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patent rights, its designs, drawings, &c., in the Chinese Company, thereby becoming the sole proprietor of the Chinese Company.
Second, the Government will have the right to liquidate its shares in the Chinese Company, but when the price offered by the Marconi Company is equal to that offered by any others, then the Marconi Company will have the first option to purchase.
In either case the Government must give one year's notice in writing, specifying which of the two above options it wishes to exercise, at the conclusion of which this agreement shall be terminated.
(c.) The liability of its shareholders shall be limited to the amount of their subscriptions.
(d) The object of the said Chinese Company shall be to manufacture wireless telegraph and telephone apparatus, materials and supplies, to deal in such apparatus, material and supplies, and to repair and maintain wireless installations now existing and hereafter established, but nothing in this agreement confers any right upon the Chinese Company to operate commercial wireless stations in China. 3. The Marconi Company hereby grants to the Chinese Company the right to the use in China, so long as it is a party to the terms and conditions of this agreement. of all the Marconi Company's patents, rights, designs, drawings, and secret processes, past, present and future, for wireless telegraphy and telephony.
4. (a) In consideration of the grant set forth in clause 3 above, the Govern ment agrees that the net divisible profits of the Chinese Company shall be divided into three equal parts: the Government and the Marconi Company each receiving one part as shareholders, and the remaining one-third is to be paid to the Marconi Company. However, should the Government exercise its right to purchase the entire Chinese Company as provided for in clause 2 (b), the latter payment will thereupon be automatically discontinued also.
(b) If hereafter at any time, before the Government has exercised its right to purchase the entire company as provided for in clause 2 (b), the Government should desire to abolish the payment of the one-third of the net divisible profits to the Marconi Company in consideration of the grant of patent and other rights as provided in the section next preceding, the Government may do so by paying a lump sum to the Marconi Company in an amount to be determined by agreement between the Government and the Marconi Company, which amount shall not exceed 300,0007. Should the Government avail itself of this right, thereafter all net devisible profits made by the Chinese Company shall be equally divided between the Government and the Marconi Company.
5.-(.) The capital of the Chinese Company shall be 700,000., divided into 700,000 shares of 11, each
(b) Immediately on the signing of this agreement, capital, amounting to 200,0007, shall be paid up: one-half, viz., 100,0007.. by the Government and one-half, viz.. 100.000, by the Marconi Company.
(c.) Further subscriptions for shares shall be in instalments as and when required and in the same proportions as above mentioned, such increases to be deter mined by resolution of the board of directors hereinafter provided for; but any increase in capital shall only take place in the event of the business of the Chinese Company justifying such increase.
6. The Government. recognising that the Chinese Company's success depends upon mutual co-operation, hereby agrees that, if the goods supplied by the Chinese Company are not lower in quality nor higher in price to those offered by other companies the Government will purchase exclusively from the Chinese Company all its present and future requirements in wireless telegraph and telephone apparatus, material and supplies, and further, if the Government suffers no loss by giving such work to the Chinese Company. the Chinese Company shall be exclusively entrusted with the repair and maintenance of all wireless telegraph and telephone apparatus and equipment in China.
7. The instalments due from the Government in respect of the shares allotted to them shall be advanced by the Marconi Company on behalf of the Government, against, and in consideration of which advances, as and when made, the Government shall issue to the Marconi Company negotiable Treasury notes in sterling amounts equal to the respective advances, the said Treasury notes to bear interest at the rate of 8 per centum per annum. payable, in sterling, semi-annually and maturing ten years from their respective dates, and of such denominations, within the sum represented as the Marconi Company may desire. Should the Government wish to repay the amount advanced by the Marconi Company before maturity, it the matter with the Marconi Company.
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8. Pending full payment of all Treasury notes issued under the terms of this agreement, all the interest of the Government in the investment and the profits of the undertaking shall stand pledged to the Marconi Company as security for such payment. The Government, however, shall at all times receive its proportion of the profits of the Chinese Company, always provided that interest and redemption on the Treasury notes above referred to is duly paid as such payments become due.
9. The supreme control of the Chinese Company shall be vested in a board of directors, consisting of three appointees of the Government and three appointees of the Marconi Company, provided, however, that, so long as the Government is indebted to the Marconi Company in respect of any of the Treasury notes issued against advanced or share subscription account, as provided in clause 7 above, one of the three appointees of the Marconi Company. to be designated by that company, shall be entitled to an additional vote,
10. (a) The Chinese Company shall utilise materials produced in China in preference to imported materials in all cases in which such materials are neither lower in quality nor higher in price than the imported materials.
(b.) The Chinese Company shall employ Chinese on its personnel, so far as may be found possible from the point of view of competency and economy.
(c.) So soon as the Chinese Company's works are in operation a school shall be established near the works for the technical education of students, whereby they may obtain a practical, as well as theoretical, training to enable them to fill important positions in the Chinese Company. The expenses of the school shall be borne by the Chinese Company.
11. So soon as this agreement comes into effect the parties hereto shall proceed to the selection of a suitable site for the works of the Chinese Company and to the appointment of the board of directors, who shall forthwith proceed to the settlement of arrangements for the acquisition of the site so selected and for the erection and equipment of the works.
12. The Marconi Company hereby covenants that during the perind when the Chinese Company shall, under the terms of clause 3 above, be entitled to the use of the patent rights, designs, drawings, and secret processes of the Marconi Company, the Marconi Company will not grant similar rights to any other person for use in China in whole or in part, and during the period of this agreement the Marconi Company and their associated companies shall not sell wireless telegraph and telephone apparatus, material and supplies in China except through the Chinese Company, and the Government, on its part. covenants that it will use all its power during the said period to prevent any other person within China infringing any of these rights causing loss to the Chinese Company, provided that previous application is made by the Chinese Company to the Government asking for the necessary protection.
13. In the event of dispute between the parties hereto regarding the amount to be paid to the Marconi Company under clause 2 (b) or any other clause in this agree- ment, the matter shall be referred to a court of arbitrators consisting of two nominees of the Government, two nominees of the Marconi Company, and a fifth to be selected by these four, making in all five members, the majority vote thereof to be final.
14. The Government agrees hereby that forthwith upon the execution of this agreement it will cause this agreement to be communicated to His Britannic Majesty's Minister at Peking by the Ministry for Foreign Affairs, whereupon this agreement shall come into full force and effect.
15. This agreement shall be executed in two exemplars, each of Chinese and English versions. In case of discrepancy, or in the event of doubt arising regarding the interpretation of this agreement, the English version shall rule.
In witness whereof this agreement is signed on behalf of the Government of the Republic of China by the Ministry of War, and sealed with the seal of the Ministry of War, and is signed on behalf of Marconi's Wireless Telegraph Company (Limited) by its duly authorised attorney.
In the presence of:
SOнтSU G. KING.
In the presence of:
GEO. W. FRODSHAM.
[5651]
(Signed and chopped in Chinese),
TING CHING,
(Duly authorised by the Minister of War). (Marconi's Wireless Telegraph Company (Limited)).
A. H. GINMAN,
Attorney-in-fact.
E