EXHIBIT 10.42
Execution Copy
Dated 27 July 2004
THE COMPANIES NAMED IN SCHEDULE 2
(as Subordinated Lenders)
and
ASIA NETCOM CORPORATION LIMITED
(as Borrower)
in favour of
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED
(as Security Trustee)
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GROUP SUBORDINATION DEED
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XXXXXXXX XXXXXX
HONG KONG
TABLE OF CONTENTS
CLAUSE NO. CLAUSE HEADING PAGE NO.
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1. DEFINITIONS AND CONSTRUCTIONS ........................................... 1
2. SUBORDINATION OF INDEBTEDNESS............................................ 3
3. ASSIGNMENT OF SUBORDINATED INDEBTEDNESS.................................. 5
4. ACKNOWLEDGEMENT BY BORROWER.............................................. 8
5. CONTINUING AND INDEPENDENT SECURITY...................................... 8
6. REPRESENTATIONS AND WARRANTIES........................................... 9
7. TAXES AND OTHER DEDUCTIONS............................................... 12
8. COSTS, CHARGES AND EXPENSES.............................................. 13
9. UNDERTAKINGS............................................................. 14
10. NO SECURITY BY SUBORDINATED LENDER....................................... 15
11. INDEMNITY................................................................ 15
12. SUSPENSE ACCOUNT......................................................... 16
13. SET OFF.................................................................. 16
14. POWER OF ATTORNEY........................................................ 17
15. FURTHER ASSURANCE........................................................ 17
16. NOTICES.................................................................. 17
17. WAIVERS, AMENDMENTS AND CONSENTS, REMEDIES, SEVERABILITY,
ASSIGNMENT AND OUNTERPARTS .............................................. 19
18. GOVERNING LAW AND JURISDICTION........................................... 20
SCHEDULE 1 - PARTICULARS OF SUBORDINATED INDEBTEDNESS................................. 22
SCHEDULE 2 - SUBORDINATED LENDERS..................................................... 23
SIGNATURE PAGE........................................................................ 24
[Group Subordination Deed]
THIS GROUP SUBORDINATION DEED is made on 27 July 2004
BETWEEN:-
(1) THE COMPANIES NAMED AND PARTICULARS OF WHICH ARE SET OUT IN SCHEDULE 2
(each a "SUBORDINATED LENDER" and collectively the "SUBORDINATED
LENDERS");
(2) ASIA NETCOM CORPORATION LIMITED, a company incorporated under the laws of
Bermuda, and whose registered office is situated at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx, XX00 Xxxxxxx (the "BORROWER"); and
(3) INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED, a company
incorporated under the laws of Hong Kong acting through its head office
at ICBC Xxxx Xxxxxxxx, 000-000 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx acting on
its own behalf and as facility agent and trustee for and on behalf of 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 Amendment and Restatement Deed (the "FACILITY AGREEMENT")
entered into by (1) the Borrower, as borrower (2) the banks and financial
institutions named therein as lenders (the "LENDERS"); (3) the Industrial
and Commercial Bank of China (Asia) Limited as arranger; and (4) the
Security Trustee, 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) The Security Trustee is acting as facility agent for the Finance Parties
pursuant to the Facility Agreement and security agent and trustee for the
Finance Parties pursuant to this Deed and other Finance Documents.
(C) It is a condition precedent to the availability of the Facility under the
Facility Agreement that the Subordinated Lenders and the Borrower shall
have executed and delivered this Deed to the Security Trustee.
NOW THIS DEED WITNESSES as follows:-
1. DEFINITIONS AND CONSTRUCTION
1.1 TERMS DEFINED
In this Deed, unless the context otherwise requires, terms used shall
have the meanings defined in the Facility Agreement and:-
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"SECURED OBLIGATIONS" means any and all moneys, liabilities and
obligations or liability (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) which
are or may become payable by the Borrower or any of the Subordinated
Lenders or any other Finance Party which is a member of the CNC HK Group
to the Finance Parties pursuant to the Finance Documents and/or all other
obligations hereby secured.
"SUBORDINATED INDEBTEDNESS" means the loans particulars of which are set
out in Schedule 1 in respect of which the Borrower is currently indebted
to the Subordinated Lenders and all and any sums which are now or may
hereafter become due, owing or incurred by the Borrower to any of the
Subordinated Lenders, whether in respect of principal, interest or
otherwise, on account of any advance, loan or payment made to or for the
account of the Borrower.
"SUBORDINATED LOAN AGREEMENT" means any loan agreement, facility letter
or other document now or hereafter entered into between any of the
Subordinated Lenders and the Borrower creating or evidencing the
Subordinated Indebtedness (or any part thereof).
1.2 TRUST
All rights, benefits, interests, powers and discretions granted to or
conferred on the Security Trustee pursuant to this Deed shall be held by
the Security Trustee on trust for the benefit of itself as Security
Trustee and each Finance Party from time to time. The Security Trustee
may do all acts within its powers to administer and manage the trust
constituted by this Clause including any full or partial release and/or
re-assignment by deed of the rights, benefits and interests conferred by
Clauses 2.1 and 3.2 or the release of all or any part of the Subordinated
Indebtedness from this Deed. The trust constituted by this Clause shall
come into existence on the date of this Deed and shall last for so long
as any of the Secured Obligations remain outstanding provided that for
the purposes of the rule against perpetuities, the perpetuity period
applicable to the trust and any dispositions made or to be made pursuant
to this Deed and this trust, is hereby specified as a period of eighty
(80) years less than (1) day from the date of this Deed.
1.3 CLAUSE HEADINGS
Clause headings and the table of contents are for ease 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 13 of the Facility Agreement shall be deemed incorporated in
this Deed mutatis mutandis as if set out separately in this Deed;
and
(b) references to the "SUBORDINATED LENDER", the "BORROWER", the
"SECURITY
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[Group Subordination Deed]
TRUSTEE" or any "FINANCE PARTY" include, where the context permits,
their respective successors and transferees and permitted assigns in
accordance with their respective interests.
1.5 SUBORDINATED LENDERS' LIABILITY
The rights and obligations of the Subordinated Lenders hereunder and all
representations, warranties, undertakings, and indemnities given by each
and any of them in this Deed are several.
2. SUBORDINATION OF INDEBTEDNESS
2.1 SUBORDINATION
In consideration of the Lenders agreeing to make the Facility available
to the Borrower upon the terms and conditions of the Facility Agreement
and as a continuing security for the due and punctual performance and
discharge of the Secured Obligations, each of the Subordinated Lenders
agrees that throughout the continuance of this Deed and so long as the
Secured Obligations or any part thereof remains owing:-
(a) the Subordinated Indebtedness owing to it:-
(i) is, and shall remain, subordinated and the payment thereof
deferred to all and any rights, claims and actions which the
Security Trustee or any Finance Party may now or hereafter
have against the Borrower in respect of the Secured
Obligations;
(ii) shall not be repaid or repayable, in whole or in part, except
with the prior written consent of the Security Trustee or in
the event of the winding-up, liquidation or dissolution of the
Borrower (or any proceedings analogous thereto);
(iii) shall not, except with the prior written consent of the
Security Trustee, be subject to payment of interest (although
interest may accrue thereon);
(iv) is and shall remain unsecured by any Security Interest over
the whole or any part of the assets of the Borrower;
(v) is not, and shall not become capable of being, subject to any
right of set-off or counterclaim;
(b) none of the Subordinated Lenders shall claim, request, demand, xxx
for, take or receive (whether by set-off or in any other manner and
whether from the Borrower or any other person) any money or other
property in respect of the Subordinated Indebtedness or any part
thereof except with the prior written consent of the Security
Trustee;
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[Group Subordination Deed]
(c) if any monies (including the proceeds of any set-off or
counterclaim) or other property are received in respect of the
Subordinated Indebtedness by or on behalf of any Subordinated
Lender, it shall forthwith pay or transfer the same to the Security
Trustee and the Security Trustee shall apply the same in or towards
satisfaction of the Secured Obligations; and
(d) if any Security Interest is created as security for the Subordinated
Indebtedness then, immediately on the creation thereof, the benefit
of such Security Interest shall be assigned or transferred in favour
of the Security Trustee as security for the Secured Obligations and
any instrument or agreement evidencing such Security Interest shall
be deposited with the Security Trustee.
2.2 WINDING-UP OF BORROWER
In any proceedings for the compulsory or voluntary winding-up, liquidation
or dissolution of the Borrower (or any proceedings analogous thereto):-
(a) the Security Trustee and the Finance Parties shall be entitled to
receive payment in full of the Secured Obligations before any
Subordinated Lender shall be entitled to receive any payment on
account of the Subordinated Indebtedness or any part thereof;
(b) each Subordinated Lender agrees that it will prove for the full
amount of its claims in respect of the Subordinated Indebtedness and
that any amounts payable to such Subordinated Lender in respect of
the Subordinated Indebtedness shall be applied in payment or
satisfaction of the Secured Obligations until the whole of the
Secured Obligations shall have been certified by the Security
Trustee as having been discharged and the remaining balance (if any)
may be applied towards payment of the amounts owing to such
Subordinated Lender in respect of such Subordinated Indebtedness.
2.3 SUBORDINATED LOAN AGREEMENTS
Each Subordinated Lender agrees that:-
(a) each and every Subordinated Loan Agreement now or hereafter entered
into shall be subject in every respect to the terms of this Deed;
(b) insofar as the terms of any Subordinated Loan Agreement or any
transaction in connection therewith are or may be inconsistent with
the terms of this Deed, the terms contained herein shall prevail;
(c) no amendment to the principal amount, interest rate or payment terms
shall be made to any Subordinated Loan Agreement except in writing
and with the Security Trustee's prior written approval, such
approval not to be unreasonably withheld, of the terms thereof; and
(d) immediately after the execution of any Subordinated Loan Agreement
or any
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[Group Subordination Deed]
agreement for the amendment of any Subordinated Loan Agreement,
copies thereof shall be delivered to the Security Trustee as
evidence thereof.
2.4 TRUST
If at any time throughout the continuance of this Deed and so long as the
Secured Obligations or any part remains owing, any of the Subordinated
Lender receives from the Borrower a payment (including by way of set-off)
or distribution in cash or in kind of, or an account of, the Subordinated
Indebtedness, that Subordinated Lender shall:
(a) forthwith notify the Security Trustee of such receipt;
(b) hold any payment so received on trust for the Security Trustee (for
the account of the Finance Parties) in a separate account; and
(c) pay and distribute any payment so received, or (in the case of a
set-off) pay an equivalent amount, on demand, to the Security
Trustee for application in or towards the Secured Obligations.
3. ASSIGNMENT OF SUBORDINATED INDEBTEDNESS
3.1 COVENANT TO PAY
Each of the Subordinated Lenders hereby covenants that it will on demand
pay to the Security Trustee and the Finance Parties the Secured
Obligations when the same become due for payment or discharge in
accordance with the Finance Documents.
3.2 ASSIGNMENT
In consideration as aforesaid, each Subordinated Lender hereby assigns to
the Security Trustee absolutely all such Subordinated Lender's right,
title, interest and benefit in and to the Subordinated Indebtedness owing
to it and all and any moneys (including the proceeds of any set-off or
counterclaim) or other property which it may receive on account of such
Subordinated Indebtedness or any part thereof and the full benefit of all
rights and remedies relating thereto including, but not limited to, all
claims and remedies for non-payment of the same and all claims under
charges, encumbrances, guarantees and other security and all proceeds and
forms of remittance in respect of the same and the full benefit of all
powers and provisions whatsoever contained in the relevant Subordinated
Loan Agreements (or any of them) as a continuing security for the due and
punctual performance and discharge of the Secured Obligations.
3.3 APPLICATION
All monies or other property hereby assigned to or otherwise received by
the Security Trustee in respect of the Subordinated Indebtedness may be
applied by the Security Trustee in or towards satisfaction of the Secured
Obligations in such manner as it may think fit.
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[Group Subordination Deed]
3.4 PERFORMANCE AND INDEMNITY
Notwithstanding the foregoing, each Subordinated Lender shall remain
liable to perform all the obligations to be performed by it in respect of
the Subordinated Indebtedness and shall discharge fully its obligations
thereunder as they become due and neither the Security Trustee nor any of
the Finance Parties shall have any obligation of any kind whatsoever
thereunder or be under any liabilities whatsoever in the event of any
failure to perform their obligations thereunder and each Subordinated
Lender hereby indemnifies and agrees to keep indemnified the Security
Trustee, the Finance Parties and each of them from and against any such
liability.
3.5 RELEASE AND TRANSFER
(a) The Security Trustee shall, upon the full performance and discharge
of the Secured Obligations to the satisfaction of the Security
Trustee and the Finance Parties, at the request and cost of the
relevant Subordinated Lenders and in such form as the Security
Trustee shall reasonably approve, release and transfer to the
relevant Subordinated Lenders, the Secured Indebtedness then the
subject of the Security Interest constituted by this Deed.
(b) Notwithstanding any discharge, release or settlement from time to
time between the Security Trustee and/or any Finance Party and any
Subordinated Lender or the Borrower, if any security, disposition or
payment granted or made to the Security Trustee and/or any Finance
Party in respect of the Secured Obligations by any Subordinated
Lender, the Borrower 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 thereafter to enforce this Deed as if no
such discharge, release or settlement had occurred.
3.6 NO DISCHARGE
The liabilities and obligations of each Subordinated Lender under this
deed and the security constituted by this Deed shall remain in force
notwithstanding any act, omission, event or circumstance whatsoever until
the expiry of the Security Period and without limiting the foregoing,
neither the liabilities of any of the Subordinated Lenders under this
Deed nor the validity or enforceability of this Deed shall be prejudiced,
affected or discharged by:-
(a) the granting of any time or indulgence to the Borrower, any
Subordinated Lender or any other person in respect of the Secured
Obligations;
(b) any variation or modification of the Facility Agreement, any of the
other Finance Documents or any other documents referred to therein
or related thereto;
(c) the invalidity or unenforceability of any obligation or liability of
any party under
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[Group Subordination Deed]
the Facility Agreement, 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, any of the other Finance Documents or any other documents
referred to therein or relating thereto;
(e) any lack of capacity or deficiency in the powers of the Borrower,
any Subordinated Lender or any other person to enter into or perform
any of its respective 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
purporting to act on behalf of the Borrower, any Subordinated Lender
or such other person;
(f) the insolvency, bankruptcy or liquidation or any incapacity,
disability or limitation or any change in the constitution or status
of the Borrower, any Subordinated Lender or any other person;
(g) any other Finance Document, Security Interest, guarantee or other
security or right or remedy being or becoming held by or available
to the Security Trustee, any Finance Party or by any other person or
by any of the same being or becoming wholly or partly void, voidable
or unenforceable or impaired or by the Security Trustee or 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 the Security Trustee and/or any Finance Party
may now or hereafter have from or against each Subordinated Lender,
the Borrower or any other person;
(h) any waiver, exercise, omission to exercise, compromise, renewal or
release of any rights against the Borrower or any Subordinated
Lender 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 each Subordinated Lender hereunder.
3.7 NO SUBROGATION
(a) None of the Subordinated Lenders shall exercise any right of
subrogation, contribution or any other rights of a surety or enforce
any security or other right or claim against the Borrower or any of
the other Subordinated Lenders (whether in respect of its liability
under this Deed or otherwise) or any other person who has guaranteed
or given any security in respect of the Secured Obligations or claim
in the insolvency or liquidation of the Borrower or any of the other
Subordinated Lenders or any such other person in competition with
the Security Trustee and/or the Finance Parties.
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(b) If the Borrower or any Subordinated Lender receives any payment or
benefit in breach of this Clause 3.7, it shall hold the same upon
trust for the Security Trustee as a continuing security for the
Secured Obligations.
4. ACKNOWLEDGEMENT BY BORROWER
The Borrower acknowledges the subordination and assignment of the
Subordinated Indebtedness and warrants and undertakes throughout the
continuance of this Deed and so long as the Secured Obligations or any
part thereof remains owing that:-
(a) after the occurrence of a Default it will make all payments in full
without set-off or counterclaim due in respect of the Subordinated
Indebtedness to the Security Trustee or as the Security Trustee
shall direct and it will comply with all the other provisions of
this Deed and it will not do, take part in or take the benefit of
anything which would or may breach the provisions of this Deed;
(b) it will promptly notify the Security Trustee whenever it incurs any
Subordinated Indebtedness; and
(c) it has no notice of any prior disposal of or charge or encumbrance
over the Subordinated Indebtedness or any part thereof to any other
person.
5. CONTINUING AND INDEPENDENT SECURITY
5.1 CONTINUING SECURITY
This Deed and the security hereby created shall remain in full force and
effect by way of a continuing security notwithstanding the insolvency or
liquidation or any incapacity or change in the constitution or status of
any Subordinated Lender, the Borrower or any other person and in
particular but without limitation shall not be, nor be considered as,
satisfied by any intermediate discharge or payment on account of any
liabilities or any settlement of accounts between the Borrower or any
Subordinated Lender and the Security Trustee or any Finance Party.
5.2 ADDITIONAL SECURITY
This Deed and the security hereby created shall be in addition to and not
in substitution for or derogation of any other Security Interest,
guarantee or other security (whether given by any Subordinated Lender, the
Borrower or otherwise) now or from time to time hereafter held by the
Security Trustee and/or any Finance Party in respect of or in connection
with the Secured Obligations.
5.3 UNRESTRICTED ENFORCEMENT
The Security Trustee need not before exercising any of the rights, powers
or remedies conferred upon it by this Deed or by law (i) take action or
obtain judgment against the
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[Group Subordination Deed]
Borrower or any Subordinated Lender or any other person in any court, (ii)
make or file any claim or prove in a winding-up or liquidation of the
Borrower or any Subordinated Lender or of any other person or (iii)
enforce or seek to enforce the recovery of the moneys and liabilities
hereby secured by any other security or other rights 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.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES BY THE SUBORDINATED LENDERS
Each of the Subordinated Lenders severally represents and warrants to the
Security Trustee for the benefit of the Finance Parties that:-
(a) STATUS: it is a company duly incorporated and validly existing under
the laws of its respective jurisdiction of incorporation and 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;
(b) POWER AND AUTHORITY: it has all legal power and authority to enter
into this Deed and perform its obligations under this Deed and all
action (including any corporate action) required to authorise the
execution and delivery of this Deed and the performance of its
obligations under this Deed has been duly taken;
(c) LEGAL VALIDITY: this Deed constitutes or, when so executed and
delivered, will constitute its legal, valid and binding obligations
enforceable in accordance with its terms;
(d) NON-CONFLICT WITH LAWS: the entry into and performance 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 that Subordinated Lender, or (iii)
any material breach of any agreement or document to which that
Subordinated Lender 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: other than the Consents, no consent of, giving of
notice to, or registration with, or taking of any other action in
respect of, any governmental authority or agency in any relevant
jurisdiction is required for or in connection with the execution,
validity, delivery and admissibility in evidence in proceeding of
this Deed, or the carrying out by, that Subordinated Lender of any
of the transactions contemplated hereby;
(f) NO REGISTRATION: it is not necessary in order to ensure the
legality, validity,
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enforceability or admissibility in evidence of this Deed that it or
any other instrument be notarised, filed, recorded, registered or
enrolled in any court or other authority or that any stamp,
registration or similar tax or charge be paid on or in relation to
this Deed and this Deed is in proper form for its enforcement in the
courts of Hong Kong and all jurisdictions the subject of any legal
opinion referred to in paragraph 4 of Schedule 3 of the Facility
Agreement;
(g) LITIGATION: except as disclosed in a letter of even date from the
Borrower to the Security Trustee, no litigation, arbitration or
administrative proceeding is currently taking place or pending or,
to the knowledge of the officers of the relevant Subordinated
Lender, threatened against it or its assets which could, in the
reasonable opinion of the Security Trustee, materially and adversely
affect its business, assets or financial condition or its respective
ability to perform its obligations under this Deed;
(h) WINDING UP AND STRIKING OFF: it has not taken any corporate action
or 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;
(i) TAXES ON PAYMENTS: all payments to be made by it under this Deed may
be made by it free and clear of, and without deduction for, Taxes
and no deductions or withholdings are required to be made therefrom
save as specified in any legal opinion referred to in paragraphs 2,
3 and 4 of Schedule 3 to the Facility Agreement; and no Taxes are
imposed on or by virtue of the execution or delivery by that
Subordinated Lender of this Deed or any document to be executed or
delivered under this Deed;
(j) TAX LIABILITIES: it 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; no material
claims are being asserted against it with respect to Taxes;
(k) NO DEFAULT:
(i) no Default has occurred and is continuing;
(ii) it is not, or with the giving of notice or lapse of time or
satisfaction of any other condition or any combination
thereof, would not be in material 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;
(l) NO IMMUNITY: it is generally subject to civil and commercial law and
to legal proceedings and none of the Borrower nor any Subordinated
Lenders nor any of their assets or revenues is entitled to any
immunity or privilege (sovereign or
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otherwise) from any set-off, judgment, execution, attachment or
other legal process;
(m) COMPLIANCE, WITH CONSENTS AND LICENSES: every consent,
authorisation, licence or approval required for the time being by it
in connection with the conduct of its business and the ownership,
use, exploitation or occupation of its property and assets has been
applied for and not refused or has been obtained and is in full
force and effect and there has been no material default in the
observance of the conditions and restrictions (if any) imposed on,
or in connection with, any of the same which may have a material
adverse effect on its ability to perform its obligations under this
Deed and, to the knowledge of its officers, no circumstances have
arisen whereby any remedial action is likely to be required to be
taken by it, or at its expense under or pursuant to any law or
regulation applicable to its business, property or assets;
(n) NO FINANCIAL INDEBTEDNESS: it does not have any Financial
Indebtedness other than as permitted by Clause 16.17 of the Facility
Agreement;
(o) SOLE AND BENEFICIAL OWNER: it is or will be the sole, absolute and
beneficial owner of the Subordinated Indebtedness and it has good
and marketable title thereto;
(p) LEGAL AND BINDING OBLIGATIONS: the obligations under the
Subordinated Loan Agreements are or will be legal, valid and binding
and enforceable in accordance with their terms and the Borrower is
not in default in respect of any provision thereof;
(q) SECURITY INTEREST: no Security Interest exists in any of its rights,
title, interests or benefits in the Subordinated Indebtedness (other
than as created by this Deed);
(r) THIRD PARTY RIGHT: it has not sold or otherwise disposed of any of
the Subordinated Indebtedness or granted in favour of any other
person any interest in or any option or other rights in respect of
any of the Subordinated Indebtedness; and
(s) PARTICULARS OF LOANS: the particulars of the Subordinated
Indebtedness set out in Schedule 1 are accurate.
6.2 REPRESENTATIONS AND WARRANTIES BY THE BORROWER
The Borrower represents and warrants to the Security Trustee in the terms
of Clause15 (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (n)
and (q) of the Facility Agreement mutatis mutandis.
6.3 CONTINUING REPRESENTATION AND WARRANTY
Each of the Subordinated Lenders also represents and warrants to and
undertakes with the Security Trustee that the foregoing representations
and warranties made by them
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respectively in Clause 6.1(a) to (n) inclusive are deemed to be made by
the Subordinated Lenders on each Drawdown Date and on each Interest
Payment Date with reference to the facts and circumstances then existing
and that the foregoing representations in Clause 6.1(o), (p) and (s) will
be true and accurate throughout the continuance of this Deed with
reference to the facts and circumstances subsisting from time to time.
7. TAXES AND OTHER DEDUCTIONS
7.1 TAX GROSS-UP
(a) All sums payable by the Borrower and any Subordinated Lender or any
other person 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.
(b) If at any time the Borrower or any Subordinated Lender 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
Finance Party (or if the Security Trustee is required to make any
such deduction or withholding from a payment to the Borrower or any
other Finance Party), the sum due from the Borrower or any
Subordinated Lender 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 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 Borrower's and Subordinated Lender's obligations under Clauses
7.1(a) and (b) shall not apply in respect of any Tax on Overall Net
Income levied on the Security Trustee or any other Finance Party.
(d) All Taxes required by law to be deducted or withheld by the Borrower
or any Subordinated Lender from any amount paid or payable under
this Deed shall be paid by the Borrower or the relevant Subordinated
Lender (as the case may be) when due (except for such amounts being
disputed by the Borrower or such Subordinated Lender in good faith)
to the relevant tax authority.
7.2 TAX INDEMNITY
Each of the Borrower and Subordinated Lenders shall jointly and severally
indemnify the Security Trustee and each other Finance Party against any
losses or costs incurred by any of them by reason of:
(a) any failure of the Borrower or any Subordinated Lender or any other
person to make any such deduction or withholding referred to in
Clause 7.1; or
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[Group Subordination Deed]
(b) any increased payment referred to in Clause 7.1 not being made on
the due date for such payment; or
(c) any Taxes which are being disputed by the Borrower or any
Subordinated Lender and remaining unpaid; and
(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 this Deed.
7.3 EVIDENCE OF PROOF
Each of the Borrower and Subordinated Lenders shall promptly deliver to
the Security Trustee any receipts, certificates or other proof evidencing
the amounts (if any) paid or payable in respect of any deduction or
withholding as aforesaid.
7.4 TAX CREDIT
If a Subordinated Lender or the Borrower, as the case may be, makes a Tax
payment and the Security Trustee determines that:-
(a) a Tax Credit is attributable either to an increased payment of which
that Tax payment forms part, or to that Tax payment; and
(b) it has obtained, utilised and retained that Tax Credit,
the Security Trustee shall, promptly after obtaining the benefit of that
Tax Credit, pay an amount to that Subordinated Lender or the Borrower, as
the case may be, which the Security Trustee determines 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 that Subordinated
Lender or the Borrower, as the case may be. Any certificate or
determination of the Security Trustee showing in reasonable details the
calculations made by the Security Trustee as to any amount for the
purposes of this Clause 7 shall, in the absence of manifest error, be
conclusive and binding on that Subordinated Lender or the Borrower.
8. COSTS, CHARGES AND EXPENSES
8.1 COSTS, CHARGES AND EXPENSES
Each of the Subordinated Lenders and the Borrower shall from time to time
forthwith on demand pay to or reimburse the Security Trustee for:
(a) all expenses (including legal, printing and out-of-pocket expenses)
reasonably incurred by the Security trustee or any other Finance
Party in connection with the negotiation, preparation and execution
of this deed and any amendment or extension of or the granting of
any waiver or consent under this Deed; and
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[Group Subordination Deed]
(b) all costs, charges and expenses (including legal fees on a full
indemnity basis properly incurred by the Security Trustee or any
other Finance Party in connection with the enforcement of or
preservation of any rights under this Deed, or otherwise in respect
of the monies owing under this Deed unless and to the extent such
costs, charges, and expenses results directly from the gross
negligence, fraud or wilful misconduct of the Security Trustee or
any other Finance Party.
and until payment of the same in full, all such costs, charges and
expenses shall be secured by this Deed.
8.2 STAMP DUTY
Each of the Subordinated Lenders and the Borrower shall pay all stamp,
documentary, registration or other like duties or taxes (including any
duties or taxes payable by the Security Trustee or any Finance Party)
imposed on or in connection with this Deed and shall indemnify each of
the Security Trustee and the other Finance Parties against any liability
arising by reason of any delay or omission by Subordinated Lenders and/or
the Borrower to pay such duties or taxes.
9. UNDERTAKINGS
9.1 UNDERTAKINGS BY THE SUBORDINATED LENDER
Each of the Subordinated Lenders hereby severally undertakes and agrees
with the Security Trustee for the benefit of the Finance Parties,
throughout the continuance of this Deed and so long as the Secured
Obligations or any part thereof remains owing that, unless the Security
Trustee otherwise agrees in writing, it will:-
(a) NO SECURITY INTEREST: not create or permit to exist any Security
Interest over all or any part of the Subordinated Indebtedness or
any interest therein or otherwise sell, transfer, assign, deal with
or dispose of all or any part of the Subordinated Indebtedness or
attempt or agree to do any of the same (except under or pursuant to
this Deed);
(b) BENEFICIAL OWNER: subject to the provisions of this Deed, at all
times remain the sole, absolute and beneficial owner of the
Subordinated Indebtedness;
(c) NO WAIVER OF LIABILITIES: not waive, release, compromise or vary the
liability of the Borrower in relation to the Subordinated
Indebtedness or do or omit to do any act or thing whereby the
recovery in full of any monies payable in respect thereof may be
prejudiced or affected;
(d) INFORMATION: give to the Security Trustee such information regarding
the amount and terms of the Subordinated Indebtedness as the
Security Trustee may reasonably require;
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[Group Subordination Deed]
(e) PERFORMANCE: subject to the provisions of this Deed, duly observe
and perform all its obligations under the Subordinated Loan
Agreements; and
(f) NO DEPRECIATION TO SECURITY: not do or cause or permit to be done
anything which may in any way depreciate, jeopardise or otherwise
prejudice the value of the Security Trustee's security hereunder.
9.2 UNDERTAKINGS BY THE BORROWER
The Borrower undertakes and agrees with the Security Trustee in the terms
of Clauses 9.1(d) to (f) mutatis mutandis.
10. NO SECURITY BY SUBORDINATED LENDER
Each of the Subordinated Lenders represents to and undertakes with the
Security Trustee 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.
11. INDEMNITY
11.1 GENERAL INDEMNITY
Each of the Subordinated Lenders and the Borrower hereby severally
undertakes with the Security Trustee to indemnify and keep indemnified
the Security Trustee, the Finance Parties and each of them (each an
"INDEMNITEE") from and against all costs, charges and expenses which the
Security Trustee or any Finance Party shall properly incur in connection
with the exercise of any powers conferred by this Deed or the perfection,
preservation or enforcement of the security created by this Deed (unless
and to the extent that any of the foregoing results directly from the
fraud, gross negligence or wilful misconduct of that indemnitee).
11.2 CURRENCY INDEMNITY
(a) If an amount due to the Security Trustee from the Subordinated
Lender or the Borrower under the Facility Agreement and/or other
Finance Document (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 Subordinated
Lender or, as the case may be, the Borrower;
(ii) obtaining or enforcing an order, judgment or award in relation
to any litigation or arbitration proceedings,
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[Group Subordination Deed]
the Subordinated Lender or, as the case may be, the Borrower shall,
as an independent obligation to the Security Trustee, indemnify the
Security Trustee 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 Subordinated Lender or, as the case may be, the Borrower hereby
waives any right it may have in any jurisdiction to pay any amount
under the Facility Agreement and/or any other Finance Document in a
currency or currency unit other than that in which it is expressed
to be payable.
11.3 PAYMENT AND SECURITY
The Security Trustee or any Finance Party may retain and pay out of any
money in the hands of the Security Trustee or such Finance Party all sums
necessary to effect the indemnity contained in this Clause and all sums
payable by any Subordinated Lender or the Borrower under this Clause
shall form part of the monies hereby secured.
12. SUSPENSE ACCOUNT
The Security Trustee may, place and keep any monies received under this
Deed, before or after the insolvency of any Subordinated Lender or the
Borrower to the credit of a suspense account in order to preserve the
rights of the Security Trustee and the Finance Parties to xxx or prove
for the whole amount in respect of claims against any Subordinated
Lender, the Borrower or any other person.
13. SET OFF
(a) Without prejudice to any right of set-off, combination of accounts,
lien or other rights which the Security Trustee is at any time
entitled whether by operation of law or contract or otherwise, the
Security Trustee may (but shall not be obliged to) set off against
any obligation of any Subordinated Lender or, as the case may be,
the Borrower due and payable by it hereunder without prior notice
any moneys held by the Security Trustee for the account of relevant
Subordinated Lender or, as the case may be, the Borrower at any
office of the Security Trustee anywhere and in any currency. The
Security Trustee may effect such currency exchanges as are
appropriate to implement such set-off.
(b) If the obligations are in different currencies, the Security Trustee
may convert either obligation at a market rate of exchange in its
usual course of business for the purpose of the set-off.
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[Group Subordination Deed]
14. POWER OF ATTORNEY
14.1 POWER OF ATTORNEY
Each of the Subordinated Lenders and the Borrower irrevocably appoints
the Security Trustee, and any persons deriving title under it by way of
security severally to be its attorney (with full power of substitution)
and in its name or otherwise on its behalf and as its act and deed to
sign, seal, execute, deliver, perfect and do all deeds, instruments, acts
and things which may be required or which the Security Trustee shall
think proper or reasonably expedient for carrying out any obligations
imposed on the Subordinated Lenders and the Borrower or any of them
hereunder or for exercising, following the security constituted by this
Deed becoming enforceable, any of the powers conferred by this Deed or
for giving to the Security Trustee the full benefit of this security and
so that this appointment shall operate to authorise the Security Trustee
to do on behalf of the Subordinated Lenders and the Borrower anything it
can lawfully do by an attorney. Each of the Subordinated Lenders and the
Borrower ratifies and confirms and agrees to ratify and confirm any deed,
instrument, act or thing which such attorney or substitute may execute or
do in exercising its powers conferred by this Clause.
14.2 DELEGATION
The Security Trustee may delegate to any person all or any of the rights
or powers conferred on it by this Deed or by law. Any such delegation
may be made upon such terms and conditions (including power to sub-
delegate) as the Security Trustee thinks fit.
15. FURTHER ASSURANCE
15.1 Each of the Subordinated Lenders and the Borrower 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 require
for the purpose of obtaining the full benefit of this Deed and of the
rights and powers herein granted.
16. NOTICES
16.1 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 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;
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[Group Subordination Deed]
(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 Borrower or any
Subordinated Lender and any of the Finance Parties in connection with
this Deed shall be made through the Security Trustee.
16.2 ADDRESSES
Notices or communications shall be sent to the following addresses:-
To any Subordinated Lender:-
Name c/o Asia Netcom Corporation Limited
Address 00/X Xxxxxx Xxxx Xxxxxx
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax (000) 0000 0000
Attention Xxxxxxx Xxxxxxxx/Wenlong Sun
With a copy to: Asia Netcom Singapore Pte Limited
0 Xxxxxxx Xxx #00-00
XXX Xxxxxx 0
Xxxxxxxxx 000000
Fax (00) 0000 0000
Attention Xxxxxx Xx
To the Borrower:-
Name Asia Netcom Corporation Limited
Address 00/X Xxxxxx Xxxx Xxxxxx
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax (000) 0000 0000
Attention Xxxxxxx Xxxxxxxx/Xxxxxxx Sun
With a copy to: Asia Netcom Singapore Pte Limited
0 Xxxxxxx Xxx #00-00
XXX Xxxxxx 0
Xxxxxxxxx 000000
Fax (00) 0000 0000
Attention Xxxxxx Xx
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[Group Subordination Deed]
To the Security Trustee:-
Name Industrial and Commercial Bank of China (Asia) Limited
Address 10/F, ICBC Asia Xxxxxxxx
000-000 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax (000) 0000 0000
Attention Xx. Xxxxxx Xxxxx/ Ms. Xxx Xxxx
16.3 LANGUAGE
Each notice or document referred to in this Deed or to be delivered under
this Deed shall be in the English language.
17. WAIVERS, AMENDMENTS AND CONSENTS, REMEDIES, SEVERABILITY, ASSIGNMENT AND
COUNTERPARTS
17.1 WAIVERS
Time shall be of the essence under this Deed but no failure or delay on
the part of the Security Trustee, the Finance Parties or any of them 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, the Finance Parties or any of them of any power, right or remedy
preclude any other or further exercise thereof or the exercise of any
other power, right or remedy.
17.2 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 if all
parties hereof so agree in writing and any waiver of any breach or
default under this Deed shall only be effective if the Security
Trustee acting on the instructions of the Finance Parties or the
Majority Lenders (as the case may be), agrees in writing. Any
consent by the Security Trustee under this Deed must be made in
writing.
(b) Any such waiver or consent may be given subject to any conditions
thought fit by the Security Trustee acting on the instructions of
the Finance Parties or the Majority Lenders, as the case may be, and
shall be effective only in the instance and for the purpose for
which it is given.
17.3 REMEDIES
The remedies provided in this Deed are cumulative and are not exclusive
of any remedies provided by law.
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[Group Subordination Deed]
17.4 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.
17.5 ASSIGNMENT
The Security Trustee may assign its rights under this Deed in accordance
with the provisions of the Facility Agreement. None of the Subordinated
Lenders and the Borrower shall assign any of their rights hereunder
without the consent of the Security Trustee.
17.6 COUNTERPARTS
This Deed may be executed in any number of counterparts, 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.
17.7 It is intended that this document takes effect as a deed notwithstanding
the fact that a party may only execute this document under hand.
18. GOVERNING LAW AND JURISDICTION
18.1 GOVERNING LAW
This Deed is governed by and construed in accordance with the laws of
Hong Kong.
18.2 SUBMISSION TO JURISDICTION
For the benefit of the Security Trustee and each Finance Party, each of
the Subordinated Lenders and the Borrower 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 each of the
Subordinated Lenders and the Borrower hereto irrevocably submits to the
jurisdiction of those courts.
18.3 OTHER JURISDICTIONS
Nothing in this Clause 18 (Governing Law and Jurisdiction) shall limit
the right of the Security Trustee or any Finance Party to take
Proceedings against any Subordinated Lender or the Borrower in any other
court of competent jurisdiction nor shall the taking of Proceedings in
one or more jurisdictions preclude the Security Trustee or any Finance
Party from taking Proceedings in any other jurisdiction, whether
concurrently or not.
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[Group Subordination Deed]
18.4 WAIVER OF INCONVENIENT FORUM
Each of the Subordinated Lenders and the Borrower 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 18 (Governing Law and
Jurisdiction) and any claim that any such Proceedings have been brought
in an inconvenient forum.
18.5 PROCESS AGENT
Each of the Borrower and the Subordinated Lenders hereby irrevocably
appoint Asia Netcom Asia Pacific Commercial Limited of 00xx Xxxxx, Xxxxxx
Xxxx Xxxxxx, 0 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx to receive, for it and on
its behalf, service of process in any Proceedings in Hong Kong. Such
service shall be deemed completed on delivery to the process agent
whether or not it is forwarded to and received by the Borrower and the
Subordinated Lenders). If for any reason the process agent ceases to be
able to act as such or not longer has an address in Hong Kong, the
Borrower and the Subordinated Lenders irrevocably agree to appoint a
substitute process agent acceptable to the Security Trustee, and to
deliver to the Security Trustee a copy of the new process agent's
acceptance of that appointment, within 30 days.
18.6 SERVICE
Each of the Subordinated Lenders and the Borrower irrevocably consents to
any process in any Proceeding anywhere being served by mailing a copy by
post in accordance with Clause 16 (Notices). Nothing shall affect the
right to serve any process in any other manner permitted by law.
18.7 WAIVER OF IMMUNITIES
To the extent that any Subordinated Lender or the Borrower 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 of 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,
it 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 each of the Subordinated Lenders and
the Borrower as its deed on the day and year first above written.
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[Group Subordination Deed]
SCHEDULE 1
PARTICULARS OF SUBORDINATED INDEBTEDNESS
Date and description
of Loan Agreement or Amount
other Instrument Outstanding
-------------------- -----------
Shareholder's Loan from China Netcom Corporation USD 6,500,000.00
(Hong Kong) Limited dated 15 March 2004
Shareholder's Loan from China Netcom Corporation USD 5,000,000.00
(Hong Kong) Limited dated 25 March 2004
Shareholder's Loan from China Netcom Corporation USD 4,259,000.00
(Hong Kong) Limited dated 1 April 2004
Shareholder's Loan from China Netcom Corporation USD 5,000,000.00
International Limited dated 7 April 2004
Shareholder's Loan from China Netcom Corporation USD 15,000,000.00
International Limited in June 2004
Shareholder's Loan from China Netcom Corporation USD 4,000,000.00
International Limited in July 2004
Shareholder's Loan from China Netcom Corporation USD 55,000,000.00
International Limited in July 2004
- 22 -
[Group Subordination Deed]
SCHEDULE 2
SUBORDINATED LENDERS
CHINA NETCOM CORPORATION (HONG KONG) LIMITED
CHINA NETCOM CORPORATION INTERNATIONAL LIMITED
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[Group Subordination Deed]
SIGNATURE PAGE
THE SUBORDINATED LENDERS
SIGNED, SEALED AND DELIVERED )
as a Deed by its duly authorised attorney )
)
for and on behalf of )
CHINA NETCOM CORPORATION )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED, SEALED AND DELIVERED )
as a Deed by its duly authorised attorney )
)
for and on behalf of )
CHINA NETCOM CORPORATION )
(HONG KONG) LIMITED )
in the presence of: )
THE BORROWER
SIGNED, SEALED AND DELIVERED )
as a Deed by its duly authorised attorney )
)
for and on behalf of )
ASIA NETCOM CORPORATON LIMITED )
in the presence of: )
- 24 -
THE SECURITY TRUSTEE
SIGNED BY )
for and on behalf of )
INDUSTRIAL AND COMMERCIAL BANK )
OF CHINA (ASIA) LIMITED )
in the presence of: )
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