Agreement on Contracting Mobile Communications Projects - Shanghai Long-Distance Telecommunications Engineering Co. and Shanghai Mobile Communication Co. Ltd.
AGREEMENT ON CONTRACTING MOBILE COMMUNICATIONS PROJECTS
This Agreement is executed by Party A and Party B on September 20, 2000
PARTY A: SHANGHAI LONG-DISTANCE TELECOMMUNICATIONS ENGINEERING COMPANY
Legal representative: Zhang Zhilian
Legal Address: 420 Guang Zhong Lu, Shanghai
PARTY B: SHANGHAI MOBILE COMMUNICATION COMPANY LIMITED
Legal representative: Chen Suxian
Legal Address: 668 Beijing Dong Lu, Shanghai
1. In order to develop its mobile communications business and engage in
normal production and operating activities, Party B needs Party A to
provide services of construction, preliminary testing, installation,
modulation, engineering and repairing for Party B's mobile
2. The Parties hereto agree that Party A shall, in accordance with the
terms and conditions of this Agreement, contract services of
construction, preliminary testing, installation, modulation,
engineering and repairing for Party B's mobile communications
THEREFORE, Party A and Party B have reached, through friendly
consultations, the following agreement in the principle of mutual preference
ARTICLE ONE SCOPE OF SERVICES
1. Within the effective term of this Agreement, Party A agrees to
contract for Party B, in accordance with the terms and conditions of
this Agreement, various mobile communications projects and the
following services, and to exert its utmost efforts to ensure that the
services provided by it are of a high quality:
1.1 Construction, preliminary testing, installation, modulation
and engineering of various mobile communications projects as
required by Party B;
1.2 Maintenance and overhaul of Party B's mobile communications
equipment and facilities.
2. Party B agrees to receive the services provided by Party A in
accordance with the terms and conditions of this Agreement.
ARTICLE TWO ITEM AND QUANTITY OF SERVICES
2.1 The specific items and quantities of the services to be provided
hereunder shall be determined separately by the Parties hereto, and
such services shall be provided in accordance with the terms set forth
herein (including standards for service fees). (The specifics and
quantities of each item of service will be agreed upon by the Parties
hereto and set out in an appendix to this Agreement.)
ARTICLE THREE SERVICE FEES
3.1 Party B shall pay service fees to Party A for the services of
construction, preliminary testing, installation, modulation,
engineering and repairing for Party B's mobile communications projects
provided by Party A under Article 2 above.
3.2 Standards of service fees: Within five days from the date on which the
Parties reach an agreement on each specific service item and execute
an appendix/appendices related to such agreement, Party B shall
disburse to Party A 30% of the total costs of the project as
advancements for materials purchase and engineering costs. During the
process of the project, Party B will review the project status report
prepared by Party A, and, on the basis of such review, disburse to
Party A 50% of the total costs of the project as project progress
advancements. The balance of the total costs of the project shall be
paid upon the inspection and acceptance of the project upon its
completion. The schedule of payments shall be confirmed by China
Mobile Communications Corporation.
3.3 The service fees shall be charged in accordance with the national or
municipal regulations concerning service fee charging standards
applicable to the telecommunications industry. In the event of any
future adjustment to such regulations, the Parties shall observe the
standards as adjusted. Party A and Party B hereby confirm that the
standards of service fees determined under Article 3.2 and Article 3.3
are in compliance with the applicable national and municipal
3.4 Party A shall submit, within five days of inspection and acceptance of
a project upon its completion, the completion settlement statement of
project to Party B for auditing. The final amounts due shall be based
on the results of such audit.
3.5 The increase or decrease of the project costs as the result of any
change(s) in design shall be settled on the basis of the actual costs
incurred after such change(s). Any and all changes in design and
increase in project costs are subject to Party B's prior written
ARTICLE FOUR QUALITY CONTROL
4.1 The Parties shall conduct joint research and discussions on the
project to be constructed prior to the provision of any project
services. Prior to the commencement of the project, Party A shall
organize its relevant personnel to study and familiarize
themselves with the drawings in connection with the project, and to
take part in the designing process, and formulate a plan satisfactory
to Party B. Party A shall also make all necessary preparations and
keep records of such preparations.
4.2 Party B shall provide Party A with relevant information on the
construction, modulation, installation, engineering and repairing of
its mobile communications projects as well as necessary assistance.
4.3 Party A shall complete, in accordance with relevant engineering
procedures, the construction, preliminary testing, modulation,
engineering and repairing of Party B's mobile communications projects
within the period agreed upon by the Parties, ensure that the quality
of the projects is in compliance with relevant standards and
regulations. Party A shall also maintain the normal operation of the
communications equipment, satisfy Party B's reasonable requirements
and provide Party B with the progress status of relevant projects on a
4.4 In the event that the construction, engineering and installation
services provided by Party A fail to meet the applicable regulations
and standards, or Party B's any communications equipment fails to
operate normally after Party A's modulation or overhaul, Party B will
deduct the service fees payable to Party A.
4.5 Party B has the right to conduct, on a regular or irregular basis,
inspections during the process of the construction, engineering,
installation, testing and repairing services provided by Party A.
ARTICLE FIVE INSPECTION AND ACCEPTANCE UPON COMPLETION; MAINTENANCE
5.1 Five days prior to the completion of a construction and installation
project, Party A shall notify Party B in writing the date of
inspection and acceptance. If Party B can not make the inspection as
scheduled, it shall notify Party A in advance and consult with Party A
for another date of inspection and acceptance. If the project passes
Party B's inspection and acceptance, Party B shall acknowledge the
date of completion of such project as notified by Party A.
5.2 A construction and installation project accepted by Party B following
inspection shall be transferred from Party A in its entirety to Party
B within 3 days from the date of such inspection and acceptance. If a
project already accepted by Party B incurs any losses as the result of
Party B's failure to take delivery of such project on schedule, Party
B shall bear any and all such losses.
5.3 If any part of a project is deemed to be unqualified and needs redoing
or repairing during the inspection of such project upon its
completion, the Parties shall, at the time of such inspection,
negotiate with each other and agree upon remedial measures and time
limit for such remedial measures. Party A shall implement such
remedial measures within the specified time limit. The delivery of
such project after redoing or repairing shall not take place until the
project has passed inspection and acceptance procedures upon
completion. Expenses and losses incurred therefrom shall be borne by
5.4 Party A shall provide a quality warranty in respect of the project for
one year from the date on which such project is inspected and accepted
upon completion. During such warranty period, Party A shall be
responsible for all repairs, at its sole expense, in connection with
any accident caused by substandard quality of the project and shall
indemnify Party B for all losses sustained by Party B as the result of
such accident; provided, however, that Party A shall not be held
liable for any losses caused by any inherent quality defect in Party
ARTICLE SIX ASSIGNMENT OF RIGHTS AND OBLIGATIONS
6.1 Neither Party may assign any or all of its rights and obligations
hereunder without the other Party's written consent thereto.
ARTICLE SEVEN CONFIDENTIALITY
7.1 The Parties shall keep strictly confidential the other Party's
business data and information. Neither Party may, without the other
Party's written consent, provide or disclose to any other
organizations or persons any data or information with regard to the
operations of such other Party, unless such disclosure is required by
the applicable laws.
ARTICLE EIGHT LIABILITIES FOR BREACH OF CONTRACT
8.1 Any failure of either Party to perform any of the terms hereunder
shall be deemed as breach of contract. The breaching Party shall
correct the breach within twenty days from the date of receipt from
the non-breaching Party a written notice specifying such breach. If
the breaching Party fails to correct such breach within such
twenty-day period, the non-breaching Party may select to terminate the
Agreement upon written notice to the other Party, in which case the
breaching Party shall compensate the non-breaching Party for all
economic losses sustained by the non-breaching Party as the result of
8.2 Party A shall repair or redo, free of charge, any project that fails
to meet any contractual requirements. In the event of any delay in
delivery as the result of such repair or redo, Party A shall pay an
overdue penalty for such delay.
8.3 If Party A fails to complete a project on the date specified in the
contract, it shall pay Party B a penalty of 0.05% of the total costs
of the project contracted to it per day.
ARTICLE NINE FORCE MAJEURE
9.1 Any event or circumstance beyond the reasonable control of a Party and
unavoidable by the affected Party by exercise of due care shall be
deemed as an "event of Force
Majeure" and shall include, but not limited to, earthquake, fire,
explosion, storm, flood, lightning or war.
9.2 Neither Party shall bear any liability for breach of contract if it
fails to perform all or any of its obligations hereunder as a result
of an event of Force Majeure. However, the Party or Parties affected
by an event of Force Majeure shall, within fifteen days of the
occurrence of such event, notify the other Party of the details of
such event of Force Majeure along with the relevant proof.
9.3 A Party/the Parties shall resume the performance of its/their
obligations hereunder after the effects of such event of Force Majeure
have been eliminated.
ARTICLE TEN GOVERNING LAW AND DISPUTE RESOLUTION
10.1 Any dispute arising from or in connection with the validity,
interpretation or performance of this Agreement shall be resolved by
the Parties through consultations. If no resolution can be reached
through consultations, either Party may submit such dispute to the
Shanghai Arbitration Commission for arbitration in accordance with its
then effective arbitration rules. Once Shanghai Mobile Communication
Company Limited is transformed into a wholly foreign-owned enterprise,
the dispute resolution institution shall be automatically changed to
China International Economic and Trade Arbitration Commission and any
dispute shall be resolved in accordance with its then effective
arbitration rules in Shanghai. The award of such arbitration shall be
final and binding upon the Parties.
10.2 Except for matters under arbitration, the remaining part of the
Agreement shall be in effect during the time of arbitration.
ARTICLE ELEVEN NOTICES
11.1 Any notice or other document to be given under this Agreement shall be
delivered in writing and may be delivered in person, sent by
registered mail or transmitted by facsimile to the Parties at their
legal addresses stated in this Agreement or any other addresses a
Party may have notified the other Party in accordance with this
11.2 Any notice or document shall be deemed to have been received at the
time as follows:
if delivered in person, at the time of delivery;
if delivered by registered mail, five (5) business days after being
posted (excluding Saturdays, Sundays and public holidays); and
if transmitted by facsimile, upon receipt, or if the time of
transmission is during non-business hours, it shall be deemed to have
been given at the beginning of the normal business hours of the
succeeding day (excluding Saturdays, Sundays and public holidays),
subject to proof by the sender or confirmation from the facsimile
machine used for such transmission that a satisfactory transmission
has been completed.
ARTICLE TWELVE EFFECTIVENESS AND TERM OF AGREEMENT
12.1 The Agreement, upon signing and affixing with their official seals by
the Parties, shall become effective on the execution date of this
Agreement and expire on December 31, 2000. Unless a Party notifies the
other Party in writing of its intention to terminate this Agreement
three months prior to the expiration date hereof, this Agreement shall
automatically be extended for one year upon the expiration of its term.
The times of such extension shall be unlimited.
12.2 Party A hereby acknowledges hereby that Party B may be transformed
into a wholly foreign-owned enterprise during the term of the
Agreement without consent or acknowledgement by Party A either prior
to or after the event, and that Party B's entire rights and
obligations under the Agreement shall not be affected or changed on
the ground that the nature of the company has changed into a wholly
foreign-owned enterprise. Party A will acknowledge the legal status of
such wholly foreign-owned enterprise in performing this Agreement.
12.3 In the event that the following conditions are not met, Shanghai
Mobile Communication Company Limited shall be entitled to terminate
this Agreement at any time. After the termination of this Agreement,
the Parties shall cease to enjoy any rights or assume any obligations
under this Agreement or in connection with its termination, except the
rights and obligations that have incurred under this Agreement prior
to such termination.
(1) China Mobile (Hong Kong) Limited ("CMHK") shall have been
granted relevant waivers by the Stock Exchange of Hong Kong
Limited ("HKSE") for CMHK's connected transactions in
accordance with the listing rules of HKSE; and
(2) The independent shareholders of CMHK who are deemed to be
independent in accordance with the listing rules shall have
approved relevant transactions.
ARTICLE THIRTEEN MISCELLANEOUS
13.1 During the performance of this Agreement, any provision that may
become invalid or unenforceable will not affect the validity of any
other provisions hereof.
13.2 Any matter not covered herein may be supplemented, explained, and
interpreted in a supplementary agreement or appendix to be entered
into by the Parties. All supplementary agreements and appendices
hereto shall constitute an integral part of, and have the same force
and effect as, this Agreement.
13.3 This Agreement is written in Chinese and signed in four counterparts.
Each Party will keep two copies, and all copies shall be signed by the
legal representative or authorized representative of each Party or
affixed with its official seal.
PARTY A: SHANGHAI LONG-DISTANCE PARTY B: SHANGHAI MOBILE COMMUNICATION
TELECOMMUNICATION ENGINEERING COMPANY LIMITED
By: s/Zhang Zhilian By: s/Chen Suxian
Legal or authorized representative Legal or authorized representative