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EXHIBIT 10.16
AGREEMENT ON MOBILE COMMUNICATIONS
EQUIPMENT MAINTENANCE
This Agreement is executed by and between the following two parties on
September 20, 2000 in Shanghai:
PARTY A: SHANGHAI MOBILE COMMUNICATION COMPANY LIMITED
Legal representative: Chen Suxian
Legal Address: 668 Beijing Dong Lu, Shanghai
PARTY B: SHANGHAI LONG-DISTANCE TELECOMMUNICATIONS ENGINEERING COMPANY
Legal representative: Zhang Zhilian
Legal Address: 420 Guang Zhong Lu, Shanghai
WHEREAS:
1. Party A needs Party B to provide maintenance services for Party A's
communications equipment .
2. Party B agrees to provide Party A with maintenance services for Party
A's communications equipment.
THEREFORE, Party A and Party B have reached the following agreement in
the principle of equality through friendly consultations.
ARTICLE ONE MAINTENANCE SERVICES; SUBJECT MATTER
1.1. "Maintenance Services" refer to maintenance services to be provided by
Party B for mobile communications equipment in respect of which Party
A enjoys the property rights.
1.2. The subject matter of the Maintenance Services is the mobile
communications equipment in respect of which Party A enjoys the
property rights.
ARTICLE TWO TYPE, QUANTITY, AND VALUE OF SUBJECT MATTER
2.1. The types and quantities of Party A's mobile communications equipment
covered by the Maintenance Services shall be determined as confirmed
by the Parties.
2.2. The value of Party A's communications equipment covered by the
Maintenance Services shall be the original purchase price of such
equipment.
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ARTICLE THREE MAINTENANCE FEE
3.1. Party B shall charge Party A the Maintenance Fee as agreed upon by the
Parties in this Agreement.
3.2. The standards of the Maintenance Fee
In respect of antennas, masts, optical cables of base stations, switch
boxes and air conditioners: original purchase price of the
communications equipment under maintenance * 2% per year(in RMB).
3.3. The Maintenance Fee shall be charged in accordance with the applicable
national or municipal regulations for services relating to the
telecommunications industry. In the event of any future adjustment to
such regulations, the Parties shall observe the standards as adjusted.
Prices of materials shall be agreed upon by the Parties on the basis
of the market price. Party A and Party B hereby confirm that the
standards of the Maintenance Fee determined under Article 3.2 are in
compliance with the applicable national and municipal regulations.
3.4. Party A shall prepay Party B, on or before January 15 each year, the
Maintenance Fee payable for the first half of the current year, and
prepay on or before July 15 Maintenance Fee payable for the second
half of the current year. The amounts of such prepaid Maintenance Fee
shall be determined as agreed upon in Articles 3.2 and 3.3. The
Parties shall verify the amounts of such pre-paid Maintenance Fee by
January 5 and July 5, respectively, of each year, and shall deliver a
statement of such pre-paid Maintenance Fee by January 10 and July 10,
respectively, to the other Party. In the event of any discrepancy in
the amounts of such pre-paid Maintenance Fee following such
verification by the Parties, the Parties shall continue the
verification until their results of such verification conform to each
other. If, as the result of the circumstance referred to in the
preceding sentence, the prepayment of the Maintenance Fee is delayed,
the time limit for such prepayment shall be postponed correspondingly.
3.5. Party B shall provide low-value consumables, tools and vehicles
required for the Maintenance Services and shall bear the relevant
transportation and personnel expenses; Party A shall provide Party B
with supplies and spare parts required by Party B and bear the
software upgrading costs, if any.
3.6. The Parties shall verify the settlement of the Maintenance Fee on a
semi-annual basis, i.e., the Parties shall verify the settlement of
the Maintenance Fee for the second half year by June 30 and for the
first half year by December 25, respectively. On the basis of such
verification, overcharged Maintenance Fee will be refunded and
deficiencies in payment will be made up, as the case may be.
3.7. The Maintenance Services to be provide by Party B shall start from
July 1, 2000.
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ARTICLE FOUR QUALITY CONTROL
4.1. Before Party B starts any Maintenance Services, the Parties shall
conduct joint testing and inspection of the communications equipment,
so as to determine its conditions and quality status. Such conditions
and quality status as determined by the Parties will be kept on file.
4.2. Party A shall provide Party B with the relevant materials, spare parts
and fittings of the relevant communications equipment.
4.3. Party B shall maintain, in accordance with the relevant maintenance
procedures, the communications equipment covered by the Maintenance
Services, and ensure that the Maintenance Services are provided in
compliance with the relevant standards and regulations. Party B shall
also maintain the normal operation of the communications equipment,
satisfy Party A's reasonable requirements, and provide Party A with
the relevant reports and data on a timely basis.
4.4. Quality Standards of the Maintenance Services:
Ratio of antenna normal working status per year > 96%; time limits for
arriving at worksites to resolve problems in urgent circumstances: no
more than 4 hours in urban areas, no more than 6 hours in suburban
areas (except islands);
Inter-base station optical cable outage per year: no more than 1 time;
time limits for arriving at worksites to resolve problems: no more
than 1 hour in urban areas, no more than 2 hours in suburban areas
(except islands); time limits for repairing measured by fiber core of
the optical cables;
Ratio of base station air-conditioning normal status per year > 98%;
time limits for arriving at worksites to resolve problems: no more
than 2 hours in urban areas, no more than 4 hours in suburban areas
(except islands).
For every 1 per cent lower than the standard for normal status, 5% of
the Maintenance Fee for the applicable period of time will be
deducted; for every instance repairs are not conducted in a timely
manner, 5% of the Maintenance Fee for the applicable period of time
will be deducted.
4.5. Party B shall hold harmless from and indemnify Party A against any
damages to Party A's communications equipment due to improper
maintenance and mismanagement on the part of Party B or a third party
affiliated with Party B, as the case may be.
4.6. Party A has the right to conduct, on a regular or irregular basis,
quality inspections on the Maintenance Services provided by Party B.
4.7. Party A shall render assistance to Party B in respect of the
Maintenance Services provided by Party B.
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ARTICLE FIVE ADJUSTMENT TO MAINTENANCE SERVICES
5.1. If Party B needs to entrust a third party to maintain Party A's
communications equipment covered by the Maintenance Services, Party B
shall notify Party A in writing in advance and obtain Party A's
consent thereto. Notwithstanding the forgoing, Party B shall continue
to be responsible to Party A for such services provided by such third
party. Party B shall bear any and all increase in costs incurred in
connection with the involvement of such third party.
5.2. Upon prior written notice to Party B, Party A may entrust a third
party to provide maintenance and modulation services.
5.3 If Party A needs to relocate its communications equipment under Party
B's maintenance, Party A shall notify Party B in writing in advance
and allow Party B a reasonable period of time to make preparations for
such relocation.
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-breading Party for all
economic losses sustained by the non-breaching Party as the result of
such breach.
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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
Article.
11.2 Any notice or document shall be deemed to have been received at the
time as follows:
if delivered in person, at the time of delivery;
if delivered by registered mail, five (5) business days after being
posted (excluding Saturdays, Sundays and public holidays); and
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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 Party A notifies
Party B in writing of its intention to terminate this Agreement three
months prior to the expiration date hereof, this Agreement shall
automatically be extended for one year upon the expiration of its term.
The times of such extension shall be unlimited.
12.2 Party B hereby acknowledges that Party A may be transformed into a
wholly foreign-owned enterprise during the term of the Agreement
without consent or acknowledgement by Party B either prior to or after
the event, and that Party A's entire rights and obligations under the
Agreement shall not be affected or changed on the ground that the
nature of the company has changed into a wholly foreign-owned
enterprise. Party B will acknowledge the legal status of such wholly
foreign-owned enterprise in performing this Agreement.
12.3 In the event that the following conditions are not met, 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 of HKSE
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.
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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 MOBILE PARTY B: SHANGHAI LONG-DISTANCE
COMMUNICATION COMPANY TELECOMMUNICATION ENGINEERING
LIMITED COMPANY
By: s/Chen Suxian By: s/Zhang Zhilian
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Legal or authorized representative Legal or authorized representative
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