Exhibit 10.7
MANAGEMENT AGREEMENT
This Agreement is dated this 29th day of June, 1999
BETWEEN
CathayOnline Technologies (Hong Kong) Ltd., a company duly incorporated
under the laws of the Hong Kong Special Administrative Region ("Hong
Kong"), the People's Republic of China ("PRC") (the "Company")
AND
Owen Li LI, a Canadian citizen, having an address at 10831 Anahim
Drive, Richmond, B.C., V7A 3C6 Canada (the "General Manager")
WHEREAS:
A. The Company is wholly owned beneficially by CathayOnline Inc. (the
"Parent");
B. The Company wholly owns Sichuan CathayOnline Technologies Co. Ltd.
("WOFE"), which is a wholly foreign-owned enterprise duly established under
the laws of the PRC;
C. The Parent is a limited liability company duly incorporated under the laws
of Nevada, the United States of America and is currently a publicly traded
company on NASDAQ OTC: BB (Stock Symbol: CAOL);
D. The Company intends, through the WOFE, to invest up to US$1,000,000 in the
first phase of its projected business operations in internet-related sector
in the PRC (the "PRC Project");
E. For the first phase operation, the WOFE entered, in June, 1999 with Sichuan
Guo Xun Xin Xi Chan Ye You Xian Gong Si("Sichuan Guo Xun."), into a
management and consultancy service agreement ("Management/Consultancy
Agreement"), pursuant to which the WOFE will provide certain management,
consultancy and technical assistance services to Sichuan Guo Xun in
relation to the Project; and
F. The Company wishes to retain the services of the General Manager in
relation to the carrying out the business and affairs of the WOFE,
implementing the Management/Consultancy Agreement, the Project, as well as
the PRC Project and the General Manager wishes to provide such services to
the Company.
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) "Working Day" in relation to performance of any obligation by
a party means a day other than a Saturday, Sunday or a
statutory holiday in the place where such obligations will be
performed;
(2) "Services" means the following managerial and other services:
(a) Recruiting and training personnel for the WOFE in relation to the Project;
(b) Managing the day to day business and affairs of the
WOFE, including keep monthly report and accounts of
the WOFE;
(c) Marketing the services of the Project to customers; and
(d) Any other reasonable service requested by the Company
from time to time in relation to the Project and the
PRC Project in general.
(3) "Term" means a period of three (3) years, commencing from the date of this
Agreement; and
(4) Where applicable, the definitions contained in the
Management/Consultancy Agreement and the WOFE's Articles of
Association are hereby incorporated by reference as an
integral part of this Agreement and shall have the same legal
effect as other parts of this Agreement.
1.2 Words importing the singular only also include the plural and vice versa
where the context so requires.
1.3 Headings used herein are for ease of reference only and shall not affect
the interpretation of this Agreement.
ARTICLE II - PROVISION OF SERVICES
2.1 Subject to the terms and conditions of this Agreement, the Company
hereby retains the General Manager for the provision of the Services
and the General Manager agrees to provide such Services during the
Term.
2.2 The Company reserves the rights to adjust the scope of the Services and
to perform part or all of the Services by itself, when and if necessary
and practical.
ARTICLE III - THE PARTIES' OBLIGATIONS AND COVENANTS
3.1 The Company agrees with the General Manager throughout the Term that the
Company will:
(1) Support the General Manager in its efforts to provide the Services to the
Company;
(2) Supply the General Manager with information in its possession
as permitted by law and/or regulatory authorities to which it
may be subject which may assist the General Manager in
providing the Services; and
(3) Indemnify the General Manager from and against any and all
loss, damage or liability whether criminal or civil suffered
and legal fees and costs incurred by the General Manager
resulting from the breach of this Agreement by the Company
including any act, neglect or default of the Company provided
that such liability has not been incurred through any default
by the General Manager in relation to his obligations under
this Agreement.
3.2 The General Manager agrees with the Company throughout the Term that the
General Manager will:
(1) At all time work diligently to provide the Services to the Company;
(2) Without the prior written consent of the Company, not receive
any undisclosed, hidden or illegal profit or benefit, whether
in cash, in kind or otherwise, from any third parties during
the provision of the Services;
(3) Pay the Company and/or the WOFE promptly all sums due to the Company;
(4) In all matters act loyally and faithfully, as the Company
Vice-President (China Project Development) and in other
capacity, for the best interest of the Company;
(5) Obey the Company's reasonable orders and instructions in relation to the
provision of the Services;
(6) In the provision of its Services strictly comply with all
applicable laws, by-laws and requirements of any governmental
or regulatory authorities of every jurisdiction in which the
General Manager, the Company or the Parent operates;
(7) Not at any time during the Term and for three years thereafter
divulge or allow to be divulged to any person any confidential
information concerning the Company's and/or the WOFE's
business (including confidential information protected by or
subject to other agreements to which the Parent, the Company,
the WOFE or any affiliates of the Parent is a party) other
than to persons who have signed a confidentiality undertaking
in the form approved by the Company or to governmental or
judicial authorities under compulsion of law; and
(8) Indemnify the Company from and against any and all loss,
damage or liability whether criminal or civil suffered and
legal fees and costs incurred by the Company resulting from
the breach of this Agreement by the General Manager including
any act, neglect or default of the General Manager provided
that such liability has not been incurred through any default
by the Company in relation to its obligations under this
Agreement.
ARTICLE IV - PERFORMANCE
4.1 In providing the Services, the General Manager will try all means to
achieve the following to the best of his ability for the WOFE during
the Term:
(1) To procure 2,500 internet service provider ("ISP") customers for the
Project within 12 months of this Agreement;
(2) To procure 7,500 ISP customers for the Project within 24 months of this
Agreement; and
(3) To procure 16,000 ISP customers for the Project within 36 months of this
Agreement.
ARTICLE V - COMPENSATION
5.1 For the General Manager's Services, the Company shall compensate the
General Manager in accordance with the following terms and conditions:
(1) pay US$10,000 per month to the General Manager at the end of each calendar
month as follows:
(a) US$6,500 in cash to be paid by the WOFE; and
(b) US$3,500 equivalent in the form of common shares issued by the Parent (the
Shares will be priced at 10% discount of the average bid for the last 5
trading days of the month);
(2) to the best of its ability cause the Parent to issue notice to
issue in trust for the General Manager its shares (the
"Shares") in the following numbers and schedules:
(a) common shares with a value equal to US$60,000 divided
by lower of (i) US$0.50 and (ii) the average closing
price of the shares of the Parent for three (3) days
preceding the date of this Agreement within 15
Working Days of the date of this Agreement;
(b) common shares with a value equal to US$75,000 divided
by lower of (i) US$0.50 and (ii) the average closing
price of the shares of the Parent for three (3) days
preceding the date of this Agreement within 10
Working Days after the General Manager has notified,
in writing to the Parent, that he has brought 2,500
ISP subscribers into the Project;
(c) common shares with a value equal to US$75,000 divided
by lower of (i) US$0.50 and (ii) the average closing
price of the shares of the Parent for three (3) days
preceding the date of this Agreement within 10
Working Days after the General Manager has notified,
in writing to the Parent, that he has brought 7,500
ISP subscribers into the Project; and
(d) common shares with a value equal to US$90,000 divided
by lower of (i) US$0.50 and (ii) the average closing
price of the shares of the Parent for three (3) days
preceding the date of this Agreement within 10
Working Days after the General Manager has notified,
in writing to the Parent, that he has brought 16,000
ISP subscribers to the Project.
5.2 The General Manager will distribute or transfer certain numbers of the
Shares to other employees of the WOFE as part of employee incentive. In
such case, the Company shall cause the Parent to complete necessary
procedures to effect such distribution or transfer as permitted by
applicable laws and/or regulations.
ARTICLE VI - NON-COMPETITION
6.1 The General Manager hereby covenants that, without written permission
of the Parent, during the Term and three years thereafter he will not
carry on any business or activities which are in competition with that
of the Company, the WOFE, and/or in relation to the Project (the
"Competing Business") within the territory of PRC provided that during
the three years after the Term the Parent will not unreasonably
withhold any permission to allow the General Manager to carry on the
Competing Business in such areas within the PRC where the Parent, the
Company, the WOFE and/or other affiliates of the Parent do not have any
business interests. This non-competition clause shall not be deemed to
include any companies, ventures, joint ventures, projects or the like,
with which the Parent is a shareholder or is working with and the
General Manager's valued input is required.
6.2 The General Manager hereby expressly acknowledges that the restrictions
contained in Article 6.1 above are fair and reasonable in all
circumstances and may be enforceable by judicial remedies available to
the Company including injunctions. The Parties further agree that if
the restrictions in Article 6.1 above shall be adjudicated to be void
and ineffective for whatever reason but would be adjudicated to be
valid and effective should part of the wording thereof be deleted or
the restrictive period or the restrictive area reduced in scope, the
said restrictions shall apply with such modifications as may be
necessary to make the restrictions valid and effective.
ARTICLE VII TERMINATION
7.1 The Company may serve a termination notice on the General Manager not
less than five (5) Working Days prior to the intended date of
termination to terminate this Agreement if the General Manager fails to
perform his obligations under Article IV hereof and such failure, if
capable of remedy, is not remedied within 10 Working Days of receipt of
a written notice of such failure from the Company.
7.2 The General Manager may serve a termination notice on the Company not
less than five (5) Working Days prior to the intended date of
termination to terminate this Agreement if the Company fails to perform
its obligations under Article 5.1 hereof and such failure, if capable
of remedy, is not remedied within ten (10) Working Days of receipt of a
written notice of such failure from the General Manager.
7.3 Any right or remedy to which either party is or may become entitled
hereunder or in consequence of the other's conduct may be enforced from
time to time separately or concurrently with any right or remedy given
hereby or now or afterwards provided for and arising by operation of
law so that such rights and remedies are not exclusive of the other or
others but cumulative.
7.4 All works, relationships, concepts, business plans, clients, client
lists and all related information and materials ("Information and
Materials") are the property of the Company and not the General Manager
and in the event that this Agreement is terminated for whatever
reasons, all such Information and Materials are to be returned
immediately to the Company without any copies having been made or
taken.
ARTICLE VIII - NO PARTNERSHIP OR JOINT VENTURE
8.1 Parties agree and acknowledge that they are not partners or joint
ventures and nothing herein shall be construed to give rise to a
partnership or joint venture relationship between the Parties.
8.2 The General Manager shall not act or purport to act as a General
Manager of the Company save as expressly stated in this Agreement.
ARTICLE IX - GENERAL PROVISIONS
9.1 This Agreement is governed by and construed in accordance with the laws of
Hong Kong.
9.2 The courts of Hong Kong shall have jurisdiction to adjudicate any
disputes arising from and in relation to this Agreement. The General
Manager hereby expressly submit to the non-exclusive jurisdiction of
the courts of Hong Kong and hereby appoints _________________________
in Hong Kong as his agent to receive any legal process in relation
hereto.
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 the General Manager shall not assign his rights and
obligations hereunder unless with express prior written consent of the
Company.
Executed by the Parties at the place and on the date first above mentioned.
Witness CathayOnline Technologies (Hong Kong)
Ltd.
_____________________________ Per:_________________ (corporate seal)
Witness Owen Li LI
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