Common use of HSR Agreement Clause in Contracts

HSR Agreement. On 30th November 2015, the Government and the Company entered into an agreement (the “HSR Agreement”) relating to the further funding and completion of the HSR. The HSR Agreement contains an integrated package of terms (subject to conditions as set out in paragraph (c)(vi) below) and provides that: (i) The Government will bear and finance the project cost up to HK$84.42 billion (which includes the original budgeted cost of HK$65 billion plus the agreed increase in the estimated project cost of HK$19.42 billion (the portion of the entrustment cost (up to HK$84.42 billion) that exceeds HK$65 billion being the “Current Cost Overrun”)); (ii) The Company will, if the project exceeds HK$84.42 billion, bear and finance the portion of the project cost which exceeds that sum (if any) (the “Further Cost Overrun”) except for certain agreed excluded costs (namely, additional costs arising from changes in law, force majeure events or any suspension of construction contracts specified in the HSR Agreement); (iii) The Company will pay a special dividend in cash of HK$4.40 in aggregate per share in two equal tranches (of HK$2.20 per share in cash in each tranche) (“Special Dividend”). The first tranche was paid on 13th July 2016 and the second tranche was paid on 12th July 2017; (iv) The Government reserves the right to refer to arbitration the question of the Company’s liability for the Current Cost Overrun (if any) under the HSR Preliminary Entrustment Agreement and HSR Entrustment Agreement (“Entrustment Agreements”) (including any question the Government may have regarding the validity of the Liability Cap). The Entrustment Agreements contain dispute resolution mechanisms which include the right to refer a dispute to arbitration. Under the HSR Entrustment Agreement, the Liability Cap is equal to the HSR Project Management Fee and any other fees that the Company receives under HSR Entrustment Agreement and certain fees received by the Company under the Preliminary Entrustment Agreement. Accordingly, the Liability Cap increases from up to HK$4.94 billion to up to HK$6.69 billion as the HSR Project Management Fee is increased in accordance with the HSR Agreement (as it will be equal to the increased HSR Project Management Fee under the HSR Entrustment Agreement of HK$6.34 billion plus the additional fees referred to above). If the arbitrator does not determine that the Liability Cap is invalid and determines that, but for the Liability Cap, the Company’s liability under the Entrustment Agreements for the Current Cost Overrun would exceed the Liability Cap, the Company shall: • bear such amount as is awarded to the Government up to the Liability Cap; • seek the approval of its independent shareholders, at another General Meeting (at which the FSI, the Government and their Close Associates and Associates and the Exchange Fund will be required to abstain from voting), for the Company to bear the excess liability; and • if the approval of the independent shareholders (referred to immediately above) is obtained, pay the excess liability to the Government. If such approval is not obtained, the Company will not make such payment to the Government; (v) Certain amendments are made to the HSR Entrustment Agreement to reflect the arrangements contained in the HSR Agreement, including an increase in HSR Project Management Fee payable to the Company under HSR Entrustment Agreement to an aggregate of HK$6.34 billion (which reflects the estimate of the Company’s expected internal costs in performing its obligations under the HSR Entrustment Agreement in relation to HSR project) and to reflect the HSR Revised Programme; (vi) The arrangements under the HSR Agreement (including the payment of the Special Dividend) were conditional on: • independent shareholder approval (which was sought at the General Meeting held on 1st February 2016); and • Legislative Council approval in respect of the Government’s additional funding obligations. The HSR Agreement (and the Special Dividend) was approved by the Company’s independent shareholders at the General Meeting held on 1st February 2016 and became unconditional upon approval by the Legislative Council on 11th March 2016 of the Government’s additional funding obligations.

HSR Agreement. On 30th November 2015, the Government and the Company entered into an agreement (the “HSR Agreement”) relating to the further funding and completion of the HSR. The HSR Agreement contains an integrated package of terms (subject to conditions as set out in paragraph (c)(vi) below) and provides that: (i) The Government will bear and finance the project cost up to HK$84.42 billion (which includes the original budgeted cost of HK$65 billion plus the agreed increase in the estimated project cost of HK$19.42 billion (the portion of the entrustment cost (up to HK$84.42 billion) that exceeds HK$65 billion being the “Current Cost Overrun”)); (ii) The Company will, if the project exceeds HK$84.42 billion, bear and finance the portion of the project cost which exceeds that sum (if any) (the “Further Cost Overrun”) except for certain agreed excluded costs (namely, additional costs arising from changes in law, force majeure events or any suspension of construction contracts specified in the HSR Agreement); (iii) The Company will pay a special dividend in cash of HK$4.40 in aggregate per share in two equal tranches (of HK$2.20 per share in cash in each tranche) (“Special Dividend”). The first tranche was paid on 13th July 2016 and the second tranche was paid on 12th July 2017; (iv) The Government reserves the right to refer to arbitration the question of the Company’s liability for the Current Cost Overrun (if any) under the HSR Preliminary Entrustment Agreement and HSR Entrustment Agreement (“Entrustment Agreements”) (including any question the Government may have regarding the validity of the Liability Cap). The Entrustment Agreements contain dispute resolution mechanisms which include the right to refer a dispute to arbitration. Under the HSR Entrustment Agreement, the Liability Cap is equal to the HSR Project Management Fee and any other fees that the Company receives under HSR Entrustment Agreement and certain fees received by the Company under the Preliminary Entrustment Agreement. Accordingly, the Liability Cap increases from up to HK$4.94 billion to up to HK$6.69 billion as the HSR Project Management Fee is increased in accordance with the HSR Agreement (as it will be equal to the increased HSR Project Management Fee under the HSR Entrustment Agreement of HK$6.34 billion plus the additional fees referred to above). If the arbitrator does not determine that the Liability Cap is invalid and determines that, but for the Liability Cap, the Company’s liability under the Entrustment Agreements for the Current Cost Overrun would exceed the Liability Cap, the Company shall: • bear such amount as is awarded to the Government up to the Liability Cap; • seek the approval of its independent shareholders, at another General Meeting (at which the FSI, the Government and their Close Associates and Associates and the Exchange Fund will be required to abstain from voting), for the Company to bear the excess liability; and • if the approval of the independent shareholders (referred to immediately above) is obtained, pay the excess liability to the Government. If such approval is not obtained, the Company will not make such payment to the Government; (v) Certain amendments are made to the HSR Entrustment Agreement to reflect the arrangements contained in the HSR Agreement, including an increase in HSR Project Management Fee payable to the Company under HSR Entrustment Agreement to an aggregate of HK$6.34 billion (which reflects the estimate of the Company’s expected internal costs in performing its obligations under the HSR Entrustment Agreement in relation to HSR project) and to reflect the HSR Revised Programme; (vi) The arrangements under the HSR Agreement (including the payment of the Special Dividend) were conditional on: • independent shareholder approval (which was sought at the General Meeting held on 1st February 2016); and • Legislative Council approval in respect of the Government’s additional funding obligations. The HSR Agreement (and the Special Dividend) was approved by the Company’s independent shareholders at the General Meeting held on 1st February 2016 and became unconditional upon approval by the Legislative Council on 11th March 2016 of the Government’s additional funding obligations.