EX-2.6
CONFORMED COPY
DATED October 7th, 0000
XXXXXX XXXXX XXXXXXXXXXX XXXXXXX
XXXXX XXXXX ELECTRICITY PLC
and
INTERNATIONAL CABLETEL INCORPORATED
________________________________
SHARE PURCHASE AGREEMENT
________________________________
SHARE PURCHASE AGREEMENT
------------------------
CONTENTS
--------
Page
------------
1. INTERPRETATION........................................... 1
2. SALE AND PURCHASE........................................ 7
3. CONSIDERATION............................................ 8
4. COMPLETION............................................... 8
5. THE SELLER'S WARRANTIES.................................. 9
6. CABLETEL REMEDIES........................................ 10
7. PURCHASER'S WARRANTIES AND INDEMNITY..................... 10
8. THE SELLER'S REMEDIES.................................... 10
9. INVESTMENT REPRESENTATIONS............................... 11
10. COVENANTS AND UNDERTAKINGS............................... 12
11. REGISTRATION UNDER THE SECURITIES ACT.................... 15
12. RESTRICTIONS ON BUSINESS ACTIVITIES...................... 26
13. THE JOINT VENTURE AGREEMENT AND OTHER ARRANGEMENTS....... 29
14. CONSORTIUM RELIEF........................................ 32
15. EFFECT OF COMPLETION..................................... 33
16. REMEDIES AND WAIVERS..................................... 33
17. ASSIGNMENT............................................... 33
18. FURTHER ASSURANCE........................................ 34
19. ENTIRE AGREEMENT......................................... 34
20. NOTICES.................................................. 34
21. ANNOUNCEMENTS............................................ 35
22. CONFIDENTIALITY.......................................... 36
23. RESTRICTIVE TRADE PRACTICES ACT 1976..................... 37
24. COSTS AND EXPENSES....................................... 37
25. COUNTERPARTS............................................. 37
26. INVALIDITY............................................... 37
27. CHOICE OF GOVERNING LAW.................................. 38
28. JURISDICTION............................................. 38
29. AGENT FOR SERVICE........................................ 38
SCHEDULE 1 Completion Arrangements........................ 39
SCHEDULE 2 Seller's Warranties............................ 41
SCHEDULE 3 Purchaser's Warranties......................... 44
SCHEDULE 4 Limitations on Liabilities under the Warranties 48
SCHEDULE 5 Seller's Interests............................. 53
SCHEDULE 6 Agreements between the Parties................. 54
SCHEDULE 7 Form of Deed of Release........................ 55
SCHEDULE 8 Purchaser's Commission Documents............... 60
SIGNATURES................................................... 61
i
THIS AGREEMENT is made October 7th, 1996
BETWEEN:-
1. SWALEC TELCO INVESTMENTS LIMITED of Xxxxxxx Xxxx, Xx. Xxxxxxx, Xxxxxxx XX0
0XX (registered in England and Wales No. 2837273) (the "Seller");
------
2. SOUTH WALES ELECTRICITY PLC of Xxxxxxx Xxxx, Xx. Xxxxxxx, Xxxxxxx XX0 0XX
(registered in England and Wales No. 2366985) ("SWALEC");
------
AND
3. INTERNATIONAL CABLETEL INCORPORATED of 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000, XXX (a Delaware corporation) (the "Purchaser").
---------
WHEREAS:-
The Seller has agreed to sell and the Purchaser has agreed to purchase all
of the Seller's Interests (as defined in this agreement) in each case on
the terms and subject to the conditions of this agreement.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
--------------
(A) In this agreement and the schedules to it:-
"Books and Records" means all books of account and other documents and
-----------------
all computer disks or tapes or other machine
legible programs or other records;
"Business Day" means a day (other than a Saturday or a Sunday) on
------------
which commercial banks are open for business in
London and New York;
""B" Directors" means the directors of the Company appointed by
-------------
the "B" Shareholders pursuant to the articles of
association of the Company and holding office for
the time being and, unless otherwise stated,
includes their duly appointed alternates;
"Business Information" means all information, know-how and
--------------------
records (whether or not confidential and in
whatever form held) including (without limitation)
all formulas, designs, specifications, drawings,
data, manuals and instructions and all customer
lists, sales information, auditors comment letters
and forecasts, and all computer software and all
accounting and tax records, correspondence, orders
and inquiries relating exclusively to the Company;
"Commission" means the Securities and Exchange Commission or
---------- any other federal agency at the time adminis-
tering the Securities Act;
"Commission Documents" means the reports and other documents specified in
-------------------- schedule 8 (The Purchaser's Commission Documents)
filed by the Purchaser under the Exchange Act (as
such documents have been amended since the time of
their filing but prior to Completion);
"Common Stock" means the shares of common stock, par value $0.01
------------ per share, of the Purchaser including in the case
of a reclassification, recapitalization or other
change in the common stock, or in the case of a
consolidation or merger of the Purchaser with or
into another person affecting the common stock,
such capital stock to which a holder of common
stock shall be entitled upon the occurrence of
such event;
"Companies Acts" means the Companies Xxx 0000, the Criminal Justice
-------------- Xxx 0000, the Companies Consolidation
(Consequential Provisions) Xxx 0000 and the
Companies Xxx 0000;
"Company" means CableTel Newport of CableTel House, 1
------- Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxx XX00 0XX
(registered in England No. 2478879);
"Completion" means completion of the sale and purchase of the
---------- Interests under this agreement;
"Completion Date" means the date of this agreement;
---------------
"Confidential Business
---------------------
Information" means Business Information which is confidential
----------- or not generally known;
"Convertible Preferred
---------------------
Stock" means the shares of Non-voting Convertible
----- Preferred Stock, Series A, par value $0.01 per
share, of the Purchaser created under a
Certificate of Designation in the agreed form
filed with the Secretary of State of Delaware on
the date of this agreement and issued to the
Seller under this agreement, and after closing
shall also mean any security issued or issuable
with respect to the Convertible Preferred Stock
(except any shares of Common Stock and any secu-
2
rity issued upon conversion or redemption of such
Convertible Redeemable Preferred Stock or issued
or issuable security) by way of payment-in-kind,
stock dividend or stock split or in connection
with a combination of shares, recapitalization,
merger, consolidation or other reorganization or
otherwise;
"Deed of Release" has the meaning given in clause 13(C);
---------------
"Disclosure Letter" means the letter dated October 7th, 1996 written
----------------- by the Seller and SWALEC to the Purchaser for the
purposes of clause 6(B) (Seller's Warranties) and
delivered to the Purchaser before execution of
this Agreement;
"Exchange Act" means the Securities Exchange Act of 1934, or any
------------ similar federal statute, and the rules and
regulations of the Commission thereunder, all as
the same shall be in effect at the time;
"Group" means the Company, all the subsidiaries and
----- subsidiary undertakings of the Company and each
undertaking in which the Company has a
participating interest (as defined in section 260
of the Companies Act 1985) which is not a
Subsidiary of the Company;
"Holder" means each person who appears in the securities
------ register maintained by or on behalf of the
Purchaser (or would so appear if such register
were properly maintained) with respect to the
Registrable Securities or, as the case may be,
Restricted Securities;
"Joint Venture Agreement" means the Subscription and Shareholders Agreement
----------------------- dated 15th December, 1993 between (1) SWALEC
Investments Limited ("SIL"), (2) the Seller, (4)
the Purchaser, (5) CableTel Holdings (UK) Limited
("CHUK"), (6) Ocom Sub II, Inc., (7) the Company
and CableTel South Wales Limited ("CSW"), as
amended by deeds of variation dated 15th December,
1995 and 28th March 1996;
"ICTA 1988" means the Income and Corporation Taxes Xxx 0000;
---------
"Interests" means the Shares and the Loan Notes;
---------
3
"Loan Notes" means all the loan notes, bonds, debentures or
---------- other indebtedness of the Group to any member of
the Seller's Group specified in Part B of
schedule 5 (The Seller's Interests);
"NMM" means the Nasdaq Stock Market's National Market;
---
"Proceedings" means any proceeding, suit or action arising
----------- out of or in connection with this agreement;
"Purchaser's Group" means the Purchaser, its subsidiaries and
----------------- subsidiary undertakings, any holding company of
the Purchaser and all other subsidiaries of any
such holding company from time to time;
"Purchaser's Warranties" means the warranties set out in schedule 3 (The
---------------------- Purchaser's Warranties) given by the Purchaser and
"Purchaser's Warranty" shall be construed
accordingly;
"Registrable Securities" means (a) any shares of Common Stock issued or
---------------------- -
issuable upon conversion or redemption of the
Convertible Preferred Stock and (b) any shares of
-
Common Stock issued or issuable by way of stock
dividend or stock split or otherwise pursuant to
the terms and conditions of the Convertible
Preferred Stock (but not any shares of Convertible
Preferred Stock); provided that a share of Common
Stock, once issued, shall cease to be a
Registrable Security (i) when a registration
statement with respect to the sale of such a share
shall have become effective under the Securities
Act and such share shall have been disposed of in
accordance with such registration statement, (ii)
on the expiry of the Effectiveness Period (as
defined in clause 11(B)(ii) and extended pursuant
to clause 11(D)(vi), (iii) when it shall have been
otherwise transferred, and a new certificate for
it not bearing a legend restricting further
transfer shall have been delivered (or should
have been delivered under clause 10(D)) by the
Purchaser and subsequent disposition of it shall
not require registration or qualification of them
under the Securities Act or any similar state law
then in force, or (vi) it has ceased to be
outstanding;
4
"Restricted Securities" means (a) any shares of Convertible Preferred
--------------------- -
Stock from time to time issued and outstanding,
(b) any shares of Common Stock issued upon
-
conversion or redemption of the Convertible
Preferred Stock which are required by the terms of
this agreement to be evidenced by a certificate
or certificates bearing the applicable legend set
forth in clause 10(C), (c) any shares of Common
Stock issued or issuable by way of stock dividend
or stock split or otherwise pursuant to the terms
and conditions of the Convertible Preferred
Stock, which are required by the terms of this
agreement to be evidenced by a certificate or
certificates bearing the applicable legend set
forth in clause 10(C), and (d) unless the context
otherwise requires, any shares of Common Stock
issuable upon the conversion or redemption of the
Convertible Preferred Stock, which, when so
issued, will be required by the terms hereof to be
evidenced by a certificate or certificates bearing
the applicable legend set forth in such section
specified in clause 10(C);
"RTPA 1976" means the Restrictive Trade Practices Acts 1976;
---------
"Securities Act" means the Securities Act of 1933, or any similar
-------------- federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall
be in effect at the time;
"Seller's Group" means the Seller, its subsidiaries and subsidiary
-------------- undertakings from time to time, any holding
company of the Seller from time to time, all other
subsidiaries or subsidiary undertakings of any
such holding company from time to time (except
members of the Group);
"Seller's Solicitors" means Xxxxxxx Xxxxxxx of Dumfries House, Dumfries
------------------- Place, Cardiff CFI 4YF;
"Seller's Warranties" means the representations and warranties set out
------------------- in clause 9 (Investment Representations) and the
warranties set out in schedule 2 (The Seller's
Warranties) given by the Seller and SWALEC and
"Seller's Warranty" shall be construed
accordingly;
"Service Document" has the meaning given in clause 29(C) (Agent for
---------------- service);
5
"Shares" means all the issued "B" ordinary shares in the
------ capital of the Company;
"Tax" or "Taxation" means and includes all forms of taxation and
--- -------- statutory, governmental, supra-governmental,
state, principal, local governmental or municipal
impositions, duties, contributions and levies, in
each whether of the United Kingdom or elsewhere,
whenever imposed and all penalties, charges, costs
and interest relating thereto and without
limitation all employment taxes and any deductions
or withholdings of any sort;
"Transfer" means any sale, assignment, pledge or other
-------- disposition of any security, or of any interest
therein, which could constitute a "sale" as that
term is defined in section 2(3) of the Securities
Act;
"Underwritten Offering" means an underwritten offering in which
--------------------- Registrable Securities are sold by the Holders of
Registrable Securities;
"U.S. Counsel" means legal counsel which is, in the reasonable
------------ opinion of the Purchaser, sufficiently experi-
enced in U.S. federal and state securities laws to
deliver the legal opinions called for by the
provisions of this agreement (including, in the
case of the Purchaser, counsel to the Purchaser
whether or not an employee of the Purchaser);
"Working Hours" means 9.30 a.m. to 5.30 p.m. (local time) on a
------------- Business Day.
(B) In this agreement, unless otherwise specified:-
(i) references to clauses, sub-clauses, paragraphs, sub-paragraphs and
schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of,
and schedules to, this agreement;
(ii) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted;
(iii) references to a "company" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
6
(iv) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
(v) references to "indemnify" and "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that
person and all loss or damage and all payments, costs or expenses made
or incurred by that person as a consequence of or which would not have
arisen but for that circumstance,
(vi) the expressions "body corporate", "debentures", "holding company",
"paid up", "subsidiary", "subsidiary undertaking" and "wholly-owned
subsidiary" shall have the meaning given in the Companies Xxx 0000;
(vii) a person shall be deemed to be connected with another if that person
is connected with another within the meaning of section 839 ICTA 1988;
(viii) references to writing shall include any modes of reproducing words
in a legible and non-transitory form;
(ix) headings to clauses and schedules are for convenience only and do not
affect the interpretation of this agreement;
(x) the schedules form part of this agreement and shall have the same
force and effect as if expressly set out in the body of this
agreement, and any reference to this agreement shall include the
schedules; and
(xi) "in the agreed form" means in relation to any document, in the form
agreed by the parties prior to execution hereof and for the purpose of
identification signed by or on behalf of the Seller and the Purchaser.
2. SALE AND PURCHASE
-----------------
(A) The Seller shall sell with full title guarantee, and the Purchaser shall
purchase, the Interests specified in schedule 5 (The Seller's Interests).
The Seller shall sell the Interests free from all claims, liens, charges,
encumbrances and equities arising by, through or under Seller or members of
the Seller's Group, and shall be sold with all rights attached or accruing
to them at Completion.
(B) The Purchaser shall be entitled from and after Completion to exercise all
rights attached or accruing to the Interests including, without limitation,
the right to receive all dividends, distributions, payments, repayments,
redemptions or any return of capital declared, paid or made by the Company.
7
3. CONSIDERATION
-------------
(A) In consideration for the sale of the Interests by the Seller to the
Purchaser, subject to the terms and provisions set forth in this agreement,
the Purchaser shall issue and deliver to the Seller in accordance with
clause 4 (Completion), and the Seller shall acquire, good and valid title
to 780 shares of Convertible Preferred Stock in accordance with clause 4
(Completion).
(B) The parties have agreed to attribute the value of such shares of
Convertible Preferred Stock on the basis that 540 shares of Convertible
Preferred Stock shall be attributed to the Loan Notes and 240 shares of
Convertible Preferred Stock to the Shares.
4. COMPLETION
----------
(A) Completion shall take place immediately after signature of this Agreement.
(B) At Completion:-
(i) the Seller or SWALEC, as the case may be, shall do or procure the
doing of those things listed in paragraphs (i) to (iv) of schedule 1
(Completion Arrangements) which are required of the Seller or SWALEC;
and
(ii) the Purchaser shall do or procure the doing of the things listed in
paragraphs (v) and (vi) of schedule 1 (Completion Arrangements) and
deliver to the Seller's Solicitors a duly executed stock certificate
representing the shares of Convertible Preferred Stock stated in
clause 3 (Consideration).
(C) The Purchaser shall not be obliged to complete this agreement unless each
of the Seller and SWALEC complies fully with the requirements of sub-clause
(B)(i) so far as they relate to the Seller, SWALEC or any member of the
Seller's Group.
(D) The Purchaser shall not be obliged to complete the sale and purchase of any
of the Interests unless the sale and purchase of all the Interests is
completed simultaneously.
(E) If the obligations of the Seller and SWALEC under sub-clause (B)(i) and
schedule 1 (Completion Arrangements) are not complied with on the
Completion Date, the Purchaser may:-
(i) defer Completion (so that the provisions of this clause 4 shall apply
to Completion as so deferred); or
(ii) proceed to Completion as far as practicable (without limiting its
rights under this agreement); or
(iii) treat this agreement as terminated for breach of a condition.
8
(F) If the obligations of the Purchaser under sub clause (B) (ii) and schedule
1 (Completion Arrangements) are not complied with on the Completion Date,
the Seller and SWALEC may;
(i) defer Completion (so that the provisions of this clause 4 shall apply
to Completion as so deferred); or
(ii) proceed to Completion as far as practicable (without limiting its
rights under this agreement); or
(iii) treat this agreement as terminated for breach of a condition.
(G) Each of the Seller and SWALEC undertake to indemnify the member of the
Group concerned against any and all claims which may be made against it by
any of the resigning "B" Directors because of his or their resignation from
office or of his or their employment being terminated and against all
costs, charges and expenses incurred by any member of the Group which are
incidental to any such claim.
(H) Delivery of the stock certificate representing the shares of Convertible
Preferred Stock stated in clause 3 (Consideration) in accordance with sub-
clause (B)(ii) shall discharge the obligations of the Purchaser under
clause 2 (Sale and Purchase).
(I) If, following Completion, the Purchaser or the Seller becomes aware that
there has been any material breach of the Seller's Warranties or the
Purchaser's Warranties (as the case may be) or any term of this agreement,
neither the Purchaser nor the Seller shall be entitled to treat this
agreement as terminated but shall be entitled to claim damages or exercise
any other right, power or remedy under this agreement.
5. THE SELLER'S WARRANTIES
-----------------------
(A) Each of the Seller and SWALEC warrant to the Purchaser in the terms of
schedule 2 (the Seller's Warranties) at the date of this agreement.
(B) Each of the Seller and SWALEC accept that the Purchaser is entering into
this agreement in reliance upon each of the Seller's Warranties.
(C) Each of the Seller and SWALEC undertake (if any claim is made against it in
connection with the sale of the Interests to the Purchaser) not to make any
claim against any member of the Group or any director, employee or adviser
of any member of the Group on whom the Seller may have relied before
agreeing to any terms of this agreement.
(D) Each of the Seller's Warranties shall be construed as a separate and
independent warranty and (except where expressly provided to the contrary)
shall not be limited or restricted by reference to or inference from the
terms of any other the Seller's Warranty or any other term of this
agreement.
9
6. CABLETEL REMEDIES
-----------------
(A) Completion shall not in any way constitute a waiver of any of the
Purchaser's rights.
(B) In the absence of any fraud or dishonesty on the part of the Seller, SWALEC
or any of their agents or advisers, the Purchaser shall not be entitled to
claim that any fact causes any of the Seller's Warranties to be breached if
fairly disclosed or specifically referred to in the Disclosure Letter or
in any document referred to in the Disclosure Letter and delivered with
it.
(C) No liability shall attach to the Seller or SWALEC in respect of claims
under the Seller's Warranties if and to the extent that the limitations
referred to in sub-clause (A) and set out in schedule 4 (Limitations on
liability under the Warranties) apply, in the absence of any fraud or
dishonesty on the part of the Seller or SWALEC, or any of their agents or
advisers.
(D) Each of the Seller and SWALEC acknowledge that the restrictions contained
in clause 10 (Covenants and Undertakings), clause 21 (Announcements) and
clause 22 (Confidentiality) shall continue to apply after the termination
of the sale and purchase of the Interests under this agreement without
limit in time, except in the case of clause 10 (Covenants and Undertakings)
as expressly provided in that clause.
(E) The Purchaser is entitled to terminate the agreement in the circumstances
referred to in clause 4(E)(iii) (Completion).
7. PURCHASER'S WARRANTIES AND INDEMNITY
------------------------------------
(A) The Purchaser warrants to the Seller and SWALEC in the terms of schedule 3
(the Purchaser's Warranties) at the date of this agreement.
(B) The Purchaser accepts that the each of the Seller and SWALEC is entering
into this agreement in reliance upon each of the Purchaser's Warranties.
(C) Each of the Purchaser's Warranties shall be construed as a separate and
independent warranty and (except where expressly provided to the contrary)
shall not be limited or restricted by reference to or inference from the
terms of any other Purchaser's Warranty or any other term of this
agreement.
8. THE SELLER'S REMEDIES
---------------------
(A) Completion shall not in any way constitute a waiver of any of the rights of
the Seller or SWALEC.
(B) In the absence of any fraud or dishonesty on the part of the Purchaser or
any of its agents or advisers, neither the Seller nor SWALEC shall be
entitled to claim that any fact causes any of the Purchaser's Warranties to
be breached if it has been disclosed in the Commission Documents.
10
(C) No liability shall attach to the Purchaser in respect of claims under the
Purchaser's Warranties if and to the extent that the limitations referred
to in sub-clause (A) and set out in schedule 4 (Limitations on liability
under the Warranties) apply, in the absence of fraud or dishonesty on the
part of Purchaser, or any of its agents or advisers.
(D) The Purchaser acknowledges that the provisions of clause 11 (Registration
under the Securities Act) and the restrictions contained in clause 21
(Announcements) and clause 22 (Confidentiality) shall continue to apply
after the termination of the sale and purchase of the Interests under this
agreement without limit in time, except, in the case of clause 10
(Covenants and Undertakings) as expressly provided in that clause.
9. INVESTMENT REPRESENTATIONS
--------------------------
(A) Each of the Seller and SWALEC acknowledge and understand that the
Convertible Preferred Stock and the Common Stock or other securities
issuable upon conversion or redemption thereof (collectively, the
"Securities") have not been registered under the Securities Act and without
-----------
prejudice to any other restrictions on transfer imposed hereby, the
Securities may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration requirements
of the Securities Act.
(B) None of the Seller, SWALEC or any of their respective affiliates, nor any
persons acting on its or their behalf, have engaged or will engage in any
directed selling efforts with respect to the Securities on behalf of the
Purchaser.
(C) The Seller, SWALEC and each of their respective affiliates will not offer
or sell on behalf of the Purchaser the Securities in the United States by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act, including, but not limited
to:
(i) any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television or
radio; or
(ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(D) (i) Neither the Seller nor SWALEC has offered or sold, and neither the
Seller nor SWALEC will offer or sell in the United Kingdom by means of any
document, any Securities except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(whether as a principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995,
(ii) The Seller has complied and will comply with all applicable provisions
of the Public Offers of Securities Regulations 1995 and the Financial
Services Xxx 0000
11
with respect to anything done by it in relation to the Securities, in, from
or otherwise involving the United Kingdom and
(iii) The Seller and SWALEC have only issued or passed on and will only
issue or pass on, to any person in the United Kingdom any document received
by it in connection with the issue of the Securities to a person who is of
a kind described in Article 8 of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) (No. 2) Order 1995 or is a person
to whom the document may otherwise lawfully be issued or passed on.
(E) The Seller and SWALEC have received and reviewed the Commission Documents.
(F) The Securities will be acquired pursuant to this agreement solely for the
account of the Seller, for investment, and not with a view to the
distribution of the Securities (other than a Transfer described in the
proviso to clause 10(I)(i)).
10. COVENANTS AND UNDERTAKINGS
--------------------------
(A) At any such time as any shares of Common Stock are traded on the NMM or
listed on any national securities exchange, the Purchaser will, at its
expense, obtain promptly and maintain the approval for trading on the NMM,
or as the case may be, listing on each such exchange of the shares of
Common Stock issuable upon conversion or redemption of then outstanding
Convertible Preferred Stock and maintain such approval and/or the listing
of such shares of Common Stock after their issuance.
(B) Each share of Convertible Preferred Stock (including each share of
Convertible Preferred Stock issued upon the Transfer of any share of
Convertible Preferred Stock or otherwise issued pursuant to the terms of
the Convertible Preferred Stock) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"This share of Convertible Preferred Stock and any shares issued or
acquired upon the conversion or redemption of this share of
Convertible Preferred Stock have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and,
unless so registered, may not be offered, sold, transferred or
otherwise disposed of except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of such Act
and applicable state securities laws. In addition, this share of
Convertible Preferred Stock and such shares may be transferred, sold
or otherwise be disposed of only in compliance with the conditions
specified in an agreement dated October 7, 1996 between Swalec Telco
Investments Limited, South Wales Electricity plc and International
CableTel Incorporated including, without limitation, the condition
that this share of Convertible Preferred Stock may not be transferred,
sold or otherwise be disposed of without the prior written consent of
the International CableTel Incorporated. A complete and correct copy
of the form of such agreement is available for inspection at the
principal office of International CableTel Incorporated."
12
(C) Except as otherwise permitted by this clause 10, each certificate for any
shares of Common Stock issued upon conversion or redemption of the
Convertible Preferred Stock or issued otherwise pursuant to the terms of
the Convertible Preferred Stock, and each certificate issued upon the
Transfer of any such Common Stock, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities laws and,
unless so registered, may not be offered, sold, transferred or
otherwise disposed of except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of such Act
and applicable state securities laws. In addition, such shares may be
transferred, sold or otherwise be disposed of only in compliance with
the conditions specified in a Share Purchase Agreement dated October
7, 0000, xxxxxxx Xxxxxx Xxxxx Xxxxxxxxxxx Xxxxxxx, Xxxxx Xxxxx
Electricity plc and International CableTel Incorporated. A complete
and correct copy of the form of such agreement is available for
inspection at the principal office of International CableTel
Incorporated."
(D) Without prejudice to sub-clause (I), before any Transfer of any Restricted
Securities which are not registered under an effective registration
statement under the Securities Act, other than a Transfer of such
securities by the Seller to SWALEC, the Holder thereof will give written
notice to the Purchaser of that holder's intention to effect such Transfer.
(E) Subject to sub-clause (I), a Holder who has complied with sub-clause (D)
shall be permitted to Transfer any Restricted Securities to a person (each,
a "Transferee") if, prior to such Transfer: -
(i) the Transferee represents to the Purchaser in writing that it is
- acquiring such Restricted Securities for investment and not with a
view to the distribution thereof (subject, however, to any requirement
of law that the disposition thereof shall at all times be within the
control of such transferee),
(ii) the Transferee agrees in writing with the Purchaser to be bound by,
-- and to comply in all respects with, the provisions of this clause 10
and clause 11 (Registration under the Securities Act); and
(iii) the Purchaser receives an opinion reasonably satisfactory to it of
--- Xxxxxxxxxxx Xxxxx & Xxxxxxxx or other U.S. Counsel reasonably
satisfactory to the Purchaser, stating that such Transfer may be
effected without registration under the Securities Act (which
opinion shall be delivered at the expense of the Holder of the
Restricted Securities).
(F) The restrictions imposed by sub-clauses (B) to (E) shall cease and
terminate as to any particular Restricted Securities when:
(i) a registration statement with respect to such Restricted Securities
shall have become effective under the Securities Act, or
13
(ii) the Purchaser receives an opinion (reasonably satisfactory to the
Purchaser) of Xxxxxxxxxxx Xxxxx & Xxxxxxxx or other U.S. counsel
reasonably satisfactory the Purchaser, stating that such restrictions
are no longer required in order to ensure compliance with the
Securities Act (which opinion shall be delivered at the expense of the
Holder of the Restricted Securities).
(G) Whenever the restrictions imposed by sub-clauses (B) to (E) shall cease and
terminate as to any Restricted Securities, the Holder thereof shall be
entitled to receive from the Purchaser, without expense (other than
applicable transfer taxes, if any), new certificates representing such
securities not bearing the applicable legends required by sub-clauses (B)
and (C) upon delivery of the legended certificates representing such
securities to the Purchaser.
(H) The Purchaser will at all times reserve and keep available, for issuance
and delivery upon conversion of the shares of Convertible Preferred Stock,
the number of shares of Common Stock from time to time issuable upon
conversion of the shares of Convertible Preferred Stock at the time
outstanding. All shares of Common Stock issuable upon conversion of any
shares of Convertible Preferred Stock shall be duly authorized and, when
issued upon such conversion, shall be validly issued, fully paid and
nonassessable.
(I) Subject to sub-clause (J) but notwithstanding anything to the contrary in
any other provision of this agreement, the Seller, SWALEC (if, subsequent
to Completion, it becomes the Holder of Restricted Securities or
Registrable Securities) and each other Holder of Restricted Securities or
Registrable Securities who acquires such securities under sub-clause 10(E)
by its acquisition of such securities, covenants and undertakes not to
Transfer: -
(i) any shares of Convertible Preferred Stock or any interest therein to
any person at any time without the prior written consent of the
Purchaser (which consent may be withheld or delayed in the Purchaser's
absolute discretion);
PROVIDED THAT, the Seller may Transfer all the shares of Convertible
Preferred Stock to SWALEC and SWALEC may Transfer all or some of the
shares of Convertible Preferred Stock to any other member of the
Seller's Group if each such other member complies with sub-clause
10(E) without the need for such prior written consent;
(ii) any shares of Common Stock or any interest therein, at any time on or
before 31st December, 1996; and
(iii) more than an aggregate cumulative amount of:
(a) 300,000 shares of Common Stock or any interest therein between
1st January and 31st May, 1997;
(b) 600,000 shares of Common Stock or any interest therein between
1st June, 1997 and 30th November, 1997;
14
(c) 1,200,000 shares of Common Stock or any interest therein between
1st December, 1997 and 28th February, 1998
PROVIDED THAT, in each case, such amounts shall be subject to such
appropriate adjustments to reflect any stock split, sub-division,
reclassification of, or other change in, the Common Stock or other
security issued or issuable upon conversion or redemption of any
Convertible Preferred Stock.
(J) The restrictions imposed by paragraphs (ii) and (iii) of sub-clause (I)
-------------------------------------------
will not apply: -
(i) to any shares of Common Stock issued upon redemption of all or some
of the shares of Convertible Preferred Stock pursuant to an exercise
by the Purchaser of its right to redeem the shares of Convertible
Preferred Stock set out in the Certificate of Designations for the
Convertible Preferred Stock dated the date of this agreement;
(ii) to any shares of Common Stock issuable upon conversion of the shares
of Convertible Preferred Stock in connection with the occurrence of a
Change of Control (as defined in the Certificate of Designations for
the Convertible Preferred Stock dated the date of this agreement) nor
at any time after such issuance; or
(iii) on or at any time after 1st March, 1998.
(K) The Purchaser will not issue any shares of Non-voting Convertible Preferred
Stock, Series A, par value $0.01 per share except such shares issued
hereunder or issued pursuant to the terms of or in exchange or substitution
for any such shares so issued under this agreement without the prior
written consent of the Holders of a majority by number of such shares so
issued.
11. REGISTRATION UNDER THE SECURITIES ACT
-------------------------------------
(A) The Purchaser shall use its best efforts, subject to and in accordance with
sub-clause (B), to cause to become effective on or before 31st December,
1996, a registration statement on Form S-3 (or if that form is not
available to the Purchaser for any reason, such other appropriate
registration form of the Commission that is a short form registration
statement similar to Form S-3 or its successor if there shall be such a
form and, if not, then such form as shall be selected by the Purchaser and
as shall be reasonably acceptable to the Holders of a majority (by number
of shares) of the Registrable Securities) in compliance with the Securities
Act with respect to, and shall take all other necessary and appropriate
actions which can be taken by it in order to effect, the registration of
the Registrable Securities for resale by the Holders of Registrable
Securities, all to the extent requisite to permit disposition of the
Registrable Securities, in accordance with the methods of disposition
elected by such Holders and set forth in such registration statement.
15
(B) In connection with the required best efforts of Purchaser to effect the
registration of any Registrable Securities under the Securities Act as
provided in this clause 11, the Purchaser will:
(i) use its best efforts to cause such registration statement to become
effective under the Securities Act on or before 31st December, 1996,
provided, however, that the Purchaser may delay such filing or
-------- -------
effectiveness under the circumstances and during the periods
described in sub-clauses (D) and (E);
(ii) subject to subclauses (D) and (E), prepare and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement continuously effective
after the date such registration statement has become effective in
accordance with paragraph (i) of this sub-clause (B) for a period
(the "Effectiveness Period") expiring on the earliest to occur of (i)
the fourth anniversary of the date of this agreement (subject to sub-
clause (D)(vi)) or, if such date is later than such anniversary (as
extended), the date when the Registrable Securities may be freely
sold pursuant to Rule 144 (or any successor or similar provision),
(ii) the date as of which no shares of Common Stock constitute
Registrable Securities, (iii) the date as of which all of the
Registrable Securities shall have been sold, distributed or otherwise
transferred and new certificates for all of such Registrable
Securities not bearing a legend restricting further transfer shall
have been delivered by the Purchaser and subsequent disposition
thereof shall not require registration or qualification of them under
the Securities Act or any similar state law then in force and comply
with the provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities covered by such
registration statement during the Effectiveness Period in accordance
with the intended methods of disposition by the Seller or Holders of
Registrable Securities set forth in such registration statement;
(iii) furnish, from time to time during the Effectiveness Period, to each
Holder of Registrable Securities named in such registration statement
who so requests in writing and who has provided to the Purchaser an
address for such purpose, at least one conformed copy of such
registration statement and of each such amendment and supplement
thereto (in each case including, if such seller so requests, all
exhibits), such number of copies of the prospectus contained in such
registration statement (including any preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, as such Holder may reasonably request for the
purposes contemplated by the Securities Act;
(iv) use its best efforts to register or qualify, prior to effectiveness
of the registration statement if possible using such efforts (and if
not then as soon as practicable thereafter as is possible using such
efforts) all Registrable Securities covered by such registration
statement for offer and sale under such other securities or blue sky
laws of such jurisdictions of the United States as any Holder of
Registrable Securities named in such registration statement shall
reasonably request by written notice to the Purchaser, to keep such
16
registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in such jurisdictions of the securities
owned by such Holder, except that the Purchaser shall not for any
such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this paragraph (iv) be obligated to be so
qualified or to take any action which would subject itself to
taxation or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered by
such registration statement to be registered with or approved by such
other governmental agencies or authorities as the Seller shall have
specified in writing to the Purchaser as necessary to enable the
Seller to consummate the disposition of such Registrable Securities;
(vi) furnish to each Holder of Registrable Securities who is named in such
registration statement and has provided the Purchaser with such
Holder's address, a signed counterpart, addressed to such Holder
(and, in the case of an Underwritten Offering, underwriters, if any)
of:
(1) an opinion of U.S. Counsel for the Purchaser, dated the
effective date of such registration statement (and, if such
registration includes an Underwritten Offering, dated the date
of the closing under the underwriting agreement), reasonably
satisfactory in form and substance to such Holder, and
(2) "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an Underwritten
Offering, dated the date of the closing under the underwriting
agreement)], signed by the independent public accountants who
have certified the Purchaser's financial statements included in
such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten
public offerings of securities and, in the case of the accountants'
letter, such other financial matters;
(vii) notify each Holder, during the Effectiveness Period, upon discovery
that, or upon the happening of any event known to the Purchaser as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made,
and if any event shall occur as a result of which it is necessary, in
the opinion of counsel to the Purchaser, to amend or supplement the
17
prospectus in order to make the prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, the Purchaser shall amend or supplement the prospectus
(i) in the case of a Transaction Delay Period (as defined in sub-
clause (D)(ii)) or an Information Delay Period (as defined in sub-
clause (D)(i)), not later than the expiration of such Delay Period
and (ii) in any other case, as soon as practicable using the
Purchaser's best efforts, so that, in either such case, as so amended
or supplemented, the prospectus will not include an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser,
not misleading, and the Purchaser will furnish to each Holder of
Registrable Securities such number of copies of such amendment or
supplement as such Holder may reasonably request in writing;
(viii) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, but not later than 90
days of the close of the period covered thereby, in a regular filing
on Form 10-K or Form 10-Q, an earnings statement satisfying Rule 158
under the Securities Act (which need not be audited) for the twelve
month period beginning not later than the first day of the
Purchaser's fiscal quarter next following the "effective date" (as
defined in such Rule 158) of such registration statement;
(ix) provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities from and after a date not later than the
effective date of such registration statement; and
(x) enter into such reasonably appropriate agreements and take such other
reasonably appropriate actions as the Holders of a majority (by
number of shares) of the Registrable Securities included or to be
included in such shelf registration statement shall reasonably
request in writing in order to expedite or facilitate the
registration of such Registrable Securities.
(C) Each Holder of Registrable Securities, by its acquisition of Registrable
Securities shall be deemed to have undertaken to furnish the Purchaser in
writing, within 15 Business Days after receipt therefor, such information
regarding such Holder and such Holder's intended method of disposition of
such securities as the Purchaser may from time to time reasonably request
in writing.
(D) (i) If, at any time prior to the expiration of the Effectiveness Period,
the Board of Directors of the Purchaser has determined in good faith
that the filing of the registration statement or the compliance by the
Purchaser with its disclosure obligations in connection with the
registration statement would require the disclosure of material
information which the Purchaser has a bona fide business purpose for
---- ----
preserving as confidential the Purchaser may, upon giving the Holders
written notice (a "Determination Notice"), delay the filing of the
registration statement (if not then filed) and shall not be required
to maintain the effectiveness thereof (without the right, however, to
de-register any such shares) or amend or supplement the Registration
Statement for a period (an "Information Delay Period") commencing on
the date of
18
delivery of the Determination Notice and expiring upon the earlier to
occur of (x) the date on which such material information is disclosed
to the public or ceases to be material or (y) 60 days after the
Purchaser makes such good faith determination. Each Determination
Notice shall be accompanied by a certificate of an officer of the
Purchaser to the effect that the Board of Directors has made the good
faith determination required by this sub-paragraph (i) and specifying
the date upon which such determination was made.
(ii) If one or more Holders holding at least a majority (by number of
shares at the time issued and outstanding) of Registrable Securities
determine at any time prior to the expiration of the Effectiveness
Period to sell Registrable Securities in an Underwritten Offering
pursuant to the registration statement, they shall so notify the
Purchaser in writing at least 30 days prior to the commencement of
such Underwritten Offering (a "Holder Notice"). If, within 30 days
after delivery of a Holder Notice, the Purchaser shall notify such
Holder(s) in writing that it intends to engage in an offering of its
equity securities or any securities convertible into, or exchangeable
or exercisable for, its equity securities (whether or not involving
registration of such securities under the Securities Act), and such
notice is accompanied by a letter from an investment banking firm
which is nationally recognized in the United States and which is to
act as the lead underwriter or initial purchaser in such offering to
the effect that, in such firm's good faith belief, sales of all or
some of Registrable Securities in the proposed Underwritten Offering
by such Holders pursuant to the registration statement at such time
are likely to materially adversely affect the successful marketing of
such offering (the "Purchaser Notice"), then, the Holders shall not be
entitled to sell and shall refrain (but only to the extent specified
by such investment banking firm) from selling their Registrable
Securities in such Underwritten Offering for a period (a "Transaction
Delay Period") commencing on the date that the Purchaser Notice was
given to the Holders and expiring upon the earliest to occur of (i)
the abandonment of such financing, and (ii) 120 days after the date
the Purchaser Notice was given.
(iii) If the Purchaser does not so deliver a Purchaser Notice within the
30 day period referred to in sub-paragraph (ii), then Holders holding
at least a majority (by number of shares at the time issued and
outstanding) of Registrable Securities may proceed to sell
Registrable Securities in an Underwritten Offering pursuant to the
registration statement provided that the distribution of Registrable
Securities in such an Underwritten Offering is completed prior to the
expiration of the Effectiveness Period. The Purchaser shall, within
thirty days after delivery of a Holder Notice, confirm in writing to
the Holders whether or not it intends to engage in an offering of its
equity securities or any securities convertible into, exchangeable or
exerciseable for its equity securities which would be conducted
concurrently with such Underwritten Offering. If the Purchaser
confirms that it intends to engage in such an offering or if the
Purchaser confirms that it does not intend to engage in such an
offering but after the expiry of those thirty days decides to engage
in such an offering, then it shall give the managing underwriter of
the Underwritten Offering notice of the intended timetable for such
offering of the Purchaser.
19
(iv) If, within 30 days after the delivery of a Holder Notice, the Purchaser
shall, instead of delivering the Purchaser Notice, notify such
Holder(s) in writing that it intends to register its Common Stock under
the Securities Act (other than by a registration in connection with an
acquisition, stock option plan, stock purchase plan savings or similar
plan) and such Common Stock are to be distributed by or through one or
more underwriters (a "Purchaser Offering"), the Purchaser will, subject
to the provisions of sub-clause D(v), use its best efforts to arrange
for such underwriters to include all the Registrable Securities to be
offered and sold by such Holder in the proposed Underwritten Offering
among the Common Stock to be distributed by such underwriters in the
Purchaser Offering to the extent of the number which the Purchaser is
so advised by the managing underwriter of such Purchaser Offering (in
the letter referred to in sub-clause D(v)) can be sold in such
Purchaser Offering,
PROVIDED THAT if, at any time after giving written notice of its
intention to register its Common Stock and prior to the effective date
of the registration statement filed in connection with such Purchaser
Offering, the Purchaser shall determine for any reason either not to
register or to delay registration of the securities included in such
Purchaser Registration, the Purchaser may, at its election, give
written notice of such determination to each Holder of Registrable
Securities and, thereupon, without prejudice, however, to the rights
of any Holder of Registrable Securities under sub-clause 11(B), (x) in
the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with
such registration or to include any Registrable Securities therein and
(y) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities as part of
the Purchaser Offering, for the same period as the delay in
registering such Common Stock.
(v) If the managing underwriter of such Purchaser Offering shall advise
the Purchaser by letter (with a copy to each Holder of the
Registrable Securities requesting such registration and the holders
of any other securities which shall have exercised, in respect of such
Purchaser Offering, registration rights comparable to the rights under
this clause 11) of its good faith belief that inclusion in such
underwritten distribution of all or a specified number of such
Registrable Securities or of such other securities so requested to be
included is likely to materially adversely affect the successful
marketing of the Common Stock (other than such Registrable Securities
and other securities so requested to be included) by the underwriters
in such Purchaser Offering (such writing to state the basis of such
belief and the approximate number of such Registrable Securities and
shares of other securities so requested to be included which may be
included in such Purchaser Offering without such effect), then the
Purchaser may, upon written notice to all Holders of such Registrable
Securities and of such other securities so requested to be included,
exclude pro rata from such Purchaser Offering (if and to the extent
--- ----
stated by such managing underwriter to be necessary to eliminate such
effect) the number of such Registrable Securities and shares of such
other securities so requested to be included in the Purchaser Offering
of which shall have been requested by each Holder of Registrable
Securities
20
and by the holders of such other securities so that the resultant
aggregate number of such Registrable Securities and of such other
shares of securities so requested to be included which are included in
such Purchaser Offering shall be equal to the approximate number of
shares stated in such managing underwriter's letter to be the number
which may be included in such Purchaser Offering without such effect.
(vi) A Transaction Delay Period and an Information Delay Period are
hereinafter collectively referred to as "Delay Periods" or a "Delay
Period." The Purchaser will give prompt written notice to each Holder
of Registrable Securities of the commencement of each Delay Period. The
Purchaser shall not be entitled to implement Delay Periods which, when
taken together with any other Delay Periods during the previous twelve
months, are in effect for more than 180 days during such twelve month
period. The Purchaser shall not, in any event, be entitled to implement
(x) Information Delay Periods which, when taken together with any other
Information Delay Period during the previous twelve months, are in
effect for more than 120 days during such twelve month period or (y)
more than one Transaction Delay Period during any twelve month period.
The Effectiveness Period shall be extended by the number of days during
which each Delay Period is in effect. Accordingly, references in this
clause 11 to the Effectiveness Period shall be construed as the
Effectiveness Period as so extended.
(E) Each Holder of Registrable Securities agrees by its acquisition of such
Registrable Securities that (i) the Purchaser shall not be obligated to
maintain the effectiveness of a registration statement with respect to the
Registrable Securities during any Information Delay Period (but the
Purchaser shall not de-register any Common Stock described in such
registration statement); and (ii) upon receipt of any notice from the
Purchaser of the existence of any fact or event of the kind described in
sub-clause (B)(vii) or the notice of commencement of the Information Delay
Period pursuant to sub-clause (D)(i), it will:
(a) keep the fact and subject matter of such notice confidential;
(b) forthwith discontinue that Holder's Transfer of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until that Holder receives either (a) copies of a
supplemented or amended prospectus in accordance with sub-clause
(B)(vii) or (b) a notice from the Purchaser advising it that use of
the prospectus forming part of such registration statement may be
resumed; and
(c) if so directed by the Purchaser, will deliver to the Purchaser (at the
Purchaser's expense) all copies, other than permanent file copies,
then in such Holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such
direction.
(F) In the case of the registration effected under the Securities Act by the
Purchaser pursuant to this clause 11, the Purchaser agrees to:
21
(i) indemnify and hold harmless, to the full extent permitted by law,
each Holder of the Registrable Securities named in such registration
statement, its officers, directors, agents and employees and each
other person who participates as an underwriter in the offering or
sale of such securities and each other person, if any, who controls
such seller or any such underwriter within the meaning of the
Securities Act, against all losses, claims, damages, liabilities and
expenses, joint or several, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in the
registration statement under which the Registrable Securities of the
Purchaser owned by the Holder were registered under the Securities
Act, any prospectus or preliminary or summary prospectus or in any
amendment or supplement thereto or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were
made) not misleading; and
(ii) reimburse each such Holder, and each such officer, director, agent
and employee, underwriter and controlling person, as incurred, for
any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
liability, action or proceeding;
PROVIDED THAT:-
(a) the Purchaser shall not be liable to any such person in any case
to the extent that any such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in
reliance upon and in conformity with written information
furnished to the Purchaser by or on behalf of such person
specifically for inclusion therein;
(b) the Purchaser shall not be liable to any indemnified party under
this sub-clause (F) with respect to such registration statement
or prospectus to the extent that any such loss, claim, damage or
liability of such indemnified party results from an untrue
statement of a material fact contained in, or the omission of a
material fact from, the registration statement or prospectus
which untrue statement or omission was corrected in an amended or
supplemented registration statement or prospectus, if the person
alleging such loss, claim, damage or liability was not sent or
given, at or prior to the written confirmation of such sale, a
copy of the amended or supplemented registration statement or
prospectus and the Purchaser had previously furnished copies
thereof to such indemnified party; and
(c) the Purchaser shall not be liable in any such case to the extent
any such loss, claim, damage or liability arises out of or is
based upon any sale of Registrable Securities by a Holder during
any period in which it has agreed or deemed to have agreed,
pursuant to the provisions of this sub-clause (E), not to sell
Registrable Securities.
(G) In connection with any registration statement in which a Holder of
Registrable Securities is participating, such Holder agrees to indemnify
and hold harmless, to
22
the full extent permitted by law, the Purchaser, its directors, officers,
agents, employees against any losses, claims, damages, liabilities and
expenses arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the registration statement under
which securities of the Purchaser owned by such holder are registered under
the Securities Act, any prospectus or preliminary prospectus or in any
amendment or supplement thereto or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of a prospectus, in the light of
the circumstances under which they were made) not misleading, to the extent
that (i) such untrue or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any information
furnished in writing by the Seller or such Holder to the Purchaser
specifically for inclusion in such registration statement or prospectus,
(ii) such losses, claims, damages or liabilities arise out of or are based
upon misstatements or alleged misstatements or omissions or alleged
omissions in respect of which the provisions of paragraphs (a), (b) and (c)
of sub-clause (F) specifically provide that the Purchaser shall not be
liable therefor.
(H) Any person entitled to indemnification hereunder will:-
(a) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and
(b) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified
party.
If such defense is assumed, the indemnifying party will not be subject to
any liability for any settlement made by the indemnified party without its
consent (but such consent will not be reasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of
more than one U.S. counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of the
outside U.S. counsel of any such indemnified party a conflict of interest
may exist between such indemnified party and any other of such indemnified
parties with respect to such claim.
(I) The Purchaser on the one hand and each Holder of Registrable Securities on
the other shall indemnify the other on a basis mutatis mutandis with the
----------------
indemnity specified elsewhere in sub-clauses (F) and (G) (with appropriate
modifications) with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act.
(J) The indemnification required by this clause 11 shall:-
(i) be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred; and
23
(ii) will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director
or controlling person of such indemnified party and will survive the
Transfer of shares of Common Stock.
(K) If the indemnification provided for under this clause 11 is unavailable for
any reason other than the exceptions to indemnification contained in sub-
clause (F) or (G), then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on one
hand and the indemnified party on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses. Notwithstanding the foregoing, no person guilty
of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(L) The Purchaser will file, during the period when a prospectus is required to
be delivered under the Securities Act, the reports required to be filed by
it under the Exchange Act to the extent required from time to time to
enable such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided
by (a) Rule 144 under the Securities Act, as such Rule may be amended from
time to time or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it
has complied with such requirements.
(M) (i) Subject to sub-clause (M)(ii), all fees and expenses incident to the
Purchaser's performance of or compliance with this clause 11 will be
borne by the Purchaser regardless of whether a Registration Statement
becomes effective, including: (a) all registration and filing fees
and expenses; (b) all fees and expenses associated with compliance
with federal securities and state Blue Sky or securities laws of the
states of the United States including the legal fees relating solely
to legal counsel on Blue Sky matters; (c) all expenses of printing
or copying (including printing of any stock certificates and printing
or copying of Prospectuses and registration statements), messenger
and delivery services; (d) all fees and disbursements of counsel for
the Purchaser; (e) all application and filing fees in connection with
listing any Registrable Securities pursuant to the requirements of
sub-clause (B)(x); and (f) all fees and disbursements of independent
certified public accountants of the Purchaser (including the expenses
of any "comfort" letters required by such performance); and (g) its
own internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit or quarterly
review and the expense of any liability insurance of the Purchaser,
PROVIDED THAT, in the case of an Underwritten Offering, the Purchaser
shall not be required bear, and the Seller and the Holders on whose
behalf Registrable Securities are included in such registration shall
reimburse the Purchaser in accordance with paragraph (iii) of this
sub-clause (L) in respect of, any and all of the fees and expenses
referred to above (other than the expenses
24
referred to in item (g)) that the Purchaser would not have incurred
in connection with the registration of the Registrable Securities
pursuant to this clause 11 if such registration did not involve an
Underwritten Offering.
(ii) Each Holder on whose behalf Registrable Securities are included in a
registration statement pursuant to clause 11, whether or not it
involves an Underwritten Offering, shall be responsible for the
payment of all fees and expenses incurred by it or any underwriters
retained by it in connection with such registration statement and any
Underwritten Offering, including, without limitation, the fees and
expenses of any counsel, solicitors, accountants, financial adviser
or any other adviser or agent retained by it or such underwriters,
advisers or agents, and all costs and expenses in connection with the
preparation and negotiation of underwriting agreements and documents,
marketing materials and meetings. Notwithstanding paragraph (i) or
anything in this agreement to the contrary, each Holder on whose
behalf Registrable Securities to be included in the registration
statement shall pay all underwriting discounts, commissions and other
selling expenses and transfer taxes, if any.
(iii) All fees and expenses which the Purchaser has not agreed to bear
under paragraph (i) of this sub-clause (M) and all fees and expenses
referred to in paragraph (ii) of this sub-clause (M), shall be
allocated pro rata among all persons on whose behalf Registrable
--- ----
Securities are included in such registration on the basis of the
respective amounts of such Securities then being registered on their
behalf.
(N) If the registration pursuant to this clause 11 involves an Underwritten
Offering, each underwriter thereof shall be an investment banking firm of
national standing in the United States selected by Holders of at least a
majority (by number of shares issued and outstanding) of Registrable
Securities with the prior written approval of the Purchaser (such approval
not to be unreasonably withheld).
(O) No person may participate in any Underwritten Offering hereunder unless
such person:
(i) agrees to sell such person's securities on the basis provided in any
- underwriting arrangements approved, subject to the terms and
conditions hereof, by the Purchaser and the Seller which approval
shall not be unreasonably withheld; and
(ii) completes and executes all questionnaires, indemnities, underwriting
-- agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements.
(P) If requested by the underwriters for any Underwritten Offering by any
Holder participating therein, the Purchaser will enter into an underwriting
agreement with such underwriters for such Underwritten Offering, such
agreement to be reasonably satisfactory in substance and form to the
Purchaser, the Seller and the underwriters and to contain such
representations and warranties by the Purchaser and such other terms as are
generally prevailing in agreements of this type, including, without
25
limitation, indemnities to the effect and to the extent provided in clause
(F). The Holders will co-operate with the Purchaser in the negotiation of
the underwriting agreement and will incorporate therein the reasonable
suggestions of the Purchaser regarding the form and substance thereof. The
Holders shall not be required to make any representations or warranties
contained in a writing furnished by the Holder for use in such registration
statement or agreements with the Purchaser or the underwriters other than
representations, warranties or agreements regarding the Holder, the
Holder's Registrable Securities and the Holder's intended method of
distribution and any other representation required by law.
(Q) The Purchaser may offer securities of the Purchaser other than the
Registrable Securities under the registration statement referred to in this
clause 11.
12. RESTRICTIONS ON BUSINESS ACTIVITIES
-----------------------------------
(A) Each of the Seller and SWALEC undertake to procure that each member of the
Seller's Group will not, either alone or in conjunction with or on behalf
of any other person (whether directly or indirectly, and whether as
shareholder, participator, partner, promoter, director, officer, agent,
manager, employee or consultant of, in or to any other person firm or
company), do any of the following things:-
(i) within two years after the Completion Date, compete directly or
indirectly with any business of any member of the Purchaser's Group
(including the Group) with regard to the provision of entertainment,
advertising, telephone and related interactive services via fixed
wire network to customers within the franchise areas within the
United Kingdom, the franchises for which are, on the Completion Date
held by any member of the Purchaser's Group (or such other business
of the Group as the shareholders of the Company shall have
specifically agreed in writing before the Completion Date shall be
undertaken by the Group) (such services being known as the "Relevant
Services");
(ii) within two years after the Completion Date, solicit away from or
endeavor to entice away from or discourage from dealing with, any
member of the Group any person who was at any time during the period
of one year preceding the Completion Date a manufacturer for or
supplier or customer or client of such member;
(iii) within two years after the Completion Date, supply or provide any
goods or services competing directly or indirectly with those
supplied by any member of the Group to any person who was at any time
during the period of one year preceding the Completion Date a
customer or client of any member of the Group to whom any member of
the Group had during that period supplied or provided goods or
services in the ordinary course of its business;
(iv) within two years after the Completion Date, solicit or endeavor to
entice away from or discourage from being employed by or providing
services to any member of the Group any person who was at the
Completion Date an officer or employee of any member of the Group
(other than a "B" Director
26
not being a person engaged exclusively or primarily to provide
services to any member of the Group) or the Purchaser (insofar as
such person is providing services primarily or exclusively for any
member of the Group) whether or not such person would commit a breach
of contract by reason of leaving service except for those persons who
answer a public advertisement or who approach a member of the
Seller's Group;
(v) within two years after the Completion Date, not employ or manage or
attempt to employ or engage or negotiate or arrange the employment or
engagement by any other person, firm or company of any person who is
at the Completion Date, or was at any time during the period of one
year prior thereto, an officer (other than a "B" Director not being a
person engaged exclusively or primarily to provide services to any
member of the Group) or employee of any member of the Group or the
Purchaser (other than a "B" Director) insofar as such person is
providing services primarily or exclusively for any member of the
Group, except for those persons who answer a public advertisement or
who approach a member of the Seller's Group.
(vi) disclose to any other person or (in any way which may be detrimental
to the business of any member of the Group as carried on at the
Completion Date) use any information which is Confidential Business
Information for so long as that information remains Confidential
Business Information except that this paragraph (vi) shall not apply
in respect of the revealing of such information in the following
circumstances:-
(a) to any of the professional advisers of any member of the
Seller's Group if such advisers have provided to the Purchaser
an undertaking from such advisers on the same terms so far as is
practicable under this paragraph (vi);
(b) pursuant to any listing agreement with or the rules and
regulations of any recognized security exchange on which
securities of any member of the Seller's Group are listed or
traded;
(c) as required by law or pursuant to the United States Internal
Revenue Code;
(d) when the relevant information has entered the public domain
otherwise than by the default by any member of the Seller's
Group of the provisions of this agreement; or
(e) to the extent required by any regulatory or governmental body to
which any member of the Seller's Group is subject or as required
by any governmental order, decree, regulation, license or rule.
(vii) without limitation to the provisions of this clause, in relation to a
business which is competitive or likely to be competitive with the
business of any member of the Group as carried on at the Completion
Date, use any trade or business name or distinctive xxxx, style or
logo used by or in the business
27
of any member of the Group at any time during the two years before
Completion or anything intended or likely to be confused with it; or
(viii) assist any other person to do any of the foregoing things;
PROVIDED THAT the restrictions set out in sub-clause (A) shall not
prohibit:-
(a) the acquisition or holding by any member of the Seller's Group of
shares amounting to less than 10% of the capital of a company quoted
on any stock exchange;
(b) any member of the Seller's Group using for its own internal
purposes or making available its distribution network and assets on
commercial terms to Energis Communications Limited and to third
parties pursuant to, or in the reasonable interests of, the Seller's
Group's electricity supply and distribution businesses;
(c) the doing of any of the foregoing things if, and to the extent,
such things have been previously approved in writing by the Purchaser;
(d) Xxxxx Services Limited through its division known as Lusis
("Lusis") providing Relevant Services solely to any other member of
Seller's Group for its own internal purposes;
(e) Lusis providing Relevant Services to a customer, but only if and
to the extent that:
(i) such customer is a customer of Lusis pursuant to a
contract in effect on the date of this agreement;
(ii) revenues, turn-over or sales receivable from such
customer or any member of such customer's affiliated
group by Lusis for such Relevant Services do not at
anytime exceed (Pounds)100,000 in any one calendar
year; and
(iii) SWALEC uses the best endeavours required of it and
otherwise complies with its obligations under clause 13
(G)(ii) PROVIDED THAT CableTel (UK) Limited uses its
reasonable endeavours as referred to in clause
13(G)(i); or
(f) Lusis providing Relevant Services to any person other than the
customers referred to in subclause (e), but only if, and to the
extent that;
(i) it is reasonable to anticipate that such person will expend
not less than (Pounds)50,000 annually for those Relevant
Services in the then calendar year;
28
(ii) the Purchaser (or such member of the Purchaser's Group as
it may designate in writing) is offered, in writing, the
reasonable right of first refusal to provide telephony
services to such person on a basis that is at least
competitive with telephony services that can be provided by
others, both in terms of pricing and deliverability
provided that the Purchaser or such member is acceptable to
any such person (which shall be ascertained by a joint
approach to such person by Lusis and the Purchaser or such
member); and
(iii) telephone services are not provided via the fixed wire
network of any member of the Seller's Group on a basis that
does not permit the full recovery of its costs (including
capital costs) associated with the provision of those
services and a commercially reasonable margin thereon.
(B) The Purchaser undertakes to procure that each member of the Purchaser's
Group will not, either alone or in conjunction with or on behalf of any
other person (whether directly or indirectly, and whether as shareholder,
participator, partner, promoter, director, officer, agent, manager,
employee or consultant of, in or to any other person, firm or company)
whilst any member of the Purchaser's Group is the holder of any shares in
the Company and for a period of two years after such date compete directly
or indirectly with any member of the Seller's Group with regard to the
electricity supply and distribution business of any member of the Seller's
Group within the region served by the Seller on the Completion Date.
(C) Each undertaking contained in this clause 12 shall be construed as a
separate undertaking and if one or more of the undertakings is held to be
against the public interest or unlawful or in any way an unreasonable
restraint of trade, the remaining undertakings shall continue to bind the
parties giving or entering into the same.
13. THE JOINT VENTURE AGREEMENT AND OTHER ARRANGEMENTS
--------------------------------------------------
(A) The parties agree that each of the agreements specified in Part A of
schedule 6 (Agreements between the parties) (including all amendments, and
modifications of, and supplements to, those agreements) will be terminated
on the Completion Date.
(B) The parties agree that all agreements between members of the Group and
members of the Seller's Group (excluding the agreements referred to in sub-
clause (A), but including, without limitation, each of the agreements
specified in Part B of schedule 6 (Agreements between the parties)) shall
continue in full force and effect notwithstanding the provisions of sub-
clause (A).
(C) The parties agree that each of them will, on Completion and in accordance
with their respective obligations under paragraphs (i)(f) and (vii)(c) of
Schedule 1, procure that all parties to the Joint Venture Agreement enter
into a deed of release in the form set out in schedule 7 (Form of Deed of
Release) (the "Deed of Release").
29
(D) The Purchaser undertakes to fully indemnify the Seller and any member of
the Seller's Group and their respective officers against any obligation,
loss, cost, claim, liability, expense, damage or demand suffered or
incurred by the Seller or any member of the Seller's Group or their
respective officers (the "Indemnified Persons") arising from or in respect
of the Joint Venture Agreement, the articles of association of the Company
and any document entered into pursuant hereto or contemplated thereto, or
otherwise arising in connection with the Company save to the extent that
any such obligation, loss, cost, claim, liability, expense, damage or
demand is suffered or incurred by an Indemnified Person as a consequence of
any:-
(i) willful default;
(ii) negligence;
(iii) breach of the Joint Venture Agreement, the articles of association
of the Company and any document entered into pursuant thereto, or
contemplated thereby; or
(iv) breach of directors' fiduciary duties;
by an Indemnified Person which was not known to the Purchaser or any member
of the Purchaser's Group at the time of entering into this agreement.
(E) The Purchaser undertakes to the Seller and SWALEC to hold, upon written
request of the Seller or SWALEC, informal meetings, approximately once each
calendar quarter, at which a senior officer of the Purchaser (such as the
President or a cognizant Vice President) will be available to discuss the
business and operations of the Purchaser, as the same are described in the
Purchaser's publicly available information. Such meetings shall occur at
such times during Working Hours on Business Days, for such duration and in
such location as are mutually convenient to the respective representatives
of the Purchaser and the Seller or SWALEC intending to attend such
meetings. This undertaking shall cease to have effect if at any time, the
number of shares of Convertible Preferred Stock held of record by all
members of the Seller's Group is, or becomes, less than 10% of the
aggregate number of shares of Convertible Preferred Stock outstanding.
(F) In sub-clauses (F) to (K), "Lease" means the lease dated 24th March 1994
between (1) P & O Developments Limited (2) Acer Consultants Limited (now
called Xxxxx Consulting Limited) and (3) Acer Group Limited in respect of
premises at 1st Floor 65 Xxxxx France Xxxxxx XX0, and words and expressions
defined in the Lease shall have the same meanings when used in sub-clauses
(F) to (K).
(G) SWALEC will procure that Xxxxx Consulting Limited ("HCL") will:
(i) within 10 Business Days after the Completion Date enter into an
agreement for the assignment of the Lease to CableTel (UK) Limited,
such agreement to be in the form initialled by the parties for
identification (which shall include a provision requiring CableTel
(UK) Limited to use all reasonable endeavours to obtain the Landlord's
licence to assign the Lease), the assignment of the Lease executed in
pursuance of such agreement to contain an
30
indemnity covenant by which CableTel (UK) Limited will on behalf of
itself and all those claiming title to the Lease through or under it
indemnify Xxxxx Consulting Limited and Acer Group Limited for all
sums, costs, claims and other amounts payable by either of them to the
landlord under the Lease as a result of non-compliance with or non-
performance of the covenants and other obligations contained in the
Lease at any time during the Contractual Term after such assignment of
the Lease, save in respect of the matters in respect of which SWALEC
has provided an indemnity under sub-clause (H); and
(ii) use best endeavours to obtain the Licence to Assign in accordance with
clause 1.2 of the agreement referred to in sub-clause (i) from the
Landlord; provided that such best endeavours shall not require SWALEC
or HCL to expend or incur any liability which could result in
expenditure of more than (Pounds)25,000 in aggregate (which amount
shall include their own internal costs attributable to the provision
of property and legal services); but which will (notwithstanding this
foregoing proviso) require SWALEC or HCL to enter into (or procure the
entering into by another member of the Seller's Group) of such
agreements or other arrangements as may be reasonably required by the
Landlord (including, but not limited to guarantees, sureties, rent
deposit deeds or indemnities) to enable the Licence to Assign to be
concluded to the satisfaction of the Landlord PROVIDED THAT this shall
not require SWALEC, HCL or such member to pay or deposit monies in
excess of the Initial Rent payable for the remainder of the
Contractual Term. The Purchaser hereby agrees to indemnify SWALEC,
HCL and such member against all claims, demands, sums, costs and other
amounts suffered or incurred by any of them pursuant to such
agreements or arrangements, save to the extent that such claims,
demands, sums, costs or amounts relate to the payment or non-payment
of the Initial Rent or rates in respect of the Premises payable for
the remainder of the Contractual Term. In the event that the Landlord
refuses to grant the Licence to Assign notwithstanding the fulfilment
by SWALEC or HCL of its obligations aforementioned, SWALEC or HCL
shall use their reasonable endeavours within six months of the date of
this agreement to assign or sub-let the Premises on an arm's length
basis at market rent to a willing assignee or tenant and shall pay to
CableTel (UK) Limited an amount equal to the Initial Rent or part
thereof plus rates paid by that assignee or tenant.
(H) SWALEC will during the residue of the Contractual Term for so long as the
Lease is vested in CableTel (UK) Limited or any of its associated or
subsidiary companies indemnify CableTel (UK) Limited and the Purchaser
(which indemnity shall provide that it may be claimed as a debt or
liquidated demand) in respect of all Initial Rent (and Value Added Tax
thereon to the extent that CableTel (UK) Limited (or any person treated as
a member of the same group as CableTel (UK) Limited for value added tax
purposes) is unable to obtain a credit for the same as allowable input tax,
after using all reasonable endeavors to obtain such credit) and rates, but
not Additional Rents payable under the Lease as and when due under the
Lease;
(I) The Purchaser will procure that CableTel (UK) Limited will:
31
(i) notify SWALEC of any notice relating to rates payable in respect of
the Premises (including without limitation notices proposing rating
revaluation) and shall not agree to any increase in the rateable value
or the rates payable in respect of the Premises without first allowing
SWALEC at SWALEC's expense to make such representations and to take
such action in respect thereof (in either case in the name of CableTel
(UK) Limited) as SWALEC shall desire; and
(ii) not without the prior express written consent of SWALEC agree to any
increase in the Initial Rent nor to any variation of the dates on
which the Initial Rent is payable under the Lease.
(J) The Purchaser shall procure that CableTel (UK) Limited will, within 10
Business Days after the Completion Date, execute and deliver to Xxxxx
Consulting Limited a counterpart of the agreement for the assignment of the
Lease referred to in sub-clause G(i).
(K) The Purchaser undertakes that, if required by the Landlord (as defined in
the Lease), it will covenant with the Landlord as Surety in the terms of
Clause 3 of the draft License to Assign marked October 2nd, 1996 (in the
form initialled by the parties hereto) or such other form as the Landlord
and the Purchaser may agree.
14. CONSORTIUM RELIEF
-----------------
(A) The Purchaser undertakes to procure that the Company and each member of the
Group shall surrender for no payment all amounts eligible for surrender
under the provisions of sections 402 to 413 of ICTA 1988 as the Seller
shall at its sole discretion direct in respect of the accounting periods of
members of the Group for any accounting period, or part of an accounting
period, in the two calendar years to 31 December 1996, and in respect of
that part of the accounting period for the year to 31 December 1994, for
the period from 1 September 1994 to 31 December 1994.
(B) The Purchaser warrants that the Inland Revenue has agreed that CableTel UK
Group, Inc. was resident for tax purposes in the United Kingdom from 31
August 1994.
(C) The Purchaser shall procure that the members of the Group shall make all
claims and elections, and do all things that need to be done, to give
effect to such surrenders in a timely manner.
(D) The Purchaser shall procure that the members of the Group shall not take
any action which shall reduce the amounts eligible for surrenders.
(E) The Purchaser shall:-
(i) send the Seller copies of the computations of the amounts referred to
in sub-clause (A), and copies of the relevant accounts of each member
of the Group, not less than 14 days prior to their submission to the
Inland Revenue;
32
(ii) advise the Seller of all significant matters which arise subsequent
to their submission to the Inland Revenue;
(iii) provide copies of relevant correspondence; and
(iv) take into consideration any reasonable comments expressed by the
Seller on such computations, significant matters and correspondence.
(F) The Purchaser undertakes to the Seller that, for the purposes of the ICTA
1988 consortium relief, it will procure that CableTel UK Group, Inc. or any
other member of the Purchaser's Group holding shares in any member of the
Group was at all times from 31 August 1994 until Completion resident in the
United Kingdom for United Kingdom tax purposes PROVIDED THAT the Purchaser
shall not be liable hereunder if CableTel UK Group, Inc. or a member of the
Purchaser's Group holding shares in any member of the Group was not so
resident by reason of a change in legislation, Inland Revenue practice, the
terms of any relevant double tax treaty or by virtue of any other matter of
circumstance arising after Completion which is outside of the control of
the Purchaser but so that in such circumstances the Purchaser will take all
such action which is reasonable within its control so as to ensure that the
Purchaser will be treated as being so resident in the United Kingdom again.
(G) The Purchaser hereby covenants with the Seller to pay to the Seller an
amount equal to any liability or increased liability to Tax of the Seller
or any member of the Seller's Group which arises as a consequence of or by
reference to any action or omission carried out or effected by the
Purchaser or any member of the Group contrary to the provisions of
paragraph (A) to (F) of this clause.
15. EFFECT OF COMPLETION
--------------------
Any provision of this agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all the Seller's Warranties, all the
Purchaser's Warranties and all indemnities and other undertakings contained
in or entered into pursuant to this agreement shall remain in full force
and effect notwithstanding Completion.
16. REMEDIES AND WAIVERS
--------------------
(A) No delay or omission on the part of any party to this agreement in
exercising any right, power or remedy provided by law or under this
agreement or any other documents referred to in it shall:-
(i) impair such right, power or remedy; or
(ii) operate as a waiver thereof.
(B) The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
33
(C) Save as otherwise expressly provided in this Agreement, the remedies
provided in this agreement are cumulative and not exclusive of any remedies
provided by law.
17. ASSIGNMENT
----------
(A) The benefits of this agreement and any agreements referred to in clause 19
(Entire agreement) may be assigned (together with any cause of action
arising in connection with any of them) by either party to any successor
company (by way of merger, consolidation or transfer of all or
substantially all of its assets) provided that such party's obligations
under this agreement are novated to such a successor.
(B) The provisions of clauses 10 and 11 shall be binding upon and inure to the
benefit of and be enforceable without the need for an express assignment,
by subsequent holders of Restricted Securities or Registrable Securities.
(C) Except as stated in sub-clauses (A) and (B), neither the benefits nor the
obligations under this Agreement shall be assignable.
18. FURTHER ASSURANCE
-----------------
Each of the parties shall from time to time, on being required to do so by
the other party to this agreement, 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 such other party as such
other party may reasonably consider necessary for giving full effect to
this agreement and securing to such other party the full benefit of the
rights, powers and remedies conferred upon such other party in this
agreement.
19. ENTIRE AGREEMENT
----------------
(A) This agreement and the Deed of Release constitute the whole and only
agreement between the parties relating to the sale and purchase of the
Interests and supersedes and extinguishes any prior drafts, agreements,
undertakings, representations, warranties and arrangements of any nature
whatsoever, whether or not in writing, relating thereto.
(B) Each party acknowledges that in entering into this agreement and the Deed
of Release on the terms set out therein, it is not relying upon any
representation, warranty, promise or assurance made or given by any other
party or any other person, whether or not in writing, at any time before
the execution of this agreement which is not expressly set out in this
agreement.
(C) This agreement may only be varied in writing signed by each of the parties.
20. NOTICES
-------
(A) Any notice or other communication given or made under or in connection with
the matters contemplated by this agreement shall be in writing.
34
(B) Any such notice or other communication shall be addressed as provided in
sub-clause (C) and, if so addressed, shall be deemed to have been duly
given or made as follows:-
(i) if sent by personal delivery, upon delivery at the address of the
relevant party; and
(ii) if sent by first class post, six Business Days after the date of
posting;
PROVIDED THAT if, in accordance with the above provisions, any such notice
or other communication would otherwise be deemed to be given or made
outside Working Hours, such notice or other communication shall be deemed
to be given or made at the start of Working Hours on the next Business Day.
(C) The relevant addressee, address of each party for the purposes of this
agreement, subject to sub-clause (D), are:-
Name of party Address
------------- --------------
South Wales Alexandra Gate,
Electricity plc Xxxxx Xxx,
Xxxxxxx XX0 0XX,
Xxxxx,
Attention: Xxxx Xxxxx
International CableTel 000 Xxxx 00xx Xxxxxx,
Xxxxxxxxxxxx Xxx Xxxx, XX 00000,
U.S.A.
Attention: Xxxxxxx X. Xxxxxxx
with a copy of each notice or other communication sent to the Purchaser to:
CableTel (UK) Limited CableTel House,
0 Xxxxxxxx Xxxx,
Xxxxxxxxxxx,
Xxxxx XX00 0XX
Xxxxxxx
Attention: Xxxxxx Xxxxxxxxx
(D) A party may notify the other parties to this agreement of a change to its
name, relevant addressee or address for the purposes of sub-clause (C)
PROVIDED THAT such notification shall only be effective on:-
(i) the date specified in the notification as the date on which the change
is to take place; or
(ii) if no date is specified or the date specified is less than five clear
Business Days after the date on which notice is given, the date
falling five clear Business Days after notice of any such change has
been given.
35
(E) For the avoidance of doubt, the parties agree that the provisions of this
clause shall not apply in relation to the service of Service Documents.
21. ANNOUNCEMENTS
-------------
(A) Subject to sub-clause (B), no announcement concerning the sale of the
Interests, the purchase of the Convertible Preferred Stock or any ancillary
matter shall be made by any member of the Seller's Group without the prior
approval of the Purchaser, such approval not to be unreasonably withheld or
delayed or by any member of the Purchaser's Group without the prior
approval of the Seller and SWALEC, such approval not to be unreasonably
withheld or delayed.
(B) Any member of the Seller's Group and any member of the Purchaser's Group
may make an announcement concerning the sale of the Interests, the purchase
of the Convertible Preferred Stock or any ancillary matter if required by:-
(i) the law of any relevant jurisdiction; or
(ii) any securities exchange or regulatory or governmental body to which
such member is subject, wherever situated, including (without
limitation) the Commission, the NNM, the Federal Trade Commission, the
London Stock Exchange or The Panel on Takeovers and Mergers, whether
or not the requirement has the force of law,
PROVIDED THAT any such announcement shall be made only after notice to the
other party.
(C) The restrictions contained in this clause shall continue to apply after the
termination of the sale and purchase of the Interests under this agreement
without limit in time.
22. CONFIDENTIALITY
---------------
(A) Subject to sub-clause (B), each party shall treat as strictly confidential
all information received or obtained as a result of entering into or
performing this agreement or the agreements specified in Part B of schedule
6 (Agreements between the parties) (including, without limitation, that
party's involvement or participation in the affairs of any member of the
Group) which relates to:-
(i) any member of the Group; or
(ii) the other party.
(B) Each party may disclose information which would otherwise be confidential
if and to the extent:-
(i) required by the law of any relevant jurisdiction;
36
(ii) required by any securities exchange or regulatory or governmental
body to which either party is subject, wherever situated, including
(without limitation) the Commission, the NNM, the Federal Trade
Commission, the London Stock Exchange or the Panel on Takeovers and
Mergers, whether or not the requirement for information has the force
of law;
(iii) required to vest the full benefit of this agreement in either party;
(iv) disclosed to the professional advisers, auditors and bankers of each
party;
(v) the information has come into the public domain through no fault of
that party; or
(vi) the other parties have given prior written approval to the
disclosure, such approval not to be unreasonably withheld or delayed,
PROVIDED THAT any such information disclosed pursuant to paragraphs (i) or
(iii) shall be disclosed only after notice to the other parties.
(C) The restrictions contained in this clause shall continue to apply after the
termination of the sale and purchase of the Interests under this agreement
without limit in time.
23. RESTRICTIVE TRADE PRACTICES ACT 1976
------------------------------------
If there is any provision of this agreement, or of any agreement or
arrangement of which this agreement forms part, which causes or would cause
this agreement or that agreement or arrangement to be subject to
registration under the RTPA 1976, then that provision shall not take effect
until the day after particulars of this agreement or of that agreement or
arrangement (as the case may be) have been furnished to the Director
General of Fair Trading pursuant to section 24 RTPA 1976.
24. COSTS AND EXPENSES
------------------
Except as otherwise stated in any other provision of this agreement, each
party shall pay its own costs and expenses in relation to the negotiations
leading up to the sale of the Interests and to the preparation, execution
and carrying into effect of this agreement and all other documents referred
to in it.
25. COUNTERPARTS
------------
(A) This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
(B) Each counterpart shall constitute an original of this agreement, but at the
counterparts shall together constitute but one and the same instrument.
37
26. INVALIDITY
----------
If at any time any provision of this agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction, that
shall not affect or impair:-
(A) the legality, validity or enforceability in that jurisdiction of any other
provision of this agreement, or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.
27. CHOICE OF GOVERNING LAW
-----------------------
This agreement shall be governed by and construed in accordance with
English law.
28. JURISDICTION
------------
The parties to this agreement irrevocably agree for the exclusive benefit
of the Purchaser that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this
agreement and that accordingly any Proceedings may be brought in such
courts. Nothing contained in this clause shall limit the right of
Purchaser to take Proceedings against the Seller in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction,
whether concurrently or not, to the extent permitted by the law of such
other jurisdiction.
29. AGENT FOR SERVICE
-----------------
(A) The Purchaser irrevocably agrees that any Service Document may be
sufficiently and effectively served on it in connection with Proceedings in
England and Wales by service on the Company at its registered office
(Attention: Xxxxxx Xxxxxxxxx).
(B) A copy of any Service Document served on an agent pursuant to this clause
shall be sent by post to the Purchaser at its address for the time being
for the service of notices and other communications under clause 20
(Notices), but no failure or delay in so doing shall prejudice the
effectiveness of service of the Service Document in accordance with the
provisions of sub-clause (A).
(C) "Service Document" means a writ, summons, order, judgment or other process
----------------
issued out of the courts of England and Wales in connection with any
Proceedings.
AS WITNESS the hands of the duly authorized representatives of the
----------
parties hereto the day and year first before written.
38
SCHEDULE 1
----------
(Completion arrangements referred to in
clause 4 (Completion))
At Completion:-
(i) the Seller shall deliver to the Purchaser:-
(a) duly executed transfers in respect of the Interests in favour of
the Purchaser, share certificates for the Shares and loan notes
evidencing the Loan Notes in the name of the relevant transferors
and certified copies of any power of attorney under which any
transfer is executed on behalf of the Seller or nominee;
(b) such waivers or consents (other than any waivers or consents
which may be required from a member of the Purchaser's Group), as
the Purchaser may require to enable the Purchaser to be
registered as holders of the Interests;
(c) a certificate of a duly authorized officer or attorney of the
Seller certifying that no decrease in the valuation of the value
of the Interests has been recorded in the Books and Records of
any member of the Seller's Group since 1st January, 1996 and
before the time of Completion;
(d) a copy of the minutes of a duly held meeting of the directors of
the Seller authorizing the execution by the Seller of this
agreement (such copy minutes being certified as correct by the
secretary of the Seller); and
(e) a counterpart of the Deed of Release duly executed by each member
of the Seller's Group which is named as a party thereto.
(ii) the Seller shall procure the "B" Directors of the Company (and any
alternate directors appointed by them) to resign their offices as
such and to relinquish any rights which they may have under any
contract of employment with the Company or any other member of the
Group or under any statutory provision including any right to
damages for wrongful dismissal, redundancy payment or compensation
for loss of office or unfair dismissal, such resignations to be
tendered at the board meetings referred to in paragraph (iii)(b);
(iii) the Seller shall procure that:-
(a) there be lodged at the registered office of the Company a notice
duly executed by the Seller appointing each of the persons
nominated by the Purchaser as the "B" Directors of the Company
in substitution for the "B" Directors referred to in paragraph
(ii) above, as the Purchas-
39
er shall direct such appointments to take effect on the
Completion Date; and
(b) the "B" Directors referred to in paragraph (ii) above shall
deliver to the Company an acknowledgement executed as a deed
that he has no claim against any member of the Group for breach
of contract, compensation for loss of office, redundancy or
unfair dismissal or on any other account whatsoever and that no
agreement or arrangement is outstanding under which any member
of the Group has or could have any obligation to him.
(iv) the Seller shall deliver to the Purchaser an opinion of the Seller's
Solicitors in the agreed form;
(v) the Purchaser shall procure board meetings of the Company and
CableTel South Wales Limited to be held at which it shall be resolved
to approve the Deed of Release and the execution thereof by each such
company; and
(vi) the Purchaser shall deliver to the Seller:
(a) an opinion of U.S. counsel to the Purchaser in the agreed form;
(b) a counterpart of the Deed of Release duly executed by each
member of the Purchaser's Group which is named as a party
thereto;
(c) a waiver of the provisions of articles 6.1 to 6.11 of the
Company's articles of association in the agreed form duly
executed by CableTel (UK) Group, Inc.
40
SCHEDULE 2
----------
The Seller's warranties referred to
in clause 5 (The Seller's Warranties)
Each of the Seller and SWALEC warrants to the Purchaser as follows:-
1. OWNERSHIP OF THE SHARES
-----------------------
(A) The Seller is the sole beneficial owner of the Shares specified in schedule
4 (The Seller's Interests), such shares in aggregate constitute the entire
issued share capital of the Company beneficially owned by any member of the
Seller's Group and the Loan Notes specified in schedule 5 (The Seller's
Interests) constitute all the loan notes, bonds, debentures or other
indebtedness of the Company (other than any indebtedness arising in the
ordinary course of trading relationships between the Company and members of
the Seller's Group) registered in the name of, beneficially owned or held
by, or owed to any member of the Seller's Group.
(B) Each of the Interests are owned by the Seller free and clear of any equity,
claim, option, right to acquire, mortgage, pledge, lien, charge, security
interest, limitation on voting rights and encumbrance of any kind and there
is no agreement or commitment to give or create any and no claim has been
made by any person to be entitled to any. The Interests represent all of
the Seller's Group's shares, interests, participations or equivalents
(however designated) of each member of the Seller's Group in the Group
howsoever arising. Neither it nor any member of the Seller's Group has
granted any interest in the Group to any third party or caused any interest
in the Group to be held by any third party.
2. CAPACITY OF THE SELLER
----------------------
(A) It has the requisite power and authority to enter into and perform this
agreement and to consummate the transactions contemplated by the agreement.
(B) The execution, delivery and performance of this agreement by it and the
consummation by it of the other transactions contemplated by this
agreement have been duly authorized by all necessary action on the part of
it and no other proceedings on the part of it are necessary to authorise
this Agreement or to consummate the transactions contemplated by this
agreement.
(C) This agreement constitutes and the other documents executed by it which are
to be delivered at Completion will, when executed, constitute binding
obligations of it in accordance with their respective terms.
(D) The execution and delivery of, and the performance by it of its obligations
under this agreement will not:-
(i) result in a breach of any provision of its memorandum or articles of
association
41
(ii) result in a breach of, or constitute a default under, any instrument
to which any member of the Seller's Group is a party or by which any
member of the Seller's Group is bound; or
(iii) result in a breach of any order, judgment or decree of any court or
governmental agency to which any member of the Seller's Group is a
party or by which any member of the Seller's Group is bound; or
(iv) require the consent of its shareholders or of any other person.
3. ARRANGEMENTS BETWEEN THE GROUP AND THE SELLER'S GROUP
-----------------------------------------------------
Except for the Loan Notes and any indebtedness arising in the ordinary
course of trading relationships between members of the Seller's Group and
members of the Group, no indebtedness (actual or contingent) is
outstanding, and there is no contract or arrangement which has not been
entered into on arm's length terms between any member of the Group and any
member of the Seller's Group or any person who is a director of or
connected with the Seller, SWALEC or with any such member.
4. OTHER INTERESTS OF SELLER AND SWALEC
------------------------------------
Neither the Seller, SWALEC nor any director of or person connected with the
Seller or SWALEC has any interest (other than the holding of shares
amounting to less than 10% of the capital of a company quoted on any stock
exchange), direct or indirect, in any business which competes or is likely
to compete with any business now carried on by any member of the Group.
5. ACCURACY OF INFORMATION
-----------------------
The information given in schedule 5 (the Seller's Interests) is true and
accurate in all respects and is not misleading because of any omission or
ambiguity or for any other reason.
6. INSOLVENCY
----------
(A) No order has been made and no resolution has been passed for the winding up
of the Seller, SWALEC, or Xxxxx plc or for a provisional liquidator to be
appointed in respect of either or all of them and no petition has been
presented and no meeting has been convened for the purpose of winding up of
the Seller, SWALEC, or Xxxxx plc.
(B) No administration order has been made and no petition for such an order has
been presented in respect of the Seller, SWALEC, or Xxxxx plc.
(C) No receiver (which expression shall include an administrative receiver) has
been appointed in respect of the Seller, SWALEC, Hyder plc or all or any of
their respective assets.
42
(D) Neither the Seller, SWALEC, nor Xxxxx is insolvent, or unable to pay its
debts within the meaning of section 123 Insolvency Xxx 0000, or has stopped
paying its debts as they fall due.
(E) No voluntary arrangement has been proposed under section 1 Insolvency Xxx
0000 in respect of the Seller, SWALEC, or Xxxxx plc.
(F) No event analogous to any of the foregoing has occurred in or outside
England and Wales.
(G) No unsatisfied judgment is outstanding against the Seller or Xxxxx plc.
7. LITIGATION
----------
No injunction, stop notice or charging order has been made, awarded or
threatened against the Seller which prevents or seeks to prevent the Seller
from selling the Interests to the Purchaser.
43
SCHEDULE 3
----------
The warranties referred to in clause 7 (The Purchaser's Warranties)
As used in this schedule 3, the term "Material Adverse Effect" with respect to
an entity (or group of entities taken as a whole) means an effect which is
materially adverse to the business, properties, assets, liabilities, results of
operations and financial condition of such entity (or group of entities taken as
a whole).
The Purchaser warrants to the Seller and SWALEC as follows:
1. ORGANIZATION ETC.
----------------
(A) The Purchaser and each of its subsidiaries is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to own, lease and operate the
assets owned and leased by it and to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power and authority would not, individually or in
the aggregate, have a Material Adverse Effect (as defined herein) on the
Purchaser and its subsidiaries taken as a whole.
(B) The Purchaser and each of its subsidiaries is duly qualified or licensed to
do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect
on the Purchaser and its subsidiaries taken as a whole.
(C) The Purchaser has made available to the Seller a complete and correct copy
of its charter and by-laws, each as amended to date. Such charter and by-
laws are in full force and effect. The Purchaser is not, nor will the
execution, delivery or performance of this Agreement by Purchaser result
in any, in violation of any provision of its charter or by-laws.
2. CAPITALIZATION.
--------------
(A) As of the date of this agreement, the authorized capital stock of the
Purchaser consists of 100,000,000 shares of the Purchaser's Common Stock,
of which 32,006,800 shares are issued and outstanding and 21,902,850 shares
are reserved for issuance upon exercise of options or warrants or
conversion of convertible securities, and 2,500,000 shares of preferred
stock, $.01 par value, of which no shares are issued and outstanding and
one million shares of Series A Junior Participating Preferred Stock have
been designated and reserved for issuance in connection with a Rights
Agreement dated as of October 13, 1993 between the Purchaser and
Continental Stock Transfer & Trust Company, a true and correct copy of
which Rights Agreement has heretofore been delivered by the Purchaser to
the Seller.
(B) All the outstanding shares of the Purchaser's capital stock are, and the
shares of Convertible Preferred Stock, and any shares of Common Stock into
or for which
44
such Convertible Preferred Stock is convertible or redeemable, will be,
when issued and paid for in accordance with the terms hereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
any preemptive rights of third parties in respect thereby.
3. AUTHORITY
---------
(A) The Purchaser has the requisite corporate power and authority to execute
and deliver this agreement and to perform its obligations under this
agreement.
(B) The execution, delivery and performance of this agreement by the Purchaser
have been duly authorized by all necessary corporate action on the part of
the Purchaser and no other corporate proceedings on the part of the
Purchaser, as the case may be, are necessary to authorize this agreement or
to perform its obligations under this agreement.
(C) This agreement has been duly executed and delivered by the Purchaser and,
assuming this agreement constitutes a valid and binding obligation of the
Seller, constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms except as
the enforceability thereof may be limited by the effect of (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors and (y) general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the
court before which any proceedings therefor may be brought.
4. CONSENTS AND APPROVALS; NO VIOLATIONS.
--------------------------------------
(A) Neither the execution, delivery or performance of this agreement by the
Purchaser nor the consummation by the Purchaser of the transactions
contemplated by this agreement:
(i) require any filing with, or permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or
agency (a "Governmental Entity");
(ii) result in a breach of or default under any material obligation,
agreement or condition contained in any security, contract,
indenture, agreement or instrument (including, without limitation,
any loan or note agreement or indenture relating to any outstanding
securities) to which the Purchaser or any subsidiary is a party or
by which the Purchaser or any material subsidiary may be bound;
(iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser
provided that the foregoing warranties shall be deemed to be in breach
only, in the case of subparagraph (i), where failure to obtain such
permits, authorizations, consents or approvals or to make such filings,
and, in the case of subparagraphs (ii)
45
and (iii), for violations, breaches, defaults or other occurrences which,
in either case, would prevent or delay consummation of this agreement in
any material respect or would have a Material Adverse Effect on the
Purchaser and its subsidiaries taken as a whole.
5. COMMISSION REPORTS AND FINANCIAL STATEMENTS.
-------------------------------------------
(A) The Purchaser has filed with the Commission, and has made available to the
Seller, true and complete copies of the Commission Documents (including all
amendments thereto). The Commission Documents are all the filings with the
Commission that the Purchaser was required to make under the Exchange Act
from 23rd March, 1996 to the Completion Date.
(B) The Commission Documents, including without limitation any financial
statements or schedules included therein, at the time filed:
(i) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading and
(ii) complied in all material respects with the applicable requirements of
the Exchange Act or the Securities Act, as the case may be.
(C) The consolidated balance sheets of the Purchaser and its consolidated
subsidiaries for the fiscal years ended December 31 in each of the years
1993 and 1994, and the related consolidated statements of income,
stockholder's equity and cash flows for the fiscal years respectively
ending on such dates, accompanied by reports thereon containing opinions by
the Purchaser's then current certified public accountants (copies of which
have been furnished to you) have been prepared in accordance with U.S.
generally accepted accounting principles consistently applied and present
fairly the financial position of the Purchaser and its consolidated
subsidiaries as of such dates and the results of their operations and cash
flows for such years.
(D) The consolidated financial statements of the Purchaser included in the
Commission Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereby, have been prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis during the periods presented (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as
permitted on the Purchaser's Form 10-Q as filed with the Commission under
the Exchange Act) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments which will not be
material in amount or effect) in all material respects the consolidated
financial position of the Purchaser and its consolidated subsidiaries as at
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended.
46
6. ABSENCE OF CERTAIN CHANGES.
--------------------------
Except as disclosed in the Commission Documents, since June 30, 1996, the
Purchaser has conducted its business in the ordinary course of such
business and there has not been:
(i) any event or occurrence which has had any Material Adverse Effect on
the Purchaser and its subsidiaries taken as a whole,
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock or
(iii) any material change in its accounting principles, practices or
methods.
7. LITIGATION.
----------
Except as disclosed in the Commission Document, there is no suit, claim,
action, proceeding or investigation pending or, to the best knowledge of
the Purchaser, threatened, against the Purchaser or any of its subsidiaries
before any governmental entity which, in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Purchaser and its
subsidiaries taken as a whole or the ability of the Purchaser to perform
its obligations under this agreement. Neither the Purchaser nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or
decree which, insofar as can be reasonably foreseen, individually or in the
aggregate, would have a Material Adverse Effect on the Purchaser and its
subsidiaries taken as a whole or the ability of the Purchaser to perform
its obligations under this agreement.
47
SCHEDULE 4
----------
LIMITATIONS ON LIABILITY UNDER THE WARRANTIES
---------------------------------------------
WARRANTIES
----------
Subject to the next sentence, notwithstanding anything in this agreement to the
contrary, the provisions of this Schedule shall operate to limit the liability
of one party (the "Defaulting Party") in respect of any claim by the other
party (the "Non-defaulting Party") for any breach of the Agreement (including
any breach of or inaccuracy in the Defaulting Party's Warranties). For the
purpose of this schedule, SWALEC, the Seller and each Relevant Member (as
defined in paragraph 2 below) shall collectively be deemed to be one party.
The provisions of this Schedule 4 shall not limit, affect or impair the
liability of any party or Holder of Registrable Securities under sub-clauses
11(F) to 11(K), the Purchaser's liability under clause 13(D) or clause 14(G) of
the agreement or the Seller's and SWALEC's liability under clause 9 of the
agreement. All other obligations, covenants, undertakings, indemnities and
warranties contained in the agreement are referred to in this schedule as the
"Obligations."
1. LIMITATION ON QUANTUM
---------------------
(A) The Non-defaulting Party shall not be entitled in any event to any payment
in respect of any claim or claims under any of the Defaulting Party's
Obligations unless and until the amount of any individual claim exceeds
(Pounds)10,000; PROVIDED THAT the total aggregate liability of the
Defaulting Party for breach of the Defaulting Party's Obligations shall
not in any event exceed (Pounds) 52,080,000 or, if the Defaulting Party is
the Seller, SWALEC and the Relevant Member, the aggregate amount payable by
the Seller, SWALEC and the Relevant Member pursuant to paragraph 2 below or
(if less) (Pounds)52,080,000.
(B) For the purpose of paragraph I(A), where a claim relates to more than one
event, circumstance, act or omission which event, circumstance, act or
omission would separately constitute a breach of or give rise to a claim
for breach of any of the Defaulting Party's Obligations, such claim shall
be treated as a separate claim in respect of each such event, circumstance,
act or omission.
2. MANNER OF SATISFYING CLAIMS
---------------------------
The liability of the Seller, SWALEC and each Relevant Member in respect of
all claims brought by the Purchaser for breach of the Obligations (the
"Indemnification Amount") shall be satisfied solely by the payment to the
Purchaser of the proceeds from the Sale, whenever consummated, by the
Relevant Member of that number of the Convertible Preferred Stock issued to
the Seller on Completion or the Common Stock issued to the Seller or
another member of the Seller's Group upon conversion of such Convertible
Preferred Stock (the "Stock") rounded upward to the nearest whole share,
which is derived by dividing the Indemnification Amount by the
48
ask/bid price of the Stock on the date the Indemnification Amount is agreed
by the parties (the "Indemnification Shares"). The Seller shall procure
that Indemnification Shares then owned by the Relevant Member shall be held
by the Relevant Member and shall be sold, subject to compliance with
applicable law as soon as practicable, at the direction of the Purchaser,
and the proceeds of the Sale (net of any taxes arising from such Sale) of
such Indemnification Shares shall be remitted to the Purchaser. To the
extent that the Seller is unable to satisfy its obligations pursuant to
this clause 2 due to a prior disposal of some or all the Indemnification
Shares, the Seller shall first remit to the Purchaser any proceeds (net of
any taxes arising from such Sale) from prior Sales of the Indemnification
Shares and thereafter the proceeds from the Sale (net of any taxes arising
from such Sale) of the Relevant Member's existing holdings of
Indemnification Shares. No further payment shall be required to be made by
the Seller, SWALEC or any Relevant Member once proceeds of the Sale of all
the Stock has been paid to the Purchaser. For the purposes of this
paragraph 2, "Relevant Member" means a member of the Seller's Group which,
(save in the case of SWALEC) having complied with clause 10(E) of the
agreement, holds the Stock for the time being and "Sale" means a sale of
Stock by a Relevant Member to a person who or which is not a member of the
Seller's Group.
3. TIME LIMITS FOR BRINGING CLAIM
------------------------------
No claim shall be brought against the Defaulting Party in respect of any
breach of the Defaulting Party's Obligations unless the Non-defaulting
Party shall have given to the Defaulting Party written notice of such claim
specifying (in reasonable detail), in so far as then known to the Non-
defaulting Party and is reasonably necessary for the Defaulting Party to
ascertain the general nature of the following, the matter which gives rise
to the breach or claim, the nature of the breach or claim and the
approximate amount claimed in respect thereof (detailing the Non-defaulting
Party's calculation of the loss thereby alleged to have been suffered by
it) within 90 days after the officers of the Defaulting Party become aware
of the basis of such claim and in any event on or before the sixth
anniversary of Completion.
PROVIDED that the liability of the Defaulting Party shall absolutely
determine (if such claim has not been previously satisfied, settled or
withdrawn) if legal proceedings in respect of such claim shall not have
been commenced within six months of the service of such notice and for this
purpose proceedings shall not be deemed to have been commenced unless they
shall have been properly issued and validly served upon the Defaulting
Party.
AND FURTHER PROVIDED that such a claim, once commenced, is progressed by
the Non-defaulting Party as quickly as reasonably possible.
49
4. CONDUCT OF LITIGATION
---------------------
(A) Upon the Non-defaulting Party becoming aware of anything which is or may
constitute a breach of any of the Defaulting Party's Obligations or of any
claim, action or demand against it or matter likely to give rise to any of
these in respect of the Defaulting Party's Obligations, the Non-defaulting
Party shall:
(i) promptly notify the Defaulting Party by written notice as soon as
practicable after it appears to the Non-defaulting Party that any
assessment or claim of a third party received by or coming to the
notice of the Non-defaulting Party may result in a claim under the
Defaulting Party's Obligations;
(ii) subject to the Defaulting Party indemnifying the Non-defaulting party
and, if so required by the Non-defaulting Party the relevant member
of the Group to their reasonable satisfaction against any liability,
costs, damages or expenses which may properly be incurred thereby,
take such reasonable action, provide such reasonable assistance and
give such information and access to personnel, premises, chattels,
documents and records to the Defaulting Party and its professional
advisers as the Defaulting Party may reasonably request in order to
investigate, avoid, dispute, resist, mitigate, settle, compromise,
defend or appeal any claim in respect thereof or adjudication with
respect thereto or any claim or potential claim in respect of a
breach of any of the Defaulting Party's Obligations;
(iii) at the request and cost of the Defaulting Party, allow the Defaulting
Party to take the sole conduct of such actions as the Defaulting
Party may deem reasonably appropriate in connection with any such
assessment or claim in the name of the Non-defaulting Party and in
that connection the Non-default ing Party shall give or cause to be
given to the Defaulting Party and at the cost of the Defaulting Party
all such assistance as the Defaulting Party may reasonably require in
avoiding, disputing, resisting, settling, compromising, defending or
appealing any such claim and shall instruct such solicitors or other
professional advisors as the Defaulting Party may nominate to act on
behalf of the Non-defaulting Party but to act in accordance with the
reasonable instructions of the Defaulting Party;
(iv) use all reasonable endeavors to ensure that no admission of
liability, agreement, settlement or compromise is made with any
third party in relation to any such claim or adjudication without the
prior written consent of the Defaulting Party (such consent not to be
unreasonably withheld or delayed); and
(v) take at the cost of the Defaulting Party all reasonable action to
mitigate any loss suffered by it in respect of which a claim could be
made under the Defaulting Party's Obligations.
50
(B) In any event, the Defaulting Party shall be entitled at any stage and at
its reasonable discretion to settle any such third party assessment or
claim and shall notify the Non-defaulting Party of its decision so to
settle such assessment or claim.
5. NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR
-------------------------------------------------
Non-defaulting Party can only claim once
----------------------------------------
(A) The Defaulting Party shall not be liable for breach of any of the
Defaulting Party's Obligations to the extent that the subject of the claim
has been or is made good or is otherwise compensated for without cost to
the Non-defaulting Party.
Tax
---
(B) In calculating the liability of the Defaulting Party for any breach of the
Defaulting Party's Obligations there shall be taken into account the amount
by which any tax for which any member of the Non-defaulting Party's Group
is now or may in the future be accountable or liable to be assessed is
reduced or extinguished as a result of the matter giving rise to such
liability PROVIDED THAT no such amount shall be taken into account until
such time as the Non-defaulting Party receives such benefit.
6. ACTS OF NON-DEFAULTING PARTY
----------------------------
No claim shall be against the Defaulting Party under the Defaulting Party's
Obligations to the extent that such claim is attributable to:
(A) any voluntary action, omission, transaction or arrangement carried out
at the request of or with the consent of the Non-defaulting Party
before Completion;
(B) any voluntary act, omission, transaction or arrangement carried out by
the Non-defaulting Party or by persons deriving title from the Non-
defaulting Party or any member of the Non-defaulting Party's Group
(other than an action, omission, transaction or arrangement carried
out pursuant to a legally binding obligation created on or before
Completion) occurring after Completion otherwise than in the ordinary
course of business; or
(C) any admission of liability made after the date hereof by the Non-
defaulting Party or by persons deriving title from the Non-defaulting
Party or any member of the Non-defaulting Party's Group on or after
Completion.
7. RETROSPECTIVE LEGISLATION
-------------------------
No liability shall arise in respect of any breach of any of the Defaulting
Party's Obligations to the extent that liability for such breach occurs or
is increased as a
51
result of any legislation not in force at the date hereof or change in
rates of taxation which in either case takes effect retrospectively.
8. NON-DEFAULTING PARTY'S KNOWLEDGE
--------------------------------
The Defaulting Party shall not be liable in respect of any claim under the
Defaulting Party's Obligations to the extent that the Non-defaulting Party
or any member of the Defaulting Party's Group which is resident in the
United Kingdom for tax purposes or operates or is registered in the United
Kingdom or any of their respective directors, employees or agents had
actual knowledge of the claim or the matter forming the basis for such
claim on the date of this agreement.
9. NO LIABILITY FOR CONTINGENT OR NON-QUANTIFIABLE CLAIMS
------------------------------------------------------
If any breach of the Defaulting Party's Obligations arises by reason of
some liability which, at the time such breach or claim is notified to the
Defaulting Party, is contingent only or otherwise not capable of being
quantified, then the Defaulting Party shall not be under any obligation to
make any payment in respect of such breach or claim unless and until such
liability ceases to be contingent or becomes capable of being quantified,
as the case may be, before six years from Completion. So long as such
claim shall have been notified to the Defaulting Party in accordance with
paragraph 3 above, then the first proviso to that paragraph shall be
amended in relation to such claim so as to require that (subject to the six
year limit imposed in the previous sentence) legal proceedings be commenced
within six months from the date on which the said liability ceases to be
contingent or becomes capable of being quantified, as the case may be, in
order for the liability of the Defaulting Party not to determine.
10. PAYMENT OF CLAIM TO BE REDUCTION IN PURCHASE PRICE
--------------------------------------------------
Any payment by the Seller or SWALEC in respect of any claim under the
Seller's Warranties shall be deemed to be a reduction in the consideration
paid by the Purchaser under clause 3 of this agreement.
11. OVERRIDING EFFECT
-----------------
If there shall be any inconsistency between the provisions of this schedule
and the remaining provisions of this agreement, then the provisions of this
schedule shall prevail. No one provision of this schedule shall reduce or
prejudice the limitation or reduction of the liability of the Defaulting
Party under any other provision of this schedule.
52
SCHEDULE 5
----------
(The Seller's Interests)
----------------------
Part A
------
(A) Numbers of Shares registered in the name of, and beneficially owned by,
-----------------------------------------------------------------------
members of the Seller's Group
-----------------------------
Number of
Registered Ordinary
Full name address Shares owned
--------------------- ------------- ------------
SWALEC TELCO Newport Road, 60,060,000
Investments Limited Xx. Xxxxxxx,
Xxxxxxx
XX0 0XX
Part B
------
(B) Details of Loan Notes registered in the name of, held by or beneficially
------------------------------------------------------------------------
owned by members of the Seller's Group and all other non-trading
----------------------------------------------------------------
indebtedness owed by any member of the Group to any member of the Seller's
--------------------------------------------------------------------------
Group
-----
The following Loan Notes are registered in the name of, held by, or
beneficially owned by the person(s) whose name(s) are set opposite them:
Name of Registered
Principal amount and designation of and, if different,
Loan Notes (or other indebtedness) beneficial owner
----------------------------------- ------------------
1. (Pounds)4,000,000 unsecured Loan Note 1999 (issued on 18 May, 1994) SWALEC TELCO
Investments Limited
2. (Pounds)4,000,000 unsecured Loan Note 2000 (issued on 21 July, 1995) SWALEC TELCO
Investments Limited
3. (Pounds)4,400,000 unsecured Loan Note 2000 (issued on 5 October, 1995) SWALEC TELCO
Investments Limited
4. (Pounds)3,680,000 unsecured Loan Note 2001 (issued on 21 December, 1995) SWALEC TELCO
Investments Limited
5. (Pounds)20,000,000 unsecured Loan Note 2001 (issued on 19 September, 1996) SWALEC TELCO
Investments Limited
(Pounds)36,080,000 SWALEC TELCO
Investments Limited
53
SCHEDULE 6
----------
Part A
------
The agreements referred to in clause 13(A) (Agreements and other
arrangements to be terminated).
1. the Joint Venture Agreement.
2. the Agreement for Provision of Management Services dated December 15, 1993
between (1) the Purchaser (2), CHUK, (3) SIL and (4) CSW.
Part B
------
The agreements referred to in clause 13(B) (Agreements and other
arrangements between the parties that continue in full force and effect)
1. the agreement for the grant of a lease of Xxxxxxxxxx Xxxxx, Xxxxxxxxxx
Xxxxxx, Xxxxxxx, between SWALEC and CSW dated 1st October, 1996.
2. Various electricity supply agreements and agreements for the supply of
power supply equipment between SWALEC and CSW.
3. The operating lease for an overhead fibre optic link between SWALEC and CSW
dated 10th May, 1995.
4. Various wayleave agreements, licenses and other consents for the
installation of the Group's telecommunications network.
5. The site sharing agreement in respect of the site at Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxx, between SWALEC and CSW dated 24th January, 1995
(as amended and renewed).
6. Various agreements and arrangements between operating subsidiaries of Xxxxx
plc and members of the Group for:
(i) the supply of water, the treatment of effluent and the provision of
services ancillary thereto;
(ii) the supply or hire of vehicles and the provision of transport and
vehicle maintenance services; and
(iii) the provision of telecommunications services.
54
SCHEDULE 7
----------
The deed of release referred to in clause 13(C)
(Form of Deed of Release)
THIS DEED OF RELEASE is made the day of October 1996.
BETWEEN:
1. SOUTH WALES ELECTRICITY PLC of Xxxxxxx Xxxx, Xx. Xxxxxxx, Xxxxxxx XX0 0XX
("SWE").
2. SWALEC INVESTMENTS LIMITED of Newport Road, St. Mellons, aforesaid
("Swalec").
3. SWALEC TELCO INVESTMENTS LIMITED of Newport Road, St. Mellons, aforesaid
("STIL").
4. INTERNATIONAL CABLETEL INCORPORATED of 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, ("XX (XX)").
5. CABLETEL LIMITED (formerly CableTel Holdings (UK) Limited) of CableTel
House, 0 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxx XX00 0XX ("IC").
6. CABLETEL UK GROUP INC (formerly OCOM Sub II, Inc.) of CableTel House,
aforesaid ("IC UK").
7. CABLETEL NEWPORT (formerly Newport Cablevision Company) of CableTel House,
aforesaid ("Newport").
8. CABLETEL SOUTH WALES LIMITED of CableTel House, aforesaid ("CableTel").
W H E R E A S:
(A) The parties are the parties to a subscription and shareholders agreement
dated 15th December 1993 (the "Joint Venture Agreement") as amended by
Deeds of Variation dated 15th December 1995 and 28th March 1996.
(B) STIL currently hold 60,060,000 B Ordinary Shares and (Pounds)36,080,000
Loan Notes evidencing the indebtedness of Newport to STIL in the sum of
(Pounds)36,080,000 (together, the "Interests").
55
(C) By an agreement of even date herewith (the "Agreement") between STIL, SWE
and IC (US), STIL agreed to sell and IC (US) agreed to purchase all of
STIL's Interests.
Pursuant to the Agreement STIL and IC (US) have agreed to procure that all
parties to the Subscription Agreement enter into this Deed of Release.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
--------------
Expressions used but not otherwise defined in this Deed and which are
defined in the Joint Venture Agreement shall bear the same meaning in this
Deed. "Management Agreement" means an agreement for the provision of
management services dated December 15, 1993 between (1) IC (US) (2)
CableTel Holdings (UK) Limited (3) Swalec and (4) CableTel.
2. RELEASE AND WAIVER OF IC (US)
-----------------------------
In consideration of the release and waiver contained in clause 3 of this
Deed of Release, IC (US), IC, IC UK, Newport and CableTel hereby release
and discharge STIL, SWE, Swalec and all subsidiaries, subsidiary
undertakings and any holding company of SWE, Swalec or STIL and all other
subsidiaries and subsidiary undertakings of any such holding company (the
"STIL Group") and all officers, employees and agents thereof from all
demands, duties, responsibilities, obligations and liabilities under or in
respect of the Joint Venture Agreement (as amended), the Articles of
Association, the Management Agreement and any document entered into
pursuant thereto, or contemplated thereby and hereby waive all claims of
whatsoever nature against all officers, employees and agents of the STIL
Group and hereby waive all claims against the STIL Group arising or
accruing under or pursuant to the Joint Venture Agreement (as amended), the
Management Agreement or the Articles of Association of Newport and any
document entered into pursuant thereto or contemplated thereby.
3. RELEASE AND WAIVER OF SWE GROUP
-------------------------------
In consideration of the release and waiver contained in clause 2 of this
Deed of Release, SWE, Swalec and STIL hereby release and discharge to
Cabletel (UK) Limited, IC (US), IC, IC UK, Newport, CableTel and all
subsidiaries, subsidiary undertakings and any holding company of IC (US),
IC, IC UK, Newport or CableTel and all other subsidiaries and subsidiary
undertakings of any such holding company (the "IC US Group") and all
officers, employees and agents thereof from all demands, duties,
responsibilities, obligations and liabilities under or in respect of the
Joint Venture Agreement (as amended), the Management Agreement, the
Articles of Association and any document entered into pursuant thereto or
contemplated thereby and hereby waive all claims of whatsoever nature
against all officers, employees and agents of the IC US Group and hereby
waive all claims against the IC US Group arising or accruing under or
pursuant to the Joint Venture Agreement
56
(as amended) the Management Agreement or the Articles of Association of
Newport and any document entered into pursuant thereto or contemplated
thereby.
PROVIDED ALWAYS that this clause shall not in any way prejudice, limit or
affect nor operate as a release or waiver of, the indemnity contained in
clause 13(D) of the Agreement.
4. COUNTERPARTS
------------
This Deed may be signed in two or more counterparts and by each party
hereto on separate counterparts, each of which when so signed and delivered
shall be an original but all counterparts together shall constitute one and
the same instrument.
57
IN WITNESS WHEREOF this Deed has been executed as a Deed by the parties thereto
but remains undelivered until the day and year first above written.
EXECUTED as a Deed by
SOUTH WALES ELECTRICITY PLC
acting by:
Director
Director/Secretary
EXECUTED as a Deed by
SWALEC INVESTMENTS LIMITED
acting by:
Director
Director/Secretary
EXECUTED as a Deed by
SWALEC TELCO INVESTMENTS LIMITED
acting by:
Director
Director/Secretary
EXECUTED as a Deed by
INTERNATIONAL CABLETEL INCORPORATED
acting by its duly authorized representative:
EXECUTED as a Deed by
CABLETEL LIMITED
acting by:
Director
58
Director/Secretary
EXECUTED as a Deed by
CABLETEL UK GROUP INC
acting by its duly authorized representative:
EXECUTED as a Deed by
CABLETEL NEWPORT
acting by:
Director
Director/Secretary
EXECUTED as a Deed by
CABLETEL SOUTH WALES LIMITED
acting by:
Director
Director/Secretary
59
SCHEDULE 8
----------
(The Purchaser's Commission Documents)
1. Annual Report on Form 10-K, for the fiscal year ended December 31, 1995.
2. Annual Report to Shareholders, for the year ended December 31, 1995.
3. Quarterly Report on Form 10-Q, for the quarterly period ended March 31,
1996.
4. Quarterly Report on Form 10-Q/A-1 for the quarterly period ended March 31,
1996.
5. Preliminary Proxy Statement, as filed on April 29, 1996.
6. Current Report on Form 8-K/A-1, as filed on May 9, 1996.
7. Current Report on Form 8-K, as filed on May 9, 1996.
8. Current Report on Form 8-K, as filed on June 11, 1996.
9. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996
dated August 14, 1996.
10. Current Report on Form 8-K, as filed on September 3, 1996.
60
SIGNATURES
----------
SWALEC TELCO INVESTMENTS LIMITED
By its attorney: X.X. XXXXXX
----------------------------------------
Name: X.X. XXXXXX
Title:
SOUTH WALES ELECTRICITY PLC
By its attorney: X.X. XXXXXX
----------------------------------------
Name: X.X. XXXXXX
Title:
INTERNATIONAL CABLETEL INCORPORATED
By: XXXXXXX XXXXXXX
---------------------------------------------------
Name:
Title:
61
