BT 2003 Annual Report Download - page 151

Retirement of directors
Provisions of the legislation which, read with the Articles, would prevent a person from being or becoming
a director because that person has reached the age of 70 do not apply to the company.
At every annual general meeting any director who was elected or last re-elected a director at or before
the annual general meeting held in the third year before the current year, shall retire by rotation. Any director
appointed by the directors automatically retires at the next following annual general meeting. A retiring
director is eligible for re-election.
Directors’ borrowing powers
To the extent that the legislation and the Articles allow, the Board can exercise all the powers of the company
to borrow money, to mortgage or charge its business, property and assets (present and future) and to issue
debentures and other securities, and give security either outright or as collateral security for any debt, liability
or obligation of the company or another person. The Board must limit the borrowings of the company and
exercise all the company’s voting and other rights or powers of control exercisable by the company in relation to
its subsidiary undertakings so as to ensure that the aggregate amount of all borrowings by the group outstanding,
net of amounts borrowed intra-group among other things, at any time does not exceed £35 billion.
Material contracts
The following contracts (not being contracts entered into in the ordinary course of business) have been entered
into in the two years preceding the date of this document by BT or another member of the group and are, or
may be, material to the group or have been entered into by BT or another member of the group and contain
a provision under which a member of the group has an obligation or entitlement which is, or may be, material
to BT or such other member of the group.
Airtel
A sale and purchase agreement dated 2 May 2001 between BT (Netherlands) Holdings BV, a subsidiary of BT
and Vodafone, under which the BT subsidiary agreed to sell its entire interest in Airtel Mo
´vil, S.A. to Vodafone.
The sale was completed on 29 June 2001 for a consideration of £1.1 billion (paid in Euros).
Yell
On 25 May 2001, the following agreements were entered into, under which BT agreed to sell its classified
advertising directory businesses in the UK and the USA:
(i) umbrella agreement between Yell Ltd, BT Holdings Ltd, Yellow Pages BV, Marchprobe Ltd, Castaim Ltd,
Yasmin Two (US) Inc. and BT;
(ii) UK share sale agreement between BT Holdings Ltd and Marchprobe Ltd under which BT Holdings Ltd agreed
to sell the share capital of Yellow Pages Sales Ltd to Marchprobe Ltd;
(iii) UK business sale agreement between Yell Ltd, Castaim Ltd and Yasmin Two (US) Inc. under which Yell Ltd
agreed to sell Yell Ltd’s business and assets to Castaim Ltd and to sell Yell Ltd’s US intellectual property
rights to Yasmin Two (US) Inc; and
(iv) US share sale agreement between Yellow Pages BV and Yasmin Two (US) Inc. under which Yellow Pages BV
agreed to sell the share capital of Yellow Book USA, Inc. to Yasmin Two (US) Inc.
The umbrella agreement sets out the common terms which apply to the UK share sale agreement, the UK
business sale agreement and the US share sale agreement. The umbrella agreement contains covenants
restricting any member of the group from carrying on a competing printed classified directories business for
twelve months from completion.
The share sale and business agreements contain standard warranties and indemnities in favour of Marchprobe
Ltd, Castaim Ltd and Yasmin Two (US) Inc. The warranties expired on 30 June 2002.
As part of the consideration under the UK business sale agreement, Castaim Ltd also assumed responsibility
for certain liabilities and obligations of the Yell business.
The sale of Yell was completed on 22 June 2001 for a consideration of £2.14 billion, comprising (i) £2 million
as consideration for the issued shares of Yellow Pages Sales Ltd; (ii) £1,288 million in cash plus £100 million in
interest bearing vendor loan notes and £100 million in deferred consideration (subject to reduction on
ascertainment of the net assets) as consideration for the assets of Yell Ltd; (iii) £1 as consideration for the US
intellectual property rights; and (iv) £650 million as consideration for the issued shares of Yellow Book USA, Inc.
(subject to adjustment in respect of certain intra-group indebtedness and pursuant to the terms of the first
amending agreement).
Following completion, Yell Ltd agreed a net asset adjustment with Castaim Ltd in respect of the assets of
Yell Ltd, and Yellow Pages BV agreed a net asset adjustment with Yasmin Two (US) Inc. in respect of Yellow Book
USA, Inc, which together resulted in the total purchase consideration received being reduced by approximately
£140 million.
Additional information for shareholders
150 BT Annual Report and Form 20-F 2003