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1.1 For the services and/or facilities provide by either Party to the other Party under thisAgreement, the Party reserves the right to collect reasonable service fees based on the principleof fairness for such services and/or facilities it provides. The other Party shall make the paymentfor the services/or facilities provided.1.2 The terms of services and/or facilities offered by one Party to the other under thisAgreement shall not be worse than any other third party offering the same or similar servicesand/or facilities.1.3 Should either Party hereunder demand for more services and/or facilities hereunder from theother Party, the other Party shall make its utmost effort to provide such services and/orfacilities requested under the conditions no less favorable than that under which this Party mayprovide the same or similar services and/or facilities to a third party.1.4 The agreed services and/or facilities hereunder shall fully comply with the purposes agreedupon under this Agreement and the standard set by the State.1.5 In the event of any breach of any provision by either Party under this Agreement that leadsto any damage suffered by the other Party, the Party in default shall be liable for all immediateand full damages for breaching this Agreement. However, this Party shall not be held responsiblefor such losses in the event of Force Majeure.1.6 Both Parties shall provide all reasonable and essential assistance to the other Party for thepurpose of fulfilling the obligations set out in this Agreement.1.7 It is agreed that both Parties will take further actions to ensure the realization of theprinciples and provisions in this Agreement. It is further agreed that both Parties will ensurethat, CNC China, being a subsidiary of the Listing Company, shall comply with the Listing Rules ofthe Hong Kong Stock Exchange for connected transactions.2. INTERCONNECTION AND SETTLEMENT VARIETIES2.1 The Parties agree to achieve interconnections between various telecommunications networks ofthe Parties.2.2 The Parties agree to settle domestic long distance voice services as is set forth in thisAgreement.3. INTERCONNECTION TECHNICAL REGULATIONS AND STANDARDS, SHARE OF INTERCONNECTION COSTS ANDENGINEERING CONSTRUCTION3.1 All foresaid connections shall be made in accordance with the interconnection technicalregulations promulgated by national telecommunications regulatory authorities.3.2 The Parties shall negotiate on the settlement of interconnection costs and engineeringconstruction with reference to relevant regulations promulgated by national telecommunicationsregulatory authorities.4. OBLIGATIONS OF THE PARTIES4.1 The Parties shall warrant that the communication quality between networks be not lower thanthe communication quality of the same services in their own networks.4.2 Under the premise of technical feasibility, when required, either Party shall providetelecommunications services which has been provided for its own customers to the other Party’scustomer unconditionally with service quality guaranteed.
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4.3 Netcom Group shall be obliged to provide the Listed Company’s auditors with the accountingrecords of Netcom Group and its connected persons for any connected transactions.5. NETWORKS MANAGEMENT AND MAINTENANCE5.1 Either Party shall give notice to the other Party six (6) months prior to its enlargement andreconstruction of its network, which may negatively affect the communication of other Party’scustomers.5.2 Except for Force Majeure, either Party shall give notice to the other Party thirty (30) daysprior to its adjustment of route system, relay circuit, signaling mode, station data and softwareversion, which may negatively affect the communication of other Party’s customers.5.3 When required, either Party shall, in a timely manner, cooperate with the other Party whenthe latter adjusts the route system, relay circuit, signaling mode, station data and softwareversion to ensure the communication quality between networks.5.4 The Parties agree to perform maintenance on their own networks to assure the normal operationof the whole networks according to the applicable regulations promulgated by nationaltelecommunications regulatory authorities from time to time.5.5 Should there be any communication breakdown and problems, the Parties shall take effectivemeasures to resume communication.6. SETTLEMENT PRINCIPLES AND METHODS BETWEEN NETWORKS6.1 Settlement relationships for domestic long distance voice services: Netcom Group and CNCChina make settlement with each other domestic long distance voice services.Settlement price for domestic long distance voice services: settlement based on voice termination -operator from whose network calls are originated makes settlement to the operator from whosenetwork calls are terminated. The price is RMB 0.06/minute whether the calls are terminated in thenetwork of Netcom Group or CNC China or in networks other than those of Netcom Group and CNC China.The above-mentioned rate shall be subject to adjustment at any time according to applicablestandards, fixed tariffs and policies published by relevant Chinese regulatory authorities.The Parties hereby agree that, the above provision in relation to the price of domestic longdistance calls terminated in networks other than those of the Parties is effective as of April 1,2007. Effective as of April 1, 2007, the Parties agree not to observe Article 6.1 of the DomesticInterconnection Settlement Agreement among Netcom Group, CNC China and China Netcom Group NewHorizon Communications Corporation, dated September 12, 2005, where it is provided that the priceis RMB 0.09/minute if domestic long distance calls are terminated in networks other than in thoseof Netcom Group and its operating companies.6.2 Data processing and checking principlesBilling and settlement center of CNC China shall be responsible for data processing. If thedifference between the bill of the center and billing data of both Parties (billing data difference= difference between the relevant two Parties/the averaged data of the relevant two Parties *100%)is equal to or lower than 3%, the bill of the center shall prevail. If the difference is higherthan 3%, a preliminary settlement shall be made based on the bill data of the center. The Partiesshall submit a written request for dispute arbitration to operational management department of CNCChina within 10 working days from the 20th of each month.
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Operational management department of CNC China shall give a written disposal suggestion within 3months upon receipt of the written dispute arbitration request. The settled amount that needsadjustment shall be adjusted in the statement of account of next month.6.3 Settlement ProceduresPlace of settlement: Beijing, ChinaSettlement period, commence date and termination date: once per quarter, settlement and billingperiod (based on the ending time of calls) is from 0:00 (inclusive) of the first calendar day ofthe first calendar month of the relevant quarter to 0:00 (exclusive) of the third calendar month ofthe relevant quarter..Method of payment: the paying Party of the month shall pay the net settlement amount to the paidParty of the month.7. REPRESENTATIONS AND WARRANTS7.1 Each Party represents and warrants to the other Party that:(1) It is a independent legal person duly incorporated and validly existed under the lawsof the PRC. It has the power and authority (including but not limited to any approval,consents or permission granted by the government departments) to sign and enforce thisAgreement;(2) No provision in this Agreement violates the constitutive documents or the laws andregulations of PRC;(3) It will use its best endeavors to take all necessary and procure appropriate oradvantageous measures to perform its obligations under this Agreement and to make thisAgreement effective in accordance with the laws and regulations of the PRC and the terms ofthis Agreement.8. FORCE MAJEURE8.1 In the event of Force Majeure that causes both Parties or either Party to fail completely orpartially in performing the obligations under this Agreement, that said Party is not liable forbreach of agreement. However, in the event of such an incident, the affected Party shall inform theother Party by written notice within fifteen (15) days after the said incident and provide relevantproof and evidence to the other Party. At the same time, the affected Party shall use its bestendeavors to minimize the damage caused by the Force Majeure event. The affected Party or bothParties shall resume its obligations under this Agreement within a reasonable time once the ForceMajeure event has ended.8.2 Force Majeure in this Agreement means all objective situations that are unforeseeable,unavoidable and that cannot be overcome.9. CONFIDENTIALITY9.1 Unless with written approval by the other Party, neither Party can announce nor supply orreveal to any third party any information regarding this Agreement or the business information ofthe other Party, with the exception of requests by the legal or governmental departments or anyother relevant securities regulatory authorities or for the purpose of the Listing Company seekinglisting or retaining listing.10. TRANSFER
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10.1 Without the written approval of the other Party, neither Party may transfer any single rightand obligation as agreed upon under this Agreement.11. NON-WAIVER11.1 Unless otherwise specified by law, the failure or delay of exercising the right, power orprivilege as endowed by this Agreement on the part of any Party cannot be deemed as the waiver ofsuch rights, power or privileges. Besides, the partial exercise of such rights, power or privilegesshould not hinder the exercise of such rights, power or privileges of this Party in the future.12. NOTICES12.1 All notices required to be delivered pursuant to this Agreement shall be in writing, anddelivered to the address as stated at the beginning part of this Agreement, or to addresses orfacsimile numbers designated by one Party to the other Parties in writing from time to time.12.2 Any notice shall be delivered either by hand, registered mail, or facsimile. Any notice shallbe deemed to have been delivered at the time of actual receipt if delivered by hand; on the date ofreturn receipt if delivered by registered mail; and at the time of transmission if delivered byfacsimile.13. GOVERNING LAWS13.1 This Agreement shall be governed, interpreted and implemented in accordance with laws of thePRC.14. DISPUTES RESOLUTION14.1 In case of disputes as to the power, interpretation or implementation of this Agreement, bothParties shall seek to settle the matters of dispute by friendly negotiation. If the matters ofdispute cannot be settled by negotiation within thirty (30) days from the day the matters ofdispute arise, either Party has the right to resort to litigation at the people’s court which hasjurisdiction over such Party.15. EFFECTIVENESS OF AGREEMENT AND OTHERS15.1 Except as otherwise provided in Article 6.1, this Agreement shall come into effect once signedby the legal representatives or authorized representatives of both Parties and affixed with theirofficial seals. This Agreement shall be effective from January 1, 2008 to December 31, 2010. If CNCChina wishes to renew this Agreement and notifies Netcom Group with 3 month’s notice, thisAgreement shall be renewed automatically for another 3 years on the same terms. There is no limiton the number of renewal.15.2 Subject to compliance with regulatory requirements in respect of the Listed Company’s orrelated transactions and upon the agreement of both Parties, both Parties can amend this Agreementor enter into supplementary agreement to this Agreement. The amendments or supplementary agreementsof this Agreement shall come into effect once signed by the legal representatives or authorizedrepresentatives of both Parties and affixed with their official seals.15.3 This Agreement is severable, that is, if any provision of this Agreement is held to be illegalor unenforceable at any time, the effectiveness and performance of other provisions of thisAgreement shall not be affected.15.4 This Agreement is made into two (2) duplicate originals. Each Party holds one (1) copy, andeach copy shall have the same legal binding effect.
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Signature page:     **CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL)**