Document:

Exhibit 4.10

 

20 November 2002

 

 

CHINA UNICOM
(BVI) LIMITED

 

 

CHINA UNICOM
LIMITED

 

 

Conditional Sale and Purchase
Agreement

relating to the entire issued capital of Unicom

New Century (BVI) Limited

 

 

THIS AGREEMENT is made on 20 November 2002

 

BETWEEN:

 

(1)                                  CHINA
UNICOM (BVI) LIMITED a company incorporated under
the laws of the British Virgin Islands whose registered office is at Craigmuir
Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands (the Vendor);

 

(2)                                  CHINA
UNICOM LIMITED a company incorporated under the
laws of Hong Kong whose registered office is at 75th Floor, The
Center, 99 Queen’s Road, Central, Hong Kong (the Purchaser).

 

WHEREAS:

 

(A)                              As part of a series of restructurings, Unicom New Century
Telecommunications Corporation Limited (the Target Company) has acquired from Unicom
Group the mobile communications networks in each of Jilin, Heilongjiang,
Jiangxi, Henan, Sichuan and Shaanxi provinces, Chongqing municipality and the
Guangxi and Xinjiang autonomous regions (the Territory).

 

(B)                                Pursuant to a reorganisation agreement dated 20 November 2002,
Unicom Centenarian (BVI) Limited (UCBVI), a wholly-owned subsidiary of Unicom
Group, acquired the Target Company Shares.

 

(C)                                Pursuant to that reorganisation agreement, UCBVI on-sold the Target
Company Shares to its wholly-owned subsidiary, Unicom New Century (BVI) Limited
(the Target Holding Company).

 

(D)                               Pursuant to a conditional sale and purchase agreement dated 20
November 2002 between the Vendor, UCBVI and Unicom Group (the Initial Acquisition),
the Vendor agreed to acquire from UCBVI the entire issued share capital of the
Target Holding Company.

 

(E)                                 The Vendor is a subsidiary of the A Share Company, a limited
liability company whose shares are listed on the Shanghai Stock Exchange. The A
Share Company is in turn a subsidiary of Unicom Group.

 

(F)                                 Immediately prior to the signing of this Agreement, the corporate
structure of the parties to this Agreement in so far as it relates to the
Target Group Companies (as defined herein) is set out in Part A of Schedule 2.

 

(G)                                The Vendor has agreed to on-sell the Target Shares to the Purchaser
for the consideration and upon the terms and conditions set out in this
Agreement.

 

(H)                               The Vendor has agreed to make certain representations, warranties
and undertakings in relation to the Target Group Companies.

 

IT IS AGREED as follows:

 

2

 

DEFINITIONS AND INTERPRETATION

 

1.                                       Words and expressions used in this Agreement shall have the meanings
set out in Schedule 1.

 

SALE OF THE TARGET SHARES AND
PRICE

 

2.1                                 The Vendor agrees to sell as legal and beneficial owner, and the
Purchaser agrees to purchase, the Target Shares. The Target Shares shall be
sold free from all security interests.

 

2.2                                 The total price payable on Completion by the Purchaser to the Vendor
for the Target Shares shall be HK$4,523,181,304 (the Total Price), payable in cash.

 

CONDITIONS PRECEDENT

 

3.1                                 Completion of the sale and purchase of the Target Shares shall be
conditional upon the fulfilment to the reasonable satisfaction of the Purchaser
or waiver of the following conditions:

 

(a)                                  the passing of resolutions by the independent shareholders of the
Purchaser at its general meeting approving (i) the transactions contemplated by
this Agreement, and (ii) the Connected Transactions;

 

(b)                                 the passing of resolutions by the independent shareholders of the A
Share Company at its general meeting approving the Initial Acquisition and the
related connected transactions for the A Share Company;

 

(c)                                  there having been no material adverse change to the financial
conditions, business operations or prospects of any of the Target Group
Companies;

 

(d)                                 the delivery by or on behalf of the Vendor to the Purchaser of
copies of all necessary Regulatory Approvals; and

 

(e)                                  the completion of the Initial Acquisition having taken place.

 

3.2                                 The Vendor undertakes to use all reasonable endeavours to ensure
that the Conditions Precedent set out in clauses 3.1(b), 3.1(c), 3.1(d) and
3.1(e) are fulfilled to the satisfaction of the Purchaser as soon as reasonably
practicable and in any event by 30 June 2003.

 

3.3                                 The Purchaser undertakes to use all reasonable endeavours to ensure
that the Condition Precedent set out in clause 3.1(a) is fulfilled to the
satisfaction of the Vendor as soon as reasonably practicable and in any event
by 30 June 2003.

 

3.4                                 The Purchaser shall be entitled in its absolute discretion, by
written notice to the Vendor, to waive any or all of the Conditions Precedent
set out in clauses 3.1(c) and 3.1(d) either in whole or in part.

 

3

 

3.5                                 If any of the Conditions Precedent has not been fulfilled (or
waived) on or before the date specified in clauses 3.2 and 3.3 or such
other date as the parties to this Agreement may agree in writing, this
Agreement (other than clauses 1, 11 to 14, 16 to 22 and Schedule 1, which
shall continue to be in force) shall automatically terminate and no party shall
have any claim of any nature whatsoever against the other parties under this
Agreement (save in respect of its accrued rights arising from any prior breach
of this Agreement).

 

PRE-COMPLETION UNDERTAKINGS

 

4.1                                 Pending Completion, the Vendor shall procure that:

 

(a)                                  each Target Group Company shall carry on its business in the
ordinary and usual course and shall not make (or agree to make) any payment
other than routine payments in the ordinary and usual course of trading;

 

(b)                                 each Target Group Company shall take all reasonable steps to
preserve and protect its assets;

 

(c)                                  the Purchaser’s representatives shall be allowed, upon reasonable
notice and during normal business hours, access to the books and records of
each Target Group Company (including, without limitation, all statutory books,
minute books, leases, contracts, supplier lists and customer lists) together
with the right to take copies;

 

(d)                                 no Target Group Company shall do, allow or procure any act or
omission which would constitute or give rise to a breach of any Warranty as if
the Warranties were to be repeated on or at any time before Completion by
reference to the facts and circumstances then existing;

 

(e)                                  prompt disclosure is made to the Purchaser of all relevant
information which comes to the notice of the Vendor in relation to any fact or
matter (whether existing on or before the date of this Agreement or arising
afterwards) which may constitute a breach of any Warranty as if the Warranties
were to be repeated on or at any time before Completion by reference to the
facts and circumstances then existing;

 

(f)                                    no dividend or other distribution shall be declared, paid or made by
any Target Group Company;

 

(g)                                 no share or loan capital shall be allotted or issued or agreed to be
allotted or issued by any Target Group Company;

 

(h)                                 all transactions between each Target Group Company and each Vendor
Group Company shall be on arm’s length commercial terms and in their respective
ordinary and usual course of business;

 

4

 

(i)                                     the amount of any Indebtedness owed by each Target Group Company or
existing as at the date of this Agreement shall not be increased or extended
and no new Indebtedness shall be entered into or assumed by any such company;
and

 

(j)                                     no action is taken by any Target Group Company or any Vendor Group
Company which is inconsistent with the provisions of this Agreement or the
consummation of the transactions contemplated by this Agreement.

 

4.2                                 Pending Completion, the Vendor shall procure that the Target Group
Companies consult fully with the Purchaser in relation to any matters which may
have a material effect upon the Target Group Companies.  Without the prior written consent of the
Purchaser, the Target Group Companies shall not, and the Vendor shall ensure
that the Target Group Companies do not:

 

(a)                                  enter into any contract or commitment (or make a bid or offer which
may lead to a contract or commitment) having a material value or involving
material expenditure or which is of a long term or unusual nature or which
could involve an obligation of a material nature or which may result in any
material change in the nature or scope of the operations of such Target Group
Company;

 

(b)                                 agree to any variation or termination of any existing contract to
which that Target Group Company is a party and which may have a material effect
upon the nature or scope of the operations of such Target Group Company;

 

(c)                                  (whether in the ordinary and usual course of business or otherwise)
acquire or dispose of, or agree to acquire or dispose of, any material business
or any material asset; or

 

(d)                                 enter into any agreement, contract, arrangement or transaction
(whether or not legally binding) other than in the ordinary and usual course of
business.

 

COMPLETION

 

5.1                                 The sale and purchase of the Target Shares shall be completed at 75th
Floor, The Centre, 99 Queen’s Road Central, Hong Kong on such date as may be
agreed between the Vendor and the Purchaser following notification by the
Purchaser to the Vendor of the fulfilment to the satisfaction of the Purchaser
(or waiver) of all the Conditions Precedent. 
The events referred to in the following provisions of this clause 5
shall take place on Completion.

 

5.2                                 The Vendor shall deliver (or cause to be delivered) to the
Purchaser:

 

(a)                                  duly executed transfers into the name of the Purchaser or its
nominee in respect of all of the Target Shares, together with the related share
certificates;

 

5

 

(b)                                 the certificates of incorporation, common seal, share register,
share certificate book (with any unissued share certificates), business
licence, the documents evidencing the Regulatory Approvals (as the case may be)
and all minute books and other statutory books (which shall be written-up to
but not including Completion) of each Target Group Company;

 

(c)                                  all such other documents (including any necessary waivers of
pre-emption rights or other consents) as may be required to enable the
Purchaser and/or its nominee to be registered as the holder(s) of the Target
Shares;

 

(d)                                 a counterpart of the Tax Indemnity duly executed by the Vendor;

 

(e)                                  a copy of a resolution of the board of directors (certified by a
duly appointed officer as true and correct) of:

 

(i)                                     the Vendor, authorising the execution of and the performance by the
Vendor of its obligations under this Agreement and each of the other documents
to be executed by the Vendor (including the Tax Indemnity);

 

(ii)                                  each Vendor Group Company, authorising the execution of and the
performance by the relevant company of its obligations under each of the Connected
Transactions to which it is a party;

 

(f)                                   a copy of the sale and purchase agreement pursuant to which the
entire issued share capital of the Target Holding Company was transferred to
the Vendor;

 

(g)                                 a legal opinion from Commerce & Finance, PRC counsel, in form
and substance acceptable to the Purchaser; and

 

(h)                                 a legal opinion from Conyers, Dill & Pearman, in form and
substance acceptable to the Purchaser.

 

5.3                                 The Vendor shall procure that resolutions of the board of directors
of the Target Holding Company are passed to approve the registration of the
transfers in respect of the Target Shares referred to in clause 5.2.

 

5.4                                 The Purchaser shall:

 

(a)                                  in satisfaction of its obligations under clause 2.2, cause the
sum set out in clause 2.2 to be paid by electronic funds transfer (or such
other modes of payment as may be agreed between the Vendor and the Purchaser)
to the Vendor’s bank account, or if so directed by the Vendor, to its nominee’s
bank account, details of which shall be notified in writing to the Purchaser at
least two Business Days prior to Completion; and

 

(b)                                 deliver to the Vendor a copy of the minutes (certified by a duly
appointed officer as true and correct) of the Purchaser authorising the
execution and

 

6

 

performance
by the Purchaser of its obligations under this Agreement, the Tax Indemnity and
each of the Connected Transactions to which it is a party.

 

Any payment
made in accordance with clause 5.4(a) shall constitute a good discharge by
the Purchaser of its obligations under clause 2.2 and the Purchaser shall
not be concerned to see that the funds are applied in payment to the Vendor.

 

5.5                                 If the Vendor fails or is unable to perform any material obligation
required to be performed by the Vendor pursuant to clauses 3.2, 5.2 and
5.3, respectively, by the last date on which Completion is required to occur,
the Purchaser shall not be obliged to complete the sale and purchase of the
Target Shares and may, in its absolute discretion, by written notice to the
Vendor:

 

(a)                                  rescind this Agreement without liability on the part of the
Purchaser; or

 

(b)                                 elect to complete this Agreement on that date, to the extent that
the Vendor is ready, able and willing to do so, and specify a later date on
which the Vendor shall be obliged to complete the outstanding obligations of
the Vendor; or

 

(c)                                  elect to defer the Completion by not more than 90 days to such other
date as it may specify in such notice, in which event the provisions of this
clause 5.5 shall apply, mutatis mutandis, if the Vendor fails or is unable
to perform any such obligations on such other date.

 

POST-COMPLETION UNDERTAKINGS;
RESTRICTIONS ON VENDOR GROUP COMPANIES

 

6.1                                 Following Completion, the Vendor undertakes to the Purchaser to use
all reasonable endeavours to obtain the release of each Target Group Company
from any Intra-Group Guarantees to which it is a party and, pending such
release, to indemnify the relevant Target Group Company against all amounts
paid by it to any third party pursuant to any such Intra-Group Guarantee in
respect of any liability of any Vendor Group Company (and all Costs incurred in
connection with such liability) whether arising before or after Completion.

 

6.2                                 Following Completion, the Purchaser undertakes to the Vendor to use
all reasonable endeavours to obtain the release of each Vendor Group Company
from any Intra-Group Guarantees to which it is a party and, pending such
release, to indemnify the relevant Vendor Group Company against all amounts
paid by it to any third party pursuant to any Intra-Group Guarantees in respect
of any liability of any Target Group Company (and all Costs incurred in
connection with such liability) whether arising before or after Completion.

 

6.3 (a)                The
Vendor shall not and shall cause that each other member of the Vendor Group
Company  shall
not (whether alone or jointly with another and whether directly or indirectly)
carry on or be engaged or (except as the owner for investment of securities
dealt in on a stock exchange and not exceeding 5 per cent. in nominal value of
the securities of that class) be interested

 

7

 

economically
or otherwise in any manner whatsoever in any Competing Business during the
Relevant Period.

 

(b)                                 The Vendor shall not and shall cause that each other member of the
Vendor Group Company shall not during the Relevant Period, directly or
indirectly, solicit or endeavour to entice away from the Target Group
Companies, offer employment to or employ, or offer or conclude any contract for
services with, any person who was employed in skilled or managerial work in the
Business at any time during the 1 year prior to Completion.

 

(c)                                  Except so far as may be required by law and in such circumstances
only after prior consultation with the Purchaser, the Vendor shall not (and
shall cause that each other member of the Vendor Group Companies shall not) at
any time disclose to any person or use to the detriment of the Business any
trade secret or other confidential information of a technical character which
it holds in relation to the Business.

 

(d)                                 The Vendor (acting for itself and each other member of the Vendor
Group Companies) acknowledges and agrees that the duration, extent and
application of the respective restrictions in clauses (a), (b) and (c) are
no greater than is reasonable and necessary for the protection of the interests
of the Purchaser but that, if any such restriction shall be adjudged by any
court of competent jurisdiction to be void or unenforceable but would be valid
if part of the wording thereof was deleted and/or the period thereof was
reduced and/or the area dealt with thereby was reduced, the said restriction
shall apply within the jurisdiction of that court with such modifications as
may be necessary to make it valid and effective.

 

WARRANTIES

 

7.1                                 The Vendor represents, warrants and undertakes to the Purchaser in
the terms of the Warranties and acknowledges that the Purchaser has entered
into this Agreement in reliance upon the Warranties.

 

7.2                                 The Vendor undertakes (without limiting any other rights of the
Purchaser in any way including its rights to damages in respect of a claim for
breach of any Warranty on any other basis) that it shall pay in cash to the
Purchaser (or, if so directed by the Purchaser, to the Target Group Company in
question) (each an Indemnified Person)
by way of indemnity on demand in the case of a breach of any of the Warranties,
a sum equal to the aggregate of (i) the amount which, if received by the
Indemnified Person, would be necessary to put that Indemnified Person into the
financial position which would have existed had there been no breach of the
Warranty in question; and (ii) all Costs suffered or incurred by the
Indemnified Person, directly or indirectly, as a result of or in connection
with such breach of Warranty.

 

7.3                                 The Vendor agrees to waive the benefit of all rights (if any) which
the Vendor may have against any Target Group Company, or any present or former
officer or employee of any such company, on whom the Vendor may have relied in
agreeing to

 

8

 

any term of
this Agreement and each of the Vendor undertakes not to make any claim in
respect of such reliance.

 

7.4                                 Each of the Warranties shall be construed as a separate Warranty and
(save as expressly provided to the contrary) shall not be limited or restricted
by reference to or inference from the terms of any other Warranty or any other
term of this Agreement.

 

7.5                                 The Warranties shall be deemed to be repeated immediately before
Completion with reference to the facts and circumstances then existing.

 

7.6                                 The Vendor undertakes to notify the Purchaser in writing promptly if
it becomes aware of any circumstance arising after the date of this Agreement
which would cause any Warranty (if the Warranties were repeated with reference
to the facts and circumstances then existing) to become untrue or inaccurate or
misleading in any respect which is material to the financial or trading
position of any of the Target Group Companies.

 

LIMITATIONS ON CLAIMS

 

8.1                                 The aggregate amount of the liability of the Vendor for all Claims
shall not exceed the Total Price.

 

8.2                                 None of the limitations contained in clause 8.1 shall apply to
any breach of any Warranty which (or the delay in discovery of which) is the
consequence of dishonest, deliberate or reckless mis-statement, concealment or
other conduct by any Vendor Group Company or any officer or employee, or former
officer or employee, of any Vendor Group Company.

 

PURCHASER’S RIGHTS TO RESCISSION

 

9.                                       The Purchaser may by written notice given to the Vendor at any time
prior to Completion rescind this Agreement without liability on the part of the
Purchaser:

 

(a)                                  if any fact, matter or event (whether existing or occurring on or
before the date of this Agreement or arising or occurring afterwards) comes to
the notice of the Purchaser at any time prior to Completion which:

 

(i)                                     constitutes a breach by the Vendor of this Agreement (including,
without limitation, any breach of the pre-Completion undertakings in
clause 4); or

 

(ii)                                  would constitute a breach of any Warranty if the Warranties are
repeated on or at any time before Completion by reference to the facts and
circumstances then existing; or

 

(iii)                               affects or is likely to affect in a materially adverse manner the
business, financial position or prospects of the Target Group Companies taken
as a whole; or

 

9

 

(b)                                 if at any time after signing of this Agreement and before Completion
there is a significant adverse change in the market price of the shares of the
Company and the Company is of the opinion that it will not be in the interests
of its shareholders as a whole to proceed with the acquisition of the Target
Shares.

 

WITHHOLDING TAX AND GROSSING UP

 

10.1                           The Vendor shall pay all sums payable by it under clauses 6.1
and 7 free and clear of all deductions or withholdings unless the law requires
a deduction or withholding.  If a
deduction or withholding is so required the Vendor shall pay such additional
amount as will ensure that the net amount the payee receives equals the full
amount which it would have received had the deduction or withholding not been
required.

 

10.2                           If any tax authority brings any sum paid by the Vendor under or
pursuant to clauses 6.1 and 7 into charge to tax, then the Vendor shall
pay such additional amount as will ensure that the total amount paid, less the
tax chargeable on such amount, is equal to the amount that would otherwise be
payable under clauses 6.1 and 7.

 

ENTIRE AGREEMENT

 

11.                                 This Agreement and the Tax Indemnity constitute the entire agreement
and understanding between the parties in connection with the sale and purchase
of the Target Shares.  This Agreement
and the Tax Indemnity supersede all prior agreements or understandings in
connection with the subject matter hereof which shall cease to have any further
force or effect.  No party has entered
into this Agreement in reliance upon any representation, warranty or
undertaking which is not set out or referred to in this Agreement and the Tax
Indemnity.

 

VARIATION

 

12.1                           No variation of this Agreement (or of any of the legally binding
agreements referred to in this Agreement) shall be valid unless it is in
writing and signed by or on behalf of each of the parties to it.  The expression “variation” shall include any
variation, supplement, deletion or replacement however effected.

 

12.2                           Unless expressly agreed, no variation shall constitute a general
waiver of any provisions of this Agreement, nor shall it affect any rights,
obligations or liabilities under or pursuant to this Agreement which have
already accrued up to the date of variation, and the rights and obligations of
the parties under or pursuant to this Agreement shall remain in full force and
effect, except and only to the extent that they are so varied.

 

10

 

ASSIGNMENT

 

13.                                 The Vendor shall not assign, transfer, charge or otherwise deal with
all or any of its rights under this Agreement nor grant, declare, create or dispose
of any right or interest in it without the prior written consent of the
Purchaser. Any purported assignment in contravention of this clause 13
shall be void.

 

ANNOUNCEMENTS

 

14.1                           Except as required by law or by any stock exchange or governmental
or other regulatory or supervisory body or authority of competent jurisdiction
to whose rules the party making the announcement or disclosure is subject,
whether or not having the force of law, no announcement or circular or
disclosure in connection with the existence or subject matter of this Agreement
shall be made or issued by or on behalf of any of the Vendor Group Companies
without the prior written approval of the Purchaser (such approval not to be
unreasonably withheld or delayed), or by or on behalf of the Purchaser without
the prior written approval of the Vendor Group Companies (such approval not to
be unreasonably withheld or delayed).

 

14.2                           Where any announcement or disclosure is made in reliance on the
exception in clause 14.1, the party making the announcement or disclosure
will so far as practicable consult with the other parties in advance as to the
form, content and timing of the announcement or disclosure.

 

COSTS

 

15.                                 Each party shall bear its own Costs incurred in connection with the
negotiation, preparation and completion of this Agreement.

 

CONFIDENTIALITY

 

16.                                 The Vendor undertakes with the Purchaser that it shall keep
confidential (and to ensure that its directors, officers, employees, agents and
professional and other advisers keep confidential) any information in its
possession (whether before or after the date of this Agreement):

 

(a)                                  in relation to the subscribers, business, assets or affairs of the
Target Group Companies (including any data held by the Target Group Companies);
or

 

(b)                                 which relates to the contents of this Agreement (or any agreement or
arrangement entered into pursuant to this Agreement),

 

provided that
the undertakings contained in this clause 16 shall not apply to any
information which is in or has entered the public domain otherwise than as a
result of an announcement or disclosure by the Vendor Group Companies in breach
of clause 14 or by their respective directors, officers, employees, agents and
professional and other advisers.

 

11

 

The Vendor
shall not use for its own business purposes or disclose to any third party any
such information without the consent of the Purchaser.

 

SEVERABILITY

 

17.                                 If any provision of this Agreement is held to be invalid or
unenforceable, then such provision shall (so far as it is invalid or
unenforceable) be given no effect and shall be deemed not to be included in
this Agreement but without invalidating any of the remaining provisions of this
Agreement.  The parties shall then use
all reasonable endeavours to replace the invalid or unenforceable provisions by
a valid and enforceable substitute provision the effect of which is as close as
possible to the intended effect of the invalid or unenforceable provision.

 

COUNTERPARTS

 

18.                                 This Agreement may be executed in any number of counterparts and by
the parties to it on separate counterparts, each of which is an original but
all of which together constitute one and the same instrument.

 

WAIVER

 

19.1                           No failure or delay by any parties hereto in exercising any right or
remedy provided by law under or pursuant to this Agreement shall impair such
right or remedy or operate or be construed as a waiver or variation of it or
preclude its exercise at any subsequent time and no single or partial exercise
of any such right or remedy shall preclude any other or further exercise of it
or the exercise of any other right or remedy.

 

19.2                           The rights and remedies of the parties hereto under or pursuant to
this Agreement are cumulative, may be exercised as often as such party
considers appropriate and are in addition to its rights and remedies under
general law.

 

FURTHER ASSURANCE

 

20.                                 The Vendor agrees to perform (or procure the performance of) all
further acts and things, and execute and deliver (or procure the execution and
delivery of) such further documents, as may be required by law or as the
Purchaser may reasonably require, whether on or after Completion, to implement
and/or give effect to this Agreement and the transaction contemplated by it and
for the purpose of vesting in the Purchaser the full benefit of the assets,
rights and benefits to be transferred to the Purchaser under this Agreement.

 

12

 

NOTICES

 

21.1                           Any notice or other communication to be given by one party to any
other party under, or in connection with, this Agreement shall be in writing
and signed by or on behalf of the party giving it.  It shall be served by sending it by fax to the number set out in
clause 21.2, or delivering it by hand, or sending it by pre-paid recorded
delivery or registered post, to the address set out in clause 21.2 and in
each case marked for the attention of the relevant party set out in
clause 21.2 (or as otherwise notified from time to time in accordance with
the provisions of this clause 21). 
Any notice so served by hand, fax or post shall be deemed to have been
duly given:

 

(a)                                  in the case of delivery by hand, when delivered;

 

(b)                                 in the case of fax, upon confirmation of transmission;

 

(c)                                  in the case of prepaid recorded delivery or registered post, at
10a.m. on the fifth Business Day following the date of posting

 

provided that
in each case where delivery by hand or by fax occurs after 6p.m. on a Business
Day or on a day which is not a Business Day, service shall be deemed to occur
at 9a.m. on the next following Business Day.

 

References to
time in this clause are to local time in the country of the addressee.

 

21.2                           The addresses and fax numbers of the parties for the purpose of
clause 21.1 are as follows:

 

	
  The Vendor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Craigmuir
  Chambers,

  P.O. Box 71,

  Road Town,

  Tortola,

  British Virgin Islands

  
	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  (852) 2126
  2016

  
	
   

  	
   

  	
   

  
	
  For the
  attention of:

  	
   

  	
  The
  Directors

  
	
   

  	
   

  	
   

  
	
  The Purchaser:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  75th Floor

  The Center,

  99 Queen’s Road Central,

  Hong Kong

  
	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  (852) 2126
  2016

  
	
   

  	
   

  	
   

  
	
  For the
  attention of:

  	
   

  	
  The
  Directors

  

 

13

 

21.3                           A party may notify any other party to this Agreement of a change to
its name, relevant addressee, address or fax number for the purposes of this
clause 21, provided that, such notice shall only be effective on:

 

(a)                                  the date specified in the notice as the date on which the change is
to take place; or

 

(b)                                 if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date following five
Business Days after notice of any change has been given.

 

21.4                           All notices under or in connection with this Agreement shall be in
the English language.

 

GOVERNING LAW, JURISDICTION AND
SERVICE OF PROCESS

 

22.1                           This Agreement and the relationship between the parties shall be
governed by, and interpreted in accordance with, the laws of Hong Kong.

 

22.2                           The parties agree that the courts of Hong Kong are to have exclusive
jurisdiction to settle any disputes (including claims for set-off and
counterclaims) which may arise in connection with the creation, validity,
effect, interpretation or performance of, or the legal relationships
established by, this Agreement or otherwise arising in connection with this
Agreement, and for such purposes irrevocably submit to the jurisdiction of the
Hong Kong courts.

 

22.3                           The Vendor shall at all times maintain an agent for service of
process and any other documents in proceedings in Hong Kong or any other proceedings
in connection with this Agreement.  Such
agent shall be China Unicom (Hong Kong) Group Limited currently of 75th
Floor, The Centre, 99 Queen’s Road, Central, Hong Kong and any writ, judgment
or other notice of legal process shall be sufficiently served on the Vendor if
delivered to such agent at its address for the time being.  The Vendor undertakes not to revoke the
authority of the above agent and if, for any reason, the Purchaser requests the
Vendor to do so it shall promptly appoint another such agent with an address in
Hong Kong and advise the Purchaser.  If,
following such a request, the Vendor fails to appoint another agent, the
Purchaser shall be entitled to appoint one on behalf of the Vendor at the
expense of the Vendor.

 

AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.

 

14

 

SCHEDULE 1

 

DEFINITIONS
AND INTERPRETATION

 

1.                                       In this Agreement, the following expressions shall have the following
meanings:

 

A Share Company means China United Telecommunications Corporation Limited;

 

Accounts means in
relation to the Target Company:

 

(a)                                  the combined audited balance sheets of the Target Company as of the
relevant Accounts Date in respect of that financial period; and

 

(b)                                 the combined audited statements of income, owner’s equity and cash
flows of the Target Company for the financial period ended on the relevant
Accounts Date,

 

together with
any notes, reports or statements included in or annexed to them;

 

Accounts Date means 31
December 2000, 31 December 2001, or 30 June 2002, as the case may be;

 

Business Day means a day
(excluding Saturdays) on which banks in Hong Kong and the PRC are generally
open for the transaction of normal banking business;

 

Claim means any claim for
breach of a Warranty;

 

Companies Ordinance means
the Companies Ordinance, Chapter 32 of the Laws of Hong Kong;

 

Competing Business means a business which carries on or is involved with the provision
of any mobile telephone (voice and data) and related value-added services using
GSM, CDMA, CDMA1x, WCDMA, 3G technology or otherwise in the Territory;

 

Completion means
completion of the sale and purchase of the Target Shares under this Agreement;

 

Conditions Precedent
means the conditions specified in clause 3.1;

 

Connected Transactions means
those transactions effected pursuant to the operating agreements in the agreed
forms as listed in Appendix 1;

 

Costs means liabilities,
losses, damages, costs (including legal costs) and expenses (including
taxation), in each case of any nature whatsoever;

 

HK$ means Hong Kong
dollars, the lawful currency of Hong Kong;

 

15

 

holding company shall be
construed in accordance with section 2 of the Companies Ordinance;

 

Hong Kong means the Hong
Kong Special Administrative Region of the PRC;

 

Indebtedness means any
indebtedness in respect of all obligations to repay borrowed money, all
indebtedness evidenced by notes, bonds, loan stock, debentures or similar
obligations, acceptances or documentary credit facilities, all rental
obligations under finance leases, and hire purchase contracts, any other
transaction having the commercial effect of a borrowing or raising of money,
the net amount of any liability under any swap, hedging or other similar
treasury instrument, and all guarantees, sureties, indemnities,
counter-indemnities or letters of comfort of obligations of others of the
foregoing types;

 

Intellectual Property Rights means patents, trade marks, service marks, trade names, design
rights, copyright (including rights in computer software), rights in know-how
and other intellectual property rights, in each case whether registered or
unregistered and including applications for the grant of any such rights and
all rights or forms of protection having equivalent or similar effect anywhere
in the world;

 

Intra-Group Guarantees
means all guarantees, indemnities, counter-indemnities and letters of comfort
of any nature whatsoever (a) given to any third party by the Target Group
Company in respect of a liability of any Vendor Group Company; and/or (as the
context may require) (b) given to any third party by any Vendor Group Company
in respect of a liability of the Target Group Company;

 

Intra-Group Loans means
all debts outstanding between any Target Group Company and any Vendor Group
Company;

 

Last Accounts means the
Accounts of the Target Company in respect of the financial period ended on the
Last Accounts Date;

 

Last Accounts Date means
30 June 2002;

 

Leased Properties means
the properties currently leased by the Target Company as tenant;

 

Mainland China means the PRC
excluding Hong Kong and the Macau Special Administrative Region of the PRC;

 

PRC means the People’s
Republic of China;

 

Properties means the properties
currently owned by the Target Company;

 

Regulatory Approvals
means the approvals, consents and authorisations from all relevant regulatory
authorities in the PRC (including the State Council, the State Development and
Planning Commission, the Ministry of Information Industry, the Ministry of
Foreign Trade and Economic Cooperation, the Ministry of Finance and the China
Securities Regulatory Commission), Hong Kong (including the

 

16

 

Telecommunications
Authority) and the United States of America (including the Federal
Communications Commission) being those necessary to effect the transactions
contemplated by this Agreement;

 

Relevant Period means the period commencing from the date of Completion and ending
on the date on which (i) the shares or the American Depository Shares of the
Purchaser cease to be listed and traded on the New York Stock Exchange, Hong
Kong Stock Exchange and any other stock exchanges or (ii) Unicom Group ceases
to be a controlling shareholder of the Purchaser or an associate of such
controlling shareholder under the Rules Governing the Listing of Securities on
the Stock Exchange of Hong Kong Limited, whichever is the earlier;

 

Reorganisation means the
acquisitions and transfers described in Recitals (A) to (C);

 

Restructuring Agreements
means the agreements listed in Appendix 2;

 

RMB means Renminbi, the
lawful currency of the PRC;

 

Schedules means Schedules
1, 2 and 3 to this Agreement and Schedule shall be construed accordingly;

 

security interest means
any security interest of any nature whatsoever including, without limitation,
any mortgage, charge, pledge, lien, assignment by way of security or other
encumbrance, options, equities, claims or other third party rights (including rights
of pre-emption) of any nature whatsoever, together with all rights attaching to
them;

 

subsidiary and subsidiaries shall be
construed in accordance with section 2 of the Companies Ordinance;

 

Target Company Shares
means all the issued shares in the capital of the Target Company, details of
which are set out in Part C of Schedule 2;

 

Target Shares means all
the issued shares in the capital of the Target Holding Company, details of
which are set out in Part B of Schedule 2;

 

Target Group Companies means
the Target Holding Company and/or the Target Company;

 

Tax Indemnity means the
Tax Indemnity in the agreed form to be entered into by the Vendor in favour of
the Purchaser;

 

Tax Warranties means the
warranties set out in paragraphs 1.1 to 1.9 in Part B of
Schedule 3;

 

Unicom Group means China United Telecommunications Corporation;

 

Vendor Group Company means
Unicom Group, any subsidiary from time to time of Unicom Group (but excluding
the Purchaser, the subsidiaries of the Purchaser from time to time and the
Target Group Companies); and

 

17

 

Warranties means the
representations and warranties set out in Schedule 3.

 

2.                                       In this Agreement, unless the context otherwise requires:

 

(a)                                  any references to the Target Company shall include any predecessor
entity or person carrying on the business of such Target Company, whether
before or after the Reorganisation;

 

(b)                                references to persons shall include individuals, bodies corporate
(wherever incorporated), unincorporated associations and partnerships;

 

(c)                                  the headings are
inserted for convenience only and shall not affect the construction of this
Agreement;

 

(d)                                 any reference to an enactment or statutory provision is a reference to it as
it may have been, or may from time to time be, amended, modified, consolidated
or re-enacted;

 

(e)                                  any statement qualified by the expression to the best knowledge of the Vendor or so far as the Vendor is aware
or any similar expression shall be deemed to include an additional statement
that it has been made after due and careful enquiry and shall be deemed also to
include the best of the knowledge of each Vendor Group Company;

 

(f)                                    any reference to a document in the agreed form is to the form of the relevant
document agreed between the parties and for the purpose of identification
initialled by each of them or on their behalf (in each case with such
amendments as may be agreed by or on behalf of the Vendor and the Purchaser);

 

(g)                                 references to any Hong Kong legal term for any action, remedy,
method of judicial proceeding, legal document, legal status, court, official or
any other legal concept shall, in respect of any jurisdiction other than Hong
Kong, be deemed to include the legal concept which most nearly approximates in
that jurisdiction to the Hong Kong legal term.

 

3.                                       The Schedules and Appendices comprise schedules and appendices to
this Agreement and form part of this Agreement.

 

18

 

SCHEDULE 2

 

CORPORATE
STRUCTURE PRIOR TO COMPLETION

 

PART A

 

Corporate Structure

 

 

19

 

PART B

 

Details of the Target Holding Company

 

UNICOM NEW CENTURY (BVI) LIMITED

 

	
  1.

  	
  Name:

  	
  Unicom New
  Century (BVI) Limited

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Date of Incorporation:

  	
  23 October
  2002

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Place of Incorporation:

  	
  British
  Virgin Islands

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Class of Company:

  	
  International
  Business Company

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Registered Number:

  	
  518427

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Registered Office:

  	
  Romasco
  Place

  Wickhams Cay 1

  P.O. Box 3140

  Road Town, Tortola

  British Virgin Islands

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Directors:

  	
  Yang Xianzu,
  Wang Jianzhou,

  Shi Cuiming and Tan Xinghui

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Registered Shareholders:

  	
  China Unicom
  (BVI) Limited

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Authorised Capital:

  	
  HK$10,000
  divided into 10,000 shares of HK$1.00 each

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Issued Capital:

  	
  10,000 shares
  of HK$1.00 each

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Subsidiary:

  	
  Unicom New
  Century Telecommunications Corporation Limited

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Mortgages and Charges:

  	
  None

  

 

20

 

PART C

 

Details of the Target Company

 

UNICOM NEW CENTURY PRC

 

	
  1.

  	
  Name:

  	
  Unicom New
  Century Telecommunications Corporation Limited

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Place of Incorporation:

  	
  Beijing, PRC

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Nature of Incorporation:

  	
  Wholly
  foreign-owned enterprise

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Scope of Business:

  	
  Mobile telecommunication businesses in Sichuan, Shaanxi, Henan,
  Heilongjiang, Jilin and Jiangxi Provinces, Chongqing Municipality and the
  Guangxi and Xinjiang Autonomous Regions; technology development, service and
  consultation; telecommunication equipment and electronic equipment sale.

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Registered Office:

  	
  Room 1012,
  10th Floor, Tower 1, Henderson Centre, 18 Jianguomen Nei Dajie,
  Beijing, PRC

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Registered Capital:

  	
  RMB328,936,300

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Total Investment:

  	
  RMB328,936,300

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Equity Holder:

  	
  Unicom New
  Century (BVI) Limited

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Tax Residence:

  	
  Beijing, PRC

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Subsidiaries:

  	
  None

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Mortgages and Charges:

  	
  None

  

 

21

 

SCHEDULE 3

 

THE
WARRANTIES

 

Part A: General

 

INFORMATION

 

1.1                                 All information relating to the Target Group Companies provided to
the Purchaser or its representatives and advisers for the purposes of
preparation of the Accounts is true, accurate and not misleading and does not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.

 

1.2                                 Save as already disclosed in writing to the Purchaser, there are no
other facts or matters which might reasonably be expected to have a material
adverse effect on the financial or trading position or prospects of any Target
Group Company.

 

CORPORATE MATTERS

 

The Target Group Companies

 

2.1(a)                   All of the Target Shares are fully-paid or properly credited as
fully-paid and the Vendor is the sole legal and beneficial owner of them free
from all security interests.

 

(b)                                 The information in respect of the Target Holding Company set out in
Part B of Schedule 2 is true and accurate and not misleading.

 

(c)                                  The Target Holding Company has been duly incorporated and is validly
existing under the laws of the BVI, with legal right, power and authority
(corporate and other) to own, use, lease and operate its properties and conduct
its business in the manner presently conducted, and is duly qualified to
transact business in any jurisdiction in which it owns or leases properties or
conducts any business and such qualification is required, or is subject to no
material liability or disability by reason of the failure to be so qualified in
any such jurisdiction; the Memorandum of Association and Articles of Association
of the Target Holding Company comply with the requirements of applicable BVI
law and are in full force and effect.

 

2.2(a)                   The Target Holding Company is the sole legal and beneficial owner of
the whole of the registered capital of the Target Company free from all
security interests.

 

(b)                                 The information in respect of each of the Target Company set out in
Part C of Schedule 2 is true and accurate.

 

(c)                                  The Target Company is currently a domestic enterprise with limited
liability and has been duly organised and is validly existing under the laws of
the PRC, and its business licence is in full force and effect; its Articles of
Association

 

22

 

comply
with the requirements of applicable PRC law and are in full force and effect;
it has all consents, approvals, authorizations, orders, registrations,
clearances and qualifications of or with any court, governmental agency or body
having jurisdiction over it or any of its properties in each jurisdiction in which
the ownership or lease of property by it or the conduct of its business
requires such qualification and has the legal right and authority to own, use,
lease and operate its assets and to conduct its business in the manner
presently conducted.

 

2.3                                 No Target Group Company owns or has any interest of any nature
whatsoever in any shares, debentures or other securities issued by any
undertaking other than, (a) in respect of the Target Holding Company, the
Target Company.

 

2.4                                 The Target Holding Company does not carry on any business other than
holding the Target Company.

 

The Vendor

 

2.5                                 The Vendor (the Warrantor) is duly incorporated or established and is
validly existing under the laws of its jurisdiction of incorporation, with full
power and authority to own, lease and operate its properties and assets and to
execute and perform its obligations under this Agreement.

 

2.6                                 The execution, delivery and performance by the Warrantor of this
Agreement has been duly authorised by it and this Agreement constitutes a
legal, valid and binding obligation of such Warrantor enforceable in accordance
with its terms, subject to the laws of bankruptcy and other similar laws
affecting the rights of creditors generally.

 

2.7                                 All regulatory, corporate and other approvals (including Regulatory
Approvals and shareholder approvals) and authorisations required by the
Warrantor for the execution and delivery of this Agreement and any agreement or
instrument contemplated hereby, the performance of the terms hereof and thereof
and the sale of the Target Shares have been obtained, are unconditional and are
in full force and effect.

 

2.8                                 The execution and delivery by the Warrantor of this Agreement, and
the performance and completion of the transactions herein contemplated:
(a) will not infringe any applicable laws or regulations; (b) will
not result in any breach of the terms of, or constitute a default under, its
constitutional documents and business licence (as applicable) or any
instrument, agreement or governmental, regulatory or other judgement, decree or
order to which the Warrantor is a party or by which it or its property is
bound; and (c) will not conflict with any of the certificates, licences or
permits of the Warrantor that enable it to carry on the business or operations
now operated by it.

 

2.9                                 The Warrantor is not: (a) in breach of the terms of, or in
default under, any instrument, agreement or order to which it is a party or by
which it or its property is bound to an extent which is material in the context
of the transactions herein

 

23

 

contemplated;
(b) involved in or the subject of any current or pending investigation or
proceedings (whether administrative, regulatory or otherwise), whether in the
PRC, Hong Kong  or elsewhere.

 

FINANCIAL MATTERS

 

Accounts

 

3.1(a)                   The Accounts give a true and fair view of the state of affairs and
financial results of the Target Company for the periods and as at the dates
stated therein.

 

(b)                                 Without limiting the generality of paragraph (a):

 

(i)                                     the Accounts of the Target Company either make full provision for or
disclose all liabilities (whether actual, contingent or disputed and including
financial lease commitments and pension liabilities), all outstanding capital
commitments and all bad or doubtful debts of the Target Company as at the
Accounts Dates, in each case in accordance with applicable accounting
principles;

 

(ii)                                  the Accounts of the Target Company for each of the periods ended on
the Accounts Date were prepared under the historical convention, complied with
the requirements of all relevant laws and regulations then in force and with
all statements of standard accounting practice (or financial reporting
standards) and applicable accounting principles then in force;

 

(iii)                               the rate of depreciation adopted by the Target Company in its
Accounts for each of the periods ended on the Accounts Dates was sufficient for
each of the fixed assets of the Target Company to be written down to nil by the
end of its useful life;

 

(iv)                              except as stated in its Accounts, no changes in the accounting
policies were made by any of the Target Company in any of the periods ended on
the Accounts Dates;

 

(v)                                 the results shown by the Accounts of the Target Company for each of
the periods ended on the Accounts Dates were not (except as therein disclosed)
affected by any extraordinary or exceptional item or by any other factor
rendering such results for all or any of such periods unusually high or low.

 

3.2                                 None of the financial information provided to the Purchaser or its
representatives and advisers is misleading in any material respect nor
materially over-state the value of the assets nor materially under-state the
liabilities of the Target Company as at the dates to which they were drawn up
and do not materially over-state the profits of the Target Company in respect
of the periods to which they relate.

 

24

 

Position since Last Accounts Date

 

3.3(a)                   Since the Last Accounts Date and compared to the Last Accounts, there
has been no material adverse change in the financial or trading position or
(save to the extent that the same would be likely to affect to a similar extent
generally all companies carrying on similar businesses) in the prospects of the
Target Company and no event, fact or matter has occurred which is likely to
give rise to any such change.

 

(b)                                 Since the Last Accounts Date and compared to the Last Accounts:

 

(i)                                     the business of the Target Company has been carried on in the
ordinary and usual course and the Target Company has not made or agreed to make
any payment other than routine payments in the ordinary and usual course of
trading;

 

(ii)                                  no dividend or other distribution has been declared, paid or made by
the Target Company;

 

(iii)                               there has been no material change in the level of borrowing or in
the working capital requirements of the Target Company (except for changes of
not more than 10% arising from expenditure of a capital nature which has been
budgeted or otherwise provided for in the Target Company’s approved business
plan);

 

(iv)                              all transactions between the Target Company and any Vendor Group
Company have been on an arm’s length basis and commercial terms;

 

(v)                                 save for the Restructuring Agreements and the Connected
Transactions, no contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into by the Target Company
which is of a long term or unusual nature or which involved or could involve an
obligation of a material nature or magnitude;

 

(vi)                              save as provided in the Restructuring Agreements, the Target Company
has not (whether in the ordinary and usual course of business or otherwise)
acquired or disposed of, or agreed to acquire or dispose of, any material
business or any material asset having a value in excess of RMB4 billion;

 

(vii)                           no debtor has been released by the Target Company on terms that it
pays less than the book value of its debt and no material debt owing to the
Target Company has been deferred, subordinated or written off or has proved to
any extent irrecoverable;

 

(viii)                        no change has been made in terms of employment and any benefits in
kind payable to employees and other employment related matters by the Target
Company or any Vendor Group Company (other than those required by law) which
could materially increase the total costs

 

25

 

attributable to employment and employee
benefits of the Target Company;

 

(ix)                                there has been no material increase or decrease in the levels of
trade debtors or creditors or in the average collection or payment periods for
the trade debtors and creditors respectively;

 

(x)                                   the Target Company has not repaid any borrowing or indebtedness in
advance of its stated maturity;

 

(xi)                                there has been no material reduction in the cash balances of the
Target Company;

 

(xii)                             no resolution of the members of the Target Company has been passed
whether in general meeting or otherwise (other than resolutions relating to the
routine business of annual general meetings); and

 

(xiii)                          the business of the Target Company has not been affected by any
abnormal factor not affecting to a similar extent generally all companies
carrying on similar businesses.

 

Working Capital

 

3.4                                 Having regard to existing bank and other financial facilities, the
Target Company has sufficient working capital available to it as at the date of
this Agreement to enable it to continue to carry on its business in its present
form and at its present level of turnover and for the purpose of performing in
accordance with their terms all orders, projects and other obligations and
discharging all liabilities which ought properly to be discharged during the
period of 12 months after Completion.

 

Accounting and other Records

 

3.5(a)                   The books of account and other records of the Target Company:

 

(i)                                     are up-to-date and have been maintained in accordance with all
applicable laws and generally accepted accounting practices on a proper and
consistent basis;

 

(ii)                                  comprise complete and accurate records of all information required
to be recorded therein;

 

(iii)                               are in its possession or under its control together with all
documents of title and executed copies of all existing agreements to which the
Target Company is a party.

 

(b)                                 All accounts, documents and returns required by law to be delivered
or made by the Target Company to any government authority or regulatory body or
any other authority have been duly and correctly delivered or made.

 

26

 

DEBT POSITION

 

Debts owed to the Target Company

 

4.1(a)                   There are no debts owing to the Target Company other than:

 

(i)                                     the Intra-Group Loans; and

 

(ii)                                  other trade debts incurred in the ordinary and usual course of
business which do not exceed RMB600 million in aggregate for the Target Company
as a whole.

 

(b)                                 The book debts shown in the Last Accounts of the Target Company have
realised, or will realise within a period of six months from the Last Accounts
Date, their nominal amount less any specific provision for bad or doubtful
debts included in such accounts. The book debts incurred by the Target Company
since the Last Accounts Date and which are outstanding as at the date of this
Agreement will realise within three months from such date not less than 90% of
their nominal amount.

 

Debts owed by the Target Company

 

4.2(a)                   The Target Company does not have outstanding any borrowing or
indebtedness in the nature of borrowing (including, without limitation, any
indebtedness for moneys borrowed or raised under any acceptance credit, bond,
note, bill of exchange or commercial paper, finance lease, hire purchase
agreement, trade bills (other than those on terms normally obtained), forward
sale or purchase agreement or conditional sale agreement or other transaction
having the commercial effect of a borrowing) other than:

 

(i)                                     the Intra-Group Loans; and

 

(ii)                                  moneys borrowed from or otherwise owed to third parties (which do
not exceed RMB22 billion in aggregate for the Target Company as a whole).

 

(b)                                 The Target Company has not received any notice to repay under any
agreement relating to any borrowing or indebtedness in the nature of borrowing
which is repayable on demand.

 

(c)                                  There has not occurred any event of default or any other event or
circumstance which would entitle any person to call for early repayment under
any agreement relating to any borrowing or indebtedness of the Target Company
or to enforce any security given by the Target Company (or, in either case, any
event or circumstance which with the giving of notice and/or the lapse of time
and/or a relevant determination would constitute such an event or
circumstance).

 

27

 

REGULATORY MATTERS

 

5.1(a)                   Save as envisaged in the Connected Transactions, the Target Company
has (or will by Completion have) obtained all licences, permissions,
authorisations and consents required for carrying on its business effectively
in the places and in the manner in which such business is now carried on.

 

(b)                                 The licences, permissions, authorisations and consents referred to
in paragraph (a) are (or will by Completion be) in full force and effect,
not limited in duration or subject to any unusual or onerous conditions and
have been (or will by Completion have been) complied with in all respects.

 

(c)                                  To the best knowledge of the Vendor, there are no circumstances
which indicate that any of the licences, permissions, authorisations or
consents referred to in paragraph (a) will or are likely to be revoked or
not renewed, in whole or in part, in the ordinary course of events (whether as
a result of the acquisition of the Target Shares by the Purchaser, the
Restructuring or otherwise).

 

5.2(a)                   The Target Company has conducted its business and corporate affairs
in accordance with its business licence and with all applicable laws and
regulations (whether of the PRC, Hong Kong or any other jurisdiction).

 

(b)                                 The Target Company is not in default of any order, decree or
judgment of any court or any governmental or regulatory authority (whether of
the PRC, Hong Kong or any other jurisdiction).

 

THE REORGANISATION AND THE ASSETS

 

The Reorganisation

 

6.1(a)                   The assets injected into the Target Company pursuant to the
Reorganisation comprise all the assets necessary for the carrying on of the
business carried on by the Target Company in the manner it is presently
conducted and the liabilities assumed by the Target Company pursuant to the
Reorganisation represent the only liabilities of the Target Company and are
fully, fairly and accurately provided for in the Accounts.

 

6.2                                 The events and transactions contemplated by the Reorganisation do
not contravene any provision of applicable law, rule or regulation and do not
contravene the Articles of Association or the business licence of the Target
Company or contravene the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument binding upon the Target Company that, singly or
in the aggregate, is material to the Target Company, or any judgement, rule or
regulation, order or decree of any governmental body, agency or court having
jurisdiction over the Target Company and will not result in the creation or
imposition of any lien, charge, encumbrance or other restriction upon any
assets of the Target Company.

 

6.3                                 Save for the conditions precedent referred to in clauses 3.1(a)
and 3.1(b), all consents, approvals, authorisations, orders, registrations and
qualifications required in

 

28

 

the PRC in
connection with the events and transactions contemplated by the Reorganisation
have been (or will by Completion have been) made or unconditionally obtained in
writing (including, without limitation, all PRC Regulatory Approvals and
shareholders’ approval), and no such consent, approval, authorisation, order,
registration or qualification has been withdrawn or is subject to any condition
precedent which has not been fulfilled or performed.

 

6.4                                 There are no legal or government proceedings pending against the
Target Company in the PRC challenging the effectiveness or validity of the
events and transactions contemplated by the Reorganisation and, to the best
knowledge of the Vendor, no such proceedings are threatened or contemplated by
any governmental agencies in the PRC or elsewhere.

 

Ownership

 

6.5(a)                   For the purpose of this Warranty 6.5, assets shall not include the properties
disclosed in the Accounts, to which the provisions of Part B of this Schedule
shall apply.

 

(b)                                 Each of the assets included in the Last Accounts of the Target
Company or acquired by it since the Last Accounts Date (other than assets
disposed of in the ordinary course of business and pursuant to the
Reorganisation) is the absolute property of the Target Company.  Save as disclosed in the Last Accounts,
those assets are not the subject of any security interest, factoring
arrangement, leasing or hiring agreement, hire purchase agreement, conditional
sale or credit sale agreement, agreement for payment on deferred terms or any
similar agreement or arrangement (or any agreement or obligation, including a
conditional obligation, to create or enter into any of the foregoing).

 

Possession and Third Party
Facilities

 

6.6(a)                   All of the assets owned by the Target Company, or in respect of
which the Target Company has a right of use, are in the possession or under the
control of the Target Company.

 

(b)                                 Where any assets are used but not owned by the Target Company or any
facilities or services are provided to the Target Company by any third party,
there has not occurred any event of default or any other event or circumstance
which may entitle any third party to terminate any agreement or licence in
respect of the provision of such facilities or services (or any event or
circumstance which with the giving of notice and/or the lapse of time and/or a
relevant determination would constitute such an event or circumstance).

 

Adequacy of Assets

 

6.7(a)                   The assets of the Target Company and the facilities and services to
which the Target Company has a contractual right include all rights,
properties, assets,

 

29

 

facilities
and services necessary or desirable for the carrying on of the business of the
Target Company in the manner in which it is currently carried on.

 

(b)                                 The assets of the Target Company and the facilities and services to
which the Target Company has a contractual right include all assets, facilities
and services necessary to enable the Target Company to conduct its business
after Completion in the same manner in all material respects as it was
conducted immediately prior to the transfer of such business to the Target
Company pursuant to the Reorganisation.

 

(c)                                  Save as otherwise provided in the Connected Transactions, the Target
Company does not depend in any material respect upon the use of assets owned
by, or facilities or services provided by, any Vendor Group Company.

 

Condition

 

6.8                                 All the plant, machinery, systems, equipment and vehicles used by
the Target Company:

 

(a)                                  are in a good state of repair and have been regularly and properly
maintained in accordance with appropriate technical specifications, safety
regulations and the terms and conditions of any applicable agreement;

 

(b)                                 are capable of being efficiently and properly used for the purposes
for which they were acquired or are retained;

 

(c)                                  are not dangerous, inefficient, obsolete or in need of renewal or
replacement.

 

Insurances

 

6.9(a)                   The business, undertakings, properties and other assets of the
Target Company are adequately insured against such risks as are normally
insured by persons carrying on similar businesses in the PRC as those carried
on by the Target Company and such insurances include all the insurances which
the Target Company is required under the terms of any leases or any contracts
in respect of any of its properties to undertake and such insurances are in
full force and effect and there are no circumstances which could render any of
such insurances void or voidable and all due premiums in respect thereof have
(if due) been paid.

 

(b)                                 No claim is outstanding by the Target Company under any such policy
of insurance and, to the best knowledge of the Vendor, there are no
circumstances likely to give rise to such a claim.

 

30

 

INTELLECTUAL PROPERTY RIGHTS

 

Registered Rights

 

7.1(a)                   The Target Company is the sole legal owner of all Intellectual
Property Rights registered or sought to be registered in any jurisdiction which
are held or beneficially owned by the Target Company.

 

(b)                                 No act has been done or omitted to be done and no event has occurred
or is likely to occur which may render any of such Intellectual Property Rights
subject to revocation, compulsory licence, cancellation or amendment or may
prevent the grant or registration of a valid Intellectual Property Right
pursuant to a pending application.

 

Infringement

 

7.2(a)                   None of the operations of the Target Company infringe, or are likely
to infringe, any rights held by any third party or involve the unauthorised use
of confidential information disclosed to the Target Company (or any Vendor
Group Company) in circumstances which might entitle a third party to make a
claim against the Target Company.

 

(b)                                 No claim has been made by any third party which alleges any
infringing act or process which would fall within paragraph (a) above or
which otherwise disputes the right of the Target Company to use any
Intellectual Property Rights relating to its business and the Vendor is not
aware of any circumstances (including any act or omission to act) likely to
give rise to such a claim.

 

(c)                                  There exists no actual or threatened infringement by any third party
of any Intellectual Property Rights held or used by the Target Company
(including misuse of confidential information) or any event likely to
constitute such an infringement nor has the Target Company (or any Vendor Group
Company) acquiesced in the unauthorised use by any third party of any such
Intellectual Property Rights.

 

Intellectual Property Licences

 

7.3                                 The Target Company is not in default under any licence, sub-licence
or assignment granted to it in respect of any Intellectual Property Rights used
by the Target Company.

 

Loss of Rights

 

7.4                                 No Intellectual Property Rights owned or used by the Target Company
and no licence of Intellectual Property Rights of which the Target Company has
the benefit will be lost, or rendered liable to any right of termination or
cessation by any third party, by virtue of the acquisition by the Purchaser of
the Target Shares.

 

31

 

Records and Software

 

7.5(a)                   All the accounting records and systems (including but not limited to
computerised accounting systems) of the Target Company are recorded, stored,
maintained or operated or otherwise held by the Target Company and are not
wholly or partly dependent on any facilities or systems which are not under the
exclusive ownership or control of the Target Company.

 

(b)                                 The Target Company is licensed to use all software necessary to
enable it to continue to use its computerised records for the foreseeable
future in the same manner in which they have been used prior to the date of
this Agreement and does not share any user rights in respect of such software
with any other person.

 

CONTRACTUAL MATTERS

 

Material Contracts

 

8.1                                 Save for the Restructuring Agreements and the Connected
Transactions, there is not outstanding any agreement or arrangement to which
the Target Company is a party:

 

(a)                                  which, by virtue of the acquisition of the Target Shares by the
Purchaser or other performance of the terms of this Agreement, will result in:

 

(i)                                     any other party being relieved of any obligation or becoming
entitled to exercise any right (including any right of termination or any right
of pre-emption or other option); or

 

(ii)                                  the Target Company being in default under any such agreement or
arrangement or losing any benefit, right or licence which it currently enjoys
or in a liability or obligation of the Target Company being created or
increased;

 

(b)                                 to which any Vendor Group Company is a party or in which any Vendor
Group Company or any connected person (as defined under the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited) is interested
or from which any such person takes benefit, whether directly or indirectly;

 

(c)                                  entered into otherwise than by way of a bargain at arm’s length and
on commercial terms;

 

(d)                                 which establishes any guarantee, indemnity, suretyship, form of
comfort or support (whether or not legally binding) given by the Target Company
in respect of the obligations or solvency of any third party;

 

(e)                                  pursuant to which the Target Company has sold or otherwise disposed
of any company or business in circumstances such that it remains subject to any

 

32

 

liability
(whether contingent or otherwise) which is not fully provided for in its Last
Accounts;

 

(f)                                    which, upon completion by the Target Company of its work or the
performance of its other obligations under it, is likely to result in a loss
for the Target Company which is not fully provided for in its Last Accounts or
which either is not expected to make a normal profit margin or involves an
abnormal degree of risk;

 

(g)                                 which establishes any joint venture, consortium, partnership or profit
(or loss) sharing agreement or arrangement to which the Target Company is a
party;

 

(h)                                 any power of attorney given by the Target Company or any other
authority which would enable any person not employed by the Target Company to
enter into any contract or commitment on behalf of the Target Company;

 

(i)                                     which involves or is likely to involve (i) material expenditure
by the Target Company or (ii) material obligations or restrictions of the
Target Company of an unusual or exceptional nature or magnitude and not in the
ordinary and usual course of business;

 

(j)                                     which establishes any material agency, distributorship, marketing,
purchasing, manufacturing or licensing agreement or arrangement to which the
Target Company is a party;

 

(k)                                  which is a currency and/or interest rate swap agreement, asset swap,
future rate or forward rate agreement, interest cap, collar and/or floor
agreement or other exchange or rate protection transaction or combination
thereof or any option with respect to any such transaction or any other similar
transaction to which the Target Company is a party;

 

(l)                                     which is any other agreement or arrangement having or likely to have
a material effect on the financial or trading position or prospects of the
Target Company;

 

(m)                               which is a bid, tender, proposal or offer which, if accepted, would
result in the Target Company becoming a party to any agreement or arrangement
of a kind described in sub-paragraphs (a) to (l) above.

 

Defaults

 

8.2 (a)                The
Target Company is not in default under any agreement to which it is a party and
there are no circumstances likely to give rise to any such default.

 

(b)                                 No party with whom the Target Company has entered into any agreement
or arrangement is in default under such agreement or arrangement and there are
no circumstances likely to give rise to any such default.

 

33

 

LITIGATION AND INVESTIGATIONS

 

Litigation

 

9.1(a)                   Except as plaintiff in the collection of debts arising in the
ordinary course of business, the Target Company is not a plaintiff or defendant
in or otherwise a party to any litigation, arbitration or administrative
proceedings which are in progress or threatened or pending by or against or
concerning the Target Company or any of its assets.

 

(b)                                 No governmental or official investigation or inquiry concerning the
Target Company is in progress or pending.

 

(c)                                  The Vendor Group are not aware of any circumstances which are likely
to give rise to any such proceeding, investigation or inquiry as is referred to
in paragraph (a) or paragraph (b).

 

DIRECTORS AND EMPLOYEES

 

Employees

 

10.1                           The Target Company has not entered into any arrangements regarding
any future variation in any contract of employment in respect of any of its
directors and employees or any agreement imposing an obligation on the Target
Company to increase the basis and/or rates of remuneration and/or the provision
of other benefits in kind to or on behalf of any of its directors or employees
at any future date.

 

Compliance

 

10.2                           The Target Company has in relation to each of its employees (and so
far as relevant to each of its former employees) complied in all material
respects with all statutes, regulations, codes of conduct, collective
agreements, terms and conditions of employment, orders and awards relevant to
their conditions of service or to the relations between it and its employees
(or former employees, as the case may be) or any recognised trade union.

 

Incentive Schemes

 

10.3                           The Target Company does not have in existence (or is proposing to
introduce) any share incentive scheme, share option scheme or profit sharing
scheme for all or any of its directors or employees.

 

Payments on Termination

 

10.4                           Except to the extent (if any) to which provision or allowance has
been made in the Last Accounts of the Target Company:

 

(a)                                  no outstanding liability has been incurred by the Target Company for
breach of any contract of employment or for services or for long service or
redundancy payments, protective awards, compensation for dismissal or for any
other

 

34

 

liability
accruing from the termination of any contract of employment or for services,
and no such liability will be incurred by the Target Company as a result of the
Reorganisation or the acquisition of the Target Shares by the Purchaser or
other performance of the terms of this Agreement and the Restructuring
Agreements;

 

(b)                                 no gratuitous payment has been made or benefit given (or promised to
be made or given) by the Target Company in connection with the actual or
proposed termination or suspension of employment, or variation of any contract
of employment, of any present or former director or employee of the Target
Company.

 

INSOLVENCY ETC.

 

11.1                           No order has been made, petition presented or meeting convened for
the purpose of considering a resolution for the winding up of any Target Group
Company or for the appointment of any provisional liquidator.  No petition has been presented for an
administration order to be made in relation to any Target Group Company, and no
receiver (including any administrative receiver) has been appointed in respect
of the whole or any part of any of the property, assets and/or undertaking of
any Target Group Company.

 

11.2                           No composition in satisfaction of the debts of any Target Group
Company, or scheme of arrangement of its affairs, or compromise or arrangement
between it and its creditors and/or members or any class of its creditors
and/or members, has been proposed, sanctioned or approved.

 

11.3                           No distress, distraint, charging order, garnishee order, execution
or other process has been levied or applied for in respect of the whole or any
part of any of the property, assets and/or undertaking of any Target Group
Company.

 

35

 

Part B: Tax and Property Warranties

 

TAX

 

1.1                                 The Target Company has a tax registration certificate which is in
full force and effect.

 

1.2                                 The Target Company has complied in all material respects with all
statutory provisions, rules, regulations, orders and directions concerning
profits or corporate tax, value-added tax, business tax and stamp duty in their
respective jurisdictions.

 

1.3                                 No tax authority has agreed to operate any special arrangement
(being an arrangement which is not based on a uniform application of the
relevant legislation whether expressly provided for in the relevant legislation
or operated by way of extra statutory concession or otherwise) in relation to
the Target Company.

 

1.4                                 The Target Company has duly, within any appropriate time limits,
made all returns, given all notices and supplied all information required to be
supplied to all relevant tax authorities. 
All such information was when provided and remain complete and accurate and
all such returns and notices were when provided and remain complete and
accurate and were made on a proper basis.

 

1.5                                 The Target Company has not received any notice or allegation from
any tax authorities that it has not complied with any relevant legal
requirement relating to registration or notification for taxation purposes and
the Target Company is not involved in any dispute or investigation with any tax
authority and there are no facts or matters which it reasonably believes will
cause any such dispute or investigation or any liability for taxation (present
or future).

 

1.6                                 The Target Company:

 

(a)                                  has paid or accounted for all taxation (if any) due to be paid or
accounted for by it before the date of this Agreement;

 

(b)                                 is not under any liability to pay any penalty or interest in connection
with any taxation referred to in paragraph (a);

 

(c)                                  has made all deductions and withholdings in respect or on account of
taxation which it is required or entitled by any relevant legislation to make
from any payments made by it including, without limitation, interest annuities
or other annual payments, royalties, rent, remuneration payable to employees or
sub-contractors or payments to a non-resident and where appropriate the Target
Company has accounted in full to the relevant fiscal authority for any taxation
so deducted or withheld; and

 

(d)                                 taken all necessary steps to obtain any repayment of or relief from
taxation available to it.

 

36

 

1.7                                 All sums due and payable to any taxation authority in respect of
emoluments paid and benefits provided to the employees of the Target Company at
the date of this Agreement have been paid and all such deductions and
retentions as are required under the applicable laws have been made.

 

1.8                                 All remuneration, compensation payments, payments on retirement or
removal from an office or employment and other sums paid or payable to
employees or officers or former employees or officers of the Target Company and
all interest, annuities, royalties, rent and other annual payments paid or
payable by the Target Company (whether before or after the date hereof)
pursuant to any obligation in existence at the date hereof are and will (on the
basis of the taxation legislation in force at the date hereof) be deductible
for incomes tax purposes either in computing the profits of the Target Company
or as a charge on the income of the Target Company.

 

1.9                                 The Target Company has made or caused to be made the returns which
ought to be made by or in respect of the Target Company for any taxation
purposes and no returns are the subject of any dispute with any tax authority.

 

PROPERTY

 

2.1                                 The Properties and the Leased Properties are in the possession and
under the control of the Target Company. The Target Company has valid title to,
and leasehold interests in, all of the Properties, free and clear of all
security interests except for those which do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Target Company.

 

2.2                                 Each Leased Property held under lease by the Target Company is held
by it under valid and enforceable leases in full force and effect with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Target Company and no
material default (or event which with notice or lapse of time, or both, would
constitute such a default) by the Target Company has occurred and is continuing
under any of such leases.

 

2.3                                 The Target Company does not own, operate, manage or have any other
right or interest, directly or indirectly, in any other material real property
of any kind save for those reflected in the Last Accounts or other than as
would not, individually or in the aggregate, have a material adverse effect on
the combined financial position, shareholder’s equity or results of operations
of the Target Company taken as a whole.

 

37

 

APPENDIX 1

 

Connected
Transactions

 

1.                                       Transfer Agreement dated 1 July 2002 between the A Share Company and
the Purchaser regarding a CDMA network capacity lease agreement.

 

2.                                       Transfer Agreement dated 1 July 2002 between the A Share Company and
the Purchaser regarding the transfer of rights and obligations under a services
agreement.

 

38

 

APPENDIX 2

 

The
Restructuring Agreements

 

1.                                       Reorganisation Agreement dated 18 November 2002 pursuant to which
Unicom New Century Telecommunications Corporation acquired from Unicom Group
its cellular business assets and operations in the Territory.

 

2.                                       Restructuring Agreement dated 23 October 2002 pursuant to which (a)
Unicom Centenarian (BVI) Limited acquired from China United Telecommunications
Corporation the registered capital of Unicom New Century Telecommunications
Corporation; and (b) Unicom New Century (BVI) Limited acquired from Unicom
Centenarian (BVI) Limited the registered capital of Unicom New Century
Telecommunications Corporation.

 

3.                                       Sale and Purchase Agreement dated 20 November 2002 pursuant to which
China Unicom (BVI) Limited acquired from Unicom Centenarian (BVI) Limited the
registered capital of Unicom New Century (BVI) Limited.

 

39

 

SIGNATURE PAGE

 

	
  SIGNED by

  	
  /s/ Tan Xing
  Hui

  	
   

  	
   

  	
  )

  
	
  for and on
  behalf of

  	
   

  	
  )

  
	
  CHINA UNICOM (BVI) LIMITED

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  /s/ Tan Xing
  Hui

  	
   

  	
   

  	
  )

  
	
  for and on
  behalf of

  	
   

  	
  )

  
	
  CHINA UNICOM LIMITED

  	
   

  	
  )

  

 

40Exhibit 4.11

 

(English Translation)

 

 

General Service Agreement

 

between

 

China Unicom Corporation Limited

 

and

 

China Unicom Ltd.

 

 

November 20, 2002

 

 

General Service Agreement

 

This Agreement (the “Agreement) is entered into on November 20, 2002,
in Beijing, China, between

 

(1)                                  Party
A: China United Telecommunications Corporation

Address: Huang
Cheng Hotel, 15 Yangfangdianlu, Haidian District,

Beijing

Legal
Representative: Mr. Yang Xianzu

 

(2)                                  Party
B: China United Telecommunications Co. Ltd (the “Unicom A-Share Company”)

Address: 9th
Floor, A 133, Xidanbeidajie, Xicheng District, Beijing

Legal
Representative: Mr. Yang Xianzu

 

Whereas:

 

(1)                                  Party
A, a duly incorporated and validly existing limited corporation, is a provider
of integrated telecommunications services;

 

(2)                                  Party
B, a limited company duly incorporated and validly existing under the laws of
the People’s Republic of China, has had its common stock listed on the Shanghai
Stock Exchange since October 9, 2002;

 

(3)                                  Party
A and Party B entered into a memorandum, dated August 12, 2002 (the “Memorandum
on Connected Transactions”), regarding certain transactions after Party B’s
public offering between Party A or its subsidiaries (excluding Party B and any
subsidiaries controlled by Party B) and China Unicom Limited (the “Unicom
Red-Chip Company”), which is indirectly controlled by Party B, or its
subsidiaries;

 

(4)                                  Unicom
New Century Telecommunications Co. Limited (the “Unicom New Century’), a
limited corporation wholly owned by Party A and a provider of integrated
telecommunications services established on July 16, 2002, has been injected by
Party A with its mobile telecommunications businesses and related assets,
credits and liabilities in the following nine provinces and municipalities:
Sichuan, Xinjiang, Chongqing, Shaanxi, Guangxi, Henan, Heilongjiang, Jilin and
Jiangxi (the “Nine Service Areas”); and

 

(5)                                  Party
A is contemplating on injecting, via a wholly owned overseas subsidiary, all
the rights and interests of the shares of Unicom New Century it now holds (the
“Target Interests”) into Unicom Red-Chip Company, which is established in Hong
Kong (the “Offshore Capital Injection Project”).

 

1

 

NOW THEREFORE, for the purpose
of the Offshore Capital Injection Project, in accordance with the Memorandum on
Connected Transactions and the applicable transaction principles set forth in
the related listing rules, and on the basis of equality and mutual benefit,
both Parties hereby have reached the following agreements after friendly
consultations:

 

1.                                      General
Principles:

 

1.1                                 The
“General Service” hereunder refers to certain services and facilities provided
by the Parties to each other and any payment by the Served Party to the Serving
Party (the “Service Fees”).

 

1.2                                 Such
services and/or facilities provided by one Party to the other Party pursuant to
this Agreement are non-gratuitous commercial transactions. In accordance
with the fair-market principles, the Serving Party shall collect reasonable
Service Fees for any services and facilities provided by it, and the Served
Party shall make any due payment.

 

1.3                                 The
condition or quality of any of the General Service provided hereunder by either
Party to the other Party shall not be lower than that of the same or similar
services or facilities the Serving Party provides to any third party.

 

1.4                                 In
the event that either Party requires the other Party to increase the supply of
any of the General Service, the other Party shall do its utmost to provide such
requested amount of the services or facilities, of which the condition or
quality shall not be lower than that of the same or similar services or
facilities the Serving Party provides to any third party.

 

1.5                                 In
the event that any Party is not able to provide, in full amount or at all, any
of the General Service due to any reasons other than its own fault, such Party
shall promptly notify the other Party and do its utmost to assist the other
Party in seeking the same or similar services or facilities through other channels.

 

1.6                                 The
General Service provided hereunder shall be in accordance with the specific
purposes agreed by both Parties as well as with the applicable national
standards.

 

1.7                                 In
the event that either Party breaches this Agreement and losses are incurred by
the other Party, the defaulting Party shall bear any liabilities for such
breach, including, but not limited to, any direct and indirect losses resulting
from the breach, provided that such losses are not caused by any force majeure
event.

 

1.8                                 Each
Party shall provide all the reasonable and necessary efforts in assisting the
other Party’s performance hereunder.

 

2

 

2.                                      Major
Items in the General Service:

 

2.1                                 The
General Service provided by the Parties to each other and other related
arrangements are set forth in the Annexes hereto:

 

Annex I:                            Interconnection
and Settlement (to be provided by both Parties to each other);

 

Annex II:                       Roaming
Arrangement (to be provided by both Parties to each other);

 

Annex III:                   Special
Phone Cards (to be provided by Party A to Party B);

 

Annex IV:                   Equipment
Acquisition Service (to be provided by Party A to Party B); and

 

Annex IV:                   Use
of the Properties (to be provided by Party A to Party B).

 

3.                                      Pricing
and Payment:

 

3.1                                 The
principles for pricing and billing standards in connection with the Service
Fees are set forth in the Annexes hereto.

 

3.2                                 Any
specific amounts of the Service Fees shall be calculated under the current
applicable Chinese accounting rules.

 

3.3                                 In
the event that the Parties fail to agree upon a certain amount of the Service
Fees, such issue shall be reported to the relevant authorities, who shall
determine such amount in accordance with this Agreement and the national
pricing policies and rules. Such authorities’ decisions shall be final and
binding to both Parties.

 

3.4                                 Each
Party shall pay the due Service Fees for the relevant services provided by the
other Party in accordance with the pricing principles and standards set forth
in this Agreement and the Annexes hereto.

 

3.5                                 In
the event that either Party fails to pay any due Service Fee, such Party shall
pay to the other Party a late fee of 0.05% of the due amount on a daily basis.
In the event that the payment is overdue for more than 60 days, the other Party
may notify in writing of its intention to suspend the relevant services. In the
event that such Service Fees are not paid within 30 days after the receipt of
the written notice, the other Party may declare to terminate the relevant
services. The suspension or termination of such services shall not affect any
rights or obligations hereunder brought forth prior to such event.

 

3.6                               In
every October, both Parties shall discuss the next fiscal year’s pricing

 

3

 

standards for
each item of the General Service as well as other related matters and enter
into certain supplemental agreements. If the Parties fail to enter into such
supplemental agreements by then, the current pricing standards and other
related clauses shall apply to the next fiscal year until certain agreement is
reached or the dispute is resolved pursuant to Section 3.3 herein.

 

4.                                      Term:

 

4.1                                 The
term of this Agreement shall be one year. Subject to Section 7 herein, this
Agreement shall become effective on January 1, 2003.

 

4.2                               Subject
to applicable laws and government regulations, this Agreement shall be
automatically renewed each year, unless Party B notifies Party A in writing 60
days prior to the expiration day.

 

5.                                      Representations,
Warranties and Covenants:

 

Each Party
hereto represents and warrants to the other Party as follows:

 

5.1                                 Such
Party has the full power and authority (including, but not limited to,
obtaining relevant approvals, consents or permits from government authorities)
to execute this Agreement and its Annexes;

 

5.2                                 This
Agreement and its Annexes will become effective and binding once it is signed
in the way specified herein and can be enforced in a mandatory manner; and

 

5.3                                 No
provision in this Agreement and its Annexes shall run counter to the applicable
laws and regulations of the People’s Republic of China.

 

6.                                      Assignment:

 

6.1                                 Subject
to the terms and conditions under this Agreement and the Memorandum on
Connected Transactions, Party A hereby gives an irrevocable consent that Party
B may transfer its rights and obligations hereunder to Unicom New Century or
its subsidiaries, or Unicom Red-Chip Company or its subsidiaries. No other or
further consent by Party A shall be required for Party B to transfer its rights
and obligations hereunder to Unicom New Century or its subsidiaries, or Unicom
Red-Chip Company or its subsidiaries.

 

6.2                                 Once
Party B transfers its rights and obligations hereunder to Unicom New Century or
its subsidiaries, or Unicom Red-Chip Company or its subsidiaries, the
transferee shall immediately assume all of Party B’s rights and obligations
hereunder, while Party B shall immediately terminate all such rights and
obligations.

 

4

 

7.                                      Effectiveness:

 

The effectiveness
of this Agreement shall be subject to the terms and conditions under Section
3.1 of the Share Transfer Agreement, dated November 20, 2002, by and among
Unicom Centenarian (BVI) Limited (“Centenarian BVI”), Party A and China Unicom
(BVI) Limited, in connection with the acquisition of Centenarian BVI by China
Unicom (BVI) Limited.

 

8.                                      Force
Majeure:

 

In any force
majeure event that is unforeseeable and the consequences of which are
unavoidable or insurmountable and results in either Party’s failure to duly
perform its obligations hereunder, such Party shall promptly notify the other
Party of such situation and provide within 15 days any valid documents
evidencing the details and explaining the reasons for not being able to perform
all or part of its obligations hereunder or the reasons for any necessary
delays of such performance. Based on the impact of the force majeure event, the
Parties shall decide through negotiations whether to terminate, partially waive
or postpone such performance.

 

9.                                      Confidentiality:

 

Unless
required by law or any regulations or requirements of any relevant regulatory
authorities, or unless for the purpose of Party B’s information disclosure to
the Shanghai Stock Exchange, each Party shall not, without the other Party’s
written consent, provide or disclose any data and information in connection
with the other Party’s businesses to any other company, enterprise,
organization or person.

 

10.                               No
Waiver:

 

Unless
otherwise required by law, any failure or delay in exercising any of its
rights, powers or privileges by one Party shall not be construed as a waiver of
such rights, powers or privileges. Any one time or partial exercise of such
rights, powers or privileges shall not affect any further or complete exercise
of such rights, powers or privileges.

 

11.                               Notification:

 

Any
notification given in connection with this Agreement shall be in writing and
shall be delivered by one Party to the other Party by hand, fax or mail. Such a
notification by hand shall be deemed to have been duly given on the date of
delivery. Such a notification via fax shall be deemed to have been duly given
upon the completion of the fax transmission. Such a notification by mail shall
be deemed to

 

5

 

have been duly given on the
third working day (extended when there is a public holiday) after the postal
date. Notifications become effective upon their arrival.

 

	
  Addresses of
  the Parties hereto for receiving notifications are as follows:

  
	
   

  

China United Telecommunications
Corporation Limited

 

	
  Attention:

  	
   

  	
  Jia Yong
  Zeng

  
	
  Address:

  	
   

  	
  A133,
  Xidanbeidajie, Room 1167, 11th Floor, Xicheng District,

  
	
   

  	
   

  	
  Beijing,
  China 100032

  

 

Unicom New Century:

 

	
  Attention:

  	
   

  	
  Song Xiao Xi

  
	
  Address:

  	
   

  	
  A133,
  Xidanbeidajie, Room 1168, 11th Floor, Xicheng District,

  
	
   

  	
   

  	
  Beijing,
  China 100032

  
	
   

  	
   

  	
   

  

12.                               Governing
Law:

 

This Agreement
is under the jurisdiction of the Chinese laws and shall be interpreted and
executed in accordance with the Chinese laws.

 

13.                               Dispute
Resolution:

 

Other than the
exceptions under Section 3.3 herein, both Parties shall endeavour to resolve
any dispute over the effectiveness, interpretation or execution of this
Agreement through friendly consultations. Should any dispute remain unsettled
for more than 30 days after its occurrence, either Party is entitled to bring a
lawsuit based on this Agreement to a competent PRC Court.

 

14.                               Miscellaneous

 

14.1                           Annexes
I to V hereof are integral parts of this Agreement with equal legal binding
force. Should there be any conflict between the Annexes and the Agreement, the
Annexes shall prevail.

 

14.2                           Based
on mutual consultations, both Parties can make modifications, revisions or
additions to this Agreement and the Annexes hereto. No revision or addition
shall become effective until it is duly signed in writing and sealed by both
Parties or their authorized representatives.

 

14.3                           This
Agreement is severable, that is, when any of the clauses in this Agreement or
the Annexes hereto is deemed illegal or non-enforceable, the effectiveness and
enforcement of the other clauses contained herein shall by no means be
affected.

 

6

 

14.4                           This
Agreement has two original copies with equal legal binding force, and each
Party shall retain one.

 

7

 

China Unicom Corporation
Limited (Corporate Seal)

 

Legal Representative or
Authorized Representative: /s/ Yang Xian Zu

 

 

China Unicom Ltd.

 

Legal Representative or
Authorized Representative: /s/ Wang Jian Zhou

 

8

 

Annex I

 

Interconnection and Settlement

 

1.                                       Types
of interconnection:

 

For the
purpose of operating various telecommunication networks, including the mobile
network of the Nine Service Areas, Party A and Party B hereby agree to
interconnect all of their telecommunication networks, including each Party’s
own mobile networks and other networks.

 

2.                                       Technical
specifications and standards, cost sharing and network construction in respect
of the interconnection:

 

2.1                                 Any
such interconnection shall be subject to the interconnection standards and
specifications set forth by governmental telecommunications authorities.

 

2.2                                 Issues
such as cost-sharing methods and network construction shall be discussed and
decided by both Parties, in accordance with applicable regulations set forth by
governmental telecommunications authorities.

 

3.                                       Each
Party’s obligations:

 

3.1                                 Each
Party shall ensure that the quality of the interconnection shall not be lower
than that of the telecommunication within their own networks.

 

3.2                                 Based
on the technology available, each Party shall unconditionally and promptly
provide the other Party’s customers, upon the customers’ requests, any
services  (including special services
and intelligent services) available to the customers in its own networks.

 

4.                                       Network
management and adjustment:

 

4.1                                 Each
Party shall notify the other Party of its construction work on network
expansions, if such construction work may affect the usage of the other Party’s
customers, six months before such construction work starts.

 

4.2                                 Each
Party shall notify the other Party of its technical adjustment work on router
systems, frame relays, transmission methods, cell data or software upgrades,
etc.,

 

9

 

if such
adjustment may affect the usage of the other Party’s customers, 30 days before
such adjustment work starts.

 

4.3                                 Each
Party shall provide timely cooperation and assistance, at the other Party’s
request, in the other Party’s adjustment work on router systems, frame relays,
transmission methods, cell data or software upgrades, etc., so as to ensure the
quality of the interconnection.

 

5.                                       Maintenance,
technical problems and solutions:

 

5.1                                 Both
Parties shall maintain their networks by the current standards and regulations
set forth by the governmental telecommunications authorities so as to ensure
normal operation of the entire network.

 

5.2                                 Each
Party may not terminate the interconnection without the other Party’s consent.

 

5.3                                 Should
there be a network breakdown or heavy network traffic, both Parties shall take
effective measures to resume operations.

 

6.                                       Settlement
and payment:

 

6.1                                 Settlement
Principles:

 

i.                                          Settlement
between both Parties’ mobile networks:

 

The two
different settlement methods for mobile calls between different provinces are
as follows:

 

1.                                       In
the event that Party A’s or Party B’s mobile subscriber makes a call in both
Parties’ service area, and when Party A collects 4% of the long-distance
charge, then Party B is also entitled to collect 4%. The remainder shall be
collected by China Unicom Corporation Limited (CUCL).

 

2.                                       If
the settlement standards stipulated in the MII announcement dated March 14,
2001 is applied, the caller’s network shall retain RMB0.06 of the long-distance
charge while the receiver’s network shall retain RMB0.06. The remainder shall
be collected by CUCL.

 

Currently,
both Parties agree to adopt the first settlement method above. Both Parties
also agree that, if any other settlement method set forth and modified from

 

10

 

time to time by governmental
authorities, are found more favorable to Party B than the settlement method
currently used by both Parties, such settlement method shall be adopted.

 

ii.                                       All
other interconnection settlement between both Parties:

 

Both Parties
agree to make settlements in accordance with the MII’s announcement dated March
14, 2001 and its amendments from time to time.

 

6.2                                 Billing
principles:

 

The
interconnection settlement between the Parties shall be based on Party B’s
billing data. However, if the discrepancy between Party A’s billing data and
Party B’s accounting billing is larger than 3%, both Parties shall consider
other basis for settlement.

 

6.3                                 Delivery
of billing data and settlement:

 

(1)                                  Settlement
between the Parties’ mobile networks

 

Both Parties
agree to submit relevant billing data on the 25th day of each month
to the Settlement Center, controlled by Party B. The Settlement Center is in
charge of data collecting and processing, and creating network settlement
statements.

 

Both Parties
also agree to make settlements once a month on the network settlement
statements created by the Settlement Center.

 

(2)                                  Other
settlements between the Parties’ mobile networks and fixed networks

 

Both Parties
agree to have their subsidiaries make settlements once a month based on the
settlement principles set forth in this Annex.

 

11

 

Annex II

 

Roaming Arrangement

 

For the
purpose of providing mobile services to each Party’s subscribers in its own
service areas and providing roaming services to both Parties’ subscribers, both
Parties hereby agree to make arrangements as follows:

 

1.                                       Both
Parties agree to arrange for automatic roaming, so that either Party’s mobile
subscribers can make and receive calls in the other Party’s service areas.

 

2.                                       Both
Parties agree that a mobile subscriber using roaming services shall be charged
with a fixed roaming fee of RMB 0.60 per minute for both incoming and outgoing
calls.

 

(1)                                  If
a Party B’s subscriber uses the roaming service in Party A’s service area, the
roaming charge collected by Party B shall be distributed as follows: (i) RMB
0.40 is collected by Party A; and (ii) RMB 0.20 is retained by Party B.

 

(2)                                  If
a Party A’s subscriber roams in the Nine Service Areas, the roaming charge
collected by Party A shall be distributed as follows: (i) RMB 0.56 is collected
by Party B; and (ii) RMB 0.04 is retained by Party A.

 

12

 

Annex III

Special Phone Cards

 

1.                                       Scope
of the special phone cards service:

 

Based on its
actual needs, Party B may request Party A to provide, via Unicom Xingye, a
subsidiary held by Party A, certain telephone cards for various purposes, including
SIM cards, UIM cards, IP cards, long-distance cards and rechargeable cards (the
“Phone Cards” collectively).

 

2.                                       Quantity
of the Phone Cards:

 

2.1                                 Annual
and periodical plans for ordering the Phone Cards:

 

2.1.1                        In October of each year, Party B shall submit to Party A its annual
order plan for the coming year, based on its operation plan for the year.

 

2.1.2                        In
February, May and September of each year, Party B shall confirm its order plans
for the periods from May to August, from September to December, and from
January to April of the next year, respectively. Party A shall deliver the  Phone Cards according to the order plans
confirmed by Party B, unless there is a force majeure event.

 

2.2                                 Rush
orders and temporary orders:

 

Party B may
request to modify its order plans. Should there be any rush orders or temporary
orders resulting from such modifications, Party A shall do its utmost to supply
the order as requested by Party B and shall confirm within three days after
Party B’s request whether it will be able to perform as requested by Party B.

 

3.                                       Prices
for the Phone Cards

 

3.1                                 Both
Parties agree that the prices for the Phone Cards shall be determined by the
actual cost of the Phone Cards to be delivered by Party A to Party B (including
the import cost, manufacture cost and distribution cost) plus a marginal profit
no higher than 20% (which is to be determined from time to time by both
Parties) of

 

13

 

the overall
cost. Both Parties also agree to set up a discount rate based on the volume of
Party B’s orders.

 

3.2                                 As
for Party B’s rush orders or temporary orders, Party A may add an expedited fee
of up to 10% on top of the prices set forth above.

 

3.3                                 Both
Parties agree to negotiate and determine in December of each year the price for
each type of Phone Card for the coming year.

 

4.                                       Delivery
time and place:

 

Party A shall
deliver the Phone Cards to Party B at the time and places designated in Party
B’s order plans or as requested by any rush/temporary orders.

 

5.                                       Quality
of the Phone Cards:

 

5.1                                 Party
A shall guarantee the quality of the Phone Cards to be up to the standards
stipulated by the relevant governmental authorities, and provide any necessary
certification.

 

5.2                                 Party
A shall guarantee all the numbers, codes and passwords of the Phone Cards to be
produced under a secure and confidential condition, and guarantee the
technology, security and confidentiality of such numbers, codes or passwords.

 

5.3                                 In
the event that Party B raises any questions regarding the quality of any Phone
Cards within five days after it receives such Phone Cards, Party A shall
exchange or repair such defective Phone Cards, unless the defect was caused by
Party B, until the applicable standards and Party B’s requirements are satisfied.

 

5.4                                 In
the event that Party B fails, after its reasonable efforts, to discover any
existing quality defects in the Phone Cards, Party A shall indemnify Party B
for all Party B’s direct losses caused by such defects.

 

6.                                       Payment:

 

6.1                                 By
the time that Party B confirms with Party A of Party B’s order plan, it shall
make a prepayment of 15% of the total price of the Phone Cards ordered by Party
B. The remaining 85% of the total payment shall be delivered to Party A by the
time that Party A completes the delivery of all the Phone Cards pursuant to
Party B’s order plan.

 

6.2                                 Payment
for rush/temporary orders:

 

14

 

By the time
that Party A confirms with Party B of any rush or temporary order, Party B
shall make the full payment of such order (including any expedited fees) and
Party B may require Party A to deliver such order on a timely basis.

 

7.                                       Other
Phone Cards:

 

Based on its
business needs, Party B may request Party A to provide other types of Phone
Cards. Party A shall make such effort after making a working plan based the
available technology, operating conditions and other factors.

 

Both Parties
agree that they shall discuss the amount, prices, and payment methods of such
other types of Phone Cards. The price shall be based on the actual cost
incurred by Party A in manufacturing and delivering such Phone Cards plus a
marginal profit no higher than 20% of the total cost.

 

15

 

Annex IV

 

Equipment Acquisition Services

 

1.                                       Scope
of the equipment acquisition services:

 

Based on its
actual needs, Party B may request Party A to act on its behalf (via Unicom
Import and Export Co. Ltd. (“Unicom I&E”), a subsidiary controlled by Party
A), to handle overseas acquisitions of telecommunications equipment and other
materials.

 

Unicom I&E
shall provide comprehensive acquisition services, including bidding,
consulting, and acting as the processing agent. Unicom I&E may also
authorize Party A’s other subsidiaries to provide such acquisition services.

 

2.                                       Procedures
for the acquisition services:

 

Both Parties
agree to authorize Unicom I&E to provide the equipment aquisition services
to Party B in accordance with “Notice on Centralized Import and Export
Operations (No. [1994]001)”, “Rules on Centralized Equipment Acquisitions of
China Unicom (No. [1995]380)”, “Rules on Centralized Acquisitions of Equipment
and Instruments (No. [1996 ]31)”, “Methods of Equipment Acquisitions of China
Uniform (No. [1998] 059)” and other applicable documents agreed upon by both
Parties.

 

3.                                       Service
Fees and Payment:

 

3.1                                 Party
B shall pay Unicom I&E such service fees for the acquisitions of any
equipment and materials as follows:

 

3.1.1                                  0.7%
of the underlying amount (including any bank processing fees) in any overseas
acquisition contract of major equipment signed by Unicom I&E on Party B’s
behalf;

 

3.1.2                                  0.5%
of the underlying amount in any domestic acquisition contract of major
equipment signed by Unicom I&E on Party B’s behalf; and

 

3.1.3                                  Unicom
I&E agrees not to charge Party B for the acquisition of any power switches,
storage batteries, diesel-electric sets, constant power supplies, the

 

16

 

air
conditioning of equipment rooms, optic fibers and other transmission materials
and necessary accessories.

 

3.2                                 Both
Parties agree that the payment time for the agent service fees shall be
determined by both Party B and Unicom I&E, based on the specific
circumstance of the equipment acquisition. Should there be any payment overdue,
Party B shall pay Unicom I&E a late fee of 0.5% of the total amount due on
a daily basis.

 

4.                                       Party
A shall cause Unicom I&E to treat Party B in the same manner as it would
Party A in respects of import and export prices as well as other material
provisions or conditions.

 

17

 

Annex V

 

USE OF THE PROPERTIES

 

1.                                       Use
and purposes of the properties:

 

1.1                                 Based
on Party B’s requests from time to time, Party A agrees to give Party B access
to use certain properties it owns (“Party A’s Properties”) and certain other
properties procured by Party A from certain third parties (the “Third Parties’
Properties”), including premises, air conditioners, power supplies, power
devices and other accessorial facilities.

 

1.2                                 Party
B shall use such above-mentioned properties only for the purposes of its
offices, retail outlets, and operations.

 

2.                                       Fees
and payments:

 

2.1                                 Party
B’s payment for using any of Party A’s Properties shall be based on the
depreciation cost or the market price of similar properties in the same
geographical area, whichever is lower.

 

2.2                                 As
for any of the Third Parties’ Properties used by Party B, both Parties shall
share the payment to such third party, based on the proportion used by each
Party.

 

2.3                                 Party
B shall make the payments to Party A within 30 days after the end of each
quarter.

 

2.4                                 Should
there be any payment overdue, Party B shall pay Party A a late fee of 0.05% of
the total amount due on a daily basis.

 

3.                                       Warranties
and Covenants:

 

Party A
warrants that it has full rights to provide such above-mentioned Party A’s
Properties and Third Parties’ Properties (including premises, power supplies,
air conditioners, power devices and other accessorial facilities) for Party B
to use. Party A agrees to indemnify Party B for all the losses resulting from
any dispute regarding Party A’s ownership or rights of use of such Properties
that prevents Party B from exercising its rights under this Annex or any other
damages incurred by Party B.

 

18

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