EXHIBIT 9.7
[ ]MM[ ]DD, 2004
TRUST ARRANGEMENT AGREEMENT ABOUT CERTAIN EQUITY INTEREST
OF CHINA NETCOM CROUP CORPORATION (HONG KONG) LIMITED
BY AND AMONG
INFORMATION AND NETWORK CENTER OF STATE ADMINISTRATION
OF RADIO, FILM AND TELEVISION
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
AND
CHINA NETCOM GROUP CORPORATION (BVI) LIMITED
1
This Trust Arrangement Agreement is made and entered into on [-], 2004 in
Beijing, People's Republic of China (hereinafter referred to as "PRC") by and
among the following parties:
(1) Information and Network Center of State Administration of Radio, Film and
Television (hereinafter referred to as INC-SARFT)
Registered address: Xx.0, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
Legal representative:
(2) China Network Communications Group Corporation (hereinafter referred to as
CHINA NETCOM GROUP)
Registered address: Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx, Xxxxx
Legal representative: Zhang Chunjiang
(3) China Netcom Group Corporation (BVI) Limited (hereinafter referred to as
CNC BVI)
Registered address: P.O. Box 3140, Wickhams Cay I, Road Town, Tortola,
British Virgin Islands
WHEREAS:
(A) As part of the Restructuring and Listing Plan of China Netcom Group
(hereinafter referred to as RESTRUCTURING AND LISTING PLAN OF CHINA NETCOM
GROUP) reported by CSRC to the State Council, INC-SARFT will become the
beneficiary holder of 37,822,125 ordinary shares of par value US$0.04 each
(hereinafter referred to as TRUST SHARES) of CNC HK (as defined below);
(B) CNC BVI will become the trustee of INC-SARFT to hold Trust Shares
nominally on the list of shareholders of CNC HK and INC-SARFT agrees to
become the beneficiary holder of Trust Shares through the Declaration of
Trust (See Exhibit 1) and this Agreement entered into with CNC BVI.
In order to further specify the rights and obligations of each party hereto and
relevant matters under this Trust Arrangement, INC-SARFT, China Netcom Group and
CNC BVI hereby agree as follows:
1 DEFINITIONS
Unless otherwise specified by the clauses or context in this Agreement,
the following terms shall have the meanings set out below:
CNC HK China Netcom Croup Corporation (Hong
Kong) Limited, a limited company
incorporated and validly existing under Hong
Kong laws with its registered address at
F/59, Bank of Xxxxx Xxxxx, 0 Xxxxxx Xxxx,
Xxxx Xxxx.
LISTING Means the global IPO of CNC HK and listing
on the Stock Exchange of Hong Kong Limited
and American Stock Exchange.
2
STATE SHAREHOLDER OF CNC HK Means the Chinese Academy of Science,
Information and Network Center of State
Administration of Radio, Film and
Television, China Railways
Telecommunications Center, Shanghai Alliance
Investment Limited, Shandong Provincial
State-owned Assets Supervision and
Administration Commission and CNC BVI as the
shareholders of CNC HK.
BUSINESS DAY Any days other than Saturday, Sunday or
Hong Kong public holidays.
2 EFFECTIVE DATE
This Agreement shall come into force immediately when the Restructuring
and Listing Plan of China Netcom Group is approved by all relevant
governmental authorities and the INC-SARFT has obtained the beneficiary
ownership of Trust Shares.
3 NATURE OF TRUST SHARES
3.1 The INC-SARFT agrees and confirms that Trust Shares are state-owned
shares, and agrees to perform its obligations as state shareholders and
dispose Trust Shares in accordance with relevant laws and regulations of
China for the period it acts as the beneficiary holder of Trust Shares
(regardless before or after the listing of CNC HK), including but not
limited to performing relevant obligations as state shareholder of CNC HK
by referencing to relevant requirements of Interim Procedure for
Management of Selling Out State-owned Shares to Raise Social Security
Fund, and instructing CNC BVI to sell certain number of shares of CNC HK
and fully pay the proceeds to the social security fund. The number of
shares of CNC HK to be sold by the INC-SARFT shall be calculated based on
the following formula:
Number of shares of CNC HK
Number of directly or indirectly held by INC- Number of
shares to SARFT new shares
be sold by = ------------------------------------ x during the x 10%
INC-SARFT Total number of shares of CNC listing of
HK directly or indirectly held by all CNC HK
state shareholders of CNC HK
3.2 Notwithstanding the stipulation under Section 3.1, the INC-SARFT shall
process relevant legal procedures in accordance with requirements of
relevant domestic regulatory authorities if such authorities have other
further requirements state shareholders of CNC HK to sell out their shares
in CNC HK and pay the proceeds to the social security fund. After listing
of CNC HK, the INC-SARFT is obliged to continue to perform its obligation
of selling out state-owned shares (the number of shares to be sold out by
INC-SARFT shall be calculated by referencing to the method under Section
3.1) in accordance with requirements of Interim Procedure for Management
of Selling Out State-owned Shares to Raise Social Security Fund if CNC HK
continues conducting equity financing on capital markets during the period
INC-SARFT continues to hold shares of CNC HK.
4 Restrictions on Share Transfer
4.1 The INC-SARFT agrees that it shall not directly or indirectly:
4.1.1 sell or sell by agreement;
4.1.2 pledge, mortgage or impawn; or
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4.1.3 transfer in other ways
the Trust shares or any interests therein, and shall not grant any share
option of the Trust Shares for a period within 24 months from the
effective date of this Agreement until the date on which the shares of CNC
HK are initially traded on Stock Exchange of Hong Kong Limited
(hereinafter to referred to as LOCK-UP PERIOD) unless it is performing its
obligations as state shareholders in accordance with relevant laws and
regulations of China.
4.2 The INC-SARFT agrees to enter into a Lock-up Period Agreement as required
by generally accepted market practice.The Lock-up Period Agreement shall
include the commitment of INC-SARFT not to transfer or instruct CNC BVI to
transfer the Trust Shares for a period less than 24 months from the date
on which the shares of CNC HK are initially traded on the Stock Exchange
of Hong Kong Limited, unless it is performing its obligations as state
shareholders in accordance with relevant laws of China.
4.3 The INC-SARFT agrees that it will not directly or indirectly pledge,
mortgage or impawn the Trust Shares or any interests thereof after the
Lock-up Period unless it has obtained prior written consent from China
Netcom Group.
4.4 Without breach of Section 4.5 herein, the INC-SARFT commits that it will
not transfer any Trust Shares to any foreign investors during and after
the Lock-up Period in strict accordance with applicable Chinese laws,
regulations or policies on foreign investments' access to China
telecommunication industry to meet the limitations set on foreign
investors by these laws, regulations or policies.
4.5 The INC-SARFT must obtain approvals (including but not limited to
approvals on number, method and price of the shares to be transferred)
from domestic regulatory authorities (including but not limited to
State-owned Assets Supervision and Administration Commission of the State
Council or local State-owned Assets Supervision and Administration
Commissions with appropriate jurisdictions and Ministry of Commerce of the
People's Republic of China) to transfer or instruct CNC BVI to transfer
the Trust Shares.
4.6 The INC-SARFT shall entrust CNC BVI to carry out relevant legal procedures
when disposing (including transferring) the Trust Shares during or after
the Lock-up period.
5 FIRST REFUSAL RIGHT
5.1 Offering for Transfer
On the premise that all stipulations under Section 4 above and Section 5
are complied, the INC-SARFT may transfer all or part of the Trust Shares
(hereinafter referred to as RELEVANT OFFERING EQUITY) to any third party
(hereinafter referred to as THIRD PARTY PURCHASER) in accordance with
Section 5 upon sending or receiving an offering satisfying all
requirements under Section 5.1.1 and 5.1.2 below (hereinafter referred to
as OFFERING FOR TRANSFER):
5.1.1 The purchase price in the written Offering for Transfer in good
faith sent to or received from a Third Party Purchaser is based on
market prices and includes all main terms and conditions of an
offering (including scheduled completion date of transfer); and
5.1.2 If the offering is issued by the INC-SARFT, the Third Party
Purchaser has expressed its intention to accept the offering in
terms and conditions set out in the offering.
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5.2 Notwithstanding the stipulation in Section 5.1.2, the Offering for
Transfer must be sent to China Netcom Group if the Offering is issued by
the INC-SARFT (regardless what kind of form it uses). China Netcom Group
may exercise its option in accordance with Section 5.4 herein.
5.3 Transfer Notice
5.3.1 If the INC-SARFT has received an Offering for Transfer meeting the
requirements under Section 5.1, it must give a notice (hereinafter
referred to as TRANSFER NOTICE) to China Netcom Group within two
business days, agreeing to sell the Relevant Offering Equity to CNC
BVI at the same cash price and conditions not higher than those
listed in the Offering for Transfer.
5.3.2 The Transfer Notice must specify:
(i) the identity of the Third Party Purchaser (when acting as
trustee) and the final beneficiary owner of the trust;
(ii) the offering acceptance period for Relevant Offering Equity to
be sold by the INC-SARFT to CNC BVI by offering. This period
shall be no less than 40 business days from the date of
Transfer Notice (hereinafter referred to as ACCEPTANCE
PERIOD); and
(iii) Details of all other terms and conditions in the Offering for
Transfer.
5.4 Option of China Netcom Group
China Netcom Group may:
5.4.1 give written notice to the INC-SARFT within the Acceptance Period to
completely accept the offerings listed in the Transfer Notice
(hereinafter referred to as ACCEPTANCE NOTICE OF CHINA NETCOM
GROUP);
5.4.2 give written notice to the INC-SARFT within the Acceptance Period to
reject the offerings listed in the Transfer Notice;
5.4.3 neither give the Acceptance Notice of China Netcom Group nor reply
to the Transfer Notice within the Acceptance Period, in which case
China Netcom Group shall be deemed as having rejected the offerings
listed in the Transfer Notice.
5.5 Results
5.5.1 If China Netcom Group completely accepts the offerings listed in the
Transfer Notice in accordance with Section 5.4.1, the INC-SARFT must
sell Relevant Offering Equity to CNC BVI or its designated person.
5.5.2 If the offerings listed in the Transfer Notice are rejected in
accordance with Section 5.4.2 or deemed to be rejected in accordance
with Section 5.4.3, the INC-SARFT may sell Relevant Offering Equity
to the Third Party Purchaser sending out the Offering upon the
approvals (including approvals on number, method and price of the
shares to be transferred) from domestic regulatory authorities
(including but not limited to State-owned Assets Supervision and
Administration Commission of the State Council or local State-owned
Assets Supervision and Administration Commission with appropriate
jurisdictions and the Ministry of Commerce of the People's Republic
of China).
6 MISCELLANEOUS
5
6.1 Confidential Restriction
For the confidential and proprietary information (hereinafter referred to
as CONFIDENTIAL INFORMATION) disclosed by any party to another party with
respect to its businesses, financial status and other confidential affairs
for the purpose of this Agreement, the receiver shall: (i) keep the
confidential information under confidentiality; (ii) not disclose above
Confidential Information (except for the information disclosure as
required by Section 6.2 under this Agreement) to any persons or entities
other than its employees and professional advisors that need accesses to
the Confidential Information to perform their duties.
6.2 Information Disclosure
Each party agrees and commits to duly perform its information disclosure
obligation under this Agreement in accordance with relevant regulations to
practically protect the interests of each party.
6.3 Governing Laws
The establishment, effectiveness, interpretation and performance of this
Agreement and dispute resolution shall be governed by laws of Hong Kong
Special Administrative Region.
6.4 Dispute Resolution
Any disputes arising from the execution, performance and interpretation of
this Agreement shall be resorted to sincere negotiation first. In case of
failure of negotiation within 30 days as from the date when such disputes
arise, any party may refer relevant disputes to China International
Economic and Trade Arbitration Commission for arbitration in Beijing in
accordance with valid arbitration rules. The arbitration verdict shall be
conclusive and binding upon both parties. Except for the disputed matters
under arbitration, other parts of this Agreement shall stay in force
during arbitration.
6.5 Expenses and Taxation
6.5.1 The INC-SARFT and CNC BVI shall share the equity transfer expenses,
such as approval and registration expenses that are required to be
paid and charged by governmental regulatory authorities in
accordance with relevant laws and regulation.
6.5.2 The taxes to be collected separately from each party in accordance
with laws and regulations shall be assumed by the taxpayer.
6.6 Waiver
The failure or delay of exercising the rights under this Agreement or any
other contracts or agreements in connection with this Agreement of any
Party hereto shall not be deemed as the waiver of such rights; any sole or
partial exercise of such rights shall not hinder the full exercise of such
rights in the future.
6.7 Revision and Supplement
This Agreement shall not be revised or supplemented by oral and may be
revised or supplemented only upon endorsement on written documents by each
party. Any supplements to this Agreement shall be deemed as indivisible
parts of this Agreement.
6.8 Severability
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The invalidity of any clauses hereto shall not affect the validity of any
other clauses of this Agreement.
6.9 Notice
Any notices as required by this Agreement sent by any party hereto to
another shall be written in Chinese and sent by registered mail, or by fax
confirmed by a registered mail immediately to relevant parties. Notices
required to be sent by this Agreement shall be deemed as received after 3
days of the date of postmark if by registered mail, and the sending date
if by fax. All notices shall be addressed to the addresses first listed
above until the receivers give a written notice changing the address.
6.10 Counterparts of this Agreement
This Agreement is made in ten counterparts, each party keeps one. The
other seven counterparts will be used for approval processing and
conversion registration procedures.
6.11 Further Undertakings
During any period after execution of this Agreement, each party shall take
all reasonable efforts to procure any necessary third parties to execute
documents and take behaviors reasonably required by relevant parties so
that relevant parties may fully enjoy interests under all clauses of this
Agreement. All relevant expenses shall be at the cost of relevant parties.
7
This Agreement has been executed and delivered as agreement by each party on the
date listed first above.
Executed as agreement:
INFORMATION AND NETWORK CENTER OF STATE ADMINISTRATION OF RADIO, FILM AND
TELEVISION (official seal):
Legal representative or authorized representative (signature):
Witnessed by:
Witness signature:
Executed as agreement:
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (official seal):
Authorized representative (signature):
Witnessed by:
Witness signature:
Executed as agreement:
CHINA NETCOM GROUP CORPORATION (BVI) LIMITED (official seal):
Director (signature):
Director or corporate secretary (signature):
Witnessed by:
Witness signature:
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EXHIBIT 1
DECLARATION OF TRUST
To: Information and Network Center of State Administration of Radio, Film and
Television of Xx 0 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxx
Date: 2004
1 We, China Netcom Group Corporation (BVI) Limited of P.O. Box 3140,
Wickhams Cay I, Road Town, Tortola, British Virgin Islands, hereby declare
that the shares specified in the Schedule hereto (the "Relevant Shares")
are now and have at all times since the Relevant Shares became registered
in our name been held in trust for you absolutely.
2 We hereby undertake:
2.1 to account to you for all distributions or dividends whether in the form
of cash, stock, in specie or otherwise, or other moneys paid to us on or
in respect of the Relevant Shares;
2.2 subject to the terms of the Trust Arrangement Deed In Respect Of Shares In
China Netcom Group Corporation (Hong Kong) Limited among Shandong
Provincial State-owned Assets Supervision and Administration Commission,
China Network Communications Group Corporation and ourselves, to transfer
or otherwise deal with the Relevant Shares as you may from time to time
direct in writing;
2.3 to exercise the voting powers and other rights in respect of the Relevant
Shares in such manner as you shall from time to time direct in writing;
and
2.4 to sign or execute such documents or instruments as may be necessary for
the purposes of this Paragraph 2.
3 In consideration of us holding the Relevant Shares in trust for you and
our undertakings as set out in Paragraph 2 above, you agree to hold us
harmless for any costs, expenses and liabilities incurred or arisen in
connection with the holding of the Relevant Shares in trust for you or any
of our acts performed under or pursuant to this Declaration.
4 This Declaration shall be governed by and construed in accordance with the
laws of Hong Kong Special Administrative Region.
References herein to the Relevant Shares shall where the subject or context
permits or requires include references to any of the Relevant Shares.
IN WITNESS whereof these presents have been executed as a Deed by us on the date
mentioned in the above.
9
THE COMMON SEAL of CHINA NETCOM
GROUP CORPORATION (BVI) LIMITED was }
hereunto affixed in the presence of:
Director
Director/Secretary
Agreed and accepted by:
INFORMATION AND NETWORK CENTER OF STATE
ADMINISTRATION OF RADIO, FILM AND TELEVISION
______________________________________________
Name:
Title:
Date:
10
SCHEDULE
THE RELEVANT SHARES
NAME OF COMPANY PARTICULARS OF SHARES
China Netcom Group Corporation (Hong Kong) Limited 37,822,125 ordinary shares of par value US$0.04
each, credited as fully paid-up, irrespective
of whether such ordinary shares are issued and
allotted before, at or after the initial public
offering of China Netcom Group Corporation
(Hong Kong) Limited
1
