EXHIBIT 10.6
ASSETS AND LIABILITIES TRANSFER AGREEMENT
BY AND BETWEEN
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
AND
CHINA NETCOM CORPORATON LIMITED
ASSETS AND LIABILITIES TRANSFER AGREEMENT
This Agreement is made and entered into on Xxxx 00, 0000 xx Xxxxxxx, Xxxxxx'x
Xxxxxxxx of China ("PRC") by and between the following parties:
(1) PARTY A: China Network Communications Group Corporation
Address: Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx, PRC
(2) PARTY B: China Netcom Corporation Limited
Address: 0 Xxxxxxxxxxx Xxxx, Xxxxxxxx and Technical Development
Zone, Beijing, PRC
WHEREAS,
(1) Party A is a state-owned enterprise duly incorporated and validly
existing under the laws of PRC, and also an organization with
investment authorized by the state and a pilot project for
state-holding corporations; Party B is a foreign-invested enterprise
duly incorporated and validly existing under the laws of PRC;
(2) In order to further implement the Telecommunications Reform Program
by the State Council and to realize the merger between Party A and
China Netcom (Holdings) Corporation Limited (hereinafter referred to
as "Netcom Holdings") and overseas listing, it is necessary to carry
out a series of restructuring for Netcom Holdings and its
subsidiaries including Party B;
(3) Before the restructuring, Netcom Holdings holds the equities of
Party B successively through China Netcom (Holdings) BVI Corporation
Limited (hereinafter referred to as "BVI CORPORATION") and China
Netcom Corporation (Hong Kong) Limited (hereinafter referred to as
"HONG KONG CORPORATION");
(4) As a part and step of the restructuring, Party A has entered into an
Agreement of Equity Transfer of China Netcom (Holdings) Corporation
Limited on Apr 20, 2004 with four shareholders of Netcom Holdings,
i.e., Chinese Academy of Sciences, The information and Network
Center of State Administration of Radio, Film and Television, China
Railways Telecommunications Center and Shanghai Alliance Investment
Limited (hereinafter referred to as "FOUR SHAREHOLDERS"), pursuant
to which the Four Shareholders shall respectively transfer 25% of
their Netcom Holdings' equities to Party A. Upon completion of the
transfer, Netcom Holdings shall become a wholly-owned subsidiary of
Party A. And in turn, Party A shall receive 100% of Netcom Holdings'
equities in BVI pursuant to Equity Transfer Agreement of BVI entered
between Party A and Netcom Holdings, which will make BVI a
wholly-owned subsidiary directly held by Party A;
(5) As another important part and step of the restructuring, it is
necessary to restructure Party B entirely, and transfer all its
assets, liabilities and relevant businesses to Party A (unless
otherwise
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specified in this Agreement). Upon completion of the equity transfer
under section (4) and government approval, Party A shall ultimately
inject the proposed listing assets, liabilities and businesses
successively into Party B (hereinafter referred to "ASSETS
INJECTION") through BVI and Hong Kong Company. The overseas public
offering and listing shall be completed by Hong Kong Company;
(6) According to above restructuring requirements and based on the terms
and conditions hereunder, Party B agrees to transfer to Party A and
Party A agrees to receive from Party B the transferred assets and
liabilities (as defined hereunder), and make agreements and
arrangements concerning relevant rights and obligations in foregoing
transfer.
Therefore, based on friendly consultation, both parties hereto agreed as
follows:
ARTICLE ONE DEFINITION
1.1 Unless otherwise stipulated by this Agreement, the following terms have
the meanings set out below in this Agreement:
AUDITED FINANCIAL REPORT Annual Financial Report 2003 of Party B
(See the Exhibit I hereto) prepared
according to Chinese Accounting
Standards and audited by
PricewaterhouseCoopers Xxxxx Xxxx CPAs
Corporation Limited, a recognized audit
organization by both parties.
TRANSFERRED ASSETS AND LIABILITIES (1) all assets and relevant liabilities
and interests listed in the audited
financial report of Party B, together
with any other assets, rights,
interests, liabilities,
responsibilities and obligations
(including any potential and contingent
liabilities), which unlisted in the
audited financial report but actually
held or borne by Party B as of
December, 31, 2003 except for the
equities of Party B in China Netcom
(Hong Kong) Operating Corporation
Limited and all overseas assets held by
Party B, and (2) all rights, interests,
liabilities, responsibilities,
obligations (including any potential
and contingent liabilities) of Party B
occurred between December, 31, 2003 and
the Effective Date (as defined
hereunder).
Effective Date The date on which all prerequisites agreed herein are
fulfilled
1.2 For the purpose of this Agreement, all headings are set only for the
convenience of reading, in no
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events shall they affect the interpretation of the terms and conditions
herein.
ARTICLE TWO TRANSFER OF ASSETS AND LIABILITIES
2.1 Party B agrees to transfer to Party A and Party A agrees to receive from
Party B the transferred assets and liabilities.
2.2 Both parties hereto agree that Party A shall not pay any cash
considerations to Party B for receipt of the transferred assets and
liabilities as a whole from Party B pursuant to this Agreement.
2.3 Both parties hereto agree that, in case that the prerequisite agreed in
article 3.2 herein is fulfilled, the transferred assets and liabilities
shall be owned or borne by Party A since Dec 31, 2003 (the long-term
investments in transferred assets and liabilities shall be processed
according to article 5.1 herein).
2.4 Based on foresaid article 2.3, for the purpose of transfer of the
transferred assets and liabilities, Party A and Party B further agree
that:
2.4.1 All rights, interests, responsibilities, obligations, liabilities
and any potential or contingent liabilities (if any) under the
transferred assets and liabilities shall be enjoyed or borne by
Party A;
2.4.2 All rights, obligations and liabilities of Party B under any
business contracts and other contracts entered into by Party B with
any third party in connection with the transferred assets and
liabilities shall be succeeded by Party A at the time the
transferred assets and liabilities are transferred to Party A; Party
A may further arrange its associated affiliates to succeed such
contracts without written consent from Party B. Party B shall assist
Party A and its associated affiliates with the necessary procedures
in changing contract party with a related third party (except that
it is otherwise agreed in item 2.4.5);
2.4.3 Since the Effective Date, as for any suits, arbitrations, claims or
other legal proceedings in connection with the transferred assets
and liabilities or related contracts, regardless occurred before or
after the Effective Date, Party A shall participate relevant suits,
arbitrations or other legal proceedings as litigant and enjoy
relevant rights as well as perform relevant obligations;
2.4.4 If any prior authorizations, approvals, permissions, confirmations
or exemptions from any third party that are necessary for the
transfer of transferred assets and liabilities to Party A fail to
complete before the Effective Date, Party A and Party B shall take
all necessary actions in accordance with this Agreement to complete
such procedures as soon as possible, provided however, all rights,
interests, profits and all obligations, losses and claims arising
from or in
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connection with such assets and liabilities shall be assumed by
Party A; and Party A shall make full and effective compensation for
any resultant costs or losses suffered by Party B for any reason;
2.4.5 In consideration of the requirement of the restructuring that after
the transferred assets and liabilities has been transferred to Party
A, part of the transferred assets and liabilities (such transferred
assets and liabilities will be listed in assets evaluation report on
assets injected to be submitted to State-owned Assets Supervision
and Administration Commission of the State Council, hereinafter
referred to as "BACK-INJECTED TRANSFERRED ASSETS AND LIABILITIES")
will be injected back into Party B by Party A through assets
injection, therefore, Party A and Party B agree that, the business
contracts and other contracts entered into by Party B with third
party, which will be resumed by Party B after assets injection, are
unnecessary to change contract party with a related third party,
provided however, this provision shall not affect or relieve the
obligations and responsibilities that shall be undertaken by Party A
in accordance with other articles contained herein.
2.5 For the transfer of bank loans in the transferred assets and liabilities,
Party A further undertakes to Party B that:
2.5.1 Party A shall make every effort and take all necessary actions
(including but not limited to signing necessary consent letter to
change loan name or entering loan renewal agreement with relevant
loan bank) to impel relevant loan bank to issue written consent to
transfer the transferred assets and liabilities under this Agreement
and waive any guarantee Party B has provided for the bank loan
(including but not limited to the security of pledge of right to
charge tariff) before the Effective Date;
2.5.2 Party A shall make every effort and take all necessary actions to
obtain before the date of effectiveness all necessary written
consents on the transfer of assets and liabilities by Party B to
Party A from Netcom Holdings' creditors (including written consent
from related loan banks of Netcom Holdings agrees to remove the
security of pledge of right to charge tariff made by Party B for
Netcom Holdings' loan).
ARTICLE THREE EFFECTIVENESS OF TRANSFER
3.1 Transfer agreed under article 2 herein shall become effective when the
restructuring and list plan of Party A is approved by the State Council
and relevant governmental authorities. If otherwise agreed in this
Agreement, the other provisions shall prevail.
3.2 Both parties hereto may waive in written the regulated conditions and
prerequisites for the transfer in order to complete equity transfer under
this Agreement as soon as possible.
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ARTICLE FOUR REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
4.1 Both parties hereby make the following representations and warranties to
each other:
(1) It is legal entity duly incorporated and validly existing under the
laws of PRC;
(2) It has legally and effectively obtained all internal authorizations,
approvals and consents necessary for performance of this Agreement;
this Agreement has binding force over it and is enforceable;
(3) The transfer under article 2 herein shall come into force on
condition that Party A should wholly-own, directly or indirectly
pursuant to the laws of PRC, all equities of Party B in certain
period.
4.2 As to transferred assets and liabilities, Party A agrees to make
compensations for Party B on the following relevant matters and at any
time enable Party B to obtain full, sufficient, timely, effective and
adequate compensations:
(1) Any indictment, claims, lawsuits, losses, compensations, payments,
expenses and costs suffered by Party B arising from the transfer of
assets and liabilities (including but not limited to professional
service charge and costs) to Party A and occurrence of any event
before or after the date of effectiveness;
(2) Any indictment, claims, lawsuits, losses, compensations, payments,
expenses and costs (including but not limited to professional
service charge and costs) suffered by Party B after the date of
effectiveness for failure in obtaining advance authorization,
approvals, consents, confirmations or exemptions of any third party
necessary for the transfer under item 2.4.4 before the date of
effectiveness.
ARTICLE FIVE OTHER AGREEMENTS
5.1 As to Party B's equities in its long-term invested entities before the
Effective Date (including the Effective Date), both parties agree that
Party B shall transfer the equities as soon as possible to associated
affiliates of Party A or a suitable third party. All proceedings from
transfer shall be included into transferred assets and liabilities under
this Agreement and be handed over to Party A timely by Party B. Party A
hereby undertakes to Party B that it shall make every effort (including
but not limited to impelling its associated affiliates or suitable third
party to pass relevant resolutions or signing relevant agreements) to
assist Party B to go through all procedures necessary for the transfer as
soon as possible and make enough and effective compensation for Party B
for any claims or losses suffered by Party B arising from the equities and
its transfer.
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5.2 As to Party B's equities in China Netcom (Hong Kong) Operating Corporation
Limited, Party A hereby warrants to Party B that it will make every effort
(including but not limited to urging relevant overseas subsidiary to pass
relevant resolutions and sign relevant agreements), before the date at
which assets evaluation results on assets injected are approved by
State-owned Assets Supervision and Administration Commission of the State
Council, to assist Party B to transfer its equities, and make sufficient
and effective compensations for Party B as to any claims or losses
suffered by Party B arising from the equities and its transfer.
5.3 Both Parties agree that after the date of effectiveness, the Parties will
carry out adequate consultation, coordination and cooperation on
unfinished matters for careful arrangement of business, organizations and
personnel integration concerned transfer of assets and liabilities under
this Agreement.
ARTICLE SIX BREACH OF THE CONTRACT
6.1 Each Party shall be entitled to claim against the breach of any
commitments and warrants or other clauses herein by the other Party. The
alleged party shall be responsible for all direct or indirect losses,
costs and liabilities suffered by the other party due to its breach of
commitments and warrants or any other clauses herein.
ARTICLE SEVEN DISPUTE RESOLUTION
7.1 If any disputes develop among the Parties in respect of the validity,
interpretations or performance of this Agreement, the parties should
resolve the disputes in question through friendly negotiation first. If
the negotiation in respect of the disputes fails within thirty (30) days
as from the date when such dispute arose, any Party shall have the right
resort to litigations to the People's Court with proper jurisdiction.
ARTICLE EIGHT EFFECTIVENESS OF THIS AGREEMENT AND OTHERS
8.1 This Agreement shall come into effect once signed by both parties' legal
representatives or authorized representatives and affixed with their
official seals.
8.2 All amendments or supplements to this Agreement shall be effective only
signed and officially sealed by the legal representatives or authorized
representatives of both parties.
8.3 This Agreement represents the entire agreement between both parties on
transfer of the transferred assets and liabilities and shall replace any
written or oral agreement, contract and memorandum (if any) between both
parties.
8.4 This Agreement is made into eight (8) duplicate originals. Each party
holds two (2), and each original
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shall have the same legal binding effect. The remains shall be kept by
Party A to process relevant reporting or filing procedures.
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(Signature page)
China Network Communications Group Corporation (seal)
By: _____________________________________________
Legal Representative or Authorized Representative
China Netcom Corporation Limited (seal)
By: _____________________________________________
Legal Representative or Authorized Representative
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Appendix One: Audited Financial Reports
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