AGREEMENT ON MOBILE COMMUNICATIONS PROJECTS CONSTRUCTION
This Agreement is executed by and between the following two parties on
September 8, 2000 in Shenyang:
PARTY A: LIAONING MOBILE COMMUNICATION COMPANY LIMITED
Legal representative: Zhang Xuehong
Legal Address: 128 Shi Yi Wei Lu, Shenhe District, Shenyang
PARTY B: LIAONING PROVINCIAL POST AND TELECOMMUNICATIONS ENGINEERING BUREAU
Legal representative: Li Jianchang
Legal Address: 158 Lian He Lu, Da Dong District, Shenyang
1. In order to develop its mobile communications business and engage in
normal production and operating activities, Party A needs Party B to
provide services for the construction, engineering, equipment
installation and modulation of its mobile communications projects.
2. The Parties hereto agree that Party B shall, in accordance with the
terms and conditions of this Agreement, provide Party A with services
for the construction, engineering, preliminary modulation and equipment
installation of Party A's mobile communication projects.
THEREFORE, Party A and Party B have reached, through friendly
consultations, the following agreement in the principle of mutual preference and
ARTICLE ONE SCOPE OF SERVICES
1. Within the effective term of this Agreement, Party B agrees to provide
Party A, in accordance with the terms and conditions of this Agreement,
with the following services and exert its utmost efforts to ensure that
the services provided by it are of a high quality:
1.1 Construction and engineering of various mobile communications
projects as required by Party A;
1.2 Equipment installation and preliminary modulation of Party A's
mobile communications projects.
2. Party A agrees to receive the services provided by Party B in
accordance with the terms and conditions of this Agreement.
ARTICLE TWO ITEM AND QUANTITY OF SERVICES
2.1 The specific items and quantities of the services to be provided
hereunder shall be determined separately by the Parties hereto, and
such services shall be provided in accordance with the terms set forth
herein (including standards for service fees). (The specifics and
quantities of each item of service will be agreed upon by the Parties
hereto and set out in an appendix to this Agreement.)
ARTICLE THREE SERVICE FEES
3.1 Party A shall pay Party B the Service Fees for services provided by
Party B under Article 2 above for the construction, engineering,
preliminary modulation and equipment installation of Party A's
communications projects. .
3.2 The Engineering Fees shall be charged in accordance with the standards
applicable to the relevant services provided in the telecommunications
industry. Within 15 days from the date on which the Parties reach an
agreement on each specific service item and have executed an
appendix/appendices related thereto, Party A shall disburse to Party B
20% of the costs of the project as advancements for materials purchase
and engineering costs. During the process of the project, Party A will
review the project status report prepared by Party B. Party A will
disburse to Party B 70% of the project costs on the basis of such
review as project progress advancements. The balance of the total costs
of the project shall be paid upon the inspection and acceptance of the
project upon its completion.
3.3 Party A shall prepay Party B, on or before February 10 each year, the
Service Fees payable for the first half of the current year, and prepay
on or before July 10 Service Fees payable for the second half of the
current year. The amounts of such prepaid Service Fees shall be
determined as agreed upon in Articles 3.2 and 3.4 hereof.
3.4 The Engineering Fees and the Service Fees shall be charged in
accordance with the applicable national or Liaoning provincial
regulations. In the event of any future adjustment to such regulations,
the Parties shall observe the standards as adjusted. Party A and Party
B hereby confirm that the standards of the Engineering Fees and the
Service Fees determined under this Article are in compliance with the
applicable national and Liaoning provincial regulations.
3.5 Party B shall submit, within 30 days of inspection and acceptance of
each item of service upon its completion, the completion settlement
document of such item of service to Party A for auditing. The
final amounts due shall be based on the results of such audit.
3.6 The increase or decrease of the project costs as the result of any
change(s) in design shall be settled on the basis of the actual costs
after such change(s). Any and all increase in project costs as the
result of such change(s) in design are subject to Party A's prior
written consent thereto.
3.7 The various services to be provide by Party B to Party A under Article
Two above will start from October 1, 2000.
ARTICLE FOUR QUALITY CONTROL
4.1 Before Party B starts any services, the Parties shall conduct joint
research and discussions on the project to be constructed. Prior to the
commencement of the project, Party B shall organize relevant personnel
to study and familiarize themselves with the drawings in connection
with the project, and to take part in the design process, and formulate
a plan satisfactory to Party A. Party B shall also make all necessary
preparations for the construction and keep records of such
4.2 Party A shall provide Party B with relevant information on the
construction, engineering and equipment installation of its
communications project as well as necessary assistance.
4.3 Party B shall complete, in accordance with relevant construction
procedures, the construction, engineering and equipment installation of
Party A's communications project within the period agreed upon by the
Parties, ensure that the quality of the project is in compliance with
relevant standards and regulations. Party B shall also maintain the
normal operation of the communication equipment, satisfy Party A's
reasonable requirements and provide Party A with the progress status of
relevant projects on a timely basis.
4.4 In the event that the quality of the services provided by Party B
hereunder fails to meet the applicable regulations and standards, or
Party A's any communications equipment fails to operate normally after
Party B's overhaul, Party A will deduct the service fees payable to
4.5 Party A has the right to conduct, on a regular or irregular basis,
inspections on the process of the construction, engineering and
equipment installation conducted by Party B.
ARTICLE FIVE INSPECTION AND ACCEPTANCE UPON COMPLETION; MAINTENANCE
5.1 Seven days prior to the completion of a project, Party B shall notify,
in a form of an application, Party A in writing the date of inspection
and acceptance. If Party A can not make the inspection as scheduled,
Party A shall notify Party B in advance and consult with Party B for
another date of inspection and acceptance.
5.2 A project accepted by Party A following inspection shall be transferred
to Party A in its entirety within 7 days from the date of such
inspection and acceptance. If a project already accepted by Party A
incurs any losses as the result of Party A's failure to take delivery
of such project on schedule, Party A shall bear any and all such
5.3 If any part of a project is deemed to be unqualified and needs redoing
or repairing during the inspection of such project upon its completion,
the Parties shall, at the time of such inspection, negotiate with each
other and agree upon remedial measures and time limit for such remedial
measures. Party B shall implement such remedial measures within the
specified time limit. The delivery of such project after redoing or
repairing shall not take place until it has passed inspection and
acceptance procedures upon completion. Expenses and losses incurred
therefrom shall be borne by Party B.
5.4 Party B shall provide a quality warranty in respect of the project for
one year from the date on which such project is inspected and accepted
upon completion. During such warranty period, Party B shall be
responsible for repairs, at its sole expense, in connection with any
accident caused by substandard quality of the project. Party B shall
indemnify Party A for all losses sustained by Party A as the result of
such accident; provided, however, that Party B shall not be held liable
for any losses caused by any inherent quality defect in Party A's
ARTICLE SIX ASSIGNMENT OF RIGHTS AND OBLIGATIONS
Neither Party may assign any or all of its rights and obligations
hereunder without the other Party's prior written consent thereto.
ARTICLE SEVEN CONFIDENTIALITY
The Parties hereto shall keep strictly confidential the other Party's
business data and information. Neither Party may, without the other Party's
written consent, provide or disclose to any other organizations or persons any
data or information with regard to the operations of such other Party, unless
such disclosure is required by the applicable laws.
ARTICLE EIGHT LIABILITIES FOR BREACH OF CONTRACT
8.1 Any failure of either Party to perform any of the terms hereunder shall
be deemed as breach of contract. The breaching Party shall correct the
breach within twenty days from the date of receipt from the
non-breaching Party a written notice specifying such breach. If the
breaching Party fails to correct such breach within such twenty-day
period, the non-breaching Party may select to terminate the Agreement
upon written notice to the other Party, in which case the breaching
Party shall compensate the other Party for all economic losses
sustained by the non-breaching Party as the result of such breach.
8.2 Party B shall repair or redo, free of charge, any project that fails to
meet any contractual requirements. In the event of any delay in
delivery as the result of such repair or redo, Party B shall pay an
overdue penalty for such delay.
8.3 If, due to Party B's reasons, the completion of a project fails to take
place on the date specified in the contract, Party B shall pay Party A
a penalty of 0.1% of the total costs of the project contracted to it
ARTICLE NINE FORCE MAJEURE
9.1 Any event or circumstance beyond the reasonable control of a Party and
unavoidable by the affected Party by exercise of due care shall be
deemed as an "event of Force Majeure" and shall include, but not
limited to, earthquake, fire, explosion, storm, flood, lightning or
9.2 Neither Party shall bear any liability for breach of contract if it
fails to perform all or any of its obligations hereunder as a result of
an event of Force Majeure. However, the Party or Parties affected by an
event of Force Majeure shall, within fifteen days of the occurrence of
such event, notify the other Party of the details of such event of
Force Majeure along with the relevant proof.
9.3 A Party/the Parties shall resume the performance of its/their
obligations hereunder after the effects of such event of Force Majeure
have been eliminated.
ARTICLE TEN GOVERNING LAW AND DISPUTE RESOLUTION
10.1 Any dispute arising from or in connection with the validity,
interpretation or performance of this Agreement shall be resolved by
the Parties through consultations. If no resolution can be reached
through consultations, either Party may submit such dispute to the
Shenyang Arbitration Commission for arbitration in accordance with its
then effective arbitration rules. Once Liaoning Mobile Communication
Company Limited is transformed into a wholly foreign-owned enterprise,
the dispute resolution institution shall be automatically changed to
China International Economic and Trade Arbitration Commission and any
dispute shall be resolved in accordance with its then effective
arbitration rules in Beijing. The award of such arbitration shall be
final and binding upon the Parties.
10.2 Except for matters under arbitration, the remaining part of the
Agreement shall be in effect during the time of arbitration.
ARTICLE ELEVEN NOTICES
11.1 Any notice or other document to be given under this Agreement shall be
delivered in writing and may be delivered in person, sent by
registered mail or transmitted by facsimile to both Parties at their
legal addresses stated in this Agreement or any other addresses a Party
may have notified the other Party in accordance with this Article.
11.2 Any notice or document shall be deemed to have been received at the
time as follows:
if delivered in person, at the time of delivery;
if delivered by registered mail, five (5) business days after being
posted (excluding Saturdays, Sundays and public holidays); and
if transmitted by facsimile, upon receipt, or if the time of
transmission is during non-business hours, it shall be deemed to have
been given at the beginning of the normal business hours of the
succeeding day (excluding Saturdays, Sundays and public holidays),
subject to proof by the sender or confirmation from the facsimile
machine used for such transmission that a satisfactory transmission has
ARTICLE TWELVE EFFECTIVENESS AND TERM OF AGREEMENT
12.1 The effective term of this Agreement shall commence on the date on
which it is affixed with the official seals of and executed by the
Parties and expire on December 31, 2001. Unless Party A notifies the
Party B in writing of its intention to terminate this Agreement three
months prior to the expiration date hereof, this Agreement shall
automatically be extended for one year upon the expiration of its term.
The times of such extension shall be unlimited.
12.2 Party B hereby acknowledges that Party A may be transformed into a
wholly foreign-owned enterprise during the term of the Agreement
without consent or acknowledgement by Party B either prior to or after
the event, and that Party A's entire rights and obligations under the
Agreement shall not be affected or changed on the ground that the
nature of the company has changed into a wholly foreign-owned
enterprise. Party B will acknowledge the legal status of such wholly
foreign-owned enterprise in performing this Agreement.
12.3 In the event that the following conditions are not met, Liaoning Mobile
Communication Company Limited shall be entitled to terminate this
Agreement at any time. After the termination of this Agreement, the
Parties shall cease to enjoy any rights or assume any obligations under
this Agreement or in connection with its termination, except the rights
and obligations that have incurred under this Agreement prior to such
(1) China Mobile (Hong Kong) Limited ("CMHK") shall have been
granted relevant waivers by the Stock Exchange of Hong Kong
Limited ("HKSE") for CMHK's connected transactions in
accordance with the listing rules of HKSE; and
(2) The independent shareholders of CMHK who are deemed to be
accordance with the listing rules of HKSE shall have approved
ARTICLE THIRTEEN MISCELLANEOUS
13.1 Any matter not covered herein may be supplemented, explained, and
interpreted in a supplementary agreement or appendix to be entered into
by the Parties. All supplementary agreements and appendices hereto
shall constitute an integral part of, and have the same force and
effect as, this Agreement.
13.2 This Agreement is written in Chinese and signed in four counterparts.
Each Party will keep two copies, and all copies shall be signed by the
legal representative or authorized representative of each Party or
affixed with its official seal.
PARTY A: LIAONING MOBILE PARTY B: LIAONING PROVINCIAL POST AND
COMMUNICATION COMPANY LIMITED TELECOMMUNICATIONS
By: s/ Zhang Xuehong By: s/ Li Jianchang
Legal or authorized representative Legal or authorized representative