Document:

Exhibit
4.17

 

 

(English Translation)

 

 

Conditional Sale and Purchase Agreement

with respect to the equity interest of Guoxin Paging Co.,
Ltd.

 

 

between

 

China Unicom Corporation Limited

 

 

and

 

China United Telecommunications Corporation Limited

 

 

November 20, 2003

 

 

This Agreement
(the “Agreement”) is entered into on November 20, 2003, in Beijing, People’s
Republic of China (“PRC”), between

 

(1).          Vendor:
China Unicom Corporation Limited (“CUCL”)

 

Address: 12F,
Tower One, Henderson Center, No. 18, Jianguomenneidajie, Beijing, PRC

 

Legal
Representative: Mr. Wang Jianzhou

 

(2).          Purchaser:
China United Telecommunications Co. Ltd (the “A Share Company”)

 

Address: 40F,
Jinmao Building, Century Boulevard, Shanghai, PRC

 

Legal
Representative: Mr. Wang Jianzhou

 

Whereas:

 

(1).          The
A Share Company is a company limited by shares duly incorporated and validly
existing under the laws of the PRC and has had its common stock listed on the
Shanghai Stock Exchange since October 9, 2002, with China United
Telecommunication Corporation (“Unicom Group”) holding 74.6017% of its total
shares.

 

(2).          CUCL
is a wholly owned subsidiary of China Unicom Limited (the “Unicom Red-Chip
Company”). Guoxin Paging Co., Ltd. (“Guoxin Paging”) is a limited liability
company duly incorporated and validly existing under the laws of the PRC
engaging in paging services, other value-added businesses and customer
services. CUCL owns 100% of the equity interest of Guoxin Paging (the “Target
Interest”).

 

(3).          Unicom
Group and the A Share Company entered into a memorandum, dated August 12, 2002,
regarding certain transactions after the public offering of the A Share Company
between Unicom Group or its subsidiaries (excluding the A Share Company and any
subsidiaries controlled by it) and the Unicom Red-Chip Company, which is
indirectly controlled by the A Share Company, or its subsidiaries;

 

NOW THEREFORE, for
the purpose of the repurchase of Guoxin Paging, on the basis of equality and
mutual benefit, both Parties hereby have reached the following agreements after
friendly consultations:

 

1.             Sale of the Target Interest

 

1.1           Sale of the Target
Interest

 

In accordance with
the terms and conditions set out in this Agreement, the Vendor agrees to sell,
and the Purchaser agrees to purchase, the entire equity interest held by the
Vendor in Guoxin Paging.

 

The Target
Interest shall be sold free from any mortgage, pledge, other security interest,
option, claim or any other rights of third parties (including but not limited
to limited rights of purchase).

 

1.2           Consideration

 

As consideration
for the sale of the Target Interest specified in Article 1.1, the Purchaser
shall pay the Vendor HK$2,590,917,656 in cash pursuant to Section 2 below.

 

2

 

2.             Closing

 

2.1           Closing

 

Pursuant to the
terms and conditions set forth in the Agreement, the closing with respect to
the sale and purchase of the Target Interest shall be completed as soon as
possible following satisfaction of the conditions under Section 5.

 

2.2           Closing Date

 

Subject to the
approval by the State Administration of Industry and Commerce, the Closing
Date, for the purpose of the sale of the Target Interest under the Agreement,
shall be the date when Guoxin Paging has completed the shareholders
modification registration and received a modified enterprise legal person
business license.

 

2.3           On or before the
Closing Date, the Purchaser shall perform its payment obligations under Article
1.2 by arranging for the sum specified in Article 1.2 to be paid to the
designated bank account in the manner as instructed by the Vendor in writing.

 

2.4           Provided the share
price of the Unicom Red-Chip Company undergoes material adverse fluctuations
and the sale of the Target Interest is not in the overall interest of the
Unicom Red-Chip Company, the Vendor has the right to terminate the Agreement.

 

3.             Representations and Warranties

 

3.1           Either party to the
Agreement has made to the other party the following representations and
warranties:

 

(a)           It has the full right,
power and authority to execute this Agreement and perform its obligations
hereunder.  This Agreement constitutes a
valid and binding obligation, enforceable pursuant to its terms.

 

(b)           Performance of terms
and/or provisions in the Agreement will not lead to:

 

(i)            Violation of the company’s constituent documents or other related documents, or any
applicable laws, regulations or rules; or

 

(ii)           Violation of any
material contracts, agreements, permits or other documents, or any
determinations, judgments and orders issued by courts, government departments
or supervisory authorities.

 

(c)           There are no orders or
resolutions to carry out any liquidation, winding-up or other similar
arrangements, or petitions to any court or meetings to be held at which a
judgment or resolution concerning liquidation, winding-up or other similar
arrangement is being considered.

 

(d)           No liquidator,
temporary liquidator, bankruptcy receiver, bankruptcy trustee or other similar
persons has been appointed and no resolution is before the board of directors or
shareholder’s meeting regarding the appointment of such persons by the company.

 

(e)           The party is not in a
situation where it is insolvent, unable to pay debts already due, or has
stopped paying debt already due.

 

3

 

3.2           The Vendor hereto makes
the following additional representations and warranties to the Purchaser:

 

(a)           The Vendor, a limited
liability company duly incorporated and validly existing under the laws of the
PRC and registered with the State Administration of Industry and Commerce, has
the full right, power and authority in its capacity as a company to develop its
business and possess, lease and operate its properties and assets;

 

(b)           The Vendor has not
entered into any agreements with any third party for the sale of the Target
Interest or which contemplates the sale of the Target Interest;

 

(c)           The sale of the Target
Interest by the Vendor to the Purchaser shall be free from any preemptive right
or any other third party rights;

 

(d)           The Vendor warrants
that the Purchaser shall be free of any liability in connection with any
claims, debts and obligations unknown on the Completion Date but incurred
before the effective date;

 

(e)           The Vendor does not
impose any mortgage, pledge or other security interest on the Target Interest,
and it is the sole owner of Guoxin Paging; and

 

(f)            The representations
and warranties hereof made by the Vendor have been true and correct in all
material respects when made and as of the Closing Date (as if these representations
and warranties were made on the Closing Date), unless clearly permitted by the
Agreement or where modifications have been anticipated.

 

3.3           The Purchaser hereto
makes the following additional representations and warranties to the Vendor:

 

(a)           The Purchaser, a
limited liability company duly incorporated and validly existing under the laws
of the PRC and registered with the State Administration of Industry and
Commerce, has the full right, power and authority in its capacity as a company
to develop its business and possess, lease and operate its properties and
assets; and

 

(b)           The representations and
warranties hereof made by the Purchaser have been true and correct in all
material respects when made and as of the Closing Date (as if these
representations and warranties were made on the Closing Date), unless clearly
permitted by the Agreement or where modifications have been anticipated.

 

4.             Resale of the Target Interest

 

4.1           Pursuant to the terms
and conditions set forth in the Agreement and the memorandum regarding
connected transactions, the Vendor has given its irrevocable consent for the
Purchaser to sell the Target Interest to Unicom Group and no other or further
consent by the Vendor shall be required for the Purchaser to sell the Target
Interest to Unicom Group.

 

5.             Effectiveness

 

This agreement shall become effective upon satisfaction of the
following conditions:

 

5.1           Approval at the
Shareholders Meeting of the A Share Company of the sale of the Target Interest
to Unicom Group pursuant to applicable laws, regulations and listing rules;

 

5.2           Approval at the
Shareholders Meeting of Unicom Red-Chip Company of implementation of this

 

4

 

Agreement pursuant to applicable laws, regulations and
listing rules;

 

5.3           Approval at the
Shareholders Meeting of the A Share Company of the implementation of the
Comprehensive Services Agreement entered into by Unicom Group, Guoxin Paging
and the A Share Company ( the “Comprehensive Services Agreement ”) pursuant to
applicable laws, regulations and listing rules;

 

5.4           Approval at the
Shareholders Meeting of Unicom Red-Chip Company of transfer of all of the
rights and obligations under the Comprehensive Services Agreement by Unicom
Red-Chip Company to CUCL, Unicom New Century Telecommunications Corporation
Limited (“Unicom New Century”) and Unicom New World Telecommunications
Corporation Limited (“Unicom New World”) pursuant to applicable laws,
regulations and listing rules;

 

5.5           Approval at the
Shareholders Meeting of Unicom Red-Chip Company of implementation of the
Premises Leasing Agreement entered into by CUCL, the Unicom New Century and the
the Unicom New World (the “Leasing Agreement”) pursuant to applicable laws,
regulations and listing rules; and

 

5.6           Approval at the Shareholders
Meeting of the A Share Company of transfer of all of the rights and obligations
under the Leasing Agreement by the A Share Company to Guoxin Paging pursuant to
applicable laws, regulations and listing rules.

 

6.             Taxation

 

6.1           Either party to the
Agreement shall pay the taxes arising from the sale and purchase of the Target
Interest under the Agreement as required by the applicable laws and
regulations.

 

6.2           The various taxes and
fees incurred in connection with Article 6.1 shall be the responsibility of the
appropriate party pursuant to applicable laws and regulations.

 

7.             Force Majeure

 

7.1           In any force majeure
event that is unforeseeable and the consequences of which are unavoidable or
insurmountable and which results in either Party’s failure to duly perform the
obligations hereunder, such Party shall promptly notify the other Party of such
situation and provide within 15 days any valid documents evidencing the details
and explaining the reasons for not being able to perform all or part of its
obligations hereunder or the reasons for any necessary delays of such
performance. Based on the impact of the force majeure event, the Parties shall
decide through negotiations whether to terminate, partially waive or postpone
such performance.

 

8.             Confidentiality

 

8.1           Except to the extent
that disclosure is required by law or by the rules of the relevant supervisory
authorities, or for the purpose of submission to the Shanghai Stock Exchange by
the A Share Company, each Party, without the other party’s written consent,
shall not provide or disclose to any company, enterprise, organisation or
person any data and information relating to the other Party’s operations or
businesses.

 

9.             No Waiver

 

9.1           Unless otherwise
required by law, any failure or delay in exercising any of its rights, powers
or privileges by one Party shall not be construed as a waiver of such rights,
powers or privileges. Any one time or partial exercise of such rights, powers
or privileges shall not affect any further or

 

5

 

complete exercise of such rights, powers or
privileges.

 

10.          Severability

 

10.1         If any of the provision
of the Agreement is deemed as invalid or unenforceable, such provision is
invalid and shall be deemed as not incorporated into this Agreement, while the
other provisions shall remain valid.  In
this situation, both parties shall make reasonable efforts to substitute the
provisions deemed invalid or unenforceable with valid or enforceable
provisions.  The validity of such new
provisions shall be as similar as possible to that of the provisions
substituted.

 

11.          Notices

 

11.1         Any notification given in
connection with this Agreement shall be in writing and shall be delivered by
one Party to the other Party by hand, fax or mail. Such a notification by hand
shall be deemed to have been duly given on the date of delivery. Such a
notification via fax shall be deemed to have been duly given upon the
completion of the fax transmission. Such a notification by mail shall be deemed
to have been duly given on the third working day (extended when there is a
public holiday) after the postal date. Notifications become effective upon
their arrivals.

 

11.2         Addresses of the Parties
hereto for receiving notifications are as follows:

 

China Unicom
Communication Limited

 

Attention: Yan
Xiaowei

 

Address: 1021,
10th Floor, No. 133 Xidanbeidajie Jia, Xicheng District, Beijing, China

 

Post Code: 100032

 

China United
Telecommunications Corporation Limited

 

Attention: Zhao
Yilei

 

Address: 40F,
Jinmao Building, Century Boulevard, Shanghai, China

 

Post Code: 200121

 

12.          Applicable Law and Dispute Settlement

 

12.1         This Agreement is under
the jurisdiction of the laws of the People’s Republic of China and shall be
interpreted and executed in accordance with the laws of the People’s Republic
of China.

 

12.2         Both Parties shall
endeavour to resolve any dispute over the effectiveness, interpretation or
execution of this Agreement through friendly consultations. Should any dispute
remain unsettled for more than 30 days after its occurrence, either Party is
entitled to bring a lawsuit based on this Agreement before a competent PRC
court.

 

13.          Miscellaneous

 

13.1         Revisions to this
Agreement (or any documents referred to in the Agreement) shall be made in
writing. No revisions or additions shall become effective until it is duly
signed in writing and sealed by the legal representatives of both parties or
their duly authorized representatives. 
The term “revision” shall include revisions, additions, deletions or
modifications in any manner.

 

6

 

13.2         This Agreement has six
original copies with each party holding three and each copy having equal legal
binding force.

 

7

 

	
  China United
  Telecommunications Corporation Limited (Corporate Seal)

  
	
   

  
	
   

  
	
  Legal Representative or
  Duly Authorized Representative:

  	
  /s/ Wang Jianzhou

  	
   

  
	
   

  
	
   

  
	
  Unicom New World
  Telecommunications Corporation Limited (Corporate Seal)

  
	
   

  
	
   

  
	
  Legal Representative or
  Duly Authorized Representative:

  	
  /s/ Sun Qian

  	
   

  

 

8Exhibit 4.18

 

(English Translation)

 

 

Comprehensive Services Agreement

 

between

 

China United Telecommunications Corporation

 

and

 

China United Telecommunications Corporation
Limited

 

 

November 20, 2003

 

 

Comprehensive Services Agreement

 

This Agreement (the “Agreement”) is entered into on November 20, 2003,
in Beijing, People’s Republic of China (the “PRC”), between

 

(1)           Party
A: China United Telecommunications Corporation

Address: Huang Cheng Hotel, 15 Yangfangdianlu, Haidian District,

Beijing

Legal Representative: Wang Jianzhou

 

(2)           Party
B: China United Telecommunications Corporation Limited

Address: 40th Floor, Jinmao Tower, 88 Century Boulevard,
Shanghai

Legal Representative: Wang Jianzhou

 

Whereas:

 

(1)           Party A, a limited liability company duly
incorporated and validly existing in the PRC, is a provider of integrated
telecommunications services;

 

(2)           Party B, a joint-stock limited company duly
incorporated and validly existing under the laws of the PRC, has had its common
stock listed on the Shanghai Stock Exchange since October 9, 2002, 74.6017% of
which is held by Party A;

 

(3)           Party A and Party B entered into a
memorandum, dated August 12, 2002 (the “Memorandum on Connected Transactions”),
regarding certain transactions between Party A or its subsidiaries (excluding
Party B and any subsidiaries controlled by Party B) and China Unicom Limited
(the “Unicom Red-Chip Company”), which is indirectly controlled by Party B, or
its subsidiaries;

 

(4)           Unicom New World Telecommunications
Corporation Limited (“Unicom New World”), a limited liability company wholly
owned by Party A and a provider of integrated telecommunications services
established on November 4, 2003, has been injected by Party A with its GSM
mobile telecommunications assets (“GSM Assets”) in the following nine provinces
(or autonomous regions): Shanxi, Inner Mongolia, Hunan, Hainan, Yunnan, Tibet
(no GSM assets), Gansu, Qinghai and Ningxia (the “9B Areas”).  Following the approval of the Ministry of
Information Industry of the PRC in Xinbu Dianhan [2003] No. 443, Unicom New
World has been authorized by Party A to provide mobile telecommunications
services within the 9B Areas; and

 

(5)           Party A is contemplating on injecting, via a
wholly owned overseas subsidiary, all the rights and interests of the shares of
Unicom New World it now holds (the “Target Interests”) into Unicom Red-Chip
Company, which is established in Hong Kong (the “Offshore Capital Injection
Project”).  Following the completion of
the Offshore Capital Injection Project, Unicom New World will become one of
Unicom Red-Chip Company’s subsidiaries that provide telecommunication services
domestically.

 

NOW THEREFORE, for the purpose of the Offshore Capital Injection
Project, in accordance with the Memorandum on Connected Transactions and the
applicable transaction principles set forth in the related listing rules, and
on the basis of equality and mutual benefit, both Parties hereby have reached
the following agreements after friendly consultations:

 

1.             General Principles:

 

1.1           The “Comprehensive Service” hereunder refers
to certain services and facilities provided by the Parties to each other or by
one party to the other under this Agreement and any payment by the

 

 

Served Party to the Serving Party (the
“Service Fees”).

 

1.2           Such services and/or facilities provided by
one Party to the other Party pursuant to this Agreement are non-gratuitous
commercial transactions. In accordance with the fair-market principles, the
Serving Party shall collect reasonable Service Fees for any services and
facilities provided by it, and the Served Party shall make any due payment.

 

1.3           The condition or quality of any of the
Comprehensive Service provided hereunder by either Party to the other Party
shall not be lower than that of the same or similar services or facilities the
Serving Party provides to any third party.

 

1.4           In the event that either Party requires the
other Party to increase the supply of any of the Comprehensive Service, the
other Party shall do its utmost to provide such requested amount of the
services or facilities, of which the condition or quality shall not be lower
than that of the same or similar services or facilities the Serving Party
provides to any third party.

 

1.5           In the event that any Party is not able to
provide, in full amount or at all, any of the Comprehensive Service due to any
reasons other than its own fault, such Party shall promptly notify the other
Party and do its utmost to assist the other Party in seeking the same or
similar services or facilities through other channels.

 

1.6           The Comprehensive Service provided hereunder
shall be in accordance with the specific purposes agreed by both Parties as
well as with the applicable national standards.

 

1.7           In the event that either Party breaches this
Agreement and losses are incurred by the other Party, the defaulting Party
shall bear any liabilities for such breach, including, but not limited to, any
direct and indirect losses resulting from the breach, provided that such losses
are not caused by any force majeure event.

 

1.8           Each Party shall provide all reasonable and
necessary efforts to assist the other Party’s performance hereunder.

 

2.             Basic Content of the
Comprehensive Service:

 

2.1           The Comprehensive Service provided by the
Parties to each other and other related arrangements are set forth in the
Annexes hereto:

 

Annex I:      Interconnection and Settlement
(to be provided by both Parties to each other);

 

Annex II:     Roaming Arrangement (to be provided
by both Parties to each other);

 

Annex III:    Special Phone Cards (to be provided by
Party A to Party B);

 

Annex IV:    Equipment Acquisition Service (to be
provided by Party A to Party B); and

 

Annex IV:    Use of the Properties (to be provided by
Party A to Party B).

 

3.             Pricing and Payment:

 

3.1           The principles for pricing and billing
standards in connection with the Service Fees are set forth in the Annexes
hereto.

 

3.2           Any
specific amounts of the Service Fees shall be calculated under the current
applicable Chinese accounting rules.

 

 

3.3           In the event that the Parties fail to agree
upon a certain amount of the Service Fees, such issue shall be reported to the
relevant authorities, who shall determine such amount in accordance with this
Agreement and the national pricing policies and rules. Such authorities’
decisions shall be final and binding on both Parties.

 

3.4           Each Party shall pay the due Service Fees
for the relevant services provided by the other Party in accordance with the
pricing principles and standards set forth in this Agreement and the Annexes
hereto.

 

3.5           In the event that either Party fails to pay
any due Service Fee, such Party shall pay to the other Party a late fee of
0.05% of the due amount on a daily basis. In the event that the payment is
overdue for more than 60 days, the other Party may notify in writing of its
intention to suspend the relevant services. In the event that such Service Fees
are not paid within 30 days after the receipt of the written notice, the other
Party may declare to terminate the relevant services. The suspension or termination
of such services shall not affect any rights or obligations hereunder brought
forth prior to such event.

 

3.6           Every October, both Parties shall discuss
the next fiscal year’s pricing standards for each item of the Comprehensive
Service as well as other related matters and enter into certain supplemental
agreements. If the Parties fail to enter into such supplemental agreements by
then, the current pricing standards and other related clauses shall apply to
the next fiscal year until certain agreement is reached or the dispute is
resolved pursuant to Section 3.3 herein.

 

4.             Term:

 

4.1           The term of this Agreement shall be one
year. Subject to Section 7 herein, this Agreement shall become effective on
December 31, 2003.

 

4.2           Subject to applicable laws and government
regulations, this Agreement shall be automatically renewed each year, unless
Party B notifies Party A in writing 60 days prior to the expiration day.

 

5.             Representations,
Warranties and Covenants:

 

Each Party hereto represents and warrants to the other Party as
follows:

 

5.1           Such Party has the full power and authority
(including, but not limited to, obtaining relevant approvals, consents or
permits from government authorities) to execute this Agreement and its Annexes;

 

5.2           This Agreement and its Annexes will become
effective and binding once it is signed in the way specified herein and can be
enforced in a mandatory manner; and

 

5.3           No provision in this Agreement and its
Annexes shall run counter to the applicable laws and regulations of the PRC.

 

6.             Assignment:

 

6.1           Subject to the terms and conditions under
this Agreement and the Memorandum on Connected Transactions, Party A hereby
gives an irrevocable consent that Party B may transfer its rights and
obligations hereunder to Unicom New World. 
No other or further consent by Party A shall be required for Party B to
transfer its rights and obligations hereunder to Unicom New World.

 

6.2           Once Party B transfers its rights and
obligations hereunder to Unicom New World, Unicom New

 

 

World shall immediately assume all of Party B’s rights and obligations
hereunder, while Party B shall immediately terminate all such rights and
obligations.

 

7.             Effectiveness:

 

The Agreement shall be effective on the day
agreed to by the Parties after the following conditions have been satisfied:

 

7.1           Party
B shall have approved through a shareholder meeting in accordance with the
applicable laws, regulations and listing rules the purchase by China Unicom
(BVI) Limited (“Unicom BVI”), a subsidiary of Party B, of the Targeted Interests
indirectly or directly held by Party A.

 

7.2           Party
B shall have approved implementation of this Agreement through a shareholder
meeting in accordance with the applicable laws, regulations and listing rules.

 

7.3           The
Unicom Red-Chip Company shall have approved through a shareholder meeting in
accordance with the applicable laws, regulations and listing rules its purchase
of the Targeted Interests from Unicom BVI.

 

7.4           The
Unicom Red-Chip Company shall have approved through a shareholder meeting in accordance
with the applicable laws, regulations and listing rules the transfer by Party B
of its rights and obligations under this Agreement to Unicom New World.

 

8.             Force Majeure:

 

In any force majeure event that is unforeseeable and the consequences
of which are unavoidable or insurmountable and which results in either Party’s
failure to duly perform its obligations hereunder, such Party shall promptly
notify the other Party of such situation and provide within 15 days any valid
documents evidencing the details and explaining the reasons for not being able
to perform all or part of its obligations hereunder or the reasons for any
necessary delays of such performance. Based on the impact of the force majeure
event on the performance of any obligations hereunder, the Parties shall decide
through negotiations whether to terminate, partially waive or postpone such
performance.

 

9.             Confidentiality:

 

Unless required by law or any regulations or requirements of any
relevant regulatory authorities, or unless for the purpose of Party B’s
information disclosure to the Shanghai Stock Exchange, each Party shall not,
without the other Party’s written consent, provide or disclose any data and
information in connection with the other Party’s businesses to any other company,
enterprise, organization or person.

 

10.          No Waiver:

 

Unless otherwise required by law, any failure or delay in exercising
any of its rights, powers or privileges by one Party shall not be construed as
a waiver of such rights, powers or privileges. Any one time or partial exercise
of such rights, powers or privileges shall not affect any further or complete
exercise of such rights, powers or privileges.

 

11.          Notification:

 

Any notification given in connection with this Agreement shall be in
writing and shall be delivered by one Party to the other Party by hand, fax or
mail. Such a notification by hand shall be deemed to have been duly given on
the date of delivery. Such a notification via fax shall be deemed to have been
duly given upon the completion of the fax transmission. Such a notification by
mail shall be deemed to have been duly given on the third working day (extended
when there is a public holiday) after the postal date. Notifications 

 

 

become effective upon their arrival.

 

	
   

  	
  Addresses of the Parties hereto for receiving notifications are as
  follows:

  
	
   

  
	
  China United Telecommunications Corporation:

  

 

	
   

  	
  Addressee:

  	
  Yi Yongji

  
	
   

  	
  Address:

  	
  A133, Xidanbeidajie, Room 1167, 11th Floor, Xicheng
  District,

  
	
   

  	
   

  	
  Beijing, China 100032

  
	
   

  	
   

  	
   

  
	
  China United Telecommunications Corporation Limited:

  

 

	
   

  	
  Addressee:

  	
  Zhao Yilei

  
	
   

  	
  Address:

  	
  40th Floor, Jinmao Tower, 88 Century Boulevard,

  
	
   

  	
   

  	
  Shanghai, China 200121

  

 

12.          Governing Law:

 

This Agreement is under the jurisdiction of the PRC laws and shall be
interpreted and executed in accordance with the PRC laws.

 

13.          Dispute Resolution:

 

Other than the exceptions under Section 3.3 herein, both Parties shall
endeavor to resolve any dispute over the effectiveness, interpretation or
execution of this Agreement through friendly consultations. Should any dispute
remain unsettled for more than 30 days after its occurrence, either Party is
entitled to bring a lawsuit based on this Agreement to a competent PRC Court.

 

14.          Miscellaneous

 

14.1         Annexes I to V hereof are integral parts of
this Agreement with equal legal binding force. Should there be any conflict
between the Annexes and the Agreement, the Annexes shall prevail.

 

14.2         Based on mutual consultations, both Parties
can make modifications, revisions or additions to this Agreement and the
Annexes hereto. No revision or addition shall become effective until it is duly
signed in writing and sealed by both Parties or their authorized
representatives.

 

14.3         This Agreement is severable, that is, when any
of the clauses in this Agreement or the Annexes hereto is deemed illegal or
non-enforceable, the effectiveness and enforcement of the other clauses
contained herein shall by no means be affected.

 

14.4         This
Agreement has six original copies with equal legal binding force, and each
Party shall retain three.

 

 

	
  China United Telecommunications Corporation (Company Seal)

  
	
   

  
	
  Legal Representative or Authorized Representative:

  	
  /s/ Wang Jianzhou

  	
   

  
	
   

  
	
   

  
	
  China United Telecommunications Corporation Limited (Company Seal)

  
	
   

  
	
  Legal Representative or Authorized Representative:

  	
  /s/  Sun Qian

  	
   

  
				

 

 

Annex I

 

Interconnection and Settlement

 

1.             Types
of interconnection:

 

For the purpose of operating various telecommunication networks,
including the mobile network of the Nine Service Areas, Party A and Party B hereby
agree to interconnect all of their telecommunication networks, including each
Party’s own mobile networks and other networks.

 

2.             Technical
specifications and standards, cost sharing and network construction in respect
of the interconnection:

 

2.1           Any such interconnection shall be subject to
the interconnection standards and specifications set forth by governmental
telecommunications authorities.

 

2.2           Issues such as cost-sharing methods and
network construction shall be discussed and decided by both Parties, in
accordance with applicable regulations set forth by governmental
telecommunications authorities.

 

3.             Each
Party’s obligations:

 

3.1           Each Party shall ensure that the quality of
the interconnection shall not be lower than that of the telecommunication
within their own networks.

 

3.2           Based on the technology available, each
Party shall unconditionally and promptly provide the other Party’s customers,
upon the customers’ requests, any services (including special services and
intelligent services) available to the customers in its own networks and shall
guarantee the quality of such services.

 

4.             Network
management and adjustment:

 

4.1           Each Party shall notify the other Party of
its construction work on network expansions, if such construction work may affect
the usage of the other Party’s customers, six months before such construction
work starts.

 

4.2           Each Party shall notify the other Party of
its technical adjustment work on router systems, frame relays, transmission
methods, cell data or software upgrades, etc., if such adjustment may affect
the usage of the other Party’s customers, 30 days before such adjustment work
starts.

 

4.3           Each Party shall provide timely cooperation
and assistance, at the other Party’s request, in the other Party’s adjustment work
on router systems, frame relays, transmission methods, cell data or software
upgrades, etc., so as to ensure the quality of the interconnection.

 

5.             Maintenance,
technical problems and solutions:

 

5.1           Both Parties shall maintain their networks
by the current standards and regulations set forth by the governmental
telecommunications authorities so as to ensure normal operation of the entire
network.

 

5.2           Each
Party may not terminate the interconnection without the other Party’s consent.

 

5.3           Should there be a network breakdown or heavy
network traffic, both Parties shall take effective 

 

 

measures to resume operations.

 

6.             Settlement
and payment:

 

6.1           Settlement
Principles:

 

(1)           Settlement
between both Parties’ mobile networks:

 

The two different settlement methods for mobile calls between different
provinces are as follows:

 

(i)            If the settlement standards stipulated in
the MII’s March 14, 2001 “Notice Regarding Announcement of ‘Settlement Measures
for Interconnection Telecommunications Fees’” (Xinbu Dian [2001] No. 195)
announcement is applied, the caller’s network shall retain RMB0.06 of the
long-distance charge while the receiver’s network shall retain RMB0.06. The
remainder shall be collected by Party B.

 

(ii)           Currently, both Parties agree to adopt the
settlement method specified in 6.1(1)(ii). 
However, both Parties also agree that, if any other settlement method
set forth and modified from time to time by the relevant governmental
authorities, are found more favorable to Party B than the settlement method
specified in 6.1(1)(ii), such settlement method shall be adopted.

 

ii.             All
other interconnection settlement between both Parties:

 

Both Parties agree to make settlements in accordance with the MII’s
announcement dated March 14, 2001 and its amendments from time to time.

 

6.2           Billing
principles:

 

The interconnection settlement between the Parties shall be based on
Party B’s billing data. However, if the discrepancy between Party A’s billing
data and Party B’s accounting billing is larger than 3%, both Parties shall
negotiate to determine a settlement basis.

 

6.3           Delivery
of billing data and settlement:

 

(1)           Settlement
between the Parties’ mobile networks

 

Both Parties agree to submit relevant billing data on the 25th
day of each month to the Settlement Center, controlled by Party B. The
Settlement Center is in charge of data collecting and processing, and creating
network settlement statements.

 

Both Parties also agree to make settlements once a month on the network
settlement statements created by the Settlement Center.

 

(2)           Other
settlements between the Parties’ mobile networks and fixed networks

 

Both Parties agree to have their subsidiaries make settlements once a
month based on the settlement principles set forth in this Annex.

 

 

Annex II

 

Roaming Arrangement

 

1.             Because
Party A and Party B provide mobile services in their own respective service
areas and in order to provide roaming services to both Parties’ mobile
subscribers, both Parties hereby agree to make arrangements as follows:

 

1.1           Both Parties agree to arrange for automatic
roaming, so that either Party’s mobile subscribers can make and receive calls
in the other Party’s service areas.

 

1.2           Both Parties agree that a mobile subscriber
using roaming services shall be charged with a fixed roaming fee of RMB0.60 per
minute for both incoming and outgoing calls.

 

(1)           If a Party B’s subscriber uses the roaming
service in Party A’s service area, the roaming charge shall be collected by
Party B and shall be distributed as follows: (i) RMB0.40 is collected by Party
A; and (ii) RMB0.20 is retained by Party B.

 

(2)           If a Party A’s subscriber roams in the Nine
Service Areas, the roaming charge shall be collected by Party A and shall be
distributed as follows: (i) RMB 0.56 is collected by Party B; and (ii) RMB 0.04
is retained by Party A.

 

2.             Roaming
on the networks of other domestic and/or international mobile
telecommunications services operators (“Other Operators”)

 

2.1           Party
A agrees to make the necessary arrangements to allow Party B roaming capabilities
on the mobile networks of Other Operators; and Party B agrees to provide its
entire long distance network for realizing such roaming capability.

 

2.2           Both
parties agree to carry out the roaming and settlement arrangements according to
the relevant roaming agreements between Party A and the Other Operators.

 

2.3           When
subscribers of Party A’s mobile networks roam on the networks of any
third-party operators under Party A’s international roaming arrangements, or
when subscribers of Other Operators roam on Party A’s networks under such
arrangements, Party B shall receive 50% of all roaming revenues to which Party
A is entitled under its international roaming arrangements.

 

 

Annex III

Special Phone Cards

 

1.             Scope
of the special phone cards service:

 

Based on its actual needs, Party B may request Party A to provide, via
Unicom Xingye, a subsidiary held by Party A, or other subsidiaries of Party A,
certain telephone cards for various purposes, including SIM cards, UIM cards,
IP cards, long-distance cards and rechargeable cards (the “Phone Cards”
collectively).

 

2.             Quantity
of the Phone Cards:

 

2.1           Annual
and periodical plans for ordering the Phone Cards:

 

2.1.1        In October of each year, Party B shall submit
to Party A its annual order plan for the coming year, based on its operation
plan for the year.

 

2.1.2        In February, May and September of each year,
Party B shall confirm its order plans for the periods from May to August, from
September to December, and from January to April of the next year,
respectively. Party A shall deliver the Phone Cards according to the order
plans confirmed by Party B, unless there is a force majeure event.

 

2.2           Rush
orders and temporary orders:

 

Party B may request to modify its order plans. Should there be any rush
orders or temporary orders resulting from such modifications, Party A shall do
its utmost to supply the order as requested by Party B and shall confirm within
three days after Party B’s request whether it will be able to perform as
requested by Party B.

 

3.             Prices
for the Phone Cards

 

3.1           Both Parties agree that the prices for the
Phone Cards shall be determined by the actual cost of the Phone Cards to be
delivered by Party A to Party B (including the import cost, manufacture cost
and distribution cost) plus a marginal profit no higher than 20% (which is to
be determined from time to time by both Parties) of the overall cost. Both
Parties also agree to set up a discount rate based on the volume of Party B’s
orders.

 

3.2           As for Party B’s rush orders or temporary
orders, Party A may add an expedited fee of up to 10% on top of the prices set
forth above.

 

3.3           Both Parties agree to negotiate and
determine in December of each year the price for each type of Phone Card for
the coming year.

 

4.             Delivery
time and place:

 

Party A shall deliver the Phone Cards to Party B at the time and places
designated in Party B’s order plans or as requested by any rush/temporary
orders.

 

5.             Quality
of the Phone Cards:

 

5.1           Party A shall guarantee the quality of the
Phone Cards to be up to the standards stipulated by the relevant governmental
authorities, and provide any necessary certification.

 

 

5.2           Party A shall guarantee all the numbers,
codes and passwords of the Phone Cards to be produced under a secure and
confidential condition, and guarantee the technology, security and
confidentiality of such numbers, codes or passwords.

 

5.3           In the event that Party B raises any
questions regarding the quality of any Phone Cards within five days after it
receives such Phone Cards, Party A shall exchange or repair such defective
Phone Cards, unless the defect was caused by Party B, until the applicable
standards and Party B’s requirements are satisfied.

 

5.4           In the event that Party B fails, after its
reasonable efforts, to discover any existing quality defects in the Phone
Cards, Party A shall indemnify Party B for all of Party B’s direct losses
caused by such defects.

 

6.             Payment:

 

6.1           By the time that Party B confirms with Party
A of Party B’s order plan, it shall make a prepayment of 15% of the total price
of the Phone Cards ordered by Party B;

 

The remaining 85% of the total payment shall be delivered to Party A by
the time that Party A completes the delivery of all the Phone Cards pursuant to
Party B’s order plan.

 

6.2           Payment
for rush/temporary orders:

 

By the time that Party A confirms with Party B of any rush or temporary
order, Party B shall make the full payment of such order (including any
expedited fees) and Party B may require Party A to deliver such order on a
timely basis.

 

7.             Other
Phone Cards:

 

Based on its business needs, Party B may request Party A to provide
other types of Phone Cards. Party A shall give complete consideration based on
the available technology, operating conditions and other factors and shall
provide such cards if able to confirm a workable plan.

 

Both Parties agree that they shall discuss the amount, prices, and
payment methods of such other types of Phone Cards. The price shall be based on
the actual cost incurred by Party A in manufacturing and delivering such Phone
Cards plus a marginal profit no higher than 20% of the total cost.

 

 

Annex IV

 

Equipment Acquisition Services

 

1.             Scope
of the equipment acquisition services:

 

Based on its actual needs, Party B may request Party A to act on its
behalf (via Unicom Import and Export Co. Ltd. (“Unicom I&E”), a subsidiary
controlled by Party A), to handle overseas or domestic acquisitions of
telecommunications equipment and other materials.

 

Unicom I&E shall, at Party B’s request, provide comprehensive
acquisition services, including bidding, consulting, and acting as the
processing agent. Unicom I&E may also authorize Party A’s other
subsidiaries to provide such acquisition services.

 

2.             Procedures
for the acquisition services:

 

Both Parties agree to authorize Unicom I&E to provide the equipment
aquisition services to Party B in accordance with “Notice on Centralized Import
and Export Operations (No. [1994]001)”, “Rules on Centralized Equipment
Acquisitions of China Unicom (No. [1995]380)”, “Rules on Centralized
Acquisitions of Equipment and Instruments (No. [1996 ]31)”, “Methods of
Equipment Acquisitions of China Uniform (No. [1998] 059)” and other applicable
documents agreed upon by both Parties.

 

3.             Service
Fees and Payment:

 

3.1           Party
B shall pay Unicom I&E such service fees for the acquisitions of any
equipment and materials as follows:

 

3.1.1           0.7% of the underlying amount (including any
bank processing fees) in any overseas acquisition contract of major equipment
signed by Unicom I&E on Party B’s behalf;

 

3.1.2           0.5% of the underlying amount in any
domestic acquisition contract of major equipment signed by Unicom I&E on
Party B’s behalf; and

 

3.1.3           Unicom I&E agrees not to charge Party B
for the acquisition of any power switches, storage
batteries, diesel-electric sets, constant power supplies, the air
conditioning of equipment rooms, optic fibers and other transmission materials
and necessary accessories.

 

3.2           Both Parties agree that the payment time for
the agent service fees shall be determined by both       Party B and Unicom I&E, based on the specific
circumstance of the equipment acquisition. Should there be any payment overdue,
Party B shall pay Unicom I&E a late fee of 0.5% of the total amount due on
a daily basis.

 

4.             Party A shall cause Unicom I&E to
treat Party B in the same manner as it would Party A in respects of import and
export prices as well as other material provisions or conditions.

 

 

Annex V

 

USE OF THE PROPERTIES

 

1.             Use
and purposes of the properties:

 

1.1           Each party agrees to, based on the other
party’s requests from time to time, to give the other party access to use
certain properties it owns (the “Owned Properties”) and certain other
properties procured by it from certain third parties (the “Third Parties’
Properties”), including premises, air conditioners, power supplies, power
devices and other accessorial facilities.

 

1.2           Any
party that uses the other party’s property shall use such above-mentioned
properties only for the purposes of its offices, retail outlets, and
operations.

 

2.             Fees
and payments:

 

2.1           Payment by one party for using any of the
other party’s Owned Properties shall be based on the depreciation cost or the
market price of similar properties in the same geographical area, whichever is
lower.  Such provision notwithstanding,
Party B can choose to charge Party A a property use fee based on the market
price of properties in the same geographical area.

 

2.2           As for any of the Third Parties’ Properties
used by either party, both Parties shall share the payment to such third party,
based on the proportion used by each Party.

 

2.3           Payments
shall be made within 30 days after the end of each quarter.

 

2.4           Should there be any payment overdue, a late
fee of 0.05% of the total amount due on a daily basis shall be assessed.

 

3.             Warranties
and Covenants:

 

Party A warrants that it has full rights to provide such
above-mentioned Owned Properties and Third Parties’ Properties (including
premises, power supplies, air conditioners, power devices and other accessorial
facilities) for Party B to use. Party A agrees to indemnify Party B for all the
losses resulting from any dispute regarding Party A’s ownership or rights of
use of such Properties that prevents Party B from exercising its rights under
this Annex or any other damages incurred by Party B.

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