Cooperation Agreement
THIS COOPERATION AGREEMENT made as of May 10, 2000
AMONG
Wu Yi University of the City of Jiangmen, Guangdong Province, the People's
Republic of China (`PRC") ("Party A")
AND
CathayOnline Technologies (Hong Kong) Limited, a company duly incorporated
under the laws of Hong Kong ("Party B")
AND
Sichuan Guo Xun Xin Xi Chan Ye You Xian Gong Si, a company incorporated
under the laws of the PRC ("Party C")
WHEREAS:
A. Party A currently owns a fiber optic network connecting 1,500 computers;
B. Party A is capable of obtaining internet service provider ("ISP") license;
C. Party A wishes to establish full ISP services and to market such services
to customers in China ("Customers");
D. Party B and Party C are having a working relationship; and
E. Party A and Party B and/or Party C wish to cooperate with each other in the
provision of the Services.
IN CONSIDERATION OF mutual promises and other good and valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follow:
Cooperation Structure and Provision of Services
1. Party A and Party B (and/or Party C) will jointly incorporate a company in
Guangdong ("Guangdong Company"), which will provide full ISP services and
other value added internet services (the "Services") to the Customers.
The Parties' Contributions
2. Party A will be responsible for obtaining telecom or other licenses from
relevant government departments in the PRC that are required for the
Guangdong Company to legally provide the Services, including, but not
limited to licenses required for ISP, ICP, data processing and e-mail
services.
3. Party B and/or Party C (or through its designated entity) will jointly or
severally contribute to and the Guangdong Company necessary capital
required for the provision of the Services operating capital required for
marketing and development of the Services ("Development Expenses"), the
amount and schedule of which will be determined by the Parties on the basis
of a feasibility study report provided that the funding and accounting
practice related thereto comply with requirements of relevant securities
regulatory authorities.
Operation and Management of the Guangdong Company
4. The board of directors of the Guangdong Company will be consisted of five
(5) directors, of which Party A will appoint Two (2) and Party B and/or
Party C will appoint Three (3).
5. The Chairman of the Board of the Guangdong Company will be appointed by
Party B and/or Party C and the General Manager for the Guangdong Company
will be appointed by Party A.
6. Party B and/or Party C (or its designated entity) will, with the assistance
and participation of Party A, be responsible for management of the
Guangdong Company on the basis of a management agreement to be entered by
the relevant parties.
7. Party A will provide the technical and administrative team required by the
Guangdong Company for the development and maintenance of the Services.
Shareholding and Dividend
8. Party A will hold twenty five (25) percent of all issued and outstanding
shares of the Guangdong Company and Party B and/or Party C (or its
designated entity) will hold seventy (75) percent of all issued and
outstanding shares of the Guangdong Company.
9. After tax profits of the Guangdong Company will be distributed to the
shareholders in accordance with their respective shareholding pursuant to
relevant laws and rules provided that no such distribution will be made
before and until the Development Expenses are fully paid back to Party B
and/or Party C (or its designated entity).
Covenants and Undertakings
10. Party A covenants not to enter into any similar discussion and agreement
with any other third parties while Party B and/or Party C will not enter
into any similar discussion or agreement with any other third parties in
Jiangmen region, Guangdong Province.
11. The Parties undertake to cooperate in good faith to implement the project
contemplated by this Agreement.
Representations and Warrants
12. Party A represents and warrants that:
(1) It has legal capacity to enter into this Agreement and has taken all
actions and steps required for entering into this Agreement.
(2) It is legally bound by this Agreement and has legal rights and
capacity to perform its obligations under this Agreement; and
(3) The entering into this Agreement and the performance of the
obligations hereunder by Party A is not in violation of any laws or
rules to which Party A is subject.
13. Party B and/or Party C severally represent and warrant that:
(1) It is established under the laws of its place of incorporation and is
validly subsisting and has complied with all the reporting
requirements under such laws;
(2) It has legal capacity to enter into this Agreement and has taken all
corporate actions and steps required for entering into this Agreement;
(3) It is legally bound by this Agreement and has legal rights and
capacity to perform its obligations under this Agreement; and
(4) The entering into this Agreement and the performance of the
obligations hereunder by Party B and/or Party C is not in violation of
any laws or rules to which Party B and/or Party C is subject.
General Provisions
14. This Agreement will come into effective upon the execution of the same by
the duly authorized signatories of the Parties and upon satisfactory
completion of due diligence on the project contemplated by this Agreement
by Party B and/or Party C or its advisers.
15. This Agreement is governed by and construed in accordance with laws of the
PRC and the Parties hereby submit to the non-exclusive jurisdiction of
courts in the PRC.
16. Any provisions hereof held by a competent court or arbitration tribunal to
be invalid or illegal shall not affect the validity of other provisions
hereof which shall remain intact and legally binding. The Parties shall
continue to implement such other provisions.
17. This Agreement shall be binding on and enure to the benefits of heirs,
executors, administrators, successors and assigns of the Parties hereto
provided that Party A shall not assign its rights and obligations hereunder
unless with express prior written consent of Party B and/or Party C.
18. This Agreement is prepared in both English and Chinese with three (3)
original copies in each language version. Should the two versions conflict,
the English version shall prevail.
Executed by the Parties on the date first above mentioned.
Witness Wu Yi University
_____________________________ Per:_________________ (corporate seal)
Witness CathayOnline Technologies (Hong
Kong) Limited
_____________________________ Per:_________________ (corporate seal)
Witness Sichuan Guo Xun Xin Xi Chan Ye
You Xian Gong Si
_____________________________ Per:_________________(corporate seal)
