BT 2015 Annual Report Download - page 221

219
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements Additional information
6HOOHU:DUUDQWLHV,QGHPQLWLHVDQG&RYHQDQWV
4.1 Warranties
The Share Purchase Agreement contains customary warranties given
by the Sellers, including in relation to authorisations, valid obligations,
filins and consents for the entr of the ellers into the ransaction
Documents, and including in relation to the EE Group, its share capital,
accounts and financial condition aterial licences and approvals
copliance with laws condition and sucienc of its networ and
assets, tax, material contracts, related party arrangements, litigation, IP
and  sstes eploees and benefit arraneents pension schees
real estate and ownership and conduct of the MBNL joint venture
arrangement.
4.2 Indemnities
The Sellers have also agreed, amongst other things, to indemnify BT in
the event that  suers loss as a result of certain reulator fines bein
levied aainst  or the  roup and aainst losses suered b  or
the EE Group as a result of certain other investigations and disputes.
The warranties and indemnities given by the Sellers are subject to
custoar financial and other liitations.
4.3 Covenants
The Share Purchase Agreement contains customary covenants restricting
the Sellers from competing with EE’s business for a period of three years
followin opletion subect to custoar eceptions for eistin
businesses and financial investents and fro solicitin eploees of
the  roup for a period of two ears followin opletion subect to
customary exceptions).
The Share Purchase Agreement also contains a customary tax covenant
in respect of liability for taxes due pre and post-Completion.
&RPSDQ\:DUUDQWLHVDQG,QGHPQLW\
The Share Purchase Agreement contains warranties given by the
Company as to, amongst other things, its capacity and authority to
enter into and perform its obligations under the Transaction Documents,
compliance by the Company in all material respects with certain laws
and reulations the availabilit of financin for the cash eleent of the
consideration for the cuisition the accurac of its public filins and
there havin been no aterial adverse chane to its financial position
since its last accounts date.
BT also agrees that it will indemnify the Sellers in the event that they
suer loss as a result of  havin taen certain actions in respect
of the  defined benefit pension schee or the  defined benefit
pension schee but in relation to the  ension chee onl where
eutsche eleo is identified as bein connected to  b virtue of the
appointment of a Director to the Board by the Deutsche Telekom Group).
The warranties and indemnity given by BT are subject to customary
financial and other liitations.
2WKHUXQGHUWDNLQJV
Prior to Completion, the Sellers and BT will agree the scope and terms
of any transitional services arrangements required after Completion,
with a view to entering into separate transitional services agreements
between EE, BT and each of the Sellers at Completion. The purpose of
these transitional services agreements is to document any services that
are currentl provided b a part or a eber of its roup and that the
recipient of those services wishes to continue to receive for a transitional
period from Completion. Any services that a service recipient elects to
continue to receive from Completion will be provided on the current
terms or agreement applicable to the provision and receipt of those
services. Unless otherwise agreed, the maximum term of each service
will be between six and 18 months depending on the type of service.
ach eller as applicable will procure that  can continue to benefit
from an existing Orange or T-Mobile brand licence for three calendar
months following Completion. Prior to the date falling three calendar
onths after opletion the ellers or the relevant ebers of their
groups), BT, and EE will agree appropriate conditions for the continued
use of the rane or -obile as applicable brands b  followin
that date until the date fallin  onths in the case of the -obile
brand and  onths in the case of the rane brand thereafter.
uch areeent will include appropriate odifications to the eistin
brand licences to reect the chane in ownership of  and continued
use of the brands will be for the purpose of an orderly wind-down and
extraction of the Orange and T-Mobile brands from EE’s business and
subject to the continued payment of royalties.
BT has also undertaken to Deutsche Telekom AG to provide, from
Completion, a back-to-back guarantee of Deutsche Telekom AG’s
guarantee to Hutchison, to a maximum value of £750 million. Deutsche
Telekom AG’s existing arrangement guarantees EE’s obligations in
respect of any liability incurred by EE under the MBNL joint operation.
7. Guarantee
Deutsche Telekom AG has agreed to guarantee the performance by
Deutsche Telekom, and Orange S.A. has agreed to guarantee the
performance by Orange, of their respective obligations under the Share
Purchase Agreement.
%UHDNIHH
If the Board changes its recommendation that Shareholders vote in
favour of the Acquisition prior to the vote being taken and Shareholders
do not approve the Acquisition or if BT recommends an alternative
transaction prior to Completion and the Acquisition does not proceed to
opletion as a result then  shall pa a brea fee of 0 illion in
aggregate) to Deutsche Telekom and Orange.
7HUPLQDWLRQ
n the event that the onditions are not satisfied or where capable of
bein waived waived b the on top ate or such later date as the
parties may agree), including where any remedies required by the CMA in
order to obtain merger clearance are not reasonable, the Share Purchase
Agreement will automatically terminate.
BT may terminate the Share Purchase Agreement prior to the Long Stop
Date if the Acquisition Resolution is not approved.
The Sellers are entitled to terminate the Share Purchase Agreement
prior to the Long Stop Date if the Board changes its recommendation
that Shareholders vote in favour of the Acquisition prior to the vote
being taken and Shareholders do not approve the Acquisition or if BT
recommends an alternative transaction prior to Completion and the
Acquisition does not proceed to Completion as a result.
10. Costs
The Company and the Sellers have each agreed to pay the costs
and expenses incurred by them in connection with the preparation,
negotiation, entering into and completion of the Transaction Documents
and any other agreements in respect of the Acquisition. BT has agreed to
bear any stamp duty or other transfer taxes in respect of the transfer of
the shares of EE.
Relationship Agreement
5HODWLRQVKLS$JUHHPHQWZLWK'HXWVFKH7HOHNRP$*DQG
'HXWVFKH{7HOHNRP
At Completion, BT will enter into the Relationship Agreement with
Deutsche Telekom AG and Deutsche Telekom, which will regulate aspects
of the ongoing relationship between BT, Deutsche Telekom AG and the
Deutsche Telekom Group.
he elationship reeent will terinate if a the rdinar hares are
no loner listed on the preiu listin seent of the cial ist and
traded on the London Stock Exchange’s main market for listed securities
or b the eutsche eleo roup ceases to be interested in ore than
3% of the issued ordinary share capital of BT.
The Relationship Agreement will contain, among other things,
undertakings from Deutsche Telekom AG that for such period as the
Deutsche Telekom Group holds 10% or more of the issued share capital
of BT:
i transactions and arraneents between  and the eutsche
Telekom Group will be entered into on an arm’s length basis
and on normal commercial terms;
ii neither it nor an eber of the eutsche eleo roup will
tae an action that would have the eect of preventin 
from complying with its obligations under the Listing Rules;
and