Private & Confidential
EXHIBIT 2.3
DATED 7 AUGUST 1998
-------------------
MARSHALLS 106 LIMITED (1)
MARSHALLS FINANCE LIMITED (2)
INTERNATIONAL EXCHANGE NETWORKS LTD. (3)
and
IPC INFORMATION SYSTEMS, INC. (4)
____________________________________
AGREEMENT
for sale/purchase of the issued share
capital of Saturn Global Network Services Holdings Limited
(as amended on 18 December 1998)
____________________________________
Xxxxxx Xxxx
London
CONTENTS
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CLAUSE HEADING PAGE
1 Definitions and interpretation............................................1
2 Purpose of this Agreement (including conditions precedent and related
undertakings).............................................................7
3 Sale of the Sale Shares..................................................12
4 Consideration............................................................13
5 Completion...............................................................13
6 Post-Completion matters..................................................17
7 Warranties...............................................................20
8 Restrictive covenants....................................................22
9 Vendor and Purchaser Guarantee...........................................26
10 Continuing effects of this Agreement.....................................28
11 Announcements............................................................28
12 Releases, waivers etc....................................................28
13 Notices..................................................................28
14 Entire Agreement.........................................................29
15 Alterations..............................................................29
16 Counterparts.............................................................29
17 Successors and Assigns...................................................29
18 Applicable law and submission to jurisdiction...........................30
19 Address for service......................................................31
20 Costs and expenses.......................................................31
21 Further Assurance........................................................31
SCHEDULES
1 The Company..............................................................32
2 The Subsidiaries.........................................................33
3 Directors and employees..................................................41
Part A - Retiring Directors..........................................41
Part B - Retiring Secretary..........................................41
Part C - Subsidiaries Retiring Directors.............................42
Part D - Subsidiaries Retiring Secretary.............................42
Part E - Persons to receive Service Agreements.......................43
4 Matters represented and warranted........................................44
Part A - General.....................................................44
Part B - Taxation and social security................................64
5 Provisions for the protection of the Vendor..............................71
6 Schedule of Licences.....................................................79
AGREED FORM DOCUMENTS
DOCUMENT CLAUSE
Working Capital at 30 April 1998 1.1
Auditors' Letter 2.2(b)(i)
Resignations of Directors and Secretary 5.1(b)(iii)
Service Agreements 5.1(b)(vi)
Taxation Deed 5.1(a)(v)
Deeds of Release 5.1(a)(iii), 5.1(a)(iv)
Confirmation from Vendor re 5.1(a)(xi)
Marshalls Indebtedness
Confirmation from Vendor re notifications 5.1(a)(xv)
Marshalls Contracts 5.1(a)(iv)
Overdue Marshalls Receivable Certificate 5.1(a)(xvi)
IXnet Note 5.1(c)(iii)
SGN Notes 5.1(c)(iv)
Working Capital Adjustment 6.3(a)
THIS AGREEMENT is dated 7 August 1998 and is made BETWEEN:
(1) MARSHALLS 106 LIMITED, a company incorporated in England and Wales with
registered number 1496819 whose registered office is at Lloyds Xxxxxxxx, 0
Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX (the "Vendor");
(2) MARSHALLS FINANCE LIMITED, a company incorporated in England and Wales with
registered number 2230414 whose registered office is at Lloyds Xxxxxxxx, 0
Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX (the "Vendor Guarantor");
(3) INTERNATIONAL EXCHANGE NETWORKS LTD., a company incorporated in the state
of Delaware, USA whose principal place of business is at Wall Street Plaza,
00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, XXX (the "Purchaser"); and
(4) IPC INFORMATION SYSTEMS, INC., a company incorporated in the state of
Delaware, USA whose principal place of business is at Wall Street Plaza, 88
Pine Street, New York, New York 10005, USA (the "Purchaser Guarantor").
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Agreement unless the context otherwise requires:
"THE ACCOUNTS" means the consolidated audited annual accounts
(incorporating a consolidated profit and loss account and a consolidated
balance sheet) for the Company and the Subsidiaries as at, and for the
financial year ended on, the Accounts Date, including the notes to those
accounts and the associated directors' and auditors' reports, a copy of
which is attached to the Disclosure Letter;
"THE ACCOUNTS DATE" means 30 April 1998;
"ACTUAL TAXATION LIABILITY" means a liability to make an actual payment of,
or of an amount in respect of, Taxation whether or not such Taxation is
also or alternatively chargeable against or attributable to any other
person;
"AFFILIATE" means with respect to any person, a person that directly or
indirectly, through one or more intermediaries, controls or is controlled
by or under common control with the specified person, where "control" means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise, provided however
that a shareholder of the Vendor Guarantor shall not be considered to be an
affiliate of the Vendor Guarantor or any other member of the Marshalls
Group unless such shareholder owns or controls, directly or indirectly,
more than 50% of the issued share capital or voting securities of the
Vendor Guarantor;
1
"AGENCY" means any court or government or any governmental, supranational,
administrative or state, municipal or local agency or any regulatory or
investigative body or any commission or organisation, in each case in any
jurisdiction, whether federal, state, local or national;
"THE AUDITORS" means the auditors of the Company namely
PricewaterhouseCoopers, Chartered Accountants, of 00 Xxxxxx Xxxxxx Xxxxxx,
Xxxxxx XX0 0XX;
"BUSINESS" means the business of the Group, including providing managed
telecommunications services to customers, including voice transmission
services, managed bandwidth services, frame relay services, satellite
services and network management monitoring or any such similar services;
"BUSINESS DAY" means a day on which banks are ordinarily open for the
transaction of normal banking business in London;
"CA 1985" means the Companies Xxx 0000;
"THE COMPANY" means Saturn Global Network Services Holdings Limited, a
company incorporated in England and Wales with registered number 2176144;
"COMPLETION" means completion of the sale and purchase of the Sale Shares
by the performance by the parties of their respective obligations under
clause 5.1;
"THE COMPLETION DATE" means 18 December 1998;
"THE CONDITIONS" means the conditions specified in clause 2.2 or any one or
more of them;
"THE CONFIDENTIAL INFORMATION" means trade secrets and information
equivalent to them (including but not limited to methods, knowledge and
Know-how) in connection with the products sold and the services supplied by
the Group and the customers and suppliers of the Group and which are for
the time being confidential to any Group Company;
"THE DISCLOSURE LETTER" means the letter of the same date as this Agreement
from the Vendor to the Purchaser disclosing certain matters in relation to
the Warranties which has been delivered to the Purchaser prior to the
execution of this Agreement;
"ENCUMBRANCE" has the meaning given thereto in paragraph 4.1 of Part A of
Schedule 4;
"FCC CONSENT" means the approval by the Federal Communications Commission
("FCC") to the transfer of control of Saturn Global Network Services (USA)
Inc. from the Vendor to the Purchaser or an affiliate of the Purchaser in
accordance with Section 63.12 of the FCC Rules;
"THE GROUP" means the Company and the Subsidiaries;
2
"GROUP COMPANY" means each and any body corporate in the Group or any one
or more of them;
"GUARANTEE" means any guarantee, indemnity, suretyship, letter of comfort,
agreement or other assurance, security or right of set-off given or
undertaken by a person to secure or support the obligations (actual or
contingent) of any third party and whether given directly or by way of
counter-indemnity to any third party who has provided a Guarantee;
"HEAD OFFICE SERVICES" means services provided by the Marshalls Group
(other than a Group Company) to the Group being those services identified
in Volume 1, divider 7 of the disclosure bundle attached to the Disclosure
Letter;
"HOLDING COMPANY" means a holding company as defined by sections 736 and
736A CA 1985;
"ICTA 1988" means the Income and Corporation Taxes Xxx 0000;
"INTELLECTUAL PROPERTY RIGHTS" means all patents, registered designs, trade
marks and service marks (whether registered or not), copyright, design
rights, and all similar property rights, including those subsisting (in any
part of the world) in designs, computer programs, confidential information,
business or brand names, goodwill or the style of presentation of goods or
services and in applications for protection thereof;
"IXnet NOTE" means the promissory note in the agreed form to be issued by
the Purchaser and guaranteed by the Purchaser Guarantor at Completion in
relation to a principal amount of (pound)4,500,000 and created and issued
by the Purchaser by a resolution of its directors prior to Completion;
"KNOW-HOW" means all commercial information and techniques, accounts,
records and information (wherever situate) pertaining to the activities of
the Group;
"LICENCES" means the telecommunications licences held by members of the
Group, details of which are set out in schedule 6;
"THE MANAGEMENT ACCOUNTS" means the management accounts of the Group for
the period from 1 May 1998 to 30 June 1998 (both dates inclusive), a copy
of which is attached to the Disclosure Letter;
"MARSHALLS CONTRACTS" means the contracts to be entered into at Completion
in the agreed form between the Vendor, the Vendor Guarantor, the Company
and the Purchaser relating to the provisions of services by the Group to
the Marshalls Group substantially in the form attached hereto;
"MARSHALLS GROUP" means the Vendor Guarantor and its subsidiaries from time
to time;
3
"MARSHALLS INDEBTEDNESS" means all the indebtedness outstanding at
Completion of the Company or any other Group Company to any member of the
Marshalls Group (other than a Group Company) other than any amounts due
from the Company or any other Group Company in respect of Head Office
Services. As at the Accounts Date the Marshalls Indebtedness was
(pound)4,233,242;
"NOMINATED ACCOUNT" means the Vendor's account numbered 00000000 at
Barclays Bank plc, 00 Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX - Sort Code 20-00-00,
or such other account or accounts as the Vendor shall specify;
"ON DEMAND MARSHALLS INDEBTEDNESS" means the amount of the Marshalls
Indebtedness less (pound)3,244,467 (which represents (pound)2,962,692 of
Marshalls Indebtedness plus capitalised interest which is the amount of the
Marshalls Indebtedness which, from the date of Completion, will become
repayable on the terms set out in the SGN Notes);
"OVERDUE MARSHALLS RECEIVABLE" means all amounts owing from any member of
the Marshalls Group (other than a Group Company) to any member of the Group
save for any amount in respect of telecommunication services provided by
the Group that on the date of Completion has not been outstanding for more
than forty-five days after the date of issue of the relevant invoice;
"PENSION ARRANGEMENTS" means the pension arrangements details of which are
contained in the Disclosure Letter;
"PERMITS" has the meaning given thereto in paragraph 15 of Part A of
Schedule 4;
"THE PURCHASE PRICE" means (pound)21,500,000 less the amount of the On
Demand Marshalls Indebtedness, together with such principal amounts as
become payable pursuant to the provisions of the IXnet note, subject to the
adjustment mechanism set out in clause 6.3(e);
"THE PURCHASER'S ACCOUNTANTS" means PricewaterhouseCoopers of 1301 Avenue
of the Americas, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, XXX;
"THE PURCHASER'S GROUP" means the Purchaser and its subsidiaries from time
to time;
"THE PURCHASER'S SOLICITORS" means Titmuss Sainer Dechert, of 0 Xxxxxxxx'x
Xxx, Xxxxxx XX0 0XX;
"RELATED COMPANY" in relation to any company means any subsidiary or
holding company of that company or any subsidiary of that holding company;
"RELIEF" means any loss, allowance, exemption, set-off, deduction, credit,
right to repayment or other relief relating to any Taxation or to the
computation of income, profits or gains for the purposes of any Taxation;
4
"THE RESTRICTED SERVICES" means services of the type or nature supplied by
the Group at the Completion Date in relation to the Business;
"THE SALE SHARES" means the 483,100 issued Ordinary Shares of(pound)1 each
of the Company, being the entire issued share capital of the Company;
"SECURITY INTEREST" means a mortgage, lien, pledge, charge, hypothecation
or other security interest (or an agreement or commitment to create any of
them), but excluding:
(a) any lien arising in the ordinary course of business to secure amounts
which are not material;
(b) any unpaid vendor's or supplier's lien arising in the ordinary course
of any Group Company's trading business to secure amounts due in
respect of goods or services sold or supplied; and
(c) liens arising by operation of law, including a banker's lien;
"THE SGN NOTES" means the loan notes of even date herewith entered into
between the Purchaser, the Purchaser Guarantor and the Company in relation
to a principal amount of (pound)3,244,467 and created and issued by the
Company by a resolution of the Directors prior to Completion;
"THE SUBSIDIARIES" means the companies specified in schedule 2 or any one
or more of them;
"SUBSIDIARY" means a subsidiary (as defined by sections 736 and 736A CA
1985);
"TAXATION" has the meaning given to that expression in the Taxation Deed;
"THE TAX WARRANTIES" means the Warranties as to the matters stated in Part
B of schedule 4;
"THE TAXATION DEED" means the taxation deed in the agreed form entered, or
to be entered, into between the Vendor (1), the Vendor Guarantor (2) and
the Purchaser (3);
"TCGA 1992" means the Taxation of Chargeable Gains Xxx 0000;
"UK GAAP" means generally accepted accounting principles applicable in the
United Kingdom;
"US GAAP FINANCIALS" means unqualified audited consolidated accounts for
the Group for the twelve months ended 30 April 1998 together with a balance
sheet as at 30 April 1997 and statements of cash flow and the related notes
thereto, all prepared in accordance with generally accepted accounting
principles applicable in the United States and in compliance with
Regulation S-X under the Securities Act of 1933;
5
"VAT" means value added tax chargeable under the VATA 1994 or under the
Sixth Council Directive of the Council of the European Communities
(77/388/EEC) or under any rule, regulation, order or instrument authorised
to be made by the VATA 1994 or such Directive or any identical or
substantially similar tax which may replace such value added tax or any tax
having the same or similar purpose or effect to value added tax whether of
the United Kingdom or elsewhere;
"VATA 1994" means the Value Added Tax Xxx 0000;
"THE VENDOR'S SOLICITORS" means Xxxxxx Xxxx, of Xxxxxxx Xxxxx, Xxxxxxxx
Xxxxxx, Xxxxxx XX0X 0XX;
"WARRANTIES" means the representations and warranties referred to in clause
7.1 and set out in schedule 4; and
"WORKING CAPITAL ADJUSTMENT" means (a) if the Working Capital on the
Completion Date is less than the working capital as at 30 April 1998 of
-(pound)884,000 (as set out in the schedule in the agreed form) (i.e. a
larger negative figure), X minus Y, where `X' equals -(pound)884,000 and
`Y' equals the larger negative amount of the Working Capital on the
Completion Date, or (b) in any other circumstances, zero; and
"WORKING CAPITAL" shall mean (a) the consolidated current assets of the
Company and the Subsidiaries, less (b) the consolidated liabilities of the
Company and the Subsidiaries (other than the Marshalls Indebtedness and any
liabilities incurred in connection with the relocation of Saturn Global
Network Services (Hong Kong) Limited from its existing premises to its new
premises) in each case calculated in accordance with UK GAAP.
1.2 In this Agreement unless the context otherwise requires:
(a) a document expressed to be "IN THE AGREED FORM" means a document in a
form which has been agreed by the parties contemporaneously with or
before the execution of this Agreement and which has, for the purposes
of identification, been initialled by them or on their behalf;
(b) references to a clause or schedule are to a clause of or a schedule to
this Agreement, references to this Agreement include its schedules and
references in a schedule or part of a schedule to a paragraph are to a
paragraph of that schedule or that part of that schedule;
(c) references to this Agreement or any other document or to any specified
provision of this Agreement or any other document are to this
Agreement, that document or that provision as in force for the time
being and as amended from time to time in accordance with the terms of
this Agreement or that document or, as the case may be, with the
agreement of the relevant parties;
6
(d) words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to persons
include corporations, partnerships and other unincorporated
associations or bodies of persons and references to a party or the
parties or any of them are to a party or the parties (as the case may
be) to this Agreement, unless otherwise provided herein;
(e) the contents table and the descriptive headings to clauses, schedules
and paragraphs are inserted for convenience only, have no legal effect
and shall be ignored in the interpretation of this Agreement; and
(f) the words "herein", "hereof" and "hereunder" and other words of
similar import, refer to this agreement as a whole, and not to any
particular provision.
1.3 In this Agreement, unless the context otherwise requires, a reference to
any enactment (meaning any statute or statutory provision (whether of the
United Kingdom or elsewhere), subordinate legislation, as defined by
section 21(1) Interpretation Xxx 0000, and any other subordinate
legislation made under any such statute or statutory provision) shall be
construed as including a reference to that enactment as re-enacted,
replaced or modified from time to time, whether before, on or after the
date hereof.
2 PURPOSE OF THIS AGREEMENT (INCLUDING CONDITIONS PRECEDENT AND RELATED
UNDERTAKINGS)
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2.1 This is an Agreement for the sale and purchase of the Sale Shares.
2.2 ((a)) The obligations of the parties for the sale and purchase of the Sale
Shares under this Agreement are conditional on (subject to clause
2.4):
(i) FCC Consent being obtained;
(ii) other than in connection with any matter relating directly or
indirectly to the transfer to the Purchaser of any Licence, no
Agency or person (including, but not limited to, any present or
former owner of any capital stock or equity interest in the
Vendor (whether through a derivative action or otherwise)) having
taken, instituted, implemented or threatened any action,
proceeding, suit, investigation or reference or made, proposed or
enacted any statute, regulation or order which seeks, or would or
might reasonably be expected, to (i) challenge, restrain, enjoin,
hinder, restrict or delay this Agreement or the consummation of
the transaction contemplated hereby or impose additional
conditions or obligations with respect to this Agreement or the
transactions contemplated hereby; (ii) impose monetary or other
relief by reason of this Agreement or the consummation of the
transactions contemplated hereby; or (iii) limit, adversely
affect or impose any obligations, undertakings or conditions with
respect to, the
7
Purchaser's ownership or control of the Sale Shares or the
conduct of the business of the Group;
(iii)the consent given by El Camino (Leasing) Ltd. on 5 August 1998
to the change of control of the Group not being withdrawn;
(iv) the completion by the Group of the download of the Timeplex
Software relating to ST1000 to resolve the four problems in the
existing Timeplex software identified in Table 2 of the
disclosure against warranty number 13.2 in the Disclosure Letter
thereby providing Timeplex hardware/software platform stability;
(b) the obligations of the Purchaser for the purchase of the Sale Shares
under this Agreement is conditional on (subject to clause 2.4):
(i) the preparation of the US GAAP Financials and their delivery to
the Purchaser in draft form five days prior to Completion
together with a letter from the Auditors to the Company in the
agreed form;
(ii) there having been prior to Completion (A) no material breach of
the Warranties or material misrepresentation by the Vendor in
each case which has or is likely to have a material adverse
effect on the valuation placed by the Purchaser on the Group
taken as a whole, material adverse effect for these purposes
being a reduction in such valuation at least equivalent to
(pound)4,500,000 and (B) no material breach by the Vendor of any
of its covenants under this Agreement including under clause 2.6,
and (C) no breach of any part of Warranty 22; and
(iii)each of the Warranties contained in paragraphs 1.1, 1.2(a) and
7.3 and in the final sentence of paragraph 2.4 of schedule 4
being true and accurate at Completion and the Warranty contained
in paragraph 7.1(d)(ii) of schedule 4 being true and accurate at
Completion save that such Warranty shall be deemed to have effect
only in respect of any Encumbrance which is a mortgage, charge,
pledge, assignment by way of security or lien, other than a lien
arising in the ordinary course of business by statute or
operation of law which is not material to the Business, (or
equivalent security under the laws of any country outside England
and Wales) and none of the other matters set out in the
definition of Encumbrance in paragraph 4.1 of schedule 4.
2.3 ((a))The Purchaser and the Vendor shall use their respective best efforts
to procure fulfilment of the Conditions on or before 30 September 1998
including the preparation and execution of a joint application for the
FCC Consent and the preparation of the US GAAP Financials; provided
that neither the Purchaser nor its affiliates shall be required or
obliged (i) to initiate, pursue or defend any litigation (or
threatened litigation), (ii) to
8
agree or otherwise become subject to any material limitation on (A)
the right of the Purchaser or its affiliates to effectively control or
operate the Group or the Business; (B) the right of the Purchaser or
its affiliates to acquire or hold the Group or the Business; or (C)
the right of the Purchaser to exercise full rights of ownership of the
Group or the Business, or (iii) to agree or otherwise be required to
sell or otherwise dispose of, hold separate (through the establishment
of a trust or otherwise), or divest itself of all or any material part
of the business, the assets, or operations of the Purchaser, any
affiliates of the Purchaser or any Group Company or the Business and
neither the Vendor nor its affiliates shall be required or obliged to
initiate, pursue or defend any litigation (or threatened litigation),
or to take an action or make any filing which it is unreasonable for
them to be expected to do;
(b) The Vendor shall promptly notify the Purchaser in writing of any event
or fact of which it becomes aware prior to the Completion Date and
which represents (or which will, upon the passage of time or the
occurrence of Completion, result in) a material breach of any of its
representations, warranties, covenants or agreements contained herein
or give rise to a liability under the Taxation Deed or which would
indicate a reasonable likelihood that the Conditions will fail to be
satisfied on the Completion Date and any such notification shall not
be and shall not be deemed to be a disclosure for the purposes of
qualifying or limiting the liability of the Vendor hereunder or
thereunder;
(c) The Vendor shall procure that the Group maintains in full force and
effect on their current terms the policies of insurance listed in the
Disclosure Letter, subject only to variations required by the ordinary
operations of the Business, or else shall obtain, prior to the lapse
of any such policy, substantially similar insurance with insurers of
recognised standing. The Vendor shall promptly advise the Purchaser in
writing of any change of insurer or type of coverage in respect of the
policies listed in the Disclosure Letter; and
(d) The Vendor shall give and shall procure (to the extent that it is
able) that the Company and the Subsidiaries give the Purchaser, the
Purchaser's Solicitors, the Purchaser's Accountants and other
representatives full access during normal business hours to all of the
Group Company's properties, books, tax returns, contracts,
commitments, records, officers, personnel and accountants and shall
furnish to the Purchaser all such documents and copies of documents
and all information with respect to the affairs of the Company and the
Subsidiaries as the Purchaser may reasonably request. Pending
Completion, the Purchaser shall preserve the confidentiality of any
information provided by any Group Company or the Vendor (whether
before or after the date hereof) to the Purchaser relating to the
Group which is confidential in nature and, if Completion does not take
place, will return all such information to the Vendor.
9
2.4 ((a)) The Purchaser reserves the right to waive (to such extent as it may
think fit) the Conditions.
(b) Any waiver by the Purchaser under this clause 2.4 is without prejudice
to any other rights which the Purchaser may have under this Agreement.
2.5 [DELETED]
2.6 The Vendor shall procure that pending Completion (except with the prior
written consent of the Purchaser (not to be unreasonably withheld or
delayed)):
(a) the Business will be conducted only in the ordinary course and
consistent with past practice, including billing, and collection
practices, supply transactions and payment of accounts payable; the
Company and all of the Subsidiaries will use reasonable endeavours to
maintain their property, equipment and other assets in at least as
good order and condition as existed on the date of this Agreement; and
the Company and all of the Subsidiaries will duly comply in all
material respects with the provisions of all their leases, agreements,
contracts, Licences, Permits and commitments, will maintain in full
force and effect and comply with all Permits and will comply in all
material respects with all laws applicable to the Business or their
assets;
(b) all reasonable efforts are taken to preserve the Business, to keep
available to the Purchaser and the Group the services of the present
officers and employees of the Company or any of the Subsidiaries, and
to preserve the goodwill of the suppliers, customers and others having
business relations with the Company or any of the Subsidiaries;
(c) no Group Company will:
(i) resolve to change its name or amend its Articles of Association,
Memorandum of Association or equivalent organisational documents
or amend any rights attaching to its shares or pass any
resolution or obtain any consent from its members in a general
meeting;
(ii) allot or issue or agree to allot or issue any shares or any
securities or grant or agree to grant rights which confer on the
holder any right to acquire any shares or other such interests;
(iii)enter into, or vary the terms of, any contract or commitment,
except those made or varied in the ordinary course of business,
the terms of which are consistent with past practice and
reasonable in light of current conditions;
(iv) enter into any employment or consulting contract or arrangement
with any person whose remuneration is in excess of (pound)25,000
per annum or appoint any director or other officer;
10
(v) sell, transfer, lease or otherwise dispose of any of its assets;
(vi) incur, create, assume or suffer to exist any mortgage, pledge,
lien, restriction, encumbrance, encroachment, covenant,
condition, claim, security interest, charge or other matter
affecting use or title on any of its assets or other property;
(vii)fail to pay when due all taxes, assessments, governmental
charges or levies imposed upon it or its income, profits or
assets or otherwise required to be paid by it, or fail to pay
when due any liability or charge which, if unpaid, might become a
lien or charge upon any of its assets;
(viii)make, change or revoke any tax claim election or disclaimer or
make any agreement or settlement with any relevant taxation
authority;
(ix) declare or pay any dividend, or other distribution in respect of
any class of its share capital, or make any payment to redeem,
purchase or otherwise acquire, or call for redemption or
otherwise reduce, any of such share capital or any securities
convertible into or exchangeable for such share capital;
(x) increase or otherwise change the remuneration, benefits or
compensation payable or to become payable to any officer,
employee, consultant or agent from the rates set forth in the
Disclosure Letter or dismiss any such person other than for just
cause or change the terms of employment or engagement of any such
person;
(xi) make or authorise the making of any single item of capital
expenditure (other than capital expenditure in the ordinary
course of business and consistent with past practice) exceeding
(pound)15,000;
(xii)incur any indebtedness for borrowed money or other obligation
for money borrowed other than pursuant to clause 2.7;
(xiii)waive or permit the loss of any substantial right;
(xiv)give any surety, indemnity or guarantee or otherwise become or
remain contingently liable in connection with any liability or
obligation of any person other than another Group Company;
(xv) loan or advance funds (other than to another Group Company) or
make an investment in or capital contribution to, or participate
in the business of, any person, firm, company, partnership or
joint venture;
(xvi)sell, transfer, assign, mortgage, pledge, encumber or otherwise
dispose of the share capital of any of the Subsidiaries;
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(xvii)save as required by this Agreement, enter into or vary the
terms of any contract, agreement or commitment with or to any
member of the Marshall's Group or repay the Marshalls
Indebtedness; or
(xviii)enter into any agreement to do any of the foregoing.
2.7 Pending Completion, the Vendor will procure that the Group Companies will
continue to be provided with sufficient working capital (not exceeding
(pound)175,000) to carry on the Business in the ordinary course and normal
course such working capital to be provided by way of loans on the same
terms as the loans currently outstanding and due to members of the
Marshalls Group (other than Group Companies) from Group Companies.
2.8 [DELETED]
2.9 After the date hereof, Vendor and Vendor Guarantor will, and both will
procure that the Company and the Auditors provide such reasonable
assistance as shall be requested by the Purchaser in the preparation of
audited or unaudited financial statements of the Group for any period or
periods required by United States federal securities laws and regulations
to be included in a registration statement relating to the registration of
any securities by the Purchaser or affiliates of the Purchaser. Such
financial statements will be in a form suitable for filing with the
Securities and Exchange Commission and will be in compliance with
Regulation S-X under the Securities Act of 1933 and shall be accompanied by
any certification or other documentation (including an independent
accountant's report, comfort letter and consent) reasonably requested by
the Purchaser. The Purchaser shall reimburse to the Vendor its out of
pocket expenses (not exceeding (pound)40,000) which the Vendor incurs in
connection with the Auditors assisting with the preparing of such financial
statements. Prior to Completion and in addition to the Vendor's obligations
under clause 2.3, if any consent, approval, filing or notice is required by
any third party or any governmental, judicial, administrative or regulatory
body, authority or organisation, then the Vendor and Vendor Guarantor
shall, and will procure that the Group shall, use their reasonable efforts
to assist the Purchaser in obtaining any such consent or approval and in
preparing any such filing or notice.
3 SALE OF THE SALE SHARES
-----------------------
3.1 The Vendor shall sell to the Purchaser and the Purchaser shall relying on
the Warranties and other obligations of the Vendor and the Vendor Guarantor
hereunder, purchase from the Vendor the Sale Shares.
3.2 The Vendor shall sell and transfer the Sale Shares with full title
guarantee and free of all Encumbrances (known or unknown).
3.3 Title to, beneficial ownership of, and any risk attaching to, the Sale
Shares shall pass on Completion, and the Sale Shares shall be sold and
purchased together with all rights and benefits attached or accruing to
them at Completion (including the right to receive all dividends,
distributions or any return of capital declared, paid or made on or after
Completion).
12
3.4 The Purchaser shall not be obliged to complete the purchase of any of the
Sale Shares unless the purchase of all the Sale Shares is completed
simultaneously.
4 CONSIDERATION
-------------
4.1 The consideration for the sale of the Sale Shares shall be:
(a) the payment in cash on Completion by the Purchaser to the Vendor of
the amount of(pound)21,500,000 less the amount of the On Demand
Marshalls Indebtedness; and
(b) the execution by the Purchaser and the Purchaser Guarantor of the
IXnet Note and the payment of such amounts as may become due
thereunder.
4.2 [DELETED]
5 COMPLETION
----------
5.1 Completion shall take place at the offices of the Vendor's Solicitors or at
such other place as the parties may agree at or before 12 noon on the
Completion Date when all (but not part only unless the parties shall so
agree) of the following business shall be transacted:
(a) The Vendor shall deliver to the Purchaser:
(i) transfers in respect of the Sale Shares duly executed and
completed in favour of the Purchaser or as it may direct or have
directed, together with the certificates therefor;
(ii) duly executed transfers (in favour of such person or persons as
the Purchaser may direct or have directed) of all shares or other
interests in the Subsidiaries not registered in the name of the
Company or any other Group Company, together with the
certificates of all shares in the Subsidiaries;
(iii) a deed of release in the agreed form in favour of the Company
from BTM (Europe) Limited in relation to a Deed of Charge and a
Guarantee entered into by the Company on 15 December 1993 in
relation to loan facilities made available to the Marshalls
Group;
(iv) deeds of release in the agreed form (with such changes as may be
required to reflect local jurisdictional legal requirements) in
favour of Saturn Global Network Services Pty Limited from BTM
(Europe) Limited (formerly Bank of Tokyo International Limited)
relating to a Guarantee and two Deeds of Charge each dated 16
December 1993 and made by, inter alia, Saturn Global
13
Network Services Pty Limited in favour of Bank of Tokyo -
Mitsubishi (UK) Limited in relation to loan facilities made
available to the Marshalls Group;
(v) a deed of release in the agreed form in favour of Saturn Global
Network Services (UK) Limited from BTM (Europe) Limited (formerly
the Bank of Tokyo International Limited) in relation to a Deed of
Charge and a Guarantee entered into by Saturn Global Network
Services (UK) Limited on 28 April 1998 in relation to loan
facilities made available to the Marshalls Group;
(vi) a partial deed of release (relating to the Sale Shares) in the
agreed form in favour of the Vendor Guarantor, X.X. Xxxxxxxx &
Company Limited and the Vendor from BTM (Europe) Limited in
relation to Deeds of Charge entered into by each of the Vendor
Guarantor, the Vendor and X.X. Xxxxxxxx & Company Limited on 15
December 1993 in relation to loan facilities made available to
the Marshalls Group;
(vii)a partial deed of release (relating to shares in Saturn Global
Network Services (USA) Inc.) in the agreed form (with such
changes as may be required to reflect local jurisdictional legal
requirements) in favour of X.X. Xxxxxxxx Inc. from BTM (Europe)
Limited in relation to a Pledge and Security Agreement entered
into by X.X. Xxxxxxxx Inc. on 15 December 1993 in relation to
loan facilities made available to the Marshalls Group;
(viii)a partial deed of release (relating to shares in Saturn Global
Network Services Pty Limited) in the agreed form (with such
changes as may be required to reflect local jurisdictional legal
requirements) in favour of X.X. Xxxxxxxx and Company Pty Limited
from BTM (Europe) Limited in relation to two Deeds of Charge
entered into by, inter alia, X.X. Xxxxxxxx and Company Pty
Limited on 16 December 1993 in relation to loan facilities made
available to the Marshalls Group;
(ix) a partial deed of release (relating to shares in Saturn Global
Network Services (Hong Kong) Limited) in the agreed form (with
such changes as may be required to reflect local jurisdictional
legal requirements) in favour of X.X. Xxxxxxxx (Hong Kong)
Limited from BTM (Europe) Limited in relation to a Deed of Charge
entered into by X.X. Xxxxxxxx (Hong Kong) Limited on 15 December
1993 in relation to loan facilities made available to the
Marshalls Group;
(x) the Taxation Deed duly executed by the Vendor and the Vendor
Guarantor;
14
(xi) confirmation in writing and in the agreed form from the Vendor
Guarantor to the Purchaser confirming that, save for (A) the
Marshalls Indebtedness; (B) specified amounts outstanding in
respect of the Head Office Services provided to the Group during
the 45 day period immediately prior to Completion; and (C)
obligations arising pursuant to the provision of services by the
Group to any member of the Marshalls Group (other than any Group
Company) (but excluding any liability for breaches and for
defaults by any member of the Group in respect of such services),
no member of the Group has any obligation or liability whatsoever
to any member of the Marshalls Group (other than any Group
Company) and irrevocably and unconditionally releasing the
Company and the Subsidiaries from, and indemnifying them against,
all obligations, undertakings, liabilities and indebtedness to
the Marshalls Group (other than any Group Company);
(xii)the common seals, all blank and cancelled stock certificates (if
any), certificates of incorporation and copies of the Memoranda
and Articles of Association (containing copies of all such
resolutions and agreements as are referred to in section 380 of
the CA 1985) or equivalent constitutional documents of each of
the Company and the Subsidiaries and their registers and books
required by CA 1985 or other relevant laws to be kept by each of
them all of which shall be written up to a date as close as is
reasonably practicable to the Completion Date;
(xiii)certificates from each of the banks at which the Company and
the Subsidiaries maintain accounts of the amounts standing to the
credit of such accounts at close of business on the second
business day preceding Completion together with a list of all
unpresented cheques and uncleared lodgements which upon
presentation or clearance would be debited or credited to such
accounts;
(xiv) the Marshalls Contracts duly executed by the Vendor Guarantor;
(xv) a letter signed by the Vendor in the agreed form confirming that
there are no matters or things which have arisen or become known
to it which ought to be notified to the Purchaser in accordance
with clause 2.3(b) or giving full details of any such matters or
things;
(xvi)a letter signed by the Vendor in the agreed form certifying the
amount of the Overdue Marshalls Receivable; and
(xvii)the US GAAP Financials and a new version of the Accounts
(prepared in accordance with UK GAAP) with an unqualified report
of the Auditors.
15
(b) The Vendor shall:
(i) cause the transfers mentioned in clause 5.1(a) to be resolved to
be registered (subject only to their being duly stamped) in
accordance with the Articles of Association of the Company;
(ii) cause such persons as the Purchaser may nominate 5 days prior to
Completion to be validly appointed as Directors and as Secretary
of the Company;
(iii) on such appointments being made, cause the persons named in part
A of schedule 3 to cease to be Directors and the person named in
part B of schedule 3 to cease to be Secretary of the Company and
cause the persons named in part C of schedule 3 as retiring
directors and part D of schedule 3 as retiring secretary of each
of the Subsidiaries to cease to be directors and secretary of
such Subsidiaries and further cause all such persons to deliver
to the Purchaser their written resignations of their respective
offices and letters (executed as deeds) in the agreed form
acknowledging that they have no claim outstanding for
compensation for loss of office or otherwise howsoever, including
redundancy and unfair dismissal (other than in the case of any
such persons who are employees of a Group Company who will not be
required to waive any claims which they may have pursuant solely
to their contracts of employment with a Group Company) and
releasing the Group from any such claims;
(IV) [DELETED]
(V) [DELETED]
(vi) procure the execution and delivery to the Group of new employment
contracts in the agreed form by those employees referred to in
Part I of schedule 3; and
(vii) alter the accounting reference periods of each Group Company to
30 September.
(c) The Purchaser shall:
(i) pay the amount of (pound)21,500,000 less the amount of the On
Demand Marshalls Indebtedness by electronic funds transfer for
value on the day of Completion to the Nominated Account;
(ii) procure that the relevant Group Companies will forthwith repay
all of the On Demand Marshalls Indebtedness and procure that an
amount equal to the On Demand Marshalls Indebtedness is paid by
electronic funds transfer for value on the day of Completion to
the Nominated Account;
16
(iii) deliver to the Vendor, duly executed on behalf of the Purchaser
and the Purchaser Guarantor, a copy of the deed constituting the
IXnet Note and issue the Ixnet Note to the Vendor; and
(iv) deliver to the Vendor, duly executed on behalf of the Purchaser
and the Purchaser Guarantor, a copy of the deed constituting the
SGN Notes and procure that the Company will issue the SGN Notes
as directed by the Vendor.
Payment of the Purchase Price as provided for by sub-paragraphs (i)
and (ii) above shall constitute a good discharge to the Purchaser in
respect of it.
5.2 ((a)) If the Purchaser shall fail to comply with any of its obligations
under the preceding provisions of this clause 5 on the Completion Date
the Vendor may:
(i) defer Completion to a business day not more than 5 days after
that date and, if the Purchaser shall fail to comply with any
such obligations on such later date, at the Vendor's option,
rescind this Agreement or follow the procedure set out in clause
5.2(a)(ii); or
(ii) proceed to Completion so far as practicable but without prejudice
to the Vendor's rights (whether under this Agreement generally or
under this clause) to the extent that the Purchaser shall not
have complied with its obligations hereunder.
(b) Clause 5.2(a) shall be deemed to be repeated herein with the
substitution of:
(i) "the Purchaser" for "the Vendor";
(ii) "the Vendor" for "the Purchaser"; and
(iii) "5.2(b)(ii)" for "5.2(a)(ii)".
6 POST-COMPLETION MATTERS
-----------------------
6.1 The Vendor hereby declares that for so long as it remains the registered
holder of any of the Sale Shares after Completion it will:
(a) hold the Sale Shares and the dividends and other distributions of
profits or surplus or other assets declared, paid or made in respect
of them after Completion and all rights arising out of or in
connection with them in trust for the Purchaser and its successors in
title;
(b) deal with and dispose of the Sale Shares and all such dividends,
distributions and rights as are described in clause 6.1(a) as the
Purchaser or any such successor may direct;
17
(c) if so requested by the Purchaser or any such successor:
(i) vote at all meetings which he shall be entitled to attend as the
registered holder of the Sale Shares in such manner as the
Purchaser or any such successor may direct; and
(ii) execute all instruments of proxy or other documents which the
Purchaser may reasonably require and which may be necessary or
desirable or convenient to enable the Purchaser or any such
successor to attend and vote at any such meeting.
6.2 ((a)) The Vendor and the Vendor Guarantor agree that they will procure that:
(i) for a period of three months after Completion (or in the case of
the accounting or payroll services provided by the Marshalls
Group to the Group, such additional period not exceeding a
further three months, as the Purchaser shall reasonably request)
any services made available to any Group Company by any member of
the Marshalls Group (as set out in the Disclosure Letter but
excluding those services which it is expressly stated will be
discontinued the "Discontinued Services") will continue to be
made available on the same basis (including as to cost) as prior
to Completion;
(ii) for a period of six months after Completion (but excluding for
these purposes the premises in Hong Kong operated by the Vendor)
any property sub-let to any Group Company by any member of the
Marshalls Group, subject to the relevant company in the Marshalls
Group retaining the right to sub-let such property will continue
to be sub-let on the same basis (including as to cost) as prior
to Completion;
(iii) for a period of three months after Completion, the persons
previously providing the Discontinued Services shall be made
available at the Purchaser's reasonable request to assist in the
transition of the Discontinued Services to the Group or the
Purchaser; and
(iv) for a period of three months after Completion, or such additional
period not exceeding a further three months as the Purchaser
shall reasonably request, assist in the transition of any
computing services, including accounting and payroll, from the
Marshalls Group's computer systems to the Group's or the
Purchaser's computer systems.
(b) The Purchaser agrees to indemnify the Vendor and any other member of
the Marshalls Group and their respective directors, officers,
employees and agents and keep them fully and effectively indemnified
against all actions, proceedings, losses, costs, claims, damages,
liabilities and
18
expenses which any of such persons may suffer or incur in respect of
any claim made as a result of any damage caused to the property
sub-let by the Marshalls Group to any Group Company pursuant to clause
6.2(a)(ii) or to any property or assets of any member of the Marshalls
Group or any property or assets which may be made available for use by
any member of the Group pursuant to clause 6.2(a)(i) or any injury
caused to any person for or to whom any member of the Marshalls Group
is responsible or for which any member of the Marshalls Group may be
vicariously liable, which damage or injury is caused by any member of
the Group or their respective directors, officers, employees or agents
or by any person for whom any member of the Group may be vicariously
liable in each case in connection with the provision of the services
and sub-letting of property referred to above and to expressly,
irrevocably and unconditionally waive any claims which the Purchaser
may have against the Vendor and any other member of the Marshalls
Group or their respective directors, officers, employees or agents in
respect of the provision of the services and sub-letting of property
referred to above, in each case other than in respect of matters
arising through the negligence or wilful default of any such person.
6.3 ((a)) On or before the second business day prior to the Completion Date,
the Vendor will provide the Purchaser with a written estimate of the
Working Capital Adjustment (the "Estimated Working Capital
Adjustment"). Such written estimate shall set forth the detail of, and
backup for, the amounts necessary to calculate the Working Capital
Adjustment. Such amounts shall be based on the Vendor's good faith
estimates and shall be presented in substantially the agreed form.
(b) Within sixty (60) business days after the Completion Date, the
Purchaser shall prepare and deliver to the Vendor a statement (the
"Final Adjustment Statement") setting forth and detailing the Working
Capital Adjustment. The Final Adjustment Statement shall be based on
amounts prepared in accordance with UK GAAP.
(c) The Final Adjustment Statement shall be final, binding and conclusive
on the parties hereto unless the Vendor notifies the Purchaser in
writing within twenty (20) business days after the receipt of the
Final Adjustment Statement of a disagreement therewith (which notice
shall state with reasonable specificity the reasons for any
disagreement and the amount in dispute); provided that the Vendor may
dispute the amounts on the Final Adjustment Statement only on the
basis that the Final Adjustment Statement was not prepared in
accordance with this clause 6.3 or that the amounts used to prepare
the Final Adjustment Statement were not determined in accordance with
UK GAAP.
(d) In the event of such a dispute, the Vendor and the Purchaser shall
attempt in good faith to reconcile their differences and any
resolution by them as to any disputed amounts shall be final, binding
and conclusive on the parties. If the Vendor and the Purchaser are
unable to resolve their
19
disputes within twenty (20) business days of the Vendor's written
notice of dispute to the Purchaser, the parties shall submit the items
remaining in dispute for resolution to a partner in a mutually
acceptable and recognised independent international accounting firm
with offices in the United Kingdom, or, if the parties are unable to
agree, the President of the Institute of Chartered Accountants in
England and Wales (the "Independent Accountant"), and within thirty
(30) business days after such submission, the Independent Accountant
shall determine and report to the parties upon such remaining disputed
items, and such report shall be final, binding and conclusive on the
parties hereto. Such determination by the Independent Accountant shall
be limited to determining whether the Final Adjustment Statement was
prepared in accordance with this clause 6.4 or that the amounts used
to prepare the Final Adjustment Statement were not determined in
accordance with UK GAAP. If the Independent Accountant determines that
the Final Adjustment Statement was not prepared in accordance with
this clause 6.3 or that the amounts used to prepare the Final
Adjustment Statement were not determined in accordance with UK GAAP,
the Independent Accountant shall provide to the parties the corrected
amounts that should have appeared on the Final Adjustment Statement.
The fees and expenses of the Independent Accountant shall be borne by
the Vendor and the Purchaser equally.
(e) If the Working Capital Adjustment as finally determined pursuant to
this clause 6.3 is greater than the Estimated Working Capital
Adjustment, then (i) the amount of the difference between the Working
Capital Adjustment and the Estimated Working Capital Adjustment shall
be offset against the principal amount outstanding pursuant to the
provisions of the IXnet Note, (ii) no accrued but unpaid interest
shall be paid with respect to the amount of such adjustment and (iii)
any interest relating to such amounts paid to any holder of the IXnet
Note shall be offset against any future payments of principal or
interest pursuant to the IXnet Note. If the Estimated Working Capital
Adjustment as finally determined pursuant to this clause 6.3 is
greater than the Working Capital Adjustment, then the Purchaser shall
pay the amount of the difference between the Estimated Working Capital
Adjustment and the Working Capital Adjustment to the Vendor within
three business days after such final determination. Payments to be
made hereunder by the Purchaser or the Vendor, as the case may be,
shall be made in cash by electronic funds to the account or accounts
designated in writing.
7 WARRANTIES
----------
7.1 The Vendor hereby represents and warrants to the Purchaser in the terms set
out in schedule 4 (subject to clause 7.2 and to the Vendor protection
provisions set out in schedule 5).
7.2 Each of the paragraphs in schedule 4 shall be construed as a separate and
independent representation and/or warranty.
20
7.3 The Warranties shall not in any respect be extinguished or affected by
Completion.
7.4 The provisions of schedule 5 shall have effect to limit the liability of
the Vendor, where expressly provided, pursuant to this Agreement and the
Taxation Deed.
7.5 The Purchaser hereby acknowledges that it has not entered into this
Agreement in reliance on any warranties, representations, covenants,
undertakings or indemnities howsoever or by whosoever or to whomsoever made
except insofar as they are contained in this Agreement, the Taxation Deed
or the Marshalls Contracts or letter delivered pursuant to this Agreement
in the agreed form save for any misrepresentation which was fraudulently
made and any representation which the Vendor knew at the time it was made
was inaccurate or misleading in any material respect.
7.6 Without prejudice to the generality of clause 7.5 the Purchaser irrevocably
and unconditionally waives any right it may have to claim damages and/or to
rescind this Agreement for any misrepresentation not contained in this
Agreement or letter delivered pursuant to this Agreement in the agreed form
or for breach of any warranty not contained in this Agreement unless such
misrepresentation was fraudulently made or such representation was known by
the Vendor at the time it was made to be inaccurate or misleading in any
material respect.
7.7 References to "(pound)" in schedule 4 shall, in relation to any amount
calculated in a currency other than pounds sterling, be construed as
references to the equivalent in pounds sterling of such other currency at
the date hereof.
7.8 Where a Warranty is qualified by reference to the knowledge, information or
belief of the Vendor then the relevant Warranty shall be deemed to be so
qualified after due and careful enquiry by the Vendor of the senior
management and Directors of the Company and the Subsidiaries, the senior
management of the Vendor and the Vendor Guarantor who participate in the
management or operations of the Group Companies (including any employees of
the Vendor or Vendor Guarantor who are directors of the Company) and the
Auditors and due and careful consideration of any documentation indicated
to be relevant by any such person and the Purchaser expressly acknowledges
that no further enquiry shall be undertaken by the Vendor or be necessary
to prevent a breach of any such Warranty.
7.9 The Vendor and the Vendor Guarantor agree with the Purchaser for itself and
as trustee for the Company and the Subsidiaries and each of their
respective officers, employees and agents irrevocably and unconditionally
to waive any rights, remedies or claims which they may have in respect of
any misrepresentation or omission from any information or advice supplied
or given by the Company and the Subsidiaries or their respective officers,
employees or agents on which either of them has relied in giving the
Warranties or agreeing to enter into the Taxation Deed or otherwise in
connection with the Warranties, provided that the waiver by the Vendor and
the Vendor Guarantor of such rights, remedies and claims shall not apply to
any claim which may be made by the
21
Vendor or the Vendor Guarantor against the following employees of Group
Companies in respect of a misrepresentation which was fraudulently made by
any such employee or which was made with actual knowledge that the
representation was false (provided that the Vendor or the Vendor Guarantor
was not aware that it was so made) unless and until an aggregate amount
equivalent to that set opposite his name below shall have been paid by such
employees to the Vendor or the Vendor Guarantor (in aggregate):
EMPLOYEE AMOUNT
-------- ------
X.X. Xxxx (pound)50,000
X.X. Xxxxxxx (pound)50,000
X.X. Xxxxxx (pound)50,000
X. Xxxxxx (pound)50,000
7.10 The Purchaser represents and warrants to the Vendor and the Vendor
Guarantor that this Agreement will, when executed, constitute legal, valid
and binding obligations of the Purchaser, enforceable in accordance with
its terms.
8 RESTRICTIVE COVENANTS
---------------------
8.1 The Vendor Guarantor undertakes with the Purchaser for itself and for the
benefit of each Group Company that without the prior consent in writing of
the Purchaser it will not (and will procure that no member of the Marshalls
Group (whilst it remains such a member) nor any affiliate of any member of
the Marshalls Group (whilst it remains such an affiliate) will), for a
period of 3 years from the date of Completion in any country in which the
Group carries on the Business at the Completion Date or in any country in
which the Group has advanced plans to carry on the Business after the
Completion Date:
(a) in relation to the Restricted Services or any of them, directly or
indirectly solicit or canvass orders from, or deal with or supply such
services to, any person, firm, company or other organisation who:
(i) was a customer of the Company or any other Group Company at any
time during the 2 years prior to Completion; or
(ii) at the date of Completion was in the process of negotiating or
contemplating doing business with the Company or any other Group
Company, or
(b) directly or indirectly solicit or entice away or endeavour to solicit
or entice away from the Company or any other Group Company any
director, manager, technical employee or salesman or other person
employed or otherwise engaged by that Group Company during the 12
months period prior to Completion.
8.2 The Vendor Guarantor undertakes with the Purchaser that it will not (and
will procure that no member of the Marshalls Group (whilst it remains such
a
22
member) will) at any time after Completion engage in any trade or business
or be associated with any person firm or company engaged in any trade or
business using the name "Saturn" or "SGN" or any similar name or names or
any colourable imitation thereof.
8.3 ((a)) The Vendor and the Vendor Guarantor hereby covenant, agree and
undertake with the Purchaser, for itself and for the benefit of each
Group Company, that from and after the Completion Date and until the
third anniversary of the Completion Date, neither the Vendor, the
Vendor Guarantor nor any member of the Marshalls Group other than X.X.
Xxxxxxxx Singapore Private Limited (after it ceases to be an indirect
subsidiary of the Vendor Guarantor) nor any affiliate of any member of
the Marshalls Group shall directly, or indirectly, engage in, or own,
manage, operate or control, or participate in the ownership,
management, operation or control of, any person, firm, company,
partnership, joint venture or other business whatsoever that engages,
in any country in which the Group carries on the Business at the
Completion Date, in a business the same as or similar to or in
competition with the Business or any part thereof, provided, however,
that nothing herein shall prohibit the Vendor and the Vendor Guarantor
or the Marshalls Group or any affiliate of any member of the Marshalls
Group from owning not more than 3% of any class of securities of a
publicly traded company engaged in such a business so long as neither
the Vendor, Vendor Guarantor, any member of the Marshalls Group nor
any affiliate of any member of the Marshalls Group participates in any
way in the management, operation or control of such entity; provided
further that, nothing herein shall prohibit the Vendor or the Vendor
Guarantor or any other member of the Marshalls Group from (i)
establishing and operating a communications network for the purpose
solely of disseminating Marshalls Group market data and transactional
information (which transactional information may include Marshalls
Group transactional data and other raw transactional information to
the extent not consolidated or summarised by any person other than a
member of the Marshalls Group) solely to Marshalls customers, or (ii)
subject to clause 8.3(b) having an interest in a third party which is
not a member or affiliate of the Marshalls Group (the "Consortium
Provider") that establishes and/or operates a communications network
for the purpose of disseminating Marshalls Group market data and
Marshalls Group transactional information, together with the
dissemination of (A) data and information of other entities (or other
affiliates) which have an interest in the Consortium Provider which
are not part of the Marshalls Group (which transactional information
may include transactional data of any entity with an interest in the
Consortium Provider (or their respective affiliates) ("Consortium
Member") and other raw transactional information to the extent not
consolidated or summarised by any person other than a Consortium
Member or (B) other raw transactional information relating to the
inter-dealer/money broker business of any other entity which is an
inter-
23
dealer/money broker to the extent that such raw transactional
information is not consolidated or summarised by any other person.
((b))((i)) If (A) any member of the Marshalls Group or any affiliate of the
Marshalls Group owns directly an aggregate of 40% or more of the
voting rights or has the right to receive 40% or more of the
profits of a Consortium Provider, and (B) no other person
(together with its own holding companies, its subsidiaries, the
subsidiaries of its holding companies or any of their respective
affiliates) owns a greater percentage of the voting rights than
the aggregate voting rights owned by the Marshalls Group and any
affiliate of the Marshalls Group, then the Vendor Guarantor shall
procure that the Group shall be the Preferred Provider of
communication network services for the Consortium Provider.
(ii) If (A) any member of the Marshalls Group or any affiliate of the
Marshalls Group owns directly or indirectly and aggregate of 40%
or more of the voting rights or has the right to receive 40% or
more of the profits of a Consortium Provider, and (B) any person
(together with its own holding companies, its subsidiaries, the
subsidiaries of its holding companies or any of their respective
affiliates) other than the Marshalls Group or any affiliate of
the Marshalls Group owns a greater or equal percentage of the
voting rights than the aggregate voting rights owned by the
Marshalls Group and any affiliate or the Marshalls Group, then
the Marshalls Group shall use its best efforts to procure that
the Group shall be the Preferred Provider of communication
network services for the Consortium Provider.
(iii) "Preferred Provider" shall mean that, save for minor
enhancements or repairs to a communications network that is
either in place on the date hereof or is established after the
date hereof but in respect of which the Group has been given the
opportunity referred to below and has not been chosen as the
provider of the relevant network services, the Consortium
Provider shall not acquire communication network services from
any third party without first providing to the Group written
notice of such communication network services and providing the
Group with a reasonable opportunity to tender for the provision
of such communication network services.
8.4 The Vendor and the Vendor Guarantor acknowledge that each of the clause
8.1, 8.2 and 8.3 and the sub-clauses thereof constitute a separable and
independent covenant and restriction on them, the Marshalls Group and any
affiliate of any member of the Marshalls Group and that given the nature of
the Business, the covenants contained in such clauses contain reasonable
limitations as to time, geographical area and scope of activity to be
restricted and do not impose a greater restriction than is necessary to
protect and preserve for the benefit of the Purchaser the goodwill of the
Business and to protect the legitimate business
24
interests of the Purchaser. If, however, any provision of such clauses or
sub-clauses is determined by any non-appealable final order, decree or
judgment of any court of competent jurisdiction to be unenforceable by
reason of its extending for too long a period of time or over too large a
geographic area or by reason of its being too extensive in any other
respect or for any other reason, but would be valid if some part thereof
were deleted, such provision shall apply with any such deletion as may be
necessary to make it valid and effective.
8.5 From and after the Completion Date, the Vendor and the Vendor Guarantor
shall, and shall procure that each member of the Marshalls Group and any
affiliate of any member of the Marshalls Group shall, keep confidential and
not disclose to any other person or use for his or its own benefit or the
benefit of any other person (a) any trade secrets or other confidential
proprietary information in his or their possession or control regarding the
Company, the Subsidiaries or their business and operations and (b) any
information concerning this Agreement or the transactions contemplated
hereby. The obligations of the Vendor and the Vendor Guarantor under this
clause 8.5 shall not apply to information which (i) is or becomes generally
available to the public without breach of the commitment provided for in
this section; or (ii) is required to be disclosed by law, order or
regulation of a court or tribunal or governmental authority, provided,
however, that, in any such case, the Vendor or the Vendor Guarantor shall
notify the Purchaser as soon as reasonably practicable prior to disclosure
to allow the Purchaser to take appropriate measures to preserve the
confidentiality of such information. The obligations of the Vendor and the
Vendor Guarantor under sub-paragraph (ii) above shall not apply to the
disclosure of any such information to any relevant regulatory body or,
provided such disclosure is made subject to appropriate confidentiality
restrictions, to any financial institution that provides or proposes to
provide loan or other facilities to any member of the Marshalls Group or
any affiliate of any member of the Marshalls Group.
8.6 For the purpose of clauses 8.1, 8.2 and 8.3 the phrase "directly or
indirectly" means, without prejudice to the generality of the expression,
either alone or jointly or as a partner, shareholder, director, executive,
employee, consultant, joint venture, investor or in any other capacity.
8.7 From and after the date hereof and unless and until this Agreement has been
terminated or rescinded pursuant to its terms, none of the Vendor or the
Vendor Guarantor, shall, and the Vendor and Vendor Guarantor shall procure
that no member of the Marshalls Group, nor any of its or their respective
affiliates, officers, directors, employees, representatives or agents,
shall, directly or indirectly, solicit, initiate or participate in any way
in discussions or negotiations with, or provide any information, or
assistance to, any person or group of persons (other than Purchaser)
concerning any acquisition of an equity interest in, or a merger,
consolidation, liquidation, dissolution, disposition of assets (other than
in the ordinary course of business and as specifically permitted pursuant
to this Agreement) of the Company or any of the Subsidiaries or any
disposition of any of the Sale Shares or any of the share capital of the
Subsidiaries (other than pursuant to the transactions contemplated by this
25
Agreement) (each, an "Acquisition Proposal"), or assist or participate in,
facilitate or encourage any effort or attempt by any other person to do or
seek to do any of the foregoing. The Vendor and the Vendor Guarantor shall,
and shall procure that the Group shall, promptly communicate to Purchaser
the terms of any Acquisition Proposal which they or any other member of the
Marshalls Group or any Affiliate may receive after the date hereof. The
Vendor and the Vendor Guarantor represent and warrant to, and covenant and
agree with, the Purchaser that neither they nor any member of the Marshalls
Group (including for the avoidance of doubt the Company and the
Subsidiaries) nor any affiliate of any member of the Marshalls Group have
incurred any obligations to any potential acquirer that would be violated
by reason of the execution, deliver and consummation of this Agreement.
8.8 Any breach of the provisions of clauses 8.1(a) and/or 8.3 which results
from any person becoming a member of the Marshalls Group or an affiliate of
any member of the Marshalls Group after the date of this Agreement by
reason of acquisition by or of, or merger with, any member of the Marshalls
Group as currently constituted where such person carries on, as a
subsidiary part of its principal business (being less than 5% of the
turnover of the business of the person concerned or turnover of 5 million
US dollars per annum (whichever is the lower)), a business which may in any
way be the same or similar to the Business or any part thereof (the
"Offending Business") shall be disregarded provided that such Offending
Business shall have been disposed of within 12 months of such person
becoming a member of the Marshalls Group or an affiliate of any member of
the Marshalls Group.
9 VENDOR AND PURCHASER GUARANTEE
------------------------------
9.1 ((a)) In consideration of the Purchaser and the Purchaser Guarantor
entering into this Agreement, the Vendor Guarantor hereby guarantees
to the Purchaser the due and punctual performance of all the
obligations and liabilities of the Vendor under or otherwise arising
out of or in connection with this Agreement and undertakes to keep the
Purchaser fully indemnified against all liabilities, losses,
proceedings, claims, damages, costs and expenses of whatever nature
which the Purchaser may suffer or incur as result of any failure or
delay by the Vendor in the performance of any of such obligations and
liabilities.
(b) If any obligation or liability of the Vendor expressed to be the
subject of the guarantee contained in this clause ("the Vendor
Guarantee") is not or ceases to be valid or enforceable against the
Vendor (in whole or in part) on any ground whatsoever (including, but
not limited to, any defect in or want of powers of the Vendor or
irregular exercise thereof or any lack of authority on the part of any
person purporting to act on behalf of the Vendor or any legal or other
limitation, disability or incapacity, or any change in the
constitution of, or any amalgamation or reconstruction of, or the
bankruptcy, liquidation, administration or insolvency of the Vendor),
the Vendor Guarantor shall nevertheless be liable to the Purchaser in
respect of that purported obligation or liability as if the
26
same were fully valid and enforceable and the Vendor Guarantor were
the principal debtor in respect thereof.
(c) The liability of the Vendor Guarantor under the Vendor Guarantee shall
not be discharged or affected in any way by:
(i) the Purchaser compounding or entering into any compromise,
settlement or arrangement with the Vendor, any co-guarantor or
any other person; or
(ii) any variation, extension, increase, renewal, determination,
release or replacement of this Agreement, whether or not made
with the consent or knowledge of the Vendor Guarantor; or
(iii) the Purchaser granting any time, indulgence, concession, relief,
discharge or release to the Vendor, any co-guarantor or any other
person or realising, giving up, agreeing to any variation,
renewal or replacement of, releasing, abstaining from or delaying
in taking advantage of or otherwise dealing with any securities
from or other rights or remedies which it may have against the
Vendor, any co-guarantor of any other person; or
(iv) any other matter or thing which, but for this provision, might
exonerate or affect the liability of the Vendor Guarantor.
(d) The Vendor Guarantee is in addition to any other security or right now
or hereafter available to the Purchaser and is a continuing security
notwithstanding any liquidation, administration, insolvency or other
incapacity of the Vendor or the Vendor Guarantor.
9.2 Clause 9.1 shall be deemed to be repeated herein with the substitution of:
(a) "Vendor" for "Purchaser"; and
(b) "Purchaser" for "Vendor".
9.3 ((a)) The Vendor Guarantor represents and warrants to the Purchaser that
this Agreement constitutes and the Taxation Deed and the Marshalls
Contracts which are to be delivered at Completion will, when executed,
constitute legal, valid and binding obligations of the Vendor
Guarantor enforceable in accordance with their respective terms.
(b) The Purchaser Guarantor represents and warrants to the Vendor and the
Vendor Guarantor that this Agreement constitutes legal, valid and
binding obligations of the Purchaser Guarantor enforceable in
accordance with its terms.
27
10 CONTINUING EFFECTS OF THIS AGREEMENT
------------------------------------
All provisions of this Agreement shall so far as they are capable of being
performed or observed continue in full force and effect notwithstanding
Completion except in respect of those matters then already performed and
Completion shall not constitute a waiver of any of the Purchaser's rights
in relation to this Agreement or the Taxation Deed.
11 ANNOUNCEMENTS
-------------
Save as (but only to the extent) expressly required by law or by any
relevant regulatory, governmental or quasi-governmental authority, all
announcements by, of or on behalf of, any of the parties hereto relating to
the sale and purchase of the Sale Shares shall be in terms to be agreed
between the parties in advance of issue.
12 RELEASES, WAIVERS ETC.
----------------------
Neither the single or partial exercise or temporary or partial waiver by
any party to this Agreement of any right, nor the failure by any such party
to exercise in whole or in part any right or to insist on the strict
performance of any provision of this Agreement, nor the discontinuance,
abandonment or adverse determination of any proceedings taken by any such
party to enforce any right or any such provision shall (except for the
period or to the extent covered by any such temporary or partial waiver)
operate as a waiver of, or preclude any exercise or enforcement or (as the
case may be) further or other exercise or enforcement by any such party of,
that or any other right or provision.
13 NOTICES
-------
13.1 Any notice or any other document to be given under this Agreement shall be
in writing and shall be deemed duly given if left at, or sent by (i) first
class post, airmail, express or other fast postal service or (ii) facsimile
transmission to the addresses and facsimile numbers specified in clause
13.4 below (including, if applicable, any "copy to" addressee) or such
other address or facsimile number as any party may by notice to the other
parties expressly substitute therefor.
13.2 Notice shall be deemed to be given if sent by first class post, express or
other fast postal service, 2 business days after posting or, in the case of
posting to an overseas address, 7 business days after posting, and if sent
by facsimile transmission when in the ordinary course of the means of
transmission it would first be received by the addressee during normal
business hours.
13.3 In proving the giving of a notice it shall be sufficient to prove that the
notice was left or that the envelope containing such notice was properly
addressed and posted or that the applicable means of telecommunications was
properly addressed and despatched (as the case may be).
13.4 The addresses and facsimile numbers referred to in clause 13.1 above are:
28
(a) The Vendor and the Vendor Guarantor:
For the attention of: The Finance Director
Address: Lloyds Xxxxxxxx
0 Xxxxxxxxx Xxxxxx
Xxxxxx X0 0XX
Facsimile number: 0171 702 3951
(b) The Purchaser and the Purchaser Guarantor:
For the attention of: Xxxxx Xxxxx
Address: IXNET
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile number: 001 212 858 7990
with a copy to: General Counsel
Address: IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile number: 001 212 858 7959
14 ENTIRE AGREEMENT
----------------
Save as otherwise agreed in writing by all the parties, this Agreement
(together with all documents which are required by its terms to be entered
into by the parties or any of them and all other documents which are in the
agreed form and are entered into by the parties or any of them in
connection with this Agreement) sets out the entire agreement and
understanding between the parties in connection with the Company and the
sale and purchase and other matters described in it.
15 ALTERATIONS
-----------
No purported alteration of this Agreement shall be effective unless it is
in writing, refers to this Agreement and is duly executed by each party
hereto.
16 COUNTERPARTS
------------
This Agreement may be entered into in the form of two or more counterparts
each executed by one or more of the parties but, taken together, executed
by all and, provided that all the parties so enter into the Agreement, each
of the executed counterparts, when duly exchanged or delivered, shall be
deemed to be an original, but, taken together, they shall constitute one
instrument.
17 SUCCESSORS AND ASSIGNS
----------------------
17.1 This Agreement shall be binding on and shall enure for the benefit of the
successors in title of each party.
29
17.2 None of the parties hereto shall be entitled to assign the benefit of any
rights under this Agreement save only that the Purchaser shall be entitled
to assign the benefit of its rights hereunder to any bank which provides
funds to the Purchaser to enable it to pay the Purchase Price or any
significant part thereof if (but only if) such bank shall require such
assignment as part of its security.
17.3 The Vendor Guarantor shall procure that in the event of the direct or
indirect sale or transfer of all or substantially all of the assets of the
Vendor Guarantor within four years from the Completion Date the Vendor
Guarantor shall, if required by the Purchaser, procure that the purchaser
of such assets shall by deed in terms reasonably satisfactory to the
Purchaser agree to the assignment of this Agreement to such purchaser of
the obligations of the Vendor and the Vendor Guarantor under this Agreement
which such purchaser will assume on a joint and several basis with the
Vendor and the Vendor Guarantor.
17.4 For the purposes of clause 17.3, substantially all of the assets of the
Vendor Guarantor shall mean assets constituting 80% of more of the assets
of the Marshalls Group (excluding the Group) on a consolidated basis,
either on the basis of book value or fair market value.
18 APPLICABLE LAW AND SUBMISSION TO JURISDICTION
---------------------------------------------
18.1 This Agreement shall be governed by and construed in accordance with
English law.
18.2 It is hereby agreed that:
(a) subject to paragraph (c) of this sub-clause, if any party has any
claim against another party arising out of or in connection with this
Agreement such claim shall be referred to the High Court of Justice in
England, to the jurisdiction of which each of the parties hereto
irrevocably submits;
(b) subject to paragraph (c) of this sub-clause, the jurisdiction of the
High Court of Justice in England over any such claim shall be an
exclusive jurisdiction and no courts outside England shall have
jurisdiction to hear or determine any such claim; and
(c) if in any suit, action or proceeding ("Proceeding") arising out of or
in connection with this Agreement an order or injunction is sought
(including but not limited to an order for specific performance of any
obligations under this Agreement) ordering a party to do or refrain
from doing anything in any jurisdiction other than England whether or
not damages or other monetary relief are also sought in the same
Proceedings, then notwithstanding paragraphs (a) and (b) of this
sub-clause such Proceeding may be brought by a Court or competent
jurisdiction situated within such other jurisdiction,
30
provided that nothing in sub-clauses (a) and (b) above shall prevent or
restrict proceedings in any jurisdiction relating to the enforcement of any
judgement already obtained in the High Court of Justice in England.
19 ADDRESS FOR SERVICE
-------------------
19.1 Each of the Purchaser and the Purchaser Guarantor hereby irrevocably
authorises and appoints the Purchaser's Solicitors (or such other person or
persons, being a firm of solicitors resident in England, as the Purchaser
or the Purchaser Guarantor (as the case may be) may hereafter as regards
itself by notice in writing to all the other parties hereto from time to
time substitute) to accept on its behalf service of all legal process
arising out of or connected with this Agreement and in the case of service
to the Purchaser's Solicitors all communications shall be marked for the
attention of the Head of the Business Law Department.
19.2 Service of such process on the person for the time being authorised under
clause 19.1 to accept it on behalf of the Purchaser or the Purchaser
Guarantor (as the case may be) shall be deemed to be service of that
process on the Purchaser or the Purchaser Guarantor (as the case may be).
20 COSTS AND EXPENSES
------------------
Each party to this Agreement shall bear the costs and expenses incurred by
it in connection with the preparation, negotiation, registration and
execution of this Agreement and the consummation of the transactions
contemplated hereby.
21 FURTHER ASSURANCE
-----------------
The Vendor undertakes to the Purchaser that as soon as possible following
Completion it will procure the execution of any document which the
Purchaser may reasonably require it to have executed so as to vest
effectively the beneficial and legal ownership of the Sale Shares in the
Purchaser or as it may direct, free from all liens, charges, encumbrances
and adverse claims.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
31
SCHEDULE 1
----------
The Company
-----------
Date and place of incorporation: Incorporated in England and Wales on 9
October 1987
Registered number: 2176144
Registered office: Lloyds Xxxxxxxx, 0 Xxxxxxxxx Xxxxxx,
Xxxxxx X0 0XX
Authorised share capital: (pound)500,000 divided into 500,000 Ordinary
Shares of(pound)1 each
Issued share capital: 483,100 Ordinary Shares
Directors: M.A.S. Xxxxxx
X.X. Xxxxxx
X.X. Xxxx
X. X'Xxxxxx
Secretary: X.X. Xxxxx
32
Schedule 2
----------
The Subsidiaries
----------------
Name: Saturn Global Network Services (U.K.) Ltd.
Date and place of Incorporation: 00 Xxxxx 0000, Xxxxxxx
Registered number: 3333840
Registered office: Lloyds Xxxxxxxx, 0 Xxxxxxxxx Xxxxxx, Xxxxxx X0
0XX
Authorised share capital: (pound)100 divided into 100 Shares of 100p each
Issued share capital: 1 share fully paid
Directors: X. X'Xxxxxx
M.A.S. Xxxxxx
X.X. Xxxx
Secretary: X.X. Xxxxx
33
Name: Saturn Global Network Services Pty Ltd.
Date and place of Incorporation: 10 July 0000, Xxxxxxxxx
Registered number: 000 000 000
Registered office: Xxxxx 0, 00 Xxxxxxxx Xxxxxx, Xxxxxx, XXX
0000, Xxxxxxxxx
Authorised share capital: A$1,000,000 divided into 1,000,000 Shares of
A$1 each
Issued share capital: 100,000 Shares fully paid
Directors: X. X'Xxxxxx
X.X. Xxxxxx
X.X. Xxxxxx
Secretary: M.A. Xxxxxx
34
Name: Saturn Systems Pte Limited
Date and place of Incorporation: 17 April 1997, Singapore
Registered number: 199702806D
Registered office: 0 Xxxxxxxx Xxxx, XXX Xxxxx #00-00, Xxxxxxxxx
000000
Authorised share capital: S$100,000 divided into 100,000 Shares of S$1
each
Issued share capital: 2 Shares fully paid
Directors: X. X'Xxxxxx
X.X. Xxxxxxx
Xxx Xxxxx Kok (Resident Director)
Secretary: Xxxxx Xxx Xx Xxx
35
Name: Saturn Global Networks, Inc.
Date and place of Incorporation: 15 July 1994, New York
Registered number: 00-0000000
Registered office: 00 Xxxx Xxxxx, Xxx Xxxx, XX00000, XXX
Authorised share capital: US$1 divided into 100 Shares of US$0.01 each
Issued share capital: 100 Shares fully paid
Directors: X.X. Xxxxxxx
X.X. Xxxx
Secretary: X.X. Xxxxxxx
36
Name: Saturn Global Network Services (Singapore)
Pte Ltd.
Date and place of Incorporation: 7 June 1996, Singapore
Registered number: 199604128W
Registered office: 0 Xxxxxxxx Xxxx, XXX Xxxxx #00-00, Xxxxxxxxx
000000
Authorised share capital: S$100,000 divided into 100,000 Shares of S$1
each
Issued share capital: 2 Shares fully paid
Directors: X. X'Xxxxxx
X.X. Xxxxxxx
Xxx Xxxxx Kok (Resident Director)
M.A.S. Xxxxxx
Secretary: Xx. Xx Xxx Xxxx
37
Name: Saturn Global Network Services (Hong Kong) Ltd.
Date and place of Incorporation: 26 September 1995, Hong Kong
Registered number: 526491
Registered office: 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx,
Xxxx Xxxx
Authorised share capital: HK$1000 divided into 1000 Shares of HK$1 each
Issued share capital: 1000 Shares fully paid
Directors: X. X'Xxxxxx
X.X. Xxxxxxx
M.A.S. Xxxxxx
Secretary: Sekots & Company Limited
38
Name: Saturn Global Network Services (Japan) Ltd.
Date and place of Incorporation: January 0000, Xxxxx
Registered number: Not applicable
Registered office: 00xx Xxxxx, Xxxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxxxx
Xx, Xxxxx, Xxxxx
Authorised share capital: Yen 40,000,000 divided into 800 shares of Yen
50,000 each
Issued share capital: 200 shares fully paid
Directors: X. X'Xxxxxx
X.X. Xxxxxxx
Kazunori Kanoh (Resident Director)
Secretary: Not applicable
39
Name: SGN Employee Trustee (Jersey) Limited
Date and place of Incorporation: 2 January 1998, Jersey Channel Islands
Registered number: 70535
Registered office: XX Xxx 00, 00 Xxxxxxxxx Xxxxxx, Xx. Xxxxxx,
Xxxxxx XX0 0XX, Channel Islands
Authorised share capital: (pound)10,000 divided into 10,000 ordinary
shares of(pound)1 each
Issued share capital: 10 ordinary shares of(pound)1 each fully paid
Shareholder: Juris Limited & Lively Limited
Directors: J.D.P. Xxxxx
N.C. Davies
M.A.S. Xxxxxx
Secretary: Mourant & Co. Secretaries Limited
40
SCHEDULE 3
----------
Directors and employees
-----------------------
Part A - Retiring Directors
---------------------------
M.A.S. Xxxxxx
X. X. Xxxxxx
X. X. Xxxx
X. X'Xxxxxx
Part B - Retiring Secretary
---------------------------
X.X. Xxxxx
41
Part C - Subsidiaries Retiring Directors
----------------------------------------
COMPANY RETIRING DIRECTOR
------- -----------------
(A) Saturn Global Network Services (1) M.A.S. Xxxxxx
(UK) Ltd (2) X. X'Xxxxxx
(3) X. X. Xxxx
(B) Saturn Global Network Services (1) X. X'Xxxxxx
Pty Ltd (2) X. X. Xxxxxx
(3) X X Xxxxxx
(C) Saturn Systems Pte Limited (1) X. X'Xxxxxx
(2) X. X. Xxxxxxx
(D) Saturn Global Network Services (1) X.X. Xxxxxxx
(USA) Inc. (2) X. X. Xxxx
(E) Saturn Global Network Services (1) M.A.S. Xxxxxx
(Singapore) Pte (2) X. X'Xxxxxx
(3) X. X. Xxxxxxx
(F) Saturn Global Network Services (1) M.A.S. Xxxxxx
(Hong Kong) Ltd (2) X. X'Xxxxxx
(3) X. X. Xxxxxxx
(G) Saturn Global Network Services (1) X. X'Xxxxxx
(Japan) Ltd (2) X. X. Xxxxxxx
(H) SGN Employee Trustee (Jersey) (1) M.A.S. Xxxxxx
Limited
Part D - Subsidiaries Retiring Secretary
----------------------------------------
COMPANY RETIRING SECRETARY
------- ------------------
(A) Saturn Global Network Services X.X. Xxxxx
(UK) Ltd
(B) Saturn Global Network Services M.A. Xxxxxx
Pty Ltd
(C) Saturn Systems Pte Limited Xxxxx Xxx Xx Xxx
(D) Saturn Global Network Services X.X. Xxxxxxx
(USA) Inc.
(E) Saturn Global Network Services Ng Xxx Xxxx
(Singapore)Pte
42
Part E - Persons to receive Service Agreements
----------------------------------------------
X. Xxxxxx
X.X. Xxxx
X.X. Xxxxxx
X.X. Xxxxxxx
43
SCHEDULE 4
----------
Matters represented and warranted
---------------------------------
PART A - GENERAL
----------------
1 CONSTITUTION AND STRUCTURE OF THE GROUP
---------------------------------------
1.1 The Sale Shares constitute the entire issued share capital of the Company.
1.2 ((a)) The Subsidiaries are and have always been the only subsidiaries of
the Company and are all wholly owned by the Company and the shares of
which are held free from any Encumbrance (as defined herein) and the
Company has no subsidiary undertaking.
(b) Each of SGN Employee Trustees (Jersey) Limited and Saturn Systems Pte
Limited is and always has been dormant, has never traded and does not
have and never has had any subsidiaries.
1.3 The information set out in schedule 1 relating to the Company and schedule
2 relating to the Subsidiaries is true and accurate in all respects.
1.4 No Group Company has any direct or indirect:
(a) interest in the share capital of, or other investment in, any body
corporate other than, in the case of the Company, the Subsidiaries; or
(b) interest in any partnership, joint venture, consortium or other
unincorporated association or arrangement for sharing profit other
than, in the case of the Company, the Subsidiaries,
and has no outstanding obligation to acquire any such interest or in
respect of any such interest formerly owned by it or agreed to be acquired
by it.
1.5 There is no shadow director of any Group Company.
1.6 The Company and all of the Subsidiaries are companies duly incorporated,
validly existing and, in the case of Saturn Global Network Services (USA)
Inc. ("SGN (USA)"), in good standing, under the laws of their respective
jurisdictions of incorporation. The Company and each of the Subsidiaries
has all requisite power and authority to own or lease their properties and
assets as now owned or leased and to carry on their businesses as and where
now being conducted. The copies of the Company's and all of the
Subsidiaries' articles and memorandum of incorporation or association or
equivalent organisational documents, as amended to date, which are
incorporated in the bundle of documents attached to the Disclosure Letter,
are correct and complete and are in full force and effect. Neither the
Company nor any of the Subsidiaries has ever engaged in any business other
than the Business.
44
1.7 All documents required by CA 1985 or any other legislation to be filed with
the Registrar of Companies in England and Wales in respect of the Company
or Saturn Global Network Services (UK) Limited and all documents required
to be filed by any other relevant legislation in respect of the
Subsidiaries have been duly filed, in each case where failure to make such
a filing would result in the imposition of a fine, losses, costs or damages
which exceeds (pound)1,000, and were when so filed correct and due
compliance has been made with all other material legal requirements in
connection with the formation of the Company and the Subsidiaries.
1.8 The Register of Members and other books required by CA 1985 or any other
relevant legislation to be kept by the Company and the Subsidiaries contain
an accurate and complete record of the matters with which they should deal
and there has been no notice of any proceedings to correct or rectify any
such books.
1.9 No Group Company is a member of any partnership, joint venture, trade
association, society or other group, whether formal or informal and whether
or not having a separate legal identity, nor is any such body relevant to
nor does any such body have any material influence over the Business.
1.10 No member of the Group has any liability whatsoever to or in respect of X X
Xxxxxxxx Options Limited (a company which was a direct subsidiary of the
Company from 22 January 1988 to 28 September 1993).
2 POWERS AND OBLIGATIONS OF THE VENDOR AND THE VENDOR GUARANTOR
-------------------------------------------------------------
2.1 The Vendor or, as the case may be, the Vendor Guarantor has the requisite
power under its Memorandum of Association to execute, deliver and perform
its obligations under this Agreement, the Taxation Deed and the Marshalls
Contracts.
2.2 The execution and delivery of, and the performance of the obligations of
the Vendor or, as the case may be, the Vendor Guarantor under, this
Agreement, the Taxation Deed and the Marshalls Contracts have been duly
authorised by all necessary corporate action on the part of the Vendor or,
as the case may be, the Vendor Guarantor whether under its Articles of
Association or otherwise.
2.3 This Agreement constitutes, the Taxation Deed, the Marshalls Contracts and
the other documents executed by the Vendor which are to be delivered at
Completion will, when executed, constitute legal, valid and binding
obligations of the Vendor enforceable in accordance with their respective
terms.
2.4 Save in connection with (i) any matter relating directly or indirectly to
any Licence or the transfer to the Purchaser of any Licence and (ii) any
restrictions relating to the acquisition by the Purchaser of the Company
under applicable competition law, restrictions on foreign ownership of
assets or connected requirements in any jurisdiction whatsoever, no
consent, notice, filing, authorisation, licence or approval of any
governmental, administrative, judicial or regulatory body, authority or
organisation or any other third party is required
45
to authorise the execution, delivery, validity, enforceability, completion
or admissibility in evidence of this Agreement, the Marshalls Contracts, or
the Taxation Deed or the performance by the Vendor or the Vendor Guarantor,
as the case may be, of its obligations under this Agreement, the Xxxxxxxx
Contracts, or the Taxation Deed. Valid and binding consent has been
obtained by the Vendor Guarantor from such number of shareholders as is
required by its articles of association to the transactions contemplated by
this Agreement, the Marshalls Contracts and the Taxation Deed and the
obligations of the Marshalls Group (other than the Group) hereunder and
thereunder insofar as so required.
2.5 The execution and delivery, of this Agreement, the Taxation Deed or the
Marshalls Contracts or the performance by the Vendor or, as the case may
be, the Vendor Guarantor of its obligations under this Agreement, the
Marshalls Contracts or the Taxation Deed will not other than in respect of
any Licence result in the maturation or acceleration of any material
liability or material obligation of the Company or any of the Subsidiaries
or give others the right to call for such a maturation or acceleration.
3 ACCOUNTS
--------
3.1 The Accounts (i) comply in all material respects with applicable United
Kingdom legal requirements; (ii) give a true and fair view of the state of
affairs of the Group as at the Accounts Date and its loss for the year
ended on that date; (iii) except as specifically disclosed therein have
been prepared in accordance with the same accounting policies as the
corresponding accounts incorporated within the consolidated accounts of the
Marshalls Group for the preceding 3 financial years; (iv) have not been
affected by any unusual, extraordinary, exceptional or non-recurring items
other than those identified as such; and (v) have been prepared in
accordance with UK GAAP.
3.2 The Management Accounts have been prepared on a prudent basis consistent
with the Accounts, fairly present the results of the operations of the
Company and the Subsidiaries and changes in financial position of the
Company and the Subsidiaries for the period covered thereby and have not
been affected by unusual, extraordinary, exceptional or non-recurring
items.
3.3 All accounts, books, ledgers, financial and other records of the Group are
in its possession and are properly maintained and fairly present in
reasonable detail the assets, liabilities and transactions of the Company
and the Subsidiaries.
3.4 No Group Company has factored or discounted any of its debts or engaged in
financing of a type which would not require to be shown or reflected in the
Accounts.
3.5 The published statutory financial statements of each Group Company (other
than SGN (USA) and Saturn Global Network Services (Japan) Ltd) for the
accounting reference period immediately preceding the period to which the
Accounts relate give a true and fair view of the state of affairs of each
such
46
company respectively at the end of such period and of their respective
profit or loss for such period.
3.6 Since the Account Date, there has not been any material change in any
method of accounting by any Group Company.
4 SHARE CAPITAL
-------------
4.1 There is no option, right to acquire, mortgage, charge, pledge, adverse
claim, lien or other form of security or encumbrance (collectively,
"Encumbrances") on, over or affecting the Sale Shares, there is no
agreement or commitment to give or create any of the foregoing and no
person has made any claim to be entitled to any of the foregoing.
4.2 All of the issued share capital set forth in each of schedule 1 and
schedule 2 has been duly authorised, validly issued and is fully paid and,
in the case of SGN (USA) only, non-assessable, and has at all times been
beneficially owned by members of the Marshalls Group and has never been
issued or sold in violation of any agreement binding upon any Group
Company. The Vendor is entitled to sell and transfer or procure the sale
and transfer of the full legal and beneficial ownership in the Sale Shares
to the Purchaser on the terms set out in this Agreement.
4.3 No share or loan capital of any Group Company is now under option or is
agreed or resolved conditionally or unconditionally to be created or issued
or put under option and there are no securities convertible or exchangeable
for any of the share capital of any Group Company.
4.4 Save as referred to in paragraph 4.6, no Group Company has or will at any
time prior to Completion:
(a) purchased or redeemed or repaid or agreed to purchase, redeem or repay
any share capital or securities convertible into share capital; or
(b) in respect of those Group Companies incorporated in England and Wales,
given or agreed to give any financial assistance in connection with
any such acquisition of share capital as would fall within sections
151 to 158 (inclusive) CA 1985 and in respect of those Group Companies
incorporated in any other jurisdiction been in breach of any
equivalent law relating to financial assistance.
4.5 No Group Company has made any declaration, setting aside or payment of a
dividend or other distribution in respect of any share capital of the
Company or any of the Subsidiaries.
4.6 The Company complied with the provisions of sections 155 to 158 Companies
Act 1985 with regard to the financial assistance given by the Company in
connection with the purchase by the Vendor Guarantor of shares in X X
Xxxxxxxx & Company Limited.
47
5 INSURANCE
---------
5.1 Particulars of all insurance policies maintained by each Group Company and
currently in force ("the Policies") are contained in the Disclosure Letter
together with a schedule of claims prepared by the insurance brokers to the
Group which details claims made by the Group under any insurance in the
three years prior to the date hereof other than any claims for less than
(pound)10,000 each in respect of private medical insurance.
5.2 All premiums due on the Policies have been paid. There is no default with
respect to any provision contained in any such Policy, nor has there been
any failure to give any notice or present any claim under any such Policy
in a timely fashion or in the manner or detail required by any such Policy.
The Disclosure Letter contains an accurate and complete description of any
provision contained in such Policies which provide for retrospective or
retroactive premium adjustments. No notice of cancellation or non-renewal
with respect to, or disallowance of any claim under, any such Policy has
been received by the Vendor, the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries has been refused any
insurance, not has its coverage been limited by any insurance provider to
which it has applied for insurance or with which it has carried insurance
during the last five years.
5.3 No claim is outstanding either by the insurer or the insured under any of
the Policies.
5.4 The Vendor is not aware of any circumstances which would or might entitle
any Group Company to make a claim in excess of (pound)10,000 under any of
the Policies.
6 TRANSACTIONS SINCE THE ACCOUNTS DATE
------------------------------------
6.1 Since the Accounts Date:
(a) each Group Company has entered into transactions and incurred
liabilities in the ordinary course of day-to-day trading operations
consistent with past practice and not otherwise;
(b) to the best of the knowledge, information and belief of the Vendor,
the assets of the Group taken as a whole have not been depleted by any
unlawful act on the part of any person;
(c) no Group Company has offered price reductions or discounts or
allowances on sales of goods or services or provided them at less than
cost or projected cost to an extent which may materially effect its
profitability; and
(d) no loan or loan capital has been repaid by any Group Company in whole
or in part or has become liable to be so repaid.
6.2 Since the Accounts Date there has not been:
48
(a) any material adverse change in the condition (financial or otherwise),
assets, liabilities, net worth, earning power or business of the
Company or any of the Subsidiaries;
(b) any making or authorisation of any capital expenditures in excess
of(pound)20,000 per item of expenditure;
(c) any cancellation or waiver of any right material to the operation of
the Company's or any of the Subsidiaries' business or any cancellation
or waiver of any debts or claims of substantial value or any
cancellation or waiver of any debts or claims against any Related
Party (as such term is hereinafter defined);
(d) any payment, discharge or satisfaction of any liability or obligation
(whether accrued, absolute, contingent or otherwise) by the Company or
any of the Subsidiaries, other than the payment, discharge or
satisfaction, in the ordinary course of business;
(e) any write-offs as uncollectable of any notes or accounts receivable of
the Company or any of the Subsidiaries or write-downs of the value of
any assets or inventory by the Company or any of the Subsidiaries
other than in immaterial amounts or in the ordinary course of business
consistent with past practice and at a rate no greater than during the
twelve months ended on the Accounts Date;
(f) any payment, loan or advance of any amount to or in respect of, or the
sale, transfer or lease of any properties or assets (whether real,
personal or mixed, tangible or intangible) to, or entering into of any
agreement, arrangement or transaction (other than with British
Telecommunications plc or any of its subsidiaries regarding the
provision of normal telephone services, local tails and nodal housing)
with, any Related Party, except for (i) directors' fees; (ii)
remuneration to the officers and employees of the Company or any of
the Subsidiaries at rates not exceeding the rates of remuneration
disclosed in the Disclosure Letter; (iii) payments made to, or
agreements, arrangements or transactions regarding the provision of
telecommunications services with, any Related Party in connection with
services provided in the ordinary course of business and consistent
with past practice to any member of the Group by any such Related
Party or vice versa; (iv) loans made by members of the Marshalls Group
to the Group for working capital purposes (as used herein, a "Related
Party" means any of the officers, directors or shareholders (other
than Xxxxxx-Xxxxxxxx Company Limited) of any member of the Marshalls
Group or any affiliate of any member of the Marshalls Group;
7 FINANCIAL MATTERS
-----------------
7.1 Save as disclosed in the Disclosure Letter, no Group Company:
(a) has outstanding any loan capital or indebtedness of any kind;
49
(b) has incurred or agreed to incur any borrowing which it has not repaid
or satisfied;
(c) has lent or agreed to lend any money which has not been repaid to it;
and
(d) is a party to or has any obligation under or is subject to :
(i) any loan agreement, debenture, acceptance credit facility, xxxx
of exchange, promissory note, finance lease, hire purchase, debt
or inventory financing, discounting or factoring arrangement or
sale and lease back arrangement; or
(ii) any Encumbrance; or
(iii) any other arrangement the purpose of which is to raise money or
provide finance or credit,
other than in respect of obligations under finance leases, hire
purchase, inventory financing or sale and lease back arrangements
where individual monthly payments do not exceed (pound)500.
7.2 No event has been alleged which is or, with the passage of a time and/or
the giving of any notice, certificate, declaration or demand, would become
an event of default under, or a breach of any of, the terms of any loan
capital, borrowing, debenture or financial facility of any Group Company or
would entitle any third party to call for repayment prior to normal
maturity.
7.3 No Group Company is a party to, or has any liability (including, without
limitation, any prospective or contingent liability) under, any Guarantee.
7.4 Save for the indebtedness outstanding as at 31 July 1998, details of which
are set out in the Disclosure Letter, as at 31 July 1998 there was no
outstanding indebtedness on any account whatsoever owing by any Group
Company to any member of the Marshalls Group or any affiliate of any member
of the Marshalls Group or by any member of the Marshalls Group to any Group
Company.
7.5 The Marshalls Group has not given any guarantee or indemnity or created any
other like obligation or given comfort in support of any Group Company
which remains outstanding.
7.6 All of the Group's trade accounts and notes receivable represent amounts
receivable for merchandise actually delivered or services actually provided
(or, in the case of non-trade accounts or notes, represent amounts
receivable in respect of other bona fide business transactions), have
arisen in the ordinary course of business and have been billed and are
generally due within 30 days after such billing. The Vendor has no
knowledge of any such receivables that are not fully collectible in the
normal and ordinary course of business except to the extent of a reserve in
an amount not in excess of the reserve for doubtful accounts reflected in
the Accounts.
50
8 EMPLOYEES
---------
8.1 There is attached to the Disclosure Letter a schedule showing the following
information in relation to each employee of each Group Company, namely:
(a) name;
(b) age;
(c) employing company;
(d) job description;
(e) emoluments (including any bonus or commission arrangements and any
non-cash benefits);
(f) notice period required to be given by the relevant company and the
employee;
(g) whether or not a member of the Group Company's or any Marshalls Group
pension scheme;
and such information is complete and correct, in the case of sub-paragraphs
(a), (b), (d) and (f) in all material respects and, in the case of
sub-paragraphs (c), (e) and (g), in all respects.
8.2 ((a)) Since the Accounts Date, no employee earning in excess
of(pound)25,000 per annum has given notice terminating his contract of
employment or is under notice of dismissal and no amount due to or in
respect of any employee or former employee is in arrears and unpaid
other than his salary for the month current at the date of this
Agreement, any commissions payable in the ordinary course of business
and in respect of the reimbursement of expenses. Since the Accounts
Date no Group Company has received or been notified of any wage claim
or any other claim for the improvement of, or amendment to, the terms
or conditions of employment of any employees of the Company and the
Subsidiaries.
(b) Since the Accounts Date, there has not been any increase in the
salaries, benefits compensation payable or to become payable to, or
any advance (excluding advances for ordinary business expense) or loan
to or other payment (other than reimbursement of business expenses and
season ticket loans) to any officer, director or employee of the
Company or any of the Subsidiaries (except normal annual merit
increases made in the ordinary course of business and consistent with
past practice).
8.3 ((a)) No Group Company is involved in any dispute with or, so far as the
Vendor is aware, is the subject of any complaint by, its current or
former employees or any of them;
51
(b) no employee of the Company or any of the Subsidiaries is represented
by any union or other employee organisation;
(c) there is no, nor has there been in the twelve months prior to the date
of this Agreement, strike, dispute, slow down or stoppage actually
pending or, so far as the Vendor is aware, threatened against or
involving the Company or any of the Subsidiaries;
(d) no private agreement restricts the Company or any of the Subsidiaries
from relocating, completing or terminating any of its operations or
facilities; and
(e) neither the Company nor any of the Subsidiaries has in the past three
years experienced any strike, work stoppage or other employee dispute.
8.4 Apart from the Pension Arrangements, no Group Company is under any
liability to provide any pensions, lump sums or other like benefits in
respect of retirement, ill-health or death.
8.5 The Disclosure Letter contains particulars of the Pension Arrangements
which are complete and correct in all material respects.
8.6 A list of the employees of each Group Company who are covered by the
Pension Arrangements, together with particulars of them necessary to
establish their entitlement to benefits thereunder, is attached to the
Disclosure Letter.
8.7 ((a)) There are no service or consultancy agreements or arrangements
outstanding between any Group Company and any other person, in each
case involving either (i) annualised payments in excess of
(pound)25,000 or (ii) a notice period or termination period in excess
of six months apart from those disclosed in the Disclosure Letter.
(b) Save as attached to the Disclosure Letter, there are no standard terms
and conditions of employment of the Group.
8.8 No Group Company is bound or accustomed to make periodical or other
payments (other than normal fixed salaries and wages) to employees,
ex-employees, officers, consultants or others and no employee, officer or
consultant has remuneration on a profit sharing or commission basis or by
reference to the turnover, profits, sales or assets of any Group Company.
8.9 No Group Company has and has ever had any share option, share incentive,
profit sharing or any other similar scheme.
8.10 No Group Company has any known reason to dismiss (nor does it wish to
dismiss) any of its employees who is entitled to remuneration of at
least(pound)25,000 per annum.
8.11 No order has been or may be made for the reinstatement or re-engagement of
any employee or former employee of any Group Company.
52
8.12 So far as the Vendor is aware, no person who is or was a director or
employee of any Group Company has any right to any compensation or other
payment by reason of the termination of his employment (whether such
termination constitutes unfair or wrongful dismissal, redundancy or
otherwise) or any breach by such Group Company of his terms of engagement
or employment.
9 THE BUSINESS
------------
9.1 The Disclosure Letter contains a schedule of, and the material terms of,
every legally binding agreement or arrangement (collectively "the
Agreements") to which any Group Company is a party at the date of this
Agreement and which:
(a) currently (based on sales in June 1998 annualised) involves (together
with any other agreements with such customer) annualised payments to
any Group Company by a customer in excess of (pound)30,000;
(b) involved as at 18 June 1998 (together with any other agreements with
such person) an aggregate annualised expenditure or payments to any
one person by the Group in excess of (pound)250,000 other than in
respect of capital expenditure in the ordinary course of business or
telecommunications contracts relating to local tails or nodal housing
agreements or facilities management agreements; or
(c) is a reseller agreement; or
(d) involves teaming arrangements for joint bidding; or
(e) concerns a joint venture entered into by any member of the Group; or
(f) is a power of attorney; or
(g) is a contract or option relating to the sale by the Company or the
Subsidiaries of any asset, other than sales of inventory in the
ordinary course of business; or
(h) is a lease agreement (whether real or personal property but excluding
agreements relating to the purchase or supply of telecommunications
bandwith) under which it is either lessor or lessee other than as
provided under financing leases, hire purchase, inventory financing or
sale and lease back arrangements where the individual monthly payments
do not exceed (pound)500; or
(i) is a "take or pay" contract which involves annualised payments in
excess of (pound)100,000; or
(j) is a contract which is material to the Business.
Except as expressly disclosed in the Disclosure Letter with specific
reference to this Warranty the Agreements are valid and in full force and
effect and are binding and enforceable in accordance with their respective
terms. All parties to
53
the Agreements have complied in all material respects with the provisions
thereof; no such party is in default of any material term thereof; and no
event has occurred that with the passage of time or the giving of notice or
both would constitute a default by any party under any material provision
thereof.
9.2 The Company is not a party to any contract, obligation or arrangement
which:
(a) is of an unusual or abnormal nature, or outside the ordinary course of
trading; or
(b) gives any party an option to acquire or dispose of any asset or
requires another person to do so.
9.3 No part of the Business has been adversely affected by the loss during the
year ended on the Accounts Date or since that date of any important trade
supplier or customer (being a customer or supplier which over any period of
3 months or more during that year has accounted for 5 per cent. or more in
value of the services supplied by, or services or products supplied to (as
the case may be), the Group during that period) and no such customer or
supplier has given notice to any Group Company, and the Vendor is not aware
of, an intention to cease or reduce trading with such company.
9.4 There are not now outstanding any agreements or arrangements (whether by
way of guarantee, indemnity, warranty, representation or otherwise) under
which any Group Company is under a prospective or contingent liability in
respect of any disposal of its assets or business or any substantial part
thereof.
9.5 The Disclosure Letter contains a copy of all standard terms of business of
the Group.
9.6 No Group Company has any unmatched open positions with respect to forward
purchases and/or sales of any foreign currency and none of such open
positions will involve any Group Company in a loss.
9.7 There is no offer or tender (or the like) given or made by any Group
Company which is still outstanding and capable of giving rise to a contract
merely by the unilateral act of any third party.
9.8 No Group Company is a party to, nor have its profits or financial position
during the three years prior to the date hereof been affected by, any
contract or arrangement which is not of an entirely arms-length nature made
on open market terms.
9.9 No Group Company has applied for, or received, any grant, subsidy or
financial assistance from, any government department or agency or any
European Community, federal, local or other authority.
9.10 No Group Company has done (or omitted to do) any act or thing which could
result in any investment grant, employment subsidy or other similar payment
54
made (or due to be made) to it, becoming repayable, or being forfeited or
withheld in whole or in part.
9.11 Save for agreements which limit disclosure of the existence or terms of
such agreements or of any other information concerning the parties thereto
and the transactions contemplated thereby, no Group Company is a party to
any secrecy or confidentiality agreement or arrangement which may restrict
the use or disclosure of material information relating to the Business nor
has it given any covenants materially limiting or excluding its right to do
business and/or complete in any area or field with any other person.
9.12 No Group Company is a party to any agreement, practice or arrangement which
contravenes the provisions of the Resale Prices Xxx 0000 or the Fair
Trading Act 1973 or which is subject to regulation, but has not been
registered, under the Restrictive Trade Practices Act 1976 or which
constitutes an anti-competitive practice under the Competition Xxx 0000 or
contravene any of the provisions of Articles 85 or 86 of the Treaty of Rome
or any other anti-trust or competition legislation.
9.13 No service provided to any Group Company has been discontinued as a result
of any Group Company failing to pay its obligations when due and, as of the
date hereof, no such service provider is currently threatening to
discontinue any material service provided to the Group as a result of any
Group Company failing to pay its obligations when due.
9.14 To the best of the knowledge, information and belief of the Vendor, no
Group Company is in material breach of any of its obligations under any
nodal housing agreements or facilities management agreements to which any
such company is a party.
9.15 The Disclosure Letter sets forth the Group's policy on overriders and
rebates.
10 INTELLECTUAL PROPERTY RIGHTS
----------------------------
10.1 Except for Intellectual Property Rights relating to the name "Saturn" or
"Saturn Global Network" and any derivative names thereof or the letters
"SGN" or the logos used by any member of the Group, or any Intellectual
Property Rights which are licensed to it or has the right to use (other
than licences relating to non custom built software or in respect of the
right to use the Marshalls Group accounting system and its associated
software), no Group Company uses Intellectual Property Rights in the
operation of the Business. None of the material Confidential Information of
either the Company or any of the Subsidiaries has been disclosed to any
person (other than professional advisers and bankers) unless such
disclosure was necessary, and was made pursuant to an appropriate
confidentiality agreement.
10.2 No Group Company has received notice that it has infringed the Intellectual
Property Rights of any other person and, to the best of the knowledge of
the
55
Vendor, the operation of the Business does not infringe the Intellectual
Property Rights of any third party.
10.3 No Group Company has granted or is obliged to grant any licences under any
Intellectual Property Rights owned by it or licensed to it or to furnish
know-how to any person.
10.4 To the best of the knowledge, information and belief of the Vendor, there
exists no actual or threatened infringement (including misuse of
confidential information) or any event likely to constitute an infringement
or breach by any third party of any of the Intellectual Property Rights
held or used by the Group within the past three years.
10.5 No Group Company has disposed of or failed to maintain any Intellectual
Property Rights.
11 LITIGATION
----------
11.1 No Group Company is engaged in any capacity, and no proceedings, notice,
filing or summons has been received with respect to, any litigation, suit,
investigation, arbitration, prosecution or other legal proceedings or in
any proceedings or hearings before any court, tribunal or arbitrator or any
statutory or Governmental body, department, board or other Agency and, to
the best of the knowledge, information and belief of the Vendor, there are
no such matters which would or might involve a claim or would result in
damages in excess of (pound)10,000 pending or threatened.
11.2 There is no outstanding judgment, order, decree, arbitral award or decision
of any court, tribunal, arbitrator or other Agency against any Group
Company.
11.3 The Company is not a party to any subsisting undertaking given to any court
or other Agency or third party arising out of any proceedings of the kind
described in paragraph 11.1.
11.4 No Group Company has received notification that any investigation or
enquiry is being or has been conducted by any governmental or other body in
respect of its affairs and the Vendor is not aware of any circumstances
which are likely to give rise to such investigation or enquiry.
12 INSOLVENCY
----------
12.1 No order has been made and no resolution has been passed for the winding up
of any Group Company incorporated in England and Wales (a "UK Group
Company") or for a provisional liquidator to be appointed in respect of any
such company and no petition has been presented and no meeting has been
convened for the purpose of winding up any such company.
12.2 No administration order has been made and no petition for such an order has
been presented in respect of any UK Group Company.
56
12.3 No receiver (which expression shall include an administrative receiver) has
been appointed in respect of any UK Group Company or in respect of all or
any part of their respective assets.
12.4 No composition in satisfaction of the debts of any UK Group Company or
scheme of arrangement of their respective affairs or compromise or
arrangement between it and its creditors and/or members or any class of its
creditors and/or members has been proposed, sanctioned or approved.
12.5 No UK Group Company is insolvent and has stopped payment and is not able to
pay its debts (within the meaning of section 123 of the Insolvency Act
1986).
12.6 No UK Group Company has, within the "relevant time" (as defined in section
240 of the Insolvency Act 1986), entered into a transaction at an
undervalue or given a preference (within the meaning of sections 238 and
239 respectively of the Insolvency Act 1986).
12.7 No event analogous to any of the circumstances mentioned in any of the
foregoing sub-paragraphs of this paragraph 12 has occurred in relation to
any Group Company incorporated outside England and Wales. Notwithstanding
disclosure in the Disclosure Letter, no Group Company will suffer any loss,
liability or damage in respect of any event analogous to paragraph 12.6
above.
13 ASSETS AND TITLE
----------------
13.1 The buildings, machinery, equipment, tools, furniture and other fixed
assets of the Company and the Subsidiaries, including those reflected in
the balance sheet included in the Accounts, are suitable for the purposes
for which they are used in the businesses of the Company and the
Subsidiaries. Except for (i) assets owned by members of the Marshalls Group
and provided to the Group as described in the Disclosure Letter and (ii)
assets for which a Group Company has the right to use that are not material
to the Business, the assets owned by the Group together with any assets
held under any hire or hire purchase rental or leasing agreement comprise
all the assets necessary for the continuation of the Business as now
carried on. Maintenance contracts are in full force and effect in respect
of all telecommunications equipment of the Group which is of a kind which
is normal or prudent to have maintained by independent or specialist
contractors.
13.2 During the year preceding the date of this Agreement none of the services
provided by any Group Company to a customer has suffered an outage which
would give such customer a legal right to terminate the relevant contract
under which that service is provided.
13.3 The Company and each of the Subsidiaries owns or has the right to use all
of their properties and assets reflected in the balance sheet included in
the Accounts.
57
14 RELATED PARTY TRANSACTIONS
--------------------------
14.1 Except for the customer contracts with the Marshalls Group attached to the
Disclosure Letter and the Marshalls Contracts and any agreements or
arrangements with British Telecommunications plc or any of its subsidiaries
regarding the provision of normal telephone services, local tails,
facilities management agreements and nodal housing agreements, there are no
contracts, arrangements, or transactions currently in effect between the
Company or any of the Subsidiaries, on one hand, and any member of the
Marshalls Group or any affiliate of the Marshalls Group or British
Telecommunications plc or any of its subsidiaries on the other hand. Except
as set forth in the Disclosure Letter, no member of the Marshalls Group (i)
has any interest in any assets or property used in the Business, (ii) has
any direct or indirect interest of any nature in any corporation or
business which competes with, conducts any similar business to, has any
arrangement or agreement with, or is involved in any other way with the
Business, (iii) has any contractual or other claim of any kind whatsoever
against the Company or the Subsidiaries. No member of the Marshalls Group
has made any payments on behalf of or for the benefit of the Company or the
Subsidiaries which are not reflected as expenses in the Accounts. No member
of the Marshalls Group nor any representative of such Company has made any
agreement or arrangement to make payments to any employee of the Company or
the Subsidiaries contingent upon the execution of this Agreement or the
consummation of the transactions contemplated hereby. No transactions
pursuant to which any Group Company has acquired from any member of the
Marshalls Group any shares in any other Group Company or any business or
other assets were entered into at an undervalue and all such transactions
were entered into bona fide and otherwise on arms-length commercial terms.
15 COMPLIANCE WITH LAWS, PERMITS AND LICENCES
------------------------------------------
15.1 The Disclosure Letter contains a copy of all material permits,
certificates, licences, orders, registrations, franchises, authorisations
and other approvals (collectively, "Permits") from all United Kingdom and
national, federal, state, local and foreign governmental and regulatory
bodies held by the Company or any of the Subsidiaries. All the Permits are
in full force and effect and the Company and each of the Subsidiaries is in
compliance with the terms and conditions thereof.
15.2 The Licences are in full force and effect and the Vendor has received no
notice that any of such Licences are to be revoked or have been breached
and, so far as the Vendor is aware (taking account of the conditions and
laws subject to which each such Licence has been granted) (a) there are no
circumstances which enable the licensing authority to reduce the same or
materially and adversely alter the terms thereof; and (b) there are no
circumstances indicating that they will not be renewed, in whole or in
part, when due for renewal.
15.3 The Company and all of the Subsidiaries hold and are in compliance in all
material respects with all Permits required under all laws, rules and
regulations required in connection with the Business. The Company and all
of the
58
Subsidiaries have otherwise complied with all applicable statutes, rules,
regulations and orders, federal, state, national and local (including
without limitation those relating to environmental protection, occupational
safety and health and equal employment practices) save where failure to so
comply has not had, and will not reasonably be expected to have, a material
adverse effect on the Business.
16 CARRIER PROVIDER FACILITIES
-- ---------------------------
The schedule attached to the Disclosure Letter with specific references to
this Warranty sets out summary details of international bandwith supplied
to the Group by third parties and the details so contained are true and
correct in all material respects as at 18 June 1998.
17 COMPUTER EQUIPMENT AND SOFTWARE
-------------------------------
17.1 Full details of the policy of the Group with regard to millennium
compliance (namely the ability of hardware and software products used in
the Business to accurately process data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century,
including leap year calculation) is set out or attached to the Disclosure
Letter, together with details of the actions taken by the Group to date in
relation to such policy.
17.2 Each Group Company has taken proper precautions to preserve the
availability, confidentiality and integrity of its computer systems.
17.3 All computer software (including all programs and data in such software)
used by the Group is reliable and readable. All media on which such
software is stored are in a suitable condition.
17.4 The Vendor is not aware of any case where unauthorised access or
modification to the Group's computer system has taken place.
18 LIABILITY
---------
18.1 The Company and the Subsidiaries have no liability or obligation of any
nature, whether due or to become due, absolute, contingent or otherwise,
including liabilities for or in respect of Taxes, except for liabilities
that are (a) fully reflected in the Accounts, or (b) specifically disclosed
in the Disclosure Letter or (c) incurred in the ordinary and normal course
of trading, since the Accounts Date.
18.2 As at 31 July 1998 the liability of the Group to El Camino (Leasing)
Limited was(pound)206,910.02.
59
19 REAL PROPERTY
-------------
Except for the real property occupied under informal arrangements with the
Marshalls Group the locations of which are disclosed in the Disclosure
Letter (collectively, the "Marshalls Properties"), no Group Company owns,
operates, leases or utilises any real property. Except for the payments set
forth in the Disclosure Letter, no Group Company has any liability or
obligation relating to the use or occupancy of the Marshalls Properties.
20 ENVIRONMENTAL
-------------
No Group Company conducts or has conducted any activities involving the use
or handling of any hazardous or toxic substance, waste or material
pollutant or contaminant, which activities are reasonably likely to result
in liability or obligation under laws relating to environmental protection.
21 EMPLOYEE BENEFITS
-----------------
21.1((a)) The Disclosure Letter lists all pensions, retirement, supplemental
retirement, deferred compensation, excess benefit, profit sharing,
bonus, incentive, stock purchase, stock ownership, stock option, stock
appreciation right, employment, severance, salary continuation,
termination, change-of-control, health, life, disability, group
insurance, vacation, holiday and fringe benefit plan, program,
contract of arrangement, maintained, contributed to, or required to be
contributed to, by any of the Companies or any Subsidiary or under
which any of the Companies or any Subsidiary may have liability,
outside the United States (the "Non-US Benefit Plans").
(b) True and complete copies of the governing documents of each Non-US
Benefit Plan including all amendments and modifications thereof
together with all related trust agreements and insurance contracts
together with all governmental filings made during the last three
years are attached to the Disclosure Letter.
(c) Except as otherwise disclosed in the Disclosure Letter, each Non-US
Benefit Plan has, so far as the Vendor is aware, been maintained,
operated and administered in compliance in all material respects with
its terms and with all applicable laws. All contributions and other
payments required to be made by the Companies, or any Subsidiary to
any Non-US Benefit Plan with respect to any period up to and including
the Completion Date shall have been made or accrued and booked on or
before the Completion Date. So far as the Vendor is aware, there are
no pending audits or investigations by any governmental or
quasi-government agency involving the Non-US Benefit Plans and no
threatened or pending claims (except for individual claims for
benefits payable in the normal operation of the Non-US Benefit Plan),
suits or proceedings involving any Non-US Benefit Plan.
60
(d) The X X Xxxxxxxx Retirement Savings Plan is approved by the Pension
Schemes Office of the Inland Revenue as an exempt approved scheme
under Chapter I Part XIV ICTA 1988 and, so far as the Vendor is aware,
nothing has been done or omitted to be done which may result in the
abovementioned scheme ceasing to be such an exempt approved scheme.
(e) No Group Company has given any undertakings or assurances to its
officers, employees or consultants regarding the continuance,
introduction or improvement of any retirement, death or disability
benefits (whether or not there is any obligation to do so) or
regarding the payment of contributions to Non-US Benefit Plans or any
Benefit Plan (as defined below) (whether or not there is any
obligation to do so).
(f) No Group Company has granted any ex gratia pension or other like
payment to any of its past or present officers, employees, consultants
or their dependants.
(g) Benefits from the Non-US Benefit Plans and the Benefit Plans (as
defined below) are provided on a money-purchase basis and no members
of the Non-US Benefit Plans or the Benefit Plans are entitled to or
has been promised a defined amount or level of any benefit (other than
a lump sum death benefit).
(h) All benefits under the Non-US Benefit Plans and Benefit Plans (as
defined below) payable on death before normal retirement age are fully
insured and, so far as the Vendor is aware, there has been no act or
omission which would give grounds to such insurance company
legitimately to refuse any claim made under such insurance.
(i) The Disclosure Letter lists each (i) "employee benefit plan", as
defined in Section 3(3) of ERISA (including any "multiemployer plan"
as defined in Section 3(37) of ERISA), (ii) all other pension,
retirement, supplemental retirement, deferred compensation, excess
benefit, profit sharing, bonus, incentive, stock purchase, stock
ownership, stock option, stock appreciation right, severance, salary
continuation, termination, change-of-control, health, life,
disability, group insurance, vacation, holiday and fringe benefit
plan, program, contract, or arrangement maintained, contributed to, or
required to be contributed to, by the Group or any ERISA Affiliate for
the benefit of any Employee, Former Employee, director or officer of
the Group or under which the Group or any ERISA Affiliate has any
liability with respect to any Employee, Former Employee, director or
officer of the Group within the United States (the "Benefit Plans").
(j) As applicable with respect to each Benefit Plan, the Vendor has
delivered to the Purchaser, true and complete copies of (i) the
governing documents of each Benefit Plan, including all amendments
thereto, and in the case of an unwritten Benefit Plan, a written
description thereof, (ii) the current summary plan description and
each summary of material
61
modifications thereto, and (iii) the most recent Internal Revenue
Service determination letter.
(k) Except as otherwise disclosed in the Disclosure Letter:
(i) so far as the Vendor is aware, each Benefit Plan has been
maintained, operated and administered in compliance in all
respects with its terms and all laws, including any related
documents or agreements and the applicable provisions of ERISA
and the Code;
(ii) the Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are
intended to meet the qualification requirements of Section 401(a)
of the Code now meet, and at all times since their inception have
met the requirements for such qualification, and the related
trusts are now, and at all times since their inception have been,
exempt from taxation under Section 501(a) of the Code;
(iii) no Benefit Plan is now or at any time has been subject to Part
3, Subtitle B of Title I of ERISA or Title IV of ERISA; no
Benefit Plan is now or at any time has been a "multiemployer
plan" within the meaning of Section 3(37) of ERISA;
(iv) all contributions to, and payments from, any Benefit Plan which
may have been required in accordance with the terms of such
Benefit Plan or any related document, have been timely made;
(v) so far as the Vendor is aware, there are no pending audits or
investigations by any governmental agency involving the Benefit
Plans, and no threatened or pending claims (except for individual
claims for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings involving any Benefit Plan,
any fiduciary thereof or service provider thereto, nor to the
best knowledge of the Vendor is there any reasonable basis for
any such claim, suit or proceeding;
(vi) any insurance premium under any insurance policy related to a
Benefit Plan for any period up to and including the Completion
Date shall have been paid, or accrued and booked on or before the
Completion Date, and, with respect to any such insurance policy
or premium payment obligation, so far as the Vendor is aware,
neither the Group, any ERISA Affiliate nor the Purchaser shall be
subject to a retrospective rate adjustment, loss sharing
arrangement or other actual or contingent liability; and
(vii) no Benefit Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of
service or retirement other than (A) coverage mandated by law or
(B) death
62
or retirement benefits under a Benefit Plan qualified under
Section 401(a) of the Code. Neither the Group nor any ERISA
Affiliate has made a written or oral representation to any
current or former employee promising or guaranteeing any employer
paid continuation of medical, dental, life or disability coverage
for any period of time beyond retirement or termination of
employment.
22 USA
---
22.1 As of the date of its most recent regularly prepared balance sheet, the
Group did not have assets located in the United States having an aggregate
book value of 15 million US dollars or more.
22.2 For the Group's most recently completed fiscal year, the Group had less
than 25 million US dollars in sales in or into the United States.
22.3 The portion of the Purchase Price allocable by the Vendor to the shares of
Saturn Global Network Services (USA) Inc. is less than 15 million US
dollars.
23 DATA PROTECTION ACT
-------------------
No member of the Group is required to be registered pursuant to the Data
Protection Xxx 0000.
24 DEBTORS AND PAYABLES
--------------------
The Schedules attached to the Disclosure Letter with reference to this
Warranty sets forth a true and accurate copy of, respectively, the ageing
of the accounts receivable as of 30 June 1998 and the ageing of the
accounts payable as of 30 June 1998.
63
PART B - TAXATION AND SOCIAL SECURITY
-------------------------------------
TAXATION
--------
1 All accounts, computations, notices and returns (including amended returns)
which ought to have been made by or in respect of any one or more of the
Company and the Subsidiaries for any Taxation purposes have been duly made;
are up to date, correct in all material respects and have been made on a
proper and punctual basis; and there is no dispute or investigation nor is
the Vendor aware of any pending dispute or investigation by any tax
authority in respect of any information contained in any one or more of the
Company's and the Subsidiaries' returns.
2 All Taxation for which any one or more of the Company and the Subsidiaries
are liable and which ought to have been paid (including deductions from
payments made by the Company and the Subsidiaries) has been duly and
punctually paid, including all income tax and national insurance
contributions deductible and payable under the PAYE system.
3 The Company and Saturn Global Network Services (UK) Limited are and have at
all times been resident in the United Kingdom for Taxation purposes and are
not and have not been treated as a resident in any other jurisdiction for
any Taxation purposes (including any double taxation agreement ) and have
never carried on any trade, business or other activities outside the United
Kingdom other than the export of goods and/or services in the ordinary and
normal course of business.
4 The Company and Saturn Global Network Services (UK) Limited are taxable
persons for the purposes of the VATA 1994 and have not applied to HM
Customs and Excise under section 43 VATA 1994 to be treated as a group for
VAT purposes; have complied with the VAT legislation; and have not made
(and do not make) exempt supplies for VAT purposes.
5 All documents in possession of the Company or any one of the Subsidiaries
or to the production of which any one or more of the Company and the
Subsidiaries are entitled and which attract UK stamp or transfer duty (or
its equivalent in any foreign jurisdiction) have been stamped and so far as
the Vendor is aware neither the Company or any one of the Subsidiaries has
any outstanding liability to stamp duty reserve tax.
6 None of the Company or the Subsidiaries have at any time entered into any
arrangement, the whole or main purpose of which was the avoidance of
Taxation.
7 No transactions have been undertaken which require and have not received
specific Treasury consent under sections 765 or 765A ICTA 1988.
8 No Taxation Authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application of
the
64
relevant legislation whether expressly provided for in the relevant
legislation or operated by way of extra-statutory concession or otherwise)
in relation to the Company or any of the Subsidiaries, being an arrangement
which is in operation as at the date of this Agreement.
9 The Taxation computations for all accounting periods of the Company and of
the Subsidiaries ended on or before 30 April 1998 have been agreed with the
relevant tax authority.
10 Neither the Company nor any of the Subsidiaries has directly or indirectly
paid any remuneration, emoluments or compensation for loss of office or
made any gratuitous payment or transferred any assets to any of its present
or former directors or employees, the cost of which will not be deductible
for Taxation purposes.
11 No transactions or arrangements involving the Company or any of the
Subsidiaries have taken place or are in existence such that any Taxation
Authority has challenged or raised questions about the pricing arrangements
operated by the Company or any of the Subsidiaries or any company which has
at any time been a member of the same group of companies or such that the
provisions of section 770 ICTA 1988 could be or have been applied.
12 The Company has not had any interest in a controlled foreign company as
defined in Chapter IV Part XVII ICTA 1988.
13 The Company and each of the Subsidiaries have sufficient information
contained in their records to calculate any chargeable gain or allowable
loss which may arise as the result of the disposal of assets owned by the
Company or each such Subsidiary at the Accounts Date.
14 Since the Accounts Date no asset has been acquired otherwise than by way of
a bargain made at arm's length and for a consideration equal to its market
value.
15 The Group has not effected or been a party to any demerger such as is
mentioned in sections 213 to 218 ICTA 1988.
16 Neither the Company nor any of the Subsidiaries has been a party to any
deprecatory transactions within the meaning of sections 176 and 177 TCGA
1992.
17 The Company and each of the Subsidiaries have sufficient information
contained in their records to calculate any balancing charge or balancing
allowance which may arise under the provisions of the Capital Xxxxxxxxxx
Xxx 0000 in respect of any buildings or assets qualifying for capital
allowances.
18 Neither the Company nor any of the Subsidiaries has ceased to be a member
of a group of companies for the purposes of section 178 and 179 TCGA 1992
and will not cease to be a member of such a group as a result of
Completion.
65
19 Neither the Company nor any of the Subsidiaries has at any time within the
period of six years ending at the date of this agreement acquired any
assets other than trading stock from any company which, at the time of the
acquisition, was a member of the same group of companies.
20 The Disclosure Letter sets out full details of any surrender or agreement
to surrender, or acceptance or agreement to accept the surrender, by the
Company or by any of the Subsidiaries of any amount by way of group relief
under the provisions of sections 402, 403 and 407 to 413 ICTA 1988.
21 All claims for group relief made by the Company or by any of the
Subsidiaries were valid and have been allowed by way of relief from
corporation tax and neither the Company nor any of the Subsidiaries is or
will become liable to make any payment for an amount surrendered by any
other company, or any repayment in respect of any amount surrendered to any
other company, under or in connection with the provisions of section 402
ICTA 1988.
22 Neither the Company nor any of the Subsidiaries is or has at any time been
party to any arrangement falling within section 410 ICTA 1988 and the
provisions of section 413 and Schedule 18 to ICTA 1988 do not apply.
23 Neither the Company nor any of the Subsidiaries has made or purported to
make any election under section 247 ICTA 1988.
24 Neither the Company nor any of the Subsidiaries has made or received or
purported to make or receive any surrender of the benefit of advance
corporation tax under section 240 ICTA 1988.
25 Neither the Company nor any of the Subsidiaries is liable to be assessed to
any Taxation under the provisions of section 190 TCGA 1992 in respect of
any chargeable gain realised prior to the date of this agreement by any
company other than a member of the Group.
26 Neither the Company nor any of the Subsidiaries has ever been a member of
any group of companies for any Taxation purpose other than of the Group.
27 No event or series of events has occurred which might cause the
disallowance of the carry forward of losses or excess charges or such that
any sections 245, 245A, 245B, 343 or 768 ICTA 1988 have applied or could
apply.
28 The Company will be entitled in respect of any qualifying distribution made
by it to a full set off of its corresponding payment of ACT under section
239(1) Taxes Act or in so far as there is no set off under section 239(1)
or in so far as any set off is restricted under section 239(3).
29 Neither the Company nor any of the Subsidiaries is (or would, if resident
in the United Kingdom for Taxation purposes, be) a close company within
section 414 ICTA 1988.
30 Since the Accounts Date:
66
30.1 Neither the Company nor any of the Subsidiaries has made or received any
distributions for any Taxation purposes:
30.2 Neither the Company nor any of the Subsidiaries has surrendered or claimed
any advance corporation tax under Chapter V Part VI ICTA 1988 or any losses
by way of group relief under Chapter IV Part X ICTA 1988.
31 In relation to VAT the Company and Saturn Global Network Services (UK)
Limited have made all necessary returns within the prescribed time limits,
provided all necessary information and documents to HM Customs and Excise,
paid all amounts due to the proper person and at all times kept and
preserved complete correct and up-to-date records, invoices and other
documents required for the purposes of VAT and are not liable and will not
(in respect of anything done before Completion be liable to any interest,
penalty or surcharge in respect of VAT) and have not been required by HM
Customs and Excise to give security under paragraph 4 of schedule 11 to the
VATA 1994.
32 All VAT payable upon the importation of goods and all duties of customs and
excise payable in respect of any assets (including trading stock) imported
or owned by the Company or Saturn Global Network Services (UK) Limited have
been paid in full.
33 No act or transaction has been effected in consequence whereof the Company
is or may be held liable for any VAT calculated by reference to the supply
of goods and services by any other company.
34 The business of the Company has been conducted in such a manner that the
Commissioners could not issue a direction under paragraph 2 of Schedule 1
VATA 1994.
35 The Company and Saturn Global Network Services (UK) Limited are not and
have not agreed to become an agent, manager or factor for the purposes of
sections 47 or 48 VATA 1994 of any person who is not resident in the United
Kingdom.
36 The Disclosure Letter contains full particulars of any election under
paragraph 2 Schedule 10 VATA 1994 to waive exemption from VAT in relation
to any land made by the Company or by any member or former member of any
group of companies of which the Company is or was registered for VAT
purposes and any agreement or other arrangement to which the Company is a
party whereby the Company has agreed not to waive exemption from VAT
pursuant to paragraph 2 Schedule 10 VATA 1994 in relation to any land.
37 The Disclosure Letter contains full details of all share schemes (including
those approved by the Inland Revenue and unapproved schemes) and of any
profit related pay schemes (including a copy of the rules thereof) which
the Company or any of the Subsidiaries operates or has operated or in which
its employees are or have been entitled to participate, together with
copies of any approvals issued by the Inland Revenue in respect of such
schemes, and nothing has been done to
67
prejudice the approved status of any such schemes which have at all times
been operated in accordance with any rules governing the scheme and
relevant Taxation legislation.
38 No transaction or event has occurred in consequence of which the Company or
any of the Subsidiaries is or may be held liable for any Taxation or
deprived of reliefs or allowances otherwise available to it or may be
otherwise held liable for any Taxation for which some other company or
person was primarily liable (whether by reason of any such other company
being or having been a member of the same group of companies or otherwise).
39 The Company and the Subsidiaries have complied with all statutory
provisions, rules, regulations, orders and directions and made all
necessary returns in relation to the collection and payment of customs
duties, excise duties and other charges having an equivalent effect and has
provided all necessary information and documentation and paid all amounts
due to HM Customs and Excise in relation to such charges within the
prescribed time limits.
40 In relation to the Company, the Disclosure Letter gives full details of all
determinations made under section 41A Taxes Management Act 1970 ("TMA"),
all directions reducing any amounts so determined pursuant to section 41B
TMA, all assessments to Taxation made by any tax authority and any
determinations under section 41A TMA and directions under section 41B TMA
which are subject to appeal or have not otherwise become final at the date
of this Agreement, and all payments of Taxation and claims for repayment of
Taxation made in respect of any period for which no assessment to Taxation
has been issued or become final.
41 Neither the Company nor any of the Subsidiaries is required to pay Taxation
levied, imposed or collected by any jurisdiction other than that in which
it is incorporated.
42 US Taxation
42.1 Saturn Global Network Services (USA), Inc. ("SGN Inc.") has duly filed, or
has had filed on its behalf, all Returns required to be filed by it, and
each such Return is true, complete and accurate in all respects. For the
purposes of this paragraph 42 of Part B of Schedule 4, "Return" means any
return, declaration, report, statement, computation or other document
required to be filed with a Taxation Authority (defined for the purposes of
this paragraph 42 as defined in the Taxation Deed) or provided to any
person in respect of Taxation.
42.2 SGN Inc. has paid, or has had paid on its behalf, all Taxation shown to
have become due pursuant to its Returns, and has paid, or has had paid on
its behalf, all other Taxation which has otherwise become due and payable.
42.3 SGN Inc. has adequately provided for, in its books of account and related
records, liability for all current Taxation which is not yet due and
payable.
68
42.4 No Taxation Authority has made any written claim or issued any deficiency
notice against SGN Inc. with respect to Taxation, and there is no action,
suit or proceeding currently pending regarding Taxation with respect to
SGN Inc.
42.5 No Return of SGN Inc. is being examined by, and no notification of
intention to examine such a Return has been received from, any Taxation
Authority.
42.6 No issue raised in writing by any Taxation Authority in connection with
any Return with respect to Taxation of SGN Inc. is currently pending.
42.7 No presently effective waiver or extension of any statute of limitation
with respect to Taxation has been given by or requested from SGN Inc.
42.8 SGN Inc. has not filed, nor has it had filed on its behalf, any consent
agreement under Section 341(f) of the Internal Revenue Code of 1986 (as
amended) of the United States of America ("IRC").
42.9 SGN Inc. has satisfied all federal, state, local and foreign withholding
requirements with respect to Taxation.
42.10 There is no ruling issued to SGN Inc., or closing agreement or gain
recognition agreement to which SGN Inc. is a party, concerning Taxation
from (or with) any Taxation Authority which will have any continuing
effect on SGN Inc., after the Completion Date.
42.11 Except for this Agreement and the Taxation Deed, there is no agreement
with any person or entity pursuant to which SGN Inc. would have any
obligation after Completion in respect of Taxation due before Completion.
42.12 SGN Inc. does not have an interest in any entity that is treated as a
partnership for federal income tax purposes.
42.13 SGN Inc. is a United States person within the meaning of Section
7701(a)(30) of the IRC.
42.14 SGN Inc. has not agreed to, nor is it required, to make an adjustment
under Section 481 of the IRC (or a comparable provision of state, local or
foreign tax law) by reason of a change of accounting method.
42.15 There is no lien or security interest in favour of any Taxation Authority
on any of the assets of SGN Inc. that has arisen in connection with any
failure (or alleged failure) to pay Taxation.
42.16 SGN Inc. has not made any payment, is not obliged to make any payment, and
is not a party to any agreement that could oblige it to make any payment
that would not be deductible under Section 280G of the IRC.
42.17 SGN Inc. never has been a member of an affiliated group filing a
consolidated federal income tax return.
69
42.18 SGN Inc. is not a successor to any other business entity as a result of a
merger, reorganisation, liquidation or similar transaction.
42.19 No asset of SGN Inc. (i) is property that is required to be treated as
owned by another person pursuant to the "safe harbor lease" provisions of
former Section 168(f)(8) of the IRC, (ii) is "tax-exempt use property"
within the meaning of Section 168(h) of the IRC; or (iii) directly or
indirectly secures any debt, interest on which is tax-exempt under Section
103(a) of the IRC.
42.20 SGN Inc. has never been a United States real property holding corporation
within the meaning of Section 897 of the IRC.
70
SCHEDULE 5
----------
Provisions for the protection of the Vendor
-------------------------------------------
1 REMEDIES
--------
1.1 A breach by the Vendor of any of the terms of this Agreement (including the
Warranties) save for a breach of clauses 3.2 and 3.3 shall, subject to the
provisions of clauses 2.5 and 5.2, give rise only to an action by the
Purchaser for damages and shall not entitle the Purchaser to rescind or
repudiate this Agreement.
1.2 Where the matter or default giving rise to a breach of any Warranty is
capable of remedy, the breach shall not entitle the Purchaser to damages or
other compensation unless written notice of the breach is given to the
Vendor and the matter or default is not remedied to the reasonable
satisfaction of the Purchaser within 30 days after the date on which such
notice is served.
2 Parties to claims
-----------------
2.1 Subject to the provisions of clause 17.2, the Warranties and the
undertakings and indemnities given by the Vendor under this Agreement and
the Taxation Deed shall be actionable only by the Purchaser and no party
other than the Purchaser shall be entitled to make any claim or take any
action whatsoever against the Vendor under this Agreement or the Taxation
Deed under or arising out of or in connection with the Warranties or those
undertakings or indemnities.
3 Exclusion of certain claims
---------------------------
3.1 No claim shall be made by the Purchaser against the Vendor and the Vendor
shall not have any liability to the Purchaser under this Agreement
(including the Warranties):
(a) in respect of any matter which is fully and fairly disclosed in, or
deemed to be disclosed by, the Disclosure Letter, and for this purpose
all documents attached to the Disclosure Letter shall be deemed to be
disclosed thereby but there shall be no deemed disclosure of any
document unless such document is so attached provided that nothing in
the Disclosure Letter shall apply to any of the covenants,
undertakings or obligations given by the Vendor or the Vendor
Guarantor in this Agreement; or
(b) in respect of any liability or other matter or thing if that
liability, matter or thing would not have arisen or occurred but for
an act, omission or transaction done, made or carried out:
(i) before Completion by any of the Group Companies or any of their
respective directors, employees or agents on the decision or
71
at the written request of the Purchaser, save in respect of any
action necessary to comply with any law, order, regulation or
requirement of any Taxation authority, binding on the Group on or
before Completion; or
(ii) after Completion by the Purchaser or any of the Group Companies
or any of their respective directors, employees or agents
otherwise than as required by law or pursuant to a legally
binding commitment of that Group Company created on or before
Completion or otherwise than in the ordinary course of business
as carried on immediately before Completion; or
(c) in respect of any matter resulting from a change in the accounting or
Taxation policies or practices of the Purchaser or any related company
of the Purchaser or any Group Company (including the method of
submitting taxation returns) introduced or having effect after
Completion; or
(d) in respect of any liability or other matter or thing to the extent
that it occurs as a result of or is otherwise attributable to:
(i) any legislation not in force at the date hereof or any change of
law or published administrative practice having retrospective
effect which comes into force after the date hereof; or
(ii) any increase hereafter in the rates of Taxation in force at the
date hereof; or
(iii) the Purchaser or any Group Company disclaiming any part of the
benefit of capital or other allowances against Taxation claimed
or proposed to be claimed on or before the date hereof where
details of such claim are contained in documents 1 and 41 of
Additional Volume 1 and documents 35 and 41 of Additional Volume
2 of the Data Room Bundle (as such term is defined in the
Disclosure Letter) with reference to this paragraph; or
(e) in respect of a liability which is contingent only unless and until
such contingent liability becomes an actual liability and is due and
payable, but this paragraph 3.1(e) shall not operate to avoid a claim
made with reasonable particularity in respect of a contingent
liability within the applicable time limits specified in paragraph 6;
and the Warranties shall be deemed to be qualified accordingly.
4 ALLOWANCES AGAINST CLAIMS
-------------------------
4.1 The Vendor shall not be liable under this Agreement in respect of any claim
if and to the extent that:
72
(a) allowance, provision or reserve is made in the Accounts specifically
in respect of the particular matter or particular thing giving rise to
the claim; or
(b) the loss in respect of which the claim is made is recovered under a
policy of insurance in force on the date of such loss; provided that
any costs and expenses incurred by the Purchaser in making such
recovery (including, without limitation, legal fees, accountants fees
and loss assessors fees) and the amount of any increase in insurance
premiums resulting from making a claim or claims against the insurers,
shall be deducted from the sum recovered under the policy of insurance
for the purposes of determining the extent to which such loss is
recovered.
4.2 ((a)) Where any Group Company or the Purchaser is or becomes entitled to
recover from any third party (including any fiscal or Taxation
authority or body) any sum in respect of any loss, damage or liability
which is or may be the subject of a claim against the Vendor under
this Agreement, the Purchaser shall, if so required by the Vendor and
subject to paragraph 4.2(b), take or procure the relevant Group
Company to take all such steps or proceedings as the Vendor may
reasonably require to enforce such recovery; provided always that
neither the Purchaser nor any Group Company shall be obliged to take
any steps which in the reasonable opinion of the Purchaser is likely
to have a material adverse effect upon the Group's business.
(b) All such steps or proceedings shall be taken at the Vendor's cost and
expense and the Purchaser shall not be under any obligation to take
them or procure them to be taken unless the Vendor shall have provided
an indemnity to the reasonable satisfaction of the Purchaser in
respect of all losses, liabilities, damages, claims, costs and
expenses thereby incurred.
(c) The Purchaser shall procure that the Vendor is provided as soon as
reasonably practicable with all such information and reports
concerning any such steps or proceedings taken by the Purchaser or the
relevant Group Company as the Vendor may from time to time reasonably
request.
(d) If any such sum as is referred to in paragraph 4.2(a) shall be
recovered by the Purchaser or any Group Company from the third party,
any claim by the Purchaser or any Group Company in respect of any
loss, damage or liability to which the sum relates shall be limited
(without prejudice to any other limitations on the liability of the
Vendor referred to in this schedule) to the amount (if any) by which
the amount of such loss, damage or liability exceeds the aggregate of:
(i) the sum recovered less all costs, charges and expenses incurred
by the Purchaser or any Group Company (as the case may be) in
recovering that sum from the third party and any Taxation
73
payable by the Purchaser or any Group Company on that sum; and
(ii) any sum or sums previously paid by the Vendor to the Purchaser or
any Group Company in respect of such Taxation or other loss,
damage or liability.
4.3 If the Vendor shall have made any payment in respect of a claim under the
Warranties and any Group Company shall receive a benefit or refund which
the Vendor can demonstrate was specifically related to such claim and not
taken into account in computing the liability of the Vendor in respect of
the claim and would have reduced the liability had this been so, the
Purchaser shall forthwith repay to the Vendor a sum corresponding to such
benefit or refund as the case may be.
5 THIRD PARTY CLAIMS
------------------
5.1 The Vendor shall be entitled to require the Purchaser (in the name of any
Group Company if the Vendor so requests) or any Group Company at the
expense of the Vendor to take all such reasonable steps or proceedings as
the Vendor may consider necessary in order to avoid, dispute, resist,
mitigate, compromise, defend or appeal against any relevant third party
claim (that is to say any claim by a third party against any Group Company
which will or may give rise to a claim under the Warranties)
provided that:
(a) the Vendor agrees in writing to be solely obligated to satisfy and
discharge such claim and to properly indemnify the Purchaser and/or
the relevant Group Company against all damages, losses, claims,
liabilities, costs and expenses suffered or incurred in connection
with the taking of such steps or proceedings;
(b) the defence, comprise or settlement of such claim will not in the
reasonable judgement of the Purchaser have any continuing material
adverse affect on the business of the Purchaser and/or the relevant
Group Company; and
(c) the Vendor provides the Purchaser with reasonable evidence of the
ability of the Vendor to satisfy the full amount of any adverse
monetary judgement that may result,
(collectively the "Litigation Conditions"). In the event that the
Litigation Conditions cease to be satisfied, the Vendor's right to require
the Purchaser or any Group Company to take all such steps or procedures
shall terminate until such Litigation Conditions are satisfied.
5.2 The Purchaser shall act or shall procure that the relevant Group Company
shall act in accordance with any such requirements subject to the Purchaser
and/or the
74
Group Company being properly indemnified by the Vendor to the reasonable
satisfaction of the Purchaser against all reasonable costs and expenses
incurred in connection with the taking of such steps or proceedings.
5.3 For the purpose of enabling the Vendor to avoid, dispute, resist, mitigate,
compromise, defend or appeal against any relevant third party claim or to
decide what steps or proceedings should be taken in order to do so in
accordance with paragraph 5.1 and subject to satisfaction of the Litigation
Conditions, the Purchaser shall:
(a) give notice to the Vendor within 14 days of any relevant third party
claim or any circumstance giving or likely to give rise to a relevant
third party claim coming to its notice or to the notice of any Group
Company;
(b) give the Vendor or its duly authorised representatives reasonable
access to the personnel of the Purchaser and/or the relevant Group
Company (as the case may be) and to any premises, chattels, accounts,
documents and records which are relevant to such claim and are within
the power, possession or control of the Purchaser and/or the relevant
Group Company ("relevant assets") to enable the Vendor and its duly
authorised representatives to investigate the claim and to examine and
take copies or photographs of the relevant assets at their own
expense; and
(c) if the Vendor so requests within 30 days of the receipt from the
Purchaser of notice of a third party claim, delegate entirely to it
the conduct of any proceedings of whatsoever nature arising in
connection with the third party claim and, in that event, give or
cause to be given to the Vendor all such assistance as they may
reasonably require in disputing the claim and instruct such solicitors
or other professional advisers as the Vendor may nominate to act in
accordance with the Vendor's instructions on their behalf or on behalf
of the relevant Group Company.
5.4 The Vendor shall reimburse to the Purchaser or the relevant Group Company
(as the case may be) all reasonable costs, charges and expenses incurred by
it in complying with its obligations under paragraphs 5.1 to 5.3 inclusive.
5.5 The Vendor, if it shall have assumed the conduct of any proceedings arising
in connection with a third party claim pursuant to paragraph 5.3(c), shall
not consent to a compromise or settlement of or the entry of any judgement
arising from any such third party claim without the prior written consent
of the Purchaser (such consent not to be unreasonably withheld or delayed)
if such compromise or settlement (i) commits the Purchaser or any Group
Company to take or to forbear to take any action (ii) does not provide for
a complete release by such third party of the Purchaser and the Group
Companies or (iii) includes any statement as to or in admission of fault,
wrong doing, guilt, culpability, liability or failure to act by or on
behalf of the Purchaser or the relevant Group Company and, the Purchaser
shall not (and shall procure that the relevant Group Company shall not)
accept or pay or compromise in respect of any such third
75
party claim. If the Vendor does not assume the conduct of any proceedings
arising in connection with a third party claim, the Purchaser or, as the
case may be, the relevant Group Company shall have the right to defend such
a third party claim with solicitors of its choice and to settle any third
party claim.
6 TIME LIMITS
-----------
6.1 No claim shall be brought by the Purchaser or any Group Company for breach
of the Warranties or any other term of this Agreement, other than in
respect of the covenants given by the Vendor or the Vendor Guarantor in the
Agreement save for those covenants set out in clauses 2.3, 2.6, 2.7, 2.8,
5.1, 6.1, 6.2, 8.7 and 21, or under the Taxation Deed unless notice in
writing of such claim (specifying in reasonable detail with supporting
evidence the event, matter or default which gives rise to the claim and an
estimate of the amount claimed) has been given to the Vendor:
(a) in the case of a claim under the Taxation Deed or under any of the
Taxation Warranties, within 7 years after Completion; or
(b) in any other case, within two years after Completion
provided that the provisions of paragraph 6.1(b) shall not apply:
(i) in the case of fraud or wilful non-disclosure by the Vendor of a
matter which would otherwise represent a breach of a representation or
Warranty; and
(ii) in the case of a claim made pursuant to the provisions of the Warranty
set out in paragraphs 1.1, 1.2, 4.1, 4.3 and 22 and the second
sentence of paragraph 4.2 of schedule 4.
6.2 ((a)) Any such claim (other than a claim made under the Taxation Deed) that
may have been made shall (if it has not been previously satisfied,
settled or withdrawn) be deemed to have been waived or withdrawn on
the expiration of 365 Relevant Days after the date it was made unless
court proceedings in respect of it shall then have been commenced
against the appropriate parties. For the purposes of the foregoing,
"Relevant Day" shall mean a day which is (i) a day on which the
aggregate amount of all successful claims and pending claims exceeds
the cumulative threshold, or (ii) a day after the second anniversary
of the Completion Date.
(b) For the purposes of paragraph 6.2(a) court proceedings shall not be
deemed to have been commenced unless they have been both issued and
served on the appropriate parties.
7 THRESHOLDS
----------
7.1 For the purposes of paragraphs 7.2 and 7.3:
76
(a) a claim together with any Related Claims (as hereinafter defined)
shall be regarded as material if the amount of the claim and any
Related Claims exceeds the individual threshold. For the purposes of
this paragraph "Related Claims" shall mean all claims arising out of
or relating to the same events, acts, omissions, transactions,
defaults, liabilities, circumstances or facts as the claim provided
that for these purposes no cost, damage, expense, loss or liability in
respect of which a claim or claims are made shall be counted more than
once;
(b) the amount of a claim shall be taken to be the liability which the
Vendor would have in respect of it in the absence of any exclusions or
restrictions under those paragraphs but taking account of all
exclusions and restrictions of liability and allowances and set-offs
provided for and all repayments made under the preceding provisions of
this schedule 5; and
(c) "the individual threshold" means(pound)75,000 and "the cumulative
threshold" means(pound)600,000.
7.2 The Vendor shall not have any liability in respect of any claim made under
or in respect of any of the terms of this Agreement other than, in respect
of the covenants, obligations and undertakings given by the Vendor or the
Vendor Guarantor in the Agreement, unless (a) the amount of the claim
(together with any applicable Related Claims) is material; and (b) the
amount of that claim (together with any applicable Related Claims) when
added to the aggregate amount of all other material claims (together with
any applicable Related Claims) exceeds the cumulative threshold.
7.3 Notwithstanding that as regards any claim or claims the conditions in
sub-paragraphs (a) and (b) of paragraph 7.2 are satisfied, the Vendor's
liability in respect of all such claims shall be limited (subject always to
paragraph 8) to the amount by which the total amount of all material claims
(together with any applicable Related Claims) exceeds the cumulative
threshold.
7.4 References to "(pound)" in this paragraph 7 shall, in relation to any
relevant claim made in a currency other than pounds sterling, be construed
as references to the equivalent in pounds sterling of such other currency
at the date the claim is made.
8 AGGREGATE MAXIMUM
-----------------
8.1 Subject to the provisions of paragraph 8.2, the total liability of the
Vendor in respect of all claims under or in respect of any of the terms of
this Agreement, other than in respect of the covenants, obligations and
undertakings given by the Vendor or the Vendor Guarantor in the Agreement,
shall not exceed a sum equal to (pound)4,500,000.
8.2 The provisions of paragraph 8.1 shall not apply:
77
(a) to claims made under the Taxation Warranties or the Warranty set out
in paragraphs 1.1, 1.2, 4.1, 4.3 and 22, the second sentence of
paragraph 4.2 of schedule 4; and
(b) in the case of fraud or wilful non-disclosure by the Vendor of a
matter which would otherwise represent a breach of a representation or
Warranty,
provided that the total aggregate liability of the Vendor in respect of all
such claims as are referred to in sub-paragraph (a) above (together with
any claims which may otherwise be brought under this Agreement and/or the
Taxation Deed other than as referred to in sub-paragraph (b) or which are
made pursuant to the provisions in the covenants in clause 8) shall not
exceed the amount of the Purchase Price.
9 NO DUPLICATION OF LIABILITY
---------------------------
9.1 The Purchaser hereby agrees with the Vendor that, in respect of any matter
which may give rise to a liability under this Agreement (including the
Warranties) and also under the Taxation Deed:
(a) such liability shall not be met more than once; and
(b) any liability with respect to such matter under the Taxation Deed
shall be deemed to be satisfied by the satisfaction of the liability
with respect to such matter under this Agreement and vice versa.
10 SUCCESSFUL CLAIMS DEEMED TO CONSTITUTE A REDUCTION IN PURCHASE PRICE
--------------------------------------------------------------------
10.1 The satisfaction by the Vendor of any claim under this Agreement (including
the Warranties) shall be deemed to constitute a reduction in the Purchase
Price.
78
SCHEDULE 6
----------
Schedule of Licences
--------------------
REGION LOCATION/ROUTES NATURE OF LICENCE
ASIA Japan Special type 2 carrier licence
Hong Kong Public Non-exclusive
Telecommunications Service Licence
Singapore Leased circuit resale licence
USA International FCC 2141TC-97-003 (limited global
facilities resale services)
International FCC 2141TC-96-549 (limited global
resale services)
EUROPE United Kingdom Class licence to run branch systems
granted under Section 7 of the
Telecommunications Xxx 0000
79
SIGNED by M.A.S. Xxxxxx )
for and on behalf of )
MARSHALLS 106 LIMITED ) /s/ M.A.S. Xxxxxx
in the presence of: X.X. Xxxxx ) ..............................
Director
SIGNED by M.J.W. Potter )
for and on behalf of )
MARSHALLS FINANCE LIMITED ) /s/ M.J.W. Potter
in the presence of: X.X. Xxxxx ) ..............................
Director
SIGNED by Xxxxxxx X. Xxxxxx )
for and on behalf of )
INTERNATIONAL EXCHANGE )
NETWORKS, LTD. ) /s/ Xxxxxxx X. Xxxxxx
in the presence of: ) ..............................
Duly authorised officer
SIGNED by Xxxxx Xxxxx )
for and on behalf of )
IPC INFORMATION SYSTEMS, INC. ) /s/ Xxxxx Xxxxx
in the presence of: ) ..............................
Duly authorised officer
80
EXHIBIT A
DATED 18 December 1998
--------------------------------
MARSHALLS 106 LIMITED (1)
MARSHALLS FINANCE LIMITED (2)
INTERNATIONAL EXCHANGE NETWORKS LTD (3)
AND
IPC INFORMATION SYSTEMS, INC. (4)
--------------------------------
TAXATION DEED
--------------------------------
XXXXXX XXXX
London
THIS DEED is made on 18 December 1998 BETWEEN:
(1) MARSHALLS 106 LIMITED a company incorporated in England and Wales with
registered number 1496819 whose registered office is at Lloyds
Xxxxxxxx, 0 Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX ("THE COVENANTOR");
(2) MARSHALLS FINANCE LIMITED a company incorporated in England and Wales
with registered number 2230414 whose registered office is at Lloyds
Xxxxxxxx, 0 Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX ("THE VENDOR GUARANTOR");
(3) INTERNATIONAL EXCHANGE NETWORKS LTD a company incorporated in the
state of Delaware, USA whose principal place of business is at Wall
Street Plaza, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, XXX ("THE
PURCHASER");
(4) IPC INFORMATION SYSTEMS, INC. a company incorporated in the state of
Delaware, USA whose principal place of business is at Wall Street
Plaza, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, XXX ("THE PURCHASER
GUARANTOR")
WHEREAS this Deed is entered into pursuant to an agreement dated 7 August 1998
herewith between the Covenantor, the Vendor Guarantor, the Purchaser and the
Purchaser Guarantor for the sale and purchase of the issued share capital of
Saturn Global Network Services Holdings Limited, as amended from time to time
("THE AGREEMENT").
IT IS HEREBY AGREED as follows:
1 INTERPRETATION
--------------
1.1 Words and expressions defined in clause 1.1 of the Agreement shall
(unless otherwise defined herein or the context otherwise requires)
have the same meaning for the purposes of this Deed.
1.2 In this Deed:
(a) "ACTUAL TAXATION LIABILITY" means a liability to make an actual
payment of or of an amount in respect of Taxation whether or not
such Taxation is also or alternatively chargeable against or
attributable to any other person;
(b) "CLAIM" means any assessment, notice, demand or other document
issued or action taken by or on behalf of any Taxation Authority
from which it appears that any one or more of the Company and the
Subsidiaries are subject to, or are sought to be made subject to,
any Taxation Liability;
(c) "DEEMED TAXATION LIABILITY" means, in any of the circumstances
set out in column (1) of the schedule hereto, an amount
determined in
1
accordance with the relevant provisions set out in column (2) of
that schedule;
(d) "EVENT" means any event, occurrence, transaction, act or omission
(or any deemed event, occurrence, transaction, act or omission)
including for the avoidance of doubt the sale and purchase of the
Sale Shares pursuant to the Agreement;
(e) "RELIEF" means any loss, allowance, exemption, set-off,
deduction, credit, right to repayment or other relief relating to
any Taxation or to the computation of income, profits or gains
for the purposes of any Taxation;
(f) "TAXATION" means:
(i) any form of tax, levy, duty, charge, impost, withholding or
other amount whenever created or imposed and whether of the
United Kingdom, the United States of America (or any state
thereof) or elsewhere and whether or not the Company or any
of the Subsidiaries is primarily liable therefor, payable to
or imposed by any Taxation Authority and includes, without
limitation, income tax (including income tax or amounts
equivalent to or in respect of income tax required to be
deducted or withheld from or accounted for in respect of any
payment), corporation tax, advance corporation tax, capital
gains tax, capital transfer tax, inheritance tax, stamp
duty, stamp duty reserve tax, capital duty, value added tax,
development land tax, withholding tax, customs and excise
duties, national insurance and social security and other
similar liabilities or contributions and any other taxes,
levies, duties, charges, imposts or withholdings similar to,
corresponding with, or replacing or replaced by any of the
foregoing; and
(ii) all surcharges, charges, interest, penalties, and fines,
incidental or relating to any Taxation falling within clause
1.2(f)(i);
(g) "TAXATION AUTHORITY" means the Inland Revenue, H.M. Customs &
Excise or any other revenue, customs, fiscal, governmental,
statutory, state, provincial, local governmental or municipal
authority, body or person, whether of the United Kingdom, the
United States of America (or any state thereof) or elsewhere;
(h) "TAXATION LIABILITY" means an Actual Taxation Liability or a
Deemed Taxation Liability or any other liability of or loss to
the Company falling within clause 2.1 hereof;
(i) "WARRANTY CLAIM" means a claim under the taxation warranties
contained in Part B of Schedule 4 of the Agreement;
(j) "UNAVAILABILITY" means, in relation to a Relief, the reduction,
modification, claw-back, counteraction, disallowance or
cancellation of
2
or failure to obtain that Relief, or the amount of any Relief
being less than the amount specified in column (1) of the
schedule hereto, and "unavailable" shall be construed
accordingly.
1.3 In determining for the purposes of this Deed whether a charge on or
power to sell, mortgage or charge any of the shares or assets of any
one or more of the Company and the Subsidiaries exists at any time,
the fact that any Taxation is not yet payable or may be paid by
instalments shall be disregarded and such Taxation shall be treated as
becoming due and the charge or power to sell, mortgage or charge as
arising on the date of the transfer of value or other Event on or in
respect of which it becomes payable or arises.
1.4 The covenants contained in this Deed apply where the liability in
question arises as a result of one or more Events or the combined
effect of more than one Event, where one such Event occurred on or
before Completion or partly before and partly on or after Completion
and the Event or Events occurring wholly or partly before Completion
took place outside, and the Event or Events occurring wholly or partly
after Completion took place within, the ordinary course of business of
the Company or its Subsidiaries.
2 COVENANT BY THE COVENANTOR
--------------------------
2.1 Subject to the provisions of clause 3 hereof, the Covenantor hereby
covenants with the Purchaser to pay to the Purchaser an amount or
amounts equal to:
(a) any Actual Taxation Liability of any one or more of the Company
and the Subsidiaries arising as a result of, in respect of or by
reference to:
(i) any Event occurring or deemed for the purposes of any
Taxation to occur on or before Completion; or
(ii) any income, profits or gains earned, accrued or received or
deemed for the purposes of any Taxation to have been earned,
accrued or received on or before or in respect of any period
ending on or before the date of Completion; or
(iii) its membership at any time of the same group of companies
as the Covenantor for the purposes of any Taxation; or
(iv) Saturn Global Network Services (USA), Inc. being severally
liable for any Taxation of any consolidated group (or any
member thereof) of which Saturn Global Network Services
(USA), Inc. is at Completion, or was prior to Completion, a
member pursuant to United States of America Treasury
Regulations Section 1.1502-6 or any analogous state or local
tax provision;
(b) any Deemed Taxation Liability of any one or more of the Company
and the Subsidiaries;
3
(c) any liability of any one or more of the Company and the
Subsidiaries to pay or repay any amount under any agreement or
arrangements relating to the surrender of group relief or advance
corporation tax entered into on or before the date of Completion;
(d) any Taxation arising in respect of or in connection with any
amounts paid or payable pursuant to or otherwise in connection
with this Deed;
(e) any costs and expenses payable by the Purchaser or any one or
more of the Company and the Subsidiaries in connection with any
such liability or amount as is referred to in any of clauses
2.1(a) to 2.1(d) inclusive or 2.5 hereof or with any claim in
respect thereof or in taking or defending any action under clause
6 or clause 8 of this Deed.
2.2 Any payments made pursuant to clause 2.1 or clause 2.5 hereof shall,
so far as possible, be treated as an adjustment to the consideration
paid by the Purchaser for the issued share capital of the Company
under the Agreement.
2.3 All sums payable by the Covenantor under the covenants contained in
this Deed shall be paid free and clear of all deductions or
withholdings or rights of counterclaim or set-off unless the deduction
or withholding is required by law.
2.4 If the Covenantor is required by law to make any deduction or
withholding from any payment under this Deed, the sum due from the
Covenantor in respect of such payment shall be increased to the extent
necessary to ensure that after the making of such deduction or
withholding the Purchaser receives and retains a net sum equal to the
sum it would have received had no deduction or withholding been
required to be made.
2.5 Without prejudice to the generality of the foregoing, the Covenantor
hereby covenants with the Purchaser to pay to the Purchaser an amount
or amounts equal to:
(i) any liability to Taxation of any one or more of the Company and
the Subsidiaries arising as a result of, in respect of or by
reference to:
(a) any failure by any one or more of the Company and the
Subsidiaries duly and punctually to register for VAT prior
to Completion and/or account for VAT in respect of any
period beginning prior to Completion in accordance with
relevant law and Taxation Authority practice in the Republic
of Ireland, Switzerland or elsewhere; and/or
(b) any failure by any one or more of the Company and the
Subsidiaries duly and punctually to pay to the Inland
Revenue Department of New Zealand, or otherwise to comply
with relevant law and Taxation Authority practice in
relation to, the Goods and Services Tax of New Zealand prior
to Completion; and/or
4
(c) any appeal, instituted before Completion, against any
ruling, assessment, notice, demand or other document issued
or action taken by or on behalf of any Taxation Authority to
the effect that the Goods and Services Tax of New Zealand is
payable by one or more of the Company and the Subsidiaries;
and/or
(ii) any costs and expenses incurred before Completion but not paid by
Completion in respect of the appeal against the Notice of
Determination issued by the Inland Revenue in the accounting
period current at Completion, and any costs and expenses
reasonably incurred after Completion in discontinuing such
appeal, by any one or more of the Company and the Subsidiaries;
and Schedule 5 to the Agreement shall not apply to this clause 2.5.
3 LIMITATIONS
-----------
The indemnity in clause 2.1 shall not apply to any Taxation Liability:
(a) to the extent that a provision or reserve was made therefor in
the Accounts or the Auditors confirm that it was taken into
account in the preparation of the Accounts;
(b) for which any one or more of the Company and the Subsidiaries
are, or may become, liable as a result of any Event in the
ordinary course of business (which shall include the disposal of
a capital asset having a value of not more than (pound)20,000)
after the Accounts Date;
(c) to the extent that such Taxation Liability or Claim arises or is
increased as a result of any provision or reserve in the Accounts
being insufficient by reason of any increase in rates of Taxation
made after the date of the Agreement and not announced on or
before the date of the Agreement;
(d) to the extent that such Taxation Liability arises or is increased
as a result only of any change in the law or judicial
interpretation of the law announced and enacted or arising after
the date of the Agreement applied with retrospective effect;
(e) to the extent that such Taxation Liability arises or is increased
as the result of the withdrawal or change in the terms of any
practice of general application previously published by the
Inland Revenue (including, for the avoidance of doubt, Inland
Revenue guidance notes and Inland Revenue manuals) or any other
Taxation Authority (whether or not such change purports to be
effective retrospectively, in whole or in part);
(f) to the extent that such Taxation Liability arises or is increased
as the result of any act or omission effected by any one or more
of the Company and the Subsidiaries after Completion other than
at the request of the Covenantor, or pursuant to a legally
binding obligation entered
5
into before Completion, or where such act or omission is required
by law and otherwise than in the ordinary course of business of
the Company or relevant Subsidiary where the Company or the
Subsidiary knew or ought reasonably to have known that such act
or omission would give rise to the Taxation Liability in
question;
(g) to the extent that such Taxation Liability arises as a result of
any change on or after Completion in any accounting policy, any
Taxation reporting or computation practice (including the basis
of preparation and method of computation of any Taxation
returns), of the Purchaser or any one or more of the Company and
the Subsidiaries other than:
(i) in the case of any such accounting policy which, at the time
such accounting policy was adopted for the purposes of
preparing any relevant accounts did not accord with
generally accepted accounting principles in the relevant
jurisdiction, any change necessary to bring such accounting
policy into line with such principles,
(ii) in the case of any Taxation reporting or computation
practice, such change was adopted to comply with any
requirement having the force of law or any Taxation
Authority practice;
(h) to the extent that such Taxation Liability arises as a result of
the Purchaser or any one or more of the Company and the
Subsidiaries failing to submit the returns, self-assessment
and/or computations required to be made by them or not submitting
such returns and computations within the appropriate time limits
or submitting such returns and computations otherwise than on a
proper basis, in each case after Completion, other than to the
extent that such Taxation Liability arises as a result of matters
arising under clause 2.5 (i) (a), or the Covenantor's conduct of
any Claim pursuant to clause 6 or its control of the Company's
tax returns pursuant to clause 8;
(i) to the extent that such Taxation Liability would not have arisen
but for:
(i) the making of or any revision to a claim, election,
surrender or disclaimer, or the giving of a notice or
consent, under the provisions of any enactment or regulation
relating to Taxation, in each case after Completion and by
the Purchaser or any one or more of the Company and the
Subsidiaries, without the prior written consent of the
Covenantor (not to be unreasonably withheld or delayed); or
(ii) the failure or omission on the part of the Purchaser or any
one or more of the Company and the Subsidiaries, without the
prior written consent of the Covenantor, to make any such
valid claim, election, surrender or disclaimer, or to give
any such notice or consent under the provisions of any
enactment or regulation
6
relating to Taxation, in circumstances where the making or
giving of which was taken into account in the preparation of
the Accounts and in each case where details of such claim,
election, surrender, disclaimer, notice or consent were
contained in documents 1 and 41 of Additional Volume 1 and
documents 35 and 41 of Additional Volume 2 in the Data Room
Bundle;
(j) to the extent that such Taxation Liability arises under Part XV
of the Value Added Tax Regulations 1995 by reason of any Event
occurring after Completion where the Disclosure Letter sets out
in full with reference to this subclause details of any capital
items as described in Regulation 113 owned or occupied by the
Company or any of the Subsidiaries prior to Completion;
(k) to the extent that the amount for which the Covenantor is liable
under this Deed does not exceed an amount for which the
Covenantor is liable under the Agreement in respect of the same
Taxation Liability, and such liability has been fully satisfied;
(l) to the extent that any one or more of the Company and the
Subsidiaries or any associated company (as defined in section 416
ICTA 1988) of the Company and the Subsidiaries has received an
amount in respect of such Taxation Liability from any Third Party
(as defined in clause 4 - Rebate);
(m) the Covenantor has satisfied such Taxation Liability by reason of
being liable for such Taxation under sections 767A or 767AA ICTA
1988.
4 REBATE
------
4.1 The Purchaser undertakes that if, after the Covenantor has paid in
full any amount due hereunder in respect of any Taxation Liability,
the Purchaser or any one or more of the Company and the Subsidiaries
is or becomes entitled to receive or receive from any Taxation
Authority a payment in respect of such Taxation Liability, the
Purchaser shall notify the Covenantor of such entitlement or recovery
as soon as reasonably practicable and, where recovery has not been
effected at the date of notification, shall (if requested by and at
the expense of the Covenantor and upon the Covenantor indemnifying the
Company, the Subsidiaries and the Purchaser to their reasonable
satisfaction against all liabilities, obligations, losses, including
any additional Taxation Liability, interest, penalties, costs, damages
and expenses which may be thereby incurred and providing them with
reasonable evidence of the ability of the Covenantor to satisfy the
amount of such indemnity) take, or cause the Company to take, such
action as the Covenantor shall reasonably request to enforce such
recovery against the person in question (keeping the Covenantor fully
informed of the progress of any action taken) and the Purchaser shall
repay to the Covenantor a sum equal to the lesser of:
7
(a) the amount of any payment so received (less such costs and
expenses of recovery); and
(b) the aggregate amount paid by the Covenantor hereunder in respect
of the Taxation Liability in question.
Any amount of the payment not so paid to the Covenantor shall be
carried forward and set off against payment in respect of any amount
payable in respect of any claims hereunder.
4.2 Any payment required to be made by the Purchaser pursuant to clause
4.1 shall be made where the Purchaser or any one or more of the
Company and the Subsidiaries receive a payment within 10 business days
of the receipt thereof.
4.3 Any sum not paid by the Purchaser on the due date of payment specified
in clause 4.2 shall bear interest (which shall accrue from day to day
after as well as before any judgment for the same) at a rate equal to
the rate of 2 per cent per annum above the base rate of The Royal Bank
of Scotland plc from the due date to and including the day of actual
payment of such sum. Such interest shall be paid 5 business days after
the demand of the Covenantor.
5 VENDOR AND PURCHASER GUARANTEE
------------------------------
5.1 ((a)) In consideration of the Purchaser and the Purchaser Guarantor
entering into this Deed, the Vendor Guarantor hereby guarantees
to the Purchaser the due and punctual performance of all the
obligations and liabilities of the Covenantor under or otherwise
arising out of or in connection with this Deed and undertakes to
keep the Purchaser fully indemnified against all liabilities,
losses, proceedings, claims, damages, costs and expenses of
whatever nature which the Purchaser may suffer or incur as result
of any failure or delay by the Covenantor in the performance of
any of such obligations and liabilities.
(b) If any obligation or liability of the Covenantor expressed to be
the subject of the guarantee contained in this clause ("the
Vendor Guarantee") is not or ceases to be valid or enforceable
against the Covenantor (in whole or in part) on any ground
whatsoever (including, but not limited to, any defect in or want
of powers of the Covenantor or irregular exercise thereof or any
lack of authority on the part of any person purporting to act on
behalf of the Covenantor or any legal or other limitation,
disability or incapacity, or any change in the constitution of,
or any amalgamation or reconstruction of, or the bankruptcy,
liquidation, administration or insolvency of the Covenantor), the
Vendor Guarantor shall nevertheless be liable to the Purchaser in
respect of that purported obligation or liability as if the same
were fully valid and enforceable and the Vendor Guarantor were
the principal debtor in respect thereof.
(c) The liability of the Vendor Guarantor under the Vendor Guarantee
shall not be discharged or affected in any way by:
8
(i) the Purchaser compounding or entering into any compromise,
settlement or arrangement with the Covenantor, any
co-guarantor or any other person; or
(ii) any variation, extension, increase, renewal, determination,
release or replacement of this Deed, whether or not made
with the consent or knowledge of the Vendor Guarantor; or
(iii) the Purchaser granting any time, indulgence, concession,
relief, discharge or release to the Covenantor, any
co-guarantor or any other person or realising, giving up,
agreeing to any variation, renewal or replacement of,
releasing, abstaining from or delaying in taking advantage
of or otherwise dealing with any securities from or other
rights or remedies which it may have against the Covenantor,
any co-guarantor of any other person; or
(iv) any other matter or thing which, but for this provision,
might exonerate or affect the liability of the Vendor
Guarantor.
(d) The Vendor Guarantee is in addition to any other security or
right now or hereafter available to the Purchaser and is a
continuing security notwithstanding any liquidation,
administration, insolvency or other incapacity of the Covenantor
or the Vendor Guarantor.
5.2 Clause 5.1 shall be deemed to be repeated herein with the substitution
of:
(a) "Covenantor" for "Purchaser";
(b) "Purchaser" for "Covenantor";
(c) "Vendor Guarantor" for "Purchaser Guarantor";
(d) "Purchaser Guarantor" for "Vendor Guarantor"; and
(e) "Purchaser Guarantee" for "Vendor Guarantee".
5.3 (a) The Vendor Guarantor represents and warrants to the Purchaser
that this Deed constitutes legal, valid and binding obligations
of the Vendor Guarantor enforceable in accordance with its terms.
(b) The Purchaser Guarantor represents and warrants to the Covenantor
and the Vendor Guarantor that this Deed constitutes legal, valid
and binding obligations of the Purchaser Guarantor enforceable in
accordance with its terms.
6 CONDUCT OF CLAIMS
-----------------
6.1 If the Purchaser or the Company shall become aware of any Claim which
is likely to give rise to a liability on the Covenantor hereunder, the
Purchaser shall
9
give notice thereof or procure that notice thereof is given within 15
days of the Purchaser or the Company becoming aware of such Claim to
the Covenantor in accordance with clause 13. Failure to provide such
notice to the Covenantor within such time limit shall not relieve the
Covenantor of any liability hereunder save only to the extent that
failure to give such notice within such time limit has increased the
amount of the liability of the Covenantor hereunder in respect of the
Claim.
6.2 In the case of a Claim of which the Covenantor does not already have
the conduct pursuant to clause 8, the Purchaser shall take or shall
procure that the Company shall take such action as the Covenantor may
by written notice given to the Purchaser reasonably request to cause
the Claim to be withdrawn or to dispute, resist, appeal against,
compromise or defend the Claim and any determination in respect
thereof or to apply to postpone (so far as legally possible) the
payment of any Taxation pending the determination of any appeal but
subject to the Purchaser and the Group being indemnified to their
reasonable satisfaction by the Covenantor (and provided with
reasonable evidence of the ability of the Covenantor to satisfy the
amount of the Taxation which is the subject of such Claim and such
indemnity) against all liabilities, obligations, losses (including any
additional Taxation Liability), interest, penalties, costs, damages
and expenses which may be thereby incurred by the Purchaser or the
Group, and Provided that:
(a) any request made by the Covenantor pursuant to this clause 6.2
shall be made within a reasonable time of receipt by the
Covenantor of any notice given by the Purchaser to the Covenantor
in accordance with clause 6.1 and if, on the expiry of a period
of 10 business days commencing on the date of service on the
Covenantor of such notice, the Covenantor shall not have given to
the Purchaser notice of the Covenantor's intentions in respect of
the Claim or shall not have provided satisfactory indemnities and
reasonable evidence in accordance with this clause 6.2, the
Purchaser and the Group shall be entitled to satisfy or settle or
deal with the Claim on such terms as they shall think fit but
without prejudice to their rights and remedies under this Deed;
(b) the Purchaser and the Group shall not be obliged to comply with
any request of the Covenantor which involves contesting any
assessment for Taxation before any court or any other appellate
body unless they have been advised in writing by tax counsel
instructed by agreement between the Purchaser and the Covenantor
at the Covenantor's expense that an appeal against the assessment
for Taxation in question will, on the balance of probabilities,
be won by the Purchaser or, as the case may be, the Group;
(c) neither the Purchaser nor the Group shall be obliged to take any
action which is likely to increase the amount of Taxation which
is the subject of the Claim or the future Taxation Liability of
any company in the group of companies of which the Purchaser is
for the time being a member nor shall the Covenantor make any
settlement or compromise of the Claim or
10
agree any matter in the conduct of the Claim which is likely to
have such effect without the prior written consent of the
Purchaser such consent not to be unreasonably withheld or
delayed;
(d) the Covenantor shall keep the Purchaser fully informed of all
relevant matters and shall promptly forward or procure to be
forwarded to the Purchaser copies of all relevant correspondence
and other relevant information and documentation;
(e) all communications written or otherwise relating to the Claim
which are to be transmitted to a Taxation Authority shall first
be submitted to the Purchaser for approval and shall only be
finally transmitted if such approval is given, such approval not
to be unreasonably withheld or delayed;
(f) the Purchaser or the Company or any Subsidiary may without
reference to the Covenantor satisfy or settle or deal with the
Claim on such terms as they shall reasonably think fit but
without prejudice to their rights and remedies under the Deed if
the Covenantor serves a notice on the Purchaser pursuant to this
clause 6.2 to the effect that in relation to any such Claim the
Covenantor does not wish to take up or continue the conduct
thereof, or if a period of 10 business days has expired following
the service of notice (other than a notice under clause 6.1) by
the Purchaser or the Company or any Subsidiary on the Covenantor
to the effect that the Covenantor is not properly and effectively
conducting the Claim where by the expiry of that period the
Covenantor has not taken steps properly and effectively so to
conduct the Claim, or if in the reasonable opinion of the
Purchaser the Covenantor or the Company has committed any acts or
omissions prior to Completion which constitute fraud or wilful
default.
6.3 Whether or not the Covenantor exercises its right to request the
Purchaser to take action pursuant to clause 6.2, it shall supply the
Purchaser and the Group free of charge with all relevant information,
books, papers and other documents in its possession or under its
control and shall give or procure the giving (as appropriate) of such
statements and other reasonable co-operation as the Purchaser and the
Group may reasonably request for the purposes of this Deed.
7 ADDRESS FOR SERVICE
-------------------
7.1 Each of the Purchaser and the Purchaser Guarantor hereby irrevocably
authorises and appoints the Purchaser's Solicitors (or such other
person or persons, being a firm of solicitors resident in England, as
the Purchaser or the Purchaser Guarantor (as the case may be) may
hereafter as regards itself by notice in writing to all the other
parties hereto from time to time substitute) to accept on its behalf
service of all legal process arising out of or connected with this Deed
and in the case of service to the Purchaser's Solicitors all
communications shall be marked for the attention of the Head of the
Business Law Department.
11
7.2 Service of such process on the person for the time being authorised
under clause 7.1 to accept it on behalf of the Purchaser or the
Purchaser Guarantor (as the case may be) shall be deemed to be service
of that process on the Purchaser or the Purchaser Guarantor (as the
case may be).
8 TAX RETURNS AND COMPUTATIONS
----------------------------
8.1 The Purchaser shall procure that:
(a) the Covenantor (or such professional advisers as the Covenantor
may select) shall have sole control over the preparing,
submitting, negotiating and agreeing of all matters relevant to
the Taxation position of the Company for any period ended on or
before the Accounts Date (the costs of which shall be borne by
the Covenantor);
(b) the Covenantor (or its advisers) shall be provided as soon as
reasonably practicable with any information received by the
Purchaser or the Company, or of which the Purchaser or the
Company otherwise becomes aware, which may be relevant to the
matters set out in clause 8.1(a) above, and with such assistance
(including assistance from such employees of the Purchaser and
the Company) as the Purchaser may reasonably agree and access to
such documents and records of, or relating to, the Company, as
the Covenantor (or its advisers) may reasonably require in
connection with such matters;
(c) the Company shall immediately sign such returns and make such
claims and elections and give such consents (including such
provisional or final claims to accept the surrender of losses or
other amounts eligible for surrender under Chapter IV of Part X
ICTA 1988 ("GROUP RELIEF"), consents to surrender Group Relief or
claims to set off or to accept the surrender of advance
corporation tax ("ACT") in respect of any period ended on or
before Completion) and comply with all procedural requirements in
respect of the making or giving of such returns, claims,
elections or consents as in each case the Covenantor may,
reasonably and properly, direct in writing provided that the
Covenantor shall give the Purchaser reasonable notice in advance
of any deadline for the making or giving of the same;
(d) the Covenantor shall keep the Purchaser fully informed of the
progress of its conduct of the tax affairs of the Company
pursuant to this clause 8.1, provide the Purchaser with copies of
all relevant correspondence and documents, and forthwith submit
in draft form to the Purchaser all relevant computations,
documents and correspondence (including without limitation the
draft tax computations) for comment and the Covenantor shall
consider all reasonable comments or suggestions made by the
Purchaser or the Company or their professional advisers.
12
8.2 Subject to clause 6 and clause 8.3 below, the Purchaser and its
advisers shall have sole conduct of all tax affairs of the Group other
than those set out in clause 8.1(a) above.
8.3 Where any computation, return or accounts is or are required to be
submitted for, or in respect of, any period during which Completion
takes place, a draft shall be submitted to the Covenantor (or such
advisers as it shall nominate) at least 21 days before its intended
submission to any Taxation Authority and the Covenantor and its
advisers shall be given access to all information reasonably necessary
to determine its accuracy. The Covenantor (or such advisers as it
shall nominate) shall comment within 14 days of such submission. If
the Purchaser has not received any comment or suggestion within 14
days, the Covenantor (or such advisers as it shall nominate) shall be
deemed to have approved such draft documents. If the Covenantor (or
such advisers as it shall nominate) have any comment or suggestion,
the Purchaser shall procure that the Company shall consider such
comment or suggestion to the extent that it arises in respect of an
Event, or profits income or gains earned accrued or received wholly on
or before Completion. In addition, the Covenantor shall be kept
informed of any material relevant negotiations regarding the Taxation
Liabilities of the Company relating to any period during which
Completion takes place and before any agreement in respect of those
Taxation Liabilities is reached with such Taxation Authority details
of the proposed agreement shall be given to the Covenantor at least 10
business days before the proposed conclusion of such agreement.
9 PAYMENT
-------
9.1 Where any amount is required to be paid by the Covenantor under this
Deed in respect of an Actual Taxation Liability, the Covenantor shall
pay such amount in cleared, immediately available funds on the
business day before the date on which the Taxation in question is due
for payment to the relevant Taxation Authority or, if later, five
business days following the date on which the Purchaser notifies the
Covenantor of its liability to make such payment.
9.2 If the Covenantor becomes liable to make a payment under clause 2
above in respect of any Deemed Taxation Liability or any other amount
not being an Actual Taxation Liability, the Purchaser will notify the
Covenantor in writing of the amount which the Covenantor is required
to pay and the Covenantor shall pay such amount in cleared,
immediately available funds before the date that an actual liability
to Taxation becomes payable by reason of the Relief not being
available or following its use to set off against other liabilities or
in the case of any liability under 2.1(e) or otherwise under this
Deed, 10 business days after the date of demand therefor. Any dispute
as to the amount contained in such notice shall be determined by an
independent chartered accountant appointed (in default of agreement)
by the President of the Institute of Chartered Accountants in England
and Wales, acting as an expert and not an arbitrator.
9.3 Sums not paid by the Covenantor on the dates specified in clauses 9.1
and 9.2 above shall bear interest (which shall accrue from day to day
after, as well as before, judgment at 2 per cent above base rate of
The Royal Bank of Scotland
13
plc or, in the absence of such base rate, at such similar rate as the
Purchaser may select and notify to the Covenantor) from the date
following the said specified date up to and including the day of
actual payment of such sums (or the next business day if such day of
actual payment is not a business day), and payable on demand by the
Purchaser.
10 OVERPROVISIONS AND CORRESPONDING SAVINGS PROVISIONS
---------------------------------------------------
10.1 If:
(a) any provision for Taxation in the Accounts has proved to be an
over-provision, except to the extent that such over-provision
results from:
(i) the utilisation of a Relief which has been treated as an
asset of the Company in preparing the Accounts; or
(ii) a Relief which arises as a consequence of or by reference to
an Event occurring (or deemed to occur) after Completion; or
(iii) a change in rates of Taxation made after the date of this
Deed; or
(b) any Taxation Liability to which clause 2 applies results in a
Relief which would not otherwise have arisen or which arises in
an accounting period other than the one in which the Taxation
Liability arises or which gives rise to a reduction in the amount
of, or the elimination of, an Actual Taxation Liability of the
Company whenever arising,
an amount equal to such over-provision or (as the case may be) the
amount of the Actual Taxation Liability which is eliminated or the
amount by which it is reduced (except to the extent to which it has
been taken into account or credit has been given for it in relation to
any Warranty Claim or claim hereunder) (as determined and certified by
the auditors for the time being of the Company) shall be dealt with in
accordance with clause 10.2 below.
10.2 Where pursuant to clause 10.1 any amount (the "RELEVANT AMOUNT") is to
be dealt with in accordance with this sub-clause:
(a) the Relevant Amount shall first be set off against any payment
then due from the Covenantor under this Deed;
(b) to the extent that there is an excess, a refund shall be made to
the Covenantor of any previous payment or payments made by it
under this Deed and not previously refunded under this sub-clause
up to the amount of such excess; and
(c) to the extent that the excess referred to in sub-clause (b) is
not exhausted under that sub-clause, the remainder of that excess
shall be carried forward and set off against any future payments
which may become due from the Covenantor under this Deed.
14
10.3 For the purposes of clause 10.1(b), a Taxation Liability shall not be
treated as being eliminated or reduced until the date upon which such
liability is actually eliminated or reduced and, in particular (but
without prejudice to the generality of the foregoing), where the
Relief is the right to set a liability of the Company to advance
corporation tax against a liability of the Company to corporation tax
pursuant to Section 239(1) or (4) ICTA 1988 or gives rise to a
repayment of corporation tax pursuant to Section 239(3) ICTA 1988, the
Relief shall not be treated as having arisen until the offset has
occurred or the repayment has been received.
11 PURCHASER'S COVENANT
--------------------
11.1 The Purchaser hereby covenants with the Covenantor to pay to the
Covenantor (as trustee for the Indemnified Persons (as defined in this
clause 11.1)) an amount or amounts equal to any Taxation for which the
Covenantor, or any other person other than a member of the Group (in
this clause 11, "THE INDEMNIFIED PERSONS") falling within section
767A(2) or 767AA(4) ICTA 1988 by virtue of a relationship which that
person has with the Covenantor, becomes liable by virtue of the
operation of sections 767A, 767AA and/or 767B ICTA 1988 in
circumstances where the tax-payer company or the transferred company
(as referred to in section 767A(1) or 767AA(1)) is the Company and
where such Taxation liability would not have arisen but for the
failure by the Company to discharge a liability to Taxation which
relates to an accounting period beginning prior to Completion.
11.2 The covenant contained in clause 11.1 shall:
(a) extend to any reasonable costs properly incurred by the
Covenantor or the Indemnified Persons in connection with such
Taxation or a successful claim under this clause 11;
(b) not extend to any Taxation in respect of which the Purchaser has
or would have had (but for such Taxation having been satisfied by
the Covenantor or the Indemnified Persons) a claim under this
Deed provided that this clause 11.2(b) shall not apply to the
extent that such claim has previously been satisfied by the
Covenantor; and
(c) not extend to any Taxation which has been recovered under section
767B(2) ICTA 1988 (and the Covenantor shall procure that no such
recovery is sought to the extent that payment is made hereunder).
11.3 The provisions of clause 2.2 (ADJUSTMENT TO PURCHASE PRICE), 4
(REBATE), 6 (CONDUCT OF claims), 2.1(d) and 2.4 (GROSS-UP), and 9
(PAYMENT) shall apply MUTATIS MUTANDIS to payments to the Covenantor
under this clause 11 as they apply to payments to the Purchaser under
this Deed.
15
12 RELEASES, WAIVERS ETC.
----------------------
Neither the single or partial exercise or temporary or partial waiver
by any party to this Deed of any right, nor the failure by any such
party to exercise in whole or in part any right or to insist on the
strict performance of any provision of this Deed, nor the
discontinuance, abandonment or adverse determination of any
proceedings taken by any such party to enforce any right or any such
provision shall (except for the period or to the extent covered by any
such temporary or partial waiver) operate as a waiver of, or preclude
any exercise or enforcement or (as the case may be) further or other
exercise or enforcement by any such party of, that or any other right
or provision.
13 NOTICES
-------
13.1 Any notice or any other document to be given under this Deed shall be
in writing and shall be deemed duly given if left at, or sent by (i)
first class post, airmail, express or other fast postal service or
(ii) facsimile transmission to the addresses and facsimile numbers
specified in clause 13.4 below (including, if applicable, any "copy
to" addressees) or such other address or facsimile number as any party
may by notice to the other parties expressly substitute therefor.
13.2 Notice shall be deemed to be given if sent by first class post,
express or other fast postal service, 2 business days after posting
or, in the case of posting to an overseas address, 7 business days
after posting, and if sent by facsimile transmission when in the
ordinary course of the means of transmission it would first be
received by the addressee during normal business hours.
13.3 In proving the giving of a notice it shall be sufficient to prove that
the notice was left or that the envelope containing such notice was
properly addressed and posted or that the applicable means of
telecommunications was properly addressed and despatched (as the case
may be).
13.4 The addresses and facsimile numbers referred to in clause 13.1 above
are:
(a) The Covenantor and the Vendor Guarantor
For the attention of: The Finance Director
Address: Lloyds Xxxxxxxx
0 Xxxxxxxxx Xxxxxx
Xxxxxx X0 0XX
Facsimile number: 0171 702 3951
(b) The Purchaser and the Purchaser Guarantor:
For the attention of: Xxxxx Xxxxx
Address: IXNET
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx,
XX 00000
Facsimile number: 001 212 858 7990
16
With a copy to: General Counsel
Address: IPC Information Systems, Inc.
Wall Street Plaza
00 Xxxx Xxxxxx
Xxx Xxxx,
XX 00000
Facsimile number: 001 212 858 7959
14 CHOICE OF LAW AND JURISDICTION
------------------------------
14.1 This Deed shall be governed by and construed in accordance with
English law.
14.2 It is hereby agreed that:
(a) subject to paragraph (c) of this sub-clause, if any party has any
claim against another party arising out of or in connection with
this Deed such claim shall be referred to the High Court of
Justice in England, to the jurisdiction of which each of the
parties hereto irrevocably submits;
(b) subject to paragraph (c) of this sub-clause, the jurisdiction of
the High Court of Justice in England over any such claim shall be
an exclusive jurisdiction and no courts outside England shall
have jurisdiction to hear or determine any such claim other than
any such claim; and
(c) if in any suit, action or proceeding ("Proceeding") arising out
of or in connection with this Deed an order or injunction is
sought (including but not limited to an order for specific
performance of any obligations under this Deed) ordering a party
to do or refrain from doing anything in any jurisdiction other
than England whether or not damages or other monetary relief are
also sought in the same Proceedings, then notwithstanding
paragraphs (a) and (b) of this sub-clause such Proceeding may be
brought by a Court or competent jurisdiction situation within
such other jurisdiction,
provided that nothing in sub-clauses (a) and (b) above shall prevent
or restrict proceedings in any jurisdiction relating to the
enforcement of any judgment already obtained in the High Court of
Justice in England.
15 ALTERATIONS
-----------
No purported alteration of this Deed shall be effective unless it is
in writing, refers to this Deed and is duly executed by each party
hereto.
16 COUNTERPARTS
------------
This Deed may be entered into in the form of two or more counterparts
each executed by one or more of the parties but, taken together,
executed by all and, provided that all the parties so enter into the
Deed, each of the executed
17
counterparts, when duly exchanged or delivered, shall be deemed to be
an original, but, taken together, they shall constitute one
instrument.
17 SUCCESSORS AND ASSIGNS
----------------------
17.1 This Deed shall be binding on and shall endure for the benefit of the
successors in title of each party.
17.2 None of the parties hereto shall be entitled to assign the benefit of
any rights under this Agreement save only that the Purchaser shall be
entitled to assign the benefit of its rights hereunder to any bank
which provides funds to the Purchaser to enable it to pay the Purchase
Price or any significant part thereof if (but only if) such bank shall
require such assignment as part of its security.
17.3 The Vendor Guarantor shall procure that in the event of the direct or
indirect sale or transfer of all or substantially all of the assets of
the Vendor Guarantor within four years from the Completion Date the
Vendor Guarantor shall, if required by the Purchaser, procure that the
purchaser of such assets shall by deed in terms reasonably
satisfactory to the Purchaser agree to the assignment of this Deed to
such purchaser of the obligations of the Covenantor and the Vendor
Guarantor under this Deed which such purchaser will assume on a joint
and several basis with the Covenantor and the Vendor Guarantor.
17.4 For the purposes of clause 17.3, substantially all of the assets of
the Vendor Guarantor shall mean assets constituting 80% of more of the
assets of the Marshalls Group (excluding the Group) on a consolidated
basis, either on the basis of book value or fair market value.
IN WITNESS whereof this Deed has been entered into the day and year first above
written.
18
SCHEDULE
--------
(Deemed Taxation Liabilities)
---------------------------
(1) (2)
1. The unavailability of all or any 1. So much of the amount of such asset
part of any Relief which has been as corresponds to the amount of the
treated as an asset of the Company in Relief unavailable.
preparing the Accounts.
2. The unavailability of all or any 2. So much of the amount of such asset
part of a right to repayment of as corresponds to the amount of
Taxation which has been treated as an the repayment unavailable.
asset of the Company in preparing the
Accounts.
3. The setting-off of a Relief (other 3. So much of the amount of such asset
than one to which paragraph 4 below as corresponds to the amount of the
applies) which has been treated as an Relief which would have been available
asset of the Company in preparing the but for such setting-off.
Accounts against an Actual Taxation
Liability in respect of which the
Purchaser would, but for that
setting-off, have been able to make a
claim against the Covenantor under
this Deed.
4. The setting-off of a right to 4. So much of the amount of such asset
repayment of Taxation which has been as corresponds to the amount of the
treated as an asset of the Company in repayment which would have been
preparing the Accounts against an obtainable but for such setting-off.
Actual Taxation Liability in respect
of which the Purchaser would, but for
that setting-off, have been able to
make a claim against the Covenantor
under this Deed.
5. The setting-off against any income, 5. The amount of the Actual Taxation
profits or gains of the Company which Liability which would have arisen but
were earned, accrued or received, or for such setting-off.
deemed for any Taxation purposes to be
earned, accrued or received, on or
before Completion, or in respect of a
period ended on or before Completion,
of any Relief which arises as a
consequence of, or by reference to an
Event
19
occurring (or deemed to occur) after
Completion and not as a consequence of
or by reference to any Event occurring
(or deemed to occur) on or before
Completion in circumstances where, but
for such setting-off, the Company
would have had an Actual Taxation
Liability in respect of which the
Purchaser would have been able to make
a claim against the Covenantor under
this Deed.
6. The setting-off against an Actual 6. The amount of the Actual Taxation
Taxation Liability of the Company in Liability which would have arisen but
respect of which the Purchaser would, for such setting-off.
but for that setting off, have been
able to make a claim against the
Covenantor under this Deed, of any
Relief or right to repayment of
Taxation which arises as a consequence
of, or by reference to, an Event
occurring (or deemed to occur) after
Completion and not as a consequence
of, or by reference to, any Event
occurring (or deemed to occur) on or
before Completion.
20
EXECUTED and DELIVERED )
as a DEED by )
MARSHALLS 106 LIMITED ) /s/ Xxxxxxxxx Xxxxx
.....................................
Director
/s/ X.X. Xxxxx
.....................................
Director/Secretary
EXECUTED and DELIVERED )
as a DEED by )
MARSHALLS FINANCE LIMITED ) /s/ M.J.W. Potter
.....................................
Director
/s/ X.X. Xxxxx
.....................................
Director/Secretary
EXECUTED and DELIVERED )
as a DEED by )
INTERNATIONAL EXCHANGE )
NETWORKS LTD ) /s/ Xxxxx Xxxxx
.....................................
Director
/s/ Xxxxxx Xxxxxxx
.....................................
Director/Secretary
EXECUTED and DELIVERED )
as a DEED by )
IPC INFORMATION SYSTEMS, )
INC. ) /s/ Xxxxx Xxxxx
.....................................
Director
/s/ Xxxxxx Xxxxxxx
.....................................
Director/Secretary
21
