Exhibit 10.33
CONFORMED COPY
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Dated 15th November, 1999
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XXXXXXXXX WHAMPOA LIMITED
and
XXXXXXXXX TELECOMMUNICATIONS LIMITED
and
GLOBAL CROSSING LTD.
and
GLOBAL CROSSING LTD.
and
HCL HOLDINGS LIMITED
________________________________________
SUBSCRIPTION AND SALE AND
PURCHASE AGREEMENT
in relation to
HCL HOLDINGS LIMITED
________________________________________
EXHIBIT 10.33
THIS AGREEMENT is made on 15th November, 1999
BETWEEN:
(1) XXXXXXXXX WHAMPOA LIMITED, a company incorporated in Hong Kong and having
its registered office at 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx (the "Vendor Guarantor");
(2) XXXXXXXXX TELECOMMUNICATIONS LIMITED, a company incorporated in Hong Kong
and having its registered office at 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00
Xxxxxxxx Xxxx, Xxxx Xxxx (the "Vendor");
(3) GLOBAL CROSSING LTD., a company incorporated in Bermuda and having its
registered office at Wessex House, 00 Xxxx Xxxxxx, Xxxxxxxx, XX00, Xxxxxxx
(xxx "Purchaser");
(4) GLOBAL CROSSING LTD., a company incorporated in Bermuda and having its
registered office at Wessex House, 00 Xxxx Xxxxxx, Xxxxxxxx, XX00, Xxxxxxx
(xxx "Purchaser Guarantor"); and
(5) HCL HOLDINGS LIMITED, a company incorporated in the British Virgin Islands
and having its registered office at X.X. Xxx 000, Xxxx Xxxx, Xxxxxxx,
Xxxxxxx Xxxxxx Xxxxxxx (the "Company").
WHEREAS:
(A) The Company is a company limited by shares incorporated in the British
Virgin Islands. The authorised share capital of the Company is as at the
date hereof US$50,000.00 divided into 50,000 shares of US$1.00 each.
Certain other particulars of the Company are set out in Schedule 1.
(B) Xxxxxxxxx Communications Limited ("HCL") is a company limited by shares
incorporated in Hong Kong and is a wholly-owned subsidiary of the Company.
Certain other particulars of HCL are set out in Schedule 2.
(C) Immediately prior to Completion, the Vendor will be the beneficial owner of
three shares of US$1.00 each in the Company, all of which will have been
issued and fully paid up or credited as fully paid up and will represent
the entire issued share capital of the Company.
(D) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Vendor Share (as hereinafter defined) subject to and upon the terms and
conditions hereinafter appearing.
(E) The Purchaser has agreed to subscribe for and the Company has agreed to
issue and allot the New Share (as hereinafter defined).
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(F) Following completion of the transactions described in Recitals (D) and (E),
the Vendor and the Purchaser will each be the holder of one half of the
issued share capital of the Company.
(G) The Purchaser may, in accordance with Clause 2.3, transfer its rights and
obligations under this Agreement to another person. The Purchaser
Guarantor agrees to enter into this Agreement to, inter alia, guarantee the
due and punctual performance of the obligations of that person.
(H) The Vendor is a wholly-owned subsidiary of the Vendor Guarantor. In
consideration of the Purchaser entering into this Agreement and at the
request of the Vendor, the Vendor Guarantor agrees to enter into this
Agreement to, inter alia, guarantee the due and punctual performance of the
obligations of the Vendor hereunder.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including the recitals above), the words and expressions
set out below shall have the following meanings attributed to them:
"Accounts" the HCL Accounts, the HMSL Accounts, the HGNL
Accounts and the Partnership Accounts;
"Accounts Date" 31st December, 1998;
"Affiliate" in relation to a company, any body corporate which
is for the time being the holding company or a
subsidiary of that company or a subsidiary of that
holding company ("holding company" and
"subsidiary" have for purposes of this Agreement
the meaning ascribed thereto in Section 2 of the
Companies Ordinance, Chapter 32 of the Laws of
Hong Kong);
"Agreement" this Agreement including its schedules and
exhibits;
"Business Day" a day on which banks in Hong Kong, New York and
Los Angeles are open for business (other than a
Saturday or a Sunday);
"Business Plan" the business plan of the Group set out in Exhibit
L;
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"Certificate of the certificate of designations of the
Designations" Convertible Preferred Stock a draft of which is in
the agreed form;
"Completion" completion of the sale and purchase of the Vendor
Share and the subscription, issue and allotment of
the New Share in accordance with Clause 5 and
Schedule 3;
"Completion (a) if the Completion Date is on or before 15th
Accounts" January, 2000, the audited consolidated accounts
of the Group made up to 31st December, 1999; and
(b) if the Completion Date is after 15th January,
2000, the consolidated accounts of the Group made
up to the Completion Date and audited by the
auditors for the time being of the Company;
"Completion Date" (a) if the Conditions are satisfied before 31st
December, 1999, 3rd January, 2000; and
(b) if the Conditions are satisfied after 31st
December, 1999, the day falling ten Business Days
after the Conditions (other than the Condition in
Clause 4.1(e)) are so satisfied or waived but in
no event later than the End Date;
"Conditions" the conditions precedent set out in Clause 4.1 and
the expression "Condition" shall mean any of them;
"Consideration" the consideration due by the Purchaser in
accordance with Clause 3;
"Convertible the convertible preferred stock to be issued by
Preferred Stock" the Purchaser Guarantor, the terms and conditions
of which are set out in the Certificate of
Designations;
"Counter-indemnities" the counter-indemnities, particulars of which are
set out in Schedule 6;
"Disclosure Letter" the letter of even date herewith written by the
Vendor to the Purchaser and the Purchaser
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Guarantor for the purposes of Clause 6.13(e)
before execution of this Agreement;
"End Date" 15th March, 2000 or such later date as the parties
may agree in writing;
"Exchange Act" the Securities Exchange Act of 1934 of the United
States;
"Excluded Business" the businesses of the provision of paging, call
centres and other ancillary services and the sales
of mobile phones, pagers and accessories carried
on and operated by HCL and the other retailing
activities to be within the scope of the Marketing
and Distribution Agreement;
"Excluded Business the arrangements for the transfer of the
Transfer Arrangements" Excluded Business and the Excluded Companies, a
summary of which is set out in Schedule 7;
"Excluded Companies" Mollson Limited, Xxxxxxxxx-Management of
Telecommunication Services Limited, Goldpraise
Limited and Goldtop Limited and "Excluded Company"
means any of them;
"Global Crossing the licence agreement regarding the licence of
Licence Agreement" certain trademarks between a wholly-owned
subsidiary of the Purchaser Guarantor and HCL to
be executed by the parties thereto at Completion a
draft of which is in the agreed form;
"Global Crossing the agreement between the Company and Global
Network Agreement" Crossing USA Inc. to be entered into between the
parties thereto at Completion a draft of which is
in the agreed form;
"Group" the Company and the Subsidiaries, the expression
"Group Company" means any of them and the
expression "Group Companies" means all of them;
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China;
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"H" Xxxxxxxxx Telecommunications (Hong Kong) Limited;
"H Service Agreement" the service agreement between H, HWL and HCL to be
executed by the parties thereto at Completion a
draft of which is in the agreed form;
"HCL Accounts" the audited accounts of HCL for the period ended
on and as at the Accounts Date, a copy of which is
in Exhibit A;
"HCL Network the partnership between Hongville Limited,
Partnership" Palliser Investments Limited and Aberdeen
Commercial Investments Limited constituted by a
partnership agreement dated 30th June, 1994 for
the purpose of leasing telecommunications
equipment to HCL, to be reorganised pursuant to
the Partnership Agreement;
"HGNL Accounts" the audited accounts of Xxxxxxxxx Global Net
Limited ended on and as at the Accounts Date, a
copy of which is in Exhibit A;
"HMSL Accounts" the audited accounts of Xxxxxxxxx Multimedia
Services Limited for the period ended on and as at
the Accounts Date, a copy of which is in Exhibit
A;
"Xxxxxxxxx Licence the licence agreement regarding the licence of
Agreement" certain trade marks between Xxxxxxxxx Whampoa
Enterprises Limited, HWL and HCL to be executed by
the parties thereto at Completion a draft of which
is in the agreed form;
"HWL Service Agreement" the service agreement between the Vendor Guarantor
and HCL to be executed by the parties thereto at
Completion a draft of which is in the agreed form;
"Intellectual Property" means patents, trade marks and service marks,
rights in designs, trade or business names, domain
names, copyrights and topography rights (whether
or not any of these is registered and including
applications for registration of any
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such thing) and rights under licences and consents
in relation to any such thing and all rights or
forms of protection of a similar nature or having
equivalent or similar effect to any of these which
may subsist anywhere in the world;
"in the agreed form" in the form agreed (subject to Clause 4.12)
between the Vendor and the Purchaser, as evidenced
by initialling on their behalf simultaneously with
the execution of this Agreement;
"Interconnect Agreement" the agreement between Xxxxxxxxx Telephone Company
Limited, HWL and HCL regarding interconnection to
be executed by the parties thereto at Completion a
draft of which is in the agreed form;
"Leased Lines Agreement" the agreement between HCL, HWL and Xxxxxxxxx
Telephone Company Limited regarding leased lines
to be executed by the parties thereto at
Completion a draft of which is in the agreed form;
"Management Accounts" the unaudited proforma consolidated management
accounts of the Group Companies as at the
Management Accounts Date (prepared on the basis
that the Excluded Business Transfer Arrangements
and the restructuring referred to in Clause 4.5(d)
have taken place), a copy of which is in Exhibit
B;
"Management Accounts 30th September, 1999;
Date"
"Marketing and the agreement between HCL, HWL and Xxxxxxxxx
Distribution Agreement" Paging Services Limited regarding marketing and
distribution services to be provided by Xxxxxxxxx
Paging Services Limited to be executed by the
parties thereto at Completion a draft of which is
in the agreed form;
"MDC Agreement" the agreement between Global Crossing Holdings
Ltd. and HCL regarding a media distribution centre
to be executed by the parties
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thereto at Completion a draft of which is in the
agreed form;
"New Share" means one new Share to be subscribed by the
Purchaser and issued and allotted by the Company
under this Agreement;
"OFTA" Office of the Telecommunications Authority;
"Partnership Accounts" the audited accounts of the HCL Network
Partnership for the period ended on and as at the
Accounts Date, a copy of which is in Exhibit A;
"Partnership Agreement" the deed between Hongville Limited, Palliser
Investments Limited, Aberdeen Commercial
Investments Limited, HCL and HCL Network
Partnership Holdings Limited referred to in Clause
4.5(d) in the agreed form to be executed by the
parties thereto at or before Completion whereby,
inter alia, HCL, Hongville Limited and HCL Network
Partnership Holdings Limited become respectively
99.98%, 0.01% and 0.01% partners of HCL Network
Partnership;
"Proceedings" any proceedings, suit or action arising out of or
in connection with this Agreement;
"Proforma 1998 Accounts" the unaudited proforma consolidated accounts of
the Group Companies for the period ended on and as
at the Accounts Date (prepared on the basis that
the Excluded Business Transfer Arrangements and
the restructuring referred to in Clause 4.5(d)
have taken place), a copy of which is in Exhibit
A;
"Purchaser Conditions" the Conditions in Clause 4.1(a)(ii), 4.1(b),
4.1(e)(ii), 4.1(f)(ii) and 4.1(h);
"Purchaser Warranties" the representations, warranties and undertakings
set out in Clause 7 and Part 3 of Schedule 5 given
by the Purchaser under this Agreement and under
the completion certificate to be provided under
Clause 4.1(h) and "Purchaser Warranty" shall be
construed accordingly;
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"Purchaser Guarantor the representations, warranties and undertakings
Warranties" set out in Clause 7 and Part 4 of Schedule 5 given
by the Purchaser Guarantor under this Agreement
and under the completion certificate to be
provided under clause 4.1(h) and "Purchaser
Guarantor Warranty" shall be construed
accordingly;
"Purchaser Parties" the Purchaser, the Purchaser Guarantor and each
subsidiary of the Purchaser Guarantor which is a
party to any Relevant Agreement and "Purchaser
Party" means any of them;
"Registration Rights the registration rights agreement between the
Agreement" Purchaser Guarantor and the Vendor to be executed
by the parties thereto at Completion a draft of
which is in the agreed form;
"Relevant Agreements" this Agreement, the Global Crossing Network
Agreement, the H Service Agreement, the HWL
Service Agreement, the Xxxxxxxxx Licence
Agreement, the Global Crossing Licence Agreement,
the Marketing and Distribution Agreement, the
Partnership Agreement, the Shareholders Agreement,
the Tax Covenant, the Registration Rights
Agreement, the MDC Agreement, the Interconnect
Agreement, the Leased Lines Agreement and the
Certificate of Designations and "Relevant
Agreement" means any of them;
"SEC" the Securities and Exchange Commission of the
United States of America;
"Securities Act" the Securities Act of 1933 of the United States;
"Shareholders Agreement" the shareholders agreement between the Vendor, the
Vendor Guarantor, the Purchaser, the Purchaser
Guarantor and the Company in the agreed form to be
executed by the parties thereto at Completion;
"Shares" means shares of US$1.00 each in the capital of the
Company;
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"Subsidiaries" the companies which are to be the subsidiaries of
the Company at Completion, particulars of which
are set out in Schedule 2;
"Target Date" 15th December, 1999;
"Taxation" (a) any form of tax whenever created or imposed and
whether of Hong Kong or elsewhere, payable to or
imposed by any Taxation Authority and includes,
without limitation, profits tax, provisional
profits tax, interest tax, salaries tax, property
tax, taxes on gross or net income or receipts,
taxes on gains, estate duty, capital duty, stamp
duty, payroll tax, sales or use tax, franchise
tax, ad valorem tax, transfer tax, value added tax
and other similar liabilities or contributions and
any other taxes, levies, duties, charges, imposts
or withholdings similar to, corresponding with, or
replacing or replaced by any of the foregoing; and
(b) all charges, interest, additional tax, penalties
and fines, incidental or relating to any taxation
falling within (a) above
and includes (for the avoidance of doubt) any of
the foregoing (within (a) or (b)) which arises out
of the Excluded Business Transfer Arrangements and
the restructuring referred to in Clause 4.5(d) or
which are payable by or imposed on the HCL Network
Partnership;
"Taxation Authority" the Inland Revenue Department of Hong Kong and/or
any other revenue, customs, fiscal governmental,
xxxxxxxxx, xxxxxxx, xxxxxxx, xxxxxxxx, xxxxx,
provincial, local governmental or municipal
authority, body or person, whether of Hong Kong or
elsewhere;
"Tax Covenant" the tax covenant to be executed in the agreed form
by the Vendor and the Vendor Guarantor in favour
of the Purchaser, the Purchaser Guarantor and the
Company at Completion;
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"Vendor Conditions" the Conditions except (i) the Purchaser Conditions
and (ii) the Condition in Clause 4.1(l);
"Vendor Parties" the parties to the Relevant Agreements (other than
the Purchaser Parties) and the Group Companies and
"Vendor Party" means any of them;
"Vendor Share" one issued Share to be sold by the Vendor and
purchased by the Purchaser under this Agreement;
"Vendor Warranties" the representations, warranties and undertakings
set out in Clause 6 and Part 1 of Schedule 5 given
by the Vendor under this Agreement and under the
completion certificate to be provided under Clause
4.1(g) and "Vendor Warranty" shall be construed
accordingly;
"Vendor Guarantor the representations, warranties and undertakings
Warranties" set out in Clause 6 and Part 2 of Schedule 5 given
by the Vendor Guarantor under this Agreement and
under the completion certificate to be provided
under Clause 4.1(g) and "Vendor Guarantor
Warranty" shall be construed accordingly;
"Warranties" the Vendor Warranties, the Vendor Guarantor
Warranties, the Purchaser Warranties and the
Purchaser Guarantor Warranties and "Warranty"
shall be construed accordingly;
"HK$" and "Hong Kong Hong Kong dollars, the lawful currency of Hong
dollars" Kong; and
"US$" and "US dollars" United States dollars, the lawful currency of the
United States of America.
1.2 References to statutory provisions shall where the context so admits or
requires be construed as references to those provisions as respectively amended,
consolidated, extended, or re-enacted from time to time, and shall, where the
context so admits or requires, be construed as including reference to the
corresponding provisions of any earlier legislation (whether repealed or not)
directly or indirectly amended, consolidated, extended, or replaced thereby or
re-enacted therein, which may be applicable to any
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relevant tax year or other period, and shall include any orders, regulations,
instruments or other subordinate legislation made under the relevant statute.
1.3 Unless the context otherwise requires, words importing the singular only
shall include the plural and vice versa and words importing natural persons
shall include corporations and un-incorporated associations; words
importing the masculine gender only shall include the feminine gender and
the neuter gender. References to Clauses, Schedules and Exhibits are to
clauses of, schedules to and exhibits to this Agreement.
1.4 In this Agreement and the Schedules, the words and expressions hereinbefore
defined shall (unless the context otherwise requires) bear the same
meanings therein given to them and this Agreement and the Schedules shall
be construed and interpreted accordingly. The Schedules and Exhibits form
part of this Agreement and shall be construed and have the same full force
and effect as if expressly set out in the body of this Agreement. The
headings contained in this Agreement are for the purposes of convenience
only and do not form part of and shall not affect the construction of this
Agreement or any part thereof.
1.5 References to a "company" shall be construed so as to include any company,
corporation or other body corporate, wherever and however incorporated or
established.
1.6 References to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or any
joint venture, association or partnership (whether or not having separate
legal personality).
1.7 References to "indemnify" and "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that person
and all loss or damage and all payments, costs or expenses made or incurred
by that person as a consequence of or which would not have arisen but for
that circumstance.
1.8 References to the knowledge, information, belief or awareness of any person
shall be treated as including any knowledge, information, belief or
awareness which the person would have if the person made reasonable
enquiries.
1.9 The rule known as the ejusdem generis rule shall not apply and accordingly:
(a) general words introduced by the word "other" shall not be given a
restrictive meaning by reason of the fact that they are preceded by words
indicating a particular class of acts, matters or things; and
(b) general words shall not be given a restrictive meaning by reason of the
fact that they are followed by particular examples intended to be embraced
by the general words.
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2. SALE AND PURCHASE AND SUBSCRIPTION AND SUBSTITUTION OF PURCHASER
2.1 Subject to the fulfilment of the Conditions and the terms and conditions of
this Agreement, the Vendor shall sell and transfer all the legal and
beneficial interests in the Vendor Share to the Purchaser and the Purchaser
shall purchase the Vendor Share free from all charges, liens and other
encumbrances whatsoever and together with all rights attaching thereto
including in particular but without prejudice to the generality of the
foregoing the right to all dividends and other distributions declared
and/or paid on or after the Completion Date.
2.2 Subject to the fulfilment of the Conditions and the terms and conditions of
this Agreement, the Purchaser shall subscribe for and the Company shall
allot and issue, fully paid, the New Share. The New Share shall be free
from all charges, liens and other encumbrances whatsoever and together with
all rights attaching thereto including in particular but without prejudice
to the generality of the foregoing the right to all dividends and other
distributions declared and/or paid on or after the Completion Date.
2.3 The Purchaser Guarantor may, at any time before Completion, by delivering a
notice to that effect to the other parties to this Agreement, cause any of
its wholly-owned subsidiaries or any person to whom it could, following
Completion, transfer Shares under the Shareholders Agreement to become the
Purchaser instead of itself, whereupon such person shall have all the
rights and obligations of the Purchaser under this Agreement and the
Purchaser Guarantor shall cease to have such rights and obligations, but
without prejudice to its rights and obligations in its capacity as
Purchaser Guarantor.
3. CONSIDERATION
3.1 The consideration for the sale of the Vendor Share shall be the issue and
allotment to the Vendor (or to such other wholly-owned subsidiary of the
Vendor Guarantor as the Vendor may direct and as shall have agreed with the
Purchaser Guarantor to be bound by Clause 10) of US$400 million in nominal
amount of Convertible Preferred Stock credited as fully paid at par. The
conversion price for the Convertible Preferred Stock shall be as set forth
in the Certificate of Designations. If any event requiring adjustment of
the Conversion Price (as defined in the Certificate of Designations) under
the Certificate of Designations occurs between the date hereof and the
Completion Date, the Conversion Price will be modified in accordance with
such provisions and the change shall be reflected in the Certificate of
Designations.
3.2 The consideration for the issue and allotment of the New Share shall be the
payment to the Company of US$50 million in cash, US$200 million to be
satisfied by the entry into and performance of the Global Crossing Network
Agreement and US$150 million to be satisfied by the entry into and
performance of the MDC Agreement.
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4. CONDITIONS PRECEDENT AND PRE- AND POST-COMPLETION MATTERS
4.1 Completion shall be subject to and conditional upon the fulfilment of the
following Conditions:
(a) all approvals and consents which may be required or necessary to be
obtained from any government or any governmental or regulatory
authority in order for:
(i) each Vendor Party to enter into and perform each Relevant
Agreement to which it is a party and to do every thing
contemplated to be done by it as a result of or as a condition
precedent (or otherwise preparatory) to the entry into and
performance of the Relevant Agreements; and
(ii) each Purchaser Party to enter into and perform each Relevant
Agreement to which it is a party and to do every thing
contemplated to be done by it as a result of or as a condition
precedent (or otherwise preparatory) to the entry into and
performance of the Relevant Agreements having been obtained;
(b) the approvals and/or consents listed in Part 1 of Schedule 9 having
been obtained;
(c) the approvals and/or consents listed in Part 2 of Schedule 9 having
been obtained and OFTA shall not have objected in writing to the entry
into or performance of any Relevant Agreement (on the grounds that it
will or might breach the terms of any licence referred to in paragraph
7.1(1)(a) of Part 1 of Schedule 5 or otherwise);
(d) the Vendor and the Vendor Guarantor having complied with their
obligations under Clause 4.4 and 4.6;
(e) no government or governmental or regulatory authority having
instituted or threatened in writing any action (including the passing
of any statute or regulation), suit or investigation to restrain,
prohibit or otherwise challenge, or which would materially restrict or
delay, the entry into or performance:
(i) by any Vendor Party of any Relevant Agreement or any thing to be
done by any Vendor Party under or as contemplated by any Relevant
Agreement; or
(ii) by any Purchaser Party of any Relevant Agreement or any thing to
be done by any Purchaser Party under or as contemplated by any
Relevant Agreement.
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(f) the delivery of legal opinions:
(i) reasonably satisfactory to the Purchaser, covering the existence
and due incorporation of the Vendor Parties, their capacity and
authority to their enter into and perform the Relevant Agreements
to which they are parties, the validity, binding nature and
enforceability of their obligations under those Relevant
Agreements and the obtaining of all necessary legal and
regulatory consents; and
(ii) reasonably satisfactory to the Vendor, covering the existence and
due incorporation of the Purchaser Parties and their capacity and
authority to enter into and perform the Relevant Agreements to
which they are parties, the validity, binding nature and
enforceability of their obligations under those Relevant
Agreements and the obtaining of all necessary legal and
regulatory consents;
(g) the Vendor Warranties and the Vendor Guarantor Warranties being
accurate in all material respects and not misleading if they were
repeated at the time of Completion and on the basis that a reference
to the actual time of Completion were substituted for any express or
implied reference to the time of this Agreement and a completion
certificate shall be delivered by the Vendor (in relation to the
Vendor Warranties) and by the Vendor Guarantor (in relation to the
Vendor Guarantor Warranties) to the Purchaser and the Purchaser
Guarantor to that effect;
(h) the Purchaser Warranties and the Purchaser Guarantor Warranties being
accurate in all material respects and not misleading if they were
repeated at the time of Completion and on the basis that a reference
to the actual time of Completion were substituted for any express or
implied reference to the time of this Agreement and a completion
certificate shall be delivered by the Purchaser (in relation to the
Purchaser Warranties) and by the Purchaser Guarantor (in relation to
the Purchaser Guarantor Warranties) to the Vendor and the Vendor
Guarantor to that effect;
(i) each contract and licence in existence at the date of this Agreement
which relates to the business of any Group Company but which has been
entered into by the Vendor Guarantor or a subsidiary of the Vendor
Guarantor which is not a Group Company shall have been novated to that
first mentioned Group Company without amendment to its terms or the
economic benefit and burden of that contract or, as case may be,
licence, shall have been otherwise transferred to that first mentioned
Group Company in a manner satisfactory to the Purchaser;
(j) each contract in existence at the date of this Agreement which has
been entered into by the Vendor Guarantor or any subsidiary of the
Vendor Guarantor which is not a Group Company as agent for a Group
Company but which has not been
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reduced to writing shall have been reduced to writing on terms
satisfactory to the Purchaser;
(k) the Vendor having delivered to the Purchaser proforma audited
consolidated accounts of the Group (including balance sheet and
related statement of income and statement of cash flows and prepared
on the basis that the Excluded Business Transfer Arrangements and the
restructuring referred to in Clause 4.5(d) have taken place) prepared
in accordance with generally accepted accounting principles in the
United States for the financial years ended and as of 31st December,
1996, 1997 and 1998;
(l) each of the Relevant Agreements referred to in Clause 4.12 having been
entered into in form and content satisfactory to the parties; and
(m) the constitutive documents of each Group Company having been amended
in the manner contemplated by Clause 3 of the Shareholders Agreement.
4.2 If the Vendor Conditions shall not have been fulfilled (or waived by the
Purchaser) on or before the End Date, the Purchaser shall have the right,
in its sole discretion, to terminate this Agreement. If the Condition in
Clause 4.1(l) shall have not been fulfilled (or waived by both parties) on
or before the End Date, each of the Purchaser and the Vendor shall have the
right (in its sole discretion) to terminate this Agreement. If the
Purchaser Conditions shall not have been fulfilled (or waived by the
Vendor) on or before the End Date, the Vendor shall have the right, in its
sole discretion, to terminate this Agreement. Notwithstanding the foregoing
the Purchaser may not, without the consent of the Vendor, require
Completion if any Vendor Condition in Clause 4.1(a)(i) or 4.1(b) is not
fulfilled and the Vendor may not, without the consent of the Purchaser,
require Completion if any Purchaser Condition in Clause 4.1(a)(ii) or
4.1(c) is not fulfilled. Upon any termination by the Vendor or the
Purchaser under this Clause 4.2, this Agreement and everything contained in
it (except for the continuing obligations under Clauses 16 and 17) shall
terminate and be null and void and of no further effect and no party to
this Agreement shall have any liability to the other parties, save in
respect of any prior breaches of the terms of this Agreement.
4.3 The Vendor and the Vendor Guarantor agree to use all reasonable endeavours
to procure the fulfilment of the Vendor Conditions and the Purchaser and
the Purchaser Guarantor agree to use all reasonable endeavours to procure
the fulfilment of the Purchaser Conditions, in each case by the Target
Date.
4.4 Subject to the matters specifically disclosed (against this Clause 4.4) in
the Disclosure Letter and matters specifically provided for in this
Agreement (including its Exhibits) or the Relevant Agreements, the Vendor
and the Vendor Guarantor will procure that, between the time of this
Agreement and Completion, each Group Company will carry on business in the
normal course. In addition, the matters listed in Schedule 4 shall require
the prior consent in writing of the Purchaser or the Purchaser Guarantor.
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4.5 The Vendor shall, immediately prior to Completion:
(a) procure that no Group Company has outstanding any indebtedness, actual
or contingent, except for:
(i) any indebtedness owed by Group Companies to each other and to no
other person; and
(ii) any indebtedness permitted to exist because of Clause 4.6;
(b) procure that there are no amounts outstanding from any of the Vendor,
the Vendor Guarantor or any of their respective Affiliates (other than
the Excluded Companies) to any of the Group Companies other than
routine trade payables arising in the ordinary course of business or
amounts payable in respect of the matters referred to in (i), (ii) or
(iii) of paragraph (v) of Schedule 4;
(c) implement and carry out the Excluded Business Transfer Arrangements so
as, inter alia, to ensure that the Group does not include any Excluded
Company, that no Group Company carries on or is in any way interested
in the Excluded Business and that there are no amounts outstanding
from any of the Excluded Companies to any of the Group Companies (the
Vendor hereby agreeing to indemnify each Group Company against any
liability, actual or contingent, arising out of or connected with the
Excluded Business); and
(d) implement and carry out such steps and acts and execute such
documents, instruments and deeds as referred to in Schedule 8
(including without limitation the Partnership Agreement) to procure
that, inter alia, HCL and HCL Network Partnership Holdings Limited
shall become 99.98% and 0.01% partners respectively of HCL Network
Partnership and that no Group Company has any liability, actual or
contingent, arising out of or connected with the HCL Network
Partnership incurred before the date of the Partnership Agreement.
4.6 The Vendor shall be responsible for the advancement of such sum of money to
the Group, by way of interest free shareholder loans, as is necessary to
fund the Group's operations until the Completion Date. All such shareholder
loans advanced up to the later of the Target Date and the date on which all
of the Vendor Conditions (except that in Clause 4.1(k)) are satisfied shall
(together with any excess of the balance referred to in the next sentence
over the maximum amount referred to in the next sentence) be capitalised
upon Completion. The balance (up to a maximum of HK$100 million per month
on a cumulative basis, prorated on a daily basis for part of a month) shall
be repaid upon Completion.
4.7 The parties shall use their respective reasonable endeavours to procure
that, as soon as practicable after the Completion Date, the Counter-
indemnities shall be absolutely released and cancelled and to be replaced
by new counter-indemnities or guarantees or other security documents to be
given by HCL or, if and to the extent that this is not
17
possible, by new counter-indemnities or guarantees or other security
documents to be given by the Vendor and the Purchaser on a several basis
(not joint or joint and several) in proportion to their respective
shareholdings in the Company immediately after Completion.
4.8 If and to the extent that the replacements contemplated by Clause 4.7
cannot be procured, the Purchaser shall give counter-indemnities to the
Vendor in respect of one-half of the amounts for which the Vendor is liable
under each of the non-replaced Counter-indemnities for the period from the
Completion Date until the expiry of the relevant non-replaced Counter-
indemnity. Pending such counter-indemnities being given, the Purchaser
shall indemnify the Vendor Guarantor, the Vendor and their subsidiaries and
keep the Vendor Guarantor, the Vendor and their subsidiaries harmless from
and against one-half of all claims, proceedings, liability, costs and
expenses incurred or suffered by the Vendor Guarantor, the Vendor and their
subsidiaries pursuant to the Counter-indemnities for the period from the
Completion Date until the date of the counter-indemnities being given by
the Purchaser.
4.9 As soon as practicable following Completion, the Company shall prepare and
have audited the Completion Accounts which shall be reviewed by Xxxxxx
Xxxxxxxx. The Completion Accounts will be prepared in accordance with
generally accepted accounting principles in Hong Kong and on a basis
consistent with the Management Accounts. If the consolidated net book value
of the tangible assets (less the consolidated liabilities) of the Group
appearing in the Completion Accounts (after adding back thereto the net
operating losses which are incurred between 30th September, 1999 and the
Completion Date) (the "Adjusted Net Assets") fall short of the consolidated
net book value of the tangible assets (less the consolidated liabilities)
of the Group shown in the Management Accounts (the "Initial Net Assets")
then an amount equal to one half of the shortfall will be paid by the
Vendor to the Purchaser. The Vendor agrees not to release, for the purpose
of preparing the Completion Accounts, any provision in the Management
Accounts for future expenditure which has not been incurred and is not
expected to be incurred or, if any such provision is released, that it
shall be deducted for the purpose of computing the Adjusted Net Assets.
4.10 This Clause applies if, following their review under Clause 4.9 above,
Xxxxxx Xxxxxxxx are of the opinion that the Adjusted Net Assets fall short
of the Initial Net Assets (when the firm of accountants undertaking the
audit are not of such opinion) or that the shortfall is greater than that
which exists in the opinion of such firm. If this Clause applies, the
Vendor and the Purchaser shall jointly appoint a third firm of accountants
to conduct a second review. If the third firm is of the same opinion as
Xxxxxx Xxxxxxxx, the shortfall shall be that which exists in the opinion of
that third firm for the purposes of computing the
18
amount payable by the Vendor to the Purchaser under Clause 4.9. If that
third firm is not of the same opinion as Xxxxxx Xxxxxxxx, this Clause 4.10
shall cease to apply. If the Vendor and the Purchaser cannot agree on the
identity of the third firm, it shall be a reputable major international
firm of accountants practising in Hong Kong selected by the President for
the time being of the Hong Kong Society of Accountants.
4.11 At any time, the Purchaser may notify the Vendor that the Purchaser wants
one or more of the Group Companies to file an election to be classified as
a disregarded entity (or as a partnership if such Group Company is owned by
more than one person or entity) for U.S. federal income tax purposes, in
which event each relevant Group Company shall promptly file such an
election (and the Vendor shall join in the making of such an election) on
Internal Revenue Service Form 8832 (or any successor form), which election
shall be effective as of a date specified by the Purchaser (the
"Election"). The Purchaser Guarantor shall indemnify and hold harmless the
Company and the Subsidiaries and the Vendor Guarantor and its Affiliates
against any income tax arising under the laws of the United States or any
political subdivision thereof for any period after Completion as a result
of the filing of the Election if such income tax arises as a result of
either (i) a post-Completion change in the tax law of the United States or
any political subdivision thereof or (ii) any post-Completion change in the
structure of the Group Companies (it being understood that the Election
itself shall not constitute a change in the structure of the Group
Companies). Notwithstanding anything to the contrary in this Section 4.11,
the Purchaser shall have no indemnity obligation hereunder with respect to
any tax that arises as a result of (i) any voluntary action taken by the
Vendor, the Vendor Guarantor or their respective Affiliates, (ii) any joint
action (other than the filing of the Election) taken by the Vendor or the
Vendor Guarantor and the Purchaser (or their respective Affiliates), (iii)
any connection between the Vendor, the Vendor Guarantor or their respective
Affiliates and the United States or any political subdivision thereof
(including, without limitation, the existence of a permanent establishment,
the carrying on of any trade or business, or the ownership of any assets
therein), or (iv) any obligation of the Vendor, the Vendor Guarantor or
their respective Affiliates under any contract or other agreement by which
it is responsible for the tax liability of any other person (including,
without limitation, under any tax sharing agreement).
4.12 The parties will cooperate in good faith with a view to agreeing the terms
of the Interconnect Agreement, the Leased Lines Agreement, the Global
Crossing
19
Licence Agreement, the Xxxxxxxxx Licence Agreement, the Registration Rights
Agreement, the Marketing and Distribution Agreement, the Global Crossing
Network Agreement, the H Service Agreement, the HWL Service Agreement, the
MDC Agreement and the Certificate of Designations by the Target Date.
5. COMPLETION
5.1 Subject to the fulfilment of the Conditions, Completion shall take place on
the Completion Date at the offices of Xxxxxxxxx and May in Hong Kong, or at
such other place as the parties hereto may agree where the parties hereto
shall each perform the acts required of them as specified in Schedule 3.
5.2 Failure by the Vendor, the Vendor Guarantor or the Company to comply with
its obligations under Clause 5.1 shall entitle the Purchaser and the
Purchaser Guarantor to defer Completion or to terminate this Agreement.
Failure by the Purchaser or the Purchaser Guarantor to comply with its
obligations under Clause 5.1 shall entitle the remaining parties to defer
Completion or to terminate this Agreement.
6. VENDOR WARRANTIES AND VENDOR GUARANTOR WARRANTIES
6.1 The Vendor represents and warrants to the Purchaser and the Purchaser
Guarantor that each of the Vendor Warranties is accurate in all respects
and not misleading at the date of this Agreement and will be accurate in
all respects and not misleading as if it was repeated on the Completion
Date and on the basis that any reference to the Completion Date is
substituted for any express or implied reference to the date of this
Agreement.
6.2 The Vendor Guarantor represents and warrants to the Purchaser and the
Purchaser Guarantor that each of the Vendor Guarantor Warranties is
accurate in all respects and not misleading at the date of this Agreement
and will be accurate in all respects and not misleading as if it was
repeated on the Completion Date and on the basis that any reference to the
Completion Date is substituted for any express or implied reference to the
date of this Agreement.
6.3 The Vendor and the Vendor Guarantor accept that the Purchaser and the
Purchaser Guarantor are entering into this Agreement in reliance upon each
of the Vendor Warranties and the Vendor Guarantor Warranties.
6.4 The Vendor (in respect of the Vendor Warranties) and the Vendor Guarantor
(in respect of the Vendor Guarantor Warranties) undertake to disclose in
writing to the Purchaser and the Purchaser Guarantor anything which is or
may constitute a breach of or be inconsistent with any of the Vendor
Warranties (or, as the case may be, the Vendor Guarantor Warranties)
immediately it comes to the notice of any of them before Completion.
6.5 The Vendor and the Vendor Guarantor undertake (if any claim is made against
either of them in connection with any Relevant Agreement) not to enforce a
right which either
20
may have against any Group Company or any director, officer or employee of
any Group Company in respect of a misrepresentation, inaccuracy or omission
in or from information given by that Group Company or that director,
officer or employee for the purpose of assisting the Vendor or the Vendor
Guarantor in reaching agreement on any terms of any Relevant Agreement
provided that the foregoing shall not prevent the Vendor or the Vendor
Guarantor from enforcing any right where such misrepresentation, inaccuracy
or omission arises as a result of wilful or fraudulent misconduct or
omission by the Group Company, director, officer or employee in question.
6.6 Each of the Vendor Warranties and the Vendor Guarantor Warranties shall be
construed as a separate and independent warranty and (except where
expressly provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other Vendor Warranty or
Vendor Guarantor Warranty or any other term of this Agreement.
6.7 Subject to the provisions herein, none of the Vendor Warranties or the
Vendor Guarantor Warranties shall in any way be extinguished or affected by
Completion.
6.8 Without restricting the rights of the Purchaser or the Purchaser Guarantor
or its ability to claim damages on any basis in the event that any Vendor
Warranty or Vendor Guarantor Warranty is breached or is untrue or
misleading, the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) covenant with the
Purchaser that the Vendor (or, as the case may be, the Vendor Guarantor)
will pay to the Group Company concerned an amount sufficient to place that
Group Company in the financial position which it would have been in had
such Vendor Warranty or (as the case may be) Vendor Guarantor Warranty not
been breached, untrue or misleading, taking into account, inter alia, the
following:
(a) the amount by which the value of an asset (including one warranted to
exist but not in fact existing) or contract of any Group Company is or
becomes less than its value would have been if that Vendor Warranty
(or, as the case may be, Vendor Guarantor Warranty) had not been
breached or not been untrue or misleading;
(b) the amount of any liability or increase in any liability which any
Group Company has incurred or is or becomes subject to which it would
not have incurred or become subject to or which would not have
increased if the Vendor Warranties (or, as the case may be, the Vendor
Guarantor Warranties) had not been breached or not been untrue or
misleading;
(c) the amount by which the profits of any Group Company are less or its
losses greater than would have been the case if that Vendor Warranty
(or, as the case may be, that Vendor Guarantor Warranty) had not been
breached or not been untrue or misleading; and
21
(d) any costs and expenses incurred directly or indirectly as a result of
or in connection with any deficiency or diminution in value of any
asset or contract or any liability or increased liability, as the case
may be, referred to in paragraph (a) or (b)
or will, at the direction the Purchaser, pay to the Purchaser an amount
equal to one-half of the amount which is so sufficient.
6.9 For the avoidance of doubt, amounts payable under Clause 6.8 will be
calculated without reference to the rules of general law relating to claims
for damages for breach of warranty.
6.10 Subject to the other provisions contained in this Clause 6, the Vendor and
the Vendor Guarantor (in respect of the Vendor Guarantor Warranties)
undertake to indemnify the Purchaser and the Purchaser Guarantor against
any losses, costs (including legal costs reasonably incurred), expenses,
claims, damages and liabilities which the Purchaser and the Purchaser
Guarantor may incur or suffer as a result of, arising out of or in
connection with any breach of the Vendor Warranties or of the obligations
of the Vendor in clause 4.5 (or, as the case may be, the Vendor Guarantor
Warranties).
6.11 Subject to the limitations set out in Clause 6.12 and 6.13, the Purchaser
and the Purchaser Guarantor shall be entitled to claim both before and
after Completion that any of the Vendor Warranties or the Vendor Guarantor
Warranties has or had been breached or is or was misleading and, without
limitation, to claim under any covenant. Notwithstanding the foregoing, if
(not less than two Business Days before Completion) the Vendor or the
Vendor Guarantor provides notice to the Purchaser or the Purchaser
Guarantor pursuant to Clause 6.4 (with full details of the breach) and the
Purchaser and the Purchaser Guarantor proceed to Completion, such shall
constitute a waiver of the Purchaser's and the Purchaser Guarantor's rights
to make a claim for breach of such Warranty or that such Warranty is
misleading.
6.12 The Vendor and the Vendor Guarantor shall not be liable for a claim for
breach of any of the Vendor Warranties or the Vendor Guarantor Warranties
to the extent that provision or reserve in respect thereof has been made in
the Management Accounts.
6.13 The liability of the Vendor in respect of any claims for breach of the
Vendor Warranties and the liability of the Vendor Guarantor in respect of
any claims for breach of the Vendor Guarantor Warranties shall be limited
as follows:
(a) the maximum liability of the Vendor and the Vendor Guarantor in
respect of all claims for breach of the Vendor Warranties (other
22
than the Vendor Warranties relating to Taxation) and the Vendor Guarantor
Warranties shall not exceed US$400 million in aggregate;
(b) neither the Vendor (in respect of the Vendor Warranties) nor the
Vendor Guarantor (in respect of the Vendor Guarantor Warranties) shall
be liable (other than in respect of the Vendor Warranties relating to
Taxation) for any individual claim which does not exceed US$150,000;
(c) the Vendor and the Vendor Guarantor shall only be liable in respect of
any claim for breach of the Vendor Warranties (other than the Vendor
Warranties relating to Taxation) if the liability of the Vendor and
the Vendor Guarantor for all such claims (excluding those which may
not be made because of paragraph (b) above) exceeds US$10,000,000 and
in such event the Vendor and the Vendor Guarantor shall be liable for
the whole amount of such claims and not only the excess.
(d) no claims may be brought against the Vendor in respect of a breach of
the Vendor Warranties or the Vendor Guarantor (in respect of a breach
of the Vendor Guarantor Warranties) after the expiry of a period of
six months after delivery of the audited accounts of the Group to the
directors of the Company for the year ended 31 December, 2000 (31st
March, 2006 where the relevant Vendor Warranty relates to Taxation),
and any claims brought within the specified time period shall be
notified to the Vendor or Vendor Guarantor in writing specifying the
basis of such claim.
(e) the Purchaser and the Purchaser Guarantor shall not be entitled to
claim that any fact causes any of the Vendor Warranties (or, as the
case may be, the Vendor Guarantor Warranties) to be breached or
renders any of them misleading to the extent that it has been fairly
disclosed to the Purchaser and the Purchaser Guarantor in the
Disclosure Letter.
(f) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which would not
have arisen but for a voluntary act, omission or transaction after the
date hereof on the part of the Purchaser which could reasonably have
been avoided or carried out and which was not in the ordinary course
of business or which arises from something done or omitted at the
Purchaser's written request or with its written consent;
(g) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of legislation which comes into force after the Completion Date
and which is retrospective in effect;
(h) the Vendor shall not be liable for or in respect of any breach of the
Vendor Warranties which, being a liability in respect of Taxation,
arises by reason of an increase in the rates of taxation made after
the date hereof with retrospective effect;
23
(i) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of a change in the Group's accounting policies after
Completion;
(j) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of a Group Company failing to act in accordance with any
reasonable request of the Vendor or the Vendor Guarantor, which action
would have the effect of avoiding a breach of such Warranty or
mitigating losses or damages due to a breach of such Warranty after
being given a reasonable time in which to comply with any such request
and provided that the Group Company has been indemnified by the Vendor
and/or the Vendor Guarantor to the reasonable satisfaction of the
Purchaser against any liability, costs, damages or expenses which may
be incurred thereby; and
(k) the Vendor shall not be liable for or in respect of any breach of
Vendor Warranties to the extent of any recovery for such matter under
the Tax Covenant.
6.14 The Purchaser shall:
(a) upon any claim, action, demand or assessment being made or issued
against the Purchaser or the Company which could lead to a claim by
the Purchaser for breach of any of the Vendor Warranties or the Vendor
Guarantor Warranties, as soon as reasonably practicable, give notice
thereof to the Vendor (or, as the case may be, to the Vendor
Guarantor) provided however, that failure to provide such notice shall
not preclude a claim by the Purchaser hereunder unless and to the
extent that such failure materially prejudices the Vendor's ability to
take action as described in subsection (b) below;
(b) permit the Vendor (or, as the case may be, to the Vendor Guarantor) to
take, in the name of the Company, such action as it deems appropriate
to avoid, resist, dispute, defend, compromise or appeal against any
such claim, action, demand or assessment and the Purchaser shall
provide or make available to the Vendor (or, as the case may be, to
the Vendor Guarantor) all information and documents reasonably
required by it for such purposes and shall give all such other
assistance in connection with such claim, action, demand or assessment
as the Vendor (or, as the case may be, the Vendor Guarantor) may
reasonably require, subject to the Purchaser and the Company being
indemnified to the Purchaser's reasonable satisfaction against any
liability, costs, damages or expenses which may be incurred thereby;
and
24
(c) in the case of any claim against the Purchaser or the Purchaser
Guarantor which could lead to a claim by the Purchaser for breach of
any of the Vendor Warranties or the Vendor Guarantor Warranties,
consult the Vendor as to the conduct of such claim and not settle it
without the consent of the Vendor, not to be unreasonably withheld.
6.15 The Vendor Guarantor hereby covenants and undertakes with the Purchaser
that it shall use all reasonable endeavours to procure the due and punctual
performance and observance of all the obligations and terms of each other
Vendor Party under each Relevant Agreement to which it is a party.
7. PURCHASER WARRANTIES AND PURCHASER GUARANTOR WARRANTIES
7.1 The Purchaser represents and warrants to the Vendor and the Vendor
Guarantor that each of the Purchaser Warranties is accurate in all respects
and not misleading at the date of this Agreement and will be accurate in
all respects and not misleading as if it was repeated on the Completion
Date and on the basis that any reference to the Completion Date is
substituted for any express or implied reference to the date of this
Agreement.
7.2 The Purchaser Guarantor represents and warrants to the Vendor and the
Vendor Guarantor that each of the Purchaser Guarantor Warranties is
accurate in all respects and not misleading at the date of this Agreement
and will be accurate in all respects and not misleading as if it was
repeated on the Completion Date and on the basis that any reference to the
Completion Date is substituted for any express or implied reference to the
date of this Agreement.
7.3 The Purchaser and the Purchaser Guarantor accept that the Vendor and the
Vendor Guarantor are entering into this Agreement in reliance upon each of
the Purchaser Warranties and the Purchaser Guarantor Warranties.
7.4 The Purchaser (in respect of the Purchaser Warranties) and the Purchaser
Guarantor (in respect of the Purchaser Guarantor Warranties) undertake to
disclose in writing to the Vendor and the Vendor Guarantor anything which
is or may constitute a breach of or be inconsistent with any of the
Purchaser Warranties (or, as the case may be, the Purchaser Guarantor
Warranties) immediately it comes to the notice of any of them before
Completion.
7.5 Each of the Purchaser Warranties and the Purchaser Guarantor Warranties
shall be construed as a separate and independent warranty and (except where
expressly provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other Purchaser Warranty or
Purchaser Guarantor Warranty or any other term of this Agreement.
7.6 Subject to the provisions herein, none of the Purchaser Warranties or the
Purchaser Guarantor Warranties shall in any way be extinguished or affected
by Completion.
25
7.7 Subject to the other provisions contained in this Clause 7, the Purchaser
(in respect of the Purchaser Warranties) and the Purchaser Guarantor (in
respect of the Purchaser Guarantor Warranties) undertake to indemnify the
Vendor and the Vendor Guarantor against any losses, costs (including legal
costs reasonably incurred), expenses, claims, damages and liabilities which
the Vendor and the Vendor Guarantor may incur or suffer as a result of,
arising out of or in connection with any breach of the Purchaser Warranties
(or, as the case may be, the Purchaser Guarantor Warranties).
7.8 Subject to the limitations set out in Clause 7.9, the Vendor and the Vendor
Guarantor shall be entitled to claim both before and after Completion that
any of the Purchaser Warranties or the Purchaser Guarantor Warranties has
or had been breached or is or was misleading and, without limitation, to
claim under any covenant. Notwithstanding the foregoing, if (not less than
two Business Days before Completion) the Purchaser or the Purchaser
Guarantor provides notice to the Vendor or the Vendor Guarantor pursuant to
Clause 7.4 (with full details of the breach), and the Vendor and the Vendor
Guarantor proceed to Completion, such shall constitute a waiver of the
Vendor's and the Vendor Guarantor's rights to make a claim for breach of
such Warranty or that such Warranty is misleading.
7.9 The liability of the Purchaser in respect of any claims for breach of the
Purchaser Warranties and the liability of the Purchaser Guarantor
Warranties in respect of any claims for breach of the Purchaser Guarantor
Warranties shall be limited as follows:
(a) the maximum liability of the Purchaser and the Purchaser Guarantor in
respect of all claims for breach of the Purchaser Warranties and the
Purchaser Guarantor Warranties shall not exceed US$400 million in
aggregate;
(b) neither the Purchaser (in respect of the Purchaser Warranties) nor the
Purchaser Guarantor (in respect of the Purchaser Guarantor Warranties)
shall be liable for any individual claim which does not exceed
US$150,000;
(c) the Purchaser and the Purchaser Guarantor shall only be liable in
respect of any claim for breach of the Purchaser Warranties if the
liability of the Purchaser and the Purchaser Guarantor for all such
claims (excluding those which may not be made because of paragraph (b)
above) exceeds US$10,000,000 and in such event the Purchaser and the
Purchaser Guarantor shall be liable for the whole amount of such
claims and not only the excess; and
(d) no claims may be brought against the Purchaser (in respect of the
Purchaser Warranties) or the Purchaser Guarantor (in respect of a
breach of the Purchaser Guarantor Warranties) after the expiry of the
earlier of (i) two years after the date of this Agreement and (ii) a
period of six months after delivery of the audited accounts of the
Group to the directors of the Company for the year ended 31 December,
2000, and any claims brought within the specified time period shall be
notified to the Vendor or Vendor Guarantor in writing specifying the
basis of such claim;
26
7.10 The Purchaser hereby covenants and undertakes with the Vendor that it shall
use all reasonable endeavours to procure the due and punctual performance
and observance of all the obligations and terms of the Global Crossing
Network Agreement, the Global Crossing Licence Agreement and the MDC
Agreement respectively on the part of the parties thereto which are
subsidiaries of the Purchaser Guarantor to be performed and observed.
8. EFFECT OF COMPLETION
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties, indemnities, covenants and
other undertakings contained in or entered into pursuant to this Agreement
shall remain in full force and effect notwithstanding Completion.
9. GUARANTEES
9.1 (a) The Purchaser Guarantor, in consideration of the Vendor entering into
this Agreement, hereby guarantees, unconditionally and irrevocably as
primary obligor, the due observance and performance by the Purchaser
of all the agreements, obligations, commitments and undertakings
contained in this Agreement (including the Purchaser Warranties)
("Purchaser Guaranteed Obligations") on the part of the Purchaser to
be observed and performed and undertakes and agrees subject to Clause
7.9 that it will indemnify the Vendor on a full indemnity basis in
respect of all losses, costs, expenses and damage sustained by it by
reason of or in consequence of any failure of the Purchaser to carry
out any such Purchaser Guaranteed Obligations.
(b) The guarantee and indemnity provided by the Purchaser Guarantor in
this Clause 9.1 shall subject to Clause 7.9 be a continuing guarantee
and indemnity and shall cover all Purchaser Guaranteed Obligations of
the Purchaser under this Agreement notwithstanding the liquidation,
incapacity or any change in the constitution of the Purchaser or any
settlement of account or variation or modification of this Agreement
or any indulgence or waiver given by any party hereto or other matter
whatsoever until the last claim whatsoever by the Vendor against the
Purchaser has been satisfied in full.
(c) Should any Purchaser Guaranteed Obligation of the Purchaser, which if
valid or enforceable would be the subject of the guarantee and
indemnity in this Clause 9.1, be or become wholly or in part invalid
or unenforceable against the Purchaser by reason of any defect in or
insufficiency or want of powers of the Purchaser or irregular or
improper purported exercise thereof or breach or want of authority by
any person purporting to act on behalf of the Purchaser or because any
of the rights have become barred by reason of any legal limitation,
disability, incapacity or any other fact or circumstance whether or
not always known to the Vendor, the Purchaser Guarantor shall
nevertheless be liable to
27
the Vendor notwithstanding the avoidance or invalidity of any term or
condition of this Agreement whatsoever including (without limitation)
avoidance under any enactment relating to liquidation) in respect of
that Purchaser Guaranteed Obligation as if the same were wholly valid
and enforceable.
(d) The guarantee and indemnity provided by the Purchaser Guarantor in
this Clause 9.1 may be enforced against it by the Vendor at any time
without first instituting legal proceedings against the Purchaser in
the first instance or joining in the Purchaser as a party in the same
proceedings against it.
9.2 (a) The Vendor Guarantor, in consideration of the Purchaser entering into
this Agreement, hereby guarantees, unconditionally and irrevocably as
primary obligor, the due observance and performance by the Vendor of
all the agreements, obligations, commitments and undertakings
contained in this Agreement (including the Vendor Warranties) ("Vendor
Guaranteed Obligations") on the part of the Vendor to be observed and
performed and undertakes and agrees subject to Clause 6.13 that it
will indemnify the Purchaser on a full indemnity basis in respect of
all losses, costs, expenses and damage sustained by it by reason of or
in consequence of any failure of the Vendor to carry out any such
Vendor Guaranteed Obligations.
(b) The guarantee and indemnity provided by the Vendor Guarantor in this
Clause 9.2 shall subject to Clause 6.13 be a continuing guarantee and
indemnity and shall cover all Vendor Guaranteed Obligations of the
Vendor under this Agreement notwithstanding the liquidation,
incapacity or any change in the constitution of the Vendor or any
settlement of account or variation or modification of this Agreement
or any indulgence or waiver given by any party hereto or other matter
whatsoever until the last claim whatsoever by the Purchaser against
the Vendor has been satisfied in full.
(c) Should any Vendor Guaranteed Obligation of the Vendor, which if valid
or enforceable would be the subject of the guarantee and indemnity in
this Clause 9.2, be or become wholly or in part invalid or
unenforceable against the Vendor by reason of any defect in or
insufficiency or want of powers of the Vendor or irregular or improper
purported exercise thereof or breach or want of authority by any
person purporting to act on behalf of the Vendor or because any of the
rights have become barred by reason of any legal limitation,
disability, incapacity or any other fact or circumstance whether or
not always known to the Purchaser, the Vendor Guarantor shall
nevertheless be liable to the Purchaser notwithstanding the avoidance
or invalidity of any term or condition of this Agreement whatsoever
including (without limitation) avoidance under any enactment relating
to liquidation) in respect of that Vendor Guaranteed Obligation as if
the same were wholly valid and enforceable.
(d) The guarantee and indemnity provided by the Vendor Guarantor in this
Clause 9.2 may be enforced against it by the Purchaser at any time
without first
28
instituting legal proceedings against the Vendor in the first instance
or joining in the Vendor as a party in the same proceedings against
it.
10. RESTRICTION ON DISPOSAL OF CONVERTIBLE PREFERRED STOCK; REGISTRATION OF
CONSIDERATION SHARES
10.1 The Vendor undertakes to the Purchaser and the Purchaser Guarantor that,
subject to Clause 10.2, for a period of one year from the Completion Date,
the Vendor and each entity holding the Convertible Preferred Stock as
directed by the Vendor pursuant to Clause 3.1 (each a "Holder") shall not,
except with the prior written consent of the Purchaser Guarantor:
(a) charge, mortgage, pledge, sell, transfer or otherwise dispose of or
encumber (collectively "Transfer") any Convertible Preferred Stock (or
any interest in it) or agree to do any of the foregoing; or
(b) issue any securities, derivatives or other financial products or grant
any option or other rights that may be convertible into any shares or
stock of the Purchaser Guarantor or any interest therein or enter into
any agreement or arrangement in respect of the foregoing or any other
agreement or arrangement for the purpose of hedging the risk of a
decline in the value of the Convertible Preferred Stock.
10.2 The Vendor shall be entitled to Transfer any of the Convertible Preferred
Stock:
(a) at any time upon the occurrence of a Change in Control; or
(b) at any time to a Subsidiary (as defined below for the purposes of this
Clause 10 only) of the Vendor Guarantor only for so long as the
transferee remains a Subsidiary (a "Permitted Transferee") provided
however that the Permitted Transferee becomes a party to this
Agreement by executing and delivering to the Purchaser Guarantor an
Agreement Counterpart and Acknowledgement in substantially the form of
Schedule 10. Following any such Transfer, the Vendor Guarantor shall
remain bound by the terms of this Agreement.
10.3 In this Clause 10:
"Affiliate" of any person means any other person who, directly or
indirectly, Controls, is under common control or is
controlled by such other person. For purposes of this
definition, "Control" (including, with correlative
meanings, the terms "controlling," "controlled by" and
"under common control with"), as used with respect to
any person, shall mean the power, directly or
indirectly, to direct or cause the direction of the
management or policies of such person, whether through
the ownership of voting securities, by contract or
29
otherwise; provided that beneficial ownership of 10% or
more of the Voting Stock of a person shall be deemed to
be Control.
"Change in means, with respect to the Purchaser Guarantor, the
Control" occurrence of any of the following: (i) any "person" (as
such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")),
other than a Permitted Holder, is or becomes the
beneficial owner, directly or indirectly, of 35% or more
of the Voting Stock (as defined below) (measured by
voting power rather than number of shares) of the
Purchaser Guarantor, and the Permitted Holders own, in
the aggregate, a lesser percentage of the total Voting
Stock (measured by voting power rather than by number of
shares) of the Purchaser Guarantor than such person and
do not have the right or ability by voting power,
contract or otherwise to elect or designate for election
a majority of the board of directors of the Purchaser
Guarantor (for the purposes of this definition, such
other person shall be deemed to "beneficially own" any
Voting Stock of a specified corporation held by a parent
corporation if such other person beneficially owns,
directly or indirectly, more than 35% of the Voting
Stock (measured by voting power rather than by number of
shares) of such parent corporation and the Permitted
Holders beneficially own, directly or indirectly, in the
aggregate a lesser percentage of Voting Stock (measured
by voting power rather than by number of shares) of such
parent corporation and do not have the right or ability
by voting power, contract or otherwise to elect or
designate for election a majority of the board of
directors of such parent corporation), (ii) during any
period of two consecutive years, Continuing Directors
cease for any reason to constitute a majority of the
board of directors of the Purchaser Guarantor, (iii) the
Purchaser Guarantor consolidates or merges with or into
any other person, other than a consolidation or merger
(a) of the Purchaser Guarantor into Global Crossing
Holdings Ltd. ("GCH") or GCH into the Purchaser
Guarantor, or the Purchaser Guarantor with or into a
Subsidiary of the Purchaser Guarantor or (b) pursuant to
a transaction in which the outstanding Voting Stock of
the Purchaser Guarantor is changed into or exchanged for
cash, securities or other property with the effect that
the beneficial owners of the outstanding Voting Stock of
the
30
Purchaser Guarantor immediately prior to such
transaction, beneficially own, directly or indirectly,
more than 35% of the Voting Stock (measured by voting
power rather than number of shares) of the surviving
corporation immediately following such transaction or
(iv) the sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one
or a series of related transactions, of all or
substantially all of the assets of the Purchaser
Guarantor and its Subsidiaries, taken as a whole, to any
person other than a Subsidiary of the Purchaser
Guarantor or a Permitted Holder or a person more than
50% of the Voting Stock (measured by voting power rather
than by number of shares) of which is owned, directly or
indirectly, following such transaction or transactions
by the Permitted Holders; provided however that sales,
transfers, conveyances or other dispositions in the
ordinary course of business of capacity on cable systems
owned, controlled or operated by the Purchaser Guarantor
or any Subsidiary or of telecommunications capacity or
transmission rights acquired by the Purchaser Guarantor
or any Subsidiary for use in its business, including,
without limitation, for sale, lease, transfer,
conveyance or other disposition to any customer of the
Purchaser Guarantor or any Subsidiary shall not be
deemed a disposition of assets for purposes of this
clause (iv).
"Continuing means individuals who at the beginning of the period
Directors" of determination constituted the board of directors of
the Purchaser Guarantor, together with any new directors
whose election by such board of directors or whose
nomination for election by the shareholders of the
Purchaser Guarantor was approved by a vote of at least a
majority of the directors of the Purchaser Guarantor
then still in office who were either directors at the
beginning of such period or whose election or nomination
for election was previously so approved or is designee
of any one of the Permitted Holders or any combination
thereof or was nominated or elected by any such
Permitted Holder(s) or any of their designees.
"Permitted Holder" means, with respect to the Purchaser Guarantor, any of
(i) Pacific Capital Group, Inc. and its Affiliates, (ii)
CIBC Xxxxxxxxxxx Corp. and its Affiliates and (iii) any
other "person" (as such term is used in Section 13(d)(3)
of the Exchange Act) which, together with such person's
31
Affiliates, is the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act) on the date hereof of more than 20% of the common
stock of the Purchaser Guarantor;
"Subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than
50% of the total voting power of shares of capital stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors,
managers or trustee thereof is at the time owned or
controlled, directly or indirectly, by such person or
one or more of the other Subsidiary of that person (or a
combination thereof) and (ii) any partnership (a) the
sole general partner or the managing general partner of
which is such person or a Subsidiary of such person or
(b) the only general partners of which are such person
or of one or more Subsidiaries of such person (or any
combination thereof);"Voting Stock" of any person as of
any date means the capital stock of such person that is
at the time entitled to vote in the election of the
Board of Directors of such person.
The "occurrence" or "consummation" of any transaction involving any offer,
exchange, conversion or like arrangement with respect to the Convertible
Preferred Stock shall be deemed to take place three days (being any other
than a Saturday or a United States federal, Bermuda or Hong Kong holiday)
prior to the record date, acceptance date or similar deadline or expiration
date for participation in the relevant transaction or on such other earlier
date as may be necessary to permit the holder of the Convertible Preferred
Stock to participate fully in such transaction on a basis no less
favourable than other stockholders of the Purchaser Guarantor.
References to Convertible Preferred Stock include any shares or stock of
the Purchaser Guarantor into which the Convertible Preferred Stock is
convertible or is converted.
10.4 Notwithstanding anything to the contrary in this Agreement, any Transfer
otherwise permitted pursuant to this Clause 10 shall be in compliance with
the provisions of the Securities Act and applicable state securities laws
of the states of the United States and other jurisdictions, as applicable
and, if the Purchaser Guarantor so requests, the transferor shall deliver
to the Purchaser Guarantor an opinion, reasonably satisfactory to the
Purchaser Guarantor, of counsel to the transferor as to such compliance.
10.5 (a) (i) Each certificate evidencing outstanding Convertible Preferred
Stock held of record or owned beneficially, directly or
indirectly, by the Vendor or a Permitted Transferee shall bear
the following legend:
32
"THE SHARES OF PREFERRED STOCK, WITH LIQUIDATION PREFERENCE $100
PER SHARE, OF THE COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD ABSENT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE ACT. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO [ ]."
(ii) Each certificate evidencing shares of common stock of the
Purchaser Guarantor of par value US$0.01 per share issuable upon
conversion of the shares of Convertible Preferred Stock held of
record or owned beneficially, directly or indirectly, by the
Vendor or a Permitted Transferee shall bear the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE
COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED PRIOR TO [ ] AND, THEREAFTER, ONLY IN
COMPLIANCE WITH THE PROVISIONS OF THE SALE AND PURCHASE AND
SUBSCRIPTION AGREEMENT, DATED 15TH NOVEMBER, 1999, AMONG
XXXXXXXXX WHAMPOA LIMITED, XXXXXXXXX TELECOMMUNICATIONS LIMITED,
GLOBAL CROSSING LTD., GLOBAL CROSSING LTD. AND HCL HOLDINGS
LIMITED."
(b) At any time after the second anniversary of the Completion Date, each
Person who is the record holder of Convertible Preferred Stock may
surrender to the Purchaser Guarantor any certificates held of record
by such Person and bearing the legend set forth in Clause 10.5(a), and
upon surrender of such certificates, the purchaser Guarantor shall
reissue such certificates without such legend. The Purchaser Guarantor
shall not include any legend on any certificate issued or reissued
that it determines is no longer applicable or required by this
Agreement or applicable securities laws.
10.6 At Completion, the relevant parties will enter into the Registration Rights
Agreement.
11. REMEDIES AND WAIVERS
11.1 Any party may, in its discretion, by a notice in writing signed by such
party, in whole or in part release, compound or compromise, or waive its
rights or grant time or indulgence
33
in respect of, any liability to it under this Agreement without in any way
prejudicing or affecting the liability of or its rights in respect of the
same or a like liability.
11.2 Neither the single or partial exercise or temporary or partial waiver by
any party hereto of any right, nor the failure by any party to exercise in
whole or in part any right or to insist on the strict performance of any
provision of this Agreement, nor the discontinuance, abandonment or adverse
determination of any proceedings taken by any party to enforce any right or
any such provision shall (except for the period or to the extent covered by
any such temporary or partial waiver) operate as a waiver of, or preclude
any exercise or enforcement or (as the case may be) further or other
exercise or enforcement by such party of, that or any other right or
provision.
11.3 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
12. ASSIGNMENT
Except as contemplated by Clause 2.3, the rights or benefits of or under
this Agreement, including without limitation the Warranties, may not be
assigned (nor may any cause of action arising in connection with any of
them be assigned) by any party or its successor in title without the prior
written consent of the other parties.
13. ACCESS AND FURTHER ASSURANCE
13.1 As from the date of this Agreement, the Purchaser, its accountants and
agents will be given full access during normal business hours to the
premises and all the books and records of each Group Company and the
directors and employees of each Group Company and each Group Company will
be instructed to give promptly all information and explanation to the
Purchaser or any such persons as they may reasonably request.
13.2 Subject to Completion, each party agrees with and undertakes to the other
parties that at any time and from time to time upon the written request of
the other parties, such party will:
(a) promptly and duly execute and deliver any and all such further
instruments and documents and do or procure to be done all and any
such acts or things as any other party may reasonably deem necessary
in obtaining the full benefits of this Agreement and of the rights and
ownership herein granted; and
(b) do or procure to be done each and every act or thing which any other
party may from time to time reasonably require to be done for the
purpose of enforcing such other party's rights under this Agreement.
34
14. ENTIRE AGREEMENT
14.1 This Agreement together with all other documents which are referred to in
this Agreement or are required by its terms to be entered into constitute
the entire agreement and understanding between the parties relating to the
transactions hereby contemplated.
14.2 No purported alteration or variation of this Agreement shall be effective
unless it is in writing, refers specifically to this Agreement and is duly
executed by each of the parties hereto.
15. NOTICES
15.1 Any notice or other communication given or made under or in connection with
the matters contemplated by this Agreement shall be in writing (other than
writing on the screen of a visual display unit or other similar device
which shall not be treated as writing for the purposes of this Clause) and
shall be deemed to be duly given if it (or the envelope containing it)
identifies the party to whom it is intended to be given as the addressee
and:
(a) it is delivered by being handed personally to the addressee; or
(b) the envelope containing the notice is properly addressed to the
addressee at its address set out below and duly posted by first class
mail or registered post or recorded delivery service (or by airmail
registered post if overseas) or the notice is duly transmitted to that
address by facsimile transmission, and, in proving the giving or
service of such notice, it shall be sufficient to prove that the
notice was duly given within the meaning of this Clause 15.1.
15.2 A notice (or the envelope containing it) sent by post shall not be deemed
to be duly posted for the purposes of Clause 15.1 unless it is put into the
post properly stamped or with all postal or other charges in respect of it
otherwise prepaid.
15.3 Any such notice or other communication shall be addressed as provided in
Clause 15.4 and, if so addressed, shall be deemed to have been duly given
and received as follows:
(a) if sent by personal delivery, upon delivery at the address of the relevant
party;
(b) if sent by post, two (or, when sent by airmail, five) Business Days after
the date of posting; and
(c) if sent by facsimile, when despatched upon receipt of a correct
transmission report
35
provided that if, in accordance with the above provisions, any such notice
or other communication would otherwise be deemed to be given or made
outside working hours, such notice or other communication shall be deemed
to be given or made at the start of working hours on the next Business Day.
15.4 The relevant addressee, address and facsimile number of each party for the
purposes of this Agreement, subject to Clause 15.5, are:
Xxxxxxxxx Whampoa Limited
Address: 00xx Xxxxx, Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Attn: The Company Secretary
Facsimile No.: 2128-1778
Xxxxxxxxx Telecommunications Limited
Address: 00xx Xxxxx, 0 Xxxxxxx Xxxxx
00 Xxx Xxxx Xxxxxx
Xxxx Xxx
Xxxxxxx
Xxxx Xxxx
Attn: The Finance Director
Facsimile No.: 2128-3104
36
Global Crossing Ltd.
Address: c/o Global Crossing Development Co.
000X Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx
XX00000
Attn: General Counsel
Facsimile No.: 000-000-0000
HCL Holdings Limited
Address: c/x Xxxxxxxxx Telecommunications Limited
18th Floor, 2 Harbour Front
00 Xxx Xxxx Xxxxxx
Xxxx Xxx
Xxxxxxx
Xxxx Xxxx
Attn: The Finance Director
Facsimile No.: 2128-3104
15.5 A party may notify the other parties to this Agreement of a change of its
name, relevant addressee, address or facsimile number for the purposes of
Clause 15.4 provided that such notification shall only be effective on:
(a) the date specified in the notification 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
falling five clear Business Days after notice of any such change has
been given.
16. ANNOUNCEMENTS
16.1 Subject to Clause 16.2, no party to this Agreement shall make any public
announcement or public communication or despatch any circular concerning
this Agreement or the transactions or arrangements hereby contemplated or
herein referred to or any matter ancillary hereto or thereto without the
prior written consent of the other parties to this Agreement.
16.2 Each party may after consultation with the other parties (if practicable in
the circumstances) make an announcement or communication or despatch a
circular concerning this Agreement and the transactions hereby contemplated
if required by:
(a) the law of any relevant jurisdiction; or
(b) a court of competent jurisdiction, any securities exchange or
regulatory or governmental body to which any party is subject,
wherever situated, including but not limited to The Stock Exchange of
Hong Kong Limited, the Securities and
37
Futures Commission, the SEC, the NASDAQ Stock Market or the National
Association of Securities Dealers, whether or not the requirement has the
force of law.
17. COST AND EXPENSES
17.1 Except as otherwise stated in Clauses 17.2 and 17.3 and any other provision
of this Agreement, each party shall pay its own costs and expenses
(including the fees and costs of any investment bank, lawyers and
accountants engaged by it) in relation to the negotiations leading up to
the transactions contemplated hereunder and to the preparation, execution
and carrying into effect of the Relevant Agreements and all other documents
referred to in them which relate to the transactions contemplated under
them. Without limiting that generality, the Vendor and the Vendor Guarantor
shall bear all costs and expenses (including all stamp and similar duties
and taxes) incurred in doing what is required to be done under Clause 4.5.
17.2 Any stamp duty payable in connection with the transfer of the Vendor Share
shall be shared between the Vendor and the Purchaser in equal proportions.
Any capital or similar duty payable on or preparatory to the issue of the
New Share shall be paid by the Company.
17.3 Any capital duty, fees or expenses payable in connection with the issue and
allotment of Convertible Preferred Stock pursuant to this Agreement shall
be borne by the Purchaser Guarantor.
18. TIME OF ESSENCE
Time shall be of the essence of this Agreement as regards any time, date or
period fixed by this Agreement for the performance of any obligation by any
of the parties hereto whether as originally fixed or as altered in any
manner provided herein.
19. EXECUTION AND COUNTERPARTS
This Agreement may be executed in one or more counterparts each of which
shall be binding on each party by whom or on whose behalf it is so
executed, but which together shall constitute a single instrument. For the
avoidance of doubt, this Agreement shall not be binding on any party hereto
unless and until it shall have been executed by or on behalf of all persons
expressed to be party hereto.
20. INVALIDITY
Each provision of this Agreement is severable and distinct from the others
and if at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
that shall not affect or impair:
38
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
21. GOVERNING LAW AND JURISDICTION
21.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
21.2 The parties to this Agreement irrevocably agree that the courts of England
are to have jurisdiction to settle any disputes which may arise out of or
in connection with this Agreement and that accordingly any Proceedings may
be brought in such courts. Nothing contained in this clause shall limit the
right of any of the parties to take Proceedings against any other party in
any other court of competent jurisdiction, nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction, whether concurrently or not, to the extent
permitted by the law of such other jurisdiction.
22. AGENTS FOR SERVICE
22.1 The Purchaser and the Purchaser Guarantor hereby irrevocably agree that any
Service Document may be sufficiently and effectively served on it in
connection with Proceedings by service on Global Crossing Ltd. at 0xx
Xxxxx, Xxxxxxxxxx House, 00-00 Xxxxxxx Xxxxxx, Xxxxxx X0X 0XX, Xxxxxxx, if
no replacement agent has been appointed and notified to the other parties
pursuant to Clause 22.4, or on the replacement agent if one has been
appointed and notified to the other parties.
22.2 The Vendor, the Vendor Guarantor and the Company hereby irrevocably agree
that any Service Document may be sufficiently and effectively served on it
in connection with Proceedings by service on its agent The Law Debenture
Corporation plc at 00 Xxxxxxx Xxxxxx, Xxxxxx, XX0X 0XX, Xxxxxxx, if no
replacement agent has been appointed and notified to the other parties
pursuant to Clause 22.4, or on the replacement agent if one has been
appointed and notified to the other parties.
22.3 Any document addressed in accordance with Clause 22.1 or 22.2 shall be
deemed to have been duly served if:
(a) left at the specified address, when it is left; or
(b) sent by first class post, two Business Days after the date of posting.
22.4 If any agent referred to in Clause 22.1 or 22.2 (or any replacement agent
appointed pursuant to this Clause) at any time ceases for any reason to act
as such or the original appointer wishes to appoint a replacement agent,
the original appointer shall appoint a
39
replacement agent to accept service having an address for service in
England and shall notify the other parties of the name and address of the
replacement agent. If the Purchaser or the Purchaser Guarantor does not do
this, each of them irrevocably authorises the Vendor to do it on their
behalf. If the Vendor or the Vendor Guarantor does not do this, each of
them irrevocably authorises the Purchaser to do it on their behalf.
22.5 "Service Document" means a writ, summons, order, judgement or other process
issued out of the courts of England in connection with any Proceedings.
IN WITNESS whereof this Agreement has been duly executed on the date first
above written.
40
SIGNED by XXX XXX NING, CANNING )
for and on behalf of )
XXXXXXXXX WHAMPOA LIMITED ) XXX XXX NING, CANNING
(as Vendor Guarantor) )
in the presence of: )
XXXX XXXXXX XXXXX XX
Solicitor, Hong Kong SAR
SIGNED by XXX XXX NING, CANNING )
for and on behalf of )
XXXXXXXXX TELECOMMUNICATIONS ) XXX XXX NING, CANNING
LIMITED (as Vendor) )
in the presence of: )
XXXX XXXXXX XXXXX XX
Solicitor, Hong Kong SAR
SIGNED by XXXX XXXXXXX )
for and on behalf of )
GLOBAL CROSSING LTD. (as Purchaser ) XXXX XXXXXXX
and Purchaser Guarantor) )
in the presence of: )
ST.X.X. XXXXXXXX
Solicitor, Hong Kong SAR
Xxxxxxxxx and May
SIGNED by XXX XXX NING, CANNING )
for and on behalf of )
HCL HOLDINGS LIMITED ) XXX XXX NING, CANNING
(as the Company) )
in the presence of: )
XXXX XXXXXX XXXXX XX
Solicitor, Hong Kong SAR
41
SCHEDULE 1:
Particulars of HCL Holdings Limited
Name : HCL Holdings Limited
1. Registered office : X.X. Xxx 000, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
0. Date of Incorporation : 10th September, 1992
Incorporation Number: 69098
Place of Incorporation : British Virgin Islands
3. Directors : KHOO Chek Ngee
CHAN Xxxx Xx
XXXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of one dollar
(US$1.00) par value each
Issued: US$1.00 comprising one share of US$1.00 (as at the date of
this Agreement)
: US$3.00 divided into three shares of US$1.00 each
(immediately prior to Completion)
6. Shareholders:
Registered Shareholder Beneficial Shareholder No. of shares No. of shares
---------------------- ---------------------- ------------- -------------
(as at the date of (immediately prior to
this Agreement) Completion)
Vendor Vendor -1- -3-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
42
SCHEDULE 2:
Part 1
Particulars of HCL
Name : Xxxxxxxxx Communications Limited
1. Registered office: 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx, Xxxx Xxxx
2. Date of Incorporation : 22nd October, 1992
Incorporation Number: 385946
Place of Incorporation : Hong Kong
3. Directors : XXXXX Xxxx Xxxxx
XXX Kin Ning, Canning
KHOO Chek Ngee
CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXXX Xxxxx
XXXX Xxxxx Xxxx
XXXX Xxxx Xxx, Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 shares of HK$10.00 each
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
HCL Holdings Limited HCL Holdings Limited -1-
Colonial Nominees Limited HCL Holdings Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
43
Part 2
Particulars of Carmarthen Limited
Name: Carmarthen Limited
1. Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 8th January, 1999
Incorporation Number: 307753
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxxxxxx Communications Limited Xxxxxxxxx Communications Limited -1-
7. Financial Year End : 31st December
44
Part 3
Particulars of Xxxxx Town Limited
Name: Xxxxx Town Limited
1. Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 18th January, 1999
Incorporation Number: 308988
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Carmarthen Limited Carmarthen Limited -1-
7. Financial Year End : 31st December
45
Part 4
Particulars of Xxxxxxxxx Global Net Limited
Name: Xxxxxxxxx Global Net Limited
1. Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx, Xxxx Xxxx
2. Date of Incorporation : 18th December, 1996
Incorporation Number: 581796
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXX Chek Ngee
XXXXX Xxxxx
XXXX Xxxx Xxx, Xxxxx
XXXX Xxxxx Xxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 shares of HK$10.00 each
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Penstock Limited Penstock Limited -1-
Colonial Nominees Limited Penstock Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
46
Part 5
Particulars of Xxxxxxxxx MultiMedia Services Limited
Name: Xxxxxxxxx MultiMedia Services Limited
1. Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx, Xxxx Xxxx
2. Date of Incorporation : 15th February, 1996
Incorporation Number: 539375
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXXX Xxxxx
XXXX Chek Ngee
XXXX Xxxxx Xxxx
XXXX Xxxx Xxx, Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 share of HK$10.00 each
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxxxxxx Limited Xxxxxxxxx Limited -1-
Colonial Nominees Ltd. Xxxxxxxxx Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
47
Part 6
Particulars of Xxxxxxxxx Limited
Name: Xxxxxxxxx Limited
1. Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 25th March, 1996
Incorporation Number: 179999
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
SIXT Xxxxx Xxxx
XXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxxxxxx Communications Limited Xxxxxxxxx Communications Limited -1-
7. Financial Year End : 31st December
48
Part 7
Particulars of Penstock Limited
Name : Penstock Limited
1. Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 8th August, 1997
Incorporation Number: 243382
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXXX Xxxxx Xxxx
XXX Pok Man, Xxxxxx
XXXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxxxxxx Communications Limited Xxxxxxxxx Communications Limited -1-
7. Financial Year End : 31st December
49
Part 8
Particulars of Timbo Star Investment Limited
Name: Timbo Star Investment Limited
1. Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx, Xxxx Xxxx
2. Date of Incorporation : 10th February, 1999
Incorporation Number: 667392
Place of Incorporation : Hong Kong
3. Directors : XXX Xxx Ning, Canning
CHOW WOO Mo Xxxx, Xxxxx
XXX Xxx Man, Xxxxxx
XXXXX Xxxxx
XXXX Xxxx Xxx, Xxxxx
XXXX Xxxxx Xxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
Issued: HK$2.00 divided into 2 shares of HK$1.00 each
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxx Town Limited Xxxxx Town Limited -1-
Colonial Nominees Limited Xxxxx Town Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
50
Part 9
Particulars of HCL Partnership Holdings Limited
Name: HCL Partnership Holdings Limited
1. Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx, Xxxx Xxxx
2. Date of Incorporation : 15th January, 1999
Incorporation Number: 590569
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Xxxx, Xxxxx
XXXX Xxxxx Xxxx
XXX Pok Man, Xxxxxx
XXXXX Xxxxx
4. Secretary : XXXX Xxxxx
5. Share Capital: Authorised: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
Issued: HK$2.00 divided into 2 shares of HK$1.00 each
6. Shareholders:
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Xxxxxxxxx Communications Limited Xxxxxxxxx Communications Limited -1-
Colonial Nominees Limited Xxxxxxxxx Communications Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
51
SCHEDULE 3:
Completion Requirements
At Completion, all of the matters set out or referred to in this Schedule 3
shall be transacted:
1. Obligations of the Vendor
1.1 The Vendor shall deliver or cause to be delivered to the Purchaser :
(a) duly executed instruments of transfer in favour of the Purchaser
and/or its nominee in respect of the Vendor Share;
(b) counterparts of the Shareholders Agreement, the Tax Covenant and the
Registration Rights Agreement duly executed by the Vendor; and
(c) a certified copy of resolutions of its board of directors authorising
its execution and performance of this Agreement, the Shareholders
Agreement and the Tax Covenant.
1.2 The Vendor shall procure that each Vendor Party (other than itself, the
Company and the Vendor Guarantor) shall deliver or cause to be delivered to
the Purchaser:
(a) a counterpart of each Relevant Agreement to which that Vendor Party is
a party duly executed by that Vendor Party; and
(b) a certified copy of resolutions of that Vendor Party's board of
directors authorising its execution and performance of each Relevant
Agreement to which that Vendor Party is a party.
2. Obligations of the Company
2.1 The Company shall deliver or cause to be delivered to the Purchaser:
(a) share certificates in the name of the Purchaser and/or its nominee in
respect of the Vendor Share and the New Share;
(b) counterparts of the Shareholders Agreement and the Tax Covenant duly
executed by the Company; and
(c) a certified copy of resolutions of the board of directors of the
Company:
(i) approving and passing for registration the transfer in respect
of the Vendor Share delivered pursuant to paragraph 1.1(a) of
this Schedule 3;
(ii) issuing and allotting the New Share to the Purchaser and/or its
nominee;
52
(iii) authorising the issue of new share certificates in the name of
the Purchaser and/or its nominee in respect of the Vendor Share
and the New Share; and
(iv) authorising its execution and delivery of this Agreement, the
Shareholders Agreement and the Tax Covenant.
3. Obligations of the Vendor Guarantor
The Vendor Guarantor shall deliver or cause to be delivered to the
Purchaser:
(a) counterparts of each Relevant Agreement to which the Vendor Guarantor
is a party duly executed by the Vendor Guarantor; and
(b) a certified copy of resolutions of its board of directors authorising
the execution and performance by the Vendor Guarantor of each Relevant
Agreement to which it is a party.
4. Obligations of the Purchaser
4.1 The Purchaser shall deliver or cause to be delivered to the Vendor:
(a) counterparts of the Shareholders Agreement and the Tax Covenant duly
executed by the Purchaser; and
(b) a certified copy of resolutions of its board of directors authorising
execution and performance of this Agreement, the Tax Covenant and the
Shareholders Agreement.
4.2 The Purchaser shall procure that each Purchaser Party (other than itself
and the Purchaser Guarantor) shall deliver or cause to be delivered to the
Vendor:
(a) a counterpart of each Relevant Agreement to which that Purchaser Party
is a party duly executed by that Purchaser Party; and
(b) a certified copy of resolutions of the board of directors of that
Purchaser Party authorising its execution and performance of each
Relevant Agreement to which that Purchaser Party is a party.
4.3 The Purchaser shall pay (or procure that there shall be paid) to the
Company US$50,000,000 in immediately available funds.
5. Obligations of the Purchaser Guarantor
The Purchaser Guarantor shall deliver or cause to be delivered to the
Vendor:
53
(a) stock certificates in the name of the Purchaser and/or its nominees in
respect of the Convertible Preferred Stock;
(b) counterparts of the Shareholders Agreement, the Tax Covenant and the
Registration Rights Agreement duly executed by the Purchaser
Guarantor; and
(c) a certified copy of resolutions of the board of directors of the
Purchaser Guarantor:
(i) issuing and allotting the Convertible Preferred Stock;
(ii) authorising the issue of stock certificates in respect of the
Convertible Preferred Stock in the name of the Vendor and/or its
nominee; and
(iii) authorising its execution and performance of this Agreement,
the Shareholders Agreement and the Tax Covenant.
54
SCHEDULE 4:
Conduct of Business before Completion
Without limitation to Clause 4.4, the Vendor and the Vendor Guarantor undertake
with the Purchaser and the Purchaser Guarantor that they will procure that no
Group Company shall between the time of this Agreement and Completion, other
than exclusively in relation to the Excluded Businesses:
(a) dispose of, agree to dispose of, or grant or agree to grant any option in
respect of, any material part of its assets; or
(b) enter into any individual contract or commitment which;
(i) relates to matters not within the ordinary business of that Group
Company or it exceeds HK$10 million in value; or
(ii) is of 18 months or greater duration, or if it has no specified
duration, it may not be terminated on less than six months' notice;
or
(iii) can be terminated in the event of any change in the underlying
ownership or control of the Group Company that is a party to that
contract or commitment;
(c) declare, make or pay any dividend or other distribution; or
(d) create, grant or issue, or agree to create, grant or issue, any mortgages,
charges (other than liens arising by operation of law), debentures or other
securities or redeem or agree to redeem any such securities or give or
agree to give, any guarantees or indemnities, except, in the case of
guarantees and indemnities, in the ordinary course of trading and except
the proposed issuance of shares in Timbo Star Investment Limited as
described in the Disclosure Letter; or
(e) create, allot or issue or agree to create, allot or issue any shares or
other securities of whatsoever nature convertible into shares; or
(f) create, issue, redeem or grant any option or right to subscribe in respect
of any share capital or agree so to do; or
(g) borrow (other than by bank overdraft or similar facility in the ordinary
course of business and within limits subsisting at the date of this
Agreement) any money or agree so to do other than interim funding as
permitted by Clause 4.6; or
(h) make any capital commitment with an individual contract value of HK$5
million or more, including for this purpose, the acquisition of any capital
asset under a finance lease; or
55
(i) make a capital commitment, which, together with all other such capital
commitments entered into between the date hereof and Completion, exceeds
the sum of HK$175 million in the aggregate; or
(j) dispose of any fixed asset having a net book value in excess of HK$10
million or fixed assets having an aggregate book value in excess of HK$20
million; or
(k) fail to take any action required to maintain any of its insurances in force
or knowingly do anything to make any policy of insurance void or voidable;
or
(l) alter the provisions of its memorandum and articles of association or by-
laws or adopt or pass further regulations or resolutions inconsistent
therewith; or
(m) change its financial year end; or
(n) make any substantial change in the nature or organisation of its business
(other than the acts described in Clause 4.5(d)); or
(o) discontinue or cease to operate all or a material part of its business
(other than pursuant to the Excluded Business Transfer Arrangements); or
(p) change its residence for Taxation purposes, change any Taxation election,
change any annual Taxation accounting period, change any method of Taxation
accounting, file any material amended Taxation return, settle any material
Taxation claim or assessment, surrender any right to claim a Taxation
refund or consent to any extension or waiver of the limitations period
applicable to any Taxation claim or assessment; or
(q) reduce its share capital or purchase its own shares; or
(r) transfer all or any material part of its business or assets to any other
Group Company (other than pursuant to the Excluded Business Transfer
Arrangements); or
(s) engage or dismiss other than for cause any employee (except where the
engagement or dismissal process has already commenced) or make any
variation to the terms and conditions of employment of any employees other
than in the ordinary course of business; or
(t) pass any resolutions in general meeting or by way of written resolution,
including, without limitation, any resolution for winding-up, or to
capitalise any profits or any sum standing to the credit of share premium
account or capital redemption reserve fund or any other reserve; or
(u) make any change to the accounting procedures or principles by reference to
which its accounts are drawn up
56
(v) enter into or modify any transaction or arrangement with the Vendor or the
Vendor Guarantor or any of their respective Affiliates (other than pursuant
to the Excluded Business Transfer Arrangements or as provided for in Clause
4.5(d) and other than (i) contracts with Affiliates for the supply of
consumer goods in the ordinary course of business, (ii) the supply of
telecommunications services in the ordinary course of business and (iii)
the provision or purchase of services in accordance with existing practice
and with no material change in terms or amounts of payment); or
(w) take any action related to developing, building, acquiring, operating or
leasing a cable landing station.
except in each case with the prior written consent of the Purchaser (not to be
unreasonably withheld in the case of the matters referred to in paragraph (r)
above) and except as expressly provided in the Relevant Agreements.
57
SCHEDULE 5:
Warranties
Part 1
Vendor
The Vendor hereby represents and warrants as follows:
1. Accounts
1.1 Accounts
--------
Each of the HCL Accounts, the HMSL Accounts, the HGNL Accounts and the
Partnership Accounts:
(1) have been prepared on a basis consistent with previous balance sheets
and profit and loss accounts of the Group Companies and in accordance
with generally accepted accounting principles in Hong Kong;
(2) comply (to the extent that they are required to do so) in all material
respects with the Companies Ordinance and all other applicable
ordinances, statutes and regulations;
(3) show a true and fair view of the state of affairs, assets and
liabilities, profit and/or loss and financial position of the Group
Companies as at the Accounts Date and of the results for the financial
period ended on such date and are not affected by any unusual or non-
recurring items not disclosed therein;
(4) make proper provision for the liabilities of the Group Companies as at
the Accounts Date in accordance with generally accepted accounting
principles referred to in (1) above; and
(5) make proper provision for the bad and doubtful debts and all Taxation
not yet due and payable in accordance with generally accepted
accounting principles referred to in (1) above.
1.2 Contingent Amounts
------------------
At the Accounts Date, no Group Company had any liability, contingent,
unquantified or disputed liability or outstanding capital commitment which
is not adequately disclosed or provided for in the Accounts (provided that
such liability or commitment was required to be disclosed in the Accounts
pursuant to generally accepted accounting principles in Hong Kong).
58
1.3 Books and records
-----------------
All the accounts, books, ledgers and records of each of the Group Companies
and of the HCL Network Partnership have been maintained in accordance with
generally accepted accounting principles standards and practices applied in
Hong Kong.
1.4 Proforma 1998 Accounts and Management Accounts
----------------------------------------------
Each of the Proforma 1998 Accounts and the Management Accounts have been
prepared in good faith in accordance with generally accepted accounting
principles and policies in Hong Kong and:
(1) are true and fair in all material respects as at the Accounts Date and
the Management Accounts Date respectively; and
(2) make proper provision for the liabilities of the relevant Group
Company as at the Management Accounts Date in accordance with the
generally accepted accounting principles in Hong Kong.
2. Corporate matters and Information
2.1 Incorporation
-------------
Each of the Group Companies is duly incorporated or established and validly
existing under the laws of its place of incorporation or establishment, and
the amount and particulars of its share capital and other particulars set
out in Schedule 2 are and will on Completion be true and accurate.
2.2 Options and Encumbrances
------------------------
(1) There are no agreements or arrangements in force which provide for the
present or future issue, allotment or transfer of or grant to any
person the right (whether conditional or otherwise) to call for the
issue, allotment or transfer of any share, interest or loan capital of
any of the Group Companies (including any option or right of pre-
emption or conversion).
(2) No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on, over
or affecting the whole or any part of the undertaking or assets of any
Group Company (including any investment in any other Group Company or
any share in the HCL Network Partnership) or any asset comprising part
of the partnership property of the HCL Network Partnership is
outstanding and there is no agreement or commitment to give or create
any and no claim has been made by any person to be entitled to any.
59
2.3 New issues of capital
---------------------
No share or loan capital has been issued or allotted, or agreed to be
issued or allotted, by any of the Group Companies since the Accounts Date
and there will not be any such issue or allotment or agreement to issue or
allot prior to Completion except for the New Share to be issued under this
Agreement.
2.4 Constitutional documents, statutory books and resolutions
---------------------------------------------------------
(1) The Vendor has delivered to the Purchaser a true and complete copy of
the memorandum and articles of association or such other similar
constitutional documents of each of the Group Companies and a true and
complete copy of the partnership agreement dated 30th June, 1994
relating to the HCL Network Partnership (the "1994 Partnership
Agreement").
(2) Since the Accounts Date no alteration has been made to the memorandum
or articles of association or other similar constitutional documents
of any of the Group Companies and since 30th June, 1994 no alteration
has been made to the 1994 Partnership Agreement.
(3) The register of members and other statutory books of each Group
Company have been properly kept and maintained in accordance with all
laws applicable thereto and contain an accurate and complete record of
the matters which they contain.
(4) No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received.
2.5 Documents filed
---------------
All returns, particulars, resolutions and documents required by the
Companies Ordinance or any other legislation to be filed with the Registrar
of Companies or any other authority in Hong Kong or the British Virgin
Islands in respect of each of the Group Companies have been duly filed and
were correct when filed.
2.6 Vendor Share and New Share
--------------------------
The Vendor Share and the New Share will at Completion be free from all
liens, charges, encumbrances and third party rights whatsoever, the Vendor
will at Completion be beneficially entitled to and/or able to procure the
sale and transfer or otherwise dispose of the Vendor Share and the Company
will at Completion be entitled to issue and allot the New Share. The
Company has not exercised any lien over any of its shares and each of the
Vendor Share and the New Share will be fully-paid at Completion. No
consent of any third party is required to be obtained in relation to the
transfer of the Vendor Share or the issue and allotment of the New Share.
The Vendor Share and the New Share will at Completion comprise one half of
the issued and allotted share capital
60
of the Company and all of the Shares will be fully paid up or credited as
fully paid up at Completion.
2.7 Interest in companies
---------------------
At Completion the Company will (itself or through one or more other Group
Companies) own the entire legal and beneficial interest in the whole of the
issued share capital of each Group Company (other than itself). Except for
the interests of HCL and HCL Network Partnership Holdings Limited in the
Partnership Agreement, each Group Company is not and will not at Completion
be the owner or the registered holder of any share or interest in or other
security of or directly or indirectly interested in any body corporate,
partnership, joint venture or any form of equity wherever incorporated or
established. The information in Schedule 2 and in Recitals (A), (B) and
(C) to this Agreement is accurate in all respects.
2.8 Corporate authority
-------------------
Each of the Group Companies has full power, authority and legal right to
own its assets and carry on its business. Each of the partners of the HCL
Network Partnership has full power, authority and legal right to own the
assets comprising the partnership property of the HCL Network Partnership
and to carry on the business of the HCL Network Partnership.
3. Taxation
3.1 Administration
--------------
(1) All returns, notifications, documents, computations and payments which
should be or should have been made by any of the Group Companies or by
or on behalf of the HCL Network Partnership for any Taxation purpose
have been duly made within the requisite periods and are up-to-date,
correct and on a proper basis and none of them is or is likely, in the
Vendor's reasonable judgment, to be the subject of any dispute,
disagreement or audit between any of the Group Companies or any person
on behalf of the HCL Network Partnership and the Inland Revenue
Department or any other Taxation Authority.
(2) Each of the Group Companies and the HCL Network Partnership has
complied in all respects with all laws, regulations, legislation,
decrees or orders relating to Taxation applicable to such Group
Company or the HCL Network Partnership, including, without limitation,
all laws, regulations, legislation, decrees or orders requiring the
deduction or withholding of Taxation from amounts paid or received by
such Group Company or the HCL Network Partnership, whether on its own
behalf or as agent, and has kept and retained all records and
documents appropriate or requisite for the purposes of any such laws,
regulations, legislation, decrees or orders.
61
3.2 Taxation claims, liabilities and reliefs
----------------------------------------
(1) (Except as reflected in the Management Accounts) since the Accounts
Date, no event has occurred which has given rise or will or is likely
to give rise to a liability to Taxation on any Group Company or the
HCL Network Partnership other than Taxation on the trading profits or
business profits of such Group Company or the HCL Network Partnership
accruing or arising since the Accounts Date.
(2) Each of the Group Companies and the HCL Network Partnership has paid
all Taxation for which it is liable and which has become due and
payable (including, without limitation, any Taxation required to be
deducted or withheld by it, whether on its own behalf or as agent) to
the Inland Revenue Department or other Taxation Authority on the due
date for payment thereof and is under no liability to pay any penalty
or interest in connection therewith.
(3) None of the Group Companies or the HCL Network Partnership has made
or is under any obligation to make any payment of interest which is
wholly or partly disallowed as deductions against its profits.
3.3 Records and other
-----------------
(1) Where applicable, each of the Group Companies and the HCL Network
Partnership has sufficient and accurate records relating to past
events during the seven (7) years prior to Completion or the period
from the date of incorporation (or, in the case of the HCL Network
Partnership, 30th June, 1994) to Completion (whichever is shorter) to
calculate the tax liability or relief which would arise on any
disposal or realisation of any asset owned at the Management Accounts
Date or acquired since the Management Accounts Date.
(2) No Group Company has received notice of an assessment or claim against
it or against the HCL Network Partnership nor has any Affiliate of a
Group Company received notice of an assessment or claim against any
Group Company or against the HCL Network Partnership in relation to
any alleged deficiency in Taxation.
(3) None of the Group Companies or the HCL Network Partnership (a) is a
party to any Taxation allocation or sharing agreement other than with
another Group Company, (b) has in the last six years been a member of
any group filing a combined or consolidated Taxation return (other
than a group the common parent of which was HWL or a Group Company) or
(c) has any liability for the Taxation of any person (other than of
any Group Company), whether primary or secondary, and whether as a
transferee or successor, by contract, by operation of law, or
otherwise.
62
(4) No Group Company nor any Affiliate of a Group Company has received
notice that a claim for unpaid Taxation has become a lien against the
property of any Group Company or the HCL Network Partnership or is
being asserted against any Group Company or the HCL Network
Partnership.
(5) There are no outstanding agreements, waivers or arrangements extending
the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxation due from or with
respect to any Group Company or the HCL Network Partnership for any
taxable period, and no power of attorney granted by or with respect to
any Group Company or the HCL Network Partnership relating to Taxation
is currently in force.
(6) The amount of Taxation chargeable on each of the Group Companies or
the HCL Network Partnership since 1st January, 1993 has not to any
material extent depended on any concession, agreement, dispensation or
other formal arrangement with any Taxation Authority in circumstances
where either:
(a) the Vendor has received notice that the availability of any such
arrangement will be prejudiced as a result of the acquisition or
change of control of the Group Companies resulting from this
Agreement or the restructuring of the HCL Network Partnership
described in Clause 4.5(d); or
(b) the Group Company or the HCL Network Partnership has not acted in
accordance with the terms of any such arrangement.
(7) Insofar as the Vendor and the Vendor Guarantor are reasonably aware,
each Group Company and the HCL Network Partnership is and has at all
times been resident for Taxation purposes in its place of
incorporation or, in the case of the HCL Network Partnership, Hong
Kong and is not and has not been treated as resident in any other
jurisdiction for any Taxation purposes (including any double taxation
arrangement).
(8) All stamp duty and similar taxes or duties have been duly paid in
respect of all transactions carried out by the Group Companies and/or
the HCL Network Partnership.
4. Finance
4.1 Dividends and distributions
---------------------------
None of the Group Companies has declared, made or paid any dividends or
distributions since its date of incorporation.
4.2 Bank and other borrowings
-------------------------
63
(1) At Completion no Group Company will have outstanding any Indebtedness
(as defined in paragraph (2) below) except as may be permitted by
Clause 4.5(a).
(2) None of the Group Companies has any outstanding mortgages, charges,
debentures or other loan capital or bank overdrafts, loans or other
similar indebtedness, financial facilities, finance leases or hire
purchase commitments or other arrangements which have as their purpose
or effect the raising of finance or any guarantees or other contingent
liabilities in connection with any of the foregoing (collectively,
"Indebtedness") except as reflected in the Accounts or the Management
Accounts or the Disclosure Letter.
(3) No outstanding Indebtedness of any of the Group Companies has become
payable by reason of default by the relevant Group Company and no
event of default has occurred or is pending which with the lapse of
time or the fulfilment of any condition or the giving of notice may
result in any such indebtedness becoming so payable prior to maturity.
4.3 Bank Accounts
-------------
Full details of all bank accounts maintained or used by each Group Company
(whether in its own name or in the name of the HCL Network Partnership)
(including, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) and of all direct
debit or standing order or similar authorities applicable to any of the
accounts.
5. Trading
5.1 Events Since the Accounts Date:
------------------------------
Since the Accounts Date and except as reflected in the Management Accounts:
(1) there has been no adverse change in the financial or trading position
or (save for the effect of changes in general economic, market or
industry (including regulatory) conditions) prospects of the Group or
the HCL Network Partnership;
(2) the business of each Group Company and the HCL Network Partnership has
in all material respects been carried on in the ordinary course of
such business;
(3) each Group Company has not borrowed or raised any money or taken any
financial facility, nor has it repaid or agreed to repay any loan
capital or borrowed moneys in whole or in part or by reason of any
default by it in its obligations;
(4) no dividends bonuses or distributions have been paid declared or made
in respect of any shares or stock of any Group Company;
64
(5) no debts or other receivables and no trading stock, goods, plant,
machinery or equipment of any Group Company or of the HCL Network
Partnership have been factored or sold or agreed to be sold, apart
from the sale of trading stock to trade customers or the public in the
ordinary course of business;
(6) no change in the financial year end of any Group Company or of the HCL
Network Partnership has been made; and
(7) subject to any provision for bad or doubtful debts in the Accounts,
all book debts shown in the Accounts or in the Partnership Accounts
have been realised for an aggregate sum not being less than that shown
in the Accounts or in the Partnership Accounts and no written
indication has been received by HCL or any Group Company or any
Affiliate of any Group Company that any debt now owing to any Group
Company or to the HCL Network Partnership is bad or doubtful.
5.2 Effect of transactions contemplated under this Agreement
--------------------------------------------------------
Neither the execution of any Relevant Agreement nor the compliance with the
terms of any Relevant Agreement does and will:
(1) result in a breach of any of the terms, conditions or provisions of
any encumbrances or leases by which or to which any asset of any of
the Group Companies or any asset comprising part of the partnership of
the HCL Network Partnership is bound or subject;
(2) relieve any person from any obligation to any of the Group Companies
or to the HCL Network Partnership or cause any person to determine any
such obligation or any right or benefit enjoyed by any of the Group
Companies or by the HCL Network Partnership, or to exercise any right
under an agreement with or otherwise in respect of any of the Group
Companies or the HCL Network Partnership;
(3) result in the crystallisation or enforcement of any encumbrance
whatsoever on any of the assets of any of the Group Companies or any
of the assets comprising part of the partnership property of the HCL
Network Partnership; and
(4) result in any present or future indebtedness of any of the Group
Companies becoming due and payable prior to its stated maturity.
65
5.3 Conduct of businesses in accordance with memorandum and articles of
-------------------------------------------------------------------
association or other constitutional documents
---------------------------------------------
Each of the Group Companies has at all times carried on business and
conducted its affairs in all respects in accordance with its memorandum and
articles of association or other similar constitutional documents for the
time being in force.
5.4 Litigation, disputes and winding up
-----------------------------------
(1) None of the Group Companies nor the HCL Network Partnership is engaged
in any litigation or arbitration proceedings as plaintiff or defendant
and there are no such proceedings pending or, to the best of the
knowledge and belief of the Vendor, threatened either by or against
any of the Group Companies or the HCL Network Partnership.
(2) There is no dispute with any revenue or other governmental departments
in Hong Kong or the British Virgin Islands, in relation to the affairs
of any of the Group Companies or of the HCL Network Partnership, and
to the best of the knowledge and belief of the Vendor there are no
facts which may give rise to any such dispute.
(3) No order has been made and no resolution has been passed for the
winding up of any Group Company or any partner in the HCL Network
Partnership or for a provisional liquidator to be appointed in respect
of any Group Company or any partner in the HCL Network Partnership and
no petition has been presented and no meeting has been convened for
the purpose of winding up any Group Company or any partner in the HCL
Network Partnership and no partner in the HCL Network Partnership has
applied for a dissolution of the HCL Network Partnership.
(4) No receiver has been appointed in respect of any Group Company or all
or any of its assets or all or any of the assets comprising the
partnership property of the HCL Network Partnership.
(5) No Group Company nor any partner in the HCL Network Partnership is
insolvent or unable to pay its debts or has stopped paying its debts
as they fall due.
(6) No event analogous to any of the foregoing has occurred in or outside
Hong Kong.
(7) No unsatisfied judgment is outstanding against any Group Company or
the HCL Network Partnership.
5.5 Compliance with statutes etc.
-----------------------------
66
(1) Each of the Group Companies and the HCL Network Partnership has
complied in all respects with all applicable statutes and legislation,
including the Telecommunications Ordinance and the Data Protection
Ordinance (including compliance with the data protection principles in
it).
(2) Each of the Group Companies and the HCL Network Partnership has
conducted and is conducting its business in all respects in accordance
with all applicable laws and regulations of Hong Kong and the British
Virgin Islands.
(3) No Group Company and the HCL Network Partnership has committed or is
liable for any criminal, illegal, unlawful or unauthorised act or
breach of any obligation or duty whether imposed by or pursuant to
statute, contract or otherwise, and no Group Company nor any Affiliate
of any Group Company nor any Affiliate of any Group Company has
received notice that any such claim remains outstanding against any
such Group Company or the HCL Network Partnership.
(4) So far as the Vendor and the Vendor Guarantor are aware no Group
Company nor any Affiliate of any Group Company has received
notification that any investigation or inquiry is being conducted by
any governmental or other body in respect of the affairs of any Group
Company or of the HCL Network Partnership and the Vendor and the
Vendor Guarantor are not aware of any circumstances which would give
rise to such investigation or inquiry.
5.6 Contracts and Related Matters
-----------------------------
(1) No Group Company nor the HCL Network Partnership is a party to any
contracts with a term in excess of one year (except for routine
confidentiality agreements and for contracts included in the list of
contracts set forth in Exhibit D and E). Except for the Relevant
Agreements (and for those listed in Exhibit D and E and for those
which are to be replaced by the Relevant Agreements) there are no
agreements or arrangements subsisting and no indebtedness (actual or
contingent) between (i) any Group Company or the HCL Network
Partnership and (ii) the Vendor Guarantor or any of their respective
Affiliates or subsidiaries and termination of any such agreements or
arrangements has not had and will not have a material effect on the
Group (including its financial or trading position or prospects).
(2) Except for those contracts included in the list of contracts set forth
in Exhibit D-I no Group Company nor the HCL Network Partnership is a
party to or has any liability (present or future) under any guarantee
or indemnity or letter of credit or any leasing, hiring, hire
purchase, credit sale or conditional sale agreement or has entered
into any contract or commitment involving, or likely to involve,
obligations or expenditure of HK$20 million.
67
(3) No Group Company nor the HCL Network Partnership is a party to any
non-competition contract or arrangement which restricts its freedom to
carry on its business in any part of the world.
(4) No Group Company nor the HCL Network Partnership and neither the
Vendor nor the Vendor Guarantor is aware of any breach of, or any
invalidity, or grounds for determination, rescission, avoidance or
repudiation of, any contract to which any Group Company nor the HCL
Network Partnership is a party or of any allegation of such a thing.
(5) No Group Company or the HCL Network Partnership is a party to any
contract which falls within any of the cases specified below:
(a) the contract relates to matters not within the scope of business
of the Group Companies to be continued after Completion as
reflected in the Shareholders Agreement; or
(b) the contract can be terminated in the event of any change in the
underlying ownership or control of the Group Company that is a
party to such contract or by the retirement or admission of
partners to the HCL Network Partnership;
and for this purpose "contract" includes any understanding,
arrangement or commitment however described.
(6) No Group Company or the HCL Network Partnership has given any power of
attorney or other authority (express, implied or ostensible) which is
still outstanding or effective to any person to enter into any
contract or commitment on its behalf (other than to its employees to
enter into routine trading contracts in the normal course of their
duties or defined authority to counterparties under normal commercial
contracts to act within the scope of such contracts).
(7) No Group Company or the HCL Network Partnership has applied for or
received any grant, allowance, aid or subsidy from any supranational,
national or local authority or government agency during the last six
years.
(8) Neither in the financial period ending on the Accounts Date nor in the
period since the Accounts Date has any person (together with other
persons connected with him) purchased from or sold to any Group
Company or the HCL Network Partnership more than 10 per cent. of the
aggregate amount of all sales or purchases made by that Group Company
or the HCL Network Partnership during such period, and there is no
person (together with other persons connected with him) on whom any
Group Company or the HCL Network Partnership is substantially
dependent or the cessation of transactions with whom would have a
material adverse effect on the financial position of such Group
Company or the HCL Network Partnership.
68
5.7 Defaults under agreements by the Group Companies or the HCL Network
-------------------------------------------------------------------
Partnership
-----------
(1) None of the Group Companies or the HCL Network Partnership is:
(a) in material default under any agreement to which it is a party;
(b) liable in respect of any material breach of representation or
warranty given under any agreement to which it is a party and
which breach will have a material adverse effect on the financial
position of the Group as a whole.
(2) No material claim of default under any agreement to which any of the
Group Companies or the HCL Network Partnership is a party has been
made and is outstanding against it.
5.8 Other party's defaults
----------------------
To the best of the knowledge and belief of the Vendor, no party to any
agreement with or which is under an obligation to any of the Group
Companies or the HCL Network Partnership is in material default under it.
5.9 Working Capital
---------------
Each Group Company has sufficient working capital for its present
requirements (that is to say, 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 contractual obligations which have been placed with or
undertaken by it.
5.10 Product Liability
-----------------
No Group Company has manufactured, sold or provided any product or service
which does not in any material respect comply with all applicable laws,
regulations or standards or which is defective or dangerous or not in
accordance with any representation or warranty, express or implied, given
in respect of it.
5.11 Trade Regulations
-----------------
None of the businesses or activities of any Group Company or the HCL
Network Partnership as currently conducted could reasonably be expected to
give rise to the imposition of any sanction under any trade regulation
legislation currently in effect.
69
6. Assets
6.1 Insurances
----------
(1) Each Group Company and the HCL Network Partnership has maintained
adequate insurance cover against risks normally insured against by
companies carrying on a similar business in the geographic area in
which the Group Companies and the HCL Network Partnership carry on
their business, and in particular has maintained all insurance
required by statute.
(2) Full details of the insurance policies taken out over the business and
assets of the Group and the HCL Network Partnership at the date hereof
are set out in Exhibit I and all such policies are in full force and
effect and are not void or voidable (on the basis of the facts and
circumstances at the time this Warranty is made or repeated). The
value of all claims outstanding by the Group Companies and the HCL
Network Partnership does not exceed HK$20,000. No event has occurred
(except as described in that Exhibit) which might give rise to any
additional claim.
6.2 Capital Assets
--------------
Since the Accounts Date (except as reflected in the Management Accounts or
as permitted by Clause 4.4), none of the Group Companies or the HCL Network
Partnership has disposed of or realised any capital assets other than in
the ordinary course of business.
7. Consents and Licences
7.1 Licences
--------
(1) The Group holds:
(a) all licences required to be held by the Group under the
Telecommunication Ordinance in order to carry on its business in
the manner it is presently being conducted and as contemplated by
the Business Plan including without limitation the licences
described in Part 1 of Exhibit C;
(b) all other licences (including all wayleaves), approvals and
consents from any person, authority or body, as the case may be,
required by law in order to carry on its business in the manner
it is presently being conducted and as contemplated by the
Business Plan,
and all such licences and consents are valid and subsisting.
70
(2) The Group has applied for the licences described in Exhibit C and has
pursued and will continue to pursue such applications with all
reasonable due diligence.
7.2 No breach
---------
(1) The Group is not in breach of any of the terms or conditions of any
such licences, approvals or consents referred to in paragraph 7.1
above; and
(2) all such licences are in full force and effect in accordance with
their respective terms.
Exhibit C sets out accurate details of the annual fees paid in the 12 month
period ending on the date of this Agreement under the licences referred to
in paragraph 7.1(1)(a) and all other licences requiring payment of licence
fees exceeding US$1,000 per annum.
7.3 Notification of breach
----------------------
None of the Group Companies or any of their Affiliates has received any
notification from the OFTA relating to an asserted breach of any of the
terms and conditions of any licences.
7.4 Special Conditions of FTNS Licence
----------------------------------
The Group has complied with the Special Conditions contained in the Fixed
Telecommunications Network Service Licence issued to the Group on 30 June,
1995 (as amended on 19 June, 1998) (the "FTNS Licence") in all respects.
Without limiting the foregoing:
(1) the Group has completed the network rollout and service obligations
contained in Special Conditions 1 and 2 of the FTNS Licence to the
extent required to be completed up to and including the date of this
Agreement;
(2) the Group has received from OFTA certificates of completion relating
to obligations under Special Conditions 1.1 through to 1.3 inclusive,
1.6, 2.1 and 3.1 of the FTNS Licence; and
(3) the Vendor reasonably expects that the Group will complete the
obligations set out in Special Conditions 1.4 and 2.2 of the FTNS
Licence upon or prior to the date required by the FTNS Licence, being
31 December, 1999.
7.5 Future Milestone Obligations
----------------------------
Exhibit C contains a true and correct description of the status of the
discussions between OFTA and the Group regarding the continuation of the
moratorium on the issue of further FTNS Licences. The Vendor reasonably
expects that the Group will complete
71
the obligations to be imposed on it in connection with such moratorium upon
or prior to the date required by OFTA.
7.6 Frequencies and WLL
-------------------
The Group does not require any frequencies in order to carry on its
business in the manner it is presently being conducted and as contemplated
by the Business Plan.
8. Employees
8.1 General
-------
(1) Exhibit J sets out a complete list of those persons who at Completion
will be employees of or seconded to the Group (distinguishing between
those who will be employees of the Group and those who will be
seconded) and none of them will have given or received notice
terminating their employment. Exhibit J sets out for each employee
their job title and remuneration. Each contract of employment with
any employee is or will be terminable without payment of damages or
compensation exceeding those payable under statute.
(2) No Group Company is involved in any industrial or trade dispute with
any of its employees or any trade union or association.
(3) No Group Company is bound or accustomed to pay any moneys other than
in respect of normal salary, remuneration or emoluments of employment
to or for the benefit of its employees and no employees are
remunerated by reference to sales, profits or performance or otherwise
receive variable remuneration.
(4) Each Group Company has in relation to each of its employees complied
in all material respects with all obligations imposed on it by all
legislation relevant to the relations between it and its employees.
(5) No liability has been incurred by any Group Company for breach of any
contract of service or for redundancy payments or severance payments
or long service payments or for compensation for wrongful dismissal or
unfair dismissal.
(6) No Group Company has entered into any agreement to acquire consultancy
services from any person.
(7) No Group Company has any outstanding undischarged liability to pay to
any governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with the
employment or engagement of personnel by any Group Company.
(8) Each Group Company has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and
safety at work of its
72
employees, and the Vendor has received no notice that any such claims
are threatened or pending by any employee or third party in respect of
any accident or injury which are not fully covered by insurance.
8.2 No claim
--------
No former director, officer, employee or agent of any Group Company has any
claim against such Group Company for compensation due to loss or
termination of office or employment.
8.3 Provident Funds
---------------
Exhibit K contains details of all provident fund and similar schemes for
the benefit of the persons who will be employees at Completion. All
contributions required to have been made (at or before Completion) to those
schemes have been made and they are fully funded in accordance with prudent
actuarial principles as to enable all such employees to obtain the benefits
to which they are or will be entitled under those schemes have been made.
9. Intellectual Property
(1) Details of all rights in any Intellectual Property (other than
copyright and unregistered designs) owned by any Group Company are set
out in Exhibit F, distinguishing between rights which have been
registered and those in respect of which applications to register have
been made.
(2) Details of all licences granted to or by any Group Company in respect
of any Intellectual Property are set out in Exhibit F. Where any
licence is subject to any limit as to time or any other limitation,
right of termination or restriction the nature and extent of this is
set out in that Exhibit.
(3) All rights in all Intellectual Property and confidential business
information owned or otherwise required for the business of any Group
Company are vested in or validly granted to the Group Company and,
except as disclosed in relation to paragraph (2) above, are not
subject to any limit as to time or any other limitation, right of
termination (including on any change in the underlying ownership or
control of the relevant Group Company) or restriction and all renewal
fees and steps required (as of the date on which this Warranty is made
or repeated) for their maintenance or protection have been paid and
taken.
(4) Each Group Company has all rights in Intellectual Property and all
business information required for the business of that Group Company
and no Group Company is a party to any confidentiality or other
agreement or subject to any duty which restricts the free use or
disclosure (or requires disclosure) of business information owned by
or required for the business of such Group Company.
73
(5) Except as listed in Exhibit F, no Group Company has granted or is
obliged to grant any licence, sub-licence or assignment in respect of
any Intellectual Property owned or otherwise required for the business
of that Group Company or has disclosed or is obliged to disclose any
confidential business information required for the business of that
Group Company to any person, other than its employees or those of
another Group Company for the purpose of carrying on its business.
(6) No Group Company nor to the best of the knowledge and belief of the
Vendor any party with which such Group Company has contracted is in
breach of any licence, sub-licence or assignment granted to or by it
in respect of any Intellectual Property owned or otherwise required
for the business of that Group Company or of any agreement under which
any confidential business information was or is to be made available
to it.
(7) The processes and methods employed, the services provided, the
businesses conducted and the products manufactured, used or dealt in
by any Group Company within the last six years do not, and/or at the
time of being employed, provided, conducted, manufactured, used or
dealt in did not, to the Vendor's knowledge, infringe the rights of
any other person in any Intellectual Property or business information.
(8) To the Vendor's knowledge, there is no, nor has there been at any time
during the past six years any, unauthorised use or infringement by any
person of any of the Intellectual Property or confidential business
information owned or otherwise required for the business of any Group
Company.
(9) The Group has outstanding no applications to register any Intellectual
Property which are not being pursued with all reasonable due diligence
and speed.
10. Interconnection arrangements
(1) The contracts referred to in Exhibit D and (by being under the short
description "INTERCONNECTION AND LEASED CIRCUITS") identified as
falling within this sub-paragraph (1) comprise (together, when they
are executed, with the Interconnect Agreement and the Leased Lines
Agreement) all agreements to which the Group is a party relating to
interconnection between the network of the Group and the network or
networks of other telecommunications operators in Hong Kong or
relating to the establishment of interconnect links or facilities for
interconnection in Hong Kong. The interconnection arrangements
established under these agreements enable communications to be sent
and received in accordance with principles established by the
Telecommunications Authority of Hong Kong.
(2) Exhibit D contains a description of all such agreements as are
mentioned in paragraph (1) and which are being negotiated with third
parties.
74
11. Switch Sites and the Networks
11.1 Switch Sites
------------
(1) Lists of the cell sites and switch sites used by the Group for its
business have been set out in Exhibit G. Such sites are all the cell
sites and switch sites which the Group requires in order to carry on
its business in the manner it is presently being conducted. The Group
holds all licences, leases or consents necessary for the use of such
sites and all such licences, leases or consents are valid and
subsisting.
(2) No site referred to in paragraph (1) is used in whole or in part in or
for the purposes of the Excluded Business.
11.2 Networks
--------
The fixed networks and systems which are operated for the purposes of the
Group's business including network management and customer service systems,
billing systems, switches, nodes and other hardware are in good operating
order, are capable of performing and do perform the functions which they
are intended to perform in accordance with normal industry practice in Hong
Kong and the nature of the business of the Group and are all such systems
as are required by the Group in order for it to conduct its business in the
manner it is presently being conducted. A network map is in Exhibit M.
12. Ownership and Condition of Assets
(1) All assets necessary for the business of any Group Company as it is
now carried on are both legally and beneficially owned by such Group
Company or by the HCL Network Partnership free from any third party
rights and all such assets are included in the Accounts.
(2) Each of the assets included in the Accounts or acquired by any Group
Company since the Accounts Date (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by that Group Company free from any third
party rights, and each of those assets capable of possession is in the
possession of the Group Company. Each of the assets appearing in the
Partnership Accounts or acquired by the HCL Network Partnership since
the Partnership Accounts Date is owned legally and beneficially by the
HCL Network Partnership and is leased to HCL and subject to this
lease, is free from all third party rights.
(3) All plant and machinery (including fixed plant and machinery),
equipment and vehicles used by any Group Company in connection with
its business are in good repair and condition (ordinary wear and tear
excepted).
75
(4) The plant register kept by each Group Company which has been produced
to the Purchaser for its inspection sets out a record of the plant and
machinery and vehicles owned or possessed by it which is complete and
accurate in all material respects.
13. Property
13.1 Except as referred to in Exhibit E, neither the Group nor the HCL Network
Partnership owns any land or properties. The Group has good and marketable
title to each property so referred to, free of all encumbrances. The HCL
Network Partnership does not rent or licence any land or properties.
13.2 In relation to the properties rented/licensed by any Group Company (being
those properties described as such in Exhibit E) ("Rented Properties"):
(1) All the rent, licence fees, maintenance and other charges have been
duly paid in accordance with the terms of the relevant tenancy or
licence agreement and the material covenants, terms and conditions
contained in any tenancy/licence agreement to be performed by a Group
Company have been duly performed and observed by such Group Company
and there are no proceedings pending for the recovery of any sums due
and payable.
(2) No notice affecting the Rented Properties or any part thereof or its
use has been received by the relevant Group Company whether given or
served by a Government department or other authority or any person or
body which has not been materially complied with.
(3) The use of the Rented Properties complies with the material
provisions, covenants, terms and conditions under which they are
rented or licensed (as the case may be), and no circumstances are
known to the Group which are likely to result in the forfeiture of the
same.
(4) There are no circumstances existing at the date on which this Warranty
is made or repeated which would entitle the landlord or any other
person to exercise any right of re-entry or to take possession of any
of the Rented Properties or any part thereof or which would otherwise
restrict or terminate the continued possession and occupation of any
of the Rented Properties or any part thereof.
14. Information Technology
(1) Details of the Information Technology owned or used by each Group
Company and all material agreements or arrangements relating to the
maintenance and support (including escrow agreements relating to the
deposit of source codes), security, disaster recovery management and
utilisation (including facilities management and computer bureau
services agreements) of the Information Technology owned or used by
each Group Company are contained in Exhibit H
76
and in Exhibit D under the short descriptions "MAINTENANCE", "HARDWARE
AND SOFTWARE", "SOFTWARE LICENCE" and "SERVICE PROVISIONING". For the
purposes of this paragraph 14, "Information Technology" means computer
hardware, software, networks and/or other information technology and
any aspect or asset of a business which relies on computer hardware
and software.
(2) All Information Technology required to carry on the business of each
Group Company and fulfil its existing contracts and commitments is
either owned by or validly leased or licensed to that Group Company.
(3) No records, systems, controls data or information of any Group Company
are recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access thereto and therefrom) are not under
the exclusive ownership or control of the Group Company.
(4) There are no material defects relating to the Information Technology
owned or used by each Group Company and the Information Technology
owned or used by each Group Company has the capacity and performance
necessary to fulfil the present and foreseeable requirements of each
Group Company as described in the Business Plan.
(5) The Company's network has passed Y2K Stage A Testing prescribed by
OFTA. The Company has conducted Y2K Stage B Testing prescribed by
OFTA, as guided by the Company's third party network equipment
manufacturers and in the presence of OFTA representatives. The
results of the Y2K Stage B Testing are attached to the Disclosure
Letter. Based upon the foregoing tests, the Company has no reason to
believe that its network and services are not Y2K Ready in all
material respects. However, it should be noted that the Company's
assessment of its Y2K Readiness is largely dependent on the Y2K status
of its network equipment, information in respect of which has been
supplied to the Company by the network equipment manufacturers and
upon which the Company can conduct only limited internal and external
testing. Each Group Company had used all commercially reasonable
endeavours to secure from suppliers and other third parties
appropriate assurances as to their Y2K Readiness and nothing has come
to any Group Company's attention which suggests that any material
supplier or other third party is not Y2K Ready. For purposes of this
Agreement, the terms "Y2K Ready" and "Y2K Readiness" refer to the
capability of a person's (including the Company's) network, services
and systems, when used in accordance with their associated
documentation, to correctly process, provide and/or receive date data
in the year 2000, including leap year calculations, provided (in the
case of the Company) that all other products and systems (for example,
third party manufactured handsets, customer premises equipment,
hardware, software and firmware) that use the
77
Company's network, services and systems properly exchange accurate
date data with it.
15. The Restructuring
15.1 At Completion:
(1) the Group will not include any Excluded Company; and
(2) no Group Company shall carry on or be in any way interested in the
Excluded Business or have any liability, actual or contingent, arising
out of or connected with the Excluded Business (except for any
liability covered by the indemnity referred to in Clause 4.5(c)).
16. The Environment
16.1 Definitions
-----------
In paragraph 16.2:
"Environment" means all or any part of the air (including, without
limitation, the air within buildings and the air
within other natural or man-made structures above or
below ground), water and land and any living organisms
or systems supported by those media;
"Environmental Laws" means all applicable laws as in effect on the date
hereof insofar as they relate to or apply to
Environmental Matters;
"Environmental Matters" means:
(i) pollution or contamination;
(ii) the disposal, release, spillage, deposit,
escape, discharge, leak or emission of,
Hazardous Materials or Waste;
(iii) exposure of any person to Hazardous
Materials or Waste;
(iv) all matters related to health and safety of
employees;
(v) the creation or existence of any noise,
vibration, radiation, common law or
statutory nuisance, or
78
other adverse impact on the Environment;
(vi) use and recovery of packaging; and
(vii) any other matters relating to human health
and safety or the condition, protection,
maintenance, restoration or replacement of
the Environment arising directly or
indirectly out or the manufacturing,
processing, treatment, keeping, handing, use
(including as a building material),
possession, supply, receipt, sale, purchase,
import, export, transportation or presence
of Hazardous Materials or Waste;
"Environmental Permits" means any registration, permit, licence, consent or
authorisation required by Environmental Laws to be
held by any Group Company;
"Hazardous Material" means anything which alone or in combination with
other things is capable of causing harm or damage to
property or to man or to the Environment or any other
organism supported by the Environment including,
without limitation, any hazardous or toxic substances
or pollutants;
"Waste" means any waste including anything which is abandoned,
unwanted or surplus irrespective of whether it is
capable of being recovered or recycled or has any
value; and
"Works" means the carrying out of:
(i) inspection, investigation, sampling and
monitoring works; and
(ii) any works, including the installation,
operation, repair or replacement of plant or
equipment, in order to remove, remediate or
contain any Environmental Matter or in order
to prevent an Environmental Matter from
arising.
16.2 Compliance
----------
(1) All Environmental Permits which are required as at the date on which
this Warranty is made or repeated have been obtained and are in full
force and effect.
79
(2) No material operating expenditure is required in order to comply with
the Environmental Permits.
(3) The entry into and performance of this Agreement will not result in
the variation, limitation or revocation of any Environmental Permit,
any Environmental Permit not being extended, renewed or granted, or
any requirement to carry out Works.
(4) Each Group Company has complied at all times and in all respects with
Environmental Law and there are and have been no acts or omissions of
the Company in relation to Environmental Matters which could give rise
to fines, penalties, losses, damages, costs, expenses or liabilities
or could require any Works.
(5) No Group Company is or has been involved in any litigation
proceedings, claim or complaint by any person under Environmental
Laws, none is threatened and, so far as the Vendor Guarantor are
aware, none is likely to arise. At no time has the Group Company
received any notice or communication or information alleging any
liability in relation to Environmental Matters or that any Works are
required or stating or suggesting that there is or might be any
pollution, contamination or nuisance at or from any Relevant Property.
(6) All environmental audits and other assessments, reviews and reports in
the possession or control of any Group Company relating to any
Relevant Property or any of the activities of the Group Company have
been Disclosed.
(7) All information provided to the Purchaser or its advisors by or on
behalf of the Vendor or the Vendor Guarantor in relation to
Environmental Matters on or prior to the date of this Agreement is
complete and accurate and is not misleading.
(8) So far as the Vendor is aware, no Group Company has any liability in
respect of Environmental Matters arising out of or in connection with
any act or omission of any former subsidiary or former business of any
Group Company.
(9) So far as the Vendor is aware, there has been no transfer to any
person or disposal of Hazardous Materials or Waste by or on behalf of
any Group Company which could give rise to fines, penalties, losses,
damages, costs, expenses or liabilities.
(10) So far as the Vendor is aware, no Group Company has any liability to
any person in respect of Environmental Matters under any contract or
other agreement relating to the sale or other disposal or grant of any
interest or rights in relation to any shares, land or other asset.
(11) The Group Companies either (a) have no obligation under applicable
laws to recycle or recover packaging or participate in any scheme or
other arrangement for the recycling or recovery of packaging (a
"Relevant Obligation") or (b) have
80
complied in full with each Relevant Obligation and full details have
been provided to the Purchaser of such Relevant Obligation, including
relevant quantities and costs.
17. Accuracy of Information
17.1 The information given in Exhibits C to M inclusive is true and accurate in
all material respects and is not misleading. The licences, material
contracts, properties, intellectual property rights, equipment and systems
described in those Exhibits constitute all the licences, material
contracts, properties, intellectual property rights, equipment and systems
necessary for the Group Companies and the HCL Network Partnership to carry
on their businesses in all material respects, the Group Companies require
no other material assets or rights (apart from working capital) for such
purposes and the Group Companies do not have any other licences and
frequencies, material contracts, properties, intellectual property rights,
equipment or systems.
17.2 There is no fact or circumstance relating to the affairs of the Vendor or
the Vendor Guarantor nor, is there any fact or circumstance relating to the
affairs of any Group Company (other than publicly available information)
which has not been disclosed to the Purchaser or the Purchaser Guarantor or
any of their advisers and which if disclosed might reasonably have been
expected to influence the decision of the Purchaser and the Purchaser
Guarantor to enter into this Agreement other than as arising out of or
resulting from the economy or the securities market generally or arising
out of or resulting from changes in or affecting the industry in which the
Vendor Guarantor operates and not specifically related to the Vendor
Guarantor.
18. Investment Representations
The Vendor and/or, if applicable, its Affiliates, are acquiring the
Convertible Preferred Stock for investment and not with a view to, or for
sale in connection with, any distribution thereof. The Vendor and/or, if
applicable, its Affiliates (either alone or together with its advisors)
have sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of its investment in
the Convertible Preferred Stock and is capable of bearing the economic
risks of such investment. This paragraph will not limit the rights of the
Vendor with respect to any breach of the Purchaser Guarantor Warranties.
19. General
19.1 The execution and delivery of, and the performance by each Vendor Party
(other than the Vendor Guarantor) of its obligations under the Relevant
Agreements to which it is a party will not:
(1) breach or constitute a default under the constitutive documents of
such Vendor Party; or
81
(2) result in a breach of, or constitute a default under any instrument or
agreement to which such Vendor Party is a party or by which such
Vendor Party is bound; or
(3) result in a breach of any order, judgment or decree of any court or
governmental agency to which such Vendor Party is a party or by which
such Vendor Party is bound; or
(4) require the consent of the shareholders of such Vendor Party.
19.2 Each Vendor Party (other than the Vendor Guarantor) has all the requisite
power and capacity to enter into and perform its obligations under each
Relevant Agreement to which it is a party.
19.3 Each Relevant Agreement and all documents and instruments executed pursuant
thereto are, and when delivered will be, valid and legally binding
obligations of each Vendor Party (other than the Vendor Guarantor) which is
a party to it and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby have been duly
authorised by all necessary corporate action on the part of each Vendor
Party (other than the Vendor Guarantor) which is a party to it and each
Relevant Agreement has been duly executed by each Vendor Party (other than
the Vendor Guarantor) which is a party to it.
19.4 Except as set forth in Schedule 9, no consent, authorisation, order or
approval of, or filing or registration with, any governmental authority or
other person that has not been obtained is required for the execution and
delivery of the Relevant Agreements by the Vendor Parties party thereto or
the consummation of the transactions contemplated by the Relevant
Agreements.
82
Part 2
Vendor Guarantor Warranties
The Vendor Guarantor hereby represents and warrants as follows:
1. Due Organisation
----------------
The Vendor Guarantor is a corporation duly organised and validly existing
under the laws of Hong Kong.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance of the Relevant
Agreements to which it is a party will not result in a breach of or
constitute a default under the constitutive documents of the Vendor
Guarantor or result in a breach of or constitute a default under any
agreement or other instrument to which the Vendor Guarantor is a party
or by which the Vendor Guarantor is bound.
(b) The Vendor Guarantor has all the requisite power and capacity to enter
into and perform its obligations under the Relevant Agreements to
which it is a party.
(c) Each Relevant Agreement to which the Vendor Guarantor is a party and
all documents and instruments executed pursuant thereto by it are, and
when delivered will be, valid and legally binding obligations of the
Vendor Guarantor, enforceable, subject to exceptions which would be
customary in a formal legal opinion, in accordance with their terms,
and the execution, performance and implementation of each Relevant
Agreement and the matters contemplated thereby by the Vendor Guarantor
have been duly authorised by all necessary corporate action on the
part of the Vendor Guarantor and each Relevant Agreement to which it
is a party has been duly executed by the Vendor Guarantor.
3. Xxxxxxxxx Whampoa Accounts
--------------------------
The audited consolidated accounts of the Vendor Guarantor comprising its
consolidated balance sheet as at the Accounts Date and its consolidated
profit and loss account and statement of cash flows for the financial year
ended on the Accounts Date (the "Xxxxxxxxx Whampoa Accounts"):
(1) have been prepared on a basis consistent with previous balance sheets
and profit and loss accounts of the Vendor Guarantor and in accordance
with generally accepted accounting principles in Hong Kong;
(2) comply (to the extent that they are required to do so) in all material
respects with the Companies Ordinance and all other applicable
ordinances, statues and regulations;
83
(3) show a true and fair view of the state of affairs, assets and
liabilities, profit and/or loss and financial position of the Vendor
Guarantor as at the Accounts Date and of the results for the financial
period ended on such date and are not affected by any unusual or non-
recurring items not disclosed therein;
(4) make proper provision for the liabilities of the Vendor Guarantor as
at the Accounts Date in accordance with generally accepted accounting
principles referred to in (1) above; and
(5) make proper provision for the bad and doubtful debts and all Taxation
not yet due any payable in accordance with generally accepted
accounting principles, standards and practice referred to in (1)
above.
4. No Material Adverse Effect on the Vendor Guarantor
--------------------------------------------------
Since the Accounts Date there has been no material adverse change in the
financial condition or results of operations of the Vendor Guarantor and
its subsidiaries, taken as a whole, other than any such change arising out
of or resulting from the economy or securities markets generally, and there
is no fact or circumstance relating to the affairs of the Vendor Guarantor
which has not been disclosed to the Purchaser or the Purchaser Guarantor or
any of their advisers and which if disclosed might reasonably have been
expected to influence the decision of the Purchaser and the Purchaser
Guarantor to enter into this Agreement other than any such change arising
out of or resulting from the economy or securities markets generally.
84
Part 3
Purchaser Warranties
The Purchaser hereby represents and warrants as follows:
1. Due Organisation
----------------
The Purchaser is a corporation duly organised and validly existing under
the laws of Bermuda.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance by each Purchaser Party
(other than the Purchaser Guarantor) of its obligations under the
Relevant Agreements to which it is a party will not:
(1) result in a breach or constitute a default under the constitutive
documents of such Purchaser Party; or
(2) result in a breach of, or constitute a default under any
agreement or other instrument to which such Purchaser Party is a
party or by which such Purchaser Party is bound; or
(3) result in a breach of any order, judgment or decree of any court
or governmental agency to which such Purchaser Party is a party
or by which such Purchaser Party is bound; or
(4) require the consent of the shareholder of such Purchaser Party.
(b) The Purchaser has all the requisite power and capacity to enter into
and perform its obligations under this Agreement.
(c) Each Relevant Agreement and all documents and instruments executed
pursuant thereto are, and when delivered will be, valid and legally
binding obligations of each Purchaser Party (other than the Purchaser
Guarantor) which is a party to it, enforceable, subject to exceptions
which would be customary in a formal legal opinion, in accordance with
their terms, and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby have been duly
authorised by all necessary corporate action on the part of each
Purchaser Party (other than the Purchaser Guarantor) which is a party
to it and each Relevant Agreement have been duly executed by each
Purchaser Party (other than the Purchaser Guarantor) which is a party
to it.
85
3. Consents
--------
Except as set forth in Schedule 9, no consent, authorisation, order or
approval of, or filing or registration with, any governmental authority or
other person that has not been obtained is required for the execution and
delivery of the Relevant Agreements by the Purchaser Parties party thereto
or the consummation of the transactions contemplated by the Relevant
Agreements.
86
Part 4
Purchaser Guarantor Warranties
The Purchaser Guarantor hereby represents and warrants as follows:
1. Due Organisation
----------------
The Purchaser Guarantor is a corporation duly organised and validly
existing under the laws of Bermuda.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance of the Relevant
Agreements to which it is a party will not result in a breach of or
constitute a default under the constitutive documents of the Purchaser
Guarantor or result in a breach of or constitute a default under any
agreement or other instrument to which the Purchaser Guarantor is a
party or by which the Purchaser Guarantor is bound.
(b) The Purchaser Guarantor has all the requisite corporate power and
capacity to enter into and perform its obligations under the Relevant
Agreements to which it is a party.
(c) Each Relevant Agreement to which the Purchaser Guarantor is a party
and all documents and instruments executed pursuant thereto by it are,
and when delivered will be, valid and legally binding obligations of
the Purchaser Guarantor, enforceable, subject to exceptions which
would be customary in a formal legal opinion, in accordance with their
terms, and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby by the
Purchaser Guarantor have been duly authorised by all necessary
corporate action on the part of the Purchaser Guarantor and each
Relevant Agreement to which it is a party has been duly executed by
the Purchaser Guarantor.
3. The Convertible Preferred Stock
-------------------------------
The Convertible Preferred Stock will on issue be credited as fully paid.
None of the Convertible Preferred Stock will be subject to any pre-emptive
rights of the holders of any class of the capital stock of the Purchaser
Guarantor.
4. Investment Company Act
----------------------
The Purchaser Guarantor is not an "investment company" within the meaning
of the Investment Company Act of 1940 of the United States.
87
5. Reports and Financial Statements
--------------------------------
The Purchaser Guarantor has filed all reports required under the Exchange
Act to be filed by the Purchaser Guarantor with the SEC since its initial
public offering on August 13, 1998 (collectively, the "SEC Reports").
None of the SEC Reports, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. Each of
the balance sheets (including the related notes) included in the SEC
Reports presents fairly, in all material respects, the consolidated
financial position of the Purchaser Guarantor and its subsidiaries as of
the respective dates thereof, and the other related statements (including
the related notes) included in the SEC Reports present fairly, in all
material respects, the results of operations and the changes in financial
position of the Purchaser Guarantor and its subsidiaries for the respective
periods or as of the respective dates set forth therein, all in conformity
with generally accepted accounting principles consistently applied during
the periods involved, except as otherwise noted therein and subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments. All of the SEC Reports, as of their respective dates,
complied as to form in all material respects with the requirements of the
Exchange Act, the Securities Act and the applicable rules and regulations
thereunder.
6. No Material Adverse Effect on the Purchaser Guarantor
-----------------------------------------------------
Since September 30, 1999, except as disclosed in the SEC Reports there has
been no material adverse change in the financial condition or results of
operations of the Purchaser Guarantor and its subsidiaries, taken as a
whole, other than any such change arising out of or resulting from the
economy or securities markets generally.
88
SCHEDULE 6:
Counter-indemnities
In favour of Issued by Nature of instrument Guaranteed Amount
1 The Government of the Hong Xxxxxxxxx Whampoa Limited Deed of Undertaking and HK$50,000,000.00
Kong SAR Guarantee (in relation to the
moratorium)
========================================================================================================================
2 The Government of the Hong Xxxxxxxxx Whampoa Limited Guarantee (in relation to the N/A
Kong SAR ESD Project)
========================================================================================================================
3 The Hongkong and Shanghai Xxxxxxxxx Counter-indemnity for HK$12,320,000.00
Banking Corporation Telecommunications Limited Performance Bond given in
(to be confirmed) respect of the ESD Project
========================================================================================================================
4 The Hongkong and Shanghai Xxxxxxxxx Counter-indemnity (in respect HK$250,000.00
Banking Corporation Telecommunications (Hong of Guarantee provided by HSBC
Kong) Ltd to the Hong Kong Electric Co
Ltd for the development of the
Electronic Billing System
========================================================================================================================
In favour of Commencement Date Expiry Date
1 The Government of the Hong To be executed* 30 June 2003
Kong SAR
============================================================================
2 The Government of the Hong To be executed* 3 months after
Kong SAR completion of the
ESD Project
============================================================================
3 The Hongkong and Shanghai To be executed* Till end of all
Banking Corporation obligations under
contract
============================================================================
4 The Hongkong and Shanghai 28 April 1999 31 October 2000
Banking Corporation
============================================================================
* substantially in the form attached to the Disclosure Letter
89
SCHEDULE 7:
Summary of Excluded Business Transfer Arrangements
Abbreviations Companies/Parties Place of Incorporation
--------------------------------------------------------------------------------------------------------------------
"HTPHL" Xxxxxxxxx Telecom Properties Holdings Limited BVI
"HTSL" Xxxxxxxxx Teleservices Limited BVI
"CNL" Colonial Nominees Limited HK
"Excluded Companies" Goldpraise, Goldtop, HMTSL and Mollson
"Goldpraise" Goldpraise Limited BVI
"Goldtop" Goldtop Limited BVI
"HCL" Xxxxxxxxx Communications Limited HK
"HCL Holdings" HCL Holdings Limited (formerly known as Rapid Profit Limited) BVI
"HIL" Xxxxxxxxx International Limited HK
"HMSL" Xxxxxxxxx MultiMedia Services Limited HK
"HMTSL" Xxxxxxxxx-Management of Telecommunication Services, Limited Macau
"HTHK" Xxxxxxxxx Telecommunications (Hong Kong) Limited HK
"HWL" Xxxxxxxxx Whampoa Limited HK
"Mollson" Mollson Limited BVI
"HPSL" Xxxxxxxxx Paging Services Limited HK
"WHL (CI)" Whampoa Holdings (C.I.) Limited Jersey
---------------------------------------------------------------------------------------------------------------------------
"BVI" British Virgin Islands -
"HK" Hong Kong Special Administrative Region of the People's Republic
of China -
---------------------------------------------------------------------------------------------------------------------------
"Macau lawyers" J. Xxxx Xxxxxxx Advogades -
"WKLL" Woo, Xxxx, Xxx & Lo -
90
Steps/Documents Parties Responsibility Remarks
1. Incorporation of HPSL
---------------------
a. Date of Incorporation : 5th January 1995 (Name changed to
Xxxxxxxxx Paging Services Limited on
29th September 1999)
b. Place of Incorporation : HK
c. Authorised share capital: HK$10,000
d. Issued share capital : HK$20 divided into 2 shares of HK$10
each
e. Shareholders : 1. Mollson
2. CNL
f. Directors : Xxxxxx Xxx
Xxxxx Xxxxx
Xxxxxxx Xxxx
g. Registered Office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx
Xxxx, Xxxx Xxxx
h. Secretary : Xxxxx Xxxx
i. Company no. : 502096
91
Steps/Documents Parties Responsibility Remarks
2.1.1 Incorporation of HTPHL
----------------------
a. Date of Incorporation : 30th March 1994 (Name changed to
Xxxxxxxxx Telecom Properties Holdings
Limited on 23rd September 1999)
b. Place of Incorporation : BVI
c. Authorised share capital: US$50,000 divided into 50,000 shares of
US$1.00 each
d. Issued share capital : 1 share of US$1.00 each
e. Shareholder : Mollson
f. Directors : Xxxxxx Xxx
Xxxxx Xxxxx
Xxxxxxx Xxxx
g. Registered Office : X.X. Xxx 00, Xxxxxxxxx Xxxxxxxx, Xxxx
Town, Tortola, British Virgin Islands
h. Registered Agent : HWR Services Limited
92
Steps/Documents Parties Responsibility Remarks
2.1.2 Incorporation of HTSL
---------------------
a. Date of Incorporation : 2nd June 1993 (Name changed to
Xxxxxxxxx Teleservices Limited on 4th
October 1999)
b. Place of Incorporation : BVI
c. Authorised share capital: US$50,000 divided into 50,000 shares of
US$1 each
d. Issued share capital : 1 share of US$1.00 each
e. Shareholder : Mollson
f. Directors : Xxxxxx Xxx
Xxxxx Xxxxx
Xxxxx Xx
g. Registered Office : X.X. Xxx 00, Xxxxxxxxx Xxxxxxxx, Xxxx
Town, Tortola, British Virgin Islands
h. Registered Agent : HWR Services Limited
2.2 Registration of HTPHL under Part XI of Companies Ordinance of Hong Kong
-----------------------------------------------------------------------
2.2.1 Form F1 - One Director of HTPHL WKLL
Registration of an oversea company in HK
2.2.2 Letter of Undertaking - One Director of HTPHL WKLL
Undertaking from HTPHL to the HK Companies Registry to submit its accounts
required under s.336(1) of the Companies Ordinance
93
Steps/Documents Parties Responsibility Remarks
2.2.3 Power of Attorney - One Director of WKLL
Appointment of authorised person(s) HTPHL
under Part XI of the Companies Ordinance
2.2.4 Certified copies of Certificate of Incorporation One Director of WKLL
and M&A of HTPHL - Certified by a director of HTPHL HTPHL
under oath before a HK solicitor
2.2.5 Directors' written resolutions of HTPHL Directors of WKLL see 7.2.5
to approve Part XI Registration and HTPHL
appointment of authorised persons
2.2.6 Submission of documents nos. 2.2.1 to 2.2.4 WKLL WKLL
above and cheque of HK$1,800 to the
HK Companies Registry
3.1 Transfer of Mollson by HCL Holdings to WHL(CI)
----------------------------------------------
3.1.1 Sale and Purchase Agreement - HCL Holdings, WKLL
HCL Holdings agrees to transfer to WHL(CI) WHL(CI)
one share in Mollson, representing
the entire issued share capital of Mollson
3.1.2 Instrument of transfer HCL Holdings, WKLL Register of members of
WHL(CI) Mollson outside HK
3.1.3 Directors' written resolutions of HCL Holdings Directors of WKLL
to approve signing of Sale and HCL Holdings
Purchase Agreement
3.1.4 Directors' written resolutions of WHL(CI) Directors of WKLL
to approve signing of Sale and WHL(CI)
Purchase Agreement and change of directorships
3.1.5 Directors' written resolutions of Mollson to Directors of WKLL
approve the transfer and change of Mollson
directorships
3.1.6 Inform registered agent to make relevant Secretary of Secretary of
entries in the register of members Mollson Mollson
3.1.7 Cancellation of old share certificate and issue of Secretary of Secretary of
new share certificate of Mollson Mollson
Mollson to WHL(CI)
94
Steps/Documents Parties Responsibility Remarks
3.2 Change of Directorships of WHL(CI) and Mollson
----------------------------------------------
In respect of WHL(CI) :-
------------------------
3.2.1 Directors' written resolutions - Directors of WHL(CI) WKLL See 3.1.4
to approve resignation and appointment of directors
3.2.2 2 Letters of Resignation from Xxxxxx Xxxxxx relevant Directors of WKLL
and Xxxxx Xxxx WHL(CI)
3.2.3 2 Letters of Consent to Act as director from relevant Directors of WKLL
Xxxxxx Xxx and Xxxxx Xxxxx WHL(CI)
3.2.4 Inform registered agent to make relevant Secretary of WHL(CI) Secretary of WHL(CI)
entries in register of directors
In respect of Mollson :-
------------------------
3.2.5 Directors' written resolutions - Directors of Mollson WKLL See 3.1.5
to approve resignation and appointment of directors
3.2.6 Letter of Resignation from Xxxxx Xxxx relevant Director of WKLL
Mollson
3.2.7 Letter of Consent to Act as director from Xxxxx Xxxxx relevant Director of WKLL
Mollson
3.2.8 Inform registered agent to make relevant Secretary of Mollson Secretary of Mollson
entries in register of directors
4. Transfer of Goldtop by HCL to HTSL
----------------------------------
4.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL one share in Goldtop,
representing the entireissued share capital of Goldtop
4.2 Instrument of transfer HCL, HTSL WKLL Register of members
of Goldtop outside
Steps/Documents Parties Responsibility Remarks
HK
95
4.3 Loan Assignment Deed HCL, HTSL, Goldtop WKLL
4.4 Directors' written resolutions of HCL to approve Directors of HCL WKLL To cover all matters
signing of Sale and Purchase Agreement and the relating to this
Loan Assignment Deed restructuring
4.5 Directors' written resolutions of HTSL to approve Directors of HTSL WKLL To cover all matters
signing of Sale and Purchase Agreement and the relating to this
Loan Assignment Deed restructuring
4.6 Directors' written resolutions of Goldtop to approve Directors of Goldtop WKLL
the transfer and the Loan Assignment Deed
4.7 Inform registered agent to make relevant entries Secretary of Goldtop Secretary of Goldtop
in the register of members
4.8 Cancellation of old share certificate and issue Secretary of Goldtop Secretary of Goldtop
of new share certificate of Goldtop to HTSL
5. Transfer of Goldpraise by HCL to HTSL
-------------------------------------
5.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL one share in
Goldpraise, representing the entire
issued share capital of Goldpraise
5.2 Instrument of transfer HCL, HTSL WKLL Register of members
of Goldpraise
outside HK
5.3 Loan Assignment Deed HCL, HTSL, Goldpraise WKLL
5.4 Directors' written resolutions of HCL to approve Directors of HCL WKLL See 4.4
signing of Sale and Purchase Agreement and the
Loan Assignment Deed
5.5 Directors' written resolutions of HTSL to approve Directors of HTSL WKLL See 4.5
signing of Sale and Purchase Agreement and the
Loan Assignment Deed
5.6 Directors' written resolutions of Goldpraise to Directors of Goldpraise WKLL
approve the transfer and the Loan Assignment Deed
96
Steps/Documents Parties Responsibility Remarks
5.7 Inform registered agent to make relevant entries Secretary of Secretary of
in the register of members Goldpraise Goldpraise
5.8 Cancellation of old share certificate and issue Secretary of Secretary of
of new share certificate of Goldpraise to HTSL Goldpraise Goldpraise
6. Transfer of HMTSL by HCL to HTSL
--------------------------------
6.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL two shares
in HMTSL, representing the entire issued share
capital of HMTSL
6.2 (a) Transfer Deed HCL, HTSL WKLL/Macau lawyers Register of members
(b) Declaration of Trust CNL of HMTSL outside
Hong Kong
6.3 Loan Assignment Deed HCL, HTSL, HMTSL WKLL
6.4 (a) Directors' written resolutions of HCL to Directors of HCL WKLL See 4.4
approve/ratify signing of Sale and Purchase
Agreement and the Loan Assignment Deed
(b) Directors' written resolutions of HCL to Directors of WKLL/Macau lawyers
approve/ratify the signing of the Transfer HCL/ Notary
Deed (with Notary Public certificate) Public
6.5 Directors' written resolutions of CNL to Directors of WKLL/Macau lawyers
approve/ratify the signing of Transfer CNL/ Notary
Deed (with Notary Public certificate) Public
6.6 (a) Directors' written resolutions of Directors of WKLL See 4.5
HTSL to approve/ratify signing of Sale HTSL
and Purchase Agreement
(b) Directors' written resolutions of HTSL Directors of WKLL/Macau lawyers
to approve/ratify the signing of the HTSL/ Notary
Transfer Deed (with Notary Public certificate) Public
6.7 Directors' written resolutions of HMTSL to Directors of WKLL
approve/ratify the transfer and the HMTSL
Loan Assignment Deed
6.8 Make relevant entries in the register of members Secretary of Secretary of
HMTSL HMTSL
6.9 Cancellation of old share certificates and issue Secretary of Secretary of
of new share certificates of HMTSL to HTSL HMTSL HMTSL
Steps/Documents Parties Responsibility Remarks
97
7. Transfer of properties from HCL at revalued cost
------------------------------------------------
7.1 Transfer of properties from HCL to HPSL
(a) Xxxx 0, 00/X., Xxxxx X with Block Roof, Po Sing
Centre, Xx Xxxxx Ping Street, Xxxx Xxxxx
(b) Shop C, G/F and Lavatory M/F., Silver Commercial Building,
719 Xxxxxx Road, Mongkok, Kowloon
(c) Flat C, 23/F with Roof, Tung Xx Xxxxxxxx,
000-000 Xxxx'x Xxxx, Xxxxx Xxxxx
(x) Office No. 1 of 29/F and Portion of Roof Top, Ho King
Xxxxxxxxxx Xxxxxx, 0-00 Xx Xxxx Xxxxxx, Xxxxxxx
7.1.1 Statutory Declaration as to loss of title Director of HCL WKLL
deeds for property (a)
7.1.2 Memorandum for Sale and Purchase for each property HCL, HPSL WKLL
7.1.3 Assignment for each property HCL, HPSL WKLL
7.1.4 Directors' written resolutions of HCL Directors of HCL WKLL See 4.4
approving the transfer
7.1.5 Directors' written resolutions of HPSL Directors of HPSL WKLL To cover all matters
approving the acquisition relating to
this restructuring
7.1.6 Memorials for WKLL WKLL
(a) Memorandum for Sale and Purchase
(b) Assignment
7.1.7 Questionnaire for stamping of Assignment WKLL WKLL
7.1.8 Submit Assignment to Stamp Office for stamping WKLL Within 30 days
7.1.9 Register Memorandum for Sale and Purchase and WKLL Within one month
Assignment with Land Registry
Steps/Documents Parties Responsibility Remarks
98
7.2 Transfer of properties from HCL to HTPHL
(a) Shop D on G/F., 1/F., Flat C on 2/F and Flat Roof, Gardenview
Xxxxxxxx, 000-000 Xxx Xxxxx Xxxx Xxxxxx
(x) Flat F, 28/F with Roof, Xxxxx Xxx Mansion, 1G-1H, 0-00 Xxxxx Xxx
Xxxxxx, Xxxxxxx, Xxxxxxx
(c) Workshop F, 7/F., Hop Hing Xxxxxxxxxx Xxxxxxxx, 000 Xxxxxx Xxxx
Xxxx, Xxxxxxx
(x) Xxxx 00, X/X, Xxxx Xxxx Xxxxx, 00 Xxx Xxxx Road, Xxxx Xxxx,
Kowloon
(e) 1/F. of 90 and 00 Xxx Xxx Xxxxxx, 0/X. of 72 and 00 Xxxxxx
Xxxxxx, 0/X. of 00 Xxx Xxx Xxxxxx and 2/F. of 00 Xxxxxx Xxxxxx
(x) Xxxx 00 xxx 00, 0/X., Xx Xxxx Xxxxxxxxxx Xxxxxx, 0-00 Xx Xxxx
Xxxxxx, Xxxxxxx
(g) Portion A of 4/F., Ho King Commercial Centre, 0-00 Xx Xxxx
Xxxxxx, Xxxxxxx
(h) 2/F and 3/F., Portion of 3/F., Ho King Xxxxxxxxxx Xxxxxx,
0-00 Xx Xxxx Xxxxxx, Xxxxxxx
7.2.1 Statutory Declaration as to loss of title deeds for Director of HCL WKLL
properties (c) and (d)
7.2.2 Memorandum for Sale and Purchase for each property HCL, HTPHL WKLL
7.2.3 Assignment HCL, HTPHL WKLL
7.2.4 Directors' written resolutions of HCL approving the transfer Directors of HCL WKLL See 4.4
7.2.5 Directors' written resolutions of HTPHL approving the Directors of WKLL
acquisition and Part XI registration under HTPHL
Companies Ordinance
7.2.6 Memorials for WKLL WKLL
(a) Memorandum for Sale and Purchase
(b) Assignment
7.2.7 Questionnaire for stamping of Assignment WKLL WKLL
7.2.8 Submit Assignment to Stamp Office for stamping WKLL Within 30
days
Steps/Documents Parties Responsibility Remarks
7.2.9 Register Memorandum for Sale and Purchase and Assignment WKLL Within one
with month
99
Land Registry
8. Transfer of business, assets and liabilities relating
-----------------------------------------------------
to paging business by HCL to HPSL
---------------------------------
8.1 Sale and Purchase Agreement for the transfer of :- HCL, HPSL WKLL
(a) fixed assets
(b) current assets and current liabilities
(c) business
(d) rights under all existing contracts
8.2 Deed of Assignment and Assumption HCL, HPSL WKLL See Schedule
1 to 8.1
8.3 Notice in Government Gazette as to transfer of business HPSL WKLL
8.4 Directors' written resolutions of HCL approving the transfer Directors of HCL WKLL See 4.4
8.5 Directors' written resolutions of HPSL approving the acquisition Directors of HPSL WKLL See 7.1.5
9. Paging Licences
---------------
Letter from HCL to OFTA - 2 Public Radiocommunication Service HPSL, HCL HPSL, HCL
Licences granted to HCL to be transferred/assigned to HPSL
with the prior written consent of OFTA
10. Radio Dealer Licence
--------------------
To inform FADM to apply for new BR Certificates and Radio Dealer
Licences
11. Shares in Hong Kong Radio Paging Association Limited ("HKRPAL")
---------------------------------------------------------------
11.1 Instrument of Transfer HCL, HPSL WKLL
11.2 Bought and Sold Notes HCL, HPSL WKLL
Steps/Documents Parties Responsibility Remarks
11.3 Minutes of Board Meeting/Directors' written resolutions of HKRPAL Directors of WKLL
to approve the transfer HKRPAL
100
12. Waiving of loan by HWL
----------------------
Directors' written resolutions of HWL waiving loan advanced to HCL Directors of HWL WKLL
13. Repayment of bank loan and part of the restructuring loan and
-------------------------------------------------------------
conversion of the balance to shareholders' loans
------------------------------------------------
14. Novation/assignment of contracts
--------------------------------
101
SCHEDULE 8:
Summary of the Partnership Reorganisation Arrangements
------------------------------------------------------------------------------------------------------------------------
Abbreviations Companies/Parties Place of Incorporation
------------------------------------------------------------------------------------------------------------------------
"Analogue" Analogue Technical Agencies Limited HK
"Aberdeen" Aberdeen Commercial Investments Limited HK
"CSC" CSC Intelicom, Inc. Delaware
"CNL" Colonial Nominees Limited
"HCL" Xxxxxxxxx Communications Limited HK
"HIL" Xxxxxxxxx International Limited HK
"HNP" HCL Network Partnership HK
"Hongville" Hongville Limited HK
"HPHL" HCL Partnership Holdings Limited HK
"HTHK" Xxxxxxxxx Telecommunications (Hong Kong) Limited HK
"HWPL" Xxxxxxxxx Whampoa Properties Limited HK
"IVRS" IVRS (International) Limited HK
"Palliser" Palliser Investments Limited HK
"Siemens" Siemens Limited HK
"Siemens Guarantor" Siemens Aktiengesellschaft Germany
"Unitech" Unitech Computer Systems Limited
------------------------------------------------------------------------------------------------------------------------
"HK" Hong Kong Special Administrative Region of
the People's Republic of China -
------------------------------------------------------------------------------------------------------------------------
"WKLL" Woo, Xxxx, Xxx & Lo -
102
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Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
1. Ratification of Execution of Documents
--------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
1.1 Directors' written resolution of Hongville to Directors of Hongville WKLL
ratify the execution of the following agreements
(the "Existing Agreements") :-
(a) the international software license,
maintenance and services agreement
between HNP and CSC dated 10th July, 1995
(the "CSC Agreement")
(b) the agreement between HNP and IVRS on
customer service support technology
and related equipment and software (the
"IVRS Agreement")
(c) the maintenance service agreements between
HNP and Unitech regarding ECL DTX-360 system
and ECI DTX-240 and coherent EC-6000 Echo
Canceller systems respectively; and
(d) contract for post warranty support dated
14th March, 1997 between HNP, Siemens and
Siemens Guarantor
-----------------------------------------------------------------------------------------------------------------------------------
1.2 Directors' written resolution of Palliser to Directors of Palliser WKLL
Existing Agreements
-----------------------------------------------------------------------------------------------------------------------------------
1.3 Directors' written resolution of Aberdeen to Directors of Aberdeen WKLL
ratify the execution of the Existing
Agreements
-----------------------------------------------------------------------------------------------------------------------------------
1.4 Written consent of action by the partners of Hongville, Palliser, WKLL
HNP to ratify the execution of the Existing Aberdeen
Agreements
-----------------------------------------------------------------------------------------------------------------------------------
103
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
2. Restructuring of HNP in Year 1999
---------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
2.1 Incorporation of HPHL HTHK
(a) Date of Incorporation : 15th January 1997
(Name to be changed
to HCL Partnership
Holdings Limited)
(b) Place of Incorporation : HK
(c) Authorised share capital : HK$10.000
(d) Issued share capital : HK$2.00 divided into
2 shares of HK$1.00 each
(e) Shareholders : 1. HCL
2. CNL
(f) Directors : Canning Fok
Xxxxx Xxxx
Xxxxxx Xxx
Xxxxx Xxxxx
(g) Registered Office : 00xx Xxxxx, Xxxxxxxxx
Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx
(h) Secretary : Xxxxx Xxxx
-----------------------------------------------------------------------------------------------------------------------------------
104
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
2.2 Restructuring agreement regarding :- Hongville, Palliser, WKLL
(a) retirement of Palliser and Aberdeen as Aberdeen, HCL, HPHL
partners of HNP;
(b) admission of HCL and HPHL as new partners
of HNP holding respectively 99.98% and
0.01% interest in the newly constituted
partnership (see Chart 2);
(c) capital contribution by HCL and HPHL
according to their respective percentage
holding in HNP;
(d) loan advance by HCL and HPHL respectively to HNP;
(e) repayments by HNP to Hongville, Palliser and
Aberdeen as to:-
(i) the entire amount of their respective
capital contribution (except for Hongville,
an amount representing Hongville's reduced
partnership share in HNP shall be retained
with HNP to reflect its pro-rata capital
contribution); and
(ii) the entire amount of their respective loan
advance (except for Hongville, an amount
representing Hongville's reduced partnership
share in HNP shall be retained with HNP to
reflect its pro-rata loan advance)
-----------------------------------------------------------------------------------------------------------------------------------
2.3 Directors' written resolution of Hongville to approve Directors of Hongville WKLL
the Restructuring Agreement and other documents relating
to the restructuring
-----------------------------------------------------------------------------------------------------------------------------------
2.4 Directors' written resolution of Palliser to approve Directors of Palliser WKLL
the Restructuring Agreement and other documents
relating to the restructuring
-----------------------------------------------------------------------------------------------------------------------------------
2.5 Directors' written resolution of Aberdeen to approve Directors of Aberdeen WKLL
the Restructuring Agreement and other documents relating
to the restructuring
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
2.6 Directors' written resolution of HCL to approve the Directors of HCL WKLL
Restructuring Agreement and other documents relating
to the restructuring and to approve borrowing of a
non-interest bearing loan from HIL and granting of
a non-interest bearing loan to HPHL
-----------------------------------------------------------------------------------------------------------------------------------
105
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
2.7 Directors' written resolution of HPHL to approve the Directors of HPHL WKLL
Restructuring Agreement and other documents relating
to the restructuring and to approve borrowing of a
non-interest bearing loan from HCL
-----------------------------------------------------------------------------------------------------------------------------------
2.8 Directors' written resolution of HIL to approve granting Directors of HIL WKLL
of a non-interest bearing loan to HCL
-----------------------------------------------------------------------------------------------------------------------------------
2.9 Contribution of capital and loan advance by HCL and HK Co HIL, HCL, HPHL
to HNP through loan provided by HIL
-----------------------------------------------------------------------------------------------------------------------------------
2.10 Written consent of action by the partners of HNP to HNP, Hongville,
approve repayment of loan advance by HNP to Hongville, Palliser, Aberdeen,
Palliser and Aberdeen which amount shall be ultimately HWPL, HIL
repaid to HIL
----------------------------------------------------------------------------------------------------------------------------------
2.11 Form IRBR64 regarding changes to particulars of HNP Hongville, Palliser, WKLL Particulars have to
filed under the Business Registration Ordinance Aberdeen, HCL, HK Co to be filed within 1
month from the date
of change
-----------------------------------------------------------------------------------------------------------------------------------
2.12 Notice in Government Gazette as to change of partners WKLL WKLL Government Gazette
of HNP is published on
every Friday and
deadline of
Government Printer
for receiving notice
for publication is
noon of Monday
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
2.13 Notification to all persons who deal with HNP as to HNP WKLL
the change of partners of HNP, including :-
(a) CSC
(b) IVRS
(c) Unitech
-----------------------------------------------------------------------------------------------------------------------------------
106
-----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
-----------------------------------------------------------------------------------------------------------------------------------
(d) Siemens
(e) Siemens Guarantor
(f) HCL
(g) Analogue
-----------------------------------------------------------------------------------------------------------------------------------
2.14 Direct Covenants to be executed by HCL and HPHL HCL, HPHL WKLL
acknowledging that they are bound by the following
existing licence agreements :-
(a) the CSC Agreement
(b) the IVRS Agreement
(c) the equipment lease agreement dated 29th July, 1996
between HNP and HCL
(d) the system supply and project management agreement
dated 9th September, 1994 between HNP, Siemens and
Siemens Guarantor
(e) the software licence dated 9th September, 1994 between
HNP and Siemens Guarantor
-----------------------------------------------------------------------------------------------------------------------------------
107
SCHEDULE 9:
Approvals
Part 1
------
1. Requisite consent of the Federal Communications Commission
2. Approval of the banks under the Global Crossing US$3 billion credit
agreement.
Part 2
------
1. OFTA having approved in writing the proposed transfer of Public
Radiocommunication Service Licences No. 044 and 047 held by HCL to
Xxxxxxxxx Paging Services Limited pursuant to the Excluded Business
Transfer Arrangements.
108
SCHEDULE 10:
Agreement Counterpart and Acknowledgement
TO: Global Crossing Ltd.
RE: The Subscription and Sale and Purchase Agreement (the "Purchase
Agreement") dated 15th November, 1999, by and among Xxxxxxxxx Whampoa
Limited, Xxxxxxxxx Telecommunications Limited, Global Crossing Ltd.,
Global Crossing Ltd. and HCL Holdings Limited and the Registration
Rights Agreement (the "Registration Rights Agreement") dated as of
_______, 1999, by and among Global Crossing Ltd. and the Holders (as
defined in the Registration Rights Agreement)
The undersigned hereby agrees to be bound by the terms of Clause 10 of the
Purchase Agreement and the Registration Rights Agreement as a party to such
agreements, and shall be entitled to all benefits of the Holders (as defined in
the Registration Rights Agreement) and shall be subject to all obligations and
restrictions of the Holders pursuant to the Registration Rights Agreement, as
fully and effectively as though the undersigned had executed a counterpart of
such agreements together with the other parties to such agreements. The
undersigned hereby acknowledges having received and reviewed a copy of the
Purchase Agreement and the Registration Rights Agreement.
DATED this _____ day of ______________, _____
By:
Title:
Number of
Shares of
Registrable Securities:
