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TERMINATION AGREEMENT
by and among
AT&T CORP.,
AT&T COMMUNICATIONS SERVICES OF JAMAICA L.L.C.,
BRITISH TELECOMMUNICATIONS PLC,
BT (NETHERLANDS) HOLDINGS B.V.
and
CONCERT B.V.
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As of October 15, 2001
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TERMINATION AGREEMENT (this "AGREEMENT"), dated as of October
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15, 2001, by and among AT&T Corp., a corporation incorporated under the laws of
the State of New York, United States of America ("AT&T"), AT&T Communications
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Services of Jamaica L.L.C., a limited liability company formed under the laws of
the State of Delaware, United States of America (formerly known as VLTH Company
L.L.C.) ("ACSJ," and together with AT&T, the "AT&T PARTIES"), British
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Telecommunications plc, a company organized under the laws of England and Wales
("BT"), BT (Netherlands) Holdings B.V., a BESLOTEN VENNOOTSCHAP organized under
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the laws of The Netherlands ("BT HOLDINGS," and together with BT, the "BT
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PARTIES"), and Concert B.V., a BESLOTEN VENNOOTSCHAP organized under the laws of
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The Netherlands (formerly known as TNV (Netherlands) B.V.) ("CONCERT BV").
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R E C I T A L S :
- - - - - - - -
A. Pursuant to a Framework Agreement, dated as of October 23,
1998, among the parties hereto, as amended by a Closing Agreement, dated as of
November 22, 1999, among the parties hereto (the "Closing Agreement") (the
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Framework Agreement as amended by the Closing Agreement, together with all
further amendments and modifications executed by the parties prior to or as of
the date hereof, the "Framework Agreement"), AT&T and BT formed a joint venture
which was implemented through Concert BV and its Subsidiaries (collectively, the
"Concert Group").
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B. Each of the parties acknowledge and agree that it is in the
best interests of each party and the Concert Group to terminate the joint
venture and wind up the business of the Concert Group as described in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the adequacy and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
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1.1 Definitions. For the purposes of this Agreement, the
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following terms shall have the following meanings, unless the context
requires otherwise:
"A/B CONCERT GROUP" means either the AT&T Concert Group or the
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BT Concert Group.
"ADDITIONAL AMOUNT" means $235,000,000 minus the sum of (i)
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the Pound Adjustment and (ii) the Canadian Note Adjustment.
"ADJUSTED NET ASSETS" of the AT&T Concert Group or the BT
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Concert Group means, as of the applicable date, total shareholders' equity as
shown on the AT&T Concert Balance Sheet or the BT Concert Balance Sheet, as
appropriate, excluding from the determination of assets, fixed assets (other
than marketable securities, similar
2
instruments and long-term deposits), any assets acquired under Section 5.2(b),
goodwill and other intangible assets, other non-current assets (other than
marketable securities, similar instruments and long-term deposits), deferred tax
assets, assets that are otherwise dealt with under the Employee Matters
Agreement and any assets shown for Sharinga and NavLink, Inc. and excluding from
the determination of liabilities, deferred taxes, any taxes (other than current
tax liabilities) that are otherwise dealt with under the Tax Matters Agreement,
all liabilities, including those reserved for, that are otherwise dealt with
under the Employee Matters Agreement, any reserves (estimates) for claims
arising from litigation or legal proceedings other than those pursuant to a
binding settlement or similar agreement entered into prior to the Closing, any
liabilities associated with Sharinga and NavLink, Inc., any reserves for real
estate occupancy termination costs described in Section 4.4(g), debt and other
liabilities owed to a parent or its Affiliates arising from the financing of the
purchase of assets pursuant to Section 5.2(b), and the Excluded AT&T Liabilities
or the Excluded BT Liabilities, as appropriate. In the calculation of the
Adjusted Net Assets of the AT&T Concert Group or the BT Concert Group, any cash
received by a member of the Concert Group for any Parental Closing Asset
Transfers shall not be taken into account, but any assets and liabilities that
have been so transferred shall be included to the extent they would have been
included in the determination of Adjusted Net Assets as provided in the first
sentence of this definition if they had been acquired by a member of an A/B
Concert Group. The calculation of Adjusted Net Assets shall take into account
any adjustments required by Section 4.2(c)(ii).
"ALLOCATED BUSINESSES" means the AT&T Allocated Business and
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the BT Allocated Business collectively.
"AT&T Allocated Business" means the AT&T Assets and the
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businesses related thereto.
"AT&T CONCERT GROUP" means any member of the Concert Group
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that is listed on Schedule 2.1(c) and identified as to be transferred or
otherwise allocated to AT&T.
"AT&T GROUP" means AT&T and each of its Affiliates and, from
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and after the Closing, shall include any member of the AT&T Concert Group.
"BRAND AGREEMENT" means the Concert Brand License Agreement,
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dated as of even date herewith, among AT&T, BT, Concert BV and Concert
Communications Company.
"BT ALLOCATED BUSINESS" means the BT Assets and the businesses
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related thereto.
"BT CONCERT GROUP" means any member of the Concert Group that
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is listed on Schedule 2.1(c) and identified as to be transferred or otherwise
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allocated to BT.
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"BT GROUP" means BT and each of its Affiliates, and from and
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after the Closing, shall include any member of the BT Concert Group.
"COMMERCIAL AGREEMENTS" means the agreements described in
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Schedule 1.1A attached hereto.
"CONCERT SUBSIDIARY" means a direct or indirect Subsidiary of
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Concert BV.
"GV ASSETS" means the Assets of the Concert Group.
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"GV LIABILITIES" means the Liabilities of the Concert Group.
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"IPR AGREEMENT" means the IPR Agreement, dated as of even date
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herewith, among AT&T, BT and Concert BV.
"LIBOR" means the arithmetic average rounded up to the nearest
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1/16th of 1% of the London interbank offered rates of major banks for Dollar
deposits for a three-month period that are displayed on page "LIBO" on the
Reuters Monitor Money Rate Service or such other page as may replace the "LIBO"
page and displays London interbank offered rates for Dollar deposits, in each
case, as relevant, determined on a particular date or from time to time.
"MAJOR CLAIM" means (a) a Claim or a series of related Claims
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for monetary damages in excess of $100,000,000, or (b) a Claim or a series of
related Claims in which the relief sought consists wholly or partly of
injunctive relief, and the injunctive relief sought, if granted, would have a
value (when added to the monetary damages sought, if any), in excess of
$100,000,000.
"ORIGINAL NOTES" means the long-term debt obligations of (i)
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Concert Holdings Limited in the principal amount of (pound)636,128,769.47,
incurred pursuant to a loan facility agreement, dated December 20, 2000, with
BT, and (ii) Concert Communications Company in the principal amount of
$1,000,000,000, incurred pursuant to a loan facility agreement, dated December
20, 2000, with Global Card Holdings Inc.
"SELECTED COURTS" means any federal or state court in the
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state of New York.
"UNWIND AGREEMENTS" means (i) this Agreement, (ii) the
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Commercial Agreements, (iii) the IPR Agreement, (iv) the Brand Agreement, (v)
the Tax Matters Agreement, (vi) the Employee Matters Agreement, (vii) the Cable
Trusts, (viii) the Mutual Release, (ix) the Transition Plan, (x) the Canada
Agreement, (xi) the Argentina Agreement, (xii) the Brazil Agreement, and (xiii)
the instruments of transfer in usual and customary form to effect the GV Share
Transfers and the GV Asset Transfers, including any resolutions of the board of
directors (or similar governing body) or shareholders, partners or equity
holders of the applicable member of the Concert Group required in connection
therewith.
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1.2 Additional Definitions. The following terms shall have the
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meanings defined in the Section indicated:
Defined Term Section Reference
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90 Day Period Section 9.1(a)
Accounting Team Section 4.2(a)
ACSJ Preamble
Additional Amount Section 4.3(c)
Affiliated Contract Section 2.1(d)
AGNS Agreement Section 8.1
Agreed Amount Section 8.2(b)
Agreement Preamble
Allocation Guidelines Section 2.1(e)
Argentina Agreement Section 7.9(e)(i)
Asserted Liability Section 11.3(a)
AT&T Preamble
AT&T Assets Section 2.1(a)
AT&T Concert Balance Sheet Section 4.2(a)
AT&T Indemnified Parties Section 11.2
AT&T Parties Preamble
AT&T Post-Closing Liabilities Section 4.9(a)
Base Amount Section 4.3(c)
Brazil Agreement Section 7.9(e)(ii)
BT Preamble
BT Assets Section 2.1(b)
BT Concert Balance Sheet Section 4.2(a)
BT Holdings Preamble
BT Indemnified Parties Section 11.1
BT Parties Preamble
BT Post-Closing Liabilities Section 4.9(b)
Cable Trusts Section 7.9(d)
Canada Agreement Section 8.2(a)
Canadian Note Section 8.2(b)
Canadian Note Adjustment Section 4.3(b)
Claims Notice Section 11.3(a)
Closing Section 9.1(a)
Closing Agreement Recital A
Closing Date Section 9.1(a)
Closing Statements Section 4.2(a)
Closing Statements Date Section 4.3(c)
Concert Balance Sheet Section 4.2(a)
Concert BV Preamble
Concert Group Recital A
Consultant Section 2.1(e)
Covered Agreements Section 13.1(b)
Covered Losses Section 4.5(a)
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Designated Accountants Section 4.6(a)
Employee Matters Agreement Section 7.7
Engagement Team Schedule 4.6(a)
First Date Section 9.1(a)
Framework Agreement Recital A
Funding Plan Section 5.1(a)
GV Asset Transfers Section 2.1(c)
GV Share Transfers Section 2.1(c)
Indemnifying Party Section 11.3(a)
Indemnitee Section 11.3(a)
Indemnity Payment Section 11.6(b)
Intercompany Payable Section 4.2(c)(i)
Key Governmental Approvals Section 7.2(a)
Losses Section 11.1
Major Transaction Section 5.2(b)(vi)
Mutual Release Section 9.1(c)(ii)
New Transaction Section 7.1(a)
Operational Concert Liabilities Section 4.4(a)
Parental Closing Asset Transfers Section 2.1(c)
payee Section 4.3(c)
payor Section 4.3(c)
Post-Closing Payment Section 4.3(a)
Pound Adjustment Section 4.1(a)
Recipient Section 7.4(b)
requesting parent Section 5.2(b)(i)
Responsible Parent Section 4.4(b)
Shareholder Representative Section 5.4(a)
Sharinga Section 4.4(h)
Specified Loss Equalization Payment Section 4.5(e)
Specified Losses Section 4.5(b)
Statement of Specified Losses Section 4.5(c)
Statement of Supplier/Distributor Excess Losses Section 4.4(c)
supplier agreements Section 4.4(a)
Supplier/Distributor Excess Loss Section 4.4(b)
Tax Matters Agreement Section 3.1
Transaction Section 5.2(b)(vi)
Transition Plan Section 7.5(a)
Unallocated Asset Section 2.1(e)
Unallocated Contracts Section 2.1(d)
1.3 General Principles of Construction. Unless otherwise
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specified, references herein to Articles, Sections and Schedules refer to
the Articles, Sections and Schedules to this Agreement. The words "HEREOF,"
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"HEREIN" and "HEREUNDER," and words of like import, refer to this Agreement
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as a whole and not to any particular Article or Section of this Agreement.
References to this Agreement herein shall, unless
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the context otherwise requires, include the Schedules hereto. The words "WITHOUT
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LIMITATION" shall be deemed to follow any use of the word "INCLUDE" or
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"INCLUDING" herein. References to amounts preceded by the "$" sign shall refer
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to Dollars but shall also be deemed to include the equivalent in other
currencies at the relevant time or times (it being agreed that, where the
context requires, the actual currency of any transaction and the conversion of
one currency into another will be mutually agreed by the parties thereto or,
absent agreement, Dollars). Prior to the Closing, no member of the Concert Group
shall be deemed to be an Affiliate of any member of the AT&T Group or of any
member of the BT Group.
1.4 Variations in Pronouns. All pronouns and any variations
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thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
1.5 Headings. The headings in this Agreement are for reference
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only and shall not affect the interpretation of this Agreement.
1.6 Other Capitalized Terms. Capitalized expressions used
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without definition in this Agreement shall have the meanings assigned to them in
the Framework Agreement or, if not defined in the Framework Agreement, in the
Closing Agreement unless redefined in this Agreement.
1.7 Conflicts Among Agreements.
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(a) If there is a conflict between the provisions of this Agreement regarding
the allocation of GV Assets and the assumption of GV Liabilities and the
provisions of the other Unwind Agreements (other than the Tax Matters Agreement,
the Employee Matters Agreement, the IPR Agreement, the Brand Agreement and the
Cable Trusts), then the provisions of this Agreement shall prevail. Subject to
Section 2.1(f), Schedule 2.1(a) and Schedule 2.1(b) shall govern the allocation
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of GV Assets.
(b) If there is a conflict in the provisions of this Agreement
regarding the allocation of GV Assets or the assumption of GV Liabilities and
the provisions of the Tax Matters Agreement (with respect to Taxes), the
Employee Matters Agreement (with respect to employee matters), the IPR Agreement
(with respect to intellectual property rights), the Brand Agreement (with
respect to brands) or the Cable Trusts (with respect to cable), then the
applicable provisions of the Tax Matters Agreement, the Employee Matters
Agreement, the IPR Agreement, the Brand Agreement or the Cable Trusts, as
applicable, shall prevail.
ARTICLE II
ALLOCATION OF GV ASSETS
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2.1 Allocation of GV Assets; Aligning Certain Liabilities.
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(a) Schedule 2.1(a) attached hereto sets forth certain GV
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Assets that are to be transferred at the Closing to AT&T or its Affiliates (such
assets,
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together with the other assets that are allocated pursuant to this Agreement for
transfer to AT&T and its Affiliates as of the Closing Date, collectively, the
"AT&T Assets").
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(b) Schedule 2.1(b) attached hereto sets forth certain GV
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Assets that are to be transferred at the Closing to BT or its Affiliates (such
assets, together with the other assets that are allocated pursuant to this
Agreement for transfer to BT and its Affiliates as of the Closing Date,
collectively, the "BT Assets").
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(c) The transfer of the AT&T Assets and the BT Assets shall be
effected in accordance with the steps set forth in Schedule 2.1(c) attached
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hereto. Any steps required for the transfer of any part of the AT&T Assets and
the BT Assets that are not covered by the steps set forth in Schedule 2.1(c)
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shall be agreed by AT&T and BT prior to the Closing Date, consistent with the
provisions of the Tax Matters Agreement. Schedule 2.1(c) shall be updated by the
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parents to reflect such matters as of the Closing Date, including any
restructuring under the Tax Matters Agreement. The transfer of the AT&T Assets
and the BT Assets shall be by way of the transfer, at the Closing, of equity
interests in the members of the Concert Group and of GV Assets to be transferred
to each parent or its Affiliates and, if required to effectuate such transfer,
prior to the Closing, the transfer of (i) certain equity interests in members of
the Concert Group to one or more other members of the Concert Group, (ii)
certain GV Assets (other than equity interests in any member of the Concert
Group) from members of the Concert Group to one or more other members of the
Concert Group, including the transfer of accounts receivable contemplated by
Section 2.1(h), and (iii) the transfer of accounts payable as contemplated by
Section 2.1(h), in each case as more fully described in Schedule 2.1(c) or as
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subsequently agreed by the parents in accordance with Schedule 2.1(c). The
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transfers on the Closing Date of equity interests in the members of the Concert
Group set forth in Schedule 2.1(c) are herein collectively referred to as the
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"GV Share Transfers." The transfers prior to, or on, the Closing Date of GV
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Assets (other than equity interests of any member of the Concert Group) set
forth in Schedule 2.1(c), including transfers of GV Assets by a member of an A/B
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Concert Group to the other parent or its Affiliates on the Closing Date
("Parental Closing Asset Transfers"), are herein collectively referred to as the
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"GV Asset Transfers."
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(d) Prior to the Closing, the Shareholder Representatives
shall attempt to designate to which parent contracts, leases and other
agreements not set forth on Schedule 2.1(a) or Schedule 2.1(b) are to be
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transferred as of the Closing Date (collectively, the "Unallocated Contracts").
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An Unallocated Contract between any member of the Concert Group and any
Affiliate of any parent (an "Affiliated Contract") shall be allocated to the
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affiliated parent. Any Unallocated Contract other than an Affiliated Contract
shall be handled in accordance with Section 2.1(e).
(e) With respect to any GV Asset (including the GV Assets
listed on Schedule 2.1(e)(i) and any Unallocated Contracts that are not
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Affiliated Contracts) other than the GV Assets set forth on Schedule 2.1(a) or
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Schedule 2.1(b) (an "Unallocated Asset"), the allocation of such Unallocated
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Asset shall be referred to the Shareholder Representatives, who shall attempt
promptly to reach agreement on the allocation thereof based on the Allocation
Guidelines set forth on Schedule 2.1(e)(ii)
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attached hereto (the "Allocation Guidelines"). If the Shareholder
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Representatives fail to reach agreement with respect to the allocation of an
Unallocated Asset, within 10 days following the referral of such matter, either
parent may refer the matter for resolution to an independent telecommunications
consultant mutually agreed by the parents or, if the parents are unable to agree
upon such person, the Wise Counselor (the "Consultant"). All referrals to the
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Consultant shall be made as soon as practicable but in any event within 45 days
after the date hereof or, if later, within five days following the discovery of
an Unallocated Asset. The Consultant shall apply the Allocation Guidelines in
making his determination. The Consultant shall be directed to make such
determination within 14 days of the referral of the matter to him. Any
determination by the Consultant shall be final and binding on the parties and
not subject to appeal. The fees of the Consultant shall be shared equally by the
parents.
(f) If a parent reasonably believes that there is an obvious
or clerical error on Schedule 2.1(a) or Schedule 2.1(b), it shall notify the
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other parent and the Shareholder Representatives in writing, describing the
asserted error. The Shareholder Representatives shall have full authority to
resolve any such matter, but if they fail to agree, the applicable asset shall
remain on the original schedule, without any right of appeal.
(g) Unless otherwise agreed by the parents, and other than the
Post-Closing Payment to the extent that the relevant assets or liabilities have
been included in the calculation of Adjusted Net Assets, no additional payment
shall be required by a parent who becomes entitled to receive a GV Asset
allocated pursuant to Section 2.1(d), 2.1(e) or 2.1(f). Any Unallocated Asset or
other GV Asset that is allocated either to AT&T or BT pursuant to Section
2.1(d), 2.1(e) or 2.1(f) shall automatically constitute a part of the AT&T
Assets or the BT Assets, as the case may be, and Schedule 2.1(a) and Schedule
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2.1(b) shall be amended to reflect such additional allocations. Any Parental
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Closing Asset Transfers shall be paid for in cash at a price no higher than the
fair market value of the relevant assets, which purchase price shall be paid on
the Closing Date by the parent or its applicable Affiliate that is the purchaser
of such assets.
(h) Any accounts receivable or accounts payable or other
liabilities associated with any contract that is to be transferred to either
parent under this Article II shall, as of the Closing Date, be assigned or
transferred to an appropriate member of the AT&T Concert Group or the BT Concert
Group to the extent that the underlying contract is not, as of the Closing Date,
already held by a member of the appropriate A/B Concert Group. If no such
assignment or transfer can be made without obtaining the consent of a third
party, then other arrangements will be made so as to transfer beneficial
ownership to the appropriate party for operational purposes, as well as for
purposes of the Post-Closing Payment. The parties shall execute such documents
of assignment and transfer and, if necessary, beneficial ownership properly to
reflect the foregoing. Without duplication, any accounts receivable and accounts
payable between a member of the Concert Group and a parent or any of its
Affiliates shall, as of the Closing Date, be assigned or transferred to a member
of such parent's A/B Concert Group. For the avoidance of doubt and subject to
the definition of "Adjusted Net Assets," all
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accounts receivable and accounts payable, together with appropriate reserves
according to U.S. GAAP, shall be included in the AT&T Concert Balance Sheet, the
BT Concert Balance Sheet and the determination of Adjusted Net Assets of the
AT&T Concert Group and the BT Concert Group.
(i) Any parent or Subsidiary thereof that enters into any
contract in its own name in accordance with Section 8.4(a) shall be allocated
such contract as of Closing. No parent or Subsidiary thereof shall be required
to transfer to the Concert Group any contract to which it currently is a party.
(j) From the date hereof until the Closing Date, the parties
shall use their reasonable efforts to ensure that the GV Liabilities associated
with AT&T Assets and BT Assets are transferred or assumed by the member of the
A/B Concert Group acquiring the AT&T Assets or BT Assets, taking into account
any specific allocations of Liabilities set forth in this Agreement, the Tax
Matters Agreement and the Employee Matters Agreement, and without imposing any
additional GV Liabilities on a parent or its Affiliates not otherwise
contemplated by this Agreement; it being agreed that no party shall be required
to incur any cost or make any concession in connection therewith.
2.2 "As Is, Where Is." AS OF THE DATE HEREOF AND AS OF THE CLOSING
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DATE, EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION OBLIGATIONS
SPECIFICALLY CONTAINED IN ANY UNWIND AGREEMENT, (A) NONE OF AT&T, BT, CONCERT BV
OR ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THE BUSINESS, ASSETS OR CONDITION (FINANCIAL OR OTHERWISE) OF, OR ANY OTHER
MATTER INVOLVING, CONCERT BV OR THE GV ASSETS TO BE TRANSFERRED OR THE GV
LIABILITIES TO BE ASSUMED IN ACCORDANCE WITH THIS AGREEMENT, (B) ALL OF THE GV
ASSETS TO BE TRANSFERRED OR GV LIABILITIES TO BE ASSUMED IN ACCORDANCE WITH THIS
AGREEMENT SHALL BE TRANSFERRED OR ASSUMED ON AN "AS IS, WHERE IS BASIS," AND ALL
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IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR
OTHERWISE ARE HEREBY EXPRESSLY DISCLAIMED, (C) NONE OF AT&T, BT, CONCERT BV OR
ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO ANY
INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE IN ANY "DATA ROOMS," IN
CONNECTION WITH ANY MANAGEMENT PRESENTATIONS, OR IN CONNECTION WITH ANY OTHER
DUE DILIGENCE MATTER RELATING TO THE RELATIONSHIP BETWEEN AT&T AND BT, OR THE
ENTERING INTO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING
THE PROVISION OF ANY BUSINESS OR FINANCIAL ESTIMATES AND PROJECTIONS AND OTHER
FORECASTS AND PLANS (AND THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING THE
SAME)), AND (D) AT&T AND BT
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ACKNOWLEDGE THAT (I) THERE ARE UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE ANY
SUCH ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND PLANS, (II) AT&T AND BT ARE
FAMILIAR WITH SUCH UNCERTAINTIES, (III) EACH OF AT&T AND BT IS TAKING FULL
RESPONSIBILITY FOR MAKING ITS OWN EVALUATION OF THE ADEQUACY AND ACCURACY OF ALL
ESTIMATES AND PROJECTIONS AND OTHER FORECASTS AND PLANS SO FURNISHED TO IT (AND
THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING THE SAME), AND (IV) EACH OF
AT&T AND BT ACKNOWLEDGES AND AGREES THAT IT IS NOT RELYING ON ANY SUCH
INFORMATION, DOCUMENTS OR MATERIAL IN ANY MANNER WHATSOEVER AND THAT IT SHALL
HAVE NO CLAIM AGAINST THE OTHER OR ANY OTHER PERSON OR ANY RIGHT TO
INDEMNIFICATION BASED ON SUCH INFORMATION, DOCUMENTS OR MATERIAL. THE PARTIES
ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 2.2 SHALL SUPERSEDE THE TERMS OF
ANY SHARE OR ASSET TRANSFER AGREEMENT, DOCUMENT, INSTRUMENT OR ARRANGEMENT
ENTERED INTO IN CONNECTION HEREWITH.
ARTICLE III
TAX MATTERS
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3.1 Tax Matters Agreement. Concurrently with the execution
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of this Agreement, the AT&T Parties, the BT Parties and Concert BV have entered
into a tax matters agreement (the "Tax Matters Agreement").
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ARTICLE IV
CLOSING BALANCE SHEETS;
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CLOSING STATEMENTS DATE PAYMENT;
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TREATMENT OF LIABILITIES
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4.1 Treatment of Loans; Parental Closing Asset Transfers.
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(a) Prior to the Closing Date, each of the parents shall
contribute the then outstanding balance of their respective Original Note in
accordance with Schedule 2.1(c) to the equity of the applicable member of the
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Concert Group. An amount equal to one-half of (x) the then outstanding principal
of, and accrued interest on, AT&T's Original Note (measured in Dollars), less
(y) the then outstanding principal of, and accrued interest on, BT's Original
Note (measured in Dollars, calculated by reference to the exchange rate in
effect on the date of contribution) shall be referred to as the "Pound
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Adjustment." The Pound Adjustment may be a positive or a negative number. If
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this Agreement is terminated prior to the Closing hereunder but after the
contribution of the Original Notes as contemplated hereby, on the date of such
termination, if the Pound Adjustment is greater than zero, BT, or if the Pound
Adjustment is less than zero, AT&T, shall, at its option, make a capital
contribution to an appropriate member of the
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Concert Group in an amount equal to two times the absolute value of the
Pound Adjustment, or pay the other parent an amount equal to the absolute value
of the Pound Adjustment.
(b) If, on the Closing Date, the aggregate purchase price paid
by BT or its Affiliates on the Closing Date for all Parental Closing Asset
Transfers made by members of the AT&T Concert Group to BT or its Affiliates is
greater than the aggregate purchase price paid by AT&T or its Affiliates on the
Closing Date for all Parental Closing Asset Transfers made by members of the BT
Concert Group to AT&T or its Affiliates, AT&T shall make a payment to BT in the
amount of the difference. Conversely, if, on the Closing Date, the aggregate
purchase price paid by AT&T or its Affiliates on the Closing Date for all
Parental Closing Asset Transfers made by members of the BT Concert Group to AT&T
or its Affiliates is greater than the aggregate purchase price paid by BT or its
Affiliates on the Closing Date for all Parental Closing Asset Transfers made by
members of the AT&T Concert Group to BT or its Affiliates, BT shall make a
payment to AT&T in the amount of the difference. The payments contemplated by
this Section 4.1(b) shall be made in cash by wire transfer of immediately
available funds on the Closing Date.
4.2 Closing Statements.
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(a) Within 90 days following the Closing Date, the parents
shall cause a group of not more than seven persons, of which three persons shall
be designated by each parent (with such persons being employees of such parent
or any of its Affiliates) and the seventh person shall be a person to be agreed
to by the parents within 30 days after the date hereof (such persons, the
"Accounting Team") to prepare (i) a consolidated balance sheet of Concert BV and
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its consolidated Subsidiaries (the "Concert Balance Sheet"), and (ii) separate
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balance sheets that will include on a combined basis each of the Persons forming
a part of the AT&T Concert Group and the BT Concert Group (the "AT&T Concert
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Balance Sheet" and the "BT Concert Balance Sheet," respectively). The Accounting
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Team may use appropriate resources as may be mutually agreed by the parents to
assist them in the preparation of the Concert Balance Sheet, the AT&T Concert
Balance Sheet and the BT Concert Balance Sheet (collectively, the "Closing
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Statements"). For the avoidance of doubt, assets or liabilities transferred to
----------
or assumed by a parent or its Affiliate pursuant to a Parental Closing Asset
Transfer shall be taken into account in the preparation of the Closing
Statements as if such assets or liabilities had been transferred to or assumed
by such parent's A/B Concert Group, but the cash purchase price paid for the
relevant assets and liabilities shall not be taken into account. Each of the
Concert Balance Sheet, the AT&T Concert Balance Sheet and the BT Concert Balance
Sheet shall be prepared as of the close of business of Concert BV and the
Concert Subsidiaries on the day immediately preceding the Closing Date, taking
into account the effect of the GV Share Transfers and the GV Asset Transfers to
occur on the Closing Date in accordance with U.S. GAAP applied on a basis
consistent with the preparation of the audited consolidated financial statements
of Concert BV and
12
the Concert Subsidiaries for the year ended December 31, 2000 (it being
understood that to the extent that an item arises in the preparation of any
Closing Statement that has no corresponding item in such audited consolidated
financial statements of Concert BV and the Concert Subsidiaries, then such item
shall be treated in accordance with U.S. GAAP), as adjusted pursuant to Section
4.2(c)(ii) and taking into account the matters set forth in Sections 5.2(b)(iii)
and 8.4. The AT&T Concert Balance Sheet and the BT Concert Balance Sheet on a
combined basis will be equal to the Concert Balance Sheet. The parents shall
provide the Accounting Team with all financial information of the AT&T Concert
Group and BT Concert Group, as the case may be, to enable the Accounting Team to
prepare and complete the Closing Statements. The Accounting Team shall consult
with the parents from time to time prior to finalization of the Closing
Statements.
(b) The Closing Statements prepared by the Accounting Team in
accordance with Section 4.2(a) shall be submitted to the Designated Accountants
immediately following completion thereof. Within 90 days following receipt
thereof, the Designated Accountants shall (i) complete an audit of the Closing
Statements, making such adjustments thereto as it shall determine are
appropriate using the U.S. GAAP principles referred to in Section 4.2(a) and as
adjusted pursuant to Section 4.2(c)(ii) and taking into account the matters set
forth in Sections 5.2(b)(iii) and 8.4, and produce revised balance sheets, if
appropriate, which shall be the Concert Balance Sheet, the AT&T Concert Balance
Sheet and the BT Concert Balance Sheet for all purposes of this Agreement, (ii)
complete a report explaining any changes to the forms of any of the Closing
Statements delivered to it and the reasons for such changes, and (iii) determine
the amount and the payor of the Post-Closing Payment provided for in Section
4.3. The balance sheets, the report and the determination referred to in the
preceding sentence shall be delivered to the parents immediately following
completion by the Designated Accountants.
(c) (i) Schedule 4.2(c)(i) sets forth as of September 15,
-------------------
2001, a list of all disputes relating to any amounts payable by or to any member
of the Concert Group, on the one hand, to or from any member of the AT&T Group
or the BT Group, on the other hand (any amounts of such type, an "Intercompany
------------
Payable"). The Shareholder Representatives shall attempt to resolve all such
-------
disputes within 45 days after the date hereof. If any such dispute is not
resolved prior to the Closing, the provisions of Article XIII shall apply. If
any Intercompany Payable is not set forth on such Schedule 4.2(c)(i), none of
Concert BV, the parents or any of the their Affiliates may assert that there is
any disputed Intercompany Payable for which an invoice has been issued on or
prior to September 15, 2001. With respect to any matter not billed as of the
date hereof, invoices may be submitted provided that they are in the normal
course in accordance with past practices relating to periods prior to September
15, 2001. For purposes of this Section 4.2(c)(i), all invoices of any member of
-----------------
the Concert Group relating to periods prior to September 15, 2001 shall be
treated as in the normal course except to the extent inconsistent with the
resolution of an Intercompany Payable as contemplated by this Section. Invoices
relating to periods prior to September 15, 2001 submitted by a parent to any
member of the Concert Group shall be deemed to be in the normal course unless
objected to by any member of the Concert Group.
(ii) In calculating the Adjusted Net Assets of either the AT&T
Concert Group or the BT Concert Group, appropriate adjustments shall be made if
the amount of Adjusted Net Assets of either the AT&T Concert
13
Group or the BT Concert Group has been increased or decreased as a result of any
violation of Section 7.1(b), including by establishing appropriate parental
payables or receivables. In addition, if the Shareholder Representatives agree
to authorize any action pursuant to Section 7.1(b) on the condition that the
impact on the Adjusted Net Assets balances be borne by the applicable parent, an
appropriate adjustment shall be made. The Shareholder Representatives will
provide the Designated Accountants with a joint written statement regarding the
matters provided for in this Section, and, if they cannot agree, any disputes
shall be resolved by the Wise Counselor as contemplated by Section 4.3(d).
(d) If, in connection with the matters set forth in Sections
4.2, 4.3 and 4.5, the Designated Accountants require an interpretation of this
Agreement, the Designated Accountants may, upon two Business Days' prior written
notice to the parents, consult with the Wise Counselor, whose determination
shall be final and binding on the parties as to such matters and shall not be
subject to appeal.
4.3 Post-Closing Payment; Interest.
------------------------------
(a) Based on the audited AT&T Concert Balance Sheet and the
audited BT Concert Balance Sheet as determined by the Designated Accountants in
Section 4.2(b), the Designated Accountants shall prepare a statement itemizing
(i) the Adjusted Net Assets shown on the AT&T Concert Balance Sheet, (ii) the
Adjusted Net Assets shown on the BT Concert Balance Sheet, and (iii) the excess
of the greater Adjusted Net Assets over the lesser Adjusted Net Assets. The
----
parent with the greater Adjusted Net Assets shall pay to the other parent
an amount equal to one-half of the amount set forth in clause (iii) of the
immediately preceding sentence in accordance with Section 4.3(c). The payment
contemplated by this Section 4.3(a) is referred to as the "Post-Closing
------------
Payment". Each of AT&T and BT acknowledges and agrees that the payment of the
-------
Post-Closing Payment shall be in full and final settlement of any rights it may
have against the other parent with respect to the equalization of the net amount
referred to in this Section 4.3(a).
(b) The term "Canadian Note Adjustment" means the Agreed
--------------------------
Amount minus $165,000,000.
-----
(c) Subject to this Section 4.3(c), on a day that is within 10
Business Days following the date of delivery of the Designated Accountants'
report (the "Closing Statements Date"), AT&T shall pay BT the Additional Amount
------------------------
(if the Additional Amount is positive) or BT shall pay AT&T the absolute value
of the Additional Amount (if the Additional Amount is negative) and applicable
parent shall make the Post-Closing Payment. If the same parent is required to
make the Post-Closing Payment and pay the Additional Amount to the other parent,
it shall make such payments, together with interest accrued thereon calculated
in accordance with Section 4.3(d), in cash in Dollars and in immediately
available funds. If, in accordance with Section 4.3(a) and this Section 4.3(c),
each parent is required to make a payment to the other parent, in lieu of two
separate payments to be made between the parents, the parent who is required to
pay a greater amount to the other parent (the "payor") shall make a payment on
----- the Closing Statements Date to the other parent (the "payee") in an amount
equal ----- to the
14
excess of (i) the payment required to be made by the payor over (ii) the payment
required to be made by the payee to the payor. Any net amount to be paid under
this Section 4.3(c) shall be paid in full in cash in Dollars and in immediately
available funds, together with interest accrued thereon calculated in accordance
with Section 4.3(d).
(d) Interest on any payment required to be made under Section
4.3(c) shall accrue from (and including) the Closing Date up to (but excluding)
the date of payment at an annual rate equal to LIBOR, plus 50 basis points, with
LIBOR determined as of the Closing Date for the period from the Closing Date to
the last day of the month in which the Closing Date occurs and, for each month
thereafter until the date of payment, LIBOR determined as of the first Business
Day of such month, compounded quarterly.
(e) For the purposes of the payments described in Sections
4.3(a), (c) and (d), the parties acknowledge and agree that if AT&T is the
payor, the actual payor thereof shall be VLT US Holdco L.L.C. and AT&T hereby
guarantees such payment by VLT US Holdco L.L.C., and if BT is the payor, the
actual payor thereof shall be BT Holdings and BT hereby guarantees such payment
by BT Holdings.
(f) All amounts payable by or to any member of the AT&T
Concert Group, on the one hand, to or from any members of the BT Concert Group,
on the other hand, in each case as of the Closing Date, shall be settled in
cash, together with interest thereon, as described in the next sentence, on the
date of payment of the Post-Closing Payment. Notwithstanding anything to the
contrary contained herein, in any of the trading or intercompany agreements or
any other instruments creating or governing such payables, interest shall accrue
on such payables from (and including) the Closing Date up to (but excluding) the
date of payment of the Post-Closing Payment at an annual rate equal to LIBOR,
plus 50 basis points, compounded quarterly.
4.4 Operational Concert Liabilities; Lease Termination Costs.
--------------------------------------------------------
(a) "Operational Concert Liabilities" means Liabilities of the
-------------------------------
Concert Group (i) to the extent incurred or resulting from any fact, event or
circumstances occurring or existing prior to the Closing, (ii) that (x) arise
out of, result from or are based on (A) customer contracts, including contracts
with Qualifying MNC Customers or other Global Account customers, Carrier
Services agreements, agreements with wholesale account and agreements for the
provision of International Traffic Termination Services, or (B) supplier or
distribution agreements, in the case of clauses (A) and (B), that are allocated
to a parent pursuant to Article II, or (y) are Liabilities relating to the
investment in NavLink, Inc., including the Liability of the Concert Group under
the Prepaid Services Agreement, dated December 21, 2000, to provide certain
services to NavLink, Inc., and (iii) that are not taken into account in the
calculation of the Adjusted Net Assets of either the AT&T Concert Group or the
BT Concert Group, but expressly excludes (1) Tax Liabilities (which are dealt
with in the Tax Matters Agreement), (2) Liabilities relating to employee matters
(which are dealt with in the Employment Matters Agreement), and (3) Liabilities
described in
15
Sections 4.4(e), 4.4(f), 4.4(g), 4.4(h), 4.8 and 4.10. For the
avoidance of doubt, the term "supplier agreements" means contracts for the
--------------------
supply of Communications Services.
(b) Notwithstanding anything to the contrary contained herein,
Operational Concert Liabilities shall be borne solely by the parent to which the
relevant GV Asset is allocated (the "Responsible Parent"); provided, that, if,
------------------
in respect of a claim or series of related claims involving an Operational
Concert Liability described in clause (ii)(x)(B) of Section 4.4(a) and a single
third party (but excluding any such Operational Concert Liability where the
counterparty is an Affiliate of the Responsible Parent) that is made or asserted
in writing against it or any of its Affiliates and with respect to which it
gives the other parent notice in writing on or before the second anniversary of
the Closing Date, the liability of the Responsible Parent exceeds or will exceed
$10,000,000, the parents shall share the liability in excess of such threshold
(such excess, a "Supplier/Distributor Excess Loss") on an equal basis. Any
----------------------------------
Action that is brought against a parent or any of its Affiliates that could
reasonably be expected to involve an Operational Concert Liability shall be
handled in accordance with Section 4.7.
(c) Each parent shall use its commercially reasonable efforts
to minimize the amount of any Operational Concert Liabilities described in
clause (ii)(x)(B) of Section 4.4(a) of the members of the Concert Group that
have been acquired by it as of the Closing Date. For the purpose of the proviso
to the first sentence of Section 4.4(b), each parent shall deliver to the other
parent (i) within 60 days after each anniversary of the Closing Date a statement
setting forth in reasonable detail the nature and amount of each
Supplier/Distributor Excess Loss that has been paid by it or its Affiliates in
the prior one year period, as the case may be, and the amounts that are payable
by the other parent in respect thereof, and providing supporting documentation
relating thereto (the "Statement of Supplier/Distributor Excess Losses") and
-----------------------------------------------
(ii) promptly after notice thereof, a statement describing any claim which could
reasonably be expected to result in a Supplier/Distributor Excess Loss. The
parent that has paid a lower aggregate amount of Supplier/Distributor Excess
Losses shall, as promptly as practicable after each parent has received the
other parent's Statement of Supplier/Distributor Excess Losses, reimburse or pay
to the other parent one-half of the amount of the excess of the other parent's
aggregate Supplier/Distributor Excess Losses over its aggregate
Supplier/Distributor Excess Losses.
(d) If the Responsible Parent proposes a settlement of any
action in which the other parent is liable to fund an Operational Concert
Liability in excess of $10,000,000 as provided in the proviso to the first
sentence of Section 4.4(b), and the other parent consents to such settlement,
such other parent shall not be required to reimburse the Responsible Parent for
any of its costs expended in connection with the defense of such Action. If the
other parent objects to the proposed settlement, such other parent shall bear
half of the amount of the reasonable costs expended (excluding the costs of
in-house counsel) in connection with the defense of such Action and shall
reimburse the Responsible Parent therefor following receipt of a statement in
writing from the Responsible Parent, setting forth a summary in reasonable
detail of the costs expended and the Action to which they relate.
16
(e) With respect to liabilities arising from the termination
of real property leased, licensed or otherwise used by a member of the Concert
Group (other than those leases, licenses or arrangements that the parents
mutually agree should not be terminated), where such lease, license or other use
is granted by or from a parent or any of its Affiliates and where such member of
the Concert Group held, occupied or used 70% or more of the applicable space as
of September 30, 2001, appropriate reserves shall be made in accordance with
U.S. GAAP for the costs associated therewith. For the avoidance of doubt, such
costs shall be borne by the parents on an equal basis through the determination
of the Adjusted Net Assets of the AT&T Concert Group and the BT Concert Group
and the Post-Closing Payment.
(f) With respect to liabilities arising from the termination
of real property leased, licensed or otherwise used by a member of the Concert
Group (other than those leases, licenses or arrangements that the parents
mutually agree should not be terminated), where such lease, license or other use
is granted by or from a third party, appropriate reserves shall be made in
accordance with U.S. GAAP for the costs associated therewith. For the avoidance
of doubt, such costs shall be borne by the parents on an equal basis through the
determination of the Adjusted Net Assets of the AT&T Concert Group and the BT
Concert Group and the Post-Closing Payment.
(g) With respect to real property leased, licensed or
otherwise used by a member of the Concert Group (other than the leases, licenses
or arrangements that the parents mutually agree should not be terminated), where
such real property is leased or licensed from a parent or any of its Affiliates
and less than 70% of the applicable space was held, occupied and used by the
Concert Group as of September 30, 2001, the costs associated therewith shall be
borne by the applicable parent only.
(h) Unless, as of the Closing, the Concert Group has divested
its equity interests in Sharinga Networks, Inc. ("Sharinga"), and discharged all
related Liabilities, such equity interests and Liabilities will be allocated to,
and assumed by, AT&T and BT in equal shares.
4.5 Certain Liabilities Not Reflected on Closing Statements.
-------------------------------------------------------
(a) Liabilities of the Concert Group (other than (1)
Operational Concert Liabilities, (2) Tax Liabilities, which are dealt with in
the Tax Matters Agreement, (3) Liabilities relating to employee matters, which
are dealt with in the Employee Matters Agreement, and (4) the Liabilities
described in Sections 4.4(e), 4.4(f), 4.4(g), 4.4(h), 4.8 and 4.10) (i) to the
extent incurred or resulting from any fact, event or circumstance occurring or
existing prior to the Closing, and (ii) that are not taken into account in the
calculation of the Adjusted Net Assets of either the AT&T Concert Group or the
BT Concert Group (collectively, the "Covered Losses") shall be handled in
---------------
accordance with this Section 4.5.
(b) Each of AT&T and BT shall bear Covered Losses for which
claims have been made or asserted in writing against it or any of its Affiliates
and with respect to which it gives the other parent notice in writing, with
reasonable detail of
17
the particulars of the claim, prior to the date that is three and one-half
years after the Closing Date (collectively, the "Specified Losses") up to an
-----------------
aggregate amount equal to $10,000,000. Any Specified Losses that are actually
paid by a parent or its Affiliates after the Closing Date in excess of
$10,000,000, in the aggregate, shall be borne by the parents on an equal basis;
provided that any Specified Loss that together with the amount of any related
--------
claims is less than $100,000 shall be ignored and not taken into account for
purposes of calculating whether the $10,000,000 threshold has been met or the
amount of Specified Losses in excess of such threshold.
(c) Each parent shall use its commercially reasonable efforts
to minimize the amount of the Specified Losses of the members of the Concert
Group that have been acquired by it as of the Closing Date. Each parent shall
deliver to the other parent and to the Designated Accountants (x) within 60 days
after each anniversary of the Closing Date a statement setting forth in
reasonable detail the nature and amount of each Specified Loss that has been
paid by it or its Affiliates in the prior one year period, and the aggregate
amount of all such Specified Losses and any outstanding claims for Specified
Losses, and providing supporting documentation relating thereto (collectively
"Statement of Specified Losses") and (y) promptly after notice thereof, a
-----------------------------
statement describing any claim which could reasonably be expected to result in a
Specified Loss in excess of $1,000,000.
(d) Any Action that is brought against a parent or any of its
Affiliates that could reasonably be expected to result in a Specified Loss shall
be handled in accordance with Section 4.7. Within 60 days following each
anniversary of the Closing Date, each parent shall determine the amount of the
reasonable costs expended (excluding the costs of in-house counsel) in
connection with the defense of Actions for which it has primary responsibility
as set forth in Section 4.7(b) and shall notify the other parent in writing
thereof, setting forth a summary in reasonable detail of the costs expended and
the Action to which they relate. The parent with the lower aggregate defense
costs shall, as promptly as practicable after each parent has received the other
parent's notice, reimburse or pay to the other parent one-half of the amount of
the excess of the other parent's defense costs over its defense costs.
(e) The Designated Accountants shall verify each parent's
Statement of Specified Losses, and shall determine the amount and the payor of
any payment required to be made so as to effectuate the intent of Section 4.5(b)
(the "Specified Loss Equalization Payment"). The Designated Accountants shall be
-----------------------------------
instructed to deliver their report within 90 days following each anniversary of
the Closing Date, or, if earlier, within 30 days following receipt by the
Designated Accountants of the Statements of Specified Losses from both parents.
The Specified Loss Equalization Payment with respect to the applicable prior
period shall be made within 10 Business Days following the date of delivery of
the Designated Accountants' report with respect to such period, in cash by wire
transfer of immediately available funds.
(f) Each of AT&T and BT acknowledges and agrees that the
payment of the Specified Loss Equalization Payment shall be in full and final
settlement of any rights that it may have against the other parent with respect
to Specified Losses
18
paid by it or its Affiliates. Each Covered Loss that is not a Specified Loss
shall be the responsibility of and borne by the parent or its Affiliate which
suffers the Covered Loss.
4.6 Designated Accountants.
----------------------
(a) Within 60 days after the date hereof, the parents shall jointly enter into
an engagement letter with PricewaterhouseCoopers LLP or Ernst & Young LLP (the
"Designated Accountants"), incorporating the items set forth on Schedule 4.6(a)
---------------------- ---------------
attached hereto. Pursuant to the terms of such engagement letter, the Designated
Accountants shall be instructed as of the date thereof to perform the work and
make the determinations described in Sections 4.2, 4.3 and 4.5, within the
periods specified therein.
(b) The parents shall promptly make available or cause to be
made available to the Designated Accountants all data and information reasonably
requested by the Designated Accountants for purposes of conducting their work
and rendering their determinations as provided in Sections 4.2, 4.3 and 4.5,
including information in the possession of PricewaterhouseCoopers LLP in its
capacity as outside auditors of Concert BV, and with a view to enabling the
Designated Accountants to complete its work in the time period contemplated in
Section 4.2(b). Without limiting the foregoing, from and after the Closing Date,
to enable the Designated Accountants to complete its work under Sections 4.2,
4.3 and 4.5, AT&T and BT shall give the Designated Accountants and its
representatives reasonable access during normal business hours to the
properties, books and records of the AT&T Concert Group and BT Concert Group,
respectively, and the employees, accountants and other consultants of each
member of the AT&T Concert Group and BT Concert Group, respectively (provided,
that such access does not unreasonably interfere with the business of
such member of the AT&T Concert Group or BT Concert Group, as the case may be),
and furnish the Designated Accountants and its representatives with all such
information as the Designated Accountants may reasonably request.
(c) The fees and expenses of the Designated Accountants shall
be borne equally by the parents. The Designated Accountants shall act as an
expert and not as an arbitrator. Absent manifest error, the report and
determinations of the Designated Accountants shall be final and binding on the
parents. The parents expressly waive any right they may have to seek review by
the Wise Counselor or judicial review of any such determinations on any ground,
absent manifest error.
4.7 Handling of Actions.
-------------------
(a) In the case of an Action that could reasonably be expected
to involve an Operational Concert Liability and that is brought against the
Responsible Parent or against both the Responsible Parent and the other parent,
the Responsible Parent shall be primarily responsible for defending such Action.
If an Action involving an Operational Concert Liability has been brought only
against a parent other than the Responsible Parent, the matter shall be handled
in accordance with Article XI to the extent set forth therein.
19
(b) If an Action that could reasonably be expected to result
in a Specified Loss is brought against both parents or their Affiliates, the
primary responsibility for defending any such Action shall be allocated to
either parent if, and so long as, it is a party to such Action based on the
geographic location of the forum in which such Action was brought as follows:
Claim brought in: Allocated to:
---------------- ------------
United Kingdom BT
Europe BT
Middle East BT
Africa BT
North America AT&T
Caribbean/Latin America AT&T
Asia Pacific AT&T
If any Action that could reasonably be expected to involve a Specified Loss has
been brought only against one parent or its Affiliates it shall, subject to
Section 4.7(c), have sole responsibility for defending such Action.
(c) The parent with the primary or sole responsibility for
defending an Action as described in Sections 4.7(a) and 4.7(b) shall control the
defense of such Action and may consent to the entry of any judgment or enter
into any settlement of the Action; provided that if any settlement would require
--------
the other parent to contribute its 50% share of the Supplier/Distributor Excess
Loss as set forth in Section 4.4(b) or its 50% share of any Specified Losses in
excess of $10,000,000, in the aggregate, as set forth in Section 4.5(b), such
other parent's consent shall be required, and provided, further, however, that
-------- ------- -------
the consent of the other parent shall be required if the effect thereof is to
permit any injunction, declaratory judgment, order or other nonmonetary relief
to be entered, directly or indirectly, against the other parent or any Affiliate
thereof or the settlement does not include a full release from liability of the
other parent or any Affiliate thereof. The parent not in control of a defense
may nonetheless participate in the defense at its own cost and expense.
(d) This Section 4.7 covers only the handling of any Action
involving an Operational Concert Liability or Specified Loss and shall not
affect the allocation of such Liabilities as set forth in Sections 4.4 and 4.5,
respectively.
4.8 Pre-GV Liabilities. The Excluded AT&T Liabilities shall be
-------------------
transferred to, or remain with or be assumed by, AT&T and the Excluded BT
Liabilities shall be transferred to, or remain with or be assumed by, BT, in
each case without regard to the limitations or qualifications thereon contained
in Sections 25.4(c) and (d) of the Framework Agreement (it being understood that
the Concert Liabilities excluded from the definition of "Excluded BT
------------
Liabilities" pursuant to the parenthetical clause of paragraph (c) of the
-----------
definition thereof do not constitute Excluded BT Liabilities, but are
Liabilities of the Concert Group).
20
4.9 Post-Closing Liabilities.
------------------------
(a) Subject to Section 4.10, AT&T shall be responsible for all
Liabilities of the AT&T Allocated Business to the extent incurred or resulting
from any fact, event or circumstance occurring or existing after the Closing
(the "AT&T Post-Closing Liabilities").
-----------------------------
(b) Subject to Section 4.10, BT shall be responsible for all
Liabilities of the BT Allocated Business to the extent incurred or resulting
from any fact, event or circumstance occurring or existing after the Closing
(the "BT Post-Closing Liabilities").
---------------------------
4.10 Cable Commitments.
-----------------
(a) With respect to all commitments to acquire cable assets or
cable capacity that were entered into by a parent before January 5, 2000 and in
respect of which, as of the Closing Date, the cable assets or cable capacity
will be transferred or allocated to such parent, such parent will be solely
responsible for all funding obligations or other liabilities that become due
from and after the Closing Date with respect thereto. For the avoidance of
doubt, if each parent had a commitment to acquire a cable asset or cable
capacity on the same cable, all funding obligations with respect to that cable
asset or cable capacity shall be transferred or allocated, as of the Closing
Date, to the parents in the same proportion as each parent's commitments bore to
the total of all commitments on such system.
(b) With respect to all commitments relating to, or
acquisitions of, cable assets or cable capacity that were entered into by the
Concert Group from January 5, 2000 to the Closing Date, each parent will be
solely responsible for all funding obligations or other liabilities that become
due from and after the Closing Date with respect to the portion of such cable
assets or cable capacity that was allocated to such parent as of the Closing
Date.
(c) With respect to all cable assets and cable capacity that
are allocated or transferred to a parent as of the Closing Date, such parent
shall be responsible for all ongoing operational and maintenance costs arising
from and after the Closing Date relating thereto with respect to that portion of
such cable asset or cable capacity that was allocated to such parent as of the
Closing Date.
(d) Notwithstanding the provisions of Section 4.10(a) through
(c), any commitments relating to, or acquisitions of, cable assets or cable
capacity that become due prior to the Closing Date shall be the responsibility
of the Concert Group and shared equally by the parents (without duplication of
any such commitment taken into account in the determination of the Adjusted Net
Assets of the AT&T Concert Group and the BT Concert Group and the Post-Closing
Payment), regardless of when and by whom such commitments were made, and
regardless of which parent is allocated the applicable assets or capacity.
21
4.11 Post-Closing Collections and Payments.
-------------------------------------
(a) With respect to any accounts receivable that, as of the
Closing Date, are transferred from a member of a parent's A/B Concert Group to a
member of the other parent's A/B Concert Group, if any amounts are collected in
respect thereof by the transferor it shall keep such payments segregated from
its other funds, and promptly pay over such amounts to the transferee of such
accounts receivable. Similarly, if, after the Closing Date, a parent or any of
its Affiliates receives any payments in respect of contracts, customer accounts
or accounts receivables that have been allocated and transferred to the other
parent or its Affiliates in accordance with this Agreement, the first parent or
its Affiliates shall keep such payments segregated from its other funds, and
promptly pay over such payments to such other parent or its Affiliates. Subject
to Section 4.7, the parent to whom any accounts receivable shall have been
allocated and transferred in accordance with this Agreement shall have the
exclusive right to deal with the obligor thereof with respect to any matter
regarding the collection or settlement of such accounts receivable.
(b) With respect to any accounts payable that, as of the
Closing Date, are transferred or allocated from a member of a parent's A/B
Concert Group to a member of the other parent's A/B Concert Group, the
transferee thereof or the parent to whom such accounts payable have been
allocated in accordance with this Agreement shall be responsible for the
payment, settlement or discharge thereof.
ARTICLE V
OPERATIONAL MATTERS
-------------------
5.1 Funding.
-------
(a) The parties acknowledge that a funding plan for the
Concert Group (the "Funding Plan") was adopted at the Management Board meeting
-------------
of Concert BV on October 11, 2001. Except as otherwise agreed by the Shareholder
Representatives or in the Unwind Agreements, the parents agree to fund, on a
50/50 basis, or cause Concert BV to fund, the projects identified in the
Transition Plan, including any such projects that are not completed by the
Closing, and any contingency plans therefor set forth in the Transition Plan, in
each case, consistent with the decision of the Management Board on October 11,
2001.
(b) Each parent will also act in good faith to support the
other parent's ability to offer and provide services to customers until such
time as the Transition Plan is complete and such other parent is able to manage
its Allocated Business.
5.2 Assets Acquired Between Signing and Closing.
-------------------------------------------
(a) Notwithstanding anything to the contrary contained herein,
but subject to the Transition Plan and the other Unwind Agreements, the cost of
any GV Asset that is acquired by any member of the Concert Group between the
date hereof and
22
the Closing Date where the cost thereof does not exceed $500,000 individually
or $2,000,000 in the aggregate and where such GV Asset is not required or
contemplated by the Transition Plan and the cost of any contractual commitments
provided for in the Funding Plan, shall, in each case, be borne by the parents
on an equal basis.
(b) (i) Since the parents desire to achieve operational readiness to deliver
service to customers following the Closing, each of the parents (a "requesting
----------
parent") may cause a member or members of the Concert Group to purchase network
------
equipment or customer premises equipment with an aggregate acquisition cost not
to exceed $150,000,000. Title to such assets will be held by a relevant member
or members of the Concert Group, but such assets may be installed and managed by
and at the facilities of the requesting parent. The requesting parent will be
obligated to advance to such member of the Concert Group the full purchase price
in cash (in the form of a shareholder loan) necessary to fund the acquisition of
all of such assets. For the avoidance of doubt, the Concert Group shall not be
required to assume any non-cash obligation in connection with the purchase of
any such equipment.
(ii) The assets acquired by the relevant member of the Concert
Group pursuant to Section 5.2(b)(i) will not be used at all by the requesting
parent, the other parent or the Concert Group prior to April 1, 2002. If the
Closing has not occurred prior to April 1, 2002, then the requesting parent that
paid for such assets or associated systems (but not the other parent) may use
such assets and associated systems to deliver service to customers unless (1)
such requesting parent has, following the date of this Agreement and prior to
April 1, 2002, entered into a Major Transaction or a letter of intent or
agreement providing for a Major Transaction, (2) any of the conditions to
Closing set forth in Sections 10.1(a)(i) through (vi) inclusive have not then
been satisfied, unless the primary reason for such conditions to Closing not
being satisfied is a breach by the other parent of its obligations under this
Agreement, and (3) the other parent has made an election as provided in the next
sentence. If the conditions contained in the preceding clauses (1) and (2) have
occurred, then the parent that did not enter into the letter of intent or
agreement regarding the Major Transaction may specify that neither parent will
be permitted to use any assets for delivery of service to customers acquired
pursuant to this Section until the conditions to Closing referred to in clause
(2) of the preceding sentence have been satisfied. Notwithstanding the preceding
sentence, if the assets have already been placed in service as permitted by this
Section and a parent subsequently announces a Major Transaction following the
in-service date, the parents shall not then be required to terminate using such
assets to deliver service to customers.
(iii) All revenues, income and other benefits received by a
parent or a member of the Concert Group and all receivables and payables derived
from the use of the assets acquired pursuant to this Section 5.2(b) prior to the
Closing Date will be held in trust for the economic benefit and risk of, and
will be promptly contributed to or assumed by, the relevant member of the
Concert Group prior to the Closing Date.
(iv) At the Closing, the requesting parent shall acquire the
assets purchased pursuant to this Section in exchange for cancellation of the
relevant shareholder loan or loans.
23
(v) If this Agreement has been terminated, the economic
benefit and risk arising from the assets acquired by the appropriate member of
the Concert Group will remain with such member. Following such termination, and
if the Concert Group requires further funding to operate its business, the
parent that has funded the lesser amount in respect of the purchase of assets
pursuant to this Section will be obligated to contribute cash (in the form of
shareholder loans) to the Concert Group from time to time as is required by the
Concert Group up to the amount of the difference of the amounts so funded by the
parents before the other parent will be required to share in the obligation to
fund the operations of the Concert Group on an equal basis.
(vi) For purposes of this Section 5.2(b), "Major Transaction"
-----------------
means a transaction or a series of related transactions involving either (i) a
merger, acquisition, business combination, divestiture, investment, joint
venture or similar transaction (a "Transaction") with a value of $7.5 billion or
-----------
more involving a parent or one or more of its Affiliates and one or more
unaffiliated third parties principally headquartered in the United States and
substantially involved in the provision of Communications Services of the type
offered by the parent or its Affiliate entering into the Transaction (but in
determining if a Person is substantially involved in such Communications
Services business, the cable television or local broadband business of such
Person will be excluded), other than any such Transaction that predominantly
involves (1) the cable television or local broadband assets and businesses of a
parent or its Affiliates, or (2) AT&T Canada Inc., or (ii) a Transaction with a
value of $500 million or more involving a parent or one or more of its
Affiliates and a local or long distance telecommunications company whose
principal headquarters is located in the United Kingdom or Europe or one or more
of its Affiliates.
5.3 Assets Sold Between Signing and Closing. Notwithstanding
--------------------------------------------
anything to the contrary contained herein or in the Funding Plan, the net sale
proceeds of any GV Asset that is a fixed asset (other than marketable
securities, similar instruments and long-term deposits) that is sold to a third
party between the date hereof and the Closing Date (i) pursuant to a contractual
commitment existing as of the date hereof, or (ii) other than a GV Asset
described in clause (i), where the gross sale proceeds do not exceed $500,000
individually or $2,000,000 in the aggregate, shall be deemed to be shared by the
parents on an equal basis.
5.4 Shareholder Representatives.
---------------------------
(a) For the purposes of facilitating the implementation of the
transactions contemplated by this Agreement, each parent shall designate a
representative (a "Shareholder Representative") who shall have full power and
---------------------------
authority to make determinations on behalf of such parent as expressly set forth
in this Agreement, as well as in respect of the matters described in Section
7.1, and in respect of such other matters as such parent may designate in
writing. All such determinations shall be consistent with the terms of this
Agreement, the Commercial Agreements and the other Schedules and Exhibits
hereto.
24
(b) The parties acknowledge that the initial Shareholder
Representative of AT&T is Xxxx Xxxx, and the initial Shareholder Representative
of BT is Xxx Xxxxx. Each parent may, from time to time, remove and replace its
Shareholder Representative by notice in writing to the other parent, with a copy
to Concert BV.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 Representations and Warranties of AT&T. AT&T represents and warrants
--------------------------------------
to the BT Parties as follows:
(a) ORGANIZATION AND STANDING. AT&T is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and ACSJ is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
has all requisite corporate or limited liability company authority and power
necessary to enable it to own, lease or otherwise hold its properties and assets
and to carry on its business as presently conducted.
(b) AUTHORIZATION; VALIDITY. Each of AT&T and ACSJ has all
requisite corporate or limited liability company authority and power to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Each of AT&T, ACSJ and their
Affiliates will have at the Closing all requisite corporate, partnership,
limited liability company or other similar authority and power to execute and
deliver the other Unwind Agreements to be executed by it on or prior to the
Closing, to perform its obligations under such other Unwind Agreements to which
it is a party and to consummate the transactions contemplated thereby. The
execution, delivery and performance by each of AT&T and ACSJ of this Agreement,
and the consummation by each of AT&T and ACSJ of the transactions contemplated
hereby, have been duly authorized by all necessary corporate or limited
liability company action on the part of AT&T and ACSJ, and the execution,
delivery and performance by each of AT&T, ACSJ and their Affiliates of the other
Unwind Agreements to be executed by it on or prior to the Closing, and the
consummation of the transactions contemplated thereby, will, prior to such
execution and delivery, be duly authorized by all necessary corporate,
partnership, limited liability company or other similar action on the part of
AT&T, ACSJ or such Affiliates, and no other corporate, partnership, limited
liability company or other similar proceedings or actions on the part of any of
AT&T, ACSJ or such Affiliates, or their respective boards of directors or other
governing bodies or stockholders, partners or members are necessary therefor.
This Agreement has been, and the other Unwind Agreements to be executed by AT&T,
ACSJ and their Affiliates on or prior to the Closing will, when executed and
delivered, be, duly executed and delivered by AT&T, ACSJ and their Affiliates,
as applicable. Assuming the due execution and delivery hereof and thereof by the
other parties thereto, this Agreement constitutes, and the other Unwind
Agreements to be executed by AT&T, ACSJ or their Affiliates on or prior to the
Closing will, when duly executed and delivered, constitute, legal, valid and
binding obligations of AT&T, ACSJ and such
25
Affiliates that are parties thereto, enforceable against it or them in
accordance with their respective terms.
(c) NO CONFLICTS. The execution, delivery and performance by each
of AT&T and ACSJ of this Agreement, the consummation of the transactions
contemplated hereby and compliance with the terms hereof do not, and the
execution, delivery and performance by each of AT&T, ACSJ and their Affiliates
of the other Unwind Agreements to be executed by it on or prior to the Closing,
the consummation of the transactions contemplated by such Unwind Agreements and
compliance with the terms of such Unwind Agreements will not at the Closing,
conflict with, or constitute or result in any Default under (i) any provision of
the Restated Certificate of Incorporation or bylaws of AT&T, the constitutive or
similar governing documents of ACSJ or any provision of the constitutive or
similar governing documents of any such Affiliate, (ii) any order, arbitration
award, judgment, injunction or decree against, or binding upon, any of AT&T,
ACSJ or any such Affiliate or upon its properties or businesses, (iii) any
instrument, contract, mortgage, charge or other agreement to which AT&T, ACSJ or
any such Affiliate is a party or by which any of its Assets is bound, or (iv)
under any Applicable Law with respect to AT&T, ACSJ or any such Affiliates or
any of their respective Assets (except, with respect to clauses (ii), (iii) and
(iv), for such conflicts or Defaults that, individually or in the aggregate,
would not have a material effect on the ability of AT&T, ACSJ or any of their
Affiliates, as applicable, to perform in all material respects its obligations
under this Agreement and the other Unwind Agreements to which it is a party in
accordance with their respective terms).
(d) CONSENTS AND APPROVALS. Except as provided in Schedule 6.1(d)
---------------
or except as may be required to implement the steps set forth in Schedule 2.1(c)
---------------
in accordance with Applicable Law, no Third Party Approval and no Governmental
Approval is required to be obtained or made by AT&T, ACSJ or any of their
Affiliates in connection with the execution, delivery and performance of this
Agreement and the other Unwind Agreements and the transactions contemplated
hereby and thereby, except for Third Party Approvals or Governmental Approvals,
the absence of which, individually or in the aggregate, would not have a
material effect on the ability of any of AT&T, ACSJ or their Affiliates, as
applicable, to perform in all material respects its obligations under this
Agreement and the other Unwind Agreements to which it is a party in accordance
with their respective terms.
6.2 Representations and Warranties of BT. BT represents and
------------------------------------
warrants to the AT&T Parties, as follows:
(a) ORGANIZATION AND STANDING. BT is a public limited company
incorporated under the laws of England and Wales, and BT Holdings is a Besloten
Vennootschap organized under the laws of The Netherlands, and each has all
requisite corporate authority and power necessary to enable it to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted.
(b) Authorization; Validity. Each of BT and BT Holdings has all
requisite corporate authority and power to execute and deliver this Agreement,
to
26
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Each of BT, BT Holdings and their Affiliates will have at
the Closing all requisite corporate, partnership, limited liability company or
other similar authority and power to execute and deliver the other Unwind
Agreements to be executed by it on or prior to the Closing, to perform its
obligations under such other Unwind Agreements to which it is a party and to
consummate the transactions contemplated thereby. The execution, delivery and
performance by each of BT and BT Holdings of this Agreement, and the
consummation by each of BT and BT Holdings of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of BT and BT Holdings, and the execution, delivery and performance by each of
BT, BT Holdings and their Affiliates of the other Unwind Agreements to be
executed by it on or prior to the Closing, and the consummation of the
transactions contemplated thereby, will, prior to such execution and delivery,
be duly authorized by all necessary corporate, partnership, limited liability
company or other similar action on the part of BT, BT Holdings or such
Affiliates and no other corporate, partnership, limited liability company or
other similar proceedings or actions on the part of any of BT, BT Holdings or
such Affiliates, or their respective boards of directors or other governing
bodies or stockholders, partners or members will be necessary therefor. This
Agreement has been, and the other Unwind Agreements to be executed by BT, BT
Holdings and their Affiliates on or prior to the Closing will, when executed and
delivered, be, duly executed and delivered by BT, BT Holdings and their
Affiliates, as applicable. Assuming the due execution and delivery hereof and
thereof by the other parties thereto, this Agreement constitutes, and the other
Unwind Agreements to be executed by BT, BT Holdings or their Affiliates on or
prior to the Closing will, when duly executed and delivered, constitute, legal,
valid and binding obligations of BT, BT Holdings and such Affiliates that are
parties thereto, enforceable against it or them in accordance with their
respective terms.
(c) NO CONFLICTS. The execution, delivery and performance by each
of BT and BT Holdings of this Agreement, the consummation of the transactions
contemplated hereby and compliance with the terms hereof do not, and the
execution, delivery and performance by each of BT, BT Holdings and their
Affiliates of the other Unwind Agreements to be executed by it on or prior to
the Closing, the consummation of the transactions contemplated by such Unwind
Agreements and compliance with the terms of such Unwind Agreements will not at
the Closing, conflict with, or constitute or result in any Default under (i) any
provision of the memorandum or articles of association or bylaws of BT, the
articles of association of BT Holdings or any provision of the constitutive or
similar governing documents of any such Affiliate, (ii) any order, arbitration
award, judgment, injunction or decree against, or binding upon, any of BT, BT
Holdings or any such Affiliate or upon its properties or businesses, (iii) any
instrument, contract, mortgage, charge or other agreement to which BT, BT
Holdings or any such Affiliate is a party or by which any of its Assets is
bound, or (iv) under any Applicable Law with respect to BT, BT Holdings or any
such Affiliates, or any of their respective Assets (except, with respect to
clauses (ii), (iii) and (iv), for such conflicts or Defaults that, individually
or in the aggregate, would not have a material effect on the ability of BT, BT
Holdings or any of their Affiliates, as applicable, to perform in all
27
material respects its obligations under this Agreement and the other Unwind
Agreements to which it is a party in accordance with their respective terms).
(d) Consents and Approvals. Except as provided in Schedule
--------
6.2(d) or except as may be required to implement the steps set forth in Schedule
------ --------
2.1(c) in accordance with Applicable Law, no Third Party Approval and no
------
Governmental Approval is required to be obtained or made by BT, BT Holdings or
any of their Affiliates in connection with the execution, delivery and
performance of this Agreement and the other Unwind Agreements and the
transactions contemplated hereby and thereby, except for Third Party Approvals
or Governmental Approvals, the absence of which, individually or in the
aggregate, would not have a material effect on the ability of BT, BT Holdings or
their Affiliates, as applicable, to perform in all material respects its
obligations under this Agreement and the other Unwind Agreements to which it is
a party in accordance with their respective terms.
6.3 Concert BV. Each of AT&T and BT has taken all action deemed
----------
necessary by it to be comfortable that Sections 6.3(a) and (b) are true and
correct in all material respects, and neither parent shall make any claim or
assertion against the other parent based on the provisions thereof being untrue
or incorrect in any respect.
(a) Organization and Standing. Concert BV is a Besloten
Vennootschap organized under the laws of The Netherlands, and has all requisite
corporate or other authority and power necessary to enable it to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted.
(b) Authorization; Validity. Concert BV has all requisite
corporate or other authority and power to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Each of Concert BV and its Affiliates will have at the
Closing all requisite corporate, partnership, limited liability company or other
similar authority and power to execute and deliver the other Unwind Agreements
to be executed by it on or prior to the Closing, to perform its obligations
under such other Unwind Agreements to which it is a party and to consummate the
transactions contemplated thereby. The execution, delivery and performance by
Concert BV of this Agreement, and the consummation by Concert BV of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate or other action on the part of Concert BV, and the execution, delivery
and performance by Concert BV and its Affiliates of the other Unwind Agreements
to be executed by it on or prior to the Closing, and the consummation of the
transactions contemplated thereby, will, prior to such execution and delivery,
be duly authorized by all necessary corporate, partnership, limited liability
company or other similar action on the part of Concert BV or such Affiliates and
no other corporate, partnership, limited liability company or other similar
proceedings or actions on the part of any of Concert BV or such Affiliates or
their respective governing bodies or stockholders, partners or members will be
necessary therefor. This Agreement has been, and the other Unwind Agreements to
be executed by Concert BV and its Affiliates on or prior to the Closing will,
when executed and delivered, be, duly executed and delivered by Concert BV and
28
its Affiliates, as applicable. Assuming the due execution and delivery hereof
and thereof by the other parties thereto, this Agreement constitutes, and the
other Unwind Agreements to be executed by Concert BV and its Affiliates on or
prior to the Closing will, when duly executed and delivered, constitute, legal,
valid and binding obligations of Concert BV and such Affiliates, enforceable
against it in accordance with their respective terms.
ARTICLE VII
COVENANTS
7.1 Reasonable Best Efforts; Conduct of Concert Group.
-------------------------------------------------
(a) The parents and Concert BV shall use their reasonable
best efforts to consummate the Closing as soon as practicable following the date
of this Agreement. Notwithstanding any reasonable best efforts or similar
obligation of the parties to obtain Key Governmental Approvals, consummate the
Closing or take similar actions under this Agreement, a parent or any of its
Affiliates may enter into and perform any agreement with respect to any
spin-off, merger, acquisition, asset or equity purchase, asset or equity sale
transaction or other restructuring, recapitalization, business combination or
similar transaction (each, a "New Transaction"); provided, that (x) the relevant
---------------
parent will otherwise continue to have a reasonable best efforts obligation to
obtain its Key Governmental Approvals and otherwise consummate the transactions
contemplated hereby as promptly as practicable following the date hereof, and
continue to have a reasonable best efforts or similar obligation to consummate
the Closing and take such similar actions, and (y) all applicable provisions of
the Framework Agreement shall remain in full force and effect except (1) that
Section 11.10 of the Framework Agreement is hereby amended to eliminate any cure
period regarding any breach of Article 11 of the Framework Agreement with
respect to any such New Transaction, and (2) as such applicable provisions of
the Framework Agreement are otherwise expressly amended by this Agreement.
(b) From the date hereof until the Closing Date except as
otherwise permitted or required by this Agreement, including Article V hereof
and including Schedule 2.1(c), the Funding Plan or the other Unwind Agreements
---------------
or as approved by the Shareholder Representatives, the parents shall cause
Concert BV not to, and Concert BV shall cause each of the Concert Subsidiaries
not to:
(i) amend its constitutive or equivalent documents;
(ii) declare or pay any dividend or distribution with
respect to its capital stock or share capital;
(iii) repurchase its capital stock or share capital;
(iv) create, incur or assume any long-term or short-term
Indebtedness (other than any Indebtedness contemplated by Section 5.1);
29
(v) assume, guarantee, endorse or otherwise become liable
or responsible for any material obligations of any Person;
(vi) make any loans, advances or capital contributions to,
or investments in, any Person in excess of $100,000 either singly or in a series
of transactions taken together in aggregate;
(vii) sell, transfer or otherwise dispose of or, except as
provided in Section 5.2, acquire any GV Asset exceeding $500,000 individually or
$2,000,000 in the aggregate in value without the prior written consent of the
parent to whom such GV Asset has been allocated or both parents in the event
such GV Asset is an Unallocated Asset;
(viii) give notice of default under, terminate or cancel
any material customer, correspondent, supply or distributor agreement or any
other material agreement other than in the ordinary course of the Venture
Business and other than with the prior written consent of the parent to which
such agreement has been allocated (for the purpose of this Section 7.1(b), a
contract shall be deemed to be "material" if it has annual revenues or annual
expenditures of over $1,000,000 or otherwise has a value exceeding $1,000,000,
or contains any exclusivity or most-favored customer provisions or purchase
commitment obligations);
(ix) enter into any new material customer, correspondent,
supply or distributor agreement or other material agreement or modify any such
existing agreement;
(x) except as contemplated by the Employee Matters
Agreement or the Transition Plan, enter into any employment agreements or
increase the compensation or benefits of, or grant any severance pay or
termination pay to, any of its employees, officers or directors; establish,
adopt or enter into any employee benefit plan, program or arrangement or amend,
modify or terminate any employee benefit plan in effect as of the date hereof,
except in the ordinary course of the Venture Business;
(xi) degrade, diminish or otherwise modify the Concert
Group product portfolio or the related MSD's or SLA's that exist as of September
15, 2001;
(xii) change the price books of the Concert Group in
effect as of September 15, 2001, except that the Concert Group may continue its
current practices in connection with responding to special bids;
(xiii) enter into any new arrangement or change any
existing arrangement between a member of the Concert Group, on the one hand, and
a parent or any of its Affiliates, on the other hand, having annual revenues or
annual expenditures exceeding $1,000,000 or otherwise having a value exceeding
$1,000,000;
(xiv) modify or replace any existing arrangement, grant
any credit or enter into any settlement with respect to any contract involving
in excess of
30
$100,000 if the impact thereof would be to increase or decrease the Adjusted Net
Assets of either the AT&T Concert Group or the BT Concert Group;
(xv) take any action to accelerate or defer, decrease or
delay the recognition of any receivable owing to any member of the Concert Group
involving in excess of $100,000;
(xvi) take any action to accelerate or defer the settlement, accrual or creation
of, increase the amount of, any payable owing by any member of the Concert Group
involving in excess of $100,000; or
(xvii) enter into any agreement or commit to effect or
implement any of the foregoing.
7.2 Governmental and Third Party Approvals.
--------------------------------------
(a) From the date of this Agreement, each parent and Concert
BV shall use its reasonable best efforts to obtain, in the case of AT&T, the
Governmental Approvals set forth in Schedule 6.1(d) with respect to AT&T and, in
---------------
the case of BT, the Governmental Approvals set forth in Schedule 6.2(d) with
---------------
respect to BT (collectively, the "Key Governmental Approvals") required for the
--------------------------
parents, Concert BV and their Subsidiaries to consummate the transactions
contemplated by the Unwind Agreements, and to obtain such approvals as is
necessary for its independent operation of the AT&T Allocated Business or BT
Allocated Business, as the case may be, provided, however, that, whether in
-------- -------
connection with any discussions with any Governmental Body or in connection with
any Governmental Approval with respect to the transactions contemplated hereby
or otherwise, (i) the obligations of the parents to use reasonable best efforts
shall not limit or restrict the parents' ability to negotiate any matters that
under the terms of any Unwind Agreement remain to be agreed by the parents, and
(ii) neither parent shall be required to agree to any important restriction,
modification, limitation or reduction of any material provision of this
Agreement or any other Unwind Agreement. In addition, each parent will cooperate
with and use reasonable commercial efforts to assist the other parent in
obtaining the Key Governmental Approvals for which such other parent is
responsible; provided that it is agreed that the cost and expense (including any
--------
reasonable out-of-pocket cost and expense incurred by the cooperating parent and
any allocations of its in-house counsel charges, which shall, in each case, be
promptly reimbursed to the cooperating parent) and the responsibility for
obtaining such Key Governmental Approvals shall rest with AT&T with respect to
the AT&T Governmental Approvals set forth on Schedule 6.1(d) and with BT with
---------------
respect to the BT Governmental Approvals set forth on Schedule 6.2(d).
---------------
(b) From the date of this Agreement, the parents and Concert
BV shall make or cause to be made available all information reasonably requested
by the other parent or a parent to permit all necessary filings and notices to
the European Commission to be made within one week following the execution of
this Agreement or as promptly thereafter as required, and, with respect to
filings and notifications in the United States and elsewhere, as promptly as
practicably following the execution hereof, but in
31
any event within sufficient time to enable all relevant filings and
notifications to be made without delay and within any prescribed period
therefor. The parents and Concert BV shall promptly furnish or cause to be
furnished all information and documents reasonably required by the relevant
Governmental Bodies, and make or cause to be made available staff to give
evidence to such Governmental Bodies, in each case as appropriate in order to
obtain its respective Key Governmental Approvals or such approvals as is
necessary for its independent operation of the AT&T Allocated Business or BT
Allocated Business, as the case may be.
(c) At all times prior to the Closing, the parents and
Concert BV shall cooperate and coordinate with each other, as appropriate, and
subject to confidentiality obligations and Applicable Law, with respect to
filings and notifications to Governmental Bodies in connection with obtaining
Governmental Approvals for the transactions contemplated hereby and such other
approvals as any parent decides is necessary for its independent operation of
the AT&T Allocated Business and BT Allocated Business, as the case may be.
(d) The parents and Concert BV will cooperate with each other
in connection with obtaining all Approvals of non-Governmental Bodies necessary
for the parents, Concert BV and their Subsidiaries to consummate the
transactions contemplated by the Unwind Agreements; provided, that it is agreed
--------
that the cost and expense (including any reasonable out-of-pocket cost or
expense incurred by the other parent or the Concert Group in so cooperating
(including any allocations of in-house counsel charges), which shall, in each
case, be promptly reimbursed to the cooperating parent) and the responsibility
of obtaining each such Approval rests with the parent to which the corresponding
GV Asset or member of the Concert Group will be transferred at Closing.
(e) If, on or prior to the Closing Date, either AT&T or BT is
unable to obtain, or to cause to be obtained, any required Approval of a
non-Governmental Body or a Governmental Approval necessary to consummate the
transactions contemplated hereby and to permit AT&T or BT, as the case may be,
to own and operate the AT&T Allocated Business or the BT Allocated Business, to
the extent permitted by Applicable Law, AT&T or BT, as the case may be, may
request that the applicable GV Asset not be transferred to it (or its
Affiliates) at the Closing as contemplated hereby and the applicable member of
the Concert Group shall hold any Assets not so transferred in trust for the
benefit of the applicable parent and its Affiliates and shall continue to be
bound by any agreements, leases, licenses and other obligations to the extent
required by the terms thereof. To the extent permitted by Applicable Law, the
applicable member of the Concert Group shall take such actions as reasonably
requested by AT&T or BT, as the case may be, at the expense of the requesting
party, to give effect to the foregoing provisions and to put the applicable
parent and its Affiliates in as nearly equivalent a position as they would be in
if the applicable GV Asset had been transferred. Such actions shall include
granting a license or indefeasible right of use with respect thereto if
requested by AT&T or BT, as the case may be. In addition, AT&T or BT, as the
case may be, shall, as agent or subcontractor for the applicable member of the
Concert Group pay, perform and discharge fully all the obligations or other
Liabilities of
32
such member of the Concert Group with respect to any GV Asset not transferred as
a result of the failure to obtain any such Approval or Governmental Approval
from and after the Closing Date. AT&T or BT, as the case maybe, shall indemnify
such member of the Concert Group, and hold it harmless against any Liabilities
arising in connection therewith. The applicable member of the Concert Group
shall, without further consideration, pay and remit, or cause to be paid or
remitted, to AT&T or BT, as the case may be, promptly all money, rights and
other consideration received by it in respect of such performance. If and when
any such Approval or Governmental Approval shall be obtained or such agreement,
lease, license or other rights or obligations shall otherwise become assignable
or able to be novated (or if AT&T or BT, as the case may be, agrees to indemnify
the applicable member of the Concert Group in respect thereof, upon the earlier
request of AT&T or BT, as the case may be) the applicable member of the Concert
Group shall thereafter transfer the applicable GV Asset or assign, or cause to
be assigned, all its rights, obligations and other Liabilities thereunder or any
rights or obligations of any member of the Concert Group to AT&T or BT, as the
case may be, without payment of further consideration and AT&T or BT, as the
case may be, shall, without the payment of any further consideration, receive
and assume such rights and obligations. Except as contemplated hereby, all
payments or transfers pursuant to this Section 7.2(e) shall be made free and
clear of, and without reduction for or on account of, any charges, fees, levies,
deductions or set-offs of any nature or kind. All payments or transfers pursuant
to this Section 7.2(e) shall be disregarded for purposes of any calculations or
adjustments pursuant to Article IV hereof, and for purposes of such Article IV
all such GV Asset transfers and liability transfers shall be deemed to have
occurred at Closing. This Section 7.2(e) shall be subject to any provisions
specifically dealing with the subject matter hereof in the Unwind Agreements.
7.3 Access. Subject to confidentiality obligations and Applicable
------
Laws on data protection or otherwise, from the date hereof until the Closing
Date, Concert BV shall give to each parent and its representatives reasonable
access during normal business hours to the properties, books and records of the
Concert Group and the employees, accountants and other consultants of the
Concert Group (provided, that such access does not unreasonably interfere with
--------
the Venture Business), and furnish each parent and its representatives with all
such information concerning the GV Assets and GV Liabilities, as a parent may
reasonably request. In furtherance and not in limitation of the foregoing, the
access the parents shall be granted shall enable them to review the accounting
entries of the Concert Group, including charges to and adjustments of assets,
liabilities and reserves.
7.4 Confidentiality.
---------------
(a) Each party acknowledges and agrees that the
confidentiality obligations set forth in Section 18.10 of the Framework
Agreement shall apply to any information provided by Concert BV or any Concert
Subsidiary to either parent or its Affiliates pursuant to Section 7.3, except
that each parent may disclose such information to its consultants, advisors and
representatives, including legal counsel and financial advisors, in connection
with the implementation and consummation of the transactions contemplated
hereby.
33
(b) Each parent shall, and shall cause its Affiliates and its
or their directors, officers, employees and agents (each, a "Recipient") to,
---------
maintain in confidence all information furnished to each such Recipient in
connection with or relating to this Agreement and the other Unwind Agreements.
The preceding sentence shall not apply to information that (i) becomes generally
available to the public other than as a result of disclosure by such Recipient
contrary to this Agreement, (ii) was available to such Recipient on a
non-confidential basis prior to its disclosure to such Recipient by the Concert
Group or the other parent, (iii) becomes available to such Recipient on a
non-confidential basis from a source other than the Concert Group or any other
Recipient unless such Recipient knows that such source is bound by a
confidentiality agreement or is otherwise prohibited from transmitting the
information to such Recipient by a contractual obligation, (iv) is independently
developed by such Recipient without reference to confidential information
received from the Concert Group or the other parent, (v) is required to be filed
publicly or disclosed by Applicable Law or legal process, or (vi) is required to
be disclosed by any listing agreement with, or the rules or regulations of, any
securities exchange on which securities of such Recipient or any of its
Affiliates are listed or traded. In the case of a disclosure in the
circumstances described in clause (v) or clause (vi) of the preceding sentence,
the disclosing Recipient shall use its reasonable best efforts to provide the
other parent with prompt notice thereof so that the other parent may take any
appropriate measures, such as seeking a protective order or other appropriate
remedy. If such protective order or other remedy is not obtained, the disclosing
Recipient agrees to furnish only that portion of the information that it is
legally required to do so and, at the request of or the other parent, shall use
its reasonable best efforts to obtain assurances that confidential treatment
will be accorded such information, if confidential treatment is available.
7.5 Transition Plan; IPR; Data Segregation Policy.
---------------------------------------------
(a) From the date hereof until the Closing and, to the extent
applicable and at all times subject to Applicable Law and Section 5.1(a), on and
after the Closing Date, the parents shall, and Concert BV shall cause the
Concert Group to, implement the transition plan attached hereto as Schedule
--------
7.5(a) (the "Transition Plan").
------ ---------------
(b) Concurrently with the execution of this Agreement, each
of AT&T, BT and Concert BV shall execute the IPR Agreement and the Brand
Agreement.
(c) From the date hereof, the parents shall, and shall cause
its Affiliates to, comply with the Competition Safeguard and Data Segregation
Policy set forth in Annex IV-E of Schedule 4 to the Transition Services
----------
Agreement, the form of which is attached hereto as Exhibit 2.
---------
7.6 Press Releases.
--------------
(a) Following the date hereof, any public announcements in
respect of the subject matter of any of the Unwind Agreements shall not be
inconsistent with the initial joint press release which has been mutually agreed
to as of the date
34
hereof. For the purposes hereof, Section 28.4 of the Framework Agreement shall
not apply.
(b) Concert BV shall not, and shall cause the Concert
Subsidiaries not to, issue any public announcement in respect of the subject
matter of this Agreement and the other Unwind Agreements without the prior
written consent of AT&T and BT.
7.7 Employee Matters. From the date hereof until the Closing Date,
----------------
and, to the extent applicable, on and after the Closing Date, each party shall
comply, and shall cause its Affiliates to comply, with the provisions set forth
in the employee matters agreement, which is being executed by AT&T, BT and
Concert BV concurrently with the execution of this Agreement (the "Employee
--------
Matters Agreement").
-----------------
7.8 Continuation of Performance. From the date hereof until the
---------------------------
Closing Date and except as expressly provided otherwise in the Tax Matters
Agreement, the Employee Matters Agreement, the IPR Agreement or the Transition
Plan, each of the parents and Concert BV shall in good faith perform its
obligations, including, subject to Section 5.1, its funding obligations, and
provide goods and services under the existing Transaction Agreements. Without
limiting the foregoing, but subject to Sections 5.1, 5.2, 5.3 and 5.4, from the
date hereof until the Closing Date, all commercial and financial transactions
between a member of the AT&T Group or BT Group, on the one hand, and any member
of the Concert Group, on the other hand, shall be conducted in the ordinary
course of business in accordance with past practice and on terms and conditions
consistent with past practices, including, in the case of Intercompany Payables
invoiced on or after September 16, 2001, taking into account the principles
adopted by the Shareholder Representatives in resolving any disputes relating to
Intercompany Payables of the same nature that are set forth on Schedule
--------
4.2(c)(i).
---------
7.9 Further Assurances.
------------------
(a) From and after the date hereof and following the Closing,
the parties shall use their reasonable best efforts to consummate the
transactions contemplated hereby, subject to the terms hereof. From and after
the date hereof and following the Closing, each party shall execute, or cause to
be executed, such documents and other instruments, and take or cause to be taken
such further actions, as may be reasonably requested to carry out the provisions
hereof and the transactions contemplated hereby, subject in all cases, to the
terms hereof.
(b) In accordance with Schedule 2.1(c) and in order to secure
---------------
the implementation of the Unwind Agreements as soon as practicable on or after
the Closing, transfers of certain equity interests in members of the Concert
Group to another member of the Concert Group, transfers or redemptions of
certain GV Assets (other than equity interests in members of the Concert Group)
from one member of the Concert Group to another member of the Concert Group, the
dissolution or liquidation of members of the Concert Group or the creation of
new members of the Concert Group
35
may occur prior to the Closing. In connection therewith, from the date hereof to
the Closing Date:
(i) Each parent shall, and shall cause its Representatives
on the DirectorCo Board and Affiliates to, and Concert BV shall, and shall cause
the Concert Subsidiaries to, adopt such board (or other similar governing body)
or shareholder resolutions as may be necessary to approve, ratify or confirm
such transfers or redemptions of equity interests and GV Assets, the dissolution
or liquidation of members of the Concert Group or the creation of new members of
the Concert Group.
(ii) Each parent shall, and shall cause its Affiliates to,
and Concert BV shall, and shall cause the Concert Subsidiaries to, execute and
deliver such instruments or deeds of transfer, stock powers or similar documents
as may be required by Applicable Law to evidence and effect such transfers or
redemptions of equity interests, all of which instruments, deeds, stock powers
or similar documents shall be in customary and usual form with respect to the
jurisdiction in question.
(iii) Each parent shall, and shall cause its Affiliates
to, and Concert BV shall, and shall cause the Concert Subsidiaries to, execute
and deliver such instruments or deeds of transfer, assignment and assumption
agreements, bills of sale or similar documents as may be required by Applicable
Law to evidence and effect such transfers of GV Assets, all of which
instruments, deeds, agreements, bills or similar documents shall be in customary
and usual form with respect to the jurisdiction in question.
(iv) Each parent shall, and shall cause its Affiliates to,
and Concert BV shall, and shall cause the Concert Subsidiaries to, execute and
deliver such instruments, deeds, agreements or other documents as may be
required by Applicable Law to effect any such dissolution or liquidation of
members of the Concert Group or the creation of any new member of the Concert
Group, all of which instruments, deeds, agreements or other documents shall be
in customary and usual form with respect to the jurisdiction in question.
(c) If any AT&T Asset or GV Liability allocated to AT&T is
held by BT or any Affiliate thereof following the Closing or any BT Asset or GV
Liability allocated to BT is held by AT&T or any Affiliate thereof following the
Closing, then BT or AT&T, as applicable, shall hold such Asset or Liability in
trust for and for the account of AT&T or BT, as applicable, and shall transfer
such Asset or Liability to AT&T or BT, as applicable, as soon as practicable,
free and clear of and without reduction for or on account of any charges, fees,
levies, deductions or set-offs of any nature or kind.
(d) Prior to the Closing Date, on a date mutually agreed by
the parties, Concert BV shall cause Concert Global Network Services Limited, a
Bermuda company, and TNV (Netherlands Antilles) N.V., a Netherlands Antilles
company, to enter into separate cable trust and management agreements,
substantially in the forms of Exhibit 7-A and Exhibit 7-B attached hereto (the
"Cable Trusts").
------------
36
(e) Without limiting the foregoing, if, by the Closing Date,
AT&T has not obtained the requisite or desirable licenses with respect to the
"Big Foot" assets (as described in the Transition Plan) in Argentina or Brazil,
the parents shall, or shall cause their respective Affiliates to, execute and
deliver:
(i) the Argentina lease agreement, substantially in the
form of Exhibit 8 attached hereto (the "Argentina Agreement"); or
--------- -------------------
(ii) the Brazil lease agreement, substantially in the form
of Exhibit 0 xxxxxxxx xxxxxx (xxx "Xxxxxx Agreement").
--------- ----------------
7.10 Insurance.
---------
(a) The parents agree that the directors' and officers'
insurance and errors and omissions insurance of the Concert Group in effect as
of the Closing Date shall be extended for a period of six years after the
Closing Date for the purpose of continuing coverage for any facts, events or
circumstances occurring or existing prior to the Closing Date. The costs of
extending such insurance coverage shall be borne by the parents on an equal
basis.
(b) From and after the Closing Date, each parent shall be
responsible for obtaining its own insurance coverage for its respective
Allocated Business.
7.11 Expenses. Except as otherwise expressly set forth herein and
--------
except as may be separately agreed by AT&T and BT in writing, each parent and
its Affiliates shall bear their own expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
other Unwind Agreements and the transactions contemplated hereby and thereby.
ARTICLE VIII
PARTICULAR MATTERS
------------------
8.1 AGNS. Each parent agrees that it will not, and that it will not
----
permit any of its Affiliates to, take any action until at least 60 days
following the termination of this Agreement to refer any matter to the Wise
Counselor or any other arbitrator for resolution in accordance with Section 7 of
the Letter Agreement, between AT&T and BT, dated November 22, 1999, as amended
by Amendment No. 1 on February 24, 2000, Amendment No. 2 on May 25, 2000, and
Amendment No. 3 on June 15, 2000 (together with the Schedules and Attachments
thereto, the "AGNS Agreement").
--------------
8.2 Canada.
------
(a) Concurrently with the execution of this Agreement, each
parent and its applicable Affiliates has entered into a partnership interest
transfer
37
agreement regarding AT&T BT Canada JVI General Partnership (the "Canada
Agreement").
(b) On the Closing Date, AT&T or one of its Affiliates shall
pay to BT Holdings an amount equal to the Agreed Amount in Dollars in cash by
wire transfer of immediately available funds, to enable BT to satisfy its
obligations to AT&T BT Canada JVI General Partnership as set forth in Section
9.1(e). "Agreed Amount" means the Dollar equivalent of the principal of, plus
-------------
accrued and unpaid interest on, the note issued by BT to the AT&T BT Canada JVI
General Partnership (the "Canadian Note") determined as of the close of business
-------------
on the day prior to the Closing Date. The conversion of Canadian dollars into
Dollars shall be made using the closing buying rate shown on the Bloomberg
Professional Screen in New York City on the relevant date.
8.3 Xxxxxxx. From the date hereof until the Closing Date, BT shall
-------
continue to operate Xxxxxxx in the ordinary course of business consistent with
past practice, without materially changing its operations or business plan in a
manner that would expand any conflict between its operations and the provisions
of the Framework Agreement (without giving effect to Section 11.18 of the
Framework Agreement), and (i) notwithstanding the provisions of Section 11.18(a)
of the Framework Agreement, Article 11 of the Framework Agreement shall not
apply to BT's or any of its Affiliate's equity interests in Xxxxxxx or to BT's
or any of its Affiliate's indirect interest in any Assets or Subsidiaries of
Xxxxxxx, and (ii) notwithstanding the provisions of Sections 11.18(b) and (d) of
the Framework Agreement, neither BT nor any of its Affiliates shall be required
to perform its obligations thereunder.
8.4 Customer Contracts.
------------------
(a) Notwithstanding anything in the Framework Agreement, any
Transaction Agreement or any other agreement to the contrary, the parties agree
that from and after the date hereof, each of the parents and their respective
Affiliates shall be entitled to enter into new agreements with Qualifying MNC
Customers and agreements for the Concert Group's provision of Carrier Services
(in each case, including agreements extending the term of, or renewing or adding
additional services to existing agreements, but not merely adding additional
volume) in the name of the applicable parent or any Affiliate thereof, provided,
that, the applicable parent or Affiliate thereof shall hold such contract in
trust for the economic benefit or risk of the Concert Group, and all revenues
and receivables and payables derived therefrom in respect of performance prior
to the Closing Date will be promptly transferred to a member of the Concert
Group prior to the Closing (it being agreed that after the Closing such
contracts shall be for the economic benefit or risk of, and all amounts payable
thereunder in respect of performance from and after the Closing shall be paid
to, the relevant parent or its Affiliate).
(b) With respect to any agreement in effect as of the date
hereof relating to the offer, sale or distribution of Communications Services to
any Qualifying MNC Customer or relating to the Concert Group's provision of
Carrier Services, in either case which agreement is allocated to the other
parent pursuant to this Agreement from and after the Closing, the parties shall
not, and shall not permit any of
38
their respective Affiliates to, seek to induce or induce any third party to
terminate or breach such agreement, or to amend any such agreement to reduce the
level of any products or services committed thereunder or to shorten the term
thereof. Without diminishing the obligations set forth in the preceding
sentence, if, prior to the Closing, a Qualifying MNC Customer or other customer
of the Concert Group requests the assignment or transfer of a customer contract
existing as of the date hereof to the parent to whom such contract is to be
transferred as of the Closing Date, the Shareholder Representatives shall review
the request. If the Shareholder Representatives determine that the assignment or
transfer request should be granted, the customer contract in question shall be
assigned or transferred to the applicable parent or its Affiliate only to the
extent permitted by Applicable Law, it being understood that notwithstanding any
such assignment or transfer, such parent or its Affiliate shall hold such
contract in trust for the economic benefit or risk of the Concert Group, and all
revenues and receivables and payables derived therefrom in respect of
performance prior to the Closing Date will be transferred to a member of the
Concert Group prior to Closing (it being agreed that after the Closing such
contracts shall be for the economic benefit or risk of, and all amounts payable
thereunder in respect of performance from and after the Closing shall be paid
to, the relevant parent or its Affiliate).
8.5 Revenues and Benefits for Certain Matters. If a parent (i)
-----------------------------------------
enters into any agreement to use the assets described in Section 5.2(b), (ii)
enters into any agreement pursuant to Section 8.4(a), or (iii) receives the
assignment or transfer of any agreement pursuant to Section 8.4(b), then such
parent shall promptly notify the other parent in writing describing such
arrangements in sufficient detail to enable all revenues, receivables and
payables derived therefrom to be reflected in the Closing Statements.
8.6 Transaction Agreements. From the date hereof until the Closing
----------------------
Date, except as specifically modified by the terms of this Agreement or any
other Unwind Agreement, the Framework Agreement and the other Transaction
Agreements shall remain in full force and effect and the parties shall continue
to perform their respective obligations thereunder.
ARTICLE IX
CLOSING
-------
9.1 Closing.
-------
(a) AT&T and BT shall promptly notify the other parties upon
receipt of notice that any Key Governmental Approvals required to be obtained by
the notifying parties in connection with the transactions contemplated hereby
have been obtained. As soon as practicable and in any event within 10 Business
Days after all conditions set forth in Article X have been satisfied or waived,
but in no event earlier than the earlier of (i) February 1, 2002, and (ii) the
completion of the projects set forth in the Transition Plan (such earlier date,
the "First Date"), the closing (the "Closing") of the transactions contemplated
---------- -------
hereby shall take place at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, 1285 Avenue of the Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00
00000, at 10:00 a.m., New York City time, at a date agreed to by the parties;
provided, however, that if all of the conditions set forth in Article X have
-------- -------
been satisfied (other than those conditions that by their nature are to be
satisfied at the Closing), but a parent forms a reasonable opinion that one or
more of the steps set forth in Schedule 2.1(c) will result in a delay of the
---------------
Closing, such parent shall have the right, notwithstanding the obligations
contained in Section 7.1(a) to use reasonable best efforts to consummate the
Closing, by notice in writing to the other parent, to extend the period to
effect the Closing for a period of up to 90 days following the date of
satisfaction of all of the conditions set forth in Article X (other than those
conditions that by their nature are to be satisfied at the Closing), but in any
event no earlier than the First Date (the "90 Day Period"), in which case (i)
-------------
upon delivery of such notice, each parent shall automatically have the right to
use, in accordance with Section 5.2(b), the assets and associated systems that
it funded pursuant to Section 5.2(b), and (ii) not later than the last day of
the 90 Day Period, the Closing shall occur (but subject to the satisfaction of
all of the conditions set forth in Article X as of the Closing Date), and, if
necessary, the party invoking the extension of the period for Closing shall have
the right to trigger the restructuring rights set forth in Section 4(c)(ii) of
the Tax Matters Agreement (if such restructuring rights have theretofore not
been invoked) and the parties shall, subject to the satisfaction of all of the
conditions set forth in Article X as of the Closing Date, effect the Closing
based on any finally determined Restructuring (as defined in the Tax Matters
Agreement) no later than the last day of the 90 Day Period. The time and date
upon which the Closing occurs is referred to herein as the "Closing Date."
------------
Except as mutually agreed, the extension of the Closing for the 90 Day Period
shall not extend the Closing beyond December 31, 2002.
(b) At the Closing, upon the terms and subject to the
conditions set forth herein, each party will and will cause its Affiliates to
take the actions described in Article 10 to be taken at the Closing and this
Section 9.1 and execute and deliver such other instruments and take all such
other reasonable actions as are necessary to consummate the transactions
contemplated by the Unwind Agreements to be consummated by it and its Affiliates
at the Closing.
(c) At the Closing, upon the terms and subject to the
conditions set forth herein, each of the parties shall, and shall cause its
Affiliates and, insofar as within its power, each of the Concert Subsidiaries
to, enter into each of the Unwind Agreements which have not been entered into
prior to the Closing Date to which such party, its Affiliates or such Concert
Subsidiary, as the case may be, are parties, including the following Unwind
Agreements:
(i) each of the Commercial Agreements, substantially in
the forms of Exhibit 1 - Exhibit 6 appended to Schedule 1.1A hereto; and
--------- --------- -------------
(ii) the mutual release, substantially in the form of
Exhibit 10 attached hereto (the "Mutual Release").
---------- --------------
40
(d) At the Closing:
(i) Each parent shall, and shall cause its Representatives
on the DirectorCo Board and Affiliates to, and Concert BV shall, and shall cause
the Concert Subsidiaries to, adopt such board or shareholder resolutions as may
be necessary to approve, ratify or confirm the GV Share Transfers and the GV
Asset Transfers and the other matters contemplated by this Agreement and to
dissolve DirectorCo and AT&T/BT Strategic Investment Program L.L.C.
(ii) Each parent shall, and shall cause its Affiliates to,
and Concert BV shall, and shall cause the Concert Subsidiaries to, execute and
deliver such instruments or deeds of transfer, stock powers or similar documents
as may be required by Applicable Law to evidence and effect the GV Share
Transfers or the dissolution of DirectorCo or AT&T/BT Strategic Investment
Program L.L.C., all of which instruments, deeds, stock powers or similar
documents shall be in customary and usual form with respect to the jurisdiction
in question.
(iii) Each parent shall, and shall cause its Affiliates
to, and Concert BV shall, and shall cause the Concert Subsidiaries to, execute
and deliver such instruments or deeds of transfer, assignment and assumption
agreements, bills of sale or similar documents as may be required by Applicable
Law to evidence and effect the GV Asset Transfers, all of which instruments,
deeds, agreements, bills or similar documents shall be in customary and usual
form with respect to the jurisdiction in question.
(iv) AT&T or its Affiliate shall receive share
certificates or other evidences of its interests in the Concert Subsidiaries
listed on Schedule 2.1(c), and BT or its Affiliate shall receive share
---------------
certificates or other evidences of its interests in the Concert Subsidiaries
listed on Schedule 2.1(c).
---------------
(v) Without duplication of Section 9.1(d)(iv), AT&T or its
Affiliate shall receive instruments or deeds of transfer, bills of sale or other
similar documents evidencing the transfer to it of the AT&T Assets to be
transferred by way of GV Asset Transfers, and BT or its Affiliates shall receive
instruments or deeds of transfer, bills of sale or other similar documents
evidencing the transfer to it of the BT Assets to be transferred by way of GV
Asset Transfers.
(e) On the Closing Date, immediately following the Closing,
BT shall immediately repay in Dollars in cash by wire transfer of immediately
available funds the Agreed Amount to the AT&T BT Canada JVI General Partnership
in full satisfaction of the Canadian Note.
9.2 Termination of Framework Agreement and Venture Business.
-------------------------------------------------------
(a) Subject to the consummation of the transactions
contemplated by Section 9.1, on the Closing Date, the Framework Agreement, the
other Transaction Agreements, all other agreements contemplated by the
Transaction Agreements, and the AGNS Agreement (including all provisions of the
foregoing that
41
purport to survive termination other than any provisions relating to maintaining
confidentiality of information) shall automatically, without any further action
on the part of any party thereto, terminate and be of no further force or
effect, except (i) as otherwise provided in Article XIII and the Tax Matters
Agreement, and (ii) that the defined terms set forth in the Framework Agreement
shall continue in effect for the purposes of this Agreement.
(b) Upon the Closing, the Concert Group joint venture shall
be deemed to be dissolved and the Venture Business shall be deemed to be
terminated.
9.3 Parent Actions. Following the Closing, each parent shall use
--------------
reasonable best efforts, and shall cause its Affiliates to use reasonable best
efforts, to take all such actions as may be necessary to facilitate the
dissolution of the Concert Group joint venture and the termination of the
Venture Business as provided in this Agreement and the other Unwind Agreements.
Following the Closing, each of AT&T and BT shall cause each member of the AT&T
Group or the BT Group, respectively, to comply with all of its respective
obligations under any Unwind Agreement.
ARTICLE X
CONDITIONS TO CLOSING
---------------------
10.1 Condition to Each Party's Obligations. The obligations of each
-------------------------------------
of AT&T and BT and their Affiliates to enter into the other Unwind Agreements
not theretofore executed and delivered to which they are parties and otherwise
to consummate the transactions to be consummated by them at Closing are subject
to the fulfillment to the satisfaction of, or waiver by, each of AT&T and BT, as
of the Closing Date, of the following conditions:
(a) Governmental Approvals.
(i) All notifications required pursuant to the HSR Act for
the transactions contemplated hereby shall have been made, and the applicable
waiting period and any extensions thereof shall have expired or been terminated.
(ii) The European Commission, pursuant to the EU Merger
Regulations, shall have granted approval of this Agreement and each other Unwind
Agreement and the transactions contemplated hereby and thereby or, upon any
transfer of jurisdiction under the Merger Regulations to a relevant national
Governmental Body or Bodies, on receipt of the appropriate clearance or
clearances.
(iii) All necessary FCC Orders approving the transactions
contemplated hereby shall have been obtained, none of which shall have been
revoked or stayed as of the Closing Date.
(iv) The U.S. Government shall have notified Concert BV
and BT of a decision to take no action with respect to any notice filed by
Concert BV
42
and BT with the Committee on Foreign Investment in the United States in
connection with this transaction.
(v) (x) A written notice shall have been received by AT&T,
BT and Concert BV from the U.S. Department of Defense, the U.S. Department of
Justice and the Federal Bureau of Investigation indicating that no further
action is required of AT&T or BT or their Affiliates in connection with that
certain agreement, dated October 7, 1999, by and between AT&T, BT, Concert BV,
Concert Global Networks USA L.L.C. (formerly known as VLT Co. L.L.C.), Violet
License Co. L.L.C., the U.S. Department of Defense, the U.S. Department of
Justice and the Federal Bureau of Investigation, or (y) at the time of Closing,
none of these agencies is continuing to interpose any objection to this
transaction.
(vi) No Governmental Body shall, at the time of Closing,
be taking any action to rescind or withdraw any Governmental Approvals
contemplated by Section 10.1(a)(i), (ii), (iii), (iv) or (v).
(vii) The consent of HM Treasury under section 765 of the
Income and Corporation Taxes Act 1988 to the transactions contemplated hereby
shall have been obtained or it has been determined as a matter of law that
section 765 of the Income and Corporation Taxes Act 1988 does not apply to such
transactions.
(b) No Injunctions. No order, judgment, injunction, award or
decree shall have been entered and in effect or threatened and not withdrawn by
any Governmental Body (including the European Commission) that enjoins,
restrains or prohibits the consummation of any of the transactions contemplated
hereby or by the other Unwind Agreements, puts in doubt the validity of this
Agreement or any other Unwind Agreement in any material respect or materially
affects the ability of AT&T to operate the AT&T Allocated Business, taken as a
whole, or BT to operate the BT Allocated Business, taken as a whole.
(c) Unwind Agreements. The Unwind Agreements listed in
Sections 9.1(c) and (d) shall have been executed and delivered by the parties
thereto and such Unwind Agreements and the other Unwind Agreements shall be in
full force and effect.
(d) Canada. The transactions contemplated by the Canada
Agreement shall simultaneously be consummated with the transactions contemplated
hereby.
10.2 Conditions to the Obligations of AT&T. The obligations of each
-------------------------------------
of AT&T and its Affiliates to enter into the other Unwind Agreements to which it
is a party and to otherwise consummate the transactions that are to be
consummated by them at the Closing are subject to the fulfillment to the
satisfaction of, or waiver by, AT&T, as of the Closing Date, of the following
additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties by BT in this Agreement shall be true and
correct, in each
43
case as of the date they were made and as of the Closing Date, as if made on and
as of the Closing Date, except in either case where the failure to be true or
correct would not have a material adverse effect on the AT&T Allocated Business.
(b) Performance of Obligations. BT and its Affiliates shall
have performed or complied with their respective covenants and agreements
contained in the Unwind Agreements required to be performed or complied with by
BT and its Affiliates on or prior to the Closing Date except where failure to
have performed or complied would not have a material adverse effect on the AT&T
Allocated Business.
10.3 Conditions to the Obligations of BT. The obligations of each of
-----------------------------------
BT and its Affiliates to enter into the other Unwind Agreements to which it is a
party and to otherwise consummate the transactions that are to be consummated by
them at the Closing are subject to the fulfillment to the satisfaction of, or
waiver by, BT, as of the Closing Date, of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties by AT&T in this Agreement shall be true and
correct, in each case as of the date they were made and as of the Closing Date,
as if made on and as of the Closing Date, except, in either case, where the
failure to be true and correct would not have a material adverse effect on the
BT Allocated Business.
(b) Performance of Obligations. AT&T and its Affiliates shall
have performed or complied with their respective covenants and agreements
contained in the Unwind Agreements required to be performed or complied with by
AT&T and its Affiliates on or prior to the Closing Date except where failure to
have performed or complied would not have a material adverse effect on the BT
Allocated Business.
ARTICLE XI
INDEMNIFICATION
---------------
11.1 Indemnification by AT&T. Subject to the terms of this
-----------------------
Agreement, AT&T shall indemnify and hold harmless BT and its Affiliates and
their respective officers, directors, employees, agents and representatives and
each of their respective heirs, executors, successors and assigns (the "BT
--
Indemnified Parties") from and against all claims, liabilities, losses, costs,
-------------------
expenses and damages, including the reasonable fees, expenses and other charges
of counsel (collectively, "Losses"), to the extent relating to, arising out of
------
or resulting from, or asserted by third Persons against the BT Indemnified
Parties in connection with (a) the AT&T Allocated Business and the ownership or
operation thereof after the Closing Date, (b) AT&T Post-Closing Liabilities, (c)
any Excluded AT&T Liabilities, (d) Operational Concert Liabilities assumed by
AT&T pursuant hereto, and (e) Liabilities reflected in the Adjusted Net Assets
of the AT&T Concert Balance Sheet, except in the case of clause (a) or (b),
where the Losses arise from the gross negligence or willful misconduct of BT or
its Affiliates or their respective officers, directors, employees, agents or
representatives in the operation
44
of any assets of the AT&T Allocated Business for and on behalf of AT&T or its
Affiliates as contemplated by Section 7.2(e) or otherwise.
11.2 Indemnification by BT. Subject to the terms of this Agreement,
---------------------
BT shall indemnify and hold harmless AT&T and its Affiliates and their
respective officers, directors, employees, agents and representatives and each
of their respective heirs, executors, successors and assigns (the "AT&T
----
Indemnified Parties") from and against all Losses, to the extent relating to,
-------------------
arising out of or resulting from, or asserted by third Persons against the AT&T
Indemnified Parties in connection with (a) the BT Allocated Business and the
ownership or operation thereof after the Closing Date, (b) BT Post-Closing
Liabilities, (c) any Excluded BT Liabilities, (d) Operational Concert
Liabilities assumed by BT pursuant hereto, and (e) Liabilities reflected in the
Adjusted Net Assets of the BT Concert Balance Sheet, except in the case of
clause (a) or (b), where the Losses arise from the gross negligence or willful
misconduct of AT&T or its Affiliates or their respective officers, directors,
employees, agents or representatives in the operation of any assets of the BT
Allocated Business for and on behalf of BT or its Affiliates as contemplated by
Section 7.2(e) or otherwise.
11.3 Notice and Opportunity to Defend Against Third Party Claims.
-----------------------------------------------------------
(a) Promptly after receipt by any BT Indemnified Party or
AT&T Indemnified Party (the "Indemnitee") from any third party of notice of any
----------
demand, claim or circumstance that, with or without the lapse of time, would
give rise to a claim or the commencement or threatened commencement of any
action, proceeding or investigation (an "Asserted Liability") that may result in
------------------
a Loss under Section 4.7, 11.1 or 11.2, as the case may be, the Indemnitee shall
give notice thereof (the "Claims Notice") to AT&T or BT, as the case may be (the
-------------
"Indemnifying Party"); provided, that, any failure to promptly give a Claims
------------------
Notice shall not relieve any Indemnifying Party of its liability hereunder
except to the extent that such Indemnifying Party has been materially prejudiced
thereby. The Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount, estimated, if necessary and if possible,
of the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel, any Asserted Liability if and to the
extent it confirms in writing that it has liability for such Asserted Liability
without qualification; provided, however, that no Indemnifying Party shall
-------- -------
consent to entry of any judgment or enter into any settlement without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, order or other nonmonetary relief to be entered, directly
or indirectly, against the Indemnitee. If the Indemnifying Party elects to
compromise or defend such Asserted Liability and gives such notice, it shall
within 30 Business Days, or sooner, if the nature of the Asserted Liability so
requires, notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party (including the allocated
cost of in-house personnel of the Indemnified Party), in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, fails to notify the Indemnitee
of its election as herein provided or
45
contests its liability to indemnify the Indemnitee, the Indemnitee may pay or
defend such Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle any claim over the objection of
the other, unless such settlement (i) does not directly or indirectly involve
the entry of any injunction, declaratory judgment, order or other nonmonetary
relief against the Indemnitee or Indemnifying Party, (ii) includes a full
release from liability of the Indemnifying Party and the Indemnitee, and (iii)
is paid by the settling party only. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of such
Asserted Liability. If the Indemnifying Party chooses to defend any Asserted
Liability, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense. If the Indemnifying Party does not so choose, it
will make available to the Indemnitee any books, records or other documents
within its control that are necessary or appropriate for the defense of the
Asserted Liability.
(c) If any Asserted Liability involves a Loss in respect of
which an Indemnifying Party has an indemnification obligation under Section 4.7
or this Article XI, as well as a Loss in respect of which such Indemnifying
Party does not have an indemnification obligation under Section 4.7 or this
Article XI, the parties shall cooperate in allocating responsibility therefor.
11.4 Limitations on Indemnification. Except in the case of the
------------------------------
application of this Article XI in respect of an Action described in Section 4.7,
the indemnification provided for in this Article XI shall be subject to the
following limitations:
(a) An Indemnifying Party shall not be required to indemnify
any Indemnitee, and shall not have any liability for any individual (or series
of related) occurrences, events, circumstances, acts or omissions where the Loss
relating thereto is less than $100,000, and such occurrences, events,
circumstances, acts or omissions shall not be aggregated for the purposes of
Section 11.4(b); and
(b) An Indemnifying Party shall not be obligated to pay any
amounts for indemnification under Section 11.1 or Section 11.2, as the case may
be, until the aggregate amount of all Losses for which it would be liable
exceeds on a cumulative basis an amount equal to $500,000, whereupon the
Indemnifying Party shall be obligated to pay in full all such Losses.
11.5 Indemnification in Respect of Specific Matters. BT and AT&T
----------------------------------------------
hereby acknowledge and agree that this Article XI shall not govern their
respective indemnification obligations in respect of Losses relating to, arising
out of or resulting from, or asserted by third Persons against BT or AT&T in
connection with (i) any Taxes, which are governed by the Tax Matters Agreement,
(ii) any employee matters, which are governed by the Employee Matters Agreement
or (iii) any Claims made or asserted under any of the Commercial Agreements, the
Argentina Agreement or the Brazil Agreement.
46
11.6 Certain Matters Relating to Indemnification.
-------------------------------------------
(a) In no event shall any Indemnifying Party be responsible
or liable for any Losses that are incidental, consequential, indirect, special,
punitive or other than actual damages, except where such Losses arise from the
willful breach by the Indemnifying Party or its Affiliates of any of its
obligations under this Agreement or except to the extent such Losses are payable
in respect of a third party claim.
(b) The amount which any Indemnifying Party is required to
pay to any Indemnitee entitled to indemnification hereunder will be reduced by
any insurance proceeds or other amount recovered or recoverable from any third
party in reduction of the related Loss. If an Indemnitee receives a payment (an
"Indemnity Payment") required by this Agreement from an Indemnifying Party in
-----------------
respect of any Loss and subsequently receives insurance proceeds or recovers any
other amount as provided in this Section 11.6(b), then the Indemnitee will
without demand reimburse the Indemnifying Party such amount as is equal to the
excess of the Indemnity Payment received over the amount of the Indemnity
Payment that would have been due if the insurance proceeds or other amounts had
been received, realized or recovered before the Indemnity Payment was made.
(c) To the extent set forth therein, the provisions of the
Tax Matters Agreement shall govern the treatment of any indemnification payments
made under this Agreement.
ARTICLE XII
BREACH; TERMINATION
-------------------
12.1 Breach. Except as otherwise expressly provided herein, a party
------
shall be in breach of this Agreement if it fails fully to perform, or suspends
its performance of, its obligations hereunder and if it fails to cure such
failure or suspension within 30 days following receipt of written notice thereof
from one of the other parties.
12.2 Remedies for Breach. In addition to any other remedies set
-------------------
forth in this Agreement, the remedies for any breach of this Agreement shall
include damages and injunctive relief, including specific performance. The
rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
12.3 Termination of this Agreement.
-----------------------------
(a) If the Closing does not occur on or prior to December 31,
2002, either parent may give written notice of termination of this Agreement, so
long as the notifying parent and its Affiliates are not in material breach of
their representations and warranties, covenants or other obligations under this
Agreement. The notice of termination shall specify a date, not later than 30
days following its delivery, for the effective time of termination. No
termination of this Agreement shall relieve a party for any liability for any
breach by it of the provisions hereof.
47
(b) Upon the termination of this Agreement, the Framework
Agreement, the other Transaction Agreements and, subject to Section 8.1, the
AGNS Agreement shall continue in full force and effect, except that:
(i) BT shall be required to make the offer to sell set
forth in Section 11.18(b) of the Framework Agreement within 90 days after the
date of termination of this Agreement; and
(ii) BT shall be required to comply with its obligations
under Section 11.18(d) of the Framework Agreement on or before the first
anniversary of the date of termination of this Agreement.
(c) Upon the termination of this Agreement, except for
Article I, Section 4.1(a) with respect to the obligation to pay the Pound
Adjustment or make a capital contribution, Section 7.4, Section 7.11, Section
8.1, Section 13.1 and Article XIV, which shall survive the termination of this
Agreement, all other provisions of this Agreement shall cease to have any force
or effect.
ARTICLE XIII
DISPUTE RESOLUTION
------------------
13.1 Jurisdiction of the Wise Counselor.
----------------------------------
(a) From the date of this Agreement until the Closing Date,
any Claim arising out of or relating to this Agreement, the Employee Matters
Agreement (but only to the extent specifically provided therein), or the
Transition Plan (with respect to pre-Closing matters only) shall, in all cases,
be submitted to the Wise Counselor in accordance with Article 24 of the
Framework Agreement, as if this Agreement, the Employee Matters Agreement and
the Transition Plan were "Transaction Agreements."
(b) Any Claim, other than a Major Claim, asserted on or after
the Closing Date and prior to the fourth anniversary thereof, arising out of or
relating to this Agreement, the Employee Matters Agreement (but only to the
extent specifically provided therein), the Mutual Release or any other
agreement, document or instrument contemplated hereby (other than the Tax
Matters Agreement, the IPR Agreement, the Brand Agreement, the Commercial
Agreements and the Canada Agreement) (collectively the "Covered Agreements")
------------------
shall, in all cases, be resolved by the Wise Counselor in accordance with
Sections 24.3(a), 24.3(b), 24.4(a), 24.8 and 24.9 of the Framework Agreement as
if the Covered Agreements were "Transaction Agreements," and the determination
of the Wise Counselor shall be final and binding on the parties thereto in all
respects. For purposes of this Section 13.1(b), the reference to the "District
Court" in Section 24.3(a) of the Framework Agreement shall be deemed to be a
reference to the "Selected Courts."
(c) If the Closing occurs, Article 24 of the Framework
Agreement shall remain in full force and effect after the Closing to enable the
Wise
48
Counselor to make its determination of any Claims (other than Major Claims)
submitted to the Wise Counselor in accordance with this Section 13.1.
13.2 Major Claims.
------------
(a) Unless the parents otherwise agree, a Major Claim
asserted on or after the Closing Date and prior to the fourth anniversary
thereof, arising out of or relating to the Covered Agreements shall be subject
to compulsory non-binding mediation, with the Wise Counselor as mediator in
which both of the (i) finance director or chief financial officer of the
parents, and (ii) the general counsel of AT&T and, for BT, the company secretary
or comparable officer will be required to participate. The mediation shall be
conducted in accordance with rules and procedures determined by the Wise
Counselor, which shall be designated to facilitate resolution of the Major Claim
by a consensus of the parents. The period of mediation shall not exceed 90 days.
If the parents cannot settle the matter through the mediation process within
such 90-day period, either parent may submit such Major Claim to the exclusive
jurisdiction of the Selected Courts, which shall adjudicate the Major Claim on a
de novo basis.
(b) If there is a dispute, the Wise Counselor shall have the
authority to determine whether or not a Claim is a Major Claim.
13.3 Preliminary Injunctive Relief. A parent seeking injunctive
-----------------------------
relief shall have the right, prior to or during any mediation, arbitration or
litigation process, to apply to the Selected Courts (in the case of a Major
Claim or, on and after the fourth anniversary of the Closing Date, any Claim)
or, prior to the fourth anniversary of the Closing Date, the Wise Counselor (in
the case of Claims other than Major Claims) for preliminary injunctive relief
pending the completion of the mediation, arbitration or litigation.
13.4 Appointment of Wise Counselor. Each parent acknowledges that
-----------------------------
the current term of the Wise Counselor and the two members of the College of
Wise Counselors will expire on January 5, 2002. For the purposes of this
Agreement, each parent shall take all such actions as may be reasonably
necessary (i) at least 30 days prior to January 5, 2002, to extend the term of
the Wise Counselor and the members of the College of Wise Counselors for an
additional period ending December 31, 2002, and (ii) if any Claim has been
submitted to the Wise Counselor on or before such date that is not likely to be
finally adjudicated by the Wise Counselor on or before such date, to extend the
term of the Wise Counselor for such period as may be necessary to enable the
Wise Counselor to make its final determination of the Claim; provided, that if
the Closing shall occur, after such date Sections 24.1(b) and (c) of the
Framework Agreement shall apply with respect to the appointment of the Wise
Counselor.
13.5 Judicial Determinations.
-----------------------
(a) With respect to any Claims that may be submitted to the
Selected Courts in accordance with this Article XIII, each party agrees not to
assert, by way of motion, as a defense or otherwise, in any such Claim, that it
is not subject
49
personally to the jurisdiction of the Selected Courts, that the Claim is brought
in an inconvenient forum or that the venue of the Claim is improper. Each party
irrevocably submits to the jurisdiction of the Selected Courts in any such
Claim.
(b) Any and all service of process and any other notice in
any such Claim shall be effective against any party if given personally or by
registered or certified mail, return receipt requested, or by any other means of
mail that requires a signed receipt, postage prepaid, mailed to such party as
herein provided. Nothing herein contained or contained in any Covered Agreement
shall be deemed to affect the right of any party to serve process in any manner
permitted by law.
(c) EACH OF THE PARENTS HEREBY AGREES, AND AGREES TO CAUSE
ITS AFFILIATES, TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
ARISING OUT OF OR RELATING TO ANY COVERED AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE TRANSACTIONS CONTEMPLATED THEREBY. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER
COVERED AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
ARTICLE XIV
MISCELLANEOUS
-------------
14.1 Notices. Any notice or other communication required or
-------
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission (with confirmation of receipt) or sent by
internationally recognized courier service, postage prepaid. Any such notice
shall be deemed given when so delivered personally or, if sent by facsimile, at
the time of receipt of a legible copy thereof or, if sent by internationally
recognized courier service, three days after the date of deposit with the
courier service, postage prepaid, and shall be sent as follows:
(i) if to the AT&T Parties, to:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000-0000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
50
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxx of America
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(ii) if to the BT Parties, to:
British Telecommunications plc
00 Xxxxxxx Xxxxxx
Xxxxxx XXXX 0XX
Xxxxxxx
Attention: Group General Counsel
Facsimile No.: 011-44-207-356-6151
and
Attention: Assistant Company Secretary
Facsimile No.: 011-44-207-356-6391
and
BT (Netherlands) Holdings B.V.
Xxxxxxxxxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Company Secretary
Facsimile No.: 011-31-20-669-2429
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx X.X. Xxxx, Esq. and
Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(iii) if to Concert BV, to:
Concert B.V.
Xxxxxxxxxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Company Secretary
Facsimile No.: 011-31-20-669-2429
51
and prior to the Closing Date only,
with a copy to:
c/o 1200 Peachtree Street, N.E.,
Room 6110
Xxxxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx XxXxxxx, Esq.
Facsimile No.: (000) 000-0000
and:
British Telecommunications plc
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Group General Counsel
Facsimile No.: 011-44-207-356-6151
and
Attention: Assistant Company Secretary
Facsimile No.: 011-44-207-356-6151
and:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx X.X. Xxxx, Esq. and
Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
and:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000-0000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
52
and:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxx of America
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Any party may by notice given in accordance with this Section 14.1 to the other
parties designate another address, facsimile number or Person for receipt of
notices hereunder.
14.2 Entire Agreement. This Agreement (including the Schedules
----------------
hereto), together with the other Unwind Agreements, and the other agreements
contemplated hereby and thereby, contain the entire agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
term sheets, discussions, negotiations and agreements, written or oral, with
respect thereto.
14.3 Waivers and Amendments; Preservation of Remedies. This
------------------------------------------------
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by AT&T and BT
or, in the case of a waiver, by the party waiving compliance. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
14.4 Severability. In case any provision of this Agreement shall be
------------
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
14.5 Assignment. This Agreement shall be binding upon and shall
----------
inure to the benefit of and be enforceable by the parties and any assigns agreed
to in writing by the parties hereto. In addition, the parties acknowledge that
each parent is contemplating certain additional restructuring activities. In
connection therewith, the AT&T Parties and the BT Parties may assign this
Agreement, the other Unwind Agreements, the Transaction Agreements and the AGNS
Agreement and their rights and obligations hereunder and thereunder to any
Person or Persons, by spin-off or otherwise, if the capabilities to perform all
obligations and provide all goods and services required of the AT&T Parties or
the BT Parties, as the case may be, under the Framework Agreement, the other
Transaction Agreements, this Agreement, the other Unwind Agreements, the AGNS
Agreement and the other agreements entered into in connection therewith are not
impaired in any material respect as a result of such transaction, and
53
upon such assignment the other AT&T Parties and any Affiliates thereof or the
other BT Parties and any Affiliates thereof, as the case may be, shall be
released from all obligations hereunder and thereunder. Any such permitted
assignee shall be deemed a successor to AT&T or BT, as the case may be, for all
purposes hereof and thereof.
14.6 No Third Party Beneficiaries. Except for the AT&T Indemnified
----------------------------
Parties and the BT Indemnified Parties pursuant to Article XI, this Agreement is
not intended to be for the benefit of and shall not be enforceable by any Person
that is not a party hereto.
14.7 Governing Law. This Agreement shall be governed by, and
-------------
construed and interpreted in accordance with, the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.
14.8 Payments. All payments to be made hereunder shall be made free
--------
and clear of, and without reduction for or on account of, any charges, fees,
taxes, levies, deductions or withholding of any nature or kind, subject to the
Tax Matters Agreement in the case of taxes and the withholding of taxes.
14.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Signatures delivered by telecopy shall
have the same effect as the manual original signatures.
[remainder of page left intentionally blank]
54
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below as of the date first written above.
AT&T CORP.
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
AT&T COMMUNICATIONS SERVICES
OF JAMAICA L.L.C.
By: /s/ Xxxxx Xxxxxx
--------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
BRITISH TELECOMMUNICATIONS PLC
By: /s/ Xxx Xxxxx
--------------------------
Name: Xxx Xxxxx
Title: General Counsel BT Ignite
BT (NETHERLANDS) HOLDINGS B.V.
By: /s/ U.M. Daelman Geerdink
--------------------------
Name: U.M. Daelman Geerdink
Title: Managing Director
CONCERT B.V.
By: /s/ Xxxx Xxxx
--------------------------
Name: Xxxx Xxxx
Title: Chief Executive Officer
By: /s/ Xxx Xxxxx
--------------------------
Name: Xxx Xxxxx
Title: Chief Operating Officer
[Termination Agreement]
