AGREEMENT TO ESTABLISH [CWN China Co., Ltd], A CHINESE-FOREIGN JOINT VENTURE LIMITED LIABILITY COMPANY
Exhibit
10(i)
AGREEMENT
TO
ESTABLISH
[CWN China Co., Ltd],
A
CHINESE-FOREIGN JOINT VENTURE LIMITED LIABILITY COMPANY
This
Agreement to Establish [CWN China Co.,
Ltd. ], a
Chinese-Foreign Joint Venture Limited Liability Company, (“Agreement”) dated
this 1th day of February, 2008 is intended to summarize the terms, conditions,
representations and warranties to be included in documents related to the
formation of a joint venture as more fully described herein (the “Joint
Venture”) between ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ (HK) Ltd., a Hong Kong company (“Chinese
WorldNet”) and Shanghai Compass
Venture Capital Investment Limited Company, a domestic limited liability
company organized in the People’s Republic of China (“Compass”) (each a “Party”
and collectively the “Parties”).
RECITALS
WHEREAS,
ChineseWorldNet and Compass desire to engage in a joint venture for the
principal business purpose described in Section 3 below titled “Business Scope”
within the People’s Republic of China (“China”);
WHEREAS,
the Parties intend to enter into a definitive joint venture agreement (“Definitive JV
Agreement”) for the establishment of a Chinese-foreign joint venture
limited liability company (the “Joint Venture”),
which agreement shall incorporate the following terms and conditions and such
other terms, conditions, representations and warranties as are usual and
customary in transactions of this type which terms and conditions shall be
subject to good faith negotiation;
WHEREAS,
until such time as the Definitive JV Agreement is executed, the Parties agree
that this Agreement shall serve as a binding agreement between the Parties in
connection with the Joint Venture; and
WHEREAS,
each of the Parties agrees to execute and/or deliver such further definitive
agreements and other instruments as may be reasonably required to carry out or
effectuate the purposes and intent of this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ChineseWorldNet and Compass,
intending to be legally bound, agree as follows:
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1)
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FORMATION OF CHINESE
JOINT VENTURE COMPANY
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a)
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The
Parties agree to form a Chinese-foreign joint venture limited liability
company, tentatively to be known as CWN China Co., Ltd. (“[CHINESE JV]”). [CHINESE JV] which shall be organized in the
People’s Republic of China (“China”). [CHINESE JV] shall be governed by a
definitive joint venture agreement, and any other agreement or
documentation to be entered into by the Parties after good faith
negotiations and as required to effectuate the Parties’ intent as
contemplated under this
Agreement.
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1
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b)
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The
Parties agree that until such time as the Definitive JV Agreement is fully
executed, this Agreement shall serve as a binding agreement between the
Parties in connection with the Joint Venture. Each of the Parties hereby
agrees to execute and/or deliver such further definitive agreements and
other instruments as may be reasonably required to carry out or effectuate
the purposes and intent of this Agreement, including the execution of the
Definitive JV Agreement.
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c)
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Each
Party will be an interest holder of [CHINESE
JV] in its individual capacity. However, each Party is free to
establish a wholly owned corporate entity to hold his respective shares of
[CHINESE
JV].
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d)
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The
formation of [CHINESE
JV] shall be subject to the professional opinions of legal counsel
and/or tax professionals satisfactory to the Parties that such Joint
Venture was duly formed, organized or structured, validly existing and in
good standing under the laws of China and has the requisite power and
authority to own, lease and operate its assets and properties and to carry
on its business as it is planned to be conducted by the Parties as
described in Section 3 below.
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e)
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The
Definitive JV Agreement shall be entered into and signed by all Parties
within four (4) weeks of the date on which this Agreement is fully
executed by all Parties (the “Execution
Date”).
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f)
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Compass
shall use its best efforts to complete the official formation and
organization of this Chinese-foreign joint venture limited liability
company within six (6) weeks of the Execution Date. ChineseWorldNet shall
assist Compass in completing the formation and organization of the
Chinese-foreign joint venture limited liability company until it is fully
formed and organized.
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2)
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CAPITALIZATION OF
[CHINESE
JV]
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a)
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The
initial capitalization of [CHINESE
JV] shall be RMB5,000,000. The total investment in [CHINESE
JV] shall be determined with the mutual consent of both
Parties.
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b)
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The
Parties shall contribute their initial capital as
follows:
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i)
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ChineseWorldNet
shall contribute RMB3,500,000 to [CHINESE JV] as its initial capital
contribution.
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ii)
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Compass
shall contribute RMB1,500,000 to [CHINESE JV] as its initial capital
contribution.
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iii)
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Each
Party’s “Equity Interest” shall mean such Party’s pro-rata share of the
capital invested in [CHINESE
JV]. As a result the above initial capital contributions, the
Parties’ initial Equity Interest in [CHINESE
JV] is as follows: ChineseWorldNet -seventy percent (70%) and
Compass - thirty percent
(30%).
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3)
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BUSINESS
SCOPE
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a)
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The
business of the [CHINESE
JV] (the “Business Scope”) shall
include:
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i)
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Reconstruction,
management and further development of Compass’ Sales Agents program in
China, including:
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(1)
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the
future training and development of the Sales Agents (as defined below);
and
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(2)
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overseeing
and coordinating the regional marketing activities of the Sales Agents (as
defined below).
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ii)
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Coordination
and operation of ChineseWorldNet’s Global Chinese Financial Forum – China
Conference (“GCFF China
Conference”).
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iii)
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Other
business development-related projects and transactions in China,
including, but not limited to the development of an investor
relations/public relations business. All such projects and transactions
shall be subject to review and unanimous approval of all Parties. All
necessary agreements in connection with such projects and transactions
shall be entered into at a later time to be determined by the
Parties.
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b)
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Sales
Agents. During the first year of the joint venture (“First Stage”), [CHINESE
JV] shall manage the 10 Compass sales agents whose names are set
forth in Appendix A
hereto (individually “Sales Agent” and collectively the “Sales
Agents”). The Definitive JV Agreement shall be executed
based on a franchising model for the Sales Agents (the “Franchising
Model”) which shall be mutually agreed upon by the Parties. The
Franchising Model shall include a Sales Agent incentive program
substantially in the form of the “Rewarding Scheme” attached hereto as
Appendix
B. After the First Stage and subject to unanimous approval by the
Parties, [CHINESE
JV] may add additional Sales
Agents.
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c)
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Other
Business Opportunities. No Party shall enter into any other venture having
a scope similar to that encompassed by the Business Scope defined herein.
Except as provided below, any business opportunity presented to or
identified by a Party that is within the scope of the business
contemplated herein shall be presented to [CHINESE
JV] for consideration, and the [CHINESE
JV] shall have thirty (30) days to determine whether it shall
participate in such venture.
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d)
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Geographic
restrictions and exclusivity
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3
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i)
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GCFF
China Conference. The Parties agree that [CHINESE JV]
shall only handle the coordination and operation of GCFF China
Conference within China, and that [CHINESE
JV] shall neither be responsible for nor shall receive revenues
from GCFF’s operations outside of China. For purposes of this Agreement,
China shall include Hong Kong, Taiwan and
Macao.
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ii)
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Products
Right. [CHINESE
JV] shall have the right to use the products/services, marketing
tools (including software) and distribution channels of Compass that
currently exist or which shall be developed during the Term (as defined
below) of this Agreement.
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4)
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JOINT VENTURE
RESPONSIBILITIES
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a)
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The
roles and responsibilities of each Party in connection with the formation
and management of the Joint Venture, shall be as
follows:
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(i)
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ChineseWorldNet’s
Responsibilities. ChineseWorldNet’s responsibilities shall be as
follows:
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(1)
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ChineseWorldNet
shall make full payment of its capital contribution according to Section
2(b) of this Agreement.
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(2)
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ChineseWorldNet
shall assist Compass in the completing the formation and organization of
the Chinese-foreign joint venture limited liability company, such as
providing related documentation for the registration and licensing of the
Joint Venture.
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(3)
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ChineseWorldNet
shall be responsible for creating an incentive program for the Sales
Agents by providing a Rewarding Program substantially in the form attached
hereto as Appendix “B” in return for the Sales Agents’ involvement in the
Joint Venture.
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(ii)
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Compass’
Responsibilities. Compass’s role and responsibilities shall
include:
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(1)
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making
full payment of its capital contribution according to Section 2(b) of this
Agreement;
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(2)
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applying
for and ensuring the complete and proper registration and licensing of the
Joint Venture with the appropriate Chinese governmental authorities and
handling any additional related issues in connection with the proper
formation, organization and licensing of
[CHINESE JV] as a Chinese-foreign joint venture limited
liability company;
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(3)
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coordination
and execution of the Franchising Model and ensuring the proper merger of
Compass’ sales/marketing team into the Joint
Venture;
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(4)
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operation
and management of the Joint Venture’s “after sales” services, software
development and maintenance programs;
and
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(5)
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arranging
for Compass to enter into and sign an exclusive agency agreement with
[CHINESE
JV].
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5)
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[CHINESE
JV] OPERATIONS
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a)
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[CHINESE
JV] shall operate through an annual business plan (the “Business
Plan”), which shall include a pre-determined cost-control model applicable
to the Sales Agents (the “JV Cost-control Model”). The initial Business
Plan (“Initial Business Plan”) shall be unanimously approved by the
Parties and the Board of Directors of [CHINESE
JV] (the “Board”).
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b)
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After
the Initial Business Plan is unanimously approved by the Parties, the
Joint Venture’s ongoing Business Plan shall be subject to review, revision
and/or further approval by [CHINESE
JV]’s Board either at the
end of each fiscal year or as needed according to the discretion of the
Board. The Business Plan shall include the
following:
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i)
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Annual
Budget containing the JV Cost-control Model, including sufficient monthly
detail as to projected revenue, expenses and capital
requirements;
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ii)
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Projected
business opportunities the Parties will evaluate during the year;
and
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iii)
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Roles
and responsibilities of each Party with respect to identification and
evaluation of business
opportunities.
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6)
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[CHINESE
JV] VOTING AND
MANAGEMENT
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a)
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Voting.
Each Party shall have a voting interest in [CHINESE
JV] equal to such Party’s Equity Interest. The members of the Board
shall each have one voting right on all matters requiring a vote by the
Board for approval.
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b)
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Except
as otherwise provided herein, all major decisions, including but not
limited to all non-day-to-day operational decisions, of [CHINESE
JV] shall require the unanimous approval by the members of the
Board unless approval by the Parties, as equity owners of [CHINESE
JV] (the “Shareholders”), for the corporate actions to be taken in
connection with such decisions is required under Chinese Law (as defined
below). For the avoidance of doubt, the following decisions/actions shall
require unanimous approval by the Board unless shareholder approval is
otherwise required under Chinese
Law:
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i)
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approval
of all revisions and additions to the [CHINESE
JV]’s
Initial Business Plan;
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ii)
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approval
of the Initial and Annual Budget;
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iii)
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approval
of the participation by [CHINESE
JV] in a business opportunity in any
manner;
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iv)
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disposition
of any investment by [CHINESE
JV];
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v)
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incurring
indebtedness by [CHINESE
JV] outside the confines of the Business Plan or Annual Budget or
otherwise in excess of
RMB1,000,000;
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vi)
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giving
any guarantee or indemnity to secure the liabilities or obligations of a
Party or any other person;
and
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vii)
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appointment
of Management (as defined below).
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viii)
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the
amendment of the Articles of
Association.
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ix)
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the
increase and/or decrease of the capitalization of [CHINESE
JV].
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x)
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the
suspension or dissolution of [CHINESE
JV].
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xi)
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the
distribution of profit of [CHINESE
JV].
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xii)
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the
change of the business scope of [CHINESE
JV].
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xiii)
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the
merger or separation of [CHINESE
JV].
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xiv)
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the
disposal of assets of [CHINESE
JV].
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c)
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Management
Structure, Executive Officers and Board of Directors. [CHINESE
JV]’s Board shall consist of three
individual members, of which ChineseWorldNet shall select two members, and
Compass shall select one member. The initial management structure and
executive officers of the [CHINESE
JV] (the “Management”) shall be determined by unanimous
approval of the Board at a later date to be determined by the Board but
not later than immediately prior to the execution of the Definitive JV
Agreement.
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7)
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DISTRIBUTIONS OF SALES
PROFITS
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a)
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All
of [CHINESE
JV]’s sales profits shall
be used primarily to fund the growth of [CHINESE
JV] ’s business and for
other business purposes as mutually agreed upon by the Parties and the
Board.
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8)
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TERM OF AGREEMENTS AND
TERMINATION
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a)
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Term
of Agreement. This Agreement shall commence on the date first above
written and shall continue in existence until the full execution of the
Definitive JV Agreement, or until Termination as set forth in Section
(8)(b) herein.
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b)
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Termination
of Agreement. This Agreement may only be terminated prior to the Parties’
full execution of the Definitive JV Agreement (“Termination”) by mutual
written consent of Compass and
ChineseWorldNet.
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c)
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Effect
of Termination. In the event this Agreement is terminated pursuant to
Section (8)(b), except for the provisions of Sections (10)(c) and (10)(d),
which shall survive the termination of this Agreement, Chinese WorldNet’s
and Compass’s rights and obligations under this Agreement shall terminate;
provided, however, that except as otherwise agreed by the parties, the
termination of this Agreement shall not relieve any party from any
liability for damages incurred as a result of a breach by such party of
its representations, warranties, covenants agreements or other obligations
hereunder occurring prior to such
termination.
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9)
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TRANSFERABILITY OF
INTERESTS/ADMISSION OF NEW
MEMBERS
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a)
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Transfer
of Interest. No Party can transfer any portion of his Equity Interest in
[CHINESE
JV] without the prior written consent of the remaining
non-transferring Party.
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b)
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Right
of First Refusal.
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i)
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If
a Party (“Selling Party”) desires to transfer all or part of his Equity
Interest in [CHINESE
JV] in any manner, the Selling Party shall first provide to the
other Party the proposal for the transfer and the terms and conditions on
which the transfer is
proposed.
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ii)
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The
other Party shall each have thirty (30) days from the date when such Party
receives the proposal from the Selling Party to decide whether such party
wishes to acquire the interest proposed for transfer on the same terms and
conditions as proposed by the Selling
Party.
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iii)
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If
the other Party does not wish to acquire the interest on the same terms
and conditions provided by the Selling Party, such Party shall give the
Selling Party a written notice or consent permitting the transfer of the
interest in [CHINESE
JV] by the Selling
Party.
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c)
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Admission
of New Members. A new joint venture member cannot be admitted to [CHINESE
JV] without the prior written consent of all
Parties.
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10)
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OTHER
PROVISIONS
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a)
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Governing
Law. This Agreement shall be governed by the laws of the People’s Republic
of China (“Chinese Law”), as if it were executed and fully performed in
that jurisdiction.
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b)
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Representations
and Warranties. Each Party represents and warrants to the other that it is
duly organized, validly existing and in good standing under the laws of
its respective jurisdiction. Each Party further represents and warrants
that it has the right to enter into this Agreement and to perform its
obligations herein.
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c)
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Survival
of Representations, Warranties and Covenants. The representations and
warranties of ChineseWorldNet and Compass contained in this Agreement
shall, notwithstanding any investigation or notice by or to any party
prior to the Execution Date, survive the Execution Date. The covenants and
agreements of the parties contained in this Agreement shall survive until
fully performed or otherwise terminated in accordance with the terms of
this Agreement.
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d)
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Indemnification.
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i)
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Compass
agrees to shall indemnify and hold harmless ChineseWorldNet from and
against any and all Loss and Litigation Expense (as defined below), which
any of them may suffer or incur as a result of or arising from any of the
following: (a) the failure of any representation or warranty by Compass in
this Agreement to be true and correct in any material respect on the
Execution Date, except to the extent that any such representation or
warranty refers specifically to a date other than the Execution Date, in
which case, failure of such representation or warranty to be true and
correct in any material respects as of such date; and (b) the failure of
Compass to perform in any material respect any of its covenants or
agreements set forth in this
Agreement.
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ii)
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ChineseWorldNet
agrees to shall indemnify and hold harmless Compass from and against any
and all Loss and Litigation Expense (as defined below), which any of them
may suffer or incur as a result of or arising from any of the following:
(a) the failure of any representation or warranty by ChineseWorldNet in
this Agreement to be true and correct in any material respect on the
Execution Date, except to the extent that any such representation or
warranty refers specifically to a date other than the Execution Date, in
which case, failure of such representation or warranty to be true and
correct in any material respects as of such date; and (b) the failure of
ChineseWorldNet to perform in any material respect any of its covenants or
agreements set forth in this
Agreement.
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iii)
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“Litigation
Expense’ means any expense incurred in connection with investigating,
defending or asserting any Claim indemnified against under this Agreement,
including, without limitation, court filing fees, court costs, arbitration
fees or costs, witness fees, and reasonable fees and disbursements of
legal counsel (whether incurred in any action or proceeding between the
parties to this Agreement or between any party to this Agreement and any
third party), investigators, expert witnesses, accountants and other
professionals. “Loss” means any loss, obligation, liability, settlement
payment, award, judgment, fine, penalty, interest charge, expense, damage
or deficiency or other charge, other than a Litigation
Expense.
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e)
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Costs.
Each Party shall individually bear the costs they each incur prior to the
formation of the Joint Venture. All costs incurred after the establishment
of the Joint Venture shall be borne proportionally by the Parties
according to their initial capital
contributions.
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f)
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Notices.
All notices, demands, requests, consents, approvals or other
communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested
(if available)) by hand, by nationally recognized air courier service, by
certified mail or facsimile, addressed as set forth below or to such other
address as such Party shall have specified most recently by written
notice. Notices shall be deemed given and effective (i) if delivered by
hand or by nationally recognized courier service, when delivered during
regular business hours at the address specified in this Section (9)(f) (or
in accordance with the latest unrevoked written direction from such
Party), (ii) if by certified mail, four (4) business days after mailing or
(iii) if given by facsimile when such facsimile is transmitted to the fax
number specified in this Section (9)(f) (or in accordance with the latest
unrevoked written direction from such Party), provided the appropriate
confirmation is received.
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Notices to
ChineseWorld Net shall be addressed and
delivered to:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. (HK)
Attn: ▇▇.
▇▇▇ ▇▇▇
#1101,
St. George’s ▇▇▇▇▇▇▇▇
▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇
Tel:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Notices to Compass shall be
addressed and delivered to:
Shanghai
Compass Venture Capital Investment Co., Ltd.
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
P.R. China 201203
Attn:
▇▇▇▇▇ ▇. ▇▇▇
Tel: ( ▇▇
) ▇▇▇▇ ▇▇▇▇
Fax: ( ▇▇
) ▇▇▇▇ ▇▇▇▇
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g)
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No
Reliance. The Parties each acknowledge that, in entering into this
Agreement, they have not relied upon any statements, representations,
warranties, correspondence, negotiations, conditions, understandings,
promises and agreements, oral or written, not specifically set forth in
this Agreement. Each of the Parties represents that prior to executing
this Agreement, each Party had an opportunity to fully review, analyze,
and obtain legal counsel to obtain advise regarding the meaning and
consequence of all of the
terms
and provisions of this
Agreement.
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h)
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Further
Assurances. Each of the Parties agree on behalf of themselves to produce
and execute such other documents or agreements as may be necessary or
desirable for execution and implementation of this Agreement and the
consummation of the transactions contemplated thereby, including but not
limited to the Definitive JV
Agreement.
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i)
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Severability
and Waiver. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, such determination
shall not affect any other provisions of this Agreement, which shall
remain in full force and effect and shall in no way be impaired. No
provision of this Agreement shall be waived unless set forth in writing
and signed by the party effecting such waiver. No waiver of the breach of
any of the terms or provisions of this Agreement shall be a waiver of any
preceding or succeeding breach of this Agreement or any other provisions
thereof. No waiver of any default, express or implied, made by any party
hereto shall be binding upon the party making such waiver in the event of
a subsequent default.
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j)
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Successors
and Assigns. Subject to the exceptions specifically set forth in this
Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective executors, administrators,
heirs, successors and assigns of the Parties. This Agreement shall not be
assignable by either of the Parties without the written consent of the
other non-assigning Party.
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k)
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Titles
and Subtitles. The titles and subtitles of the Sections of this Agreement
are used for convenience only and shall not be considered in construing or
interpreting this agreement
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1)
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Counterparts
and Facsimile. This Agreement may be executed in one or more counterparts
and transmitted by facsimile copy, each one of which shall constitute an
original and all of which shall constitute one and the same
document.
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[Remainder
of this page left blank intentionally. Signatures on following
page.]
10
IN
WITNESS WHEREOF, this Agreement to Establish [NAME OF CHINESE JOINT VENTURE], a Chinese-Foreign Joint Venture
Limited Liability Company, has been executed by and between the Parties
effective as of the date first written above.
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▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
INC.
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By:
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/s/
▇▇▇ ▇▇▇
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▇▇▇
▇▇▇,
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Chief
Executive Officer
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Shanghai
Compass Venture Capital Co., Ltd.
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By:
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/s/
Zhijie ▇▇▇▇
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▇▇▇▇▇▇
Wang
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Chairman
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