Exhibit 10.1
MANAGEMENT AND CONSULTANCY SERVICE AGREEMENT
This Agreement is dated this _______ day of _________________, 1999
BETWEEN
Sichuan Guo Xun Xin Xi Chan Ye You Xian Gong Si, a company incorporated
under the laws of the People's Republic of China (the "PRC") ("Party
A")
AND
Sichuan CathayOnline Technologies Co. Ltd., a wholly foreign-owned
enterprise established under the laws of the PRC ("Party B")
WHEREAS:
A. Party A holds a PRC Computer Information Network International
Networking Business Operating Licence No.9923 (the "Licence"), pursuant
to which Party A is duly authorized by Sichuan Telecommunication
Administration Bureau to engage in the operation of computer
information network international networking business (the "Business")
in certain cities specified in the Licence (the "Cities") from
September 8, 1999 to March 23, 2003 (the "Term");
B. Party B is a wholly foreign-owned enterprise duly established and
approved to engage in the business of providing value added services in
relation to data processing and computer networking related business;
and
C. Party A wishes to retain certain management, consultancy and technical
assistance services of Party B in relation to the carrying out of the
Business and Party B wishes to provide such services to Party A.
IN CONSIDERATION OF mutual promises and other valuable considerations, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE I - INTERPRETATION
1.1 In this Agreement, the following definitions apply:
(1) "Assets" means assets such as computer hardware and software required
for the Project and owned by Party B;
(2) "Asset Usage Fee" means the fees to be paid by Party A for the use of
the Assets which are calculated as amounts equal to the Depreciation
Charge for any given accounting period;
(3) "Depreciation Charge" for any given accounting period means the total
depreciation charge for that accounting period based on the total
capital expenditure of Party B in relation to the Project depreciated
over a five year period on a straight-line basis or otherwise in
accordance with generally accepted accounting principles in the PRC;
(4) "Net Profit" means the income deriving from the Project for a given
accounting period less the Operating Expenses, the Asset Usage Fee, and
the income tax and other applicable taxes (including business tax)
payable to the PRC central and/or local governments in relation to the
Project for such accounting period;
(5) "Operating Expenses" means the legitimate costs and expenses which are
allowed by the PRC Law to be deducted for enterprise income tax
purposes for any accounting period in relation to the Project and shall
include salary and other expenses for employees of Party B seconded for
the Project at the recommendation of the Committee;
(6) "PRC Law" means all written laws, regulations, ordinances, rules,
measures, provisions and guidelines enacted by the PRC central and
various local governments, including those that are temporarily in
force or on trial implementation, but excluding all internal documents
the disclosure of which is prohibited to foreign business;
(7) "Project" means the carrying out of the Business to customers
("Customers") in the Cities by Party A with the assistance of Party B
during the Term;
(8) "Services" means the following management, consultancy and technical
assistance services:
(a) value added services in relation to data processing and computer
networking related planning, designing and implementation;
(b) services relating to computer and electronic communication related
project development, consulting and management;
(c) other services required for the Project (including certain
administrative services such as collecting accounts from the Customers)
and agreed to by Party B.
(9) "Service Fees" means ninety (90) percent of the Net Profit for any
given accounting period.
1.2 Headings used herein are for ease of reference only and shall not
affect the interpretation of this Agreement.
ARTICLE II - PROVISION OF SERVICES AND USE OF ASSETS
2.1 Subject to the terms and conditions of this Agreement, Party A hereby
retains Party B for the provision of the Services and Party B agrees to
provide such Services during the Term.
2.2 In addition to the provision of Services, Party B will during the Term
provide the Assets for the use of the Project.
ARTICLE III - ACCOUNTING, FEES AND PAYMENT
3.1 A separate accounting system and records will be kept and maintained
and separate accounting reports and statements prepared for the Project
("Accounting Records"). Such accounts for the Project shall be kept in
accordance with relevant PRC Law and by using internationally
recognized, generally accepted accounting principles.
3.2 The Accounting Records shall be available for the inspection of Party B
any time reasonably requested by Party B.
3.3 For the provisions of the Services, Party B shall be paid the Service
Fees and 10% of the Net Profit shall be paid to Party A.
3.4 For the use of the Assets, Party B shall be paid the Asset Usage Fee.
ARTICLE IV - PARTY A'S OBLIGATIONS AND REPRESENTATIONS
4.1 In addition to its obligations set out in other provisions of this
Agreement, Party A agrees that Party A will:
(1) Take all actions and steps required for the successful implementation
of the Project;
(2) Use the Assets and operate and manage the Project in an efficient,
prudent and lawful manner in order to maximise the Net Profit and in
accordance with the recommendations of the Committee; and
(3) Make its best efforts, acting in good faith, to take all necessary
actions and complete all necessary procedures to renew the Term of the
Licence six (6) months prior to the expiry of the Term or at such other
advance time allowed under the PRC Law.
4.2 Party A represents and warrants that:
(1) It is an independent legal person established under the PRC Law and is
validly subsisting and has complied with all the reporting requirements
under the PRC Law;
(2) It hold all licences, approvals, permissions and authorizations issued
by competent PRC authorities required for the legally carrying out of
the Business to customers in the Cities;
(3) It has legal capacity to enter into this Agreement and has taken all
corporate actions and steps required for entering into this Agreement;
(4) It is not at present involved in any legal dispute or civil suit which
may have any effect on the Project in a substantial manner; and
(5) It is legally bound by this Agreement.
ARTICLE V - COOPERATION COMMITTEE
5.1 Upon the execution of this Agreement, the Parties shall establish a
cooperation management committee ("Committee") for the Project. The
Committee shall, at its discretion, decide upon matters of importance
to the Project. Other matters concerning the Project shall be delegated
to Party B.
5.2 The Committee shall consist of three (3) members, two (2) appointed by
Party B and one (1) by Party A (hereinafter referred to individually as
the "Member" and collectively as "Members"). One of the Members will be
appointed by Party B as the Chairman of the Committee.
5.3 The decision of the Committee shall be made at meetings of the
Committee by a simple majority vote of the Members present at such
meetings.
5.4 Unless otherwise decided by the Committee, its meetings shall be held
in Chengdu, the PRC and English language shall be the working language
of such meetings. The meeting of the Committee may be held in person or
by way of telephone conference call or other communication facilities
which enable all the Members to communicate at ease with each other. A
resolution in writing (including by fax transmission) signed by all the
Members is as valid as if it had been passed at the meeting.
5.5 The Members may attend and vote at the meeting of the Committee in
person or by appointing in writing proxies on their behalf or by
telephone or other means of communication as referred to in Section 5.5
herein.
5.6 The quorum for meetings of the Committee shall be two-thirds (2/3) of
the Members. Resolutions adopted at a meeting without a quorum shall
have no legal force or effect.
ARTICLE VI - INDEMNITY
6.1 As a separate and distinct obligation, Party A undertakes to keep Party
B harmless and to indemnify Party B from and against any and all loss,
damage or liability suffered and legal fees and costs incurred by Party
B resulting from the failure of the Project due to lack of appropriate
government authorization and permission.
6.2 For greater certainty, the obligations under Article 6.1 shall not be
affected by any invalidity or ineffectiveness of any provisions hereof
or this Agreement.
ARTICLE VII - EXCLUSIVITY AND CONFIDENTIALITY
7.1 Each of the Parties agrees that during the Term (including the extended
term) it or any of its affiliates or related agencies shall not discuss
or sign with any other party, in the PRC or abroad, any memorandum of
understanding, letter of intent, agreement or understanding in respect
of carrying out business, whether by joint venture or otherwise,
involving the Project.
7.2 The Parties recognize and affirm that any oral or written information
exchanged between them is confidential proprietary information and
undertake to keep such information in strict confidence and shall not
disclose such information to any third party or use such information
other than in connection with the Project without prior written consent
of the other party which provided such information, except, where such
information is available to the public (but not as a result of
unauthorized disclosure into the public domain of such information by
the Party receiving the information) or required to be disclosed by any
applicable law or regulations.
7.3 Except as may be required by law or the rules of any stock exchange on
which the shares of any Party or any of its affiliates are listed
and/or traded, no Party shall make any public announcement or issue any
press release concerning this Agreement and/or the Project without
prior written consent of the other Party.
ARTICLE VIII - TERM AND TERMINATION
8.1 This Agreement is valid and legally binding on the Parties for the Term
provided that this Agreement shall be automatically renewed for a
period equal to the renewed term of the Licence should the Term of the
Licence be renewed. In such case, the words "Term" shall be read to
mean a period which will end at the expiry of the Licence as renewed.
8.2 One Party may serve a termination notice on the other party not less
than seven (7) days prior to the intended date of termination to
terminate this Agreement if the other Party is adjudicated to be
bankrupt or file an application for its bankruptcy or liquidation, or
an application is filed by any third party for its bankruptcy or
liquidation.
ARTICLE IX - GENERAL PROVISIONS
9.1 This Agreement is governed by and construed in accordance with the PRC
Law.
9.2 The courts of the PRC shall have jurisdiction to adjudicate any
disputes arising from and in relation to this Agreement unless the
Parties agree to submit the disputes to an arbitration body in the PRC
for arbitration.
9.3 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.
9.4 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 his rights and obligations
hereunder unless with express prior written consent of Party B.
9.5 This Agreement is prepared in both English and Chinese with 5 original
copies in each language version. Should the two versions conflict, the
English version shall prevail.
Executed by the Parties at the place and on the date first above mentioned.
Witness Sichuan Guo Xun Xin Xi Chan Ye You Xian Gong Si.
_____________________________ Per:_________________ (corporate seal)
Witness Sichuan CathayOnline Technologies Co. Ltd.
_____________________________ Per:_________________(corporate seal)