{"id":42195,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/contractual-joint-venture-contract-chengdu-huanyu-information.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"contractual-joint-venture-contract-chengdu-huanyu-information","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/contractual-joint-venture-contract-chengdu-huanyu-information.html","title":{"rendered":"Contractual Joint Venture Contract &#8211; Chengdu Huanyu Information Industry Co. Ltd. and Big Sky Network Canada Ltd."},"content":{"rendered":"<pre>                       CONTRACTUAL JOINT VENTURE CONTRACT\n                                       FOR\n                       SICHUAN HUAYU BIG SKY NETWORK LTD.\n\n\n\n\n\n\n\n                             PRELIMINARY STATEMENTS\n\nIn  accordance  with the \" Law of the  People's  Republic  of  China on  Chinese\nForeign  Contractual  Joint  Ventures\"  and  other  relevant  Chinese  laws  and\nregulations of Chengdu,  Chengdu Huanyu  Information  Industry Co., Ltd. and Big\nSky Network  Canada  Ltd.,  adhering  to the  principle  of equality  and mutual\nbenefits,  spirit of  friendship  and  cooperation,  agreed to jointly  set up a\nContractual  Joint Venture to manage the project at Chengdu,  Sichuan  Province,\nthe  People's  Republic of China.  The  Contract  hereunder is concluded by both\nparties on July 8, 2000.\n\n\n\n\n\n\n\n\n                                       2\n\n\n\n\n\n\n                                    CHAPTER 1\n                               GENERAL PROVISIONS\n\nARTICLE 1.1 DEFINITIONS\n\nIn the Contract (as  hereinafter  defined) the following  words and  expressions\nshall have the  meanings  hereby  assigned  to them,  except  where the  context\notherwise requires:\n\n1.   \"Approval  Authority\"  means  the  Chengdu  Municipal  Government  and  its\n     functional departments.\n\n2.   \"Articles of  Association\"  means the \"Articles of Association  for Sichuan\n     Huayu Big Sky Network Ltd.\n\n3.   \"Board of Directors\" means the Board of Directors of the Company.\n\n4.   \"Business  License\" means the business license of the Company issued by the\n     State Administration for Industry and Commerce.\n\n5.   \"Company\" means Sichuan Huayu Big Sky Network Ltd.\n\n6.   \"Contract\" means this Contractual  Joint Venture Contract For Sichuan Huayu\n     Big Sky Network Ltd.\n\n7.   \"Effective  Date\" means the date on which the  approval  documents  of this\n     Contract is issued by the Approval Authority.\n\n8.   \"Parties\"  means Party A (Chengdu  Huayu  Information  Industry Co.,  Ltd.,\n     [Chinese Characters Appear Here] and Party B (Big Sky Network Canada Ltd.).\n\n9.   \"RMB\" means the currency of the People's Republic of China.\n\n10.  \"Foreign  Currency\"  means the currencies of foreign  countries  (including\n     paper money) and foreign payment orders (including  commercial  instruments\n     and bank deposit certificates, etc.).\n\n11.  \"Senior  Officers\" means the members of the Directors of Board, the General\n     Manager,  the Deputy  General  Manager,  the Chief  Engineer  and the Chief\n     Accountant.\n\n12.  \"ITSP\" means the Internet Technology Service Provider.\n\n\n                                       3\n\n\n\n\n\n\n                                    CHAPTER 2\n                    PARTIES OF THE CONTRACTUAL JOINT VENTURE\n\n\nARTICLE 2.1 JOINT VENTURE PARTIES\nParties to this Contract are as follows:\nParty A: Chengdu Huayu Information Industry Co., Ltd. [Chinese Characters Appear\nHere] \" hereinafter referred to as Party A).\nRegistration Place: Chengdu, The People's Republic of China\nLegal Address: 14F, Jinyu Building, 191, Section Bei Si, Yihuan\n               Road., Chengdu, Sichuan, the People's Republic of China\nLegal Representative:\nName:Wang Yuan Lin\nPosition: Chairman\nNationality: Chinese\nTelephone: 86-28-3372468\nFax: 86-28-3315758\n\nParty B: Big Sky Network Canada Ltd. [Chinese Characters Appear Here],\nhereinafter referred to as Party B).\nRegistration Place: British Virgin Islands\nLegal Address: 2080, 440 2nd Ave., SW, Calgary, Alberta, Canada\nLegal Representative:\nName: Matthew Heysel\nPosition: Chairman\nNationality: Canadian\nTelephone: 1-403-708-5962\nFax: 1-403-708-0823\n\n\n\n\n                                       4\n\n\n\n\n\n                                    CHAPTER 3\n                         REPRESENTATIONS AND WARRANTIES\n\n\nARTICLE 3.1 REPRESENTATIONS AND WARRANTIES BY PARTY A.\n\nParty A hereby represents and warranties as of the date hereof as follows:\n\n1.   Party A is a company duly organized and validly existing with the status of\n     a legal person under the laws of the People's Republic of China.\n\n2.   The  execution  and  performance  by  Party  A of  this  Contract  and  its\n     appendices (i) are within its corporate power and business scope, (ii) have\n     been duly  authorized  by  necessary  corporate  resolution,  (iii) do  not\n     contravene its Articles of  Association  and (iv) do not contravene any law\n     or contractual restriction binding on or affecting part A.\n\n3.   Party A owns and  controls  Huayu HFC network and its entire  software  and\n     hardware platform,  and the rights to use the Facilities (\"the Facilities\")\n     and equipment for the data  transmission  and Internet related  business in\n     Chengdu area.\n\n4.   Party A ensures to hire the Company as its  exclusive  Internet  Technology\n     Service  Provider  (\"ITSP\") in Chengdu area during the life of the Company.\n     Party A promises not to appoint other  companies  located either in Chengdu\n     or outside China for the purpose of offering the  above-mentioned  services\n     to Party A without the written consent of the Company.\n\n5.   Party A understands and promises to be held responsible for the prohibition\n     of business  strife in bad faith and Party A shall ensure the Joint Venture\n     all relevant  permission  and approvals  (including  approval for  Internet\n     business operation) by the relevant government authorities. Party A ensures\n     not to permit and transfer its ownership,  operating rights to use the said\n     network  Facilities  and  equipment  to any third  party  without a written\n     permission from the Company.\n\n6.   All authorizations, consents or approvals or actions by, and all notices to\n     or filings with,  any governmental authority required for the due execution\n     and performance by Party A of this\n\n\n                                       5\n\n\n\n\n     Contract  have been  obtained, except for the  approval of this Contract by\n     the Approval Authority.\n\n7.   Subject  to the  approval  of this  Contract  and  its  appendices  by  the\n     relevant   Authority,   this  Contract  is  the  legal, valid  and  binding\n     obligation of Party A,  enforceable  against Party A in accordance with its\n     terms.\n\nARTICLE 3.2 REPRESENTATIONS AND WARRANTIES BY PARTY B.\n\nPARTY B hereby represents and warranties as of the date hereof as follows:\n\n1.   Party B is a corporation  duly  incorporated,  validly existing and in good\n     standing under the laws of British Virgin Island.\n2.   The  execution  and  performance  by  Party  B of  this  Contract  and  its\n     appendices (i) are within  its  corporate  power and business  scope,  (ii)\n     have been duly authorized by all necessary corporate  resolution,  (iii) do\n     not contravene  its Articles of Association  and (iv) do not contravene any\n     law or contractual restriction binding on or affecting Party B.\n3.   The  investment  funds  and  equipment,   contribution   manners  and  time\n     arrangement  stipulated  in the  Contract  shall  be  observed  Party  B to\n     guarantee operation of the project.\n4.   All authorization, consent or approval or other action by, and notice to or\n     filng with, any  governmental  authority is required for the due execution,\n     delivery and  performance  by Party B of this Contract and its  appendices,\n     except for the approval of this Contract by the Approval Authority.\n5.   Subject to the approval of this Contract and its appendices by the Approval\n     Authority,  this  Contract is the legal,  valid and binding  obligation  of\n     Party B, enforceable against Party B in accordance with its terms.\n\n\n                                       6\n\n\n\n\n\n                                    CHAPTER 4\n                        ESTABLISHMENT OF THE CONTRACTUAL\n                              JOINT VENTURE COMPANY\n\n\nARTICLE 4.1 ESTABLISHMENT OF THE COMPANY.\nThe  Company  shall be  established  as a limited  liability  Contractual  Joint\nVenture company in accordance with the Law of the People's  Republic of China on\nChinese  Foreign  Contractual Joint Ventures and other relevant Chinese laws and\nregulations, and after completion of the Feasibility Study.\n\nARTICLE 4.2 THE NAME AND LEGAL ADDRESS OF THE COMPANY\n1.   The Name of the Company in Chinese is:  [Chinese  Characters  Appear  Here]\n     (hereinafter referred to as the \"Company\").\n2.   The name of the Company in English is: Sichuan Huayu Big Sky Network Ltd.\n3.   Registration.  Place: Chengdu,  Sichuan Province,  the People's Republic of\n     China.\n4.   Legal Address:  2 Gulou North 3rd Street,  Chengdu,  Sichuan,  the People's\n     Republic of China.\n\nARTICLE 4.3 LAW OF THE PEOPLE'S REPUBLIC OF CHINA\nThe Company is a Contractual  Joint Venture  registered in Chengdu,  approved by\nthe  authorities  of the Government of Chengdu.  As a legal entity,  the Company\nshall follow the laws and  regulations  of the People's  Republic of China.  All\nactivities  of the  Company  shall be  governed  and  protected  by the laws and\npertinent rules and regulations of the People's Republic of China.\n\nARTICLE 4.4 LIMITED LIABILITY\nThe  Company  is a limited  liability  company.  The  funds or \/and  cooperative\nconditions  and terms  provided by both Parties of the Company shall  constitute\npart of the property of the Company.  The Company shall be  responsible  for its\nown  liability  and under all its own assets.  Both  Parties of the Company have\nreached consensus in the Contract on the following:  the terms and conditions of\nthe\n\n\n                                    7 \n\n\n\n\n\ncooperation  and  investment,  profit  distribution,   manner  of  the  business\nmanagement  anal  operation,  and  asset  distribution  on  termination  of  the\nContract.\n\n\n\n\n\n\n\n\n                                       8\n\n\n\n\n\n                                    CHAPTER 5\n                         OBJECTIVE AND SCOPE OF BUSINESS\n\n\nARTICLE 5.1 PURPOSE\nThe  objective  of the  Company is using  Huayu's  HFC  network  to  develop  an\nadvanced  broadband  software and hardware  platform for data  transmission  and\nInternet related business in Chengdu area. This will be accomplished by economic\ncooperation  and  technical  exchanges  as well  as  through  adopting  advanced\ntechnology and scientific management  expertise,  in order to achieve favourable\neconomic results and ensure a satisfactory rate of return for the Parties.\n\nARTICLE 5.2 SCOPE OF BUSINESS\nThe  business  scope of the Company  shall  include:  to provide a software  and\nhardware platform for broadband data transmission network, data transmission and\nnetwork value-added business,  information network services, related development\nof software applications, technical consulting and training services.\n\nARTICLE 5.3 BUSINESS ACTIVITIES\nThe  Company  and Party A shall  jointly  provide  Internet  access  services to\ncustomers as follows:\n\n1. The  Company  shall  purchase  and  install  multi-user  modems  and  related\nequipment to connect the computers or other  equipment of customers to Party A's\nnetwork.\n\n2.  Customers  who desire to obtain  Internet  access will be required to pay an\ninstallation and monthly  maintenance fee (including  monthly  equipment fee and\nthe Internet  access .fee  payable to Party A for being  permitted to connect to\nthe Internet through Party A's network).\n\n3.  After   collecting  the  above  said  fees  from  customers  and  paying  an\ninterconnection provider the inter-connection  charges, Party A and Party B will\nshare the profits in accordance with Article 9.1 of the Contract.\n\n\n                                       9\n\n\n\n\n\n                                    CHAPTER 6\n                    TOTAL AMOUNT OF INVESTMENT AND REGISTERED\n                               CAPITAL AND OTHERS\n\nARTICLE 6.1 TOTAL INVESTMENT\n1.   The total amount of investment in the Company shall be  US$5,500,000(say US\n     Dollars five million five hundred thousand).\n2.   The unit of currency for  the  total  investment,  registered  capital  and\n     contributions shall be the U.S. dollar. The exchange rate used shall be the\n     average  exchange  rate  announced  by the China  State  Administration  of\n     Exchange  Control  for  U.S.  dollars  and RMB for the  date on  which  the\n     respective capital contributions are made.\n3.   All  capital  contributions  in cash  shall be made to the  account  of the\n     Company at the office of an  authorized  bank in Chengdu or, if approved by\n     the appropriate PRC authorities  pursuant to the relevant  foreign exchange\n     control regulations,to a bank designated by the Company outside of the PRC.\n4.   All capital contributions to the Company, whether in cash or kind, shall be\n     for the exclusive use of the Company.\n\nARTICLE 6.2 REGISTERED CAPITAL.\n1.   The registered capital shall be US$2,250,000(say US Dollars two million and\n     two hundred and fifty thousand) including cash and equipment.  The purchase\n     of the  said  equipment  should  be in  accordance  with  CHAPTER  8 of the\n     Contract.\n2.   By a unanimous consent of the Parties and the Board of Directors, the total\n     investment  may be increased for the  Company's  new business  development.\n     Party B shall be assisting  fund raising for the new business  development.\n     It needs to be approved by the Approval Authority of the government.\n\nARTICLE 6.3 TERMS AND CONDITIONS\nThe terms and conditions provided by both Parties are as follows:\n\n\n\n                                       10\n\n\n\n\n\n1.By Party A: Huayu's  software and hardware data  transmission  platform on its\nHFC network and the rights to use all its  Facilities and equipment for the high\nspeed Internet access, data transmission and network value-added business.\n\n2.By Party B:\nTotal cash and  equipment  investment  required  by the  project to a maximum of\nUS$5,500,000(including   cash  and  equipment).   Registered  capital  shall  be\nUS$2,250,000.  The purchase of the said equipment  should be in accordance  with\nCHAPTER 8 of the Contract.\n\n3.CONTRIBUTION MANNERS\nThe contribution stipulated in the Contract shall be made in accordance with the\nfollowing manner:\n     (1)Party A shall  obtain all  regulatory  approvals  that the  Company  may\n        require in order to conduct its business  within fifteen (15) days after\n        the issuing date of the Business  License and Party B shall be satisfied\n        of these  approvals  by obtaining a legal  opinion from Chinese  counsel\n        selected by Party B. If all relevant approvals are not obtained by Party\n        A within fifteen  (15)  days after the issuance of the Business  License\n        due to the government policy and delay, Party  A shall not be considered\n        to be in breach of the  Contract.  Should  approvals  not be obtained by\n        Party A, both Parties shall mutually  agree on an appropriate  extension\n        to obtain the relevant approvals.\n     (2)The initial capital  contribution of US$500,000 shall be made by Party B\n        within  thirty  (30)  days  after  all  approval  of  relevant  Approval\n        Authorities.\n     (3)All the remaining  registered capital and other investment shall be made\n        based  on  the Company's operation plan and investment plan  as per  the\n        relevant provisions of China.\n     (4)Party A shall  provide  the  Company  with the terms and  conditions  of\n        cooperation  stipulated in ARTICLE 6.3 of this Contract  within  fifteen\n        (15) days after the issuance of the Business License.\n\n\n                                       11\n\n\n\n\n4.During the cooperation, both Parties shall not withdraw any registered capital\nor vary the terms and  conditions  of  cooperation  upon which the Parties  have\nmutually agreed.\n\nARTICLE 6.4 VERIFICATION OF CAPITAL CONTRIBUTIONS AND TERMS\n1.   A reputable  international  accounting  firm  registered  in China shall be\n     engaged by the Company to verify the contributions of Party B and provide a\n     certificate  of   verification.   The  Company,   upon  the  receipt  of  a\n     satisfactory certificate of verification,  shall issue a new Certificate of\n     Capital Contribution to each Party. The Certificate of Capital Contribution\n     shall include the  following  items:  the name of the Company,  the date of\n     establishment,  the names of the Parties and Party B's  contributions,  the\n     date on which the capital contributions were made, and the date of issuance\n     of the  Certificate  of Capital  Contribution.  The  Certificate of Capital\n     Contribution  shall  be  the  conclusive  evidence  of  Party  B's  capital\n     contribution to the Company.  The Certificate of Capital Contribution shall\n     be effective  when signed by the Chairman and Vice Chairman and the seal of\n     the Company is affixed thereon.\n2.   A law firm  registered  in China shall be retained by the Company to verify\n     the contributions of Party A and provide a certifcate of verification.  The\n     Company,  upon the receipt of a satisfactory  certificate of  verification,\n     shall issue a Certificate of Contribution to each Party. The Certificate of\n     Contribution  shall include the following  items:  the name of the Company,\n     the date of  establishment,  the names of  the Parties and their respective\n     contributions, the date on which Party A's contributions were made, and the\n     date of  issuance  of the Certificate of  Contribution.  The Certificate of\n     Contribution shall be the conclusive  evidence of Party A's contribution to\n     the Company. The Certificate of Contribution shall be effective when signed\n     by the Chairman and Vice Chairman and the seal of the Company\n\n\n                                       12\n\n\n\n\n\n     is affixed thereon\n\nArticle 6.5  TRANSFER OF  INTEREST,  RIGHTS AND  OBLIGATIONS\n1.   In case either party to the  Contract  intends to assign all or part of its\n     interest,  rights and obligations to a third party, a written consent shall\n     be obtained from the other party (the  Non-Transferring  Party).  Approvals\n     with  regard to the said  transfer  is required  from the  examination  and\n     Approval  Authority.  The  application  for  the  said  transfer  shall  be\n     registered with the State  Administration  for Industry and Commerce within\n     one (1) month after the approval from relevant Approval Authority.\n2.   If a party (the  \"Transferring  Party\")  desires to transfer all or part of\n     its  interest  rights  and  obligations  to any third  party  other  than a\n     subsidiary  of  the Party,  the  Transferring  Party shall secure a binding\n     written  offer from such third party (the \"Third Party  Offer\") to purchase\n     some or all of its interest,  rights and obligations and the other Party to\n     this  Contract  (the  \"Non-Transferring   Party\")  shall  have  an  option,\n     exercisable  within fifteen (15) days of the Third Party Offer, to purchase\n     the Transferring Party's interest, rights and obligations in the Company as\n     specified  in this  Article on the same terms and  conditions  as the Third\n     Party Offer. Such option shall be exercised by the  Non-Transferring  Party\n     giving a written notice to the  Transferring  Party of its exercise of such\n     option.\n3.   If any Non-Transferring  Party exercises its option within the fifteen (15)\n     day  period to  purchase  the  Transferring  Party's  interest,  rights and\n     obligations in the Company, the Transferring Party's Interest shall be sold\n     to such  Non-Transferring  Party on the same  terms and  conditions  as the\n     Third Party Offer.\n4.   If the  Non-Transferring  Party does not  exercise  its  option  within the\n     fifteen (15) day period,  the Transferring  Party may, subject to obtaining\n     the prior written  consent of such  Non-Transferring  Party (which  consent\n     shall not be\n\n\n                                       13\n\n\n\n\n\n     unreasonably withheld) and the unanimous approval of the Board of Directors\n     (and the Non-Transferring Party  hereby  agrees to cause the members of the\n     Board of Directors designated by it to approve such transfer), transfer the\n     transferring Party's interest to such third party.\n5.   Notwithstanding the foregoing but subject to any required approval from the\n     Approval Authority,  a Party may transfer all or any part of its respective\n     interest,  rights and  obligations  in the Company to any  Subsidiary  upon\n     notification  to the other Party.  With  respect to any such  transfer to a\n     Subsidiary,  such other Party hereby agrees to any such transfer and waives\n     any first right of refusal  with respect to such  transfer.  The Parties to\n     the  Contract  also agrees  that the option to purchase  shall not apply to\n     such transfer or  assignment.  When such  transfer or  assignment  has been\n     completed,  the  Transferring  Party shall release from the Contract as per\n     the  provisions  of the  Contract  and the  Articles  of  Association.  The\n     Subsidiary shall be a new party to the Contract.\n6.   Any  sale,  assignment  or  transfer  of a  Party's  interest,  rights  and\n     obligations  in the Company under this Article  shall not become  effective\n     until all  necessary  approvals  have been  obtained.  Upon receipt of such\n     approvals,  the  Parties  shall  cause  the  Company  to  cancel  the  then\n     outstanding  Certificates  of  Capital  Contribution  and  to  issue  a new\n     Certificate  of Capital  Contribution  to reflect the new  ownership and to\n     register  the change in  ownership  with the  relevant  office of the State\n     Administration of Industry and Commerce.  The Parties shall also amend this\n     Contract,  if  required,  to reflect the  admission of a new  party to this\n     Contract.\n\n\n                                       14\n\n\n\n\n\n                                    CHAPTER 7\n                      RESPONSIBILITIES OF EACH PARTY TO THE\n                            CONTRACTUAL JOINT VENTURE\n\nARTICLE 7.1 RESPONSIBILITIES OF BOTH PARTIES\nThe Parties shall be respectively  responsible for performing their  obligations\ncontained  in Article 7.2, 7.3 and 7.4 in a timely and  effective  fashion,  The\nParties  agree that the cost involved in  performing  the following  obligations\nwill be paid by the  Company  except  to  the  extent  that  any  such  cost  is\nspecifically  included  as  part  of  a  Party's  capital  contribution  to  the\nregistered capital of the Company.\n\nARTICLE 7.2 RESPONSIBILITIES OF PARTY A:\n1.   Handling  applications  for approval,  registration,  business  license and\n     other matters  concerning  the  establishment  of the Company from relevant\n     Approval Authorities in Chengdu;\n2.   Assisting  the  Company  with  any  matters   involving  PRC   governmental\n     departments or agencies;\n3.   Use its best  efforts  to assist  the  Company  in  obtaining  satisfactory\n     network access for public use or other telecommunications services;\n4.   Assisting the Company in the submission of applications  for, and obtaining\n     of, all necessary approvals, permits, certificates and licenses required to\n     conduct Company's business;\n5.   Assisting the Company in applying for and obtaining the maximum  benefit of\n     all permitted  reductions  in, or exemptions from, PRC income tax including\n     withholding tax, import duties,  value added tax,  business and consumption\n     tax, local tax, real estate tax,  vehicle tax or any other tax  reductions,\n     rebates  or  exemptions  to which the  Company is  currently  or may in the\n     future become entitled;\n\n6.   Assisting  Party B in obtaining from the  appropriate  PRC  authorities all\n     necessary   licenses   and  foreign   exchange   approvals  to  permit  the\n     repatriation  out of China of all  profits,  dividends,  return of capital,\n     proceeds of liquidation, after the\n\n\n                                       15\n\n\n\n\n\n     payment of applicable PRC income tax, if any;\n7.   Processing  for applying  the right to the use of a site as an office space\n     of the Company;\n8.   Assisting  the  Company  in  purchasing  or  leasing  necessary  equipment,\n     materials,   articles  for  office  use,   means  of   transportation   and\n     communication facilities, etc;\n9.   Assisting the Company in contacting and settling the fundamental facilities\n     for business operation such as water, etectricity, transportation, etc.\n10.  Assisting  the  Company in  recruiting  Chinese  management  and  technical\n     personnel, workers and other personnel required.\n11.  Assisting expatriate personnel in applying for Temporary  Residential Card,\n     entrance visa and work permit and handle their traveling matters.\n12.  Providing  convenience  for Party B in controlling  the  implementation  of\n     investment.\n13.  Providing Party B with a certificate of integrity of Party A's ownership of\n     the said network  stipulated in ARTICLE 6.3 to guarantee the implementation\n     of the Contract and the Articles of  Association  within  fifteen (15) days\n     after signing this Contract.\n14.  Responsible for handling other matters entrusted by the Company.\n\nARTICLE 7.3 REPONSIBILITIES OF PARTY B:\n1.   Assisting  Party  A to  handle  applications  for  approval,  registration,\n     business  license and other matters  concerning  the  establishment  of the\n     Company from relevant approval authorities in China;\n2.   Assisting the Company in the development of (i) its financial  planning and\n     reporting systems,  and (ii) its utilizing advanced  scientific  management\n     systems;\n3.   Assisting  the  Company  with  any  matters   involving  PRC   governmental\n     departments or agencies;\n4.   As entrusted by the Company, (i) selecting technology, components, software\n     and other related materials unavailable\n\n\n                                       16\n\n\n\n\n\n     in the PRC from abroad, (ii) selecting  appropriate equipment  necessary to\n     establish the computer network system, at a comparable price for comparable\n     quality and specifications, to be obtained abroad on behalf of the Company,\n     and (iii) shipping the foregoing to Chengdu or such other  destinations  in\n     the PRC in which the  Company  is  engaged  in  business;and  (iv)the  cost\n     incurred  in  performing the  above  said matters shall  be  borne  by  the\n     Company.\n5.   Training the technical  personnel and employees of the Company  (details in\n     ARTICLES OF ASSOCIATION).\n6.   Assisting  the Company in promoting  its business  with the best  marketing\n     efforts.\n7.   Party B shall provide Party A with the Letter of Comfort from an investment\n     bank  within  fifteen  (15)  days  after  signing  this  Contract  to  show\n     commitment to the Contract.\n8.   Assisting the Company with other matters entrusted by the Company.\n\nARTICLE 7.4 RESPONSIBILITIES OF BOTH PARTIES.\n\nEach Party shall be responsible for the following:\n1.   Making their  respective  contributions  to the Company pursuant to ARTICLE\n     6.3;\n2.   To use  their  best  efforts  in good  faith  to (i)  ensure  the  economic\n     viability and  profitability of the Company,  (ii) maximize revenue  of the\n     Company by  increasing  the number of users of the Company's  network,  and\n     (iii)  protect  the  goodwill  and  the  trademarks  of  the  Company  from\n     infringement;\n3.   Ensuring that two (2) sets of books and records are kept in accordance with\n     the applicable  accounting  regulations of the People's  Republic of China.\n     One set is in the Chinese language and another is in the English  language.\n     Parallel  accounts for each set of books and records in RMB  and US dollars\n     and all vouchers are to be kept with the Chinese books;\n4.   No party shall mortgage,  pledge or permit any liens on any property of the\n     Company without the prior written approval\n\n\n                                       17\n\n\n\n\n\n     of the Board of Directors;\n5.   Parties  shall  cooperate to each other,  execute all  documents,  take all\n     necessary actions, in order to achieve the purpose and goals of the Company\n     set forth in this Contract.\n6.   No party shall  borrow or lend  money or  provide  guarantee in the name of\n     the Company or establish any subsidiary of the Company without the approval\n     of the Board of Directors.\n\n\n\n\n\n\n                                       18\n\n\n\n\n\n                                    CHAPTER 8\n                                    EQUIPMENT\n\n\nARTICLE 8.1 PURCHASE OF EQUIPMENT\nAll  equipments  for  the  Company  can  be  purchased  in  either  domestic  or\ninternational  market.  The  Company  shall give  priority to  suppliers  of the\nPeople's  Republic of China  whenever  the  equipment  from such  suppliers  are\ncompetitive  with like  imported  items in  pricing,  delivery  time,  technical\nspecifications,  quality of product,  international  credit,  and reputation and\nother  material  terms.  If the  Company  needs to purchase  from  international\nmarket,  the  Board  of the  Company  shall  make a  decision  to  purchase  the\nequipment.   The  Company  shall  submit  the  equipments   purchased  from  the\ninternational  market for inspection by the PRC's commodity inspection authority\npursuant to the \"Law of Import and Export  Commodity  Inspection of the People's\nRepublic  of China.\" The Parties  shall  agree  further  upon the details of the\npurchase of equipments contributed by Part B as part of the registered capital.\n\n\n\n\n\n\n                                       19\n\n\n\n\n\n\n                                    CHAPTER 9\n                               PROFIT DISTRIBUTION\n\n\nARTICLE 9.1 DISTRIBUTION OF PROFITS\nAfter the  Company  pays all taxes,  fees and  statutory  duties as  required by\napplicable  law and  regulations  of PRC, and allocates the public reserve funds\nand public  welfare funds and other  relevant  funds as required by the \"Company\nLaw of the People's Republic of China \"and other regulations,  the profits shall\nbe distributed as follows:\n\n                                  Party A        Party B\n\nPhase I  (2001*-2007):             35%           65%\nPhase II (2008-2013):              50%           50%\nPhase III (2014-2020):             65%           35%\n\n*Or the Effective Date which ever occurs earlier.\n\n\n\n\n                                       20\n\n\n\n\n\n                                   CHAPTER 10\n                               BOARD OF DIRECTORS\n\n\nARTICLE 10.1 ESTABLISHMENT OF BOARD OF DIRECTORS\nThe Board of  Directors is the highest  organ of  authority of the Company.  The\nBoard of Directors  of the Company  shall come into  existence on the  Effective\nDate.\n\nThe Board of Directors  shall have all the powers and  responsibility  under the\nlaw to policy decisions concerning the management of the business and affairs of\nthe Company.\n\nThe Board of  Directors  shall be consisted  of seven (7)  Directors.  Three (3)\nDirectors  shall  be  appointed  by  Party A and  four  (4)  Directors  shall be\nappointed by Party B. The Chairman of the Board shall be  designated  by Party A\nand the Vice  Chairman of the Board shall be  designated by Party B. The term of\noffice of a Director, Chairman and Vice Chairman is three (3) years. The term of\noffice may be renewed if continuously  appointed by the respective Parties.  The\ndistribution of Directors shall be as follows:\n\n                                                         Party A     Party B\n              Phase I  (2001*-2007):                        3        4\n              Phase II (2008-20013):                        4        3\n              Phase III (2014-2020):                        4        3\n*Or the Effective Date which ever occurs earlier.\n\nThe powers, procedures,  requirements and other matters relating to the Board of\nDirectors are set out in the Articles of Association.\n\nARTICLE 10.2 BOARD OF DIRECTORS AND CHAIRMAN\nThe  Chairman  of the  Board of  Directors  is the legal  representative  of the\nCompany and may exercise powers authorized  by the Articles of Association.,  or\nact as expressly  authorized in writing by the Board of  Directors,  or sign the\ndocuments binding upon the Company.\n\nARTICLE 10.3 QUORUM; MEETINGS OF THE BOARD OF DIRECTORS\nThe Board of Directors shall convene at least two meetings every\n\n\n\n\n\n                                       21\n\n\n\n\n\nyear.  At any meeting,  a quorum shall consist of at least four (4) Directors of\nwhich can not be less than one (1) Director is  appointed by Party A,  attending\nin person, by proxy or by telephone.  A meeting shall be called by the Chairman,\nor, if the Chairman is unable to call the meeting,  the  Chairman shall delegate\nthe Vice Chairman or another Director to call and preside over the meeting.\n\nThe Chairman must call a meeting upon the proposal of any two  Directors.  Board\nof Director  meeting  shall  be  called upon  fourteen  (14) day's prior written\nnotice (or upon a shorter notice if all Directors  unanimously  agree in writing\nfrom time to time) to all  Directors.  The  Board  meeting  can be held,  by two\nthirds (2\/3) majority of the Board, at any jurisdiction approved by the Board of\nDirectors,  provided that  adequate  facilities  are  available  for  electronic\nparticipation.\n\nDirectors  may be present  and vote in  person,  by proxy or by  telephone.  The\nChairman and the Vice Chairman shall each have one vote. For matters which would\notherwise need to be approved at a meeting of the Board of Directors, in lieu of\na meeting of the Board of Directors,  a written resolution may be adopted by the\nBoard of  Directors  if such  resolution  is sent to all members of the Board of\nDirectors signed and adopted by the number of Directors necessary to make such a\ndecision as stipulated in this Contract and the Articles of Association.  Notice\nof a Board  meeting  may be waived in  writing  at any time  before or after the\nmeeting. A notice shall be deemed to be waived by attending the Board meeting in\nperson, by proxy or participating by telephone or by TV.\n\nARTICLE 10.4 BOARD APPROVAL REQUIREMENTS.\nThe Board of Directors shall have rights to exercise all of the powers belonging\nto the Company.  Except  specifically  stated in the Contract hereof, all action\ntaken by the Board of Directors shall require approval by simple majority of the\nDirectors  at the meeting at which a quorum is present and in which at least one\nDirector  appointed  by Party A votes  with the  majority.  In  particular,  the\nfollowing matters\n\n\n                                       22\n\n\n\n\nrequire approval of two thirds (2\/3) majority of the Board:\n1.   Annual and any interim  production and operating  plans, the annual and any\n     interim  operating  budget,   including  anticipated  operating  costs  and\n     expenses,  and annual and any interim  financial  statements of the Company\n     and any significant change to the above mentioned.\n2.   Significant changes to the business scope stipulated in ARTICLE 5.2;\n3.   Determining  the salary and  benefits for the General  Manager,  the Deputy\n     General  Manager  and the other  Senior  Officers  of the  Company  and any\n     changes thereto;\n4.   The appointment and removal of the General Manager, Deputy General Manager,\n     the Chief Financial Officer and other Senior Officers of the Company;\n5.   Determining  the scale of wages,  benefits and  allowances of the employees\n     of the Company and changes thereto;\n6.   The approval and amendment of (i) any contract,  commitment or  expenditure\n     which is not included in an annual budget and which by itself,  or together\n     with other contracts,  commitments or expenditure which are not included in\n     the budget, exceeds an equivalent amount in U.S. Dollars of US$100,000 (say\n     US Dollars  one hundred  thousand)  or  (ii) any  expenditure,  contract or\n     commitment  approved in the annual budget which exceeds the amount provided\n     for  in the  budget  by 10% or  any  contract,  commitment  or  expenditure\n     approved in the annual budget which  exceeds an  equivalent  amount of U.S.\n     Dollars of US$300,000 (say US Dollars three hundred thousand)or such higher\n     dollar amounts and such higher  percentage as the Board of Directors  shall\n     determine or (iii) any borrowing by the Company which would result in total\n     debt of the Company  exceeding the equivalent  amount of US$300,000 (say US\n     Dollars  three  hundred  thousand)or  (iv)  the  disposition,  mortgage  or\n     transfer of fixed  assets  owned by the  Company  with a value in excess of\n     US$150,000(say US Dollars one hundred and fifty thousand);\n\n\n\n                                       23\n\n\n\n\n\n7    The  commencement or settlement of arbitration,  litigation or conciliation\n     with any third party; and\n8.   The  appointment  of a  liquidation  team and its  members to  conduct  the\n     liquidation of the Company pursuant to Chapter 16.\n\n\nARTICLE 10.5 MINUTES OF THE BOARD MEETING\nThe minutes of the Board  meeting shall be confirmed and signed by the Directors\nattending the meeting and to be filed with the Company.\n\n\n\n\n\n\n\n                                       24\n\n\n\n\n                                   CHAPTER II\n                             BUSINESS MANAGEMENT AND\n                                LABOR MANAGEMENT\n\n\nARTICLE 11.1 MANAGEMENT OFFICE\n\nThe Company shall establish a management office,  which shall be responsible for\nits day-to-day  operation and  management.  The management  office shall  have a\nGeneral Manager,  nominated  by Party B; a Deputy General Manager,  nominated by\nParty A. The General  Manager and Deputy General  Manager shall  be appointed by\nthe Board of  Directors  whose  terms of office is three (3)  years.  1n Phase I\n(2001*-2007),  the  General Manager shall be nominated by Party B and the Deputy\nGeneral  Manager  shall be  nominated by Party A. A Director of the Board may be\nappointed as General Manager or Deputy General Manager.  In Phase II (2008-2013)\nand  Phase  III  (2014-2020),  the  General  Manager  shall be  hired by  public\nrecruitment.\n\n*Or the Fffective Date which ever occurs earlier.\n\nARTICLE 11.2 GENERAL MANAGER AND DEPUTY GGENERAL MANAGER\nThe  responsibility  of the General Manager is to carry out the decisions of the\nBoard, and conduct the day-to-day  management of the Company. The Deputy General\nManager shall assist the General  Manager in his work. The General  Manager must\nconsult with the Deputy General Manager concerning  handling major issues in the\nCompany.\n\nARTICLE 11.3 POWER OF BOARD TO DISMISS OFFICERS\nIn case of  graft or  serious  dereliction  of duty on the  part of the  General\nManager or the Deputy  General  Manager,  the Board of Directors  shall have the\npower to dismiss them at any time.\n\nARTICLE 11.4 LABOUR MANAGEMENT\nLabor contract covering the recruitment,  employment, dismissal and resignation,\nwages, welfare, labor protection and insurance, labor\n\n\n\n\n\n                                       25\n\n\n\n\n\ndiscipline,  rewards, penalty and other matters concerning the staff and workers\nof the Company  shall be drawn up between the Company and the Trade Union of the\nCompany as a whole or individual  employees in accordance with the  \"Regulations\nof the  People's  Republic  of  China  on Labor  Management  in  Chinese-Foreign\nContractual  Joint  Ventures and its  Implementation  Rules\" and  regulations of\nSichuan.  The labor  contracts  shall,  after  being  signed,  be filed with the\nChengdu Labor Bureau for the procedures of employment.\n\nARTICLE 11.5 SENIOR OFFICERS\nThe appointment of senior  officers who are  recommended by both Parties,  their\nsalaries, social insurance,  welfare and the standard of traveling expenses etc.\nshall be decided by the Board of Directors  with reference to the trade standard\nin Chengdu.\n\n\n\n\n\n                                       26\n\n\n\n\n\n\n                                   CHAPTER 12\n                                CONFIDENTIALITY\n\n\nArticle 12.1 Confidentiality\nNo Party in this Contract  shall,  nor shall, it permit any of  its employecs or\nthe  employees  of the  Company  to,  divulge  to any person  any  technical  or\ncommercial  secrets  concerning  execution of the business of the Company during\nthe cooperation period. The confidentiality  shall remain for a period of twenty\n(20) years from signing this Contract to termination of this Contract.\n\n\n\n\n\n\n                                       27\n\n\n\n\n\n\n                                   CHAPTER 13\n                      TAXES, FINANCE, AUDIT, STATISTICS AND\n                         ENVIRORNMENT MENTAL PROTECTION\n\n\nARTICLE 13.1 TAXATION\nThe Company shall pay taxes in accordance with the  stipulations of Chinese laws\nand other relevant regulations.\n\nARTICLE 13.2 INCOME TAX\nAll employees of the Company shall pay individual  income tax,  according to the\n\"Individual Income Tax Law of the People's Republic of China.\"\n\nARTICLE 13.3 FUNDS\nAllocations  for public  reserve funds,  for expansion  funds of the Company and\npublic  welfare funds and bonus for  employees  shall be set aside in accordance\nwith  stipulations  in the \"Company  Law of the People's  Republic of China \"and\n\"Law of the  People's  Republic of China on Chinese  Foreign  Contractual  Joint\nVentures\"  and  regulations  of the  Chengdu  city.  The  annual  proportion  of\nallocations  shall be  decided  by the  Board of  Directors  as per the laws and\nregulations and in accordance with the business situation of the Company.\n\nARTICLE 13.4 ACCOUNTING\nThe  financial  affairs  and  accounting  of the  Company  shall be  handled  in\naccordance  with the  applicable  accounting  system and  financial,  management\nregulations of the Financial  Ministry of the People's Republic of China and the\nChengdu City. The accounting system of the Company shall be filed for the record\nat the  Financial  Bureau and  Taxation  in Chengdu  and  reviewed  by  relevant\nauthorities with respect to finance, tax and audit.\n\nARTICLE 13.5 AUDITING\nFinancial  auditing  and  examination  of the Company  shall be  conducted by an\naccounting firm registered in China and reports shall\n\n\n                                       28\n\n\n\n\n\nbe submitted to the Board of Directors and the General Manager.  Both Parties to\nthe Company have the right to employ on their own an  registered  accountant  in\nChina to  undertake  annual  financial  checking  and  examination  at their own\nexpense.\n\nARTICLE 13.6 REPORTS\nThe monthly  reports,  quarterly  reports and annual reports  including  Balance\nSheet and Profit and Loss Statement and Cash Flow  Statement  shall be submitted\nto the relevant  authorities in accordance  with the regulations of the People's\nRepublic of China.\n\nARTICLE 13.7 ENVIRONMENT\nThe Company shall commit to bear the  responsibility  of protecting  environment\naccording to \"Law of the People's Republic of China on Environment Protection\".\n\n\n\n\n\n                                \n                                       29\n\n\n\n\n\n                                   CHAPTER 14\n                                FOREIGN EXCHANGE\n\n\nARTICLE 14.1 FOREIGN EXCHANGE\nAll the  foreign  exchange  matters  shall be  handled  in  accordance  with the\n\"Regulations of Foreign Exchange Control of the People's Republic of China.\"\n\nARTICLE 14.2 BALANCE OF FOREIGN CURRENCY RESERVE\nThe Company shall maintain a balance of foreign currency  reserve.  Any loan and\nguarantee  as  investment  or  cooperation  terms for either side of the Parties\nshall be settled on their own, respectively.\n\nARTICLE 14.3 REMITTING FOREIGN CURRENCY\nAll profits,  income and funds after liquidation of Party B shall be entitled in\naccordance with relevant foreign exchange regulations of China to be remitted to\noutside China.\n\nARTICLE 14.4 REMITTING EMPLOYMENT INCOME OF EXPATRIATES\nThe employment income and other legitimate income of the expatriate personnel in\nthe  Company  shall be  entitled  to remit  their  employment  income  and other\nlegitimate  income to outside China after they complete  paying relevant tax and\ndeduct the expenses incurred in China.\n\n\n\n\n\n\n                                       30\n\n\n\n\n\n                                   CHAPTER 15\n                             DURATION OF THE COMPANY\n\n\nARTICLE 15.1 DURATION\nThe  duration  of the Company is twenty (20)  years.  The  establishment  of the\nCompany shall start from the date on which the relevant  approvals are obtained.\nAn  application  for the  extension of the  duration,  proposed by one Party and\nunanimously  agreed  by  the  Parties,   shall  be  submitted  to  the  approval\nauthorities  one hundred  and eighty  (180) days prior to the expiry date of the\nCompany.\n\n\n\n\n\n\n\n\n                                       31\n\n\n\n\n\n                                   CHAPTER 16\n                          THE DISPOSAL OF ASSETS AFTER\n                         THE EXPIRATION OF THE DURATION\n\n\nARTICLE 16.1 LIQUIDATION COMMITTEE\nUpon the  expiration  of the duration  and upon  termination  of this  Contract,\nliquidation  of assets,  credit and debt shall be carried out  according  to the\nrelevant law. A  Liquidation  Committee  set up by the  representatives  of both\nParties shall be responsible for the liquidation.\n\nARTICLE 16.2 ASSETS HANDLING\nUpon  prior  termination  of this  Contract,  the  Company's  assets  after  the\nliquidation shall be settled in accordance with the following provisions:\n(1)  All fixed assets and capital shall be turned to Party A upon the expiration\n     of the Contract and under no extension of the Contract;\n\n(2)  Before the  expiration  date of the  Contract,  after paying in full of the\n     debts of the  Company,  the  Liquidation  Committee  shall  distribute  the\n     remaining  assets  among the  Parties  hereto in  proportion  to the profit\n     distribution  ratios in effect under ARTICLE 50 of Articles of  Association\n     as of  the  liquidation  date,  After  the  liquidation,  Part  A  has  the\n     pre-emptive right to purchase the remaining equipment.\n\n\n\n\n\n\n\n                                       32\n\n\n\n\n\n                              CHAPTER 17 INSURANCE\n\n\nARTICLE 17.1 INSURANCE\nInsurance   policies  of  the  Company  on  various  kinds  of  risks  shall  be\nunderwritten with the People's Republic of China.  Types, the value and duration\nshall be decided by the Board of Directors with the stipulations of the People's\nRepublic of China.\n\n\n\n\n\n                                 \n                                       33\n\n\n\n\n\n\n\n                                   CHAPTER 18\n                               THE ALTERATION AND\n                            DISCHARGE OF THE CONTRACT\n\n\nARTICLE 18.1 ALTERATION\nThe amendment of the Contract and the Articles of  Association,  any increase or\ndecrease of the  registered  capital,  pledge of assets,  merger or  separation,\ndiscontinuation or dissolution, amalgamation with other economic organization or\nany other major  appendices  shall come into force only after it is  unanimously\napproved by the Board of Directors.  The written  agreement  with  signatures of\nboth  Parties can become  effective  only after it is  submitted to the original\nexamination  and approval  authority for its approval,  and  registered in State\nAdministration for Industry and Commerce.\n\nARTICLE 18.2 DISCHARGE\nIn case of the inability to fulfil the Contract or to continue  operation due to\nheavy loss in  successive  years as a result of Force  Majeure,  Chinese taw and\nregulations,  and the  change of  governmental  administrative  activities,  the\nduration of the Company and the Contract shall be terminated  before the time of\nexpiration after consultation with between each Party (If the Board of Directors\ncan not reach an  agreement  upon the above  matters in  question,  either party\nshall have the right to refer the disputes to  Arbitration)  and after obtaining\napprovals from the original examination and approval authority.\n\nARTICLE 18.3 TERMINATION\nShould the Company be unable to continue its  operations or achieve the business\npurpose  stipulated in the Contract due to the fact that one of the  contracting\nParties fails to fulfill the obligations prescribed by the Contract and Articles\nof  Association,  or  seriously  violate the  stipulations  of the  Contract and\nArticles  of  Association  (particularly  the  provisions  of  Chapter 3 of this\nContract),  that Party  shall be deemed as having  unilaterally  terminated  the\nContract. The other Party shall have the right to terminate the\n\n\n\n                                       34\n\n\n\n\n\nContract in accordance with the provisions of the Contract after approved by the\noriginal  approval  authority as well as to claim  damages.  In case Party A and\nParty B of the Company agree to continue the operation.,  the Party who fails to\nfulfil the obligations shall be liable to the losses thus caused to the Company.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                                       35\n\n\n\n\n\n\n                                   CHAPTER 19\n                       LIABILITIES FOR BREACH OF CONTRACT\n\n\nARTICLE 19.1 FAILURE TO CONTRIBUTE; FAILURE TO PROVIDE TERMS AND CONDITIONS\nShould either Party A or Party B fails to pay on schedule the  contributions  or\nprovide the terms and conditions in accordance  with the  provisions  defined in\nARTICLE 6.3 of this Contract,  the breaching  Party shall be responsible for the\nbreaching  event and pay to the other Party in cash an amount equal to 0.04% per\nday of the value of the registered  capital  contribution for each day following\nthe date when such contribution was due but not made or the terms and conditions\nwere due but not  provided.  If the breach  Party fails to remedy such  material\nbreach  within a period of ninety (90) days, in addition to be paid in cash as a\npenalty an amount  equal to 4.5% of the value of the  capital  contribution.  In\naddition  the other Party shall have the right to  terminate  the  Contract  and\nclaim damages thus caused during the breaching event.\n\nARTICLE 19.2 FAULT\nShould all or part of the Contract and its  appendices be unable to be fulfilled\nowing  to  the  fault  of  one  Party,   the  breaching  Party  shall  bear  the\nresponsibilities thus caused. Should it be the fault of both Parties, they shall\nbear their respective responsibilities. The breaching Party shall take action to\nremedy such material breach within thirty (30) days after notice in writing from\nthe other Party. Except for the stipulation in ARTICLE 19.1 of this Contract, if\nthe  breaching  Party fails to remedy the breach in time,  the  breaching  Party\nshall pay the  other  Party in cash as a  penalty  an amount  equal to 1% of the\nvalue of the capital contribution to compensate for damages caused by the breach\nevent.  If both Parties to the Company  fail to execute or to fully  execute the\nterms and conditions of this Contract,  each of them shall bear their respective\nresponsibilities  for default and compensation for losses, based on the specific\ncircumstances.  The  circumstances  specified in Article 20.1 shall not apply to\nthe provisions of this Article.\n\n\n                                       36\n\n\n\n\n\n                                   CHAPTER 20\n                                  FORCE MAJEURE\n\n\nARTICLE 20.1 FORCE MAJEURE\n\nShould  either of the Parties to the Contract be prevented  from  executing  the\nContract by Force Majeure, such as earthquake,  typhoon, flood, fire and war and\nother unforeseen  events, and their happening and consequences are unpreventable\nand avoidable, the prevented Party shall notify the other Party by cable without\nany  delay,  and  within  fifteen  (15) days  thereafter  provide  the  detailed\ninformation  of the  events  and a valid  document  for  evidence  issued by the\nrelevant  public  notary  organization  at which the Force  Majeure  happens  for\nexplaining  the reason of its inability to execute or delay the execution of all\nor part of the  Contract.  Both Parties  shall,  through  consultations,  decide\nwhether to terminate the  Contract,  or to execute the part of  obligations  for\nimplementation  of the  Contract,  or  whether  to delay  the  execution  of the\nContract or to release from the  obligations  of the Contract or to release from\npart of the  obligations of the Contract  according to the effects of the events\non the performance of the Contract.\n\n\n\n\n\n\n\n                                       37\n\n\n\n\n\n\n\n                                   CHAPTER 21\n                                 APPLICABLE LAW\n\n\nARTICLE 21.1 APPLICABLE LAW\nThe  formation of this  Contract,  its validity,  interpretation,  execution and\nsettlement of the disputes shall be governed by the related laws of the People's\nRepublic  of China.  If changes  are made to the current  laws,  regulations  or\npolicies  of the  People's  Republic  of China  applicable  to this  Contract to\nprovide more favourable  conditions for the achievement of the objectives of the\nParties as set out in ARTICLE 5.1 AND ARTICLE 5.2 of this Contract,  the Parties\nshall  negotiate  in good faith to amend this  Contract  so that the Parties can\nbenefit from the more favourable conditions to the greatest extent possible.\n\n\n\n\n\n\n\n\n\n\n                                       38\n\n\n\n\n\n\n                                   CHAPTER 22\n                             SETTLEMENT OF DISPUTES\n\n\nARTICLE 22.1 CONSULTATION\nAny dispute or  difference  between the Parties  arising out of or in connection\nwith this Contract or as to rights or obligations  hereunder  shall initially be\nreferred to the Chairman of Party B and the legal  representative of Party A for\nresolution  to the  satisfaction  of the Parties,  if possible.  The Chairman of\nParty B and the legal representative of Party A may, if they so desire,  consult\noutside experts for assistance in arriving at a resolution.  Such, persons shall\nmake a bona fide attempt to settle  amicably  through  friendly  negotiation any\nsuch dispute or difference within 30 days after its submission and, if unable to\ndo  so,  the  dispute  or  difference  may be  referred  by  any  of  thetas  to\narbitration.\n\nARTICLE 22.2 ARBITRATION\n1.   Any dispute arising out of or in connection  with this Contract,  including\n     any question  regarding its  existence,  validity or  termination  or as to\n     rights or  obligations  of the  Parties  hereunder  which is not settled by\n     friendly  discussions  pursuant  to Article  24.1 shall be  referred to and\n     finally  resolved by  arbitration  in  Stockholm  in  accordance  with  the\n     Arbitration Rules of the Stockholm International  Arbitration Centre (the \"\n     SIAC  Rules\")  for the time  being in force  which  rules are  deemed to be\n     incorporated by reference into this Article.\n\n2.   The tribunal shall consist of one arbitrator to be jointly appointed by the\n     Parties.  If the Parties are unable to agree upon the  appointment  of  the\n     arbitrator  within 30 days,  then the arbitrator  shall be appointed by the\n     Chairman of the Stockholm International Arbitration Centre.\n\n3.   The  Chinese  and  English  languages  shall  both be used in the  arbitral\n     proceedings. Unless otherwise agreed by the Parties, all hearing materials,\n     statements of claim or defense,  award and the reasons  supporting it shall\n     be written in both\n\n\n\n                                       39\n\n\n\n\n\n     Chinese and English.\n\n4.   To the extent this Article is deemed to be a separate agreement independent\n     from  this  Contract,  ARTICLE  24.4  concerning  notices are  incorporated\n     herein by reference.\n\nARTICLE 22.3 OPERATION OF THE COMPANY\nThroughout  the  pendency of any dispute or  difference  submitted  to the legal\nrepresentative of Party A and the Chairman of Party B for resolution pursuant to\nARTICLE 22.1 or to  arbitration  pursuant to ARTICLE  22.2,  the  Company  shall\ncontinue to conduct its  business  activities  in  accordance  with the business\nplans of the Company then in effect.\n\n\n\n\n\n\n\n\n\n\n\n                                       40\n\n\n\n\n\n\n                                   CHAPTER 23\n                                    LANGUAGE\n\n\nARTICLE  23.1  LANGUAGE\nThe  Contract  shall be written in Chinese  version  and English  version.  Both\nlanguages have equal legal  authorities.  Should there be a conflict between the\ntwo  versions,  the spirit and the Purpose of the Contract  shall be the guiding\nprinciple to interpret the Contract.\n\n\n\n\n\n\n\n\n\n\n                                       41\n\n\n\n\n\n\n                                   CHAPTER 24\n                          EFFECTIVENESS OF THE CONTRACT\n                                AND MISCELLANEOUS\n\n\nARTICLE 24.1 APPENDICES\nThe appendices  (including the Articles of Association )  drawn up in accordance\nwith the principles of this Contract are an integral part of this Contract.\n\nARTICLE 24.2 HEADINGS\nThe headings of the Articles of this Contract are for  convenience  of reference\nonly and still not be deemed or  construed  as in any way  limiting or extending\nthe language of the provisions to which such headings may refer.\n\nARTICLE 24.3 EFFECTIVE DATE\nThe Contract and its appendices shall come into force beginning from the date of\napproval of the relevant approval authority. This approval date is the Effective\nDate.\n\nARTICLE 24.4 NOTICE\nShould notices in connection. with any Party's rights and obligations be sent by\neither Party A or Party B by telegram,  telex,  email or fax,  etc., the written\nnotices shall be also required afterwards.  Such written letter notices shall be\ndelivered  by post  services,  and  considered  to be  received  by in ten  (10)\nbusiness days from the date of postmark.  The legal address of Party A and Party\nB listed in this Contract (or such other address as  either Party may notify the\nother Party in writing) shall be the posting addresses.\n\n\n\n\n\n\n\n\n                                       42\n\n\n\n\n\nARTICLE 24.5 SEVERABILITY\nIf any provision of this Contract  should be or become fully or partly  invalid,\nillegal or unenforceable in any respect for any reason whatsoever, the validity,\nlegality and  enforceability of the remaining  provisions of this Contract shall\nnot in any way be affected or impaired thereby.\n\nARTICLE 24.6 ORIGINAL COPIES\nThis Contract is executed in four (4) original counterparts  each of which shall\nhave equal effect in law.\n\n\nIN WITNESS  WHEREOF,  the Parties hereto have signed this Contract as of July 8,\n2000.\n\nParty B:\nChengdu Huayu Information                            Big Sky Network Canada Ltd\nIndustry Co., Ltd.\n[Chinese Characters Appear Here]\n\nAuthorized Representative                            Authorized Representative\n\n\/s\/GONG YONGRONG                                     \/s\/DAMING YANG\n-------------------------------------------------    --------------\n   Gong Yongrong [Chinese Characters Appear Here]       Daming Yang\n   General Manager                                      General Manager\n\n\n\n[Seal]                                               [Seal]\n\n\n\n\n                                       43\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7079],"corporate_contracts_industries":[9517],"corporate_contracts_types":[9613,9617],"class_list":["post-42195","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-china-broadband-corp","corporate_contracts_industries-telecommunications__other","corporate_contracts_types-operations","corporate_contracts_types-operations__jv"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42195"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42195"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42195"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}