Conditional Sale and Purchase Agreement - China Mobile Hong Kong (BVI) Ltd., China Mobile Communications Corp. and China Mobile (Hong Kong) Ltd.


                       [LINKLATERS & ALLIANCE LETTERHEAD]



                              Dated 4 October 2000

                      CHINA MOBILE HONG KONG (BVI) LIMITED



                     CHINA MOBILE COMMUNICATIONS CORPORATION



                        CHINA MOBILE (HONG KONG) LIMITED







                     CONDITIONAL SALE AND PURCHASE AGREEMENT
   2
THIS AGREEMENT is made on 4 October 2000

BETWEEN:

(1)    CHINA  MOBILE HONG KONG (BVI)  LIMITED a company  incorporated  under the
       laws of the British Virgin Islands whose registered office is at P.O. Box
       957, Offshore  Incorporation  Centre, Road Town, Tortola,  British Virgin
       Islands (the "VENDOR");

(2)    CHINA MOBILE COMMUNICATIONS CORPORATION a company incorporated under the
       laws of the PRC whose registered office is at 53A Xibianmennei Dajie,
       Xuanwuqu, Beijing, PRC ("CMCC");and

(3)    CHINA MOBILE (HONG KONG) LIMITED a company incorporated under the laws of
       Hong Kong whose registered office is at 60th Floor, The Center, 99
       Queen's Road Central, Hong Kong, PRC (the "PURCHASER").

WHEREAS:

(A)    Each of Beijing Mobile BVI, Shanghai Mobile BVI, Tianjin Mobile BVI,
       Hebei Mobile BVI, Liaoning Mobile BVI, Shandong Mobile BVI and Guangxi
       Mobile BVI (each, as defined below and, together, the "TARGET BVI
       COMPANIES") is a private company limited by shares incorporated on 1
       September 2000 in the British Virgin Islands. Beijing Mobile BVI,
       Shanghai Mobile BVI, Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning
       Mobile BVI, Shandong Mobile BVI and Guangxi Mobile BVI are the sole
       beneficial owners of Beijing Mobile, Shanghai Mobile, Tianjin Mobile,
       Hebei Mobile, Liaoning Mobile, Shandong Mobile and Guangxi Mobile (each
       as defined below), respectively.

(B)    The Vendor is the sole legal and beneficial owner of the entire issued
       share capital of each of the Target BVI Companies.

(C)    CMCC has effected certain reorganisations in relation to the mobile
       communications assets and businesses in each of Beijing, Shanghai,
       Tianjin, Hebei, Liaoning, Shandong and Guangxi, and, prior to the signing
       of this Agreement, each of the Target Companies (as defined below) became
       a wholly-owned subsidiary of Beijing Mobile BVI, Shanghai Mobile BVI,
       Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning Mobile BVI, Shandong
       Mobile BVI and Guangxi Mobile BVI, respectively, through a series of
       transfers pursuant to a Share Transfer Agreement dated 30 September 2000
       (the "REORGANISATION").

(D)    The Vendor has agreed to sell the entire issued share capital of each of
       the Target BVI Companies to the Purchaser for the consideration and upon
       the terms and conditions set out in this Agreement.

(E)    The Vendor and CMCC have agreed to make certain representations,
       warranties and undertakings in relation to the Target Group Companies (as
       defined below).

IT IS AGREED as follows:


1      INTERPRETATION

       1.1      In this  Agreement,  the  following  expressions  shall have the
                following meanings:

                "ACCOUNTS" means in relation to the Target Companies:

                (a)      the  combined  audited  balance  sheets  of the  Target
                         Companies as of the relevant  Accounts  Date in respect
                         of that financial period; and

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                (b)      the combined  statements of income,  owner's equity and
                         cash flows of the Target  Companies  for the  financial
                         period ended on the relevant Accounts Date,

                together with any notes, reports or statements included in or
                annexed to them;

                "ACCOUNTS DATE" means, 31 December 1997, 1998 or 1999, or 30
                June 2000, as the case may be;

                "APPRAISAL REPORT" means the appraisal report prepared by PRC
                appraisers in respect of the Target Companies;

                "BEIJING MOBILE" means . . . . . . . . . . . . (Beijing Mobile
                Communication Company Limited), a company established on 26 July
                2000 under the laws of the PRC and wholly-owned by Beijing
                Mobile BVI;

                "BEIJING MOBILE BVI" means Beijing Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "BUSINESS DAY" means a day (excluding Saturdays) on which banks
                generally are open in Hong Kong and the PRC for the transaction
                of normal banking business;

                "CHINA MOBILE (SHENZHEN)" means China Mobile (Shenzhen) Limited,
                a company established under the laws of the PRC and wholly-owned
                by the Purchaser;

                "CLAIM" means any claim for breach of a Warranty;

                "COMPANIES ORDINANCE" means the Companies Ordinance, Chapter 32
                of the Laws of Hong Kong;

                "COMPLETION" means completion of the sale and purchase of the
                Target BVI Shares under this Agreement pursuant to clause 5;

                "CONDITIONS PRECEDENT" means the conditions specified in clause
                3.1;

                "CONNECTED TRANSACTIONS" means those transactions effected
                pursuant to the operating agreements as listed in Appendix 1;

                "CONSIDERATION SHARES" has the meaning given to it in clause
                2.2(c) and (if relevant) clause 2.3;

                "COSTS" means liabilities, losses, damages, costs (including
                legal costs) and expenses (including taxation), in each case of
                any nature whatsoever;

                "ENCUMBRANCE" means any claim, charge, mortgage, security, lien,
                option, equity, power of sale, hypothecation or third party
                rights, retention of title, right of pre-emption, right of first
                refusal or security interest of any kind;

                "FINANCIAL STATEMENTS" means the combined audited balance sheets
                of the Target Companies as of 31 December 1997, 1998 and 1999
                and 30 June 2000, and the related combined statements of income,
                owner's equity and cash flows for each of the years in the
                three-year period ended 31 December 1999 and the six months
                ended 30 June 2000, all of which are included in the
                Registration Statements;

                "GUANGXI MOBILE" means . . . . . . . . . . . . (Guangxi Mobile
                Communication Company Limited), a company established on 3
                August 2000 under the laws of the PRC and wholly-owned by
                Guangxi Mobile BVI;

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                "GUANGXI MOBILE BVI" means Guangxi Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "HEBEI MOBILE" means . . . . . . . . . . . . (Hebei Mobile
                Communication Company Limited), a company established on 31 July
                2000 under the laws of the PRC and wholly-owned by Hebei Mobile
                BVI;

                "HEBEI MOBILE BVI" means Hebei Mobile (BVI) Limited, a company
                incorporated in the British Virgin Islands;

                "HOLDING COMPANY" shall be construed in accordance with section
                2 of the Companies Ordinance;

                "HONG KONG" means the Hong Kong Special Administrative Region of
                the PRC;

                "HK$" or "HK DOLLARS" means Hong Kong dollars, the lawful
                currency of Hong Kong;

                "INDEBTEDNESS" means any indebtedness in respect of all
                obligations to repay borrowed money, all indebtedness evidenced
                by notes, bonds, loan stock, debentures or similar obligations,
                acceptances or documentary credit facilities, all rental
                obligations under finance leases, and hire purchase contracts,
                any other transaction having the commercial effect of a
                borrowing or raising of money, the net amount of any liability
                under any swap, hedging or other similar treasury instrument,
                and all guarantees, sureties, indemnities, counter-indemnities
                or letters of comfort of obligations of others of the foregoing
                types;

                "INDEPENDENT SHAREHOLDERS" means the holders of shares in the
                Purchaser other than the Vendor and its Associates (as defined
                in the Listing Rules);

                "INTELLECTUAL PROPERTY RIGHTS" means patents, trade marks,
                service marks, trade names, design rights, copyright (including
                rights in computer software), rights in know-how and other
                intellectual property rights, in each case whether registered or
                unregistered and including applications for the grant of any
                such rights and all rights or forms of protection having
                equivalent or similar effect anywhere in the world;

                "INTRA-GROUP GUARANTEES" means all guarantees, indemnities,
                counter-indemnities and letters of comfort of any nature
                whatsoever (a) given to any third party by any Target Group
                Company in respect of a liability of any Vendor Group Company,
                and/or (as the context may require) (b) given to any third party
                by any Vendor Group Company in respect of a liability of any
                Target Group Company;

                "INTRA-GROUP LOANS" means all debts outstanding between any
                Target Group Company and any Vendor Group Company;

                "LAST ACCOUNTS" means the Accounts of the Target Companies in
                respect of the financial period ended on the Last Accounts Date;

                "LAST ACCOUNTS DATE" means 30 June 2000;

                "LEASED PROPERTIES" means the properties stated in the Property
                Legal Opinions that are leased by the Target Companies;

                "LIAONING MOBILE" means . . . . . . . . . . . . (Liaoning Mobile
                Communication Company Limited), a company established on 7
                August 2000 under the laws of the PRC and wholly-owned by
                Liaoning Mobile BVI;

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                "LIAONING MOBILE BVI" means Liaoning Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "LISTING RULES" means the Rules Governing the Listing of
                Securities on The Stock Exchange of Hong Kong Limited;

                "MILLENNIUM COMPLIANT" or "MILLENNIUM COMPLIANCE" means the
                ability of a computer system and any related hardware and
                software to provide all the following functions:

                (a)      handle date information before, during and after 1
                         January 2000 including, but not limited to, accepting
                         date input, providing date output and performing
                         calculations on dates or portions of dates;

                (b)      function accurately and without interruption before,
                         during and after 1 January 2000, without any change in
                         operations associated with the advent of the year 2000
                         and the new century;

                (c)      respond to two-digit year input and process two-digit
                         year date information in ways that resolve the
                         ambiguity as to century in a disclosed, defined and
                         predetermined manner; and

                (d)      store and provide output of date information in ways
                         that are similarly unambiguous as to century,

                "OFFERINGS" means the proposed offerings of equity and
                convertible debt securities by the Purchaser to raise funds for
                the Purchaser to finance part of the purchase price under clause
                2.2(a), in each case pursuant to the relevant Underwriting
                Agreements;

                "OFFERING PRICE" means the price per Share to be paid by the
                proposed investors for the subscription of the new Shares which
                are the subject of the proposed offering of equity securities
                under the Offerings;

                "PRC" means the People's Republic of China;

                "PRC APPROVALS" means the approvals, consents and authorisations
                from all relevant regulatory authorities in the PRC including,
                but not limited to the State Council, the State Development and
                Planning Commission, the Ministry of Information Industry, the
                Ministry of Foreign Trade and Economic Cooperation, the Ministry
                of Finance, the Ministry of State Land Resources and the China
                Securities Regulatory Commission, which are necessary to effect
                the transactions contemplated by the Restructuring Agreements,
                this Agreement and the Underwriting Agreements;

                "PROPERTIES" means the properties and land use rights stated in
                the Property Legal Opinions whether owned or occupied by the
                Target Companies;

                "PROPERTY LEGAL OPINIONS" means the legal opinions to be issued
                by Commerce & Finance Law Offices, PRC counsel for the purposes
                of the acquisition contemplated hereunder in relation to the
                properties or land use rights owned, occupied or used by the
                Target Companies;

                "REGISTRATION STATEMENTS" means the Purchaser's Registration
                Statements on Form F-3 and such other registration statements
                (if any) filed by the Purchaser with


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                any regulatory authorities relating to the new Shares and/or the
                convertible debt securities to be issued by the Purchaser
                pursuant to the Offerings;

                "RESTRUCTURING AGREEMENTS" means the agreements listed in
                Appendix 2 pursuant to which CMCC transferred its business,
                assets and liabilities related to mobile communication services
                in Beijing, Shanghai, Tianjin, Hebei, Liaoning, Shandong and
                Guangxi to the respective Target Companies;

                "RMB" means Renminbi, the lawful currency of the PRC;

                "SCHEDULES" means Schedules 1 and 2 to this Agreement and
                Schedule shall be construed accordingly;

                "SHANDONG MOBILE" means . . . . . . . . . . . . (Shandong Mobile
                Communication Company Limited), a company established on 7
                August 2000 under the laws of the PRC and wholly-owned by
                Shandong Mobile BVI;

                "SHANDONG MOBILE BVI" means Shandong Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "SHANGHAI MOBILE" means . . . . . . . . . . . . (Shanghai Mobile
                Communication Company Limited), a company established on 4
                August 2000 under the laws of the PRC and wholly-owned by
                Shanghai Mobile BVI;

                "SHANGHAI MOBILE BVI" means Shanghai Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "SHARES" means ordinary shares of par value HK$0.10 each in the
                share capital of the Purchaser;

                "SHARE TRANSFER AGREEMENT" means the share transfer agreement
                referred to in paragraph 29 of Appendix 2;

                "SUBSIDIARY" and "SUBSIDIARIES" shall be construed in accordance
                with section 2 of the Companies Ordinance;

                "TARGET BVI COMPANIES" means Beijing Mobile BVI, Shanghai Mobile
                BVI, Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning Mobile BVI,
                Shandong Mobile BVI and Guangxi Mobile BVI, details of each of
                which are set out in Part A of Schedule 1;

                "TARGET BVI SHARES" means all the issued shares in the capital
                of each of the Target BVI Companies;

                "TARGET COMPANIES" means Beijing Mobile, Shanghai Mobile,
                Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile
                and Guangxi Mobile, details of each of which are set out in Part
                B of Schedule 1, and shall, in each case, include any
                predecessor entity or person carrying on the business of such
                Target Company, whether before or after the Reorganisation;

                "TARGET GROUP COMPANY" means any of the Target BVI Companies or
                any of the Target Companies;

                "TAX INDEMNITY" means the Tax Indemnity to be entered into by
                the Vendor and CMCC in favour of the Purchaser on Completion, in
                the agreed form set out in Appendix 3;

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                "TAX WARRANTIES" means the warranties set out in paragraphs 1.1
                to 1.9 in Part B of Schedule 2;

                "TIANJIN MOBILE" means . . . . . . . . . . . . (Tianjin Mobile
                Communication Company Limited), a company established on 24 July
                2000 under the laws of the PRC and wholly-owned by Tianjin
                Mobile BVI;

                "TIANJIN MOBILE BVI" means Tianjin Mobile (BVI) Limited, a
                company incorporated in the British Virgin Islands;

                "UNDERWRITING AGREEMENTS" means (a) the underwriting agreements
                relating to the proposed offering of equity securities by the
                Purchaser, and (b) the underwriting agreement relating to the
                proposed offering of convertible debt securities by the
                Purchaser, in each case to be entered into between the Purchaser
                and the several underwriters named therein of the relevant
                Offerings;

                "US$" or "US DOLLARS" means United States dollars, the lawful
                currency of the United States of America;

                 "VENDOR GROUP COMPANY" means the Vendor, CMCC, any holding
                company from time to time of the Vendor (including CMCC) and any
                subsidiary from time to time of the Vendor or any of its holding
                company (but excluding the Purchaser, any of the Purchaser's
                subsidiaries, the Target BVI Companies and the Target
                Companies);

                "WARRANTIES" means the representations and warranties set out in
                Schedule 2;

                "WFOE" means a wholly foreign owned enterprise established under
                the laws of the PRC.

       1.2      In this Agreement, unless the context otherwise requires:

                (a)      references to persons shall include individuals, bodies
                         corporate (wherever incorporated), unincorporated
                         associations and partnerships;

                (b)      the headings are inserted for convenience only and
                         shall not affect the construction of this Agreement;

                (c)      references to one gender include all genders;

                (d)      any reference to an enactment or statutory provision is
                         a reference to it as it may have been, or may from time
                         to time be, amended, modified, consolidated or
                         re-enacted;

                (e)      any statement qualified by the expression to the best
                         knowledge of the Vendor and CMCC or so far as the
                         Vendor and CMCC are aware or any similar expression
                         shall be deemed to include an additional statement that
                         it has been made after due and careful enquiry and
                         shall be deemed also to include the best of the
                         knowledge of each Vendor Group Company;

                (f)      any reference to a document in the agreed form is to
                         the form of the relevant document agreed between the
                         parties and for the purpose of identification
                         initialled by each of them or on their behalf (in each
                         case with such amendments as may be agreed by or on
                         behalf of the Vendor and the Purchaser);

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                (g)      references to any Hong Kong legal term for any action,
                         remedy, method of judicial proceeding, legal document,
                         legal status, court, official or any other legal
                         concept shall, in respect of any jurisdiction other
                         than Hong Kong, be deemed to include the legal concept
                         which most nearly approximates in that jurisdiction to
                         the Hong Kong legal term.

       1.3      The Schedules and Appendices comprise schedules and appendices
                to this Agreement and form part of this Agreement.


2      SALE OF THE TARGET BVI SHARES AND PRICE

       2.1      The Vendor agrees to sell as legal and beneficial owner, and the
                Purchaser agrees to purchase, the Target BVI Shares. The Target
                BVI Shares shall be sold free from all Encumbrances, together
                with all rights attaching to them.

       2.2      The total price payable on Completion by the Purchaser to the
                Vendor for the Target BVI Shares shall be HK$256,021 million
                (the "TOTAL PRICE"), comprising:

                (a)      HK$67,519 million (or such equivalent amount in US
                         Dollars) payable in cash;

                (b)      HK$11,772 million (or such equivalent amount in RMB or
                         US Dollars), payable in cash;

                (c)      HK$176,730 million to be satisfied by the allotment by
                         the Purchaser to the Vendor of the number of Shares,
                         credited as fully paid, calculated by dividing
                         HK$176,730 million by the Offering Price (the
                         "CONSIDERATION SHARES").

       2.3      The Purchaser may elect to increase the number of Consideration
                Shares provided that the Vendor's shareholding in the Purchaser
                following Completion and the issue of the Consideration Shares
                referred to in clause 2.2(c) and (if relevant) this clause 2.3
                and completion of the Offerings in relation to the proposed
                offerings of equity securities shall not exceed 76.5%. If the
                number of Consideration Shares to be allotted by the Purchaser
                is so increased, the cash portion of the Total Price as referred
                to in clauses 2.2(a) and/or 2.2(b) will be reduced by an
                aggregate amount calculated by multiplying the Offering Price by
                such additional number of Consideration Shares. Subject to the
                foregoing, the Purchaser may, in its absolute discretion,
                determine the amount of reduction applicable to each of the cash
                portion of the Total Price referred to in clauses 2.2(a) and
                2.2(b).


3      CONDITIONS PRECEDENT

       3.1      Completion of the sale and purchase of the Target BVI Shares
                shall be conditional upon the fulfilment of the following
                conditions:

                (a)      the passing of resolutions by the Independent
                         Shareholders approving the transactions contemplated by
                         this Agreement and the issue of the Consideration
                         Shares to the Vendor upon Completion, and the Connected
                         Transactions;

                (b)      the passing of resolutions by the shareholders of the
                         Purchaser approving the increase in the authorised
                         share capital of the Purchaser;

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                (c)      the Purchaser having received adequate funding or
                         financing to satisfy the cash portion of the Total
                         Price as referred to in clauses 2.2(a) and 2.2(b) but
                         subject to clause 2.3;

                (d)      the granting by the Listing Committee of The Stock
                         Exchange of Hong Kong Limited of listing of, and
                         permission to deal in, the Consideration Shares to be
                         issued by the Purchaser upon Completion;

                (e)      there having been no material adverse change to the
                         financial conditions, business operations or prospects
                         of any of the Target Group Companies; and

                (f)      the receipt by the Purchaser of the PRC Approvals.

       3.2      Each of the Vendor and CMCC undertakes to use all reasonable
                endeavours to ensure that the Conditions Precedent set out in
                clauses 3.1(e) and (f) are fulfilled to the satisfaction of the
                Purchaser as soon as reasonably practicable and in any event by
                31 December 2000.

       3.3      The Purchaser undertakes to use all reasonable endeavours to
                ensure that the Conditions Precedent set out in clauses 3.1(a),
                3.1(b), 3.1(c) and 3.1(d) are fulfilled to the satisfaction of
                the Vendor as soon as reasonably practicable and in any event by
                31 December 2000.

       3.4      The Purchaser shall be entitled in its absolute discretion, by
                written notice to the Vendor, to waive any or all of the
                Conditions Precedent set out in clauses 3.1(c) and 3.1(e) either
                in whole or in part.

       3.5      If any of the Conditions Precedent has not been fulfilled (or
                waived) on or before the date specified in clauses 3.2 and 3.3
                or such other date as the parties to this Agreement may agree in
                writing, this Agreement (other than clauses 14, 16 and 22) shall
                automatically terminate and no party shall have any claim of any
                nature whatsoever against the other parties under this Agreement
                (save in respect of its accrued rights arising from any prior
                breach of this Agreement).


4      PRE-COMPLETION UNDERTAKINGS

       4.1      Pending Completion, each of the Vendor and CMCC shall ensure
                that:

                (a)      each Target Group Company shall carry on its business
                         in the ordinary and usual course and shall not make (or
                         agree to make) any payment other than routine payments
                         in the ordinary and usual course of trading;

                (b)      each Target Group Company shall take all reasonable
                         steps to preserve and protect its assets;

                (c)      the Purchaser's representatives shall be allowed, upon
                         reasonable notice and during normal business hours,
                         access to the books and records of each Target Group
                         Company (including, without limitation, all statutory
                         books, minute books, leases, contracts, supplier lists
                         and customer lists) together with the right to take
                         copies;

                (d)      no Target Group Company shall do, allow or procure any
                         act or omission which would constitute or give rise to
                         a breach of any Warranty if the


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                         Warranties were to be repeated on or at any time before
                         Completion by reference to the facts and circumstances
                         then existing;

                (e)      prompt disclosure is made to the Purchaser of all
                         relevant information which comes to the notice of the
                         Vendor or CMCC in relation to any fact or matter
                         (whether existing on or before the date of this
                         Agreement or arising afterwards) which may constitute a
                         breach of any Warranty if the Warranties were to be
                         repeated on or at any time before Completion by
                         reference to the facts and circumstances then existing;

                (f)      no dividend or other distribution shall be declared,
                         paid or made by any Target Group Company;

                (g)      no share or loan capital shall be allotted or issued or
                         agreed to be allotted or issued by any Target Group
                         Company;

                (h)      all transactions between each Target Group Company and
                         each Vendor Group Company shall be on arm's length
                         commercial terms and in their respective ordinary and
                         usual course of business;

                (i)      otherwise than in the ordinary course of business, the
                         amount of any Indebtedness owed by each Target Group
                         Company or existing as at the date of this Agreement
                         shall not be increased or extended and no new
                         Indebtedness shall be entered into or assumed by any
                         such company; and

                (j)      no action is taken by any Target Group Company or any
                         Vendor Group Company which is inconsistent with the
                         provisions of this Agreement or the consummation of the
                         transactions contemplated by this Agreement.

       4.2      Pending Completion, each of the Vendor and CMCC shall ensure
                that the Target Group Companies consult fully with the Purchaser
                in relation to any matters which may have a material effect upon
                the Target Group Companies. Without the prior written consent of
                the Purchaser, the Target Group Companies shall not, and each of
                the Vendor and CMCC shall ensure that the Target Group Companies
                do not:

                (a)      enter into any contract or commitment (or make a bid or
                         offer which may lead to a contract or commitment)
                         having a material value or involving material
                         expenditure or which is of a long term or unusual
                         nature or which could involve an obligation of a
                         material nature or which may result in any material
                         change in the nature or scope of the operations of such
                         Target Group Company;

                (b)      agree to any variation or termination of any existing
                         contract to which that Target Group Company is a party
                         and which may have a material effect upon the nature or
                         scope of the operations of such Target Group Company;

                (c)      (whether in the ordinary and usual course of business
                         or otherwise) acquire or dispose of, or agree to
                         acquire or dispose of, any material business or any
                         material asset; or

                (d)      enter into any agreement, contract, arrangement or
                         transaction (whether or not legally binding) other than
                         in the ordinary and usual course of business.

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5      COMPLETION

       5.1      The sale and purchase of the Target BVI Shares shall be
                completed at 60th Floor, The Center, 99 Queen's Road Central,
                Hong Kong (or such other place as the Vendor, the Purchaser and
                CMCC may agree upon) on:

                (a)      the date of completion of the Offerings,

                (b)      the Business Day following the passing of the
                         resolutions referred to in clause 3.1(a), or

                (c)      such other date as may be agreed between the Vendor and
                         the Purchaser,

                whichever is later, following notification by the Purchaser to
                the Vendor of the fulfilment to the satisfaction of the
                Purchaser (or waiver) of all the Conditions Precedent.

       5.2     On Completion, the Vendor shall deliver (or cause to be
               delivered) to the Purchaser:

                (a)      duly executed transfers into the name of the Purchaser
                         or its nominee in respect of all of the Target BVI
                         Shares, together with the related share certificates
                         evidencing the title and ownership of such shares;

                (b)      the certificates of incorporation, common seal, share
                         register, share certificate book (with any unissued
                         share certificates), business licence, the documents
                         evidencing the PRC Approvals (as the case may be) and
                         all minute books and other statutory books (which shall
                         be written-up to but not including Completion) of each
                         Target Group Company;

                (c)      all such other documents (including any necessary
                         waivers of pre-emption rights or other consents) as may
                         be required to enable the Purchaser and/or its nominee
                         to be registered as the holder(s) of the Target BVI
                         Shares;

                (d)      a counterpart of the Tax Indemnity duly executed by the
                         Vendor;

                (e)      a copy of a resolution of the board of directors
                         (certified by a duly appointed officer as true and
                         correct) of the Vendor, authorising the execution of
                         and the performance by the Vendor of its obligations
                         under this Agreement and each of the other documents to
                         be executed by the Vendor;

                (f)      a certified copy of the Share Transfer Agreement
                         pursuant to which the equity interest of each of the
                         Target Companies is transferred from CMCC to each of
                         the Target BVI Companies, respectively, through a
                         series of transfers, duly executed by each of the
                         parties thereto; and

                (g)      a legal opinion from Commerce & Finance Law Offices,
                         PRC counsel, in form and substance acceptable to the
                         Purchaser.

       5.3      On Completion, CMCC shall deliver (or cause to be delivered) to
                the Purchaser:

                (a)      a counterpart of the Tax Indemnity duly executed by
                         CMCC; and

                (b)      all such other documents (including any necessary
                         waivers of pre-emption rights or other consents) as may
                         be required to enable the Purchaser and/or its nominee
                         to be registered as the holder(s) of the Target BVI
                         Shares.

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   12
       5.4      On Completion, the Vendor shall procure that resolutions of the
                board of directors of each Target BVI Company are passed to
                approve the registration of the transfers in respect of the
                Target BVI Shares referred to in clause 5.2.

       5.5      Against compliance by the Vendor and CMCC of their respective
                obligations under Clauses 5.2, 5.3 and 5.4, the Purchaser shall:

                (a)      (subject to clause 2.3) in satisfaction of its
                         obligations under clause 2.2(a), cause the price set
                         out in clause 2.2(a) to be paid on Completion or such
                         later date as may be agreed between the Vendor and the
                         Purchaser by electronic funds transfer (or such other
                         modes of payment as may be agreed between the Vendor
                         and the Purchaser) to the bank account of the Vendor or
                         such other party as the Vendor may direct, details of
                         which shall be notified in writing to the Purchaser at
                         least two Business Days prior to Completion;

                (b)      (subject to clause 2.3) in satisfaction of the
                         obligations under clause 2.2(b), procure China Mobile
                         (Shenzhen) to pay the price set out in clause 2.2(b) on
                         Completion or such later date as may be agreed between
                         the Vendor and the Purchaser by electronic funds
                         transfer (or such other modes of payment as may be
                         agreed between the Vendor and the Purchaser) to the
                         bank account of the Vendor or such other party as the
                         Vendor may direct, details of which shall be notified
                         in writing to the Purchaser at least two Business Days
                         prior to Completion;

                (c)      (subject to clause 2.3) in satisfaction of its
                         obligations under clause 2.2(c), cause the
                         Consideration Shares to be allotted to the Vendor
                         credited as fully paid, the Vendor's name to be entered
                         in the register of members and a certificate in respect
                         of the Consideration Shares to be delivered to the
                         Vendor; and

                (d)      deliver to the Vendor a copy of the board minutes
                         (certified by a duly appointed officer as true and
                         correct) of the Purchaser authorising the execution and
                         performance by the Purchaser of its obligations under
                         this Agreement.

       5.6      The procurement by the Purchaser of payment by China Mobile
                (Shenzhen) in accordance with clause 5.5(b) shall constitute a
                good discharge for the Purchaser of its obligations under clause
                2.2(b) and the Purchaser shall not be concerned to see that the
                funds are applied in payment to the Vendor.

       5.7      If the Vendor or CMCC fails or is unable to perform any material
                obligations (including the transfer of all Target BVI Shares to
                the Purchaser or its nominees simultaneously upon Completion)
                required to be performed by the Vendor or CMCC (as the case may
                be) pursuant to clause 3.2, clause 5.2 and clause 5.3,
                respectively, by the last date on which Completion is required
                to occur, the Purchaser shall not be obliged to complete the
                sale and purchase of the Target BVI Shares and may, in its
                absolute discretion, by written notice to the Vendor and CMCC:

                (a)      rescind this Agreement without liability on the part of
                         the Purchaser; or

                (b)      elect to complete this Agreement on that date, to the
                         extent that the Vendor and CMCC are ready, able and
                         willing to do so, and specify a later date on


                                     - 11 -
   13
                         which the Vendor and CMCC shall be obliged to complete
                         the outstanding obligations of the Vendor and CMCC; or

                (c)      elect to defer the completion of this Agreement by not
                         more than 90 days to such other date as it may specify
                         in such notice, in which event the provisions of this
                         clause 5.7 shall apply, mutatis mutandis, if the Vendor
                         and/or CMCC fails or is unable to perform any such
                         obligations on such other date,

                provided that clause 5.7(b) will not apply where the Vendor is
                unable or fails to effect transfer of all Target BVI Shares to
                the Purchaser or its nominee simultaneously upon Completion.

       5.8      Each of the Vendor and CMCC jointly and severally undertakes
                that it shall pay in cash to the Purchaser by way of indemnity
                all Costs which the Purchaser may suffer or incur if the Vendor
                or CMCC breaches any of its obligations under this Agreement
                (including to effect the transfer of all Target BVI Shares to
                the Purchaser or its nominee simultaneously upon Completion) and
                all Costs which the Purchaser has incurred in relation to the
                preparation and execution of this Agreement.


6      POST-COMPLETION UNDERTAKINGS

       6.1      Within 60 Business Days following Completion or such other date
                to be agreed upon between the Vendor, the Purchaser and CMCC,
                each of the Vendor and CMCC undertakes to the Purchaser to use
                all reasonable endeavours to obtain the release of each Target
                Group Company from any Intra-Group Guarantees to which it is a
                party and, pending such release, to indemnify the relevant
                Target Group Company against all amounts paid by it to any third
                party pursuant to any such Intra-Group Guarantee in respect of
                any liability of any Vendor Group Company (and all Costs
                incurred in connection with such liability) included in the Last
                Accounts or arising after the Last Accounts Date.

       6.2      Within 60 Business Days following Completion or such other date
                to be agreed upon between the Vendor, the Purchaser and CMCC,
                the Purchaser undertakes to the Vendor to use all reasonable
                endeavours to obtain the release of each Vendor Group Company
                from any Intra-Group Guarantees to which it is a party and,
                pending such release, to indemnify the relevant Vendor Group
                Company against all amounts paid by it to any third party
                pursuant to any Intra-Group Guarantees in respect of any
                liability of any Target Group Company (and all Costs incurred in
                connection with such liability) included in the Last Accounts or
                arising after the Last Accounts Date.

       6.3      If in the Purchaser's opinion the System (as defined in
                paragraph 7.1 of Part A, Schedule 2) is not Millennium Compliant
                then, without prejudice to any other right or remedy the
                Purchaser may have, upon written request from the Purchaser, the
                Vendor and CMCC shall at no charge to the Purchaser use their
                best endeavours to amend the System as quickly as possible to
                make it Millennium Compliant. The Vendor and CMCC shall supply
                an action plan in this regard to the Purchaser as soon as
                practicable and in any event no later than 30 days of the
                Purchaser's written request.

                                     - 12 -
   14
       6.4      The Vendor and CMCC shall jointly and severally indemnify the
                Purchaser against any or all Costs arising out of or in
                connection with any failure to meet any of the provisions of
                clause 6.3 and any of the warranties set out in paragraphs 7.1
                and 7.2 of Part A, Schedule 2.

       6.5      Regardless of the terms of clause 8.1, the Vendor and CMCC shall
                be liable to the Purchaser for the full amount of all Costs,
                including indirect or consequential Costs, arising from any
                breach of clause 6.3 and any of the warranties set out in
                paragraphs 7.1 and 7.2 of Part A, Schedule 2.

       6.6      The provisions of clause 6.3 and the warranties set out in
                paragraphs 7.1 and 7.2 of Part A, Schedule 2 shall survive any
                other expiration of warranty period or the termination of this
                Agreement.


7      WARRANTIES

       7.1      Each of the Vendor and CMCC jointly and severally represents,
                warrants and undertakes to the Purchaser in the terms of the
                Warranties (save that the Warranties set out in paragraphs 2.5
                to 2.10 of Part A, Schedule 2 are given by each of the Vendor
                and CMCC in respect of itself only) and that such Warranties are
                true and accurate. Each of the Vendor and CMCC acknowledges that
                the Purchaser has entered into this Agreement in reliance upon
                the Warranties.

       7.2      Each of the Vendor and CMCC jointly and severally undertakes
                (without limiting any other rights of the Purchaser in any way
                including its rights to damages in respect of a claim for breach
                of any Warranty on any other basis) that it shall pay in cash to
                the Purchaser (or, if so directed by the Purchaser, to the
                Target Group Company in question) (each an "INDEMNIFIED PERSON")
                by way of indemnity on demand:

                (a)      in the case of a breach of any of the Warranties, a sum
                         equal to the aggregate of (a) the amount which, if
                         received by the Indemnified Person, would be necessary
                         to put that Indemnified Person into the financial
                         position which would have existed had there been no
                         breach of the Warranty in question; and (b) all Costs
                         suffered or incurred by the Indemnified Person,
                         directly or indirectly, as a result of or in connection
                         with such breach of Warranty; and

                (b)      in the case of a breach by the Purchaser of its
                         representations or warranties set out in the
                         Underwriting Agreements and which relates to any of the
                         Target Group Companies, for any and all losses, claims,
                         damages, actions, liabilities, demands, proceedings or
                         judgments (in each case whether or not successful,
                         compromised or settled and whether joint or several) to
                         which any Indemnified Person may be subject and against
                         all losses, claims, damages, actions, liabilities,
                         demands, costs, charges, or expenses (including legal
                         fees) ("LOSSES") which the Indemnified Person may
                         suffer or incur (including, but not limited to, all
                         such Losses, suffered or incurred in disputing any
                         claim, action, liability, demand, proceeding or
                         judgment aforesaid and/or in establishing its right to
                         be indemnified pursuant to this clause, and/or in
                         seeking advice as to any claim, action, liability,
                         demand, proceeding or judgment aforesaid or in any way
                         related to or in connection with this indemnity).

                                     - 13 -
   15
       7.3      Each of the Vendor and CMCC agrees to waive the benefit of all
                rights (if any) which the Vendor or CMCC may have against any
                Target Group Company, or any present or former officer or
                employee of any such company, on whom the Vendor or CMCC may
                have relied in agreeing to any term of this Agreement and each
                of the Vendor and CMCC undertakes not to make any claim in
                respect of such reliance.

       7.4      Each of the Warranties shall be construed as a separate Warranty
                and (save as expressly provided to the contrary) shall not be
                limited or restricted by reference to or inference from the
                terms of any other Warranty or any other term of this Agreement.

       7.5      The Warranties shall be deemed to be repeated on Completion with
                reference to the facts and circumstances then existing.

       7.6      Each of the Vendor and CMCC undertakes to notify the Purchaser
                in writing promptly if it becomes aware of any circumstance
                arising after the date of this Agreement which would cause any
                Warranty (if the Warranties were repeated with reference to the
                facts and circumstances then existing) to become untrue or
                inaccurate or misleading in any respect which is material to the
                financial or trading position of any of the Target Group
                Companies.


8      LIMITATIONS ON CLAIMS

       8.1      Subject to clauses 6.5 and 8.2, the aggregate amount of the
                liability of each of the Vendor and CMCC for all Claims shall
                not exceed the Total Price (as defined in clause 2.2).

       8.2      The limitation contained in clause 8.1 shall not apply to any
                breach of any Warranty which (or the delay in discovery of
                which) is the consequence of dishonest, deliberate or reckless
                mis-statement, concealment or other conduct by any Vendor Group
                Company or any officer or employee, or former officer or
                employee, of any Vendor Group Company.


9      PURCHASER'S RIGHTS TO RESCISSION

       The Purchaser may by written notice given to the Vendor and CMCC at any
       time prior to Completion rescind this Agreement without liability on the
       part of the Purchaser if any of the Underwriting Agreements is terminated
       or rescinded or otherwise does not become unconditional in all respects
       or if any fact, matter or event (whether existing or occurring on or
       before the date of this Agreement or arising or occurring afterwards)
       comes to the notice of the Purchaser at any time prior to Completion
       which:

       (a)      constitutes a breach by the Vendor or CMCC of this Agreement
                (including, without limitation, any breach of the pre-Completion
                undertakings in clause 4); or

       (b)      would constitute a breach of any Warranty if the Warranties were
                repeated on or at any time before Completion by reference to the
                facts and circumstances then existing; or

       (c)      affects or is likely to affect in a materially adverse manner
                the business, financial position or prospects of the Target
                Group Companies taken as a whole.

                                     - 14 -
   16
10     WITHHOLDING TAX AND GROSSING UP

       10.1     Each of the Vendor and CMCC shall pay all sums payable by it
                under this Agreement free and clear of all deductions or
                withholdings unless the law requires a deduction or withholding.
                If a deduction or withholding is so required the Vendor or CMCC
                shall pay such additional amount as will ensure that the net
                amount the payee receives equals the full amount which it would
                have received had the deduction or withholding not been
                required.

       10.2     If any tax authority charges taxation on any sum paid by the
                Vendor or CMCC under or pursuant to this Agreement, then the
                Vendor or CMCC shall pay such additional amount as will ensure
                that the total amount paid, less the tax chargeable on such
                amount, is equal to the amount that would otherwise be payable
                under this Agreement.


11     ENTIRE AGREEMENT

       This Agreement and the Tax Indemnity constitute the entire agreement and
       understanding between the parties in connection with the sale and
       purchase of the Target BVI Shares. This Agreement and the Tax Indemnity
       supersede all prior agreements or understandings in connection with the
       subject matter hereof which shall cease to have any further force or
       effect. No party has entered into this Agreement in reliance upon any
       representation, warranty or undertaking which is not set out or referred
       to in this Agreement and the Tax Indemnity.


12     VARIATION

       12.1     No variation of this Agreement (or of any of the legally binding
                agreements referred to in this Agreement) shall be valid unless
                it is in writing and signed by or on behalf of each of the
                parties to it. The expression "VARIATION" shall include any
                variation, supplement, deletion or replacement however effected.

       12.2     Unless expressly agreed, no variation shall constitute a general
                waiver of any provisions of this Agreement, nor shall it affect
                any rights, obligations or liabilities under or pursuant to this
                Agreement which have already accrued up to the date of
                variation, and the rights and obligations of the parties under
                or pursuant to this Agreement shall remain in full force and
                effect, except and only to the extent that they are so varied.


13     ASSIGNMENT

       No party shall be entitled to assign the benefit of any provision of this
       Agreement without the prior written approval of the other parties.


14     ANNOUNCEMENTS

       14.1     Except as required by law or by any stock exchange or
                governmental or other regulatory or supervisory body or
                authority of competent jurisdiction to whose rules the party
                making the announcement or disclosure is subject, whether or not
                having the force of law, no announcement or circular or
                disclosure in connection with the existence or subject matter of
                this Agreement shall be made or issued by or on behalf of any of
                the Vendor Group Companies or the Target Group Companies or


                                     - 15 -
   17
                any of them without the prior written approval of the Purchaser
                (such approval not to be unreasonably withheld or delayed), or
                by or on behalf of the Purchaser without the prior written
                approval of the Vendor and CMCC (such approval not to be
                unreasonably withheld or delayed).

       14.2     Where any announcement or disclosure is made in reliance on the
                exception in clause 14.1, the party making the announcement or
                disclosure will so far as practicable consult with the other
                parties in advance as to the form, content and timing of the
                announcement or disclosure.


15     COSTS

       Each of the parties shall bear its own Costs incurred in connection with
       the negotiation, preparation and completion of this Agreement and the Tax
       Indemnity.


16     CONFIDENTIALITY

       Each of the Vendor and CMCC undertakes with the Purchaser that it shall
       keep confidential (and to ensure that its directors, officers, employees,
       agents and professional and other advisers keep confidential) any
       information in its possession (whether before or after the date of this
       Agreement):

       (a)      in relation to the subscribers, business, assets or affairs of
                the Target Group Companies (including any data held by the
                Target Group Companies); or

       (b)      which relates to the contents of this Agreement (or any
                agreement or arrangement entered into pursuant to this
                Agreement),

       provided that the undertakings contained in this clause 16 shall not
       apply to any information which is in or has entered the public domain
       (which shall include any public filing or disclosure requirements of the
       United States Securities and Exchange Commission or under applicable
       laws) otherwise than as a result of publication or disclosure by the
       Vendor or CMCC or their respective directors, officers, employees, agents
       and professional and other advisers without the prior written consent of
       the Purchaser.

       Each of the Vendor and CMCC shall not use for its own business purposes
       or disclose to any third party any such information (collectively,
       "CONFIDENTIAL INFORMATION") without the consent of the Purchaser.


17     SEVERABILITY

       If any provision of this Agreement is held to be invalid or
       unenforceable, then such provision shall (so far as it is invalid or
       unenforceable) be given no effect and shall be deemed not to be included
       in this Agreement but without invalidating any of the remaining
       provisions of this Agreement. The parties shall then use all reasonable
       endeavours to replace the invalid or unenforceable provisions by a valid
       and enforceable substitute provision the effect of which is as close as
       possible to the intended effect of the invalid or unenforceable
       provision.


18     COUNTERPARTS

       This Agreement may be executed in any number of counterparts and by the
       parties to it on separate counterparts, each of which is an original but
       all of which together constitute one and the same instrument.

                                     - 16 -
   18
19     WAIVER

       19.1     No failure or delay by any parties hereto in exercising any
                right or remedy provided by law under or pursuant to this
                Agreement shall impair such right or remedy or operate or be
                construed as a waiver or variation of it or preclude its
                exercise at any subsequent time and no single or partial
                exercise of any such right or remedy shall preclude any other or
                further exercise of it or the exercise of any other right or
                remedy.

       19.2     The rights and remedies of the parties hereto under or pursuant
                to this Agreement are cumulative, may be exercised as often as
                such party considers appropriate and are in addition to its
                rights and remedies under general law.


20     FURTHER ASSURANCE

       Each of the Vendor and CMCC agrees to perform (or procure the performance
       of) all further acts and things, and execute and deliver (or procure the
       execution and delivery of) such further documents, as may be required by
       law or as the Purchaser may reasonably require, whether on or after
       Completion, to implement and/or give effect to this Agreement and the
       transaction contemplated by it and for the purpose of vesting in the
       Purchaser the full benefit of the assets, rights and benefits to be
       transferred to the Purchaser under this Agreement.


21     NOTICES

       21.1     Any notice or other communication to be given by one party to
                any other party under, or in connection with, this Agreement
                shall be in writing and signed by or on behalf of the party
                giving it. It shall be served by sending it by fax to the number
                set out in clause 21.2, or delivering it by hand, or sending it
                by pre-paid recorded delivery or registered post, to the address
                set out in clause 21.2 and in each case marked for the attention
                of the relevant party set out in clause 21.2 (or as otherwise
                notified from time to time in accordance with the provisions of
                this clause 21). Any notice so served by hand, fax or post shall
                be deemed to have been duly given:

                (a)      in the case of delivery by hand, when delivered;

                (b)      in the case of fax, upon confirmation of transmission;

                (c)      in the case of prepaid recorded delivery or registered
                         post, at 10:00 a.m. on the fifth Business Day following
                         the date of posting,

                provided that in each case where delivery by hand or by fax
                occurs after 6:00 p.m. on a Business Day or on a day which is
                not a Business Day, service shall be deemed to occur at 9:00
                a.m. on the next following Business Day.

                References to time in this clause are to local time in the
                country of the addressee.

       21.2     The addresses and fax numbers of the parties for the purpose of
                clause 21.1 are as follows:

                THE VENDOR:

                Address:                  60th Floor
                                          The Center


                                     - 17 -
   19
                                          99 Queen's Road Central
                                          Hong Kong
               Fax:                       (852) 2511 9092
               For the attention of:      The Directors


               CMCC:
               Address:                   53A Xibianmennei Dajie
                                          Xuanwuqu
                                          Beijing
                                          PRC
               Fax:                       (8610) 6360 4943
               For the attention of:      The Authorised Representative


               THE PURCHASER:
               Address:                   60th Floor
                                          The Center
                                          99 Queen's Road Central
                                          Hong Kong
               Fax:                       (852) 2511 9092
               For the attention of:      Legal Counsel


       21.3     A party may notify any other party to this Agreement of a change
                to its name, relevant addressee, address or fax number for the
                purposes of this clause 21, provided that, such notice shall
                only be effective on:

                (a)      the date specified in the notice as the date on which
                         the change is to take place; or

                (b)      if no date is specified or the date specified is less
                         than five Business Days after the date on which notice
                         is given, the date following five Business Days after
                         notice of any change has been given.

       21.4     All notices under or in connection with this Agreement shall be
                in the English language.


22     GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS

       22.1     This Agreement and the relationship between the parties shall be
                governed by, and interpreted in accordance with, the laws of
                Hong Kong.

       22.2     Any dispute arising out of or in connection with this Agreement
                shall be resolved by arbitration in Hong Kong International
                Arbitration Centre by a single arbitrator in accordance with the
                UNCITRAL Arbitration Rules in force from time to time. The
                parties agree that the arbitral award will be final and binding.

                                     - 18 -
   20
AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.

                                     - 19 -
   21
                                   SCHEDULE 1
                                     PART A
                       DETAILS OF THE TARGET BVI COMPANIES



                                               
(1)    BEIJING MOBILE BVI

1      NAME:                                      Beijing Mobile (BVI) Limited

2      DATE OF INCORPORATION:                     1 September 2000

3      PLACE OF INCORPORATION:                    British Virgin Islands

4      CLASS OF COMPANY:                          International Business Company

5      REGISTERED NUMBER:                         404705

6      REGISTERED OFFICE:                         P.O. Box 957
                                                  Offshore Incorporations Centre
                                                  Road Town, Tortola
                                                  British Virgin Islands

7      DIRECTORS:                                 Wang Xiaochu
                                                  Li Zhenqun
                                                  Ding Donghua

8      REGISTERED SHAREHOLDER:                    China Mobile Hong Kong (BVI) Limited

9      AUTHORISED CAPITAL:                        HK$10,000.00 divided into 10,000 shares of HK$1.00 each

10     ISSUED CAPITAL:                            One share of HK$1.00 each

11     PRINCIPAL OPERATING SUBSIDIARY:            . . . . . . . . . . . . (Beijing Mobile Communication Company Limited)

12     MORTGAGES AND CHARGES:                     None
- 20 - 22 (2) SHANGHAI MOBILE BVI 1 NAME: Shanghai Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404703 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Shanghai Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 21 - 23 (3) TIANJIN MOBILE BVI 1 NAME: Tianjin Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404702 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Tianjin Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 22 - 24 (4) HEBEI MOBILE BVI 1 NAME: Hebei Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404701 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Hebei Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 23 - 25 (5) LIAONING MOBILE BVI 1 NAME: Liaoning Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404700 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Liaoning Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 24 - 26 (6) SHANDONG MOBILE BVI 1 NAME: Shandong Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404510 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Shandong Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 25 - 27 (7) GUANGXI MOBILE BVI 1 NAME: Guangxi Mobile (BVI) Limited 2 DATE OF INCORPORATION: 1 September 2000 3 PLACE OF INCORPORATION: British Virgin Islands 4 CLASS OF COMPANY: International Business Company 5 REGISTERED NUMBER: 404714 6 REGISTERED OFFICE: P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands 7 DIRECTORS: Wang Xiaochu Li Zhenqun Ding Donghua 8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited 9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each 10 ISSUED CAPITAL: One share of HK$1.00 each 11 PRINCIPAL OPERATING SUBSIDIARY: . . . . . . . . . . . . (Guangxi Mobile Communication Company Limited) 12 MORTGAGES AND CHARGES: None
- 26 - 28 PART B DETAILS OF THE TARGET COMPANIES (1) BEIJING MOBILE 1 NAME: Beijing Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Beijing Municipality, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Beijing: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: No.58, Dongzhong Avenue, Dongcheng District, Beijing Municipality, PRC 6 REGISTERED CAPITAL: RMB6,124,696,100 7 TOTAL INVESTMENT: RMB9,244,034,800 8 EQUITY HOLDER: Beijing Mobile (BVl) Limited 9 TAX RESIDENCE: Beijing Municipality, PRC 10 SUBSIDIARIES: None 11 MORTGAGES AND CHARGES: None
- 27 - 29 (2) SHANGHAI MOBILE 1 NAME: Shanghai Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Shanghai Municipality, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Shanghai: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: No.668, Beijing Dong Avenue, Shanghai, PRC 6 REGISTERED CAPITAL: RMB6,038,667,700 7 TOTAL INVESTMENT: RMB9,100,607,300 8 EQUITY HOLDER: Shanghai Mobile (BVl) Limited 9 TAX RESIDENCE: Shanghai Municipality, PRC 10 SUBSIDIARIES: None 11 MORTGAGES AND CHARGES: None
- 28 - 30 (3) TIANJIN MOBILE 1 NAME: Tianjin Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Tianjin Municipality, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Tianjin: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: 64 Zone M, Tianjin Bonded Area, Tianjin Gang, Tianjin, PRC 6 REGISTERED CAPITAL: RMB2,151,035,500 7 TOTAL INVESTMENT: RMB3,684,402,500 8 EQUITY HOLDER: Tianjin Mobile (BVl) Limited 9 TAX RESIDENCE: Tianjin Municipality, PRC 10 SUBSIDIARIES: Tianjin Mobile owns 90% shareholding in . . . . . . . . . . . . . (Tianjin Post and Telecommunications Equipment Company Limited) and 90% shareholding in . . . . . . . . . . . . (Tianjin Tianbo Communication Development Company Limited), respectively. 11 MORTGAGES AND CHARGES: None
- 29 - 31 (4) HEBEI MOBILE 1 NAME: Hebei Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Hebei, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Hebei province: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: No.220, Qingyuan Avenue, Shijiazhuang, Hebei, PRC 6 REGISTERED CAPITAL: RMB4,314,668,600 7 TOTAL INVESTMENT: RMB8,379,664,000 8 EQUITY HOLDER: Hebei Mobile (BVl) Limited 9 TAX RESIDENCE: Hebei, PRC 10 SUBSIDIARIES: Hebei Mobile owns 80% shareholding in . . . . . . . . . . (Hebei Provincial Post and Telecommunications Planning and Design Institute). 11 MORTGAGES AND CHARGES: None - 30 - 32 (5) LIAONING MOBILE 1 NAME: Liaoning Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Liaoning, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Liaoning province: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: 128 Shi Yi Wei Lu, Shen He District, Shenyang, PRC 6 REGISTERED CAPITAL: RMB5,140,126,700 7 TOTAL INVESTMENT: RMB11,016,504,400 8 EQUITY HOLDER: Liaoning Mobile (BVl) Limited 9 TAX RESIDENCE: Liaoning, PRC 10 SUBSIDIARIES: Liaoning Mobile owns 80% shareholding in . . . . . . . . . . . . . . . (Liaoning Mobile Communication Planning and Design Company Limited) and 20% shareholding in . . . . . . . . . . . (Shandong Mobile Communication Planning and Design Institute), respectively. 11 MORTGAGES AND CHARGES: None - 31 - 33 (6) SHANDONG MOBILE 1 NAME: Shandong Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Shandong, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Shandong province: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: 84 Da Wei Er Lu, Shi Zhong District, Jinan, Shandong, PRC 6 REGISTERED CAPITAL: RMB6,341,851,300 7 TOTAL INVESTMENT: RMB11,663,861,400 8 EQUITY HOLDER: Shandong Mobile (BVl) Limited 9 TAX RESIDENCE: Shandong, PRC 10 SUBSIDIARIES: Shandong Mobile owns 80% shareholding in . . . . . . . . . . . . . . . (Shandong Mobile Communication Planning and Design Institute) and 20% shareholding in . . . . . . . . . . . . . . . (Liaoning Mobile Communication Planning and Design Company Limited), respectively. 11 MORTGAGES AND CHARGES: None - 32 - 34 (7) GUANGXI MOBILE 1 NAME: Guangxi Mobile Communication Company Limited 2 PLACE OF INCORPORATION: Guangxi Zhuang Zu Autonomous Region, PRC 3 NATURE: Wholly foreign-owned enterprise (WFOE) 4 SCOPE OF BUSINESS: Operating the following businesses in Guangxi Zhuang Zu Autonomous Region: engaging in operation of mobile communication business (including voice, data and multimedia); providing IP phone and access to internet services; engaging in the design, investment and construction of mobile communication networks, IP phone and internet networks; engaging in installation, engineering and construction, and maintenance of facilities including mobile communication networks, IP phone and internet networks; engaging in system integration, settlement and clearing of roaming, technological development, technological service, advertising business and marketing equipment etc. in relation to mobile communication business and IP phone and internet services; engaging in sale or lease of mobile communication terminal equipment, IP phone equipment, internet network equipment and their accessories and spare parts and providing after-sale services. 5 REGISTERED OFFICE: 92 Min Zu Da Dao, Nanning, Guangxi Zhuang Zu Autonomous Region, PRC 6 REGISTERED CAPITAL: RMB2,340,750,100 7 TOTAL INVESTMENT: RMB4,683,492,500 8 EQUITY HOLDER: Guangxi Mobile (BVl) Limited 9 TAX RESIDENCE: Guangxi Zhuang Zu Autonomous Region, PRC 10 SUBSIDIARIES: None 11 MORTGAGES AND CHARGES: None - 33 - 35 SCHEDULE 2 THE WARRANTIES PART A: GENERAL 1 INFORMATION 1.1 All information relating to the Target Group Companies provided to the Purchaser or its representatives and advisers for the purposes of inclusion in the Registration Statements or preparation of the Financial Statements and the Appraisal Report is true, accurate and not misleading and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 1.2 Save as already disclosed in writing to the Purchaser, there are no other facts or matters which might reasonably be expected to have a material adverse effect on the financial or trading position or prospects of any Target Group Company. 2 CORPORATE MATTERS THE TARGET GROUP COMPANIES 2.1 (a) All of the Target BVI Shares are fully-paid or properly credited as fully-paid and the Vendor is the sole legal and beneficial owner of them free from all Encumbrances. The Target BVI Shares constitute the entire issued share capital of each of the Target BVI Companies. (b) The information in respect of each of the Target BVI Companies set out in Part A of Schedule 1 is true and accurate and not misleading. (c) Each of the Target BVI Companies has been duly incorporated and is validly existing under the laws of the British Virgin Islands, with legal right, power and authority (corporate and other) to own, use, lease and operate its properties and conduct its business in the manner presently conducted and as described in the Registration Statements, and is duly qualified to transact business in any jurisdiction in which it owns or leases properties or conducts any business and such qualification is required, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; the Memorandum of Association and Articles of Association of each Target BVI Company comply with the requirements of applicable laws of the British Virgin Islands and are in full force and effect. 2.2 (a) The Target BVI Companies are the sole legal and beneficial owner of the whole of the registered capital of each of the Target Companies, respectively, free from all Encumbrances. (b) The information in respect of each of the Target Companies set out in Part B of Schedule 1 is true and accurate and not misleading. (c) Each of the Target Companies is (or a valid application has been made for it to be registered as) a wholly-foreign owned enterprise with limited liability and has been duly organised and is validly existing under the laws of the PRC, and its business licence is in full force and effect; the Articles of Association of each Target Company comply with the requirements of - 34 - 36 applicable PRC law and are in full force and effect; each Target Company has all consents, approvals, authorizations, orders, registrations, clearances and qualifications of or with any court, governmental agency or body having jurisdiction over each Target Company or any of its properties in each jurisdiction in which the ownership or lease of property by it or the conduct of its business (as described in the Registration Statements) requires such qualification, except for such consents, approvals, authorizations, orders, registrations, clearances and qualifications the absence of which is disclosed in the Registration Statements or which is not material to such Target Company, and has the legal right and authority to own, use, lease and operate its assets and to conduct its business in the manner presently conducted and as described in the Registration Statements. 2.3 Save for the unlisted equity securities in the PRC as disclosed in the Accounts and the interest of the Target BVI Companies in the Target Companies, none of the Target Group Companies (that is, the Target BVI Companies and the Target Companies) owns or has any interest of any nature whatsoever in any shares, debentures or other securities issued by any undertaking. 2.4 No Target BVI Company carries on any business other than holding the respective Target Companies, or owns any asset other than the shares of the respective Target Companies or has any liabilities. THE VENDOR AND CMCC 2.5 Each of the Vendor and CMCC (each a "WARRANTOR") is duly incorporated or established and is validly existing under the laws of its jurisdiction of incorporation, with full power and authority to own, lease and operate its properties and assets and to execute and perform its obligations under this Agreement. 2.6 The execution, delivery and performance by each of the Warrantor of this Agreement has been duly authorised by it and this Agreement constitutes a legal, valid and binding obligation of such Warrantor enforceable in accordance with its terms, subject to the laws of bankruptcy and other similar laws affecting the rights of creditors generally. 2.7 All regulatory, corporate and other approvals (including shareholder approvals) and authorisations required by the Warrantor for the execution and delivery of this Agreement and any agreement or instrument contemplated hereby, the performance of the terms hereof and thereof and the sale of the Target BVI Shares have been obtained, are unconditional and are in full force and effect. 2.8 All consents, approvals and authorisations of any court, government department or other regulatory body required with respect to the Warrantor for the execution of this Agreement and the performance of its terms have been obtained and are unconditional and in full force and effect. 2.9 The execution and delivery by the Warrantor of this Agreement, and the performance and completion of the transactions herein contemplated: (a) will not infringe any applicable laws or regulations; (b) will not result in any breach of the terms of, or constitute a default under, its constitutional documents and business licence (as applicable) or any instrument, agreement or governmental, regulatory or - 35 - 37 other judgement, decree or order to which such Warrantor is a party or by which it or its property is bound; and (c) will not conflict with any of the certificates, licences or permits of such Warrantor that enable it to carry on the business or operations now operated by it. 2.10 The Warrantor is not: (a) in breach of the terms of, or in default under, any instrument, agreement or order to which it is a party or by which it or its property is bound to an extent which is material in the context of the transactions herein contemplated; (b) involved in or the subject of any current or pending investigation or proceedings (whether administrative, regulatory or otherwise), whether in the PRC or elsewhere. 3 FINANCIAL MATTERS FINANCIAL STATEMENTS 3.1 (a) The Financial Statements give a true and fair view of the state of affairs and financial results of the Target Companies for the periods and as at the dates stated therein. (b) Without limiting the generality of paragraph (a): (i) the Accounts of the Target Companies either make full provision for or disclose all liabilities (whether actual, contingent or disputed and including financial lease commitments and pension liabilities), all outstanding capital commitments and all bad or doubtful debts of the Target Companies as at the Accounts Dates, in each case in accordance with applicable accounting principles; (ii) the Accounts of the Target Companies for each of the periods ended on the Accounts Dates were prepared under the historical convention, complied with the requirements of all relevant laws and regulations then in force and with all statements of standard accounting practice (or financial reporting standards) and applicable accounting principles then in force; (iii) the rate of depreciation adopted by the Target Companies in its Accounts for each of the periods ended on the Accounts Dates was sufficient for each of the fixed assets of the Target Companies to be written down to nil by the end of its useful life; (iv) except as stated in its Accounts, no changes in the accounting policies were made by any of the Target Companies in any of the periods ended on the Accounts Dates; (v) the results shown by the Accounts of the Target Companies for each of the periods ended on the Accounts Dates were not (except as therein disclosed) affected by any extraordinary or exceptional item or by any other factor rendering such results for all or any of such periods unusually high or low. 3.2 None of the financial information provided to the Purchaser or its representatives and advisers is misleading in any material respect nor materially over-state the value of the assets nor materially under-state the liabilities of any Target Company as at - 36 - 38 the dates to which they were drawn up and do not materially over-state the profits of any Target Company in respect of the periods to which they relate. POSITION SINCE LAST ACCOUNTS DATE 3.3 (a) Since the Last Accounts Date and compared to the Last Accounts, there has been no material adverse change in the financial or trading position or in the prospects of any Target Company and no event, fact or matter has occurred which is likely to give rise to any such change. (b) Since the Last Accounts Date and compared to the Last Accounts: (i) the business of each Target Company has been carried on in the ordinary and usual course and no Target Company has made or agreed to make any payment other than routine payments in the ordinary and usual course of trading; (ii) no dividend or other distribution has been declared, paid or made by any Target Company; (iii) there has been no material change in the level of borrowing or in the working capital requirements of any Target Company; (iv) all transactions between each Target Company and any Vendor Group Company have been on an arm's length basis and commercial terms; (v) save for the Restructuring Agreements and the Connected Transactions, no contract, liability or commitment (whether in respect of capital expenditure or otherwise) has been entered into by any Target Company which is of a long term or unusual nature or which involved or could involve an obligation of a material nature or magnitude; (vi) save as provided in the Restructuring Agreements or in the usual and ordinary course of business of the Target Companies, no Target Company has (whether in the ordinary and usual course of business or otherwise) acquired or disposed of, or agreed to acquire or dispose of any material business or any material asset having a value in excess of RMB 50,000,000; (vii) no debtor has been released by any Target Company on terms that it pays less than the book value of its debt and no material debt owing to any Target Company has been deferred, subordinated or written off or has proved to any extent irrecoverable; (viii) no change has been made in terms of employment and any benefits in kind payable to employees and other employment related matters by any Target Company or any Vendor Group Company (other than those required by law) which could materially increase the total costs attributable to employment and employee benefits of the Target Companies; - 37 - 39 (ix) there has been no material increase or decrease in the levels of debtors or creditors or in the average collection or payment periods for the debtors and creditors respectively; (x) no Target Company has repaid any borrowing or indebtedness in advance of its stated maturity; (xi) there has been no material reduction in the cash balances of any Target Company; (xii) no resolution of the members of any Target Company has been passed whether in general meeting or otherwise (other than resolutions relating to the routine business of annual general meetings); (xiii) the business of each Target Company has not been affected by any abnormal factor not affecting to a similar extent generally all companies carrying on similar businesses; and (xiv) no Target Company has agreed to any variation or termination of any existing contract to which that Target Company is a party and which may have a material effect upon the nature or scope of the operations of such Target Company. WORKING CAPITAL 3.4 Having regard to existing bank and other financial facilities, each Target Company has sufficient working capital available to it as at the date of this Agreement to enable it to continue to carry on its business in its present form and at its present level of turnover and for the purpose of performing in accordance with their terms all orders, projects and other obligations and discharging all liabilities which ought properly to be discharged during the period of 12 months after Completion. ACCOUNTING AND OTHER RECORDS 3.5 (a) The books of account and other records of each Target Company: (i) are up-to-date and have been maintained in accordance with all applicable laws and generally accepted accounting practices on a proper and consistent basis; (ii) comprise complete and accurate records of all information required to be recorded therein; (iii) are in its possession or under its control together with all documents of title and executed copies of all existing agreements to which the relevant Target Company is a party. (b) All accounts, documents and returns required by law to be delivered or made by any Target Company to any government authority or regulatory body or any other authority have been duly and correctly delivered or made. - 38 - 40 4 DEBT POSITION DEBTS OWED TO THE TARGET COMPANIES 4.1 (a) There are no debts owing to any Target Company other than; (i) the Intra-Group Loans; and (ii) trade debts incurred in the ordinary and usual course of business which do not exceed 120% of the trade debts as set out in the Last Accounts. DEBTS OWED BY THE TARGET COMPANIES 4.2 (a) No Target Company has outstanding any borrowing or indebtedness in the nature of borrowing (including, without limitation, any indebtedness for moneys borrowed or raised under any acceptance credit, bond, note, bill of exchange or commercial paper, finance lease, hire purchase agreement, trade bills (other than those on terms normally obtained), forward sale or purchase agreement or conditional sale agreement or other transaction having the commercial effect of a borrowing) other than: (i) the Intra-Group Loans; and (ii) moneys borrowed from or otherwise owed to third parties which do not exceed 120% of the money borrowed from or otherwise owed to third parties as set out in the Last Accounts. (b) No Target Company has received any notice to repay under any agreement relating to any borrowing or indebtedness in the nature of borrowing which is repayable on demand. (c) There has not occurred any event of default or any other event or circumstance which would entitle any person to call for early repayment under any agreement relating to any borrowing or indebtedness of any Target Company or to enforce any security given by any Target Company (or, in either case, any event or circumstance which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute such an event or circumstance). 5 REGULATORY MATTERS 5.1 (a) Each Target Company has, or will by Completion have, obtained all licences, permissions, authorisations and consents required for carrying on its business effectively in the places and in the manner in which such business is now carried on. (b) The licences, permissions, authorisations and consents referred to in paragraph (a) are (or will by Completion be) in full force and effect, not limited in duration or subject to any unusual or onerous conditions, have been (or will by Completion have been) complied with in all respects. (c) To the best knowledge of the Vendor and CMCC, there are no circumstances which indicate that any of the licences, permissions, authorisations or consents referred to in paragraph (a) will or are likely to be - 39 - 41 revoked or not renewed, in whole or in part, in the ordinary course of events (whether as a result of the acquisition of the Target BVI Shares by the Purchaser or otherwise). 5.2 (a) Each Target Company has conducted its business and corporate affairs in accordance with its business licence and with all applicable laws and regulations (whether of the PRC or any other jurisdiction). (b) No Target Company is in default of any order, decree or judgment of any court or any governmental or regulatory authority (whether of the PRC or any other jurisdiction). 6 THE REORGANISATION AND THE ASSETS THE REORGANISATION 6.1 The property and other assets transferred into the Target Companies pursuant to the Reorganisation comprise all the assets necessary for the carrying on of the business carried on or to be carried on by the Target Companies in the manner it is presently conducted and as described in the Registration Statements and the liabilities assumed by the Target Companies pursuant to the Reorganisation represent the only liabilities of the Target Companies and are fully, fairly and accurately provided for in, the Financial Statements. 6.2 The events and transactions contemplated by the Reorganisation do not contravene any provision of applicable law, rule or regulation and do not contravene the Articles of Association, other constitutional documents or the business licence of the Target Companies or contravene the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or instrument binding upon the Target Companies that, singly or in the aggregate, is material to the Target Companies, or any judgement, rule or regulation, order or decree of any governmental body, agency or court having jurisdiction over the Target Companies and will not result in the creation or imposition of any Encumbrance or other restriction upon any assets of the Target Companies. 6.3 All consents, approvals, authorisations, orders, registrations and qualifications required in the PRC in connection with the events and transactions contemplated by the Reorganisation have been (or will by Completion have been) made or unconditionally obtained in writing (including, without limitation, all PRC Approvals), and no such consent, approval, authorisation, order, registration or qualification has been withdrawn or is subject to any condition precedent which has not been fulfilled or performed. 6.4 There are no legal or government proceedings pending against any of the Target Companies in the PRC challenging the effectiveness or validity of the events and transactions contemplated by the Reorganisation and, to the best knowledge of the Vendor and CMCC, no such proceedings are threatened or contemplated by any governmental agencies in the PRC or elsewhere. - 40 - 42 OWNERSHIP 6.5 (a) For the purpose of this Warranty 6.5, assets shall not include the Properties and the Leased Properties, to which the provisions of Part B of this Schedule shall apply. (b) Each of the assets included in the Last Accounts of each Target Company or acquired by it since the Last Accounts Date (other than assets disposed of in the ordinary course of business and pursuant to the Reorganisation) is the absolute property of that Target Company. Save as disclosed in the Last Accounts, those assets are not the subject of any security interest or any assignment, equity, option, right of pre-emption, royalty, factoring arrangement, leasing or hiring agreement, hire purchase agreement, conditional sale or credit sale agreement, agreement for payment on deferred terms or any similar agreement or arrangement (or any agreement or obligation, including a conditional obligation, to create or enter into any of the foregoing). POSSESSION AND THIRD PARTY FACILITIES 6.6 (a) All of the assets owned by each Target Company, or in respect of which any Target Company has a right of use, are in the possession or under the control of that Target Company. (b) Where any assets are used but not owned by any Target Company or any facilities or services are provided to any Target Company by any third party, there has not occurred any event of default or any other event or circumstance which may entitle any third party to terminate any agreement or licence in respect of the provision of such facilities or services (or any event or circumstance which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute such an event or circumstance). ADEQUACY OF ASSETS 6.7 (a) The assets of each Target Company and the facilities and services to which each Target Company has a contractual right include all rights, properties, assets, facilities and services necessary or desirable for the carrying on of the business of that Target Company in the manner in which it is currently carried on. (b) The assets of each Target Company and the facilities and services to which the relevant Target Company has a contractual right include all assets, facilities and services necessary to enable such Target Company to conduct its business after Completion in the same manner in all material respects as it was conducted immediately prior to the transfer of such business to the relevant Target Company pursuant to the Reorganisation. (c) Save as otherwise provided in the Connected Transactions, no Target Company depends in any material respect upon the use of assets owned by, or facilities or services provided by, any Vendor Group Company. - 41 - 43 CONDITION 6.8 (a) All the plant, machinery, systems, equipment and vehicles used by each Target Company: (i) are in a good state of repair and have been regularly and properly maintained in accordance with appropriate technical specifications, safety regulations and the terms and conditions of any applicable agreement; (ii) are capable of being efficiently and properly used for the purposes for which they were acquired or are retained; (iii) are not dangerous, inefficient, obsolete or in need of renewal or replacement. INSURANCES 6.9 (a) The business, undertakings, properties and other assets of each Target Company are adequately insured against such risks as are normally insured by persons carrying on similar businesses in the PRC as those carried on by the Target Company concerned and such insurances include all the insurances which each Target Company is required under the terms of any leases or any contracts in respect of any of its properties to undertake and such insurances are in full force and effect and there are no circumstances which could render any of such insurances void or voidable and all due premiums in respect thereof have (if due) been paid. (b) No claim is outstanding by any Target Company under any such policy of insurance and, to the best knowledge of the Vendor and CMCC, there are no circumstances likely to give rise to such a claim. 7 MILLENNIUM COMPLIANCE AND INTELUCTUAL PROPERTY RIGHTS 7.1 The computer systems and any related hardware and software of each of the Target Companies (the "SYSTEM") are Millennium Compliant and, in particular: (a) all data containing dates produced by the System include in each date an indication of the century; (b) all operations and functions carried out by the System on data containing dates will take account of and handle properly the change in the century; (c) if data containing dates which do not have an indication of the century are received or accessed by the System it will not process the data and will generate an error message detailing the time, source and content of the data concerned. 7.2 The System has been tested to establish that it is Millennium Compliant. REGISTERED RIGHTS 7.3 (a) Each of the Target Companies is the sole legal owner of all Intellectual Property Rights registered or sought to be registered in any jurisdiction which are held or beneficially owned by such Target Company. - 42 - 44 (b) No act has been done or omitted to be done and no event has occurred or is likely to occur which may render any of such Intellectual Property Rights subject to revocation, compulsory licence, cancellation or amendment or may prevent the grant or registration of a valid Intellectual Property Right pursuant to a pending application. INFRINGEMENT 7.4 (a) None of the operations of any Target Company infringe, or are likely to infringe, any rights held by any third parry or involve the unauthorised use of confidential information disclosed to any Target Company (or any Vendor Group Company) in circumstances which might entitle a third party to make a claim against a Target Company. (b) No claim has been made by any third party which alleges any infringing act or process which would fall within paragraph (a) above or which otherwise disputes the right of any Target Company to use any Intellectual Property Rights relating to its business and the Vendor and CMCC are not aware of any circumstances (including any act or omission to act) likely to give rise to such a claim. (c) There exists no actual or threatened infringement by any third party of any intellectual Property Rights held or used by a Target Company (including misuse of confidential information) or any event likely to constitute such an infringement nor has a Target Company (or any Vendor Group Company) acquiesced in the unauthorised use by any third party of any such Intellectual Property Rights. INTELLECTUAL PROPERTY LICENCES 7.5 No Target Company is in default under any licence, sub-licence or assignment granted to it in respect of any Intellectual Property Rights used by any Target Company. LOSS OF RIGHTS 7.6 No Intellectual Property Rights owned or used by a Target Company and no licence of Intellectual Property Rights of which a Target Company has the benefit will be lost, or rendered liable to any right of termination or cessation by any third party, by virtue of the acquisition by the Purchaser of the Target BVI Shares. RECORDS AND SOFTWARE 7.7 (a) All the accounting records and systems (including but not limited to computerised accounting systems) of the Target Companies are recorded, stored, maintained or operated or otherwise held by a Target Company and are not wholly or partly dependent on any facilities or systems which are not under the exclusive ownership or control of a Target Company. (b) Each Target Company is licensed to use all software necessary to enable it to continue to use its computerised records for the foreseeable future in the same manner in which they have been used prior to the date of this - 43 - 45 Agreement and does not share any user rights in respect of such software with any other person. 8 CONTRACTUAL MATTERS MATERIAL CONTRACTS 8.1 Save for the Restructuring Agreements and the Connected Transactions, there is not outstanding any agreement or arrangement to which any Target Company is a party: (a) which, by virtue of the acquisition of the Target BVI Shares by the Purchaser or other performance of the terms of this Agreement, will result in: (i) any other party being relieved of any obligation or becoming entitled to exercise any right (including any right of termination or any right of pre-emption or other option); or (ii) any Target Company being in default under any such agreement or arrangement or losing any benefit, right or licence which it currently enjoys or in a liability or obligation of any Target Company being created or increased; (b) to which any Vendor Group Company is a party or in which any Vendor Group Company or any connected person (as defined under the Listing Rules) is interested or from which any such person takes benefit, whether directly or indirectly; (c) entered into otherwise than by way of a bargain at arm's length and on commercial terms; (d) which establishes any guarantee, indemnity, suretyship, form of comfort or support (whether or not legally binding) given by any Target Company in respect of the obligations or solvency of any third party; (e) pursuant to which any Target Company has sold or otherwise disposed of any company or business in circumstances such that it remains subject to any liability (whether contingent or otherwise) which is not fully provided for in its Last Accounts; (f) which, upon completion by a Target Company of its work or the performance of its other obligations under it, is likely to result in a loss for that Target Company which is not fully provided for in its Last Accounts or which either is not expected to make a normal profit margin or involves an abnormal degree of risk; (g) which establishes any joint venture, consortium, partnership or profit (or loss) sharing agreement or arrangement to which any Target Company is a party; (h) any power of attorney given by any Target Company or any other authority which would enable any person not employed by any Target Company to enter into any contract or commitment on behalf of any Target Company; - 44 - 46 (i) which involves or is likely to involve (i) material expenditure by any Target Company or (ii) material obligations or restrictions of any Target Company of an unusual or exceptional nature or magnitude and not in the ordinary and usual course of business; (j) which establishes any material agency, distributorship, marketing, purchasing, manufacturing or licensing agreement or arrangement to which any Target Company is a party; (k) which is a currency and/or interest rate swap agreement, asset swap, future rate or forward rate agreement, interest cap, collar and/or floor agreement or other exchange or rate protection transaction or combination thereof or any option with respect to any such transaction or any other similar transaction to which any target Company is a party; (l) which is any other agreement or arrangement having or likely to have a material effect on the financial or trading position or prospects of any Target Company; (m) which is a bid, tender, proposal or offer which, if accepted, would result in any Target Company becoming a party to any agreement or arrangement of a kind described in paragraphs (a) to (l) above. DEFAULTS 8.2 (a) No Target Company is in default under any agreement to which it is a party and there are no circumstances likely to give rise to any such default. (b) No party with whom any Target Company has entered into any agreement or arrangement is in default under such agreement or arrangement and there are no circumstances likely to give rise to any such default. 9 LITIGATION AND INVESTIGATIONS LITIGATION 9.1 (a) Except as plaintiff in the collection of debts arising in the ordinary course of business, no Target Company is a plaintiff or defendant in or otherwise a party to any material litigation, arbitration or administrative proceedings which are in progress or threatened or pending by or against or concerning any Target Company or any of its assets. (b) No governmental or official investigation or inquiry concerning any Target Company is in progress or pending. (c) The Vendor and CMCC are not aware of any circumstances which are likely to give rise to any such proceeding, investigation or inquiry as is referred to in paragraph (a) or paragraph (b). 10 DIRECTORS AND EMPLOYEES EMPLOYEES 10.1 No Target Company has entered into any arrangements regarding any future variation in any contract of employment in respect of any of its directors and - 45 - 47 employees or any agreement imposing an obligation on the Target Company to increase the basis and/or rates of remuneration and/or the provision of other benefits in kind to or on behalf of any of its directors or employees at any future date. COMPLIANCE 10.2 Each Target Company has in relation to each of its employees (and so far as relevant to each of its former employees) complied in all material respects with all statutes, regulations, codes of conduct, collective agreements, terms and conditions of employment, orders and awards relevant to their conditions of service or to the relations between it and its employees (or former employees, as the case may be) or any recognised trade union. INCENTIVE SCHEMES 10.3 No Target Company has in existence any share incentive scheme, share option scheme or profit sharing scheme for all or any of its directors or employees. PAYMENTS ON TERMINATION 10.4 Except to the extent (if any) to which provision or allowance has been made in the Last Accounts of each Target Company: (a) no outstanding liability has been incurred by any Target Company for breach of any contract of employment or for services or for long service or redundancy payments, protective awards, compensation for dismissal or for any other liability accruing from the termination of any contract of employment or for services, and no such liability will be incurred by any Target Company as a result of the Reorganisation or the acquisition of the Target BVI Shares by the Purchaser or other performance of the terms of this Agreement and the Restructuring Agreements; (b) no gratuitous payment has been made or benefit given (or promised to be made or given) by any Target Company in connection with the actual or proposed termination or suspension of employment, or variation of any contract of employment, of any present or former director or employee of any Target Company. 11 INSOLVENCY ETC. 11.1 No order has been made, petition presented or meeting convened for the purpose of considering a resolution for the winding up of any Target Group Company or for the appointment of any provisional liquidator. No petition has been presented for an administration order to be made in relation to any Target Group Company, and no receiver (including any administrative receiver) has been appointed in respect of the whole or any part of any of the property, assets and/or undertaking of any Target Group Company. 11.2 No composition in satisfaction of the debts of any Target Group Company, or scheme of arrangement of its affairs, or compromise or arrangement between it and its creditors and/or members or any class of its creditors and/or members, has been proposed, sanctioned or approved. - 46 - 48 11.3 No distress, distraint, charging order, garnishee order, execution or other process has been levied or applied for in respect of the whole or any part of any of the property, assets and/or undertaking of any Target Group Company. 11.4 No events or circumstances analogous to any of those referred to in Warranties 11.1 to 11.3 have occurred in any jurisdiction outside the PRC. 11.5 No circumstances exist which are likely to give rise to the occurrence of any events or circumstances described in Warranties 11.1 to 11.4 if the Warranties were to be repeated at any time on or before Completion. - 47 - 49 PART B: TAX AND PROPERTY WARRANTIES 1 TAX 1.1 Each of the Target Companies has two tax registration certificates which are in full force and effect and no Target Company has established any place of business or carried on any business and has not made any filing with any tax authority in any part of the world other than the PRC. 1.2 Each of the Target Companies has complied in all material respects with all statutory provisions, rules, regulations, orders and directions concerning profits or enterprise income tax, foreign enterprise income tax, value-added tax, business tax and stamp duty (and any similar applicable tax or taxation in the PRC). 1.3 No tax authority has agreed to operate any special arrangement (being an arrangement which is not based on a uniform application of the relevant legislation whether expressly provided for in the relevant legislation or operated by way of extra statutory concession or otherwise) in relation to any of the Target Companies. 1.4 Each of the Target Companies has duly, within all appropriate time limits, made all returns, given all notices and supplied all information required to be supplied to all relevant tax authorities, All such information was when provided and remain complete and accurate and all such returns and notices were when provided and remain complete and accurate and were made on a proper basis. 1.5 No Target Company has received any notice or allegation from any tax authorities that it has not complied with any relevant legal requirement relating to registration or notification for taxation purposes and no Target Company is involved in any dispute or investigation with any tax authority and there are no facts or matters which it reasonably believes will cause any such dispute or investigation or any liability for taxation (present or future). 1.6 Each of the Target Companies: (a) has paid or accounted for all taxation (if any) due to be paid or accounted for by it before the date of this Agreement; (b) is not under any liability to pay any penalty or interest in connection with any taxation referred to in paragraph (a); (c) has made all deductions and withholdings in respect or on account of taxation which it is required or entitled by any relevant legislation to make from any payments made by it including, without limitation, interest annuities or other annual payments, royalties, rent, remuneration payable to employees or sub-contractors or payments to a non-resident and where appropriate each Target Company has accounted in full to the relevant fiscal authority for any taxation so deducted or withheld; and (d) has taken all necessary steps to obtain any repayment of or relief from taxation available to it. 1.7 All sums due and payable to any taxation authority in respect of emoluments paid and benefits provided to the employees of the Target Companies at the date of this - 48 - 50 Agreement have been paid and all such deductions and retentions as are required under the laws of the PRC have been made. 1.8 All remuneration, compensation payments, payments on retirement or removal from an office or employment and other sums paid or payable to employees or officers or former employees or officers of each Target Company and all interest, annuities, royalties, rent and other annual payments paid or payable by each Target Company (whether before or after the date hereof) pursuant to any obligation in existence at the date hereof are and will (on the basis of the taxation legislation in force at the date hereof) be deductible for incomes tax purposes either in computing the profits of each Target Company or as a charge on the income of such Target Company. 1.9 Each of the Target Companies has made or caused to be made the returns which ought to be made by or in respect of each Target Company for any taxation purposes and no returns are the subject of any dispute with any tax authority. 2 PROPERTY 2.1 The Target Companies have valid title to, or valid leasehold interests in, all of the Properties and Leased Properties, respectively, and valid title to all material personal property owned by them, in each case free and clear of all Encumbrances, defects or any other restrictions except such as are described in the Property Legal Opinions or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Target Companies. 2.2 Each Leased Property held under lease by the Target Companies are held by them under valid and enforceable leases in full force and effect with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Target Companies and no material default (or event which with notice or lapse of time, or both, would constitute such a default) by the Target Companies has occurred and is continuing under any of such leases. 2.3 The Target Companies do not own, operate, manage or have any other right or interest, directly or indirectly, in any other material real property of any kind save for those described in the Property Legal Opinions. - 49 - 51 APPENDIX 1 CONNECTED TRANSACTIONS 1 Maintenance and Testing Agreement for Mobile Telecommunications Equipment between Beijing Mobile and Beijing Huarui Wireless Communications Equipment Installation Company ("BEIJING HUARUI"). 2 Agreement for the Design and Construction of Communications Equipment between Beijing Mobile and Beijing Huarui. 3 Property Leasing and Management Agreement between Beijing Mobile and Beijing Communications Services Company. 4 Agreement regarding the Lease of Buildings from Beijing Mobile to Beijing Communications Services Company. 5 Property Leasing Agreement between Tianjin Mobile and Tianjin Communications Services Company. 6 Maintenance Agreement for Base Station Optic Fibre and Mobile Communications Antenna between Shanghai Mobile and Shanghai Long Distance Communications Engineering Company ("SHANGHAI LONG DISTANCE"). 7 Mobile Communications Construction Contractors Agreement between Shanghai Mobile and Shanghai Long Distance. 8 Property Leasing and Management Agreement between Shanghai Mobile and Shanghai Communications Services Company. 9 Mobile Communications Construction Agreement between Liaoning Mobile and Liaoning Post and Telecommunications Construction Bureau (. . . . . . . .). 10 Maintenance Agreement for Communications Equipment between Liaoning Mobile and Liaoning Post and Telecommunications Construction Bureau (. . . . . . . .). 11 Property Leasing and Management Agreement between Liaoning Mobile and Liaoning Communications Services Company. 12 Sales and Maintenance Services Agreement between Hebei Mobile and Hebei Postal and Telecommunication Equipment. 13 Property Leasing and Management Agreement between Hebei Mobile and Hebei Communications Services Company. 14 Mobile Communications Construction Contractors Agreement between Shandong Mobile and Shandong Mobile Telecommunications Construction Bureau. 15 Property Leasing and Management Agreement between Shandong Mobile and Shandong Communications Services Company. 16 Property Leasing Agreement between Guangxi Mobile and Guangxi Communications Services Company. 17 Roaming and Inter-provincial Interconnection Agreement between CMCC and the Purchaser. - 50 - 52 18 Trademark Licensing Agreement between CMCC and the Purchaser. 19 Long Distance Transmission Lines Lease Agreement between CMCC and the Purchaser. 20 Agreement for the Use of Spectrum and Number Resources between CMCC and the Purchaser. 21 Supplemental Agreement (in relation to Agreements No.17-20 above) between CMCC and the Purchaser. 22 Settlement Agreement for Pre-Paid Value Cards between CMCC and the Purchaser. - 51 - 53 APPENDIX 2 THE RESTRUCTURING AGREEMENTS 1 Capital Contribution Agreement between CMCC, Beijing Communications Services and Beijing Mobile. 2 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Beijing Mobile and Beijing Communications Services. 3 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Beijing Mobile and Beijing Communications Services. 4 Share transfer agreement between Beijing Communications Services and CMCC. 5 Capital Contribution Agreement between CMCC, Tianjin Communications Services and Tianjin Mobile. 6 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Tianjin Mobile and Tianjin Communications Services. 7 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Tianjin Mobile and Tianjin Communications Services. 8 Share transfer agreement between Tianjin Communications Services and CMCC. 9 Capital Contribution Agreement between CMCC, Shanghai Communications Services and Shanghai Mobile. 10 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Shanghai Mobile and Shanghai Communications Services. 11 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Shanghai Mobile and Shanghai Communications Services. 12 Share transfer agreement between Shanghai Communications Services and CMCC. 13 Capital Contribution Agreement between CMCC, Liaoning Communications Services and Liaoning Mobile. 14 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Liaoning Mobile and Liaoning Communications Services. 15 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Liaoning Mobile and Liaoning Communications Services. 16 Share transfer agreement between Liaoning Communications Services and CMCC. - 52 - 54 17 Capital Contribution Agreement between CMCC, Hebei Communications Services and Hebei Mobile. 18 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Hebei Mobile and Hebei Communications Services. 19 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Hebei Mobile and Hebei Communications Services. 20 Share transfer agreement between Hebei Communications Services and CMCC. 21 Capital Contribution Agreement between CMCC, Shandong Communications Services and Shandong Mobile. 22 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Shandong Mobile and Shandong Communications Services. 23 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Shandong Mobile and Shandong Communications Services. 24 Share transfer agreement between Shandong Communications Services and CMCC. 25 Capital Contribution Agreement between CMCC, Guangxi Communications Services and Guangxi Mobile. 26 Agreement regarding the Transfer of Employees, Assets and Liabilities Unrelated to the Telecommunications Business between CMCC, Guangxi Mobile and Guangxi Communications Services. 27 Agreement regarding the Confirmation of the Rights and Obligations Corresponding to the Transfer of Employees, Assets and Liabilities between Guangxi Mobile and Guangxi Communications Services. 28 Share transfer agreement between Guangxi Communications Services and CMCC. 29 Share transfer agreement between CMCC, China Mobile (Hong Kong) Group Company Limited, the Vendor, Beijing Mobile BVI, Tianjin Mobile BVI, Shanghai Mobile BVI, Liaoning Mobile BVI, Hebei Mobile BVI, Shandong Mobile BVI and Guangxi Mobile BVI. - 53 - 55 APPENDIX 3 FORM OF TAX INDEMNITY Dated 2000 CHINA MOBILE HONG KONG (BVI) LIMITED CHINA MOBILE COMMUNICATIONS CORPORATION CHINA MOBILE (HONG KONG) LIMITED TAX INDEMNITY - 54 - 56 THIS DEED OF TAX INDEMNITY is made on 2000 BETWEEN: (1) CHINA MOBILE HONG KONG (BVI) LIMITED a company incorporated under the laws of the British Virgin Islands whose registered office is at PO Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands (the "VENDOR"); (2) CHINA MOBILE COMMUNICATIONS CORPORATION a company incorporated under the laws of the PRC whose registered office is at 53A Xibianmennei Dajie, Xuanwuqu, Beijing PRC ("CMCC"); and (3) CHINA MOBILE (HONG KONG) LIMITED a company incorporated under the laws of Hong Kong whose registered office is at 60th Floor, The Center, 99 Queen's Road Central, Hong Kong (the "PURCHASER"). WHEREAS: (A) By a Conditional Sale and Purchase Agreement dated 4 October 2000 (the "AGREEMENT") made between the Vendor, CMCC and the Purchaser, the Vendor has agreed to sell and the Purchaser has agreed to purchase the Target BVI Shares (as defined in the Agreement) on the terms and conditions therein contained. (B) It is a condition of the Agreement that the Vendor and CMCC deliver to the Purchaser this Deed of Tax Indemnity on Completion (as defined in the Agreement). NOW THIS DEED WITNESSES as follows: 1 INTERPRETATION 1.1 In this Deed, unless the context requires otherwise: (a) words and expressions and other rules of interpretation defined, used or set out in the Agreement have the same meanings and application in this Deed; (b) "TAXATION" means and includes all forms of tax, levy, duty, charge, impost, fee, deduction or withholding of any nature now or hereafter imposed, levied, collected, withheld or assessed by any taxing or other authority in any part of the world and includes any interest, additional tax, penalty or other charge payable or claimed in respect thereof, (c) "CLAIM" means any assessment, notice, demand, letter or other document issued or action taken by or on behalf of any person, authority or body whatsoever and of whatever country from which it appears that any of the Target Group Companies is liable or is sought to be made liable to make any payment or is deprived or is sought to be deprived of any relief or allowance or credit or right to repayment of taxation; (d) "EVENT" includes (without limitation) the death of any person, any action, omission or transaction whether or not any of the Target Group Companies is a party thereto and includes completion of the sale of the Target BVI Shares to the Purchaser and references to the result of events on or before the date hereof shall include the combined result of two or more events one or more of which shall have taken place before the date hereof; - 55 - 57 (e) references to income or profits or gains earned, accrued or received shall include income or profits or gains deemed to have been or treated as or regarded as earned, accrued or received for the purposes of any legislation; (f) references to a Claim shall include any Claim whether made before or after the date hereof and whether satisfied or unsatisfied at the date hereof and shall also include: (i) the loss of any relief, allowance or credit granted by or pursuant to any legislation or otherwise for taxation purposes which could but for the Claim in question have been available to the Purchaser or any of the Target Group Companies whether or not the said loss results in any taxation being payable at the time of such loss; and (ii) the nullifying or cancellation of a right to repayment of taxation which would have been so available or is at the date hereof assumed by the Vendor, CMCC or the Purchaser to be available; and in such a case the amount of taxation which could otherwise have been relieved, allowed or credited by the relief, allowance or credit so lost or the amount of repayment which would otherwise have been obtained shall be treated as an amount of taxation for which a liability has arisen; (g) references to the Agreement shall be construed as references to the Agreement as amended or supplemented from time to time. 1.2 The expressions the VENDOR, CMCC, the TARGET GROUP COMPANY and the PURCHASER shall, where the context permits, include their respective successors and assigns. 2 INDEMNITY Subject as hereinafter provided, each of the Vendor and CMCC hereby jointly and severally undertakes to indemnify and keep indemnified the Purchaser (for itself and as trustee for the Target Group Companies) against any loss or liability suffered by the Purchaser or any Target Group Company including, but not limited to, any diminution in the value of the assets of or shares in any Target Group Company, any payment made or required to be made by the Purchaser or any Target Group Company and any costs and expenses incurred as a result of or in connection with any Claim falling on any Target Group Company resulting from or by reference to any income, profits or gains earned, accrued or received on or before the date hereof or any event on or before the date hereof whether alone or in conjunction with other circumstances and whether or not such taxation is chargeable against or attributable to any other person, firm or company. 3 EXCEPTIONS The indemnities given by this Deed do not cover any Claim to the extent that provision or reserve in respect thereof has been made in the Last Accounts or to the extent that payment or discharge of such Claim has been taken into account therein. 4 COSTS AND EXPENSES The indemnities given by this Deed shall cover all costs and expenses (on a full indemnity basis) incurred by the Purchaser or any of the Target Group Companies in connection with - 56 - 58 any Claim, and any penalties, fines or interest payable by the Purchaser or any of the Target Group Companies relating to any Claim for which the Vendor or CMCC is liable under this Deed. 5 REIMBURSEMENT In the event that any Claim which is the subject of an indemnity hereunder is or has been discharged (whether by payment or by the loss of any relief, allowance, credit or right to repayment of taxation) or suffered by any of the Target Group Companies, the indemnity given hereunder shall take effect as a covenant by the Vendor and CMCC forthwith to reimburse the relevant Target Group Company (through the Purchaser) for any amount so paid or to compensate the relevant Target Group Company for any loss of relief, allowance, credit or right to repayment so suffered. 6 CONDUCT OF CLAIMS If the Purchaser becomes aware of a Claim relevant for the purposes of this Deed, it shall as soon as reasonably practicable give notice thereof to the Vendor and CMCC and shall (subject to the Purchaser and the Target Group Companies being indemnified to the Purchaser's satisfaction against any liability, costs, damages or expenses which may be incurred thereby) take such action and procure that the Target Group Companies shall take such action as the Vendor and CMCC may reasonably request to avoid, resist, dispute, defend, compromise or appeal against the Claim, provided that neither the Purchaser nor any of the Target Group Companies shall be required to take any steps which would require any admission of guilt or liability relating to matters connected with the Claim in question or which would affect the future conduct of the business of the Purchaser or any of the Target Group Companies or affect the rights or reputations of any of them nor shall they be required to take any such action unless the Vendor and CMCC shall have produced to them a leading barrister's opinion that such action is reasonable. 7 SET-OFF AND DEDUCTIONS All payments to be made by the Vendor and CMCC under this Deed shall be made in full without set-off or counterclaim or any restriction or condition and free and clear of any present or future taxes, duties, charges or other deductions or withholdings of any nature. If any deduction or withholding is required to be made from any such payment the Vendor and CMCC shall, together with such payment, pay such additional amount as is necessary to ensure that the recipient receives the full amount due hereunder. 8 WAIVER AND SEVERABILITY No failure or delay by the Purchaser or any of the Target Group Companies in exercising any right, power or remedy under this Deed shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy. If at any time any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect, the legality, validity and enforceability of the remaining provisions of this Deed shall not be affected or impaired thereby. 9 ASSIGNMENT The Purchaser and any Target Group Company may assign its respective rights and benefits under this Deed. - 57 - 59 10 NOTICES Each notice, demand or other communication given or made hereunder shall be in writing and delivered or sent to the relevant party at its address or telex number or fax number set out in the Agreement. The provisions of clause 21 of the Agreement shall apply to this Deed as though they have been fully set out herein, 11 GOVERNING LAW AND JURISDICTION 11.1 This Deed shall be governed by and construed in accordance with the laws of Hong Kong. 11.2 Any dispute arising out of or in connection with this Deed shall be resolved by arbitration in Hong Kong International Arbitration Centre by a single arbitrator in accordance with the UNCITRAL Arbitration Rules in force from time to time. The parties agree that the arbitral award will be final and binding. IN WITNESS WHEREOF this Deed has been executed on the day and year first above written. THE COMMON SEAL OF ) CHINA MOBILE HONG KONG (BVI) LIMITED ) was affixed hereto in the presence of: ) --------------------------------- --------------------------------- [NAME OF DIRECTOR] [NAME OF DIRECTOR] Director Director SIGNED, SEALED AND DELIVERED ) BY ) a duly authorised representative on behalf of ) CHINA MOBILE COMMUNICATIONS CORPORATION ) - 58 - 60 THE COMMON SEAL OF ) CHINA MOBILE (HONG KONG) LIMITED ) was affixed hereto in the presence of: ) --------------------------------- --------------------------------- [NAME OF DIRECTOR] [NAME OF DIRECTOR] Director Director - 59 - 61 SIGNATURE PAGE SIGNED by ) for and on behalf of )/s/ Wang Xiaochu CHINA MOBILE HONG KONG (BVI) LIMITED ) in the presence of: /s/ David L. Kreider ) SIGNED by ) for and on behalf of )/s/ Xue Taohai CHINA MOBILE COMMUNICATIONS CORPORATION ) in the presence of: /s/ Wei Jie ) SIGNED by ) for and on behalf of )/s/ Wang Xiaochu CHINA MOBILE (HONG KONG) LIMITED ) in the presence of: /s/ David L. Kreider ) - 60 - 62 TABLE OF CONTENTS
CONTENTS PAGE 1 INTERPRETATION.................................................................................1 2 SALE OF THE TARGET BVI SHARES AND PRICE........................................................7 3 CONDITIONS PRECEDENT...........................................................................7 4 PRE-COMPLETION UNDERTAKINGS....................................................................8 5 COMPLETION....................................................................................10 6 POST-COMPLETION UNDERTAKINGS..................................................................12 7 WARRANTIES....................................................................................13 8 LIMITATIONS ON CLAIMS.........................................................................14 9 PURCHASER'S RIGHTS TO RESCISSION..............................................................14 10 WITHHOLDING TAX AND GROSSING UP...............................................................15 11 ENTIRE AGREEMENT..............................................................................15 12 VARIATION.....................................................................................15 13 ASSIGNMENT....................................................................................15 14 ANNOUNCEMENTS.................................................................................15 15 COSTS.........................................................................................16 16 CONFIDENTIALITY...............................................................................16 17 SEVERABILITY..................................................................................16 18 COUNTERPARTS..................................................................................16 19 WAIVER........................................................................................17 20 FURTHER ASSURANCE.............................................................................17 21 NOTICES.......................................................................................17 22 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS............................................18 SCHEDULE 1 PART A Details of the Target BVI Companies..................................................20
- i - 63 PART B Details of the Target Companies..................................................................27 SCHEDULE 2 THE WARRANTIES Part A: General...............................................................34 Part B: Tax and Property Warranties......................................................................48 APPENDIX 1 Connected Transactions.......................................................................50 APPENDIX 2 The Restructuring Agreements.................................................................52 APPENDIX 3 Form of Tax Indemnity........................................................................54 SIGNATURE PAGE...........................................................................................60
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