EXHIBIT 4.02
CONFORMED COPY
DATED 19 DECEMBER, 2002
RT GROUP TELECOM SERVICES LIMITED (1)
RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION) (2)
MARCONI CORPORATION PLC (3)
ULTRAMAST LIMITED (4)
-and-
JAMES ROBERT DRUMMOND SMITH AND
NICHOLAS JAMES DARGAN (5)
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SETTLEMENT DEED
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ALLEN & OVERY
London
SH/IRT/BK:1071686.1
THIS AGREEMENT is made by way of deed on 19 December, 2002
BETWEEN:
(1) RT GROUP TELECOM SERVICES LIMITED, a company incorporated in England
and Wales (registered number 3963596) whose registered office is at
20-22 Bedford Row, London WC1R 4JS ("RTS");
(2) RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION), a company
incorporated in England and Wales (registered number 2904614) whose
registered office is at 20-22 Bedford Row, London WC1R 4JS ("RG")
acting by its joint liquidators James Robert Drummond Smith and
Nicholas James Dargan of Deloitte & Touche, 180 Strand, London WC2R 1WL
(the "LIQUIDATORS");
(3) MARCONI CORPORATION PLC, a company incorporated in England and Wales
(registered number 67307) whose registered office is at New Century
Park, P.O. Box 53, Coventry CV3 1HJ ("MARCONI");
(4) ULTRAMAST LIMITED, a company incorporated in England and Wales
(registered number 4042640) whose registered office is at City Point,
One Ropemaker Street, London EC2Y 9SS ("ULTRAMAST"); and
(5) THE LIQUIDATORS.
WHEREAS:
(A) Ultramast has an issued share capital of L1,000 divided into 1,000
Ordinary Shares, all of which have been issued fully paid.
(B) On 14th December, 2000, Marconi and RTS entered into the Ultramast
Agreement. Following completion of the Ultramast Agreement on 26th
April, 2001, Marconi was and is the registered holder of and is
beneficially entitled to 500 Ordinary Shares and RTS was and is the
registered holder of and is beneficially entitled to 500 Ordinary
Shares.
(C) On 1st February, 2002, RTS exercised its rights under the Easynet Put
Option in respect of the Easynet Shares. Marconi refused to accept
delivery of the Easynet Shares or to pay the consideration of
L20,000,000 payable for the Easynet Shares under the Easynet Put Option
on the basis that it alleged that it was entitled to set-off against
its obligation to pay for the Easynet Shares a number of claims against
RTS.
(D) On 25th March, 2002, RTS commenced the Action seeking payment of sums
alleged to be due under the Easynet Put Option and on 19th April, 2002,
RTS made an application for summary judgment. The application was heard
on 25th July, 2002, when Morison J declined to grant summary judgment
in the light of Marconi's counterclaims but ordered Marconi to pay the
sum of L20,000,000, together with accrued interest, into Court.
(E) This agreement sets out in full the terms of the agreement between the
parties to settle the Action, to end their arrangements in relation to
Ultramast, to provide for the completion of the acquisition by Marconi
of the Easynet Shares, to write off against the share premium account
of Ultramast the deficit on the profit and loss reserve on its balance
sheet, to provide for the cancellation of the Marconi Reduction Shares
and (if applicable) the RTS Reduction Shares through a reduction of
capital and share premium account of Ultramast and a subsequent
repayment of capital to Marconi and (if applicable) RTS and to
terminate the Ultramast Agreement, the relevant part of the Ipsaris
Agreement and other related agreements.
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(F) On 28th November, 2002, Ultramast increased its authorised share
capital through the creation of 126 Deferred Shares and adopted new
articles of association containing the rights attached to those
Deferred Shares.
(G) Ultramast has, by virtue of regulation 34 of the Companies (Tables A to
F) Regulations 1985, which applies to Ultramast, power and authority to
reduce its share capital in any way.
NOW IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this agreement, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
"ACCOUNTS" accounts of Ultramast for the financial
period ended 31st March, 2002, in the agreed
form;
"ACTION" the action currently proceeding in the
Queen's Bench Division, High Court of
Justice, Commercial Court with Claim Number
2002 Folio 309;
"AFFILIATE" in relation to any party, any subsidiary
undertaking or parent undertaking of that
party or any subsidiary undertaking of that
parent undertaking but, for the avoidance of
doubt, neither Ipsaris nor Easynet shall be
taken for the purposes of this agreement as
being an Affiliate of Marconi;
"AGREED FORM" in relation to any document, the form of
that document which has been initialled for
the purposes of identification by Marconi's
Solicitors and RTS's Solicitors;
"APPROVAL TIME" the time at which the Reduction Order is
made and delivered to Ultramast;
"APT AGREEMENT" an agreement for acquisition, management and
construction management services dated 26th
April, 2001 between Albany Partnership
Limited and Ultramast (as varied by a letter
agreement dated 28th November, 2002 made
between Albany Partnership Limited and
Ultramast);
"CAPITAL REDUCTION" has the meaning given in sub-clauses
5.1.1(a), 5.1.1(b) and 5.1.1(c);
"CLAIM" each and any claim, counter-claim, cause or
right of action or proceedings, whether at
law or in equity, in any jurisdiction
whatsoever, whether secured, proprietary, by
way of tracing, priority or otherwise,
whether by way of contribution or
subrogation or
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otherwise, whether known or unknown to the
parties, whether or not presently known to
the law and whether arising before on or
after the date of this agreement arising out
of or relating to the Joint Venture
Arrangements including, for the avoidance of
doubt, any claim made in the Action but
excluding any claims in respect of :
(a) any invoices properly raised by RTS
or Marconi (or their respective
Affiliates) on or prior to 30th
September, 2002; or
(b) any Purchase Orders; or
(c) this agreement; or
(d) the APT Agreement; or
(e) the Participation Agreement;
"COMPLETION" the Reduction Order being filed with the
Registrar and completion of the other
matters contemplated by this agreement in
accordance with clause 7;
"CONDITIONS" the conditions precedent to Completion set
out in sub-clause 2.1;
"CONSENT ORDER" the consent order in the form set out in
Schedule 1 and signed by each of Marconi and
RTS (through Marconi's Solicitors and RTS's
Solicitors respectively) on the date of this
agreement in accordance with sub-clause 6.1;
"CREDITORS' COMMITTEES" (a) the co-ordination committee of the
syndicate banks who have provided
loans to Marconi or its Affiliates;
and
(b) the informal committee of holders
of bonds issued by Marconi or its
Affiliates;
"D&T REPORT" a report dated 26th November, 2002 prepared
by Deloitte & Touche addressed to Ultramast
for the purposes of the Capital Reduction;
"DEFERRED SHARES" deferred shares of L1 each in the capital of
Ultramast having the rights and obligations
set out in Schedule 6 (such rights and
obligations being set out in the articles of
association of Ultramast adopted on 28th
November, 2002);
"EASYNET" Easynet Group plc, a company registered in
England and Wales (registered number
3137522) whose
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registered office is at 44 Whitfield Street,
London W1P 5RF;
"EASYNET PUT OPTION" the put option granted by Marconi to RTS
under clause 11 of the Ipsaris Agreement;
"EASYNET SHARES" 1,324,054 ordinary shares of 4 pence each in
the capital of Easynet;
"EMPLOYEES" Andrew Elliman and Simon Ralph;
"EMPLOYMENT COSTS" the properly incurred costs relating to the
employment of the Employees and recharged to
Ultramast under the Secondment Arrangement;
"ENGLISH MAST AGREEMENT" an agreement dated 26th April, 2001 between
Marconi and Ultramast relating to the
identification of suitable sites for masts
in England and Wales and the grant of mast
leases;
"FURTHER MARCONI DEFERRED has the meaning set out in sub-clause 9.2;
SHARES"
"IMPLEMENTATION AGREEMENT" an implementation agreement dated 26th June,
2001 between Marconi, RTS and Ipsaris;
"INITIAL MARCONI DEFERRED that number of Deferred Shares the aggregate
SHARES" nominal value of which will constitute not
less than 10 per cent. of the nominal value
of all of the shares in the capital of
Ultramast immediately following the Capital
Reduction (but no more than 63 Deferred
Shares and on the assumption that the
Initial RTS Deferred Shares will be issued
to RTS at the same time) and to be issued by
Ultramast to Marconi in accordance with
sub-clause 4.10;
"INITIAL RTS DEFERRED that number of Deferred Shares the aggregate
SHARES" nominal value of which will constitute not
less than 10 per cent. of the nominal value
of all of the shares in the capital of
Ultramast immediately following the Capital
Reduction (but no more than 63 Deferred
Shares and on the assumption that the
Initial Marconi Deferred Shares will be
issued to Marconi at the same time) and to
be issued by Ultramast to RTS in accordance
with sub-clause 4.10;
"IPSARIS" Easynet Telecommunications Limited (formerly
Ipsaris Limited), a company incorporated in
England and Wales (registered number
2883980) whose registered office is at 44
Whitfield Street, London W1P 5RF;
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"IPSARIS AGREEMENT" the subscription and shareholders agreement
dated 14th December, 2000 between Marconi,
RTS and Ipsaris as amended by a variation
agreement dated 26th April, 2001 between
Marconi, RTS and Ipsaris and as further
amended by the Implementation Agreement;
"JOINT VENTURE all of the agreements and other arrangements
ARRANGEMENTS" (written or unwritten) in relation to
Ultramast or Ipsaris or shareholdings in
either of them, entered into prior to the
date of this agreement:
(a) by Marconi (or any of its
Affiliates) on the one hand and
RTS, RG or Ultramast (or any of
their Affiliates) on the other
hand; or
(b) by Ultramast on the one hand and
RTS or RG (or any of their
Affiliates) on the other hand,
including, without limitation, the Ultramast
Agreement, the Ipsaris Agreement, the
Easynet Put Option, the English Mast
Agreement and the Scottish Mast Agreement;
"MARCONI REDUCTION AMOUNT" a sum equal to L26,139,000;
"MARCONI REDUCTION SHARES" the 500 Ordinary Shares registered in the
name of Marconi;
"MARCONI'S SOLICITORS" Allen & Overy of One New Change, London
EC4M 9QQ;
"MARCONI SUBSCRIPTION a sum equal to the nominal value of the
MONIES" Initial Marconi Deferred Shares;
"ORACLE AGREEMENT" an employee licence agreement dated 24th
May, 2001 between Marconi and Oracle
Corporation UK Limited;
"ORDINARY SHARES" ordinary shares of L1 each in the capital of
Ultramast;
"PARENT UNDERTAKING" has the meaning given in section 258 of the
Companies Act 1985;
"PARTICIPATION AGREEMENT" a participation agreement dated 24th
September, 2001 between Marconi and
Ultramast in relation to the allocation of
Oracle software licences granted to Marconi
under the Oracle Agreement;
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"PURCHASE ORDERS" those purchase orders authorised by
Ultramast as at the date of this agreement
or subsequently in respect of goods or
services provided or to be provided by
Marconi or, as the case may be, RTS (or
their respective Affiliates);
"RAILTRACK AGREEMENTS" an agreement dated 26th April, 2001 between
Railtrack plc and RTS relating to the
identification of suitable sites for masts
in Scotland and the grant of mast leases and
an agreement dated 26th April, 2001 between
Railtrack plc and RTS relating to the
identification of suitable sites for masts
in England and Wales and the grant of mast
leases;
"REDUCTION ORDER" the order of the Court confirming the
Capital Reduction;
"REDUCTION TIMETABLE" the timetable for the Capital Reduction set
out in Schedule 2;
"REGISTRAR" the registrar of companies at Companies
House in Cardiff;
"RTS REDUCTION AMOUNT" a sum equal to L19,186,026 or such lower
amount as may be required under sub-clause
5.5.1;
"RTS REDUCTION SHARES" 367 Ordinary Shares registered in the name
of RTS or such lower number of Ordinary
Shares registered in the name of RTS as may
be required under sub-clause 5.5.2;
"RTS'S SOLICITORS" Ashurst Morris Crisp of Broadwalk House,
Appold Street, London EC2A 2HA;
"RTS SUBSCRIPTION MONIES" a sum equal to the nominal value of the
Initial RTS Deferred Shares;
"SCOTTISH MAST AGREEMENT" an agreement dated 26th April, 2001 between
Marconi and Ultramast relating to the
identification of suitable sites for masts
in Scotland and the grant of mast leases;
"SEALED CONSENT ORDER" the Consent Order duly sealed by the Court;
"SECONDMENT ARRANGEMENT" the unwritten, informal secondment
arrangement under which the Employees are
and have been seconded from Marconi (or its
wholly owned subsidiary Albany Partnership
Limited) to Ultramast;
"SUBSIDIARY UNDERTAKING" has the meaning given in section 258 of the
Companies Act 1985; and
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"ULTRAMAST AGREEMENT" an agreement dated 14th December, 2000
between RTS and Marconi relating to the
subscription for shares and the regulation
of the exercise of their rights in relation
to Ultramast.
1.2 In this agreement, unless the context otherwise requires:
1.2.1 words denoting persons shall include bodies corporate and
unincorporated associations of persons;
1.2.2 any reference to the singular shall include the plural and
vice versa;
1.2.3 a reference to a clause, sub-clause or Schedule is a reference
to a clause, sub-clause or schedule to this agreement; and
1.2.4 any reference to an enactment includes reference to that
enactment as amended, extended or applied by or under any
other enactment before, on or after the signature of this
agreement.
1.3 The headings in this agreement are for convenience only and do not
affect its interpretation.
2. CONDITIONS PRECEDENT
2.1 Completion is conditional on:
2.1.1 the Court making an order confirming the repayment to Marconi
out of Ultramast's capital of the MARCONI REDUCTION AMOUNT and
any condition or undertaking imposed by the Court in that
order being satisfied, no later than 15th February, 2003 or
such later date as Marconi and RTS may agree, such agreement
not to be unreasonably withheld or delayed; and
2.1.2 the Consent Order having been sealed by the Court, no later
than 28th February, 2003, or such later date as Marconi and
RTS may agree, such agreement not to be unreasonably withheld
or delayed.
2.2 Marconi and RTS agree that the Consent Order shall not be lodged with
the Court for sealing until the Approval Time has occurred.
2.3 Each of the parties shall use all reasonable endeavours to procure the
satisfaction of these Conditions, including the passing of all
appropriate resolutions and execution of all reasonably necessary
documents. If all these Conditions are not fulfilled by the time given
for their satisfaction and Marconi and RTS do not agree to extend the
time for satisfaction of these Conditions:
2.3.1 except for this sub-clause, clauses 1, 11 and 12 and
sub-clauses 4.6, 18.1, 18.4 and 18.5, all the other clauses of
this agreement shall lapse and cease to have effect; but
2.3.2 the lapsing of these provisions shall not affect any accrued
rights or liabilities of any party.
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3. SETTLEMENT
3.1 Subject to Completion having occurred and subject to the remainder of
this clause 3, this agreement is in full and final settlement of:
3.1.1 all and any Claims by Marconi against RTS, RG or Ultramast;
3.1.2 all and any Claims by RTS against Marconi or Ultramast;
3.1.3 all and any Claims by RG against Marconi or Ultramast; and
3.1.4 all and any Claims by Ultramast against RG, RTS or Marconi,
and, subject to Completion having occurred and subject to the remainder
of this clause 3, each of the parties mutually irrevocably releases and
covenants not to sue or threaten to sue each other, or their present or
former agents, Affiliates, partners, directors or employees in relation
to any such Claim, provided that this covenant shall not extend to any
Claim that any party may have against Railtrack plc.
3.2 Subject to Completion having occurred, each party agrees to procure, so
far as it is able, that none of its Affiliates shall pursue any Claim
that it may have against any other party or their present or former
agents, Affiliates, partners, directors or employees.
3.3 Each of RTS and Marconi, in its capacity as a shareholder of Ultramast,
hereby irrevocably consents to and approves the release of Claims in
accordance with the terms of this agreement by Ultramast against RTS,
RG and Marconi and further irrevocably consents to and approves the
Capital Reduction in accordance with the terms of this agreement. The
consent and approval given by RTS and Marconi by this sub-clause
extends for the benefit of Ultramast and the directors of Ultramast.
3.4 In respect of any Claim that Ultramast may have against RG or RTS, this
clause 3 shall only have effect in relation to any Claim which has or
may have accrued to Ultramast at the date of Completion, and shall not
operate to terminate any agreements or arrangements between Ultramast
on the one hand and RTS or RG (or their respective Affiliates) on the
other hand. This clause 3 shall not affect any Claim that Ultramast may
have against RTS or RG (or any of their Affiliates) to the extent that
such a Claim arises as a result of a breach by Railtrack plc of any
agreement between Railtrack plc on the one hand and RTS or RG (or any
of their Affiliates) on the other hand, provided that Ultramast
undertakes to RTS that, pending Completion, it will not without the
prior written consent of RTS take or threaten to take any action in
respect of any such Claim.
3.5 Nothing in this agreement shall affect the obligation or ability of
Ultramast to discharge any invoice properly raised by RTS or Marconi
(or any of their respective Affiliates) on or prior to 30th September,
2002 or any sums payable pursuant to Purchase Orders or any sums
payable pursuant to clause 10.
4. PERIOD BETWEEN SIGNING AND COMPLETION
4.1 In the period from the date of this agreement until Completion, each of
Marconi and RTS shall exercise all rights and powers available to it to
procure that Ultramast shall:
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4.1.1 carry on its business in the ordinary and usual course; and
4.1.2 not take any action which would have or might reasonably be
expected to have the effect of increasing either the number of
its creditors or the amounts owed to those creditors, save in
respect of bona fide arms length transactions with creditors
in the ordinary and usual course of trading.
4.2 Without prejudice to the generality of sub-clause 4.1 and without
prejudice to the terms of the Ultramast Agreement, in the period from
the date of this agreement until Completion, each of Marconi and RTS
shall exercise all rights and powers available to it to procure that
Ultramast shall not, without the prior consent (in writing or by
e-mail) of both Marconi and RTS:
4.2.1 incur any single item of capital expenditure or any series of
items of capital expenditure in excess of L10,000; or
4.2.2 dispose of or grant any option or right of pre-emption in
respect of any part of its assets except in the ordinary
course of trading; or
4.2.3 borrow any money or make any payments out of or drawings on
its bank accounts other than in the ordinary course of trading
or in accordance with the terms of this agreement; or
4.2.4 enter into any onerous, unusual, abnormal or long-term
contract or commitment including, without limitation, operator
agreements, contractor agreements and, to the extent that they
are onerous, unusual, abnormal or long-term, supply
agreements; or
4.2.5 make any loan or advance or give any credit to any person
other than loans, advances or credit given to persons (not
being Affiliates of RTS or Marconi) in the ordinary course of
trading; or
4.2.6 enter into any leasing, vendor finance, hire-purchase, or
other agreement or arrangement for payment on deferred terms;
or
4.2.7 enter into any lease, licence or commitment to enter into any
lease or licence of land whether for the purposes of erecting
telecommunications masts or otherwise; or
4.2.8 grant or issue any mortgage, charge, debenture or other
security or give any guarantee, bond or indemnity; or
4.2.9 make any change in the terms and conditions of employment of
any of its directors or employees or terminate (except for
good cause) the employment of any person; or
4.2.10 make, or announce to any person any proposal to make, any
change or addition to any retirement, death or disability
benefit of or in respect of any of its current or former
directors or employees, or grant or create any additional or
new retirement, death or disability benefit; or
4.2.11 permit any of its insurances to lapse or do anything which
would make any policy of insurance void or voidable but, for
the avoidance of doubt, shall not take out any new or extend
any current policy of insurance for a period in excess of one
month; or
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4.2.12 take any action in relation to any contract with British
Waterways or Ente Sardo Acquedottie Fognature or any other
contract material (or which might reasonably be expected to be
material) to the business of Ultramast; or
4.2.13 bring any claim, action or proceeding against Marconi, RTS or
RG; or
4.2.14 agree, conditionally or otherwise, to do any of the foregoing;
or
4.2.15 take any action which might reasonably be expected adversely
to affect the ability of the Court to approve the Capital
Reduction.
4.3 Ultramast undertakes to Marconi and RTS that it shall not, without the
prior consent (in writing or by e-mail) of both of them, take any
action of the kind described in sub-clause 4.1 or 4.2 above or in
clause 11.1 of the Ultramast Agreement.
4.4 Within two days of the date of this agreement, Ultramast shall:
4.4.1 pay to RTS (and, if applicable, its Affiliates) the aggregate
sum of L1,641,000 in respect of goods or services provided by
RTS or its Affiliates up to and including 30th September, 2002
and validly invoiced prior to the date of this agreement; and
4.4.2 pay to Marconi (and, if applicable, its Affiliates) the
aggregate sum of Y60,000 in respect of goods or services
provided by Marconi or its Affiliates up to and including 30th
September, 2002 and validly invoiced prior to the date of this
agreement,
and, in either such case, receipt by RTS or, as the case may be,
Marconi (or, if applicable, their respective Affiliates), shall be a
sufficient discharge by Ultramast of its obligations to pay such sums.
4.5 Notwithstanding the terms of this clause 4, in the period from the date
of this agreement until Completion, Ultramast shall discharge promptly
any invoices (other than those invoices referred to in sub-clause 4.4)
properly raised pursuant to Purchase Orders or pursuant to sub-clause
10.2.
4.6 Each of Marconi and RTS shall use all reasonable endeavours to procure
in so far as it is able that the Accounts are audited, approved by the
board of directors of Ultramast and signed by a director of Ultramast
by not later than the date of this agreement. For the avoidance of
doubt only, the approval by the board of directors of Ultramast of the
Accounts shall not constitute or be deemed to constitute an approval of
such Accounts by RTS or Marconi or admission by RTS or Marconi of any
counter claim or claim previously raised by either of them or
Ultramast.
4.7 In the period from the date of this agreement until Completion, RTS may
engage in discussions with third parties in relation to the acquisition
of the Ordinary Shares registered in the name of RTS and may pass
confidential information relating to Ultramast and its business
(including, to the extent lawfully permitted by their terms, copies of
agreements between Ultramast on the one hand and third parties on the
other) in connection with such discussions to such third parties,
provided always that such discussions do not adversely affect the
ability of Ultramast either to carry out the Capital Reduction in
accordance with the Reduction Timetable or to conduct its business in
the ordinary course and provided further that any such third party is
required to enter into confidentiality undertakings for the benefit of
Ultramast in respect of any confidential information so passed to it.
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4.8 Ultramast shall make any request for the consent of Marconi and RTS
under sub-clause 4.2 or 4.3 in writing or by e-mail, followed on the
same day by a confirmatory telephone call:
4.8.1 in the case of Marconi, to Tony Robinson (or, in his absence,
to Will Johnson or, in his absence, to Chris Chapple); and
4.8.2 in the case of RTS, to Richard Womersley-Smith (or, in his
absence, to Simon Osborne).
4.9 Each of Marconi and RTS shall reply to any request for consent given in
accordance with sub-clause 4.8.1 or 4.8.2 (as the case may be) within
three business days of receipt of that request. In the event that
Marconi or RTS fails to reply within this period, Marconi or RTS (as
the case may be) shall be deemed to have consented to that request.
4.10 Each of Marconi and RTS shall procure that Ultramast shall, conditional
upon the Court making the Reduction Order, allot and issue to Marconi
at par fully paid the Initial Marconi Deferred Shares and allot and
issue to RTS at par fully paid the Initial RTS Deferred Shares.
4.11 At any time in the period from the date of this agreement until
Completion, RTS may, provided that it has complied with clause 22.1 of
the Ultramast Agreement, transfer all, but not some only, of the
Ordinary Shares registered in the name of RTS to another company within
its group (as defined in section 170 of the Taxation of Chargeable
Gains Act 1992) (an "RTS GROUP COMPANY") provided always that such
transfer does not adversely affect the ability of Ultramast either to
carry out the Capital Reduction in accordance with the Reduction
Timetable or to conduct its business in the ordinary course and further
provided that the RTS Group Company and the other parties to this
agreement have entered into a deed of adherence substantially in the
form set out in Schedule 7 and that RTS procures that the RTS Group
Company complies with its obligations under that deed of adherence. The
parties to this agreement hereby undertake and agree to enter into the
deed of adherence immediately following the entry into such deed by the
RTS Group Company.
5. CAPITAL REDUCTION
5.1 Each of Marconi and RTS shall:
5.1.1 as soon as reasonably practicable after the date of this
agreement but, in any event, not later than 20th December,
2002, sign a shareholders' written resolution of Ultramast to
authorise Ultramast, in accordance with sections 135 to 141 of
the Companies Act 1985, to:
(a) reduce the amount standing to the credit of its share
premium account for the purpose of creating a reserve
against which to write off the accumulated deficit on
the profit and loss reserve on its balance sheet;
(b) reduce its share capital and share premium account
through the cancellation of the Marconi Reduction
Shares and, subject to sub-clause 5.5, the RTS
Reduction Shares; and
(c) repay to Marconi out of Ultramast's share capital and
its share premium account the MARCONI REDUCTION
AMOUNT and repay, subject to sub-clause
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5.5, to RTS out of Ultramast's share capital and its
share premium account the RTS Reduction Amount
(the "CAPITAL REDUCTION"); and
5.1.2 exercise all powers and rights available to it to procure that
Ultramast makes an application to the Court pursuant to
section 136 of the Companies Act 1985 for an order confirming
the Capital Reduction,
provided that the timing of the compliance by Marconi and RTS with
their respective obligations under sub-clause 5.1 shall be conditional
upon the Accounts having been audited and signed as referred to in
sub-clause 4.6.
5.2 Marconi and RTS shall use their respective reasonable endeavours to
procure (insofar as they are able) that, in furtherance of the Capital
Reduction, Ultramast shall take the steps set out in the Reduction
Timetable and shall use all reasonable endeavours to ensure that those
steps are taken in accordance with the Reduction Timetable including,
without limitation, instructing professional advisers to deal with all
aspects of the Capital Reduction in accordance with the Reduction
Timetable and undertaking all necessary due diligence into the creditor
position of Ultramast.
5.3 The day to day legal aspects of the Capital Reduction shall be dealt
with by RTS's Solicitors (as instructed by Ultramast) in consultation
with Marconi's Solicitors. RTS shall notify Marconi as soon as it
becomes aware of any reason why the Capital Reduction may not take
place either at all or in accordance with the Reduction Timetable. In
the event of such a notification, Marconi and RTS shall work together
in good faith with a view to ensuring (insofar as is possible) that the
Capital Reduction is nevertheless completed and in accordance with, or
as nearly as is reasonably practicable in accordance with, the
Reduction Timetable.
5.4 Subject to Ultramast having complied with its obligations under
sub-clauses 4.4 and 4.5, each of Marconi, RTS and RG shall, and in
respect of its Affiliates (other than, in the case of Marconi, Marconi
Communications SpA) shall exercise all powers and rights available to
it to procure that those Affiliates shall, consent in its capacity as
creditor to Ultramast to the Capital Reduction and shall take all such
action and sign all such documents as may reasonably be required to
satisfy the requirements of the Court under section 137(1) of the
Companies Act 1985 including, without limitation, agreeing to
subordinate any claims it may have against Ultramast to the claims of
any other creditor of Ultramast who does not give such a consent.
5.5 If the level of the actual or contingent creditors of Ultramast is such
that the Capital Reduction cannot, or is unlikely (based on the advice
of Queen's Counsel instructed in relation to the Capital Reduction) to,
be confirmed by the Court:
5.5.1 the RTS Reduction Amount shall be reduced to such sum, being a
multiple of L52,278, as shall allow the Capital Reduction to
be confirmed by the Court (based on the advice of Queen's
Counsel instructed in relation to the Capital Reduction); and
5.5.2 the RTS Reduction Shares shall be reduced to the number of
Ordinary Shares registered in the name of RTS as would be
cancelled on a repayment to RTS of the RTS Reduction Amount
(as reduced in accordance with sub-clause 5.5.1) on the basis
of L52,278 per Ordinary Share.
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5.6 Ultramast undertakes that it shall, to the extent contemplated by this
agreement, progress the Capital Reduction with all due care and in
accordance so far as is practicable with the Reduction Timetable.
5.7 Upon receipt of the Reduction Order, Ultramast undertakes that it shall
not lodge the sealed Reduction Order with the Registrar until
Completion.
5.8 Notwithstanding any other provision of clause 5, each of Marconi, RTS
and Ultramast shall take all steps, measures and actions available to
it to procure (so far as it is able) that Condition 2.1.1 is satisfied
within the time specified for its satisfaction and that Marconi is paid
the MARCONI REDUCTION AMOUNT in full under the Capital Reduction in
accordance with the Reduction Timetable.
6. CONSENT ORDER
6.1 On the date of this agreement, each of Marconi and RTS shall sign
(through Marconi's Solicitors and RTS's Solicitors respectively) the
Consent Order, which shall be held by Marconi's Solicitors to the joint
order of Marconi and RTS until the Approval Time, whereupon Marconi's
Solicitors shall lodge it with the Court for the Court's approval (if
required) and sealing. A copy of the signed Consent Order (marked as
such) shall be provided to Ultramast and RTS.
6.2 If the Court requires a hearing prior to sealing the Consent Order,
Marconi and RTS shall use all reasonable endeavours to arrange such
hearing in accordance with the Reduction Timetable.
6.3 Upon receipt by Marconi's Solicitors of the Sealed Consent Order, it
shall be copied by Marconi's Solicitors to RTS's Solicitors. Marconi
and RTS agree that no request for payments out of Court in accordance
with the Sealed Consent Order shall be made by either of them other
than at Completion and in accordance with sub-clauses 7.3.1 and 7.4.2
or as Marconi and RTS otherwise agree.
6.4 Marconi and RTS each acknowledge that, of the L19,186,026 which
will become payable to Marconi pursuant to the terms of the Consent
Order, L4,000,000 will, if Completion occurs, be payable in full
and final settlement of Marconi's counterclaims in the Action in
respect of sums payable and damages claimed under the Ultramast
Agreement and L15,186,026 will, if Completion occurs, be payable
in full and final settlement of Marconi's counterclaims in the Action
in respect of sums payable and damages claimed under the Ipsaris
Agreement.
6.5 In accordance with the terms of the Easynet Put Option, RTS covenants
with Marconi that, subject to the provisions of the Easynet Put Option
and subject to any disposal effected by Marconi and any encumbrance
arising as a result of any action on the part of Marconi, as at the
Approval Time and immediately prior to Completion, it will have the
right to sell and transfer to Marconi the full legal and beneficial
interest in the Easynet Shares, free from liens, charges, equities and
encumbrances and together with all rights attaching to them.
6.6 Marconi covenants with Ultramast that as at the Approval Time and
immediately prior to Completion it will have full legal and beneficial
title to the Marconi Reduction Shares free from liens, charges,
equities and encumbrances. RTS covenants with Ultramast that as at the
Approval Time and immediately prior to Completion it will have full
legal and beneficial title to the RTS Reduction Shares free from liens,
charges, equities and encumbrances.
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7. COMPLETION
7.1 Completion shall take place at the offices of Marconi's Solicitors on
the business day following the date on which all of the Conditions are
satisfied or at such other time and place as Marconi and RTS may agree.
7.2 At Completion Ultramast shall:
7.2.1 lodge the Reduction Order with the Registrar;
7.2.2 upon notification that the Registrar has registered the
Reduction Order, pay to Marconi the MARCONI REDUCTION AMOUNT
and pay to RTS the RTS Reduction Amount;
7.2.3 pay to RTS (or, as the case may be, its Affiliates) all sums
outstanding from Ultramast to RTS or any of its Affiliates
under invoices properly raised pursuant to Purchase Orders;
7.2.4 pay to Marconi (or, as the case may be, its Affiliates) all
sums outstanding from Ultramast to Marconi or any of its
Affiliates under invoices properly raised pursuant to Purchase
Orders and any sums owing pursuant to sub-clause 10.2;
7.2.5 deliver to Marconi a share certificate representing the
Initial Marconi Deferred Shares and deliver to RTS a share
certificate representing the Initial RTS Deferred Shares; and
7.2.6 lodge with the Registrar a Form 88(2) in respect of the
Initial Marconi Deferred Shares and the Initial RTS Deferred
Shares.
7.3 At Completion, RTS shall:
7.3.1 authorise Marconi's Solicitors to lodge the Sealed Consent
Order with the Court together with a request for payment in
accordance with its terms;
7.3.2 pay to Ultramast the RTS Subscription Monies;
7.3.3 deliver to Ultramast the share certificates representing the
RTS Reduction Shares; and
7.3.4 to the extent necessary, irrevocably release to Marconi the
stock transfer form transferring the Easynet Shares to Marconi
and the share certificate in respect of the Easynet Shares.
7.4 At Completion, Marconi shall:
7.4.1 deliver to Ultramast the share certificates representing the
Marconi Reduction Shares;
7.4.2 authorise Marconi's Solicitors to lodge the Sealed Consent
Order with the Court together with a request for payment in
accordance with its terms;
7.4.3 pay to Ultramast the Marconi Subscription Monies; and
17
7.4.4 deliver to Ultramast the resignations of Tony Robinson and, if
requested by RTS, Andrew Elliman and/or any other director of
Ultramast appointed by Marconi under the Ultramast Agreement
as a director of Ultramast, in each case acknowledging under
seal that he has no claim against Ultramast whether for loss
of office or otherwise.
7.5 All payments to be made under this agreement to RTS shall be made,
without deduction or set-off, by telegraphic transfer to the client
account of RTS's Solicitors and all payments to be made under this
agreement to Marconi shall be made, without deduction or set-off, by
telegraphic transfer to the bank account of Marconi which has been
notified to RTS, RG or Ultramast (as the case may be), save for any
payment due to Marconi to be received from the Court which shall be
made to the client account of Marconi's Solicitors.
7.6 Ultramast covenants to Marconi that it shall not, and RTS covenants to
Marconi that it shall procure that Ultramast shall not, sell, transfer
or otherwise dispose of the whole or substantially the whole of its
business and undertaking to a person which is not an Affiliate of
Ultramast or of Marconi plc prior to 30th September, 2004. RTS
undertakes that prior to any transfer of any interest in the shares
held by it in Ultramast it shall secure, for the benefit of Marconi, a
covenant and undertaking from the transferee in identical terms,
mutatis mutandis, to the covenant and undertaking imposed on it under
this clause, whereupon it shall be released from its covenant under
this clause, provided that where RTS transfers an interest in some but
not all of the shares held by it in Ultramast, it shall secure a
covenant and undertaking from each separate transferee in identical
terms, mutatis mutandis, and shall only be released from its covenant
under this clause once it has transferred all shares (other than
Deferred Shares) held by it in Ultramast.
7.7 Marconi and RTS each acknowledge that, subject to the parties having
complied with their respective obligations at Completion, Marconi shall
be deemed to have satisfied the price payable to RTS under the Easynet
Put Option in respect of the Easynet Shares and Marconi shall be
entitled to be registered as the registered holder of the Easynet
Shares.
8. TERMINATION OF CERTAIN AGREEMENTS
8.1 Upon each of the parties having complied with its obligations at
Completion:
8.1.1 the Ultramast Agreement shall terminate and be of no further
effect save that, notwithstanding any other provision of the
Ultramast Agreement or this agreement and regardless of any
continuation of any Marconi shareholding in Ultramast, the
provisions of clause 14.2 of the Ultramast Agreement, together
with any other provisions of the Ultramast Agreement necessary
for the interpretation, operation or enforcement of that
clause, shall continue to apply until 31st December, 2004
(provided that the words "own or" shall be deemed to have been
deleted from sub-clause 14.2(B) of the Ultramast Agreement),
whereupon those clauses shall terminate and be of no further
effect;
8.1.2 as between Marconi and RTS, the Ipsaris Agreement shall
terminate and be of no further effect;
8.1.3 the English Mast Agreement shall terminate and be of no
further effect; and
8.1.4 the Scottish Mast Agreement shall terminate and be of no
further effect.
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8.2 On Completion, Marconi shall use its reasonable endeavours to cause
Easynet to procure that Ipsaris agrees to the termination, without
liability to Ultramast or RTS, of all the agreements entered into
between Ipsaris and Ultramast or RTS, provided that Marconi shall not
be required to take any action which may constitute a breach of:
8.2.1 paragraph 3.12 or 9.34 of the listing rules issued from time
to time by the United Kingdom Listing Authority for the
purposes of Part VI of the Companies Act 1985; or
8.2.2 a relationship agreement dated 26th June, 2001 between Marconi
and Easynet.
8.3 Marconi confirms that the relationship agreement referred to in
sub-clause 8.2.2 provides that Marconi shall exercise all powers of
control in relation to itself and its associates so as to ensure to the
extent it is able through its exercise of such powers that at all times
Easynet and Ipsaris are capable of carrying on, and do carry on, their
business independently of Marconi and any of its associates.
8.4 For the avoidance of doubt, nothing in this agreement shall affect any
agreement between Ipsaris on the one hand and RTS, RG or Ultramast on
the other hand.
8.5 On and after Completion, Marconi undertakes to RTS and Ultramast that
it shall not, and shall procure that its Affiliates shall not,
knowingly seek to exert any influence or control it may have, pursuant
to any contract with British Waterways, over British Waterways in
relation to Ultramast provided that this sub-clause shall not have any
effect in relation to a letter dated 26th April, 2001 from Marconi plc
to British Waterways.
8.6 Marconi shall no later than 5 days from the date of this agreement
notify (in accordance with the Oracle Agreement) Oracle Corporation UK
Limited of the transaction contemplated by this agreement and shall use
its reasonable endeavours to procure (including expressly requesting
the same) that Oracle Corporation UK Limited treats the 30 software
licences which are the subject of the Participation Agreement as
Transferable Licences (within the meaning of the Oracle Agreement) and
grants to Ultramast a New License Agreement (as defined in the Oracle
Agreement) at no cost to Ultramast (other than the payment of any
charges for Services (within the meaning of the Oracle Agreement) for
the next following annual support period, it being agreed as between
Marconi and Ultramast that, other than the aggregate sum of
L20,000 (part of which was invoiced in November, 2002 and part of
which is to be invoiced in February, 2003) together with the sum of
approximately L2,000 to be invoiced in December, 2003, Ultramast
has paid for support in the period up to and including 31st December,
2002). On and after Completion, notwithstanding any other provision of
this agreement, the Participation Agreement shall continue in full
force and effect for a period of 12 months from the date of Completion
(or, if earlier, until the grant of the New License Agreement),
whereupon it shall terminate and be of no further effect, save in
respect of any rights of Marconi or Ultramast accrued under it.
8.7 RTS and RG shall each use all reasonable endeavours to procure that
Railtrack plc agrees that the exclusivity provisions contained in the
clauses headed "non-competition" in each of the Railtrack Agreements
shall remain in full force and effect notwithstanding that Marconi may
cease to hold 10 per cent. of the share capital of Ultramast.
8.8 On Completion, Marconi undertakes that it shall not (and shall procure
that its Affiliates shall not), until 31st December, 2004, either on
its own account or in conjunction with or on behalf of any person, firm
or company, solicit or endeavour to entice away from Ultramast any
19
person who is an officer, manager or employee of the operational
telecoms staff of Ultramast, whether or not such a person would commit
a breach by reason of leaving service or office, provided that this
sub-clause shall not apply in respect of Andrew Elliman or Simon Ralph,
except to the extent that either of them becomes an employee of
Ultramast or an Affiliate of Ultramast on or after Completion.
9. DEFERRED SHARES
9.1 For the purposes of this clause, a "REORGANISATION" shall mean:
9.1.1 a sub-division or consolidation of the Ordinary Shares;
9.1.2 a distribution or other capital reorganisation (whether by way
of bonus, capitalisation or otherwise) by Ultramast; or
9.1.3 any event in relation to the Ordinary Shares or the Deferred
Shares having a dilutive effect in the proportion of the
Deferred Shares in relation to the total number of shares in
the capital of Ultramast.
9.2 In the event of a Reorganisation following Completion, such that
Marconi would cease to hold 10 per cent. of the nominal value of all
the shares in the capital of Ultramast, Marconi shall subscribe at par
for such further number of Deferred Shares as would result in Marconi
continuing to hold 10 per cent. of the nominal value of all the shares
in the capital of Ultramast (the "FURTHER MARCONI DEFERRED SHARES"),
provided that:
9.2.1 RTS shall pay to Marconi a sum equal to the subscription price
of the Further Marconi Deferred Shares;
9.2.2 Marconi shall not be obliged to subscribe the Further Marconi
Deferred Shares where such a subscription would have any
adverse tax or accounting consequences for Marconi or its
Affiliates; and
9.2.3 RTS shall reimburse Marconi for all of its legal and other
professional costs and expenses incurred in dealing with the
subscription for the Further Marconi Deferred Shares.
9.3 RTS grants to Marconi an option to require RTS to purchase all of the
Deferred Shares from time to time issued to Marconi on the terms and
subject to the conditions set out in Schedule 3 (the "PUT OPTION") and
Marconi grants to RTS an option to purchase from Marconi all of the
Deferred Shares from time to time issued to Marconi on the terms and
subject to the conditions set out in Schedule 3 (the "CALL OPTION").
The Put Option and the Call Option shall both lapse and cease to be of
any further effect on the date being the thirtieth anniversary of the
date of this agreement.
10. SECONDMENT ARRANGEMENT
10.1 The Secondment Arrangement shall terminate on Completion and be of no
further effect.
10.2 Marconi shall recharge to Ultramast the Employment Costs which accrue
up to Completion on exactly the same basis it has done to date under
the Secondment Arrangement. Ultramast
20
shall not be responsible for any Employment Costs in relation to the
Employees other than the Employment Costs which accrue up to
Completion.
10.3 With effect from Completion and unless the Employees take up employment
with Ultramast and/or its Affiliates following Completion, Marconi
shall perform and discharge all obligations in respect of the Employees
arising on or after Completion and shall be responsible for all costs
and liabilities in relation to the Employees arising on or after
Completion including all costs and liabilities (whether or not these
costs or liabilities relate to the period of the Secondment
Arrangement) in relation to any termination of the Employees'
employment with Marconi or its Affiliates and termination of the
Secondment Arrangement; and
10.4 Marconi hereby undertakes to indemnify Ultramast against those costs
and liabilities which it is obliged to discharge under sub-clause 10.3.
10.5 The total aggregate liability of Marconi under sub-clauses 10.3 and
10.4 shall not exceed the sum of L300,000.
11. CONFIDENTIALITY
11.1 The terms of this agreement shall be held in complete confidence by
each of the parties and shall not be disclosed to any other person
except:
11.1.1 to the auditors and to the legal advisers of that party to
whom the confidentiality obligations set out in this agreement
shall extend; or
11.1.2 where that party is under a legal or regulatory obligation to
make such disclosure, but limited to the extent of that legal
or regulatory obligation; or
11.1.3 to the extent that it is already in the public domain (other
than as a result of a party's breach of this agreement) or to
the extent required by a Court of competent jurisdiction; or
11.1.4 with the prior written consent of the other parties to this
agreement, such consent not to be unreasonably withheld; or
11.1.5 to the Creditors' Committees who may, for the avoidance of
doubt, disclose the terms to any lender to Marconi or any
holder of any bond issued by Marconi; or
11.1.6 to the shareholders of a party, in response to a specific
question raised by such a shareholder at a general meeting of
that party; or
11.1.7 to the extent required for the purposes of the Court
considering or hearing the Capital Reduction.
11.2 The parties shall take all reasonable steps to make their employees and
agents aware of the terms of sub-clause 11.1 and to instruct them to
observe those terms.
11.3 If none of the exceptions at sub-clauses 11.1.1 to 11.1.7 apply and a
party is asked about the Action or this agreement, the party shall
respond in accordance with the questions and answers in the agreed form
and no more.
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12. NON-ADMISSION OF LIABILITY
Save for sub-clause 6.4, none of the parties makes any admission of
liability whether by entering into this agreement or otherwise and no
party shall claim that any other party has admitted any liability by
entering into this agreement.
13. PRESS RELEASE
Marconi and RTS shall each release a press release in the agreed form
following signature of this agreement.
14. BREACH
Each of the parties individually and severally acknowledges, having
regard to the nature of this settlement, that damages would not be an
adequate remedy for any breach of this agreement and that the remedies
of injunction, specific performance and other equitable relief for any
threatened or actual breach of this agreement should lie to enforce any
of the obligations herein. Notwithstanding the provisions of this
clause but without prejudice to the provisions of clause 2, no party
shall have any right to rescind or otherwise to terminate this
agreement.
15. WARRANTY OF AUTHORITY
Each of the parties warrants to the others that this agreement
constitutes its legal, valid and binding obligation and that it has
full power and authority to enter into and perform, and has taken all
necessary action to authorise its entry into and performance of this
agreement.
16. THIRD PARTY RIGHTS
Save in respect of clause 3, a person who is not a party to this
agreement shall have no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce any of its terms. Clause 3 may be varied
or terminated by agreement between the parties without the consent of
any person.
17. FURTHER ASSURANCE
17.1 Each party shall execute and do (or procure to be executed and done by
any other necessary party) all such deeds, documents, acts and things
and exercise all rights and powers available to it in respect of any
other person as may from time to time reasonably be required in order
to give full effect to this agreement.
17.2 Each party hereby gives all consents necessary to the transactions
contemplated by this agreement including, without limitation, all
consents required under the Ultramast Agreement.
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18. GENERAL
18.1 Each party shall bear its own costs in connection with the negotiation,
execution and implementation of this agreement.
18.2 This agreement shall be binding on the parties, their successors and
assigns and the name of a party appearing herein shall be deemed to
include the names of any such successor or assign.
18.3 Each party confirms that this agreement sets out the entire agreement
and understanding between the parties in relation to the subject matter
hereof. Each of the parties acknowledges that no representation
(including pre-contractual negligent and innocent misrepresentations)
of any nature has been made to that party or relied upon by that party
in connection with or in relation to this settlement, except as set out
in this agreement and each of the parties irrevocably waives all rights
and remedies which, but for this sub-clause, might otherwise be
available to it in respect of any such representation. This clause
shall not limit or exclude any liability for fraud.
18.4 This agreement may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement and
any parties may enter into this agreement by executing a counterpart.
18.5 This agreement shall be governed by and shall be construed in
accordance with English law. The parties submit to the exclusive
jurisdiction of the English Courts for the purpose (but solely for the
purpose) of any action to enforce the terms of this agreement.
18.6 Save as may be specifically provided by this agreement, none of the
rights or obligations under this agreement may be assigned,
transferred, held on trust or otherwise dealt with in any way without
the prior written consent of all of the parties.
18.7 A waiver (whether express or implied) by one of the parties of any of
the provisions of this agreement or of any breach of or default by any
other party in performing any of those provisions shall not constitute
a continuing waiver and that waiver shall not prevent the waiving party
from subsequently enforcing any of the provisions of this agreement not
waived or from acting on any subsequent breach of or default by any
other party under any of the provisions of this agreement.
18.8 The invalidity, illegality or unenforceability of any of the provisions
of this agreement shall not affect the validity, legality or
enforceability of the remaining provisions of this agreement.
19. THE LIQUIDATORS
19.1 The Liquidators are entering into and signing this agreement as agents
of RG and have been acting in that capacity in the negotiation,
preparation and implementation of this agreement.
19.2 The Liquidators and their staff, employees, advisers and agents shall
incur no personal liability whatsoever in respect of any matter
referred to in this agreement or any other deed, instrument or document
entered into pursuant to it and, without prejudice to the generality of
the foregoing, in respect of any of the obligations undertaken by RG or
in respect of any failure on the part of RG to observe, perform or
comply with any such obligations or in relation to any associated
arrangements or negotiations whether such liability would arise under
the Insolvency Act 1986 or otherwise howsoever and any liability to
which the
23
Liquidators or their staff, employees, advisers and agents would
otherwise be subject (whether in contract, tort or otherwise) is
expressly excluded.
19.3 Without prejudice to clause 15 and sub-clause 18.3, in favour of the
Liquidators and RG, all representations (including pre-contractual
negligent and innocent misrepresentations) and warranties express or
implied, and whether statutory or otherwise, relating to the subject
matter of this agreement are excluded.
19.4 Any claim against RG and/or against the Liquidators, or their firm or
their partners, employees, agents advisers or representatives shall, in
any event, notwithstanding the above exclusions of liability, be
irrevocably waived unless made in writing by notice to the Liquidators
not later than 90 days after the date hereof, the first day of such 90
days' period to be the day immediately following the date hereof.
19.5 The exclusion of liability in this agreement shall:
19.5.1 arise and continue notwithstanding the termination of the
Liquidators' agency before or after the signing of this
agreement and shall operate as waivers of any claims in tort
as well as under the law of contract;
19.5.2 be in addition to and not in substitution for and
notwithstanding any right of indemnity or relief otherwise
available; and
19.5.3 continue after Completion.
19.6 The parties further acknowledge and agree that the Liquidators are
parties to this agreement in their personal capacities only for the
purposes of receiving the benefit of the exclusions and limitations in
their favour in this agreement.
19.7 Nothing in this agreement shall operate to restrict or affect in any
way any right of the Liquidators to an indemnity or to a lien whether
under section 234 of the Insolvency Act 1986 or otherwise howsoever.
19.8 The Liquidators shall be entitled to retain all such records and
documents relating to RG or its business or any of its assets as are
necessary to perform and complete their duties as Liquidators and the
other parties to the agreement shall render such assistance to the
Liquidators and their representatives and agents as the Liquidators may
reasonably require to perform and complete such duties in so far as
they relate specifically to this settlement deed and directly related
matters.
19.9 The exclusions and limitations contained in this agreement shall not
apply in the case of any fraudulent misrepresentation made by RG or the
Liquidators or their respective agents or insofar as any action against
any of them is based upon the fraud of RG or the Liquidators or their
respective agents (and for these purposes "fraud" includes the
deliberate concealment (to be construed by reference to section 32(2)
of the Limitation Act 1980) of any fact relevant to any right of action
against RG or the Liquidators) save insofar as they satisfy the
requirement of reasonableness as stated in the Unfair Contract Terms
Act 1977 or, where applicable, would satisfy the requirement of
reasonableness were references to periods of time to be construed as
running from the discovery of the fraud or concealment (as the case may
be) in which event such references shall be so construed.
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20. INDEMNITIES
20.1 Marconi shall indemnify and hold harmless each of Ultramast and RTS or
the New Party (as defined in the Form of Deed of Adherence in Schedule
7) and, to the extent applicable, their respective Affiliates against
all actual costs, claims, demands and expenses (including reasonable
legal costs and expenses) of whatever nature incurred or suffered by
it, and arising out of any claim, action or proceeding taken or issued
by or on behalf of British Waterways (or its predecessors) against
Ultramast, RTS, Marconi or Marconi plc solely to the extent that such
claim, action or proceeding is in respect of a letter dated 26th April,
2001 from Marconi plc to British Waterways or in connection with the
relationship between Marconi plc and British Waterways created by that
letter (a "BW CLAIM"), provided always that:
20.1.1 Ultramast and/or RTS (as the case may be) shall promptly, and
in any event within seven days, notify Marconi in writing of
any BW Claim of which it becomes aware;
20.1.2 Marconi shall, at its expense, be entitled to have the conduct
of and/or settle all negotiations and litigation arising from
any BW Claim to the extent that such negotiations and
litigation relate to the BW Claim;
20.1.3 Ultramast and/or RTS shall, and shall procure so far as they
are able that their Affiliates shall, at Marconi's request and
with Marconi reimbursing Ultramast, RTS and/or any Affiliate
(as the case may be) for all costs and expenses (including
reasonable legal costs and expenses) reasonably incurred, give
Marconi all assistance reasonably requested by Marconi
(including, without limitation, giving access to such
employees, documents and records as Marconi may reasonably
require provided that such access would not result in RTS
and/or Ultramast and/or their respective Affiliates waiving or
losing the benefit of any legal privilege they would otherwise
have in respect of such employees, documents and records);
20.1.4 if a BW Claim does not include RTS, Ultramast or any of their
Affiliates as a named party to any such claim, action or
proceeding, Marconi shall not be obliged to pay the costs,
claims, demands or expenses of Ultramast, RTS and/or any of
their Affiliates unless it has first received notification of
the intention to incur such amounts and Marconi has given its
prior written consent to the incurrence of such amounts (such
consent not to be unreasonably withheld or delayed);
20.1.5 neither Ultramast nor RTS shall make any admission of
liability or agree to any settlement or compromise of any BW
Claim or incur any costs or expenses in relation to a BW Claim
except with the prior written consent of Marconi;
20.1.6 the Liquidators will, while Marconi has conduct of claims as
contemplated in this sub-clause 20.1, be kept fully informed
of the process and progress of any such negotiation and/or
litigation and will be permitted reasonable access to the
legal counsel(s) conducting such negotiation and/or litigation
for or on behalf of Marconi; and
20.1.7 the total aggregate liability of Marconi under this sub-clause
20.1 shall not exceed L10,000,000.
20.2 RTS, Marconi and Ultramast shall use their respective reasonable
endeavours to procure, insofar as they are respectively able, that Ente
Sardo Acquedottie e Fognature ("ESAF") agrees to the termination of an
agreement dated 30th July, 2002 between ESAF and
25
Ultramast (the "CONVENTION") without any liability on the part of
Ultramast. In using their respective reasonable endeavours to procure
termination of the Convention, none of RTS, Marconi or Ultramast shall
make any payment to ESAF without the prior written consent of both RTS
and Marconi (such consent not to be unreasonably withheld). RTS,
Marconi and Ultramast shall consult each other with regard to actions
to be taken to achieve such termination, and shall co-operate with each
other in good faith with a view to securing, insofar as the parties are
respectively able, such termination prior to Completion.
20.3 If such termination in a manner reasonably satisfactory to both RTS and
Marconi (the "REQUIRED TERMINATION") is not achieved prior to
Completion and Ultramast is required to pay any sum to ESAF (other than
sums specifically provided for in respect of ESAF in the witness
statement prepared in connection with the Capital Reduction) in respect
of the Convention or any leases required to be entered into pursuant to
it, including as a result of breach or otherwise non-compliance with
the terms of the Convention (an "ESAF PAYMENT"), Marconi shall
indemnify and hold harmless RTS against 50 per cent. of all such ESAF
Payments, provided always that:
20.3.1 Ultramast and/or RTS (as the case may be) shall promptly, and
in any event within seven days, notify Marconi in writing of
any ESAF Payment of which it becomes aware;
20.3.2 RTS, Marconi and Ultramast agree that no steps will be taken
by any of them in relation to the Convention or Ultramast's
relationship with ESAF, without the prior written consent of
both RTS and Marconi (such consent not to be unreasonably
withheld);
20.3.3 in no event shall Marconi's liability under this indemnity,
whether in relation to one or more ESAF Payments, exceed in
aggregate L1.68 million;
20.3.4 this indemnity shall only subsist so long as Ultramast remains
a subsidiary of either RTS or the New Party (as defined in the
Form of Deed of Adherence in Schedule 7); and
20.3.5 this indemnity shall lapse and cease to have effect if the
Required Termination is subsequently achieved or if either of
Ultramast or RTS build any mast sites pursuant to the terms of
the Convention or otherwise take any other material action
with respect to their purported obligations thereunder other
than seeking the Required Termination.
20.4 Insofar and to the extent that RTS receives a payment from Marconi
pursuant to the indemnity provided for in sub-clause 20.3, RTS shall
forward such sum received to Ultramast subject to the deduction of all
reasonable costs and expenses (including legal costs and expenses)
incurred in the process of obtaining such payment from Marconi,
provided always that this sub-clause shall not have the effect of
increasing the liability of Marconi under sub-clause 20.3 in any way
whatsoever.
26
IN WITNESS whereof the parties hereto have caused this deed to be duly executed
and delivered on the date first written above.
EXECUTED as a DEED by )
RT GROUP TELECOM SERVICES LIMITED ) SIMON OSBORNE
acting by )
and ) PAUL WORTHINGTON
EXECUTED as a DEED by )
RT GROUP PLC )
(IN MEMBERS' VOLUNTARY LIQUIDATION) )
acting by James Robert Drummond Smith
one of the Liquidators
(as its agent without personal liability)
in the presence of:
JAMES SMITH
Signature of witness LOUIS ATTRILL
AS JOINT LIQUIDATION
RT GROUP PLC
LOUIS ATTRILL (IN MEMBERS VOLUNTARY LIQUIDATION)
Name of Witness
ASHURST MORRIS CRISP
BROADWALK HOUSE
5 APPORD STREET
LONDON, EC2A 2HA
Address
TRAINEE SOLICITOR
Occupation
27
EXECUTED as a DEED by )
RT GROUP TELECOM SERIVCES )
LIMITED ) SIMON OSBORNE
acting by A DIRECTOR )
and ITS SECRETARY ) PAUL WORTHINGTON
EXECUTED as a DEED by RT )
GROUP PLC ) JAMES SMITH
(IN MEMBERS' VOLUNTARY )
LIQUIDATION )
acting by James Robert Drummond Smith )
one of the liquidators
(as its agent without personal liability)
in the presence of:
Signature of witness
___________________________________
Name of Witness
___________________________________
___________________________________
___________________________________
Address
___________________________________
Occupation
EXECUTED as a DEED by )
MARCONI CORPORATION PLC ) MICHAEL PARTON
acting by )
and ) CHRIS HOLDEN
EXECUTED as a DEED by )
ULTRAMAST LIMITED ) SIMON OSBORNE
acting by )
and ) TONY ROBINSON
EXECUTED as a DEED by )
James Robert Drummond Smith ) JAMES SMITH
for and on behalf of himself and Nicholas James Dargan )
in the presence of:
LOUIS ATTRILL
Signature of witness
LOUIS ATTRILL
Name of Witness
ASHURST MORRIS CRISP
BROADWALK HOUSE.
5 APPORD STREET
LONDON, EC2A 2HA
Address
TRAINEE SOLICITOR
Occupation
EXECUTED as a DEED by MARCONI )
CORPORATION PLC ) MIKE PARTON
acting by )
and )
EXECUTED as a DEED by )
ULTRAMAST LIMITED ) SIMON OSBORNE
acting by A DIRECTOR )
and A DIRECTOR ) TONY ROBINSON
EXECUTED as a DEED by )
by James Robert Drummond Smith ) JAMES SMITH
one of the liquidators )
for and on behalf of himself and Nicholas James Dargan )
in the presence of:
Signature of witness
___________________________________
Name of Witness
___________________________________
___________________________________
___________________________________
Address
___________________________________
Occupation
IN THE HIGH COURT OF JUSTICE CLAIM NO. 2002 FOLIO 309
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
CLAIMANT RAILTRACK TELECOM SERVICES LIMITED
and
DEFENDANT MARCONI CORPORATION PLC
-----------------------
CONSENT ORDER
-----------------------
The Claimant and Defendant having agreed terms of settlement
BY CONSENT
IT IS ORDERED that:
1. L19,186,026 of the L20,558,903.90 paid into Court by the Defendant on
15th August, 2002 pursuant to the Order of Morison J dated 25th, July
2002 shall be paid to the Defendant's solicitors, Allen & Overy;
2. the balance of the L20,558,903.90 so paid into Court, together with all
accrued interest on that L20,558,903.90 shall be paid to the Claimant's
solicitors, Ashurst Morris Crisp;
3. this action is hereby discontinued; and
4. there be no order for costs.
Dated this 21st day of February, 2003
CLAIM NO. 2002 FOLIO 309
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
CLAIMANT RAILTRACK TELECOM
SERVICES LIMITED
AND
DEFENDANT MARCONI CORPORATION
PLC
-------------------
CONSENT ORDER
-------------------
Ashurt Morris Crisp
Broadwalk House
5 Appold Street
London EC2A 2HA
Ref: JRL
SOLICITORS FOR THE CLAIMANT
Allen & Overy
One New Change
London EC4M 9QQ
Ref: SH/IRT
SOLICITORS FOR THE DEFENDANT
SCHEDULE 2
REDUCTION TIMETABLE
- ------------------------------------------------------------------------------------------------------------------------------------
DATE ACTION(S) DOCUMENT(S) RESPONSIBILITY
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF THIS AGREEMENT (1) Marconi and RTS sign Consent Order (but (1) D&T Report D&T/U/AMC
UNTIL 20TH DECEMBER, 2002 held by A&O to the order of the parties
pending receipt of the court order (2) Instructions to Counsel AMC
approving the Capital Reduction)
(3) Petition AMC/U
(2) Fully investigate the position of
creditors of Ultramast as at date of (4) Witness statement AMC
witness statement
(5) Certificate of Incorporation and
(3) Draft all court documentation and Certificates of Incorporation on
circulate to all parties for comment changes of name AMC
(4) Instruct counsel (Martin Moore QC) to (6) Memorandum and Articles of
settle all documentation Association (including any
changes) D&T/U
(7) Accounts
(8) Latest management accounts
(30.09.02) U
(9) Evidence of cash balances (e.g.
balance sheet, bank statements) U
(10) Evidence of how and when loss
arose for purposes of loss
reduction AMC
(11) Reduction Order AMC/U
33
- ------------------------------------------------------------------------------------------------------------------------------------
DATE ACTION(S) DOCUMENT(S) RESPONSIBILITY
- ------------------------------------------------------------------------------------------------------------------------------------
(12) Advertisements (one for hearing
and one confirming approval of
reduction) AMC
(13) Consent Order (see Schedule 1) A&O
(14) Application Notice AMC
(15) Order for directions AMC
(16) Letters of consent to reduction AMC
- ------------------------------------------------------------------------------------------------------------------------------------
34
- ------------------------------------------------------------------------------------------------------------------------------------
DATE ACTION(S) DOCUMENT(S) RESPONSIBILITY
- ------------------------------------------------------------------------------------------------------------------------------------
20TH DECEMBER, 2002 (1) Marconi and RTS to sign shareholders' (1) Shareholders' written resolution
(A.M.) written resolution to approve the (in duplicate) AMC
Capital Reduction and amend Articles of
Association (2) Board minutes including
resolutions to approve Accounts,
(2) Board meeting of Ultramast management accounts, Capital
Reduction and one director (A.
(3) Director of Ultramast (A. Elliman) to Elliman) swearing witness
sign witness statement statement AMC
(3) Witness statement (see above) AMC
(4) Articles of Association AMC/ A&O
- ------------------------------------------------------------------------------------------------------------------------------------
20TH DECEMBER, 2002 (1) Issue application notice for directions (1) Application Notice (see above) AMC
(P.M.) for the Capital Reduction, lodge
petition, witness statement and
supporting papers with Court
(2) File shareholders' written resolution AMC
and amended Articles of Association with
the Registrar
- ------------------------------------------------------------------------------------------------------------------------------------
16TH JANUARY, 2003 (1) Hearing of application notice for the AMC/Counsel
Capital Reduction before the court
registrar (in chambers)
(2) Court registrar settles form of order Court/Counsel
for directions and advertisement of
hearing
(3) Book advertisement space in national AMC
newspaper
- ------------------------------------------------------------------------------------------------------------------------------------
28TH JANUARY, 2003 (1) Advertise hearing of petition in (1) Advertisement AMC
national daily newspaper
- ------------------------------------------------------------------------------------------------------------------------------------
5TH FEBRUARY, 2003 (1) Court hearing of petition to confirm AMC/Counsel
Capital Reduction
- ------------------------------------------------------------------------------------------------------------------------------------
35
- ------------------------------------------------------------------------------------------------------------------------------------
DATE ACTION(S) DOCUMENT(S) RESPONSIBILITY
- ------------------------------------------------------------------------------------------------------------------------------------
(2) Lodge Consent Order at court for
sealing A&O
- ------------------------------------------------------------------------------------------------------------------------------------
7TH FEBRUARY, 2003 (1) Hearing (if necessary) of the Court to AMC/Counsel
approve the Consent Order
(2) Sealed Consent Order issued by Court
- ------------------------------------------------------------------------------------------------------------------------------------
10TH FEBRUARY, 2003 (1) Completion (1) Board resolutions AMC/A&O
(2) Application for Deferred Shares AMC
(2) Registrar registers Reduction Order (3) Deferred Share certificate
whereupon Capital Reduction is effective (4) APT agreement AMC/U
(5) Share certificate re Marconi AMC
Reduction Shares Marconi
(6) Share certificate re RTS Reduction
Shares AMC
(7) Letter to Companies House enclosing
Reduction Order AMC
- ------------------------------------------------------------------------------------------------------------------------------------
BY 25TH FEBRUARY, 2003 Advertise registration of Reduction Order (1) Advertisement (see above) AMC
- ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 3
PUT & CALL OPTION
1. INTERPRETATION
In this Schedule, unless the context otherwise requires, the following words and
expressions shall have the following meanings:
"CALL EXERCISE NOTICE" a notice substantially in the form set out in
Schedule 4;
"EXERCISE NOTICE" a Call Exercise Notice or a Put Exercise Notice (as
the context may require);
"OPTION" either or both of the Put Option and the Call Option
(as the context may require);
"OPTION COMPLETION" completion of the exercise of an Option as described
in paragraph 4;
"OPTION CONSIDERATION" the consideration payable upon Option Completion as
set out in paragraph 3;
"PUT EXERCISE NOTICE" a notice substantially in the form set out in
Schedule 5.
2. EXERCISE OF THE OPTIONS
2.1 RTS may exercise the Call Option by serving a Call Exercise Notice on
Marconi at any time after 30th September, 2004.
2.2 Marconi may exercise the Put Option by serving a Put Exercise Notice on
RTS at any time after the date being the fifteenth anniversary of the
date of this agreement or, if earlier, upon Railtrack plc agreeing to
the changes to the Railtrack Agreements contemplated by sub-clause 8.7.
2.3 An Option may be exercised only in respect of all of the Deferred
Shares issued to Marconi at the time of the relevant Exercise Notice
(the "OPTION SECURITIES").
2.4 Exercise of an Option shall oblige Marconi to sell and RTS to purchase
the Option Securities.
2.5 The Option Securities shall be sold free from all liens, charges,
equities and encumbrances and together with all rights attaching to the
Option Securities at the date of service of the relevant Exercise
Notice.
3. OPTION CONSIDERATION
3.1 The consideration for the acquisition of the Option Securities shall be
paid by RTS at Option Completion and shall be as provided in paragraph
3.2.
3.2 The consideration for the acquisition of the Option Securities upon the
exercise of an Option shall be the sum of L1 for each of the Option
Securities.
37
4. OPTION COMPLETION
4.1 Option Completion of the sale and purchase of the Option Securities
following the exercise of an Option shall take place at the offices of
RTS's Solicitors on the date which is the fifth business day after the
date of service of the Exercise Notice.
4.2 At Option Completion:
4.2.1 Marconi shall deliver to RTS a transfer or transfers in
respect of the Option Securities duly completed in favour of
RTS (or as it may direct) together with the certificate(s) for
the Option Securities; and
4.2.2 following delivery of the documents referred to in paragraph
4.2.1, RTS shall pay the Option Consideration to Marconi (or
to such other person as Marconi may direct).
5. NON-DISPOSAL
5.1 Until Option Completion, Marconi shall not, without the prior written
consent of RTS sell, transfer or otherwise dispose of (or agree to do
so) any of the Option Securities (or any interest in them).
38
SCHEDULE 4
FORM OF CALL EXERCISE NOTICE
[ON THE HEADED NOTEPAPER OF RTS]
To: [Marconi] [DATE]
Dear Sirs
RE: SETTLEMENT AGREEMENT, DATED - DECEMBER, 2002, AND MADE BETWEEN, INTER ALIA,
MARCONI CORPORATION PLC AND RT GROUP TELECOM SERVICES LIMITED (THE "AGREEMENT")
We refer to the Agreement and to the Call Option (as defined in the Agreement)
granted by you to us under clause 9.3 of the Agreement.
We hereby give notice pursuant to paragraph 2 of schedule 3 to the Agreement
that we exercise the Call Option granted by you in respect of all of the Option
Securities (as defined in the Agreement).
Yours faithfully
- ---------------------------------------
For and on behalf of
RT Group Telecom Services Limited
39
SCHEDULE 5
FORM OF PUT EXERCISE NOTICE
[ON THE HEADED NOTEPAPER OF MARCONI CORPORATION PLC]
To: [RTS] [DATE]
Dear Sirs
RE: SETTLEMENT AGREEMENT, DATED - DECEMBER, 2002, AND MADE BETWEEN, INTER ALIA,
MARCONI CORPORATION PLC AND RT GROUP TELECOM SERVICES LIMITED (THE "AGREEMENT")
We refer to the Agreement and to the Put Option (as defined in the Agreement)
granted by you to us under clause 9.3 of the Agreement.
We hereby give notice pursuant to paragraph 2 of schedule 3 to the Agreement
that we exercise the Put Option granted by you in respect of all of the Option
Securities (as defined in the Agreement).
Yours faithfully
- ----------------------------------------
For and on behalf of
Marconi Corporation plc
40
SCHEDULE 6
RIGHTS OF THE DEFERRED SHARES
The rights attached to and imposed on the Deferred Shares are as follows:
1. Income and Capital
Subject to paragraph 2 below, the Deferred Shares shall not confer on
the holders thereof any entitlement to any participation in the profits
or the assets of Ultramast.
2. Winding Up
The Deferred Shares shall confer on the holders thereof the right, in
the event of a winding up of Ultramast or other return of capital, to
receive an amount equal to the nominal value of such Deferred Shares
but only after the holders of all other shares have received in
aggregate a distribution in the sum or to the value of L1,000,000,000
in respect of their holdings.
3. Voting
The Deferred Shares shall not confer on the holders thereof any
entitlement to receive notice of or to attend or vote at any general
meeting of Ultramast.
41
SCHEDULE 7
FORM OF DEED OF ADHERENCE
THIS DEED is made on [ ]
BETWEEN:
(1) [ ] of [ ] (the NEW PARTY);
(2) RT GROUP TELECOM SERVICES LIMITED, a company incorporated in England
and Wales (registered number 3963596) whose registered office is at
20-22 Bedford Row, London WC1R 4JS ("RTS");
(3) RT GROUP PLC (IN MEMBERS' VOLUNTARY LIQUIDATION), a company
incorporated in England and Wales (registered number 2904614) whose
registered office is at 20-22 Bedford Row, London WC1R 4JS ("RG")
acting by its joint liquidators James Robert Drummond Smith and
Nicholas James Dargan of Deloitte & Touche, 180 Strand, London WC2R 1WL
(the "LIQUIDATORS");
(4) MARCONI CORPORATION PLC, a company incorporated in England and Wales
(registered number 67307) whose registered office is at New Century
Park, P.O. Box 53, Coventry CV3 1HJ ("MARCONI");
(5) ULTRAMAST LIMITED, a company incorporated in England and Wales
(registered number 4042640) whose registered office is at City Point,
One Ropemaker Street, London EC2Y 9SS ("ULTRAMAST"); and
(6) THE LIQUIDATORS.
WHEREAS:
(A) RTS, RG, Marconi, Ultramast and the Liquidators (together the
"CONTINUING PARTIES") are parties to a settlement deed dated [ ]th
December, 2002 (the "AGREEMENT"). Words and expressions defined in the
Agreement shall have the same meaning in this deed.
(B) The New Party proposes to purchase all of the Ordinary Shares
registered in the name of RTS from RTS.
(C) This deed is made by the New Party in compliance with clause 4.11 of
the Agreement.
THIS DEED WITNESSES as follows:
1. The New Party confirms that it has been supplied with a copy of the
Agreement.
2. Subject to clauses 4 and 5 of this deed, the New Party undertakes to
each of the Continuing Parties to be bound by the Agreement in all
respects as if the New Party was a party to the Agreement and named in
it as RTS and to observe and perform all the provisions and obligations
of the Agreement applicable to or binding on RTS under the Agreement
insofar as they fall to be observed or performed on or after the date
of this deed.
3. Subject to clauses 4 and 5 of this deed, the Continuing Parties
undertake to the New Party to observe and perform all the provisions
and obligations of the Agreement applicable to or
42
binding on them under the Agreement and acknowledges that the New Party
shall be entitled to the rights and benefits of the Agreement as if the
New Party were named in the Agreement as RTS with effect from the date
of this deed.
4. The New Party shall not be bound by, and shall not be entitled to
exercise any rights in relation to, the rights and obligations of RTS
set out in sub-clauses 2.1.2, 2.2, 3.5, 4.10, 4.11, 6, 7.2.3, 7.2.5,
7.2.6, 7.3.1, 7.3.2, 7.3.4, 7.7, 8.1.2 or clause 9 of or schedule 3 to
the Agreement (but, for the avoidance of doubt, these clauses,
sub-clauses and that schedule shall continue to apply to and be binding
on RTS).
5. Nothing in this agreement shall affect the rights of RTS under the
Agreement or the obligation of RTS to comply with the terms of the
Agreement, save in respect of sub-clauses 2.1.1, 3.3, 4.1, 4.2, 4.3,
4.4, 4.7, 4.8, 4.9, 5.1, 5.5, 7.1, 7.2.2, 7.3.3, 8.2 and 8.5 which
shall no longer apply to RTS but, for the avoidance of doubt, shall
apply to the New Party.
6. This deed may be executed in any number of counterparts, all of which
taken together shall constitute one and the same deed and any party may
enter into this deed by executing a counterpart.
7. This deed shall be governed by and shall be construed in accordance
with English law. The parties submit to the exclusive jurisdiction of
the English Courts for the purpose (but solely for the purpose) of any
action to enforce the terms of this deed.
IN WITNESS of which this deed has been executed and has been delivered on the
date which appears first on page 1.