EXHIBIT 10.4
Public Deed No. 44/2000
P U B L I C D E E D
(Offentliche Urkunde)
Before me, the undersigned Public Notary of the Canton of Zug, Switzerland,
Peter B. Arnold, at his offices at Untermuli 6, CH-6300 Zug, Switzerland,
appeared on Saturday, this 6th day of May 2000:
Mr. Stefan Koller, Attorney at Law and Notary Public, born 23.09.1958, Swiss
citizen, residing at CH-6312 Steinhausen, Switzerland, Rebenstrasse 6, having
his offices at Untermuli 6, CH-6300 Zug, Switzerland, here not acting in his own
name, but as representative, exempt of personal liability, acting without
express authority in the name and on behalf of
Seat Pagine Gialle S.p.A., Via Aurelio Saffi, 18, I-1038 Turin, Italy
and
RSL COM Deutschland GmbH, D-60528 Frankfurt am Main, Lyonerstr. 9
and
J.P. Morgan Securities Limited, 60 Victoria Embankment, GB-London EC 4Y 0JP
and
Morgan Stanley Bank AG, Junghofstrasse 13-15, D-60311 Frankfurt am Main
under the reservation to supply to the acting notary a forthcoming certified
consent by each one of the foregoing parties, in legally appropriate form, as
soon as reasonably possible and without undue delay.
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This having been done, the person appearing declared, requesting that it be
notarised, the following:
I. RSL Com Deutschland GmbH and Seat Pagine Gialle S.p.A. hereby conclude the
Joint Venture Agreement as Annex I with the following Exhibits:
1 Articles of Association of Telegate Holding GmbH, Planegg-Martinsried,
Germany, to be amended as shown in Exhibit 1 to the Joint Venture
Agreement
2 Business Plan as Exhibit 2 to the Joint Venture Agreement
3 Option Agreement between Seat Pagine Gialle S.p.A. and RSL Com Deutschland
GmbH as Exhibit 3, such Exhibit 3 with Sub-Exhibits 1 to 4, with a Share
Purchase Agreement in Sub-Exhibit 4, Sub-Exhibit 4 with a Share Transfer
Agreement in Annex 1;
4 RSL Com Deutschland GmbH, J.P. Morgan Securities Ltd. and with regard to
the Escrow Agreement as referred to below Morgan Stanley Bank AG hereby
conclude the Borrowing and Forward Purchase Agreement as Exhibit 4 to the
Joint Venture Agreement which consists of:
the Overseas Securities Lender's Agreement together with a Schedule
concluded between RSL Com Deutschland GmbH and J.P. Morgan
Securities Ltd.;
the Borrowing Request concluded between RSL Com Deutschland GmbH and
J.P. Morgan Securities Ltd.;
the Agreement for the Transfer of Shares concluded between RSL Com
Deutschland GmbH and J.P. Morgan Securities Ltd., with a
shareholders' resolution of May 4, 2000 (Appendix 1), an approval of
the managing director of May 4, 2000 (Appendix 2), a shareholders'
resolution of May 6, 2000 (Appendix 3), and approval of future
shareholder dated May 6, 2000 (Appendix 4);
the Escrow Agreement with an Account Opening Application and the
General Business Conditions of Morgan Stanley Bank AG concluded
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between RSL Com Deutschland GmbH, J.P. Morgan Securities Ltd. and
Morgan Stanley Bank AG;
the ISDA 1992 Multicurrency Cross Border Master Agreement together
with a Schedule concluded between RSL Com Deutschland GmbH and J.P.
Morgan Securities Ltd.;
the Forward Purchase Transaction concluded between RSL Com
Deutschland GmbH and J.P. Morgan Securities Ltd.;
the Master Netting Agreement concluded between RSL Com Deutschland
GmbH and J.P. Morgan Securities Ltd.;
5 RSL Com Deutschland GmbH and Seat Pagine Gialle S.p.A. conclude the Share
Purchase Agreement together with a Share Transfer Agreement as Annex 1 to
the Share Purchase Agreement as Exhibit 5 to the Joint Venture Agreement;
6 Guarantee given by the Parent Company of RSL
and Schedules 5 e (financial statements),
5 i (agreements),
5 l (Betriebsvereinbarungen) ,
5 p (litigation),
5.2 (data room index list).
II. RSL Com Deutschland GmbH, Seat Pagine Gialle S.p.A., J.P. Morgan
Securities Ltd. and Morgan Stanley Bank AG hereby conclude the Arbitration
Agreement as Annex II.
III. Words and expressions in this deed and its appendices and annexes shall
have the meanings defined in the respective part of this deed, and
definitions used in one agreement contained in this deed are not
necessarily applicable in another agreement contained in this deed.
IV. The costs of this deed shall be borne by the Seat Pagine Gialle S.p.A. All
other costs shall be borne by the party by which they are incurred.
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The notary informed the person appearing that
- shareholders in a GmbH can be held jointly and severally liable for
capital contributions not fully paid in,
- insofar as the transfer of the title is subject to conditions precedent,
the title passes only if those conditions are fulfilled.
The above and all appendices and annexes were laid out for inspection to the
person appearing and were approved by the person appearing and read out aloud to
the person appearing before the notary, approved by the person appearing and
executed by him in his own hand as follows:
Zug/Switzerland, this 6th day of May 2000
/s/
--------------------------
Stefan Koller
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Joint Venture Agreement
(Umbrella Agreement)
between
Seat Pagine Gialle SpA, with domicile in Turin (hereinafter "Seat"), an Italian
stock corporation,
and
RSL COM Deutschland GmbH, with domicile in Frankfurt am Main, a German limited
liability company (hereinafter "RSL"),
(hereinafter together the "Parties")
Preamble
Seat is mainly active in the fields of producing and publishing telephone
directories and similar publications, and of selling advertising space in such
directories and publications, as well as providing direct marketing services, in
Italy and elsewhere.
RSL is active in the field of providing a broad range of voice, data, internet
and value-added product and service solutions within the telecommunications
industry.
RSL is active in the said field through amongst others (since 1998) a
participation of approx. 50.2 % in Telegate Holding GmbH (hereinafter the
"Holding"), a German holding company which in turn holds approx. 51% of the
shares in Telegate AG (hereinafter "Telegate"), a German stock corporation whose
shares are traded on the Frankfurt Neuer Markt and which is also active in the
field of providing directory assistance and other information, mostly via
telephone but also through an internet portal. Concurrently with the
notarization of this Agreement, Seat will notarize an agreement with the sole
other shareholder in the Holding, L, (the "L Umbrella Agreement") with a view to
acquire L's shareholding in the Holding.
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RSL wishes to expand the existing cooperation between RSL and Telegate currently
consisting of providing call completion services domestically and
internationally into a strategic partnership with Seat, as the new joint
venture-partner, by means of entering into a joint venture with Seat through
joint shareholding in the Holding (as a consequence of L's exit), allowing Seat
to take the lead in the joint venture and restricting RSL's role therein to
support Seat; it is anticipated that the support by RSL will no longer be needed
after a certain period of time. In view of that later time RSL wishes to offer
Seat and Seat wishes to offer RSL the right to request Seat to acquire RSL's
remaining shareholding in the Holding.
RSL wishes to allow Seat to take the lead in the Holding, and thus wishes to
transfer to Seat a 1.6 % share in the Holding thereby conferring the majority of
the Holding to Seat; via JPMorgan acting as an intermediary in this transaction
(hereinafter the "Intermediary"). For that purpose, RSL will transfer the said
share to Intermediary in in a separate Borrowing and Forward Purchase Agreement
(Exhibit 4 to this Agreement), and Intermediary will transfer the said share to
Seat in a separate Share Purchase (Contribution) Agreement (Exhibit 5 to this
Agreement).
By the present Agreement, Seat and RSL agree what shall apply between them in
connection with the above.
Section 1
The Principles Governing the Joint Venture
1. Strategic Partnership between RSL and Seat
The Parties wish to enter into a strategic partnership with the aim of
fostering the growth of Telegate. The undertakings of RSL under this
Agreement shall show that RSL as the current majority shareholder in the
Holding continues its support of Telegate also after surrendering control
to Seat. At the same time, Seat as the new controlling shareholder of the
Holding requires flexibility to integrate Telegate into its own overall
strategic objectives.
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The Parties agree that in the Holding Seat shall hold approx. 51.4 % and
RSL approx. 48.6 %. For that purpose, RSL shall transfer shares in the
Holding with an aggregate nominal value of DM 800 (corresponding in total
to approx. 1.6 % of the share capital of the Holding) to Seat, as set
forth in Section 2 subparagraph 1 and Section 3 subparagraph 1 below.
2. Scope of Joint Venture Activities
The joint venture activities shall relate to the support of Telegate's
European and American expansion (see subparagraph a) below) and internet
activities (see subparagraph b) below) and Italian expansion in particular
(see subparagraph c) below).
a) European and American Expansion
RSL undertakes to offer support to Telegate regarding the following
matters on a non-exclusive basis, and subject to arm's length
commercial terms and conditions:
(i) Inbound access
(ii) Completion services
(iii) Network allocation
(iv) Real estate allocation
(v) Regulatory support
(vi) RSL own usage
(vii) Billing services
b) Cooperation in the Internet Activities
RSL undertakes to offer support to Telegate regarding the following
matters on a non-exclusive basis, and subject to adequate terms and
conditions:
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(i) Cooperation with RSL ASP (application service provider)
activity
(ii) Cooperation with RSL free internet access product line
(iii) Use of RSL web hosting.
Seat undertakes to offer support to Telegate regarding the following
matters on a non-exclusive basis, and subject to adequate terms and
conditions:
(i) Development of 11880.com internet service offering
c) Italian Expansion
Seat undertakes to offer support to Telegate regarding the following
matters on a non-exclusive basis , and subject to adequate terms and
conditions:
(i) Development of audio services portal activities
(ii) Cooperation with Seat on developing White Pages activities
(iii) Development of 11880.com internet service offering
3. Implementation
a) Articles of Association of the Holding
The Parties agree that the Articles of Association of the Holding
shall have the form shown in Exhibit 1 to this Agreement. The
Parties shall comply with such amended Articles of Association as of
the day when Seat becomes a shareholder of the Holding even if the
amendment of the Articles of Association (to be resolved upon
pursuant to Section 11 subparagraph 1 litt. a) below) should by then
not yet be registered with the competent commercial register.
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b) Business Plan
The Parties shall develop in good faith a business plan based on the
business targets as set out in Exhibit 2 to this Agreement. Such
business plan shall be approved by a shareholders' resolution to be
taken no later than September 30, 2000, unless the Parties agree
otherwise. Any revision and changes to this plan shall also be
agreed upon by way of a shareholders' resolution.
c) Strategy Meetings / Working Group
The Parties shall establish a working group which shall hold regular
meetings in order to review the progress and in order to prepare any
necessary modification to the business plan. Meetings shall take
place at least every 2 months upon request of either party and shall
typically be held by way of telephone-/video conferences. The party
inviting to the meeting shall be responsible for drafting the
minutes.
4. Structure of the Holding / Obligation to not Sell Share
In light of its role assumed in the Joint Venture, RSL undertakes that it
will not wholly or partly dispose of its shareholding in the Holding in
any way, be it by selling, transferring, encumbering, pledging or granting
any other rights to third parties of whatever nature in its shareholding
in the Holding to a third party. For each violation of this undertaking,
RSL shall owe a penalty equal to the consideration that would have been
applicable if the Put Option or the Call Option pursuant to the Option
Agreement (Exhibit 3 to this Agreement) had been exercised (at the time of
the violation), it being understood that Seat may claim from RSL any
higher amount of damage which it can show to have occurred. Seat has also
the right to claim from RSL to restore its full and unencumbered
shareholding in the Holding, and to then transfer its shareholding in the
Holding to Seat at 90 % of the afore-mentioned penalty.
5. Changes in the Holding
The Parties agree that the Holding shall continue to hold its present
shareholding in Telegate. RSL and Seat will undertake in good faith
<PAGE>
negotiations with a view to change the size of the shareholding of the
Holding in Telegate, if that is necessary in order to allow Seat to
acquire the Remaining Shareholding by way of a contribution in kind, as is
nearer explained in Section 8 of this Agreement and in the Option
Agreement (Exhibit 3 to this Agreement), provided that such change must in
no way adversely affect the position of RSL in and with regard to the
exercise of the options under the Option Agreement.
6. Changes in Telegate's share capital
In the event that during the term of the Joint Venture Telegate intends to
increase its share capital in a manner leading to Holding holding only 50%
or less of the shares in Telegate RSL shall have the opportunity of either
subscribing shares on a pro-rata basis to its indirect shareholding (as a
consequence of which the amount of shares in Telegate covered by the put-
and call-option according to the Option Agreement shall be adjusted
accordingly) or getting sufficient time, but not more than two months
after a respective request of Seat (but in no case earlier than January 1,
2001) to obtain consent of its bondholders allowing it to reduce the
holding of Holding in Telegate to 50% or less. In the event RSL chooses to
seek for the consent of its bondholders and the aforementioned period
expires without RSL stating to Seat that approval has been obtained Seat
shall be entitled to exercise its call-option under the Option Agreement.
Section 2
The Majority-Conferring Share and its Transfer
Concurrently to the notarization of the present Agreement, Seat will notarize
the L Umbrella Agreement with, whereby Seat will acquire a shareholding of a
nominal DM 25,400 corresponding to approx. 49.8 % in the Holding. By virtue of
the present Agreement, Seat shall acquire an additional shareholding of approx.
1.6 % in the Holding (as nearer set forth in this Section 2) which additional
shareholding shall hereinafter be referred to as the "Majority-Conferring
Share".
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1. The Majority-Conferring Share shall be a share in the Holding with a
nominal value of DM 800 out of a total nominal share capital of the
Holding of DM 51,000 and hence representing approx. 1.6 % of the share
capital in the Holding. RSL shall create the Majority-Conferring Share by
splitting its existing share in the Holding with a nominal value of DM
25,600 into two shares with nominal amounts of DM 24,800 and DM 800 (the
Majority-Conferring Share), respectively. Concurrently with the
notarization of this Agreement, (i) RSL has declared the said split by the
declaration shown in Appendix 2 to the Agreement for the Transfer of
Shares attached to the Borrowing and Forward Purchase Agreement (Exhibit
4); (ii) the Holding has approved of the said split, by the declaration
shown in Appendix 1 to the Agreement for the Transfer of Shares attached
to the Borrowing and Forward Purchase Agreement (Exhibit 4); (iii) and L,
RSL and the Intermediary, each in its capacity as (future) shareholder of
the Holding, shall approve of the transfers of the Majority-Conferring
Share, by the declaration shown in Appendices 1, 3 and 4 to the Agreement
for the Transfer of Shares attached to the Borrowing and Forward Purchase
Agreement (Exhibit 4).
2. The Majority-Conferring Share shall be transferred from RSL to the
Intermediary by virtue of the Borrowing and Forward Purchase Agreement
(Exhibit 4). The Intermediary shall transfer the Majority-Conferring Share
further to Seat as a contribution in kind to the an increase of the share
capital of Seat, through a Share Purchase (Contribution) Agreement which
shall be notarized concurrently with this Agreement, which is attached as
Exhibit 5 to this Agreement and pursuant to which the transfer to Seat
shall become effective at the shortest possible interval before the newly
issued shares shall in freely tradeable form be delivered to the
Intermediary.
Section 3
Consideration
1. The consideration for the Majority-Conferring Share, owed by Seat to the
Intermediary (only), shall consist in shares in Seat in such number as is
defined in subparagraph 2, and shall be due at such time as is defined in
subparagraph 3.
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The consideration for the Majority-Conferring Share, to which RSL is
entitled against the Intermediary (only), shall consist in cash generated
by the monetization of the shares due by Seat to the Intermediary, in such
amount as set forth in subparagraph 4, and shall be due at such time as
set forth in subparagraph 5.
2. The number of shares in Seat due for the Majority-Conferring Share shall
be calculated as follows:
(i) Firstly, it shall be established what number of Telegate shares the
Majority-Conferring Share indirectly represents (Example: If there
is a total of 12,730,000 outstanding Telegate shares of which the
Holding owns 6,490,577 shares, and the Holding has a registered
share capital of DM 51,000, then the Majority-Conferring Share with
a nominal value of DM 800 shall represent 101,813 shares in
Telegate);
(ii) Secondly, the value of the shares in Telegate and Seat shall be
assessed. (a) For this purpose, the value of each share in Telegate
shall be deemed to be the higher of (aa) 150 and (bb) the official
closing price as published by Bloomberg for Telegate shares on the
Frankfurt Stock Exchange one day prior to the notarization of this
Agreement (hereinafter "T.May3"); whilst (b) the value of each share
in Seat shall be the Official Closing Price ("Prezzo di
Riferimento") as published by Bloomberg for Seat shares on the Milan
Stock Exchange one day prior to the notarization of this Agreement
(hereinafter "S.May3").
(iii) By comparing the respective values, which is to be done by dividing
(a) the higher of (aa) 150 and (bb) T.May3 by (b) S.May3, the number
of Seat shares is obtained which correspond to one Telegate share.
3. Seat shall transfer such number of Seat shares as result from the above
calculation to the Intermediary at such moment when an according number of
Seat shares will be available following
(i) a resolution, to be passed at Seat's extraordinary shareholders'
meeting scheduled to take place on or around June 30, 2000, whereby
the registered share capital of Seat shall be increased by such an
amount and in such ways as is necessary to allow Seat to provide the
Intermedi-
<PAGE>
ary with such number of new Seat shares as will be owed as
consideration for (i) the Majority-Conferring Share, and (ii) the
Shareholding as defined in and pursuant to the L Umbrella Agreement;
and
(ii) the completion of such additional steps as are required under
Italian law for making the new shares resulting from the said
shareholders' resolution on the capital increase, available as
freely tradeable shares.
The Parties expect the said new Seat shares to be available as freely
tradeable shares on or around August 7, 2000. If this is not the case by
October 15, 2000, Section 4 subparagraph 3 shall apply.
4. RSL shall receive from the Intermediary a cash amount for the
Majority-Conferring Share which is to be calculated as follows
(hereinafter the "Cash Equivalent"):
(i) Firstly, it shall be established (the same way as in subparagraph 2
(i)) what number of Telegate shares the Majority-Conferring Share
indirectly represents;
(ii) Secondly, the price of the Telegate share shall be deemed to be the
higher of (aa) 150 and (bb) the closing price as published by
Bloomberg for the Telegate share on the Frankfurt Stock Exchange one
day prior to the notarization of this Agreement;
(iii) Thirdly, the number of Telegate shares represented by the
Majority-Conferring Share (subparagraph (i)) shall be multiplied
with the price of the Telegate share as resulting from subparagraph
(ii).
5. The Intermediary shall pay the Cash Equivalent into an escrow account two
banking days after the notarization of the Borrowing and Forward Purchase
Agreement (Exhibit 4). The escrow shall be released to RSL, including the
interest accrued, on the earlier of (i) such day when Seat shall transfer
the new Seat shares to the Intermediary, pursuant to subparagraph 3, and
(ii) October 16, 2000 provided Seat decides to uphold this agreement
pursuant to Section 4 No. 3 (b).
6. The Intermediary is not a party to this Agreement. All arrangements which
need to be made between the Intermediary and Seat, and between the
Intermediary and
<PAGE>
RSL in light of the provisions of this Section, are contained in the
Borrowing and Forward Purchase Agreement to be notarized by RSL and the
Intermediary concurrently with the notarization of this Agreement (Exhibit
4), and in the Sale and Purchase (Contribution) Agreement to be notarized
by Seat and the Intermediary concurrently with the notarization of this
Agreement (Exhibit 5).
Section 4
Conditions Precedent; Event of Termination;
Event of Requalification; Rescission
1. Conditions Precedent
This Agreement shall not become effective (except for its Section 12,
Section 13 subparagraphs 1 and 2, and 14 which shall become effective upon
the notarization of this Agreement) prior to the fulfilment of the
following conditions precedent:
a) The L Umbrella Agreement has been notarized and any agreements and
resolutions and other declarations attached to it have been
notarized or signed by the parties thereto;
b) The transactions contemplated in this Agreement and in the L
Umbrella Agreement, have received merger control clearance from the
competent antitrust authority or authorities, or the applicable
statutory waiting period has expired;
c) The ultimate parent company of RSL has provided the guarantee as set
forth in Section 10,
2. Automatic Termination
This Agreement shall automatically cease to be effective without a need
for further declarations from the Parties, and all effects already
materialized under
<PAGE>
this Agreement shall be unwound, (except for its Section 12, Section 13
subparagraphs 1, 2 and 3, and 14) if the resolution by the shareholders'
of Seat to be taken pursuant to Section 3 subparagraph 3 (i) is not taken
by July 31, 2000.
3. Termination and Requalification
In such a case where the resolution by the shareholders' of Seat to be
taken pursuant to Section 3 subparagraph 3 (i) has been taken and there is
no event of termination pursuant to subparagraph 2, but where the
conditions contemplated in Section 3 subparagraph 3 (ii) have not
materialized by October 15, 2000, 23.59 p.m., Seat may in its discretion
decide whether (a) it terminates this agreement against a break-up fee
payable to RSL in the amount of 7,500,000 or (b) whether it upholds this
agreement provided however that in this case (b) the consideration to the
Intermediary pursuant to Section 3 subparagraph 2 shall no longer be due
in the form of new Seat shares, but in the form of a cash amount
corresponding to the Cash Equivalent (as defined in Section 3 subparagraph
4).
4. Rescission
Seat may rescind this Agreement (zurucktreten) if RSL is not the sole
owner of the Majority-Conferring Share; or that RSL is not the sole owner
of the Remaining Shareholding (as defined in Section 8), or that L is not
the sole owner of the Shareholding as defined in the L Umbrella Agreement,
or that the Holding is not the sole owner of the majority of the
outstanding shares in Telegate; or that any of the mentioned shareholding
and shares is not completely free of any rights, liens and encumbrances
whatsoever for the benefit of third parties (except for the requirement
under the articles of association of the Holding whereby the transfer of
shares in the Holding requires the approval of all other shareholders).
Seat may also rescind this Agreement if for any reason not attributable to
Seat, the transfer of the Shareholding as defined in the L Umbrella
Agreement to Seat is not done or does not become effective by the time due
under the L Umbrella Agreement.
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Seat may declare the rescission pursuant to this subparagraph only prior
to the moment when both (i) the transfer of the Shareholding as defined in
the L Umbrella Agreement to Seat has become effective and (ii) the
transfer of the Majority-Conferring Share to Seat has become effective.
Section 5
Guarantees given by R
1. RSL represents and warrants by way of an independent guarantee obligation
pursuant toss.ss. 305 and 241 of the German Civil Code ("selbstandiges
Garantieversprechen") to Seat that the following statements are true,
complete and correct in all material respects as of the time of
notarization this Agreement. All of the following guarantees when
referring to the "Companies" mean all of the Holding, Telegate and all
direct and indirect majority-held German subsidiaries of Telegate
including but not limited to Datagate GmbH, 11880.com GmbH, and Telegate
Anklam Gesellschaft fur telefonische Informationsdienste mbH.
a) Authority to Enter into this Agreement
RSL has the corporate power and authority to enter into this
Agreement with no requirement for (further) internal or intra-group
approvals. All corporate actions, if any, which are necessary and
appropriate for RSL to take in order to enter into this Agreement
have been taken.
b) Absence of Conflicting Obligations
Except for this Agreement, there is no contract, option or any other
right of another party binding upon (or which at any time in the
future may become binding upon) RSL or upon any of the Companies to
sell, transfer, pledge, mortgage or in any other way dispose of or
encumber any of the shares in any (other) of the Companies.
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c) The Companies
Each of the Companies and teleSAFE.net AG and phonecom Kommunikation
GmbH are validly existing under the laws of the jurisdiction which
applies to it. With regard to none of the Companies there is a
resolution to put it in liquidation or to unwind it in whichever
way. With regard to none of the Companies have insolvency
proceedings or settlement proceedings of whatever nature been
proposed, requested or opened by any person or entity, at any time.
d) Unrestricted Share Ownership
RSL is the sole and lawful owner of shares with a total nominal
value of DM 25.600 in the Holding such shareholding representing the
majority shareholding in the Holding whose total registered share
capital amounts to DM 51,000.
The Holding is the sole and lawful owner of a number of 6,490,577 of
all outstanding shares in Telegate which in the total amount to a
number of 12,730,000 (not including the authorised share capital of
up to another 200,000 shares).
Telegate is the sole and lawful direct or indirect owner of 100 % of
the shares in Datagate GmbH, 11880.com GmbH and telegate Anklam
Gesellschaft fur telefonische Informationsdienste GmbH and of a 33
1/3 % shareholding in teleSAFE.net AG and of a 35 % shareholding in
phonecom Kommunikation GmbH.
All shares in all of the Companies are duly authorized, validly
issued and fully paid up, and free and clear of any third party's
rights (including any rights of pledge and rights of first refusal),
restrictions, encumbrances and liens whatsoever and no repayment of
share capital has been effected, and no share capital increases are
pending at the Companies or have been agreed, in particular no share
capital increases allowing any party other than one of the Companies
to take a shareholding in any of the Companies (except for what has
been announced in the agenda of the annual general meeting of
Telegate convened for May 31, 2000).
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e) Financial Statements
The financial statements (including the balance sheet and the profit
and loss account) as of December 31, 1999 of all the Companies,
whether audited or unaudited, consider all the assets, obligations,
liabilities and risks of the businesses conducted by the respective
Companies, as of December 31, 1999 which should be considered there
applying the generally accepted accounting principles of the
relevant jurisdiction(s). All financial statements as of December
31, 1998 and December 31, 1999 which have been audited, and have
received the unqualified certification (uneingeschrankter
Bestatigungsvermerk) by the auditing Wirtschaftsprufer. All
financial statements as of December 31, 1998 and December 31, 1999
of the Holding, which have not been audited, are attached to this
Agreement as Schedule 5 e in a form signed by the managing director
of the Holding.
f) No Shareholder Loans
There is no financial indebtedness of any of the Companies towards
RSL or any company affiliated to RSL (other than the Companies). All
business which is being conducted between RSL and any companies
affiliated to RSL (other than the Companies) on the one hand and any
of the Companies on the other hand is at arm's length and may be
terminated by the Companies (should they wish to do so)
substantially within such terms and under such conditions as are
customary in the industry.
g) Conduct of Business
Since December 31, 1999 the Companies have not disposed of their
businesses or of a material part thereof and the Companies and their
businesses have been conducted in their usual and ordinary course in
all material respects employing the care of a diligent and
conscientious manager (within the meaning of ss. 93 subparagraph 1
of the German Stock Corporation Act and ss. 43 subparagraph 1 of the
German Limited Liability Companies Act). Furthermore, since December
31, 1999 there
<PAGE>
have been no material adverse changes in the financial situation of
the Companies.
h) Governmental Approvals, Licences and Permits, Compliance with Laws
The current operations and activities of the Companies including
without limitation their current operations and activites in the
five business core areas (i) data (enrichment, combination and
sale), (ii) internet, (iii) telephony (technical operations), (iv)
TIS (telephony information services) and (v) CCS (call center
services) are, to the best knowledge of RSL, all in compliance in
all material respects with all laws and governmental regulations and
orders.
To the extent the operations and activities of the Companies require
the the assignment of call numbers or the possession of governmental
approvals, licences or permits (including all material approvals,
licences or permits as may be required under applicable
telecommunications laws, and including the assignment of the call
numbers "11880", 11887", "11890" and the interconnect access code
"01080"(provided however that the interconnect access "01080" is
currently not used by Telegate and may therefore be revoked), such
approvals, licences or permits are all being held by the respective
Companies. Such assignments, approvals, licences and permits are in
full force and effect and will not be terminated due to the
transactions contemplated in this Agreement. RSL and Telegate do not
know of any circumstances which could justify a revocation of these
assignments, approvals, licences or permits. The conditions
("Bedingungen" and/or "Auflagen") accompanying these approvals,
licences and permits have been complied with in all material
respects.
i) Essential Agreements
The interconnection agreement dated December 12, 1999 and the
billing agreement dated October 12, 1998 Telegate has entered into
with Deutsche Telekom AG (hereinafter together the "Essential
Agreements") are all in full force and effect pursuant to the terms
and conditions thereof, and enforceable in accordance with their
terms and conditions against the other parties thereto, except as
enforcement
<PAGE>
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors. Neither Telegate (or any other of the
Companies) nor the other parties are in default in any material
respect under any material provision of the Essential Agreements.
The Companies are not aware that the other party to any of the
Essential Agreements has any intention not to continue any of the
Essential Agreements as currently practised.
Schedule 5 i shows a list of all agreements entered into by any of
the Companies which require (irrespective of whether such agreements
are considered Essential Agreements) a yearly expenditure in excess
of DM 1,000,000 (DM One Million) or which cannot be terminated with
one year's notice at the latest.
j) Trademarks, Know-how, Other Intellectual Property Rights and Domain
Names
The Companies are the owners of all know-how the Companies use in
their businesses. Telegate is the owner of the trademark "Telegate"
(all together hereinafter "Intellectual Property Rights"). Seat is
informed about the current status of registration concerning the
registered and applied for trademarks. All Intellectual Property
Rights are free of liens and encumbrances by third parties. The
Companies need not to rely on licence-agreements with third parties.
The Companies are the sole and lawful owners, and do not need to
rely on licences, of those of the internet domain names
"telegate.com", "telegate.de", "travelgate.de" and "11880.com",
which internet domain names are in each case clear and free of all
liens, encumbrances and any other rights of third parties.
To the best knowledge of RSL, there are no claims by third parties
challenging any of the Company's rights or title, nor are there any
factual violations, in each case with regard to any of the
trademarks, domain names, know-how or other intellectual property or
name rights of the Companies, or any products which are currently
being developed in the Business.
<PAGE>
To the best knowledge of RSL, the trademarks, domain names, know-how
or other intellectual property or name rights of the Companies, and
their use do not infringe any third party's rights.
k) Technical Equipment
All technical equipment used by the Companies in carrying out their
businesses, whether owned, leased or licensed, and including without
limitation computer hardware, computer programs, switches and all
other devices, is in good working order and is sufficient to cover
substantially all current needs of the businesses of the Companies.
l) Employees
All key employees of the Companies have been hired in the ordinary
course of business. There have not been any written or oral promises
of pay rises or any other additional remuneration to any of the key
employees. There are no outstanding payments of salaries, bonuses,
vacation pay, social insurance contributions and all other payments
due under the employment relationships. No key employee at any of
the Companies has made known the intention to leave. RSL or
companies affiliated to it (other than the Companies) have not
offered employment to any key employee of any of the Companies. No
key employees have been given a right to receive a severance payment
in case of termination of their employment agreements exceeding the
rights provided for by statutory law or collective bargaining
agreements, nor have the members of the management board of Telegate
been granted any such right to receive a severance payment in cash
or in kind. There is no labor litigation with any of the employees
of the Companies exceeding in the individual case a value of DM
100,000; and all labor litigation does in the aggregate not exceed a
value of DM 500,000. Schedule 5-l shows a complete list of all
material shop agreements ("Betriebsvereinbarungen") which the
Companies have stipulated with the competent works councils. The
Companies are, on the date hereof, not engaged in any material legal
dispute with trade unions, shop councils or any other employees
organizations.
<PAGE>
m) Insurances
The Companies have taken out, for insured sums as are in accordance
with applicable market standards, all the insurances which are
mandatory under the law and all such other insurances as are
appropriate or customary in the type of business as conducted by the
Companies, and all insurance premiums have timely been paid.
n) Taxes
The Companies have filed all tax returns, which returns are complete
and correct in all material respects, required to be filed by them
or on their behalf with any tax of governmental authority in any
jurisdiction; and have paid in full all federal, state, local or
foreign taxes, levy, impost, fees, duties, fiscal and social
security and similar charges, including any interest and penalty
thereon (collectively "Taxes") shown on such returns or for which
they have been assessed, or have, with regard to all Taxes that are
or may become due but have not yet been paid, made adequate accruals
on their books, in accordance with generally accepted accounting
principles applicable in the respective jurisdiction; and none of
the Companies is engaged in a dispute with any tax or social
security authority.
Upon request of RSL, Seat shall cause the Company concerned to
appeal at the cost of RSL and in accordance with its instructions,
against tax assessments if such appeal may result in taxes being
reimbursed to or not to be paid by the respective Company. In order
to enable RSL to properly assess the chances of such an appeal and
to proceed with such appeal, Seat shall cause the respective Company
to make available to RSL all relevant information and documentation.
The respective Company may settle with the consent of RSL only which
consent will not be unreasonably withheld.
o) No Impediments
There are no material legal or factual impediments preventing the
Companies from carrying on their businesses to the extent and in the
manner hitherto conducted, and there are no material unfulfilled
obligations
<PAGE>
imposed on the Companies by the authorities with respect to their
businesses.
p) Litigation
The Companies are not involved as plaintiff or defendant or as a
joined party in any litigation, including arbitration proceedings or
administrative proceedings, with a litigation value exceeding in the
aggregate DM 5,000,000, nor has any such litigation, including
arbitration proceedings or administrative proceedings, been
threatened to the Companies, or is there a foreseeable need to take
recourse to litigation, except in all cases as set forth in Schedule
5 p.
2. Section 460 of the German Civil Code (BGB) shall apply mutatis mutandis.
Seat is deemed to know such documents which were contained in the data
room in Planegg which was made accessible to representatives and advisers
of Seat on March 28 and 29 and April 26 and 27 and May 2, 2000 which are
listed in the list attached to this Agreement as Schedule 5.2.
3. The above guarantees shall be deemed to be repeated by RSL also as of the
time when the transfer of the Majority-Conferring Share to Seat becomes
effective (Section 2 subparagraph 2), provided that (i) before such date
RSL will have been given a reasonable opportunity to discuss with one or
several members of the board of directors (Vorstand) of Telegate whether
the above guarantees are still true, complete and correct in all material
respects, and (ii) will have been provided by the management with a
statement thereon. To the extent that RSL, as a result of the said
discussion, makes specific limiting qualifications the above guarantees
shall not be deemed to be repeated.
Section 6
Liability for Breach of Guarantees
1. If any of the guarantees given by RSL in Section 5 proves to be partly or
wholly incorrect, the Party which learns first about such incorrectness
shall inform the other Party thereof. For a period of 90 days starting
with such
<PAGE>
information, RSL shall have the possibility to cure the breach by
restoring a situation where the guarantee is true.
2. If RSL is unable to cure the breach or does for other reasons not cure the
breach, RSL shall indemnify Seat for the amount that would have to be
spent to fully restore the factual situation to the guaranteed situation
("damage"), limited, however, to a part such amount (as defined in
subparagraph 3), which shall be paid, at RSL's choice, to either the
Company or Companies to which the guarantee which is breached has the
closest connection, or to Seat. If the payment of an indemnification
occurs at such a time when the Joint Venture as agreed in Section 1 should
no longer exist or where a Put Option Acceptance Declaration or a Call
Option Acceptance Declaration has been made pursuant to the Option
Agreement (Exhibit 3), any amount pursuant to this subparagraph shall be
paid, at Seat's choice, to either the Company or Companies to which the
guarantee which is breached has the closest connection, or to Seat.
3. Whilst Seat shall have the right to recover full damages pursuant to
subparagraph 2 from RSL and L in the aggregate (the latter gives Seat, in
the L Umbrella Agreement, the same guarantees as are in this Agreement
given by RSL), each of RSL and L shall only be severally liable for the
damages. Of each damage, RSL shall bear a part of 25.6/51 (approx. 50.2%)
and RSL shall bear a part of 25.4/51 (approx. 49.8 %).
4. Where guarantees are given subject to the (best) knowledge, RSL shall be
deemed to have the same knowledge as L has (and L shall, in the L Umbrella
Agreement, be deemed to have the same knowledge as RSL has).
5. The amount of the liability of RSL for breaches of guarantees shall be
limited as follows:
(i) In calculating the aggregate liability of RSL and L, only such
individual breaches of guarantees shall be taken into account which
represent a damage of 0.5 million or more, provided that they
represent in the aggregate a total damage of 5 million or more.
(ii) The liability of RSL shall not exceed 33.33 % of the Total
Consideration; the Total Consideration shall be for the purposes of
this subparagraph 5 (ii) shall mean Cash Equivalent (as defined in
Section 3
<PAGE>
subparagraph 4 of this Agreement) plus the cash Exercise Price as
defined in ss. 4.1 of the Option Agreement.
(iii) Until the moment in which the Cash Equivalent (as defined in Section
3 subparagraph 4 of this Agreement) is to be released from escrow,
no damages in excess of 33.33 % of the Cash Equivalent (as defined
in Section 3 subparagraph 4), shall be payable yet (fallig) by RSL,
and after the said moment damages shall be payable in the aggregate
only within the limit set forth in subparagraph (ii).
This subparagraph (iii) is not to be construed as a limitation
whereby Seat shall resort to arbitration (as set forth in Section
12) only after a certain moment in time, or whereby the arbitrators
shall give their award only after a certain moment in time.
6. None of the limitations as to the amount of the liability of RSL set forth
in subparagraph (3) sentence 2 and subparagraph (5) shall apply in the
case of a breach of the guarantee pursuant to which RSL is, as of the time
of entering into the Borrowing and Forward Purchase Agreement (Exhibit 4),
the sole owner of the Majority-Conferring Share; and the
Majority-Conferring Share is completely free of any rights, liens and
encumbrances whatsoever for the benefit of third parties. None of the
limitations as to the amount of the liability of RSL set forth in
subparagraph (3) and subparagraph (5) shall apply in the case of a breach
of the guarantee pursuant to which RSL is the sole owner of the Remaining
Shareholding; and the Remaining Shareholding is completely free of any
rights, liens and encumbrances whatsoever for the benefit of third
parties.
7. None of the limitations as to the amount of the liability of RSL set forth
in subparagraph (5) shall apply in the case of a breach of the guarantee
(given in Section 5 subparagraph 1 d)) pursuant to which the Holding is
the sole owner of the majority of the outstanding shares in Telegate and
that such shareholding is completely free of any rights, liens and
encumbrances whatsoever for the benefit of third parties, as of the time
of the notarization of this Agreement.
8. The liability of RSL for breaches of guarantees shall be limited in time
as follows:
<PAGE>
(i) Seat may only bring such claims, which it has, by June 30, 2001,
reasonably identified and communicated to RSL.
(ii) Where the guarantee given in Section 5 subparagraph 1 n) (Taxes) is
breached, the date mentioned in subparagraph (i) shall be replaced
by such date which is 6 months after the final tax assessment of the
relevant tax has been made by the tax authorities (provided such
date is later than the date mentioned in subparagraph (i)).
(iii) For breaches of the guarantees given in Sections subparagraphs 6 and
7 of this Section 6 there shall be no limitation in time except as
set forth in section 195 of the German Civil Code.
9. If and to the extent there are any claims of Seat under this Section at
such time when the Cash Equivalent should be released from escrow or when
cash consideration under the Option Agreement becomes due, then such Cash
Equivalent shall remain in escrow and such cash consideration shall be put
in escrow, in each case upon Seat request, and in each case limited to the
amount of Seat's claim (if the pro-rata threshold amounts set forth in
subparagraph 5 (i) and (ii) are exceeded), until an arbitral award shall
have been given on Seat's claim. The escrow shall be released if Seat does
not initiate arbitration procedures within three months from the time when
the Cash Equivalent should have been released from escrow or the cash
consideration would have become due. The instructions to be given to the
bank where the escrow account shall be made pursuant in accordance with
this subparapraph 9.
10. No claim under this agreement shall lead to Seat being barred from
exercising the call option nor to RSL from exercising the put option under
the Option Agreement.
<PAGE>
Section 7
Guarantees given by San Remo
Seat represents and warrants to RSL that the Seat shares to be delivered to the
Intermediary pursuant to Section 3 subparagraph 1 will be validly issued, free
and clear of any liens, charges, security interests, burdens, encumbrances or
other restrictions or limitations of any nature whatsoever (except for such
rights which the Intermediary itself may grant to third parties) and will be
freely tradeable on the Milan Stock Exchange, as any existing shares of Seat as
of the date when they are delivered to the Intermediary.
Section 8
Acquisition of Remaining Shareholding and
Termination of the Joint Venture
1. The Parties agree that Seat shall be entitled to acquire the Remaining
Shareholding, and RSL shall be entitled to request Seat to acquire the
Remaining Shareholding as set forth in the Option Agreement (Exhibit 3).
The "Remaining Shareholding" means such shares in the Holding which RSL
continues to hold after the disposal of the Majority-Conferring Share
pursuant to Section 2 of this Agreement, which remaining shares shall have
an aggregate nominal value of DM 24,800 and shall represent all of the
outstanding share capital of the Holding except for the
Majority-Conferring Share and for such shareholding in the Holding as Seat
shall acquire under the L Umbrella Agreement.
2. The Parties agree that upon Seat's acquisition of the Remaining
Shareholding, the Joint Venture as agreed in Section 1 of this Agreement
shall be terminated.
<PAGE>
Section 9
Non Competition Following Termination of the Joint Venture
Following a period of two (2) years after Seat will have acquired the
remaining shareholding in the Holding from RSL, RSL and its affiliates
shall not directly or indirectly compete with the businesses currently
carried out by the Companies in Germany.
Section 10
Guarantee by Parent Company of RSL
RSL Communication Ltd. in its capacity as the ultimate parent company of
RSL guarantees ("garantiert") without limitation the fulfilment of all
obligations of RSL arising out or in connection with this Agreement in the
form shown in Exhibit 6 to this Agreement.
Section 11
Other Documents to be Executed
1. Prior or concurrent to the execution of this Agreement, the following
documents shall be executed by the Parties thereto:
(i) A shareholder's resolution, by RSL and L, on amendments to the
articles of association of the Holding, as shown in Exhibit 1 to
this Agreement and as contemplated in Section 1 subparagraph 3 a) of
this Agreement;
(ii) A filing statement to the competent commercial register of the
Holding, (or a power of attorney enabling representatives of Seat to
sign the filing statement) whereby the amendments to the articles of
association are filed for registration with the commercial register
to be signed by the sole managing director of the Holding which
filing statement shall be presented to the commercial register
forthwith;
<PAGE>
(iii) Approval of the split of a share held by RSL, by the Holding, as
shown in Appendix 1 to the Agreement for the Transfer of Shares
attached to the Borrowing and Forward Purchase Agreement (Exhibit 4)
and as contemplated in Section 2 subparagraph 1 of this Agreement,
to be executed by the sole managing director of the Holding;
(iv) Approval of the transfer of the shares held by RSL in the Holding
pursuant to this Agreement, by other shareholder L, as shown in
Exhibit 6 to this Agreement and as contemplated in Section 2
subparagraph 1 of this Agreement;
(v) A Borrowing and Forward Purchase Agreement, to be entered into by
RSL and the Intermediary, as shown in Exhibit 4 to this Agreement
and as contemplated in Section Section 2 subparagraph 1 of this
Agreement;
(vi) A Share Purchase (Contribution) Agreement, to be entered into by the
Intermediary and Seat, as shown in Exhibit 5 to this Agreement and
as contemplated in Section Section 2 subparagraph 2 of this
Agreement;
(vii) An Option Agreement, to be entered into by RSL and Seat, as shown in
Exhibit 3 to this Agreement and as contemplated at the end of
Section 1 and in Section 8 of this Agreement;
2. None of the documents to be signed prior or concurrently to the
notarization of this Agreement shall thereafter be revoked or amended or
otherwise changed without the approval of Seat.
3. The Parties shall also after after the notarization of this Agreement
execute such documents and do such other things, and shall cause
Intermediary do execute such other documents and do such other things as
may be necessary and appropriate to implement the terms and conditions of
this Agreement.
<PAGE>
Section 12
Applicable Law and Arbitration
This Agreement shall be governed by German law except for such aspects as
may mandatorily be governed by Italian law. Terms to which a German
translation has been added shall be interpreted throughout the Agreement
in the meaning assigned to the German translation. All disputes arising
out of or in connection with this Agreement shall be finally settled under
the Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with the said rules. The arbitration
proceedings shall be held in Paris and in English.
Section 13
Costs and Taxes
1. Seat shall bear the costs of notarization of this Agreement and of those
other agreements and resolutions which are attached to this Agreement.
2. Each Party shall itself bear the costs of its own advisors and its other
costs incurred in connection with preparing this Agreement.
3. Each Party shall itself bear any taxes or other public duties which may
become payable by it by reason of the transactions contemplated in this
Agreement.
4. In the case of an automatic event of termination (Section 4 subparagraph
2) Seat shall reimburse RSL such fees for legal advisers and for an
investment bank hired by RSL for the preparation of this Agreement, as are
reasonable and usual-in-the-market.
<PAGE>
Section 14
Confidentiality
The Parties shall keep confidential the contents of this Agreement and its
attachments, and in particular all aspects regarding the monetization of the
Majority-Conferring Share to the extent admissible under the applicable laws,
unless they mutually agree otherwise.
Any public notice or press release (whether required by law or not) shall be
agreed upon by the Parties beforehand.
Section 15
No Assignments
Neither Seat nor RSL is entitled to transfer without the consent of the other
Party rights or obligations arising out of this Agreement to a third party
except for the transfer of title guarantees to be assigned to the Intermediary.
Section 16
Notices
16.1 Notices or declarations to Seat made in the context of this Agreement
shall be deemed to be validly given if sent by registered mail or courier
to the following address or such other address as notified in writing by
Seat to RSL:
RSL COM Deutschland GmbH, c/o RSL Communications, Ltd., attn: Avery S.
Fischer, Esq., 810 Seventh Avenue, 39th Floor, New York, NY 10019
16.2 Notices or declarations to RSL made in the context of this Agreement shall
be deemed to be validly given if sent by registered mail or courier to the
following address or such other address as notified in writing by RSL to
Seat:
Angelo Novati, CFO, Seat Pagine Gialle SpA, Via Aurelio Saffi 18, 1038
Turin, Italy.
<PAGE>
Section 17
Miscellaneous
17.1 Should any provision of this Agreement be or become invalid or
unenforceable, the validity of the other parts of this Agreement shall not
be affected thereby. The same applies if this Agreement contains any
omissions. In lieu of the invalid or unenforceable provision or in order
to complete any omission, a fair provision shall apply which, to the
extent legally permissible, comes as close as possible to what the Parties
had intended or would have intended, according to the spirit and purpose
of this Agreement if they had considered the matter at the time this
Agreement was executed.
17.2 Changes and amendments to this Agreement are only valid if they have been
made in writing or, if notarisation is required by law, notarised.
Date _______________
/s/ /s/
________________________ _________________________
RSL COM Deutschland GmbH Seat Pagine Gialle S.p.A.
<PAGE>
NOTARIAL AUTHENTICATION
(Oeffentliche Beurkundung)
(Public Deed No. 44/2000)
The undersigned Notary Public of the Canton of Zug, Switzerland, lic. iur. Peter
B. Arnold, Attorney at Law, hereby certifies and authenticates:
The foregoing Agreement corresponds with the intentions and the free will of the
party who personally appeared in the capacities as follows:
Mr. Stefan Koller, Attorney at Law and Notary Public, born 23.09.1958, Swiss
citizen, residing at CH-6312 Steinhausen, Switzerland, Rebenstrasse 6, having
his offices at Untermuli 6, CH-6300 Zug, Switzerland, here not acting in his own
name, but as representative, exempt of personal liability, acting without
express authority in the name and on behalf of
Seat Pagine Gialle S.p.A., Via Aurelio Saffi, 18, I-1038 Turin, Italy,
and
RSL COM Deutschland GmbH, D-60528 Frankfurt am Main, Lyonerstr. 9,
and
J.P. Morgan Securities Limited, 60 Victoria Embankment, GB-London EC 4Y 0JP,
and
Morgan Stanley Bank AG, Junghofstrasse 13-15, D-60311 Frankfurt am Main,
under the reservation to supply to the acting notary a forthcoming certified
consent by each one of the foregoing parties, in legally appropriate form, as
soon as reasonably possible and without undue delay.
The foregoing Deed and all appendices and annexes thereto were laid out for
inspection to and were approved by the person appearing. Subsequently, the Deed
was read out aloud to the person appearing before the notary, approved by the
person appearing and executed by him in his own hand.
This Public Deed is made out in one copy.
Zug/Switzerland, this 6th day of May 2000
The Notary Public
Peter B. Arnold
