Document:

exv4w27

EXHIBIT 4.27

15 January 2007

CHINA NETCOM (GROUP) COMPANY LIMITED

and

CHINA NETWORK COMMUNICATIONS GROUP CORPORATION

ASSET TRANSFER AGREEMENT

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Rule	 	 	 	Page	 
	 	 	 
	 	 	 	 
	1	 	DEFINITIONS AND INTERPRETATION
	 	 	2	 
	 	 	 
	 	 	 	 
	2	 	ASSET TRANSFER
	 	 	3	 
	 	 	 
	 	 	 	 
	3	 	ASSET DELIVERY
	 	 	4	 
	 	 	 
	 	 	 	 
	4	 	PROFIT AND LOSS BEFORE AND AFTER COMPLETION
	 	 	5	 
	 	 	 
	 	 	 	 
	5	 	EXPENSES AND TAXATION
	 	 	5	 
	 	 	 
	 	 	 	 
	6	 	LABOUR ARRANGEMENT
	 	 	5	 
	 	 	 
	 	 	 	 
	7	 	STATEMENTS, REPRESENTATIONS AND WARRANTIES
	 	 	6	 
	 	 	 
	 	 	 	 
	8	 	CONDITIONS PRECEDENT
	 	 	7	 
	 	 	 
	 	 	 	 
	9	 	EVENTS OF BREACH AND COMPENSATION
	 	 	7	 
	 	 	 
	 	 	 	 
	10	 	PRE-EMPTIVE RIGHT
	 	 	8	 
	 	 	 
	 	 	 	 
	11	 	FORCE MAJEURE
	 	 	8	 
	 	 	 
	 	 	 	 
	12	 	INFORMATION DISCLOSURE AND CONFIDENTIALITY
	 	 	8	 
	 	 	 
	 	 	 	 
	13	 	SURVIVAL
	 	 	9	 
	 	 	 
	 	 	 	 
	14	 	RESOLUTION OF DISPUTES
	 	 	9	 
	 	 	 
	 	 	 	 
	15	 	NOTICES
	 	 	9	 
	 	 	 
	 	 	 	 
	16	 	CONFLICTS
	 	 	9	 
	 	 	 
	 	 	 	 
	17	 	NO ASSIGNMENT
	 	 	10	 
	 	 	 
	 	 	 	 
	18	 	SEVERABILITY
	 	 	10	 
	 	 	 
	 	 	 	 
	19	 	NO WAIVER
	 	 	10	 
	 	 	 
	 	 	 	 
	20	 	GOVERNING LAW
	 	 	10	 
	 	 	 
	 	 	 	 
	21	 	LANGUAGE AND COUNTERPARTS
	 	 	10	 
	 	 	 
	 	 	 	 
	22	 	APPENDIX TO THIS AGREEMENT
	 	 	10	 
	 	 	 
	 	 	 	 
	23	 	EFFECTIVENESS OF THIS AGREEMENT
	 	 	10	 

	APPENDIX 	 	            PARTICULARS OF TARGET ASSETS AND DESCRIPTION OF RELEVANT INFORMATION

 

 

ASSET TRANSFER AGREEMENT

THIS AGREEMENT is made on 15 January 2007 in Beijing, the People’s Republic of China (the “PRC”)

	 	 	 
	BETWEEN:
	 	 
	 
	 	 
	Transferor:

	 	CHINA NETCOM (GROUP) COMPANY LIMITED
	 

	 	(the “Transferor’’ or “CNC China”)
	 

	 	Address: Rm. 1020, China Netcom Tower, No. 21 Financial Street, Xicheng
District, Beijing
	 

	 	Legal Representative: Zhang Chunjiang
	 
	 	 
	Transferee:

	 	CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
	 

	 	(the “Transferee” or “China Netcom Group”)
	 

	 	Address: Rm. 1207, China Netcom Tower, No. 21 Financial Street, Xicheng
District, Beijing
	 

	 	Legal Representative: Zhang Chunjiang
	 
	 	 
	WHEREAS:
	 	 

	(1)	 	CNC China is a limited liability company established and existing in accordance with the laws
of the PRC. CNC China engages in the businesses of domestic fixed telecommunications networks
and facilities (including local wireless loops), voice, data, video and multi-media
communications and information services based on fixed telecommunications networks in twelve
provinces, autonomous regions and municipalities including Beijing, Tianjin, Hebei, Liaoning,
Shandong, Henan, Shanghai, Guangdong, Shanxi, Neimenggu, Jilin and Heilongjiang, international
telecommunications settlement and the development of international telecommunications market.
CNC China also engages in system integration, technical development, technical service,
information consultancy services, equipment manufacture and sales, design and construction in
relation to communications and information services. CNC China Is a wholly-owned subsidiary of
China Netcom Group Corporation (Hong Kong) Limited (“CNC HK”).
	 
	(2)	 	China Netcom Group is a State-owned enterprise established and existing in accordance with
the laws of the PRC, and an entity in which the investment is made with the authorisation of
the State. China Netcom Group currently holds 69.88% of the shares of CNC HK.
	 
	(3)	 	CNC HK is a corporation incorporated and existing in accordance with the laws of Hong Kong.
Its shares were listed on the SEHK on 17 November 2004, and its American Depository Shares
were listed on the New York Stock Exchange on 16 November 2004.
	 
	(4)	 	CNC China engages in the businesses of domestic fixed telecommunications networks and
facilities (including local wireless loops), voice, data, video and multi-media communications
and information services based on fixed telecommunications networks in Shanghai and Guangdong
through its branches in Shanghai and Guangdong, and owns the relevant telecommunications
assets.
	 
	(5)	 	CNC China intends to transfer to China Netcom Group, and China Netcom Group intends to accept
the transfer of, the Target Assets (the “Asset Transfer”).

NOW THEREFORE, for the purpose of the Asset Transfer, through friendly negotiation based on the
principle of equality and mutual benefit, the parties hereto agree as follows:

 

 

	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Unless otherwise specified therein, the following expressions shall have the following
meanings in this Agreement, including the recitals hereof and the appendix hereto:

	 	 	 
	“Transferor” or “CNC China”

	 	means China Netcom (Group) Company Limited.
	 
	 	 
	“Transferee” or “China Netcom Group”

	 	means China Network Communications Group
Corporation.
	 
	 	 
	“CNC HK”

	 	means China Netcom Group Corporation (Hong
Kong) Limited.
	 
	 	 
	“Shanghai Branch”

	 	means China Netcom (Group) Company Limited,
Shanghai Branch.
	 
	 	 
	“Guangdong Branch”

	 	means China Netcom (Group) Company Limited,
Guangdong Branch.
	 
	 	 
	“Target Assets”

	 	means the businesses owned by CNC China in
Shanghai and Guangdong in respect of the
local domestic fixed telecommunications
networks and facilities (including local
wireless loops), voice, data, video and
multi-media communications and Information
services based on fixed telecommunications
network, and the relevant core communications
assets and liabilities in connection with
telecommunications services owned by CNC
China.
	 
	 	 
	“Asset Transfer”

	 	means the transfer of the Target Assets by
the Transferor to the Transferee under Clause
2.1 hereof.
	 
	 	 
	“Asset Transfer Price”

	 	means the aggregate amount of the cash
consideration for the Asset Transfer as
provided in Clause 2.2 hereof.
	 
	 	 
	“Completion Date”

	 	means the end of the month in which all the
conditions precedent to the Asset Transfer
set out in Clause 8.1 hereof have been
satisfied or waived in writing by the parties
to the extent permitted by applicable laws,
whichever is later, or another date agreed
upon by the parties hereto.
	 
	 	 
	“Agreements pending Assignment”

	 	mean the agreements as defined in Clause 3.2
hereof.
	 
	 	 
	“Compensation Period”

	 	means a period of two years from the
Completion Date as provided in Clause 9.5
hereof.
	 
	 	 
	“Pre-emptive Right”

	 	means the right granted by China Netcom Group
to CNC HK and CNC China as defined in Clause
10.1 hereof.

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	“MII”

	 	means the Ministry of Information Industry of
the PRC.
	 
	 	 
	“MOC”

	 	means the Ministry of Commerce of the PRC.
	 
	 	 
	“SEHK”

	 	means The Stock Exchange of Hong Kong Limited.

	1.2	 	Unless otherwise expressly provided, all references to a clause or article in this Agreement
shall refer to a clause or article of this Agreement.
	 
	1.3	 	The term “including” used in this Agreement shall refer to “including but not limited to”.
	 
	1.4	 	All references to a party to this Agreement or any other agreement or document in this
Agreement shall include any successor or authorised assignee of such party.
	 
	1.5	 	All references to any law or any provision of any law in this Agreement shall include any
amendment to or re-enactment of such law or provision, any legal provision replacing such law
or provision, and all regulations and legal documents promulgated pursuant thereto.
	 
	1.6	 	The headings in this Agreement and the appendix hereto are inserted for convenience only and
shall not have any effect on the construction of this Agreement.
	 
	2	 	ASSET TRANSFER
	 
	2.1	 	The Transferor agrees to transfer the Target Assets owned by the Transferor to the Transferee
(particulars of which are specified in Appendix 1) on the Completion Date as stipulated in
this Agreement, and the Transferee agrees to accept the transfer of the Target Assets, in
accordance with the terms and conditions as set forth herein.
	 
	2.2	 	The Transferor agrees to sell the Target Assets to the Transferee for a consideration in cash
of RMB 3,500 million (the “Asset Transfer Price”). In addition, the Transferee will assume an
aggregate principal amount of RMB 3,000 million of debt which is due and owing from the
Shanghai Branch and the Guangdong Branch to independent third parties upon completion of the
Asset Transfer.
	 
	2.3	 	The parties hereto agree that the Transferee shall pay RMB 1,050 million in cash to the
Transferor (equivalent to thirty per cent. (30%) of the Asset Transfer Price) in full within
one (1) business day after the Completion Date and the Transferee shall pay the remaining RMB
2,450 million in cash to the Transferor (equivalent to seventy per cent. (70%) of the Asset
Transfer Price) in full within thirty (30) days after the Completion Date.
	 
	 	 	The Transferee agrees to transmit the aforesaid Asset Transfer Price to a bank account as
designated by the Transferor.
	 
	2.4	 	Except as provided in Clause 9.1 hereof, the Transferee shall be the owner of the Target
Assets immediately after the Completion Date.

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	3	 	ASSET DELIVERY
	 
	3.1	 	Except as otherwise provided by this Agreement, the Target Assets shall be deemed to have
been legally owned by China Netcom Group on the Completion Date, and China Netcom Group shall
not bring any claims against CNC China in respect of the delivery of the Target Assets other
than those as agreed upon herein, except in the case of any breach hereof by CNC China
existing prior to the Completion Date. All assets, liabilities, responsibilities and
obligations concerning the Target Assets existing prior to the Completion Date shall be borne
by CNC China; and any debts concerning the Target Assets and other forms of assets,
liabilities, responsibilities and obligations arising after the Completion Date shall be borne
by China Netcom Group.
	 
	3.2	 	For the purpose of the transfer of the Target Assets, contracts and agreements executed in
the name of Shanghai Branch or Guangdong Branch or any of their sub-branches in connection
with the Target Assets and interests which are effective shall belong to China Netcom Group
commencing from the Completion Date, and the parties hereto have entered into deed of novation
and/or consent letter with other relevant parties to some of such contracts and agreements.
Due to the time limit and the amount of such contracts and agreements, there are a certain
number of such contracts and agreements the assignment of which from CNC China to China Netcom
Group has not been approved by other relevant parties thereto (the “Agreements Pending
Assignment”). With reference to the Agreements Pending Assignment, the parties hereto
specifically agrees as follows:

	 	(1)	 	unless otherwise provided herein, any rights, obligations, profits or losses
held by CNC China under the Agreements Pending Assignment shall belong to China Netcom
Group commencing from the Completion Date. CNC China agrees that any interests received
or held by CNC China in respect of the Agreements Pending Assignment shall be deemed to
have been received or held by CNC China in the capacity as a trustee of China Netcom
Group, and the ownership of such interests shall belong to China Netcom Group. CNC
China shall transfer such interests to China Netcom Group as requested by China Netcom
Group from time to time.
	 
	 	(2)	 	CNC China shall exercise and perform the rights and obligations under the
Agreements Pending Assignment strictly in accordance with the instructions given by
China Netcom Group from time to time, and may not amend any provisions of the
Agreements Pending Assignment or terminate any of the Agreements Pending Assignment.
	 
	 	(3)	 	China Netcom Group shall indemnify CNC China against any actual costs and
expenses reasonably incurred due to the performance by CNC China of its obligations
under Clause 3.2.1 above, except those caused by an act of negligence or willful
default on the part of CNC China.
	 
	 	(4)	 	if it is required to enforce any of the rights of China Netcom Group under the
Agreements Pending Assignment in the name of CNC China, including to bring or conduct
legal or arbitration proceedings or other necessary actions, CNC China shall assist
China Netcom Group in enforcing such rights in the name of CNC China.
	 
	 	(5)	 	the parties hereto shall use their best endeavours to complete the formalities
for the assignment of the Agreements Pending Assignment as soon as practicable, and/or
to obtain the approval letters from other relevant parties to the Agreements Pending
Assignment.

	3.3	 	Due to the reason that some of the Target Assets, such as land use rights, buildings,
structures and vehicles, the transfer and registration formalities of which needs to be
completed, and that

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	 	 	only the de facto delivery (transfer of ownership) of such assets and not the transfer of
legal ownership of such assets (completion of the transfer formalities) can be completed on
the Completion Date, CNC China agrees to assume the obligations to assist the transfer of
the ownership of such assets to China Netcom Group or its local branch or sub-branch after
the Completion Date.
	 
	3.4	 	The Transferor and the Transferee agree that the account receivables and the account payables
between the Shanghai Branch and the Guangdong Branch on the one hand and the Transferor on the
other hand shall be settled in cash within one (1) business day after the Completion Date.
	 
	3.5	 	The parties hereto agree to use their best endeavours to complete the completion formalities
that have not been completed on the Completion Date. The parties hereto agree to take all
necessary steps to ensure the full implementation of the completion, including but not limited
to the entering into or procuring other relevant parties to enter into any document, applying
for and obtaining any approval, consent and permit, and handling the registration, recording
and filing of the relevant procedural documents. The parties hereto shall negotiate in an
amicable manner and handle properly any relevant matters not referred to herein.
	 
	4	 	PROFIT AND LOSS BEFORE AND AFTER COMPLETION
	 
	4.1	 	The parties hereto agree that the profit and loss generated from the Target Assets prior to
the Completion Date (and including the Completion Date) shall be borne and owned by the
Transferor.
	 
	4.2	 	The parties hereto agree that the profit and loss generated from the Target Assets after the
Completion Date shall be borne and owned by the Transferee.
	 
	5	 	EXPENSES AND TAXATION
	 
	 	 	The parties hereto shall pay their respective taxes arising in connection with the Asset
Transfer in accordance with the requirements under the laws, regulations and regulatory
documents of the PRC. All expenses incurred as a result of the negotiation, preparation and
implementation of this Agreement shall also be borne by the respective parties.
	 
	6	 	LABOUR ARRANGEMENT
	 
	6.1	 	The parties hereto acknowledge that the Transferor shall determine a list of employees who
are to be transferred to the Transferee together with the Target Assets and such employees
shall include all members of the senior management and ordinary employees.
	 
	6.2	 	The parties hereto acknowledge that the labour relationships of all the employees relating to
the Target Assets and their social security (including pension insurance, medical insurance,
and unemployment insurance) prior to the Completion Date shall be handled and arranged by the
Transferor; and that the labour relationships of all the employees relating to the Target
Assets and their social security (including pension insurance, medical insurance, and
unemployment insurance) from the Completion Date shall be handled and arranged by the
Transferor.
	 
	6.3	 	The Transferor and the Transferee shall be jointly responsible and shall jointly settle any
labour dispute arising from causes occurred before the date on which the labour contracts are
amended and from the amendments to the labour contracts.

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	7	 	STATEMENTS, REPRESENTATIONS AND WARRANTIES
	 
	7.1	 	Each of the parties hereto represent to each other that:

	 	(1)	 	such party has full legal right, power and authority to execute this Agreement
and perform its obligations hereunder, which constitute valid obligations binding upon
such party pursuant to the provisions of this Agreement;
	 
	 	(2)	 	the performance of the provisions of this Agreement will not result in:

	 	(i)	 	any breach of any provision of such party’s incorporation
documents or other relevant documents, or breach of any law, regulation and
rule applicable to such corporation; or
	 
	 	(ii)	 	any breach of any important contract, agreement, permit or
other instrument, or any order, judgement or decree issued by any court,
governmental department and regulatory authority;

	 	(3)	 	such party will provide full consultation, close collaboration and active
support to the other party in the process of the Asset Transfer, especially in
satisfying or fulfilling the conditions precedent and handling the completion
formalities of the Asset Transfer;
	 
	 	(4)	 	such party has executed and processed or will execute and process all necessary
documents and approvals, and has taken or will take all necessary steps pursuant to
relevant laws, regulations and rules to ensure the legality and validity of the Asset
Transfer contemplated herein;
	 
	 	(5)	 	such party will handle or assist the other party in the mutual handling of any
matter in respect of the Asset Transfer, including without limitation providing
information in respect of the Transferor, drafting and executing relevant documents,
and handling relevant approval and registration formalities in accordance with the
provisions of applicable law and this Agreement.

	7.2	 	Except as provided in Clause 7.1 above, the Transferor undertakes to the Transferee in
respect of the Target Assets as follows:

	 	(1)	 	the Transferor will operate and manage the Target Assets and the businesses
relating thereto in the ordinary manner from the date hereof till the Completion Date;
	 
	 	(2)	 	the Target Assets are lawfully owned by the Transferor with a clear and legal
title and free from any dispute;
	 
	 	(3)	 	except as disclosed to the Transferee by the Transferor, the Transferor has not
created any mortgage, pledge, lien, or any third party right over such
telecommunications assets which may materially affect the right of the Transferee in
respect of the Target Assets;
	 
	 	(4)	 	other than the liabilities as disclosed and/or the liabilities arising in the
ordinary course of business, the Target Assets are free and clear of, and/or will not
be affected by any actual and/or contingent liabilities or obligations prior to the
Completion Date;
	 
	 	(5)	 	the transfer of the Target Assets from the Transferor to the Transferee
hereunder does not constitute any breach of any contract and agreement to which the
Transferor is a

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	 	 	 	party or any applicable law, administrative regulations and rules, nor does it
constitute any infringement of any right of any third party;
	 
	 	(6)	 	there is no litigation, arbitration or administrative punishment which will
materially and adversely affect the Target Assets or any threat of such litigation,
arbitration and administrative punishment.

	7.3	 	The Transferor and Transferee undertake that in the event that a party hereto breaches any
statement, representation and warranty set out in this Clause 7, the party in breach shall
indemnify the other party in full against any claim, loss, expense or other liability
resulting from the breach.
	 
	8	 	CONDITIONS PRECEDENT
	 
	8.1	 	The parties hereto agree that the completion of the following matters by the parties hereto
shall constitute the conditions precedent to the Asset Transfer:

	 	(1)	 	The approval by the shareholders of CNC HK in general meeting in relation to
the implementation of the Asset Transfer in accordance with applicable laws,
regulations and listing rules;
	 
	 	(2)	 	MIl, MOC and other relevant government and regulatory authorities approving
matters relating to the Asset Transfer such as the change of the business scope of CNC
China.

	8.2	 	The parties hereto shall use their best endeavours to cooperate to satisfy or procure the
satisfaction of each of the conditions precedent following the execution of this Agreement.
Neither party may engage in any act that may preclude or restrict the satisfaction of any
condition precedent as set forth in Clause 8.1 above.
	 
	9	 	EVENTS OF BREACH AND COMPENSATION
	 
	9.1	 	In the event that the Transferee fails to pay to the Transferor the Asset Transfer Price as
scheduled in accordance with the provisions of Clause 2.3 hereof, the Transferee shall pay to
the Transferor a daily fine in an amount equal to 0.05% of the overdue payment, and the
Transferor may suspend the Asset Transfer by a written notice to the Transferee sixty (60)
days after the date on which the payment is due if such amount remains unpaid. If the
Transferee does not pay the Asset Transfer Price and the accrued overdue fine within thirty
(30) days after receipt of the notice of payment from the Transferor, the Transferor may
declare to terminate this Agreement.
	 
	 	 	Any suspension or termination of this Agreement and the Asset Transfer as set forth
hereinabove shall not affect the rights and obligations of the parties hereto which have
already been created or accrued under this Agreement (except as provided in Clause 2.4).
	 
	9.2	 	Any non-performance or partial performance of this Agreement or any performance hereof not in
compliance with the manner or terms as agreed herein shall constitute a breach of this
Agreement, the party in breach shall be liable to the non-defaulting party for such breach. In
case there is breach by each of the parties, their respective liabilities for such breach
shall be ascertained.
	 
	9.3	 	After the formal execution of this Agreement, any non-performance or partial performance by
either party of any obligation, statement, warranty or undertaking provided in this Agreement
shall constitute a breach hereof by such party. The party in breach shall make full and
adequate compensation to the other party, including but not limited to the costs of any legal
action against

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	 	 	the party in breach incurred by non-defaulting party (including without limitation
professional consultation fees) and any legal action involving a third party and
compensations payable to a third party (including without limitation professional
consultation fees) due to the breach.
	 
	9.4	 	The maximum amount of compensation payable by one party to this Agreement to the other under
this Clause 9 shall not exceed the Asset Transfer Price.
	 
	9.5	 	A party to this Agreement may institute claims for compensation against the other within two
years after the Completion Date (the “Compensation Period”) [, and any claims for compensation
shall be subject to the relevant provisions regarding limitation on legal proceedings under
PRC laws].
	 
	 	 	If a party fails to institute a claim for compensation against the other party during the
Compensation Period, such party will be deemed to have waived its rights to claim
compensation under this Agreement (alternatively, the other party will be deemed not to have
committed any breach whilst discharging Its obligations). After the Compensation Period, a
party without having instituted claims for compensation shall not institute claims for
compensation against the other in respect of the discharge of obligations under this
Agreement.
	 
	10	 	PRE-EMPTIVE RIGHT
	 
	10.1	 	In the event that China Netcom Group intends to dispose of the Target Assets or enter into
any joint venture or cooperation with any other party in respect of the interests in the
Target Assets following the completion of the Asset Transfer, CNC China will be entitled to a
first right to acquire them or participate in such joint venture or cooperation at terms equal
to or no less favourable than those offered by China Netcom Group to other parties.
	 
	10.2	 	CNC China shall comply with the relevant provisions of the listing rules of the SEHK and the
laws and regulations of the PRC in its exercise of the pre-emptive right pursuant to this
Clause 10.
	 
	11	 	FORCE MAJEURE
	 
	11.1	 	If any of the parties is rendered unable to perform or is caused to delay in his performance
of any obligation under this Agreement due to the occurrence of any event beyond its
reasonable control or due to any reason other than its own fault or negligence, such party
shall not be deemed to have breached this Agreement and the performance of such obligation
shall be suspended to the extent which is fair and reasonable under the circumstances.
	 
	11.2	 	If a party is rendered unable to perform any of its obligations under this Agreement as a
result of a force majeure event, such party shall give a written notice to the other party
within 7 business days of the occurrence of such force majeure event and the parties shall
mitigate the damage to an extent as is reasonably possible. In the event of any force majeure,
no party shall be held liable for any damage, increase in expenses or loss incurred by the
other party due to any failure to perform or delay in performing this Agreement caused by such
force majeure event, and no such failure or delay shall be deemed a breach of this Agreement.
The party claiming the force majeure event as the cause of its non-performance shall take
proper steps to mitigate or eliminate the effect of the force majeure event, and shall, within
the shortest possible time, endeavour to resume the performance of any obligation so affected
by the force majeure event.
	 
	12	 	INFORMATION DISCLOSURE AND CONFIDENTIALITY
	 
	 	 	Unless otherwise provided by the PRC laws or the laws of the place where the shares of CNC
HK are listed and the listing rules or otherwise required by the SEHK or any other
regulatory

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	 	 	authorities, no party to this Agreement shall publish or permit any person to publish any
announcement relating to this Agreement or any matter ancillary to this Agreement without
the prior written consent of the other party (such consent shall not be unreasonably
withheld).

	13	 	SURVIVAL
	 
	 	 	Save and except as provided under Clause 9.5, the representations, warranties, covenants and
indemnity set out in this Agreement shall continue to have force and effect after the
completion of the Asset Transfer.
	 
	14	 	RESOLUTION OF DISPUTES
	 
	 	 	If any dispute arises in connection with the interpretation or implementation of this
Agreement, the relevant parties shall endeavour to resolve the dispute through friendly
negotiation or mediation conducted by the representatives appointed by each of the parties
for such purpose. If the relevant parties fail to resolve any dispute in the manner as
described above within 30 days after the occurrence of such dispute, either party may
initiate an action at a People’s Court with competent jurisdiction.
	 
	15	 	NOTICES
	 
	15.1	 	Any notices required to be delivered under this Agreement must be in writing and delivered to
the addresses set forth in the beginning of this Agreement, or delivered to the relevant
addresses or transmitted to the fax numbers that are notified by either of the parties to the
other party in writing from time to time.
	 
	15.2	 	Any of the notices mentioned above must be delivered by hand, or sent by registered mail or
transmitted by fax. Any such notice shall be deemed to have been received upon delivery if
delivered by hand, or deemed to have been received on the date of the acknowledgement if
posted by registered mail, or deemed to have been received at the time of transmission if
transmitted by fax.
	 
	15.3	 	The information for the delivery of notices to the parties to this Agreement are as follows:

	 	 	 
	 	 	China Network Communications
	China Netcom (Group) Company Limited	 	Group Corporation
	 
	 
	 	 
	Addressee: Liu Haiqiang

	 	Addressee: Luo Gang
	 
	 	 
	Address: Rm. 1020, China Netcom Tower, No.
21 Financial Street, Xicheng District,
Beijing

	 	Address: Rm. 1207, China
Netcom Tower, No. 21
Financial Street, Xicheng
District, Beijing
	 
	 	 
	Postal Code: 100032

	 	Postal Code: 100032
	 
	 	 
	Fax: 010 6625 9544

	 	Fax: 010 6625 9950

	16	 	CONFLICTS
	 
	 	 	In the event that there is any apparent conflict or discrepancy with the provisions of any
other relevant documents in connection with the Asset Transfer, the provisions of such
documents shall

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	 	 	be appropriately interpreted by reference to the provisions of this
Agreement to the extent permitted by the PRC laws.
	 
	17	 	NO ASSIGNMENT
	 
	 	 	No party shall assign or otherwise transfer or shall purport to assign all or part of its
rights, interests, liabilities or obligations under this Agreement without the prior written
consent of the other party to this Agreement.
	 
	18	 	SEVERABILITY
	 
	 	 	If any one or more of the provisions under this Agreement becomes invalid, illegal or
unenforceable in any respect in accordance with any applicable laws, the validity, legality
and enforceability of the remaining provisions of this Agreement shall not be affected or
prejudiced in any manner.
	 
	19	 	NO WAIVER
	 
	 	 	Save and except as provided under Clause 9.5, no failure or Inability of any party to
exercise, and no delay in exercising, any right, power or remedy under or conferred in
accordance with this Agreement shall constitute a waiver of such right, power or remedy by
that party.
	 
	20	 	GOVERNING LAW
	 
	 	 	This Agreement shall be governed by the laws of the People’s Republic of China, and shall be
interpreted and implemented in accordance with the laws of the People’s Republic of China.
	 
	21	 	LANGUAGE AND COUNTERPARTS
	 
	 	 	This Agreement shall be written in Chinese. This Agreement shall be entered Into in 12
original copies. Each of the parties shall keep 4 copies, and the remaining copies shall be
submitted to the relevant competent authorities of the government for approval and/or
filing. Each of the aforesaid copies of this Agreement shall have equal legal effect.
	 
	22	 	APPENDIX TO THIS AGREEMENT
	 
	22.1	 	The appendix to this Agreement is an integral part of this Agreement, and shall have the same
legal effect as the main body of this Agreement as if it was included in the main body of this
Agreement.
	 
	22.2	 	Amendments to this Agreement or the appendix to this Agreement shall only be made In writing,
and shall be executed and chopped by the legal representatives of the parties or their
authorized representatives, and be subject to the approvals required to be obtained by the
parties in accordance with their respective constitutional documents.
	 
	23	 	EFFECTIVENESS OF THIS AGREEMENT
	 
	 	 	This Agreement shall become effective after it has been executed and chopped by the legal
representatives of the parties or their authorized representatives.
	 
	 	 	In witness hereof, this Agreement is entered into by the authorized representatives of the
parties on the date and at the place stated on the first page of this Agreement.

-10-

 

	 	 	(There is no text below and the next page is the signing page.)

-11-

 

(This page is the signing page and does not contain any text.)

China Netcom (Group) Company Limited (chop)

Legal Representative or Authorized Representative:                                                             

(signature)

China Network Communications Group Corporation (chop)

Legal Representative or Authorized Representative:                                                             

(signature)

-12-

 

APPENDIX

PARTICULARS OF TARGET ASSETS AND DESCRIPTION OF RELEVANT

INFORMATION

	1.	 	Assets and related liabilities of China Netcom (Group) Company Limited, Shanghai Branch
	 
	 	 	The specific relevant assets include: current assets, machinery and equipment, land and
buildings, construction in progress, construction materials, other intangible assets,
long-term amortisation expenses, deferred tax debits and current liabilities.
	 
	2.	 	Assets and related liabilities of China Netcom (Group) Company Limited, Guangdong Branch
	 
	 	 	The specific relevant assets include: current assets, machinery and equipment, land and
buildings, construction in progress, construction materials, land use rights, other
intangible assets, deferred assets and current liabilities of the 21 sub-branches of
Guangdong Branch in Guangzhou, Shenzhen, Dongguan, Zhuhai, Zhongshan, Foshan, Huizhou,
Jiangmen, Jieyang, Shunde, Zhanjiang, Maoming, Zhaoqing, Shantou and Chaozhou.

-13-exv4w28

EXHIBIT 4.28

DOMESTIC INTERCONNECTION SETTLEMENT AGREEMENT

BY AND BETWEEN

CHINA NETCOM (GROUP) COMPANY LIMITED

AND

CHINA NETWORK COMMUNICATIONS GROUP CORPORATION

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:
	 	No. 156, Fuxingmennei Avenue, Xicheng District,
Beijing, PRC
	 
	 	 	 	 
	(2)

	 	Party B:
	 	China Netcom (Group) Company Limited (“CNC China”)
	 
	 	 	 	 
	 

	 	Address:
	 	Building C, No. 156, Fuxingmennei Avenue, Xicheng
District, Beijing, 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 interconnect and settle fees with Netcom Group in its relevant
telecommunications services operations.

Based on fair and reasonable basis, following cooperative negotiation, regarding relevant issues
relating to interconnection settlement between the two Parties, Netcom Group (including branches,
subsidiaries, and other controlled units, but excluding branches, subsidiaries and other controlled
units of the Listed Company) and CNC China (including branches, subsidiaries, and other controlled
units) agreed hereto as follows:

1. BASIC PRINCIPLES

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1.1 For the services and/or facilities provide by either Party to the other Party under this
Agreement, the Party reserves the right to collect reasonable service fees based on the principle
of fairness for such services and/or facilities it provides. The other Party shall make the payment
for the services/or facilities provided.

1.2 The terms of services and/or facilities offered by one Party to the other under this
Agreement shall not be worse than any other third party offering the same or similar services
and/or facilities.

1.3 Should either Party hereunder demand for more services and/or facilities hereunder from the
other Party, the other Party shall make its utmost effort to provide such services and/or
facilities requested under the conditions no less favorable than that under which this Party may
provide the same or similar services and/or facilities to a third party.

1.4 The agreed services and/or facilities hereunder shall fully comply with the purposes agreed
upon under this Agreement and the standard set by the State.

1.5 In the event of any breach of any provision by either Party under this Agreement that leads
to any damage suffered by the other Party, the Party in default shall be liable for all immediate
and full damages for breaching this Agreement. However, this Party shall not be held responsible
for such losses in the event of Force Majeure.

1.6 Both Parties shall provide all reasonable and essential assistance to the other Party for the
purpose of fulfilling the obligations set out in this Agreement.

1.7 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 the Listing Company, shall comply with the Listing Rules of
the Hong Kong Stock Exchange for connected transactions.

2. INTERCONNECTION AND SETTLEMENT VARIETIES

2.1 The Parties agree to achieve interconnections between various telecommunications networks of
the Parties.

2.2 The Parties agree to settle domestic long distance voice services as is set forth in this
Agreement.

3. INTERCONNECTION TECHNICAL REGULATIONS AND STANDARDS, SHARE OF INTERCONNECTION COSTS AND
ENGINEERING CONSTRUCTION

3.1 All foresaid connections shall be made in accordance with the interconnection technical
regulations promulgated by national telecommunications regulatory authorities.

3.2 The Parties shall negotiate on the settlement of interconnection costs and engineering
construction with reference to relevant regulations promulgated by national telecommunications
regulatory authorities.

4. OBLIGATIONS OF THE PARTIES

4.1 The Parties shall warrant that the communication quality between networks be not lower than
the communication quality of the same services in their own networks.

4.2 Under the premise of technical feasibility, when required, either Party shall provide
telecommunications services which has been provided for its own customers to the other Party’s
customer unconditionally with service quality guaranteed.

2

 

4.3 Netcom Group shall be obliged to provide the Listed Company’s auditors with the accounting
records of Netcom Group and its connected persons for any connected transactions.

5. NETWORKS MANAGEMENT AND MAINTENANCE

5.1 Either Party shall give notice to the other Party six (6) months prior to its enlargement and
reconstruction of its network, which may negatively affect the communication of other Party’s
customers.

5.2 Except for Force Majeure, either Party shall give notice to the other Party thirty (30) days
prior to its adjustment of route system, relay circuit, signaling mode, station data and software
version, which may negatively affect the communication of other Party’s customers.

5.3 When required, either Party shall, in a timely manner, cooperate with the other Party when
the latter adjusts the route system, relay circuit, signaling mode, station data and software
version to ensure the communication quality between networks.

5.4 The Parties agree to perform maintenance on their own networks to assure the normal operation
of the whole networks according to the applicable regulations promulgated by national
telecommunications regulatory authorities from time to time.

5.5 Should there be any communication breakdown and problems, the Parties shall take effective
measures to resume communication.

6. SETTLEMENT PRINCIPLES AND METHODS BETWEEN NETWORKS

6.1 Settlement relationships for domestic long distance voice services: Netcom Group and CNC
China make settlement with each other domestic long distance voice services.

Settlement price for domestic long distance voice services: settlement based on voice termination -
operator from whose network calls are originated makes settlement to the operator from whose
network calls are terminated. The price is RMB 0.06/minute whether the calls are terminated in the
network of Netcom Group or CNC China or in networks other than those of Netcom Group and CNC China.
The above-mentioned rate shall be subject to adjustment at any time according to applicable
standards, fixed tariffs and policies published by relevant Chinese regulatory authorities.

The Parties hereby agree that, the above provision in relation to the price of domestic long
distance calls terminated in networks other than those of the Parties is effective as of April 1,
2007. Effective as of April 1, 2007, the Parties agree not to observe Article 6.1 of the Domestic
Interconnection Settlement Agreement among Netcom Group, CNC China and China Netcom Group New
Horizon Communications Corporation, dated September 12, 2005, where it is provided that the price
is RMB 0.09/minute if domestic long distance calls are terminated in networks other than in those
of Netcom Group and its operating companies.

6.2 Data processing and checking principles

Billing and settlement center of CNC China shall be responsible for data processing. If the
difference between the bill of the center and billing data of both Parties (billing data difference
= difference between the relevant two Parties/the averaged data of the relevant two Parties *100%)
is equal to or lower than 3%, the bill of the center shall prevail. If the difference is higher
than 3%, a preliminary settlement shall be made based on the bill data of the center. The Parties
shall submit a written request for dispute arbitration to operational management department of CNC
China within 10 working days from the 20th of each month.

3

 

Operational management department of CNC China shall give a written disposal suggestion within 3
months upon receipt of the written dispute arbitration request. The settled amount that needs
adjustment shall be adjusted in the statement of account of next month.

6.3 Settlement Procedures

Place of settlement: Beijing, China

Settlement period, commence date and termination date: once per quarter, settlement and billing
period (based on the ending time of calls) is from 0:00 (inclusive) of the first calendar day of
the first calendar month of the relevant quarter to 0:00 (exclusive) of the third calendar month of
the relevant quarter..

Method of payment: the paying Party of the month shall pay the net settlement amount to the paid
Party of the month.

7. REPRESENTATIONS AND WARRANTS

7.1 Each Party represents and warrants to the other Party that:

(1) It is a independent legal person duly incorporated and validly existed under the laws
of the PRC. It has the power and authority (including but not limited to any approval,
consents or permission granted by the government departments) to sign and enforce this
Agreement;

(2) No provision in this Agreement violates the constitutive documents or the laws and
regulations of PRC;

(3) It will use its best endeavors to take all necessary and procure appropriate or
advantageous measures to perform its obligations under this Agreement and to make this
Agreement effective in accordance with the laws and regulations of the PRC and the terms of
this Agreement.

8. FORCE MAJEURE

8.1 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.

8.2 Force Majeure in this Agreement means all objective situations that are unforeseeable,
unavoidable and that cannot be overcome.

9. CONFIDENTIALITY

9.1 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 or retaining listing.

10. TRANSFER

4

 

10.1 Without the written approval of the other Party, neither Party may transfer any single right
and obligation as agreed upon under this Agreement.

11. NON-WAIVER

11.1 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.

12. NOTICES

12.1 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.

12.2 Any notice 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.

13. GOVERNING LAWS

13.1 This Agreement shall be governed, interpreted and implemented in accordance with laws of the
PRC.

14. DISPUTES RESOLUTION

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 such Party.

15. EFFECTIVENESS OF AGREEMENT AND OTHERS

15.1 Except as otherwise provided in Article 6.1, 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.

15.2 Subject to compliance with regulatory requirements in respect of the Listed Company’s or
related transactions and 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.

15.3 This Agreement is severable, that is, if any provision of this Agreement is held to be illegal
or unenforceable at any time, the effectiveness and performance of other provisions of this
Agreement shall not be affected.

15.4 This Agreement is made into two (2) duplicate originals. Each Party holds one (1) copy, and
each copy shall have the same legal binding effect.

5

 

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

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