EXHIBIT 10.14
EXECUTION COPY
MANAGEMENT AGREEMENT
THIS AGREEMENT (the "Agreement") made as of September 30, 1999 by and
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among Infonet Services Corporation, a Delaware Corporation ("ISC" and, together
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with its Affiliates, "Infonet"), AUCS Communications Services v.o.f., a general
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partnership organized under the laws of The Netherlands ("AUCS"), and herein
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represented by AUCS N.V. (as hereinafter defined), AUCS Communications Services
N.V., a company organized under the laws of The Netherlands ("AUCS N.V.", and
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AUCS and AUCS N.V. collectively together with all of their direct and indirect
subsidiaries, the "AUCS Entities" and each an "AUCS Entity"), Unisource Pan-
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European Services B.V., a company organized under the laws of The Netherlands
("UPES"), Unisource N.V., a company organized under the laws of The Netherlands
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("Unisource"), Briap B.V., a company organized under the laws of The Netherlands
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("Unisource Nominee" and collectively with Unisource and UPES, the "Unisource
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Entities"), the stockholders of Unisource, Telia AB, a company organized under
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the laws of Sweden ("Telia"), KPN Telecom B.V., a company organized under the
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laws of The Netherlands ("KPN"), and Swisscom AG, a company organized under the
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laws of Switzerland ("Swisscom" and, together with Telia and KPN, the "Indirect
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AUCS Stockholders") (each, a "Party" and collectively, the "Parties").
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WHEREAS, the AT&T exit from its relationships with the AUCS Entities
pursuant to the AT&T Exit Agreements (the "AT&T Exit") has been consummated
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prior to the date hereof;
WHEREAS, Infonet is in the business of providing products and
telecommunications services of a type and nature similar to the products and
services provided by the AUCS Entities (the latter services, the "Contract
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Services");
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WHEREAS, the AUCS Entities wish to have ISC assume the sole and
exclusive management of all operations of the AUCS Entities in order to ensure
continuity of service and, in keeping with the commitments of the AUCS Entities
under the AT&T Exit Agreements and the WorldPartners Membership Agreements,
while reducing their operating costs and other expenses as quickly as possible;
WHEREAS, the AUCS Entities and ISC expect that the management of the
operations of the AUCS Entities by ISC will result in economies of scope and
scale, the benefits of which they expect will be passed on to distributors;
WHEREAS, under the terms of this Agreement, the AUCS Entities will not
transfer any personnel or assets to Infonet other than as specifically provided
for in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I.
DEFINITIONS
Section 1.1 Certain Definitions. In this Agreement, the capitalized
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terms defined on Schedule 1.1 hereto shall have the meanings set forth or
referred to therein.
ARTICLE II.
TERM
Section 2.1 Term. The term of this Agreement shall begin at 00:01
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a.m., Greenwich Mean Time on the Commencement Date and shall end at 11.59pm,
Greenwich Mean Time following the third anniversary of the Commencement Date
(the "Initial Term") unless as otherwise agreed between the Parties in
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accordance with Section 2.2 below.
Section 2.2 Extension of Term Unisource may request in writing
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delivered to ISC not less than 180 days and not more than 270 days prior to the
Termination Date that the Term be extended for a further twelve months (and if
the Term is extended once, again for a second twelve months), on substantially
the same terms as set forth in this Agreement, except that:
(a) the Management Fee payable pursuant to Section 5.1 shall be equal to 1.5
percent of the greater of (i) the total consolidated revenues of the AUCS
Entities and (ii) the aggregate losses of all the AUCS Entities (including all
Restructuring Costs and Liquidation Costs) before interest and taxes, in each
case for each quarter during such extended term but shall not, in any event,
exceed in any year following the expiry of the Initial Term the Management Fee
paid in respect of the third year of the Initial Term;
(b) Section 5.2 shall no longer apply; and
(c) Sections 4.1 (b) and (c) shall no longer apply and, accordingly, the
Funding Requirements shall be as agreed between ISC and Unisource.
In no event shall the Term of the Agreement exceed five years from the
Commencement Date. For the avoidance of doubt, ISC shall not be obliged to
extend the Term beyond the Initial Term.
ARTICLE III.
SERVICES TO BE PROVIDED
Section 3.1 Management Services.
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(a) Except as otherwise expressly provided in this Agreement (including in this
Section 3.1 and Article XII), throughout the Term, ISC shall have the exclusive
right to manage the business, affairs, operations and actions of the AUCS
Entities as determined by ISC in its sole discretion. ISC is hereby empowered to
take any and all actions regarding the operations, strategy, marketing,
services, products, administration and general business of the AUCS Entities, as
determined by it in its sole and exclusive discretion.
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(b) The Parties agree that:
(i) the Supervisory Board of AUCS N.V. shall continue in
existence and have only the powers set forth in Section 12.1 of this Agreement;
and
(ii) all other rights of the Unisource Entities under any
governing document or law with respect to the AUCS Entities shall be exercised
as directed by ISC.
(c) In exercising its management powers under Section 3.1(a), ISC will use its
best efforts to act as a responsible manager of the AUCS Entities. In its
management of the AUCS Entities and while seeking over time to reduce the
expenses of the AUCS Entities, ISC will (i) use commercially reasonable efforts
to ensure continuity of Contract Services to customers, (ii) cause the AUCS
Entities to comply with the terms of the AT&T Exit Agreements and the
WorldPartners Membership Agreements, and (iii) cause the AUCS Entities to comply
in all material respects with the laws of all relevant jurisdictions.
(d) The AUCS Entities, the Unisource Entities and the Indirect AUCS
Stockholders shall procure that the management boards of the AUCS Entities shall
appoint additional, changed or new officers (including the management director
and managing directors) as ISC shall recommend from time to time during the
Term, as soon as practicable upon ISC's recommendation, provided that such
appointments shall be subject, only to the extent required by applicable law, to
the advice of any works councils of AUCS. The Unisource Entities and the
Indirect AUCS Stockholders shall procure that the management boards of the AUCS
Entities shall not appoint additional, changed, or new officers (including the
management director and managing directors) or remove any of the foregoing
without the prior consultation and approval of ISC.
(e) In order to effectuate the foregoing provisions of this Article III and to
fully empower ISC, each of the AUCS Entities hereby irrevocably appoints ISC and
any of its executive officers, their true and lawful attorney with full power of
substitution and with power for such person or entity in its own name and
capacity, together or separately, or in the name and capacity of the respective
AUCS Entity to manage the business, affairs, operations and actions of the
respective AUCS Entity as determined by ISC in its sole discretion; provided,
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however, that such agency shall not create any fiduciary obligations. The
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foregoing power of attorney is coupled with an interest.
(f) Promptly following the Commencement Date, ISC shall (at AUCS' expense)
commence a review of the business, assets, operations, and prospects of the AUCS
Entities and prepare a proposal for the future operations of the AUCS Entities
(the "Review of Operations"). The Review of Operations shall consider, among
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other things the profitability or potential profitability of the Contract
Services or other services, and the marketing, products, services,
administration, employee-related matters and general business of the AUCS
Entities. Every month during the preparation of the Review of Operations and
promptly following finalization of the Review of Operations ISC shall (i)
consult with the Indirect AUCS Stockholders as to the contents of the Review of
Operations (or the then current draft thereof) and (ii) inform Unisource to such
an extent which enables it to continue properly informing and consulting with
the Unisource European Works Council. ISC shall complete the Review of
Operations as soon as
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practicable and in any event within 90 days following the Commencement Date.
Attached hereto as Exhibit 3.1(f) is a non-binding, preliminary draft
implementation plan and a non-binding outline social plan prepared by ISC and
presented by AUCS to the works council of AUCS.
ARTICLE IV.
FUNDING REQUIREMENTS
Section 4.1 Funding Requirements.
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(a) The Parties recognize that the AUCS Entities are likely to incur continuing
losses and in order to continue their business, it will be necessary for
Unisource to contribute further funds during the Term (the "Funding
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Requirements") to the AUCS Entities. During the Term all Funding Requirements
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of the AUCS Entities will be paid by Unisource, by way of capital contribution
or loans (as described in Section 5.4), as and when requested by ISC pursuant to
Section 4.1(e) up to the limits set forth in Section 4.1(b). Funding
Requirements arising as a result of each of the categories (i) through (iv) set
forth in the following sentence shall be separately accounted for by AUCS when
made and each category shall be mutually exclusive. The Funding Requirements may
arise as a result of (i) the AUCS Entities' EBITDA Losses; (ii) Restructuring
Costs; (iii) Management Fees (payable pursuant to Section 5.1); and (iv)
Liquidation Costs (if any).
(b) If the aggregate total of the AUCS Entities' Adjusted EBITDA Losses during
the Initial Term reaches Euro 368,316,000 (three hundred and sixty eight million
three hundred and sixteen thousand Euro) the "Review Point" shall have been
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reached.
(c) If during the Initial Term, Management Accounts are delivered to Unisource
by AUCS showing that the Review Point has been exceeded, Unisource may
determine, within 30 days of receipt of such Management Accounts to terminate
this Agreement in accordance with Section 7.1(d) and (i) to liquidate the AUCS
Entities or (ii) take any other course of action not in violation of this
Agreement during the period of effectiveness of this Agreement and, if any such
determination to terminate this Agreement is made, Unisource shall so notify ISC
in writing, received by ISC within such 30 day period. Forthwith following such
determination, Unisource shall liquidate the AUCS Entities entirely at its own
cost and expense and in any event the Unisource Entities and the Indirect AUCS
Stockholders shall severally ensure that any and all of the obligations of the
AUCS Entities to Infonet are satisfied, whether by a Unisource Entity or an
Indirect AUCS Stockholder in place of the AUCS Entities or by some other
arrangement acceptable to ISC. In the event of a liquidation on a solvent basis,
Section 12.5 shall apply. If during the Initial Term, Management Accounts are
delivered to ISC by AUCS showing that the Review Point has been exceeded, ISC
may determine within 30 days of delivery of such Management Accounts to ISC to
terminate this Agreement in accordance with Section 7.1(d). If any such
determination is made, ISC shall so notify Unisource in writing, received by
Unisource within such 30 day period. For the avoidance of doubt, both Unisource
and ISC shall always have the right during the Initial Term to make any
determination permitted under this Section 4.1(c) within 30 days of receipt of
any Management Accounts which show that the Review Point has been exceeded.
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(d) Unisource shall make any Funding Requirement payments only to AUCS pursuant
to this Section 4.1 as requested by AUCS as directed by ISC and no later than 30
days after Unisource receives a written request therefor from ISC. Funding
Requirements shall be contributed as set forth in Section 5.4.
(e) In order to assist Unisource in meeting such Funding Requirements, ISC
shall cause AUCS to provide Unisource with non-binding cash flow forecasts
setting forth AUCS' best estimates of the anticipated Funding Requirements for
the next calendar month, three months and year, such cash flow forecasts to be
provided not less than 30 days prior to commencement of the relevant period. The
untimely delivery of any such forecasts shall not limit in any way Unisource's
obligations under this Section 4.1 provided that no written request delivered
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pursuant to Section 4.1(d) shall be binding on Unisource until the cash flow
forecast for the relevant period has been provided to Unisource. Any cash
surplus or deficit as set forth in the Commencement Date Financial Statements
(defined below) shall be considered an advance payment or an additional amount
due (as the respective case may be) in respect of any Funding Requirement.
(f) ISC shall cause AUCS to prepare and to deliver to ISC and Unisource within
60 days following the Commencement Date, Consolidated Financial Statements,
prepared in accordance with Schedule C (the "Commencement Date Financial
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Statements"). In connection with the Commencement Date Financial Statements,
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the Parties agree that in respect of revenues and costs of the AUCS Entities
represented by full and final settlements with customers and service providers
(rather than normal invoicing procedures) prior to the Commencement Date, such
settlements shall reflect fairly the relative proportion of the volume of the
business with such service provider or customers in the period prior to the
Commencement Date and that the settlement process shall be prepared and executed
with active involvement of Unisource. If within 30 days following the delivery
of the Commencement Date Financial Statements neither ISC nor Unisource has
given notice of its objection to the Commencement Date Financial Statements
(such notice must contain a statement of the basis of the objection) to the
other, then the Commencement Date Financial Statements shall be deemed to be
agreed between the Parties. If either ISC or Unisource gives such notice of
objection, Unisource and ISC will negotiate to resolve the issues in dispute for
14 days (or such longer period as they shall mutually agree) and, if not so
resolved, then the issues in dispute will be submitted to such independent "Big
5" accountants as ISC and Unisource agree and, in default of agreement such
independent "Big 5" firm of accountants as approved by the President for the
time being of the Institute of Chartered Accountants of England and Wales upon
the application of ISC or Unisource (the "Accountants"), for resolution and
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the Accountants shall be instructed to prepare independently audited
Commencement Date Financial Statements. If issues in dispute are submitted to
the Accountants for resolution, (i) each Party to this Agreement will furnish to
the Accountants such workpapers and other documents and information relating to
the AUCS Entities and the disputed issues as the Accountants may request and are
available to that Party or its subsidiaries (or its independent public
accountants), and Unisource and ISC will be afforded the opportunity to present
to the Accountants any material relating to the determination and to discuss the
determination with the Accountants; (ii) the determination by the Accountants,
as set forth in a notice delivered to Unisource and ISC by the Accountants and
the audited Commencement Date Financial Statements prepared by the Accountants,
will be binding and conclusive on the Parties;
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and (iii) AUCS will bear the fees of the Accountants for such determination and
the preparation of the audited Commencement Date Financial Statements.
(g) The Commencement Date Financial Statements shall be used to determine the
AUCS Entities' Adjusted EBITDA Losses during the Initial Term.
Section 4.2 Capital Expenditures
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(a) During the Term, it is anticipated that certain capital expenditures
("Capital Expenditure") shall be required to be made by the AUCS Entities
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for, amongst other things, maintenance and upgrade of the data transmission
platforms of the AUCS Entities.
(b) Unisource agrees, in addition to the Funding Requirements, to provide such
funding to AUCS , as and when requested by AUCS as directed by Infonet, as will
permit Capital Expenditure by the AUCS Entities of up to Euro 2,844,000 (two
million eight hundred and forty four thousand Euro) over the Initial Term plus
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any additional Capital Expenditure as is approved by the Supervisory Board, no
later than 30 days after Unisource has received a written request therefor, and
in the case of additional Capital Expenditure no later than 30 days after any
additional Capital Expenditure has been approved by the Supervisory Board.
(c) Unisource shall have no obligation to fund any Capital Expenditure on
Infonet native platforms.
ARTICLE V.
INVOICES AND PAYMENTS
Section 5.1 Management Fee. For each calendar quarter of the
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Initial Term, AUCS will pay to ISC in arrears, a fee in Euro equal to 1.5 per
cent of the total consolidated revenues of the AUCS Entities for such quarter as
set forth in the Management Accounts as a management fee (the "Management Fee")
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up to an aggregate maximum during the Initial Term of Euro 17,065,000 (seventeen
million and sixty five thousand Euro) (plus any applicable VAT and any non
recoverable Dutch withholding taxes or any replacement therefor). AUCS shall pay
the Management Fee to ISC no later than the 30th calendar day of the month
following the last day of the calendar quarter for which the Management Fee is
due. AUCS shall pay the Management Fee by wire transfer of immediately available
funds to an account designated by ISC in writing.
Section 5.2 Incentive Payments.
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(a) If the cumulative sum of the AUCS Entities' Adjusted EBITDA Losses over the
Initial Term is below Euro 295,317,000 (two hundred and ninety five million
three hundred and seventeen thousand Euro) in the aggregate (the "Incentive
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Target"), ISC will receive as an incentive payment 100% of such difference
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below Euro 295,317,000 (two hundred and ninety five million three hundred and
seventeen thousand Euro) from Unisource, such payment to be made by Unisource to
ISC by wire transfer of immediately available funds in Euro to an account
designated by ISC in writing within 30 days of the agreement, deemed agreement
or determination by the Accountant of the Closing Date Financial Statements for
the Initial Term in accordance with Section 5.2(c).
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(b) If the cumulative sum of the AUCS Entities' Adjusted EBITDA Losses over the
Initial Term exceeds the Incentive Target, then ISC shall rebate to AUCS (or as
otherwise directed by the Supervisory Board) such part of the Management Fees
paid or payable during the Initial Term as are equal to 25% of the aggregate of
the AUCS Entities' Adjusted EBITDA Losses, during the Initial Term which are in
excess of the Incentive Target, provided that such rebate shall never exceed the
Management Fee received or to be received by ISC.
(c) Within 90 days following the end of the Initial Term, AUCS shall prepare
and deliver to ISC and Unisource Consolidated Financial Statements for the
Initial Term, and as of the Termination Date accompanied by a statement
setting forth the aggregate AUCS Entities' Adjusted EBITDA Losses, for the
Initial Term ("Closing Date Financial Statements") such Consolidated
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Financial Statements shall be subject to the same review, audit and dispute
mechanism resolution procedures set forth in Section 4.1(f) and upon agreement,
deemed agreement or determination by the Accountant shall be conclusive evidence
of (i) the consolidated revenues of the AUCS Entities and (ii) the AUCS
Entities' Adjusted EBITDA Losses, in each case during the Initial Term for the
purposes of calculating the amounts payable pursuant to Sections 5.1 and 5.2.
(d) Unisource intends to propose to ISC a mechanism whereby ISC will be
incentivized to minimize the Restructuring Costs (if any).
Section 5.3 Letters of Credit.
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(a) The Indirect AUCS Stockholders shall establish with a major reputable bank
in the Netherlands reasonably acceptable to ISC letters of credit (unless as
otherwise agreed between the Indirect AUCS Stockholders and ISC that some other
form of facility be provided offering ISC similar comfort) in favor of AUCS for
the duration of this Agreement in a form acceptable to ISC (the "Letters of
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Credit"). Each quarter, the Indirect AUCS Stockholders shall adjust the Letters
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of Credit so that the amount of funds available under such Letters of Credit is
at least equal, in the aggregate, to Euro 42,662,000 (forty two million six
hundred and sixty two thousand Euro) during the first year of the Initial Term
and an equal amount in the second and third years of the Initial Term unless, in
respect of the second and third years, the Indirect AUCS Stockholders and ISC
agree to lower such amount or waive the obligation of the Indirect AUCS
Stockholders under this Section 5.3(a) in respect of such period as the Indirect
AUCS Stockholders and ISC may in their discretion agree.
(b) AUCS may draw down funds from the Letters of Credit as required to satisfy
any Funding Requirements or Capital Expenditure which, in each case, has not
been paid by Unisource in a timely manner in accordance with Sections 4.1(d) and
4.2(b) as the case may be.
Section 5.4 Payment of Funding Requirements. The Funding
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Requirements shall be paid to AUCS in the form of loans made available on arm's
length terms by Unisource to AUCS for each quarter to cover the envisaged
Funding Requirements for that quarter. All quarterly loans (including accrued
interest) shall terminate at the end of the calendar year. New loans will be
made immediately following such terminations for an aggregate amount equivalent
to the aggregate amount of the loans so terminated, except to the extent that
any such loans are converted into equity in accordance with the following
sentence. Any outstanding loans made
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under this Section 5.4 shall, at the end of a calendar year, be converted into
equity and contributed to the capital of AUCS as required such that the
consolidated interest bearing debt of the AUCS Entities is equal to the equity
in the Consolidated Financial Statements or any higher proportion of equity as
is necessary to ensure that (i) the AUCS Entities are solvent and continue
trading under all relevant laws and rules and (ii) the statutory auditors of the
AUCS Entities are able to deliver an unqualified audit opinion under Dutch GAAP
(or other applicable national GAAP).
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations of the AUCS Entities, Unisource Entities
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and the Indirect AUCS Stockholders. Each of the AUCS Entities party to this
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Agreement, the Unisource Entities and the Indirect AUCS Stockholders severally
represents and warrants to ISC as at the Commencement Date that:
(a) In the case of an Indirect AUCS Stockholder, a Unisource Entity and AUCS
N.V., it is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is in good
standing in each jurisdiction where the failure to be in good standing would
have a material adverse effect on its business or ability to perform its
obligations under this Agreement. In the case of AUCS, it is a general
partnership duly formed, validly existing and in good standing under the laws of
The Netherlands, and is in good standing in each jurisdiction where failure to
be in good standing would have a material adverse effect on its business or
ability to perform its obligations under this Agreement;
(b) In the case of an Indirect AUCS Stockholder, a Unisource Entity and AUCS
N.V., it has all necessary corporate power and authority, and in the case of
AUCS, AUCS has all the necessary partnership power and authority, to own, lease
and operate its assets and to carry on its business;
(c) In the case of an Indirect AUCS Stockholder, a Unisource Entity and AUCS
N.V., it has all necessary corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on its part.
In the case of AUCS, it has all necessary partnership power and authority to
enter into this Agreement and to perform its obligations hereunder, and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on its part;
(d) This Agreement constitutes the legal, valid and binding obligation of it,
enforceable against it by ISC in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and except to the extent that
enforceability is subject to the application of equitable principles (including
good faith) or remedies;
(e) It is not a party to, and is not bound or affected by or subject to, any
instrument, agreement, charter or by-law provision, law, rule, regulation,
judgment or order which would be
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contravened or breached as a result of the execution of this Agreement, or
consummation of the transactions contemplated hereby, where such contravention
or breach would have a material adverse effect on the business, operations or
financial condition of the AUCS Entities or the transactions contemplated by
this Agreement;
(f) Except for any Form A/B filing by certain of the Parties to the European
Commission in relation to the transactions contemplated between the Parties, no
consent, approval or authorization of, or declaration or filing with, any
governmental or regulatory authority, or any other person or entity, is required
to be made or obtained by it that has not been made or obtained in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby except where such failure
to make or obtain such consent, approval, authorization, declaration or filing
would not have a material adverse effect on the business, operations or
financial condition of the AUCS Entities or the transactions contemplated by
this Agreement;
(g) It has not employed or made any agreement with any broker, finder or
similar agent or any person or firm which will, as a result of the transactions
contemplated hereby, obligate Infonet or any AUCS Entity to pay any finder's
fee, brokerage fees, commission or similar payment in connection with the
transactions contemplated hereby.
(h) No order has been made or petition presented, meeting convened or
resolution passed for the winding up of any of the Unisource Entities, any AUCS
Entities or any Indirect AUCS Stockholder nor has any receiver been appointed or
any distress, execution, or other process been levied in respect of the assets
or any of them.
(i) No composition in satisfaction of the debts of any of the Unisource
Entities, any AUCS Entities or any of the Subsidiaries or scheme of arrangement
of its affairs or compromise or arrangement between it and either or both of its
creditors or members or any class of either or both of its creditors or members
has been proposed, sanctioned or approved.
(j) The Unisource Entities and the Indirect AUCS Stockholders are not aware of
any fact, matter or circumstance which may have a material adverse effect on the
business, assets or financial condition of the AUCS Entities considered as a
whole which has not been disclosed in writing to ISC during its investigation of
the AUCS Entities or otherwise in writing.
Section 6.2 Representations of ISC. ISC represents and warrants to
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AUCS that:
(a) It is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware;
(b) It has all necessary corporate power and authority to own, lease and
operate its assets and to carry on its business as presently conducted and as it
will be conducted pursuant to this Agreement;
(c) It has all necessary corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery of this Agreement and the
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consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on its part;
(d) This Agreement constitutes the legal, valid and binding obligation of ISC,
enforceable against it in accordance with its terms;
(e) It is not a party to, and is not bound or affected by or subject to, any
instrument, agreement, charter or by-law provision, law, rule, regulation,
judgment or order which would be contravened or breached as a result of the
execution of this Agreement or consummation of the transactions contemplated
hereby;
(f) Except for any Form A/B filing by certain of the Parties to the European
Commission in relation to the transactions contemplated between the Parties, no
consent, approval or authorization of, or declaration or filing with, any
governmental or regulatory authority, or any other person or entity, is required
to be made or obtained by it that has not been made or obtained in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby;
(g) There are no (i) outstanding orders, writs, injunctions or decrees of any
court, governmental agency or arbitration tribunal against it or (ii) any
actions, suits or legal, administrative or arbitration proceedings or
investigations pending, which if determined adversely to it, could reasonably be
expected to have a material adverse effect on it; and
(h) It has not employed or made any agreement with any broker, finder or
similar agent or any person or firm which will, as a result of the transactions
contemplated hereby, obligate any party hereto, other than ISC, to pay any
finder's fee, brokerage fees, commission or similar payment in connection with
the transactions contemplated hereby.
(i) It has the ability to provide management services in accordance with the
terms of this Agreement.
ARTICLE VII.
TERMINATION
Section 7.1 Termination
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(a) Upon written notice, either of (i) Unisource or (ii) ISC, may immediately
terminate this Agreement, without charge to the terminating Party, in the event
of a material breach of this Agreement by any Party other than the Party seeking
termination (including material failure by ISC to act in accordance with its
obligations specifically set forth in Section 3.1), failure by any Party other
than the Party seeking termination to pay any amount due and payable under this
Agreement when due, subject to the Party seeking termination providing the Party
in default with sufficient, prior written notice of such breach or failure to
pay and allowing the Party in default 60 days to cure the same.
(b) Either of (i) Unisource or (ii) ISC, may terminate this Agreement without
charge to the terminating Party, in the event that any Party (other than the
terminating Party) voluntarily files a bankruptcy petition, or has an
involuntary bankruptcy petition filed against it and such petition is
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not dismissed within 30 days, or in the event any Party (other than the
terminating Party) is insolvent and unable to pay its debts as they mature, or
if such Party shall make an assignment for the benefit of creditors or have a
receiver appointed for its property. In the case of termination pursuant to this
Section 7.1(b), termination of this Agreement shall be effective immediately
upon delivery of notice of such termination to Unisource or ISC as applicable.
(c) Upon 180 days prior written notice, either of (i) Unisource or (ii) ISC,
may immediately terminate this Agreement without charge to the terminating
Party.
(d) Unisource or ISC may terminate this Agreement in accordance with Section
4.1(c) on 30 days notice.
(e) The rights of termination provided herein shall be in addition to any other
rights or remedies permitted by operation of law or in equity or under any
other provision of this Agreement.
(f) Notwithstanding termination of this Agreement, Sections 1.1, 4.1(c), 5.2,
8.1, 9.1, 9.2, 9.3, 9.4, 10.2, 10.4, 10.8, Article XI, 12.2, 12.4 and this
Section 7.1(f) shall remain in full force and effect.
Section 7.2 Orderly Handover.
----------------
(a) Following the termination of this Agreement, ISC shall procure that those
persons at Infonet who have been principally involved in providing the
management services to the AUCS Entities set forth in Section 3.1 shall make
themselves available for consultation during normal business hours by Unisource,
at Unisource's expense, for up to 60 days following termination of this
Agreement about the matters within their management control during the Term.
(b) Following termination of this Agreement, ISC shall provide to the AUCS
Entities, for such transitional period as shall be agreed between ISC and AUCS
on arm's length commercial terms, and to the extent that ISC is reasonably able,
such operational services as were provided by Infonet to, or on behalf of, the
AUCS Entities immediately prior to termination as the AUCS Entities may require
in order to continue to provide the services which the AUCS Entities provided
immediately prior to the date of termination of this Agreement. Any such
operational services provided will be provided by ISC shall be in accordance
with an outsourcing agreement to be agreed between the Parties as and when
required.
ARTICLE VIII.
COVENANTS
Section 8.1 Confidential Information. While this Agreement is in
-------------------------
effect and for a period of 36 calendar months thereafter the Parties will hold
in confidence the financial terms and provisions of this Agreement and any
financial and other confidential information relating to the AUCS Entities which
ISC obtains during its management of the business, affairs, operations and
actions of the AUCS Entities (collectively the "Confidential Information"). The
--------------------------
Parties hereby acknowledge and agree that the Confidential Information is
confidential and proprietary and is not to be disclosed to third persons without
the prior written consent of both AUCS and ISC. The Parties shall not disclose
such Confidential Information to any third party
11
(other than to officers, directors, employees and agents of AUCS and ISC, each
of whom is bound by this Section 8.1) except:
(a) to the extent necessary to comply with applicable law or the valid order of
a governmental agency or court of competent jurisdiction; provided, however,
-------- -------
that the Party making such disclosure shall seek confidential treatment of said
information from such third parties;
(b) as part of its normal reporting or review procedure to regulatory agencies,
its parent company, its auditors and its attorneys; provided that the Party
--------
making such disclosure to any such regulatory agency shall give the other
Party advance written notice of any disclosure, shall seek confidential
treatment of such information and shall use commercially reasonable efforts
to cooperate with the other Party in seeking confidential treatment of such
information; provided that any other third party (not being a regulatory
--------
agency) to whom disclosure is made agrees to the confidential treatment of
such information;
(c) in order to enforce its rights and perform its obligations pursuant to this
Agreement, including obtaining any necessary government authorizations with
respect to this Agreement;
(d) to the extent required by any public offering of securities of ISC in any
jurisdiction;
(e) pursuant to the disclosure requirements of the U.S. Securities Act of 1933
and the U.S. Securities Exchange Act of 1934 and any similar legislation in any
jurisdiction, in each case as amended and the rules and regulations promulgated
thereunder; and
(f) to the extent necessary to obtain appropriate insurance, to its insurance
agent; provided that such agent agrees to the confidential treatment of
--------
such information.
In the event that any Party is requested (the "Disclosing Party")
----------------
pursuant to, or becomes compelled by, applicable law, regulation or legal
process to disclose any Confidential Information, the Disclosing Party will
provide any non-Disclosing Party with prompt written notice so that any non-
Disclosing Party may seek a protective order or other appropriate remedy. In
the event that no such protective order or other remedy is obtained, the
Disclosing Party will furnish only that portion of the Confidential Information
which the Disclosing Party is advised by counsel is legally required and
cooperate, at the Disclosing Party's sole cost and expense, with the other
party's efforts to obtain reliable assurance that confidential treatment will be
accorded the Confidential Information.
Section 8.2 No Litigation. Both Unisource and ISC agree to notify
--------------
each other upon the occurrence of any judgment, threatened or pending litigation
or proceeding involving or affecting the transactions provided for in, or
contemplated by, this Agreement (collectively, "Proceedings"). Each party
-----------
confirms to the other that it is not presently aware of any such Proceedings.
Section 8.3 General Cooperation; Further Assurances. Each Party,
----------------------------------------
at its expense, shall promptly and duly execute and deliver to the other Parties
such further documents and assurances and take such further action as the other
Parties may from time to time reasonably request in writing in order to carry
out more effectively the intent and purpose of this Agreement
12
(including, without limitation, any applications, documents and reports required
by any governmental authority).
Section 8.4 Regulation. ISC reserves the right to take all actions,
----------
including termination of Contract Services, which is reasonably necessary to
enable Infonet, any Affiliate or any AUCS Entity to comply with applicable
national or international communications regulations, laws or tariffs.
ARTICLE IX.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 9.1 Liability
---------
(a) Liability. THE PARTIES AGREE THAT NO PARTY WILL BE HELD TO ANY WARRANTIES
----------
DIRECTLY OR INDIRECTLY RELATED TO SERVICES, SYSTEMS, PRODUCTS AND CONTRACTS,
WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTY OF
SATISFACTORY QUALITY AND FITNESS FOR A PARTICULAR PURPOSE OTHER THAN THOSE
EXPRESSLY SET FORTH IN THIS AGREEMENT.
(b) Consequential Loss. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
------------------
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT
LIMITED TO, LOSS OF USE, REVENUE, OR PROFIT, EVEN WHERE THE OTHER PARTY HAD BEEN
ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. No Party
nor the owner of any computer programs licensed to it shall be responsible for
any application of the results obtained from the use of any computer programs or
equipment or for unintended or unforeseen results obtained by any customer in
the use of such programs.
Section 9.2 Indemnity to Infonet.
---------------------
(a) Subject to Section 9.1 above, each of the AUCS Entities jointly and
severally, the Unisource Entities severally and each of the Indirect AUCS
Stockholders severally indemnifies and holds harmless Infonet and their
respective stockholders, members, officers, directors, employees and agents
(individually, an "ISC Indemnified Party" and, collectively, the "ISC
--------------------- ---
Indemnified Parties") from and against any and all Losses incurred by such
-------------------
ISC Indemnified Party or ISC Indemnified Parties by reason of, or resulting
from, (i) the breach of any representation, warranty or covenant made by any of
the AUCS Entities, the Unisource Entities or any of the Indirect AUCS
Stockholders in this Agreement, (ii) ISC's management of the AUCS Entities or
right to manage the AUCS Entities during the Term, (iii) any taxes of any AUCS
Entity, (iv) any third party claim against any ISC Indemnified Party relating to
breaches by the AUCS Entities, the Unisource Entities and/or the Indirect AUCS
Stockholders of any of their representations or warranties or any of their
obligations hereunder or any obligations of any of the foregoing to such third
party; (v) any liabilities of any AUCS Entity to any third party, whether
incurred before or after the Review Point and (vi) any liabilities of any ISC
Indemnified Party incurred in connection with the liquidation of any AUCS
Entity; provided that none of the AUCS Entities, the Unisource Entities or the
--------
Indirect AUCS Stockholders will be liable to any
13
ISC Indemnified Party pursuant to this Section 9.2(a) (i) unless the aggregate
amount otherwise due to the ISC Indemnified Parties exceeds on a cumulative
basis Euro 100,000 (one hundred thousand Euro) and (ii) if, but only to the
extent that, such Losses are incurred as a direct result of any willful
misconduct or negligence on the part of ISC or the breach by ISC of any of its
responsibilities, warranties or covenants expressly set forth in this Agreement.
(b) Each of the Indirect AUCS Stockholders severally indemnifies and holds
harmless the ISC Indemnified Parties for any liabilities arising in connection
with the employment agreements and employment relationships between the AUCS
Entities and their employees, former employees, and/or other persons in any
jurisdiction, including but not limited to any liability under the EC Acquired
Rights Directive (Business Transfer Directive 77(187)) or any domestic
derivative including articles 7:662-666 of the Dutch Civil Code, and for any
fiscal, pension, social security or other liabilities (including but not limited
to liability on account of "inlenersaansprakelijkheid") relating to the
employees, former employees, workers and/or other persons involved with the AUCS
Entities.
Section 9.3 Indemnity to Unisource. Subject to Section 9.1 above,
-----------------------
ISC indemnifies and holds harmless the Unisource Entities, the AUCS Entities and
the Indirect AUCS Stockholders, and their respective officers, directors,
employees and agents (individually, an "AUCS Indemnified Party" and,
----------------------
collectively, the "AUCS Indemnified Parties" and together with the ISC
------------------------
Indemnified Parties, the "Indemnified Parties") from and against any and all
-------------------
Losses incurred by such AUCS Indemnified Party or AUCS Indemnified Parties by
reason of, or resulting from, the breach of any representation, warranty or
covenant made by ISC in this Agreement, provided that ISC will not be liable to
--------
any AUCS Indemnified Party pursuant to this Section 9.3 (i) unless the aggregate
amount otherwise due the AUCS Indemnified Parties exceeds on a cumulative basis
Euro 100,000 (one hundred thousand Euro) and (ii) if, but only to the extent
that such Losses are incurred as a direct result of any willful misconduct or
negligence on the part of any AUCS Entity, any Unisource Entity or any Indirect
AUCS Stockholder or the breach by any of the foregoing of any of their
respective representations, warranties or covenants expressly set forth in this
Agreement.
Section 9.4 Indemnification Procedures. In the case of any claim
---------------------------
asserted by a third party against an Indemnified Party, notice shall be given
by the Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
-------------------
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defence of any claim or any litigation resulting therefrom;
provided that (i) the counsel for the Indemnifying Party who shall conduct the
--------
defence of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate in such defence at
such Indemnified Party's expense, and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defence of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other non-monetary relief affecting the Indemnified Party or that
does not include
14
as an unconditional term thereof the giving by each claimant or plaintiff to
such Indemnified Party of a release from all liability with respect to such
claim or litigation. In the event that the Indemnified Party shall in good faith
determine that the conduct of the defence of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
tax liability or the ability of Indemnified Party to conduct its business, or
that the Indemnified Party may have available to it one or more defences or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defence, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party. In the event that the Indemnifying Party does not accept the defence of
any matter as above provided, the Indemnified Party shall have the full right to
defend against any such claim or demand and shall be entitled to settle or agree
to pay in full such claim or demand. In any event, the Indemnifying Party and
the Indemnified Party shall cooperate in the defence of any claim or litigation
subject to this Section 9.4 and the records of each shall be available to the
other with respect to such defence.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Assignment.
-----------
(a) Except as provided in Section 10.1(b) below, none of the Parties may
assign, sublicense, transfer or otherwise dispose of any rights or sub-contract
or transfer or otherwise dispose of any obligations under this Agreement, other
than in connection with the sale or transfer of all or substantially all the
assets of the assigning Party, except with the prior written approval of
Unisource and ISC, which approval shall not be unreasonably withheld or delayed.
(b) The Unisource Entities and the Indirect AUCS Stockholders may do any of the
following, provided that any such actions do not and will not affect the rights
of ISC under this or any other agreement:
(i) simplify the corporate governance of AUCS and/or AUCS N.V.;
(ii) transfer the interests of the Unisource Entities in (x) AUCS
and AUCS N.V., (y) AUCS and the assets of AUCS N.V., or (z) the assets of AUCS
and AUCS N.V., either directly or indirectly to the Indirect AUCS Stockholders.
(c) The Parties other than ISC shall, from time to time on being requested to
do so by ISC, now or at any time in the future, do or procure the doing of all
such acts and/or execute or procure the execution of all such documents in a
form satisfactory to ISC as ISC may consider necessary for giving full effect to
this Agreement and securing to ISC the full benefit of the rights, powers and
remedies conferred upon ISC in this Agreement at the cost and expense of the
Parties other than ISC.
15
Section 10.2 Governing Law and Arbitration.
------------------------------
(a) This Agreement shall be governed by and shall be construed in accordance
with English law, without reference to the choice of law provisions thereof.
Accordingly any dispute arising out of or having any connection with this
Agreement shall be decided exclusively in accordance with English law; provided
--------
that all such disputes shall be referred, in the first instance, to the
respective chief executive officers of the Parties for resolution.
(b) If a dispute, after having first been discussed by the chief executive
officers of each of the relevant Parties (provided that if the dispute is
--------
between ISC and an AUCS Entity, the matter shall be discussed between the
chief executive officers of ISC and Unisource), is not resolved by the said
chief executive officers within a maximum of 14 days, the dispute shall be
referred to and finally resolved by arbitration under the London Court of
International Arbitration ("LCIA") Arbitration Rules, which Arbitration
----
Rules are deemed to be incorporated by reference to this Section 10.2(b).
(c) Any arbitration commenced pursuant to Section 10.2(b) shall be administered
by the LCIA and the standard LCIA administrative procedures and schedule of
costs shall apply. In any such arbitration, the appointing authority shall
be the LCIA. The number of arbitrators shall be three and such arbitrators
to include persons experienced in European telecommunications (the
"Arbitrators"). The place of arbitration shall be London and the language
-----------
used in the arbitral proceedings shall be English. The governing law of
the Agreement shall be the substantive law of England.
(d) The fees of the Arbitrators, the costs of the LCIA and the cost of the
other Parties relating to the arbitration (including, but not limited to, the
reasonable costs of professional advisers) shall be borne by those Parties
against whom the Arbitrators make any award in the proportion of any such award.
(e) The Arbitrators shall have authority to award interest on any amount
awarded by the Arbitrators up to the date of that award at the rate equal to 1
(one) percentage point above the three month EURIBOR rate for Euros from time to
time. If any amount payable as a result of a decision of the Arbitrators is not
paid within 14 days of publication of that decision, interest will thereafter
accrue on the amount at the rate equal to 2 (two) percentage points above the
three month EURIBOR rate for Euros from time to time.
(f) The referral of a dispute to arbitration under Section 10.2(b) shall not
preclude any Party from obtaining interim relief on an urgent basis from a
court of competent jurisdiction pending any decision of the Arbitrators.
(g) Any decision of the Arbitrators shall be final, conclusive and binding on
the Parties, and the Parties agree to exclude, so far as lawfully possible
to exclude, any right of application or appeal to the English (or other)
courts in connection with any question of law arising in the arbitration or
in connection with any award or decision made by the Arbitrators, except as
may be necessary to enforce such award or decision.
(h) The provisions of this Section are severable from the rest of this
Agreement and shall remain in effect despite the termination of or invalidity
for any reason of this Agreement.
16
Section 10.3 No Partnership. ISC shall perform its obligations
---------------
hereunder as an independent contractor of the respective AUCS Entities. Nothing
in this Agreement shall be deemed to create any joint venture, partnership or
principal and agent relationship between any of the AUCS Entities, the Unisource
Entities, and the Indirect AUCS Stockholders on the one hand and Infonet on the
other hand and no Party shall hold itself out in its advertising or otherwise in
any manner which would indicate or imply any such relationship with another.
Section 10.4 No Fiduciary Duties. The AUCS Entities, the Unisource
--------------------
Entities, the Indirect AUCS Stockholders expressly agree that neither this
Agreement nor any actions taken by ISC in its performance of its obligations
hereunder, including but not limited to actions taken in connection with the
management services provided by ISC pursuant to Article III hereof or otherwise,
cause or will cause Infonet to have any fiduciary, trustee or similar
obligations to the AUCS Entities, Unisource, UPES or the Indirect AUCS
Stockholders.
Section 10.5 Validity. If any provision of this Agreement is found
---------
or held to be invalid or unenforceable, the validity of all the other provisions
hereof shall not be affected thereby and the parties agree to meet and review
the matter and if any valid and enforceable means is reasonably available to
achieve the same object as the invalid or unenforceable provision, to adopt such
means by way of variation of this Agreement. However, if any invalid term is
capable of amendment to render it valid, the parties agree to negotiate an
amendment to remove the invalidity.
Section 10.6 Due Diligence. Prior to the date hereof, ISC has,
--------------
directly or through its representatives, reviewed the properties, books and
records of AUCS listed on the Data Room Index initialed by the Parties ISC and
Unisource comprising Exhibit 10.6 and their financial and legal condition to the
extent that it has deemed necessary or advisable to familiarize itself with the
properties and other matters related to the AUCS Entities; such review shall
not, however, affect the representations or warranties made by the AUCS
Entities, the Unisource Entities and the Indirect AUCS Stockholders herein, or
the remedies of ISC for the breach of those representations and warranties.
Section 10.7 Severability. In the event that any of the terms of
-------------
this Agreement are found to be invalid, unlawful or unenforceable, such terms
(provided that they are not fundamental to the agreement) shall be severable
--------
from the remaining terms, which shall continue to be valid and enforceable.
Section 10.8 Variation. No variation of or addition to this
----------
Agreement shall be of any force or effect unless reduced to writing, signed by
or on behalf of Unisource (on behalf of all the Unisource Entities and the
Indirect AUCS Stockholders), AUCS N.V. (on behalf of all the AUCS Entities) and
ISC and expressed to amend this Agreement.
Section 10.9 Entire Agreement. This Agreement (including the
-----------------
documents referred to in it) replaces all prior agreements and arrangements
between the Parties and constitutes the entire understanding between the parties
relating to the subject matter of this Agreement. Each Party acknowledges that
in agreeing to enter into this Agreement it has not relied on any
representations, warranties or promises (except those set out in this Agreement)
made by or on behalf of the other Parties before the signature of this
Agreement. Each Party
17
waives all rights and remedies which, but for this Section, might otherwise be
available to it in respect of any such representation, warranty or promise,
provided that nothing in this Section shall limit or exclude any liability for
fraud.
Section 10.10 Waiver. A waiver by the Parties of a breach of any
-------
term or condition of this Agreement in any one instance shall be in writing and
shall not be deemed as a continuing waiver or a waiver of any other or
subsequent breach unless the written notice so provides.
Section 10.11 Notices.
-------
(a) The Parties choose the following addresses as the address at which they
will accept service of all documents and notices relating to this Agreement.
to ISC at:
0000 Xxxx Xxxxx Xxx
Xx Xxxxxxx XX 00000
XXX
Fax: x0 000 000 0000
Attention: The General Counsel
to any Unisource Entity at:
c/o Unisource NV
"Transpolis"
Xxxxxxxxxxxxx 00
0000 XX, Xxxxxxxxx
Xxx Xxxxxxxxxxx
Fax: x00 00 000 0000
Attention: The General Counsel
to any AUCS Entity at:
Xxxxxxxxx 0-00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Fax: x00 00 000 0000
Attention: The General Counsel
to Telia at:
Xxxxxxxxxxxxx 00
Xxxxxxxxx
Xxxxxx
18
Fax: x00 00 00 000
Attention: Director of Legal Affairs
To KPN at:
Xxxxxxx 000
0000 XX, Xxx Xxxxx
Xxx Xxxxxxxxxxx
Fax: + 00 00 000 0000
Attention: The General Counsel
To Swisscom at:
Xxxxxxxxxx
Xxxxxxxxxx
XX-0000
Xxxxx, Xxxxxxxxxxx
Fax: + 00 00 000 0000
Attention: Chief Legal Counsel
Any notice to be given by a Party to another Party in terms of this
Agreement shall be given by prepaid registered post, or by facsimile
or shall be delivered by hand; provided that:
--------
(i) any notice given by prepaid registered post for which a
signed receipt is issued shall be deemed to have been received by the addressee,
in the absence of proof to the contrary, ten days after the date of postage;
(ii) any notice delivered by hand during normal business hours
for which a signed receipt is issued shall be deemed to have been received by
the addressee, in the absence of proof to the contrary, at the time of delivery;
and
(iii) any notice given by facsimile shall be deemed to have been
received by the addressee, in the absence of proof to the contrary, immediately
upon the issuance by the transmitting facsimile machine, of a report confirming
correct transmission of all the pages of the document containing the notice or
upon receipt by the transmitting facsimile machine, at the end of the notice
being transmitted, of the automatic answer back of the receiving facsimile
machine.
Section 10.12 Counterparts. This Agreement may be executed in one
-------------
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
Section 10.13 General. Unless expressly provided otherwise, all
-------
representations, warranties, undertakings, covenants, agreements and obligations
made, given or entered into in
19
this Agreement by the Indirect AUCS Stockholders and/or the Unisource Entities
are each made, given or entered into severally by each such entity.
Section 10.14 Filing. Each Party hereto shall use its reasonable
------
efforts to obtain all authorizations, consents, orders and approvals of, to give
all notices to and make all filings with, all governmental authorities and other
third parties that may be or become necessary (or as otherwise agreed by the
Parties) for its execution and delivery of, and performance of its obligations
pursuant to, this Agreement, and each Party will cooperate fully with the other
Parties in promptly seeking to obtain all such authorizations, consents, orders
and approvals, giving such notices, and making such filings (including any
filings to be submitted to the European Commission as a result of this
Agreement). Each Party will bear its own costs, expenses and disbursements in
relation to any and all such costs, expenses and disbursements incurred by it
under this Section 10.14.
ARTICLE XI.
GUARANTEE
Section 11.1 In consideration of ISC entering into this Agreement,
the Indirect AUCS Stockholders (the "Guarantors") hereby severally
----------
unconditionally guarantee to ISC and its successors, transferees and assigns and
to AUCS N.V. the due and punctual performance and observance by the AUCS
Entities and the Unisource Entities of all the AUCS Entities' and the Unisource
Entities' obligations and the punctual discharge by the AUCS Entities and the
Unisource Entities of all the AUCS Entities' and/or the Unisource Entities'
liabilities to Infonet or AUCS N.V. and/or any other Parties contained in or
arising under this Agreement or arising from any termination of this Agreement.
Section 11.2 If any AUCS Entity or Unisource Entity shall make
default in the payment when due of any amount payable to Infonet and/or any
other Party under this Agreement (including any AUCS Entity) or arising from the
termination thereof, the Guarantors shall forthwith on demand by Infonet
unconditionally pay to ISC in the manner prescribed in this Agreement an amount
equal to the amount payable by such AUCS Entity or Unisource Entity.
Section 11.3 As an independent and primary obligation, without
prejudice to Section 11.1, the Guarantors hereby unconditionally and irrevocably
agree to indemnify and keep indemnified ISC against all and any losses, costs,
claims, liabilities, damages, demands and expenses suffered or incurred by ISC
and/or any other Party arising from failure of any AUCS Entity or Unisource
Entity to comply with any of its material obligations or discharge any of its
liabilities under this Agreement or arising from the termination of this
Agreement or by reason of the AUCS Entities or the Unisource Entities not being
at any time, or ceasing to be, liable in respect of the obligations and
liabilities purported to be assumed by them in accordance with the express terms
of this Agreement.
Section 11.4 The guarantee and indemnity contained in this Article
XI shall be a continuing guarantee and indemnity and shall continue in full
force and effect until all liabilities or purported liabilities of the AUCS
Entities and the Unisource Entities arising under, and all monies owing or
payable or purported to be owing or payable by the AUCS Entities or the
Unisource Entities under this Agreement or arising from any termination of this
Agreement, have
20
been paid, discharged or satisfied in full and notwithstanding any insolvency or
winding up of any AUCS Entity or Unisource Entity or any change in the status of
any AUCS Entity or any Unisource Entity.
Section 11.5 The Guarantors shall not be exonerated or discharged
nor shall their liability be affected by any forbearance, whether as to payment,
time, performance or otherwise howsoever, or by any other indulgence being given
to any AUCS Entity or any Unisource Entity or by any variation of the terms of
this Agreement or by any act, thing, omission or means whatever which, but for
this provision, might operate to exonerate or discharge the Guarantors from
their obligations under the guarantee and indemnity contained in this Article
XI.
ARTICLE XII.
GOVERNANCE AND REPORTING
Section 12.1 Supervisory Board. The Supervisory Board of AUCS N.V.
------------------
(the "Supervisory Board") will remain in existence and continue to function
-----------------
during the Term. The approval of the Supervisory Board must be obtained prior to
undertaking any of the actions listed in subparagraphs (a) to (m) below. For the
avoidance of doubt, the list below is a definitive list of all actions requiring
the approval of the Supervisory Board and the approval of the Supervisory Board
or Indirect AUCS Stockholders shall not be required in any other matters. All
governing documents of all AUCS Entities shall be modified accordingly and,
pending such modification, shall be construed in accordance with this Section
12.1 and Section 3.1(b):
(a) the issuance or acquisition of shares or stock and debt instruments issued
by an AUCS Entity or by a general or limited partnership in which an AUCS
Entity is a general partner;
(b) the issuance of depository receipts for shares in the capital stock of any
AUCS Entity;
(c) an application for listing or withdrawal of a listing at a stock exchange
of shares, debentures, bonds and depository receipts of any AUCS Entity;
(d) the commencement or termination of a major long-lasting joint venture or
other revenue-sharing arrangement of the AUCS Entities with another corporation
or partnership (other than Infonet), or participation as a general partner in a
general or limited partnership if this joint venture or other revenue-sharing
arrangement or termination is of major significance to an AUCS Entity.
(e) any acquisition by AUCS N.V. or a subsidiary of a material participation in
another corporation and any significant increase or decrease in any such
participation;
(f) any proposal to make a major amendment to the articles of the AUCS
Entities;
(g) any proposal to dissolve any of the AUCS Entities;
(h) the filing of a petition for bankruptcy of any AUCS Entity or for a
suspension of payments by any AUCS Entity;
21
(i) any proposal to reduce the issued capital of any AUCS Entity;
(j) any proposal to submit the annually-required EU compliance report of AUCS
to the relevant authorities;
(k) any fundamental change in the nature of the business of the AUCS Entities
following the Commencement Date, other than any such changes which contemplated
by the AT&T Exit Obligations, this Agreement or other agreements to which
Infonet and or any AUCS Entity are parties;
(l) the recipient of any payment to be made by ISC in accordance with Section
5.2(b) of this Agreement; and
(m) Capital Expenditures as described in Section 4.2.
Section 12.2 Relationship Management Committee. Unisource and ISC
---------------------------------
shall constitute a committee to act as a forum to discuss issues arising out of
this Agreement and the implementation of its terms (the "Relationship Management
-----------------------
Committee"). For the avoidance of doubt, the Relationship Management Committee
---------
shall not be a decision-making body. The Relationship Management Committee
shall meet not less frequently than once every calendar quarter. The meetings
shall be held at Hoofddorp, The Netherlands or at such other place agreed by the
Relationship Management Committee. At each meeting, representatives of ISC
shall report on their general activities arising out of its obligations under
this Agreement and progress towards reducing the losses of the AUCS Entities.
The Relationship Management Committee shall comprise six persons, three of whom
shall be appointed by ISC and one of whom shall be appointed by each Indirect
AUCS Stockholder. The Chairman shall be one of the ISC appointees (selected by
ISC). Any member of the Relationship Management Committee may call meetings of
the Relationship Management Committee. The quorum required for any meeting of
the Relationship Management Committee shall be four persons present, comprising
not less than two ISC appointees and not less than two Indirect AUCS Stockholder
appointees. Each member of the Relationship Management Committee shall have one
vote on any matter voted on. Decisions shall be taken by simple majority vote.
The Chairman shall not have a second or casting vote. No cumulative voting
shall be permitted. Any member may appoint another member as his alternate to
attend and vote in his place. The Chairman shall keep (or appoint someone to
keep) minutes, tallies of votes and all other records of such meetings.
The Relationship Management Committee shall have non-exclusive
jurisdiction to be consulted with regard to the following matters:
(a) compliance with this Agreement (including without limitation, the
continuity and quality of service relations with AT&T and WorldPartners and
compliance with the AT&T Exit Agreements and the WorldPartners Membership
Agreement);
(b) progress towards targeted loss reductions (including Restructuring Costs);
(c) financial relations between Infonet and the AUCS Entities;
(d) monthly, quarterly and annual financial reporting requirements;
22
(e) tax issues;
(f) liabilities dating from the period prior to the Management Agreement;
(g) services to be provided by the AUCS Entities after mid 2002;
(h) policy on potential termination of loss making services;
(i) branding policies;
(j) regulatory matters;
(k) the Review of Operations and any subsequent material changes to the Review
of Operations;
(l) proposals for the termination of the employment of a significant number of
employees of any AUCS Entity, at the same time or within a short time span;
(m) proposals for a substantial change in the employment conditions of a
significant number of employees of any AUCS Entity;
(n) all other matters which are subject to Supervisory Board approval as set
forth in Section 12.1;
(o) material commitments of the AUCS Entities continuing after June 2002; and
(p) material disputes between AUCS and service providers and with distributors.
Section 12.3 Accounts.
--------
(a) Within 10 working days (or otherwise in accordance with AUCS' historic
practice), following the end of each calendar month during the Term, ISC shall
cause AUCS to prepare and deliver to ISC and Unisource the Management Accounts
for such month and, for information purposes only, budget information, in such
manner and to the same extent as historically provided.
(b) Within 45 working days (or otherwise in accordance with AUCS' historic
practice), following the end of each calendar year, ISC shall cause AUCS to
prepare and deliver to ISC and Unisource Consolidated Financial Statements
audited for Unisource consolidation purposes (to the extent historically done by
AUCS) and a statement of the AUCS Entities' Adjusted EBITDA Losses for such
calendar year. In the event of any dispute between ISC and Unisource as to such
Consolidated Financial Statements or the statement of the AUCS Entities'
Adjusted EBITDA Losses, they shall be subject to the same review, and dispute
resolution procedures set forth in Section 4.1(f).
Section 12.4 Agreements with Infonet. During the Term, Infonet
-----------------------
shall cause the AUCS Entities to implement all agreements with Infonet in
accordance with their terms. Any new agreements entered into between Infonet and
any AUCS Entity during the Term shall be
23
negotiated and entered into on an arms-length basis. Not more than once in any
calendar year, during the Term, Unisource may, at its own cost and expense,
appoint an independent external auditor to perform a review of Infonet's
compliance with this Section 12.4.
Section 12.5 Assistance with Liquidation. If the Review Point is
---------------------------
exceeded and Unisource determines to liquidate the AUCS Entities or if within 30
days following the termination of this Agreement for any reason Unisource
decides to liquidate the AUCS Entities on a solvent basis, Unisource shall have
the right to request and upon such request ISC shall provide management support
to the AUCS Entities in connection with such liquidation, subject to the Parties
agreeing reasonably acceptable terms, including appropriate payment and
indemnification terms. Infonet shall be not liable for and shall be fully
indemnified against, all costs and expenses of liquidation and all liabilities
of the AUCS Entities and the Unisource Entities and all liabilities of Infonet
incurred in connection therewith.
[signature pages follow]
24
SIGNED this 30th day of September, 1999.
For and on behalf of ISC
INFONET SERVICES CORPORATION
By: __________________________
Title: __________________________
For and on behalf of AUCS
AUCS COMMUNICATIONS SERVICES v.o.f., represented by AUCS N.V.
By: __________________________
Title: __________________________
For and on behalf of AUCS N.V.
AUCS COMMUNICATIONS SERVICES N.V.
By: __________________________
Title: __________________________
For and on behalf of UPES
UNISOURCE PAN-EUROPEAN SERVICES B.V.
By: __________________________
Title: __________________________
For and on behalf of Unisource N.V.
UNISOURCE N.V.
By: __________________________
Title: __________________________
For and on behalf of Unisource Nominee
BRIAP B.V.
By: __________________________
Title: __________________________
25
For and on behalf of Telia
TELIA AB
By: __________________________
Title: __________________________
For and on behalf of KPN
KPN TELECOM B.V.
By: __________________________
Title: __________________________
For and on behalf of Swisscom
SWISSCOM AG
By: __________________________
Title: __________________________
26
Schedule 1.1
------------
"Affiliate" means (i) ISC, (ii) each current or future
corporation or entity owned or under the Control
of ISC, (iii) any of ISC's current or future
subsidiaries, (iv) any current or future
corporate entity (or subsidiary thereof) whose
primary business is to conduct data
communications or other related activities, and
such entity has entered into a legal relationship
with ISC or any of its Affiliates whereby such
corporation has the right to conduct business
under the trademark and tradename of "Infonet"
and which entities as of the Commencement Date
are listed in Schedule B, as it may be amended
from time to time by ISC upon notice to Unisource
and consent of Unisource which will not be
unreasonably withheld or delayed.
"Arbitration Rules" means the rules of the LCIA in accordance with
which any LCIA arbitration will be conducted, or
such amended rules as the LCIA may have adopted
hereafter to take effect before the commencement
of the arbitration
"AT&T" means AT&T Pan-European Services Inc. and, where
the context permits, AT&T Corporation and any of
its subsidiaries.
"AT&T Exit Agreements" means the Framework Agreement entered into
between the AUCS Entities, UPES, Unisource and
various AT&T entities, dated May 29, 1999
including all the various ancillary documents set
out as schedules to that Framework Agreement, to
the extent disclosed to ISC by Unisource (for the
avoidance of doubt, section 6 and related
schedules of the Framework Agreement and certain
other pricing and financial information were not
disclosed by Unisource to ISC), true and correct
copies of all of which have been delivered to ISC
which documents are listed at Schedule A.
"AT&T Exit Obligations" means liabilities, losses, costs and expenses
arising pursuant to the terms of the AT&T Exit
Agreements during the Initial Term only but
excluding, for the avoidance of doubt, any of
such liabilities, losses, costs and expenses
(whether actual or contingent) which have arisen
at any time prior to commencement of the Term,
including those reflected in the Commencement
Date Financial Statements, or, for the avoidance
of doubt, any matters relating to non-disclosed
items in the AT&T Exit Agreements.
i
"AUCS Entities' EBITDA means the negative consolidated net earnings of
Losses" the AUCS Entities from ordinary activities
(including the AT&T Exit Obligations) before
interest income and expense, taxation,
depreciation and amortization for the relevant
period as presented in the Management Accounts or
the Consolidated Financial Statements but
excluding the Management Fee, any Restructuring
Costs and any Liquidation Costs.
"AUCS Entities' Adjusted means the AUCS Entities' EBITDA Losses plus the
EBITDA Losses" Management Fee. For the avoidance of doubt, any
liabilities of the AUCS Entities arising prior to
the Commencement Date of this Agreement including
those reflected in the Commencement Date
Financial Statements, shall not be included.
"Commencement Date" means October 1, 1999, 00:01am.
"Consolidated Financial means, with respect to any period and as of any
Statements" date, consolidated financial statements of the
AUCS Entities including an income statement, a
statement of source and use of funds and a
balance sheet all prepared in accordance with
Dutch GAAP.
"Control" means in relation to a body corporate, the power
of a person to secure that its affairs are
conducted in accordance with the wishes of that
person:
(a) by means of the holding of shares or the
possession of voting power in or in relation to
that or any other body corporate; or
(b) by virtue of any powers conferred by the
articles of association or any other document
regulating that or any other body corporate, and,
in relation to a partnership, means the right to
a share of more than one half the assets, or of
more than one half of the income, of the
partnership;
"Dutch GAAP" means Netherlands generally accepted accounting
principles as consistently applied by Unisource
in respect of AUCS.
"Encumbrance" means any interest or equity of any person other
than ISC (including any right to acquire, option
or right of pre-emption) or any mortgage, charge,
pledge, lien, assignment, hypothecation, security
interest, title, retention or any other security
agreement or arrangement.
ii
"Liquidation Costs" means any and all liabilities (whether absolute
or contingent accrued or unaccrued or otherwise)
incurred by any AUCS Entity, or Infonet on its
behalf, during the Initial Term in connection
with the winding up or liquidation of any or all
AUCS Entities including, without limitation,
settlement of all outstanding liabilities,
resulting severance costs, the fees, costs,
disbursements and expenses of any liquidators in
any jurisdiction, court fees, taxes and all
legal, accounting, consulting and other directly
allocable fees, costs, disbursements and expenses
of any AUCS Entity or, Infonet on its behalf.
"Losses" means any and all liabilities, damages, costs and
expenses (including, without limitation, counsel
fees and expenses).
"Management Accounts" means monthly and quarterly consolidated income
statements and a balance sheet and a statement of
the source and use of funds of the AUCS Entities
prepared in accordance with Dutch GAAP, except
for the absence of year-end adjustments and
footnotes and accompanied, during the Initial
Term by AUCS' best estimate of the AUCS Entities'
Adjusted EBITDA Losses as of the date of such
Management Accounts.
iii
"Restructuring Costs" means any and all costs incurred by AUCS, or by
Infonet on behalf of the AUCS Entities, in
connection with the restructuring of the AUCS
Entities, during the Initial Term for:
(i) the lawful termination of employment of
work or services by workers or employees;
(ii) early termination or related exit costs
related to any consultant contract;
(iii) early termination or related exit costs
related to maintenance contracts;
(iv) early termination or related exit costs
related to RTU/MSE, SA 1.x contracts
(RTU/MSE, SA 1.x as currently defined and
classified in the AUCS accounting records);
(v) early termination or related exit costs
related to facility related contracts;
(vi) early termination or related exit costs of
Direct Backbone related contracts (Direct
Backbone as currently defined and
classified in the AUCS accounting records).
Without limitation such costs include:
leased lines, capacity contracts, dial in
rotaries, and volume or growth commitments.
For the purposes of this definition all of (i)
through (vi) shall:
(a) without limitation include all reasonable
external legal, accounting, consulting
costs and reasonable out-of-pocket
expenses, incurred by any AUCS Entity, or
by Infonet on behalf of AUCS, in connection
with the restructuring of the AUCS
Entities;
(b) be applicable for any AUCS Entity;
(c) in cases where Infonet incurs costs on
behalf of AUCS, require pre-approval by the
AUCS daily management.
"Term" means the period from the Commencement Date
through the Termination Date.
"Termination Date means 11:59p.m., Greenwich Mean Time on the third
anniversary of the Commencement Date or, where
the term of the Agreement has been extended
beyond the Initial Term, 11:59p.m., Greenwich
Mean Time on the date upon which such extension
would otherwise expire.
"VAT" means Value Added Tax or any similar tax from
time to time replacing it or performing a similar
fiscal function.
iv
"WorldPartners Membership means (i) the WorldPartners Association
Agreements" Membership Agreement between WorldPartners Company
and Unisource N.V. dated 30 September 1994, and
(ii) the WorldPartners Association membership
Agreement between AT&T Communications (UK) Ltd.
and WorldPartners Company dated 21 October 1994,
which membership was transferred to AUCS on or
about 25 October 1996 and whereby AUCS became the
WorldPartners Association Member for Europe, but
only to the extent that true and correct copies of
which have been delivered to ISC.
The capitalized terms listed below shall have the meanings given to them in the
sections of this Agreement cross referenced below:
"Accountants" shall have the meaning set forth in Section
4.1(f);
"Agreement" shall have the meaning set forth in the
Introduction;
"Arbitrators" shall have the meaning set forth in Section
10.2(c);
"AT&T Exit" shall have the meaning set forth in the Recitals;
"AUCS" shall have the meaning set forth in the
Introduction;
"AUCS Entity" and "AUCS Entities" shall have the meanings set
forth in the Introduction;
"AUCS Indemnified Party" or "AUCS Indemnified Parties" shall have the
meaning set forth in Section 9.3;
"AUCS N.V." shall have the meaning set forth in the
Introduction;
"Capital Expenditure" shall have the meaning set forth in Section
4.2(a);
"Closing Date Financial shall have the meaning set forth in Section 5.2;
Statements"
"Commencement Date shall have the meaning set forth in Section
Financial Statements" 4.1(f);
"Confidential Information" shall have the meaning set forth in Section 8.1;
"Contract Services" shall have the meaning set forth in the Recitals;
v
"Disclosing Party" shall have the meaning set forth in Section 8.1;
"Funding Requirements" shall have the meaning set forth in Section 4.1;
"Guarantors" shall have the meaning set forth in Section 11.1;
"Incentive Target" shall have the meaning set forth in Section 5.2;
"Indemnifying Party" shall have the meaning set forth in Section 9.4;
"Indirect AUCS shall have the meaning set forth in the
Stockholders" Introduction;
"Infonet" shall have the meaning set forth in the
Introduction;
"Initial Term" shall have the meaning set forth in Section 2.1;
"ISC" shall have the meaning set forth in the
Introduction;
"ISC Indemnified Party" or shall have the meaning set forth in Section
"ISC Indemnified Parties" 9.2(a);
"KPN" shall have the meaning set forth in the
Introduction;
"LCIA" shall have the meaning set forth in Section
10.3(b);
"Letters of Credit" shall have the meaning set forth in Section
5.3(a);
"Management Fee" shall have the meaning set forth in Section 5.1;
"Party" and "Parties" shall have the meanings set forth in the
Introduction;
"Proceedings" shall have the meaning set forth in Section 8.2;
"Relationship Management shall have the meaning set forth in Section 12.2;
Committee"
"Review of Operations" shall have the meaning set forth in Section
3.1(f);
"Review Point" shall have the meaning set forth in Section
4.1(b);
"Supervisory Board" shall have the meaning set forth in Section 12.1;
"Swisscom" shall have the meaning set forth in the
Introduction;
"Telia" shall have the meaning set forth in the
Introduction;
vi
"Unisource" shall have the meaning set forth in the
Introduction;
"Unisource Entities" shall have the meaning set forth in the
Introduction;
"Unisource Nominee" shall have the meaning set forth in the
Introduction; and
"UPES" shall have the meaning set forth in the
Introduction.
vii
Schedule A: AT&T Exit Documents
-------------------------------
1. Framework Agreement between AT&T Corp., AT&T Pan-European Services Inc.,
Unisource N.V., Unisource Pan-European Service B.V., AUCS v.o.f., and AUCS
N.V. date 29 May 1999.
2. Easylink Business Transfer Agreement between AUCS v.o.f., AUCS (UK) Limited,
AT&T Easylink Services (UK) Limited and AT&T Global Communications Services
Inc. dated 22 May 1999 and attached to the Framework Agreement as Schedule
4.1.1.
3. Easylink Transition Services Agreement between AUCS v.o.f. and AT&T Easylink
Services (UK) Limited dated 22 May 1999 and attached to the Framework
Agreement as Schedule 4.1.2.
4. Continental Asset Transfer Agreement between AT&T Communications Services
Inc. and AUC v.o.f dated 29 May 1999 and attached to the Framework Agreement
as Schedule 4.2(a).
5. Italian X.25 Transfer Agreement between AT&T Communications Services Italia
SpA and AUCS (Italia) SpA dated 29 May 1999 and attached to the Framework
Agreement as Schedule 4.2(b).
6. Continental Access Circuits Transfer Agreement between AT&T GME and AUCS
v.o.f dated 29 May 1999 and attached to the Framework Agreement as Schedule
4.2(c).
7. UK Stratacom Asset Transfer Agreement between AT&T UK and AUCS v.o.f date 29
May 1999 and attached to the Framework Agreement as Schedule 4.2(d).
8. X.25 Outsourcing Service Agreement between AT&T GME and AUCS v.o.f dated 29
May 1999 and attached to the Frame work Agreement as Schedule 4.2(e).
9. Redditch CDC Lease Agreement between AT&T ISTEL and AUCS v.o.f dated 29 May
1999 and attached to the Framework Agreement as Schedule 4.2(f).
10. Redditch GNMC Telehousing Agreement between AT&T UK and AUCS v.o.f dated 29
May 1999 and attached to the Framework Agreement as Schedule 4.2(g).
11. Summit House Telehousing Agreement between AT&T UK and AUCS v.o.f dated 29
May 1999 and attached to the Framework Agreement as Schedule 4.2(h).
12. Amsterdam Telehousing Agreement between AT&T Communications Services
Nederland B.V. and AUCS v.o.f dated 29 May 1999 and attached to the
Framework Agreement as Schedule 4.2(i).
13. Voice Service Provider Agreement between AT&T UK and AUCS v.o.f dated 29
May 1999 and attached to the Framework Agreement as Schedule 4.2(j).
viii
14. Data Service Provider Agreement between AT&T UK and AUCS v.o.f dated 29 May
1999 and attached to the Framework Agreement as Schedule 4.2(k).
15. Interconnect Service Amendment Agreement between AT&T UK and AUCS v.o.f
dated 29 May 1999 and attached to the Framework Agreement as Schedule
4.2(l).
16. Wholesale Services Agreement between AT&T GME and AUCS v.o.f dated 29 May
1999 and attached to the Framework Agreement as Schedule 4.2(m).
17. Worldsource Channel Amendment Agreement between AT&T UK, AT&T GME and AUCS
v.o.f dated 29 May 1999 and attached to the Framework Agreement as Schedule
4.2(n).
18. AT&T UK Distribution Agreement between AT&T UK and AUCS v.o.f dated 29 May
1999 and attached to the Framework Agreement as Schedule 4.2(o).
ix
Schedule B: Affiliates
----------------------
SEDCO
Infonet Australia
Datakom Austria GmbH
Infonet Belgium S.A
Datacom, S.A.
Interpac Telematica Ltda
Infonet Canada
Infonet Software Solutions
Infonet Chile S.A.
Infonet Services Corporation
Infonet/China Ltd
Enterprise Ltda
Tecapro
Aliatel a.s.
Telecom Denmark Erhverv A/S
Codetel
DATCOM LTD.
InTouch Communications Services
Oy Infonet Finland
Infonet France S.A.
France Telecom Interpac S.A.
Infonet Network Services Deutschland GmbH.
OTE SA
Infonet - Hong Kong
BankNet Ltd.
PT Telekominukasi Indonesia
Infonet Ireland Ltd
Infonet Israel, Ltd
Infonet Italia S.p.A
KDD Communications, Inc. (KCOM)
Korea Telecom, Data Division
x
InfoGlobe Corporation
Infonet Luxembourg SA
Telecom Malaysia Berhard
Infonet/ACASIA program office
Infonet Mexico
Infonet Nederland BV
Infonet TELECOM AS
CCNet S.A.
Philippines Long Distance Telephone
PLDT Marketing Center
Infonet Portugal
Telefonica Large Distancla
INFOCOM
Singapore Telecom Int'l PTE, Ltd
EDS South Africa (Pty) Limited
Telefonica Servicios SA (TSA1)
Lanka Communication Services Pte. Ltd.
Infonet Svenska AB
Infonet (Switzerland) Ltd.
Hong Kong Telecom Ltd
SIAM Infor Tel Co., Ltd
ACCESS A.S
Infonet UK, Ltd
Infonet Software Solutions, Ltd
Infocom GmbH
Setradat C.A.
xi
Schedule C
----------
The Commencement Date Financial Statements will be prepared by AUCS in
accordance with Dutch GAAP and shall take account of the following principles
(providing they are not in conflict with Dutch GAAP, except in the case of
principle 2 below):
1. that the going concern principle will apply;
2. that no provisions will be made for obligations arising out of the AT&T Exit
relating to events occurring after the Commencement Date; provided that the
AT&T Exit is in itself not considered as such an event (if this principle 2
is in conflict with Dutch GAAP, the intent of the Parties expressed in this
Schedule C will prevail with regard to determining the provisions to be
taken into account when calculating the Incentive Target, any incentive
payment payable pursuant to Section 5.2(a), any rebate of the Management Fee
pursuant to Section 5.2(b), and the Review Point);
3. that no accruals or provisions will be made for inter alia, rightsizing,
restructuring and reorganization of the business operations of AUCS not
incurred as of the Commencement Date;
4. Where normal invoicing and payment procedures are not followed by
distributors and service providers of the AUCS Entities, revenues from such
distributors and expenses resulting from payments to such service providers
shall be based on full and final settlements agreed with such distributors
or service providers.
xii
Exhibit 3.3(f)
--------------
DRAFT AUCS & INFONET IMPLEMENTATION PLAN
----------------------------------------
AND DRAFT AUCS SOCIAL PLAN OUTLINE
----------------------------------
xiii
AUCS & INFONET IMPLEMENTATION PLAN
DRAFT
1. Summary
-------
Infonet plans to undertake a review of all AUCS operations over the first 90
days in order to formulate a business plan to meet the objectives agreed with
KPN, Swisscom and Telia. During this review period Infonet proposes regular
consultation and meetings with the Works Council so that there will be ongoing
input in the decision process. After this review period Infonet will then
implement the plan.
2. Consulting and Planning Phase
-----------------------------
2.1. General
-------
Although as a result of the due diligence effort and our long standing business
relationship, Infonet has a general understanding of the AUCS organization and
product offering, Infonet also knows that such general knowledge is not a
sufficient base to formulate a sound and detailed enough business plan.
As such Infonet plans to do a detailed on-site review of the total AUCS
organization during Step 1 of the initial phase. This Step 1 is planned to take
up to 60 days.
Step 2 of this initial phase will be the preparation for implementation of the
business plan. This Step 2 is planned to take up to an additional 30 days.
It is planned that during this initial phase there will be a consulting process
with the Works Council at least on a monthly base.
2.2. Step 1 (Day 1 - Day 60)
-----------------------
2.2.1. Initial Staff update and ongoing information
On Day 1 it is planned to call a plenary meeting of all AUCS staff in order to
present Infonet, its senior management and to explain the agreements reached and
the general planning as outlined in this document.
The Infonet management team that will be involved on site during this initial
review will be presented as well as their general areas of responsibility.
It will be announced that after the initial Consulting and Planning Phase a new
plenary meeting will be held where the general vision and outline of the
business plan will be announced.
The name of a contact person will be provided to whom any questions can be
directed during this period that relate to a better understanding of the process
or the agreements made.
xiv
2.2.2. AUCS management team
As early as possible in the process the onsite Infonet management team will do a
joint planning session with the AUCS management team on how best to understand
the organization, processes, products, current and planned activities.
As part of this process an inventory will be made of the non-standard ongoing
projects and priorities will be assigned taking into account the known synergies
between the companies and the knowledge that Infonet can bring to these
projects.
Also as part of this process it will be clarified in more detail what member of
the Infonet team will review and be involved in what part of the AUCS functional
organization. Once this is defined the members of the respective AUCS
functional teams will be informed.
2.2.3. Functional Organization Review
Once the teams are informed, the Infonet member will work with the staff
involved to understand the way their line of business is currently operating.
During this process it is planned that all staff members will have the
opportunity to meet and explain their current assignments, other interests and
ideas.
2.2.4. Business Plan Preparation
Whilst individual functional business plans will be created as a result of these
reviews there will be a constant feedback to the senior management planning team
that will review this ongoing input and provide a cross functional view leading
to a joint business plan.
It is planned to have a first outline plan ready after 30 days, followed by
weekly revisions afterwards, resulting in a final plan after 60 days.
2.2.5. Works Council Consultation
It is planned to inform and review the first outline plan (i.e. after 30 days)
with the Works Council and get their input as part of the ongoing planning
process.
The Works Council will also be consulted at the end of the week before the final
plan.
Upon finalization of the plan, the Works Council will be informed and planning
will be done for the joint responsibilities during Step 2 of the initial phase.
It is understood that if during this period substantial changes have to be made
to this Implementation Plan the Works Council shall be consulted as soon as
practical possible.
xv
2.2.6. Administration and Billing
As a result of the agreements that will be in place, certain changes will be
required with respect to the billing structure as well as some additional
reporting requirements. These will be addressed and start implementation as
soon as possible in the process.
2.3. Step 2 (Day 61 - Day 90)
------------------------
The management teams will during this period start the implementation planning
for the business plan.
In as far as the result of the business plan shows an overstaffing in certain
areas, the management team will work together with the Works Council to prepare
a fair Social Plan - a draft outline was on request of the AUCS senior
management already prepared at this stage.
2.4. Staff Information
-----------------
As announced during the first plenary meeting a new meeting will be organized
and the outline and main ideas of the business plan will be presented to all
staff.
The name of a contact person will also be provided to whom additional questions
can be raised during the days following this meeting.
3. Implementation Phase
--------------------
All staff will now start towards the implementation of the business plan.
Performance against plan will be measured on a monthly base and at least on a
quarterly base be communicated to the staff.
4. Business Plan Review
--------------------
It is planned to review the Business Plan at least every 6 months in order to
update it to the then current situation. The Works Council will be informed of
such updates and consulted in case this should result in major changes.
5. Open Door Policy and Infonet Priorities
---------------------------------------
It will be made clear as of day one that the Infonet management style is a very
similar hands on open door approach. Infonet is always looking for ideas,
suggestions, and comments and will share information as much as possible.
xvi
The priorities as communicated by Infonet senior management to its staff since
years are:
. Meet financial and operational commitments on a consistent basis.
. Increase pretax margins to the level of profitability to fuel future
growth.
. Provide a customer perceived level of service that is unmatched in our
industry.
. Establish a customer oriented working climate that supports risk taking,
creativity, fairness, team spirit and mutual respect.
. Attract, train and retain top quality personnel.
. Provide the opportunity for stable employment through the steady growth
of the company.
This document has been prepared in connection with a proposed
transaction between Infonet and AUCS. Although it has been prepared in good
faith and is indicative of the current thinking, it is not a legally binding
document and is subject to review and amendment. Accordingly, none of
Unisource, AUCS or Infonet can accept any liability to any person in connection
with this document or its contents.
xvii
AUCS SOCIAL PLAN OUTLINE
Draft
1. General
-------
Although the business planning as defined in the AUCS & INFONET Implementation
Plan will first need to be conducted, it is acknowledged that the restructuring
as a result of the proposed transaction may result in redundancies.
Although management does not know if and what the redundancies will be, nor the
re-employment possibilities, it does understand the potential concerns and would
like to share its current thinking in order to confirm, that in such case this
will be handled professional and in a spirit of mutual respect.
As indicated in the Implementation Plan there will be regular consultation with
the Works Council and if such case should arise a detailed Social Plan will be
developed and reviewed.
The following represents the basic provisions that are seen at this stage.
2. Basic Provisions
----------------
. If appropriate, staff will be reassigned between AUCS functional
organizations.
. In case this is not appropriate, assignment within KPN, Telia, Swisscom,
Infonet or an affiliated company will be explored.
. In case this is not appropriate an outplacement program will be considered
and developed.
. In case staff is not covered by any of the above, fair redundancy
arrangements will be made in line with the jurisdictions in force.
3. Guidance and Monitoring
-----------------------
Professional local advisor will in such case, in addition to the consultations
with the Works Council, be used to advise management on the correct legal and HR
procedures as well as the content of the social plan.
Management envisages that, during a to be agreed upon time, resources would be
made available to provide guidance and consultancy to staff affected.
This document has been prepared in connection with a proposed
transaction between Infonet and AUCS. Although it has been prepared in good
faith and is indicative of the current thinking, it is not a legally binding
document and is subject to review and amendment. Accordingly, none of
Unisource, AUCS or Infonet can accept any liability to any person in connection
with this document or its contents.
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