Document:

PCCW Limited: Exhibit 4(bb)- Prepared By TNT Filings Inc.

EXHIBIT 4(bb)

Execution Version 

Dated 13th June 2005

(1) 
  DISTACOM HONG KONG LIMITED               

(2) 
 DISTACOM COMMUNICATIONS
LIMITED   

(3)  
PCCW LIMITED                                                    

AGREEMENT FOR THE 

SALE AND PURCHASE OF SHARES 

IN SUNDAY COMMUNICATIONS LIMITED  

 

  	RICHARDS BUTLER

      20th Floor

Alexandra House

16-20 Chater Road

      Central

      Hong Kong

 

 

	
    CONTENTS
	 	 	 
	Number	
    Clause Headings	
    Page
	 	 	 
	
    
    1.	
    
    Definitions and
    Interpretation	
    
    1
	
    
    2.	
    
    Sale of Sale
    Shares	
    
    4
	
    
    3.	
    
    Consideration	
    
    4
	
    
    4.	
    
    Conditions
    Precedent	
    
    5
	
    
    5.	
    
    Completion	
    
    5
	
    
    6.	
    
    Further
    Obligations	
    
    8
	 	 	 
	
    
    7.	
    
    Warranties	
    
    10
	
    
    8.	
    
    Restrictive
    Covenants	
    
    11
	
    
    9.	
    
    Guarantee	
    
    12
	
    
    10.	
    
    Confidentiality
    and Disclosures	
    
    13
	 	 	 
	
    
    11.	
    
    Costs	
    
    14
	
    
    12.	
    
    General	
    
    14
	
    
    13.	
    
    Notices	
    
    15
	
    
    14.	
    
    Governing Law and
    Submission to Jurisdiction	
    
    16
	
    SCHEDULE 1	
    17
	
    SCHEDULE 2	
    22

THIS AGREEMENT is made on                    
, 2005 

BETWEEN:- 

  (1)
    DISTACOM HONG KONG
  LIMITED, a company
  incorporated in Hong Kong whose registered office is at 6th Floor, Alexandra
  House, 16-20 Chater Road, Central, Hong Kong (the 
  ''Vendor"); 

  
  (2)
    DISTACOM
  COMMUNICATIONS LIMITED, a 
  company incorporated in Hong Kong
  whose registered office is at 6th Floor, Alexandra House, 16-20 Chater Road,
  Central, Hong Kong (the "Vendor
  Guarantor"); and 

  
  (3)
     PCCW LIMITED,
  a company incorporated in
  Hong Kong whose registered office is at 39th Floor, PCCW Tower, TaiKoo Place,
  979 King's Road, Quarry Bay, Hong Kong (the 
  "Purchaser"). 

WHEREAS:- 

  (A)  The
  Vendor is the legal and beneficial owner of 1,380,000,000 ordinary shares of
  HKS0.10 each in the capital of SUNDAY Communications Limited (the 
  "Company"), 
  representing approximately 46.15%
  of the issued share capital of the Company as at the date of this Agreement.
  The Company was incorporated in the Cayman Islands with limited liability. The
  shares of the Company are listed on the Main Board of the Stock Exchange (as
  defined below) and American Depository Receipts relating to the Company are
  listed on the NASDAQ National Market in the United States of America. 

  (B)
   The Vendor Guarantor
  is the direct registered and beneficial owner of the entire issued share
  capital of the Vendor (other than one share held on its behalf by a nominee)
  and has agreed to guarantee the obligations of the Vendor under this
  Agreement. 

  (C)
    The Vendor wishes to
  sell and the Purchaser wishes to purchase the Sale Shares (as defined below)
  on the terms and conditions set out in this Agreement. 

  (D)
   The Parties
  acknowledge that the sale and purchase of the Sale Shares as set out herein
  will cause the Purchaser (or the wholly owned subsidiary of the Purchaser
  designated by it to purchase the Sale Shares) to be obliged to make a
  mandatory general offer for the Offer Shares, pursuant to the Takeovers Code.
  

IT IS HEREBY AGREED as follows:- 

1.
     DEFINITIONS
AND INTERPRETATION

 

1.1    In this
Agreement where the context so admits, the following words and expressions shall
have the following meanings; 

	"Balance Sheet
    Date"	31st December
    2004;

-1-

	
    "Business Day"	
    a day (excluding Saturday and any day on which a tropical
    cyclone warning no. 8 or above is hoisted at any time between 9:00 a.m. and
    5:30 p.m. or on which a "black" rainstorm warning is hoisted at any time
    between 9:00 a.m. and 5:30 p.m.) on which licensed banks in Hong Kong are
    open for business;

	 	 
	"CCASS"	
    the Central Clearing and Settlement System established
    and operated by the Hong Kong Securities Clearing Company Limited; 
    

	 	 
	
    "Completion"	completion of the
    sale and purchase of the Sale Shares as specified in Clause 5;
	 	 
	
    "Completion Date"	22nd June 2005 or
    such other date as the Parties may agree in writing;
	 	 
	
    "Condition"	the condition
    precedent set out in Clause 4.1;
	 	 
	
    "Consideration"	the total
    consideration for the Sale Shares being the sum specified in Clause 3.1;
	 	 
	
    "Executive"	
    means the Executive Director of the Corporate Finance
    Division of the SFC (or any delegate of that Executive Director);

	 	 
	
    "Group" 	
    means the group of companies consisting of the Company
    and its subsidiaries and the expression "Group Company" shall be construed
    as any of them individually;

	 	 
	
    "Hong Kong"	the Hong Kong
    Special Administrative Region of the People's Republic of China;
	 	 
	"Huawei"	Huawei Tech.
    Investment Co., Ltd, a company incorporated in Hong Kong;
	 	 
	"Huawei
    Agreements"	
    the Huawei Financing Agreement, the Huawei SubContract
    and the Huawei Supply Contract, and a reference to a "Huawei Agreement"
    shall mean any of them

	 	 
	"Huawei
    Financing Agreement"	
    the Facility Agreement dated 13 May 2004 as amended and
    restated on 15 November 2004, and made between Mandarin Communications
    Limited (a wholly owned subsidiary of the Company), the

	 	 

-2-

	 	 
	 	
    Company, Huawei and
    J P Morgan Chase Bank, N.A.;
	 	 

    	"Huawei
    Sub-Contract" 	
    the sub-contract dated 13th May 2004 and made between
    Huawei and Mandarin Communications Limited (a wholly owned subsidiary of the
    Company), pursuant to the Huawei Supply Contract, as amended pursuant to a
    supplemental agreement dated 15th November 2004;

	 	 
	"Huawei
    Supply Contract" 	
    the Turn Key Contract for the Supply and Installation of
    a Mobile Communications Network and Associated Services dated 13 May 2004
    and made  between Mandarin Communications Limited (a wholly owned subsidiary
    of the Company) and Huawei, as amended pursuant to a supplemental agreement
    dated 15th November 2004, but excluding any of the annexes (as amended or
    supplemented) thereto;

	 	 
	
    "Listing Rules" 	the Rules
    Governing the Listing of Securities on the Stock Exchange;
	 	 
	
    "Offer"	the conditional
    cash offer to be made by the Purchaser to acquire all the Offer Shares;
	 	 
	
    "Offer Document"	the document
    containing the terms of the Offer to be despatched in connection with the
    Offer;
	 	 
	
    "Offer Shares"	
    all of the issued shares of the Company other than those
    that will, on Completion, already be owned by the Purchaser and persons
    acting in concert with the Purchaser;

	 	 
	
    "Parties"	the named parties
    to this Agreement and their respective successors and assigns;
	 	 
	
    "Resigning Directors"	the persons
    listed in Schedule 2;
	 	 
	
    "Sale Shares"	the 1,380,000,000
    Shares representing approximately 46.15% of the issued share capital of the
    Company as at the date of this Agreement and any and all shares or other
    securities of the Company derived from or representing those Shares;
	 	 
	"SFC"
    	the Securities
    and Futures Commission of Hong Kong;
	 	 

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    "Shares"	ordinary shares
    of HK$0.10 each in the issued share capital of the Company;
	 	 
	
    "Stock Exchange"	The Stock
    Exchange of Hong Kong Limited;
	 	 
	
    "Takeovers Code"	the Hong Kong
    Code on Takeovers and Mergers in force from time to time;
	 	 
	
    "Telecommunications Authority"	the
    Telecommunications Authority appointed under Section 5 of the
    Telecommunications Ordinance;
	 	 
	
    "Telecommunications Ordinance"	the
    Telecommunications Ordinance (Cap.106) of the laws of Hong Kong;
	 	 
	
    'Warranties" 	the
    representations and warranties contained or referred to in Clause 7 and
    Schedule 1;
	 	 
	
    "HK$"	Hong Kong
    dollars, the lawful currency of Hong Kong; and
	 	 
	
    "US$"	United States
    dollars, the lawful currency of the United States of America.

1.2   References in this
Agreement to Clauses and the Schedules are to clauses in and the schedules to
this Agreement (unless the context otherwise requires). The Recitals and the
Schedules to this Agreement shall be deemed to form part of this Agreement. 

1.3   The expressions "the
Vendor", "the Vendor Guarantor" and "the Purchaser" include
their respective successors and assigns. 

2.     SALE
OF SALE SHARES  

Subject to the terms and conditions
of this Agreement, the Vendor shall sell, as legal and beneficial owner, and the
Purchaser shall purchase, or procure the purchase by one of its wholly-owned
subsidiaries of, the Sale Shares, free from all liens, charges and encumbrances
and together with all rights now or hereafter attaching to them, including all
rights to any dividends or other distributions declared, made or paid after the
date of this Agreement. 

3.     CONSIDERATION
 

3.1   The
total consideration payable for the Sale Shares (the "Consideration") shall be
the sum of HK$897,000,000 (eight hundred and ninety seven million Hong Kong
dollars). being a price per Sale Share of HK$0.65. 

-4-

3.2   The Consideration
shall be payable by the Purchaser on Completion in accordance with Clause 5.4.1.

3.3   The
Vendor shall not, except with the prior written consent of the Purchaser, create
or permit to subsist any pledge, lien or charge over, or grant any option or
other right or dispose of any interest in, all or any of the Sale Shares prior
to Completion (other than the rights created herein). 

3.4   The
transfer of the Sale Shares shall be effected on the Company's principal
register of members in the Cayman Islands, subject (if necessary) to the consent
of the board of directors of the Company to the removal of the Sale Shares to
that register and the Sale Shares shall remain on that register until title has
been transferred to the Purchaser or one of its subsidiaries designated by the
Purchaser. 

4.     CONDITION PRECEDENT

4.1  
Completion of this Agreement shall be conditional upon there being no breach of
the representations and warranties set out in Schedule 1 to this Agreement prior
to Completion. The Purchaser may waive the Condition, but the Vendor shall not
be permitted to waive the Condition. 

4.2   If
the Condition is not satisfied (or waived by the Purchaser), all rights,
obligations and liabilities of the Parties hereunder shall cease and terminate
and none of the Parties shall have any claim against any other in respect of
this Agreement save for claims (if any) in respect of any antecedent breaches of
this Agreement. 

5.     COMPLETION  

5.1  
Subject to fulfilment (or waiver by the Purchaser) of the Condition, Completion
shall take place at 10:00 a.m. on the Completion Date, at 20/F, Alexandra House,
16-20 Chater Road, Central, Hong Kong (or at such other place and time as may be
agreed by the Parties in writing) when all (but not some only) of the events
described in this Clause 5 shall occur. 

5.2    At
Completion, the Vendor and the Vendor Guarantor shall deliver to the Purchaser:

5.2.1        duly executed transfer form(s) in respect of all of the Sale Shares in favour of
the Purchaser or its wholly owned subsidiary referred to in Clause 2 designated
by the Purchaser or the nominee(s) of either of them together with (in respect
of the relevant physical Sale Shares) the relative share certificate(s) and/or
(in respect of the relevant Sale Shares held in CCASS) the relevant instructions
to the relevant CCASS participant(s) to effect the transfer(s) of the relevant
Sale Shares through CCASS to the Purchaser or its wholly owned subsidiary
referred to in Clause 2 designated by the Purchaser or such person(s) having an
account(s) with CCASS as may he notified in writing by the Purchaser to the
Vendor at least 2 Business Days prior to the Completion Date; 

-5-

5.2.2
      certified copies of the minutes of the meetings of shareholders and meetings of
directors, or the written approvals of the shareholders or directors (as the
case maybe), of each of the Vendor and the Vendor Guarantor required to authorise the execution and completion of this Agreement by the Vendor and the
Vendor Guarantor, and the performance by the Vendor and the Vendor Guarantor of
their respective obligations hereunder; 

5.2.3
       a legal opinion from Messrs Deacons, Hong Kong legal counsel for the Vendor and
the Vendor Guarantor, confirming that the Vendor and the Vendor Guarantor are
each validly incorporated and have the capacity to enter into this Agreement and
that this Agreement constitutes the legal, valid and enforceable obligations of
each of them; and 

5.2.4        if Hong Kong stamp duty is payable on the transfer of the Sale Shares, a cheque
drawn in favour of "The Government of the Hong Kong Special Administrative
Region" in the amount of the Vendor's 50% share of the estimated stamp duty
payable in respect of the sale and purchase of the Sale Shares. 

5.3    At Completion: 

5.3.1        
the Vendor and the Vendor Guarantor shall deliver to the Company (with certified
copies to the Purchaser) letters of resignation by all the Resigning Directors,
expressed to be subject to the Offer proceeding, with effect from the later of
(1) the first closing date of the Offer and (2) the date on which the Offer
becomes or is declared unconditional (or such earlier date as the Executive
under the Takeovers Code may permit) but otherwise unconditional and
irrevocable, as directors of the Company and of each subsidiary of the Company
of which they are respectively directors, confirming, in each case, that they
have no claims against the Company or the relevant subsidiary (as the case
maybe), whether by way of compensation for loss of office or otherwise
howsoever; and 

5.3.2        
the Vendor shall procure that a board meeting of the Company is held at which
resolutions shall be passed approving: - 

5.3.2.1
     the
resignations of the Resigning Directors, as directors of the Company referred to
in Clause 5.3.1; and 

5.3.2.2
   the appointment
with effect from the date of posting of the Offer Document (or such earlier date
specified by the Purchaser which the Executive has consented to), but otherwise
on an unconditional and irrevocable basis, of such person as the Purchaser
shall nominate as directors of the Company; 

and the Vendor shall deliver to
the Purchaser certified copies of the minutes of the board meeting containing
those resolutions; and 

-6-

5.3.3       
the Vendor shall procure that a board meeting of each key subsidiary of the
Company nominated by the Purchaser is held at which resolutions shall be passed
approving: 

5.3.3.1
     the
resignations of the Resigning Directors, as directors of such key subsidiary;
and 

5.3.3.2
    the
appointment with effect from the date of the posting of the Offer Document (or
such earlier date specified by the Purchaser which the Executive has consented
to), but otherwise on an unconditional and irrevocable basis, of such persons as
the Purchaser shall nominate as directors of such key subsidiary. 

and the Vendor shall deliver to the
Purchaser certified copies of the minutes of the board meetings of each such key
subsidiary containing those resolutions. 

5.4    
At Completion and subject to compliance by the Vendor and the Vendor Guarantor
with their respective obligations under Clauses 5.2 and 5.3, the Purchaser
shall: 

5.4.1       
pay, or procure the payment
of, the Consideration in cash, by way of a cashier's order drawn on a
note-issuing bank in Hong Kong in favour of the Vendor, or by way of electronic
transfer to an account of the Vendor notified by the Vendor to the Purchaser in
writing at least three Business Days prior to the Completion Date; and 

5.4.2
       
deliver to the Vendor certified copies of a resolution of a duly appointed
committee of the Purchaser's board of directors authorising the execution and
completion of this Agreement. 

5.5   If
any of the Vendor, the Vendor Guarantor or the Purchaser shall be unable to
comply with any of their respective obligations under Clauses 5.2, 5.3 or 5.4
(as the case may be) on or before the date fixed for Completion, the Party not
in default may:- 

5.5.1
       
defer Completion to a date not more than 28 days after the said date (and so
that the provisions of this Clause 5.5 shall apply to Completion as so
deferred); or 

5.5.2
      
proceed to Completion so far as practicable but without prejudice to that
Party's rights (whether under this Agreement generally or under this Clause) to
the extent that the other Party shall not have complied with its obligations
hereunder; or 

5.5.3
       
terminate this Agreement, without prejudice to any other rights or remedies of
the terminating Party arising under this Agreement or otherwise. 

5.6   The
Vendor and the Vendor Guarantor shall procure that the board meetings referred
to in Clause 5.3.2.2 and Clause 5.3.3.2 shall be convened and the requisite
resolutions proposed to appoint persons nominated by the Purchaser as directors
and shall further procure that the Resigning Directors and any other person
designated by the Vendor or the Vendor Guarantor as a director of the relevant
company shall vote in favour of the 

-7-

relevant resolutions and the Vendor and the Vendor
Guarantor shall use all reasonable endeavours to ensure that the persons
nominated as directors by the Purchaser are duly appointed. Provided that the
Vendor and the Vendor Guarantor have complied with their foregoing obligations
under this Clause 5.6, if the persons designated for appointment as directors by
the Purchaser are not appointed and the Purchaser elects to proceed to
Completion under Clause 5.5.2. or to terminate this Agreement under Clause
5.5.3, the Purchaser will not have a claim for damages or other remedy against
the Vendor or the Vendor Guarantor as a result solely of the failure of the
persons nominated for appointment as directors of the Company and the key
subsidiaries by the Purchaser not having been so appointed, but without
prejudice to any and all other claims, rights and remedies of the Purchaser
under this Agreement or otherwise.

6.     FURTHER OBLIGATIONS
 

6.1  
Upon an obligation arising on the Purchaser (or the wholly owned subsidiary of
the Purchaser designated by it to purchase the Sale Shares) to make a mandatory
general offer pursuant to Rule 26 of the Takeovers Code for the Offer Shares as
a result of Completion of this Agreement and/or the performance of the
Purchaser's obligations hereunder, the Purchaser or the wholly owned subsidiary
of the Purchaser designated by it to purchase the Sale Shares (as the case may
be) shall announce as soon as is reasonably practicable as required pursuant to
the Takeovers Code the making of the Offer. 

6.2   The
Purchaser undertakes to the Vendor and the Vendor Guarantor to fulfil its
obligations, and to procure that any wholly owned subsidiary designated by it to
purchase the Sale Shares will fulfil its obligations, under Rule 26 of the
Takeovers Code. 

6.3   The
Parties undertake that they will comply with the Takeovers Code in relation to
the Offer and they will each use all reasonable endeavours (and the Vendor and
the Vendor Guarantor will through the Resigning Directors, use all reasonable
endeavours) to procure that the Company shall supply such information as may be
reasonably necessary to be included in the documents to be despatched or the
announcements to be issued pursuant to the Takeovers Code in connection with the
Offer, take respective responsibility for such information and authorise the
publication, despatch and/or release of such documents and announcements. 

6.4   The
Vendor and the Vendor Guarantor shall use all reasonable endeavours, but without
prejudice to the fiduciary duties of the relevant directors, to procure that the
board of directors of the Company shall recommend acceptance of the Offer by the
shareholders of the Company. 

6.5   At
all times after the date hereof and until the Offer shall become or be declared
unconditional in all respects, each of the Vendor and the Vendor Guarantor shall
refrain from deliberately taking any action or making any statement which is or
may be prejudicial to the success of the Offer. Without prejudice to the
generality of the foregoing, each of the Vendor and the Vendor Guarantor: 

-8-

6.5.1       
shall not accept any other offer in respect of all or any of the Sale
Shares respectively held by them; 

6.5.2       
shall not sell, transfer, assign, pledge, charge or otherwise dispose of
any Shares held by it except pursuant to the terms of this Agreement; 

6.5.3       
shall not requisition any shareholders meeting of the Company without the
prior written consent of the Purchaser; 

6.5.4       
shall not make any offer to acquire the whole or any part of the issued
share capital of the Company or permit any company in which the Vendor or the
Vendor Guarantor (as the case may be), directly or indirectly, has any interest
to make such an offer or solicit or encourage any other person to make such an
offer; 

6.5.5       
shall not acquire any interest in any other shares in, or other
securities of, the Company; and 

6.5.6       
shall not enter into any agreement or arrangement with any person, whether
conditionally or otherwise, to do any of the acts referred to in this Clause
6.5. 

6.6  
Each of the Parties undertakes to the others that it shall execute and do and
procure that there shall be executed and done all other documents and things as
may be necessary or desirable to  implement or give legal effect to the
provisions of this Agreement. 

6.7   At
all times after the date hereof until the later of (1) the first closing date of
the Offer and (2) the date on which the Offer shall become or be declared
unconditional in all respects, each of the Vendor and the Vendor Guarantor shall
use its respective reasonable endeavours to ensure that the business of the
Group will be operated in the ordinary course and in particular (but without
limiting the generality of the foregoing) that the Company and each of its
subsidiaries shall not: 

6.7.1       
dispose of any material assets used or required for the operation of its
business; 

6.7.2       
enter into, modify or agree to terminate any material contract; 

6.7.3       
incur any capital expenditure on any individual item in excess of HKS5
million except to the extent committed to prior to the date of this Agreement or
under the Huawei Agreements; 

6.7.4       
make, or agree to make, material alterations to the terms and conditions
of employment (including benefits) of any of its directors, officers or
employees; 

6.7.5       
allot or agree to allot any shares or other securities or repurchase,
redeem or agree to repurchase or redeem any shares or other securities; 

6.7.6       
pay any dividend or make any other distribution of its assets; 

-9-

6.7.7       
borrow any sum in excess of amounts borrowed in the ordinary course of business
and available to it at the date of this Agreement; 

6.7.8       
create any encumbrance over its assets or its undertaking other than in
the ordinary course of business; 

6.7.9       
institute, settle or agree to settle any legal proceeding relating to its
business, except debt collection in the normal course of business; 

6.7.10     
appoint any new directors other than those new directors nominated by the
Purchaser and referred to in Clauses 5.3.2.2 and 5.3.3.2; or 

6.7.11     
alter any of the Group's financing arrangements in any material respect without
the Purchaser's prior approval. 

6.8   The
Purchaser expressly acknowledges that of the ten directors of the Company, only
four (namely Richard John Siemens,  William Bruce Hicks, Kuldeep Saran and
Kenneth Michael Kate) ("Relevant Directors") are directors of, or interested in,
the Vendor and the Vendor Guarantor. Accordingly, provided that the Vendor and
the Vendor Guarantor have otherwise complied with their obligations to use their
respective reasonable endeavours and have not taken any action which might or
might be expected to prevent the matters referred to in Clauses 6.3, 6.4 and 6.7
from taking place, the obligations of the Vendor and Vendor Guarantor under
Clauses 6.3, 6.4 and 6.7 (but not under any other provision of this Clause 6 or
any other provision of this Agreement) shall be qualified (if necessary) to the
extent that the Vendor and the Vendor Guarantor shall not be in breach of their
obligations thereunder if the Vendor and the Vendor Guarantor are unable to
procure performance of the obligations referred to therein as a result of the
actions of other directors of the Company and its subsidiaries and/or the
Relevant Directors not comprising a majority of the board. 

6.9   The
Vendor Guarantor hereby irrevocably undertakes to the Purchaser that on or
before Completion the Vendor Guarantor will not offer, sell, transfer, pledge,
charge, create any right in respect of or grant any option over or otherwise
dispose of any of its shares in the Vendor or any interest therein and will
procure that the Vendor will not create, allot or issue any new shares or class
of shares or securities. 

6.10  If
requested by the Purchaser after Completion, the Vendor shall procure that the
entire legal and beneficial interest in all deferred shares in Mandarin
Communications Limited held by the Vendor, the Vendor Guarantor or any of their
respective subsidiaries will be transferred to a Group Company free from all
liens, charges and encumbrances and together with all rights now or hereafter
attaching to them, and will use its reasonable endeavours to procure that the
remaining deferred shares of Mandarin Communications Limited which are not owned
by a Group Company will be transferred to a Group Company on the same basis. 

7.     WARRANTIES  

7.1    The Vendor represents and warrants to the Purchaser
that each of the Warranties set out in Schedule 1 is as at the date hereof and
will on Completion remain true and accurate.

-10-

7.2     The
Vendor acknowledges that the Purchaser has entered into this Agreement in
reliance upon the Warranties and has been induced by them to enter into this
Agreement. 

7.3    
Each of the Warranties shall be separate and independent and, save as expressly
provided to the contrary, shall not be limited by reference to or inference from
any other Warranty or any other term of this Agreement. 

7.4     The
benefit of the Warranties may be assigned by the Purchaser in whole or in part
to any party acquiring the Sale Shares. 

8.       RESTRICTIVE COVENANTS
 

8.1  
Each of the Vendor and the Vendor Guarantor covenants with the Purchaser that it
will not, during the period from the date of this Agreement until the date which
is two years after Completion (either alone or jointly with, through or as
manager, adviser, consultant or agent for or shareholder or investor in any
person or holder of any other security in any person) directly or indirectly:

8.1.1       
be engaged, concerned or interested in or otherwise directly or
indirectly exert any management control over, any company carrying on a mobile
communications business in Hong Kong as a carrier licensee (as defined in the
Telecommunications Ordinance) ("Competitor"); 

8.1.2        
(other than as a result of general advertisement without direct
solicitation or contact) solicit or contact (with a view to the engagement or
employment by any person) any senior employee or any person who has been a
senior employee, officer (other than the Resigning Directors) or manager of any
Group Company; 

8.1.3        
do or say anything which is harmful to the reputation of any Group Company which
may lead any person to cease to do business with any Group Company on
substantially equivalent terms to those previously offered to any Group Company
prior to Completion or not to engage in business with any Group Company, 

with the intent that each of the foregoing shall
constitute an entirely separate and independent restriction on each of the
Vendor and the Vendor Guarantor. 

8.2   
It is agreed between the parties that whilst the restrictions set out in Clause
8.l are considered fair and reasonable, if it should be found that any of the
restrictions be void as going beyond what is fair and reasonable in all the
circumstances and if by deleting part of the wording or substituting a shorter
period of time or different geographical limit or a more restricted range of
activities for any of the periods of time, geographical limits or ranges of
activities set out in Clause 8.1 it would not be void, then there shall be
substituted such next less extensive period and/or limit and/or activity or such
deletions shall be made as shall render Clause 8.1 valid and enforceable. 

-11-

8.3  
The Purchaser shall have the right at any time to serve a notice on the
Vendor and the Vendor Guarantor for the purpose of deleting part of the wording
or substituting a shorter period of time or smaller geographical limit or a more
restricted range of activities for any of the periods of time, geographical
limits or ranges of activities set out in Clause 8,1, and in that case, there
shall be substituted such less extensive period and/or limit and/or activity or
such deletions shall be made as shall Tender Clause 8.1 to operate accordingly
from the date of this Agreement. 

8.4   
Nothing in Clause 8.1 shall apply in relation to the holding of shares or
other securities by the Vendor or the Vendor Guarantor in a Competitor, provided
that: 

8.4.1       
the securities are listed on a recognised stock exchange and the total
number of shares or other securities held by the Vendor and the Vendor Guarantor
(as the case may be) do not amount to 5 per cent, or more of the issued shares
or other securities of the company in question (the "Listed Company"); 

8.4.2        
the number of directors which the Vendor or the Vendor Guarantor (as the
case may be) are entitled to appoint to the board of directors of the Listed
Company does not, as a percentage of the total number of directors comprising
the board of the Listed Company, exceed the Vendor's or the Vendor Guarantor's
(as the case may be) holding in the shares or other securities of the Listed
Company; and 

8.4.3        
at all times, there is a holder of such shares or other securities holding
(together with, where appropriate, that shareholder's "associates" within the
meaning of that term as used in the Listing Rules) a larger percentage of such
shares or other securities than the Vendor or the Vendor Guarantor (as the case
may be). 

9.     GUARANTEE  

9.1   The
Vendor Guarantor hereby irrevocably and unconditionally guarantees to the
Purchaser the due and punctual performance of each obligation of the Vendor
contained in this Agreement. The Vendor Guarantor shall pay to the Purchaser
from time to time on demand a sum of money which the Vendor is at any time
liable to pay to the Purchaser under or pursuant to this Agreement and which has
not been paid at the time the demand is made. The obligations of the Vendor
Guarantor under this Clause 9.1 are primary obligations and not those of a mere
surety. If an obligation of the Vendor is void, voidable or unenforceable for
any reason, the obligations of the Vendor Guarantor under this Clause 9.1 are
unaffected and the Vendor Guarantor shall perform the Vendor's obligations as if
it were primarily liable for the performance. 

9.2   The
obligations of the Vendor Guarantor under Clause 9.1 are continuing and are not
satisfied, discharged or affected by an intermediate payment or settlement of
account by or a change in the constitution or control of, or the insolvency of,
or bankruptcy, winding up or analogous proceedings relating to the Vendor. 

-12-

9.3   The
liability of the Vendor Guarantor under Clause 9.1 is not affected by an
arrangement which the Purchaser may make with the Vendor or with another person
which (but for this Clause 9.3) might operate to diminish or discharge the
liability of or otherwise provide a defence to a surety. 

9.4   Without affecting
the generality of Clause 9.3, the Purchaser may at any time as it thinks fit and
without reference to the Vendor Guarantor: 

9.4.1        
grant a time for payment or grant another indulgence or agree to an
agreement, variation, waiver or release in respect of an obligation of the
Vendor; 

9.4.2        
give up, deal with, vary, exchange or abstain from perfecting or
enforcing other securities or guarantees held by the Purchaser; 

9.4.3        
discharge a party to other securities or guarantees held by the Purchaser
and release all or any of those securities or guarantees; and 

9.4.4        
compound with, accept compositions from and make other arrangements with
the Vendor or a person or persons liable on other securities or guarantees held
or to be held by the Purchaser. 

9.5   So
long as the Vendor is under an actual or contingent obligation under this
Agreement, the Vendor Guarantor shall not exercise a right which it may at any
time have by reason of the performance of its obligations under Clause 9.1 to be
indemnified by the Vendor, to claim a contribution from another surety of the
Vendor's obligations or to take the benefit (wholly or partly and by way of
subrogation or otherwise) of any of the Vendor's rights under this Agreement or
of any other security taken by the Purchaser in connection with this Agreement.

9.6   The
liability of the Vendor Guarantor under Clause 9.1 is not affected by the
avoidance of an assurance, security or payment or a release, settlement or
discharge which is given or made on the faith of an assurance, security or
payment, in either case, under an enactment relating to bankruptcy or
insolvency. 

10.    CONFIDENTIALITY AND DISCLOSURES
 

10.1  Save as required by law
or the Stock Exchange, the SFC, the Takeovers Code or any applicable regulations
of any regulatory authority, each of the Vendor and the Vendor Guarantor shall
keep secret the possibility, terms and condition of the Offer until the relevant
announcement regarding the same has been published by the Purchaser. 

10.2 Each of the
Vendor and the Vendor Guarantor understands and agrees that, in accordance with
the Takeovers Code, particulars of this Agreement and the dealings of the Vendor
and the Vendor Guarantor, persons acting in concert with them for the purposes
of the Takeovers Code and each of their respective Associates (as defined in the
Takeovers Code) in any shares in the capital of the Company (including
subscription rights and derivatives) in the past six months will be contained in
the Offer Document and that this Agreement will be available for inspection
during the  

-13-

offer period (as defined in the
Takeovers Code) and each of the Vendor and the Vendor Guarantor undertakes to
make available to the Purchaser promptly upon request a written memorandum
identifying all such dealings.

10.3 Each of the
Vendor and the Vendor Guarantor undertakes to use its reasonable endeavours to
ensure that the Company shall provide drafts of any and all announcements and
other documents proposed to be made, released or despatched by or on behalf of
the Company or the Vendor and/or the Vendor Guarantor in connection with the
Offer and to incorporate the reasonable comments of the Purchaser in those
announcements and other documents, but without prejudice to the obligations of
the Company or the Vendor and/or the Vendor Guarantor (as the case may be) under
any law, the Listing Rules or the Takeovers Code. 

11.     COSTS

11.1   
The Parties acknowledge and agree that each Party shall bear its own legal costs
incurred in connection with the preparation and negotiation of this Agreement
and matters incidental thereto. 

12.    GENERAL  

12.1
This Agreement shall be
binding upon and enure for the benefit of the successors of the Parties. 

12.2
This Agreement (together with
any documents referred to herein or executed contemporaneously by the Parties in
connection herewith) constitutes the whole agreement between the Parties and
supersedes any previous agreements or arrangements between them relating to the
subject matter hereof; it is expressly declared that no variations hereof shall
be effective unless made in writing signed by duly authorised representatives of
the Parties. 

12.3
All of the provisions of this
Agreement shall remain in full force and effect notwithstanding Completion
(except insofar as they set out obligations which have been fully performed at
Completion). 

12.4
This Agreement may be executed
in one or more counterparts, and by the Parties on separate counterparts, but
shall not be effective until each Party has executed at least one counterpart
and each such counterpart shall constitute an original of this Agreement but all
the counterparts shall together constitute one and the same instrument. 

12.5
No failure or delay by any
Parry in exercising any right, power or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of the
same preclude any further exercise thereof or the exercise of any other right,
power or remedy. 

-14-

12.6 If at any time
any provision of this Agreement is or becomes illegal, invalid or unenforceable
in any respect, the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired thereby. 

13.     NOTICES  

13.1
Any notice, claim, demand, court process, document or other communication
to be given under this Agreement (collectively "communications" in this Clause)
shall be in writing in the English language and may be served or given
personally or sent to the facsimile number of the relevant Party as specified in
this Clause. 

13.2
A change of address or facsimile number of the person to whom a
communication is to be addressed pursuant to this Agreement shall only be
effective on the second Business Day after the relevant notice of change has
been served in accordance with the provisions of this Clause on the other
Parties to this Agreement with specific reference in such notice that such
change is for the purposes of this Agreement. 

13.3 All
communications shall be served by the following means and the addressee of a
communication shall be deemed to have received the same within the time stated
adjacent to the relevant means of despatch:- 

	
    Means of despatch
	Time of
    deemed receipt
	
     
	 
	
    Facsimile
	on despatch
	
    Personal delivery
	upon receipt

13.4 The initial addresses and
facsimile numbers of the Parties for the service of communications and the
persons for whose attention such communications are to be marked are as
follows:- 

To the Vendor:- 

Address:            
c/o Deacons, 5th Floor, Alexandra House, 16-20 Chater Road, Central, Hong Kong

Facsimile no.:     (852)2810 0431 

Attention:           Mr. Keith
Cole 

To the Vendor Guarantor:- 

Address:            
c/o Deacons. 5th Floor, Alexandra House, 16-20 Chater Road, Central, Hong Kong

Facsimile no.:     (852)2810 0431 

Attention:           Mr. Keith
Cole 

To the Purchaser.-  

Address:            
39th Floor, PCCW Tower, TaiKoo Place, 979 King's Road, Quarry Bay, Hong Kong

-15-

Facsimile no.:     (852) 2962 5725 

Attention:          Company
Secretary 

13.5 A
communication served in accordance with this Clause shall be deemed sufficiently
served and in proving service and/or receipt of a communication it shall be
sufficient to prove that such communication was left at the addressee's address
(in the case of personal delivery) or that the communication was properly
transmitted by facsimile to the addressee. In the case of communication by
facsimile transmission, such transmission shall be deemed properly transmitted
on receipt of a report of satisfactory transmission printed out by the sending
machine. 

14.   GOVERNING LAW AND SUBMISSION TO JURISDICTION

This Agreement shall be governed by
and construed in accordance with the laws of Hong Kong and the Parties hereto
irrevocably submit to the non-exclusive jurisdiction of the Hong Kong courts for
the purpose of enforcing any claim arising hereunder. 

 

 

 

 

 

-16-

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES

1.    CAPACITY  

1.1   Each of the Vendor and the Vendor Guarantor is duly
incorporated and validly existing and has power and authority to enter into and
perform this Agreement and the other documents referred to in it. 

1.2   This Agreement and the other documents referred to
in it constitute (or shall constitute when executed) valid, legal and binding
obligations on each of the Vendor and the Vendor Guarantor in the terms of this
Agreement and the other documents referred to in it. 

1.3   Compliance with the terms of this Agreement and the documents
referred to in it shall not breach or constitute a default under any of the
following: 

(a)
  any provision of the
memorandum or articles of association or equivalent constitutional documents of
the Vendor or the Vendor Guarantor; or 

(b)
  any agreement or
instrument to which the Vendor or the Vendor Guarantor is a party or by which it
is bound; or 

(c)
  any order, judgment,
decree or other restriction applicable to the Vendor or the Vendor Guarantor.

1.4  
Except pursuant to clause 25.9(c) of the Huawei Financing Agreement as a result
of the resignation of the Resigning Directors, neither the execution nor
performance of this Agreement by the Vendor or the Vendor Guarantor nor the
change of control of the Company resulting from a transfer of Shares
representing more than 50% of the issued share capital of the Company under the
Offer will: 

(a)
  result in any Group
Company losing the benefit of a permit, asset, lease, tenancy, licence, grant,
subsidy, right or privilege which it enjoys at the date of this Agreement in any
jurisdiction; or 

(b)
 conflict with, or result
in a breach of, or constitute a default or give rise to an event of default
under, or require the consent of a person under, or enable a person to
terminate, or relieve a person from an obligation under: 

(i)   
any material agreement, arrangement, instrument, document or obligation to which
any Group Company is a party or a legal or administrative requirement in any
jurisdiction; or 

(ii)    the
memorandum or articles of association or any other constitutive document of any
Group Company; 

-17-

  
(c)  
  relieve any other party to any material agreement, arrangement or instrument
  with any Group Company or under which it is interested of such party's
  obligations to any Group Company thereunder or enable such party to determine
  such obligations or enforce any rights thereunder or determine any right or
  benefit to which any Group Company is entitled or result in the acceleration
  of any obligation under any such agreement, arrangement or instrument; or 

  (d)    result in
  the creation or imposition of any lien, charge, encumbrance or any other third
  party rights whatsoever on any of the material property or assets of any Group
  Company. 

2.     THE SALE SHARES 

2.1   
The Vendor is the registered
and beneficial owner of 1,380,000,000 Shares representing 46.15% of the entire
issued share capital of the Company. 

2.2   
The Sale Shares have been duly
authorised, issued and allotted and are fully paid up or credited as fully paid
up. 

2.3   
The Sale Shares are free from
all pre-emption and priority rights, options, claims, equities, liens, charges,
mortgages, encumbrances and third party rights of any kind. 

2.4   
The Sale Shares rank pari
passu inter se and with all other Shares in issue. 

2.5   
The Sale Shares are all the
Shares owned or held by the Vendor, the Vendor Guarantor and parties acting in
concert (as defined in the Takeovers Code) with them. 

3.     FINANCING AND SECURITY 

3.1    Except for
the Huawei Agreements, no Group Company is party to any loan agreements, vendor
financing arrangements or other credit or indebtedness facilities or
arrangements in relation to indebtedness or credit in an aggregate amount
exceeding US$20 million. 

3.2   
Except for the security given under the Huawei Agreements, no guarantee,
mortgage, charge, pledge, lien, assignment or other security agreement or
arrangement has been given or entered into by any Group Company or any third
party in respect of borrowings or other obligations of any Group Company in an
aggregate amount exceeding US$20 million. 

4.     CORPORATE MATTERS 

4.1   
Except for two dormant joint ventures, no Group Company is or has agreed to
become a member of any partnership, joint venture, consortium or other
unincorporated association. In relation to the two joint ventures, both of them
are dormant, the joint venture agreements have been terminated and no Group
Company has any material liability or obligation arising out of or in connection
with either of them. 

-18-

4.2   The
subsidiaries shown on page 4 and listed on page 75 of the Company's 2004 Annual
Report are all of the principal subsidiaries of the Company. The Company is the
sole legal and beneficial owner of the whole allotted and issued share capital
and all other issued securities (if any) of each of those principal subsidiaries
(other than the non-voting deferred shares in the capital of Mandarin
Communications Limited referred to in Clause 6.10). The whole of the allotted
and issued share capital and all other issued securities (if any) of each other
material subsidiary of the Company is solely legally and beneficially owned by
another Group Company. No Group Company holds or beneficially owns, or has
agreed to acquire, any securities of any other corporation. 

4.3  
Except for the security given under the Huawei Agreements, the shares of the
Company's subsidiaries are free from encumbrances, there is no right to require
any of the Company's subsidiaries to issue any share capital and no encumbrance
affecting any unissued shares or other securities of the subsidiaries (and no
commitment has been given to create any such encumbrance or for them to issue
any share capital). 

5.    SINCE THE BALANCE SHEET DATE  

5.1   Since the Balance Sheet Date: 

(a)  
no material adverse change has occurred in relation to the business,
operations, assets, position (financial, trading or otherwise), profits or
prospects of the Group and no event or circumstance has occurred that may result
in such a material adverse change, taking into account industry trends and also
taking into account the investment required to be made in the Group's 3G
business; 

(b)  
each Group Company has conducted its business in the normal course and as
a going concern; 

(c)  
save for amounts drawn down under the Huawei Agreements, no Group Company
has borrowed or raised any money or taken any form of financial security or
incurred contingent or other liabilities in an aggregate amount exceeding US$10
million which have not been publicly disclosed; 

(d)   
no Group Company has issued or agreed to issue any share or loan capital;
and 

(e)   
except for capital expenditure financed under the Huawei Agreements, no
Group Company has incurred any capital expenditure in excess of US$10 million.

6.     INSURANCE  

The insurance policies maintained by
or on behalf of the Group provide for indemnity cover against all losses and
liabilities that are normally insured against by a person carrying on the same
type of business as the Group. So far as the Vendor is aware, there are no
material outstanding claims under, or in respect of the validity of, any of
those policies and, so far as the Vendor is aware, there are no circumstances
likely to give rise to any claim under those policies. 

-19-

7.     CONTRACTS AND COMMITMENTS  

7.1    Except for
the Huawei Agreements, no Group Company is a party to or subject to any
agreement or arrangement with a value exceeding US$10 million: 

(a)  
which contains onerous or unusual terms or which was entered into
otherwise than in the ordinary course of business; or 

(b)  
which involves discounts, rebates or other special terms, or 

(c)  
which restricts the trading activities of the Group in any way in any
jurisdiction. 

8.     LICENCES  

8.1  
Each Group Company has all
necessary licences, consents, permits and authorities necessary to carry on its
business in the places and in the manner in which its business is now carried
on, all of which are valid and subsisting. Subject to the powers of the
Telecommunications Authority under the Telecommunications Ordinance, there is no
reason why any of those licences, consents, permits and authorities should be
suspended, cancelled, revoked or not renewed on the same terms. 

8.2  
No material queries have been received from, or investigations or
enquiries undertaken, by the Office of the Telecommunications Authority in Hong
Kong, other than as a result of the performance of this Agreement by the
parties. 

9.     LITIGATION AND INVESTIGATION  

9.1   
No Group Company is engaged in any material litigation, administrative,
mediation or arbitration proceedings or other proceedings or hearings before any
statutory or governmental body, department, or other agency (except for debt
collection in the normal course of business) or is the subject of any
investigation, enquiry or enforcement proceedings by any such body, department
or other agency and, so far as the Vendor is aware, no such proceedings,
investigation or enquiry have been threatened or are pending and there are no
circumstances likely to give rise to any such proceedings. 

9.2  
No Group Company is affected by any material existing or pending
judgements or rulings and no Group Company has given any undertaking arising
from legal proceedings to a court, governmental agency, regulatory body or third
party. 

9.3   
No Group Company is party to any material outstanding investigation or
dispute with the Inland Revenue Department. 

10.   INTELLECTUAL PROPERTY  

10.1  The intellectual property used in connection with the conduct of
the business of each Group Company (whether or not registered): 

-20-

(a)  
comprises all intellectual property required by it to conduct its
business and, so far as the Vendor is aware, the business does not infringe any
intellectual property rights of any third party; and 

(b)  
is beneficially owned by it or licensed to that Group Company free from
any licences to third parties which are materially prejudicial to the use of
that intellectual property and will not be adversely affected by the
transactions contemplated by this Agreement. 

11.   OTHERS  

The copies of the Huawei Agreements provided to the
Purchaser for review are the current versions and up to date, including all
material amendments. 

 

 

 

-21-

SCHEDULE 2   

RESIGNING DIRECTORS  

Richard John Siemens 

William Bruce Hicks 

Kuldeep Saran 

Kenneth Michael Katz 

-22-

EXECUTION PAGE 

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date appearing at the head hereof. 

	
    Signed by      
    	)	
    
	 	)
	for and on behalf of	)
	DISTACOM HONG KONG LIMITED	)
	in the presence of:-	)
	                           
     	)
	 	KEITH RICHARD COLE	 	 
	 	SOLICITOR	 	 
	 	DEACONS	 	 
	 	3RD-7TH & 18TH FLOORS	 	 
	 	ALEXANDRIA HOUSE	 	 
	 	CENTRAL, HONG KONG SAR	 	 

 

	
    Signed by      
    	)	
    
	 	)
	for and on behalf of	)
	DISTACOM COMMUNICATIONS
    LIMITED	)
	in the presence of:-	)
	                           
     	)
	 	KEITH RICHARD COLE	 	 
	 	SOLICITOR	 	 
	 	DEACONS	 	 
	 	3RD-7TH & 18TH FLOORS	 	 
	 	ALEXANDRIA HOUSE	 	 
	 	CENTRAL, HONG KONG SAR	 	 

	 	 
	Signed by      
    	)
	 	)
	for and on behalf of	)
	PCCW LIMITED	)
	in the presence of:-	)
	                            
    	)

-23-

EXECUTION PAGE 

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date appearing at the head hereof. 

	Signed by      
    	)	 
	 	)
	for and on behalf of	)
	DISTACOM HONG KONG LIMITED	)
	in the presence of:-	)
	                            
    	)

	 	 	 

    	Signed by      
    	)	 

    	 	)

    	for and on behalf of	)

    	DISTACOM COMMUNICATIONS LIMITED	)

    	in the presence of:-	)

    	                            
    	)

	 	 

    	
    Signed by       	)

    	
    	)	
    

    	for and on behalf of	)

    	PCCW
    LIMITED	)

    	in the presence of:-	)

    	                            
    	GRAHAM P. WINTER	)
	 	Solicitor	 	 
	 	Hong Kong	 	 

-23-PCCW Limited: Exhibit 4(cc) - Prepared by TNT Filings Inc.

EXHIBIT 4(cc)

Execution Version 

Dated 13th June 2005

(1) 
    TOWNHILL
ENTERPRISES LIMITED

(2)     
USI HOLDINGS LIMITED                       

      
(3)      

PCCW LIMITED                                              

 

AGREEMENT FOR THE 

SALE AND PURCHASE OF SHARES 

IN SUNDAY COMMUNICATIONS LIMITED  

 

  	RICHARDS BUTLER

      20th Floor

Alexandra House

16-20 Chater Road

      Central

      Hong Kong

	
    CONTENTS

	 	 	 
	Number	
    Clause
    Headings
	
    Page
	 	 	 
	
    
    1.	
    
    Definitions and
    Interpretation	
    
    1
	
    
    2.	
    
    Sale of Sale
    Shares	
    
    4
	
    
    3.	
    
    Consideration	
    
    4
	
    
    4.	
    
    Conditions
    Precedent	
    
    5
	
    
    5.	
    
    Completion	
    
    5
	
    
    6.	
    
    Further
    Obligations	
    
    8
	
    
    7.	
    
    Warranties	
    
    11
	
    
    8.	
    
    Restrictive
    Covenants	
    
    11
	
    
    9.	
    
    Guarantee	
    
    12
	
    
    10.	
    
    Confidentiality
    and Disclosures	
    
    14
	
    11.	
    Costs	
    14
	
    
    12.	
    
    General	
    
    14
	
    
    13.	
    
    Notices	
    
    15
	
    
    14.	
    
    Governing Law and
    Submission to Jurisdiction	
    
    16
	
    SCHEDULE 1	
    17
	
    SCHEDULE 2	
    22

 

THIS AGREEMENT is made
on  , 2005 

BETWEEN:-

(1)
  TOWNHILL ENTERPRISES
LIMITED, a company
incorporated in the British Virgin Islands whose registered office is at PO Box
957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
(the "Vendor");

(2)
  USI HOLDINGS LIMITED,
a company incorporated in
Bermuda whose registered office is at Cannons Court, 22 Victoria Street,
Hamilton HM12, Bermuda (the 
"Vendor Guarantor"); and

(3)
  PCCW LIMITED, 
a company incorporated in Hong
Kong whose registered office is at 39th Floor, PCCW Tower, TaiKoo Place, 979
King's Road, Quarry Bay, Hong Kong (the 
"Purchaser"). 

WHEREAS:- 

(A)
 The Vendor is the legal
and beneficial owner of 410,134,000 ordinary shares of HK$0.10 each in the
capita! of SUNDAY Communications Limited (the 
"Company"), 
representing approximately 13.7% of
the issued share capital of the Company as at the date of this Agreement. The
Company was incorporated in the Cayman Islands with limited liability. The
shares of the Company are listed on the Main Board of the Stock Exchange (as
defined below) and American Depository Receipts relating to the Company are
listed on the NASDAQ National Market in the United States of America. 

(B)
 The Vendor Guarantor is
the direct registered and beneficial owner of the entire issued share capital of
USI Holdings (B.V.I.) Limited, which in turn is the direct registered and
beneficial owner of the entire issued share capital of the Vendor and has agreed
to guarantee the obligations of the Vendor under this Agreement. 

(C)
  The Vendor wishes to
sell and the Purchaser wishes to purchase the Sale Shares (as defined below) on
the terms and conditions set out in this Agreement. 

(D)
 The Parties acknowledge
that the sale and purchase of the Sale Shares as set out herein will cause the
Purchaser (or the wholly owned subsidiary of the Purchaser designated by it to
purchase the Sale Shares) to be obliged to make a mandatory general offer for
the Offer Shares, pursuant to the Takeovers Code. 

IT IS 
HEREBY AGREED 
as follows:- 

1. 
    DEFINITIONS 
AND INTERPRETATION

 

1.1    In this
Agreement where the context so admits, the following words and expressions shall
have the following meanings: 

	
    -1-
	
    

	"Balance Sheet
    Date"	31st December
    2004;

	 	 

    	
    "Business Day"	
    a day (excluding Saturday and any day on which a tropical
    cyclone warning no. 8 or above is hoisted at any time between 9:00 a.m. and
    5:30 p.m. or on which a "black" rainstorm warning is hoisted at any time
    between 9:00 a.m. and 5:30 p.m.) on which licensed banks in Hong Kong are
    open for business;

    	 	 

    	"CCASS"	
    the Central Clearing and Settlement System established
    and operated by the Hong Kong Securities Clearing Company Limited; 
    

    	 	 

    	
    "Completion"	completion of the
    sale and purchase of the Sale Shares as specified in Clause 5;

    	 	 

    	
    "Completion Date"	22nd June 2005 or
    such other date as the Parties may agree in writing;

    	 	 

    	
    "Condition"	the condition
    precedent set out in Clause 4.1;

    	 	 

    	
    "Consideration"	the total
    consideration for the Sale Shares being the sum specified in Clause 3.1;

    	 	 

    	
    "Executive"	
    means the Executive Director of the Corporate Finance
    Division of the SFC (or any delegate of that Executive Director);

    	 	 

    	
    "Group" 	
    means the group of companies consisting of the Company
    and its subsidiaries and the expression "Group Company" shall be construed
    as any of them individually;

    	 	 

    	
    "Hong Kong"	the Hong Kong
    Special Administrative Region of the People's Republic of China;

    	 	 

    	"Huawei"	Huawei Tech.
    Investment Co., Ltd, a company incorporated in Hong Kong;

    	 	 

    	"Huawei
    Agreements"	
    the Huawei Financing Agreement, the Huawei SubContract
    and the Huawei Supply Contract, and a reference to a "Huawei Agreement"
    shall mean any of them

    	 	 

    	"Huawei
    Financing Agreement"	
    the Facility Agreement dated 13 May 2004 as amended and
    restated on 15 November 2004, and made between Mandarin Communications
    Limited (a wholly owned subsidiary of the Company), the  

	
    -2-
	
    

	 	
    Company, Huawei and
    J P Morgan Chase Bank, N.A.;
	 	 

    	"Huawei
    Sub-Contract" 	
    the sub-contract dated 13th May 2004 and made between
    Huawei and Mandarin Communications Limited (a wholly owned subsidiary of the
    Company), pursuant to the Huawei Supply Contract, as amended pursuant to a
    supplemental agreement dated 15th November 2004;

	 	 
	"Huawei
    Supply Contract" 	
    the Turn Key Contract for the Supply and Installation of
    a Mobile Communications Network and Associated Services dated 13 May 2004
    and made  between Mandarin Communications Limited (a wholly owned subsidiary
    of the Company) and Huawei, as amended pursuant to a supplemental agreement
    dated 15th November 2004, but excluding any of the annexes (as amended or
    supplemented) thereto;

	 	 
	
    "Listing Rules" 	the Rules
    Governing the Listing of Securities on the Stock Exchange;
	 	 
	
    "Offer"	the conditional
    cash offer to be made by the Purchaser to acquire all the Offer Shares;
	 	 
	
    "Offer Document"	the document
    containing the terms of the Offer to be despatched in connection with the
    Offer;
	 	 
	
    "Offer Shares"	
    all of the issued shares of the Company other than those
    that will, on Completion, already be owned by the Purchaser and persons
    acting in concert with the Purchaser;

	 	 
	
    "Parties"	the named parties
    to this Agreement and their respective successors and assigns;
	 	 
	
    "Resigning Directors"	the persons
    listed in Schedule 2;
	 	 
	
    "Sale Shares"	
    the 410,134,000 Shares representing approximately 13.7%
    of the issued share capital of the Company as at the date of this Agreement
    and any and all shares or other securities of the Company derived from or
    representing those Shares;

	 	 
	"SFC"
    	the Securities
    and Futures Commission of Hong Kong;
	 	 

	
    -3-
	
    

	
    "Shares"	ordinary shares
    of HK$0.10 each in the issued share capital of the Company;
	 	 
	
    "Stock Exchange"	The Stock
    Exchange of Hong Kong Limited;
	 	 
	
    'Takeovers Code"	the Hong Kong
    Code on Takeovers and Mergers in force from time to time;
	 	 
	
    "Telecommunications Authority"	the
    Telecommunications Authority appointed under Section 5 of the
    Telecommunications Ordinance;
	 	 
	
    "Telecommunications Ordinance"	the
    Telecommunications Ordinance (Cap.106) of the laws of Hong Kong;
	 	 
	
    'Warranties" 	the
    representations and warranties contained or referred to in Clause 7 and
    Schedule 1;
	 	 
	
    "HK$"	Hong Kong
    dollars, the lawful currency of Hong Kong; and
	 	 
	
    "US$"	United States
    dollars, the lawful currency of the United States of America.

1.2  
References in this Agreement
to Clauses and the Schedules are to clauses in and the schedules to this
Agreement (unless the context otherwise requires). The Recitals and the
Schedules to this Agreement shall be deemed to form part of this Agreement. 

1.3  
The expressions "the Vendor",
"the  Vendor 
Guarantor"  

and 

"the Purchaser" include their
respective successors and assigns.

2.    
SALE OF 
SALE 

SHARES  

Subject to the terms and conditions
of this Agreement, the Vendor shall sell, as legal and beneficial owner, and the
Purchaser shall purchase, or procure the purchase by one of its wholly-owned
subsidiaries of, the Sale Shares, free from all liens, charges and encumbrances
and together with all rights now or hereafter attaching to them, including all
rights to any dividends or other distributions declared, made or paid after the
date of this Agreement. 

3.    

CONSIDERATION

 

3.1   The
total consideration payable for the Sale Shares (the "Consideration") shall be
the sum of HK$266,587,100 (two hundred and sixty six million, five hundred and
eighty seven thousand, one hundred Hong Kong dollars), being a price per Sale
Share of HK$0.65. 

	
    -4-
	
    

3.2   The Consideration
shall be payable by the Purchaser on Completion in accordance with Clause 5.4.1.

3.3
 The Vendor shall not, except
with the prior written consent of the Purchaser, create or permit to subsist any
pledge, lien or charge over, or grant any option or other right or dispose of
any interest in, all or any of the Sale Shares prior to Completion (other than
the rights created herein). 

3.4   The
transfer of the Sale Shares shall be effected on the Company's principal
register of members in the Cayman Islands, subject (if necessary) to the consent
of the board of directors of the Company to the removal of the Sale Shares to
that register and the Sale Shares shall remain on that register until title has
been transferred to the Purchaser or one of its subsidiaries designated by the
Purchaser. 

4.    
CONDITIONS PRECEDENT 
 

4.1  
Completion of this Agreement shall be conditional upon satisfaction (or waiver
by the Purchaser) of the condition in Clause 4.1.1 and the satisfaction (or
waiver by the Vendor) of the condition in Clause 4.1.2
- in the case of the condition
in Clause 4.1.1 by 5:00 p.m.. on the Completion Date and in the case of the
condition in Clause 4.1.2 by 5..00 p.m. on the Business Day falling two Business
Days prior to the Completion Date or (in either case) such later date as may be
agreed in writing between the parties: 

4.1.1        
there being no breach of the representations and warranties set out in Schedule
1 to this Agreement; 

4.1.2        
the consent of the boards of directors of each of the Vendor and the Vendor
Guarantor to the sale of the Sale Shares on the terms of this Agreement being
obtained. 

4.2   If
the Conditions are not satisfied (or waived by relevant party), all rights,
obligations and liabilities of the Parties hereunder shall cease and terminate
and none of the Parties shall have any claim against any other in respect of
this Agreement save for claims (if any) in respect of any antecedent breaches of
this Agreement. 

5.    
COMPLETION  

5.1  
Subject to fulfilment (or
waiver by the Purchaser) of the Conditions, Completion shall take place at 10:00
a.m. on the Completion Date, at 20/F, Alexandra House, 16-20 Chater Road,
Central, Hong Kong (or at such other place and time as may be agreed by the
Parties in writing) when all (but not some only) of the events described in this
Clause 5 shall occur. 

5.2   
At Completion, the Vendor and
the Vendor Guarantor shall deliver to the Purchaser: 

5.2.1        
duly executed transfer form(s) in respect of all of the Sale Shares in favour of
the Purchaser or its wholly owned subsidiary referred to in Clause 2 designated
by the Purchaser or the nominee(s) of either of them together with (in respect  

	
    -5-
	
    

of the relevant physical Sale Shares)
the relative share certificate(s) and/or (in respect of the relevant Sale Shares
held in CCASS) the relevant instructions to the relevant CCASS participant(s) to
effect the transfer(s) of the relevant Sale Shares through CCASS to the
Purchaser or its wholly owned subsidiary referred to in Clause 2 designated by
the Purchaser or such person(s) having an account(s) with CCASS as may be
notified in writing by the Purchaser to the Vendor at least 2 Business Days
prior to the Completion Date;

5.2.2        
certified copies of the minutes of the meetings of directors, or the written
approvals of the directors (as the case may be), of each of the Vendor and the
Vendor Guarantor required to authorise the execution and completion of this
Agreement by the Vendor and the Vendor Guarantor, and the performance by the
Vendor and the Vendor Guarantor of their respective obligations hereunder; 

5.2.3        
legal opinions from legal counsel for the Vendor and the Vendor Guarantor in
their respective jurisdictions of incorporation, confirming that the Vendor and
the Vendor Guarantor are each validly incorporated and have the capacity to
enter into this Agreement and that this Agreement constitutes the legal, valid
and enforceable obligations of each of them; and 

5.2.4        
if Hong Kong stamp duty is payable on the transfer of the Sale Shares, a cheque
drawn in favour of "The Government of the Hong Kong Special Administrative
Region" in the amount of the Vendor's 50% share of the estimated stamp duty
payable in respect of the sale and purchase of the Sale Shares. 

5.3   At Completion: 

5.3.1        
the Vendor and the Vendor Guarantor shall deliver to the Company (with certified
copies to the Purchaser) letters of resignation by all the Resigning Directors,
expressed to be subject to the Offer proceeding, with effect from the later of
(1) the first closing date of the Offer and (2) the date on which the Offer
becomes or is declared unconditional (or such earlier date as the Executive
under the Takeovers Code may permit) but otherwise unconditional and
irrevocable, as directors of the Company and of each subsidiary of the Company
of which they are respectively directors, confirming, in each case, that they
have no claims against the Company or the relevant subsidiary (as the case may
be), whether by way of compensation for loss of office or otherwise howsoever;
and 

5.3.2        
the Vendor shall use all reasonable endeavours to procure that a board meeting
of the Company is held at which resolutions shall be passed approving:- 

5.3.2.1     
the resignations of the Resigning Directors, as directors of the Company
referred to in Clause 5.3.1; and 

5.3.2.2     
the appointment with effect from the date of posting of the Offer Document (or
such earlier date specified by the Purchaser which the Executive has consented
to), but otherwise on an unconditional and 

	
    -6-
	
    

irrevocable basis, of such persons as the Purchaser
shall nominate as directors of the Company; and the Vendor shall deliver to the Purchaser
certified copies of the minutes of the board meeting containing those
resolutions; and 

5.3.3       
the Vendor shall use all reasonable endeavours to procure that a board meeting
of each key subsidiary of the Company nominated by the Purchaser is held at
which resolutions shall be passed approving: 

5.3.3.1     
the resignations of the Resigning Directors, as directors of such key
subsidiary; and 

5.3.3.2     
the appointment with effect from the date of the posting of the Offer Document
(or such earlier date specified by the Purchaser which the Executive has
consented to), but otherwise on an unconditional and irrevocable basis, of such
persons as the Purchaser shall nominate as directors of such key subsidiary. 

and the Vendor shall deliver to the Purchaser
certified copies of the minutes of the board meetings of each such key
subsidiary containing those resolutions. 

5.4    At Completion
and subject to compliance by the Vendor and the Vendor Guarantor with their
respective obligations under Clauses 5.2 and 5.3, the Purchaser shall: 

5.4.1
      
pay, or procure the payment of, the Consideration in cash, by way of a cashier's
order drawn on a note-issuing bank in Hong Kong in favour of the Vendor, or by
way of electronic transfer to an account of the Vendor notified by the Vendor to
the Purchaser in writing at least three Business Days prior to the Completion
Date; and 

5.4.2
       
deliver to the Vendor certified copies of a resolution of a duly appointed
committee of the Purchaser's board of directors authorising the execution and
completion of this Agreement. 

5.5   If
any of the Vendor, the Vendor Guarantor or the Purchaser shall be unable to
comply with any of their respective obligations under Clauses 5.2, 5.3 or 5.4
(as the case may be) on or before the date fixed for Completion, the Party not
in default may:- 

5.5.1        
defer Completion to a date not more than 28 days after the said date (and so
that the provisions of this Clause 5.5 shall apply to Completion as so
deferred); or 

5.5.2        
proceed to Completion so far as practicable but without prejudice to that
Party's rights (whether under this Agreement generally or under this Clause) to
the extent that the other Party shall not have complied with its obligations
hereunder; or 

5.5.3        
terminate this Agreement, without prejudice to any other rights or remedies of
the terminating Party arising under this Agreement or otherwise. 

	
    -7-
	
    

5.6   The
Vendor and the Vendor Guarantor shall use their respective reasonable endeavours
to procure that the board meetings referred to in Clause 5.3.2.2 and Clause
5.3.3.2 shall be convened and the requisite resolutions proposed to appoint
persons nominated by the Purchaser as directors and shall further procure that
the Resigning Directors and any other person designated by the Vendor or the
Vendor Guarantor as a director of the relevant company shall vote in favour of
the relevant resolutions and the Vendor and the Vendor Guarantor shall use all
reasonable endeavours to ensure that the persons nominated as directors by the
Purchaser are duly appointed. Provided that the Vendor and the Vendor Guarantor
have complied with their foregoing obligations under this Clause 5.6, if the
persons designated for appointment as directors by the Purchaser are not
appointed and the Purchaser elects to proceed to Completion under Clause 5.5.2.
or to terminate this Agreement under Clause 5.5.3, the Purchaser will not have a
claim for damages or other remedy against the Vendor or the Vendor Guarantor as
a result solely of the failure of the persons nominated for appointment as
directors of the Company and the key subsidiaries by the Purchaser not having
been so appointed, but without prejudice to any and all other claims, rights and
remedies of the Purchaser under this Agreement or otherwise. 

6.    FURTHER OBLIGATIONS

6.1  
Upon an obligation arising on me Purchaser (or the wholly owned subsidiary of
the Purchaser designated by it to purchase the Sale Shares) to make a mandatory
general offer pursuant to Rule 26 of the Takeovers Code for the Offer Shares as
a result of Completion of this Agreement and/or the performance of the
Purchaser's obligations hereunder, the Purchaser or the wholly owned subsidiary
of the Purchaser designated by it to purchase the Sale Shares (as the case may
be) shall announce as soon as is reasonably practicable as required pursuant to
the Takeovers Code the making of the Offer. 

6.2   The
Purchaser undertakes to the Vendor and the Vendor Guarantor to fulfil its
obligations, and to procure that any wholly owned subsidiary designated by it to
purchase the Sale Shares will fulfil its obligations, under Rule 26 of the
Takeovers Code. 

6.3   The
Parties undertake that they will comply with the Takeovers Code in relation to
the Offer and they will each use all reasonable endeavours (and the Vendor and
the Vendor Guarantor will through the Resigning Directors, use all reasonable
endeavours) to procure that the Company shall supply such information as may be
reasonably necessary to be included in the documents to be despatched or the
announcements to be issued pursuant to the Takeovers Code in connection with the
Offer, take respective responsibility for such information and authorise the
publication, despatch and/or release of such documents and announcements. 

6.4   The
Vendor and the Vendor Guarantor shall use all reasonable endeavours, but without
prejudice to the fiduciary duties of the relevant directors, to procure that the
board of directors of the Company shall recommend acceptance of the Offer by the
shareholders of the Company. 

	
    -8-
	
    

6.5    At all times after the date hereof
and until the Offer shall become or be declared unconditional in all respects,
each of the Vendor and the Vendor Guarantor shall refrain from deliberately
taking any action or making any statement which is or may be prejudicial to the
success of the Offer. Without prejudice to the generality of the foregoing, each
of the Vendor and the Vendor Guarantor: 

6.5.1
       
shall not accept any other offer in respect of all or any of the Sale Shares
respectively held by them; 

6.5.2
       
shall not sell, transfer, assign, pledge, charge or otherwise dispose of any
Shares held by it except pursuant to the terms of this Agreement; 

6.5.3
       
shall not requisition any shareholders meeting of the Company without the prior
written consent of the Purchaser; 

6.5.4        
shall not make any offer to acquire the whole or any part of the issued share
capital of the Company or permit any company in which the Vendor or the Vendor
Guarantor (as the case may be), directly or indirectly, has control to make such
an offer or solicit or encourage any other person to make such an offer; 

6.5.5        
shall not acquire any interest in any other shares in, or other securities of,
the Company; and 

6.5.6        
shall not enter into any agreement or arrangement with any person, whether
conditionally or otherwise, to do any of the acts referred to in this Clause
6.5. 

6.6  
Each of the Parties undertakes to the others that it shall execute and do and
procure that there shall be executed and done all other documents and things as
may be necessary or desirable to implement or give legal effect to the
provisions of this Agreement. 

6.7   At
all times after the date hereof until the later of (1) the first closing date of
the Offer and (2) the date on which the Offer shall become or be declared
unconditional in ail respects, each of the Vendor and the Vendor Guarantor shall
use its respective reasonable endeavours to ensure that the business of the
Group will be operated in the ordinary course and in particular (but without
limiting the generality of the foregoing) that the Company and each of its
subsidiaries shall not: 

6.7.1       
dispose of any material assets used or required for the operation of its
business; 

6.7.2
      
enter into, modify or agree to terminate any material contract; 

6.7.3
      
incur any capital expenditure on any individual item in excess of HK$5 million
except to the extent committed to prior to the date of this Agreement or under
the Huawei Agreements; 

6.7.4       
make, or agree to make,
material alterations to the terms and conditions of employment (including
benefits) of any of its directors, officers or employees; 

	
    -9-
	
    

6.7.5
      
allot or agree to allot any shares or other securities or repurchase, redeem or
agree to repurchase or redeem any shares or other securities; 

6.7.6
      
pay any dividend or make any other distribution of its assets; 

6.7.7        
borrow any sum in excess of amounts borrowed in the ordinary course of business
and available to it at the date of this Agreement; 

6.7.8
      
create any encumbrance over its assets or its undertaking other than in the
ordinary course of business; 

6.7.9
      
institute, settle or agree to settle any legal proceeding relating to its
business, except debt collection in the normal course of business; 

6.7.10     
appoint any new directors
other than those new directors nominated by the Purchaser and referred to in
Clauses 5.3.2.2 and 5.3.3.2; or 

6.7.11     
alter any of the Group's
financing arrangements in any material respect without the Purchaser's prior
approval. 

6.8   The
Purchaser expressly acknowledges that of the ten directors of the Company, only
two (namely Edward Wai Sun Cheng and Andrew Chun Keung Leung ) ("Relevant
Directors") are directors of, or interested in, the Vendor and the Vendor
Guarantor. Accordingly, provided that the Vendor and the Vendor Guarantor have
otherwise complied with their obligations to use their respective reasonable endeavours and have not taken any action which might or might be expected to
prevent the matters referred to in Clauses 6.3, 6.4 and 6.7 from taking place,
the obligations of the Vendor and Vendor Guarantor under Clauses 6.3, 6.4 and
6.7 (but not under any other provision of this Clause 6 or any other provision
of this Agreement) shall be qualified (if necessary) to the extent that the
Vendor and the Vendor Guarantor shall not be in breach of their obligations
thereunder if the Vendor and the Vendor Guarantor are unable to procure
performance of the obligations referred to therein as a result of the actions of
other directors of the Company and its subsidiaries and/or the Relevant
Directors not comprising a majority of the board. 

6.9   The
Vendor Guarantor hereby irrevocably undertakes to the Purchaser that on or
before Completion the Vendor Guarantor will not offer, sell, transfer, pledge,
charge, create any right in respect of or grant any option over or otherwise
dispose of any of its shares in the Vendor or any interest therein and will
procure that the Vendor will not create, allot or issue any new shares or class
of shares or securities. 

6.10  If
requested by the Purchaser within 12 months after Completion, the Vendor shall
procure that the entire legal and beneficial interest in all deferred shares in
Mandarin Communications Limited held by the Vendor, the Vendor Guarantor or any
of then-respective subsidiaries will be transferred to a Group Company free from
all liens, charges and encumbrances and together with all rights now or
hereafter attaching to them, and will use its reasonable endeavours to procure
that the remaining deferred shares of Mandarin Communications Limited which are
not owned by a Group Company will be transferred to a Group Company on the same
basis. 

	
    -10-
	
    

7.   
WARRANTIES  

7.1
  The Vendor represents
and warrants to the Purchaser that each of the Warranties set out in Schedule 1
is as at the date hereof and will on Completion remain true and accurate. 

7.2
  The Vendor acknowledges
that the Purchaser has entered into this Agreement in reliance upon the
Warranties and has been induced by them to enter into this Agreement. 

7.3
  Each of the Warranties
shall be separate and independent and, save as expressly provided to the
contrary, shall not be limited by reference to or inference from any other
Warranty or any other terra of this Agreement. 

7.4
  The benefit of the
Warranties may be assigned by the Purchaser in whole or in part to any party
acquiring the Sale Shares. 

7.5
  No claim shall be
brought by the Purchaser under the Warranties unless proceedings in respect of
any claim have been issued and served on the Vendor or the Vendor Guarantor no
later than the second anniversary of the date of this Agreement. 

7.6
  The total aggregate
liability of the Vendor and the Vendor Guarantor in respect of all claims made
under the Warranties shall not exceed HK$266,587,100.

8.    
RESTRICTIVE COVENANTS  

8.1  
Each of the Vendor and the Vendor Guarantor covenants with the Purchaser that it
will not, during the period from the date of this Agreement until the date which
is two years after Completion (either alone or jointly with, through or as
manager, adviser, consultant or agent for or shareholder or investor in any
person or holder of any other security in any person) directly or indirectly;

8.1.1        
be engaged, concerned or interested in or otherwise directly or indirectly exert
any management control over, any company carrying on a mobile communications
business in Hong Kong as a carrier licensee (as defined in the
Telecommunications Ordinance) ("Competitor"); 

8.1.2        
(other than as a result of general advertisement without direct solicitation or
contact) solicit or contact (with a view to the engagement or employment by any
person) any senior employee or any person who has been a senior employee,
officer (other than the Resigning Directors) or manager of any Group Company;

8 1.3        
do or say anything which is harmful to the reputation of any Group Company which
may lead any person to cease to do business with any Group Company on
substantially equivalent terms to those previously offered to any Group Company
prior to Completion or not to engage in business with any Group Company, 

	
    -11-
	
    

with the intent that each of the
foregoing shall constitute an entirely separate and independent restriction on
each of the Vendor and the Vendor Guarantor.

8.2
  It is agreed between
the parties that whilst the restrictions set out in Clause 8.1 are considered
fair and reasonable, if it should be found that any of the restrictions be void
as going beyond what is fair and reasonable in all the circumstances and if by
deleting part of the wording or substituting a shorter period of time or
different geographical limit or a more restricted range of activities for any of
the periods of time, geographical limits or ranges of activities set out in
Clause 8.1 it would not be void, then there shall be substituted such next less
extensive period and/or limit and/or activity or such deletions shall be made as
shall render Clause 8.1 valid and enforceable. 

8.3
  The Purchaser shall
have the right at any time to serve a notice on the Vendor and the Vendor
Guarantor for the purpose of deleting part of the wording or substituting a
shorter period of time or smaller geographical limit or a more restricted range
of activities for any of the periods of time, geographical limits or ranges of
activities set out in Clause 8.1, and in that case, there shall be substituted
such less extensive period and/or limit and/or activity or such deletions shall
be made as shall render Clause 8.1 to operate accordingly from the date of this
Agreement. 

8.4    Nothing in
Clause 8.1 shall apply in relation to the holding of shares or other securities
by the Vendor or the Vendor Guarantor in a Competitor, provided that:

8.4.1
      
the securities are listed on a recognised stock exchange and the total number of
shares or other securities held by the Vendor and the Vendor Guarantor (as the
case may be) do not amount to 20 per cent or more of the issued shares or other
securities of the company in question (the "Listed Company"); 

8.4.2
      
the number of directors which the Vendor or the Vendor Guarantor (as the case
may be) are entitled to appoint to the board of directors of the Listed Company
does not, as a percentage of the total number of directors comprising the board
of the Listed Company, exceed the Vendor's or the Vendor Guarantor's (as the
case may be) holding in the shares or other securities of the Listed Company;
and 

8.4.3
      
at all times, there is a holder of such shares or other securities holding
(together with, where appropriate, that shareholder's "associates" within the
meaning of that term as used in the Listing Rules) a larger percentage of such
shares or other securities than the Vendor or the Vendor Guarantor (as the case
may be). 

9.    
GUARANTEE  

9.1   The
Vendor Guarantor hereby irrevocably and unconditionally guarantees to the
Purchaser the due and punctual performance of each obligation of the Vendor
contained in this Agreement. The Vendor Guarantor shall pay to the Purchaser
from time to time on demand a sum of money which the Vendor is at any time
liable to pay to the Purchaser under or pursuant to this Agreement and which has
not been paid at 

	
    -12-
	
    

the time the demand is made. The
obligations of the Vendor Guarantor under this Clause 9.1 are primary
obligations and not those of a mere surety. If an obligation of the Vendor is
void, voidable or unenforceable for
any reason, the obligations of the Vendor Guarantor under this Clause 9.1 are
unaffected and the Vendor Guarantor shall perform the Vendor's obligations as if
it were primarily liable for the performance.

9.2   The
obligations of the Vendor Guarantor under Clause 9.1 are continuing and are not
satisfied, discharged or affected by an intermediate payment or settlement of
account by or a change in the constitution or control of, or the insolvency of,
or bankruptcy, winding up or analogous proceedings relating to the Vendor. 

9.3   The
liability of the Vendor Guarantor under Clause 9.1 is not affected by an
arrangement which the Purchaser may make with the Vendor or with another person
which (but for this Clause 9.3) might operate to diminish or discharge the
liability of or otherwise provide a defence to a surety. 

9.4    Without
affecting the generality of Clause 9.3, the Purchaser may at any time as it
thinks fit and without reference to the Vendor Guarantor: 

9.4.1
       
grant a time for payment or grant another indulgence or agree to an agreement,
variation, waiver or release in respect of an obligation of the Vendor; 

9.4.2
       
give up, deal with, vary, exchange or abstain from perfecting or enforcing other
securities or guarantees held by the Purchaser; 

9.4.3        
discharge a party to other securities or guarantees held by the Purchaser and
release all or any of those securities or guarantees; and 

9.4.4        
compound with, accept compositions from and make other arrangements with the
Vendor or a person or persons liable on other securities or guarantees held or
to be held by the Purchaser.

9.5   So
long as the Vendor is under an actual or contingent obligation under this
Agreement, the Vendor Guarantor shall not exercise a right which it may at any
time have by reason of the performance of its obligations under Clause 9.1 to be
indemnified by the Vendor, to claim a contribution from another surety of the
Vendor's obligations or to take the benefit (wholly or partly and by way of
subrogation or otherwise) of any of the Vendor's rights under this Agreement or
of any other security taken by the Purchaser in connection with this Agreement.

9.6   The
liability of the Vendor Guarantor under Clause 9.1 is not affected by the
avoidance of an assurance, security or payment or a release, settlement or
discharge which is given or made on the faith of an assurance, security or
payment, in either case, under an enactment relating to bankruptcy or
insolvency. 

	
    -13-
	
    

10.   CONFIDENTIALITY AND DISCLOSURES

10.1 Save as
required by law or the Stock Exchange, the SFC, the Takeovers Code or any
applicable regulations of any regulatory authority, each of the Vendor and the
Vendor Guarantor shall keep secret the possibility, terms and condition of the
Offer until the relevant announcement regarding the same has been published by
the Purchaser. 

10.2 Each of the
Vendor and the Vendor Guarantor understands and agrees that, in accordance with
the Takeovers Code, particulars of this Agreement and the dealings of the Vendor
and the Vendor Guarantor, persons acting in concert with them for the purposes
of the Takeovers Code and each of their respective Associates (as defined in the
Takeovers Code) in any shares in the capital of the Company (including
subscription rights and derivatives) in the past six months will be contained in
the Offer Document and that this Agreement will be available for inspection
during the offer period (as defined in the Takeovers Code) and each of the
Vendor and the Vendor Guarantor undertakes to make available to the Purchaser
promptly upon request a written memorandum identifying all such dealings. 

10.3 Each of the
Vendor and the Vendor Guarantor undertakes to use its reasonable endeavours to
ensure that the Company shall provide drafts of any and all announcements and
other documents proposed to be made, released or despatched by or on behalf of
the Company or the Vendor and/or the Vendor Guarantor in connection with the
Offer and to incorporate the reasonable comments of the Purchaser in those
announcements and other documents, but without prejudice to the obligations of
the Company or the Vendor and/or the Vendor Guarantor (as the case may be) under
any law, the Listing Rules or the Takeovers Code. 

11.   COSTS

The Parties acknowledge and agree that each Party
shall bear its own legal costs incurred in connection with the preparation and
negotiation of this Agreement and matters incidental thereto. 

12.    GENERAL  

12.1
This Agreement shall be
binding upon and enure for the benefit of the successors of the Parties. 

12.2
This Agreement (together with
any documents referred to herein or executed contemporaneously by the Parties in
connection herewith) constitutes the whole agreement between the Parties and
supersedes any previous agreements or arrangements between them relating to the
subject matter hereof; it is expressly declared that no variations hereof shall
be effective unless made in writing signed by duly authorised representatives of
the Parties. 

12.3
All of the provisions of this
Agreement shall remain in full force and effect notwithstanding Completion
(except insofar as they set out obligations which have been fully performed at
Completion). 

	
    -14-
	
    

12.4
This Agreement may be executed
in one or more counterparts, and by the Parties on separate counterparts, but
shall not be effective until each Party has executed at least one counterpart
and each such counterpart shall constitute an original of this Agreement but all
the counterparts shall together constitute one and the same instrument. 

12.5
No failure or delay by any
Party in exercising any right, power or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of the
same preclude any further exercise thereof or the exercise of any other right,
power or remedy. 

12.6
If at any time any provision
of this Agreement is or becomes illegal, invalid or unenforceable in any
respect, the legality, validity and enforceability of the remaining provisions
of this Agreement shall not be affected or impaired thereby. 

13.    NOTICES  

13.1
Any notice, claim, demand,
court process, document or other communication to be given under this Agreement
(collectively "communications" in this Clause) shall be in writing in the
English language and may be served or given personally or sent to the facsimile
number of the relevant Party as specified in this Clause. 

13.2
A change of address or
facsimile number of the person to whom a communication is to be addressed
pursuant to this Agreement shall only be effective on the second Business Day
after the relevant notice of change has been served in accordance with the
provisions of this Clause on the other Parties to this Agreement with specific
reference in such notice that such change is for the purposes of this Agreement.

13.3
All communications shall be
served by the following means and the addressee of a communication shall be
deemed to have received the same within the time stated adjacent to the relevant
means of despatch:- 

	
    Means of despatch
	Time of deemed
    receipt
	
     
	 
	
    Facsimile
	on despatch
	
    Personal delivery
	upon receipt

13.4 The initial
addresses and facsimile numbers of the Parties for the service of communications
and the persons for whose attention such communications are to be marked are as
follows:- 

	
    -15-
	
    

To the Vendor:-

Address:                
25th Floor, Unimix Industrial Centre, 2 Ng Fong Street, San Po Kong, Kowloon 

Facsimile no.:         (852)2351 8404

Attention:              
Company Secretary 

To the Vendor Guarantor:-

Address:                
25th Floor, Unimix Industrial Centre, 2 Ng Fong Street, San Po Kong, Kowloon 

Facsimile no.:         (852) 2351 8404

Attention:              
Company Secretary 

To the Purchaser:- 

Address:                 39th Floor, PCCW Tower, TaiKoo Place, 979 King's Road, Quarry Bay, Hong Kong 

Facsimile no.:         (852) 2962 5725 

Attention:               Company
Secretary 

13.5 A
communication served in accordance with this Clause shall be deemed sufficiently
served and in proving service and/or receipt of a communication it shall be
sufficient to prove that such communication was left at the addressee's address
(in the case of personal delivery) or that the communication was properly
transmitted by facsimile to the addressee. In the case of communication by
facsimile transmission, such transmission shall be deemed properly transmitted
on receipt of a report of satisfactory transmission printed out by the sending
machine. 

14.    GOVERNING LAW AND SUBMISSION TO JURISDICTION
 

This Agreement shall be governed by
and construed in accordance with the laws of Hong Kong and the Parties hereto
irrevocably submit to the non-exclusive jurisdiction of the Hong Kong courts for
the purpose of enforcing any claim arising hereunder. 

	
    -16-
	
    

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES

1.    CAPACITY  

1.1   Each of the Vendor and the Vendor Guarantor is duly
incorporated and validly existing and has power and authority to enter into and
perform this Agreement and the other documents referred to in it. 

1.2   This Agreement and the other documents referred to
in it constitute (or shall constitute when executed) valid, legal and binding
obligations on each of the Vendor and the Vendor Guarantor in the terms of this
Agreement and the other documents referred to in it. 

1.3   Compliance with the terms of this Agreement and the documents
referred to in it shall not breach or constitute a default under any of the
following: 

(a)
  any provision of the
memorandum or articles of association or equivalent constitutional documents of
the Vendor or the Vendor Guarantor; or 

(b)
  any agreement or
instrument to which the Vendor or the Vendor Guarantor is a party or by which it
is bound; or 

(c)
  any order, judgment,
decree or other restriction applicable to the Vendor or the Vendor Guarantor.

1.4  
Except pursuant to clause 25.9(c) of the Huawei Financing Agreement as a result
of the resignation of the Resigning Directors, neither the execution nor
performance of this Agreement by the Vendor or the Vendor Guarantor nor the
change of control of the Company resulting from a transfer of Shares
representing more than 50% of the issued share capital of the Company under the
Offer will: 

(a)
  result in any Group
Company losing the benefit of a permit, asset, lease, tenancy, licence, grant,
subsidy, right or privilege which it enjoys at the date of this Agreement in any
jurisdiction; or 

(b)
 conflict with, or result
in a breach of, or constitute a default or give rise to an event of default
under, or require the consent of a person under, or enable a person to
terminate, or relieve a person from an obligation under: 

(i)   
any material agreement, arrangement, instrument, document or obligation to which
any Group Company is a party or a legal or administrative requirement in any
jurisdiction; or 

(ii)    the
memorandum or articles of association or any other constitutive document of any
Group Company; 

	
    -17-
	
    

(c)
  relieve any other party
to any material agreement, arrangement or instrument with any Group Company or
under which it is interested of such party's obligations to any Group Company
thereunder or enable such party to determine such obligations or enforce any
rights thereunder or determine any right or benefit to which any Group Company
is entitled or result in the acceleration of any obligation under any such
agreement, arrangement or instrument; or 

(d)
   result in the
creation or imposition of any lien, charge, encumbrance or any other third party
rights whatsoever on any of the material property or assets of any Group Company
- 

2.      THE
SALE SHARES  

2.1
  The Vendor is the
registered and beneficial owner of 410,134,000 Shares representing 13.7% of the
entire issued share capital of the Company. 

2.2
  The Sale Shares have
been duly authorised, issued and allotted and are fully paid up or credited as
fully paid up. 

2.3
  The Sale Shares are
free from all pre-emption and priority rights, options, claims, equities, liens,
charges, mortgages, encumbrances and third party rights of any kind. 

2.4
  The Sale Shares rank
pari passu inter se and with all other Shares in issue. 

2.5
  The Sale Shares are all
the Shares owned or held by the Vendor and the Vendor Guarantor. 

3.      FINANCING AND SECURITY
 

3.1
  Except for the Huawei
Agreements, no Group Company is party to any loan agreements, vendor financing
arrangements or other credit or indebtedness facilities or arrangements in
relation to indebtedness or credit in an aggregate amount exceeding US$20
million. 

3.2
  Except for the security
given under the Huawei Agreements, no guarantee, mortgage, charge, pledge, lien,
assignment or other security agreement or arrangement has been given or entered
into by any Group Company or any third party in respect of borrowings or other
obligations of any Group Company in an aggregate amount exceeding USS20 million.

4.      CORPORATE MATTERS
 

4.1  
Except for two dormant joint ventures, no Group Company is or has agreed to
become a member of any partnership, joint venture, consortium or other
unincorporated association. In relation to the two joint ventures, both of them
are dormant, the joint venture agreements have been terminated and no Group
Company has any material liability or obligation arising out of or in connection
with either of them. 

	
    -18-
	
    

4.2 
The subsidiaries shown on page
4 and listed on page 75 of the Company's 2004 Annual Report are all of the
principal subsidiaries of the Company. The Company is the sole legal and
beneficial owner of the whole allotted and issued share capital and all other
issued securities (if any) of each of those principal subsidiaries (other than
the non-voting deferred shares in the capital of Mandarin Communications Limited
referred to in Clause 6.10). The whole of the allotted and issued share capital
and all other issued securities (if any) of each other material subsidiary of
the Company is solely legally and beneficially owned by another Group Company.
No Group Company holds or beneficially owns, or has agreed to acquire, any
securities of any other corporation. 

4.3
  Except for the security
given under the Huawei Agreements, the shares of the Company's subsidiaries are
free from encumbrances, there is no right to require any of the Company's
subsidiaries to issue any share capital and no encumbrance affecting any
unissued shares or other securities of the subsidiaries (and no commitment has
been given to create any such encumbrance or for them to issue any share
capital). 

5.      SINCE
THE-BALANCE SHEET DATE  

5.1    Since the Balance Sheet Date: 

(a)
  no material adverse
change has occurred in relation to the business, operations, assets, position
(financial, trading or otherwise), profits or prospects of the Group and no
event or circumstance has occurred that may result in such a material adverse
change, taking into account industry trends and also taking into account the
investment required to be made in the Group's 3G business; 

(b)
   each Group
Company has conducted its business in the normal course and as a going concern;

(c)
  save for amounts drawn
down under the Huawei Agreements, no Group Company has borrowed or raised any
money or taken any form of financial security or incurred contingent or other
liabilities in an aggregate amount exceeding US$10 million which have not been
publicly disclosed; 

(d)   
no Group Company has issued or
agreed to issue any share or loan capital; and 

(e)
    except for
capital expenditure financed under the Huawei Agreements, no Group Company has
incurred any capital expenditure in excess of US$10 million. 

6.     
INSURANCE  

The insurance policies maintained by
or on behalf of the Group provide for indemnity cover against all losses and
liabilities that are normally insured against by a person carrying on the same
type of business as the Group. So far as the Vendor is aware, there are no
material outstanding claims under, or in respect of the validity of, any of
those policies and, so far as the Vendor is aware, there are no circumstances
likely to give rise to any claim under those policies. 

	
    -19-
	
    

7.     CONTRACTS AND COMMITMENTS  

7.1  
Except for the Huawei Agreements, no Group Company is a party to or subject to
any agreement or arrangement with a value exceeding US$10 million: 

(a)
 which contains onerous
or unusual terms or which was entered into otherwise than in the ordinary course
of business; or 

(b)
 which involves
discounts, rebates or other special terms; or 

(c)
 which restricts the
trading activities of the Group in any way in any jurisdiction. 

8.      LICENCES  

8.1   
Each Group Company has all necessary licences, consents, permits and authorities
necessary to carry on its business in the places and in the manner in which its
business is now carried on, all of which are valid and subsisting. Subject to
the powers of the Telecommunications Authority under the Telecommunications
Ordinance, there is no reason why any of those licences, consents, permits and
authorities should be suspended, cancelled, revoked or not renewed on the same
terms. 

8.2   
No material queries have been received from, or investigations or enquiries
undertaken, by the Office of the Telecommunications Authority in Hong Kong,
other than as a result of the performance of this Agreement by the parties. 

9.      LITIGATION AND INVESTIGATION

9.1   No
Group Company is engaged in any material litigation, administrative, mediation
or arbitration proceedings or other proceedings or hearings before any statutory
or governmental body, department, or other agency (except for debt collection in
the normal course of business) or is the subject of any investigation, enquiry
or enforcement proceedings by any such body, department or other agency and, so
far as the Vendor is aware, no such proceedings, investigation or enquiry have
been threatened or are pending and there are no circumstances likely to give
rise to any such proceedings. 

9.2   
No Group Company is affected by any materia! existing or pending judgements or
rulings and no Group Company has given any undertaking arising from legal
proceedings to a court, governmental agency, regulatory body or third party. 

9.3     No Group Company is party to any
material outstanding investigation or dispute with the Inland Revenue
Department. 

10.    INTELLECTUAL PROPERTY  

10.1  The
intellectual property used in connection with the conduct of the business of
each Group Company (whether or not registered): 

	
    -20-
	
    

(a)
  comprises all
intellectual property required by it to conduct its business and, so far as the
Vendor is aware, the business does not infringe any intellectual property rights
of any third party; and 

(b)
 is beneficially owned by
it or licensed to that Group Company free from any licences to third parties
which are materially prejudicial to the use of that intellectual property and
will not be adversely affected by the transactions contemplated by this
Agreement. 

11.   OTHERS  

The copies of the Huawei Agreements provided to the
Purchaser for review are the current versions and up to date, including all
material amendments. 

 

 

 

	
    -21-
	
    

SCHEDULE 2   

RESIGNING DIRECTORS  

Edward Wai Sun Cheng 

Andrew Chun Keung Leung 

 

 

 

 

	
    -22-
	
    

EXECUTION PAGE 

IN WITNESS WHEREOF the parties hereto have executed this
Agreement on the appearing at the head hereof- 

    	
    Signed by       	)	
    

    	
    	)

    	for and on behalf of	)
	TOWNHILL ENTERPRISES LIMITED

    	)

    	in the presence of:-	)

    	                             	)

    	 	KEITH RICHARD COLE	 	 

    	 	SOLICITOR	 	 

    	 	DEACONS	 	 

    	 	3RD-7TH & 18TH FLOORS	 	 

    	 	ALEXANDRIA HOUSE	 	 

    	 	CENTRAL, HONG KONG SAR	 	 

 

    	
    Signed by       	)	
    

    	
    	)

    	for and on behalf of	)
	USI HOLDINGS LIMITED

    	)

    	in the presence of:-	)

    	                             	)

    	 	KEITH RICHARD COLE	 	 

    	 	SOLICITOR	 	 

    	 	DEACONS	 	 

    	 	3RD-7TH & 18TH FLOORS	 	 

    	 	ALEXANDRIA HOUSE	 	 

    	 	CENTRAL, HONG KONG SAR	 	 

	 	
    

    	
    Signed by       	)

    	
    	)	
    

    	for and on behalf of	)

    	PCCW
    LIMITED	)

    	in the presence of:-	)

    	                            
    	GRAHAM P. WINTER

    	)
	 	Solicitor	 	 
	 	Hong Kong

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