PROPERTY LEASING AGREEMENT BY AND BETWEEN CHINA NETWORK COMMUNICATIONS GROUP CORPORATION AND CHINA NETCOM (GROUP) COMPANY LIMITED
EXHIBIT 4.32
BY AND BETWEEN
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
AND
CHINA NETCOM (GROUP) COMPANY LIMITED
This Agreement is made and entered into on November 6, 2007 in Beijing, People’s Republic of China
(“PRC”) by and between the following two parties:
(1)
|
Party A: | China Network Communications Group Corporation (“Netcom Group”) | ||
| Address: | Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, | |||
| Xxxxxxx, XXX | ||||
(2)
|
Party B: | China Netcom (Group) Company Limited (“CNC China”) | ||
| Address: | Xxxxxxxx X, Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx | |||
| Xxxxxxxx, Xxxxxxx, PRC |
Whereas:
(1) Netcom Group is a state owned enterprise duly incorporated and validly existing under the
laws of the PRC;
(2) CNC China is a foreign funded enterprise duly incorporated and validly existing under the
laws of PRC and is ultimately controlled by Netcom Group through China Netcom Group Corporation
(Hong Kong) Limited (“Listed Company”), a company duly incorporated and validly existing under the
laws of the Hong Kong Special Administration Region and dually listed on the Hong Kong Stock
Exchange and New York Stock Exchange. CNC China is approved by the Ministry of Information Industry
of the PRC to operated relevant telecommunications services in Beijing, Tianjin, Hebei, Henan,
Shandong, Liaoning, Heilongjiang, Jilin, Inner Mogolia and Shanxi;
(3) CNC China desires to enter into property leasing arrangements with Netcom Group in its
telecommunications business operations.
In this Agreement, the term “Tenant” and “Lessor” refer to, depending on particular situation,
Netcom Group (including branches, subsidiaries, and other controlled units, but excluding branches,
subsidiaries and other controlled units of the Listed Company) or CNC China (including branches,
subsidiaries, and other controlled units) , or both Parties, for this Agreement.
Pursuant to the Contract Law of the PRC as well as relevant provisions of other laws and
regulations, for the purpose of clarifying their respective rights and obligations, the Parties,
through cooperative negotiation, hereby enter into this Agreement as follows:
ARTICLE ONE SCOPE AND PURPOSE OF THE LEASE
1. Due to the demand of business operations, Netcom Group and CNC China agree to lease to each
other the Properties owned by their respective branches, subsidiaries, affiliates and enterprises
or controlled units (hereinafter collectively referred to as “Subsidiary Companies”). Netcom Group
and CNC China confirm that such subsidiary companies, enterprises and units have agreed to entrust
Netcom Group or CNC China to exercise the leasing rights of the Properties defined hereunder.
Netcom Group agrees to lease to CNC China the Properties owned by Netcom Group hereunder
(hereinafter referred to as “Properties of Netcom Group”); and CNC China is willing to lease the
Properties of Netcom Group and pay the consideration accordingly as provided hereunder. CNC China
agrees to lease to Netcom Group the Properties owned by CNC China hereunder (hereinafter referred
to as “Properties of CNC China”); and Netcom Group is willing to lease the Properties of CNC China
and pay the consideration accordingly as provided hereunder.
2. The scope of the Properties of Netcom Group and the Properties of CNC China as referred to in
the foregoing article shall be defined in the Appendix of this Agreement. Netcom Group and CNC
China may make adjustment once a year to the scope of the Properties of Netcom Group and the
Properties of CNC China as defined in the Appendix in accordance with the actual circumstances.
3. Both Parties agree that the Properties of Netcom Group or the Properties of CNC China they
have leased shall only be used by them within the permitted scope to legally engage in business
operational activities, and neither Party may lease the other Party’s Properties to a third party
without the other Party’s written consent, and this sub-leasing party shall still be liable for the
liabilities and obligations hereunder.
ARTICLE TWO TERMS OF LEASING
1. The agreed lease term of the Properties hereunder is the same as that of this Agreement,
subject to item 2 of this Article.
2. The Lessor may immediately terminate the agreed lease of the Properties hereunder if the
Tenant commits any of the following:
1) The Tenant, at its own discretion, sublease or sublend the Properties of the Lessor to other
party without the prior consent of the Lessor (except when the Properties are subleased or sub-lent
to the subsidiaries or affiliated companies of the Tenant);
2) The Tenant violates the purpose of usage as agreed by both Parties for the leasing, or uses
the leased Properties to conduct any illegal activities and do harm to the public interests.
3. If, in accordance with Article Ten, the Tenant does not exercise the right of renewal but is
unable to return the Properties to the Lessor upon the expiration of this Agreement due to its
business operations, the Lessor shall extend the term to a period as deemed appropriate and is
entitled to claiming rental from the Tenant for an amount negotiated and agreed by both Parties.
ARTICLE THREE RENTAL AND METHOD OF PAYMENT
1. Netcom Group and CNC China agree that the actual rental for the Properties leased to each
other shall be determined by both Parties in the Appendix to this Agreement based on the market
price or the depreciation and maintenance cost and with reference to the rental standard set by the
local price authorities while taking into consideration the actual needs of the Parties (not
exceeding the market price).
2. Netcom Group and CNC China agree that both Parties may sign separate execution documents with
regard to the leasing issues of certain Properties of Netcom Group or certain Properties of CNC
China with the purpose of specifying the applicable terms and conditions relating to such leased
Properties, provided that the execution documents shall comply with the principles, compendium and
terms and conditions set forth hereunder.
3. The foregoing rental shall be reviewed once a year where Netcom Group and CNC China shall
negotiate to determine whether the rental needs to be adjusted as well as the actual amount of the
rental after such adjustment.
4. The rental shall be settled once each quarter and the settlement date is the last day of each
quarter. When the last day of the quarter happens to be Saturday, Sunday or public holiday, the
settlement date shall be postponed to the first working day immediately after the holiday.
5. All tax burdens incurred by the leasing of the Properties of Netcom Group or the Properties
of CNC China, and management fees and other charges levied by the state and local governments
against the Properties of Netcom Group and the Properties of CNC China shall be borne by the
Lessor, unless otherwise specified hereunder.
ARTICLE FOUR THE REPAIR AND MAINTENANCE OF THE PROPERTIES DURING THE LEASE TERM
The repair and maintenance of the Properties during the lease term is the Lessor’s obligation, and
all costs incurred for this purpose shall be borne by the Lessor. When performing necessary
renovation to the leased Properties, unless otherwise specified by this Agreement, the Tenant shall
consult the Lessor for any renovation involving the alterations to the main structure of the leased
Properties and shall not proceed with the renovation until a written agreement is entered into.
However, unless with valid reasons, the Lessor shall not refuse or delay the alterations to the
main structure of the Properties requested by the Tenant. Regarding alterations, additions that do
not involve the main structure of the Properties, the Tenant may perform such alterations and
additions on its own and at its own expense without notice to and consent from the Lessor. Any
additions or value added to the Properties as a result of renovation, alterations or additions made
by the Tenant or the Lessor during the lease term shall belong to the Lessor.
ARTICLE FIVE CHANGE OF THE LESSOR
1. If the Lessor transfers the title of the leased Properties to a third party, this Agreement
shall remain in force and effective to the new owner of the title of the Properties.
2. When the Lessor sells the ownership of the leased Properties, the Lessor shall notify the
Tenant three months before the sale. The Tenant shall have the preferential right under the same
conditions.
ARTICLE SIX THE REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
1. Both Netcom Group and CNC China hereby represent and warrant to the other Party that both
Parties are established, registered and existing companies or organizations in accordance with the
laws of the PRC and have full powers and authorizations (including the legal, the company’s
internal and other powers and authorizations):
1) The powers and authorizations to own, lease, rent and operate its assets;
2) The powers and authorizations to sign and implement this Agreement.
2. The Lessor hereby represents and warrants to the Tenant as follows:
1) The Lessor is the only lawful owner of the leased Properties and has the exclusive right to
lease the said Properties to the Tenant for considerations in accordance with the provisions of
this Agreement;
2) The leased Properties, when delivered to the Tenant for use, are in good conditions with
structures complete and adequate for the Tenant to use them for the purposes set forth in this
Agreement;
3) The Lessor undertakes that the Tenant has the right to terminate this Agreement at any time
if the foregoing warranty contains any untrue statement. Meanwhile, the Lessor agrees to undertake
the indemnify obligation for any economic loss and damages incurred to the Tenant by such untruth.
3. The Tenant hereby represents and warrants to the Lessor as follows:
1) The Tenant shall pay the relevant rental to the Lessor in accordance with Article Three of
this Agreement. If the Tenant fail to pay the said rental, the Tenant 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 the Lessor.
2) During the lease term, the Tenant shall abide by the relevant laws and regulations of the PRC
and it shall be the Tenant’s sole responsibility to bear the consequences of security, fire and
environment protection issues.
4. Netcom Group warrants to providing CNC China’s auditors with the accounting records of Netcom
Group and its connected persons for any connected transactions.
5. Any terms of this Agreement and its appendixes are not in violation of the regulatory
documents of each Netcom Group and the law and regulations of the PRC.
6. It is agreed that both Parties will take further actions to ensure the realization of the
principles and provisions in this Agreement. It is further agreed that both Parties will ensure
that, CNC China, being a subsidiary of a company to be listed or listed, China Netcom Group (Hong
Kong) Limited, shall comply with the Listing Rules of the Hong Kong Stock Exchange for connected
transactions.
ARTICLE SEVEN FORCE MAJEURE
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 fifteen (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 within a reasonable time once the Force
Majeure event has ended.
2 Force Majeure in this Agreement means all objective situations that are unforeseeable,
unavoidable and that cannot be overcome.
ARTICLE EIGHT BREACH OF CONTRACT
1. The failure of a Party to perform the obligations set forth by this Agreement shall be deemed
in violation of the contract. The delinquent Party shall correct this noncompliance within five (5)
days upon receiving from the other Party detailed notice of such violation. If after five (5) days,
such violation of Agreement has not been corrected, the delinquent Party should compensate the
other Party for all direct and foreseeable losses caused by such breach of contract.
2. If the Tenant’s use of the leased Properties is prolonged due to the errors or mistakes of
the Lessor, the agreed lease term of the Properties hereunder shall be extended accordingly.
ARTICLE NINE CONFIDENTIALITY
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 or retaining listing.
ARTICLE TEN GOVERNING LAWS AND DISPUTES RESOLUTION
1. The execution, power, interpretation, implementation and disputes resolution of this
Agreement are subject to the protection and jurisdiction of the law of the PRC.
2. Both Parties shall seek to settle matters of dispute arising from the implementation of this
agreement or in connection with this agreement by cooperative negotiation. If the matters of
disputes cannot be settled by negotiation, either Party has the right to resort to litigation at
the people’s court which has the jurisdiction over the matter.
ARTICLE ELEVEN EFFECTIVENESS OF AGREEMENT AND OTHERS
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 from January 1, 2008 to December 31, 2010. If CNC China wishes to renew this Agreement
and notifies Netcom Group with 3 month’s notice, this Agreement shall be renewed automatically for
another 3 years on the same terms. There is no limit on the number of renewal.
2. The supplementary agreements, side agreements, and documents drawn according to the
principles of this Agreement are parts of this Agreement. Both Parties agree that any changes,
revisions or amendments to this Agreement shall come into effect by written agreements entered into
by both Parties and shall become indivisible parts of this Agreement.
3. The Agreement is made in Chinese. It is made into two (2) duplicate originals. Each Party
holds one (1) copy, and each copy shall have the same legal binding effect.
IN WITNESS WHEREOF the Legal representatives or the authorized representatives of both Parties
hereto have executed the Agreement as of the date and venue first written above.
Signature page:
| CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL) |
||||
| By: | /s/ Zuo Xunsheng | |||
| Legal Representative or Authorized Representative | ||||
| CHINA NETCOM (GROUP) COMPANY LIMITED (SEAL) |
||||
| By: | /s/ Zuo Xunsheng | |||
| Legal Representative or Authorized Representative | ||||
APPENDIX
I: ITEMIZED LIST OF PROPERTIES LEASED BY NETCOM GROUP TO CNC CHINA
| NO. | NAME OF THE PROPERTY |
USAGE | FULL ADDRESS |
AREA LEASED |
RENTALS (TOTAL) |
NOTE | ||||||||||||||||||
| * | Please indicate in the Note column if there are other special articles as applicable. |
II: ITEMIZED LIST OF PROPERTIES LEASED BY CNC CHINA TO NETCOM GROUP
| NO. | NAME OF THE PROPERTY |
USAGE | FULL ADDRESS |
AREA LEASED |
RENTALS (TOTAL) |
NOTE | ||||||||||||||||||
| * | Please indicate in the Note column if there are other special articles as applicable. |
