EXHIBIT 10.12
MATERIALS PROCUREMENT AGREEMENT
BY AND BETWEEN
CHINA NETCOM (GROUP) COMPANY LIMITED
AND
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
MATERIALS PROCUREMENT AGREEMENT
THIS AGREEMENT is made and entered into on [-], 2004 in Beijing, People's
Republic of China ( "PRC") by and between the following parties:
Party A: China Netcom (Group) Company Limited
Address: Xxxxxxxx X, Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx, PRC
Legal representative:Zhang Xxxx Xxxxx
Party B: China Network Communications Group Corporation
Address: Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx, PRC
Legal representative: Zhang Xxxx Xxxxx
On the basis of equality and reasonableness, after friendly negotiation,
both Party A and Party B reached the following agreement in respect of the
relevant matters in relation to Party B (including the branches and subsidiaries
of Party B and other units controlled by Party B; the definitions employed below
are the same) providing materials procurement services (hereinafter referred to
as the "Materials Procurement Services") and the related storage, warehousing
and transportation services to Party A (including the branches and subsidiaries
of Party B and other units controlled by Party B; the definitions employed below
are the same). and that Party A's procurement of some kinds of materials
directly from Party B (hereinafter referred to as the "Direct Materials
Procurement"):
1. BASIC PRINCIPLES
1.1 In respect of the materials procurement services and the related storage,
warehousing and materials procurement services provided by Party B to
Party A as well as the self-operated materials sold directly from Party B
to Party A under this Agreement, Party B shall have the right to receive
reasonable service charges or payments for materials as priced in
accordance with the stipulations of this Agreement. Party A shall fulfill
its corresponding obligations of payment.
1.2 The conditions of the materials procurement services and the related
storage, warehousing and materials procurement services provided by Party
B to Party A as well as the self-operated materials sold directly from
Party B to Party A shall not be inferior to the conditions of the same or
similar services or materials that Party B provides to any third party.
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1.3 If Party B fails to provide the materials procurement services and the
related storage, warehousing and transportation services or materials
under this Agreement for reasons not because of its own fault or if it
fails to provide such services or materials completely, Party B shall
inform Party A in writing immediately and Party B shall make its best
endeavour to assist Party A in obtaining the same or similar services or
materials through other channels.
1.4 In providing the materials procurement services and the related storage,
warehousing and transportation services or materials provided by Party B
to Party A as well as the self-operated materials sold directly from Party
B to Party A under this Agreement must comply with the purposes agreed by
both parties and the relevant standards prescribed by the State.
1.5 For any loss one party causes to the other party under this agreement due
to breach of terms of this agreement, the party in breach should bear the
responsibility of making timely and complete compensation for breach of
contract to the other party, including, but not limit to, direct or
indirect losses caused to the other party due to breach of contract.
However, the party in breach is not responsible for loss caused to the
other party due to force majeure.
1.6 In the course of either party performing its duties under this Agreement,
the other party should provide reasonable and necessary assistance to that
party.
2. BASIC CONTENT OF MATERIALS PROCUREMENT SERVICES, DIRECT MATERIALS
PROCUREMENT AND RELATED WAREHOUSING AND TRANSPORTATION SERVICES
2.1 The materials procurement services provided by Party B to Party A under
this Agreement include but are not limited to:
(1) imported telecommunications materials procurement;
(2) domestic telecommunications materials procurement;
(3) domestic non-telecommunications materials procurement.
The above-mentioned procurement services include tender management,
technical specifications review and approval and installation
services.
2.2 The products Party B sells directly to Party A are mainly cables, modems
and yellow pages telephone directories, etc.
2.3 Party B also provides Party A with the storage, warehousing,
transportation services related to materials procurement services and
direct purchase of materials.
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3. PRICING PRINCIPLES
3.1 The amount determined for the commissions for the domestic materials
procurement services and the standardized charges therefor under this
Agreement shall not exceed 3% of the contract volume of the relevant
materials procurement.
3.2 The amount determined for the commissions for the imported materials
procurement services and the standardized charges therefor under this
Agreement shall not exceed 1% of the contract volume of the relevant
materials procurement.
3.3 The pricing criteria in respect of part of the direct purchase of
materials sold by Party B to Party A as set forth under this Agreement
shall be governed by the principle in this provision and in the following
order: those that are fixed by the State shall follow the government-fixed
price; those that have the government guidance price shall follow the said
guidance price; those that have no fixed price nor government guidance
price yet have a market price shall follow the market price; those that
none of the above said is applicable shall follow the pricing method
agreed upon by both parties, however, the said pricing method should be
calculated with regard to the reasonable cost and reasonable profit of the
service, whereby "reasonable cost" means the cost agreed by both parties.
The "State Rate" follows the Pricing Law of the People's Republic of
China, which is set by the governmental pricing department or other
related departments based on the pricing limits and range.
The "government guidance price" follows the Pricing Law of the People's
Republic of China, which provides guidance to business operators by the
governmental pricing department or other related departments based on the
pricing limits, basic price range and its floating range.
The "Market Rate" means the rate determined by the business operator and
attained through market competition. The market price shall be determined
by the following order: (1) the rate charged by any independent third
party providing the same kind of service in the same or surrounding area
under normal situation; or (2) the rate charged by any independent third
party providing the same kind of service within China under normal
situation.
3.4 The prices and / or criteria of pricing in respect of the commission for
the related storage, warehousing and transportation in relation to the
materials procurement services and the direct materials procurement should
be determined according to the market prices. The market prices referred
herein means the prices set out by the business operators on their own
through the market competitions.and should be set out in the following
sequence: (1) the prices charged by an independent third party in respect
of providing those services under normal circumstances of transaction in
its region of provision or other nearby regions; or (2) the prices charges
by an independent third party in respect of providing those service under
normal circumstances of transaction in the territory of PRC.
3.5 Party B and Party A can enter into a separate execution document, which
should stipulate clearly the actual services or materials in which Party A
needs at that time and they should also stipulate the binding principles,
criteria and conditions under this Agreement.
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3.6 The specific amount of service charge agreed upon under this Agreement
shall from time to time be calculated by the accounting principle
applicable in China (if applicable).
3.7 Both parties shall, before December 31 of every calendar year, conduct a
review on the price of every item of service and facility stated in this
Agreement for the next accounting year (if necessary).
4. PAYMENT OF SERVICE CHARGES
4.1 Party A shall, based on the provisions of this Agreement, any
supplementary agreement of this Agreement (if any), and in specific
execution documents, pay Party B or its trustee service charge in
consideration for the services provided by Party B or its trustee.
4.2 If Party A fails to pay on time the said service charge agreed upon under
the provisions of this Agreement, any supplementary agreement of this
Agreement (if any), and the specific execution documents, Party A shall,
for each 1 day (calendar day, and the same applies below) late, pay a late
charge penalty of 0.05% of the outstanding balance to Party B; and after
60 days of late payment, Party B is entitled to notify Party A the
termination of service; if Party A still fails to pay for the outstanding
balance upon 30 days after receiving the written notice to terminate
service, Party B shall be entitled to terminate the service immediately.
The suspension or termination of such service shall not in any way
prejudice or affect the rights and obligations under this Agreement prior
to such event.
5. RIGHTS AND OBLIGATIONS OF BOTH PARTIES
5.1 Rights and Obligations for Party A
5.1.1 Rights of Party A
(1) Party A (including its subsidiaries, branches and controlled units)
has the right to receive the agreed service provided by Party B;
(2) The auditor of Party A has the right to inspect and examine the
accounting books of Party B and its connected persons in relation to
the connected transactions under this Agreement.
5.1.2 Obligations of Party A
(1) Guarantee and/or procure its subsidiaries, branches and all other
controlled units to enter into specific execution documents with
Party B and its subsidiaries, branches or controlled units in
relation to this Agreement and/or any supplementary agreement of
this Agreement (if any);
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(2) Coordinate with all relating matters with regard to the
abovementioned specific execution documents;
(3) Pay the service charge as stated in this Agreement and all other
specific execution documents;
(4) Guarantee to pay for any damage suffered by Party B or counter
party of specific execution documents that is caused by the breach
of Party A of any provisions in this Agreement and specific
execution documents.
5.2 Rights and Obligations of Party B
5.2.1 Rights of Party B
(1) Party B is entitled to the service charge agreed upon under this
Agreement;
(2) Right to provide the same or similar service to a third party, on
the condition that Party B continues to provide the same service
agreed upon under this Agreement.
5.2.2 Obligations of Party B
(1) Guarantee and/or prompt its subsidiaries, branches and all other
controlled units to enter into specific execution documents with
Party A and its subsidiaries, branches or its other controlled units
in relation to this Agreement and/or any supplementary agreement of
this Agreement (if any);
(2) Provide the services and monitor the services provided by its
subsidiaries, branches and other controlled units at a good quality
according to the provisions of this Agreement;
(3) Coordinate with all relating matters with regard to the
abovementioned specific execution documents;
(4) Guarantee to pay for any damage suffered by Party A or counter party
of specific execution documents that is caused by the breach of
Party B of any provisions in this Agreement and all other specific
execution documents;
(5) Agree to provide the auditor of Party A the accounting books of
Party B and its connected persons in relation to the connections
transactions under this Agreement.
5.3 It is agreed that both parties will take further actions to ensure the
realization of the principles and
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provisions in this Agreement. It is further agreed that both parties will
ensure that, Party A, being a subsidiary of a company to be listed or
listed, China Netcom Group (Hong Kong) Limited (hereinafter "Listing
Company"), shall comply with the Listing Rules of the Hong Kong Stock
Exchange for connected transactions.
6 PREFERENTIAL RIGHT
6.1 For the same service or materials, if an independent third party cannot
offer better conditions and terms than Party B, Party A can grant Party B
preferential right.
6.2 Party B undertakes to Party B that Party B shall not offer the same or
similar services and materials stated under this Agreement to a third
party at terms more favorable than those offered to Party A.
6.3 Party B has the right to provide the same or similar service to a third
party, on the condition that Party B continues to provide the same service
and materials agreed upon under this Agreement.
1. TERM
7.1 This Agreement shall come into effect once signed by the legal
representatives or authorized representatives of both Parties and affixed
with their official seals. This Agreement shall be effective till June 30,
2007. If Party A wishes to renew this Agreement and notifies Party B with
3 month's notice, this Agreement shall be renewed automatically for
another 3 years on the same terms. There are no limits on the number of
renewal.
2. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
Each party represents, warrants and undertakes to the other party that:
(1) It is an independent legal person existing in accordance with the
laws of PRC, and have the power and authority (including but not
limited to any approval, consents or permission granted by the
government departments to enter into and perform this Agreement);
(2) No provision in this Agreement violates the constitutive documents
or the laws and regulations of China;
(3) It will use its best endeavors to take all necessary and procure
appropriate or advantageous measures to perform this Agreement and
to make this Agreement effective in accordance with the law and
regulations of China and this Agreement.
3. FORCE MAJEURE
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9.1 In the event of Force Majeure that causes both Parties or either Party to
fail completely or partially in performing the obligations under this
Agreement, that said Party is not liable for breach of agreement. However,
in the event of such an incident, the affected party shall inform the
other party by written notice within 15 days after the said incident and
provide relevant proof and evidence to the other Party. At the same time,
the affected party shall use its best endeavors to minimize the damage
caused by the Force Majeure event. The affected Party or both Parties
shall resume its obligations under this Agreement once the Force Majeure
event has ended within a reasonable time.
9.2 Force Majeure in this Agreement means all objective situations that are
unforeseeable, unavoidable and that cannot be overcome.
4. CONFIDENTIALITY
10.1 Unless with written approval by the other party, neither party can
announce nor supply or reveal to any third party any information regarding
this Agreement or the business information of the other party, with the
exception of requests by the legal or governmental departments or any
other relevant securities regulatory authorities or for the purpose of the
Listing Company seeking listing (and remain as one).
5. TRANSFER OF RIGHTS AND OBLIGATIONS
11.1 Without the written approval of the other party, neither party may
transfer any single right and obligation as agreed upon under this
Agreement.
6. NON-WAIVER
12.1 Unless otherwise specified by law, the failure or delay of exercising the
right, power or privilege as endowed by this Agreement on the part of any
Party cannot be deemed as the waiver of such rights, power or privileges.
Besides, the partial exercise of such rights, power or privileges should
not hinder the exercise of such rights, power or privileges of this Party
in the future.
7. NOTICE
13.1 All notices required to be delivered pursuant to this Agreement shall be
in writing, and delivered to the address as stated at the beginning part
of this Agreement, or to addresses or facsimile numbers designated by one
Party to the other Parties in writing from time to time.this Agreement.
13.2 Any notice above shall be delivered either by hand, registered mail, or
facsimile. Any notice shall be deemed to have been delivered at the time
of actual receipt if delivered by hand; on the date of return receipt if
delivered by registered mail; and at the time of transmission if delivered
by facsimile.
8. DISPUTE RESOLUTION
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14.1 In case of disputes as to the power, interpretation or implementation of
this Agreement, both parties shall seek to settle the matters of dispute
by friendly negotiation. If the matters of dispute cannot be settled by
negotiation within thirty (30) days from the day the matters of dispute
arise, either party has the right to resort to litigation at the people's
court which has jurisdiction over where Party A situates.
9. MISCELLANEOUS
15.1 Without written confirmation from both parties, no party can change or
amend this Agreement. Upon the agreement of both parties, both parties can
amend this Agreement or enter into supplementary agreement to this
Agreement. The amendments or supplementary agreements of this Agreement
shall come into effect once signed by the legal representatives or
authorized representatives of both Parties and affixed with their official
seals.
15.2 This Agreement is severable, that is, if any provision of this Agreement
is held to be void, illegal, void or unenforceable at any time, the
effectiveness and performance of other provisions of this Agreement shall
not be affected.
15.3 This Agreement shall be governed and interpreted in accordance with the
laws of PRC.
15.4 This Agreement is made into four (4) duplicate originals. Each party holds
two (2) copies, and each copy shall have the same legal binding effect.
IN WITNESS WHEREOF, the legal representatives or authorized representatives of
the both Parties hereto have executed this Agreement as of the date and
venue first written above..
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Signature Page
PARTY A: CHINA NETCOM (GROUP) COMPANY LIMITED (SEAL)
By :______________
Legal representative or Authorized representative_
PARTY B: CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL)
By :______________
Legal representative or Authorized representative
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