EX-99.(B)(25) 2 d699526dex99b25.htm FACILITY AGREEMENT FACILITY AGREEMENT

Exhibit (b)-(25)

EXECUTION VERSION

U.S.$850,000,000

FACILITY AGREEMENT

dated 27 June 2014

for

GIANT MERGER LIMITED

arranged by

CHINA MINSHENG BANKING CORP., LTD., HONG KONG BRANCH

BNP PARIBAS HONG KONG BRANCH

CREDIT SUISSE AG, SINGAPORE BRANCH

DEUTSCHE BANK AG, SINGAPORE BRANCH

GOLDMAN SACHS (ASIA) L.L.C.

ICBC INTERNATIONAL FINANCE LIMITED

JPMORGAN CHASE BANK, N.A.

as Mandated Lead Arrangers and Bookrunners

BANK OF CHINA LIMITED MACAU BRANCH

CATHAY UNITED BANK COMPANY, LIMITED, HONG KONG BRANCH

CHINA MERCHANTS BANK CO., LTD. HONG KONG BRANCH

ING BANK N.V., SINGAPORE BRANCH

PING AN BANK CO., LTD.

as Mandated Lead Arrangers

HUA NAN COMMERCIAL BANK, LTD., OFFSHORE BANKING BRANCH

LUSO INTERNATIONAL BANKING LTD.

MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD., OFFSHORE BANKING BRANCH

as Arrangers

with

BNP PARIBAS

acting as Agent

and

BNP PARIBAS

acting as Security Agent

 

LOGO

Ref: L-221080


CONTENTS

 

CLAUSE    PAGE  
SECTION 1   
INTERPRETATION   

1.

  Definitions and interpretation      1   
SECTION 2   
THE FACILITY   

2.

  The Facility      68   

3.

  Purpose      70   

4.

  Conditions of Utilisation      71   
SECTION 3   
UTILISATION   

5.

  Utilisation      73   
SECTION 4   
REPAYMENT, PREPAYMENT AND CANCELLATION   

6.

  Repayment      74   

7.

  Illegality, voluntary prepayment and cancellation      75   

8.

  Mandatory prepayment and cancellation      76   

9.

  Restrictions      82   
SECTION 5   
COSTS OF UTILISATION   

10.

  Interest      84   

11.

  Interest Periods      85   

12.

  Changes to the calculation of interest      86   

13.

  Fees      87   
SECTION 6   
ADDITIONAL PAYMENT OBLIGATIONS   

14.

  Tax gross-up and indemnities      88   

15.

  Increased costs      91   

16.

  Other indemnities      92   

17.

  Mitigation by the lenders      95   

18.

  Costs and expenses      95   
SECTION 7   
GUARANTEE   

19.

  Guarantee and indemnity      97   
SECTION 8   
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT   

20.

  Representations      101   

21.

  Information undertakings      112   

22.

  Financial covenants      119   

23.

  General undertakings      129   

24.

  Events of Default      157   

 

(i)


SECTION 9   
CHANGES TO PARTIES   

25.

  Changes to the Lenders      164   

26.

  Debt Purchase Transactions      169   

27.

  Changes to the Obligors      170   
SECTION 10   
THE FINANCE PARTIES   

28.

  Role of the Agent, the Arranger and others      174   

29.

  Conduct of business by the Finance Parties      184   

30.

  Sharing among the Finance Parties      185   
SECTION 11   
ADMINISTRATION   

31.

  Payment mechanics      187   

32.

  Set-off      191   

33.

  Notices      191   

34.

  Calculations and certificates      194   

35.

  Partial invalidity      194   

36.

  Remedies and waivers      194   

37.

  Amendments and waivers      194   

38.

  Confidentiality      200   

39.

  Counterparts      204   
SECTION 12   
GOVERNING LAW AND ENFORCEMENT   

40.

  Governing law      205   

41.

  Enforcement      205   

THE SCHEDULES

 

SCHEDULE    PAGE  

SCHEDULE 1 The Original Parties

     206   

PART I The Original Obligors

     206   

PART II The Original Lenders

     207   

PART III The Original Hedge Counterparties

     208   

SCHEDULE 2 Conditions Precedent

     209   

PART I Initial conditions precedent

     209   

PART II Conditions precedent required to be delivered by an Additional Guarantor

     215   

PART III Condition Subsequent required to be delivered in respect of Additional Transaction Security

     217   

SCHEDULE 3 Requests and Notices

     219   

PART I Utilisation Request

     219   

PART II Selection Notice

     220   

PART III Extension Request

     221   

SCHEDULE 4 Form of Transfer Certificate

     222   

SCHEDULE 5 Form of Assignment Agreement

     225   

SCHEDULE 6 Form of Accession Deed

     228   

SCHEDULE 7 Form of Resignation Letter

     231   

SCHEDULE 8 Form of Compliance Certificate

     232   

SCHEDULE 9 LMA Form of Confidentiality Undertaking

     237   

SCHEDULE 10 Timetables

     244   

SCHEDULE 11 Material Companies

     245   

 

(ii)


SCHEDULE 12 Security Principles

     246   

SCHEDULE 13 Form of Increase Confirmation

     253   

SCHEDULE 14 Forms of Notifiable Debt Purchase Transaction Notice

     256   

PART I Form of Notice on Entering into Notifiable Debt Purchase Transaction

     256   

PART II Form of Notice on Termination of Notifiable Debt Purchase Transaction/ Notifiable Debt Purchase Transaction ceasing to be with Sponsor Affiliate

     257   

SCHEDULE 15 Form of Founder Certificate

     258   

SCHEDULE 16 VIE Contracts

     260   

PART I Existing VIE Contracts

     260   

PART II VIE Part 1 Contracts

     261   

SCHEDULE 17 Existing Revenue Sharing Agreements

     262   

SCHEDULE 18 White List

     265   

SCHEDULE 19 Black List

     266   

SCHEDULE 20 Existing Security

     267   

SCHEDULE 21 Form of Budget

     268   

 

(iii)


THIS AGREEMENT is dated 27 June 2014 and made between:

 

(1) GIANT INVESTMENT LIMITED, an exempted company incorporated with limited liability under the laws of the Cayman Islands with registered number WK-284201 and registered office at Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9005, Cayman Islands (the “Parent” or the “Original Guarantor”);

 

(2) GIANT MERGER LIMITED, an exempted company incorporated with limited liability under the laws of the Cayman Islands with registered number WK-284202 and registered office at Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9005, Cayman Islands (the “Borrower” or “MergeCo”);

 

(3) CHINA MINSHENG BANKING CORP., LTD., HONG KONG BRANCH, BNP PARIBAS HONG KONG BRANCH, CREDIT SUISSE AG, SINGAPORE BRANCH, DEUTSCHE BANK AG, SINGAPORE BRANCH, GOLDMAN SACHS (ASIA) L.L.C., ICBC INTERNATIONAL FINANCE LIMITED and JPMORGAN CHASE BANK, N.A. as mandated lead arrangers and bookrunners (whether acting individually or together, the “MLABs”);

 

(4) BANK OF CHINA LIMITED MACAU BRANCH, CATHAY UNITED BANK COMPANY, LIMITED, HONG KONG BRANCH, CHINA MERCHANTS BANK CO., LTD. HONG KONG BRANCH, ING BANK N.V., SINGAPORE BRANCH AND PING AN BANK CO., LTD., as mandated lead arrangers (whether acting individually or together, the “MLAs”);

 

(5) HUA NAN COMMERCIAL BANK, LTD., OFFSHORE BANKING BRANCH, LUSO INTERNATIONAL BANKING LTD. AND MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD., OFFSHORE BANKING BRANCH as arrangers (together with the MLABs and the MLAs, whether acting individually or together, the “Arranger” or the “Mandated Lead Arranger”);

 

(6) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 (The Original Parties) as lenders (the “Original Lenders”);

 

(7) THE ENTITIES listed in Part III of Schedule 1 (The Original Parties) as hedge counterparties (the “Original Hedge Counterparties”);

 

(8) BNP PARIBAS, a banking corporation incorporated under the laws of France, acting through its office at 59th-63rd Floors, Two International Finance Centre, 8 Finance Street, Central, Hong Kong, as agent of the other Finance Parties (the “Agent”); and

 

(9) BNP PARIBAS, a banking corporation incorporated under the laws of France, acting through its office at 59th-63rd Floors, Two International Finance Centre, 8 Finance Street, Central, Hong Kong, as security trustee for the Secured Parties (the “Security Agent”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Definitions

In this Agreement:

Acceptable Bank” means:

 

  (a)     

 

 

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  (i) (for the purposes of (x) paragraph (a) of the definitions of “Cash” and “Cash Equivalent Investments” (insofar as they are used in Clause 22 (Financial covenants)) and (y) Clause 31.5 (Impaired Agent)) a bank or financial institution (or its parent company if it has no rating) which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A- or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or A3 or higher by Moody’s Investors Service Limited or a comparable rating from an internationally recognised credit rating agency; or

 

  (ii) (for all other purposes) a bank or financial institution (or its parent company if it has no rating) which has a rating for its long-term unsecured and non credit-enhanced debt obligations of BBB or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or Baa2 or higher by Moody’s Investors Service Limited or a comparable rating from an internationally recognised credit rating agency; or

 

  (b) a Finance Party or any Affiliate of a Finance Party (excluding any Sponsor Affiliate); or

 

  (c) any other bank or financial institution (and the conditions upon which such bank or financial institution may hold cash and/or credit balances) approved:

 

  (i) (prior to the date of this Agreement) by the Original Mandated Lead Arrangers; or

 

  (ii) (on or after the date of this Agreement) by the Agent,

(in each case such approval not to be unreasonably withheld or delayed).

Accession Deed” means a document substantially in the form set out in Schedule 6 (Form of Accession Deed).

Accountants’ Report” means the finance and tax due diligence report by Ernst & Young Transactions Limited dated 9 January 2014 and the updated report dated 3 March 2014 relating to the Target and its Subsidiaries, and which:

 

  (a) is addressed to, and/or capable of being relied upon, by the Reliance Parties that have entered into a duty of care letter with Ernst & Young Transactions Limited; and

 

  (b) has been updated to reflect the cash balances of each member of the Target Group as of 31 December 2013.

Accounting Principles” means:

 

  (a) in relation to the Group (on a consolidated basis), the Target (on a consolidated basis) and the Offshore Group, generally accepted accounting principles in the United States of America or, if adjusted or changed in accordance with paragraph (b) of Clause 21.3 (Requirements as to financial statements), IFRS; and

 

  (b) in relation to each Onshore Group Member, generally accepted accounting principles in the PRC.

Accounting Reference Date” means 31 December.

Accrued Cash Sweep Amount” means, for any Calculation Period, the aggregate of the Cash Sweep Shortfall Amounts (if any) for each prior Calculation Period, less any amounts applied towards such amounts in accordance with the Payment Waterfall.

 

2


Accrued Prepayment Amount” means, for any Calculation Period, the aggregate of the Prepayment Shortfall Amounts (if any) for each prior Calculation Period, less any amounts applied towards such amounts in accordance with the Payment Waterfall.

Acquisition/Investment Basket” means, for any Financial Year, U.S.$40,000,000 (or its equivalent), provided that:

 

  (a) for the Financial Year ending 31 December 2014, the basket amount shall be reduced proportionately on the basis of the number of days elapsed from the Closing Date to and including the last day of the Financial Year in which the Closing Date occurs and a year of 360 days;

 

  (b) if in any Financial Year (the “Original Financial Year”) the aggregate amount of the Acquisition/Investment Expenditure is less than the maximum amount permitted for that Original Financial Year (the difference being referred to as the “Unused Amount”), then the maximum amount permitted for the immediately following Financial Year (the “Carry Forward Year”) shall be increased by an amount (the “Permitted Carry Forward Amount”) equal to the lower of (A) 100 per cent. of the Unused Amount and (B) the amount which could have been utilised by way of additional Acquisition/Investment Expenditure in the Original Financial Year without causing a breach of the Cashflow Cover test during that Original Financial Year or any other term of this Agreement;

 

  (c) in any Carry Forward Year, the original basket amount applicable for that Financial Year (being U.S.$40,000,000) shall be treated as having been incurred prior to any Permitted Carry Forward Amount carried forward into that Carry Forward Year and no amount carried forward into that Carry Forward Year may be carried forward into a subsequent Financial Year; and

 

  (d) at the Borrower’s election in any Compliance Certificate, in any Original Financial Year, up to 50 per cent. of the original basket amount (being U.S.$40,000,000) for a Carry Forward Year (the “Permitted Carry Back Amount”) may be carried back to the Original Financial Year and added to the maximum Acquisition/Investment Expenditure permitted for the Original Financial Year but only to the extent that the Permitted Carry Back Amount can be spent as Acquisition/Investment Expenditure in the current Financial Year without breaching any term of this Agreement and the Acquisition/Investment Basket originally available for that Carry Forward Year will be correspondingly reduced by the Permitted Carry Back Amount actually spent in that Original Financial Year).

Acquisition/Investment Expenditure” means, in respect of any Financial Year, the aggregate of:

 

  (a) the Total Purchase Price (as defined in paragraph (g) of the definition of Permitted Acquisition);

 

  (b) the Joint Venture Investment (as defined in paragraph (iii) of the definition of Permitted Joint Venture); and

 

  (c) the Capital Expenditure,

 

3


incurred by the Group Member that Financial Year except (in each case) to the extent funded from (x) the Retained Excess Cashflow and/or (y) the proceeds of New Shareholder Injections which (in each case) has not been previously applied or allocated for a particular purpose and which has been so confirmed in a Compliance Certificate.

Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 27 (Changes to the Obligors).

Adjusted Repayment Instalment” has the meaning given to it in the definition of “Offshore Cash Required Amount”.

Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

Aggregate Onshore Cash Balance” means, at any time, the aggregate of all cash held by the Onshore Group Members (including VIE Group Members) at that time.

Aggregate Vendor Note Cash Amount” has the meaning given to that term in Clause 23.46 (Onshore VLN Accounts and Offshore VLN Account).

Annual Financial Statements” has the meaning given to that term in Clause 21 (Information undertakings).

Anti-Corruption Laws” means the US Foreign Corrupt Practices Act of 1977, as amended or the UK Bribery Act of 2010 and or any other applicable anti-bribery or anti-corruption laws in other jurisdictions.

Anti-Money Laundering Laws” means all applicable financial recordkeeping and reporting requirements, and the applicable anti-money laundering statutes of jurisdictions where the Borrower or any of its Subsidiaries conducts business and/or where they are incorporated, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, which in each case are issued, administered or enforced by any Governmental Authority.

Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee provided that if that other form does not contain the undertaking set out in the form set out in Schedule 5 (Form of Assignment Agreement) it shall not be a Creditor Accession Undertaking as defined in, and for the purposes of, the Intercreditor Agreement.

Auditors” means:

 

  (a) Ernst & Young Hua Ming LLP; or

 

  (b) (in relation to a WFOE Group Member) Shanghai Zhiyuan Certified Public Accountants LOGO ; or

 

  (c) one of the Big Four or any other approved in advance by the Majority Lenders (such approval not to be unreasonably withheld or delayed).

Authorisation” means:

 

  (a) an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration, in each case, as required by law or applicable regulation; or

 

4


  (b) in relation to anything which will be fully or partly prohibited or restricted by law if a Governmental Authority intervenes or acts in any way within a specified period after lodgement, filing, registration or notification, the expiry of that period without intervention or action.

Availability Period” means, the period from and including the date of this Agreement to and including the earlier of:

 

  (a) the end of the Certain Funds Period;

 

  (b) the date on which the Merger Agreement terminates or otherwise ceases to have effect; and

 

  (c) the Closing Date.

Available Commitment” means a Lender’s Commitment minus (subject as set out below):

 

  (a) the amount of its participation in the Loan; and

 

  (b) in relation to any proposed Loan, the amount of its participation in the Loan that is due to be made on or before the proposed Utilisation Date.

Available Facility” means the aggregate for the time being of each Lender’s Available Commitment.

Baring” means funds advised by Baring Private Equity Asia Group Limited, a Cayman limited company, and its Control Investment Affiliates (but excluding any portfolio companies or entities of any of the foregoing and any Subsidiary of any such portfolio company or entity).

Baring SPV” means Baring Private Equity Asia V Holding (12) Limited.

Base Case Model” means the financial model including profit and loss, balance sheet and cashflow projections in agreed form relating to the Group (for these purposes assuming completion of the Merger) prepared by Baring.

Big Four” means PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche (or any local affiliate or amalgamation of the same or their successors).

Black List” means the list set out in Schedule 19 (Black List).

Borrowings” has the meaning given to that term in Clause 22.1 (Financial definitions).

Break Costs” means the amount (if any) by which:

 

  (a) the interest excluding the Margin which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

 

  (b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

 

5


Budget” means:

 

  (a) in relation to the period beginning on Closing Date and ending on 31 December 2014, the Base Case Model in agreed form to be delivered by the Borrower to the Agent pursuant to Clause 4.1 (Initial conditions precedent); and

 

  (b) in relation to any other period, any budget delivered by the Borrower to the Agent in respect of that period pursuant to Clause 21.4 (Budget).

Business Day” means:

 

  (a) for the purpose of determining LIBOR, a day (other than a Saturday or Sunday) on which banks are open for transaction of domestic and foreign exchange business in London;

 

  (b) for the purpose of payment of amounts under the Finance Documents, a day (other than a Saturday or Sunday) on which banks are open for the transaction of domestic and foreign exchange business in London, New York, Singapore and Hong Kong;

 

  (c) for the purpose of any action or step to be performed or implemented by an Onshore Group Member, a day (other than a Saturday or Sunday) on which banks are open for general business in Hong Kong, Singapore and Beijing; and

 

  (d) for all other purposes, a day (other than a Saturday or Sunday) on which banks are open for general business in Hong Kong and Singapore.

Calculation Period” means each period from (and including) 1 July in any calendar year to (and including) 30 June in the immediately following calendar year, provided that the first Calculation Period shall start on 1 July 2015 and the last Calculation Period will end on the Termination Date.

Capital Expenditure” has the meaning given to that term in Clause 22.1 (Financial definitions).

Cash” means, at any time:

 

  (a) (for the purposes of Clause 22 (Financial covenants)) cash in hand or at bank and (in the latter case) credited to an account in the name of an Obligor with an Acceptable Bank and to which an Obligor is alone (or together with other Obligors) beneficially entitled and for so long as:

 

  (i) repayment of that cash is not contingent on the prior discharge of any other indebtedness of any Group Member or of any other person whatsoever;

 

  (ii) there is no Security over that cash except for Transaction Security or any Security referred to in paragraphs (b), (c), (m), (o) or (p) of the definition of Permitted Security; and

 

  (iii) the cash is freely and (except to the extent of any Transaction Security under the Transaction Security Documents) immediately available (or, in the case of term deposits, available at the expiry of the applicable term of such deposit or at any time subject to any loss of interest upon breaking the applicable term of such deposit) to be applied in repayment or prepayment of the Facility).

 

6


  (b) (for all other purposes) cash in hand or at bank and (in the latter case) credited to an account in the name of a Group Member with an Acceptable Bank and to which such Group Member is alone (or together with other Group Members) beneficially entitled and for so long as:

 

  (i) repayment of that cash is not contingent on the prior discharge of any other indebtedness of any Group Member or of any other person whatsoever;

 

  (ii) there is no Security over that cash except for Permitted Security; and

 

  (iii) the cash is freely and (except to the extent of any Transaction Security under the Transaction Security Documents) immediately available (or, in the case of term deposits, available at the expiry of the applicable term of such deposit or at any time subject to any loss of interest upon breaking the applicable term of such deposit).

Cash Contribution” has the meaning given to that term in Part I of Schedule 2 (Conditions Precedent).

Cash Equivalent Investments” means at any time:

 

  (a) certificates of deposit maturing within one year after the relevant date of calculation and issued by an Acceptable Bank;

 

  (b) any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, Hong Kong, Japan or any Participating Member State or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security;

 

  (c) commercial paper not convertible or exchangeable to any other security:

 

  (i) for which a recognised trading market exists;

 

  (ii) issued by an issuer incorporated in the United States of America, the United Kingdom or any Participating Member State;

 

  (iii) which matures within one year after the relevant date of calculation; and

 

  (iv) which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investors Service Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;

 

  (d) sterling bills of exchange eligible for rediscount at the Bank of England from and accepted by an Acceptable Bank (or their dematerialised equivalent);

 

  (e) any investment in money market funds which (i) have a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited, (ii) which invest substantially all their assets in securities of the types described in paragraphs (a) to (d) above and (iii) can be turned into cash on not more than 30 days’ notice; or

 

  (f) any other debt security approved:

 

7


  (i) (prior to the date of this Agreement) by the Original Mandated Lead Arrangers; or

 

  (ii) (on or after the date of this Agreement) by the Majority Lenders,

in each case, to which:

 

  (A) ((for the purposes of Clause 22 (Financial covenants)) any Obligor is alone (or together with other Obligors); and

 

  (B) (for all other purposes), any Group Member is alone (or together with other Group Members),

beneficially entitled at that time and which is not issued or guaranteed by any Group Member or subject to any Security (other than Security arising under the Transaction Security Documents).

Cash Sweep Shortfall Amount” means, for any Calculation Period, the amount (if any) by which the Required Distribution Amount (plus any Freely Available Cash taken into account in the calculation of that amount) for that Calculation Period is insufficient to fund the full amount of any Required Cash Sweep Amount for that Calculation Period in accordance with the Payment Waterfall as a result of the application of paragraph (a)(ii) of Clause 23.44 (Required Distribution Amount).

Cashflow” has the meaning given to that term in Clause 22.1 (Financial definitions).

CDH” means funds managed or advised by CDH Wealth Management Company Limited and/or their respective Control Investment Affiliates (but excluding any portfolio companies or entities of any of the foregoing and any Subsidiary of any such portfolio company or entity).

CDH SPV” means CDH Journey Limited.

Certain Funds Period” means the period commencing on the date of the Commitment Letter and ending on 17 September 2014 (the “Initial Certain Funds Period Expiry Date”), provided that, in the event that the Merger Effective Time has not occurred on or prior to the Initial Certain Funds Period Expiry Date and the Termination Date (as defined in the Merger Agreement) has been extended beyond the Initial Certain Funds Period Expiry Date pursuant to section 8.02(a) of the Merger Agreement by the Target or the Parent, the Initial Certain Funds Period Expiry Date may be extended by the Borrower to the earlier of (i) the Termination Date (as defined in, and extended pursuant to, the Merger Agreement) and (ii) 17 December 2014, by delivery of a duly executed Extension Request to the Agent on or before the Initial Certain Funds Period Expiry Date.

Certain Funds Utilisation” means the Loan made or to be made under the Facility during the Certain Funds Period where it is or is to be made solely for a Merger Purpose.

Change of Control” means:

(a) prior to the occurrence of a Qualifying Flotation:

 

  (i) the Equity Investors, in the aggregate, cease to (on a fully diluted basis):

 

  (A) have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

 

  1. cast, or control the casting of, more than 50 per cent. of the maximum number of votes that might be cast at a general meeting of Holdco;

 

8


  2. appoint or remove all, or the majority, of the directors or other equivalent officers of Holdco; and/or

 

  (B) beneficially hold, directly or indirectly, more than 50 per cent. of the economic interest in Holdco; and/or

 

  (ii) any of (x) the Equity Investors or (y) the Founder and his Family Members (in the aggregate) cease to (on a fully diluted basis):

 

  (A) individually have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast, or control the casting of, at least the applicable Sponsor Minimum Share of the maximum number of votes that might be cast at a general meeting of Holdco; and/or

 

  (B) individually hold, directly or indirectly, at least the applicable Sponsor Minimum Share of the economic interest in Holdco;

 

  (iii) the Founder and his Family Members (in the aggregate) cease (on a fully diluted basis):

 

  (A) to have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast, or control, the largest number of votes that may be cast a general meeting of Holdco; or

 

  (B) to hold, directly or indirectly, the largest economic interest in Holdco.

 

  (b) following the occurrence of a Qualifying Flotation:

 

  (i) the Equity Investors, in the aggregate, cease to (on a fully diluted basis):

 

  (A) have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast or control the casting of at least 35 per cent. of the maximum number of votes that might be cast at a general meeting of the Holdco; and/or

 

  (B) beneficially hold, directly or indirectly, at least 35 per cent. of the economic interest in Holdco; and/or

 

  (ii) any of (x) the Equity Investors or (y) the Founder and his Family Members (in the aggregate) cease to:

 

  (A) have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast or control the casting of at least the applicable Sponsor Minimum Share of the maximum number of votes that might be cast at a general meeting of Holdco; and/or

 

  (B) hold, directly or indirectly, at least the applicable Sponsor Minimum Share of the economic interest in Holdco; and

 

  (c) at any time, Holdco ceases to (on a fully diluted basis):

 

  (i) have the power directly or indirectly (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast, or control the casting of, 100 per cent. of the maximum number of votes that might be cast at a general meeting of the Parent; and/or

 

9


  (ii) have the power directly or indirectly (whether by way of ownership of shares, proxy, contract, agency or otherwise) to appoint or remove all, or the majority, of the directors or other equivalent officers of the Parent; and/or

 

  (iii) hold, directly or indirectly, beneficially or economically 100 per cent. of the Equity Interests of the Parent (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and

 

  (d) at any time, the Parent ceases to (on a fully diluted basis):

 

  (i) have the power directly or indirectly (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast, or control the casting of, 100 per cent. of the maximum number of votes that might be cast at a general meeting of the MergeCo or, following the Merger Effective Time, the Target; and/or

 

  (ii) have the power directly or indirectly (whether by way of ownership of shares, proxy, contract, agency or otherwise) to appoint or remove all, or the majority, of the directors or other equivalent officers of the MergeCo or, following the Merger Effective Time, the Target; and/or

 

  (iii) hold, directly or indirectly, beneficially or economically 100 per cent. of the Equity Interests of the MergeCo or, following the Merger Effective Time, the Target (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

For the purposes of this definition:

 

  (e) economic interest” means any interest which is beneficial, economic or financial in nature, including any right to a benefit, reward or return or the exposure to a risk of liability, loss or diminution in value;

 

  (f) Sponsor Minimum Share” means:

 

  (i) in respect of the Founder and his Family Members (in the aggregate):

 

  (A) prior to the occurrence of a Qualifying Flotation (in respect of paragraph (a)(ii) above), 30 per cent.; and

 

  (B) following the occurrence of a Qualifying Flotation (in respect of paragraph (b)(ii) above), 17.5 per cent.; and

 

  (ii) in respect of Baring:

 

  (A) prior to the occurrence of a Qualifying Flotation (in respect of paragraph (a)(ii) above), 17.0 per cent.; and

 

  (B) following the occurrence of a Qualifying Flotation (in respect of paragraph (b)(ii) above), 12.0 per cent.;

 

  (iii) in respect of Hony:

 

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  (A) prior to the occurrence of a Qualifying Flotation (in respect of paragraph (a)(ii) above), 17.0 per cent.; and

 

  (B) following the occurrence of a Qualifying Flotation (in respect of paragraph (b)(ii) above), 12.0 per cent.; and

 

  (iv) in respect of CDH:

 

  (A) prior to the occurrence of a Qualifying Flotation (in respect of paragraph (a)(ii) above), 10.0 per cent.; and

 

  (B) following the occurrence of a Qualifying Flotation (in respect of paragraph (b)(ii) above), 7.5 per cent.

Charged Account” means any account maintained by an Obligor outside of the PRC which from time to time is, or is expressed to be, subject to valid and effective Transaction Security pursuant to a Transaction Security Document.

Charged Property” means all of the assets of the Obligors and the Parent which from time to time are, or are expressed to be, the subject of the Transaction Security.

Chief Financial Officer” means Jazy Zhang and any replacement chief financial officer (or equivalent officer, as appropriate) from time to time of the Borrower.

Clean-Up Date” means:

 

  (a) in respect of the Merger, the date falling 90 days from and including the Closing Date; and

 

  (b) in respect of any Permitted Acquisition (other than the Merger), the date falling 90 days from the date of completion of such Permitted Acquisition.

Clean-Up Default” means an Event of Default existing on or arising after the Closing Date other than an Event of Default under any of Clause 24.1 (Non-payment), Clause 24.6 (Insolvency), Clause 24.7 (Insolvency proceedings), Clause 24.8 (Creditors’ process), Clause 24.10 (Unlawfulness and invalidity), Clause 24.11 (Intercreditor Agreement and other documents), Clause 24.13 (Cessation of business), Clause 24.17 (Repudiation and rescission of agreements) and Clauses 23.48 (Conditions subsequent: Merger) to Clause 23.51 (Conditions subsequent: hedging and security).

Clean-Up Representation” means any of the representations and warranties under Clause 20 (Representations).

Clean-Up Undertaking” means any of the undertakings specified in Clause 23 (General undertakings).

Closing Date” means the date on which the Merger Effective Time occurs.

Code” means the US Internal Revenue Code of 1986.

Commitment” means:

 

  (a) in relation to an Original Lender, the amount in USD set opposite its name under the heading “Commitment” in Part II of Schedule 1 (The Original Parties) and the amount of any other Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase); and

 

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  (b) in relation to any other Lender, the amount in USD of any Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase),

to the extent not cancelled, reduced or transferred by it under this Agreement.

Commitment Letter” means the commitment letter dated 17 March 2014 from the Arrangers and their Affiliates to the Borrower.

Company Disclosure Schedule” has the meaning given to that term in the Merger Agreement.

Compliance Certificate” means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate) or any other form agreed between the Agent and the Borrower.

Confidential Information” means all information relating to the Parent, any Obligor, the Group, the Target Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:

 

  (a) any Group Member, the Target Group or any of its advisers; or

 

  (b) another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Group Member or the Target Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

 

  (i) is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 38 (Confidentiality); or

 

  (ii) is identified in writing at the time of delivery as non-confidential by any Group Member or the Target Group or any of its advisers; or

 

  (iii) is known by that Finance Party before the date the information is disclosed to it in accordance with paragraph (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group or the Target Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the LMA as set out in Schedule 9 (LMA Form of Confidentiality Undertaking) or in any other form agreed between the Borrower and the Agent and which is addressed to, or capable of being relied upon by, the Borrower or any other Group Member by virtue of reliance on the Third Parties Act with respect to the relevant provisions therein.

Constitutional Documents” means the certificate of incorporation, the memorandum of association and articles of association of each of the Parent and the Borrower (including any amendments thereto).

 

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Control” means, in relation to any person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by contract or otherwise (and the term “Controlled” shall be construed accordingly).

Control Investment Affiliate” means, with respect to any person, another person that directly or indirectly is in Control of, or is Controlled by, or is under common Control with, such first-mentioned person.

Debenture (Giant HK)” means the document dated on or after the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed and floating charge or similar security interest over all or substantially all assets of Giant HK in favour of the Security Agent under the law of Hong Kong.

Debenture (Giant Interactive)” means the document dated on or after the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed and floating charge or similar security interest over all or substantially all assets of the Target in favour of the Security Agent under the law of Hong Kong.

Debenture (MergeCo)” means the document dated on or about the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed and floating charge or similar security interest over all or substantially all assets of the Borrower in favour of the Security Agent under the law of Hong Kong.

Debt Document” has the meaning given to that term in the Intercreditor Agreement.

Debt Purchase Transaction” means, in relation to a person, a transaction where such person:

 

  (a) purchases by way of assignment or transfer;

 

  (b) enters into any sub-participation in respect of; or

 

  (c) enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,

any Commitment or amount outstanding under this Agreement.

Debtor” has the meaning given to that term in the Intercreditor Agreement.

Default” means an Event of Default or any event or circumstance specified in Clause 24 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination (including that of materiality) under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

Defaulting Lender” means any Lender (other than a Lender which is a Sponsor Affiliate):

 

  (a) which has failed to make its participation in the Loan available (or has notified the Agent or the Borrower (which has notified the Agent) that it will not make its participation in the Loan available) by the Utilisation Date in accordance with Clause 5.4 (Lenders’ participation);

 

  (b) which has otherwise rescinded or repudiated a Finance Document; or

 

  (c) with respect to which an Insolvency Event has occurred and is continuing,

 

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unless, in the case of paragraph (a) above:

 

  (i) its failure to pay is caused by:

 

  (A) administrative or technical error; or

 

  (B) a Disruption Event; and

   payment is made within five Business Days of its due date; or

 

  (ii) the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

Disposal” has the meaning given to that term in paragraph (a) of Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow).

Disruption Event” means either or both of:

 

  (a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

  (b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

 

  (i) from performing its payment obligations under the Finance Documents; or

 

  (ii) from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

Distribution” means, in respect of a person:

 

  (a) the taking of any of the actions described in paragraph (a) of Clause 23.17 (Dividends and share redemption);

 

  (b) paying, repaying or prepaying any principal, interest or other amount on or in respect of, or redeeming, purchasing or defeasing, any Financial Indebtedness, owed actually or contingently to any of its shareholders or to any Affiliate;

 

  (c) declaring, paying or making any dividend or other payment or distribution of any kind on or in respect of any class of its shares; or

 

  (d) reducing, returning, purchasing, repaying, cancelling or redeeming any of its share capital (including any Recapitalisation).

Distribution Retention Amount” means, for any Calculation Period, forty per cent. of the Required Distribution Amount for that Calculation Period, but for the purposes of this definition calculating the Required Distribution Amount without reference to the Distribution Retention Incremental Amount for that Calculation Period.

 

14


Distribution Retention Incremental Amount” has the meaning given to it in the definition of “Offshore Cash Required Amount”.

Dividend Account” means an interest-bearing account:

 

  (a) held in a jurisdiction reasonably satisfactory to the Agent by an Offshore Group Member with a Finance Party (or an Affiliate thereof);

 

  (b) identified in writing between the Borrower and the Agent as the “Dividend Account”;

 

  (c) subject to Security in favour of the Security Agent which Security is in form and substance satisfactory to the Agent and Security Agent (acting reasonably); and

 

  (d) from which no withdrawals may be made by any member of the Group except as contemplated by this Agreement,

(as the same may be re-designated, substituted or replaced from time to time).

DSRA” means any debt service reserve account:

 

  (a) held in a jurisdiction reasonably satisfactory to the Agent by an Offshore Group Member with a Finance Party (or any Affiliate thereof);

 

  (b) identified in writing between the Borrower and the Agent as a “DSRA”, provided that no more than three accounts may be so identified and all such accounts are with the same Finance Party;

 

  (c) subject to Security in favour of the Security Agent which Security is in form and substance satisfactory to the Agent and the Security Agent (acting reasonably); and

 

  (d) from which no withdrawals may be made by any Group Member except as contemplated by this Agreement,

(as the same may be re-designated, substituted or replaced from time to time).

DSRA Minimum Balance” means, at any time, an amount equal to the aggregate of the amount of principal and interest falling due and payable under the Facility during the DSRA Reserve Period at that time (after giving effect to any voluntary prepayment made under Clause 7 (Illegality, voluntary prepayment and cancellation)), calculated on the basis of six month Interest Periods and that:

 

  (a) the interest rate applicable for the DSRA Reserve Period starting on the Utilisation Date will be the interest rate for the first Interest Period; and

 

  (b) the interest rate for any other DSRA Reserve Period will be that for the Interest Period commencing most recently prior to the first day of the relevant DSRA Reserve Period;

provided that, in respect of the principal falling due on the Termination Date, only USD100,000,000 of that amount will be taken into account.

DSRA Reserve Period” means:

 

15


  (a) on the Utilisation Date, the period starting on the Utilisation Date and ending on (and including) 30 June 2015; and

 

  (b) at any time from (and including) 1 July 2015, the period starting on that date and ending on the date falling six months thereafter.

Environment” means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:

 

  (a) air (including, without limitation, air within natural or man-made structures, whether above or below ground);

 

  (b) water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

 

  (c) land (including, without limitation, land under water).

Environmental Claim” means any claim, proceeding, formal notice or investigation by any person in respect of:

 

  (a) any breach, or alleged breach, of any Environmental Law; or

 

  (b) any accident, fire, explosion or other event of any type involving the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste.

Environmental Law” means any applicable law or regulation which relates to:

 

  (a) the pollution or protection of the Environment;

 

  (b) the conditions of the workplace;

 

  (c) community welfare and/or land or property rights;

 

  (d) occupational health and safety; or

 

  (e) the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste.

Environmental Permits” means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any Group Member conducted on or from the properties owned or used by any Group Member.

Equity Commitment Letters” means the letter agreements entered into or to be entered into respectively by The Baring Asia Private Equity Fund V, L.P., CDH WM Giant Fund, L.P. and Hony Capital Fund V, L.P., in each case, in favour of Holdco, pursuant to which The Baring Asia Private Equity Fund V, L.P., CDH WM Giant Fund, L.P. and Hony Capital Fund V, L.P. respectively agree to make an equity investment in Holdco at or immediately prior to the Merger Effective Time in connection with the Merger.

Equity Interest” means, in relation to any person:

 

  (a) any share of any class or capital stock of or equity interest in such person or any depositary receipt in respect of any such share, capital stock or equity interest; or

 

16


  (b) any security convertible or exchangeable (whether at the option of the holder thereof or otherwise and whether such conversion is conditional or otherwise) into any such shares, capital stock, equity interest or depositary receipt, or any depositary receipt in respect of any such security; or

 

  (c) any option, warrant or other right to acquire any such share, capital stock, equity interest, security or depositary receipt or security referred to in the foregoing paragraphs (a) and/or (b) above.

Equity Investors” means:

 

  (a) Baring;

 

  (b) CDH; and

 

  (c) Hony.

E.U.” means the European Union.

Event of Default” means any event or circumstance specified as such in Clause 24 (Events of Default).

Excess Cashflow” has the meaning given to that term in Clause 22.1 (Financial definitions).

Executive Order” means each of:

 

  (a) the US Executive Order No.13224 on Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, which came into effect on 24 September 2001, as amended;

 

  (b) the US Executive Order No. 13590 of 21 November 2011 authorising the imposition of certain sanctions with respect to the provision of goods, services, technology or support for Iran’s energy and petrochemical sectors; and

 

  (c) any other U.S. Executive Order issued and in effect in connection with restrictions on the export of goods or economic or trade sanctions.

Existing Investments” means the securities and investments (i) owned by a Target Group Member and (ii) disclosed to the Original Mandated Lead Arrangers in writing, each on or prior to the date of the Commitment Letter.

Existing Revenue Sharing Agreements” means the contracts listed in Schedule 17 (Existing Revenue Sharing Agreements) and any other arrangement, instrument or agreement entered into on or before the date of this Agreement between Group Members or between a Studio and a Group Member in connection with the transfer or sharing of revenue pursuant to licensing or servicing arrangements.

Existing VIE Contracts” means the contracts listed in Part I of Schedule 16 (VIE Contracts).

Extension Request” means a request in substantially the form set out in Part III of Schedule 3 (Requests and Notices).

Facility” means the term loan facility made available under this Agreement as described in Clause 2.1 (The Facility).

 

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Facility Office” means:

 

  (a) in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement; or

 

  (b) in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.

Family Member” means, in relation to any individual, such individual, his or her lineal descendants, and any trust or other similar entity established for the sole benefit of or the sole beneficial owner(s) of which (directly or indirectly) are any or all of the foregoing, any of their respective lineal descendants, estate or any executor of their respective estate, and/or (in the case of any such trust or other similar entity) any trustee in bankruptcy or similar officer in respect of any such trust or such other similar entity.

FATCA” means:

 

  (a) sections 1471 to 1474 of the Code, any associated regulations and other official guidance;

 

  (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States of America and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; and

 

  (c) any agreement pursuant to the implementation of paragraph (a) or (b) above with the United States Internal Revenue Service, the government of the United States of America or any governmental or taxation authority in any other jurisdiction.

FATCA Application Date” means:

 

  (a) in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the United States of America), 1 July 2014;

 

  (b) in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the United States of America), 1 January 2017; or

 

  (c) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) or (b) above, 1 January 2017;

 

  (d) or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA after the date of this Agreement.

FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.

FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction.

 

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FATCA Protected Lender” means any Lender irrevocably designated as a “FATCA Protected Lender” by the Borrower by notice to that Lender and the Agent at least six months prior to the earliest FATCA Application Date for a payment by a Party to that Lender (or to the Agent for the account of that Lender).

Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States.

Fee Letter” means (as applicable):

 

  (a) any letter or letters dated on or about the date of this Agreement between the Arranger and the Borrower (or the Agent and the Borrower or the Security Agent and the Borrower) setting out any of the fees referred to in Clause 13 (Fees); and/or

 

  (b) any agreement setting out fees payable to a Finance Party referred to in paragraph (f) of Clause 2.2 (Increase) of this Agreement; and/or

 

  (c) any agreement setting out any other fees payable to a Finance Party referred to in this Agreement or under any other Finance Document.

Finance Document” means this Agreement, the Commitment Letter, any Accession Deed, any Compliance Certificate, any Fee Letter, any Hedging Agreement, the Hedging Letter, the Intercreditor Agreement, the Vendor Note Subordination Deed, any Report Proceeds Letter, any Resignation Letter, any Selection Notice, any Transaction Security Document, any PRC Account Control Agreement, any Transfer Certificate, any Increase Confirmation, the Utilisation Request and any other document designated as a “Finance Document” by the Agent and the Borrower provided that where the term “Finance Document” is used in, and construed for the purposes of, this Agreement or the Intercreditor Agreement, a Hedging Agreement shall be a Finance Document only for the purposes of:

 

  (a) the definition of “Material Adverse Effect”;

 

  (b) paragraph (a) of the definition of “Permitted Transaction”;

 

  (c) the definition of “Transaction Document”;

 

  (d) the definition of “Transaction Security Document”;

 

  (e) paragraph (a)(iv) of Clause 1.2 (Construction);

 

  (f) Clause 19 (Guarantee and indemnity);

 

  (g) Clause 24 (Events of Default) (other than paragraph (c) of Clause 24.17 (Repudiation and rescission of agreements) and Clause 24.20 (Acceleration));

 

  (h) the Security Principles; and

 

  (i) describing the secured obligation under any Transaction Security Document.

Finance Party” means the Agent, the Arranger, the Security Agent, a Lender or a Hedge Counterparty provided that where the term “Finance Party” is used in, and construed for the purposes of, this Agreement or the Intercreditor Agreement, a Hedge Counterparty shall be a Finance Party only for the purposes of:

 

19


  (a) the definition of “Secured Parties”;

 

  (b) paragraph (a)(i) of Clause 1.2 (Construction);

 

  (c) Clause 19 (Guarantee and indemnity); and

 

  (d) Clause 29 (Conduct of business by the Finance Parties).

Financial Indebtedness” means any indebtedness for or in respect of:

 

  (a) moneys borrowed and debit balances at banks or other financial institutions;

 

  (b) any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

 

  (c) any note purchase facility or the issue of bonds (but not Trade Instruments), notes, debentures, loan stock or any similar instrument;

 

  (d) the amount of any liability in respect of Finance Leases;

 

  (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

 

  (f) any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);

 

  (g) any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of an underlying liability (but not, in any case, Trade Instruments) of an entity which is not a Group Member which liability would fall within one of the other paragraphs of this definition;

 

  (h) any amount raised by the issue of shares or Equity Interests which are redeemable (other than at the option of the issuer) before the Termination Date (as amended from time to time) or are otherwise classified as borrowings under the Accounting Principles);

 

  (i) any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 150 days after the date of supply;

 

  (j) any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) classified as borrowings under the Accounting Principles; and

 

  (k) the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (j) above.

Financial Quarter” has the meaning given to that term in Clause 22.1 (Financial definitions).

Financial Year” has the meaning given to that term in Clause 22.1 (Financial definitions).

First Test Date” means the Quarter Date falling at the end of the first full Financial Quarter following the Utilisation Date.

 

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First Tier Offshore Group Member” means any Offshore Group Member that directly legally holds (in whole or in part) any Onshore Group Member from time to time (being as at the date of this Agreement, Giant HK).

First Tier WFOE” means any Onshore Group Member which is directly legally held (in whole or in part) by an Offshore Group Member from time to time (being as at the date of this Agreement, WFOE (Zhengtu), WFOE (Zhuhai) and WFOE (Zhengduo)).

First Tier WFOE Account” means each account held by a First Tier WFOE (other than an account held by WFOE (Zhuhai)).

Flotation” has the meaning given to that term in Clause 8.1 (Exit and Flotation).

Flotation Proceeds” has the meaning given to that term in Clause 8.1 (Exit and Flotation).

Forecast Debt Service” has the meaning given to it in the definition of “Offshore Cash Required Amount”.

Founder” means:

 

  (a) Mr. Yuzhu Shi LOGO ; and

 

  (b) any company or corporation which is (x) incorporated outside of the PRC; (y) established for the specific purpose of holding Equity Interests in Holdco on behalf of Mr. Yuzhu Shi LOGO ; and (z) managed by or is under the control of Mr. Yuzhu Shi LOGO .

Freely Available Cash” means, at any time, Cash held by Offshore Group Members at that time which is freely available for application in accordance with the Payment Waterfall but:

 

  (a) including any Cash standing to the credit of the DSRA only to the extent in excess of the DSRA Minimum Balance at that time;

 

  (b) including any Cash standing to the credit of the Offshore Mandatory Prepayment Account at that time only to the extent any mandatory prepayment to which that balance relates falls due in the relevant Calculation Period; and

 

  (c) excluding any Cash standing to the credit of the Offshore VLN Account except to the extent required to fund a payment of principal falling due under the Vendor Note following application of the Payment Waterfall.

Freely Available Cash Balance” means, at any time, the aggregate amount of Freely Available Cash as at that time.

Funds Flow Statement” means a funds flow statement in agreed form.

Future Revenue Sharing Agreement” means any arrangement, instrument or agreement entered into after the date of this Agreement between Group Members or between a Studio and a Group Member in connection with the transfer or sharing of revenue pursuant to licensing or servicing arrangements.

GAPP” means the General Administration of Press and Publication in the PRC LOGO , including any local counterpart thereof.

 

21


Giant HK” means Giant Interactive (HK) Limited LOGO , a company incorporated, with limited liability under the laws of Hong Kong with registered number 1295991 and registered office at Room 5101, 51/F., Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong.

Governmental Authority” means any government or any governmental agency, semi-governmental or judicial entity or authority (including any stock exchange or any self-regulatory organisation established under statute).

Grandall Minutes” means the minutes dated 7 March 2014 of meetings and telephone conversations of the Target with GAPP in respect of the VIE Restructuring prepared by Grandall Law Firm (which is capable of being disclosed by a Finance Party on a confidential and non-reliance basis to persons who may become Lenders as part of the Syndication).

Group” means the Borrower and each of its Subsidiaries for the time being, including at and following the Merger Effective Time, each member of the Target Group.

Group Member” means any member of the Group.

Group Structure Chart” means the structure chart of the Group which identifies (i) the Sponsors (and any person by or through which they hold or beneficially own Equity Interests in the Borrower); (ii) the Group; and (iii) the Material Companies, together with the percentage of ownership of Equity Interest, and which is otherwise in the agreed form.

Guarantor” means the Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with Clause 27 (Changes to the Obligors).

Guarantor Threshold Requirement” has the meaning given to that term in paragraph (b) of Clause 23.32 (Guarantors).

Hedge Counterparty” means:

 

  (a) any Original Hedge Counterparty; and

 

  (b) any entity which has become a Party as a Hedge Counterparty in accordance with Clause 25.8 (Accession of Hedge Counterparties),

which, in each case, is or has become, a party to the Intercreditor Agreement as a Hedge Counterparty in accordance with the provisions of the Intercreditor Agreement.

Hedging Agreement” means any master agreement, confirmation, schedule or other agreement in agreed form entered into or to be entered into by the Borrower and a Hedge Counterparty for the purpose of hedging the types of liabilities and/or risks in relation to the Facility which the Hedging Letter (by reference to its form at the time that agreement is entered into) either requires or had required, to be hedged and which complies with the requirements in relation to hedging documents stipulated in the Intercreditor Agreement.

Hedging Letter” means the letter dated on or before the date of this Agreement and made between the Arranger, the Borrower describing the hedging arrangements to be entered into in respect of the interest rate liabilities of the Borrower of, and in relation to, the Facility.

Holdco” means Giant Group Holdings Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands with registered number WK-284198 and registered office at Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9005, Cayman Islands.

 

22


Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.

Hony” means funds managed or advised by Hony Capital Fund Ltd and/or their respective Control Investment Affiliates (but excluding any portfolio companies or entities of any of the foregoing and any Subsidiary of any such portfolio company or entity).

Hony SPV” means Rich Noble Enterprises Limited.

HR Report” means the human resources report prepared by Towers Watson Shanghai Office and dated 28 November 2013.

ICP Licence” means a value-added telecommunications business operating license issued by the SCAB.

IFRS” means International Financial Reporting Standards issued and/or adopted by the International Accounting Standards Board from time to time.

Impaired Agent” means the Agent at any time when:

 

  (a) it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

 

  (b) the Agent otherwise rescinds or repudiates a Finance Document;

 

  (c) (if the Agent is also a Lender) it is a Defaulting Lender under paragraph (a), (b) or (c) of the definition of “Defaulting Lender”; or

 

  (d) an Insolvency Event has occurred and is continuing with respect to the Agent;

unless, in the case of paragraph (a) above:

 

  (i) its failure to pay is caused by:

 

  (A) administrative or technical error; or

 

  (B) a Disruption Event; and

payment is made within five Business Days of its due date; or

 

  (ii) the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

Increase Confirmation” means a confirmation substantially in the form set out in Schedule 13 (Form of Increase Confirmation) or any other form agreed between the Agent and the Borrower.

Increase Lender” has the meaning given to that term in paragraph (a)(iii) of Clause 2.2 (Increase).

Indirect Tax” means any value added tax, goods and services tax, consumption tax, business tax or any Tax of a similar nature.

Information Memorandum” has the meaning given to that term in the Commitment Letter.

 

23


Information Package” means the Reports, the Base Case Model, the MOFCOM Memorandum and the Grandall Minutes.

Insolvency Event” in relation to an entity means that entity:

 

  (a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

  (b) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

  (c) makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

  (d) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

 

  (e) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:

 

  (i) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

 

  (ii) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

 

  (f) has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009 or in each case, any equivalent legislation in any relevant jurisdiction;

 

  (g) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

  (h) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in paragraph (d) above);

 

  (i) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

 

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  (j) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (i) above; or

 

  (k) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

Intellectual Property” means all right, title and interest from time to time in and to:

 

  (a) any patents, trade marks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, inventions, confidential information, knowhow and other intellectual property rights and interests (which may now or in the future subsist), whether registered or unregistered; and

 

  (b) the benefit of all applications and rights to use such assets (which may now or in the future subsist),

and in each case including any related lease, licences and sub-licences of the same.

Intercreditor Agreement” means the intercreditor agreement dated on or about the same date as this Agreement and made between, among others, Holdco, the Parent, the Borrower, the Debtors (as defined in the Intercreditor Agreement), the Security Agent, the Agent, the Lenders (as Senior Lenders), the Arranger, the Hedge Counterparties (as defined in the Intercreditor Agreement), and the Intra-Group Lenders (as defined in the Intercreditor Agreement).

Interest Period” means, in relation to the Loan, each period determined in accordance with Clause 11 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 10.3 (Default interest).

Interim Investors Agreement” means the interim investors agreement in the agreed form entered into or to be entered into between the Founder, Vogel, Union Sky, Baring SPV, CDH SPV, Hony SPV, Holdco, the Parent and the Borrower pursuant to which the parties to the agreement agree to certain terms and conditions in relation to the Merger.

Interpolated Screen Rate” means, in relation to LIBOR, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

 

  (a) the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period; and

 

  (b) the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period,

each as of the Specified Time on the Quotation Day for the currency of the Loan.

Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

Lanlin” means Shanghai Lanlin Bio-Technology Co., Ltd. LOGO , a company incorporated with limited liability under the laws of the PRC with registered number 310104000233205.

 

25


Legal Due Diligence Report” means:

 

  (a) the legal due diligence report dated 13 March 2014 prepared by Fangda Partners;

 

  (b) the memorandum dated 13 March 2014 prepared by Fangda Partners in respect of the ability of the Onshore Group Members to upstream cash to the Offshore Group Members and confirming the timing, steps and legal ability of First Tier WFOE to make distributions; and

 

  (c) the legal due diligence report dated 13 March 2014 prepared by Weil, Gotshal & Manges LLP.

Legal Opinion” means any legal opinion delivered to the Agent under Clause 4.1 (Initial conditions precedent) or Clause 27 (Changes to the Obligors).

Legal Reservations” means:

 

  (a) the principle that equitable remedies are remedies which may be granted or refused at the discretion of a court, the principle of reasonableness and fairness (to the extent applicable to the laws to which this definition relates) and the limitation of enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganisation and other laws generally affecting the rights of creditors;

 

  (b) the time barring of claims under applicable limitation laws and defences of acquiescence, set off or counterclaim, including the Limitation Acts and the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

  (c) the principle that in certain circumstances security granted by way of fixed charge may be recharacterised as a floating charge or that security purported to be constituted as an assignment may be re-characterised as a charge;

 

  (d) the principle that additional interest imposed pursuant to any relevant agreement may be held to be unenforceable on the grounds that it is a penalty and thus void;

 

  (e) the principle that a court may not give effect to an indemnity for legal costs incurred by an unsuccessful litigant;

 

  (f) the principle that the creation or purported creation of security over any contract or agreement which is subject to a prohibition on transfer, assignment or charging may be void, ineffective or invalid and may give rise to a breach of the contract or agreement over which security has purportedly been created;

 

  (g) similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

 

  (h) any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

Lender” means:

 

  (a) any Original Lender; and

 

  (b) any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 2.2 (Increase) or Clause 25 (Changes to the Lenders),

which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.

 

26


Liabilities” has the meaning given to that term in the Intercreditor Agreement.

Liabilities Acquisition” has the meaning given to that term in the Intercreditor Agreement.

LIBOR” means, in relation to the Loan or any part of it or any Unpaid Sum:

 

  (a) the applicable Screen Rate;

 

  (b) (if a Screen Rate is available for the currency of that Loan or relevant part of it or any Unpaid Sum but is not available for the Interest Period of that Loan or relevant part of it or any Unpaid Sum (provided that a Screen Rate is available for both a period longer and a period shorter than the Interest Period for that Loan or relevant part of it or any Unpaid Sum)) the Interpolated Screen Rate; or

 

  (c) if no Screen Rate is available for the currency of that Loan or relevant part of it or any Unpaid Sum or if no Screen Rate is available for both a period longer and a period shorter than the Interest Period for that Loan or relevant part of it or any Unpaid Sum) the Reference Bank Rate,

as of the Specified Time on the Quotation Day for the currency of the Loan and for a period equal in length to the Interest Period of the Loan or relevant part of it or any Unpaid Sum, provided that if that rate is below zero, LIBOR will be deemed to be zero.

Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.

LMA” means the Loan Market Association.

Loan” means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan.

Major Default” means with respect to the Parent or the Borrower only (in each case, without taking into account any member of the Target Group and whether or not the Merger has occurred or will occur), any circumstances constituting a Default under any of:

 

  (a) Clause 24.3 (Other obligations) insofar as it relates to a breach of Clause 23.5 (Merger), Clause 23.7 (Acquisitions), Clause 23.8 (Joint Ventures), Clause 23.9 (Holding Companies), Clause 23.12 (Negative pledge), Clause 23.13 (Disposals), Clause 23.15 (Loans or credit), Clause 23.16 (No Guarantees or indemnities), Clause 23.17 (Dividends and share redemption), Clause 23.20 (Financial Indebtedness), paragraph (a) of Clause 23.39 (Merger Documents) (insofar as it relates to an amendment, variation, novation, supplement, superseding, waiver or termination of the Merger Documents in a manner which would reasonably be likely to materially and adversely affect the interests of the Lenders), Clause 23.34 (Anti-corruption law and anti-money laundering) or Clause 23.35 (Sanctions);

 

  (b) Clause 24.4 (Misrepresentation) insofar as it relates to a breach of any Major Representation;

 

  (c) Clause 24.1 (Non-payment), Clause 24.6 (Insolvency), Clause 24.7 (Insolvency proceedings), Clause 24.8 (Creditors’ process);

 

  (d) Paragraph (a) or (b) of Clause 24.10 (Unlawfulness and invalidity); and

 

27


  (e) Clause 24.17 (Repudiation and rescission of agreements).

Major Intellectual Property” means any right, title and interest from time to time in and to any Intellectual Property relating to:

 

  (a) the “ZT Online 1”, ZT Online II”, ZT Online 1 Green Edition” and “ZT Online 1 Classic Edition” games;

 

  (b) the “World of Xianxia” game; and

 

  (c) the “Giant Online” game,

and any other games in the same series as the games listed above, and any separate editions of those games (including, without limitation, the Intellectual Property relating to the games and the platforms for those games).

Major Representation” means a representation or warranty with respect to the Parent or the Borrower only (in each case, without taking into account any member of the Target Group and whether or not the Merger has occurred or will occur) under any of Clause 20.2 (Status) to Clause 20.5 (Power and authority), paragraph (a) of Clause 20.6 (Validity and admissibility in evidence) inclusive, Clauses 20.18 (Anti-corruption law and anti-money laundering), 20.19 (Sanctions), paragraph (a) of Clause 20.23 (Legal and beneficial ownership) (to the extent it relates to assets to be subject to Transaction Security), paragraph (a) of Clause 20.24 (Shares), (to the extent it relates to shares or Equity Interests in the Parent or the Borrower) and Clause 20.30 (Merger Documents, disclosures and other documents).

Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than 662/3 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662/3 per cent. of the Total Commitments immediately prior to that reduction) provided that a Lender may have more than one vote in relation to its share in the Loan or Commitment and may split its vote in whatever percentages it may choose and may vote each percentage of its votes in different ways.

Management Vesting Agreement” means any agreements entered into by, among others, Holdco to implement the New Management Incentive Program and/or the Rollover Incentive Program (each as defined) in Schedule A to the Shareholder Terms).

Margin” means:

 

  (a) in relation to the Loan 4.50 per cent. per annum;

 

  (b) in relation to any Unpaid Sum relating or referable to the Facility, 4.50 per cent. per annum; and

 

  (c) in relation to any other Unpaid Sum, 4.50 per cent. per annum,

but if:

 

  (i) no Event of Default has occurred and is continuing;

 

  (ii) a period of at least 12 Months has expired since the Utilisation Date; and

 

  (iii) Adjusted Leverage in respect of the most recently completed Relevant Period is within a range set out below,

then the Margin will be the percentage per annum set out below in the column opposite that range:

 

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Adjusted Leverage   

Margin

% p.a.

 

Greater than or equal to 2.00:1

     4.50   

Less than 2.00:1 but greater than or equal to 1.50:1

     4.00   

Less than 1.50:1 but greater than or equal to 1.00:1

     3.50   

Less than 1.00:1

     3.00   

However:

 

  (A) any increase or decrease in the Margin for the Loan shall take effect on the date (the “reset date”) of receipt by the Agent of the Compliance Certificate for that Relevant Period pursuant to Clause 21.2 (Provision and contents of Compliance Certificate) or, if an adjustment has not taken effect because an Event of Default is continuing, on the date on which the Agent is notified by the Borrower that such Event of Default ceases to be continuing;

 

  (B) if, following receipt by the Agent of the Compliance Certificate related to the relevant Annual Financial Statements, that Compliance Certificate does not confirm the basis (and calculations) for a reduced Margin, then paragraph (b) of Clause 10.2 (Payment of interest) shall apply and the Margin for the Loan shall be the percentage per annum determined using the table above and the revised ratio of Adjusted Leverage calculated using the figures in that Compliance Certificate (which calculation shall be made by the Borrower and confirmed by the Agent);

 

  (C) while an Event of Default is continuing, the Margin shall be the highest percentage per annum set out above; and

 

  (D) for the purpose of determining the Margin, Adjusted Leverage and Relevant Period shall be determined in accordance with Clause 22.1 (Financial definitions).

Margin Stock” means “margin stock” as defined in Regulation U of the Federal Reserve Board, as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Market Report” means a market report prepared by Bain & Company dated 20 November 2013 and the Updated Report dated 13 January 2014.

Material Adverse Effect” means a material adverse effect on:

 

  (a) the business, assets or financial condition of the Group (taken as a whole); or

 

  (b) the ability of the Obligors (taken as a whole) to perform their payment obligations under the Finance Documents; or

 

  (c) (subject to applicable Legal Reservations and Perfection Requirements which are not overdue) the validity or enforceability of, or the effectiveness or ranking of the Security granted or purporting to be granted pursuant to any of, the Finance Documents (in each case, in accordance with its terms) or the rights or remedies of any Finance Party under the Finance Documents which, if capable of remedy, is not remedied within 20 Business Days of the earlier of an Obligor first becoming aware of such event or circumstance or being given notice of such event or circumstance by the Agent (provided that such grace period will run concurrently with any other applicable grace period).

 

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Material Company” means, at any time:

 

  (a) an Original Obligor;

 

  (b) any Additional Guarantor; or

 

  (c) any Group Member which:

 

  (i) is listed in Schedule 11 (Material Companies);

 

  (ii) has earnings before interest, tax, depreciation and amortisation calculated on the same basis as EBITDA (as defined in Clause 22.1 (Financial definitions)) (but calculated on an unconsolidated basis if such Group Member has any Subsidiary) representing five per cent. or more of EBITDA (as defined in Clause 22.1 (Financial definitions)) of the Group, calculated on a consolidated basis); or

 

  (iii) has gross assets (excluding intra-group items) representing five per cent., or more of the gross assets of the Group, each calculated on a consolidated basis; or

 

  (d) any Group Member that holds or beneficially owns (directly or indirectly) any Equity Interests in any Obligor or any member of the Group referred to in paragraph (b) or (c) above.

A report by the Auditors of the Group that a Subsidiary is or is not a Material Company shall, in the absence of manifest error, be conclusive and binding on all Parties.

Compliance with the conditions set out in paragraphs (c)(ii) and (c)(iii) above shall be determined by reference to the most recent Compliance Certificate supplied by the Borrower and/or the latest audited financial statements of that Subsidiary (consolidated or unconsolidated (as appropriate) in the case of a Subsidiary which itself has Subsidiaries) and the latest audited consolidated financial statements of the Group. However, if a Subsidiary has been acquired since the date as at which the latest audited consolidated financial statements of the Group were prepared, the financial statements shall be deemed to be adjusted in order to take into account the acquisition of that Subsidiary.

Maximum Distribution Amount” means, for any Calculation Period, the lower of:

 

  (a) for so long as the relevant laws and regulations in the PRC materially restrict the Onshore Group Members from freely remitting funds to an Offshore Group Member, the aggregate accumulated after-tax profits of the First Tier WFOEs (excluding WFOE (Zhuhai)) as shown in their audited unconsolidated financial statements for the Financial Year ending on 31 December immediately prior to the start of that Calculation Period after deduction of any statutory reserves required under applicable law to the extent not fully accrued; and

 

  (b) the Aggregate Onshore Cash Balance on the Required Distribution Calculation Date less the Minimum Retained Balance.

 

30


Merger” means the transaction pursuant to which the Borrower will merge with and into the Target in accordance with the Merger Agreement and pursuant to which the Target, as the surviving entity of such merger, will become a wholly-owned Subsidiary of the Parent.

Merger Agreement” means the agreement and plan of merger dated 17 March 2014 relating to the Merger and made among the Borrower, the Parent and the Target, together with all appendices and annexes thereto (including, for the avoidance of doubt, the Company Disclosure Schedule).

Merger Certificate” means the certificate of merger issued by the Registrar of Companies in accordance with section 233(11) of the Companies Law (2013 Revision) of the Cayman Islands in respect of the Merger.

Merger Consideration” means the aggregate consideration payable in cash under the Merger Agreement.

Merger Costs” means all fees, costs and expenses, stamp, registration and other Taxes incurred or assumed and required to be paid by the Borrower or any other Group Member in connection with the Merger or the Transaction Documents.

Merger Documents” means the Merger Agreement, the Merger Plan, the Company Disclosure Schedule, the constitutional documents of the Target following the Merger (as the surviving entity of such merger).

Merger Documents Assignment (Giant Interactive – Cayman)” means the document dated on or about the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking charge or assignment by way of security or similar security interest over all rights and benefits of the Target (as the Borrower following merger) under the Merger Documents under the law of the Cayman Islands.

Merger Documents Assignment (MergeCo – Cayman)” means the document dated on or about the date of the Closing Date creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking charge or assignment by way of security or similar security interest over all rights and benefits of the MergeCo under the Merger Documents under the law of the Cayman Islands.

Merger Documents Assignment (Parent – Cayman)” means the document dated on or about the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking charge or assignment by way of security or similar security interest over all rights and benefits of the Parent under the Merger Documents under the law of the Cayman Islands.

Merger Effective Time” means the time when the Merger becomes effective pursuant to the Merger Agreement, being the “Effective Time” specified in the Merger Plan.

Merger Plan” has the meaning given to the term “Plan of Merger” in the Merger Agreement.

Merger Purpose” means any of the purposes set out in Clause 3.1 (Purpose).

Merger Submission Date” means the date on which the application to file the Merger Plan with the Registrar of Companies is made.

 

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Minimum Retained Balance” means U.S.$70,000,000 on an aggregate basis for all Onshore Group Members.

Minority Shareholders” means Yuliang Feng LOGO , Haixiao Lin LOGO , Wei Liu LOGO , Chen Cheng LOGO , Lu Zhang LOGO , Tao Yue LOGO , Fabing Qu LOGO , Yonggui Wang LOGO and Kai Chen LOGO .

MOC Licence” means an internet culture operation license issued by the SMACRF&T.

MOFCOM” means the Ministry of Commerce of the PRC LOGO (including its successors) and its local counterparts.

MOFCOM Memorandum” means the written advice by T&D Associates in relation to, among others, MOFCOM approval and SAIC registration (which is capable of being disclosed by a Finance Party on a confidential and non-reliance basis).

Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

 

  (a) (subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

 

  (b) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

 

  (c) if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.

The above rules will only apply to the last Month of any period.

New Lender” has the meaning given to that term in Clause 25.1 (Assignments and transfers by the Lenders).

New Shareholder Injections” has the meaning given to that term in Clause 22.1 (Financial definitions).

Non-Consenting Lender” has the meaning given to that term in Clause 37.6 (Replacement of Lender).

Notifiable Debt Purchase Transaction” has the meaning given to that term in paragraph (b) of Clause 26.3 (Disenfranchisement on Debt Purchase Transactions entered into by Sponsor Affiliates).

Obligor” means the Borrower or a Guarantor (excluding, except for the purposes of Clause 19 (Guarantee and Indemnity), Clause 30 (Sharing among the Finance Parties), Clause 31 (Payment mechanics) and Clause 24 (Events of Default), the Parent).

Obligors’ Agent” means the Borrower, appointed to act on behalf of each Obligor in relation to the Finance Documents pursuant to Clause 2.4 (Obligors’ Agent).

OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury (or any successor thereto).

 

32


Official FX Rate” means the officially published PBOC rate for exchanging RMB into USD.

Offshore Cash Required Amount” means, for any Calculation Period without any duplication, an amount in USD equal to the aggregate of:

 

  (a) any amounts of principal, interest, fees, costs or expenses then due under the Finance Documents but unpaid;

 

  (b) an amount (the “Forecast Debt Service”) equal to the aggregate of:

 

  (i) the principal amount of each repayment instalment falling due during that Calculation Period under Clause 6.1 (Repayment of the Loan), after adjustment for any voluntary or mandatory prepayment applied against any such repayment instalment prior to the start of that Calculation Period (an “Adjusted Repayment Instalment”); and

 

  (ii) all interest projected to accrue on the Loan during that Calculation Period calculated on the basis of:

 

  (A) the interest rate applicable to the Loan as at the Required Distribution Calculation Date (after taking into account any applicable interest rate hedging and calculating the applicable Margin for any portion of that Calculation Period based on the Adjusted Leverage reflected in the most recently delivered Compliance Certificate adjusted on a pro forma basis for the full repayment of any Adjusted Repayment Instalment falling due during that Calculation Period for the applicable portion of that Calculation Period after such scheduled instalment) and further taking into account the effect of any voluntary prepayments of principal elected by the Borrower and specified in the relevant Compliance Certificate setting out the calculation of the Offshore Cash Required Amount) (a “Voluntary Prepayment Election”); and

 

  (B) the principal amount of the Loan outstanding on the first day of that Calculation Period but reduced for any portion of a Calculation Period with effect from any applicable Repayment Date during that Calculation Period by the amount of any Adjusted Repayment Instalment falling due on that Repayment Date (and after taking into account the affect on the Adjusted Repayment Instalments of any Voluntary Prepayment Election);

 

  (c) to the extent not fully provided for under paragraph (b) above, any additional amount required to ensure that the Borrower would be in compliance with Clause 23.43 (DSRA) for that Calculation Period;

 

  (d) an amount (the “Distribution Retention Incremental Amount”) equal to the difference (if the result is positive) between (x) the Distribution Retention Amount for that Calculation Period and (y) the Distribution Retention Amount for the previous Calculation Period, provided that for the first Calculation Period that difference will be deemed to be zero;

 

  (e) an amount of U.S.$7,500,000 to fund, in the first instance, any Permitted Offshore Expenses;

 

  (f) the amount outstanding under the Vendor Note as at the Required Distribution Calculation Date;

 

33


  (g) the Required Prepayment Amount as at the Required Distribution Calculation Date;

 

  (h) the Required Cash Sweep Amount for that Calculation Period; and

 

  (i) any Accrued Prepayment Amount or Accrued Cash Sweep Amount from any prior Calculation Periods.

Offshore Group” means the Offshore Group Members.

Offshore Group Member” means a Group Member which is not an Onshore Group Member.

Offshore Mandatory Prepayment Account” means an interest-bearing account:

 

  (a) held in a jurisdiction reasonably satisfactory to the Agent by an Offshore Group Member with a Finance Party (or an Affiliate thereof);

 

  (b) identified in writing between the Borrower and the Agent as a “Offshore Mandatory Prepayment Account”;

 

  (c) subject to Security in favour of the Security Agent which Security is in form and substance satisfactory to the Agent and Security Agent (acting reasonably); and

 

  (d) from which no withdrawals may be made by any Group Members except as contemplated by this Agreement,

(as the same may be redesignated, substituted or replaced from time to time).

Offshore VLN Account” means an account:

 

  (a) held in a jurisdiction reasonably satisfactory to the Agent by an Offshore Group Member (or an Affiliate thereof) incorporated in Hong Kong;

 

  (b) identified in writing between the Borrower and the Agent as the “Offshore VLN Account”;

 

  (c) subject to Security (in the form of an assignment by way of security) in favour of the Security Agent (with effect from the Merger Effective Time) which Security is in form and substance satisfactory to the Agent and the Security Agent (acting reasonably), and

 

  (d) from which no withdrawals may be made by any member of the Group except as contemplated by this Agreement,

(as the same may be re-designated, substituted or replaced from time to time).

Onshore Distributions” means any Distribution by Onshore Group Members that may in accordance with applicable PRC laws and regulations be paid or made by one or more of the Onshore Group Members to or in favour of any holders of Equity Interests in any or all of the Onshore Group Members outside the PRC, after taking into account all Taxes payable under PRC laws and all statutory reserve requirements in the PRC.

Onshore Group” means the Onshore Group Members.

Onshore Group Member” means a Group Member which is established or incorporated in the PRC.

Onshore Mandatory Prepayment Account” means each account:

 

34


  (a) held by a First Tier WFOE (other than WFOE (Zhuhai)) with any Finance Party (or any Affiliate of any Finance Party);

 

  (b) identified in writing between the Borrower and the Agent as an “Onshore Mandatory Prepayment Account”;

 

  (c) subject to the terms of a PRC Account Control Agreement; and

 

  (d) from which no withdrawals may be made by any member of the Group except as contemplated by this Agreement,

(as the same may be re-designated, substituted or replaced from time to time).

Onshore VLN Account” means each account:

 

  (a) held by a First Tier WFOE (other than WFOE (Zhuhai)) with any Finance Party (or any Affiliate of any Finance Party);

 

  (b) identified in writing between the Borrower and the Agent as an “Onshore VLN Account”;

 

  (c) subject to the terms of a PRC Account Control Agreement; and

 

  (d) from which no withdrawals may be made by any Group Members except as contemplated by this Agreement,

(as the same may be re-designated, substituted or replaced from time to time).

Onshore VLN Retention Account” means each account of WFOE (Zhuhai) in the PRC (if any) identified by the Borrower to the Agent in writing prior to the delivery of the Utilisation Request as an account in which funds are being held in relation to the liquidation of WFOE (Zhuhai).

Original Financial Statements” means:

 

  (a) the audited consolidated financial statements of the Target for the Financial Year ended 31 December 2013;

 

  (b) the audited unconsolidated financial statements of WFOE (Zhengduo) for the Financial Year ended 31 December 2013;

 

  (c) the audited unconsolidated financial statements of WFOE (Zhengtu) for the Financial Year ended 31 December 2013;

 

  (d) the audited unconsolidated financial statements of WFOE (Zhuhai) for the Financial Year ended 31 December 2013; and

 

  (e) the audited unconsolidated financial statements of the VIE Entity for the Financial Year ended 31 December 2013,

each prepared in accordance with the applicable Accounting Principle.

Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement or, in the case of an Additional Guarantor, as at the date on which that Additional Guarantor becomes Party as a Guarantor.

Original Mandated Lead Arranger” means an Arranger which is a party to the Commitment Letter.

Original Obligor” means the Borrower or the Parent.

 

35


Parent Loan” means all present and future moneys, debts and liabilities due, owing or incurred from time to time by the Borrower to the Parent, including:

 

  (a) a loan from the Parent to the Borrower not specified in the Structure Memorandum arising as a result of a New Shareholder Injection after the Closing Date; and

 

  (b) under or in connection with any Parent Loan Document,

in each case governed by the law of the Hong Kong.

Parent Loan Document” means any document, agreement or instrument or intercompany account pursuant to which any sum is or becomes or is capable of becoming due, owing or incurred from time to time by the Borrower to the Parent (other than the Constitutional Documents).

Participant” means each person to whom a Lender has transferred all or any of its obligations, economic interest or other interest under the Finance Documents by way of a Participation Agreement.

Participation” means, in relation to a person, a transaction where such person:

 

  (a) enters into any sub-participation in respect of;

 

  (b) enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of; or

 

  (c) enters into a credit derivative (including a credit default swap or credit linked note), total return swap in respect of,

any Commitment or amount outstanding under this Agreement.

Participation Agreement” means each agreement or letter (including, without limitation, a Fee Letter) between a Lender and a Participant under which the Lender has transferred all or any of its obligations, economic interest or other interest under the Finance Documents, directly or indirectly, whether by Participation or in any other way but excluding any assignment, transfer or novation of any of a Lender’s Commitments and/or rights and/or obligations in accordance with Clause 25 (Change to the Lenders) or Clause 37.8 (Replacement of Dissenting Lenders).

Participating Member State” means any member state of the European Union that adopts or has adopted, and in each case continues to adopt, the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

Party” means a party to this Agreement.

Paying Agent Agreement” means the agreement to be entered into by the Parent and the Paying Agent (as defined in the Merger Agreement) as contemplated under section 2.04 of the Merger Agreement.

Payment Waterfall” has the meaning given to it in Clause 23.45 (Payment Waterfall).

PBOC” means the central bank of the People’s Republic of China LOGO .

Perfection Requirements” means the making of the appropriate registrations, filings or notifications of the Transaction Security Documents as specifically contemplated by any Legal Opinion or Transaction Security.

 

36


Permitted Acquisition” means:

 

  (a) the Merger;

 

  (b) an acquisition by a Group Member (other than by the Borrower) of an asset sold, leased, transferred or otherwise disposed of by another Group Member in circumstances constituting a Permitted Disposal;

 

  (c) an acquisition of Equity Interests or securities pursuant to a Permitted Management Transaction or Permitted Share Issue;

 

  (d) an acquisition of securities which are Cash Equivalent Investments;

 

  (e) the incorporation of a limited liability company (or establishment of a company or the purchase of a shelf company with no prior liabilities or activities since the date of its incorporation or establishment or purchase (in each case, other than by the Borrower) which on incorporation, establishment or purchase becomes a Group Member;

 

  (f) the acquisition or establishment of, or involvement in, any share or interest in any Permitted Joint Venture;

 

  (g) an acquisition (not being an acquisition by the Borrower) of (A) at least 50.1% of the voting shares or equivalent ownership interest of any company or (B) (if the acquisition is made by a limited liability company whose sole purpose is to make the acquisition) a business or undertaking carried on as a going concern, but only if:

 

  (i) no Event of Default is continuing or would occur as a result of the acquisition, tested on the closing date of the acquisition (subject to Clause 24.21 (Clean-Up period));

 

  (ii) the acquired company, business or undertaking is incorporated or established, and carries on its principal business in any country or territory which is not a Sanctioned Country and is engaged in a business substantially the same as or complementary to that carried on by the Group;

 

  (iii) the Acquisition/Investment Expenditure constituted by the Total Purchase Price of that acquisition, when aggregated with the amount of any other Acquisition/Investment Expenditure in the same Financial Year, does not in any Financial Year exceed in the aggregate the Acquisition/Investment Basket, and the “Total Purchase Price” means the consideration (including associated costs and expenses) for the acquisition and any Financial Indebtedness or other assumed actual or contingent liability (including any defined benefit pension schemes or social benefit schemes which are not fully funded), in each case, remaining in the acquired company (or any such business) at the time of acquisition (when aggregated with the consideration (including associated costs and expenses) for any other Permitted Acquisition under this paragraph (g) consummated in the same Financial Year as such acquisition and any Financial Indebtedness or other assumed actual or contingent liability, in each case remaining in the applicable acquired companies or businesses at the time of acquisition;

 

37


  (iv) (if the entity or business is a Negative EBITDA Entity) the earnings before tax, depreciation and amortisation of the Negative EBITDA Entity (calculated on the same basis as EBITDA (as defined in Clause 22.1 (Financial definitions))) for the 12 month period immediately prior to the proposed acquisition, when aggregated with the earnings before tax, depreciation and amortisation of any other Negative EBITDA Entity (as of the date their earnings before tax, depreciation and amortisation were calculated hereunder) acquired in the same Financial Year, does not exceed (when expressed as a positive number) U.S.$10,000,000 or its equivalent in other currencies, and for the purposes of this paragraph “Negative EBITDA Entity” shall mean an entity or business whose earnings before tax, depreciation and amortisation (calculated on the same basis as EBITDA (as defined in Clause 22.1 (Financial definitions) for the 12 month period immediately prior to its proposed acquisition is less than zero;

 

  (v) the Borrower would have remained in compliance with its obligations under Clause 22.2 (Financial condition) if the covenant tests thereunder were recalculated for the Relevant Period ending immediately prior to the closing date of the acquisition and, for the purposes of such recalculation, consolidating the financial statements of the target entity (consolidated if it has Subsidiaries) or business with the financial statements of the Group for such period on a pro forma basis and as if the consideration for the proposed acquisition had been paid at the start of that Relevant Period;

 

  (vi) the Borrower is forecast to remain in compliance with each financial covenant in Clause 22.2 (Financial condition) (calculated on the same pro forma basis as in paragraph (v) above) for the four Relevant Periods ending on the next four Quarter Dates falling immediately after the closing date of that acquisition;

 

  (vii) in respect of an acquisition the consideration for which (including any remaining Financial Indebtedness and any assumed actual or contingent liabilities in the relevant entity or business at the time of acquisition) is in excess of U.S.$10,000,000, the Adjusted Leverage ratio for the Relevant Period ending on the Quarter Date falling immediately prior to the closing date of that acquisition, (recalculated on the same pro forma basis as in paragraph (v) above and taking into account any indebtedness incurred in connection with the acquisition), does not exceed the Adjusted Leverage ratio as at the Closing Date;

 

  (viii) any reports actually prepared and available are delivered to the Agent and, in respect of an acquisition the consideration for which (including any remaining Financial Indebtedness and any assumed actual or contingent liabilities in the relevant entity or business at the time of acquisition) is in excess of U.S.$10,000,000 (or its equivalent in other currencies), a legal due diligence report is prepared and delivered to the Agent.

Any acquisition will only be permitted under paragraph (g) above if the Borrower has delivered to the Agent not later than three Business Days after the closing date of that acquisition a certificate signed by two directors of the Borrower (one of such directors to be the Chief Financial Officer) in form and substance satisfactory to the Agent (acting reasonably) confirming or demonstrating (with calculations giving reasonable detail) that each of the conditions set out in paragraph (g) above have been met and to which is attached a copy of the latest audited accounts (or if not available, management accounts) of the target company or business;

 

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  (h) an acquisition of assets (other than Equity Interests) constituting a Capital Expenditure permitted under this Agreement; or

 

  (i) an acquisition made by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed in writing to the Original Mandated Lead Arrangers) or (B) such agreement was entered into on or after the date of the Commitment Letter and neither such agreement nor such acquisition requires the consent of the Parent under the Merger Agreement.

Permitted Disposal” means any sale, lease, licence, loan (other than with respect to cash or cash equivalents), transfer or other disposal:

 

  (a) of assets made by any Group Member in the ordinary course of day-to-day business of the disposing entity;

 

  (b) of any asset by a Group Member (the “Disposing Company”) to another Group Member (the “Acquiring Company”), provided that if:

 

  (i) the Disposing Company is:

 

  (A) an Obligor, the Acquiring Company is also an Obligor;

 

  (B) a WFOE Group Member, the Acquiring Company is also a WFOE Group Member; and

 

  (C) a VIE Group Member, the Acquiring Company is also a VIE Group Member;

 

  (ii) the Disposing Company had given Security over the asset, the Acquiring Company gives equivalent Security over that asset;

 

  (iii) the Disposing Company is a Guarantor, the Acquiring Company is a Guarantor guaranteeing at all times an amount no less than that guaranteed by the Disposing Company,

and provided further that:

 

  (iv) if the Disposing Company is a wholly owned Group Member and the Acquiring Company is a non-wholly owned Group Member, the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable of any other sale, lease, licence, transfer or other disposal made hereunder) does not exceed U.S.$2,000,000 (or its equivalent) in any Financial Year of the Borrower; and

 

  (v) neither the Disposing Company nor the Acquiring Company is the Borrower.

 

  (c) (Obligor-to-WFOE) of any asset by an Obligor (other than the Borrower) to a WFOE Group Member, provided that:

 

39


  (i) the higher of the market value and net consideration receivable (when aggregated with the higher of net consideration receivable and the market value of any other sale, lease, licence, transfer or other disposal made hereunder) does not exceed U.S.$3,500,000 (or its equivalent) in any Financial Year of the Borrower; and

 

  (ii) if the Obligor is a wholly owned Group Member and the WFOE Group Member is a non-wholly owned Group Member, the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable of any other sale, lease, licence, transfer or other disposal made hereunder) does not exceed U.S.$2,000,000 (or its equivalent) in any Financial Year of the Borrower;

 

  (d) (VIE-to-others) of any asset by a VIE Group Member to a Group Member (other than a VIE Group Member) for not more than fair market value;

 

  (e) (WFOE-to-VIE) of any asset by a WFOE Group Member to a VIE Group Member, provided that:

 

  (i) the proposed sale, lease, licence, transfer or other disposal does not relate to:

 

  (A) any Equity Interests owned by a WFOE Group Member (whether directly or indirectly and whether legally or beneficially) as of the Closing Date; or

 

  (B) any Intellectual Property owned by a WFOE Group Member (whether directly or indirectly and whether legally or beneficially) as of the Closing Date;

 

  (ii) the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable of any other sale, lease, licence, transfer or other disposal made hereunder) does not exceed U.S.$10,000,000 (or its equivalent) during the term of this Agreement; and

 

  (iii) if the WFOE Group Member is a wholly owned Group Member and the VIE Group Member is a non-wholly owned Group Member, the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable of any other sale, lease, licence, transfer or other disposal made hereunder) does not exceed U.S.$2,000,000 (or its equivalent) in any Financial Year of the Borrower;

 

  (f) of assets (other than shares, businesses, Real Property or Intellectual Property) in exchange for other assets (other than cash or Cash Equivalent Investments) comparable or superior as to type, value and quality;

 

  (g) of obsolete or redundant assets for consideration (if any) in cash;

 

  (h) of Existing Investments for cash for fair market value;

 

  (i) of Cash Equivalent Investments for cash or in exchange for other Cash Equivalent Investments (in each case at par or for a greater value);

 

  (j) constituted by a licence of intellectual property rights permitted by Clause 20.25 (Intellectual Property) or a termination of any licence of intellectual property rights no longer required for the Group’s business;

 

40


  (k) permitted by Clause 23.8 (Joint Ventures);

 

  (l) arising as a result of any Permitted Security;

 

  (m) constituted by a lease, sublease or licence (or a surrender of any lease, sublease or licence) of Real Property not required for the ordinary course of business of any Group Member and not constituting a sale and leaseback or other Quasi-Security;

 

  (n) of cash not otherwise prohibited under the Finance Documents;

 

  (o) of assets in order to comply with an order of any Governmental Authority or any applicable law or regulation (or any asset which is seized, expropriated or acquired by compulsory purchase by or by the order of any Governmental Authority), provided that such Disposal does not result from any material default or breach by any Group Member and does not materially impair the day to day business operations of the Group (taken as a whole); or

 

  (p) made by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed in writing to the Original Mandated Lead Arrangers) or (B) such agreement was entered into on or after the date of the Commitment Letter and such acquisition does not require the consent of the Parent under the Merger Agreement,

 

  (q) of assets (other than Major Intellectual Property and other than to a VIE Group Member) not permitted by the preceding paragraphs for cash where the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed U.S.$10,000,000 (or its equivalent in other currencies) during the term of this Agreement;

but notwithstanding the foregoing, excluding in each case any sale, lease, licence, transfer or other disposal:

 

  (i) where a Group Member (which is a wholly owned Group Member as of the Closing Date) would become a non-wholly owned Group Member; or

 

  (ii) of:

 

  (A) any Major Intellectual Property owned by a Group Member (whether directly or indirectly and whether legally or beneficially) as of the Closing Date; or

 

  (B) any rights and/or obligations under any VIE Contract and/or any Existing Revenue Sharing Agreement relating to Major Intellectual Property, in each case, to which a Group Member is a party as of the Closing Date (the “Existing Rights and Obligations”), unless:

 

  1. such transfer or other disposal of Existing Rights and Obligations is (x) by a wholly owned WFOE Group Member to another wholly owned WFOE Group Member or (y) by a non-wholly owned WFOE Group Member to a wholly owned WFOE Group Member; and

 

41


  2. such transfer or other disposal of Existing Rights and Obligations does not (x) have an adverse impact on the ability of the Onshore Group Members (taken as a whole) to make Onshore Distributions and (y) adversely affect the cashflows of Onshore Group Members (taken as a whole) and (z) materially and adversely affect the timing of Onshore Distributions, in each case measured against what the ability, cashflows and timing would be if the proposed transfer or other disposal is not made; and

 

  3. the Existing Rights and Obligations, if owned and/or held by and/or in favour of a WFOE Group Member which is subject to a Share Charge (WOFE), are transferred and/or disposed to another WFOE Group Member which is subject to a Share Charge (WOFE),

save that a sale, lease, licence, transfer or other disposal of the assets referred to in paragraphs (ii)(A) and (ii)(B) above may be made with the consent of Majority Lenders.

Permitted Distribution” means the making of a lawful Distribution subject to, in each case, the Intercreditor Agreement (and in each case excluding any payment by the VIE Entity to its shareholders):

 

  (a) to the Borrower or any of its Subsidiaries provided that the amount of any Distribution paid to minority shareholders does not exceed their proportionate share of Equity Interests in the Group Member making such Distribution;

 

  (b) to fund the administrative costs, Taxes, professional fees, regulatory costs and similar costs and expenses (including payments by way of remuneration to directors and employees) incurred (or reasonably expected to be incurred) or paid by the Parent or any direct or indirect Holding Company of Parent to register and maintain their corporate existence, maintain their corporate substance or otherwise and act as a Holding Company, provided that the aggregate amount of all such amounts does not, in any Financial Year, exceed U.S.$7,500,000 (or its equivalent), to the extent such amounts may be funded from Freely Available Cash pursuant to the Payment Waterfall;

 

  (c) to fund any payment expressly contemplated by the Structure Memorandum;

 

  (d) funded out of Qualifying Flotation Proceeds that the Borrower is not required to prepay under paragraph (c) of Clause 8.1 (Exit and Flotation) and provided that no Default in respect of Clause 24.1 (Non-payment) or Event of Default has occurred and is continuing or would arise as a result of the payment being made and, on the Quarter Date falling immediately prior to the date that payment is to be made, the Adjusted Leverage as shown in a Compliance Certificate as at that Quarter Date received by the Agent is less than or equal to 1.0:1 (adjusted on a pro forma basis to take into account any prepayment under paragraph (c) of Clause 8.1 (Exit and Flotation) relating to such Flotation and the proposed Permitted Distribution funded out of the Qualifying Flotation Proceeds of such Flotation and calculated as if, immediately prior to the end of that 12 Month period over which that Adjusted Leverage is being tested, the relevant amount of Qualifying Flotation Proceeds had been applied in prepayment, the proposed Permitted Distribution funded out of the Qualifying Flotation Proceeds of such Flotation had been made and any remainder of the Qualifying Flotation Proceeds is not taken into account);

 

42


  (e) a Distribution to fund any Permitted Management Transaction;

 

  (f) a Distribution to fund a payment to the Vendor Note Lender in respect of any principal or interest in respect of the Vendor Note, provided that the Distribution, if in respect of principal, is funded from cash held in the Offshore VLN Account in accordance with Clause 23.46 (Onshore VLN Accounts and Offshore VLN Account) and Clause 23.45 (Payment Waterfall), no Default in respect of Clause 24.1 (Non-payment) or Event of Default has occurred and is continuing or would arise as a result of the payment being made, the requirements of Clause 23.43 (DSRA) are and would be, pro forma for the payment and retested as of the date of proposed payment, complied with;

 

  (g) a Distribution by the Borrower to the Parent provided that the Distribution is:

 

  (i) funded from Retained Excess Cashflow;

 

  (ii) made when no Default in respect of Clause 24.1 (Non-payment) or Event of Default is continuing or would occur immediately after the making of that Distribution; and

 

  (iii) not in breach of the Intercreditor Agreement, and the Adjusted Leverage, as shown in a Compliance Certificate received by the Agent as at the Quarter Date falling immediately prior to the date that payment is to be made, is less than or equal to 1.0:1 (adjusted on a pro forma basis as if the relevant payment had been made immediately prior to the end of that 12 Month period over which that Adjusted Leverage is being tested);

 

  (h) to fund any payment set out in the Funds Flow Statement on or prior to the Closing Date which is specified as being funded out of the cash of the Target Group by way of dividends, or

 

  (i) to fund any payment by the VIE Entity to implement the VIE Part 1 Restructuring or, up to the amount of any new capital contribution to the VIE Entity (which was not funded by a Group Member), the VIE Part 2 Restructuring.

Permitted Financial Indebtedness” means Financial Indebtedness:

 

  (a) arising under any of the Transaction Documents or subordinated obligations subject to the terms of the Intercreditor Agreement;

 

  (b) (other than by a VIE Group Member) arising under a foreign exchange transaction for spot or forward delivery entered into in connection with protection against fluctuation in currency rates where that foreign exchange exposure arises in the ordinary course of business, but not a foreign exchange transaction for investment or speculative purposes;

 

  (c) arising under a Permitted Loan, a Permitted Guarantee or a Permitted Hedging Transaction;

 

  (d) of any person acquired by a Group Member after the Closing Date which is incurred under arrangements in existence at the date of acquisition, but not incurred or increased (other than pursuant to the accrual of interest) or having its maturity date extended in contemplation of, or since, that acquisition, and outstanding only for a period of three months following the date of acquisition;

 

43


  (e) under finance or capital leases of vehicles, plant, equipment or computers by a Group Member (other than a VIE Group Member), provided that the aggregate capital value of all such items so leased under outstanding leases by Group Members does not exceed U.S.$2,500,000 (or its equivalent in other currencies) at any time;

 

  (f) (other than by a VIE Group Member) New Shareholder Injections by way of debt;

 

  (g) raised by the issue of redeemable Equity Interests which are either:

 

  (i) held by another Group Member which may only be an Obligor if such Equity Interests are issued by an Obligor; or

 

  (ii) issued by the Parent so long as such issue does not result in a Change of Control and are not redeemable at the option of their holder until after the Termination Date;

 

  (h) arising in connection with any vendor financing, deferred consideration, payment, guarantee or any similar arrangements in connection with any Permitted Acquisition or Permitted Joint Venture, provided that such arrangement is not entered into for the purpose of raising Financial Indebtedness and the deferral is for less than 150 days;

 

  (i) debit balances of Onshore Group Members at banks or other financial institutions arising in the ordinary course of business and not exceeding U.S.$5,000,000 (or its equivalent) in aggregate for all Onshore Group Members at any time; or

 

  (j) incurred by a Group Member which is not permitted by the preceding paragraphs and not owed to a Group Member and the outstanding principal amount of which does not exceed U.S.$10,000,000 (or its equivalent in other currencies) in aggregate for the Group Members at any time.

Permitted Guarantee” means:

 

  (a) any guarantee arising under any of the Finance Documents;

 

  (b) the endorsement of negotiable instruments in the ordinary course of day-to-day business;

 

  (c) any performance or similar bond guaranteeing performance by a Group Member under any contract entered into in the ordinary course of day-to-day business;

 

  (d) a guarantee by a Group Member (the “Guarantor Company”) in respect of obligations or Financial Indebtedness of another Group Member (the “Guaranteed Company”), but provided that:

 

  (i) if the Guarantor Company is:

 

  (A) an Obligor, the Guaranteed Company is an Obligor;

 

  (B) a WFOE Group Member, the Guaranteed Company is a WFOE Group Member; and

 

  (C)  (a VIE Group Member, the Guaranteed Company is a VIE Group Member,

and provided further that:

 

44


  (ii) if the Guarantor is a wholly-owned Group Member and Guaranteed Company is a non-wholly owned Group Member, the guarantee (when aggregated with the amount of all such guarantees given by a wholly owned Group Member) does not exceed U.S.$2,000,000 (or its equivalent) at any time; and

 

  (iii) the Guarantor Company is not the Borrower;

 

  (e) any guarantee made by a VIE Group Member in respect of obligations or Financial Indebtedness of another Group Member (to the extent that a Permitted Loan (in an amount equal to the maximum actual or contingent liability under such a guarantee) could have been made by that VIE Group Member to that other Group Member);

 

  (f) any guarantee made by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed to the Original Mandated Lead Arrangers in writing) or (B) such agreement was entered into on or after the date of the Commitment Letter and such guarantee does not require the consent of the Parent under the Merger Agreement;

 

  (g) any guarantee of a Joint Venture to the extent permitted by Clause 23.8 (Joint Ventures);

 

  (h) any guarantee permitted under Clause 23.20 (Financial Indebtedness);

 

  (i) any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph (c) of the definition of “Permitted Security”;

 

  (j) any indemnity given in the ordinary course of the documentation of an acquisition or disposal transaction which is a Permitted Acquisition or Permitted Disposal which indemnity is in a customary form and subject to customary limitations;

 

  (k) any guarantee given by an Obligor in respect of obligations or Financial Indebtedness of a WFOE Group Member, provided that the maximum actual or contingent liability under such guarantee (when aggregated with (A) the maximum actual or contingent liability of any other guarantee given under this paragraph (k) and (B) the amount of any loans or credit made by an Obligor under paragraph (e) of the definition of “Permitted Loan”) does not, at any time, exceed U.S.$2,000,000;

 

  (l) any guarantee given by a Group Member that is not an Obligor in respect of obligations or Financial Indebtedness of an Obligor, provided that Group Member which is not an Obligor first accedes to the Intercreditor Agreement; or

 

  (m) any guarantee not permitted by the preceding paragraphs and not given to or for the benefit of a VIE Group Member, where the aggregate principal liability (whether actual or contingent) of Group Members under all such guarantees, when aggregated with the aggregate outstanding principal amount of any loans or credit made under paragraph (l) of the definition of “Permitted Loan”, does not exceed U.S.$10,000,000 (or its equivalent in other currencies) in aggregate at any time, but in any event excluding (A) any guarantee given by a wholly owned Group Member in respect of obligations or Financial Indebtedness of a non-wholly owned Group Member or (B) any guarantee given by a Group Member (other than a VIE Group Member) in respect of obligations or Financial Indebtedness of a VIE Group Member or (C) any guarantee given by a Group Member in respect of obligations or Financial Indebtedness of any shareholder of the VIE Entity.

 

45


Permitted Hedging Transaction” means:

 

  (a) any derivative transaction required or permitted by Clause 23.30 (Compliance with Hedging Letter) and documented by a Hedging Agreement and any replacement or extension permitted under the Intercreditor Agreement;

 

  (b) any spot and forward delivery foreign exchange contracts entered into in the ordinary course of day-to-day business of a Group Member (other than by a VIE Group Member) or as required or specifically contemplated under any Finance Documents, and (in either case) not for speculative purposes; or

 

  (c) any other Treasury Transaction entered into for the hedging of actual or projected real exposures arising in the ordinary course of business activities of a Group Member (other than by a VIE Group Member) and (in each case) not for speculative purposes and not in connection with any Financial Indebtedness.

Permitted Joint Venture” means any investment (other than by the Borrower) in any Joint Venture:

 

  (a) where:

 

  (i) the Joint Venture is incorporated, or established, and carries on its principal business, in any country or territory which is not a Sanctioned Country;

 

  (ii) the Joint Venture is engaged in a business substantially the same as or complementary to that carried on by the Group;

 

  (iii) in any Financial Year of the Borrower, the Acquisition/Investment Expenditure constituted by the aggregate (the “Joint Venture Investment”) of:

 

  (A) all amounts subscribed for Equity Interests in, lent to, or otherwise invested in all such Joint Ventures by any Group Member; plus

 

  (B) the contingent liabilities of any Group Member under any guarantee given in respect of the liabilities of any such Joint Venture; plus

 

  (C) the market value of any assets transferred by any Group Member to any such Joint Venture,

 

       when aggregated with the amount of any other Acquisition/Investment Expenditure in that Financial Year, does not exceed the Acquisition/Investment Basket;

 

  (iv) no Event of Default is continuing on the date of such investment or would occur as a result of such investment; and

 

  (v) the documents evidencing the terms of the Joint Venture do not commit any Group Member to fund obligations in excess of the amount permitted under paragraph (iii) above; or

 

  (b) made by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed to the Original Mandated Lead Arrangers) or (B) such agreement was entered into on or after the date of the Commitment Letter and such investment does not require the consent of the Parent under the Merger Agreement.

 

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Permitted Loan” means:

 

  (a) any trade credit extended by any Group Member to its customers on normal commercial terms and in the ordinary course of business;

 

  (b) Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, “Permitted Financial Indebtedness” (except under paragraph (e) of that definition);

 

  (c) a loan or credit made to a Joint Venture to the extent permitted under Clause 23.8 (Joint Ventures);

 

  (d) a loan or credit by a Group Member (the “Creditor Company”) to another Group Member (the “Debtor Company”), but provided that:

 

  (i) if the Creditor Company is:

 

  (A) an Obligor, the Debtor Company is an Obligor;

 

  (B) a WFOE Group Member, the Debtor Company is a WFOE Group Member; and

 

  (C) a VIE Group Member, the Debtor Company is a Group Member,

and provided further that:

 

  (ii) if the Creditor Company is a wholly owned Group Member and the Debtor Company is a non-wholly owned Group Member, the outstanding principal amount of the loan (when aggregated with the outstanding principal amount of all such loans made by wholly owned Group Members) does not exceed U.S.$2,000,000 (or its equivalent) at any time; and

 

  (iii) the Creditor Company is not the Borrower;

 

  (e) a loan or credit by an Obligor (other than the Borrower) to a WFOE Group Member, provided that:

 

  (i) the outstanding principal amount of the loan (when aggregated with (A) the outstanding principal amount of all such loans made by Obligors and (B) the maximum actual or contingent liability of any guarantee given by Obligors under paragraph (k) of the definition of “Permitted Guarantee”) does not exceed U.S.$2,000,000 (or its equivalent) at any time; and

 

  (ii) if the Obligor is a wholly owned Group Member and the WFOE Group Member is a non-wholly owned Group Member, the outstanding principal amount of the loan (when aggregated with the aggregate outstanding principal amount of all such loans made to such WFOE Group Members) does not exceed U.S.$2,000,000 (or its equivalent) at any time;

 

  (f) any Parent Loan;

 

47


  (g) a loan made by the Borrower to the Parent or by the Parent to Holdco to the extent that the amount lent would have been a Permitted Distribution if distributed by way of dividend;

 

  (h) any deferred consideration in relation to Permitted Disposals made on arm’s length terms and where the amount of such deferred consideration does not exceed 20 per cent. of the purchase price;

 

  (i) a loan or credit made by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed to the Original Mandated Lead Arrangers in writing) or (B) such agreement was entered into on or after the date of the Commitment Letter and such loan does not require the consent of the Parent under the Merger Agreement;

 

  (j) a loan or credit falling within paragraph (a) or (b) of the definition of “Permitted Management Transaction”;

 

  (k) a loan or credit constituted by a cash credit balance at a bank or other financial institution; or

 

  (l) any loan or credit not permitted by the preceding paragraphs (other than a loan or credit made by a Group Member to another Group Member) so long as the aggregate outstanding principal amount of the Financial Indebtedness under any such loans and/or credits, when aggregated with the aggregate principal liability (whether actual or contingent) of guarantees given under paragraph (m) of the definition of “Permitted Guarantee”, does not exceed U.S.$10,000,000 (or its equivalent in other currencies) at any time,

but in any event excluding any loan made by a Group Member to any shareholder of the VIE Entity.

Permitted Management Transaction” means (in each case excluding any loan or payment made by the VIE Entity to its shareholders):

 

  (a) a loan made by a Group Member to an employee or director of any Group Member so long as the outstanding principal amount of that loan does not exceed U.S.$2,000,000 (or its equivalent in other currencies) in the case of any single loan and (when aggregated with the aggregate outstanding principal amount of all loans and payments made under paragraphs (b) and (c) below) U.S.$7,500,000 (or its equivalent in other currencies) in aggregate at any time and in each case provided that no Event of Default is continuing or would result from making the relevant loan;

 

  (b) a loan from the Borrower to an employee share option scheme to fund the purchase of any of the management equity (together with the purchase or repayment of any related loans) of a director or similar officer who has ceased employment with a Group Member provided that such loan will be repaid when the relevant director or similar officer is replaced by a successor and so long as the aggregate outstanding principal amount of all such loans, when aggregated with the amount of all loans and payments made under paragraphs (a) and (c)of this definition, does not exceed U.S.$7,500,000 (or its equivalent in other currencies) at any time;

 

  (c) (A) a payment by a Group Member to a director or similar officer of any Group Member following the termination of their directorship or employment provided such payment is required to be paid by a Group Member under the terms of the relevant director’s or officer’s service contract and so long as the aggregate outstanding principal amount of all such loans, when aggregated with the aggregate outstanding principal amount of all loans and payments made under paragraphs (a) and (b) above, does not exceed U.S.$7,500,000 (or its equivalent in other currencies) at any time or (B) a payment as contemplated under the Rollover Incentive Program as defined in the Shareholder Terms; or

 

48


  (d) an issue of shares by the Parent to management or employees pursuant to the New Management Incentive Program or the New ESOP Program, each as defined in the Shareholder Terms, or to any other share incentive scheme previously approved by the Majority Lenders.

Permitted Offshore Expenses” means, without double-counting, (A) costs, fees and expenses as described in paragraph (b) of “Permitted Distribution” whether incurred by any Offshore Group Member or permitted to be paid to the Parent or any Holding Company of the Parent pursuant to paragraph (b) of Permitted Distribution; (B) any other expenditure incurred by an Offshore Group Member which, in accordance with its Accounting Principles, is treated as operating expenditure of the Offshore Group Members; and (C) any commitments as at the date of the Commitment Letter of an Offshore Group Member in respect of an Existing Investment.

Permitted Sanction Action” means an action in relation to any Sanctions imposed, administered or enforced from time to time by a Sanctioning Authority in relation to such action, which is licenced or otherwise authorised by that Sanctioning Authority, and provided that such action would not cause any Finance Party or member of the Group to be in breach of any Sanctions.

Permitted Security” means:

 

  (a) any Transaction Security;

 

  (b) any lien arising by operation of law and in the ordinary course of day-to-day business and not as a result of any default or omission by any Group Member;

 

  (c) any netting or set-off arrangement entered into by any Group Member in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of Group Members but only so long as (i) such arrangement does not permit credit balances of Obligors to be netted or set off against debit balances of Group Members which are not Obligors and (ii) such arrangement does not give rise to other Security over the assets of Obligors in support of liabilities of Group Members which are not Obligors except, in the case of (i) and (ii) above, to the extent such netting, set-off or Security relates to, or is granted in support of, a loan permitted pursuant to paragraph (e) of the definition of “Permitted Loan”;

 

  (d) any payment or close out netting or set-off arrangement pursuant to any Treasury Transaction or foreign exchange transaction entered into by a Group Member (that is not a VIE Group Member) which constitutes Permitted Financial Indebtedness, excluding any Security or Quasi-Security under a credit support arrangement;

 

  (e) any Security or Quasi-Security over or affecting any asset acquired by a Group Member after the Closing Date if:

 

49


  (i) the Security or Quasi-Security was not created in contemplation of the acquisition of that asset by a Group Member;

 

  (ii) the principal amount secured has not been increased (other than by capitalised interest) in contemplation of or since the acquisition of that asset by a Group Member; and

 

  (iii) the Security or Quasi-Security is removed or discharged within three months of the date of acquisition of such asset;

 

  (f) any Security or Quasi-Security over or affecting any asset of any company which becomes a Group Member after the Closing Date, where the Security or Quasi-Security is created prior to the date on which that company becomes a Group Member if:

 

  (i) the Security or Quasi-Security was not created in contemplation of the acquisition of that company;

 

  (ii) the principal amount secured has not increased (other than by capitalised interest) in contemplation of or since the acquisition of that company; and

 

  (iii) the Security or Quasi-Security is removed or discharged within three months of that company becoming a Group Member;

 

  (g) any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a Group Member in the ordinary course of day-to-day business and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any Group Member;

 

  (h) any Quasi-Security arising as a result of a disposal which is a Permitted Disposal;

 

  (i) any Security or Quasi-Security arising as a consequence of any finance or capital lease permitted pursuant to paragraph (e) of the definition of “Permitted Financial Indebtedness”;

 

  (j) any Security or Quasi-Security constituted by rental deposits arising in the ordinary course of day-to-day business in respect of any property leased or licensed by a Group Member on arm’s length terms;

 

  (k) any Security or Quasi-Security constituted by any deposit or pledge of cash by any Onshore Group Member (in the ordinary course of day-to-day business and on arm’s length terms) to secure the performance of bids, trade contracts, performance bonds and other obligations of a similar nature incurred by such Onshore Group Member;

 

  (l) any Security or Quasi-Security over bank accounts (other than the bank accounts which are, or are expressed to be, subject to the Transaction Security) arising under applicable law or granted as part of ‘the applicable bank’s or other financial institution’s standard terms and conditions;

 

  (m) any Security or Quasi-Security over Equity Interests in any Joint Venture to secure obligations of such Joint Venture or obligations to holders of Equity Interests in that Joint Venture and not in connection with the incurrence of Financial Indebtedness;

 

50


  (n) any Security or Quasi-Security arising as a result of legal proceedings being contested in good faith and which is discharged within 90 days of such Security or Quasi-Security first arising;

 

  (o) any Security or Quasi-Security arising by operation of law in respect of Taxes (i) not yet due or payable or (ii) being contested in good faith with adequate reserves being maintained therefor;

 

  (p) any Security or Quasi-Security arising in respect of any Equity Interest in any VIE Group Member pursuant to the VIE Contract relating to such VIE Group Member, provided that such Security or Quasi-Security (i) is granted in favour of any member of the Group (that is not a VIE Group Member) or (ii) constitutes any right of first refusal granted by the holder of such Equity Interest in favour of another shareholder of such VIE Group Member on arm’s length terms in respect of the acquisition of such Equity Interest by such latter-mentioned shareholder upon any transfer of such Equity Interest by such first-mentioned holder; or

 

  (q) any Security, securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of Security given by any Group Member other than any permitted under the preceding paragraphs) does not exceed U.S.$5,000,000 (or its equivalent in other currencies).

Permitted Share Issue” means an issue of:

 

  (a) ordinary shares by the Borrower to the Parent, paid for in full in cash upon issue and which by their terms are not redeemable and where the newly-issued shares also become subject to the Transaction Security on the same terms;

 

  (b) Equity Interests by a Group Member (other than the Borrower or the VIE Entity except pursuant to the VIE Restructuring) to any other person, provided that:

 

  (i) (if the existing Equity Interests of the Group Member are the subject of the Transaction Security) the newly-issued Equity Interests also become subject to the Transaction Security on the same terms;

 

  (ii) (in the case that the Group Member is a party to a VIE Contract) the Group Member remains under the Control of another Group Member;

 

  (iii) (if the Group Member is a wholly-owned Group Member as of the Closing Date) it remains a wholly-owned Group Member; and

 

  (iv) the value of Equity Interests issued to (x) to any new equity holder (that is not a Group Member) or (y) any existing equity holder (that is not a Group Member) in excess of its proportionate share of existing Equity Interests in the issuing Group Member shall not exceed, in the aggregate, U.S.$3,500,000 (or its equivalent) in any Financial Year,

and provided further that, for the avoidance of doubt, no Equity Interests may be issued by a WFOE Group Member to a VIE Group Member hereunder;

 

51


  (c) subject to paragraphs (b)(i), (ii) and (iii) above, Equity Interests issued for the purpose of incentivizing management, employees or developers under a Permitted Management Transaction;

 

  (d) Equity Interests by a Target Group Member pursuant to any agreement existing at the Closing Date where (A) such agreement existed at the date of the Commitment Letter (to the extent disclosed to the Original Mandated Lead Arrangers in writing) or (B) such agreement was entered into on or after the date of the Commitment Letter and such issue or grant does not require the consent of the Parent under the Merger Agreement; or

 

  (e) Equity Interests, which issue is made with the prior written consent or approval of the Majority Lenders.

Permitted Transaction” means:

 

  (a) any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Security or Quasi-Security given, or other transaction arising, under the Finance Documents;

 

  (b) an amalgamation, demerger, merger, consolidation or corporate reconstruction on a solvent basis of a Group Member which is not an Obligor (and not involving the Parent or the Borrower) where all of the business and assets of that Group Member remain within and are distributed to other Group Members (other than to a VIE Group Member unless from another VIE Group Member);

 

  (c) any transaction (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of Security or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of day-to-day business on arm’s length terms;

 

  (d) any payments or other transactions expressly contemplated under the Structure Memorandum, Merger Documents and the Shareholders Documents in connection with the Merger;

 

  (e) any liquidation or dissolution on a solvent basis of (i) Eddia International Group Limited, Shanghai Juxin Network Technology Co., Ltd., Shanghai Juhe Network Technology Co., Ltd., Shanghai Juquan Network Technology Co., Ltd., Zhuhai Zhengtu Information Technology Co., Ltd., Shanghai Juyan Network Technology Co., Ltd. and Beijing Giant Zhengtu Network Technology Co., Ltd. or (ii) a Group Member (A) the earnings before tax, depreciation and amortisation (calculated on the same basis as EBITDA (as defined in Clause 22.1 (Financial definitions)) or (B) the revenue of which is equal to or less than zero for the 12 month period immediately prior to the proposed liquidation or dissolution provided that, in each case, all of the business and assets of that person remain within and are distributed to other Group Members (or if an Obligor, to another Obligor) in proportion to such Group Members’ (or Obligor’s) Equity Interest in that person;

 

  (f) where necessary to comply with any tax or other legislation, any conversion of any loans owed by any Onshore Group Member (that is not a VIE Group Member) to another Onshore Group Member (that is not a VIE Group Member) into distributable reserves of the first-mentioned Onshore Group Member, provided that such conversion shall not result in any reduction of the Borrower’s interest (direct or indirect) in any Equity Interests in any of its Subsidiaries (expressed as a percentage of the aggregate Equity Interests in such Subsidiary); or

 

52


  (g) the VIE Restructuring.

PRC” means the People’s Republic of China (which, for the purposes of this Agreement, does not include the Special Administrative Region of Hong Kong, the Special Administrative Region of Macau or Taiwan).

PRC Account Control Agreement” means, in respect of an Onshore Group Member and a PRC Designated Account maintained by such Onshore Group Member, an account control agreement to be entered into between such Onshore Group Member, the bank or financial institution with which such PRC Designated Account is held and the Agent, in form and substance reasonably satisfactory to the Agent, which shall in any event take effect from (and subject to the occurrence of) the Closing Date and shall terminate upon the repayment in full of all amounts due, arising or payable under the Finance Documents.

PRC Designated Account” means any Onshore VLN Account, any Onshore Mandatory Prepayment Account or any other account in the PRC designated as such by the Borrower and the Agent.

Prepayment Shortfall Amount” means, for any Calculation Period, the amount (if any) by which the Required Distribution Amount (plus any Freely Available Cash taken into account in the calculation of that amount) for that Calculation Period is insufficient to fund the full amount of any Required Prepayment Amount for that Calculation Period in accordance with the Payment Waterfall as a result of the application of paragraph (a)(ii) of Clause 23.44 (Required Distribution Amount).

Qualifying Flotation” has the meaning given to that term in Clause 8.1 (Exit and Flotation).

Qualifying Flotation Proceeds” has the meaning given to that term in Clause 8.1 (Exit and Flotation).

Quarter Date” means the last day of a Financial Quarter.

Quasi-Security” has the meaning given to that term in Clause 23.12 (Negative pledge).

Quotation Day” means:

 

  (a) in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days); and

 

  (b) in relation to any Interest Period the duration of which is selected by the Agent pursuant to Clause 10.3 (Default interest), such date as may be reasonably determined by the Agent.

Real Property” means:

 

  (a) any freehold, leasehold or immovable property; and

 

53


  (b) any buildings, fixtures, fittings, fixed plant or machinery from time to time situated on or forming part of that freehold, leasehold or immovable property.

Recapitalisation” means any return of capital, repayment of capital contribution or other redemption, repurchase, retirement or reduction of Equity Interests of Onshore Group Members.

Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

Recovery Claim” has the meaning given to it in Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow).

Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks in relation to LIBOR, as the rate at which the relevant Reference Bank could borrow funds in the London interbank market, in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.

Reference Banks” means, in relation to LIBOR, the principal London offices of BNP Paribas, Credit Suisse AG and Deutsche Bank AG or such other banks as may be appointed by the Agent in consultation with the Borrower.

Registrar of Companies” means the Registrar of Companies of the Cayman Islands.

Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

Relevant Interbank Market” means the London interbank market.

Relevant Jurisdiction” means, in relation to an Obligor or the Parent:

 

  (a) its Original Jurisdiction;

 

  (b) any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated; and

 

  (c) any jurisdiction where it conducts its business.

Relevant Period” has the meaning given to that term in Clause 22.1 (Financial definitions).

Reliance Parties” means the Agent, the Arranger, the Security Agent, each Hedge Counterparty, each Original Lender and each person which becomes a Lender as part of the primary Syndication of the Facility and no later than the syndication date.

Repayment Date” means each date set out in paragraph (a) of Clause 6.1 (Repayment of the Loan).

Repeating Representations” means each of the representations set out in Clause 20.2 (Status) to Clause 20.7 (Governing law and enforcement), Clause 20.11 (No default), Clause 20.13 (Original Financial Statements), Clause 20.20 (Ranking), Clause 20.22 (Good title to assets), Clause 20.23 (Legal and beneficial ownership), Clause 20.24 (Shares) and Clause 20.33 (Holding Companies).

 

54


Report Proceeds Letter” means any letter between any addressee of a Report, the Borrower and the Agent pursuant to which such addressee of a Report governing the right of the addressee of the Report and others to receive sums recovered as a result of any claim brought against the authors of the Reports.

Reports” means the Accountants’ Report, the Legal Due Diligence Report, the Market Report, the HR Report and the Structure Memorandum, in each case being capable of being disclosed by a Finance Party on a confidential and non-reliance basis (other than in respect of the Accountants’ Report and the Structure Memorandum which, for the avoidance of doubt, may be disclosed to the Reliance Parties on a reliance basis).

Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

Required Cash Sweep Amount” means, for any Calculation Period, any amount of Excess Cashflow for the Financial Year ending in the immediately preceding Calculation Period which is required to be applied in prepayment of the Loan pursuant to Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) including any amount which is required to be applied in prepayment pursuant to Clause 8.6 (Trapped Amount) (applying the Official FX Rate on the Required Distribution Calculation Date).

Required Distribution Amount” means, for any Calculation Period, the aggregate Onshore Distributions required to be made to an Offshore Group Member HK pursuant to paragraph (a) of Clause 23.44 (Required Distribution Amount) for that Calculation Period but, in respect of any payment of principal, only to the extent of any cash balance standing to the credit of the Onshore VLN Account).

Required Distribution Calculation Date” means, for any Calculation Period, the date falling five Business Days after receipt of the last Tax Certificate in respect of the First Tier WFOEs (excluding WFOE (Zhuhai)) for the Financial Year ending immediately prior to the commencement of that Calculation Period, but in any event no later than the Required Distribution Date.

Required Distribution Date” means, for any Calculation Period, 1 July of that Calculation Period.

Required Prepayment Amount” means, on any Required Distribution Calculation Date, any amount of Disposal Proceeds, Insurance Proceeds and Recovery Proceeds received by an Onshore Group Member and which, as at that date, is required to be applied in prepayment of the Loan pursuant to Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) including any amount which is required to be applied in prepayment pursuant to Clause 8.6 (Trapped Amount) (where applicable, applying the Official FX Rate on the Required Distribution Calculation Date).

Resignation Letter” means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).

Retained Excess Cashflow” has the meaning given to that term in Clause 22.1 (Financial definitions).

Retention Amount Release Date” means the date on which the share capital of WFOE (Zhuhai) in an amount not less than RMB223,000,000 may, as a matter of PRC law, be freely remitted to an Offshore Group Member.

 

55


Revenue Sharing Agreement” means an Existing Revenue Sharing Agreement or a Future Revenue Sharing Agreement.

SAFE” means the State Administration of Foreign Exchange of the PRC LOGO (including its successors), or its local branch.

SAFE Circular 75” means the Circular on Related Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Roundtrip Investment via Overseas Special Purpose Companies LOGO (Hui Fa [2005] No. 75), issued by SAFE on 21 October 2005, effective from 1 November 2005.

SAFE Rules” means SAFE Circular 75 and the Notice of the State Administration of Foreign Exchange on Issues concerning the Foreign Exchange Administration of Domestic Individuals’ Participation in Equity Incentive Plans of Overseas Listed Companies LOGO (Hui Fa [2012] No. 7) issued by SAFE on 15 February 2012, effective from 15 February 2012, and any implementation, successor rule or regulation which is effective from time to time relating thereto under PRC law.

SAIC” means the State Administration of Industry and Commerce of the PRC LOGO (including its successors), or its local counterpart.

Sanctioned Country” means Cuba, Burma (Myanmar), Iran, North Korea, Sudan and Syria and any other country or territory which is the subject of any countrywide or territory-wide Sanctions.

Sanctioning Authority” means:

 

  (a) the U.S. government or any U.S. agency (including OFAC, the U.S. State Department, the U.S. Department of Commerce or the U.S. Department of the Treasury);

 

  (b) the United Nations Security Council;

 

  (c) the E.U. (or any of its member states);

 

  (d) the U.K. government (including, without limitation, any of Her Majesty’s Treasury, the Foreign and Commonwealth Office and the U.K. Department for Business, Innovation & Skills);

 

  (e) the government of Hong Kong (including, without limitation, the Hong Kong Monetary Authority);

 

  (f) the government of Singapore (including without limitation, the Monetary Authority of Singapore); or

 

  (g) the State Secretariat for Economic Affairs of Switzerland or the Swiss Directorate of Public International Law,

 

  and/or any other body notified in writing by the Agent (acting on behalf of a Lender) to the Borrower from time to time.

 

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Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by a Sanctioning Authority.

Sanctions List” means any of the specifically designated nationals or designated persons or entities in relation to Sanctions issued by a Sanctioning Authority.

Sanctions Restricted Person” means any person or entity that is (i) listed on the Sanctions List, (ii) located in or incorporated under the laws of any Sanctioned Country, or (iii) otherwise a target of Sanctions.

SCAB” means the Shanghai Communication Administrative Bureau LOGO , a local office of the Ministry of Industry and Information Technology of the PRC LOGO .

Screen Rate” means, in relation to LIBOR, the London interbank offered rate administered by the ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.

Secured Obligations” has the meaning given to it in the Intercreditor Agreement.

Secured Parties” means each Finance Party from time to time Party to this Agreement, any Receiver or Delegate.

Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

Security Principles” means the principles set out in Schedule 12 (Security Principles).

Selection Notice” means a notice substantially in the form set out in Part II of Schedule 3 (Requests and Notices) given in accordance with Clause 11 (Interest Periods) in relation to the Facility.

Share Charge (Giant Interactive)” means the document dated on or about the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed charge or similar security interest over all Target Shares in favour of the Security Agent under the law of the Cayman Islands.

Share Charge (MergeCo)” means the document dated on or about the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed charge or similar security interest over all Equity Interests of MergeCo in favour of the Security Agent under the law of the Cayman Islands.

Share Charge (WFOE)” means the document(s) dated on or after the date of this Agreement creating or expressing to create, or effecting, implementing or expressing to effect or implement, a first ranking fixed charge or similar security interest over all Equity Interests in each First Tier WFOE (other than WFOE (Zhuhai)) in favour of the Security Agent under the law of PRC.

 

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Shareholder Guarantees” means (i) the guarantee issued or to be issued by The Baring Asia Private Equity Fund V, L.P. in favour of the Founder, Union Sky and Hony SPV, in connection with the Interim Investors Agreement and (ii) the guarantee issued or to be issued by Hony Capital Fund V, L.P. in favour of the Founder, Union Sky and Baring SPV in connection with the Interim Investors Agreement.

Shareholder Limited Guarantees” means the limited guarantees issued or to be issued by Union Sky Holding Group Limited, The Baring Asia Private Equity Fund V, L.P., CDH WM Giant Fund, L.P. and Hony Capital Fund V, L.P. in favour of the Target, guaranteeing certain obligations under the Merger Documents.

Shareholder Terms” means the document entitled “Shareholders Agreement Term Sheet” in the agreed form.

Shareholders Agreement” means the shareholders agreement entered into or to be entered into between, among others, the Founder, Union Sky, Baring SPV, CDH SPV and Hony SPV reflecting the shareholder arrangements in respect of the interests held by each of them in Holdco and substantially reflecting the Shareholder Terms (with any differences thereto not being differences which could be reasonably expected to materially and adversely affect the interests of the Lenders).

Shareholders Documents” means the Shareholders Agreement, the Support Agreement, the Interim Investors Agreement, the Shareholder Guarantees, the Shareholder Limited Guarantees and the Equity Commitment Letters.

SMACRF&T” means the Shanghai Municipal Administration of Culture, Radio, Film & TV LOGO .

Specified Time” means a time determined in accordance with Schedule 10 (Timetables).

Sponsor Affiliate” means a Sponsor, each of their Affiliates, any trust of which a Sponsor or any of their Affiliates is a trustee, any partnership of which a Sponsor or any of their Affiliates is a partner and any trust, fund or other entity which is managed by, or is under the control of, a Sponsor or any of its Affiliates provided that:

 

  (a) any such trust, fund or other entity which has been established for at least six months solely for the purpose of making, purchasing or investing in loans or debt securities and which is managed or controlled independently from all other trusts, funds or other entities managed or controlled by a Sponsor or any of their Affiliates which have been established for the primary or main purpose of investing in the share capital of companies; or

 

  (b) any banking arm, branch or Affiliate of such Sponsor which (i) has the Authorisation to engage in financial services and businesses (including lending and investment banking) and (ii) is separated by information barriers to that Sponsor,

shall not constitute a Sponsor Affiliate.

Sponsors” means:

 

  (c) the Founder; and

 

  (d) each of the Equity Investors,

 

  (e) and their or any subsequent successors or assigns or transferees.

 

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Structure Memorandum” means the structure paper entitled “High-level Tax analysis on the proposed deal structure, VIE restructuring plan and a disposal of investment” and dated 6 March 2014 describing the Group and the Merger and prepared by Ernst & Young Transactions Limited in the agreed form and addressed to, and/or capable of being relied upon by, the Reliance Parties.

Studio” means any entity in which a Group Member holds, directly or indirectly, any Equity Interests, and the principal role of which is to develop games and/or game-related products.

Subsidiary” means in relation to any company, corporation or entity (subject to paragraph (g) of Clause 1.2 (Construction)), a company, corporation or entity:

 

  (a) which is controlled, directly or indirectly, by the first mentioned company, corporation or entity;

 

  (b) more than half the issued share capital, registered capital or Equity Interest of which is beneficially owned, directly or indirectly by the first mentioned company, corporation or entity; or

 

  (c) which is a Subsidiary of another Subsidiary of the first mentioned company, corporation or entity,

and for this purpose, a company, corporation or entity shall be treated as being controlled by another if that other company, corporation or entity is:

 

  (i) able to direct its affairs and/or to control the majority of the composition of its board of directors or equivalent body; and/or

 

  (ii) able to (A) exercise effective Control over it or (B) consolidate its financial condition or results of operation in accordance with the Accounting Principles for the purposes of the consolidated financial statements,

whether pursuant to a VIE Structure or other contractual arrangements or otherwise.

Support Agreement” means the support agreement entered into or to be entered into between Union Sky, Vogel and Baring SPV and Holdco and the Parent, pursuant to which Union Sky and Baring SPV have agreed to cancel certain Target Shares held by such person for nil consideration in the Merger and subscribe for newly issued ordinary shares of Holdco immediately prior to the Closing pursuant to the terms of the applicable Shareholders Documents and Merger Documents.

Surplus Cash” means, for any Calculation Period, any Freely Available Cash which is available to be applied pursuant to paragraph (xi) of the Payment Waterfall for that Calculation Period.

Syndication” means co-underwriting and general syndication of the Facility.

Syndication Date” means the last day of the Syndication Period (as defined in the Commitment Letter).

Target” means Giant Interactive Group Inc. LOGO , an exempted company with limited liability incorporated under the laws of the Cayman Islands with registration number 171613 with registered office Offshore Incorporations (Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands and, as of the date of this Agreement, listed on the New York Stock Exchange.

 

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Target Group” means the Target and each of its Subsidiaries for the time being, including for the avoidance of doubt each VIE Group Member.

Target Shares” means all of the Equity Interests in the Target and all warrants and options in respect of the share capital of the Target.

Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

Tax Certificate” means, in relation to a First Tier WFOE, a tax clearance certificate issued in respect of that First Tier WFOE by the applicable local tax authority evidencing that all enterprise income taxes of that First Tier WFOE for a relevant Financial Year have been fully paid.

Termination Date” means the date which is 60 Months after the Utilisation Date, save that if such day is not a Business Day, it shall end on the preceding Business Day.

Third Party Disposal” has the meaning given to it in Clause 27.3 (Resignation of a Guarantor).

Total Commitments” means the aggregate of the Commitments, being U.S.$850,000,000 at the date of this Agreement.

Trade Instruments” means any performance bonds, advance payment bonds or documentary letters of credit issued in respect of the obligations of any Group Member arising in the ordinary course of trading of that Group Member.

Transaction Documents” means the Finance Documents, the Merger Documents, the VIE Contracts and the Constitutional Documents.

Transaction Security” means the Security created or expressed to be created in favour of the Security Agent pursuant to the Transaction Security Documents.

Transaction Security Documents” means each of the documents listed as being a Transaction Security Document in paragraph 3(a) of Part I of Schedule 2 (Conditions Precedent), and any document required to be delivered to the Agent under paragraph 12 of Part II of Schedule 2 (Conditions Precedent) and under Clause 23.51 (Conditions subsequent: hedging and security), together with any other document entered into by any Obligor or the Parent creating or expressed to create any Security over all or any part of its assets in respect of the obligations of any of the Obligors or the Parent under any of the Finance Documents.

Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

Transfer Date” means, in relation to an assignment or a transfer, the later of:

 

  (a) the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

 

  (b) the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.

 

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Trapped Amount” means any amount of Disposal Proceeds, Insurance Proceeds or Recovery Proceeds and/or any amount of Excess Cashflow that would otherwise be required to be applied in mandatory prepayment pursuant to Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) where:

 

  (a) applicable legal (including thin capitalisation, financial assistance and corporate benefit restrictions on upstreaming of cash and fiduciary and statutory duties of directors or other officers of the relevant Group Members) or contractual restrictions prevent the amount being prepaid (including by making the amount available to a member of the Group that can make such prepayment; or

 

  (b) prepaying the amount or making the amount available to a member of the Group for prepayment would result in the incurrence of material costs or expenses (including material tax or other liabilities, but excluding (x) any withholding taxes applicable as at the date of this Agreement (y) any reserve requirements and (z) any fees, costs and expenses payable to a bank in connection with any demand for return, refund or repayment of cash credited to an account) (where “material” for these purposes shall be defined as being an amount in excess of five per cent. of the amount required to be prepaid),

provided that, in the case of any contractual restriction referred to in paragraph (a) above, it was not entered into with the intention of limiting any prepayment which would otherwise be payable.

Treasury Transactions” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

U.K.” means the United Kingdom.

Union Sky” means Union Sky Holding Group Limited, a company with limited liability incorporated under the laws of the British Virgin Islands with registered number 1041862 with registered address at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.

Unpaid Sum” means any sum due and payable but unpaid by an Obligor or the Parent under the Finance Documents.

U.S.”, “United States of America” and “United States” means the United States of America, its territories, possessions and other areas subject to the jurisdiction of the United States of America.

US Tax Obligor” means an Obligor some or all of whose payments under the Finance Documents are from sources within the United States of America for United States federal income tax purposes.

U.S.A. Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 of the United States.

Utilisation” means the utilisation of the Facility.

Utilisation Date” means the date of the Utilisation, being the date on which the Loan is to be made.

Utilisation Request” means a notice substantially in the relevant form set out in Part I of Schedule 3 (Requests and Notices).

 

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Vendor Note” means the limited recourse loan or promissory note issued by the Vendor Note Issuer to the Vendor Note Lender on the Closing Date in a principal amount not exceeding the Vendor Note Amount, which is subordinated to the Secured Obligations pursuant to the terms of the Vendor Note Subordination Deed.

Vendor Note Amount” means U.S.$450,000,000.

Vendor Note Documents” means:

 

  (a) the Vendor Note; and

 

  (b) the Vendor Note Subordination Deed,

and any other document designated as such by the Borrower and the Agent.

Vendor Note Issuer” means the Target (upon completion of the Merger).

Vendor Note Lender” means Union Sky.

Vendor Note Maturity Date” means the Maturity Date under and as defined in the agreed form of the Vendor Note.

Vendor Note Subordination Deed” means the subordination deed dated on or after the date of this Agreement and made between the Vendor Note Lender, the Vendor Note Issuer and the Security Agent.

VIE Capital Decrease” means a reduction in the registered capital of the VIE Entity in an amount of RMB2,500,000 in respect of all of the Equity Interests held by the Minority Shareholders, as a result of which the Equity Interests of the VIE Entity will be 100 per cent. held by Lanlin, as contemplated by section 6.16 of the Company Disclosure Schedule.

VIE Capital Increase” means an increase in the registered capital of the VIE Entity by way of a capital contribution of RMB2,500,000 by Lanlin, as a result of which the Equity Interests of the VIE Entity will be approximately 80 per cent. held by Lanlin, as contemplated by section 6.16 of the Company Disclosure Schedule.

VIE Contract” means any arrangement, instrument or agreement that is part of any contractual arrangements enabling a Group Member or the Target Group to exercise effective Control over a VIE Group Member or consolidate the financial condition or results of operation of a VIE Group Member for the purposes of the consolidated financial statements of the Group or the Target Group, including (but not limited) to (on and from the date of their execution):

 

  (a) the Existing VIE Contracts (subject to any termination or amendment of such arrangement, instrument or agreement pursuant to the VIE Part 1 Contracts and/or the VIE Part 2 Contracts) and, if entered into, the VIE Equity Pledge (Lanlin 75%);

 

  (b) the VIE Part 1 Contracts (subject to any termination or amendment of such arrangement, instrument or agreement pursuant to the VIE Part 2 Contracts); and

 

  (c) the VIE Part 2 Contracts.

 

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VIE Entity” means Shanghai Giant Network Technology Co., Ltd. LOGO , a company incorporated under the laws of PRC with registered number 310104000301331 and registered office at Room 708, Building 29, 396 Guilin Road, Shanghai, China.

VIE Equity Pledge (Lanlin 75%)” means a pledge agreement to be entered into between Lanlin (as pledgor), WFOE (Zhengtu) (as pledgee) and the VIE Entity (as the company) pursuant to which, inter alia, Lanlin pledges at least 75 per cent. of the equity interests in the VIE Entity to WFOE (Zhengtu).

VIE Equity Pledge (Lanlin 80%)” means a pledge agreement to be entered into between Lanlin (as pledgor), WFOE (Zhengtu) (as pledgee) and the VIE Entity (as the company) pursuant to which, inter alia, Lanlin pledges approximately 80 per cent. of the equity interests in the VIE Entity to WFOE (Zhengtu).

VIE Equity Pledge (Lanlin 100%)” means a pledge agreement to be entered into between Lanlin (as pledgor), WFOE (Zhengtu) (as pledgee) and the VIE Entity (as the company) pursuant to which, inter alia, Lanlin pledges 100 per cent. of the equity interests in the VIE Entity to WFOE (Zhengtu).

VIE Equity Pledge (Part 2)” means one or more pledge agreements to be entered into between each holder of any Equity Interests in the VIE Entity (each as pledgor), WFOE (Zhengtu) (as pledgee) and the VIE Entity (as the company) pursuant to which, inter alia, each of the holders of Equity Interests in the VIE Entity pledges in aggregate 100 per cent. of the equity interests in the VIE Entity to WFOE (Zhengtu).

VIE Group” means:

 

  (a) the VIE Entity and each of its Subsidiaries for the time being; and

 

  (b) each entity that is the subject of a VIE Structure and each Subsidiary of any such entity.

VIE Group Member” means any member of the VIE Group.

VIE Part 1 Contracts” means the contracts listed in Part II of Schedule 16 (VIE Contracts).

VIE Part 1 Restructuring” means the restructuring of the equity capital holding of the VIE Entity to ensure that the equity interests of the VIE Entity are 100 per cent. legally and (subject to the interests of WFOE (Zhengtu) under the VIE Contracts) beneficially owned by Lanlin by way of:

 

  (a) the VIE Capital Increase, followed by the VIE Capital Decrease; or

 

  (b) if the VIE Capital Increase and/or the VIE Capital Decrease is not completed by the Closing Date, a transfer by the Minority Shareholders of all of their equity interests in the VIE Entity to Lanlin.

VIE Part 2 Contracts” means the contracts to be entered into to give effect to the VIE Part 2 Restructuring.

VIE Part 2 Restructuring” means the restructuring of the equity capital holding of the VIE Entity after the Closing Date, to give effect substantially to the reorganization contemplated by the rights set forth in the “Reorganization Undertaking” section of the Shareholder Terms.

VIE Restructuring” means the VIE Part 1 Restructuring and the VIE Part 2 Restructuring.

 

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VIE Structure” means any arrangement where an entity (that is established in the PRC and in respect of which the Borrower or the Target does not, directly or indirectly, hold or own a majority of its Equity Interests) and/or any or all of its shareholder(s) enter into contractual arrangements with any Group Member or the Target Group which enable such Group Member or the Target Group to exercise effective Control over such first-mentioned entity or consolidate the financial condition or results of operation of such first-mentioned entity in accordance with the Accounting Principles for the purposes of the consolidated financial statements of the Group or the Target Group.

Vogel” means Vogel Holding Group Limited, a company incorporated under the laws of the British Virgin Islands with registered number 1041825 and registered office at the British Virgin Islands with registered number 1041862 with registered address at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.

Voting Participation” means a Participation which includes a transfer of any voting rights, directly or indirectly, under, or in relation to, the Finance Documents (including, for the avoidance of doubt, arising as a result of being able to direct the way that another person exercises its voting rights).

WFOE Group Member” means each First Tier WFOE and each of its Subsidiaries for the time being (but excluding any VIE Group Member).

WFOE (Zhengduo)” means Shanghai Zhengduo Information Technology Co., Ltd. LOGO , a company incorporated under the laws of PRC with registered number 310000400601571 and registered office at Room 1006, 165 Caoxi Road, Shanghai China.

WFOE (Zhengtu)” means Shanghai Zhengtu Information Technology Co., Ltd. LOGO , a company incorporated under the laws of PRC with registered number 310000400481511 and registered office at 2/F., Building 29, 396 Guilin Road, Shanghai, China.

WFOE (Zhuhai)” means Zhuhai Zhengtu Information Technology Co., Ltd. LOGO , a company incorporated under the laws of PRC with registered number 440400400025907 and registered office at Unit 603I, 6/F., Main Building 10, First Technology Road, Harbour Avenue, Zhuhai, Guangdong, China.

White List” means the list set out in Schedule 18 (White List).

 

1.2 Construction

 

(a) Unless a contrary indication appears, a reference in this Agreement to:

 

  (i) the “Agent”, the “Arranger”, any “Finance Party”, any “Hedge Counterparty”, any “Lender”, any “Obligor”, any “Party”, any “Secured Party”, the “Security Agent” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents and, in the case of the Security Agent, any person for the time being appointed as Security Agent or Security Agents in accordance with the Finance Documents;

 

  (ii) a document in “agreed form” is a document which is previously agreed in writing by or on behalf of the Borrower and the Agent;

 

  (iii) assets” includes present and future properties, revenues and rights of every description;

 

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  (iv) a “certified copy” means a copy certified by a director of the Borrower as being true, accurate and complete copy of the original;

 

  (v) a “Finance Document” or a “Transaction Document” or a “VIE Contract” or a “Revenue Sharing Agreement” or any other agreement or instrument is a reference to that Finance Document, Transaction Document, VIE Contract or Revenue Sharing Agreement or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced and includes any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under that Finance Document, Transaction Document, VIE Contract or Revenue Sharing Agreement or other agreement or instrument;

 

  (vi) a “group of Lenders” includes all the Lenders (and/or any group of less than all of the Lenders);

 

  (vii) guarantee” means (other than in Clause 19 (Guarantee and indemnity)) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

 

  (viii) including” (or similar expressions) means including without limitation;

 

  (ix) indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

  (x) a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, Joint Venture, consortium, partnership or other entity (whether or not having separate legal personality);

 

  (xi) a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, with which compliance is customary) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

 

  (xii) a provision of law is a reference to that provision as amended or re-enacted;

 

  (xiii) a time of day is a reference to Hong Kong time.

 

(b) Any reference in this Agreement to the “Borrower” shall mean, on and from the Merger Effective Time, the Target as the surviving entity of the Merger.

 

(c) Section, Clause and Schedule headings are for ease of reference only.

 

(d) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

 

(e) A Default and an Event of Default is “continuing” if it has not been remedied or waived in writing.

 

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(f) The “equivalent” in any currency (the “first currency”) of any amount in another currency (the “second currency”) shall be construed as a reference to the amount in the first currency which could be purchased with that amount in the second currency at the Agent’s spot rate of exchange for the purchase of the first currency with the second currency at or about 11:00 a.m. on a particular day (or at or about such time and on such date as the Agent may from time to time reasonably determine to be appropriate in the circumstances), provided, that for purposes of any calculation under this Agreement requiring the conversion of RMB amounts into U.S.$, such conversion will be made at the officially published PBOC exchange rate for purchasing U.S.$.

 

(g) A VIE Group Member (to which any VIE Contract relates) shall be considered to be:

 

  (i) a Subsidiary of the Target and accordingly a member of the Target Group; and

 

  (ii) (with effect from the Merger Effective Time) a Subsidiary of the Borrower and accordingly a Group Member,

except that for the purposes of paragraphs (a) to (c) of Clause 22.2 (Financial condition), and Clause 22.4 (Equity cure) and any determination relating thereto (and any related financial definitions for the purposes of such determination), any determination of the Guarantor Threshold Requirement and the consolidated financial statements of the Group, whether any VIE Group Member constitutes a Subsidiary of the Borrower, a Group Member or a Subsidiary of a Group Member shall be determined in accordance with the Accounting Principles (as applied in the preparation of the Original Financial Statements).

 

1.3 Currency symbols and definitions

 

(a) Any reference in this Agreement to “U.S.$”, “USD” and “U.S. dollars” is to the lawful currency of the United States of America.

 

(b) Any reference in this Agreement to “RMB” is to the lawful currency of the PRC.

 

1.4 Currency fluctuations

 

(a) For the purpose of determining compliance with any basket amount, thresholds and other exceptions to the representations and warranties in Clause 20 (Representations), undertakings in Clause 23 (General undertakings) and Events of Default in Clause 24 (Events of Default) that are determined by reference to amounts in U.S. dollars, the equivalent amount in U.S. dollars shall be calculated as at the date on which the applicable Obligor or Group Member incurs, commits to or makes the applicable Financial Indebtedness, acquisition, disposal, investment or other action.

 

(b) No breach of any representation and warranty in Clause 20 (Representations), general undertaking under Clause 23 (General undertakings) or Events of Default under Clause 24 (Events of Default) (other than an Event of Default under Clause 24.2 (Financial covenants)) shall arise merely as a result of a subsequent change in the U.S. dollar equivalent of any relevant amount due to fluctuation in exchange rates.

 

(c) This Clause 1.4 shall not apply to Clause 8.6 (Trapped Amount), Clause 23.43 (DSRA), Clause 23.44 (Required Distribution Amount), Clause 23.45 (Payment Waterfall), and Clause 23.46 (Onshore VLN Accounts and Offshore VLN Account).

 

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1.5 Third party rights

 

(a) Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or enjoy the benefit of any term of this Agreement.

 

(b) Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

 

1.6 Intercreditor Agreement

This Agreement is subject to, and has the benefit of, the Intercreditor Agreement. In the event of any inconsistency between this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall prevail.

 

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SECTION 2

THE FACILITY

 

2. THE FACILITY

 

2.1 The Facility

Subject to the terms of this Agreement, the Lenders make available to the Borrower a USD term loan facility in an aggregate amount equal to the Total Commitments.

 

2.2 Increase

 

(a) The Borrower may by giving prior notice to the Agent by no later than the date falling five Business Days after the effective date of a cancellation of:

 

  (i) the Available Commitments of a Defaulting Lender in accordance with Clause 7.5 (Right of cancellation in relation to a Defaulting Lender); or

 

  (ii) the Commitments of a Lender in accordance with:

 

  (A) Clause 7.1 (Illegality); or

 

  (B) paragraph (a) of Clause 7.4 (Right of cancellation and repayment in relation to a single Lender),

request that the Commitments relating to the Facility be increased (and the Commitments relating to the Facility shall be so increased) in an aggregate amount in USD of up to the amount of the Available Commitments or Commitments relating to the Facility so cancelled as follows:

 

  (iii) the increased Commitments will be assumed by one or more Lenders or other banks, financial institutions, trusts, funds or other entities (each an “Increase Lender”) selected by the Borrower (each of which shall not be a Sponsor Affiliate or a Group Member) and each of which confirms in writing (whether in the relevant Increase Confirmation or otherwise) its willingness to assume and does assume all the obligations of a Lender corresponding to that part of the increased Commitments which it is to assume, as if it had been an Original Lender;

 

  (iv) each of the Obligors, the Parent and any Increase Lender shall assume obligations towards one another and/or acquire rights against one another as the Obligors, the Parent and the Increase Lender would have assumed and/or acquired had the Increase Lender been an Original Lender;

 

  (v) each Increase Lender which is not already a Lender shall become a Party as a “Lender” and any Increase Lender and each of the other Finance Parties shall assume obligations towards one another and acquire rights against one another as that Increase Lender and those Finance Parties would have assumed and/or acquired had the Increase Lender been an Original Lender;

 

  (vi) the Commitments of the other Lenders shall continue in full force and effect; and

 

  (vii) any increase in the Commitments relating to the Facility shall take effect on the date specified by the Borrower in the notice referred to above or any later date on which the conditions set out in paragraph (b) below are satisfied.

 

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(b) An increase in the Commitments relating to the Facility will only be effective on:

 

  (i) the execution by the Agent of an Increase Confirmation from the relevant Increase Lender provided that the requirements set out in paragraph (ii)(B) below have been satisfied in the case of an Increase Lender which is not a Lender immediately prior to the relevant increase;

 

  (ii) in relation to an Increase Lender which is not a Lender immediately prior to the relevant increase:

 

  (A) the Increase Lender entering into the documentation required for it to accede as a party to the Intercreditor Agreement; and

 

  (B) the Agent being satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations and internal policies in relation to the assumption of the increased Commitments by that Increase Lender. The Agent shall promptly notify the Borrower and the Increase Lender upon being so satisfied.

 

(c) Each Increase Lender, by executing the Increase Confirmation, confirms (for the avoidance of doubt) that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the increase becomes effective.

 

(d) The Borrower shall promptly on demand pay the Agent and the Security Agent the amount of all costs and expenses (including legal fees) reasonably incurred by either of them and, in the case of the Security Agent, by any Receiver or Delegate in connection with any increase in Commitments under this Clause 2.2.

 

(e) The Increase Lender shall (or the Borrower shall on its behalf), on the date upon which the increase takes effect, pay to the Agent (for its own account) a fee in an amount equal to the fee which would be payable under Clause 25.3 (Assignment or transfer fee) if the increase was a transfer pursuant to Clause 25.5 (Procedure for transfer) and if the Increase Lender was a New Lender.

 

(f) The Borrower may pay to the Increase Lender a fee in the amount and at the times agreed between the Borrower and the Increase Lender in a Fee Letter.

 

(g) Clause 25.4 (Limitation of responsibility of Existing Lenders) shall apply mutatis mutandis in this Clause 2.2 in relation to an Increase Lender as if references in that Clause to:

 

  (i) an “Existing Lender” were references to all the Lenders immediately prior to the relevant increase;

 

  (ii) the “New Lender” were references to that “Increase Lender”; and

 

  (iii) a “re-transfer” and “re-assignment” were references to respectively a “transfer” and “assignment”.

 

2.3 Finance Parties’ rights and obligations

 

(a) The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

 

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(b) The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor, the Parent shall be a separate and independent debt.

 

(c) A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

 

2.4 Obligors’ Agent

 

(a) Each Obligor (other than the Borrower) and the Parent by its execution of this Agreement or an Accession Deed irrevocably appoints the Borrower (acting through one or more authorised signatories) to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:

 

  (i) the Borrower on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices, consents, and instructions, to agree, accept and execute on its behalf any Accession Deed and all Finance Documents, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor or the Parent notwithstanding that they may affect the Obligor or the Parent and to give confirmations as to the continuation of guarantee obligations, in each case, without further reference to or the consent of that Obligor or the Parent; and

 

  (ii) each Finance Party to give any notice, demand or other communication to that Obligor or the Parent pursuant to the Finance Documents to the Borrower,

and in each case that Obligor or the Parent shall be bound as though that Obligor or the Parent itself had given the notices, consents and instructions (including, without limitation, the Utilisation Request) or executed or made the agreements or effected the amendments, supplements, variations or consents, or received the relevant notice, demand or other communication.

 

(b) Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent under any Finance Document on behalf of another Obligor or the Parent or in connection with any Finance Document (whether or not known to any other Obligor or the Parent and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor and the Parent as if that Obligor or the Parent had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor or the Parent, those of the Obligors’ Agent shall prevail.

 

3. PURPOSE

 

3.1 Purpose

The Borrower shall apply all amounts borrowed by it under the Facility towards:

 

  (a) payment of the Merger Consideration under the Merger Agreement; and

 

  (b) payment of the Merger Costs,

as described in the Funds Flow Statement.

 

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3.2 Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

 

4. CONDITIONS OF UTILISATION

 

4.1 Initial conditions precedent

 

(a) The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to the Utilisation if on or before the Utilisation Date for the Utilisation, the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent (acting reasonably) unless the Agent (acting on the instructions of all the Original Mandated Lead Arrangers) has waived receipt of any such document or other evidence listed in Part I of Schedule 2 (Conditions Precedent). The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied.

 

(b) Other than to the extent that an Original Mandated Lead Arranger notifies the Agent in writing to the contrary before the Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

 

4.2 Further conditions precedent

 

(a) Subject to Clause 4.1 (Initial conditions precedent), during the Certain Funds Period, the Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to a Certain Funds Utilisation if, on the date of the Utilisation Request and on the proposed Utilisation Date:

 

  (i) no Major Default is continuing or would result from the proposed Utilisation; and

 

  (ii) all the Major Representations are true in all material respects (or, where any Major Representation is already qualified by materiality or Material Adverse Effect, in all respects).

 

(b) During the Certain Funds Period (save in circumstances where, pursuant to paragraph (a) above, a Lender is not obliged to comply with Clause 5.4 (Lenders’ participation) and subject as provided in Clause 7.1 (Illegality) and paragraph (b)(ii) of Clause 8.1 (Exit and Flotation)), none of the Finance Parties shall be entitled to:

 

  (i) cancel any of its Commitments to the extent to do so would prevent or limit the making of a Certain Funds Utilisation;

 

  (ii) rescind, terminate or cancel this Agreement or the Facility or exercise any similar right or remedy or make or enforce any claim under the Finance Documents it may have to the extent to do so would prevent or limit the making of a Certain Funds Utilisation;

 

  (iii) refuse to participate in the making of a Certain Funds Utilisation;

 

  (iv) exercise any right of set-off or counterclaim in respect of a Certain Funds Utilisation to the extent to do so would prevent or limit the making of a Certain Funds Utilisation; or

 

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  (v) cancel, accelerate or cause repayment or prepayment of any amounts owing under this Agreement or under any other Finance Document to the extent to do so would prevent or limit the making of a Certain Funds Utilisation,

provided that immediately upon the expiry of the Certain Funds Period all such rights, remedies and entitlements shall be available to the Finance Parties notwithstanding that they may not have been used or been available for use during the Certain Funds Period.

 

4.3 Maximum number of Utilisations

 

(a) The Borrower may not deliver more than one Utilisation Request.

 

(b) The Borrower may not request that the Loan be divided.

 

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SECTION 3

UTILISATION

 

5. UTILISATION

 

5.1 Delivery of the Utilisation Request

The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time (or such later time as the Agent may agree).

 

5.2 Completion of the Utilisation Request

 

(a) The Utilisation Request for the Loan is irrevocable and will not be regarded as having been duly completed unless:

 

  (i) the proposed Utilisation Date is a Business Day within the Availability Period;

 

  (ii) the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and

 

  (iii) the proposed Interest Period complies with Clause 11 (Interest Periods).

 

(b) Only one Utilisation may be requested in the Utilisation Request.

 

5.3 Currency and amount

 

(a) The currency specified in the Utilisation Request must be USD.

 

(b) The amount of the proposed Utilisation must be an amount equal to the Total Commitments or, if less, the Available Facility.

 

5.4 Lenders’ participation

 

(a) If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office.

 

(b) The amount of each Lender’s participation in the Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.

 

5.5 Limitations on Utilisations

The Facility may only be utilised on the Closing Date (except that the Facility may be utilised on a date within two Business Days of the Closing Date due to administrative or technical issues (and not due to any default of any Obligor)).

 

5.6 Cancellation of Commitment

The Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.

 

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SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

 

6. REPAYMENT

 

6.1 Repayment of the Loan

 

(a) The Borrower shall repay the Loan in instalments by repaying on each Repayment Date an amount which reduces the outstanding Loan by an amount set out opposite that Repayment Date below:

 

Repayment Date    Repayment instalment  

30 June 2015

   U.S.$ 45,000,000   

31 December 2015

   U.S.$ 60,000,000   

30 June 2016

   U.S.$ 80,000,000   

31 December 2016

   U.S.$ 80,000,000   

30 June 2017

   U.S.$ 90,000,000   

31 December 2017

   U.S.$ 90,000,000   

30 June 2018

   U.S.$ 100,000,000   

31 December 2018

   U.S.$ 100,000,000   

Termination Date

   U.S.$ 205,000,000   

 

(b) The Borrower may not reborrow any part of the Facility which is repaid.

 

6.2 Effect of cancellation and prepayment on scheduled repayments and reductions

 

(a) If the Borrower cancels the whole or any part of the Commitments in accordance with Clause 7.4 (Right of cancellation and repayment in relation to a single Lender) or Clause 7.5 (Right of cancellation in relation to a Defaulting Lender) or if the Commitment of any Lender is cancelled under Clause 7.1 (Illegality) then (other than, in any relevant case, to the extent that any part of the relevant Commitment(s) so cancelled is subsequently increased pursuant to Clause 2.2 (Increase)), the amount of the repayment instalment for each Repayment Date falling after that cancellation will reduce pro rata by the amount cancelled.

 

(b) If the Borrower cancels the whole or any part of the Commitments in accordance with Clause 7.2 (Voluntary cancellation) or if the whole or any part of the Commitments is cancelled pursuant to Clause 5.6 (Cancellation of Commitment) then the amount of the repayment instalment for each Repayment Date falling after that cancellation will reduce pro rata by the amount cancelled.

 

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(c) If the Loan is repaid or prepaid in accordance with Clause 7.4 (Right of cancellation and repayment in relation to a single Lender) or Clause 7.1 (Illegality) then, other than to the extent that any part of the relevant Commitment is subsequently increased pursuant to Clause 2.2 (Increase), the amount of the repayment instalment for the Facility for each Repayment Date falling after that repayment or prepayment will reduce pro rata by the amount of the Loan repaid or prepaid.

 

(d) If the Loan is prepaid in accordance with Clause 7.3 (Voluntary prepayment of the Loan), then the amount of the repayment instalment for each Repayment Date falling after that prepayment shall be reduced as the Borrower may direct.

 

(e) If the Loan is prepaid in accordance with Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) or under paragraph (c) of Clause 8.1 (Exit and Flotation), then the amount of the repayment instalment for each Repayment Date falling after that prepayment will reduce pro rata by the amount of the Loan prepaid.

 

7. ILLEGALITY, VOLUNTARY PREPAYMENT AND CANCELLATION

 

7.1 Illegality

If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in the Loan or it becomes unlawful for any Holding Company of a Lender for that Lender to do so:

 

  (a) that Lender, shall promptly notify the Agent upon becoming aware of that event and the Agent shall notify the Borrower as soon as reasonably practicable after receiving such notification;

 

  (b) upon the Agent notifying the Borrower, the Available Commitment of that Lender will be immediately cancelled to the extent necessary to comply with applicable laws; and

 

  (c) to the extent that the Lender’s participation has not been transferred pursuant to Clause 37.6 (Replacement of Lender), the Borrower shall repay that Lender’s participation in the Loan made to the Borrower on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment(s) shall be cancelled in the amount of the participations repaid.

 

7.2 Voluntary cancellation

The Borrower may, if it gives the Agent not less than five Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of U.S.$5,000,000) of the Available Facility. Any cancellation under this Clause 7.2 shall reduce the Commitments of the Lenders rateably.

 

7.3 Voluntary prepayment of the Loan

 

(a) Subject to paragraph (b) below, the Borrower may, if it gives the Agent not less than five Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan by a minimum amount of U.S.$5,000,000).

 

(b) The Loan may only be voluntarily prepaid after the last day of the Availability Period (or, if earlier, the day on which the Available Facility is zero).

 

7.4 Right of cancellation and repayment in relation to a single Lender

 

(a) If:

 

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  (i) any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 14.2 (Tax gross-up);

 

  (ii) any Lender claims indemnification from the Borrower or an Obligor under Clause 14.3 (Tax indemnity) or Clause 15.1 (Increased costs); or

 

  (iii) any FATCA Protected Lender notifies the Agent of a FATCA Event pursuant to Clause 8.7 (Mandatory repayment and cancellation of FATCA Protected Lenders),

the Borrower may, whilst the circumstance giving rise to the requirement for that increase, indemnification or FATCA Event continues, give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Loan or procure the transfer of that Lender’s Commitment to another Lender willing to accept such transfer.

 

(b) On the date falling five Business Days after receipt of a notice referred to in paragraph (a) above in relation to a Lender, the Commitment of that Lender shall immediately be reduced to zero.

 

(c) On the last day of each Interest Period which ends after the Borrower has given notice under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Loan together with all interest and other amounts accrued in relation to such repaid amount under the Finance Documents.

 

7.5 Right of cancellation in relation to a Defaulting Lender

 

(a) If any Lender becomes a Defaulting Lender, the Borrower may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent five Business Days’ notice of cancellation of the Available Commitment of that Lender.

 

(b) On the notice referred to in paragraph (a) above becoming effective, the Available Commitment of the Defaulting Lender shall immediately be reduced to zero.

 

(c) The Agent shall as soon as practicable after receipt of a notice referred to in paragraph (a) above, notify all the Lenders.

 

8. MANDATORY PREPAYMENT AND CANCELLATION

 

8.1 Exit and Flotation

 

(a) For the purpose of this Clause 8:

Flotation” means the listing or admission to trading on any stock or securities exchange or market of any shares or securities of any Group Member (or Holding Company of any Group Member (other than a Sponsor)), or any sale or issue by way of listing, flotation or public offering (or any equivalent circumstances) of any shares or securities of any Group Member (or Holding Company of any Group Member (other than a Sponsor)) in any jurisdiction or country.

Flotation Proceeds” means the cash proceeds in relation to a Flotation or a primary issue of shares in connection with a Flotation, after deducting all reasonable fees, costs, expenses and Taxes incurred in connection with such Flotation.

Qualifying Flotation” means a Flotation where at least 50 per cent. of the gross cash proceeds of that Flotation are received or recovered as a result of primary issuance of shares by any Group Member (or Holding Company of any Group Member (other than a Sponsor)).

 

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Qualifying Flotation Proceeds” means the cash proceeds in relation to the primary issuance of shares in connection with a Qualifying Flotation, after deducting all reasonable fees, costs, expenses and Taxes incurred in connection with such Flotation.

 

(b) Upon the occurrence of:

 

  (i) any Flotation which results in a Change of Control or is not a Qualifying Flotation; or

 

  (ii) a Change of Control; or

 

  (iii) the sale of all or substantially all of the assets of the Group whether in a single transaction or a series of related transactions,

the Facility will be cancelled and the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents, shall become immediately due and payable.

 

(c) Upon the occurrence of a Qualifying Flotation (not resulting in a Change of Control), the Borrower will:

 

  (i) promptly notify the Agent upon becoming aware of that event; and

 

  (ii) ensure that an amount equal to the relevant percentage of Qualifying Flotation Proceeds for such Flotation is applied in prepayment of the Loan (as determined by reference to Adjusted Leverage as demonstrated in the then most recent Compliance Certificate received by the Agent) in accordance with the table below at the times and in the order contemplated by Clause 8.3 (Application of mandatory prepayments and cancellations).

 

Adjusted Leverage ratio    Percentage of Qualifying Flotation Proceeds  

Greater than or equal to 1.50:1

     75

Less than 1.50:1

     50

 

8.2 Disposal, Insurance and Recovery Proceeds and Excess Cashflow

 

(a) For the purposes of this Clause 8.2, Clause 8.3 (Application of mandatory prepayments and cancellations) and Clause 8.4 (Offshore Mandatory Prepayment Account):

Disposal” means a sale, lease, licence, transfer, loan or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions).

Disposal Proceeds” means the consideration received by any Group Member (including any amount received in repayment of intercompany debt) for any Disposal made by any Group Member except for Excluded Disposal Proceeds and after deducting:

 

  (i) any reasonable expenses which are incurred by any Group Member with respect to that Disposal to persons who are not Group Members; and

 

  (ii) any Tax incurred and required to be paid by the seller in connection with that Disposal (as reasonably determined by the seller, on the basis of existing rates and taking account of any available credit, deduction or allowance).

Excluded Disposal Proceeds” means any proceeds of any Disposal which the Borrower notifies the Agent are:

 

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  (i) made in accordance with paragraphs (a) to (f) and (i) to (n) of the definition of “Permitted Disposal” and applied in the purchase of assets for use in the business of the Group within 12 months or such longer period as the Majority Lenders may agree after receipt or committed to be applied within 12 months of receipt or such longer period as the Majority Lenders may agree and actually applied within 18 months or such longer period as the Majority Lenders may agree after receipt;

 

  (ii) received in kind or by way of non-cash consideration; or

 

  (iii) equal to or less than U.S.$200,000 in respect of any individual Disposal.

Excluded Insurance Proceeds” means any proceeds of an insurance claim which the Borrower notifies the Agent are, or are to be, applied:

 

  (i) in the replacement, reinstatement and/or repair of the assets or otherwise in amelioration of the loss in respect of which the relevant insurance claim was made;

 

  (ii) in the purchase of assets for use in the business of the Group;

 

  (iii) equal to or less than U.S.$200,000 in respect of any single insurance claim,

in each case (excluding paragraph (iii) above) applied within 12 months or such longer period as the Majority Lenders may agree) after receipt or committed to be applied within 12 months of receipt or such longer period as the Majority Lenders may agree and actually applied within 18 months or such longer period as the Majority Lenders may agree after receipt.

Excluded Recovery Proceeds” means any proceeds of a Recovery Claim which the Borrower notifies the Agent are, or are to be, applied:

 

  (i) to rectify the deficiency leading to such recovery;

 

  (ii) in the purchase of assets for use in the business of the Group (other than stock or inventory); or

 

  (iii) equal to or less than U.S.$200,000 in respect of any single Recovery Claim,

in each case (excluding paragraph (iii) above) as a result of the events or circumstances giving rise to that Recovery Claim, if those proceeds are so applied within 12 months or such longer period as the Majority Lenders may agree after receipt or committed to be applied within 12 months of receipt or such longer period as the Majority Lenders may agree and actually applied within 18 months or such longer period as the Majority Lenders may agree after receipt.

Insurance Proceeds” means the proceeds of any insurance claim under any insurance maintained by any Group Member (except for Excluded Insurance Proceeds and the proceeds of any third party liability claim or claim under any business interruption or similar insurance) and after deducting any reasonable expenses in relation to that claim which are incurred by any Group Member to persons who are not Group Members.

Recovery Proceeds” means the proceeds of any claim, or exercise of any right of remedy, or the receipt or recovery of any compensation, indemnification, reimbursement or other payment, under or in respect of any claim in relation to any of the Merger Documents or against the provider of any Report (in its capacity as a provider of that Report) or any proceeds received under or in connection with the Report Proceeds Letter or any settlement, award or order in respect of any of the foregoing (collectively a “Recovery Claim”) except for Excluded Recovery Proceeds, and after deducting:

 

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  (i) any reasonable expenses which are incurred by any Group Member to persons who are not Group Members; and

 

  (ii) any Tax incurred and required to be paid by a Group Member (as reasonably determined by the relevant Group Member on the basis of existing rates and taking into account any available credit, deduction or allowance),

in each case in relation to that Recovery Claim.

 

(b) Subject to Clause 8.6 (Trapped Amount) and Clause 23.45 (Payment Waterfall), the Borrower shall prepay the Loan in amounts equal to the following amounts at the times and in the order of application contemplated by Clause 8.3 (Application of mandatory prepayments and cancellations):

 

  (i) (where the amount of Recovery Proceeds, Disposal Proceeds and Insurance Proceeds in aggregate exceed U.S.$5,000,000 in any Financial Year) the full amount of such Recovery Proceeds, Disposal Proceeds and Insurance Proceeds (and not that excess only); and

 

  (ii) the amount equal to the relevant percentage of Excess Cashflow for that Financial Year of the Borrower commencing with the Financial Year ending 31 December 2014 set out in the following table determined by reference to the corresponding Adjusted Leverage ratio as shown in the then most recent Compliance Certificate:

 

Adjusted Leverage ratio    Percentage of Excess Cashflow  

Greater than or equal to 2.0:1

     100

Less than 2.0:1 but greater than or equal to 1.5:1

     75

Less than 1.5:1 but greater than or equal to 1.0:1

     50

Less than 1.0:1

     0

provided that Excess Cashflow for the Financial Year ending 31 December 2014 will be calculated by reference to Cashflow calculated for the period from the Closing Date to 31 December 2014.

 

8.3 Application of mandatory prepayments and cancellations

 

(a) A prepayment of the Loan or cancellation of Available Commitments made under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) or under paragraph (c) of Clause 8.1 (Exit and Flotation) shall be applied in prepayment of the Loan as contemplated in paragraphs (b) to (e) inclusive below.

 

(b) Unless the Borrower makes an election under paragraph (d) below, the Borrower shall prepay the Loan at the following times:

 

  (i) in the case of any prepayment relating to the amounts of Recovery Proceeds, Disposal Proceeds, Insurance Proceeds or Qualifying Flotation Proceeds, promptly upon (and in any event within five Business Days of) receipt of those proceeds; and

 

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  (ii) in the case of any prepayment relating to an amount of Excess Cashflow, on or prior to 30 June.

 

(c) A prepayment under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) or under paragraph (c) of Clause 8.1 (Exit and Flotation) shall prepay the Loan in reducing the relevant repayment instalment for each Repayment Date falling after the date of prepayment on a pro rata basis in the manner contemplated by paragraph (e) of Clause 6.2 (Effect of cancellation and prepayment on scheduled repayments and reductions).

 

(d) Subject to paragraph (e) below, the Borrower may elect that any prepayment under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) or under paragraph (c) of Clause 8.1 (Exit and Flotation) be applied in prepayment of the Loan on the last day of the current Interest Period, provided that such election must be made and notified to the Agent no later than the time which, but for this paragraph (d), the Borrower would have been so required to apply such amount towards prepayment of the Loan. If the Borrower makes that election then a proportion of the Loan equal to the amount of the relevant prepayment will be due and payable on the last day of its current Interest Period.

 

(e) If the Borrower has made an election under paragraph (d) above but an Event of Default has occurred and is continuing, that election shall no longer apply and a proportion of the Loan in respect of which the election was made equal to the amount of the relevant prepayment shall be immediately due and payable (unless the Majority Lenders otherwise agree in writing).

 

8.4 Offshore Mandatory Prepayment Account

 

(a) The Borrower shall ensure that:

 

  (i) an amount equal to the Disposal Proceeds, Insurance Proceeds, Recovery Proceeds and Qualifying Flotation Proceeds in respect of which the Borrower has made an election under paragraph (d) of Clause 8.3 (Application of mandatory prepayments and cancellations) are paid into the Offshore Mandatory Prepayment Account as soon as reasonably practicable after receipt by a Group Member; and

 

  (ii) an amount equal to any Excess Cashflow in respect of which the Borrower has made an election under paragraph (d) of Clause 8.3 (Application of mandatory prepayments and cancellations) is paid into the Offshore Mandatory Prepayment Account promptly after such election.

 

(b) To the extent that there has been a Prepayment Shortfall Amount in respect of any Calculation Period, promptly upon the Offshore Group having sufficient cash to pay all or part of the then applicable Accrued Prepayment Amount in accordance with the Payment Waterfall, the Borrower shall ensure that an amount equal to such Accrued Prepayment Amount (or part thereof) is paid into the Offshore Mandatory Prepayment Account.

 

(c) The Borrower irrevocably authorises the Agent (or the Finance Party with which the Offshore Mandatory Prepayment Account is opened) to apply amounts credited to the Offshore Mandatory Prepayment Account to pay amounts due and payable under Clause 8.3 (Application of mandatory prepayments and cancellations) and otherwise under the Finance Documents.

 

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8.5 Excluded proceeds

Where Excluded Recovery Proceeds, Excluded Disposal Proceeds and Excluded Insurance Proceeds include amounts which are intended to be used for a specific purpose within a specified period (as set out in the relevant definition of “Excluded Recovery Proceeds”, “Excluded Disposal Proceeds” or “Excluded Insurance Proceeds”), the Borrower shall ensure that those amounts are used for that purpose and, if requested to do so by the Agent (acting reasonably), shall deliver a certificate to the Agent at the time of such application and at the end of such period confirming the amount (if any) which has been so applied within the requisite time periods provided for in the relevant definition.

 

8.6 Trapped Amount

 

(a) To the extent that any amount of Disposal Proceeds, Insurance Proceeds or Recovery Proceeds and/or the amount of Excess Cashflow constitutes a Trapped Amount, there will be no obligation to make that prepayment or repayment (as the case may be) under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) provided that such Trapped Amount (other than the amount constituted by Excess Cashflow) is, as soon as reasonably practicable, paid into the Onshore Mandatory Prepayment Accounts at or prior to such time as that amount would have been required to be prepaid had it not constituted a Trapped Amount.

 

(b) If, at any time, the circumstances resulting in an amount being a Trapped Amount are removed or no longer subsisting, the amount which was a Trapped Amount will be applied in prepayment of the Facility at the end of the Interest Period ending not less than five Business Days after the date such circumstances are removed or no longer subsisting.

For the avoidance of doubt, any such prepayment or prepayment shall constitute a prepayment or repayment made under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) and reduce the obligation to make such prepayment or repayment thereunder pro tanto.

 

(c) So long as there is any Trapped Amount constituted by Excess Cashflow, the Borrower shall confirm in each Compliance Certificate delivered in accordance with Clause 21.2 (Provision and contents of Compliance Certificate) that the aggregate Cash held by the Onshore Group Members is in excess of the sum of (x) that Trapped Amount and (y) U.S.$70,000,000.

 

(d) Paragraphs (a), and (b) above shall be subject always to the obligation of each Obligor to use (or to procure that any member of the Group uses) commercially reasonable endeavours to overcome the circumstances resulting in an amount being a Trapped Amount and/or minimise the costs of a prepayment, including using any Surplus Cash and cash held by the Group (which is not a Trapped Amount).

 

8.7 Accrued Cash Sweep Amount and Accrued Prepayment Amount

To the extent that all or part of a Required Prepayment Amount for any Calculation Period constitutes a Prepayment Shortfall Amount for that Calculation Period and/or all or part of the Required Cash Sweep Amount constitutes a Cash Sweep Shortfall Amount for any Calculation Period, there will be no obligation to make that prepayment or repayment (as the case may be) under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) in respect of that amount provided that such amount shall become due and payable on the last day of that Calculation Period as an Accrued Prepayment Amount or an Accrued Cash Sweep Amount, as the case may be, in accordance with the Payment Waterfall (except to the extent constituting a Trapped Amount, a Prepayment Shortfall Amount or a Cash Sweep Shortfall Amount in respect of the next Calculation Period).

 

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8.8 Mandatory repayment and cancellation of FATCA Protected Lenders

 

(a) If on the date falling six months before the earliest FATCA Application Date for any payment by a Party to a FATCA Protected Lender (or to the Agent for the account of that Lender), that Lender is not a FATCA Exempt Party and, in the opinion of that Lender (acting reasonably), that Party will, as a consequence, be required to make a FATCA Deduction from a payment to that Lender (or to the Agent for the account of that Lender) on or after that FATCA Application Date (a “FATCA Event”):

 

  (i) that Lender shall, reasonably promptly after that date, notify the Agent of that FATCA Event and the relevant FATCA Application Date;

 

  (ii) if, on the date falling one month before such FATCA Application Date, that FATCA Event is continuing and that Lender has not been repaid or replaced pursuant to Clause 7.4 (Right of cancellation and repayment in relation to a single Lender):

 

  (A) that Lender may, at any time between one month and two weeks before such FATCA Application Date, notify the Agent;

 

  (B) upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and

 

  (C) the Borrower shall repay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the last Business Day before the relevant FATCA Application Date.

 

9. RESTRICTIONS

 

9.1 Notices of cancellation or prepayment

Any notice of cancellation, prepayment, authorisation or other election given by any Party under Clause 7 (Illegality, voluntary prepayment and cancellation), paragraph (d) of Clause 8.3 (Application of mandatory prepayments and cancellations) or Clause 8.4 (Offshore Mandatory Prepayment Account) shall (subject to the terms of those Clauses) be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

 

9.2 Interest and other amounts

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

 

9.3 No reborrowing of the Facility

The Borrower may not reborrow any part of the Facility which is prepaid.

 

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9.4 Prepayment in accordance with Agreement

The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

 

9.5 No reinstatement of Commitments

Subject to Clause 2.2 (Increase), no amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

 

9.6 Agent’s receipt of notices

If the Agent receives a notice under Clause 7 (Illegality, voluntary prepayment and cancellation) or an election under paragraph (d) of Clause 8.3 (Application of mandatory prepayments and cancellations), it shall promptly forward a copy of that notice or election to either the Borrower or the affected Lender, as appropriate.

 

9.7 Prepayment elections

The Borrower shall (through the Agent) notify the Lenders as soon as possible of any proposed prepayment of the Loan under Clause 8 (Mandatory prepayment and cancellation).

 

9.8 Effect of repayment and prepayment on Commitments

If all or part of any Lender’s participation in the Loan under the Facility is repaid or prepaid and is not available for redrawing, an amount of that Lender’s Commitment (equal to the amount of the participation which is repaid or prepaid) in respect of the Facility will be deemed to be cancelled on the date of repayment or prepayment.

 

9.9 Application of prepayments

Any prepayment of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality) or Clause 7.4 (Right of cancellation and repayment in relation to a single Lender) or Clause 9.9 (Application of prepayments)) shall be applied pro rata to each Lender’s participation in the Loan.

 

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SECTION 5

COSTS OF UTILISATION

 

10. INTEREST

 

10.1 Calculation of interest

The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

 

  (a) Margin; and

 

  (b) LIBOR.

 

10.2 Payment of interest

 

(a) The Borrower shall pay accrued interest on the Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six Monthly intervals after the first day of the Interest Period).

 

(b) If the Compliance Certificate received by the Agent which relates to the relevant Annual Financial Statements shows that a higher Margin should have applied during a certain period, then the Borrower shall promptly pay to the Agent any amounts necessary to put the Agent and the Lenders in the position they would have been in had the appropriate rate of the Margin applied during such period, provided that additional payments to a Lender will only be made to the extent it was a Lender during the relevant Interest Period that a higher rate of Margin should have applied.

 

(c) If the Annual Financial Statements and related Compliance Certificate received by the Agent show that a lower Margin should have applied during a certain period, upon the next payment of interest falling due the Margin shall be reduced to the extent necessary to put the Obligors in the position they would have been in if the Margin had been reduced for that period, provided that such reduction may only be made in respect of payments to a Lender which (i) was a Lender during the period in respect of which such interest was paid and (ii) is a Lender on such following interest payment date (the “Overpaid Lender”) and only to the extent of its participation in the Loan during that period (and, for the avoidance of doubt, no reduction in payment shall be made to Overpaid Lenders on account of any overpayments made to any other Lenders). The Agent shall not and no Lender shall be required to make any payment to the Group in reimbursement for any part of any applicable Margin already paid and no reduction in interest payment may be made to those Lenders who are not Overpaid Lenders.

 

(d) The calculations required in respect of paragraphs (b) and (c) above shall be made by the Borrower and confirmed by the Agent on the basis of the reset dates applicable to the periods referred to therein (and any other assumptions reasonably selected by the Agent).

 

10.3 Default interest

 

(a) If an Obligor or the Parent fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is two per cent. per annum higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 10.3 shall be immediately payable by the Obligor or the Parent on demand by the Agent.

 

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(b) If any overdue amount consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period:

 

  (i) the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan; and

 

  (ii) the rate of interest applying to the overdue amount during that first Interest Period shall be two per cent. per annum higher than the rate which would have applied if the overdue amount had not become due.

 

(c) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

 

10.4 Notification of rates of interest

The Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.

 

11. INTEREST PERIODS

 

11.1 Selection of Interest Periods

 

(a) The Borrower may select an Interest Period for the Loan in the Utilisation Request for the Loan or (if the Loan has already been borrowed) in a Selection Notice.

 

(b) Each Selection Notice for the Loan is irrevocable and must be delivered to the Agent by the Borrower not later than the Specified Time.

 

(c) If the Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be one Month.

 

(d) Subject to this Clause 11, the Borrower may select an Interest Period of one, two, three or six Months or any other period agreed between the Borrower and the Agent (acting on the instructions of all the Lenders).

 

(e) An Interest Period for the Loan shall not extend beyond the Termination Date applicable to its Facility.

 

(f) Each Interest Period for the Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.

 

(g) Prior to the Syndication Date, Interest Periods shall be one Month or such other period as the Agent and the Borrower may agree and any Interest Period which would otherwise end during the Month preceding or extend beyond the Syndication Date shall end on the Syndication Date.

 

(h) Notwithstanding paragraph (d) above, any Interest Period requested in a Utilisation Request or Selection Notice delivered prior to 31 December 2014 which would otherwise end after 31 December 2014 in accordance with the preceding paragraphs shall, if requested by the Borrower in that Utilisation Request or (if the Loan has already been borrowed) the relevant Selection Notice, instead end on 31 December 2014.

 

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11.2 Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

 

12. CHANGES TO THE CALCULATION OF INTEREST

 

12.1 Absence of quotations

Subject to Clause 12.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

 

12.2 Market disruption

 

(a) If a Market Disruption Event occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

 

  (i) the Margin; and

 

  (ii) the rate notified to the Agent by that Lender as soon as practicable and in any event by close of business in Hong Kong on the date falling two Business Day after the Quotation Day (or, if later, on the date falling three Business Days prior to the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan from whatever source it may reasonably select, provided that if such rate is below zero, such rate will be deemed to be zero.

 

(b) If:

 

  (i) the percentage rate per annum notified by a Lender pursuant to paragraph (a)(ii) above is less than LIBOR; or

 

  (ii) a Lender has not notified the Agent of a percentage rate per annum pursuant to paragraph (a)(ii) above,

the cost to that Lender of funding its participation in the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be LIBOR.

 

(c) If a Market Disruption Event occurs the Agent shall, as soon as is practicable, notify the Borrower and the Lenders.

 

(d) In this Agreement:

Market Disruption Event” means:

 

  (i) at or about noon (London time) on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for the relevant currency and Interest Period; or

 

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  (ii) before noon in Hong Kong on the Business Day immediately following the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 35 per cent. of the Loan) that by reason of factors affecting the Relevant Interbank Market generally the cost to it of funding its participation in the Loan from whatever source it may reasonably select would be in excess of LIBOR.

 

12.3 Alternative basis of interest or funding

 

(a) If a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.

 

(b) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

 

(c) The agent shall promptly inform the Borrower and each Lender of any alternative basis agreed under this Clause 12.3 (Alternative basis of interest or funding).

 

(d) For the avoidance of doubt, in the event that no alternative basis is agreed at the end of the 30 day period, the rate of interest shall be determined in accordance with Clause 12.1 (Absence of quotations) and Clause 12.2 (Market disruption).

 

12.4 Break Costs

 

(a) The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.

 

(b) Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

 

13. FEES

 

13.1 Arrangement fee

Subject to the Closing Date occurring, the Borrower shall pay to the Arranger an arrangement fee in the amount and at the times agreed in a Fee Letter.

 

13.2 Agency fee

Subject to the Closing Date occurring, the Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

 

13.3 Security agency fee

Subject to the Closing Date occurring, the Borrower shall pay to the Security Agent (for its own account) a security agency fee in the amount and at the times agreed in a Fee Letter.

 

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SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

 

14. TAX GROSS-UP AND INDEMNITIES

 

14.1 Definitions

In this Agreement:

Protected Party” means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

Tax Credit” means a credit against, relief or remission for, or repayment of, any Tax.

Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document (other than a FATCA Deduction).

Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 14.2 (Tax gross-up) or a payment under Clause 14.3 (Tax indemnity).

Unless a contrary indication appears, in this Clause 14 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

 

14.2 Tax gross-up

 

(a) Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

 

(b) The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and that Obligor.

 

(c) If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

 

(d) If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

 

(e) Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

 

14.3 Tax indemnity

 

(a) The Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

 

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(b) Paragraph (a) above shall not apply:

 

  (i) with respect to any Tax assessed on a Finance Party:

 

  (A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

 

  (B) under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

 

  (ii) to the extent a loss, liability or cost is:

 

  (A) compensated for by an increased payment under Clause 14.2 (Tax gross-up); or

 

  (B) relates to a FATCA Deduction required to be made by a Party.

 

(c) A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.

 

(d) A Protected Party shall, on receiving a payment from an Obligor under this Clause 14.3, notify the Agent.

 

14.4 Tax Credit

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

 

  (a) a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

 

  (b) that Finance Party has obtained and utilised that Tax Credit,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

 

14.5 Stamp taxes

The Borrower shall pay and, within three Business Days of demand, indemnify each Secured Party and Arranger against any cost, loss or liability that Secured Party or Arranger incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

 

14.6 VAT

 

(a) All amounts expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any Indirect Tax. If any Indirect Tax is chargeable on any supply made by any Finance Party to any Party under or in connection with a Finance Document, that Party must pay to such Finance Party (in addition to and at the same time as paying the consideration for such supply) an amount equal to the amount of the Indirect Tax.

 

(b) Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any costs or expenses, that Party shall at the same time pay and indemnify such Finance Party against all Indirect Tax incurred by the Finance Party in respect of the costs or expenses, except to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of the Indirect Tax.

 

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14.7 FATCA information

 

(a) Subject to paragraph (c) below, each Party shall, within 10 Business Days of a reasonable request by another Party:

 

  (i) confirm to that other Party whether it is:

 

  (A) a FATCA Exempt Party; or

 

  (B) not a FATCA Exempt Party; and

 

  (ii) supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru payment percentage” or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA.

 

(b) If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

 

(c) Paragraph (a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:

 

  (i) any law or regulation;

 

  (ii) any fiduciary duty; or

 

  (iii) any duty of confidentiality.

 

(d) If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then:

 

  (i) if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and

 

  (ii) if that Party failed to confirm its applicable “passthru payment percentage” then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable “passthru payment percentage” is 100 per cent (or such other percentage prescribed under FATCA from time to time); and

 

  (iii) none of the Obligors shall be required to make a FATCA Payment to such Party,

until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

14.8 FATCA Deduction

 

(a) Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

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(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Finance Parties.

 

15. INCREASED COSTS

 

15.1 Increased costs

 

(a) Subject to Clause 15.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement or (iii) the implementation or application of or compliance with Basel III or CRD IV.

 

(b) In this Agreement:

Basel III” means:

 

  (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

 

  (ii) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

  (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.

CRD IV” means:

 

  (i) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and

 

  (ii) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.

Increased Costs” means:

 

  (i) a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;

 

  (ii) an additional or increased cost; or

 

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  (iii) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

 

15.2 Increased cost claims

 

(a) A Finance Party intending to make a claim pursuant to Clause 15.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.

 

(b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

 

15.3 Exceptions

 

(a) Clause 15.1 (Increased costs) does not apply to the extent any Increased Cost is:

 

  (i) attributable to a Tax Deduction required by law to be made by an Obligor;

 

  (ii) attributable to a FATCA Deduction required to be made by a Party;

 

  (iii) compensated for by Clause 14.3 (Tax indemnity) (or would have been compensated for under Clause 14.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 14.3 (Tax indemnity) applied);

 

  (iv) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or

 

  (v) attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

 

(b) In this Clause 15.3 reference to a “Tax Deduction” has the same meaning given to the term in Clause 14.1 (Definitions).

 

16. OTHER INDEMNITIES

 

16.1 Currency indemnity

 

(a) If any sum due from an Obligor or the Parent under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

 

  (i) making or filing a claim or proof against that Obligor or the Parent; or

 

  (ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

 

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that Obligor or the Parent shall as an independent obligation, within five Business Days of receipt of demand, indemnify the Arranger and each other Secured Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

 

(b) Each Obligor and the Parent waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

 

16.2 Other indemnities

 

(a) The Borrower shall (or shall procure that an Obligor will), within five Business Days of receipt of demand, indemnify the Arranger and each other Secured Party against any cost, loss or liability incurred by it as a result of:

 

  (i) the occurrence of any Event of Default;

 

  (ii) a failure by an Obligor or the Parent to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 30 (Sharing among the Finance Parties);

 

  (iii) funding, or making arrangements to fund, its participation in the Loan requested by the Borrower in the Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default, negligence or breach of a Finance Document by that Secured Party); or

 

  (iv) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

 

(b) The Borrower shall within five Business Days of receipt of demand indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate, against any cost, loss or liability incurred by that Finance Party or its Affiliate (or officer or employee of that Finance Party or Affiliate) in connection with or arising out of the Merger or the funding of the Merger (including but not limited to those incurred in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry concerning the Merger), unless such loss or liability is caused by the gross negligence or wilful misconduct of that Finance Party or its Affiliate (or employee or officer of that Finance Party or Affiliate). Any Affiliate or any officer or employee of a Finance Party or its Affiliate may rely on this Clause 16.2, subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.

 

16.3 Indemnity to the Agent

The Borrower shall promptly indemnify the Agent against:

 

  (a) any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

 

  (i) investigating any event which it reasonably believes is a Default;

 

  (ii) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or

 

  (iii) instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

 

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  (b) any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 31.11 (Disruption to payment systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents.

 

16.4 Transfer costs and expenses

Notwithstanding any other term of the Finance Documents, if a Lender assigns or transfers any of its rights, benefits or obligations under the Finance Documents, no Group Member shall be required to pay any fees, costs, expenses or other amounts (“Transfer Costs”) relating to or arising in connection with that assignment or transfer (including, without limitation, any Taxes and any amounts relating to the perfection or amendment of the Transaction Security). This Clause 16.4 shall not apply in respect of an assignment or transfer made (x) in the ordinary course of the Syndication on or prior to the Syndication Date or (y) during an Event of Default or (z) by operation of Clause 37.6 (Replacement of Lender).

 

16.5 Indemnity to the Security Agent

 

(a) Each Obligor and the Parent jointly and severally shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

 

  (i) any failure by the Borrower to comply with its obligations under Clause 18 (Costs and expenses);

 

  (ii) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

 

  (iii) the taking, holding, protection or enforcement of the Transaction Security;

 

  (iv) the exercise or purported exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;

 

  (v) any default by any Obligor or the Parent in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or

 

  (vi) acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Charged Property (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).

 

(b) Each Obligor and the Parent expressly acknowledges and agrees that the continuation of its indemnity obligations under this Clause 16.5 will not be prejudiced by any release or disposal under clause 13 (Distressed Disposals and Appropriation) of the Intercreditor Agreement taking into account the operation of that clause.

 

(c) The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 16.5 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

 

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17. MITIGATION BY THE LENDERS

 

17.1 Mitigation

 

(a) Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 14 (Tax gross-up and indemnities) or Clause 15 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

 

(b) Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

 

17.2 Limitation of liability

 

(a) The Borrower shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 17.1 (Mitigation).

 

(b) A Finance Party is not obliged to take any steps under Clause 17.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so would be reasonably expected to be prejudicial to it.

 

18. COSTS AND EXPENSES

 

18.1 Transaction expenses

The Borrower shall, within five Business Days of demand, pay the Agent, the Arranger, and the Security Agent the amount of all reasonable costs and expenses (including legal fees) incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate), subject to any cap agreed between the Original Mandated Lead Arrangers and the Borrower, in connection with the negotiation, preparation, execution, Syndication and perfection of:

 

  (a) this Agreement and any other documents referred to in this Agreement and the Transaction Security; and

 

  (b) any other Finance Documents executed after the date of this Agreement.

 

18.2 Amendment costs

If:

 

  (a) an Obligor or the Parent requests an amendment, waiver or consent; or

 

  (b) an amendment is required pursuant to Clause 31.10 (Change of currency),

the Borrower shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all costs and expenses (including legal fees, subject to any agreed cap) reasonably incurred (excluding management time) by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

 

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18.3 Enforcement and preservation costs

The Borrower shall, within three Business Days of demand, pay to the Arranger and each other Secured Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of or the preservation of any rights under any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these rights.

 

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SECTION 7

GUARANTEE

 

19. GUARANTEE AND INDEMNITY

 

19.1 Guarantee and indemnity

Each Guarantor irrevocably and unconditionally jointly and severally:

 

  (a) guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor’s obligations under the Finance Documents;

 

  (b) undertakes with each Finance Party that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

 

  (c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 19 if the amount claimed had been recoverable on the basis of a guarantee.

 

19.2 Continuing Guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

 

19.3 Reinstatement

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of each Guarantor under this Clause 19 will continue or be reinstated as if the discharge, release or arrangement had not occurred.

 

19.4 Waiver of defences

The obligations of each Guarantor under this Clause 19 will not be affected by an act, omission, matter or thing which, but for this Clause 19, would reduce, release or prejudice any of its obligations under this Clause 19 (without limitation and whether or not known to it or any Finance Party) including:

 

  (a) any time, waiver or consent granted to, or composition with, any Obligor or other person;

 

  (b) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any Group Member;

 

  (c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

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  (d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

 

  (e) any amendment, novation, supplement, extension restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or increase in any facility or the addition of any new facility under any Finance Document or other document or security;

 

  (f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

 

  (g) any insolvency or similar proceedings.

 

19.5 Guarantor intent

Without prejudice to the generality of Clause 19.4 (Waiver of defences), each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.

 

19.6 Immediate recourse

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 19. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

 

19.7 Appropriations

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

 

  (a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

 

  (b) hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause 19.

 

19.8 Deferral of Guarantors’ rights

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 19:

 

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  (a) to be indemnified by an Obligor;

 

  (b) to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;

 

  (c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

 

  (d) to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under Clause 19.1 (Guarantee and indemnity);

 

  (e) to exercise any right of set-off against any Obligor; and/or

 

  (f) to claim or prove as a creditor of any Obligor in competition with any Finance Party.

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 31 (Payment mechanics).

 

19.9 Release of Guarantors’ right of contribution

If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the Finance Documents then on the date such Retiring Guarantor ceases to be a Guarantor:

 

  (a) that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

 

  (b) each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

 

19.10 Additional security

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

 

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19.11 Guarantee limitations

This guarantee does not apply to any liability to the extent that it would result in the relevant Guarantor breaching any applicable law and/or regulation (including any financial assistance laws) and, with respect to any Additional Guarantor, is subject to any limitations set out in the Accession Deed applicable to such Additional Guarantor.

 

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SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

 

20. REPRESENTATIONS

 

20.1 General

 

(a) Each Obligor makes the representations and warranties set out in this Clause 20 to each Finance Party.

 

(b) The Parent makes the representations and warranties set out in Clause 20.2 (Status) to Clause 20.7 (Governing law and enforcement), Clause 20.18 (Anti-corruption law and anti-money laundering), Clause 20.19 (Sanctions), Clause 20.22 (Good title to assets), Clause 20.23 (Legal and beneficial ownership), Clause 20.24 (Shares), Clause 20.28 (Parent Loan Documents and Vendor Note Documents) and Clause 20.33 (Holding Companies) to each Finance Party.

 

(c) For the purposes of representations and warranties made on the Merger Effective Time, the Merger Effective Time shall be deemed to have occurred and members of the Target Group shall be deemed to have become Group Members.

 

20.2 Status

 

(a) It is a limited liability corporation, duly incorporated and validly existing (and, if incorporated or established in the Cayman Islands, in good standing) under the law of its Original Jurisdiction.

 

(b) Each of its Subsidiaries is a limited liability corporation, duly incorporated and validly existing (and, if incorporated or established in the Cayman Islands, in good standing) under the law of its jurisdiction of incorporation.

 

(c) It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.

 

(d) It is not a US Tax Obligor.

 

20.3 Binding obligations

Subject to the Legal Reservations and, in the case of the Transaction Security Documents, the Perfection Requirements:

 

  (a) the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations; and

 

  (b) (without limiting the generality of paragraph (a) above), each Transaction Security Document to which it is a party creates the security interests which that Transaction Security Document purports to create and those security interests are valid and effective.

 

20.4 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Transaction Documents and the granting of the Transaction Security pursuant to the Security Principles do not and will not conflict with:

 

  (a) any law or regulation applicable to it to the extent it has, or could reasonably be expected to have, a Material Adverse Effect;

 

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  (b) the constitutional documents of any Obligor and any other Group Member that has obligations under the Transaction Documents or over whose assets Security is purported to be given in any material respect; or

 

  (c) any agreement or instrument binding upon it or any Group Member or any of its or any Group Member’s assets or constitute a default or termination event (however described) under any such agreement or instrument to the extent it has, or could reasonably be expected to have, a Material Adverse Effect.

 

20.5 Power and authority

 

(a) It has or will have on or prior to the relevant time the power to enter into, perform and deliver, and has taken or will have on or prior to the relevant time taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents.

 

(b) No limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.

 

20.6 Validity and admissibility in evidence

 

(a) Subject to any applicable Legal Reservations, all Authorisations required:

 

  (i) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party;

 

  (ii) to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; and

 

  (iii) to enable it to create the Security purported to be created by it or any of its Subsidiaries pursuant to any Transaction Security Document and, subject to any Perfection Requirements, to ensure that such Security has the priority and ranking it is expressed to have,

have been obtained or effected and are in full force and effect (save for any Authorisation that is not required to be in effect under applicable law or regulation or under the applicable Transaction Documents at the time when the representation and warranty under this Clause 20.6 is made or deemed to be made, in which case such Authorisation will, by the earlier of the time such Authorisation is required to be obtained or effected under applicable law or regulation and the time required under the applicable Transaction Documents, be obtained or effected and will thereafter be in full force and effect).

 

(b) All Authorisations necessary for the conduct of the business, trade and ordinary activities of Group Members have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorisations has or is reasonably likely to have a Material Adverse Effect.

 

20.7 Governing law and enforcement

 

(a) Subject to the Legal Reservations, the choice of governing law of the Finance Documents to which it is a party will be recognised and, subject to Perfection Requirements, enforced in its Relevant Jurisdictions.

 

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(b) Subject to the Legal Reservations, any judgment obtained in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document to which it is a party will be recognised and, subject to Perfection Requirements, enforced in its Relevant Jurisdictions.

 

20.8 Insolvency

No:

 

  (a) corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 24.7 (Insolvency proceedings); or

 

  (b) creditors’ process described in Clause 24.8 (Creditors’ process),

has been taken or, to the knowledge of the Borrower, threatened in relation to a Material Company and none of the circumstances described in Clause 24.6 (Insolvency) applies to a Material Company.

 

20.9 No filing or stamp taxes

Under the laws of its Relevant Jurisdiction it is not necessary that any of the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to any of the Finance Documents or the transactions contemplated by the Finance Documents, except for any filing, recording or enrolling (or the payment of Taxes or fees payable) in relation to any Transaction Security (constituting Perfection Requirements) which will be made and/or paid within the time limits specified in the relevant Transaction Security Document (and in any event by the earlier of (i) the time such filing, recording or enrolling is required to be made or (as the case may be) such Taxes or fees are required to be paid under applicable law or regulation and (ii) the time required under the Finance Documents) and except that Cayman Islands stamp duty will be payable if any Finance Document is executed in, brought into, or produced to a court of, the Cayman Islands.

 

20.10 Deduction of Tax

It is not required under the laws of its Relevant Jurisdictions to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Finance Party.

 

20.11 No default

 

(a) No Event of Default and, on the date of this Agreement, the Closing Date and the Merger Effective Time, no Default is continuing or is reasonably likely to result from the making of the Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.

 

(b) No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is reasonably likely to have a Material Adverse Effect.

 

20.12 No misleading information

 

(a) Save as disclosed in writing to the Agent and the Arranger prior to the date of the Commitment Letter:

 

  (i) to the knowledge, information and belief of the Borrower (having made due and careful enquiry and where the factual information relates to the Target Group, only as provided by the Target Group but not otherwise) any factual information contained in the Information Memorandum or the Information Package taken as a whole was true and accurate in all material respects as at the date of the relevant report or document containing the information or (as the case may be) as at the date the information is expressed to be given;

 

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  (ii) the Base Case Model has been prepared in accordance with the applicable Accounting Principles as applied to the Original Financial Statements, and the financial projections contained in the Base Case Model have been prepared on the basis of recent historical information and based on fair and reasonable assumptions (in each case, on the date of preparation) (it being understood that projections are subject to significant uncertainties and contingencies many of which are beyond the control of the Group and that no assurances can be given that such projections will be realised) and have been prepared in accordance with the Accounting Principles as disclosed to the Lenders and have been approved by the board of directors of the Borrower;

 

  (iii) any financial projections or forecasts contained in the Information Memorandum or the Information Package (insofar as they relate to the Accountants’ Report and the Structure Memorandum) have been prepared on the basis of recent historical information as available to the Sponsors (and disclosed to the Original Mandated Lead Arrangers prior to their preparation) and on the basis of reasonable and fair assumptions (as at the date of the relevant report or document containing the projection or forecast) and have been prepared in accordance with the applicable Accounting Principles as disclosed to the Lenders (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Group and that no assurances can be given that such projections will be realised); and

 

  (iv) to the knowledge, information and belief of the Borrower (having made due and careful enquiry and where the factual information relates to the Target Group as provided by the Target Group but not otherwise) no event or circumstance has occurred or arisen and no information has been omitted from the Information Memorandum or the Information Package and no information has been given or withheld that results in the information, opinions, intentions, forecasts or projections contained in the Information Memorandum or the Information Package taken as a whole being untrue or misleading in any material respect at their stated date (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Group and that no assurances can be given that such projections will be realised); and

 

  (v) all other written information provided by or on behalf of the Parent, any Obligor or any member of the Group to a Finance Party pursuant to any express provision of any Finance Document on or after the date of the Commitment Letter is, taken as a whole, true, complete and accurate in all material respects and is, taken as a whole, not misleading in any material respect (in each case) as at the date on which such information is so provided.

 

20.13 Original Financial Statements

 

(a) Its Original Financial Statements were prepared in all material respects in accordance with the Accounting Principles consistently applied unless expressly disclosed to the Agent in writing or in the Accountants’ Report to the contrary.

 

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(b) Its Original Financial Statements give a true and fair view of its financial condition and results of operations during the relevant Financial Year unless expressly disclosed to the Agent in writing to the contrary prior to the date of this Agreement, subject to customary year-end adjustments.

 

(c) Its most recent financial statements delivered pursuant to Clause 21.1 (Financial statements):

 

  (i) have been prepared in accordance with the Accounting Principles; and

 

  (ii) give a true and fair view of (if audited) or fairly represent in all material respects (if unaudited), and it being understood that unaudited statements are prepared for the management of the relevant Obligor) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate (to the extent appropriate in the context of management accounts), subject to customary year-end adjustments,

subject to normal year end adjustments made in the case of monthly and quarterly statements.

 

(d) Since 31 December 2013 there has been no material adverse change in the financial condition of the Group (taken as a whole).

 

20.14 No proceedings pending or threatened

 

(a) No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which are reasonably likely to be adversely determined and, if adversely determined, are reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or formally threatened in writing against it or any of its Subsidiaries (including by any VIE Group Member against a WFOE Group Member).

 

(b) No shareholder of the VIE Entity has challenged the validity of the VIE Contracts.

 

20.15 No breach of laws

 

(a) It has not (and none of its Subsidiaries has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

 

(b) No labour disputes are current or, to the best of its knowledge and belief (having made due and careful enquiry), threatened against any Group Member which have or are reasonably likely to have a Material Adverse Effect.

 

20.16 Environmental laws

 

(a) Each Group Member is in compliance with Clause 23.3 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

 

(b) No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is formally threatened against any Group Member where that claim has or is reasonably likely to be adversely determined and, if determined against that Group Member, is reasonably likely to have a Material Adverse Effect.

 

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20.17 Taxation

 

(a) It is not (and none of its Subsidiaries is) overdue in the filing of any Tax returns and it is not (and none of its Subsidiaries is) overdue in the payment of any amount in respect of Tax where such failure to take action could reasonably be expected to have a Material Adverse Effect.

 

(b) No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any of its Subsidiaries) with respect to Taxes which is reasonably likely to have a Material Adverse Effect.

 

(c) It is resident for Tax purposes only in its Original Jurisdiction.

 

20.18 Anti-corruption law and anti-money laundering

 

(a) None of the Obligors or any Group Member or any director, officer, senior manager or, to the Borrower’s knowledge after due and careful enquiry, agent or employee associated with or acting on behalf of an Obligor or any Group Member, has made any unlawful payment within the meaning of, and is not in any other way in violation of, any Anti-Corruption Laws.

 

(b) The business and operations of each Obligor and each Group Member are and have been conducted at all times in compliance with Anti-Money Laundering Laws and no action, suit or proceeding by or before any court or Governmental Authority or any arbitrator involving a Group Member with respect to Anti-Money Laundering Laws is pending or, to the knowledge of the Borrower (after due inquiry), threatened.

 

(c) It and each other Obligor and Group Member has instituted and maintained policies and procedures designed to promote and achieve compliance with Anti-Corruption Laws and Anti-Money Laundering Laws.

 

20.19 Sanctions

 

(a) Neither it (nor any other Obligor or Group Member) is contributing or is otherwise making available all or any part of the proceeds of the Facility, directly or indirectly, to, or for the benefit of, any person (whether or not related to an Obligor or any Group Member) for the purpose of financing or facilitating the activities of, transactions with, or investments in, any Sanctions Restricted Person or any Sanctioned Country.

 

(b) No Sanctions Restricted Person owns or controls any Obligor or Group Member, in each case, to the extent such action or status is prohibited by, or would itself cause any Finance Party or Obligor or Group Member to be in breach of, any Sanctions (for the avoidance of doubt, in each case, other than an action which is a Permitted Sanction Action).

 

(c) Neither it (nor any other Obligor or Group Member) is a Sanctions Restricted Person.

 

(d) Neither it (nor any other Obligor or Group Member) or any director, officer, senior manager or agent or employee associated with or acting on behalf of an Obligor or any Group Member:

 

  (i) is in violation of any Sanctions;

 

  (ii) engages in any transaction, activity or conduct prohibited by any Sanctions applicable to a Sanctions Restricted Person;

 

  (iii) has been engaged in any transaction, activity or conduct that could reasonably be expected to result in it being designated as a Sanctions Restricted Person; or

 

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  (iv) has received notice of, or is otherwise aware of, any claim, action, suit, proceedings or investigation involving it with respect to Sanctions,

provided that, the representations in (i) to (iii) above with respect to any agent or employee associated with or acting on behalf of an Obligor or any Group Member are made to such Obligor’s or Group Member’s knowledge after due and careful enquiry.

 

20.20 Ranking

Without limiting Clause 20.21 (Security, Financial Indebtedness and guarantees) and subject to the Legal Reservations and the Perfection Requirements, the unsecured and unsubordinated payment obligations of the Borrower under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are materially preferred by laws of general application to companies.

 

20.21 Security, Financial Indebtedness and guarantees

 

(a) No Security exists over all or any of the present or future assets of any Group Member other than as permitted by Clause 23.12 (Negative pledge).

 

(b) No Group Member has any Financial Indebtedness outstanding or any guarantees of Financial Indebtedness outstanding other than as permitted by Clause 23.20 (Financial Indebtedness) or Clause 23.16 (No Guarantees or indemnities).

 

(c) Subject to the Legal Reservations and any applicable Perfection Requirements, each Transaction Security Document creates (or, once entered into, will create), in favour of the Security Agent for the benefit of the Secured Parties, the Security which it is expressed to create with the ranking and priority it is expressed to have, except for obligations mandatorily preferred by law applying to companies generally.

 

20.22 Good title to assets

It and each of its Subsidiaries has a good, valid and marketable title to, or valid leases or licences of, and all necessary Authorisations to use, the assets necessary to carry on its business as presently conducted where failure would have a Material Adverse Effect.

 

20.23 Legal and beneficial ownership

 

(a) Subject to paragraph (a) of the definition of “Permitted Security”, it and each of its Subsidiaries is the sole legal and beneficial owner of the respective assets over which it purports to grant Security.

 

(b) All the Target Shares are or will be as at the Merger Effective Time legally and beneficially owned by the Parent free from any claims, third party rights or competing interests other than Permitted Security permitted under Clause 23.12 (Negative pledge).

 

20.24 Shares

 

(a) Other than as required by law or as permitted by the terms of this Agreement, the Equity Interests of any Group Member which are (or are required by this Agreement to be or become) subject to the Transaction Security are (or, at the time such security will be granted, will be) fully paid and not subject to any option to purchase or similar rights.

 

(b) The constitutional documents of companies whose shares and Equity Interests are (or are required by this Agreement to be or become) subject to the Transaction Security do not and could not (or, at the time such security will be granted, will not except as required by law) restrict or inhibit any transfer of those shares or Equity Interests on creation or enforcement of the Transaction Security.

 

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(c) There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any Material Company (including any option or right of pre-emption or conversion).

 

20.25 Intellectual Property

It and each of its Subsidiaries:

 

  (a) except as otherwise disclosed, is the sole legal and beneficial owner of or has licensed to it on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted and as contemplated in the Base Case Model;

 

  (b) there has been no material infringement or, to its knowledge, threatened or suspected infringement of or challenge to the validity of any Intellectual Property owned by or licenced to it or any Group Member which has or would reasonably be expected to have a Material Adverse Effect.

 

  (c) has taken all formal or procedural actions (including payment of fees) required to maintain any Intellectual Property owned by it to the extent that failure to do so has or would reasonably be expected to have a Material Adverse Effect; and

 

  (d) does not (nor does any of its Subsidiaries), in carrying on its businesses, infringe any Intellectual Property of any third party in any respect which has or is reasonably likely to have a Material Adverse Effect.

 

20.26 Group Structure Chart

Assuming Merger Effective Time has occurred, the Group Structure Chart delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) shows all Material Companies and is true, complete and accurate in all material respects.

 

20.27 Accounting Reference Date

The Accounting Reference Date of each Group Member is 31 December.

 

20.28 Vendor Note Documents

The Vendor Note Documents to be delivered as a condition precedent in accordance with Part I of Schedule 2 (Conditions Precedent):

 

  (a) contain all the terms of the arrangements between the Vendor Note Lender (and/or any of their respective Affiliates) and the Vendor Note Issuer and/or any member of the Group (and/or any of their respective Affiliates) in respect of the Vendor Note;

 

  (b) subject to any conditionality in relation to the other Transaction Documents, are or, on the Closing Date, will be in full force and effect; and

 

  (c) have not been amended, varied or supplemented from the form in which they were delivered as a condition precedent in accordance with Part I of Schedule 2 (Conditions Precedent) or waived (in whole or in part) and no consent has been given thereunder, save for any which are minor or technical or otherwise permitted under the Vendor Note Subordination Deed.

 

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20.29 VIE Contracts

 

(a) The VIE Contracts and Revenue Sharing Agreements contain all the material terms of the VIE Structure (subject to the implementation of the VIE Restructuring), and there are no other dealings between the parties thereto that affect the VIE Contracts or the Revenue Sharing Agreements that would reasonably be expected to be materially adverse to the interests of the Finance Parties.

 

(b) It and each of its Subsidiaries is in compliance in all material respects with all of its obligations under the VIE Contracts and Revenue Sharing Agreements to which it is a party, and to the best of its knowledge (and save as disclosed in writing to all of the Arrangers prior to the date of the Commitment Letter):

 

  (i) no representation or warranty given by any party to any VIE Contract or any Revenue Sharing Agreement is untrue or misleading in any material respect; and

 

  (ii) no party to any VIE Contract or any Revenue Sharing Agreement is in default under or breach of any of its obligations under such VIE Contract or such Revenue Sharing Agreement in any material respect.

 

(c) Except with the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders) or pursuant to the implementation of the VIE Restructuring:

 

  (i) there has been no amendment, variation or supplement of or to, or waiver by any Group Member of, any of the terms of any VIE Contract or any Revenue Sharing Agreement in any manner that would reasonably be expected to be materially adverse to the interests of the Finance Parties; and

 

  (ii) no party thereto has given any consent (which would reasonably be expected to be materially adverse to the interests of the Finance Parties) under any VIE Contract or any Revenue Sharing Agreement.

 

(d) Except pursuant to the implementation of the VIE Restructuring, there has been no termination, rescission or cancellation of any of the VIE Contracts or the Revenue Sharing Agreements and each VIE Contract and Revenue Sharing Agreement is in full force and effect.

 

20.30 Merger Documents

 

(a) The Merger Documents contain all the material terms of the Merger.

 

(b) Except with the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders):

 

  (i) there has been no amendment, variation or supplement of or to, or waiver by any Group Member of, any of the terms of any Merger Document in any manner that would reasonably be expected to be materially adverse to the interests of the Finance Parties; and

 

  (ii) no Group Member has given any consent (which would reasonably be expected to be materially adverse to the interests of the Finance Parties) under any Merger Document.

 

(c) There has been no termination, rescission or cancellation of the Merger Document and the Merger Document is in full force and effect (save for any discharge through performance in full).

 

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(d) The terms of the Paying Agent Agreement are or, when entered into, will be consistent with the provisions of the other Merger Documents in all material respects.

 

20.31 Shareholders Documents and the Management Vesting Agreements

 

(a) The Shareholders Documents contain all the material terms agreed between the parties thereto with respect to the subject matter thereof.

 

(b) The Management Vesting Agreement contain all material terms agreed between the parties thereto with respect to the subject matter thereof.

 

(c) It, the Parent and each of its Subsidiaries is in compliance in all material respects with all of its obligations under the Shareholders Documents and the Management Vesting Agreements to which it is a party, and to the best of its knowledge:

 

  (i) no representation or warranty given by any party to any Shareholders Document or any Management Vesting Agreement is untrue or misleading in any material respect; and

 

  (ii) no party to any Shareholders Document and any Management Vesting Agreement is in default under or breach of any of its obligations under such Shareholders Document or Management Vesting Agreement in any material respect.

 

(d) Except with the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders):

 

  (i) there has been no amendment, variation or supplement of or to, or waiver by any Group Member or its Holding Company of, any of the terms of any Shareholders Document or any Management Vesting Agreement in any manner that would reasonably be expected to be materially adverse to the interests of the Finance Parties;

 

  (ii) no Group Member or its Holding Company has given any consent (which would reasonably be expected to be materially adverse to the interests of the Finance Parties) under any Shareholders Document or any Management Vesting Agreement.

 

(e) There has been no termination, rescission or cancellation of any of the Shareholders Documents or the Management Vesting Agreements and each of the Shareholders Documents and the Management Vesting Agreements is in full force and effect where such termination, rescission or cancellation would reasonably be expected to have a material adverse effect on the interests of the Finance Parties.

 

20.32 Pensions

All pension schemes and employee benefit schemes (social insurance, housing fund contributions or otherwise) operated by or maintained for the benefit of any or all of it and Group Members and/or the employees of any of the foregoing are fully funded based on reasonable actuarial assumptions and recommendations and are operated and maintained in accordance with the requirements of applicable laws and regulations, in each case, where failure to do has or would reasonably be expected to have a Material Adverse Effect.

 

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20.33 Holding Companies

Except as may arise under the Transaction Documents and for Merger Costs or as expressly contemplated by the Structure Memorandum, before the Closing Date neither the Parent nor the Borrower has traded or incurred any liabilities or commitments (actual or contingent, present or future) other than in the case of the Parent acting as a Holding Company of the Borrower or as otherwise permitted by this Agreement.

 

20.34 Compliance with SAFE Rules etc.

All approvals of, and filings and registrations and other requisite formalities with, any Governmental Authority in the PRC required in respect of the Target and any member of the Target Group and their capital structure and operations, including but not limited to registrations with the SAIC, the SAFE and the State Administration of Taxation of the PRC, and their respective local counterparts, have been duly completed in accordance with applicable PRC laws and regulations (including the SAFE Rules), except for any non-compliance which has not and is not reasonably likely to have a Material Adverse Effect.

 

20.35 US Margin Regulations

The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and, additionally, following the application of the proceeds of the Utilisation, not more than 25 percent of the value of the assets of the Obligors (on a consolidated basis) will be invested in Margin Stock.

 

20.36 Times when representations made

 

(a) All the representations and warranties in this Clause 20 are made by each Obligor (and the representations and warranties referred to in paragraph (b) of Clause 20.1 are made by the Parent) on the date of this Agreement except for the representations and warranties set out in paragraphs (a)(i) to (a)(iv) of Clause 20.12 (No misleading information) which are deemed to be made by each Obligor (A) with respect to the Information Memorandum, on the date the Information Memorandum is approved by the Borrower (B) with respect to the Base Case Model, on the date of this Agreement and on the Closing Date and (C) with respect to the Information Package (other than the Base Case Model), on the date of this Agreement and on any later date on which the Information Package (or part of it) is released to the Arranger for distribution in connection with Syndication.

 

(b) All the representations and warranties in this Clause 20 are deemed to be made by each Obligor (and the representations and warranties referred to in paragraph (b) of Clause 20.1 are deemed to be made by the Parent) on the Closing Date and by the Target at the Merger Effective Time.

 

(c) The representation and warranties in Clause 20.12 (No misleading information) are deemed to be made by each Obligor on the Syndication Date.

 

(d) The Repeating Representations are deemed to be made by each Obligor on the date of the Utilisation Request, on the Utilisation Date and on the first day of each Interest Period (except that those contained in paragraphs (a) to (c) of Clause 20.13 (Original Financial Statements) will cease to be so made once subsequent financial statements have been delivered under this Agreement).

 

(e) The representations and warranties referred to in paragraph (b) of Clause 20.1 are deemed to be made by the Parent on the date of the Utilisation Request, on the Utilisation Date and on the first day of each Interest Period.

 

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(f) All the representations and warranties in this Clause 20 except Clause 20.12 (No misleading information), Clause 20.26 (Group Structure Chart), Clause 20.28 (Parent Loan Documents and Vendor Note Documents), Clause 20.29 (VIE Contracts), Clause 20.30 (Merger Documents, disclosures and other documents), Clause 20.31 (Shareholders Documents and the Management Vesting Agreements) and Clause 20.33 (Holding Companies) are deemed to be made by each Additional Guarantor on the day on which it becomes an Additional Guarantor.

 

(g) Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.

 

(h) In respect of each representation and warranty made on the date of this Agreement and/or any other date on or before the Closing Date, the Borrower shall be assumed to have the knowledge of members of, and the management of, the Equity Investors (who have, and shall be deemed to have, made due and careful enquiry of the Target Group).

 

21. INFORMATION UNDERTAKINGS

The undertakings in this Clause 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

In this Clause 21:

Annual Financial Statements” means the financial statements for a Financial Year delivered pursuant to paragraph (a) of Clause 21.1 (Financial statements).

Annual WFOE Financial Statements” means the financial statements delivered pursuant to paragraph (a)(ii)(D) of Clause 21.1 (Financial statements).

Quarterly Financial Statements” means the financial statements delivered pursuant to paragraph (b) of Clause 21.1 (Financial statements).

 

21.1 Financial statements

The Borrower shall supply to the Agent in sufficient copies for all the Lenders:

 

  (a) as soon as they are available, but in any event within:

 

  (i) 150 days after the end of the Financial Year in which the Merger Effective Time occurs; and

 

  (ii) 120 days after the end of the each Financial Year thereafter:

 

  (A) its audited financial statements (prepared on consolidated basis) for that Financial Year;

 

  (B) the audited financial statements of Giant HK (prepared on an unconsolidated basis) for that Financial Year;

 

  (C) the audited financial statements of the VIE Entity (prepared on an unconsolidated basis) for that Financial Year; and

 

  (D) the audited financial statements of each First Tier WFOE (prepared on unconsolidated basis) for that Financial Year;

 

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  (b) as soon as they are available, but in any event within 45 days after the end of each Financial Quarter of each of its Financial Years, its consolidated unaudited financial statements for that Financial Quarter (save that if the last due date for delivery falls before the date falling 180 calendar days after the Closing Date, the Borrower shall have additional 10 Business Days to deliver such financial statements);

 

  (c) as soon as they are available, but in any event within 45 days after the end of each Financial Quarter, the unaudited consolidated quarterly financial statements of the Target for any Financial Quarter commencing on or after 31 December 2013 and ending on a date prior to the Closing Date but only if they are available;

 

  (d) as soon as practicable, but in any event within 10 Business Days after the last Business Day of each month ending after the Closing Date, an officer’s certificate of the Borrower (x) confirming the aggregate balance in the bank accounts of all Onshore Group Members (together with any cash held at hand) and (y) attaching screenshots showing the balances as of the end of each month in each Onshore Group Member’s individual bank accounts (prepared on an unconsolidated and unaggregated basis) provided that such requirement shall not apply to bank accounts to the extent the aggregate balances of all such accounts do not exceed RMB30,000,000 (aggregating for this purpose only those accounts with credit balances); and

 

  (e) if requested by the Agent or required to be prepared by law, within any statutory time period allowed for the preparation thereof, the annual unaudited financial statements of any other Obligor.

 

21.2 Provision and contents of Compliance Certificate

 

(a) The Borrower shall supply:

 

  (i) commencing with the First Test Date, a Compliance Certificate to the Agent with each set of its audited consolidated Annual Financial Statements and each set of its consolidated Quarterly Financial Statements; and

 

  (ii) commencing from the first full month end after the Closing Date, an officer’s certificate to the Agent with each set of bank statements delivered pursuant to paragraph (d) of Clause 21.1 (Financial statements).

 

(b) The Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with Clause 22 (Financial covenants) (including, where relevant, the effect of any election under Clause 22.4 (Equity cure)), Clause 23.44 (Required Distribution Amount), 23.45 (Payment Waterfall) and 23.46 (Onshore VLN Accounts and Offshore VLN Account), any amount which is required to be prepaid under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow), the list of Material Companies, the key operating data of all material operating games of the Group and compliance with Clause 23.43 (DSRA) and Clause 23.45 (Payment Waterfall) and shall be otherwise in the form set out in Schedule 8 (Form of Compliance Certificate).

 

(c) Each Compliance Certificate shall be signed by two directors (one of such directors to be the Chief Financial Officer) of the Borrower and:

 

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  (i) (if required to be delivered with the consolidated Annual Financial Statements of the Borrower) shall be reported on by the Borrower’s Auditors on the proper extraction of the numbers used in the financial covenant calculations; and

 

  (ii) (if required to be delivered with (x) the consolidated financial statements for the second Financial Quarter in a Financial Year or (y) the consolidated Annual Financial Statements of the Borrower) shall be reported on by the Borrower’s Auditors on whether or not a Subsidiary is a Material Company and whether the requirements of Clause 23.32 (Guarantors) were satisfied in respect of the Financial Year to which those financial statements relate,

unless the Auditors in the relevant jurisdiction have adopted a general policy of not providing such reports or, if the Borrower’s Auditors as a matter of practice in respect of such reports require the Finance Parties to sign a letter of engagement with them, the Finance Parties have confirmed that they will not enter into such engagement letters with the Borrower’s Auditors.

 

21.3 Requirements as to financial statements

 

(a) The Borrower shall procure that each set of Annual Financial Statements, Quarterly Financial Statements and Annual WFOE Financial Statements includes a balance sheet, profit and loss account and cashflow statement. In addition the Borrower shall procure that:

 

  (i) each set of Annual Financial Statements and each set of Annual WFOE Financial Statements shall be audited by the Auditors; and

 

  (ii) each set of Quarterly Financial Statements includes a cashflow forecast in respect of the Group relating to the 12 month period commencing at the end of the relevant Financial Quarter.

 

(b) Each set of financial statements delivered pursuant to Clause 21.1 (Financial statements):

 

  (i) in the case of consolidated financial statements of the Group, shall be accompanied by a statement by the directors of the Borrower comparing actual performance for the period to which the financial statements relate to:

 

  (A) the projected performance for that period set out in the Budget; and

 

  (B) the actual performance for the corresponding period in the preceding Financial Year of the Group; and

 

  (ii) shall be prepared using the Accounting Principles, (which, for the avoidance of doubt, shall be the generally accepted accounting principles in the PRC in the case of the Annual WFOE Financial Statements), accounting practices and financial reference periods consistent with those applied in the preparation of the Base Case Model, unless, in relation to any set of financial statements, the Borrower notifies the Agent that there has been a material change in the Accounting Principles or the accounting practices and its Auditors (or, if appropriate, the Auditors of the Obligor) deliver to the Agent:

 

  (A) a description of any change necessary for those financial statements to reflect the Accounting Principles or accounting practices upon which the Base Case Model or, as the case may be, that Obligor’s Original Financial Statements were prepared; and

 

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  (B) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 22 (Financial covenants) has been complied with, to determine the Margin as set out in the definition of “Margin”, to determine the amount of any prepayments to be made from Excess Cashflow under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) and to make an accurate comparison between the financial position indicated in those financial statements and the Base Case Model (in the case of the Borrower) or that Obligor’s Original Financial Statements (in the case of an Obligor).

 

(c) If the Borrower notifies the Agent of a change in accordance with paragraph (b)(ii) above then the Borrower and the Agent shall enter into negotiations in good faith with a view to agreeing:

 

  (i) whether or not the change might result in any material alteration in the commercial effect of any of the terms of this Agreement; and

 

  (ii) if so, any amendments to this Agreement which may be necessary to ensure that the change does not result in any material alteration in the commercial effect of those terms; and

if any amendments are agreed they shall take effect and be binding on each of the Parties in accordance with their terms.

 

(d) If no such agreement is reached within 30 days of that notification of change, the Agent shall (if so requested by the Majority Lenders) instruct the Auditors of the Borrower or independent accountants (approved by the Borrower or, in the absence of such approval within five days of request by the Agent of such approval, a firm with recognised expertise) to determine any amendment to Clause 22.2 (Financial condition), the Margin computations set out in the definition of “Margin”, the amount of any prepayments to be made from Excess Cashflow under Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) and any other terms of this Agreement which the Auditors or, as the case may be, accountants (acting as experts and not arbitrators) consider appropriate to ensure the change does not result in any material alteration in the commercial effect of the terms of this Agreement. Those amendments shall take effect when so determined by the Auditors, or as the case may be, accountants. The cost and expense of the Auditors or accountants shall be for the account of the Borrower.

 

(e) Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Base Case Model or, as the case may be, the Original Financial Statements were prepared.

 

(f) Notwithstanding the foregoing, in respect of the quarterly financial statements required to be delivered under paragraph (b) of Clause 21.1 (Financial statements), and the last due date for delivery of which falls before the date falling 180 calendar days after the Closing Date, such financial statements may be prepared using the accounting practices of the Target Group which were in place immediately prior to the Merger Effective Time.

 

21.4 Budget

 

(a) Commencing with the Financial Year starting 1 January 2015, the Borrower shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event within 30 days after the start of each of its Financial Years, an annual Budget for that Financial Year (save that if the last due date for delivery falls before the date falling 180 calendar days after the Closing Date, the Borrower shall have additional 10 Business Days to deliver such Budget).

 

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(b) The Borrower shall ensure that each Budget:

 

  (i) is substantially in the form as set out in Schedule 21 (Form of Budget) and includes in any event a projected consolidated profit and loss, balance sheet and cashflow statement for the Group and projected financial covenant calculations;

 

  (ii) is prepared in accordance with the Accounting Principles and the accounting practices and financial reference periods applied to financial statements under Clause 21.1 (Financial statements); and

 

  (iii) has been approved by the board of directors of the Borrower.

 

(c) If the Borrower updates or changes the Budget in any material respect, it shall promptly (in any event within not more than five Business Days of the update or change being made) deliver to the Agent, in sufficient copies for each of the Lenders, such updated or changed Budget together with a written explanation of the main changes in that Budget.

 

21.5 Presentations

Once in every Financial Year, or more frequently if requested to do so by the Agent if the Agent reasonably suspects an Event of Default is continuing or may have occurred or could reasonably be expected to occur, at least two directors of the Borrower (one of whom shall be the Chief Financial Officer) must give a presentation upon reasonable notice and at a reasonable time to the Finance Parties about the on-going business and financial performance of the Group.

 

21.6 Year-end

The Borrower shall procure that each Financial Year-end of the Group and of each Group Member falls on 31 December.

 

21.7 Auditors

The Borrower shall ensure that it has at all times as the auditors for the consolidated financial statements of the Group, one of the Auditors (or their respective affiliates in its Relevant Jurisdiction).

 

21.8 Information: miscellaneous

The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

 

  (a) at the same time as they are dispatched, copies of all documents dispatched by the Borrower due to a requirement of mandatory law to its shareholders generally (or any class of them) or dispatched by the Borrower or any Obligors to its creditors generally (or any class of them) other than in the ordinary course of business;

 

  (b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings or Environmental Claim which are current, threatened or pending against any Group Member, and if adversely determined, are reasonably likely to have a Material Adverse Effect;

 

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  (c) promptly upon becoming aware of them, the details of any labour disputes which are current, threatened or pending against any Group Member and which have or are reasonably likely to have a Material Adverse Effect.

 

  (d) promptly upon becoming aware of the relevant default, the details of any material breach or non-compliance with the material terms of the Merger Documents, the VIE Contracts, the Shareholders Documents, the Management Vesting Agreements, the Vendor Note Documents or any of the Reports;

 

  (e) details of any Change of Control, Flotation, Disposal, insurance claim or Recovery Claim which will require a prepayment under Clause 8.1 (Exit and Flotation) or Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow);

 

  (f) promptly upon becoming aware of the relevant amendment, waiver, consent, default, breach, non-compliance, the details of any actual material amendment to or material waiver or material consent under, any material default under or any material breach of or non-compliance with the terms of any Merger Document, any VIE Contract, any Shareholders Document, any Management Vesting Agreement, any Parent Loan Document and any Vendor Note Document by any party thereto (including any material breach of warranty thereunder);

 

  (g) promptly, a notification if the Merger is withdrawn or abandoned;

 

  (h) promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Obligors and the Parent with the terms of any Transaction Security Documents;

 

  (i) promptly upon request by the Agent, an updated Group Structure Chart;

 

  (j) promptly, any material notification from GAPP, SCAB, SMACRF&T or Governmental Authority concerning the legality, validity, enforceability, renewal or effectiveness of the ICP Licence, MOC Licence, internet publishing licence or other similar Authorisation (including any potential variation or compromise thereof and/or relating to the VIE Restructuring);

 

  (k) (without limiting any of the obligations under Clause 21.9 (Notification of Default)) details of any violation of any Sanctions, as soon as reasonably practicable following such notification of violation provided that the Borrower (or relevant Group Member) shall be permitted, prior to notification, to first notify the relevant body, agency, regulatory authority or equivalent organisation (each, a “Regulator”) which regulates such relevant Sanctions (such notification to be made promptly, taking into account any disclosure obligations under applicable law or regulation). To the extent that such Regulator imposes confidentiality restrictions, the Borrower (or the relevant Group Member) shall not be required to notify the Lenders to the extent it would contravene such confidentiality restrictions, provided that the Borrower (or the relevant Group Member) shall use reasonable endeavours to remove such restrictions; and

 

  (l) promptly on request, such further information regarding the financial condition, assets and operations of the Group and/or any Group Member (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement, any changes to management of the Group and sufficient information to determine whether a Change of Control has occurred as any Finance Party through the Agent may reasonably request.

 

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21.9 Notification of default

 

(a) Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).

 

(b) Promptly upon a request by the Agent, the Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

 

21.10 “Know your customer” checks

 

(a) If:

 

  (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

  (ii) any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or

 

  (iii) a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (a)(iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (a)(iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (a)(iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations and internal policies pursuant to the transactions contemplated in the Finance Documents.

 

(b) Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations and internal policies pursuant to the transactions contemplated in the Finance Documents.

 

(c) The Borrower shall, by not less than 10 Business Days’ prior written notice to the Agent, notify the Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Guarantor pursuant to Clause 27 (Changes to the Obligors).

 

(d) Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Guarantor obliges the Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations and internal policies pursuant to the accession of such Subsidiary to this Agreement as an Additional Guarantor.

 

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22. FINANCIAL COVENANTS

 

22.1 Financial definitions

In this Agreement:

Adjusted EBITDA” means, in relation to a Relevant Period, EBITDA for that Relevant Period adjusted by:

 

  (a) including the operating profit before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA) of a Group Member (or attributable to a business or assets) acquired during the Relevant Period for that part of the Relevant Period prior to its becoming a Group Member or (as the case may be) prior to the acquisition of the business or assets; and

 

  (b) excluding the operating profit before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA) attributable to any Group Member (or to any business or assets) disposed of during the Relevant Period from the first day of that Relevant Period.

Adjusted Leverage” means, in respect of any Relevant Period, the ratio of Total Net Debt on the last day of that Relevant Period to Adjusted EBITDA in respect of that Relevant Period.

Borrowings” means, at any time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on prepayment or redemption) of any indebtedness of Group Members for or in respect of:

 

  (a) moneys borrowed and debit balances at banks or other financial institutions;

 

  (b) any acceptances under any acceptance credit or bill discount facility (or dematerialised equivalent);

 

  (c) any note purchase facility or the issue of bonds (but not Trade Instruments), notes, debentures, loan stock or any similar instrument;

 

  (d) any Finance Lease;

 

  (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

 

  (f) any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument (but not, in any case, Trade Instruments) issued by a bank or financial institution in respect of an underlying liability of an entity which is not a Group Member which liability would fall within one of the other paragraphs of this definition;

 

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  (g) any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the Termination Date;

 

  (h) any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind the entry into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 150 days after the date of supply;

 

  (i) any amount raised under any other transaction (including any forward sale or purchase agreement, sale and sale back or sale and leaseback agreement) classified as borrowings under the Accounting Principles; and

 

  (j) (without double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (e) above.

Business Acquisition” means the acquisition of a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company.

Capital Expenditure” means any expenditure or obligation in respect of expenditure which, in accordance with the Accounting Principles, is treated as capital expenditure or intangible expense or intangible expenditure (and which shall include, for the avoidance of doubt, any royalties, licenses or similar costs, fees or expenses paid for the acquisition of patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, software or other intellectual property).

Cashflow” means, in respect of any Relevant Period, EBITDA for that Relevant Period after:

 

  (a) adding the amount of any decrease (and deducting the amount of any increase) in Working Capital for that Relevant Period;

 

  (b) adding the amount of any cash receipts (and deducting the amount of any cash payments) during that Relevant Period in respect of any (x) Exceptional Items or (y) realised gains or losses on any derivative instrument not already taken account of in calculating EBITDA for any Relevant Period;

 

  (c) adding the amount of any cash receipts during that Relevant Period in respect of any Tax rebates or credits and deducting the amount actually paid in respect of Taxes during that Relevant Period by any Group Member (other than, in the case of cash receipts, any Disposal Proceeds, Insurance Proceeds or Recovery Proceeds which are required to be applied pursuant to Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow) disregarding the application of Clause 8.6 (Trapped Amount));

 

  (d) adding (to the extent not already taken into account in determining EBITDA) the amount of any dividends or other profit distributions received in cash by any Group Member during that Relevant Period from any entity which is itself not a Group Member and deducting (to the extent not already deducted in determining EBITDA) the amount of any dividends paid in cash during the Relevant Period (i) to minority shareholders in Group Members or (ii) by the Borrower;

 

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  (e) adding the amount of any cash paid to a Group Member in the Relevant Period that represents (x) payment of interest, dividend, redemption or other return of capital in respect of its Joint Venture Investment or (y) repayment of any loan made to a Joint Venture;

 

  (f) adding the amount of any increase in provisions, other non-cash debits and other non-cash charges (which are not Current Assets or Current Liabilities) and deducting the amount of any non-cash credits (which are not Current Assets or Current Liabilities) in each case to the extent taken into account in establishing EBITDA;

 

  (g) deducting the amount of any Capital Expenditure actually made in cash during that Relevant Period by any Group Member and the aggregate of any cash consideration paid for, or the cash cost of, any Business Acquisitions and the amount of any Joint Venture Investments except (in each case) to the extent funded from:

 

  (A) the proceeds of any Disposal or insurance claims permitted to be retained for this purpose;

 

  (B) Retained Excess Cashflow; or

 

  (C) New Shareholder Injections,

and there shall be excluded the effect of all cash movements associated with the Merger and the Merger Costs.

Cashflow Cover” means the ratio of Cashflow to Debt Service (excluding, for the avoidance of doubt, any prepayment made pursuant to Clause 7 (Illegality, voluntary prepayment and cancellation) but not any scheduled instalment to which it relates) in respect of any Relevant Period and for such calculation the balance standing to the credit of the DSRA at the first day of that Relevant Period will be added to Cashflow for that Relevant Period.

Current Assets” means the aggregate (on a consolidated basis) of all inventory, work in progress, trade and other receivables of each Group Member including prepayments in relation to operating items and sundry debtors (but excluding Cash and Cash Equivalent Investments) expected to be realised within 12 months from the date of computation but excluding amounts in respect of:

 

  (a) receivables in relation to Tax;

 

  (b) Exceptional Items and other non-operating items;

 

  (c) insurance claims;

 

  (d) any interest owing to any Group Member; and

 

  (e) amounts owed to any Group Member in connection with the Merger.

Current Liabilities” means the aggregate (on a consolidated basis) of all liabilities (including trade creditors, accruals and provisions) of each Group Member expected to be settled within 12 months from the date of computation but excluding amounts in respect of:

 

  (a) liabilities for Borrowings and Finance Charges;

 

  (b) liabilities for Tax;

 

  (c) Exceptional Items and other non-operating items;

 

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  (d) insurance claims;

 

  (e) liabilities in relation to dividends declared but not paid by the Borrower or by a Group Member in favour of a person which is not a Group Member; and

 

  (f) amounts owed by any Group Member in connection with the Merger.

Debt Service” means, in respect of any Relevant Period, the aggregate of:

 

  (a) Net Finance Charges for that Relevant Period;

 

  (b) all scheduled repayments of Borrowings falling due during that Relevant Period (including amounts set out in paragraph (a) of Clause 6.1 (Repayment of the Loan)), provided that any such scheduled repayments of Borrowings falling due during that Relevant Period shall be calculated after taking into account any actual reduction in such scheduled repayments of Borrowings as a result of any mandatory or voluntary prepayment that has been made, except that any reduction in any scheduled repayments of Borrowings as a result of any voluntary prepayment of any scheduled repayments of Borrowings (in part or in whole) that would otherwise fall due during that Relevant Period shall be disregarded (and such scheduled repayments of Borrowings shall be calculated as if such prepayment had not occurred) except to the extent that such voluntary prepayment has been applied towards reduction of all repayment instalments for each Repayment Date falling after the date of such voluntary prepayment on a pro rata basis, and provided further that such scheduled repayments of Borrowings shall exclude:

 

  (i) any amounts falling due under any overdraft or revolving facility and which were available for simultaneous redrawing according to the terms of that facility;

 

  (ii) for the avoidance of doubt, any mandatory prepayment made pursuant to Clause 8.2 (Disposal, Insurance and Recovery Proceeds and Excess Cashflow);

 

  (iii) any such obligations owed to any Group Member; and

 

  (iv) any repayment or prepayment of Borrowings under the Vendor Note to the extent funded from amounts in the Offshore VLN Account; and

 

  (c) the amount of the capital element of any payments in respect of that Relevant Period payable under any Finance Lease entered into by any Group Member.

EBITDA” means, in respect of any Relevant Period, the consolidated operating profit of the Group before taxation:

 

  (a) before deducting any interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments whether accrued, paid, payable or capitalised by any Group Member (calculated on a consolidated basis) in respect of that Relevant Period;

 

  (b) not including any accrued interest owing to any Group Member;

 

  (c) after adding back any amount attributable to the amortisation, depreciation or impairment of assets of Group Members (and taking no account of the reversal of any previous impairment charge made in that Relevant Period);

 

  (d) before taking into account any Exceptional Items;

 

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  (e) before deducting any Merger Costs;

 

  (f) after deducting the amount of any profit (or adding back the amount of any loss) of any Group Member which is attributable to minority interests;

 

  (g) plus or minus the Group’s share of the profits or losses (after finance costs and tax) of Non-Group Entities;

 

  (h) before taking into account any unrealised gains or losses on any derivative instrument, including those arising on translation of currency of debt (other than any derivative instrument which is accounted for on a hedge accounting basis);

 

  (i) before taking into account any gain or loss arising from an upward or downward revaluation of any other asset; and

 

  (j) excluding the charge to profit represented by the expensing of stock options and any other share-based compensation,

in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining operating profits of the Group before taxation.

Exceptional Items” means any exceptional, one off, non-recurring or extraordinary items.

Excess Cashflow” means, for any period for which it is being calculated, Cashflow for that period less (except to the extent already deducted in calculating Cashflow):

 

  (a) Debt Service of that period;

 

  (b) to the extent included in Cashflow pursuant to paragraph (g) of that definition, the amount of any New Shareholder Injections made during that period;

 

  (c) any Permitted Carry Forward Amount in respect of such Financial Year but adding back Permitted Carry Forward Amount carried forward to such Financial Year which has not been applied in payment of Capital Expenditure.

Finance Charges” means, for any Relevant Period, the aggregate amount of the accrued interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments in respect of Borrowings paid or payable by any Group Member (calculated on a consolidated basis) in cash or capitalised in respect of that Relevant Period:

 

  (a) excluding any upfront fees or costs which are included as part of the effective interest rate adjustments;

 

  (b) including the interest (but not the capital) element of payments in respect of Finance Leases;

 

  (c) including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any Group Member under any interest rate hedging arrangement;

 

  (d) excluding, to the extent included, any Merger Costs;

 

  (e) excluding any interest cost or expected return on plan assets in relation to any post-employment benefit schemes;

 

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  (f) if a Joint Venture is accounted for on a proportionate consolidation basis, after adding the Group’s share of the finance costs or interest receivable of the Joint Venture;

 

  (g) taking no account of any unrealised gains or losses on any derivative instruments other than any derivative instruments which are accounted for on a hedge accounting basis; and

 

  (h) excluding any capitalised interest under the loan made to the Borrower on or around the Closing Date or under New Shareholder Injections by way of debt but including any capitalised interest on the Vendor Note to the extent paid in cash,

together with the amount of any cash dividends or distributions paid or made by the Borrower in respect of that Relevant Period and so that no amount shall be added (or deducted) more than once.

Finance Lease” means any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a finance or capital lease.

Financial Quarter” means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.

Financial Year” means the annual accounting period of the Group ending on or about 31 December in each year.

Interest Cover” means the ratio of EBITDA to Net Finance Charges in respect of any Relevant Period.

Net Finance Charges” means, for any Relevant Period, the Finance Charges for that Relevant Period after deducting any interest payable in that Relevant Period to any Obligor (other than by another Obligor) on any Cash or Cash Equivalent Investment held by an Offshore Group Member.

New Shareholder Injections” means the aggregate amount subscribed for by Parent after the Closing Date for ordinary shares in the Borrower or for loans or other debt instruments in the Borrower subordinated to the Facility under the terms of the Intercreditor Agreement or otherwise on terms acceptable to the Majority Lenders (acting reasonably) provided that for the purposes of this Clause 22 (Financial covenants) and the related definitions or any permission or usage under or in respect of the Finance Documents (such as the usage referred to in the definition of “Acquisition/Investment”), New Shareholder Injection shall exclude any such equity or debt instrument (and the proceeds relating thereto) made:

 

  (a) as per the Funds Flow Statement or pursuant to Clause 4.1 (Initial conditions precedent); and

 

  (b) pursuant to Clause 22.4 (Equity cure) (but without prejudice to, for the avoidance of doubt, paragraph (c) thereof).

Non-Group Entity” means any investment or entity (which is not itself a Group Member (including associates and Joint Ventures)) in which any Group Member has an ownership interest.

Quarter Date” means each of 31 March, 30 June, 30 September and 31 December.

Relevant Period” means each period of 12 months, or such shorter period commencing on the Closing Date, ending on or about the last day of the Financial Year and each period of 12 months ending on or about the last day of each Financial Quarter.

 

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Retained Excess Cashflow” means Excess Cashflow which is not required to be applied in making any prepayment under the Finance Documents (but, for the avoidance of doubt, not including any Accrued Cash Sweep Amount or any Trapped Amount and, to the extent that there is any Accrued Cash Sweep Amount or any Trapped Amount, Retained Excess Cashflow shall be deemed to be zero for the purposes of the definition of “Permitted Distribution”).

Total Net Debt” means, at any time, the aggregate amount of all obligations of Group Members for or in respect of Borrowings at that time but:

 

  (a) excluding any such obligations to any other Group Member;

 

  (b) excluding any such obligations in respect of the Parent Loan and, to the extent they constitute Borrowings, any New Shareholder Injections;

 

  (c) including, in the case of Finance Leases only, their capitalised value;

 

  (d) excluding, any such obligations in respect of the Vendor Notes;

 

  (e) deducting the aggregate amount of Cash and Cash Equivalent Investments held by any Offshore Group Member at that time (excluding, any amount standing to the credit of the Offshore VLN Account),

and so that no amount shall be included or excluded more than once.

Unused Amount” has the meaning given to it in the definition of Acquisition/Investment Basket.

Working Capital” means, on any date, Current Assets less Current Liabilities.

 

22.2 Financial condition

The Borrower shall ensure that:

 

  (a) Cashflow Cover: Cashflow Cover in respect of any Relevant Period ending on or after the First Test Date, shall not be less than 1.25:1.

 

  (b) Interest Cover: Interest Cover in respect of any Relevant Period specified in column 1 below (and which ends on or after the First Test Date) shall not be less than the ratio set out in column 2 below opposite that Relevant Period.

 

Column 1
Relevant Period
   Column 2
Ratio
 

Relevant Period expiring 30 June 2014

     4.00:1   

Relevant Period expiring 30 September 2014

     4.00:1   

Relevant Period expiring 31 December 2014

     4.00:1   

Relevant Period expiring 31 March 2015

     4.00:1   

Relevant Period expiring 30 June 2015

     4.00:1   

Relevant Period expiring 30 September 2015

     4.00:1   

Relevant Period expiring 31 December 2015

     4.00:1   

Relevant Period expiring 31 March 2016

     4.00:1   

 

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Column 1
Relevant Period
   Column 2
Ratio
 

Relevant Period expiring 30 June 2016

     5.00:1   

Relevant Period expiring 30 September 2016

     5.00:1   

Relevant Period expiring 31 December 2016

     5.00:1   

Relevant Period expiring 31 March 2017

     5.75:1   

Relevant Period expiring 30 June 2017

     6.50:1   

Relevant Period expiring 30 September 2017

     6.50:1   

Relevant Period expiring 31 December 2017

     6.50:1   

Relevant Period expiring 31 March 2018

     6.50:1   

Relevant Period expiring 30 June 2018

     6.50:1   

Relevant Period expiring 30 September 2018

     6.50:1   

Relevant Period expiring 31 December 2018

     6.50:1   

Relevant Period expiring 31 March 2019

     6.50:1   

Relevant Period expiring 30 June 2019

     6.50:1   

 

  (c) Adjusted Leverage: Adjusted Leverage in respect of any Relevant Period specified in column 1 below (and which ends on or after the First Test Date) shall not exceed the ratio set out in column 2 below opposite that Relevant Period.

 

Column 1
Relevant Period
   Column 2
Ratio
 

Relevant Period expiring 30 June 2014

     4.00:1   

Relevant Period expiring 30 September 2014

     4.00:1   

Relevant Period expiring 31 December 2014

     4.00:1   

Relevant Period expiring 31 March 2015

     4.00:1   

Relevant Period expiring 30 June 2015

     3.00:1   

Relevant Period expiring 30 September 2015

     3.00:1   

Relevant Period expiring 31 December 2015

     3.00:1   

Relevant Period expiring 31 March 2016

     3.00:1   

Relevant Period expiring 30 June 2016

     2.00:1   

Relevant Period expiring 30 September 2016

     2.00:1   

Relevant Period expiring 31 December 2016

     2.00:1   

Relevant Period expiring 31 March 2017

     2.00:1   

 

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Column 1
Relevant Period
   Column 2
Ratio
 

Relevant Period expiring 30 June 2017

     1.50:1   

Relevant Period expiring 30 September 2017

     1.50:1   

Relevant Period expiring 31 December 2017

     1.50:1   

Relevant Period expiring 31 March 2018

     1.50:1   

Relevant Period expiring 30 June 2018

     1.50:1   

Relevant Period expiring 30 September 2018

     1.50:1   

Relevant Period expiring 31 December 2018

     1.50:1   

Relevant Period expiring 31 March 2019

     1.50:1   

Relevant Period expiring 30 June 2019

     1.50:1   

 

  (d) Capital Expenditure: in any Financial Year of the Borrower, the aggregate Capital Expenditure of the Group, together with the amount of any other Acquisition/Investment Expenditure in that Financial Year, shall not exceed the Acquisition/Investment Basket.

 

22.3 Financial testing

 

(a) Subject to paragraph (b) below, the financial covenants set out in Clause 22.2 (Financial condition) shall be calculated in accordance with the Accounting Principles and tested by reference to each of the financial statements delivered pursuant to paragraphs (a) and (b) of Clause 21.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 21.2 (Provision and contents of Compliance Certificate).

 

(b) For the purpose of the financial covenant in paragraphs (a) (Cashflow Cover) and (b) (Interest Cover) of Clause 22.2 (Financial condition) for each of the Relevant Periods ending on a date which is less than 12 months after the Closing Date, Net Finance Charges shall, for the period which has elapsed since the Closing Date, be annualised on a straight line basis.

 

(c) For the purpose of the financial covenant in paragraph (a) (Cashflow Cover) of Clause 22.2 (Financial condition) for each of the Relevant Periods ending on a date which is less than 12 months after the Closing Date, the Cashflow Cover shall be calculated using Debt Service (other than in relation to Net Finance Charges which shall be calculated in accordance with paragraph (b) above) for the period from the Closing Date to the end of that Relevant Period and the Cashflow for the period from the Closing Date to the end of that Relevant Period (the latter being annualised on a straight line basis).

 

(d) For the purpose of the financial covenants in paragraphs (a) (Cashflow Cover), (b) (Interest Cover) and (c) (Adjusted Leverage) of Clause 22.2 (Financial condition) for each of the Relevant Periods ending on a date which is less than 12 months after the Closing Date, EBITDA (and Adjusted EBITDA) shall be calculated on an actual basis over the previous 12 month period, and in respect of any part of the Relevant Period falling prior to the date on which the Target Group became part of the Group, the definition of EBITDA (and Adjusted EBITDA) shall is construed and calculated as if references to the Group were references to the Target Group based on actual historic data.

 

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(e) For the purpose of this Clause 22, no item shall be included or excluded more than once in any calculation.

 

22.4 Equity cure

 

(a) If the requirements of any of the financial covenants in paragraphs (a) to (c) of Clause 22.2 (Financial condition) are not met (or would but for this Clause 22.4 not be met) in respect of a Relevant Period (a “Breach Period”), but on or prior to the date falling 10 Business Days after the date on which the Compliance Certificate relating to the relevant Quarterly Financial Statements in respect of that Relevant Period is due to be delivered to the Agent under paragraph (a) of Clause 21.2 (Provision and contents of Compliance Certificate) (the “Cure Date”) a New Shareholder Injection is made curing the breach of the financial covenants in Clause 22.2 (Financial condition) which were shown to have been breached by such Compliance Certificate, then such requirements shall be deemed to have been satisfied as at the original date of determination as though there had been no failure to comply and any Default or Event of Default occasioned thereby shall be deemed to have been remedied for all purposes under the Finance Documents.

 

(b) Paragraph (a) above will only apply if each of the following conditions is satisfied:

 

  (i) the Borrower delivers to the Agent a certificate in the agreed form within 10 Business Days after the date on which the relevant Compliance Certificate referred to in paragraph (a) above was due to be delivered in respect of any Breach Period electing to apply the net amounts of such New Shareholder Injections in accordance with paragraph (c) below for that Breach Period;

 

  (ii) any such certificate certifies the aggregate net amounts received by the Borrower, and is signed by the Chief Financial Officer and one other director of the Borrower;

 

  (iii) the certificate shall be accompanied by a revised Compliance Certificate setting out calculations in reasonable detail indicating compliance with the ratios in Clause 22.2 (Financial condition) after taking into account the amounts of New Shareholder Injections used to remedy the non-compliance;

 

  (iv) the Borrower may not make any such election:

 

  (A) more than once in respect of any Relevant Period;

 

  (B) more than three times over the life of the Facility; or

 

  (C) in respect of consecutive Relevant Periods;

 

  (v) the Borrower may only elect to apply New Shareholder Injections as contemplated in this Clause 21.4 to the extent that failure to do so would result in non-compliance with Clause 22.2 (Financial condition) and such New Shareholder Injections shall be disregarded for all other purposes of the Finance Documents; and

 

  (vi) the amount of such New Shareholder Injections must be received in cash by the Borrower and 100 per cent. of such New Shareholder Injections must be paid to the Agent on the Cure Date to be applied in prepayment and cancellation in the order set out in paragraph (a) of Clause 8.3 (Application of mandatory prepayments and cancellations).

 

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(c) The Borrower may only elect to use the net amounts received in respect of any New Shareholder Injection by:

 

  (i) for the purposes of calculating Cashflow Cover, adding those amounts to Cashflow on the first day of the Breach Period;

 

  (ii) for the purposes of calculating Adjusted Leverage, deducting those amounts from Total Net Debt as at the last day of the Breach Period; or

 

  (iii) for the purposes of calculating Interest Cover, recalculating Net Finance Charges by treating such amounts as having been applied in prepayment of the Loan on the first day of the Breach Period.

 

(d) The net amounts received in respect of any New Shareholder Injection as contemplated by this Clause 22 shall be deemed to have been received on the first day of the Relevant Period in respect of which they are to be taken into account to remedy non-compliance with any requirement set out in Clause 22.2 (Financial condition).

 

23. GENERAL UNDERTAKINGS

The undertakings in this Clause 23 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

Authorisations and compliance with laws

 

23.1 Authorisations

Each Obligor and the Parent shall promptly:

 

  (a) obtain, comply with and do all that is necessary to maintain in full force and effect; and

 

  (b) upon the Agent’s request, supply certified copies to the Agent of:

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

 

  (i) enable it to perform its material obligations under the Finance Documents and the Merger Documents;

 

  (ii) subject to the Legal Reservations and, in the case of the Transaction Security Documents, the Perfection Requirements ensure in all material respects the legality, validity, enforceability or admissibility in evidence of any Finance Document and any Merger Document; and

 

  (iii) carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

 

23.2 Compliance with laws

Each Obligor shall (and the Borrower shall ensure that each Group Member will) comply in all respects with all laws to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.

 

23.3 Environmental compliance

Each Obligor shall (and the Borrower shall ensure that each Group Member will):

 

  (a) comply with all Environmental Law;

 

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  (b) obtain, maintain and ensure compliance with all requisite Environmental Permits;

 

  (c) implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

where failure to do so (i) has or is reasonably likely to have a Material Adverse Effect.

 

23.4 Taxation

 

(a) Each Obligor shall (and the Borrower shall ensure that each Group Member will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

 

  (i) such payment is being contested in good faith;

 

  (ii) adequate reserves are being maintained for those Taxes and the costs required to contest them which are disclosed in accordance with the Accounting Principles in its latest financial statements delivered to the Agent under Clause 21.1 (Financial statements); and

 

  (iii) such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

 

(b) No Group Member may change its residence for Tax purposes if to do so would be materially adverse to the interests of the Lenders.

Restrictions on business focus

 

23.5 Merger

No Obligor shall (and the Borrower shall ensure that no other Group Member will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than a Permitted Transaction, a Permitted Disposal, a Permitted Acquisition or a Permitted Share Issue.

 

23.6 Change of business

The Borrower shall procure that no substantial change is made to the general nature of the business of the Group taken as a whole from that carried on by the Target Group at the date of this Agreement.

 

23.7 Acquisitions and investments

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will):

 

  (i) acquire a company or any shares or Equity Interests or securities or a business or undertaking (or, in each case, any interest in any of them); or

 

  (ii) incorporate a company; or

 

  (iii) make, or acquire any interest in, any financial investment (whether in debt or equity securities or other investment products).

 

(b) Paragraph (a) above does not apply to an acquisition of a company, of shares, Equity Interests, securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company which is:

 

  (i) a Permitted Acquisition; or

 

  (ii) a Permitted Transaction.

 

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23.8 Joint Ventures

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will):

 

  (i) enter into, invest in or acquire (or agree to acquire) any shares, Equity Interests, stocks, securities or other interest in any Joint Venture; or

 

  (ii) transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

 

(b) Paragraph (a) above does not apply to any acquisition of (or agreement to acquire) any interest in a Joint Venture or transfer of assets (or agreement to transfer assets) to a Joint Venture or loan made to or guarantee given in respect of the obligations of a Joint Venture if such transaction is a Permitted Acquisition, a Permitted Disposal, a Permitted Loan or a Permitted Joint Venture.

 

23.9 Holding Companies

Notwithstanding any other provision of this Agreement, neither the Parent nor the Borrower shall trade, carry on any business, own any assets or incur any liabilities except for:

 

  (a) the provision and purchase of management, legal, accounting and administrative services (excluding treasury services) to other Group Members of a type customarily provided by a holding company to its Subsidiaries;

 

  (b) ownership of Equity Interests in its Subsidiaries, and credit balances in bank accounts, cash and Cash Equivalent Investments but only if those shares and, in the case of the Borrower, credit balances, cash and Cash Equivalent Investments are subject to the Transaction Security;

 

  (c) having commitments as at the date of the Commitment Letter in respect of an Existing Investment;

 

  (d) in the case of the Borrower, intra-Group debit balances and intra-Group credit balances;

 

  (e) having rights and liabilities under the Transaction Documents to which it is a party;

 

  (f) incurring any liabilities for (i) Permitted Offshore Expenses and (ii) any Merger Costs contemplated in the Funds Flow Statement;

 

  (g) making any Permitted Loan or Permitted Disposal, granting Permitted Security, incurring any Permitted Financial Indebtedness, making or benefiting from any Permitted Guarantee, and making, facilitating or receiving any Permitted Share Issue or Permitted Distribution or any arrangement in respect thereof or any transaction to facilitate such actions in each case provided that such are not otherwise prohibited by the Finance Documents;

 

  (h) having rights and liabilities as a result of a Permitted Transaction or a Permitted Hedging Transaction; and

 

  (i) non-trading administrative activities desirable to maintain its tax status.

 

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Restrictions on dealing with assets and Security

 

23.10 Preservation of assets

Each Obligor shall (and the Borrower shall ensure that each other Group Member will) maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary in the conduct of its business where failure to do so could reasonably be expected to have a Material Adverse Effect.

 

23.11 Pari passu ranking

Subject to the Legal Reservations and, in the case of the Transaction Security Documents, the Perfection Requirements, each Obligor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party or Hedge Counterparty against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

 

23.12 Negative pledge

In this Clause 23.12, “Quasi-Security” means an arrangement or transaction described in paragraph (b) below.

Except as permitted under paragraph (c) below:

 

  (a) No Obligor shall (and the Borrower shall ensure that no other Group Member will) create or permit to subsist any Security over any of its assets.

 

  (b) No Obligor shall (and the Borrower shall ensure that no other Group Member will):

 

  (i) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other Group Member;

 

  (ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms;

 

  (iii) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

 

  (iv) enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

 

  (c) Paragraphs (a) and (b) above do not apply to any Security or (as the case may be) Quasi-Security, which is:

 

  (i) Permitted Security; or

 

  (ii) a Permitted Transaction.

 

23.13 Disposals

 

(a) Except as permitted under paragraph (c) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset (including, but not limited to, any Intellectual Property and any Studios).

 

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(b) Except as permitted under paragraph (c) below, each Obligor shall ensure that no Studio that is a Group Member will enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any interest in any Intellectual Property developed by the Group.

 

(c) Paragraphs (a) and (b) above does not apply to any sale, lease, transfer or other disposal which is:

 

  (i) a Permitted Disposal;

 

  (ii) a Permitted Transaction; or

 

  (iii) a disposal giving effect to a Liabilities Acquisition which is permitted by, and as defined in, the Intercreditor Agreement.

 

23.14 Arm’s length basis

 

(a) Except as permitted by paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will) enter into any transaction with any person except on arm’s length terms.

 

(b) The following transactions shall not be a breach of this Clause 23.14:

 

  (i) intra-Group loans permitted under Clause 23.15 (Loans or credit) (other than (A) a loan made by an Obligor to a non-Obligor or (B) a loan made by a WFOE Group Member to a VIE Group Member);

 

  (ii) intra-Group issuance of Equity Interests permitted under Clause 23.21 (Share capital) (other than Equity Interests issued by an Obligor to a non-Obligor);

 

  (iii) fees, costs and expenses payable under the Transaction Documents in the amounts set out in the Transaction Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or agreed by the Agent;

 

  (iv) any Permitted Distribution or Permitted Management Transaction or Permitted Transaction; and

 

  (v) any Liabilities Acquisition which is permitted by, and as defined in, the Intercreditor Agreement.

Restrictions on movement of cash – cash out

 

23.15 Loans or credit

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will) be a creditor in respect of any Financial Indebtedness.

 

(b) Paragraph (a) above does not apply to:

 

  (i) a Permitted Loan;

 

  (ii) a Permitted Guarantee; or

 

  (iii) a Permitted Transaction.

 

23.16 No Guarantees or indemnities

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will) incur or allow to remain outstanding any guarantee in respect of any obligation of any person.

 

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(b) Paragraph (a) above does not apply to a guarantee which is:

 

  (i) a Permitted Guarantee; or

 

  (ii) a Permitted Transaction.

 

23.17 Dividends and share redemption

 

(a) Except as permitted under paragraph (b) below, the Borrower shall not (and will ensure that no other Group Member will):

 

  (i) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);

 

  (ii) repay or distribute any dividend or share premium reserve;

 

  (iii) pay or allow any Group Member to pay any management, advisory or other fee to or to the order of any of the shareholders of the Borrower; or

 

  (iv) redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so.

 

(b) Paragraph (a) above does not apply to:

 

  (i) a Permitted Distribution; or

 

  (ii) a Permitted Transaction (other than one referred to in paragraph (c) of the definition of that term).

 

23.18 Subordinated loans

 

(a) Except as permitted under paragraph (b) below, the Borrower shall not (and will ensure that no other Group Member will):

 

  (i) repay or prepay any principal amount (or capitalised interest) outstanding under the Vendor Note or any New Shareholder Injection by way of debt;

 

  (ii) pay any interest, fee or charge accrued or due under the Vendor Note or any New Shareholder Injection by way of debt; or

 

  (iii) purchase, redeem, defease or discharge any of any Vendor Note, any Parent Loan or any New Shareholder Injection by way of debt.

 

(b) Paragraph (a) above does not apply to a payment, repayment, prepayment, purchase, redemption, defeasance or discharge which is a Permitted Distribution or is otherwise permitted under the Vendor Note Subordination Deed or the Intercreditor Agreement.

 

23.19 Parent Loans

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will):

 

  (i) repay or prepay any principal amount (or capitalised interest) outstanding under the Parent Loans;

 

  (ii) pay any interest or any other amounts payable in connection with the Parent Loans; or

 

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  (iii) purchase, redeem, defease or discharge any amount outstanding with respect to the Parent Loans.

 

(b) Paragraph (a) above does not apply to a payment, repayment, prepayment, purchase, redemption, defeasance or discharge which is a Permitted Distribution or is otherwise permitted under the Intercreditor Agreement.

Restrictions on movement of cash – cash in

 

23.20 Financial Indebtedness

 

(a) Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other Group Member will) incur or allow to remain outstanding any Financial Indebtedness.

 

(b) Paragraph (a) above does not apply to Financial Indebtedness which is:

 

  (i) Permitted Financial Indebtedness; or

 

  (ii) a Permitted Transaction.

 

23.21 Share capital

 

(a) No Obligor shall (and the Borrower shall ensure that no other Group Member will) issue any Equity Interests except pursuant to:

 

  (i) a Permitted Share Issue; or

 

  (ii) a Permitted Transaction.

 

(b) No Obligor shall (and the Borrower shall ensure that no Group Member will) at any time enter into or be party to any agreement or arrangement (other than the Finance Documents) that would restrict the ability of a Group Member (other than the Borrower) to declare or pay:

 

  (i) dividends to the holders of its Equity Interests (other than, in the case of the VIE Entity, pursuant to the terms of the VIE Contracts);

 

  (ii) (in the case of any Onshore Group Member) any Onshore Distributions.

 

(c) Each Obligor shall ensure that no Onshore Group Member shall increase the amount of its statutory reserve requirements or the ratio of retained earnings to be contributed towards statutory reserves under its articles of association, except:

 

  (i) as required under applicable laws of the PRC; or

 

  (ii) as required by any applicable Governmental Authority.

Miscellaneous

 

23.22 Insurance

 

(a) Each Obligor shall (and the Borrower shall ensure that each other Group Member will) maintain insurances on and in relation to its business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business.

 

(b) All such insurances must be with reputable independent insurance companies or underwriters.

 

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23.23 Pensions

Each Obligor shall (and the Borrower shall ensure that each other Group Member will) ensure that all pension schemes and social benefit schemes operated by or maintained for the benefit of any or all of it and/or other Group Members and/or any of their respective employees are funded, operated and maintained to the extent required by law and regulations where failure to do so would be reasonably likely to have a Material Adverse Effect.

 

23.24 Access

If an Event of Default is continuing, each Obligor shall, and the Borrower shall ensure that each Group Member will permit the Agent and/or the Security Agent and/or accountants and/or other professional advisers and contractors of the Agent or Security Agent reasonable access at reasonable times and on reasonable notice at the risk and cost of the Borrower to (a) the premises, assets, books, accounts and records of each Group Member and (b) meet and discuss matters with senior management of each Group Member, in each case, only to the extent the Agent (acting reasonably) considers to be necessary to investigate and plan any action in connection with such Event of Default and provided that all information obtained as a result of such access shall be subject to the confidentiality restrictions set out in this Agreement.

 

23.25 Intellectual Property

 

(a) Each Obligor shall (and the Borrower shall procure that each other Group Member will):

 

  (i) preserve and maintain the subsistence and validity of the Intellectual Property necessary for the business and/or activities of the relevant Group Member (including with respect to any Intellectual Property that is not owned by it, ensuring that it has valid licences of such Intellectual Property) (such Intellectual Property being “Relevant Intellectual Property”); and

 

  (ii) in respect of any Relevant Intellectual Property:

 

  (A) use reasonable endeavours to prevent any infringement in any material respect of the Relevant Intellectual Property;

 

  (B) make registrations and pay all registration fees and taxes necessary to maintain the Relevant Intellectual Property in full force and effect and record its interest in that Relevant Intellectual Property;

 

  (C) not use or permit the Relevant Intellectual Property to be used in a way or take any step or omit to take any step in respect of that Relevant Intellectual Property which may materially and adversely affect the existence or value of the Relevant Intellectual Property or imperil the right of any Group Member to use such property; and

 

  (D) not discontinue the use of the Relevant Intellectual Property,

in each case, where failure to do so is reasonably likely to have a Material Adverse Effect.

 

(b) Failure to comply with any part of paragraph (a) above shall not be a breach of this Clause 23.25 to the extent that any dealing with Relevant Intellectual Property which would otherwise be a breach of paragraph (a) above is contemplated by the definition of “Permitted Transaction”.

 

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(c) Each Obligor shall (and the Borrower shall procure that each other Group Member will) use commercially reasonable endeavours to ensure that, to the extent permissible by law and not materially disadvantageous to the Group Members (taken as a whole), any new Intellectual Property (including any new games that use or utilise any existing Intellectual Property) is licenced, developed and owned by a WFOE Group Member and not by a VIE Group Member.

 

23.26 Amendments of Parent Loan Documents

No Obligor shall (and the Borrower shall ensure that neither the Parent nor a Group Member will) amend from the form delivered to the Agent in accordance with this Agreement or give any waiver or consent under any provision of:

 

  (a) any Parent Loan Document except as contemplated by Clause 20.28 (Parent Loan Documents and Vendor Note Documents); or

 

  (b) any other document delivered to the Agent pursuant to Clause 4 (Conditions of Utilisation) or Clause 27 (Changes to the Obligors) other than an amendment, waiver or consent which could not reasonably be expected to be material and adverse to the interests of the Finance Parties under the Finance Documents.

 

23.27 Group bank accounts

The Borrower shall ensure that within 10 Business Days of the Closing Date all bank accounts of each Offshore Group Member shall be opened and maintained with a Finance Party (or an Affiliate of a Finance Party).

 

23.28 Cash management

 

(a) VIE-to-WFOE cash transfer: the Borrower shall ensure that to the extent legally permissible (subject to the Borrower ensuring that the relevant Group Member takes commercially reasonable steps to overcome any such legal limitation), within five Business Days of a Quarter Date that the VIE Group Members pay or transfer all amounts in excess of RMB120,000,000 standing to the credit of all bank accounts held by the VIE Group Members (when aggregated together) as at that Quarter Date into the bank accounts held by the WFOE Group Members.

 

(b) First Tier WFOE Account (subsidiary Cash Management): to the extent legally possible and commercially reasonable, each Obligor shall (and the Borrower shall procure that each other Group Member which is not a VIE Group Member will) ensure that any cash to which an Onshore Group Member (other than a VIE Group Member) is beneficially entitled is promptly paid or credited into a First Tier WFOE Account.

 

(c) No investments: in respect of any cash to which an Onshore Group Member is or becomes beneficially entitled, except as otherwise permitted or required under this Agreement, the Borrower shall ensure that all such cash is promptly converted into and held as Cash (in accordance with paragraph (b) of the definition thereof).

 

23.29 Treasury Transactions

No Obligor shall (and the Borrower will procure that no other Group Member will) enter into any Treasury Transaction, other than any Permitted Hedging Transaction.

 

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23.30 Compliance with Hedging Letter

The Borrower shall ensure that all interest rate hedging arrangements required by the Hedging Letter are implemented in accordance with the terms of the Hedging Letter and that such arrangements are not terminated, varied or cancelled without the consent of the Agent (acting on the instructions of the Majority Lenders), save as permitted by the Intercreditor Agreement.

 

23.31 Financial assistance

Each Obligor shall ensure that all payments of amounts due under this Agreement, all guarantees issued by any Obligor under any Finance Document and any Security created pursuant to any Finance Document by any Obligor or the Parent are made or created in compliance with any applicable law or regulation in any of its Relevant Jurisdictions concerning financial assistance by a company for the acquisition of or subscription for shares or concerning the protection of shareholders’ capital.

 

23.32 Guarantors

 

(a) The Borrower shall ensure that as soon as reasonably practicable and in any event prior to the date falling 20 Business Days following the Closing Date, the Target and each other Offshore Group Member as at the Closing Date is a Guarantor.

 

(b) The Borrower shall ensure that as soon as reasonably practicable and in any event at all times from the date falling 20 Business Days following the Closing Date:

 

  (i) the aggregate of earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA, as defined in Clause 22 (Financial covenants) but on an unconsolidated basis and excluding all intra-Group items and investments in Subsidiaries of any Group Member) of the Guarantors represents not less than 90 per cent. of EBITDA of the Group; and

 

  (ii) the aggregate gross assets (calculated on a unconsolidated basis and excluding all intra-Group items and investments in Subsidiaries of any Group Member) of the Guarantors represents not less than 90 per cent. of consolidated gross assets of the Group,

(such requirement, the “Guarantor Threshold Requirement”), provided that:

 

  (A) any Group Member whose earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA, as defined in Clause 22 (Financial covenants), but on an unconsolidated basis) is negative; and

 

  (B) the earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA, as defined in Clause 22 (Financial covenants) or (y) the gross assets (in each case calculated on an unconsolidated basis and excluding all intra-Group items and investments in Subsidiaries of any Group Member) of any Group Member which is not required to accede as an Additional Guarantor by reason of the Security Principles,

shall each be excluded from the calculations under this paragraph (b) (including from the Guarantor Threshold Requirement).

 

(c) The Borrower shall not be required to meet the requirements of this Clause 23.32 to the extent that it cannot meet such requirements by reason of the Security Principles. The Borrower shall use all reasonable endeavours to ensure that the Group Members do all that is necessary in order to ensure compliance with this Clause 23.32.

 

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23.33 Further assurance

 

(a) Subject to the Security Principles, each Obligor and the Parent shall (and the Borrower shall procure that each other Group Member will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify having regard to the rights and restrictions in the Finance Documents (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):

 

  (i) to perfect the Security created or intended to be created under or evidenced by the Transaction Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;

 

  (ii) to confer on the Security Agent or confer on the Finance Parties Security over any property and assets of that Obligor or the Parent located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Transaction Security Documents; and/or

 

  (iii) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security; and/or

 

  (iv) to procure remittance of any balance standing to the credit of any accounts which are subject to the terms of the PRC Account Control Agreement to an account designated by the Security Agent.

 

(b) Subject to the Security Principles, each Obligor and the Parent shall (and the Borrower shall procure that each other Group Member will) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

 

23.34 Anti-corruption law and anti-money laundering

Each Obligor shall (and the Borrower shall ensure that each other Group Member will) comply in all respects with all Anti-Money Laundering Laws and Anti-Corruption Laws.

 

23.35 Sanctions

No Obligor (nor any other Group Member) shall:

 

(a) contribute or otherwise make available all or any part of the proceeds of the Facility, directly or indirectly, to, or for the benefit of, any person (whether or not related to any Obligor or any Group Member) for the purpose of financing or facilitating the activities of, transactions with, or investments in, any Sanctions Restricted Person or in any Sanctioned Country, including to the extent such action or status is prohibited by, or would itself cause any Finance Party, an Obligor or a Group Member to be in breach of, any Sanctions (for the avoidance of doubt, in each case, other than an action which is a Permitted Sanction Action);

 

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(b) directly or indirectly fund all or part of any payment under any Finance Document out of proceeds derived from any person, action or status which is prohibited by, or would itself cause any Finance Party, any Obligor or Group Member to be in breach of, any Sanctions;

 

(c) permit any Sanctions Restricted Person to have any direct or indirect interest in any member of the Group to the extent that such interest would cause any Finance Party, any Obligor or Group Member to be in breach of any Sanctions; or

 

(d) engage in any transaction, activity or conduct that violates any Sanctions or that could reasonably be expected to result in it or any other Obligor, Group Member or any Finance Party being designated as a Sanctions Restricted Person.

 

23.36 SAFE Rules and other PRC law compliance

Each Obligor shall, and shall ensure that each Group Member shall, comply in all material respects with the SAFE Rules, any amendments and/or supplements to the SAFE Rules to the extent applicable, and all further and/or supplemental laws and/or regulations (relating to any of the subject matters of the SAFE Rules) to which it is subject from time to time, except for any non-compliance which is not reasonably likely to have a Material Adverse Effect.

 

23.37 US Margin Regulations

No proceeds of the Utilisation will be used to purchase or carry any carrying Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock in contravention of Regulation T, U or X of the Federal Reserve Board.

 

23.38 Vendor Note Documents, Management Vesting Agreements

 

(a) The Borrower shall ensure that within 20 Business Days of the Closing Date, the Management Vesting Agreements have been entered into by the relevant parties thereto and the New Management Incentive Program and the Rollover Incentive Program have been implemented substantially in accordance with the terms of Schedule A to the Shareholder Terms.

 

(b) The Borrower shall not, and will procure that each relevant Group Member will not, without the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders):

 

  (i) make or agree to any amendment or variation of or supplement to any provision of any Vendor Note Document or any Management Vesting Agreement;

 

  (ii) terminate, rescind, supersede, cancel or agree to terminate, rescind, supersede or cancel any Vendor Note Document, or any Management Vesting Agreement;

 

  (iii) grant or agree to any waiver of any of its rights or remedies under or in connection with any Vendor Note Document or any Management Vesting Agreement;

 

  (iv) give any consent under any Vendor Note Document or any Management Vesting Agreement that is discretionary; or

 

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  (v) assign, transfer, novate or otherwise dispose of any or all of its rights and/or obligations under any Vendor Note Document or any Management Vesting Agreement, except for any assignment of its rights constituted by the creation of Transaction Security over such rights,

in each case where such event or circumstance is or would reasonably be expected to be materially adverse to the Finance Parties, in which event the Borrower shall as soon as reasonably practicable notify the Agent in writing upon the occurrence of such event or circumstance.

 

23.39 Merger Documents

 

(a) The Borrower shall not (and shall procure that each other Group Member will not) without the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders):

 

  (i) make or agree to any amendment or variation of or supplement to any provision of any Merger Documents;

 

  (ii) grant or agree to any waiver of any of its rights or remedies under or in connection with any Merger Documents; or

 

  (iii) give any consent under any Merger Documents,

in each case where such event or circumstance is or would reasonably be expected to be materially adverse to the Finance Parties, and the Borrower shall as soon as reasonably practicable notify the Agent in writing upon the occurrence of any event or circumstance specified in paragraphs (i) to (iii) above.

 

23.40 Shareholders Documents

 

(a) Each of the Parent and the Borrower shall ensure that there shall be no amendment or variation of or supplement to any provision of any Shareholders Document or any of the constitutional documents of a Group Member, Holdco or any intermediate holding company through which Holdco holds its interest in the Group, and that no person other than the Founder shall otherwise acquire “control” (for the purposes of the Anti-Monopoly Law of the PRC) of Holdco, the Parent or any Group Member (including, without limitation, the Equity Investors acting in concert in relation to operational or non-operational matters of Borrower or any Equity Investor, pursuant to the applicable constitutional documents, acquiring a veto right over any operational matters of Holdco, the Parent or any other Group Member), where such amendment, variation or supplement or acquisition of “control” (as the case may be) as reasonably likely to trigger a merger control filing with MOFCOM unless (in each case) (A) a merger control filing has been made and cleared in accordance with applicable PRC laws (by (1) a clearance decision or (2) the lapse of the applicable waiting periods, including any extensions thereof, without any objection, condition or obligation having been raised or imposed) in respect of the Merger or any subsequent amendment, variation or supplement of any Shareholders Document or the constitutional documents (or the transactions contemplated thereunder) or in respect of the acquisition of “control” (a “Shareholder Terms Drop Away Event”) or (B) the effectiveness of such amendment, variation or supplement is conditional upon the occurrence of, and the satisfaction of the terms of, a Shareholder Terms Drop Away Event in respect of such amendment, variation or supplement or such acquisition of “control” or (C) the Agent has received an opinion from its PRC counsel in form and substance satisfactory to it (acting reasonably) that the Shareholders Document as so amended, supplemented or waived would not trigger a merger control filing.

 

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(b) No Obligor shall (and the Borrower shall ensure that no Group Member will) amend, vary, novate, supplement, supersede, waive or terminate the constitutional documents of any Group Member over whose shares and Equity Interests Transaction Security is purported to be given under the terms of the Transaction Security Documents where to do so would be materially adverse to the interest of the Lenders.

 

23.41 VIE Structure

 

(a) Each Obligor shall not (and the Borrower shall use its commercially reasonable endeavours to ensure that each person who is party to a VIE Contract or Revenue Sharing Agreement and each holder or owner of any interest in any VIE Group Member will not) (and the Borrower shall procure that each other Group Member will not), without the prior written consent of (at any time on or prior to the Closing Date) the Original Mandated Lead Arrangers or (at any time after the Closing Date) the Agent (acting on the instructions of the Majority Lenders):

 

  (i) make or agree to any amendment or variation of or supplement to any provision of any VIE Contract, other than pursuant to the VIE Restructuring, where such amendment, variation or supplement is or would reasonably be expected to be materially adverse to the interests of the Finance Parties;

 

  (ii) terminate, rescind, supersede, cancel or agree to terminate, rescind, supersede or cancel any VIE Contract, other than pursuant to the VIE Restructuring;