EXHIBIT 10.12
Private and Confidential Execution Copy
Exclusive Technical Service and Consultancy Agreement
between
Shanghai T2 Entertainment Co., Ltd.
and
T2CN Information Technology (Shanghai) Co., Ltd.
FANGDA PARTNERS
22/F, Kerry Center
1515 Nan Jing West Road
Shanghai 200040, PRC
Exclusive Technical Service and Consultancy Agreement
This Exclusive Technical Service and Consultancy Agreement (hereinafter this
"Agreement") is entered into in Shanghai, the People's Republic of China
(hereinafter "PRC") as of November 4, 2004 by and between the following two
Parties:
(1) Shanghai T2 Entertainment Co., Ltd., a limited liability corporation duly
incorporated and validly existing under the PRC laws, with its legal
address at 5th Floor 88 Qingjiang Road, Xuhui District, Shanghai, PRC
(hereinafter "Party A"); and
(2) T2CN Information Technology (Shanghai) Co., Ltd., a wholly foreign owned
enterprise duly incorporated and validly existing under the PRC laws, with
its legal address at Suite 22301-526, Pudong Software Garden, 498 Guo
Shoujing Road, Pudong New District, Shanghai, PRC (hereinafter "Party B").
(In this Agreement, Party A and Party B are collectively referred to as the
"Parties" and individually as a "Party")
Preface
Whereas Party A is a limited liability corporation duly incorporated and validly
existing in Shanghai, PRC, with Eight Technical services in the field of
computer hardware development as its main business;
Whereas Party B is a wholly foreign invested enterprise duly incorporated and
validly existing in Shanghai, PRC, with computer hardware development and
technical service as its main business;
Whereas Party A need Party B to provide, and Party agrees to provide, technical
service and consultancy related to Party A's business (as defined below).
The Parties hereby have reached the following agreement upon mutual friendly
consultations:
Article 1 - Definition
1.1 Except as otherwise construed in the terms or context hereof, the following
terms in this Agreement shall be interpreted to have the following
meanings:
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"Party A's Business" shall mean any and all Eight Technical services in the
field of computer hardware development engaged in and developed by Party A
currently and at any time during the valid term hereof.
"Services" shall mean the exclusive technical platform services and relevant
technical support and website operation and maintenance services in connection
with hardware as well as software which are to be provided by Party B to Party
A, including but not limited to:
(1) Providing computers and network hardware equipment that are necessary for
Party A's Business to Party A for its use necessary;
(2) daily management, maintenance and upgrading of the hardware equipment and
databases;
(3) development, maintenance and upgrading of the related applied software;
(4) training professional technical staff for Party A;
(5) assisting Party A in conducting relevant technical information collecting
and research;
(6) Providing other related technical service and consultancy services from
time to time as required by Party A.
"Annual Business Plan" shall mean the development plan and budget report on
Party A's Business for the next calendar year which is prepared before November
30 of each year by Party A with the assistance of Party B pursuant to this
Agreement.
"Service Fees" shall mean all fees to be paid by Party A to Party B pursuant to
Article 3 of this Agreement in respect of the Services provided by Party B.
"Equipment" shall mean any and all equipment owned by Party B or purchased by
Party B from time to time, which are to be used for the purpose of provision of
the Services.
"Business Related Technology" shall mean any and all technology related to Party
A's Business and developed by Party A on the basis of Service provided by Party
B under this Agreement.
"Service Equipment" shall be the meaning stipulated in Article 2.1 hereof.
"Customer Information" shall be the meaning stipulated in Article 6.1 hereof.
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"Confidential Information" shall be the meaning stipulated in Article 6.2
hereof.
"Defaulting Party" shall be the meaning stipulated in Article 11.1 hereof.
"Default" shall be the meaning stipulated in Article 11.1 hereof.
"Party's Rights" shall be the meaning stipulated in Article 13.5 hereof.
1.2 The references to any laws and regulations (hereinafter the "Law") herein
shall be deemed
(1) to include the references to the amendments, changes, supplements and
reenactments of such Law, irrespective of whether they take effect
before or after the formation of this Agreement; and
(2) to include the references to other decisions, notices or regulations
enacted in accordance therewith or effective as a result thereof.
1.3 Except as otherwise stated in the context herein, all references to an
Article, clause, item or paragraph shall refer to the relevant part of this
Agreement.
Article 2 - Services
2.1 Party B shall procure various equipment reasonably necessary for the
provision of the Services and shall purchase and procure new equipment
(hereinafter the "Service Equipment") in accordance with Party A's Annual
Business Plan and Party A's reasonable requests, as to meet with the demand
for its provision of quality Services under this Agreement.
2.2 Party B shall provide Party A with services in a timely manner and
communicate with Party A with respect to all information related to Party
A's Business and/or Party A's customers.
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Article 3 - Service Fees
3.1 In respect of the Services to be provided by Party B pursuant to Article 2
hereof, Party A agrees to pay to Party B pursuant to Article 3 hereof the
Service Fees, including the following:
(1) an annual fixed service fee of RMB two million (RMB2,000,000); (2) a
performance-based service fee equivalent to 80% of the total income
before tax of Party A in the current year; and
(3) a verified equipment depreciation fee of RMB one hundred thousand
(RMB100,000).
3.2 Party A shall pay the Service Feea to Party B on a quarterly basis. Prior to
January 31, April 30, July 31 and October 31 each year, Party A shall pay to
Party B the performance fee set out in Paragraph (2) of Article 3.1
according to the percentage set out in the preceding Article and the amount
of Party A's total business income in the preceding three (3) months, and
pay the quarterly apportioned part of the Service Fees (one-fourth (1/4) of
the total fees for the year) set out in Paragraphs (1) and (3) of Article
3.1. Upon expiration or termination of this Agreement, Party A shall, within
thirty (30) days of the date of the expiration or termination of this
Agreement, make all the outstanding payments of the Service Fees to Party B.
After the end of each of Party A's accounting years, Party A and Party B
shall, on the basis of Party A's total annual income in the preceding
accounting year which is verified by an auditing report issued by a Chinese
Certified Public Accountant firm and mutually accepted by the Parties, carry
out the overall examination and verification on the Service Fees actually
payable by Party A, and shall make corresponding payment adjustment (to
return in case of overpayment, or make up in case of underpayment) within
fifteen (15) days of the issuance of the auditing report. Party A undertakes
to Party B that it will provide the involved Chinese Certified Public
Accountant firm with all materials and assistance required and cause it to
complete and issue the auditing report of the preceding year to the Parties
within thirty (30) working days of the end of each accounting year.
3.3 Party A shall, according to the provisions of this Article, pay all Service
Fees in a timely manner into the bank account designated by Party B. In case
that Party B is to change its bank account, it shall notify Party A in
writing of such change seven (7) working days in advance.
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3.4 Notwithstanding the above, in case of incurrence of losses by Party A during
the term of this Agreement, Party A may request for the reduction of the
payable amount of the Service Fees or delay in the payment of the Service
Fees to ensure its business operation by written notice to Party B, and
Party B may, at its sole discretion, agree to reduce the payable amount of
the Services Fees by such amount as it deems appropriate or to delay in the
collection of the Service Fees for such time period as it deems appropriate.
Article 4 - Party A's Obligation
4.1 The Services provided by Party B hereunder shall be of an exclusive nature.
During the valid term hereof, without Party B's prior written consent, Party
A shall not enter into any agreement with any other third party as to engage
such third party to provide to Party A services identical or similar to the
Services provided by Party B.
4.2 Prior to November 30 of each year Party A shall provide Party B with the
final version of Annual Business Plan of Party A for the next year, as for
Party B to make appropriate arrangement for its services plan and purchase
necessary equipment and strengthen technical service force. In case that
Party A needs Party B to purchase new equipment contingently, Party A shall
discuss the same with Party B fifteen (15) days in advance so as to reach
agreement.
4.3 For the convenience of Party B providing Service, Party A shall provide
Party B with relevant materials accurately and in a timely manner at the
request of Party B.
4.4 Party A shall, according to the provisions of Article 3 hereof, pay the full
amount of the Service Fees to Party A in a timely manner
4.5 Party A shall maintain a good reputation of itself and make all its efforts
to develop business, as to maximize the profits.
4.6 In order to promote Party A's Business, the Parties agree that, within Party
A's capacity and without violating the mandatory regulations under PRC laws,
Party B may appoint Party A to conduct specific research and develop related
to the technologies needed by the Service to be provided by Party B under
this Agreement pursuant to Party B's requirement. With respect to such
appointment, Party A must accept, and the provision in Articles 5.1 and 5.2
in this Agreement shall apply to the rights and interests of the technical
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achievements so made.
Article 5 -Intellectual Property
5.1 Intellectual property of the work products generated in the process of Party
B's provision of the Services shall belong to Party B.
5.2 For the reason that Party A's Business relies on the Party B's provision of
the Service under this Agreement, Party A agrees to the following
arrangements subject to the Business Related Technology developed by Party A
on the basis of such Services:
(1) In case that the Business Related Technology is generated through
Party A's further development based on its performance pursuant to
Party B's appointment, or generated through Party A and Party B's
joint development, the title and relevant patent application right
shall belong to Party B;
(2) In case that the Business Related Technology is generated through
Party A's independent development, provided (A) that Party A has
informed Party B with details of such related technology in a timely
manner and provided Party B with relevant materials required by Party
B; (B) that if Party A intends to license or transfer such technology,
Party shall have priority in being transferred, or granted the
exclusive license of such technology, to the extent where no mandatory
regulation under the PRC laws is violated, and Party B may use such
technology within the scope specified by Party A's transfer or license
(provided that Party B shall have the right to decide whether to
accept such transfer or license for use); Party A may not transfer
title of such technology or license such technology to a third party
unless and until Party B waives its preferential rights to purchase or
be exclusively licensed to use such technology, provided that the
conditions offered by Party A to such third party shall be not
favorable than those offered to Party B, and provided further that
Party A shall ensure the full compliance with and full performance by
such third party of the duties and obligations on the part of Party A
hereunder; (C) Save as under the circumstance set forth in (B) above,
Party B shall have the right to request to purchase such technology
within the term stipulated in Article 8.1, which technology shall be
consented by Party B, provided that such purchase shall not violate
the mandatory regulation under the PRC laws. Purchase price shall be
the lowest price permitted by the laws at that time.
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5.3 In case that Party B is licensed to exclusively use the Business Related
Technology in accordance with Item 2 of Article 5.2 under this Agreement,
such license shall be settled according to the following provision hereof:
(1) Term of the license for use shall be no less than ten (10) years
(calculated from the date upon effectiveness of relevant license
agreement);
(2) Scope of right to the license for use shall be as wide as possible.
(3) Within the license term and licensed territory, any other party
(including Party A) other than Party B shall not use or license others
to use such technology by any means.
(4) Without breaching the conditions under Item 3 of Article 5.3, Party A
shall be entitled to solely decide to license other third party to use
such related technology.
(5) After expiry of the term of license for use, Party B shall be entitled
to request renewing the license agreement, and Party A shall approve
such request. Terms of the license agreement then shall keep the same,
expect for those amended as acknowledged by Party B.
5.4 Notwithstanding the provision under Paragraph 2 of Article 5.2 above, any
application for patent regarding any Business Related Technology described
in such paragraph shall be conducted pursuant to the following provisions:
(1) In case that Party A intends to apply for patent regarding any
Business Related Technology described in such paragraph, prior written
consent from Party B shall be obtained.
(2) Party A may not apply for patent in its own name or transfer such
application right to a third party unless and until Party B waives its
rights to acquire the patent application right of the Business Related
Technology. Under the circumstance that Party A transfers the
aforesaid patent application right to a third party, Party A shall
ensure the full compliance with and full performance of the
responsibilities and obligations on the part of Party A hereunder, and
provided that the conditions (including but not limited to transfer
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price terms) offered by Party A to such third party regarding the
patent application right shall be no favorable than those to Party B
according to provision in Paragraph 3 below.
(3) Within the term of this Agreement, Party B may require Party A at any
time to apply for patent regarding such Business Related Technology,
and solely determine whether to acquire the application right of such
patent application. Upon request of Party B, Party A shall transfer
such patent application right to Party B at the transfer price being
the lowest price permitted by the then Law to the extent where no
mandatory regulation is violated under the PRC laws. After Party B has
obtained the patent application right regarding such Business Related
Technology, submitted the patent application and obtained the patent,
Party B shall be the legal owner of such patent.
5.5 Party A and Party B both warrant to each other to compensate the other party
for any and all economic losses incurred due to infringement of others'
intellectual property (including copyright, trademark right, patent right
and know-how) on the part of Party A or Party B.
Article 6 - Confidentiality Obligation
6.1 During the term of this Agreement, all customer information and other
relevant materials related to Party A's business and Services provided by
Party B (hereinafter "Customer Information") shall jointly belong to the
Parties.
6.2 Notwithstanding the termination of this Agreement, Party A and Party B
shall both be obliged to keep strictly in confidence the commercial secret,
proprietary information and customer information jointly owned by the
Parties, other relevant materials and other non-public information owned by
another Party received by the Parties as the result of performance of this
Agreement (hereinafter collectively the "Confidential Information"). The
Party who receives the Confidential Information shall not disclose the
Confidential Information or any part of it to any other third party, except
for prior written consent by the other Party or the situation that it must
be disclosed to a third party required by relevant laws, rules and
regulations or for the purpose of public listing; Except for the purpose of
performance of this Agreement, receiving Party shall not use or indirectly
use the Confidential Information or any part of it.
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6.3 The following information shall not belong to Confidential Information:
(a) any information that can be proved by written evidence to be
previously obtained by the Party who receives the information;
(b) information that enters into the public not for the reason of
receiving Party's fault or information that is known by the public for
other reasons; or
(c) information legally obtained by the receiving Party by other means
thereafter.
6.4 The Party who receives the information can disclose the Confidential
Information to its relevant employee, agent or professional employed by it.
However the receiving Party shall ensure that the aforesaid staff shall be
restricted by this Agreement in order to keep the Confidential Information
under confidentiality and to be used merely for the purpose of performance
of this Agreement.
Article 7 -Undertakings and Warranties
7.1 Party A represents and warrants hereby as follows:
7.1.1 it is a company of limited liabilities duly registered and validly
existing under the laws of its incorporation with independent legal
person qualification, with full and independent legal status and
legal capacity to execute, deliver and perform this Agreement, and
may act independently as a subject of actions.
7.1.2 its has full corporate power and authorization to execute and deliver
this Agreement and all the other documents to be entered into by it
in relation to the transaction referred to herein, and it has the
full power and authorization to complete the transaction referred to
herein. This Agreement shall be executed and delivered by it legally
and properly. This Agreement constitutes the legal and binding
obligations on it and is enforceable on it in accordance with its
terms and conditions.
7.1.3 it has obtained complete business permits as necessary for its
operations upon this Agreement taking effect, and it has sufficient
rights and qualifications to operate Party A's Business it is
currently engaged in within the PRC.
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7.2 Party B represents and warrants hereby as follows:
7.2.1 it is a company of limited liabilities duly registered and validly
existing under the laws of its incorporation with independent legal
person qualification, with full and independent legal status and
legal capacity to execute, deliver and perform this Agreement, and
may act independently as a subject of actions.
7.2.2 its has full corporate power and authorization to execute and deliver
this Agreement and all the other documents to be entered into by it
in relation to the transaction referred to herein, and it has the
full power and authorization to complete the transaction referred to
herein. This Agreement shall be executed and delivered by it legally
and properly. This Agreement constitutes the legal and binding
obligations on it and is enforceable on it in accordance with its
terms and conditions.
Article 8 - Term of Agreement
8.1 The Parties hereby confirm, this Agreement shall take effect as of the date
of formal execution by the Parties, and shall remain in force with no
express expiration unless as early terminated in writing by the Parties.
8.2 After expiry of this Agreement, Party A and Party B shall still comply with
their obligation stipulated in Article 3.2 and Article 6 under this
Agreement.
Article 9 - Indemnification
Party A shall indemnify and keep Party B harmless from any and all losses Party
B suffers or may suffer as the result of providing Services, including but not
limited to any loss arising from any litigation, repayment pursuit, arbitration,
claims lodged by any third party or administration investigations and/or
penalties by government authorities against it; provided that losses due to
Party B's willful or gross fault shall be excluded from such indemnification.
Article 10 - Notice
10.1 Any notice, request, demand and other correspondences made as required by
or in accordance with this Agreement shall be made in writing and delivered
to the relevant Party.
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10.2 The abovementioned notice or other correspondences shall be deemed to have
been delivered when it is transmitted if transmitted by facsimile or telex;
it shall be deemed to have been delivered when it is delivered if delivered
in person; it shall be deemed to have been delivered five (5) days after
posting the same if posted by mail.
Article 11 - Default Liability
11.1 The Parties agree and confirm that, if any Party (hereinafter the
"Defaulting Party") breaches substantially any of the agreements made under
this Agreement, or fails substantially to perform any of the obligations
under this Agreement, such a breach shall constitute a default under this
Agreement (hereinafter a "Default"), then the non-defaulting Party shall
have the right to require the Defaulting Party to rectify such Default or
take remedial measures within a reasonable period. If the Defaulting Party
fails to rectify such Default or take remedial measures within such
reasonable period or within ten (10) days following the other Party
notifying the Defaulting Party in writing and requiring it to rectify the
Default, then the non-defaulting Party shall have the right to choose any
one of the following Default remedy methods by itself: In case of Party A
being the Defaulting Party, Party B shall have the right to (1) terminate
this Agreement and require the Defaulting Party to indemnify it for all the
damage; or (2) require specific performance of the obligations of the
Defaulting Party hereunder and require the Defaulting Party to indemnify it
for all the damage. In case of Party B being the Defaulting Party, Party A
shall have the right to require specific performance of the obligations of
the Defaulting Party hereunder and require the Defaulting Party to
indemnify it for all the damage.
11.2 The Parties agree and confirm that Party A shall in no circumstance be
entitled to terminate this Agreement for any reason.
11.3 The rights and remedies set out herein shall be cumulative, and shall not
preclude any other rights or remedies provided by law.
11.4 Notwithstanding any other provisions herein, the validity of this Article
shall stand disregarding the suspension or termination of this Agreement.
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Article 12- Force Majeure
In the event of earthquake, typhoon, flood, fire, war, computer virus, loophole
in the design of tooling software, internet encountering a hacker, change of
policies or laws, and other unforeseeable or unpreventable or unavoidable event
of force majeure, which directly prevents a Party from performing this Agreement
or performing the same on the agreed condition, the Party encountering such a
force majeure event shall forthwith issue a notice by a facsimile and, within
thirty (30) days, the Party claiming such a force majeure event shall forthwith
issue a notice by a facsimile and, within thirty (30) days, present the
documents proving the details of such force majeure event and the reasons for
which this Agreement is unable to be performed or is required to be postponed in
its performance, and such proving documents shall be issued by the notarial
office of the area where such force majeure event takes place. The Parties shall
consult each other and decide whether this Agreement shall be waived in part or
postponed in its performance with regard to the extent of impact of such force
majeure event on the performance of this Agreement. No Party shall be liable to
compensate for the economic losses brought to the other Party by the force
majeure event.
Article 13 - Miscellaneous
13.1 This Agreement shall be prepared in the Chinese language in two (2)
original counterparts, and each Party shall hold one (1) counterpart.
13.2 The formation, validity, execution, amendment, interpretation and
termination of this Agreement shall be subject to the PRC Laws.
13.3 Any disputes arising hereunder and in connection herewith shall be settled
through consultations between the Parties, and if the Parties cannot reach
an agreement regarding such disputes within thirty (30) days of their
occurrence, such disputes shall be submitted to China International
Economic and Trade Arbitration Commission Shanghai Branch for arbitration
in Shanghai in accordance with the arbitration rules of such Commission,
and the arbitration award shall be final and binding on the Parties.
13.4 Any rights, powers and remedies empowered to any Party by any provisions
herein shall not preclude any other rights, powers and remedies enjoyed by
such Party in accordance with laws and other provisions under this
Agreement, and the exercise of its rights, powers and remedies by a Party
shall not preclude its exercise of its other rights, powers and remedies by
such Party.
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13.5 Any failure or delay by a Party in exercising any of its rights, powers and
remedies hereunder or in accordance with laws (hereinafter the "Party's
Rights") shall not lead to a waiver of such rights, and the waiver of any
single or partial exercise of the Party's Rights shall not preclude such
Party from exercising such rights by any other means and exercising the
remaining part of the Party's Rights.
13.6 The titles of the Articles contained herein shall be for reference only,
and in no circumstances shall such titles be used in or affect the
interpretation of the provisions hereof.
13.7 Each provision contained herein shall be severable and independent from
each of other provisions, and if at any time any one or more articles
herein become invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions herein shall not be affected as
a result thereof.
13.8 Any amendments or supplements to this Agreement shall be made in writing
and shall take effect only when properly signed by the Parties to this
Agreement.
13.9 No Party shall assign any of its rights and/or obligations hereunder to any
third parties without the prior written consent from the other Party.
13.10 This Agreement shall be binding on the legal successors of the Parties.
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(Execution Page)
IN WITNESS HEREOF, the Parties have caused this Exclusive Technical Service and
Consultancy Agreement to be executed as of the date and in the place first here
above mentioned.
Shanghai T2 Entertainment Co., Ltd.
Signed by /s/ Tao Feng
--------------------------
Name:
Position: Authorized Representative
T2CN Information Technology (Shanghai) Co., Ltd.
Signed by /s/ Jun-Tse Teng
--------------------------
Name:
Position: Authorized Representative