CONFORMED COPY
DATED 26TH APRIL, 1999
CABLE AND WIRELESS PLC
and
GLOBAL CROSSING LTD.
_______________________________________
SALE AND PURCHASE AGREEMENT
in respect of Cable & Wireless Marine Limited
and interests in certain other companies
_______________________________________
ALLEN & OVERY
London
CO:531528.8
INDEX
Clauses Page
1. Definitions........................................................... 2
2. Sale and Purchase..................................................... 6
3. Consideration......................................................... 6
4. Conditions Precedent.................................................. 7
5. Completion............................................................ 9
6. Warranties............................................................ 10
7. Limitations on Claims................................................. 11
8. Leasing Arrangements.................................................. 15
9. Costs................................................................. 15
10. Pensions.............................................................. 15
11. Intragroup Matters.................................................... 15
12. Tax Deed.............................................................. 16
13. Marks and Licences.................................................... 16
14. Guarantees and Covenant............................................... 17
15. Employees and Properties.............................................. 18
16. Transitional Services................................................. 20
17. Whole agreement....................................................... 21
18. Announcements and Confidentiality..................................... 22
19. Notices............................................................... 22
20. General............................................................... 23
21. Governing Law and Jurisdiction........................................ 25
Schedules
1. Particulars of the Companies.......................................... 26
2. Properties............................................................ 40
3. Warranties............................................................ 41
4. Pensions.............................................................. 55
5. Covenants up to Completion............................................ 69
6. Completion Arrangements............................................... 71
7. Vessels............................................................... 74
8. Leasing Arrangements.................................................. 76
THIS AGREEMENT is made on 26th April, 1999 BETWEEN:
(1) CABLE AND WIRELESS PLC whose registered office is at 124 Theobalds Road,
London WC1X 8RX ("C&W" or the "Seller"); and
(2) GLOBAL CROSSING LTD. whose registered office is at Wessex House, 45 Reid
Street, Hamilton HM-12, Bermuda (the "Purchaser").
WHEREAS:
(A) The Seller is the owner of the entire issued share capital of Cable & Wireless Marine Limited ("CWM") further details of which are set out in
Schedule 1, Part I.
(B) CWM is the owner of the entire issued share capitals of Cable and Wireless
Marine Inc., General Offshore (UK) Limited, Vibro Einspultechnik Duker und
Wasserbau GmbH ("Vibro") and Harmstorf Submarine Systems Sdn Bhd (together
the "General Offshore Companies") and of Cable & Wireless (Marine)
Southampton Limited, Marine Investments Limited and Worldwide Ocean
Surveying Limited (together the "Dormant Companies") further details of
which are set out in Schedule 1, Part I.
(C) Cable & Wireless Marine Inc. and Vibro are the owners of the entire issued
share capitals of General Offshore Specialized Services Inc. and Cable & Wireless Global Marine (Singapore) Pte Limited respectively (together the
"CWM Subsidiaries") further details of which are set out in Schedule 1,
Part I.
(D) CWM is the owner of 30% of the issued share capital of International
Cableship Pte Limited (Singapore) and 40% of the issued share capital of
Sembawang Cable Depot Pte Limited (Singapore) (together the "CWM JV
Companies") further details of which are set out in Schedule 1, Part II.
(E) C&W is the ultimate holding company of Cable & Wireless Marine SA ("CW
Luxembourg") and, together with its subsidiary Hong Kong Telecommunications
Limited, is the owner of the entire issued share capital of Great Eastern
Telecommunications Limited ("GET").
(F) CW Luxembourg is the owner of 25% of the issued share capital of NTT World
Engineering Marine Corporation (the "Japanese JV Company") further details
of which are set out in Schedule 1, Part II.
(G) GET is the owner of 49% of the issued share capital of SB Submarine Systems
Ltd (the "PRC JV Company") further details of which are set out in Schedule
1, Part II.
(H) C&W wishes to sell and the Purchaser wishes to purchase or procure the
purchase of the entire issued share capital of CWM on the terms and subject
to the conditions set out in this agreement.
(I) C&W wishes to procure the sale of and the Purchaser wishes to purchase or
procure the purchase of the shares held by CW Luxembourg in the Japanese JV
Company and the shares held by GET in the PRC JV Company on the terms and
subject to the conditions set out in this agreement.
NOW IT IS AGREED as follows:
2
1. DEFINITIONS
(1) In this agreement:
"Accounts" means the audited balance sheet as at the Accounts Date and the
audited profit and loss account for the year ended on the Accounts Date of
CWM;
"Accounts Date" means 31st March, 1999;
"Agreed Form" means, in relation to any document, the form of that document
which has been initialled for the purpose of identification by or on behalf
of the Seller and the Purchaser;
"Business Day" means a day (not being a Saturday or Sunday) when banks are
open for general business (including dealings in foreign exchange and
foreign currency deposits) in London and New York;
"Changes in the PRC JV Company" means, as contemplated by this agreement,
the transfer of the PRC JV Shares and the amendment of the PRC JV Contract
and PRC JV Company Articles of Association reflecting the transfer of the
PRC JV Shares and the change in parties;
"Companies" means CWM, the General Offshore Companies, the Dormant
Companies and the CWM Subsidiaries, and "Company" means any one of the
Companies;
"Completion" means the completion of the sale and purchase of the CWM
Shares in accordance with clause 5;
"Confidential Information" means all information which is confidential and
is used in or otherwise relates to the business, customers, financial or
other affairs of the Companies, the CWM JV Companies and the JV Companies
including, without limitation, information relating to:
(a) goods or services (including, without limitation, customer names and
lists and other details of customers, sales targets, sales statistics,
market share statistics, prices, market research reports and surveys,
and advertising and other promotional materials); and
(b) future projects, business development or planning, commercial
relationships and negotiations,
in relation to any of the Companies, the CWM JV Companies and the JV
Companies but not including information which is made public by, or with
the consent of, the Purchaser;
"CWM Charter Vessels" means those of the Vessels set out in Part 3 of
Schedule 7 which are subject to charter arrangements;
"CWM Finance Vessels" means those of the Vessels set out in Part 2 of
Schedule 7 which are subject to lease financing arrangements;
"CWM Shares" means the 55,000,000 existing ordinary shares of (Pounds)1
each in the share capital of CWM and the further ordinary shares of
(Pounds)1 each in the share capital of CWM to be subscribed by the Seller
under clause 11(1) and (if any) 14(4);
3
"CWM Vessels" means those of the Vessels set out in Part 1 of Schedule 7
owned by CWM or, in the case of one Vessel, owned by the Seller but to be
transferred to CWM pursuant to this agreement;
"Data Room" means the documents listed in the Data Room Index in the Agreed
Form;
"Disclosure Letter" means the letter of the same date as this agreement
from the Seller to the Purchaser and includes the Data Room except as
specified in clause 6(4);
"Dividend" means the dividend declared by CWM on 23rd April, 1999 in the
amount of (Pounds)117,700,000 and paid to the Seller;
"Facility Agreement" means the credit facility agreement entered into
between CWM and the Bank of Nova Scotia on 23rd April, 1999 relating to
credit facilities of (Pounds)100,000,000;
"GOC Agreements" means the sale and purchase agreement dated 23rd December,
1997 between General Offshore Corporation, Offshore Scientific Corporation,
Hannon Armstrong & Company, R. Jon Armstrong, Michael Hannon, CWM and
Marine Investments Limited and related documents;
"Group Management Accounts" means the accounts to be prepared for the
Companies and the CWM JV Companies on a consolidated basis and consistent
with prior monthly management financial statements for these companies as
at and for the year ended on the Accounts Date;
"Incentive Scheme" means any scheme or arrangement established by the
Seller, any Company or any member of the Remaining Group and in which
Companies are participating at the date of Completion for incentivising
employees through shares in the Seller and/or cash payments and shall
include any profit sharing scheme, bonus scheme, incentive pay arrangement
and employee share scheme;
"Intellectual Property Rights" means trade marks, patents, rights in
designs or inventions, database rights and copyright all whether registered
or unregistered and including applications for the grant of any of the
foregoing and rights in the Confidential Information and all similar and
analogous rights anywhere in the world;
"Intercompany Balance" means the amount of (Pounds)12,407,000 as defined in
clause 11(1);
"Japanese JV Agreement" means the participants agreement dated 11th
February, 1999 between Nippon Telegraph and Telephone Corporation, CW
Luxembourg, CWM and NTT World Engineering Marine Corporation;
"Japanese JV Completion" means completion of the sale and purchase of the
Japanese JV Shares in accordance with clause 5;
"Japanese JV Shares" means the shares owned by CW Luxembourg in the share
capital of the Japanese JV Company;
"JV Companies" means the Japanese JV Company and the PRC JV Company;
"JV Shares" means the Japanese JV Shares and the PRC JV Shares;
4
"Loan" means the outstanding principal amount payable by CWM under the
Facility Agreement;
"Net Assets" means the amount of share capital and reserves as shown in the
Group Management Accounts;
"Overseas Properties" means the Properties described in Part 2 of Schedule
2;
"PRC JV Contract" means the contract dated 15th April, 1994 between
Directorate General of Telecommunications of the Peoples Republic of China
and GET in relation to the PRC JV Company;
"PRC JV Completion" means completion of the sale and purchase of the PRC JV
Shares in accordance with clause 5;
"PRC JV Shares" means the interests owned by GET in the registered capital
of the PRC JV Company;
"Properties" means the leasehold and other properties briefly described in
Schedule 2;
"Purchaser's Group" means the Purchaser and Subsidiaries of the Purchaser
from time to time;
"Remaining Group" means the Seller and its Subsidiaries from time to time
(other than the Companies and those of the CWM JV Companies (if any) which
are Subsidiaries of the Seller);
"ROVs" means the remotely operated vehicles described in Part 4 of Schedule
7;
"Subsidiary" and "Subsidiaries" means a subsidiary for the purposes of the
Companies Act 1985;
"Taxation" and "Taxation Authority" have the meanings assigned to them in
the Tax Deed;
"Tax Deed" means the tax deed in the Agreed Form;
"Trade Mark and Patent Assignment " means the assignment of inter alia
registered trade marks and patents by the Seller to CWM to be delivered by
the Seller to the Purchaser at Completion in the Agreed Form;
"Transfer Price" means the amount of (Pounds)2,000,000 as defined in clause
11(1);
"UK Properties" means the Properties described in Part 1 Schedule 2;
"Undertaking" means the agreement of the same date as this agreement
containing undertakings by the Seller and the Purchaser;
"Vessels" means the cableships listed in Schedule 7;
"Warranties" means the warranties contained in clause 6(1) and Schedule 3;
and
5
"Working Capital" means net working capital, short term loans and cash
balance, bank balances, cash and overdrafts, and intergroup loans as stated
in the Group Management Accounts,
(2) The Seller shall procure that a meeting of the directors of CWM is held at
Completion at which the following business is transacted:
(a) the directors shall approve (subject to stamping) the transfer of the
CWM Shares;
(b) the situation of the registered office shall be changed as the
Purchaser may direct;
(c) such persons as the Purchaser shall nominate shall be appointed as
secretary and directors of CWM; and
(d) such firm as the Purchaser nominates shall be appointed as auditors of
CWM.
(3) Any reference, express or implied, to an enactment includes references to:
(a) that enactment as amended, extended or applied by or under any other
enactment before this agreement;
(b) any enactment which that enactment re-enacts (with or without
modification) before this agreement; and
(c) any subordinate legislation made before this agreement under any
enactment, including one within (a) or (b) above.
(4) Where any statement is qualified by the expression "so far as the Seller is
aware" or "the Seller is not aware" or "to the best of the Seller's
knowledge, information and belief" or any similar expression that statement
shall be deemed to be made on the basis only of actual knowledge of the
Seller, having made reasonable enquiries only of David Foot, Barry Shine,
David Skentelbery and Chris Todhunter.
(5) In this agreement, unless otherwise specified, any reference to "material"
shall mean material in the context of the business of the Companies, CWM's
proportionate shareholding interest in the business of the CWM JV Companies
and CW Luxembourg's and GET's respective proportionate shareholding
interests in the business of the JV Companies, taken as a whole as at the
date of this agreement.
(6) Words denoting persons shall include bodies corporate and unincorporated
associations of persons.
(7) Subclauses (1) to (5) above apply unless the contrary intention appears.
(8) The headings in this agreement do not affect its interpretation.
(9) Nothing in this agreement, express or implied, is intended to confer upon
any person other than the parties hereto or their respective permitted
successors and assigns any rights, remedies, obligations or liabilities
under or by reason of this agreement.
2. Sale and Purchase
6
(1) Subject to clause 4 the Seller shall sell and the Purchaser shall purchase
or procure the purchase by a wholly-owned Subsidiary of the Purchaser of
the CWM Shares free from all charges, liens, encumbrances, equities and
claims and together with all rights attaching to them.
(2) Subject to clause 4 the Seller shall procure the sale of the JV Shares and
the Purchaser shall purchase or procure the purchase by a wholly-owned
Subsidiary of the Purchaser of the JV Shares, free from all charges, liens,
encumbrances, equities and claims and together with all rights attaching to
them.
(3) The Seller covenants with the Purchaser as follows: (a) that it has the
right with respect to the CWM Shares to sell and transfer and with respect
of the JV Shares to procure the sale and transfer of the full legal and
beneficial interests in the CWM Shares and the JV Shares to the Purchaser
on the terms and subject to the conditions set out in this agreement; and
(b) that on or after Completion, Japanese JV Completion or PRC JV
Completion respectively it will execute and do (or procure to be executed
and done) all such deeds, documents, acts and things as the Purchaser may
from time to time reasonably require in order to vest the CWM Shares, the
Japanese JV Shares and the PRC JV Shares respectively in the Purchaser.
(4) Notwithstanding anything to the contrary in this agreement, upon
satisfaction of the conditions in clause 4(5)(b), the Seller shall be
deemed to have offered the Japanese JV Shares to the Purchaser and the
Purchaser shall be deemed to have accepted such offer. In the event that
Nippon Telegraph and Telephone Corporation has exercised its right to
purchase a part of the Japanese JV Shares from the Seller pursuant to
clause 12 of the Japanese JV Agreement, the Purchaser shall purchase the
remaining shares and the consideration specified in clause 3(2)(a) shall be
pro-rated based on the number of shares actually purchased by the
Purchaser.
(5) Notwithstanding anything to the contrary in this agreement, upon
satisfaction of the condition in clause 4(5)(c), the Seller shall be deemed
to have offered the PRC JV Shares to the Purchaser and the Purchaser shall
be deemed to have accepted such offer. In the event that the Directorate
General Telecommunications have exercised its right to purchase a part of
the PRC JV Shares from the Seller pursuant to clause 5.09 of the PRC JV
Contract, the Purchaser shall purchase the remaining interests in the PRC
JV Company and the consideration specified in clause 3(2)(b) shall be pro-
rated based on the interests in the PRC JV Company actually purchased by
the Purchaser.
3. Consideration
(1) The consideration for the sale and purchase of the CWM Shares shall be the
sum of (Pounds)421,000,000, subject to upwards adjustment as provided in
clause 14(4), which shall be payable by the Purchaser (or of which the
Purchaser shall procure payment) in cash on Completion.
(2) The consideration for the sale and purchase of the JV Shares shall be as
follows:
(a) for the Japanese JV Shares, the sum of (Pounds)7,000,000 which shall
be payable by the Purchaser (or of which the Purchaser shall procure
payment) in cash on Completion; and
(b) for the PRC JV Shares, the sum of (Pounds)20,000,000 which shall be
payable by the Purchaser (or of which the Purchaser shall procure
payment) in cash on Completion.
7
4. Conditions Precedent
(1) The sale and purchase of the CWM Shares and the JV Shares is conditional
on:
(a) in respect of Germany, the Bundeskartellamt granting a negative
clearance ("Nichtuntersagung") in respect of the acquisition by the
Purchaser of the CWM Shares and the JV Shares; and
(b) in respect of the agreements relating to the leasing or lease
financing of each of the vessels and the ROV referred to in Schedule
8, either:
(i) the parties thereto giving written consent (1) to the change of
control contemplated by this agreement of the Companies which
are parties to such agreements and (2) to the release of the
Seller and/or any member of the Remaining Group from all
related guarantees, indemnities, undertakings, bonds or other
arrangements to which they are a party; or
(ii) the termination of such leasing or lease financing and the
payment of all amounts payable by the Companies in respect of
such termination and any fees, costs and expenses required by
the other parties thereto in relation to such termination and a
Company or an entity nominated by the Purchaser being the
beneficial owner or having the right to purchase the relevant
vessel or ROV; or
(iii) such other arrangements being agreed in writing by the parties
thereto as are reasonably acceptable to the Purchaser and the
Seller and which ensure (1) that the change of control of the
Companies contemplated by this agreement does not adversely
affect the rights or increase the obligations under such
agreements of the Companies which are parties to such
agreements and the Seller and (2) the release of the Seller
and/or any member of the Remaining Group from all obligations
and liabilities in relation to such agreements.
(2) The parties shall use reasonable endeavours to procure that the conditions
in subclause (1) above are fulfilled on or before the date falling 60 days
after the date of this agreement. In relation to the conditions contained
in subclause (1)(b) above, the parties agree to take the steps set out in
Schedule 8 with a view to procuring that such conditions are fulfilled. In
relation to the condition contained in subclause (1)(a) above, the parties
agree that all requests and enquiries from the Bundeskartellamt or any
other applicable regulatory body shall be dealt with by the Purchaser in
consultation with the Seller promptly and the parties undertake to co-
operate fully with each other, including exchanging all relevant
information promptly and in full, and to provide all necessary information
and assistance reasonably required by such regulatory body, and the
Purchaser will take account of all reasonable requests of the Seller in
relation thereto.
(3) If the conditions in subclause (1) above are not fulfilled on or before the
date specified in subclause (2) above all the preceding clauses, subclauses
(4) to (8) of this clause and clauses 5, 6, 8, 10 to 16, 18(2) and 20(7)
of, and the Schedules to, this agreement shall cease to have effect and
neither of the parties will have any rights or liabilities under this
agreement.
(4) Until Completion, subject to the covenants and restrictions set out in this
agreement, the Seller shall comply with the provisions of Schedule 5.
8
(5) The sale and purchase of the JV Shares is conditional on:
(a) Completion;
(b) in the case of the sale of the Japanese JV Shares;
(i) the unconditional written consent of Nippon Telegraph and
Telephone Corporation in accordance with clause 11 of the
Japanese JV Agreement;
(ii) the written waiver of Nippon Telegraph and Telephone
Corporation of any right of first refusal it may have pursuant
to clause 12 of the Japanese JV Agreement or the purchase by
Nippon Telegraph and Telephone Corporation of only part of the
Japanese JV Shares pursuant to the provisions of clause 12 of
the Japanese JV Agreement;
(iii) the consent of the board of directors of the Japanese JV
Company;
(iv) the receipt by CW Luxembourg and the Japanese JV Company of any
governmental approvals, consents or other permissions required
under Japanese law; and
(v) the Purchaser entering into an amendment or deed of accession
to the Japanese JV Agreement in accordance with clause 22.6 of
the Japanese JV Agreement,
(collectively, the "NTT Consent"); and
(c) in the case of the sale of the PRC JV Shares:
(i) the unconditional written consent of Directorate General of
Telecommunications of the People's Republic of China in
accordance with clause 24.03 of the PRC JV Contract;
(ii) the written waiver of the Directorate General Communications of
any right of first refusal it may have pursuant to clause 5.09
of the PRC JV Contract or the purchase by the Directorate
General Communications of only part of the PRC JV Shares
pursuant to the provisions of clause 5.09 of the PRC JV
Contract;
(iii) the unanimous consent of the board of directors of the PRC JV
Company of the Changes in the PRC JV Company;
(iv) a duly executed amendment of the PRC JV Contract and PRC JV
Company Articles of Association reflecting the Changes in the
PRC JV Company;
(v) the receipt by GET and the PRC JV Company of the equity
transfer agreement governing the Changes in the PRC JV Company
duly executed by the Purchaser;
(vi) the receipt by GET and the PRC JV Company of the unconditional
approval of the Ministry of Foreign Trade and Economic Co-
operation and any other applicable industry regulator (or
its/their duly authorised lower level
9
commission) of the Changes in the PRC JV Company; and
(vii) the receipt by GET and the PRC JV Company of the amended
Business License of the PRC JV Company reflecting the Changes
in the PRC JV Company from the State Administration of Industry
and Commerce (or its duly authorised lower level
administration). (collectively, the "PRC Consent").
(6) The parties shall use reasonable endeavours to procure that the conditions
in subclause (5) are fulfilled on or before 31st December, 1999.
(7) If the condition in subclause (5)(a) is fulfilled but the other conditions
in subclause (5) above (or either of them) are not fulfilled on or before
the date specified in subclause (6):
(a) where NTT Consent is not obtained as specified, clauses 2(2) (as it
relates to the Japanese JV Shares) and (4), 3(2)(a) and 5(4) and (5)
of this agreement shall cease to have effect and the Seller shall re-
pay to the Purchaser the sum paid by the Purchaser pursuant to clause
3(2)(a); and
(b) where PRC Consent is not obtained as specified, clauses 2(2) (as it
relates to the PRC JV Shares), 3(2)(b) and 5(6) and (7) of this
agreement shall cease to have effect and the Seller shall re-pay to
the Purchaser the sum paid by the Purchaser pursuant to clause
3(2)(b),
in each case, together with interest in accordance with subclause (8)
below.
(8) Any amount due under subclause (7) above shall be paid without deduction of
any bank charges and commissions by the Seller's bank, without set-off and
in immediately available funds on or before 14th January, 2000 together
with simple interest at the rate of 2.75 per cent. above LIBOR calculated
from the date of Completion up to, but not including, the date of payment.
5. Completion
(1) Completion shall take place at the offices of Allen & Overy no later than
the fifth Business Day after the conditions referred to in clause 4(1) have
been fulfilled. The Purchaser shall notify the Seller forthwith when the
condition referred to in clause 4(1)(a) has been fulfilled.
(2) At Completion the Seller and the Purchaser shall procure that the relevant
events specified in Schedule 6 for which each is designated responsible
shall take place.
(3) The Purchaser shall at Completion deliver or procure the delivery by way of
telegraphic transfer without deduction of any bank charges and commissions
by the Purchaser's bank, without set off and in immediately available funds
to an account designated by the Seller before the Business Day before
Completion the payments for the CWM Shares and the JV Shares referred to in
clauses 3(1) and 3(2) above and the payment in respect of the Transfer
Price referred to in clause 11(1) below.
(4) Japanese JV Completion shall take place at the offices of Allen & Overy on
or before 31st December, 1999 and no later than the fifth Business Day
after the conditions referred to in clauses 4(5)(a) and 4(5)(b) have been
fulfilled. The Seller shall notify the Purchaser forthwith when both those
conditions have been fulfilled.
10
(5) At Japanese JV Completion the Seller and the Purchaser shall procure that
the relevant events specified in Schedule 6 for which each is designated
responsible shall take place.
(6) PRC JV Completion shall take place at the offices of Allen & Overy on or
before 31st December, 1999 and no later than the fifth Business Day after
the conditions referred to in clauses 4(5)(a) and 4(5)(c) have been
fulfilled. The Seller shall notify the Purchaser forthwith when both those
conditions have been fulfilled.
(7) At PRC JV Completion the Seller and the Purchaser shall procure that the
relevant events specified in Schedule 6 for which each is designated
responsible shall take place.
(8) The delivery by the Purchaser of the consideration for the JV Shares to the
Seller pursuant to subclause (3) shall be a good discharge of the
Purchaser's obligation to pay the relevant members of the Remaining Group
that part of the consideration as relates to their respective holdings of
JV Shares and the Seller shall receive that part of the consideration for
the JV Shares as agent for the relevant members of the Remaining Group.
6. Warranties
(1) The Seller warrants to the Purchaser for itself and as trustee for its
nominated wholly-owned Subsidiary or Subsidiaries as transferee(s) of the
CWM Shares and the JV Shares under this agreement that, except as
disclosed to the Purchaser in the Disclosure Letter and, subject to
subclause (4) below, the Data Room, each of the statements set out in
Schedule 3 is true and accurate as at the date of this agreement.
(2) The Seller further warrants to the Purchaser that:
(a) the Seller is a corporation validly existing under the laws of England
with the requisite power and authority to enter into and perform, and
has taken all necessary corporate action to authorise the execution
and performance of, its obligations under this agreement, the
Undertaking, the Tax Deed and the other documents to be entered into
by the Seller pursuant to this agreement;
(b) this agreement, the Undertaking, the Tax Deed and the other documents
to be entered into by the Seller pursuant to this agreement constitute
or will, when executed, constitute valid and binding obligations of
the Seller; and
(c) other than as contemplated by this agreement, no announcements,
consultations, notices, reports or filings are required to be made by
the Seller in connection with the transactions contemplated by this
agreement nor are any consents, approvals, registrations,
authorisations or permits required to be obtained by the Seller in
connection with the execution or performance of this agreement, the
Undertaking and the Tax Deed the failure to make or obtain any of
which:
(i) would prevent or delay completion of this agreement; or
(ii) would subject the Purchaser or the Companies to any liability.
(3) The Purchaser warrants to the Seller that:
(a) the Purchaser is a corporation validly existing under the laws of
Bermuda with the
11
requisite power and authority to enter into and perform, and has taken
all necessary corporate action to authorise, the execution and
performance of, its obligations under this agreement, the Undertaking,
the Tax Deed and the other documents to be entered into by the
Purchaser pursuant to this agreement;
(b) this agreement, the Undertaking, the Tax Deed and the documents to be
entered into by the Purchaser pursuant to this agreement constitute or
will, when executed, constitute valid and binding obligations of the
Purchaser; and
(c) other than as contemplated by this agreement, no announcements,
consultations, notices, reports or filings are required to be made by
the Purchaser in connection with the transactions contemplated by this
agreement nor are any consents, approvals, registrations,
authorisations or permits required to be obtained by the Purchaser in
connection with the execution or performance of this agreement, the
Undertaking, and the Tax Deed the failure to make or obtain any of
which:
(i) would prevent or delay completion of this agreement; or
(ii) would subject the Seller or the Companies to any liability.
(4) The disclosure of the Data Room as a whole under subclause 6(1) above in
respect of the Warranties shall not apply in relation to the Warranties
contained in the following paragraphs of Schedule 3, but the documents
referred to in the specific matters disclosed against each of these
Warranties in the Disclosure Letter are disclosed against that Warranty:
A.5 (Accounts); A.7 (Position since Accounts Date); sub-paragraph (2) of
A.9 (Properties); sub-paragraphs (2), (3), (4), (5) and (10) of A.10
(Vessels); sub-paragraph (4) of A.11 (Environment) except that all the
documents contained in Volume XIX (Environmental Documents) of the Data
Room Index shall be deemed to be disclosed against these Warranties; sub-
paragraphs (3) and (5) of A.14 (Indebtedness); A.15 (Litigation); sub-
paragraph (2) of A.16 (Material Contracts); A.21 (Joint Ventures); A.22
(Brokerage or Commissions); sub-paragraphs (a) and (c) of B.4 (Capital
gains); B.14 (Capital allowances); and sub-paragraph (a) of B.15 (Claims).
(5) The Seller will not enforce a right which it may have against a Company or
a director, officer or employee of a Company in respect of a
misrepresentation, inaccuracy or omission in or from information given by
that Company or that director, officer or employee for the purpose of
assisting the Seller to give a Warranty or prepare the Disclosure Letter or
the Data Room, PROVIDED THAT the foregoing shall not prevent the Seller
from enforcing any right where such misrepresentation, inaccuracy or
omission arises as a result of wilful or fraudulent misconduct or omission
by the Company, director, officer or employee in question.
7. Limitations on Claims
(1) The Purchaser acknowledges to and agrees with the Seller that:
(a) the Warranties are the only warranties or other assurances of any kind
given by or on behalf of the Seller or any member of the Remaining
Group and on which the Purchaser may rely in entering into and
performing this agreement;
(b) no other statement, promise or forecast made by or on behalf of the
Seller or any other member of the Remaining Group may be relied on or
form the basis of, or be pleaded in connection with, any claim by the
Purchaser under or in connection with
12
this agreement;
(c) any claim by the Purchaser under or in connection with this agreement
(a "Claim"), other than a claim under the Tax Deed save to the extent
expressly provided to the contrary in this agreement, shall be subject
to the following provisions of this clause; and
(d) at the time of entering into this agreement it has no actual
knowledge, by virtue of the knowledge of any of its directors,
including Tom Casey, or of Clint Walker or Justin O'Neill or by virtue
of reports, information and advice given by its advisers involved in
the Purchaser's due diligence in connection with, and the negotiation
of, this agreement, of any matter which, upon entering into this
agreement, would constitute a breach of the Warranties.
(2) The liability of the Seller shall be limited as follows:
(a) the Seller shall not be liable in respect of any breach of this
agreement if and to the extent that the matter giving rise to the
breach is recovered under the Tax Deed;
(b) there shall be disregarded for all purposes including but not limited
to paragraph (c) below any breach of this agreement in respect of
which the amount of the damages to which the Purchaser would otherwise
be entitled is less than (Pounds)100,000;
(c) the Purchaser shall not be entitled to recover any damages in respect
of any breach or breaches of this agreement except to the extent that
the amount of damages in respect of such breach or breaches, together
with any liability on the part of the Seller under the Tax Deed,
exceeds in aggregate (Pounds)5,000,000 PROVIDED THAT the foregoing
provisions of this paragraph (c) shall not operate to limit the
liability of the Seller under clause 11, under paragraph 9 of Schedule
4 or in respect of any breach of Warranty A.5(3); and
(d) the maximum aggregate liability of the Seller under this agreement,
clauses 3(5) to (7) of the Undertaking and the Tax Deed shall not
exceed 100% of the total sums payable by the Purchaser and received by
the Seller under clauses 3, 11(1)(c) and 11(2) of this agreement and
shall be reduced to the extent that any moneys are repaid by the
Seller under clause 4(7) PROVIDED THAT the foregoing provisions of
this paragraph (d) shall not operate to limit the liability of the
Seller in respect of its obligation to deliver a duly executed
transfer of the CWM Shares if and when that obligation is wholly
unconditional and due for performance under and in accordance with the
terms of this agreement in circumstances where the Purchaser is ready,
able and willing to perform its payment obligation under clause 5(3).
(3) The Purchaser shall not be entitled to make any Claim:
(a) to the extent that any specific provision or allowance for the matter
or liability which would otherwise give rise to the claim in question
has been made in the Accounts or it is otherwise apparent from the
notes to the Accounts;
(b) (other than under clauses 15(2), (4) and (8) and Schedules 4 and 8 and
the Tax Deed) in respect of a matter disclosed to the Purchaser in the
Disclosure Letter or, subject to clause 6(4), the Data Room;
13
(c) if the claim would not have arisen but for a change in legislation
made or enacted on or after the date of this agreement (whether
relating to Taxation, rates of Taxation or otherwise) or the
withdrawal after the date of this agreement of any practice or extra-
statutory concession previously published by the Inland Revenue or
other taxing authority (whether or not the change purports to be
effective retrospectively in whole or in part);
(d) to the extent that the claim arises as a result of any changes in the
accounting policies or practices of the Companies made after
Completion except where such change is necessary to ensure compliance
with UK GAAP;
(e) to the extent occasioned by any act or omission of any member of the
Purchaser's Group or one of the Companies after Completion, not being
an act or omission contemplated by this agreement or an act or
omission in the ordinary course of business which the relevant person
did not know or should not reasonably have known would give rise to a
Claim; or
(f) in respect of any matter of which any member of the Purchaser's Group
has actual knowledge, by virtue of the knowledge of any of its
directors, including Tom Casey, or of Clint Walker or Justin O'Neill
or by virtue of reports, information and advice given by its advisers
involved in the Purchaser's due diligence in connection with, and the
negotiation of, this agreement, as at the date of this agreement,
and to the extent that any Claim is increased as a result of any of the
matters set out in this subclause, the Seller shall not be liable in
respect of the amount by which any Claim is so increased.
(4) If the Purchaser or one of the Companies becomes aware of a matter which
could give rise to a Claim, written notice of the relevant facts
(containing sufficient details to allow the Seller to make a reasonable
assessment of the value and nature of such potential Claim) shall be given
by the Purchaser to the Seller as soon as reasonably practicable and in any
event within 60 days of the Purchaser or one of the Companies becoming
aware of those facts; and, secondly, in the case of a Claim which relates
to a matter where there has been an assessment, notice or other document
served on one of the Companies in respect of Taxation in circumstances
where there are statutory time limits for appealing against or otherwise
responding to any such notice or other document, notice of the relevant
facts shall be given to the Seller as soon as reasonably practicable and in
any event within 10 days. In addition, (subject to the provisions of the
Tax Deed in relation to any matter which may form the subject of a claim
under it) if the Claim in question is as a result of or in connection with
a liability or alleged liability to a third party:
(a) the Purchaser shall procure that the relevant Company take such action
to avoid, dispute, resist, appeal, compromise or contest the liability
as may be requested by the Seller which shall be entitled to have the
conduct of any appeal, dispute, compromise or defence of the dispute
and of any incidental negotiations but at the Seller's expense and
subject to the Seller indemnifying the Purchaser to its reasonable
satisfaction against the costs and expenses thereof; and
(b) the Purchaser shall procure that the relevant Company makes available
to the Seller such persons and all such information as the Seller may
reasonably require for avoiding, disputing, resisting, appealing,
compromising or contesting any such liability.
14
(5) The Seller shall cease to have any liability:
(a) on the seventh anniversary of Completion in respect of Claims relating
to Warranties B.1 to B.15 in Schedule 3; and
(b) on the second anniversary of the date of this agreement in respect of
any other Claims,
except in respect of a Claim of which the Purchaser has given written
notice to the Seller before the relevant date and in accordance with
subclause (4) but the liability of the Seller in respect of any Claim shall
terminate absolutely if proceedings in respect of it have not been
commenced within six months of service of notice of that Claim PROVIDED
however that the foregoing shall be without prejudice to the Purchaser's
right to bring proceedings where, on or before the date of such written
notice, the Purchaser or any relevant Company commences and diligently
pursues a claim under any policy of insurance or under the GOC Agreements
in respect of the matter which gave rise to the Claim, but only to the
extent that the Purchaser or any relevant Company continues diligently to
pursue such claim under the policy of insurance or under the GOC
Agreements, and in that event proceedings may be commenced within six
months after the Purchaser has exhausted its remedies against the insurer
or under the GOC Agreements.
(6) Without prejudice to the Purchaser's duty to mitigate any loss in respect
of any breach of the agreement, if, in respect of any matter which would
otherwise give rise to a breach of the agreement, one of the Companies is
entitled to claim under any policy of insurance (or would have been so
entitled had it maintained in force its insurance cover current at
Completion) the amount of insurance monies which the Companies recover
shall reduce pro tanto or extinguish the claim for breach of the agreement
and the Purchaser shall not pursue any Claim it may have against the Seller
until it has exhausted its remedies against the insurer.
(7) If the Seller makes any payment by way of damages for breach of the
agreement (the "Damages Payment") and one of the Companies or any member of
the Purchaser's Group receives any benefit otherwise than from the Seller
which would not have been received but for the circumstance giving rise to
the Claim in respect of which the Damages Payment was made, the Purchaser
shall, once it or one of the Companies or the member of the Purchaser's
Group has received such benefit, promptly repay to the Seller an amount
equal to the lesser of the amount of such benefit (after deducting all
reasonable costs and expenses of obtaining that benefit) and the Damages
Payment.
(8) Where the Seller has made a payment to the Purchaser in respect of, or
relating to, any Claim and one of the Companies or the Purchaser has a
right of reimbursement against some other person in respect of or relating
to that Claim the Purchaser shall notify the Seller within a reasonable
period of that fact and shall (if indemnified to its reasonable
satisfaction against the costs and expenses of taking such action) take all
reasonable steps or proceedings to enforce such right.
(9) Without prejudice to the generality of subclause (8), where the Purchaser
becomes aware of any matter which may give rise to a Claim relating to the
General Offshore Companies the Purchaser shall notify the Seller within a
reasonable period of such matter and shall take, or procure the taking of,
all steps or proceedings necessary to enforce the rights of the relevant
Companies under the warranties, covenants and indemnities contained in the
GOC Agreements and shall exhaust its remedies thereunder before pursuing
any Claim it may have
15
against the Seller. In the event that the Seller becomes liable to the
Purchaser under a Claim in respect of the General Offshore Companies the
Seller shall be liable only for the excess of the amount of any such
successful Claim over the amount paid to the relevant Companies in respect
of claims made under the GOC Agreements.
(10) If any amount in respect of any breach of the agreement is paid by the
Seller to the Purchaser and any subsequent event or circumstances happens
or arises by virtue of which the loss attributable to such breach is
reduced or removed altogether, then the Purchaser shall forthwith repay to
the Seller that amount or the appropriate proportion thereof less the
Purchaser's reasonable costs and expenses including taxes (if any) incurred
in recovering any relevant amount.
(11) Neither party shall be entitled to rescind this agreement whether before or
after Completion in any circumstances, unless it can establish fraud on the
part of the other party.
8. Leasing Arrangements
The provisions of Schedule 8 relating to the lease financing agreements
shall have effect on and from the date of this agreement with regard to the
Companies.
9. Costs
In the event of any legal proceedings arising out of this agreement, the
following shall apply in relation to the costs of such litigation to the
extent permissible by law. The party which is unsuccessful in any such
litigation shall pay the reasonable costs of the party which is successful.
A party which obtains a judgment in its favour shall be regarded as
unsuccessful if the judgment fails to better or the party fails to obtain a
judgment which is more advantageous than any payment into Court, offer made
without prejudice save as to costs, or offer made under Part 36 of the
Civil Procedure Rules of the English Courts.
10. Pensions
The provisions of Schedule 4 relating to pensions shall have effect on and
from Completion with regard to the Companies.
11. Intragroup Matters
(1) The Purchaser acknowledges to the Seller and the Seller undertakes to the
Purchaser that the following transactions shall occur on or before
Completion:
(a) the Seller shall subscribe for additional ordinary shares of (Pounds)1
each in the share capital of CWM and the aggregate subscription monies
to be paid therefor will be (Pounds)23,782,000;
(b) CWM shall pay to the Seller or as the Seller directs
(Pounds)12,407,000 in full and final settlement of all outstanding
intercompany balances owed by CWM to the Remaining Group and by the
Remaining Group to CWM as at the Accounts Date (the "Intercompany
Balance");
(c) the Seller shall sell and CWM shall purchase the Seller's interest in
the cableship "Cable Enterprise" for an aggregate purchase price of
(Pounds)2,000,000 (the "Transfer Price"), and the Purchaser undertakes
to the Seller for itself and on behalf of CWM
16
that it will pay to the Seller (Pounds)2,000,000 in satisfaction of
CWM's obligation to pay the Transfer Price; and
(d) any intercompany balances arising after the Accounts Date between the
Companies on the one hand and the Remaining Group on the other hand
shall be settled in the ordinary course of business.
(2) The Purchaser undertakes to the Seller, for itself and on behalf of CWM,
that it shall on and simultaneously with Completion deliver or procure the
delivery by way of telegraphic transfer without deduction of any bank
charges and commissions by the Purchaser's bank, without set-off and in
immediately available funds to an account designated by the Seller on
behalf of CWM before the Business Day before Completion cash in an amount
equal to the Loan and that it shall immediately thereafter procure the
repayment in full by CWM of the Loan by the onward delivery of that cash by
the same means and on the same basis to an account designated by the Seller
on behalf of CWM at Bank of Nova Scotia.
12. Tax Deed
The Seller and the Purchaser shall enter into the Tax Deed at Completion.
13. Marks and Licences
(1) Subject to subclause (2), the Purchaser shall and shall procure that the
Companies shall from the date of Completion cease to use or display the
names "Cable & Wireless" or "C&W" or any colourable imitations thereof
and/or any logo used by any member of the Remaining Group (together called
"the Marks") in relation to any goods or services provided by the Seller or
the Companies including, without prejudice to the foregoing, the use of the
Marks on any building, vessel owned or used by the Companies and on any
letterhead provided that at no time after Completion shall any member of
the Purchaser's Group or the Companies represent itself as being associated
in any way with the Remaining Group.
(2) Notwithstanding subclause (1), the Companies (but not the Purchaser or any
member of the Purchaser's Group) shall be permitted for the period of three
months from the date of Completion (and, in respect of Marks on Vessels,
for the shortest practicable period which is longer than those three
months) to use the Marks on or in connection with any brochures, catalogues
or items of sales literature used by the Companies prior to the date of
Completion which were published prior to the date of Completion. After the
expiry of such three month period, the Purchaser shall and shall procure
that the Companies shall cease to use the Marks or any confusingly similar
marks and shall destroy any remaining stocks of such brochures, catalogues
or items of sales literature using the Marks.
(3) The Seller hereby grants on its own behalf and on behalf of the Remaining
Group to the Companies from Completion a non-exclusive perpetual,
irrevocable, world-wide, royalty-free licence to use and to permit its
Subsidiaries, suppliers and customers to use Intellectual Property Rights
which are the property of the Seller or the Remaining Group and which are
used in the business and operations of the Companies at Completion. The
licence granted under this subclause (3) is conditional on Completion
taking place in accordance with clause 5 of this agreement.
(4) (a) To the extent that Intellectual Property Rights have been licensed to
the Seller or the Remaining Group by a third party and are used by the
Companies for the operation of their businesses as carried on at
Completion, the Seller will use its best endeavours
17
either to grant sublicences, to the extent it is permitted to do so,
or to procure that the Companies are granted licences for such
Intellectual Property Rights on substantially the same terms and
conditions as contained in the licences to the Seller or the Remaining
Group.
(b) To the extent that Intellectual Property Rights have been licensed to
the Companies by any third party and such licences are validly
terminated by the licensor thereunder as a consequence of this
agreement, the Seller will use its best endeavours to procure that the
Companies are granted replacement licences on substantially the same
terms and conditions as contained in those licences.
The Seller's obligations under this subclause (4) will continue for a
period of one year,
(i) from the date of Completion in respect of paragraph (a) above; and
(ii) from any such termination in respect of paragraph (b) above.
Any costs (save for internal costs of the Seller or the Remaining Group and
the legal costs of effecting the grant of the licences, which will be borne
by the Seller) incurred in connection with licences obtained under this
subclause (4) shall be met by the Companies.
14. Guarantees and Covenant
(1) The Purchaser undertakes with the Seller to procure the release at
Completion of the Seller and/or any member of the Remaining Group from all
guarantees, indemnities, bonds, letters of comfort and undertakings listed
in Part 4 of Schedule 6 to which they or any of them are a party in respect
of the Companies, the CWM JV Companies or the JV Companies or their
business, any vessels or other ships or leasing or other contractual
arrangements in respect of any vessels or ships or properties occupied or
used by them and to indemnify and to keep indemnified on a continuing basis
the Seller and any member of the Remaining Group from all claims,
liabilities, costs and expenses (including without limitation, legal and
other professional advisers' fees) arising in respect or by reason thereof.
(2) Without limiting the generality of subclause (1) the Purchaser agrees, in
discharging its obligations under that subclause, to:
(a) offer any guarantees, indemnities or other undertakings (as the case
may be) in place of the guarantees and indemnities and other
arrangements referred to in subclause (1); or
(b) offer to discharge the liabilities in relation to which a guarantee or
indemnity or other arrangements referred to in subclause (1) was
given.
(3) The obligations of the Purchaser under subclauses (1) and (2) will continue
after Completion until all such releases are obtained.
(4) The Seller agrees to pay or procure the repayment of (through a
subscription of additional ordinary shares of (Pounds)1 each in the share
capital of CWM before Completion or through any other means which the
Purchaser shall agree after Completion) any amounts payable by the
Companies resulting from any breach by the Companies in respect of the
borrowings or indebtedness (including in relation to any lease financing
arrangement) of the Companies, the CWM JV Companies or the JV Companies as
at the date of this agreement arising before the
18
date of this agreement. An amount equal to any amounts paid by the Seller
in respect of a repayment by the Companies of the Loan, of the principal
amount of any other borrowing or of scheduled payments under any financing
lease or other financing agreement which do not represent interest, fees,
penalties or amounts in respect of lost profits of any other party to such
agreement (collectively, "Scheduled Payments") shall be added to the cash
purchase price payable by the Purchaser under clause 3(1) (but in respect
of any amounts paid by the Seller after Completion shall also be paid
notwithstanding Completion). The Seller shall be under no obligation to
make payments under this clause in respect of the prepayment by the
Companies of Scheduled Payments under finance leases unless the total
amount of prepayments exceeds (Pounds)16,652,000 minus the cost to the
Companies of the loss of use of such funds resulting from such prepayment.
The provisions of clause 7 of this agreement shall not apply to this
subclause (4).
15. Employees and Properties
(1) The Seller undertakes:
(a) to exercise any relevant discretion to ensure that options granted to
Company employees participating in any Incentive Scheme shall be
capable of being exercised following Completion and that in the case
of any Incentive Scheme which is not an option scheme to ensure that
the awards vest in respect of such Company employees and where
relevant use its best endeavours to procure that any body with whom
such discretion rests shall exercise any relevant discretion to ensure
that this undertaking is complied with; and
(b) to allow Company employees participating in any Incentive Scheme the
maximum period permissible under the scheme for the exercise of their
rights following their transfer of employment and will, where
relevant, use its best endeavours to procure that any body with whom
such discretion rests shall exercise any relevant discretion to ensure
that this undertaking is complied with.
(2) The Seller agrees to indemnify the Purchaser (for itself and as trustee for
each relevant Company) against any withholding tax and/or Pay As You Earn
and/or social security liabilities incurred (in the United Kingdom or
elsewhere) which may arise for the Purchaser or any Company in relation to
the Incentive Schemes.
(3) If, within three months after Completion, any or all of the following
employees of the Seller makes a request of the Seller that they be seconded
to CWM or released from their existing service agreements with the Seller
in order to enter into service agreements with CWM, the Seller will take
all reasonable steps necessary to procure that the individual(s) be so
seconded or be so employed by CWM, including, but not limited to, entering
into a secondment agreement with CWM, waiving its entitlement to notice of
termination from that (or those) individual(s) and releasing the
individual(s) from all contractual obligations other than those imposing a
duty of confidentiality on the individual(s), if such steps are required.
This sub-clause (3) applies to:
(a) David Foot;
(b) Chris Todhunter; and
(b) Peter Mole.
19
(4) If any of the individuals referred to in subclause (3) above enters above
into employment with CWM within three months after Completion, the Seller
shall indemnify the Purchaser or any member of the Purchaser's Group
against all losses, claims, damages, actions, proceedings and liabilities
(including costs and expenses reasonably incurred) in relation to any of
those individuals in respect of any acts or omissions of the Seller or any
member of the Seller's Group prior to Completion (together "Pre-Completion
Claims") which the Purchaser or any member of the Purchaser's Group may
suffer, sustain, incur or be put to arising from, or in connection with,
any Pre-Completion Claims by, in relation to, or on behalf of, any of those
individuals.
(5) If any of the individuals referred to in subclause (3) above enters into
employment with CWM within three months after Completion, the Purchaser
shall indemnify the Seller or any member of the Seller's Group against all
losses, claims, damages, actions, proceedings and liabilities (including
costs and expenses reasonably incurred) in relation to those individuals in
respect of any acts or omissions of the Purchaser or any member of the
Purchaser's Group on or after Completion (together "Post-Completion
Claims") which the Seller or any member of the Seller's Group may suffer,
sustain, incur or be put to arising from, or in connection with, any Post-
Completion Claims by, in relation to, or on behalf of, any of those
individuals.
(6) If any contract of employment relating to a person other than an Employee
or a person referred to in subclause (3) above not disclosed in writing to
the Purchaser, has effect as if originally made between the Purchaser and
that person, the Purchaser shall notify the Seller. The Seller or any
member of the Seller's Group may offer employment to that person within 21
days of that notification. If, after that period has elapsed, the person
concerned has not been offered such employment the Purchaser may terminate
the contract, acting lawfully in accordance with the terms of the contract
of employment and taking all reasonable steps to mitigate any damages or
compensation which might be awarded to the persons concerned and in any
event acting in consultation with the Seller. Subject to the Purchaser
acting in that way, the Seller shall indemnify the Purchaser against any
liabilities arising out of such termination and against any sum payable to
it or in respect of that employee under his contract of employment
following Completion (assuming that the contract is not altered by the
Purchaser or the Companies after Completion).
(7) In this subclause (7):
"Beneficiary" means, in relation to an indemnity in this clause 15, the
person receiving the benefit of the indemnity; and
"Covenantor" means, in relation to an indemnity in this clause 15, the
person undertaking to indemnify the Beneficiary.
If the Beneficiary becomes aware of any matter which might give rise to a
claim for an indemnity from the Covenantor, the following provisions shall
apply:
(a) The Beneficiary shall immediately give written notice to the
Covenantor of the matter in respect of which the indemnity is being
claimed (stating in reasonable detail the nature of the matter and, so
far as practicable, the amount claimed) and shall consult with the
Covenantor with respect to the matter. If the matter has become the
subject of any proceedings the Beneficiary shall give the notice
within sufficient time to enable the Covenantor time to contest the
proceedings before any first instance judgement in respect of such
proceedings is given.
20
(b) The Beneficiary shall:
(i) take such action and institute such proceedings, and give such
information and assistance, as the Covenantor or its insurers
may reasonably request to dispute, resist, appeal, compromise,
defend, remedy or mitigate the matter or enforce against any
person (other than the Covenantor) the rights of the
Beneficiary or its insurers in relation to the matter;
(ii) in connection with any proceedings related to the matter (other
than against the Covenantor) use professional advisers
nominated by the Covenantor or its insurers and, if the
Covenantor or its insurers so requests, allow the Covenantor or
its insurers the exclusive conduct of the proceedings in each
case on the basis that the Covenantor shall fully indemnify the
Beneficiary for all costs incurred as a result of any request
or nomination by the Covenantor or its insurers; and
(iii) not admit liability in respect of or settle the matter without
the prior written consent of the Covenantor such consent not to
be unreasonably withheld or delayed.
(c) If the Covenantor has conduct of any litigation and negotiations in
connection with a claim, the Covenantor shall promptly take all proper
action to deal with the claim so as not, by any act or omission in
connection with the claim, to cause the Beneficiary to be in breach of
its obligations to its current or past employees or to cause the
Beneficiary's business interests to be materially prejudiced.
(8) The Seller shall indemnify the Purchaser against any and all costs, losses,
claims and demands sustained by the Purchaser or CWM by reason of the non-
registration at HM Land Registry of the underlease dated 3rd November, 1997
between Portland Harbour Limited (1) and CWM (2), provided that this
indemnity shall cease and determine on and with effect from registration of
CWM as registered proprietor of the underlease with leasehold title
absolute.
(9) The Seller shall use all reasonable endeavours to formalise the informal
licence with regard to the Property at Sandys Parish, Bermuda referred to
in Schedule 2 on a timely basis and pending that licence being formalised
shall permit the current arrangements under that licence to continue.
16. Transitional Services
(1) The Seller shall continue to provide payroll services to CWM in the same
manner as provided pre-Completion for a term of six months from the date of
Completion ("Payroll Services").
(2) The Seller shall continue to provide assistance to CWM in relation to
taxation matters relating to CWM for a term of six months from the date of
Completion ("Tax Assistance"). For the avoidance of doubt this Tax
Assistance will not include the provision by the Seller to CWM of any tax
advice.
(3) In consideration of the provision of the services rendered by the Seller to
CWM pursuant to subclauses (1) and (2) above, CWM shall pay to the Seller a
monthly fee of (Pounds)7,350 in relation
21
to the provision of Payroll Services and a monthly fee of (Pounds)2,100 in
relation to the provision of Tax Assistance, both quarterly in advance,
together with any attributable value added tax.
(4) CWM may require the Seller to cease providing Payroll Services and Tax
Assistance, at any time, by the giving to the Seller of not less than one
month's written notice of such cessation. If either of Payroll Services or
Tax Assistance are terminated pursuant to this subclause, the Seller shall
repay to CWM within 7 days of the termination such part of the fee paid by
CWM pursuant to subclause (3) above as shall be attributable to the period
after the termination, and such amount shall be calculated by reference to
the actual number of days which have elapsed in the relevant period prior
to such termination. The termination of the services shall not affect the
accrued rights of the Seller and CWM in relation thereto.
(5) The Seller agrees to fulfil its obligations and do all such things as are
required to give effect to all foreign exchange agreements with CWM that
have not yet been exercised at the applicable rates.
(6) The Seller shall continue to provide insurance to CWM under its global risk
financing programme as provided pre-Completion for a term of six months
from the date of Completion ("Insurance Services"), in consideration of
which CWM shall pay to the Seller an amount equal to the third party
premium plus 2.5% thereof, quarterly in advance. The provisions of
subclause (4) above will apply mutatis mutandis to the Insurance Services.
During the period from the date of this agreement and of the provision of
these services, the parties will negotiate in good faith with a view to
putting in place an agreement for the provision of Insurance Services on a
longer-term basis. The Seller shall also use its reasonable endeavours to
make arrangements for the continuation of the provision to CWM of such
other insurance as is not covered by the Insurance Services but of which
CWM currently has the benefit for a term of six months from the date of
Completion, the costs of such insurance to be borne by CWM.
(7) The Seller shall continue to provide office accommodation to employees of
the Companies in those offices currently occupied by those employees but
owned, leased or occupied under licence by members of the Remaining Group
for a term of six months from the date of Completion, subject to such
arrangements to preserve the confidentiality of the Remaining Group's and
the Purchaser's Group's businesses and affairs as the Seller or the
Purchaser may reasonably request, and in consideration thereof CWM shall
pay to the Seller its proportionate share of the costs of those offices.
The provisions of subclause (4) above will apply mutatis mutandis to these
accommodation arrangements.
(8) The Purchaser shall procure that CWM complies with its obligations under
this clause 16 from Completion.
17. Whole Agreement
(1) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions contemplated by
this agreement and supersede all previous agreements between the parties
relating to those transactions.
(2) In entering into this agreement no party may rely on any representation,
warranty, collateral contract or other assurance (except those set out in
this agreement and the documents referred to in it) made by or on behalf of
any other party before the signature of this agreement and each of the
parties waives all rights and remedies which, but for this subclause, might
otherwise be available to it in respect of any such representation,
warranty, collateral contract or other
22
assurance; provided that nothing in this subclause shall limit or exclude any
liability for fraud.
18. Announcements and Confidentiality
(1) No announcement concerning this sale and purchase or any ancillary matter
will be made before, on or after Completion by any member of the Remaining
Group or of the Purchaser's Group without prior consultation with and
(unless the announcement is required by law, The London Stock Exchange
Limited, the Securities Exchange Commission, Nasdaq or any other relevant
regulatory authority) without the prior written approval of the Seller and
the Purchaser (such approval not to be unreasonably withheld or delayed).
The Purchaser may disclose the existence and terms of this transaction to
the extent it is required to do so in any filing it is obliged to make
under the securities laws of the United States of America or other relevant
jurisdiction.
(2) The Seller undertakes to the Purchaser, for itself and as agent and trustee
for each Company, that the Seller shall not use or disclose to any person
Confidential Information it has relating to the Companies from Completion,
relating to the Japanese JV Company from Japanese JV Completion and
relating to the PRC JV Company from PRC JV Completion; and the Seller shall
procure that each member of the Remaining Group complies with this
subclause (2).
(3) The Purchaser undertakes to the Seller, for itself and as agent and trustee
for each Company, CWM JV Company and JV Company, that the Purchaser shall
until Completion (and in respect of PRC Completion and Japanese JV
Completion, in relation to the PRC JV Company and Japanese JV Company
respectively) not use or disclose to any person Confidential Information it
has and the Purchaser shall procure that each member of the Purchaser's
Group complies with this subclause (3).
(4) Subclauses (2) and (3) above do not apply to:
(a) disclosure of Confidential Information in a manner contemplated by
this agreement;
(b) use or disclosure of Confidential Information required to be used or
disclosed by law, or the London Stock Exchange, Nasdaq or any other
competent regulator;
(c) Confidential Information which becomes publicly known except by the
Seller's breach of subclause (2) or the Purchaser's breach of
subclause (3), as the case may be.
19. Notices
(1) Any notice or other document to be served under this agreement must be in
the English language and may be delivered or sent by first class recorded
delivery post or facsimile process to the party to be served at its address
appearing in this agreement or at such other address as it may have
notified to the other parties in accordance with this clause.
(2) Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 a.m. on the third Business Day after it was put
into the post; or
23
(c) if sent by facsimile process, at the expiration of two hours after the
time of despatch, if despatched before 3.00 p.m. on any Business Day,
and in any other case at 10.00 a.m. on the Business Day following the
date of despatch.
(3) In proving service of a notice or document it shall be sufficient to prove
that delivery was made or that the envelope containing the notice or
document was properly addressed and posted as a prepaid first class
recorded delivery letter or that the facsimile message was properly
addressed and despatched and the correct answerback or identity code is
received as the case may be.
(4) The addresses of the parties for the purpose of this clause are as follows:
The Seller
124 Theobalds Road
London
WC1X 8RX
For the attention of: The Company Secretary
Facsimile: 0171 315 5051
The Purchaser
Wessex House
45 Reid Street
Hamilton HM-12
Bermuda
For the attention of: The Company Secretary
Facsimile: 001 441 2968606
with a copy to the Purchaser at
150 El Camino Drive
Suite 204
Beverly Hills, CA 90217
For the attention of: The General Counsel
Facsimile: 001 310 2814942
20. General
(1) Each of the obligations and undertakings set out in this agreement which is
not fully performed at Completion will continue in force after Completion.
(2) Neither party shall be entitled to assign or transfer its rights or
obligations under this agreement without the prior written consent of the
other party.
(3) Each party shall pay the costs and expenses incurred by it in connection
with the entering
24
into and completion of this agreement except as otherwise provided in this
agreement.
(4) The Purchaser will bear all stamp duty and registration fees payable or
assessed in relation to this agreement, the transfer of the CWM Shares and
the JV Shares and any related documents.
(5) Time is of the essence in relation to all obligations under this agreement.
(6) The invalidity, illegality or unenforceability of a provision of this
agreement does not affect or impair the continuation in force of the
remainder of this agreement.
(7) (a) The Purchaser agrees to provide the Seller and its advisers during
normal business hours with full and free access (including the right
to take copies) to the books of accounts and other financial records
of the Companies which relate to the period up to Completion as the
Seller may reasonably request for the purpose of preparing its annual
consolidated accounts for the year in which Completion takes place.
The Purchaser further agrees for the same purpose to give the Seller
reasonable access to its employees (including the employees of the
Companies) and to respond to requests from the Seller for information.
The Seller shall comply with any reasonable requests by the Purchaser
for such access to be supervised by a representative of the Purchaser.
(b) The Seller agrees to provide the Purchaser and its advisers during
normal business hours with full and free access (including the right
to take copies) to the books of accounts and other financial records
of the Seller to the extent that such documents relate to the conduct
of the business of the Companies in the period from the Accounts Date
to Completion as the Purchaser may reasonably request for the purpose
of preparing any filing the Purchaser is required to make with the
Securities and Exchange Commission of the United States of America.
The Seller further agrees for the same purpose to give the Purchaser
reasonable access to its employees (and to permit the Purchaser and
its auditors reasonable access to the Seller's auditors) and to
respond to reasonable requests from the Purchaser for information.
The Purchaser shall comply with any reasonable requests by the Seller
for such access to be supervised by a representative of the Seller.
(c) Each party shall bear its own costs in respect of the matters set out
in paragraphs (a) and (b) above, except that any costs incurred by the
Seller's auditors under paragraph (b) above shall be to the
Purchaser's account.
(8) In the case of any inconsistency between the terms of this agreement and
the terms of any ancillary document arising hereunder the terms of this
agreement shall prevail.
(9) This agreement may be executed in any number of counterparts, each of which
is an original and all of which together evidence the same agreement.
(10) A variation of this agreement is valid only if it is in writing and signed
by or on behalf of each party.
(11) The failure to exercise or delay in exercising a right or remedy provided
by this agreement or by law does not constitute a waiver of the right or
remedy or a waiver of other rights or remedies. No single or partial
exercise of a right or remedy provided by this agreement or by law prevents
further exercise of the right or remedy or the exercise of another right or
25
remedy.
21. Governing Law and Jurisdiction
(1) This agreement is governed by and shall be construed in accordance with the
laws of England.
(2) The parties submit to the jurisdiction of the English courts for all
purposes relating to this agreement and the Purchaser irrevocably appoints
Global Crossing Marketing U.K. Limited as its agent for service of process.
AS WITNESS this agreement has been signed by and on behalf of the parties the
day and year first before written.
26
SCHEDULE 1, PART I
PARTICULARS OF THE COMPANIES
Company name: Cable & Wireless Marine Limited
Registered number: 1708481
Registered office: East Saxon House
27 Duke Street
Chelmsford
Essex CM1 1HT
Date and place of
incorporation: 22nd March, 1983
England and Wales
Directors: David George Foot
Alistair Reginald Grieve
Stephen Raymond Pettit
Barry Clive Shine
Captain David Charles Skentelbery
David Ian Wickham
Secretary: Kenneth Keith Claydon
Accounting reference date: 31st March
Auditors: KPMG Audit Plc
27
Company name: Cable & Wireless Marine Inc.
Registered office: 1209 Orange Street
Wilmington
Delaware 19899
USA
Date and place of
incorporation: 22nd April, 1986
United States
Directors: David George Foot
Charles J Rogers
Secretary: Richard Henley Goshorn
Accounting reference date: 31st March
Auditors: KPMG Audit Plc
28
Company name: Vibro Einspultechnik Duker - und Wasserbau GmbH
Registered number: HRB 17927
Registered office: Ohmoor 16a
22455 Hamburg
Germany
Date and place of
incorporation: 13th November, 1975
Germany
Directors: Friedrich Harmstorf
Anneliese Maab
Accounting reference date: 31st March
Auditors: KPMG Audit Plc
29
Company name: Harmstorf Submarine Systems Sdn Bhd
Registered office: 18th Floor Wisma Semantan
Block B No. 12 Jalan Gelenggang
Damansara Heights
20590 Jua la Lumpur
Malaysia
Date and place of
incorporation: 11th January, 1994
Malaysia
Directors: Loong Caesar
Asnam bin Mansor
Jack Haynie
Secretary: Loong Caesar
Accounting reference date: 31st March
Auditors: KPMG Audit Plc
30
Company name: Cable & Wireless Global Marine (Singapore) Pte Limited
Registered number: 199303480D
Registered office: 7 Temasek Boulevard
# 31-01/02 Suntec Tower One
038987
Singapore
Date and place of
incorporation: 2nd June, 1993
Singapore
Directors: Jack Caro Haynie
Captain David Charles Skentelbery
Secretary: Steven Ng Nai
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
31
Company name: General Offshore Specialized Services Inc.
Registered number: 2857058
Registered office: 2605 Stirling Road
Fort Lauderdale
Florida 22182, U.S.A.
Date and place of
incorporation: 10th February, 1998
United States
Directors: Bernard Cole
Joseph L Collins
Charles William Gattas
Admiral Stephen Loftus
Charles Jack Rogers
Secretary: John A Douglas
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
32
Company name: Marine Investments Limited
Registered number: 02717006
Registered office: East Saxon House
27 Duke Street
Chelmsford
Essex CM1 1HT
Date and place of
incorporation: 21st May, 1992
England and Wales
Directors: David George Foot
Charles William Gattas
Jacqueline Violet McDowell
Secretary: Kenneth Keith Claydon
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
33
Company name: Worldwide Ocean Surveying Limited
Registered number: 2445587
Registered office: East Saxon House
27 Duke Street
Chelmsford
Essex CM1 1HT
Date and place of
incorporation: 22nd November, 1989
England and Wales
Directors: Jonathan Mark Bolton
Kenneth Keith Claydon
Secretary: Kenneth Keith Claydon
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
34
Company name: Cable & Wireless (Marine) Southampton Limited
Registered number: 02091049
Registered office: East Saxon House
27 Duke Street
Chelmsford
Essex CM1 1HT
Date and place of
incorporation: 19th January, 1987
England and Wales
Directors: David George Foot
Rex Michael Joseph Ramsden
Secretary: Kenneth Keith Claydon
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
35
Company name: General Offshore (UK) Limited
Registered number: 2155758
Registered office: 124 Theobalds Road
London
WC1X 8RX
Date and place of
incorporation: 20th August, 1987
England and Wales
Directors: Christopher Philip Butler
David George Foot
Philip John Footman-Williams
Barry Clive Shine
Secretary: Kenneth Keith Claydon
Accounting reference
date: 31st March
Auditors: KPMG Audit Plc
36
SCHEDULE 1, PART II
PARTICULARS OF THE JOINT VENTURE COMPANIES
Company name: International Cableship Pte Limited (Singapore)
Registered number: 199105577G
Registered office: Katong Submarine Cable Station
375 Tanjong Katong Road
Singapore 437132
Date and place of
incorporation: 6th November, 1991
Singapore
Directors: Mark Cleaver
David George Foot
Jose P Roxas
Yoong Hong Siang
Captain David Charles Skentelbery
Lim Toon
Secretary: Chan Su Shan
Accounting reference date: 31st March
Auditors: Price Waterhouse
37
Company name: Sembawang Cable Depot Pte Limited (Singapore)
Registered number: 01184/1986/R
Registered office: Katong Submarine Cable Station
375 Tanjong katong Road
437132
Singapore
Date and place of
incorporation: 7th June, 1986
England and Wales
Directors: Hoh Wing Chee
Mark Cleaver
Jack Caro Haynie
Siew Ying Oak
Ho Yit Sim
David Glynn Wrench
Secretary: Chan Su Shan
Accounting reference date: 31st March
Auditors: Price Waterhouse
38
Company name: NTT World Engineering Marine Corporation
Registered number: 35790
Registered office: 25-33 Nishi-Shinbashi 3-chome
Minato-ku
Tokyo
105-0003 Japan
Date and place of
incorporation: 26th March, 1998
Japan
Directors: Shoichi Makino
Shunichi Hirose
Shingo Horikawa
Tokio Kawanabe
Toichi Okada
Mikio Dohi
Takefumi Kubota
Yoshitaka Ishii
Secretary: Toichi Okada
39
Company name: SB Submarine Systems Limited
Registered number: 60728543-6
Registered office: Building 25
1591 Hongqioa Road
Shanghai
China
Date and place of
incorporation: 14th January, 1995
People's Republic of China
Directors: David George Foot
David C Skentelbery
Nathan Hsu
Li Wen Qing
Tao Fen Gao
Wang Hong Jian
Secretary: None
Accounting reference date: 31st December
40
SCHEDULE 2
Properties
Part 1
Property address Title Document
UK Properties
East Saxon House Lease dated 27th March, 1996 between Scottish
27 Duke Street Widow's Fund and Life Assurance Society (1)
Chelmsford and Cable & Wireless (Marine) Limited (2)
Essex
CM1 1HT
Unit 1 Lease dated 11th July, 1997 between Possfund
Triaxal Boreham Interchange Custodian Trustee Limited (1) and Cable & Chelmsford Wireless (Marine) Limited (2)
Premises at the Inner Coaling Pier and Hanger Underlease dated 3rd November, 1997 between
Store Portland Harbour Limited (1) and Cable & Wireless
Portland Port Marine Limited (2)
Portland
Dorset
Part of the Old Cement Works Informal
South Heighton
Newhaven
Sussex BN9 0HS
Part 2
Overseas Properties
Leasehold premises known as Lot 1, plan S.1151, Lease dated 1st April, 1987 between The Director
Suva Foreshore, Fiji of Lands of Fiji on behalf of The Crown (1) and
Cable & Wireless (Marine) Limited (2)
Leasehold premises at Batangas, The Philippines Lease dated 27th July, 1989 between Atlantic,
Gulf and Pacific Company of Manila Inc (1) and
Cable & Wireless (Marine) Limited (2)
Leasehold premises at Fort Lauderdale, Florida Lease dated August, 1990 between M.J. Wallace and
J.L. Becker (1) and General Offshore Corporation
(2)
Sandys Parish, Bermuda Berthing licence with access rights over land to
depot; informal licence (in the process of being
formalised) with a member of the Remaining Group
for use of depot leased from the MoD under which
CWM pays B$26,000 per annum.
41
SCHEDULE 3
Warranties
A. General
A.1 Recitals
The particulars relating to the Companies and the Properties set out in the
recitals and the schedules to this agreement are true and accurate.
A.2 Incorporation
The Companies are each corporations validly existing under the laws of
their relevant jurisdictions as set out in Schedule 1 with full power and
authority to conduct their respective business as presently conducted.
A.3 Ownership of Shares
(1) The CWM Shares constitute the whole of the issued and allotted share
capital of CWM. The JV Shares constitute the whole of the issued share
capital of the JV Companies owned by the Remaining Group.
(2) There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance on, over or affecting any of the CWM
Shares or the JV Shares and there is no agreement or commitment to give or
create any of the foregoing.
(3) The Seller is entitled to procure the transfer of the full legal and
beneficial ownership in the CWM Shares and the JV Shares to the Purchaser
on the terms but subject to the conditions set out in this agreement.
A.4 Subsidiaries and associates
None of the Companies is the holder or beneficial owner of nor has agreed
to acquire any shares of any other corporation other than as set out in
Schedule 1.
A.5 Accounts
(1) The Accounts:
(a) have been prepared under the historic cost convention (as modified for
the revaluation of land and buildings) and in accordance with
generally accepted accounting standards, the Companies Act 1985 and
other applicable statutes and regulations;
(b) give a true and fair view of the state of affairs of CWM and each of
the other Companies as at the Accounts Date and of the profit or loss
of CWM and each of the other Companies for the period ended on the
Accounts Date; and
(c) have, in the case of CWM only, been prepared on a basis consistent
with the basis employed in CWM's accounts for each of the two
preceding financial periods.
42
(2) The Companies have, since the Accounts Date, maintained their accounting
records in a manner consistent with their practices for the year ended on
the Accounts Date.
(3) The Net Assets as at the Accounts Date are not less than
(Pounds)177,000,000, including Working Capital of not less than
(Pounds)37,000,000, such amount of Working Capital being sufficient for the
Companies to conduct their business and perform their obligations in the
ordinary course as at the date of this agreement.
A.6 Records
Save in the ordinary course of business all material records and
information belonging to the Companies (whether or not held in written
form) are in its exclusive possession, under its control and all such
records and information are subject to access by it.
A.7 Position since Accounts Date
Since the Accounts Date:
(a) there has been no material and adverse change in the financial
position of the Companies as a whole;
(b) the business of the Companies has been carried on in the ordinary
course;
(c) other than the Dividend, no dividend or other distribution has been
declared, paid or made by any of the Companies;
(d) no share or loan capital has been issued or agreed to be issued by the
Companies;
(e) no indebtedness for borrowed money has been incurred by the Companies
other than the Loan and normal trade debts;
(f) no material change has been made in terms of employment by the
Companies (other than those required by law, collective bargaining
agreements and those made pursuant to any annual salary review);
(g) no capital commitment has been entered into by the Companies to spend
monies in excess of (Pounds)1,000,000 in aggregate;
(h) no fixed asset with a value in excess of (Pounds)1,000,000 has been
acquired or disposed of or agreed to be acquired or disposed of,
except for worn-out or obsolete assets offered for sale or sold in the
ordinary course of business consistent with the Companies' practices
for the year ended on the Accounts Date; and
(i) in respect of bids and tenders for contracts with undersea cable
manufacturers for the installation of, or with persons for the
maintenance of, undersea cables in which the Remaining Group has an
interest as referred to in clause 3(3) of the Undertaking, CWM has not
made any amendments other than on normal commercial terms consistent
with its practices for the year ended on the Accounts Date.
A.8 Licences and Compliance
43
(1) So far as the Seller is aware, the Companies have obtained all material
licences, permissions, authorisations and consents required for the
carrying on of the businesses now carried on by the Companies in the places
and in the manner in which those businesses are now carried on.
(2) Neither the Seller nor the Companies have received notice that any of the
Companies is in default under any material licence, permission,
authorisation or consent.
(3) So far as the Seller is aware, none of the Companies, the CWM JV Companies
or the JV Companies is in default under any licence, permission,
authorisation or consent to an extent which is material.
(4) The Companies have not received notice that they are in violation of, or in
default with respect to any statute, regulation, order, decree or judgment
of any court or any governmental agency which could have a material and
adverse effect upon their assets or business.
(5) So far as the Seller is aware, none of the Companies, the CWM JV Companies
or the JV Companies is in violation of, or in default with respect to, any
statute, regulation, order, decree or judgment of any court or any
governmental agency to an extent which is material.
A.9 Properties
(1) The UK Properties comprise all the land and buildings in which any of the
Companies has an interest in the United Kingdom.
(2) In relation to each of the UK Properties, the Seller is not aware of any
claim disputing that the relevant Company has good title to that UK
Property free of all leases, tenancies, mortgages or charges and that the
Company is in exclusive occupation of that Property.
(3) The relevant Companies have not received notices relating to any subsisting
material and adverse breaches of any applicable law relating to town and
country planning and applicable building regulations and bye-laws affecting
the same nor any such notices relating to non-compliance with covenants
(other than covenants for repair), restrictions and conditions affecting
each UK Property.
(4) So far as the Seller is aware, no event has occurred which constitutes a
material and subsisting breach of any applicable law relating to town and
country planning and applicable building regulations and bye-laws affecting
the same to an extent which is material, nor, so far as the Seller is
aware, has an event occurred which constitutes non-compliance with any
covenants (other than covenants for repair), restrictions and conditions
affecting any UK property to an extent which is material.
(5) The relevant Companies have not received notices relating to any subsisting
material and adverse breaches of any statutory, municipal or other
requirements (including planning consents) relating to the use of the UK
Properties and the conduct of the business of the relevant Company and the
Seller is not aware of any intended or contemplated revocation or refusal
of any licence or consent authorising such use or the conduct of such
business.
(6) So far as the Seller is aware, no event has occurred which constitutes a
material and subsisting breach of any statutory, municipal or other
requirements (including planning consents) relating to the use of the UK
Properties and the conduct of the business of the relevant Company, to an
extent which is material.
44
(7) The UK Properties are all served by drainage, water, electricity and/or gas
services, all of which are connected to the mains sufficient for their
current use.
(8) The Seller is not aware of any material and adverse disputes relating to
the UK Properties.
(9) The means of access to the UK Properties are over either roads which have
been adopted and maintained by the local authority or under permanent legal
easements sufficient for their current use.
(10) So far as the Seller is aware, there is no resolution or proposal for
compulsory acquisition of any of the UK Properties by a local or other
authority.
(11) So far as the Seller is aware, only in the case of a latent defect it has
not been informed by a person appropriately qualified to make the
assessment, and otherwise the Seller is not aware that there exists any
material deficiency which requires correction in the state or condition of
any building or other structure forming part of any of the UK Properties.
(12) So far as the Seller is aware, no person is currently entitled to forfeit,
enter in or take possession of any of the UK Properties to an extent which
is material (but this statement shall not be construed as a statement that
the Companies have performed all their obligations, including repairing
obligations, under the relevant leases).
(13) So far as the Seller is aware and, for the avoidance of doubt, without
having made any assessment as to the application of local law, the Overseas
Properties comprise all the land and buildings in which any of the
Companies has an interest outside the United Kingdom.
(14) The Seller is not aware of any material and adverse disputes relating to
the Overseas Properties.
A.10 Vessels
(1) The Vessels described in Parts 1 to 3 of the Schedule 7 are the only
cableships in which the Companies have any ownership interest, any right of
possession and use or any right to direct the commercial operation.
(2) The CWM Vessels are beneficially owned by one of the Companies or, in the
case of one Vessel, by the Seller (but the beneficial ownership of this one
Vessel is to be transferred to CWM pursuant to this agreement.)
(3) The CWM Finance Vessels are subject to the lease financing arrangements
described in Part 2 of Schedule 7 and true and complete copies of such
lease financing arrangements and the draft lease financing arrangements
relating to the Portland Harbour equipment to be leased to CWM by Lombard
via Cosens Engineering (the "Portland Equipment") are contained in the Data
Room.
(4) The CWM Charter Vessels are subject to the charters described in Part 3 of
Schedule 7 and true and complete copies of such charters are contained in
the Data Room.
(5) The Vessels and the Portland Equipment are in the possession or under the
control of one of the Companies and the Vessels (other than the CWM Charter
Vessels) are free from all mortgages, charges, pledges, liens and maritime
liens (save in the ordinary course of operation of such Vessels) and no
purchase or sale option in respect of such Vessels has been
45
exercised or exists.
(6) The ROVs and all other material items of equipment on board each of the
Vessels (other than the CWM Charter Vessels) are beneficially owned by one
of the Companies, are free from all mortgages, charges, pledges, liens and
maritime liens (save in the ordinary course of operation of the ROVs) and
no purchase or sale option in respect of the ROVs and such equipment has
been exercised or exists.
(7) There are no outstanding claims by any of the Companies in respect of the
purchase, construction or repair of any Vessel or the cableship hull 977
("Bold Endeavour") under construction arising under or pursuant to any
material building or repair contract.
(8) The Companies have not received any notice that any Vessel is or is likely
to be subject of or any claim, to forfeiture, arrest, other detention,
seizure, capture, confiscation or other requisition.
(9) Each Vessel (other than the CWM Charter Vessels) is presently permanently
registered at its place of registry, all fees of such registry have been
paid up and no outstanding amounts are payable in respect thereof. No
applications have been made by the Companies to change the name of any such
Vessel.
(10) The Data Room includes copies of the classification society certificates
with respect to the Vessels.
(11) Each of the Vessels (other than the CWM Charter Vessels) currently holds
all material certificates, licences or authorisations required to enable
such Vessel to carry out its operations in the jurisdiction in which it is
registered.
A.11 Environment
(1) In this paragraph:
"Environment" means land including, without limitation, surface land and
subsurface strata, sea bed or river bed under any water (as hereinafter
described) excluding man-made structures above or below ground; water
including, without limitation, coastal and inland waters, surface waters
and ground waters and water in drains and sewers; and air including,
without limitation, air within buildings and man-made structures above or
below ground;
"Environmental Law" means all laws and regulations in force at the date
hereof concerning the protection of the environment and applicable in the
countries in which the Companies operate;
"Environmental Licence" means any permit, licence, authorisation, consent
or other approval necessary relating to the Environment to carry on any
business of any of the Companies.
(2) Notwithstanding the provisions of any other Warranty, the provisions of
this paragraph are the only Warranties given in relation to the
Environment, Environmental Law and Environmental Licences.
(3) The Companies hold all material Environmental Licences.
(4) The Companies are in material compliance with all Environmental Laws.
46
(5) The Companies have not received any written notice which is outstanding
that they are in violation of any Environmental Law or Environmental
Licence from any regulatory authorities and the Companies are not the
subject of any litigation concerning any Environmental Law or Environmental
Licence.
A.12 Intellectual Property Rights
(1) All material registered trade marks and patents, or applications for
registration thereof, of which the Seller or any Company is the registered
proprietor or assignee and which are used by the Companies in the
operations of their businesses are set out in the Schedules to the Trade
Mark and Patent Assignment and the Seller or the relevant Company is the
owner of the registered trade marks, patents and applications in such
Schedules free from any encumbrances.
(2) No notice has been received by the Companies claiming that they infringe,
and so far as the Seller is aware the business and operations of the
Companies do not infringe, the Intellectual Property Rights of any third
party.
A.13 Secret or confidential information or property
So far as the Seller is aware, the Companies have not (except (i) in the
ordinary course of business, (ii) to their professional advisers, (iii) as
required by law or any regulatory authority or (iv) subject to a
confidentiality undertaking) disclosed to any person other than the
Purchaser (and its professional advisers) any secret or confidential
information relating to their business.
A.14 Indebtedness
(1) The Companies have not received any notice to repay any borrowings or
indebtedness under any agreements relating to any borrowing (or
indebtedness in the nature of borrowing) which are repayable on demand; and
the Companies have not received notice that there has occurred any event of
default under any agreement relating to any other borrowing or indebtedness
in the nature of borrowing or other credit facility of the Companies.
(2) The total amount borrowed by the Companies from their bankers does not
exceed their overdraft and other facilities.
(3) The Companies have not outstanding any loan capital or any money borrowed
or raised (other than under their bank facilities or normal trade credit
and any lease financing arrangement contained in the Data Room).
(4) The Companies have not lent any money which is due to be repaid and, as at
the date of this agreement, has not been repaid or owns the benefit of any
debt other than debts accrued in the ordinary course of its business.
(5) So far as the Seller is aware, no event has occurred which constitutes a
default in respect of the borrowings or indebtedness (including in relation
to any lease financing arrangements) of the Companies, the CWM JV Companies
or the JV Companies to an extent which is material.
A.15 Litigation
Except as plaintiff in the collection of debts arising in the ordinary
course of business, none
47
of the Companies nor, so far as the Seller is aware, the CWM JV Companies
or the JV Companies, is a plaintiff or defendant in or otherwise a party to
any material litigation, arbitration or administrative proceedings which
are in progress nor, so far as the Seller is aware, have such proceedings
been threatened by or against any of the Companies, the CWM JV Companies or
the JV Companies or any of their respective assets nor, so far as the
Seller is aware, are any such proceedings pending, in each case where those
proceedings would have a material adverse effect on their financial
position.
A.16 Material Contracts
(1) The Data Room includes true and complete copies of all the material terms
of the material contracts to which a Company is a party.
(2) So far as the Seller is aware, no event has occurred which constitutes a
default under any contract to which a Company, a CWM JV Company or a JV
Company is a party, to an extent which is material.
(3) Neither the Seller nor any of the Companies has received notice that any
Company is in default under any material contract to which it is a party
and, so far as the Seller is aware, none of the CWM JV Companies or the JV
Companies has received notice that it is in default under any material
contract to which it is a party.
(4) So far as the Seller is aware, none of the Companies is a party to any
material guarantee or performance bond in respect of obligations of the
Remaining Group.
A.17 Anti-competitive arrangements
(1) So far as the Seller is aware no Company is a party to any agreement,
arrangement, concerted practice or course of conduct which:
(a) is subject to registration under the Restrictive Trade Practices Acts
1976 and 1977;
(b) contravenes the provisions of the Resale Prices Act 1976 or any
secondary legislation adopted under the Fair Trading Act 1973;
(c) infringes Article 85 or 86 of the Treaty establishing the European
Community or any other anti-trust or similar legislation in any
jurisdiction in which that Company carries on business or has assets
or sales; or
(d) is void or unenforceable (whether in whole or in part) or may render
that Company liable to proceedings under any such legislation as is
referred to in subparagraphs (a) to (c) above.
(2) So far as the Seller is aware no Company is a party to any agreement or
arrangement or been involved in any business practice in respect of which
an undertaking has been given by or an order made against or in relation to
it pursuant to any anti-trust or similar legislation in any jurisdiction in
which it carries on business or has assets or sales.
(3) So far as the Seller is aware, no Company has received a communication or
request for information which remains current relating to any material
aspect of a Company's business from or by the Director General of Fair
Trading, Monopolies and Mergers Commission (now the Competition
Commission), Secretary of State for Trade and Industry, Commission of the
48
European Communities, EFTA Surveillance Authority or a competition
authority of another jurisdiction. So far as the Seller is aware, no
agreement, arrangement or conduct (by omission or otherwise) of a Company
is currently the subject of an investigation, report or decision by any of
those persons or bodies.
A.18 Insurances
The Companies have taken out insurances on the bases and in respect of the
risks referred to in the list of insurance cover contained in the Data
Room:
(a) so far as the Seller is aware, such insurances are in full force and
effect and all premiums have been paid when due;
(b) so far as the Seller is aware, there are no special circumstances
which might lead to any liability under such insurances being avoided
by the insurers;
(c) no material claims have been made under any of such insurances which
remain outstanding; and
(d) so far as the Seller is aware, no insurer is currently disputing or
has given notice which is still current of the intention to dispute
any insurance cover, or cancelled or refused to accept to continue
cover for a Company.
A.19 Liquidation
(1) No administrator, receiver or administrative receiver has been appointed in
respect of the whole or any part of the assets or undertaking of the
Companies nor, so far at the Seller is aware, of the CWM JV Companies or
the JV Companies.
(2) No petition has been presented, no order has been made and no resolution
has been passed for the winding-up of the Companies nor, so far at the
Seller is aware, of the CWM JV Companies or the JV Companies.
A.20 Employees
(1) The Seller has delivered to the Purchaser in the Data Room:
(a) a complete and accurate list of full and part time employees of CWM
(the "CWM Employees") including details of the commencement date of
employment, salary and job title or grade of each CWM Employee;
(b) a complete and accurate list of all full and part time employees of
General Offshore Specalized Services Inc (the "GOSS Employees")
including details of the commencement date of employment, salary and
job title or grade of each GOSS Employee;
(c) a complete and accurate list of all full and part time employees of
Cable & Wireless Global Marine (Singapore) PTE employees (the "CWGM
(Singapore) Employees") including details of job titles or grade of
each CWGM (Singapore)) Employee;
(d) copies of the terms and conditions of employment of all employees of
the Companies earning more than (Pounds)65,000 (or local equivalent)
per annum; and
49
(e) a copy of the relevant standard terms and conditions of employment
of the CWM Employees.
(2) David Foot, Chris Todhunter and Peter Mole are seconded full time to CWM.
(3) Save as disclosed pursuant to subclause (1) above, there is not in
existence any written or unwritten contract of employment with any of the
Companies' Employees (as defined below) which cannot be terminated by six
months' notice or less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment or statutory
compensation for unfair dismissal).
(4) Save as disclosed pursuant to subclause (1) above, there is not
outstanding any agreement or arrangement to which any of the Companies is
a party for profit-sharing or for payments to any of the employees of the
Companies (the "Companies' Employees") of bonuses or for incentive
payments or other similar matters and there are no other payments in
excess of (Pounds)500 owed to any of the Companies' Employees which have
not been disclosed.
(5) None of the directors or managing directors of any of the Companies have
given notice to terminate his employment.
(6) Within the year ending on the date of this agreement none of the
Companies have given notice of redundancies to the relevant Secretary of
State or started consultations with a trade union under Chapter II of
Part IV of the Trade Union and Labour Relations Act 1992.
(7) None of the Companies are involved in a dispute with a trade union or any
other body representing any of the Companies' Employees.
(8) The Companies have no obligations to make any payment to any employee
benefit trust in connection with any Incentive Scheme.
A.21 Joint Ventures
The Data Room includes true and complete copies of the material terms of
the contractual arrangements relating to the CWM JV Companies and the JV
Companies to which the Companies or any member of the Remaining Group is
a party.
A.22 Brokerage or Commissions
No person is entitled to receive a finder's fee, brokerage or commission
from any Company in connection with this agreement.
A.23 Unlawful payments
So far as the Seller is aware, no Company has:
(1) induced a person to enter into an agreement or arrangement with a
Company by means of an unlawful payment, contribution or gift;
(2) offered or made an unlawful payment, contribution or gift to a
government official or employee; or
50
(3) made an unlawful contribution to a political activity.
B. Tax Warranties
B.1 General
(a) Taxation returns
All notices, computations and returns which ought to have been given or
made have been properly and duly submitted by each Company to the relevant
taxation or excise authorities and all information, notices, computations
and returns submitted to such authorities are true and accurate and are not
the subject of any material dispute nor are likely to become the subject of
any material dispute with such authorities. Each Company has properly
maintained all such records as it is required to maintain in relation to
Tax.
(b) Taxation liabilities
All taxation of any nature whatsoever for which a Company is liable or for
which a Company is liable to account has been duly paid (insofar as such
taxation ought to have been paid or fully provided in the Accounts).
(c) Concessions
The amount of taxation chargeable on any of the Companies during any
accounting period ending on or within three years before the Accounts Date
has not been reduced to any material extent by any concession, agreement or
other formal or informal arrangement with any taxation authority (not being
a concession, agreement or arrangement available to companies generally).
(d) Penalties and interest
No Company has within the past three years paid or become liable to pay any
penalty, fine, surcharge or interest.
(e) Investigations
No Company has within the past 2 years suffered any investigation, audit or
visit by any taxation or excise authority, and neither the Seller nor the
Companies are aware of any such investigation, audit or visit planned for
the next twelve months.
(f) Each Company has made and submitted each claim, disclaimer, election,
notice and consent assumed to have been made and submitted for the purposes
of the Accounts, and details of all such claims, disclaimers, elections,
notices and consents are contained in the Disclosure Letter.
B.2 Deductions and withholdings
(a) Each Company has made all deductions in respect, or in account, of any
taxation from any payments made by it which it is obliged or entitled to
make and has accounted in full to the appropriate authority for all amounts
so deducted and has properly performed the pay as you earn system and has
materially complied with each reporting obligation in connection with
benefits provided to directors, officers and employees.
51
(b) None of the Companies has received any notice from any taxation authority
which required or will require a Company to withhold taxation from any
payment made since the Accounts Date (in respect of which such withheld
taxation has not been accounted for in full to the appropriate authority).
B.3 Depreciation
(a) On the assumption that disposals are made for a consideration equal to the
book value shown in or adopted for the purposes of the Accounts no charge
to taxation would arise on the disposal by a Company of any of its assets.
(b) No claim has been made for the depreciation of any asset of a Company for
taxation purposes in circumstances in which the claim is likely to be
disallowed.
B.4 Capital gains
(a) The Disclosure Letter sets out full particulars of all claims and elections
made (or assumed in the Accounts to be made) insofar as they could affect
the chargeable gain or allowable loss which would arise in the event of a
disposal after the Accounts Date by a Company of any of its assets.
(b) No Company has disposed of or acquired any assets since the Accounts Date
in circumstances such that the disposal price or acquisition cost of the
asset would be treated for taxation purposes as being different from the
consideration given or received.
(c) The Disclosure Letter contains details of each claim under section 152 and
153 of the TCGA (replacement of business assets) made before the date of
this Agreement to which section 154 of the TCGA (new assets which were
depreciating assets) applies and which affects any asset owned by each
Company on or after the Last Accounting Date (except where the held-over
gain is treated as having accrued before the Last Accounting Date).
B.5 Disposal of debts
No taxable profit or gain would accrue on the disposal of any debt owed to
a Company at the book value of that debt or at the value adopted for the
purposes of the Accounts.
B.6 Tax grouping
(a) None of the Companies has, nor at any time in the last three years has had,
its tax affairs dealt with on a consolidated basis nor has any Company
entered into any tax sharing arrangement (including without limitation any
arrangement under which tax losses or tax reliefs are surrendered or
claimed or agreed to be surrendered or claimed) in respect of the profits,
gains or losses of the Company.
(b) The Disclosure Letter gives details of every written arrangement referred
to in paragraph (1) above that a Company has entered into.
(c) Except as provided in the Accounts no Company is, nor will it be, under any
obligation to make or have any entitlement to receive any payment in
respect of any period ending on or before the Accounts Date under the
arrangements referred to in paragraph (1) above.
52
B.7 Completion
No charge to taxation will arise on a Company by virtue only of the
entering into and/or completion of this agreement.
B.8 Tax Residence
No Company is treated for any taxation purpose as resident in a country
other than the country of its incorporation and no Company has, nor has it
within the past three years had, a branch, agency or permanent
establishment in a country other than the country of its incorporation.
B.9 Secondary liability
No Company is nor will it become liable to taxation chargeable primarily on
any other company.
B.10 Transfer pricing
No transactions or arrangements involving a Company have taken place or are
in existence which are such that any provision relating to transfer pricing
might be invoked by a taxation or excise authority.
B.11 Deemed income and gains
Except as provided in the Accounts, no Company has a liability to taxation
on income or gains except in respect of and to the extent of income and
profits actually received, nor do any arrangements exist which might give
rise to such a liability.
B.12 Value added tax
(a) Each Company is duly registered for the purposes of the equivalent of value
added tax in its country of incorporation ("VAT").
(b) Each Company has complied with all statutory provisions, rules,
regulations, orders and directions concerning VAT, including the making on
time of accurate returns and payments. No Company has been in material
default in respect of an accounting period as the terms "default" and
"accounting period" are used in Section 59(1) VATA and no Company has been
liable to a penalty in relation to VAT.
(c) No Company has made any exempt supplies in the current or preceding VAT
year applicable to that Company and there are no circumstances by reason of
which there might not be a full entitlement to credit for all VAT
chargeable on supplies and acquisitions received and imports made (or
agreed or deemed to be received or made) by a Company.
B.13 Stamp tax
All stamp tax and similar taxes or duties have been duly paid in respect of
all transactions carried out by the Companies.
B.14 The Disclosure Letter contains full and accurate details of all capital
allowances to which each Company will be entitled (assuming that there is
no disposal of any relevant asset), for
53
each accounting period ending after the date hereof, in respect of each
asset or class of assets owned by the Company prior to or as at the date
hereof.
B.15 Claims
(a) The Disclosure Letter contains details of each claim and each consent to
surrender by each Company for or of:
(i) group relief under Chapter IV of Part X of the Taxes Act (loss
relief and group relief) ("Group Relief");
(ii) the surrender of advance corporation tax under section 240 of the
Taxes Act (set-off of company's surplus ACT against subsidiary's
liability to corporation tax) ("ACT"); and
(iii) the surrender of tax refund under section 102 of the Finance Act
1989 (surrender of company tax refund etc. within group) ("Tax
Refund")
where such claim or notice is assumed for the purposes of the Accounts to
have been made or given but has not actually been made or given prior to
the date of this Agreement.
(b) No Company is liable to surrender Group Relief, ACT or Tax Refund.
C. Pension Warranties
C.1 In this paragraph:
(i) "Employee" has the same meaning as in Schedule 4;
(ii) "Relevant Benefit" has the same meaning as in Section 612 of the
Taxes Act;
(iii) "Relevant Company" those of the Companies which employ the Relevant
Employees;
(iv) "Scheme" means the Cable and Wireless Superannuation Fund; and
(v) "MN Scheme" means the Merchant Navy Officers Pension Fund.
C.2 Except pursuant to the Scheme and the MN Scheme, no Relevant Company is or
has been under any obligation to pay, provide or contribute towards any
Relevant Benefit for or in respect of any present or past employee (or any
spouse, child or dependant of any of them) of any Relevant Company.
C.3 The Seller has delivered to the Purchaser copies of the documents
containing the provisions currently governing the Scheme and all
explanatory booklets and announcements containing particulars of benefits
of all the Employees under the Scheme. Each such document is complete,
accurate, up-to-date and contains no material omissions.
C.4 The Seller has delivered to the Purchaser information regarding the
entitlements of the Employees who are active members of the Scheme.
C.5 The Scheme and, so far as the Seller is aware, the MN Scheme is approved by
Inland
54
Revenue for the purposes of Chapter 1 of Part XIV of the Taxes Act.
C.6 The Scheme is a contracted-out scheme for the purposes of the Pension
Schemes Act 1993.
C.7 The Scheme and, so far as the Seller is aware, the MN Scheme, have been
designed to comply with and has been administered in accordance with all
applicable legal and administrative requirements and the trusts, powers and
provisions of such scheme. Each Relevant Company has complied with Article
119 of the Treaty of Rome in relation to Relevant Benefits.
C.8 No amount due in respect of the Scheme and the MN Scheme by each Relevant
Company is unpaid. All contributions due from the Employees who are
members of the Scheme and the MN Scheme have been paid to the trustees of
such scheme within the prescribed period.
C.9 In respect of Employees in the United States the only retirement benefits
are of defined contribution type and no amount due in respect of any such
retirement benefit by any Relevant Company is unpaid.
55
SCHEDULE 4
PENSIONS
1. Interpretation
(A) In addition to the provisions of clause 1 of this agreement, this schedule
is construed as set out in this paragraph.
(B) The following expressions and related expressions have the same meanings as
in the Pension Schemes Act 1993 "cash equivalent", "contracted-out",
"guaranteed minimum pension" and "money purchase benefits". "Section 9(2B)
Rights" has the same meaning as in the Contracting-out (Transfer and
Transfer Payment) Regulations 1996.
(C) The following expressions have the same meanings as in the Rules:
"Pensionable Service", "Normal Retirement Date", "Pensionable Earnings" and
"Final Pensionable Salary".
(D) All references to notifications and other communications mean written ones.
(E) The following expressions have the following meanings:
"Actual Payment Date" means the date on which the Transfer Amount is
actually transferred to the Purchaser's Scheme.
"Actuary" means a Fellow of the Institute or Faculty of Actuaries or a firm
of those Fellows or a body making available the advice of one of those
Fellows.
"Actuary's Letter" means the letter from the C&W Actuary to the Purchaser's
Actuary relating to this schedule dated 23rd April, 1999, a copy of which
is appendix C.
"AVCs" means additional voluntary contributions paid by Members to the C&W
Scheme.
"Consenting Member" means a person:
(a) who is an Employee Member;
(b) who is a Member immediately before the Membership Transfer Date;
(c) who (other than LBP Member) begins to accrue retirement benefits as
stated in paragraph 3(C) under the Purchaser's Scheme as of the
Membership Transfer Date; and
(d) in respect of whom the C&W Scheme receives a signed Option Form with
Option A (transfer payment) selected, by the date specified in the
form for its return (or any later date which the Seller and the
Purchaser may agree) and who does not withdraw his selection of that
Option before the Due Payment Date.
"C&W Actuary" means an Actuary appointed by the Seller and notified to the
Purchaser for the purpose of this schedule. Until further notice, the C&W
Actuary is Watson Wyatt Partners.
56
"C&W Scheme" means the Cable and Wireless Superannuation Fund. Where the
context requires, the "C&W Scheme" includes its trustees.
"Due Payment Date" means a date notified by the Seller to the Purchaser
which is no later than one month after all the Transfer Conditions have
been satisfied provided they then remain satisfied.
"Employee" means an employee of the Company. D. Foot, P. Mole and C.
Todhunter are included as Employees if they become employed by CWM as
mentioned in this agreement.
"Employee Members" means those Employees who are Members of the C&W Scheme
as at Completion.
"Exempt Approved Scheme" has the same meaning as in section 592 of the
Income and Corporation Taxes Act 1988 and "Exempt Approved" and "Exempt
Approval" are construed accordingly.
"Index" means the FTSE -Actuaries all-share total return index.
"Investment Adjustment" means the notional investment return over the
relevant period specified in this schedule calculated by comparing the
level of the Index at the close of business on the first day of that period
with the level of the Index at close of business on the last day of that
period or, if either of those days is not a day for which the indices
comprising the Index are quoted, the level of the Index at the close of
business on the previous day for which they were quoted is used.
"LBP Member" means a Member of the Lifetime Benefits Plan of the C&W
Scheme.
"Member" means an active member of the C&W Scheme (including a member who
is temporarily absent under the Rules on maternity leave).
"Membership Transfer Date" means 30th March, 2000, except that the
Membership Transfer Date will be any earlier date (but not before 30th
September, 1999) on which the payroll for the Employee Members ceases to be
operated by the Remaining Group, or any earlier as may be agreed between
the Seller and the Purchaser.
"Non-Consenting Member" means an Employee Member who does not become a
Consenting Member.
"Option Form" means a form to be completed by Members and delivered to the
C&W Scheme, being in all material respects in the form set out in appendix
A. The date by which the form must be completed and returned must be not
earlier than one month and not later than three months after the date of
issue of the forms to the Members.
"Purchaser's Actuary" means an Actuary appointed by the Purchaser and
notified to the Seller for the purpose of this schedule. Until further
notice, the Purchaser's Actuary is Bacon & Woodrow.
"Purchaser's Scheme" means the scheme or schemes described in paragraph 3
and, where the context permits, includes its or their trustees.
"Rules" means the trust deeds, rules and other documents governing the C&W
Scheme as
57
identified in the Disclosure Letter.
"Transfer Conditions" means all of the following:
(a) The Purchaser has complied with the requirements of paragraph 3 and
the Purchaser's Scheme is as described in, and complies with,
paragraph 3.
(b) Neither the Purchaser, any member of the Purchaser's Group nor the
Purchaser's Scheme has made any statement to the effect that any
benefit which is required to be provided under paragraph 3 will be
reduced or discontinued.
(c) The Board of Inland Revenue has given written approval to the transfer
of assets from the C&W Scheme to the Purchaser's Scheme in respect of
the Consenting Members and any condition to which that approval is
subject is satisfied.
(d) The C&W Scheme has received the Option Forms completed and signed by
the Consenting Members.
(e) The calculation of the Transfer Amount has become final and binding as
set out in this schedule.
(f) The C&W Scheme has received the confirmation and undertakings in the
form set out in appendix B (or such other form as is agreed between
the C&W Scheme and the Purchaser's Scheme) executed by the Purchaser's
Scheme (together with any supporting documentary evidence which the
Seller may reasonably request) and those confirmations and
undertakings remain true and effective in all material respects.
"Transfer Amount" and "unadjusted Transfer Amount" have the meanings given
in paragraph 4.
"Transitional Period" means the period commencing on the date of Completion
and ending at the end of the Membership Transfer Date.
2. Transitional Period
(A) The Seller and the Purchaser shall use their best endeavours to procure the
continued participation of the Company in the C&W Scheme during the
Transitional Period in respect of the Employee Members subject to the
Exempt Approval of the C&W Scheme not being adversely affected.
(B) During the Transitional Period the Purchaser shall procure that the Company
and the Employee Members will pay to the trustees of the C&W Scheme
contributions at the rate of 9.8 per cent of Pensionable Earnings in
respect of employer's contributions for Members other than LBP Members, and
at the rate required by the Rules in the case of members' contributions
(including contributions due in respect of flexible benefits) and in the
case of employer's matching contributions in respect of LBP Members, plus 2
per cent of Pensionable Earnings in respect of expenses and risk costs for
all Members; contributions, expenses and risk costs to be paid quarterly in
advance. The Purchaser will procure that the Company will comply in all
other respects with the provisions of the C&W Scheme.
(C) The Seller shall procure that no action will be taken in relation to the
C&W Scheme which
58
would have the effect of reducing the Transfer Amount or the unadjusted
Transfer Amount and that any alteration which shall be made in the basis of
contributions payable to or to the benefits payable from the C&W Scheme
shall not apply to the Company or to any of the Employee Members without
the prior written consent of the Purchaser (not to be unreasonably
withheld).
(D) If the Company is required to pay contributions, expenses or risk costs to
the C&W Scheme in excess of the contributions, expenses and risk costs
referred to in sub-paragraphs (B) and (H) and the Purchaser has not in
writing consented to the change in the rate, the Seller shall on demand
reimburse the Purchaser for such excess contributions or expenses or risk
costs paid by the Company.
(E) The Purchaser undertakes that during the Transitional Period the Company
shall if so required by the Seller in writing, nominate the Seller (or such
other person as the Seller may direct) for the purpose of any provision of
or regulations made under the Pensions Act 1995 which allow employers in
multi-employer schemes to nominate a person to act for them for any
purposes of any provision of that Act or regulations and that the Company
will exercise any power and execute any document as the Seller may
reasonably require to implement that Act or those regulations.
(F) The Seller will procure that the C&W Scheme will not be terminated prior to
transfer of the Transfer Amount.
(G) The Seller and the Purchaser shall use their best endeavours to procure
that while the Employee Members (other than LBP Members) are Members their
employment shall be contracted-out employment by reference to the C&W
Scheme.
(H) In this sub-paragraph "Limited Earnings Increase" means, in respect of the
Non-Consenting Members in aggregate, an increase in earnings after
Completion which has the effect of increasing their aggregate Final
Pensionable Salaries, compared to what their aggregate Final Pensionable
Salaries would have been if their Pensionable Service had ended at
Completion, by no more than 4.5% if the period between the date of
Completion and the termination of his Pensionable Service is one year and
so in proportion for a period other than a year.
The Purchaser will pay to the Seller (or as it may direct) an amount in
cash equal to:
(i) the amount by which the capital value of the aggregate benefits
payable under the C&W Scheme to or in respect of Non-Consenting
Members is increased as a consequence of any act (other than a
Limited Earnings Increase) by the Purchaser, the Company (or any
member of the Purchaser's Group) including, but without limitation,
increasing Pensionable Earnings or granting an early retirement
pension under Rule 13 of the Rules;
(ii) that amount shall be adjusted by the Investment Adjustment in
respect of the period from (and including) the date on which the
Non-Consenting Member ceases to be in Pensionable Service by
reference to the C&W Scheme up to (but excluding) the date on which
final payment is made in accordance with this sub-paragraph.
For the purposes of this sub-paragraph:
(iii) the amount by which the capital value of the benefits is so
increased is taken to be the amount by which A exceeds B where "A"
is the capital value of the benefits
59
payable under the C&W Scheme (whether immediately, prospectively or
contingently) to or in respect of the Non-Consenting Member on and
after the date on which the Non-Consenting Member ceases to be in
Pensionable Service and "B" is the amount by which the Transfer
Amount would have been greater if he had been a Consenting Member
but calculated at the date he left Pensionable Service;
(iv) "A" above is calculated as at the date on which the Non-Consenting
Member ceases to be in Pensionable Service and on the basis of the
assumptions and methods set out in the Actuary's Letter in the same
way as the unadjusted Transfer Amount is calculated;
(v) paragraph 6 applies to the calculation referred to in (iv) mutatis
mutandis; and
(vi) payment in accordance with this sub-paragraph must be made within a
period of 14 days after the calculation of the amount by which the
capital value has been increased as mentioned in (iii) and (iv) has
become final and binding in accordance with (v) above.
3. Purchaser's Scheme
(A) Particulars of scheme
---------------------
Not later than two months before Membership Transfer Date the Purchaser
will provide to the Seller particulars of one or more proposed occupational
pension schemes which the Purchaser intends to be the Purchaser's Scheme
for the purposes of this schedule. The scheme (or each such scheme) must
be a scheme which as at the Due Payment Date satisfies the terms of this
paragraph 3.
(B) General Conditions
------------------
The Purchaser will procure that the Purchaser's Scheme -
(i) is established and wholly administered in the United Kingdom;
(ii) is Exempt Approved (or designed so as to be capable of such
approval);
(iii) is contracted-out (other than in respect of LBP Members) and a
scheme to which the C&W Scheme is permitted by law to make a
transfer payment in respect of the entire rights under the C&W
Scheme of the Consenting Members (including rights to guaranteed
minimum pensions and section 9(2B) rights); and
(iv) complies with the minimum funding requirement (within the meaning
of section 56, Pensions Act 1995) or would so comply if the
requirement applied to it, such that the value of the scheme's
assets exceeds 100 per cent of its liabilities or, if the scheme
first assumes pension liabilities as of the Membership Transfer
Date, it has no liabilities immediately before the Membership
Transfer Date (in either case as certified by the Purchaser's
Actuary to the Seller).
(C) Future service benefits
-----------------------
The Purchaser will, and will procure that the Purchaser's Scheme will, make
the offers described below and provide the benefits described below in
respect of persons who accept
60
the offers. Each Employee Member (other than a LBP Member) will be offered,
in relation to employment from and after the Membership Transfer Date,
membership of the Purchaser's Scheme with benefits which are of final
salary type overall not less favourable (valued on the basis of the
actuarial assumptions set out in the Actuary's Letter) than those which
would prospectively have been provided by the C&W Scheme for and in respect
of him if he had continued in membership after the Membership Transfer Date
(assuming that the C&W Scheme is not altered after Completion) and taking
account of the required amounts of Members' contributions. The offer will
not be conditional on the Employee agreeing to transfer to the Purchaser's
Scheme the value of his accrued rights in the C&W Scheme.
(D) Past service benefits
---------------------
The Purchaser will, and will procure that the Purchaser's Scheme will, make
the offers described below and, in consideration of and subject to receipt
of the Transfer Amount, provide the benefits described below in respect of
persons who accept the offers.
Each person who is an Employee Member (other than a LBP Member) at the
Membership Transfer Date in respect of his Pensionable Service in the C&W
Scheme will be offered benefits which are overall at least equal in value
to those applying for and in respect of him under the C&W Scheme
immediately before the Membership Transfer Date in relation to his
Pensionable Service, valuing benefits under the Purchaser's Scheme and
under the C&W Scheme for this purpose on the basis of the assumptions and
methods set out in the Actuary's Letter.
The Purchaser will procure that the part of the Transfer Amount which
relates to LBP Members will be credited to any account in the Purchaser's
Scheme exclusively for the benefit of each LBP Member and his dependants
and that he will be provided with benefits of a minimum of that which would
be granted on a normal transfer-in to the Purchaser's Scheme.
Each person referred to above who has paid additional voluntary
contributions will be offered benefits which are at least equal in value to
the amount to be paid by the C&W Scheme to the Purchaser's Scheme in
respect of additional voluntary contributions and provide such benefits (in
addition to any others) for and in respect of each such person who becomes
a Consenting Member.
4. Transfer Amount
The Transfer Amount will be calculated by the C&W Actuary as follows:
1. First, the unadjusted Transfer Amount shall be calculated in
accordance with the Actuary's Letter in respect of the Consenting
Members excluding LBP Members. Any liability which there may be in
respect of any difference as between a man and a woman relating to the
guaranteed minimum pension shall not be included in the calculation.
If any Consenting Member has more than one period of Pensionable
Service any period before the last (the "previous periods") is ignored
in that calculation to the extent that benefits for that period are
based only on a historic level of earnings
2. Second, the unadjusted Transfer Amount is increased or decreased over
the period starting on the day before the date of Completion and
ending at the end of the day
61
before the Actual Payment Date by the Investment Adjustment.
3. Third, the following will be added: the contributions paid by and in
respect of the Consenting Members excluding LBP Members in respect of
the Transitional Period (excluding the amounts paid at the rate of 2%
of Pensionable Earnings in respect of expenses and risk costs)
increased or decreased by the Investment Adjustment over the period
starting on the day the contribution is received and ending at the end
of the day before the Actual Payment Date.
4. Fourth, the balances of the money purchase accounts (including the
part derived from employer's contributions) as at the Actual Payment
Date of the Consenting Members who are LBP Members will be added.
In calculating the Transfer Amount any benefits under the C&W Scheme which
are attributable to AVCs paid by the Consenting Members and in respect of
which the Consenting Members are not entitled to benefits based on their
final pensionable earnings, and the AVCs themselves, are disregarded.
5. Notices to Employees
(A) Not later than two months before the Membership Transfer Date the Purchaser
will provide to the Seller a draft notice to be issued to Employees Members
inviting them to join the Purchaser's Scheme for future service and
offering them the ability to transfer the value of their accrued rights
under the C&W Scheme to the Purchaser's Scheme by completing an Option
Form. The notice shall explain the options available to the persons
concerned under the C&W Scheme in respect of their accrued rights.
(B) The Seller shall supply its comments on the draft notice to the Purchaser
within 14 days of its receipt. The Purchaser will then submit a further
draft taking into account the Seller's comments, to the Seller for
agreement.
(C) The Purchaser will issue the notice and the Option Form to the relevant
Employees as soon as reasonably practicable after they have been agreed by
the Seller and in any event no later than 2 months after the Membership
Transfer Date.
(D) The parties acknowledge the obligations of the C&W Scheme under Regulation
27A of the Occupational Pension Schemes (Preservation of Benefit)
Regulations 1991 and will co-operate with each other and the C&W Scheme
with a view to assisting the C&W Scheme in complying with that Regulation.
6. Calculation of Transfer Amount
Within one month after the Membership Transfer Date the Purchaser and
Seller shall provide to each other any documents and information which is
reasonably required for the calculation and checking of the Transfer Amount
by the C&W Actuary and the Purchaser's Actuary. Within 2 months of
receiving this information the C&W Actuary shall calculate the unadjusted
Transfer Amount. As soon as reasonably practicable after the C&W Actuary
has calculated the unadjusted Transfer Amount the Seller will notify the
Purchaser of the result of that calculation. Within 21 days after that
notification the Purchaser's Actuary may request the C&W Actuary to supply
to him particulars of the calculation and the data on which it is based
which he reasonably requires to enable him to check that the calculation is
correct. The Purchaser's Actuary has 6 weeks from the date on which those
particulars and
62
data have been supplied to him (or, if he has made no request for any of
those particulars and/or data within the 21 day period mentioned above,
from the date of notification by the Seller of the result of the
calculation) in which he may raise any objection that the calculation is
incorrect. The calculation will be final and binding on the Seller and the
Purchaser on the later of:
(i) if the Purchaser's Actuary raises no objection within the terms
mentioned above, the expiry of the period mentioned above in which
he may raise an objection;
(ii) if the Purchaser's Actuary raises an objection as mentioned above,
the date of a subsequent written agreement between the C&W Actuary
and the Purchaser's Actuary that the calculation (or revised
calculation) is correct;
(iii) if a reference is made to an independent actuary under paragraph 13,
the date of his determination of the disputed issue;
subject to any adjustment needed, after (i) (ii) or (iii) above have
occurred, to take account of a person who does not select, or withdraws the
selection of, Option A (transfer payment) and accordingly is not a
Consenting Member.
7. Transfer of Transfer Amount and AVCs
(A) The Seller will use all reasonable endeavours to procure that on the Due
Payment Date the C&W Scheme transfers to the Purchaser's Scheme the
Transfer Amount and the assets representing, as at the date of transfer,
the AVCs paid by the Consenting Members.
(B) The Purchaser will seek promptly from the Board of Inland Revenue approval
to the transfer of assets from the C&W Scheme to the Purchaser's Scheme in
respect of the Consenting Members and, at the Seller's request, will supply
promptly to the Seller the documents and information which the Seller
reasonably requires to enable the C&W Scheme to obtain a corresponding
approval.
8. Form of transfer
The Seller and the Purchaser will use all reasonable endeavours to secure
agreement between the C&W Scheme and the Purchaser's Scheme respectively as
to the particular assets to be transferred representing the Transfer
Amount. If agreement is not reached by the Due Payment Date, the transfer
will be in the form of assets of the C&W Scheme listed on The London Stock
Exchange (or unitised funds comprising such assets) which the C&W Actuary
and the Purchaser's Actuary agree are representative selection of such
listed assets held by the C&W Scheme . Any securities to be transferred
will be valued at the mid-market price at the close of business on The
London Stock Exchange on the day before the date of transfer.
9. Payments by Seller and Purchaser
(A) If the Transfer Amount is not transferred in full to the Purchaser's Scheme
within three months after the Due Payment Date as provided for in paragraph
7, the Seller shall, subject to (B) and (C) below, not later than one month
after receipt of a written demand from the Purchaser, pay to the Purchaser,
by way of an adjustment of the CWM consideration for the Sale Shares the
following amount:
(i) if some assets have been transferred from the C&W Scheme to the
Purchaser's
63
Scheme (whether before or after that written demand is received) -
the amount by which the Transfer Amount (calculated as at the date
on which those assets were transferred) exceeds the value so
transferred but the excess for this purpose shall:
(a) be the excess adjusted by the Investment Adjustment from (and
including) the date of that transfer up to (but excluding) the
date of payment by the Seller pursuant to this sub-paragraph;
and
(b) be reduced (after the adjustment in (a)) if, despite some
assets having been transferred to the Purchaser's Scheme, any
benefit remains payable to or in respect of a Consenting Member
under the C&W Scheme; the reduction will be by the aggregate of
the cash equivalents of those benefits.
(ii) if no assets have been transferred - the amount by which the
Transfer Amount (calculated as at the date on which payment is made
to the Purchaser in accordance with this sub-paragraph) exceeds the
aggregate of the cash equivalents of the benefits remaining payable
to or in respect of the Consenting Members under the C&W Scheme when
payment is made in accordance with this sub-paragraph;
less (in either case):
(iii) any amount due from the Purchaser or the Company to the Seller or
the C&W Scheme under this schedule; and
(iv) any amount, in addition to the amount transferred referred to in (i)
above, transferred from the C&W Scheme to the Purchaser's Scheme
before payment under this sub-paragraph is made adjusted by the
Investment Adjustment from the date of transfer to the date of such
payment.
For the purpose of this sub-paragraph each of the Consenting Members in
respect of whom benefits are so payable shall be deemed to have a right to
a cash equivalent.
The amount derived under (i) to (iv) above is referred to below as the
"Shortfall".
(B) If any of the Transfer Conditions ceases to be fulfilled or effective, the
Purchaser shall not demand payment pursuant to (A) above and the time limit
referred to in (A) above will not commence, or (if any of the Transfer
Conditions cease to be fulfilled or effective after the time limit has
started to run) will be suspended, the shortfall will not be payable until
all those conditions are again fulfilled and effective.
(C) No payment shall be due from the Seller pursuant to (A) above:
(i) if the reason for the Transfer Amount (or part of it) not having
been transferred to the Purchaser's Scheme by the expiry of the time
limit referred to above is the failure of the Purchaser's Scheme for
whatever reason to accept the whole or any part of the Transfer
Amount or if the reason is any other reason outside the control of
the C&W Scheme but, if no payment is due from the Seller because of
any such other reason outside the control of the C&W Scheme, payment
will become due (subject to the other provisions of this paragraph
9) if and when such reason ceases to exist;
(ii) unless the Purchaser undertakes in writing to the Seller to pay the
Shortfall forthwith to the Purchaser's Scheme and to procure that
such amount be applied by the
64
Purchaser's Scheme to provide benefits for the Consenting Members in
respect of their Pensionable Service in the C&W Scheme before the
Membership Transfer Date.
(D) If payment is made by the Seller in accordance with (A) above, the amount
of that payment will be deducted from the amount otherwise payable under
paragraph 7.
(E) If the Seller pays the Shortfall to the Purchaser then:
(i) forthwith following the Seller making payment of the Shortfall the
Purchaser shall procure that an amount equal to the Shortfall shall
be contributed to the Purchaser's Scheme;
(ii) the Purchaser will and will procure that all members of the
Purchaser's Group will take all reasonable steps (including the
claiming of any relevant deduction from profits and any repayment of
tax and the obtaining of approval of the Purchaser's Scheme as an
Exempt Approved Scheme) to maximise the Aggregate Tax Benefit;
(iii) the Purchaser will within 21 days after the Aggregate Tax Benefit
has been established, pay to the Seller, by way of adjustment to the
consideration for the CWM Sale Shares, an amount equal to the
Aggregate Tax Benefit, adjusted by the Investment Adjustment from
(and including) the date on which the Shortfall was paid up to (but
excluding) the date of payment of that excess.
In this sub-paragraph:
"Tax Benefit" means the aggregate of the amount by which the
relevant company's liability to pay corporation tax is reduced and
the amount of any repayment of corporation tax to which the relevant
company is entitled, which, in either case, arises as a result of
the contribution referred to in (i) above (including any such
reduction or right which is attributable to a surrender by way of
group relief or consortium relief under sections 402 to 413, Taxes
Act 1988 of a loss which arises as a result of the payment of the
contribution); and
"Aggregate Tax Benefit" means the aggregate of any Tax Benefits
arising to the Purchaser and the Purchaser's Group in respect of all
accounting periods on or before the fifth anniversary of the date of
Completion.
(F) If, for a reason outside the Seller's control, the value of the aggregate
of the assets transferred by the C&W Scheme to the Purchaser's Scheme and
the assets transferred by the Seller to the Purchaser under this paragraph
9 (in the case of non-cash assets based on the value of the assets
transferred as at the date of transfer) exceeds the Transfer Amount, the
Purchaser shall, within one month of such an excess having been
transferred, pay to the Seller, by way of an adjustment of the
consideration for the CWM Sale Shares, a sum in cash equal to such excess
adjusted by the Investment Adjustment from (and including) the date of
transfer of the excess to the Purchaser's Scheme up to (but excluding) the
date of payment of the excess by the Purchaser to the Seller.
10. Seller's protection
(A) In this paragraph:
65
"Claim" means a claim relating to the C&W Scheme which it is claimed the
Seller, any member of the Remaining Group or the C&W Scheme is required to
provide pursuant sections to 62-66 of the Pensions Act 1995 or Article 119
of the Treaty of Rome arising from any inequality as between men and women
relating to guaranteed minimum pensions.
"Claimant" means a Consenting Member or any person claiming through or in
respect of a Consenting Member.
"Liability" includes any award, compensation, damage, loss, order or
requirement of any court, tribunal or Pensions Ombudsman, and costs and
expenses properly incurred.
"Liability Amount" means the amount of any Liability incurred or sustained
by the Seller, or any member of the Remaining Group or the C&W Scheme
arising out of or in connection with a Claim by a Claimant.
(B) Subject to payment of the Transfer Amount, the Purchaser will indemnify,
and keep indemnified on a continuing basis, the Seller, each member of the
Remaining Group and the C&W Scheme against any Liability Amount.
(C) To the extent that this indemnity relates to a Claim against a member of
the Remaining Group or the C&W Scheme, the Seller holds the benefit of the
indemnity as trustee for that member or the C&W Scheme (as the case may
be). Without prejudice to the ability of that person to enforce the
indemnity, the indemnity may be enforced by the Seller as trustee.
(D) In quantifying any Liability Amount, the Actuary's Letter shall be applied
as nearly as practicable and, in default of agreement as to how it should
apply, the disagreement shall be resolved in accordance with paragraph 13.
11. Purchaser's protection
The Seller hereby agrees with the Purchaser (contracting for itself and as
trustee for the Company) to indemnify the Company against all costs,
liabilities and expenses arising or which may arise, out of the operation
of section 75 of the Pensions Act 1995 in relation to the C&W Scheme and/or
the operation of Article 15 (indemnity, limitation of liability and
remuneration of trustees) of the Rules in respect of the period before the
Membership Transfer Date provided that this indemnity will not apply:
(i) if the Company has not paid any amount due in accordance with this
schedule to the C&W Scheme;
(ii) if the relevant insolvency event occurs in relation to the Company.
12. No assistance
The Purchaser agrees that, except as required by law, it will not, and will
procure that the Purchaser's Scheme and the Purchaser's Group will not,
take any action or provide any assistance to any person (direct or
indirect) which might result in the C&W Scheme transferring a smaller or a
larger amount than the Transfer Amount and the assets representing
Consenting Members' AVCs to the Purchaser's Scheme.
13. Disputes
66
Any dispute between the Seller and the Purchaser or between the C&W Actuary
and the Purchaser's Actuary concerning any matter of an actuarial value
shall, in the absence of agreement between them within one month of the
party concerned having notified the other in writing of the dispute, be
referred to an independent actuary chosen by agreement between the parties
or, failing agreement, appointed by the President for the time being of the
Institute of Actuaries at the instance of either party. The independent
actuary shall determine the disputed matter in accordance with this
schedule (including the Actuary's Letter) acting as an expert and not as an
arbitrator and his decision shall be final and binding. The fees and
expenses of the independent Actuary and of the President shall be borne
equally between the parties, except that the independent Actuary shall have
power to determine, at the request of either party, that the fees and
expenses shall be borne exclusively by the other party or in such
proportions as the Actuary may determine and any such determination shall
be final and binding.
14. USA
In respect of George Stossell: if and to the extent allowed by law and tax
authority's requirements, the Seller will use reasonable endeavours to
permit Mr. Stossell to remain in membership of the pension scheme of the
Seller of which he is a member at the date hereof until the Membership
Transfer Date.
67
APPENDIX A
OPTION FORM
TO BE COMPLETED AND RETURNED TO [ ] BY [ ]
To: The trustees of the Cable and Wireless Superannuation Fund (the "[ ]
Scheme")
I have read and understood the notice dated [ ], in which the [Purchaser's
Scheme] (the "[ ] Scheme") has offered to provide benefits in respect of my
Pensionable Service under the [C&W] Scheme up to [ ] and in which the options
available to me in respect of my accrued rights under the [C&W] Scheme have been
explained.
PLEASE SPECIFY WHICH ONE OF THE OPTIONS YOU SELECT BY TICKING THE BOX ALONGSIDE
IT AND THEN SIGNING AND COMPLETING THIS FORM
OPTION A - TRANSFER TO [PURCHASER'S] SCHEME
I have applied to become a member of the [Purchaser's] Scheme
with effect on and from [ ]. I request the trustees of _____
the [Seller's] Scheme to transfer the value of all benefits
relating to my membership of the [C&W] Scheme which have BOX
accrued to or in respect of me under the [C&W] Scheme to the
trustees of the [purchaser's] Scheme to secure benefits for me _____
as mentioned in the notice referred to above. I understand
and acknowledge that in complying with this request the
trustees of the
[C&W] Scheme will be discharged from any obligation to provide
benefits to me or any person claiming under me or in respect
of my membership.
B - OTHER OPTIONS
I do not want to transfer the value of my accrued benefits to _____
the [Purchaser's] Scheme.
BOX
_____
IMPORTANT - Please note that the benefits offered in option A will be available
only if this form is returned, duly completed, by
Signature ................ Date...............
Name .....................)
) block capitals
Address ..................) National Insurance No. ..............
68
APPENDIX B
TRANSFER AGREEMENT
To: The trustees of the Cable and Wireless Superannuation Fund
From: The trustees of the [ ]
Scheme Date:
(the "Receiving Scheme")
Re: Employees of [ ] Limited
We request the transfer to us of the sum and/or assets referred to in Appendix 2
hereto equal in value to the Transfer Amount calculated in accordance with the
letter from [ ] to [ ] dated [ ] in respect of the
members listed in Appendix 1 hereto (the "Consenting Members") and, in
consideration of that transfer, we hereby confirm and undertake as follows:
1. The Consenting Members have been offered membership of the Receiving Scheme
as of [ ], with the benefits and contribution rate described in
the notice issued to them on [ ], a copy of which is Appendix 3
hereto (the "Notice").
2. Each Consenting Member who has accepted that offer has been admitted to
membership of the Receiving Scheme and has entered employment with an
employer which participates in the Receiving Scheme and that employment is
contracted-out by reference to the Receiving Scheme for the purposes of the
Pension Schemes Act 1993 (a copy of the appropriate contracting-out
certificate(s) is Appendix 4 hereto). Each Consenting Member will be
entitled in respect of the Transfer Amount to benefits from the Receiving
Scheme which are as described in the Notice and on receipt of the Transfer
Amount we relieve you of all liabilities to or in respect of the Consenting
Members.
3. We undertake to treat the amounts previously advised as Consenting Members'
contributions for the purposes of the Receiving Scheme and not to allow a
refund of contributions on subsequent cessation of service or membership
except where a refund is not prohibited by Inland Revenue restrictions or
the preservation requirements in force under the Pension Schemes Act 1993.
4. We confirm that the Receiving Scheme is established and administered wholly
in the United Kingdom and is [designed so as to be capable of being] an
exempt approved scheme (within the meaning of section 592 of the Income and
Corporation Taxes Act 1988) and that we are permitted under the documents
governing the scheme and by the Inland Revenue to receive the Transfer
Value.
5. We enter into this agreement as the trustees of the Receiving Scheme so as
to bind us and our successors as trustee(s) of the Receiving Scheme and we
agree to bring the contents of this agreement to the notice of our
successors.
Add names and signatures of trustees of Receiving Scheme.
69
SCHEDULE 5
Covenants up to Completion
Part 1
The Seller shall procure that without the consent of the Purchaser (not to be
unreasonably withheld or delayed) none of the Companies shall before Completion:
(a) subject to the effect of any withholding of consent by the Purchaser in
relation to the other matters set out in this Part 1, conduct its business
other than in the ordinary course consistent with its practices for the
year ended on the Accounts Date;
(b) incur capital expenditures exceeding (Pounds)1,000,000 in aggregate; or
(c) dispose of or grant any option or right of pre-emption in respect of any
part of its assets except for worn-out or obsolete fixed assets in the
ordinary course of business consistent with its practices for the year
ended on the Accounts Date; or
(d) borrow any money in excess of (Pounds)1,000,000 in total or make any
payments out of or drawings on its bank account(s) (except to satisfy
commitments to persons other than members of the Remaining Group or routine
payments to persons other than members of the Remaining Group in the
ordinary course of business consistent with its practices for the year
ended on the Accounts Date), other than the payment of the Intercompany
Balance and payments to members of the Remaining Group for administrative
services consistent with the current levels of payments for those services;
or
(e) enter into any material contract or commitment, other than the purchase of
the Seller's interests in the cableship "Cable Enterprise" as referred to
in clause 11(1), as referred to in the Undertaking, or for new business
having a value of less than (Pounds)2,000,000 per individual contract where
the contract is entered into on normal commercial terms consistent with its
practices for the year ended on the Accounts Date, or amend any material
contract or terminate any material contract; or
(f) dispose of or agree to dispose of any of the Properties or the Vessels or
any interest in or relating to any of the Properties, the Vessels or the
Portland Equipment; or
(g) agree, arrange or undertake to acquire or agree to acquire any interest in
any land or premises including any option or right of pre-emption relating
to any land or premises; or
(h) in relation to each of the Properties:
.change its existing use,
.terminate or give notice to terminate a lease, tenancy or
licence,
.apply for a consent to do something requiring consent under a lease,
tenancy or licence, save as already contemplated and disclosed in
relation to the extensions to the Boreham and Portland depots,
.agree a new rent or fee payable under a lease, tenancy or licence
other than pursuant to a
70
contractual rent review,
.suspend, cancel, invalidate or do anything which could invalidate or
cause to be avoided any insurance cover in existence in relation to
that Property,
.do any action or thing constituting (or which could lead to) a breach
of the terms of any lease, tenancy or licence or which could entitle
or require a person to forfeit or enter on or, take possession of, or
occupy that Property; or
(i) grant or agree to grant any lease, licence or tenancy or grant, create or
agree to grant or create third party right or interest of any nature in
respect of any of the Properties; or
(j) declare, make or pay any dividend or other distribution; or
(k) grant, issue or redeem any mortgage, charge, debenture or other security or
give any guarantee or indemnity, other than in relation to any matters
referred to in Schedule 8; or
(l) make any material change in the terms and conditions of employment or
pension or other benefits of any of its employees or employ or terminate
(except for good cause) the employment of any person other than to
implement the reorganisation of the employment of offshore employees; or
(m) create, issue, purchase or redeem any class of share or loan capital, other
than as referred to in clauses 11(1) and 14(4); or
(n) maintain its accounting records in a manner inconsistent with its practices
for the year ended on the Accounts Date other than as required under
changes in UK GAAP; or
(o) submit or amend tenders for new business, other than as referred to in the
Undertaking or for new business having a value of less than
(Pounds)2,000,000 per individual tender where the tender is submitted or
amended on normal commercial terms consistent with its practices for the
year ended on the Accounts Date; or
(p) in relation to any of the agreements relating to the leasing and lease
financing of each of the vessels and the ROV referred to in Schedule 8 and
the Portland Equipment, do any act or thing or omit to do any act or thing
(other than the obtaining of any consent or agreement to terminate as
contemplated by clause 4(1)(b) and Schedule 8) constituting (or which could
lead to) a breach of the terms of such agreement or which could entitle the
relevant lessor to terminate or require the relevant Company which is party
to such agreement to voluntarily terminate such agreement, or which would
materially increase the obligations of the relevant Company under such
agreements, other than an obligation pursuant to the terms of such
agreement contemplated as at the date hereof.
Nothing contained in the above restrictions will prevent the Companies from
undertaking any actions pursuant to the implementation of the maintenance
contract with Global Crossing or from continuing to pay and proceed as
contracted in relation to the SEAIOCMA ROV.
Part 2
The Seller shall keep the Purchaser informed as to all material developments in
the operation of the business of the Companies.
71
SCHEDULE 6
Completion Arrangements
Part 1
CWM Completion
1. The Seller shall deliver or cause to be delivered:
(a) share certificates in respect of the CWM Shares together with a duly
executed transfer into the name of the Purchaser or its nominated
wholly-owned Subsidiary in respect of the CWM Shares;
(b) the common or corporate seal (where it exists), all minute books,
share register and share certificate books (with any unissued share
certificates) and other statutory books of each of the Companies;
(c) the Tax Deed duly executed by the Seller;
(d) the resignation of the auditors of the Companies in a form reasonably
satisfactory to the Purchaser;
(e) the resignations of the secretary and all of the directors of each of
the Companies other than those notified by the Purchaser to the Seller
prior to Completion, in each case delivering a letter in a form
reasonably satisfactory to the Purchaser ; and
(f) a certified Transcript of Register dated within 3 Business Days before
the date of Completion in respect of each of the Vessels evidencing
that (other than the CWM Charter Vessels and "Iris" and "Monarch") the
respective Vessel is duly registered in the name of CWM, free and
clear of all registered liens, mortgages and encumbrances.
2. The Seller shall procure that a meeting of the directors of CWM is held at
Completion at which resolutions in a form reasonably satisfactory to the
Purchaser addressing relevant matters in relation to paragraph 1 above
shall be passed.
3. The Seller shall procure that extraordinary general meetings of the members
of the Companies are held at Completion at which the names of these
Companies are changed so as not to include the name "Cable & Wireless" or
any colourable imitation thereof.
4. The Seller shall deliver to the Purchaser a counterpart of the Trade Mark
and Patent Assignment executed by the Seller and CWM.
5. The Seller shall issue a notice to the other parties to the Japanese JV
Agreement in accordance with the requirements of clause 20.4.4. of the
Japanese JV Agreement.
Part 2
Japanese JV Completion
72
1. The Seller shall deliver or cause to be delivered a share certificate in
respect of the Japanese JV Shares and all other instruments of conveyance
and transfer as may be necessary to convey and vest in the Purchaser or its
nominated wholly-owned Subsidiary all right, title and interest of the
Seller in and to the Japanese JV Shares.
2. The Seller shall issue a notice to the Japanese JV Company in accordance
with the requirements of clause 20.4.4. of the Japanese JV Agreement.
Part 3
PRC JV Completion
1. The Seller shall deliver or cause to be delivered:
(a) an investment certificate in respect of the PRC JV Shares actually
transferred under this agreement;
(b) originals or copies (as appropriate) of the documents listed in clause
4(5)(c); and
(c) the resignations of all of the directors of the PRC JV Company
appointed by the Seller.
Part 4
The Purchaser shall deliver such documents evidencing to the Seller's reasonable
satisfaction the release of the Seller's liability under such of the following
guarantees and performance bonds in accordance with the Purchaser's obligations
under clause 14 as are extant at Completion (references to amounts are to
amounts as at 31st March, 1999 unless otherwise specified):
(a) Seller guarantee to Scottish Widows in respect of property lease rentals
and service charge for 2nd and 3rd floors of East Saxon House, remaining
rentals (Pounds)4,567,635 ((Pounds)101,503 x 45).
(b) Seller guarantee to Scottish Widows in respect of property lease rentals
and service charge for part of 1st floor of East Saxon House, remaining
rental (Pounds)887,929 ((Pounds)18,121 x 49).
(c) Seller guarantee to Scottish Widows in respect of a licence to perform
alterations to the East Saxon House premises.
(d) Seller performance bond to Mercury Communications Ltd in respect of the
Swansea Brean cable project, up to a maximum of (Pounds)175,503.
(e) Seller performance bond to AIG Europe (UK) Limited, in respect of indemnity
for a bond issue up to a maximum of CAD 200,000.
(f) Seller performance bond to AIG Europe (UK) Limited in respect of the Brazil
bond payment up to a maximum value of US$2,961,000.
(g) Seller guarantee in favour of ECGD in respect of (Pounds)2.4m relating to
the financing of the Brazil Domestic Submarine Cable System; Seller has no
contingent liability as CWM will compensate any loss; the balance of the
counter indemnity at 31 March 1999 is (Pounds)2,377,490.
73
(h) RBS guarantee in favour of The Standard Steamship Owners' Protection and
Indemnity Association (Bermuda) up to a maximum of US$113,162.75.
(i) Seller guarantee to Lombard North Central in respect of NOS obligations re
purchase of Modular plough. Liability limited to 75% of repayments. The
outstanding payments under the lease as at 30th March, 1999 total
(Pounds)314,000 and therefor the Seller's contingent liability (at 75%) is
(Pounds)235,500.
74
SCHEDULE 7
Vessels
Part 1 - CWM Vessels
Name Registered Owner Flag
Cable Enterprise C&W UK
Cable Installer CWM UK
Seaspread CWM UK
Part 2 - CWM Finance Vessels
Name Registered Owner Flag Note
Cable Innovator CWM UK US LILO
Sir Eric Sharp CWM UK US LILO
Pacific Guardian CWM UK US LILO
Iris Midland Montagu UK Finance Lease
Monarch Midland Montagu UK Finance Lease
Part 3 - CWM Charter Vessels
Name Registered Owner Flag Note
Agile Secunda Global Marine Inc Barbados Time Charter
Nexus James Fisher Limited UK Time Charter
Sovereign BT Cable Ships Limited UK Bareboat Charter to
CWM
Cable Retriever ICPL Singapore Bareboat Charter to
CWM
Toisa Coral Toisa Limited UK Time Charter
75
Part 4 - Remotely Operated Vehicles
1. Cirrus
2. Eureka
3. Marlin 250 ((TM))
4. ROV 128
5. Scarab 1
6. Scarab 3
7. Scorpio 45
8. Subtrak
9. Trencher
10. Mako
76
SCHEDULE 8
Leasing Arrangements
This Schedule 8 sets out the steps to be taken by the parties pursuant to Clause
4(2) of this Agreement in respect of the arrangements relating to leasing or the
lease financing of each of the vessels and the ROV specified below with a view
to ensuring that Condition 4(1)(b) is fulfilled on or before the date referred
to in Clause 4(2) (the "Condition Date").
1. Hull 977 ("Bold Endeavour") under construction at Van der Giessen-de Noord
(a) The Agreements
--------------
Principal Dated as at Parties
Agreements
-------------------------------------------------------------------------
Novation Agreement 8 March 1999 CWM (1), Lombard
Asset Finance Ltd
("LAFL") (2) & Van
der Giessen-de Noord
Shipbuilding
Division BV ("VdG")
(3)
Charterparty 8 March 1999 LAFL (1) & CWM (2)
Shipbuilding Contract 15 October 1998 VdG (1) & CWM (2)
(b) Steps
-----
(i) The Seller shall and shall procure that CWM shall assist the Purchaser in
consulting with LAFL (as contemplated by Clause 20.2 of the Charterparty
and a letter of 8 March 1999 relating thereto from Lombard North Central
PLC to CWM) with a view to securing on or before the Condition Date:
(1) LAFL's acceptance of the proposed change of control of CWM as
contemplated by this agreement and the continuation of the
transactions contemplated by the Transaction Documents (as defined in
the Charterparty) subject to such amendments to the Transaction
Documents as may be required by LAFL and which are reasonably
acceptable to the Purchaser; or
(2) failing acceptance as contemplated by (1) above, the termination of
the Charterparty, the re-novation of the Shipbuilding Contract to CWM
and the payment of the Termination Sum (as defined in the
Charterparty) and of an amount reasonably acceptable to the Purchaser
provided that, without limiting the foregoing, the amount of such
Termination Sum shall not be reasonably acceptable to the Purchaser if
the calculation thereof does not take into account, as a credit or
reduction, any instalments of the purchase price for the vessel which
remain payable by CWM under the Shipbuilding Contract or any
obligation of CWM under the Novation Agreement to reimburse any
instalments of the purchase price paid by LAFL, following a renovation
of the Shipbuilding Contract.
77
(ii) The Purchaser shall, with the assistance as required by it of the Seller
and/or CWM, consult with LAFL with a view to securing on or before the
Condition Date:
(1) LAFL's acceptance of the proposed change of control of CWM as referred
to in paragraph (i)(1) above; or
(2) failing such acceptance, the termination of the Charterparty, re-
novation of the Shipbuilding Contract to CWM and the payment of the
Termination Sum as referred to in paragraph (i)(2) above.
2. "Cable Innovator", "Sir Eric Sharp" and "Pacific Guardian"
(a) The Agreements
--------------
Principal Dated as at Parties
Agreements
-------------------------------------------------------------------------------------------------
Participation Agreement 29/2/96 Banc One Equipment Finance,
INC ("Banc One") (1),
Wilmington Trust Company
("Charter Trustee") (2),
Charyhold B.V.
("Charterer") (3), CWM (4)
and Hollandsche Bank-Unie
N.V. ("Loan Participant")
(5)
Charter#3 29/2/96 Charter Trustee (1) and
Charterer (2)
Equity L/C 29/2/96 Chemical Bank, London
Branch ("Chemical") (1) and
Banc One (2)
Reimbursement Agreement 29/2/96 Seller (1) and Chemical
Bank (2)
Equity Guarantee 29/2/96 Seller (1), Charter Trustee
(2) and Banc One (3)
Debt Guarantee 29/2/96 Seller (1), Charter Trustee
(2) and Loan Participant (3)
C&W plc Bond 29/2/96 Seller (1) and Charterer (2)
Letter of Undertaking 29/2/96 Seller (1) and Banc One (2)
78
(b) Steps
-----
(i) The Seller shall and shall procure that CWM shall assist the Purchaser in
negotiations with Banc One, the Charter Trustee, the Loan Participant,
Chemical and the Charterer (the "Relevant Parties") with a view to
securing on or before the Condition Date:
(1) the termination of the Overall Transaction, (as defined in the
Participation Agreement) in respect of all three Vessels, the
payment in full of the Stipulated Loss Value/Termination Value in an
amount agreed by Banc One and the Loan Participant and reasonably
acceptable to the Seller and the Purchaser and the discharge of the
Equity Guarantee, the Debt Guarantee and the Reimbursement
Agreement; or
(2) the written consent of the Relevant Parties to the change of control
of CWM as contemplated by this Agreement and the substitution of the
Purchaser or a third party for the Seller as a party to each of the
Operative Documents (as defined in the Participation Agreement) to
which the Seller is a party and the execution of all documents
and/or amendments to the Operative Documents required in order to
effect a full release of the Seller from any liability thereunder;
(ii) the Seller shall, in the event of a termination as referred to in
paragraph (i)(1) above or a substitution referred to in paragraph (i)(2)
above, redeem the C&W plc Bond on the date of such termination or
substitution and shall pay to the Charterer an amount calculated for the
date of such payment in accordance with paragraph (i) of the definition
of "Early Redemption Amount" in the Conditions of the Bond;
(iii) the Purchaser shall, with the assistance as required by it of the Seller
and/or CWM, negotiate with the parties referred to in paragraph (i) above
with a view to securing the termination or substitution referred to
therein;
(iv) subject to the proviso to paragraph 5 below, the Purchaser, shall in the
event of a termination as referred to in subclause (i)(1) above, fund or
procure funding for the Charterer to enable it to pay to the Charter
Trustee the Equity Portion of Stipulated Loss Value /Termination Value
(less the Early Redemption Amount referred to in paragraph (ii) above)
payable in respect of such termination.
3. Mako ROV
(a) The Agreements
--------------
Principal Dated as at Parties
Agreements
-------------------------------------------------------------------------
Purchase Agreement 13 November 1996 CWM (1) and Lombard
North Central PLC
("LNC")(2)
Charterparty 13 November 1996 LNC (1) and CWM (2)
79
Remarketing Agreement 13 November 1996 GATX Asset-Residual
Management Plc (1)
and CWM (2)
(b) Steps
-----
(i) The Seller shall and shall procure that CWM shall assist the Purchaser in
consulting with LNC with the view to securing on or before the Condition
Date:
(1) LNC's written agreement to the proposed change of control of CWM as
contemplated by this agreement and the continuation of the
Charterparty subject to such amendments as may be required by LNC and
which are reasonably acceptable to the Purchaser; or
(2) failing agreement as contemplated by (1) above, the termination of the
Charterparty and the sale of the ROV to CWM or another entity
nominated by the Purchaser and payment of an amount required by LNC
and reasonably acceptable to the Purchaser in the respect of the early
termination of the Charterparty.
(ii) The Purchaser shall, with the assistance as required by it of the Seller
and/or CWM, negotiate with LNC with a view to securing on or before the
Condition Date:
(1) LNC's agreement to the proposed change of control of CWM as referred
to in paragraph (i)(1) above; or
(2) failing such agreement, the termination of the Charterparty, sale of
the ROV and payment of the amount as referred to in paragraph (i)(2)
above.
4. "Iris" and "Monarch"
(a) The Agreements
--------------
Principal Dated as at Parties
Agreements
-------------------------------------------------------------------
80
Finance Lease - Iris
Demise Charterparty 1.6.76 Midland Montagu Leasing
Limited ("Midland Montagu")
(1) The Post Office (2)
Amendment Agreement 1.10.87
Midland Montagu (1) BT Plc
(2) BT (Marine) (3)
Waiver and Amendment
Agreement ?.12.94 Midland Montagu (1) BT Plc
(2) BT (Marine) (3) CWM (4)
Sales Agency Agreement 18.11.88 Midland Montagu (1) BT
(Marine) (2) BT Plc (3)
Finance Lease - Monarch
Demise Charterparty 11.11.75 Midland Montagu (1) The
Post Office (2)
Amendment Agreement 1.10.87 Midland Montagu (1) BT Plc
(2) BT (Marine) (3)
Waiver and Amendment Agreement ?.12.94 Midland Montagu (1) BT Plc
(2) BT (Marine) (3) CWM (4)
(b) Steps
-----
(i) The Seller shall and shall procure that CWM shall assist the Purchaser in
negotiating with Midland Montagu with a view to securing on or before the
Condition Date:
(1) the written consent of Midland Montagu to the change of control of CWM
as contemplated by this agreement and the continuation of the Iris and
Monarch charterparty arrangements subject to such amendments as may be
required by Midland Montagu and which are reasonably acceptable to the
Purchaser; or
(2) failing such consent, the voluntary termination in accordance with
Clause 2(b) of each Demise Charterparty, the payment of the proportion
of the Capital Cost in accordance with Clause 8 of each Demise
Charterparty and the sale of the Vessels to CWM or another entity
nominated by the Purchaser pursuant to the sales agency arrangements
relating to that vessel.
(ii) The Purchaser shall, with the assistance as required by it of the Seller
and/or CWM, negotiate with Midland Montagu with the view to securing its
consent as contemplated in paragraph (i)(1) above, and failing which, the
voluntary termination of each charterparty arrangement, sale of the Vessels
and payment of the proportion of the Capital Cost referred to in paragraph
(i)(2) above.
81
5. Funding of Payments
Subject as provided below, the Purchaser shall fund or procure the funding
of:
(a) any amounts which may be agreed to be paid or provided to the parties as
referred to in paragraphs 1 to 4 above (other than paragraph 2(b)(ii))
(the "Financing Parties") by way of:-
(i) cash collateral or other forms of security, including the cost of
providing the same; or
(ii) fees, costs, expenses or other charges.
In order to secure the agreement or consent needed in relation to the
change of control of the Companies as contemplated by this agreement;
(b) any termination sums, stipulated loss value, termination value or other
amounts payable in respect of termination of the agreements referred to in
this Schedule, calculated (i) where such amounts or the method of
calculation of such amounts are set out in the relevant agreements , on the
basis provided for in the relevant agreements, or (ii) where such amounts
or the method of calculation thereof are not set out in the relevant
agreements, on the basis of the net present value on the date of such
termination of the rentals or other amounts that would have been payable
under the relevant agreements had such termination not occurred, such net
present value being calculated by reference to a discount rate determined
in such agreements or at a rate agreed by the Purchaser with the relevant
Financing Parties;
(c) any additional amounts payable by way of fees, costs (including broken
funding costs and the costs of external professional advisers), penalties
for early termination, adjustments in respect of taxation and expenses or
otherwise required by the Financing Parties in respect of the early
termination of the agreements relating to the leasing arrangements; and
(d) if necessary to secure a termination of the relevant leasing arrangements
and ensure that a Company or an entity nominated by the Purchaser is the
beneficial owner of the relevant vessel or ROV, the purchase price of that
vessel or ROV payable to the Financing Party which is the lessor.
PROVIDED THAT the Purchaser's obligation to the Seller to fund or procure
funding in respect of (i) any amounts specified in paragraphs (a)(ii) and
(c) above and (ii) the purchase price of any vessel or ROV referred to in
paragraph (d) above to the extent that such purchase price, less any
retention from the purchase price to which the lessor thereof, as seller,
is entitled under the relevant documents, is not offset against the
termination sum, stipulated loss value or other similar sum payable in
respect of the relevant termination or is not payable by way of rebate or
sales commission to a Company or any member of the Purchaser's Group, shall
not exceed $30,000,000 (thirty million dollars) in aggregate and for the
purposes of this paragraph 5 it is agreed that:
(1) in the event of a substitution as referred to in paragraph 2(b)(i)(2)
above, any amount to be funded or any amount of funding to be procured
by the Purchaser in respect of providing US Treasury bonds or other
securities as security for the Equity Portion of the Scheduled
Purchase Option Price (as defined in the Participation Agreement) in
excess of the amount payable by the Seller on redemption of the C&W
plc Bond as referred to in paragraph 2(b)(ii) above shall be an amount
falling within paragraph 5(a) above; and
82
(2) in the event of a termination as referred to in paragraph 2(b)(i)(1)
above, each amount (if any) payable to the Charter Trustee as trustee
for Banc One in respect of such termination up to the amount of the
Equity Portion of the Stipulated loss Value/Termination Value for the
date of termination calculated on the basis set out in Schedules B/C
to Charter #. 3 is an amount falling within paragraph 5(b) above and
any amount so payable to the Charter Trustee in addition thereto is an
amount falling within paragraph 5(c) above.
83
Signed by C. NASH )
for and on behalf of ) C. NASH
CABLE AND WIRELESS PLC )
Signed by T. CASEY )
for and on behalf of ) T. CASEY
GLOBAL CROSSING )
LTD. )
Sale and Purchase Agreement - Cable and Wireless PLC and Global Crossing Ltd.
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