by and between
Beijing Century Hi-Tech Investment Co., Ltd.
Guolian Securities Co., Ltd.
Table of Contents
CHAPTER 1: DEFINITIONS AND INTERPRETATIONS ................... 4
CHAPTER 2: PARTIES TO THE AGREEMENT .......................... 7
CHAPTER 3: REPRESENTATIONS AND WARRANTIES .................... 7
CHAPTER 4: ESTABLISHMENT OF THE JOINT VENTURE COMPANY ........ 8
CHAPTER 5: JVC'S BUSINESS SCOPE .............................. 8
CHAPTER 6: THE JOINT VENTURE TERM ............................ 9
CHAPTER 7: REGISTERED CAPITAL ................................ 9
CHAPTER 8: SERVICES .......................................... 10
CHAPTER 9: BUSINESS OPERATIONS ............................... 10
CHAPTER 10: SHAREHOLDERS' MEETING ............................. 10
CHAPTER 11: BOARD OF DIRECTORS ................................ 12
CHAPTER 12: ORGANISATION AND MANAGEMENT ....................... 16
CHAPTER 13: LABOUR MANAGEMENT ................................. 17
CHAPTER 14: STOCK INCENTIVE PLAN .............................. 18
CHAPTER 15: ACCOUNTING AND FINANCE ............................ 18
CHAPTER 16: TAXATION .......................................... 19
CHAPTER 17: CONFIDENTIALITY ................................... 19
CHAPTER 18: TERMINATION AND MATERIAL BREACH ................... 20
CHAPTER 19: LIQUIDATION ....................................... 22
CHAPTER 20: FORCE MAJEURE ..................................... 23
CHAPTER 21: GOVERNING LAW AND DISPUTE RESOLUTION .............. 23
Remuneration of Senior Management Personnel
JVC's Articles of Association
JVC's Services Agreement with Sohu ITC Information Technology Co., Ltd.
JVC's Services Agreement with Guolian Securities Co., Ltd.
THIS SHAREHOLDER'S AGREEMENT (this "Agreement") is made on this 16/th/ day of
March 2002 in the People's Republic of China ("China" or the "PRC")
by and between
BEIJING CENTURY HI-TECH INVESTMENT CO., LTD., with its legal address at Suite
21, 15th Floor, Tower 2, Bright China Chang'an Building, 7 Jianguomennei Avenue,
Dongcheng District, Beijing 100005, People's Republic of China, ("Party A")
GUOLIAN SECURITIES CO., LTD., with its legal address at No.153, Zhongshan Road,
Wuxi 214001, Jiangsu Province, PRC.
(individually a "Party" and collectively the "Parties").
A. Party A is an affiliated company to Sohu.com, Inc., a leading Internet
portal company, and a developer of advanced Internet-related technology.
B. Party B is a leading provider of comprehensive financial services,
including online securities brokerage services.
C. The Parties wish to establish a joint venture company ("JVC") in compliance
with PRC Law (as defined below) and the provisions of this Agreement to
provide online securities brokerage and financial services for Clients (as
defined below) by opening online trading accounts with the Service Stations
(as defined below) through a telephone and web-based platform.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
CHAPTER 1: DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. Unless the terms or context of this Agreement provide
otherwise, the following items shall have the meanings set out below:
Affiliate an entity in which either Party directly or
indirectly holds at least 10% of the voting
Articles of Association the articles of association of the
JVC signed by the Parties on the same date as this
Shanghai AIC the Shanghai Administration for Industry and
Board the JVC's Board of Directors;
Branches securities business branches and securities
Brokerage Seats remote trading seats, which are
communication ports provided by securities
exchanges to securities companies for the purpose
of facilitating connections among host computers;
Chairman the Director who is the chairman of the JVC's
Clients persons that open online trading accounts through
Client Database the database used to record JVC Clients and
Company Secretary an employee of the JVC whose responsibilities
include preparing the Board minutes;
Confidential all information and matters relating to this
Information Agreement, the JVC, the Parties or to the business
of the Parties or the JVC, including without
limitation all IPRs (as defined below),
information regarding costs, technology, finances,
future commercial plans and other information
which is deemed to be confidential by the Parties
or the Board (as appropriate);
CSRC the China Securities Regulatory Commission;
Director an individual appointed by the Parties in
accordance with the provisions of this Agreement
to serve as a member of the Board;
Effective Date the effective date of this Agreement, which shall
be the date first indicated above;
Employment Contract the contract entered into between the JVC and each
of the Senior Management Personnel, Management
Personnel and Working Personnel in relation to
their employment, wages and benefits;
Force Majeure any earthquake, storm, fire, flood, war or other
significant event of natural or human-caused
disaster arising after signing this Agreement
(including, without limitation, any significant
changes to any PRC government policy or PRC Law)
which is unforeseen (or, if foreseen, not
reasonably avoidable), is beyond the control of
either Party and prevents the total or partial
performance of this Agreement by either Party or
materially affects the business of the JVC;
Guolian Branches Branches established by Party B, including
securities business branches and securities
IPRs any intellectual property rights held exclusively
by either Party, existing or developed in the
(b) trade marks (including product trade mark and
service trade mark), trade name and other
rights relevant to commercial logos,
regardless of whether the medium of
expression is words, graphics, or a
(c) rights relating to patented inventions
(regardless of whether they are completely
registered or under application) and
(d) the ownership of any software (including
source codes), database and industrial
(e) commercial secrets;
(f) know-how; and
(g) all rights that are produced as a result of
intellectual creative activities in the
industrial and scientific fields;
Joint Venture Term as defined in Article 6.1 and any extension
thereof under Article 6.2;
Liquidation the committee appointed by the Board which has the power
Committee to represent the JVC in all legal matters relating to the
liquidation of the JVC;
Management the management personnel of the JVC as appointed by the
Personnel general manager according to the rules set forth by the
Board and stipulated in the Articles of Association;
Net Revenue Revenue generated by the JVC from the Clients through all
kinds of trading and value-added services, less any
Online Trading any non-spot remote trading conducted by technical means,
including but not limited to Internet;
Policies and the manual outlining the guidelines and procedures
Procedures Manual relating to the administration and labour management of
the JVC, which shall be prepared by the general manager
in accordance with PRC Law and approved by the Board;
PRC GAAP PRC Generally Accepted Accounting Principles;
PRC Law any published and applicable laws, regulations, rules and
policies of the PRC;
Profits any profits of the JVC, less expenses incurred in the
normal course of business, including taxes, contributions
to the employee bonus and welfare funds and corporate
reserve and development funds;
RMB Renminbi, the official currency of the PRC;
Senior the JVC's general manager (equivalent of Chief Executive
Management Officer), finance manager (equivalent of Chief Financial
Personnel Officer), deputy general managers (equivalent of Chief
Operating Officer and Chief Technology Officer), who
shall be appointed by the Board;
Service Station offices established for the purpose of providing remote
trading services, to be used in marketing and promotion,
technical training and consultation, demonstration of
business processes, handling of urgent technical matters,
account opening, designated trading, services relating to
cancellation of designated trading, printing brokerage
receipts and trading checklists and other services
permitted by the CSRC, but not be used in the deposit or
withdrawal of clients' cash, over-counter trading and
settlement and provision of business trading place;
US GAAP United States Generally Accepted Accounting Principles;
Trading Column a sub-channel of the Sohu.com's finance channel dedicated
to online trading including, but not limited to,
Working Personnel all employees of the JVC other than the Senior Management
Personnel and Management Personnel.
1.2.1 A reference to a day herein is to a calendar day. A reference to a
business day herein is to a day on which commercial banks are open
for business in the PRC. A reference herein to an Article or
Appendix is to an article or appendix of this Agreement.
1.2.2 The headings of the Articles are for convenience only and do not
affect the meaning of any of the provisions of this Agreement.
1.2.3 The use of the singular shall include the use of the plural and
vice versa. The use of one gender shall include the use of the
other gender as appropriate.
CHAPTER 2 : PARTIES TO THE AGREEMENT
2.1 The Parties. The Parties to the Agreement are:
2.1.1 Party A
BEIJING CENTURY HI-TECH INVESTMENT CO., LTD., a limited liability
company registered in Beijing with its legal address at Suite 21,
15th Floor, Tower 2, Bright China Chang'an Building, 7
Jianguomennei Avenue, Dongcheng District, Beijing 100005, PRC.
Name : Charles Zhang
Title : Chairman
2.1.2 Party B
GUOLIAN SECURITIES CO., LTD., a limited liability company
incorporated in Wuxi, Jiangsu Province with its legal address at
No.153, Zhongshan Road, Wuxi 214001, Jiangsu Province, PRC.
Name : Fan Yan
Title : Chairman
CHAPTER 3 : REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties. Each Party represents and warrants to the
3.1.1 it possesses full power and authority to enter into this Agreement
and to perform its obligations hereunder;
3.1.2 its authorised representative, whose signature is affixed hereto,
has been fully authorised to sign this Agreement on its behalf
pursuant to a valid power of attorney, a copy of which has been
provided to the other Party;
3.1.3 it has obtained and will maintain the validity of all licenses
necessary for IPRs required to perform its obligations hereunder;
3.1.4 it has obtained, and will maintain the validity of all necessary
permits from the relevant governmental authorities required for the
lawful operation of its business and its performance of this
3.1.5 it shall maintain as strictly confidential the provisions and
existence of this Agreement, as well as any information relating to
the business of the other Party to which it might have access
during the performance of this Agreement, in accordance with
Chapter 17 below;
3.1.6 the execution and performance of this Agreement and the
consummation of the transactions contemplated hereby do not violate
any judicial or administrative order, award, judgement or decree
applicable to it or conflict with any of the terms, conditions or
provisions of any other agreement, contract, or arrangement,
written or oral, to which it is bound;
3.1.7 it is in lawful possession of all assets relating to its business;
3.1.8 it shall not sell, dispose of, pledge, cede or encumber any of its
equity interest in the JVC by any means whatsoever without the
prior written consent of the other Party.
CHAPTER 4: ESTABLISHMENT OF THE JOINT VENTURE COMPANY
4.1 Registration. Within 14 days after the Effective Date, the preparation
committee appointed by the Parties shall undertake registration procedures
with the Shanghai AIC for the establishment of the JVC and apply for the
JVC's business licence. The JVC shall come into existence on the date of
the issuance of its business licence.
4.2 Name and Address.
4.2.1 The Chinese name of the JVC shall be "Name of Company in Chinese
4.2.2 The English name of the JVC shall be "Sohu - Guolian Information
Technology Co., Ltd.".
4.2.3 The name of the JVC's website will be decided pursuant to Article
4.2.4 The legal address of the JVC shall be in Pudong, Shanghai, PRC.
4.3 Limited Liability Company. The JVC shall be a limited liability company.
Each Party's liability to the JVC shall be limited to the amount of its
contribution to the JVC's registered capital. Each Party shall share
Profits, and assume risks and losses in accordance with its shareholding
percentage in the registered capital of the JVC.
4.4 Laws and Decrees.
4.4.1 The JVC shall be a legal person under PRC Law. The activities of
the JVC shall be governed, and its lawful rights protected, by PRC
4.4.2 If, after the execution date of this Agreement, any existing PRC
Law is changed or the interpretation thereof is changed, or any new
PRC Law is implemented and the effect of such changed or new PRC
Law is to provide for preferential treatment to either Party, the
JVC and the relevant Party shall promptly apply to the relevant
government authorities for the preferential treatment of such
changed or new PRC Law.
4.4.3 If either Party's economic benefits under this Agreement are
materially and adversely affected, directly or indirectly, as a
result of the changed PRC Law or the interpretation thereof or the
new PRC Law, then:
220.127.116.11 this Agreement shall continue to be implemented in
accordance with its original terms; or
18.104.22.168 either Party may choose to terminate this Agreement
pursuant to Article 18.2.4.
CHAPTER 5: JVC'S BUSINESS SCOPE
5.1 Scope of Business. The scope of business of the JVC shall include:
5.1.1 the development and manufacture of computer software and hardware,
the development of network systems technology, the development of
an online securities trading system and related technical services;
5.1.2 Internet information services, market research and marketing
5.2 Expansion of Business Scope. The JVC shall apply in its own name for an
online securities brokerage services permit. Once that permit has been
issued, the business scope of the JVC shall be amended to include "online
securities brokerage services".
CHAPTER 6: THE JOINT VENTURE TERM
6.1 Joint Venture Term. The Joint Venture Term shall commence on the issuance
date of the JVC's business licence and shall expire 30 years thereafter,
unless such term is extended in accordance with Article 6.2 or
prematurely terminated in accordance with Article 18.2.
6.2 Extension of the Joint Venture Term. No less than 1 year prior to the
expiry of the Joint Venture Term, the Parties may discuss the extension
of the Joint Venture Term. If the Parties so agree, an application for
examination and approval of such extension shall be submitted to the
Shanghai AIC no less than 180 days prior to the expiry of the Joint
CHAPTER 7: REGISTERED CAPITAL
7.1 Registered Capital. The total amount of the JVC's registered capital shall
be RMB 50 million.
7.2 Capital Contribution.
7.2.1 Party A's contribution to the JVC's registered capital shall be RMB
25.5 million in cash, representing 51% of the JVC's total
7.2.2 Party B's contribution to the JVC's registered capital shall be RMB
24.5 million in cash, representing 49% of the JVC's total
7.2.3 Each Party shall contribute its respective registered capital
amount in full to the designated account of the Shanghai AIC within
50 days after confirmation of the JVC's Company name by the
7.3 Capital Increase.
7.3.1 Neither the JVC's total registered capital nor the proportion of
the Parties' respective shareholding percentage in the JVC shall be
changed during the Joint Venture Term without a unanimous
resolution of the Board and the approval of the Shanghai AIC.
7.3.2 If the Board resolves to increase the JVC's registered capital,
each Party shall have the pre-emptive right (unless otherwise
waived), within 30 days of the passing of the relevant Board
resolution, to subscribe to such capital increase in proportion to
its shareholding percentage of the JVC's total registered capital.
Where either Party chooses not to subscribe, its shareholding
percentage (and for the avoidance of doubt, its Board
representation and rights to Profits) shall be diluted accordingly.
7.4.1 Party B agrees that after the establishment of the JVC, Party A
shall have the right to assign any or all its equity in the JVC to
any Affiliate or Subsidiary of Sohu.com, Inc The Affiliate or
Subsidiary in question shall assume liabilities proportionate to
the equity in the total registered capital of the JVC assigned to
Party B shall execute all documents necessary for the completion of
such an equity transfer, including, without limitation, Board
resolutions, shareholders' resolutions and an equity transfer
7.4.2 Party B shall have the right to assign all or part of its interests
in the JVC to any of its Affiliates or Subsidiaries, but such
assignee's qualifications for engaging in securities industry and
any license or permit required for maintaining the JVC's online
securities trading permit shall require the prior examination and
approval of Party A. The Affiliate or Subsidiary in question shall
assume liabilities proportionate to the equity in the total
registered capital of the JVC assigned to it. However, under no
circumstances shall such assignment affect the JVC's application
for and holding of the online securities brokerage services permit
or violate PRC Law.
7.4.3 Except as stated under Article 7.4.1, either Party (the "Selling
Shareholder") may transfer, sell or otherwise assign all, but no
less than the totality, of its JVC equities (the "Sale Equities"),
in accordance with and subject to the following provisions:
22.214.171.124 The Selling Shareholder shall first irrevocably offer the
Sale Shares in writing to the other Party of the JVC
("Non-selling Shareholder"), stating the price and terms
of payment required by it. Such offer shall be
irrevocable and shall be valid for 14 days from receipt
of such offer. The Party to whom such offer is made must
indicate its acceptance of such by written notice to the
Selling Shareholder within 14 day period, and effect the
purchase of the Selling Shareholder's equity by complying
with the terms of payment as specified in the offer.
Acceptance of the offer shall constitute the firm and
irrevocable purchase of the Sale Shares by the
126.96.36.199 If the Non-selling Shareholder fails to accept the
Selling Shareholder's offer, then the Selling Shareholder
has the right to transfer all or part of its equities in
the JVC to any third party at same price as offered to
the Non-selling Shareholder.
7.5 Verification Report.
7.5.1 The JVC shall appoint an accounting firm registered in the PRC to
verify the capital contributions of the Parties within 60 days
thereof. After completing the verification, the accounting firm
shall provide the relevant capital verification report to the JVC,
a copy of which shall then immediately be forwarded to each Party
by the JVC. The JVC shall submit the capital verification report to
the local department of finance or the Shanghai AIC within 10 days
of the receipt of such report.
7.5.2 The capital verification report shall specify the following
188.8.131.52 the JVC's name;
184.108.40.206 the name of each Party;
220.127.116.11 the amount of the capital contribution subscribed by each
18.104.22.168 the details of the capital contribution by each Party in
7.6 Investment Certificates. In accordance with the capital verification
report, the JVC shall issue to each Party an investment certificate signed
by the Chairman, as the legal representative of the JVC.
CHAPTER 8: SERVICES
8.1 Service Markets. The JVC shall provide online securities brokerage services
and value-added financial services to Clients
8.2 Service Charges. The rates which the JVC will charge the Clients for its
services shall be determined by the general manager based on the JVC's
operational strategy and price standards stipulated by the Board.
CHAPTER 9: BUSINESS OPERATION
CHAPTER 10: SHAREHOLDERS' MEETING
10.1 Formation. The shareholders' meeting is comprised of all the shareholders
of the JVC.
10.2 Authority. The shareholders' meeting is the highest organ of authority of
the JVC and shall exercise the following powers:
10.2.1 determining the JVC's business strategies and investment plans;
10.2.2 appointing and replacing the Directors of the JVC and determining
their remuneration and related matters;
10.2.3 appointing and replacing the supervisors of the JVC and determining
their remuneration and related matters;
10.2.4 examining and approving annual business reports and other important
interim business reports submitted by the Board of Directors;
10.2.5 examining and approving annual business reports and other important
interim business reports submitted by the supervisors;
10.2.6 examining and approving the JVC's annual budgets and end-of-year
10.2.7 examining and approving the JVC's profit distribution plans and
measures to remedy losses;
10.2.8 approving increases and reductions in the JVC's registered capital;
10.2.9 approving the issuance of JVC bonds;
10.2.10 approving any merger, division, restructuring, dissolution and
liquidation of the JVC;
10.2.11 approving the amendment of the Articles of Association; and
10.2.12 approving the appointment of independent auditors for the purpose
of preparing financial reports in accordance with US GAAP and PRC
10.3 Shareholders' Meetings.
10.3.1 The first shareholders' meeting shall be convened and presided over
by the shareholder with the largest equity interest in the JVC.
10.3.2 During shareholders' meetings, the shareholders shall exercise
their voting rights according to the ratio of their respective
10.3.3 Shareholders' meetings shall be divided into regular meetings and
interim meetings. Written notice of a shareholders' meeting shall
be sent to all shareholders 15 days prior to the convening of such
meeting. Regular shareholders' meetings shall be convened once a
year and interim meetings may be convened upon the proposal of any
shareholder holding at least one-quarter of the equity interest in
the JVC or more than one-third of the Directors or supervisor(s) of
the JVC. Shareholders may attend a shareholders' meeting in person
or authorise a proxy in writing to attend the shareholders' meeting
on their behalf. The proxy shall exercise the rights as specified
in the relevant power of attorney.
10.3.4 Shareholders' meetings (except for the first meeting) shall be
convened and presided over by the Chairman. Where the Chairman is
not able to perform this duty due to special reasons, he or she may
appoint another Director as a proxy to preside over the meetings on
his or her behalf.
10.4 Shareholders' Meeting Resolutions. Resolutions on the matters specified in
Article 10.2 above shall only require the consent of a simple majority of
the shareholders except that resolutions on the matters listed below shall
require the consent of the shareholders representing 2/3 or above voting
10.4.1 increases or reductions in the JVC's registered capital;
10.4.2 the merger, division, dissolution and restructuring of the JVC; and
10.4.3 amendments to the Articles of Association.
10.5 Minutes. Matters discussed at a shareholders' meeting shall be recorded in
the minutes of such meeting, which shall be signed by all the shareholders
present at that shareholders' meeting.
10.6 Deadlock Procedure.
10.6.1 Where there is deadlock vote on any issue at a shareholders'
meeting, either Party may serve a written deadlock notice to the
other Party by facsimile and registered airmail.
10.6.2 In case more than one Party issues a deadlock notice, the date of
the first notice delivered shall govern.
10.6.3 A shareholders' meeting shall be convened at a time and place
convenient to either party, no later than 20 days from the date of
the issuance of the deadlock notice.
10.6.4 At the meeting, each Party shall hand to the other Party a sealed
envelope constituting an irrevocable offer to purchase the
totality, and no less than the totality, of the equity held by the
other Party in the JVC (a "Sealed Bid").
10.6.5 The Sealed Bids shall be opened by the Parties and/or the fully
empowered representatives of the Parties. After having been made
available for inspection by the representative of each Party, the
offer which contains the highest price per share shall be declared
to be successful.
10.6.6 The Party issuing the highest price per share shall be deemed to be
the "Acquiring Shareholder" and the other Party shall be deemed to
be the "Transferring Shareholder".
10.6.7 The Parties irrevocably and expressly acknowledge that such
above-mentioned declaration shall be the binding price for the
relevant Party's equity interest, and irrevocably accept that the
highest Sealed Bid in terms of price per share shall be the
10.6.8 The Acquiring Shareholder shall be obligated to purchase all, but
no less than all of the equity interest in the JVC from the other
Party at the price offered.
10.6.9 All purchase bids must be for cash payment within 60 days of the
acceptance of the successful offer.
CHAPTER 11: BOARD OF DIRECTORS
11.1 Board Authority. The Board shall discuss and determine all major issues
regarding the JVC.
11.2 Board Formation.
11.2.1 The Board shall be established on the date of the issuance of the
JVC's business licence. The Board shall consist of 8 Directors.
Party A shall appoint 4 Directors, and Party B shall appoint 4
Directors. Party B shall also appoint the Chairman.
11.2.2 Each Director shall be appointed for a term of 3 years, unless the
term is shortened by his removal or resignation, and may serve
consecutive terms if re-appointed by the Party that originally
appointed him. If a Director's position becomes vacant for any
reason, the Party which originally appointed that Director shall
appoint a successor within 30 days of the vacancy to serve the
remainder of his term.
11.2.3 At the invitation of the Board, the Chairman or any other Director
may concurrently hold the position of general manager or that of
any other Senior Management Personnel.
11.2.4 The Chairman shall be the legal representative of the JVC, and
shall be appointed by Party B. If the Chairman is unable to perform
his responsibilities, he shall authorise another
Director nominated by Party B in writing to represent him and shall
promptly notify the Board and each Party of such authorisation.
11.3 Removal and Resignation of Directors.
11.3.1 Either Party may at any time, by written notice, immediately remove
a Director (including the Chairman) whom it appointed, and shall
thereafter appoint a successor to serve the remainder of the term
of the removed Director.
If the Director so removed is the Chairman, the relevant Party
shall, within 7 days thereof, notify the JVC Secretary in writing
of such removal and of the details of the Chairman's successor,
including the successor's name, nationality and background. The JVC
Secretary shall notify the other Party and all Directors of the
same in writing within 7 days of receiving the said notice.
11.3.2 If a Director (including the Chairman) resigns, then:
22.214.171.124 the Party that originally appointed such Director shall,
within 7 days of his resignation, appoint a successor to
serve the remainder of the Director's term and notify the
JVC Secretary of the same in writing; and
126.96.36.199 the JVC Secretary shall notify the other Party and all
Directors of the details of the resignation and the
appointment of a successor in writing within 7 days of
receiving the said notice.
11.4 Responsibilities of Directors.
11.4.1 All the Directors shall observe this Agreement and Articles of
Association, carry out their duties faithfully and safeguard the
interests of the JVC , and shall not seek personal gain through
their position and authority in the JVC.
11.4.2 No personal act of any Director may bind the Board or the JVC
without the prior written approval of the Board.
11.4.3 No Director shall be personally liable for any act performed in his
capacity as a Director, except for acts that constitute a violation
of PRC Law, this Agreement, Articles of Association or the laws of
any other jurisdiction to which the relevant Director is subject.
11.5 Board Meetings.
11.5.1 The Chairman shall convene the first Board meeting of the JVC
within 30 days of the date of the issuance of the JVC's business
11.5.2 Board meetings shall be held at least once a year at such place
within or outside the PRC as designated by the Board. When it is
considered necessary and upon the written request of 1/3 or more of
the Directors, the Chairman shall convene an interim Board meeting.
11.5.3 The Chairman or the JVC Secretary, as duly authorised by the
Chairman, shall send written notices regarding Board meetings at
least 30 days prior to each meeting to all Directors, unless:
188.8.131.52 the requirement for such notice is waived by all
184.108.40.206 a lesser period is proposed by 2/3 or more of the
Directors, in which event written notice regarding such
meetings shall be sent to the other Directors within such
Notices for Board meetings shall include information on
the time, place and agenda of the meetings, as well as on
the topics to be discussed and the proposals to be
decided by the Board. Each Director shall confirm in
whether he/she will be able to attend that meeting within
7 days of receipt of such notice.
11.5.4 A quorum for a Board meeting shall be 4 Directors, present in
person or by proxy.
11.5.5 If a Director cannot attend a Board meeting, he may authorise in
writing another person to act as his proxy to attend and vote at
that particular Board meeting, and shall send a copy of the
relevant letter of authorisation to the Chairman and the JVC
Secretary. The proxy so entrusted shall have the same rights and
responsibilities as the Director for whom the proxy is acting.
11.5.6 Each Director present at a Board meeting shall have 1 vote, unless
he is appointed to act as a proxy by another Director who is unable
to participate in the said meeting and, accordingly, may have more
than 1 vote.
11.5.7 A Director participating in any Board meeting by means of telephone
or another mode of communication approved by the Board shall be
deemed to have attended that meeting in person, unless he was
unable to hear clearly or be clearly heard by the other Directors,
and the situation was immediately brought to the attention of the
Directors present at the meeting. If a quorum for a Board meeting
was not constituted in the absence of such Director, discussion
among the other Directors on any matter shall immediately be
suspended until a quorum is reached.
11.5.8 Any action by the Board may be taken without a Board meeting if all
Directors consent in writing through registered mail or fax to such
action. Such written consent shall be filed with the JVC Secretary
as part of the Board minutes. Such resolution shall have the same
force and effect as if it had been unanimously passed at a duly
convened Board meeting.
11.6 Board Resolutions.
11.6.1 Any resolutions involving the following matters of the JVC may only
be adopted by the unanimous affirmative vote of all Directors
present (in person or by proxy) at the Board meeting:
220.127.116.11 any amendment to this Agreement or the Articles of
18.104.22.168 any increase, decrease to or transfer of the registered
22.214.171.124 extending or obtaining of loans, and the use of JVC
assets as collateral for the same;
126.96.36.199 external investments made by the JVC;
188.8.131.52 a division of the JVC or a merger of the JVC with any
other economic organisation;
184.108.40.206 the dissolution or termination of the JVC (except where
such termination occurs as a result of a material breach
by either of the Parties); or
220.127.116.11 approval of any application from Party B under Article
9.10.8 of this Agreement,
11.6.2 With the exception of those topics listed under Article 11.6.1
above, Board resolutions on all other matters shall be adopted by
an affirmative vote of a simple majority of all Directors present
at the Board meeting, including without limitation the following:
18.104.22.168 Any suspension or ceasing of, or any changes in the
nature or address of, or any authorization of a third
party to manage the business activities of the JVC, or a
substantial part thereof.
22.214.171.124 The declaring, paying, or allocating of any dividend or
other allocation of [ ] to the shareholders.
126.96.36.199 Any significant change in the accounting policies of
188.8.131.52 The approval of the long-term or annual business plan
and operating budget of the JVC.
184.108.40.206 The entering into of any purchase and lease contracts
or any financial expenditure or commitment with either
Party or a third party for any reason in an amount
exceeding RMB 1,000,000.
220.127.116.11 Any material agreement and any other agreement entered
into by the JVC outside of the normal and ordinary
course of the business of the JVC.
18.104.22.168 The establishment of employee pensions or additional
benefits which are not required by PRC Law.
22.214.171.124 The opening of bank accounts for the JVC.
126.96.36.199 The investment policy of the JVC for its excess cash.
11.7 Deadlock Procedures.
Where there is a deadlock vote on any issue at a Board meeting, the
Parties shall resolve such deadlock as follows:
11.7.1 a second Board meeting will be convened within 48 hours of the
initial meeting, and the matter in question will be discussed and
voted upon again; and
11.7.2 where the votes are again equal, the Chairman of each Party (or
his / her designated representative) shall resolve the matter
through friendly consultations, and notify the Board of their
mutually agreed decision in writing.
11.8.1 Unless otherwise determined by the Board, the JVC shall not pay
any fees to the Directors for services performed in their
capacity as such.
11.8.2 The JVC shall pay the reasonable expenses for air tickets, meals
and accommodation incurred by the Directors for the purpose of
attending Board meetings.
11.9 General Manager. The general manager may attend Board meetings but is not
entitled to vote unless he/she is a Director in his/her own right
or has been entrusted to represent an absent Director according to
Article 11.5.5 and Article 11.5.6.
11.10.1 Draft minutes of the Board meetings, recording discussions among
and resolutions passed by the Directors, shall be prepared by the
JVC Secretary in Chinese and shall be reviewed and signed by all
Directors within 15 days after the close of each Board meeting.
Any Director who wishes to propose any amendment or addition
thereto shall submit the same in writing to the Chairman, copying
to all Directors, immediately after receipt of the Board minutes
and in any event no later than 30 days following the relevant
Board meeting, otherwise he shall be deemed to have agreed to the
11.10.2 Signing procedures for Board minutes shall be as follows:
188.8.131.52 the JVC Secretary shall prepare 1 original each in
Chinese and English of the Board minutes based on the
draft minutes agreed (or deemed to have been agreed) to
by all the Directors, and forward the same to Party A;
184.108.40.206 Party A shall within 15 days of receipt of the original
minutes dispatched by the JVC Secretary arrange for its
Directors to sign the same. If any Director appointed by
Party A fails to sign the said minutes, within the said
15-day period, then the Director appointed by Party A
shall be deemed to have agreed to and signed the said
minutes. Upon (and, in any event, no later than) the
expiration of the said 15-day period, Party A shall
immediately relay the minutes by courier service to Party
220.127.116.11 Party B shall within 15 days of receipt of the original
minutes dispatched by Party A arrange for its Directors
to sign the same. If any Director appointed by Party B
fails to sign the said minutes within the said 15-day
period, then such Director appointed by Party B shall be
deemed to have agreed to and thus to have signed the said
minutes. Upon (and, in any event, no later than) the
expiration of the said 15-day period, Party B shall
return the signed original minutes to the JVC Secretary;
18.104.22.168 After the JVC Secretary has received from the Parties the
signed original Board minutes, he shall provide 1 copy of
each for each Party for record and file the original of
the same with the JVC.
CHAPTER 12: ORGANISATION AND MANAGEMENT
12.1 Management Organisation. The JVC shall implement and adopt a management
system under which the general manager shall be responsible to the Board
for the operations of the JVC and shall report to the Board on a regular
basis. The Board shall, in accordance with the Articles of Association,
conduct an annual review of the general manager's performance of his
12.2 Appointment and Dismissal of Senior Management Personnel.
12.2.1 Party A shall be entitled to nominate the general manager (CEO) and
finance manager (CFO), whose appointment or dismissal shall be
confirmed by the Board, and whose term of employment shall be 2
years. Party B shall be entitled to nominate the Chief Operating
Officer (DGM) whose appointment or dismissal shall be confirmed by
the Board, and whose term of employment shall be 2 years. The
general manager and other Senior Management Personnel shall be
appointed by the Board.
12.2.2 Senior Management Personnel shall have the relevant qualifications
and experience for their respective positions.
12.2.3 Senior Management Personnel shall perform, on a full-time
basistheir duties and all other obligations stipulated in the
Articles of Association or as resolved by the Board. Pursuant to
PRC Law, the general manager may not concurrently hold the position
of general manager or deputy general manager at any other economic
organisation within the PRC during his term of employment by the
12.2.4 The Senior Management Personnel shall not, either on their own
behalf or on behalf of any third parties, engage in any business
activities which are of the same type as that conducted by the JVC,
or engage in any activities which are harmful to the interests of
The Senior Management Personnel may not enter into contracts or do
business with the JVC, either on their own behalf or on behalf of
any other companies, unless approved to do so by the shareholders'
12.2.5 If any Senior Management Personnel leaves the employ of the JVC,
the said personnel shall not work for any other economic
organisation in direct or indirect competition with the JVC for a
period of 360 days after his resignation from the JVC.
12.3 Dismissal of Senior Management Personnel. If any Senior Management
Personnel commits graft or a serious dereliction of duty, he may be
summarily dismissed by a simple majority resolution of the Board. If
the relevant Senior Management Personnel is a Director, he may not
participate in such a vote.
12.4 Management Personnel. The Management Personnel must have the relevant
qualifications and experience for their respective positions, and shall
be appointed and dismissed by the general manager according to the
management system adopted by the Board.
12.5 General Manager's Responsibilities.
12.5.1 The general manager shall be fully responsible for the day-to-day
operation and management of the JVC and shall implement the
decisions of the Board.
12.5.2 In addition to the other responsibilities set forth in this
Agreement and the Articles of Association, the general manager
shall have the following responsibilities:
22.214.171.124 to formulate the operational plan and the budget of the
JVC, which shall be implemented after their approval by
126.96.36.199 to determine the pricing of the services provided by the
JVC in accordance with the guidelines established by the
188.8.131.52 to purchase, at a reasonable price, any goods and
services necessary for the JVC's operations;
184.108.40.206 with the approval of the Board, to purchase or sell any
equipment necessary for the JVC's operations, which
equipment shall be deemed to be an asset of the JVC;
220.127.116.11 to nominate any Senior Management Personnel (except the
general manager, finance manager and deputy general
managers) for appointment and dismissal by the Board;
18.104.22.168 to employ and dismiss any Management Personnel and
Working Personnel; and
22.214.171.124 to approve and determine, under the supervision of the
Board, other matters authorised by the Board.
12.6 Remuneration of Senior Management Personnel. The Parties agree that the
Senior Management Personnel's remuneration shall be confirmed by the Board
in a formal resolution.
CHAPTER 13 : LABOUR MANAGEMENT
13.1 Governing Principles.
13.1.1 As stipulated by PRC Law, the JVC shall autonomously determine
the following labour management matters:
126.96.36.199 the time, conditions, and methods of recruitment of the
JVC's personnel, as well as the number of employees to be
188.8.131.52 the terms of employment for the JVC's personnel, as well
as circumstances under which their Employment Contracts
may be terminated; and
184.108.40.206 the system of wage payment, the standard of wages and the
incentives, subsidies and benefits of the JVC.
13.1.2 The employment plan determined by the JVC shall be filed for the
record with the local labour administrative department.
13.2 Employment Contracts.
13.2.1 The JVC must, in accordance with PRC Law, sign an Employment
Contract with each Senior Management Personnel, Management
Personnel and Working Personnel on the basis of equality and
volition as well as consultation and agreement.
13.2.2 Authentication procedures should be carried out with the local
labour administration authorities within 30 days following the
execution of an Employment Contract.
13.3 Employee Compensation.
13.3.1 The compensation of the JVC's employees and policies governing the
same shall be stipulated in the relevant Employment Contract and
the Policies and Procedures Manual.
13.3.2 The JVC shall not pay any extra wages, subsidies, benefits or other
compensation to its employees except as stipulated in the
Employment Contract and the Policies and Procedures Manual.
13.4 Social Insurance and Welfare. The JVC shall provide social insurance and
welfare benefits for the JVC's employees in accordance with PRC Law.
CHAPTER 14 : STOCK INCENTIVE PLAN
14.1 Each Party shall contribute on a pro rata basis a portion of its equity
in the JVC to an incentive plan for the Directors, Senior Management
Personnel and other employees of the JVC. The total amount of equity
contributed to the incentive plan shall be 15%.
14.2 At the discretion of the JVC Board of Directors, such 15% of its total
equity may be distributed under the stock incentive plan among the
Directors, Senior Management Personnel and other employees of the JVC, or
to a designated entity established for the purpose of holding the said
equity. The vesting terms, detailed option terms and purchase price of the
equity payable pursuant to the stock incentive plan shall be determined by
the JVC Board.
CHAPTER 15 : ACCOUNTING AND FINANCE
15.1 Accounting and Auditing System.
15.1.1 The general manager and the finance manager shall be responsible
for the financial management of the JVC; they shall submit 1 copy
each of the approval certificate, business licence, this Agreement
and the Articles of Association to the local department of finance
within 30 days following the completion of the industrial and
commercial registration and shall secure taxation registration
certificates from the State and local taxation bureau.
15.1.2 The general manager and the finance manager shall prepare the
accounting system and procedures of the JVC in accordance with PRC
Law and the internal auditing and internal reporting requirements
of Party A (in particular, including an annual statement and audit
report prepared according to international accounting standards),
which shall be submitted to the Board for approval and filed with
the relevant governmental administrations.
15.1.3 The financial year of the JVC shall be from January 1st to December
31st of the calendar year; the first financial year of the JVC
shall commence on the date of the issuance of the JVC's business
licence and shall end on December 31st of the same year.
15.1.4 The JVC will prepare financial statements in accordance with both
US GAAP and PRC GAAP. The JVC shall be audited by both an
internationally registered accounting firm and a PRC-registered
accounting firm both of which shall be nominated by Party A and
appointed by JVC. The JVC shall bear the costs of auditing. If
Party A has additional requirements, the JVC shall cooperate with
Party A and Party A itself shall bear the relevant expenses. The
PRC GAAP financial statements shall be used for all PRC statutory
filing purposes and the payment of dividends. US GAAP shall be used
for determining employee and senior management bonuses, amounts to
be charged under service agreements, resolving any JVC valuation
issues associated with termination or breach of contract and profit
sharing for the respective shareholders.
15.1.5 All accounting records, vouchers, books and statements of the JVC
shall be prepared in Chinese.
All important financial and accounting documents, records and
statements shall require the approval and signature of the general
manager and the finance manager.
15.1.6 The finance manager shall, within 30 days after the end of each
quarter, provide each Party and the relevant governmental
administrations with quarterly financial statements of the JVC,
including the profit and loss account and the balance sheet. The
annual financial statements of the JVC, together with the annual
auditing report shall be submitted to relevant Shanghai AIC within
120 days of the end of each accounting year.
15.1.7 The finance manager shall, within 15 days after the end of each
month provide Party A and Party B with monthly financial statements
prepared in accordance with PRC GAAP and US GAAP. The PRC GAAP and
US GAAP annual audited financial statements shall be completed
within 60 days of the year end. The finance manager shall comply
with all PRC and US financial reporting requirements.
15.1.8 Either Party or its duly authorised representative may at any
reasonable time without prior notice to or approval of the other
Party inspect the accounts of the JVC and appoint its own auditors
to inspect the books and records of the JVC.
15.2 Bank Accounts.
15.2.1 The JVC shall open and maintain bank accounts as approved by the
Board, and no bank accounts shall be opened unless approved by the
15.2.2 Excess cash shall be invested according to the investment policy
approved by the Board and PRC Law.
15.3 Profits Distribution. For the avoidance of doubt, any and all Profits shall
be divisible between the Parties in accordance with the shareholding. .
However, the actual distribution of profits shall be subject to the
approval of the Board.
15.4 Legal Fees. The JVC shall bear the legal fees associated with the
establishment of the JVC, including the drafting of this Agreement and the
Articles of Association
CHAPTER 16 : TAXATION
16.1 Tax and Preferential Treatment. The JVC shall pay taxes according to the
relevant PRC Law and shall be entitled to any exemptions and preferential
treatment accorded to it by the same.
16.2 Personal Income Tax. All employees of the JVC shall pay their individual
income taxes in accordance with PRC Law.
CHAPTER 17 : CONFIDENTIALITY
17.1 In addition to the conditions set forth in Article 15.3 of this Agreement,
the Parties shall maintain the confidentiality of all Confidential
Information during the Joint Venture Term and indefinitely thereafter.
17.2 Confidentiality Agreement. The Parties and the JVC shall take all necessary
measures (including the signing of a confidentiality agreement) to ensure
that their employees, agents, contractors, suppliers and advisors also
comply with the obligation to maintain confidentiality as set forth in this
Chapter and shall arrange for the summary dismissal of any employee, agent
or advisor who breaches such obligation.
17.3 Exceptions. The disclosure of Confidential Information by either Party
under any of the following circumstances shall not be deemed as a breach of
17.3.1 at the time of its disclosure, disclosed Confidential Information
is already in the public domain;
17.3.2 the Confidential Information is disclosed pursuant to the prior
written consent of the Parties;
17.3.3 the Confidential Information is required to be disclosed by a
government authority or law to which either Party or an Affiliate
of either Party is subject;
17.3.4 the Confidential Information is no longer deemed as confidential
information due to operational needs, and is provided to any
Director, employee, agent, contractor, supplier or advisor of the
JVC, a Subsidiary or Affiliate; or
17.3.5 Confidential Information is disclosed to an Affiliate, Subsidiary
or other bona fide potential assignee, provided that such assignee
has entered into a confidentiality agreement to the satisfaction of
the other Party prior to the said disclosure.
CHAPTER 18 : TERMINATION AND MATERIAL BREACH
18.1 Principle. This Agreement shall terminate upon the expiration of the Joint
Venture Term, unless it is extended pursuant to Article 6.2 or prematurely
terminated pursuant to Article 18.2.
18.2 Termination. Either Party may initiate termination of this Agreement prior
to the expiration of the Joint Venture Term by notifying the other Party in
writing of its intention to terminate, and the Board shall undertake any
and all measures necessary to obtain the approval from the Shanghai AIC for
the said termination for any of the following reasons, namely:
18.2.1 if either the JVC or the respective other Party:
220.127.116.11 is the subject of proceedings for liquidation or
dissolution required by law; or
18.104.22.168 is declared bankrupt by a court of competent
18.2.2 if all or any material part of the key assets of the JVC are
expropriated, causing an adverse material effect on the operation
and production of the JVC;
18.2.3 if any government organ with authority over either Party requires
any provision of this Agreement to be revised in such a way that
causes a material adverse effect on the JVC or on either Party and,
despite the best efforts of the JVC or the affected Party to remedy
such situation, such material adverse effect cannot be cured;
18.2.4 if an amendment is made to the existing PRC Law or to the
interpretation thereof, or a new law is introduced after the
Effective Date which materially, adversely and irreparably affects
the JVC's operations;
18.2.5 if Force Majeure prevails for more than 30 days and has a material
adverse effect on the operation of the JVC, and the Parties have
been unable to find an equitable solution despite prompt
consultations in accordance with the stipulations of Article 21.3;
18.2.6 if a buy-out is not effected pursuant to Article 18.4;
18.2.7 if a Party has materially breached this Agreement, and if such
material breach has not been cured within 15 days pursuant to
Article 18.3.2; and
18.2.8 if the JVC fails to obtain the online securities brokerage services
permit within 3 years of the date of the issuance of its business
18.3 Material Breach.
18.3.1 A Party shall be deemed to have materially breached its obligations
under this Agreement (the "Breaching Party") in any of the
22.214.171.124 it has failed to perform any of its obligations under
Chapter 9 of this Agreement;
126.96.36.199 any of the representations or warranties it has made
herein is false, so as to have a material adverse effect
on the operation of the JVC;
188.8.131.52 it fails to ensure that any Senior Management Personnel
in the employ of the JVC undertakes in writing not to
work for a competing operation within 180 days after his
or her departure from the JVC;
184.108.40.206 it breaches any provision of this Agreement and such
breach prevents the JVC from continuing to operate (in
which case either Party may apply directly to the
Shanghai AIC for approval to terminate this Agreement).
220.127.116.11 it has been found guilty of illegal operations by a
competent government authority;
18.104.22.168 In the case of Party B, where it fails to transfer assets
(including contracts with Clients) to the JVC, except
under the circumstances as set forth in Article 9.2.3
22.214.171.124 in the case of Party B, where it is in material breach of
the exclusive service agreement described in Article 9.2.
18.3.2 In the event of a material breach as outlined in Article 18.3.1,
the Breaching Party shall have 15 days after receipt of notice
specifying the breach from the other Party (the "Non-breaching
Party") to cure such breach. In case of failure, the Non-breaching
Party, in addition to seeking compensation from the Breaching Party
for all direct and foreseeable damages caused by the material
breach, shall have the following rights:
126.96.36.199 to terminate this Agreement; and
188.8.131.52 together with a qualified third party (or third parties)
chosen at the Non-Breaching Party's sole discretion, to
buy out the Breaching Party's total shareholding interest
in the JVC.
18.4.1 In the event of a material breach, the price at which the
Non-Breaching Party (and its co-investor(s)) may buy the Breaching
Party's equity in the JVC shall be determined as the lower of: the
total value of the Breaching Party's equity in the JVC (as a going
concern) as described in a written valuation from the accounting
firm retained by the JVC; or the original value of the registered
capital contributed by the Breaching Party.
18.4.2 In the event that this Agreement is terminated by either Party
pursuant to Article 18.2 above, the other Party may, within 60 days
thereafter, buy out such Party subsequent to mutual written
agreement between the Parties, at a price based upon a written
valuation from the accounting firm appointed by the JVC
representing the value of such Party's equity holding in the JVC as
a going concern.
CHAPTER 19 : LIQUIDATION
19.1.1 If this Agreement is terminated for any reason and either Party's
total shareholding interest in the JVC is not purchased by the
other Party or any third party pursuant to Article 18.3.2. 1 and
Article 18.3.2. 2, then the JVC shall undergo liquidation,
whereupon the Liquidation Committee shall value and liquidate the
JVC's assets in accordance with PRC Law and the principles set out
in this Article.
19.1.2 The Liquidation Committee shall be established within 15 days after
the commencement of liquidation proceedings and shall comprise 6
members, 3 of whom shall be nominated by Party A and 3 of whom
shall be nominated by Party B. After nomination by the Board, 1 of
the members appointed by Party A shall be the Chairman, and 1 of
the members appointed by Party B shall be the vice-Chairman, of the
Liquidation Committee. The Board shall report the establishment of
the Liquidation Committee to the Shanghai AIC.
Members of the Liquidation Committee shall be Directors or relevant
professionals retained by the Board. Any resolution by the
Liquidation Committee shall be passed on a simple majority basis.
Either Party may, at its own cost, also appoint professional
advisors, including accountants and lawyers qualified either in the
PRC or abroad, to assist the Liquidation Committee.
19.1.3 After the establishment of the Liquidation Committee, the JVC shall
submit to the Liquidation Committee the accounting statements,
financial books, list of company assets and creditor and debtor
lists of the JVC, as well as other materials in connection with the
liquidation of the JVC.
19.1.4 Within a period of 30 days of the formation of the Liquidation
Committee, each Party shall have a right of first refusal to
purchase any tangible and intangible asset of the JVC. Where both
Parties wish to purchase the same asset, it shall be sold to the
Party that offers the highest price.
If the Parties agree that there is a need to arrange for the sale
of the JVC's assets and/or business to third parties, the
Liquidation Committee shall, in preparing and executing the
liquidation plan, endeavour to obtain the highest possible price
for the said assets and/or business. Consideration shall be given
to the sale of the JVC's assets and/or business by public auction
open to domestic and foreign bidders with a view towards concluding
sales at the best possible market prices.
19.1.5 Liquidation expenses shall be paid out of the JVC's liquidated
assets, with priority over the claims of other creditors.
After the payment of the liquidation expenses, other payments shall
be made according to the following order:
184.108.40.206 wages and insurance premiums of the JVC's employees;
220.127.116.11 taxes payable to the State; and
18.104.22.168 other outstanding debts.
19.1.6 After the settlement of all of the JVC's outstanding debts outlined
in Article 19.1.5 above and the division of tangible property not
sold according to the liquidation plan, the total cash proceeds of
the liquidation of property and remaining available funds received
by the JVC shall be calculated in RMB and divided between the
Parties in proportion to their respective percentage shares of the
JVC's total registered capital;
19.1.7 On completion of all liquidation procedures, the Liquidation
Committee shall submit to the Shanghai AIC a final liquidation
report (including the profit and loss account) approved by the
Board, and within 10 days of the said submission, shall undergo
procedures with the tax bureau for cancellation of the JVC's
registrations. Within 10 days of completion of the said
procedures, the Liquidation Committee shall submit the
liquidation report and the certificates of cancellation of
registrations to the Shanghai AIC and shall return the JVC's
business licence and complete all other formalities to nullify
the JVC's registration. Party B shall have a right to obtain
copies of all of the JVC's accounting books and other documents
but the originals thereof shall be left in the care of Party A.
19.2 Release of Obligations.
19.2.1 Neither Party shall have any further obligations or liabilities
to or rights against the JVC or the other Party upon completion
of the liquidation of the JVC under Article 19.1, except for the
obligations stipulated in Chapter 15.
19.2.2 Upon the receipt of all sums payable to it, the Party which has
sold its total shareholding interest in the JVC pursuant to a
buy-out under Article 18.3.3 shall have no further obligations or
liabilities to or rights against the JVC or the other Party under
this Agreement, except for the obligations stipulated in Chapter
19.2.3 If the JVC continues to operate after a buy-out, then the JVC
and/or the remaining Party shall hold the Party which has sold
its shareholding interest in the JVC harmless from any liability
or costs related to this Agreement or the JVC in respect of
events which occur after the buy-out.
CHAPTER 20: FORCE MAJEURE
20.1 Suspension of Obligations. In the event of Force Majeure, the Parties
should consult with each other to determine a method of dealing with
such, and the performance of the Parties' contractual obligations (except
the obligations relating to confidentiality under Chapter 15) shall be
suspended to the extent they are affected by the Force Majeure. The Joint
Venture Term shall be extended with the agreement of the Parties and the
approval of the Shanghai AIC, without penalty to either Party, by the
period of such suspension of obligations.
20.2 Written Evidence. The Party claiming Force Majeure shall, within 15 days
after the date of its first occurrence, inform the other Party of the
same and provide said Party with written evidence of the occurrence of
Force Majeure as issued by the relevant authorities, and shall use all
reasonable efforts to minimise the consequences of such Force Majeure.
20.3 Termination. If Force Majeure prevails for more than 30 days and has a
material adverse effect on the operation of the JVC, either Party may
initiate termination of this Agreement pursuant to Article 18.2.5.
CHAPTER 21 : GOVERNING LAW AND DISPUTE RESOLUTION
21.1 Governing Law. The execution, validity, interpretation and implementation
of this Agreement and the settlement of disputes under it shall be
governed by PRC Law.
21.2 Interpretation. If any dispute arises in connection with the
interpretation of any provisions of this Agreement, the Parties shall
determine the true intention of those provisions by making reference to
the wording of the Agreement, the relevant Articles, the objective of the
Agreement, commercial practice and the principle of good faith.
21.3 Consultation. If any dispute arises in connection with this Agreement,
the Parties shall attempt in the first instance to resolve such dispute
through friendly consultation or mediation.
21.4 Arbitration. If the dispute cannot be resolved in the above manner within
30 days after the commencement of consultations, either Party may submit
the dispute to arbitration as follows:
21.4.1 all disputes arising out of or in connection with this Agreement
shall be submitted for arbitration to the Shanghai Sub-commission
of the China International Economic and Trade Arbitration
Commission ("Arbitration Commission") under its rules and by an
arbitration panel appointed in accordance with those rules. The
arbitration panel shall consist of 3 arbitrators. Each of the
Parties shall appoint 1 arbitrator from among the Panel of
Arbitrators of the Arbitration Commission or entrust the chairman
of the Arbitration Commission to make such appointment. A third
arbitrator shall act as the presiding arbitrator and shall be
jointly appointed by the Parties or appointed by the chairman of
the Arbitration Commission upon the Parties' joint authorization.
If the Parties fail to jointly appoint a third arbitrator or fail
to jointly entrust the chairman of the Arbitration Commission to
appoint a third arbitrator within 20 days of the date on which the
respondent receives the notice of arbitration, the third arbitrator
shall be appointed by the chairman of the Arbitration Commission.
21.4.2 The arbitration shall be conducted in the Chinese language, with
the arbitral award being final and binding upon both Parties.
Unless otherwise determined by the arbitrator, the cost of
arbitration shall be borne by the losing Party.
21.4.3 When any dispute is submitted to arbitration, except for the
matters under dispute, the Parties shall continue to perform this
CHAPTER 22: MISCELLANEOUS
22.1 Notices. Any notice between the Parties shall be made in writing and in
the English and/or Chinese languages by facsimile transmission, delivery
in person (including courier service) or registered airmail letter. Until
changed by written notice, all notices and communications shall be
delivered to the appropriate correspondence addresses set forth below:
BEIJING CENTURY HI-TECH INVESTMENT CO., LTD.
Address: Suite 21, 15th Floor, Tower 2, Bright China Chang'an
Building, 7 Jianguomennei Avenue, Dongcheng District,
Fax : (86 10) 6510-2160
Attn : Charles Zhang
GUOLIAN SECURITIES CO., LTD.
Address: No.153, Zhongshan Road, Wuxi 214001, Jiangsu Province.
Fax : [ ]
Attn : [ ]
22.2 Receipt of Notices. The date of receipt of a notice or communication
hereunder shall be deemed to be the earliest of the following:
22.2.1 that as set forth in the transmission journal in the case of a
facsimile transmission, unless such facsimile transmission is
sent after 5:00 p.m. or on a non-business day in the place of
receipt, in which event the date of receipt shall be deemed to be
the following business day in the place of receipt;
22.2.2 the time of receipt by the receiving party in the case of
delivery in person; and
22.2.3 3 days after the issuance of a receipt by the post office in the
case of a registered letter.
22.3 Waiver. Failure or delay on the part of either Party hereto to exercise
any right, power or privilege under this Agreement, or under any other
agreement relating hereto, shall not constitute a waiver thereof; nor
shall any single or partial exercise of any right, power of privilege
preclude any other future exercise thereof.
22.4 Amendments. This Agreement may only be amended by a written agreement
signed by the Parties.
22.5 Severability. The invalidity of any provision of this Agreement shall not
affect the validity of any other provision of this Agreement which is
unrelated to that provision.
22.6 Versions. This Agreement is executed in 4 originals. 2 originals shall be
for each Party.
22.7 Entire Agreement. This Agreement, the Appendices hereto and the Articles
of Association constitute the entire agreement between the Parties and
supersede all prior discussions, negotiations and agreements. The
Appendices to this Agreement form an integral part hereof and have the
same legal effect as this Agreement.
22.8 Indemnity. The JVC shall indemnify either Party against all losses,
damages or liabilities with respect to third-party claims arising out of
the operation of the JVC, except for acts of either Party that constitute
a violation of this Agreement or the Articles of Association.
22.9 Successors. This Agreement is made for the benefit of, and shall bind,
the Parties and their respective lawful successors and assignees.
22.10 Matters Not Covered. Matters not specifically provided for in this
Agreement shall be handled in conformity with the relevant resolutions
adopted by the Board and in accordance with the relevant provisions of
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorised signatories on the date first indicated above.
For and on behalf of
Beijing Century Hi-Tech Investment Co., Ltd.
Name : Charles Zhang
Title : Chairman
Signature : /s/ Charles Zhang
Company Seal :
For and on behalf of
Guolian Securities Co., Ltd.
Name : Fan Yan
Title : Chairman
Signature : /s/ Fan Yan
Company Seal :
* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.
Appendix [ ]
Remuneration of Senior Management Personnel
1. General Manager (Chief Executive Officer): annual base salary of RMB * to
2. Vice-president (Chief Operating Officer): annual base salary of RMB * to
3. Finance Manager (Chief Finance Officer) and Technical Manager (Chief
Technical Officer): annual base salary of RMB * to RMB *;
* Omitted pursuant to request for confidential treatment and filed separately
with the Securities and Exchange Commission.
CHAPTER 22: MISCELLANEOUS ............................................... 24