EXHIBIT 10.2
Cooperation Agreement regarding China Online's
Internet Connection Service Commercial Business
Shenzhen Rayes Group Co., Ltd. is a private high-tech enterprise registered in
Shenzhen, Guangdong, China. (Party A). "China Online" was established by the
Rayes Group to meet China's development needs. China Online is a
commercially-focused, inter-provincial and inter-city online service provider
based on China Telecom's digital network and connected with the Internet.
Shenzhen Neihe Electronic System Co., Ltd. is a high-tech company registered in
Shenzhen with electronic business affairs as a focus and computer network
technology and consulting service as additional (Party B) . With mutual consent
and recognition of the favorable development prospect for China's internet
market and after a full discussion between the two parties, the cooperation
agreement agreed on is set out below.
I Parties to the Agreement
Party A: Shenzhen Rayes Group Co., Ltd.
Party B: Shenzhen Neihe Electronic Network Systems Co., Ltd.
II Basis of Cooperation
The project China Online invested by Party A has wide advantages in
respect of policy, brand and business development, mainly including:
1. On Oct.30th, 1998, the Administration Bureau of
Telecommunications of the Ministry of Information Industry issued
the "Reply on the Re-Acquisition of the Business Permit for the
Internet Business of Computer Information Network" for Shenzhen
Rayes Group Co., Ltd., approving Shenzhen Rayes Group Co., Ltd.
to be engaged in the Internet business of computer information
network in its business subsidiaries in 80 cities;
2. In 1998, it entered into a cooperation agreement on jointly
supplying information services to society with the State
Administration of Telecommunications, reaching the
interconnection between public multi-media communications network
and "China Online" in China. The users of "China Online" may
directly dial the special service number 169 for online access;
3. In 1997 and 1998, in two phases, it obtained the special service
number 95888 as approved by the former Ministry of Posts and
Telecommunications to be used in 64 cities throughout the
country;
4. In 1997, the former Ministry of Posts and Telecommunications
issued official documents to supply preferential to Shenzhen
Rayes Group Co., Ltd. in leasing dedicated digital line;
5. On April 22, 1998, it signed a letter of intent with the Bank of
China, to make the Commodities Transaction Center of "China
Online" a corresponding point to develop the overall business and
technological cooperation in the fields of "China Online"
communications service, information service and e-commerce.
6. On June 10, 1999, the State Administration of Communications of
China made further definition on the cooperation scope,
settlement, expense, roaming, etc. in the "Circular on the
Cooperation, Execution, and Relevant Issues of ISP/ICP between
Rayes Group and Others".
Party B is a high-tech company qualified as a corporation in
China owing to its advantage in respect to the introduction
of new technology, technological consultations, market
popularization, assets raising, etc.
III Content of Co-operation
Utilising Party A's Internet platform and value added businesses, Party B will
use its own funding and technical advantages to offer technical and marketing
consultancy services to Party A. Parties A & B both guarantee the effectiveness
of these measures. Should China ever allow foreign companies to participate in
and expand investment into value added services on the Internet, Party A
promises to give Party B priority in this participation and expansion.
IV Responsibilities of Both Parties to Co-operate
1. Responsibilities of Party A
A. Party A is responsible for the business development and planning of
the whole network of "China Online", and for better developing the
business of Internet connection provider under the technological
support of Party B;
B. With the permission of Party A, Party B may jointly enjoy any
preferential state policies obtained in the "China Online" project to
the extent allowed by the laws and policies of China.
2. Responsibilities of Party B
A. The development of all businesses of Party B must observe all
regulations of relevant policies and rules of China;
B. The development of all businesses of Party B must conform to the
planning of business development of whole network of the "China
Online" project of Party A stipulated by Chinese government and
coordinate the operation management of Party A;
C. Party B's business development is limited to Shanghai and Wuhan. If
Party B needs to expand its business services locations, it must
obtain Party's permission to develop business .
D. The development of all business of Party B should be under the daily
supervision and control of the network management center of Party A
and relevant technological and business data should be reported in
time;
E. Party B agrees to introduce American and Canadian network technology
to China Online to improve China Online's own conditions and
competitive ability.
V Expenses of Cooperation
Party B agrees (1) to be retained by Party A as consultant to Party A's
Shanghai and Wuhan offices. Party B will offer technical, marketing and
operational consultancy services to Party A. Party B's consultancy fee will
be equivalent to fifty percent of the income Party A derives from its
internet connection service commercial business in those two locations.
Party A (2) agrees, within the bounds of Chinese law and policy, to give
preferential operational rights to Party B.
Based on the 2 points above, Party B agrees to first pay to Party A 3
million RMB, Within 30 days of formal signature of this agreement.
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VI
In the event that in the cooperation period the business permit of Party
A's internet connection service commercial business is altered, canceled or
terminated by the relevant department thereafter affecting the performance
of the Agreement, or in the cooperation period China allows foreign
investment participating in internet connection service commercial business
or carries out other opening measures, Party A and Party B agree to amend
or sign another agreement through friendly negotiation.
VII Duration of the Agreement
This Agreement is valid from July 1, 1999 to July 1, 2004, totaling 5
years. Upon expiration of the Agreement, the parties may sign to extend the
Agreement through negotiation.
VIII Default Responsibilities
In the event that Party B makes a breach of the Agreement, Party A has the
right to terminate the performance of the Agreement and the fees received
will not be returned. In the event that Party A makes a breach of the
Agreement, Party A should return the fees received from Party B and
compensate Party B for relevant losses caused therefrom.
IX Other
The Agreement is made in duplicate, of which Party A and Party B separately
hold one copy. The Agreement comes into effect upon the date of signing and
sealing of the two parties.
Party A: Shenzhen Rayes Group Co., Ltd. Party B: Shenzhen Neihe Electronic
Network Systems Co., Ltd.
Date: 15 July 1998
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