Cooperation Agreement
THIS COOPERATION AGREEMENT made as of March _____, 2000
AMONG
ChinaAerospace Machinery and Electric Group Institute No. 2
Telecommunication Station, of Beijing, the People's Republic of China
(`PRC") ("Party A")
AND Beijing Qizhengtong Scientific and Technological Development
Corporation, a company incorporated under the laws of the PRC ("Party B")
AND
Beijing CathayOnline Technologies Co., Ltd., a wholly-owned foreign
enterprise established under the laws of the PRC ("Party C")
WHEREAS:
A. Party A is a division of China Aerospace and is currently providing full
telecom services to customers in Yongding Road Area in Beijing, with an
existing customer basis of corporate and individual customers of around
15,000 ("Existing Customers");
B. Party B is a corporate entity established by Party A, which has separate
legal status and is capable of obtaining internet service provider ("ISP")
license;
C. Party A and/or Party B wish to establish full ISP services for the Existing
Customers and to market such services to customers of the other China
Aerospace divisions as well as other potential customers ("Other
Customers"); and
D. Party A and/or Party B and 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/or Party B, together with Party C (or its designated party),
will jointly incorporate a company in Beijing ("Beijing Company"), which
will provide full ISP services and other value added internet services (the
"Services") to the Existing Customers and Other Customers.
The Parties' Contributions
2. Party A and/or Party B will jointly and severally be responsible for the
following:
(1) obtaining telecom or other licenses from relevant government departments in
the PRC that are required for the Beijing Company to legally provide the
Services, including, but not limited to licenses required for ISP, ICP,
data processing and e-mail services; and
(2) cooperating with other stations of China Aerospace to market the Services
to Other Customers.
3. Party C (or through its designated entity) will contribute to the Beijing
Company a total amount of about US$ 2.5 million in the form of necessary
equipment and provision of operating capital required for marketing and
development of the Services ("Development Expenses"), the schedule of which
will be determined by the Parties on the basis of the project needs
provided that the funding and accounting practice related thereto comply
with requirements of relevant securities regulatory authorities. Party C
will further provide funds required for the provision of the Services or
expansion of such Services and such funding requirements will be reviewed
by the Parties.
Operation and Management of the Beijing Company
4. The board of directors of the Beijing Company will be consisted of five (5)
directors, of which Party A and/or Party B will appoint Two (2) and Party C
will appoint Three (3).
5. The Chairman of the Board of the Beijing Company will be appointed by Party
C and the General Manager for the Beijing Company will be appointed by
Party A and/or Party B.
6. Party C (or its designated entity) will, with the assistance and
participation of Party A and/or Party B, be responsible for management of
the Beijing Company on the basis of a management agreement to be entered by
the relevant parties.
7. Party A and/or Party B will provide the technical and administrative team
required by the Beijing Company for the development and maintenance of the
Services.
Shareholding and Dividend
8. Party A and/or Party B will hold Thirty (30) percent of all issued and
outstanding shares of the Beijing Company and Party C (or its designated
entity) will hold Seventy (70) percent of all issued and outstanding shares
of the Beijing Company.
9. After tax profits of the Beijing 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 Capital Expenses are fully paid back to Party C (or
its designated entity).
Covenants and Undertakings
10. Each of the Parties covenants not to enter into any similar discussion and
agreement with any other third parties.
11. The Parties undertake to cooperate in good faith to implement the project
contemplated by this Agreement.
Representations and Warrants
12. Party A and/or Party B jointly and severally represent and warrant 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 and/or Party B is not in violation of
any laws or rules to which Party A and/or Party B is subject.
13. Party B represents and warrants that:
(1) It is established under the laws of the PRC and is validly subsisting
and has complied with all the reporting requirements under the laws of
the PRC;
(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 C is not in violation of any laws or
rules to which 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 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 and/or Party B shall not assign its rights and
obligations hereunder unless with express prior written consent of 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 China Aerospace Machinery and Electric
Group No.2 Institute Telecommunication
Station
_____________________________ Per:_________________ (corporate seal)
Witness Beijing Qizhengtong Scientific and
Technological Development Corporation
_____________________________ Per:_________________ (corporate seal)
Witness Beijing CathayOnline Technologies
Co., Ltd.
_____________________________ Per:_________________(corporate seal)
