COOPERATIVE JOINT VENTURE CONTRACT
IN RESPECT OF
PLACER TECHNOLOGIES CORP.
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COOPERATIVE JOINT VENTURE CONTRACT
This Cooperative Joint Venture Contract in respect of PLACER TECHNOLOGIES
CORP. is made and entered into:
BY AND BETWEEN: XIN HAI TECHNOLOGY DEVELOPMENT LTD., a corporation formed
under the laws of the People's Republic of China with its legal address at
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇. ▇▇ ▇▇ Gen Lin Road, West District, City of
Beijing, People's Republic of China, herein represented by ▇▇. ▇▇▇ ▇▇▇, a
Chinese citizen, its legal representative and its Chairman;
(hereinafter sometimes referred to as "Party A" or as "Xin Hai")
AND: INFORNET INVESTMENT LIMITED., a corporation formed under the laws of Hong
Kong with its legal address at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, and herein represented by ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, a Canadian
citizen, its legal representative and its president;
(hereinafter sometimes referred to as "Party B" or as "Infornet")
WHEREAS the Xin Hai Technology Development Ltd. ("Xin Hai") is a Chinese company
engaged in the business of developing computer hardware, software, and
telecommunication network technology, and providing consultation and training
services and technology transfer thereof;
WHEREAS Infornet Investment Limited is a Hong Kong telecommunication and
management company which provides financial resources and expertise in
telecommunication projects;
NOW, THEREFORE, in accordance with the Law of the People's Republic of China on
SinoForeign Cooperative Joint Ventures and other relevant Chinese laws and
regulations, Party A and Party B hereby agree, acting on the principle of
equality and of mutual benefit and through friendly consultation, to set up a
sino-foreign cooperative joint venture company in the City of Beijing, People's
Republic of China and further agree as follows:
ARTICLE 1
ESTABLISHM[ENT OF THE JOINT VENTURE COM[PANY
1.1 Formation. In accordance with the Law of the People's Republic of China on
Sino-Foreign Cooperative Joint Ventures and other relevant Chinese laws and
regulations, the Parties hereto agree to form Placer Technologies Corp.
(hereinafter referred to as the "Joint Venture Company") which shall be
established as a limited liability company.
1.2 Name. The name in the English language of the Joint Venture Company is
Placer Technologies Corp. The name in the Chinese language of the Joint Venture
Company is Pu Wei Si You ▇▇▇▇ ▇▇▇▇ Si.
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1.3 Legal address. The legal address of the Joint Venture Company shall be
located at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇. ▇▇ ▇▇ Gen Lin Road, West District, City of
Beijing, People's Republic of China.
1.4 Fiscal Year. The fiscal year of the Joint Venture Company for accounting and
tax purposes shall be from January I to December 31 (the "Fiscal Year").
1.5 Document. The Joint Venture Company shall execute, file and submit all
documents necessary to comply with the requirements of the laws, decrees and
applicable rules and regulations of China for the establishment of the Joint
Venture Company.
1.6 Title to Property. All property owned by the Joint Venture Company, tangible
or intangible, shall be owned by the Joint Venture Company (as an entity) and no
Party, individually, shall have any ownership interest in any such property.
1.7 Risk. No Party shall be liable for any of the debts, losses or liabilities
which not belong to the Joint Venture Company. The liabilities and the risk of
the Parties to the Joint Venture Company is limited to the amount of the
registered capital of the Joint Venture Company; each Party's liability shall be
limited to the amount of its investment in the Joint Venture Company. The Joint
Venture Company's liability shall be limited to its whole asset.
1.8 Participation in Profits. The profits of the Joint Venture Company shall be
allocated and distributed to the Parties in accordance with Article 4 of this
Contract.
1.9 Articles of Association. The Parties agree to negotiate in good faith the
terms of the Articles of Association of the Joint Venture Company.
ARTICLE 2
THE PURPOSE AND SCOPE OF THE JOINT VENTURE COMPANY
2.1 Purpose. The Joint Venture Company shall employ the latest scientific
management methods and advanced technology to ensure that the computer and
telecommunications technology services perform according to the most advanced
international standards. The Joint Venture Company shall demonstrate competitive
capability in the market place based on its engineering technology and quality
of its service, so as to maximize the economic results of the Joint Venture
Company and ensure satisfactory economic benefits for each Party. The short term
purpose of the Joint Venture Company is to establish the computer and
telecommunications engineering service business in Beijing; the long term
purpose will be to expand the computer and telecommunications engineering
services into other cities in China.
2.2 Scope. The business scope of the Joint Venture Company is as follows:
2.2.1 to manufacture and sell computer software.
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2.2.2 to manufacture and sell computer network systems.
2.2.3 to manufacture and sell communications equipment.
2.2.4 to provide communication engineering services.
ARTICLE 3
TOTAL AMOUNT OF INVESTMENT AND THE REGISTERED CAPITAL
3.1 Total Investment. The total amount of investment (registered capital and
external financing) of the Joint Venture Company is established at Two million
dollars U.S. (US$2,000,000).
3.2 Registered Capital. Based on the amount of investment mentioned in section
3.1 above, the registered capital of the Joint Venture Company shall be Two
hundred thousand dollars U.S. (US$200,000) (or the equivalent amount in Renminbi
determined at the time that the registered capital is invested). The registered
capital shall be entirely contributed by Party B.
3.3 Capital Contribution. The Parties agree that the capital contribution may
take a variety of forms, including but without limitation, cash, equipment,
industrial property rights and Know how etc. However, the capital contribution
taking forms of cash and equipment shall not less than 90% of the total
registered capital contribution (i.e. US$180,000).
3.4 External Financial . The Parties agree that the Joint Venture Company may
borrow funds from financial institutions within China or from foreign financial
institutions outside of China and grant security on its assets.
3.5 Time to Contribution. The registered capital of the Joint Venture Company
shall be contributed within six months from the date of the registration and
obtaining business license of the Joint Venture Company. An investment
verification report shall be issued by a Chinese registered accountant and the
Joint Venture Company shall issue an investment certificate after the
contribution in the registered capital is paid.
3.6 Use of Funds. The Parties agree that most of the capital investment shall be
used to develop the business of the company.
3.7 Tax efficiency. The Parties agree that the investment to be made by each of
them in the Joint Venture Company may be effected through a wholly owned
subsidiary or an Affiliate of such Party. All changes fees shall be paid by the
Party looking for such changes.
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For the purposes hereof, the expression "Affiliate" means any legal entity (i)
whose ownership by a Party shall exist through the direct or indirect ownership
of more than fifty percent (50%) of the equity interest of the legal entity and
having more than fifty percent (50%) of the voting rights entitling the holders
thereof to vote for the election of directors or persons performing similar
functions, or (ii) in respect of which a Party has the right to elect or appoint
the majority of directors or persons performing similar functions, or (iii) in
respect of which a Party has more than fifty percent (50%) of the right of vote
in such legal entity.
ARTICLE 4
DISTRIBUTION OF PROFIT
4.1 Distribution Percentage.
The Parties agree that the percentage of profits to be distributed to Party A
and Party B by the Joint Venture Company shall be made in accordance with the
following:
(a) Unfit such date as Party B's total investment and interest of the external
financing in the Joint Venture Company has been fully recovered by Party B (the
"Recoupment Date"), the distribution of profits shall be in accordance with the
following percentages:
Name of the Party Distribution Percentage
PARTY A 20%
PARTY B 80%
(b) After the Recoupment Date, all distribution of profits shall be made as
follows:
Name of the Party Distribution Percentage
PARTY A 49%
PARTY B 51%
4.2 Nature of Distribution. The net profit of the Joint Venture Company shall be
distributed in cash (in Renminbi) unless otherwise unanimously agreed to by the
Parties. Such distribution may be converted into foreign currency with the rate
determined at the time of the distribution.
4.3 Distribution of Profits prior to the Recoupment Date shall be made as and
when Profits are legally available for distribution, as determined by the Joint
Venture Company's accountant.
4.4 All equipments provided by Party B shall be treated as investment made by
Party B to the Joint Venture Company.
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4.5 Regarding the guarantee of the payback of investment of Party B, Party B
shall have 80% of the profit distribution to ensure the payback of its
investments contributed to the Joint Venture Company. ARTICLE 5
RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE
5.1 Responsibilities of Party A.
Party A shall be responsible for:
5.1.1 coordinating with all existing customers and actively promoting
sales and applications of the Joint Venture Company's products, as well as
supporting sales of goods and services of the Joint Venture Company to
customers;
5.1.2 obtaining all required pen-nits and authorizations (whether local,
municipal, provincial, state or other) and registrations which may be
required or applicable to the constitution of the Joint Venture Company
including the preparation and submission of the necessary documents for
the examination and approval authorities;
5.1.3 securing and obtaining all necessary licenses, permits and
authorizations from the administration which may be applicable or
necessary to the business of the company;
5.1.4 assisting the Joint Venture Company in handling the applications for
processing import customs declarations for the machinery and mechanical
and electronic equipment to be used and arranging transportation and
delivery within the Chinese territory;
5.1.5assisting the Joint Venture Company in contracting for and
obtaining all necessary infrastructure and utility facilities, such as
water, electricity, transportation, etc.;
5.1.6 according to applicable laws and regulations in China,
assisting the Joint Venture Company in applying for and obtaining a
reduction or exemption of taxes, including local taxes, business tax,
import or custom duties, sales taxes or other duties on material,
equipment or other goods imported into China for the purposes of the Joint
Venture Company, and in obtaining other preferential tax treatments for
the Joint Venture Company and the Parties for the maximum available
period;
5.1.7 obtaining all necessary permits or authorization from
the appropriate foreign exchange control bureaus confirming that Party B
can have access to all required U.S. dollars or other foreign
currency acceptable to it and that Party B can send its investments
to the overseas;
5.1.8 Party A warranties that it will not cooperate with any party
other than Party B with regard to business of the Company;
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5.1.9 Performing any other responsibilities as may be agreed upon by and between
the Parties.
5.2 Responsibilities of Party B.
Party B shall be responsible for:
5.2.1 making the capital contribution to the Joint Venture Company as
contemplated in Section 3.3 and Section 3.4 in accordance with the laws
and regulations in China;
5.2.2assisting the Company in purchasing and/or leasing equipment,
material, office supplies, transportation, communication lines from
local or overseas suppliers;
5.2.3 within the China's territory, Party B warranties that it will
not cooperate with any other party than Party A for the business specified
in this agreement;
5.2.4 assuming any other responsibilities as may be mutually agreed upon
by the Parties.
ARTICLE 6
BOARD OF DIRECTORS
6.1 Highest Authority. The Board of Directors shall be the highest authority of
the Joint Venture Company. It shall decide all major issues concerning the
activities, business and operations of the Joint Venture Company.
6.2 Board of Directors. The Board of Directors of the Joint Venture Company
shall be composed of four (4) directors, of which two (2) shall be designated by
Party A and two (2) by Party B. The Chairman of the Board shall be appointed by
Party B. The term of office for the directors and Chair-man is four (4) years.
The term of office of each of them may be extended or renewed by the Party
designating same.
6.3 Approval. Unanimous approval of at least four directors shall be required
before any decision is made concerning the matters listed below:
6.3.1 to approve the annual budgets;
6.3.2 to acquire property, both moveable and immovable, in one instance
for a consideration of or in twelve months its accrued amount is greater
than or equal to one hundred thousand dollars U.S. (US$1 00,000);
6.3.3 to deal with any negotiable or non-negotiable instrument which is
for a consideration in excess of US$100,000;
6.3.4 to borrow money on behalf of the Joint Venture Company or to provide
security, mortgage or guarantee to any other company;
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6.3.5 to open and operate any bank accounts of the Joint Venture Company
and to designate and change the signatories to such accounts;
6.3.6 to make any amendment to the Articles of Association or to the
Joint Venture Contract;
6.3.7 to invest in any other company or enterprise, or to acquire any of
the shares or assets of any other company or enterprise;
6.3.8 to distribute any capital or profit of the Joint Venture
Company after Recoupment Date;
6.3.9 to issue, purchase or redeem any interest in the Joint
Venture Company;
6.3.10 to increase the registered capital of the Joint Venture
Company;
6.3.11 to merge or amalgamate the Joint Venture Company with any other
company or legal entity or economic organization;
6.3.12 to deal with any matter concerning any transactions of the Joint
Venture Company which may result in a conflict of interest between the
Joint Venture Company and any party hereto;
6.3.13 to change the business scope and the mode of operation of the
Joint Venture Company;
6.3.14 to terminate the Joint Venture Company before its expiration or to
declare that the Joint Venture Company becomes bankrupt or insolvent;
6.3.15 to set up any branch office of the Joint Venture Company.
6.4 Chairman. The Chairman of the Board is the legal representative of the
Joint Venture Company. If, for any reason, the Chairman is unable to
exercise his responsibilities, a director as agreed upon by all the
Parties, shall represent the Joint Venture Company.
6.5 Meeting. The Board of Directors shall convene at least one (1) meeting every
year. The meeting shall be called and presided over by the Chairman of the
Board. The Chairman may convene an interim meeting based on a proposal made by
more than two (2) directors or which there will be one (1) representative from
each of Party A and Party B. Minutes of the meetings shall be placed on file.
The meetings of the Board of Directors shall be held at the registered office of
the Joint Venture Company or at any other place as determined by the Chairman.
All notices and minutes of such meetings shall be in both Chinese and English.
6.6 Telephone Conference Calls. Any Party may request that a meeting of
directors be held by telephone conference call, by giving at least two (2)
business days' notice to all directors, by telefax or by telex.
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6.7 Quo . Quorum at the meetings (including any adjourned meetings of the Board
of Directors shall consist of at least three (3) directors. To the extent
permitted under Chinese law, a director who is unable to attend a meeting may
authorize another director to attend and vote at such meeting on his behalf by
power of attorney.
6.8 No Interference. The Joint Venture Company shall conduct its affairs in
accordance with the terms of this Joint Venture Contract and the Articles of
Association.
ARTICLE 7
MANAGEMENT COMMITTEE
7.1 Management Committee. The Joint Venture Company shall establish a Management
Committee (the "Management Committee") to administer its day to day affairs. The
Management Committee shall consist of a president (sometimes called the "General
Manager") and several vice-presidents (sometimes called the "Deputy General
Manager") appointed by the Board of Directors. Their appointment shall be
reviewed every three (3) years. The President, the vice president in charge of
technology and the chief engineer shall be nominees of Party A. The vice
president acting as senior financial officer shall be a nominee of Party B.
7.2 Conduct of Business. The Management Committee shall be chaired by the
president who shall decide all matters of importance relating to the business
and operations of the Joint Venture Company. The Management Committee shall make
recommendations and reports for approval by the Board of Directors.
7.3 Responsibilities of the President. The president shall be responsible for
organizing and conducting the daily management and business operations of the
Joint Venture Company. The vice-presidents shall assist the president in
performing his responsibilities. The president shall consult the vice presidents
in respect of important decisions regarding the business operations of the Joint
Venture Company.
7.4 Removal of the President and Vice-President. The Board of Directors shall
have the power to dismiss the president and any vice-president at any time for
cause. Furthermore, the president and any vice-president may be dismissed by the
Party who nominated him and such officer shall again be designated by the same
Party subject to the approval of the Board of Directors.
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ARTICLE 8
PURCHASE AND SALE OF EQUIPMENT
8.1 China First. The Joint Venture Company shall purchase, whenever possible,
such goods as machinery equipment, raw materials, fuel, spare parts,
transportation services and facilities in the Chinese market, provided however
that the cost and quality of such goods or services are at least equal to the
cost and quality of equivalent goods and services which may be acquired from
outside the PRC.
8.2 Purchases Abroad. Any purchase of goods or services in the international
market requires the unanimous consent of the Board of Directors regarding the
models, quality, place of production, quantity and price. ARTICLE 9
LABOUR MANAGEMENT
9.1 Labour Relations.The recruitment, employment, dismissal, resignation, wages,
labour insurance, welfare, rewards, penalty and other matters concerning the
personnel of the Joint Venture Company shall be carried out in accordance with
the Labour Management Regulations of the Enterprises with Foreign and Chinese
Investment in the People's Republic of China. The Joint Venture Company shall
draw up the labour contracts for the personnel for submission to the Beijing
Municipal Labour Bureau (for the record).
9.2 Appointment and Compensation of Senior Personnel. The appointment of senior
personnel recommended or nominated by the Parties, their salaries, social
insurance, welfare, traveling expenses and other related matters, shall be
decided by the Board of Directors.
ARTICLE 10
TAXES, FINANCE AND AUDIT
10.1 Payment of Taxes. The Joint Venture Company shall pay taxes in accordance
with all applicable Chinese laws and regulations. Each Party agrees to use its
best efforts to ensure that the business affairs of Joint Venture Company be
conducted in the most tax efficient manner.
10.2 Individual Income Tax. Each employee of the Joint Venture Company shall pay
individual income tax according to the Individual Income Tax Law of the People's
Republic of China. Except for statutory withholding taxes, the Joint Venture
Company shall not be responsible for the payment of such taxes. 10
10.3 Reserves. Allocations for reserve funds, expansion funds and welfare funds
of the Joint Venture Company shall be set up in accordance with the provisions
contained in the Law of the People's Republic of China on China Foreign
Cooperative Joint Ventures and other relevant Chinese laws, regulations and
decrees. The annual allocations shall be decided by the Board of Directors
according to the business situation and financial condition of the Joint Venture
Company.
10.4 Books and Records. The Joint Venture Company shall maintain and keep at its
legal address all books and records required by law or necessary, useful or
appropriate for the business and affairs of the Joint Venture Company. Each
Party shall have the right to inspect the Joint Venture Company's books and
records at any reasonable time upon advance written request to the general
manager.
10.5 Accounts. The Joint Venture Company shall, according to the requirements
for an enterprise with Chinese and Foreign Investment in the People's Republic
of China, hire accountants and draw up an accounting system for the Joint
Venture Company.
10.6 Certificates, Reports, Returns, and Audits. The books of account shall be
closed promptly after the end of each Fiscal Year. Unless the following
requirements or any of them, are waived unanimously by the Parties, the Joint
Venture Company shall deliver to all of the Parties the following financial
reports prepared in accordance with the procedures set forth below:
10.6.1 All financial statements shall be prepared in Renminbi and in U.S.
dollars in English and Chinese.
10.6.2Annual. Within eighty (80) days after the end of each Fiscal Year, an
annual report in respect of such Fiscal Year containing:
10.6.2.1 audited financial statements as at the end of, and for, such
Fiscal Year (prepared in accordance with international generally accepted
accounting principles (International GAAP) adopted in China consistently
applied, with comparative financial statements as at the end of, and for,
the immediately preceding Fiscal Year) containing a balance sheet; a
statement of profit and loss; a statement of changes in financial
position; and a statement of change in capital;
10.6.2.2 a report of the Auditors on such financial statements stating
that such financial statements have been prepared in accordance with
international generally accepted accounting principles (International
GAAP) adopted in China consistently applied;
10.6.2.3 a report on allocations and distributions (whether
directly or indirectly) to the Parties;
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10.6.2.4 such other information as is required to be provided to the Parties or,
in the opinion of the general manager, is material to the business of the Joint
Venture Company;
10.6.2.5 such financial and other information as may be reasonably requested by
a Parry; and
10.6.2.6 information concerning creditors and charges to the capital and current
accounts allocated to the Parties and such other information as may be necessary
to enable a Party to file income tax returns with respect to such Party's income
or loss in respect of such Fiscal Year.
10.7 Auditors. The auditors of the Joint Venture Company shall be a firm of
auditors of international expertise as the Parties may appoint from time to time
(the "Auditors"). The Auditors shall, at the Fiscal Year end and at such other
times as they may be reasonably requested by any Party, make an audit of the
books and records of the Joint Venture Company and for such purposes they shall
have access to all books and records of the Joint Venture Company.
10.8 Timing of the profit distribution. The Joint Venture Company may distribute
profits quarterly or annually according to the current business situation.
ARTICLE 11
DURATION OF THE JOINT VENTURE COMPANY
AND OWNERSHIP OF FIXED ASSETS
11.1 Term of the Joint Venture Company. This Joint Venture Contract shall become
effective upon the execution thereof and shall terminate twenty (20) years
following the issuance of the business license to the Joint Venture Company.
11.2 Extension of the Joint Venture Contract. An application for the extension
of this Joint Venture Contract, proposed by one Party and unanimously approved
by the Board of Directors, shall be submitted for approval to the examination
and approval authorities (or other examination and approval authorities
stipulated in the law) located in the area where has been done the registration
of the Joint Venture Company six months prior to the expiry date of the original
term of the Joint Venture Contract.
11.3 Ownership of fixed assets. On the expiry of the duration of the term of the
Joint Venture Company, if Parties agree to not extend its duration and under the
condition that Party B has already recouped its investment, the fixed assets of
the Joint Venture Company will revert to the ownership of Party A.
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ARTICLE 12
BUDGETS
12.1 Except as other-wise herein permitted, all operations of the Joint Venture
Company shall be carried on in conformity with the budgets previously approved
by the Board of Directors, setting, forth operating costs and capital costs to
be incur-red in such Fiscal Year by the Joint Venture Company.
ARTICLE 13
TERMINATION AND LIQUIDATION
13.1 Termination. This Joint Venture Contract may be terminated before its
expiration upon the occurrence of any of the following events:
13.1.1 if any Party shall be in breach of any of its material obligations
hereunder, and such breach shall continue for a period of thirty (30) days from
the receipt of a written notice of breach from the other Party;
13.1.2 if any Party passes a resolution that it wind up or be liquidated, or a
meeting is convened for the purpose of passing any such resolution, or an order
is made for the winding-up or liquidation of such Party;
13.1.3 if a receiver or receiver-manager is appointed with respect to the whole
or a substantial part of the affairs or assets of any Party or if a Party is
adjudged bankrupt or insolvent, or files a proposal in bankruptcy;
13.1.4 if the Joint Venture Company suffers significant losses during any Fiscal
Year due to an event of force majeure as defined in Article 15.1 . hereto or the
foreign investor suffers significant losses;
13.1.5 if the Joint Venture Company becomes bankrupt or insolvent; or
13.1.6 if the two Parties agree unanimously that the termination of the Joint
Venture Contract is in the best interests of the Parties.
The Board of Directors shall decide at a meeting duly held for such purpose to
terminate the Joint Venture Contract, and such decision shall be submitted for
examination and approval by the competent examination and approval authorities.
13.2 Events of Default.
13.2.1 If any party fails to perform its duties specified in the present Joint
Venture Contract or in the Articles of Association, or if the Party seriously
breaches the provisions of the Joint Venture Contract or of the Articles of
Association, and thereby causes damage to the operations of the Joint Venture
Company or causes,
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directly or indirectly, the failure to reach the goals regarding the operations
specified in the present Joint Venture Contract, such act shall be deemed an
event of default by the Party who breaches the Joint Venture Contract. The other
Party is entitled to claim for remedy, and shall have the right to terminate the
Joint Venture Contract by filing an application to the competent examination and
approval authorities. Should the Joint Venture Company continue to operate. the
Party who breaches the Joint Venture Contract must compensate for the economic
losses and damages incurred by the Joint Venture Company and the shareholders
thereof.
13.2.2 A party which tails to contribute investment or to meet terms of
cooperation as stipulated in the Joint Venture Contract must bear liability for
breach of Contract in respect of that other party which has already contributed
investment or met terms of cooperation as stipulated in the Joint Venture
Contract.
13.2.3 Any Party that causes the non-performance or incomplete performance of
the Joint Venture Contract or any ancillary agreement thereto, because of its
default. shall be deemed responsible for the occurrence of an event of default.
If two Parties cause the non-performance or incomplete performance of such
contract, each shall be responsible to the extent of its own breach or liability
for the' occurrence of the event of default.
13.3 Dissolution and Liquidation. Upon the expiration of the term of this Joint
Venture Contract, or, if the Joint Venture Contract is terminated as provided
above in this Section CHAPTER 13, as the case may be, the Parties shall proceed
to liquidate the Joint Venture Company in the following manner:
13.3.1 the Board of Directors of the Joint Venture Company shall set-up a
liquidation committee of four (4) members. The members of such committee will be
selected from among the members of the Board and each of Party A and Party B
shall have two (2) representatives on such committee. The task of the committee
will be to prepare an inventory of the Joint Venture Company's assets and
liabilities and to formulate a liquidation plan;
13.3.2 the proceeds of liquidation of the Joint Venture Company's assets shall
be utilized in the following order of priority:
13.3.2.1 firstly, to the repayment of all debts and liabilities of the Joint
Venture Company and the expenses of liquidation and to the setting up of any
reserve fund that the Board of Directors, upon the recommendation of the
liquidation committee, considers reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Joint Venture Company;
13.3.2.2 secondly, to the Parties for the payment of any registered capital and
profits not yet paid to them.
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13.3.2.3 after accomplish the above mentioned two payments, the remaining shall
be distributed in accordance with the percentage stated in the Section 4. 1.
13.4 Survival. In the event that the Joint Venture Contract is terminated as
provided in this Section CHAPTER 13, no Party shall be relieved of any
obligation or liability towards the Joint Venture Company or any other Party, in
each case accrued up to the date of the resolution of the Board of Directors to
liquidate the Joint Venture Company.
13.5 Assets Other Than Cash. Assets of the Joint Venture Company may be
distributed in kind on the basis of the then appraised fair market value of such
assets, if agreed to by all the Parties. For the purposes of making such
distribution only, the unrealized profit or loss on any such asset (based on its
fair market value) shall be first allocated among the Parties and the
distribution of the asset shall be treated as a distribution of cash equal to
the fair market value of such asset. In the event that Party B is unable to
repatriate the assets distributed to it in kind, then Party A agrees to purchase
the assets to be otherwise distributed to them at their fair market value as
determined by an independent evaluator acceptable to the Parties.
ARTICLE 14
INSURANCE
14.1 Insurance Policies. Insurance policies of the Joint Venture Company on
various kinds of risks shall be underwritten with the People's Insurance Company
of China and shall be maintained in force at all times. The type, value and
duration of insurance shall be decided by the Board of Directors in accordance
with generally accepted international standards for such coverage.
ARTICLE 15
FORCE MAJEURE
15.1 Force Majeure. Should any Party to this Joint Venture Contract be prevented
from executing any of its obligations under this Joint Venture Contract by force
majeure, such as earthquake, typhoon, flood, fire, war, riots, civil commotions,
strikes, and other unforeseen events or circumstances beyond the reasonable
control of a Party, then the Party so prevented shall notify the other Party in
the manner set forth in Section 18.2 without any delay, and within fifteen (15)
days thereafter provide the detailed information of the events explaining the
reasons of its inability to execute or of the delay in the execution of all or
part of this Joint Venture Contract. The Parties shall, through consultation,
decide whether to terminate the Joint Venture Contract and liquidate the Joint
Venture Company or to exempt the part of obligations which is subject to force
majeure from the terms of the Joint Venture Contract or to delay the execution
of the Joint Venture Contract until such time that the events giving rise to the
force majeure cease.
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ARTICLE 16
EXCLUSIVE DEALING
16.1 In consideration for the Parties entering into the present Contract, the
Parties hereto mutually agree that they shall not, directly or indirectly,
solicit or consider offers, enter into discussions with, provide information to,
negotiate with or in any manner, encourage, discuss, accept, or consider, any
proposal of any third party in the PRC.
ARTICLE 17
REPRESENTATIONS AND WARRANTIES
17.1 Representations and Warranties. Each of the Parties to the Contract
represents and warrants to the other as follows:
17.1.1 it is a legal entity duty organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation with power,
authority and capacity to enter into this Joint Venture Contract and to perform
its obligations hereunder and in the agreements and contracts contemplated
hereunder in accordance with the terms thereof,
17.1.2 the execution, delivery and performance of this Joint Venture Contract
and the transactions contemplated hereby have been duly authorized by all
necessary corporate and other action, and upon the Joint Venture Contract coming
into effect, it shall constitute a valid and binding obligation and shall be
enforceable against such Party in accordance with its terms subject to any
applicable insolvency or bankruptcy laws; and
17.1.3 neither the execution and delivery of this Joint Venture Contract nor the
consummation of the transaction contemplated hereby shall violate, result in a
breach of any material term or provision of, or constitute a default under
statutes, regulations or articles of association or any material agreement,
instrument, law or regulation to which such Party is bound;
17.1.4 to the extent that it may in any jurisdiction claim for itself or its
assets or revenues immunity from suit, execution, attachment (whether in aid of
execution, before judgment or otherwise) or other legal process and to the
extent that in any such jurisdiction there may be attributed to itself or its
assets or revenues such immunity (whether or not claimed) it agrees not to claim
and irrevocably waives such immunity to the full extent permitted by the laws of
such jurisdiction.
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ARTICLE 18
MISCELLANEOUS PROVISIONS
18.1 Preamble. The preamble shall form an integral part hereof as if herein
recited at length.
18.2 Notice. Any notice, consent, authorization, direction or other instrument
required or permitted by this contract to be given hereunder ("Notice") shall be
in writing and shall be delivered either by personal delivery, registered mail
or by telecopier, return receipt requested, and addressed as follows:
18.2.1 if to XIN HAI TECHNOLOGY DEVELOPMENT LTD.
▇▇▇▇▇ ▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇. ▇ I
We Gen Lin Rd., West District
Beijing, People's Republic of China
Attention: ▇▇. ▇▇▇ ▇▇▇
Telecopier: (▇▇▇▇) ▇▇▇-▇▇▇▇
18.2.2 if to INFORNET INVESTMENT LIMITED
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇▇-▇▇▇▇
COPY TO:
830 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier (▇▇▇) ▇▇▇-▇▇▇▇
Any Notice shall be deemed to have been effectively given and received, if sent
by telecopier, on the next business day following receipt of such transmission
(confirmation of receipt by confirmed facsimile transmission being deemed
receipt of communication sent by telecopy) or, if delivered, to have been given
and received on the date of such delivery. Any of Party A or Party B may change
its address for service by written Notice given as aforesaid.
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18.3 Foreign Economic Contracts. The Parties acknowledge that this Contract and
the other contracts and agreements contemplated hereunder constitute foreign
economic contracts and are subject to the Foreign Economic Contract Law and Law
of the People's Republic of China on Sino-Foreign Cooperative Joint Ventures.
18.4 Integration. This Joint Venture Contract, together with all of the
contracts and agreements contemplated herein, set forth the entire agreement
between the Parties with regard to the subject matter hereof.
18.5 Resolution of Disputes.
18.5.1 Any controversy or claim that may arise under, out of, in connection with
or relating to this Joint Venture Contract or the Joint Venture Company or any
breach hereof, shall be submitted to a panel consisting of representatives of
each Party. Each of Parties related to the dispute may appoint up to one (1)
individual to such panel. The members of such panel shall be appointed by each
of them within ten (10) days of the receipt by the Party of notice of the
existence of such controversy or claim. The unanimous decision of such panel
shall resolve the controversy or claim. If the panel is unable to resolve such
matter within thirty (30) days of the submission of such controversy or claim to
such panel, it shall be. brought before the President or Chairman of each of
Party involved in any such controversy or claim, for final resolution. If such
individuals are unable to resolve the matter within thirty (30) days of the
submission of such controversy or claim to such individuals, any Party may
request arbitration in accordance with Section 18.5.2.
18.5.2 Any controversy or claim that is not resolved under Section 18.5.1 shall
be submitted to the China International Economic and Trade Arbitration Committee
for settlement by arbitration in accordance with its arbitration procedures or
rules. The PRC laws and regulations are applicable for the arbitration. The
arbitration location shall be at Beijing. The arbitral decision shall be final
and binding, and without appeal. The costs of arbitration shall be assumed by
the Party or Parties against whom the arbitral award is decided.
18.5.3 Any controversy which constitutes a disagreement as to a matter which is
properly within the competence of the Board of Directors shall not be subject to
arbitration under Section 18.5.2 unless all Parties agree thereto.
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18.6 Confidential Information. All information other than information generally
known in the telecommunications industry supplied by or on behalf of any Party
pursuant to this Joint Venture Contract ("Confidential Information") shall be
treated as confidential by all Parties. The Parties covenant and agree that no
Confidential Information shall be disclosed to anyone outside the organization
of such Party without the prior written consent of the other. In addition, the
Parties agree to take such action as may be appropriate to prevent the
unauthorized use and disclosure of, and to keep confidential all such
Confidential Information, including ensuring that such Confidential Information
be disclosed only to responsible employees of the Party and on a need to know
basis.
18.7 Implementation. The Parties hereto hereby agree to ensure compliance by its
directors, agents or representatives with the terms and conditions of this Joint
Venture Contract. The Parties shall also implement or help to implement all
necessary and useful steps in order to ensure Parties' promises.
18.8 Severability. In case any one or more of the provisions contained in this
Joint Venture Contract or any application of such provisions shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions or the remaining applications shall
at no time in any way be affected or impaired.
18.9 Applicable Law. This Joint Venture Contract shall be governed by, construed
and enforced in accordance with the laws of the People's Republic of China.
18.10 Counterparts This Joint Venture Contract shall be executed in six (6)
originals and may be executed in counterparts and all counterparts so executed
shall constitute one contract binding all the Parties.
18.11 Captions. The captions and headings in this Joint Venture Contract are for
convenience only and shall not be considered in interpreting any provision of
this Joint Venture Contract.
18.12 Binding Effect. Except as other-wise provided to the contrary, this Joint
Venture Contract shall be binding upon, and enure to the benefit of, the Parties
and their respective heirs, executors, administrators, successors and permitted
assigns.
18.13 Gender and Number. Whenever required by the context, the singular shall be
deemed to include the plural, and the plural shall be deemed to include the
singular.
18.14 Amendment. This Joint Venture Contract may not be amended in whole or in
part unless by agreement in writing signed by all the Parties. If the Parties
agree, during the term of this Joint Venture Contract, to make a major amendment
to this Joint Venture Contract, they shall apply for approval to the appropriate
authorities. Where the subject of amendment involves industrial or commercial
registration or tax registration, the re-registration formalities shall be
completed with the industry and commerce authorities and the taxation
authorities, as required.
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18.15 Transfer to Affiliates. Any of Party A and Party B may, at any time, but
subject to the provisions of this Contract, sell, transfer, assign or otherwise
dispose of all or any of their respective Participation in the Joint Venture
Company to one or more of their respective Affiliates provided however that:
18.15.1 each such transferee Affiliate agrees in writing m advance to be fully
bound by the terms and conditions of this Contract;
18.15.2 the Party transferring its interest, shall remain responsible to the
other Parties for the action of such transferee Affiliate, including compliance
with this Contract;
18.15.3 all transfers of a Participation as provided above shall also require
the approval of the relevant authorities in China.
18.16 Language. This Joint Venture Contract shall be written in Chinese and in
English and both versions shall have the same legal and binding effect.
IN WITNESS WHEREOF, the Parties have duly executed this Joint Venture Contract
in Beijing, China, as of this_____ th day of Aug____________ 1997.
XIN HAI TECHNOLOGY DEVELOPMENT LTD.
Seal
Per: ______________________________________________
INFORNET INVESTMENT LIMITED
Seal
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