EXHIBIT 10.3
DATED 2001
(1) ▇▇▇▇▇▇▇▇▇ TELECOMMUNICATIONS LIMITED
AND
(2) ▇▇▇▇▇▇▇▇▇ WHAMPOA LIMITED
AND
(3) ASIA GLOBAL CROSSING LTD.
AND
(4) GLOBAL CROSSING LTD.
AND
(5) ▇▇▇▇▇▇▇▇▇ GLOBAL CROSSING HOLDINGS LIMITED
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SHAREHOLDERS' AGREEMENT
RELATING TO
▇▇▇▇▇▇▇▇▇ GLOBAL CROSSING HOLDINGS LIMITED
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▇▇▇▇▇▇ ▇▇▇▇▇ SAPTE
43/F ▇▇▇▇▇▇ KONG CENTER
▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
TEL: ▇▇▇-▇▇▇▇-▇▇▇▇
INDEX
PAGE
1. DEFINITIONS AND INTERPRETATION .................................. 2
2. THE COMPANY, HGCI AND HGC ....................................... 8
3. ARTICLES OF ASSOCIATION ......................................... 12
4. BUSINESS OF THE HGC GROUP ....................................... 13
5. DIRECTORS ....................................................... 16
6. SHAREHOLDERS' MEETINGS .......................................... 19
7. DEADLOCK ........................................................ 20
8. ACCOUNTS AND INFORMATION TO SHAREHOLDERS ........................ 20
9. BUSINESS PLAN; OPERATING BUDGET ................................. 22
10. EMPLOYMENT POLICIES ............................................ 23
11. TRANSFER OF SHARES AND SHAREHOLDERS' LOAN ...................... 24
12. GUARANTEES ..................................................... 25
13. CONFIDENTIALITY ................................................ 27
14. NON COMPETITION AND OTHER OBLIGATIONS .......................... 27
15. PROTECTION OF NAME ............................................. 32
16. TERMINATION .................................................... 32
17. MISCELLANEOUS .................................................. 33
18. NOTICE ......................................................... 35
19. TAXES .......................................................... 36
20. AGENT FOR SERVICE .............................................. 38
21. CONTRACTS (RIGHTS OF THIRD PARTIES) ............................ 40
SCHEDULE 1A A GROUP SERVICES ...................................... 41
SCHEDULE 1B B GROUP SERVICES ...................................... 42
SCHEDULE 2 NON COMPETE EXCEPTIONS ................................. 43
SCHEDULE 3 RESERVED MATTERS ....................................... 44
SCHEDULE 4 DEED OF ADHERENCE ...................................... 46
SCHEDULE 5 ARBITRATION/EXPERT ..................................... 48
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT is made on 24 of September 2001
BETWEEN:
(1) ▇▇▇▇▇▇▇▇▇ TELECOMMUNICATIONS LIMITED, a company incorporated in Hong
Kong and having its registered office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("PARTY A");
(2) ▇▇▇▇▇▇▇▇▇ WHAMPOA LIMITED, a company incorporated in Hong Kong with its
registered office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇ ("PRINCIPAL PARTY A");
(3) ASIA GLOBAL CROSSING LTD., a company incorporated with limited liability
in Bermuda with its registered office at Wessex House, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ Bermuda ("PARTY B");
(4) GLOBAL CROSSING LTD., a company incorporated with limited liability in
Bermuda with its registered office at Wessex House, 45 ▇▇▇▇ Street,
▇▇▇▇▇▇▇▇, HM12, Bermuda ("PRINCIPAL PARTY B"); and
(5) ▇▇▇▇▇▇▇▇▇ GLOBAL CROSSING HOLDINGS LIMITED, a company incorporated in
the British Virgin Islands with its registered office at the offices of
Trident Trust Company (B.V.I.) Limited, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, the British Virgin Islands (the "COMPANY").
WHEREAS:
(A) The Company is a company incorporated in the British Virgin Islands with
registered number 69098 and as at the date hereof has an authorised
capital of US$50,000 divided into 50,000 shares of US$1 each, 320 of
such shares have been issued and are fully paid and are beneficially
owned by Party A and by Party B as to 160 shares each.
(B) ▇▇▇▇▇▇▇▇▇ Global Crossing Limited ("HGC") (previously known as ▇▇▇▇▇▇▇▇▇
Communications Limited) is a company incorporated in Hong Kong with
registered number 385946 and as at the date hereof has an authorised
capital of HK$10,000 divided into 1,000 ordinary shares of HK$10 each.
Two of such shares have been issued and are fully paid up and are both
beneficially owned by ▇▇▇▇▇▇▇▇▇ Global Crossing Investments Limited
("HGCI"), which is a wholly owned subsidiary of the Company.
(C) The Company's Subsidiaries provide fixed telecommunication network and
multimedia services in Hong Kong.
1.
(D) By a letter agreement dated 12 October 2000 (known as the "ROLL-UP
LETTER") between Principal Party A, Party A, the Company, Party B,
Principal Party B and Global Crossing Holdings Limited it was agreed,
inter alia, that Party B would become a Shareholder in replacement of
Global Crossing Holdings Limited.
(E) On the same date as this Agreement, HGC entered into the Data Center
Business Transfer Agreement and the ESD Transfer Agreement, pursuant to
which the spin-offs of its media distribution center business and
electronic services delivery business respectively ("SPIN-OFFS") were
effected.
(F) The parties hereto have agreed to enter into this Agreement to provide
for the ownership, management, financing and other activities of the
Company and its Subsidiaries from time to time and their rights and
duties inter se, taking into account the changes to the HGC Group since
the Original Shareholders' Agreement (as defined below) and the
Spin-offs and to supersede the Original Shareholders' Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings respectively:
"A GROUP" means Principal Party A and its Subsidiaries and Affiliates
from time to time, but unless otherwise expressly stated does not
include any member of the HGC Group, MDC Group or ESD Group.
"A GROUP SERVICES" means the Telecommunications services provided in
Hong Kong by member(s) of the A Group as set forth in Schedule 1A, as
supplemented from time to time in accordance with Clause 2.15.
"AGREEMENT" means this Shareholders' Agreement, including its Recitals
and Schedules, as it may be amended and/or supplemented from time to
time.
"AFFILIATE" means, as to any Person, (a) any corporation more than 20%
of whose stock of any class or classes having by the terms thereof
ordinary voting power (including the right to vote on appointment of
directors) is at the time directly or indirectly owned by such Person
and/or one or more Subsidiaries of such Person and (b) any partnership,
association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person have more than 20% direct or
indirect equity interests therein, in each case, other than a Subsidiary
of such Person.
"ARTICLES" means the articles of association of the Company, as amended
from time to time and for the time being in force.
"B GROUP" means Principal Party B and its Subsidiaries and its
Affiliates from time to time but unless otherwise expressly stated does
not include any member of the HGC Group, MDC Group or ESD Group.
2.
"B GROUP SERVICES" means the services provided by member(s) of the B
Group set forth in Schedule 1B, as supplemented from time to time in
accordance with Clause 2.15.
"BOARD" means the board of Directors of the Company from time to time.
"BUSINESS" means the provision of:
(a) HK Fixed Services;
(b) Internet Access and Transport Services in Hong Kong;
(c) PRC Fixed Services; and
(d) Internet Access and Transport Services in the PRC.
"BUSINESS DAYS" means any day on which banks in Hong Kong, New York and
Los Angeles are officially open for business generally, except a
Saturday or a Sunday.
"BUSINESS PLAN" means the business plan and operating budget of the HGC
Group (including the Existing BP) as referred to in Clause 9.
"CAPACITY" means:
(a) in the case of the HGC Group, backhaul, capacity, and leased
circuit services on the terrestrial networks in Hong Kong and
the PRC owned by the HGC Group or with respect to which the HGC
Group has the right to set the price and other terms; and
(b) in the case of the B Group, wholesale international cable
capacity owned by the B Group or with respect to which the B
Group has the right to set the price and other terms.
"CARRIER" means a person that is entitled, authorised, licensed or
otherwise permitted to establish, operate and maintain
Telecommunications facilities and/or to provide services over such
facilities in Hong Kong from time to time.
"CK" means ▇▇▇▇▇▇ Kong (Holdings) Limited.
"COMPANIES ORDINANCE" means the Companies Ordinance (Cap. 32) of the
Laws of Hong Kong.
"CONTENT AND PORTAL DISTRIBUTION" means the provision of information,
entertainment and other content on the Internet and services associated
therewith including, for example, development, establishment and supply
of portal sites, provision of search engines and other software
development for content provisioning on the Internet.
"DATA CENTER BUSINESS TRANSFER AGREEMENT" means the agreement dated the
date of this Agreement for the sale and purchase of the media
distribution center business between HGC and ▇▇▇▇▇▇▇▇▇ GlobalCenter
Limited.
"DATA CENTER SERVICES" means the provision of equipment co-location
services, data center facilities management (including network
management services and system security monitoring services), web
hosting and associated web design services,
3.
application hosting, monitoring and management (whether the application
is proprietary or belongs to the customers), storage, management,
security and recovery services for data.
"DIRECTOR(S)" means the director(s) of the Company from time to time.
"E-COMMERCE" means the sale of goods and services on the Internet.
"EFFECTIVE DATE" means 1 September 2001.
"ESD GROUP" means ESD Investments One Limited and its Subsidiaries from
time to time.
"ESD TRANSFER AGREEMENT" means the agreement dated the date of this
Agreement for the sale and purchase of the Sale Shares (as defined
therein) and the assignment of certain shareholder loans between HGC (as
seller and assignor) and Party A and Party B (as purchasers and
assignees).
"EXISTING BP" means the business plan adopted by the board of directors
of HGC on 1 December 2000, which relates to the Business as well as the
businesses carried on by ▇▇▇▇▇▇▇▇▇ Green Limited, ESD Investments One
Limited and their respective Subsidiaries.
"FUNDAMENTAL BREACH" means any breach of any obligation hereunder the
commission of which would entitle a non-breaching party to terminate
this Agreement at law (ignoring for that purpose any contrary provision
in this Agreement).
"FTNS LICENCE" means any fixed telecommunications network services
licence issued under the Telecommunications Ordinance held from time to
time by the HGC Group and includes:
(a) any successor licence or licence replacing or modifying the said
fixed telecommunications network service licence; and
(b) all authorisations and licences issued pursuant to the said
fixed telecommunications network service licence or incidental
thereto.
"GLOBAL CROSSING NETWORK" means:
(a) those submarine and terrestrial cable systems referred to in the
Network Agreement; and
(b) submarine and terrestrial cable systems (other than terrestrial
cable systems in the PRC and Hong Kong) owned by any one or more
members of the B Group from time to time or with respect to
which any one or more members of the B Group has the right to
set the price and other terms for the related capacity.
"GROUP SERVICES" means the collective reference to A Group Services and
B Group Services.
"HGC GROUP" means the Company and its Subsidiaries from time to time.
"HK FIXED SERVICES" means the provision by wireline or wireless means of
Telecommunications services between fixed points in Hong Kong or between
one or more fixed points in Hong Kong and one or more fixed points
outside Hong Kong
4.
including the provision of services, establishment and maintenance of
networks (whether owned or leased) and facilities and other activities
from time to time authorised under HGC's FTNS Licence, but does not
include Satellite Based Services. For the avoidance of doubt, HK Fixed
Services includes the following to the extent so authorised under HGC's
FTNS Licence:
(a) facilitating the establishment of submarine cable landing
stations in Hong Kong as permitted by Clause 4.6; and
(b) without limiting the definition of Satellite Based Services set
out below, subject to the approval of the Board in accordance
with Clause 4.7, the establishment and use of satellite earth
stations and the leasing of satellite capacity as part of the
network established under HGC's FTNS Licence for the provision
of services between fixed points.
"HONG KONG" means the Hong Kong Special Administrative Region of the
PRC.
"HOSTING OPERATIONS" means the provision of a secure, environmentally
controlled, physical space for customer-owned equipment with electrical
power and security within a data center facility.
"INTELLECTUAL PROPERTY" means all intellectual property rights, to the
extent acquired by or developed by or vested in the Company and/or its
Subsidiaries or their respective employees in the course of their
conducting the Business, including but not limited to the following
rights:
(a) patents, copyrights, registered designs, trade marks, service
marks, know how, discoveries, processes, computer software and
programs, codes and related items, inventions, disclosures and
related improvements and any right of the Company to have
confidential information kept confidential; and
(b) any application or right to apply for registration of any of the
rights referred to in paragraph (a).
"INTERNET ACCESS AND TRANSPORT SERVICES" means the establishment,
maintenance or provision of Internet access facilities or services or
the provision of capacity for accessing and transporting communications
on the Internet on a wholesale or retail basis. Internet Access and
Transport Services includes, without limitation, Internet Protocol
("IP") transit services.
"INTERNET ADVERTISING" means advertising on the Internet and services
relating thereto.
"MDC GROUP" means ▇▇▇▇▇▇▇▇▇ Green Limited and its Subsidiaries from time
to time.
"MDC SHAREHOLDERS' AGREEMENT" means the shareholders' agreement dated
the date of this Agreement between Party A, Principal Party A, Party B,
Principal Party B and ▇▇▇▇▇▇▇▇▇ Green Limited as amended from time to
time.
"MOBILE SERVICES" means providing and maintaining a public
radio-telephone service (other than services provided pursuant to an
FTNS Licence) and the sales and/or lease of subscriber equipment (mobile
and portable radio telephone equipment and related accessories).
5.
"NETWORK AGREEMENT" means the Global Crossing Network Agreement, dated
12 January 2000, among the Company, Principal Party B and Global
Crossing USA Inc (which has assigned its rights and obligations under
that agreement to Party B), as amended, supplemented or otherwise
modified from time to time.
"ORIGINAL SHAREHOLDERS' AGREEMENT" means the original shareholders'
agreement between Party A, Principal Party A, Principal Party B, Global
Crossing Holdings Ltd. (which has transferred its Shares to Party B),
and the Company, relating to the Company, dated 12 January 2000.
"PAGING SERVICES" means paging and ancillary services, including
services of a type which were authorised under the Public Radio
Communications Services licenses.
"PERSON" means any individual, partnership, joint venture, corporation,
limited liability company, limited duration company, limited life
company, association, trust or other enterprise or a government,
including an agency thereof.
"PRC" means the People's Republic of China, including Macau, but
excluding Hong Kong, and for the avoidance of doubt does not include
Taiwan.
"PRC FIXED SERVICES" means the provision by wireline or wireless means
of Telecommunications services between fixed points in the PRC or
between one or more fixed points in the PRC and one or more fixed points
outside the PRC, but does not include Satellite Based Services. For the
avoidance of doubt, PRC Fixed Services includes the following:
(a) facilitating the establishment of submarine cable landing
stations in Hong Kong as permitted by Clause 4.6; and
(b) without limiting the definition of Satellite Based Services set
out below, subject to the approval of the Board in accordance
with Clause 4.7, the establishment and use of satellite earth
stations and the leasing of satellite capacity as part of the
network established for the provision of services between fixed
points as aforesaid.
"PRINCIPAL PARTIES" means Principal Party A and Principal Party B.
"RELEVANT AGREEMENTS" has the meaning assigned to that term in the Sale
and Purchase Agreement.
"RELEVANT PERIOD" means the period from the Effective Date to the date
one year (or if a court of competent jurisdiction determines that this
period is unenforceable six months) following the termination of this
Agreement.
"RELEVANT SHAREHOLDER" means:
(a) in respect of Principal Party A, Party A and any person for
whose obligations Principal Party A is liable under Clause 11.3;
and
(b) in respect of Principal Party B, Party B and any person for
whose obligations Principal Party B is liable under Clause 11.3.
6.
"SALE AND PURCHASE AGREEMENT" means a subscription and sale and purchase
agreement between the parties named therein dated 15 November, 1999, as
amended, supplemented or otherwise modified from time to time.
"SATELLITE BASED SERVICES" means Telecommunications services provided by
satellite (other than services provided pursuant to a FTNS Licence)
including, without limitation, the ownership and operation of
satellites, television broadcasting and similar services provided by
satellite, VSAT services and services provided through global satellite
systems and global positioning services, and the establishment and
maintenance of facilities relating to any of the foregoing and services
ancillary thereto.
"SHAREHOLDER(S)" means holder(s) of Share(s) from time to time.
"SHAREHOLDERS' LOAN(S)" means loan(s) made or to be made to the Company
by the Shareholders (or where the context so requires, by a particular
Shareholder) or, where the context so requires, the outstanding amount
thereof.
"SHARE(S)" means the issued share(s) in the capital of the Company from
time to time.
"SUBSIDIARY" means, as to any Person, (a) any corporation more than 50%
of whose stock of any class or classes having by terms thereof ordinary
voting power to elect a majority of the directors of such corporation is
at the time owned by such Person and/or one or more Subsidiaries of such
Person and (b) any partnership, association, joint venture or other
entity in which such Person and/or one or more Subsidiaries of such
Person have more than 50% equity interests therein provided that,
whether or not falling within paragraphs (a) and (b) of this definition
and without limiting the foregoing, Party B and its Subsidiaries (as
defined in paragraphs (a) and (b) above) shall be deemed to be
Subsidiaries of Principal Party B for so long as Party B or any of Party
B's Subsidiaries owns any Shares (and, if Party B or its Subsidiary
disposes of its Shares after the restrictions on transfer of Shares
under this Agreement are removed pursuant to Clause 11.2(a), Party B and
its Subsidiaries shall be deemed to continue to be Subsidiaries of
Principal Party B from the date of such disposal until the date this
Agreement terminates under Clause 11.2).
"TELECOMMUNICATIONS ORDINANCE" means the Telecommunications Ordinance,
(Cap. 106) of the Laws of Hong Kong.
"TELECOMMUNICATIONS" includes any communication by wire or radio waves
or any other electromagnetic means or by any combination thereof:
(a) whether between persons and persons, things and things or
persons and things; and
(b) whether in the form of speech, music or other sounds;
(c) whether in the form of data, text, visual images (animated,
moving or otherwise), signals or any other form; and
(d) whether in any combination of forms.
"HK$" means Hong Kong dollars, the lawful currency of Hong Kong.
7.
"US$" means United States dollars, the lawful currency of the United
States of America.
1.2 References herein to Clauses, paragraphs, Recitals and Schedules are to
clauses, paragraphs and recitals of and schedules to this Agreement
unless the context requires otherwise and the Recitals and the Schedules
shall form part of this Agreement.
1.3 References to any statute or statutory provisions shall include any
statute or statutory provision which amends or replaces, or has amended
or replaced it and shall include any subordinate legislation made under
the relevant statute.
1.4 References to writing shall include typewriting, printing, lithography,
photography and facsimile message and other modes of reproducing words
in a legible and non-transitory form.
1.5 Words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to any person
shall include references to an individual, firm, or body corporate or
unincorporate.
1.6 Headings are for convenience of reference only and shall not affect the
construction of this Agreement.
1.7 The expressions "Party A", "Party B", "Principal Party A", "Principal
Party B", "Shareholder(s)" and "the Company" shall, where the context
permits, include their respective successors and permitted assigns.
1.8 Any obligation of a party to procure or cause an Affiliate to take any
action whatsoever shall be limited to an obligation to use reasonable
commercial endeavours to secure that the Affiliate undertakes that
action.
1.9 This Agreement shall become effective on the Effective Date.
2. THE COMPANY, HGCI AND HGC
2.1 The Company is and shall be an international business company
incorporated under the laws of the British Virgin Islands.
2.2 HGCI is and shall be an international business company incorporated
under the laws of the British Virgin Islands.
2.3 HGC is and shall be a private company limited by shares incorporated
under the Companies Ordinance.
2.4 Full Effect
Each of the Shareholders shall, and shall procure all persons nominated
by it on the Board or the board of directors of any Subsidiaries of the
Company and representative(s) appointed to attend shareholders' meeting
of the Company or any of its Subsidiaries to, exercise all voting rights
and powers of control available to it in relation to the Company and its
Subsidiaries so as to give full effect to the terms and conditions of
this Agreement.
8.
2.5 Listing
Upon written request to the Company made at any time after 12 January
2002, either Principal Party A or Principal Party B may demand that the
Company undertakes a listing of not more than 15% of any of:
(i) the Shares;
(ii) the shares in the capital of HGCI or HGC; or
(iii) the shares of a holding company of the Company, HGCI or HGC,
such holding company to be a new corporation formed for the
purpose of seeking such listing,
(the "LISTING SHARES").
In each case on an internationally recognised stock exchange or other
internationally recognised securities market by means of an initial
public offering (the "INITIAL PUBLIC OFFERING") of the Listing Shares.
If either Principal Party A or Principal Party B makes such a demand,
the parties shall fully cooperate with each other in the marketing of
the Listing Shares and shall be unconditionally obliged to each take all
actions necessary or desirable to effect the Initial Public Offering.
Without prejudicing each party's unconditional obligation to effect an
Initial Public Offering in accordance with the previous sentence, the
parties agree to cooperate with each other and negotiate in good faith
with each other to address such amendments to this Agreement and other
matters as may be reasonably necessary to effect the Initial Public
Offering. Unless agreed to the contrary:
(a) the Initial Public Offering shall take place on a Hong Kong
stock exchange which is recognised internationally and/or the
NASDAQ National Market as may be determined by agreement of the
parties (and in attempting to reach agreement the parties will
give good faith consideration to the written recommendations of
the underwriter to the Initial Public Offering). If the parties
do not agree on the exchange or exchanges on which the Initial
Public Offering shall take place, the parties agree that the
listing shall take place on both a Hong Kong internationally
recognised stock exchange and on the NASDAQ National Market or
the New York Stock Exchange; the percentage dilution of the A
Group and the B Group in the corporation the securities of which
are to be listed ("LISTING VEHICLE") shall be shared equally;
(b) fees and expenses of the Initial Public Offering shall be borne
by the Listing Vehicle;
(c) the Initial Public Offering shall be of a primary issue of
common shares of the Listing Vehicle; and
(d) the parties shall negotiate in good faith over the necessary
amendments to this Agreement in order to include the holding
company referred to in 2.5(iii) within the HGC Group and in
order to make the terms hereof applicable to such holding
company and its Subsidiaries and shall each undertake all such
acts, and execute all such documents, as may be reasonably
necessary or desirable to give effect to this Clause.
9.
2.6 A Group Obligation to Use B Group Services
Principal Party A agrees:
(a) to:
(i) procure that Subsidiaries of Principal Party A
(excluding Subsidiaries located outside of Hong Kong or
the PRC whose shares are publicly traded); and
(ii) use reasonable commercial efforts to procure that its
Subsidiaries located outside of Hong Kong or the PRC
whose shares are publicly traded and its Affiliates,
who require access to B Group Services shall subscribe for such
B Group Services from the B Group so long as such B Group
Services are reasonably competitive as to price, availability,
quality and other terms material to its competitiveness and
provided that with respect to B Group Services not set forth in
Schedule 1B as of the date hereof, the B Group has complied with
its obligations set forth in Clause 2.15; and
(b) for so long as CK is the beneficial owner of at least 40% of the
voting shares of Principal Party A, to use its reasonable
commercial endeavours to cause CK and such of CK's Subsidiaries
located in Hong Kong or the PRC which require B Group Services
to obtain such B Group Services from the B Group so long as such
B Group Services are reasonably competitive as to price,
availability, quality and other terms material to its
competitiveness and provided that with respect to B Group
Services not set forth in Schedule 1B as of the date hereof, the
B Group has complied with its obligations set forth in Clause
2.15;
provided, in each case that such B Group Services are not otherwise
provided by any member of the A Group or by the HGC Group.
2.7 HGC Group Use of A Group Services
The Company agrees to procure that members of the HGC Group who require
A Group Services shall procure such A Group Services from the A Group,
so long as such A Group Services are reasonably competitive as to price,
availability, quality and other terms material to its competitiveness
and provided that with respect to A Group Services not set forth in
Schedule 1A as of the date hereof, the A Group has complied with its
obligations set forth in Clause 2.15.
2.8 HGC Group Use of B Group Services
The Company agrees to procure that members of the HGC Group who require
B Group Services shall, subject to the provisions of Clause 2.11 in the
case of purchases of Capacity, procure such B Group Services from the B
Group, so long as such B Group Services are reasonably competitive as to
price, availability, quality and other terms material to its
competitiveness and provided that with respect to B Group Services not
set forth in Schedule 1B as of the date hereof, the B Group has complied
with its obligations set forth in Clause 2.15.
10.
2.9 B Group Obligation to Use A Group Services
Subject to Clause 14.8, Principal Party B agrees to procure that members
of the B Group (other than Party B and its Subsidiaries if such persons
are deemed Subsidiaries of Principal Party B solely by operation of the
provisions contained in the last parenthetical of the definition of
"Subsidiary") who require A Group Services in Hong Kong (not otherwise
provided by any member of the B Group or by any member of the HGC Group)
shall procure such services from the A Group, so long as such services
are reasonably competitive as to price, availability, quality and other
terms material to its competitiveness and provided that with respect to
A Group Services not set forth in Schedule 1A as of the date hereof, the
A Group has complied with its obligations set forth in Clause 2.15.
2.10 Access to A Group/CK Properties
Principal Party A agrees:
(a) to provide, and to cause each member of the A Group to provide,
HGC and its Subsidiaries with access to properties (including
related infrastructure) which from time to time are owned or
controlled by any member of the A Group; and
(b) for so long as CK is the beneficial owner of at least 40% of the
voting shares of Principal Party A, to use its reasonable
commercial endeavours to cause CK and its Subsidiaries to
provide HGC and its Subsidiaries with access to properties
(including related infrastructure) which from time to time are
owned or controlled by CK or its Subsidiaries;
in each case on a commercially reasonable basis and on terms which are,
in any event, not worse (from the perspective of the HGC Group) than the
basis and terms on which access is currently provided to the HGC Group.
2.11 Price of B Group Capacity For HGC Group
Principal Party B shall, and shall cause members of the B Group (other
than Party B and its Subsidiaries if such persons are deemed
Subsidiaries of Principal Party B solely by operation of the provisions
contained in the last parenthetical of the definition of "Subsidiary")
to, provide Capacity on the Global Crossing Network to the HGC Group at
a price equal to the lowest price of any sale on the applicable Global
Crossing Network during the preceding calendar quarter to a
non-affiliated entity activating a similar amount of Capacity on the
applicable system(s) (excluding discounts given in respect of future
commitments and past purchases unless comparable circumstances apply in
the case of the proposed purchaser and having regard to timing of
commitments, purchase and activation) less 5%; provided, however, that
in no event shall such price be at below cost.
2.12 Price of HGC Group Capacity for A Group, B Group and ESD Group
The HGC Group shall provide Capacity and other services within the
Business to:
(a) Principal Party A and its Subsidiaries;
(b) Principal Party B and its Subsidiaries; and
11.
(c) ESD Investments One Limited respectively and its Subsidiaries,
provided it is more than 50% owned directly or indirectly, by
Party A and Party B,
at a price equal to the lowest price of any sale on the HGC Group
network during the preceding calendar quarter to a non-affiliated entity
activating a similar amount and type of Capacity or service (excluding
discounts given in respect of future commitments and past purchases
unless comparable circumstances apply in the case of the proposed
purchaser and having regard to timing of commitments, purchases and
activation) less 5%; provided, however, that in no event shall such
price be below cost.
2.13 Price of HGC Group Capacity to MDC Group
The Shareholders shall procure that so long as the HGC Group and the MDC
Group remain to be more than 50% owned by Party A and Party B, directly
or indirectly, that the HGC Group shall provide Capacity to members of
the MDC Group at cost, plus the administrative costs incurred by the HGC
Group in providing such services.
2.14 Price of HGC Group Capacity To Third Parties
Except as otherwise agreed by the Board or as otherwise provided by this
Agreement (including, without limitation, in Clause 2.12), Capacity and
other services within the Business shall be provided by the HGC Group to
third parties at market rates.
2.15 Notice of New Group Services
Each of Principal Party A and Principal Party B respectively shall be
permitted to supplement its respective Group Services by providing the
other Principal Party with written notice of the services then being
offered by members of the A Group or the B Group (as the case may
require) (with respect to members of the A Group, in Hong Kong and with
respect to members of the B Group, outside of Hong Kong). Unless the
Principal Parties agree to the contrary, the services set forth in such
notice shall be deemed included in Schedule 1A or Schedule 1B, as the
case may be, at the end of the period of thirty (30) days after the date
of such notice (the Principal Parties to negotiate in good faith over
such additional Group Services during such period).
3. ARTICLES OF ASSOCIATION
3.1 New Articles of Association
As soon as practicable following the signing of this Agreement the
Company shall, and each of the Shareholders hereby agrees that they
shall procure the Company to, adopt new Articles of Association in order
to reflect the relevant terms and provisions of this Agreement.
3.2 Inconsistency
In the event of inconsistency between this Agreement and the Articles or
the articles of association of HGC, this Agreement shall prevail.
12.
4. BUSINESS OF THE HGC GROUP
4.1 The Business
The HGC Group shall carry on the Business as its primary areas of focus.
4.2 Incidental Activities
In addition, the HGC Group may also carry on the following activities
incidental to the Business:
(a) the provision of E-Commerce in Hong Kong;
(b) the provision of Content and Portal Distribution in Hong Kong;
(c) the provision of Internet Advertising in Hong Kong;
(d) Hosting Operations;
(e) Data Center Services;
(f) the establishment and maintenance of facilities and the
provision of services reasonably incidental to the Business and
to any of the above and/or as may be agreed; and
(g) the provision of subscriber equipment in connection with the
services listed above;
In pursuing the activities referred to in paragraphs (a) to (c) above,
the Shareholders shall procure that if any Hosting Operations or Data
Center Services are required by the HGC Group, the HGC Group shall
obtain these services from the MDC Group subject to and in accordance
with Clause 14.5 of the MDC Shareholders' Agreement.
In pursuing the activities referred to in paragraphs (d) and (e) above,
the Shareholders shall not, and shall procure that HGC and its
Subsidiaries do not, breach Clause 11 (Restrictive Covenants) of the
Data Center Business Transfer Agreement dated the date of this Agreement
between (1) HGC and (2) ▇▇▇▇▇▇▇▇▇ GlobalCenter Limited or Clause 14
(Non-competition and other obligations) of the MDC Shareholders'
Agreement.
If a customer of the HGC Group requires Hosting Operations and Data
Center Services (other than the provision of equipment co-location
services to Carriers) the HGC Group shall use commercially reasonable
efforts to persuade such customer to use the MDC Group for such Hosting
Operations and Data Center Services.
4.3 Excluded
For the avoidance of doubt, the business of the HGC Group does not
include:
(a) the provision of Mobile Services;
(b) the provision of Paging Services and associated facilities; or
(c) Satellite Based Services.
13.
4.4 PRC Business
(a) The Shareholders and the Principal Parties acknowledge that PRC
Fixed Services and Internet Access and Transport Services in the
PRC (together, the "PRC BUSINESS") are within the Company's
scope of business, and neither Principal Party (and none of
their respective Subsidiaries) shall pursue such an opportunity
except through the Company and its Subsidiaries, other than as
provided in this Clause 4.4 or Clause 14.
(b) If either Principal Party or their respective Subsidiaries
obtain an opportunity in a PRC Business which such party wishes
to pursue (each, a "PRC OPPORTUNITY"), such party (the "OFFERING
PARTY") shall give prompt written notice thereof to the Board.
Such notice shall specify the PRC Opportunity in reasonable
detail (including the timing of the transaction) so that the
Board can reasonably consider the PRC Opportunity.
(c) If the HGC Group is not permitted by law, or published policy,
regulation or decree to pursue a PRC Opportunity (collectively,
"PROHIBITION"), then the Offering Party shall be permitted,
after giving written notice thereof to the Board and the other
Principal Party, to pursue such PRC Opportunity (through itself,
through its related Principal Party or through one of such
related Principal Party's Subsidiaries), provided, however,
that:
(i) prior to exercising the rights conferred by the
remainder of this Clause based on the view that the HGC
Group is not permitted to pursue the PRC Opportunity by
virtue of a Prohibition, the Offering Party shall first
discuss the problem in good faith with the other
Principal Party with a view to attempting to overcome
the problem during a reasonable period having regard to
any time constraints attached to the opportunity and
having regard to whether such Prohibition will cease
within a reasonable time period;
(ii) if the discussions in (i) have not resulted in the
problem being overcome and the Offering Party still
wishes to pursue the PRC Opportunity, the Offering Party
shall in that event provide a written offer ("OFFER") to
the other Principal Party (the "OFFERED PARTY") for the
right to participate in 50% of the PRC Opportunity
available to the Offering Party (subject to the Offered
Party assuming 50% of the liabilities attached thereto),
such Offer to set out the terms of the PRC Opportunity
as well as the structure in which the Offered Party and
the Offering Party shall participate, in each case in
reasonable detail (the "OFFERING NOTICE"). The Offered
Party shall have a reasonable opportunity to consider
such Offer, but shall, in any event, provide the
Offering Party a written reply to such Offer within 30
days of receiving the Offering Notice ("Offer Period");
(iii) should the Offered Party refuse or fail within the Offer
Period to accept in writing the Offer, the Offering
Party and/or its Subsidiary or Subsidiaries shall be
entitled to undertake the PRC Opportunity. If however
the only reason preventing the Offered Party from
accepting the Offer is a Prohibition (and the Offered
Party notifies the Offering Party thereof in writing
within the Offer Period), the Offering Party and the
Offered Party shall negotiate in good faith with the
other to
14.
establish a mechanism through which the other will be
put in the same position, including as to risks and
returns, as if it had invested directly in such PRC
Opportunity; and
(iv) if the Offered Party accepts the Offer within the Offer
Period, both parties agree to proceed in accordance with
the terms of the Offer.
For the avoidance of doubt, the carrying on of businesses by any
Shareholder pursuant to this Clause shall not be regarded as a
breach of the non-competition provisions contained in Clause 14.
Any right to participate under this Clause may be exercised by
the Offered Party in its own right or by a Subsidiary of the
Offered Party.
4.5 Intellectual Property
Each of the Shareholders recognises and acknowledges that, as between
the HGC Group and the Shareholders, the Company is the sole and
exclusive owner of all of the rights in and to the Intellectual
Property. The Shareholders agree that no member of the HGC Group shall
grant a licence to any member of the A Group or the B Group with respect
to any Intellectual Property, except a licence in writing that is
approved by the Board. Each of the Shareholders agrees that neither this
Agreement nor any of the Shareholder's activities contemplated herein
shall confer upon any member of the A Group or B Group any right, title
or interest in or to any of the Intellectual Property or any right to
use the Intellectual Property except:
(a) to the extent licensed in writing to that Shareholder by an HGC
Group company;
(b) to the extent owned by that member of the A Group or B Group and
licensed to the HGC Group company; provided, however, that any
improvements or developments made by the Company and based upon
Intellectual Property licensed from a member of the A Group or B
Group shall belong exclusively to the Company; and
(c) in the case of know how or other information, that information
becomes generally known or generally available to the public
through no act or failure to act on the part of either
Shareholder.
4.6 Cable Landing Stations
The HGC Group shall not:
(a) make any capital expenditure or equity contribution in relation
to a submarine cable landing station in Hong Kong or the PRC
(including the establishment thereof); or
(b) own cable stations or submarine cable systems in each case which
land in Hong Kong or the PRC or participate in consortiums or
similar arrangements doing the same;
provided that it is agreed that the HGC Group may facilitate the
establishment of cable landing stations to the extent desirable to
enable the HGC Group to compete as a provider of backhaul facilities and
domestic services in Hong Kong and the PRC.
15.
4.7 Satellite Earth Stations/Capacity
The HGC Group shall not undertake the establishment and use of satellite
earth stations or the leasing of satellite capacity without the prior
approval of the Board and provided that the earth stations or satellite
capacity is required for purposes not reasonably able to be achieved on
a competitive basis by use of submarine cables.
5. DIRECTORS
5.1 Directors' Appointment
The Board shall, unless the Shareholders otherwise unanimously agree,
consist of six Directors. Each Shareholder shall be entitled to nominate
3 Directors and require the appointment by the Shareholders or by the
Board of the 3 Directors nominated by it. The nominating Shareholder
shall have the exclusive right to require the removal and replacement of
the Director(s) nominated by that Shareholder from time to time. Each
Shareholder shall from time to time promptly upon request of the other
Shareholder take all such action, including voting their respective
Shares, procuring their respective nominated Directors on the Board to
vote in favour of resolutions and signing documents as may be necessary
to appoint, remove or replace (as the case may require) Director(s)
under this Clause.
5.2 Board Meetings
Any two Directors may, at any time, convene a Board meeting. Meetings of
the Board shall be held at least once every quarter. Unless otherwise
agreed by a majority of the Directors, all Board meetings shall be held
after not less than 14 Business Days written notice thereof (or such
shorter period as the majority of the Directors entitled to attend that
meeting may agree) has been given to each Director, or his alternate,
stating the date, time, place and agenda of the Board meeting (including
details of arrangements for participation by conference telephone or any
other communication equipment permitted by Clause 5.8) and no business
(other than business of a routine or non-material nature) may be
conducted at a Board meeting other than the business specified in the
agenda. The sending of a notice of a Board meeting to the address or
facsimile number from time to time notified or provided by each Director
or his alternate to the Company Secretary shall be deemed to be a valid
service of a notice of the Board meeting.
5.3 Quorum
No meeting of the Board may proceed to business nor transact any
business unless a quorum is present. The quorum for a Board meeting
shall be two Directors (including one Director nominated by Party A and
one Director nominated by Party B) present in person or by their
respective alternates. If a quorum is not present within twenty minutes
of the time scheduled for commencement of the Board meeting, the meeting
shall be adjourned to the same time and place on the same day in the
next week, unless at least one Director nominated by each of Party A and
Party B agree to an alternative date, time or place.
16.
5.4 Vote
At any Board meeting, each Director shall have one vote.
5.5 Chairman
The Chairman of the Board shall initially be nominated by Party A from
among the persons for the time being nominated by Party A for
appointment as Directors and shall be in such office for 18 months, from
12 January 2000. The Chairman of the Board will then be appointed by
Party B from among the persons for the time being nominated for
appointment by Party B for appointment as Directors and shall also be in
office for 18 months. Thereafter, such right of nomination of the
Chairman of the Board shall be rotated between Party A and Party B every
18 months. The Chairman of the Board shall not be entitled to a second
or casting vote.
5.6 Directors' Fees
Unless otherwise agreed by the Shareholders unanimously, the Directors
(or their respective alternates) shall not be entitled to be paid
director's fees but shall be reimbursed for all out-of-pocket (including
travel and accommodations) expenses reasonably incurred in performing
their duties as Directors and shall receive such remuneration for
executive services performed for any member of the HGC Group as the
Board may decide.
5.7 Written Resolutions
A resolution in writing signed by at least two Directors nominated by
Party A and at least two Directors nominated by Party B or by signed
facsimile of their signatures shall be valid and effective for all
purposes as if passed at a duly convened meeting of the Board. Any such
resolution may consist of one or several documents in like form, each
signed or authenticated by one or more of the Directors.
5.8 Participation and Location
Any or all Directors may participate in a meeting of the Board by means
of a conference telephone or any communications equipment which allows
all persons participating in the meeting to hear and speak to each
other. A person so participating shall be deemed to be present in person
at the meeting and shall be entitled to be counted in the quorum and to
vote accordingly. Unless otherwise agreed by the Shareholders,
(a) Board meetings (including attendance via conference calls) shall
take place in Hong Kong, Bermuda or such other location as may
be agreed by Party A and Party B; and
(b) written resolutions of the Board shall be signed by the Board in
Hong Kong, Bermuda or such other locations as may be agreed by
Party A and Party B.
5.9 Board Referral and Voting
The Board shall determine all matters by way of simple majority unless
otherwise provided for herein or unanimously agreed by the Shareholders,
provided that prior to the date upon which the transfer restrictions on
Shareholders cease by virtue of the application of Clause 11.2 (a), all
action by the Board shall require an affirmative vote
17.
of at least one director nominated by each Shareholder. The Shareholders
shall procure that no member of the HGC Group will do any of the things
listed in Schedule 3 without the prior approval of the Board.
Notwithstanding the foregoing:
(a) a resolution regarding termination of the service agreement
dated 12 January 2000 between HGC, Principal Party A and
▇▇▇▇▇▇▇▇▇ Telecommunications (Hong Kong) Limited or the service
agreement dated 12 January 2000 between HGC and Principal Party
A or the termination of any service provided under either such
agreement may be passed by a majority of the directors nominated
by Party B present at a validly convened meeting of directors of
HGC and in the event of such termination Party A shall procure
that its nominated directors on the board of directors of HGC do
not unreasonably withhold their approval of a replacement
arrangement with a third party proposed by Principal Party B;
and
(b) a resolution regarding termination of the Licence and Technical
Assistance Agreement dated 12 January 2000 between the Company
and Principal Party B may be passed by a majority of the
directors nominated by Party A present at a validly convened
meeting of directors of the Company or HGC (as the case may
require) and Principal Party B shall procure that its nominated
directors on the Board and on the board of directors of HGC
respectively do not unreasonably withhold their approval of a
replacement agreement with a third party proposed by Principal
Party B.
5.10 Board Matters
Any action to be taken by or on behalf of the Company with respect to
the matters set forth in Schedule 3 shall be first considered by the
Board; provided, however, that the list of such matters is not intended
and shall not be deemed to be an exhaustive list of items within the
purview of the Board nor is it intended that the absence of any matter
from inclusion in Schedule 3 shall give rise to any inference that any
officer of the Company shall be permitted to take any action on behalf
of the Company with respect to such omitted matter without first seeking
the approval of the Board.
5.11 The Company's Subsidiaries Generally
Unless the Shareholders otherwise unanimously agree, Clauses 5.1 to 5.10
shall apply, mutatis mutandis, to the Company's Subsidiaries (except
partly owned Subsidiaries whose boards include directors appointed by
third parties) provided however that in the case of such Subsidiaries
other than HGC:
(a) the board of directors of such Subsidiary shall consist of two
directors;
(b) each Shareholder shall be entitled to nominate one director each
for such Subsidiary and require the appointment of the director
nominated by it;
(c) meetings of the board of directors of such Subsidiary shall be
held in the manner and at the times agreed by the Shareholders;
(d) no resolution shall be passed by the board of directors of such
Subsidiary unless it is approved by the two directors of such
Subsidiary;
18.
(e) the Shareholders shall take any actions necessary to procure
that the decisions of the board of directors of such Subsidiary
are implemented; and
(f) Clause 5.7 shall apply as if each reference therein to "two
Directors" were to a reference to "one Director".
5.12 Certain Partly Owned Subsidiaries
In the case of partly owned Subsidiaries of the Company whose boards
include directors appointed by third parties, each Shareholder shall be
entitled to appoint or require the appointment of, half the total number
of directors which the shareholder of that Subsidiary (being a member of
the HGC Group) is entitled to appoint to the board of directors of such
Subsidiary ("TOTAL NUMBER"), provided that where the Total Number is an
odd number, Party A and Party B shall mutually decide on the remaining
director. If the Shareholders agree, they may appoint a lesser number of
directors than the Total Number to the board of directors of such
Subsidiary, provided that the number of directors appointed by each
Shareholder shall be equal. The Shareholders shall procure that no
resolution shall be passed by the board of directors unless it is
approved by all the directors appointed by each Shareholder, each acting
in accordance with the instructions of the Board or the board of
directors of HGC. The Shareholders shall take any actions within their
power to procure that the decisions of the Board and of the board of
directors of HGC relating to such Subsidiary are implemented.
6. SHAREHOLDERS' MEETINGS
6.1 Convening Meetings
Meetings of the Shareholders shall be convened at such times and in such
manner as specified in the Articles and as required by law. The quorum
for a meeting of the Shareholders shall be Party A and Party B being
present in person or by proxy or attorney. If there is no quorum present
within one hour of the time scheduled for the commencement of such
meeting, then such meeting shall be adjourned to a date seven (7) days
after the appointed date for such meeting and at the same time and
place.
6.2 Requisite Majority
The Shareholders shall determine all matters by way of simple majority
unless otherwise provided for herein or required by any law or
regulation applicable to the Company, in which case the matter shall be
determined in the manner so provided for or required by such applicable
law or regulation; provided, that all actions by Shareholders shall
require the affirmative vote of Party A and Party B. The chairman of the
meeting shall not have a second or casting vote. A resolution in writing
signed by the authorised representative(s) of all Shareholders or by
signed facsimile of their signatures shall be valid and effective for
all purposes as if passed at a duly convened meeting of the
Shareholders. Any such resolution may consist of one or several
documents in like form, each signed or authenticated for and on behalf
of one or more of the Shareholders.
19.
7. DEADLOCK
7.1 Definition
A "DEADLOCK" is deemed to have arisen where:
(a) (i) a matter relating to the affairs of the Company and/or
its Subsidiaries has been considered by a meeting of the
Board or of the Shareholders (or the board of the
Company's Subsidiaries, as the case may be); and
(ii) no resolution has been carried at such meeting of the
Board or the Shareholders (or the board of the Company's
Subsidiaries, as the case may be) in relation to the
matter by reason of an equality of votes for and against
any proposal for dealing with it; and
(iii) such matter is not resolved at such meeting; and
(b) such matter remains not resolved at the next meeting of the
Board or the Shareholders (or the board of the Company's
Subsidiaries, as the case may be).
7.2 Escalation Procedures
When a deadlock is deemed to have arisen, the Company shall (and if the
Company fails to do so, either Party A or Party B may do so) provide
written notice thereof to the Third Level Executives, the Second Level
Executives and the First Level Executives (the date such notice is
delivered, the "START DATE"). The matter shall be referred in the first
instance to the Managing Director of Party A and the Chief Executive
Officer of Party B ("THIRD LEVEL EXECUTIVES") for their consideration,
discussion and mutual decision. If there is no written agreement on such
matter within 14 days from the Start Date, the matter shall be referred
to the Group Managing Director of Principal Party A and the Chief
Executive Officer of Principal Party B ("SECOND LEVEL EXECUTIVES") for
their consideration, discussion and mutual decision. If they cannot
reach a written agreement within 28 days from the Start Date, the matter
will be referred to the respective chairmen of the Principal Parties
("FIRST LEVEL EXECUTIVES"). If, following this process, there is no
written agreement between the First Level Executives within 45 days from
the Start Date, the matter shall be referred to arbitration and the
provisions of Schedule 5 shall apply. Any agreement between the Third
Level Executives, Second Level Executives or First Level Executives
shall be recorded in writing and notified to the Shareholders and the
Company and shall thereupon bind the parties.
8. ACCOUNTS AND INFORMATION TO SHAREHOLDERS
8.1 Accounting Records
Each member of the HGC Group shall maintain accurate and complete
accounting records and shall keep its accounts in accordance with
generally accepted accounting principles in Hong Kong and such accounts
shall be audited annually. In addition, each member of the HGC Group
shall prepare quarterly financial statements in
20.
accordance with generally accepted accounting principles in Hong Kong,
reconciled in each instance to United States generally accepted
accounting principles ("U.S. GAAP") at the cost of the Company.
8.2 Financial Year
The financial year of each member of the HGC Group shall end on 31st
December in each year or on such other date as may be determined by the
Board.
8.3 Auditors
The auditors of each member of the HGC Group shall be a major
international firm to be determined by the Board, but shall not be
either ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or PricewaterhouseCoopers LLP.
8.4 Shareholder Inspection
Each of the Shareholders and its authorised representatives shall have
the right, by prior appointment made on reasonable notice, during normal
office hours, to inspect the books, accounting records and any document
of any member of the HGC Group at its own expense.
8.5 Management and Audited Accounts
The Company shall and will procure that each member of the HGC Group
periodically prepares and submits to each of the Directors and the
Shareholders:
(a) on a calendar monthly basis (and no later than 21 days after the
end of the relevant month) management accounts for such month
(and for the relevant financial year to date) containing:
(i) both on a consolidated basis and for each member of the
HGC Group individually, a detailed profit and loss
account and cashflow statement for the relevant period
and a balance sheet drawn up as at the end of such
period; and
(ii) a comparison with the position at the relevant point,
and in respect of the relevant period, in the previous
financial year; and
(b) on an annual basis (and no later than 3 months after the end of
the financial year end) audited accounts for such financial year
containing both on a consolidated basis and for each member of
the HGC Group individually, a detailed profit and loss account
and cashflow statement for the financial year and a balance
sheet drawn up as at the end of such financial year; and
(c) such further information in relation to the HGC Group (and in
such form) as any Shareholder may reasonably require from time
to time.
8.6 Non-Operating Companies
The Board will, in consultation with the auditors of the Company,
determine whether (a) management accounts shall be prepared for the
non-operating companies of the HGC Group and (b) auditors need be
appointed for such non operating companies, and, in making such
determination, the Board shall consider whether such audits are
21.
necessary in order to prepare the U.S. GAAP financial reconciliations
referred to in Section 8.1.
8.7 Minutes
The Company shall send to the Shareholders copies of minutes of all
meetings of the Board and the Shareholders as soon as they have been
finalised.
9. BUSINESS PLAN; OPERATING BUDGET
9.1 Business Plan
The Shareholders agree to procure that the Existing BP shall be amended
to reflect the transactions effected pursuant to the ESD Transfer
Agreement and the Data Center Business Transfer Agreement respectively,
and thereafter should regularly be revised and up-dated on a "rolling 5
year annual basis" in accordance with the following provisions of this
Clause 9.
9.2 Annual Plans
The Company shall arrange and procure that, no later than 45 days before
each financial year end, the Chief Financial Officer of the Company
shall prepare and submit to each of the Directors and the Shareholders
an updated 5 year business plan (for the financial year immediately
following such financial year end and the next 4 financial years)
incorporating (at least):
(a) a description of the HGC Group's intended activities over this 5
year period together with financial projections for the same
period; and
(b) the operating budgets (including, without limitation, estimated
revenues and expenditures) for the first financial year of this
period (the "OPERATING BUDGET") in substantially the same format
as the operating budgets included in the Existing BP.
9.3 Shareholder Approval
Following submission to the Directors and the Shareholders of each
business plan referred to in Clause 9.2, each of the Directors and the
Shareholders shall have the opportunity to comment on such business plan
and the Board shall consider such comments and, if considered
appropriate, make such alterations to such business plan as seem
appropriate with a view to the preparation of a definitive business plan
for the relevant financial years capable of approval by the Shareholders
as required in accordance with Clause 9.4. Following any such
alterations, the revised business plan for the relevant financial years
shall be re-circulated, as soon as practicable, to the same parties.
9.4 Reasonable Endeavours to Agree
Once the business plan is approved by the Shareholders it shall become
the "Business Plan" for the purposes of this Agreement. Each of the
Shareholders will use its respective reasonable endeavours to agree the
Business Plan on or before the date which is 20 days before the
financial year end.
22.
9.5 Expenditure and Failure by Board to Approve
No expenditure shall be incurred by or on behalf of the HGC Group which
is not contemplated, either specifically or generally, by the Operating
Budget then in effect. If the Board does not approve the proposed
Business Plan (including the Operating Budget) for any financial year,
then the Operating Budget to be used by the HGC Group in connection with
the management of the HGC Group for such financial year shall be the
Operating Budget for the immediately preceding financial year (a
"ROLL-OVER BUDGET"), except that the aggregate expenses of the HGC Group
for the preceding financial year shall be increased by 7.5%, provided,
however:
(a) the budget may include funding for any emergency expenditures
necessary during the current year that were not included in the
Operating Budget for the preceding financial year; and
(b) the budget may include funding for any pre-existing commitment
of the HGC Group which has received any required approvals under
this Agreement.
At least 10 Business Days prior to the beginning of each quarter of any
financial year covered by a Roll-Over Budget, the Chief Financial
Officer of the Company will prepare and present a proposed operating
budget with respect to the remainder of such financial year which, upon
Board approval thereof in accordance with Clause 5, shall be used by the
HGC Group as the Operating Budget for such period.
10. EMPLOYMENT POLICIES
Key Staff
(a) Subject to the provisions of this Clause 10, the Board shall
consult each of the Shareholders regarding the appointment of
key senior management staff of HGC PROVIDED always that whether
or not to appoint such person and if so the terms thereof shall
be determined by the Board at its absolute discretion.
(b) The initial Chief Executive Officer of the Company and its
Subsidiaries shall be ▇▇▇▇▇ ▇▇▇▇. The Chief Executive Officer of
the Company and its Subsidiaries from time to time will be
nominated by Party A, with appointment subject to the Board's
approval.
(c) The Chief Financial Officer of the Company and its Subsidiaries
from time to time shall be nominated by Party B, with
appointment subject to the Board's approval.
(d) The Sales and Marketing Director shall from time to time be
nominated by Party B, with appointment subject to the Board's
approval.
(e) The Internet Director of the Company and its Subsidiaries from
time to time will be nominated by Party A, with appointment
subject to the Board's approval.
(f) The Chief Operating Officer of the Company and its Subsidiaries
shall initially be ▇▇▇▇▇ ▇▇▇. Any successor Chief Operating
Officer from time to
23.
time shall be nominated by Party A, with appointment subject to
the Board's approval.
(g) The Director of International Engineering of the Company and its
Subsidiaries from time to time shall be nominated by Party B from
time to time, with appointment subject to the Board's approval.
The said Director will report to the Chief Operating Officer.
11. TRANSFER OF SHARES AND SHAREHOLDERS' LOAN
11.1 General Restriction
Subject to Clause 11.2, no Shareholder shall, except with the prior
written consent of the other Shareholder, sell, assign or otherwise
dispose of, create or permit to subsist any pledge, lien or charge over,
or grant any option or other rights or any interest in all or any of the
Shares held by it or all or part of the Shareholders' Loan made by it.
11.2 Legal and Beneficial Ownership
Principal Party A covenants that it shall continue to own legally and
beneficially, directly or indirectly, 100% of the Shares owned by Party
A. Principal Party B covenants that it shall continue to own legally and
beneficially, directly or indirectly, more than 50% of the Shares owned
by Party B except that Principal Party B may reduce its direct and
indirect ownership in Party B (and consequently, its indirect ownership
in the Shares owned by Party B) provided that if it ceases to legally
and beneficially hold directly and indirectly at least 35% of the
outstanding voting stock of Party B (a "TRIGGERING EVENT"):
(a) the restrictions on the Shareholders under Clause 11.1 and on
the Principal Parties under this Clause 11.2 shall no longer
apply upon and from the date being 90 days from the date of the
occurrence of the Triggering Event (or, if earlier, the date
referred to in paragraph (c) below);
(b) this Agreement shall terminate automatically upon the date being
180 days from the date of the Triggering Event and all
obligations of the parties hereto under this Agreement shall
terminate, without prejudice to accrued liabilities; and
(c) Principal Party B shall have the right, upon written notice to
Principal Party A, to immediately terminate this Agreement
effective on the date Principal Party A receives such notice and
upon such termination, all obligations of the parties hereto
under this Agreement shall terminate, without prejudice to
accrued liabilities.
11.3 Transfer to Wholly Owned Subsidiaries
(a) Notwithstanding anything herein to the contrary, Party A may
transfer all (but not less than all) of its Shares and
Shareholders' Loan to any company which is a direct or indirect
wholly owned Subsidiary of Principal Party A, without the
consent of Party B provided that written notice is given to
Principal Party B. Principal Party A further agrees that, in the
event that Party A transfers
24.
Shares and Shareholders' Loan to a direct or indirect wholly
owned Subsidiary of Principal Party A, it will procure that such
transferee (a) is and will remain its direct or indirect wholly
owned Subsidiary and without limiting the foregoing, if for any
reason it ceases to be so, shall procure the re-transfer of the
Shares and Shareholders' Loan to itself or the transfer of the
Shares or Shareholders' Loan to another direct or indirect
wholly owned Subsidiary of it, and (b) (as a condition of any
such transferee becoming a Shareholder) agrees to the adherence
to this Agreement by executing and delivering to the other
Shareholder a deed of adherence substantially in the form set
out in Schedule 4. In the event of any such transfer, Principal
Party A shall remain liable for all obligations of the
transferee under this Agreement.
(b) Notwithstanding anything herein to the contrary, Party B may
transfer all (but not less than all) of its Shares and
Shareholders' Loans to any company which is a direct or indirect
wholly owned Subsidiary of either (i) Principal Party B or (ii)
Party B without the consent of Party A provided that written
notice is given to Principal Party A; and provided that in the
case of a transfer pursuant to clause (ii) above, Party B
obtains the prior consent of Principal Party B to such transfer.
Principal Party B further agrees that, in the event that Party B
transfers Shares and Shareholders' Loans to a direct or indirect
wholly owned Subsidiary of Principal Party B, it will procure
that such transferee (a) is and will remain its direct or
indirect wholly owned Subsidiary and without limiting the
foregoing, if for any reason it ceases to be so, shall procure
the re-transfer of the Shares and Shareholders' Loans to itself
or the transfer of the Shares or Shareholders' Loans to another
direct or indirect wholly owned Subsidiary of it, and (b) (as a
condition of any such transferee becoming a Shareholder) agrees
to the adherence to this Agreement by executing and delivering
to the other Shareholder a deed of adherence substantially in
the form set out in Schedule 4. In the event of any such
transfer, Principal Party B shall remain liable for all
obligations of the transferee under this Agreement.
Party B further agrees that, in the event that Party B transfers
Shares and Shareholders' Loans to a direct or indirect wholly
owned Subsidiary of Party B, it will procure that such
transferee (a) is and will remain its direct or indirect wholly
owned Subsidiary and without limiting the foregoing, if for any
reason it ceases to be so, shall procure the re-transfer of the
Shares and Shareholders' Loans to itself or the transfer of the
Shares or Shareholders' Loans to another direct or indirect
wholly owned Subsidiary of it, and (b) (as a condition of any
such transferee becoming a Shareholder) agrees to the adherence
to this Agreement by executing and delivering to the other
Shareholder a deed of adherence substantially in the form set
out in Schedule 4. In the event of any such transfer, Principal
Party B shall remain liable for all obligations of the
transferee under this Agreement.
12. GUARANTEES
12.1 Guarantee of Relevant Shareholder
Each of the Principal Parties, in consideration of the other Shareholder
other than its Relevant Shareholder (the "OTHER SHAREHOLDER") and the
other Principal Party entering into this Agreement, hereby guarantees,
unconditionally and irrevocably as
25.
primary obligor, the due observance and performance by its Relevant
Shareholder of all its agreements, obligations, commitments and
undertakings contained in this Agreement (the "GUARANTEED OBLIGATIONS").
12.2 Continuing Guarantee etc.
The guarantee and indemnity provided by each of the Principal Parties in
this Clause 12 shall be a continuing guarantee and indemnity and shall
cover all Guaranteed Obligations of its Relevant Shareholder
notwithstanding the liquidation, incapacity or any change in the
constitution or direct or indirect shareholding of its Relevant
Shareholder or any settlement of account or variation or modification of
this Agreement or any indulgence or waiver given by any party hereto or
other matter whatsoever until the last claim whatsoever by the Other
Shareholder against its Relevant Shareholder has been satisfied in full.
12.3 Invalidity
Should any Guaranteed Obligation of the Relevant Shareholder, which if
valid or enforceable would be the subject of the guarantee and indemnity
in this Clause 12, be or become wholly or in part invalid or
unenforceable against the Relevant Shareholder by reason of any defect
in or insufficiency or want of powers of the Relevant Shareholder or
irregular or improper purported exercise thereof or breach or want of
authority by any person purporting to act on behalf of the Relevant
Shareholder or because any of the rights have become barred by reason of
any legal limitation, disability, incapacity or any other fact or
circumstance whether or not always known to the Other Shareholder,
Principal Party A or Principal Party B (as the case may be) shall
nevertheless be liable to each Other Shareholder notwithstanding the
avoidance or invalidity of any term or condition of this Agreement or of
any Relevant Agreements whatsoever including, without limitation,
avoidance under any enactment relating to liquidation) in respect of
that Guaranteed Obligation as if the same were wholly valid and
enforceable.
12.4 Enforcement
The guarantee and indemnity provided by each of the Principal Parties in
this Clause 12 may be enforced against it by the Company or any Other
Shareholder at any time without first instituting legal proceedings
against its Relevant Shareholder in the first instance or joining in its
Relevant Shareholder or the Other Shareholder or the other Principal
Party as a party in the same proceedings against it.
12.5 Deed of Adherence
Prior to a Shareholder disposing of any or all of its direct and
indirect interest in the Shares under this Agreement, such Shareholder
shall procure that the acquiror of such Shares (as a condition to any
such acquiror becoming a Shareholder) agrees to the adherence to this
Agreement by executing and delivering to the other Shareholder a deed of
adherence substantially in the form set out in Schedule 4 (the "DEED OF
ADHERENCE"). For avoidance of doubt, the guarantee under Clause 12.1 of
the Principal Party whose Relevant Shareholder disposes of Shares under
this Agreement remains in full force and effect notwithstanding such
disposal and supports all agreements, obligations, commitments and
undertakings of the acquiror of such Shares contained in this Agreement.
26.
12.6 Acknowledgement
The parties acknowledge Principal Party B's desire to be released from
the guarantee set out in Clause 12.1 above and shall work towards a
resolution of such issues as soon as reasonably practicable after the
date hereof. Principal Party A shall not unreasonably withhold or delay
its consent to the release of Principal Party B from its obligations
under clause 12.1, on terms to be mutually agreed.
13. CONFIDENTIALITY
Each Shareholder and Principal Party shall, and shall exercise all of
its powers so as to procure that its Subsidiaries and the Company shall,
keep secret all trade secrets, know-how and other confidential
information of the Company and of the other Shareholder and its
Principal Party and the terms and conditions of this Agreement and shall
not use or disclose any such confidential information except as
authorised in writing by the owner. This obligation shall survive
termination of this Agreement but shall not apply to any information
after it has come into the public domain other than through a breach
under this Agreement or to any disclosure to a party's professional
advisors or if is required by any applicable laws or rules or
regulations of any stock exchange or regulatory body, by order of a
court of competent jurisdiction or in order to enforce the Shareholders'
rights under this Agreement.
14. NON COMPETITION AND OTHER OBLIGATIONS
14.1 Non Solicitation of Employees
Each of the Shareholders and Principal Parties covenant with the others
that it shall not and shall procure that none of its Subsidiaries shall,
either on its own account or jointly with, on behalf of, or for any
person, whether as principal, agent, partner, shareholder, director,
consultant, employee or otherwise, and whether directly or indirectly,
at any time during the Relevant Period solicit or entice away, or
endeavour to solicit or entice away, from any member of the HGC Group,
any employee, consultant or officer employed or engaged by any member of
the HGC Group in Hong Kong or the PRC within 12 months prior to the act
of solicitation whether or not such person would commit any breach of
contract by reason of leaving the service of that member of the HGC
Group; provided, however, nothing shall prohibit general solicitations
not focused on the HGC Group.
The parties acknowledge that as a consequence of the Spin-offs employees
of the HGC Group have been transferred to ▇▇▇▇▇▇▇▇▇ GlobalCenter Limited
and ESD Services Limited, in accordance with the terms of the Data
Center Business Transfer Agreement and the ESD Transfer Agreement, and
that such transfers shall not be treated as breaching this Clause 14.1
or Clause 15.1 of the Original Shareholders' Agreement.
14.2 Non-Compete
Save as otherwise agreed among the Shareholders or as otherwise provided
herein, during the term of this Agreement, each of the Shareholders and
Principal Parties
27.
shall not, and shall procure that their respective Subsidiaries shall
not, and Party A and Party B shall procure that ▇▇▇▇▇▇▇▇▇ Green Limited
and its Subsidiaries and ESD Investments One Limited and its
Subsidiaries (so long as ▇▇▇▇▇▇▇▇▇ Green Limited or ESD Investments One
Limited (as appropriate) remain to be more than 50% owned by Party A and
Party B, directly or indirectly) shall not, and Principal Party A shall,
for so long as CK is the beneficial owner of at least 40% of the voting
shares of Principal Party A, use its reasonable commercial endeavours to
cause CK and its Subsidiaries not to engage in any Business or form,
enter into an agreement or other arrangement with any third party for an
investment in, or otherwise make any investment in, any entity engaged
in or intending to engage in any Business (each, a "COMPETING ENTITY"):
(a) with respect to PRC Fixed Services, the PRC;
(b) with respect to Internet Access and Transport Services, Hong
Kong and/or the PRC; and
(c) with respect to HK Fixed Services Hong Kong only;
in any case, other than through the HGC Group.
14.3 Exceptions to Non-Compete
Nothing in Clauses 14.1 or 14.2 or any other provision of this Agreement
shall:
(a) prohibit any Shareholder or its Subsidiaries or Principal Party
or its Subsidiaries (each a "RESTRICTED PERSON") from investing
in any Competing Entity so long as (a) the consolidated revenues
of such Competing Entity from any service or activity within the
scope of the Business do not exceed 15% of the total
consolidated revenues of such Competing Entity at the date of
such investment and (b) such Competing Entity shall not use the
name "▇▇▇▇▇▇▇▇▇" and/or "Whampoa" or "Global Crossing" as part
of its name; provided, however, in a case where the service or
activity within the scope of the Business is conducted by an
entity which has no significant operations or operating history
and, within two years from the date of such investment, the
consolidated revenues of the Competing Entity from such service
and/or activity exceeds 20% of the total consolidated revenues
of such Competing Entity, such Restricted Person shall provide
the Company an option to acquire its investment in such
Competing Entity (subject to any necessary third party consents
provided that such party shall use commercially reasonable
efforts to avoid the requirement for, and obtain, if applicable,
the necessary consents) in cash at the fair market value thereof
but subject to the proviso contained in this Clause 14.3(a), the
said Restricted Person may maintain such investment
notwithstanding such revenues in the future exceed 15% of the
total consolidated revenues of such Competing Entity.
(b) prohibit a Restricted Person from being or becoming the owner
for investment purposes of the shares or other securities of any
corporation which carries on any Business PROVIDED that (i) such
investment has been notified to the Board in writing prior to
the investment; (ii) the corporation does not use as part of its
corporate or business name the name "Global Crossing",
"▇▇▇▇▇▇▇▇▇" and/or "Whampoa" and (iii) such investment does not
exceed 10% of the outstanding voting stock of such corporation;
28.
(c) prohibit any Restricted Person from carrying on a PRC Business
in accordance with Clause 4.4;
(d) prohibit any Restricted Person from engaging in (or entering
into investments that are engaging in) any service or activity
within the scope of the Business to the extent such service,
activity or investment was considered by the Board and was
rejected by the Board; provided that (i) such Restricted Person
or its relevant proposing Principal Party notifies the Board in
writing of its intent to engage in such service or activity or
make such investment at least 30 days prior to committing to
undertake such service or activity or make such investment and
(ii) such service or activity or investment shall not use the
name "▇▇▇▇▇▇▇▇▇" and/or Whampoa or "Global Crossing"; and
provided, further, if the reason the Board rejected such
service, activity or investment was due to capital requirements
and the Restricted Person pursues such opportunity, the Company
shall have an option, for a period of one year from the date of
the notice referred to above to acquire such opportunity from
the Restricted Person for cash in an amount equal to the
Restricted Person's total investment cost plus interest thereon
at a rate per annum equal to the Restricted Person's cost of
capital;
(e) prohibit any member of the A Group from carrying on the
activities set forth in Schedule 2;
(f) require Principal Party A to cause CK or its Subsidiaries to
refrain from engaging in any activity which a member of the A
Group could undertake under sub-clauses (a) through to (e)
above;
(g) prohibit any Restricted Person within the B Group from
developing, constructing, owning, operating, maintaining and/or
using cable landing stations (for the avoidance of doubt, the B
Group shall be permitted to develop, construct, own, operate,
maintain and land submarine cable systems, and terrestrial
systems outside Hong Kong and the PRC and sell capacity and
services thereon, subject to the proviso contained in paragraph
(h) of Clause 14.3); or
(h) prohibit any Restricted Person within the B Group from
developing, constructing, operating, maintaining, owning,
leasing or otherwise providing backhaul facilities in Hong Kong
and the PRC to connect cable stations owned and operated by any
member of the B Group in Hong Kong and the PRC with related
Point-of-Presence in Hong Kong and the PRC (together with
Capacity and services on their submersible cable systems and
their terrestrial cable systems outside Hong Kong and the PRC);
provided, however that no member of the B Group shall supply
capacity or services on such backhaul facilities, or utilise
such Points-of-Presence for provision of such capacity or
services to persons other than:
(i) Carriers in Hong Kong and/or the PRC in connection with
the use of the B Group's network or cable landing
station(s);
(ii) persons located outside Hong Kong requiring
international connectivity provided that the agreements
in relation to such connectivity were initiated outside
Hong Kong and the PRC and provided further that no
member of the B Group shall engage in marketing in Hong
Kong or the PRC to any person other than a
29.
Carrier;provided further that each member of the B Group
shall use the HGC Group for all Capacity in Hong Kong
subject to the terms set out in Clause 14.8. For
avoidance of doubt, nothing in this paragraph (h) shall
allow any member of the B Group to develop, construct,
own, lease, or use any terrestrial link between Hong
Kong and the PRC or any terrestrial links between
Points-of-Presence in Hong Kong or the PRC (other than
terrestrial links connecting its cable stations in Hong
Kong with a Point-of-Presence in Hong Kong or connecting
its cable stations in the PRC with a Point-of-Presence
in the PRC) (as the case may be), other than on the HGC
network or otherwise in accordance with Clause 14.8; and
for the avoidance of doubt nothing in Clause 14.2 shall prohibit
Party A or Party B from investing in ▇▇▇▇▇▇▇▇▇ Green Limited and
ESD Investments One Limited and their respective Subsidiaries.
14.4 Definition of Carrier
For the purposes of Clause 14.3(h) above,
(a) "CARRIER" means:
(i) in relation to services provided in Hong Kong, a person
in Hong Kong who is authorised to undertake the full
range of HK Fixed Services in Hong Kong;
(ii) in relation to services provided in the PRC, a person in
the PRC who is authorised to undertake the full range of
PRC Fixed Services in the PRC.
If the competitive environment in relation to the Business or
the licensing regime for HK Fixed Services or PRC Fixed Services
changes after the date hereof and as a result thereof the
provisions of Clause 14.3(h), applying the definition of Carrier
as defined above, no longer reflects the commercial
understanding of the parties at the date hereof (which
commercial understanding was arrived at having regard to the
competitive environment and the licensing regime as at the date
hereof), Principal Party B shall be permitted, by giving notice
to Principal Party A, to request that the definition of
"Carrier" be re-negotiated. The parties shall co-operate with
each other in relation to such re-negotiation and shall
undertake such re-negotiation in good faith.
(b) "POINT-OF-PRESENCE" or "POP" means a facility or equipment
connecting the B Group's network with the network of a local
fixed network in Hong Kong (other than a cable landing station).
14.4A Overseas Sales by HGC Group
No member of the HGC Group shall sell any services or facilities
comprising the Business to any Person outside Hong Kong and the PRC
provided that:
(a) the HGC Group shall be permitted to sell capacity or rights
thereto acquired under the Network Agreement or any capacity
agreement entered into
30.
thereunder to Principal Party A or its Subsidiaries pursuant to
and subject to the terms set out in Section 9(c) of the said
Network Agreement; and
(b) the HGC Group shall be permitted to sell services or facilities
to Persons located outside of Hong Kong and the PRC requiring
international connectivity provided that: (i) the discussions,
negotiations and offer of sale in relation to such connectivity
were initiated with a Person located in Hong Kong or the PRC;
(ii) the negotiations in respect of such sale were conducted in
Hong Kong or the PRC, and (iii) the Person located outside Hong
Kong or the PRC purchasing such services or facilities is
affiliated with the Person located in Hong Kong or the PRC with
whom the initial discussions and negotiations were entered into;
and (iv) the Person located outside Hong Kong or the PRC is
entering into the relevant agreement for such sale due to
corporate approval, regulatory, tax or other similar
circumstances and provided further that no member of the HGC
Group shall engage in marketing outside Hong Kong and the PRC .
14.5 Without prejudice to Clauses 2.11 and 14.8, Principal Party B shall and
shall procure that members of the B Group shall allow connection to
their respective cable landing stations located in Hong Kong or to their
respective POPs located in Hong Kong on reasonable commercial terms with
network facilities and services owned, operated or provided by the HGC
Group.
14.6 Compatibility with Global Crossing Network
The parties agree to procure that HGC's network and services will be
compatible with the Global Crossing Network in order to provide for
seamless network management in accordance with international industry
standards.
14.7 Restrictions Reasonable
While the restrictions contained in this Clause 14 are considered by the
parties hereto to be reasonable in all the circumstances, it is
recognised that restrictions of the nature in question may fail for
technical reasons unforeseen. It is hereby agreed and declared that if
any such restrictions shall be adjudged to be void as going beyond what
is reasonable in all the circumstances for the protection of the
interests of the parties hereto, but would be valid if parts of the
wording thereof were deleted or the period thereof were reduced, the
said restrictions shall apply with such modifications as may be
necessary to make it valid and effective.
14.8 Use of HGC Group
Except as provided in this Clause 14:
(a) Principal Party A and Principal Party B respectively agree, and
agree to cause members of the A Group and the B Group
respectively, to use the HGC Group for all Capacity and service
needs in the PRC and Hong Kong which fall within the Business
and are being provided by the HGC Group; and
(b) Principal Party A agrees, for so long as CK is the beneficial
owner of at least 40% of the voting shares of Principal Party A,
to use its reasonable commercial endeavours to cause CK and its
Subsidiaries to use the HGC Group for all Capacity and service
needs in the PRC and Hong Kong which fall within the Business
and are being provided by the HGC Group,
31.
provided that the terms offered by the HGC Group are reasonably
competitive as to price, availability, quality and other terms material
to its competitiveness and subject to Clause 2.12.
In the event that the terms offered by HGC Group are not competitive as
aforesaid, then the relevant member of the A Group or the B Group (as
the case may require) or CK or its Subsidiaries, as the case may be, may
use a third party to provide the relevant Capacity and services in
respect of which HGC Group was not so competitive and such use shall not
infringe this Clause 14.
14.9 Revenues
For purposes of Clause 14.3(a) above, revenues of a Competing Entity
shall be determined on the basis of financial information for the most
recent period of twelve months for which financial information is
available.
15. PROTECTION OF NAME
15.1 Principal Party A/▇▇▇▇▇▇▇▇▇ Name
In the event that Principal Party A or any of its Subsidiaries ceases to
hold any Shares, the Shareholders shall, at the request of Principal
Party A and within a reasonable period of time of receipt thereof, take
such steps as may be necessary to procure that the Company removes any
reference to Principal Party A's name or to the name of "▇▇▇▇▇▇▇▇▇" in
the name or business description of any member of the HGC Group.
15.2 Principal Party B/Global Crossing Name
In the event that Principal Party B or any of its Subsidiaries ceases to
hold any Shares, the Shareholders shall, at the request of Principal
Party B and within a reasonable period of time of receipt thereof, take
such steps as may be necessary to procure that the Company removes any
reference to Principal Party B's name or to the Global Crossing name in
the name or business description of any member of the HGC Group.
16. TERMINATION
16.1 Term
Save as otherwise provided, this Agreement shall continue indefinitely.
16.2 Termination
This Agreement, other than the provisions of Clause 14 shall terminate:
(a) with respect to a Shareholder when such Shareholder ceases to be
a shareholder of the Company by reason of a transfer of Shares
pursuant to Clause 11; and
(b) as contemplated by Clause 11.2;
32.
and shall terminate upon the Company being wound up or otherwise
dissolved.
16.3 Termination by Principal Party
A Principal Party may without prejudice to its other rights at law,
terminate this Agreement in the event of occurrence of any of the
following:
(a) any order shall be made by a competent court or other
appropriate governmental authority or any resolution shall be
passed for bankruptcy liquidation, winding-up or dissolution or
for the appointment of a trustee or similar official of the
other Principal Party and/or its Relevant Shareholder, or of all
or a substantial part of such other Principal Party's and/or its
Relevant Shareholder's assets, and shall not have been dismissed
or overturned for 60 days; or
(b) the other Principal Party and/or its Relevant Shareholder shall
stop payment to creditors generally or make an arrangement with
its creditors or shall be unable to pay its debts within the
meaning of any applicable legislation relating to bankruptcy; or
(c) the occurrence of a Fundamental Breach by the other Principal
Party and/or its Relevant Shareholder ("DEFAULTER") which
breach, if capable of remedy, has not been remedied at the
expiry of 30 days following written notice by a non-breaching
Shareholder ("INNOCENT PARTY") having been served on the
Defaulter if the said written notice states in reasonable detail
the Fundamental Breach alleged and such Innocent Party's intent
to exercise its rights under this Clause 16 as a result of such
Fundamental Breach.
In order to terminate this Agreement under the Clause 16.3(c), the
Innocent Party must serve a further notice of termination ("TERMINATION
NOTICE") on the Defaulter which notice may be served at any time after
the expiration of the 30 day period referred to in Clause 16.3(c).
Termination of this Agreement shall take effect at the time specified in
the Termination Notice, provided that such time so specified shall not
be less than 2 Business Days after the receipt by the Defaulter of the
Termination Notice from the Innocent Party.
16.4 Reservation of Other Rights
Each Party reserves all of its rights at law (including, without
limitation, rights to claim damages) arising out of any breach of this
Agreement by any other Party.
17. MISCELLANEOUS
17.1 Assignment
This Agreement shall be binding upon and shall enure to the benefit of
the parties their successors and assigns, provided that this Agreement
may not be assigned or transferred in whole or in part by any party
without the consent of the other parties or otherwise as provided for
herein.
33.
17.2 Implementation of Agreement
Each Shareholder agrees that it will at all times:
(a) use all means reasonably available to it (including its voting
power direct or indirect in relation to the Company) so as to
ensure that the Company and any Director nominated by it (and
any alternate of such Director) shall implement the provisions
of this Agreement relating to the Company;
(b) cooperate in good faith and execute such documents and take such
action as may be reasonably required to give full effect to the
provisions and intent of this Agreement; and
(c) use its commercially reasonable endeavours to develop and expand
the business of the Company in accordance with the Business
Plan.
17.3 No Agency, Partnership or Third Party Beneficiaries
Other than for United States federal tax purposes, nothing contained in
or relating to this Agreement shall or shall be deemed to constitute a
partnership or agency relationship between any of the parties. This
Agreement does not provide, and is not intended to provide, third
parties with any remedy, claim, liability, reimbursement, cause of
action or any other right.
17.4 Severability
If any term or provision of this Agreement shall be found to be invalid
or unenforceable for any reason, the other terms or provisions shall not
be affected and such invalid or unenforceable term shall be deemed to be
deleted.
17.5 Counterparts and Amendments
This Agreement may be executed in multiple counterparts, each of which
when fully executed shall be deemed an original for all purposes. This
Agreement shall not be amended except by written instrument signed by
each of the Principal Parties (which amendment, when made, shall be
binding on all of the parties to this Agreement from time to time).
17.6 Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the
laws of England and (other than matters to be determined under Clause 7)
each party hereby irrevocably submits to the non-exclusive jurisdiction
of English courts in England.
17.7 Complete Agreement
This Agreement shall come into effect on the Effective Date and
constitutes the entire agreement between the parties hereto in respect
of the matters referred to herein to the exclusion of all other
agreements or arrangements, whether express or implied, and therefore
supersedes any prior agreements including but not limited to the
Original Shareholders' Agreement or arrangement between the parties
hereto or any of them in respect of such matters referred to herein,
provided that nothing in this Agreement shall affect the rights of the
parties in relation to any antecedent breach of the Original
Shareholders' Agreement before the date of this Agreement.
34.
18. NOTICE
Each demand, notice or communication given or made under this Agreement
shall be in writing and shall be delivered or sent to the relevant party
personally, by expedited courier, by certified or registered mail
(airmail if overseas) with return receipt requested or by facsimile at
the following address or facsimile number (or such other addresses or
facsimile number as the addressee has by fourteen (14) days' prior
notice specified to the other parties):
Principal Party A: ▇▇▇▇▇▇▇▇▇ Whampoa Limited
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Facsimile No.: 852-2128-1778
Attention: The Company Secretary
Party A: ▇▇▇▇▇▇▇▇▇ Telecommunications Limited
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Facsimile No.: 852-2128-1778
Attention: The Company Secretary
Principal Party B: Global Crossing Ltd.
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
Party B: Asia Global Crossing Ltd.
Wessex House
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
The Company: ▇▇▇▇▇▇▇▇▇ Global Crossing Holdings Limited
c/o Trident Trust Company (B.V.I.) Limited
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Facsimile No.: 852-2128-1778
Attention: The Company Secretary
Any notice so addressed shall be sufficiently served: (i) if delivered
personally, at the time of delivery; (ii) if sent by expedited courier
or by certified or registered mail with postage or transmission charges
fully paid, on the fifth (5th) day following the date of posting or
dispatch; (iii) if by facsimile, at the time of transmission to the
correct facsimile number, provided that the sending party shall have
obtained electronic or other confirmation of accurate and complete
transmission.
19. TAXES
19.1 Tax Matters
(a) The "tax matters partner" for purposes of section 6231(a)(7) of
the Internal Revenue Code of 1986 of the United States, as
amended (the "CODE") shall be Party B or its designated
Affiliate (provided, however, that such Affiliate must be a
Shareholder) (the "TAX MATTERS SHAREHOLDER"). The Tax Matters
Shareholder shall have all of the rights, duties, powers and
obligations provided for in sections 6221 through 6231 of the
Code with respect to the Company.
(b) Tax Returns
(i) The Tax Matters Shareholder shall timely prepare, or
cause to be prepared, all tax returns for each member of
the HGC Group for all taxable years or periods, and in
all jurisdictions other than Hong Kong, that such tax
returns are required to be filed.
(ii) Any Shareholder may request in writing to review any and
all tax returns of the HGC Group, and all reasonable
comments proposed by such Shareholder shall be
incorporated into such tax returns by the party
controlling the preparation thereof.
36.
(iii) If a dispute arises with respect to the preparation of
any tax return, any Shareholder may request in writing
to submit such tax return to review by an outside
accounting firm mutually acceptable to all Shareholders
(the "ACCOUNTING FIRM"), and the determination made by
the Accounting Firm shall be binding on all members of
the HGC group and on all Shareholders. Such
determination shall be made no later than the 10th day
prior to the due date for filing such return.
(iv) All fees incurred by the Accounting Firm with respect to
any dispute referred to in subclause (iii) shall be paid
as follows:
(1) If the Accounting Firm determines that the
position of the party requesting review of a
return according to the provisions of subclause
(iv) above (the "REQUESTING PARTY") is correct,
then the non-requesting party (the "OTHER
PARTY") shall pay all such fees;
(2) If the Accounting Firm determines that the
position of the Other Party is correct, then the
Requesting Party shall pay all such fees; or
(3) If the Accounting Firm determines that the
position of neither or both parties is correct,
the Requesting Party and the Other Party shall
each pay half of all such fees.
19.2 HGC Group Tax Elections
(a) The Tax Matters Shareholder shall, in its reasonable discretion,
have the right to make, or cause each member of the HGC Group to
make, all United States federal, state and local tax elections
with respect to such member (including, without limitation, any
election to be classified as a corporation for U.S. federal
income tax purposes); provided that the Tax Matters Shareholder
shall notify and consult with Principal Party A and Principal
Party B prior to making any such elections; and provided
further, however, that the elections described in subclause (b)
below may be made in the sole discretion of the Tax Matters
Shareholder, without notification of or consultation with
Principal Party A and Principal Party B, and shall be subject to
the provisions of subclause (b).
(b) At any time, each member of the HGC Group shall, if so requested
by the Tax Matters Shareholder and subject to the provisions of
Clause 4.11 of the Sale and Purchase Agreement, make an election
to be classified as a partnership or a disregarded entity, as
the case may be, for U.S. federal income tax purposes by filing
an election on Internal Revenue Service Form 8832 (or any
successor form), all of which elections shall be effective as of
a date specified by the Tax Matters Shareholder.
(c) Except as set forth in subsections (a) and (b) of this Clause
19.2, the Company shall make, or cause to be made, all other tax
elections of each member of the HGC Group, subject to prior
approval of the Board as set forth in Clause 5.9 hereof, and
subject further to the deadlock provisions of Clause 7 hereof;
provided however, that such Board approval and such deadlock
procedures shall proceed in a manner so as to allow any election
under this subclause to be timely made.
37.
19.3 Capital Accounts: Book Allocations
(a) As soon as reasonably practicable following the date of this
Agreement, the Shareholders shall use reasonable commercial
efforts to establish for each Shareholder on the books of the
Company a capital account (each being a ("CAPITAL ACCOUNT"). The
Capital Account of each Shareholder shall be increased by any
allocation of income or gain and by any additional capital
contributions by that Shareholder, and shall be reduced by any
allocation of loss, expense or deduction and by any distribution
to that Shareholder. Capital Accounts shall be appropriately
adjusted to reflect transfers of part (but not all) of a
Shareholder's Shares. Interest shall not be payable on Capital
Account balances.
(b) Except as otherwise provided herein, all items of Company
income, gain, loss, expense or deduction shall be allocated to
the Capital Accounts of the Shareholders in proportion to their
Share ownership. The foregoing provisions relating to the
maintenance of Capital Accounts and allocations of Company
income, gain, loss, expense or deduction are intended to comply
with U.S. Treasury Regulations section 1.704-1(b) (including,
without limitation, the "qualified income offset" provisions
contained therein) and shall be interpreted and applied in a
manner consistent with such U.S. Treasury Regulations.
Additionally, the foregoing allocation provisions shall be
interpreted and applied in a manner consistent with the "minimum
gain chargeback" provisions set forth in U.S. Treasury
Regulations section 1.704-2(f) and 1.704-2(i)(4).
19.4 Tax Allocations
Except as otherwise required by the Code or U.S. Treasury Regulations
(including without limitation section 704(b) and (c) of the Code and
U.S. Treasury Regulations promulgated thereunder), all items of Company
income, gain, loss, expense, deduction and any other items shall be
allocated among the Shareholders for federal income tax purposes in the
same proportions as they share the corresponding items pursuant to
Section 19.3.
20. AGENT FOR SERVICE
20.1 Principal Party B
Principal Party B hereby irrevocably agrees that any Service Document
may be sufficiently and effectively served on it in connection with
Proceedings by service on its agent ▇▇▇▇▇▇▇▇ Chance Secretaries Limited
at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ if no replacement
agent has been appointed and notified to the other parties pursuant to
Clause 20.4, or on the replacement agent if one has been appointed and
notified to the other parties.
20.1A Party B
Party B hereby irrevocably agrees that any Service Document may be
sufficiently and effectively served on it in connection with Proceedings
by service on its agent Trusec Limited at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, if no replacement
38.
agent has been appointed and notified to the other parties pursuant to
Clause 20.4, or on the replacement agent if one has been appointed and
notified to the other parties.
20.2 Principal Party A
Principal Party A hereby irrevocably agrees that any Service Document
may be sufficiently and effectively served on it in connection with
Proceedings by service on its agent ▇▇▇▇▇▇▇▇▇ Whampoa Agents (UK)
Limited at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, if
no replacement agent has been appointed and notified to the other
parties pursuant to Clause 20.4, or on the replacement agent if one has
been appointed and notified to the other parties.
20.2A Party A
Party A hereby irrevocably agrees that any Service Document may be
sufficiently and effectively served on it in connection with Proceedings
by service on its agent ▇▇▇▇▇▇▇▇▇ Whampoa Agents (UK) Limited at ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, if no replacement agent
has been appointed and notified to the other parties pursuant to Clause
20.4, or on the replacement agent if one has been appointed and notified
to the other parties.
20.2.B The Company
The Company hereby irrevocably agrees that any Service Document may be
sufficiently and effectively served on it in connection with Proceedings
by service on its agent ▇▇▇▇▇▇▇▇▇ Whampoa Agents (UK) Limited at ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, if no replacement agent
has been appointed and notified to the other parties pursuant to Clause
20.4, or on the replacement agent if one has been appointed and notified
to the other parties.
20.3 Service
Any document addressed in accordance with Clause 20.1, 20.1A, 20.2,
20.2A or 20.2B shall be deemed to have been duly served if:
(a) left at the specified address, when it is left; or
(b) sent by first class post, two Business Days after the date of
posting.
20.4 Replacements
If the agent referred to in Clause 20.1, 20.1A, 20.2, 20.2A or 20.2B (or
any replacement agent appointed pursuant to this Clause) at any time
ceases for any reason to act as such, the original appointer shall
appoint a replacement agent to accept service having an address for
service in London, England and shall notify the other parties of the
name and address of the replacement agent.
20.5 Definitions
In this Clause 20:
(a) "PROCEEDINGS" means any proceedings, suit or action arising out
of or in connection with this Agreement; and
39.
(b) "SERVICE DOCUMENT" means a writ, summons, order, judgement or
other process issued out of the courts of England in connection
with any Proceedings.
21. CONTRACTS (RIGHTS OF THIRD PARTIES)
The parties do not intend that any term of this Agreement shall be
enforceable solely by virtue of the Contracts (Rights of Third Parties)
▇▇▇ ▇▇▇▇ by any person who is not a party to this Agreement.
IN WITNESS whereof this Agreement has been executed on the day and year first
above written.
40.
SCHEDULE 1A
A GROUP SERVICES
1. Paging Services
2. Mobile Services
3. Call Centre Services
41.
SCHEDULE 1B
B GROUP SERVICES
List of Global Crossing Products
Wholesale Capacity on Global Crossing Network
- Subsea & Terrestrial
- Dark Fiber, Wavelengths, STMs, Ds-3s, Els, etc.
- IRUs and leases
Services Across Global Crossing Network
- Subsea & Terrestrial
- Data Services (incl. ATM and Frame Relay)
- IP Services (incl. Transit/Transport, Internet Access and IP VPN)
- Voice (VOIP and Circuit Switched Minutes)
- IPLCs
Telehouse/MDC Services
- Collocation
- Hosting Operations and Data Center Services
- Peering Services
42.
SCHEDULE 2
NON COMPETE EXCEPTIONS
The provision by ▇▇▇▇▇▇▇▇▇ Telephone Company Limited or its Subsidiary or
Affiliate of Internet Access and Transport Services through wireless means to
subscribers to its mobile telecommunications services, but subject to the
provisions of Clause 14.8.
43.
SCHEDULE 3
RESERVED MATTERS
1. Any amendment to the Articles or the articles of association of any
member of the HGC Group.
2. The creation, allotment or issue of any Shares or of any shares in the
capital of any member of the HGC Group or the grant or agreement to
grant any option over Shares or any uncalled capital of the Company or
shares or uncalled capital of any member of the HGC Group or the issue
of any obligations convertible into Shares or shares of any member of
the HGC Group.
3. The redemption or purchase of any Shares or of any shares of any member
of the HGC Group.
4. Any change in the nature or scope of the Business or the commencement of
any new business not being ancillary or incidental to such business
and/or any modification to the Existing BP, the Business Plan or the
Operating Budget.
5. The giving of any guarantee, indemnity or other security to any person
(including, without limitation, to any of the Principal Parties or any
members of the A Group or the B Group) by the Company or any other
member of the HGC Group or the borrowing by the Company or any other
member of the HGC Group in excess of limits from time to time contained
in the Business Plan or otherwise not in excess of HK$7,500,000 or any
refinancing thereof or material amendments thereto.
6. The acquisition or the disposal by the Company or any member of the HGC
Group of:
(a) any shares or other interests in any company or other entity; or
(b) any business (or assets formerly used in the conduct of any
business); or
(c) any assets, other than in the ordinary course of business.
7. The approval pursuant to Clause 9 of the Business Plan.
8. The amalgamation or merger of the Company or any other member of the HGC
Group with any other company or legal entity.
9. Any change in name of any member of the HGC Group.
10. The declaration or payment of dividends.
11. The commencement of the defence or conduct of litigation by any member
of the HGC Group concerning a claim by a third party against any member
of the HGC Group which is material to such member.
12. Any changes to the accounting policies of any member of the HGC Group.
13. The commencement of a winding-up (or similar proceedings) (or the sale
of all or substantially all of the assets of any member of the HGC
Group).
44.
14. The purchase of any freehold property by, or the grant or assignment of
any leasehold property to, any member of the HGC Group.
15. The provision by HGC Group of backhaul services at other than market
rates where not expressly permitted by this Agreement.
16. The disposition of capacity on the HGC network for non-cash
consideration.
17. Any transaction or agreement between any member of the HGC Group, on the
one hand, and Principal Party A or Principal Party B (or their
respective affiliates), on the other hand, or any amendments to any such
agreements.
18. Capital expenditures in excess of HK$7,500,000, unless specifically
contemplated by the Operating Budget.
19. Execution or material amendment or termination of "material" contracts.
20. Election, appointment or removal of senior management.
21. Create, grant or issue or agree to create, grant or issue, any mortgage,
charge or other lien on any of its assets (or any of its Shares).
22. Enter into any individual contract or commitment which is outside the
ordinary course of business or has a value in excess of HK$7,500,000 or
has a duration of greater than 18 months.
23. Disposition of any asset having a net book value in excess of
HK$7,500,000.
24. Changing the HGC Group's independent accountants.
25. Subject to Clauses 19.1 and 19.2, changing any member of the HGC Group's
residence for taxation purposes, making or changing any taxation
election, changing any annual taxation accounting period or method of
taxation accounting, filing any material amended taxation return,
settling any material taxation claim or assessment, surrendering any
right to claim a taxation refund or consenting to any extension or
waiver of the limitation period applicable to any taxation claim
assessment.
26. The acquisition of, or investment in, any company.
27. Any reorganisation, recapitalization or similar extraordinary corporate
action or transaction involving any member of the HGC Group.
28. Establishment of any new subsidiary.
For the purpose of this Schedule, a contract shall be "material" if (a) it
relates to a matter not within the ordinary course of business of the applicable
member of the HGC Group; (b) it has a value in excess of HK$7,500,000; (c) it
has a stated term (including automatic renewals and renewals which may be
exercised by the other party) in excess of 18 months (and, if any contract does
not have a stated term it shall be deemed to be "material" if it cannot be
terminated on less than six months' notice); or (d) such contract can be
terminated (or the substantive rights set forth therein can be modified) in the
event of change in the underlying ownership or control of the member of the HGC
Group which is a party to such contract.
45.
SCHEDULE 4
DEED OF ADHERENCE
THIS DEED is dated -, - and is made by [-] of [-] (the "NEW SHAREHOLDER") in
favour of the following persons ("EXISTING PARTIES"):
(1) [Include the name of each shareholder of ▇▇▇▇▇▇▇▇▇ Global Crossing
Holdings Limited other than the outgoing shareholder, as at the date of
the Deed] a company incorporated in [-] and having its registered office
at [-] ("EXISTING SHAREHOLDERS");
(2) ▇▇▇▇▇▇▇▇▇ Whampoa Limited, a company incorporated in Hong Kong and
having its registered office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("PRINCIPAL PARTY A");
(3) Global Crossing Ltd., a company incorporated in Bermuda and having its
registered office at Wessex House, 45 ▇▇▇▇ Street, ▇▇▇▇▇▇▇▇, HM12,
Bermuda ("PRINCIPAL PARTY B"); and
(4) ▇▇▇▇▇▇▇▇▇ Global Crossing Holdings Limited, a company incorporated in
the British Virgin Islands and having its registered office at P.O. Box
957 Offshore Incorporations Center, Road Town, Tortola, British Virgin
Islands (the "COMPANY").
WHEREAS:
(A) This Deed is supplemental to a Shareholders' Agreement, dated as of [-]
(the "SHAREHOLDERS' AGREEMENT"), a copy of which is annexed hereto.
(B) Principal Party [A][B] [complete as applicable] has given written notice
to Principal Party [A][B] [complete as applicable] that the New
Shareholder is becoming a member of the Company.
NOW THIS DEED WITNESSETH THAT:-
(1) The New Shareholder hereby covenants and undertakes to the Existing
Parties that it will at all times perform and observe the continuing
provisions of the Shareholders' Agreement as if the New Shareholder were
a party to the Shareholders' Agreement and were named therein as a
Shareholder and Party [A][B] [complete as applicable] and on the basis
that references therein to "Shareholder" include a reference to the New
Shareholder and references to the "Principal Party" in respect of the
New Shareholder were a reference to Principal [A][B] [insert Principal
Party of the transferring party].
(2) (A) This Deed shall be governed by and construed in accordance with
the laws of England.
(B) The New Shareholder hereby irrevocably accepts and submits to
the non-exclusive jurisdiction of the courts of England but this
Deed may be enforced in any court of competent jurisdiction.
46.
IN WITNESS WHEREOF, this Deed has been executed as a Deed the day and year
before first written.
SEALED with the Common Seal of )
[Insert Name of the New Shareholder] )
and SIGNED by )
in the presence of:- )
47.
SCHEDULE 5
ARBITRATION/EXPERT
Unless otherwise stated, references herein to Clauses are to clauses of this
Schedule.
1. General
1.1 If a deadlock arises between the Principal Parties in connection with or
arising from this Agreement and the matter is referred to arbitration
pursuant to Clause 7.2 of this Agreement (a "DISPUTE"), the Dispute
shall be submitted to arbitration in accordance with Clause 2.
1.2 A party must not use information obtained in the course of any procedure
established by this Schedule for any purpose other than to resolve the
relevant dispute.
2. Arbitration
2.1 (a) Any referral of a Dispute to arbitration shall be made by
notice, including a statement of the matters in the Dispute.
(b) The arbitration must be conducted in accordance with the London
Court of International Arbitration Rules (the "RULES") in force
at the time the arbitration is commenced . The Rules are deemed
to be incorporated by reference into this Schedule.
(c) The arbitration shall take place in England and shall be
conducted in English.
(d) Party A and Principal Party A on the one hand, and Party B and
(if Principal Party B is a different entity to Party B)
Principal Party B, on the other hand, shall each appoint one
arbitrator to resolve any Dispute, whereupon the two arbitrators
shall appoint a third arbitrator. If the arbitrators appointed
by the parties are unable to agree upon the appointment of the
third arbitrator within 14 days, then such arbitrator shall be
appointed by the London Court of International Arbitration.
(e) In addition to the qualifications of the arbitrators
contemplated by the Rules, the arbitrators should:
(i) have an understanding of the relevant aspects of the
telecommunications industry; and
(ii) not be an officer, director or employee of a
telecommunications company.
(f) The parties agree to expedite the arbitration to the extent
possible.
(g) Unless determined to the contrary by the arbitrators, the
parties will bear their own costs of the arbitration including
the costs of any representatives and will each bear half the
costs of the arbitration.
2.2 The Parties agree that the arbitrators may refer business or technical
matters to experts for decision.
48.
SIGNED by ▇▇▇▇▇ ▇▇▇▇ )
for and on behalf of )
▇▇▇▇▇▇▇▇▇ TELECOMMUNICATIONS ) /s/ ▇▇▇▇▇ ▇▇▇▇
LIMITED )
in the presence of:- ▇▇▇▇▇▇▇▇▇▇ ▇▇ )
SIGNED by ▇▇▇▇▇ ▇▇▇▇ )
for and on behalf of )
▇▇▇▇▇▇▇▇▇ WHAMPOA LIMITED ) /s/ ▇▇▇▇▇ ▇▇▇▇
in the presence of:- ▇▇▇▇▇▇▇▇▇▇ ▇▇ )
SIGNED by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ )
for and on behalf of )
ASIA GLOBAL CROSSING LTD. ) /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
in the presence of:- ▇▇▇▇▇▇▇ ▇▇▇▇▇ )
)
SIGNED by ▇▇▇ ▇▇▇▇▇ )
for and on behalf of )
GLOBAL CROSSING LTD. ) /s/ ▇▇▇ ▇▇▇▇▇
in the presence of:- )
SIGNED by ▇▇▇▇▇ ▇▇▇▇ )
for and on behalf of )
▇▇▇▇▇▇▇▇▇ GLOBAL CROSSING ) /s/ ▇▇▇▇▇ ▇▇▇▇
HOLDINGS LIMITED )
in the presence of:- ▇▇▇▇▇▇▇▇▇▇ ▇▇ )
49.
