Document:

Exhibit 4.15

 

(English Translation)

 

 

Restructuring Agreement

 

between

 

China United Telecommunications Corporation

 

and

 

Unicom New World Telecommunications
Corporation Limited

 

 

November 4, 2003

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Restructuring
  of Project Assets and Interests in China

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Representations,
  Warranties and Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Taxation

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Non-Competition

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Further
  Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Mutual
  Indemnification and Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Ownership
  of Profits

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Document
  Transfer

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  No Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Dispute
  Resolution

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Effectiveness; Miscellaneous

  	
   

  

 

 

Restructuring Agreement

 

This Restructuring
Agreement (the “Agreement”), dated November 4, 2003, is entered into in
Beijing, the People’s Republic of China (“China” or “PRC”), by and between the
following two parties:

 

(1)           China United
Telecommunications Corporation (“Unicom Group”) Address: Huang Cheng Hotel,
No.15, Yangfangdian Road, Haidian District, Beijing, China

 

Legal Representative: Wang Jianzhou

 

(2)           Unicom New World
Telecommunications Corporation Limited (“Unicom New World”) Address: Room 1009,
10th Floor, Tower 1, No. 18, Jian Guo Men Nei Avenue, Dongcheng
District, Beijing, China

 

Legal Representative: Wang Jianzhou

 

WHEREAS:

 

(1)           Unicom Group is a duly
organized and validly existing corporation engaged in integrated
telecommunications services in accordance with PRC law.

 

(2)           Unicom New World is a
duly organized and validly existing corporation wholly owned by Unicom Group at
the time of incorporation in accordance with PRC law, established with a
registered capital of RMB2,054,769,800. It operates mobile telecommunications
services in 9 provinces (autonomous regions), namely, Shanxi, Neimenggu, Hunan,
Hainan, Yunnan, Tibet, Gansu, Qinghai and Ningxia.

 

(3)           Unicom Group intends to
inject all its equity interests in Unicom New World into China Unicom Limited
(“Unicom Red Chip Company”) through a wholly owned overseas company.

 

NOW THEREFORE, on the
basis of equality and mutual benefit, after friendly consultations, Unicom
Group and Unicom New World agree as follows:

 

1.             Definitions

 

Unless stated otherwise,
in the Agreement:

 

	
  Assets Assessment Report

  	
   

  	
  shall mean the Assets Assessment General Report for
  the Intention of Establishment of Unicom New World Telecommunications
  Corporate Limited by China United Telecommunications Corporation (Zhong Qi
  Hua Ping Bao Zi [2003]139), which is made by Zhong Qi Hua Asset Evaluation
  Company and approved by the Committee of Management of State-owned Assets
  under the State Council (Guo Zi Chan Quan Han [2003]314), with June 30,
  2004 as the assessment reference date.

  
	
   

  	
   

  	
   

  
	
  Auditor’s Report

  	
   

  	
  shall mean the financial statements and audit report
  (Pu Hua Yong Dao Te Shen Zi [2003]123) issued by PricewaterhouseCoopers Zhong
  Tian Accountants Firm for Unicom New World Telecommunications Corporation
  Limited for 2002 and the six months period ended June 30, 2003.

  
	
   

  	
   

  	
   

  
	
  Unicom Group

  	
   

  	
  China United Telecommunications Corporation

  
	
   

  	
   

  	
   

  
	
  Unicom Red Chip Company

  	
   

  	
  China Unicom Limited

  
	
   

  	
   

  	
   

  
	
  CUCL

  	
   

  	
  China Unicom Corporation Limited

  
	
   

  	
   

  	
   

  
	
  Unicom New World

  	
   

  	
  Unicom New World Telecommunications Corporation
  Limited

  

 

1

 

	
  Unicom New World (BVI)

  	
   

  	
  Unicom New World (BVI) Limited

  
	
   

  	
   

  	
   

  
	
  Project Assets and Interests in China

  	
   

  	
  shall mean related assets, rights and liabilities
  injected by Unicom Group into Unicom New World, i.e. all assets and interests
  listed in the Assets Assessment Report, and all contracts, agreements,
  certificates, business operation information, documents and files, land use
  rights and housing ownership rights in connection with such assets and
  interests, and all interests thereof, together with all interests and income
  generated by such assets and interests since June 30, 2003.

  
	
   

  	
   

  	
   

  
	
  Listed Business

  	
   

  	
  shall mean any telecommunications business and other
  related businesses, wholly or partially owned, managed or operated directly
  or indirectly by Unicom Red Chip and/or Unicom New World at any time.

  
	
   

  	
   

  	
   

  
	
  Competing Business

  	
   

  	
  shall mean any business or activity which results or
  may result in any direct or indirect commercial competition with the Listed
  Business.

  
	
   

  	
   

  	
   

  
	
  Unassigned Contracts

  	
   

  	
  shall mean the unassigned contracts defined in
  article 2.10 under the Agreement.

  
	
   

  	
   

  	
   

  
	
  Restructuring Effective Date

  	
   

  	
  shall mean the date of incorporation of Unicom New
  World, i.e., November 4, 2003.

  

 

Unless stated
otherwise herein, “provisions” mean only those hereunder. The titles and
headings used are for convenience only and are not to be considered in
construing or interpreting the Agreement.

 

2.             Restructuring of Project Assets and
Interests in China

 

2.1           Unicom Group and Unicom
New World (collectively, the “Parties”) hereby agree to assign the Project
Assets and Interests in China to Unicom New World pursuant to the provisions
and conditions of the Agreement.

 

2.2           Pursuant to the
Restructuring, Unicom Group assigns net assets and related interests being
RMB2,054,769,800 to Unicom New World.

 

2.3           Both Parties agree and
confirm the assignment of the Project Assets and Interests in China, including
the land use rights and real estate titles to be assigned to Unicom New World
pursuant to the Restructuring.

 

Both Parties confirm such
land use rights and real estate titles have been appraised to be Unicom Group’s
investment in Unicom New World.

 

2.4           Unless otherwise provided
herein, Unicom New World shall own and control the Project Assets and Interests
in China free of any liens, security or any other third party interests, and be
responsible for related liabilities on and after the Restructuring Effective
Date.

 

2.5           Both Parties hereby
agree and confirm that Unicom Group shall undertake all the responsibilities
for any agreements, arrangements, liabilities or obligations in connection with
the following matters, while Unicom New World shall not bear any of such responsibilities:

 

2.5.1        Any rights of Unicom
Group’s employees (including the employees transferred to Unicom New World), in
connection with any of Unicom Group’s salary funds or benefits funds at any
time prior to the Restructuring Effective Date; and

 

2.5.2        Any capital contribution
agreements or arrangements made between Unicom Group and its employees prior to
the Restructuring Effective Date.

 

2

 

2.6           Pursuant to the
Restructuring, certain employees of Unicom Group shall be transferred to Unicom
New World on the Restructuring Effective Date. Unicom Group shall permit any
such employee to occupy his or her current residence (owned by Unicom Group)
under the same conditions as before the Restructuring Effective Date until his
or her employment by Unicom New World is terminated. In the event that any such
employee decides to exercise his or her option to purchase his or her current
residence as permitted by the PRC government’s policies or regulations on
housing reform, Unicom Group shall bear all the costs or losses arising from
the sale of the residence (excluding any expenses to be paid by such employee
as required by laws or regulations).

 

2.7           For the purpose of
arranging the Restructuring pursuant to the provisions hereunder and to handle
effectively all the related existing and remaining matters, both Parties hereby
agree and confirm that all the activities in connection with the Restructuring
shall be legally binding on each Party hereto.

 

2.8           Both parties agree to
make their best efforts to complete as early as possible all the Restructuring
matters remaining after the Restructuring Effective Date. Both Parties agree to
take all actions, including, but not limited to, executing or causing others to
execute any documents, applying and obtaining any approvals, consents or
permits, and registering, listing or filing any proceeding documents, so as to
ensure the full implementation of the Restructuring. As for any related matters
not referred hereto, both parties shall consult with each other in a friendly
fashion and handle them in an appropriate manner.

 

2.9           In the event that there
is any lawsuit or arbitration, caused by any matters that happened prior to the
Restructuring Effective Date, in connection with the Project Assets and
Interests in China assigned to Unicom New World, both Parties shall participate
in such lawsuit or arbitration, exercise their rights and Unicom Group shall
undertake related responsibilities, and take all proper and reasonable actions
permitted by the court or arbitrator so as to protect the interests of both
Unicom Group and Unicom New World against such lawsuit or arbitration.

 

2.10         All existing contracts
and agreements, with Unicom Group or any of its subsidiaries as a party and in
connection with the Project Assets and Interests in China, shall be assigned to
Unicom New World on the Restructuring Effective Date.

 

For the purpose of
changing the titles of such contracts or agreements, both Parties have entered
into agreements and/or letters of consent with other participating parties.

 

In the event that some of
such contracts have not yet been agreed by certain other participating parties
to be assigned from Unicom Group to Unicom New World because of such reasons as
time or quantity (“Unassigned Contracts”), both Parties agree as follows:

 

2.10.1      Unicom Group shall hold the
Unassigned Contracts after the Restructuring Effective Date and perform, in the
name of Unicom Group, its obligations thereunder to the other participating
parties thereto, while all Unicom Group’s rights or obligations thereunder and
all the consequent profits or losses, unless otherwise specified herein, shall
belong to Unicom New World. Unicom Group agrees that it shall receive or hold
any interests thereunder, including, but not limited to, goods and money, on
behalf of Unicom New World, who is the owner of such interests. Unicom Group
shall deliver such interests to Unicom New World at Unicom New World’s
requests;

 

2.10.2      Unicom Group shall exercise
and perform, strictly under Unicom New World’s instructions from time to time,
its rights and obligations under the Unassigned Contracts, and shall not alter
or terminate any Unassigned Contracts without Unicom New World’s prior written
consent; notwithstanding the fact that Unicom Group holds the Unassigned
Contracts as a trustee of Unicom New World, the latter shall not directly claim
any rights against other participating parties thereto, unless consented by
such other participating parties;

 

2.10.3      Any reasonable expenses
incurred by Unicom Group in performing the obligations under 2.10.1 herein
shall be reimbursed by Unicom New World, excluding those arising from Unicom
Group’s negligence or fault or any other factors caused by Unicom Group;

 

2.10.4      During the time when Unicom
Group holds or performs any Unassigned Contract as a trustee

 

3

 

of Unicom New World
pursuant to the provisions hereunder, in the event that there are any losses
incurred by Unicom New World resulting from Unicom Group’s negligence or fault
or any other factors caused by Unicom Group, prior to or after the
Restructuring Effective Date, including, but not limited to, lawsuit costs and
indemnification, Unicom Group shall make adequate, effective and timely
indemnification to Unicom New World against such loss; and

 

2.10.5      In the event that Unicom New
World needs Unicom Group to exercise, in the latter’s name, its rights under
any Unassigned Contract, including filing lawsuits or arbitration or taking other
necessary actions, Unicom Group should assist Unicom New World by so doing in
exercising such rights.

 

2.11         Each Party agrees to bear
its own expenses hereunder, unless specified otherwise herein.

 

3.             Representations, Warranties and Covenants

 

3.1           Each Party hereto makes
to the other Party the following representations, warranties and covenants:

 

3.1.1        It is an independent legal
person organized under PRC law. It has its valid business license and full
rights to operate within the business scope described in the license;

 

3.1.2        It has the full legal
rights, power and authorization to execute this Agreement and perform its
responsibilities and obligations hereunder; and

 

3.1.3        No provision hereunder
violates any of its organizational documents, PRC laws and regulations, and any
third-party agreements.

 

3.2           Unicom Group makes to
Unicom New World the following representations, warranties and covenants:

 

3.2.1        Unicom Group is the
legitimate owner of the Project Assets and Interests in China, upon which
Unicom Group has no lien, security, debts or other third-party interests
(except for those disclosed in the Assets Assessment Report and the Auditor’s
Report);

 

3.2.2        Unicom Group agrees to
execute this Agreement and perform its responsibilities and obligations hereunder,
including, but not limited to, the assignment of the Project Assets and
Interests in China to Unicom New World; such assignment does not violate any of
Unicom Group’s organizational documents, agreements or contracts of which
Unicom Group is a participating party, and applicable laws and regulations;

 

3.2.3        Unicom Group has taken all
necessary actions, including, but not limited to, executing agreements,
adopting resolutions, filing and obtaining approvals, and has acquired all the
necessary approvals from the state government, provincial and municipal
governments and relevant supervisory authorities for the purpose of effectively
assigning the Project Assets and Interests in China to Unicom New World;

 

3.2.4        The Auditor’s Report
truthfully and impartially reflects the aggregate profits and net assets
injected into Unicom New World’s Asset Injection Project for fiscal year as of
December 31, 2002 and the six months period ended June 30, 2003. The
Auditor’s Report fully provides and discloses all obligations (notwithstanding
whether they are existing or not, indirect or disputable, including financial
lease undertaking obligations, pension obligations), and all outstanding
capital undertaking and all bad and non-performing debts.

 

3.2.5        Since the Assessment
Reference Date, Unicom Group has been managing in a proper manner all the
assets and liabilities in connection with the Project Assets and Interests in
China and operating in a proper manner all the related business, and there has
been no material adverse changes in the content and value of such assets and
liabilities;

 

3.2.6        Except for the liabilities
in connection with the Project Assets and Interests in China which have been
disclosed in the Assets Assessment Report and the Auditor’s Report and the
debts generated in the regular business operation after the Assessment
Reference Date as stated in the Auditor’s Report, Unicom New World has no other
actual, liquid or contingent debt,

 

4

 

including any guaranteed
debt, or liability to undertake;

 

3.2.7        Unicom Group handles the
Project Assets and Interests in China and operates all the related business in
accordance with all applicable PRC laws and regulations, and has taken no
illegal actions that may bring Unicom New World any material loss;

 

3.2.8        Unicom Group has not
violated any provisions of any material contracts or agreements related to the
Project Assets and Interests in China injected into Unicom New World;

 

3.2.9        The operation of the
Project Assets and Interests in China has not been affected or interrupted by
any shortage of facilities or resources, such as electricity, or any other
factors;

 

3.2.10      Unicom Group has not
violated any third party’s patents, copyrights, trademarks, titles or other registered
or unregistered industrial or intellectual copyrights. Unicom Group shall bear
the responsibility for indemnification in the event of any claims arising from
Unicom New World’s use of the Chinese and English names of “Unicom”;

 

3.2.11      As of the execution date of
this Agreement, Unicom Group and its subsidiaries have not engaged in any
Competing Business in any manner in China (including, but not limited to,
proprietorship, equity or cooperative joint venture, or directly or indirectly
possessing other companies’ shares or other interests, unless via China Unicom
Corporation Limited (“CUCL”) and Unicom New World), except for the existing
Competing Business stipulated in the prospectus of Unicom Red Chip Company
issued on June 30, 2000;

 

3.2.12      There is no material
ongoing, pending or threatened lawsuit, arbitration or other legal proceeding
related to Unicom Group (whether as a plaintiff, defendant or any other
identity) and in connection with the Project Assets and Interests in China
injected into Unicom New World by Unicom Group, nor any claim or fact of
material importance to the Restructuring that may result in any claim which may
have a material impact on Unicom New World’s operations or financial
conditions;

 

3.2.13      After the Restructuring Effective
Date, all existing or future business licenses, consents, permits and approvals
(including Unicom Group’s licenses for telecommunications business) obtained
from the Ministry of Information Industry and other state telecommunications
authorities and other government authorities, other allocated and/or acquired
resources (including but not limited to such resources as spectra, frequencies,
numbers, trademarks and titles) related to Unicom New World’s Listed Business
are also applicable to Unicom New World. Unicom Group shall obtain in
accordance with law, continue to hold, retain and renew such business licenses,
consents, permits and approvals and other resources for the sole benefit of
Unicom New World’s Listed Business, and shall not conduct any action or
inaction which may adversely affect the legality, validity and continuity of
such business licenses, consents, permits and approvals and other resources or
which may impair Unicom New World’s ability in operating Listed Business in
accordance with PRC laws and regulations. Unicom Group shall take all action or
inaction to obtain, maintain, retain, renew or extend such business licenses,
consents, permits and approvals, and for the legality, validity and continuity
of such business licenses, consents, permits and approvals and other resources
and the ability of Unicom New World in operating Listed Business in accordance
with PRC laws and regulations;

 

3.2.14      To meet the operating needs
of Unicom New World’s Listed Business, Unicom Group shall arrange to allow
Unicom New World to participate in its existing or future roaming and
settlement arrangements set up with third parties in accordance with industry
rules;

 

3.2.15      After the Restructuring
Effective Date, (i) Unicom Group shall have the obligation to assist Unicom New
World in obtaining the real estate title certificates in connection with the
Project Assets and Interests in China. In the event that Unicom New World fails
to acquire such certificates for any reasons, Unicom Group shall indemnify Unicom
New World for all resulting losses, indemnities, payments, fees, expenses, or
claims; and (ii) Unicom Group shall provide Unicom New World, other than the
Project Assets and Interests in China, certain other assets and related
services (including but not limited to those ensuring the continuous use by

 

5

 

Unicom New World of any
premises owned by Unicom Group for which documentation of its relevant rights
has not yet obtained, for three years after the Restructuring Effective Date).
Unicom Group has the full legal rights, power and authorization to make such
arrangements. In the event that there is any dispute regarding the usage by
Unicom New World or its branches/subsidiaries of such assets or the related services
that has resulted in the failure of Unicom New World or its
branches/subsidiaries in exercising their relevant rights or caused damages to
Unicom New World or its branches/subsidiaries, Unicom Group agrees to indemnify
Unicom New World or its branches/subsidiaries for all consequent losses,
indemnities, payments, fees, expenses, or claims;

 

3.2.16      Should Unicom New World deem
it necessary, Unicom Group shall continue to provide financial support to
Unicom New World; and

 

3.2.17      Unicom Group shall, at
Unicom New World’s request from time to time, make available to Unicom New
World or its branches/subsidiaries certain of its own assets and assets of
which use rights have been obtained from certain third parties (including
premises and related facilities). In the event that there is any dispute for
any reason and under any circumstance regarding Unicom Group’s property rights
or use rights of such assets that has resulted in Unicom New World’s failure in
exercising its relevant rights or resulted in damages to Unicom New World,
Unicom Group agrees to indemnify Unicom New World for all resulting claims.

 

3.3           All representations,
warranties and covenants herein are separate and independent, and not subject
to any other provisions or contents herein, unless stipulated otherwise herein.

 

3.4           In the event that
Unicom New World finds Unicom Group has defaulted on any representations,
warranties or covenants herein, Unicom New World shall be entitled to claim an
indemnity against Unicom Group; Unicom Group agrees to indemnify Unicom New
World, within thirty (30) days after it receives a notice for indemnity from
Unicom New World, for all direct and indirect losses, fees or liabilities
arising from such default by Unicom Group.

 

4.             Taxation

 

4.1          “Taxes” stipulated in
Section 4.2 herein means all the taxes collected by or paid to state,
provincial and local government authorities, including, but not limited to,
taxation on gross or net profit, income, sales, acquisitions, patents and other
intellectual property rights, tangible or intangible assets, chattel or estate
(including sales, assignments, bestowal, disposals, possession, usage or
occupancy of such), including, but not limited to, income tax, sales tax,
value-added tax, consumption tax, tariff, stamp duty, deductions and
withholding tax, and also include the following:

 

4.1.1        Any tax collected or paid
based on contractual packages or in other similar methods;

 

4.1.2        Any additional or
double-levied tax, whether such tax results from the deficiency of the previously
collected or paid tax or the tax credits generated by previously collected or
paid tax are unjustifiable or illegitimate; and

 

4.1.3        Any penalties, interest,
delinquency charges or any other payables, but not including any tax to be paid
which has been listed in financial statements.

 

4.2           Unicom Group will
assume the following:

 

4.2.1        All taxes generated by the
operation of the Project Assets and Interests in China, or any other assets
assigned to Unicom New World, prior to the Restructuring Effective Date,
whether such taxes are levied or payable before or after the Restructuring
Effective Date; and

 

4.2.2        All taxes generated prior
to or after the Restructuring Effective Date by assets, rights, debts or
obligations (and the relevant operations) owned but not stipulated in the
Assets Assessment Report and the Auditor’s Report.

 

4.3           Unicom Group agrees to
indemnify Unicom New World as follows:

 

6

 

All taxes
stipulated in Section 4.2 above and their related claims, lawsuits,
losses, indemnities, payments, fees or expenses, including, but not limited to,
all payments, fees and expenses arising from or associated with enforcements of
judgments or settlements of such claims or lawsuits.

 

5.             Non-Competition

 

Unicom Group
hereby covenants to Unicom New World that, once the shares of Unicom Red Chip
Company are listed, Unicom Group, as a controlling shareholder of Unicom Red
Chip Company and the coordinator of other controlling shareholders in
accordance with laws or listing rules of such listing place, shall not engage
or participate in, and shall prevent its subsidiaries from engaging or
participating in, any Competing Business in China, except for the existing
Competing Business or cellular telephony services based on CDMA technology, in
any form (including, but not limited to, proprietorship, equity or cooperation
joint venture, or directly or indirectly possessing other companies’ shares or
interests, unless via Unicom Operating Company and/or Unicom New World). In the
event that Unicom Group and/or any of its subsidiaries engages or participates
in, at any time and in any place within China, operations or activities that
have become a Competing Business, except for the existing Competing Business or
cellular telephony services base on CDMA technology, Unicom Group shall
terminate and/or cause its subsidiaries to terminate the engagement,
participation, management and operation of such Competing Business.

 

6.             Further Consents

 

6.1           After Unicom Group has
assigned all of its shares in Unicom New World to Unicom New World (BVI)
Limited (“New World BVI”), Unicom New World shall then become a wholly owned
foreign proprietorship company of New World BVI, and this agreement shall
remain binding on Unicom Group and Unicom New World.

 

6.2           If Unicom Red Chip
Company needs to further restructure Unicom Operating Company and Unicom New
World, then this Agreement shall be binding on such company which shall be a
successor to the assets, interests and businesses of Unicom New World.
Representations, warranties and covenants made by Unicom Group to Unicom New
World shall be deemed to be made to such company which shall be a successor to
the assets, interests and businesses of Unicom New World.

 

7.             Mutual Indemnification and Guarantee

 

7.1           Except for liabilities
specified in the Assets Assessment Report and the Auditor’s Report to be borne
by Unicom New World, Unicom Group shall bear all the liabilities (including
contingent liabilities) related to the Project Assets and Interests in China
and other assigned assets and interests and all the indemnities arising from
the Restructuring. Unicom New World assumes no responsibilities, rights or
interests related to other assets, rights and liabilities (including contingent
liabilities) owned by Unicom Group pursuant to the Restructuring.

 

7.2           Unicom Group agrees to
make unlimited indemnities to Unicom New World as follows:

 

7.2.1        Any claims (excluding
those related to taxation) of Unicom New World arising from or related to (i)
the failure to disclose certain assets or liabilities in the financial
statements prior to the Restructuring Effective Date or (ii) assets and
liabilities retained or held by Unicom Group;

 

7.2.2        Any claims arising from or
related to Unicom Group’s negligence or mismanagement in respect of the Project
Assets and Interests in China prior to the execution date of this Agreement
(unless any such claim is specified in the Assets Assessment Report); and

 

7.2.3        At any time:

 

(a)           Any claims arising from
Unicom Group’s failure to inject any related assets or liabilities into Unicom
New World pursuant to the Restructuring and this Agreement; and

 

(b)           Any claims arising from
Unicom Group’s breach of any provision hereunder.

 

7

 

7.3           Unicom New World agrees
to indemnify Unicom Group for any claim arising from Unicom New World’s breach
of any provision hereunder.

 

7.4           Claims specified in
Sections 7.2 and 7.3 above include but are not limited to all payments, fees
and expenses generated in or related to the handling of such claims or the
enforcement of judgments or decisions thereof. However, any lawsuits, claims,
payments, fees and expenses resulting from or relating to the deliberate breach
of this Agreement, fraud or negligence by the party claiming such indemnity are
not included hereunder.

 

7.5           Any indemnity claim
from any Party hereto should be presented in written form and with a
description of the facts and status of the claim in reasonable detail.

 

7.6           Unicom Group hereby
agrees to forward to Unicom New World any payment that belongs to Unicom New
World after the Restructuring Effective Date within seven (7) days after Unicom
Group receives such payment from any third party.

 

7.7           Pursuant
to the Restructuring, some of Unicom Group’s employees shall be transferred to
Unicom New World together with various social securities attached thereto.
Unicom New World shall sign an employment contract with each of such employees
as required by law, and provide such employee with all required benefits such
as social security, medical insurance and retirement plans in accordance with
the applicable PRC laws. Unicom Group agrees that Unicom New World shall not be
responsible for any liabilities incurred in the period of such employee’s
employment in Unicom Group. Unicom Group shall indemnify Unicom New World in
the event that such liabilities result in Unicom New World’s loss.

 

8.             Ownership of Profits

 

Both Parties
hereby agree that, after the Restructuring Effective Date, profits generated by
businesses related to the Project Assets and Interests in China shall belong to
Unicom New World.

 

9.             Document Transfer

 

Unicom Group shall
transfer to Unicom New World the originals of all the contracts, deeds,
agreements, letters of undertaking, letters of guarantee, insurance policies
and all other relevant documents related to the Project Assets and Interests in
China.

 

10.          Force
Majeure

 

Should an
unforeseeable, unavoidable and uncontrollable event of force majeure cause
either Party hereto to be unable to perform its obligations hereunder, such
party shall inform the other party of the situation, and provide within 15 days
the relevant detailed information and a document discussing the reasons for the
total inability or partial inability or necessary delay in continuing to
perform the obligations hereunder. Both Parties shall consequently consult with
each other in consideration of the degree such event of force majeure has
affected the performance of such obligations so as to decide whether to
terminate or partially relieve or delay the performance of such obligations.

 

11.          Confidentiality

 

Unless required
otherwise by law or by supervisory authorities or for the purpose of
acquisition, each party hereto shall not provide or disclose, without written
permission from the other party, to any company, enterprise, organization or
individual any information and materials regarding the other party.

 

12.          No Waiver

 

Unless required
otherwise by law, any party’s failure or delay in exercising any of its rights,
power or privileges hereunder shall not be construed as any waiver of such
rights, power or privileges. Any partial exercising of such rights, power or
privileges shall not impair any further exercising of such rights, power or
privileges.

 

8

 

13.          Notices

 

Notices given in
connection with this Agreement shall be transmitted in written form by hand
delivery, facsimile or mail. If hand-delivered, it shall be deemed effectively
delivered on the date it is actually delivered to the other Party. If sent by
facsimile, it shall be deemed effectively delivered at the time the
transmission report indicates that the message was completely transmitted. If
sent by mail, it shall be deemed effectively delivered three business days
(postponed automatically for public holidays) after the date of mailing. Any
notice shall become effective upon delivery.

 

The Parties’
addresses are as follows:

 

	
  China United Telecommunications Corporation

  	
   

  	
  Unicom
  New World Telecommunication Corporation Limited

  
	
   

  	
   

  	
   

  
	
  Contact
  Person: Yi Yongji

  	
   

  	
  Contact
  Person: Song Xiaoxi

  
	
   

  	
   

  	
   

  
	
  Address:
  Room 1167, 11/F, No. 133A, Xidan North Street, Xicheng District, Beijing,
  China

  	
   

  	
  Address:
  828, 8th Floor, No. 133A, Xidan North Avenue, Xicheng District,
  Beijing, China

  
	
   

  	
   

  	
   

  
	
  Postal
  code:100032

  	
   

  	
  Postal
  code:100032

  

 

14.          Governing
Law

 

This Agreement and
its interpretation and enforcement shall be governed by the laws of the
People’s Republic of China.

 

15.          Dispute Resolution

 

In the event that
there is any dispute regarding the effectiveness, interpretation or performance
of this Agreement, both Parties hereto shall first endeavor to resolve such
dispute through friendly consultations. In the event that such dispute fails to
be resolved within thirty (30) days after its occurrence, any Party may bring
up a suit to a PRC Court in a relevant jurisdiction.

 

16.          Effectiveness; Miscellaneous

 

16.1         This Agreement shall
become effective immediately after being executed and sealed by both Party’s
legal representatives or their authorized persons.

 

16.2         This Agreement is
severable. In the event that any provision hereof is determined to be unlawful
or unenforceable, it shall not affect the effectiveness and enforcement of the
other provisions hereof.

 

16.3         If mutually agreed upon,
any amendments or supplements to this Agreement and related appendices may be
made by both Parties and shall become effective after being executed and sealed
by both Parties’ legal representatives or their authorized persons.

 

16.4         Each Party shall not
transfer any of its rights and obligations hereunder to any third party without
the written consent of the other party.

 

16.5         This agreement shall be
executed by the Parties hereto in six (6) original counterparts. Each of the
originals is equally effective.

 

9

 

Signature page follows:

 

 

China United Telecommunications
Corporation  (corporate seal)

 

 

	
  By:

  	
  /s/ Wang Jianzhou

  	
   

  
	
     (The signature of legal
  representative or authorized representative)

  

 

 

Unicom New World Telecommunications
Corporation Limited  (corporate seal)

 

 

	
  By:

  	
  /s/ Tong Jilu

  	
   

  
	
     (The signature of legal
  representative or authorized representative)

  

 

10Exhibit
4.16

 

 

20
November 2003

 

 

CHINA UNICOM (BVI) LIMITED

 

 

CHINA UNICOM LIMITED

 

 

Conditional Sale and Purchase
Agreement relating to the entire

issued capital of Unicom New World (BVI) Limited

 

 

 

CONTENTS

 

	
  Clause

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions and
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Sale of the Target Shares and Price

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Conditions Precedent

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Pre-Completion Undertakings

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Completion

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Post-Completion
  Undertakings; Restrictions on Vendor Group Companies

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Limitations
  on Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Purchaser’s
  Rights to Rescission

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Withholding
  Tax and Grossing Up

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Entire
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Variation

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Announcements

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Further
  Assurance

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Governing
  Law, Jurisdiction and Service of Process

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  
	
   

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2

  	
   

  
	
   

  	
  CORPORATE STRUCTURE PRIOR TO COMPLETION

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3

  	
   

  
	
   

  	
  THE WARRANTIES

  	
   

  

 

 

	
  APPENDIX 1

  	
   

  
	
   

  	
  Prospective Cellular Connected Transactions
  of the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX 2

  	
   

  
	
   

  	
  Prospective Cellular Connected Transactions
  of the A Share Company

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX 3

  	
   

  
	
   

  	
  The Restructuring Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURE PAGE

  	
   

  

 

 

THIS AGREEMENT is made on
20 November 2003

 

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 World Telecommunications Corporation Limited (the Target Company) has
acquired from Unicom Group the mobile communications networks in each of Shanxi, Hunan,
Hainan, Yunnan, Gansu and Qinghai provinces and Inner Mongolia, Ningxia Hui and
Xizang autonomous
regions (the Territory).

 

(B)           Pursuant to a reorganisation
agreement dated 14 November 2003, 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 World (BVI) Limited (the Target Holding Company).

 

(D)          Pursuant to a conditional sale and purchase
agreement dated 20 November 2003 between the Vendor, UCBVI and Unicom Group
(the Initial Acquisition
Agreement), 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:

 

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$3,014,886,000
(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 (in the case of 3.1(b) and 3.1(c)) waiver of
the following conditions:

 

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

 

(b)                                 the passing of resolutions by
the independent shareholders of the A Share Company at its general meeting
approving (i) the Initial Acquisition Agreement and (ii) the Prospective
Cellular Connected Transactions of the A Share Company;

 

(c)                                  there having been no material
adverse change to the financial condition, 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 2004.

 

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 as soon as reasonably practicable and in any
event by 30 June 2004.

 

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.

 

3.5           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;

 

(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;

 

 

(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 (i) 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 or (ii) as otherwise directed by the Vendor; 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 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 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
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 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 Target Company’s 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 Vendor
Group Companies shall not) at any time disclose to any person or use to the
detriment of the Target Company’s business any trade secret or other
confidential information of a technical character which it holds in relation to
the Target Company’s business.

 

(d)                                 The Vendor (acting for itself
and each other Vendor Group Company) 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 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

 

(b)                                 if at any time after signing
of this Agreement and before Completion there is a material 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.

 

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.

 

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.

 

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

  

 

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.

 

 

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 2002 or 30 June 2003, 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 the Prospective Cellular Connected Transactions
of the A Share Company and the Prospective Cellular Connected Transactions of
the Company;

 

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;

 

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 2003;

 

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;

 

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

 

Prospective Cellular Connected Transactions of the A Share
Company  means those transactions effected
pursuant to the operating agreements in the agreed forms as listed in Appendix
2;

 

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 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 3;

 

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

 

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;

 

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

 

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.

 

 

SCHEDULE 2

 

CORPORATE
STRUCTURE PRIOR TO COMPLETION

 

PART A

 

Corporate Structure

 

 

 

PART B

 

Details of the Target
Holding Company

 

UNICOM NEW WORLD (BVI) LIMITED

 

	
  1.

  	
  Name:

  	
   

  	
  Unicom New World
  (BVI) Limited

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Date of Incorporation:

  	
   

  	
  5 November 2003

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Place of Incorporation:

  	
   

  	
  British Virgin
  Islands

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Class of Company:

  	
   

  	
  International
  Business Company

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Registered Number:

  	
   

  	
  566613

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Registered Office:

  	
   

  	
  Romasco Place

  Wickhams Cay 1

  P.O. Box 3140

  Road Town, Tortola

  British Virgin Islands

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Directors:

  	
   

  	
  Wang Jianzhou,
  Shi Cuiming, William Lo Wing Yan and Ye Fengping

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Registered Shareholders:

  	
   

  	
  China Unicom
  (BVI) Limited

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Authorised Capital:

  	
   

  	
  HK$11,000
  divided into 11,000 shares of HK$1.00 each

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Issued Capital:

  	
   

  	
  1,000 shares of
  HK$1.00 each

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Subsidiary:

  	
   

  	
  Unicom New World
  Telecommunications Corporation Limited

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Mortgages and Charges:

  	
   

  	
  None

  

 

 

PART C

Details of the Target
Company

 

 

UNICOM NEW WORLD PRC

 

	
  1.

  	
   

  	
  Name:

  	
   

  	
  Unicom New World
  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 Shanxi, Hunan, Hainan,
  Yunnan, Gansu and Qinghai provinces and Inner Mongolia, Ningxia Hui and
  Xizang autonomous
  regions

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered Office:

  	
   

  	
  Room 1009, 10th
  Floor, Tower 1, Henderson Centre, 18 Jianguomen Nei Dajie, Beijing, PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered Capital:

  	
   

  	
  RMB2,054,769,700

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Total Investment:

  	
   

  	
  RMB2,054,769,700

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Equity Holder:

  	
   

  	
  Unicom New World
  (BVI) Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Tax Residence:

  	
   

  	
  Beijing, PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Subsidiaries:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Mortgages and Charges:

  	
   

  	
  None

  

 

 

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 entire equity interests in 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 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, in respect of the Target
Holding Company, its equity interests in 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 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.

 

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 material 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
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
material 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.

 

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).

 

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 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, 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.

 

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.

 

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, except for a royalty-free Trademark
Sub-Licensing Contract between the Target Company and the A Share Company;

 

(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 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)                                 which involves 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 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;

 

(k)                                  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;

 

(l)                                     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 (k) 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.

 

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 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.

 

 

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.

 

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.

 

 

APPENDIX 1

 

Prospective
Cellular Connected Transactions of the Company

 

1.                                       Transfer Agreement dated 20 November 2003
between the A Share Company and the Target Company regarding the transfer of
rights and obligations under a CDMA network capacity lease agreement.

 

2.                                       Transfer Agreement dated 20 November 2003
between the A Share Company and the Target Company regarding the transfer of
rights and obligations under a comprehensive services agreement.

 

 

APPENDIX 2

 

Prospective
Cellular Connected Transactions of the A Share Company

 

1.                                       CDMA Network Capacity Lease
Agreement dated 20 November 2003 among Unicom New Horizon Telecommunications
Company Limited, Unicom Group and the A Share Company.

 

2.                                       Comprehensive Services
Agreement dated 20 November 2003 between Unicom Group and the A Share Company.

 

 

APPENDIX 3

 

The
Restructuring Agreements

 

1.                                       Reorganisation Agreement dated
4 November 2003 pursuant to which Unicom New World Telecommunications
Corporation Limited acquired from Unicom Group its cellular business assets and
operations in the Territory.

 

2.                                       Restructuring Agreement dated
14 November 2003 pursuant to which (a) Unicom Centenarian (BVI) Limited
acquired from China United Telecommunications Corporation the entire equity
interests in Unicom New World Telecommunications Corporation Limited; and (b)
Unicom New World (BVI) Limited acquired from Unicom Centenarian (BVI) Limited
the entire equity interests in Unicom New World Telecommunications Corporation
Limited.

 

3.                                       Sale and Purchase Agreement
dated 20 November 2003 pursuant to which China Unicom (BVI) Limited acquired
from Unicom Centenarian (BVI) Limited the entire issued share capital of Unicom
New World (BVI) Limited.

 

 

SIGNATURE PAGE

 

 

	
  SIGNED by

  	
  /s/
  Ye Fengping

  	
   

  	
   

  
	
  for
  and on behalf of

  	
   

  
	
  CHINA UNICOM (BVI)
  LIMITED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  /s/
  Shi Cuiming

  	
   

  	
   

  
	
  for
  and on behalf of

  	
   

  
	
  CHINA UNICOM LIMITED

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]