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SECURITIES AND EXCHANGE COMMISSION
Washington, D C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
August 14, 1998
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RSL COMMUNICATIONS, LTD.
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(Exact name of registrant as specified in its charter)
BERMUDA
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(State or other jurisdiction of incorporation)
0-23139 N/A
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(Commission File Number) (IRS Employer Identification Number)
Clarendon House, Church Street, Hamilton HM CX Bermuda
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (441) 295-2832
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Page 1 of 97
Exhibit Index appears on Page 4
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 14, 1998 (the "Closing Date"), RSL COM Telco UK Limited, RSL COM Telco
Belgium NV and RSL COM Telco Deutschland GmbH, each a subsidiary of RSL
Communications, Ltd. ("RSL") completed the acquisition of substantially all of
the business and assets of each of Motorola Limited (United Kingdom), SA
Motorola NV (Belgium) and Motorola Electronic GmbH (Germany), respectively. RSL
COM Telco France S.A., a subsidiary of RSL, anticipates completing the
acquisition of substantially all of the business and assets of Motorola SA
(together, with Motorola Limited, SA Motorola NV and Motorola Electronic GmbH,
the "Motorola Group") on or about September 30, 1998. The business of the
Motorola Group consists primarily of the resale of cellular airtime services and
the sale and distribution of Motorola(TM) cellular telephones and related
products carried on in each of the United Kingdom, Belgium, Germany and France.
The purchase price for the assets of the Motorola Group was $75 million, which
was paid in cash, plus the assumption of a working capital deficit of
approximately $25 million.(1) RSL has recorded each of the transactions under
the purchase accounting method. The purchase price for the assets of the
Motorola Group was paid from RSL's available cash.(1)
The terms of each business sale agreement, including the amount of the purchase
price, were negotiated by the parties on an arm's length basis. The purchase
price paid for the assets of the Motorola Group may be adjusted after the
Closing Date in accordance with the terms of each of the business sale
agreements. RSL intends to continue to utilize the assets purchased in its
business.
ITEM 7. EXHIBITS
1. Restated Umbrella Agreement, dated as of June 26, 1998, among Motorola
Limited, SA Motorola NV, Motorola Electronic GmbH, Motorola SA and RSL
Communications, Ltd.
2. Company Press Release dated June 29. 1998.
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(1) A portion of this purchase price and working capital deficit relating to
Motorola SA will be paid and assumed on or about September 30, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized this 25th day of August, 1998.
RSL COMMUNICATIONS, LTD.
By: /s/ Mark J. Hirschhorn
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Name: Mark J. Hirschhorn
Title: Vice President - Finance
and Global Controller
<PAGE>
EXHIBIT INDEX
Exhibit Description
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1. Restated Umbrella Agreement, dated as of June 26, 1998, among
Motorola Limited, SA Motorola NV, Motorola Electronic GmbH, Motorola
SA and RSL Communications, Ltd.
2. Company Press Release dated June 29, 1998.
<PAGE>
SCHEDULE
The schedules and exhibits to the Restated Umbrella Agreement are omitted
pursuant to Rule 601(b)(2) of Regulation S-K(2). This schedule contains summary
information extracted from the schedules to the Restated Umbrella Agreement and
is qualified by its entirety by reference to such schedules and exhibits.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Restated Umbrella Agreement.
Schedules
Schedule 1
Lists all the employees of the relevant Seller.
Schedule 2
Lists the assets used by the relevant Seller in connection with the relevant
part of the Business which are excluded from the sale to the Buyer.
Schedule 3
Lists the plant, machinery, equipment, fixtures, fittings, vehicles and other
objects used by the relevant Seller in connection with the relevant part of the
Business.
Schedule 4
Sets forth all industrial and intellectual property rights of any of the Sellers
used in or for the purposes of the Business.
Schedule 5
[intentionally omitted]
Schedule 6
Sets forth the procedures in which accounting records are to be prepared by the
parties.
Schedule 7
Sets forth the allocation of price among each of the UK Business, German
Business, French Business and Belgian Business.
Schedule 8
Lists Agreed Form Documents
Schedule 9
Lists the Sellers' facilities.
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(2) The Registrant has determined that Schedule 6 and portions of Schedule 8
may be deemed material to an investment decision and, accordingly, has
filed each of Schedule 6 and portions of Schedule 8, excluding any
schedules attached thereto, with this report. In connection with the
filing of Schedule 8, only the Business Sale Agreements may be deemed
material, and as to those the Registrant is only filing the UK Business
Sale Agreement, since it is substantially the same as each of the German
Business Sale Agreement, French Business Sale Agreement and Belgian
Business Sale Agreement.
Schedule 6
Schedule 8
DATED 1998
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(1) MOTOROLA LIMITED
(2) SA MOTOROLA NV
(3) MOTOROLA ELECTRONIC GMBH
(4) MOTOROLA SA
(5) RSL COMMUNICATIONS LTD
================================================================================
RESTATED UMBRELLA AGREEMENT
================================================================================
OLSWANG
90 Long Acre
London WC2E 9TT
Tel: 0171-208 8888
Fax: 0171-208 8800
email: [email protected]
Ref:THP/JSG/6240-5
<PAGE>
CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION.........................................2
CONDITION PRECEDENT...................................................14
2. AGREEMENT FOR SALE....................................................15
3. PRICE.................................................................17
4. COMPLETION............................................................17
5. EMPLOYEES AND PENSIONS................................................22
6. TRANSFER TAXES........................................................22
7. FACILITIES AFTER COMPLETION...........................................22
8. WARRANTIES BY THE SELLERS.............................................22
9. LIMITATIONS ON SELLERS' LIABILITY.....................................24
10. PROTECTION OF THE BUYER...............................................25
11. ANNOUNCEMENTS.........................................................27
12. COSTS.................................................................27
13. COMMUNICATIONS........................................................27
14. MUTUAL GUARANTEE AND INDEMNITY........................................28
15. ENTIRE AGREEMENT AND SCHEDULES........................................31
16. ASSIGNMENT............................................................32
17. NAME..................................................................33
18. RESTRICTIVE TRADE PRACTICES...........................................33
19. WAIVER................................................................34
20. MODIFICATIONS.........................................................34
21. COUNTERPARTS..........................................................34
<PAGE>
22. EFFECT OF COMPLETION..................................................34
23. INVALIDITY............................................................35
24. FURTHER ASSURANCE AND ASSISTANCE......................................35
25. EQUIPMENT.............................................................36
26. ONGOING RELATIONSHIP..................................................36
27. PROPER LAW............................................................37
SCHEDULE 1..................................................................38
PART A................................................................38
UK Business...........................................................38
PART 1................................................................38
Senior Employees......................................................38
PART 2................................................................38
Other Employees.......................................................38
PART B................................................................39
PART 1................................................................39
Senior Employees......................................................39
PART 2................................................................39
Other Employees.......................................................39
PART C................................................................40
French Business.......................................................40
PART 1................................................................40
Senior Employees......................................................40
PART 2................................................................40
Other Employees.......................................................40
PART D................................................................41
Belgian Business......................................................41
PART 1................................................................41
Senior Employees......................................................41
PART 2................................................................41
Other Employees.......................................................41
SCHEDULE 2..................................................................42
PART A................................................................42
UK Business...........................................................42
Excluded Assets.......................................................42
PART B................................................................43
German Business.......................................................43
Excluded Assets.......................................................43
PART C................................................................44
French Business.......................................................44
<PAGE>
Excluded Assets.......................................................44
PART D................................................................45
Belgian Business......................................................45
Excluded Assets.......................................................45
SCHEDULE 3..................................................................46
PART A................................................................46
UK Business...........................................................46
PART B................................................................46
German Business.......................................................46
Fixed Assets..........................................................46
PART C................................................................46
French Business.......................................................46
Fixed Assets..........................................................46
PART D................................................................46
Belgian Business......................................................46
Fixed Assets..........................................................46
SCHEDULE 4..................................................................47
PART A................................................................47
UK Business...........................................................47
Industrial Property Rights............................................47
PART B................................................................48
German Business.......................................................48
Industrial Property Rights............................................48
PART C................................................................49
French Business.......................................................49
Industrial Property Rights............................................49
PART D................................................................50
Belgian Business......................................................50
Industrial Property Rights............................................50
SCHEDULE 5
SCHEDULE 6
Completion Statement..................................................52
SCHEDULE 7
PART A................................................................56
Allocation of Price...................................................56
UK Business...........................................................56
PART B................................................................57
German Business.......................................................57
PART C................................................................58
<PAGE>
French Business.......................................................58
PART D................................................................59
Belgian Business......................................................59
SCHEDULE 8
Agreed Form Documents.................................................60
<PAGE>
THIS AGREEMENT is made the 14th day of August 1998
BETWEEN:
(1) MOTOROLA LIMITED (Company No. 912182) whose registered office is at Jays
Close, Viables Industrial Estate, Basingstoke, Hampshire RG22 4PD
("Motorola Limited");
(2) SA MOTOROLA NV whose principal place of business is at Excelsiorlaan 89-
1930, Zaventem, Belgium; Brussels Commercial Registry No. 379.427,
represented by Robert Sroka ("Motorola NV");
(3) MOTOROLA ELECTRONIC GMBH having an office at 47 Hagenauer Strasse,
Wiesbaden, Germany ("Motorola GmbH");
(4) MOTOROLA SA whose registered office is at 1 Boulevard Victor, B.P. 568,
75726 Paris Cedex 15, registered with the Registry of Commerce and
Companies of Paris under number B712030113 ("Motorola SA"); and
(5) RSL COMMUNICATIONS LTD whose principal place of business is at Clarendon
House, Church Street, Hamilton HM CX Bermuda ("Buyer").
WHEREAS the parties originally signed an umbrella agreement on 25 June 1998
("Original Umbrella Agreement"). This Agreement incorporates certain variations
to the Original Umbrella Agreement.
<PAGE>
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Words and expressions in this Agreement, the Business Sale Agreements and
the Schedules have the following meanings unless the context requires
otherwise:
"Accounts" the pro forma financial statements
(incorporating a statement of net assets, a
statement of income and notes thereto) of
the Business as at 31 December 1997;
"Accounting Date" 31 December 1997;
"Agreed Form" the form of documents agreed between the
parties to this Agreement and either
initialled by them or appended for
identification and which are listed in
Schedule 8;
"Assets" all the property and assets and rights of
each of the Sellers used in the conduct of
the relevant Business as at the Effective
Date, other than the Excluded Assets, but
including (without limitation) the Customer
Contracts, the Business Contracts, the
Customer Lists, the Debts, the Fixed Assets,
the Goodwill, the Industrial Property
Rights, the Stock and the benefit of the
Sellers' Rights and all work in progress;
"Belgian Business" the business of the resale of cellular
airtime services and the sale and
distribution of Motorola
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cellular telephones and related products
carried on in Belgium at the Effective Date
by the division of SA Motorola NV trading
under the name "Motorola Tel.co" which, for
the avoidance of doubt, includes the
Employees set out in Part D of Schedule 1;
"Belgian Business Sale the agreement in the Agreed Form in respect
Agreement" of the sale by SA Motorola NV of the Belgian
Business and annexed hereto marked "D";
"Business" the UK Business, the German Business, the
French Business and the Belgian Business,
together;
"Business Contracts" the contracts in respect of the relevant
part of the Business entered into by the
relevant Seller with suppliers for the
supply of goods or services to the relevant
Seller in connection with the relevant part
of the Business which remain to be performed
in whole or in part at the Effective Date as
specified in each of the Business Sale
Agreements;
"Business Sale Agreements" the UK Business Sale Agreement, the German
Business Sale Agreement, the French Business
Sale Agreement and the Belgian Business Sale
Agreement, together;
"Buyer's Accountants" Deloitte Touche Tohmatsu International of
Hill House, 1 Little New Street, London EC4A
3TR;
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"Buyer's Group" the Buyer and any body corporate which is
from time to time a wholly-owned subsidiary
of the Buyer;
"Buyer's Solicitors" Field, Fisher Waterhouse of 41 Vine Street,
London EC3N 2AA;
"Cash Balances" cash in hand or credited to an account with
a bank and securities with a maturity of
less than one year;
"Completion" completion of the sale and purchase of the
Business and the Assets (other than the
French Business and Assets) or completion
of the sale and purchase of the French
Business and Assets, as the context
requires, in each case in accordance with
the terms of this Agreement, in particular
the matters referred to in Clauses 4.2 and
4.3, and the Business Sale Agreements;
"Completion Statement" the accounts prepared in accordance with
Schedule 6;
"Companies Acts" the United Kingdom Companies Act 1985 and
the United Kingdom Companies Act 1989;
"Contracts" the Business Contracts and the Customer
Contracts together;
"Customer" an individual corporate or other entity who
has entered into a contract with one of the
Sellers providing access to a cellular
network;
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"Customer Contracts" the current contracts (whether in writing
or not) of the Sellers with Customers in
relation to the Business under which the
Customer has access to or airtime on a
network through the Sellers with or without
the supply of handsets which remain to be
performed in whole or in part at the
Effective Date and in the case of a
corporate customer shall be deemed to be a
separate contract in respect of each
individual subscriber;
"Customer List" the list of customers of the relevant Seller
in relation to the relevant part of the
Business;
"Debts" the aggregate amount of all debts owed to
the Sellers in connection with the Business
at the Effective Date including, without
limitation, trade debtors, commissions
receivable, payments in advance, trade bills
receivable, retrospective network bonus
accruals, prepaid expenses, accrued income,
unbilled call accruals, retrospective
rebates and over payments and other debtors;
"Deed on Limitation of the deed in the Agreed Form to be
Liabilities" executed on Completion between, inter alia,
the parties to this Agreement limiting the
aggregate liability of the Sellers;
"Default Interest Rate" the interest rate of three per cent per
annum above the base rate of Barclays Bank
plc for the time
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being prevailing, such interest to be
calculated on a daily basis with monthly
rests;
"Disclosure Letter" the disclosure letters each in the Agreed
Form dated with the same date as the
Original Umbrella Agreement from the
relevant Seller to the Buyer disclosing
various facts and matters relating to the
Warranties given by the relevant Seller and
all annexures to that letter;
"Distribution Agreement" the distribution agreement in the Agreed
Form to be executed on Completion between
Motorola Limited and the Buyer relating to
the distribution of cellular telephone
handsets and associated accessories offered
to the Buyer or a member of the Buyer's
Group;
"Effective Date" the close of business on the business day
immediately preceding Completion;
"Employees" all the employees of the relevant Seller
named in Schedule 1;
"Excluded Assets" the assets used by the relevant Seller in
connection with the relevant part of the
Business listed in Schedule 2 which are
excluded from the sale to the Buyer;
"Excluded Liabilities" all liabilities and obligations of any
nature of any of the Sellers other than the
Liabilities including without limitation:
6
<PAGE>
a. any liabilities relating to litigation
or other claims arising, or relating to
the conduct of the Business, before
Completion;
b. any liabilities of the Sellers to any
member of the Group;
c. any liabilities in respect of taxation
(including VAT and salary related
taxes) relating to any period up to
Completion;
d. all costs and expenses incurred by the
Sellers in connection with the
negotiation, execution or performance
of this Agreement, the Business Sale
Agreements and all ancillary documents;
e. any liabilities to Employees incurred
prior to the Effective Date save as
specifically provided in the Business
Sale Agreements and including, for the
avoidance of doubt, any loyalty or
success payments relating to this
transaction;
f. the Warranties and all other
liabilities and obligations of the
Sellers under this Agreement, the
Business Sale Agreements and all
ancillary documents;
"Facilities Agreements" the agreements in the Agreed Form in respect
of services and facilities to be made
available to the
7
<PAGE>
Buyer or its subsidiaries by the relevant
Seller in respect of the relevant part of
the Business;
"Fixed Assets" the plant, machinery, equipment, fixtures,
fittings, vehicles and other objects used by
the relevant Seller in connection with the
relevant part of the Business including
those listed in Schedule 3;
"French Business" the business of the resale of cellular
airtime services and the sale and
distribution of Motorola cellular telephones
and related products carried on by Motorola
SA in France at the Effective Date under the
name "Motorola Tel.co" which, for the
avoidance of doubt, includes the Employees
set out in Part C of Schedule 1;
"French Business Sale the agreement in the Agreed Form in respect
Agreement" of the sale by SA Motorola of the French
Business and annexed hereto marked "C";
"French Provisional Price" US$8.1 million if both the FT Contract and
the SFR Contract (each as defined in Clause
2.5) are assigned and/or novated, 60% of
that amount if only the FT Contract is
assigned or novated or 40% of that amount if
only the SFR Contract is assigned or
novated;
"German Business" the business of the resale of cellular and
fixed wire airtime services and the sale and
distribution of Motorola cellular telephones
and related products carried on by Motorola
Electronic GmbH in
8
<PAGE>
Germany at the Effective Date under the name
"Motorola Tel.co" which, for the avoidance
of doubt, includes the Employees set out in
Part B of Schedule 1;
"German Business Sale the agreement in the Agreed Form in respect
Agreement" of the sale by Motorola Electronic GmbH of
the German Business and annexed hereto
marked "B";
"Goodwill" the goodwill of the Sellers in relation to
the Business together with the exclusive
right for the Buyer or its assignee to
represent itself as carrying on the Business
in succession to the Sellers and the name
"Tel.co" and any name used exclusively by
the Sellers in relation to the Business,
including, without limitation, the names
listed in Schedule 4 (but for the avoidance
of doubt not including the name "Motorola"
or any other name confusingly similar
thereto or any other name not exclusively
associated with the Business);
"Group" each of the Sellers and any company which
is a Holding Company or a Subsidiary of any
of the Sellers or a Subsidiary of that
Holding Company;
"Holding Company" a holding company as defined in Sections
736 and 736A of the Companies Act 1985 or
the equivalent under laws outside the UK
where the company is incorporated outside
the UK;
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<PAGE>
"Industrial Property Rights" all industrial and intellectual property
rights of any of the Sellers used in or for
the purposes of the Business whether or not
registered including (without limitation)
patents, trade marks, service marks, trade
names, registered design and any
applications for the protection or
registration of those rights listed in
Schedule 4 and the copyright in all
drawings, plans, specifications, designs and
other documents and including any computer
programs owned by any of the Sellers and
used in or for the purposes of the Business
and all know-how and confidential
information so owned and used, and
including the exclusive right for the Buyer
or its assignee to represent itself as
carrying on the Business in succession to
the Sellers and the name "Tel.co" and any
name used exclusively by the Sellers in
relation to the Business, including, without
limitation, the names listed in Schedule 4
(but for the avoidance of doubt not
including the name "Motorola" or any other
name confusingly similar thereto or any
other name not exclusively associated with
the Business);
"Liabilities" the liabilities of the Sellers in relation
to the Business as at the Effective Date as
recorded in the Accounts or incurred in the
ordinary course of the Business since the
Accounting Date including, without
limitation, liabilities arising under the
Contracts, but excluding the Excluded
Liabilities;
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<PAGE>
"Net Liabilities" the net liabilities of the Sellers relating
to the Business being their Liabilities less
the Debts as determined in the Completion
Statement;
"Price" the price of the Business and the Assets as
set out in Clause 3.1 and Schedule 6;
"Provisional Price" US$68.1 million paid by the Buyer pursuant
to Clause 3.2;
"Sellers" Motorola Limited, SA Motorola NV, Motorola
Electronic GmbH and Motorola SA, together,
and "Seller" shall mean any one of them;
"Sellers' Accountants" KPMG (International);
"Sellers' Rights" all rights and claims of any of the Sellers
against any third party in relation to the
Business (whether or not accrued and
enforceable at the Effective Date) under any
warranties or conditions or guarantees or
indemnities (whether express or implied)
existing at the Effective Date in favour of
any of the Sellers or otherwise in relation
to the Business;
"Sellers' Solicitors" Olswang, 90 Long Acre, London WC2E 9TT;
"Senior Employee" all senior employees of the relevant Seller
named in Parts A, B, C and D of Parts 1 of
Schedule 1;
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<PAGE>
"Stock" all and any of the stock-in-trade including
raw materials, finished goods, work in
progress and all packaging, packaging
materials and spare materials or goods owned
or used by any of the Sellers at the
Effective Date for the purposes of or in
connection with the Business including those
items subject to reservation of title by the
sellers which are under the control of any
of the Sellers;
"Subsidiary" a subsidiary as defined in Sections 736 and
736A of the Companies Act 1985 or the
equivalent under laws outside the UK where
the company is incorporated outside the UK;
"Third Party Consents" licences or consents or waivers required
from third parties for the effective
transfer or assignment or novation in favour
of the Buyer of any of the Assets;
"Trade Mark Licence" the four trade mark licences to be executed
on Completion between Motorola Inc and the
Buyer in the Agreed Form (or such other
member of the Buyer's Group that may be
nominated by the Buyer to purchase a
Business);
"UK Business" the business of the resale of cellular
airtime services and the sale and
distribution of Motorola cellular telephones
and related products carried on by Motorola
Limited in the UK, at the Effective Date
under the name "Motorola Tel.co" which, for
12
<PAGE>
the avoidance of doubt, includes the
Employees set out in Part A of Schedule 1;
"UK Business Sale Agreement" the agreement in the Agreed Form in respect
of the sale by Motorola Limited of the UK
Business and annexed hereto marked "A"; and
"Warranties" the warranties set out in Clause 8 and in
respect of each of the Sellers as set out in
Schedule 1 of each Business Sale
Agreement.
1.2 Unless the context requires otherwise words in the singular include the
plural and vice versa and words for any gender shall include all genders.
Reference to persons includes a body corporate.
1.3 Other than in the case of the Warranties, reference to any statute or
statutory provision includes a reference to statutory instruments and
orders made further to it and includes consolidations or amendments or
modifications or re-enactments.
1.4 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.5 Unless otherwise stated a reference to a clause or a schedule or a party
is a reference to a Clause in or a Schedule or a party to this Agreement.
1.6 Reference to writing includes any method of reproducing words in a legible
and non-transitory form.
1.7 Unless the context requires otherwise any period of time from a specified
date or day shall be calculated exclusive of that date or day.
13
<PAGE>
CONDITION PRECEDENT IN RELATION TO THE FRENCH BUSINESS
1A In relation to the sale and purchase of the French Business, this
Agreement shall become unconditional in all respects upon the earlier of
31 October 1998 (or such other date as may be agreed between Motorola SA
and the Buyer) and the date that Motorola SA procures the assignment or
novation, to the reasonable satisfaction of the Buyer, to the Buyer or any
member of the Buyer's Group as the Buyer may direct of either the contract
between Motorola SA and Societe Francaise du Radiotelephone ("SFR") or the
contract between Motorola SA and France Telecom ("FT").
1B Motorola SA and the Buyer agree to use their best endeavours to procure
the satisfaction of the condition as soon as reasonably practicable.
1C Motorola SA undertakes that during the conditionality period set out
above, it shall not solicit or negotiate with any other party with respect
to the sale of the French Business or any part of it.
1D Motorola SA shall manage the process in liaising with SFR and FT and the
Buyer shall provide all such assistance as Motorola SA shall reasonably
require in this regard.
1E Motorola SA and the Buyer agree that in the event that either or both of
the network operators shall refuse to execute any contractual assignment
of Customers of the French Business they shall in good faith explore until
31 October 1998 (or such other date as may be agreed between Motorola SA
and the Buyer) the possibility of the Buyer acting as reseller of Motorola
SA's services in relation to that network operator or operators. If the
relevant contractual arrangements allow for the Buyer to act as a reseller
in this circumstance to the reasonable satisfaction of both parties, the
Buyer shall act as the agent of Motorola SA in providing as far as
practicable a normal service to those Customers. The Buyer shall pay to
Motorola SA a fee equal to 0.01% of the net margins derived from the
Customers to whom this service is being provided for the duration of the
Customer Contract and the parties will in good faith as a precondition to
those provisions coming
14
<PAGE>
into effect negotiate the amount which the Buyer shall pay to Motorola SA
for receiving the benefit of the income derived from those Customer
Contracts.
1F In the event that the Buyer is unable to act as a reseller in respect of
those Customers who are the subject of a network agreement which is not to
be assigned to the Buyer, those Debts in respect of those Customers will
not form part of the "Debts" and the Buyer shall act as the agent of
Motorola SA and will use its reasonable endeavours to procure the
collection of the aforesaid Debts. All monies received by the Buyer shall
be paid to Motorola SA within seven days of receipt. In this event, the
Customer Contracts of those Customers will not be assigned to the Buyer.
2. AGREEMENT FOR SALE
2.1 On the terms and subject to the conditions of this Agreement and, in
respect of the relevant Sellers, the relevant Business Sale Agreements,
the Sellers with full title guarantee shall sell to the Buyer or such
member of the Buyer's Group as it shall nominate in accordance with the
provisions of Clause 4.2 and the Buyer or such member of the Buyer's Group
shall purchase free from all claims, charges, liens and encumbrances as at
and with effect from the Effective Date:
2.1.1 the Business as a going concern; and
2.1.2 the Assets.
2.2 In addition, the Buyer shall discharge the Liabilities in respect of the
Business in accordance with terms of each of the relevant Business Sale
Agreements.
2.3 There shall be excluded from the sale and purchase hereby effected the
Excluded Assets and the Excluded Liabilities.
15
<PAGE>
2.4 The parties agree that the terms of this Agreement shall exclude the sale
and purchase of the French Business and Assets and the obligations of
Motorola SA in that regard until such time as the condition referred to in
Clause 1A has been satisfied.
2.5 The parties further agree that completion of the sale and purchase of the
French Business shall take place in accordance with Clauses 4.2 and 4.3 on
the earlier of (i) 31 October 1998 (or such other date as may be agreed
between Motorola SA and the Buyer) and (ii) within three business days
following the date on which the assignment or novation, to the reasonable
satisfaction of the Buyer, to the Buyer or any member of the Buyer's Group
as the Buyer may direct of both the contract between Motorola SA and SFR
(the "SFR Contract") and the contract between Motorola SA and FT (the "FT
Contract") has been executed. For the avoidance of doubt, the parties
agree and acknowledge that completion of the sale and purchase of the
French Business shall take place on 31 October 1998 (or such other date as
may be agreed between Motorola SA and the Buyer) in the event that only
one of the FT or SFR contracts is assigned or novated to the Buyer.
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3. PRICE
3.1 The Price shall be US$85 million in respect of the Business and Assets
(other than the French Business and Assets), as adjusted pursuant to
Schedule 6 of this Agreement. The Price for the French Business and Assets
shall be US$15 million which shall be payable as to 60% if the FT Contract
is assigned or novated and 40% if the SFR Contract is assigned or novated
and in full if both contracts are assigned and/or novated. In the event
that only one of the FT or SFR Contracts is assigned or novated to the
Buyer, the Buyer shall assume responsibility for all the Liabilities in
respect of the French Business and Assets, save for those Liabilities
solely and exclusively relating to payments between Motorola SA and either
the Customers or the network operator in respect of the contract not so
assigned or novated. In all other respects the Price for the French
Business shall be adjusted pursuant to Schedule 6 of this Agreement.
3.2 On account of the Price in respect of the Business and Assets (other than
the French Business and Assets) the Buyer shall pay to the Sellers on
Completion the Provisional Price. In respect of the French Business and
Assets the Buyer shall pay to Motorola SA on Completion the French
Provisional Price.
3.3 The Price shall be exclusive of value added tax or other transfer taxes
(if any) which shall be attributable to the Assets as set out in Schedule
6.
4. COMPLETION
4.1 Completion of the sale and purchase shall take place at such location as
the Buyer shall require (and if outside the United Kingdom at the cost of
the Buyer) on 14 August 1998 (other than in relation to the French
Business, to which the provisions of Clause 2.5 shall apply) or such later
date as may be agreed between the Sellers and the Buyer when all of the
matters set out in Clauses 4.2 and 4.3 shall be transacted and completed.
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4.2 Each Seller, in respect of that part of the Business and the Assets being
sold by the relevant Seller, shall cause to be delivered or (if so
requested by the Buyer) made available to the Buyer or the Buyer's
Solicitors or such member of the Buyer's Group as the Buyer shall notify
in advance in writing to the Sellers at least two business days prior to
Completion:
4.2.1 the UK Business Sale Agreement duly executed by Motorola Limited;
4.2.2 the German Business Sale Agreement duly executed by Motorola
Electronic GmbH;
4.2.3 the French Business Sale Agreement duly executed by Motorola SA;
and
4.2.4 the Belgian Business Sale Agreement duly executed by SA Motorola
NV;
the Business Sale Agreements to be completed in accordance with the
respective terms of each agreement.
4.3 On Completion of the matters referred to in Clause 4.2 the Buyer shall pay
or procure the payment of the Provisional Price to the Sellers by means of
a telegraphic transfer to the Sellers. On Completion of the matters
referred to in Clause 4.2 in respect of the French Business the Buyer
shall pay or procure the payment of the French Provisional Price to
Motorola SA by means of a telegraphic transfer to Motorola SA.
4.4 During the interval between the signing of this Agreement and the later of
Completion or 31 October 1998 of the sale and purchase of the French
Business, Motorola SA:
4.4.1 shall carry on the French Business in the normal course; and
4.4.2 shall not in respect of the French Business (without the written
consent of the Buyer or such person as the Buyer shall nominate in
writing):
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(i) enter into, amend, renew or terminate any commitment or
any material or long term contract or onerous obligation
in excess of (pound)50,000;
(ii) enter into any agreement which is not on bona fide arms'
length terms;
(iii) enter into any partnership or joint venture or acquire or
dispose of any business, undertakings or securities;
(iv) dispose of any assets other than stock which is disposed
of in the ordinary and proper course of business;
(v) engage any consultant or employee unless such engagement
is terminable on less than four weeks' notice and will
not involve payment of remuneration in excess of
(pound)20,000 per annum;
(vi) raise the salaries of any of, or otherwise vary the terms
of employment of, any of its employees;
(vii) waive any rights against, or terminate the employment of,
any of its employees;
(viii) appoint any agent or attorney;
(ix) issue or commit to issue any securities or any debentures
or other instruments whether or not convertible into such
securities; nor
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(x) grant any option, right to acquire, mortgage, charge,
pledge, lien or other form of security or encumbrance or
enter into any agreement or commitment to give or create
any of the foregoing.
4.5 The Buyer shall not unreasonably withhold or delay consent in relation to
Clauses 4.4.2(vi) and (vii).
4.6 During such interval Motorola SA shall:
4.6.1 answer fully and fairly all reasonable requests for information
made by the Buyer concerning the affairs of the French Business;
and
4.6.2 procure that the Buyer and all persons reasonably authorised by it
shall be given full access to the premises and employees of the
French Business and all the books and records of the French
Business.
4.7 If any of the events referred to in Clause 4.4 shall occur on or before
Completion of the sale and purchase of the French Business and as a result
the Buyer can reasonably claim that:
4.7.1 its rights (if any) to an indemnity or damages under or in respect
of this Agreement would not provide it with an adequate remedy;
and
4.7.2 it would not have signed this Agreement had the relevant item
arisen or occurred and become known to the Buyer before the
signing of this Agreement,
then the Buyer shall be entitled (by notice in writing to the Sellers'
Solicitors given on or before Completion of the sale and purchase of the
French Business) to rescind this Agreement so far as it relates to the
French Business without liability on its part notwithstanding that any
person or thing cannot be restored to its position or state prior to the
signing of this Agreement.
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4.8 The events referred to in Clause 4.7 are:
4.8.1 any material breach or material non-fulfilment of any of the
Warranties;
4.8.2 any matter or thing arising, or becoming known or being notified
to the Buyer which if the Warranties were to be given and incurred
immediately thereafter (and on the basis that any express or
implied reference to the date of the Original Umbrella Agreement
is substituted by a reference to the time of the Warranties being
so given or incurred) would give rise to a material breach or
non-fulfilment of any of the Warranties as so given and incurred;
4.8.3 Motorola SA becoming unable or failing to carry out any material
obligation required to be done by them under or pursuant to this
Agreement; or
4.8.4 the French Business sustaining a loss from fire, flood or other
calamity which has a material adverse effect on the ability of the
French Business to operate;
the use of the word "material" shall, in this Clause 4.8 only, mean
material in the context of the jurisdiction in which the relevant event
occurs.
4.9 The rights conferred upon the Buyer by Clause 4.7 are in addition to and
without prejudice to any other rights which it may have to make a claim
against Motorola SA or any other of the Sellers and no failure to exercise
any of such rights shall constitute a waiver of any of them.
4.10 Motorola SA undertakes with the Buyer that it shall disclose immediately
in writing to the Buyer any event or circumstance which may arise or
become known to it after the date of this Agreement and prior to
Completion of the sale and purchase of the French Business which is
inconsistent with any of the Warranties or which is material to be known
by a buyer for value of the French Business. Motorola Limited similarly
undertakes to
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disclose such matters to the Buyer immediately on becoming aware of any
such event or circumstance.
5. EMPLOYEES AND PENSIONS
The Sellers and the Buyer agree that the contracts of employment of the
Employees shall be transferred to the Buyer except insofar as they relate
to pension and death benefits save where this Agreement is inconsistent
with any provisions of the Business Sale Agreements, where such other
provisions shall take precedence.
6. TRANSFER TAXES
All transfer, documentary, stamp duty, sales, use, registration and other
taxes and penalties, interest and additions to such taxes that are
incurred in connection with the sale of the Business and Assets shall be
dealt with in accordance with the terms of each of the Business Sale
Agreements.
7. FACILITIES AFTER COMPLETION
The Sellers shall make available to the Buyer following the Effective
Date; (a) such facilities as are specified in the Facilities Agreements
for the periods and at the costs referred to in the Facilities Agreements;
and (b) such other facilities as are reasonably required by the Buyer to
enable the Business to continue without interruption for periods
corresponding to those specified in the Facilities Agreements in respect
of the relevant jurisdiction on a cost plus 5% basis.
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8. WARRANTIES BY THE SELLERS
8.1 Each Seller severally warrants to the Buyer in respect of that part of the
Business operated by the relevant Seller in the UK, Germany, Belgium or
France, as the case may be, in the terms of the relevant Warranties and
for the purposes of giving effect to those Warranties that:
8.1.1 except as is fairly set out in the relevant Disclosure Letter, the
facts set out in the relevant Warranties are true and correct and
not misleading in all material respects at the date of the
Original Umbrella Agreement; and
8.1.2 the contents of the relevant Disclosure Letter and of all
documents referred to therein or accompanying it are true and
correct and not misleading in all material respects and fairly
disclose every fact and matter to which they relate which are
necessary to qualify the relevant Warranties.
8.2 The rights and remedies of the Buyer in respect of any breach of the
Warranties shall not be affected in any way by Completion.
8.3 The Buyer will not be entitled to claim that any fact or combination of
facts constitutes a breach of any of the Warranties if any to the extent
that such fact or combination of facts has been fairly disclosed in the
Disclosure Letter.
8.4 The Sellers undertake that, in the event of any claim being made against
the Sellers whether under the Warranties or otherwise in connection with
the sale of the Business or the Assets to the Buyer, the Sellers will not
make any claim against any of the Employees on whom it may have relied
before agreeing to any term of this Agreement or authorising any statement
in the Disclosure Letter.
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9. LIMITATIONS ON SELLERS' LIABILITY
9.1 The Buyer acknowledges and confirms that it has not been induced to enter
into this Agreement or any other documents or arrangements referred to in
this Agreement including, without limitation, the Business Sale
Agreements, by any statement or statements of fact or opinion other than
those statements set out in this Agreement, the Business Sale Agreements
and subject to all matters which may be disclosed in any of the Disclosure
Letters.
9.2 The liability of the Sellers under this Agreement, the Warranties and the
Business Sale Agreements shall be several and shall be limited as follows:
9.2.1 in the case of Motorola Limited in accordance with the provisions
of Clauses 9.3 to 9.14 (inclusive) of the UK Business Sale
Agreement;
9.2.2 in the case of Motorola Electronic GmbH in accordance with the
provisions of Clauses 12.3 to 12.14 (inclusive) of the German
Business Sale Agreement;
9.2.3 in the case of Motorola SA in accordance with the provisions of
Clauses 9.3 to 9.14 (inclusive) of the French Business Sale
Agreement; and
9.2.4 in the case of SA Motorola NV in accordance with the provisions of
Clauses 9.3 to 9.14 (inclusive) of the Belgian Business Sale
Agreement;
notwithstanding any other provision of this Agreement or the Business Sale
Agreements and where any other provision appears to be in conflict or
inconsistent with those Clauses the provisions of those Clauses shall
prevail, subject to the aggregate liability of the Sellers generally being
subject to the provisions of the Deed on Limitation of Liabilities.
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10. PROTECTION OF THE BUYER
10.1 Each Seller agrees with the Buyer in order to assure to the Buyer the full
benefit and value of the Business that:
10.1.1 for a period of 24 months after the Effective Date it shall wholly
discontinue and not recommence in any respect carrying on the
business of reselling cellular telephony services in the UK,
Germany, France and Belgium, as the case may be being those
cellular telephony services currently being provided by the
Sellers to their respective subscribers;
10.1.2 except as required by law or by any recognised investment exchange
at any time after the date of this Agreement it shall not disclose
to any person or use for any purpose and shall use all reasonable
endeavours to prevent the publication or disclosure of any
information concerning the Assets or the Business or clients and
customers of the Business where such publication or disclosure is
reasonably likely to have a material adverse effect on the
Business;
10.1.3 it shall not from the Effective Date use the name "Tel.co" or any
other name likely to be confused with that name; and
10.1.4 except as otherwise agreed in writing by the Buyer, it shall not
solicit or entice away any Employee engaged in the Business for a
period being the earlier of 24 months after the Effective Date and
the date when such Employee ceases to be employed by any member of
the Buyer's Group PROVIDED THAT in the event the Buyer intends to
make any such Senior Employee redundant, the Buyer shall notify
the Seller in advance of such redundancy and on such notification
this Clause 10.1.3 shall not apply to the Employee concerned; and
10.1.5 it shall not for a period of 24 months after Completion directly
or indirectly (i) persuade or attempt to persuade any customer who
did business with the Sellers
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within one year prior to Completion not to do business or to
reduce the amount of business it does with the Buyer's Group or
(ii) persuade or attempt to persuade any producer, manufacturer,
licensor, supplier or other person providing services or goods to
the Business not to do business or to reduce the amount of
business it does with the Buyer's Group.
10.2 Each Seller shall use its reasonable endeavours to procure that no member
of the Group shall do any of the above provided that nothing contained in
Clause 10.1 shall prevent any of the Sellers or any member of the Group
from:
10.2.1 holding or being interested in any class of securities listed or
dealt in on any stock exchange for investment purposes where its
interest does not exceed 10% of the issued securities of that
class;
10.2.2 carrying on or developing any business as currently carried on by
that company other than the resale of cellular telephony services
including, for the avoidance of doubt, any internet or telematics
services; and
10.2.3 being a party to any acquisition or merger, the primary purpose of
which is not to engage in a business which competes with the
Business and which competing business is only an incidental part
of the whole business (comprising not more than 5% of the revenue
of the particular business).
10.3 Each of the restrictions in this Clause 10 is considered by the parties to
be reasonable and each provision of this Clause 10 is separate and shall
be enforceable separately and independently of every other provision. If
any restriction shall be found to be unenforceable but would be valid if
some part of it were deleted or its scope reduced in some way then that
restriction shall apply with that necessary modification to make it valid
and effective.
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11. ANNOUNCEMENTS
The Sellers and the Buyer agree that no announcement of any kind shall be
made in respect of the subject matter of this Agreement except as
specifically agreed between them unless an announcement is required by law
or any recognised investment exchange in which case the contents of such
announcement where practicable shall be agreed between the Sellers and the
Buyer prior to its publication.
12. COSTS
All expenses incurred by or on behalf of the parties including all fees of
agents, representatives, solicitors, accountants and actuaries employed by
any party in connection with the negotiation and preparation and execution
of this Agreement shall be payable and paid solely by the party which
incurred that expense.
13. COMMUNICATIONS
13.1 Any communication or notice required to be given pursuant to this
Agreement or any Business Sale Agreement shall be in writing and shall be
delivered by hand or sent by facsimile or sent by first-class registered
or recorded delivery post if posting to an address within the country of
posting or by a recognised international courier if posting to an address
outside of the country of posting to the address of the relevant party as
set out in this Agreement or to any other address as any party may notify
for the purposes of this Clause and in the case of the Buyer marked for
the attention of Itzhak Fischer, President, RSL Communications Limited,
Clarendon House, Church Street, Hamilton HA CX, Bermuda with a copy to RSL
Communications, N Couriered America, Inc. 767 5th Avenue, Suite 4300, New
York, New York 10153, USA, fax: 212 317 0600, attention Avery Fischer and
in the case of the relevant Seller marked for the attention of the Country
Manager in the relevant country as detailed in the relevant Business Sale
Agreement, with a copy in the case of each Seller to the Director of the
Legal Department at Motorola Limited, 110 Bath Road, Slough, Berkshire,
SL1 3SZ by facsimile +44(0)
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1753 537390 and to the Director of Finance of the European Cellular
Subscriber Division at Midpoint, Alencon Link, Basingstoke, Hampshire,
RG21 7PL by facsimile +44(0) 1256 810032.
13.2 Any communication or notice pursuant to Clause 13.1 shall be deemed to
have been received and served:
13.2.1 if hand delivered at the time of delivery;
13.2.2 if sent by facsimile at the completion of transmission during
business hours at its destination or if not within business hours
at the opening of business hours at its destination on the next
business day and on:
13.2.2.1 proof by the sender that it holds a printed record
confirming dispatch of the transmitted notice to the
addressee; and
13.2.2.2 dispatch of the notice by post in accordance with Clause
13.1 on the same day as its transmission; and
13.2.3 if sent by post within 48 hours of posting (exclusive of the hours
of Sunday) if posted to an address within the country of posting
and five days of posting if posted to an address outside the
country of posting.
13.3 For the purpose of Clause 13.2 "business hours" means between 09.00 and
17.30 and "business day" means a day between Monday and Friday inclusive
on which banks in the country of the addressee are open for business.
14. MUTUAL GUARANTEE AND INDEMNITY
14.1 Motorola Limited unconditionally and irrevocably guarantees to the Buyer
the due and punctual performance and observance by the Sellers of all
their obligations and
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commitments and undertakings and warranties and indemnities under or
pursuant to this Agreement and each of the Business Sale Agreements and
agrees to indemnify the Buyer on first written demand against all loss and
damage and costs and expenses which the Buyer may suffer through or
arising from any breach by any of the Sellers of their obligations or
commitments or warranties or undertakings under or pursuant to this
Agreement and/or the Business Sale Agreements to the extent of any limit
on the liability of the Sellers in this Agreement and/or the Business Sale
Agreements.
14.2 The liability of Motorola Limited under this Agreement and/or the Business
Sale Agreements shall not be released or diminished by any variation of
the terms of this Agreement and/or the Business Sale Agreements (whether
or not agreed by Motorola Limited) or by any forbearance or neglect or
delay in seeking performance of the obligations imposed by this Agreement
and/or the Business Sale Agreements or by any granting of time for that
performance.
14.3 If and when the Sellers or any of them default for any reason in the
performance of any obligation or liability undertaken or expressed to be
undertaken by the relevant Sellers or any of them under or pursuant to
this Agreement and/or the Business Sale Agreements then Motorola Limited
shall promptly upon demand unconditionally perform (or procure performance
of) and satisfy (or procure the satisfaction of) the obligation or
liability in respect of which the default has been made in the manner
prescribed by this Agreement and/or the Business Sale Agreements and so
that the same benefits shall be conferred on the Buyer as would have been
conferred and received by the Buyer if the obligation or liability had
been duly performed and satisfied by the relevant Seller.
14.4 The guarantee contained in Clause 14.1 is:
14.4.1 a continuing guarantee which shall remain in force until all the
obligations of the Sellers referred to in Clause 14.1 have been
performed or satisfied; and
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14.4.2 in addition to and without prejudice to and not in substitution
for any rights or security which the Buyer may now or at any time
after the date of this Agreement and/or the Business Sale
Agreements have or hold for the performance and observance of the
obligations and commitments and undertakings and warranties of the
Sellers pursuant to or in connection with this Agreement and/or
the Business Sale Agreements.
14.5 As a separate and independent obligation on its part Motorola Limited
agrees that any obligation expressed to be undertaken by the Sellers
(including without limitation any monies expressed to be payable under
this Agreement and/or the Business Sale Agreements) which may not be
enforceable against or recoverable from the Sellers by reason of any legal
limitation or disability or incapacity on or of the Sellers or any other
fact or circumstances (other than any limitation imposed by this Agreement
and/or the Business Sale Agreements) shall be enforceable against and
recoverable from Motorola Limited as though it had been incurred by
Motorola Limited and Motorola Limited were the sole or principal obligor
in respect of that obligation which shall be performed or paid by Motorola
Limited on demand.
14.6 The obligations of this Clause 14 shall apply mutatis mutandis such that
reference to "Motorola Limited" shall be replaced by references to "the
Buyer", references to "the Buyer" by references to "the Sellers" and
references to "the Sellers" by references to "the Buyer and its
Subsidiaries".
14.7 Motorola Limited confirms that it is a wholly owned subsidiary of Motorola
Inc., a company listed on the New York Stock Exchange.
14.8 In consideration of Motorola Limited agreeing to give the guarantee
hereunder to facilitate the transaction set out in this Agreement, each of
the Sellers (other than Motorola Limited) agrees to indemnify Motorola
Limited for any claim arising in respect of a payment made in this Clause
14.
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14.9 In the event that either or both of the FT and SFR Contracts are not
assigned or novated to the Buyer or any member of the Buyer's Group prior
to 31 October 1998 or such other date as may be agreed between Motorola SA
and the Buyer, Motorola SA and the Buyer agree to use their best
endeavours to continue to operate the French Business as a going concern
with a view to selling the French Business at its market value to a third
party as soon as reasonably practicable thereafter. In the event that the
value received for the sale of the French Business in such circumstances
(including, without limitation, cash or securities received from the third
party and the assumption of debt or other liabilities by that third party)
is more than US$15 million (where neither the FT Contract nor the SFR
Contract has been assigned or novated to the Buyer or to a member of the
Buyer's Group), US$9 million (where the SFR Contract has been assigned or
novated to the Buyer or to a member of the Buyer's Group) or US$6 million
(where the FT Contract has been assigned or novated to the Buyer or to a
member of the Buyer's Group), the additional consideration over such
respective amount shall be divided equally between Motorola SA and the
Buyer.
14.10 If, notwithstanding the fact that either the FT or SFR Contract is not
assigned or novated to the Buyer or to a member of the Buyer's Group, the
Buyer is successful in procuring the migration of that unassigned or
unovated operator's Customers to the Buyer or to a member of the Buyer's
Group, the Buyer shall pay to Motorola SA the percentage of US$9 million
if the FT Contract is not so assigned or novated or US$6 million if the
SFR Contract is not so assigned or novated in either case less any
liabilities in relation to those Customers which are assumed by the Buyer
(and for the avoidance of doubt not already included in the Net
Liabilities) as corresponds to the number of Customers migrated to the
Buyer expressed as a percentage of the total number of Customers to whom
service is provided under the FT or SFR Contract, as the case may be.
15. ENTIRE AGREEMENT AND SCHEDULES
15.1 This Agreement (as amended from time to time) together with any document
expressly referred to in any of its terms, contains the entire agreement
between the parties relating to the subject matter covered and supersedes
any previous agreements, arrangements,
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undertakings or proposals, written or oral, between the parties in
relation to such matters. No oral explanation or oral information given by
any party shall alter the interpretation of this Agreement. The Buyer
confirms that, in agreeing to enter into this Agreement, it has not relied
on any representation save insofar as the same has expressly in this
Agreement been made a representation and agrees that it shall have no
remedy in respect of any misrepresentation which has not become a term of
this Agreement save that the agreement of the Buyer contained in this
Clause shall not apply in respect of any fraudulent or negligent
misrepresentation whether or not such has become a term of this Agreement.
15.2 All the Schedules form part of and shall be read together with this
Agreement.
16. ASSIGNMENT
16.1 This Agreement shall be binding on the parties and their respective
successors and assigns.
16.2 The Buyer shall not be entitled to assign its rights or obligations under
this Agreement without the prior written consent of each of the Sellers
which shall not be unreasonably withheld or delayed save that the Buyer
shall be entitled to assign its rights and obligations under this
Agreement (save for its guaranteed obligations contained in Clause 4) to
any person within the Buyer's Group provided that in the event that such
transferee or any subsequent transferee from time to time shall cease to
be a member of the Buyer's Group, the Buyer shall procure that before the
relevant transferee so ceases to be such a member the relevant transferee
will assign such rights and obligation in this Agreement to another
company in the Buyer's Group to the intent that such rights and
obligations shall always be retained by a company which is a member of the
Buyer Group.
17. NAME
17.1 Notwithstanding the definition of Goodwill contained in Clause 1.1, but
subject to the provisions of the relevant Trade Mark Licence, the Buyer
shall be entitled to apply and
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use the Motorola name and logo (either alone or with the name or mark
TelCo) in connection with the Business as follows:
17.1.1 during the period of six months from Completion, the Buyer shall
be entitled to apply and use the Motorola name and logo;
17.1.2 at any time prior to six months from Completion the Buyer shall be
entitaed to request and the Sellers shall consent for the use of
the Motorola name and logo for further periods of one month. The
Buyer shall be entitled to make five further requests following
the initial six month period to enable the use of the Motorola
name and logo for a maximum period of 12 months.
17.2 The Buyer shall:
17.2.1 not use the Motorola name and logo for any purpose or use not
currently utilised by the Business without the consent of the
Sellers; and
17.2.2 use all reasonable endeavours to cease using the Motorola name and
logo as soon as practicable following Completion.
18. RESTRICTIVE TRADE PRACTICES
Any provision of this Agreement or of any other agreement or arrangement
of which this Agreement forms part by virtue of which this Agreement is
subject to registration pursuant to the Restrictive Trade Practices Acts
1976 (or the equivalent legislation in the jurisdiction in which the
Business operates) shall not take effect until the day after particulars
of this Agreement or of that agreement have been provided to the Director
General of Fair Trading. The parties shall use all reasonable endeavours
to procure that those particulars be provided as soon as reasonably
practicable after the signing of this Agreement.
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19. WAIVER
No failure to exercise and no delay in exercising on the part of any of
the parties, any right or remedy in respect of any provision of this
Agreement shall operate as a waiver of that right or remedy and any single
or partial exercise of any right or remedy shall not preclude any other or
further exercise of that right or remedy. Any right of rescission
conferred on any party by this Agreement shall be in addition to and
without prejudice to all other rights and remedies available to it and no
exercise or failure to exercise that right of rescission shall constitute
a waiver by that party of that other right or remedy. Completion shall not
constitute a waiver by that party of any breach of this Agreement whether
or not known at the date of Completion.
20. MODIFICATIONS
This Agreement may be amended or modified or replaced or cancelled by
written instrument executed by all the parties and any of its provisions
may be waived by the party entitled to waive compliance with that
provision.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of which
when taken together shall constitute one and the same agreement.
22. EFFECT OF COMPLETION
This Agreement and each of its provisions remaining to be performed or
capable of having effect after Completion shall remain in full force and
effect notwithstanding Completion.
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23. INVALIDITY
23.1 If any provision in or any part of this Agreement shall be found to be
illegal or unenforceable under any enactment or rule of law, then that
provision or part shall to that extent be deemed not to form part of this
Agreement and the remaining provisions shall continue in full force and
effect.
23.2 Where any provision in or any part of this Agreement or the Business Sale
Agreements is found to be illegal or unenforceable under any enactment or
rule of law, the Sellers and the Buyer shall replace any such provision by
a valid and/or enforceable provision, the purpose and intent of which
shall be as close as possible to that of the provision that it shall
replace.
24. FURTHER ASSURANCE AND ASSISTANCE
24.1 The Sellers agree that they will do or procure the doing of all such acts
and things and execute or procure the execution of all such documents as
may be reasonably required on or subsequent to Completion to vest in the
Buyer legal and beneficial ownership of the Assets in accordance with the
Agreement and otherwise to give effect to its terms.
24.2 The Sellers will at the Buyer's request give to the Buyer all reasonable
assistance in the power of the Sellers to enable the Buyer to enforce the
Seller's Rights or any of them and the Buyer shall indemnify the Sellers
for all reasonable costs and expenses which the Sellers incur in giving
such assistance.
24.3 The Sellers shall at the cost of the Buyer, execute such assignments of
individual assets as the Buyer shall reasonably require from time to time.
24.4 Following Completion the parties shall provide all such information and
assistance as is reasonably required to comply with any regulatory
requirement applying to the sale of the Business in any jurisdiction.
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25. EQUIPMENT
25.1 Motorola Limited and the Buyer shall enter into the Distribution Agreement
at Completion.
26. ONGOING RELATIONSHIP
26.1 The Buyer will continue to service the Motorola group of companies in
Germany, UK, France and Belgium ("Motorola") and its employees in
accordance with the terms of their individual subscriber contracts as
transferred to the Buyer.
26.2 Subject to Clause 26.5, the Sellers will use their reasonable endeavours
to ensure that any Motorola employees who are given handsets by Motorola
or require access to a cellular airtime network will be connected to a
cellular airtime network through the Buyer.
26.3 Subject to Clause 26.5, the Sellers will not do anything to encourage its
employees to terminate their subscriber contracts with a view to changing
to another service provider.
26.4 Notwithstanding the foregoing, if Motorola decides to negotiate a package
on its own behalf or on behalf of its employees for the supply of cellular
airtime (with or without handsets and other accessories or related
benefits) it will give the Buyer the opportunity to negotiate to provide
such service before entering into any agreement with any other service
provider.
26.5 The Buyer will provide Motorola with those services and products that it
provides at the most competitive prices, with "best in class" service.
26.6 The Sellers will not enter into any arrangement with another cellular
service provider which is on worse terms taken as a whole than those
offered by the Buyer or any member of the Buyer's Group.
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27. PROPER LAW
The construction and validity and performance of this Agreement shall be
governed by the laws of England and Wales and each party submits to the
exclusive jurisdiction of the English courts for the purposes of
determining any dispute arising out of this Agreement or the transactions
contemplated by it (save where otherwise stated).
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SCHEDULE 6
Completion Statement
3. Completion Statement
3.1 The parties shall procure that forthwith after the Effective Date accounts
for the Business shall be prepared and reported on in accordance with the
provisions of this Schedule 6.
3.2 The Completion Statement shall consist of a statement prepared in
accordance with paragraph 1.3.2 below and shall expressly specify a figure
for the Net Liabilities.
3.3 The Completion Statement shall (subject as hereinafter provided):
3.3.1 be prepared in accordance with the historical cost convention and
with accounting principles generally accepted in the United States
by the American Institute of Public Accountants;
3.3.2 show accurately the Assets and Liabilities as at the Effective
Date; and
3.3.3 adopt bases and policies of accounting applied for the purposes of
the Accounts save where inconsistent with paragraph 1.4 below.
3.4 In preparing the Completion Statement:
3.4.1 no value shall be attributed to goodwill or any other intangible
asset;
3.4.2 Fixed Assets shall be included at their net book value at the
Effective Date;
3.4.3 all customer deposits are held as a liability in the Completion
Accounts until due for repayment to or requested by the customer;
and
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3.4.4 Debts and other current assets shall be valued in accordance with
the current accounting principles of the Business.
4. Procedure
4.1 The Sellers shall procure that within 60 days after the Effective Date the
Seller's Accountants shall prepare an audited Completion Statement and any
additional financial statement required to support the Buyer's SEC
reporting requirements and the Sellers' Accountants shall deliver the
Completion Statement to the Buyer's Accountants for consideration on
behalf of the Buyer. The Sellers shall bear the cost of the preparation of
the Completion Statement and the Buyers shall bear the costs of any
additional work carried out by the Sellers' Accountants in preparing the
additional financial statements. Such costs to be agreed in advance.
4.2 Within 28 days of receipt of such draft Completion Statement, the Buyer's
Accountants shall notify the Seller's Accountants in writing whether or
not they accept that the draft Completion Statement complies with
paragraph 1 and if they do not so accept, then the Buyer's Accountants and
the Seller's Accountants shall use their best endeavours to reach
agreement upon adjustment of the said draft to meet the objections of the
Buyer's Accountants.
4.3 When the Buyer's Accountants accept that the draft Completion Statement
complies with paragraph 1, the Buyer's Accountants shall sign a report to
the effect that the Completion Statement complies with paragraph 1 (and
shall certify a figure for Net Liabilities) and any Completion Statement
so reported on (which report shall state the Price) shall be the
Completion Statement for the purposes of this Agreement and shall be final
and binding on the parties.
4.4 In the event that the Seller's Accountants and the Buyer's Accountants are
unable to reach agreement as aforesaid any matter in dispute shall be
referred to the decision of a single independent chartered accountant or
an independent firm of chartered accountants (in
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either case, "the Independent Accountant") to be agreed upon between them
or (in default of such agreement) to be selected (at the instance of
either of them) by the President for the time being of the Institute of
Chartered Accountants in England and Wales. The Independent Accountant
(whose costs shall be paid as the Independent Accountant shall direct)
shall be familiar with US accounting principles; act as expert (and not as
arbitrator) and the decision of the Independent Accountant shall (in the
absence of manifest error) be final and binding on the parties. In giving
such decision the Independent Accountant shall state what adjustments (if
any) are to be made to the said drafts in order that the Completion
Statement shall comply with paragraph 2.
4.5 The Sellers and the Buyer agree that the provisions of this Schedule shall
apply separately in respect of the Business and Assets (other than the
French Business and Assets) on the one hand and the French Business and
Assets on the other hand and that the Completion Statement in respect of
the sale and purchase of the French Business shall be prepared within the
time periods referred to in this Schedule 6 as if the Effective Date were
the date of completion of the sale and purchase of the French Business.
5. Adjustment of Price
5.1 When the Completion Statement has become final and binding (whether under
paragraph 2.3 or by virtue of a decision of the Independent Accountant)
the figure for Net Liabilities in the Completion Statement shall be
deducted from US$85 million in respect of the Business and Assets (other
than the French Business and Assets) and from US$15 million in respect of
the French Business and Assets, each of which shall be referred to below
as the "Cash Element".
5.2 The Provisional Price (references to which shall be substituted by
references to the French Provisional Price where the context requires)
shall forthwith:
5.2.1 be increased by the amount (if any) by which the Cash Element is
greater than the Provisional Price; or (as the case may be);
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5.2.2 be reduced by the amount (if any) by which the Cash Element is
less than the Provisional Price.
5.3 The amount of any increase or reduction in the Provisional Price or the
French Provisional Price, as the case may be, shall be paid by the Buyer
or the Sellers (as the case may be) within 7 days after the Completion
Statement have become final and binding as aforesaid together in either
case with interest at the base rate of Barclays Bank plc from time to time
for the period from the Effective Date to the date on which payment is
made under this paragraph.
6. Acceptance of the Completion Statement by the Buyer shall be without
prejudice to any claim which the Buyer may have against the Sellers in
respect of any breach of the Warranties or this Agreement and shall not be
capable of any set off or deduction against any such Warranty Claim.
7. All sums payable under this Schedule shall be paid in cash in immediately
available funds (and in the case of sums payable to the Sellers shall be
paid to the Seller's Solicitors and in the case of sums payable to the
Buyer to the Buyer's Solicitors and payment to them will be a good and
sufficient discharge to the payer and the Buyer or the Sellers (as the
case may be) will not be concerned as to the application of the moneys so
paid).
8. The exchange rates to be used in preparing the Completion Statement shall
be the mid-point spot rates reported in the Financial Times on the date of
Completion.
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SCHEDULE 8
Agreed Form Documents
1. UK Business Sale Agreement
2. German Business Sale Agreement
3. French Business Sale Agreement
4. Belgian Business Sale Agreement
5. Disclosure Letter in respect of UK Business
6. Disclosure Letter in respect of German Business
7. Disclosure Letter in respect of French Business
8. Disclosure Letter in respect of Belgian Business
9. IPR Licence in respect of UK Business
10. IPR Licence in respect of German Business
11. IPR Licence in respect of French Business
12. IPR Licence in respect of Belgian Business
13. Facilities Agreement in respect of UK Business
14. Facilities Agreement in respect of German Business
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15. Facilities Agreement in respect of French Business
16. Facilities Agreement in respect of Belgian Business
17. Deed on Limitation of Liabilities
18. Distribution Agreement
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The Sellers
SIGNED by ROBERT SROKA ) /s/ SIGNATURE ILLEGIBLE
for and on behalf of ) -----------------------
MOTOROLA LIMITED )
in the presence of: HOWARD PALMER )
SIGNED by ROBERT SROKA ) /s/ SIGNATURE ILLEGIBLE
for and on behalf of ) -----------------------
SA MOTOROLA NV )
in the presence of: HOWARD PALMER )
SIGNED by ROBERT SROKA ) /s/ SIGNATURE ILLEGIBLE
for and on behalf of ) -----------------------
MOTOROLA ELECTRONIC GMBH )
in the presence of: HOWARD PALMER )
SIGNED by COLIN TURNER ) /s/ SIGNATURE ILLEGIBLE
for and on behalf of ) -----------------------
MOTOROLA SA )
in the presence of: SIGNATURE ILLEGIBLE )
The Buyer
SIGNED by MICHAEL KEEBLE ) /s/ MICHAEL KEEBLE
RSL COMMUNICATIONS ) ------------------
LTD ) MICHAEL KEEBLE
in the presence of: COLIN TURNER )
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DATED AUGUST 14, 1998
- --------------------------------------------------------------------------------
(1) MOTOROLA LIMITED
(2) RSL COM TELCO UK LIMITED
================================================================================
AGREEMENT RELATING TO SALE OF UK BUSINESS
AND ASSETS
================================================================================
OLSWANG
90 Long Acre
London WC2E 9TT
Tel: 0171-208 8888
Fax: 0171-208 8800
email: [email protected]
Ref: CXT/JSG/6240-1
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CONFORMED COPY
CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION.........................................1
2. AGREEMENT FOR SALE.....................................................3
3. COMPLETION.............................................................4
4. CONTRACTS..............................................................6
5. DEBTS..................................................................7
6. LIABILITIES............................................................8
7. EMPLOYEES..............................................................8
8. VALUE ADDED TAX.......................................................11
9. LIMITATIONS ON SELLER'S LIABILITY.....................................12
10. PENSIONS..............................................................16
11. CLAUSES INCORPORATED INTO THIS AGREEMENT..............................16
12. PROPER LAW............................................................17
SCHEDULE 1
Warranties............................................................18
SCHEDULE 2
Pensions..............................................................39
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THIS AGREEMENT is made the day of 1998
BETWEEN:
(1) MOTOROLA LIMITED (Company No. 912182) whose registered office is at Jays
Close Viables Industrial Estate Basingstoke Hampshire RG22 4PD ("Seller");
and
(2) RLS COM TELCO UK LIMITED (Company No. 3219541) whose registered office is
at 9 Old Queen Street, Westminster, London SW1H 9JA ("Buyer").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Except as otherwise provided in this Agreement, words and expressions in
this Agreement and the Schedules hereto have the meanings ascribed to them
in the Umbrella Agreement, unless the context requires otherwise:
"Disclosure Letter" the disclosure letter in the Agreed Form
dated with the same date as this Agreement
from the Seller to the Buyer disclosing
various facts and matters relating to the
Warranties given by the Seller and all
annexures to that letter;
"Employees" all the employees of the Seller involved in
the UK Business named in Part A of Schedule
1 to the Umbrella Agreement;
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"Employment Regulations" the Transfer of Undertakings (Protection of
Employment) Regulations 1981, as amended;
"Planning Acts" the Town and Country Planning Act 1990, the
Planning (Listed Buildings and Conservation
Areas) Act 1990, the Planning (Hazardous
Substances) Act 1990 and the Planning
(Consequential Provisions) Act 1990 and any
subsequent legislation of a similar nature
and any permission or consent or direction
made or issued under that legislation;
"Records" the records or copies of the records
relating to the UK Business in respect of
matters during the twelve month period
immediately preceding Completion;
"Umbrella Agreement" the agreement entered into by, among others,
the Seller and the Buyer in respect of the
sale of the Business and dated with the same
date as this Agreement; and
"Warranties" the warranties set out in Clause 8 of the
Umbrella Agreement and Schedule 1 to this
Agreement.
1.2 Unless the context requires otherwise words in the singular include the
plural and vice versa and words for any gender shall include all genders.
Reference to persons includes a body corporate.
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1.3 Other than in the case of the Warranties, reference to any statute or
statutory provision includes a reference to statutory instruments and
orders made further to it and includes consolidations or amendments or
modifications or re-enactments.
1.4 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.5 Unless otherwise stated a reference to a Clause or a Schedule or a party
is a reference to a Clause in or a Schedule or a party to this Agreement.
1.6 Reference to writing includes any method of reproducing words in a legible
and non-transitory form.
1.7 Unless the context requires otherwise any period of time from a specified
date or day shall be calculated exclusive of that date or day.
2. AGREEMENT FOR SALE
2.1 On the terms and subject to the conditions of the Umbrella Agreement and
this Agreement the Seller with full title guarantee shall sell to the
Buyer and the Buyer shall purchase free from all claims, charges, liens
and encumbrances as at and with effect from the Effective Date:
2.1.1 the UK Business as a going concern; and
2.1.2 the Assets of the UK Business.
2.2 In addition, the Buyer shall discharge the Liabilities in respect of the
UK Business in accordance with Clause 6.
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3. COMPLETION
3.1 The Seller shall deliver to the Buyer at the principal office of the UK
Business those Assets being sold by the Seller and which are capable of
being transferred by delivery.
3.2 In relation to the UK Business, the Seller shall cause to be delivered or
(if so requested by the Buyer) made available to the Buyer or the Buyer's
Solicitors:
3.2.1 those documents as are necessary or appropriate and requested by the
Buyer (acting reasonably) at least three business days prior to the
Effective Date to complete the sale and purchase of the Assets and
to vest title to each Asset in the Buyer including (without
limitation) assignment of the Goodwill, the Industrial Property
Rights, the Debts and the Contracts;
3.2.2 copies of all its nominal ledgers, sales ledgers, purchase ledgers,
cash book. payables ledger, payroll records, employee contracts,
income records, stock and other records relating to the UK Business
and information relating to customers and suppliers of the UK
Business (including, without limitation, the Customer List as at the
Effective Date) and copies of any relevant computer programs used
exclusively within the Business (including relevant discs and tapes
and, for those computer programs developed for or by, and owned by
the Seller exclusively, source codes) licences and any other books
and documents which relate to the UK Business (other than minute
books relating to directors' and shareholders' meetings and
statutory books);
3.2.3 copies of all its designs and drawings, plans, instructional and
promotional material, sales publications, advertising materials,
terms and conditions and other technical and sales matter which
relate to the UK Business, together with any plates, blocks,
negatives and other similar material relating to them;
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3.2.4 all test procedures for the computer systems relating to the UK
Business;
3.2.5 a list of sales distributors, identifying sales by subscriber and
the territory served since 1 January 1998 and copies of all the
current agreements with those distributors relating to the UK
Business;
3.2.6 copies of all records of national insurance, PAYE and other relevant
records relating to the Employees on the date of Completion duly
completed up to the Effective Date;
3.2.7 releases in the Agreed Form of the UK Business and the Assets from
all charges, debentures, bank guarantees or other encumbrances;
3.2.8 all Third Party Consents which the Seller may have obtained; and
3.2.9 an updated schedule listing the Employees at the Efeective Date.
3.3 The Buyer shall not be obliged to complete the purchase of any of the
Assets unless the purchase of substantially all the Assets is completed in
accordance with this Agreement.
3.4 The Buyer may waive any requirement contained in Clauses 3.2 and 3.3 or
may waive that requirement on condition that the Seller gives on
Completion a written undertaking to the Buyer in a form reasonably
required by the Buyer.
3.5 The Buyer agrees to provide to the Seller copies (or originals where
necessary) of any of the Records as the Seller may reasonably require for
a period of one year (and if required by the Inland Revenue or Customs &
Excise) seven years from Completion in order that the Seller may comply
with internal or external accounting, regulatory, taxation and other
requirements. In addition, the Buyer agrees to preserve the Records and
any systems
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required to access such Records in workable condition for a period of
seven years from Completion.
4. CONTRACTS
4.1 The Buyer shall perform and discharge for and on its own account the
obligations and liabilities under the Contracts from the Effective Date
and shall fully indemnify the Seller against all sums payable of any
nature arising from or in respect of any liabilities of the Seller in
relation to the Contracts by reason of any act or omission by the Buyer
after the Effective Date.
4.2 The Buyer shall perform the obligations of the Seller for after-sales
service and meet warranty claims of customers arising in the course of the
UK Business as a result of transactions carried out by the Seller prior to
the Effective Date where required by the Seller's conditions of sale,
including, for the avoidance of doubt, the extended 3 year warranties
given to certain customers, copies of which have been produced to the
Buyer or as the Buyer may be required to do by law.
4.3 As soon as reasonably practicable after becoming aware of any circumstance
giving rise to any liability of the Buyer pursuant to Clause 4.1, the
Seller shall give notice to the Buyer of that circumstance and shall take
no action in that respect without the prior written consent of the Buyer
(such consent not to be unreasonably withheld or delayed). The Buyer shall
have conduct of any claim arising under the Contracts and the Seller shall
take any action the Buyer may reasonably require to deal with that
circumstance and the resulting liability provided that the Buyer shall pay
any costs and expenses incurred by the Seller in taking that action.
4.4 To the extent that any of the Contracts cannot effectively be assigned to
the Buyer without the consent of a third party or except by an agreement
of novation then unless and
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until that consent is obtained or such Contracts are terminated in
accordance with their terms or novated:
4.4.1 the Seller and the Buyer shall use all reasonable endeavours to
obtain consent or to procure novation;
4.4.2 the Seller shall hold the benefit of those Contracts in trust for
the Buyer absolutely and the Buyer shall perform on behalf of the
Seller (for the benefit and at the expense of the Buyer) all the
obligations of the Seller arising after the Effective Date, the
Seller shall account to the Buyer for any amounts received under any
Contract and the Buyer shall indemnify the Seller against all sums
of any nature incurred by the Seller by reason of any act or
omission of the Buyer to perform or comply with any obligation of
the Seller to be performed after the Effective Date.
5. DEBTS
5.1 The Seller shall on or as soon as reasonably practicable but not more than
two weeks following Completion provide the Buyer with full details of the
Debts in respect of the UK Business and the Buyer may collect the Debts on
its own behalf.
5.2 The Seller shall give the Buyer such assistance and information as the
Buyer may reasonably require to assist the Buyer to collect the Debts
assigned to the Buyer pursuant to this Agreement, including, without
limitation, and at the request and cost of the Buyer, the sending of a
letter concerning the transfer of the Debts to the Buyer jointly written
by the Seller and the Buyer to the debtors of the Business.
5.3 The Seller shall pay to the Buyer within seven business days of receipt
any payment received in respect of any of the Debts.
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6. LIABILITIES
6.1 The Seller shall on or as soon as reasonably practicable but not more than
two weeks following Completion provide the Buyer with full details of the
Liabilities, including agreed payment terms, in respect of the UK
Business.
6.2 The Buyer shall discharge the Liabilities in respect of the UK Business in
accordance with the terms of such Liabilities.
6.3 In addition to the obligation in Clause 6.2 the Buyer shall fully
indemnify the Seller against every claim, action, liability, demand, loss
or expense (including all legal and other third party fees) which the
Seller may incur as a result of:
6.3.1 any failure by the Buyer to discharge the Liabilities; and
6.3.2 claims by third parties arising from defective products which may be
brought against the Seller in its capacity as reseller but not for
the avoidance of doubt in its capacity as manufacturer or original
supplier in respect of sales occurring after the Effective Date
which relate to the Business.
7. EMPLOYEES
7.1 The Seller and the Buyer intend that the contracts of employment of the
Employees shall be transferred to the Buyer pursuant to the Employment
Regulations except insofar as they relate to pension and death benefit
arrangements.
7.2 Subject to Clause 7.3, the Seller shall fully indemnify the Buyer against
any sums payable of any nature arising from or in respect of each and
every action, proceeding, liability, cost, claim, loss, expense (including
reasonable legal fees) or demand payable to or on
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behalf of any of the Employees arising from or relating to employment by
the Seller prior to the Effective Date in relation to any of its
obligations to the Employees.
7.3 The Seller shall indemnify the Buyer against all liabilities, obligations,
proceedings, court or tribunal orders, fines and penalties, damages,
expenses, costs (including legal costs) claims and demands arising from or
relating to:
7.3.1 any claim or other legal recourse by any prior or existing employee
of the Seller (other than Employees) in respect of whom the Buyer
may incur or has incurred liability as a result of the operation of
the Employment Regulations; and
7.3.2 any claim or other legal recourse resulting from the Buyer
dismissing any person who the Seller has dismissed prior to the
Effective Date (or purported to dismiss) in circumstances where the
Seller's dismissal (or purported dismissal) is ineffective by virtue
of it being automatically unfair by virtue of the provisions of the
Employment Regulations.
7.4 The Buyer shall fully indemnify the Seller against any sums payable of any
nature arising from or in respect of liabilities to any of the Employees
by reason of any act or omission by the Buyer from (and including) the
Effective Date in relation to any of its obligations to the Employees.
Except that the above indemnity shall not extend to anything relating to
pension and death benefits.
7.5 The parties shall promptly provide to each other in writing such
information as will enable them to carry out their respective duties under
regulation 10 of the Employment Regulations. If either party fails to
carry out its duties under regulation 10, that party shall indemnify the
other party against all liabilities, costs, expenses, claims and demands
which it may incur to the extent that they arise from any such failure.
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7.6 In the event that for any reason the contract of employment of any of the
Employees does not, through the operation of the Employment Regulations,
transfer:
7.6.1 the Buyer undertakes forthwith after the Effective Date to offer a
contract of employment to commence with immediate effect to any such
Employee on terms no less favourable except in sofar as they relate
to pension and death benefit arrangements than those enjoyed by the
Employee immediately before the Completion Date;
7.6.2 the Buyer shall indemnify and keep indemnified the Seller against
all claims, liabilities, costs, expenses or demands in respect of
any such Employee arising out of the breach by the Buyer of its
undertaking given in Clause 7.6.1 above save to the extent that the
terms of employment of such Employee as disclosed are those which
are actually enjoyed.
7.7 The Seller and the Buyer shall notify each other promptly in writing of
any claims of which they are entitled to claim under the indemnities at
Clause 7.2, 7.3 and 7.4 respectively above, and if either of the Seller or
the Buyer whichever is so entitled to claim, shall so request in writing,
they shall entrust to the other the care and conduct of conducting each
such claim, and shall at each other's expense give upon request by the
other any co-operation, assistance or information as may reasonably be
requested which is relevant to such claim.
7.8 All amounts payable to or in relation to the Employees including (without
limitation) salaries and other emoluments, tax and national insurance
payments, accrued holiday entitlement and contributions to retirement
benefit schemes shall be payable and paid by the Seller up to the
Effective Date and by the Buyer from (and including) the Effective Date
and all necessary apportionments shall be made accordingly without
imposing on the Buyer any obligation to make contributions to retirement
benefit schemes.
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7.9 The Buyer shall provide to the Seller promptly in writing, and the Seller
shall provide to the Buyer promptly in writing, such information as will
enable the respective parties to carry out their duties under Regulation
10 of the Employment Regulations.
7.10 As soon as reasonably practicable after Completion the Seller and the
Buyer shall give notice to each of the Employees in the Agreed Form
informing them of Completion and of the fact that the rights and
obligations of the Seller arising from contracts of employment (except
rights and obligations relating to pension and death benefit arrangements)
have been automatically transferred to the Buyer and that the date on
which the employment of any of the Employees commenced or is deemed to
have commenced with the Buyer shall (except insofar as it may be relevant
for calculating pension and death benefits) be the effective date of the
commencement of that employment with the Seller.
7.11 The Buyer shall indemnify and keep indemnified the Seller against every
claim, action, liability, demand, loss or expense (including all legal and
actuarial fees) which the Seller may incur as a result of any failure by
the Buyer to provide, or to procure the provision of, retirement, death
and related benefits in respect of any Employee's service after Completion
which are as favourable to the Employee as those provided in respect of
his service before Completion. Provided that this indemnity shall not
extend to any failure by the Buyer to provide or to procure the provision
of such benefits in respect of Graham Ward.
8. VALUE ADDED TAX
8.1 The parties shall use all reasonable endeavours to procure that the sale
of the UK Business is deemed to be a transfer of a business as a going
concern for the purposes of Section 49 of the Value Added Tax Act 1994 and
Article 5 of the Value Added Tax (Special Provisions) Order 1995. The
Buyer warrants that it will use the Business and Assets in carrying on the
same kind of business whether or not as part of any existing business as
that carried on by the Buyer.
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8.2 If the sale of the UK Business is not deemed to be a transfer of a
business as a going concern for the purposes referred to in Clause 8.1 or
if for any reason value added tax is held to be chargeable in respect of
the sale of any of the Assets (including but without limitation the
Stock), the Buyer shall forthwith following receipt from the Seller of a
valid value added tax invoice in respect thereof pay an additional amount
equal to any value added tax (including interest or penalties) properly
chargeable in respect of the sale of the UK Business.
9. LIMITATIONS ON SELLER'S LIABILITY
9.1 The Buyer acknowledges and confirms that it has not been induced to enter
into this Agreement or any other documents or arrangements referred to in
this Agreement including, without limitation, the Umbrella Agreement, by
any statement or statements of fact or opinion other than those statements
set out in this Agreement and subject to all matters which may be fairly
disclosed in the Disclosure Letter.
9.2 The liability of the Seller under this Agreement, the Umbrella Agreement
and the Warranties shall be limited in accordance with the provisions of
Clauses 9.3 to 9.14 (inclusive) notwithstanding any other provision of
this Agreement or the Umbrella Agreement and where any other provision
appears to be in conflict or inconsistent with those Clauses the
provisions of those Clauses shall prevail.
9.3 The liability of the Seller under this Agreement, the Umbrella Agreement
and the Warranties shall, in the absence of fraud, and other than in
respect of Warranties 1.1 and 1.2, cease on 31 March 2000 except as
regards any alleged specific breach of the Warranties in respect of which
notice in writing (containing full details of the event or circumstances
giving rise to the breach) shall have been served on the Seller prior to
that date.
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9.4 Where in relation to a claim under this Agreement, the Umbrella Agreement
and/or the Warranties for damages a notice has been served in accordance
with Clause 9.3 then unless proceedings are commenced in respect of that
claim by the issue and service of legal process (which are not satisfied
or withdrawn or settled) within six months of the date of the notice the
Seller shall cease to be under any liability in respect of that claim.
9.5 The Seller shall not be liable for breach of this Agreement, the Umbrella
Agreement and/or the Warranties unless the aggregate liability of the
Sellers under this Agreement, the Umbrella Agreement and the Business Sale
Agreements exceed US$1,000,000 and in that event the Seller shall be
liable for the whole claim and not merely for the amount exceeding the
limit in this Clause.
9.6 The liability of the Seller under this Agreement, the Umbrella Agreement,
the Business Sale Agreements and the Warranties shall not in any event
exceed US$68,100,000 until such time as the French Business Sale Agreement
is completed in accordance with the terms of the Umbrella Agreement.
Following completion of the French Business Sale Agreement, the aggregate
liability of the Sellers shall not in any event exceed (i) US$70,860,000
in the event that only the SFR Contract is assigned or novated to the
Buyer or any member of the Buyer's Group; (ii) US$72,240,000 in the event
that only the FT Contract is assigned or novated to the Buyer or any
member of the Buyer's Group or (iii) US$75,000,000 in the event that both
the FT and SFR Contracts are assigned or novated to the Buyer or any
member of the Buyer's Group or in any other event.
9.7 If the Seller pays to the Buyer an amount in respect of a claim under this
Agreement, the Umbrella Agreement and/or the Warranties and the Buyer
subsequently recovers from a third party an amount in respect of that
claim then the Buyer shall repay within 20 working days of receipt of that
sum to the Seller that portion of the amount paid by the Seller which is
equal to the amount recovered from the third party less all costs, charges
and expenses reasonably incurred by the Buyer in recovering that sum from
the third party.
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9.8 For the purpose of enabling the Seller to remedy a breach of this
Agreement which is remediable, the Umbrella Agreement and/or Warranty the
Buyer shall notify the Seller as soon as reasonably practicable but in any
event within 14 days of the breach coming to the notice of the Buyer.
Accordingly, the Seller shall have a period of 30 days following such
notification to remedy such breach (if capable of remedy) during which
period the Buyer shall not issue or serve legal process.
9.9 The Seller shall not be liable in respect of any claim for breach of this
Agreement, the Umbrella Agreement and/or the Warranties if the claim:
9.9.1 occurs or arises as a result of or is otherwise attributable to an
act or omission carried out after the date of this Agreement by the
Buyer or any of its Subsidiaries otherwise than in the ordinary
course of business and which was carried out by such person in the
knowledge or reasonably being expected to have the knowledge that it
would result in an increase of the liability of the Seller under the
Warranties; and
9.9.2 occurs or arises as a result of any change or changes in legislation
made after the date of this Agreement or the withdrawal of any
extra-statutory concession made by the Inland Revenue.
9.10 The Buyer shall procure that on service of any notice to the Seller of any
claim for breach of this Agreement, the Umbrella Agreement and/or the
Warranties the Buyer shall:
9.10.1 take any action the Seller may reasonably request to avoid or
dispute or resist or appeal or compromise or defend a claim in
relation to a third party subject to the Buyer being indemnified to
its reasonable satisfaction by the Seller against all losses, costs,
damages and expenses incurred by that action;
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9.10.2 allow the Seller and its agents access at all reasonable times and
on reasonable notice to and to inspect and take copies of all
necessary books and records;
9.10.3 use all reasonable endeavours to require its personnel to provide
statements and proof of evidence and to attend any trial or hearing
to give evidence or otherwise and to provide similar assistance to
enable the Seller to avoid or dispute or resist or appeal or
compromise or defend any claim provided that the Seller shall
reimburse all reasonable out of pocket costs and expenses incurred
by the Buyer in procuring such assistance and the salary costs of
any such personnel where in any month more than 20% of that
individual's working hours are utilised in providing assistance to
the Seller. The Seller shall also be entitled to assistance on the
basis set out in Clause 9.10.3 for litigation which comprises part
of the Excluded Liabilities;
9.10.4 take or procure that any relevant subsidiary shall take all
reasonable steps necessary to mitigate any loss in relation to any
action or claim;
9.10.5 the Seller shall also be entitled to assistance on the basis set
out in Clause 9.10.3 for litigation which comprises part of the
Excluded Liabilities.
9.11 Without prejudice to the duty of the Buyer to mitigate any loss in respect
of any breach of the Warranties the liability of the Seller for any breach
shall be reduced or extinguished to the extent that the Buyer or any
relevant Subsidiary is entitled to claim under any policy of insurance or
policies providing equivalent cover entitling it to claim under the policy
or policies. The Buyer shall procure that the relevant company shall use
all reasonable endeavours to recover all claims from the insurers before
proceeding against the Seller.
9.12 The Warranties given by the Seller are given subject to and shall be
qualified by the following:
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9.12.1 any matters fairly disclosed in the Disclosure Letter or in this
Agreement or the Umbrella Agreement or any schedules to such
agreements other than any contract which has not been disclosed in
the Data Room;
9.12.2 any matter expressly provided for under the terms of this Agreement
or the Umbrella Agreement;
9.12.3 any matter or thing done or omitted to be done prior to the date of
this Agreement by the Seller at the request of or with the approval
of the Buyer or its authorised representatives or professional
advisers or any of them; and
9.12.4 any matters included or expressly referred to in any accounts
relating to the UK Business or the notes to them provided to the
Buyer.
9.13 Claims for breach of this Agreement, the Umbrella Agreement and/or any
Warranty or representation shall be reduced by the amount of any relief
against taxation obtained or obtainable by the Buyer or persons deriving
title under it in respect of any loss or losses by reason of a matter not
being as warranted or represented.
9.14 The Warranties given by the Seller are in respect of the UK Business and
the Assets used in the conduct of the UK Business as at the Effective
Date.
10. PENSIONS
The Seller and the Buyer agree that the provisions of Schedule 2 shall
apply.
11. CLAUSES INCORPORATED INTO THIS AGREEMENT
Clauses 11 to 24 (inclusive) of the Umbrella Agreement shall be deemed to
be incorporated into this Agreement.
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12. PROPER LAW
The construction and validity and performance of this Agreement shall be
governed by the laws of England and Wales and each party submits to the
exclusive jurisdiction of the English courts for the purposes of
determining any dispute arising out of this Agreement or the transactions
contemplated by it.
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SCHEDULE 1
Warranties
CONTENTS
Paragraph Page
1. ASSETS................................................................20
1.1 Authority and Capacity of the Seller..................................20
1.2 Ownership of Assets...................................................20
1.3 Assets Sufficient for the UK Business.................................20
1.4 Fixed Assets..........................................................21
1.5 Investigations........................................................21
1.6 Material Information..................................................22
2. TRADING...............................................................22
2.1 Existing Suppliers....................................................22
2.2 Joint Ventures and Partnerships.......................................22
2.3 Agreements Restricting the UK Business................................22
2.4 Unfair Trade and Restrictive Practices................................23
2.5 Litigation............................................................24
2.6 Compliance with Statutes..............................................24
2.7 Powers of Attorney....................................................25
2.8 Licences and Consents.................................................25
2.9 Value Added Tax.......................................................25
3. CONTRACTS.............................................................26
3.1 Business Contracts....................................................26
3.3 Other Contracts.......................................................27
3.4 Defaults Under Agreements.............................................27
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3.5 Outstanding Offers....................................................28
3.6 Defective Products....................................................28
3.7 Service Liabilities...................................................28
3.8 Guarantees and Indemnities and Agreements for Services................28
3.9 Government Grants.....................................................29
4. RECORDS...............................................................29
......................................................................29
Books and Records...........................................................29
5. EMPLOYMENT............................................................30
5.1 Employees.............................................................30
5.2 Terms of Employment...................................................30
5.3 Bonus Schemes.........................................................31
5.4 Increase in Remuneration..............................................31
5.5 Termination of Contracts of Employment................................31
5.6 Industrial Disputes...................................................32
5.7 Industrial Agreements.................................................33
5.8 Pensions..............................................................33
6. INDUSTRIAL PROPERTY RIGHTS AND TRADE SECRETS..........................34
6.1 Disclosure of Industrial Property Rights..............................34
6.2 Validity..............................................................34
6.3 Infringements.........................................................35
6.4 Disclosure of Trade Secrets...........................................35
6.5 Secrecy Agreements....................................................36
7. POST-ACCOUNTING DATE EVENTS...........................................36
8. INSURANCE.............................................................37
9. REASONABLE ENQUIRY....................................................38
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1. ASSETS
1.1 Authority and Capacity of the Seller
At the date of this Agreement the Seller has all necessary power and
authority to enter into and perform this Agreement and the Umbrella
Agreement with the Buyer, and the Seller is entitled to sell the Assets to
the Buyer.
1.2 Ownership of Assets
1.2.1 The Seller has good and marketable title to and at the date of this
Agreement owns the Assets.
1.2.2 None of the Assets is subject to any option or lien or encumbrance
or any agreement or commitment to give or create any of these and
the Assets are the sole unencumbered absolute property of the Seller
and, so far as the Seller is aware, there is no unsatisfied
liability to tax attached or attributable to the Assets.
1.2.3 There has been no exercise or purported exercise or claim for any
charge or lien or encumbrance or equity over any of the Assets and
there is no dispute relating to any of the Assets.
1.3 Assets Sufficient for the UK Business
The Assets consist of all material assets used in the UK Business at the
date of this Agreement which are required for the full and effective
continuation of the UK Business as carried on at the date of this
Agreement.
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1.4 Fixed Assets
1.4.1 The Fixed Assets set out in Schedule 3 to the Umbrella Agreement
comprise substantially the whole of the Fixed Assets used in the
Business.
1.4.2 The machinery and equipment included in the Fixed Assets:
1.4.2.1 are in a good and proper and safe state of repair and
condition and are in good working order;
1.4.2.2 have been regularly and properly maintained;
1.4.2.3 are in the possession and control of and are the absolute
property of the Seller except for those items the subject of
hire-purchase or rental agreements are disclosed in the Data
Room or the Disclosure Letter; and
1.4.2.4 except in respect of software and computer equipment, are
not expected to require replacements or additions at a cost
in excess of (pound)50,000 within the period of six months
after the Effective Date.
1.5 Investigations
To the best of the knowledge and information and belief of the Seller
there are not pending or in existence any investigations or enquiries by
or on behalf of any governmental or other body in respect of the Seller or
the UK Business or any of the Assets.
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1.6 Material Information
So far as the Seller is aware there are no material facts or circumstances
in relation to the UK Business or the Assets which have not been fully and
fairly disclosed to the Buyer or the Buyer's Solicitors and which if
disclosed might reasonably be expected to affect the decision of the Buyer
to enter into this Agreement and/or the Umbrella Agreement.
2. TRADING
2.1 Existing Suppliers
So far as the Seller is aware, no supplier of the UK Business will, as a
result of the proposed acquisition of the UK Business by the Buyer, cease
supplying the UK Business or may substantially reduce its supplies to the
UK Business.
2.2 Joint Ventures and Partnerships
The Seller is not a party to any joint venture, consortium or any
partnership, arrangement or agreement or to any agreement or arrangement
for sharing commissions or other income relating to the UK Business.
2.3 Agreements Restricting the UK Business
The Seller is not a party to any agency or distributorship or marketing or
purchasing or manufacturing or licensing agreement or arrangement or any
restrictive trading or other agreement or arrangement pursuant to which
any part of the UK Business is carried on or which in any way restricts
the freedom to carry on the whole or any part of the UK Business or use or
exploit any of the Assets in any part of the world in any manner as the
Seller thinks fit.
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2.4 Unfair Trade and Restrictive Practices
2.4.1 So far as the Seller is aware, the Seller has not committed or
omitted to do any act or thing in relation to the UK Business which
is likely to give rise to any fine or penalty.
2.4.2 The Seller is not and has not been a party in relation to the UK
Business to any agreement or practice or arrangement which in whole
or in part:
2.4.2.1 contravenes or is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977;
2.4.2.2 contravenes the provisions of Part IX Fair Trading Act 1973;
2.4.2.3 would or might result in a reference of a "consumer trade
practice" within the meaning of Section 13 Fair Trading Act
1973 and be liable to reference to the Consumer Protection
Advisory Committee under Part II of that Act;
2.4.2.4 contravenes the provisions of the Trade Descriptions Acts
1968 and 1972; nor
2.4.2.5 contravenes the provisions of the Consumer Credit Act 1974.
2.4.3 The Seller has not engaged in any anti-competitive practice as
defined in the Competition Act 1980 in relation to the UK Business.
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2.5 Litigation
2.5.1 The Seller is not engaged in connection with the UK Business any
litigation or arbitration proceedings as plaintiff or defendant
(other than debt collection in the ordinary course of business) and,
so far as the Seller is aware, there are no proceedings, pending or
threatened, either by or against the Seller which would have a
material adverse affect on the UK Business.
2.5.2 There is no dispute in connection with the UK Business with any
revenue or other government agency in the United Kingdom or
elsewhere in relation to the affairs of the Seller and there are no
facts known to the Seller which may give rise to any dispute which
would have a material adverse affect on the UK Business.
2.5.3 So far as the Seller is aware having made all reasonable enquiry no
order has been made or petition presented or resolution passed for
the winding-up of the Seller nor has any distress or execution or
other process been levied in respect of the Seller nor is there any
unfulfilled or unsatisfied judgment or court order outstanding
against the Seller and affecting the UK Business.
2.6 Compliance with Statutes
Neither the Seller nor any of its officers, agents or Employees (during
the course of their duties in relation to the UK Business) has committed
or omitted to do any act or thing, the commission or omission of which is
or could be in contravention of any Act or Order, Regulation, permit,
consent or other authorisation, or the like including, for the avoidance
of doubt, any environmental statute, law or regulation giving rise to any
fine or penalty or default proceedings or other liability in relation to
the UK Business and/or the Assets and which would have a material adverse
effect on the UK Business.
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2.7 Powers of Attorney
There are not in force any powers of attorney given by the Seller in
relation to the UK Business.
2.8 Licences and Consents
2.8.1 The Seller has obtained any and all licences and authorisations and
consents from any person or authority or body which are necessary
for the proper carrying on of the UK Business and the Seller is not
at the date of this Agreement in breach of any of their material
terms or conditions.
2.8.2 Details of all the licences and authorisations and consents
including standard form software licences in respect of computer
equipment have been disclosed to the Buyer in the Data Room.
2.9 Value Added Tax
The Seller is duly registered for value added tax and all proper returns
and payments have been made as required by law for the legislation
relating to value added tax in connection with the UK Business.
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3. CONTRACTS
3.1 Business Contracts
The Business Contracts disclosed in the Data Room constitute all the
material contracts and other engagements, whether written or otherwise, in
relation to the UK Business other than the contracts of employment of the
Employees.
3.2 Nature of Contracts
None of the Contracts:
3.2.1 is of an unusual or abnormal or onerous nature taking into account
the industry in which the UK Business operates;
3.2.2 is for a fixed term of more than twelve months;
3.2.3 is of a long-term nature (in that it is incapable of performance in
accordance with its terms within twelve months after the date on
which it was entered into or undertaken);
3.2.4 will be incapable of termination in accordance with its terms by the
Buyer on twelve months' notice or less;
3.2.5 will not be capable of being fulfilled or performed by the Buyer in
time without undue or unusual expenditure of money or personnel;
3.2.6 involves the supply of goods the aggregate sales value of which will
represent in excess of 10% of the anticipated turnover of the UK
Business for the period of twelve months after the Effective Date;
nor
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3.2.7 was entered into in any way other than in the ordinary and normal
course of the UK Business.
3.3 Other Contracts
Compliance with the terms of this Agreement does not and will not:
3.3.1 conflict with or result in the breach of or constitute a default
under any of the terms conditions or provisions of the Memorandum or
Articles of Association of the Seller; nor
3.3.2 result in the creation or imposition of any lien or charge or
encumbrance of any nature on any of the Assets.
3.4 Defaults Under Agreements
3.4.1 The Seller is not:
3.4.1.1 in material default under any of the Contracts or in respect
of any other obligations or restrictions binding on it in
relation to the UK Business; nor
3.4.1.2 in material default under any provisions existing by reason
of membership of any association or body relating to the UK
Business.
3.4.2 So far as the Seller is aware, there is nothing to cause any of the
Contracts or any other agreement or instrument or arrangement to be
avoided or terminated or rescinded by any other party or to cause
the terms being materially worsened as against the Seller or to
cause the UK Business and/or the Assets to be
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materially prejudiced as a result of anything done or omitted or
permitted to be done by the Seller.
3.5 Outstanding Offers
Except in the ordinary course of the UK Business, no offer or tender or
similar invitation is outstanding in relation to the UK Business which is
capable of being converted into an obligation of the Seller by an
acceptance or other act of some other person or firm or corporation.
3.6 Defective Products
So far as the Seller is aware, the Seller has not sold products in
relation to the UK Business which were or are in any material respect
faulty or defective or which do not comply in any material respect with
any warranties or representations either expressly or impliedly made by
the Seller or with all applicable regulations and standards and
requirements.
3.7 Service Liabilities
Other than in the normal and usual course of the UK Business, the Seller
has not accepted any liability or obligation to service or repair or
maintain or take back or otherwise do or not do anything in respect of any
goods or products that would apply after those goods or products have been
delivered by it.
3.8 Guarantees and Indemnities and Agreements for Services
There is not now outstanding in respect of the UK Business any guarantee
or agreement for indemnity or for suretyship given by or to accommodate
the UK Business.
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3.9 Government Grants
The Seller has not applied for or received any grant or subsidy or
financial assistance from any government department or agency or any local
or other authority in respect of the UK Business.
4. RECORDS
Books and Records
All the books and records of the Seller (including all invoices and other
records required for value added tax) which are to be delivered to the
Buyer in accordance with this Agreement:
4.1 have been fully and properly and accurately kept and completed in
all material respects;
4.2 do not contain any material inaccuracies or discrepancies; and
4.3 give and reflect a true and fair view of the contractual and trading
position of the Seller and of its fixed and current assets and
liabilities (actual and contingent) and debtors and creditors and
all other matters which are and according to usual UK Business
practice would be recorded in them.
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5. EMPLOYMENT
5.1 Employees
The Employees listed in Schedule 1 Part A of the Umbrella Agreement
consist of all the persons employed by the Seller in relation to the UK
Business at the date of this Agreement.
5.2 Terms of Employment
5.2.1 Full and accurate particulars of the terms and conditions of
employment of all the Employees including (without limitation)
profit sharing or commission or discretionary bonus arrangements are
set out in Schedule 1 Part A of the Umbrella Agreement and in the
disclosure documents.
5.2.2 Accurate details have been supplied to the Buyer in writing of the
terms on which all consultants and other independent contractors are
engaged in the UK Business and no notice has been received from the
Inland Revenue intimating that those persons are in fact employees
of the Seller.
5.2.3 The Seller has neither offered any new contract of employment in
relation to the UK Business nor, so far as the Seller is aware,
become bound by any variation in any existing contract of employment
in relation to the Employees.
5.2.4 None of the Senior Employees or persons who have previously worked
in the UK Business is on maternity leave or on a long term leave of
absence from work on the grounds of sick leave or disability.
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5.2.5 Other than as disclosed in the Data Room there is in existence no
arrangement whereby the Seller or any member of the Group has agreed
to re-engage any Employee following the sale of the UK Business.
5.3 Bonus Schemes
5.3.1 There are no schemes in operation by or in relation to the Seller
under which any Employee is entitled to a commission or remuneration
of any other sort calculated by reference to the whole or part of
the turnover, profits or sales of the UK Business.
5.3.2 The Seller does not have in existence or participate in and is not
proposing to introduce or participate in any share incentive, share
option, profit-sharing, bonus or other incentive scheme for all or
any one of its employees or directors.
5.4 Increase in Remuneration
No negotiations for any increase in the remuneration or benefits of any
Employee are current or likely within the period of three months after
Completion.
5.5 Termination of Contracts of Employment
5.5.1 All subsisting contracts of service to which the Seller is a party
are determinable on three months' notice or less without
compensation (other than compensation in accordance with the
Employment Rights Act 1996).
5.5.2 No Senior Employee has given or received notice terminating his
employment except as expressly contemplated in this Agreement and no
Senior Employee will be entitled to give notice as a result of any
act or omission of the Seller in relation to this Agreement.
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5.5.3 None of the Senior Employees are the subject of disciplinary action
nor is any Senior Employee engaged in any grievance procedure and
there is no matter or fact in existence so far as the Seller is
aware which can be reasonably foreseen as likely to give rise to any
action or procedure.
5.5.4 The Seller is not in material breach of any contracts of employment
of any Senior Employee nor so far as the Seller is aware is any
Senior Employee in material breach of his contract of employment.
5.5.5 There are no outstanding obligations to pay any compensation or
contractual damages to any Employees.
5.5.6 No complaints have been made by or, so far as the Seller is aware,
are pending or are threatened by any Employee, in respect of sex or
race or disability discrimination or of unequal treatment.
5.5.7 All notices required to be issued under the Social Security Act 1975
in respect of the Employees have been issued.
5.5.8 The Seller has not dismissed any person for a reason connected with
the transfer of the UK Business.
5.6 Industrial Disputes
None of the Employees is involved in any industrial dispute and so far as
the Seller is aware there are no circumstances which may result in any
industrial dispute involving any Employees and, so far as the Seller is
aware, none of the provisions of this Agreement (including the identity of
the Buyer) will lead to any industrial dispute.
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5.7 Industrial Agreements
The Seller has not entered into any recognition agreement with a trade
union nor has it done any act which might be construed as recognition.
5.8 Pensions
5.8.1 Apart from the Motorola Pension Fund the Seller has no arrangements
(whether legal, moral or ex gratia) for providing or contributing
towards benefits on retirement, leaving service or death for or in
respect of any of the Employees. No announcement has been made of an
intention to establish any new arrangement for providing or
contributing towards any such benefits.
5.8.2 The Seller has given the Buyer true and accurate copies of:
5.8.2.1 the latest definitive trust deed and rules to the Motorola
Pension Fund and any later amending deeds or announcements
of any changes to benefits or contributions in respect of
the Employees, and
5.8.2.2 the latest editions of the members' booklets.
5.8.3 No discretion has been exercised in respect of any of the Employees
to increase benefits under the Motorola Pension Fund or (apart from
routine transfers-in) to provide benefits which would not otherwise
have been provided.
5.8.4 The Seller has notified the Buyer of the rates of contributions
which members are currently paying to the Motorola Pension Fund and
the definition(s) of earnings used to calculate contributions. Apart
from any outstanding in the ordinary course of business, all
members' contributions which have become due to the Motorola Pension
Fund have been paid.
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5.8.5 The Motorola Pension Fund is an exempt approved scheme within the
meaning of Chapter I Part XIV Income and Corporation Taxes Act 1988
and all of the Employees who are members of it (other than those who
are members for death in service benefit only) are contracted-out of
the State earnings related pension scheme by virtue of their
membership.
5.8.6 There are no disputes about benefits actual or threatened by or in
respect of any of the Employees relating to the Motorola Pension
Fund or the pension aspects of their contracts of employment.
5.8.7 The Schedule listing the Employees sex, date of birth, section of
the Motorola Pension Fund, Fund entry date and benefit details is
true and accurate.
6. INDUSTRIAL PROPERTY RIGHTS AND TRADE SECRETS
6.1 Disclosure of Industrial Property Rights
Schedule 4 Part A of the Umbrella Agreement contains inter-alia full and
accurate particulars of the Industrial Property Rights which are
registered and in respect of which the Seller is the beneficial or
registered owner or proprietor or licensee or in respect of which
applications for registration have been made and which the Buyer is buying
pursuant to this Agreement.
6.2 Validity
6.2.1 Each of the Industrial Property Rights is valid and enforceable and
the Seller is not aware of, nor has it been notified of, any fact or
matter which would or may affect the validity or enforceability of
any of the Industrial Property Rights.
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6.2.2 No right has been granted to any person to do anything which would
or might otherwise infringe any of the Industrial Property Rights
and no act has been done or omission permitted by which they or any
of them have ceased to be valid and enforceable.
6.3 Infringements
The Seller has not in relation to the UK Business infringed any patent or
registered design or trade mark or copyright or other intellectual or
industrial property right of any other person (or would not do so if the
same were valid) or taken any action which may give rise to a liability to
pay compensation pursuant to any legislation in respect of intellectual or
industrial property.
6.4 Disclosure of Trade Secrets
Save in relation to the sale process leading up to this transaction and
conducted on behalf of the Seller by Morgan Stanley, the Seller has not
(save in the ordinary and normal course of the UK Business) disclosed, or
permitted to be disclosed or undertaken or arranged to disclose, to any
person other than the Buyer any of its know-how or trade secrets or
confidential information or price lists or lists of customers or suppliers
relating to the UK Business.
6.5 Secrecy Agreements
The Seller is not a party to any secrecy agreement or agreement which may
restrict the use or disclosure of information relating to the UK Business.
7. POST-ACCOUNTING DATE EVENTS
7.1 Since the Accounting Date the Business:
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7.1.1 has carried on its business in the ordinary and usual course and
without any material interruption or alteration in the nature, scope
or manner of its business and nothing has been done which would be
likely to materially prejudice the interests of the Buyer as a
prospective buyer of the Business and Assets;
7.1.2 has not experienced any material deterioration in its financial
position or turnover or suffered any diminution of its assets by the
wrongful act of any person and the value of its net assets is not
materially less than the value of its net assets at the Accounting
Date and the Business has not had its business or profitability
adversely affected by the loss of any important customer or source
or supply or by any abnormal factor not affecting similar businesses
to a like extent and so far as the Seller is aware there are no
facts which are likely to give rise to any such effects;
7.1.3 has not acquired or disposed of or agreed to acquire or dispose of
any assets or assumed or incurred or agreed to assume or incur any
liabilities (actual or contingent) or create any charges, liens or
encumbrances otherwise than in the ordinary course of business
consistent with past practice;
7.1.4 has not become aware that any event has occurred which would entitle
any third party to terminate any material contract or any material
benefit enjoyed by it or call in any money before the normal due
date therefor the effect of which would be material to the Business;
and
7.1.5 has not altered in a material way its accounting policies and
practices.
7.2 The Business has begun to implement a process with the view to becoming
Year 2000 compliant.
36
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8. INSURANCE
8.1 All the assets of the Business which are of an insurable nature have been
at all material times and are at the date of this Agreement insured
against fire and other risks normally insured against by companies
carrying on similar businesses or owning property of a similar nature and
the Business has at all times been and is adequately covered against
accident, employer's liability, third party products liability, loss of 6
months' profits and other risks normally insured against by such
businesses and in respect of its business for such amounts as would in the
circumstances be prudent for such similar businesses; and in respect of
all such insurances:
a. all premiums have been duly paid to date;
b. all the policies are in full force and effect and are not voidable
on account of any act, omission or non-disclosure on the part of the
insured party;
c. particulars of such insurance are contained in the Data Room;
d. there are no circumstances which would or might give rise to any
material claim and no material insurance claim is outstanding; and
e. all policies are held in the name of the Business.
9. REASONABLE ENQUIRY
Where any of the statements set out above is qualified by the expression
"to the best of the knowledge, information and belief of the Seller" or
"so far as the Seller is aware" or any similar expression that statement
shall be deemed to include an additional statement that it has been made
after reasonable enquiry.
37
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SCHEDULE 2
Pensions
1. If any Employee who immediately before the Effective Date was a member of
the Motorola Pension Fund ("Scheme") exercises his statutory right to
require that a cash equivalent be paid by the trustees of the Scheme to a
retirement benefits scheme established or a group personal pension scheme
nominated by the Buyer the Seller shall (if it would otherwise be greater
than the cash equivalent calculated on the statutory basis) use its best
endeavours to procure that the payment shall be calculated on a past
service reserve basis.
2. If a retirement benefits scheme established by the Buyer or a group
personal pension scheme nominated by the Buyer receives a transfer amount
or transfer amounts, calculated in accordance with paragraph 1 on a past
service reserve basis from the Motorola Pension Fund then the Buyer
undertakes to procure that the entire transfer amount or transfer amounts
(without deduction in respect of any charges for commission,
administration or other expenses relating to the receipt by the trustees
of the retirement benefits scheme or the provider of the personal pension
scheme) are used in the provision of benefits for the Employees.
38
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The Seller
SIGNED by ROBERT SROKA ) /s/ SIGNATURE ILLEGIBLE
) -----------------------
for and on behalf of ) AS ATTORNEY-IN-FACT
MOTOROLA LIMITED )
in the presence of: HOWARD PALMER )
The Buyer
SIGNED by ) /s/ MICHAEL KEEBLE
) ------------------------
for and on behalf of MICHAEL KEEBLE ) AS ATTORNEY-IN-FACT
RSL COM TELCO UK LIMITED )
in the presence of: SIGNATURE ILLEGIBLE )
39
Company Press Release
RSL COM Acquires Motorola's European Cellular Airtime Services Business
Leads the industry in convergence of fixed wire and mobile telephony
HAMILTON, Bermuda-- (BUSINESS WIRE)-- June 29, 1998--RSL Communications, Ltd.
(NASDAQ:RSLCF - news) announced today that it has agreed to purchase Motorola
Tel.co., a division of Motorola's European Cellular Subscriber Group, for $75
million in cash and assumption of working capital deficit of approximately $25
million.
Motorola Tel.co is one of the largest independent providers of cellular air time
services and related products in Europe with operations in the United Kingdom,
France, Germany and Belgium. RSL COM has operations in each of these key markets
and will cross-sell existing RSL COM services through Motorola Tel.co's
excellent distribution channel of over 1000 points of sale and an existing
direct sales force. Motorola Tel.co has exceptional operational efficiencies and
customer care reflected by their being named service provider of the year 1997
by Germany's "Connect" magazine.
Motorola Tel.co has nine licenses from service providers across these four major
European markets. In 1997, Motorola Tel.co had total revenues in excess of $300
million. Motorola Tel.co has a customer base of approximately 480,000 which is
comprised of small and medium sized businesses as well as individuals affiliated
with businesses.
"Recognizing the growing trend in the use of mobile phones throughout Europe,
RSL Communications' purchase of Motorola Tel.co allows us to provide our
European customers with a complete set of telecommunications services," said
Itzhak Fisher, President and Chief Executive Officer of RSL Communications.
"By acquiring a business with nearly half a million customers across Europe, RSL
COM will now be able to provide bundled fixed line and mobile services to a
significantly expanded customer base at very attractive rates. This means that
Motorola Tel.co's mobile customers will have the opportunity to easily obtain
RSL COM's fixed line services and RSL COM's customers now have the opportunity
to receive mobile service, all from one provider. This investment gives RSL COM
a significant head start in the convergence of fixed-wire and mobile telephony,"
he said.
Richard Williams, President and CEO of RSL COM Europe, Ltd. added, "In
purchasing Motorola Tel.co, RSL COM is also acquiring an extremely strong
management team that understands the European mobile service provider market.
Our expanded European management team is now well positioned to grow RSL COM's
European business."
Commenting on the acquisition, Graham Ward, General Manager of Motorola
Tel.co., said, "To be a competitor in the European telecommunications markets,
you must be able to provide both fixed line as well as mobile services. This
will grow from a one-stop shop and progress toward integrated services with
other value-added features. RSL COM is a dynamic telecommunications company and
our team is excited by this outstanding opportunity."
RSL Communications, Ltd. is a global facilities-based telecommunications company
that provides international services, including long distance, calling card,
private line, value-added and Internet-based services for businesses, consumers
and other carriers worldwide. The Company operates on four continents in twenty
countries that account for nearly 70 percent of the world's international
traffic.
<PAGE>
The acquisition is subject to receipt of various third party and work council
approvals and is expected to be completed during the third quarter of 1998.
This press release contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, and are subject to the safe harbors created
hereby. Investors are cautioned that any such forward-looking statements are not
guarantees of RSL COM's future performance and involve risks and uncertainties,
and RSL COM's future actual results could differ materially from the forward
looking statements discussed herein as a result of various factors. A list of
certain factors that could cause actual results to differ materially from those
discussed herein can be found in the documents the company files with the SEC,
including those contained in RSL COM's registration statement, and Form 10-K for
the year ended December 31, 1997.
This release is available on the RSL COM website at www.rslcom.com.
- -------------
Contact:
RSL COM
Alan Garratt/Karen van de Vrande
212/891-7450/7429
E-mail: [email protected]/[email protected]
or
MOTOROLA
Barbara Jankowski
Tel: +44 1256 790 173
E-mail: [email protected]
or
KCSA
Jeffrey Corbin/Joseph A. Mansi
212/682-6300, ext. 214/205
E-mail: [email protected]
