EXHIBIT 10.49
EXECUTION COPY
DATED 27 JULY 2004
CHINA NETCOM CORPORATION (HONG KONG) LIMITED
(AS GUARANTOR)
IN FAVOR OF
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED
(AS SECURITY TRUSTEE)
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GUARANTEE AND INDEMNITY
IN RESPECT OF THE OBLIGATIONS OF
ASIA NETCOM CORPORATION LIMITED
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XXXXXXXX XXXXXX
HONG KONG
TABLE OF CONTENTS
CLAUSE PAGE NO.
1. DEFINITIONS AND CONSTRUCTION....................................1
2. GUARANTEE AND INDEMNITY.........................................4
3. CONTINUING GUARANTEE............................................5
4. REPRESENTATIONS AND WARRANTIES..................................7
5. TAXES AND OTHER DEDUCTIONS......................................9
6. COSTS, CHARGES AND EXPENSES....................................11
7. UNDERTAKINGS...................................................11
8. CLAIMS BY GUARANTOR............................................21
9. FURTHER INDEMNITIES............................................22
10. GUARANTOR IPO DATE.............................................22
11. SUSPENSE ACCOUNT...............................................23
12. SET OFF........................................................23
13. FURTHER ASSURANCE..............................................23
14. NOTICES........................................................23
15. WAIVERS, AMENDMENTS AND CONSENTS, REMEDIES, SEVERABILITY,
ASSIGNMENT, COUNTERPARTS AND DEED..............................24
16. GOVERNING LAW AND JURISDICTION.................................26
SCHEDULE 1..........................................................27
FORM OF CONFIDENTIALITY UNDERTAKING.................................27
SIGNATURE PAGE......................................................28
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THIS DEED OF GUARANTEE AND INDEMNITY (this "Deed") is made on 27 July, 2004
between:
(1) CHINA NETCOM CORPORATION (
HONG KONG) LIMITED, a company incorporated
and existing under the laws of
Hong Kong, whose registered office is
situated at 59/F., Bank of Xxxxx Xxxxx, 0 Xxxxxx Xxxx, Xxxxxxx, Xxxx
Xxxx (the "GUARANTOR"); and
(2) INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED, a company
incorporated under the laws of
Hong Kong acting through its head office
at 10/F, ICBC Asia Building, 000-000 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx
acting on its own behalf and as security trustee for and on behalf of
itself and the Finance Parties (the "SECURITY TRUSTEE").
WHEREAS:
(A) By a facility agreement signed on 2 December, 2003 (but held undated in
escrow) as released from escrow and amended and restated by the
Supplemental and Amendment Deed (the "FACILITY AGREEMENT") entered into
by (1) Asia Netcom Corporation Limited, as borrower (the "BORROWER");
(2) the banks and financial institutions named therein as lenders (the
"LENDERS"); (3) Industrial and Commercial Bank of China (Asia) Limited
as arranger (the "ARRANGER"); and (4) Industrial and Commercial Bank of
China (Asia) Limited as facility agent (the "FACILITY AGENT"), the
Lenders have agreed, upon and subject to the terms of the Facility
Agreement, to make available to the Borrower a term loan facility of up
to US$150,000,000 (the "FACILITY") for the purposes more particularly
specified therein.
(B) It is a condition precedent to the Lenders making the Facility
available to the Borrower that the Guarantor executes and delivers this
Deed.
NOW THIS DEED WITNESSES as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 TERMS DEFINED
In this Deed, unless the context otherwise requires, terms and
expressions used or defined in the Facility Agreement shall have the
same meaning and construction and:
"BALANCE SHEET" means the audited balance sheet of the Guarantor as of
31 December, 2003 prepared in accordance with GAAP, or if as of a later
date, the then latest audited or unaudited (as the case may be)
consolidated balance sheet of the Guarantor, as required to be
delivered by the Guarantor to the Security Trustee pursuant to Clause
7.2 and prepared in accordance with the terms of Clause 7.2.
"BALANCE SHEET DATE" means with respect to a Balance Sheet, the date up
to and in
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respect of which that Balance Sheet has been prepared.
"CITIBANK LIEN" means the lien created by the Guarantor in favour of
Citibank,N.A. acting through its branches in Beijing and
Hong Kong
("CITIBANK") pursuant to a security agreement dated as of 15 April 2002
between Citibank and the Guarantor in respect of, among other things,
(a) the obligations owed by China Netcom Corporation Limited to
Citibank, N.A. acting through its branch in Beijing pursuant to a
facility agreement dated 15 April 2002, as amended from time to time;
and (b) the obligations owed by the Guarantor to Citibank, N.A. acting
through its branch in
Hong Kong pursuant to a foreign exchange
agreement dated 15 April 2002, as amended from time to time.
"ELIGIBLE CORPORATION" means an international corporation with a credit
rating of "A" or above (as determined by Standard & Poor's
International Ratings or if not rated by Standard & Poor's, the
equivalent credit rating as determined by Xxxxx'x).
"EQUITY" shall have the meaning given to it in Clause 7.6(a).
"GAAP" means generally accepted accounting principles, standards and
practices in
Hong Kong in effect from time to time.
"GUARANTEED OBLIGATIONS" means any and all moneys, liabilities and
obligations (whether actual or contingent, whether now existing or
hereafter arising, whether or not for the payment of money, and
including, without limitation any obligation to pay damages for breach
of contract) which are or may become payable by the Borrower to the
Security Trustee and/or the other Finance Parties or any of them
pursuant to the Facility Agreement and/or any other Finance Document
and/or all other obligations hereby guaranteed.
"GUARANTOR GROUP" means the Guarantor and its Subsidiaries.
"GUARANTOR IPO DATE" means the earliest date on which:
(a) the Guarantor has completed an initial public offering and the
listing of the share capital of the Guarantor on a Guarantor
Stock Exchange (a "GUARANTOR IPO"); and
(b) by reference to the Guarantor's audited consolidated financial
statements:
(i) the Consolidated Tangible Net Worth (as defined in
Clause 7.18) of the Guarantor is not less than
US$3,000,000,000;
(ii) the Consolidated Total Assets (as defined in Clause
7.18) of the Guarantor is not less than
US$10,000,000,000; and
(iii) the Consolidated Financial Indebtedness (as defined
in Clause 7.18) of the Guarantor does not exceed 200
per cent of the Consolidated Tangible Net Worth (as
defined in Clause 7.18) of the Guarantor.
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"PRIVATE EQUITY FUND" mean either:
(a) a private equity fund (i) managed by an investment fund
manager which is a member of and/or funded and/or established
by a private equity group or entity which group or entity has
been established for more than 6 months prior to the relevant
proposed disposal or further disposal, as the case may be, of
no more than 20% of the Borrower's shares or other Equity
referred to in Clause 7.6(b), (ii) the aggregate value of the
assets managed under such fund is more than US$100,000,000 but
less than US$150,000,000 and such fund has more than one
investor, (iii) which does not in aggregate hold or control
more than 20% of the total issued share capital and other
Equity in the Borrower, and (iv) the amount invested in the
Borrower by such fund is not more than 50% of the aggregate
value of such fund: or
(b) a private equity fund (i) managed by an investment fund manager
which is a member of and/or funded and/or established by a
private equity group or entity which group or entity has been
established for more than 6 months prior to the relevant
proposed disposal or further disposal, as the case may be, of
no more than 20% of the Borrower's shares or other Equity
referred to in Clause 7.6(b), (ii) the aggregate value of the
assets managed under such fund is more than US$150,000,000 and
such fund has more than one investor and (iii) the amount
invested in the Borrower by such fund is not more than 50% of
the aggregate value of such fund,
and in respect of which in each case, prior to any proposed disposal or
further disposal, as the case may be, referred to in Clause 7.6(b), the
Security Trustee and the Lenders are satisfied, within a reasonable
period of time after requesting information on the proposed Transferee,
subsequent transferees or successors in title of such Transferee as
referred to in Clause 7.6(b), that each of the Finance Parties will be
able to comply with all legal and regulatory requirements applicable in
the PRC and
Hong Kong regarding such proposed transferee and its
interest in the Borrower, the non-compliance with which would prevent
any Finance Party form continuing to maintain the Facility or otherwise
fulfilling their respective obligations under the Finance Documents.
"TAX ON OVERALL NET INCOME" of a person shall be construed as a
reference to a Tax imposed on that person by the jurisdiction in which
its principal office (and/or, in the case of a Lender, its Facility
Office) is located by reference to (a) the net income, profits or gains
received or receivable (but not any sum deemed to be received or
receivable) of that person worldwide or (b) such of its net income,
profits or gains received or receivable (but not any sum deemed to be
received or receivable) as arise in or relate to that jurisdiction.
"TELECOMMUNICATIONS PROVIDER" means a provider or telecommunications
with a credit rating of "BB-" or above (as determined by Standard &
Poor's International Ratings, or, if not rated by Standard & Poor's, the
equivalent credit rating as determined by Xxxxx'x).
"TRANSFEREE" shall have the meaning given to it in Clause 7.6(b).
1.2 TRUST
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All rights, benefits, interests, powers and discretions granted to or
conferred upon the Security Trustee under this Deed shall be held by
the Security Trustee on trust for the benefit of itself as Security
Trustee and each other Finance Party from time to time. The trust
constituted by this Clause shall come into existence on the date of
this Deed and shall last for so long as any part of the Guaranteed
Obligations remains outstanding, provided that, for the purposes of the
rule against perpetuities, the perpetuity period applicable to the
trust constituted under this Clause and dispositions made or to be made
pursuant to this Deed and this trust, is hereby specified as a period
of eighty (80) years less one (1) day from the date of this Deed.
1.3 CLAUSE HEADINGS
Clause headings and the table of contents are inserted for convenience
of reference only and shall be ignored in the interpretation of this
Deed.
1.4 CONSTRUCTION
In this Deed, unless the context otherwise requires:
(a) Clause 1.3 of the Facility Agreement shall be deemed
incorporated in this Deed mutatis mutandis as if set out
separately in this Deed;
(b) references to "DISPOSAL" includes any sale, transfer, grant,
assignment, lease, exchange or other disposal, whether
voluntary or involuntary, and "DISPOSE" shall be construed
accordingly; and
(c) references to the "BORROWER", the "GUARANTOR", any "SECURITY
PARTY", the "SECURITY TRUSTEE", a "FINANCE PARTY" or any
"LENDER" include, where the context permits, their respective
successors and permitted transferees and permitted assigns in
accordance with their respective interests.
2. GUARANTEE AND INDEMNITY
2.1 GUARANTEE
In consideration of the Lenders agreeing to make the Facility available
to the Borrower upon the terms and conditions of the Facility
Agreement, the Guarantor hereby unconditionally and irrevocably
guarantees to the Security Trustee on behalf of each Finance Party, as
a continuing obligation, the due and punctual payment and performance
of the Guaranteed Obligations in the currency or respective currencies
in which the same is payable under the terms of the Facility Agreement
and the due and punctual performance and observance by the Borrower of
all other obligations of the Borrower contained in the Facility
Agreement and any other Finance Document to which it is a party,
notwithstanding any dispute between any Finance Party and the Borrower,
and if the Borrower fails to pay any amount of the Guaranteed
Obligations when due the Guarantor shall pay such amount to the
Security Trustee in the required currency as aforesaid forthwith upon
receiving the Security Trustee's first written demand.
2.2 INDEMNITY
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Without prejudice to the guarantee contained in Clause 2.1, the
Guarantor, as principal obligor and not merely as surety, hereby
unconditionally and irrevocably undertakes, as a separate, primary,
additional and continuing obligation, to indemnify the Security Trustee
and each Finance Party against all losses, liabilities, damages, costs
and expenses whatsoever without duplication arising out of any failure
by the Borrower to make due, and punctual payment of the Guaranteed
Obligations or in the due and punctual performance and observance of
all other obligations under the Facility Agreement or any other Finance
Document. This indemnity shall remain in effect notwithstanding that
the guarantee under Clause 2.1 may cease to be valid or enforceable
against the Guarantor for any reason whatsoever.
3. CONTINUING GUARANTEE
3.1 CONTINUING GUARANTEE
This Deed shall be a continuing guarantee and shall remain in full
force and effect until the final and irrevocable payment in full of the
Guaranteed Obligations, notwithstanding the insolvency or liquidation
or any incapacity or change in the constitution or status of the
Borrower or the Guarantor or any other person or any intermediate
settlement of account or other matter whatsoever. This Deed is in
addition to, and independent of, any Security Interest, guarantee or
other security or right or remedy now or at any time hereafter held by
or available to the Security Trustee or any other Finance Party.
3.2 PROTECTIVE CLAUSES
Without limiting Clause 3.1, neither the liability of the Guarantor nor
the validity or enforceability of this Deed shall be prejudiced,
affected or discharged by:-
(a) the granting of any time or indulgence to any Security Party
or any other person in respect of the Guaranteed Obligations;
(b) any variation or modification of the Facility Agreement, any
of the other Finance Documents or any other document referred
to therein or related thereto;
(c) the invalidity or unenforceability of any obligation or
liability of any party under the Facility Agreement or any of
the other Finance Documents or any other documents referred to
therein or related thereto;
(d) any invalidity or irregularity in the execution of the
Facility Agreement or any of the other Finance Documents or
any other documents referred to therein or related thereto;
(e) any lack of capacity or deficiency in the powers of any
Security Party (other than the Guarantor) or any other person
to enter into or perform any of its obligations under the
Facility Agreement or any of the other Finance Documents to
which it is party or any other documents referred to therein
or related thereto or any irregularity in the exercise thereof
or any lack of authority by any person
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purporting to act on behalf of any Security Party (other than
the Guarantor) or such other person;
(f) the insolvency, bankruptcy or liquidation or any incapacity,
disability or limitation of any Security Party (other than the
Guarantor) or any other person or any change in the
constitution or status of any Security Party or any other
person;
(g) the Facility Agreement or any other Finance Document, Security
Interest, guarantee or other security or right or remedy being
or becoming held by or available to any Finance Party or by any
other person or by any of the same being or becoming wholly or
partly void, voidable, unenforceable or impaired or by any
Finance Party at any time releasing, refraining from enforcing,
varying or in any other way dealing with any of the same or any
power, right or remedy any Finance Party may now or hereafter
have from or against any Security Party or any other person;
(h) any waiver, exercise, omission to exercise, compromise, renewal
or release of any rights against any Security Party or any
other person or any compromise, arrangement or settlement with
any of the same; or
(i) any act, omission, event or circumstance which would or may but
for this provision operate to prejudice, affect or discharge
this Deed or the liability of the Guarantor hereunder.
3.3 UNRESTRICTED RIGHT OF ENFORCEMENT
This Deed may be enforced and demands may be made from time to time
without any Finance Party (or any trustee or agent on its behalf) first
having to make any demand or have recourse to any other security or
rights or taking any other steps or proceedings against any Security
Party (save as may be required by the Facility Agreement) or any other
person and may be enforced for any balance due after resorting to any
one or more other means of obtaining payment or discharge of the monies,
obligations and liabilities hereby secured.
3.4 DISCHARGE AND RELEASE
Notwithstanding any discharge, release or settlement from time to time
between any Finance Party and the Guarantor or any other Security Party,
if any security, disposition or payment granted or made to any Finance
Party in respect of the Guaranteed Obligations by the Guarantor or any
other person is avoided or set aside or ordered to be surrendered, paid
away, refunded or reduced by virtue of any provision, law or enactment
relating to bankruptcy, insolvency, liquidation, winding-up, composition
or arrangement for the time being in force or for any other reason, the
Security Trustee shall be entitled hereafter to enforce this Deed as if
no such discharge, release or settlement had occurred.
3.5 EVIDENCE OF DEBT
Any statement of account signed in good faith by an authorised signatory
of the Security Trustee as correct showing any amount due under the
Facility Agreement or under any
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other Finance Document shall, in the absence of manifest error, be
conclusive evidence of the amount so due.
3.6 APPLICATION OF PROCEEDS
All moneys received by the Security Trustee and the Lenders pursuant to
this Deed shall be applied in or towards reduction of the Guaranteed
Obligations in accordance with Clauses 6 and 13.5 of the Facility
Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Security Trustee for the
benefit of each Finance Party that:-
(a) STATUS AND DUE AUTHORISATION: it is a company duly
incorporated and validity existing under the laws of
Hong Kong
with power and authority to enter into this Deed and perform
its obligations under this Deed and all action (including any
corporate action) required by the Guarantor to authorise its
execution and delivery of this Deed and the performance of its
obligations under this Deed has been duly taken;
(b) POWER AND AUTHORITY: it has full power, authority and legal
right to own its property and assets and to carry on its
business as such business is now being conducted;
(c) LEGAL VALIDITY: this Deed constitutes or, when so executed and
delivered, will constitute legal, valid and binding
obligations of the Guarantor enforceable in accordance with
its terms;
(d) NON-CONFLICT WITH LAWS: the entry into, performance and
delivery of this Deed and the transactions contemplated by
this Deed do not and will not conflict with or result in:
(i) a breach of any law, judgment or regulation or any
official or judicial order, or (ii) a breach of the
constitutional documents of the Guarantor, or (iii) a material
breach of any agreement or document to which the Guarantor is
a party or which is binding upon it or any of its assets or
revenues with a monetary value greater than US$500,000, nor
cause any limitation placed on it or the powers of its
directors to be exceeded or result in the creation or
imposition of any Security Interest on any part of its assets
or revenues pursuant to the provisions of any such agreement
or document;
(e) NO CONSENTS: each consent, authorisation, licence or approval
of, or registration with, or declaration to, governmental or
public bodies or authorities or courts in Hong Kong and/or the
United States of America and/or any jurisdiction relevant to
the Guarantor IPO required for or in connection with, the
execution, validity, delivery and admissibility in evidence of
this Deed, or the performance by the Guarantor of its
obligations under this Deed has been obtained or effected as
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appropriate;
(f) LITIGATION: no litigation, arbitration or administrative
proceeding is taking place or pending or, to the knowledge
of the directors of the Guarantor, threatened against it or
any of its assets which would materially and adversely affect
its business, assets or financial condition or its ability
to perform its obligations under this Deed;
(g) WINDING UP: the Guarantor has not taken any corporate action
and, to the knowledge of the directors of the Guarantor, no
other step has been taken or legal proceedings have been
commenced or threatened against it for its winding-up,
dissolution, administration or reorganisation or for the
appointment of a receiver, administrator, trustee or similar
officer of it or all or any of its assets or revenues except
as permitted by Clause 17.1(g) (Winding-up) of the Facility
Agreement;
(h) PARI PASSU RANKING: its obligations hereunder rank at least
pari passu with all its other present and future unsecured
and unsubordinated obligations save for any obligations
mandatorily preferred by law and not by contract;
(i) TAX LIABILITIES: the Guarantor has complied with all Taxation
laws in all material respects in all jurisdictions in which
it is subject to Taxation and has paid all Taxes due and
payable by it (other than Taxes contested by the Guarantor in
good faith by appropriate proceeding and for which provisions
have been appropriately made in accordance with GAAP); no
material claims are being asserted against it with respect to
Taxes;
(j) NO EVENT OF DEFAULT OR NO DEFAULT:
(A) to the knowledge of the directors of the Guarantor
after due enquiry, no Default has occurred and is
continuing provided that the Guarantor makes no
representation with respect to Clause 17.1(v)
(Financial Covenants) of the Facility Agreement; and
(B) the Guarantor is not and would not, with the giving
of notice or lapse of time or satisfaction of any
other condition or any combination thereof, be in
breach of or in default under any agreement relating
to Financial Indebtedness to which it is a party
or by which it may be bound and which breach or
default would be reasonably likely to have a
material and adverse effect on the ability of the
Guarantor to perform its obligations under this Deed;
(k) NO IMMUNITY: it is generally subject to civil and commercial
law and to legal proceedings and neither the Guarantor nor any
or its assets or revenues is entitled to any immunity or
privilege (sovereign or otherwise) from any set-off, judgment,
execution, attachment or other legal process;
(l) FINANCIAL STATEMENTS: the audited financial statements
(including the profit and loss account and balance sheet) of
the Guarantor for the financial year ended 31
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December 2003 and the unaudited financial statements (including the profit
and loss account the balance sheet) of the Guarantor for the financial year
ended 31 March 2004 respectively were prepared in accordance with all
applicable laws and regulations and GAAP and fairly present the financial
position of the Guarantor as of such date, and there has been no material
adverse change in the business or financial condition of the Guarantor
since 31 December 2003;
(m) OTHER INFORMATION: all documents supplied to the Security Trustee by or on
behalf of the Guarantor in connection with any of the Finance Documents or
the transactions contemplated herein or thereby is true and accurate in all
material respects and not materially misleading and all forecasts and
projections contained therein (if any) were made after due and careful
consideration on its part (or on the part of the party making the same)
based on fair and reasonable assumptions;
(n) SHAREHOLDING: except as permitted under Clause 7.6(b), the Guarantor owns
and controls directly or indirectly 100% of the issued share capital and
other Equity of the Borrower; and
(o) CITIBANK LIEN: the Citibank Lien has been released and the Indebtedness
secured thereby has been fully satisfied.
4.2 CONTINUING REPRESENTATIONS AND WARRANTY
Each of the representations and warranties in this Clause 4.1
(Representations and Warranties) are made on the date of this Deed and
shall be deemed to be repeated on each Drawdown Date (by reference to the
facts and circumstances then subsisting, save that reference to the audited
or unaudited financial statements in Clause 4.1(l) shall be construed as a
reference to the then latest financial statements required to be delivered
by the Guarantor to the Security Trustee pursuant to Clause 7.2) and;
(a) in the case of those representations and warranties contained in
Clauses 4.1(a),(b),(c),(d)(ii), d(iii), (e), (f)(j),(k) and (n) are
deemed to be repeated (by reference to the facts and circumstances
then subsisting) by the Guarantor on each Interest Payment Date that
occurs prior to the Guarantor IPO Date; and
(b) in the case of those representations and warranties contained in
clauses 4.1(a),(c),(d)(ii),(j)(B) and (k), are deemed to be repeated
(by reference to the facts and circumstances then subsisting) by the
Guarantor on each Interest Payment Date that occurs subsequent to the
Guarantor IPO Date.
5. TAXES AND OTHER DEDUCTIONS
5.1 TAX GROSS-UP
(a) All sums payable by the Guarantor under this Deed shall be paid in
full without any restriction or condition and free and clear of any
Tax or other deductions or withholdings of any nature except to the
extent that the Guarantor is required by
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law to make payment subject to any Taxes.
(b) If at any time the Guarantor or any other person is required in any
jurisdiction to make any deduction or withholding in respect of Taxes
or otherwise from any payment due under this Deed for the account of
the Security Trustee or any other Finance Party (or if the Security
Trustee is required to make any such deduction or withholding from a
payment to any other Finance Party), the sum due from the Guarantor in
respect of such payment shall be increased to the extent necessary to
ensure that, after the making of such deduction or withholding, the
Security Trustee and each Finance Party receives on the due date for
such payment (and retains, free from any liability in respect of such
deduction or withholding) a net sum equal to the sum which it would
have received had no such deduction or withholding been required to be
made.
(c) The Guarantor's obligations under Clause 5.1(a) and Clause 5.1(b)
shall not apply in respect of any Tax on Overall Net Income levied on
a Finance Party.
(d) All Taxes required by law to be deducted or withheld by the Guarantor
from any amounts paid or payable under this Deed shall be paid by the
Guarantor when due (except for such amounts being disputed by the
Guarantor in good faith) to the relevant taxing authority.
5.2 TAX INDEMNITY
The Guarantor shall indemnify each Finance Party against any losses or
costs incurred by any of them by reason of:
(a) any failure of the Guarantor to make any such deduction or withholding
referred to in Clause 5.1; or
(b) any increased payment referred to in Clause 5.1 not being made on the
due date for such payment; or
(c) any Taxes which are being disputed by the Guarantor and remaining
unpaid; or
(d) any liability suffered (directly or indirectly) for or on account of
Tax by that Finance Party in respect of any payment received or
receivable or deemed to be received or receivable under a Finance
Document.
5.3 EVIDENCE OF PROOF
The Guarantor shall, within 14 days of being requested in writing by the
Security Trustee, deliver to the Security Trustee any receipts,
certificates or other proof evidencing the amounts (if any) paid or payable
to the appropriate authority in respect of any deduction or withholding as
aforesaid.
5.4 TAX CREDIT
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If the Guarantor makes a Tax Payment and the relevant Finance Party
determines that:
(a) a Tax Credit is attributable either to an increase payment of which
that Tax Payment forms part, or to that Tax Payment; and
(b) the Finance Party has obtained, utilised and retained that Tax Credit,
the Finance Party shall, promptly after obtaining the benefit of that Tax
Credit, pay an amount to the Guarantor which will leave it (after that
payment) in the same after-Tax position as it would have been in had the
Tax Payment not been required to be made by the Guarantor. Any certificate
or determination of a Finance Party showing in reasonable details the
calculations made by that Finance Party as to any amount for the purpose of
this Clause 5.4 shall, in the absence of manifest error, be conclusive and
binding on the Guarantor.
6. COST, CHARGES AND EXPENSES
The Guarantor shall from time to time forthwith on demand pay to or
reimburse the Security Trustee and the other Finance Parties for:
(a) all costs, charges and expenses (including legal and other fees on a
full indemnity basis) reasonably and properly incurred by the Security
Trustee or any other Finance Party in connection with the preparation,
execution and registration of this Deed; and
(b) all costs, charges and expenses (including legal and other fees on a
full indemnity basis) properly incurred by the Security Trustee or any
other Finance Party in exercising any of its rights or powers
hereunder or in suing for or seeking to recover any sums due hereunder
or otherwise preserving or enforcing its rights hereunder or in
releasing or re-assigning this Deed upon payment of all moneys hereby
secured unless and to the extent that such costs, charges and expenses
results directly from the gross negligence, fraud or wilful misconduct
of the Security Trustee or such other Finance Party,
and until payment of the same in full, all such costs, charges and expenses
shall be guaranteed by this Deed.
7. UNDERTAKINGS
7.1 DURATION
Subject as more particularly provided in this Clause 7, the Guarantor
hereby undertakes to and agrees with the Security Trustee for the benefit
of each Finance Party that the undertakings in this Clause 7 shall remain
in force throughout the continuance of this Deed and so long as the
Guaranteed Obligations or any part of thereof remains owing.
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7.2 INFORMATION
The Guarantor undertakes that it shall furnish to the Security Trustee, in
sufficient copies for each of the Lenders:
(a) as soon as they are available, but in any event within 180 days after
the end of each of its financial years, copies of the audited
consolidated financial statements (including, but not limited to, a
profit and loss account, balance sheet and cash flow statement,
prepared on a consolidated basis) of the Guarantor in respect of such
financial year;
(b) as soon as they are available, but in any event within 90 days after
the end of each half-yearly period of each of its financial years,
copies of the unaudited consolidated financial statements (including a
profit and loss account, cash flow statement and balance sheet
prepared on a basis consistent with the audited financial statements
prepared on a consolidated basis) of the Guarantor in respect of such
half-yearly period;
(c) upon written request from the Security Trustee following the
occurrence of a Default (i) promptly the then latest available
unaudited financial statements of the Guarantor whether for the
previous half-yearly, quarterly or monthly period or otherwise and
(ii) as soon as they are available, but no later than 30 days after
the end of the month in which the Default occurred, copies of the
unaudited consolidated financial statements (including a profit and
loss account, cash flow statement and balance sheet prepared on a
basis consistent with the audited financial statements prepared on a
consolidated basis) of the Guarantor in respect of such period between
the date of the latest audited or unaudited (as the case may be)
consolidated financial statements provided by the Guarantor to the
Security Trustee and the end of the month in which the Default
occurred.
(d) subject to any applicable laws or regulations restricting the
furnishing of the same to the Finance Parties, promptly on request,
all notices or other documents despatched by the Guarantor to the
Guarantor's shareholders or creditors (or any class thereof);
(e) subject to any laws or regulations of the Guarantor Stock Exchange
binding on the Guarantor from time to time and restricting the
furnishing of the same to the Finance Parties, such further
information in the possession or control of the Guarantor with respect
to the financial condition and operations of the Guarantor or any
other member of the Guarantor Group as the Security Trustee or any
Lender may from time to time reasonably request provided that it shall
not be obliged to provide any such information which is price
sensitive information or confidential to it unless in each case, the
Security Trustee or such Lender and/or any professional consultants
appointed by either of them agrees to enter into a confidentiality
undertaking in the form of Schedule 1 hereto and
(f) promptly, details of any actual, pending or threatened litigation,
arbitration or administrative proceedings against the Guarantor or any
other member of the
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Guarantor Group or any of their respective assets which is reasonably
likely to have a material adverse effect on the Guarantor's financial
condition or on its ability to perform its obligations under this
Deed.
The Guarantor undertakes that all financial statements required under this
Deed shall be prepared in accordance with GAAP and financial reference
periods consistently applied (or if not consistently applied, accompanied
by details with the assistance of the Guarantor's auditors of the
inconsistencies) and shall fairly present the financial condition of the
Guarantor or the Guarantor Group, as the case may be, as at the date to
which such financial statements are drawn up and such financial statements
shall be accompanied by a certificate signed by an executive director of
the Guarantor confirming that as at the date to which such financial
statements are drawn up, the covenants in Cause 7.18 have been complied
with by the Guarantor.
The Guarantor must notify the Security Trustee of any change to GAAP or the
basis on which the financial statements required under this Clause 7.2 are
prepared which is reasonably likely, to affect the calculations or amounts
used in Clause 7.18 and if requested by the Security Trustee, the Guarantor
shall supply to the Security Trustee:
(i) a description in reasonable detail with the assistance of the
Guarantor's auditors of any change notified above; and
(ii) all such reasonable information which is necessary to enable the
Finance Parties to make a proper comparison between the financial
position shown by the relevant set of financial statements prepared on
the changed basis and its then most recent audited financial
statements delivered to the Security Trustee under this Deed.
If requested by the Security Trustee following consultation with the
Guarantor and its auditors, the Guarantor and the Security Trustee shall
enter into discussions in good faith for a period of not more than 30 days
with a view to agreeing, after consultation with the Guarantor's auditors,
any amendments required to be made to Clause 7.2 or Clause 7.18 to place
the Guarantor and the Finance Parties in substantially the same position as
they would have been if the change had not happened. Any agreement between
the Guarantor and the Security Trustee will be binding on all the parties
to this Deed PROVIDED THAT if no such agreement is reached on the required
amendments to Clause 7.2 or Clause 7.18, the Guarantor agrees that its
auditors shall certify in reasonable detail the change to the basis on
which the financial statements are prepared and any necessary changes to
Clause 7.2 or Clause 7.18 and the certificate of the auditors of the
Guarantor will be, in the absence of manifest error, conclusive and binding
on all the parties to this Deed and Clause 7.2 and Clause 7.18 shall, to
such extent be read and construed accordingly.
7.3 DISPOSALS
The Guarantor undertakes with the Security Trustee and each of the other
Finance Parties that, without the prior written consent of the Majority
Lenders:
(a) NEGATIVE PLEDGE: prior to the Guarantor IPO Date, it will not, and
will procure
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that no member of the Guarantor Group shall, create of permit to arise
or exist any Security Interest on all or any part of the assets of the
Guarantor or any other member of the Guarantor Group or any income or
profit therefrom, unless contemporaneously therewith or prior thereto
Indebtedness owing to the Finance Parties under the Finance Documents
is equally and rateably secured except that the restriction in this
Clause 7.3(a) shall not apply to any Security Interest otherwise
permitted by Clause 16.16(a) of the Facility Agreement;
(b) TRANSACTIONS SIMILAR TO SECURITY: prior to the Guarantor IPO Date, the
Guarantor will not, and will procure that no other member of the
Guarantor Group shall:
(i) sell, transfer or otherwise dispose of any of its assets on terms
whereby it is or may be leased to or re-acquired or acquired by
the Guarantor or any other member of the Guarantor Group or any
of its or their Affiliates; or
(ii) sell, transfer or otherwise dispose of any of its receivables on
recourse terms, except for the discounting of bills or notes in
the ordinary course of trading,
in circumstances where the transaction is entered into primarily as a
method of raising Financial Indebtedness or of financing the
acquisition of an asset;
(c) DISPOSALS: prior to the Guarantor IPO Date, the Guarantor will not,
and will procure that no other member of the Guarantor Group shall
either in a single transaction or in a series of transactions whether
related or not and whether voluntarily or involuntarily, dispose of
any rights or interest in or to all or any material part of the
business or assets or revenues of the Guarantor or any other member of
the Guarantor Group except that the restriction in Clause 7.3(c) shall
not apply to any disposal which (A) is made in good faith for full
consideration on an arm's length basis in the ordinary course of its
business, and (B) does not materially and adversely affect the ability
of the Guarantor or any other member of the Guarantor Group to perform
its obligations under the Finance Documents or the rights of the
Finance Parties under the Finance Documents,
PROVIDED THAT insofar as the provisions of this Clause 7.3 relate to
members of the Guarantor Group other than the Guarantor, such provisions
shall be without prejudice to the provisions of or restrictions in the
Finance Documents relating to such other members of the Guarantor Group
including following the Guarantor IPO Date.
7.4 RECORDS
The Guarantor shall keep proper records and books of account in respect of
its business and prior to the Guarantor IPO Date it shall permit the
Security Trustee and/or any professional consultants appointed by the
Security Trustee at all reasonable times upon prior notice to inspect and
examine the records and books of account of the Guarantor Group.
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Following the Guarantor IPO Date, the Guarantor shall permit the inspection
and examination of the records and books of account of the Guarantor Group
provided that such inspection and examination does not constitute a breach
of the regulations of the relevant Guarantor Stock Exchange or any law
binding on the Guarantor from time to time and provided further, to the
extent that such records and books of account are price sensitive or
confidential, the Security Trustee and/or any professional consultants
appointed by the Security Trustee agrees to enter into a confidentiality
undertaking in the form of Schedule 1.
7.5 CONSTITUTIONAL DOCUMENTS
Prior to the Guarantor IPO Date, the Guarantor shall ensure that no
amendment or supplement is made to its memorandum and articles or
association without the prior written consent of the Security Trustee
unless such amendments and/or supplement do not materially and adversely
affect the rights or interests of the Finance Parties under or the ability
of any Security Party to perform its obligation under the Finance
Documents.
7.6 SHAREHOLDING
(a) Save as provided in Clause 7.6(b), prior to the Guarantor IPO Date,
the Guarantor undertakes that it shall continue to own or control
directly or indirectly the total issued share capital and other rights
in respect of equity or share capital (the "Equity") in the Borrower
and its Subsidiaries.
(b) The Guarantor shall be permitted to transfer or dispose of not more
than 20% in aggregate of its shareholding or other Equity in the
Borrower provided that:
(i) any such transfer or disposal of Equity in the Borrower is made
to a person ("TRANSFEREE") which is:
(1) an Affiliate which is controlled by the Guarantor; or
(2) a Telecommunications Provider; or
(3) a Private Equity Fund; or
(4) an Eligible Corporation; and
(ii) such Transferee prior to any such disposal to it gives a written
undertaking in agreed form to the Guarantor and the Security
Trustee for the benefit of the Finance Parties that it shall not
enter into any further disposal of any of the issued share
capital or other Equity transferred to it other than to any
person which itself falls within the criteria set out in Clause
7.6(b)(i)(1) to (4) inclusive above and which has itself, prior
to any such further disposal, given an undertaking in the same
terms mutatis mutandis and only provided that all subsequent
transferees or successors in title of such Transferee prior to
any further disposals to them give an equivalent undertaking in
the same terms mutatis mutandis;
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(iii) if the Transferee or any subsequent transferees or successors in
title of such Transferee falls within the criteria set out in
Clause 7.6(b)(i)(1) above, such Transferee, subsequent
transferee, or successor in title of such Transferee, as the
case may be, executes contemporaneously with such disposal, or
further disposal, as the case may be, and Additional Share
Mortgage or other Security Interest over the share capital or
other Equity transferred to it in form and substance equivalent
to the ANC Share Mortgage; and
(iv) any shareholder agreement or other contractual arrangement
between the shareholders of the Borrower which may be entered
into with any Transferee, subsequent transferee, or successor in
title of such Transferee, as the case may be, in connection with
any disposal or further disposal, as the case may be, shall not
jeopardise the effectiveness, enforceability or priority of any
Security Interest constituted by any of the Finance Documents
nor the ability of any Security Party to perform its obligations
under the Finance Documents and if requested by the Security
Trustee, subject to any applicable regulations of any Guarantor
Stock Exchange, the Guarantor shall execute an additional
Security Document in favour of the Security Trustee in agreed
form constituting a Security Interest in respect of the
Guarantor's right, title and interest in and to such shareholder
agreement or arrangement.
(c) Following the Guarantor IPO Date, the Guarantor undertakes that it
shall continue to own or control directly or indirectly at least 51%
of the total issued share capital and other Equity in the Borrower.
(d) The Guarantor, subject to any applicable regulations of any Guarantor
Stock Exchange, undertakes that it shall at all times control the
appointment of the directors of the board of directions of the
Borrower subject to which, it shall ensure that the Borrower has no
more than 7 directors appointed to its board of whom 3 shall be
appointed by the Guarantor and/or CNC International and one shall be
an independent director which has been appointed by the Guarantor
and/or CNC International if required by such regulations.
7.7 INSURANCE
Prior to the Guarantor IPO Date, the Guarantor will (if necessary) effect
and maintain such insurance over and in respect of its assets and business
with reputable underwriters or insurance companies in such manner and to
such extent as is reasonable and customary for a business enterprise
engaged in the same or a similar business and in the same or similar
localities and whose practice is not to self-insure.
7.8 SHARE CAPITAL
Prior to the Guarantor IPO Date, the Guarantor will not, without the prior
written consent of the Security Trustee, purchase or redeem any of its
issued shares or other
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Equity or reduce its share capital or make a distribution of assets or
other capital distribution to its shareholders.
7.9 DIVIDENDS
Prior to the Guarantor IPO Date, the Guarantor will not declare or pay
any dividend or make any other distribution (whether of an income or
capital nature) except if:
(a) no Default has occurred or would occur as a result of such
declaration, payment or distribution; and
(b) the amount of the declaration, payment or distribution shall
not be greater than 50% of the distributable profits of the
Guarantor in the financial year of the Guarantor preceding the
time of such declaration, payment or distribution.
7.10 LENDING
The Guarantor will not make or grant any loan or advance except (i) to
a Subsidiary of the Guarantor or (ii) as may be necessary or
appropriate in the ordinary course of the Guarantor's business.
7.11 NOTIFICATION OF DEFAULTS
The Guarantor will promptly inform the Security Trustee of any
occurrence of any event which it becomes aware will materially and
adversely affect its ability to perform its obligations under this Deed
or under any other Finance Document.
7.12 CONSENTS
The Guarantor will obtain and promptly renew from time to time and
thereafter maintain in full force and effect, and will comply in all
material respects with, all such authorizations, approvals, consents,
licenses and exemptions as may be required under any applicable law or
regulation to enable it to perform its obligations under the Finance
Documents or required for the validity or enforceability against the
Guarantor of this Deed or any other Finance Document to which it is a
party.
7.13 PARI PASSU RANKING
The Guarantor undertakes that its obligations hereunder do and will at
all times rank at least pari passu with all other present and future
unsecured and unsubordinated obligations of the Guarantor save for any
obligations mandatorily preferred by law and not by contract.
7.14 NO PREJUDICE
The Guarantor shall not do or permit to be done anything which may
jeopardise the effectiveness, enforceability or priority of any
Security Interest constituted by any of the Finance Documents.
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7.15 CHANGE OF BUSINESS
The Guarantor shall at all times remain as a limited liability company
incorporated under the laws of Hong Kong, and shall procure that at all
times:
(a) the Guarantor Group will remain principally engaged in the business of
providing, or investing in businesses which provide fixed, mobile,
cable, multimedia, paging, internet, data and voice transmission, and
domestic and/or international telecommunications services and matters
ancillary or related thereto; and
(b) the Guarantor Group will carry on business principally in the PRC
including Hong Kong.
7.16 SUPPORT OF ASIA NETCOM CORPORATION LIMITED
The Guarantor undertakes that if the Debt Service Coverage Ratio is less
than 1:11, it shall provide reasonable financial support to the Borrower so
as to enable the Borrower's Debt Service Coverage Ratio to be equal to or
more than 1:1 in respect of each Relevant Period and ending on each Balance
Sheet Date. The Guarantor undertakes and agrees to support the Borrower in
the form of loans, or in the form of equity contributions (which shall be
each subordinated to the indebtedness under the Facility on terms
acceptable to the Lenders).
7.17 COMPLIANCE WITH LAWS AND REGULATIONS
The Guarantor will comply and will ensure that each other member of the
Guarantor Group complies with all laws, regulations, agreements, licences
and concessions material to the carrying on of its respective business
where failure to do so is reasonably likely to have a material adverse
effect on the business or financial condition of the Guarantor.
7.18 FINANCIAL CONDITION
(a) Following the Guarantor IPO Date, the Guarantor undertakes and agrees
with the Finance Parties that the Guarantor shall ensure that in
respect of each Relevant Period ending on a Balance Sheet Date:
(i) the Consolidated Tangible Net Worth of the Guarantor is not less
than US$3,000,000,000;
(ii) the Consolidated Total Assets of the Guarantor is not less than
US$10,000,000,000; and
(iii) the Consolidated Financial Indebtedness of the Guarantor does
not exceed 200 per cent of the Consolidated Tangible Net Worth
of the Guarantor.
(b) For the purpose of this Clause 7.18 (Financial Condition),
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"CONSOLIDATED FINANCIAL INDEBTEDNESS"
means in respect of the Guarantor, any indebtedness of the Guarantor and its
Subsidiaries for or in respect of:
(a) monies borrowed and debit balances at banks;
(b) any amount raised under any note purchase facility or the issue of any
debenture, bond, note, loan stock or other instrument or security;
(c) any acceptance credit;
(d) receivables sold or discounted (otherwise than on a non-recourse
basis);
(e) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable where
the advance or deferred payment is arranged primarily as a method of
raising finance or financing the acquisition of that asset;
(f) leases or hire purchase contracts entered into primarily as a method
of raising finance or financing the acquisition of the asset leased
unless the aggregate financing amount of all such leases at any time
does not exceed US$500,000;
(g) net amount payable in respect of currency swap or interest rate swap,
cap or collar arrangements or other derivative instruments;
(h) amounts raised under any other transaction having the commercial
effect of a borrowing or raising of money;
(i) preferred shares or shares which are issued or the terms of which are
varied in each case after the date of this Deed and which are expressed
to be redeemable;
(j) deferred payments for assets (other than current assets) or services
acquired other than on trade credit terms in the ordinary course of a
person's business; and
(k) any guarantee, indemnity (including counter indemnity) or similar
assurance against financial loss of any person,
but no particular indebtedness shall be taken into account more than once.
For the purposes of calculating Consolidated Financial Indebtedness, any amount
outstanding or payable in a currency other than US Dollars shall on that day be
taken into account:
(l) if an audited consolidated balance sheet of a member of the Guarantor
Group has been prepared as at that day, in their US Dollar equivalent
at the rate of exchange used for the purpose of preparing that balance
sheet; and
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(ii) in any other case, in their US Dollar equivalent at the rate
of exchange that would have been used had an audited
consolidated balance sheet of the Guarantor Group been
prepared as at that day in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means in respect of the Guarantor at
any relevant time, the aggregate of:
(a) the amount paid up or credited as paid up on the issued share
capital of the Guarantor; and
(b) the amount standing to the credit of the consolidated capital
and revenue reserves of the Guarantor Group,
based on the Balance Sheet at that time but adjusted by:
(i) adding any amount standing to the credit of the profit and
loss account of the Guarantor Group for the period ending on
the date of the Balance Sheet to the extent not included in
sub-paragraph (b) above;
(ii) deducting any dividend or other distribution declared,
recommended or made by any member of the Guarantor Group;
(iii) deducting any amount standing to the debit of the profit and
loss account of the Guarantor Group for the period ending on
the date of the Balance Sheet to the extent not deducted from
sub-paragraph (b) above;
(iv) deducting any amount attributable to goodwill (other than
non-amortised goodwill) or any other intangible asset;
(v) adding any amount attributable to an upward revaluation of
assets by an independent professional valuer acceptable to the
Security Trustee after 31st December, 2003, or in the case of
assets of a person which becomes a member of the Guarantor
Group after that date, the date on which that person becomes a
member of the Guarantor Group;
(vi) reflecting any variation in the amount of the issued share
capital of the Guarantor and the consolidated capital and
revenue reserves of the Guarantor Group after the date of the
Balance Sheet;
(vii) reflecting any variation in the interest of the Guarantor in
any other member of the Guarantor Group since the date of the
Balance Sheet;
(viii) excluding any amount attributable to deferred taxation; and
(ix) excluding any amount attributable to minority interests.
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"CONSOLIDATED TOTAL ASSETS"
means, in respect of the Guarantor Group, as at any relevant time, the
aggregate of the total assets of the Guarantor Group determined on a
consolidated basis.
"RELEVANT PERIOD" means:-
(a) each financial year of the Guarantor;
(b) each period beginning on the first day of the second half of a
financial year of the Guarantor and ending on the last day of the first
half of its next financial year; and
(c) following the occurrence of a Default, each period beginning on the
then latest Balance Sheet Date and ending on the date of that Default.
All the terms and expressions used in this Clause 7.18 are to be calculated
in accordance GAAP.
8. CLAIMS BY GUARANTOR
The Guarantor represents to and undertakes with the Security Trustee for
the benefit of each Finance Party that it has not taken and will not take
any security in respect of its liability under this Deed whether from the
Borrower or any other person. So long as any sum remains owing by any
Security Party to the Finance Parties, the Guarantor shall not exercise any
rights which it may have by reason of performance by it of its obligations
under the Finance Documents.
(a) to be indemnified by any Security Party (other than the Guarantor);
(b) to claim any contribution from any other guarantor of any Security
Party's obligations under the Finance Documents; and/or
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties under
the Finance Documents or of any other guarantee or security taken
pursuant to, or in connection with, the Finance Documents by any
Finance Party.
The Guarantor must hold in trust for and immediately pay or transfer to the
Finance Parties any payment or distribution or benefit of security received
by it contrary to this Clause 8 or in accordance with any directions given
by the Security Trustee under this Clause 8 provided that nothing in this
Clause 8 shall have the effect of creating a charge in favour of the
Finance Parties.
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9. FURTHER INDEMNITIES
9.1 GENERAL INDEMNITY
The Guarantor hereby undertakes with each Finance Party to indemnify and
keep indemnified the Finance Parties and each of them (each an
"INDEMNITEE") from and against all costs, charges and expenses which such
Finance Party shall incur in connection with the non-performance or
non-observance of any of the undertakings and agreements on the part of
the Guarantor contained in this Deed (unless and to the extent that any of
the foregoing results from, or is attributed to the fraud, gross
negligence or wilful misconduct of that indemnitee).
9.2 CURRENCY INDEMNITY
(a) If an amount due to the Security Trustee or any other Finance Party
from the Guarantor under this Deed (a "SUM"), or any order, judgment
or award given or made in relation to a sum, has to be converted from
the currency (the "FIRST CURRENCY") in which that sum is payable into
another currency (the "SECOND CURRENCY") for the purpose of:
(i) making or filing a claim or proof against the Guarantor;
(ii) obtaining or enforcing an order, judgment or award in relation
to any litigation or arbitration proceedings,
the Guarantor shall, as an independent obligation to the Security Trustee
and such other Finance Party, indemnify the Security Trustee and such other
Finance Party to whom that sum is due against any cost, loss or liability
arising out of or as a result of the conversion including any discrepancy
between (A) the rate of exchange used to convert that sum from the first
currency into the second currency and (B) the rate or rates of exchange
available to that person at the time of its receipt of that sum.
(b) The Guarantor waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency or currency unit
other than that in which it is expressed to be payable.
10. GUARANTOR IPO DATE
Without prejudice to any other provisions or restrictions in the Finance
Documents, the Security Trustee (acting on behalf of the Finance Parties)
acknowledges that prior to the Guarantor IPO Date the Guarantor may,
subject thereto, dispose of its assets and may carry out any corporate
reorganisation of the Guarantor Group for the purpose of, or in direct
connection with, achieving a Guarantor IPO, provided always that (a) the
Guarantor notifies the security Trustee by at least 21 days notice of such
intended disposal; and (b) such disposal or reorganisation does not and
will not contravene or materially and adversely affect the ability of the
Guarantor or any other Security Party
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to perform its obligations under, the Finance Documents or the rights
of any of the Finance Parties under the Finance Documents or result in
any of the Finance Documents required to be executed by a Security
Party being unable to be provided or being, or the rights of any of the
Finance Parties thereunder being, adversely impaired.
11. SUSPENSE ACCOUNT
The Security Trustee may place and keep any monies received under this
Deed, before or after the insolvency of the Guarantor or any other
Security Party, to the credit of a suspense account for so long as is
required by the Security Trustee to preserve the rights of the Finance
Party to xxx or prove for the whole amount in respect of claims against
the Guarantor, any other Security Party or any other person.
12. SET OFF
(a) Without prejudice to any right of set-off, combination of
accounts, lien or other rights which the Security Trustee or
any other Finance Party is at any time entitled whether by
operation of law or contract or otherwise, the Security
Trustee and each other Finance Party may (but shall not be
obliged to) set off against any obligation of the Guarantor
due and payable by it hereunder without prior notice against
any moneys held by the Security Trustee or such other Finance
Party for the account of the Guarantor at any office of the
Security Trustee or such other Finance Party anywhere and in
any currency. The Security Trustee or such other Finance Party
may effect such currency exchanges as are appropriate to
implement such set-off.
(b) If the obligations are in different currencies, the Security
Trustee or any other Finance Party may convert either
obligation at a market rate of exchange in its usual course of
business for the purpose of the set-off.
13. FURTHER ASSURANCE
The Guarantor agrees that at any time and from time to time upon the
written request of the Security Trustee it will promptly and duly
execute and deliver any and all such further instruments and documents
as the Security Trustee may reasonably request for the purpose of
obtaining the full benefit of this Deed and of the rights and powers
herein granted.
14. NOTICES
14.1 NOTICES
Any notice or communication under or in connection with this Deed
shall be in writing and shall be delivered personally or by prepaid
letter (airmail if available) or facsimile
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transmission to the addresses or facsimile numbers set out below or at
such other address as the recipient may have notified to the other parties
in writing. Proof of posting or despatch of any notice or communication to
any party hereto shall be deemed to be proof of receipt:-
(a) in the case of a letter, on the fifth Business Day after posting
if airmail or second Business Day if local mail;
(b) in the case of a facsimile transmission, on the Business Day
immediately following the date of despatch with confirmed
facsimile report.
All communications or other correspondence between the Guarantor and any
of the Finance Parties in connection with this Deed shall be made through
the Security Trustee.
14.2 ADDRESSES
Notices or communications shall be sent to the following addresses:-
To the Guarantor:-
Name China Netcom Corporation (Hong Kong) Limited
Address 59/F., Bank of China Tower
0 Xxxxxx Xxxx
Xxxxxxx
Xxxx Xxxx
Fax (000) 0000 0000
Attention Mr. Wenlong Sun
To the Security Trustee:-
Name Industrial and Commercial Bank of China (Asia) Limited
Address 10/F, ICBC Asia Building
000-000 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax 0000 0000
Attention Xx. Xxxxxx Xxxxx/Ms. Xxx Xxxx
14.3 LANGUAGE
Each notice or document referred to in this Deed or to be delivered under
this Deed shall be in the English language.
15. WAIVERS, AMENDMENTS AND CONSENTS, REMEDIES, SEVERABILITY, ASSIGNMENT,
COUNTERPARTS AND DEED
15.1 WAIVERS
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No failure or delay on the part of the Security Trustee or any other
Finance Party to exercise any power, right or remedy under this Deed
shall operate as a waiver thereof, nor shall any single or partial
exercise by the Security Trustee or any other Finance Party of any
power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
15.2 AMENDMENTS AND CONSENTS
(a) Any amendment of any provision of this Deed shall only be
effective if made in accordance with provisions with this Deed
and executed in writing by both the Guarantor and the Security
Trustee. Any waiver of any breach or default under this Deed
shall only be effective if the Security Trustee acting on the
instructions of the Lenders agrees in writing. Any consent by
the Security Trustee under this Deed must be made in writing.
(b) Any such waiver of or consent under any provision of this Deed
may be given in writing subject to any conditions thought fit
by the Security Trustee or the Lenders and shall be effective
only in the instance and for the purpose for which it is
given.
15.3 REMEDIES
The remedies provided in this Deed are cumulative and are not exclusive
of any remedies provided by law.
15.4 SEVERABILITY
If any provision of this Deed is prohibited or unenforceable in any
jurisdiction such prohibition or unenforceability shall not invalidate
the remaining provisions hereof or affect the validity or
enforceability of such provision in any other jurisdiction.
15.5 ASSIGNMENT
The Security Trustee may assign its rights under this Deed subject to
the provisions of the Facility Agreement. The Guarantor shall not
assign any of its rights hereunder.
15.6 COUNTERPARTS
This Deed may be executed in any number of counterparts including by
facsimile and all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Deed by signing
any such counterpart.
15.7 DEED
It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute this document
under hand.
_______________________________________________________________________________
[Guarantee and Indemnity]
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16. GOVERNING LAW AND JURISDICTION
16.1 GOVERNING LAW
This Deed is governed by and construed in accordance with the laws of Hong
Kong.
16.2 SUBMISSION TO JURISDICTION
For the benefit of the Security Trustee and the other Finance Parties, the
Guarantor irrevocably agrees that the courts of Hong Kong are to have
jurisdiction to settle any disputes which may arise out of or in connection
with this Deed and that, accordingly, any legal action or proceedings
arising out of or in connection with this Deed ("PROCEEDINGS") may be
brought in those courts and the Guarantor irrevocably submits to the
jurisdiction of those courts.
16.3 OTHER JURISDICTIONS
Nothing in this Clause shall limit the right of the Security Trustee or any
other Finance Party to take proceedings against the Guarantor in any other
court of competent jurisdiction nor shall the taking of Proceedings in one
or more jurisdictions preclude the Security Trustee or any other Finance
Party from taking Proceedings in any other jurisdiction, whether
concurrently or not.
16.4 WAIVER OF INCONVENIENT FORUM
The Guarantor irrevocably waives any objection which it may at any time
have to the laying of the venue of any Proceedings in any court referred to
in this Clause 16 (Governing Law and Jurisdiction) and any claim that any
such Proceedings have been brought in an inconvenient forum.
16.5 SERVICE
The Guarantor irrevocably consents to any process in any Proceeding
anywhere being served by mailing a copy by post in accordance with Clause
14 (Notices). Nothing shall affect the right to serve any process in any
other manner permitted by law.
16.6 WAIVER OF IMMUNITIES
To the extent that the Guarantor has or hereafter may acquire any immunity
(sovereign or otherwise) from any legal action, suit or proceeding, from
jurisdiction of any court or from set-off or any legal process (whether
service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to
itself or any of its property, the Guarantor hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations
under this Deed.
IN WITNESS whereof this Deed has been executed by the parties hereto and is
intended to be and is hereby delivered by the Guarantor as its deed on the day
and year first above written.
_______________________________________________________________________________
[Guarantee and Indemnity]
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(Schedule 1)
(Form of Confidentiality Undertaking)
SCHEDULE 1
FORM OF CONFIDENTIALITY UNDERTAKING
SEE ANNEX A
_______________________________________________________________________________
(Guarantee and Indemnity)
- 27 -
SIGNATURE PAGE
GUARANTOR
THE COMMON SEAL OF )
CHINA NETCOM CORPORATION )
(HONG KONG) LIMITED )
is hereby affixed )
in the presence of: )
/s/ [Signature]
/s/ [Signature]
/s/ Xxxxxxxx Xxxxxx
/s/ Shearman and Sterling LLP
_______________________________________________________________________________
[Guarantee and Indemnity]
/s/ Sun Wenlong
SECURITY TRUSTEE
SIGNED by )
)
/s/ Xxxx Xxx, Xxxxxx Xxx ) /s/ Xxxx Xxx /s/ Xxxxxx Xxx
for and on behalf of )
INDUSTRIAL AND COMMERCIAL )
BANK OF CHINA (ASIA) LIMITED )
-------------------------------------------------------------------------------
[Guarantee and Indemnity]
-29-
ANNEX A
CONFIDENTIALITY AGREEMENT
[DATE]
Gentlemen:
In connection with the guarantee (the "Guarantee") of the term loan
facility (the "Facility") to Asia Netcom Corporation Limited ("ANC") by each of
China Netcom Corporation (Hong Kong) Limited ("CNC HK") dated [o] 2004, you have
requested certain information regarding CNC HK.
As used herein, "Evaluation Material" means any and all information
relating to CNC HK, provided to you by us or any of our affiliates or advisers,
in whatever form, and includes information given orally and any document,
electronic file or any other way of representing or recording information which
contains or is derived or copied from such information, but excludes information
that (a) is or becomes public knowledge other than as a direct or indirect
result of any breach of this agreement or (b) is known by you before the date
the information is disclosed to you by us or any of our affiliates or advisers
or is lawfully obtained by you after that date, other than from a source which
is connected with CNC HK and which, in either case, has not been obtained in
violation of, and is not otherwise subject to, any obligation of
confidentiality. As used herein, "Representatives" means the directors,
officers, partners, employees, agents, representatives or advisors (including,
without limitation, attorneys, accountants and consultants) of a party.
In consideration of your being furnished with the Evaluation Material, you
agree that:
1. Subject to paragraph 3 below, the Evaluation Material will be kept
confidential and you will not, and you will cause your Representatives not to,
without the prior written consent of CNC HK and ANC, disclose any Evaluation
Material, in whole or in part to any person. You will not use, and you will
cause your Representatives not to use, such Evaluation Materials for any purpose
other than in connection with evaluating the business and financial condition of
CNC HK in connection with the Guarantee and the Facility. Moreover, you agree
not to disclose that you are making such evaluation. You agree to disclose
Evaluation Material to your Representatives only if and to the extent that such
Representatives need to know the Evaluation Material for the purpose of such
evaluation. You agree that before providing your Representatives any Evaluation
Material, you shall advise such Representatives of this agreement and that such
Representatives shall have agreed with you, and for the benefit of the CNC HK,
to keep confidential and not to disclose the Evaluation Material and otherwise
be bound by the provisions hereof as if they were you. In any event, you will be
responsible for any breach of this agreement by any of your Representatives and
you agree, at your sole expense, to take all reasonable measures (including but
not limited to court proceedings) to restrain your Representatives from
unauthorized disclosure or use of the Evaluation Material.
_______________________________________________________________________________
[Guarantee and Indemnity]
-1-
2. Subject to paragraph 3 below, without the prior written consent of CNC
HK and ANC, you shall not and you shall cause your Representatives not to
disclose to any person any information regarding the Facility or the Guarantee
or any information relating in any way to the Evaluation Material. You further
agree that the Evaluation Material that is in written or electronic form shall
not be copied or reproduced by you or your Representatives at any time without
the prior written consent of CNC HK.
3. In the event that you or your Representatives are requested or required
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, any informal or formal investigation by
any government or governmental agency or authority or otherwise) to disclose any
Evaluation Material, you agree, prior to any such disclosure (i) to immediately
notify CNC HK of the existence, terms and circumstances surrounding such a
request, (ii) to promptly consult with the CNC HK on the advisability of taking
legally available steps to resist or narrow such request and to cooperate with
CNC HK in taking any such steps and (iii) if disclosure of such information is
required, to furnish only that portion of the Evaluation Material which, in the
written opinion of your counsel, you are legally compelled to disclose and to
cooperate with any action by CNC HK to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Evaluation Material.
4. You hereby acknowledge that you are aware that by receiving the
Evaluation Material, (a) you may receive material non-public information about
CNC HK and ANC, and (b) there exist securities laws that may restrict or
eliminate your ability to sell or purchase securities of CNC HK while in
possession of such information or that may restrict your ability to share such
information with other persons who may engage in such trading. You hereby agree
(x) not to violate such securities laws and (y) to use your best efforts to
prevent any of your Representatives who receive such information from (whether
prepared by CNC HK or their Representatives or otherwise and irrespective of the
form of communication) from violating such restrictions.
5. You acknowledge and agree that in the event of any breach of this
agreement, CNC HK would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that CNC HK in
addition to any other remedy to which it may be entitled in law or equity,
shall be entitled to an injunction or injunctions to prevent breaches of this
agreement and to compel specific performance of this agreement, without the
need for proof of actual damages. Such remedy shall not be deemed to be the
exclusive remedy for breach of this agreement but shall be in addition to all
other remedies available at law, equity or otherwise to CNC HK. You agree to
waive, and to cause your Representatives to waive, any requirement for the
securing or posting of any bond in connection with such remedy. You also agree
to reimburse CNC HK for all costs and expenses, including attorney's fees,
incurred by them in successfully enforcing your or your Representatives'
obligations hereunder.
6. The agreements set forth in this agreement may be modified or waived
only by a separate writing by CNC HK and you which expressly modifies or waives
such agreements.
_______________________________________________________________________________
[Guarantee and Indemnity]
-2-
7. It is understood and agreed that no failure or delay by CNC HK or ANC in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
8. This agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to the principles of conflict
of laws thereof.
9. Each of the parties hereto (a) consents to submit itself to the
nonexclusive personal jurisdiction of any federal court located in the State of
New York or any New York supreme court in the event any dispute arises out of
this agreement, (b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it shall not bring any action relating to this agreement in
any court other than a federal or state court sitting in the State of New York.
10. If any provision of this agreement is held to be illegal, void or
unenforceable, such action shall have no effect on the enforceability of any
other provision of this agreement. The agreement may be executed in
counterparts, each of which shall be deemed to be an original, all of which
shall constitute the same agreement.
11. Your obligations under this agreement will continue until the second
anniversary of the date of this agreement, unless expressly terminated upon
mutual written consent of the parties.
Please confirm that the foregoing is in accordance with your understanding
of our agreement by signing and returning to us a copy of this letter.
Very truly yours,
CHINA NETCOM CORPORATION (HONG KONG)
LIMITED
By:
------------------------------
Name:
Title:
_______________________________________________________________________________
[Guarantee and Indemnity]
- 3 -
Confirmed and Agreed to as of
the date first written above
[Name of Lender]
By:
-----------------------------------
Name:
Title:
_______________________________________________________________________________
[Guarantee and Indemnity]
-4-
