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EXHIBIT 10.38
AGREEMENT ON CONTRACTING MOBILE COMMUNICATIONS PROJECTS
This Agreement is executed by Party A and Party B on September 1, 2000
in Jinan:
PARTY A: SHANDONG MOBILE COMMUNICATIONS ENGINEERING BUREAU
Legal representative: Zhao Xuheng
Legal Address: 187 Jing San Lu, Jinan
PARTY B: SHANDONG MOBILE COMMUNICATION COMPANY LIMITED
Legal representative: Li Huabin
Legal Address: 84 Da Wei Er Lu, Shi Zhong District, Jinan
WHEREAS:
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 base station power supply design, engineering and
renovation, installation, modulation, transmission line laying and
maintenance, power equipment maintenance, mast, antenna and feeder line
engineering, maintenance and overhaul for Party B's mobile
communications projects.
2. The Parties hereto agree that Party A shall, in accordance with the
terms and conditions of this Agreement, contract for Party B various
installation, engineering and maintenance services and the services
referred to above.
THEREFORE, Party A and Party B have reached, through friendly
consultations, the following agreement in the principle of mutual preference and
benefits:
ARTICLE ONE SCOPE OF SERVICES
1.1 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, the following services, and to exert its utmost efforts to
ensure that the services provided by it are of a high quality:
1.1.1 Base station power supply design, engineering and renovation,
equipment installation, modulation, trunk optic cable laying,
micro-wave transmission network construction and maintenance,
power supply equipment maintenance in respect of various
mobile communications projects as required by Party B;
1.1.2 Engineering, overhaul, renovation and maintenance of Party B's
masts, antennas and feeder lines;
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1.2 Services to be provided by B include (see details in the Appendix to
this Agreement):
1.2.1 Overhaul, renovation, design and engineering of all base
station masts in the province in 2000.
1.2.2 Base station power supply renovation and engineering in the
province in 2000.
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 base station power
supply design, engineering and renovation, installation, modulation,
transmission line laying and maintenance, antenna, feeder line and
power supply equipment maintenance, mast engineering and overhaul
design provided by Party A under Article 2 above.
3.2. The mast overhaul design and engineering fees and the base station
power renovation design and engineering fees shall be charged in
accordance with the existing national regulations applicable to design
and engineering fee charging. The transmission line and equipment
maintenance fees shall be charged at 1% of their original purchase
prices per year. The mast maintenance fees shall be charged at 2% of
its original purchase price per year.
3.3. The transmission line and equipment maintenance fees, the mast
maintenance fees, the base station maintenance fees, the installation
fees, the modulation service fees and the antenna, feeder line and
power supply equipment maintenance fees shall be charged on the basis
of the market price and shall be no higher than the standards
stipulated by the State. In the event of any adjustment to such
standards, the Parties shall follow the standards as adjusted. Prices
of materials shall be agreed upon by the Parties on the basis of the
market price.
3.4. Method of payment:
In respect of a project contracted to a general contractor, Party B
shall disburse to Party A an amount equal to 20% of the total costs of
the project within 15 days after the execution of the contract as
advancements for material purchase and engineering costs. Party B shall
make quarterly disbursements to Party A on the basis of the project
status report and the quarterly project costs settlement statement
prepared by
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Party A until 90% of the total costs under the contract (including the
advancements) has been disbursed. The remaining 10% shall be reserved
and will be disbursed within 10 days after Party B has finished
auditing the final accounting statement prepared by Party A.
3.5. Method of settlement:
3.5.1 Party A shall prepare the final accounting statement within 10
days after the project is inspected and accepted upon its
completion, and Party B shall finish auditing such final
accounting statement within 15 days after receipt of the same.
The final amounts due shall be based on the results of such
audit, and in no event shall such amounts be more than the
total costs as agreed upon by the Parties.
3.5.2 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 or decrease in project costs
are subject to Party B's prior written consent thereto.
3.5.3 The maintenance fees shall be charged on the basis of the
amount of actual maintenance services provided by Party A.
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
renovation, maintenance, installation, engineering and overhaul, base
station power supply and transmission lines of various mobile
communications projects as well as necessary assistance.
4.3 Party A shall complete, in accordance with relevant engineering
procedures, the project 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 satisfy Party B's
reasonable requirements and provide Party B with the progress status of
relevant projects on a timely basis.
4.4 In the event that the project 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
renovation or overhaul, Party B will deduct the service fees payable to
Party A and will reserve its rights to further claims for such failure.
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4.5 Party B has the right to conduct, on a regular or irregular basis,
inspections during the process of the project contracted to Party A.
ARTICLE FIVE INSPECTION AND ACCEPTANCE UPON COMPLETION; MAINTENANCE
5.1 Seven days prior to the completion of a 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.
5.2 A project accepted by Party B following inspection shall be transferred
from Party A in its entirety to Party B within 15 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 Party A.
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.
ARTICLE SIX ASSIGNMENT OF RIGHTS AND OBLIGATIONS
Neither Party may assign any or all of its rights and obligations
hereunder without the other Party's written consent thereto.
ARTICLE SEVEN CONFIDENTIALITY
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.
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ARTICLE EIGHT LIABILITIES FOR BREACH OF CONTRACT
8.1 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.
8.2 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.
8.3 If Party B fails to make disbursements of engineering fees as agreed
upon in this Agreement, or delays the settlement without due reasons,
it shall pay Party A 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 This Agreement shall be governed by and interpreted in accordance with
the law of the People's Republic of China. Each Party shall irrevocably
submit any dispute in respect of any claims or other matters arising
out of or in connection with this Agreement to the Jinan Arbitration
Commission for arbitration in accordance with its then effective
arbitration rules. The award of such arbitration shall be final and
enforceable against the Parties.
10.2 Except for matters under arbitration, the remaining part of the
Agreement shall be in effect during the time of arbitration.
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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
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 effective term of this Agreement shall commence on the date on
which it is affixed with the official seals of and executed by the
Parties and expire on December 31, 2001. Unless 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 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, Shandong 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
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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: SHANDONG MOBILE PARTY B: SHANDONG MOBILE
COMMUNICATIONS COMMUNICATION COMPANY
ENGINEERING BUREAU LIMITED
By: s/ Zhao Xuheng By: s/ Li Huabin
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Legal or authorized representative Legal or authorized representative
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