre digital
telecommunications equipment.
11. The parties hereto agree upon the closing date that the respective
equity and voting interests of the parties shall be as follows:
CCCC 90% (via $2.25 million authorized capital)
TNT 10% (via $250,000 authorized capital)
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In the event that any party owns more or less than the interest described above
as a result of amendments approved by TNT and CCCC, the parties agree to adjust
their voting interest accordingly.
12. The parties further acknowledge that this AGREEMENT reflects the
understanding of the parties and that such further and other documents and
documentation shall be necessary to effect the incorporation of CCL.
Furthermore, the parties agree individually to assist, as may be required, in
both the formation of CCL and the sale of CCCC's common shares as described
herein.
13. The parties hereto agree to use their best efforts to obtain the
approval and consent of regulatory authorities in China and USA according to the
terms and conditions of this agreement and to provide such documents as may be
reasonably required to evidence such approval and consent.. The parties further
agree to form CCL, as herein described, without delay and at the earliest
possible date.
14. The parties further acknowledge that this AGREEMENT and any subsequent
agreements shall be construed and interpreted pursuant to the laws of China.
15. The parties agree that the closing date shall be a date that is
consistent with the dates for payment of funds identified in the Chinese
Cooperative Joint Venture By-Laws, or, a later date as agreed to by the parties.
IN WITNESS WHEREOF the parties hereto set their hands, this 10th day of
April, 2000.
/s/ Jiang Min
---------------------------------------------
Zhong -- Xxx Xxxx Company
Per: Xx. Xxxxx Min, Chairperson
/s/ Xxx Xxxxx
---------------------------------------------
China Cohy Communications Corporation
Per: Xx. Xxx Xxxxx, President
/s/ Xxxxx Xxx
---------------------------------------------
Cohy Enterprise Investment Company (CHIC)
Per: Mr, Xxxxx Xxx, Chairman
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