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EXHIBIT 10.1
DATED 11 NOVEMBER 1999
WORLDPORT COMMUNICATIONS INC.(1)
WORLDPORT INTERNATIONAL INC.(2)
ENERGIS PLC(3)
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE ISSUED
SHARE CAPITAL OF
WORLDPORT COMMUNICATIONS EUROPE HOLDING B.V.
AND
WORLDPORT COMMUNICATIONS LIMITED
AND
FOR THE SALE AND PURCHASE OF
DMS GSP INTERNATIONAL GATEWAY SWITCHES
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RAKISONS
SOLICITORS
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TEL: ▇▇▇ (▇)▇▇▇ ▇▇▇ ▇▇▇▇
FAX: ▇▇▇ (▇)▇▇▇ ▇▇▇ ▇▇▇▇
E-MAIL: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇.▇▇
REF: MCT/RCH/ML/W0789002034
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TABLE OF CONTENTS
Introduction..................................................... 3
Operative Provisions............................................. 3
1 Definitions................................................. 3
2 Delivery at Signing......................................... 7
3 Conditions Precedent........................................ 8
4 Agreement for Sale.......................................... 10
5 Purchase Consideration...................................... 10
6 Completion.................................................. 10
7 Adjustments to Purchase Consideration....................... 11
8 Covenants of WCEH and WorldPort............................. 13
9 Warranties by the Vendor.................................... 14
10 Y2K......................................................... 17
11 Assignment and Successions.................................. 17
12 Termination................................................. 18
13 Announcements............................................... 18
14 Information................................................. 18
15 Costs....................................................... 19
16 Time of Essence............................................. 19
17 Communications.............................................. 19
18 Confidentiality............................................. 19
19 Invalidity.................................................. 19
20 Counterparts................................................ 20
21 Proper Law.................................................. 20
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DATED: 11 NOVEMBER 1999
PARTIES:
(1) WORLDPORT COMMUNICATIONS INC. incorporated in the State of Delaware
whose principal executive offices are at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America ("WORLDPORT");
(2) WORLDPORT INTERNATIONAL INC. incorporated in the State of Delaware
whose principal executive offices are at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 30144, United States of America ("VENDOR"); and
(3) ENERGIS PLC with Company number 3438871 whose registered office is at
Carmelite, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("PURCHASER")
INTRODUCTION
(A) WorldPort International Inc. is wholly owned by WorldPort
Communications Inc.
(B) WorldPort International Inc has agreed to dispose of its holding of
shares in WorldPort Communications Europe Holding BV to the Purchaser on the
terms of this agreement.
(C) Simultaneously with the disposal of the shares in WorldPort
Communications Europe Holding BV, WorldPort has agreed to dispose to the
Purchaser its holding of shares in WorldPort Communications Limited and to
dispose of its interest in DMS GSP international gateway switches to UCS the
U.S. subsidiary of the Purchaser.
OPERATIVE PROVISIONS
1 Definitions
1.1 In this agreement, including the Schedules, the following words and
expressions have the meanings stated, unless they are inconsistent with the
context:
"ADDITIONAL INDEBTEDNESS" the aggregate of the amounts incurred in accordance
with clause 3.5(d) (including accrued interest)
between the date of signing of this agreement and
Completion
"ASSOCIATE" any subsidiary or holding company of WCEH, and any
other subsidiary of any holding company of WCEH,
"holding company" having the same meaning as in CA
sec. 736 and
for this purpose a company is controlled by one or
more persons if he or they can exercise more than
fifty per cent of the voting rights in it
"ASSUMED DEBT" the sum of interest bearing liabilities including
financial leases excluding the Indebtedness and
less cash and cash equivalent as at the Management
Accounts Date, being as set out in Schedule 9
"ASSUMED DEBT SCHEDULE" Schedule 9 of this Agreement providing details of
the Assumed Debt
"BANKERS TRUST PLEDGES" the pledges granted by WCEH in favour of Bankers
Trust as set out in Schedule 8, together with any
other Encumbrances affecting the Shares or the
assets of WCEH, the shares or assets of the
Subsidiary or WCL or the Switch (as defined in the
Switch Agreement)
"CA" Companies ▇▇▇ ▇▇▇▇
"CERTIFICATES" the certificates in the agreed form to be delivered
by WorldPort and the Vendor as at the date of this
Agreement and at Completion to the Purchaser
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"COMPANIES ACTS" CA, the former Companies Acts (within the meaning
of CA sec. 735(1)) and the Companies ▇▇▇ ▇▇▇▇
"THE COMPANY" WCEH
"COMPLETION" completion of the purchase of the Shares in
accordance with clause 6
"COMPLETION ACCOUNTS" the audited combined balance sheet of WCEH and the
Subsidiary as at the Completion Date and the
audited combined profit and loss account of WCEH
and the Subsidiary for the period from the Last
Accounts Date to Completion prepared on the basis
described in clause 7
"COMPLETION BALANCE SHEET" the combined balance sheet of WCEH and the
Subsidiary prepared from the Completion Accounts in
accordance with clause 7 and adjusted in accordance
with clause 7
"COMPLETION DATE" subject to clause 10.2, the date five business days
after the satisfaction of the conditions set out in
clause 3 (or if such date falls between 31 December
1999 and 14 January 2000, 15 January 2000) or such
other date as may be agreed between the parties
"CONSIDERATION" the consideration specified in clause 5 as adjusted
in accordance with clause 5.4 and clause 7
"DATA ROOM" the room located at the premises of WCEH at ▇.▇.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ in which documentation in relation to
WCEH and the Subsidiary has been made available to
the Purchaser for the purpose of its due diligence
activities
"DATA ROOM DISCLOSURE LIST" the list of documents reviewed by the Purchaser in
relation to the Data Room in the agreed form as
attached to the Disclosure Letter
"DUTCH GAAP" Dutch Generally Accepted Accounting Principles
"ENCUMBRANCE" includes any mortgage, charge, pledge
hypothecation, lien, assignment by way of security,
title retention, option, right to acquire, right of
pre-emption, right of set off, counterclaim, trust
arrangement or other security, preferential right
or agreement to confer security, or restriction
"GLOBAL CROSSING NOVATION
AGREEMENT" the agreement in the agreed form to be entered into
on or prior to Completion as set out in Annex IV
"INDEBTEDNESS" the inter-company debts owed by WCEH and the
Subsidiary as at 30 September 1999 being as set out
in Schedule 4
"INTELLECTUAL PROPERTY
RIGHTS" means patents, trade marks, service marks, trade
names, domain names, registered designs, designs,
semiconductor topography rights, database rights,
copyrights and other forms of intellectual or
industrial property (in each case in any part of
the world, whether or not registered or
registrable), know-how, inventions, formulae,
confidential or secret processes and information,
rights in computer software, and any other
protected rights and assets, and any licenses and
permissions in connection with the foregoing
"LAST ACCOUNTS" the balance sheet, as at the Last Accounts Date,
and profit and loss account for the year ended on
the Last Accounts Date of each of WCEH and the
Subsidiary in the agreed form as set out in
Schedule 11
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"LAST ACCOUNTS DATE" 31 December 1998 (being the date to which the Last
Accounts were prepared)
"LONGSTOP DATE" subject to clause 3.7, 31 January 2000 (or such
other date as may be agreed in writing by the
Vendor and the Purchaser)
"MANAGEMENT ACCOUNTS" the unaudited balance sheet and profit and loss
accounts for the nine month period ended on and as
at the Management Accounts Date for WCEH and the
Subsidiary in the agreed form as set out in
Schedule 13
"MANAGEMENT ACCOUNTS DATE" 30 September 1999
"MINORITY SHAREHOLDER" the shareholder who holds 60 shares of NLG 100
each, being 15% of the issued share capital of
WCEH, whose name is set out in part A of Schedule 4
"NET ASSETS" the aggregate of the share capital plus reserves
for WCEH and the Subsidiary
"THE NET ASSETS SCHEDULE" Schedule 10 of this Agreement providing details of
the Net Assets as at the Management Accounts Date
"NET ASSETS STATEMENT" the statement referred to in clause 7
"PURCHASER'S AUDITORS" PriceWaterhouseCoopers of ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
"PROPERTIES" the properties in the name of WCEH, set out in
Schedule 3
"SEC" the US Securities and Exchange Commission
"SHAREHOLDER LOAN" the loan to be repaid to the Minority Shareholder
at Completion, the amount owing as at the
Management Accounts Date, being as set out in part
A of Schedule 4
"SHAREHOLDER PROXIES" the proxies referred to in clause 2.1(a)
"SHARES" 340 shares of NLG 100 each, being 85% of the issued
share capital of WCEH
"SUBSIDIARY" EnerTel N.V.
"TAXATION" all forms of taxation, duties and levies whatsoever
and whenever imposed, whether by governmental or
other authority and whether of the USA, the
Netherlands, the United Kingdom or elsewhere, and
(without limitation) includes:
(a) income tax, corporation tax, capital gains tax,
inheritance tax, stamp duty, capital duty, value
added tax, transfer tax, sales tax, customs and
other import duties and national insurance
contributions and any payment whatsoever which WCEH
or the Subsidiary may be or become bound to make to
any person as a result of any enactment relating to
taxation and any other taxes, duties or levies
supplementing or replacing any of the above;
(b) all interest, fines and penalties incidental,
or relating, to any such taxation, duties or
levies, whatsoever
"UK SWITCH AGREEMENT" the agreement in the agreed form of even date made
between WorldPort and WCL for the sale and purchase
of the Nortel 250 Switch as set out in Annex III
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"UCS" Unisource Carrier Services USA. Inc.
"US SWITCH AGREEMENT" the agreement in the agreed form of even date made
between WorldPort and UCS whereby WorldPort agrees
to sell its interest in the US Switches and the
Contracts (each as defined in the US Switch
Agreement) as set out in Annex II
"VENDOR'S AUDITORS" ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Prof. W.H. Keesomlaan 8, 1183 DJ
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"VENDOR'S SOLICITORS" Rakisons, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
"WARRANTY CLAIM" a claim made by the Purchaser for breach of any of
the WCEH Warranties
"WCEH" WorldPort Communications Europe Holding B.V. having
its statutory seat in Rotterdam, The Netherlands
"WCEH AUDITORS" ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Prof. W.H. Keesomlaan 8, 1183 DJ
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"WCEH CONTRACTS" the contracts set out in Schedule 5 to be assigned
or novated by WorldPort to WCEH prior to Completion
"WCEH DISCLOSURE LETTER" the disclosure letter, of today's date, from the
Vendor and WorldPort to the Purchaser
"WCEH WARRANTIES" the warranties of the Vendor and WorldPort in
respect of the sale of the Shares set out in
Schedule 2
"WCL" WorldPort Communications Limited
"WCL SHARE AGREEMENT" the agreement of even date made between WorldPort
and the Purchaser whereby WorldPort agrees to sell
the entire issued share capital of WCL as set out
in Annex I
"YEAR 2000 COMPLIANT" neither the performance nor the functionality of
the assets when in normal use will be materially
impaired by the advent of the Year 2000 and in
particular:
(a) Year 2000 Compliant shall mean that no value
for current date will cause any interruption or
error in the operation of the assets;
(b) all manipulations of time-related data by the
assets will produce the desired results for all
valid date values prior to, through and beyond
the Year 2000;
(c) date elements in these products (including
interfaces and data storage) will permit
specifying the century to eliminate date
ambiguity without human intervention including
leap year calculations; and
(d) where any data element is represented without a
century, the correct century shall be
unambiguous for all manipulations involving
that element
1.2 Unless it is inconsistent with the context a reference to a statutory
provision includes a reference to:
(a) any statutory amendment, modification, consolidation or
re-enactment (whether before or after the date of this agreement);
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(b) any statutory instruments or subordinate legislation or orders
made pursuant to the statutory provision;
(c) statutory provisions of which the statutory provision is an
amendment, modification, consolidation or re-enactment;
but does not include a substituted provision.
1.3 References to WCEH shall be deemed to extend both to WCEH and the
Subsidiary to the effect that each of the WCEH Warranties shall be deemed to be
repeated (save where the context otherwise requires) in respect of the
Subsidiary as if the expression "WCEH" has been replaced by the name of the
Subsidiary throughout.
1.4 Words denoting the singular include the plural and vice versa; words
denoting one gender include all genders; words denoting persons include
corporations and vice versa.
1.5 Unless otherwise stated, a reference to a clause, sub-clause or
Schedule is a reference to a clause or sub-clause of, or Schedule to, this
agreement.
1.6 Clause headings in this agreement and in the Schedules are for ease of
reference only and do not affect the construction of any provision.
1.7 Each reference to a statutory provision or to UK accounting principles
or standards shall be construed as the equivalent statutory provision or
accounting principles or standards under the laws of the Netherlands where the
context requires.
1.8 References to Dollars ($) herein shall mean U.S. Dollars.
1.9 References to documents "in the agreed form" are to documents in terms
agreed between the parties and signed (for the purposes of identification only)
by the parties or the Vendor's Solicitors and the Purchaser's Solicitors.
2 DELIVERY AT SIGNING
2.1 Immediately upon signing this Agreement, WorldPort and the Vendor will
deliver to the Purchaser the following:
(a) the Shareholder Proxies;
(b) a duly executed copy of the US Switch Agreement and the WCL Share
Agreement;
(c) legal opinion, in the agreed terms from ▇'▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLC in
respect of this Agreement;
(d) the Certificates as set out in Schedule 12 part A; and
(e) a certified extract of the share register of WorldPort indicating
the share ownership of each shareholder of WorldPort that has executed a
Shareholder Proxy
and the Purchaser will enter into, with the Minority Shareholder, the
agreement referred to in clause 3.1(e).
2.2 WorldPort and the Vendor confirm to the Purchaser receipt by them of an
opinion in the agreed form from ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney confirming the fairness of
the Consideration referred to in this Agreement.
2.3 WorldPort undertakes to the Purchaser to include in the information
statement (referred to in clause 3.1(d)) a statement regarding confirmation of
the fairness, from a financial point of view, of the Consideration referred to
in this Agreement.
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3 CONDITIONS PRECEDENT
3.1 This agreement shall be subject to the fulfilment at or prior to the
Completion Date of each of the following conditions:
(a) the transactions contemplated by this Agreement having been
approved and adopted by the requisite action of the shareholders of
WorldPort in accordance with the certificate of incorporation and by-laws
of WorldPort and applicable Delaware law;
(b) the Vendor having entered into the US Switch Agreement with UCS;
(c) WorldPort having entered into the WCL Share Agreement with the
Purchaser;
(d) the preparation and due distribution by WorldPort to its
shareholders of an information statement in accordance with the rules and
regulations of the SEC and the expiration of the waiting period required by
applicable SEC rule; and
(e) the Minority Shareholder having entered into an agreement with the
Purchaser agreeing to sell to the Purchaser the 15% of the issued share
capital of WCEH held by it;
and none of the agreements referred to in (b) or (c) or (e) having been
terminated.
The Vendor shall notify the Purchaser immediately on becoming aware of
anything which will or may prevent any of the conditions in this clause 3.1 from
being satisfied by the Longstop Date.
The Purchaser may, at its discretion, waive any of the above conditions
other than in paragraph (a) and (d) above.
3.2 The obligations of the Vendor to complete the transactions contemplated
is subject to the fulfilment of all of the following conditions on or prior to
the Completion Date:
(a) all obligations of the Purchaser to be performed under this
agreement through, and including on, the Completion Date shall have been
performed in all material respects;
(b) the Purchaser shall have made the deliveries contemplated in
clause 6.5 hereof;
(c) no litigation proceedings having been commenced which is
reasonably likely to have a material adverse effect on the Vendor's or
WorldPort's anticipated benefits under this Agreement.
3.3 The obligations of the Purchaser to complete the transactions
contemplated is subject to the fulfilment of all of the following conditions on
or prior to the Completion Date:
(a) each and every warranty made by the Vendor and WorldPort shall
have been true and correct in all material respects when made and shall be
true and correct in all material respects as if originally made on and as
at the Completion Date except to the extent that such warranties are not
true and correct in all material respects as a result of:
(i) except for paragraph 7.3 of Schedule 2, an event or occurrence
outside the control of the Vendor or WorldPort occurring during the
period from the execution of this Agreement until the Completion Date;
(ii) any act or omission of the Purchaser during the period from
the execution of this Agreement until the Completion Date;
(iii) any action taken by WCEH or the Subsidiary in the ordinary
course of business during the period from the execution of this
Agreement until the Completion Date;
(b) all obligations of the Vendor to be performed under this agreement
through, and including on, the Completion Date shall have been performed in
all material respects;
(c) the Vendor and WorldPort shall have made the deliveries
contemplated in clause 6.2 hereof;
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(d) the relevant notification having been filed in respect of this
agreement and the expiration of the waiting period required by applicable
SEC rule; and
(e) no litigation proceedings having been commenced which is
reasonably likely to have a material adverse effect on the Purchaser's
anticipated benefits under this Agreement.
3.4 The parties shall use reasonable efforts to satisfy or procure the
satisfaction of the conditions set out in this clause 3 as soon as possible and
in any event by the Longstop Date and the Vendor and WorldPort shall use
reasonable endeavours to:
(a) make the filing with the SEC referred to in clause 3.1(d) within 7
business days of the date of execution of this agreement; and
(b) despatch an information statement to shareholders in respect of
the SEC filing within 65 days of the date of execution of this agreement.
3.5 The Vendor shall ensure that between the date of this agreement and the
Completion Date (both dates inclusive):
(a) WCEH and the Subsidiary shall each carry on the business of WCEH
and the Subsidiary, respectively, in the ordinary course;
(b) neither WCEH nor the Subsidiary shall declare or pay any dividend;
(c) WCEH and the Subsidiary shall not enter into any contract or
commitment of an unusual nature or which is not in the ordinary course of
trading or which provides for total annual expenditure in excess of
$250,000;
(d) WCEH and the Subsidiary shall not assume or incur or agree to
assume or incur any capital commitment or any debt, obligation or
liability:
(i) outside the ordinary course of trading; or
(ii) within the ordinary course of trading in excess of $6 million
in aggregate;
(e) the Purchaser will be entitled to convene meetings jointly with
WCEH and/or the Subsidiary with customers relating to marketing and
communications regarding WCEH and the Subsidiary;
(f) the Purchaser will be entitled to convene a meeting of employees
of WCEH and the Subsidiary or their representatives to explain the
transactions and any proposed plan of the Purchaser insofar as it relates
to those employees; and
(g) the Purchaser shall be entitled to nominate such person from time
to time who shall be entitled to attend as an observer at all board
meetings of WCEH and the Subsidiary and to receive the same information as
is provided to directors of WCEH and the Subsidiary.
For the purposes of this clause 3.5 the Purchaser acknowledges that neither
the Vendor nor WorldPort shall be under any obligation whatsoever to provide
further financing to WCEH or the Subsidiary from the date of this agreement to
the Completion Date and the expression "ordinary course of trading" shall be
construed accordingly.
3.6 The Purchaser shall have the right, subject to the consent of the
Vendor including as to the terms (such consent not to be unreasonably withheld)
during the period from the date of this agreement until the Completion Date to
require WCEH and/or the Subsidiary to lease or borrow assets from it (or any
Associate of the Purchaser) on arm's length terms.
3.7 The Longstop Date may be extended in the following circumstances:
(a) to a date no later than 28 February 2000, by either the Vendor or
the Purchaser giving written notice to the other on or as before 31 January
2000 and, in such case, WorldPort shall be obliged to extend the period of
certain mutually agreed insurance arrangements to at least 28 February
2000;
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(b) if extended pursuant to (a) above, to a date of no later than 31
March 2000 by the Vendor giving notice to the Purchaser on or before 28
February 2000 provided that the only reason for Completion not having
occurred by 28 February 2000 is that the SEC shall, despite WorldPort and
the Vendor having used all reasonable efforts to despatch the information
statement (as referred to in Clause 3.4 (b)), not have permitted such
information statement to be despatched in sufficient time and, in such
case, WorldPort shall be obliged to extend the period of the insurance
arrangements referred to in (a) above to at least 30 March 2000.
4 AGREEMENT FOR SALE
4.1 Subject to the terms and conditions of this agreement, the Vendor shall
sell and transfer with full title guarantee and the Purchaser shall purchase the
Shares with all rights attaching to them, with effect from the Completion Date.
4.2 The Vendor waives any pre-emption rights it may have in relation to any
of the Shares, whether under the articles of association of WCEH or otherwise.
5 PURCHASE CONSIDERATION
5.1 The Consideration for the Shares shall (subject to adjustment as
provided in clauses 5.4 and 7) be the sum of $366,019,100 which shall be paid in
cash at Completion in accordance with the provisions of clause 6.5.
5.2 On Completion the Purchaser shall procure the repayment of the
Indebtedness.
5.3 In acquiring the Shares for the consideration specified in clause 5.1
and the shares held by the Minority Shareholder, the Purchaser acknowledges that
WCEH remains liable for the Assumed Debt.
5.4 To the extent that any Additional Indebtedness has been incurred and
remains outstanding as at the Completion Date then in such circumstances the sum
to be paid for the Shares in clause 5.1 shall be reduced by that amount on a $
for $ basis and the relevant amount shall be repaid at Completion.
5.5 Schedule 15 sets out the calculation of the various payments to be made
pursuant to this Agreement.
5.6 Schedule 16 sets out the calculation of the Consideration to the Vendor
pursuant to this Agreement.
6 COMPLETION
6.1 Completion shall take place at the offices of the Vendor's Solicitors
on or before the Longstop Date, when the following provisions of this clause
shall apply.
6.2 The Vendor or WorldPort (as the case may be) shall:
(a) effect the transfer of the Shares by passing a deed of transfer
(in the form attached as Schedule 6) to be executed before one of the civil
law notaries of De Brauw Blackstone Westbroek NV such transfer to be
acknowledged by WCEH;
(b) following the transfer of the Shares deliver to the Purchaser the
shareholder's register of WCEH in which the transfer of the Shares is
validly registered;
(c) complete the WCL Share Agreement;
(d) complete the US Switch Agreement;
(e) complete the UK Switch Agreement;
(f) deliver to the Purchaser the duly executed Global Crossing
Novation Agreement and to the Subsidiary duly executed novation agreements
in similar form relating to contracts with Star Telecommunications, Inc.
and Viatel, Inc.;
(g) deliver to the Purchaser releases, in the agreed form, in respect
of the Bankers Trust Pledges and any other pledges in respect of the
Indebtedness executed as necessary before one of the civil law notaries of
De Brauw Blackstone Westbroek NV;
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(h) deliver to the Purchaser resignations, in the agreed form, of the
outgoing directors, secretary and auditors as required by the Purchaser;
(i) deliver to the Purchaser the discharge of the Indebtedness in the
agreed form;
(j) deliver the Certificates in the form set out in Schedule 12 part
B; and
(k) deliver to the Purchaser legal opinions in the agreed form from
▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC and De Brauw Blackstone Westbroek NV in respect of
the Completion of this Agreement.
6.3 There shall be delivered or made available to the Purchaser:
(a) the statutory books, books of account and documents of record of
WCEH and the Subsidiary, and their respective certificates of incorporation
and common seals; and
(b) all the current cheque books of WCEH and the Subsidiary, together
with current statements of all its bank accounts with a reconciliation to
Completion.
6.4 Shareholder resolutions of WCEH and the Subsidiary shall be passed at
which:
(a) such persons as the Purchaser nominates are appointed additional
directors; and
(b) the transfers of the Shares referred to in clause 6.2(a) and of
the shares to be transferred pursuant to the agreement referred to in
clause 3.1 (e) are approved.
6.5 At Completion the Purchaser shall:
(a) transfer by telegraphic transfer the following amounts:
(i) $140,352,000 plus accrued interest through to the Completion
Date to the account of Bankers Trust, being the amount required to
discharge the Bankers Trust Pledges;
(ii) $117,759,300 and NLG 4,878,934, plus accrued interest through
to the Completion Date to the account of WorldPort, being the amounts
required to discharge the Indebtedness owed by each of WCEH and the
Subsidiary;
(iii) $415,365 plus accrued interest through to the Completion Date
to the account of Global Crossing, being the amount due and payable
under the Global Crossing contract;
(iv) $6,290,000 to the account of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc;
(v) $7,000,000 to the account of American International Companies;
and
(vi) $181,961,835 (less any accrued interest paid under clauses
(i), (ii) and (iii) above and less any amount caused by the reduction
pursuant to clause 5.4 as mentioned below being the remaining
Consideration for the Shares;
and the amount of the Additional Indebtedness referred to in clause
5.4 shall be repaid.
For the purposes of any payments made under this clause all amounts will
be denominated in the currency in which they are due and, for the
avoidance of doubt, the Consideration will be calculated on the basis of
the closing exchange rates on 10 November 1999;
(b) complete the WCL Share Agreement; and
(c) complete the US Switch Agreement.
6.6 The Purchaser shall not be required to complete this Agreement unless
at the same time the Minority Shareholder completes the agreement referred to in
clause 3.1(e) and the WCL Share Agreement is completed.
7 ADJUSTMENTS TO PURCHASE CONSIDERATION
7.1 The parties shall procure, as soon as practicable and in any event
within 60 days after Completion, the preparation of the Completion Accounts,
which shall be prepared by WCEH, subject to this clause 7, on
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the basis of accounting standards generally accepted in the Netherlands and
audited by WCEH's Auditors to a standard to be agreed between WCEH's Auditors
and the Purchaser's Auditors. The cost of the audit shall be paid as to one half
by the Vendor and as to the other half by the Purchaser.
7.2 The parties shall disclose to WCEH's Auditors and the Purchaser's
Auditors all information relevant for the purposes of preparing the Completion
Accounts.
7.3 The parties shall instruct WCEH, the WCEH Auditors and the Purchaser's
Auditors to prepare the Net Assets Statement from the Completion Accounts and to
deliver to the Vendor and the Purchaser copies of the Completion Accounts and
Completion Balance Sheet and of their calculation of any adjustments required by
this clause within 14 days of the preparation of the Completion Accounts.
7.4 The basis of preparing the Completion Balance Sheet is as set out
below:
(a) except as stated in (c) below in accordance with Dutch GAAP;
(b) they are to comprise individual balance sheets for WCEH and the
Subsidiary in a similar format to the Management Accounts in Schedule 13,
together with statements of assets and liabilities for the US Switch (as
defined in the US Switch Agreement) and the UK Switch (as defined in the UK
Switch Agreement). A statement of Net Assets will be aggregated in a
similar form to Schedule 10;
(c) the Completion Accounts shall:
(i) not treat as an asset any prepayments which will not give rise
to a benefit to the business of either WCEH or the Subsidiary;
(ii) exclude any deferred tax assets of WCEH and the Subsidiary;
(iii) exclude depreciation and amortisation charged to the profit
and loss account from the Management Accounts Date to the date of
Completion;
(iv) be prepared to present the individual balance sheets and
statements of assets and liabilities on the basis immediately before the
following specified events which are expected to occur before or at
Completion:
(a) the transfer of the UK Switch pursuant to the UK Switch
Agreement;
(b) the repayment of the Indebtedness.
7.5 It is anticipated that the value of the Net Assets as at Completion
will be a negative figure. To the extent that the value of such Net Assets is:
(a) a negative figure which is greater than NLG47,748,000, the Vendor
will repay to the Purchaser the amount by which this negative figure is
greater than NLG47,748,000 and the Consideration shall be reduced by the
amount of that repayment provided that the amount of the repayment shall
not exceed $20,000,000; and
(b) a negative figure which is less than NLG47,748,000, the Purchaser
will pay to the Vendor the amount by which this negative figure is less
than NLG47,748,000 and the Consideration shall be increased by the amount
of that payment, provided that the amount of that payment shall not exceed
$20,000,000.
7.6 Each of the parties undertakes to the other to pay the amount of any
reduction or increase (as the case may be) to the other in cash within 28 days
after delivery to the Vendor and the Purchaser of a copy of the calculation
referred to in clause 7.3.
Any amount due under clause 7.6 of the WCL Share Agreement may be off-set
against any amount due under this clause.
7.7 Disputes with respect to the Completion Accounts or the Completion
Balance Sheet or the calculation of the Net Assets Statement or any other matter
referred to in this clause 7 shall be referred for final settlement to a firm of
chartered accountants, nominated jointly by the Vendor and the Purchaser, or,
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failing nomination within 14 days after request by either the Vendor or the
Purchaser, nominated at the request of either party by the President for the
time being of the Institute of Dutch Chartered Accountants. The firm shall act
as experts and not as arbitrators and their decision (in the absence of manifest
error) shall be final and binding on the parties. Their fees shall be payable by
the Vendor and the Purchaser in such proportions as the firm determines.
7.8 For the purposes of the Purchaser's review under this clause 7, the
Purchaser's Auditors and the Vendor's Auditors attempts to resolve any dispute
under this clause 7 and the settlement of any dispute by the independent
accountants, the Vendor and the Purchaser shall ensure that the Vendor's
Auditors and the Purchaser's Auditors and (if applicable) the independent
accountants are promptly given all information, assistance and access to all
books of accounts, documents, files and papers which they may reasonably
require.
7.9 Unless otherwise indicated under this agreement, the translations of
local currency amounts into US Dollars will be made on the basis of the closing
exchange rates on 10 November 1999.
8 COVENANTS OF WCEH AND WORLDPORT
8.1 WCEH and WorldPort hereby covenant that during the period between the
date of this Agreement and Completion WCEH and the Subsidiary shall use
reasonable endeavours to:
(a) continue negotiations in respect of the seven outstanding local
loop lease agreements with the relevant Dutch Regional Electricity
companies, being Telecai Utrecht, Palet Kabelcom, ENECO, Casema, Castel,
UPC and Cecatel; and
(b) negotiate the renewal of the interconnection agreement between the
Subsidiary and KPN Telecom dated 19 June 1997, which has a term of three
years starting 1 July 1997, ending 1 July 2000.
8.2 Notwithstanding the WCEH Warranties and the disclosures made in the
WCEH Disclosure Letter, the Vendor and WorldPort hereby agree to indemnify the
Purchaser in respect of any liability of the Purchaser and/or WCEH and/or the
Subsidiary (including any costs incurred) in relation to or arising out of any
of the following matters:
(a) the current review by the Dutch Treasury of the pension scheme of
the Subsidiary;
(b) any claim by Mr. Zolfagharpour;
(c) any Dutch capital duty payable by either WCEH or the Subsidiary in
respect of events or transactions occurring on or before Completion;
(d) any liability of WCEH or the Subsidiary to pay any amount in
respect of tax or Social Security Contributions (and any associated
interest or penalties) or to pay an amount to an employee, director, ex-
employee or ex-director by way of additional salary or otherwise arising
out of the expense allowance matter disclosed in the WCEH Disclosure Letter
against paragraph 3.1 of Schedule 2.
provided always that the limitations contained in clauses 9.3, 9.5, 9.7,
9.8 and 9.9 shall apply to the above.
8.3 On Completion, the employment contract of ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be
transferred by WorldPort to the Subsidiary.
8.4 WorldPort hereby covenants with the Purchaser that the information
statement referred to in Clause 3.4 (b) that shall be distributed to WorldPort
shareholders shall comply with all applicable provisions of the US Securities
Exchange Act and the related rules and regulations thereunder.
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9 WARRANTIES BY THE VENDOR
9.1 The Vendor and WorldPort warrant to the Purchaser that, save as set out
in the WCEH Disclosure Letter, the WCEH Warranties are accurate in all material
respects and as at Completion will be accurate in all material respects except
to the extent that such warranties are not accurate in all material respects as
at the Completion Date as a result of:
(a) except for paragraph 7.3 of Schedule 2 an event or occurrence
outside the control of the Vendor and/or WorldPort (as the case may be)
occurring during the period from the date of this agreement until the
Completion Date;
(b) any act or omission of the Purchaser during the period from the
date of this agreement until the Completion Date; and
(c) any action taken by WCEH or the Subsidiary in the ordinary course
of business during the period from the date of this Agreement until the
Completion Date.
9.2 The Vendor and WorldPort warrant to the Purchaser that:
(a) the execution, delivery and performance of this agreement and all
documents executed or to be executed in connection therewith have been duly
authorised by all necessary corporate action on behalf of the Vendor and
WorldPort. This agreement constitutes, and, as of the Completion Date, all
documents executed or to be executed in connection therewith shall
constitute, the legal, valid and binding obligation of the Vendor and
WorldPort enforceable against them in accordance with its terms;
(b) other than as stated in this agreement, or in the WCEH Disclosure
Letter there is no pledge, lien or other encumbrance on, over or affecting
the Shares, the shares of the Subsidiary or the assets of WCEH or the
Subsidiary and there is no agreement or arrangement to give or create any
such encumbrance and no claim has been made by any person to be entitled to
any of the foregoing;
(c) no consent, approval or other action by any shareholder of
WorldPort is required for the consummation of any of the transactions
contemplated by this Agreement other than the approval referred to in
clause 3.1(a).
9.3 The Vendor and WorldPort shall not be liable in respect of any claim
under the WCEH Warranties unless the Purchaser serves written notice of such
claim setting out the nature of the claim and so far as is practicable its
estimate of the amount claimed upon the Vendor and/or WorldPort by, in respect
of claims in relation to Taxation, not later than the date following the expiry
of five full accounting periods following Completion and, in respect of all
other claims, by not later than 30 September 2001 provided that the amount
payable in respect of the relevant claim is agreed by the Vendor and/or
WorldPort within 12 months of the date of such written notice or legal
proceedings are instituted in respect of such claim by the due service of
process on the Vendor and/or WorldPort by the date falling 12 months after the
date of such written notice, unless extended by agreement between the parties.
9.4 The Vendor and WorldPort shall not be liable in respect of any claim
under the WCEH Warranties (except for paragraph 7.3 of Schedule 2) unless the
aggregate liability in respect of that claim (which shall include any claims
arising out of the same causes or event) and all other claims exceeds
$10,000,000 in which case only the excess shall be recoverable.
9.5 Subject to clause 10.2 the aggregate liability of the Vendor and
WorldPort under the WCEH Warranties and the WCL Warranties (as defined in the
WCL Share Agreement) shall not (in respect of claims made in the period to 30
September 2000) exceed $150,000,000 and (in respect of claims made thereafter)
exceed $100,000,000 (including claims made in the period to 30 September 2000).
9.6 The Purchaser shall in relation to any loss or liability which may give
rise to a claim under this Agreement against the Vendor and WorldPort, discharge
its common law duty to use reasonable endeavours to mitigate the loss suffered
by it.
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9.7 The Vendor and WorldPort shall not be liable in respect of any claim
under the WCEH Warranties in respect of any breach or claim:
(a) to the extent that such breach or claim would not have arisen but
for some voluntary act, omission, transaction or arrangement, which could
reasonably have been avoided and which is not required by law, carried out
after Completion by or on behalf of all or any of the Purchaser or WCEH and
its respective successors in title;
(b) to the extent that such breach or claim would not have arisen or
occurred but for the coming into force of any legislation not in force at
Completion but having retrospective effect or by reason of the withdrawal
of any extra statutory concession applying at Completion or a change in the
application of any extra statutory concession applying at Completion, in
each case having retrospective effect;
(c) to the extent that WCEH recovers against any loss or damage
suffered arising out of such breach or claim under the terms of any
insurance policy for the time being in force;
(d) to the extent that such breach or claim arises as a result of any
change in the accounting bases or policies in accordance with which WCEH
values its assets or calculates its liabilities or any other change in
accounting practice on or after Completion.
9.8 If the Vendor or WorldPort pays or is due to pay to the Purchaser an
amount in respect of any claim under the WCEH Warranties and the Purchaser
recovers from a third party any amount in respect of the matter giving rise to
that claim, the Purchaser shall (or shall procure that WCEH shall) forthwith
repay to or reduce the amount due from the Vendor or WorldPort the sum which
represents or would represent a double recovery under such claim less all costs,
charges and expenses including Taxation reasonably incurred by the Purchaser in
recovering that sum from the third party and any applicable taxation suffered by
the Purchaser in respect of that recovery.
9.9 If any claim is received by the Purchaser or WCEH from a third party in
respect of which the Vendor or WorldPort may be or become liable under the WCEH
Warranties, the Purchaser shall procure that WCEH shall:
(a) as soon as reasonably practicable give written notice thereof to
the Vendor or (with a copy to the Vendor's Solicitors) specifying the
nature of the claim in reasonable detail;
(b) not make any admission of liability, agreement or compromise to or
with any person in relation thereto without the prior written consent of
the Vendor or (such consent not to be unreasonably withheld or delayed),
provided always that no such prior consent in writing shall be required in
circumstances where, in the reasonable opinion of the Purchaser, failure to
admit liability or to compromise or settle such claim shall be materially
prejudicial to the goodwill or reputation of WCEH or the Purchaser;
(c) give the Vendor or WorldPort and its professional advisers
reasonable access on reasonable notice to the premises and personnel of
WCEH and to any relevant documents and records within the possession or
control of the Purchaser or WCEH for the purpose of enabling the Vendor or
WorldPort to consider the merits of such claim and to take copies thereof
(at the expense of the Vendor or WorldPort); and
(d) take such action as the Vendor or WorldPort may reasonably request
to avoid, dispute, resist, appeal or compromise such claim, subject to the
Purchaser and WCEH being indemnified to their reasonable satisfaction
against all losses, liabilities, costs and expenses which they may suffer
or incur by reason of such action including, for the avoidance of doubt,
the amount of any third party claim.
9.10 Where under the provisions of the Taxation statutes or otherwise the
Purchaser and/or WCEH is entitled (whether by right of indemnity, reimbursement
or any other means) to recover from some other person (not being the Purchaser
or WCEH but including, without limitation any Taxation authority) any sum or
benefit in respect of any matter giving rise or which may give rise to a claim
against the Vendor or WorldPort under the WCEH Warranties, the Purchaser shall
(and shall procure that WCEH shall) as soon as reasonably practicable notify the
Vendor in writing of such entitlement and at the request of the Vendor or
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WorldPort and subject to being indemnified and secured to their reasonable
satisfaction against all losses, liabilities, costs and expenses which they may
suffer or incur thereby take all appropriate and reasonable steps to enforce
recovery at the sole cost of the Vendor or WorldPort including without
limitation the issuance of proceedings in the name of WCEH.
9.11 Any payment by the Vendor or WorldPort pursuant to the WCEH Warranties
shall be treated for all purposes by the parties as a reduction in the
Consideration.
9.12 The Purchaser shall only be entitled to recover once for the same loss
in respect of two or more breaches of the WCEH Warranties for claims relating to
the same subject matter.
9.13 Where qualified by the knowledge, information, belief or awareness of
the Vendor or WorldPort, each Warranty is deemed to include such knowledge,
information, belief or awareness held, in respect of the relevant subject matter
of such Warranty, by the following senior management individuals:
▇▇▇▇ ▇▇▇▇▇▇▇ (Chief Executive Officer: WorldPort), ▇▇▇▇ ▇▇▇▇▇▇ (Chief
Financial Officer: WorldPort), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Managing Director: the
Subsidiary), ▇▇▇▇▇ ▇▇▇▇▇▇ (Managing Director: corporate development: the
Subsidiary), ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Vice President Director: the Subsidiary),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Vice President Officer: the Subsidiary) and Jeroen Bulk
(Chief Financial Officer: the Subsidiary).
9.14 The Purchaser acknowledges that, in connection with the WCEH
Warranties, it has had the opportunity to review all of the documentation as set
out in the Data Room Disclosure List and that the documents referred to in the
Data Room Disclosure List shall be treated as having been fully disclosed to it
for the purposes of disclosure against the WCEH Warranties.
9.15 The Purchaser confirms, and agrees that as at the date hereof neither
the Purchaser nor any director of the Purchaser is aware of any fact, matter or
circumstance which constitutes or is reasonably likely to constitute a breach of
the WCEH Warranties and to the extent that the Purchaser or any such director is
so aware, no claim may be made under the WCEH Warranties in respect of such
facts, matter or circumstance.
9.16 Each of the parties acknowledges that in agreeing to enter into this
agreement it has not relied on any representation, warranty, undertaking or
other assurance except those set out or referred to in this agreement. Without
prejudice to the foregoing, the Purchaser acknowledges that it has not relied on
any representations or warranties or other information contained in the
information on the Vendor and the Company prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney or in
any other written or oral information supplied by or on behalf of the Vendor or
WorldPort or its advisers or made or supplied in connection with the
negotiations of the sale and purchase under this agreement except those set out
or referred to in this Agreement.
9.17 Each of WorldPort and the Vendor represent that:
(a) in connection with the transactions contemplated by this
Agreement, WorldPort retained ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ as adviser; prior to the
negotiation, execution and delivery of this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
solicited expressions of interest from potential purchasers of the assets,
each of whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ reasonably believed would consider the
possibility of making an offer to acquire such assets and had the financial
capability to fund such acquisitions, and each of whom was given the
opportunity to submit to WorldPort and the Vendor an offer to consummate
the transactions contemplated by this Agreement; WorldPort provided such
potential purchasers with detailed information with respect to such assets
and permitted all such potential purchasers to have reasonable access to
the Data Room in order for them to assess their willingness to submit
specific proposals for the acquisition of such assets;
(b) assuming Completion were to occur on the date of this Agreement,
following consummation of the transactions contemplated by this Agreement:
(i) it and its subsidiaries would be able to pay its debts as they
come due;
(ii) it and its subsidiaries would have adequate capital to conduct
its remaining business; and
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(iii) the fair value of its assets would be greater than the total
amount of its liabilities (including contingent and unliquidated
liabilities);
(c) the transactions contemplated by this agreement are not being made
with the intent to hinder, delay or defraud any creditors of WorldPort, the
Vendor or any of their respective subsidiaries;
(d) the consummation of the transactions contemplated by this
Agreement will not cause WorldPort or their respective subsidiaries to
become insolvent or stop payment of its debts, or be subject to an
involuntary bankruptcy, insolvency, reorganisation or similar proceeding;
and
(e) neither it nor its directors or shareholders, nor any of its
respective subsidiaries, or any of their boards of directors or
shareholders has commenced a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganisation or other similar law,
nor, to the best of its knowledge, on the assumption that the transaction
is completed, is any such case or proceeding contemplated.
9.18 The limitations on liability contained in clauses 9.4 and 9.5 shall
not apply to any claim made for breach of any WCEH Warranty relating to Taxation
and the limitations on liability contained in clause 9.4 shall not apply to any
claim under clause 8.2. This Clause 9 shall be subject to clause 10.2.
9.19 The Parties may also agree to other warranties and/or conditions which
shall have effect as if set out in this Agreement.
10 Y2K
10.1 The parties agree that following the date of this Agreement, one of
the Purchaser's employees, agents or consultants shall work with the Vendor and
WorldPort to assess the work carried out to date and the work to be carried out
to make WCEH and the Subsidiary and WCL Year 2000 Compliant.
10.2 Notwithstanding any other provision of this agreement:
(a) if, prior to Completion, there shall occur a material disruption
to the business of WCEH and/or the Subsidiary and/or WCL caused by a
failure of the assets of any such business to be Year 2000 Compliant,
resulting in a breach of paragraph 7.3 of Schedule 2, or paragraph 7.3 of
Schedule 2 to the WCL Share Agreement, the Purchaser shall notify the
Vendor of such occurrence as soon as is reasonably practicable and shall
indicate to the Vendor whether it considers the aggregate amount of any
claims it shall have pursuant to those paragraphs is over $100,000,000 (on
the assumption that the limitations in clause 9.4 and clause 9.4 of the WCL
Share Agreement do not apply in those circumstances);
(b) if such a notice is delivered, Completion shall not take place
until the expiry of at least 7 days, during which time the Vendor shall, if
the Purchaser has indicated that it considers the amount of any such claim
to exceed $100,000,000, have the right to terminate this Agreement by
notice in writing to the Purchaser;
(c) if the Purchaser has indicated that it does not consider the
aggregate amount of any such claims to exceed $100,000,000 following
Completion the Purchaser may not claim for any breach of paragraph 7.3 of
Schedule 2 or of paragraph 7.3 of Schedule 2 to the WCL Share Agreement in
respect of an aggregate amount exceeding $100,000,000 (on the assumption
that the limitations in such Clauses 9.4 do not apply in these
circumstances);
(d) in respect of any claim for breach of paragraph 7.3 of Schedule 2
and of paragraph 7.3 of Schedule 2 to the WCL Share Agreement made prior to
31 March 2000, the maximum aggregate liability of the Vendor and WorldPort
referred to in clause 9.5 shall be increased by an additional $50 million.
11 ASSIGNMENT AND SUCCESSIONS
Except as expressly provided above, none of the rights of the parties under
this agreement or the WCEH Warranties may be assigned or transferred except that
the Purchaser may assign, transfer or novate its rights to any Associate,
provided that the Purchaser will guarantee the obligations of that Associate
transferred to it
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under this Agreement. If that Associate shall subsequently cease to be an
Associate of the Purchaser, the Purchaser will immediately procure the
re-assignment of such rights back to the Purchaser.
12 TERMINATION
This agreement and the transactions contemplated hereby may be terminated
at any time prior to the Completion Date by prompt notice given in accordance
with clause 17:
(a) by the mutual written consent of the Purchaser and the Vendor; or
(b) by the Vendor if:
(i) there has been a material breach by the Purchaser of any
representation or warranty contained in this agreement; or
(ii) there has been a material breach of any of the covenants or
agreements set forth in this agreement on the part of the Purchaser, and
which breach is not cured within 30 days after written notice of such
breach is given by the Vendor to the Purchaser;
(c) by the Purchaser if:
(i) there has been a material breach by the Vendor or WorldPort of
any representation or warranty contained in this agreement; or
(ii) there has been a material breach of any of the covenants or
agreements set forth in this agreement on the part of the Vendor or
WorldPort, which breach is not cured within 30 days after written notice
of such breach is given by the Purchaser to the Vendor;
(d) by either the Purchaser or the Vendor if the Completion shall not
have occurred at or before 11:59pm on the Longstop Date; provided, however,
that the right to terminate this agreement under this clause 12(d) shall
not be available to any party whose breach of a warranty or failure to
fulfil any material obligation under this agreement has been the cause of
or resulted in the failure of the Completion to occur on or prior to the
aforesaid date.
13 ANNOUNCEMENTS
13.1 No announcement shall be made in respect of the subject matter of this
agreement, except as specifically agreed between the parties, unless an
announcement is required by any applicable law or is required to be made to the
Stock Exchange, NASDAQ Stock Market or the Securities Exchange Commission and
the party making such an announcement shall, where possible, discuss the content
of the announcement with the other side.
13.2 If this agreement ceases to have effect, the Purchaser will release
and return to WCEH all documents concerning it provided to the Purchaser or its
advisers in connection with this agreement and will not use or make available to
another person information which it or its advisers have been given in respect
of WCEH and which is not in the public domain.
14 INFORMATION
The Vendor shall procure that, prior to Completion, the Purchaser, its
agents, representatives, auditors and solicitors are given promptly on request
all such facilities and information regarding the business, assets, liabilities,
contracts and affairs of WCEH, and of the documents of title and other evidence
of ownership of its assets, as the Purchaser reasonably requires.
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15 COSTS
All expenses incurred by or on behalf of the parties, including all fees of
agents, representatives, solicitors, auditors and actuaries employed by any of
them in connection with the negotiation, preparation or execution of this
agreement, shall be borne solely by the party who incurred the liability, and
WCEH shall not have any liability in respect of them.
16 TIME OF ESSENCE
Time shall be of the essence of this agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which, by
agreement in writing between or on behalf of the Vendor and the Purchaser, are
substituted for them.
17 COMMUNICATIONS
17.1 All communications between the parties with respect to this agreement
shall:
(a) be delivered by hand, or sent by post to the above address (in the
case of a notice to the Vendor, marked for the attention of ▇▇▇▇ ▇▇▇▇▇▇) or
(b) be sent by facsimile transmission to the facsimile transmission
numbers stated below or as notified for the purpose of this clause.
17.2 Communications shall be deemed to have been received as follows:
(a) if sent by post -- 3 business days after posting;
(b) if delivered by hand -- on the day of delivery, if delivered at
least 2 hours before the close of business hours on a business day, and
otherwise on the next business day;
(c) if sent by facsimile transmission -- at the time of transmission,
if received at least 2 hours before the close of business hours on a
business day, and otherwise on the next business day.
17.3 For this purpose, a "business day" means a day on which the clearing
banks in the City of London are open for business and "business hours" mean
between the hours of 09.00 and 18.00 inclusively local time.
17.4 The facsimile transmission numbers referred to in clause 17.1 are:
(a) for the Vendor -- ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇ (attention ▇▇▇▇ ▇▇▇▇▇▇)
(b) for WorldPort -- ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇ (attention ▇▇▇▇ ▇▇▇▇▇▇)
(c) for the Purchaser -- ▇▇▇-▇▇▇▇-▇▇▇▇ (attention ▇▇▇▇▇ ▇▇▇▇▇▇▇)
17.5 The Vendor and WorldPort hereby appoint Rakisons of ▇▇/▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, marked for the personal attention of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ as their authorised agent for the purpose of accepting service of
process for all purposes in connection with this Agreement.
18 CONFIDENTIALITY
None of the parties shall issue any press release or publish any circular
to shareholders or any other public document or make any public statement or
otherwise disclose to any person who is not a party (including (without
limitation) any document or statement published, issued or made by the Vendor
and/or the Purchaser to any supplier to or customer of WCEH or of the
Subsidiary), in each case relating to or connected with or arising out of this
agreement or the matters contained in it, without obtaining the previous
approval of the other party to its contents and the manner of its presentation
and publication or disclosure (such approval not to be unreasonably withheld),
unless required by any applicable law.
19 INVALIDITY
If a term in or provision of this agreement is held to be illegal or
unenforceable, in whole or in part, under an enactment or rule of law, it shall
to that extent be deemed not to form part of this agreement and the
enforceability of the remainder of this agreement shall not be affected.
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20 COUNTERPARTS
This agreement may be executed in any number of separate counterparts, each
of which when executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
21 PROPER LAW
The construction, validity and performance of this agreement shall be
governed by the laws of England and the parties submit to the non-exclusive
jurisdiction of the English Courts.
Executed by the parties.
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SCHEDULE 2
WARRANTIES
1 LAST ACCOUNTS
1.1.1 The Last Accounts were prepared in accordance with the historical
cost convention; and the bases and policies of accounting, adopted for the
purpose of preparing them, are the same as those adopted in preparing the
audited accounts of WCEH, and the Subsidiary in respect of accounting periods
since incorporation.
1.1.2 The Last Accounts:
(a) give a true and fair view of the assets and liabilities of WCEH
and the Subsidiary at the Last Accounts Date and its profits for the
financial period ended on that date;
(b) comply with the requirements of the laws of the Netherlands;
(c) are not affected by extraordinary, exceptional or non-recurring
items, or changes in accounting policies or bases;
(d) fully provide or reserve for or disclose all material liabilities
and capital commitments of WCEH and the Subsidiary outstanding at the Last
Accounts Date, including contingent, unquantified or disputed liabilities.
1.2 VALUATION OF STOCK-IN-TRADE AND WORK IN PROGRESS
In the Last Accounts and in the accounts of WCEH for the three preceding
financial years stock in trade and work in progress have been treated in
accordance with Dutch GAAP.
1.3 DEPRECIATION OF FIXED ASSETS
In the Last Accounts and in the accounts of WCEH for the three preceding
financial years, fixed assets have been depreciated in accordance with Dutch
GAAP.
1.4 DEFERRED TAXATION
Where provision for deferred taxation is not made in the Last Accounts,
details of the amounts of deferred taxation are disclosed in the WCEH Disclosure
Letter.
1.5 ACCOUNTING REFERENCE DATE
The accounting reference date of WCEH is 31 December.
1.6 BOOKS AND RECORDS
All the accounts, books, ledgers, financial and other records, of WCEH and
the Subsidiary:
(a) are in its possession; and
(b) do not contain material inaccuracies.
(c) have been maintained in accordance with all applicable laws and
are in the possession or control of the Vendor.
1.7 MANAGEMENT ACCOUNTS
In relation to the Management Accounts:
(a) the assets and liabilities of WCEH and the Subsidiary at the
Management Accounts Date and their results for the nine month period ended
on that date have not been materially mis-stated and the Vendor does not
consider such accounts to be misleading;
(b) the Management Accounts were prepared on a consistent basis to the
bases and policies of accounting adopted in preparing the Last Accounts.
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(c) such accounts contains details of:
(i) profits, losses and liabilities;
(ii) provisions; and
(iii) share capital and reserves,
of WCEH and the Subsidiary.
1.8 ASSUMED DEBT
The Assumed Debt amounts referred to in Schedule 9 are correct as the
Management Accounts Date.
1.9 Since the Last Accounts Date there has been no material adverse change
in the financial or trading position of WCEH.
2 CORPORATE MATTERS
2.1 DIRECTORS AND SHADOW DIRECTORS
2.1.1 The only directors of WCEH are the persons whose names are listed in
relation to WCEH in Schedule 1.
2.1.2 No person is a shadow director of WCEH.
2.2 SUBSIDIARY, ASSOCIATIONS AND BRANCHES
2.2.1 WCEH is not the holder or owner nor has it any interest or agreed to
acquire share or loan capital of a company (whether incorporated in the
Netherlands or elsewhere) which is not the Subsidiary listed in Schedule 1.
2.2.2 WCEH has no branch, agency or place of business, or a permanent
establishment outside the Netherlands.
2.3 OPTIONS OVER WCEH'S CAPITAL
Except as required by this agreement, there are no agreements or
arrangements in force which provide for the issue, allotment or transfer of, or
grant to any person the right to call for the issue, allotment or transfer of,
share or loan capital of WCEH held by the Vendor.
2.4 THE SHARES
2.4.1 None of the Shares was issued at a discount.
2.4.2 No share or loan capital has been issued or allotted, or agreed to be
issued or allotted, by WCEH since the Last Accounts Date.
2.4.3 The Shares constitute 85% of the issued and allotted share capital of
WCEH and the Subsidiary is a 100% subsidiary of WCEH.
2.4.4 The Vendor will be entitled to transfer the full legal and beneficial
ownership of the Shares to the Purchaser on the terms of this agreement without
the consent of a third party.
2.4.5 Save as set out in the WCEH Disclosure Letter, there is no pledge,
lien or other encumbrance on, over or affecting the Shares and there is no
agreement or arrangement to give or create any such encumbrance.
2.4.6 WCEH was properly incorporated under the laws of the jurisdiction
under which it was incorporated and is organised in accordance with its
constitutional documents.
3 TAXATION
3.1 WCEH has duly made all relevant returns and given or delivered all
notices, accounts and information which ought to have been made to and is not
involved in any dispute with any taxation authority in The Netherlands
concerning any matter likely to affect in any way the liability (whether
accrued, contingent
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or future) of it to Taxation of any nature whatsoever or other sums imposed,
charged, assessed, levied or payable under the provisions of the Taxation
statutes.
3.2 WCEH has duly paid or fully provided for all Taxation for which it is
liable and so far as the Vendor is aware there are no circumstances in which
interest or penalties in respect of Taxation not duly paid could be charged
against it in respect of any period prior to Completion.
3.3 No liability of WCEH to Taxation has arisen or so far as the Vendor is
aware will arise up to Completion save for corporation tax payable in respect of
normal trading profits earned by it or other tax and insurance contributions for
which it is accountable to any taxation authority in The Netherlands or other
relevant authority and which has where appropriate been deducted or charged and
where due paid to the Inland Revenue or such other relevant authority.
3.4 WCEH has not entered into or been a party to any schemes or
arrangements designed partly or wholly for the purposes of WCEH or (so far as
the Directors are aware) any other person avoiding Taxation.
3.5 All payroll Taxation deduction systems have been properly operated and
the required records have been kept by WCEH.
3.6 WCEH has duly accounted for value added tax, and properly maintained
all relevant records in relation to value added tax.
3.7 So far as the Vendor is aware WCEH is not liable to be assessed or to
have any Taxation collected from it nor is it accountable for any Taxation in
respect of any transactions, events, profits, income of gains or deemed profits,
income or gains of any third party.
3.8 So far as the Vendor is aware WCEH has not carried out or been engaged
in any transaction or arrangement such that there may be substituted for the
actual consideration given or received by WCEH any different consideration for
any Taxation purpose.
3.9 No Taxation arose in respect of the grant or waiver of the subordinated
loan by WCEH to the Subsidiary.
3.10 So far as the Vendor is aware all capital duty arising in respect of
share capital and share premium contributions and any informal equity
contributions have been paid in full and on a timely basis.
3.11 The Dutch tax authorities have issued nil tax assessments for the
Subsidiary in respect of the years ended 31 December 1996 and 31 December 1997
which contain confirmation that tax losses arose in those years of NLG
39,007,519 and NLG 57,840,500, respectively and have not subsequently indicated
to the Subsidiary in writing that such confirmations no longer represent the
view of the tax authorities at the date of this Agreement.
4 FINANCE
4.1 CAPITAL COMMITMENTS
There were no commitments on capital account outstanding at the Last
Accounts Date and, since the Last Accounts Date, WCEH has not made or agreed to
make any capital expenditure, or incurred or agreed to incur capital commitments
or disposed of or realised capital assets or an interest in capital assets.
4.2 DIVIDENDS AND DISTRIBUTIONS
Since the Last Accounts Date no dividend or other distribution has been, or
is treated as having been, declared, made or paid by WCEH.
4.3 BANK AND OTHER BORROWINGS
Details of all limits on WCEH's bank overdraft facilities are set out in
the WCEH Disclosure Letter.
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4.4 BANK ACCOUNTS
4.4.1 Statements of the bank accounts of WCEH, and of the credit or debit
balances as at a date not more than seven days before the date of this
agreement, have been supplied to the Purchaser.
4.4.2 Since the date of each statement, there have been no payments out of
the account to which the statement relates, except for payments in the ordinary
course of business; and the balances on current accounts are not substantially
different from the balances shown in the statements.
4.5 CREDITORS
There is no amount owing by WCEH to a creditor other than in the ordinary
course of business which has been due for more than 3 months.
5 TRADING
5.1 CHANGES SINCE LAST ACCOUNTS DATE
Since the Last Accounts Date:
(a) the business of WCEH has been continued in the normal course;
(b) WCEH has paid its creditors in accordance with their respective
credit terms.
5.2 VENDOR'S OTHER INTERESTS AND LIABILITIES TO WCEH
There is no outstanding indebtedness of the Vendor to WCEH.
5.3 EFFECT OF SALE OF SHARES
5.3.1 The Vendor has no knowledge, information or belief that after
Completion (whether by reason of an existing agreement or arrangement or
otherwise):
(a) a major supplier of WCEH will cease supplying it; or
(b) a major customer of WCEH will cease to deal with it.
5.3.2 So far as the Vendor is aware compliance with the terms of this
agreement does not:
(a) conflict with, or result in the breach of, or constitute a default
under an agreement or arrangement to which WCEH is a party where such
agreement or arrangement has an annual value to WCEH of $250,000 or more;
(b) result in the creation, imposition, crystallisation or enforcement
of an encumbrance on assets of WCEH;
(c) result in present or future indebtedness of WCEH becoming due and
payable, or capable of being declared due and payable, prior to its stated
maturity.
5.4 JOINT VENTURES AND PARTNERSHIP
5.4.1 WCEH is not and has not agreed to become, a participant in or member
of a joint venture, consortium, partnership or other unincorporated association.
5.4.2 WCEH is not and has not agreed to become, a party to an agreement or
arrangement for sharing commissions.
5.5 LITIGATION, DISPUTES AND WINDING UP
5.5.1 WCEH and the Subsidiary are not engaged in litigation or arbitration
proceedings, as claimant or defendant and there are no proceedings pending or
threatened, either by or against WCEH.
5.5.2 So far as the Vendor is aware there is no dispute with a revenue or
other official department in the Netherlands in relation to the affairs of WCEH.
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5.5.3 So far as the Vendor is aware there are no claims pending or
threatened against WCEH, by an employee or third party in respect of an accident
or injury, which are not covered by insurance.
5.5.4 So far as the Vendor is aware no order has been made, or petition
presented, or resolution passed for the winding up of WCEH; no distress,
execution or other process has been levied in respect of WCEH which remains
undischarged; and so far as the Vendor is aware there is no unfulfilled or
unsatisfied judgment or court order outstanding against WCEH.
5.6 BUSINESS NAMES
WCEH does not use a name for any purpose other than its full corporate
name.
5.7 POWER OF ATTORNEY AND AUTHORITY
5.7.1 No power of attorney given by WCEH is in force.
5.7.2 No express authorities by which another person may enter into a
contract or commitment to do anything on behalf of WCEH are outstanding.
5.8 LICENCES AND CONSENTS
WCEH has obtained all necessary licences and consents for the proper
carrying on of its business and all material licences and consents are valid and
subsisting and so far as the Vendor is aware WCEH is not in breach of any of
such licences or consents.
5.9 SUBSISTING CONTRACTS
5.9.1 The WCEH Disclosure Letter contains particulars of all existing
material contracts (being those contracts having a value to WCEH of more than
$250,000 annually), to which WCEH is a party.
5.9.2 WCEH is not a party to a contract, transaction or arrangement (where
such an arrangement has a value to WCEH of more than $250,000 annually) which:
(a) of an unusual or abnormal nature, or is outside the ordinary and
proper course of business;
(b) is for a fixed term of more than twelve months;
(c) cannot be terminated by it, in accordance with its terms, on three
months' notice or less;
(d) involves, or is likely to involve, the supply of goods the
aggregate sales value of which will represent in excess of 10 per cent of
its turnover for the preceding financial year.
5.10 DEFAULT UNDER AGREEMENTS
WCEH is not:
(a) in default under a material agreement or arrangement to which it
is a party, or in respect of another material obligation or restriction by
which it is bound;
(b) liable in respect of an express warranty.
5.11 PURCHASES AND SALES FROM OR TO ONE PARTY
Except as set forth in the Disclosure Letter not more than 10 per cent of
the aggregate amount of all the purchases, and not more than 10 per cent of the
aggregate amount of all the sales, of WCEH is obtained, or made, from or to the
same supplier or customer, (including a person connected with the supplier or
customer).
6 EMPLOYMENT
6.1 EMPLOYEES AND TERMS OF EMPLOYMENT
6.1.1 Particulars of the identities, dates of commencement of employment
and terms of employment of all the employees and officers of WCEH, including
profit sharing, commission or discretionary bonus arrangements, are contained in
the WCEH Disclosure Letter.
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6.1.2 There are no agreements or arrangements between WCEH and a trade
union or other body representing employees.
6.2 BONUS SCHEMES
There are no schemes in operation entitling an employee of WCEH to a
commission or remuneration calculated by reference to the whole or part of the
turnover, profits or sales of WCEH.
6.3 CHANGES IN REMUNERATION
During the period to which the Last Accounts relate and since the Last
Accounts Date or (where employment or holding of office commenced after the
beginning of the period) since the commencing date of the employment or holding
of office:
6.3.1.1 no change has been made in the rate of remuneration, emoluments or
pension benefits, of an officer, ex-officer or senior executive of WCEH (a
senior executive being a person in receipt of remuneration in excess of $125,000
per annum); and
6.3.1.2 no material change has been made in any other terms of employment
of an officer or senior executive.
6.4 TERMINATION OF CONTRACTS OF EMPLOYMENT
6.4.1 All contracts of employment to which WCEH is a party are terminable
at any time on three months' notice or less without additional compensation
(other than compensation in accordance with the Dutch civil code).
6.4.2 No executive of WCEH, who is in receipt of remuneration in excess of
$125,000 per annum, and no officer of WCEH has given or received notice
terminating his employment, except as expressly contemplated in this agreement,
or will be entitled to give notice as a result of this agreement.
7 ASSETS
7.1 OWNERSHIP OF ASSETS
Except for assets subject to hire purchase or lease arrangements, all
assets were owned by WCEH at the Last Accounts Date, and WCEH had good title to
all the assets included in the Last Accounts and (except for current assets
subsequently sold or realised in the ordinary course of business) still owns and
has good title to them and to all assets acquired since the Last Accounts Date
and so far as the Vendor is aware none of the assets are subject to or affected
by any option, right to acquire, mortgage, charge, pledge, lien or agreement for
payment on deferred terms, judgment or other security on Encumbrance whatsoever.
7.2 INSURANCE/Y2K
7.2.1 All the material assets and undertakings of WCEH of an insurable
nature are insured in amounts representing their full replacement or
reinstatement value against fire and other risks normally insured against by
persons carrying on the same business as that carried on by it.
7.2.2 So far as the Vendor is aware WCEH is, and has for the last three
years been, adequately covered against accident, damage, injury, third party
loss (including product liability), loss of profits and other risks normally
insured against by persons carrying on the same kind of business.
7.2.3 So far as the Vendor is aware all insurance is in full force, and
nothing has been done or omitted to be done which could make any policy of
insurance void or voidable.
7.3 All major critical equipment of or used by, and all services provided
by, WCEH are Year 2000 Compliant.
7.4 So far as the Vendor is aware all material assets of WCEH will be
operating functionally immediately before Completion.
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8 PROPERTY
8.1 LEASEHOLD PROPERTIES
8.1.1 WCEH has paid the rent and observed and performed the covenants on
the part of the tenant and the conditions contained in any material leases
(which expressions in this clause 8 includes underleases) under which the
Properties are held, and the last demand for rent (or receipt, if issued) was
unqualified, and all such leases are valid and in full force.
8.1.2 The licences, consents and approvals required from the landlords and
any superior landlords under the leases of the Properties have been obtained,
and the covenants on the part of the tenant contained in the licences, consents
and approvals have been duly performed.
8.1.3 There are no rent reviews in progress under the leases of the
Properties held by WCEH, except for the annual rent increase, pursuant to
indexations, as inserted in the respective lease agreement and/or the general
conditions applicable thereto.
8.1.4 No obligation necessary to comply with a notice given by or other
requirement of the landlord under a lease of any of the Properties is
outstanding or unperformed.
8.1.5 There is no obligation to reinstate any of the Properties by removing
or dismantling an alteration made to it by WCEH or a predecessor in title.
8.1.6 WCEH does not have any interest in real estate save as stated in
Schedule 3.
8.1.7 So far as the Vendor is aware the present use of the Properties does
not conflict with any material contractual obligations and so far as the Vendor
is aware no material building or alteration work has been carried out without
the required licences.
8.1.8 So far as the Vendor is aware no municipal, provincial or
governmental or other authority has given any written instruction to WCEH in
connection with pollution of soil (including sub-soil and water therein) which
is currently owned or used by WCEH.
8.1.9 So far as the Vendor is aware WCEH currently holds, and is
substantially in compliance with all conditions of all, permits necessary to
operate its business.
9 PENSIONS
9.1 Schedule 7 contains a true and complete overview of:
9.1.1 all pension and early retirement scheme undertakings of WCEH; and
9.1.2 the obligations of WCEH to pay premiums with respect to pensions and
early retirement schemes for employees and former employees of WCEH.
9.2 All premiums that have become payable in connection with the
obligations referred to in sub-clause 9.1.2 have been fully paid at Completion.
9.3 No obligations exist, including past service commitments in excess of
amounts anticipated in the Last Accounts.
9.4 All pension commitments made by WCEH are in accordance with the Pension
and Savings Act, and WCEH is not deemed to have made any such commitments which
are not in accordance with such provisions. All pension commitments made by
WCEH, including back service obligations, have been fully funded.
10 INTELLECTUAL PROPERTY RIGHTS
10.1 So far as the Vendor is aware all the material Intellectual Property
Rights used or required by WCEH for its business and the running of their
networks are valid, enforceable, in full force and effect, registered (so far as
is capable of registration) in the sole name of WCEH, not subject to renewal or
re-registration within two years of the date hereof, are each in the sole and
exclusive legal and beneficial ownership of WCEH without the requirement for any
licence, consent or permission from or payment to any
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person, are each individually transferable by WCEH free from any Encumbrance of
any kind and there are no defects in WCEH's title to any of them.
10.2 So far as the Vendor is aware WCEH has not granted any licences or
assignments under or in respect of any Intellectual Property Rights or disclosed
or provided to any person (other than employee under enforceable obligations of
confidence) any confidential or secret material in which any Intellectual
Property Right exists, including without limitation, know-how, trade secrets,
technical assistance, confidential information or lists of customers or
suppliers and is not obliged so to grant or disclose any of the same.
10.3 So far as the Vendor is aware WCEH is entitled to carry on its
business in the ordinary and usual course as at present carried on and does not
thereby infringe any Intellectual Property Rights of any third party nor is it
liable to pay any commission, royalty or like fee or obtain any consent or
licence.
10.4 So far as the Vendor is aware all fees for the grant or renewal of the
Intellectual Property Rights owned or used by WCEH have been paid promptly and
no circumstances exist which might lead to the cancellation, forfeiture or
modification of any Intellectual Property Rights owned or used by WCEH or to the
termination of or any claim for damages under any licence of Intellectual
Property Rights to WCEH.
11 SPECIFIC INFORMATION
To the best of the knowledge of the Vendor and WorldPort none of the
information in the documents listed in the Data Room Documents List and in the
Schedule of Disclosed Documents (as defined in the WCEH Disclosure Letter) is
inaccurate or misleading in any material respect.
WORLDPORT COMMUNICATIONS INC.
acting by:
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WORLDPORT INTERNATIONAL INC.
acting by:
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ENERGIS PLC
acting by:
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