Exhibit 2
No. 02510105
Loan Agreement
Bank of Communications
No. 02510105
Loan Agreement
Borrower: China Network Communications Group Corporation
Legal representative: Zhang Chunjiang
Registered address: Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
Mailing address: Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
Lender: Bank of Communications, Beijing Branch
Person in charge: Wang Bin
Mailing address: Xx. 00, Xxxxxxx Xxxxxx, Xxxxxxx
Whereas the Borrower applied to the Lender for a loan, upon negotiation,
the Borrower and the Lender hereby enter into this agreement to specify the
rights and liabilities of both parties.
Article 1 The Loan
1.1 Currency: US dollar
1.2 Amount: One hundred and fifty million (150,000,000)
1.3 The loan under this agreement shall be only used to purchase the
shares of PCCW Limited.
1.4 Period: March 17, 2005 to March 17, 2008
Article 2 Interest Rate and Payment of Interest
2.1 Annual interest: Six-month LIBOR in US dollar plus 0.8%. Every three
months from the advancement date of the loan shall be one period for the
purpose of rate calculation ("Period") and the interest rate for the loan shall
be adjusted each Period. Daily interest rate equals to one thirtieth of the
monthly interest rate, and the monthly interest rate equals to one twelfth of
the annual interest rate.
"Six-month LIBOR in US dollar" under this agreement shall mean the London
Interbank Offered Rate for loans with a six-month term in US dollar. "Six-month
LIBOR in US dollar" shall be determined as the London Interbank Offered Rate
for loans with a six-month term in US dollar shown in the Telerate Service Page
"3750" at 11am (London time) on the business day that is two business days
before the first business day of the current Period.
2.2 Calculation of Interest
2.2.1 Normal interest = interest rate stipulated under this agreement x
advanced amount x number of days of the advancement. The number of days of the
advancement shall be calculated from the date of advancement till the maturity
date.
2.2.2 The penalty interest for the overdue payments and the amount of
loan not used for the purpose of this agreement shall be calculated in
accordance with the amount and actual number of days overdue or misused. The
penalty interest rate shall equal to 120% of the interest rate stipulated in
this agreement.
2.3 The interest for the loan under this agreement shall be calculated
each Period and the calculation date shall be the last day of each Period (the
next business day following the calculation date if such date is on a holiday).
The interest for the last Period shall be paid together with the principal of
the loan upon maturity. The payment date shall be the calculation date.
Article 3 Advancement and Repayment of Loan
3.1 The Borrower shall follow the relevant withdrawal procedures three
banking business days before any advancement. The loan shall be advanced on
March 17, 2005 and amount of advancement shall be US$ 150 million.
3.2 Conditions Precedent for the Advancement of the Loan:
(1) The Borrower has obtained relevant governmental approvals, consents,
registrations and other consents or approvals required by the Lender, and such
approvals, consents and registrations are still valid;
(2) The operation and financial conditions of the Borrower have not
undergone material adverse change; and
(3) The Borrower has not breached any provisions of this agreement.
3.3 The actual advancement date and advanced amount shall be determined
in accordance with the record in the Borrowing Certificate.
3.4 The Borrower shall repay the principal of the loan on March 17, 2008.
If the maturity date recorded in the Borrowing Certificate does not conform to
the stipulation in this agreement, the date on the Borrowing Certificate shall
prevail.
3.5 The Borrower may prepay all or part of the loan under this agreement
without paying any penalty or fees, however, the Borrower shall notify the
Lender in writing five business days in advance.
Article 4 Representations and Warranties of the Borrower
4.1 The Borrower is an independent person of civil capacity and is
legally established and existing with all of the necessary rights and
capacities to perform the obligations and undertake the liabilities under this
agreement on its own behalf.
4.2 The execution and performance of this agreement are out of the true
intention of the Borrower, and all necessary consents, approvals and
authorizations have been obtained and such consents, approvals and
authorizations have no legal defect.
4.3 All documents, statements, materials and information provided by the
Borrower to the Lender in the execution and performance of this agreement are
true, accurate, complete and valid, and the Borrower has not concealed any
information that may affect its financial conditions and solvency from the
Lender.
Article 5 Rights and Liabilities of the Lender
5.1 The Lender has the right to collect the principal and interest
(including any compound interest and penalty interest for any overdue and
misused loans) of the loan in accordance with this agreement, charge fees
payable by the Borrower, and exercise other rights stipulated by law or agreed
upon in this agreement.
5.2 The Lender shall not disclose the financial and operational materials
and information provided by the Borrower, except as otherwise stipulated by law
or provided in this agreement.
5.3 The Lender shall advance the loan in full amount to the Borrower in
accordance with this agreement, unless the delay was caused by the Borrower or
Force Majeure.
5.4 The Lender shall notify the Borrower in writing the amount of
principal and interest payable by the Borrower two business days before each
repayment and interest payment date, however, such notice shall only be
regarded as the Lender's reminder for performing the repayment obligations by
the Borrower.
Article 6 Liabilities of the Borrower
6.1 Unless otherwise provided in this agreement, the Borrower shall repay
the principal and interest of the loan under this agreement in accordance with
the timetable, amount and currency stipulated in this agreement.
6.2 The Borrower shall not use the loan under this agreement for any
purpose other than as provided in this agreement.
6.3 The Borrower shall be responsible for the fees and expenses that may
arise out of this agreement, including but not limited to the notarization fee,
appraisal fee, evaluation fee, registration fee and etc.
6.4 The Borrower shall observe the internal rules and commercial
practices of the Lender, including but not limited to, cooperating with the
Lender in its supervision and inspection of the use of the loan and the
operations of the Borrower, complying with the requirement of the Borrower to
provide all necessary financial statements, other materials and information and
ensuring the truthfulness, completeness and accuracy of such documents,
materials and information provided.
6.5 If any of the following events occurs to the Borrower, the Borrower
shall notify the Lender in writing fifteen business days in advance, and shall
not take any actions before repaying the principal and interest of the loan
under this agreement or providing the repayment plan and payment guarantee to
the Lender:
(1) sale, bestowing, lease, lending, transfer, mortgage, pledging or
otherwise disposal of the material assets or all or substantial part of the
assets; and
(2) material change or possible material change of the organizational
structure or ownership structure, including but not limited to, leasing and
operating, leasing, joint venture, corporate restructuring, changing into a
company limited by shares, sale of the enterprise, merge/acquisition, equity
joint venture/cooperative joint venture, divesture, establishment of
subsidiaries, transfer of ownership, decrease of registered capital, etc.
6.6 The Borrower shall notify the Lender within seven days after any of
the following events occurs or is likely to occur to the Borrower:
(1) amendment of articles, change of enterprise name, legal
representative/person in charge, registered address, mailing address, business
scope or other items registered with relevant offices of State Administration
of Industry and Commerce, or making decisions that have material effect on
finance and human resources of the Borrower;
(2) application for bankruptcy or such request by its creditors;
(3) involvement in material litigations or arbitrations, or placing of a
judicial lien on its material assets;
(4) providing any guarantee to a third party that has resulted in a
material adverse effect on its financial conditions or its abilities to perform
its obligations under this agreement;
(5) entering into any contract that has a material adverse effect on its
operation and financial conditions;
(6) ceasing operation, dissolution, business suspension, cancellation or
revocation of business license;
(7) involvement in any illegal activities by the Borrower, legal
representative/person in charge or important members of the management of the
Borrower;
(8) significant operational difficulties, deterioration of its finance
conditions, or other events that have an adverse effect on the operation,
financial conditions or solvency of the Borrower.
Article 7 Other Stipulated Items
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Article 8 Acceleration of the Loan
If any of the following events occurs, the Lender has the right to stop
advancing any amount of loan not drawn down by the Borrower, to declare
acceleration of the payment of the principal of the loan advanced under this
agreement on its own and to request prompt repayment of all the principal and
interest of the loan by the Borrower:
(1) The representations and warranties made by the Borrower in Article 4
are not true;
(2) The Borrower breaches any provision of this agreement;
(3) Any event listed in Article 6.6 that requests notification actually
occurs, which occurrence the Lender believes will affect the realization of its
creditors' rights;
(4) In performing other contracts entered into by the Borrower and the
Lender, the Borrower delays in performance or otherwise defaults thereunder and
has not cured its defaults after requested by the Lender.
Article 9 Events of Default
9.1 If the Borrower defaults in repayment of the principal of the loan or
the payment of the interest in full or has not used the loan for the purpose
stipulated in this agreement, the Lender will charge penalty interest rate on
overdue loan amount or misused loan amount and charge compound interest on the
unpaid interest.
9.2 If the Borrower defaults in repayment of the principal of the loan or
the payment of the interest in full, it shall be responsible for any expenses
that the Lender may incur in requesting such repayment or payment, fees in
connection with any litigation (or arbitration), judicial lien, public notice
and enforcement, and any lawyer's fee, travel expenses and other expenses.
9.3 If the Borrower evades supervision of the Lender, delays in repayment
of the principal or payment of interest, or maliciously escapes its debts, the
Lender shall have the right to notify relevant authorities of such activities
of the Borrower and make public announcement via media.
9.4 If the Lender has not provided the loan to the Borrower in accordance
with this agreement or charge interest in accordance with regulations of the
People's Bank of China relating to interest rate without due cause, or has not
promptly issued any principal repayment and interest payment notice to the
Borrower, the Borrower has the right to request the Lender to cure its
inactions or activities within a certain period; and if such inactions or
activities of the Lender have resulted in any loss to the Borrower, the
Borrower has the right to claim compensation from the Lender.
Article 10 Provision Regarding Repayment and Payment
10.1 If any principal, interest, penalty interest, compound interest or
any other fees are due and payable by the Borrower, the Borrower authorizes the
Lender, upon confirmation of the amount by the Borrower, to debit directly any
of its accounts with the Bank of Communications for repayment.
10.2 After such transfer, the Lender shall notify the Borrower of the
relevant account number, the loan contract number, the number of the Borrowing
Evidence, the debit amount and the balance of the loan.
10.3 If the debit amount can not satisfy the full indebtedness of the
Borrower, such amount shall be first applied towards the payment of due and
unpaid fees. If the overdue time of the principal and interest has not exceeded
ninety days, the remaining amount after deducting the payment of fees shall be
first applied towards the payment of the due and unpaid interest or penalty
interest and compound interest, and then towards the repayment of due and
unpaid principal. If the overdue time of the principal and interest exceeds
ninety days, the remaining amount after deducting the payment of fees shall be
first applied towards the repayment of due and unpaid principal, and then
towards the payment of the due and unpaid interest or penalty interest and
compound interest.
10.4 If the currency of the debit amount is not the same currency as the
indebtedness to be paid for, such debit amount shall be calculated in
accordance with the exchange rate published by the Bank of Communications on
the debit date.
Article 11 Dispute Resolution
Any dispute arising out of this agreement shall be resolved in accordance
with the first method listed below. During the course of dispute, both parties
shall continue to perform other provisions of this agreement which are not in
dispute.
(1) Commencing a litigation at the competent court at the locality of the
Lender;
(2) [intentionally left blank]
Article 12 Miscellaneous
12.1 The Borrowing Certificate under this agreement and relevant
documents and materials confirmed by both parties shall constitute
indispensable parts of this agreement.
12.2 This agreement shall become effective upon execution or affixation
of personal seals by the legal representative/person in charge or authorized
representative and affixation of corporate seals of both parties.
12.3 This agreement has been executed in six counterparts, with each
party holding three counterparts.
[Intentionally left blank]
The Borrower has read through the above provisions, and the Lender has made
relevant clarifications to the Borrower upon its requests and the Borrower has
no objection to any of the above content.
The Borrower (corporate seal)
Legal representative/person in charge or authorized representative
(execution or personal seal)
/s/ Li Fushen
Date: March 17, 2005
Lender (corporate seal)
Legal representative/person in charge or authorized representative
(execution or personal seal)
/s/ Xxxx Xxxxxx
Date: March 17, 2005
