EXHIBIT 9.8
[ ]MM[ ]DD, 2004
TRUST ARRANGEMENT AGREEMENT ABOUT CERTAIN EQUITY INTEREST
OF CHINA NETCOM CROUP CORPORATION (HONG KONG) LIMITED
BY AND AMONG
CHINA RAILWAYS TELECOMMUNICATIONS CENTER
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
AND
CHINA NETCOM GROUP CORPORATION (BVI) LIMITED
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) China Railways Telecommunications Center (hereinafter referred to as CRTC)
Registered address: Xx.00 Xxxxx Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
Xxxxx representative:
(2) China Network Communications Group Corporation (hereinafter referred to as
CHINA NETCOM GROUP)
Registered address: Xxxxxxxx X, Xx.000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx, Xxxxx
Legal representative: Zhang Chunjiang
(3) China Netcom Group Corporation (BVI) Limited/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 to the State Council, CRTC will become the beneficiary
holder of 37,822,125 ordinary shares of par value at US$0.04 each
(hereinafter referred to as TRUST SHARES) of CNC HK (as defined below);;
(B) CNC BVI will become the trustee of the CRTC to hold Trust Shares nominally
on the register of shareholders of CNC HK and the CRTC 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, CRTC, 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.
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 CRTC has obtained the beneficiary
ownership of Trust Shares.
3 NATURE OF TRUST SHARES
3.1 The CRTC 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 CRTC shall be calculated based on the following
formula:
Number of shares of CNC HK Number of
Number of directly or indirectly held by CRTC new shares
shares to be = -------------------------------------- x during the x 10%
sold by CRTC 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 CRTC 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 CRTC is obliged to continue to perform its obligation of selling
out state-owned shares (the number of shares to be sold out by CRTC 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
CRTC continues to hold shares of CNC HK.
4 RESTRICTIONS ON SHARE TRANSFER
4.1 The CRTC agrees that it shall not directly or indirectly:
4.1.1 sell or sell by agreement;
4.1.2 pledge, mortgage or impawn; or
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 CRTC 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 CRTC 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 CRTC 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 CRTC 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 CRTC 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 CRTC 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 CRTC 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 CRTC, the Third Party Purchaser has
expressed its intention to accept the offering in terms and
conditions set out in the offering.
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 CRTC (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 CRTC 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 day, 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 CRTC 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 CRTC within the Acceptance Period to
completely accept the offerings listed in the Transfer Notice
(hereinafter referred as ACCEPTANCE NOTICE OF CHINA NETCOM GROUP);
5.4.2 give written notice to the CRTC 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 CRTC 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 CRTC 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
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 CRTC and CNC BVI shall share the equity transfer expenses, such
as approval and registration expenses that are required are 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
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.
This Agreement has been executed and delivered as agreement by each party on the
date listed first above.
Executed as agreement:
CHINA RAILWAYS TELECOMMUNICATIONS CENTER (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:
EXHIBIT 1
DECLARATION OF TRUST
To: China Railways Telecommunications Center of Xx 00 Xxxxxxxxx Xxxx, 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.
THE COMMON SEAL of CHINA NETCOM
GROUP CORPORATION (BVI) LIMITED was }
hereunto affixed in the presence of:
Director
Director/Secretary
Agreed and accepted by:
CHINA RAILWAYS TELECOMMUNICATIONS CENTER
_________________________________________
Name:
Title:
Date:
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
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