Exhibit 10.57
CONFORMED COPY
THIS SHARE MORTGAGE is made as a deed on 30 March 2007
BETWEEN:
(1) H3C HOLDINGS LIMITED, a company incorporated under the laws of the Cayman
Islands whose registered office is at ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
Church Street, ▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands (the "MORTGAGOR");
and
(2) INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED, a limited
partnership registered under the laws of Hong Kong whose registered office
is at 33rd Floor, ICBC Tower, 3 Garden Road, Central, Hong Kong (in its
capacity as collateral agent, the "COLLATERAL AGENT", which expression
shall, wherever the context so admits, include such entity and all other
persons from time to time acting in such capacity).
WHEREAS:
(A) By the Facility Agreement, the Lenders have agreed to make Term Loans to
the Mortgagor upon the terms and subject to the conditions contained
therein.
(B) As security for the Mortgagor's obligations under the Facility Agreement,
the Mortgagor has agreed to enter into this Deed.
NOW THIS DEED WITNESSES as follows:
1. INTERPRETATION AND DEFINITIONS
1.1 DEFINITIONS
In this Deed, unless the context otherwise requires:
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are generally open for business in Hong Kong;
"CONVEYANCING AND PROPERTY ORDINANCE" means the Conveyancing and Property
Ordinance (Chapter 219 of the Laws of Hong Kong);
"DEBT SERVICE ACCOUNT" means the bank account defined as the Debt Service
Account in the Borrower Charge over Bank Accounts entered into on 22 March
2007 by the Mortgagor and the Collateral Agent;
"DERIVED ASSETS" means all shares, rights or other property of a capital
nature which accrue or are offered, issued or paid at any time (by way of
bonus, rights, redemption, conversion, exchange, substitution,
consolidation, subdivision, preference, warrant, option, purchase or
otherwise) in respect of:
(A) the Shares; or
(B) any Further Shares; or
H3C Share Mortgage
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(C) any shares, rights or other property previously accruing, offered,
issued or paid as mentioned in this definition;
"DIVIDENDS" means all dividends, interest and other income paid or payable
in respect of the Shares, any Further Shares or any Derived Assets;
"FACILITY AGREEMENT" means the senior secured credit and guaranty agreement
dated 22 March 2007 and signed by or on behalf of, amongst others, the
Mortgagor and the Collateral Agent, as amended, supplemented and/or
restated from time to time in any manner whatsoever;
"FURTHER SHARES" means all shares (other than the Shares and any shares
comprised in any Derived Assets) which the Mortgagor and the Collateral
Agent may at any time agree shall be subject to the Mortgage;
"MORTGAGE" means the security from time to time constituted by or pursuant
to this Deed (or intended to be constituted by or pursuant to this Deed) or
any part thereof;
"MORTGAGED PROPERTY" means any or all of the rights, title and interest,
present and future, in and to the Shares, Future Shares and Derived Assets
expressed to be subject to the security created under Clause 3 (Mortgage)
of this Deed;
"POWERS OF ATTORNEY ORDINANCE" means the Powers of Attorney Ordinance
(Chapter 31 of the Laws of Hong Kong);
"PROCEEDINGS" means any proceeding, suit or action arising out of or in
connection with this Deed and/or any other document referred to in this
Deed.
"RECEIVER" means a receiver appointed by or on behalf of the Collateral
Agent under this Deed or pursuant to the Collateral Agent's statutory
powers, and includes more than one such receiver and substituted receiver;
"SECURED INDEBTEDNESS" means the moneys, liabilities and obligations
(whether actual or contingent and whether owed jointly and severally or in
any other capacity whatsoever) of the Mortgagor which are, or are expressed
to be, or may at any time in the future be due and owing to the Collateral
Agent (whether for its own account or as agent or trustee for the Secured
Parties) or to any of the Secured Parties under or in connection with the
Facility Agreement together with all costs, charges and expenses incurred
by the Collateral Agent or any Secured Party which are, or are expressed to
be, or may become due and owing by the Mortgagor under or in connection
with the Facility Agreement; and
"SHARES" means the shares comprising all the issued capital of Huawei-3Com
Co., Limited more particularly described in Schedule 1 (Particulars of the
Shares).
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1.2 DEFINITIONS IN THE FACILITY AGREEMENT
Unless a contrary indication appears, a term used in the Facility Agreement
has the same meaning when used in this Deed.
1.3 CONVEYANCING AND PROPERTY ORDINANCE
In the context of the rights, powers, privileges, discretions and
immunities conferred on the Collateral Agent, any Receiver or any Attorney
(as defined in Clause 15 (Power of Attorney), references to "mortgage" and
"mortgaged land" in any provision of the Conveyancing and Property
Ordinance shall, for the purposes of this Deed, be deemed to be references
to the Mortgage and the Mortgaged Property respectively.
2. COVENANT TO PAY AND NATURE OF SECURED INDEBTEDNESS
2.1 COVENANT TO PAY
The Mortgagor hereby covenants with the Collateral Agent that it shall pay
and discharge the Secured Indebtedness at the time or times and in the
manner provided for in the Facility Agreement and the Mortgagor hereby
creates the Mortgage in the Mortgaged Property in the manner and on the
terms set out in Clause 3 (Mortgage).
2.2 NATURE OF SECURED INDEBTEDNESS
Each transfer, assignment, mortgage and charge hereunder expressed to be
to, each undertaking and agreement hereunder expressed to be to or with,
and each representation and warranty hereunder expressed to be given to,
the Collateral Agent is to, with or, as the case may be, given to the
Collateral Agent for itself and as agent and trustee for the Secured
Parties from time to time. Without prejudice to the generality of the
foregoing or Clause 1.2 (Definitions in the Facility Agreement), any
reference in this Deed to the Mortgagor, the Collateral Agent or any
Secured Party shall be construed so as to include their respective
successors and permitted assigns or transferees.
3. MORTGAGE
3.1 SHARE MORTGAGE
Subject to the provisions of Clause 5 (Redemption) below, the Mortgagor, as
continuing security for the payment and discharge of the Secured
Indebtedness:
(A) assigns and transfers absolutely to ICBC (Asia) Nominee Ltd. or such
other person as nominated in writing by the Collateral Agent (in each
case, the "NOMINEE") by way of first legal mortgage all of its rights,
title and interest in and to the Shares;
(B) charges and agrees to mortgage to the Nominee all its rights, title
and interest in and to any Further Shares and any Derived Assets (with
the intent that the Mortgage constituted by this Deed with respect to
any Further Shares and any
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shares comprised in any Derived Assets shall, until such shares are
registered in the name of the Nominee, take effect by way of first
fixed equitable charge and, upon such shares being so registered,
shall take effect by way of first legal mortgage); and
(C) charges and assigns to the Nominee all its rights, title and interest
in and to any Dividends which are paid or payable to the Mortgagor
before the shares to which they relate are registered in the name of
the Nominee.
4. COVENANT TO DEPOSIT AND FURTHER ASSURANCES
4.1 THE SHARES AND FURTHER SHARES
The Mortgagor shall, immediately after the execution of this Deed (or such
longer period as the Collateral Agent may allow) in the case of the Shares,
and within two Business Days (or such longer period as the Collateral Agent
may allow) of each occasion on which the Collateral Agent and the Mortgagor
agree that any shares shall become Further Shares:-
(A) deposit with the Collateral Agent :-
(i) all share certificates, documents of title and other documentary
evidence of ownership in relation to such shares;
(ii) transfers of such shares duly executed by the Mortgagor or its
nominee in favour of the Nominee and stamped; and
(B) procure that the Nominee is registered as the holder of such shares in
the register of members of the relevant company and is issued with
share certificates in respect of such shares.
4.2 DERIVED ASSETS
In respect of any Derived Assets to which the Mortgagor may be or become
entitled before the shares to which they relate are registered in the name
of the Nominee, the Mortgagor shall immediately upon receipt of the
relevant share certificates, renounceable certificates, letters of
allotment, documents of title or other evidence of entitlement thereto
deliver the same to the Collateral Agent duly executed by the Mortgagor (or
its nominee) in favour of the Nominee and shall promptly take whatever
steps may be necessary to ensure that the Nominee becomes registered as the
holder of any shares comprised in such Derived Assets.
4.3 RIGHTS ISSUES
If the Nominee in its capacity as registered holder of the Mortgaged
Property receives an offer of rights to subscribe for shares, it shall be
entitled, subject to prior notice to the Mortgagor, to sell (or allow to be
sold) such rights nil paid and apply the proceeds in accordance with
section 2.16(h) of the Facility Agreement, provided that if the
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Mortgagor, whether or not it receives any notice from the Nominee of the
offer of such rights, puts the Collateral Agent in sufficient funds within
the period allowed for the acceptance of such rights the Nominee shall take
up such rights and the shares so subscribed shall form part of the
Mortgaged Property.
4.4 FURTHER ASSURANCES
In addition to and without prejudice to anything else contained in this
Deed, the Mortgagor shall, at its own cost, promptly execute and do all
such deeds, instruments, transfers, renunciations, proxies, notices,
documents, assurances, acts and things in such form as the Collateral Agent
may from time to time require:
(A) for perfecting, preserving or protecting the Mortgage or the priority
of the Mortgage; and
(B) for facilitating the realisation of the Mortgage or the exercise of
any rights vested in the Collateral Agent.
4.5 REGISTRATION
Without limitation to the generality of the Clause 4.4 (Further
Assurances), the Mortgagor shall make all filings and registrations as may
be required by applicable laws or requested by the Collateral Agent from
time to time as may be necessary to perfect, preserve and protect the
Mortgage.
5. REDEMPTION
(A) Subject always to Clause 11.9 (Discharge Conditional), if the
Collateral Agent is, acting reasonably, satisfied that:
(i) all Secured Indebtedness have been unconditionally and
irrevocably paid or discharged in full and the Facility Agreement
has been terminated; or
(ii) security or a guarantee for the Secured Indebtedness, in each
case acceptable to the Collateral Agent, has been provided in
substitution for this Deed,
then, the Collateral Agent shall, at the request and cost of the
Mortgagor, promptly discharge, release and/or re-assign, or, as
appropriate, transfer the benefit of so much of the Mortgaged Property
as has not been applied by the Collateral Agent in or towards
satisfaction of the Secured Indebtedness to the Mortgagor or as the
Mortgagor may direct and, thereafter, the Mortgagor shall have no
future obligation hereunder.
(B) The execution of a discharge, release, re-assignment, transfer or
partial discharge by the Collateral Agent shall be a good and valid
release or discharge of the Mortgage constituted by this Clause 3
(Mortgage) or the relevant part
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thereof (as the case may be) and the obligations (or the relevant part
thereof, as the case may be) of the Mortgagor from this Deed without
the need for the Mortgagor to be a party thereto.
(C) The Collateral Agent hereby agrees that it shall, at the request and
cost of the Mortgagor, do all such things and execute all such
documents and procure that the Nominee do all such things and execute
all such documents as may be reasonably necessary to give effect to
the discharge, release, re-assignment, transfer or partial discharge
referred to in Sub-clauses (A) and (B).
(D) Upon any release, discharge, re-assignment, transfer or partial
discharge pursuant to and in accordance with Sub-clause (A), the
Collateral Agent shall, at the request and cost of the Mortgagor:
(i) promptly procure the redelivery to the Mortgagor of all deeds,
instruments, certificates and other documents delivered to or
deposited with or to the order of the Collateral Agent pursuant
to Clause 4 (Covenant to Deposit and Further Assurances); and
(ii) promptly give notice to each person (if any) who has received
notice of the Mortgage pursuant to this Deed of such release,
discharge, re-assignment and/or transfer,
in each case to the extent the same relates to such release,
discharge, re-assignment, transfer or partial discharge.
6. THE SHARES
6.1 EXERCISE OF POWER
Until the Mortgage becomes enforceable the Nominee shall exercise in
respect of the Mortgaged Property all of the powers and rights conferred on
or exercisable by the registered holder thereof, including any voting
rights attaching thereto, provided that before the Mortgage becomes
enforceable, it shall exercise such voting rights in such manner as the
Mortgagor may direct or shall, at the election of the Collateral Agent,
appoint a proxy nominated by the Mortgagor to exercise on its behalf such
voting rights, save however that the obligation of the Nominee to so
exercise such voting rights or to so appoint a proxy may at any time be
terminated upon and to the extent of any notice by the Collateral Agent to
the Mortgagor evidencing its intention thenceforth to exercise such rights
for the purpose of preserving the value of the Mortgage.
6.2 MORTGAGOR TO PAY CALLS AND OTHER PAYMENTS
The Mortgagor shall pay all calls or other payments due in respect of any
part of the Mortgaged Property, and in any case of default by the Mortgagor
in this respect the Collateral Agent may (but shall not be obliged) if it
thinks fit make any such payment on behalf of the Mortgagor in which event
any sums so paid shall be reimbursed on
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demand by the Mortgagor to the Collateral Agent and shall, until
reimbursed, bear interest at the rate provided in section 2.10 of the
Facility Agreement.
6.3 DIVIDENDS
The Collateral Agent agrees that until this Deed becomes enforceable it
shall pay over all amounts received by it by way of dividends from
Huawei-3Com Co., Limited to the credit of the Debt Service Account.
7. REPRESENTATIONS AND WARRANTIES
The Mortgagor represents and warrants to the Collateral Agent that:-
(A) it is duly incorporated and validly existing under the laws of the
Cayman Islands and it has the power and capacity to enter into this
Deed and grant the security created hereunder;
(B) subject only to this Mortgage, it is the sole beneficial owner of the
Mortgaged Shares;
(C) no Lien (other than Permitted Liens) exists on, over or with respect
to any of the Mortgaged Property;
(D) it has not sold, transferred, lent, assigned, parted with its interest
in, disposed of, granted any option in respect of or otherwise dealt
with any of its rights, title and interest in and to the Mortgaged
Property, or agreed to do any of the foregoing (otherwise than
pursuant to this Deed or as permitted by the Facility Agreement);
(E) the Shares, any Further Shares and any shares comprised in any Derived
Assets are fully paid and there are no moneys or liabilities
outstanding in respect of any of them;
(F) the Shares, any Further Shares and any shares comprised in any Derived
Assets have been duly authorised and validly issued and are free from
any restrictions on transfer or rights of pre-emption, save as
provided in the articles of association of Huawei-3Com Co., Limited;
(G) it has the power to enter into, and perform and comply with its
obligations under, this Deed, and to create the Mortgage;
(H) the entry into and performance by it of, the creation of security
under, and the transactions contemplated by, this Deed do not and will
not conflict with:
(i) any law or regulation applicable to it;
(ii) its constitutional documents; or
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(iii) any agreement or instrument binding upon it or its Subsidiaries
or any of its or its Subsidiaries' assets.
(I) all actions, conditions and things required to be taken, fulfilled and
done (including the obtaining of any necessary consents) in order to
(i) enable it lawfully to enter into, and perform and comply with its
obligations under, this Deed, (ii) ensure that those obligations are
valid, legal, binding and enforceable, (iii) permit the creation of
the Mortgage and ensure that (subject to all necessary registrations
thereof being made) the Mortgage is a valid, legal, binding and
enforceable first fixed security interest over the Mortgaged Property
ranking in priority to the interests of any liquidator, administrator
or creditor of the Mortgagor, and (iv) make this Deed admissible in
evidence in the courts of Hong Kong, have been taken, fulfilled and
done;
(J) the obligations of the Mortgagor under this Deed and (subject to all
necessary registrations thereof being made) the Mortgage are and will
be until fully discharged valid, legal, binding and enforceable and
the Mortgage constitutes a first fixed security interest over the
Mortgaged Property ranking in priority to the interests of any
liquidator, administrator or creditor of the Mortgagor; and
(K) each of the above representations and warranties will be correct and
complied with in all respects at all times during the continuance of
the Mortgage as if repeated then by reference to the then existing
circumstances.
8. COVENANTS AND UNDERTAKINGS
8.1 COVENANTS AND UNDERTAKINGS OF THE MORTGAGOR
The Mortgagor covenants and undertakes with the Collateral Agent that,
except with the prior written consent of the Collateral Agent:
(A) it shall not sell, transfer, lend, assign, exchange, dispose of, grant
any option in respect of otherwise deal with the whole or any of its
rights, title and interest in the Mortgaged Property or agree to do
any of the foregoing other than as expressly permitted or provided for
in the Facility Agreement or pursuant to this Deed;
(B) other than as provided in the Facility Agreement or pursuant to this
Deed it shall not, nor shall it attempt to, create, incur or permit to
subsist any Lien on the Mortgaged Property;
(C) it shall at all times give to the Collateral Agent such information as
the Collateral Agent may reasonably require in respect of the
Mortgaged Property for the purpose of the discharge of the trusts,
powers, rights, duties, authorities and discretions vested in it
hereunder or by operation of law;
(D) it shall take all action within its power to procure, maintain in
effect and comply in all material respects with all the terms and
conditions of all approvals,
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authorisations, consents and registrations necessary or appropriate
for anything provided for on its part in this Deed;
(E) it shall take all reasonable steps as may be required by the
Collateral Agent to allow the Collateral Agent to sell or dispose of
the Mortgaged Property on or after the Mortgage becomes enforceable;
(F) it shall not do or cause or permit to be done, or omit to do anything
which may in any way adversely prejudice, affect or diminish the value
of any of the Mortgaged Property;
(G) it shall ensure that there are no moneys or liabilities outstanding in
respect of any of the Mortgaged Property;
(H) without prejudice to Clause 8.1(G), it shall punctually pay all
calls, subscription moneys and other moneys payable on or in respect
of any of the Mortgaged Property and indemnify and keep indemnified
the Nominees against any cost, liabilities or expenses which it or
they may suffer or incur as a result of any failure by the Mortgagor
to pay the same;
(I) it shall ensure that the Shares, any Further Shares and any shares
comprised in any Derived Assets are free from any restriction on
transfer or rights of pre-emption, subject to the articles of
association of Huawei-3Com Co., Limited;
(J) it shall ensure that the Mortgage will at all times be a legally valid
and binding first fixed security interest over the Mortgaged Property
ranking in priority to the interests of any liquidator, administrator
or creditor of the Mortgagor; and
(K) it shall deliver to the Collateral Agent a copy of every circular,
notice, report, set of accounts or other document received by the
Mortgagor in respect of or in connection with any of the Mortgaged
Property forthwith upon receipt by the Mortgagor of such document.
8.2 POWER OF COLLATERAL AGENT TO REMEDY FAILURES
If at any time the Mortgagor shall fail to comply with or perform any of
the covenants contained in this Deed or any Credit Document, the Collateral
Agent shall have the power on behalf of or in the name of the Mortgagor,
but shall not be under any obligation, to perform the covenants and to take
such steps which the Collateral Agent may in its discretion consider
appropriate with a view to remedying or mitigating the consequences of such
failure but so that the exercise of this power or the failure to exercise
it shall, in no circumstances, prejudice the other rights of the Collateral
Agent under this Deed or any Credit Document. The Mortgagor shall on demand
reimburse to the Collateral Agent all proper costs, expenses and losses
incurred or sustained by the Collateral Agent in connection with such steps
and until such costs, expenses and losses are reimbursed the outstanding
sums shall carry interest in accordance with section 2.10 of the Facility
Agreement from the date when payment is due to the date of reimbursement
and such outstanding sums including any accrued interest shall form
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part of the Secured Indebtedness. No exercise by the Collateral Agent of
its powers under this Clause 8.2 (Power of Collateral Agent to Remedy
Failures) shall render the Collateral Agent liable to account as a
mortgagee in possession.
8.3 IT IS AGREED BETWEEN THE MORTGAGOR AND THE COLLATERAL AGENT THAT THE
MORTGAGOR MAY AT ANY TIME AND FROM TIME TO TIME PROCURE HUAWEI-3COM CO.,
LIMITED TO ISSUE FURTHER SHARES TO IT, PROVIDED THAT ALL SUCH SHARES ISSUED
SHALL CONSTITUTE FURTHER SHARES FOR THE PURPOSES OF THIS DEED AND SHALL BE
SUBJECT TO THE MORTGAGE.
9. DEFAULT PROCEDURE
The Mortgage shall become immediately enforceable:
(A) automatically upon the occurrence of any Event of Default described in
sections 8.1(f) or 8.1(g) of the Facility Agreement (except with
respect to Excluded Subsidiaries); and
(B) at the request of (or with the consent of) the Requisite Lenders and
upon notice to the Borrower by the Administrative Agent, upon the
occurrence of any other Event of Default (including those described in
sections 8.1(f) or 8.1(g) of the Facility Agreement with respect to
Excluded Subsidiaries).
10. EFFECTS OF THE MORTGAGE BECOMING ENFORCEABLE
10.1 EFFECTS
After the Mortgage (or the relevant part thereof) shall have become
enforceable in accordance with Clause 9 (Default Procedure) and without
prejudice to the powers of the Collateral Agent to appoint a Receiver
pursuant to Clause 13 (Appointment of Receiver):
(A) the Mortgagor's rights or power to deal with the Mortgaged Property
(whether statutory or otherwise) shall cease and the Collateral Agent
shall be entitled to deal with, collect in and realise the same in
such manner as the Collateral Agent thinks fit;
(B) the Collateral Agent shall be entitled to exercise all powers in
respect of the Mortgaged Property provided in Section 51 of and The
Fourth Schedule to the Conveyancing and Property Ordinance but without
the necessity to comply with any restrictions imposed by the
provisions of the said Section 51 or The Fourth Schedule;
(C) the Collateral Agent may sell, realise or otherwise dispose of, for
such consideration (whether payable immediately or by instalments) as
it shall in its absolute discretion think fit (whether by private sale
or otherwise), the whole or any part of the Mortgaged Property in
respect of which the security hereby constituted has become
enforceable and the Collateral Agent may to the extent that it has not
already done so, take possession of and hold all or any part of
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the Mortgaged Property and accordingly register, or cause to be
registered all or any of the Mortgaged Property constituting shares in
its own name or in the name of the Collateral Agent's nominee or
assignee or in the name of any purchaser thereof and apply any of the
Mortgaged Property constituting dividends or other distributions in
cash as if they were proceeds of sale of the Mortgaged Property; and
(D) the provisions of paragraph 11 of The Fourth Schedule to the
Conveyancing and Property Ordinance shall not restrict the exercise by
the Collateral Agent or any Receiver of its powers hereunder and the
Mortgage shall become immediately enforceable and the statutory power
of sale and other powers of sale and appointing a Receiver shall
become immediately exercisable without any juridical or other
formality or any presentment, demand, protest or other notice of any
kind on or at any time after the Mortgage becomes enforceable; and
(E) without prejudice to the foregoing, the provisions of the Conveyancing
and Property Ordinance are expressly extended (subject to Clause 10.9
(Inconsistency and Conflict)) so that the Collateral Agent may in
addition to any powers granted it by applicable law, upon and from the
Mortgage becoming enforceable and upon and subject to the terms and
conditions of the Facility Agreement) do all such other acts and
things it may consider necessary or expedient for the realisation or
preservation of the Mortgage or incidental to the exercise of any of
the rights conferred on it under or in connection with this Deed or
the Conveyancing and Property Ordinance and to concur in the doing of
anything which it has the right to do and to do any such thing jointly
with any other person.
10.2 ENTITLEMENT TO PAY EXPENSES AND OUTGOINGS
Subject to the order of priority of payments set out in section 2.16(h) of
the Facility Agreement, the Collateral Agent may pay and discharge the
expenses incurred (whether by the Collateral Agent, any Receiver or any
other person) in and about the carrying on and management of any such
business as contemplated by Clause 10.1 (Effects) or in the exercise of any
of the powers conferred by Clause 10.1 (Effects) or otherwise in respect of
the Mortgaged Property and all outgoings which it shall think fit to pay
out of the profits and income of the Mortgaged Property and the moneys
received by it in carrying out any business as contemplated by Clause 10.1
(Effects) and may apply the residue of the said profits, income and moneys
in the manner provided by section 2.16(h) of the Facility Agreement
provided that any such expenses shall, in any event, to the extent not
fully paid or discharged, form or shall be deemed to form part of the
Secured Indebtedness.
10.3 NO WAIVER
No failure or delay on the part of the Collateral Agent or any Receiver to
exercise any right, power or remedy under this Deed will operate as a
waiver thereof nor will any
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single or partial exercise of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy.
10.4 WAIVERS TO BE IN WRITING
Any waiver and any consent by the Collateral Agent under this Deed must be
in writing, be express and not implied and may be given subject to any
conditions which the Collateral Agent considers fit. Any waiver or consent
shall be effective only in the instance and for the purpose for which it is
given.
10.5 NO OBLIGATION TO INSURE
Notwithstanding any provisions to the contrary, the Collateral Agent shall
not be under any obligation to insure any of the Mortgaged Property or the
title deeds or other evidence in respect thereof and shall not be
responsible for any loss which may be suffered as a result of the lack of
or inadequacy of any such insurance.
10.6 NO RESPONSIBILITY FOR LOSSES
The Collateral Agent shall not be responsible for any loss or diminution in
the value occasioned to the Mortgaged Property by any act or omission of
the Mortgagor or any prior ranking encumbrancer or any other person.
10.7 NO RESPONSIBILITY FOR TAX
The Collateral Agent shall have no responsibility whatsoever to any person
as regards any deficiency which might arise because the Collateral Agent is
subject to any tax, duties or levies in respect of the Mortgaged Property
or any part thereof on any income therefrom or any proceeds thereof.
10.8 NO LIABILITY
The Collateral Agent shall not be liable for any failure, omission or
defect in perfecting the Mortgage or any security created by the Facility
Agreement or any of the Credit Documents.
10.9 INCONSISTENCY AND CONFLICT
To the maximum extent permitted by applicable law, where any inconsistency
or conflict exists between the provisions of this Deed and the provisions
of any applicable law (including without limitation the Conveyancing and
Property Ordinance and the Trustee Ordinance (Chapter 29 of the Laws of
Hong Kong)), the provisions of this Deed shall prevail and such
inconsistent or conflicting provisions shall be deemed to be expressly
negated or modified hereby provided that none of the foregoing shall be
construed as a limitation on the powers of any Receiver.
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10.10 NO EXEMPTION
Nothing in this Deed shall exempt the Collateral Agent from or indemnify it
against any liability which would by rule of law or otherwise attach to it
in respect of any act of gross negligence or wilful default which it may
have committed in relation to its duties and/or discretions under this
Deed.
10.11 SUSPENSE ACCOUNT(S)
All monies received, recovered or realised by the Collateral Agent or a
Receiver under this Deed (including the proceeds of any conversion of
currency) after the security created hereunder has become enforceable,
except where such monies together with all other monies received, recovered
or realised by the Collateral Agent or any Receiver under this Deed are
sufficient to satisfy and discharge the Secured Indebtedness in full, may
in the discretion of the Collateral Agent or the Receiver (provided that
such action has first been approved by the Collateral Agent) be credited to
any suspense or impersonal account in the name of the Collateral Agent at
The Industrial and Commercial Bank of China and may be held in such account
for so long as the Collateral Agent may think fit (with interest accruing
thereon at such market rate, if any, as the Collateral Agent may deem fit)
pending their application from time to time (as the Collateral Agent shall
be entitled to do in its discretion) in or towards satisfaction of the
Secured Indebtedness in accordance with the terms of this Deed. Save as
provided above, no party shall be entitled to withdraw any amount at any
time standing to the credit of any such suspense or impersonal account.
10.12 NEW ACCOUNT
At any time following (a) the Collateral Agent receiving notice (either
actual or constructive) of any subsequent security interest affecting the
Mortgaged Property or (b) the Collateral Agent receives notice of any
assignment or disposition affecting all or any part of the Mortgaged
Property or any interest therein to which the Collateral Agent has not
given its approval or (c) the commencement of the insolvency,
administration, reorganisation, (other than as part of a solvent
reconstruction or amalgamation the terms of which have been approved in
writing by the Collateral Agent), liquidation or dissolution of, or any
analogous proceeding in respect of, of the Mortgagor, the Collateral Agent
may open a new account in the name of the Mortgagor (whether or not it
permits any existing account to continue). If the Collateral Agent does not
open such a new account, it shall nevertheless be treated as if it had done
so at the time when the notice was received or was deemed to have been
received or, as the case may be, the insolvency, administration,
reorganisation, liquidation, dissolution or other proceeding commenced.
Thereafter, all payments made by the Mortgagor to the Collateral Agent or
received by the Collateral Agent for the account of the Mortgagor shall be
credited or treated as having been credited to the new account and shall
not operate to reduce the amount secured by this Deed at the time when the
Collateral Agent received or was deemed to have received such notice or, as
the case may be, the insolvency, administration, reorganisation,
liquidation, dissolution or other proceeding commenced.
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11. PRESERVATION OF RIGHTS
11.1 SECURITY ADDITIONAL
The Mortgage and the rights given to the Collateral Agent under this Deed
shall be in addition to and shall be independent of every guarantee,
indemnity or other security which the Collateral Agent may at any time hold
for the Secured Indebtedness and it is hereby declared that no prior
security held by the Collateral Agent over the whole or any part of the
Mortgaged Property shall merge in the Mortgage.
11.2 SECURITY CONTINUING
The Mortgage shall be a continuing security notwithstanding the winding-up
or dissolution of the Mortgagor or any partial payment, settlement of
account or other matter whatsoever and in particular (but without prejudice
to the generality of the foregoing) shall not be considered satisfied by
any intermediate repayment in satisfaction of all or any of the Secured
Indebtedness and shall continue in full force and effect until the Secured
Indebtedness has been discharged and satisfied in full.
11.3 INDULGENCE AND RELEASE
The Collateral Agent may (with the prior written consent of the Requisite
Lenders) in its discretion grant time or other indulgence, or make any
other arrangement, variation or release with, the Mortgagor or any other
person (whether or not party hereto and whether or not jointly liable with
the Mortgagor) in respect of the Secured Indebtedness or of any other
security therefor or guarantee in respect thereof without prejudice either
to the Mortgage or to the liability of the Mortgagor for the Secured
Indebtedness.
11.4 RIGHTS CUMULATIVE
The rights, powers and remedies provided in this Deed are cumulative and
are not, nor are they to be construed as, exclusive of any rights, power or
remedies provided by law.
11.5 MORTGAGE NOT AFFECTED
Neither the Mortgage nor any of the rights, powers and remedies conferred
upon the Collateral Agent or any Receiver (or their respective delegates)
by this Deed or by law nor the liability of the Mortgagor hereunder shall
be discharged, impaired or otherwise affected by:
(A) any time, waiver or consent granted, or any other indulgence or
concession granted, by the Collateral Agent or any other Secured Party
to the Mortgagor or any other person; or
(B) the taking, holding, variation, compromise, exchange, renewal,
realisation or release by the Collateral Agent or any other Secured
Party or any other person of any rights under or in connection with a
Credit Document, any other security, guarantee, indemnity or other
document; or
15
(C) the refusal or failure to take up, hold, realise, perfect or enforce
by the Collateral Agent or any other Secured Party or any other person
any rights under or in connection with a Credit Document, any other
security, guarantee, indemnity or other document (including, without
limitation, any failure to comply with any formality or other
requirement or any failure to realise the full value of any security);
or
(D) the existence of any claim, set-off or other right which the Mortgagor
may have at any time against the Collateral Agent or any other Secured
Party or any other person; or
(E) the making or absence of any demand for payment or discharge of any
Secured Indebtedness on the Mortgagor or any other person, whether by
the Collateral Agent or any other Secured Party or any other person;
or
(F) any arrangement, compromise or settlement entered into by the
Collateral Agent or any other Secured Party with the Mortgagor or any
other person; or
(G) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of the Mortgagor under a
Credit Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order; or
(H) any variation, amendment, waiver, release, novation, supplement,
extension (whether of maturity or otherwise) or restatement (in each
case however fundamental and of whatsoever nature) or replacement of
any Credit Document, or any other security, guarantee, indemnity or
other document; or
(I) any amendment, variation, novation, supplementation or replacement of
any agreement between the Secured Parties; or
(J) any unenforceability, illegality or invalidity of any obligation of
any person under any Credit Document or any other security, guarantee,
indemnity or other document; or
(K) any of the obligations of the Mortgagor under any of Credit Document
or under any other Lien taken in respect of the obligations of the
Mortgagor under any Credit Document being or becoming illegal,
invalid, unenforceable, ineffective or impaired in any respect; or
(L) any amalgamation, merger or reconstruction that may be effected by the
Collateral Agent with any other person or any sale or transfer of the
whole or any part of the undertaking, property and assets of the
Collateral Agent to any other person; or
(M) any amalgamation, merger or reconstruction (other than as part of a
solvent reconstruction or amalgamation the terms of which have been
approved by the Collateral Agent), reorganisation, administration,
administrative or other
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receivership or dissolution or liquidation entry into a voluntary
arrangement of the Mortgagor or any other person; or
(N) the insolvency, bankruptcy, winding-up or dissolution of the Mortgagor
or any change in its status, function, control or ownership; or
(O) any change in the constitution of the Mortgagor; or
(P) any incapacity, lack of power, authority or legal personality of the
Mortgagor to enter into or perform any of its obligations under any
Credit Document to which it is a party or any irregularity in the
exercise thereof or any lack of authority by any person purporting to
act on their behalf; or
(Q) any exercise, omission to exercise, compromise, renewal or release of
any rights against the Mortgagor; or
(R) any invalidity or irregularity in the execution of this Deed or any
other Credit Document; or
(S) any other act (save for a valid act of release and discharge granted
by the Collateral Agent), event or omission which, but for this Clause
11.5 (Mortgage Not Affected) might operate to discharge, impair or
otherwise affect the Mortgage or the liability of the Mortgagor for
the Secured Indebtedness or any of the rights, powers or remedies
conferred upon the Collateral Agent or any Receiver (or their
respective delegates) by this Deed or by law or the liability of the
Mortgagor hereunder.
Without prejudice to the generality of this Clause 11.5, the Mortgagor
expressly confirms that it intends that its liability for the Secured
Indebtedness and its obligations under this Deed shall extend from time to
time to any variation, increase, extension, addition or replacement
(however fundamental) of or to any of the Credit Documents and/or any
facility or amount made available under any of the Credit Documents.
11.6 NO PREJUDICE TO OTHER SECURITY
Nothing contained in this Deed is intended to, or shall operate so as to,
prejudice or affect any guarantee, indemnity or other security of any kind
whatsoever which the Collateral Agent may have for the Secured Indebtedness
or any right, remedy or privilege of the Collateral Agent thereunder.
11.7 SCOPE OF RELEASE
Any receipt, release or discharge of the Mortgage or of any liability
arising under this Deed may be given by the Collateral Agent and, unless
expressly stated otherwise, shall not release or discharge the Mortgagor
from any liability for the same or any other monies which may exist
independently of this Deed. Where such receipt, release or discharge
relates only to part of the Mortgaged Property such receipt, release or
17
discharge shall not prejudice or affect the Mortgage in relation to the
remainder of the Mortgaged Property, unless expressly stated otherwise.
11.8 FURTHER ADVANCES
The security created by this Deed is intended to secure any further
advances made by the Lenders pursuant to the terms of the Facility
Agreement.
11.9 DISCHARGE CONDITIONAL
Any settlement, reassignment, release or discharge between the Mortgagor on
the one part and the Collateral Agent or any Receiver (or their respective
delegates) on the other (the Collateral Agent, any Receiver and their
respective delegates being referred to in this Clause 11.9 (Discharge
Conditional) as the "TRANSACTION PERSON(S)") shall be conditional upon no
security or payment by any person in respect of the Secured Indebtedness
being avoided or reduced by virtue of any provisions of law or enactments
(including but not limited to those relating to bankruptcy, insolvency or
liquidation) for the time being in force and, in the event of any such
security or payment being so avoided or reduced, the Transaction Person(s)
shall be entitled, to recover the value or amount of such payment and the
Mortgage subsequently as if such settlement or discharge had not occurred
but so that nothing herein shall confer on any Transaction Persons the
right to claim under this Clause 11.9 (Discharge Conditional) for more than
the Collateral Agent would be entitled to claim in aggregate hereunder in
respect of such avoided or reduced security or payment provided that any
such settlement, reassignment, release or discharge shall become
unconditional upon the expiry of one month after the maximum period within
which such settlement, reassignment, release or discharge can be avoided or
reduced.
11.10 NO CONDITIONS TO EXERCISE OF RIGHTS
Neither the Collateral Agent nor any Receiver nor any of their respective
delegates shall be obliged before exercising any of the rights, powers or
remedies conferred upon them by this Deed or by law:
(A) to take any action or obtain judgment in any court against the
Mortgagor;
(B) to make or file any claim or proof in a winding-up or dissolution of
the Mortgagor; or
(C) to enforce or seek to enforce the recovery of any moneys and
liabilities hereby secured or any other security taken in respect of
any of the obligations of the Mortgagor under any of the Credit
Documents.
12. PROTECTION OF PURCHASERS
No purchaser or other person dealing with the Collateral Agent or its
delegate or any Receiver appointed hereunder shall be bound to see or
inquire whether the right of the Collateral Agent or such Receiver to
exercise any of its or his powers has arisen or
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become exercisable or be concerned to see whether any such delegation by
the Collateral Agent shall have lapsed for any reason or been revoked. Any
sale or other dealing by the Collateral Agent or its delegate or any
Receiver of or with the Mortgaged Property and any part thereof shall be
deemed to be within the power of the person effecting the same and the
receipt by such person of the purchase or other moneys connected therewith
shall effectively discharge the purchaser or other party to such dealing
who shall not be concerned with the manner of application of the proceeds
of sale or other dealing or be in any way answerable therefor.
13. APPOINTMENT OF RECEIVER
13.1 APPOINTMENT AND REMOVAL
The Collateral Agent may if requested by the Mortgagor or at any time after
the Mortgage (or the relevant part thereof) shall have become enforceable
in accordance with Clause 9 (Default Procedure), appoint one or more
persons to be a Receiver or Receivers of the whole or any part of the
Mortgaged Property. The Collateral Agent may:
(A) remove any Receiver previously appointed hereunder; and
(B) appoint another person or other persons as Receiver or Receivers,
either in the place of a Receiver so removed or who has otherwise
ceased to act or to act jointly with a Receiver or Receivers
previously appointed hereunder.
If at any time and by virtue of any such appointment(s) any two or more
persons shall hold office as Receivers of the same assets or income, each
one of such Receivers shall be entitled (unless the contrary shall be
stated in any of the deed(s) or other instrument(s) appointing them) to
exercise all the powers and discretions hereby conferred on Receivers
individually and to the exclusion of the other or others of them.
13.2 POWERS OF RECEIVERS
Every Receiver for the time being holding office by virtue of an
appointment made by the Collateral Agent hereunder shall (subject to any
limitations or restrictions expressed in the deed or other instrument
appointing him but notwithstanding any winding-up or dissolution of the
Mortgagor) have, in relation to the Mortgaged Property, or as the case may
be, that part of the Mortgaged Property in respect of which he was
appointed:
(A) all the powers (as varied and extended by the provisions hereof)
conferred by the Conveyancing and Property Ordinance or otherwise by
law on mortgagees (whether or not in possession) and receivers
appointed under the Conveyancing and Property Ordinance; and
(B) the power in the name or on behalf and at the cost of the Mortgagor to
exercise all the powers and rights of an absolute owner of the
Mortgaged Property or the relevant part thereof and do or omit to do
anything which the Mortgagor could do.
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13.3 ADDITIONAL POWERS OF RECEIVERS
In addition and without prejudice to the generality of the foregoing every
Receiver shall (notwithstanding any winding-up or dissolution of the
Mortgagor) have the powers specified in Clause 10.1 (Effects).
13.4 RECEIVER TO BE AGENT OF THE MORTGAGOR
Every Receiver so appointed shall be deemed at all times and for all
purposes to be the agent of the Mortgagor and the Mortgagor shall be solely
responsible, jointly and severally, for the acts and defaults of such
Receiver (save in the case of the fraud, negligence, wilful default, breach
of duty or breach of trust in relation to duties by such Receiver) and for
payment of such Receiver's remuneration in respect thereof.
13.5 REMUNERATION OF RECEIVER
Every Receiver shall be entitled to remuneration for his services at a
reasonable rate to be fixed by agreement between him and the Collateral
Agent (or, failing such agreement, to be fixed by the Collateral Agent)
appropriate to the work and responsibilities involved upon the basis of
charging from time to time adopted in accordance with his current practice
or the current practice of his firm.
13.6 MONIES ACTUALLY PAID BY RECEIVER
Only monies actually paid by the Receiver to the Collateral Agent in
satisfaction of the Secured Indebtedness shall be capable of being applied
by the Collateral Agent in satisfaction thereof. The Receiver shall pay
over to the Collateral Agent any monies realised by the Receiver as a
result of the enforcement of the Mortgage (other than monies paid into a
suspense account by such Receiver in accordance with Clause 10.11 (Suspense
Account(s)).
13.7 LIMITATION OF LIABILITY
(A) Neither the Collateral Agent nor the Receiver nor any attorney or
agent of such party shall be liable to any person in respect of any
loss or damage whatsoever which arises out of the realisation of the
Mortgaged Property or any part thereof or from any act, default or
omission in relation to the Mortgage or from any exercise or
non-exercise, or the attempted or purported exercise of, or the
failure to exercise any of their respective powers, authorities or
discretions conferred upon them in relation to the Mortgage or any
part of it, unless such loss or damage is caused by its or his
negligence, wilful default, breach of duty, breach of trust or fraud.
(B) Without prejudice to the generality of Sub-clause (A), entry into
possession of the Mortgaged Property shall not render the Collateral
Agent or the Receiver liable to account as mortgagee in possession or
liable for any loss on realisation or for any default or omission for
which a mortgagee in possession might be liable unless such loss or
damage is caused by its negligence, wilful default,
20
breach of duty, breach of trust or fraud and, if and whenever the
Collateral Agent or the Receiver enters into possession of the
Mortgaged Property, it shall be entitled at any time to go out of such
possession.
13.8 POWER OF APPOINTMENT ADDITIONAL
The foregoing powers of appointment of a Receiver shall be in addition to
and not to the prejudice of all statutory and other powers of the
Collateral Agent under the Conveyancing and Property Ordinance (and so that
the statutory power of sale shall be exercisable without regard to
paragraph 11 of the Fourth Schedule to the said Ordinance) or otherwise and
so that such powers shall be and remain exercisable by the Collateral Agent
in respect of any part of the Mortgaged Property in respect of which no
Receiver has been appointed and notwithstanding that an appointment under
the provisions of this Clause 13 (Appointment of Receiver) shall have
subsisted and been withdrawn in respect of that property or shall be
subsisting in respect of any other part of the Mortgaged Property.
14. INDEMNITY
14.1 INDEMNITY
Without prejudice to any right at law given to trustees, the Mortgagor
further covenants with and undertakes to each of the Collateral Agent and
any Receiver or Receivers fully to indemnify and keep indemnified it from
and against all liabilities, losses, damages, costs and expenses (including
legal costs and expenses), charges, actions, proceedings, claims and
demands or any other obligation or liability (including, without
limitation, in respect of taxes, duties, levies, imposts and other charges
any indemnity and other amounts which the Collateral Agent is or would
become obliged to pay, upon payment by the Mortgagor, under such indemnity)
which it may properly incur (except, having regard to the provisions of any
Credit Document, insofar as they are incurred because of fraud, negligence,
wilful default or breach of trust on the part of it whether before or after
the Mortgage becomes enforceable):
(A) in consequence of anything done or purported to be done by the
Collateral Agent or any Receiver in relation to the Mortgaged Property
or under this Deed or any Credit Document as a result of or in
connection with any failure by the Mortgagor to comply with its
obligations thereunder to the Collateral Agent or any Receiver; or
(B) in consequence of any payment in respect of the Secured Indebtedness
(whether made by the Mortgagor or a third party) being impeached or
declared void for any reason whatsoever; or
(C) in consequence of the breach or non-performance by the Mortgagor of
any of their respective warranties, representations, covenants or
undertakings herein contained or otherwise relating to all or any part
of the Mortgaged Property; or
21
(D) in connection with the realisation of the Mortgaged Property
(including the costs of any proceedings in relation to this Deed or to
the Secured Indebtedness).
14.2 INTEREST
The amounts payable to the Collateral Agent or the Receiver under Clauses
14.1 (Indemnity) and 17 (Stamp Duty and Taxes) shall carry interest in
accordance with section 2.10 of the Facility Agreement from the date on
which they were paid or incurred by the Collateral Agent or the Receiver
(as the case may be) to the date of actual payment to the Collateral Agent
or, as the case may be, the Receiver under the aforementioned clauses as
well after as before any judgment and such amounts and interest may be
debited by the Collateral Agent to any account of the Mortgagor, but shall,
in any event (to the extent not fully paid or discharged), form part of the
Secured Indebtedness and accordingly be secured on the Mortgaged Property
under the Mortgage.
15. POWER OF ATTORNEY
15.1 APPOINTMENT AND POWERS
The Mortgagor hereby irrevocably appoints the following (each an "ATTORNEY"
and collectively the "ATTORNEYS", and acting solely or jointly with the
other Attorneys), namely:
(A) the Collateral Agent;
(B) each and every person to whom the Collateral Agent shall from time to
time have duly delegated the exercise of the power of attorney
conferred by this Clause 15.1 (Appointment and Powers); and
(C) any Receiver appointed hereunder and for the time being holding
office,
to be its attorney or attorneys and in its name and otherwise on its behalf
and as its act and deed to sign, seal, execute, deliver, perfect and do all
deeds, instruments, acts and things which may be required (or which the
Collateral Agent, any person falling within Sub-clause (B) or any Receiver
appointed hereunder shall reasonably consider requisite) for carrying out
any obligation imposed on the Mortgagor, as the case may be, by or pursuant
to this Deed (including but not limited to the obligations of the Mortgagor
under Clauses 4 (Covenant to Deposit and Further Assurance) and 8
(Covenants and Undertakings), for carrying out any sale, lease or other
dealing by the Collateral Agent or any such Receiver into effect, for
conveying or transferring any legal estate or other interest in the
Mortgaged Property, for getting in the Mortgaged Property, and generally
for enabling the Collateral Agent or any person falling within Sub-clause
(B) or any Receiver to exercise the respective powers conferred on them by
or pursuant to this Deed or by law provided that the power contained in
this Clause 15.1 (Appointment and Powers) shall not be exercisable unless
and until the Mortgage shall have become enforceable. The exercise of such
power by the Collateral Agent or any person falling within Sub-clause (B)
or any Receiver shall not put any person dealing with it upon any
22
inquiry as to whether a Event of Default shall have occurred. Each of the
Collateral Agent, any person falling within Sub-clause (B) and any Receiver
shall have full power to delegate the power conferred on it by Clause 15.1
(Appointment and Powers), but no such delegation shall preclude the
subsequent exercise of such power by the Collateral Agent or any person
falling within Sub-clause (B) or any Receiver (as the case may be) itself
or preclude the Collateral Agent or any person falling within Sub-clause
(B) or any Receiver (as the case may be) from making a subsequent
delegation thereof to some other person; any such delegation may be revoked
by the Collateral Agent or any person falling within Sub-clause 15.1(B) or
any Receiver (as the case may be) at any time.
15.2 RATIFICATION
The Mortgagor shall ratify and confirm all transactions lawfully and
properly entered into by the Collateral Agent or any Receiver or delegate
of the Collateral Agent in the exercise of the Collateral Agent's or such
Receiver's respective powers and all transactions lawfully and properly
entered into, documents executed and things done by the Collateral Agent or
such Receiver or delegate by virtue of the power of attorney given by
Clause 15.1 (Appointment and Powers).
15.3 ACKNOWLEDGEMENT OF CONSIDERATION
The power of attorney hereby granted is, as regards the Collateral Agent,
its delegates and any such Receiver (and as the Mortgagor hereby
acknowledges), granted irrevocably and severally, for value and for
security as part of the Mortgage to secure the several proprietary
interests of and the performance of obligations owed to the respective
donees within the meaning of the Powers of Attorney Ordinance.
16. SET-OFF AND CURRENCY
16.1 CURRENCY OF ACCOUNT
(A) Except where specifically provided otherwise, US dollars are the
currency of account and payment for each and every sum at any time due
to the Collateral Agent hereunder provided that each payment in
respect of costs and expenses shall be made in Hong Kong dollars if
incurred in Hong Kong dollars.
(B) If any sum due from the Mortgagor under this Deed or any order or
judgment given or made in relation hereto has to be converted from the
currency (the "FIRST CURRENCY") in which the same is payable hereunder
or under such order or judgment into another currency (the "SECOND
CURRENCY") for the purpose of (a) making or filing a claim or proof
against the Mortgagor, (b) obtaining an order or judgment in any court
or other tribunal or (c) enforcing any order or judgment given or made
in relation hereto then:
(i) the Mortgagor shall indemnify and hold harmless the Collateral
Agent from and against any loss suffered except to the extent
that such loss is
23
suffered as a result of or in connection with the Collateral
Agent's own fraud, negligence, wilful default, breach of duty or
breach of trust; and
(ii) the Collateral Agent shall account to the Mortgagor for the
amount by which any sum realised by it exceeds the aggregate
amount of all sums owing to it by the Mortgagor at the time at
which such profit is realised provided that the Collateral Agent
shall only be required to make any payment to the Mortgagor in
relation thereto if at such time all the payment obligations of
the Mortgagor hereunder to the Collateral Agent are satisfied,
in each case where such loss or excess arises as a result of any
discrepancy between (1) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second
currency and (2) the rate or rates of exchange at which the Collateral
Agent may in the ordinary course of business purchase the first
currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim
or proof.
16.2 SET-OFF
The Mortgagor waives, and (where incapable of waiver) agrees not to
exercise (unless required to do so by law), any right of set-off or
netting, whether conferred by agreement or law, which it may have against
the Collateral Agent so that it does not reduce any amount payable by it to
the Collateral Agent under this Deed.
16.3 CURRENCY CONVERSION
For the purpose of the satisfaction of the Secured Indebtedness or for the
purpose of crediting any monies to the Account or any suspense account
pursuant to Clause 10.11 (Suspense Account(s)) or making any application
therefrom or for any other purpose in connection with this Deed, the
Collateral Agent may (unless otherwise required by law) convert any monies
received, recovered or realised or subject to application by the Collateral
Agent under this Deed or any monies to be credited to any such account
(including the proceeds of any previous conversion under this Clause 16
(Set-off and Currency)) from their existing currency of denomination into
such other currency of denomination as the Collateral Agent may reasonably
think fit and any such conversion shall be effected at such rate or rates
of exchange as may be agreed by the Collateral Agent in consultation with
the Mortgagor as being relevant and any rate, method and date so agreed
shall be binding on the Mortgagor and any costs, expenses or commissions
incurred in effecting any such conversion shall be deducted from the
proceeds of any such conversion.
17. STAMP DUTY AND TAXES
The Mortgagor shall pay all stamp duties and similar fees, filing and
registration fees and other transaction taxes required in relation to or
for the purpose of procuring the execution, validity and enforceability of
this Deed and the Mortgage and shall indemnify
24
the Collateral Agent and each Receiver appointed hereunder against any
liabilities, costs, claims and expenses resulting from any failure to pay
or any delay in paying the same on a full indemnity basis.
18. AMENDMENTS
This Deed may not be amended, modified or waived in any respect whatsoever,
without the prior written consent of the Collateral Agent given with
express reference to this Clause 18 (Amendments) and expressly stated to be
intended to operate as the Collateral Agent's consent to such amendment,
modification or waiver on behalf of the Requisite Lenders.
19. APPLICATION TO COURT
The Collateral Agent may, at any time after the Mortgage has become
enforceable, apply to the court for an order that the terms of this Deed be
carried into execution under the direction of the Court and for the
appointment of a Receiver of the Mortgaged Property or any part thereof and
for any other order in relation to the administration of the terms of this
Deed as the Collateral Agent shall deem fit and it may assent to or approve
any application to the Court made at the instance of the Collateral Agent
or on its behalf and the Collateral Agent shall be indemnified by the
Mortgagor against all costs, charges and expenses properly incurred by it
in relation to any such application or proceedings.
20. PARTIAL INVALIDITY
Every provision contained in this Deed shall be severable and distinct from
every other such provision and if at any time any provision hereof is or
becomes illegal, invalid or unenforceable in any respect under the law of
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions hereof nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.
21. NOTICES
21.1 COMMUNICATIONS IN WRITING
Each communication to be made hereunder shall be made in writing and,
unless otherwise stated, shall be made by facsimile or letter.
21.2 ADDRESSES
Any communication or document to be made or delivered by one person to
another pursuant to this Deed shall (unless that other person has by 15
days' written notice to the one specified another address department,
officer or person as the case may be) be made or delivered to that other
person at the address identified with its signature below and shall be
deemed to have been made or delivered (in the case of any communication
made by letter) when left at that address during normal business hours
25
on a Business Day (or on the next Business Day if not left during normal
business hours on a Business Day) or (as the case may be) 5 days (in the
case of local post) and 10 days (in the case of overseas post) after being
deposited in the post postage prepaid in an envelope addressed to it at
that address marked for the attention of any specified department, officer
or person or (in the case of any communication made by facsimile
transmission) when sent to the correct facsimile number of the addressee
identified with its signature below and received in whole and in legible
form by such addressee provided that any communication or document to be
made or delivered by the Mortgagor or the Collateral Agent shall be
effective only when received by the Mortgagor or the Collateral Agent, as
appropriate, and then only if the same is expressly marked for the
attention of the department, officer or person identified below with the
signature of the relevant addressee (or such other department, officer or
person as the relevant addressee shall from time to time and in each case
by not less than 3 days' prior notice in writing to the parties hereto have
specified for this purpose).
21.3 ENGLISH LANGUAGE
Each communication and document made or delivered by one party to another
pursuant to this Deed shall be in the English language or accompanied by a
translation thereof into English certified (by an officer of the person
making or delivering the same) as being a true and accurate translation
thereof.
22. ASSIGNMENT
The Collateral Agent may assign its rights and obligations under this Deed
to any successor under the Facility Agreement in accordance with section
9.7 of the Facility Agreement.
23. COSTS AND EXPENSES
The Mortgagor further covenants with and undertakes to the Collateral Agent
and any Receiver appointed by the Collateral Agent hereunder or by law
(including more than one such receiver and any substitute receiver) to
reimburse or pay to the Collateral Agent or such Receiver (on the basis of
full indemnity) the amount of all proper costs, charges, liabilities and
expenses including costs, charges or expenses incurred by the Collateral
Agent or such Receiver or any attorney, manager, agent or delegate in
connection with:
(A) the negotiation, preparation, registration, perfection, preservation
or enforcement of this Deed and any other document relating thereto;
and
(B) the proper exercise or the attempted proper exercise by or on behalf
of the Collateral Agent or such Receiver of any of the powers of the
Collateral Agent or such Receiver or any other action properly taken
by or on behalf of the Collateral Agent with a view to or in
connection with the enforcement of any obligations of the Mortgagor
under any of the Credit Documents or the recovery by the Collateral
Agent or any such Receiver from the Mortgagor of the Secured
Indebtedness then due and payable.
26
24. CERTIFICATES AND DETERMINATIONS
For all purposes, including any Proceedings:
(a) a determination by the Collateral Agent; or
(b) a copy of a certificate signed by an officer of the Collateral Agent,
of the amount of any indebtedness comprised in the Secured Indebtedness for
the time being or at any time shall, in the absence of manifest error, be
conclusive evidence against the Mortgagor as to the amount thereof.
25. GOVERNING LAW
This Deed is governed by Hong Kong law.
26. JURISDICTION
26.1 HONG KONG COURTS
The courts of Hong Kong have non-exclusive jurisdiction to settle any
dispute (a "DISPUTE") arising out of or in connection with this Deed
(including a dispute regarding the existence, validity or termination of
this Deed or the consequences of its nullity).
26.2 CONVENIENT FORUM
The parties agree that the court of Hong Kong are the most appropriate and
convenient courts to settle Disputes between them and, accordingly, that
they will not argue to the contrary.
26.3 NON-EXCLUSIVE JURISDICTION
This Clause 26 (Jurisdiction) is for the benefit of all parties hereto
other than the Mortgagor. As a result and notwithstanding Clause 26.1 (Hong
Kong Courts), it does not prevent any party hereto other than the Mortgagor
from taking Proceedings in any other courts with jurisdiction. To the
extent allowed by law, the parties hereto other than the Mortgagor may take
concurrent Proceedings in any number of jurisdictions.
26.4 AGENT FOR SERVICE
(A) The Mortgagor irrevocably appoints Huawei-3Com Co., Limited. of Suites
3013-3014, 30/F One International Finance Centre, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ to be its agent for the receipt of Service
Documents. It agrees that any Service Document may be effectively
served on it in connection with Proceedings in Hong Kong by service on
its agent effected in any manner permitted by applicable law.
27
(B) If the agent at any time ceases for any reason to act as such, the
Mortgagor shall appoint a replacement agent having an address for
service in Hong Kong and shall notify the Collateral Agent of the name
and address of the replacement agent. Failing such appointment and
notification, the Collateral Agent shall be entitled by notice to the
Mortgagor to appoint a replacement agent to act on behalf of the
Mortgagor. The provisions of this clause applying to service on an
agent apply equally to service on a replacement agent.
(C) "SERVICE DOCUMENT" means a claim form, application notice, order,
judgment or other document relating to any Proceedings.
27. EXECUTION AND COUNTERPARTS
This Deed may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same Deed.
IN WITNESS WHEREOF the parties hereto have caused this Deed to be duly executed
the day and year first above written.
28
SCHEDULE 1
PARTICULARS OF THE SHARES
MORTGAGOR NUMBER AND CLASS OF SHARES
--------- --------------------------
H3C HOLDINGS LIMITED 9,705,000 ORDINARY SHARES
Shareholder of and the number and class of shares in Huawei-3Com Co., Limited
EXECUTION PAGES
THE MORTGAGOR
Executed as a Deed by ) SEAL AFFIXED
for and on behalf of )
H3C HOLDINGS LIMITED ) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
in the presence of: ▇▇▇▇▇▇▇ ▇. HELD )
)
Address: ▇▇ ▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇ House, South Church Street,
▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands
Facsimile Number: __________________________
Attention: _________________________________
EXECUTION PAGES
THE COLLATERAL AGENT
Executed as a deed by affixing the common seal )
of INDUSTRIAL AND COMMERCIAL )
BANK OF CHINA (ASIA) LIMITED ) SEAL AFFIXED
in the presence of: )
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Director
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Secretary
Address: ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Facsimile Number: 2869 8221
Attention: ________________________________
CONFORMED COPY
Dated 30 March 2007
H3C HOLDINGS LIMITED
as Mortgagor
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED
as Collateral Agent
----------
H3C SHARE MORTGAGE
----------
▇▇▇▇▇▇▇▇▇ and May
▇▇/▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
(RMGG/AHLL)
HK070540103
CONTENTS
CLAUSE PAGE
------ ----
1. INTERPRETATION AND DEFINITIONS 1
2. COVENANT TO PAY AND NATURE OF SECURED INDEBTEDNESS 3
3. MORTGAGE 3
4. COVENANT TO DEPOSIT AND FURTHER ASSURANCES 4
5. REDEMPTION 5
6. THE SHARES 6
7. REPRESENTATIONS AND WARRANTIES 7
8. COVENANTS AND UNDERTAKINGS 8
9. DEFAULT PROCEDURE 10
10. EFFECTS OF THE MORTGAGE BECOMING ENFORCEABLE 10
11. PRESERVATION OF RIGHTS 14
12. PROTECTION OF PURCHASERS 17
13. APPOINTMENT OF RECEIVER 18
14. INDEMNITY 20
15. POWER OF ATTORNEY 21
16. SET-OFF AND CURRENCY 22
17. STAMP DUTY AND TAXES 23
18. AMENDMENTS 24
19. APPLICATION TO COURT 24
20. PARTIAL INVALIDITY 24
21. NOTICES 24
22. ASSIGNMENT 25
23. COSTS AND EXPENSES 25
24. CERTIFICATES AND DETERMINATIONS 26
25. GOVERNING LAW 26
26. JURISDICTION 26
27. EXECUTION AND COUNTERPARTS 27
SCHEDULE 1 28
Particulars of the Shares 28