EXHIBIT 10.1
JUNE 29, 2004
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
CHINA NETCOM HOLDINGS (BVI) LIMITED
CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
CHINA NETCOM CORPORATION LIMITED
ASSET INJECTION AGREEMENT
1. Injected Assets........................................................................... 3
2 Netcom Group injecting assets to Netcom BVI............................................... 3
3 Netcom BVI injecting assets to Netcom Hong Kong........................................... 3
4 Netcom Hong Kong injecting assets to Netcom Limited....................................... 4
5 Representations, Warranties and Undertakings.............................................. 5
6 Condition Precedent and Effective date.................................................... 5
7 Indemnities............................................................................... 6
8 Confidentiality........................................................................... 6
9 Non Waiver................................................................................ 6
10 Noticies.................................................................................. 7
11 Counterparts............................................................................... 7
12 Governing law and dispute resolution....................................................... 7
13 Miscellaneous ............................................................................. 7
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ASSET INJECTION AGREEMENT
This Asset Injection Agreement ("Agreement") was made by the following parties
in Beijing, the People's Republic of China ("PRC") on June 29, 2004:
PARTY A: CHINA NETWORK COMMUNICATIONS GROUP CORPORATION. ("NETCOM GROUP")
Registered address: Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx, PRC
PARTY B: CHINA NETCOM HOLDINGS (BVI) LIMITED ("NETCOM BVI")
Registered Address: X.X. Xxx 0000 Wickhams Cay 1, Road Town, Tortola, British
Virgin Island
PARTY C: CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED ("NETCOM HONG KONG")
Registered Address: 00/X Xxxx xx Xxxxx Xxxxx, 0 Xxxxxx Xxxx, Xxxx Xxxx
PARTY D: CHINA NETCOM COMPANY LIMITED ("NETCOM LTD")
Registered address: 0 Xxxxxxxxxxx Xxxx, Beijing Economic & Technology
Development Zone, Beijing, PRC
WHEREAS:
A. According to the Restructuring and listing plan of Netcom Group.
("RESTRUCTURING PLAN") approved by China's State Council, Netcom Group has
conducted a series of restructuring activities regarding certain of its
telecom assets and businesses in mainland China. After the restructuring,
Netcom Hong Kong, indirectly held by Netcom Group, will act as the issuer
to offer shares and American Depositary Shares in overseas markets, and
will seek listing on The Stock Exchange of Hong Kong Limited and The New
York Stock Exchange, Inc.
B. In order to implement the Restructuring Plan, on April 20, 2004, Netcom
Group entered into an equity transfer agreement with four state-owned
shareholders of China Netcom (Holdings) Company Limited. ("NETCOM
HOLDINGS") regarding the acquisition of all their respective entire equity
interest in Netcom Holdings, namely, Chinese Academy of Sciences, China
Railways Telecommunications Center, Information and Network Center of
State Administration of Radio, Film and Television, and Shanghai Alliance
Investment Limited. After the equity transfer agreement is approved by the
relevant regulatory authorities of the Chinese government and after the
transfer is completed, Netcom Group will become the sole shareholder of
Netcom Holdings.
C. Netcom Holdings will transfer all its Netcom BVI shares to Netcom Group.
After the transfer is approved by the relevant authorities of the Chinese
government and is completed, Netcom Group will become the sole shareholder
of Netcom BVI.
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D. Netcom Hong Kong will implement similar equity restructuring measures. CNC
Fund LLP, the shareholders of Netcom Hong Kong, will transfer all its
equity interest to Netcom BVI, thus allowing Netcom BVI to own 100% equity
interest in Netcom Hong Kong.
E. With the completion of all the above-mentioned transfers, Netcom Group
will own, indirectly through Netcom BVI and Netcom Hong Kong, all the
equity interest in Netcom Limited.
F. By signing a series of asset transfer agreements with relevant parties
within the group, Netcom Group will own all the Injected Assets (as
defined in Section 1 of this agreement) in China within the scope of the
listing.
THEREFORE, all the parties, through friendly negotiations, agreed to the
following regarding asset injection:
1. INJECTED ASSETS
The Injected Assets mentioned in this Agreement refer to the telecom core
business related assets and liabilities legally owned by Netcom Group in
Beijing, Tianjin, Hebei, Liaoning, Henan, Shandong, Shanghai and
Guangdong, as well as international telecom business related assets and
liabilities legally owned by Netcom Group. The specific scope and details
of the Injected Assets are all the assets and liabilities listed in the
Assets Valuation Report regarding the above-mentioned Netcom Group assets
and liabilities (attached hereto as Appendix I). This Report was prepared
by Beijing Zhong Qi Hua Assets Evaluation Ltd. and approved by the
State-owned Assets Supervision and Administration Conmission of the
Chinese State Council, the reference date of which is December 31, 2001.
2. NETCOM GROUP INJECTING ASSETS TO NETCOM BVI
2.1 In consideration of the mutual commitments under this Agreement and
the consideration payable by Netcom BVI to Netcom Group under clause
2.2 of this Agreement, Netcom Group agrees to inject the Injected
Assets owned by it to Netcom BVI, and Netcom BVI agrees to accept
all the Injected Assets.
2.2 The consideration of the Injected Assets injected by Netcom Group to
Netcom BVI is the net asset value listed in the Asset Valuation
Report approved by the State-owned Assets Supervision Administration
Commission. Netcom BVI shall satisfy the consideration by way of
capital investment. After the Injected Assets are injected, Netcom
Group shall continue to own all the equity interest in Netcom BVI.
3. NETCOM BVI INJECTING ASSETS TO NETCOM HONG KONG
3.1 In consideration of the mutual commitments under this Agreement and
the consideration
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payable by Netcom Hong Kong to Netcom BVI under clause 3.2 of this
Agreement, Netcom BVI agrees to inject, immediately after receiving
the Injected Assets injected by Netcom Group, all the said Injected
Assets to Netcom Hong Kong, and Netcom Hong Kong agrees to accept
all Injected Assets.
3.2 The consideration of the Injected Assets injected by Netcom BVI to
Netcom Hong Kong is the net asset value listed in the Asset
Valuation Report approved by the State-owned Assets Supervision and
Administration Commission. Netcom Hong Kong shall satisfy the
consideration by way of issuing new ordinary shares. Netcom Hong
Kong and Netcom BVI hereby agree that, the number of the
above-mentioned newly issued ordinary shares shall be decided upon
through consultation between them during the period when Netcom BVI
owns 100% of Netcom Hong Kong.
3.3 Netcom Hong Kong shall procure its board of directors to pass the
following resolutions and implement the issuance of new shares in
the said resolutions:
3.3.1 Approve Netcom Hong Kong to issue new ordinary shares to
Netcom BVI by the number as stated in clause 3.2.
3.3.2 Approve Netcom Hong Kong to register Netcom BVI on its
register of members in relation to the above mentioned new
shares, and issue Netcom Hong Kong's ordinary shares
certificate in Netcom BVI's name representing the amount of
shares as stated in clause 3.2.
3.4 The asset injection pursuant to this clause shall be deemed to take
place immediately upon the completion of the asset injection as
mentioned in clause 2 of this Agreement.
4. NETCOM HONG KONG INJECTING ASSETS TO NETCOM LIMITED
4.1 In consideration of the mutual commitments under this Agreement and
the consideration payable by Netcom Limited to Netcom Hong Kong
under clause 4.2 of this Agreement, Netcom Hong Kong agrees to
inject, immediately after receiving the Injected Assets injected
from Netcom BVI, all said Injected Assets to Netcom Limited, and
Netcom Limited agrees to accept all Injected Assets.
4.2 The consideration of the Injected Assets injected by Netcom Hong
Kong to Netcom Limited is the net asset value listed in the Asset
Valuation Report approved by the State-owned Assets Supervision and
Administration Commission. Netcom Limited shall satisfy this
consideration by way of capital investment. After the asset
injection, Netcom Hong Kong shall continue to own all the equity
interest in Netcom Limited.
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4.3 The asset injection pursuant to this clause shall be deemed to take
place immediately upon the completion of the asset injection
mentioned in clause 3 of this Agreement and the procedure changing
the business registration certificate from Netcom Limited to China
Netcom Group Ltd.
5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1 Each party in this agreement represents, warrants and undertakes to
each of the other parties respectively:
5.1.1 It is an independent legal entity incorporated and validly
existing under the laws in its place of incorporation.
5.1.2 It has the full legal rights, power and authority to sign this
Agreement and perform its obligations and responsibilities
under this Agreement.
5.1.3 None of the provisions in this Agreement violates its articles
of association or applicable laws and regulations.
5.1.4 The representative signing on this Agreement has been fully
authorized. This Agreement shall constitute legal, valid and
enforceable obligations on all parties upon its execution.
5.2 According to applicable laws or any applicable restrictive
agreements, Netcom Group has the obligation to inform any counter
party or third party who should be informed about issues of the
final asset injection to Netcom Limited that are related to
sequential asset injections described in clauses 2, 3 and 4 of this
Agreement, and should obtain the consent of any counter party or
third party whose consent is required by applicable laws or
applicable restrictive agreements.
6. CONDITION PRECEDENT AND EFFECTIVE DATE
6.1 Injected assets under this Agreement shall become effective when all
conditions below are met:
(i) The Chinese Ministry of Commerce approves the asset injection
arrangement under this Agreement;
(ii) Full completion of equity transfers as described in the
recital of this Agreement.
6.2 In order to implement the Restructuring Plan, all the parties in
this Agreement specifically agree that when condition precedent
stated in clause 6.1 are met, the effective date of the asset
injection described in clauses 2, 3 and 4 of this Agreement shall be
deemed to be December 31, 2003. Namely, the Injected Assets shall be
deemed to be injected on December 31, 2003 from Netcom Group through
Netcom BVI and Netcom Hong Kong and finally to Netcom Limited in
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the manner described in clause 2, 3 and 4.
7. INDEMNITIES
If any of the following incidents occurs, Netcom Group shall indemnify the
other parties in this Agreement or Netcom Limited at any time completely,
fully, timely, effectively and sufficiently .
7.1 Due to Netcom Group's failure in fulfilling its obligations under
clause 5.2 of this Agreement notifying third parties and obtaining
their consent, any third party claims or disputes the Injected
Assets, resulting in difficulty or impossibility in the sequential
asset injection as described in this Agreement.
7.2 Due to Netcom Group's breach of any agreed obligations in this
Agreement, including but not limited to the representations,
warranties and undertakings in clause 5, Netcom Limited is unable to
actually hold, effectively control or operate the Injected Assets.
If this situation arises, Netcom Limited shall receive complete and
sufficient indemnities from Netcom Group.
7.3 Due to any incident that occurs before the effective date of the
asset injection as described in this Agreement, Netcom Limited
encounters or suffers any right claim, accusation, legal
investigation, claim for compensation, legal action, losses,
damages, payment, charges or expenses, including but not limited to
professional service charges or expenses that involve the Injected
Assets.
The indemnification obligations of Netcom Group in this clause are
independent from any agreements between it and related parties, including
the indemnification obligations in the restructuring agreement provisions.
Any compensation paid by Netcom Group according to other agreements shall
not be used to reduce its obligatory compensation under this agreement.
8. CONFIDENTIALITY
Unless otherwise provided by law or required by regulatory authorities, no
party shall provide or disclose the content of this Agreement, any data
and information relating to other parties' businesses to any companies,
enterprises, organizations or individuals without prior written permission
of the other parties (which permission shall not be denied or delayed
without reason).
9. NON-WAIVER
Unless otherwise specified by law, the failure or delay of exercising the
rights, powers or privileges 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, powers or
privileges should not hinder the exercise of such rights, powers or
privileges of this Party in the future.
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10. NOTICE
All notices required to be delivered pursuant to this Agreement shall be
in writing, and shall be delivered either by hand, facsimile or by mail.
Any notice shall be deemed to have been delivered at the time of actual
receipt if delivered by hand; at the time of transmission if delivered by
facsimile; and on the fifth (5th) working day (excluding legal holidays)
if delivered by mail. Notification will be in effect upon its delivery.
11. COUNTERPARTS
This Agreement can be signed on any number of copies. Each party can sign
on separate copies. All copies are original copies and they constitute one
document.
12. GOVERNING LAW AND DISPUTE RESOLUTION
12.1 This Agreement is governed, construed and enforced by laws in the
People's Republic of China.
12.2 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.
13. MISCELLANEOUS
13.1 This Agreement shall come into effect and be binding upon all
parties hereto once signed by the legal representatives or
authorized representatives of the Parties and affixed with their
official seals
13.2 Appendices to this Agreement are part of this Agreement and have the
same validity as the Agreement itself. When the provisions in an
appendix and the Agreement conflict with each other, the provisions
in the appendix shall prevail.
13.3 Through negotiation, each party may revise or amend this Agreement
and its appendices. All revisions or amendments shall be signed by
legal or authorized representatives from all parties before they
become effective.
13.4 This Agreement is severable, that is, if any provision of this
Agreement or its appendices is held to be void, illegal or
unenforceable at any time, the effectiveness and performance of
other provisions of this Agreement shall not be affected.
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(Signature page)
CHINA NETWORK COMMUNICATION GROUP CORPORATION.
Legal Representative (or Authorized Representative):
Zhang Xxxx Xxxxx
[official seal]
CHINA NETCOM HOLDINGS (BVI) LIMITED
Legal Representative (or Authorized Representative):
Tian Su Ning
CHINA NETCOM CORPORATION (HONG KONG) LIMITED
Legal Representative (or Authorized Representative):
Tian Su Ning
CHINA NETCOM CORPORATION LIMITED
Legal Representative (or Authorized Representative):
Tian Su Ning
[official seal]
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