Hangzhou Nantian Starcom Communication Equipment Co. Ltd. Joint Venture Contract – Zhejiang Nantian Post and Telecommunication Development Group Co. Ltd. and UTStarcom Inc.
HANGZHOU NANTIAN STARCOM COMMUNICATION
EQUIPMENT CO. LTD.
CONTRACT
CONTENT
1. Chapter one General rules
2. Chapter two Parties of joint venture
3. Chapter three Establishment of the Joint Venture Company
4. Chapter four The purpose, scope and scale of business
5. Chapter five Total investment and the registered capital
6. Chapter six Responsibilities of each party
7. Chapter seven Craft and technology
8. Chapter eight Sales of products
9. Chapter nine Board of Directors
10. Chapter ten Business management office
11. Chapter eleven Labor management
12. Chapter twelve Taxes, finance, audit and foreign currency
13. Chapter thirteen Terms of joint venture
14. Chapter fourteen Handle of assets when the joint venture expires
15. Chapter fifteen Insurance
16. Chapter sixteen Amendment, change and cancellation of contract
17. Chapter seventeen Liabilities for breach of contract
18. Chapter eighteen Force Majeure
19. Chapter nineteen Governing laws and settlement of disputes
20. Chapter twenty Language
21. Chapter twenty-one Validity of contract and others
10
CHAPTER ONE: GENERAL RULES
In accordance with the Laws of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment and other relevant laws and implemented
regulations, Zhejiang Nantian Post and Telecommunication Development Group Co.
Ltd. and UT Starcom Inc. of USA enter into agreement to invest jointly in
Hangzhou(China), set up joint venture company and formulate this contract on the
basis of the principle of equality and mutual benefit. The contract is amended
in Hangzhou in the year 1997.
CHAPTER TWO: PARTIES OF JOINT VENTURE
ARTICLE 1: The parties of the contract:
1. Zhejiang Nantian Post and Telecommunication Development Co. Ltd.
(hereinafter referred to as Party A) has registered to the Administration
of Industry and Commerce of Zhejiang Province, China.
Legal residence: 118 Mo ganshan Street, Hangzhou, Zhejiang Province,
China. Post code: 310005.
Legal representative: Rong Ming-Bao. Position: Chair of Board.
Nationality: China.
2. UT Starcom Inc. of USA (hereinafter referred to as Party B) has registered
in the United States. Legal residence: Suite 100 Alameda, Harbor Bay Park,
CA 94502, USA. Legal representative: Ying-Wu. Position: Director
Nationality: LISA.
CHAPTER THREE: ESTABLISHMENT OF THE JOINT VENTURE COMPANY
ARTICLE 2: In accordance with the Laws of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment, Party A and
Party B enter into agreement to set up a joint venture company of
Hangzhou Nantian Starcom Communication Equipment Co. Ltd. in the
territory of PRC.
11
ARTICLE 3: The full name of the company: Hangzhou Nantian Starcom
communication Equipment Co. Ltd (hereinafter referred to as the
Joint Venture Company). The legal residence of the Joint Venture
Company: 70 Tian Mushan Street, Hangzhou, Zhejiang Province. Post
code: 310013.
ARTICLE 4: All activities of the Joint Venture company shall observe the
laws, decrees and relevant regulations of the People's Republic
of China.
ARTICLE 5: The Joint Venture Company is a limited liability company. Party A
and Party B shall undertake the debts liability of the Joint
Venture company in proportion to their contribution to the
registered company. Each party shares profits, risks and deficits
in proportion to its contribution to the registered capital.
CHAPTER FOUR: BUSINESS PURPOSE, SCOPE AND SCALE
ARTICLE 6: The purpose of the Joint Venture Company: According to the
purpose or strengthen economic cooperation and technology
exchange, the Joint Venture Company will adopt advanced
international technologies and scientific management experiences
to enhance the technology and quality level of the products of
the Joint Venture Company, and will introduce and develop new
products that are competitive in the international market in
quality, price and service, etc. to achieve more economic
profits.
ARTICLE 7: The business scope of the Joint Venture: Designs, develops,
assembles, installs telecommunication network systems, provides
maintenance and technical services for its own products, and
provides system integrating of telecommunication network, and
undertake eight telecommunication systems every year.
CHAPTER FIVE: TOTAL INVESTMENT AND THE REGISTERED CAPITAL
ARTICLE 8: The total investment of the Joint Venture Company is [*].
ARTICLE 9: The contribution of Party A and Party B is altogether [*] and
it is used as the registered capital of the Joint Venture
Company. The contribution of Party A is RMB equal to [*] ( the
conversion rate of RMB and US dollar shall be determined on
the basis of the exchange quotation published by the National
Foreign Currency Administration Bureau of
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
12
PRC for the date of concern), accounting for 35% of the
registered capital; Party B contributes [*], accounting for
65% of the registered capital.
ARTICLE 10: Party A and Party B shall pay the contribution in the following
way:
Party A: pays in RMB equals to [*] (the conversion rate of RMB
and US dollar shall be determined on the basis of the exchange
quotation published by the State Administration Bureau of the
PRC for the date of concern); Party B: spot exchange [*].
ARTICLE 11: The registered capital of the Joint Venture Company shall be paid
off in one time within two month from the date when the business
license is signed and issued according to the proportion of
contribution of Party A and Party B.
ARTICLE 12: In case one party from Party A and Party B transfers all or part
of its contributed capital to a third party besides Party A and
Party B, it shall be agreed by the other party and shall be
submitted to examination and approval authority for approval.
CHAPTER SIX: THE RESPONSIBILITIES OF EACH PARTY
ARTICLE 13: Party A and Party, B shall fulfill the following duties:
The duties of Party A:
l. Applying for the approval of the relevant Chinese
Authorities concerned to register the establishment of the
Joint Venture Company and receive the business license;
2. Providing contributed capital according to the regulations
in Chapter Five;
3. Handling the procedures of renting the places for handling
official business and places for manufacturing;
4. Assisting the Joint Venture Company in choosing and
purchasing advanced foreign equipment for test and
production, assemble parts of SKD, raw materials, means of
transportation and articles used in office;
5. Assisting the Joint Venture Company in employing local
Chinese operation, management, technology and other staff
and workers;
6. Providing information of supply and demand of the domestic
communication market and actively opening up the market;
7. Handling other matters appointed by the Joint Venture
Company.
The duties of Party B:
1. Providing the contributed capital according to Chapter Five;
2. Assisting the Joint Venture Company in choosing and
purchasing advanced foreign equipment for test and
production, assemble parts of SKD, raw materials, means or
transportation and articles used in office;
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
13
3. Providing free technological material of communication
products for the Joint Venture Company, training technical,
management and manipulating staff;
4. Actively opening up external sales channels, achieving
balance of foreign currency and economic profits;
5. Providing information of supply and demand of communication
equipment and technology in international market, and
opening up the international market;
6. Providing the Joint Venture Company with advanced
communication products and assemble parts of SKD, and
ascertaining the preference and timely delivery for the
whole set of wireless communication access network equipment
ordered by the Joint Venture Company;
7. Handling other matters appointed by the Joint Venture
Company.
CHAPTER SEVEN: CRAFT AND TECHNOLOGY
ARTICLE 14: Party B must provide craft, technical service, test, design,
quality standard and training staff for the Joint Venture Company
to make the products reach the advanced international and
domestic level.
CHAPTER EIGHT: SALES OF PRODUCTS
ARTICLE 15: The products of the Joint Venture Company shall be sold to
markets [*]. In order to sell the products in [*] and
conducting repair services after sale, the Joint Venture
Company has get the permission of relevant authorities to set
up branches the sale, maintenance and repair services [*].
CHAPTER NINE: BOARD OF DIRECTORS
ARTICLE 16: The Board of Directors is set up from the date when the Joint
Venture Company registered.
ARTICLE 17: The Board of Directors consists of seven Directors, three from
Party A and four from Party B, including one Chair, one Vice
Chair and one Finance Supervisor. The Finance Supervisor will
attend the Board meetings as a nonvoting delegate. Chair, Vice
Chair, other Directors and Finance Supervisor shall hold the
office for a period of four years and may be reappointed
consecutively.
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
14
ARTICLE 18: The Board of Directors shall be the highest authority of the
Joint Venture Company, deciding all important matters of the
Joint Venture Company. The following matters shall be decided
with the unanimous approval or the Directors who participate in
the Board meetings:
1. Amendment of the article of association of the Joint Venture
Company;
2. Termination, dismissal of the Joint Venture Company and
prolonging of the joint venture time limits;
3. Increases and transfers of the registered capital of the
Joint Venture Company;
4. Merges or the Joint Venture Company with other economic
organizations.
Other matters shall be decided with the majority's approval of
the Directors (including one from Party A) who attend the Board
meetings.
ARTICLE 19: The Chair is the legal representative of the Joint Venture
Company. When the Chair is unable to fulfill his or her duties, he or she may
appoint the Vice Chair or other Directors to take his place.
ARTICLE 20: The Board meetings shall be held at least once in a year. All
Directors shall be informed fifteen days before the meetings. The Chair shall
preside the Board meetings, and may convene a special meeting suggested by
one-third of the Directors. The file meetings shall be kept.
CHAPTER TWENTY-ONE: BUSINESS MANAGEMENT OFFICE
ARTICLE 21: The Joint Venture Company shall set up a business management
office, being responsible for the routine operation and management of the
Joint Venture Company. The organization structure includes one General Manger
and one Standing Deputy Manager who are appointed by the Board of Directors
and shall hold the office for a period of four years.
ARTICLE 22: The duty of the General Manager is to execute the resolutions of
the board of Directors and the Standing Deputy Manager shall assist the
General Manager.
ARTICLE 23: In cases of graft, serious violation of the rules and
regulations or grave neglect on the part of the General Manager and the
Standing Deputy Manager, they shall be dismissed by the Board of Directors at
any time.
CHAPTER ELEVEN: LABOR MANAGEMENT
ARTICLE 24: After the consideration of the Board of Directors, the
recruitment, employment, dismissal, wages, labor, insurance, welfare, awards
and penalties of the staff and workers shall be stipulated in detail in the
labor contracts made between the Joint Venture Company, the labor union and
the staff and workers, in accordance with the Administration Regulations on
Labors of Foreign Investment Enterprises and relevant Chinese regulations.
15
ARTICLE 25: The appointment, wages, insurance, welfare, and the expense
standard of business trip of high-ranking management staff nominated by Party
A and Party B shall be decided by the Board meetings.
CHAPTER TWELVE: TAXES, FINANCE, AUDITS AND FOREIGN CURRENCY
ARTICLE 26: The Joint Venture Company and its staff and workers shall pay
taxes according to the relevant Chinese laws and regulations.
ARTICLE 27: The Joint Venture Company shall draw funds according to the
relevant laws of the PRC. The proportion of drawing shall be decided by the
Board of Directors on the basis of the operation status of the Joint Venture
Company.
ARTICLE 28: The fiscal year of the Joint Venture Company is from the first
of January to the twenty-first of December. All vouchers, certificates,
account books and reports shall be prepared in Chinese.
ARTICLE 29: The Joint Venture Company shall invite accountants registered in
China to examine and check the finance and submit the result to the Board of
Directors and the General Manager. In case Party A and Party B need to invite
other accountants or auditors to examine the annual finance, the Joint
Venture Company shall give them the approval. The expenses shall be paid by
the party who invites the accountants or auditors.
ARTICLE 30: The General Manager shall prepare the balance sheets, the
statements of loss and profit and the profit allocation plans within the
first three months of every fiscal year and submit them to the Board of
Directors for approval.
ARTICLE 31: All the foreign currency matters of the Joint Venture Company
shall be handled in accordance with the Regulations of the People's Republic
of China on Foreign Currency Administration and stipulations. In case the
income and expenses of foreign currency is imbalance, Party A and Party B
shall allocate profits in RMB.
CHAPTER THIRTEEN: TERM OF JOINT VENTURE
ARTICLE 32: The Joint Venture Company's term is 20 years, counted from the
date on which the business license is signed and issued. After one party's
nomination and the unanimous approval of the Board of Directors, the
application for prolonging the joint venture time limits shall be submitted
to the examination and approval authority in writing within six months before
the end of the time limits.
CHAPTER FOURTEEN: HANDLE OF ASSETS WHEN JOINT VENTURE EXPIRES
16
ARTICLE 33: When the joint venture expires or is terminated, the Joint
Venture Company shall conduct liquidation in accordance with the laws. After
the income tax of the part of properties after liquidation (which exceeds the
amount of actually-paid contribution) is paid, the properties shall be
allocated in proportion to the contributed capital of Party A and Party B.
CHAPTER FIFTEEN: INSURANCE
ARTICLE 34: The insurance of the Joint Venture Company shall be covered with
the insurance organizations in Chinese territory. The coverage, insured value
and insured terms shall be decided by the Board of Directors according to the
stipulations of the insurance organizations in Chinese territory.
CHAPTER SIXTEEN: THE AMENDMENT, CHANGE AND CANCELLATION OF THE CONTRACT
ARTICLE 35: The amendment of the contract and its supplements shall require
written agreement signed by Party A and Party B, and shall be submitted to
the original examination and approval authority for approval to become
effective.
ARTICLE 36: Owing to the failure to carry out the contract due to Force
Majeure, or to continue operation due to the constant deficits of the Joint
Venture Company, the termination of joint venture before its time limits or
the cancellation of the contract shall be unanimously approved by the Board
of Directors and shall be submitted to the examination and approval authority
for approval.
ARTICLE 37: The failure of operating the Joint Venture Company or achieving
the business purpose stipulated by the contract due to one party's not
fulfilling its obligations stipulated by the contract and the articles of
association or seriously violating the contract and the articles of
association shall be considered as unilaterally germinating the contract of
the delinquent party. The observant party shall have rights to claim to the
delinquent party and to terminate the Joint Venture Company with the approval
of the examination and approval authority according to the stipulations of
the contract. In case both parties agree to continue operation, the
delinquent party shall compensate the economic losses of the Joint Venture
Company.
CHAPTER SEVENTEEN: LIABILITIES FOR BREACH OF CONTRACT
ARTICLE 38: In case any of the two parties doesn't pay off the contributed
capital oil time according to the stipulations in Chapter Five of the
contract, the delinquent party shall pay 1% of its contributed capital a
month as penalty for to the observant party from the first month of exceeding
the time limits. In case the
17
delinquent party doesn't pay three months after the time limits, besides
requiring it pay off the penalty fee which adds up to 3% of the contribution,
the observant party shall have rights to apply for approval to terminate the
contract and ask the delinquent party to compensate its losses.
CHAPTER EIGHTEEN: FORCE MAJEURE
ARTICLE 39: Due to earthquake, typhoon, flood, acts of war and other
unpredictable and unavoidable Force Majeure accidents which directly
influence the fulfillment of the contract according to the agreed conditions,
the party which suffers from the above mentioned Force Majeure accidents
shall inform the other party of the situation by telegram or facsimile, and
provide detailed report of the accident and valid certificates stating the
reasons for not fulfilling part or all of the contract or prolonging to
fulfill it within fifteen days. The certificates shall be presented by the
local notary organizations where the accident happens. Two parties shall
negotiate and decide whether to cancel the contract, or to relieve part of
the liabilities to fulfill the contract, or to prolong the fulfillment of the
contract according to the degree of the influence of the accident on the
fulfillment of the contract.
CHAPTER NINETEEN: GOVERNING LAWS AND THE SETTLEMENT OF DISPUTES
ARTICLE 40: The stipulation, effectiveness, explanation, fulfillment and
settlement of disputes shall all de governed by the laws of the People's
Republic of China.
ARTICLE 41: All disputes caused by the fulfillment of the contract or
related to the contract shall be settled through friendly negotiation. In
case the dispute cannot be resolved through negotiation, it shall be
submitted to China Foreign Economic and Trade Arbitration Commission for
arbitration in accordance with its rules of procedures. The arbitral award is
final and binding upon both parties.
CHAPTER TWENTY: CONTRACTUAL LANGUAGE
ARTICLE 42: This contract shall be made in Chinese.
CHAPTER TWENTY-ONE: EFFECTIVENESS OF THE CONTRACT AND OTHERS
ARTICLE 43: The articles of association of the Joint Venture Company
stipulated according to the principals of the contract shall be regarded as
part of the contract.
18
ARTICLE 44: This contract is subjected to the approval of the Ministry of
Foreign Trade and Economic Cooperation of the People's Republic of China or
the examination and approval authority it appointed, and shall enter into
effect upon the date of approval.
ARTICLE 45: The way of the two parties to dispatch a notice, such as by
telegram or by facsimile, which is related to the rights and obligations of
each party, shall be followed with a letter to inform the other party. The
legal residences listed in the contract are the addresses of Party A and
Party B.
ARTICLE 46: This contract is signed by representatives appointed by Party
A and Party B in Hangzhou, China.
ARTICLE 47: This contract is made into six copies, two of them shall be
submitted to the authorities concerned and each party keeps two copies.
ARTICLE 48: The matters which are not discussed in the contract shall be
handled according to the Cooperation Law of the People's Republic of China.
Party A: Zhejiang Nantian Post and Party B: UT Starcom Inc. of USA
Telecommunication
Development Group Co. Ltd.
Representative: Representative: (Signature)
(Signature)
September 12, 1997
19
Was this helpful?
Stay Up-to-Date With How the Law Affects Your Life
