Joint Venture Contract

Execution Copy
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JOINT VENTURE CONTRACT


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BY AND BETWEEN


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HUNAN TELEVISION BROADCASTING GOODS
AND MATERIALS COMPANY


AND


UIH DEVELOPMENT, INC.


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RELATING TO THE ESTABLISHMENT OF
HUNAN INTERNATIONAL TELECOMMUNICATIONS COMPANY LIMITED


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DATED 11, APRIL, 1994


CONTENTS


Article Page - ------- ---- 1. Definitions.................................................. 1


2. Parties to the Contract...................................... 4


3. Establishment of the Joint Venture Company................... 5


4. The Purpose, Scope and Scale of Production and Operation..... 7


5. Total Amount of Investment and Registered Capital............ 8


6. Responsibilities of the PARTIES.............................. 13


7. Other Contracts.............................................. 14


8. Sale of Services, Programming and Products................... 15


9. Board of Directors........................................... 15


10. Operation and Management..................................... 19


11. Land......................................................... 22


12. Supply and Purchase of Materials and Services................ 22


13. Labor Management............................................. 23


14. Financial Affairs and Accounting............................. 25


15. Taxation and Insurance....................................... 29


16. Confidentiality.............................................. 30


17. The Joint Venture Term....................................... 31


18. Termination, Buy-Out and Liquidation Procedures.............. 32


19. Force Majeure................................................ 35


20. Settlement of Disputes....................................... 36


21. Expert Procedures............................................ 38


22. Applicable Law............................................... 39


23. Miscellaneous Provisions..................................... 40


Signatures................................................... 43


LIST OF EXHIBITS
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Exhibit A Articles of Association

Exhibit B Land Description

Exhibit C List of PARTY A's Contribution of Machinery and Equipment

Exhibit D Capital Contribution Schedule


JOINT VENTURE CONTRACT
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THIS CONTRACT is made in the People's Republic of China on this 11th day of April, 1994, by and between HUNAN TELEVISION BROADCASTING GOODS AND MATERIALS COMPANY, a legal person duly organized and existing under the laws of the People's Republic of China and having its registered address at 34 Yu Hua Street, Changhsa, Hunan Province, the People's Republic of China ("PARTY A") and UIH DEVELOPMENT, INC., a company duly organized and existing under the laws of United States of America and having its head office at Suite 1300, 4643 S. Ulster, Denver, Colorado, U.S.A. ("PARTY B").


PRELIMINARY STATEMENT
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After friendly consultations conducted in accordance with the principle of equality and mutual benefit, PARTY A and PARTY B have agreed to establish a limited liability equity joint venture in accordance with the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment (the "Joint Venture Law"), the Implementing Regulations issued thereunder (the "Joint Venture Regulations") and the provisions of this Contract.


NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
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ARTICLE 1 - DEFINITIONS
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Unless the terms or context of this Contract otherwise provides, the following terms shall have the meanings set out below:-


1.01 "Approval Authority" shall mean the Ministry of Foreign Trade and
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Economic Cooperation or the local authority designated by such Ministry
to approve this Contract and the Central and local agencies as may be
necessary to implement the provisions of this Contract and any ancillary
contracts referred to herein.


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1.02 "Articles of Association" shall mean the Articles of Association of the
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Company as set forth in Exhibit A attached hereto.


1.03 "Board" shall mean the board of directors of the Company.
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1.04 "Business License" shall mean the business license of the Company issued
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by the SAIC following approval of this Contract.


1.05 "China or "PRC" shall mean the People's Republic of China (but for
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business purposes under this Contract shall not include the regions of
Hong Kong, Taiwan and Macau).


1.06 "Company" shall mean the Hunan International Telecommunications Company
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Limited, a joint venture limited liability company formed by the PARTIES
pursuant to this Joint Venture Contract, the Joint Venture Law, the Joint
Venture Regulations, and other relevant Chinese laws.


1.07 "Contributed Assets" shall mean those assets contributed by PARTY A
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pursuant to Article 5.03(a) and which are more particularly described in
Exhibit C.


1.08 "Effective Date" shall mean the effective date of this Contract, which
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date shall be the date on which all of the following conditions have been
fulfilled:-


(a) Agreement and Articles. This Contract and the Articles of
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Association have been approved by the Approval Authority without
any additional or different conditions being imposed; and


(b) Business License. The Business License has been issued by the
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SAIC, reflecting the status and structure of the Company as
described herein, without any additional or different conditions
being imposed.


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1.09 "Feasibility Study" shall mean the Feasibility Study Report dated
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____________ 1994 and signed by the PARTIES, regarding the feasibility of
the joint venture and establishment of the Company.


1.10 "Joint Venture Term" shall mean the term of the Company as set forth in
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Article 17 hereof.


1.11 "Land" shall mean the land more particularly described in Exhibit B.
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1.12 "Management Personnel" shall mean and include the General Manager, Deputy
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General Manager, Production Manager, Financial Controller, Marketing
Manager, Production Engineer and such other personnel designated as
Management Personnel by the Board.


1.13 "PARTY" or "PARTIES" means PARTY A and PARTY B individually or
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collectively.


1.14 "Renminbi" or "RMB" shall mean the lawful currency of China.
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1.15 "SAEC" means the State Administration of Exchange Control of China and/or
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its local branches as appropriate to the context.


1.16 "SAIC" means the State Administration of Industry and Commerce of China
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and/or its local branches as appropriate to the context.


1.17 "United States Dollars", "U.S. Dollars" and "US$" shall mean the lawful
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currency of the United States of America.


1.18 "Working Personnel" shall mean the employees of the Company except the
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Management Personnel.


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ARTICLE 2 - PARTIES TO THE CONTRACT
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2.01 The Parties
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The PARTIES to this Contract are:


(a) PARTY A, Hunan Television Broadcasting Goods and Materials Company
registered in Changsha, Hunan Province, the People's Republic of
China, with its registered address at No. 34 Yu Hua Street,
Changsha, Hunan Province, the People's Republic of China.


Legal Representative : Xiong Tie Shi
Position : General Manager
Nationality : Chinese


(b) PARTY B, UIH Development, Inc. a company registered in Colorado,
U.S.A. with its head office at Suite 1300, 4643 S. Ulster, Denver,
Colorado, U.S.A.


Legal Representative : Warren L. Mobley, Jr.
Position : Vice President
Nationality : U.S.A.


2.02 Authority
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Each PARTY hereby represents and warrants to the other PARTY that, as of
the date hereof and as of the Effective Date:


(a) such PARTY is duly organized, validly existing and in good standing
under the laws of the place of its establishment or incorporation;


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(b) such PARTY has all requisite power, authority and approval required
to enter into this Contract and, upon the Effective Date, will have
all requisite power, authority and approval to perform fully each
and every one of its obligations hereunder;


(c) such PARTY has taken all actions necessary to authorize it to enter
into this Contract and such PARTY representative whose signature is
affixed hereto is fully authorized to sign this Contract, and to
bind such PARTY thereby, pursuant to a valid power of attorney;


(d) upon the Effective Date, this Contract shall constitute the legal,
valid and binding obligations of such PARTY;


(e) neither the execution of this Contract, nor the performance of such
PARTY's obligations hereunder, will conflict with, or result in a
breach of, or constitute a default under, any provision of the
Articles of Incorporation or By-Laws of such PARTY, or any law,
rule, regulation, authorization or approval of any government agency
or body, or of any contract or agreement to which it is a party or
subject;


(f) there is no lawsuit, arbitration, or legal, administrative or other
proceeding or governmental investigations pending or, to the best
knowledge of such PARTY, threatened against such PARTY with respect
to the subject matter of this Contract.


ARTICLE 3- ESTABLISHMENT OF THE JOINT VENTURE COMPANY
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3.01 Establishment of the Company
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The PARTIES hereby agree to establish the Company promptly after the
Effective Date in accordance with the Joint Venture Law, the Joint
Venture Regulations and the provisions of this Contract.


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3.02 Name and Address of the Company: Branches
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(a) Name. The name of the Company shall be: ________________ in Chinese,
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and "Hunan International Telecommunications Company Limited" in
English.


(b) Address. The legal address of the Company shall be
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________________Changsha,Hunan Province, the People's Republic of
China.


(c) Branches. The Company may establish necessary branch offices inside
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of China with the approval of the Board and the relevant authority
in the location of the proposed branch.


3.03 Limited Liability Company
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The form of organization of the Company shall be a limited liability
company. Except as otherwise provided herein, once a PARTY has paid in
full its contribution to the registered capital of the Company, it shall
not be required to provide any further funds to or on behalf of the
Company in excess of its obligation under this Contract. Except as
otherwise provided pursuant to written agreement signed by the PARTY to
be charged, creditors of the Company shall have recourse only to the
assets of the Company and shall not seek repayment from any PARTY. The
Company shall indemnify the PARTIES against any and all losses, damages
or liability suffered by the PARTIES in respect of third-party claims
arising out of the operation of the Company. Subject to the above, the
profits, risks and losses of the Company shall be shared by the PARTIES
in proportion to and limited by their respective contributions to the
Company's registered capital.


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3.04 Laws and Decrees
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The Company shall be a legal person under the laws of China. The
activities of the Company shall be governed and protected by the relevant
published and publicly available laws, decrees, rules and regulations of
China.


ARTICLE 4 - THE PURPOSE, SCOPE AND SCALE
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OF PRODUCTION AND OPERATION
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4.01 Purpose and Scope of the Company
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(a) Purpose. The Company shall adopt advanced technology and scientific
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management methods and establish an "information highway" with the
aim to earn lawful profits, gain a competitive position in the
market and make a contribution to the people of China by:


(1) Advancing economic and technical development of Hunan and
China;


(2) Advancing the level of managerial and marketing skills by
providing an environment utilizing modern and proven scientific
business methods; and


(3) Promoting the rights and dignity of workers by creating an
equitable and dynamic work environment.


(b) Scope. The scope of the Company is to:
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(1) Provide information, engineering, design and operation and
management support and consulting services relating to
broadcasting, television and telecommunications industry;


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(2) Design, engineer, renovate and construct transmission
facilities for television and broadcasting;


(3) Purchase and lease telecommunications equipment;


(4) Assemble, manufacture, distribute and sell television and other
telecommunications equipment;


(5) Produce, package, distribute and broadcast television
programming, including advertisements approved by the PRC
government.


4.02 Scale
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The initial activity of the Company will be to design, engineer and
renovate Hunan's microwave network, to procure, lease and use the
telecommunications equipment required by such network, and to provide
operation and management consulting services in connection with the
network.


ARTICLE 5 - TOTAL AMOUNT OF INVESTMENT AND
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REGISTERED CAPITAL
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5.01 Total Investment. The Company's total investment shall be Eight Million
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United States Dollars (US$8,000,000).


5.02 Registered Capital. The Company's registered capital shall be Four
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Million Eighty One Thousand Six Hundred and Thirty Three United States
Dollars (US$4,081,633).


5.03 Contribution to Capital
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(a) The contribution to the registered capital of the Company subscribed
by PARTY A shall be Two Million Eighty One Thousand Six Hundred and


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Thirty Three United States Dollars (US$2,081,633), representing a fifty
one percent (51%) share of the registered capital of the Company,


PARTY A's contribution shall consist of (i) buildings, water,
electricity, road access and machinery and equipment more particularly
described in the list set forth as Exhibit C, and (ii) land use rights
described more particularly in Exhibit B, which for purposes of valuation
the PARTIES agree are valued at approximately Two Million Eighty One
Thousand Six Hundred and Thirty Three United States Dollars
(US$2,081,633).


(b) The contribution to the registered capital of the Company subscribed by
PARTY B shall be cash in the amount of Two Million United States Dollars
(US$2,000,000) representing a forty nine percent (49%) share of the
registered capital of the Company.


(c) The capital contributions which shall be made by PARTY A and PARTY B
shall be used by the Company only in the implementation of this Contract.
Except as otherwise provided herein, all of the items contributed by the
PARTIES to the Company shall remain the property of the Company
throughout the entire term of this Contract.


(d) PARTY A's Representations and Warranties. With respect to PARTY A's
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contributions, PARTY A represents and warrants as follows:


(i) PARTY A is the lawful owner of the Contributed Assets, which are
free and clear of any lien, mortgage or other security interests
and claims;


(ii) PARTY A possesses rights, powers and authorization adequate for it
to contribute the Contributed Assets in the manner described in
this Contract;


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(iii) there is no ongoing or future legal procedure, lawsuit,
arbitration procedure, administrative litigation or other
government or court order, interdiction, decision or ruling to
which PARTY A is a party or which binds or affects the Contributed
Assets or is capable of so doing;


(iv) all information provided to PARTY B concerning the Contributed
Assets, business, finances and other aspects of business is true,
accurate and complete in every respect;


(v) as of the date of this Contract and as of the Effective Date, all
of the assets are in good operating condition, consistent with
PARTY A's past practices;


(vi) PARTY A has conducted its business in compliance with all
important laws, regulations, provisions and orders of any
governmental authority with jurisdiction over it, its business,
finances or operations or its property; and


(vii) before and after the execution of this Contract, PARTY A has taken
and shall take all necessary or appropriate actions to cause this
Contract to be adequately performed in accordance with the terms
thereof.


5.04 Payment of Registered Capital and Conditions Precedent Thereto
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(a) Subject to Article 5.04 (b) below, each PARTY shall pay into the
Company the capital contribution subscribed by it in accordance with
the Capital Contribution Schedule set forth as Exhibit D hereto.


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(b) Notwithstanding the foregoing, the PARTIES' obligations to make
their respective contribution to the Company's registered capital
shall not arise until each of the following conditions has been
fulfilled:


(i) approval of this Contract, the Articles of Association and
the Feasibility Study has been obtained from the Examination
and Approval Authority or other relevant authorities without
varying the terms hereof or imposing any additional terms or
conditions; and


(ii) the issuance of the Company's Business License (with a scope
of business as set forth in Article 4.01 hereof); and


(iii) the Company has established a foreign currency bank account.


5.05 Late Contribution to Registered Capital
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Any delay in payment of either PARTY's contribution in accordance with
the Capital Contribution Schedule attached as Exhibit B shall result in a
payment of penalty to the Company equal to 1% of the relevant PARTY's
total cash contribution for that month or part thereof that the delay in
payment continues.


5.06 Investment Certificate
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After each PARTY's contribution to the registered capital has been made
in full, a Chinese registered accountant shall verify the contribution
and issue a contribution verification report. Thereupon, the Company
shall issue within sixty (60) days after the payment of the contribution
an investment certificate to each PARTY signed by the Chairman of the
Board. Each investment certificate shall indicate on its face the amount
of the capital contribution evidenced thereby and a copy shall be
submitted to the Approval Authority for the record. The Board shall
request the Financial Controller to maintain a register identifying the
investment certificates that have been issued to the PARTIES.


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5.07 Transfer or Assignment of Registered Capital
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Each PARTY hereto undertakes to the other PARTY that, except as permitted under the laws of China it shall not:


(i) transfer, assign, sell or otherwise dispose of the legal or beneficial ownership of; or


(ii) create any mortgage, charge, pledge, or other encumbrance over either the whole or any part of its interest in the Company's registered capital or its rights, obligations and benefits under this Contract.


5.08 Increase of Registered Capital
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If the valuation of PARTY A's contribution by the relevant authority is in excess of the amount stated in Article 5.03(a), Party A and B shall meet to determine and agree on the increase in the registered capital. Party B should correspondingly increase its proportional share of the registered capital. Any increase in the registered capital of the Company shall be contributed by the PARTIES in accordance with the ratio of each PARTY's share of the registered capital at the time of such increase and within the limit and in the form specified by the Board for such increase. In the event of either PARTY refusing or failing to contribute to the increase in the capital in full or in part, the same could be contributed by the other PARTY in addition to its respective share of the increase within the total increase in capital approved by the Board with the resultant changes in the proportions of the interests of each PARTY in the registered capital of the Company.


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ARTICLE 6 - RESPONSIBILITIES OF THE PARTIES
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6.01 Responsibilities of PARTY A
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In addition to its other obligations under this Contract, PARTY A shall
be responsible for the following matters:


(a) Approvals. Assist the Company in obtaining (1) the exclusive
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commercial right to use the Facility for the Joint Venture Term, and
(2) the approvals, permits and licenses necessary for the
establishment and operation of the Company and the manufacture,
distribution and sale of the Joint Venture Products;


(b) Tax Treatment. Assist the Company in applying for and obtaining the
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most favourable tax and customs duty reductions and exemptions and
other investment incentives available for the Company under the laws
of China, Changsha Municipality, Hunan Province or other local laws;


(c) Imports. Assist with the procedures for applying for, and procuring
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licenses for the import of machinery and equipment, materi ...