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Exhibit 2.5
[Letterhead of Mannesmann Eurokom GmbH]
EHG Einkaufs- und Handels GmbH
c/o Western Wireless International
0000 000xx Xxxxxx X.X.
Suite 400
Bellevue, WA 98006
June 29, 2001
Attn.: Xxxxxxx Xxxxxxx
Dear Xx. Xxxxxxx,
Reference is made to the Agreement for the Sale and Purchase of 100% of the
Shares in tele.ring Telekom Service GmbH ("tele.ring GmbH") and 100% of the
Partnership Interest in tele.ring Telekom Service GmbH & Co KEG ("tele.ring
KEG") and for the Call Option regarding the Sale and Purchase of 100% of the
Shares in Mannesmann 3G Mobilfunk GmbH entered into between Mannesmann Eurokom
GmbH and EKOM Telecommunications Holding AG as Vendors and EHG Einkaufs- und
Handels GmbH (the "Purchaser") on the date hereof (the "Agreement"). Terms used
in this letter shall have the same meaning as in the Agreement.
1. Subject to the terms of the Agreement and of this letter, we herewith
represent and warrant to you that the following shall be accurate as of
the Closing:
Each of tele.ring GmbH and tele.ring KEG has paid, or the accounts fully
provide for, all taxes which tele.ring GmbH or tele.ring KEG, as the
case may be, was liable to pay up to the Closing, provided that no claim
shall exist against the Vendors under this warranty unless Vendors (i)
have received written notice by tele.ring GmbH or tele.ring KEG of an
event reasonably likely to result in a breach of this warranty,
including, without limitation, the receipt (by tele.ring GmbH, tele.ring
KEG or Purchaser) of any notice of the commencement of any tax audit or
administrative or judicial proceeding affecting the taxes of tele.ring
GmbH or tele.ring KEG, which, if determined adversely to the taxpayer,
could result in a breach of this warranty (the 'Event') by the Vendors
no less than 5 (five) business days after the date of occurrence of any
such Event (provided that notice given after such five-business day
period shall only prejudice the giver to the extent of actual prejudice
to the recipient), (ii) have been given full access to all information
of tele.ring GmbH and tele.ring KEG pertaining to such Event, including,
without limitation, copies of any notice or other document received from
any tax authority in respect of any asserted tax liability, and (iii)
have been given the opportunity to take all measures, including, without
limitation, the opportunity to challenge, in any administrative or
judicial form (at Vendors' cost and expense) any decree, order, or other
authoritative determination by any tax authority or other state body
which could result in a breach of this warranty.
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This warranty constitutes a Vendors Warranty within the meaning of the
Agreement and shall be subject to the limitations set forth in Schedule
6 of the Agreement. Purchaser's remedies in the case of a breach of the
foregoing warranty shall in no case permit the recovery of amounts
already recovered by Purchaser, in particular under the rules relating
to the consolidated Closing Net Working Capital contained in the
Agreement.
2. We are further referring to the repayment of intra-group debt as carried
out by tele.ring GmbH, which repayment covers an overall amount of debt
in the magnitude of approximately Euro One Billion.
If the funding preceding the repayment of intra-group debt referred to
above is considered, in a binding decision of the relevant tax
authority, in whole or in part to be income for the purposes of Austrian
corporate income tax, and any such income is greater than:
(a) the accumulated tax loss carry forward of tele.ring GmbH as of
December 31, 2000, plus
(b) any additional losses (for tax purposes) incurred by tele.ring
GmbH in the period from January 1, 2001 until the Closing Date,
with such additional losses to be determined on the basis of an
interim pro forma tax balance sheet as of the Closing Date as
if it was a year end tax balance sheet (the "Pro Forma Closing
Tax Balance") to be prepared by tele.ring GmbH and audited or
reviewed by a certified public accountant reasonably
satisfactory to the Purchaser following the preparation of the
Closing Balance Sheet under the Agreement (together the
"Closing Tax loss Carry Forward"), we shall fully compensate
tele.ring GmbH on a net basis, upon your request, for the
hypothetical tax burden under Austrian corporate income tax
laws resulting from the full excess of any such tax income as
described above over the Closing Tax Loss Carry Forward.
In the event that the decision of the relevant tax authority referred to
above, is subsequently annuled or struck down, then any compensation
secured by tele.ring GmbH from us, shall be repaid together with
statutory interest, without prejudice to any subsequent claims for
compensation based upon subsequent decisions of the tax authorities.
The procedural rules set forth in Clause 1 shall apply to the
compensation agreed in this Clause 2 mutatis mutandis.
Our liability under this Clause 2 shall not be limited in amount.
3. Schedule 13 to the Agreement is amended (mostly for the avoidance of
doubt) by substituting the Schedule 13 attached hereto.
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4. The documents referred to Schedule 11 to the Agreement shall be held at
the offices of Mannesmann Eurokom GmbH ("MEU") and shall be retained in
confidence by MEU and EKOM Telecommunications Holding AG ("EKOM") and
only used for (i) accounting purposes, to the extent necessary, (ii) in
connection with asserting or defending any claim or arbitration under
the Agreement, or (iii) any other performance under or administration of
the Agreement.
In the event of any dispute, controversy or claim arising out of or in
connection with the arrangements embodied herein (including any schedule or
attachment hereto) or the breach, termination or validity of this document, the
parties hereto shall use all reasonable endeavours to resolve the matter on an
amicable basis. If one party serves formal written notice on the other party or
parties that a material dispute, controversy or claim of such a description has
arisen and the parties are unable to resolve the dispute within a period of
thirty (30) days from the service of such notice, then the dispute, controversy
or claim shall be referred to the respective senior executives of the parties
hereto. No recourse to arbitration by one party against the other party under
this arrangement shall take place unless and until such procedure has been
followed.
If the senior executives of the parties hereto shall have been unable to resolve
any dispute, controversy or claim referred to them within a period of ten (10)
days from referral to the senior executives, that dispute, controversy or claim
shall be referred to and finally settled by arbitration under and in accordance
with the Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in Switzerland. The arbitration proceedings shall be
conducted, and the award shall be rendered, in the English language.
The parties hereto hereby waive any rights of application and appeal to any
court or tribunal of competent jurisdiction (including without limitation the
courts of Germany, Austria, Switzerland, the U.S.A. and England) to the fullest
extent permitted by law in connection with any question of law arising in the
course of the arbitration or with respect to any award made except for actions
relating to enforcement of this arbitration clause or an arbitral award and
except for actions seeking interim or other provisional relief in aid of
arbitration in any court of competent jurisdiction.
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To express your agreement with the terms thereof, please sign a copy of this
letter where indicated below and have such countersigned copy returned to us.
Very truly yours
/s/
Agreed: Dusseldorf, June 29, 2001 (degree)
[Signature]
By its signature, EKOM Telecommunications Holding AG declares its acceptance of
clauses 3 and 4 and of the provisions hereof regarding dispute
resolution/arbitration only:
/s/
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(degree) To be agreed, outside Austria
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SCHEDULE 13
CLOSING BALANCE SHEET PROCEDURES
A. Draft Balance Sheet
1. Not less than three days prior to Closing, Vendors shall cause
tele.ring GmbH to prepare a consolidated balance sheet of tele.ring
GmbH and tele.ring KEG in accordance with Austrian accounting rules as
if it was a year end tax balance sheet as at the most recent date
practicable (the "Draft Balance Sheet") on the assumption that all
debt from Vodafone or any of its Affiliates and any third-party debt
have been repaid or contributed to the capital of such entities. After
preparation of the Draft Balance Sheet, it shall be promptly delivered
to Purchaser together with such back up information that shall enable
Purchaser to verify the accuracy thereof. Within two days after
receipt of the Draft Balance Sheet, Vendors and Purchaser shall meet
and shall agree on the amount of Consolidated Closing Net Working
Capital as of the date of the Draft Balance Sheet.
2. Within two days after agreement upon the Draft Balance Sheet, Vendors
shall provide to tele.ring GmbH the amount by which Consolidated Closing
Net Working Capital as at the date of the Draft Balance Sheet is a
negative number.
B. Closing Date Balance Sheet
1. Not more than 60 days after Closing, Purchaser shall cause a Balance
Sheet to be prepared as at the Closing Date in accordance with
Austrian accounting rules as if it was a year end tax balance sheet
("Closing Balance Sheet") in order to verify whether or not the
Consolidated Closing Net Working Capital is zero. After preparation of
the Closing Balance Sheet, Purchaser shall promptly deliver a copy
thereof to Vendors together with such back-up information that shall
enable Vendors to verify the accuracy thereof. For purposes of
preparing the Closing Balance Sheet, Austrian accounting rules shall
be consistently applied, unless - in light of the facts and
circumstances at the time the Closing Balance Sheet is prepared -
different practices are appropriate.
2. In the event that the Closing Date Balance Sheet shows that Consolidated
Closing Net Working Capital is a negative number, Vendors shall within
10 days after receipt of the Closing Balance Sheet pay the amount
thereof to tele.ring GmbH, unless prior to the end of such 10 day period
Vendors give written notice to Purchaser that Vendors disagree with the
method of preparation of the Closing Balance Sheet, which notice shall
specify in detail the reasons therefore. In the event that Vendors fail
to give such timely notice, Vendors shall be deemed to have agreed with
the Closing Balance Sheet and shall, within two days thereafter pay by
wire transfer the amount by which such Consolidated Closing Net Working
Capital was negative or if the Consolidated Closing Net Working
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Capital was a positive number, Purchaser shall cause tele.ring GmbH to
pay to Vendors such amount.
3. In the event that Vendors disagree with the manner in which the
Closing Balance Sheet was prepared, the Parties shall meet in order to
attempt to resolve any differences. If such resolution cannot be
achieved within 5 days, either Party may, by notice to the other,
designate a Big 5 accounting firm (the "First Firm") to determine
whether the Closing Balance Sheet was properly prepared. The First
Firm shall promptly determine whether the Closing Balance Sheet was
properly prepared unless the other Party elects, within 3 days after
receipt of the notice, to designate another Big 5 accounting firm (the
"Second Firm") by giving notice to the Party which designated the
First Firm. If Vendors so elect, the First and Second Firms shall
within 3 days of the appointment of the Second Firm select a Third Big
5 accounting firm (the "Third Firm") to make such determination.
4. If the First Firm and the Second Firm fail to mutually agree on the
Third Firm within 3 days, the Third Firm shall be appointed by the
President of the Vienna Chamber of Accountants upon request from either
Vendors of Purchaser.
5. The Third Firm shall make such determination as promptly as practicable
but in any event within 10 days of its appointment. The determination of
the Third Firm shall be final and binding on the parties and not subject
to further review or appeal.
6. The difference between zero and the actual amount of Consolidated
Closing Net Working Capital shall be paid by the appropriate Party to
the other taking into consideration any payments made pursuant to Clause
A.2 of this Schedule 13.
7. Each Party shall pay the costs of the firm that it designated and the
cost of the Third Firm shall be shared equally.
