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Exhibit 10.1

 
Business Agreement

 
This Business Agreement is made on October 21st,2011 in P.R.C.by and between:
 
VelaTel Global Communications Inc.(“VelaTel”)
Address: 12656 High Bluff Drive, Suite 155, San Diego, California 92130 USA

Next Generation Special Network Communications Technology Co. Ltd. (“NGSN”)
Address: 4th Floor, Putian Building, No. 6 North Second Street, Haidian
District, Beijing, 100080, PRC
 
VelaTel and NGSN are each referred to as a “Party” and together as the
“Parties.”
 
WHEREAS:
 
A.
VelaTel is in the business of designing, building, deploying and operating high
speed wireless broadband telecommunications networks in key markets throughout
the world. VelaTel has technical expertise, sales, marketing, customer support,
relationships with equipment vendors and access to vendor and institutional
financing (collectively “VelaTel Resources”).

 
B.
NGSN holds a License for Value-added Telecom Service Business (“SP License”, see
Annex 1 to this Agreement), by which NGSN is authorized to provide information
service business nationwide in the People’s Republic of China (“PRC”) on
wireless networks.

 
C.
NGSN has the ability to obtain licenses from appropriate government agencies in
the PRC to use radio frequency spectrum in the 1.8GHz and 3.5GHz bandwidth, and
has special authorizations from central, regional and local governments,
including but not limited to concessions and other authorizations for the
deployment of wireless broadband access networks.

 
D.
The Parties entered into a Memorandum of Understanding on August 26th, 2011,
based on which the Parties wish to cooperate with each other, and to define the
rights and obligations of each Party pursuant to the terms set forth below.

 
AGREEMENT
 
1.             Overview of Project Structure
 
1.1          NGSN shall, pursuant to relevant PRC laws and regulations,
authorize one of its subsidiary companies (“NGSN’s Subsidiary”) to carry out
telecom service business that is covered by its SP license and future telecom
business related licenses (collectively “Telecom Licenses”). Such authorization
shall be legal, irrevocable and exclusive. Without VelaTel’s written consent,
NGSN shall not authorize any other third party to use its Telecom
Licenses.  NGSN’s Subsidiary shall conduct business that is permitted under the
Telecom Licenses.
 

 
 

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1.2           VelaTel shall establish a holding company organized in Cayman
Islands (“Cayman Co”) through one of its subsidiary companies.  Cayman Co shall
have a wholly owned subsidiary organized in Hong Kong (“HK Co”).  HK Co shall
have a wholly owned subsidiary organized in Beijing that also qualifies as a
wholly foreign owned enterprise under Chinese law (“WFOE”, the Cayman Co, HK Co
and WFOE are collectively referred to as “New Co”).  WFOE shall be a technical
service company, engaged mainly in the business of telecom service related
technology development, consulting, design, deployment management and operation
management.
 
1.3           NGSN’s Subsidiary shall sign a set of agreements with WFOE, to
exclusively and irrevocably contract WFOE for the provision of deployment
management and operation management and other services by WFOE to NGSN’s
Subsidiary (collectively the “Service Agreement”). WFOE and/or VelaTel shall pay
capital expenditures, operating expenditures and other negative cash flow in
connection with the Business for NGSN’s Subsidiary, and shall arrange financing
for NGSN’s Subsidiary.  The revenue of NGSN’s Subsidiary shall be used in
priority to reimburse WFOE and/or VelaTel for any amount paid for by either of
them, and to repay any financing arranged by WFOE and/or VelaTel.  NGSN’s
Subsidiary shall pay a service fee to WFOE, of which the method of calculation
and payment shall be stipulated in the Service Agreement. In principal the total
investment made by WFOE and/or VelaTel (including third-party financing) shall
be no less than US$10million for each municipality and provincial capital city,
and US$8million for any other city. The actual investment intensity and schedule
shall comply with the Business Plan that shall be jointly prepared by NGSN’s
Subsidiary and WFOE. The Business Plan shall be attached to the Shareholders and
Share Subscription Agreement as a binding Annex.
 
1.4           VelaTel shall provide financing to WFOE and NGSN’s Subsidiary, and
shall assist WFOE and/or NGSN’s Subsidiary to obtain vendor financing or other
third-party financing. WFOE shall repay in priority to VelaTel the amount of
financing provided by VelaTel, unless VelaTel consents for WFOE to retain the
revenues for further investment until the time of equity capitalization of New
Co or other time agreed by VelaTel.
 
1.5           As part of its capital contribution for its interest in New Co,
VelaTel shall transfer to WFOE its resources concerning the design, planning and
engineering works of wireless broadband network in 29 major cities throughout
China (including Beijing, Shanghai, Guangzhou and other cities, a complete list
the cities see Annex 2 to this Agreement）.  NGSN’s Subsidiary and/or WFOE shall
have the right to use such resources when the Business of NGSN’s Subsidiary is
expanded to relevant cities.
 
1.6           To ensure the repayment of WFOE’s financing and payment of service
fees to WFOE, to the maximum extent authorized by PRC law, the revenue of NGSN’s
Subsidiary shall flow directly from the customers to WFOE.  If in case some
revenues must be paid to NGSN’s Subsidiary in order to comply with PRC law, it
shall be paid to a special account of NGSN’s Subsidiary that is jointly
controlled by NGSN’s Subsidiary and WFOE.  The shareholders of NGSN’s Subsidiary
shall pledge their shares in NGSN’s Subsidiary to WFOE as collateral for this
repayment obligation.
 
 
 
 
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1.7           VelaTel and NGSN shall sign a Shareholders and Share Subscription
Agreement, according to which NGSN is entitled to obtain up to 45% shares of
Cayman Co.  25% shares of Cayman Co will be issued after the execution of the
Shareholders and Share Subscription Agreement, 10% shares will be issued after
NGSN obtains approval from relevant government authorities to use the 3.5GHz
spectrum in the Business Territory (as defined in Article 2.3) or other spectrum
that is suitable for the Business, and the rest 10% will be issued when the New
Co is approved for public listing on a stock exchange. In exchange for shares in
Cayman Co, NGSN shall ensure the continuous validity of its Telecom License
during the term of operation of the New Co, and shall use its best efforts to
obtain additional Telecom Licenses, to secure NGSN’s Subsidiary’s exclusive
right of use of its Telecom Licenses, and the effective performance of the
Service Agreement. Based on the success in obtaining additional Telecom Licenses
and the revenue of New Co, NGSN shall be entitled to issuance of Series A common
stock of VelaTel, in amounts and based on milestones which shall be detailed in
the Shareholders and Share Subscription Agreement.
 
2.              Business and Territory
 
2.1           The business of NGSN’s Subsidiary shall cover all the business
that is permitted by NGSN’s Telecom Licenses, and other related business
(collectively “Business”), which mainly includes wireless broadband network
operation, internet information service, location based service and advertising
service to government, enterprise and individual customers, e.g. fleet tracking
by GPS, tracking people with Alzheimer disease, tracking children and pets,
meter reading services, video surveillance service, trading services, distance
education, and agriculture information.
 
2.2           WFOE shall be the exclusive contractor to provide service to
NGSN’s Subsidiary for the aforementioned Business. Where a special qualification
or expertise is required for any kind of service, WFOE shall have the right to
sub-contract such service to a qualified third party after notify NGSN’s
Subsidiary in written.
 
2.3           The Business of NGSN’s Subsidiary will mainly focus on the
following territories: Heilongjiang Province, Jiangsu Province, Guangxi
Autonomous Region, Guangzhou City, and Chongqing City (“Business Territory”).
The Parties may broaden the scope of Business Territory through discussion.
 
3.             The Operation and Management of New Co
 
3.1           New Co shall establish a Board of Directors (the "Board") which
shall be composed of 3 directors, of which 2 directors shall be designated by
VelaTel and 1 director shall be designated by NGSN. The Chairman of the Board
shall be one of the directors appointed by VelaTel.
 
3.2           HK Co and WFOE shall each have an executive director, who shall be
designated by VelaTel.
 

 
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3.3           VelaTel shall be responsible for the operation and management of
WFOE.  NGSN shall be responsible for monitoring the operation of WFOE to ensure
WOFE’s operations comply with relevant PRC rules on internet security,
information security and national security.
 
3.4           WFOE shall assist NGSN’s Subsidiary on formulating its business
development plan.  NGSN shall assist NGSN’s Subsidiary to obtain necessary
licenses for conducting the business planned by NGSN, or shall obtain the
necessary licenses in its own name, and then grant exclusive right of use to
NGSN’s Subsidiary.  NGSN shall also assist NGSN’s Subsidiary to obtain
government contract opportunities by using its resources.
 
3.5           The Parties shall make efforts to have New Co.be listed in a
domestic or overseas stock market in about three years. VelaTel shall assist New
Co in fulfilling such objective with its overseas financing resources and
legal/financial professionals.
 
4.              Follow-up Actions
 
4.1           After the signing of this Agreement, the Parties shall jointly
form a working group to promote the implementation of this Agreement. The
working group shall consist of core management and technical staff of each
Party, with Robert C. V. Chen, Executive VP and China GM to be the team leader
of VelaTel, and Lu Bin, GM to be the team leader of NGSN.
 
4.2           VelaTel shall start with the formation of the entities comprising
New Co, and endeavor its best efforts to establish New Co by the end of December
2011.
 
4.3           NGSN shall start to apply for 1.8G and 3.5G spectrum usage
approval in the Business Territory, and endeavor its best efforts to obtain the
approval by the end of March 2012.
 
4.4           The Parties shall start the drafting and negotiation of the
Shareholders and Share Subscription Agreement and Service Agreement, the signing
of which shall take place by the end of December 2011.
 
5.              Confidentiality
 
5.1           The confidential information in this Agreement includes this
Agreement itself and the content it concerned, and any information obtained by
one Party from the other Party or its affiliated company, during the execution
and performance of this agreement, regarding its business, operation and
marketing, technology etc., or document which has been taken confidential
measures or marked as “Confidential”.
 
5.2           Both Parties guarantee that the confidential information shall
only be used for the purpose related to this Agreement. Without the other
Party’s written consent, neither Party shall disclose, publish, sell or transfer
the confidential information in any way.
 

 
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5.3           Either Party’s disclosure of confidential information according to
the requirements of law or relevant supervision authority shall not be
considered as breach of confidentiality obligation.
 
5.4          The confidentiality obligation of both Parties shall continue to be
valid during the term of this agreement and continue for two years after this
Agreement is terminated.
 
6.             Breach and Termination
 
6.1          Either Party that breaches this Agreement and causes loss to the
other Party shall compensate the other Party’s loss arising from its breach,
including but not limited to attorney fees and financial expenses that the other
Party incurs for the execution and performance of this Agreement.
 
6.2          Before the date of expiration, this Agreement may be terminated
through both Parties’ discussion.
 
7.             Governing Law and Dispute Resolution
 
7.1           This agreement and any dispute arising from it shall be governed
and construed by Hong Kong law, without regard to the conflict of laws
principles thereof, as the same apply to agreements executed solely by residents
of Hong Kong and wholly to be performed within Hong Kong.
 
7.2           Any dispute relating to this Agreement shall be submitted to Hong
Kong International Arbitration Center for resolution conducted pursuant to its
procedural rules at the time of arbitration. The arbitration award shall be
final and binding on both Parties, and may be enforced in any court of competent
jurisdiction.  The prevailing Party in the arbitration shall be entitled to
recover from the non-prevailing Party its reasonable attorney fees and other
costs and expenses incurred in connection with the arbitration and/or any action
to enforce the results of the arbitration.
 
8.              Others
 
8.1           Each Party shall bear its own expense arising from the execution
and performance of this Agreement unless it is otherwise provided in this
Agreement.
 
8.2           The Parties shall comply with all United States and Chinese laws
and regulations applicable to the performance of their obligations under this
Agreement and any anticipated follow-on agreement, including, but not limited
to, the provisions of the United States Foreign Corrupt Practices Act.  Neither
Party shall pay, promise to pay or authorize the payment of money or anything of
value, directly or indirectly, to any person (whether a governmental official or
a private individual) for the purpose of illegally or improperly inducing or
attempting to induce any foreign official or political party or official thereof
to make a buying decision or illegally or improperly assist New Co. in obtaining
or retaining business, or to take any other action favorable to the Parties in
connection with any proposed transaction between the Parties or a third party.
 

 
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8.3           This Agreement constitutes the entire agreement between the
Parties concerning the subject matter of this Agreement and shall supersede all
previous written or oral agreements between the Parties.
 
8.4           The annexes to this Agreement are an integral part of this
Agreement and have the same legal effect as this Agreement.
 
8.5           For matters that are not addressed in this Agreement, a
supplementary agreement may be made by the Parties through discussion.
 
8.6           This Agreement is executed in both the English and Chinese
language.  In the event of any conflict between the two languages on the meaning
or interpretation of a word, phrase or clause in this Agreement, the English
language version shall prevail.
 
8.7           This Agreement shall come into effect from the date that both
Parties’ authorized representatives sign on this Agreement.
 
This Agreement has been signed by the authorized representatives of each Party
on the date indicated above.
 
VelaTel Global Communications, Inc.
 
By: /s/ Colin Tay      
 
Authorized representative：
Colin Tay
Title: President
 
 
Next Generation Special Network Communications Technology Co. Ltd
 
By: /s/ Tianli Sui      
 
Authorized representative：
Tianli Sui
Title: General Manager
 
 
 
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Annex 1
 
[annex1-1.jpg]
 
 
 
 
Annex 1-1

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Annex 2
 
ANNEX 2 TO BUSINESS AGREEMENT BETWEEN VELATEL AND NGSN
 
29 PRC CITIES WHERE VELATEL HAS PERFORMED ENGINEERING WORK
 
 

Beijing
 
Changchun
 
Changsha
 
Chengdu
 
Chongqing
 
Dalian
 
Fuzhou
 
Guangzhou
 
Guiyang
 
Ha’erbin
 
Haikou
 
Hangzhou
 
Jinan
 
Kunming
 
Lanzhou
 
Nanchang
 
Nanjing
 
Nanning
 
Ningbo
 
Qingdao
 
 
Shanghai
 
Shenyang
 
Shenzhen
 
Shijiazhuang
 
Taiyuan
 
Wuhan
 
Xi’an
 
Xiamen
 
Zhengzhou
 

 
 
 
 
 
 
 Annex 2-1

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