EXHIBIT 2.2
DATED 29 FEBRUARY 2000
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AT&T COMMUNICATIONS SERVICES INTERNATIONAL INC.
AND GLOBAL CARD HOLDINGS INC. (1)
VIATEL, INC. (2)
AND
VIATEL GLOBAL COMMUNICATIONS LIMITED (3)
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE
CAPITAL OF AT&T COMMUNICATIONS (UK) LTD.
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CONTENTS
CLAUSE HEADING PAGE
1 Definitions and interpretation........................................1
2 Sale of the Shares...................................................12
3 Consideration........................................................12
4 Completion...........................................................16
5 Undertakings and other matters.......................................18
6 Warranties...........................................................33
7 Tax Covenant.........................................................35
8 Announcements........................................................35
9 Releases, waivers etc., by the Purchaser.............................35
10 Notices..............................................................36
11 Entire Agreement.....................................................38
12 Alterations..........................................................38
13 Severability.........................................................38
14 Counterparts.........................................................38
15 Payment of costs.....................................................39
16 Successors and Assigns...............................................39
17 Applicable law , submission to jurisdiction and dispute resolution...39
18 Confidentiality......................................................40
19 Time of Essence......................................................40
20 Effect of Completion.................................................40
21 Guarantee............................................................41
Schedule 1....................................................................43
Schedule 2....................................................................44
Schedule 3....................................................................49
Schedule 5....................................................................59
Schedule 6....................................................................83
Schedule 7....................................................................90
Schedule 8...................................................................101
Schedule 9...................................................................105
Schedule 10..................................................................108
Appendix A Listed Customers and Services
Appendix B Private Transit draft terms
Agreed drafts: Property Sale Agreement
Announcement
Agreements for Lease (x3)
Escrow Letter
Pension Notice of Withdrawal
Transitional Services Amendment Agreements
THIS AGREEMENT is dated 29 February 2000
BETWEEN:
(1) AT&T COMMUNICATIONS SERVICES INTERNATIONAL INC. a Delaware corporation
having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ("ACSI") and GLOBAL CARD HOLDINGS INC., a Delaware
corporation having its principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ("GLOBAL") (together the "VENDORS");
and
(2) VIATEL, INC., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
(the "GUARANTOR"); and
(3) VIATEL GLOBAL COMMUNICATIONS LIMITED (No. 3918064) whose registered
office is at ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the
"PURCHASER").
WHEREAS
(A) The Company (as defined below) is a private company limited by shares.
(B) The Vendors have agreed to sell and the Purchaser has agreed to
purchase the Shares (as defined below) upon the terms and subject to
the conditions of this Agreement.
(C) The Guarantor has agreed to guarantee the obligations of the Purchaser
under this Agreement (and any other agreement to be entered into by the
Purchaser in connection with this Agreement) on the terms set out in
this Agreement.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement unless the context otherwise requires:
"31/12/99 ACCOUNTS" means the Company's individual accounts (including
the notes to those accounts and the associated directors' and auditor's
reports) for the 12 month period ended on, 31st December 1999 prepared
in accordance with Schedule 8;
"ACCOUNTS" means the Company's audited individual accounts, prepared in
compliance with generally accepted accounting conventions, policies,
principles and practices in the United States, for the 9 month period
ended on the Accounts Date, including the notes to those accounts and
the associated directors' and auditors' reports;
"ACCOUNTS DATE" means 30th September 1999;
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"ACCOUNTS RELIEF" means any Relief taken into account in arriving at
the provision for tax in the Completion Date Accounts or shown as an
asset in those accounts;
"AGREED FORM" means terms contained in a form reasonably acceptable to
the Vendors and the Purchaser;
"AGREEMENTS FOR LEASE" means the three agreements for lease to be
entered into by the Company on or before Completion in the agreed form;
"ANNOUNCEMENT" means the press announcement in the agreed form relating
to this Agreement;
"APPENDIX" means the appendix to this Agreement in the form of the
agreed draft describing the Data Services, Voice Services, Listed Data
Customers, Listed Data Contracts, Listed Voice Customers and Listed
Voice Contracts;
"ASSETS" means the telecommunications dishes, leased fibre, switches,
hubs, routers, and other equipment, spares and supplies currently being
used by the Company at the date of this Agreement in connection with
the business of the Company (or any part thereof);
"ASSURANCE" means any guarantee, assurance, covenant, undertaking or
commitment;
"AT&T GME" means AT&T Global Markets (EMEA) Limited, a company with
limited liability and having its registered office at Quadrant House,
▇▇▇▇▇▇ ▇▇▇▇ Square, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"AT&T GROUP" means AT&T Corp., being a New York Corporation having its
principal office at 32 Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ - 2412, and those of its related companies or entities (other
than the Company) in respect of which AT&T Corp. owns 50% or more of
the equity stock or shares of that entity from time to time;
"AT&T GROUP PROPRIETARY INFORMATION" means any specifications, designs,
plans, drawings, data, prototypes or other business and/or technical
information (excluding programs and software and materials licensed
under the Supply Agreement) which is owned by any entity within the
AT&T Group and used in the business of the Company at the Completion
Date but which is not generally known to the public;
"AT&T PATENT" means any patent owned by any member of the AT&T Group;
"AUCS" means collectively AUCS N.V. and AUCS v.o.f., both having their
registered offices at Hoofddorp, The Netherlands;
"AUCS DATA PLATFORM" means the physical and technical platform owned
and/or utilised by AUCS at 1st April 1999 to deliver Data Services to
Listed Data Customers (including without limitation Stratacom assets
2
and technology, Nortel and Nortel DPN assets and technology, and the
AUCS internet protocol platform used to deliver internet transit and
dial I.P. service);
"AUCS VOICE PLATFORM" means the physical and technical platforms owned
and/or utilised by AUCS at 1st April 1999 to provide voice virtual
network services and international customer calling centre services;
"AUDITORS" means the auditors of the Company namely
PricewaterhouseCoopers, Chartered Accountants and Registered Auditors,
of ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇;
"BUSINESS DAY" means a day (excluding Saturdays and Sundays) on which
clearing banks are ordinarily open for the transaction of normal
banking business in New York and the City of London;
"BUSINESS INFORMATION" means formulas, designs, specifications,
drawings, data, manuals and instructions and customer lists, sales
information, technical information, computer software, accounting and
tax records, correspondence, orders and enquiries;
"CA 1985" means the Companies ▇▇▇ ▇▇▇▇;
"CARVE OUT AGREEMENTS" means the memoranda of sale and assets transfer
agreement between the Company and AT&T GME and AT&T Easylink Services
Limited and documentation recording the purchase of various assets from
AT&T ISTEL and AT&T (UK) LTD, copies of which are contained at sections
19.1, 19.2 and 19.3 of the Data Room;
"CLAIM" means any notice, demand, assessment, letter or other document
issued or action taken by or on behalf of any Tax Authority (whether
before, on or after the date of this Agreement) from which it appears
that a Tax Liability is to be or may come to be imposed on the Company
or that the Company is liable or is sought to be made liable to make
any payment or increased or further payment to such Tax Authority;
"COMPANY" means AT&T Communications (UK) LTD. (No. 2948988) whose
registered office is at Quadrant House, ▇▇▇▇▇▇ ▇▇▇▇ Square, ▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"COMPLETION" means completion of the sale and purchase of the Shares by
the performance by the parties of their respective obligations under
clause 3;
"COMPLETION DATE" means 29th February 2000 (or such other date as the
parties may agree in writing);
"COMPLETION DATE ACCOUNTS" means the Company's individual accounts
(including the notes to those accounts and the associated directors'
and auditors' reports) for the 14 month period of the Company ending on
the Completion Date, prepared in accordance with schedule 8;
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"CONFIDENTIAL INFORMATION" means Business Information relating
specifically to the business of the Company and which is owned by the
Company and is for the time being confidential to the Company but
excluding AT&T Group Proprietary Information;
"DATA ROOM DOCUMENTS" means the documents contained in the data room
prepared by the Vendors, all as indexed in the Data Room Index and the
Supplemental Data Room Index;
"DATA ROOM INDEX" means the index of Data Room Documents in the agreed
form;
"DATA SERVICES" means the data telecommunications services currently
delivered by AUCS as described in the Appendix or any new services
offered by AUCS to AT&T GME from time to time;
"DISCLOSURE LETTER" means the letter of the same date as this Agreement
from the Vendors to the Purchaser disclosing certain matters in
relation to the Warranties;
"EMPLOYEES" means the persons whose names are set out in the Disclosure
Letter as being all the employees of the Company;
"ESCROW ACCOUNT" means an interest bearing deposit account in the joint
names of the Purchaser's Solicitors and the Vendors' Solicitors at TSB
Lloyds Bank, Colmore Row, Birmingham Branch (sort code: 30-00-03);
"ESCROW AMOUNT" means (pound)2,308,997;
"ESCROW LETTER" means the letter referred to in clause 4.1(a)(iv);
"EVENT" means any event, act, transaction, action or omission (whether
or not the Company is a party thereto) and includes the disposal of the
Shares pursuant to this Agreement, any change in the residence of any
person for the purposes of Tax, the death or dissolution of any person,
the receipt or accrual of any income profits or gains, any
distribution, any transfer, payment, loan or advance, and any event
which is deemed to have occurred or is treated or regarded as having
occurred for the purposes of Tax Legislation;
"FA" means Finance Act of the year referred to;
"GLOBAL CONTRACTS" means all those contracts between either of the
Vendors or other members of the AT&T Group (other than the Company) and
their suppliers facilitating the supply of goods or services to the
AT&T Group and under which certain goods or services have been provided
for the benefit of the Company and which are listed in Data Room
section XXVII, file 27.1.23;
"HOLDING COMPANY" shall bear the meaning given to that expression in
section 736 CA 1985;
"ICTA 1988" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
4
"INCOME PROFITS OR GAINS" includes income profits or gains (including
capital gains) of any description and from any source and income
profits or gains which are deemed to be earned accrued or received for
the purposes of any Tax;
"INFORMATION TECHNOLOGY" means computer hardware, software, firmware,
networks and other information technology and any assets which include
embedded technology;
"INSTALMENT PAYMENT REGULATIONS" means the Corporation Tax (Instalment
Payment) Regulations 1998 (S.I. 1998 No. 3175);
"INTELLECTUAL PROPERTY" means patents, trade marks and service marks,
rights in designs, trade or business names, copyrights (including,
without limitation, rights in software) and topography rights (whether
or not any of these are registered and including applications for
registration of any such thing), database rights and all rights or
forms of protection of a similar nature or having equivalent or similar
effect to any of these which may subsist anywhere in the world;
"LEASEHOLD PROPERTIES" means the leasehold properties details of which
are set out in Part A of Schedule 2;
"LISTED DATA CONTRACT" means a contract for the supply of Data Services
between AT&T GME and a Listed Data Customer which is listed in the
Appendix;
"LISTED DATA CUSTOMER" means a customer of AT&T GME for Data Services
as at the Completion Date as listed in the Appendix;
"LISTED VOICE CONTRACT" means a contract for the provision of Voice
Services between AT&T GME and a Listed Voice Customer which is listed
in the Appendix;
"LISTED VOICE CUSTOMER" means a customer of AT&T GME for Voice Services
as at the Completion Date as listed in the Appendix;
"MANAGEMENT ACCOUNTS" means the unaudited management accounts of the
Company as at the Management Accounts Date contained in section I, file
1.8.19 of the Data Room;
"MANAGEMENT ACCOUNTS DATE" means 31st December 1999;
"MATERIAL CONTRACT" means a contract, agreement or arrangement with a
material customer or a material supplier;
"MATERIAL CUSTOMER" means a customer identified in the disclosures
against Warranty 10.3 as set out in the Disclosure Letter;
"MATERIAL SUPPLIER" means a supplier identified in the disclosures
against Warranty 10.3 as set out in the Disclosure Letter;
"NEGOTIATING TEAMS" means, in the case of the Vendors, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇, and in the case of the Purchaser, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇;
5
"NEW RELIEF" means any Relief which arises:
(a) as a result of any Event occurring after Completion; or
(b) in respect of any period commencing on or after Completion;
"NOMINATED ACCOUNT" means the Vendors' Solicitors' client account
numbered ▇▇▇▇▇▇▇ at Lloyds TSB Bank PLC (Colmore Row, Birmingham
branch) - Sort Code 30-00-03;
"PERSON" means any individual, partnership, body corporate or
unincorporated association;
"PENSION PLANS" means all or any of:
(a) the AT&T ISTEL Pension Plan established by a definitive deed
and rules dated 31st March 1989 (the "MAIN PLAN");
(b) the AT&T ISTEL Supplementary Pension Plan established by a
definitive deed and rules dated 31st March 1989 (the
"SUPPLEMENTARY PLAN"); and
(c) the AT&T (UK) LTD Retirement Benefits Plan governed by a
definitive deed and rules dated 13th November 1992 (the "UK
PLAN");
"PROPERTY" or "PROPERTIES" means freehold, leasehold or other immovable
property in any part of the world;
"PROPERTY OWNER" means, in relation to any Leasehold Property, the
person referred to as the proprietor in Part A of Schedule 2;
"PROPERTY SALE AGREEMENT" means an agreement for the sale of a
portfolio of properties entered into on the date of this Agreement
between (1) AT&T ISTEL and (2) the Company;
"PURCHASE PRICE" means $125,000,000 plus or minus any payment pursuant
to clause 3.3;
"PURCHASER'S SOLICITORS" means Bird & Bird of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇;
"RELATED COMPANY" in relation to any company means any subsidiary or
holding company of that company or any subsidiary of any such holding
company;
"RELEVANT BREACH" means any event, condition, occurrence, fact, matter
or circumstance which is inconsistent with, contrary to or otherwise a
breach of any of the Warranties;
"RELEVANT PERIOD" means:
(a) in relation to corporation tax, any accounting period ended on
or before Completion; and
6
(b) in relation to any other Tax, any period ended on or prior to
Completion in respect of which the Company is required to make
a return or payment to a Tax Authority;
"RELIEF" means any loss, relief, allowance, exemption, set-off,
deduction, credit, right to payment or other relief available in
relation to Tax or to the computation of income profits or gains for
the purposes of Tax;
"RELEVANT VOICE SERVICES" means in relation to any Listed Voice
Customer, the provision to such customer in whatever manner through use
of the AUCS Voice Platform of Voice Services which meet the same
requirements of such customer, or are the same as or substantially
similar to the Voice Services, as delivered to such customer under the
relevant Listed Voice Contract or Contracts;
"RELEVANT DATA SERVICES" means in relation to any Listed Data Customer,
the provision to such customer in whatever manner through use of the
AUCS Data Platform of Data Services which meet the same requirements of
such customer, or are the same as or substantially similar to the Data
Services, as delivered to such customer under the relevant Listed Data
Contract or Contracts;
"SERVICE PROVIDER AGREEMENTS" means the Service Provider Agreement -
Voice - between the Company and AUCS dated 29/5/99 and the Service
Provider Agreement - Data - between the Company and AUCS dated 29/5/99;
"SHARES" means all of the issued and outstanding shares in the capital
of the Company;
"SECURITY INTEREST" means a mortgage, charge, pledge, lien, option,
right of possession, right of pre-emption or other encumbrance or
security interest of any kind but excluding:
(a) any lien arising in the ordinary course of business to secure
amounts which are not material;
(b) any unpaid vendors' or suppliers' lien arising in the ordinary
course of the Company's trading business to secure amounts due
in respect of goods or services sold or supplied; and
(c) liens arising by operation of law, including a banker's lien;
"SUBSIDIARY" means a subsidiary (as defined by sections 736 and 736A CA
1985);
"SUPPLEMENTAL DATA ROOM INDEX" means the index of supplemental
documents contained in the Data Room in the agreed form;
"THE SUPPLY AGREEMENT" means the agreement dated 27 October 1999 for
the provision and use of certain software and systems owned by AT&T
Corp after the Completion Date contained in section III, file 3.18 of
the Supplementary Data Room Index;
"TAX" means:
7
(a) corporation tax, advance corporation tax, income tax
(including income tax or amounts equivalent to income tax
required to be deducted or withheld from or accounted for in
respect of any payment), capital gains tax, inheritance tax,
net worth, real or personal property taxes, stamp duty,
reserve tax, capital stock, duties of customs and excise,
value added tax, sales taxes and national insurance
contributions and any other taxes, levies, duties, charges,
imposts or withholdings corresponding to, replaced by or
replacing any of them whether of the United Kingdom or
elsewhere, by a federal, state or local Tax Authority; and
(b) all penalties, fines, charges, surcharges and interest in
relation to taxation within paragraph (a) or to any failure to
file any return required for the purpose of any of them;
"TAX AUTHORITY" means the Inland Revenue, HM Customs & Excise, the
Department of Social Security and any other governmental, statutory,
state, provincial or local government authority, body or official
(whether within or outside the United Kingdom) involved in the
assessment, collection or administration of Tax;
the "TAX COVENANT" means the covenant by the Vendors contained in
Schedule 3;
"TAX LEGISLATION" means any statute, enactment, law or regulation
providing for the imposition of Tax;
"TAX LIABILITY" means a liability to make an actual payment of Tax
whether or not the Company shall or may have a right of recovery or
reimbursement against any other Person (regardless of whether any such
liability shall have been discharged in whole or in part on or before
Completion, save to the extent that such discharge is taken into
account in the Completion Date Accounts) and also:
(1) the loss, of any Relief which would (were it not for the said
loss) have been available to the Company and which has been
taken into account in computing (and so reducing) any
provision for deferred Tax which appears in the Completion
Date Accounts (or which, but for the presumed availability of
such Relief, would have appeared in the Completion Date
Accounts);
(2) the loss of a right to repayment of Tax which has been treated
as an asset of the Company in preparing the Completion Date
Accounts; and
any Reliefs and rights to repayment of Tax referred to in
sub-paragraphs (1) or (2) shall be "ACCOUNTS RELIEF" for the
purposes of this Agreement, and in any case falling within any
of sub-paragraphs (1) or (2), the amount that is to be treated
for the purposes of this deed as a Tax Liability of the
Company (the "DEEMED TAX LIABILITY") shall be determined as
follows:
(a) in a case which falls within paragraph (2), the Deemed Tax
Liability shall be the amount of the repayment that would have
been obtained but for the loss mentioned in that
sub-paragraph;
8
(b) in a case which falls within sub-paragraph (1) and where the
Relief that was the subject of the loss mentioned in those
sub-paragraphs was a deduction from or offset against Tax, the
Deemed Tax Liability shall be the amount of that Relief; and
(c) in a case which falls within sub-paragraph (1) and where the
Relief that was the subject of the loss mentioned in those
sub-paragraphs was a deduction from or offset against income,
profits or gains, the Deemed Tax Liability shall be the amount
of Tax which would, on the basis of the rates of Tax current
at the date of the loss, have been saved but for the loss;
"THE TAX WARRANTIES" means the Warranties contained in Part B of
Schedule 5;
"TCGA 1992" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"TERRITORY" means the United Kingdom and Eire;
"THIRD PARTY INTELLECTUAL PROPERTY" means the intellectual property
licensed to the Company by third parties and used in the business of
the Company general details of which are set out in the Disclosure
Letter;
"TRANSITIONAL SERVICES" means the provision and receipt of services to
and from other AT&T Group companies and to and from AUCS and X-TANT on
a temporary basis as set out in the Transitional Service Agreements;
"TRANSITIONAL SERVICES AGREEMENTS" means the agreements for the
provision and receipt of Transitional Services, copies of which are
contained at section XVII, file 17.2 of the Data Room Documents;
"TRANSITIONAL SERVICES AMENDMENT AGREEMENTS" means the agreements to
amend certain of the Transitional Services Agreements in the agreed
forms;
"US ACCOUNT" means the account of the Vendors numbered ▇▇▇-▇-▇▇▇▇▇▇ at
Chase Manhattan Bank, New York, Swift Code - CHASUS 33;
"VAT" means the tax imposed by VATA 1994;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"VENDORS' APPEAL" means any appeal, dispute, compromise or defence in
relation to the Vendors' Conduct Matters;
"VENDORS' CONDUCT MATTERS" means the preparation, submission,
negotiation, correspondence and agreement of all matters relevant to
the Tax position of the Company for a Relevant Period;
"VENDORS' RELIEF" means any Relief which arises as a result of any
event occurring in respect of a period ending on or before Completion;
"VENDORS' SOLICITORS" means Wragge & Co of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇;
9
"VOICE SERVICES" means voice telecommunications services currently
delivered by AUCS as described in the Appendix;
"WARRANTIES" means the warranties contained in clause 6.1 and Schedule
5;
"WORKING CAPITAL PAYMENT" means the sum to be paid by the Purchaser in
accordance with clause 3.3;
"WORKING CAPITAL VALUE" means the sum (positive or negative) as is
calculated by deducting the current liabilities of the Company from its
current assets (including cash in hand or at bank), such current assets
and current liabilities being determined in accordance with UK GAAP and
the accounting policies and principles set out in Part A of Schedule 9;
"WORKING CAPITAL STATEMENT" means the statement to be prepared in
accordance with clause 3 showing the calculation of the Working Capital
Value as at the Completion Date;
"YEAR 2000 COMPLIANT" means that any software or hardware will not be
adversely affected by any changes to the date format caused by the
advent of the year 2000 or any subsequent year and in particular:
(a) no value for the current date will cause any interruption in
the operation of any software or hardware;
(b) all manipulations of time-related data will produce the
desired results for all valid date values within the
application domain of any software or hardware and in
combination with other software or hardware products;
(c) all date elements in interfaces and data storage within any
software will permit the century to be specified without human
intervention; and
(d) where any date element is represented without a century, the
correct century will be unambiguous for all manipulations
involving that element;
as further interpreted by the British Standard Institution's Year 2000
compliance rules and amplification notes as set out in document PD2000
1:1998;
1.2 a document expressed to be "IN THE AGREED FORM" means a document in a
form which has been agreed by the parties contemporaneously with or
before the execution of this Agreement and which has, for the purposes
of identification, been initialled by them or on their behalf;
1.3 references to a clause or Schedule are to a clause of, or a Schedule
to, this Agreement, references to this Agreement include its schedules
and references in a Schedule or part of a Schedule to a paragraph are
to a paragraph of that Schedule or that part of that Schedule;
1.4 references to this Agreement or any other document or to any specified
provision of this Agreement or any other document are to this
Agreement, that document or that provision as in force for the time
being and as amended from time to time in accordance with the terms of
10
this Agreement or that document or, as the case may be, with the
agreement of the relevant parties;
1.5 words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to persons
include corporations, partnerships and other unincorporated
associations or bodies of persons;
1.6 the contents table and the descriptive headings to clauses, schedules
and paragraphs (and summaries in parentheses of the scope of any
statutory provisions in the Tax Warranties) are inserted for
convenience only, have no legal effect and shall be ignored in the
interpretation of this Agreement;
1.7 the words and phrases "OTHER", "INCLUDING" and "IN PARTICULAR" shall
not limit the generality of any preceding words or be construed as
being limited to the same class as the preceding words where a wider
construction is possible;
1.8 a person is connected with another person if he is so connected within
the meaning of section 839 ICTA 1988;
1.9 reference to an Event occurring on or before Completion shall be deemed
to include:
(a) any combination of two or more Events all of which shall have
occurred on or before Completion;
(b) any Event which is treated or deemed to occur on or before
Completion for the purposes of any Tax;
1.10
(a) "ENACTMENT" means any statute or statutory provision (whether
of the United Kingdom or elsewhere), subordinate legislation
(as defined by section 21(1) Interpretation Act 1978) and any
other subordinate legislation made before the date hereof
under any such statute or statutory provision;
(b) a reference to any enactment shall be construed as including a
reference to:
(i) any enactment which that enactment has before the
date hereof directly or indirectly replaced (whether
with or without modification), and
(ii) that enactment as re-enacted, replaced or modified
from time to time;
provided that this clause 1.10 shall not increase the
liability of any party above that which exists as at
Completion.
1.11 All agreements, obligations and liabilities on the part of the Vendors
are joint and several and shall be construed accordingly.
1.12 In relation to a body corporate:
11
(a) "GROUP" means that body corporate, its subsidiaries and
holding company together with any subsidiaries of any such
holding company;
(b) "GROUP COMPANY means a member of a Group.
2 SALE OF THE SHARES
2.1 The Vendors shall sell to the Purchaser and the Purchaser shall
purchase the Shares from the Vendors.
2.2 The Vendors shall sell and transfer the Shares free from all claims,
Security Interests (including for these purposes free from any of the
items referred to in paragraph (a) - (c) in the definition of "SECURITY
INTERESTS"), equities and other rights exercisable by third parties and
with full title guarantee.
2.3 Title to, beneficial ownership of, and any risk attaching to the Shares
shall pass on Completion and the Shares shall be sold and purchased
together with all rights and benefits attached or accruing to them at
Completion (including the right to receive all dividends, distributions
or any return of capital declared, paid or made by the Company on or
after Completion).
2.4 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed
simultaneously.
3 CONSIDERATION
3.1 The consideration for the Shares shall be:
(a) the payment by the Purchaser to the Vendors of the Purchase
Price in cash in accordance with the provisions of this clause
3 and clause 4.1(c);
(b) the undertaking of the Purchaser set out in clause 5.21 below.
3.2 On Completion, the Purchaser shall pay
(a) to the US Account of ACSI on behalf of both Vendors, the sum
of US$125,000,000 in respect of the Purchase Price;
(b) to the US Account of ACSI on behalf of both Vendors, the sum
of $7,763,921 on account of any Working Capital Payment; and
(c) the Escrow Amount into the Escrow Account, on account of the
balance of any Working Capital Payment in excess of the amount
referred to in (b) above.
3.3 Following the agreement or determination of the Working Capital
Statement pursuant to clause 3.15:
(a) if the Working Capital Value is less than $5,000,000, the
Vendors shall pay to the Purchaser an amount equal to such
shortfall;
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(b) if the Working Capital Value is more than $5,000,000, the
Purchaser shall pay to the Vendors an amount equal to such
excess;
(c) if the Working Capital Value is $5,000,000 then no further
payment shall be due from the Purchaser to the Vendors or vice
versa in respect of Working Capital Value.
3.4 If a payment is due from the Purchaser to the Vendors pursuant to
clause 3.3(b):
(a) which is equal to or more than the sum of the payment made
pursuant to clause 3.2(b) and the Escrow Amount the Vendors
shall be entitled to the Escrow Amount plus accrued interest
and the balance due shall be paid by the Purchaser in
accordance with clause 3.6;
(b) which is less than the sum of the payment made pursuant clause
3.2(b) and the Escrow Amount, the Vendors shall be entitled to
be paid that lesser amount from the Escrow Account plus
accrued interest on that amount and the Purchaser shall be
entitled to the balance of the Escrow Account including any
accrued interest not paid to the Vendors.
3.5 If a payment is due from the Vendors to the Purchaser pursuant to
clause 3.3(a) then the Purchaser shall be entitled to the whole of the
Escrow Amount plus accrued interest and the balance due to the
Purchaser shall be paid by the Vendors in accordance with clause 3.6.
3.6 In respect of any amount payable under clause 3.3 and subject to clause
3.8 the Parties shall:
(a) instruct the Vendors' Solicitors and the Purchaser's
Solicitors within 7 business days to make any payments due
from the Escrow Account pursuant to clause 3.4 or 3.5 in
accordance with the Escrow Letter;
(b) pay any balance due in each case in accordance with clauses
3.4 or 3.5 by electronic transfer:
(i) (where such sum is expressed to be payable to the
Vendors) to the Nominated Account (and the Vendors'
Solicitors are hereby authorised to receive it in
such account);
(ii) (where such sum is expressed to be payable to the
Purchaser) to such account as the Purchaser shall
notify in writing.
3.7 Payment by the Purchaser to the US Account, the Nominated Account or
the Escrow Account, or from the Escrow Account (as applicable),
pursuant to clauses 3.2 or 3.6 shall constitute a good discharge to the
Purchaser in respect of its obligations pursuant to clauses 3.2 and
3.4. Payment by the Vendors to the account nominated in clause
3.6(b)(ii) shall constitute a good discharge to the Vendors in respect
of the obligation set out in clause 3.5.
3.8 If on the due date of any payment to the Vendors pursuant to clause
3.4, the Purchaser has given written notice to the Vendors of one or
more claims pursuant to the Warranties, the indemnities in clause 5
13
and/or the Tax Covenant, the Escrow Amount (or such part of it as
equals the amount claimed by the Purchaser) shall be retained in the
Escrow Account only until such claim or claims (and, for the avoidance
of doubt, no other claim notified after such date) is agreed between
the parties or is adjudicated by a court of competent jurisdiction at
first instance.
3.9 As soon as practicable following Completion, and in any event not later
than 40 Business Days after Completion, a draft of the Working Capital
Statement shall be prepared by the Vendors in accordance with clause
3.10 and delivered to the Purchaser. The Purchaser shall co-operate
with the Vendors in the preparation of the draft Working Capital
Statement by giving or procuring such access and providing such
information and assistance as referred to in clause 3.16.
3.10 The draft Working Capital Statement shall be prepared in accordance
with UK GAAP and the accounting policies and principles set out in Part
A of Schedule 9 and in a format and on a basis consistent with the pro
forma Working Capital Statement set out in Part B of Schedule 9;
3.11 As soon as practicable after delivery of the draft Working Capital
Statement to the Purchaser in accordance with clause 3.9 and in any
event within 40 Business Days after such delivery or such longer period
as the parties may agree ("THE REVIEW PERIOD"), the Purchaser shall
review the draft Working Capital Statement and endeavour to agree what
adjustments (if any) need to be made to them in order for them to
comply with clause 3.10.
3.12 If within the Review Period:
(a) the Purchaser agrees that no adjustments need to be made to
the draft Working Capital Statement; or
(b) the parties agree on the adjustments to be made to the draft
Working Capital Statement in order for them to comply as
aforesaid,
then the amount of the Working Capital Value specified in the draft
Working Capital Statement (incorporating any adjustments mentioned in
(b) above) shall be the Working Capital Statement and the amount of the
Working Capital Value for all purposes of this Agreement and shall, in
the absence of manifest error, be final and binding on the parties and
shall not be subject to question on any ground whatsoever.
3.13 If the parties are unable to agree within the Review Period on:
(a) whether adjustments need to be made to the Working Capital
Statement;
(b) the adjustments to be made thereto; or
(c) the amount of the Working Capital Value,
then such matter or matters (but no other matters) shall thereupon be
referred to such firm of independent chartered accountants as the
Vendors and the Purchaser may agree within 10 business days of a
request by either of them to the other or, failing such agreement
14
within such time, as the President for the time being of the Institute
of Chartered Accountants in England and Wales may nominate on the
application of the Vendors or the Purchaser ("THE INDEPENDENT
ACCOUNTANTS") for determination as set out in clause 3.14.
3.14 Any determination by any Independent Accountants appointed under clause
3.13 shall be on the following basis:
(a) the Independent Accountants shall be instructed to notify the
Vendors and the Purchaser of their determination of any such
matter within 20 business days of such referral;
(b) the Vendors and the Purchaser shall be entitled to make
written submission(s) to the Independent Accountants, but
subject thereto the Independent Accountants shall have power
to determine the procedure to be followed in relation to their
determination;
(c) any submissions to and the determination of the Independent
Accountants shall be in the English language and any oral
hearings shall be conducted in English in London;
(d) in making such submissions the Vendors and the Purchaser shall
state their respective best estimates of monetary amounts of
the matters referred for determination;
(e) in making their determination the Independent Accountants
shall act as experts and not as arbitrators, their decision as
to any matter referred to them for determination shall in the
absence of manifest error be final and binding in all respects
on the parties and shall not be subject to question on any
ground whatsoever; and
(f) the fees and expenses of the Independent Accountants shall be
borne and paid as the Independent Accountants shall direct or,
in the absence of any such directions, by the Vendors and the
Purchaser equally.
3.15 Following any agreement between the Vendors and the Purchaser under
clause 3.12 or any determination by the Independent Accountants in
accordance with clause 3.14, the parties shall jointly incorporate into
and reflect in the draft Working Capital Statement the matters agreed
between the Vendors and the Purchaser and/or determined by the
Independent Accountants, together with any adjustments which may have
been agreed between the parties and the Working Capital Value stated in
the Working Capital Statement shall be the Working Capital Value for
all purposes of this Agreement, shall in the absence of manifest and
error be final and binding on the parties and shall not be subject to
question on any ground whatsoever.
3.16 Until the Working Capital Statement shall have been agreed or
determined the Vendors and the Purchaser shall respectively:
15
(a) give or procure that each other, their agents and the
Independent Accountants are given access at all reasonable
times to all relevant books and records which are in the
possession or under the control of the Vendors, the Company or
the Purchaser (as the case may be); and
(b) generally provide each other, their agents and the Independent
Accountants with such other information and assistance as they
may reasonably require (including access to and assistance at
reasonable times from personnel employed by the Vendors, the
Company or the Purchaser, as the case may be), in relation to
the review, agreement or determination of the Working Capital
Statement and the Working Capital Value.
4 COMPLETION
4.1 Completion shall take place at the offices of the Purchaser's
Solicitors on the Completion Date and all (but not part only unless the
parties shall so agree) of the following business shall be transacted:
(a) the Vendors shall deliver to the Purchaser or, in the case of
paragraphs (ii) and (iii) below, make available for collection
by the Purchaser or its authorised representatives:
(i) transfers in respect of the Shares duly executed and
completed in favour of the Purchaser or its nominee,
together with the certificate or certificates
therefore in the names of the transferors;
(ii) (as agents for the Company) all of the Company's
statutory and minute books written up to date and its
Common Seal, Certificate of Incorporation, any
Certificate or Certificates of Incorporation on
Change of Name and copies of its Memorandum and
Articles of Association;
(iii) the deeds and documents of title to the Leasehold
Properties; (iv) a letter from the Vendors and the
Purchaser to the Vendors' Solicitors and the
Purchaser's Solicitors in the agreed form duly
executed by the Vendors and the Purchaser (being the
Escrow Letter); (v) the Property Sale Agreement duly
executed by AT&T ISTEL; (vi) the Transitional
Services Amendment Agreements duly executed by the
parties thereto;
(b) the Vendors shall:
(i) cause the transfers mentioned in clause 4.1(a)((i))
to be resolved to be registered by the Company
(subject only to their being duly stamped);
16
(ii) cause the persons named in part A of Schedule 4 to be
validly appointed as additional Directors and the
person named in part B of Schedule 4 to be validly
appointed as Secretary of the Company; and
(iii) on such appointments being made, cause the persons
named in part C of Schedule 4 to cease to be
Directors and the person named in part D of Schedule
4 to cease to be Secretary of the Company;
(c) the Purchaser shall pay:
(i) $125,000,000 (being the Purchase Price payable
pursuant to clause 3.2(a)) and the sum of $7,763,921
on account of any Working Capital Payment payable
pursuant to clause 3.2(b) by electronic funds
transfer for value to the US Account; and
(ii) shall pay an amount equal to the Escrow Amount to the
Escrow Account (and the Vendors' Solicitors and the
Purchaser's Solicitors are hereby authorised to
receive it in such account);
(d) the parties shall join in procuring that:
(i) the current accounting reference period of the
Company shall be altered so as to end on the
Completion Date;
(ii) an agreement for lease in the agreed form in respect
of each of the Properties described in Part B of
Schedule 2 is entered into by the parties identified
against each such property;
(iii) an agreement for lease in the agreed form in respect
of the Property described in Part C of Schedule 2 is
entered into by the parties identified against such
property.
4.2 Neither the Purchaser nor the Vendors shall be obliged to complete this
Agreement unless the Vendors comply or procure compliance with or, as
the case may be, the Purchaser complies or procures compliance with,
the requirements of clause 4.1.
4.3 Neither the Purchaser nor the Vendors shall be obliged to complete the
sale and purchase of some but not all of the Shares.
5 UNDERTAKINGS AND OTHER MATTERS
5.1 The Vendors hereby declare that for so long as they remain the
registered holders of any of the Shares after Completion they will:
(a) hold the Shares and the dividends and other distributions of
profits or surplus or other assets declared, paid or made in
respect of them after Completion and all rights arising out of
or in connection with them in trust for the Purchaser; and
17
(b) deal with and dispose of the Shares and all such dividends,
distributions and rights as are described in clause 5.1(a)
only as the Purchaser may direct.
5.2 The provisions of Schedule 7 shall have effect in relation to pensions
matters.
5.3 The Vendors shall procure that:
(a) a resolution be passed at or before Completion changing the
name of the Company to Viatel Holdings UK Limited;
(b) the resolution referred to in clause 5.3(a) shall forthwith be
submitted to the Registrar of Companies together with the
appropriate fee as soon as reasonably practicable after
Completion (and in any event within ten business days); and
(c) promptly following receipt of the Change of Name Certificate
from the Registrar of Companies, the same is delivered to the
Purchaser.
5.4 Subject to clause 5.5, the Purchaser shall procure that:
(a) as soon as reasonably practicable after Completion (and in any
event within ten business days), the name or ▇▇▇▇ "AT&T" or
the globe design and any combination thereof or any other name
or marks owned by a member of the AT&T Group ("THE AT&T GROUP
MARKS") and any names or marks likely to cause confusion with
and/or which are phonetically similar to any of the AT&T Marks
shall no longer be used by the Company or any related company
as a corporate, business or trading name or logo except
insofar as permitted under clause 5.4(b) in relation solely to
the use of pre-existing documentation, signage, stocks, sales
literature and promotional material; and
(b) the Company shall as soon as practicable but not later than
three months after Completion cease to use any documentation
(including without limitation, letterhead, business cards and
invoices), signage, stocks, sales literature and promotional
material existing prior to the Completion Date which contain
any of the AT&T Group Marks. Without limiting the foregoing
the Company may for three months after Completion use labels,
signs, stationery, brochures and other printed materials
currently in the possession of the Company and use them in
connection with the business of the Company provided that the
Company uses all reasonable endeavours to cease any such use
as expeditiously as possible and during such time clearly
identify that the Vendors do not control, operate, conduct or
are not otherwise associated or affiliated with the Company.
5.5 Without prejudice to clause 5.4 no rights or licences in any of the
AT&T Group Marks are granted under this Agreement and nothing in this
Agreement shall be construed as conferring by implication, estoppel or
otherwise, any licence or rights in any of the AT&T Group Marks. The
Purchaser agrees not to challenge the ownership by the Vendors or the
relevant member of the AT&T Group of, or the validity of, the AT&T
18
Group Marks. The Purchaser further agrees that it has not relied upon,
nor have the Vendors made, any representations or warranties of any
kind concerning the availability and/or use of the AT&T Group Marks
under clause 5.4 and any such representations or warranties are hereby
expressly disclaimed by the Vendors.
5.6 The provisions of Schedule 8 shall have effect in relation to the
preparation of the 31/12/99 Accounts and the Completion Date Accounts.
5.7 The Vendors undertake with the Purchaser that they will not at any time
after Completion (subject to clause 5.8) without the consent of the
Company or the Purchaser use, whether on its own behalf or on behalf of
any third party, or divulge to any third party, any of the Confidential
Information.
5.8 The restrictions in clause 5.7 shall not apply:
(a) in respect of any of the Confidential Information which is in
or becomes part of the public domain, other than through a
breach of the obligations of confidentiality set out in clause
5.7; or
(b) to either Vendor to the extent that it is required to disclose
Confidential Information by any applicable law, governmental
order, decree, regulation, licence or rule or pursuant to the
regulations of any securities exchange or regulatory or
governmental body to which it is subject provided that any
information disclosed pursuant to this paragraph (b) shall be
disclosed only after consultation with the Purchaser.
5.9 Following Completion the Purchaser agrees that it shall, for the
periods set out below (and subject to clause 5.11), give or procure
that the Vendors (including their employees, officers and advisers) are
given access at all reasonable times on reasonable notice to all
records, books, documents and title deeds held by the Company in
respect of the carrying on of the business of the Company at all times
prior to the Completion Date which are in the possession or under the
control of the Company or the Purchaser and which are reasonably
required by the Vendors or any other member of the AT&T Group, in
either case for the carrying on of the business of or which otherwise
relates to the business of any such Vendor or other member of the AT&T
Group:
(a) subject to (b) below, for a period of six years following the
Completion Date;
(b) for such longer period as may reasonably be required by the
Vendors to the extent necessary to comply with any legal
obligations (including without limitation, the requirement to
produce accounts and tax returns), at any time after the
Completion Date provided that the Vendors give written notice
prior to expiry of the period referred to in (a) giving
specific details of such records, books, documents and title
deeds required by them.
5.10 The Vendors undertake to procure that all records, books, documents and
title deeds used exclusively by the Company shall be under the control
of the Company at Completion and shall be returned to the Company's
19
principal place of business within six months from the Completion Date.
Following Completion, the Vendors shall, for the periods set out below
and subject to clause 5.11, provide or procure the provision to the
Purchaser, its related companies and their officers, agents, directors
and employees, upon reasonable notice, reasonable access to and copies
of any other records, books, documents and title deeds in the
possession or under the control of the Vendors or their related
companies insofar as the same are reasonably required for the carrying
on of the business of or which otherwise relates to the business of the
Company:
(a) subject to (b) below, for a period of six years following the
Completion Date;
(b) for such longer period as may reasonably be required by the
Purchaser to the extent necessary to comply with any legal
obligations (including without limitation, the requirement to
produce accounts and tax returns), at any time after the
Completion Date provided that the Purchaser gives written
notice prior to expiry of the period referred to in (a) giving
specific details of such records, books, documents and title
deeds required by it.
5.11 The parties undertake with each other that in respect of any
information comprised in records, books, documents and title deeds or
otherwise ("DISCLOSED INFORMATION" for the purposes of this clause
5.11) to which access is given under clauses 5.9 or 5.10 they shall
not, without the consent of the party disclosing the Disclosed
Information (such consent not to be unreasonably withheld):
(a) use the Disclosed Information for any other purpose than the
purpose for which such access was given; or
(b) disclose the Disclosed Information to any third party save:
(i) to a member of the same Group and, in such case, the
party receiving such Disclosed Information shall
procure that the other members of its Group shall
observe the terms of this clause 5.11;
(ii) where disclosure is implicit in the purpose for which
such access was given;
(iii) that the restrictions in clause 5.11 shall not apply
in the same circumstances as specified in clause 5.8
as if the same were set out here in full in relation
to the Disclosed Information.
5.12 The Vendors agree and undertake that (in the absence of fraud) they
have no rights against and shall not make any claim against the Company
or any employee, director, agent, officer or adviser of the Company in
respect of any misrepresentation in or omission from any information or
advice supplied or given by any such person and on which they have
relied in agreeing the Warranties, preparing the Disclosure Letter or
entering into this Agreement or any agreement referred to in it.
20
5.13 Without prejudice to any restriction or limitation on the extent of any
party's obligations under this Agreement, each of the parties shall (at
its own cost) from time to time, so far as each is reasonably able, do
or procure the doing of all such reasonable acts and/or execute or
procure the execution of all such documents in a form reasonably
satisfactory to the party concerned as they may reasonably consider
necessary to transfer the Shares to the Purchaser or otherwise to give
any party the full benefit of this Agreement.
5.14 The Vendors agree that payment of any bonuses payable to employees of
the Company in connection with the sale of the Company (being sums
payable to Senior Management in accordance with the relevant bonus
schemes identified in Supplemental Data Room section III, files 3.9 and
3.10) will be for the Vendors' account and they shall indemnify the
Purchaser (for itself and as trustee for the Company and each of its
other related companies) against the payment of such bonuses and all
related costs and liabilities (including, without limit employer's
national insurance). Subject to the Vendors placing the Company in
funds (including, without limitation, National Insurance) in advance of
the due date for payment of such bonuses, the Purchaser agrees that it
shall procure that the Company pays such sums on the Vendors' behalf.
5.15
(a) The Vendors shall at their sole cost and expense procure that
the Company is entitled to continue using (excluding all
support and maintenance and renewal fees which shall be the
ongoing responsibility of the Company) the Third Party
Intellectual Property insofar as such Third Party Intellectual
Property is currently licensed to the Company.
(b) The Vendors shall procure that neither they nor any of their
related companies shall require the Purchaser, the Company or
any of their related companies to pay any royalty or other
payment to any of them after Completion for the licensing of
any Intellectual Property owned by the AT&T Group which has
been used by the Company prior to Completion, save for those
charges expressly set out in the Supply Agreement.
(c) The Vendors covenant not to ▇▇▇ the Company for infringement
of any AT&T Patent used by the Company immediately prior to
the Completion Date insofar as the said AT&T Patent is
necessarily and unavoidably infringed by the Company in the
provisioning of services of a type offered by the Company in
the Territory at the Completion Date.
(d) Nothing contained in this Agreement shall be construed as
conferring by implication, estoppel, or otherwise any licence
of or under any AT&T Patent. The Vendors disclaim any
liability of any kind concerning the availability and use of
any AT&T Patent by the Company after the Completion Date.
(e) All AT&T Group Proprietary Information shall remain the
exclusive property of the AT&T Group and the Purchaser shall
procure that the Company shall:
21
(i) use the AT&T Group Proprietary Information only to
the extent necessary for the purpose of conducting
business of a type undertaken by the Company prior to
the Completion Date;
(ii) restrict disclosure of AT&T Group Proprietary
Information to its employees with a need to know (and
obligate such employees to conduct themselves in
accordance with the obligations assumed herein);
(iii) not disclose AT&T Group Proprietary Information to
any third party without the prior written approval of
the Vendors (which shall not be unreasonably withheld
or delayed) except that the Company may disclose AT&T
Group Proprietary Information to third parties
without prior written approval if, and only to the
extent that, such disclosure is consistent with the
conduct of the business of the Company of a type
undertaken at the Completion Date and such third
party is obligated so as to maintain the
confidentiality of such AT&T Group Proprietary
Information.
5.16 Subject to any express provision to the contrary, any claim under this
Agreement shall be paid in pounds sterling.
5.17 The Purchaser covenants that, at any time and from time to time on or
after Completion, it will use all reasonable endeavours (without
incurring any additional financial liability on its part) in order to
effect the release and discharge in full of any Assurance given by the
Vendors or any of their related companies to any person in respect of
any obligation or liability of the Company. Pending such release and
discharge, the Purchaser hereby agrees with the Vendors (on behalf of
themselves and their related companies) that it will indemnify the
Vendors and their related companies against all liabilities incurred
pursuant to any such Assurance arising after the Completion Date.
5.18 The Vendors covenant that, at any time and from time to time on or
after Completion, they will execute and deliver all such instruments of
assumption and acknowledgements or take such other action as the
Purchaser may reasonably request (which shall not include the repayment
or settlement of any primary obligation before its due date for
repayment or settlement in order to effect the release and discharge in
full of any Assurance given by the Company to any person in respect of
any obligation or liability of either of the Vendors or any of their
related companies and shall procure the assumption of, and the
substitution of one of the Vendors or an appropriate related company of
the Vendors as the primary obligor in respect of, each such Assurance
on a non-recourse basis to the Purchaser or any of its related
companies. Pending such release and discharge, the Vendors hereby agree
with the Purchaser (on behalf of itself and its related companies) that
it will assume and pay and discharge when due, and indemnify the
Purchaser and its related companies against, all such Assurances;
5.19
(a) The Purchaser acknowledges and agrees that upon Completion all
insurance cover provided in relation to the business of the
Company pursuant to policies maintained by the Vendors and
22
their related companies shall cease and that no further
liability shall arise under such policies but (subject to the
terms of any relevant policy) without prejudice to (i) any
accrued claims which the Company may have at Completion and
(ii) any claims which the Company may have under an occurrence
based policy which that policy covers in respect of events or
circumstances arising prior to Completion (together,
"INSURANCE CLAIMS").
(b) The Vendors shall and shall procure that each of their related
companies shall take all action and give all assistance as the
Purchaser may reasonably request in respect of any Insurance
Claims and shall promptly pay any sums received in respect of
any Insurance Claims to the Purchaser or, as it directs, to
the Company or to any of its related companies. Where the
Company has direct rights in respect of any Insurance Claim,
it shall take the lead role in prosecuting that claim.
(c) The Vendors shall not and shall procure that each of their
related companies shall not waive any rights under the
insurance policies which provide cover for the Insurance
Claims.
5.20 As from the Completion Date all rights for the Company to order or
procure goods or services under the Global Contracts shall cease
forthwith.
5.21 As consideration for the Vendors agreeing to enter into this Agreement
and to sell the Shares to the Purchaser, the Purchaser hereby
undertakes to each of the Vendors (for themselves and also as trustees
for every member of the AT&T Group from time to time) that the
Purchaser shall procure that the Company shall not directly or
indirectly compete with any member of the AT&T Group in the provision
of Voice Services or Data Services to Listed Voice Customers or Listed
Data Customers or solicit or entice away any such customers by (in
respect of any of the foregoing) offering or providing Relevant Voice
Services or Relevant Data Services or through use of the Confidential
AUCS Information (as defined in clause 5.23) contrary to the provisions
of clause 5.23. This restriction shall apply until the termination in
whatever manner of the relevant Listed Voice Contract or Listed Data
Contract, or in the case of Listed Voice Customers 31st December 2000,
and in the case of Listed Data Customers, 31st December 2001, whichever
is the earlier. For the avoidance of doubt:
(a) where used in this clause 5.21 "termination" shall occur at
the point in time at which a Listed Data Contract or a Listed
Voice Contract shall come to an end either by expiration of
its fixed term or, where the relevant contract continues until
due notice to terminate has been given in accordance with its
terms by one party to the other or others, the date of expiry
of such notice;
(b) this clause 5.21 shall not operate so as to prevent the
Company from:
(i) using any assets owned by it in the United Kingdom
itself to provide or deliver Voice Services or Data
Services to Listed Voice Customers or Listed Data
Customers unless it does so directly or indirectly in
23
conjunction with AUCS and/or AUCS Voice Platform or
the AUCS Data Platform (as the case may be)
(ii) offering Voice Services or Data Services to Listed
Voice Customers or Listed Data Customers where those
services are to be delivered other than by AUCS or
any third party through the use of the AUCS Voice
Platform or the AUCS Data Platform
5.22 For the purposes of clause 5.21, the expression "SOLICIT" shall be
deemed to include (without limitation) any person referred to as being
bound by the covenant in clause 5.23 using information about customers
which it may obtain through providing the Voice Services or Data
Services, or approaching such customers (whether or not requested by
customers to do so) without the prior knowledge of a member of the AT&T
Group.
5.23 The Purchaser shall not (and shall procure that the Company and the
members of its Group from time to time shall not) disclose to any third
party any information whatsoever concerning Listed Data Customers,
Listed Data Contracts, Listed Voice Customers, Listed Voice Contracts
("CONFIDENTIAL AUCS INFORMATION") and shall use their best endeavours
to put in place as soon as possible such security measures as may be
necessary to prevent such disclosure or otherwise allow access to the
same.
5.24 The restriction in clause 5.23 shall not apply to Confidential AUCS
Information which:
(a) is required for the efficient delivery by AT&T or members of
the AT&T Group of Voice Services and/or Data Services to
Listed Voice Customers or Listed Data Customers pursuant to
the Listed Voice Contracts or Listed Data Contracts; or
(b) has become generally available to the public without breach of
the provisions of clause 5.23 by the receiving party; or
(c) with the prior written consent of a member of the AT&T Group;
or
(d) is legally in the possession of the Purchaser or any member of
its Group prior to the date of this Agreement (without breach
of confidentiality), as evidenced by its own written records,
but excluding information disclosed by the Vendors pursuant to
the Confidentiality Agreement between the Purchaser and ▇ ▇
▇▇▇▇▇▇ Securities Limited dated 25 May 1999.
5.25 Where disclosure of Confidential AUCS Information is permitted, it
shall be disseminated only to those of the receiving party's employees
who have a genuine need to know the same and subject to the condition
that such employees are advised of the obligations of confidentiality
assumed by the Purchaser under this Agreement.
5.26 The Vendors are prepared to finance and shall reimburse the Purchaser
for outplacement counselling up to a maximum total cost of
(pound)150,000 (plus VAT) within 10 Business Days of receipt by the
24
Vendors of a valid VAT invoice from the relevant provider for any
Employees who are made redundant by the Purchaser at any time following
Completion and before 31st December 2000. The Purchaser shall keep the
Vendors informed of any proposals or consultations proposed in relation
to such redundancies and shall only seek reimbursement of the cost of
such outplacement and counselling to the extent reasonable and
appropriate to the seniority of the relevant Employees and consistent
with the practices of the AT&T Group in the United Kingdom prior to the
Completion Date. The Vendors shall provide to the Purchaser, on
request, the names of any relevant person employed by the AT&T Group in
the United Kingdom who the Vendors reasonably believe may wish to
employ any Employee made or proposed to be made redundant by the
Purchaser in the period to 31 December 2000.
5.27 The Vendors and the Purchaser shall cooperate after Completion to
procure that the benefit of the Company's existing arrangements with
American Express for the provision of credit cards to selected
Employees ("AMEX Arrangements") are continued for at least 90 days
after Completion and cooperate to ensure that, as soon as possible
after Completion, the relevant contracts which constitute the AMEX
Arrangements are terminated or novated to the Purchaser or its nominee
as appropriate. Pending such novation or the cancellation of the AMEX
Arrangements, the Purchaser shall indemnify the Vendors and any other
members of the AT&T Group against any liabilities, costs, claims or
damages which such entities may incur by reason of the continuation of
AMEX Arrangements. For the avoidance of doubt, any continued support by
the Vendors or the AT&T Group of the AMEX Arrangements after Completion
shall be considered Assurances for the purpose of clause 5.17.
5.28 From the date of Completion to 31st December 2000, the Vendors and
members of the AT&T Group may enter 3 year contracts to purchase from
time to time from any member of the Guarantor's Group
telecommunications lit fibre on any portion of the Guarantor's European
Circe Network then in commercial operation, in accordance with that
Group member's then current terms and conditions for supply of such
fibre, for their own use in the conduct of their business and not for
resale, sub-lease, sub-licence or transfer whatsoever to any other
entity provided, however, that they may transfer such fibre to any
company within the AT&T Group. The price for such fibre shall be
equivalent to 90% of the "Average Market Price". For the purposes of
this Agreement, "Average Market Price" shall mean the average publicly
quoted price being charged for substantially equivalent fibre by the
following companies: MCI Worldcom, Inc., KPN Qwest B.V., COLT Telecom
Group Plc and Global Telesystems Group, Inc. at the date of purchase of
such fibre. Such price shall be calculated in GBP by the Purchaser at
the date of purchase of such fibre using, if required, the Financial
Times spot currency exchange rates.
5.29 In connection with ancillary transitional support matters, the
provisions of schedule 10 shall apply.
25
5.30 The Vendors shall indemnify the Purchaser (for itself and on trust for
the Company) against any loss, cost, expense or liability suffered or
incurred by the Company arising from or in connection with:
(a) the termination of an agreement dated 23 November 1998 between
Cable & Wireless Communications Services Limited and the
Company relating to International Facilities Access;
(b) the sale of equipment pursuant to an agreement dated 11
December 1998 between X-TANT Limited AT&T ISTEL, NTL Inc and
the Company;
(c) the termination on or before Completion of any agreement
pursuant to or in contemplation of the Carve Out Agreements or
pursuant to or in contemplation of the transfer by the Company
to AT&T GME of any business or asset to AT&T GME (to the
extent that the Company is not indemnified by AT&T GME in
respect thereof).
5.31 (a) The Vendors shall, on demand, reimburse the Company for the
rental costs payable by it pursuant to the lease of ▇▇ ▇▇▇▇▇▇
▇▇▇▇ identified in Section 16 of Part A of Schedule 2
("LEASE")for the remainder of the current term of the Lease to
23 August 2000.
(b) On or before the third business day prior to the date on which
notice of renewal is due in respect of the Lease:
(i) the Vendors shall place the Company in funds in an
amount of (pound)152,239.15 together with an amount
equal to employer's national insurance in respect of
such amount (ie. grossed-up); and
(ii) the Purchaser shall place the Company in funds in an
amount of (pound)38,059.79 together with an amount
equal to employer's national insurance in respect of
such amount (ie. grossed-up); and
(iii) subject to receipt of the amounts referred to in (i)
and (ii), the Purchaser shall procure that the
Company pays such amounts (net of tax and employer's
national insurance) to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ provided that
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is still an employee of the Company
at that time.
5.32 It is acknowledged that legal title to the leases of certain access
circuits ("ACCESS CIRCUITS") which were used in connection with the
BCSE business (which was sold by AT&T ISTEL to the Company on 1 January
1998) remain vested in AT&T ISTEL although beneficial ownership of them
was passed to the Company at the time of sale of the business.
Accordingly the parties shall use their respective reasonable
endeavours to transfer the leases of the Access Circuits and the
Purchaser shall indemnify the Vendors (as trustees for AT&T ISTEL)
against all costs, expenses, liabilities or charges arising under them.
5.33 The Vendors will use reasonable endeavours to procure that Concert
Communications Limited ("CONCERT") enters into a new contract with the
Company for the provision by the Company to it of FCS and ATM services
26
to commence upon the expiry of the current contract for such services
between the Company and AT&T GME at the end of March 2000. The Vendors
shall furthermore use reasonable endeavours to procure that any such
negotiations are undertaken in good faith with pricing levels being
dependant upon contract length and service level commitments and in the
event that a migration plan onto a Concert service is proposed then the
Vendors shall use reasonable endeavours to procure that Concert is
responsible for any applicable cancellation costs incurred by the
Company arising directly from that migration plan.
5.34 The Vendors will use reasonable endeavours procure that the current
Data Connect Agreement between AT&T Corp. and the Company is varied
with effect from Completion to permit the following data access through
the applicable firewall namely:
(a) GBP Data;
(b) GSMS access for support;
(c) customer database access;
(d) BASE access; and
(e) e-mail connectivity (for 90 days) or such longer period as the
parties shall agree in accordance with clause 5.36.
5.35 The Vendors will use reasonable endeavours to procure that an
appropriate contractual arrangement is put in place as soon as
practicable after Completion between the Company and X-TANT Limited in
relation to (1) accessing the RACAL ISDN DAPS (a switching device) on
node sites and/or customer sites by use of the X-TANT X.25 Network and
(2) CMS 400 management system access.
5.36 The Purchaser shall be entitled to use the ▇▇▇.▇▇▇ domain name suffix
for up to 90 days from Completion. In the event that the Purchaser
notifies the Vendors not later than 75 days from Completion that the
Company may be unable to transition to an alternative domain name
system within 90 days of Completion then the Vendors will use
reasonable endeavours to assist the Company in attempting to obtain an
extension of the timeframe for cessation of use of the ▇▇▇.▇▇▇ domain
name suffix.
5.37 The Vendors will indemnify the Purchaser (for itself and on trust for
the Company) against:
(a) any claims brought against the Company which relate to the
travel and low speed data network business sold by the Company
(and AT&T ISTEL) to X-TANT Limited except insofar as (unless
within subclause (b) below) such claims relate to the
activities of the Company in relation to the period after the
sale of such business; and
27
(b) any claims brought against the Company which relate to those
activities comprised within the agreements for the
reorganisation of Transitional Services between:
(i) AT&T GME and X-TANT Limited dated September 1999; and
(ii) AT&T ISTEL and X-TANT Limited dated September 1999;
in relation to the period from 11 December 1998 (being the
date of sale of the said business to X-TANT) to date.
5.38 It is acknowledged by the Company and the Vendors (on behalf of the
AT&T Group) that each control Indefeasible Rights of Use ("IRUS") in
Transatlantic Voice Traffic half channels which connect with IRUs of
the other party. It is further acknowledged that if either party ceases
to operate a half channel connected to the other party then the
remaining party may have a stranded asset, namely an IRU half channel
that would incur operating costs with no revenues. In order to avoid
such an occurrence the Vendors and the Purchaser shall negotiate in
good faith in order to endeavour that neither party has stranded assets
comprising unusable IRU half channels and in this regard it is agreed
by the parties that they will engage in meaningful discussions with a
view to resolving any such potential issues within 90 days of
Completion with a final date for resolution (ie. that no IRU or half
channels remain or are stranded assets) of such potential issues by 30
September 2000. Such discussions will at all times be conducted on
behalf each party by persons who are appropriately empowered to make
decisions with a view to resolving potential issues.
5.39 The Vendors will indemnify the Purchaser (for itself and in trust for
the Company) against any claim that the Company was not entitled to
licence the MAXM software to AUCS such indemnity being limited in
aggregate to the sum of (pound)135,000. This indemnity shall only apply
insofar as such claims for infringement are brought against the Company
by 31 December 2001.
5.40 The Vendors will indemnify the Purchaser (for itself and in trust for
the Company) against costs incurred by the Purchaser or the Company up
to the aggregate sum of $1 million relating directly to the necessity
to replace the whole roof membrane of Quadrant House insofar as such
replacement arises from the diesel oil spillage which occurred in 1998.
Such indemnification by the Vendors is subject to:
(a) the Company not having the right to claim under any applicable
insurance policy; and
(b) the Vendors at all times being consulted in relation to the
conduct of claims in relation to the loss.
This indemnity shall cease to apply insofar as the Company fails to
undertake normal maintenance of the roof (to the extent that the
Company is legally responsible for such maintenance) or the Company or
the Purchaser fail to act in good faith in respect of such matters.
28
5.41 The Vendors will indemnify the Purchaser against the amount of any
licence or licence transfer fee in excess of $150,000 payable to
▇▇▇▇▇▇▇ by the Company in consideration of their granting a
non-exclusive non-transferable licence in favour of the Company as a
non AT&T Group entity post Completion in relation to the period up to
31 December 2000. Support charges payable to ▇▇▇▇▇▇▇ by the Company are
outside the ambit of this indemnity.
5.42 The Vendors shall indemnify the Purchaser (for itself and in trust for
the Company) against all cost, expense or liability (excluding loss of
profit) suffered or incurred by the Company arising from the relocation
of any telecommunications switches or other telecommunications
equipment situated in ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ if such relocation is required as a result of any
enforcement action taken or formally threatened by a planning or other
competent body or authority. The maximum aggregate liability of the
Vendors pursuant to this clause 5.41 shall be $100,000.
PRIVATE TRANSIT AGREEMENT OPTION
5.43 The Guarantor shall be granted an option ("OPTION"), which shall be
assignable to any of its subsidiaries, to enter into a Private Transit
Agreement ("PTA") with AT&T Internet Services ("AT&T Internet").
5.44 The key terms of this PTA shall be as follows:
(a) the Guarantor and/or one of its subsidiaries will enter into
the PTA for a 60 month "Initial Term" for a minimum of one OC3
at one access point to AT&T's network.
(b) the Guarantor and/or its subsidiaries will enjoy the Best
Price available from AT&T Internet upon entering into the PTA
(currently calculated to be $55k per month for the OC3 access
speed).
(c) during the Initial Term, whenever the Guarantor wishes to
upgrade from its OC3 access to a higher speed OC(X) port it
can do so and then enjoy the Best Price available from AT&T
Internet at the time of the upgrade.
(d) AT&T Internet shall act in good faith in determining the "Best
Price". "Best Price" shall be obtained by:
(i) AT&T Internet applying the pricing methodology which
is consistent with that used by AT&T Internet to
arrive at the initial OC3 price (currently $55k per
month); and
(ii) AT&T Internet applying the lowest port price given in
an agreement to any of AT&T Internet's customers who
have ordered substantially the same MIS port
bandwidth as the Guarantor and who have ordered this
bandwidth for the same or similar initial service
period,
29
(e) new MIS access ports or upgrades which the Guarantor and/or
its subsidiaries order during the Initial Term will also be
offered to the Guarantor and/or its subsidiaries at the Best
Price (as defined in 3 above),
(f) the Guarantor has the right to request a price review at the
13th, 25th, 37th and 49th months (each, a "Review Month") of
the 60 month term of the PTA. Only MIS ports or upgrades which
have been in service for at least twelve months at the Review
Month will be capable of being reviewed,
(g) modified prices offered to the Guarantor and/or its
subsidiaries at a Review Month shall be at the Best Price (as
defined in 3 above),
(h) should AT&T Internet not be able to reduce port charges in a
review in (f) above, the Guarantor shall have the right to
terminate the PTA in relation to the specific port which
cannot be reduced in price.
5.45 The Guarantor may at anytime during the 60 day period following
execution of this Agreement require the Vendors to use reasonable
endeavours to procure that the Guarantor may sign an Option with AT&T
Internet which incorporates the provisions contained in clauses 5.43
and 5.44 and the terms and conditions as attached as Appendix B.
BT POOLING
5.46 (a) The provisions of this clause 5.46 relate to the BT digital
pooling arrangements between British Telecom plc ("BT") and
the Company (DatRoom section VIII, file 8.5.10 and
Supplemental Data Room file 3.19) ("BT DIGITAL POOLING
ARRANGEMENTS") under which the Company has certain minimum
purchase obligations which are as follows:
(i) for 2000 and 2001, a requirement to reach 2,250
pooled circuits with a one off penalty of(pound)1,300
per circuit not purchased payable on 31.12.01;
(ii) for 2000 through to 2003, a minimum of 1,650 circuits
with a penalty of (pound)835 per circuit not
purchased payable per quarter up to 31st December
2003.
(b) Subject to the following provisions of this clause 5.46, the
Vendors will indemnify the Purchaser (for itself and as
trustee for the Company) in a sum equal to all penalties that
are payable in respect of any shortfall in circuits under the
minimum purchase obligations incurred at any time after 1st
January 2000.
(c) The obligation of the Vendors under clause 5.46(b) above is
strictly subject to the following:
(i) the Company not being permitted to purchase circuits
from another circuit provider except in circumstances
where the circuits provided under the BT digital
30
pooling arrangements do not have the appropriate
technical characteristics for the specific purpose;
(ii) the Company and the Purchaser using their respective
reasonable endeavours to maximise their use of
circuits under the BT digital pooling arrangements;
(iii) compliance by the Company and the Vendors with their
obligations under clause 5.46(d)(i).
(iv) the Purchaser and the Company each keeping the
Vendors informed of all material correspondence under
the BT digital pooling arrangements.
(d) (i) Each of the Purchaser, the Company and the Vendors
shall use all reasonable endeavours to work together
to mitigate the overall potential liability under the
BT digital pooling arrangements and engage in
discussions with BT to renegotiate the BT digital
pooling arrangements in such a way as to reduce both
the minimum purchase obligation and the amount of the
penalties payable.
(ii) If the Vendors so elect, the Vendors shall be
entitled to take on a leading role in all
discussions, negotiations or correspondence with BT
in relation to the BT digital pooling arrangements,
provided that they consult with the Company on a
regular basis and keep it informed of all material
developments in such discussions, negotiations or
correspondence and allow a representative of the
Purchaser to be present.
(iii) The Purchaser and the Company shall allow the Vendors
reasonable access to key personnel of the Company for
the purpose of giving effect to the provisions of
this clause 5.46.
(e) The Vendors shall have no liability in respect of any claim
under clause 5.46(b) unless that claim when aggregated with
all other claims for any calendar year exceeds the sum of
(pound)75,000 (in which case the Vendors shall be liable for
the full amount of such claims).
(f) The total liability of the Vendors under clause 5.46(b) shall
not exceed(pound)6,200,000.
(g) No claim shall be brought under clause 5.46(b) unless notice
in writing specifying the penalties payable has been given to
each of the Vendors by 31st March 2004 and any such claim that
may have been made by such date shall (if it has not been
previously satisfied, settled or withdrawn) be deemed to have
been waived or withdrawn on the expiration of 12 months after
the date it was made unless court proceedings in respect of it
shall then have been commenced against the Vendors.
31
(h) The provisions of this clause 5.46 shall apply only to the BT
digital pooling arrangements and not to any new or replacement
arrangements whether with BT or any other party.
(i) The Vendors shall have no liability under this clause 5.46 to
the extent that such liability relates to any variation,
modification, alteration or amendment to the BT digital
pooling arrangements made without the prior written consent of
the Vendors.
(j) No claim shall be made and the Vendors shall have no liability
under the Warranties in respect of any penalty paid or payable
under the BT digital pooling agreement.
NTL
5.47 (a) The provisions of this clause 5.47 relate to a contract
between the Company and NTL for the purchase by the Company of
E1 circuits (Data Room section VIII, file 8.5.6) ("NTL
CONTRACT") under which the Company may face penalties
("PENALTIES") if certain minimum purchase obligations are not
met by stated dates.
(b) Subject to the following provisions of this clause 5.47, the
Vendors will indemnify the Purchaser (for itself and as
trustee for the Company) in a sum equal to all Penalties that
are payable.
(c) The obligation of the Vendors under clause 5.47(b) above is
strictly subject to the following:
(i) compliance by the Company and the Vendors with their
obligations under clause 5.47(d);
(ii) the Purchaser each keeping the Vendors informed of
all material correspondence under the NTL Contract.
(d) Each of the Purchaser, the Company and the Vendors shall use
all reasonable endeavours to work together to mitigate the
overall potential liability.
(e) The total liability of the Vendors under this clause 5.47(b)
shall not exceed(pound)700,000.
(f) No claim shall be brought under clause 5.47(b) unless notice
in writing specifying the Penalties payable has been given to
each of the Vendors by 31 December 2000 and any such claim
that may have been made by such date shall (if it has not been
previously satisfied, settled or withdrawn) be deemed to have
been waived or withdrawn on the expiration of 6 months after
the date it was made unless court proceedings in respect of it
shall then have been commenced against the Vendors.
32
(g) The provisions of this clause 5.47 shall apply only to the NTL
Contract and not to any new or replacement arrangements
whether with NTL or any other party.
(h) The Vendors shall have no liability under this clause to the
extent that such liability relates to any variation,
modification, alteration or amendment to the NTL Contract made
without the prior written consent of the Vendors.
(i) No claim shall be made and the Vendors shall have no liability
under the Warranties in respect of any penalty paid or payable
under the NTL Contract.
5.48 The Purchaser agrees that the provisions for the protection of the
Vendors set out in paragraphs 1.1, 4.1, 5, 9 and 10 shall apply mutatis
mutandis to any claim for indemnity pursuant to clauses 5.37, 5.39,
5.40, 5.41, 5.42, 5.46 and 5.47.
6 WARRANTIES
6.1 Subject always to the provisions of Schedule 6, in consideration of the
Purchaser entering into this Agreement:
(a) the Vendors warrant to the Purchaser (subject to clause 6.2)
that the Statement set out in Schedule 5 are true and
accurate; and
(b) where any statement in Schedule 5 is qualified as being made
"so far as the Vendors are aware" or "to the best of the
knowledge, information and belief of the Vendors" or any
similar expression, such statement shall be deemed to have
been made by the Vendors after reasonable enquiry in relation
to the matters in question by the Vendors of ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ (Commercial Director), ▇▇▇▇ ▇▇▇▇▇▇ (Sales &
Marketing Director), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Human Resources), ▇▇▇▇▇
▇▇▇▇ (Network), ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Finance Manager), ▇▇▇▇▇ ▇▇▇▇▇▇
(IT Director) and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Managing Director).
6.2
(a) the Warranties are qualified (unless there is a specific
acknowledgment in the Disclosure Letter from the Vendors that
they are not so qualified) to the extent, but only to the
extent, of those matters fairly disclosed in the Disclosure
Letter and for this purpose "FAIRLY DISCLOSED" means disclosed
in such manner and in such detail as to enable a reasonable
purchaser to make an informed and reasonably accurate
assessment of the matter concerned.
(b) each of the paragraphs in Schedule 5:
(i) shall be construed as a separate and independent
representation and/or warranty; and
(ii) save as expressly otherwise provided in this
Agreement, shall not be limited by reference to any
other paragraph in Schedule 5 or by any other
provision of this Agreement,
33
and the Purchaser shall have a separate claim and right of
action in respect of every Relevant Breach of each such
representation or warranty.
6.3 All claims by the Purchaser for damages or compensation in respect of
any Relevant Breach shall be subject to the provisions for the
protection of the Vendors in Schedule 6 unless specifically provided
otherwise or if there shall have been fraud on the part of the Vendors
or if the Vendors shall have deliberately concealed from the Purchaser
facts known to them which a purchaser of the Company would reasonably
expect to be told for the purpose of making an informed assessment of
the assets and liabilities, financial position, profits and losses, and
prospects of that entity and of the rights attaching to the Shares.
6.4 The Warranties shall not in any respect be extinguished or affected by
Completion.
6.5 The Vendors accept that the Purchaser is entering into this Agreement
in reliance upon each of the Warranties.
6.6 The Purchaser warrants to the Vendors that:
(a) the Purchaser has obtained all corporate authorisations and
all other applicable governmental, statutory, regulatory or
other consent, licences, waivers or exemptions required to
empower it to enter into and to perform its obligations under
this Agreement and each document to be executed by it at or
before Completion;
(b) the Purchaser's obligations under this Agreement and each
document to be executed at or before Completion are, or when
the relevant document is executed, will be enforceable in
accordance with their terms;
(c) the Purchaser is a limited company incorporated under English
law and has been in continuous existence since its
incorporation.
7 TAX COVENANT
7.1 The Vendors hereby covenant with the Purchaser in the terms of the Tax
Covenant, the provisions of which shall take effect from Completion.
8 ANNOUNCEMENTS
8.1 Subject to clause 8.2, save as and to the extent expressly required by
law or any securities exchange or regulatory or governmental body to
which either of the parties is subject, all announcements or circulars
by, of or on behalf of either of the parties hereto and relating to the
sale and purchase hereunder shall be in terms to be approved in writing
by the parties in advance of issue.
8.2 To the extent that any announcement or circular is required by law or
any securities exchange or regulatory or governmental body ("A RELEVANT
REQUIREMENT") to be made by either of the parties, the party which is
required to make such announcement shall:
34
(a) notify the other party of such relevant requirement as soon as
is reasonably practicable and in any event prior to making
such announcement or circular;
(b) consult with the other party over the content of the
announcement or circular with a view to minimising the
information relating to such sale and purchase to the greatest
possible extent compatible with the relevant requirement and
otherwise to agree the content of the announcement or circular
as far as possible.
9 RELEASES, WAIVERS ETC., BY THE PURCHASER
9.1 Each party may, in its discretion, in whole or in part release,
compound or compromise, or waive its rights or grant time or indulgence
in respect of, any liability to it under this Agreement. Any such
waiver shall be effective only if in writing signed by the party or
parties against whom enforcement is sought.
9.2 Subject to clause 9.1, neither the single or partial exercise or
temporary or partial waiver by a party of any right, nor the failure by
a party to exercise in whole or in part any right or to insist on the
strict performance of any provision of this Agreement, nor the
discontinuance, abandonment or adverse determination of any proceedings
taken by a party to enforce any right or any such provision shall
operate as a waiver of, or preclude any exercise or enforcement or (as
the case may be) further or other exercise or enforcement by a party of
that or any other right or provision.
9.3 All references in clause 9.2 to:
(a) any right shall include any power, right or remedy conferred
by this Agreement on, or provided by law or otherwise
available to a party; and
(b) any failure to do something shall include any delay in doing
it.
9.4 The giving by a party of any consent to any act which by the terms of
this Agreement requires such consent shall not prejudice the right of a
party to withhold or give consent to the doing of any similar act.
10 NOTICES
10.1 Except as otherwise provided in this Agreement, every notice under this
Agreement shall be in writing and shall be deemed to be duly given if
it (or the envelope containing it) identifies the party to whom it is
intended to be given as the addressee and:
(a) it is delivered by being handed personally to the addressee
(or, where the addressee is a corporation, any one of its
directors or its secretary); or
(b) it is delivered by being left in a letter box or other
appropriate place for the receipt of letters at the
addressee's authorised address; or
35
(c) the envelope containing the notice is properly addressed to
the addressee at his authorised address and duly posted by the
recorded delivery service (or by airmail registered post if
overseas) or the notice is duly transmitted to that address by
facsimile transmission,
and, in proving the giving or service of such notice, it shall
be conclusive evidence to prove that the notice was duly given
within the meaning of this clause 10.1.
10.2 A notice sent by post (or the envelope containing it) shall not be
deemed to be duly posted for the purposes of clause 10.1((c)) unless it
is put into the post properly stamped or with all postal or other
charges in respect of it otherwise prepaid.
10.3 For the purposes of this clause 10 the authorised address of the
Vendors and the Purchaser shall be:
(a) the Vendors:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (AT&T Legal)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (M&A Director)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Tel: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇▇▇ ▇▇▇▇▇▇
(b) the Guarantor:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Executive Vice President, Business
Development) or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Senior Vice President and
General Counsel)
Viatel, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇, ▇▇▇▇▇
▇▇▇
36
(c) the Purchaser:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Executive Vice President, Business
Development) or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Senior Vice President and
General Counsel)
Viatel, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇, ▇▇▇▇▇
▇▇▇
10.4 Any notice duly given within the meaning of clause 10.1 shall be deemed
to have been both given and received:
(a) if it is delivered in accordance with clause 10.1((a)) or
10.1((b)), on such delivery;
(b) if it is duly posted or transmitted in accordance with clause
10.1((c)) by any of the methods therein specified, on the
second (or, when sent airmail, fifth) business day after the
day of posting or (in the case of a notice transmitted by
facsimile transmission) upon receipt by the sender of the
correct answer back or transmission report.
10.5 For the purposes of this clause 10 "NOTICE" shall include any request,
demand, instruction, communication or other document.
11 ENTIRE AGREEMENT
11.1 This Agreement, the Disclosure Letter and the documents in the agreed
form referred to in this Agreement ("ANCILLARY DOCUMENTS") constitute
the entire agreement between the parties in relation to the subject
matter covered and supersede any previous agreement between the parties
in relation to such matters which shall cease to have any further
effect. It is agreed that:
(a) no party has entered into this Agreement in reliance upon any
statement, representation, warranty or undertaking which is
not set out or referred to in this Agreement or the Ancillary
Documents;
(b) in the absence of fraud, no party will have any remedy in
respect of any untrue statement, made to it or its
representatives or agents, prior to this Agreement being
entered into and upon which it or they relied other than
warranties or undertakings set out or referred to in this
Agreement or the Ancillary Documents; and
(c) this clause shall not exclude any liability for fraudulent
misrepresentation.
12 ALTERATIONS
12.1 No purported alteration of this Agreement shall be effective unless it
is in writing, refers specifically to this Agreement and is duly
executed by each party hereto.
37
13 SEVERABILITY
13.1 Each provision of this Agreement is severable and distinct from the
others. The parties intend that every such provision shall be and
remain valid and enforceable to the fullest extent permitted by law. If
any such provision is or at any time becomes to any extent invalid,
illegal or unenforceable under any enactment or rule of law, it shall
to that extent be deemed not to form part of this Agreement but (except
to that extent in the case of that provision) it and all other
provisions of this Agreement shall continue in full force and effect
and their validity, legality and enforceability shall not be thereby
affected or impaired, provided that the operation of this clause would
not negate the commercial intent and purpose of the parties under this
Agreement.
14 COUNTERPARTS
14.1 This Agreement may be entered into in the form of two or more
counterparts each executed by one or more of the parties but, taken
together, executed by all and, provided that all the parties so enter
into the Agreement, each of the executed counterparts, when duly
exchanged or delivered, shall be deemed to be an original, but, taken
together, they shall constitute one instrument.
15 PAYMENT OF COSTS
15.1 Each of the parties shall be responsible for his or its respective
legal and other costs incurred in relation to the negotiation,
preparation and completion of this Agreement and all Ancillary
Documents.
16 SUCCESSORS AND ASSIGNS
16.1 This Agreement shall be binding on and shall be for the benefit of the
successors in title of each party.
16.2 Save as provided in clause 16.3, none of the parties hereto shall be
entitled to assign the benefit of any rights under this Agreement.
16.3 The benefit but not the burden of this Agreement shall be freely
assignable by any party and, in the event of any such assignment all
references in this Agreement to such party shall be deemed to include
its assigns provided that:
(a) such assignment is to a member of its Group; and
(b) if any such assignee ceases to be a member of such party's
Group (otherwise than by reason of such party ceasing to exist
by reason of any amalgamation or liquidation by way of solvent
reconstruction) then such assignee shall immediately further
assign the said benefit of this Agreement to a company which
is a member of such party's Group;
16.4 Subject to clauses 16.1 and 16.3, a person who is not a party to this
Agreement (including any employee, officer, agent representative or
sub-contractor of either party) shall not have any right to enforce any
term of this Agreement which expressly or by implication confers a
benefit on that person without the express prior agreement in writing
of the parties which agreement must refer to this clause 16.4.
38
17 APPLICABLE LAW , SUBMISSION TO JURISDICTION AND DISPUTE RESOLUTION
17.1 This Agreement shall be governed by and construed in accordance with
English law and the parties hereby submit to the non-exclusive
jurisdiction of the High Court of Justice in England and Wales for the
purpose of hearing and determining any suit, claim, action or
proceedings which may arise out of or in connection with this
Agreement.
17.2 Subject to clause 17.3, prior to exercising any remedy available under
this Agreement or otherwise by law in respect of any breach or alleged
breach of this Agreement or in respect of any other dispute arising out
of this Agreement, the parties shall refer any such dispute to the
Negotiating Teams who shall co-operate in good faith to resolve the
dispute as amicably as possible within 20 business days of the dispute
being referred to them. In the event that they are unable to resolve
such dispute, the parties shall be free to exercise any remedies that
they may have under this Agreement or otherwise by law, subject always
to the terms of this Agreement.
17.3 clause 17.2 shall not apply to any dispute or claim arising out of the
agreement or determination of the Working Capital Statement (save in
the case of manifest error) or where a specific dispute resolution
mechanism is otherwise specifically provided for under the terms of
this Agreement.
18 CONFIDENTIALITY
18.1 Each party shall treat as confidential all information obtained as a
result of entering into or performing this Agreement which relates to:
(a) the provisions of this Agreement;
(b) the negotiations relating to this Agreement; or
(c) any other party.
18.2 Notwithstanding the other provisions of this clause, a party may
disclose confidential information:
(a) if and to the extent required by law or for the purpose of any
judicial proceedings;
(b) if and to the extent required by any securities exchange or
regulatory or governmental body to which that party is
subject, whether or not the requirement for information has
the force of law;
(c) if and to the extent required to vest the full benefit of this
Agreement in that party;
(d) to its professional advisers, auditors and bankers;
39
(e) if and to the extent the information has come into the public
domain through no fault of that party; or
(f) if and to the extent the other party has given prior written
consent to the disclosure.
Any information to be disclosed pursuant to paragraphs (a) or (b) shall
be disclosed only after consultation with the other parties.
18.3 The restrictions contained in this clause shall apply without limit in
time.
19 TIME OF ESSENCE
19.1 Except as otherwise expressly provided, time is of the essence of this
Agreement.
20 EFFECT OF COMPLETION
20.1 Any provision of this Agreement and any other documents referred to in
it which is capable of being performed after but which has not been
performed at or before Completion and all Warranties and covenants,
indemnities and other undertakings contained in or entered into
pursuant to this Agreement shall remain in full force and effect
notwithstanding Completion.
21 GUARANTEE
21.1 In consideration of the Vendors selling the Shares and in particular
(without limitation) agreeing to perform their obligations pursuant to
Schedule 8 (the adequacy of which consideration is agreed by the
Guarantor), the Guarantor hereby unconditionally and irrevocably
guarantees to the Vendors the due and complete performance by the
Purchaser of all of its obligations under this Agreement (and any
Ancillary Documents). If the Purchaser defaults in the due performance
of its obligations under this Agreement (and any Ancillary Documents)
the Guarantor shall procure the performance of such obligations by the
Purchaser.
21.2 The Guarantor agrees that the Vendors shall be entitled to enforce this
guarantee against the Guarantor as principal obligor and without making
any demand on or taking any proceedings against the Purchaser and shall
not be required before enforcing this guarantee to pursue, enforce or
exhaust any other right, remedy or security which it may have. This
guarantee shall continue in full force and effect until all the
liabilities and obligations of the Purchaser under this Agreement (and
any Ancillary Documents) have been fully performed and discharged.
21.3 This guarantee shall not be affected in any way by any time or
indulgence granted to the Purchaser by the Vendors or by any variation,
compromise or release of any of its obligations under this Agreement
(or any Ancillary Documents).
21.4 This guarantee shall not be affected by the liquidation or dissolution
of the Purchaser or by the appointment of a receiver over the
undertaking, property or assets of the Purchaser or by any
circumstances affecting the obligations of the Purchaser to meet its
liabilities or by any alteration in the constitution of the Purchaser
40
or by reason of any change in the interest of the Guarantor in the
Purchaser. If any such matters or any other act or event in consequence
of which the Purchaser loses its separate legal identity the Guarantor
shall become liable for the obligations of the Purchaser under this
Agreement (and any Ancillary Documents) as if it were a primary obligor
provided that if the Purchaser ceases to be a member of the same group
as the Guarantor, the Guarantor shall have no further obligation under
this clause 21 if the Guarantor procures that a member of the
Purchaser's Group registered in England and Wales and of no less
financial standing than the Guarantor as at the date of this Agreement
and reasonably satisfactory to the Vendors, enters into a guarantee on
substantially similar terms to the terms of this clause 21 in respect
of any remaining obligations of the Purchaser under this Agreement (and
any Ancillary Documents).
21.5 This guarantee shall be of a continuing nature and shall not be
considered as wholly or partially satisfied by the payment or
liquidation at any time after the date of this Agreement of any sum of
money for the time being due to the Vendors but shall extend to cover
and be a security for all future sums of money at any time owing to the
Vendors under this Agreement (and any Ancillary Documents)
notwithstanding any such payment or liquidation.
21.6 As a separate and independent stipulation the Guarantor agrees that any
sum or sums of money intended to be the subject of this guarantee shall
be recoverable from the Guarantor as sole or principal debtor even if
they would not be recoverable from the Purchaser, whether by reason of
any legal limitation, disability, incapacity or liquidation of the
Purchaser or any other fact or circumstance (whether known to the
Vendors or not) but which would have been recoverable from the
Guarantor if it were the sole or principal debtor in respect of such
liability in place of the Purchaser.
IN WITNESS whereof this Agreement has been entered into on the date appearing at
the beginning of this Agreement.
41
SCHEDULE 1
THE COMPANY
Date and place of incorporation: 15 July 1994, England
Registered number: 2948988
Registered office: Quadrant House, ▇▇▇▇▇▇ ▇▇▇▇ Square,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Authorised share capital: (pound)500,000,000 divided into
500,000,000 shares of(pound)1 each
Issued share capital: 186,028,208 ordinary shares fully
paid held as follows:
ACSI - 92,041,394
Global - 93,986,814
Directors: ▇.▇. ▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇▇▇▇▇▇,
R.J.M. Jephcott
Secretary: ▇.▇. ▇▇▇▇▇▇▇▇
Auditors: Pricewaterhouse Coopers
Bankers: HSBC plc
Accounting reference date: 31st December (to be changed to 29th
February at Completion)
Subsidiaries: None
42
SCHEDULE 2
LEASEHOLD PROPERTIES
Part A
Leasehold Properties
====================================================================================================================================
Number Description Proprietor Date of Parties to Term and Occupier(s) Current Use
Lease Lease rent
====================================================================================================================================
1 Unit 1, Centech, Company 31.01.2000 (1) GLP 01.11.1999 - Company Development of
North Moons Intressenter AB 31.10.2004 electronic products
Moat Industrial (2) Company
Estate, Redditch (pound)25,000
------------------------------------------------------------------------------------------------------------------------------------
2 Unit 2, Centech Company 31.01.2000 (1) GLP 01.10.1999 - Company Development of
Park, Fringe Intressenter AB 31.10.2004 electronic products
Meadow Road, (2) Company
North Moons (pound)17,350
Industrial Estate,
Redditch
------------------------------------------------------------------------------------------------------------------------------------
3 Unit 6 and 7 Company 2 leases (1) Nortrust 15 years from 24 Company Use as a switch site
Maidwell Drive, dated Nominees 24 June 1997 providing voice and
▇▇▇▇▇▇▇ 08.08.1997 Limited and data telecommunications
(2) Company 6 -(pound)54,235
7 -(pound)57,975
------------------------------------------------------------------------------------------------------------------------------------
43
====================================================================================================================================
Number Description Proprietor Date of Parties to Term and Occupier(s) Current Use
Lease Lease rent
====================================================================================================================================
4 Floors 1-8 The Company 09.08.1996 (1) Trinity Tower 15 years from Company Offices
Quadrant, ▇▇▇▇▇▇ (comprised Investments 24.06.1996
More Square, in 3 Leases) Limited (2)
▇▇▇▇▇▇, ▇▇ ▇▇▇ Company Floors 1-5
(pound)866,685
Floor 6
(pound)181,940
Floors 7-8
(pound)349,675
------------------------------------------------------------------------------------------------------------------------------------
5 Unit C, Plot 4, Company 08.10.1997 (1) ▇▇▇▇▇▇ 25 years from 20 Company Use as a switch site
Phase III Meridian ▇▇▇▇▇▇ 20 August 1997 providing voice and
Business Park, Properties data telecommunications
Braunstone, Limited (2) (pound)64,125
Leicestershire Company
------------------------------------------------------------------------------------------------------------------------------------
6 Unit B, Bandstand Company 21.07.1997 (1) ▇▇▇▇▇▇ 15 years from Company Use as a switch site
Parkside Industrial ▇▇▇▇▇▇▇ 21.07.1997 providing voice and
Estate, Leeds Developments data communications
Limited (2) (pound)45,600
Company
------------------------------------------------------------------------------------------------------------------------------------
7 Part Second Floor, Company 30.07.1996 (1) Marples 5 years from 30 Company Offices
Adlington Court (Greencourts) July 1996
Phase 2, Limited (2)
Greencourts, 333 Company (pound)26,000
Styal Road,
Wythenshawe,
Manchester
------------------------------------------------------------------------------------------------------------------------------------
44
====================================================================================================================================
Number Description Proprietor Date of Parties to Term and Occupier(s) Current Use
Lease Lease rent
====================================================================================================================================
8 Ground, First, Company 29.10.1996 (1) London Stock expires Company Offices and switch for
Second and Third Exchange 21.03.2014 telecommunications
Floors Summit Limited and (2) equipment
House, 70 ▇▇▇▇▇▇ Company (pound)1,094,394
Street, London
------------------------------------------------------------------------------------------------------------------------------------
9 Car Parking Company 29.10.1996 (1) ▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)▇▇▇▇ - Company Car Parking Spaces
Spaces Summit Exchange expires 21.03
House, London Limited 2014 (
2) AT&T (UK)
Holdings
Limited
------------------------------------------------------------------------------------------------------------------------------------
10 Lower Ground and Company Agreement (1) London Stock 7.4.1997- Company Offices
Basement Summit for lease Exchange 21.3.2014
House, London dated Limited and (2) (pound)63,189
30.9.1997 Company
------------------------------------------------------------------------------------------------------------------------------------
11 Unit 1 Europa Company 19.7.1996 (1) Heath 25.12.1994 - Company Use as a switch site
Way, Trafford Investments 24.12.2019 providing voice and
Park, Manchester Limited (2) data telecommunications
Company (pound)52,335
------------------------------------------------------------------------------------------------------------------------------------
12 Unit A, Gateway Company (1) GLE Property Expires Company Use as a switch site
Centre, Butchers 13.8.1999 Developments 29.7.2019 providing voice and
Road, Newham Limited and (2) (pound)105,000 data telecommunications
Company
------------------------------------------------------------------------------------------------------------------------------------
13 60 Melville Street, Company Registered (1) TSB Group 26.3.1996 - Company Offices
Edinburgh date Pension Trust 20.3.2001
2.7.1996 Limited (2)
Company. (pound)21,338
------------------------------------------------------------------------------------------------------------------------------------
45
====================================================================================================================================
Number Description Proprietor Date of Parties to Term and Occupier(s) Current Use
Lease Lease rent
====================================================================================================================================
14 Unit 4, Queen Company Registered (1) The Joint 28.8.1995 - Company Use as a switch site
Annes Park, date Properties 27.8.2020 providing voice and
Newbridge, 10.5.19 Limited (2) data telecommunications
Edinburgh Company (pound)40,116
------------------------------------------------------------------------------------------------------------------------------------
15 Unit 22 Company 01.01.2000 (1)▇▇▇▇▇▇ ▇▇▇▇ 6 months from Company Storage
Colemeadow ▇▇▇▇▇▇ (t/a 01.01.2000
Road, North JP Computers (pound)1,000
Moons Moat (2) Company per quarter
Industrial Estate,
Redditch
------------------------------------------------------------------------------------------------------------------------------------
16 33 Acacia Road, Company 24.8.1999 (1) Felsa 24.8.99 - ▇▇▇▇▇ Residential
St ▇▇▇▇▇ ▇▇▇▇, Investments S.A. 23.8.2000 ▇▇▇▇▇▇▇▇▇ accommodation
London (2) Company (employee
of Company)
------------------------------------------------------------------------------------------------------------------------------------
46
SCHEDULE 2
Part B
------ ------------------------------ --------------------------- ---------------- ----------- --------------- ---------------------
PROPERTY LANDLORD TENANT TERM RENT OTHER TERMS
------ ------------------------------ --------------------------- ---------------- ----------- --------------- ---------------------
------ ------------------------------ --------------------------- ---------------- ----------- --------------- ---------------------
1 Fifth Floor The Company AT&T 3 years (pound)320,873 As set out in the
Quadrant, ▇▇▇▇▇▇ ▇▇▇▇▇ Lease annexed to
More Square, London the agreement for
lease annexed hereto
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
2 Second Floor Company AT&T Global 3 years (pound)288,993 As set out in the
The Quadrant, Markets form of draft Lease
▇▇▇▇▇▇ ▇▇▇▇ (EMEA) annexed to the
Square, London Limited agreement for lease
annexed hereto
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
SCHEDULE 2
Part C
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
PROPERTY LANDLORD TENANT TERM RENT OTHER TERMS
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
1 CDC Ravensbank AT&T ISTEL Company As set out in the
Drive, Redditch 10 years (pound)189,090 form of draft Lease
annexed to the
agreement for lease
annexed hereto
------ ------------------------------ -------------------------- ---------------- ----------- --------------- ---------------------
47
SCHEDULE 3
TAX COVENANT
1 TAX COVENANT
1.1 Subject to the following provisions of this Schedule, the Vendors
hereby covenant with the Purchaser to pay to the Purchaser so far as
possible by way of repayment of the consideration payable under this
Agreement) an amount equal to:
(a) any Tax Liability of the Company:
(i) arising as a consequence of or by reference to one or
more Events which occurred on or before Completion or
were deemed to occur on or before Completion for the
purposes of any Tax; or
(ii) arising in respect of or by reference to any income
profits or gains which were earned accrued or
received on or before or in respect of a period ended
on or before Completion;
(b) any Tax Liability of the Company which would have arisen (and
in respect of which the Vendors would have been liable under
paragraph 1.1(a)) but for the setting off of a New Relief or
Accounts Relief against that Tax Liability or (as the case may
be) against the income profits or gains which would have given
rise to that Tax Liability;
(c) any Tax Liability of the Company arising as a consequence of
or by reference to any of the following occurring or being
deemed to occur at any time after Completion:
(i) the disposal by any Relevant Company of any asset or
of any interest in or right over any asset; or
(ii) the making by any Relevant Company of any such
payment or deemed payment as constitutes a chargeable
payment for the purposes of section 214 of the Income
and Corporation Taxes ▇▇▇ ▇▇▇▇;
(iii) or any Relevant Company ceasing to be resident in the
United Kingdom for the purposes of any Tax; or
(iv) any Relevant Company failing to pay the whole of the
Tax charged by any Tax assessment made in respect of
that Relevant Company within six months of the date
of that Tax assessment;
and, for the purposes of this paragraph, the term "RELEVANT
COMPANY" shall mean the Vendors and any company that may be
treated for the purposes of any Tax as being a member of the
same group of companies as the Vendors or as being associated
with the Vendors
48
(d) any reasonable costs and expenses properly incurred in
connection either with any such liability or amount as is
referred to in paragraphs 1.1(a), 1.1(b), or 1.1(c), or with
any claim therefor (except insofar as reclaimed under
paragraph (8) or in taking or defending any successful action
under this Schedule.
2 RESTRICTION OF TAX COVENANT
2.1 The provisions of Schedule 6 of this Agreement which are expressed to
apply to this Schedule shall have effect as if set out here in full and
the Vendors' liability under this Schedule shall be limited or excluded
and/or repayments shall be made to the Vendors accordingly.
2.2 The Vendors shall not be liable under this Schedule in respect of any
Tax Liability or other amount ("TAX AMOUNT") if and to the extent that:
(a) such Tax Amount was paid or discharged on or before
Completion; or
(b) provision or reserve in respect of that Tax Amount was made in
the Completion Date Accounts; or
(c) such Tax Amount arises or is increased as a result of:
(i) any change in Tax Legislation; or
(ii) any increase in rates of Tax; or
(iii) any change by a Tax Authority of any published
practice or any withdrawal of change or withdrawal of
any extra-statutory concession or published change by
a Tax Authority in its interpretation of Tax
Legislation,
(in each case) announced or taking effect after
Completion; or
(d) such Tax Amount results from or is increased after Completion
by any change in the accounting policies employed by the
Company in the preparation of its accounts (including any
variation of the accounting basis upon which the Company
values its assets) other than any change required so as to
conform such policies to UK GAAP as it exists at Completion;
or
(e) such Tax Amount would not have arisen but for a change after
Completion in the tax policies or practices of the Company or
its method of application (including the method of valuation
or treatment of any assets or liabilities) or the method of
computing or submitting tax computations other than any
changes required by law as it exists at Completion;
(f) such Tax Amount would not have arisen but for a change in the
accounting reference date of the Company made after
Completion; or
(g) such Tax Amount, interest or penalties and the Vendors would
not have been liable to make a payment under this Schedule in
respect of that Tax Amount but for breach by the Purchaser or
49
the Company of its obligations under paragraph 7 or 8 of this
Schedule; or
(h) such Tax Amount would not have arisen but for a voluntary act,
transaction or omission of the Company or the Purchaser after
Completion outside the ordinary course of business other than
any such act, transaction or omission carried out or effected
under a legally binding commitment created on or before
Completion or in accordance with the instructions of the
Vendors under paragraphs 7 and 8.
(i) any Vendors' Relief is available to the Purchaser or the
Company to set against or otherwise reduce the amount of that
Tax Amount.
3 TAX SAVINGS
3.1 In this paragraph 3 "TAX SAVING" means the reduction or elimination of
any Tax Liability to the extent such reduction or elimination would not
have occurred but for the payment or discharge by the Company of a
previous Tax Liability in respect of which the Vendors have made
payment to the Purchaser under this Schedule.
3.2 If the Purchaser or the Company becomes aware that a Tax Saving has
arisen the Purchaser covenants that it will notify the Vendors in
writing of such Tax Saving as soon as reasonably practicable and shall
on demand by the Vendors repay to the Vendors the lesser of:
(a) the amount of such Tax Saving; and
(b) the aggregate amounts previously paid by the Vendors to the
Purchaser under this Schedule
3.3 For the purposes of this paragraph 3, the Company shall be regarded as
obtaining a Tax Saving on the date on which it obtains relief from an
actual payment of Tax by reason of the Tax Saving in question.
4 OVER PROVISIONS
4.1 If any provision for Tax, excluding deferred Tax, contained in the
Completion Date Accounts shall at the date of any payment by the
Vendors pursuant to this Schedule be or have been (at the Vendors'
request and expense) certified by the Company's auditors for the time
being to be, an overprovision, the value of such overprovision shall:
(a) first be set off against any payment then due from the Vendors
under this Schedule; and
(b) to the extent that there is an excess there shall be refunded
to the Vendors (within 7 days after receipt by the Purchaser
of a written demand by the Vendors)any previous payment or
payments made by the Vendors and not previously refunded under
this Schedule up to the amount of the excess; and
50
(c) to the extent that the excess referred to in paragraph (b) has
not been exhausted under that paragraph, the remainder of such
excess shall be carried forward and be set against any further
such payment or payments in chronological order until
exhausted.
4.2 If the Purchaser or the Company becomes aware that an overprovision has
arisen the Purchaser covenants that it will notify the Vendors in
writing of such overprovision as soon as reasonably practicable.
5 DEDUCTIONS
5.1 Save only as may be required by law all sums payable under this
Schedule shall be paid free and clear of all deductions or withholdings
whatsoever.
5.2 If any deductions or withholdings are required by law to be made from
any payment under this Schedule (other than interest) the payer shall
pay such sum as will, after the deduction or withholding has been made,
leave the recipient with the same amount as it would have been entitled
to receive in the absence of any such requirement to make a deduction
or withholding.
5.3 If any sum payable under this Schedule is subject to a Tax Liability in
the hands of the recipient (other than interest under paragraph 6 (Date
for Payment)) the payer shall pay such sum as would have been required
to be paid under paragraph 5.2 had that Tax Liability been a deduction
or withholding from the sum payable by the payer.
6 DATE FOR PAYMENT
6.1 Where the Vendors become liable to make a payment pursuant to the
provisions of this Schedule, the due date for the making of that
payment shall be the date which is the later of seven days after the
Purchaser has given the Vendors notice requiring payment of the amount
claimed (together with a copy of any relevant assessment, invoice or
other document and a computation of the amount claimed) and;
(a) in the case of a Tax Liability referred to in paragraph 1.1(a)
or paragraphs 5.2 and 5.3, the last date on which the payment
of the Tax Liability in question may be paid to the relevant
Tax Authority in order to avoid incurring a liability to
interest or a charge fine or penalty in respect of that Tax
Liability; or
(b) in the case of a Tax Liability referred to in paragraph 1.1(b)
the last date on which the payment of Additional Tax has to be
paid to the relevant Tax Authority in order to avoid incurring
a liability to interest or a charge fine or penalty in respect
of that Additional Tax (where "ADDITIONAL TAX" means a Tax
Liability which would not have been payable but for the
utilisation of the New Relief or Accounts Relief in question).
6.2 The Vendors may at their expense require the amount of any payment
required to be made under this Schedule to be certified by the auditors
51
for the time being of the Company (acting as experts and not as
arbitrators) and the amount so certified shall (save for manifest
error) be conclusive and binding on the Vendors and the Purchaser.
6.3 If any payment required to be made by the Vendors under this Schedule
is not made by the due date for the making thereof, then, except to the
extent that the Vendors' liability under paragraph 1 (Tax Covenant)
compensates the Purchaser for the late payment by virtue of its
extending to interest and penalties, that payment shall carry interest
from that due date until the date when the payment is actually made at
the rate of 2 per cent. above base rate from time to time of National
Westminster Bank plc.
7 CONDUCT OF TAX AFFAIRS OF THE COMPANY
7.1
(a) the Vendors (or such professional advisers as the Vendors may
select) shall have the sole conduct of the Vendors' Conduct
Matters and of any Vendors' Appeal;
(b) the Purchaser shall procure that the Vendors (or their
advisers) shall be provided promptly with any information
received by the Purchaser or the Company, or of which the
Purchaser or the Company otherwise becomes aware, which may be
relevant to the Vendors' Conduct Matters or any Vendors'
Appeal, and with such assistance (including assistance from
employees of the Purchaser and the Company) and access to such
documents and records of, or relating to, the Company, as the
Vendors (or their advisers) may reasonably require in
connection with the Vendors' Conduct Matters, any Vendors'
Appeal or the tax affairs of the Vendors or any member of the
same group of companies as the Vendors;
(c) the Company shall promptly sign such returns and make such
claims and elections and give such consents and comply with
all procedural requirements in respect of the making or giving
of such returns, claims, elections or consents as the Vendors
may, in their absolute discretion, direct in writing;
(d) neither the Purchaser nor the Company shall amend, disregard,
withdraw or disclaim any elections, claims or benefits or
disclaim any initial or writing down allowances or any other
capital allowances in respect of any Relevant Period.
(e) the Purchaser shall not be obliged to procure that the Company
takes any such action as is mentioned in sub-paragraph 7.1 in
relation to any Tax return that is not true and accurate in
all material respects.
(f) nothing done by the Company pursuant to this paragraph shall
in any respect restrict or reduce any rights the Purchaser may
have to make a claim against the Vendors under this Schedule
in respect of any such Tax Liability as is mentioned in
Paragraph 1 (Tax Covenant).
52
7.2 Subject to paragraph 8 below, the Purchaser and its advisers shall have
sole conduct of all tax affairs of the Company other than Vendors'
Conduct Matters and Vendors Appeals.
8 CLAIMS
8.1 If the Purchaser or the Company shall become aware of any Claim which
is likely to give rise to a liability of the Vendors under this
Schedule, then the Purchaser shall (or shall procure that the Company
shall) as soon as reasonably practicable give notice thereof to the
Vendors and in any event within 28 days of becoming aware of the Claim
(or 14 days in the case of a notice of assessment, demand for Tax or
notice of a General Commissioner's meeting).
8.2 If the Vendors shall indemnify the Company and the Purchaser to the
reasonable satisfaction of the Purchaser against all costs and expenses
(including interest on overdue Tax) which may be incurred thereby, the
Purchaser shall (and shall procure that the Company shall), in
accordance with any reasonable instructions of the Vendors given by
notice to the Purchaser (but subject to paragraphs 8.2(a) and 8.2(b))
seek to avoid, dispute, resist, appeal, compromise or defend such Claim
provided always that:
(a) the Company shall not be obliged to appeal against any
assessment for Tax raised on it if, having given the Vendors
notice of the receipt of that assessment, it has not within
fifteen days thereafter received instructions from the
Vendors, in accordance with the provisions of this paragraph
8.2, to make that appeal; and
(b) the Purchaser and the Company shall not be obliged to comply
with any instruction of the Vendors which involves contesting
any assessment for Tax before any Court or other appellate
body (excluding the Tax Authority in question) unless the
Vendors furnish the Purchaser with the written opinion of Tax
Counsel of at least six years' call to the effect that an
appeal against the assessment for Tax will, on the balance of
probabilities, be won;
(c) if requested by the Vendors, the Purchaser shall allow the
Vendors to take over conduct of the Claim and any dispute,
correspondence or negotiation arising from it in the name of
the Company.
9 PURCHASER'S COVENANT
9.1 The Purchaser hereby covenants with the Vendors to pay to the Vendors
an amount equal to any of the following:
(a) any liability or increased liability to Tax of the Vendors or
any of their subsidiaries which arises as a consequence of or
by reference to any Relevant Company at any time after
Completion failing to pay the whole of the Tax charged by any
assessment to Tax made in respect of that Relevant Company
within six months of the date of that assessment to Tax where
(and to the extent that ) the liability for that Tax arises in
53
circumstances such that the Purchaser would not have been
entitled to make a claim against the Vendors under clause 1
(Tax Covenant) of the Schedule or under the Tax Warranties in
respect of that Tax had it been paid by Relevant Company and,
for the purposes of this sub-paragraph, the terms "Relevant
Company" shall mean that Company and any other company which
is, or has at any time been, treated for the purposes of any
Tax as being a member of the same group of companies as the
Purchaser or as being associated with the Purchaser other than
the Vendors; and
(b) any reasonable costs and expenses reasonably and properly
incurred by the Vendors or any of their subsidiaries in
connection with any such liability or increased liability to
Tax (or Claim therefore) for which the Purchaser is liable or
is successfully taking or successfully defending any action
under this paragraph.
9.2 The provisions of paragraph 5 (Deductions), 6 (Date for Payment), 8
(Claims) shall apply mutatis mutandis to this paragraph 9 as if set out
herein.
10 REMOVAL FROM VAT GROUP
10.1 The Purchaser shall procure that the Company will:
(a) on or before 20 April 2000 provide to the Representative
Member the Final Return showing the correct VAT output tax and
correct VAT input tax and the Final Balance;
(b) (if VAT output tax exceeds VAT input tax in the Final Return),
on or before 20 April 2000 the Company shall pay to the
Representative Member an amount equal to the Final Balance;
and
(c) provide to the Representative Member all such documents
information and assistance as the Vendors may reasonably
require to enable the Representative Member to comply with its
obligations in relation to VAT.
10.2 Any payment(s) made pursuant to clauses 10.1 and/or 10.2 shall take
into account any payment(s) on account of VAT which shall have been
made previously by or to the Company in respect of the Final Period.
10.3 If the Representative Member shall obtain (whether by way of repayment,
credit or otherwise) the benefit of VAT bad debt relief (pursuant to
Section 36 VATA 1994 and Regulations made thereunder) in respect of
supplies actually made by the Company (but treated as made by the
Representative Member under section 43(1) VATA 1994), the Vendors shall
procure that the Representative Member shall:
(a) notify the Purchaser forthwith; and
(b) as Representative Member of the VAT Group, within seven days
after the Representative Member obtains such benefit;
54
pay an amount equal to the benefit to the Company. If consideration for
the supply is recovered, the Purchaser shall notify the Vendors
forthwith and shall indemnify the Representative Member on an after-tax
basis for any value added tax for which the Representative Member has
to account to the Commissioners of Customs & Excise as a result of the
recovery.
10.4 The Vendors shall procure that any amount owing at Completion by any
member of the VAT Group to the Company in respect of transactions
entered into, or services provided, by the Company in the ordinary
course of business prior to Completion shall be paid by such member of
the VAT Group in the normal course.
10.5 The Vendors shall procure that any amount owing at Completion by the
Company to any member of the VAT Group in respect of transactions
entered into, or services provided, by a member of the VAT Group in the
ordinary course of business shall be paid by the Company in the normal
course.
10.6 The Vendors agree to reimburse the Purchaser on an after tax basis for
any amount claimed from the Company and/or the Purchaser by the
Commissioners of Customs and Excise in respect of VAT liability
attributable to any supplies made by any other member of the VAT Group.
10.7 In this clause 10:
(a) "CUSTOMS" means H M Customs & Excise;
(b) "EXIT DATE" means the date of Completion or (as the case
maybe) such other effective date from which Customs shall
agree that the Company ceases to be a member of the VAT Group;
(c) "THE FINAL BALANCE" means, in respect of the Final Period, the
difference (whether positive or negative) between VAT output
tax and VAT input tax of the Company which amounts shall be
computed on the assumption that the Company had been
separately registered for VAT during such period (but
disregarding any supplies between the Company and any other
member of the VAT Group) and in respect of any period up to
the Completion Date shall be the amount provided for in the
Completion Date Accounts;
(d) "FINAL PERIOD" means the period from 1 January 2000 to the
Exit Date;
(e) "FINAL RETURN" means an intra-group VAT return in the standard
format used by the VAT Group to be produced by the Company in
respect of the Final Period;
(f) "REPRESENTATIVE MEMBER" means AT&T (UK) LTD which is the
representative member of the VAT Group;
55
(g) "VAT GROUP" means the companies, including the Company,
registered as a group registration pursuant to Section 43 VATA
1994 under number 455744426.
56
SCHEDULE 4
DIRECTORS AND EMPLOYEES
Part A - Additional Directors
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
Part B - New Secretary
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Part C - Retiring Directors
▇. ▇▇▇▇
R.J.M. Jephcott
A Macfarlane
Part D - Retiring Secretary
▇. ▇▇▇▇▇▇▇▇
57
SCHEDULE 5
MATTERS REPRESENTED AND WARRANTED
Part A - General Warranties
1 INFORMATION
1.1 The facts stated in Schedules 1 and 2 are correct.
1.2 All forecasts and projections relating to the Company contained in the
Information Memorandum dated 1 June 1999 were prepared in good faith.
1.3 The unaudited December 1999 key performance indicators attached as
Section III, file 3.11 in the Supplementary Data Room Index has been
prepared in good faith and is derived from the appropriate records and
databases of the Company.
1.4 The budget information attached as Section I, file 1.8 and 1.9 in the
Supplementary Data Room Index relating to the 12 month period ending on
December 31st, 2000 has been prepared in good faith with a level of
care appropriate to a forward looking budget exercise carried out for
management accounting purposes.
1.5 The Company is a corporation duly organised and validly existing under
the laws of England and Wales with the requisite power and authority to
own its properties and carry on its business as the same is being
conducted as of the date hereof.
2 THE SHARES
2.1 The Shares represent all the issued and outstanding share capital of
the Company. All the Shares are fully paid or are properly credited as
fully paid and the Vendors are the sole legal and beneficial owner of
the Shares.
2.2 There is no option, right to acquire or Security Interest on, over or
affecting the Shares or any of them and there is no agreement or
commitment to give or create any and no claim has been made by any
person to be entitled to any.
3 ACCOUNTS
3.1 The Management Accounts have been prepared on a prudent basis and using
accounting policies and principles consistent with those used in the
preparation of the Accounts.
3.2 The Management Accounts fairly present the state of affairs of the
Company as at the Management Accounts Date and of the profits or losses
of the Company for the twelve month period to which the Management
Accounts relate.
3.3 The Management Accounts are not misleading in any material respect and
neither materially over-state the value of the assets nor materially
under-state the liabilities of the Company as at the dates to which
58
they were drawn up and do not materially under-state the losses of the
Company in respect of the periods to which they relate.
3.4 So far as the Vendors are aware there are no material liabilities or
obligations of any kind relating to the business of the Company during
the periods to which the Accounts and the Management Accounts relate
which are not reflected in the Accounts or the Management Accounts
respectively or the respective notes thereto.
3.5 The Company's accounting records are up-to-date, in its possession or
under its control, and so far as the Vendors are aware have been
maintained in accordance with the law.
3.6 The Accounts fairly and accurately present the state of affairs of the
Company as at the Accounts Date and of the profits and losses of the
Company for the nine month period to which they relate, on the basis
that the Carve Out Agreements had been completed and all other changes
to the business carried on by the Company in contemplation of
Completion of this Agreement had been fully implemented prior to the
relevant financial period to which the Accounts relate.
3.7 The Accounts have been prepared in accordance with generally accepted
accounting conventions, policies, principles and practices of the
United States.
4 POSITION SINCE THE MANAGEMENT ACCOUNTS DATE
4.1 Since the Management Accounts Date, the Company has not:
(a) acquired or agreed to acquire any business; or
(b) disposed of or agreed to dispose of any of its assets except
in the ordinary and normal course of business at the full
market values of the assets concerned; or
(c) incurred any capital commitments (other than as anticipated in
the Company's current capital expenditure budget) in excess of
(pound)1,000,000 individually; or
(d) made any offer or tender which is capable of being converted
into an obligation of the Company by acceptance or other act
of some other person other than in the ordinary course of
business;
(e) changed the terms of employment, including pension fund
commitments of the Company (other than those required by law)
which could increase the total staff costs of the Company by
more than 5% per annum, or the remuneration of any one
director or employee by more than (pound)10,000 per annum;
(f) agreed to do any of the foregoing.
59
4.2 So far as the Vendors are aware there has been no material adverse
change in the financial results or position of the Company since the
Management Accounts Date.
4.3 Since the Management Accounts Date the business of the Company has been
carried on only in the ordinary course and in the same manner
(including nature and scope) consistent with the way it was carried on
prior to the Management Accounts Date.
4.4 Since the Management Accounts Date no liabilities (including contingent
liabilities) have been assumed or incurred by the Company otherwise
than in the ordinary course of its business.
4.5 Since the Management Accounts Date no resolution of the Company in
general meeting has been passed and no dividend or other distribution
has been declared, made or paid by the Company.
4.6 Since the Management Accounts Date no change in the accounting
reference period of the Company has been made.
4.7 All payments, receipts and invoices of the Company since the Management
Accounts Date have been fully and accurately recorded in the books of
the Company.
5 SUBSIDIARIES
5.1 The Company:
(a) has never had any subsidiary; and
(b) holds no shares or interests in the capital of any other
company.
6 PROPERTY
6.1 The Leasehold Properties are the only Properties owned, controlled,
used or occupied by the Company and all deeds and documents necessary
to prove title to each of them are in the possession of the Company or
are the subject of acknowledgements. Each of the Leasehold Properties
is used and occupied for the purpose of the business of the Company.
6.2 In relation to each of the Leasehold Properties:
(a) the Company is solely legally and beneficially entitled to
such Leasehold Property and has good and marketable title to
the same (but for the avoidance of doubt this shall not confer
any warranty as to the capital or rental value of the
Properties);
(b) the Company has paid the rent and observed and performed the
covenants on the part of the lessee and the conditions
contained in any leases (which expression includes
underleases) under which the Leasehold Properties are held;
60
(c) all the licences, consents and approvals required from the
landlords and any superior landlords under the leases of the
Leasehold Properties and from their respective mortgagees (if
any) have been obtained and the covenants on the part of the
lessee contained in such licences, consents and approvals have
been duly performed and observed;
(d) save as disclosed in the Disclosure Letter the Vendors are not
aware of any notices, negotiations or proceedings pending in
relation to rent reviews nor is any rent liable at the date of
this Agreement to be reviewed;
(e) so far as the Vendors are aware there is not outstanding any
obligation necessary to comply with any notice or other
requirement given by the landlord under any leases of the
Leasehold Properties;
(f) so far as the Vendors are aware there are no circumstances
which would entitle any landlord to exercise any powers of
entry or take possession whether by means of peaceable
re-entry or proceedings or which would otherwise restrict the
continued possession and enjoyment of the Leasehold
Properties;
(g) save as disclosed in the Disclosure Letter all covenants
(whether affecting the freehold or leasehold titles to the
Leasehold Properties) have been properly performed and
observed and neither the Vendors nor the Company has received
notice of any outstanding breach of covenant as regards any of
the Leasehold Properties;
(h) save as disclosed in the Disclosure Letter the Leasehold
Properties are free from any mortgage debenture or charge
(whether specific or floating legal or equitable) rent-charge
lien or other encumbrance securing the repayment of monies or
other obligation or liability of the Company or any other
party;
(i) the Leasehold Properties are not subject to any liability for
the payment of any outgoings other than national non-domestic
rates, water and sewerage services charges and insurance
premiums of a recurring nature;
(j) the Leasehold Properties are not subject to any covenants,
restrictions, stipulations, easements, profits a prendre,
wayleaves, licences, grants, exceptions or reservations
overriding interests or other such rights the benefit of which
is vested in the third parties nor any agreement to create the
same;
(k) where any such matters as are referred to in paragraphs (h),
(i) and (j) have been disclosed in the Disclosure Letter the
obligations and liabilities imposed and arising under them
have been fully observed and performed and all payments in
respect of them due and payable have been duly paid;
(l) the Leasehold Properties are not subject to any agreement or
right to acquire the same nor any option, right of pre-emption
or right of first refusal and there are no outstanding actions
claims or demands between the Company or any Subsidiary and
61
any third party affecting or in respect of the Leasehold
Properties;
(m) there is no person who is in occupation or who has or claims
any rights or easements of any kind in respect of the
Leasehold Properties adversely to the estate, interest, right
or title of the Company;
(n) neither the Vendors nor the Company have received any
compulsory purchase notices, orders or resolutions affecting
the Leasehold Properties nor are the Vendors aware of any
circumstances likely to lead to any being made;
(o) so far as the Vendors are aware the present use of each
Leasehold Property is authorised under the Planning Acts;
(p) so far as the Vendors are aware no development, alterations or
other works which would require any permission or consent
under the Planning Acts or any bye-laws or building
regulations or other relevant legislation have been carried
out without all those permissions and consents having been
obtained and all conditions attached to those permissions and
consents have been observed and performed;
(q) neither the Vendors nor the Company have received any notice
of breach of the Planning Acts or of any relevant bye-laws,
building regulations and other legislation in relation to any
Leasehold Property;
(r) so far as the Vendors are aware each Leasehold Property is
served by drainage, water, electricity and gas services all of
which are connected to the mains by media located entirely on,
in or under that Leasehold Property or by media elsewhere in
respect of the use of which the Company and those deriving
title under it to that Leasehold Property have a permanent
legal easement free from onerous or unusual conditions and the
passage and provision of those services in uninterrupted and
neither any of the Vendors nor the Company knows of any
imminent or likely interruption of such passage or provision;
(s) so far as the Vendors are aware none of the facilities
necessary for the enjoyment and current use of any Leasehold
Property are enjoyed on terms entitling any person to
terminate or curtail them;
(t) so far as the Vendors are aware the means of access to or
egress from each Leasehold Property are over either roads
which have been adopted by the local authority and are
maintainable at public expense or roads in respect of the use
of which the Company to that Leasehold Property have a
permanent and legal easement free from onerous or unusual
conditions;
(u) so far as the Vendors are aware there are no disputes
regarding boundaries, easements, covenants or other matters
relating to any Leasehold Property or its use;
62
(v) all fixtures and fittings at the Leasehold Properties are the
absolute property of the Company;
(w) where the title of the Leasehold Properties is unregistered it
is properly constituted by, and can be deduced from duly
stamped documents of title which are in the possession or
under the control of the Company or the Vendors.
(x) where the title to any of the Leasehold Properties is
registered the Company is shown on the register thereof at HM
Land Registry as the proprietor with absolute title and the
Land Certificate in respect of each of such Leasehold
Properties is in the possession or under the control of the
Company or the Vendors;
(y) so far as the Vendors are aware compliance is being made and
has at all times been made with all applicable statutory and
bye-law requirements with respect to the Leasehold Properties
and in particular (but without limitation) with requirements
as to fire precautions and means of escape in case of fire and
with requirements under the Public Health Acts, the Housing
Acts, the Highways Acts, the Offices, Shops and Railway
Premises ▇▇▇ ▇▇▇▇, the Health and Safety at Work ▇▇▇ ▇▇▇▇, the
Factory Acts and the London Building Acts;
(z) so far as the Vendors are aware there is no covenant,
restriction, burden, stipulation or outgoing affecting any
Leasehold Property which is of an onerous or unusual nature or
which conflicts with its present use.
6.3 The information contained in Schedule 2 as to the principal terms of
the leases under which the Leasehold Properties are occupied or used by
the Company is true and accurate in all respects.
6.4 The Company has not been a guarantor of a tenant's covenants in any
lease.
6.5 The Company has not surrendered the lease of any leasehold property to
the reversioner without first investigating the reversioner's title and
without receiving from the reversioner an absolute release from the
tenant's covenants in the relevant lease and from all liability arising
from that lease.
6.6 The Company has not assigned any leasehold property of which it was the
original tenant in respect of which it entered into a covenant with the
landlord to observe and perform the tenant's covenants under that lease
without receiving a full and effective indemnity in respect of its
liability under that lease.
6.7 In relation to each of the Properties to be assigned to the Purchaser
pursuant to the Property Sale Agreement:
(a) all the warranties referred to in paragraph 6.2 above shall
apply mutatis mutandis; and
63
(b) the information contained in Schedule 1 of the Property Sale
Agreement is true and accurate in all respects.
7 ASSETS
7.1 The Company has not experienced any material adverse effect to its
Assets or to any other software or hardware used by the Company as a
result of such Assets, software or hardware not being Year 2000
Compliant.
7.2 The Company legally and beneficially owns, free from third party rights
or has a right to use, all the assets and undertaking (other than
Intellectual Property) used in connection with and required for the
business of the Company.
7.3 All such assets and undertaking (other than Intellectual Property ) are
owned by the Company free from any Security Interest and there is no
agreement or commitment to give or create any such Security Interest.
So far as the Vendors are aware, no claim has been made by any person
to be entitled to any Security Interest over the assets and undertaking
and there are no agreements or arrangements restricting the freedom of
the Company to use or dispose of its assets and undertaking as it
thinks fit.
7.4 All assets of the Company used in connection with the business of the
Company which retain a written down value in excess of 50% of their
acquisition cost are:
(a) in the possession and under the control of the Company; and
(b) in reasonable repair and condition having regard to their age
and historic usage.
7.5 Save for leases in respect of backbone fibre, access circuits and
network infrastructure entered into in the ordinary course of business,
the Company is not a party to, or is liable under, a lease or hire,
hire purchase, credit sale or conditional sale agreement which is
material. For these purposes "material" shall mean requiring payments
of in aggregate more than (pound)50,000 in any 12 month period.
7.6 The assets of the Company together with those assets in relation to
which the Company has a direct or indirect right of use pursuant to the
Transitional Service Agreements or the Supply Agreement comprise all of
the assets and equipment used by the Company in connection with the
business of the Company.
8 INSURANCES
8.1 Particulars of all insurances maintained by the Company are disclosed
by the Disclosure Letter and all such insurances are and have at all
material times been in force.
8.2 There have been no insurance claims made by the Company in the 12
months prior to the date of this Agreement.
64
9 BANK ACCOUNTS
9.1 The Disclosure Letter contains full and accurate details of all of the
Company's investment, deposit and bank accounts and of the banks and
other financial institutions at which they are kept. Since the date of
each statement no payment out of any of the accounts has been made,
except for routine payments in the ordinary course of trading, and the
present balances are not substantially different from those shown in
the statement. Amounts represented by cheques, warrants, mandates or
other payment instructions issued or given by the Company which at the
date of this Agreement remain outstanding or unpaid or unperformed do
not exceed in the aggregate (pound)5,000,000 and will be duly paid by
the Company
9.2 Full details of all overdraft, loan and other financial facilities
available to the Company and the amounts outstanding, under them are
disclosed by the Disclosure Letter and no Person who provides any of
those facilities has given any indication that they are considering
withdrawing or altering any of such facilities.
9.3 So far as the Vendors are aware, the Company has not done or omitted to
do anything whereby the continuance of the facilities referred to in
paragraph 9.1 above may be prejudiced or affected.
9.4 The Disclosure Letter contains full details of all outstanding
borrowings and other indebtedness of the Company other than amounts
owed to trade creditors. Except for such borrowings and indebtedness
and amounts due to trade creditors, the Company does not have
outstanding any loan capital and has not incurred or agreed to incur
any borrowing which it has not repaid or satisfied, nor has it lent or
agreed to lend any money which has not been repaid to it nor does it
own the benefit of any debt present or future (other than debts due to
it in respect of the sale of trading stock in the normal course of
trading) nor is it a party to or have any obligation under:
(a) any debenture, acceptance credit facility, ▇▇▇▇ of exchange,
promissory note, finance lease, debt or inventory financing,
discounting or factoring arrangements or sale and lease back
arrangements; or
(b) any other arrangements the purpose of which is to raise money
or provide finance or credit.
9.5 No event which is or, with the passing of any time or the giving of any
notice, certificate, declaration or demand, would become an event of
default under or any breach of any of the terms of any loan capital,
borrowing, debenture or financial facility of the Company or would
entitle any third party to call for repayment prior to normal maturity
has occurred or been alleged.
9.6 The Company has not factored or discounted any of its debts.
10 CONDUCT OF BUSINESS
10.1 The Vendors are not aware of any material breach by the Company of any
Material Contract to which the Company is a party or of any allegation
of such a thing. So far as the Vendors are aware no written notice has
been received from any third party to any Material Contract to which
the Company is a party that any event has occurred prior to the date of
65
this Agreement which would entitle that third party to terminate that
contract prematurely.
10.2 No Material Customer or Material Supplier has during the 12 months
preceding the date of this Agreement ceased or indicated an intention
to cease trading with or supplying to the Company or is likely to
reduce substantially its trading with or supplies to the Company .
10.3 In the twelve months prior to the date of this Agreement not more than
ten per cent in value of purchases by the Company were placed with any
one supplier and not more than ten per cent in value of sales by the
Company were made to any one customer.
10.4 So far as the Vendors are aware the Company has obtained all licences,
permissions and consents required for the carrying on of its business
(save for any such licences, permissions or consents which relate to
Intellectual Property matters, which are dealt with under paragraph 23
below) and, such licences, permissions and consents are listed in the
Disclosure Letter, are in force and effect, are not limited in duration
(except as referred to on the faces of the relevant documents) or
subject to onerous conditions. The Company has complied with all
conditions of and requirements relating to all such licences,
permissions and consents.
10.5 So far as the Vendors are aware the Company is in compliance in all
material respects with all laws, statutes, rules, regulations,
ordinances, decrees and orders of all applicable governmental
authorities applicable to it and its business and neither the Vendors
nor the Company has received any notice that any violation or potential
violation or any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed or commenced
against the Company alleging or investigating any failure to comply
(except such failures to company that could not, individually or in the
aggregate, have a material adverse effect on the business and prospects
of the Company) and the Vendors are not aware of any circumstances
which would give rise to any such action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice.
11 DIRECTORS AND EMPLOYEES
11.1 The details of the Employees and the particulars of their employment
set out in the relevant list contained in the Disclosure Letter are
accurate and complete in all material respects. So far as the Vendors
are aware, no person who was formerly employed by the Company has a
right to return to work (whether for reasons connected with maternity
leave or absence by reason of illness or incapacity or otherwise) or a
right to be reinstated or re-engaged in the Company or to any other
compensation.
11.2 The terms and conditions of employment of all Employees of the Company
are in all material respects in accordance with the standard terms and
conditions supplied to the Purchaser.
66
11.3 There are not in existence:
(a) any service agreements or other contracts with Employees which
cannot be terminated by three months' notice or less without
giving rise to any claim for damages or compensation (other
than compensation under the Employment Rights Act 1996); or
(b) any consultancy agreements or other contracts for service
whether written or oral between the Company and any other
Person firm or company; or
(c) any arrangements by which any Person has the use of any credit
or charge card or account for which the Company is
responsible.
11.4 There are no arrangements to which the Company or its holding company
is a party, involving share options profit sharing or bonus or
incentive payments for Employees.
11.5 There is no actual or, so far as the Vendors are aware, threatened
dispute between the Company and a material number of its Employees nor,
so far as the Vendors are aware, any circumstances likely to give rise
to any such dispute; there have been no strikes or industrial action
short of strike action (official or unofficial) by any of the Employees
during the period of two years immediately preceding the date hereof
and there is no agreement or arrangement written or oral between the
Company and any trade union or other body representing Employees in
relation either to recognition of trade union or other body or to
collective terms and conditions or representation.
11.6 Within the period of 3 months prior to the date of this Agreement no
Employee has been given notice of termination of his employment (or has
had his employment terminated without notice) and no Employee has left
the Company's employment of his own accord or tended his resignation.
11.7 Full particulars are contained in the Disclosure Letter of any
outstanding offer of employment made to any person by the Company and
there is no person who has accepted such an offer in writing but whose
employment has not yet started.
11.8 In respect of each of the Employees the Company has:
(a) so far as the Vendors are aware, performed all obligations and
duties required to be performed by it (and has settled all
outstanding claims and debts), whether arising under contract,
statute, at common law or in equity; and
(b) paid to the Inland Revenue and any other appropriate authority
all taxes, National Insurance contributions and other levies
due in respect of the Employees in respect of their employment
by the Company up to Completion.
11.9 The Company has not offered, promised or agreed for the future any
variation in any contract of employment or any contract for services in
respect of the Employees.
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11.10 The Company has maintained current adequate records regarding the
service and terms and conditions of employment of each of its Employees
including without limitation those required pursuant to the Working
Time Regulations 1998 and the National Minimum Wage Regulations 1999.
11.11 So far as the Vendors are aware no liability has been incurred by the
Company (including without limit any amounts outstanding or promised to
any Employees) which remains undischarged for breach of any contract of
service or for services or for redundancy payments (including
protective awards) or for compensation under any employment legislation
or regulations or for wrongful dismissal, unfair dismissal, equal pay,
sex, race or disability discrimination or otherwise and no order has
been made in the 12 month period prior to the date of this Agreement
for the reinstatement or re-engagement of any of the Employees or any
person formerly employed or engaged by the Company.
11.12 The Company does not have an obligation to make any payment on
redundancy in excess of the statutory redundancy payment and the
Company has not operated any discretionary practice of making any such
excess payments save to the extent, in both cases, disclosed in the
documents in section IV, file 4 of the Data Room.
11.13 The Company is not engaged or involved in any, claim or legal
proceedings (whether arising under contract, common law, statute or in
equity including without limitation under the Equal Pay ▇▇▇ ▇▇▇▇, the
Sex Discrimination ▇▇▇ ▇▇▇▇, the Race Relations ▇▇▇ ▇▇▇▇, the Sex
Discrimination ▇▇▇ ▇▇▇▇, the Employment ▇▇▇ ▇▇▇▇, the Trade Union and
Labour Relations Consolidation ▇▇▇ ▇▇▇▇, the Disability Discrimination
▇▇▇ ▇▇▇▇, Article 141 of the Treaty of Rome, the Working Time
Regulations 1998 or the National Minimum Wage Act 1998) by any of the
Employees or the Company's former employees, former directors or former
consultants or employee representatives or Trade Unions acting on
behalf of any such Employees or former Company employees, former
directors or consultants.
11.14 The Company has not made any loan or advance (other than a loan to
purchase a rail season ticket) to any of the Employees which is
outstanding.
11.15 No Employee is currently on a career break.
11.16 There are no arrangements, whether contractual or otherwise, entitling
any of the Employees to any payments by the Company or other benefits
from the Company arising from the sale or disposal of the Sale Shares.
11.17 The Company has in all material respects complied with its obligations
under statute and regulations concerning the health and safety at work
of its employees.
12 PENSIONS
12.1 Other than in respect of the Pension Plans the Company has no
obligation to pay or provide any pensions, allowances, lump sums or
other like benefits on retirement or on death or during periods of
sickness or disablement called for the purpose of this paragraph 12
"BENEFITS" to or for the benefit of any of the Company's employees or
68
directors or former employees or former directors (together called, for
the purposes of this paragraph 12, "EMPLOYEES") or for the benefit of
dependants of any such Employees and is not a party to or obliged to
contribute to any or under any agreements, arrangements, customs or
practices for the payment of or contribution towards Benefits to or for
the benefit of Employees or such dependants nor has any proposal to
establish any such agreement or arrangement been announced.
12.2 Full details of the Pension Plans are included or annexed to the
Disclosure Letter in the form of:
(a) copies of all trust deeds and rules governing or relating to
the Pension Plans;
(b) copies of all current booklets, announcements and other
explanatory literature issued to the Employees who are members
of the Pension Plans and copies of letters or other documents
relating to arrangements for individual members or groups of
members.
(c) particulars of any discretionary increases (whether customary
or otherwise) in Benefit under the Pension Plans granted in
the period of 3 years prior to the Completion Date;
(d) a copy of the contracting-out certificate and letter of Inland
Revenue approval in respect of the Pension Plans;
(e) in relation to the UK Plans, trustee resolutions and a copy of
the latest audited accounts of the UK Plan
12.3 No discretion or power has been or will before Completion be exercised
under the Pension Plans to:
(a) augment benefits thereunder in respect of any of the
Employees;
(b) admit to membership an Employee who would not otherwise have
been eligible for admission to membership thereof;
(c) provide in respect of a member who is an Employee a benefit
which would not otherwise be provided in respect of such
member; or
(d) pay a contribution thereto in respect of an Employee which
would not otherwise have been paid.
12.4 All benefits (other than refunds of contributions) payable under the
Pension Plans on the death of a member who is an Employee are fully
insured under a policy held in the name of the trustees of the relevant
Pension Plan effected with an insurance company of good repute and all
premiums due under such policy have been paid.
12.5 No payment or repayment of any of the assets of the Pension Plans has
been made to any employer participating in the Pension Plans.
69
12.6 There has been no breach of the trusts of the Pension Plans and there
are no actions, suits or claims (other than routine claims for
benefits) outstanding, pending or threatened against the trustees or
administrator of the Pension Plans or against the Vendors or the
Company or any other employer which participates in the Pension Plans
in respect of any act, event, omission or other matter arising out of
or in connection with the Pension Plans. There have been no submissions
or referrals made to the Occupational Pensions Regulatory Authority, to
the Pensions Ombudsman or to OPAS in relation to the Pension Plans and
so far as the Vendors are aware no such submission or referral is
proposed or threatened.
12.7 In relation to the Pension Plans:
(a) the current rates of all contributions are set out in the
Disclosure Letter and there are not at the date hereof any
contributions thereto from or in respect of Employees or other
payments which have fallen due but are unpaid;
(b) since the report of the last actuarial valuation for the Main
Plan and Supplementary Plan contributions in respect of
Employees have been made at the rate or rates recommended in
such report or any other subsequent actuarial advice;
(c) the benefits payable under the UK Plan whether immediate,
prospective or contingent, are solely the benefits which can
be provided by the funds available for each member which are
held by the trustee of the UK Plan.
12.8 The Pension Plans are approved by the Commissioners of Inland Revenue
as exempt approved schemes for the purposes of Part XIV Chapter I ICTA
1988 and the Vendors are not aware of any circumstances which might
give the Inland Revenue reason to withdraw such approval.
12.9 The Main Plan and UK Plan are contracted-out schemes for the purposes
of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and have been administered in
accordance with the contracting-out requirements of Part III of that
Act. The Company holds or is named upon a current contracting-out
certificate issued since 5th April 1997 in relation to the Main Plan
and UK Plan.
12.10 The Pension Plans do not distinguish between male and female members
(except in relation to maternity) in the provision of benefits relating
to periods of pensionable service after 17th May 1990 and no adverse
alteration has been made to benefits already accrued at the date of
announcing changes designed to equalise benefits.
12.11 The Pension Plans have not at any time excluded employees from
eligibility for membership on the grounds of specified hours of work.
12.12 The Pension Plans have been administered in accordance with:
(a) the preservation requirements within the meaning of section ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
70
(b) the equal access requirements of section 62 ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
and
subject thereto in accordance with the trusts powers and provisions of
the Pension Plans and overriding legislation including,
without limitation, the requirements of Article 141 of the EC
Treaty of Rome.
12.13 The Company has been properly admitted to participation in the Pension
Plans.
12.14 No company or other entity participates in or has at any time
participated in the UK Plan other than to the extent shown in the
Disclosure Letter.
12.15 None of the assets of the UK Plan are invested (directly or indirectly)
in or loaned (directly or indirectly) to the Company and there is no
"EMPLOYER-RELATED INVESTMENT" (as such term is utilised in section
40(2) of the Pensions Act 1995), whether direct or indirect.
12.16 The assets, investments and policies comprising the funds of the UK
Plan are and will be at the Completion Date beneficially held in the
names of the trustees of the UK Plan and legally and effectually
comprised within the assets of the UK Plan.
12.17 No benefit will become payable or be subject to any augmentation as a
result of Completion which, had Completion not occurred, would not have
resulted in such benefit becoming payable or being subject to
augmentation.
12.18 As far as the Vendors are aware no undertaking or assurance (whether
legally binding or not) has been given to any Employee about the
continuation of the Pension Plans or any alteration to or from its
terms or the increase or improvement of benefits.
12.19 As far as the Vendors are aware the Pension Plans comply in all
respects with the requirements of the Pensions ▇▇▇ ▇▇▇▇.
13 COMMERCIAL CONTRACTS AND JOINT VENTURES
13.1 There are not now outstanding so far as the Vendors are aware, any
contract or arrangement to which the Company is party which is outside
the ordinary course of business of the Company and of a long-term
nature (which for this purpose includes a contract or arrangement which
is not capable of being terminated by three months' notice or less
without payment of compensation or damages).
13.2 The Company has never been, and is not party to any joint venture,
consortium or partnership arrangement or agreement or a member of any
unincorporated association.
13.3 Copies of all Material Contracts are set out in section IX, file 9.11.6
and section XXVII, file 27.1.27 of the Data Room.
13.4 The Company is not a party to nor does it have any liability (present
or future) under any guarantee or indemnity or letter of credit.
71
13.5 Except for any guarantee or warranty implied by law or contained in its
standard terms of business (a copy of which is attached to the
Disclosure Letter) or otherwise in the ordinary course of business, the
Company has not given any guarantee, indemnity, warranty or made any
representation, in respect of goods or services supplied or contracted
to be supplied by it or accepted any liability or obligation that would
apply after any such goods or services had been supplied by it.
13.6 To the extent that the Vendors have disclosed, in or pursuant to the
Disclosure Letter, copies of contracts to which the Company is a party,
such copies are true in all material respects and complete copies of
the documents of which they purport to be copies.
13.7 So far as the Vendors are aware all Material Contracts are valid and
binding, and so far as the Vendors are aware no such agreement is
voidable. Neither the Company nor so far as the Vendors are aware any
other party is in default (nor, with the lapse of time, will be in
default) under any Material Contract being a default which would be
material in the context of the financial or trading position or
prospects of the Company, and the Vendors have not received written
notice of any claim alleging any such default.
13.8 Since 1st July 1999 the Company has not entered into, and as at the
date of this Agreement it is not in the course of negotiating any
agreement, and there is no submitted offer or tender which is capable
of being converted into, an agreement:
(a) which involves or may involve obligations, restrictions or
expenditure other than in the ordinary course of business of
the Company;
(b) which imposes non-compete restrictions on the Company's
ability to carry on any business in any part of the world;
(c) pursuant to which the Company has advanced money other than
trade credit, deposits, prepayments or other advance payments
or payments on account made in the ordinary and proper course
of business.
13.9 The Company has not given or received notice terminating any Material
Contract.
13.10 There are not now outstanding any Security Interest given by or in
relation to the Company.
14 UNISSUED CAPITAL
14.1 There are no agreements, commitments or instruments in force which
require or confer the right (conditionally or unconditionally) to
require the issue or transfer of any share or loan capital or other
securities of the Company nor are there any agreements restrictions or
obligations entered into by or binding on the Company as to its
unissued share or loan capital or other securities.
72
15 LITIGATION, OFFENCES AND PROCESSES
15.1 Apart from routine debt collection the Company is not engaged in any
material litigation (whether criminal or civil), arbitration, reference
of any dispute or disagreement to an expert or any alternative dispute
resolution process and no such litigation, arbitration, reference or
alternative dispute resolution process is pending or threatened and, so
far as the Vendors are aware, there are no facts or circumstances
likely to give rise to such litigation, arbitration, reference or any
alternative dispute resolution process.
15.2 At the date hereof, neither the Vendors nor the Company have received
any written notice that any regulatory authority will revoke, cancel,
rescind, modify or refuse to renew any licences, authorisation, permits
and certificates required to operate the business of the Company (the
"LICENCES").
15.3 So far as the Vendors are aware, they have not received any material
written complaints constituting breach of contract from any person in
relation to the provision by the Company of the various services
comprised in the business of the Company which it believes should be
brought to the attention of the Purchaser.
16 GRANTS
16.1 Full particulars of all grants, allowances, aids and subsidies paid or
made to the Company during the last six years by, and of all
outstanding claims by the Company for any such grant, allowance, aid or
subsidy from, any supranational, national or local authority or
government agency are set out in the Disclosure Letter. The Company has
not done or failed to do anything as a result of which all or any part
of any investment or other grant, allowance, aid, subsidy or similar
payment made or due to be made to the Company is liable to be repaid,
forfeited or withheld in whole or in part and nor will the sale of the
Shares have that result.
17 TRANSACTIONS WITH SHAREHOLDERS OR DIRECTORS
17.1 Save for trading account balances arising in the ordinary course of
business, no monies are owed by the Company to any director of the
Company or to the Vendors or to any person connected with any such
director or the Vendors.
17.2 Save for trading account balances arising in the ordinary course of
business, the Company has no debts owed to it by its directors or any
of them or by the Vendors or by any person connected with any such
director or the Vendors.
17.3 There is no contract or arrangement which is other than on arm's length
terms outstanding between the Company (on the one hand) and the Vendors
or the Company's directors or any person connected with the Vendors or
any such director (on the other hand).
18 ADMINISTRATION
18.1 The Disclosure Letter discloses a true and accurate copy of the
Memorandum and Articles of Association of the Company together with
copies of all resolutions and other documents required by law to be
attached to them.
73
18.2 The register of members of the Company contains a true and accurate
record of the members and all former members of the Company and their
holdings of shares in the capital of the Company.
18.3 The statutory books (including all registers and minute books) of the
Company have been properly kept, do not contain any material error or
omissions and no notice or allegation that any of them is incorrect or
should be rectified has been received.
18.4 All documents which should have been delivered by the Company to the
Registrar of Companies have been properly so delivered.
19 CAPACITY OF THE VENDORS
19.1 Each Vendor is a duly incorporated corporation and is validly existing
under the laws of Delaware.
19.2 Each Vendor and each of its other relevant related companies has the
requisite power and authority to enter into and perform this Agreement
and the Ancillary Documents to be entered into by it pursuant to this
Agreement.
19.3 This Agreement constitutes and the Ancillary Documents executed by the
Vendors and any of their related companies which are to be delivered at
Completion will, when executed, constitute binding obligations of each
Vendor or its related company (as the case may be) in accordance with
their respective terms.
19.4 The execution and delivery of and the performance by the Vendors and
their relevant related companies of their respective obligations under,
this Agreement and the Ancillary Documents will not:
(a) result in a breach of any provision of the memorandum or
articles of association of any of the Vendors, their related
companies or the Company; or
(b) result in a breach of, or constitute a default under, any
instrument to which any of the Vendors, their related
companies or the Company is a party or by which any of them is
bound; or
(c) result in a breach of any order, judgement or decree of any
court or governmental agency to which any of the Vendors,
their related companies or the Company is a party or by which
any of them is bound; or
(d) require the consent of the shareholders any of the Vendors and
their related companies or the consent of any other person.
19.5 No order has been made or petition presented or resolution passed for
the winding-up or administration of either of the Vendors, no distress,
execution or other process has been levied on any of the assets of
either of the Vendors, no liquidation, provisional liquidator, receiver
or administrative receiver of either of the Vendors has been appointed
and there is no reason to believe that such person might be appointed
74
in respect of its business or assets or any part thereof, and no event
has occurred in any jurisdiction other than England and Wales which is
analogous to any of the foregoing.
20 POWERS OF ATTORNEY
20.1 The Company has not given any power of attorney or other authority
(express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment on its
behalf other than to its employees to enter into routine trading
contracts in the normal course of their duties.
21 INSOLVENCY
21.1 No order has been made and no resolution has been passed for the
winding up of the Company or for a provisional liquidator to be
appointed in respect of the Company and no petition has been presented
and no meeting has been convened for the purpose of winding up the
Company.
21.2 No administration order has been made and no petition for such an order
has been presented in respect of the Company.
21.3 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of the Company or all or any of its
assets.
21.4 The Company is not insolvent, or unable to pay its debts as they fall
due.
21.5 No voluntary arrangement has been proposed under section 1 Insolvency
▇▇▇ ▇▇▇▇ in respect of the Company.
21.6 No event analogous to any of the foregoing has occurred in or outside
England.
21.7 No unsatisfied judgement is outstanding against the Company.
21.8 No guarantee, loan capital, borrowed money or interest is overdue for
payment by the Company, and no other obligation or indebtedness is
outstanding which is substantially overdue for performance or payment
by the Company.
22 COMPETITION AND TRADE REGULATION
22.1 The Company is not a party and has not been a party during the last six
years, to any agreement, arrangement or concerted practice which:
(a) is subject to registration under the Restrictive Trade
Practices Act 1976 and 1977 (as amended);
(b) contravenes the provisions of the Resale Prices ▇▇▇ ▇▇▇▇ (as
amended) or any secondary legislation adopted under the Fair
Trading ▇▇▇ ▇▇▇▇;
(c) would infringe any provision of the Competition ▇▇▇ ▇▇▇▇, if
such provision were now in force:
75
(d) so far as the Vendors are aware infringes Article 81 or 82
(formerly Articles 85 and 86) of the Treaty establishing the
European Economic Community or any other anti-trust or similar
legislation in any jurisdiction in which the Company carries
on business or has assets or sales; or
(e) is void or unenforceable (whether in whole or in part) or may
render the Company liable to proceedings under any such
legislation as is referred to in paragraphs (a) to (d) above.
22.2 So far as the Vendors are aware, there are no aspects of the Company's
business which are or are likely to be subject to investigation by the
Office of Telecommunications in the United Kingdom.
23 INTELLECTUAL PROPERTY
23.1 Details of all rights in registered Intellectual Property owned by the
Company are set out in the Disclosure Letter. Such rights are owned
legally and beneficially by the Company, free from all Security
Interests and all renewal fees required for the maintenance of such
rights have been paid.
23.2 So far as the Vendors are aware, the Company is not infringing the
Intellectual Property rights or making unauthorised use of the rights
in confidential Business Information of any third party.
23.3 So far as the Vendors are aware, no third party is infringing any
Intellectual Property rights or making unauthorised use of any rights
in confidential Business Information owned by the Company.
23.4 So far as the Vendors are aware, the Company has not disclosed any
confidential Business Information to any person other than the
employees or other members of the AT&T Group, except under an
obligation of confidentiality.
23.5 The Intellectual Property and Business Information owned by or licensed
to the Company is all the Intellectual Property and Business
Information that is necessary in all material respects to carry on the
business of the Company in the same manner that it is presently carried
on.
23.6 The Company has, if required to do so under the Data Protection ▇▇▇
▇▇▇▇, duly registered as a data user and has complied in all material
respects with the Data Protection Act Principles as set out in that
Act.
24 INFORMATION TECHNOLOGY
24.1 The Company has made enquiries as to the Year 2000 compliance of the
Information Technology of its suppliers as listed in the Disclosure
Letter. Details of such enquiries made in relation to suppliers are set
out in the Disclosure Letter.
24.2 The Disclosure Letter sets out the actions taken by the Company in
respect of Year 2000 compliance of the Information Technology and the
steps that the Company has taken in relation to any Year 2000
76
compliance recommendations formally communicated to it in writing by
third party suppliers of Information Technology.
25 COMPUTER SYSTEMS
25.1 No person, other than the Employees, contractors, and independent third
parties under development, maintenance or support contracts, is
entitled to have access to or operate any of the Company's owned or
leased computer hardware.
25.2 The Company either:
(a) owns free from all claims, liens, charges, encumbrances and
equities the copyright in all computer software used by it in
relation to its business, in which case it is entitled to use
and otherwise exploit that software without restriction; or
(b) has, so far as the Vendors are aware, a valid and subsisting
licence to use that software in respect of which the Company
has complied with its obligations in all material respects
and in each case where bespoke software of material importance
to the business of the Company has been developed for the Company, the
Company has rights to access the relevant source code for that
software.
25.3 The Disclosure Letter sets out a summary of the Company's data back-up
policies and IT disaster recovery policies and there is set out at
section II, file 2 of the Supplemental Data Room the Company's manuals
in connection with such policies and the Company has materially
complied with the procedures set out in those manuals.
26 DATA ROOM
26.1 Since 28 January, 2000, no documents have been added to the Data Room
or amended other than as listed in the Supplemental Data Room Index.
27 LISTED CUSTOMERS
27.1 The Listed Data Customers and the Listed Voice Customers set out in the
Wholesale Agreement are the same customers as are referred to in the
Framework Agreement of July 1999 between AUCS and members of the AT&T
Group.
77
Part B - Taxation Warranties
1 All accounts computations returns notices or information ("RETURNS")
required to be made submitted or given to any Tax Authority by the
Company (including, without limitation, all Returns in respect of PAYE
and National Insurance) have been properly and duly prepared and
punctually made submitted or given and are up-to-date and correct in
all material respects.
2 The Company is not (and in the last seven years has not been) in
dispute with or subject to any investigation by any Tax Authority other
than standard visits or audits and, so far as the Vendors are aware,
there are no facts or circumstances likely to give rise to or be the
subject of any such dispute or investigation.
3 The Company has (to the extent required by law) preserved and retained
in its possession complete and materially accurate records relating to
Tax and the Company has sufficient records relating to past events to
calculate for Tax purposes the profit, gain, loss, balancing charge or
balancing allowance which would arise on the disposal or realisation of
any assets owned at the Accounts Date or acquired since that date but
before Completion.
4 The Company has paid to the relevant Tax Authority all Tax and
deductions or withholdings required to be deducted including those
under the PAYE and National Insurance systems and in respect of any Tax
chargeable on benefits provided for its employees or former employees
and is not liable to pay any interest, penalty, fine or surcharge in
respect of any such Tax.
5 The Company is registered for VAT, is a taxable person, does not make
any material exempt supplies and has complied in all material respects
with the requirements of the VATA 1994 and all applicable regulations
and orders in respect of VAT.
6 The Company has, since 1 February 1995 been treated for the purposes of
Section 43 VATA 1994 as a member of a group of companies (the "VAT
GROUP") of which the representative member is AT&T (UK) Ltd (the
"REPRESENTATIVE MEMBER").
7 The Representative Member (in relation to the Company) has made, given,
obtained and kept full, complete correct and up-to-date returns,
records, invoices and other documents appropriate or required for the
purposes of VATA 1994 and is not in arrears with any payments or
returns due.
8 No agreement or arrangements have been made or are in place under which
the Company is or could become liable (except as provided for in the
Accounts) to make any payment to the Representative Member (or any
other past or present member of the VAT Group) in respect of some or
all of the Representative Member's liability to account to H.M. Customs
and Excise for VAT.
78
9 The Company has no assets to which the provisions of Part XV Value
Added Tax Regulations 1995 (the Capital Goods Scheme) apply.
10 The Company has not at any time made any election to waive exemption
under the provisions of VATA Schedule 10 for value added tax in respect
of any land or buildings currently within its ownership.
11 All documents required to prove the title of the Company to any assets
owned at the date of this Agreement have been duly stamped.
12 Since the Accounts Date the Company has not incurred any liability to
stamp duty reserve tax.
13 The Company is resident for tax purposes only in the United Kingdom and
has never paid tax on income profits or gains to any Tax Authority in
any other country.
14 So far as the Vendors are aware, the Company has not given any
indemnity in respect of any Taxation under which it would be liable to
make a payment in consequence of the failure by any other Person to
discharge that Taxation, where the Taxation relates to a profit,
income, gain, transaction or event arising, occurring prior to
Completion.
15 The Company has not since the Accounts Date made any payment which is
or, so far as the Vendors are aware, may be, treated as a distribution
for the purposes of ICTA 1988 Sections 209 to 211.
16 So far as the Vendors are aware, the Company has not disposed of nor
has it acquired any capital asset in such circumstances that the
provisions of TCGA 1992 Section 17 could apply.
17 The Company has not at any time in the last 10 years redeemed, repaid
or purchased or agreed to redeem, repay or purchase any of its own
shares.
18 The provision for deferred Taxation in respect of the Company contained
in the Accounts is adequate and in accordance with accountancy
practices generally accepted in the United Kingdom.
19 The Company is not and has never been a close company as defined in
ICTA 1988.
20 Instalment Payments etc.
20.1 The Disclosure Letter correctly identifies whether or not the Company
is a "large company" within the meaning of regulation 3 of the
Instalment Payments Regulations.
20.2 The Disclosure Letter contains full details of all instalment payments
required to be made by the Company under the Instalment Payments
Regulations since the Accounts Date and of all repayments claimed by
the Company under the Instalment Payments Regulations since the
Accounts Date, all such payments or repayments have been duly made or
79
received, and the computation of each such payment or claim for
repayment took full and proper account of all relevant estimates and
other information available to the Company at the time when any such
payment was required to be made or (as the case may be) at the time
when any such claim for repayment was submitted to the Inland Revenue.
20.3 The Company has sufficient books, documents, records and other
information to enable it promptly to comply in full with any notice
served on it under regulations 10 or 11 of the Instalment Payments
Regulations in respect of any accounting period commencing before
Completion.
20.4 No action has been taken by the Company before Completion such that the
provisions of regulation 14 of the Instalment Payments Regulations
could have effect in respect of the Company at any time.
21 The Company has not, at any time within the last six years, acquired
any asset from any other company which was, at the time of the
acquisition, a member of the same group of companies as the Company for
the purposes of section 170 of Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇.
22 Since the Accounts Date the Company has not been a party to any
transaction for which any tax clearance provided for by statute has
been or could have been obtained.
80
SCHEDULE 6
PROVISIONS FOR THE PROTECTION OF THE VENDORS
1 REMEDIES
1.1 Following Completion, a breach by the Vendors of any Warranty shall
give rise only to an action by the Purchaser for damages and shall not
entitle the Purchaser to rescind or repudiate this Agreement.
1.2 Where the matter or default giving rise to a breach of any Warranty is
capable of remedy, the breach shall not entitle the Purchaser to
damages or other compensation unless written notice of the breach is
given to the Vendors and the matter or default is not remedied to the
reasonable satisfaction of the Purchaser within 30 days after the date
on which such notice is served.
2 PARTIES TO CLAIMS
2.1 The Warranties and indemnities given by the Vendors in this Agreement
shall be actionable only by the Purchaser (or any permitted assignee
under clause 16.3) and no party other than the Purchaser (or any
permitted assignee under clause 16.3) shall be entitled to make any
claim or take any action whatsoever against the Vendors under this
Agreement.
3 EXCLUSION OF CERTAIN CLAIMS
3.1 No claim shall be made by the Purchaser against the Vendors and the
Vendors shall not have any liability to the Purchaser under the
Warranties:
(a) in respect of any liability or other matter or thing if and to
the extent that liability, matter or thing would not have
arisen or occurred but for an act, omission or transaction
done, made or carried out by the Purchaser or the Company or
any of their respective directors, employees or agents:
(i) before Completion at the written request of the
Purchaser; or
(ii) after Completion where the Purchaser was or
reasonably ought to have been aware that such act,
omission or transaction would result in such
liability PROVIDED THAT nothing in this sub-paragraph
shall apply to any act, omission or transaction
which:
(A) is required by law; or
(B) is required pursuant to a legally binding
commitment of the Company created on or
before Completion; or
(C) is in the ordinary course of the business of
the Company as carried out immediately
before Completion; or
(b) in respect of any matter resulting from a voluntary change in
the accounting or taxation policies or practices of the
Purchaser or any related company of the Purchaser or the
81
Company (including the method of submitting taxation returns)
introduced or having effect after Completion; or
(c) in respect of any liability or other matter or thing to the
extent that it occurs as a result of or is otherwise
attributable to:
(i) any legislation not in force at the date hereof or
any change of law or administrative practice having
retrospective effect which comes into force after the
date hereof; or
(ii) any increase hereafter in the rates of taxation in
force at the date hereof; or
(iii) the Purchaser or the Company disclaiming any part of
the benefit of capital or other allowances against
taxation claimed on or before the date hereof; or
(d) in respect of a liability which is contingent only unless and
until such contingent liability becomes an actual liability
and is due and payable, but this paragraph 3.1(d) shall not
operate to avoid a claim made with reasonable particularity in
respect of a contingent liability within the applicable time
limits specified in paragraph 6.1;
(e) in respect of any matter or thing fairly disclosed in the Data
Room Documents;
(f) in respect of any matter or thing disclosed in this Agreement
or in the execution and performance of this Agreement or by
reason or in consequence of the execution and performance of
this Agreement;
and the Warranties shall be deemed to be qualified accordingly.
4 ALLOWANCES AGAINST CLAIMS
4.1 The Vendors shall not be liable under the Warranties in respect of any
claim if and to the extent that:
(a) an allowance, provision or reserve is made in the Accounts,
the Management Accounts or the Working Capital Statement in
respect of the specific matter or thing giving rise to the
claim; or
(b) the loss in respect of which the claim is made is actually
recovered in cash under a policy of insurance in force on the
date of such loss (after allowing for the costs of recovery
and any resulting increase in insurance premium) and the
Purchaser undertakes with the Vendors that it will use all
reasonable endeavours to seek to recover such loss under any
policy of insurance which may cover the loss in respect of
which such claim might otherwise be made.
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4.2
(a) where the Company or the Purchaser is or becomes entitled
(whether under any insurance or by way of payment, discount,
credit, set off, counterclaim or otherwise) to recover from
any third party (including any fiscal or taxation authority or
body) any sum in respect of taxation or any other loss, damage
or liability which is or may be the subject of a claim against
the Vendors under this Agreement (including the Tax Covenant),
the Purchaser shall, if so required by the Vendors and subject
to paragraph 4.2(b), take or procure the Company to take all
such steps or proceedings as the Vendors may reasonably
require to enforce such recovery at the Vendors' cost.
However, nothing in this paragraph 4.2 shall require the
Purchaser to commence proceedings unless counsel of at least
10 years standing gives an opinion that such proceedings have
a reasonable prospect of success and provided that the
Purchaser is reasonably satisfied that the third party has the
financial means to make payment.
(b) the Purchaser shall procure that the Vendors are provided with
all such information and reports concerning any such steps or
proceedings taken by the Purchaser or the Company as the
Vendors may from time to time reasonably request.
(c) if any such sum as is referred to in paragraph 4.2(a) shall be
recovered by the Purchaser or the Company from the third
party, any claim by the Purchaser or the Company in respect of
any taxation or other loss, damage or liability to which the
sum relates shall be limited (without prejudice to any other
limitations on the liability of the Vendors referred to in
this Schedule) to the amount (if any) by which the amount of
such claim exceeds the aggregate of:
(i) the sum recovered less all costs, charges and
expenses incurred by the Purchaser in recovering that
sum from the third party; and
(ii) any sum or sums previously paid by the Vendors to the
Purchaser or the Company in respect of such claim,
4.3
(a) any liability of the Vendors under the Warranties (other than
the Tax Warranties) in respect of any matter shall be computed
after taking into account and giving credit for any
corresponding increase in the value of the net assets of, or
other saving by or benefit to, the Purchaser or the Company,
in each case solely to the extent actually realised by the
Purchaser or the Company as the case may be, resulting from
the same matter, including without limitation any saving of
taxation.
(b) if the Vendors shall have made any payment in respect of a
claim under the Warranties and the Company shall receive a
benefit or refund which the Vendors can demonstrate was not
taken into account in computing their liability in respect of
the claim and would have reduced the liability had this been
83
so, the Purchaser shall forthwith repay to the Vendors a sum
corresponding to the account by which the Vendor's payment
would have been reduced had such benefit or refund, as the
case may be, been taken into account.
5 THIRD PARTY CLAIMS
5.1 Subject to the Vendors indemnifying the Purchaser pursuant to paragraph
5.2 below, the Vendors shall be entitled to require the Purchaser (in
the name of the Company if the Vendors so request) or the Company at
the expense of the Vendors to take all such steps or proceedings as the
Vendors may reasonably consider necessary in order to avoid, dispute,
resist, mitigate, compromise, defend or appeal against any claim by a
third party against the Company which will or may give rise to a claim
under the Warranties other than the Tax Warranties (a "RELEVANT THIRD
PARTY CLAIM").
5.2 The Purchaser shall act or shall procure that the Company shall act in
accordance with any such requirements subject to the Purchaser and/or
the Company being properly indemnified to the reasonable satisfaction
of the Purchaser against all costs, charges, liability damages and
expenses incurred in connection with the taking of such steps or
proceedings.
5.3 For the purpose of enabling the Vendors to avoid, dispute, resist,
mitigate, compromise, defend or appeal against any relevant third party
claim or to decide what steps or proceedings should be taken in order
to do so, subject to the Vendors admitting liability in respect of the
relevant third party claim and indemnifying to Purchaser pursuant to
paragraph 5.2 above, the Purchaser shall:
(a) give notice to the Vendors within one month of any relevant
third party claim or any circumstance giving or likely to give
rise to a relevant third party claim coming to its notice or
to the notice of the Company;
(b) subject as aforesaid, give the Vendors or their duly
authorised representatives reasonable access to the personnel
of the Purchaser and/or the Company (as the case may be) and
to any premises, chattels, accounts, documents and records
which are relevant to such claim and are within the power,
possession or control of the Purchaser and/or the Company
("RELEVANT ASSETS") to enable the Vendors and their duly
authorised representatives to investigate the claim and to
examine and take copies or photographs of the relevant assets
at their own expense; and
(c) subject as aforesaid, if the Vendors so request, delegate
entirely to them the conduct of any proceedings of whatsoever
nature arising in connection with the third party claim and,
in that event, give or cause to be given to the Vendors all
such assistance as they may reasonably require in disputing
the claim and instruct such solicitors or other professional
advisers as the Vendors may nominate to act in accordance with
their instructions on their behalf or on behalf of the
Company.
5.4 The Vendors shall reimburse to the Purchaser or the Company (as the
case may be) all costs, charges liabilities, damages and expenses
incurred by it in complying with its obligations under paragraphs 5.1
to 5.3 inclusive and, subject as aforesaid, the Purchaser shall not
84
(and shall procure that the Company shall not) accept or pay or
compromise any relevant third party claim or make any submission in
respect of it.
5.5 The provisions of paragraph 8 of the Tax Covenant shall apply to the
Tax Warranties as if a liability under the Tax Warranties were a
liability under the Tax Covenant.
5.6 The Vendors shall not accept or pay or compromise any relevant third
party claim without the prior written consent of the Purchaser (such
consent not to be unreasonably withheld).
5.7 In the event that the Purchaser becomes aware of any relevant third
party claim and the Vendors dispute that the relevant third party claim
will or may give rise to a claim under the Warranties or the Tax
Warranties, the Purchaser shall, in addition to any duty to mitigate
arising by operation of law, be under an express duty to mitigate (or
procure that the Company shall mitigate) the relevant third party claim
and shall (or procure that the Company shall) take all reasonable such
steps or proceedings as may be necessary in order to avoid, dispute,
resist, mitigate, compromise, defend or appeal against such relevant
third party claim.
6 TIME LIMITS
6.1 No claim shall be brought by the Purchaser for breach of the Warranties
or the Tax Covenant unless notice in writing of such claim (specifying
in reasonable detail with supporting evidence the event, matter or
default which gives rise to the claim and an estimate of the amount
claimed) has been given to each of the Vendors :
(a) in the case of a claim under the Tax Covenant or under any of
the Tax Warranties, within 6 years after the end of the first
accounting period ending after Completion; or
(b) in any other case, within fifteen months after Completion.
6.2
(a) any such claim that may have been made shall (if it has not
been previously satisfied, settled or withdrawn) be deemed to
have been waived or withdrawn on the expiration of 12 months
after the date it was made unless court proceedings in respect
of it shall then have been commenced against the Vendors;
(b) for the purposes of paragraph 6.2(a) court proceedings shall
not be deemed to have been commenced unless they have been
both issued and served on the appropriate parties.
7 THRESHOLDS
7.1 For the purposes of paragraphs 7.2 and 7.3:
85
(a) a "VENDORS' CLAIM" means a claim against the Vendors or either
of them for breach of or otherwise in respect of the
Warranties or under the Tax Covenant;
(b) any references to "MATERIAL" or any similar qualifications
expressed in a Warranty shall be relevant for the purpose of
establishing whether or not there is a Relevant Breach but
shall be disregarded in qualifying the loss in respect of
which the resulting Vendors' claim is made;
(c) the amount of a Vendors' claim shall be taken to be the
liability which the Vendors would have in respect of it in the
absence of any exclusions or restrictions under those
paragraphs but taking account of all exclusions and
restrictions of liability and allowances and set-offs provided
for and all repayments made under the preceding provisions of
this Schedule; and
(d) "THE INDIVIDUAL THRESHOLD" means an amount equal
to(pound)100,000 and "THE CUMULATIVE THRESHOLD" means an
amount equal to (pound)500,000.
7.2 The Vendors shall have no liability in respect of any Vendors' claim
unless:
(a) that claim, when aggregated with all other connected claims or
claims arising from the same facts or circumstances exceeds in
value the individual threshold; and
(b) the amount of that claim when added to the aggregate amount of
all other Vendors' claims (each of an amount greater than the
individual threshold) exceeds the cumulative threshold (in
which case the full amount of that claim and those other
claims shall be payable).
7.3 References to "(pound)" in this paragraph 7 shall, in relation to any
relevant claim made in a currency other than pounds sterling, be
construed as references to the equivalent in pounds sterling of such
other currency at the date the claim is made, but such equivalent in
pounds sterling shall not limit the Vendor's actual liability in
respect of any Vendor's claim.
8 AGGREGATE MAXIMUM
8.1 The total liability of the Vendors in respect of all Vendor's claims
shall not exceed an aggregate amount equal to (pound)39,000,000.
9 NO DUPLICATION OF LIABILITY
9.1 The Purchaser and the Company hereby agree with the Vendors that, in
respect of any matter which may give rise to a liability under this
Agreement:
(a) such liability shall not be met more than once;
(b) any liability with respect to such matter under the Tax
Covenant shall be deemed to be satisfied by the satisfaction
of the liability with respect to such matter under any other
provision of this Agreement and vice versa; and
86
(c) any liability with respect to such matter to any of the
Purchaser or the Company shall be deemed to be satisfied by
the satisfaction of the liability with respect to such matter
to either of them.
10 SUCCESSFUL CLAIMS DEEMED TO CONSTITUTE A REDUCTION IN PURCHASE PRICE
10.1 The satisfaction by the Vendors of any claim under this Agreement
(including the Warranties and the Tax Covenant) shall be deemed to
constitute a reduction in the consideration payable by the Purchaser to
the Vendors for the sale of the Shares.
11 RESTRICTION OF TAX WARRANTIES
11.1 The provisions of paragraph 2 of Schedule 3 (Restriction of Tax
Covenant) shall apply to the Tax Warranties mutatis mutandis as if set
out herein.
87
SCHEDULE 7
PENSIONS
1 INTERPRETATION
1.1 This Schedule applies to the Pension Plans. Where the context requires,
references to the Plans include its trustees.
2 DEFINITIONS
2.1 In this Schedule the following expressions have the following meanings:
"ACTIVE MEMBERS" means members of the Pension Plans in pensionable service;
"ACTUARIES" means the Vendors' Actuary and the Purchaser's Actuary;
"ACTUARY"means a Fellow of the Institute of Actuaries or a Fellow of the
Faculty of Actuaries in Scotland;
"ACTUARY'S LETTER" means the letter from the Vendors' Actuary to the Purchaser's
Actuary relating to this Schedule dated 29 February 2000, a copy of
which is Appendix A;
"APPENDIX" means an appendix to this Schedule;
"CONSENTING MEMBERS" means those Member Employees who are Active Members
immediately before the Pension Transfer Date and who join the
Purchaser's Scheme on the Pension Transfer Date and who consent to a
transfer of their rights accrued under the Plans to the Purchaser's
Scheme (and who do not revoke such direction, become entitled to
immediate payment of their benefits or die before the transfer is
made);
"CONTRACTED-OUT SCHEME", "CONTRACTING-OUT CERTIFICATE" and "CONTRACTED-OUT
EMPLOYMENT" have the same meanings as in the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"EXEMPT APPROVED SCHEME" has the same meaning as in Chapter I Part XIV Income
and Corporation Taxes Act 1988 and "EXEMPT APPROVED" shall be construed
accordingly;
"GUARANTEED MINIMUM PENSION" has the same meaning as in the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇;
"INLAND REVENUE" means the Commissioners of Inland Revenue;
"INVESTMENT ADJUSTMENT" means the Investment Adjustment set out in the Actuary's
Letter;
"MAIN PLAN" means the AT&T ISTEL Pension Plan established by a definitive
deed and rules dated 31 March 1989;
88
"MEMBER EMPLOYEES" means those employees of the Company who are Active Members
at the Completion Date;
"MONEY PURCHASE SCHEME" has the meaning given in the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"PARAGRAPH" means a paragraph of this Schedule;
"PAYMENT DATE" means the date 14 business days after the Purchaser has notified
the trustees of the Plans and the Vendors of:
(a) the date on which the Transfer Amount is agreed or determined
pursuant to paragraph 6 or paragraph 11; and
(b) the date on which the Purchaser has complied with its
obligations under paragraph 4;
"PENSION TRANSFER DATE" means the date 6 months after the Completion Date; or
such other date as may be agreed by the Vendors and the Purchaser;
"PLAN" means either or both of the Main Plan and the Supplementary Plan (and
("PLANS") shall be construed accordingly), and where the context
requires includes the Main Plan Trustee and the Supplementary Plan
Trustee;
"PURCHASER'S ACTUARY" means ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇;
"PURCHASER'S SCHEME" means the scheme to be nominated in accordance with
paragraph 4. Where the context requires, the "PURCHASER'S SCHEME"
includes its trustees;
"THE SUPPLEMENTARY PLAN" means the AT&T ISTEL Supplementary Pension Plan
established by a definitive deed and rules dated 31st March 1989;
"SECTION 9(2B) RIGHTS" has the meaning set out in the Contracting-Out (Transfer
and Transfer Payment) Regulations 1996 (SI 1996/1462)
"TRANSFER AMOUNT" is the sum calculated pursuant to paragraph 6.1;
"TRANSITIONAL PERIOD" means the period from and including the Completion Date up
to but excluding the Pension Transfer Date;
"VENDORS' ACTUARY" means ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇ and ▇▇▇▇▇▇▇;
This Schedule applies to each Plan separately.
3 THE TRANSITIONAL PERIOD
3.1
(a) The Vendors shall use all reasonable endeavours to procure that the
Company and the Member Employees are permitted to continue to
participate in the Pension Plans for the Transitional Period subject to
the approval of the Inland Revenue, which approval the Vendors shall
use all reasonable endeavours to obtain.
89
(b) The Purchaser shall supply to the Vendors such information in
its possession or control as may be required for obtaining the
approval of the Inland Revenue to the Company's continued
participation in the Plans.
3.2
(a) The Purchaser and the Vendors shall use their respective
reasonable endeavour to cause the Member Employees to continue
to be in contracted-out employment by reference to the Pension
Plans throughout the Transitional Period
(b) the Purchaser shall procure that the Company will surrender
any contracting-out certificate it obtains in relation to the
Pension Plans under paragraph 3.2 (a) with effect from the
Pension Transfer Date.
3.3 The Purchaser shall procure that the Company will in respect of the
Transitional Period promptly pay or collect and remit (as appropriate)
to the Pension Plans contributions of the amounts set out in the
Actuary's Letter in respect of each Member Employee who participates in
the Pension Plans.
3.4 Subject to paragraph 3.7 if any improvement in benefits or change
affecting members' contributions is made under the Plans during the
Transitional Period the Vendors shall forthwith inform the Purchaser
and the Company of such improvement or change and the cost of funding
it.
3.5 The Purchaser will during the Transitional Period (and subject to the
requirements of paragraph 3.6 (b)) give to each of the Member
Employees:
(a) a notice offering membership of the Purchaser's Scheme with
effect from Pension Transfer Date on terms which satisfy the
requirements of paragraph 4;
(b) a form of consent addressed to the Plans consenting to the
transfer from the Plans to the Purchaser's Scheme in respect
of their accrued rights under the Plans (if the Purchaser so
elects, excluding their accrued rights to guaranteed minimum
pensions, and section 9(2B) rights, where any of these remain
payable under the Plans).
3.6 The Purchaser shall not and shall procure that any related company of
the Purchaser will not during the Transitional Period
(a) take or omit any action which would prejudice the approval of
the Plans as an exempt approved scheme or the Main Plan as a
contracted-out scheme;
(b) make any announcements to the Member Employees on the subject
of the Plans, or (up to the date of despatch of the notice
pursuant to paragraph 3) on the subject of the Purchaser's
Scheme which are not consistent with paragraph 4. For this
purpose, the Purchaser must supply a draft of any such
announcement to the Vendors prior to its issue, and may not
issue such announcement until the Vendors have confirmed that
90
it is consistent with paragraph 4, such confirmation not to be
unreasonably withheld or delayed;
(c) exercise any power or discretion as a participating employer
of the Plans except on such terms (whether as to payment of
additional contributions or otherwise) as the Vendors may
agree in writing (such agreement not to be unreasonably
withheld or delayed);
(d) and shall use all reasonable endeavours to procure that the
Purchaser's Scheme will not take any action or assist any
Person in any manner which would result in the Plans having to
pay in respect of the Consenting Member a larger amount than
the Transfer Amount to the Purchaser's Scheme.
The Purchaser agrees that the undertaking at paragraph 3.6(d) applies both
during and after the Transitional Period.
3.7 The Pension Plans will not be amended (except with the consent of the
Purchaser, such consent not to be unreasonably withheld or delayed) if
any amendment:
(a) affects the rate of contributions required to be paid by
Member Employees during the Transitional Period;
(b) affects the rate of contributions of the Company; or
(c) reduces the amount, or adversely affects the payment, of the
Transfer Amount.
4 THE PURCHASER'S SCHEME
4.1 Before the Pension Transfer Date the Purchaser shall nominate a
retirement benefits scheme or personal pension scheme which at the
Pension Transfer Date:
(a) will be an exempt approved scheme or capable of being exempt
approved;
(b) may be a contracted-out scheme with a contracting-out
certificate covering the employment of the Consenting Members;
(c) will subject to the receipt of the Transfer Amount either,
(i) provide benefits for Consenting Members (related to
member's salary on termination of pensionable service
under the Purchaser's Scheme) in respect of
pensionable service completed in the Plans before the
Pension Transfer Date which are in the opinion of the
Purchaser's Actuary as agreed by the Vendor's Actuary
at least equal in value on the assumptions set out in
the Actuary's Letter to those that would have been
provided in respect of that pensionable service in
the Plans assuming that the Consenting Members
remained in pensionable service under the Plans until
retirement leaving service or earlier death, and that
the Plans continued, unamended, until that date; or
91
(ii) apply the whole of the Transfer Amount exclusively to
provide benefits for and in respect of Consenting
Members without at the time of application making any
deduction from the Transfer Amount whatsoever whether
in commissions, fees or any other form.
4.2 The Purchaser will as soon as reasonably practicable after the Pension
Transfer Date produce evidence to the Vendors that the Purchaser's
Scheme meets each of the requirements set out in paragraph 4.1.
5 INFORMATION
5.1 The Purchaser shall upon request by the Vendors or the Vendors' Actuary
promptly provide the Vendors with such documents and information in the
Purchaser's or the Company's possession or control as the Vendors may
require to calculate the Transfer Amount and to enable the Plans to
obtain the approval of the Inland Revenue to a transfer of assets to
the Purchaser's Scheme in respect of the Consenting Members which
approval the Vendors shall use all reasonable endeavours to obtain. The
Purchaser warrants that such data shall be in all material respects
true, complete and accurate.
6 CALCULATION OF TRANSFER AMOUNT
6.1 The Vendors will instruct the Vendors' Actuary to calculate the
Transfer Amount on the basis of the method and assumptions set out in
the Actuary's Letter.
6.2 The Vendors shall instruct the Vendors' Actuary to allow the
Purchaser's Actuary such reasonable access to the Vendors' Actuary's
calculations of the Transfer Amount and the information on which they
are based as the Purchaser's Actuary reasonably requires in order to
check and agree that those calculations are mathematically correct and
in accordance with the terms of this Schedule.
6.3 Paragraph 10 applies where the Purchaser's Actuary notifies the
Vendor's Actuary that he does not agree with the amount of Transfer
confirmed to him under paragraph 6.1.
7 THE PAYMENT OF THE TRANSFER AMOUNT
7.1 The Vendors shall use reasonable endeavours to procure that each of the
Plans transfers on or before the Payment Date to the Purchaser's Scheme
in respect of the Consenting Members the Transfer Amount in the form of
such assets as may be agreed before the Payment Date between each of
the Plans and the Purchasers Scheme.
7.2 The assets (if any) to be transferred from the Plans shall be valued at
the mid-market price at the close of business on the relevant Stock
Exchange two business days before the Payment Date.
7.3 If either Plan and the Purchaser's Scheme are unable to agree some or
all of the particular assets to be transferred or the mid-market value
of any such assets, the payment of the Transfer Amount (or the
92
appropriate part of it) shall be satisfied by the Plan transferring
cash equal to that part of the Transfer Amount in respect of which
there has been no agreement as to the assets to be transferred.
7.4 There will be deducted from the Transfer Amount any sums, including but
not limited to sums payable under paragraph 3.3, owed by the Company to
the relevant Plan on the Payment Date.
8 SHORTFALL
8.1 The Vendors undertake (as principal and not as guarantor), not later
than 10 days after receipt of a written demand from the Purchaser, to
pay to the Purchaser (or at the Purchaser's direction to the Company),
by way of an adjustment to the consideration payable under this
Agreement an amount in cash (the "Shortfall") equal to:
(a) the Transfer Amount;
LESS
(b) the amount or value of assets actually received by the
Purchaser's Scheme at the date of the written demand,
adjusted by the Investment Adjustment from the Payment Date to the actual date
of payment under this paragraph.
8.2 Any Shortfall payment shall be the amount determined in accordance with
this paragraph reduced by such percentage as is agreed by the
Purchaser's Actuary and the Vendor's Actuary (or, in default of their
agreement, as is determined under the disputes procedure in paragraph
10) to be appropriate to reflect the value to the Purchaser (at the
time of payment of the Shortfall) of the tax deductions which the
Purchaser would obtain assuming it were to pay an amount equal to the
Shortfall into the Purchaser's Scheme forthwith upon the receipt of the
Shortfall.
9 MEMBER'S ADDITIONAL VOLUNTARY CONTRIBUTIONS
9.1 The Vendors shall use all reasonable endeavours to procure that on the
Payment Date the Plans shall transfer to the Purchaser's Scheme any
assets representing additional voluntary contributions (excluding any
part of Members' Premium Pay Accounts referred to in paragraph 9.2)
paid to the Plans by the Consenting Members other than any additional
voluntary contributions which have been taken into account in
calculating the Transfer Amount under paragraph 6.
9.2 The Vendors shall use all reasonable endeavours to procure that on the
Payment Date the Plans shall transfer to the Purchaser's Scheme any
assets representing the value of the Premium Pay Accounts (as referred
to in Rule 23.15.3(b) in the Main Plan) attributable to the Consenting
Members other than any Premium Pay Accounts which have been taken into
account in calculating the Transfer Amount under paragraph 6.
93
10 REFERENCE TO INDEPENDENT ACTUARY
10.1 If the Purchaser's Actuary notifies the Vendors' Actuary that he does
not agree the amount of the Transfer Amount certified to him under
paragraph 6.1 , the Actuaries shall attempt to reach agreement as to
the Transfer Amount but if no such agreement is reached within 28 days
of the Purchaser's Actuary notifying his original disagreement the
matter may be referred to an independent Actuary appointed jointly by
the Vendors and the Purchaser. If they fail jointly to appoint the
Actuary, paragraph 10.2 applies.
10.2 Where this paragraph 10.2 applies the matter shall be referred to and
determined by an independent Actuary appointed by the President for the
time being of the Institute of Actuaries on the application of either
the Vendors or the Purchaser, whichever shall first apply.
10.3 The independent Actuary shall determine the Transfer Amount in
accordance with this Schedule acting as an expert and not as an
arbitrator and his decision (and any interim directions) shall be final
and binding and his expenses shall be borne as he directs.
11 VENDORS' INDEMNITY
11.1 The Vendors shall indemnify and keep indemnified the Purchaser, the
Company and any Member of the Purchaser's Group against all payments,
damages, losses, costs and expenses (including legal expenses) of
whatever nature arising from, or in connection with, any liability of
the Company under section 75 of the Pensions Act 1995 referable to its
participation in a retirement benefits scheme before Completion.
11.2 "Member of the Purchaser's Group" means the Purchaser, any subsidiary
(as defined by section 736 of the Companies Act 1985) and any associate
(as defined by section 435 of the Insolvency Act 1986).
11.3 Notwithstanding any other provision of the Agreement, this indemnity
shall not be limited in amount but shall only apply to claims made
within 12 years of the Pension Transfer Date.
12 NOTICE OF WITHDRAWAL
12.1 The Purchaser shall procure that immediately after Completion the
Company gives to the trustees of the UK Plan a signed notice of
withdrawal in the form set out in Appendix C to this Schedule.
13 FORM OF CONFIRMATION AND DISCHARGE
13.1 The Purchaser shall use its best endeavours to procure that the
trustee(s) of the Purchaser's Scheme give the trustees of each of the
Plans a form of confirmation and discharge in respect of the Transfer
Amount substantially in the form set out in Appendix B to this
Schedule.
94
14 The Vendors shall use their best endeavours to procure that within 3
months of Completion the Trustees of the UK Plan shall secure the
accrued rights (including appropriate allowance for future salary
increases) of ▇▇▇▇ ▇▇▇▇ (the "MEMBER") at Completion, whether arising
under the UK Plan or under a letter to him dated 13 June 1988. The
Vendors shall indemnify and keep indemnified the Purchaser, the Company
and any member of the Purchaser's Group (as defined above) against any
claims by the Member for benefits arising by reference to service
before Completion.
95
APPENDIX A
ACTUARY'S LETTER
▇▇
▇▇▇▇▇▇▇▇ ▇
FORM OF CONFIRMATION AND DISCHARGE
To: The Trustees of the AT&T ISTEL [Supplementary] Pension Plan (the "Plan")
We, the Trustees of the Purchaser's Pension Scheme refer to an agreement made
the [ ] between [ ] and [ ] (the "Agreement") and in particular to the
provisions relating to pension matters set out in Schedule 7 to the Agreement.
We acknowledge having received a Transfer Amount in connection with the
Agreement of(pound)[ ] and confirm that:
1 The payment of the Transfer Amount discharges the trustees of the Plan
from all further liability and obligations under the Plan for and in
respect of the persons whose names are set out in the list annexed to
this form; and
2 The Transfer Amount will be applied in accordance with paragraph 4.1 of
Schedule 7 to the Agreement.
...................................................
[the Trustees of the Purchaser's Scheme]
97
APPENDIX C
NOTICE OF WITHDRAWAL
To: The trustees of the AT&T (UK) LTD Retirement Benefits Plan (the "Plan")
We, being AT&T Communications (UK) LTD, give notice under clause 19(b)(i) of the
Second Definitive Deed and Rules of the Plan dated 29 November 1999 of our
intention to:
(a) terminate our participation in the Plan; and
(b) terminate our liability, and the liability of those of our
employees who are members of the Plan, to contribute to the
Plan,
with effect from 31 May 2000.
Signed ......................................................
for and on behalf of AT&T Communications (UK) LTD
98
SCHEDULE 8
PREPARATION OF THE 31/12/99 ACCOUNTS AND THE COMPLETION DATE ACCOUNTS
PART A
GENERAL
1 Until both the 31/12/99 Accounts and the Completion Date Accounts have
been signed off by the Auditors producing a signed audit certificate,
as provided below:
1.1 the Purchaser shall give or procure that the Vendors or the Auditors
are given access at all reasonable times to all relevant books and
records which are in the possession or under the control of the Company
or the Purchaser (as the case may be); and
1.2 the Purchaser shall generally provide the Vendors and the Auditors with
such other information and assistance as they may reasonably require
(including access to and assistance at reasonable times from personnel
employed by the Company or the Purchaser, as the case may be) in
relation to the audit of the 31/12/99 Accounts and the Completion Date
Accounts.
2 The Purchaser undertakes to the Vendors to procure that the Auditors
remain the auditors of the Company until the audit certificate for the
31/12/99 Accounts and the Completion Date Accounts have been signed by
them.
3 The Vendors and the Purchaser shall use their respective reasonable
endeavours to comply with the requirements placed upon them under this
Schedule 8 (including, without limitation, the provisions relating to
timing).
4 All reasonable costs and expenses incurred by the Vendors and the
Purchaser in connection with the preparation and approval of the
31/12/99 Accounts and the Completion Date Accounts pursuant to this
Schedule 8 shall be for their own account and be borne by the Vendors
and the Purchaser respectively, save that the whole of the Auditor's
fees in connection with the preparation of both sets of accounts shall
be borne by the Vendors and the Vendors hereby agree to indemnify and
keep indemnified the Purchaser against all such Auditor's costs and
expenses.
5 The Purchaser shall procure that the internal accounting team of the
Company (consisting of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and his department) is deployed to
the Vendors' reasonable request in the preparation and audit of the
31/12/99 Accounts and the Completion Date Accounts. It is acknowledged
that the reasonableness of any Vendors' request will be determined in
the context of the importance to the Guarantor of the delivery of the
31/12/99 Accounts by 15 April 2000 and the Vendor's liability to the
Guarantor in liquidated damages for any failure to meet such
requirement.
6 It is acknowledged and agreed that, in determining the application of
resource pursuant to this schedule 8, the 31/12/99 Accounts shall take
priority.
99
PART B
31/12/99 ACCOUNTS
1 The Vendors and the Purchaser shall jointly procure that, as soon as
reasonably practical following Completion and in any event not later
than 15th April 2000, the 31/12/99 Accounts shall have been audited and
the auditors shall have signed the audit opinion and delivered the same
to the Guarantor.
2 The 31/12/99 Accounts shall be prepared subject to paragraph 2(b)
below, in accordance with and on the basis of consistent application of
US GAAP and the accounting policies, principles and practices applied
and adopted in the preparation of the Accounts.
3 For the purposes of preparing the 31/12/99 Accounts as soon as possible
after the Completion Date, the Vendors will provide the services of ▇▇▇
Hele (at Quadrant House for two consecutive days per week and at
Highfield House for one other day per week) to assist with the
management of the audit process for those accounts as follows:
(a) to interface with the Auditors and to use the strength of
AT&T's existing relationship with the Auditors to expedite the
process;
(b) to liaise with the Vendors' UK based and New Jersey based
shared service centre management to ensure that the Vendors'
appropriate resources are committed to the process;
(c) to partner with and liaise with ▇▇▇▇▇ ▇▇▇▇▇▇▇ and his team to
ensure that a project plan for the audit is established.
4 The Vendors acknowledge that if the 31/12/99 Accounts are not delivered
to the Guarantor by 15 April 2000 in accordance with paragraphs 1 and 2
above, the Guarantor will suffer a loss as a result of not being
permitted to make appropriate filings with the Securities and Exchange
Committee necessary to enable it to raise capital in the public
markets. Under such circumstances and in consideration of the Guarantor
agreeing to guarantee the obligations of the Purchaser pursuant to this
Agreement, the Vendors shall pay to the Purchaser the sum of $100,000
for every day after 15 April 2000 until delivery of the 31/12/99
Accounts.
100
PART C
COMPLETION DATE ACCOUNTS
1 The Vendors and Purchaser shall jointly procure that, as soon as
reasonably practical following Completion and in any event not later
than 30th June 2000, the signed audited Completion Date Accounts shall
have been prepared.
2 The Completion Date Accounts shall be prepared in accordance with UK
GAAP and on the basis of consistent application of the accounting
policies, principles and practices applied and adopted in the
preparation of the 31st December 1998 accounts of the Company (set out
in section I, file 1.9.9 of the Data Room).
3 The Completion Date Accounts shall not show any liability in respect of
the VAT assessment raised on AT&T (UK) Ltd as representative member of
the VAT group relating to VAT refunded to the Company and any liability
in respect of this shall remain with AT&T (UK) Ltd.
4 The Purchaser shall procure that the Company adopts the Completion Date
Accounts as its statutory accounts for the 14 month period to 29th
February 2000 and files them at Companies House within 14 days of their
date of adoption.
5 The Purchaser acknowledges that if the Completion Date Accounts are not
prepared by 31 December 2000 the Vendors shall not be able to make
filings for US tax purposes. Accordingly, the Parties have agreed that
the Vendors shall have the right to require the Purchaser to pay
$100,000 for every day after 31st December 2000 until delivery of the
Completion Date Accounts.
101
SCHEDULE 9
WORKING CAPITAL STATEMENT ACCOUNTING POLICIES AND PRINCIPLES
A. POLICIES AND PRINCIPLES
ACCOUNTING POLICIES AND PRINCIPLES
Subject to the specific policies noted below the Working Capital Statement is to
be prepared in accordance with UK GAAP and the accounting policies, principles
and practices of the Company which are those applied and adopted in the
preparation of the Company's statutory accounts for the year ended 31 December
1998 (set out in section I, file 1.9.9 of the Data Room). Necessarily the
policies set out in the Vendors' statutory accounts do not describe in
sufficient detail, in certain areas, how these policies are to be applied in the
preparation of the Working Capital Statement. Therefore, and for the avoidance
of doubt, the statements below clarify in greater detail how the Company's
accounting policies are to be applied in preparing the Working Capital
Statement.
The Working Capital Statement will be prepared in accordance with the historical
cost convention.
The Working Capital Statement will list all the FACCT codes, which are
amalgamated to form the individual elements of Working Capital.
1 1 PROVISION FOR BAD AND DOUBTFUL DEBTS
A 75% provision for debts over 90 days, and 100% provision for debts
over 121 days are provided, ageing being based on the invoice due date.
In addition, those debtors in liquidation or receivership are provided
for in full. No bad debt provision will be made with respect to
intra-AT&T Group balances. The above policy will not be applied to the
debtor balances in relation to AUCS and X-TANT. These will be treated
on an individual basis because of the nature of the relationship. Bad
debt provisions will not be made on debts covered by a credit note
provision.
1 CREDIT NOTES PROVISION
These are specific provisions relating to customer invoices whereby the
credit notes will be raised in relation to a prior period of trading.
2 HOME OFFICE ACCOUNT
Home Office account will be cleared to zero prior to Completion
3 NON CURRENT PORTION OF SDH LEASE
Only 12 months worth of the SDH lease debtor will be shown in current
assets at any month end position.
102
B. PRO FORMA WORKING CAPITAL STATEMENT
FACCT DESCRIPTION VALUE
--------------------------------------------------------------------------------
10102000 Cash at bank 0
10105100 0
10105520 0
10107719 0
10111000 0
-----------------
TOTAL CASH & BANK 0
-----------------
11164100 Trade debtors 0
11164200 Accrued income 0
11164300 Unallocated cash 0
11167000 Trade debtors 0
11264100 Trade debtors 0
11264200 Accrued income 0
11267000 Home office 0
11316000 Bad debt/credit note provisions 0
14103900 Employee receivables - Other 0
14105000 Interest - receivable external 0
14190000 AUCS accrued income 0
14290000 0
16101010 Prepayments 0
16102000 Prepayments 0
16103430 Prepayments 0
16103500 VAT 0
16107000 Prepayments 0
16190000 Prepayments and SDH lease 0
Non current portion of SDH in above account 0
16201000 Asset disposal holding account 0
16290000 Non AUCS Service Provider accrued income 0
19117000 Holding account for expenses to be recharged out 0
--------------
TOTAL CURRENT ASSETS 0
--------------
20101010 Trade creditors 0
20101220 Accrued invoices 0
20104000 Clearing account for int'l settlements 0
20190000 Accrued invoices 0
20201000 Trade creditors 0
20201020 Home office 0
103
20281000 AT&T accruals 0
21301000 Foreign income tax 0
22212000 Payments in after cash book close 0
22103000 Employee related accruals 0
22114000 0
22115000 Accrued health plans insurance 0
22130010 0
22130130 0
22130160 0
22130180 Accrued health plans insurance 0
22130410 0
22130420 0
22130450 0
22131900 0
22155080 0
22190090 0
22202000 0
22203000 Customer deposits 0
22212000 0
22358100 VAT 0
22358110 VAT 0
22358120 VAT 0
22358200 VAT 0
23259000 Accrued interest 0
--------------
TOTAL CURRENT LIABILITIES 0
--------------
--------------
WORKING CAPITAL 0
--------------
104
SCHEDULE 10
ANCILLARY TRANSITIONAL MATTERS
1 Each party will appoint two persons to be members of a working party
("WORKING PARTY") constituted with a view to achieving a resolution of
issues in relation to the transitional services or business critical
requirements of each party which were unforeseen at the date of this
Agreement.
(a) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ from the Company; and
(b) ▇▇▇ Hele and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ from the Vendors.
2 Either party may replace either of its Working Party members by giving
written notice to the other.
3 Unless otherwise agreed the Working Party shall meet once a month
during the period of six months after the date of this Agreement.
Thereafter the Working Party will meet on a mutually convenient date
within 14 days following one party giving written notice to the other
that it requires a meeting of the Working Party.
4 The Working Party shall meet at a mutually convenient location within
the United Kingdom. It is contemplated by the parties that the location
for the meeting of the Working Party shall rotate between suitable
premises of the Company and suitable premises of the AT&T Group within
the United Kingdom.
5 The agenda for each meeting of the Working Party shall wherever
possible be agreed at least 24 hours before the start of each meeting.
Minutes of each Working Party meeting shall be sent to all members of
the Working Party within 48 working hours following each meeting.
6 At the date of this Agreement it is anticipated that the Working Party
will be required to work towards the resolution of the following items
(amongst others):
(a) formalising confirmation that the Company is validly licensed
to use Oracle products used by it at the date of this
Agreement;
(b) documenting and formalising arrangements in relation to the
use of the X-TANT X25 network by the Company in relation to
the CMS400 system and shared use of that system;
(c) the use by the Company of the ▇▇▇.▇▇▇ domain name suffix and
its transition to an alternative domain name suffix.
7 The provisions of this Schedule are without prejudice to the legal
rights and obligations of respective parties under this Agreement or
the Transitional Services Agreement.
105
SIGNED BY ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
for and on behalf of )
AT&T COMMUNICATIONS )
SERVICES INTERNATIONAL INC. ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Duly Authorised Attorney
SIGNED BY ▇▇▇▇▇ ▇▇▇▇▇ )
for and on behalf of )
GLOBAL CARD HOLDINGS INC. ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Duly Authorised Attorney
SIGNED BY ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
for and on behalf of )
VIATEL, INC. ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Duly Authorised Attorney
SIGNED BY ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
for and on behalf of )
VIATEL GLOBAL )
COMMUNICATIONS LIMITED ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Duly Authorised Attorney
106
APPENDIX A
LISTED CUSTOMER AND SERVICES
▇▇▇
▇▇▇▇▇▇▇▇ ▇
PRIVATE TRANSIT DRAFT TERMS
108