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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 18, 1997
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-17581 22-2358635
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(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
102 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On December 19, 1997, Geotek Communications, Inc. ("Geotek" or the
"Registrant") announced that it had entered into an Agreement for the Sale and
Purchase of Shares (the "NB3 Agreement"), dated as of December 18, 1997, by and
among Geotek, Geotek GmbH Holding Corporation, a Delaware corporation and a
wholly-owned subsidiary of Geotek ("Geotek Holding"), Telesystem International
Wireless Inc., a Canadian corporation ("Telesystem") and TIWC Holding (UK)
Limited, an entity incorporated under the laws of England and Wales ("TIWC"),
pursuant to which Geotek Holding will sell all of the issued and outstanding
shares of capital stock of National Band Three Limited ("NB3") to TIWC in
exchange for the payment of eighty million U.S. dollars (US$80,000,000), which
dollar amount is subject to increase or decrease based on the amount of net loan
repayments prior to closing by NB3 to Geotek Holding (the "NB3 Sale"). Five
percent of the US$80,000,000 sale price will be held in escrow to satisfy Geotek
Holding's indemnity obligations, if any, under the NB3 Agreement. The funds in
the escrow account will be released to Geotek Holdings six months after the
closing of the NB3 Sale.
Consummation of the NB3 Sale is subject to the satisfaction of certain
conditions, including, but not limited to (i) the receipt of regulatory
approvals (a) with respect to the deemed transfer of the radio spectrum to TIWC
pursuant to the NB3 Sale and (b) with respect to the quantity of radio spectrum
which TIWC will own upon consummation of the NB3 Sale and (ii) that there be no
material adverse change to NB3.
The foregoing discussion of the terms of the NB3 Sale and the NB3 Agreement
does not purport to be complete and is qualified in its entirety by reference to
the NB3 Agreement itself, a copy of which is attached hereto as Exhibit 10.1.
In addition, on December 19, 1997, Geotek announced that it had entered
into a Purchase Agreement (the "Terrafon Agreement"), dated as of December 18,
1997, by and among Geotek, Geotek Communications GmbH, a German corporation and
an indirect wholly-owned subsidiary of Geotek ("Geotek GmbH"), o.tel.o
communications GmbH & Co., a German corporation and RegioKom Deutschland
Gesellschaft fur Bundelfunkdienste GmbH, a German corporation affiliated with
Telesystem ("RegioKom"), pursuant to which Geotek GmbH agreed to sell its 50%
limited partner interest in Terrafon Bundelfunk GmbH & Co. KG ("Terrafon KG")
and all of its shares of capital stock of Terrafon Bundelfunk Geschaftsfuhrungs
Gesellschaft mbH ("Terrafon GmbH"), which shares represent 50% of all of the
issued and outstanding shares of capital stock of Terrafon GmbH, to RegioKom in
exchange for the payment of DM 7,000,000 (approximately US$5,000,000) of which
payment DM 500,000 shall be held in escrow to satisfy Geotek GmbH's indemnity
obligations, if any, under the Terrafon Agreement (the "Terrafon Sale"). The
funds in the
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escrow account will be released to Geotek GmbH within fifteen months after the
closing of the Terrafon Sale.
Consummation of the Terrafon Sale is subject to the satisfaction of certain
conditions, including, but not limited to the receipt of certain regulatory
approvals.
The foregoing discussion of the terms of the Terrafon Sale and the Terrafon
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Terrafon Agreement itself, a copy of which is attached hereto
as Exhibit 10.2.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
10.1 Agreement for the sale and Purchase of Shares, dated as of
December 18, 1997, by and among Geotek, Geotek GmbH Holdings
Corporation, Telesystem International Wireless Inc. and TIWC
Holding (UK) Limited.
10.2 Purchase Agreement, dated as of December 18, 1997, by and among
Geotek, Geotek Communications GmbH, o.tel.o communications GmbH &
Co. and RegioKom Deutschland Gesellschaft fur Bundelfunkdienste
mbH.
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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 hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: January 20, 1998 By: /s/ Robert Vecsler
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Name: Robert Vecsler
Title: Secretary and General Counsel
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EXHIBIT INDEX
Exhibit No.
10.1 Agreement for the Sale and Purchase of Shares, dated as of
December 18, 1997, by and among Geotek, Geotek GmbH Holding
Corporation, Telesystem International Wireless Inc. and TIWC
Holding (UK) Limited.
10.2 Purchase Agreement, dated as of December 18, 1997, by and among
Geotek, Geotek Communications GmbH, o.tel.o communications GmbH &
Co. and RegioKom Deutschland Gesellschaft fur Bundelfunkdienste
MbH.
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EXHIBIT 10.1
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CONFORMED COPY
Dated 18 December 1997
GEOTEK COMMUNICATIONS, INC.
and
GEOTEK GMBH HOLDING CORPORATION
and
TIWC HOLDINGS (UK) LIMITED
and
TELESYSTEM INTERNATIONAL WIRELESS INC.
AGREEMENT
relating to the sale and purchase
of the whole of the issued share capital of
NATIONAL BAND THREE LIMITED
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
Tel: (+44) 171 456 2000
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Agreement for the Sale and Purchase of Shares
This Agreement is made on 18 December 1997
Between:
(1) Geotek Communications, Inc. of 102 Chestnut Ridge Road, Montvale, New
Jersey 07645, United States of America ("Geotek");
(2) Geotek GmbH Holding Corporation of 9/11 Washington Street, Wilmington,
Delaware 19801, United States of America (the "Vendor");
(3) TIWC Holdings (UK) Limited of Block C, The Crescent, Jay's Close, The
Viables, Basingstoke, Hampshire, RG22 4BS United Kingdom (the
"Purchaser"); and
(4) Telesystem International Wireless Inc of 1250 Rene-Levesque Blvd West,
Suite 1100, Montreal, Quebec, H3B 4WB Canada (the "Guarantor").
Recitals
(A) Geotek owns the entire issued share capital of the Vendor;
(B) The Vendor owns or will at Completion own the entire issued share
capital of National Band Three Limited;
(C) The Guarantor owns, directly or indirectly, the entire issued share
capital of the Purchaser;
(D) The Vendor wishes to sell, and the Purchaser wishes to purchase, on the
terms set out in this Agreement, the entire issued share capital of
National Band Three Limited;
(E) The Guarantor has agreed to guarantee certain obligations of the
Purchaser under this Agreement; and
(F) Geotek has agreed to guarantee all of the obligations of the Vendor
under this Agreement.
It is agreed as follows:
1 Interpretation
In this Agreement, including the Schedules, the headings shall not
affect its interpretation and, unless the context otherwise requires,
the above definitions and the provisions in this clause 1 shall apply:
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1.1 Definitions
"agreed terms" means in relation to any document such document in the
terms agreed between the parties and signed by or on behalf of the
Purchaser's Solicitors and the Vendor's Solicitors for the purposes of
identification as that document may be amended by agreement in writing
between the parties from time to time for any reason including, without
limitation, to take account of any changes between the date of this
Agreement and Completion;
"Articles of Association" means the articles of association of the
Company;
"Associate" means in relation to any company, any body corporate
controlled by or under common control with that company, which, for the
avoidance of doubt, shall include any subsidiary or holding company of
that company and any subsidiary of any holding company of such company;
"Audited Accounts" means the audited accounts of the Company for the
nine months ended on the Balance Sheet Date;
"Balance Sheet Date" means 30 September 1997;
"Business Day" means a day on which banks are open for business in:
London, England; Montreal, Canada; and New York, the United States of
America;
"CHAPS" means clearing houses automated payment systems;
"Company" means National Band Three Limited, registered number 2672488
of Wren House, Hedgerows Business Park, Colchester Road, Springfield,
Chelmsford, Essex, England;
"Completion" means the completion of the sale and purchase of the Shares
pursuant to clause 6;
"Completion Date" means the date on which Completion occurs;
"controls" means with respect to a person and a body corporate that:
(i) he holds, or is beneficially entitled to, more than fifty (50)
per cent. of the equity share capital in the body, or
possesses more than fifty (50) per cent. of the voting power
in it; or
(ii) he holds, or is beneficially entitled to, ten (10) per cent.
or more of the equity share capital in that body, or possesses
ten (10) per cent. or more of the voting power in it, and an
arrangement exists between him and any other participant in
the body as to the manner in which any voting power in that
body possessed by either of them is to be exercised, or as to
the omission by either of them to exercise such voting power;
or
(iii) although he does not have such an interest in the body, it is
reasonable, having regard to all the circumstances, to expect
that he will be able, by whatever means and whether directly
or indirectly, to achieve the result that the affairs of the
body are conducted in accordance with his wishes;
For the purposes of (ii):
(a) "arrangement" includes any agreement or arrangement, whether or not
it is, or is intended to be, legally enforceable; and
(b) a person shall be treated:
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(i) as holding, or being beneficially entitled to, any equity
share capital which is held by a body corporate which he
controls or to which such a body corporate is beneficially
entitled; and
(ii) as possessing any voting power possessed by such a body
corporate.
"Disclosure Letter" means the letter of even date with this Agreement from
the Vendor to the Purchaser disclosing:
(i) information constituting exceptions to the Warranties;
(ii) information about the Company and its affairs related to the
Warranties; and
(iii) details of other matters referred to in this Agreement;
"Environment" means all or any of the following media, namely: the air, water
and land; and the medium of air includes, without limitation, the air within
buildings and the air within other natural or man-made structures above or
below ground;
"Environmental Laws" means all European Union regulations, United Kingdom
statutes, regulations and orders and other local laws, rules, regulations and
bye-laws and all codes of practice and guidance notes and circulars in force
at the Completion Date, which:
(a) have as a purpose or effect the protection or enhancement of the
Environment and relate to the presence manufacturing processing
treatment keeping handling use possession supply receiving sale
purchase import export or transportation of Hazardous Materials or
any event activity condition or phenomenon which alone or in
combination with others is capable of causing harm or damage to
property or to man or any other organism supported by the
Environment;
(b) relate to the release spillage deposit escape discharge leak or
emission of Hazardous Materials;
(c) relate to the control of Waste;
(d) relate to noise vibration radiation or common law or statutory
nuisance or any other interference with the enjoyment or use of
land;
(e) relate to the use of land or the erection occupation or use of
buildings or other natural or man-made structures above or below
ground; or
(f) relate to human health and safety;
"Expert" has the meaning set out in clause 4.5.1;
"Hazardous Material" means any Substance or organism which alone or in
combination with others is capable of causing harm or damage to property or
to man or any other organism supported by the Environment or damaging the
Environment or public health or welfare;
"ICTA" means the Income and Corporation Taxes Act 1988;
"Intellectual Property Rights" means all patents, patent applications, know-how,
trade marks, trade mark applications, trade names, registered designs, design
rights, copyrights, rights of extraction or database rights and other similar
industrial, intellectual or commercial rights subsisting anywhere in the world;
"Losses" means all losses, liabilities, costs (including, without limitation,
legal costs), charges, expenses, actions, proceedings, claims and demands;
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"Management Accounts" means the unaudited management accounts relating to the
Company drawn up in a format consistent with that adopted by the Company for
its management accounts for the preceding twelve (12) months for any calendar
month after the Balance Sheet Date (the "Relevant Management Accounts Date")
and ending on a date at least ten (10) Business Days before the Completion
Date;
"Material Adverse Change" has the meaning set out in clause 4.1.5;
"MMC" means the Monopolies and Mergers Commission of 48 Carey Street, London
WC2;
"Net Loan Repayment" has the meaning set out in clause 5.3.1;
"Notification Date" means the Business Day on which notice is given pursuant
to clauses 4.3.1 and 4.3.2 that all the Pre-conditions have been either
fulfilled or waived, subject to any delay caused as a result of clauses
4.1.5(c)(ii), 4.1.5(g), 4.4.3 and 4.5.2;
"OFT" means the Office of Fair Trading of Field House, 15 - 25 Bream
Buildings, London EC4A 1PR;
"PAMR" means public access mobile radio;
"Payment" has the meaning set out in clause 4.5.1;
"Payment Account Details" means, in relation to any payment to be made under
or pursuant to this Agreement, the name, account number, sort code, account
location and other details specified by the payee and necessary to effect
payment (whether by cheque, banker's draft, telegraphic or other electronic
means of transfer) to the payee;
"Pension Scheme" means the National Band Three Pension Scheme in force at the
date of this Agreement;
"Personnel" has the meaning set out in clause 5.1.4;
"Planning Acts" means Town and Country Planning Acts 1971-1990;
"PMR" means private mobile radio;
"Pre-conditions" means the conditions set out in clauses 4.1.1, 4.1.2, 4.1.3
and 4.1.4;
"Principal Properties" means Wren House, Hedgerows Business Park, Colchester
Road, Springfield, Chelmsford, Essex; Rugby House, New Century Park,
Coventry, CV3 1HJ; Faraday Centre, Magnet Road, East Lane, Wembley HA9 7RG; 3
Pittbrook Street, Ardwick, Manchester M12 6LR and Kirk O'Shotts, Forrest
Road, Salisburgh, Lanarkshire, ML7 9PB;
"Properties" means the properties brief details of which are set out in
Schedule 3 and "Property" means any one of them;
"Purchaser's Accountants" means Ernst & Young of Becket House, 1 Lambeth
Palace Road, London SE1 7EU;
"Purchaser's Solicitors" means Linklaters & Paines of One Silk Street, London
EC2Y 8HQ;
"Radiocommunications Agency" means the Radiocommunications Agency of New
Kings Beam House, 22 Upper Ground, London SE1 9SA;
"Retention Fund" has the meaning set out in clause 3.1;
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"Security Interest" means any claim, charge, mortgage, security, lien,
option, equity, power of sale or hypothecation;
"Shares" means nine (9) million ordinary shares of L1 each being the entire
issued share capital of the Company;
"SoS" means the Secretary of State for Trade and Industry of 1 Victoria
Street, London SW1H 0ET;
"Substance" means any natural or artificial matter whether in solid or liquid
form or in the form of a gas or vapour and for this purpose includes
electricity or heat including mixtures of such substances;
"TA Licence" means the licence dated 12 December 1997 granted to the Company
under section 7 Telecommunications Act 1984 and includes any class licence
granted under that Act which is relied upon by the Company;
"Taxation" means liability arising under any of the Taxation Statutes;
"Taxation Statutes" means statutes (and all regulations and arrangements
whatsoever made thereunder) enacted (or issued coming into force or entered
into) whether before or after the date of this Agreement providing for or
imposing or relating to all forms of taxation duties levies and rates
whatsoever including without limitation:
(a) any charge tax duty or levy upon income profits chargeable gains or
any other property or instruments in writing or supplies or other
transactions;
(b) income tax, corporation tax, advance corporation tax, withholding
tax, capital gains tax, inheritance tax, capital transfer tax,
value added tax, stamp duty, stamp duty reserve tax, capital duty,
customs and other import duties national insurance contributions,
general rates, water rates or other local rates;
(c) any liability for sums equivalent to any such charge tax duty levy
or rates and/or for any penalty fine or interest payable in
connection therewith; and
(d) any law or regulation whatsoever providing for or imposing or
otherwise relating to any charge tax levy or rates (of a like or
similar nature) chargeable outside the United Kingdom and/or for
any penalty fine or interest payable in connection with them.
"Tax Deed of Covenant" means the deed of covenant against Taxation in the
agreed terms to be entered into at Completion;
"TETRA" means the draft digital PMR and PAMR standards of the European
Telecommunications Standards Institute;
"UK GAAP" means accounting principles generally accepted in the UK;
"US$" or "$" means US dollars;
"Vendor's Accountants" means Coopers & Lybrand of 1 Embankment Place, London
WC2;
"Vendor's Overheads" means all Losses relating to Andrew Robb and his
secretary (including, without limitation, all costs relating to salaries,
premises and pensions), all Losses relating to Peter Ratcliffe and all Losses
relating to GMS Inc., all as described in the Disclosure Letter, and all
Losses relating to all other contracts or arrangements referred to in
paragraph 5.2 of Part 1 of Schedule 2;
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"Vendor's Solicitors" means Fladgate Fielder of Heron Place, 3 George
Street, London W1H 6AD;
"Warranties" means the warranties set out in Part 1 of Schedule 2 and
"Warranty" means any one of them;
"Warranty Claim" means any claim made in respect of an alleged breach of
one or more of the Warranties;
"Waste" means any Substance which constitutes a scrap material or an
effluent or other unwanted surplus Substance arising from the
application of any process and any Substance or article which requires
to be disposed of as being broken worn out contaminated or otherwise
spoiled;
"Working Capital" means current assets less current liabilities; and
"WT Licence" means the licence granted on 9 April 1992 and the licence
granted on 15 December 1997 to the Company for the purpose of section 1
of the Wireless Telegraphy Act 1949 and any amendment, modification or
addition to such licences.
1.2 Subordinate Legislation
Any reference to a statutory provision shall include any subordinate
legislation made from time to time under that provision on or before the
date of this Agreement.
1.3 Modification etc. of Statutes
Any reference to a statutory provision shall include such provision as
from time to time modified, re-enacted or consolidated on or before the
date of this Agreement so far as such modification, re-enactment or
consolidation applies or is capable of applying to any transactions
entered into under this Agreement prior to Completion and (so far as
liability thereunder may exist or can arise) shall include also any past
statutory provision (as from time to time modified, re-enacted or
consolidated) which such provision has directly or indirectly replaced
on or before the date of this Agreement.
1.4 Connected Persons
A person shall be deemed to be connected with another if that person is
connected with such other within the meaning of section 839 of the ICTA.
1.5 Vendor
References to the Vendor shall, where the context allows, include Geotek
on the basis that the Vendor and Geotek are acting on a joint and
several basis.
1.6 Accounts
Any reference to audited accounts or the Audited Accounts shall include
the directors' and auditors' reports, relevant balance sheets, profit
and loss accounts and cash flow accounts and related notes together with
all documents which are required by law to be annexed to the accounts of
the company concerned to be laid before that company in general meeting
in respect of the accounting reference period in question.
1.7 Companies Act 1985
The words holding company and subsidiary shall have the same meanings in
this Agreement as their respective definitions in the Companies Act 1985.
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1.8 Interpretation Act 1978
The Interpretation Act 1978 shall apply to this Agreement in the same
way as it applies to an Act (as defined therein).
1.9 Schedules etc.
References to this Agreement shall include the recitals and Schedules to
it and references to clauses and Schedules are to clauses of and
schedules to this Agreement.
1.10 Information
Any reference to books, records or other information means books,
records or other information in any form including paper, electronically
stored data, magnetic media, film and microfilm.
1.11 SSAPs
A reference to a SSAP means a statement of standard accounting practice
as adopted by the Accounting Standards Board and published by the
Institute of Chartered Accountants of England and Wales.
2 Agreement to Sell the Shares
2.1 Sale of Shares
The Vendor shall sell and the Purchaser, relying only on the Warranties
and undertakings contained in this Agreement, shall purchase the Shares
free from all Security Interests and together with all rights and
advantages now and hereafter attaching thereto with effect from the
Completion Date.
2.2 Rights of Pre-emption
The Vendor hereby waives irrevocably any and all rights of pre-emption
over the Shares conferred either by the Articles of Association or other
equivalent document of the Company or in any other way and the Vendor
shall procure that any Associate waives irrevocably and without
consideration any such rights.
3 Consideration
3.1 Amount and Retention Fund
Subject as hereinafter provided the consideration for the purchase of
the Shares shall be the sum of eighty million US dollars (US$80,000,000)
together with any increase or less any decrease pursuant to clause 5.3
of which 95% of that sum together with any increase or less any decrease
pursuant to clause 5.3 shall be credited to the account specified in the
Payment Account Details of the Vendor by way of CHAPS on the Completion
Date and the balance (the "Retention Fund") shall be dealt with in
accordance with the provisions set out in Schedule 6. Any sum payable to
the Vendor out of the Retention Fund shall be paid to the Vendor,
provided that if any amount by way of a Warranty Claim or by way of a
claim pursuant to clauses 4.4, 5.2, 6.4, 6.6 or 9.15 shall become
payable to the Purchaser out of the Retention Fund in accordance with
the provisions of Schedule 6, the consideration shall be abated by the
amount so payable and any right of the Purchaser to such claim shall be
reduced by the amount of such abatement but without prejudice to the
right of the Purchaser to recover the excess of any such claim or any
other Losses from the Vendor.
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3.2 Method of Payment
Wherever in this Agreement provision is made for the payment by one
party to another, such payment shall be effected by crediting the
account specified in the Payment Account Details of the party entitled
to the payment by way of CHAPS on or before the due date for payment
unless the payee by notice to the payer, not later than three (3)
Business Days prior to the due date for payment, elects to be paid by
banker's draft drawn on any international bank reasonably acceptable to
the payer and having an office in London. Payment of such sum shall be a
good discharge to the payer of its obligation to make such payment
hereunder.
3.3 Reduction of Consideration
If any payment is due by the Vendor to the Purchaser in respect of any
claim against the Vendor under this Agreement (including without
limitation any Warranty Claim), the payment shall be made by way of
adjustment of the consideration paid by the Purchaser for the Shares
under this Agreement and the consideration shall be deemed to have been
reduced by the amount of such payment.
4 Conditions
4.1 Conditions Precedent
Completion is conditional upon satisfaction of the following conditions:
4.1.1 the receipt by the Purchaser and the Company of written
confirmation from each of the SoS and the Director General of
Telecommunications, in the agreed terms;
4.1.2 (a) the receipt by the Purchaser of written confirmation from
the OFT indicating, in terms satisfactory to the Purchaser,
that the SoS, in exercise of her functions under the Fair
Trading Act 1973, does not intend to refer the proposed
acquisition of the Shares or any matter relating thereto to
the MMC and for the purpose of this clause, an unconditional
written notice to the Purchaser from the OFT that the SoS does
not intend to refer the proposed acquisition to the MMC will
satisfy the Purchaser; or
(b) the SoS accepting an undertaking or undertakings in terms
satisfactory to the Purchaser pursuant to Section 75G of Fair
Trading Act 1973 instead of referring the proposed acquisition
of the Shares or any matter relating thereto to the MMC;
4.1.3 the receipt by the Purchaser and the Company of letters in the
agreed terms from EASAMS Limited, GEC - Marconi Communications
Limited and GPT Limited;
4.1.4 the receipt by the Purchaser of written confirmation from the
SoS indicating in terms satisfactory to the Purchaser that the
merger of the Wireless Telegraphy Act TETRA licences issued on
15 December 1997 to the Company and Tetralink
Telecommunications Limited ("Tetralink") will be permitted
and/or that Tetralink will be licensed to use all of the
radiofrequency spectrum licensed under such licences; and for
the purposes of this clause written confirmation from the
Radiocommunications Agency that Tetralink will be licensed
pursuant to its Wireless Telegraphy Act TETRA licence to use
80 or more channels within the spectrum currently designated
in that licence, subject to co-ordination of such channels
with the Ministry of Defence, will satisfy the Purchaser; and
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4.1.5 there being no Material Adverse Change between the date of
this Agreement and Completion and for the purposes of this
Agreement "Material Adverse Change" means:
(a) the gross loss ("churn") to the Company of two thousand
(2,000) subscriber units (each subscriber unit being a radio
unit recorded on the Company's SMART system in a manner fully
consistent with such recording practice over the last year) in
any month or, if Completion is not at the end of a calendar
month, part of that calendar month, excluding former
subscriber units on the Company's networks which become
subscriber units to Fleetcomm Limited's networks in any such
calendar month or part of it;
(b) an increase of more than ten (10) per cent. in the
aggregate amount of the rentals of the sites on which the
Company's base stations are located payable by the Company for
the period of twelve (12) months ending on the Completion Date
over the aggregate amount of such rentals paid by the Company
for the period of twelve (12) months ended on the date which
is three hundred and sixty five (365) days before the
Completion Date;
(c) any actual or threatened litigation which either relates
singly or in the aggregate to an amount exceeding one million
pounds (L1,000,000), provided that:
(i) such litigation is not frivolous;
(ii) the Vendor shall have twenty (20) days from the
receipt of any statement of claim or other initiating
process in which to settle or otherwise dispose of
such litigation; and
(iii) such litigation is not fully covered by a valid
insurance policy held by the Company on the Completion
Date and disclosed to the Purchaser.
For the purpose of this clause, "fully covered" excludes any
reasonable deductible from any such insurance policy;
(d) twenty (20) or more of the Company's base stations being
unavailable to provide service on its principal network
for three (3) or more consecutive days;
(e) any of the switches operated by the Company being
unavailable to provide service on its principal network
for two (2) or more consecutive days;
(f) total destruction of the Property of the Company known as
Wren House, or that Property not being able to be used by
the Company for its operations for three (3) or more
consecutive days;
(g) the Purchaser becoming aware of any liability of the
Company which is not fully covered by a valid insurance
policy as referred to in clause 4.1.5(c) and which was
not disclosed in its Audited Accounts of one million
pounds (L1,000,000) or more, which the Vendor has not
settled in full within seven (7) days after the
Notification Date;
(h) an announcement by or on behalf of the
Radiocommunications Agency or by or on behalf of the SoS
that the fee payable by the Company in respect of the use
of spectrum for its principal network for the period from
1 April 1998 to 31 March 1999 will be at least one
hundred (100) per cent. more than such fee paid by the
Company for the period from 1 April 1997 to 31 March 1998;
(i) as at 15 January 1998 the Company or its service
providers having received notices of termination given
after the date of this Agreement in respect of 3,000
subscriber units (each
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subscriber unit being a radio unit recorded on the
Company's SMART system in a manner fully consistent with
such recording practice over the last year) which have
not been implemented by the Company by removing the unit
from the SMART system by that date, excluding former
subscriber units on the Company's networks which have
before that date become subscriber units to Fleetcomm
Limited's networks.
4.2 Responsibility for Satisfaction
The parties hereby undertake to use all reasonable endeavours to
ensure the satisfaction of the Pre-conditions and the Vendor hereby
undertakes to use all reasonable endeavours to ensure that a Material
Adverse Change does not occur. Without prejudice to the foregoing, it
is agreed that all requests and enquiries from any government,
governmental, supranational or trade agency, court or regulatory body
relating to the Company or this Agreement shall be dealt with by the
Vendor and the Purchaser in consultation with each other and each of
the Vendor and the Purchaser shall promptly co-operate with and
provide all necessary information and assistance reasonably required
by such government, agency, court or body upon being requested to do
so by the other.
4.3 Non-Satisfaction/Waiver
4.3.1 The party responsible for the satisfaction of each
Pre-condition shall promptly give notice to the other parties
of the satisfaction of the relevant Pre-condition by giving
them a copy of the relevant written confirmations on the
Business Day next following the day on which it has received
the relevant confirmation. If the Pre-conditions are not
satisfied on or before sixty (60) days from the date of this
Agreement or such extended period as is referred to in clauses
4.1.5(c)(ii), 4.1.5(g), 4.4.3 and 4.5.2, either party may
terminate this Agreement and no party shall have any claim
against any other under it, save for any claim arising from
breach of the undertakings contained in clauses 4.2 and 9.4.
4.3.2 The Purchaser may waive in whole or in part and conditionally
or unconditionally any of the conditions in clause 4.1 by
notice in writing to the Vendor.
4.4 Reduction of Consideration
4.4.1 In the event that notice of termination of the leases of any
of the Principal Properties is received by the Company after
the date of this Agreement but prior to Completion the
consideration payable by the Purchaser under clause 3.1 shall,
subject to clause 4.4.2, be reduced by L250,000 for each of
the Principal Properties in respect of which a notice has been
given provided that the Vendor's Accountants have given a
written opinion to the Vendor and the Purchaser, upon the
request of the Vendor, that Losses have been actually or are
reasonably expected to be incurred by the Company as a
consequence of the termination of the lease.
4.4.2 In respect of each notice of termination, as described in
clause 4.4.1, whose validity is disputed by the Vendor:
(i) the consideration payable by the Purchaser under clause
3.1 shall not be reduced at Completion;
(ii) the Retention Fund shall be increased by L250,000; and
(iii) a payment from the Retention Fund together with the
interest accrued on that amount shall be made pursuant to
Schedule 6, provided that: (a) the notice of termination
is held to be valid by
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a court of competent jurisdiction; or (b) the Company
does not contest the notice of termination within thirty
(30) days of receipt.
4.4.3 Upon receipt of a notice of termination as described in clause
4.4.1, the Vendor will immediately request the Vendor's
Accountants to render the written opinion referred to in that
clause within seven (7) Business Days.
4.5 Dispute procedure
4.5.1 If any dispute arises between the Vendor and the Purchaser as to
the occurrence or alleged occurrence of a Material Adverse Change
or a payment to the Purchaser pursuant to paragraph 1.3 of
Schedule 6 ("Payment"), the Vendor and the Purchaser will
immediately refer such dispute for determination by a senior
chartered accountant appointed by agreement between the Vendor
and the Purchaser or, failing agreement within three (3) Business
Days, upon application by either of them to the President for the
time being of the Institute of Chartered Accountants in England
and Wales ("Expert").
4.5.2 The Vendor and the Purchaser will jointly request the Expert
to act as an expert and not as an arbitrator and to state
within twenty (20) Business Days of his receipt of that
request whether, in his opinion:
(a) a Material Adverse Change has occurred; or
(b) whether a Payment should be made.
4.5.3 The determination of the Expert will be final and binding upon
the Vendor and the Purchaser, except in the case of manifest
error, and the Expert's costs will be shared equally between
the Vendor and the Purchaser. To assist him with the
determination, the Expert may employ the services of a lawyer.
5 Action Pending Completion
5.1 Vendor's General Obligations
The Vendor shall procure that, pending Completion:
5.1.1 the Company will carry on business only in the ordinary
course, (save insofar as otherwise agreed in writing by the
Purchaser) in substantially the same manner as presently
conducted, and the Vendor shall use all reasonable efforts to
preserve the Vendor's and the Company's relationship with the
Company's employees, customers, suppliers, lessors, licensors
and other business associates;
5.1.2 the Purchaser receives copies of the Management Accounts
within twelve (12) Business Days of the month end to which
such Management Accounts relate, and any other monthly reports
prepared by the Company for its non-statutory directors and
all weekly technical and management reports known as "hotline
reports" in a timely fashion following their production;
5.1.3 the Purchaser and its agents will, upon reasonable notice, be
allowed access to, and to take copies of, the statutory books,
minute books, leases, licences, contracts, tax records,
details of receivables without customer names, documents
evidencing or embodying Intellectual Property Rights, supplier
lists, consultants reports relating to the analogue business
of the Company and correspondence with regulators in the
possession or control of the Company;
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5.1.4 the Purchaser and its agents will, upon reasonable notice, be
allowed access to all directors including non-statutory
directors of the Company (the "Personnel") and the Personnel
shall comply with all reasonable requests by the Purchaser for
financial, operating, technical, marketing and other
information relating to the Company, including any information
relating to any pending application by the Company for any
regulatory or governmental approval but excluding any
information relating to customers' names, service providers'
names, prospective financial information, other than the
Company's 1998 budget for its analogue business, and
information relating to the TETRA business of the Company;
5.1.5 the Company maintains in force all insurance policies and all
other such insurances normally kept in force by it; and
5.1.6 the Vendor, to the extent that it does not currently own the
entire issued share capital of the Company, shall promptly do
so following the execution of this Agreement.
5.2 Restrictions on the Vendor
Without prejudice to the generality of clause 5.1, the Vendor shall
consult with the Purchaser in relation to all material matters
concerning the running of the Company between the date of this
Agreement and Completion, and the Vendor will permit the Purchaser to
consult the Personnel on all matters concerning the operation of the
Company between the date of this Agreement and the Completion Date,
other than on those matters specifically excluded from clause 5.1.4,
will arrange weekly meetings between the Company and the agents of the
Purchaser to discuss the business of the Company and its integration
into the Purchaser's Associates; and during that period shall procure
that the Company shall not without the prior written consent of the
Purchaser such consent not to be unreasonably withheld or delayed:
5.2.1 incur or enter into any agreement or commitment involving any
capital expenditure in excess of L50,000 per item and L200,000
in aggregate, provided that in relation to the Company's
proposed digital business no further capital expenditure will
be made or committed to and no further expenses in relation to
that business will be incurred or committed to, other than
pursuant to existing contracts;
5.2.2 enter into or amend any contract or commitment which is not
capable of being terminated without compensation at any time
with three (3) months notice or less or which relates to the
acquisition or lease of any premises other than up to 6 base
station sites or which is not in the ordinary course of
business or which involves or may involve total annual
expenditure in excess of L200,000;
5.2.3 enter into or amend any Security Interest, contract or
commitment relating to any of the Properties or their
management or the rents payable therefor other than contracts
or commitments which would not have a material adverse effect
on the value of the Company or the value of the Properties;
5.2.4 begin any discussions or negotiations or agree to the
amendment of the TA Licence or the WT Licence or in any way
act contrary to the terms of such Licences;
5.2.5 begin any discussions or negotiations with Taxation
authorities;
5.2.6 incur any additional borrowings or incur any other
indebtedness;
5.2.7 make any material amendment to the terms and conditions of
employment (including, without limitation, remuneration,
pension entitlements and other benefits) of any employee,
provide or agree to provide any gratuitous payment or loan or
benefit to any such person or any of their dependants,
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or dismiss or terminate the employment of any employee other
than for cause, or engage or appoint any additional employee
other than pursuant to offer letters outstanding at the date
of this Agreement, the details of which, other than the name
of the offeree, have been disclosed in writing to the
Purchaser in the Disclosure Letter;
5.2.8 discontinue or amend the Pension Scheme to any material extent
or commence to wind it up or cause it to cease to admit new
members or communicate to any employee any material plan,
proposal or intention to amend, wind up, terminate or exercise
any discretion in relation to the Pension Scheme;
5.2.9 pay any benefits under the Pension Scheme other than in
accordance with the terms of the documents governing such
scheme and not under any discretionary power;
5.2.10 acquire or agree to acquire or dispose of or agree to dispose
of any material asset or material stocks or allow or suffer
any of the Company's assets to become subject to any Security
Interest except:
(a) as permitted pursuant to clauses 5.2.1 and 5.2.2;
(b) for orders accepted or made by the Company in the
ordinary course of business before the date of this
Agreement; and
(c) for acquisitions made to fulfil orders made by customers
in the ordinary course of business;
5.2.11 take steps to procure payment by any debtor generally in
advance of the date on which book and other debts are usually
payable in accordance with the standard terms of business of
the Company or (if different) the period extended to any
particular debtor in which to make payment;
5.2.12 delay making payment to any trade creditors generally beyond
the date on which payment of the relevant trade debt should be
paid in accordance with credit periods authorised by the
relevant creditors or (if different) the period extended by
any particular creditor in which to make payment;
5.2.13 fail to pay any statutory creditor by the due date;
5.2.14 amend any insurance policy, allow any insurance policy
normally kept in force by the Company to lapse, fail to notify
any insurance claim in accordance with the provisions of the
relevant policy or settle any such claim below the amount
claimed;
5.2.15 create, allot or issue or redeem any share or loan capital of
the Company or any option, warrant or right relating thereto;
5.2.16 acquire or agree to acquire any share, shares or other
interest in any company, partnership or other entity; or
5.2.17 declare, make or pay any dividend or other distribution or
repay any loan to shareholders except as provided in clause
5.3;
and the Vendor shall indemnify and hold the Purchaser indemnified
against all Losses arising through its failure to comply with the
provisions of this clause 5.2.It is hereby acknowledged (for the
avoidance of doubt) that none of the provisions of this clause 5.2 or
the exercise or failure to exercise any of the Purchaser's rights
hereunder shall give rise to any liability on the part of the Purchaser
or any of its employees, consultants or representatives or any person
connected with it. The Vendor undertakes to the Purchaser to indemnify
and hold
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indemnified the Purchaser and such persons as aforesaid against all
Losses which it may incur by reason of any such liability, subject to
the Purchaser's employees acting in the normal and proper course of
their duties.
5.3 Net Loan Repayment
5.3.1 The Vendor and the Purchaser agree, that between the date of
this Agreement and Completion, the Company shall repay to the
Vendor and/or its Associates the amounts owing to them as at
Completion, less the amounts owing by the Vendor and/or its
Associates (including GMS, Inc) to the Company as at
Completion, the net amount of such repayment to the Vendor
and/or its Associates being referred to as the "Net Loan
Repayment".
5.3.2 At Completion the consideration for the purchase of the Shares
shall be adjusted as follows:
(i) it shall be increased by the amount by which L3,800,000
exceeds the Net Loan Repayment;
(ii) it shall be decreased by the amount by which the Net Loan
Repayment exceeds L3,800,000.
5.3.3 Notwithstanding the provisions of clause 5.3.1, the Purchaser
consents to the making of a partial Net Loan Repayment prior
to Completion of an amount not exceeding a total of L2,500,000.
and any adjustment to the consideration shall be converted into US$
based on the average pounds sterling/US$ exchange rate quoted by Lloyds
Bank plc at the close of business on the ten Business Days ended on the
Business Day immediately before the Notification Date.
5.4 Post Completion
5.4.1 The Vendor's Accountants will be responsible, in consultation
with the Purchaser's Accountants, for the preparation on
behalf of the Company of its corporation tax return (and/or
amended return and corporation tax computation) for the year
ending 31 December 1997 and the computation calculating the
figures in the return and with the approval of the Company and
the Purchaser, filing them with the Inland Revenue. The
Company will remain responsible for signing such returns. The
Vendor's Accountants will also be responsible in consultation
with the Purchaser's Accountants and subject to the
Purchaser's written approval, such approval not to be
unreasonably withheld or delayed, for responding to any
queries raised by the Inland Revenue in relation to such
returns.
5.4.2 The Vendor will prepare the accounts of the Company for the
year ending 31 December 1997 in consultation with the
Purchaser and the Purchaser's Auditors to reflect this
Agreement which will be audited by the Vendor's Accountants
and, to the extent that the management of the Company have
discretion to determine the accounting policies of the
Company, the Company will amend those policies as reasonably
required by the Purchaser, provided that no such amendment
shall be required to the extent that it would have adverse tax
consequences for the Vendor or to the extent that it would
cause the Vendor's Accountants to qualify their auditor's
report on such accounts;
6 Completion
6.1 Date and Place
Subject to clause 4, Completion shall take place at the offices of the
Purchaser's Solicitors three (3) Business Days after the Notification
Date or at such other place or on such other date as may be agreed
between the Purchaser and the Vendor.
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6.2 Vendor's Obligations on Completion
On Completion the Vendor shall deliver or make available to the Purchaser:
6.2.1 a certificate confirming the truth and accuracy in all
respects of the Warranties and that such Warranties are not
misleading in any respect as at Completion except as provided
in clause 7.2 and confirming that it does not have any
knowledge of any matter which would constitute a Warranty
Claim subject to the contents of the Disclosure Letter;
6.2.2 a certificate confirming that no Material Adverse Change has
occurred;
6.2.3 duly executed transfers of the Shares in favour of the
Purchaser or as it may direct accompanied by the relative
share certificates;
6.2.4 the written resignations of each of the statutory directors
and secretary of the Company from his office as a statutory
director or secretary to take effect on the Completion Date in
the agreed terms;
6.2.5 the written resignations of the auditors of the Company to
take effect on the later of the Completion Date and the date
on which the audited accounts of the Company for the year
ending 31 December 1997 and the associated management letters
are finalised, with acknowledgments signed by them in agreed
terms to the effect that they have no claim against the
Company and containing the statement referred to in Section
394 of the Companies Act 1985 to the effect that as at the
Completion Date there are no circumstances connected with
their resignation which they consider should be brought to the
notice of the members or creditors of the Company;
6.2.6 the certificates of incorporation, corporate seals (if any),
cheque books and statutory books of the Company (duly written
up-to-date);
6.2.7 all the financial and accounting books and records (including
those in relation to Taxation) of the Company and all
documents of title relating to the Properties;
6.2.8 (if the Purchaser so requires) irrevocable powers of attorney
(in agreed terms) executed by the Vendor (as the holder of all
the Shares) in favour of the Purchaser to enable the Purchaser
(pending registration of the relevant transfers) to exercise
all voting and other rights attaching to the Shares and to
appoint proxies for this purpose;
6.2.9 bank statements of all bank accounts of the Company as at
close of business on the Business Day before the Completion
Date;
6.2.10 evidence reasonably satisfactory to the Purchaser that the
Vendor has fulfilled all liabilities of the Company under the
long-term incentive scheme described in the memorandum dated
27 August 1997 from E J Watts to Yaron Eitan, in respect of
share options issued under Geotek's share option plans dated
1989 and 1994 and in respect of the Vendor's Overheads;
6.2.11 evidence satisfactory to the Purchaser that all intercompany
balances, including but not limited to payments owing by GMS,
Inc and the loan from Geotek to the Company have been settled
on a final basis;
6.2.12 evidence satisfactory to the Purchaser that in respect of all
the Principal Properties the Company has a lease in its name
and such leases are valid and subsisting;
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6.2.13 evidence satisfactory to the Purchaser that the Company has a
lease or licence in its name, and such leases or licences are
valid and subsisting, for one hundred and five (105) of the
Properties;
6.2.14 written consent from the auditors of the Company, that to the
extent necessary, they will consent, subject to receiving
confirmation from any subsequent auditors of the Company that
no historic accounts prepared by them require adjustment, to
the copying and publication of the accounts included in the
three (3) annual returns of the Company for the years ended 31
December 1995, 1996 and 1997 by the Purchaser or any of its
Associates or future Associates in any of their regulatory or
financial filings, including registration statements and
exhibits;
6.2.15 a copy of the most recent opinion of the financial adviser to
Geotek (or other investment banking firm) to the effect that
the consideration payable by the Purchaser under clause 3.1 is
fair to Geotek; and
6.2.16 an opinion from Klehr, Harrison, Harvey, Branzburg & Ellers
LLP in terms reasonably satisfactory to the Purchaser that the
Shares are not subject to any Security Interest.
6.3 Board Resolutions of the Company
On Completion the Vendor shall procure the passing of board
resolutions of the Company:
6.3.1 revoking all existing authorities to bankers in respect of the
operation of its bank accounts and giving authority in favour
of such persons as the Purchaser may nominate to operate such
accounts;
6.3.2 accepting the resignations referred to in clause 6.2.4 and
appointing such persons (within the maximum number permitted
by the Articles of Association) as the Purchaser may nominate
as statutory directors and secretary;
6.3.3 approving the registration of the share transfers referred to
in clause 6.2.3 subject only to their being duly stamped;
6.3.4 accepting the resignation referred to in clause 6.2.5 and
appointing the Purchaser's Accountants as auditors of the
Company;
6.3.5 changing its registered office in accordance with instructions
given by the Purchaser; and
6.3.6 changing its accounting reference date in accordance with
instructions given by the Purchaser;
and shall hand to the Purchaser duly certified copies of such
resolutions.
6.4 Indemnity
The Vendor shall indemnify and keep indemnified the Purchaser on an
after-tax basis against all Losses of the Company arising out of or in
connection with any scheme of Geotek relating to the remuneration of,
or other payments to, the Company's employees or directors, including
the long-term incentive scheme described in the memorandum dated 27
August 1997 from E J Watts to Yaron Eitan and share options issued
under Geotek share option plans dated 1989 and 1994, and in respect of
the Vendor's Overheads.
6.5 Payment of Price
6.5.1 The Purchaser shall deliver to the Vendor a certificate
confirming the truth, completeness and accuracy of the
warranties set out in Part 2 of Schedule 2 as at Completion.
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6.5.2 Subject to clause 4, against compliance with clauses 5.1.2,
6.2 and 6.3 the Purchaser shall pay to the Vendor in
accordance with the payment details set out in clause 3 that
part of the consideration for the purchase of the Shares which
is payable to the Vendor on the Completion Date and as regards
the Retention Fund the Purchaser and the Vendor shall take the
necessary steps to complete the arrangements set out in
Schedule 6.
6.6 Default
6.6.1 If the provisions of clauses 5.1.2, 6.2 and 6.3 are not fully
complied with by the Vendor by or on the Completion Date, the
Purchaser shall be entitled (in addition to and without
prejudice to all other rights or remedies available to it
including the right to claim damages but not including a right
to terminate this Agreement) by written notice to the Vendor
served on such date:
(i) to effect Completion so far as practicable having regard
to the defaults which have occurred; or
(ii) to fix a new date for Completion (not being more than
twenty (20) Business Days after the agreed date for
Completion) in which case the foregoing provisions of
this clause 6 shall apply to Completion as so deferred
but provided such deferral may only occur once.
6.6.2 If the provisions of clause 6.5 are not fully complied with by
the Purchaser by or on the Completion Date or any new date for
Completion fixed pursuant to clause 6.6.1(ii), the Vendor
shall be entitled (in addition to and without prejudice to all
other rights or remedies available to it including the right
to claim damages) by written notice to the Purchaser served on
such date:
(i) to effect Completion so far as practicable having regard
to the defaults which have occurred; or
(ii) to fix a new date for Completion (not being more than
twenty (20) Business Days after the agreed date for
Completion) in which case the foregoing provisions of
this clause 6 shall apply to Completion as so deferred
but provided such deferral may only occur once.
7 Warranties
7.1 Incorporation of Schedule 2
7.1.1 The Vendor warrants to the Purchaser on the date of this
Agreement and on the Completion Date in the terms set out in
Part I of Schedule 2 subject only to:
(i) any matter which is fully disclosed in the Disclosure
Letter, the Audited Accounts or the Management Accounts
made available to the Purchaser prior to the date of this
Agreement;
(ii) any matter or thing hereafter done or omitted to be done
pursuant to this Agreement or otherwise at the request in
writing or with the approval in writing of the Purchaser;
and
(iii) the provisions of clause 7.2.2.
7.1.2 The Vendor acknowledges that the Purchaser has entered into
this Agreement in reliance upon the Warranties and the
undertakings contained in this Agreement. Save as expressly
otherwise provided, the Warranties shall be separate and
independent and shall not be limited by reference to any other
paragraph of the Schedule, or by anything in this Agreement or
the Tax Deed of Covenant.
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7.1.3 The Vendor confirms, as at the date of this Agreement (and
will confirm as at the Completion Date pursuant to clause
6.2.1), the truth and accuracy in all respects of the
Warranties, that such Warranties are not misleading in any
respect as at Completion except as provided in clause 7.2 and
that it does not have any knowledge of any matter which would
constitute a Warranty Claim other than as set out in the
Disclosure Letter.
7.1.4 The Purchaser confirms that as at the date of this Agreement
it does not have any knowledge of a matter which would
constitute a Warranty Claim. For the purpose of this clause
7.1.4 "knowledge" means the knowledge of Yves Marois, Marc
Godin, Fran ois Dupuis and Ted Beddoes of any matter fully
disclosed in writing in the report dated 15 December 1997 from
the Purchaser's Accountants to the Purchaser and in the
Disclosure Letter.
7.2 Updating to Completion
7.2.1 The Vendor further warrants to the Purchaser that:
(i) subject to clauses 7.1.1 and 7.2.2, the Warranties will
be fulfilled down to and will be true and accurate in all
respects and not misleading in any respect at Completion
as if they had been given again at Completion; and
(ii) if after the signing of this Agreement and before
Completion any event shall occur or matter shall arise
which results or may result in any of the Warranties
being unfulfilled, untrue, misleading, incomplete or
inaccurate in any respect at Completion the Vendor shall
immediately notify the Purchaser in writing fully thereof
prior to Completion and the Vendor (at its own cost)
shall make any investigation concerning the event or
matter which the Purchaser may require.
7.2.2 The Purchaser agrees with the Vendor that clause 7.2.1(i) does
not apply to the following Warranties and that they will be
given at Completion as follows:
(i) paragraphs 3.8.11, 5.8.1, 5.8.2 and 5.8.3 of Part 1 of
Schedule 2: the total number of Subscribers (as defined
in paragraph 5.8.1 of Part 1 of Schedule 2) will be
subject to a gross reduction of two thousand (2,000) per
calendar month or part of a calendar month, excluding
from the reduction, subscribers to the Company's networks
in any such month or part of it which become subscribers
to Fleetcomm Limited's network and that as at 15 January
1998, the number of Subscribers which have given notice
to the Company (whether directly or indirectly) to
terminate but whose contracts have not yet been
terminated does not exceed three thousand (3000). For the
purpose of this clause "gross reduction" means before
adding new subscribers during the period from the date of
this Agreement to the Completion Date; and
(ii) paragraphs 6.1.1 to 6.1.3 of Part 1 of Schedule 2 will be
subject to additional employees disclosed pursuant to
clause 5.2.7, but the Warranties will otherwise be given
at Completion.
7.3 Limitation of Liability
Notwithstanding the provisions of clauses 7.1 and 7.2, the Vendor shall
not be liable under this Agreement:
7.3.1 Time Limits
In respect of any claim unless notice of such claim is given
in writing by the Purchaser to the Vendor setting out such
details as are available of the specific matter in respect of
which the claim
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is made, within sixteen (16) months from the Completion Date
except that the limit will be six (6) years from the end of
the accounting reference period of the Company in which
Completion takes place in relation to a claim under paragraph
7 of Part 1 of Schedule 2 and will be unlimited in time in
relation to a claim under paragraph 1.4 of Part 1 of Schedule
2 except that the Vendor will cease to be liable for any claim
unless proceedings against it are issued and served within
twenty (20) months of the notice in question unless previously
satisfied, settled or withdrawn;
7.3.2 Aggregate Minimum Claims
In respect of any claim unless:
(a) that claim exceeds L10,000; and
(b) the aggregate amount of all claims for which the Vendor
would otherwise be liable under this Agreement and the
Tax Deed of Covenant exceeds L250,000 but if the
aggregate amount of the liability in respect of all such
claims exceeds that figure then all claims, including
claims previously notified, shall accrue against and be
recoverable from the Vendor;
7.3.3 Maximum Claims
In respect of any claim to the extent that the aggregate
amount of the liability of the Vendor for all claims made
under this Agreement and the Tax Deed of Covenant would exceed
the purchase consideration under clause 3 but in the case of
any claim relating to any statutory and/or criminal fine or
penalty the liability of the Vendor shall be without
limitation;
7.3.4 Contingent Liabilities
In respect of any liability which is contingent unless and
until such contingent liability becomes an actual liability
and is due and payable but this sub-clause shall not operate
to avoid a claim made in respect of a contingent liability
within the applicable time limit specified in clause 7.3.1 if
the requisite details of such claim have been delivered before
the expiry of such period (even if such liability does not
become an actual liability until after the expiry of the
relevant period);
7.3.5 Provisions in the Accounts
In respect of any claim if and to the extent that proper
provision or reserve or, in respect of contingent liabilities
only, note is made for the matter giving rise to the claim in
the Audited Accounts;
7.3.6 Legislation and Taxation
In respect of any matter, act, omission or circumstance (or
any combination thereof) (including, for the avoidance of
doubt, the aggravation of a matter or circumstance) to the
extent that the same would not have occurred but for:
(i) Changes in Legislation
the passing of, or any change in, after the date of this
Agreement, any law, rule, regulation or administrative
practice of any government, governmental department,
agency or regulatory body including (without prejudice to
the generality of the foregoing) any increase in the
rates of Taxation or any imposition of Taxation or any
withdrawal of relief from Taxation not actually (or
prospectively) in effect at the date of this Agreement; or
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(ii) Accounting and Taxation Changes
any change in accounting or Taxation policy, bases or
practice of the Purchaser introduced or having effect
after the date of this Agreement.
7.3.7 Insurance
In respect of any claim to the extent that any Losses arising
from such claim are covered by a policy of insurance in force
on the date of this Agreement;
7.3.8 Other Limitations
In respect of any claim which:
(i) occurs or arises as a direct result of or is otherwise
attributable to a voluntary act or omission occurring
after Completion of the Purchaser or the Company, other
than pursuant to a legally binding commitment created
before Completion;
(ii) arises as the result of any provision or reserve made in
respect of it in the Audited Accounts being insufficient
by reason of any increase in the rates of Taxation made
after the date of this Agreement or arises as a result of
the retrospective imposition of Taxation as a consequence
of a change in the law enacted after the date of this
Agreement.
(iii) would not have arisen but for any claim, election,
surrender or disclaimer made or omitted to be made or
notice or consent given or omitted to be done by the
Company, or the Purchaser under the provisions of the
Taxation Statutes after date of this Agreement; or
(iv) occurs or arises out of, as a result of or in connection
with;
(a) any change in the nature of the business of the
Company or in the manner of conducting it after
Completion; or
(b) any asset acquired by the Company after Completion;
(v) occurs or arises as a result of or is otherwise
attributable to an act or omission after the date of this
Agreement of the Company (provided the Purchaser has
consented in writing to such act or omission) or the
Purchaser including anything which occurs or arises as a
result of a change in any accounting policy pursuant to
clause 5.4.2;
(vi) is made good under clauses 4.4, 5.2, 6.4 or 9.15, except
that this sub-clause 7.3.8(vi) shall apply only to the
extent that a claim is made good;
Provided that none of the limitations contained in this clause 7.3
shall apply to any claim which arises or is increased, or to the
extent to which it arises or is increased, as the consequence of, or
which is delayed as a result of, fraud, wilful misconduct or wilful
concealment by the Vendor or any officer or employee of the Vendor or
any of the directors of the Company (including any non-statutory
directors of the Company).
7.4 Recovery of ACT
If the Vendor is liable to the Purchaser under the Warranties by
reason of an obligation of the Company to pay advance corporation tax
or any sum recoverable from the Company as if it were advance
corporation tax, the liability of the Vendor will be reduced and the
amount paid to the Purchaser in respect of such liability will be
refunded (excluding any amount paid in respect of the Purchaser's or
the Company's funding costs in
21
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connection with such liability) when and to the extent that the
Company obtains the benefit of a reduction in liability to mainstream
corporation tax by reason of such payment.
7.5 Conduct of Claims
7.5.1 If the Purchaser becomes aware of any matter that may give
rise to a claim against the Vendor under this Agreement
notice of that fact shall be given as soon as possible to
the Vendor but any failure to give such notice shall not
affect the rights of the Purchaser except to the extent that
the Vendor is prejudiced by such failure.
7.5.2 Without prejudice to the validity of the claim or alleged
claim in question, the Purchaser shall allow the Vendor and
its accountants and professional advisers to investigate the
matter or circumstance alleged to give rise to such claim
and whether and to what extent any amount is payable in
respect of such claim and for such purpose the Purchaser
shall give, subject to its being paid all reasonable costs
and expenses, all such information and assistance, including
access to premises and personnel, and the right to examine
and copy or photograph any assets, accounts, documents and
records, as the Vendor or its accountants or professional
advisers may reasonably request.
7.5.3 If the claim in question is a result of or arises in
connection with a claim by or liability to a third party
then the Purchaser (if requested promptly in writing by the
Vendor and indemnified to its reasonable satisfaction by the
Vendor against all Losses which may as a result be incurred
by the Purchaser) shall take all such action and institute
such proceedings as the Vendor may reasonably request to
avoid, dispute, deny, defend, resist, appeal, compromise or
contest such claim or liability. Nothing in this clause
7.5.3 shall oblige the Purchaser to take any action which
may reasonably damage its commercial interests.
7.6 Prior Receipt
If the Vendor pays an amount in discharge of any claim under this
Agreement and the Purchaser subsequently recovers (whether by
payment, discount, credit, relief or otherwise) from a third
party a sum which is related to the subject matter of the claim
and which would not otherwise have been received by the
Purchaser, the Purchaser shall pay to the Vendor an amount equal
to (i) the sum recovered from the third party less any reasonable
costs and expenses incurred in obtaining such recovery or (ii) if
less, the amount previously paid by the Vendor to the Purchaser
less any reasonable costs and expenses incurred to obtain such
recovery.
7.7 Effect of Completion
Subject to clause 7.3 the Warranties and all other provisions of this
Agreement and the Tax Deed of Covenant insofar as the same shall not
have been performed at Completion shall not be extinguished or
affected by Completion, or by any other event or matter whatsoever
(including, without limitation, any satisfaction and/or waiver of any
Pre-condition) except by a specific and duly authorised written waiver
or release by the Purchaser.
7.8 Purchaser's Warranties
7.8.1 The Purchaser and the Guarantor warrant to the Vendor in the
terms set out in part 2 of Schedule 2.
7.8.2 Each of the Purchaser and its Associates undertakes to the
Vendor that it will not, and undertakes to the Vendor to
procure that its employees and agents will not, between the
date of this Agreement and the Completion Date:
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(i) without the prior written consent of the Vendor which
cannot be unreasonably withheld, take the initiative to
communicate with The General Electric Company PLC about
any contract or any lease or licence of the Company or
with any landlords of any of the Properties regarding any
licence or lease with the Company or with any of the
subscribers to the Company's networks other than in the
ordinary course of business of the Purchaser or its
Associates as carried on in the twelve (12) months prior
to the date of this Agreement, or with any of the
Company's service providers regarding the Company;
(ii) induce or attempt to induce a breach of any of the
Warranties;
(iii) cause or attempt to cause a Material Adverse Change
except that this sub clause 7.8.2(iii) does not apply to
any activities of Fleetcomm Limited, provided that
Fleetcomm Limited carries on business as it has done in
the last 12 months; or
(iv) communicate with any suppliers of TETRA with regard to
any possible supply to the Company.
7.8.3 Between the date of this Agreement and the Completion Date, the
Purchaser and the Vendor will give each other reasonable notice
of any proposed discussions with the OFT, the Radiocommunications
Agency or the Communications and Information Industries Division
of the Department of Trade and Industry relevant to this
Agreement or the provision of radio frequency spectrum for TETRA
and will invite the directors of the Company and their agents to
participate in any meetings with such organisations.
8 Restrictions on the Vendor
8.1 Restrictions
The Vendor further undertakes with the Purchaser and its Associates
that the Vendor will not and will procure that (i) none of its
Associates and (ii) none of its directors will in any Relevant
Capacity during the Restricted Period:
8.1.1 directly or indirectly carry on within the United Kingdom
any business relating to the provision of PMR services, PAMR
services or community radio services, regardless of the
technology involved, nor be concerned or interested within
such area in any such business save through the holding or
being interested in not more than five (5) per cent of the
outstanding share capital of a company the shares of which
are listed on any recognised stock exchange;
8.1.2 in competition with the business of the Company as described
in clause 8.1.1, canvass or solicit the custom of any person,
firm or company who has within three (3) years prior to
Completion been a material subscriber (having regard to the
number of units) of the Company; or
8.1.3 induce or seek to induce any present senior employee of the
Company with an annual salary in excess of L45,000 to become
employed whether as employee, consultant or otherwise by any
of the Vendor or its Associates.
8.2 Reasonableness of Restrictions
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The Vendor acknowledges and agrees that as a result of the consideration
paid by the Purchaser to the Vendor under clause 3, the restrictions
contained in this clause are no greater than is reasonable and necessary
for the protection of the interest of the Purchaser but if any such
restriction shall be held to be void but would be valid if deleted in
part or reduced in application, such restriction shall apply with such
deletion or modification as may be necessary to make it valid and
enforceable.
8.3 Interpretation
The following terms shall have the following meanings respectively in this
clause 8:
8.3.1 "Restricted Period" means three (3) years commencing on
Completion; and
8.3.2 "Relevant Capacity" means for its or his own account or for
that of any person, firm or company (other than the Purchaser
and the Company) or in any other manner and whether through
the medium of any company controlled by it or him or as
principal, partner, director, employee, consultant or agent.
9 Other Provisions
9.1 Announcements
9.1.1 Subject to the agreed announcement on signing of this Agreement,
pending Completion, the Vendor and the Purchaser shall, subject
to the requirements of law or rules of any regulatory body,
including any securities commission in Canada or the Securities
and Exchange Commission in the United States of America, or the
rules and regulations of any recognised stock exchange, consult
together as to the terms of, the timetable for and manner of
publication of, any formal announcement or writing to
shareholders, employees, customers, suppliers, distributors,
sub-contractors, stock exchange, media or other person which
either may desire or be obliged to make regarding this Agreement.
Any other communication which the Purchaser or the Vendor may
make concerning the foregoing matters shall, subject to the
requirements of law or rules of any regulatory body, including
any of the securities commissions in Canada or the Securities and
Exchange Commission in the United States of America, or the rules
and regulations of any recognised stock exchange, be consistent
with any such formal announcement or writing as aforesaid.
9.1.2 Subject to clause 9.1.1, neither the Purchaser nor the Vendor
shall pending Completion make or authorise or issue any formal
public announcement or writing concerning the subject matter of
this Agreement or any other document or transaction referred to
in or contemplated by this Agreement.
9.2 Successors and Assigns
9.2.1 The Vendor agrees that the benefit of every provision in this
Agreement is given to the Purchaser for itself and its
Associates. Accordingly, the Purchaser (and its Associates) may,
without the consent of the Vendor, assign to any Associate of the
Purchaser the benefit of all or any of the Vendor's obligations
under this Agreement, or any benefit to the Purchaser arising
under or out of this Agreement.
9.2.2 The Vendor agrees that, upon the request of the Purchaser or its
Associates, this Agreement may be novated (in whole or in part)
in favour of any Associate of the Purchaser, and the Vendor shall
24
<PAGE>
execute a Novation Agreement substantially in the terms set out
in Schedule 5. If the Vendor fails to execute any such Agreement
within 14 days of the request by the Purchaser, the Purchaser may
execute it on behalf of the Vendor and for such purpose the
Vendor hereby irrevocably appoints the Purchaser as the Vendor's
attorney for the purpose of executing any such Agreement. The
Vendor agrees to ratify and confirm any action properly taken by
the Purchaser by virtue of this power of attorney.
9.3 Variation
No variation of this Agreement shall be effective unless in writing
and signed by or on behalf of each of the parties to this Agreement.
9.4 Further Assurance
At any time after the date of this Agreement the Vendor shall and
shall use its best endeavours to procure that any necessary third
party shall execute such documents and do such acts and things as the
Purchaser may reasonably require for the purpose of giving to the
Purchaser the full benefit of all the provisions of this Agreement.
9.5 Costs
The Vendor shall bear all legal, accountancy and other costs and
expenses incurred by it and the Company in connection with this
Agreement and the sale of the Shares. The Purchaser shall bear all
such costs and expenses incurred by it.
9.6 Interest
If the Vendor or the Purchaser default in the payment when due of any
sum payable under this Agreement (whether determined by agreement or
pursuant to an order of a court or otherwise) the liability of the
Vendor or the Purchaser (as the case may be) shall be increased to
include interest on such sum from the date when such payment is due
until the date of actual payment (whether after or before judgment) at
a rate per annum of three (3) per cent above the base rate from time
to time of Midland Bank PLC. Such interest shall accrue from day to
day.
9.7 Notices
9.7.1 Any notice or other communication requiring to be given or
served under or in connection with this Agreement shall be
in writing and shall be sufficiently given or served if
delivered or sent:
In the case of either the Vendor or Geotek, to:
102 Chestnut Ridge Road
Montvale
New Jersey 07645
United States of America
Fax: 1 (201) 930 1363
Attention: Robert Vecsler
25
<PAGE>
and with a copy to the Vendor's Solicitors for the attention
of Nicolas Greenstone;
in the case of the Purchaser, to:
Block C
The Crescent
Jay
's Close,
The Viables,
Basingstoke,
Hampshire RG22 4BS.
Fax: (01256) 368002
Attention: Marc Godin
and in the case of the Guarantor, to:
1250 Rene-Levesque Boulevard West
Suite 1100, Montreal, Quebec
Canada
Fax: + 1 514 925 8470
Attention: Fran ois Dupuis and Yves Marois
9.7.2 Any such notice or other communication shall be delivered by hand
or sent by courier, fax or prepaid first class post. If sent by
courier or fax such notice or communication shall conclusively be
deemed to have been given or served at the time of dispatch, in
case of service in the United Kingdom, or on the following
Business Day in the case of international service. If sent by
post such notice or communication shall conclusively be deemed to
have been received two (2) Business Days from the time of
posting, in the case of inland mail in the United Kingdom or
three (3) Business Days from the time of posting in the case of
international mail.
9.8 Severance
If any term or provision in this Agreement is held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of
law, such term or provision or part shall to that extent be deemed not
to form part of this Agreement but the enforceability of the remainder
of this Agreement shall not be affected and in lieu of such illegal or
unenforceable provision there should be added automatically as a part
of this Agreement a provision
26
<PAGE>
as similar in terms to such illegal or unenforceable provision as may
be possible and be legal and enforceable, it being the intent of the
parties to maintain the benefit of the bargain for all parties.
9.9 Counterparts
This Agreement may be executed in any number of counterparts each of
which shall be deemed an original, but all the counterparts shall
together constitute one and the same instrument.
9.10 Restrictive Trade Practices
Notwithstanding any other provision of this Agreement, no provision of
this Agreement which is of such a nature as to make the Agreement
liable to registration under the Restrictive Trade Practices Act 1976
shall take effect until the day after that on which particulars
thereof have been duly furnished to the Director General of Fair
Trading pursuant to the said Act. Each of the Vendor and Geotek agree
to notify the Purchaser if either of them commences to carry on
business in the United Kingdom within three (3) years from the date of
this Agreement.
9.11 Governing Law and Submission to Jurisdiction
This Agreement and the documents to be entered into pursuant to it,
save as expressly referred to therein, shall be governed by and
construed in accordance with English law and all the parties
irrevocably agree that the courts of England are to have exclusive
jurisdiction to settle any disputes other than pursuant to clause 4.5
which may arise out of or in connection with this Agreement and such
documents.
9.12 Appointment of Process Agent
9.12.1 The Vendor hereby irrevocably appoints the Vendor's Solicitors as
its agent for the service of process in England in relation to
any matter arising out of this Agreement, service upon whom shall
be deemed completed whether or not forwarded to or received by
the Vendor.
9.12.2 The Vendor shall notify the Purchaser of any change in the
address of its process agent within twenty-eight (28) days of
such change.
9.12.3 If such process agent ceases to have an address in England the
Vendor irrevocably agrees to appoint a new process agent
acceptable to the Purchaser and to deliver to the Purchaser
within fourteen (14) days a copy of a written acceptance of
appointment by the process agent.
9.12.4 Nothing contained in this Agreement shall affect the right to
serve process in any other manner permitted by law or the right
to bring proceedings in any other jurisdiction for the purposes
of the enforcement or execution of any judgment or other
settlement in any other courts.
9.13 Guarantee of Purchaser's Obligations
In consideration of the Purchaser agreeing to enter into this
Agreement the Guarantor undertakes with the Vendor that:
(i) if the Purchaser fails to pay the consideration set out in
clause 3.1, the Guarantor will on demand pay to the Vendor
any money due but not paid by the Purchaser and indemnify
the Vendor against all Losses which it may incur by reason
of such default on the part of the Purchaser in performing
and observing its obligations under clause 3.1; and
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<PAGE>
(ii) although, as between the Purchaser and the Guarantor, the
Guarantor is a guarantor only, as between the Guarantor and
the Vendor, the Guarantor is deemed to be a principal debtor
and accordingly will not be released or discharged nor will
its liability under this Agreement be prejudiced by any
forbearance or indulgence shown by the Vendor to the
Purchaser, whether as to payment, time, performance or
otherwise.
9.14 Vendor's Awareness
For the purpose of this Agreement references to the Vendor being aware
of any fact or matter means the awareness of the Vendor and its
employees, after making due and careful enquiry of the directors of
the Company, including any non-statutory director of the Company.
9.15 Base Station Licences
Within the period of six (6) months from the Completion Date, the
Vendor will pay to the Purchaser on demand against reasonable evidence
all Losses incurred by the Company as a result of the lease or licence
of any base station used by the Company not being in the name of the
Company on the Completion Date, including without limitation:
9.15.1 all expenses incurred by the Company in order to transfer into
the name of the Company any base station leases or licences which
are not in the name of the Company on the Completion Date
including but not limited to any administrative expenses, legal
fees and amounts paid to landlords, whether by way of expenses,
legal fees and amounts paid on the issue of a new lease or
licence; and
9.15.2 the reasonable costs directly incurred by the Company to move its
network equipment to another base station in the event that the
landlord of any base station referred to in clause 9.15.1
terminates that lease or licence within six (6) months of the
Completion Date.
9.16 Audit and Access Rights
During the six (6) years from the Completion Date, the Purchaser will
permit the Vendor and its duly authorised agents access on reasonable
notice during normal business hours and, at its cost, to take copies
of, the accounting and Taxation records and correspondence, tax
returns, correspondence with Taxation authorities and all accounting
records and work papers certified by the Vendor's Accountants as
necessary to complete the Vendor's or Geotek's tax returns relating
to any accounting period ending on or before the Completion Date,
subject always to the Vendor and Geotek and their duly authorised
agents agreeing to keep such records confidential and to use them only
for the purposes of the Taxation returns of the Vendor or its
Associates and subject to the Company holding such records.
9.17 No other beneficiaries
The parties to this Agreement do not intend that the Company's
employees, customers, lessors, licensors, suppliers or any other person
should obtain any rights as third party beneficiaries of this Agreement.
28
<PAGE>
In witness whereof this Agreement has been duly executed.
SIGNED by ROBERT
VECSLER on behalf
of GEOTEK } signed
COMMUNICATIONS, INC.
in the presence of:
witnessed
SIGNED by ROBERT
VECSLER on behalf of
GEOTEK GmbH HOLDING } signed
CORPORATION in the
presence of:
witnessed
SIGNED by MARC GODIN
on behalf of TIWC
HOLDINGS (UK) } signed
LIMITED in the
presence of:
witnessed
SIGNED by YVES
MAROIS on behalf
of TELESYSTEM } signed
INTERNATIONAL
WIRELESS INC. in
the presence of:
witnessed
29
<PAGE>
EXHIBIT 10.2
<PAGE>
Attachment A to the notarial deed ___/1997
of the notary public ___________________
Purchase Agreement
between
I. o.tel.o communications GmbH & Co.
Am Bonneshof 35,
40474 Dusseldorf - hereinafter "Seller 1"-
II. Geotek Communications GmbH
Am Luftschacht 20
45307 Essen -hereinafter "Seller 2"-
-hereinafter jointly the "Sellers"-
and
III. Geotek Communications, Inc.
102 Chestnut Ridge Road
Montvale, NJ 07645, USA -hereinafter "Geotek Communications"-
and
IV. RegioKom Deutschland Gesellschaft fur BundelfunkdienstembH
Heynstr 19
13187 Berlin -hereinafter the "Buyer"-
(1 to 4 hereinafter also referred to as the "Party" or jointly as the "Parties)
1
<PAGE>
Contents
Preamble
Section 1 Purchase and Assignment of the Limited Partnership Interests in
Terrafon KG
Section 2 Purchase and Assignment of the Shares in Terrafon GmbH
Section 3 Conditions Precedent
Section 4 Purchase Price, Escrow Account
Section 5 Cooperation
Section 6 Representations and Warranties
Section 7 Non-compliance with the Representations and Warranties
Section 8 Tax Assessments, Audits and Public Charges
Section 9 Period between Signing and Closing
Section 10 Geotek Communications Guarantee
Section 11 Lease Guarantees
Section 12 Channel Fees Indemnification
Section 13 Liability of the Sellers as Several Debtors
Section 14 Secrecy; Non-competition Covenants
Section 15 Expenses and Taxes
Section 16 Law; Language; Arbitration
Section 17 Final Regulations
Section 18 Partial Invalidity
2
<PAGE>
Preamble
I. Seller 1 with registered office in Dusseldorf, registered with the
Commercial Register of the Lower Court of Dusseldorf under number HRA
13103, and Seller 2 with registered office in Salzgitter and an office in
Essen, registered with the Commercial Register of the Lower Court of
Salzgitter under number HRB 913 are the sole limited partners in Terrafon
Bundelfunk GmbH & Co. KG (hereinafter "Terrafon KG") with registered office
in Essen, registered with the Commercial Register of the Lower Court of
Essen under number HRA 6637. They hold the following registered limited
partnership interests in the capital of Terrafon KG with a total face value
of DM 30,000,000, whereby the limited partnership interest of each limited
partner corresponds to its maximum liability as registered in the
Commercial Register:
A. Seller 1 holds a registered limited partnership interest in the amount
of DM 15,000,000, and thereby holds 50% in the capital of
Terrafon KG, and
B. Seller 2 holds a registered limited partnership interest in the amount
of DM 15,000,000, and thereby holds 50% in the capital of Terrafon KG.
II. Further Seller 1 and Seller 2 are the sole shareholders of Terrafon
Bundelfunk Geschaftsfuhrungs Gesellschaft mbH (hereinafter "Terrafon GmbH")
with registered office also in Essen, registered with the Commercial
Register of the Lower Court of Essen under number HRB 12247. The
registered capital of Terrafon GmbH amounts to DM 55,000, whereby Seller 1
holds one share with a face value of DM 27,500, and Seller 2 holds one
share with a face value of DM 27,500. Terrafon GmbH is the sole general
partner of Terrafon KG, but has no capital interest in Terrafon KG.
Terrafon GmbH is and has been engaged solely in its business as general
partner of Terrafon KG.
III. Accordingly, Seller 1 and Seller 2 are the sole limited partners in
Terrafon KG and the sole shareholders in Terrafon GmbH (hereinafter
jointly referred to as the "Terrafon Companies").
IV. Seller 2 is an indirect wholly-owned subsidiary of Geotek Communications.
V. Prior to the date hereof, certain corporate mergers and restructuring have
taken place which are in more detail described in Enclosure A.
VI. The Sellers have agreed to sell and assign, and the Buyer, having its
registered office in Berlin, registered with the Commercial Register of the
Lower Court of Charlottenburg under HRB 39499, and being a wholly owned
subsidiary of RegioKom Verwaltungsgesellschaft mbH with registered office
in Frankfurt am Main, registered with the Commercial Register of the Lower
Court of Frankfurt am Main under HRB 39579, has agreed to acquire, the
limited partnership interests in Terrafon KG, as well as the shares in
Terrafon GmbH, held by the Sellers, as of December 31, 1997, 24.00 p.m. for
the Sellers / January 1, 1998, 0.00 a.m. for the Buyer
(the "Effective Date").
Based on the above, the Parties enter into the following agreement:
Section I.
3
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Purchase and Assignment of the Limited Partnership Interests in Terrafon KG
A. Effective as of the Effective Date Seller 1 sells its registered
limited partnership interest of DM 15,000,000 in Terrafon KG to the
Buyer, who accepts it.
B. Effective as of the Effective Date Seller 2 sells its registered
limited partnership interest of DM 15,000,000 in Terrafon KG to the
Buyer, who accepts it.
C. The assignment of the limited partnership interests sold pursuant to
Section 1.1 and Section 1.2 will be consummated subject to the
conditions precedent listed in Section 3.1 by the assignment of its
registered limited partners interest in Terrafon KG in the total
amount of DM 15,000,000 by Seller 1 to the Buyer, and by the
assignment of its registered limited partnership interest in Terrafon
KG in the total amount of DM 15,000,000 by Seller 2 to the Buyer.
The Buyer accepts the assignments. The limited partnership interests
mentions in Section 1.1 and Section 1.2 will be hereinafter referred to as
the "Sold Limited Partnership Interests".
D. The Sold Limited Partnership Interests together with the rights to
receive profits will be sold and assigned as of the Effective Date.
E. Seller 1 and Seller 2 hereby consent to the sale and assignment of the
Sold Limited Partnership Interests to the Buyer in accordance with
Section 16.1 of the Partnership Agreement of Terrafon KG. The consent
of the sole managing director of Terrafon GmbH on behalf of Terrafon
KG to the assignments of the Sold Limited Partnership Interests to the
Buyer is enclosed as Enclosure 1. The Sellers represent (zusichern)
that there are no further corporate consent requirements.
Section II.
Purchase and Assignment of the Shares in Terrafon GmbH
A. Effective as of the Effective Date Seller 1 sells its share of DM
27,500 in Terrafon GmbH to the Buyer, who accepts it.
B. Effective as of the Effective Date Seller 2 sells its share of DM
27,500 in Terrafon GmbH to the Buyer, who accepts it.
C. The assignment of the shares sold pursuant to Section 2.1 and Section
2.2 will be consummated subject to the conditions precedent listed in
Section 3.1 by the assignment of its share with a face value of DM
27,500 by Seller 1 to the Buyer, and by the assignment of its share
with a face value of DM 27,500 by Seller 2 to the Buyer.
The Buyer accepts the assignments. The shares mentioned in Section 2.1 and
Section 2.2 with a face value of DM 27,500 each will be hereinafter
referred to as the "Sold Terrafon Shares".
D. The Sold Terrafon Shares will be sold and assigned as of the Effective
Date together with the rights to receive dividends.
4
<PAGE>
E. Seller 1 and Seller 2, in their capacities as sole shareholders of
Terrafon GmbH, hereby consent to the sale and assignments of the Sold
Terrafon Shares to the Buyer in compliance with Section 9.1 of the
Articles of Association of the Terrafon GmbH and they hereby waive
their preemptive rights under Section 9.3 of said Articles.
Section III.
Conditions Precedent
A. The assignments of the Sold Terrafon Shares, and the Sold Limited
Partnership Interests are subject to the conditions precedent
("Conditions Precedent") that:
1. the required consent of the Federal Ministry for Post and
Telecommunication, which in turn will require the consent of the
Federal Cartel Office, is granted;
2. Buyer provides for (i) the release pursuant to Section 11.1 a) of
the relevant guarantors by the Relevant Lessors of the Guarantees
issued by Quante Aktiengesellschaft and RWE Telliance
Aktiengesellschaft in connection with the Leasing Agreements
referred to in Section 11.1, or (ii) bank guarantees in favor of
the Relevant Lessors pursuant to Section 11.1 b);
3. the Buyer is duly registered in the Commercial Register of the
Lower Court of Essen as new limited partner of Terrafon KG, as
special successor to the Sold Limited Partnership Interests; and
4. the payment of the Purchase Price (as defined in Section 4.1) and
of the purchase price for the Loan (as defined in Section 9.5).
The day on which all Conditions Precedent mentioned are fulfilled is
hereinafter called the "Closing Date". The Buyer may waive in writing the
Condition Precedent in Section 3.1 c).
B. If the Closing Date is a date later than February 16, 1998 due to no
fault of the Sellers and the Buyer, but other than solely due to a
failure of the Commercial Register of the Lower Court of Essen to
register the Buyer pursuant to 3.1 c), the Sellers jointly, or the
Buyer, may decide to withdraw from this Agreement by written notice to
the relevant other Party or Parties with no obligations remaining
under this Agreement (provided that the Conditions Precedent pursuant
to Section 3.1 have not been fulfilled in the meantime prior to the
giving of such notice).
Section IV.
Purchase Price; Escrow Account
A. As consideration for the sale and assignments of the Sold Limited
Partnership Interests and the Sold Terrafon Shares (hereinafter
jointly referred to as "Sold Interests"), including the rights
mentioned in Sections 1.4 and 2.4, and all other rights granted
hereunder, the Buyer will pay to the Sellers a purchase price
("Purchase Price") of DM 14 million (in words; fourteen million German
marks). The Purchase Price will be allotted as follows:
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a. - DM 27,500 for the Sold Terrafon Share of Seller 1 -
b. - DM 6,972,500 for the Sold Limited Partnership Interest of
Seller 1 -
c. - DM 27,500 for the Sold Terrafon Share of Seller 2 -
d. - DM 6,972,500 for the Sold Limited Partnership Interest of
Seller 2 -
B. The Purchase Price mentioned in Section 4.1 is due within 10 working
days after proof that the Conditions Precedent as stipulated in
Section 3.1 a) to c) have been fulfilled.
C. The Purchase Price is payable as follows:
4.3.1 DM 6,500,000 (in words six million five hundred thousand German marks)
to the account no 1260900 of Seller 1 with the Commerzbank AG,
Dusseldorf branch (bank code 300 400 00);
4.3.2 DM 6,500,000 (in words six million five hundred thousand German marks)
to the account no. ABA#026007825, Attn.: Corporate Trust A/C # CT-968C
Geotek Communications, Inc. SR. Discount Notes Custody Account;
4.3.3 The remaining part of the Purchase Price (DM 1,000,000) shall be paid
into Escrow as follows:
In order to secure the indemnification of the Buyer by the Sellers set
forth in Section 12, and the claims of the Buyer against the Sellers
pursuant to Sections 7 and 8, if any, the Parties shall enter into the
Escrow Agreement ("Escrow Agreement") substantially in the form set out in
Enclosure 2 and instruct their relevant Agents (as defined in Escrow
Agreement) to also execute the same.
The Buyer shall fund as per the Closing Date, in satisfaction of its
obligation to pay the Purchase Price, the Escrow Account (as defined in the
Escrow Agreement) by a payment of DM 1,000,000 (the "Escrow Funds").
The DM 1,000,000 (plus interest, minus fees, costs, charges and Agents'
Indemnification Amounts (as defined in the Escrow Agreement) in whole (the
"Escrow Funds") shall serve as a security for claims of the Buyer under
Sections 7 and 8, made pursuant to joint representations and warranties of
the Sellers and as a security for the indemnity obligations of the Sellers
pursuant to Section 12. DM 500,000 (plus pro rata interest, minus pro rata
fees, costs, charges and Agents' Indemnification Amounts) shall serve as
security for the claims of the Buyer against Seller 1 in connection with
representations and warranties made solely by Seller 1. DM 500,000 (plus
pro rata interest, minus pro rata fees, costs, charges and Agents'
Indemnification Amounts) shall serve as security for the claims of the
Buyer against Seller 2 in connection with representations and warranties
made solely by Seller 2.
The Parties shall give joint written instructions to the Agents pursuant to
litC1 of the Escrow Agreement, to release the Escrow Funds to the Buyer (to
an account to be identified in writing by the Buyer):
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a. up to 100% of the Escrow Funds, to the extent there are
payment obligations of the Sellers towards the Buyer
pursuant to (a) an agreement between Seller 1, Seller 2 and
the Buyer that Seller 1 and Seller 2 owe moneys to the Buyer
pursuant to representations and warranties made jointly by
the Sellers under Sections 7 and 8, or the indemnification
under Section 12, or (b) the ruling of the Arbitration Panel
as set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligations of the Sellers to pay
moneys to the Buyer based on a breach of representations and
warranties of the Sellers under Sections 7 and 8, or the
indemnification under Section 12; in each case such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the Closing Date;
b. up to 50% of the Escrow funds, to the extent there are
payment obligations of Seller 1 towards the Buyer pursuant
to (a) an agreement between Seller 1 and the Buyer that
Seller 1 owes moneys to the Buyer pursuant to
representations and warranties made solely by Seller 1 under
Sections 7 and 8; or (b) the ruling of the Arbitration Panel
as set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligation of Seller 1 to pay
moneys to the Buyer based on a breach of the representations
and warranties of Seller 1 under Sections 7 and 8; such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the
Closing Date; and
c. up to 50% of the Escrow Funds, to the extent there are
payment obligations of Seller 2 towards the Buyer pursuant
to (a) an agreement between Seller 2 and the Buyer that
Seller 2 owes moneys to the Buyer pursuant to
representations and warranties made solely by Seller 2 under
Sections 7 ad 8; or (b) a ruling of the Arbitration Panel as
set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligation of Seller 2 to pay
moneys to the Buyer based on a breach of the representations
and warranties of Seller 2 under Sections 7 and 8; such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the Closing Date.
(hereinafter the "Buyer's Indemnification")
The Parties will instruct the Agents under the Escrow Agreement in
accordance with lit. C.1 of the Escrow Agreement to pay the Escrow Funds
(500,000 DM per Seller plus pro rata interest, minus pro rata fees, costs,
charges and Agents' Indemnification Amounts),
- at 100% if no Buyer's Indemnification has been made prior to the
Expiration Date;
- if a Buyer's Indemnification has been made prior to the Expiration
Date, the Sellers and the Buyer agree to instruct the Agents to pay,
if (x) a Buyer's Indemnification has been made against the Seller 1 -
(ii) above - to Seller 1 an amount equal to the difference between
such indemnification amount and DM 500,000 (plus pro rata interest,
minus pro rata fees, charges, costs and Agents' Indemnification
Amounts); (y) a Buyer's
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Indemnification has been made against the Seller 2 - (iii) above -, an
amount equal to the difference between such indemnification amount and
DM 500,000 (plus pro rata interest, minus pro rata fees, charges,
costs and Agents' Indemnification Amounts); and (z) a Buyer's
Indemnification has been made against the Seller jointly - (i) above
-, an amount equal to the difference between such indemnification
amount and DM 1,000,000 (plus pro rata interest, minus pro rata fees,
charges, costs and Agents' Indemnification Accounts), to each Seller
at 50%.
"Expiration Date" shall mean the earlier of (i) an agreement among the
Parties that no claims under Sections 7, 8 or 12 will be raised by the
Buyer; (ii) a ruling of the appropriate arbitration panel or enforceable
court ruling, to the same effect; and (iii) the day 15 months after the
Closing Date.
The Parties will give full force and effect to the above. The Parties
hereby commit not to take any action against any of the Agents (same for an
instruction to replace them in accordance with the Escrow Agreement) other
than as permitted expressly by the Escrow Agreement. The Parties also
commit to each other not to take enforcement actions against the Escrow
Funds (Pfandungen), and hereby waive (verzichten) the right to attach any
of the Escrow Funds (other than in accordance with a final arbitration
ruling in accordance with the Arbitration Agreement provided for in Section
16.2 or other decision of a competent court of law).
Section V.
Cooperation
The Parties agree to participate in all business negotiations and legal
transactions which are necessary to fulfill this Agreement. In particular, the
Parties will cooperate and use their best efforts in order that the Conditions
Precedent in Section 3.1 will be fulfilled. The Seller 1, Seller 2 and the
Buyer shall apply in notarial form for the registration of the assignment of the
Sold Limited Partnership Interests (See Section 3.1c)), and procure that also
Terrafon GmbH joins the application.
Upon the Buyer's request Seller 2 and Geotek Communications will procure that a
fairness opinion by a mutually agreeable firm, confirming that the Purchase
Price is fair to Geotek Communications, will be provided to the Buyer, at the
Buyer's and Sellers' 50:50 expense, prior to the Closing Date.
Section VI.
Representations and Warranties
A. Sellers represent and warrant in the form of an independent guarantee
(selbstandiges Garantieversprechen) to the Buyer that the following
information is true, correct and complete:
1. As of today and the Closing Date:
Terrafon KG is a limited partnership, duly established and duly
existing according to the laws of the Federal Republic of Germany.
Terrafon GmbH is a limited liability company duly established and duly
existing according to the laws of the Federal Republic of Germany.
The statements regarding Terrafon KG and Terrafon GmbH
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made in clause 1, clause 2 and clauses 3, 5 and 6 of the Preamble are
true, correct and complete.
2. The Terrafon Companies do not hold, either directly or
indirectly, any interests in other companies, partnerships or
businesses. They have also no other corporate relationships with
third parties. This Agreement and its execution do not violate
any agreement by which one of the Terrafon Companies is bound.
3. The Partnership Agreement of Terrafon KG dated June 12, 1997 and
the Articles of Association of Terrafon GmbH dated March 19, 1997
attached as Enclosure 3 remain unchanged and valid. There are no
supplementary or side agreements to these documents. In
particular, there are no subpartnership agreements, silent
partnership agreements, or enterprise contracts in accordance
with Section 291 ff of the Stock Corporation Act, or any similar
agreements or liability bonds arising from terminated enterprise
contracts. The excerpts from the Commercial Register of the
Lower Court of Essen for the Terrafon Companies as of October 28,
1997 and October 29, 1997 are correct as enclosed and will remain
the same until the Closing Date save for necessary registrations
of changes in the management of the Terrafon Companies.
4. The audited financial accounts of Terrafon KG (including the
auditor's report) and the accounts of the Terrafon GmbH as of
June 30, 1997, the copies of which are enclosed as Enclosure 4
and Enclosure 5 (the "Terrafon Financial Accounts") have been
prepared with the diligence of a prudent business man (Sorgfalt
eines ordentlichen Kaufmannes); and the audited financial
accounts of Terrafon KG (including auditor's report), (i) are in
accordance with the German legal requirements as set forth in the
relevant auditor's report, (ii) present, giving regard to
applicable GAAP (Grundsatze ordnungsmabiger Buchfuhrung) a view
corresponding to actual facts and circumstances as regards the
net worth, financial position and results of each company
(Section 322 HGB) as of June 30, 1997, recognizing that the
auditor's certificate is dated October 30, 1997; and the
declarations of completeness (Vollsabdigkeitserklarungen) are
true and correct. The Sellers confirm that the assessment of the
equipment and fixed assets as mentioned in the auditor's report
on page 27 of the Report section has been carried out and did not
give rise to significant corrections.
Each of the monthly management accounts of the Terrafon KG as of June
30, July 31, August 31, September 30, October 31 and November 30, 1997
which are enclosed as Enclosure 6 (i) have been prepared in good faith
with the care of a prudent business man (Sorgfalt eines ordentlichen
Kaufmannes) on a consistent basis; and (ii) no facts are known to the
Sellers which render these accounts materially incorrect or
misleading.
5. As of June 30, 1997 non of the Terrafon Companies had liabilities
(including but not limited to uncertain liabilities), contingent
liabilities (including but not limited to guarantee or product
indemnity liabilities) or imminent losses from pending
transactions, other than those which are included in the Terrafon
Financial Accounts, or for which there are sufficient reserves in
the Terrafon
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Financial Accounts.
The Terrafon Companies will have, as of the Closing Date, no
shareholder loans or other indebtedness towards the shareholders, nor
long term (i.e. payable 12 months or later) bank indebtedness, or
indebtedness towards other financial institutions, other than current
overdrafts not in excess of DM 100,000, and no other long term
contractual debt in each case in excess of DM 200,000 which cannot be
terminated without leaving payment obligations in excess of DM
200,000, other than disclosed in Enclosure 7.
6. As of June 30, 1997 the Terrafon Companies assumed the pension
payment obligations as set forth in Enclosure 8. Since then, no
subsequent pension commitments or promises have been made.
Notwithstanding the above mentioned pension payment obligations no
Terrafon Company has any direct or indirect obligations to pay any
old-age pensions, invalidity pensions, sickness benefits, widow's
benefits or similar benefits towards any present or former employees,
independent of whether the rights of the employees to these
obligations may be lapse or not.
7. The Terrafon Companies own no real estate (Grundbesitz), and hold
no rights similar to real estate rights (usufruct rights), except
for real estate rights to a piece of real estate registered in
the Land Registry of Berlin-Kopenick folio 6127 N, marked 110515,
plot 202, parcel 1.
8. Enclosure 9 to this Agreement contains a complete list of all
employees of each Terrafon Company. As of the Closing Date the
Terrafon Companies will have no more than 78 employees.
9. With the exception of those mentioned in Enclosure 10, none of
the Terrafon Companies is bound in any way by any shop
agreements, or any other collective bargaining agreement, or shop
practices (betriebliche Ubungen) (other than by what is customary
in the industry).
10. The Terrafon Companies hold the licenses granted by BMPT as
listed in Enclosure 11 (the "Licenses") and have not been
notified by any third party of a breach of third party industrial
property rights or know-how necessary to conduct their business.
The Licenses are valid, and will be valid and unrevoked, as of
the Closing Date. The Terrafon Companies are in compliance with
the terms and conditions of the Licenses except for immaterial
non-compliance. Save for the acts required under this Agreement,
the Sellers will refrain from any activities which could endanger
the present status of the Licences. The Terrafon Companies have
not been notified of any challenges to the Licences. The
statements made in this subclause j) are subject to the changes
in the Licenses required by the BMPT in connection with the
implementation of this Agreement.
11. The books and files of the Terrafon Companies have been kept and
stored
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correctly, and will remain at the disposal of the relevant
company also after the Closing Date.
12. As of October 31, 1997 the Terrafon Companies were in the
possession of at least 142 base stations (Basistationen and
Relaisstationen) and at least 903 channels.
13. Terrafon KG has at least 38,200 Subscribers; the term
"Subscriber" is defined as a Subscriber (Teilnehmer) booked in
and invoiced in the month of December, 1997. The average invoice
per Subscriber will amount to DM 42 for the month of December
1997 (excluding VAT).
14. To the best knowledge and belief of the Sellers, the Terrafon
Companies, their operations and their businesses are in
compliance in all material respects with applicable laws and
regulations.
15. Except as disclosed in Enclosure 12 there is no litigation or
administrative proceeding (Verwaltungsstreitverfahren) pending
(rechtshangig) against the Terrafon Companies, and the management
has not received any notice with regard to intended litigation or
administrative proceedings against the Terrafon Companies.
16. Except as listed in Enclosure 13, the Terrafon Companies are not
a party to or bound by any of the following category or type of
contracts or commitments:
a. joint venture, cooperation or similar agreements other than
listed in Annex A No. 7 of Enclosure 13;
b. any lease agreement other than listed in Annex A Nos. 1 and
2 of Enclosure 13 with respect to SMR Equipment which would
be in excess of a total commitment of DM 50,000 p.a. or DM
150,000 in total;
c. any lease agreement with respect to other equipment,
excluding car lease agreements in the ordinary course of
business, providing for an annual commitment in excess of DM
80,000 or a total commitment in excess of DM 200,000;
d. except for base stations and radio sites: any lease and
sublease agreement regarding premises (Grundstick und
R umlichkeiten) other than listed in Annex A Nos. 3 and 4 of
Enclosure 13 providing for annual rent payments in excess of
DM 60,000 (including side costs) or binding for a term
beyond December 31, 2002;
e. any material agreement, other than listed in Annex A Nos. 5
and 6 of Enclosure 13, regarding the purchase, maintenance
and service of SMR equipment and/or software in excess of
total payment obligations of DM 100,000;
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f. any material agreement with customers, other than listed in
Annex A Nos. 8, 9 and 10 of Enclosure 13 with a commitment
to provide dedicated infrastructure and/or software which
would result in a financial investment in excess of DM
250,000 in total;
g. any roaming agreement which cannot be terminated at once;
h. any employment agreement with managing directors and key
employees other than Mr. Steinbeck, Mr. Munzel, Mr. Grumbach
and Mr. Kettermann;
i. any commitment to guarantee or to secure indebtedness of
third parties;
j. any loan to a managing director or any employee in excess of
DM 25,000;
k. any contracts or commitments other than referred to in the
foregoing clauses (i) through (x) which involve an expense
or commitment of more than DM 200,000 annually and any other
contracts or commitments of an exceptional nature which are
of particular importance to the Terrafon Companies.
The Terrafon Companies have complied in all material respects with the
agreements listed in Enclosure 13.
17. As of signing, all accounts receivable of the Terrafon Companies
which are reflected in their books represent actual bona fide
obligations owing to them in the ordinary course of business.
18. The Terrafon Companies own, possess or lease materially all
assets necessary to conduct their business as presently
conducted.
19. The Terrafon Companies have not made any profit distributions
since June 30, 1997, and have not declared any dividend or paid
any interest on shareholder loans or repaid any shareholder loans
since that date. They will not make any profit distributions and
not pay any dividend or pay any interest on shareholder loans or
repay any shareholder loans until the Closing Date.
20. Except as in the ordinary course of business, there are no
agreements between the Terrafon Companies on the one side and any
of the Sellers or any former shareholders/partner on the other
side (including any affiliate or related party of such Sellers or
former shareholder/partners) except as disclosed in Enclosure 14
still in force, and no Seller or former shareholder/partner,
including any affiliate or related party of such Seller or former
shareholder/partner has any right or claim in or to any of the
Terrafon Companies or their assets.
21. Since June 30, 1997
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- the Terrafon Companies have continued to conduct their respective
business in a normal and ordinary fashion and consistent with
past practice; and
- no changes or events (other than changes or events in the general
economy or the business of SMR Operators in general) have
occurred which had or reasonably can be expected to have a
material adverse effect on the business of the Terrafon Companies
or their operations or profitability or net worth.
B. Sellers represent and warrant (each with regard to the Sold Limited
Partnership Interest, and the Sold Terrafon Share sold by it) to the
Buyer in the form of an independent guarantee that the following
information is true, correct and complete, and will be correct and
complete as of the Closing Date:
The limited partnership interests in Terrafon KG and the shares in Terrafon
GmbH sold by Seller 1 and Seller 2, respectively, are fully paid up, and
the contributions were not repaid to the partners/shareholders, and neither
the limited partnership interest nor any limited partner is subject to
assessment (Nachschu ). Seller 1 and Seller 2, respectively, are the sole
owners of the Sold Limited Partnership Interests and the Sold Terrafon
Shares, and have unlimited power to sell and dispose of them. The Sold
Limited Partnership Interests and the Sold Terrafon Shares together with
all other partner's/shareholders' rights associated with them are validly
existing, free of pledges and any other rights of third parties pursuant to
Sections 434 ff BGB. Upon the transfer of the Sold Limited Partnership
Interests and Sold Terrafon Shares, the Buyer will acquire the full and
unlimited ownership of these. The Sold Limited Partnership Interests and
the Sold Terrafon Shares are not subject to any preemption rights, options
or other acquisition rights of third parties. This Agreement and its
execution do not violate any agreements by which Seller 1 or Seller 2,
respectively, is bound.
Section 7
Non-Compliance with the Representations and Warranties
7.1 Should any of the representations and warranties made by the Sellers in
accordance with Section 6 prove either fully or partly to be incorrect, the
relevant Seller making the representation, or warranting the fact has to
put the Buyer in a position in which it would be, if the warranties and
representations were correct by restoring the condition corresponding to
the relevant representation and warranty (Wiederherstellungsanspruch).
Where the representations or warranties were made jointly, such obligation
exists as a joint obligation of the Sellers, whereby financial obligations
(monetary damages) are borne severally by the Sellers at 50% each. A
restoration claim by the Buyer can only be asserted within a period of 3
months by written declaration (also by telefax) to the Sellers. This time
limit shall commence at the time when the management of the Buyer
(Geschaftsfuhrung) is made aware of the facts which are the basis of such
restoration claim.
Sections 377, 378 HGB do not apply.
7.2 If the Sellers do not completely fulfill the restoration claim effectively
asserted pursuant to Section 7.1 within one month following the receipt of
the notice of the claim, the restoration claim will become invalid, and the
Buyer will be entitled to monetary damages for the incorrect and
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unrestored representations and warranties. Only direct damages of the
Terrafon Companies or the Buyer, but no indirect damages (consequential
damages), are to be compensated.
7.3 As far as the information provided for in Section 6 are based on the best
knowledge and belief of the Sellers, the Sellers are only liable, if at
least one of the Sellers had knowledge of the incorrectness or
incompleteness, or, if the incorrectness or incompleteness remained unknown
to one or more of them as a result of failure to apply the customary care.
The knowledge of the following persons shall be imputed upon both Sellers:
Mr. Polk, Mr. Robb, Mr. Bibring, Mr. Zaboji, Mr. Schmidtkord, Mr. Poensgen,
Dr. Fisseler, Messrs. Subrbier and Hettiger.
7.4 Claims for breach of the representations and warranties can be asserted by
the Buyer only, if they exceed DM 100,000 individually. Provided however
that related claims under any particular representation and warranty clause
(e.g. 6.1 a) or b) or c) and so forth) shall count as one individual claim.
Claims for the breach of the representations and warranties in the amount
of or more than DM 100,000 individually can only be asserted by the Buyer,
if their aggregate amounts exceeds DM 500,000, in which case the entire
amount can be claimed. Representation or warranty claims are limited to a
maximum amount of DM 10 million. The special regulations for tax and
public charges as included in Section 8 remain unaffected by the above
limitation.
7.5 All claims for representations and warranties asserted by the Buyer become
statute-barred after December 31, 1999. This does not apply to claims made
as a result of or in connection with taxes and other public charges
(Section 8), for which a special clause is provided for under Section 8.
Furthermore, it does not apply to claims based on breach of representations
and warranties for ownership free from rights of third parties in or to the
Sold Interests, which shall expire within 8 (eight) years following the
Closing Date.
7.6 The representations and warranties provided for by this Agreement shall be
conclusive (abschlieBend). No other representations or warranties, whether
express or implied are being given by the Sellers. In particular, claims
based on theories of culpa in contrahendo, positive Forderungsverletzung,
and the like are excluded. The consequences for a breach of
representations and warranties made by the Sellers in this Agreement are
exclusively the remedies provided for by this Agreement. In particular,
the Buyer shall have no right to rescind, reverse or void the contract or
demand anything else than monetary damages; if, however, any of the Sellers
should fail to deliver proper title to the Sold Interests, the Buyer shall
have the rights set forth in Section 320 pp. of the German Civil Code,
after reasonable notice to the Seller. All other rights in connection with
express or implied representations and warranties are hereby excluded.
Irrespective of the limitations in this Section 7 the Parties shall retain
the rights under the concept of "cessation of the basis for a business
transaction" (Wegfall der Geschaftsgrundlage) developed by the German
Federal Court of Justice (BGH) allowing for the adjustment or avoidance of
the contract under very exceptional circumstances making it unbearable for
a party (schlechthin unzumutbar) to adhere to a contract.
7.7 Claims under the representations and warranties shall be excluded if the
facts giving rise to the relevant claims were disclosed to the Buyer in
writing or the Buyer and its representations had knowledge of such facts at
the time of the signing of this Agreement.
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The knowledge of the following persons shall be imputed upon the Buyer:
Messrs. von Ribbentrop, Witte, Heck, Hoffmann, Lacroix, Stephan Oppenhoff,
Selter, Kunz, Wohrle.
Section 8
Tax Assessments, Audits and Public Changes
8.1 Sellers represent and warrant to the Buyer in the form of an independent
guarantee that the following information is true, correct and complete.
a) as of today the Terrafon Companies submitted all tax declarations
correctly and in time, and the tax declarations for 1996 will be
submitted by February 28, 1998;
b) for all taxes (including but not limited to tax deductibles, accessory
claims, interest and surcharges), contributions (including but not
limited to social insurance contributions), and other public charges,
which apply to the period up to and including the Effective Date, and
which have not been fully paid up by that time, sufficient reserves
have been made in the Terrafon Financial Accounts or will be made in
the accounts as of the Effective Date;
c) in the period from 01.01.1997 up to and including Effective Date no
tax liabilities accrued or will accrue for the Terrafon Companies,
which are based on activities or lack of activities beyond the scope
of the normal business activities (Handlungen und Unterlassungen) of
the Terrafon Companies. In particular, no legal transactions have
been carried out or will be carried out within these periods which
could be interpreted by the inland revenue office as being hidden
profit distribution/withdrawals or hidden deposits;
d) as of today, there were tax inspections at the Terrafon Companies for
the period between 1992 and 1994 and a VAT special inspection at
Terrafon KG for the period from March until July 1997. The results of
these inspections are and have been taken into complete consideration
in the Terrafon Financial Accounts.
8.2 The Buyer will inform the Sellers without delay, if the inland revenue
office either announces or commences a tax inspection of the Terrafon
Companies for the period up to and including December 31, 1997, and, if
need be, up to and including the Closing Date. The Buyer will give the
Sellers and their advisers the opportunity to inform themselves about the
progress of the tax inspection and to have direct contact with the tax
officials, who are involved in the tax inspection. The Sellers and their
advisers are authorized to take part in all discussions, in particular, in
the formal conclusive meeting and to express their opinions accordingly.
If no agreement can be reached with the inland revenue office, the Buyer is
obliged to file an appeal against the tax-assessment notice, which concerns
the personal taxes of the Sellers for the period up to and including
December 31, 1997, and, if need be, up to and including the Closing Date,
as advised by the Sellers and at their costs. In case Buyer does not
comply with this obligation, the Buyer has to indemnify the Sellers for
their additional personal tax payment obligations resulting from such
non-compliance.
8.3 In case the representations and warranties in Section 8.1 are untrue or
incorrect or incomplete, the
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Sellers are obliged to put the Buyer in a position in which it would be, if
the representations and warranties were correct. However, payments for tax
arrears in the assessment period prior to and including 1997, based on a
tax inspection of the corporate, trade, property, and value added tax of
Terrafon GrabH, and the trade or value added tax of Terrafon KG can only be
asserted if the individual amount of such payment or the aggregate amount
of payments related to each other are in excess of DM 50,000 or more.
8.4 Claims which apply either directly or indirectly to taxes, contributions or
other expenses in accordance with Section 8 for the period until the
Effective Date, will become statute-barred 6 months after they became
legally final and binding.
Section 9
Period between Signing and Closing
9.1 Subject to Section 9.2 below, the Sellers undertake to cause the Terrafon
Companies to conduct their business in a normal and ordinary fashion and
consistent with past practice and to give the Buyer reasonable access to
the Terrafon Companies and its management and employees. The financial
matters of the Terrafon Companies will be reviewed regularly (once a week)
with a representative of the Buyer, who shall be currently informed by the
Terrafon Companies.
9.2 The Sellers undertake to cause the Terrafon Companies from today's date up
to and including the Closing Date not to enter into any agreement providing
for a consideration of more than DM 25,000 if the consideration is paid on
a nonrecurrent basis and of more than DM 10,000 a year if the consideration
is paid on a recurrent basis without the prior written consent of the Buyer
(except according to the agreed upon Business Plan). Furthermore, Sellers
undertake to cause the Terrafon Companies not to enter into any agreements
or be involved in any business referred to or concerning matters referred
to in 6.1.b), 6.1.c) 1st and 2nd sentence, 6.1.e), last para, 6.1.f),
6.1.g), 6.1.i), 6.1.j), 6.1.I), 6.1.p) or 6.1.t) without the prior written
consent of the Buyer.
9.3 Notwithstanding the obligations contained in Article 9.2 above, the Sellers
undertake to inform the Buyer, and to seek the Buyer's prior written
consent, with respect to the transactions subject to
shareholders'/partners' approval in the Articles of Association/the
Partnership Agreement of the Terrafon Companies.
9.4 The Buyer will make available to both Sellers not later than February 14,
1998 audited accounts of the Terrafon Companies as of December 31, 1997,
The Buyer will procure that the auditors of the Sellers will have access to
all information necessary to review the audited accounts of the Terrafon
Companies as of December 31, 1997.
9.5 Seller 1 and Geotek Communications commit to lend, at 50% each, by way of
loan agreement providing for no interest or security (collateral), to be
concluded between Seller 1 and Geotek Communications and Terrafon KG,
sufficient amounts to Terrafon KG in order to meet the minimum funding
requirements set out in the Business Plan enclosed as Enclosure 15 (the
"Loan"). As of the Closing Date the Buyer hereby purchases the Loan so
extended to Terrafon KG from the relevant leaden (50% each) at face value,
and pay to them interest of 6% p.a. on the Loan from the date of funding,
each Seller at 50% of such amount. The relevant purchase
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agreement will contain representations as regards existence (Bestand),
assignability and documentation.
The purchase price for the Loan shall become due and payable on the Closing
Date, to the accounts of Seller 1 and Seller 2 (who shall receive the
purchase price for the Loan for Geotek Communications) as designated in
Section 4.3.1 and Section 4.3.2, respectively.
Section 10
Geotek Communications Guarantee
If Seller 2 fails to perform any of its obligations pursuant to this Agreement,
Geotek Communications hereby unconditionally and irrevocably guarantees the
complete performance when due of all such obligations of Seller 2. With respect
to payment obligations, Geotek Communications guarantees to make payment upon
first written demand of the Buyer stating that and to which extent Seller 2
failed to perform its payment obligations.
Section 11
Lease Guarantees
11.1 RWE Telliance Aktiengesellschaft, Essen and Quante
Aktiengesellschaft, Wuppertal have issued certain guarantees as
listed in Enclosure 16 vis-a-vis various leasing companies
("Relevant Lessors"), to cover obligations of the Terrafon
Companies under the leasing agreement with GEFA-Leasing AG dated
December 28, 1993 and the leasing agreement with Deutsche Leasing
AG dated July 12, 1993 (jointly referred to as the "Leasing
Agreements"), and Geotek Communications has issued an indemnity
as listed in Enclosure 17 vis-a-vis Quante Aktiengesllschaft
(jointly referred to as the "Guarantees"). Buyer undertakes, but
only if and when the Condition Precedent referred to in Section
3.1a) has been fulfilled, either
a) to provide for the release of the Guarantees in the form of
release declarations signed by the Relevant Lessors to be
presented to the relevant guarantors, or
b) to provide for one or more bank guarantees of reputable banks or
Sparkassen holding a European banking licence, to be issued in
favor of the Relevant Lessors substantially in the form of
Enclosure 18.
Section 12
Channel Fees Indemnification
It is presently disputed between the Sellers and the Buyer. whether or not
Terrafon KG has overpaid certain channel fees provided for in the Annual
Financial Statements of Terrafon KG as of December 31, 1995 in the amount of DM
3,339,000 plus surcharge and interest, if any (the "1995 Overpaid Fees"), or was
or is obliged to pay channel fees for the period from January 1, 1996 through
July 31, 1996 in the amount of DM 2,972,878.35 plus surcharge and interest, if
any (the "1996 Fees").
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It is hereby agreed between the Sellers and the Buyer that Terrafon KG leaves
all negotiations, and possible legal actions and defense against the assessment
of the 1995 Overpaid Few or the 1996 Fees ("Defense"), to the Sellers jointly in
the name of Terrafon KG. All costs and expense in connection with the Defense
are to be borne by the Sellers.
In the event the 1995 Overpaid Fees will be recovered finally (endgultig) in
whole or in part by Terrafon KG, the Buyer agrees to pay 50% of the amount of
the recovered fees net of costs and expenses by way of an increase in the
Purchase Price to each Seller not later than 15 days following a final
settlement of the 1996 Fees. In the event the 1996 Fees should become payable
following an indemnification Event, the Sellers, at 50% each, will pay to
Terrafon KG, the face amount of the 1996 Fees ("Channel Fee Indemnification")
first by an off-set with possible enforceable counter claims of Terrafon KG as
regards the 1995 Overpaid Fees, then by an instruction to the Agents (as defined
in the Escrow Agreement) to release all available ESCROW Funds to the Buyer to
the extent necessary to satisfy such claims, and if such ESCROW Funds should
prove insufficient, by direct payment to the BAPT. In the event the 1996 Fees
should be recovered finally (endgultig) later in whole or in part, or in the
event that the 1995 Overpaid Fees should be recovered finally (endgultig) later
in whole or in put, the Buyer will pay to the Sellers (at 50% each) the relevant
amounts paid by them (or deemed paid by the Sellers) due to the Channel Fee
Indemnification (plus excess, if any, of the 1995 Overpaid Fees over the Channel
Fee Indemnification). In the event an agreement should be reached between
Terrafon KG (represented by the Sellers), and the BAPT as regards the 1995
Overpaid Fees and the 1996 Fees, for instance by way of refund of the 1995
Overpaid Fees, and agreement to effect only a partial payment of the 1996 Fees,
the Channel Fee Indemnification shall be reduced by the amount recovered with
respect to the 1995 Overpaid Fees and any remaining balance shall be paid to the
Sellers.
In any event, however, Terrafon KG or the Buyer may withhold payments due
to the Sellers under the foregoing provisions to the extent Terrafon KG's
liability for the 1996 Fees is still outstanding, provided that they shall pay
any withheld amounts to the Sellers, at 50% each, within 15 days from the date
they or any of them is no longer entitled to withhold the amounts.
Section 13
Liability of the Sellers as Several Debtors
The Sellers have several, but no joint liability for all claims arising out of
and in connection with this Agreement and its execution as several debtors
(Section 420 BGB) unless expressly stated otherwise.
Section 14
Secrecy; Non-Competition Covenants
14.1 Each Seller and Geotek Communication undertakes for a period of 5 years to
keep strictly secret all matters and in particular all business and trade
secrets of Terrafon KG or Terrafon GmbH known to it (and not being public
knowledge) and not to disclose such matters and secrets, directly or
indirectly, to any third party, nor to cause such disclosure by third
parties (other than required by law or pursuant to regulatory
requirements), nor to use such matters or seats for itself.
14.2 Each Seller and Geotek Communications undertakes for a period of 2 years
from the day
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of this Agreement not to cause or influence any worker, employee, agent or
adviser (excluding lawyers, certified public accountants and tax advisers)
now or since January 1, 1997 employed or retained by Terrafon KG, Terrafon
GmbH or the Buyer to work in any way whatsoever for it, for an enterprise
in which it holds an interest, or for a competitor, or to terminate an
existing relationship with Terrafon KG, Terrafon GmbH or the Buyer unless
it has obtained the prior written consent of the Buyer.
14.3 Each Seller and Geotek Communications undertakes for a period of 5 years
from the day of this Agreement not to provide SMR-services in Germany, nor
to assist third parties, directly or indirectly, in the rendering of such
services, nor to hold it any way whatsoever an interest in a company which
renders such services. Excluded from this restriction is the acquisition
and holding for investment purposes of shares or convertible debentures of
a company listed on a major stock exchange which is engaged in the
rendering of such services, provided that the respective Seller does not
acquire directly and/or indirectly shares or convertible debarittues which
consist or can be converted to consist of more than 5% of the share capital
of the respective company.
Section 15
Expenses and Taxes
15.1 Transfer taxes, notary fees and other public expenses which are incurred in
connection with this Agreement and its execution, shall be borne by the
Buyer.
15.2 Each party to this Agreement shall bear the fees of their own advisers
(including the appointed accountants and auditors).
Section 16
Law; Language, Arbitration
16.1 Solely, German substantive law shall apply. This Agreement is executed in
the English version. and only the English version shall apply.
16.2 The Parties agree on the Arbitration Agreement set forth in Enclosure 19.
Section 17
Final Regulations
17.1 Amendments and supplements to this Agreement including this Article have to
be made in writing as long as no stricter form is required by law. Oral
agreements are excluded.
17.2 The Enclosures form an integral part of this Agreement. The headings in
this Agreement are only intended for better orientation within the text of
the Agreement and have no significance for the interpretation of the
contents of the Agreement.
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17.3 The Parties may assign rights under this Agreement only to their respective
affiliates within the meaning of Sections 15 ff. of the German Stock
Corporation Act.
17.4 The right to set-off or withholding shall be excluded unless the relevant
counterclaim is undisputed or adjudicated by final judgement or arbitration
panel ruling.
17.5 Default interest (Verzugszinsen) for obligations under this Agreement shall
be at least 10% p.a. A showing of higher damages shall be permitted.
Section 18
Partial Invalidity
18.1 If any provision of this Agreement should, for any reason, become partly or
completely invalid or impracticable (undurehfilhrbar), the remaining terms
of the Agreement will retain their validity. This also applies to an
omission in the Agreement. Instead of the invalid or impracticable term or
in replacement of the omission, a suitable term should apply, which,
provided it is legally possible, best meets the intent of the Parties, or
their possible intent, if they had considered the issue before the
execution of the Agreement taking into consideration the purpose of the
Agreement.
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