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EXHIBIT 10.3
NEW YORK SWITCH
DATED 11 NOVEMBER 1999
WORLDPORT COMMUNICATIONS INC.(1)
UNISOURCE CARRIER SERVICE USA, INC.
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE
DMS GSP US INTERNATIONAL GATEWAY SWITCHES
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DATE 11 NOVEMBER 1999
PARTIES
(1) WORLDPORT COMMUNICATIONS INC, incorporated in the State of Delaware
whose principal executive offices are at 0000 Xxxxxxx Xxxxx Xxxxxxxxxx, Xxxxx
0000 Xxxxxxxx, Xxxxxxx 30144, United States of America ("VENDOR"); and
(2) Unisource Carrier Service USA, Inc. a corporation incorporated in
Delaware ("PURCHASER")
INTRODUCTION
(A) The Vendor has agreed to dispose of its interest in the DMS GSP US
international gateway switch together with the benefit of certain contracts to
the Purchaser on the terms of this agreement.
(B) Simultaneously with the disposal of the DMS GSP US international
gateway switch, together with the benefit of certain contracts, the Vendor has
agreed to sell to the Purchaser's ultimate holding company, Energis plc, the
Vendor's holding of shares in WorldPort Communications Europe Holding BV.
OPERATIVE PROVISIONS
1 INTERPRETATION
1.1 In this Agreement (including the Introduction and the Schedules),
except where a different interpretation is necessary in the context, the
following words and expressions shall have the following meanings:
"ASSETS" the Contracts and the US Switch;
"COMPLETION" completion of this Agreement pursuant to the terms
of clause 4;
"COMPLETION" DATE" the date five business days after the
satisfaction of the conditions set out in clause 2
or such other date as may be agreed between the
parties;
"COMPLETION NET ASSETS
STATEMENT" the statements showing the Net Assets as at
Completion as prepared and adjusted in accordance
with clause 10 of this Agreement
"CONSIDERATION" the consideration payable in accordance with clause
4 as adjusted in accordance with clause 10;
"CONTRACTS" the agreements referred to in the Schedule 1 to
this Agreement;
"ENCUMBRANCES" any option, right to acquire, mortgage, charge,
pledge, liens or agreement for payment on deferred
terms, retention of title, judgment or other
security, encumbrance or equity whatsoever
"ENERGIS PLC" Energis plc whose registered office is at
Carmelite, 00 Xxxxxxxx Xxxxxxxxxx, Xxxxxx, XX0X
XXX;
"GLOBAL CROSSING AGREEMENT" the Global Crossing Agreement in the agreed form;
"INTELLECTUAL PROPERTY
RIGHTS" patents, trade marks, service marks, trade names,
domain names, registered designs, designs,
semiconductor topography rights, database rights,
copyrights and other forms of intellectual or
industrial property (in each case in any part of
the world, whether or not registered or
registrable), know-how, inventions, formulae,
confidential or secret processes and information,
rights in computer software, and any other
protected rights and assets, and any licenses and
permissions in connection with the foregoing
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"NET ASSETS" the net book value of the Assets less the net
present value of lease obligations relating to the
Assets
"NET ASSETS SCHEDULE" Schedule 5 setting out the Net Assets relating to
the US Switch
"PURCHASER'S AUDITORS" PriceWaterhouseCoopers of 0 Xxxxxxxxxx Xxxxx,
Xxxxxx XX0X 0XX
"US GAAP" United States Generally Accepted Accounting
Principles
"UK SWITCH AGREEMENT" the agreement in the agreed form of even date made
between the Vendor and WCL for the sale and
purchase of a Nortel 250 Switch
"US SWITCH" the DMS GSP US international gateway switch leased
by the Vendor located at 000 0xx Xxxxxx, Xxx Xxxx
Xxxx, Xxx Xxxx, XXX with 728 ports and an
approximate capacity of 164 million minutes per
month, further details of which are set out in
Schedule 2 to this Agreement
"VENDOR'S AUDITORS" the auditors of the Vendor from time to time
"VENDOR'S SOLICITORS" Rakisons, Xxxxxxxx Xxxxx, 00/00 Xxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX
"WCEH" WorldPort Communications Europe Holding B.V. having
its statutory seat in Rotterdam The Hague
"WCEH SHARE AGREEMENT" the agreement in the agreed form of even date made
between WorldPort, the Vendor and Energis plc
whereby WorldPort agrees to sell 85% of the issued
share capital of WCEH
"WCL" WorldPort Communications Limited
"WCL SHARE AGREEMENT" the agreement in the agreed form of even date made
between the Vendor and Energis plc whereby the
Vendor agrees to sell the entire issued share
capital of WCL
"WORLDPORT" WorldPort International Inc, incorporated in the
State of Delaware whose principal executive offices
are 0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000, Xxxxxx Xxxxxx of America
"YEAR 2000 COMPLIANT" neither the performance nor the functionality of
assets when in normal use will be materially
impaired by the advent of the Year 2000 and in
particular:
(a) Year 2000 Compliant shall mean that no value
for current date will cause any interruption or
error in the option of the assets;
(b) all manipulations of time-related data by the
assets will produce the desired results for all
valid date values prior to, through and beyond
the Year 2000;
(c) date elements in these products (including
interfaces and data storage) will permit
specifying the century to eliminate date
ambiguity without human intervention including
leap year calculations; and
(d) where any data element is represented without a
century, the correct century shall be
unambiguous for all manipulations involving
that element
1.2 References to the parties or clauses or Schedules are references to the
parties and clauses of or Schedules to this Agreement.
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1.3 Headings to clauses are for information only and shall not form part of
the operative provisions of this Agreement.
2 CONDITIONS PRECEDENT
2.1 This agreement shall be subject to the fulfilment at or prior to the
Completion Date of each of the following conditions (unless waived by each of
the parties):
(a) this agreement and the other transactions contemplated shall have
been approved and adopted by the requisite vote of the shareholders of the
Vendor; and
(b) the completion of the WCEH Share Agreement with the Purchaser.
2.2 The obligations of the Purchaser to complete the transactions
contemplated is subject to the fulfilment of all of the following conditions on
or prior to the Completion Date:
(a) each and every warranty made by the Vendor shall have been true
and correct in all material respects when made and shall be true and
correct in all material respects as if originally made on and as at the
Completion Date except to the extent that such warranties are not true and
correct in all material respects as a result of:
(i) an event or occurrence outside the control of the Vendor
occurring during the period from the execution of this Agreement until
the Completion Date;
(ii) any act or omission of the Purchaser during the period from
the execution of this Agreement until the Completion Date; and
(iii) any action taken by the Vendor in the ordinary cause of
duress during the period from the execution of this Agreement until the
Completion Date; and
(b) the Vendor shall have executed or procured on terms reasonably
satisfactory to the Purchaser an agreement in writing granting to the
Purchaser access to the US Switch.
3 SALE AND PURCHASE OF THE ASSETS
3.1 The Vendor shall sell with full title guarantee and the Purchaser shall
purchase all rights, title and interest of the Vendor in and to the Assets
subject only to the terms of and the obligations under the Contracts and
otherwise free and clear of Encumbrances.
3.2 Risk in the US Switch shall pass to the Purchaser with effect from the
close of business on the Completion Date.
4 CONSIDERATION PAYABLE BY THE PURCHASER
4.1 The total purchase consideration payable by the Purchaser to acquire
the Assets shall be US$1,990,000 (subject to adjustment as provided in clause
10).
4.2 All sums payable by the Purchaser in respect of the Consideration shall
be paid in cash at Completion.
4.3 Schedule 3 sets out the calculation of the various payments to be made
pursuant to this Agreement.
4.4 Schedule 4 sets out the calculation of the Consideration to the Vendor
pursuant to this Agreement.
4.5 Schedule 5 sets out a statement of net assets in relation to this
Agreement.
5 COMPLETION
5.1 Completion of the sale and purchase of the Assets shall take place on
the Completion Date at the offices of the Vendor's Solicitors or at such other
place as may be mutually agreed.
5.2 Upon and after Completion the Vendor shall (subject to the terms of
this Agreement) do and execute all other necessary acts, deeds, documents and
things within its power effectively to vest the Assets in
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the Purchaser and, pending the doing and executing of such acts, deeds,
documents and things the Vendor shall hold the legal estate in such Assets in
trust for the Purchaser.
6 THE CONTRACTS
6.1 With effect from the Completion Date the Purchaser shall be entitled to
all the benefits of the Vendor under, and will perform all the obligations and
liabilities arising under the Contracts.
6.2 The Vendor and the Purchaser shall prior to Completion each negotiate
in good faith with the counterparty to each of the Contracts for the novation of
each of the Contracts for nil consideration and on terms whereby the Purchaser
undertakes to perform each Contract and to be bound by all the terms thereof as
if the Purchaser was as from the Completion Date party thereto in lieu of the
Vendor and whereby each Contractor releases and discharges the Vendor from all
claims and demands whatsoever in respect thereof arising after the Completion
Date and whereby the Contractors accept the liability of the Purchaser in lieu
of the liability of the Vendor in every way as if the Purchaser was named
therein as party thereto in place of the Vendor as from the Completion Date.
6.3 If a counterparty does not agree to enter into a novation agreement in
respect of a Contract, the Vendor and the Purchaser shall, prior to Completion,
each enter into such documentation as shall be required to assign the benefit
(subject to the burden) of those of the Contracts for which a deed of novation
is not entered into, by virtue of which the Purchaser undertakes to perform such
Contracts and to be bound by all the terms thereof with effect from the
Completion Date.
6.4 In any case where the consent of a counterparty is required to the
assignment from the Vendor to the Purchaser of any Contract, and such consent
has not been duly obtained, the assignment of that Contract shall be conditional
upon such consent and, pending the grant of such consent, the Vendor shall hold
its rights under the relevant Contract on trust for the Purchaser.
6.5 Whether or not any novation agreement is entered into, the Vendor shall
indemnify the Purchaser on a full indemnity basis from and against all costs,
claims, proceedings and demands (whether in contract or in tort or otherwise)
arising in respect of any period before the Completion Date in connection with
the Assets.
6.6 Subject to clause 6.4, whether or not any novation agreement is entered
into, the Purchaser shall indemnify the Vendor on a full indemnity basis from
and against all costs, claims, proceedings and demands (whether in contract or
in tort or otherwise) arising in respect of any period after the Completion Date
in connection with the Assets.
7 WARRANTIES
7.1 The Vendor warrants to the Purchaser as follows:
(a)(i) that the Purchaser shall acquire the Assets free from all
Encumbrances, subject only to the Contracts;
(ii) that the US Switch as of the Completion Date complies with all
material statutory requirements and regulations relating to its
operation;
(iii) so far as the Vendor is aware use of the US Switch by or on
behalf of the Purchaser will not infringe the Intellectual Property
Rights of any third party;
(iv) the US Switch is Year 2000 Compliant; and
(v) the Contracts are true, complete and accurate in all material
respects and are in full force and effect and that no written notice of
termination or alleging breach has been received by the Vendor;
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(b) that discussions have taken place with Xxxxxxxx XxXxxxxx
Associates, Inc ("FMA") and Comdisco, pursuant to which FMA and Comdisco
have indicated to the Vendor that they will consider the sale and/or lease
of the US Switch to interested parties and the novation of relevant
Contracts under mutually agreeable terms and conditions.
8 ANNOUNCEMENTS
8.1 No announcement of any kind shall be made in respect of the subject
matter of this Agreement except as specifically agreed between the Vendor and
the Purchaser or as required by law.
8.2 Notwithstanding clause 8.1, the Vendor and the Purchaser shall procure
as soon as practicable after Completion that appropriate notices are given to
each Contractor of the assignment or proposed novation of each relevant Contract
by the Vendor to the Purchaser.
9 GENERAL PROVISIONS
9.1 Either party may at its absolute discretion in whole or in part
release, compound or compromise, or grant time or indulgence to the other party
for any liability under this Agreement without affecting its rights against the
other party under the same or any other liability.
9.2 No party shall, prior to Completion, divulge to any third party (other
than their respective professional advisers) the fact that this Agreement has
been entered into or any information regarding its terms or any matters
contemplated by this transaction or make any announcement relating to it without
the prior written consent of the other party.
9.3 The express or implied waiver by any party of any of its rights under
this Agreement shall constitute neither a continuing waiver of the right waived
nor a waiver of any other right under this Agreement.
9.4 Nothing in this Agreement shall constitute or be deemed to constitute a
partnership between the parties.
9.5 This Agreement is personal to the parties and shall not be capable of
assignment without the prior written consent of the other party (such consent
not to be unreasonably withheld).
9.6 If any provision of this Agreement is held to be invalid or
unenforceable, then such provision shall (so far as it is invalid or
unenforceable) be given no effect and shall be deemed not to be included in this
Agreement but without invalidating any of the remaining provisions of this
Agreement.
9.7 Any notices must be in writing and may be given to either party at its
registered office or to such other address as may have been notified to the
other parties and will be effectively served:
(a) on the day of receipt where any hand-delivered letter, telex or
telefax message is received on a business day before or during normal
working hours;
(b) on the following business day, where any hand-delivered letter,
telex or telefax message is received either on a business day after normal
working hours or on any other day; or
(c) on the second business day following the day of posting from
within the United Kingdom of any letter sent by post office inland first
class mail postage prepaid.
9.8 This Agreement is governed by and is to be construed in accordance with
English law.
9 ADJUSTMENTS TO PURCHASE CONSIDERATION
9.1 The parties shall procure, as soon as practicable and in any event
within 60 days after Completion, the preparation of the Completion Net Assets
Statement, which shall be prepared by the Vendor's Auditors, subject to this
clause 10, on the basis of accounting standards generally accepted in the United
States and audited by the Vendor's Auditors to a standard to be agreed between
the Vendor's Auditors and the Purchaser's Auditors. The cost of the audit shall
be paid as to one half by the Vendor and as to the other half by the Purchaser.
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9.2 The parties shall disclose to Vendor's Auditors and the Purchaser's
Auditors all information relevant for the purposes of preparing the Completion
Net Assets Statement.
9.3 The parties shall instruct the Vendor's Auditors and the Purchaser's
Auditors to prepare the Completion Net Assets Statement and to deliver to the
Vendor and the Purchaser copies of the Completion Net Assets Statement and of
their calculation of any adjustments required by this clause within 14 days of
the preparation of the Completion Net Assets Statement.
9.4 If:
(a) the value of Net Assets is less than $130,000, the Consideration
shall be reduced by the amount of the shortfall provided that the amount of
the repayment shall not exceed $20,000,000; and
(b) the value of the Net Assets is more than $130,000 the Purchaser
shall pay to the Vendor in cash a sum equal to the amount of that excess
provided that the amount of this payment shall not exceed $20,000,000.
9.5 Each of the parties undertakes to the other to pay the amount of any
reduction or increase (as the case may be) to the other in cash within 28 days
after delivery to the Vendor and the Purchaser of a copy of the calculation
referred to in clause 10.3.
9.6 Any amount due under the WCL Share Agreement, the WCEH Share Agreement
and the Global Crossing Agreement may be off-set against any amount due under
this clause.
9.7 Disputes with respect to the calculation of the Completion Net Assets
Statement or any other matter referred to in this clause 10 shall be referred
for final settlement to a firm of chartered accountants, nominated jointly by
the Vendor and the Purchaser, or, failing nomination within 14 days after
request by either the Vendor or the Purchaser, nominated at the request of
either party by the President for the time being of the US Accountants
Institute. The firm shall act as experts and not as arbitrators and their
decision (in the absence of manifest error) shall be final and binding on the
parties. Their fees shall be payable by the Vendor and the Purchaser in such
proportions as the firm determines.
9.8 For the purposes of the Purchaser's review under this clause 10, the
Purchaser's Auditors and the Vendor's Auditors attempts to resolve any dispute
under this clause 10 and the settlement of any dispute by the independent
accountants, the Vendor and the Purchaser shall ensure that the Vendor's
Auditors and the Purchaser's Auditors and (if applicable) the independent
accountants are promptly given all information, assistance and access to all
books of accounts, documents, files and papers which they may reasonably
require.
9.9 Unless otherwise indicated under this agreement, the translations of
local currency amounts into US Dollars will be made on the basis of the closing
exchange rates on 10 November 1999.
10 APPORTIONMENT OF BUSINESS RESPONSIBILITY
10.1 All costs and other outgoings in connection with the Assets and any
revenue from or in respect of the Assets shall be apportioned on a time basis so
that the relevant costs, outgoings and revenue attributable to the period ended
on the Completion Date shall be borne by the Vendor and the relevant charge,
income or payment attributable to the period commencing on the day following the
Completion Date shall be received by the Purchaser.
10.2 Prepayments and payments in advance (if any) made to the Vendor on or
before the Completion Date in respect of goods and/or services to be supplied
under the Contracts after the Completion Date shall be payable by the Vendor to
the Purchaser (and until payment shall be held on trust for the Purchaser).
Prepayments and payments in advance made by the Vendor in respect of goods
ordered but not delivered and for services contracted for but not rendered,
under the Contracts prior to the Completion Date shall be reimbursed by the
Purchaser.
10.3 Payments (if any) made to the Vendor after the Completion Date in
respect of services supplied under the Contracts on or before the Completion
Date shall be retained by the Vendor, and if any such sum is received by the
Purchaser, the Purchaser shall pay that sum to the Vendor (and until payment
shall hold the
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sum in question on trust for the Vendor). Payments (if any) made to the Vendor
in respect of services supplied after the Completion Date shall be paid by the
Vendor to the Purchaser (and until payment the Vendor shall hold the sum on
trust for the Purchaser).
IN WITNESS WHEREOF this Agreement has been executed as a Deed the day and
year first above written
ATTESTATIONS
SIGNED for and on behalf of
WORLDPORT COMMUNICATIONS INC
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
SIGNED for and on behalf of
UNISOURCE CARRIER SERVICE USA, INC.
/s/ Xxxxxxx Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxx Xxxxxxxxx
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