<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1) of the
Securities Exchange Act of 1934
----------------------------
SIMULATION SCIENCES INC.
(Name of Subject Company)
SIEBE PLC
S ACQUISITION CORP.
(Bidders)
----------------------------
Common Stock, Par Value $.001 Per Share
(Title of Class of Securities)
829-213-107
(CUSIP Number of Class of Securities)
----------------------------
David K. Robbins
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, CA 90071
(213) 473-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
CALCULATION OF FILING FEE
----------------------------
<TABLE>
Transaction Valuation:* Amount of filing fee:
<S> <C>
$159,913,070 $31,983
</TABLE>
* For purposes of calculating fee only. This amount is based on a per share
offer price of $10.00, for 15,991,307 shares of common stock. Pursuant to the
Agreement and Plan of Merger, dated as of April 15, 1998, by and among
Simulation Sciences Inc. (the "Company"), Siebe plc, S Acquisition Corp.
(collectively, the "Bidders") and S Sub Corp., the Company represented to the
Bidders that, as of such date, it had 14,146,608 shares of common stock issued
and outstanding and 1,784,699 shares of common stock reserved for issuance upon
exercise of outstanding stock options (excluding 301,550 shares which are
subject to purchase upon exercise of options which have an exercise price equal
to or exceeding $10.00 per share). The Company has also advised the Bidders that
it has approximately 60,000 shares of common stock reserved for issuance
pursuant to the terms of the Company's employee stock purchase plans. The amount
of the filing fee, calculated in accordance with Rule 0-11 under the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percent of the aggregate of
the cash offered by the Bidders.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Dated Filed: Not applicable
<PAGE> 2
This Tender Offer Statement on Schedule 14D-1 relates to the offer by S
Acquisition Corp., a Delaware corporation ("Offeror"), and an indirect wholly
owned subsidiary of Siebe plc, a public limited company organized under the laws
of the United Kingdom ("Parent"), to purchase all of the outstanding shares of
Common Stock, par value $0.001 per share, of Simulation Sciences Inc., a
Delaware corporation (the "Company"), including the associated preferred stock
purchase rights issued pursuant to the Stockholders Rights Agreement, dated as
of August 13, 1997, as amended through the date hereof, between the Company and
Harris Trust Company of California, as Rights Agent (collectively, the
"Shares"), at a price of $10.00 per Share, net to the seller in cash and without
interest thereon, on the terms and subject to the conditions set forth in the
Offer to Purchase, dated April 21, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (the "Letter of Transmittal," which together with
the Offer to Purchase, constitutes the "Offer"), copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The subject company is Simulation Sciences Inc., a Delaware
corporation with its principal executive offices located at 601 Valencia Avenue,
Suite 100, Brea, California 92823.
(b) The information set forth in the Introduction, and Section 1 "Terms
of the Offer," of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 "Price Range of Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a) through (d), (g) The information set forth in the Introduction,
Section 9 "Certain Information Concerning Offeror," and Annex I of the Offer to
Purchase is incorporated herein by reference.
(e) None of Offeror, Parent or, to the best knowledge of Offeror or
Parent, any person listed in Annex I of the Offer to Purchase has, during the
last 5 years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(f) None of Offeror, Parent or, to the best knowledge of Offeror or
Parent, any person listed in Annex I of the Offer to Purchase has, during the
last 5 years, been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) and (b) The information set forth in Section 11 "Background of
Offer" and Section 13 "The Transaction Documents" of the Offer to Purchase are
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) through (c) The information set forth in Section 10 "Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
<PAGE> 3
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a) through (e) The information set forth in Section 12 "Purpose of the
Offer; The Merger; Plans for the Company," Section 13 "The Transaction
Documents," and Section 14 "Dividends and Distributions" of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth in Section 7 "Effect of Offer on
Nasdaq National Market Listing, Market for Shares and SEC Registration" of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) None.
(b) On March 9, 1998, an executive officer of The Foxboro Company, an
affiliate of Parent ("Foxboro"), purchased 1,900 shares of common stock of the
Company at a purchase price of $10.125 per share and also purchased 2,000
shares of common stock of the Company at a purchase price of $9.9375 per share.
All such shares were purchased by the executive officer of Foxboro through a
broker-dealer in open market transactions.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, Section 1 "Terms of the
Offer," Section 11 "Background of Offer," Section 12 "Purpose of the Offer; The
Merger; Plans for the Company," Section 13 "The Transaction Documents,"
Section 14 "Dividends and Distributions" and Section 15 "Certain Conditions to
Offeror's Obligations" of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in Section 17 "Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 "Certain Information Concerning
Offeror" and Annex II of the Offer to Purchase is incorporated herein by
reference. Attached as Exhibit (g)(1) to Item 11 of this Statement are copies of
the financial statements contained in the 1997 Report and Accounts of Parent and
the financial statements contained in the 1997 Interim Report of Parent, which
are incorporated herein by reference.
<PAGE> 4
ITEM 10. ADDITIONAL INFORMATION
(a) None or not applicable.
(b) and (c) The information set forth in Section 16 "Certain Regulatory
and Legal Matters" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 "Effect of Offer on Nasdaq
National Market Listing, Market for Shares and SEC Registration" of the Offer to
Purchase is incorporated herein by reference. Section 16 "Certain Regulatory
and Legal Matters -- Federal Reserve Board Regulation."
(e) None.
(f) The Offer to Purchase, a copy of which is attached as Exhibit (a)(1)
hereto, and the Letter of Transmittal, a copy of which is attached as Exhibit
(a)(2) hereto, each of which is incorporated in its entirety herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
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(a)(1) - Offer to Purchase, dated April 21, 1998.
(a)(2) - Letter of Transmittal.
(a)(3) - Letter from Morgan Stanley & Co. Incorporated, as Dealer
Manager, to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(4) - Letter to Clients from Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5) - Notice of Guaranteed Delivery.
(a)(6) - Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) - Form of Summary Announcement, as published on April 21,
1998.
(a)(8) - Press Release, as issued by Parent on April 15, 1998.
(a)(9) - Press Release as issued by Parent on April 21, 1998.
(b) - Revolving Credit Agreement, dated November 29, 1995,
between Parent, Siebe Inc., Deutsche Siebe GmbH, and
Bankers Trust Company, Natwest Capital Markets Limited and
SBC Warburg, as Arrangers, Swiss Bank Corporation as
Agent, and lenders parties thereto.
(c)(1) - The Agreement and Plan of Merger, dated as of April 15,
1998, among Offeror, Parent, S Sub Corp. and the Company.
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
(c)(2) - The Stock Option Agreement, dated as of April 15, 1998,
between Parent and the Company.
(c)(3) - Mutual Nondisclosure Agreement, dated as of April 7,
1998, between Parent and the Company.
(d)
through (f) - None or not applicable.
(g)(1) - Financial Statements contained in the (i) 1997 Report
and Accounts of Parent and (ii) 1997 Interim Report of
Parent.
</TABLE>
<PAGE> 6
SIGNATURES
After due inquiry and to the best of the knowledge and belief of each of
the undersigned, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct.
April 21, 1998
SIEBE PLC
By: /s/ GEORGE SARNEY
-----------------------------------
Name: George Sarney
Title: Director
S ACQUISITION CORP.
By: /s/ JAMES C. BAYS
-----------------------------------
Name: James C. Bays
Title: Vice President
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
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<S> <C> <C>
(a)(1) Offer to Purchase, dated April 21, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Letter from Morgan Stanley & Co. Incorporated, as Dealer Manager,
to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(4) Letter to Clients from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute
Form W-9.
(a)(7) Form of Summary Announcement, as published on April 21, 1998.
(a)(8) Press Release, as issued by Parent on April 15, 1998.
(a)(9) Press Release, as issued by Parent on April 21, 1998.
(b) Revolving Credit Agreement, dated November 29, 1995, between Parent,
Siebe Inc., Deutsche Siebe GmbH, and Bankers Trust Company, Natwest
Capital Markets Limited and SBC Warburg, as Arrangers, Swiss Bank
Corporation as Agent, and lenders parties thereto.
(c)(1) The Agreement and Plan of Merger, dated as of April 15, 1998, among
Offeror, Parent, S Sub Corp. and the Company.
(c)(2) The Stock Option Agreement, dated as of April 15, 1998, between Parent
and the Company.
(c)(3) Mutual Nondisclosure Agreement, dated as of April 7, 1998, between
Parent and the Company.
(d)
through (f) None or not applicable.
(g)(1) Financial Statements contained in the (i) 1997 Report and
Accounts of Parent and (ii) 1997 Interim Report of Parent.
</TABLE>
<PAGE> 1
EXHIBIT 99.(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
AT
$10.00 NET PER SHARE
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SIEBE PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE, OF SIMULATION
SCIENCES INC. (THE "COMPANY"), INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE
RIGHTS (COLLECTIVELY, THE "SHARES"), WHICH WOULD REPRESENT, ON A FULLY DILUTED
BASIS (EXCLUDING "OUT OF THE MONEY OPTIONS" AS DEFINED IN THE INTRODUCTION TO
OFFER), AT LEAST A MAJORITY OF THE OUTSTANDING SHARES. THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
INTRODUCTION AND SECTIONS 1 AND 15 HEREOF.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF APRIL 15, 1998 (THE "MERGER AGREEMENT"), AMONG SIEBE
PLC, S ACQUISITION CORP., S SUB CORP., AND THE COMPANY. THE BOARD OF DIRECTORS
OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder of the Company desiring to tender Shares should either (i)
complete and sign the Letter of Transmittal or a facsimile thereof in accordance
with the instructions in the Letter of Transmittal and deliver the Letter of
Transmittal with the Shares and all other required documents to the Depositary
(as defined herein) or follow the procedures for book-entry transfer set forth
in Section 3 or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if they
desire to tender their Shares.
Any stockholder of the Company who desires to tender Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis or
who cannot deliver all required documents to the Depositary, in each case prior
to the expiration of the Offer, must tender such Shares pursuant to the
guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance may be directed to Morgan Stanley &
Co. Incorporated, the Dealer Manager, or to D.F. King & Co., Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent or from brokers,
dealers, commercial banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
April 21, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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<C> <S> <C>
Introduction........................................................... 1
1. Terms of the Offer.......................................... 2
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 7
5. Certain Federal Income Tax Consequences..................... 8
6. Price Range of Shares; Dividends on the Shares.............. 9
7. Effect of Offer on Nasdaq National Market Listing, Market
for Shares and SEC Registration............................. 9
8. Certain Information Concerning the Company.................. 10
9. Certain Information Concerning Offeror...................... 12
10. Source and Amount of Funds.................................. 14
11. Background of Offer......................................... 15
12. Purpose of the Offer; The Merger; Plans for the Company..... 16
13. The Transaction Documents................................... 19
14. Dividends and Distributions................................. 29
15. Certain Conditions to Offeror's Obligations................. 29
16. Certain Regulatory and Legal Matters........................ 31
17. Fees and Expenses........................................... 32
18. Miscellaneous............................................... 33
Annex I. Certain Information Concerning the Directors and Executive
Officers of Parent and Offeror.............................. I-1
Annex II. Summary of Significant Differences Between UK GAAP and US
GAAP........................................................ II-1
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF SIMULATION SCIENCES INC.:
INTRODUCTION
S Acquisition Corp., a Delaware corporation ("Offeror") and an indirect
wholly owned subsidiary of Siebe plc, a public limited company organized under
the laws of the United Kingdom ("Parent"), hereby offers to purchase all of the
outstanding shares of common stock, par value $0.001 per share, of Simulation
Sciences Inc., a Delaware corporation (the "Company"), including the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Preferred
Shares Rights Agreement, dated as of August 13, 1997, as amended by the "Rights
Amendment" as of April 17, 1998 (as so amended, the "Rights Agreement"), between
the Company and Harris Trust Company of California, as Rights Agent
(collectively, the "Shares"), at a purchase price of $10.00 per share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). Tendering stockholders will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by Offeror
pursuant to the Offer. Offeror will pay all charges and expenses of Morgan
Stanley & Co. Incorporated ("Morgan Stanley" or the "Dealer Manager"), Bankers
Trust Company (the "Depositary"), and D.F. King & Co., Inc. (the "Information
Agent") for their respective services in connection with the Offer and the
Merger (as hereinafter defined). See Section 17.
Offeror is a corporation newly formed by Parent in connection with the
Offer and the transactions contemplated by the Merger Agreement (as hereinafter
defined).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE BOARD OF DIRECTORS HAS RECEIVED THE OPINION OF DAIN RAUSCHER WESSELS, A
DIVISION OF DAIN RAUSCHER INCORPORATED, THE COMPANY'S FINANCIAL ADVISOR ("DRW"),
DATED APRIL 15, 1998, TO THE EFFECT THAT, AS OF SUCH DATE AND SUBJECT TO THE
VARIOUS ASSUMPTIONS AND LIMITATIONS SET FORTH THEREIN, THE CASH CONSIDERATION TO
BE RECEIVED BY THE STOCKHOLDERS OF THE COMPANY PURSUANT TO THE OFFER AND THE
MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH HOLDERS. A COPY OF THAT
OPINION IS SET FORTH IN FULL AS AN EXHIBIT TO THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WHICH IS BEING MAILED TO
THE COMPANY'S STOCKHOLDERS, AND STOCKHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES (THE "MINIMUM NUMBER OF SHARES") WHICH WOULD REPRESENT AT LEAST A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS (EXCLUDING "OUT OF
THE MONEY OPTIONS," MEANING ANY OPTION, WARRANT OR OTHER CONTRACTUAL RIGHT TO
PURCHASE SHARES OF THE COMPANY'S COMMON STOCK WHICH ON APRIL 15, 1998 HAD AN
EXERCISE PRICE PER SHARE THAT WAS EQUAL TO OR GREATER THAN $10.00)(THE "MINIMUM
CONDITION"). SEE SECTION 15.
The Company has represented to Parent and Offeror that, as of April 15,
1998, there were 14,146,608 Shares issued and outstanding and 2,086,249 Shares
reserved for issuance in connection with outstanding stock options. The Company
has advised Parent and Offeror that there are 301,550 Shares reserved for
issuance in connection with Out of the Money Options and approximately 60,000
Shares reserved for issuance under the Company's Stock Plans (as hereinafter
defined). Based on the foregoing, Offeror believes that approximately 7,995,654
Shares must be validly tendered and not withdrawn prior to the expiration of the
Offer in order for the Minimum Condition to be satisfied. See Section 1.
1
<PAGE> 4
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 15, 1998 (the "Merger Agreement"), by and among Parent, Offeror, S
Sub Corp., a Delaware corporation and a wholly owned subsidiary of Offeror
("Merger Sub"), and the Company. The Merger Agreement provides, among other
things, for the making of the Offer by Offeror, and further provides that, upon
the terms and subject to certain conditions of the Merger Agreement, Merger Sub
or another direct or indirect subsidiary of Parent will be merged with and into
the Company (the "Merger"). The Merger Agreement is more fully described in
Section 13. The Merger is subject to a number of conditions, including the
approval and adoption of the Merger Agreement by stockholders of the Company, if
such approval is required by applicable law. See Section 12. In the Merger, each
outstanding Share shall automatically be cancelled and extinguished and each
outstanding Share (other than Shares owned by the Company as treasury stock, by
Parent, or any subsidiary thereof, or Shares held by stockholders who perfect
their appraisal rights under Delaware law) will be converted into and represent
the right to receive $10.00 (or any higher price that may be paid for each Share
pursuant to the Offer) in cash, without interest thereon (the "Offer Price").
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
This Offer to Purchase contains forward-looking statements that involve
risks and uncertainties, including the risks associated with satisfying the
various conditions to the Offer. Certain of these factors as well as additional
risks and uncertainties, are detailed in the Company's periodic filings with the
Securities and Exchange Commission (the "Commission").
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including, if the Offer is extended or amended, the terms and conditions of any
extension or amendment), Offeror will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 midnight, New
York City time, on May 18, 1998, unless Offeror shall have extended the period
of time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Offeror, shall expire.
In the Merger Agreement, Offeror has agreed that if all of the conditions
to the Offer are not satisfied by the Expiration Date then, provided that all
such conditions are reasonably probable of being satisfied by the date which is
30 business days after the commencement of the Offer, Offeror shall extend the
Offer (up to such 30th business day) until such conditions are satisfied or
waived. Otherwise, Offeror has agreed in the Merger Agreement that, without the
prior written approval of the Company, it will not extend the period during
which the Offer is open, except (subject to the Company's right of termination,
discussed under Section 13, "Merger Agreement -- Termination," below) (A) as
required to comply with any rule, regulation or interpretation of the
Commission, (B) until such time as all such conditions described under Section
15, "Certain Conditions to Offeror's Obligations," below, have been satisfied or
waived or (C) only if less than 90% of the outstanding Shares have been
tendered, for one or more times for a total number of days in the aggregate for
any extension in accordance with this clause (C) not to exceed 10 business days
for any reason other than those specified in the immediately preceding clauses
(A) and (B). Subject to the foregoing restrictions, Offeror reserves the right
(but will not be obligated), in its sole discretion, to extend the period during
which the Offer is open by giving oral or written notice of such extension to
the Depositary and by making a public announcement of such extension. There can
be no assurance that Offeror will exercise its right to extend the Offer.
If Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and, if at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier
2
<PAGE> 5
than the expiration of a period ending on the tenth business day from, and
including, the date that such notice is first so published, sent or given, then
the Offer will be extended until the expiration of such period of ten business
days. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15. As
described in the Introduction to this Offer to Purchase, Offeror believes the
Minimum Number of Shares is approximately 7,995,654. Offeror reserves the right
(but shall not be obligated), in accordance with applicable rules and
regulations of the Commission, to waive or reduce the Minimum Condition or to
waive any other condition to the Offer; provided, however, that pursuant to the
Merger Agreement, Offeror has agreed that it will not, without the consent of
the Company, waive the Minimum Condition if such waiver would result in less
than a majority of the outstanding Shares (on a fully-diluted basis excluding
Out of the Money Options) being accepted for payment or paid for pursuant to the
Offer. If the Minimum Condition or any of the other conditions set forth in
Section 15 has not been satisfied by 12:00 midnight, New York City time, on May
18, 1998 (or any other time then set as the Expiration Date), Offeror may elect
to (1) subject to the qualifications above with respect to the extension of the
Offer, extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, subject to the
terms of the Offer, (2) subject to complying with applicable rules and
regulations of the Commission and to the terms of the Merger Agreement, accept
for payment all Shares so tendered and not extend the Offer or (3) subject to
the terms of the Merger Agreement, terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders.
Subject to the applicable rules and regulations of the Commission, Offeror
expressly reserves the right, in its sole discretion, to delay payment for any
Shares regardless of whether such Shares were theretofore accepted for payment,
or, subject to the limitations set forth in the Merger Agreement, to terminate
the Offer and not to accept for payment or pay for any Shares not theretofore
accepted for payment or paid for, upon the occurrence of any of the conditions
set forth in Section 15 by giving oral or written notice of such delay or
termination to the Depositary. Offeror's right to delay payment for any Shares
or not to pay for any Shares theretofore accepted for payment is subject to the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
relating to Offeror's obligation to pay for or return tendered Shares promptly
after the termination or withdrawal of the Offer.
In the Merger Agreement, Offeror has also agreed that it will not, without
the prior written approval of the Company, (1) reduce the cash price per Share
to be paid pursuant to the Offer, (2) reduce the number of Shares to be
purchased pursuant to the Offer, (3) change the form of consideration to be paid
in the Offer, (4) increase the Minimum Number of Shares, (5) impose additional
conditions to the Offer, or (6) otherwise amend the terms of the Offer in a
manner that is materially adverse to the stockholders of the Company.
Except as set forth above, and subject to the applicable rules and
regulations of the Commission, Offeror expressly reserves the right, in its sole
discretion, to amend the Offer in any respect. Any extension of the period
during which the Offer is open, or delay in acceptance for payment or payment,
or termination or amendment of the Offer, will be followed, as promptly as
practicable, by public announcement thereof, such announcement in the case of an
extension to be issued not later than 9:00 a.m. New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Without limiting the obligation of Offeror under such rule or the manner in
which Offeror may choose to make any public announcement, Offeror currently
intends to make announcements by issuing a press release to the Dow Jones News
Service and making any appropriate filing with the Commission.
3
<PAGE> 6
If Offeror makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer (including a waiver of the Minimum Condition), Offeror will disseminate
additional tender offer materials and extend the Offer if and to the extent
required by Rules 14d-4(c), 14d-6(d) and 14(e)-1 under the Exchange Act or
otherwise. The minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information changes. With respect to a change in price or a
change in percentage of securities sought, a minimum ten business day period is
generally required to allow for adequate dissemination to stockholders and
investor response.
The Company has provided Offeror with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal will be
mailed to record holders of the Shares and will be furnished to brokers,
dealers, commercial banks and similar persons whose names, or the names of whose
nominees, appear on the list of stockholders or, if applicable, who are listed
as participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Offeror will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn) promptly after the Expiration Date. Subject to compliance with Rule
14e-1(c) under the Exchange Act, Offeror expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with any applicable
law. See Sections 1 and 15. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities"),
pursuant to the procedures set forth in Section 3, (ii) a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
all required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Offeror gives oral or written notice to the Depositary of Offeror's
acceptance of such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from Offeror and transmitting such payment to
tendering stockholders. If, for any reason whatsoever, acceptance for payment of
any Shares tendered pursuant to the Offer is delayed, or Offeror is unable to
accept for payment Shares tendered pursuant to the Offer, then, without
prejudice to Offeror's rights under Section 15, the Depositary may,
nevertheless, on behalf of Offeror, retain tendered Shares, and such Shares may
not be withdrawn, except to the extent that the tendering stockholders are
entitled to withdrawal rights as described in Section 4 below and as otherwise
required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will
interest be paid on the purchase price for Shares by Offeror by reason of any
delay in making such payment.
4
<PAGE> 7
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to a Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, Offeror increases the consideration
offered to stockholders pursuant to the Offer, such increased consideration will
be paid to all stockholders whose Shares are purchased pursuant to the Offer.
Offeror reserves the right to transfer or assign, in whole or from time to
time in part, to Parent or to one or more direct or indirect subsidiaries of
Parent, the right to purchase Shares tendered pursuant to the Offer, but any
such transfer or assignment will not relieve Offeror of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date. In
addition, either (i) certificates representing such Shares must be received by
the Depositary or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below, and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
there must be compliance with the guaranteed delivery procedure set forth below.
No alternative, conditional or contingent tenders will be accepted. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
Signature Guarantee. Signatures on the Letter of Transmittal need not be
guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Exchange Act), by a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or by any other "Eligible
Guarantor Institution," as defined in Rule 17Ad-15 under the Exchange Act
(collectively, "Eligible Institutions"), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) as noted in the following
sentence. If the certificates evidencing Shares are registered in the name of a
person or persons other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for unpurchased Shares are to be issued to
a person other than the registered owner or
5
<PAGE> 8
owners, then the certificates must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the certificates, with the signatures on
the certificates or stock powers guaranteed as provided in the Letter of
Transmittal. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if such
tender complies with all of the following guaranteed delivery procedures:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), and any
required signature guarantees and any other documents required by the
Letter of Transmittal are received by the Depositary within five Nasdaq
National Market trading days after the date of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for the Shares (or a Book-Entry
Confirmation), a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME
TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT HE IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 SET FORTH IN
THE LETTER OF TRANSMITTAL.
Determinations of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Offeror, in its sole discretion,
and its determination will be final and binding on all parties. Offeror reserves
the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Offeror, be unlawful. Offeror also reserves the
absolute right to waive any of the conditions of the Offer (other than the
Minimum Condition, as described above) or any defect or irregularity in the
tender of any Shares. Offeror's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the Instructions to the
Letter of Transmittal) will be final and binding on all parties. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Offeror, the Dealer Manager,
the
6
<PAGE> 9
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Offeror as such
stockholder's proxies, each with full power of substitution, in the manner set
forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Offeror (and any and all other Shares or other securities or rights
issued or issuable in respect of such Shares on or after April 15, 1998). All
such proxies shall be considered coupled with an interest in the tendered
Shares. This appointment is effective when, and only to the extent that, Offeror
deposits the payment for such Shares. Upon acceptance for payment, all prior
proxies given by the stockholder with respect to such Shares or other securities
or rights will, without further action, be revoked and no subsequent proxies may
be given (and, if given, will not be deemed effective). The designees of Offeror
will, with respect to the Shares and other securities or rights, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
judgment deem proper in respect of any annual or special meeting of the
Company's stockholders, or any adjournment or postponement thereof, or in
connection with any action by written consent in lieu of any such meeting or
otherwise. Offeror reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon Offeror's payment for such Shares,
Offeror must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights, including voting at any meeting
of stockholders then scheduled.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer as well as the tendering stockholder's representation
and warranty that (a) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (b)
the tender of such Shares complies with Rule 14e-4. It is a violation of Rule
14e-4 for a person, directly or indirectly, to tender Shares for such person's
own account unless, at the time of tender, the person so tendering (i) has a net
long position equal to or greater than the amount of (x) Shares tendered or (y)
other securities immediately convertible into or exchangeable or exercisable for
the Shares tendered and such person will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Offeror's acceptance for payment of Shares tendered pursuant to
the Offer will constitute a binding agreement between the tendering stockholder
and Offeror upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after June 19, 1998. If purchase of or payment for Shares is delayed for any
reason or if Offeror is unable to purchase or pay for Shares for any reason,
then, without prejudice to Offeror's rights under the Offer, tendered Shares may
be retained by the Depositary on behalf of Offeror and may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as set forth in this Section 4, subject to Rule 14e-1(c) under the
Exchange Act which provides that no person who makes a tender offer shall fail
to pay the consideration offered or return the securities deposited by or on
behalf of security holders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name in which
7
<PAGE> 10
the certificates representing such Shares are registered, if different from that
of the person who tendered the Shares. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in Section
3, any notice of withdrawal must also specify the name and number of the account
at the applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Offeror, in its sole discretion, and
its determination will be final and binding on all parties. None of Offeror, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be returned at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted to cash in the Merger (including
pursuant to the exercise of appraisal rights). The discussion applies only to
holders of Shares in whose hands Shares are capital assets, and may not apply to
Shares received pursuant to the exercise of employee stock options or otherwise
as compensation, or to holders of Shares who are in special tax situations (such
as insurance companies, tax-exempt organizations or non-U.S. persons), or to
persons holding Shares as part of a "straddle," "hedge," or "conversion
transaction." This discussion does not address any aspect of state, local or
foreign taxation.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including pursuant to the exercise of appraisal rights) will be a taxable
transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a holder of Shares will recognize gain
or loss equal to the difference between the holder's adjusted tax basis in the
Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss (other than, with respect to the
exercise of appraisal rights, amounts, if any, which are or are deemed to be
interest for federal income tax purposes, which amounts will be taxed as
ordinary income) and will be (i) long-term gain or loss if, on the date of sale
(or, if applicable, the date of the Merger), the Shares were held for more than
eighteen months, and (ii) mid-term gain or loss if, on the date of sale (or, if
applicable, the date of the Merger), the Shares were held for more than one year
but not more than eighteen months.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a 31% rate. Backup withholding generally applies if the
stockholder (a) fails to furnish his social security number or other taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN,
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<PAGE> 11
(c) fails properly to report interest or dividends or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is his correct number and that he is not subject
to backup withholding. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are entitled to exemption from
backup withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Each stockholder should consult with
his own tax advisor as to his qualification for exemption from withholding and
the procedure for obtaining such exemption.
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (the "Company 10-K"), since October 25, 1996 the Shares
have traded on the Nasdaq National Market under the symbol "SMCI" and the
Company has not paid any cash dividends on the Shares for more than five years.
Pursuant to the Merger Agreement, the Company has agreed not to declare, set
aside for payment or pay any dividends or other distributions with respect to
the Shares prior to consummation of the Merger. The following table sets forth
the high and low sales prices per Share on the Nasdaq National Market for the
periods indicated, as reported in published financial sources.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year Ended December 31, 1996:
Fourth Quarter (from October 25, 1996)................... $15.00 $ 9.25
Year Ended December 31, 1997:
First Quarter............................................ 18.63 10.00
Second Quarter........................................... 15.38 9.13
Third Quarter............................................ 19.88 12.25
Fourth Quarter........................................... 23.38 13.88
Year Ending December 31, 1998:
First Quarter............................................ 16.13 5.25
Second Quarter (through April 20, 1998).................. 9.97 7.75
</TABLE>
The closing sale price per Share on the Nasdaq National Market on April 14,
1998, the last full day of trading prior to the public announcement of Offeror's
intention to make the Offer, was $8.06. The closing sale price per Share on the
Nasdaq National Market on April 20, 1998, the last full day of trading prior to
the commencement of the Offer, was $9.81. Stockholders are urged to obtain
current market quotations for the Shares and to review all information received
by them from the Company, including the proxy materials and annual and quarterly
reports referred to in Section 8.
7. EFFECT OF OFFER ON NASDAQ NATIONAL MARKET LISTING, MARKET FOR SHARES AND SEC
REGISTRATION.
The purchase of the Shares by Offeror pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and may reduce the number
of holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by stockholders other than Offeror. The
Company 10-K states that, as of March 16, 1998, there were 74 stockholders of
record and approximately 2,800 beneficial owner of Shares.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion on the Nasdaq
National Market. If trading volume were lower than such standards, quotations
might continue to be published in the "additional list" or in one of the "local
lists," or such quotations might not be published at all. If the number of
holders of Shares (based on round lots) fell below 400, NASDAQ might cease to
provide
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<PAGE> 12
quotations but quotations might still be available from other sources. Offeror
cannot predict whether NASDAQ trading volume standards for publication will be
met after the Offer.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if there are fewer than 300 record holders of Shares. It is the intention of
Offeror to seek to cause an application for such termination to be made as soon
after consummation of the Offer as the requirements for termination of
registration of the Shares are met. If such registration were terminated, the
Company would no longer legally be required to disclose publicly in proxy
materials distributed to stockholders the information which it now must provide
under the Exchange Act or to make public disclosure of financial and other
information in annual, quarterly and other reports required to be filed with the
Commission under the Exchange Act; the officers, directors and 10% stockholders
of the Company would no longer be subject to the "short-swing" insider trading
reporting and profit recovery provisions of the Exchange Act or the proxy
statement requirements of the Exchange Act in connection with stockholders'
meetings; and the Shares would no longer be eligible for Nasdaq National Market
reporting or for continued inclusion on the Federal Reserve Board's "margin
list." Furthermore, if such registration were terminated, persons holding
"restricted securities" of the Company may be deprived of their ability to
dispose of such securities under Rule 144 promulgated under the Securities Act
of 1933, as amended.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as specifically set forth herein, the information concerning the
Company contained in this Offer to Purchase has been taken from or is based upon
publicly available documents and records on file with the Commission and other
public sources. Neither Parent nor Offeror has any knowledge that would indicate
that any statements contained herein based on such documents and records are
untrue. However, neither Parent nor Offeror assumes any responsibility for the
accuracy or completeness of the information concerning the Company, furnished by
the Company or contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or which may affect the
significance or accuracy of any such information but which are unknown to
Offeror.
The Company is a Delaware corporation with its principal executive offices
located at 601 Valencia Avenue, Suite 100, Brea, California 92823. According to
the Company 10-K, the Company is a leading provider of commercial application
software and related services to the petroleum, petrochemical, industrial
chemical and other process industries, as well as the engineering and
construction firms that support those industries.
Set forth below is certain summary consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
consolidated financial statements presented in the Company 10-K. More
comprehensive financial information is included in such reports and in other
documents filed by the Company with the Commission (which may be inspected or
obtained in the manner set forth below), and the following summary is qualified
in its entirety by reference to such reports and other documents and all of the
financial information and notes contained therein or incorporated therein by
reference.
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<PAGE> 13
SIMULATION SCIENCES INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 60,575 $46,903 $33,119
Cost of Revenues............................................ 6,556 6,928 6,760
Operating Expenses.......................................... 64,608 35,791 24,152
Operating income (loss)..................................... (10,589) 4,184 2,207
Net income (loss)........................................... (11,121) 2,692 1,355
Per share:
Net income (loss) per share............................... (1.01) 0.37 0.20
Weighted average number of common and common
equivalents............................................ 11,004 7,250 6,667
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
1997 1996
-------- -------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................................... $ 58,088 $27,904
Total assets.............................................. 106,753 53,198
Total liabilities......................................... 20,993 14,379
Total stockholders' equity................................ 85,760 38,819
</TABLE>
Recent Developments. In a press release issued on April 15, 1998, the
Company announced that, for its first quarter ended March 31, 1998, it expected
to report total revenues of $9.0 million to $9.6 million and a net loss per
share of $0.38 to $0.48. The Company stated in the press release that the
results for its 1998 first quarter were significantly below its expectations,
and that operating results for the quarter were adversely impacted by a number
of factors, including economic conditions in the petroleum and petrochemical
industries and longer sales cycles associated with larger contracts that
resulted in delays and deferrals of customer purchase commitments. The Company
further stated in the press release that it believed such factors would continue
and that the Company would experience revenue levels at lower than historic
levels through the Company's fourth quarter ending December 31, 1998 and an
operating loss in the Company's second quarter ending June 30, 1998.
Certain Company Estimates. During the course of discussions between Parent
and the Company that led to the execution of the Merger Agreement (see Section
11), the Company provided Parent with certain information relating to the
Company which Offeror believes is not publicly available. This information
included a preliminary operating budget for the Company for fiscal years 1998,
1999 and 2000 developed by the Company's senior management following the end of
the Company's first quarter ended March 31, 1998 predicated on their then
preliminary assumptions for macroeconomic conditions, gross profits and
operating expenses. The Company's fiscal year 1998 operating budget estimated
revenues of $50.3 million, cost of revenues of $10.3 million, operating expenses
of $51.7 million, operating losses of $11.7 million, and a net loss of $8.4
million. The Company's fiscal year 1999 operating budget estimated revenues of
$64.0 million, cost of revenues of $10.3 million, operating expenses of $46.0
million, operating income of $7.7 million, and net income of $6.6 million. The
Company's fiscal year 2000 operating budget estimated revenues of $82.0 million,
cost of revenues of $11.5 million, operating expenses of $50.0 million,
operating income of $20.5 million, and net income of $14.5 million. The
foregoing information has been excerpted from the materials presented to Parent
and does not reflect consummation of the Offer or the Merger.
11
<PAGE> 14
The foregoing estimates constitute forward-looking statements that involve
risks and uncertainties, including, but not limited to, risks associated with
fluctuations in quarterly results, product introductions, competition, rapid
technological change, reliance on distribution channels, international sales and
other factors. These risks and uncertainties are discussed in greater detail in
the Company's periodic filings with the Commission.
The Company does not as a matter of course make public any estimates as to
future performance or earnings, and the estimates set forth above are included
in this Offer to Purchase only because the information was made available to
Parent by the Company. The Company has informed Parent that the estimates were
not prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding estimates or forecasts. The
Company has also informed Parent that its internal financial forecasts (upon
which the estimates provided to Parent were based in part) are, in general,
prepared solely for internal use and capital budgeting and other management
decision-making purposes and are subjective in many respects and thus
susceptible to various interpretations and periodic revision based on actual
experience and business developments. Projected information of this type is
based on estimates and assumptions that are inherently subject to significant
economic and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond the control of the Company,
Offeror or Parent or their respective financial advisors. Many of the
assumptions upon which the estimates were based, none of which were approved by
Parent or Offeror, are dependent upon economic forecasting (both general and
specific to the Company's businesses), which is inherently uncertain and
subjective. The inclusion of the foregoing estimates should not be regarded as
an indication that the Company, Offeror, Parent or any other person who received
such information considers it an accurate prediction of future events, and
neither Offeror nor Parent has relied on them as such. None of Offeror or Parent
or their financial advisors assumes any responsibility for the accuracy or
validity of any of the estimates.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
obligated to file reports and other information with the Commission relating to
its business, financial condition, and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities, any material interests of such persons in transactions
with the Company, and other matters is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements, and other information should be
available for inspection at the Commission's Public Reference Room, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and copies should be obtainable
upon payment of the Commission's customary charges by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection and copying at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York, 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. The Commission also maintains a World Wide
Web site on the Internet at http://www.sec.gov that contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission.
9. CERTAIN INFORMATION CONCERNING OFFEROR.
Offeror, a Delaware corporation, was recently incorporated for the purpose
of making the Offer and Merger Sub, a Delaware corporation, was recently
incorporated for the purpose of the Merger. All of the outstanding capital stock
of Merger Sub is owned by Offeror.
Until, with respect to Offeror, immediately prior to the time it purchases
Shares pursuant to the Offer, and, with respect to Merger Sub, immediately prior
to the Merger, it is not anticipated that Offeror or Merger Sub will have any
significant assets or liabilities or engage in activities other than those
incidental to their formation and capitalization and the transactions
contemplated by the Offer
12
<PAGE> 15
and the Merger. Since Offeror and Merger Sub are newly formed and have minimal
assets and capitalization, no meaningful financial information is available with
respect to either of them.
Parent is a holding company which, through its subsidiaries and related
companies, engages in the design, manufacture and marketing of process
automation and building control systems, temperature and appliance controls and
engineered industrial equipment.
The principal executive offices of Offeror and Merger Sub are located at
1013 Centre Road, Wilmington, Delaware 19805. The principal executive offices of
Parent are located at Saxon House, 2-4 Victoria Street, Windsor, Berkshire SL4
1EN, United Kingdom.
The name, business address, past and present principal occupations and
citizenship of each of the directors and executive officers of Offeror and
Parent are set forth in Annex I to this Offer to Purchase.
Set forth below is certain summary consolidated financial information with
respect to Parent. The summary below is qualified in its entirety by reference
to Parent financial information contained in Parent's 1997 Annual Report and
Accounts and 1997 Interim Report filed as an exhibit to the Tender Offer
Statement on Schedule 14D-1 with respect to the Offer filed by the Offeror and
Parent (the "Schedule 14D-1") which may be inspected and copies obtained at the
offices of the Commission as set forth in Section 8 (except that they will not
be available at the regional offices of the Commission), and such financial
information and related notes are incorporated herein by reference.
Neither Offeror nor Parent is subject to the informational filing
requirements of the Exchange Act. Offeror does not file reports or other
information with the Commission relating to its business, financial condition or
other matters. Parent files certain reports (including its Annual Report and
Accounts) and information pursuant to Rule 12g3-2(b)(1) under the Exchange Act,
which may be inspected and copies obtained at the offices of the Commission set
forth in Section 8 (except that they will not be available at the regional
offices of the Commission). In addition, stockholders of the Company may also
obtain copies of Parent's 1997 and 1996 Annual Reports and Accounts and 1997
Interim Report by contacting the Corporate Secretary of Parent at Parent's
principal executive offices in the United Kingdom set forth above.
Parent's consolidated financial statements have been prepared in accordance
with United Kingdom accounting practices ("UK GAAP") which practices are
described in the notes to such statements. UK GAAP are not the same as generally
accepted accounting principles in the United States ("US GAAP"). Parent has not
determined its financial position or results of operations for any period under
US GAAP. See Annex II hereto for a description of the material differences
between UK GAAP and US GAAP. Offeror believes that the differences between US
GAAP and UK GAAP are not, for purposes of this Offer, material to a decision by
a stockholder of the Company whether to sell, tender or hold any Shares since
any such differences would not affect the ability of Offeror to obtain all funds
necessary to pay for Shares to be acquired pursuant to the Offer and the Merger.
13
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, FISCAL YEAR ENDED
------------------------------------- --------------------------------------------------------
APRIL 5, APRIL 5, APRIL 6, APRIL 1,
1997* 1997* 1996* 1997 1997 1996 1995
--------------- -------- -------- --------------- -------- ---------------- --------
(US DOLLARS (POUNDS STERLING (US DOLLARS (POUNDS STERLING
IN MILLIONS)(2) IN MILLIONS) IN MILLIONS)(2) IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED PROFIT AND
LOSS ACCOUNT DATA:
Sales................... 2,747.5 1,706.5 1,471.4 4,838.5 3,005.3 2,599.1 2,146.2
Profit on ordinary
activities before
taxation.............. 356.9 221.7 190.4 682.8 424.1 331.1 275.1
Taxation on ordinary
activities............ (127.8) (79.4) (71.4) (252.6) (156.9) (126.8) (108.7)
Profit on ordinary
activities after
taxation.............. 229.1 142.3 119.0 430.2 267.2 204.3 166.4
Minority interests...... (8.7) (5.4) (6.9) (21.6) (13.4) (11.3) (6.1)
Attributable to Siebe... 220.4 136.9 112.1 408.6 253.8 193.0 160.3
CONSOLIDATED BALANCE SHEET
DATA (AT END OF PERIOD):
Cash at bank and in
hand.................. 403.0 250.3 270.3 339.4 210.8 282.3 280.1
Current assets excluding
cash.................. 2,826.7 1,755.7 1,435.7 2,265.3 1,407.0 1,240.3 1,113.0
Fixed assets............ 2,807.4 1,743.7 1,542.3 2,467.2 1,532.4 1,423.7 1,210.8
Current liabilities..... (1,809.3) (1,123.8) (869.3) (1,530.2) (950.4) (832.5) (809.3)
Other liabilities....... (2,060.7) (1,279.9) (1,116.1) (1,693.4) (1,051.8) (972.4) (749.4)
-------- -------- -------- -------- -------- ------- -------
BALANCE SHEET TOTAL....... 2,167.1 1,346.0 1,262.9 1,848.3 1,148.0 1,141.4 1,045.2
======== ======== ======== ======== ======== ======= =======
Capital and reserves.... 1,951.2 1,211.9 1,106.4 1,636.7 1,016.6 1,062.3 966.2
Minority interests...... 215.9 134.1 156.5 211.6 131.4 79.1 79.0
-------- -------- -------- -------- -------- ------- -------
BALANCE SHEET TOTAL....... 2,167.1 1,346.0 1,262.9 1,848.3 1,148.0 1,141.4 1,045.2
======== ======== ======== ======== ======== ======= =======
</TABLE>
- ---------------
* Unaudited.
(1) See Annex II for a description of certain differences between UK GAAP and US
GAAP.
(2) Pounds Sterling ("L") are translated into U.S. Dollars at L1 - $1.61, the
Noon Buying Rate on September 30, 1997.
10. SOURCE AND AMOUNT OF FUNDS.
If all Shares (including Shares covered by options (other than Out of the
Money Options outstanding at April 15, 1998)) are tendered to and purchased by
Offeror, the aggregate purchase price and all estimated commissions, fees and
expenses will be approximately $162.5 million. Offeror intends to obtain all of
such funds from Parent which in turn would obtain such funds from Parent's
existing working capital, from drawings under Parent's currently existing
unsecured $1.5 billion revolving credit facility arranged by Bankers Trust
Company, Natwest Capital Markets Limited and SBC Warburg and from proceeds from
the exercise of the Company's outstanding stock options. As of the close of
business on April 20, 1998, the undrawn amount available to Parent under the
Banker's Trust facility was approximately $183.4 million. Amounts drawn under
the facility are unsecured, bear interest at an effective rate of 5.9% (as of
April 20, 1998) and mature on November 29, 2000. The Parent believes that all
such borrowings will be repayable from its operations and subsequent
refinancings which may be entered into from time to time in the ordinary course
of business. The Offer is not conditioned on the Offeror or Parent obtaining any
financing.
Parent will effect loans or contributions to capital in order to make funds
available to Offeror, as determined by Parent. Parent will prepare
documentation, on terms and conditions satisfactory to
14
<PAGE> 17
Parent and customary in such loans between Parent and its subsidiaries, to
evidence such intercompany loans or contributions to capital.
11. BACKGROUND OF OFFER.
The Company engages in lines of business similar or complimentary to those
of Parent and its affiliates. Accordingly, Parent and its affiliates have
followed the business activities of the Company for some time.
In October 1997, the Company's Executive Vice President of Sales, Marketing
and Engineering Services, Dirk Pfeiffer, met with Mark Davidson, the Director of
Product Marketing of The Foxboro Company ("Foxboro"), an affiliate of Siebe, at
the Company's principal executive offices in Brea, California to discuss
generally, and exchange information regarding, their respective businesses,
technology and products.
In December 1997, Morgan Stanley contacted Parent to discuss the advantages
of a business combination between Parent and the Company. Morgan Stanley advised
Parent that it had not been retained by, nor had it engaged in any discussions
with, the Company with respect to any such transaction. Thereafter, Morgan
Stanley and Parent periodically discussed the advantages of a business
combination between Parent and the Company.
On February 13, 1998, Gary Foster, President, Software Services and
Corporate Marketing of Foxboro, telephoned Mr. Harris to discuss the possibility
of a strategic alliance with the Company, including a possible joint venture
relationship.
On March 3, 1998, Mr. Harris and other representatives of the Company met
with representatives of Siebe, including Bruce Robinson, President of Foxboro,
in Houston, Texas. At the meeting, both companies discussed their respective
businesses, products and growth strategies. The parties noted the synergies
between their respective technologies and discussed the possibility of a
strategic technology alliance, including the possibility of Foxboro becoming a
member of the Company's group of engineering service providers.
On March 26, 1997, Mr. Harris telephoned Mr. Robinson to indicate the
Company's willingness to continue their discussions regarding a strategic
alliance, and indicated a willingness on the Company's part to pursue a possible
expansion of that relationship.
On March 27, 1998, Allen Yurko, Managing Director and Chief Executive
Officer of Siebe, spoke with Mr. Harris and discussed a possible acquisition of
the Company by Siebe and shared with Mr. Harris his views on the general
structure of such a transaction and the role that the Company would play in the
combined entity. On March 31, 1997, Dr. George W. Sarney, President and Chief
Operating Officer of the Control Systems Division of Siebe, telephoned Mr.
Harris at which time they agreed to set a date to have more in-depth discussions
regarding a possible combination and to further conduct due diligence.
On April 7, 1998, representatives of the Company, including Mr. Harris,
Robert E. Grice, Jr., Executive Vice President, Finance and Chief Financial
Officer of the Company, and key technical personnel, and DRW met with
representatives of Siebe, including Dr. Sarney and Mr. Robinson, and Morgan
Stanley & Co. Incorporated, Siebe's financial advisor ("Morgan Stanley"), in
Orange County, California to discuss a possible acquisition of the Company by
Siebe. Prior to the meeting, Parent and the Company executed a Mutual
Nondisclosure Agreement, effective as of April 7, 1998, that required Parent and
its representatives to maintain certain confidential information provided to
them by or on behalf of the Company confidential and also included customary
standstill restrictions. At the meeting, the Company provided Siebe with
financial information about the Company, including non-public information
regarding the Company's preliminary operating results for the quarter ended
March 31, 1998, as well as information regarding its business, products and
strategies. At the meeting, Dr. Sarney indicated Siebe's continued desire to
acquire the Company and indicated that, subject to its due diligence review,
including a review of the Company's preliminary revised and
15
<PAGE> 18
reduced forecast for the 1998 fiscal year, it intended to propose a cash offer
for the Company on April 10, 1998. Early in the morning on April 10, 1998, the
Company provided Parent with its revised and reduced forecast for the 1998
fiscal year.
From April 8, 1998 to April 14, 1998, Siebe and its legal and financial
advisors conducted legal, financial and technical due diligence of the Company.
On April 9, 1998, legal counsel for Siebe sent a draft Merger Agreement and
draft Stock Option Agreement to legal counsel for the Company.
On April 10, 1998, Morgan Stanley contacted DRW and indicated that, subject
to further due diligence review, including an analysis of the Company's
preliminary revised and reduced estimate for the 1998 fiscal year, Siebe was
prepared to offer $10.00 in cash per share of the Company.
Thereafter, commencing on April 10, 1998 and continuing through the early
morning on April 15, 1998, the Company and Parent and their respective legal and
financial advisors engaged in negotiations with respect to a possible
acquisition of the Company by Parent.
On April 13, 1998, Siebe informed the Company that it would withdraw its
proposal to acquire the Company if a definitive acquisition agreement was not
executed prior to the opening of the U.S. trading markets on April 15, 1998.
The Merger Agreement and the Stock Option Agreement were executed and
delivered in the early morning on April 15, 1998.
Following the Offer and the Merger, Parent intends to operate the Company
on a basis generally consistent with the Company's existing plans and programs.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer and the Merger is for Offeror to acquire
control of, and the entire equity interest in, the Company. The purpose of the
Merger is for Offeror to acquire all Shares not purchased pursuant to the Offer.
Upon consummation of the Merger, the Company will become a wholly owned
subsidiary of Offeror. The Offer is being made pursuant to the Merger Agreement.
Approval. Under the Delaware General Corporation Law (the "DGCL"), the
approval of the Board of Directors of the Company and the affirmative vote of
the holders of a majority of the outstanding Shares are required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. The Board of Directors of the Company has unanimously approved and
adopted the Merger Agreement and the transactions contemplated thereby, and,
unless the Merger is consummated pursuant to the short-form merger provisions
under the DGCL described below, the only remaining required corporate action of
the Company is the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares. Accordingly, if the Minimum Condition is satisfied,
Offeror will have sufficient voting power to cause the approval and adoption of
the Merger Agreement and the transactions contemplated thereby without the
affirmative vote of any other stockholders.
Stockholder Meetings. In the Merger Agreement, the Company has agreed to
take all action necessary to convene a meeting of its stockholders as soon as
practicable after the consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the transactions contemplated
thereby, if such action is required by the DGCL. Parent has agreed that all
Shares owned by it or any of its subsidiaries (including Offeror) will be voted
in favor of the Merger Agreement and the transactions contemplated thereby. The
Company has also agreed to postpone the holding of its Annual Meeting of
Stockholders indefinitely pending consummation of the Merger unless the Company
is otherwise required to hold such meeting by Delaware Law.
Board Representation. If Offeror purchases at least a majority of the
outstanding Shares pursuant to the Offer, the Merger Agreement provides that the
Company shall increase the size of
16
<PAGE> 19
its Board of Directors to seven (7) members and Offeror will be entitled to
designate representatives to serve on the Board in the same proportion as the
proportion of Shares beneficially owned by Parent and its subsidiaries
(including Offeror) following such purchase. See Section 13. Parent currently
intends to designate a majority of the directors of the Company following
consummation of the Offer. It is currently anticipated that Parent will
designate Allen M. Yurko, Dr. George W. Sarney, Roger Mann, Colin P. Bonsey
and/or James C. Bays, or such other persons listed on Annex I as Parent shall
determine, to serve as directors of the Company following consummation of the
Offer. See Annex I. Offeror expects that such representation would permit
Offeror to exert substantial influence over the Company's conduct of its
business and operations.
Short Form Merger. Under the DGCL, if Offeror acquires, pursuant to the
Offer, at least 90% of the outstanding Shares, Offeror will be able to approve
the Merger without a vote of the Company's stockholders. In such event, Parent
and Offeror anticipate that they will take all necessary and appropriate action
to cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's stockholders. If, however,
Offeror does not acquire at least 90% of the outstanding Shares pursuant to the
Offer or otherwise and a vote of the Company's stockholders is required under
the DGCL, a significantly longer period of time would be required to effect the
Merger. Pursuant to the Merger Agreement the Company has agreed to take all
action necessary under the DGCL and its certificate of incorporation and by-
laws to convene a meeting of its stockholders promptly following consummation of
the Offer to consider and vote on the Merger, if a stockholders' vote is
required.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders will have certain
rights under the DGCL to dissent and demand appraisal of, and to receive payment
in cash of the fair value of, their Shares. Such rights to dissent, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value of the Shares, as of the day prior to the date on which the
stockholders' vote was taken approving the Merger or similar business
combination (excluding any element of value arising from the accomplishment or
expectation of the Merger), required to be paid in cash to such dissenting
holders for their Shares. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity. In
Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things,
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Therefore, the value so determined in
any appraisal proceeding could be the same as, or more or less than, the
purchase price per Share in the Offer or the Merger consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant
17
<PAGE> 20
to the Offer or otherwise in which Offeror seeks to acquire the remaining Shares
not held by it. Offeror believes, however, that Rule 13e-3 will not be
applicable to the Merger, if the Merger is consummated within one year after the
Expiration Date at the same per Share price as paid in the Offer. If applicable,
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Company substantially as they
are currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
businesses, particularly the businesses conducted by Foxboro.
Confidentiality; Standstill. In connection with granting Parent and its
representatives access to certain confidential information of the Company,
Parent executed a Mutual Disclosure Agreement with the Company, dated as of
April 7, 1998 (the "Confidentiality Agreement"). Among other things, the
Confidentiality Agreement provides that, beginning on the date of the
Confidentiality Agreement and ending twelve (12) months after the date on which
Parent or the Company provides notice that it has decided not to proceed with a
transaction between the parties, neither Parent nor the Company (nor their
affiliates) will, without the prior written consent of the other party's Board
of Directors, do any of the following (the "Standstill Provisions"): (a) acquire
or agree, offer, seek or propose to acquire, or cause to be acquired, ownership
of any of the other party's assets (other than in the ordinary course of
business) or businesses or any voting securities issued by the other party, or
any rights to acquire such ownership; (b) make or participate in any
solicitation of proxies or consents with respect to any securities of the other
party that may be entitled to vote in the election of the other party's
directors, or seek to influence any person with respect to the voting of any
such securities, or become a participant in an election contest with respect to
the other party, or demand a copy of the other party's stock ledger, list of
stockholders or other books and records, or attempt to call any meeting of the
stockholders of the other party; or (c) enter into any discussions or
arrangements with any third parties with respect to any of the foregoing. Those
provisions shall not apply if another person (including the Company) commences a
tender offer for, or publicly discloses a transaction to acquire, at least 50%
of the Company's securities (the "Standstill Proviso").
The Company waived the Standstill Provisions with respect to the Offer and
the Merger, and such restrictions shall not apply following consummation of the
Offer. In addition, in the Merger Agreement, the Company has agreed that,
notwithstanding the Standstill Provisions, if any third party commences an
Alternative Acquisition (defined below) involving a change of control in the
Company or its business then, provided the Merger Agreement has been terminated,
Parent and its affiliates may propose or present any offer or offers, or take
other action it deems appropriate, in response thereto. See Section 13,
"Non-Solicitation Obligations; Bona Fide Offers," below.
Extraordinary Corporate Transactions. Except as indicated in this Offer to
Purchase, neither Parent nor Offeror have any present plans or proposals which
relate to or would result in an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any subsidiary,
a sale or transfer of a material amount of assets of the Company or any
subsidiary or any material change in the Company's capitalization or dividend
policy or any other material changes in the Company's corporate structure or
business, or the composition of the Company's Board of Directors or management.
18
<PAGE> 21
13. THE TRANSACTION DOCUMENTS.
The Merger Agreement
Commencement. The Merger Agreement provides for the commencement of the
Offer not later than five business days after the execution of the Merger
Agreement, provided that the Merger Agreement has not theretofore been
terminated pursuant to its terms. Parent, Offeror and the Company are required
to use all reasonable efforts to take all action as may be necessary or
appropriate in order to effectuate the Offer and the Merger as promptly as
possible and to carry out the transactions provided for or contemplated by the
Merger Agreement.
Merger. The Merger Agreement provides that, as soon as practicable after
expiration of the Offer and the receipt of any required approvals and adoption
of the Merger Agreement by the stockholders of the Company, to the extent
required by the DGCL, and the satisfaction or waiver, if possible, of certain
other conditions contained in the Merger Agreement, Merger Sub (or another
direct or indirect Delaware subsidiary of Parent) will be merged with and into
the Company (the "Merger"), with the Company continuing as the surviving
corporation (the "Surviving Corporation") in the Merger under the corporate name
it possesses immediately prior to the effective time of the Merger (the
"Effective Time"). Notwithstanding the foregoing, the parties to the Merger
Agreement have agreed that Offeror may revise the structure of the Merger
(including merging the Company into Merger Sub or merging the Company with or
into another direct or indirect wholly-owned subsidiary of Parent) provided that
any such restructuring does not (i) cause a failure of a condition to the Offer
or the Merger, (ii) adversely affect the stockholders of the Company and (iii)
cause the Company to breach its representations and warranties under the Merger
Agreement.
Vote Required to Approve Merger. In the Merger Agreement, the Company has
agreed, if required by the DGCL, in order to consummate the Merger, to take all
action necessary in accordance with the DGCL to convene a meeting of its
stockholders promptly following consummation of the Offer for the purpose of
considering and approving the Merger. The Company, acting through its Board of
Directors, has further agreed that if a stockholders' meeting is convened, the
Board of Directors shall recommend that stockholders of the Company vote in
favor of the Merger and that such recommendation shall not be withdrawn or
adversely modified except by resolution of the directors who are directors of
the Company on the date of the Merger Agreement (the "Continuing Directors")
adopted in the exercise of applicable fiduciary duties, after consultation with
counsel. In the event that proxies are to be solicited from the Company's
stockholders, the Company shall, if and to the extent requested by Offeror, use
its best efforts to solicit from stockholders of the Company proxies in favor of
the Merger, and to take all other reasonable action necessary or, in the opinion
of Offeror, helpful to secure the vote of its stockholders in favor of the
Merger. At any such meeting, all of the Shares then owned by Parent, Offeror or
any subsidiary of Parent, and all Shares for which the Company has received
proxies to vote, will be voted in favor of the Merger.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding immediately prior thereto shall be cancelled and extinguished and
each Share (other than Shares held in the treasury of the Company, Shares held
by Parent or any subsidiary thereof, and Shares with respect to which appraisal
rights are properly exercised ("Dissenting Shares")) shall, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of the Shares, be converted into the right to receive the Offer Price
upon the surrender of the certificate formerly representing such Share. Each
share of common stock of Merger Sub issued and outstanding immediately prior to
the Effective Time shall, at the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Company or the holders of
Shares, be converted into and shall thereafter evidence one validly issued and
outstanding share of common stock of the Surviving Corporation.
19
<PAGE> 22
Treatment of Stock Option Plans and Stock Purchase Plans. Following the
purchase of Shares pursuant to the Offer, the unvested portion of all
outstanding stock options, warrants or other rights to acquire shares under the
Company's 1994 Stock Option Plan, 1996 Stock Plan, 1996 Director Option Plan or
any other agreement or arrangement (collectively, the "Stock Plans") shall
automatically accelerate in accordance with the terms of the Stock Plans (the
"Accelerated Options"). In lieu of exercising such Accelerated Options, each
holder of an Accelerated Option shall, upon surrender for cancellation of the
same to the Company on or before the Effective Time, be entitled to receive from
the Company for each Share subject to such Accelerated Option an amount in cash
equal to the excess, if any, of (a) the product of the number of Shares covered
by such Accelerated Options multiplied by the Offer Price, over (b) the product
of the number of Shares covered by such Accelerated Options multiplied by the
per-Share exercise, purchase or conversion price payable upon exercise, purchase
or conversion, subject to any required withholding taxes. Any outstanding stock
options or warrants that shall not have been so exercised or surrendered for
payment shall terminate at the Effective Time.
Also in the Merger Agreement, the Company has agreed to amend its 1996
Employee Stock Purchase Plan for U.S. Employees and its 1996 Employee Stock
Purchase Plan for non-U.S. employees (together, the "Employee Stock Purchase
Plans") so that (a) any Shares to be purchased under the Employee Stock Purchase
Plans will be purchased no later than the last trading day immediately prior to
the consummation of the Offer, and (b) immediately following such purchase, each
of the Employee Stock Purchase Plans will terminate.
Except as set forth above, the Company has agreed in the Merger Agreement
not to modify or accelerate the exercisability of any stock options, rights or
warrants presently outstanding, or to amend, change or waive (or exempt any
person from the effect of) the Rights Agreement, except in the exercise of the
fiduciary duties of its Board of Directors after consultation with counsel.
Conditions to Obligations of All Parties to the Merger. The obligations of
each of the parties to effect the Merger following completion of the Offer are
subject to the following conditions:
(i) The Merger shall have been approved and adopted by the vote of the
stockholders of the Company to the extent required by the DGCL;
(ii) All waiting, review and investigation periods (and any extension
thereof) applicable to the consummation of the Merger under the Hart-Scott
Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act") shall have expired or been terminated;
(iii) There shall have been no law, statute, rule or order, domestic
or foreign, enacted or promulgated which would make consummation of the
Merger illegal;
(iv) No injunction or other order entered by a United States (state or
federal) court of competent jurisdiction shall have been issued and remain
in effect which would prohibit consummation of the Merger;
(v) The Merger Agreement shall not have been terminated as provided
therein (see Section 13, "Merger Agreement -- Termination," below); and
(vi) Offeror shall have been required to purchase Shares pursuant to
the Offer.
Schedule 14D-9. In the Merger Agreement, the Company has agreed that
simultaneously with, or as promptly as possible after, the commencement of the
Offer, it will file with the Commission and promptly mail to its stockholders, a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
containing the recommendation of the Board of Directors that the Company's
stockholders accept the Offer, tender their Shares thereunder to Offeror and, if
required by applicable law, approve the Merger; provided, that such
recommendation may not be withdrawn or modified except by resolution of the
Board of Directors adopted in the exercise of its fiduciary duties after
consultation with counsel.
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<PAGE> 23
Board of Directors. The Merger Agreement provides that promptly upon the
payment by Offeror or any of Parent's direct or indirect subsidiaries pursuant
to the Offer for such number of Shares which represents at least a majority of
the outstanding Shares, the Company shall increase the size of its Board of
Directors to seven (7) members, and Offeror shall be entitled to designate
members of the Board of Directors such that Offeror, subject to the provisions
of Section 14(f) of the Exchange Act, will have a number of representatives on
the Board of Directors, rounded up to the next whole number, equal to the
product obtained by multiplying seven (7) by the percentage of Shares
beneficially owned by Parent and any of its subsidiaries. The Company has
agreed, upon the request of Offeror, to promptly increase the size of the Board
of Directors as permitted in accordance with the Certificate of Incorporation of
the Company and/or use its reasonable efforts to secure the resignations of such
number of directors as is necessary to enable Offeror's designees to be elected
to the Board of Directors and has agreed to use its best efforts to cause
Offeror's designees to be so elected. Notwithstanding the foregoing, if
Offeror's designees at any time prior to the Effective Time constitute a
majority of the Company's Board of Directors of the Company, then the Board of
Directors shall have at least two Continuing Directors. The Company has agreed,
at the request of Offeror and at its expense, to take all actions necessary to
effect the foregoing, including the mailing to its stockholders of the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, in form and substance reasonably satisfactory to Offeror
and its counsel.
Parent currently intends to designate a majority of the directors of the
Company following consummation of the Offer. It is currently anticipated that
Parent will designate Allen M. Yurko, Dr. George W. Sarney, Roger Mann, Colin P.
Bonsey and/or James C. Bays, or such other persons listed on Annex I as Parent
shall determine, to serve as directors of the Company following consummation of
the Offer. See Annex I.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent, Offeror and Merger Sub,
including, but not limited to, representations and warranties relating to the
Company's organization and qualification, capitalization and authority to enter
into the Merger Agreement and the Stock Option Agreement (defined and discussed
under Section 13, "Stock Option Agreement," below) and carry out the
transactions contemplated thereby, the Company's subsidiaries, Commission
filings (including financial statements), the documents supplied by the Company
relating to the Offer, required consents and approvals, employee benefit plans,
litigation, the material liabilities of the Company and its subsidiaries,
environmental matters relating to the Company and its subsidiaries, labor
matters, trademarks, patents and other intellectual property, the payment of
taxes, arrangements with financial advisors, the Rights Agreement, the absence
of product liability claims, related party transactions, and the absence of
certain material adverse changes or events since December 31, 1997. The Company
has also represented that it has taken or will take all action necessary to
render Section 203 of the DGCL (see Section 16, "State Takeover Laws," below)
and the Rights Agreement inapplicable to Parent, Offeror or Merger Sub solely by
virtue of the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the purchase of Shares pursuant to the Offer, the Merger or the Stock
Option Agreement, and the transactions contemplated thereby or therein. The
Company has also represented that the aggregate fees and expenses payable by the
Company and its subsidiaries in respect of the Merger Agreement and the
transactions contemplated thereby to any of its advisors will not exceed
$3,000,000, as long as the transactions are consummated without any related
litigation, and excluding any fees and expenses relating to certain antitrust
matters.
Parent, Offeror and Merger Sub have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to Parent's, Offeror's and Merger Sub's organization and
qualification, their authority to enter into the Merger Agreement and the Stock
Option Agreement and consummate the Offer and the Merger, required
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<PAGE> 24
consents and approvals, documents related to the Offer, the applicability of
certain margin rules and the availability of sufficient financing to consummate
the Offer.
Conduct of Company's Business Pending Merger. Pursuant to the Merger
Agreement, the Company has agreed that, prior to the Effective Time, unless
Offeror shall otherwise have agreed in writing or as otherwise contemplated by
the Merger Agreement, the Company will do the following:
(i) carry on the business of the Company and its subsidiaries only in,
and will maintain its and its subsidiaries facilities in, the ordinary
course of business and consistent with past practice;
(ii) use its reasonable efforts and shall cause its subsidiaries to
use reasonable efforts, to preserve intact their respective business
organizations and goodwill, keep available the services of their current
officers and employees as a group and maintain satisfactory relationships
with customers, suppliers, distributors and others having business dealings
with them;
(iii) as requested by Offeror and Merger Sub, confer on a regular and
frequent basis with representatives of Offeror and Merger Sub to report
operational matters and the general status of ongoing operations;
(iv) not take any action which would cause, or which reasonably may be
expected to cause, a failure to satisfy the conditions described in clause
(e) of Section 15, below; and
(v) notify Offeror and Merger Sub of any emergency or other change in
the normal course of the Company's or any of its subsidiaries' business or
in the operation of the Company's or the subsidiaries' properties and of
any governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would, individually
or in the aggregate, have a material adverse effect on the business,
revenues, assets, operations or financial conditions of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect") or would
reasonably be expected to impair any party's ability to consummate the
transaction contemplated by the Merger Agreement.
The Company has also agreed pursuant to the Merger Agreement that, prior to
the Effective Time, it will not directly or indirectly do, or permit any of its
subsidiaries to do, any of the following:
(i) issue, sell, pledge, dispose of or encumber (or permit any of its
subsidiaries to issue, sell, pledge, dispose of or encumber) any shares of,
or any options, warrants, conversion privileges or rights of any kind to
acquire any shares of any capital stock of the Company or any of its
subsidiaries (other than shares issuable upon exercise of the outstanding
(as of the date of the Merger Agreement) options or rights under the
Employee Stock Purchase Plans to acquire Shares in accordance with their
terms in effect on the date of the Merger Agreement);
(ii) amend or propose to amend the Certificate or Articles of
Incorporation or By-Laws of the Company or any of its subsidiaries;
(iii) split, combine or reclassify any outstanding Shares, or declare,
set aside or pay any dividend or other distribution payable in cash, stock,
property or otherwise with respect to the Shares other than pursuant to the
Rights Agreement;
(iv) other than pursuant to the Rights Agreement, redeem, purchase or
acquire or offer to acquire (or permit any of its subsidiaries to redeem,
purchase or acquire or offer to acquire) any Shares or other securities of
the Company or any of its subsidiaries other than as contemplated by the
Merger Agreement and other than for the repurchase by the Company, pursuant
to existing agreements, of any outstanding Shares upon termination of any
employment, director or consulting relationship with the Company; or
(v) enter into or materially modify any agreement, commitment or
arrangement with respect to any of the foregoing.
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<PAGE> 25
Pursuant to the Merger Agreement, the Company has agreed that neither the
Company nor any of the subsidiaries will:
(i) sell, pledge, lease, dispose of or encumber any material assets
other than in the ordinary course of business consistent with past
practice;
(ii) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, partnership or other business organization
or enterprise or material assets thereof;
(iii) incur any indebtedness for borrowed money or issue any debt
securities except for borrowings in the ordinary course of business and
consistent with past practice;
(iv) guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person (other than a subsidiary of the Company or the Company) except
in the ordinary course of business consistent with past practice and in
amounts immaterial to the Company;
(v) enter into or materially modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(vi) enter into or modify any employment, severance or similar
agreements or arrangements with, or grant any bonuses, salary increases,
severance or termination pay to, any officers or directors;
(vii) in the case of employees who are not officers or directors, take
any action other than in the ordinary course of business consistent with
past practice (none of which actions shall be unreasonable or unusual) with
respect to the grant of any bonuses, salary increases, severance or
termination pay or with respect to any increase of benefits in effect on
the date of the Merger Agreement; or
(viii) adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust fund or arrangement for the benefit
or welfare of any employee.
In addition, the Company has agreed that it will not (i) except as is
necessary after consultation with counsel to comply with fiduciary duties of the
Board of Directors of the Company, call any meeting (other than as contemplated
by the Merger Agreement) of its stockholders or waive or modify any provision
of, or terminate any, confidentiality or standstill agreement entered into by
the Company with any person; and (ii) except as expressly contemplated in the
Merger Agreement, modify or accelerate the exercisability of any stock options,
rights or warrants presently outstanding, and shall not amend, change or waive
(or exempt any person from the effect of) the Rights Agreement, except in the
exercise of the fiduciary duties of the Company's Board of Directors or as
expressly contemplated by the Merger Agreement.
The Company has also agreed that neither it nor any of its subsidiaries
will: (i) adopt a plan of liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or reorganization; or (ii) make any material tax
election or settle or compromise any material federal, state, local or foreign
tax liability, except in the ordinary course of business consistent with past
practice. In addition, the Merger Agreement also requires the Company to use its
reasonable efforts to cause its current insurance (or reinsurance) policies not
to be cancelled or terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar premiums are
in full force and effect.
Non-Solicitation Obligations; Bona Fide Offers. The Company agreed in the
Merger Agreement to immediately cease and terminate any existing activities,
discussions or negotiations with any parties with respect to any acquisition of
or sale of any equity interest in or substantial assets of the Company or any of
its subsidiaries. Also, from the date of the Merger Agreement until the
Effective
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<PAGE> 26
Time or the termination of the Merger Agreement, the Company will not, directly
or indirectly, through any of its affiliates, officers, directors or agents, or
otherwise solicit, initiate, entertain or encourage any proposals or offers from
any other person other than Parent or its affiliates (a "third party") relating
to any possible acquisition of the Company or any of its subsidiaries (whether
by way of merger, purchase of capital stock, purchase of assets, or otherwise)
(an "Alternative Acquisition"), or engage in any recapitalization or sale of any
equity interest in or sale or assignment of substantial assets of the Company or
any of its subsidiaries (other than pursuant to the exercise of options and
Rights outstanding on the date of the Merger Agreement or granted afterwards
with Parent's written permission) to a third party (an "Equity Transaction"),
nor will the Company participate in any negotiations regarding, or furnish to
any third party any information with respect to, or otherwise cooperate with,
facilitate or encourage any effort or attempt by any third party to do or seek
an Alternative Acquisition or Equity Transaction ("Non-Solicitation
Obligations").
However, notwithstanding the Company's Non-Solicitation Obligations, the
Company may negotiate with or furnish information to a third party that provides
a "Bona Fide Offer," provided that the Company first notifies the Parent in
writing of its receipt of such proposal and of its material terms. A "Bona Fide
Offer" means any bona fide proposal made by a third party with respect to an
Alternative Acquisition on terms which the Board of Directors of the Company
determines in its good faith judgment (after consultation with its outside
financial advisors) to be more favorable to the Company's stockholders than the
Offer and the Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of the
Company (after consultation with its outside financial advisors) is highly
probable of being obtained by such third party. In addition, the Company may
terminate this Agreement and accept such Bona Fide Offer upon the payment to
Parent of the Termination Fee (defined under "Expenses; Termination Fee" below).
Indemnification. Parent has agreed in the Merger Agreement to cause the
Surviving Corporation to maintain, for three years from the date Parent, Offeror
and Merger Sub together acquire a majority of the Shares, all rights to
indemnification existing in favor of the directors, officers, employees and
agents of the Company pursuant to the Company's By-Laws at or prior to the
Effective Time, unless required by law. Parent has also agreed in the Merger
Agreement to use its reasonable efforts to cause the Surviving Corporation to
maintain in full force and effect for a period of at least three years from the
Effective Time directors' and officers' liability insurance with limits of at
least those currently in place containing terms and provisions comparable to the
terms and provisions of the current policy maintained by the Company, for the
benefit of existing and former officers, directors, employees and agents of the
Company, but the Surviving Corporation shall only be liable for annual premiums
of no more than 30% greater than that incurred by the Company on the date of the
Merger Agreement. Parent has further agreed that, from and after the
consummation of the Offer, it will fulfill and honor, and it will cause the
Company to fulfill and honor, all obligations of the Company pursuant to each
indemnification agreement in effect at such time between the Company and each
person who is or was a director, officer, employee or agent of the Company at or
prior to such time. Parent has further agreed to assume the foregoing
indemnification obligations during any period of time in which the Surviving
Corporation fails or is unable to perform such obligations.
Employment Agreements. In addition, Parent has agreed that it will cause
the Company or its successors to honor without modification all employment
agreements and severance agreements and policies in effect prior to the date of
the Merger Agreement between the Company and any employee of the Company. The
Company has advised Offeror that the Company has entered into separation
agreements with certain of its officers, including Charles R. Harris, its
President and Chief Executive Officer, and that, in connection with the Offer,
effective April 15, 1998, the Company's Board of Directors authorized an
amendment to the separation agreements (i) to extend the terms of the agreements
for one year, (ii) to provide (effective upon the purchase of Shares pursuant to
the Offer) for a six-month employment period during which the agreements will
not be
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<PAGE> 27
terminable by the Company except for cause, and (iii) to provide that, at the
end of such six-month period, each such agreement may be terminated by the
employee in his or her sole discretion and such employee shall be entitled to
severance payments under the agreement. Generally, such severance payments are
equal to six months salary. However, if the employee has not found new
employment at the end of six months, the employee may continue to receive his or
her salary for additional one month periods, not to exceed an additional six
months, until the employee has found new employment. Such obligation to pay
severance will terminate immediately if the officer accepts employment, directly
or indirectly, with a competitor of Foxboro or the Company's business.
Amendment to Preferred Shares Rights Agreement. Pursuant to the Merger
Agreement, the Company has agreed to effect an amendment to the Preferred Shares
Rights Agreement dated as of August 13, 1997 (the "Rights Agreement") entered
into between the Company and Harris Trust Company of California as Rights Agent
(the "Rights Agent") to exclude Parent and Affiliates and Associates (as such
terms are defined in the Rights Agreement), including Offeror and Merger Sub,
from the definition of "Acquiring Person" therein, with respect to the
beneficial ownership of the Shares which Parent, Offeror or any of their
respective Affiliates and Associates have obtained the right to acquire, or will
acquire, as a result of the transactions contemplated by the Merger Agreement
and the Stock Option Agreement. Such amendment has been effected by the
execution of a formal amendment to the Rights Agreement on April 17, 1998 (the
"Rights Amendment") by the Company and the Rights Agent, and the filing with the
Commission (and the effectiveness of) an amendment to the Company's Registration
Statement on Form 8-A on April 21, 1998 with respect to such Rights Amendment.
The Rights Amendment ensures that neither Parent, Offeror nor any of their
respective Affiliates and Associates will be considered an "Acquiring Person"
under the Rights Agreement, and prevents the occurrence of a "Distribution
Date," a "Shares Acquisition Date" or a "Triggering Event" (each as defined
therein) as a result of Offeror's acquisition of Shares upon consummation of the
Offer or Parent's or Offeror's acquisition of Shares, or rights to acquire same,
in connection with the Merger or otherwise pursuant to the Merger Agreement or
Stock Option Agreement or any of the transactions contemplated thereby.
Consents and Amendments. In the Merger Agreement, the Company has agreed
to use its commercially reasonable efforts to obtain, without the payment of any
fee or compensation, certain consents to the Offer, the Merger, and the
transactions contemplated by the Merger Agreement. Also, the Company has agreed
to use its best efforts to amend the Software License Agreement (the "Shell
License Agreement") dated September 15, 1997 by and between the Company and
Shell Oil Products Company, with Shell acting for itself and Shell Oil Company
(collectively "Shell"), on terms reasonably satisfactory to Parent.
Termination of Merger Agreement. The Merger Agreement provides grounds for
which it may be terminated at any time prior to the Effective Time, but only if
no Shares have been purchased pursuant to the Offer. The Merger Agreement may be
so terminated:
(a) by mutual consent of the Boards of Directors of Parent and the
Company;
(b) by either Offeror or the Company if the Offer shall not have been
consummated on or before October 31, 1998; provided, however, that a party
shall not be entitled to terminate the Merger Agreement pursuant to such
provision if such party is in material breach of its obligations under the
Merger Agreement;
(c) by Offeror if (i) the Company or any of its subsidiaries
authorizes, recommends or proposes, or has announced such an intention, or
has entered into an agreement with respect to, any Alternative Acquisition
or Equity Transaction, or the Company's board of directors withdraws or
adversely modifies its favorable recommendations with respect to the Offer
and the Merger, or any corporation, entity, "group" or "person" (as defined
in the Exchange Act) other than Parent, Offeror or the Merger Sub, acquires
beneficial ownership of more than 50% of the outstanding Shares, or (ii)
the Rights Amendment is not adopted by April 20, 1998 or does not remain in
full force and effect thereafter;
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<PAGE> 28
(d) by Offeror upon any failure of any of the conditions to the Offer
set forth in Section 15 below; provided that if any and all such conditions
are and continue to be reasonably probable of being satisfied by the
thirtieth (30th) business day after commencement of the Offer, Offeror
shall not terminate the Merger Agreement as a result of such failures until
such thirtieth (30th) business day;
(e) by the Company if (i) the Offer has not commenced substantially in
accordance with its terms, or (ii) the Offer expires or is terminated
without any Shares having been purchased, or (iii) if a tender offer for
Shares is commenced by a person or entity, or the Company receives an offer
with respect to a merger, sale of assets or other business combination with
a person, any of which the Board of Directors determines, in the exercise
of its fiduciary duties and subject to its duties under the Merger
Agreement with respect to Bona Fide Offers, makes necessary or advisable
the termination of the Merger Agreement, or (iv) there has been a material
breach or failure to perform in any material respect by Parent, Offeror or
Merger Sub of any representation, warranty, covenant or other agreement
contained in the Merger Agreement which cannot be or has not been cured
within thirty (30) days after the giving of written notice to such
breaching party; or
(f) by Offeror if any governmental entity shall have issued an order,
decree or ruling or taken other action (in each case which is final and
nonappealable) permanently enjoining, restraining or otherwise prohibiting
acceptance or payment for Shares pursuant to the Offer or the Merger.
If the Merger Agreement is so terminated (a) the Merger Agreement will
become void and there will be no liability or further obligation on the part of
Parent, Offeror, Merger Sub or the Company or their respective stockholders,
officers or directors, except for expense reimbursement or payment of the
Termination Fee (discussed below), confidentiality obligations, and the
standstill obligations of the parties and (b) Offeror and Merger Sub shall
terminate the Offer, if still pending, without purchasing any Shares thereunder
and will not, subject to the Standstill Proviso of the of the Confidentiality
Agreement (see Section 12, "Confidentiality; Standstill," above), for a period
of two years following termination, commence a tender or exchange offer for any
capital stock of the Company without prior written consent of the Company.
Expenses; Termination Fee. The Merger Agreement provides that the Company
will pay Parent, upon demand, $7,250,000 (the "Termination Fee"), to compensate
Parent, Offeror and Merger Sub for taking actions to consummate the Merger
Agreement, to reimburse them for the time and expense relating thereto and for
other direct or indirect costs in connection with the transactions contemplated
by the Merger Agreement, if the Merger Agreement is terminated for any of the
following reasons and upon the conditions set forth in the Merger Agreement:
(A) the Company's acceptance of a Bona Fide Offer (see "Merger
Agreement -- Non-Solicitation Obligations; Bona Fide Offers," above);
(B) the determination by the Company's Board of Directors that such
termination is necessary or advisable given the commencement of a
third-party tender offer for the Shares or the receipt by the Company of an
offer with respect to a business combination transaction;
(C) the Company's pursuit of any Alternative Acquisition or Equity
Transaction, the withdrawal or adverse modification of the favorable
recommendations of the Company's Board of Directors with respect to the
Offer and the Merger, a third-party acquisition of beneficial ownership of
more than 50% of the outstanding Shares, or the failure to adopt the Rights
Amendment by April 20, 1998 or to maintain the Rights Amendment in full
force and effect thereafter; or
(D) any reason other than a material breach of the Merger Agreement by
Parent, Offeror or Merger Sub if within four months thereafter either (x) a
definitive agreement is entered into between the Company and any third
party for the acquisition or disposition of a material
26
<PAGE> 29
amount of assets or securities of the Company, or for a merger,
consolidation or other reorganization of the Company at a price equivalent
to a price per Share in excess of $10.00, and such transactions are
subsequently consummated at any time, or (y) any person or "group" (as that
term is used in Section 13(d)(3) of the Exchange Act) other than Offeror or
any affiliate of Offeror acquires or makes a public tender offer to acquire
beneficial ownership of at least 50% of the outstanding Shares at a price
per Share in excess of $10.00, and such transactions are consummated at any
time.
If the Company fails to pay the Termination Fee promptly when due, the
Company has agreed to pay to Parent all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees and expenses) incurred by Parent
in connection with the collection of the Termination Fee, together with interest
from the date the Termination Fee was due until such time as payment is received
by Parent at the lesser of 10% per annum or the maximum rate permitted by law
(the "Interest Rate").
The Merger Agreement further provides that, in addition to any damages
caused by conduct that constitutes a breach under the Merger Agreement by either
Parent, Offeror and Merger Sub, on the one hand, and the Company, on the other
hand, the breaching party, jointly and severally, will pay to the nonbreaching
party all reasonable out-of-pocket costs and expenses it incurs in connection
with its enforcement of its rights under the Merger Agreement, together with
interest from the date such damages are incurred until such time as payment is
received by the nonbreaching party at the Interest Rate.
Consent of Continuing Directors to Termination, Modification, Amendment or
Waiver. Notwithstanding anything in the Merger Agreement to the contrary, the
affirmative vote of a majority of the Continuing Directors will be required to
terminate, amend, modify or waive any provision of the Merger Agreement on
behalf of the Company, or to approve any other action by the Company with
respect to the Offer or the other transactions contemplated by the Merger
Agreement, or the Certificate of Incorporation or By-Laws of the Company which
adversely affects the interests of the stockholders of the Company (other than
Parent, Offeror or Merger Sub) with respect to such transactions.
The Stock Option Agreement
Grant of Stock Option. Parent and the Company have entered into a Stock
Option Agreement, dated as of April 15, 1998 (the "Stock Option Agreement"),
pursuant to which the Company granted to Parent an option (the "Stock Option")
to purchase authorized and unissued shares of common stock of the Company
("Option Shares") in an aggregate amount of up to 15% of the Company's issued
and outstanding shares on the date of the Stock Option Agreement, at a price per
share equal to $10.00, payable in cash. The type and number of Option Shares and
the option exercise price will be adjusted to reflect any stock dividends,
split-ups, recapitalizations or the like. Further, if the Company enters into a
merger with another company in which the Company's shares of common stock are
converted into the right to receive cash, securities or other property, then the
Company will ensure that the Stock Option becomes an option to acquire the cash,
securities or other property that Parent would have received in such merger if
it had exercised the Stock Option immediately prior to such merger. The Company
has also agreed that, if at the time of issuance of any Option Shares, the
Company shall have issued any share purchase rights or similar securities to
holders of any class of the Company's common stock, then, subject to the terms
and conditions of any plan governing such rights or securities, each such Option
Share shall also represent rights that are substantially similar and at least as
favorable to Parent. The Stock Option may only be transferred to a direct or
indirect wholly-owned subsidiary of Parent who agrees to be bound by the terms
of the Option Agreement.
Exercise of Stock Option. The Stock Option will be triggered upon a
"Purchase Event," meaning the termination of the Merger Agreement in connection
with (A) the Company's
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<PAGE> 30
acceptance of a Bona Fide Offer (see "Merger Agreement -- Non-Solicitation
Obligations; Bona Fide Offers," above), (B) the determination by the Company's
Board of Directors that such termination is necessary or advisable given the
commencement of a third-party tender offer for the Shares or the Company
receives an offer with respect to a business combination (see "Termination of
Merger Agreement," clause (e)(iii), above), or (C) the Company's pursuit of any
Alternative Acquisition or Equity Transaction, the withdrawal or adverse
modification of the favorable recommendations of the Company's Board of
Directors with respect to the Offer and the Merger, a third-party acquisition of
beneficial ownership of more than 50% of the outstanding Shares, or the failure
to adopt the Rights Amendment by April 20, 1998 or to maintain the Rights
Amendment in full force and effect thereafter (see "Termination of Merger
Agreement," clause (c), above). Upon the occurrence of a Purchase Event, Parent
may exercise the Stock Option, in whole or in part, during the period (the
"Option Exercise Period") commencing on the Purchase Event and terminating 180
days thereafter (the "Termination Date"), with such period to be adjusted if any
injunction, order or similar court restraint delays the exercise of the Stock
Option. The related closing will generally take place on a date specified by
Parent that is within 2 business days and 60 calendar days after the date that
Parent provides written notice of exercise of the Stock Option (the "Notice
Date"), subject to adjustment if the closing is delayed by any applicable law or
because prior notification to or approval of any governmental authority is
required.
Repurchase of Stock Option and Option Shares. If Parent notifies the
Company of its intention to exercise a portion of the Stock Option, but the
related closing has not occurred, then the Company may, by providing written
notice to Parent not less than two business days prior to the date scheduled for
such closing, elect to repurchase the Stock Option in its entirety from Parent
together with all Option Shares previously purchased by Parent as to which
Parent then has beneficial ownership (as used in Rule 13d-3 under the Exchange
Act). The repurchase will take place within three business days of such
election. The repurchase price will equal the sum of the following: (i) with
respect to the unexercised portion of the Stock Option, the difference between
(A) the "Market/Tender Offer Price" (defined below) for shares of the Company's
common stock and (B) the option exercise price of $10.00 (subject to adjustment
as provided above), multiplied by the number of Option Shares subject to the
unexercised portion of the Stock Option, but only if such Market/Tender Offer
Price is greater than such exercise price; and (ii) with respect to Option
Shares, the greater of the Market/Tender Offer Price and the purchase price paid
for any Option Shares acquired upon exercise of any portion of the Stock Option,
multiplied by the number of Option Shares so acquired. "Market/Tender Offer
Price" means the higher of (x) the highest price per share at which a tender or
exchange offer has been made and not withdrawn for shares of the Company's
common stock during the Option Exercise Period or (y) the highest closing price
per such share as reported by the NASDAQ National Market for any day within the
period beginning on the Notice Date and preceding the date the Company gives
notice of its election to repurchase.
Limitation on Total Profit. If Parent (or any of its affiliates) sells any
of the Option Shares or any rights therein, Parent may keep the proceeds of such
sale until the proceeds exceed by more than $14,250,000 the aggregate purchase
price paid for such Option Shares (the "Profit Limitation"). Any proceeds in
excess of the Profit Limitation (whether in cash or in kind, valued at fair
market) will be paid to the Company. The Profit Limitation applies to all sales
and dispositions by Parent and its affiliates, including a sale to the Company
pursuant to its repurchase rights.
Termination. The Stock Option Agreement will terminate, but only if a
Purchase Event has not occurred, on (i) the date on which Offeror purchases all
Shares tendered in the Offer and not withdrawn pursuant to the Offer, or (ii)
the termination of the Merger Agreement pursuant to its terms (unless terminated
by the occurrence of a Purchase Event).
Registration Rights; Listing. The Company has granted to the holders and
beneficial owners of the Option Shares certain registration rights that may be
exercised at any time after the closing of a sale of Option Shares. Registration
will be at the Company's expense except for underwriting commissions and the
fees and disbursements of counsel to such holders and beneficial owners. Upon
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<PAGE> 31
receiving any request to exercise such registration rights, the Company will
send a copy thereof to any other person known to the Company to be entitled to
such registration rights. In no event will the Company be required to effect
more than one registration pursuant to such rights. Also, if the Option Shares
are then listed on any national securities exchange, the Company, upon the
request of Parent, will promptly file an application to list the Option Shares
on all such exchanges and will use its best efforts to obtain approval of such
listings as soon as practicable.
Representations and Warranties; Covenants. Under the Stock Option
Agreement, the Company made customary representations and warranties to Parent,
including with respect to the Company's authority to enter into and perform its
obligations under the Stock Option Agreement, the due execution and delivery by
the Company of the Stock Option Agreement, the Company's taking of all corporate
actions necessary to authorize and reserve for issuance the Option Shares, and
the valid issuance of such fully paid and nonassessable Option Shares, free and
clear of all encumbrances. The Company also agreed that no provision of the
Rights Agreement will be triggered solely by virtue of any ownership, exercise
or purchase under the Stock Option Agreement.
Parent has also made customary representations and warranties under the
Stock Option Agreement, including with respect to Parent's authority to enter
into and perform its obligations under the Stock Option Agreement, the due
execution and delivery by Parent of the Stock Option Agreement, and the Parent's
representation that it will not transfer or dispose of the Option Shares except
in compliance with the Securities Act.
The foregoing is a summary of certain provisions of the Merger Agreement
and the Stock Option Agreement, copies of which have been filed as exhibits to
the Schedule 14D-1 and which are available in the manner set forth in Section 8.
Such summary is qualified in its entirety by reference to the text of such
agreements.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, (a) issue, sell, pledge, dispose of or
encumber (or permit any of its subsidiaries to issue, sell, pledge, dispose of
or encumber) any shares of, or any options, warrants, conversion privileges or
rights of any kind to acquire any shares of any capital stock of the Company or
any of its subsidiaries (other than shares issuable upon exercise of the
outstanding (as of the date of the Merger Agreement) options or rights under the
Employee Stock Purchase Plans to acquire Shares in accordance with their terms
in effect on the date of the Merger Agreement); (b) split, combine or reclassify
any outstanding Shares, or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect to the
Shares other than pursuant to the Rights Agreement; or (c) other than pursuant
to the Rights Agreement, redeem, purchase or acquire or offer to acquire (or
permit any of its subsidiaries to redeem, purchase or acquire or offer to
acquire) any Shares or other securities of the Company or any of its
subsidiaries other than as contemplated by the Merger Agreement and other than
for the repurchase by the Company, pursuant to existing agreements, of any
outstanding Shares upon termination of any employment, director or consulting
relationship with the Company. See Section 13, "Conduct of Company's Business
Pending Merger."
15. CERTAIN CONDITIONS TO OFFEROR'S OBLIGATIONS.
In the Merger Agreement, Offeror has agreed that if all of the conditions
to the Offer are not satisfied by the Expiration Date then, provided that all
such conditions are reasonably probable of being satisfied by the date which is
30 business days after the commencement of the Offer, Offeror shall extend the
Offer (up to such 30th business day) until such conditions are satisfied or
waived. Subject to such obligation to extend the Offer, Offeror shall not be
required to accept for payment, purchase or pay for any Shares tendered, or may
postpone the acceptance, purchase or payment for Shares, or may amend or
terminate (to the extent permitted by the Merger Agreement) the Offer,
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<PAGE> 32
(1) if the Minimum Condition is not satisfied as of the expiration of the Offer;
(2) if any applicable waiting period under the Hart-Scott-Rodino Act in respect
of the Offer shall not have expired or have been terminated prior to the
expiration of the Offer or (3) if, upon the Expiration Date and before
acceptance of such Shares for payment, any of the following conditions exists or
is continuing (each of paragraphs (a) through (f) providing a separate and
independent condition to Offeror's obligations pursuant to the Offer):
(a) there is any statute, rule, injunction or other order by any court
or governmental agency or other agency or commission, domestic or foreign
of competent jurisdiction (other than the routine application of waiting,
review and investigation periods under the Hart-Scott-Rodino Act and
similar foreign antitrust laws and published rules, and routine application
of federal securities laws and published rules), (i) making the purchase of
some or all of the Shares pursuant to the Offer or the Merger illegal, or
resulting in a material delay in the ability of Offeror or the Merger Sub
to purchase some or all of the Shares, (ii) invalidating or rendering
unenforceable any material provision of the Merger Agreement, (iii)
imposing material limitations on the ability of Offeror or the Merger Sub
effectively to acquire or hold or to exercise full rights of ownership of
the Shares acquired by it, including voting rights, (iv) imposing material
limitations on the ability of any of Parent, Offeror, or the Company to
continue to own or operate effectively all or any material portion of its
respective business as heretofore conducted or to continue to own or
operate effectively all or any material portion of its respective assets as
heretofore owned or operated, (v) imposing material limitations on the
ability of Offeror to continue effectively all or any material portion of
the Company's business as heretofore conducted or to own or operate
effectively all or any material portion of the Company's assets as
heretofore operated, or (vi) to the effect that the Offer or the Merger is
violative of any applicable law which would reasonably be expected to
result in any of the consequences described in clauses (i) through (v)
above;
(b) there is any law, statute, rule or regulation, domestic or
foreign, that results or would reasonably be expected to result in any of
the consequences referred to in paragraph (a) above, or any action, suit or
proceeding is commenced by a governmental or regulatory authority or body
seeking to restrain, enjoin or otherwise prohibit the Offer, the Merger, or
the completion of the transactions contemplated by the Merger Agreement;
(c) there is (i) any general suspension of, or limitation on prices
for, trading in securities on any national securities exchange or in the
over the counter market in the United States or on the London Stock
Exchange, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or the United Kingdom,
(iii) any limitation by any governmental authority which would reasonably
be expected to materially adversely affect, the extension of credit by
banks or other lending institutions in the United States or the United
Kingdom, (iv) from the date of the Merger Agreement through the close of
business on the business day immediately prior to the Expiration Date, a
decline of at least 25% in the Standard & Poor's 500 Index, or (v) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
(d) except as set forth in reports heretofore filed by the Company
with the Commission or the disclosure schedule provided by the Company, any
change occurs or is threatened since the date of the Merger Agreement which
individually or in the aggregate has had or is continuing to have or would
reasonably be expected to have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole;
(e) any of the representations and warranties of the Company in the
Merger Agreement are not true and correct (i) in all material respects on
the date of the Merger Agreement or (ii) in all respects as if made on the
Expiration Date, except in the case of clause (ii) where the aggregate of
all inaccuracies would not have a Material Adverse Effect on the Company,
and except for those representations and warranties that address matters
only as of a particular date
30
<PAGE> 33
(which representations and warranties will be true and correct except as
would not have a Material Adverse Effect on the Company as of such
particular date) (for purposes of determining whether inaccurate
representations and warranties would have a Material Adverse Effect on the
Company, "Material Adverse Effect" and "materiality" qualifications and
limitations in the representations and warranties will not be given
effect); or (iii) the Company shall have breached in any material respect
or shall not have performed in all material respects each covenant and
complied with each agreement to be performed and complied with by it under
the Merger Agreement; or
(f) the Merger Agreement is terminated pursuant to its terms
which, in the good faith judgment of Offeror, in any such case, and regardless
of the circumstances giving rise to any such condition (except in the case any
such condition is not satisfied as the direct result of a breach by Parent or
Offeror of obligations under the Merger Agreement), make it inadvisable to
proceed with acceptance for payment or purchase of or payment for the Shares.
The foregoing conditions are for the sole benefit of Offeror and Parent and
may be asserted by Offeror and Parent regardless of the circumstances (except in
the case any such condition is not satisfied as the direct result of a breach by
Parent or Offeror of obligations under the Merger Agreement) giving rise to such
conditions, or may be waived (except for the Minimum Condition) by Offeror or
Merger Sub in whole at any time or in part from time to time in their sole
discretion. The failure by Offeror or Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time. Any determination by Offeror concerning the conditions described
in this Section shall be final and binding upon all parties.
16. CERTAIN REGULATORY AND LEGAL MATTERS.
Except as set forth in this Section, Offeror is not aware of any approval
or other action by any governmental or administrative agency which would be
required for the acquisition or ownership of Shares by Offeror as contemplated
herein. Should any such approval or other action be required, it will be sought,
but Offeror has no current intention to delay the purchase of Shares tendered
pursuant to the Offer pending the outcome of any such matter, subject, however,
to Offeror's right to decline to purchase Shares if any of the conditions
specified in Section 15 shall have occurred. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions, or that adverse consequences might not result to
the Company's business or that certain parts of the Company's business might not
have to be disposed of if any such approvals were not obtained or other action
taken.
Antitrust. The Hart-Scott-Rodino Act provides that the acquisition of
Shares by Offeror may not be consummated unless certain information has been
furnished to the Division (the "Division") and the FTC and certain waiting
period requirements have been satisfied. The rules promulgated by the FTC under
the Hart-Scott-Rodino-Act require the filing of a Notification and Report Form
(the "Form") with the Division and the FTC and that the acquisition of Shares
under the Offer may not be consummated until 15 days after receipt of the Form
by the Division and the FTC. Within such 15 day period the Division or the FTC
may request additional information or documentary material from Offeror. In the
event of such request the acquisition of Shares under the Offer may not be
consummated until 10 days after receipt of such additional information or
documentary material by the Division or the FTC. Offeror expects to file its
Form with the Division and the FTC on April 22, 1998. The Company advised the
Offeror that the Company expects to file its Form with the Division and the FTC
on April 24, 1998.
Federal Reserve Board Regulations. Federal Reserve Board Regulations G, T,
U and X (the "Margin Regulations") promulgated by the Federal Reserve Board
place restrictions on the amount of credit that may be extended for the purpose
of purchasing margin stock (including the Shares) if such credit is secured
directly or indirectly by margin stock. Because, among other reasons, Parent's
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<PAGE> 34
Revolving Credit Agreement is unsecured, Parent and Offeror believe the
financing for the acquisition of the Shares will comply with the Margin
Regulations.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On April 15, 1998,
prior to the execution of the Merger Agreement, the Board of Directors of the
Company, by unanimous vote of all directors present at a meeting held on such
date, (i) approved and adopted the Merger Agreement, the Option Agreement and
the transactions contemplated thereby, (ii) determined that the Merger
Agreement, the Option Agreement and the transactions contemplated thereby,
including each of the Offer and the Merger, is fair to and in the best interests
of, the stockholders of the Company and (iii) recommended that the stockholders
of the Company accept the Offer and approve and adopt the Merger Agreement, the
Option Agreement and the transactions contemplated thereby. Accordingly, Section
203 is inapplicable to the Offer, the Merger or the Option Agreement.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Offeror does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Offeror will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Offeror might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Offeror might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, Offeror may not be
obligated to accept for payment any Shares tendered. See Section 15.
17. FEES AND EXPENSES.
Neither Offeror nor Parent will pay any fees or commissions to any broker
or dealer or other person (other than the Dealer Manager) for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will, upon request, be reimbursed by Offeror for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
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<PAGE> 35
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Parent in connection with
the proposed acquisition of the Company. Parent has agreed to pay Morgan Stanley
(i) an advisory fee in the range of $100,000 to $200,000, if no acquisition of
the Company is consummated, (ii) a fee of $500,000, upon Parent's reaching any
agreement to acquire the Company or commencement of a tender offer for shares of
the Company, and (iii) a transaction fee of $1,500,000 (against which any of the
aforementioned fees paid will be credited), if an acquisition of the Company is
concluded. The transaction fee will become payable in the event Offeror acquires
more than a majority of the outstanding Shares. In addition, Parent has agreed
to reimburse Morgan Stanley for all reasonable out-of-pocket expenses incurred
by Morgan Stanley, including the reasonable fees and disbursements of its legal
counsel, and to indemnify Morgan Stanley and certain related persons against
certain liabilities and expenses, including, without limitation, certain
liabilities under the federal securities laws.
Offeror has retained D.F. King & Co., Inc. as Information Agent and Bankers
Trust Company as Depositary in connection with the Offer. The Information Agent
and the Depositary will receive reasonable and customary compensation for their
services hereunder and reimbursement for their reasonable out-of-pocket
expenses. The Depositary will also be indemnified by Offeror against certain
liabilities in connection with the Offer.
18. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities or blue sky
laws of such jurisdiction. In any jurisdiction where the securities or blue sky
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of Offeror by one or more registered
brokers or dealers which are licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Offeror other than as contained in this Offer to
Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by Offeror.
Offeror has filed with the Commission a statement on Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated
thereunder, furnishing certain information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be examined and
copies may be obtained at the same places and in the same manner as set forth
with respect to the Company in Section 8 (except that they will not be available
at the regional offices of the Commission).
S ACQUISITION CORP.
April 21, 1998
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<PAGE> 36
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND OFFEROR
The names and ages of the directors and executive officers of Parent and
Offeror, and their present principal occupations, are set forth below. Unless
otherwise indicated, each individual is a citizen of the United Kingdom and his
business address is Saxon House, 2-4 Victoria Street, Windsor, Berkshire SL4
1EN, United Kingdom.
SIEBE PLC
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT WITH SIEBE PLC; MATERIAL POSITIONS
NAME AND AGE HELD DURING THE PAST FIVE YEARS
------------ ---------------------------------------------
<S> <C>
Sir Philip Beck (63)(a) Chairman since March 1, 1998, and a member of the Board of
Directors for more than the past five years. Formerly
Chairman and Chief Executive Officer of John Mowlem and
Company plc.
Sir Colin Marshall (64)(b) Deputy Chairman, and a member of the Board of Directors
since January 1, 1998. Chairman of British Airways plc since
1993; Deputy Chairman and Chief Executive Officer prior to
1993. Also Chairman of Inchcape since 1996; Deputy Chairman
of British Telecommunications plc since 1995 and Board
Director of the New York Stock Exchange Inc. since 1994.
Allen M. Yurko (46)(c) Member of the Board of Directors, Managing Director and
Chief Executive Officer since January 1, 1994; Managing
Director and Chief Operating Officer from October 1, 1992 to
December 31, 1993.
Dr. George W. Sarney (58)(d) Member of the Board of Directors since January 1994;
President and Chief Operating Officer, Siebe Control
Systems, since September 1993; Director, President and Chief
Operating Officer, Siebe Temperature and Appliance Controls
from June to September 1993. Director, Bowthorpe plc, since
1996; Senior Vice President, Energy and Environmental Group,
Raytheon Company, prior to 1993.
Roger Mann (58) Member of the Board of Directors and Group Finance Director
for more than the past five years.
Colin P. Bonsey (51) Member of the Board of Directors and Director of Planning
for more than the past five years.
James C. Bays (48)(e) Vice President, General Counsel and Chief Legal Officer
since March 1996. Vice President, Law and Assistant General
Counsel, GenCorp Inc., from April 1993 to March 1996.
R.P.A. Coles (55) Director of Legal Affairs and Company Secretary for more
than the past five years.
Sir Richard Lloyd, Bt. (69)(f) Member of the Board of Directors for more than the past five
years.
Lord Trefgarne PC (57)(g) Member of the Board of Directors since 1991. Chairman of the
Engineering Training Authority since 1994; President of the
Mechanical and Metals Trades Confederation since 1990;
former Minister of State.
</TABLE>
I-1
<PAGE> 37
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT WITH SIEBE PLC; MATERIAL POSITIONS
NAME AND AGE HELD DURING THE PAST FIVE YEARS
------------ ---------------------------------------------
<S> <C>
Mr. Peter A. M. Curry (67)(h) Member of the Board of Directors since June 1996. Executive
Chairman of Unitech plc prior to May 1996.
Mr. Timothy K. Thornton (63)(i) Member of the Board of Directors since 1995. Director of
Kleinwort Benson Securities Limited prior to 1995.
Mr. James Mueller (51)(j) Member of the Board of Directors since April 1996; President
and Chief Operating Officer of Siebe Temperature and
Appliance Controls since 1993; President of Ranco Inc., an
indirect wholly owned subsidiary of Parent, briefly in early
1993.
</TABLE>
OFFEROR
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT WITH OFFEROR; MATERIAL POSITIONS
NAME AND AGE HELD DURING THE PAST FIVE YEARS
------------ -------------------------------------------
<S> <C>
Allen M. Yurko Chairman and Member of the Board of Directors (see notation
above for age and employment history).
Dr. George W. Sarney Member of the Board of Directors and President (see notation
above for age and employment history).
James C. Bays Member of the Board of Directors and Vice President (see
notation above for age and employment history).
Thomas G. Foley (56)(k) Vice President; Executive Vice President and Chief Financial
Officer, Siebe Control Systems and Executive Vice President
and Chief Financial Officer, The Foxboro Company, since
September 1990.
Gregory M. Miller (49)(l) Vice President and Treasurer; Vice President of
International Finance, Parent, since January 1998; Vice
President, Finance and Administration, Siebe Inc. (a holding
company for Siebe plc's U.S. investments) since September
1990.
R.P.A. Coles Secretary (See notation above for age and employment
history).
</TABLE>
- ---------------
(a) Sir Philip Beck's business address is Pylle Manor, Pylle, Shepton Mallet,
Somerset, BA4 6TD, United Kingdom.
(b) Sir Colin Marshall's business address is British Airways, Berkeley Square
House, Berkeley Square, London, W1X 6BA, United Kingdom.
(c) Mr. Yurko is a citizen of the United States.
(d) Dr. Sarney is a citizen of the United States and his business address is 33
Commercial Street, Bristol Park, Foxboro, Massachusetts 02035.
(e) Mr. Bays is a citizen of the United States.
(f) Sir Richard Lloyd's business address is Sundridge Place, Sundridge,
Sevenoaks, Kent TN14 6DD, United Kingdom.
(g) Lord Trefgarne's business address is The Old Barn, Kettlewell Close,
Horsell Nr. Woking, Surrey GU 21 4HZ, United Kingdom.
(h) Mr. Curry's business address is The Old Vicarage, Valley End, Chobham,
Surrey, GU24 8TB, United Kingdom.
(i) Mr. Thornton's business address is Juthware Hall, Halstock, Nr. Yeovil,
Somerset, BA22 9SG, United Kingdom.
I-2
<PAGE> 38
(j) Mr. Mueller is a citizen of the United States and his business address is
8161 US Route 42N, Plain City, Ohio 43064.
(k) Mr. Foley is a citizen of the United States and his business address is 33
Commercial Street, Foxboro, Massachusetts 02035.
(l) Mr. Miller is a citizen of the United States and his business address is
33 Commercial Street, Foxboro, Massachusetts 02035
I-3
<PAGE> 39
ANNEX II
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
Below are the major differences between UK GAAP and US GAAP as they relate
to Parent:
Goodwill and Other Intangibles
Under U.K. GAAP, Parent writes off goodwill, being the excess of cost over
the fair value attributable to the net assets acquired, to consolidated equity
in the year of acquisition. Under U.S. GAAP, goodwill is capitalized and
amortized through the statement of income over a period representing the
estimated useful life, not exceeding 40 years. In calculating any gain or loss
resulting from a disposition of assets, goodwill previously written off, subject
to certain adjustments, is restored to original cost under U.K. GAAP.
In accordance with U.K. GAAP, development prototype expenditure and
associated software costs on development of defined commercial projects are
capitalized and amortized through the profit and loss account over a period of
three to ten years. Under U.S. GAAP, such expenditure is generally expensed as
it is incurred.
Deferred Taxation
Under U.K. GAAP, provision is made for deferred taxation under the
liability method unless there is reasonable certainty that such deferred
taxation will not become payable in the foreseeable future. Under U.S. GAAP,
deferred taxation is accounted for on all temporary differences which will
result in taxable or tax deductible amounts in future years subject to a
valuation allowance to reduce the deferred tax asset if it is more likely than
not that the related tax benefit will not be realized.
Dividends
Under U.K. GAAP, dividends are provided for in the year to which they
relate. These dividends are deducted from current year earnings and therefore
reserves. U.S. GAAP recognizes proposed dividends as a reduction of retained
earnings in the accounting period in which they are formally declared.
Pensions
Contributions to the pension funds are assessed in accordance with advice
from actuaries and charged to the income statement so as to spread the pension
cost over the expected service lives of the employees with the pension plan.
Pension accounting under U.S. GAAP is more prescriptive than that under U.K.
GAAP, where a more flexible and judgmental approach is taken. Accordingly, there
may be differences in the actuarial assumptions and methods of valuation of the
plan assets compared with those that would be made under U.S. GAAP.
Acquisition Accounting
Prior to the adoption of Financial Reporting Standard No. 7 -- "Fair Values
in Acquisition Accounting" ("FRS7"), Parent provided for certain costs as part
of the purchase accounting adjustments on an acquisition which under U.S. GAAP
should have been included in the statement of income when those costs were
incurred. Examples of such items include certain costs in respect of salaries of
individuals made redundant, the closure of certain of the Parent's existing
operations and the rectification of inadequate operating systems.
With effect from April 2, 1994, Parent adopted FRS7, FRS7 sets out rules
for accounting for acquisitions in consolidated financial statements. The fair
value balance sheet of the acquired
II-1
<PAGE> 40
company cannot include provisions for integration and reorganization costs set
up by the acquiring company. In compliance with FRS7, comparative figures have
not been restated. Under U.S. GAAP, certain integration and reorganization
costs, meeting specific criteria, may be considered liabilities assumed and
included in the allocation of the acquisition cost.
Restructuring and Integration Costs
Under U.K. GAAP, when a decision has been taken to restructure part of
Parent's business, provisions are made for the impairment of asset values
together with severance and other costs. U.S. GAAP requires a number of specific
criteria to be met before such costs can be recognized as an expense. Among
these criteria is the requirement that all significant actions arising from a
restructuring and integration plan and their completion dates must be identified
by the balance sheet date and employees must have been informed of their
severance benefits. These criteria also apply to the recognition of integration
costs considered liabilities assumed on acquisition.
Earnings per Ordinary Share
Under U.K. GAAP, earnings per ordinary share is computed using the weighted
average number of ordinary shares in issue during the year. U.S. GAAP also
includes in the computation for earnings per ordinary share the dilutive effect
of all outstanding share options and common share equivalents under the treasury
stock method. Under U.K. GAAP, the weighted average number of ordinary shares
for prior years is restated to reflect the bonus element of rights issued. Under
U.S. GAAP, no restatement is made.
Cash Flows
Under U.K. GAAP, Parent complies with the Revised Financial Reporting
Standard No. 1 -- "Cash flow statements' ("FRS1"). Its objective and principles
are similar to those set out in the Statements of Financial Accounting Standards
No. 95 -- "Statement of Cash Flows" ("SFAS No. 95").
The principal difference between U.K. GAAP and U.S. GAAP is in respect of
classification. Under U.K. GAAP, Parent presents its cash flows for operating
activities, returns on investments and servicing of finance, taxation, capital
expenditures and financial investments, acquisitions and disposals, equity
dividends paid, management of liquid resources, and financing. U.S. GAAP
requires only three categories of cash flow activities which are operating,
investing and financing activities.
Cash flows arising from taxation and returns on investments and servicing
of finance under U.K. GAAP would, with the exception of dividends paid, be
included as operating activities under U.S. GAAP; dividend payments would be
included as a financing activity under U.S. GAAP. In addition, capital
expenditures and financial investment, acquisition and disposals, and management
of liquid resources under U.K. GAAP would be presented as investing activities
under U.S. GAAP.
Furthermore, under U.K. GAAP, cash and cash equivalents include short term
borrowings which under U.S. GAAP would be presented as financing activities.
Investment Securities
Trade investments are carried at cost, reduced for any permanent diminution
in value. Under U.S. GAAP, investments in marketable equity securities and all
debt securities would be classified as "available for sale" securities and
recorded at fair value, with unrealized gains and losses, net of tax, presented
as a component of equity.
Share Option Scheme
Parent does not recognize any compensation for performance-based options
granted to directors
II-2
<PAGE> 41
and executives. U.S. GAAP requires compensation cost to be recorded over the
service period for the excess of the market value of the underlying shares over
the exercise price of the options.
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary is:
Bankers Trust Company
<TABLE>
<S> <C> <C>
By Mail By Hand By Overnight Mail or Courier
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group Corporate Trust & Agency Group
P.O. Box 292737 Receipt and Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington St., 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
</TABLE>
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
For Information Telephone:
(800) 735-7777
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at Offeror's
expense. You may also contact your broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(800) 769-6414
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7239
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 21, 1998
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SIEBE PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS EXTENDED.
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group Corporate Trust & Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
For Information Telephone:
(800) 735-7777
</TABLE>
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Simulation Sciences Inc. (the "Stockholders") if certificates
evidencing Shares ("Certificates") are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery
of Shares is to be made by book-entry transfer to an account maintained by the
Depositary at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
<PAGE> 2
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates for, or a Book-Entry Confirmation (as defined in
Section 2 of the Offer to Purchase) with respect to, their Shares and all other
required documents to the Depositary prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
See Instruction 2 hereof.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDERS(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
SHARE CERTIFICATE NUMBER OF SHARES NUMBER OF SHARES
NUMBER(S)* REPRESENTED BY CERTIFICATE(S)* TENDERED**
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
- --------------------------------------------------------------------------------
Account No.:
- ----------------------------------------------------------------------------- at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code No.:
- --------------------------------------------------------------------------------
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Shareholder(s):
Date of Execution of Notice of Guaranteed Delivery:
Window Ticket Number (if any):
Name of Institution which Guaranteed Delivery:
If delivery is by book-entry transfer:
Name of Tendering Institution:
Account No.:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code Number:
---------------------------------------------
Ladies and Gentlemen:
The undersigned hereby tenders to S Acquisition Corp., a Delaware
corporation ("Offeror") and an indirect wholly owned subsidiary of Siebe plc, a
public limited company organized under the laws of the United Kingdom
("Parent"), the above-described shares of Common Stock, $0.001 par value per
share, of Simulation Sciences Inc., a Delaware corporation (the "Company"),
including the associated preferred stock purchase rights issued pursuant to the
Preferred Shares Rights Agreement, dated as of August 13, 1997, as amended
through the date hereof, by and between the Company and Harris Trust Company of
California, as Rights Agent (collectively, the "Shares") for $10.00 per share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated April 21, 1998 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Offer"). The Offer is being made in connection
with the Agreement and Plan of Merger, dated as of April 15, 1998, among the
Parent, Offeror, S Sub Corp., a Delaware corporation and a wholly owned
subsidiary of Offeror, and the Company (the "Merger Agreement"). The undersigned
understands that Offeror reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its or Parent's affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Offeror of its
obligations under the Offer or prejudice the rights of tendering holders of the
Shares ("Stockholders") to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, Offeror all right, title
and interest in and to all of the Shares that are being tendered hereby and any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after the date of the Offer (a "Distribution"), and constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distributions), with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver Certificates evidencing such Shares
(and any Distributions), or transfer ownership of such Shares (and any
Distributions) on the account books maintained by a Book-Entry Transfer Facility
together, in any such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, Offeror, upon receipt by the Depositary,
as the undersigned's agent, of the purchase price with respect to such Shares,
(ii) present such Shares (and any Distributions) for transfer on the books of
the Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Offeror as the
attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by Offeror (and any
Distributions), including, without limitation, the right to vote such Shares
(and any Distributions) in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper. All such powers of
attorney
3
<PAGE> 4
and proxies, being deemed to be irrevocable, shall be considered coupled with an
interest in the Shares tendered herewith. Such appointment will be effective
when, and only to the extent that, Offeror accepts such Shares for payment. Upon
such acceptance for payment, all prior powers of attorney and proxies given by
the undersigned with respect to such Shares (and any Distributions) will be
revoked, without further action, and no subsequent powers of attorney and
proxies may be given (and, if given, will be deemed ineffective). The designees
of Offeror will, with respect to the Shares (and any Distributions) for which
such appointment is effective, be empowered to exercise all voting and other
rights of the undersigned with respect to such Shares (and any Distributions) as
they in their sole discretion may deem proper. Offeror reserves the absolute
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Offeror or its
designees are able to exercise full voting rights with respect to such Shares
(and any Distributions).
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Offeror, Offeror will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances including irrevocable proxies, and that the Shares tendered
hereby (and any Distributions) will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Offeror to be necessary or desirable to complete the
sale, assignment and transfer of Shares tendered hereby (and any Distributions).
In addition, the undersigned shall promptly remit and transfer to the
Depositary, for the account of Offeror, all Distributions issued to the
undersigned on or after April 15, 1998, in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer; and pending such
remittance and transfer or appropriate assurance thereof, Offeror shall be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by Offeror in its sole discretion.
The undersigned understands that Offeror's acceptance for payment of any
Shares tendered hereby will constitute a binding agreement between the
undersigned and Offeror with respect to such Shares upon the terms and subject
to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Offeror may not be required to accept for payment any of
the Shares tendered hereby or may accept for payment fewer than all of the
Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check and/or return any such Certificates evidencing
Shares not tendered or not accepted for payment in the name(s) of, and deliver
such check and/or return such Certificates to, the person(s) so indicated.
Unless otherwise indicated herein under "Special Payment Instructions," in the
case of a book-entry delivery of Shares, please credit the account maintained at
the Book-Entry Transfer Facility indicated above with respect to any Shares not
accepted for payment. The undersigned recognizes that Offeror has no obligation
pursuant to the "Special Payment Instructions" to transfer any Shares from the
name of the registered holder thereof if Offeror does not accept for payment any
of the Shares tendered hereby.
4
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Certificates not tendered or not accepted for
payment and/or the check for the purchase price of Shares accepted for payment
are to be issued in the name of someone other than the undersigned, or if
Shares delivered by book-entry transfer that are not accepted for payment are
to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
Issue: [ ] Check [ ] Certificate(s) to:
Name
------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------
------------------------------------------------
------------------------------------------------
(ZIP CODE)
------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit Shares by book-entry transfer and not purchased to the account set
forth below
Check appropriate Box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Acct No.:
---------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Certificates not tendered or not accepted for
payment and/or the check for the purchase price of Shares accepted for payment
are to be sent to someone other than the undersigned or to the undersigned at
an address other than that shown above.
Mail check and/or certificates to:
Name
------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------
------------------------------------------------
------------------------------------------------
(ZIP CODE)
------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on this Letter of Transmittal need not be guaranteed by a member firm of a
registered national securities exchange (registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) or by a member
firm of the National Association of Securities Dealers, Inc., by a commercial
bank or trust company having an office or correspondent in the United States or
by any other "Eligible Guarantor Institution" (bank, stockholder, savings and
loan association or credit union with membership approved signature guarantee
medallion program) as defined in Rule 17Ad-15 under the Exchange Act (each of
the foregoing constituting an "Eligible Institution"), unless the Shares
tendered hereby are tendered (i) by the registered holder (which term, for
purposes of this document, shall include any participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Shares) of such Shares who has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" herein
or (ii) as noted in the following sentence. If the Certificates are registered
in the name of a person other than the signer of this Letter of Transmittal, or
if payment is to be made to, or Certificates evidencing unpurchased Shares are
to be issued or returned to, a person other than the registered owner, then the
tendered Certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name(s) of the registered owner(s)
appear(s) on the Certificates, with the signatures on the Certificates or stock
powers guaranteed by an Eligible Institution as provided herein. See Instruction
5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by Stockholders if Certificates evidencing Shares are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
if delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth in Section 3 of the Offer to Purchase. For a Stockholder to
validly tender Shares pursuant to the Offer, either (a) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof),
with any required signature guarantees and any other required documents, or an
Agent's Message in the case of a book-entry delivery, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
and either (i) Certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
Stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 3 of the Offer to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer prior to the Expiration Date may
tender their Shares by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Offeror, must be received by the Depositary prior to the Expiration
Date, and (iii) the Certificates representing all tendered Shares in proper form
for transfer, or a Book-Entry Confirmation with respect to all tendered Shares,
together with a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within five Nasdaq National Market trading days after the date of
such Notice of Guaranteed Delivery. If Certificates are forwarded separately to
the Depositary, a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY
<PAGE> 7
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering Stockholders, by execution of this Letter of Transmittal (or a
facsimile thereof), waive any right to receive any notice of the acceptance of
their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. Partial Tenders. If less than all of the Shares represented by any
Certificates delivered to the Depositary herewith is to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such case, a new Certificate for the remainder of the
Shares that were evidenced by the old Certificate(s) will be sent, without
expense, to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal, as soon as
practicable after the Expiration Date. All Shares represented by Certificate(s)
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates. To
obtain additional Letters of Transmittal, you may either make a photocopy of
this Letter of Transmittal or call D.F. King & Co., Inc., the Information Agent,
at (800) 769-6414.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Offeror of such person's authority to so act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the Certificate(s).
Signature(s) on such Certificate(s) and such endorsements or instruments of
transfer must be guaranteed by an Eligible Institution.
6. Transfer Taxes. Except as set forth in this Instruction 6, Offeror will
pay or cause to be paid any transfer taxes with respect to the transfer and sale
of purchased Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or (in the circumstances
permitted hereby) if Certificates for Shares not tendered or not purchased are
to be registered in the name of, any person other than the registered holder(s),
or if tendered Certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any transfer
taxes (whether imposed on the registered holder(s) or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted herewith.
<PAGE> 8
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by book-entry transfer to a Book-Entry Transfer Facility, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility.
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses or telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or
brokers, dealers, commercial banks and trust companies and such materials will
be furnished at Offeror's expense.
9. Waiver of Conditions. The conditions of the Offer may be waived by
Offeror, in whole or in part, at any time or from time to time, at Offeror's
sole discretion, subject to the terms of the Offer and the Merger Agreement.
10. Backup Withholding Tax. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below.
FAILURE TO PROVIDE THE INFORMATION ON THE SUBSTITUTE FORM W-9 MAY SUBJECT THE
TENDERING STOCKHOLDER TO 31% FEDERAL INCOME TAX BACKUP WITHHOLDING ON THE
PAYMENT OF THE PURCHASE PRICE FOR THE SHARES. The tendering Stockholder should
indicate in the box in Part III of the Substitute Form W-9 if the tendering
Stockholder has not been issued a TIN and has applied for or intends to apply
for a TIN in the near future, in which case the tendering Stockholder should
complete the Certificate of Awaiting Taxpayer Identification Number provided
below. If the Stockholder has indicated in the box in Part III that a TIN has
been applied for and the Depositary is not provided a TIN within 60 days, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided to the Depositary.
11. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Depositary. The holders will then be instructed as to the procedure to be
followed in order to replace the Certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed Certificate(s) have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH CERTIFICATES OR A
BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder is
an individual, the TIN is his social security number. If the tendering
Stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, such Stockholder should so indicate on
the Substitute Form W-9 and should complete the Certificate of Awaiting Taxpayer
Identification Number provided below. See Instruction 10. If the Depositary is
not provided with the correct TIN, the Stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Stockholders with respect to Shares purchased pursuant to the Offer
may be subject to federal income tax backup withholding.
<PAGE> 9
Certain Stockholders (including among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Forms for such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent federal income tax backup withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such Stockholder is awaiting a TIN) and that (1) such
Stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified the Stockholder that
he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report.
<PAGE> 10
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Name(s)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
--------------------------------------------------------------------------
Address
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------------------------------
Area Code and Telephone Number
--------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
----------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
Dated:
--------------------------------- , 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
Authorized Signature(s)
--------------------------------------------------------------------------
Name
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------------------------------
Dated:
--------------------------------- , 1998
<PAGE> 11
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: BANKERS TRUST COMPANY
- -----------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT PART III -
FORM W-9 THE RIGHT AND CERTIFY BY SIGNING AND DATING TIN:
BELOW. Social Security Number
or Employer Identification Number
-------------------------------------------------------------------------------------------
DEPARTMENT OF THE PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines for
TREASURY, Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
INTERNAL REVENUE instructed therein.
SERVICE
-------------------------------------------------------------------------------------------
PAYOR'S REQUEST Certification -- Under penalties of perjury, I certify that:
FOR TAXPAYER (1) The number shown on this form is my correct TIN (or I am waiting for a number to be
IDENTIFICATION issued to me); and
NUMBER ("TIN") (2) I am not subject to backup withholding because (a) I am exempt from backup withholding
AND CERTIFICATION or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
-------------------------------------------------------------------------------------------
Signature: ________________________________________________________ Date: ______________
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received
another notification from the IRS that you were no longer subject to backup
withholding, do not cross out item (2). (Also see the instructions in the
enclosed Guidelines.)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a TIN
to the appropriate IRS Center or Social Security Administration Officer or
(2), I intend to mail or deliver an application in the near future. I
understand that if I do not provide a TIN by the time of payment, 31% of all
payments pursuant to the Offer made to me thereafter will be withheld until I
provide a number.
<TABLE>
<C> <S> <C>
Signature: ______________________________________________________________________________ Date: ______________
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Call Toll Free
(800) 769-6414
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, NY 10036
(212) 761-7239
<PAGE> 1
EXHIBIT (a)(3)
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7239
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
AT
$10.00 NET PER SHARE
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SIEBE PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS EXTENDED.
April 21, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by S Acquisition Corp., a Delaware corporation (the
"Offeror") and an indirect wholly owned subsidiary of Siebe plc, a public
limited company organized under the laws of the United Kingdom ("Parent"), to
act as Dealer Manager in connection with Offeror's offer to purchase all
outstanding shares of Common Stock, $0.001 par value per share, of Simulation
Sciences Inc. (the "Company"), including the associated preferred stock purchase
rights issued pursuant to the Preferred Shares Rights Agreement, dated as of
August 13, 1997, as amended through the date hereof, by and between the Company
and Harris Trust Company of California, as Rights Agent (collectively, the
"Shares"), at a purchase price of $10.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated April 21, 1998 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which together with any amendments or
supplements thereto, collectively constitute the "Offer") enclosed herewith. The
Offer is being made in connection with the Agreement and Plan of Merger, dated
as of April 15, 1998, among Parent, Offeror, S Sub Corp., a Delaware corporation
and a wholly owned subsidiary of Offeror, and the Company (the "Merger
Agreement"). Holders of Shares whose certificates for such Shares are not
immediately available or who cannot deliver their certificates and all other
required documents to Bankers Trust Company (the "Depositary") or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE, OF THE COMPANY,
INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS, WHICH WOULD REPRESENT,
ON A FULLY DILUTED BASIS (EXCLUDING OUT OF THE MONEY OPTIONS (AS DEFINED IN THE
INTRODUCTION OF THE OFFER TO PURCHASE)), AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS
OFFER TO PURCHASE. SEE SECTIONS 1 AND 15 OF THE OFFER TO PURCHASE.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase, dated April 21, 1998.
2. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares. Facsimile copies of the Letter of
Transmittal (with manual signatures) may be used to tender Shares.
3. A letter to stockholders of the Company from Charles R. Harris,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 of the Offer to Purchase promptly after the later to
occur of (a) the Expiration Date and (b) the satisfaction or waiver of the
conditions set forth in Section 15 of the Offer to Purchase related to
regulatory matters. Subject to compliance with Rule 14e-1(c) under the Exchange
Act, Offeror expressly reserves the right to delay payment for Shares in order
to comply in whole or in part with any applicable law. See Sections 1 and 16 of
the Offer to Purchase. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company, pursuant
to the procedures set forth in Section 3 of the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with all required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined in Section 2 of the Offer to
Purchase) and (iii) any other documents required by the Letter of Transmittal.
Neither Offeror nor Parent will pay any fees or commissions to any broker,
dealer or any other person (other than the Dealer Manager, the Information Agent
and the Depositary as described in Section 17 of the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer. The
Offeror will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients.
Offeror will pay or cause to be paid any stock transfer taxes incident to
the transfer to it of validly tendered Shares, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS
THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message or other required documents should be sent to the Depositary and
(ii) certificates representing the tendered Shares or a timely Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender
<PAGE> 3
must be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent for the Offer, at 77 Water Street,
New York, New York 10005, 1-800-769-6414 or Morgan Stanley & Co. Incorporated,
the Dealer Manager, at 1585 Broadway, New York, New York, 10036, 212-761-7239.
Additional copies of the enclosed materials may be obtained by calling D.F.
King & Co., Inc., the Information Agent at 1-800-769-6414 or from brokers,
dealers, commercial banks or trust companies.
Very truly yours,
MORGAN STANLEY &
CO. INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PARENT, OFFEROR, THE COMPANY, THE DEPOSITARY,
THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
AT
$10.00 NET PER SHARE
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SIEBE PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS EXTENDED.
April 21, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April 21,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by S Acquisition Corp., a
Delaware corporation (the "Offeror") and an indirect wholly owned subsidiary of
Siebe plc, a public limited company organized under the laws of the United
Kingdom ("Parent"), to purchase all of the outstanding shares of Common Stock,
$0.001 par value per share, of Simulation Sciences Inc., a Delaware corporation
(the "Company"), including the associated preferred stock purchase rights issued
pursuant to the Preferred Shares Rights Agreement, dated as of August 13, 1997,
as amended through the date hereof, by and between the Company and Harris Trust
Company of California, as Rights Agent (collectively, the "Shares"), at a price
of $10.00 per Share, net to the Seller in cash, upon the terms and subject to
the conditions set forth in the Offer. The Offer is being made in connection
with the Agreement and Plan of Merger, dated as of April 15, 1998, among Parent,
Offeror, S Sub Corp., a Delaware corporation and a wholly owned subsidiary of
Offeror, and the Company (the "Merger Agreement"). Holders of Shares whose
certificates for such Shares (the "Certificates") are not immediately available
or who cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date (as defined in the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf any or all of the Shares held by us for your account, pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $10.00 per Share, net to the seller in cash.
2. The Offer is subject to a Minimum Condition (as defined in the
Offer to Purchase) and certain other conditions. See Sections 1 and 15 of
the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by Offeror
pursuant to the Offer. However, federal income tax backup withholding at a
rate of 31% may be required, unless an exemption is provided or unless the
required taxpayer identification information is provided. See Instruction
10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, May 18, 1998, unless the Offer is extended.
<PAGE> 2
6. The Board of Directors of the Company (the "Board") has
unanimously approved the Offer and the Merger Agreement (as defined in the
Offer to Purchase) and determined that the Offer and the Merger are fair to
and in the best interests of the Company and its stockholders and
unanimously recommends that the stockholders accept the Offer and tender
their Shares.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the offer will in all cases be made
only after timely receipt by the Depositary of (a) Certificates pursuant to
the procedures set forth in Section 3 of the Offer to Purchase, or a timely
Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase)
with respect to such Shares, (b) the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, with any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in Section 2 of the Offer to Purchase) and (c)
any other documents required by the Letter of Transmittal. Accordingly,
payment may not be made to all tendering stockholders at the same time
depending upon when Certificates are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. YOUR
INSTRUCTIONS TO US SHOULD BE FORWARDED PROMPTLY TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Offeror may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Offeror by Morgan Stanley & Co. Incorporated or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
BY
S ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase of S Acquisition Corp. dated April 21, 1998, and the related Letter
of Transmittal (which together constitute the "Offer") in connection with the
offer by S Acquisition Corp., a Delaware corporation and an indirect wholly
owned subsidiary of Siebe plc, a public limited company organized under the laws
of England, to purchase all outstanding shares of Common Stock of Simulation
Sciences Inc., a Delaware corporation, including the associated preferred stock
purchase rights issued pursuant to the Preferred Shares Rights Agreement, dated
as of August 13, 1997, as amended through the date hereof, by and between the
Company and Harris Trust Company of California, as Rights Agent (collectively,
the "Shares").
This will instruct you to tender to Offeror the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to be Tendered:*
-----------------------------------------------
Account Number:
----------------------------------------
Date:
--------------------------------------------, 1998
SIGN HERE
- ------------------------------------------------------------
- ------------------------------------------------------------
Signature(s)
- ------------------------------------------------------------
- ------------------------------------------------------------
(Print Name(s))
- ------------------------------------------------------------
- ------------------------------------------------------------
(Print Address(es))
- ------------------------------------------------------------
(Area Code and Telephone Number(s))
- ------------------------------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
EXHIBIT (a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
OF
SIMULATION SCIENCES INC.
AT
$10.00 NET PER SHARE
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SIEBE PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MAY 18, 1998, UNLESS EXTENDED.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
the Common Stock, $0.001 par value per share of Simulation Sciences Inc., a
Delaware corporation (the "Company"), including the associated preferred stock
purchase rights issued pursuant to the Preferred Shares Rights Agreement, dated
as of August 13, 1997, as amended through the date hereof, by and between the
Company and Harris Trust Company of California, as Rights Agent (collectively,
the "Shares"), are not immediately available or the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach Bankers Trust Company (the "Depositary") prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase). This
Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or United States mail, overnight mail or courier to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Group Corporate Trust & Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
</TABLE>
Facsimile Copy Number:
(615) 835-3701
(For Eligible Institutions Only)
For Confirmation Telephone:
(615) 835-3572
For Information Telephone:
(800) 735-7777
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to S Acquisition Corp., a Delaware
corporation ("Offeror") and an indirect wholly owned subsidiary of Siebe plc, a
public limited company organized under the laws of the United Kingdom
("Parent"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated April 21, 1998 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"), receipt of which
is hereby acknowledged, the number of Shares indicated below pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: ---------------------------------------- Name(s) of Record Holder(s): ----------------------------
Certificate Numbers (if available): -----------------------------------------------------------
-------------------------
- ----------------------------------------------------------- -----------------------------------------------------------
(Please Type or Print)
- -----------------------------------------------------------
Check ONE box if Share(s) will be tendered Address(es):
by book entry transfer: -----------------------------------------------
[ ] The Depositary Trust Company -----------------------------------------------------------
[ ] Philadelphia Depositary Trust Company -----------------------------------------------------------
Area Code and Tel. No(s).: -------------------------------
Account No.: ---------------------------------------------- Signature(s):
----------------------------------------------
Date: ----------------------------------------------------- -----------------------------------------------------------
</TABLE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), hereby guarantees to deliver to the Depositary the
certificates representing Shares tendered hereby, in proper form for transfer,
or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase)
with respect to such Shares, in either case together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), with any required signature guarantees, and any other documents
required by the Letter of Transmittal, all within five Nasdaq National Market
trading days after the date hereof.
<TABLE>
<S> <C>
Name of Firm: -------------------------------------------- --------------------------------------------
(Authorized Signature)
Address: -------------------------------------------------- Name: --------------------------------------
(Please Type or Print)
- ----------------------------------------------------------- Title: -------------------------------------
(Zip Code)
Area Code and Tel. No.: ----------------------------------- Date: --------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the Payer.
<TABLE>
<C> <S> <C>
- -------------------------------------------------------------
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The Minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-
savings trust (grantor is trustee(1)
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under state law
5. Sole proprietorship The owner(3)
=============================================================
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: EMPLOYER
IDENTIFICATION
NUMBER OF --
- -------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(4)
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
=============================================================
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employment identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number (for businesses and all
other entities), or Form W-7 for Individual Taxpayer Identification Number (for
alien individuals required to file U.S. tax returns), at an office of the Social
Security Administration or the Internal Revenue Service.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all payments include the
following:
-- A financial institution.
-- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under Section 403(b)(7).
-- The United States or any agency or instrumentality thereof.
-- A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
-- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
-- An international organization or any agency, or instrumentality thereof.
Payees that may be exempted from backup withholding:
-- A corporation.
-- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
-- A real estate investment trust.
-- A common trust fund operated by a bank under section 584(a).
-- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
-- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
-- Payments to nonresident aliens subject to withholding under section 1441.
-- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
-- Payments of patronage dividends where the amount received is not paid in
money.
-- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
-- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
-- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
-- Payments described in section 6049(b)(5) to nonresident aliens.
-- Payments on tax-free covenant bonds under section 1451.
-- Payments made by certain foreign organizations.
-- Mortgage interest paid to you.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED
APRIL 21, 1998, AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING
MADE TO, AND TENDERS WILL NOT BE ACCEPTED FROM, OR ON BEHALF OF,
HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF
THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IF
THE SECURITIES LAWS OF ANY JURISDICTION REQUIRE
THE OFFER TO BE MADE BY A LICENSED BROKER OR
DEALER, THE OFFER SHALL BE DEEMED TO BE MADE
ON BEHALF OF S ACQUISITION CORP. BY MORGAN
STANLEY & CO. INCORPORATED OR ONE OR MORE
REGISTERED BROKERS OR DEALERS LICENSED
UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
SIMULATION SCIENCES INC.
AT
$10.00 NET PER SHARE IN CASH
BY
S ACQUISITION CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SIEBE PLC
S Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect
wholly-owned subsidiary of Siebe plc, a public limited company organized under
the laws of the United Kingdom ("Parent"), is offering to purchase all
outstanding shares of Common Stock, par value $0.001 per share, of Simulation
Sciences Inc., a Delaware corporation (the "Company"), including the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Preferred
Shares Rights Agreement, dated as of August 13, 1997, as amended through the
date hereof, between the Company and Harris Trust Company of California, as
Rights Agent (collectively, the "Shares"), at a purchase price of $10.00 per
share (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "Offer Price"), net to the seller in cash,
without interest thereon, less any required withholding taxes, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated April
21, 1998, and the related Letter of Transmittal (which together constitute the
"Offer"). See the Offer to Purchase for capitalized terms used but not defined
herein.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 18, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined below)
Shares representing not less than a majority of the Shares then outstanding on a
fully diluted basis on the date of purchase (excluding any option, warrant or
other contractual right to purchase shares of the Company's common stock which
on April 15, 1998 had an exercise price per share that was equal to or greater
than $10.00) (the "Minimum Condition") and (ii) the expiration or termination of
any applicable waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. See Sections 1 and 15 of the Offer to
Purchase.
The Offer is not conditioned on obtaining financing.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of April 15, 1998 (the "Merger Agreement"), by and among Parent, Purchaser, S
Sub Corp. ("Merger Sub") and the Company. The Merger Agreement provides, among
other things, for the commencement of the Offer by Purchaser and further
provides that, after the purchase of Shares pursuant to the Offer and subject to
the satisfaction or waiver of certain conditions set forth therein, Merger Sub
will be merged with and into the Company (the "Merger"), with the Company
surviving the Merger as an indirect wholly-owned subsidiary of Parent. Pursuant
to the Merger, each outstanding Share (other than (i) Shares owned by Parent,
Purchaser or any subsidiaries thereof or Shares held in the Company's treasury
and (ii) Shares held by holders who have properly exercised their appraisal
rights under the Delaware General Corporation Law) immediately prior to the
Effective Time (as defined in the Merger Agreement), will be converted into the
right to receive the Offer Price, in cash, without interest thereon, less any
required withholding of taxes, upon the surrender of certificates formerly
representing such Shares.
<PAGE> 2
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY AND THE HOLDERS OF SHARES (THE "STOCKHOLDERS") AND
UNANIMOUSLY RECOMMENDED THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered to Purchaser and not
withdrawn on or prior to the Expiration Date if, as and when Purchaser gives
oral or written notice to Bankers Trust Company (the "Depositary") of
Purchaser's acceptance for payment of such Shares. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payments to tendering
Stockholders. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering Stockholders, Purchaser's obligation to make such
payment will be satisfied, and tendering Stockholders must thereafter look
solely to the Depositary for payments of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Monday, May 18, 1998, unless and until Purchaser, in accordance with the terms
of the Offer and the Merger Agreement, extends the period of time during which
the Offer is open, in which event the term "Expiration Date" means the latest
time and date at which the Offer, as so extended, expires. In the Merger
Agreement, Purchaser has agreed that if all of the conditions to the Offer are
not satisfied by the Expiration Date then, provided that all such conditions are
and continue to be reasonably probable of being satisfied by the date which is
30 business days after the commencement of the Offer, Purchaser shall extend the
Offer from time to time (up to such 30th business day) until such conditions are
satisfied or waived. Otherwise, Purchaser has agreed in the Merger Agreement
that, without the prior written approval of the Company, it will not extend the
period during which the Offer is open, except (subject to the Company's right to
terminate the Merger Agreement, discussed under Section 13 of the Offer to
Purchase) (A) as required to comply with any rule, regulation or interpretation
of the Securities and Exchange Commission (the "Commission"), (B) until such
time as all such conditions described under Section 15 of the Offer to Purchase
have been satisfied or waived or (C) if less than 90% of the outstanding Shares
have been tendered, for one or more times for a total number of days in the
aggregate for any extension in accordance with this clause (C) not to exceed 10
business days for any reason other than those specified in the immediately
preceding clauses (A) and (B). Subject to the foregoing restrictions, Purchaser
reserves the right (but will not be obligated), in its sole discretion, to
extend the period during which the Offer is open by giving oral or written
notice of such extension to the Depositary and by making a public announcement
of such extension. There can be no assurance that Purchaser will exercise its
right to extend the Offer.
Purchaser reserves the right (but shall not be obligated), in accordance with
applicable rules and regulations of the Commission, to waive or reduce the
Minimum Condition or to waive any other condition to the Offer; provided,
however, that pursuant to the Merger Agreement, Purchaser has agreed that it
will not, without the consent of the Company, waive the Minimum Condition if
such waiver would result in less than a majority of the outstanding Shares (on a
fully-diluted basis) being accepted for payment or paid for pursuant to the
Offer. If the Minimum Condition, or any of the other conditions set forth in
Section 15 of the Offer to Purchase, has not been satisfied by 12:00 midnight,
New York City time, on May 18, 1998 (or any other time then set as the
Expiration Date), Purchaser may elect to (1) subject to the qualifications above
with respect to the extension of the Offer, extend the Offer and, subject to
applicable withdrawal rights, retain all tendered Shares until the expiration of
the Offer, as extended, subject to the terms of the Offer, (2) subject to
complying with applicable rules and regulations of the Commission and to the
terms of the Merger Agreement, accept for payment all Shares so tendered and not
extend the Offer or (3) subject to the terms of the Merger Agreement, terminate
the Offer and not accept for payment any Shares and return all tendered Shares
to tendering Stockholders.
Except as set forth above, and subject to the applicable rules and
regulations of the Commission, Purchaser expressly reserves the right, in its
sole discretion, to amend the Offer in any respect. Any extension of the period
during which the Offer is open, or delay in acceptance for payment or payment,
or termination or amendment of the Offer, will be followed, as promptly as
practicable, by public announcement thereof, such announcement in the case of an
extension to be issued not later than 9:00 a.m. New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
The reservation by Purchaser of the right to delay acceptance for payment of, or
payment for, Shares is subject to the provisions of Rule 14e-l(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires
that Purchaser pay consideration offered or return the Shares deposited by or on
behalf of Stockholders promptly after the termination or withdrawal of the
Offer. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares whether or not the Purchaser exercises its
right to extend the Offer.
2
<PAGE> 3
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in Section 4 of the Offer to Purchase. Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth in
Section 4 of the Offer to Purchase at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by Purchaser pursuant to
the Offer, may also be withdrawn at any time after June 19, 1998. For a
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase. Any such notice
of withdrawal must specify the name of the persons who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the tendering Stockholder must also submit to the Depositary the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn, and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution (as defined below), except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
3 of the Offer to Purchase, the notice of withdrawal must also specify the name
and number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures. An Eligible Institution is a member firm of a
registered national securities exchange (registered under Section 6 of the
Exchange Act), a member of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or any other "Eligible Guarantor Institution," as defined in Rule
17Ad-15 under the Exchange Act.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 14d-6(e)(1)(VII) OF THE
GENERAL RULES AND REGULATIONS UNDER THE EXCHANGE ACT IS CONTAINED IN THE OFFER
TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
The Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's Stockholder list,
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
STOCKHOLDERS ARE URGED TO READ THE OFFER TO PURCHASE AND THE RELATED LETTER
OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Questions and requests for assistance or for copies of the Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery or other related
materials may be directed to the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers set forth below, and copies
will be furnished promptly at Purchaser's expense. Holders of Shares may also
contact brokers, dealers, commercial bankers and trust companies for additional
copies of the Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery or other related materials.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Toll Free (800) 769-6414
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7239
April 21, 1998
3
<PAGE> 1
EXHIBIT (a)(8)
SIEBE PLC TO ACQUIRE SIMULATION SCIENCES INC.
WINDSOR, England--(BUSINESS WIRE)--April 15, 1998--SIEBE plc and
Simulation Sciences Inc. (SimSci) (Nasdaq: SMCI) announced today that Siebe has
entered into a definitive agreement to acquire SimSci for US$10 per share in
cash, or approximately US$147 million (88 million pounds). Net cash cost to
Siebe will be US$101 million (60 million pounds) when deducting Simulation
Sciences Inc.'s US$46 million in cash.
The offer was unanimously approved by SimSci's Board of Directors and
the Board of Directors of Siebe plc. Siebe expects to initiate a cash tender
offer within 5 business days. The transaction is due to be completed in May
1998.
Founded in 1967, SimSci is a leading international software provider to
the petroleum, petrochemical and related process industries. The Company's
process simulation software is designed to optimize productivity and management
decision making in the operation of petrochemical and chemical plants and
refineries. SimSci reported 1997 revenues of US$61 million (37 million pounds)
with a loss before tax of US$8.7 million (5.3 million pounds) after charging in
process research and development costs of US$17.5 million (10.7 million pounds)
relating to companies acquired in 1997. Net assets were US$86 million (51.5
million pounds). SimSci employs about 380 people.
Allen M. Yurko, Chief Executive Officer of Siebe plc, said: "SimSci is a
recognized global leader in process optimization and simulation software and
this acquisition will allow us to significantly extend our presence into the
rapidly growing, US$650 million (400 million pounds) process simulation and
modeling market. Furthermore, SimSci will also enhance Foxboro's engineering and
services product offering by incorporating process plant design and simulation
services into our portfolio."
Dr. George W. Sarney, President and Chief Operating Officer of Siebe
Control Systems, said: "Foxboro's wide range of I/A Series automation systems
software offerings have generated significant market share growth in all market
segments but most notably in the chemical, oil and gas segments.
SimSci's Pro/II, Romeo and other simulation software products will
complement Foxboro's advanced control and information technology software, such
as Connoisseur, BOSS blend optimization and I/A Plant Asset Optimization. SimSci
will therefore further strengthen Siebe's world leading software solutions for
the automation of buildings, factories and the process industries."
Charles Harris, President and Chief Executive Officer of Simulation
Sciences Inc., said: "This alliance with Siebe plc allows our customers to
benefit from a fully integrated range of industrial automation software
products, improved distribution channels and greater levels of service."
<PAGE> 2
Siebe plc intends to finance the acquisition of Simulation Sciences Inc.
with existing lines of credit. Siebe expects to promptly commence a tender offer
at US$10 per share for all outstanding shares of Simulation Sciences Inc. The
offer is subject to the condition that a majority of the shares are tendered and
other customary conditions. If the tender offer is successful, it will be
followed as promptly as possible by a merger in which any remaining shares of
SimSci's stock will be converted into the right to receive US$10 per share in
cash. Siebe was advised in the acquisition by Morgan Stanley & Co. Incorporated.
Siebe plc is one of the United Kingdom's largest diversified engineering
groups and incorporates over 200 companies worldwide, employing over 50,000
people. The Group designs and manufactures temperature and appliance controls,
electronic power controls, process automation and building control systems, and
engineered industrial equipment.
The Group generated a profit before tax of 221.7 million pounds
(approximately $358 million) on a turnover of 1,706.5 million pounds
(approximately $2,757 million) for the six months ended September 30, 1997, up
16.4% and 16.0% respectively over the comparable period in the prior year. For
the prior year ended April 5, 1997, the Group generated a profit before tax of
424.1 million pounds on a turnover of 3,005.3 million pounds.
Note:
The purchase price and assets are translated at $1.67/pound (being the
spot rate at April 13, 1998) and sales and profits being translated at
$1.64/pound (being the average rate for the twelve months ended March 31, 1998).
Siebe's ordinary shares trade on the London Stock Exchange. In the US,
Siebe's American Depositary Receipts (ADRs), each representing two ordinary
shares, trade over the counter under the symbol SIBEY. Additional information on
Siebe is available on Siebe's home page: http://www.siebe.com
CONTACT: Ceri Williams
Siebe plc
[email protected]
011-44-1753-839-288
-or-
James P. Prout
Taylor Rafferty Associates
212-889-4350
13:35 EDT April 15, 1998
-Ends-
2
<PAGE> 1
EXHIBIT (a)(9)
[For Release in U.S.]
21 April, 1998
SIEBE PLC COMMENCES TENDER OFFER
FOR SIMULATION SCIENCES INC.
SIEBE plc is today commencing its tender offer for all outstanding shares of
Common Stock of Simulation Sciences Inc. (NASDAQ: SMCI) ("SimSci"), at a price
of $10.00 per share, payable in cash. The offer, which has been unanimously
approved and recommended by SimSci's Board of Directors, is being made pursuant
to the merger agreement between the companies. The merger was announced on April
15, 1998.
The tender offer, which is currently scheduled to expired at 12:00 midnight, New
York City time Monday May 18, 1998 unless extended, is subject to the tender by
SimSci shareholders of that number of shares of SimSci which would represent a
majority of the outstanding shares of SimSci on a fully diluted basis and other
customary conditions.
Siebe is one of Britain's largest diversified engineering and electronics
groups, incorporating over 200 companies and employing over 50,000 people
worldwide. The Group designs and manufactures temperature and appliance
controls, process automation and control systems, and industrial equipment.
Founded in 1967, SimSci is a leading international software provider to the
petroleum, petrochemical and related process industries. The Company's process
simulation software is designed to optimise productivity and management decision
making in the operation of petrochemical, chemical plants and refineries.
Morgan Stanley & Co. Incorporated is acting as dealer manager for the tender
offer, D.F. King & Co., Inc. is acting as information agent, and Bankers Trust
Company is acting as depositary.
- Ends -
For further information, contact:
Barry Francis, Siebe plc
Ceri Williams, Siebe plc
Telephone: 01753 855411 International Telephone: +44 1753 855411
Daniel M. Sullivan, D.F. King & Co. Inc.
Telephone: 001 212 493 6927 International Telephone: +1 212 493 6927
<PAGE> 1
EXHIBIT (b)
CONFORMED COPY
AGREEMENT
DATED 29th November, 1995-
US$1,500,000,000
REVOLVING CREDIT FACILITY
FOR
SIEBE plc
ARRANGED BY
BANKERS TRUST COMPANY
NATWEST CAPITAL MARKETS LIMITED
AND
SBC WARBURG
ALLEN & OVERY
London
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
CLAUSE PAGE
- ------ ----
<S> <C>
1. INTERPRETATION.................................................................................................2
2. THE FACILITY..................................................................................................14
3 PURPOSE........................................................................................................14
4. CONDITIONS PRECEDENT..........................................................................................15
5. DRAWDOWN......................................................................................................16
6. REPAYMENT.....................................................................................................18
7. PREPAYMENT AND CANCELLATION...................................................................................18
8. INTEREST......................................................................................................20
9. OPTIONAL CURRENCIES...........................................................................................21
10. PAYMENTS.....................................................................................................24
11. TAXES........................................................................................................26
17. UNDERTAKINGS.................................................................................................39
18. DEFAULT......................................................................................................52
19. THE AGENT AND THE ARRANGERS..................................................................................56
26. CHANGES TO THE PARTIES.......................................................................................66
27. DISCLOSURE OF INFORMATION....................................................................................70
28. SET-OFF......................................................................................................71
29. PRO RATA SHARING.............................................................................................71
30. SEVERABILITY.................................................................................................73
31. COUNTERPARTS.................................................................................................73
32. NOTICES......................................................................................................73
33. LANGUAGE.....................................................................................................74
34. JURISDICTION.................................................................................................74
35. GOVERNING LAW................................................................................................76
</TABLE>
<PAGE> 3
SCHEDULES
<TABLE>
<S> <C>
1 Banks and Commitments.....................................................
2 Condtions Precedent Documents.............................................
Part I -- To be delivered before the first Loan................................
Part II -- To be delivered by an Additional Borrower...........................
3 Calculation of the MA Cost................................................
4 Form of Request...........................................................
5 Form of accession documents...............................................
Part I -- Form of Novation Certificate.........................................
Part II -- Borrower Accession Agreement........................................
Part III -- Borrower Cessation Notice..........................................
6 Timetable.................................................................
7 Facility Offices..........................................................
Signatories....................................................................
</TABLE>
<PAGE> 4
THIS AGREEMENT is dated 29th November, 1995 between:
(1) SIEBE plc (incorporated in England and Wales, registered no. 166023)
(the "COMPANY");
(2) SIEBE INC. (incorporated in the State of Delaware, U.S.A.) and
DEUTSCHE SIEBE GmbH (incorporated in Germany) as original borrowers
(the "ORIGINAL BORROWERS");
(3) BANKERS TRUST COMPANY, NATWEST CAPITAL MARKETS LIMITED
and SBC WARBURG, a division of SWISS BANK CORPORATION, as arrangers
(in this capacity the "ARRANGERS");
(4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the "BANKS");
and
(5) SWISS BANK CORPORATION as agent (in this capacity the "AGENT").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ADDITIONAL BORROWER"
means a member of the Group which becomes a Borrower in accordance with
Clause 26.4 (Additional Borrowers).
"AFFILIATE"
means a Subsidiary or a Holding Company (as defined in Section 736 of
the Companies Act 1985) of a person and any other Subsidiary of that
Holding Company.
"AGENT'S SPOT RATE OF EXCHANGE"
means the Agent's spot rate of exchange for the purchase of the
relevant Optional Currency in the London foreign exchange market with
Dollars at or about 11.00 a.m. on a particular day.
- 2 -
<PAGE> 5
"BALANCE SHEET"
means, at any time, the latest published audited consolidated balance
sheet of the Group.
"BORROWER"
means any of the Company, an Original Borrower or an Additional
Borrower (and "BORROWERS" shall mean all of them).
"BORROWER ACCESSION AGREEMENT"
means a letter substantially in the form of Part 11 of Schedule 5 with
such amendments as the Agent may approve or reasonably require.
"BORROWER CESSATION NOTICE"
means a notice substantially in the form set out in Part III of
Schedule 5 with such amendments as the Agent may approve or reasonably
require.
"BORROWINGS"
means:
(a) all items which are of a type which would be accounted for as
borrowings in accordance with the accounting principles
applied in connection with the Original Group Accounts; and
(b) (without double counting) all guarantees, indemnities or other
forms of assurance against financial loss in respect of any
such item in paragraph (a) above of any person.
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open
for business in London and New York City and (in relation to a
transaction involving ECUs) Paris and Brussels and (in relation to a
transaction involving any other Optional Currency) the principal
financial centre of the country of that Optional Currency.
"CANADIAN DOLLARS"
means the lawful currency for the time being of Canada.
- 3 -
<PAGE> 6
"COMMITMENT"
means, subject to Clause 26.2 (Transfers by Banks), the amount in
Dollars set opposite the name of a Bank in Schedule 1, to the extent
not cancelled, transferred or reduced under this Agreement.
"DEFAULT"
means an Event of Default or an event which, with the giving of notice
and/or expiry of any grace period, would constitute an Event of
Default.
"DEUTSCHMARKS"
means the lawful currency for the time being of Germany.
"DOLLARS" OR "US$"
means the lawful currency for the time being of the United States of
America.
"DOUBLE TAXATION TREATY"
means any convention between a government of the jurisdiction of
incorporation of a Borrower and any other government for the avoidance
of double taxation and the prevention of fiscal evasion with respect to
taxes on income and capital gains.
"DRAWDOWN DATE"
means the date of the advance of a Loan.
"ECU"
means the European Currency Unit used in the European Monetary System.
"EVENT OF DEFAULT"
means an event specified as such in Clause 18.1 (Events of Default).
"EXISTING FACILITIES"
means:
(a) the Company's syndicated revolving credit facility dated 25th
July, 1994 arranged by NatWest Capital Markets Limited and
S.G. Warburg & Co. Ltd; and
- 4 -
<PAGE> 7
(b) Siebe Inc.'s secured facility dated 27th July, 1990 arranged
by Bankers Trust Company.
"FACILITY"
means the facility referred to in Clause 2.1 (Facility).
"FACILITY OFFICE"
means, in relation to a Bank, the office(s) notified by a Bank to the
Agent:
(a) on or before the date it becomes a Bank; or
(b) by not less than 5 Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement being, at the date of this Agreement,
the addresses set out in Schedule 7.
"FEE LETTERS"
means the letters dated the date of this Agreement between the Company
and, respectively, the Agent and the Arrangers setting out the amount
of various fees referred to in Clause 20 (Fees).
"FINAL REPAYMENT DATE"
means the fifth anniversary of the date of this Agreement.
"FINANCE DOCUMENT"
means this Agreement, the Fee Letters, a Novation Certificate or any
other document designated in writing as such by the Agent and the
Company.
"FINANCE PARTY"
means an Arranger, a Bank or the Agent.
"FINANCIAL INDEBTEDNESS"
means any indebtedness in respect of:
(a) moneys borrowed and debit balances at banks; or
(b) any debenture, bond, note, loan stock or other security (other
than equity which is not a mechanism for borrowing): or
- 5 -
<PAGE> 8
(c) any acceptance or documentary credit, except for any such
credit opened in the ordinary course of trade the term of
which is 180 days or less; or
(d) recourse in respect of receivables sold or discounted in the
event that these receivables cannot be collected; or
(e) the acquisition cost of any asset (other than any asset
obtained on normal commercial terms in the ordinary course of
trading) to the extent payable before or after the time of
acquisition or possession by the party liable where the
advance or deferred payment is arranged primarily as a method
of raising finance or financing the acquisition of that asset;
or
(f) leases (whether in respect of land, machinery, equipment or
otherwise) entered into primarily as a method of raising
finance or financing the acquisition of the asset leased; or
(g) currency or interest swap, cap or collar arrangements; or
(h) any guarantee or indemnity given in respect of indebtedness of
a type referred to in sub-paragraphs (a) to (g) above,
"FRENCH FRANCS"
means the lawful currency for the time being of France.
"GROUP"
means the Company and its Subsidiaries.
"LOAN"
means a loan made by the Banks under the Facility or the principal
amount outstanding of that loan.
"LIBOR"
means, in relation to a Loan:
(a) the arithmetic mean (rounded upward to the nearest four
decimal places) of the offered quotations for deposits in the
currency of that Loan for a period comparable to its Term
which appear on the relevant Page (if any) of the Reuters
Screen at or about 11.00 a.m. on the applicable Rate Fixing
Date; or
- 6 -
<PAGE> 9
(b) if one only or no such offered quotation appears on the
relevant Page of the Reuters Screen or there is no relevant
Page, the rate per annum of the offered quotation for deposits
in the currency of that Loan for a period comparable to its
Term which appears on Telerate Page 3750 or Telerate Page 3740
(as appropriate) at or about 12.00 noon (showing the rate as
at 11.00 am.) on the applicable Rate Fixing Date; or
(c) if one only or no such offered quotation appears on the
relevant Page of the Reuters Screen or there is no relevant
Page and no such offered quotation appears on the relevant
Telerate Page by 12 noon, the arithmetic mean (rounded upward
to the nearest four decimal places) of the rates, as supplied
to the Agent at its request, quoted by each Reference Bank to
leading banks in the London interbank market at or about 11.00
a.m. on the applicable Rate Fixing Date for the offering of
deposits in the currency of that Loan for a period equal or
comparable to its Term.
For the purposes of this definition, "TELERATE PAGE 3750" or "TELERATE
PAGE 3740" means the display designated as "Page 3750" or "Page 3740"
on the Telerate Service (or such other page as may replace Page 3750 or
Page 3740 on that service) or such other service as may be nominated by
the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement
Rates.
"MAJORITY BANKS"
means, at any time, Banks whose Commitments:
(a) then aggregate more than 67 per cent. of the Total
Commitments; or
(b) if the Total Commitments have been reduced to zero, aggregated
more than 67 per cent. of the Total Commitments immediately
before the reduction.
"MARGIN"
means 0.2 per cent. per annum.
"MATERIAL SUBSIDIARY"
means, at any time:
(a) a Borrower; or
(b) a Subsidiary of the Company the gross assets or profit before
tax and exceptional items and extraordinary items (in both
cases, shown as such in
- 7 -
<PAGE> 10
its most recently audited accounts) of which (consolidated in
the case of a Subsidiary which itself has Subsidiaries) amount
to 5 per cent. or more of the consolidated gross assets or
profits before tax and exceptional items and extraordinary
items (shown as such in the Balance Sheet or the Profit and
Loss Account) of the Group (all as calculated by reference to
the latest audited consolidated accounts of the Group); or
(c) a Subsidiary of the Company to which has been transferred
(whether by one transaction or a series of transactions,
related or not) the whole or substantially the whole of the
assets of a Subsidiary which immediately prior to such
transactions was a Material Subsidiary.
For the purposes of this definition:
(i) if a Subsidiary of the Borrower becomes a Material Subsidiary
under paragraph (c) above, then the Material Subsidiary from
which the relevant transfer was made shall, subject to
paragraph (b) above, cease to be a Material Subsidiary; and
(ii) if a Subsidiary is acquired by the Company after the end of
the financial period to which the latest audited consolidated
accounts relate, those accounts shall be adjusted as if that
Subsidiary had been shown in them by reference to its then
latest audited accounts (consolidated if appropriate) until
consolidated accounts of the Group for the financial period in
which the acquisition is made have been prepared and audited.
"MLA COST"
means the cost imputed to the Banks of compliance with the mandatory
liquid assets requirements of the Bank of England during the Term of a
Loan denominated in Sterling, determined in accordance with Schedule 3.
"NOVATION CERTIFICATE"
has the meaning given to it in Clause 26.3 (Procedure for novations).
"OPTIONAL CURRENCY"
means Sterling, Canadian Dollars, French Francs, Yen, Deutschmarks,
Swiss Francs or ECUs or any other currency (other than Dollars) which
the Agent certifies is readily available and freely transferable in the
London interbank market.
- 8 -
<PAGE> 11
"ORIGINAL DOLLAR AMOUNT"
means:
(a) the principal amount of a Loan denominated in Dollars; or
(b) the principal amount of a Loan denominated in an Optional
Currency, translated into Dollars on the basis of the Agent's
Spot Rate of Exchange on the date of receipt by the Agent of
the Request for that Loan.
"ORIGINAL GROUP ACCOUNTS"
means the audited consolidated accounts of the Group for the year ended
1st April, 1995.
"PARTICIPATION DATE"
means:
(a) in relation to a Bank which is an original Party, the date of
this Agreement; and
(b) in relation to any other Bank, the date on which it becomes a
Party.
"PARTY"
means a party to this Agreement.
"PRESCRIBED TIME"
means the time set opposite the number of a sub-Clause or paragraph
under the heading "TIME" in Schedule 6.
"PROFIT AND LOSS ACCOUNT"
means, at any time, the latest published audited consolidated profit
and loss account of the Group.
"QUALIFYING LENDER"
means a bank or financial institution which either:
(a) for a Loan to a Borrower incorporated in the U.K.
- 9 -
<PAGE> 12
(i) is recognised by the Inland Revenue as a bank
carrying on a bona fide banking business in the U.K.
for the purpose of Section 349 of the Income and
Corporation Taxes Act 1988 and takes any interest
received by it under this Agreement into account as a
trading receipt of such a business; or
(ii) is a Treaty Bank; or
(b) for a Loan to a U.S. Borrower:
(i) is either not a foreign person for U.S. federal
income tax purposes or payments of principal,
interest, fees and other amounts under the Finance
Documents are effectively connected with the conduct
of a trade or business in the United States of
America; or
(ii) is a Treaty Bank.
"RATE FIXING DATE"
means:
(a) the Drawdown Date for a Loan denominated in Sterling; or
(b) the second Business Day before the Drawdown Date for a Loan
denominated in Dollars or an Optional Currency other than
Sterling.
"REFERENCE BANKS"
means, subject to Clause 26.5 (Reference Banks), the principal London
offices of National Westminster Bank Plc, Swiss Bank Corporation and
Bankers Trust Company.
"REGULATION D COSTS"
means, in relation to any Loan made to a US Borrower (or deposits
maintained by a Bank to fund such a Loan), the amount (if any)
certified by a Bank to be the cost to it of complying with Regulation D
of the Board of Governors of the United States Federal Reserve System
(or any similar reserve requirements) in respect of that Loan or those
deposits.
"REPAYMENT DATE"
means the last day of the Term of a Loan.
- 10 -
<PAGE> 13
"REQUEST"
means a request made by a Borrower for a Loan, substantially in the
form of Schedule 4.
"ROLLOVER LOAN"
means a Loan which:
(a) is being borrowed solely to refinance an outstanding Loan; and
(b) is in the same currency as and is in an amount equal to or
less than that outstanding Loan.
"SECURITY INTEREST"
means any mortgage, pledge, lien, charge, assignment operating by way
of security, hypothecation or security interest, or, in relation to a
jurisdiction other than England and Wales, any other equivalent or
analogous agreement or arrangement having the effect of conferring
security, but excludes, for the avoidance of doubt, set off rights
enjoyed by or against any bank or financial institution which do not
amount to a cash management scheme.
"STERLING" OR "(POUND)"
means the lawful currency for the time being of the U.K.
"SUBSIDIARY"
means a subsidiary within the meaning of Section 736 of the Companies
Act 1985, as amended by Section 144 of the Companies Act 1989. "Swiss
Francs" means the lawful currency for the time being of Switzerland.
"SWISS FRANCS"
means the lawful currency for the time being of Switzerland.
"TERM"
means, in relation to a Loan, the period for which the Loan is
borrowed, as selected by a Borrower in the Request relevant to that
Loan.
- 11 -
<PAGE> 14
"TOTAL COMMITMENTS"
means the aggregate for the time being of the Commitments being
US$1,500,000,000 at the date of this Agreement
"TREATY BANK"
means a bank or financial institution which is entitled at its
Participation Date to the benefit of a provision in a Double Taxation
Treaty giving exemption from withholding or deduction in respect of
taxation on interest by a Borrower and which does not carry on business
in the jurisdiction of incorporation of that Borrower through a
permanent establishment with which the indebtedness under the Finance
Documents in respect of which the interest is paid is effectively
connected.
"U.K."
means the United Kingdom of Great Britain and Northern Ireland.
"US BORROWER"
means Siebe Inc. or a Borrower that is incorporated or organised under
the laws of any of the United States of America or the District of
Columbia.
"U.S. FACILITY"
means the US$150,000,000 11.22% Senior Secured Notes due 2001 issued by
Siebe Inc.
YEN"
means the lawful currency for the time being of Japan.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference
to:
(i) "ASSETS" includes properties, revenues and rights of every
description;
an "AUTHORISATION" includes an authorisation, consent,
approval, resolution, licence, exemption, filing, registration
and notarisation;
a "MONTH" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day
in the next calendar month, except that:
- 12 -
<PAGE> 15
(A) if there is no numerically corresponding day in the
month in which that period ends, that period shall
end on the last Business Day in that calendar month;
and
(B) if a Term for a Loan commences on the last Business
Day of a calendar month, that Term shall end on the
last Business Day in the month in which it is to end;
a "REGULATION" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law, but if not having the force of law, only if
compliance with the regulation is in accordance with
the general practice of persons to whom the regulation is
intended to apply) of any governmental body, agency,
department or regulatory, self-regulating or other authority
or organisation;
(ii) a provision of a law is a reference to that provision
as amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of
or a schedule to this Agreement;
(iv) a person includes its successors and assigns;
(v) a Finance Document or another document (other than
the U.S. Facility) is a reference to that Finance
Document or that other document as amended, novated
or supplemented;
(vi) a time of day is a reference to London time; and
(vii) a Bank is a reference to a Bank and any of its
successors and permitted assigns and any other bank
or financial institution which becomes a Bank whether
by way of Novation Certificate or otherwise.
(b) NatWest Capital Markets Limited in its capacity as an Arranger
is a Party as agent for National Westminster Bank Plc a member
of IMRO. All references to NatWest Capital Markets Limited as
an Arranger include National Westminster Bank Plc unless the
context otherwise requires. This paragraph does not affect the
rights or obligations of National Westminster Bank Plc under
this Agreement.
(c) Unless the contrary intention appears, a term used in any
other Finance Document or in any notice given under or in
connection with any Finance
- 13 -
<PAGE> 16
Document has the same meaning in that Finance Document or
notice as in this Agreement.
(d) The index to and the headings in this Agreement are for
convenience only and are to be ignored in construing this
Agreement.
2. THE FACILITY
2.1 FACILITY
Subject to the terms of this Agreement, the Banks grant to the
Borrowers a commited revolving multicurrency advance facility under
which the Banks shall, when requested by a Borrower, make to that
Borrower Loans up to an aggregate Original Dollar Amount not exceeding,
at any time, the Total Commitments at that time. No Bank is obliged to
lend more than its Commitment.
2.2 NUMBER OF REQUESTS AND DRAWDOWNS
No more than one Loan with a Term of 7 days and no more than 30 other
Loans may be outstanding at any time. Subject to the above, up to 10
Requests may be delivered on the same day and up to 10 Loans may be
requested with the same Drawdown Date, whether or not the currencies
and Terms requested are similar.
2.3 NATURE OF A FINANCE PARTY'S RIGHTS AND OBLIGATIONS
(a) The obligations of a Finance Party under the Finance Documents are
several. Failure of a Finance Party to carry out those obligations does
not relieve any other Party of its obligations under the Finance
Documents. No Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
3 PURPOSE
(a) Each Borrower shall apply each Loan towards its general corporate
purposes, including refinancing the Existing Facilities.
(b) Without affecting the obligations of any Borrower in any way, no
Finance Party is bound to monitor or verify the application of any
Loan.
- 14 -
<PAGE> 17
4. CONDITIONS PRECEDENT
4.1 DOCUMENTARY CONDITIONS PRECEDENT
The obligations of each Finance Party to a Borrower under this
Agreement are subject to the condition precedent that the Agent has
notified the Company and the Banks that it has received all of the
documents set out in Part I of Schedule 2 relevant to that Borrower and
the Company in form and substance satisfactory to the Agent. The Agent
shall use all reasonable endeavours to give that notification promptly
after receiving all of those documents.
4.2 CONDITION PRECEDENT TO THE FIRST LOAN
The obligations of each Bank to participate in the first Loan are
subject to the further condition precedent that the Agent has notified
the Banks that it has received confirmation from the Company that the
proceeds of the first Loan will be utilised in repaying or prepaying
the Existng Facilities in whole and that all commitments under the
Existing Facilities have been, or will be, cancelled in full on or
before the first Drawdown Date.
4.3 FURTHER CONDITIONS PRECEDENT
The obligations of each Bank to participate in a Loan are subject to
the further conditions precedent that on both the date of the Request
and the Drawdown Date for that Loan:
(a) the representations and warranties in Clause 16
(Representations and warranties) to be repeated on those dates
in accordance with Clause 16.14 (Times for making
representations and warranties) are correct (other than those
which have been expressly waived in accordance with this
Agreement) and will be correct immediately after the Loan is
made;
(b) (in the case of any Loan other than a Rollover Loan) no
Default is outstanding or will result from the making of the
Loan (which has not been waived in accordance with this
Agreement); and
(c) the borrowing of the Loan will not cause the aggregate of:
(i) the Original Dollar Amount of all outstanding Loans
(but, for the purpose of this sub-paragraph (c) only,
disregarding any outstanding Loan which falls to be
repaid on or before, and including any Loan which is
scheduled to be made prior to or on, the Drawdown
Date of that Loan); and
- 15 -
<PAGE> 18
(ii) the Original Dollar Amount of that Loan,
to exceed the Total Commitments at that time.
if an Event of Default is outstanding (which has not been waived in
accordance with this Agreement) or will result from the making of a
rollover Loan, the Borrower must not select a Term of more than one
month.
5. DRAWDOWN
5.1 RECEIPT OF REQUESTS
A Borrower may utilise the Facility if the Agent receives, not later
than the Prescribed Time, a duly completed Request.
5.2 COMPLETION OF REQUESTS
A Request will not be regarded as having been duly completed unless:
(a) the Drawdown Date is a Business Day;
(b) only one currency is specified and the principal amount of the
Loan is for an amount equal to the aggregate of the then
undrawn Commitments or, if less, is:
(i) if the currency is Dollars, a minimum of US$5,000,000
and an integral multiple of US$ 1,000,000; or
(ii) if the currency is Sterling, a minimum of
(pound)5,000,000 and an integral multiple of
(pound)1,000,000; or
(iii) if the currency is an Optional Currency other than
Sterling, a minimum and integral multiple of the
amounts agreed between the relevant Borrower and the
Agent before the delivery of that Request or failing
agreement, the equivalent in the Optional Currency of
a minimum amount of US$2,000,000 and an integral
multiple of US$1,000,000 calculated at the Agent's
Spot Rate of Exchange at the Prescribed Time referred
to in Clause 5.1 (Receipt of Requests) rounded on
such basis as may be reasonably determined by the
Agent and notified to that Borrower; or
(iv) such other amount as the Agent and the relevant
Borrower may agree;
- 16 -
<PAGE> 19
(c) only one Term is specified which:
(i) does not overrun the Final Repayment Date; and
(ii) is a period of an approved duration or of an optional
duration;
and
(d) the payment instructions comply with Clause 10 (Payments).
In this Agreement:
"APPROVED DURATION" means a period of 7 days or 1, 2, 3 or 6 months;
and
"OPTIONAL DURATION" means a period of 12 months or such other period as
the Borrower and the Banks may agree,
5.3 AMOUNT OF EACH BANK'S PARTICIPATION IN THE LOAN
The amount of a Bank's participation in the Loan will be the proportion
of the Loan which its Commitment bears to the Total Commitments on the
date of receipt of the relevant Request.
5.4 NOTIFICATION OF THE BANKS
The Agent shall, not later than the Prescribed Time, notify each Bank
of the details of the requested Loan and the amount of its
participation in the Loan.
5.5 SELECTION OF AN OPTIONAL DURATION
(a) If a Borrower selects a Term of an optional duration, it may also
select in the relevant Request a Term of an approved duration to apply
if the selection of a Term of in optional duration becomes ineffective
in accordance with paragraph (b) below.
(b) If:
(i) a Borrower requests a Term of an optional duration; and
(ii) the Agent receives notice from a Bank not later than the
Prescribed Time that it does not agree to the request,
the Term for the proposed Loan shall be of the alternative approved
duration specified in the relevant Request or, in the absence of any
alternative selection, 6 months.
- 17 -
<PAGE> 20
(c) If the Agent receives a notice from a Bank under paragraph (b) above,
it shall notify the relevant Borrower and the Banks of the new Term for
the proposed Loan by not later than the Prescribed Time.
5.6 PAYMENT OF PROCEEDS
Subject to the terms of this Agreement, each Bank shall make its
participation in the Loan available to the Agent for the relevant
Borrower on the relevant Drawdown Date.
6. REPAYMENT
Each Borrower shall repay each Loan made to it in full on its Repayment
Date to the Agent for the Banks. Amounts repaid may, in accordance with
the terms of this Agreement, be reborrowed.
7. PREPAYMENT AND CANCELLATION
7.1 AUTOMATIC CANCELLATION OF THE TOTAL COMMITMENTS
The Commitment of each Bank shall be automatically cancelled at close
of business on the Final Repayment Date.
7.2 VOLUNTARY CANCELLATION
The Company may, by giving not less than 14 days' prior notice to the
Agent, cancel the unutilised portion of the Total Commitments in whole
or in part (but, if in part, in minimum amounts of US$20,000,000 and
integral multiples of US$10,000,000 thereafter) without premium or
penalty. Any cancellation in part shall be applied against the
Commitment of each Bank pro rata.
7.3 VOLUNTARY PREPAYMENT
A Borrower may, by giving not less than 14 days' prior notice to the
Agent, prepay any Loan, or any part of it which is of a minimum amount
or a higher integral multiple of the amounts in the relevant currency
specified in Clause 5.2(b) (Completion of Requests).
7.4 MANDATORY PREPAYMENT
If any single person, or group of persons acting in concert (as defined
in the City Code on Take-Overs and Mergers), acquires control (as
defined in Section 416 of the Income and Corporation Taxes Act 1988) of
the Company, the Company shall notify the Agent promptly after becoming
aware of the relevant event. The Agent
- 18 -
<PAGE> 21
(on behalf of and after consultation with the Banks) shall negotiate
with the Company with a view to agreeing terms and conditions
acceptable to the Banks for continuing the Facility. Any terms and
conditions agreed in writing by the Agent (on behalf of and with the
consent of all the Banks) and the Company within 30 days of the
occurrence of the event in question shall take effect in accordance
with its terms. If no such agreement is reached within that 30 day
period, then, if so instructed by the Majority Banks at any time
thereafter, the Agent shall by notice to the Company:
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable.
7.5 ADDITIONAL RIGHT OF PREPAYMENT AND CANCELLATION
If any Borrower is required to pay any amount to a Bank under Clause 11
(Taxes) or Clause 13 (Increased Costs), the Company may, whilst the
circumstances giving rise to the requirement continue, serve a notice
of prepayment and cancellation on that Bank through the Agent. In that
event:
(a) each Borrower shall prepay that Bank's participation in all
the Loans made to that Borrower on the date falling 5 Business
Days after the date of service of the notice together with all
other amounts payable by it to that Bank under this Agreement;
and
(b) the Bank's Commitment shall be cancelled on the date of
service of the notice.
7.6 MITIGATION
If any circumstances arise which result, or would on the giving of
notice (or the like) result, in a Borrower having to make a payment to
or for the account of a Bank under Clause 11 (Taxes), 13 (Increased
costs) or 14 (Illegality), then, without in any way limiting, reducing
or otherwise qualifying any of the obligations of any Borrower under
those Clauses, the Bank shall promptly notify that Borrower and
negotiate in good faith and shall take such steps as are reasonably
open to it and as are acceptable to that Borrower to mitigate or remove
those circumstances, including (without limitation) change of its
Facility Office, restructuring of its participation in the Facility or
the transfer of its obligations to an Affiliate or other person
acceptable to that Borrower. Nothing in this Clause requires a Bank to
take any action which, in its sole opinion, might be in any way
prejudicial to it or
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conflict with its banking policies or to disclose any information
regarding its or its Affiliates' tax affairs.
7.7 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of
any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) Without prejudice to the right of a Borrower, subject to the term of
this Agreement, to re-borrow Loans repaid in accordance with Clause 6
(Repayment) or prepaid in accordance with Clause 7.3 (Voluntary
prepayment), no amounts prepaid under this Agreement (other than
pursuant to Clause 7.3 (Voluntary prepayment)) may be reborrowed. No
amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
8. INTEREST
8.1 INTEREST RATE
The rate of interest on each Loan for its Term is the rate per annum
determined by the Agent to be the aggregate of the applicable:
(a) Margin;
(b) LIBOR; and
(c) in the case of Loans denominated in Sterling, MLA Cost.
8.2 DUE DATES
Except as otherwise provided in this Agreement, accrued interest on
each Loan is payable by the relevant Borrower on its Repayment Date and
also, in the case of a Loan with a Term longer than 6 months, on the
dates falling at 6 monthly intervals after its Drawdown Date.
8.3 DEFAULT INTEREST
(a) If a Borrower fails to pay any amount payable by it under this
Agreement, it shall forthwith on demand by the Agent pay interest on
the overdue amount from the
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due date up to the date of actual payment, as well after as before
judgment, at a rate (the "DEFAULT RATE") determined by the Agent to be
1 per cent. per annum above the rate which would have been payable if
the overdue amount had, during the period of non-payment, constituted a
Loan in the currency of the overdue amount for such successive Terms of
such duration as the Agent may determine (each a "DESIGNATED TERM").
(b) The default rate will be determined on each Business Day or the first
day of, or two Business Days before the first day of, the relevant
Designated Term, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by the
Reference Banks to leading banks in the London interbank market, the
default rate will be determined by reference to the cost of funds to
the Agent from whatever sources it reasonably selects.
(d) Default interest will be compounded at the end of each Designated
Term.
8.4 NOTIFICATION OF RATES OF INTEREST
The Agent shall promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
9. OPTIONAL CURRENCIES
9.1 CHANGE OF CURRENCY
If, before 9.30 a.m. on the Rate Fixing Date of a Loan to be
denominated in an Optional Currency, the Agent receives notice from a
Bank that:
(a) it is impracticable for the Bank to fund its participation in
the Loan for its Term in that Optional Currency in the ordinary course
of business in the London interbank market; or
(b) the use of the proposed Optional Currency might contravene any
law or regulation,
then:
(i) the Agent shall promptly and in any event before 10.30 a.m. on
that Rate Fixing Date notify the relevant Borrower and the
Banks;
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(ii) if the Agent receives notice from the relevant Borrower
specifying the Loan should not be made by 11.00 a.m. on the
relevant Rate Fixing Date, the Loan shall not be made;
(iii) if the Agent does not receive any notice under sub-paragraph
(ii) above, the Loan will be denominated instead in Dollars
(unless the Agent receives notice under sub-paragraph (iv)
below) in an amount equal to its Original Dollar Amount, and
there shall be substituted in the definition of "LIBOR"
(insofar as it applies to that Loan in Dollars) in Clause 1.1
(Definitions) the times "l.00 p.m." and "2.00 p.m." for,
respectively, the times "11.00 a.m." and "12.00 noon"; and
(iv) if the Agent receives notice from the relevant Borrower
specifying the Loan shall be made in Sterling by 11.00 a.m. on
the relevant Rate Fixing Date, the Loan shall be made in
Sterling.
9.2 NOTIFICATION OF RATES AND AMOUNTS
The Agent shall notify each relevant Party of any applicable Agent's
Spot Rate of Exchange or Original Dollar Amount promptly after it is
ascertained.
9.3 ECU
(a) If, at any time:-
(i) the ECU ceases to be utilised as the basic accounting unit of
the European Union;
(ii) the ECU ceases to be used in the European Monetary System;
(iii) it becomes illegal, impossible or impracticable for payments
to be made under this Agreement in ECU; or
(iv) the Agent determines that any event mentioned in sub-paragraph
(i) to (iii) above is likely to occur before the Final
Repayment Date.
then:-
(1) the Agent shall notify the Company and the Banks promptly upon
becoming aware of the event;
(2) the Banks shall not be obliged to make any Loans denominated
in ECU on or after the date of that notification; and
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<PAGE> 25
(3) subsequently each amount which would otherwise have been
payable by the relevant Borrower under this Agreement in ECU
shall be paid by that Borrower in Dollars or any component
currency of the ECU or any other currency acceptable to all of
the Banks (the "REPLACEMENT CURRENCY") and the amount of
replacement currency so payable will be determined in
accordance with paragraph (b) below.
(b) (i) The equivalent in replacement currency of the Loan in ECU for
the purposes of paragraph (a) above will be calculated by the
Agent as the sum of the equivalent in replacement currency of
the components of the ECU;
(ii) the components of the ECU for this purpose will be the
currency amounts that were components of the ECU when the ECU
was most recently used in the European Monetary System, except
that, if the ECU is being used for the settlement of
transactions by public institutions of or within the European
Community, or was so used after its most recent use in the
European Monetary System, the components will be:-
(1) the currency amounts that are components of the ECU
as so used on the day the calculation of the amount
of replacement currency is to be made (the "DAY OF
VALUATION"); or
(2) the currency amounts that were components of the ECU
when it was most recently so used, as appropriate;
(iii) the rates to be used by the Agent for the above purposes will
be its rates for the purchase in the London foreign exchange
market of replacement currency with each of the components at
or about 11.00 a.rn. on the day of valuation for value on the
day the relevant payment in replacement currency is due; and
(iv) the day of valuation will be the day determined by the Agent
for the purposes of calculating the equivalent in replacement
currency of any amount in ECU and, unless the Agent considers
it inappropriate, will be the day two Business Days before the
relevant payment in replacement currency is due.
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<PAGE> 26
10. PAYMENTS
10.1 PLACE
All payments by a Borrower or a Bank under this Agreement shall be made
to the Agent or to its account at such office or bank as it may notify
to that Borrower or Bank for this purpose.
10.2 FUNDS
Payments under this Agreement to the Agent shall be made for value on
the due date at such times and in such funds as the Agent may specify
to the Party concerned as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
10.3 DISTRIBUTION
(a) Each payment received by the Agent under this Agreement for another
Party shall, subject to paragraphs (b) and (c) below, be made available
by the Agent to that Party by payment (on the date and in the currency
and funds of receipt) to its account with such bank in the principal
financial centre of the country of the relevant currency (or, in the
case of ECU, a principal financial centre selected by the relevant
Party in which payments in ECU may be cleared) as it may notify to the
Agent for this purpose by not less than 1 Business Day's prior notice.
(b) The Agent shall apply any amount received by it for a Borrower in any
currency (the "FIRST CURRENCY") in or towards:
(i) payment (on the date and in the currency and funds of receipt)
of any amount in the first currency due from that Borrower
under this Agreement; or
(ii) if that Borrower and the Agent so agree, the purchase of any
amount of any other currency (the "SECOND CURRENCY") to be
applied in payment of any amount in the second currency due
from that Borrower under this Agreement; the resultant amount
shall be deemed to be the amount received by the Agent after
allowing for costs of conversion.
Nothing in this Clause 10.3(b) shall be effective to create a charge.
(c) Where a sum is to be paid under this Agreement to the Agent for the
account of another Party, the Agent is not obliged to pay that sum to
that Party until it has established that it has actually received that
sum. The Agent may, however, assume that the sum has been paid to it in
accordance with this Agreement and, in
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<PAGE> 27
reliance on that assumption, make available to that Party a
corresponding amount. If the sum has not been made available but the
Agent has paid a corresponding amount to another Party, that Party
shall forthwith on demand refund the corresponding amount to the Agent
together with interest on that amount from the date of payment to the
date of receipt, calculated at a rate determined by the Agent to
reflect its cost of funds.
10.4 CURRENCY
(a) A repayment or prepayment of a Loan is payable in the currency in which
the Loan is denominated.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
(d) Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in Dollars.
10.5 SET-OFF AND COUNTERCLAIM
All payments made by a Borrower under this Agreernent shall be made
without set-off or counterclaim.
10.6 NON-BUSINESS DAYS
(a) If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on the principal at the rate payable
on the original due date.
10.7 PARTIAL PAYMENTS
(a) If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by a Borrower under this Agreement, the
Agent shall apply that payment towards the obligations of that Borrower
under this Agreement in the following order:
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<PAGE> 28
(i) FIRST, in or towards payment of any unpaid costs and
reasonable expenses of the Agent under this Agreement;
(ii) SECONDLY, in or towards payment pro rata of any accrued fees
due but unpaid by that Borrower under Clause 20.2 (Commitment
fee);
(iii) THIRDLY, in or towards payment pro rata of any accrued
interest due but unpaid by that Borrower under this Agreement;
(iv) FOURTHLY, in or towards payment pro rata of any principal due
but unpaid by that Borrower under this Agreement; and
(v) FIFTHLY, in or towards payment pro rata of any other sum due
but unpaid by that Borrower under this Agreement.
(b) The Agent shall, if so directed by all the Banks, vary the order set
out in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made by a
Borrower.
11. TAXES
11.1 GROSS-UP
Subject to Clause 11.5 (Exceptions to Gross-up), all payments by a
Borrower under the Finance Documents shall be made without any
deductions and free and clear of and without deduction for or on
account of any taxes, except to the extent that the Borrower is
required by law to make payment subject to any taxes. Subject to Clause
11.5 (Exceptions to Gross-up), if any tax or amounts in respect of tax
must be deducted, or any other deductions must be made, from any
amounts payable or paid by a Borrower, or paid or payable by the Agent
to a Bank, under the Finance Documents, the Borrower shall pay such
additional amounts as may be necessary to ensure that the relevant Bank
receives a net amount equal to the full amount which it would have
received had payment not been made subject to tax or any such other
deduction. This Clause shall only apply to taxes imposed, levied or
assessed by or on behalf of the United Kingdom or the jurisdiction of
incorporation of a Borrower or any other jurisdiction from or through
which a Borrower may choose to make any payment under this Agreement
(or any federation or organisation of which the United Kingdom or any
such other jurisdiction is a member) or any political sub-division or
authority of any of the foregoing.
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<PAGE> 29
11.2 TAX RECEIPTS
All taxes required by law to be deducted or withheld by a Borrower from
any amounts paid or payable under this Agreement shall be paid by that
Borrower when due and that Borrower shall, within 30 days of the
payment being made, deliver to the Agent for the relevant Bank evidence
satisfactory to that Bank (including any relevant tax receipts) that
the payment has been duly remitted to the appropriate authority.
11.3 US TAX FORMS
(a) Each Bank (other than any that is organised under the federal laws of,
or the laws of any of, the United States of America or the District of
Columbia) shall, subject to paragraph (c) below, deliver to each US
Borrower and the Agent as soon as practicable and in any case within 30
days of the later of its Participation Date and the date on which the
US Borrower becomes a Party (and prior to the expiry of any such form
previously provided), the appropriate number of copies of duly executed
US Internal Revenue Service Form 1001 or 4224, whichever is applicable
(in each case together with a Form W-8, if required) or any successor
to such relevant form allowing the US Borrower to make payments to that
Bank without deduction or withholding in respect of taxes in the United
States of America.
(b) Each Bank that is organised under the federal laws of, or the laws of
any of, the United States of America of the District of Columbia shall,
subject to paragraph (c) below, deliver to each US Borrower and the
Agent as soon as practicable and in any case within 30 days of its
Participation Date (and prior to the expiry of any such form previously
provided) the appropriate number of copies of duly executed US Internal
Revenue Service Form W-9 or any successor to such form.
(c) No Bank is obliged to deliver any form(s) under paragraph (a) or (b)
above to the extent that the Bank is unable to do so, or it would be
inappropriate for it to do so, as a result of the introduction of or
any change in, or in the interpretation or application by any relevant
authority of, any law or regulation or any practice or concession of
the US Internal Revenue Service after the date of this Agreement.
11.4 OTHER TAX FORMS
(a) Each Bank shall, so far as it is able, promptly (in respect of the
Company) and (in respect of any Additional Borrower) promptly on
request by the relevant Borrower, provide any applicable information or
documentation to the appropriate tax authority in the jurisdiction of
incorporation of that Borrower and (if applicable) the jurisdiction in
which the Facility Office of that Bank is situated with a view to
ensuring that, by virtue of the application of any Double Taxation
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Treaty or otherwise, that Borrower is enabled to make payments to that
Bank without deduction or withholding in respect of taxes in the
jurisdiction of incorporation of that Borrower.
(b) Each Bank shall, so far as it is able, promptly complete and file with
the relevant tax authorities all applicable forms required by that
Borrower and shall use reasonable endeavours to procure that the
applicable forms are lodged with the appropriate tax authority in the
jurisdiction of incorporation of that Borrower and (if applicable) the
jurisdiction in which the Facility Office of that Bank is situated as
soon as reasonably practicable.
11.5 EXCEPTIONS TO GROSS-UP
(a) If, otherwise than as a result of the introduction of, change in, or
general change in the official interpretation, administration or
application of, any law or regulation or any practice or concession of
the appropriate tax authority in the jurisdiction of incorporation of a
Borrower or the relevant Double Taxation Treaty on or after its
Participation Date, a Bank is not or ceases to be a Qualifying Lender,
that Borrower is not liable to pay to that Bank under Clause 11.1
(Gross-up) any amount in respect of taxes levied or imposed by the
jurisdiction of incorporation of that Borrower or any taxing authority
thereof or therein in excess of the amount it would have been obliged
to pay if that Bank had not ceased to be a Qualifying Lender.
(b) For a Treaty Bank Clause 11.1 (Gross-up) shall not apply to the extent
that deduction or withholding on account of the relevant taxes could
have been avoided by obtaining the appropriate direction or regulation
from the appropriate tax authority in the jurisdiction of incorporation
of a Borrower to make a payment gross prior to the relevant payment,
and the failure to obtain such a direction results solely from the
relevant Bank failing to comply with its obligations under Clause 11.4
(Other tax forms).
(c) If a Bank fails to perform its obligations under Clause 11.3 (U.S. Tax
forms), a US Borrower is not liable to pay that Bank under Clause 11.1
(Gross-up) any amount in respect of taxes levied or imposed by the
United States of America or any taxing authority thereof or therein in
excess of the amount it would have been obliged to pay if that Bank had
performed its obligations under Clause 11.3 (U.S. Tax forms).
11.6 WARRANTY BY EACH BANK
Each Bank warrants to the Company that:
(a) it is a Qualifying Lender;
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(b) it is in compliance with its obligations under Clause 11.4
(Other tax forms); and
(c) for a Loan to a US Borrower, it is in compliance with its
obligations under Clause 11.3 (US tax forms).
Those warranties will be deemed to be repeated by each Bank from its
Participation Date and on the due date of each payment of interest to
that Bank on a Loan, unless that Bank is not able to make them on that
date as a result of the introduction of, change in, or general change
in the official interpretation, administration or application of, any
relevant law or any relevant practice or concession of the appropriate
tax authority in the jurisdiction of incorporation of a Borrower the
relevant Double Taxation Treaty after the date of this Agreement. If at
any time after the date of this Agreement any Bank is aware that it is,
or will become, unable to make those warranties (for whatever reason),
it shall promptly notify the Company.
11.7 REFUND OF TAX CREDITS
If a Borrower makes a payment under Clause 11.1 (a "TAX PAYMENT") in
respect of a payment to the Agent or a Bank under this Agreement and
the Agent or Bank determines in its discretion that it has obtained a
refund of tax or obtained and used a credit against tax on its overall
net income (a "TAX CREDIT") which the Agent or Bank is able to identify
as attributable to that Tax Payment, then the Agent or Bank shall
reimburse that Borrower such amount as the Agent or Bank determines to
be such proportion of that Tax Credit as will leave the Agent or Bank
(after that reimbursement) in no better or worse position in respect of
its worldwide tax liabilities than it would have been in if no Tax
Payment had been required. That Bank or the Agent shall not be obliged
to disclose any information regarding its tax affairs and computations.
12. MARKET DISRUPTION
(a) Where paragraph (c) of the definition of LIBOR applies, if a Reference
Bank does not supply an offered rate by 12.30 p.m. (or, where Clause
9.1 (Change of Currency) applies, 2.30 p.m.) on a Rate Fixing Date, the
applicable LIBOR shall, subject to paragraph (b) below, be determined
on the basis of the quotations of the remaining Reference Banks.
(b) If, in relation to any proposed Loan:
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(i) where paragraph (c) of the definition of LIBOR applies, no, or
only one, Reference Bank supplies a rate for the purposes of
determining the applicable LIBOR; or
(ii) the Agent receives notification from Banks whose
participations in a Loan exceed 50 per cent. of that Loan
that, in their opinion:
(A) matching deposits are not reasonably likely to be
available to them in the London interbank market in
the ordinary course of business to fund their
participations in that Loan for the relevant Term; or
(B) the cost to them of matching deposits in the London
interbank market would be in excess of the relevant
LIBOR.
the Agent shall promptly notify the relevant Borrower and the relevant
Banks of the fact and that this Clause 12 is in operation.
(c) After any notification under paragraph (b) above
(i) unless the relevant Borrower notifies the Agent before close
of business in London on the day it receives notification
under paragraph (b) above that it no longer wishes the Loan to
be made (in which case the Loan shall not be made) the Loan
shall be made;
(ii) within 5 Business Days of receipt of the notification, that
Borrower, the Company and the Agent shall enter into
negotiations for a period of not more than 30 days with a view
to agreeing a substitute basis for determining the rate of
interest and/or funding applicable to that Loan and any future
Loan to be denominated in the currency of the affected Loan;
(iii) any substitute basis agreed under sub-paragraph (ii) above
shall be, with the prior consent of all the Banks, binding on
all the Parties;
(iv) if no alternative basis is agreed under sub-paragraph
(ii) above, each Bank (through the Agent) shall certify on or
before the last day of the Term to which the notification
relates an alternative basis for maintaining its participation
in that Loan;
(v) any alternative basis referred to in sub-paragraph (iv) above
may include an alternative method of fixing the interest rate,
alternative Terms or alternative currencies but it must
reflect the cost to the Bank of funding its participation in
the Loan from whatever sources it may reasonably select plus
the Margin plus any applicable MLA Cost; and
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(vi) each alternative basis so certified shall be binding on the
relevant Borrower and the certifying Bank and treated as part
of this Agreement.
13. INCREASED COSTS
13.1 INCREASED COSTS
(a) Subject to Clause 13.2 (Exceptions), the Company shall forthwith on
demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or its Holding Company as a result of the
introduction of or any change in or change in the interpretation or
application of any law or regulation (including any relating to
taxation or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "INCREASED COST" means:
(i) an additional cost incurred by a Finance Party or its Holding
Company as a result of the Finance Party having entered into,
or performing, maintaining or funding its obligations under,
this Agreement;
(ii) that portion of an additional cost incurred by a Finance Party
or its Holding Company in the Finance Party making, funding or
maintaining all or any advances comprised in a class of
advances formed by or including the participations in the
Loans made or to be made under this Agreement as is
attributable to it making, funding or maintaining those
participations; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party or its Holding Company
under this Agreement or on its capital; or
(iv) the amount of any payment made by a Finance Party or its
Holding Company, or the amount of interest or other return
foregone by a Finance Party or its Holding Company, calculated
by reference to any amount received or receivable by a Finance
Party from any other Party under this Agreement.
(c) When calculating an increased cost, the Finance Party
concerned may allocate or spread costs, liabilities and losses
to or across its liabilities or assets, or any class of
liabilities or assets, and on such basis, as it reasonably
considers fair and appropriate. At the same time as it makes a
demand under (a) above, the Finance Party shall supply a
certificate of its increased costs containing reasonable
details of the amount and basis of its claim. No
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Finance Party is under an obligation to disclose information
which it reasonably considers to be confidential.
13.2 EXCEPTIONS
Clause 13.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the MLA Cost;
(b) compensated for by the operation of Clause 11 (Taxes) or which
would be so compensated but for Clause 11.5 (Exceptions to
Gross-up);
(c) on account of tax on the overall net income of a Bank (or the
overall net income of a division or branch of the Bank)
imposed in the jurisdiction in which its principal office or
Facility Office is situate; or
(d) which results from the implementation, as contemplated as at
the signing of this Agreement, of the matters set out in the
July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence
of Capital Measurement and Capital Standards", the Directive
of the Council of the European Communities on a Solvency Ratio
for Credit Institutions (89/647/EEC of 18th December, 1989)
and/or the Directive of the Council of the European
Communities on Own Funds of Credit Institutions (89/299/EEC of
l7th April, 1989) in each case as amended prior to the date of
this Agreement) unless it results from any change in, or in
the interpretation or application of, these matters after the
signing of this Agreement.
13.3 REGULATION D COSTS
Each US Borrower shall, promptly upon demand by any Bank (through the
Agent), pay to that Bank the amount of any Regulation D Costs actually
incurred by that Bank in respect of any Loans made by it to that US
Borrower. Any such demand shall contain reasonable details of the
calculation of the relevant Regulation D Costs.
14. ILLEGALITY
If it becomes unlawful in any jurisdiction for a Bank to give effect to
any of its obligations as contemplated by this Agreement or to fund or
maintain its participation in any Loan, then:
(a) the Bank may notify the Company through the Agent accordingly;
and
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<PAGE> 35
(b) (i) each Borrower shall forthwith prepay that Bank's
participation in all the Loans to that Borrower,
together with all other amounts payable by it to that
Bank under this Agreement; and
(ii) the Bank's Commitment shall be cancelled.
15. GUARANTEE
15.1 GUARANTEE
The Company irrevocably and unconditionally:
(a) as principal obligor, guarantees to each Finance Party the due
and punctual payment within 3 Business Days of demand of any
and every sum or sums of money which any Borrower (other than
the Company) under the Finance Documents shall at any time be
liable to pay to each Finance Party and which have not been
paid at the time such demand is made; and
(b) indemnifies each Finance Party within 3 Business Days of
demand against any loss or liability suffered by it if any
obligation guaranteed by the Company is or becomes
unenforceable, invalid or illegal the amount of such loss or
liability being the amount which the Party suffering the same
would otherwise have been entitled to recover from the Company
under this Clause 15 (Guarantee).
15.2 CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Borrowers under the Finance
Documents, regardless of any intermediate payment or discharge in whole
or in part.
15.3 REINSTATEMENT
(a) Where any discharge (whether in respect of the obligations of any
Borrower or any security for those obligations or otherwise) is made in
whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation,
the liability of the Company under this Clause 15 (Guarantee) shall
continue as if the discharge or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
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15.4 WAIVER OF DEFENCES
The obligations of the Company under this Clause 15 (Guarantee) will
not be affected by any act, omission, matter or thing which, but for
this provision, would reduce, release or prejudice any of its
obligations under this Clause 15 (Guarantee) or prejudice or diminish
those obligations in whole or in part, including (whether or not known
to it or any Finance Party):
(a) any time or waiver granted to, or composition with, any
Borrower or other person;
(b) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Borrower or other person or any non-presentation or
non-observance of any formality or other requirement of any
security;
(c) any incapacity or lack of powers, authority or legal
personality of or dissolution or change in the members or
status of a Borrower or any other person;
(d) any variation (however fundamental) or replacement of a
Finance Document or any other document or security so that
references to that Finance Document in this Clause 15
(Guarantee) shall include each variation or replacement;
(e) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security, to the intent that the Company's
obligations under this Clause 15 (Guarantee) shall remain in
full force and its guarantee be construed accordingly, as if
there were no unenforceability, illegality or invalidity;
(f) any postponement, discharge, reduction, non-provability or
other similar circumstances affecting any obligation of any
Borrower under a Finance Document resulting from any
insolvency, liquidation or dissolution proceedings or from any
law, regulation or order so that each such obligation shall
for the purposes of the Company's obligations under this
Clause 15 (Guarantee) be construed as if there were no such
circumstance.
15.5 IMMEDIATE RECOURSE
The Company waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or
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security or claim payment from any person before claiming from the
Company under this Clause 15 (Guarantee).
15.6 APPROPRIATIONS
Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been irrevocably paid
in full, each finance Party (or any trustee or agent on its behalf)
may:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any
trustee or agent on its behalf) in respect of those amounts,
or apply and enforce the same in such manner and order as it
sees fit (whether against those amounts or otherwise) and the
Company shall not be entitled to the benefit of the same; and
(b) hold in an interest bearing suspense account any moneys
received from the Company or on account of the Company's
liability under this Clause 15 (Guarantee).
15.7 NON-COMPETITION
Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been irrevocably paid
in full, the Company shall not, after a claim has been made or by
virtue of any payment or performance by it under this Clause 15
(Guarantee):
(a) be subrogated to any rights, security or moneys held, received
or receivable by any Finance Party (or any trustee or agent on
its behalf) or be entitled to any right of contribution or
indemnity in respect of any payment made or moneys received on
account of the Company's liability under this Clause 15
(Guarantee);
(b) claim, rank, prove or vote as a creditor of any Borrower or
its estate in competition with any Finance Party (or any
trustee or agent on its behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of any Borrower,
or exercise any right of set-off as against any Borrower.
The Company shall hold in trust for and forthwith pay or transfer to
the Agent for the Finance Parties any payment or distribution or
benefit of security received by it
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contrary to this Clause 15.7 (Non-competition). Nothing in this Clause
15.7 (Non-competition) shall be effective to create a Security
Interest.
15.8 ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by
any other security now or hereafter held by any Finance Party.
16. REPRESENTATIONS AND WARRANTIES
16.1 REPRESENTATIONS AND WARRANTIES
(a) Each Borrower (other than the Company) makes, in respect of itself, the
representations and warranties set out in this Clause 16
(Representations and warranties) to each Finance Party; and
(b) the Company, in respect of itself and each Material Subsidiary, makes
the representations and warranties set out in this Clause 16
(Representations and warranties) to each Finance Party.
16.2 STATUS
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of the jurisdiction of its incorporation and,
in the case of a US Borrower, is in good standing under such laws; and
(b) it and each of the Material Subsidiaries has the power to own its
assets and carry on its business as it is being conducted.
16.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, the
Finance Documents to which it is or will be a party and the
transactions contemplated by those Finance Documents.
16.4 LEGAL VALIDITY
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation enforceable in accordance with its terms
(subject to the qualifications as to matters of law only contained in
any legal opinion delivered to the Agent under Schedule 2).
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16.5 NON-CONFLICT
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not:
(a) conflict in any respect with any law or regulation or judicial
or official order to which it is subject; or
(b) conflict with its constitutional documents; or
(c) conflict in any material respect with any material document
which is binding upon it or any of the Material Subsidiaries
or any of its assets or the assets of any of the Material
Subsidiaries.
16.6 NO DEFAULT
(a) No Event of Default is outstanding or will result from the making of
any Loan; and
(b) no other event is outstanding which constitutes a material default
under any document which is binding on it or any of the Material
Subsidiaries or any asset of it or any of the Material Subsidiaries to
an extent or in a manner which would be reasonably likely to have a
material adverse effect on the ability of the Company to perform its
obligations under this Agreement.
16.7 AUTHORISATIONS
All necessary authorisations in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected
(as appropriate) and are in full force and effect.
16.8 ACCOUNTS
In the case of the Company only, the audited consolidated accounts of
the Group most recently delivered to the Agent (which, at the date of
this Agreement, are the Original Group Accounts):
(a) have been prepared in accordance with accounting principles
and practices generally accepted in the United Kingdom
consistently applied; and
(b) present a true and fair view of the consolidated financial
condition of the Group as at the date to which they were drawn
up.
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16.9 LITIGATION
No litigation, arbitration or administrative proceedings are current
or, to its knowledge, pending or threatened in which it is reasonably
likely that there will be a determination adverse to the Company and
which would, if adversely determined, have a material adverse effect on
the ability of the Company to perform its obligations under this
Agreement.
16.10 CERTAIN US GOVERNMENTAL REGULATION
In the case of a US Borrower only, no US Borrower is subject to
regulation under the United States Public Utility Holding Company Act
of 1935, the United States Federal Power Act or the United States
Investment Company Act of 1940 or to any United States federal or state
statute or regulation limiting its ability to incur indebtedness.
16.11 SECURITIES ACTIVITIES
In the case of a US Borrower only, no US Borrower is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board of Governors of
the United States Federal Reserve System).
16.12 SOLVENCY
In the case of a US Borrower only, each US Borrower:
(a) owns assets the fair saleable value of which is greater than
the amount that will be required to pay its probable liability
on its existing debts as they mature;
(b) has capital that is not unreasonably small in relation to its
business as presently conducted or any contemplated or
undertaken transaction; and
(c) does not intend to incur and does not believe that it will
incur debts beyond its ability to pay such debts as they
become due.
16.13 OWNERSHIP OF BORROWERS
(a) Each Borrower (other than the Company) is, on the, date of this
Agreement, a wholly-owned Subsidiary of the Company;
(b) each Borrower (other than the Company) is a Subsidiary of the Company;
and
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<PAGE> 41
(c) the Company owns in excess of 50 per cent. of the share capital of
each Borrower (other than the Company).
16.14 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out in this Clause 16
(Representations and warranties):
(a) (i) in the case of a Borrower which is a Party on the
date of this Agreement, are made on the date of this
Agreement; and
(ii) in the case of an Additional Borrower, will be deemed
to be made by that Additional Borrower on the date it
executes a Borrower Accession Agreement; and
(b) (other than Clauses 16.6(b) (No default), 16.9 (Litigation)
and 16.13(a) (Ownership of Borrowers) and, in the case of a
Rollover Loan only, Clause 16.6(a) (No default)) are deemed to
be repeated by the Company and a Borrower on the date of each
Request by that Borrower, on each Drawdown Date for a Loan to
that Borrower and, by the Company, on the date of a Borrower
Accession Agreement with reference to the facts and
circumstances then existing.
17. UNDERTAKINGS
17.1 DURATION
The undertakings in this Clause 17 (Undertakings) remain in force from
the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
17.2 FINANCIAL INFORMATION
The Company shall supply to the Agent in sufficient copies for all the
Banks:
(a) as soon as the same are available (and in any event within 135
days (or, in the case of Deutsche Siebe GmbH, 180 days) of the
end of each of its financial years), its audited consolidated
accounts and the audited financial statements for each
Borrower (other than the Company) for that financial year;
(b) as soon as the same are available (and in any event within 90
days of the end of the first half-year of each of its
financial years) its interim report; and
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<PAGE> 42
(c) (i) together with the accounts specified in paragraph (a)
above, a certificate signed by two of its directors
(without personal liability) on its behalf setting
out in reasonable detail computations establishing
compliance with Clause 17.12 (Financial covenants);
and
(ii) together with the accounts specified in paragraph (b)
above, a certificate signed by two of its directors
(without personal liability) on its behalf setting
out in reasonable detail computations establishing
compliance with Clause 17.12 (Financial covenants) as
at the date to which those accounts were drawn-up.
17.3 INFORMATION - MISCELLANEOUS
Each Borrower shall supply to the Agent in sufficient copies for all of
the Banks, if the Agent so requests:
(a) (in the case of the Company) all documents despatched by it to
its shareholders (or any class of them) or its creditors (or
any class of them) at the same time as they are despatched;
(b) promptly upon becoming aware of them, details of any
litigation, arbitration or administrative proceedings which
are current, threatened or pending, and which might, if
adversely determined. have a material adverse effect on the
ability of the Company to perform its obligations under this
Agreement; and
(c) (in the case of the Company) promptly, such further
information in the possession or control of any member of the
Group regarding its financial condition as the Majority Banks
may reasonably request and which the Company is at liberty to
disclose without breaching the rules or legal requirements of
the London Stock Exchange, any other applicable laws or any
duties of confidentiality owed to parties other than any
member of the Group.
17.4 NOTIFICATION OF DEFAULT
Each Borrower shall notify the Agent of any Default (and the steps, if
any, being taken to remedy it) promptly upon becoming aware of its
occurrence.
17.5 COMPLIANCE CERTIFICATES
The Company shall supply to the Agent:
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<PAGE> 43
(a) together with the accounts specified in Clause 17.2(a) and (b)
(Financial Information); and
(b) promptly at any other time, if the Agent so requests
(provided that the Agent may not make more than three such
requests during any financial year of the Company unless at
the date of the request a Default is outstanding),
a certificate signed by two of its directors (without personal
liability) on its behalf certifying that no Default is outstanding or,
if a Default is outstanding, specifying the Default and the steps, if
any, being taken to remedy it.
17.6 AUTHORISATIONS
Each Borrower shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability
of, any Finance Document.
17.7 PARI PASSU RANKING
Each of the Company and each other Borrower shall procure that its
obligations under the Finance Documents do and will rank at least pari
passu with all its other present and future unsecured obligations,
except for those obligations which are mandatorily preferred by law
applying to companies generally.
17.8 NEGATIVE PLEDGE
(a) The Company shall not, and shall procure that none of its Material
Subsidiaries will, create or permit to subsist any Security Interest on
any of its assets unless at the same time the Company or, as the case
may be, that Material Subsidiary creates a Security Interest in favour
of the Banks securing all the obligations of the Borrowers under this
Agreement upon the same assets, ranking at least pari passu with the
other obligations secured on those assets.
(b) Paragraph (a) does not apply to:
(i) any lien arising by operation of law (or by an agreement
evidencing the same) in the ordinary course of business and
securing amounts not more
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<PAGE> 44
than 30 days overdue or which is being contested in good faith
and by appropriate means;
(ii) Security Interests created by Siebe Inc. and/or any of its
Subsidiaries (whether on, before or (but only if in accordance
with the existing terms of the U.S. Facility) after the date
of this Agreement) to secure:
(A) the U.S. Facility; or
(B) the secured facility dated 27th July, 1990 for Siebe
Inc. arranged by Bankers Trust Company, until the
date on which that facility is to be repaid or
prepaid in accordance with Clause 4.2 (Condition
precedent to the first Loan),
provided that the principal amount of Financial Indebtedness secured
thereby is not increased except, for the facility referred to in
sub-paragraph (B) above only, by reason of any fluctuation in the
amount outstanding under that facility and within the limits and in
accordance with the terms of that facility; and
(iii) any Security Interests existing at the date of this Agreement
(which Security Interests secure a principal amount of
indebtedness incurred or committed to be lent not exceeding in
aggregate US$35.000,000 or its equivalent in other
currencies);
(iv) any Security Interest in respect of the refinancing, renewal
or extension of any indebtedness incurred or committed to be
lent and secured by any Security Interest referred to in
sub-paragraph (iii) above, provided that the principal amount
of any such secured indebtedness is not increased except to
the extent permitted by paragraph (xi) below:
(v) any Security Interest arising out of any rights of
consolidation, combination or set-off over any clearing or
current or deposit account in connection with a cash
management scheme operated by a member of the Group at its
clearing bank;
(vi) any Security Interest created by the Company or a Material
Subsidiary in respect of goods, the related documents of title
and/or other related documents arising or created in the
ordinary course of its business as security only for
indebtedness to a bank or financial institution relating to
the goods or documents on or over which that Security Interest
exists;
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<PAGE> 45
(vii) any Security Interest arising out of title retention
provisions in a supplier's standard conditions of supply of
goods acquired by the relevant person in the ordinary course
of business,
(viii) any Security Interest existing at the time of acquisition on
or over any asset acquired by the Company or a Material
Subsidiary after the date of this Agreement and not created in
contemplation of or in connection with that acquisition and
any Security Interest created in respect of the refinancing or
renewal of the indebtedness to which that Security Interest
relates, provided that the principal amount of that
indebtedness is not increased after the date of the
acquisition;
(ix) in the case of any company which becomes a Subsidiary after
the date of this Agreement, any Security Interest existing on
or over its assets when it becomes a Subsidiary and not
created in contemplation of or in connection with it becoming
a Subsidiary and any Security Interest created in respect of
the refinancing or renewal of the indebtedness to which that
Security Interest relates, provided that the principal amount
of that indebtedness is not increased after the date of that
company becoming a Subsidiary;
(x) any Security Interest on credit balances with a bank or
similar financial institution as security for back-to-back or
similar finance to be provided to a member of the Group;
(xi) any Security Interest created or outstanding on or over assets
of the Company or any Material Subsidiary, provided that the
aggregate outstanding principal, capital or nominal amount
secured by all Security Interests created or outstanding under
this exception (including any indebtedness which exceeds the
limit referred to in paragraph (id) above) on or over assets
of the Company or any Material Subsidiary must not at any time
exceed 10 per cent. of the Tangible Consolidated Net Worth (as
defined in Clause 17.12 (Financial covenants)) in aggregate or
its equivalent (as reasonably determined by the Agent); and
(xii) any Security Interest not otherwise permitted by the above
provisions which is created or subsists with the prior written
consent of the Majority Banks.
17.9 TRANSACTIONS SIMILAR TO SECURITY
(a) Subject to paragraph (b) below, the Company shall not, and the Company
shall procure that none of its Material Subsidiaries will:
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<PAGE> 46
(i) sell, transfer or otherwise dispose of any of its assets on
terms whereby it is or may be leased to or re-acquired or
acquired by a member of the Group or any of its related
entities; or
(ii) sell, transfer or otherwise dispose of any of its receivables
on terms which provide for recourse to the Company or any
Material Subsidiary in the event that such a receivable is
uncollectable, except for the discounting of bills or notes in
the ordinary course of trading,
in circumstances where the transaction is entered into primarily as a
method of raising finance or of financing the acquisition of an asset.
(b) Paragraph (a) does not apply to:
(i) any such transaction that may be entered into:
(A) with the prior consent of the Majority Banks; or
(B) where that transaction (together with all other such
transactions, whether related or not) would
constitute a disposal which is not substantial in
relation to the assets of the Group as a whole; and
(ii) a sale, transfer or disposal of assets on arm's length terms
(on terms whereby it is or may be so leased or re-acquired)
within 180 days of the purchase, transfer or acquisition of
those assets by the Company or any Material Subsidiary, as the
case may be.
17.10 DISPOSALS
(a) The Company shall not, and the Company shall procure that no other
member of the Group will, either in a single transaction or in a series
of transactions, whether related or not and whether voluntarily or
involuntarily, sell, transfer, grant or lease or otherwise dispose of
all or any substantial part of its assets.
(b) Paragraph (a) does not apply to:
(i) disposals made in the ordinary course of business of the
disposing entity; or
(ii) disposals of assets in exchange for, or for cash proceeds
which are used within 3 months of that disposal to acquire,
other assets comparable or superior as to type, value and
quality; or
(iii) disposals made with prior consent of the Majority Banks; or
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<PAGE> 47
(iv) disposals which are not substantial in the context of the
Group taken as a whole; or
(v) disposals by one member of the Group to the Company or to
another member of the Group in circumstances where the direct
or indirect shareholding or other interest of the Company in
that other member of the Group acquiring the asset in question
is equal to or greater than the direct or indirect
shareholding or other interest of the Company in the member of
the Group disposing of that asset; or
(vi) disposals by a member of the Group to another member of the
Group where the Company's direct or indirect shareholding or
other interest in the member of the Group acquiring the asset
is less than its direct or indirect shareholding or other
interest in the member of the Group disposing of that asset,
provided that the disposal is on arm's length terms for market
value and for a consideration to be satisfied in full at the
time of the disposal; or
(vii) disposals on normal commercial terms on an arm's length basis
of obsolete assets or assets no longer required for the
purpose of the relevant person's business; or
(viii) the payment of cash as consideration for the acquisition of
any asset on normal commercial terms on an arm's length basis;
or
(ix) the temporary application of funds not immediately required in
the relevant person's business in the purchase or making of
investments or the realisation of those investments; or
(x) the application of the proceeds of an issue of securities
(whether equity or debt) for the purpose stated in the
prospectus or other offering document relating to that issue.
17.11 CHANGE OF BUSINESS
The Company shall procure that no substantial change is made to the
general nature or scope of the business of the Company or the Group
from that carried on at the date of this Agreement. An extension or
commencement of business to include allied, related or similar
activities does not constitute a change of business for this purpose.
17.12 FINANCIAL COVENANTS
(a) In this Clause 17.12:
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<PAGE> 48
"EXCLUDED CASH"
means, in respect of any member of the Group, the amount (if any) of
any cash in hand or cash at bank or other form of deposit, in each
case, of that member held outside the U.K. which or the proceeds of
which, in accordance with all applicable foreign exchange laws or other
laws, is or are not permitted at that time to be applied to meet any
indebtedness included in the calculation of Total Consolidated
Borrowings or to be remitted to the U.K.
"INTEREST PAYABLE"
means all interest, acceptance commission and all other continuing,
regular or periodic costs, charges and expenses in the nature of
interest (whether paid, payable or capitalized) incurred by the Group
in effecting, servicing or maintaining Total Consolidated Borrowings
during a financial year of the Group.
"INVESTMENTS"
means:
(a) the then current market value of marketable debt securities
issued or guaranteed by any OECD member government;
(b) short term deposits and money at call with a recognized bank,
building society or financial institution incorporated or
established in the OECD, except to the extent they constitute
Excluded Cash;
(c) the then current market value of any certificate of deposit
the term of which has 12 months or less remaining to maturity
issued by a recognised bank, building society or financial
institution incorporated or established in the OECD;
(d) the then current market value of any commercial paper and any
other negotiable money market instrument with a maximum
maturity of 12 months or less with ratings of Al granted by
Standard & Poor's Ratings Group and PI granted by Moody's
Investors Service, Inc. respectively (or, if a rating is
granted by only one of these agencies either A1 granted by
Standard & Poor's Ratings Group or P1 granted by Moody's
Investors Service, Inc.) or is issued or guaranteed by a
recognised bank or building society incorporated or
established in the OECD; and
(e) any cash in hand or cash at bank, except to the extent they
constitute Excluded Cash.
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<PAGE> 49
"NET INTEREST"
means Interest Payable less any interest or amounts in the nature of
interest receivable by any member of the Group during the relevant
financial year or, if not remittable to the UK, is receivable in an
OECD country or is off-settable in the relevant jurisdiction against
any Interest Payable.
"OPERATING PROFIT"
means the consolidated profits before tax (after adding back Interest
Payable and any exceptional item shown as such in the Profit and Loss
Account) of The Group for a financial year of the Group (before taking
into account any extraordinary items; shown as such in the Profit and
Loss Account).
"TANGIBLE CONSOLIDATED NET WORTH"
means at any time the aggregate of,
(i) the amount paid up or credited as paid up on the issued share
capital of the Company; and
(ii) the amount standing to the credit of the consolidated capital
and revenue reserves of the Group;
based on the Balance Sheet but adjusted by:
(A) adding any amount standing to the credit of the profit and
loss account for the Group for the period ending on the date
of the Balance Sheet, to the extent not included in
sub-paragraph (ii) above and to the extent the amount is not
attributable to any dividend or other distribution declared,
recommended or made by any member of the Group;
(B) deducting (to the extent not already reflected in the
reserves) any amount standing to the debit of the profit and
loss account for the Group for the period ending on the date
of the Balance Sheet;
(C) deducting any amount attributable to goodwill or any other
intangible asset except that any goodwill or any other
intangible asset arising on the acquisition of companies and
businesses made after the date of the Agreement will not be
deducted or (to the extent already deducted or written off)
will be added back;
(D) deducting (so far as not otherwise excluded as attributable to
minority interests) any amount attributable to an upward
revaluation of assets of any member
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<PAGE> 50
of the Group after 1st April, 1995 or, in the case of assets
of a company which becomes a member of the Group after that
date, the date on which that company becomes a member of the
Group, save where the upward revaluation is made pursuant to
SSAP 14;
(E) reflecting any variation in the amount of the issued share
capital of the Company and the consolidated capital and
revenue reserves of the Group after the date of the Balance
Sheet;
(F) reflecting any variation in the interest of the Company in any
other member of the Group since the date of the Balance Sheet;
(G) excluding any amount attributable to deferred taxation (other
than deferred taxation insofar as standing to the credit of
reserves in accordance with SSAP 15);
(H) excluding any amount attributable to minority interests; and
(I) eliminating inconsistencies between the accounting principles
applied in connection with the Balance Sheet and those applied
in connection with the Original Group Accounts.
"TOTAL CONSOLIDATED BORROWINGS"
means at any time the aggregate (without double counting) of the following:
(i) the outstanding principal amount of any moneys borrowed by any
member of the Group and any outstanding overdraft debit
balance of any member of the Group;
(ii) the outstanding principal amount of any debenture, bond, note,
loan stock or other security (other than equity which is not a
mechanism for borrowing) of any member of the Group;
(iii) the outstanding principal amount of any acceptance under any
acceptance credit opened by a bank or other financial
institution in favour of any member of the Group, except for
any such acceptance credit opened in the ordinary course of
trade the term of which is 180 days or less;
(iv) the outstanding principal amount of all moneys owing by a
member of the Group in connection with the sale or discounting
of receivables (otherwise than on a nonrecourse basis);
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<PAGE> 51
(v) the outstanding principal amount of any indebtedness of any
member of the Group arising from any advance or deferred
payment agreements arranged primarily as a method of raising
finance or financing the acquisition of an asset (other than
any asset obtained on normal commercial terms in the ordinary
course of trading);
(vi) the capitalised element of indebtedness of any member of the
Group in respect of a lease entered into primarily as a method
of raising finance or financing the acquisition of the asset
leased;
(vii) any fixed or minimum premium payable on the repayment or
redemption at maturity of any instrument referred to in
sub-paragraph (ii) above; and
(viii) the outstanding principal amount of any indebtedness of any
person of a type referred to in sub-paragraphs (i) - (vii)
above which is the subject of a guarantee or indemnity by any
member of the Group,
other than any Financial Indebtedness owed by one member of the Group
to another member of the Group.
Any amount outstanding in a currency other than Sterling is to be taken
into account at the relevant rate of exchange used in the preparation
of the financial statement in question, but if there is no such
financial statement, at its Sterling equivalent calculated on the basis
of the Agent's spot rate of exchange for the purchase of that currency
in the London foreign exchange market with Sterling at or about 11.00
a.m. on the day the relevant amount falls to be calculated.
"TOTAL CONSOLIDATED NET BORROWINGS"
means at any time Total Consolidated Borrowings at that time less
Investments at that time of any member of the Group.
(b) All the terms used in paragraph (a) above are to be calculated in
accordance with the accounting principles applied in connection with
the Original Group Accounts.
(c) The Company shall procure that:
(i) Tangible Consolidated Net Worth is not at any time less than
(pound)525,000,000;
(ii) the ratio of Total Consolidated Net Borrowings to Tangible
Consolidated Net Worth is not at any time more than 1.25:1;
and
(III) the ratio of Operating Profit to Net Interest is not, at the
end of each financial year of the Group, less than 3.00:1.
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17.13 SUBSIDIARY BORROWINGS
No Borrower other than the Company shall, and the Company shall procure
that no Material Subsidiary will, incur any Borrowings other than:
(a) Borrowings under this Agreement;
(b) Borrowings under the U.S. Facility or any refinancing of the
U.S. Facility but, except with the prior written consent of
the Majority Banks, the principal amount of that facility may
not be increased except by reason of any fluctuation in the
amount outstanding under that facility in accordance with its
terms;
(c) Borrowings from
(i) the Company, or
(ii) another Material Subsidiary; or
(iii) any other Subsidiary (other than the Company or a
Material Subsidiary), except to the extent that the
Borrowings are funded by that Subsidiary from
Borrowings from outside the Group;
(d) in the case of a company that becomes a Subsidiary after the
date of this Agreement, any Borrowings of that Subsidiary
existing when it becomes a Subsidiary and not incurred in
connection with it becoming a Subsidiary or any Borrowings
incurred to refinance those Borrowings, provided that:
(i) the principal amount of the Borrowings are not
increased after the date of that company becoming a
Subsidiary; and
(ii) the borrowings are not guaranteed by the Company or
any Material Subsidiary; and
(e) any Borrowings (other than Borrowings set out in
sub-paragraphs (a) to (d) (inclusive) above) of Material
Subsidiaries which do not exceed in aggregate USS350,000,000
(or its equivalent in any other currency or currencies).
17.14 GUARANTEES
The Company shall procure that no guarantee or indemnity or other
similar assurance against financial loss is granted by any of the
Material Subsidiaries in respect of any Financial Indebtedness of the
Company, unless a similar guarantee,
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indemnity or other assurance has been granted in favour of the
Banks in respect of the Company's obligations under the
Finance Documents, except that Material Subsidiaries
incorporated in the UK may grant guarantees, in the ordinary
course of their business, to secure the Company's indebtedness
in respect of debit balances of members of the Group with the
Group's UK clearing banks (being currently Barclays Bank PLC,
National Westminster Bank Plc, Royal Bank of Scotland p1c,
Lloyds Bank Plc and Standard Chartered Bank) if:
(a) the bank to whom the guarantee is granted (the "BENEFICIARY")
is. at the time of granting the guarantee, providing group
overdraft limits to the Company and one or more of its UK
subsidiaries;
(b) the relevant guarantee extends only to cover debit
balances on accounts of members of the Group with the
Beneficiary included in the cash management scheme provided by
that Beneficiary; and
(c) the liability of each Material Subsidiary under any guarantee
provided by it under this exception is limited in amount to
the amount (if any) of the credit balance(s) on that Material
Subsidiary's account(s) with the Beneficiary which are part of
the cash management scheme provided by that Beneficiary.
17.15 COMPLIANCE WITH ERISA
(a) No US Borrower shall, and the Company shall procure that no other
member of the Group incorporated in the United States will, establish
any new employee benefit plan or amend any existing employee benefit
plan if the liability or increased liability resulting from such
establishment or amendment would be reasonably likely to have a
material adverse effect on the ability of the Company to perform its
obligations under the Finance Documents.
(b) Each US Borrower shall, and the Company shall procure that each US
Borrower will, establish, maintain and operate each employee benefit
plan maintained by each US Borrower and each person (an "ERISA
AFFILIATE") which is a member of a group which is under common control
with that US Borrower within the meaning of Section 414(b) and (c) of
the United States Internal Revenue Code (the "IRC") for the benefit of
any of the employers of that US Borrower or an ERISA affiliate in
compliance in all material respects with the provisions of the United
States Employee Retirement Income Security Act of 1974 ("ERISA"), the
IRC and all other applicable laws and regulations except where failure
to comply would not be reasonably likely to have a material adverse
effect on the ability of the Company to perform its obligations under
the Finance Documents, and shall not
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permit any accumulated funding deficiency (as specified in the IRC) to
occur with respect to any such employee benefit plan by more than an
amount which would be reasonably likely to have a material adverse
effect on the ability of the Company to perform its obligations under
the Finance Documents.
18. DEFAULT
18.1 EVENTS OF DEFAULT
Each of the events set out in Clauses 18.2 (Non-Payment) to 18.14
(Material adverse change) (inclusive) is an Event of Default (whether
or not caused by any reason whatsoever outside the control of any
Borrower or any other person).
18.2 NON-PAYMENT
Any Borrower does not pay within 3 Business Days of the due date any
amount payable by it under the Finance Documents at the place at and in
the currency in which it is expressed to be payable.
18.3 BREACH OF OTHER OBLIGATIONS
Any Borrower does not comply with any provision of the Finance
Documents (other than those referred to in Clause 18.2 (Non-payment))
and, except in the case of a breach of Clause 17.12 (Financial
covenants), if that default is capable of remedy, it is not remedied
within 30 days after notice of that default is given to the Company by
the Agent.
18.4 MISREPRESENTATION
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by or
on behalf of any Borrower under or in connection with any Finance
Document is incorrect in any material respect when made or deemed to be
made or repeated.
18.5 CROSS-DEFAULT
(a) Any Financial Indebtedtness of the Company or any Material Subsidiary
is not paid when due or within any applicable grace period; or
(b) an event of default howsoever described occurs under any document
relating to Financial Indebtedness of the Company or any Material
Subsidiary, unless the event of default:
(i) is not material; and
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(ii) is remedied or unconditionally waived within 21 days of the
Company or the relevant Material Subsidiary becoming aware of
its occurrence without any lender concerned taking any action
to improve its position; or
(c) any Financial Indebtedness of the Company or any Material Subsidiary
becomes prematurely due and payable or is placed on demand, in either
case as a result of an event of default (howsoever described) under the
document relating to that Financial Indebtedness; or
(d) any commitment for, or underwriting of, any Financial Indebtedness of
the Company or any Material Subsidiary is cancelled or suspended as a
result of an event of default (howsoever described) under the document
relating to that Financial Indebtedness,
provided that the aggregate amount of any such Financial Indebtedness
referred to in paragraphs (a) to (d) above is equal to or exceeds
US$10,000,000 or its equivalent in other currencies.
18.6 INSOLVENCY
(a) The Company or any Material Subsidiary is, or is deemed for the
purposes of any law (other than Section 123(i)(a) of the Insolvency act
1986, in circumstances where the sum claimed in the statutory demand is
being contested by the Company or the relevant Material Subsidiary in
good faith and the Company or the relevant Material Subsidiary is able
to show, to the reasonable satisfaction of the Agent, that the contest
will succeed) to be, unable to pay its debts as they fall due or to be
insolvent, or admits inability to pay its debts as they fall due; or
(b) the Company or any Material Subsidiary suspends making payments on all
or any class of its debts or announce, an intention to do so, or a
moratorium is declared in respect of any of its indebtedness; or
(c) the Company or any Material Subsidiary by reason of financial
difficulties, begins negotiations with one or more of its creditors
with a view to the readjustment or rescheduling or any of its
indebtedness.
18.7 WINDING-UP AND OTHER PROCEEDINGS
(a) Any step (including petition, proposal or convening a meeting)
is taken by the Company or any Material Subsidiary with a view
to a composition, assignment or arrangement with any creditors
of the Company or any Material Subsidiary; or
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(b) a meeting of the Company or any Material Subsidiary is
convened by the Company or any Material Subsidiary for the
purpose of considering any resolution for (or to petition for)
its winding-up of its administration or any such resolution is
passed; or
(c) any person presents a petition for the winding-up or for the
administration of the Company or any Material Subsidiary and,
in the case of a petition for the winding-up of the Company or
any Material Subsidiary, that petition is not withdrawn within
30 days of the Company or the relevant Material Subsidiary
becoming aware of the same or the Company or the relevant
Material Subsidiary is contesting the petition in good faith
and is able to show, to the reasonable satisfaction of the
Agent, that the petition for winding-up will be struck out or
dismissed; or
(d) any order for the winding-up or administration of the Company
or any Material Subsidiary is made,
save for (i) the purposes of a reconstruction, amalgamation,
reorganisation, merger or consolidation of the Company or the relevant
Material Subsidiary on terms approved in advance by the Majority Banks
(such approval, in the case of a Material Subsidiary (other than a
Borrower), not to be unreasonably withheld) and (ii) the voluntary
solvent winding-up of a Material Subsidiary (other than a Borrower).
18.8 APPOINTMENT OF RECEIVERS AND MANAGERS
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like
is appointed in respect of the Company or any Material Subsidiary or
any part of its assets, save for (i) the purposes of a reconstruction,
amalgamation, reorganisation, merger or consolidation of the Company or
the relevant Material Subsidiary on terms approved in advance by the
Majority Banks (such approval, in the case of a Material Subsidiary
(other than a Borrower), not to be unreasonably withheld) and (ii) the
voluntary solvent winding-up of a Material Subsidiary (other than a
Borrower); or
(b) the directors of the Company or any Material Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator or
the like, save for (i) the purposes of a reconstruction, amalgamation,
reorganisation, merger or consolidation of the Company or the relevant
Material Subsidiary on terms approved in advance by the Majority Banks
(such approval, in the case of a Material Subsidiary (other than a
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Borrower), not to be unreasonably withheld) and (ii) the voluntary
solvent winding-up of a Material Subsidiary (other than a Borrower).
18.9 CREDITORS' PROCESS
Any attachment, sequestration, distress or execution affects any asset
of the Company or any Material Subsidiary and is not discharged within
21 days of such action, unless being contested in good faith by
appropriate means.
18.10 ANALOGOUS PROCEEDINGS
There occurs, in relation to the Company or any Material Subsidiary,
any event anywhere which, in the opinion of the Majority Banks,
corresponds with any of those mentioned in Clauses 18.6 (Insolvency) to
18.9 (Creditors' process) (inclusive).
18.11 CESSATION OF BUSINESS
The Company or any Material Subsidiary ceases, or threatens to cease,
to carry on all or a substantial part of its business save for (i) the
purposes of a reconstruction, amalgamation, reorganisation, merger or
consolidation of the Company or the relevant Material Subsidiary on
terms approved in advance by the Majority Banks (such approval, in the
case of a Material Subsidiary (other than a Borrower), not to be
unreasonably withheld) and (ii) the voluntary solvent winding-up of a
Material Subsidiary (other than a Borrower).
18.12 UNLAWFULNESS
It is or becomes unlawful for a Borrower to perform any of its material
obligations under the Finance Documents.
18.13 GUARANTEE
The guarantee of the Company is not effective or is alleged by the
Company to be ineffective for any reason.
18.14 MATERIAL ADVERSE CHANGE
Any event or series of events occurs which, in the reasonable opinion
of the Majority Banks, would have a material and adverse effect on the
ability of the Company to comply with its obligations under the Finance
Documents and each of the relevant Banks (through the Agent) shall
promptly (but without prejudice to the rights of the Banks under this
Agreement) provide the Company with a certificate
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setting out in reasonable detail the event or series of events in
question and the reasons for such an opinion.
18.15 ACCELERATION
On and at any time after the occurrence of an Event of Default if such
Event of Default is continuing the Agent may, and shall if so directed
by the Majority Banks, by notice to the Company:
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement
be immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand.
19. THE AGENT AND THE ARRANGERS
19.1 APPOINTMENT AND DUTIES OF THE AGENT
Each Finance Party (other than the Agent) irrevocably appoints the
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorises the Agent on its behalf to
perform the duties and to exercise the rights, powers and discretions
that are specifically delegated to it under or in connection with the
Finance Documents, together with any other incidental rights, powers
and discretions. The Agent shall have only those duties which are
expressly specified in this Agreement. Those duties are solely of a
mechanical and administrative nature.
19.2 ROLE OF THE ARRANGERS
Except as otherwise provided in this Agreement, no Arranger has any
obligations of any kind to any other Party under or in connection with
any Finance Document.
19.3 RELATIONSHIP
The relationship between the Agent and the other Finance Parties is
that of agent and principal only. Nothing in this Agreement constitutes
the Agent as trustee or fiduciary for any other Party or any other
person and the Agent need not hold in trust any moneys paid to it for a
Party or be liable to account for interest on those moneys.
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19.4 MAJORITY BANKS' DIRECTIONS
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of
any right, power or discretion or any matter not expressly provided for
in the Finance Documents. Any such instructions given by the Majority
Banks will be binding on all the Banks. In the absence of such
instructions the Agent may act as it reasonably considers to be in the
best interests of all the Banks, provided that the Agent may not start
any legal proceedings on behalf of a Finance Party without that Finance
Party's prior consent.
19.5 DELEGATION
The Agent may act under the Finance Documents through its personnel and
agents.
19.6 RESPONSIBILITY FOR DOCUMENTATION
Neither the Agent nor any Arranger is responsible to any other Party
for:
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document; or
(b) the collectability of amounts payable under any Finance
Document; or
(c) the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document.
19.7 DEFAULT
(a) The Agent is not obliged to monitor or enquire as to whether or not a
Default has occurred. The Agent will not be deemed to have knowledge of
the occurrence of a Default. However, if the Agent receives notice from
a Party referring to this Agreement, describing the Default and stating
that the event is a Default, it shall promptly notify the Banks.
(b) The Agent may require the receipt of security satisfactory to it
whether by way of payment in advance or otherwise, against any
liability or loss which it will or may incur in taking any proceedings
or action arising out of or in connection with any Finance Document
before it commences these proceedings or takes that action.
19.8 EXONERATION
(a) Without limiting paragraph (b) below, the Agent will not be liable to
any other Party for any action taken or not taken by it under or in
connection with any
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Finance Document, unless directly caused by its gross negligence or
wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or
agent of the Agent in respect of any claim it might have against the
Agent or in respect of any act or omission of any kind (including
negligence or wilful misconduct) by that officer, employee or agent in
relation to any Finance Document.
19.9 RELIANCE
The Agent may:
(a) rely on any notice or document believed by it to be genuine
and correct and to have been signed by, or with the authority
of, the proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed
to be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional
advisers selected by it (including those in the Agent's
employment and those representing a Party other than the
Agent).
19.10 CREDIT APPROVAL AND APPRAISAL
Without affecting the responsibility of the Company for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:
(a) his made its own independent investigation and assessment of
the financial condition and affairs of the Company and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Agent or an Arranger in connection with
any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while
any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.
19.11 INFORMATION
(a) The Agent shall promptly forward to the person concerned the original
or a copy of any document which is delivered to the Agent by a Party
for that person.
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(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions Precedent) upon the
request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent
is not obliged to review or check the accuracy or completeness of any
document it forwards to another Party.
(d) Except as provided above, the Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank
with any credit or other information concerning the financial
condition or affairs of the Company or any related entity of
the Company whether coming into its possession or that of any
of its related entities before, on or after the date of this
Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance
with this Agreement, to request any certificates or other
documents from any Borrower.
19.12 THE AGENT AND THE ARRANGERS INDIVIDUALLY
(a) If it is also a Bank, each of the Agent and the Arrangers has the same
rights and powers under this Agreement as any other Bank and may
exercise those rights and powers as though it were not the Agent or an
Arranger.
(b) If it is also a Bank or an Arranger, any reference in the Finance
Documents to the Agent means the agency department of the Agent
specifically responsible for acting as Agent under and in connection
with the Finance Documents, as referred to in Clause 32 (Notices). In
acting as Agent, the agency department will be treated as a separate
entity from any other department or division of the Bank or Arranger
concerned. Without limiting the above, the Agent will not be deemed to
have notice of a document, information, fact, matter or thing in the
possession or knowledge of any other department or division of that
Bank or Arranger.
(c) Each of the Agent and the Arrangers may:
(i) carry on any business with the Company or its related
entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, the Company or its related entities; and
(iii) retain any profits or remuneration in connection with its
activities under this Agreement or in relation to any of the
foregoing.
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19.13 INDEMNITIES
(a) Without limiting the liability of the Borrowers under the Finance
Documents, each Bank shall, within 2 Business Days of demand, indemnify
the Agent for its proportion of any liability or loss incurred by the
Agent in any way relating to or arising out of its acting as the Agent,
except to the extent that the liability or loss arises directly from
the Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which its participation in the Loans (if any)
bear to all the Loans on the date of the demand. If, however, there are
no Loans outstanding on the date of demand, then the proportion will be
the proportion which its Commitment bears to the Total Commitments at
the date of demand or, if the Total Commitments have been cancelled,
bore to the Total Commitments immediately before being cancelled.
19.14 COMPLIANCE
(a) The Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person, and may do anything which, in its opinion,
is necessary or desirable to comply with any law or regulation of any
jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose any
information relating to the Company or any of its related entities if
the disclosure might, in the opinion of the Agent, constitute a breach
of any law or regulation or any duty of secrecy or confidentiality or
be otherwise actionable at the suit of any person.
19.15 RESIGNATION OF AGENT
(a) Notwithstanding its irrevocable appointment, the Agent may resign by
giving notice to the Banks and the Company, in which case the Agent may
forthwith appoint one of its Affiliates as successor Agent or, failing
that, the Majority Banks may after consultation with the Company
appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after notice of resignation,
appointed a successor Agent which accepts the appointment, the retiring
Agent may after consultation with the Company appoint a successor
Agent.
(c) The resignation of the retiring Agent and the appointment of any
successor Agent will both become effective only upon the successor
Agent notifying all the Parties that it accepts the appointment. On
giving the notification, the successor Agent
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will succeed to the position of the retiring Agent and the term "AGENT"
will mean the successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such assistance
as the successor Agent may reasonably request for the purposes of
performing its functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 19 (The Agent and
the Arrangers) shall continue to benefit the retiring Agent in respect
of any action taken or not taken by it under or in connection with the
Finance Documents while it was the Agent, and, subject to paragraph (d)
above, it shall have no further obligation under any Finance Document.
(f) The Majority Banks may, at any time, with the prior consent of the
Company (such consent not to be unreasonably withheld) direct the Agent
to resign, whereupon the Agent shall resign but may not appoint its
successor. If the Majority Banks direct the Agent to resign, they may,
with the prior consent of the Company (such consent not to be
unreasonably withheld), appoint a successor Agent.
19.16 BANKS
The Agent may treat each Bank as a Bank, entitled to payments under
this Agreement and as acting through its Facility Office(s) until it
has received notice from the Bank to the contrary not less than 5
Business Days prior to the relevant payment.
20. FEES
20.1 FRONT-END FEE
The Company shall pay to the Agent for the Arrangers within three
Business Days of the date of this Agreement a front-end fee in the
amount agreed in the Fee Letter between the Arrangers and the Company.
The front-end fee shall be distributed by the Agent, on behalf of the
Arrangers, among the Banks in the proportions agreed between the
Arrangers and the Banks prior to the date of this Agreement.
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20.2 COMMITMENT FEE
(a) The Company shall pay to the Agent for each Bank a commitment fee
computed at the rate of 0.1 per cent. per annum on the undrawn,
uncancelled amount of that Bank's Commitment during the period from the
date of this Agreement up to and including the Final Repayment Date.
For this purpose, Loans are taken at their Original Dollar Amount.
(b) Accrued commitment fee is payable semi-annually in arrears on the
average unutilised portion of the Commitment. Accrued commitment fee is
also payable to the Agent for the relevant Bank(s) on the cancelled
amount of its Commitment at the time the cancellation takes effect.
20.3 AGENT'S FEE
The Company shall pay to the Agent for its own account an agency fee in
the amount agreed in the Fee Letter between the Agent and the Company.
The agency fee is payable annually in advance. The first payment of
this fee is payable within three Business Days of the date of this
Agreement and each subsequent payment is payable on each anniversary of
the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
20.4 VAT
Any fee referred to in this Clause 20 (Fees) is exclusive of any value
added tax or any other tax which might be chargeable in connection with
that fee. If any value added tax or other tax is so chargeable, it
shall to the extent that such value added tax is irrecoverable by the
Agent or the Bank, as the case may be, be paid by the Company at the
same time as it pays the relevant fee.
21. EXPENSES
21.1 INITIAL AND SPECIAL COSTS
The Company shall within 2 Business Days of demand pay the Agent the
amount of all reasonable costs and expenses (including legal fees)
itemised in reasonable detail incurred by it in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement;
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(ii) any other Finance Document (other than a Novation
Certificate) executed after the date of this
Agreement; and
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf
of the Company and relating to a Finance Document.
21.2 ENFORCEMENT COSTS
The Company shall within 2 Business Days of demand pay to each Finance
Party the amount of all reasonable costs and expenses (including legal
fees) incurred by it in connection with the enforcement of, or the
preservation of any rights under, any Finance Document.
22. STAMP DUTIES
The Company shall pay and, within 2 Business Days of demand indemnify
each Finance Party against any liability it incurs in respect of:
(a) any United Kingdom stamp, registration and similar tax which
is or becomes payable in connection with the entry into or,
performance of any Finance Document; and
(b) any stamp, registration and similar tax which is or becomes
payable in connection with the enforcement of any Finance
Document in any jurisdiction,
other than any such tax payable in connection with any assignment or
transfer by any Bank of any of its rights and/or obligations under this
Agreement on the entering into of a Novation Certificate.
23. INDEMNITIES
23.1 CURRENCY INDEMNITY
(a) If a Finance Party receives an amount in respect of a Borrower's
liability under the Finance Documents or if that liability is converted
into a claim, proof, judgment or order in a currency other than the
currency (the "CONTRACTUAL CURRENCY") in which the amount is expressed
to be payable under the relevant Finance Document:
(i) that Borrower shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
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(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business, is less than the amount owed in the
contractual currency, that Borrower shall within 2 Business
Days of demand pay to that Finance Party an amount in the
contractual currency equal to the deficit; and
(iii) that Borrower shall pay to the Finance Party concerned on
demand any exchange costs, and taxes payable in connection
with any such conversion.
(b) Each Borrower waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency other than that in
which it is expressed to be payable.
23.2 OTHER INDEMNITIES
The Company shall within 2 Business Days of demand indemnify each
Finance Party against any loss or liability which that Finance Party
incurs as a consequence of:
(a) the occurrence of any Event of Default;
(b) the operation of Clause 18.15 (Acceleration) or Clause 29 (Pro
rata sharing);
(c) any payment of principal or an overdue amount being received
from any source otherwise than on its Repayment Date and, for
the purposes of this paragraph (c), the Repayment Date of an
overdue amount is the last day of each Designated Term (as
defined in Clause 8.3 (Default interest)); or
(d) (other than by reason of negligence or default by a Finance
Party) a Loan not being made after a Borrower has delivered a
Request for that Loan.
The Company's liability in each case includes any loss of margin or
other loss or expense on account of funds borrowed, contracted for or
utilized to fund any amount payable under any Finance Document, any
amount repaid or prepaid or any Loan. At the same time it makes demand,
the Finance Party shall supply a certificate of loss or liability
containing reasonable details of the amount and basis of the claim.
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24. EVIDENCE AND CALCULATIONS
24.1 ACCOUNTS
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate.
24.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by a Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
24.3 CALCULATIONS
Interest and the fee payable under Clause 20.2 (Commitment fee) accrue
from day to day and are calculated on the basis of the actual number of
days elapsed and a year of 360 days, or, in the case of interest
(including any applicable MLA Cost) payable on an amount denominated in
Sterling only, 365 days.
25. AMENDMENTS AND WAIVERS
25.1 PROCEDURE
(a) Subject to Clause 25.2 (Exceptions), any term of the Finance
Documents may be amended or waived with the agreement of the
Company and the Majority Banks. The Agent may effect, on
behalf of the Banks, an amendment to which they or the
Majority Banks have agreed.
(b) The Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above, and
any such amendment or waiver shall be binding on all the
Parties.
25.2 EXCEPTIONS
(a) An amendment or waiver which relates to:
(i) the definition of "Majority Banks" in Clause 1.1
(Interpretation);
(ii) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance
Documents; or
(iii) an increase in a Bank's Commitment; or
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(iv) the incorporation of additional borrowers otherwise than in
accordance with Clause 26.4 (Additional Borrowers); or
(v) a term of a Finance Document which expressly requires the
consent of each Bank; or
(vi) Clause 15 (Guarantee), Clause 17.7 (Pari passu ranking),
Clause 29 (Pro rata sharing) or this Clause 25 (Amendments and
waivers),
may not be effected without the consent of each Bank.
(b) An amendment or waiver which relates to the rights and/or obligations
of the Agent may not be effected without the consent of the Agent.
25.3 WAIVERS AND REMEDIES CUMULATIVE
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
26. CHANGES TO THE PARTIES
26.1 TRANSFERS BY THE BORROWERS
Neither the Company nor any other Borrower may assign, transfer,
novate, or dispose of any of, or any interest in, its rights and/or
obligations under this Agreement.
26.2 TRANSFERS BY BANKS
(a) A Bank (the ("EXISTING BANK") may at any time assign, transfer or
novate any of its rights and/or obligations under this Agreement and/or
its Commitment to another bank or financial institution (the "NEW
BANK") which is a Qualifying Lender and which complies with its
obligations under Clause 11.3 (US tax forms) and Clause 11.4 (Other tax
forms). If an Existing Bank transfers, assigns or novates its rights
and obligations in respect of less than all its Commitment, the portion
to which such transfer, assignment or novation relates must be equal to
or greater than US$10,000,000. The prior consent of the Company is
required for any such assignment, transfer or novation, unless:
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(i) the New Bank is another Bank or an Affiliate of a Bank; or
(ii) an Event of Default is outstanding.
However, the prior consent of the Company must not be unreasonably
withheld or delayed and will be deemed to have been given if, within 14
days of receipt by the Company of an application for consent, it has
not been expressly refused.
(b) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 26.3
(Procedure for novations); or
(ii) the New Bank confirms to the Agent and the Company that it
undertakes to be bound by the terms of this Agreement as a
Bank in form and substance satisfactory to the Agent. On the
transfer becoming effective in this manner the Existing Bank
shall be relieved of its obligations under this Agreement to
the extent that they are transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to
sub-contract an obligation if that Bank remains liable under this
Agreement for that obligation.
(d) On each occasion an Existing Bank assigns, transfers or novates any of
its rights and/or obligations under this Agreement, the New Bank shall,
on the date the assignment, transfer and/or novation takes effect, pay
to the Agent for its own account a fee of (pound)750.
(e) An Existing Bank is not responsible to a New Bank for:
(i) the execution genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:
(i) has made its own independent investigation and assessment of
the financial condition and affairs of the Company and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on
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any information provided to it by the Existing Bank in
connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while
any amount is or may be outstanding under this Agreement or
any Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights
and/or obligations assigned, transferred or novated under this
Clause; or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by the Company of its obligations under this
Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank, but
excludes a Bank if no amount is or may be owed to or by that Bank under
this Agreement and its Commitment has been cancelled or reduced to nil.
(i) If, at the time of any transfer, novation or assignment by a Bank or of
any change of Facility Office, circumstances exist which would oblige a
Borrower to pay to the New Bank or assignee (or, in the case of a
change of Facility Office, the relevant Bank) under Clause 11 (Taxes),
13 (Increased costs) or 14 (illegality) any sum in excess of the sum
(if any) which it would have been obliged to pay to that Bank under the
relevant Clause in the absence of that transfer, novation, assignment
or change, that Borrower shall not be obliged to pay that excess.
26.3 PROCEDURE FOR NOVATIONS
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent a duly
completed certificate, substantially in the form of Part I of
Schedule 5 (a "NOVATION CERTIFICATE"),
(ii) the Agent executes it; and
(iii) the novation is in accordance with Clause 26.2(a) (Transfers
by Banks).
(b) Each party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate
on its behalf.
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<PAGE> 71
(c) To the extent that they are expressed to be the subject of the novation
in the Novation Certificate:
(i) the Existing Bank and the other Parties (the "EXISTING
PARTIES") will be released from their obligations to each
other (the "DISCHARGED OBLIGATIONS");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged
obligations only insofar as they are owed to or assumed by the
New Bank instead of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties
and vice versa (the "DISCHARGED RIGHTS") will be cancelled;
and
(iv) the New Bank and the existing Parties will acquire rights
against each other which differ from the discharged rights
only insofar as they are exercisable by or against the New
Bank instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the Agent
or, if later, the date specified in the Novation Certificate.
26.4 ADDITIONAL BORROWERS
(a) If the Company wishes one of its wholly-owned Subsidiaries to become an
Additional Borrower, then it may (with the prior consent of the Agent
acting on the instructions of the Majority Banks) deliver to the Agent
the documents listed in Part II of Schedule 2.
(b) On delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Company, the Subsidiary concerned will become an
Additional Borrower. However, it may not utilise the Facility until the
Agent confirms to the other Finance Parties and the Company that it has
received all the documents referred to in paragraph (a) above in form
and substance satisfactory to it.
(c) Delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Company, constitutes confirmation by that Subsidiary
and the Company that the representations and warranties set out in
Clause 16 (Representations and warranties) and to be made by them on
the date of the Borrower Accession Agreement under, in the case of the
relevant Subsidiary, sub-paragraph (a)(ii) and in the case of the
Company, paragraph (b) of Clause 16.14 (Times for making
representations and warranties) are correct, as if made with reference
to the facts and circumstances then existing.
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<PAGE> 72
(d) If at any time a Borrower (other than the Company) is under no payment
obligation under this Agreement, the Company and that Borrower may
declare that that Borrower shall cease to be a Borrower under this
Agreement by delivery to the Agent of a Borrower Cessation Notice. On
delivery of that Borrower Cessation Notice, that Borrower shall
forthwith cease to be a Borrower.
26.5 REFERENCE BANKS
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be one of the Banks, the Agent
shall (in consultation with the Company) appoint another Bank or an
Affiliate of a Bank to replace that Reference Bank.
26.6 REGISTER
The Agent shall keep a register of all the Parties and shall supply any
other Party (at that Party's expense) with a copy of the register on
request.
27. DISCLOSURE OF INFORMATION
(a) A Bank may disclose to an Affiliate or any person with whom it is
proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in
connection with any Finance Document;
provided that any such Affiliate or person has agreed in writing to
maintain the confidentiality of any such document or information on the
same terms (with the appropriate consequential changes) as are set out
in paragraph (b) below.
(b) Subject to paragraph (a) above, each Bank shall keep confidential and
not, without the prior written consent of the Company, use any
information (other than information which is publicly available other
than as a result of a breach of this paragraph (b)) supplied by or on
behalf of any Borrower under this Agreement otherwise than in
connection with this Agreement. However, each Bank is entitled to
disclose information:
(i) in connection with any legal proceedings arising out of or in
connection with this Agreement; or
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(ii) if requited to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise; or
(iii) pursuant to any law or regulation in accordance with which
that Bank is required to act; or
(iv) to any governmental, banking or taxation authority of
competent jurisdiction; or
(v) to its auditors or legal or other professional advisers.
28. SET-OFF
A Finance Party may set off any matured obligation owed by a Borrower
under this Agreement (to the extent beneficially owned by that Finance
Party) against any obligation, whether or not matured (provided that a
Bank may only exercise rights of set off against an unmatured
obligation owed by it after an Event of Default has occurred), owed by
that Finance Party to that Borrower, regardless of the place of
payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Finance Party may convert
either obligation at a market rate of exchange in its usual course of
business for the purpose of the set-off. If either obligation is
unliquidated or unascertained, the Finance Party may, after an Event of
Default his occurred, set off in an amount estimated by it in good
faith to be the amount of that obligation. The relevant Finance Party
shall promptly notify the Company of any set off pursuant to this
Clause 28 (Set-off). Nothing in this Clause 28 (Set-off) shall be
effective to create a charge.
29. PRO RATA SHARING
29.1 REDISTRIBUTION
If any amount owing by a Borrower under this Agreement to a Finance
Party (the "RECOVERING FINANCE PARTY") is discharged by payment,
set-off or any other manner other than through the Agent in accordance
with Clause 10 (Payments) (a "RECOVERY"), then:
(a) the recovering Finance Party shall, within 3 Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Finance Party would have
received had the recovery
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<PAGE> 74
been received by the Agent and distributed in accordance with
Clause 10 (Payments);
(c) subject to Clause 29.3 (Exceptions), the recovering Finance
Party shall, within 5 Business Days of demand by the Agent,
pay to the Agent an amount (the "REDISTRIBUTION") equal to the
excess;
(d) the Agent shall treat the redistribution as if it were a
payment by the relevant Borrower under Clause 10 (Payments)
and shall pay the redistribution to the Finance Parties (other
than the recovering Finance Party) in accordance with Clause
10.7 (Partial payments); and
(e) after payment of the full redistribution, the recovering
Finance Party will be subrogated to the portion of the claims
paid under paragraph (d) above, and the Company will owe the
recovering Finance Party a debt which is equal to the
redistribution, immediately payable and of the type originally
discharged.
29.2 REVERSAL OF REDISTRIBUTION
If under Clause 29.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a
recovery, or an amount measured by reference to a recovery, to
a Borrower; and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
each Finance Party shall, within 3 Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid
to that Finance Party. Thereupon, the subrogation in Clause 29.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
29.3 EXCEPTIONS
(a) A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
relevant Borrower in the amount of the redistribution pursuant to
Clause 29.1(e) (Redistribution).
(b) Where a recovering Finance Party has received a recovery as a
consequence of the satisfaction or enforcement of a judgment obtained
in any legal action or proceedings to which it is a party, it need not
pay a redistribution to any Finance Party which (being entitled to do
so) did not join in with the recovering Finance
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<PAGE> 75
Party in the legal action or proceedings, unless the recovering Finance
Party did not give prior notice of its involvement in the legal action
or proceedings to the Agent for disclosure to all the Banks.
30. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other
jurisdictions of that or any other provision of the Finance
Documents.
31. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
32. NOTICES
32.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Agreement shall be given in writing or by telex or facsimile. Any such
notice will be deemed to be given as follows:
(a) if in writing, when delivered;
(b) if by telex when dispatched, but only if, at the time of
transmission, the correct answerback appears at the start and
at the end of the sender's copy of the notice; and
(c) if by facsimile, when received in a legible form.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
32.2 ADDRESSES FOR NOTICES
(a) The address, telex number and facsimile number of each Party (other
than the Agent) for all notices under or in connection with this
Agreement are:
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(i) that notified by that Party for this purpose to the Agent on
or before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent
by not less than five Business Days' notice.
(b) The address, telex number and facsimile number of the Agent is:
For the attention of Loans Agency Department
1 High Timber Street
London EC4V 3SB
Telex no: 887434
Fax no: 0171-711 3861
or such other address, telex number or facsimile number as the Agent
may notify to the other Parties for this purpose by not less than five
Business Days' notice.
(c) The Agent shall, promptly upon request from any Party, give to that
Party the address, telex number or facsimile number of any other Party
applicable at the time for the purposes of this Clause. The Agent shall
deliver a copy of any notice to a Borrower (other than the Company) to
the Company.
33. LANGUAGE
(a) Any notice given under or in connection with any Finance Document shall
be in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation (except for the audited accounts of Deutsche Siebe
GmbH) and, in this case, the English translation shall prevail
unless the document is a statutory or other official document.
34. JURISDICTION
34.1 SUBMISSION
(a) For the benefit of each Finance Party, each Borrower agrees that the
courts of England have jurisdiction to settle any disputes in
connection with any Finance Document and accordingly submits to the
jurisdiction of the English courts.
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<PAGE> 77
(b) Without prejudice to paragraph (a) above, Siebe Inc. and any other US
Borrower agrees that any New York State or Federal court sitting in
New York City shall have jurisdiction to settle any disputes in
connection with any Finance Document and accordingly submits to the
jurisdiction of those courts.
34.2 SERVICE OF PROCESS
Without prejudice to any other mode of service, each Borrower (other
than a Borrower incorporated in England and Wales):
(a) irrevocably appoints the Company as its agent for service of
process relating to any proceedings before the English courts
in connection with any Finance Document;
(b) agrees that failure by a process agent to notify the Borrower
of the process will not invalidate the proceedings concerned;
and
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 32.2.
(Addresses for notices).
34.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD
Each Borrower:
(a) waives objection to the English or New York courts on grounds
of inconvenient forum or otherwise as regards proceedings in
connection with a Finance Document; and
(b) agrees that a judgment or order of an English court in
connection with a Finance Document is conclusive and binding
on it and may be enforced against it in the courts of any
other jurisdiction.
34.4 NON-EXCLUSIVITY
Nothing in this Clause 34 limits the right of a Finance Party to bring
proceedings against a Borrower in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
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35. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning of
this Agreement.
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<PAGE> 79
SCHEDULE 1
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Banks COMMITMENTS
US$
<S> <C>
SENIOR LEAD MANAGERS
Bankers Trust Company 60,000,000
National Westminster Bank Plc 60,000,000
Swiss Bank Corporation 60,000,000
The Bank of Tokyo, Ltd. 60,000,000
Bayerische Landesbank Girozentrale, London Branch 60,000,000
CIBC Wood Gundy Ireland Ltd 60,000,000
Commerzbank Aktiengesellschaft, London Branch 60,000,000
Den Danske Bank Aktieselskab 60,000,000
The Fuji Bank, Limited 60,000,000
Lloyds Bank Plc 60,000,000
Midland Bank plc 60,000,000
Westdeutsche Landesbank Girozentrale, London Branch 60,000,000
LEAD MANAGERS
Bank Brussels Lambert London 40,000,000
Banque Nationale de Paris London Branch 40,000,000
Barclays Bank PLC 40,000,000
Chemical Bank 40,000,000
The First National Bank of Boston 40,000,000
Mellon Bank N.A. 40,000,000
Morgan Guaranty Trust Company of New York 40,000,000
The Sanwa Bank, Limited 40,000,000
Standard Chartered Bank 40,000,000
The Sumitomo Bank, Limited 40,000,000
The Toronto-Dominion Bank 40,000,000
MANAGERS
ABN AMRO Bank N.V. 20,000,000
Banca Commerciale Italiana SpA, London Branch 20,000,000
Banca Nazionale del Lavoro SpA, London Branch 20,000,000
Banco Exterior de Espana S.A. - London Branch 20,000,000
Bank of Montreal 20,000,000
The Bank of Nova Scotia 20,000,000
Bayerische Vereinsbank Aktiengesellschaft, London Branch 20,000,000
Comerica Bank 20,000,000
Credit Lyonnais 20,000,000
</TABLE>
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<PAGE> 80
<TABLE>
<S> <C>
Credit Suisse 20,000,000
Deutsche Bank AG London 20,000,000
Fleet Bank of Massachusetts, N.A. 20,000,000
The Mitsubishi Bank, Limited 20,000,000
Nomura Bank International plc 20,000,000
Svenska Handelsbanken (publ) 20,000,000
The Tokai Bank, Limited 20,000,000
Wachovia Bank of Georgia, N.A. 20,000,000
-------------
Total Commitments US$1,500,000,000
-------------
</TABLE>
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<PAGE> 81
SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
PART I
TO BE DELIVERED BEFORE THE FIRST LOAN
1. All Borrowers
A copy of the memorandum and articles of association and certificate of
incorporation or other constitutional documents of each Borrower.
2. Company
(a) A copy of a resolution of the board of directors of the Company:
(i) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement
and the Fee Letters;
(ii) authorising a specified person or persons to execute this
Agreement and the Fee Letters on its behalf, and
(iii) authorising a specified person or persons, on its behalf, to
sign and/or despatch all other documents and notices to be
signed and/or despatched by it under or in connection with
this Agreement:
(b) a specimen of the signature of each person authorised by the resolution
referred to in paragraph (a) above;
(c) a certificate of a director of the Company confirming that utilisation
of the Facility in full would not cause any borrowing limit binding on
it to be exceeded; and
(d) a certificate of an authorised signatory of the Company certifying that
each copy document specified in Part I of this Schedule 2 (other than
paragraph 4 below) is correct, complete and in full force and effect as
at a date no earlier than the date of this Agreement.
3. Original Borrowers
(a) A copy of a resolution of the board of directors of Siebe Inc.:
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<PAGE> 82
(i) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to
sign and/or despatch all other documents and notices to be
signed and/or despatched by it under or in connection with
this Agreement;
(b) a specimen of the signature of each person authorised by the resolution
referred to in paragraph (a) above;
(c) in respect of Deutsche Siebe GmbH, a legalised extract from the
Commercial Registry of Bleldeld showing that the person or persons
executing the Agreement on behalf of Deutsche Siebe GmbH are in fact
Geschaftsfuhreur(s) with the proper signature authority; and
(d) a certificate of a director of the relevant Borrower confirming that,
in the case of Deutsche Siebe GmbH, utilisation of the Facility in full
would not cause any borrowing limit binding on it to be exceeded and,
in the case of Siebe Inc., Siebe Inc. will not utilise the Facility to
the extent that it would cause any borrowing limit on it to be
exceeded.
4. Other documents
(a) A letter from the Company to Swiss Bank Corporation and from Siebe Inc.
to Bankers Trust Company as agents under the Existing Facilities
confirming that all amounts owing under the Existing Facilities will be
repaid or prepaid in full, and that all commitments will be cancelled
in full, on the first proposed Drawdown Date.
(b) A copy of any other authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, any Finance Document or for the validity and
enforceability of any Finance Document.
5. Legal opinions
(a) A legal opinion of Fried, Frank. Harris, Shriver & Jacobson, legal
advisers to the Company as to U.S. law;
(b) a legal opinion of Hengeler Mueller Weitzel Wirtz, legal adviser to the
Agent as to German law; and
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<PAGE> 83
(c) a legal opinion of Allen & Overy, legal advisers to the Agent as to
English law, in each case, addressed to the Finance Parties.
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<PAGE> 84
PART II
TO BE DELIVERED BY AN ADDITIONAL BORROWER
(a) A Borrower Accession Agreement, duly executed by the Additional
Borrower and the company;
(b) a copy of the memorandum and articles of association and certificate of
incorporation or other constitutional documents of the Additional
Borrower;
(c) a copy of a resolution of the board of directors (or equivalent) of the
Additional Borrower:
(i) approving the terms of, and the transactions contemplated by,
the Borrower Accession Agreement and resolving that it execute
the Borrower Accession Agreement;
(ii) authorising a specified person or persons to execute the
Borrower Accession Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to
sign and/or despatch all other documents and notices to be
signed and/or despatched by it under or in connection with
this Agreement;
(d) a certificate of a duly authorised officer of the Additional Borrower
confirming that utilisation of the Facility in full would not cause any
borrowing limit binding on it to be exceeded;
(e) a copy of any other authorisation or other document, opinion or
assurance which the Agent (acting reasonably) considers to be necessary
in connection with the entry into and performance of, and the
transactions contemplated by, the Borrower Accession Agreement or for
the validity and enforceability of any Finance Document;
(f) a specimen of the signature of each person authorised by the resolution
referred to in paragraph (c) above;
(g) the latest audited financial statements of the Additional Borrower;
(h) a legal opinion of legal advisers to the Agent in the jurisdiction of
incorporation of the Additional Borrower, addressed to the Finance
Parties; and
(i) a certificate of an authorised signatory of the Additional Borrower
certifying that each copy document specified in paragraphs (b) and (c)
of Part II of this Schedule 2 is correct, complete and in full force
and effect as at a date no earlier than the date of the Borrower
Accession Agreement.
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SCHEDULE 3
CALCULATION OF THE MLA COST
(a) The MLA Cost for a Loan denominated in Sterling for each Interest
Period for that Loan is calculated in accordance with the following
formula:
BY + L(Y-X) + S(Y-Z) % per annum = MLA Cost
-------------------
100-(B + S)
where on the day of application of the formula:
B is the percentage of the Agent's eligible liabilities which the Bank of
England then requires the Agent to hold on a non-interest-bearing
deposit account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Agent to
leading banks in the London interbank market at or about 11.00 am. on
that day for the relevant period;
L is the percentage of eligible liabilities which (as a result of the
requirements of the Bank of England) the Agent maintains as secured
money with members of the London Discount Market Association or in
certain marketable or callable securities approved by the Bank of
England, which percentage shall (in the absence of evidence that any
higher figure is appropriate) be conclusively presumed to be 5%;
X is the rate at which secured Sterling investments may be placed by the
Agent with members of the London Discount Market Association at or
about 11.00 a.m. on that day for the relevant period or if greater the
rate at which Sterling bills of exchange (of a term or equal to the
duration of the relevant period) eligible for rediscounting at the Bank
of England can be discounted in the London Discount Market at or about
11.00 am. on that day;
S is the percentage of the Agent's eligible liabilities which the Bank of
England then requires the Agent to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on
special deposits.
(b) For the purposes of this Schedule 3:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
meanings given to them it the time of application of the
formula by the Bank of England;
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<PAGE> 86
(ii) "RELEVANT PERIOD" in relation to a Loan, means:
(A) if its Term is 3 months or less, its Term; or
(B) if its Term is more than 3 months, 3 months.
(c) In the application of the formula, B, Y, 1, X, S and Z are included in
the formula as figures and not as percentages, e.g. if B = 0.5% and Y =
15 %. BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each Loan.
(ii) Each amount calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
(e) If the Agent determines that a change in circumstances has rendered, or
will render, the formula inappropriate, the Agent (after consultation
with the Banks) shall notify the Company of the manner in which the MLA
Cost will subsequently be calculated. However, only such amendments may
be made to the method of calculation as are necessary to the above
formula so as to (and only so as to) restore the position in terms of
overall return to that which prevailed before the relevant change
occurred. The manner of calculation so notified by the Agent shall, in
the absence of manifest error, be binding on all the Parties.
- 84 -
<PAGE> 87
SCHEDULE 4
FORM OF REQUEST
To: SWISS BANK CORPORATION as Agent
From:[ ] Date:[ ]
SIEBE PLC - US$1,500,000,000 REVOLVING CREDIT AGREEMENT
DATED 29TH NOVEMBER, 1995
<TABLE>
<S> <C> <C>
1. We wish to borrow a Loan as follows:
(a) Drawdown Date: [ ]
(b) Currency: [ ]
(c) Amount: [ ]
(d) Term: [ ] /alternative approved duration of Term: [ ]*
(e) Payment Instructions: [ ].
</TABLE>
2. We confirm that each condition specified in Clause 4.3 (Further
conditions precedent) is satisfied on the date of this Request.
By:
[ ]
Authorised Signatory
- --------
* Complete only if the requested Term is of an optional duration.
- 85 -
<PAGE> 88
SCHEDULE 5
FORM OF ACCESSION DOCUMENTS
PART I
FORM OF NOVATION CERTIFICATE
To: SWISS BANK CORPORATION as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
SIEBE PLC - US$1,500,000,000 REVOLVING CREDIT AGREEMENT
DATED 29TH NOVEMBER, 1995
We refer to Clause 26.3 (Procedure for novations).
1. We (the "EXISTING BANK") and [ ] (the "NEW BANK") agree to the Existing
Bank and the New Bank novating all the Existing Bank's rights and
obligations referred to in the Schedule in accordance with Clause 26.3
(Procedure for novations).
2. The specified date for the purposes of Clause 26.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 32.2 (Addresses for notices) are set out in the
Schedule.
4. The New Bank makes its warranties under Clause 11.6 (Warranties by each
Bank) on the date of this Novation Certificate and the date in
paragraph 2 above.
5. This Novation Certificate is governed by English law.
- 86 -
<PAGE> 89
THE SCHEDULE
RIGHTS AND OBLIGATIONS TO BE NOVATED
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
Facility Office Address for notices
[ ] [ ]
[Existing Bank] [New Bank]
By: By:
Date: Date:
SWISS BANK CORPORATION
as agent for and on behalf of
itself and the other Parties
By:
Date:
- 87 -
<PAGE> 90
PART II
BORROWER ACCESSION AGREEMENT
To: SWISS BANK CORPORATION as Agent
From: [PROPOSED BORROWER] and SIEBE pic
[Date]
SIEBE PLC - US$1,500,000,000 REVOLVING CREDIT AGREEMENT
DATED 29TH NOVEMBER, 1995 (THE "CREDIT AGREEMENT")
We refer to Clause 26.4 (Additional Borrowers).
[Name of company] of [Registered Office] ( ) (the "PROPOSED BORROWER") agrees to
become an Additional Borrower and to be bound by the terms of the Credit
Agreement as an Additional Borrower in accordance with Clause 26.4 (Additional
Borrowers).
The address for notices of the Proposed Borrower for the purposes of Clause 32.2
(Addresses for notices) is:
[
]
This Agreement is governed by English law.
By:
[PROPOSED BORROWER]
Authorised Signatory
By:
SIEBE plc
Authorised Signatory
- 88 -
<PAGE> 91
PART III
FORM OF BORROWER CESSATION NOTICE
To: SWISS BANK CORPORATION as Agent
From: [BORROWER] and SIEBE plc
[Date]
SIEBE PLC - US$1,500,000,000 REVOLVING CREDIT AGREEMENT
DATED 29TH NOVEMBER, 1995 (THE "CREDIT AGREEMENT")
We refer to Clause 26.4 (Additional Borrowers) of the Credit Agreement.
[Borrower] is under no actual payment obligation under the Credit Agreement in
its capacity as a Borrower. Accordingly, pursuant to Clause 26.4(d) of the
Credit Agreement and with effect from the date of this notice, [Borrower] shall
cease to be a Borrower under the Credit Agreement.
This notice is governed by English law.
By: By:
[BORROWER] SIEBE plc
Authorised Signatory Authorised Signatory
- 89 -
<PAGE> 92
SCHEDULE 6
TIMETABLE
In this Schedule 6:
D-[x] = x Business Days before the relevant Drawdown Date
A = Agent
B = Bank
<TABLE>
<CAPTION>
TIME
------------------------------------------------------
DOLLARS OR OPTIONAL SIEBE INC. SIEBE INC.
CURRENCY OTHER THAN (APPROVED (OPTIONAL
STERLING DURATION) DURATION)
(BORROWERS OTHER THAN STERLING
CLAUSE EVENT SIEBE INC.
- ------------ --------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5.1 A receives Request D-3 D-3 D-4 D-1
10.00 a.m. 3.30 p.m. 3.30 p.m. 10.00 a.m.
5.4 A notifies B's of details of Request D-3 D-3 D-4 D-1
and amount of each B's 1.00 p.m. 5.30 p.m. 5.30 p.m. 1.00 p.m.
participation
5.5(b) A receives objection by B to D-3 D-3 D-1
selection of a Term of optional 4.00 p.m. 9.30 a.m. 4.00 p.m.
duration
5.5(c) A notifies Company and B's of the D-2 D-3 D
new Term 9.30 a.m. 5.30 p.m. 9.30 a.m.
</TABLE>
- 90 -
<PAGE> 93
SCHEDULE 7
FACILITY OFFICES
SENIOR LEAD MANAGERS
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
Telephone: 0171-9822500
Telex: 883341
Fax: 0171-9821182
National Westminster Bank Plc
135 Bishopsgate
London EC2M 3UR
Telephone: 0171-3755014
Telex: 882121
Fax: 0171-3755967
(For non-US Borrowers)
Swiss Bank Corporation, London Branch
1 High Timber Street
London EC4 3SB
Telephone: 0171 711 3489
Telex: 887434
Fax: 0171 711 3861
(For US Borrowers)
Swiss Bank Corporation, New York Branch
222 Broadway
PO Box 395
Church Street Station
New York
New York 10008
- 91 -
<PAGE> 94
Telephone: 001 212 574 3856
Telex:
Fax: 001 212 574 4176
(For non-US Borrowers)
The Bank of Tokyo, Ltd.
12/15 Finsbury Circus
London EC2M 7BT
Telephone: 0171-216 1213
Telex: 946178
Fax: 0171-638 8470
(For US Borrowers)
The Bank of Tokyo, Ltd.
1251 Avenue of theAmericas
New York,
New York 10116-3138
Telephone: 001 202 463 0170
Telex:
Fax: 001 201 413 8225
Bayerische Landesbank Girozentrale
London Branch
13/14 Appold Street
London EC2A 2AA
Telephone: 0171-247 0056
Telex: 886437
Fax: 0171-955 5173
CIBC Wood Gundy Ireland Ltd
Ormonde House
12 Lower Leeson Street
Dublin 2
Ireland
Telephone: 353 1 662 4400
Telex:
Fax: 353 1 662 4371
- 92 -
<PAGE> 95
Commerzbank Aktiengesellschaft
London Branch
Commerzbank House
PO Box 286
23 Austin Friars
London EC2P 2JD
Telephone: 0171 418 4807
Telex: 8954308/9 CBKLDN G
Fax: 0171 418 4870
Den Danske Bank Aktieselskab
75 King William Street
London EC4N 7DT
Telephone: 0171 410 4949
Telex: 896229/896220
Fax: 0171 283 9526
(For non-US Borrowers)
The Fuji Bank, Limited
River Plate House
7-11 Finsbury Circus
London EC2M 7DH
Telephone: 0171 588 2211
Telex: 886352/886317FUJIBK G
Fax: 0171 588 1400
(For US Borrowers)
The Fuji Bank (Luxembourg) S.A.
29 Avenue de la Porte-Neuve 2227
Luxembourg B.P. 894
2018 Luxembourg
Telephone: 00 352 47 4681
Telex: 3213
Fax: 00 352 474688
- 93 -
<PAGE> 96
Lloyds Bank Plc
Corporate Banking and Treasury Division
Bank House
Wine Street
Bristol BS1 2AN
Telephone: 0117-923-3476
Telex: 888301 LOYDLN
Fax: 0117-923 3367
Midland Bank plc
Midland Corporate Banking
27-32 Poultry
London EC2P 2BX
Telephone: 0171-2604157
Telex: 8812288
Fax: 0171-2604227
Westdeutsche Landesbank Girozentrale
London Branch
51 Moorgate
London EC2R 6AE
Telephone: 0171-6386141
Telex: 88798415
Fax: 0171-374 8546
LEAD MANAGERS
(For non-US Borrowers)
Bank Brussels Lambert London
6 Broadgate
London EC2M 2AJ
Telephone: 0171 2475566
Telex: 884979
Fax: 0171 247 1277
(For US Borrowers)
BBL International (UK) Limited
6 Broadgate
London EC2M 2AJ
- 94 -
<PAGE> 97
Telephone: 0171 2475566
Telex: 884979
Fax: 0171 247 1277
Banque Nationale de Paris London Branch
8/13 King William Street
London EC4N 7QJ
Telephone: 0171-895-7070
Telex: 883412 BNPLNX G
Fax: 0171-929 0310
Barclays Bank PLC
Murray House
1 Royal Mint Court
London EC3N
Telephone: 0171 488 1144
Telex:
Fax: 0171 696 2929
Chemical Bank
125 London Wall
London EC2Y 5AJ
Telephone: 0171 777 3629
Telex: 940 60000 CBC G
Fax: 0171-777 4745
The First National Bank of Boston
39 Victoria Street
London SW1H 0ED
Telephone: 0171 932 9057
Telex: 886705/885125
Fax: 0171 932 9364
Mellon Bank NA
Princess House
1 Suffolk Lane
London EC4R 0AN
- 95 -
<PAGE> 98
Telephone: 0171 626 9828
Telex: 885962
Fax: 0171 454 0092
Morgan Guaranty Trust Company of New York
PO Box 161
60 Victoria Embankment
London EC4Y 0JP
Telephone: 0171-325-5767
Telex: 896631 MGT G
Fax: 0171-325 8276
(For non-US Borrowers)
The Sanwa Bank, Limited
PO Box 36
City Place House
55 Basinghall Street
London EC2V 5DL
Telephone: 0171 330 5000
Telex: 888350
Fax: 0171 330 5555
(For US Borrowers)
The Sanwa Bank, Limited
Georgia-Pacific Center,
Suite 4750
133 Peachtree Street, N.E.
Atlanta
Georgia 30303
U.S.A.
Telephone: 001 404 586-6880
Telex: ITT 4611830
Fax: 001 404 589-1629
Standard Chartered Bank
27 Gracechurch Street
London EC3V 0BX
- 96 -
<PAGE> 99
Telephone: 0171 280 7621
Telex: 885951
Fax: 0171 280 7611
(For non-US Borrowers)
The Sumitomo Bank, Limited
Temple Court
11 Queen Victoria Street
London EC4N 4TA
Telephone: 0171-7861000
Telex: 887667
Fax: 0171-2360049
(For US Borrowers)
The Sumitomo Bank, Limited
277 Park Avenue
New York, NY 10172
USA
Telephone: 00 1 212 224 4000
Telex: 420515 (ITT)
Fax: 00 1 212 593-9522
The Toronto-Dominion Bank
Triton Court
14/18 Finsbury Square
London EC2A 1DB
Telephone: 0171 282 8255
Telex: 886142
Fax: 0171 638 2251
MANAGERS
ABN AMRO Bank N.V.
101 Moorgate
London EC2M 6SB
Telephone: 0171 628 7766
Telex: 887366
Fax: 0171 588 2975
- 97 -
<PAGE> 100
Banca Commerciale Italiana SpA
London Branch
42 Gresham Street
London EC2V 7LA
(For non-US Borrowers)
Banca Nazionale del Lavoro SpA
London Branch
Fitzwilliam House
10 St. Mary Axe
London EC3A 8NA
Telephone: 0171-337 2400
Telex: 888094
Fax: 0171-929 7983
(For US Borrowers)
Banca Nazionale del Lavoro SpA
London Branch
Fitzwiliam House
London Branch
10 St. Mary Axe
London EC3A 8NA
Telephone: 0171-337 2400
Telex: 888094
Fax: 0171-929 7983
(For US Borrowers)
Banca Nazionale del Lavoro SpA
25 West 51st Street
New York
NY 10019
USA
Telephone: 00 1 212 581 0710
Telex: 62840
Fax: 00 1 212 765 2978
(For non-US Borrowers)
Banco Exterior de Espana S.A.
1 Great Tower Street
London EC3R 5AH
- 98 -
<PAGE> 101
Telephone: 0171 623 3404
Telex: 886820 BELCO G
Fax: 0171 623 3235
(For US Borrowers)
Banco Exterior de Espana S.A. - London Branch
320 Park Avenue
20th Floor
New York
New York 10022
Telephone: 001 2126059800
Telex: 4964640 BEX NYC
Fax: 00 12127554211
Bayerische Vereinsbank Aktiengesellschaft
London Branch
1 Royal Exchange Buildings
London EC3V 3LD
Telephone: 0171-6261301
Telex: 889196
Fax: 0171-6969989
Comerica Bank
500 Woodward Avenue
Detroit
Michigan
USA 48226-3329
Telephone: 00 13132224473
Telex: 164366
Fax: 00 1 3139644765
Credit Lyonnais
84-94 Queen Victoria Street
London EC4P 4LX
Telephone: 0171-6348000
Telex: 885479
Fax: 0171-4891559
- 99 -
<PAGE> 102
(From 11.12.95)
Credit Lyonnais
PO Box 81
Broadwalk House
5 Appold Street
London EC2A 2JP
Telephone: 0171-3744014
Telex: 885479
Fax: 0171-2147070
(For non-US Borrowers)
Credit Suisse
Five Cabot Square
London E14 4QR
Telephone: 01718888000
Telex: 887322 CREDSU G
Fax: 01718888395
(For US Borrowers)
Credit Suisse
PO Box 3700
Church Street Station
New York 10008
USA
Telephone: 001 212 238 5081
Telex: 420149/420232/420491
Fax: 0012122385389
Deutsche Bank AG London
6 Bishopsgate
London EC2P 2AT
Telephone: 01719717000
Telex: 9401555
Fax: 01719717455
(For non-US Borrowers)
Fleet Bank of Massachusetts, N.A.
40/41 St. Andrew's Hill
London EC4V 6DE
- 100 -
<PAGE> 103
Telephone: 01712489531
Telex: -
Fax: 01713349456
(For US Borrowers)
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
USA
Telephone: 00 1 6173461577
Telex: -
Fax: 00 16173461679
The Mitsubishi Bank, Limited
6 Broadgate
London EC2M 2SX
Telephone: 01716382222
Telex: 8958931 BISHBK G
Fax: 01713340140
Nomura Bank International plc
Nomura House
1 St. Martin's le Grand
London EC1A 4NP
Telephone: 01719292366
Telex: 9413063/4 NBI G
Fax: 0171-626-0851
Svenska Handelsbanken (publ)
Svenska House
3-5 Newgate Street
London EC1A 7DA
Telephone: 01713294467
Telex: 894716
Fax: 01713290654
- 101 -
<PAGE> 104
(For non-US Borrowers)
The Tokai Bank, Limited
One Exchange Square
London EC2A 2EH
Telephone: 01714968000
Telex: 887375
Fax: 01716381144
(For US Borrowers)
The Tokai Bank, Limited
Park Avenue Plaza
55 East 52nd Street
New York
NY 10055
USA
Telephone: 00 12123391200
Telex: 422857
Fax: 00 12127542153
Wachovia Bank of Georgia, N.A.
International Division
191 Peachtree Street, N.E.
Atlanta
Georgia 30303
USA
Telephone: 001-404-332-5900
Telex: -
Fax: 001-404-332-5905
- 102 -
<PAGE> 105
SIGNATORIES
COMPANY
SIEBE plc
/s/ E.B. STEPHENS
- ---------------------------
By: E.B. STEPHENS
ORIGINAL BORROWERS:
SIEBE INC.
/s/ E.B. STEPHENS
- ---------------------------
By: E.B. STEPHENS
DEUTSCHE SIEBE GmbH
/s/ E.B. STEPHENS
- ---------------------------
By: E.B. STEPHENS
ARRANGERS
BANKERS TRUST COMPANY
/s/ K.L. Brown
- ---------------------------
By: K.L. Brown
NATWEST CAPITAL MARKETS LIMITED
/s/ M.W.A. VENN
- ---------------------------
By: M.W.A. VENN
SBC WARBURG, A DIVISION OF SWISS BANK CORPORATION
/s/ D.M.M. BEEVER
- ---------------------------
By: D.M.M. BEEVER
BANKS
BANKERS TRUST COMPANY
/s/ K.L. BROWN
- ---------------------------
By: K.L. BROWN
- 103 -
<PAGE> 106
NATIONAL WESTMINSTER BANK PLC
/s/ ROGER W. BYATT
- ---------------------------
By: ROGER W. BYATT
SWISS BANK CORPORATION
/s/ D.M.M. BEEVER
- ---------------------------
By: D.M.M. BEEVER
THE BANK OF TOKYO, LTD.
/s/ ANDREW E. LEE
- ---------------------------
By: ANDREW E. LEE
BAYERISCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
/s/ CAROLINE POWELL /s/ HEREWARD DRUMMON
- --------------------------- -------------------------
By: CAROLINE POWELL HEREWARD DRUMMON
CIBC WOOD GUNDY IRELAND LTD
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
DEN DANSKE BANK AKTIESELSKAB
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
THE FUJI BANK, LIMITED
/s/ KEIJI TAKADA
- ---------------------------
By: KEIJI TAKADA
FUJI BANK (LUXEMBOURG) S.A.
/s/ KEIJI TAKADA
- ---------------------------
By: KEIJI TAKADA
LLOYDS BANK PLC
/s/ RICHARD D.C. DAKIN
- ---------------------------
By: RICHARD D.C. DAKIN
- 104 -
<PAGE> 107
MIDLAND BANK PLC
/s/ PHILIP MILLS
- ---------------------------
By: PHILIP MILLS
WESTDEUTSCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
/s/ ROBIN D.C. ARNOLD /s/ BUBLITZ
- --------------------------- ---------------------------
By: ROBIN D.C. ARNOLD BUBLITZ
BANK BRUSSELS LAMBERT LONDON
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
BBL INTERNATIONAL (UK) LIMITED
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
BANQUE NATIONALE DE PARIS LONDON BRANCH
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
BARCLAYS BANK PLC
/s/ A.H.F. RIGBY
- ---------------------------
By: A.H.F. RIGBY
CHEMICAL BANK
/s/ DAVID A. BROWNE
- ---------------------------
By: DAVID A. BROWNE
THE FIRST NATIONAL BANK OF BOSTON
/s/ DAMARIS G. ALBARRAN
- ---------------------------
By: DAMARIS G. ALBARRAN
MELLON BANK N.A.
/s/ KEITH R.C. BRACKLEY
- ---------------------------
By: KEITH R.C. BRACKLEY
MORGAN GUARANTY TRUT COMPANY OF NEW YORK
/s/ SOHAIL A. RASUL
- ---------------------------
By: SOHAIL A. RASUL
- 105 -
<PAGE> 108
THE SANWA BANK, LIMITED
/s/ P.B. LUCAS
- ---------------------------
By: P.B. LUCAS
STANDARD CHARTERED BANK
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
THE SUMITOMO BANK, LIMITED
/s/ M.D.R. MOORE
- ---------------------------
By: M.D.R. MOORE
THE TORONTO-DOMINION BANK
/s/ M.J. DALY
- ---------------------------
By: M.J. DALY
ABN AMRO BANK N.V.
/s/ C.M. MACDONALD
- ---------------------------
By: C.M. MACDONALD
BANCA COMMERCIALE ITALIANA SPA
/s/ C.A. PIPER
- ---------------------------
By: C.A. PIPER
BANCA NAZIONALE DEL LAVORO SPA
/s/ G. MARRA /s/ PAUL MITCHELL
- --------------------------- ---------------------------
By: G. MARRA PAUL MITCHELL
BANCO EXTERIOR DE ESPANA S.A. - LONDON BRANCH
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
BANK OF MONTREAL
/s/ C. FERGUSON
- ---------------------------
By: C. FERGUSON
THE BANK OF NOVA SCOTIA
/s/ D. GILES /s/ S. FOLEY
- --------------------------- ---------------------------
By: D. GILES S. FOLEY
- 106 -
<PAGE> 109
BAYERISCHE VEREINSBANK AKTIENGESELLSCHAFT, LONDON BRANCH
/s/ J. SIMMS
- ---------------------------
By: J. SIMMS
COMERICA BANK
/s/ IAN BROWN
- ---------------------------
By: IAN BROWN (BY POWER OF ATTORNEY)
CREDIT LYONNAIS
/s/ N.P. SPONG
- ---------------------------
By: N.P. SPONG
CREDIT SUISSE
/s/ S. FOSTER /s/ JEFFREY HUGHES
- --------------------------- ---------------------------
By: S. FOSTER JEFFREY HUGHES
DEUTSCHE BANK AG LONDON
/s/ B.D. STEVENSON
- ---------------------------
By: B.D. STEVENSON
FLEET BANK OF MASSACHUSETTS, N.A.
/s/ G.J. KILBY
- ---------------------------
By: G.J. KILBY
THE MITSUBISHI BANK, LIMITED
/s/ CLARE KINGDON
- ---------------------------
By: CLARE KINGDON
NOMURA BANK INTERNATIONAL PLC
/s/ SIMON DUFFAY
- ---------------------------
By: SIMON DUFFAY
SVENSA HANDELSBANKEN (PUBL)
/s/ ADELE WITMOND /s/ PAUL BREAKSPEAR
- --------------------------- ---------------------------
By: ADELE WITMOND PAUL BREAKSPEAR
- 107 -
<PAGE> 110
THE TOKAI BANK, LIMITED
/s/ DAVID WILSON
- ---------------------------
By: DAVID WILSON
WACHOVIA BANK OF GEORGIA, N.A.
/s/ THOMAS N. MCKINSTRY
- ---------------------------
By: THOMAS N. MCKINSTRY
AGENT
SWISS BANK CORPORATION
/s/ D.M.M. BEEVER /s/ IAN BROWN
- --------------------------- ---------------------------
By: D.M.M. BEEVER IAN BROWN
- 108 -
<PAGE> 1
EXHIBIT - (c)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 15, 1998 (the "Agreement"),
by and among Siebe plc, a United Kingdom public limited company (the "Parent"),
S Acquisition Corp., a Delaware corporation and an indirect wholly-owned
subsidiary of Parent (the "Purchaser"), S Sub Corp., a Delaware corporation and
a wholly-owned subsidiary of the Purchaser (the "Merger Sub"), and Simulation
Sciences Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Parent, the Purchaser, the Merger
Sub and the Company have each determined that it is in the best interests of
their respective stockholders for the Purchaser to acquire the Company on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that the Purchaser shall
make a cash tender offer to acquire all of the issued and outstanding shares of
common stock, par value $.001 per share, of the Company (the "Company Common
Stock"), together with the associated Rights (as hereinafter defined) for $10.00
per share of Company Common Stock (all issued and outstanding shares of Company
Common Stock, together, except where the context otherwise requires, with the
associated Rights, being hereinafter collectively referred to as the "Shares"),
net to the seller in cash, in accordance with the terms and subject to the
conditions provided for herein and in the offering documents relating to the
Offer (as defined below); and
WHEREAS, the Board of Directors of the Company has unanimously (i)
determined that each of the Offer and the Merger (as defined below) is fair to
and in the best interests of the Company and its stockholders and (ii) resolved
to approve and adopt this Agreement and the transactions contemplated hereby and
to recommend acceptance of the Offer and approval and adoption by the
stockholders of the Company of this Agreement and the Merger on the terms and
conditions set forth herein of the Merger Sub with and into the Company
following the Offer.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, the Purchaser, the Merger Sub and the Company hereby agree as follows:
<PAGE> 2
ARTICLE 1
THE OFFER
1.1 The Offer.
(a) Provided this Agreement shall not have been terminated in accordance
with Section 8.1, the Purchaser (or one or more other direct or indirect
wholly-owned subsidiaries of Parent) shall, not later than one business day
after execution of this Agreement, publicly announce the transactions
contemplated hereby, and not later than five business days after execution of
this Agreement, commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase all
Shares at a price of $10.00 per Share (the "Per Share Price"), net to the seller
in cash (the "Offer," which term shall include any amendments to such Offer not
prohibited by this Agreement) and, subject to a minimum of not less than a
majority of the outstanding Shares (on a fully-diluted basis excluding Out of
the Money Options (as defined below)) being validly tendered and not withdrawn
prior to the expiration of the Offer (the "Minimum Condition") and the further
conditions set forth in this Agreement and Annex I of this Agreement, shall
accept for payment and pay for Shares purchased pursuant to the Offer. The
initial expiration date of the Offer shall be May 18, 1998. Parent shall provide
or cause to be provided to the Purchaser on a timely basis the funds necessary
to accept for payment and pay for any Shares that the Purchaser becomes
obligated to accept for payment, and pay for, pursuant to the Offer, and shall
cause the Purchaser and the Merger Sub to fulfill all of their respective other
obligations under this Agreement. The Offer shall be made by means of an offer
to purchase containing the Minimum Condition and the further conditions set
forth in this Agreement and Annex I. Simultaneously with the commencement of the
Offer, the Purchaser shall file with the Securities and Exchange Commission (the
"Commission") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer (together with all amendments and supplements hereto, the "Schedule
14D-1"), which shall have been provided to the Company such that the Company
shall have a reasonable opportunity to promptly comment thereon. Parent, the
Purchaser and the Merger Sub agree to provide the Company and its counsel any
comments the Parent, the Purchaser or the Merger Sub or their counsel may
receive from the Commission or its staff with respect to the Schedule 14D-1
promptly after the receipt of such comments. For purposes of this Agreement,
"Out of the Money Options" shall mean any option, warrant or other contractual
right to purchase shares of the Common Stock of the Company which as of the date
hereof have an exercise price per Share of Common Stock equal to or greater than
the Per Share Price.
(b) The Purchaser expressly reserves the right to modify the terms and
conditions of the Offer from time to time, except that, without the prior
written approval of the Company, the Purchaser shall not amend the Offer (i) to
reduce the cash price per Share to be paid pursuant thereto, (ii) to reduce the
number of Shares to be purchased thereunder, (iii) to change the form of
consideration to be paid in the Offer, (iv) to increase the minimum number of
Shares which must be tendered as a condition to the
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Offer, (v) to waive the Minimum Condition if such waiver would result in less
than a majority of the outstanding Shares (on a fully-diluted basis excluding
Out of the Money Options) being accepted for payment or paid for pursuant to the
Offer, (vi) to impose additional conditions to the Offer, (vii) to extend the
period of the Offer, except that the Offer may be extended (subject to the
Company's right of termination in Section 8.1 herein), without the prior written
approval of the Company (A) as required to comply with any rule, regulation or
interpretation of the Securities and Exchange Commission (the "Commission"), (B)
if at the scheduled or extended expiration date of the Offer any of the
conditions set forth in Annex I have not been satisfied or waived, until such
time as all such conditions are satisfied or waived or (C) provided that there
shall not have been tendered at least 90% of the outstanding Shares, for one or
more times for a total number of days in the aggregate for any extension
pursuant to this clause (C) not to exceed 10 business days for any reason other
than those specified in the immediately preceding clauses (A) and (B), or (viii)
otherwise to amend the terms of the Offer (including the conditions set forth in
the Agreement and Annex I) in a manner that is materially adverse to
stockholders of the Company.
(c) Notwithstanding the foregoing, the Parent, the Purchaser and the
Merger Sub agree that if all of the conditions set forth on Annex I hereto are
not satisfied on any scheduled expiration date of the Offer then, provided that
all such conditions are and continue to be reasonably probable of being
satisfied by the date which is 30 business days after the commencement of the
Offer, the Purchaser shall extend the Offer from time to time until such
conditions are satisfied or waived, provided that the Purchaser shall not be
required to extend the Offer beyond the date which is 30 business days after the
commencement of the Offer.
1.2 Company Action.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors has unanimously (i) approved the Offer and the Merger (as defined
in Section 2.1), has determined that this Agreement and the Offer are fair to
and in the best interest of the Company and its stockholders and has resolved to
recommend acceptance of the Offer to the Company's stockholders, and that the
stockholders tender their Shares in the Offer and, if applicable, vote to
approve and adopt this Agreement and the Merger, (ii) taken all action necessary
to render (x) Section 203 of the Delaware General Corporation Law, and (y) the
Company's Stockholders Rights Agreement, dated as of August 13, 1997, between
the Company and Harris Trust Company of California, as rights agent, (the
"Rights Agreement"), inapplicable to the Offer, the Merger, this Agreement, the
Stock Option Agreement (as defined herein) or any of the transactions
contemplated hereby or thereby and (iii) approved the Stock Option Agreement (as
defined in Section 6.12). The Company hereby consents to the inclusion in the
Offer Documents (as hereinafter defined) of the recommendation of the Board of
Directors described in the first sentence of this Section 1.2, except as such
consent may be withdrawn by the Board of Directors of the Company in the
exercise of its fiduciary duties after consultation with its counsel. The
Company represents that it has received
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the opinion of Dain Rauscher Wessels, a division of Dain Rauscher Incorporated
("DRW") to the effect that, as of the date of such opinion, the consideration
offered pursuant to the Offer and Merger is fair to stockholders of the Company
from a financial point of view.
(b) Simultaneously with, or as promptly as possible after, the
commencement of the Offer, subject to the terms hereof, the Company shall file
with the Commission and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9"), which shall reflect
the recommendation of the Board of Directors; provided that prior to the filing
of such Schedule 14D-9, the Company shall have provided the Purchaser's counsel
with a reasonable opportunity to review and make comments with respect to such
Schedule 14D-9. Such recommendation shall not be withdrawn or adversely modified
except by resolution of the Board of Directors adopted in the exercise of
applicable fiduciary duties after consultation with counsel.
(c) In the event that the Purchaser has not designated a majority of the
members of the Company's Board of Directors pursuant to the terms of Section 1.3
hereof and a stockholder vote is required, all information supplied by the
Company for inclusion in any proxy statement filed with the Commission and sent
or given to stockholders pursuant to Section 6.2 hereof shall, at the time such
proxy statement is first mailed to the Company's stockholders and at the time of
the related stockholders meeting, not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading at the time of filing with the
Commission, mailing to stockholders or any meeting of stockholders.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information which is supplied in writing by Parent, the
Purchaser or the Merger Sub specifically for inclusion and which is contained in
any of the foregoing documents. Each of the Company, the Parent and the
Purchaser agrees to correct promptly any information supplied by it for use in
the Schedule 14D-9 if and to the extent that the Schedule 14D-9 shall become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be
mailed to holders of the Shares. Any such Schedule 14D-9 and/or proxy statement,
or any amendment thereto, shall be provided to the Parent, the Purchaser and the
Merger Sub such that Parent, Purchaser and Merger Sub shall have an opportunity
to promptly comment thereon. The Company agrees to provide the Parent, the
Purchaser and the Merger Sub and their counsel any comments the Company or its
counsel may receive from the Commission or its staff with respect to any such
Schedule 14D-9 and/or proxy statement, or any amendment thereto, promptly after
receipt of such comments.
(d) The Company shall promptly furnish the Purchaser with mailing labels
containing the names and addresses of the record holders and, if available, of
non-objecting beneficial owners of Shares and lists of securities positions of
Shares held in stock depositories, each as of the most recent practicable date,
and shall from time to time
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furnish the Purchaser with such additional information, including updated
or additional lists of stockholders, mailing labels and lists of
securities positions, and other assistance as the Purchaser may reasonably
request in order to be able to communicate the Offer to the stockholders
of the Company. Subject to the requirements of law, and except for such
steps as are necessary to disseminate the Offer and any other documents
necessary to consummate the Merger, Parent, the Purchaser and the Merger
Sub and each of their affiliates shall treat all information in such
labels, lists and additional information as "Evaluation Material" in
accordance with the letter agreement dated April 7, 1998 between Parent
and the Company (the "Confidentiality Agreement").
1.3 Directors. Promptly upon the payment by the Purchaser or any of
Parent's direct or indirect subsidiaries pursuant to the Offer for such number
of Shares which represent at least a majority of the outstanding Shares and from
time to time thereafter, the Company shall increase the size of its Board of
Directors to seven (7) members and the Purchaser shall be entitled to designate
members of the Company's Board of Directors such that the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, will have a number of
representatives on the Board of Directors, rounded up to the next whole number,
equal to the product obtained by multiplying seven (7) by the percentage of
Shares beneficially owned by Parent and any of its subsidiaries. The Company
shall, upon request by the Purchaser, promptly increase the size of the Board of
Directors to the extent permitted by its Certificate of Incorporation and/or use
its reasonable efforts to secure the resignations of such number of directors as
is necessary to enable the Purchaser's designees to be elected to the Board of
Directors and shall use its best efforts to cause the Purchaser's designees to
be so elected, provided, however, that in the event that Purchaser's designees
are elected to, and constitute a majority of, the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
two directors who are directors of the Company on the date of this Agreement
(the "Continuing Directors") and, provided further that, in such event, if the
number of Continuing Directors shall be reduced below two for any reason
whatsoever, the remaining Continuing Director(s) shall designate a person to
fill such vacancy who shall be deemed to be a Continuing Director for purposes
of this Agreement, or, if no Continuing Director then remain, the other
directors of the Company on the date hereof shall designate three persons to
fill such vacancies, and such persons shall be deemed to be Continuing Directors
for purposes of this Agreement. The Company shall take, at its expense, all
action necessary to fulfill its obligations under this Section 1.3, including
the mailing to the Company's stockholders of the information required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, in form and
substance reasonably satisfactory to the Purchaser and its counsel. The
Purchaser shall supply to the Company and be solely responsible for any
information furnished in writing to the Company specifically with respect to the
Purchaser and its nominees, officers, directors and affiliates for use in
connection with and required by, such Section 14(f) and Rule 14f-1
Notwithstanding the foregoing, (i) the affirmative vote of a majority of
the Continuing Directors shall be required to terminate, amend, modify or waive
any provision of this Agreement on behalf of the Company, or to approve any
other action by the Company with respect to the Offer or the other transactions
contemplated hereby, or the Certificate of Incorporation or Bylaws of the
Company which adversely affects the interests of the
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stockholders of the Company (other than the Parent, the Purchaser or the Merger
Sub) with respect to such transactions and (ii) none of the Purchaser, the
Merger Sub or Parent shall, directly or indirectly, cause the Company to breach
its obligations hereunder.
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ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the Delaware General Corporation Law, as
amended (the "Delaware Law"), the Merger Sub (or another direct or indirect
Delaware subsidiary of Parent) shall be merged with and into the Company (the
"Merger"), the separate existence of the Merger Sub (except as may be continued
by operation of law) shall cease, and the Company shall continue as the
surviving corporation under the corporate name it possesses immediately prior to
the Effective Time. The Company, in its capacity as the corporation surviving
the Merger, sometimes is referred to herein as the "Surviving Corporation."
Notwithstanding the foregoing, the Purchaser may revise the structure of the
Merger (including merging the Company into the Merger Sub or merging the Company
with or into another direct or indirect wholly-owned subsidiary of Parent)
provided that any such restructuring does not (i) cause a failure of a condition
to the Offer or the Merger, (ii) adversely affect the stockholders of the
Company and (iii) cause the Company to breach its representations and warranties
hereunder.
2.2 Effect of the Merger. The Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, both public and private, of the
Merger Sub and the Company (collectively, the "Constituent Corporations"); shall
be vested with all property, whether real, personal, or mixed, and all debts due
on whatever account, including subscriptions to shares, and all other choses in
action, and all and every other interest belonging to or due to each of the
Constituent Corporations; and shall be responsible and liable for all the
obligations and liabilities of each of the Constituent Corporations, all with
the effect set forth in the Delaware Law.
2.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver, if possible, of the conditions set forth in Article 7,
and in no event later than five business days after such satisfaction or waiver,
the parties hereto will cause an Agreement or Certificate of Merger to be filed
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with, the relevant provisions of applicable law
using the procedures permitted in Section 253 (if possible) or Section 251 of
the Delaware Law. The Merger shall be effective at the time of the filing of the
Agreement or Certificate of Merger with the Secretary of State of the State of
Delaware or at such other time specified in the Certificate of Merger as the
Merger Sub and the Company shall agree (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
2.4 Certificate of Incorporation and By-Laws; Directors and Officers. The
Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation immediately after the
Effective Time and shall thereafter continue to be its Certificate of
Incorporation and By-Laws until amended, subject to Section 6.10 below, as
provided therein and under the Delaware Law. The directors of the Merger Sub
holding office immediately prior
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to the Effective Time shall be the directors of the Surviving Corporation
immediately after the Effective Time.
2.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time, other than Shares to be cancelled pursuant to Section
2.5(b) hereof, shall automatically be cancelled and extinguished and,
other than Shares with respect to which appraisal rights are properly
exercised ("Dissenting Shares"), be converted into and become a right to
receive in cash the highest price per share paid pursuant to the Offer
(the "Merger Consideration").
(b) Each Share issued and outstanding immediately prior to the
Effective Time and held in the treasury of the Company or owned by Parent,
the Purchaser or any subsidiary thereof shall automatically be cancelled
and retired and no payment shall be made with respect thereto.
(c) Each share of the Merger Sub's Common Stock, par value $.01 per
share, issued and outstanding immediately prior to the Effective Time
shall automatically be converted into and become one validly issued, fully
paid and nonassessable share of Common Stock, par value $.001 per share,
of the Surviving Corporation.
(d) The holders of such Dissenting Shares, if any, shall be entitled
to payment for such shares only to the extent permitted by and in
accordance with the provisions of Section 262 of the Delaware Law;
provided, however, that if, in accordance with such Section of the
Delaware Law, any holder of Dissenting Shares shall (i) subsequently
withdraw his demand for payment for such shares, or (ii) fail to maintain
a petition for appraisal as provided in such Section; or if neither any
holder of Dissenting Shares nor the Surviving Corporation has filed suit
as provided in Section 262 of the Delaware Law, such holder or holders (as
the case may be) shall forfeit such right to payment of such Shares, and
such Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration.
2.6 Company Stock Options. The Parent, the Purchaser, the Merger Sub and
the Company hereby acknowledge and agree that the Surviving Corporation shall
not assume or continue any outstanding stock options or warrants under any of
the Company's 1994 Stock Option Plan, 1996 Stock Option Plan or 1996 Director
Option Plan or any other agreement or arrangement (collectively, as amended, the
"Stock Plans"), or substitute any additional options or warrants for such
outstanding options or warrants. Following the purchase of Shares pursuant to
the Offer, the unvested portions of all outstanding stock options, warrants or
other rights to acquire shares issued under the Stock Plans shall automatically
accelerate in accordance with the terms of the Stock Plans(the "Accelerated
Options"). In lieu of exercising such Accelerated
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Options, each holder thereof shall, upon surrender for cancellation of the same
to the Company on or before the Effective Time, be entitled to receive from the
Company, subject to applicable withholding requirements, an amount in cash equal
to the excess of (a) the product of the number of Shares covered by such
Accelerated Options multiplied by the Merger Consideration, over (b) the product
of the number of Shares covered by such Accelerated Options multiplied by the
per-Share exercise, purchase or conversion price payable upon exercise, purchase
or conversion of the same. Any outstanding stock options or warrants that shall
not have been exercised or surrendered for payment in accordance with the
preceding sentence shall terminate at the Effective Time in accordance with the
terms of the Stock Plans.
2.7 Employee Stock Purchase Plans. The Company shall terminate its 1996
Employee Stock Purchase Plan for U.S. Employees and its 1996 Employee Stock
Purchase Plan for non-U.S. employees (together, the "Employee Stock Purchase
Plans") by having its Board of Directors amend each of the Employee Stock
Purchase Plans as necessary to provide that: (a) any shares of the Company's
Common Stock shall be purchased under the Employee Stock Purchase Plans on a new
"Exercise Date" (as such term is defined in the Employee Stock Purchase Plans)
set by the Board of Directors, which Exercise Date shall be on the last trading
day immediately prior to the consummation of the Offer, or such earlier time as
the Board shall specify, and (b) immediately following such purchase of shares
of the Company's Common Stock, each of the Employee Stock Purchase Plans shall
terminate.
2.8 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, the Purchaser shall designate a
bank or trust company reasonably satisfactory to the Company to act as
agent for the holders of Shares (the "Exchange Agent") to receive the
Merger Consideration, and at or immediately following the Effective Time,
Parent shall take all steps necessary to cause the Purchaser to have
sufficient funds to be able to provide the Exchange Agent with the funds
necessary to make the payments contemplated by this Article II.
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each person who was, at the Effective Time, a holder of record of
Shares entitled to receive the Merger Consideration pursuant to Section
2.5(a) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates previously
representing Shares to be exchanged pursuant to the Merger (the
"Certificates") shall pass, only upon proper delivery of such Certificates
to the Exchange Agent) and instructions for use thereof in effecting the
surrender of the Certificates. Upon surrender to the Exchange Agent of the
Certificates, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such
other documents as may be requested, the Exchange Agent shall promptly
deliver to the persons entitled thereto the Merger Consideration payable
in respect of the Shares represented by the Certificates, and the
Certificates shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing
Shares held in the treasury of the Company, by the Purchaser or any
subsidiary of the Purchaser and Dissenting Shares) evidencing Shares
shall, after the
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Effective Time, be deemed to evidence only the right to receive the Merger
Consideration.
(c) If delivery of the Merger Consideration in respect of cancelled
Shares is to be made to a person other than the person in whose name a
surrendered Certificate or instrument is registered, it shall be a
condition to such delivery or payment that the Certificate or instrument
so surrendered shall be properly endorsed or shall be otherwise in proper
form for transfer and that the person requesting such delivery or payment
shall have paid any transfer and other taxes required by reason of such
delivery or payment in a name other than that of the registered holder of
the Certificate or instrument surrendered or shall have established to the
satisfaction of the Surviving Corporation or the Exchange Agent that such
tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
Shares thereafter on the records of the Company. From and after the
Effective Time, holders of Certificates evidencing ownership of Shares
outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares except as otherwise provided herein
or by law. No interest shall be paid or accrue on any portion of the
Merger Consideration.
(e) Notwithstanding anything to the contrary in this Section 2.7,
none of the Exchange Agent, the Surviving Corporation or any party hereto
shall be liable to a holder of Shares for any amount properly paid to a
public official pursuant to any applicable property, escheat or similar
law.
2.9 Taking of Necessary Action; Further Action. Subject to the terms and
conditions hereof, Parent, the Purchaser, the Merger Sub and the Company,
respectively, shall use all reasonable efforts to take all such action as may be
necessary or appropriate in order to effectuate the Offer and the Merger as
promptly as possible and to carry out the transactions provided for herein or
contemplated hereby. If at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, immunities, powers and franchises of
either of the Constituent Corporations, the officers and directors of the
Surviving Corporation are fully authorized in the name of either of the
Constituent Corporations or otherwise to take, and shall take, all such action.
2.10 Lost, Stolen or Destroyed Certificates. In the event any certificates
evidencing Shares shall have been lost, stolen or destroyed, the paying agent
shall pay to such holder the Merger Consideration required pursuant to Section
2.5, in exchange for such lost, stolen or destroyed certificates, upon (i) the
making of an affidavit of that fact by the holder thereof with such assurances
as the paying agent (upon prior consultation with Parent) in its discretion and
as a condition precedent to the payment of the Merger Consideration as the
paying agent, may reasonably require of the holder of such lost, stolen or
destroyed certificates, and (ii) upon written agreement by such holder to
indemnify the Company, Parent, Merger Sub and the
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Surviving Corporation for any and all losses or damages suffered by such
entities as a result of payment of the Merger Consideration (upon prior
consultation with Parent) in its discretion and as a condition precedent to the
payment of the Merger Consideration as the paying agent, may reasonably require
of the holder of such lost, stolen or destroyed certificates.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PARENT,
THE PURCHASER AND THE MERGER SUB
The Parent, the Purchaser and the Merger Sub hereby agree and represent
and warrant to the Company as follows:
3.1 Organization and Qualification. Each of the Parent, the Purchaser and
the Merger Sub has been duly incorporated and is validly existing as a
corporation and in good standing under the laws of the United Kingdom in the
case of Parent and the laws of Delaware in the case of the Purchaser and Merger
Sub and has the requisite corporate power to carry on its respective business as
now conducted. Each of the Parent, the Purchaser and the Merger Sub is duly
qualified as a foreign corporation in good standing in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
revenues, operations or financial condition of the Parent and its subsidiaries,
taken as a whole. As of the date of this Agreement, the Parent, the Purchaser
and the Merger Sub have no obligations or liabilities, and none of such parties
are parties to any pending or, to the knowledge of such parties, threatened,
litigation, which in any case if paid or adversely determined would have a
material effect on their ability to consummate the transactions contemplated by
this Agreement. The Purchaser is an indirect wholly-owned subsidiary of the
Parent and the Merger Sub is a wholly-owned subsidiary of the Purchaser. The
Certificate or Articles of Incorporation and By-Laws of the Purchaser and the
Merger Sub contain no provisions which would have a material adverse effect on
the ability of either of such entities to consummate the transactions
contemplated by this Agreement.
3.2 Authority Relative to this Agreement. Each of the Parent, the
Purchaser and the Merger Sub has the requisite corporate power and authority to
enter into this Agreement and the Option Agreement, as applicable, and to carry
out its respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Option Agreement, as applicable, by the
Parent, the Purchaser and the Merger Sub, as applicable, and the consummation by
the Parent, the Purchaser and the Merger Sub, as applicable, of the transactions
contemplated hereby and thereby have been duly authorized by the respective
Boards of Directors of the Parent, the Purchaser and the Merger Sub, as
applicable, by the Parent as the sole stockholder of the Purchaser, and by the
Purchaser as the sole stockholder of the Merger Sub, and no other corporate
proceedings on the part of the Parent, the Purchaser or the Merger Sub are
necessary to authorize this Agreement or the Option Agreement, as applicable,
and the
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transactions contemplated hereby and thereby. This Agreement and the Option
Agreement, as applicable, have been duly executed and delivered by the Parent,
the Purchaser and the Merger Sub and constitute a valid and binding obligation
of each such company, enforceable in accordance with its terms. None of the
Parent, the Purchaser or the Merger Sub is subject to or obligated under any
provision of (a) its Certificate or Articles of Incorporation or By-Laws, or (b)
any contract, indenture, instrument, or other agreement, or (c) any license,
franchise or permit, or (d) any law, regulation, order, judgment or decree,
which would be breached, violated or defaulted or in respect of which a right of
termination or acceleration or any encumbrance on any of its assets would be
created by its execution, delivery and performance of this Agreement or the
Stock Option Agreement, as applicable, and the consummation by it of the
transactions contemplated hereby and thereby, other than any such breaches,
violations, defaults, rights of termination or acceleration, or encumbrances,
which will not, individually or in the aggregate, have a material adverse effect
on the ability of the Purchaser or the Merger Sub to consummate the Offer or the
Merger. Other than in connection with or in compliance with the provisions of
the Delaware Law, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "Hart-Scott-Rodino Act"), no authorization, consent
or approval of, or filing with, any public body, court or authority of competent
jurisdiction (each a "Government Entity") is necessary on the part of the
Parent, the Purchaser or the Merger Sub for the consummation by the Parent, the
Purchaser and the Merger Sub of the transactions contemplated by this Agreement
or the Stock Option Agreement, as applicable, other than filings with such
foreign jurisdictions in which subsidiaries of the Company are organized which
may require filings to be made in connection with the transfer of control of
such subsidiaries, and Parent, the Purchaser and the Merger Sub each agrees to
make any and all such filings on or prior to the Effective Time if any of such
parties are required to make such filings under applicable law.
3.3 Offer Documents. The Offer to Purchase and related Letter of
Transmittal and Schedule 14D-1 (and any amendments or supplements to the
foregoing) (which together constitute the "Offer Documents") shall in all
material respects conform with the requirements of the Exchange Act and the
rules and regulations thereunder (except that the foregoing representation shall
not apply with respect to the accuracy of information relating to the Company
which has been excerpted or derived from public sources or furnished in writing
by the Company specifically for inclusion in the Offer Documents). As of their
respective dates, and on the date they are first published, sent or given to
holders of Shares, the Offer Documents, taken as a whole, shall not contain any
misstatement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances in which they were made, not misleading. Each of the
Parent, Purchaser and the Company agrees to correct promptly any information
provided by it for use in the Schedule 14D-1 and the other Offer Documents if
and to the extent that any of them shall become false or misleading in any
material respect, and Parent and the Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable law.
The information supplied by Parent for inclusion in the proxy statement to be
sent to the stockholders of the Company in connection with the meeting of the
Company's stockholders to consider the Merger, or the information statement to
be sent to such stockholders, as appropriate, shall not, on the date the proxy
statement or information statement is first mailed to stockholders, at the time
of such
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stockholders' meeting, if any, or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for such stockholders'
meeting which has become false or misleading.
3.4 Financing. At the expiration of the Offer and the Effective Time,
Parent and the Purchaser will have available all funds necessary for the
acquisition of all Shares pursuant to the Offer and to perform their respective
obligations under this Agreement, including without limitation, payment in full
for all shares of Common Stock validly tendered into the Offer or outstanding at
the Effective Time and all obligations to make payment with respect to the
Options pursuant to Section 2.6.
3.5 No Violation of the Margin Rules. None of the transactions
contemplated by this Agreement will violate or result in the violation of
Section 7 of the Exchange Act or any regulation promulgated pursuant thereto,
including, without limitation, Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
3.6 Interim Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has engaged in
no other business activities.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent, the Purchaser
and the Merger Sub, except as set forth in the Disclosure Schedule which was
dated and delivered to the Parent, the Purchaser and the Merger Sub on or prior
to the date hereof, as follows:
4.1 Organization and Qualification. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
Delaware. The Company is duly qualified as a foreign corporation in good
standing in each jurisdiction in which the character of its properties owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect on the business, revenues, assets, operations or financial conditions of
the Company and its subsidiaries, taken as a whole (a "Material Adverse Effect
on the Company" (it being understood that (i) any adverse effect that is caused
by conditions affecting the economy or security markets generally shall not be
taken into account in determining whether there has been a Material Adverse
Effect on the Company, (ii) any adverse effect that is caused by conditions
affecting the primary industry in which the Company currently competes shall not
be taken into account in determining whether there has been a Material Adverse
Effect on the Company (provided that such affect does not adversely effect the
Company in a disproportionate manner) and (iii) any adverse effect resulting
from litigation brought or threatened against the Company or any
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member of its Board of Directors in respect of the Offer, the Merger, or any of
the transactions contemplated hereby shall not be taken into account in
determining whether there has been a Material Adverse Effect on the Company)).
The Company has full corporate power and authority to own its properties and
conduct its business as presently owned and conducted. The copies of the
Certificate of Incorporation and By-Laws of the Company previously delivered or
made available to the Purchaser are true, correct and complete as of the date
hereof.
4.2 Subsidiaries. Each subsidiary of the Company, all of which are listed
in either Exhibit 21.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (the "Form 10-K Report") or the Disclosure
Schedule, has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified as a foreign corporation in good standing in each jurisdiction in the
United States in which the character of its properties owned or leased or the
nature of its activities make such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on the
Company, and has full power and authority to own its properties and conduct its
business as presently owned and conducted. Except as set forth on Schedule 4.2,
the Company owns, directly or indirectly, all of the outstanding shares of
capital stock of each such subsidiary free and clear of all liens, claims.
charges or encumbrances; there are no irrevocable proxies with respect to such
shares; and all such shares are validly issued, fully paid and nonassessable.
Except for the capital stock of such subsidiaries or otherwise as disclosed in
the Form 10-K Report, the Company does not own, directly or indirectly, any
investment (other than for ordinary cash management purposes) in (a) any general
partnership or joint venture or (b) any equity or debt investment having either
a fair market or face value or cost in excess of $100,000. Except as disclosed
in the Disclosure Schedule, neither the Company nor any of its subsidiaries is
obligated to make any payments in the form of earn-outs, deferred purchase price
or other consideration in respect of the purchase price payable in connection
with the acquisition of any subsidiary or business.
4.3 Capitalization. The authorized capital stock of the Company consists
of 30,000,000 Shares and 5,000,000 shares of preferred stock, $.001 par value
("Preferred Stock"), of which 100,000 shares have been designated Series A
Participating Preferred Stock (the "Series A Preferred Stock"). As of the date
hereof, 14,146,608 Shares (plus any Shares issued upon exercise of stock options
outstanding on March 31, 1998), and no shares of Preferred Stock, are issued and
outstanding. All issued and outstanding Shares are duly authorized and issued,
and are fully paid and nonassessable. As of the date hereof, (a) 2,086,249
Shares (less the number of Shares issued upon the exercise of stock options
outstanding on March 31, 1998) are reserved for issuance pursuant to outstanding
stock options, (b) 1,320,001 shares are reserved for future grants pursuant to
the Stock Plans, and (c) 100,000 shares of Series A Preferred Stock are reserved
for issuance pursuant to preferred stock purchase rights (the "Rights") issued
under the Rights Agreement. Section 4.3 of the Disclosure Schedule sets forth a
complete and correct list of the Company's outstanding stock options, including
for each the name of the option holder, the date of grant, the expiration date,
the plan under which the option (or any portion thereof) was granted, and the
dates and the number of Shares as to which any portion of the option becomes
exercisable. Except as otherwise described in the Disclosure Schedule and for
Stock issuable upon exercise of outstanding options on the date hereof or upon
issuance of Stock
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pursuant to the Employee Stock Purchase Plans, there are no options, warrants,
conversion privileges or other rights, agreements, arrangements or commitments
obligating the Company or any of its subsidiaries to issue or sell any shares
of, or make any payments based on the value or appreciation of any, capital
stock of the Company or any of its subsidiaries or securities or obligations of
any kind convertible into or exchangeable for any shares of capital stock of the
Company, any of its subsidiaries or any other person. The holders of outstanding
Shares are not entitled to any contractual or statutory preemptive or other
similar rights. Upon consummation of the Merger in accordance with the terms of
this Agreement, the Purchaser will own the entire equity interest in the
Company, and there will be no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating the Surviving
Corporation or any of its subsidiaries to issue or sell any shares of capital
stock of the Surviving Corporation or of any of its subsidiaries.
4.4 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to enter into this Agreement and the Option
Agreement and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Option Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and unanimously authorized by the Board of Directors of the
Company and, except for the approval of its stockholders (if required) as set
forth in Section 6.1, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or the Option Agreement and the
transactions contemplated hereby and thereby. This Agreement and Option
Agreement have been duly executed and delivered by the Company and the Agreement
constitutes valid and binding obligations of the Company, enforceable in
accordance with their terms. Except as set forth on the Disclosure Schedule 4.4,
neither the Company nor any of its subsidiaries is subject to or obligated under
any provision of (a) its Certificate or Articles of Incorporation or By-Laws,
(b) except as set forth in the Disclosure Schedule, any contract, (c) any
license, franchise or permit, or (d) any law, regulation, order, judgment or
decree, which would be breached or violated or in respect of which a right of
termination or acceleration or any encumbrance on any of its or any of its
subsidiaries' assets would be created by the Company's execution, delivery and
performance of this Agreement or the Option Agreement and the consummation by
the Company of the transactions contemplated hereby, other than any such
breaches, violations, rights or encumbrances which will not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Other than in
connection with or in compliance with the provisions of the Delaware Law, the
Exchange Act and the Hart-Scott-Rodino Act, no authorization, consent or
approval of, or filing with, any public body, court or authority is necessary
for the consummation by the Company of the transactions contemplated by this
Agreement or the Option Agreement other than (i) filings with such foreign
jurisdictions in which subsidiaries of the Company are organized which may
require filings to be made in connection with the transfer of control of such
subsidiaries, and (ii) such authorizations, consents, approvals or filings with
respect to which the failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or the ability of the
parties to consummate the transactions contemplated hereby. The Company agrees
to make any and all such filings on or prior to the Effective Time if the
Company is required to make such filings under applicable law.
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4.5 Commission Filings. The Company has heretofore delivered or made
available to the Purchaser copies of the Company's (a) Form 10-K Report and (b)
all proxy statements relating to the Company's meetings of stockholders (whether
annual or special) during 1997 and 1998, in each case as filed with the
Commission. The Company has heretofore made available to the Purchaser all other
reports, registration statements and other documents filed by the Company with
the Commission under the Exchange Act and the Securities Act. All such documents
described in the first two sentences of this section are collectively referred
to herein as the "Commission Filings." Except as set forth on the Disclosure
Schedule, the Company has not filed any Form 8-K Reports with the Commission
since January 1, 1998. The Company has timely filed all reports, registration
statements and other documents required to be filed with the Commission under
the rules and regulations of the Commission, and all Commission Filings complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be. As of their respective dates, the Commission
Filings (including in all cases any exhibits or schedules thereto or documents
incorporated therein by reference) did not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent corrected or
superseded by subsequent filings.
4.6 Financial Statements and Related Data. The audited consolidated
financial statements of the Company included in the Form 10-K Report have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto, and fairly presented the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in financial position for
the periods then ended.
4.7 Absence of Certain Changes or Events. Except as contemplated by this
Agreement, or reflected in any financial statement or note thereto referred to
in Section 4.6 or reflected in the Disclosure Schedule, or reflected in any
Commission Filing filed prior to date hereof, since December 31, 1997 until the
date hereof, there has not been (a) any Material Adverse Effect on the Company;
(b) any damage, destruction or loss, whether covered by insurance or not, having
a Material Adverse Effect on the Company; (c) any entry by the Company or any
subsidiary into any commitment or transaction material to the Company and its
subsidiaries taken as a whole, which is not in the ordinary course of business;
(d) any change by the Company in accounting principles or methods except insofar
as may be required by a change in generally accepted accounting principles; (e)
any declaration, payment or setting aside for payment of any dividends or
purchase or redemption of any securities of the Company or (f) any entering into
or modification of any employment or severance contract with any executive
officer of the Company or any of its subsidiaries or any increase in
compensation payable by the Company or any of its subsidiaries to any of their
executive officers or any material increase under any bonus, pension or benefit
plan.
4.8 Litigation. As of the date hereof, except as set forth on Schedule
4.8, no action, suit, claim, proceeding, or to the Company's knowledge as of the
date hereof, investigation,
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compliance review, or other legal or administrative proceeding is pending or to
the Company's knowledge as of the date hereof, is threatened at law, in equity
or otherwise, before any court, board, commission, agency or instrumentality of
any federal, state, or local government or of any agency or subdivision thereof,
or before any arbitrator or panel of arbitrators (a "Claim") which is against
(i) the Company, (ii) or any of its subsidiaries or (iii) against any of the
officers or directors of the Company or any of its subsidiaries with respect to
the Company or its subsidiaries or the business or property of the Company or
its subsidiaries.
4.9 Liabilities. Except as disclosed in the Form 10-K Report neither the
Company nor any of its subsidiaries has any obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, whether or not known
to the Company, whether due or to become due) of a nature that would be required
under GAAP to be disclosed on a balance sheet of the Company other than (i)
obligations and liabilities incurred since December 31, 1997 in the ordinary
course of business consistent with past practice, which in the aggregate have
not had nor are reasonably expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole, and (ii) obligations and
liabilities to be incurred from and after the date of this Agreement relating to
the transactions contemplated hereby.
4.10 Environmental Matters. The Company and its subsidiaries have obtained
all material permits, licenses and other authorizations which are required under
applicable federal, state, local and foreign laws relating to public health and
safety, worker health and safety, pollution or protection of the environment,
including those relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes, except where its failure to obtain
the same would not have a Material Adverse Effect on the Company. The Company
and its subsidiaries have complied and are in compliance with all terms and
conditions of any and all required permits, licenses, and authorizations, and
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
federal, state, local or foreign law or any regulation, code, plan, order,
decree or judgment relating to public health and safety, worker health and
safety, and pollution or protection of the environment, or any notice or demand
letter issued, entered, promulgated or approved thereunder by any Governmental
Entity, except where the failure to comply would not have a Material Adverse
Effect on the Company. To the knowledge of the Company as of the date hereof, no
facts, events or conditions relating to the Company's or any of its
subsidiaries' past or present operations, facilities or properties interfere in
any material respect with or prevent continued compliance by the Company in all
material respects with, or give rise to any material present or potential legal,
common law or statutory liability of the Company under, any applicable law or
regulation related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or related to the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste.
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4.11 Employee Benefit Plans.
(a) Section 4.11(a) of the Disclosure Schedule hereto sets forth a
list of all material "employee benefit plans," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all other material employee benefit or compensation
arrangements, including, without limitation, any such material
arrangements providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation,
bonus pay, incentive pay, stock options (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that
are maintained by the Company, any subsidiary of the Company or any
Company ERISA Affiliate (as defined in this Section 4.11) or with respect
to which the Company, any subsidiary of the Company or any Company ERISA
Affiliate has or may have any material liability (the "Company Employee
Benefit Plans").
(b) None of the Company Employee Benefit Plans is a "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA (a "Multiemployer Plan"),
and neither the Company nor any subsidiary of the Company or Company ERISA
Affiliate presently maintains or has maintained such a plan.
(c) Except as provided in Part 6 of Title I of ERISA, the Company
and the subsidiary of the Company do not maintain or contribute to any
plan or arrangement which provides or has any liability to provide life
insurance or medical or other employee welfare benefits to any employee or
former employee upon his retirement or termination of employment, and the
Company and the subsidiaries of the Company have never represented,
promised to or contracted with any employee or former employee that such
benefits would be provided.
(d) Except for the Options set forth in Section 4.3 of the
Disclosure Schedule and the rights of participants under the Company's
Employee Stock Purchase Plans, the execution of, and performance of the
transactions contemplated in, this Agreement will not, either alone or
upon the occurrence of subsequent events, result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any individual. The only severance agreements or severance
policies applicable to the Company or the subsidiary of the Company in the
event of a change of control of the Company are the agreements and
policies specifically referred to in Section 4.11(d) of the Disclosure
Schedule. No payment or benefit which will or may be made by the Company,
Parent or any of their subsidiaries or affiliates with respect to any
employee of the Company or any subsidiary of the Company will be
characterized as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended.
(e) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of the Code, and each trust maintained pursuant thereto,
has been determined
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to be exempt from federal income taxation under Section 501 of the Code by
the IRS, and, to the Company's knowledge, nothing has occurred with
respect to the operation or organization of any such Company Employee
Benefit Plan that would cause the loss of such qualification or exemption
or the imposition of any material liability, penalty or tax under ERISA or
the Code. No Company Employee Benefit Plan is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA, and neither the Company nor
any subsidiary of the Company or any Company ERISA Affiliate maintains or
has ever maintained such a plan.
(f) (i) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under
any of the Company Employee Benefit Plans to any funds or trusts
established thereunder or in connection therewith have been made by the
due date thereof, (ii) the Company and the subsidiary of the Company have
complied in all material respects with any notice, reporting and
documentation requirements of ERISA and the Code, (iii) as of the date
hereof there are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the Company's knowledge, threatened, in
connection with the Company Employee Benefit Plans, and (iv) the Company
Employee Benefit Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA and the Code
(including rules and regulations thereunder) and other applicable federal
and state laws and regulations.
(g) Section 4.11(g) of the Disclosure Schedule sets forth a complete
list of all amounts outstanding relating to bonuses payable to employees
and any obligation to pay bonuses to employees relating to the Company's
performance, the employee's performance or the transactions contemplated
hereby.
(h) All compensation attributable to outstanding options to acquire
Shares constitute "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.
(i) The Company has provided, or concurrently herewith shall
provide, all notices to holders of options required under any Stock Plan
or otherwise in connection with the Offer and the other transactions
contemplated hereby.
For purposes of this Agreement, "Company ERISA Affiliate" means any
business or entity which is a member of the same "controlled group of
corporations," under "common control" or a member of an "affiliated service
group" with the Company within the meanings of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company under Section 414(o) of
the Code, or is under "common control" with the Company, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under
any of the foregoing Sections.
4.12 Labor Matters. As the date hereof, there are no controversies pending
or, to the knowledge of the Company, threatened, between the Company or any of
its subsidiaries and any
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group of their respective employees; (ii) neither the Company nor, to the
knowledge of the Company, any of its subsidiaries, is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries nor does the Company know of any
activities or proceedings of any labor union to organize any such employees;
(iii) neither the Company nor any of its subsidiaries has materially breached or
otherwise materially failed to comply with any provision of any such agreement
or contract and there are no material grievances outstanding against any such
parties under any such agreement or contract; (iv) there are no unfair labor
practice complaints pending against the Company or any of its subsidiaries
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any of its subsidiaries; and (v)
the Company has no knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries. No consent of any union which is a party to any
collective bargaining agreement with the Company is required to consummate the
transactions contemplated by this Agreement.
4.13 Offer Documents. Neither the Schedule 14D-9 nor any of the
information supplied by the Company for inclusion in the Offer Documents shall,
at the respective times the Schedule 14D-9, the Offer Documents or any such
amendments or supplements are filed with the SEC or are first published, sent or
given to stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4.14 Trademarks, Patents and Copyrights.
(a) The Company and its subsidiaries own, or are licensed to use,
all trademarks, trade names, service marks, copyrights and patents,
together with any applications for the registrations of such trademarks,
trade names, services marks, copyrights and patents, and all processes,
formulae, methods, schematics, technology, know-how, software programs or
applications and tangible or intangible proprietary information or
materials that are necessary to conduct the business of the Company and
its subsidiaries as currently conducted, the absence of which rights would
reasonably be expected to have a Material Adverse Effect on the Company
(the foregoing collectively referred to as the "Company IP Rights").
(b) Schedule 4.14(b) of the Disclosure Schedule sets forth a
complete list of all patents, registered copyrights, registered
trademarks, trade names and service marks and any applications for all of
the foregoing, included in Company IP Rights, and specifies, where
applicable, the jurisdictions in which each such Company IP Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners.
(c) Schedule 4.14(c) of the Disclosure Schedule sets forth a list of
all material licenses, sublicenses and other agreements to which the
Company or any of its
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subsidiaries is a party and pursuant to which the Company or any other
person is licensed or otherwise has rights under any Company IP Right,
including agreements pursuant to which any party is granted any rights to
access source code or to use source code to create derivative works of any
products of the Company, but excluding object code licenses granted by the
Company to end-users in the ordinary course of business that permit use of
software products without a right to distribute or sublicense the same or
otherwise that are on customary end-user terms, and excluding standard
licenses granted to the Company by software vendors covering software
which is broadly distributed by such licensors. The Company and its
subsidiaries are not subject to any agreement which restricts in any
material respect the use, transfer, or licensing by the Company and its
subsidiaries of the Company IP Rights and the products of the Company.
(d) The execution and delivery of this Agreement by the Company, and
the consummation of the transactions contemplated hereby, will neither
cause the Company to be in violation of or default under any such license,
sublicense or other agreement set forth or required to be set forth on
Schedule 4.14(c), nor entitle any other party to any such license,
sublicense or agreement to terminate or modify such license, sublicense or
agreement, except in each case or in the aggregate where such violation,
default, termination or modification would not have a Material Adverse
Effect on the Company. Except as set forth in Schedule 4.14 of the
Disclosure Schedule, the Company (i) is the sole and exclusive owner of,
with all right, title and interest in and to (free and clear of any liens
or encumbrances), Company IP Rights, or (ii) is a licensee under or
otherwise possesses legally enforceable rights under the Company IP Rights
under valid and binding agreements listed in Schedule 4.14(c) of the
Disclosure Schedule or excluded therefrom as permitted by this Section
4.14.
(e) No claims against the Company, or to the Company's knowledge,
its licensors or licensees with respect to Company IP Rights, have been
asserted or are, to the Company's knowledge, threatened by any person, nor
to the Company's knowledge, are there any valid grounds for any claims,
(i) to the effect that the manufacture, sale, use, offer for sale,
importation, reproduction, distribution or preparation of derivative works
of any of the products of the Company infringes on any copyright, patent,
trademark, service mark, trade secret or other proprietary rights, (ii)
against the manufacture, sale, use, offer for sale, importation,
reproduction, distribution or preparation of derivative works by the
Company of any computer software programs and applications and tangible or
intangible proprietary information or material used in the Company's
business as currently conducted or as currently proposed to be conducted,
or (iii) challenging the ownership by the Company, or the validity or
effectiveness of any, of the Company IP Rights, except in the case of
clauses (i), (ii) and (iii) with respect to claims brought after the date
hereof as would not have a Material Adverse Effect on the Company. To the
Company's knowledge, there is no material unauthorized use, infringement
or misappropriation under any Company IP Rights by any third party,
including any employee or former employee of the Company. To the knowledge
of the Company, no Company IP Right or product of the Company is subject
to any outstanding decree, order, judgment, or stipulation restricting in
any manner the licensing thereof by or to the Company.
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(f) It is the Company's policy to have each employee, consultant or
contractor of the Company execute a proprietary information and
confidentiality agreement substantially in the form of the Company's
standard forms of such agreement, and substantially all of the Company's
employees, consultants and contractors have executed such an agreement.
4.15 Taxes. Each of the Company and its subsidiaries has filed all federal
and state tax returns and reports, and all material local and foreign tax
returns and reports, that it was required to file. All such tax returns and
reports were correct and complete in all material respects. All taxes owed by
any of the Company and its subsidiaries have been paid except for taxes in an
immaterial amount or as to which the Company is contesting in good faith (with
the basis for such contested Taxes set forth on Schedule 4.15). Each of the
Company and its subsidiaries has withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid to any employee,
independent contractor, creditor, stockholder, or other third party. Neither the
Internal Revenue Service (the "IRS") nor any other taxing authority or agency is
now asserting or, to the best of the Company's knowledge, threatening to assert
against the Company or any of its subsidiaries any deficiency or claim for
material additional taxes or interest thereon or penalties in connection
therewith. Neither the Company nor any of its subsidiaries has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any federal, state, local or foreign income tax.
The accruals and reserves for taxes reflected in the balance sheet of the
Company as of December 31, 1997 are adequate to cover all taxes accruable
through such date (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting principles. Neither the Company
nor any of its subsidiaries has made an election under Section 341(f) of the
Code. The Company is not, and has not been during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c) of the Code.
4.16 Brokers, Advisors. No broker, finder or investment banker
(other than DRW)
(a) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company.
The Company has heretofore furnished to the Purchaser and the Merger Sub a
complete and correct copy of all agreements between the Company and DRW
pursuant to which such firm would be entitled to any payment relating to
the transactions contemplated hereunder.
(b) As long as the transactions contemplated hereunder are
consummated without any related litigation, and excluding any fees and
expenses related to antitrust matters other than fees and expenses
associated with the Company's initial filing under the Hart-Scott-Rodino
Act, the aggregate fees and expenses payable by the Company and its
subsidiaries in respect of this Agreement and the transactions
contemplated hereby to any of its advisors (including investment bankers,
counsel, accountants and other consultants) will not exceed $3,000,000.00.
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4.17 Product Liabilities. Except as set forth in the Disclosure Schedule,
as of the date hereof there are no product warranty, product liability or
similar claims pending, or to the knowledge of the Company, as of the date
hereof, threatened, against the Company or any of its subsidiaries.
4.18 Related Party Transactions. Except as set forth in the Disclosure
Schedule, or the SEC Reports for the year ended December 31, 1997, no current or
former director, officer or, to the knowledge of the Company as of the date
hereof, key employee of the Company or any of its subsidiaries nor any
"Associate" (as defined in Rule 405 promulgated under the Securities Act) of any
such person, is presently, directly or indirectly through his affiliation with
any other person or entity, a party to any transaction with the Company or any
of its subsidiaries providing for the furnishing of services (except as an
employee) by or to, or rental of real or personal property from or to, or
otherwise requiring cash payments by or to any such person. In addition, except
as set forth in the Disclosure Schedule or SEC Reports, during such periods
there was no relationship or transaction involving the Company or any of its
subsidiaries which is described in Item 404 of Regulation S-K promulgated under
the Securities Act.
4.19 Rights Agreement. The Board of the Directors of the Company has
approved an amendment to the Rights Agreement, and within 3 business days
hereof, the Company will amend the Rights Agreement, so that the Rights
Agreement will not be applicable to Parent, Purchaser or Merger Sub solely by
virtue of this Agreement, the Option Agreement, the Offer, the announcement of
the Offer, the purchase of Shares or Option Shares by Parent, the Purchaser or
the Merger Sub pursuant to the Offer or the Merger, or any other action
contemplated hereby.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, prior to the Effective Time, unless the Purchaser
shall otherwise agree in writing or as otherwise expressly contemplated or
permitted by this Agreement or as set forth in Schedule 6.1:
(a) The business of the Company and its subsidiaries shall be
conducted only in, and the Company and its subsidiaries shall maintain
their facilities in, the ordinary course of business and consistent with
past practice.
(b) The Company shall not directly or indirectly, or permit any of
its subsidiaries, do any of the following: (i) issue, sell, pledge,
dispose of or encumber (or permit any of its subsidiaries to issue, sell,
pledge, dispose of or encumber) any shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of, any
capital stock of the Company or any of its subsidiaries (other than shares
issuable upon exercise of the outstanding (as of the date hereof) options
or rights under the Employee Stock Purchase Plans to acquire Shares in
accordance with their terms in effect on the date hereof); (ii) amend or
propose to amend the Certificate or Articles of
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Incorporation or By-Laws of it or any of its subsidiaries; (iii) split,
combine or reclassify any outstanding Shares, or declare, set aside or pay
any dividend or other distribution payable in cash, stock, property or
otherwise with respect to the Shares other than pursuant to the Rights
Plan; (iv) other than pursuant to the Rights Plan redeem, purchase or
acquire or offer to acquire (or permit any of its subsidiaries to redeem,
purchase or acquire or offer to acquire) any Shares or other securities of
the Company or any of its subsidiaries other than as contemplated by
Section 2.5 hereof and other than for the repurchase by the Company,
pursuant to existing agreements, of any outstanding Shares upon
termination of an employment, director or consulting relationship with the
Company; or (v) enter into or materially modify any agreement, commitment
or arrangement with respect to any of the foregoing.
(c) Neither the Company nor any of its subsidiaries shall (i) sell,
pledge, lease, dispose of or encumber any material assets other than in
the ordinary course of business consistent with past practice; (ii)
acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership or other business organization or
enterprise or material assets thereof; (iii) incur any indebtedness for
borrowed money or issue any debt securities for borrowings except in the
ordinary course of business and consistent with past practice; (iv)
guarantee, endorse or otherwise became liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person (other than a subsidiary of the Company or the Company) except in
the ordinary course of business consistent with past practice and in
amounts immaterial to the Company; or (v) enter into or materially modify
any contract, agreement, commitment or arrangement with respect to any of
the foregoing.
(d) Neither the Company nor any of its subsidiaries shall (i) enter
into or modify any employment, severance or similar agreements or
arrangements with, or grant any bonuses, salary increases, severance or
termination pay to, any officers or directors; or (ii) in the case of
employees who are not officers or directors, take any action other than in
the ordinary course of business consistent with past practice (none of
which actions shall be unreasonable or unusual) with respect to the grant
of any bonuses, salary increases, severance or termination pay or with
respect to any increase of benefits in effect on the date of this
Agreement.
(e) Except as may be required by applicable law, neither the Company
nor any of its subsidiaries shall adopt or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust
fund or arrangement for the benefit or welfare of any employee.
(f) Except as is necessary after consultation with counsel to comply
with the fiduciary duties of the Board of Directors of the Company, the
Company will not (i) call any meeting (other than any meeting contemplated
by Section 6.1) of its stockholders or (ii) waive or modify any provision
of, or terminate any, confidentiality or standstill agreement entered into
by the Company with any person.
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<PAGE> 25
(g) The Company shall use its reasonable efforts to cause its
current insurance (or reinsurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under
the cancelled, terminated or lapsed policies for substantially similar
premiums are in full force and effect.
(h) The Company (i) shall use its reasonable efforts, and cause each
of its subsidiaries to use reasonable efforts, to preserve intact their
respective business organizations and goodwill, keep available the
services of its officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it or its subsidiaries; (ii) as
requested by the Purchaser and the Merger Sub shall confer on a regular
and frequent basis with representatives of the Purchaser and the Merger
Sub to report operational matters and the general status of ongoing
operations; (iii) shall not take any action, and shall not permit any of
its subsidiaries to take any action, which would cause, or which
reasonably may be expected to cause, a failure to satisfy the condition
set forth in paragraph (e)(x) of Annex I; and (iv) shall notify the
Purchaser and the Merger Sub of any emergency or other change in the
normal course of its or any of its subsidiaries' business or in the
operation of its or any of its subsidiaries' properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would, individually
or in the aggregate, have a Material Adverse Effect on the Company or
would reasonably be expected to impair any party's ability to consummate
the transactions contemplated by this Agreement; and
(i) Neither the Company nor any of its subsidiaries shall adopt a
plan of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or reorganization;
(j) Neither the Company nor any of its subsidiaries shall make any
material tax election or settle or compromise any material federal, state,
local, or foreign tax liability, except in the ordinary course of business
and consistent with past practice;
(k) Except as contemplated by Sections 2.6, 2.7 and 6.3, the Company
shall not modify or accelerate the exercisability of any stock options,
rights or warrants presently outstanding, and shall not amend, change or
waive (or exempt any person from the effect of) the Rights Agreement,
except in the exercise of its fiduciary duties by the Board of Directors
after consultation with counsel.
(i) The Company shall postpone the holding of its Annual Meeting of
Stockholders (the "Company Annual Meeting") indefinitely pending
consummation of the Merger unless the Company is otherwise required to
hold the Company Annual Meeting by Delaware Law.
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ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Action of Stockholders. The Company shall take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and
By-Laws to convene a meeting of its stockholders promptly following consummation
of the Offer to consider and vote upon the Merger, if a stockholder vote is
required. If a stockholders' meeting is convened, the Board of Directors shall
recommend that the stockholders of the Company vote to approve the Merger. Such
recommendation shall not be withdrawn or adversely modified except by resolution
of the Continuing Directors adopted in the exercise of applicable fiduciary
duties after consultation with counsel. In the event that proxies are to be
solicited from the Company's stockholders, the Company shall, if and to the
extent requested by the Purchaser, use its best efforts to solicit from
stockholders of the Company proxies in favor of such approval and shall take all
other reasonable action necessary or, in the opinion of the Purchaser, helpful
to secure a vote or consent of stockholders in favor of the Merger. At any such
meeting, the Parent shall vote or cause to be voted all of the Shares then owned
by the Parent, Purchaser or any subsidiary of the Parent in favor of the Merger
and the Company shall vote all Shares in favor of the Merger for which proxies
in the form distributed by the Company shall have been given and with respect to
which no contrary direction shall have been made. Following the purchase of
Shares, if any, pursuant to the Offer, Parent shall ensure that all Shares
purchased pursuant to the Offer continue to be held by Parent, Purchaser, and/or
a direct or indirect wholly-owned subsidiary of Parent until such time as the
Merger is consummated.
6.2 Proxy Statement. If a stockholder vote is required, the Company and
the Purchaser shall cooperate with each other and use all reasonable efforts to
prepare, and the Company and the Purchaser shall file with the Commission as
soon as reasonably practicable following consummation of the Offer and use their
best efforts to have cleared by the Commission, a proxy statement or information
statement, as appropriate, with respect to the approval of the Merger by the
Company's stockholders. The information provided and to be provided by the
Purchaser, the Merger Sub and the Company, respectively, for use in the proxy
statement or information statement shall be true and correct in all material
respects and shall not omit to state any material fact required to be stated
therein or necessary in order to make such information not misleading.
6.3 Employee Agreements and Severance Agreements. Parent shall cause the
Company (or any successor to the Company after the purchase of shares pursuant
to the Offer) to honor without modification all employment agreements and
severance agreements and policies in effect prior to the date hereof between the
Company and any employee of the Company, all of which, the Company hereby
represents and warrants, have been disclosed in writing to Parent prior to the
date hereof.
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6.4 Expenses. If (a) this Agreement is terminated by the Company pursuant
to Section 8.1(e)(iii) or Section 6.6(b), or (b) this Agreement is terminated by
the Purchaser pursuant to Section 8.1(c) or (c) this Agreement is terminated for
any reason other than a material breach of this Agreement by the Parent, the
Purchaser or the Merger Sub, and in case of this clause (c) reasonably
concurrently therewith or within four months thereafter (x) a definitive
agreement is entered into between the Company and any person other than the
Purchaser or any affiliate of the Purchaser for the acquisition or disposition
of a material amount of assets or securities of the Company, or for a merger,
consolidation or other reorganization of the Company at a price equivalent to a
price per Share in excess of $10.00 and the transactions contemplated thereby
are subsequently consummated at any time or (y) any person or "group" (as that
term is used in Section 13(d)(3) of the Exchange Act) other than the Purchaser
or any affiliate of the Purchaser shall have acquired beneficial ownership of
50% or more of the outstanding Shares at a price per Share in excess of $10.00,
or offered by way of a public tender offer to acquire beneficial ownership of
50% or more of the outstanding Shares at a price per Share in excess of $10.00
and the transactions contemplated thereby are consummated at any time, the
Company shall pay to Parent upon demand (by wire transfer of immediately
available federal funds to an account designated by Parent for such purpose) the
amount of $7,250,000 (the "Termination Fee") to compensate Parent, the Purchaser
and the Merger Sub for taking actions to consummate this Agreement, to reimburse
them for the time and expense relating thereto and for other direct and indirect
costs (including lost opportunity costs) in connection with the transactions
contemplated herein. The Company acknowledges that the provisions set forth in
this section are an integral part of this Agreement that have been negotiated in
order to induce Parent, the Purchaser and the Merger Sub to enter into this
Agreement; accordingly, if the Company fails to promptly pay the amounts
referred to above, the Company shall in addition pay Parent all reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees and
expenses) incurred in collecting such fees together with interest on the amount
of such fees from the date such payment was required to be made until such time
as payment is received by Parent at the rate of the lesser of (i) 10% per annum
or (ii) the maximum rate permitted by law. Payment of such amount by the Company
along with any interest, costs and expenses as may be required under this
Section 6.4 shall constitute a full and complete discharge of all obligations or
liabilities of the Company under this Paragraph.
In addition to any damages caused by conduct which constitutes a breach by
any of Parent, the Purchaser, the Merger Sub or the Company of any of their
obligations under this Agreement, the breaching party agrees, jointly and
severally, to pay to the nonbreaching party all reasonable out-of-pocket costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
nonbreaching party in connection with the enforcement by the nonbreaching party
of its rights hereunder, together with interest on the amount of such damages
from the date such damages are incurred until such time as payment is received
by the nonbreaching party at the rate of the lesser of (i) 10% per annum or (ii)
the maximum rate permitted by law.
6.5 Additional Agreements. Subject to the terms and conditions provided
herein, each of the parties agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, including using best
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efforts to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings, including but not limited to filings
under the Hart-Scott-Rodino Act and submissions of information requested by
governmental authorities. The Company shall, and shall cause its officers,
directors, affiliates and agents to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any acquisition of or sale of any equity
interest in or substantial assets of the Company or any of its subsidiaries.
6.6 No Solicitation.
(a) Except as provided in Section 6.6(b) below, the Company agrees
that from the date hereof until the Effective Time or the termination of
this Agreement, the Company will not, directly or indirectly, through any
officer, director, affiliate or agent of the Company, or otherwise,
solicit, initiate, entertain, or encourage any proposals or offers from
any person other than Parent or its affiliates (a "third party") relating
to any possible acquisition of the Company or any of its subsidiaries
(whether by way of merger, purchase of capital stock, purchase of assets
or otherwise) (an "Alternative Acquisition"), or engage in any
recapitalization or sale of any equity interest in or sale or assignment
of substantial assets of the Company or any of its subsidiaries (other
than pursuant to the exercise of options and Rights outstanding on the
date hereof or granted following the date hereof with Parent's written
permission) to a third party (an "Equity Transaction"); nor will the
Company participate in any negotiations regarding, or furnish to any third
party any information with respect to, or otherwise cooperate with,
facilitate or encourage any effort or attempt by any third party person to
do or seek, any Alternative Acquisition or Equity Transaction (it being
understood that the Company may make available copies of this Section 6.6
to third parties who are not solicited by Company or any officer,
director, affiliate or agent of the Company).
(b) Notwithstanding the foregoing, this Section 6.6 will not be
violated and the Company shall be permitted to negotiate and provide
information to any third party that provides a Bona Fide Offer, provided
that the Company shall have first notified the Parent in writing of its
receipt of such proposal and the material terms thereof. For purposes of
this Agreement, a "Bona Fide Offer" means any bona fide proposal made by a
third party with respect to an Alternative Acquisition on terms which the
Board of Directors of the Company determines in its good faith judgment
(after consultation with its outside financial advisors) to be more
favorable to the Company's stockholders than the Offer and the Merger and
for which financing, to the extent required, is then committed or which,
in the good faith judgment of the Board of Directors of the Company (after
consultation with its outside financial advisors) is highly probable of
being obtained by such third party. In addition, the Company may terminate
this Agreement and accept such Bona Fide Offer upon the payment to Parent
of the fee provided in Section 6.4.
(c) Notwithstanding the provisions of paragraph 13 of the
Confidentiality Agreement and clause (b) of Section 8.4 of this Agreement
(the "Standstill Provisions") if
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any third party commences an Alternative Acquisition involving a change of
control in the Company or its business then, provided this Agreement has
been terminated, Parent and its affiliates shall be entitled to propose or
present any offer or offers or take other action it deems appropriate in
response thereto and the Standstill Provisions shall not be applicable
thereto.
6.7 Notification of Certain Matters. Each party shall give prompt notice
to the others of (a) the occurrence or failure to occur of any event, which
occurrence or failure would be likely to cause any representation or warranty on
its part contained in this Agreement or the Option Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof through the
purchase of Shares pursuant to the Offer, and (b) any material failure of such
party, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
6.8 Access to Information. From the date hereof to the Effective Time, the
Company shall, and shall cause its subsidiaries, officers, directors, employees
and agents (including lenders, attorneys and accountants) to afford the Parent
and the Purchaser complete access at all reasonable times to its officers,
employees, agents, properties, books and records, and shall furnish Parent and
the Purchaser all financial, operating, personnel, compensation, tax and other
data and information as the Purchaser, through its officers, employees or
agents, may reasonably request. All of such information shall be treated as
"Evaluation Material" pursuant to the terms of the Confidentiality Agreement.
6.9 Stockholder Claims. The Company shall not settle or compromise any
claim brought by any present, former or purported holder of any securities of
the Company in connection with the Merger prior to the Effective Time without
the prior written consent of the Purchaser.
6.10 Indemnification.
(a) The By-Laws of the Company as the Surviving Corporation shall
contain the provisions with respect to indemnification set forth in
Article VI of the By-Laws of the Company. Such provisions in the By-Laws
of the Company and the Surviving Corporation shall not be amended,
repealed or otherwise modified for a period of three years from the date
Parent, the Purchaser or the Merger Sub acquires a majority of the Shares
in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by law. In addition, Parent shall use its reasonable efforts to
cause the Company, as the Surviving Corporation, to maintain in full force
and effect for a period of at least three years following the Effective
Time, directors and officers liability insurance with limits of at least
those currently in place containing terms and provisions comparable to the
terms and provisions of the current policy maintained by the Company for
the benefit of existing and former officers, directors, employees and
agents of the Company but the Surviving Corporation shall only be liable
for annual premiums of no more than 30% greater than that presently
incurred by the
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Company on the date hereof for such coverage. From and after the
consummation of the Offer, Parent will, and will cause the Company to,
fulfill and honor in all respects the obligations of the Company pursuant
to each indemnification agreement in effect at such time between the
Company and each person who is or was a director, officer, employee or
agent of the Company at or prior to such time.
(b) In the event Parent or the Company as the Surviving Corporation
or any of its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in
each such case, proper provisions shall be made so that the successors and
assigns of Parent or the Surviving Corporation, shall assume the
obligations set forth in this Section 6.10. Parent further agrees to
assume the obligations set forth in this Section 6.10 and the obligations
of the Surviving Corporation under the indemnification obligations of the
Company referenced in paragraph (a) of this Section 6.10 during any period
of time in which the Surviving Corporation fails to or is unable to
perform its obligations hereunder.
(c) This Section 6.10 shall survive the Effective Time, is intended
to benefit the Company, the Surviving Corporation and each of the persons
referred to in paragraph (a) of this Section and shall be binding on all
successors and assigns of Parent and the Company.
6.11 Consents and Amendments. The Company shall use its commercially
reasonable efforts to obtain, without the payment of any fee or compensation,
consents to the Offer, the Merger, and the transactions contemplated by this
Agreement from the parties to the agreements listed on Section 6.11 of the
Disclosure Schedule. The Company shall use its best efforts to enter into an
agreement with Shell Oil Products Company, with Shell acting for itself and
Shell Oil Company (collectively "Shell"), whereby the Company and Shell amend
the Software License Agreement (the "Shell License Agreement") dated September
15, 1997 by and between the Company and Shell (the "Shell Amendment") on terms
reasonably satisfactory to Parent.
6.12 Option Agreement. The Company hereby covenants that it will not take
any action whatsoever challenging or seeking to invalidate the effectiveness or
validity of the Option Agreement.
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ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) The Merger shall have been approved and adopted by the vote of
the stockholders of the Company to the extent required by the Delaware
Law;
(b) All waiting, review and investigation periods (and any extension
thereof) applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;
(c) There shall have been no law, statute, rule or order, domestic
or foreign, enacted or promulgated which would make consummation of the
Merger illegal;
(d) No injunction or other order entered by a United States (state
or federal) court of competent jurisdiction shall have been issued and
remain in effect which would prohibit consummation of the Merger;
(e) This Agreement shall not have been terminated pursuant to
Section 8.1 hereof; and
(f) The Purchaser shall have been required hereunder to purchase
Shares pursuant to the Offer.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of the
Company (provided, however, that if Shares are purchased pursuant to the Offer,
neither Parent nor the Purchaser may in any event terminate this Agreement):
(a) By mutual consent of the Boards of Directors of Parent and the
Company;
(b) By either the Purchaser or the Company if the Offer shall not
have been consummated on or before October 31, 1998, provided, however,
that a party shall not be entitled to terminate this Agreement pursuant to
this Section 8.1(b) if it is in material breach of its obligations under
this Agreement;
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(c) By the Purchaser if (i) the Company or any subsidiary of the
Company shall have authorized, recommended or proposed, or shall have
announced an intention to authorize, recommend or propose, or shall have
entered into an agreement or agreement in principle with respect to, any
Alternative Acquisition or Equity Transaction or the Company's board of
directors shall have withdrawn or adversely modified (including by
amendment to the Schedule 14D-9) its favorable recommendations with
respect to the Offer and the Merger, or any corporation, entity, "group"
or "person" (as defined in the Exchange Act) other than Parent, the
Purchaser or the Merger Sub, shall have acquired beneficial ownership of
more than 50% of the outstanding Shares, or (ii) the Rights Amendment
shall not have been adopted by April 20, 1998 and remained in full force
and effect thereafter;
(d) By the Purchaser prior to the purchase of Shares pursuant to the
Offer in the event of any failure of any of the conditions to the Offer
set forth in Annex I; provided that if any and all such conditions as to
which there is a failure are and continue to be reasonably probable of
being satisfied by the date which is 30 business days after commencement
of the Offer, the Purchaser shall not terminate this Agreement as a result
of such failures until the date which is 30 business days after
commencement of the Offer.
(e) By the Company if (i) the Offer shall not have been commenced
substantially in accordance with Section 1.1; or (ii) the Offer shall have
expired or been terminated without any Shares having been purchased
thereunder; or (iii) if a tender offer for Shares is commenced by a person
or entity, or the Company receives an offer with respect to a merger, sale
of assets or other business combination with a person, any of which the
Board of Directors determines, in the exercise of its fiduciary duties and
subject to compliance with Section 6.6(b), makes necessary or advisable
the termination of this Agreement; provided that the provisions of Section
6.4 shall survive termination of the Agreement pursuant to this clause
(iii); or (iv) there shall have occurred a material breach or failure to
perform in any material respect by Parent, the Purchaser or Merger Sub of
any representation, warranty, covenant or other agreement contained in
this Agreement which cannot be or has not been cured within thirty days
after the giving of written notice to such breaching party; or
(f) By the Purchaser or if any Governmental Entity shall have issued
an order, decree or ruling or taken other action permanently enjoining,
restraining or otherwise prohibiting acceptance or payment for, Shares
pursuant to the Offer or the Merger, which such order, decree, ruling or
other action shall have become final and nonappealable provided that the
provisions of Section 6.4 shall survive termination of the Agreement
pursuant to this clause (f);
8.2 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto; provided, however, that after approval of the Merger
by the stockholders of the Company
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(if such approval is required), no amendment may be made which changes the
amount into which each Share will be converted or effects any change which would
materially and adversely affect the stockholders of the Company without the
further approval of the stockholders of the Company.
8.3 Waiver. Subject to applicable law and the provisions of this
Agreement, at any time prior to the Effective Time, any party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
any other party hereto, or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit. For the purposes of this Section 8, Parent, the Purchaser and the
Merger Sub shall be considered to be a single party.
8.4 Effect of Termination. In the event of termination of this Agreement
as provided in Section 8.1, (a) this Agreement shall become void and there shall
be no liability or further obligation on the part of the Parent, the Purchaser,
the Merger Sub or the Company or their respective stockholders, officers or
directors, except as set forth in Section 6.4, in the last sentence of Section
1.2(d) hereof and in the confidentiality obligations of Section 6.8 hereof and
(b) the Purchaser and the Merger Sub shall terminate the Offer, if still
pending, without purchasing any Shares thereunder and shall not, subject to the
proviso set forth in Section 13(c) of the Confidentiality Agreement, for a
period of two years following termination, commence a tender or exchange offer
for any capital stock of the Company without prior written consent of the
Company.
ARTICLE 9
GENERAL PROVISIONS
9.l Public Statements. Except as required by applicable law, including the
rules and regulations of NASDAQ, neither Parent, the Purchaser or the Merger
Sub, on the one hand, nor the Company, on the other hand, shall make any public
announcement or statement with respect to the Offer, the Merger, this Agreement
or the transactions contemplated hereby, without the approval of the Company or
the Purchaser, respectively. The parties hereto agree to consult with each
other, to the extent practicable, prior to issuing each public announcement or
statement with respect to the Offer, the Merger, this Agreement or the
transactions contemplated hereby.
9.2 Notices. All notices and other communications hereunder shall be in
writing and sent by hand delivery, facsimile transmission (with confirmation of
receipt), or nationally recognized overnight courier service (with proof of
delivery), to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice):
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(a) if to Parent, the Purchaser or the Merger Sub:
Siebe plc
Saxon House
2-4 Victoria Street
Windsor, Berkshire SL4 1EN
England
Attention: Allen Yurko
Telephone: 011-44-1753-839-266
Facsimile: 011-44-1753-831-176
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, CA 90071
Attention: David K. Robbins, Esq.
Telephone: (213) 473-2000
Facsimile: (213) 473-2222
(b) if to the Company:
Simulation Sciences Inc.
601 Valencia Avenue, Suite 100
Brea, California 92823
Attention: Charles R. Harris
Telephone: 714-579-0412
Facsimile: 714-579-0175
with copies to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Marty Korman, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
9.3 Interpretation. When a reference is made in this Agreement to
subsidiaries of the Purchaser or the Company, the word "subsidiaries" means any
"majority-owned subsidiary" (as defined in Rule 12b-2 under the Exchange Act) of
the Purchaser or the Company, as the case may be; provided, however, that the
Company shall in no event and at no time be considered a subsidiary of the
Purchaser for purposes of this Agreement. As used herein, the term "person"
means an individual, a partnership, a corporation, an association, a joint stock
company, a trust, a
34
<PAGE> 35
joint venture, an unincorporated organization or other entity. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. References to
Sections and Articles refer to sections and articles of this Agreement unless
otherwise stated.
9.4 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
enforceable, the remainder of the terms, provisions, covenants, and restrictions
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated and the parties shall negotiate in good faith
to modify the Agreement to preserve each party's anticipated benefits under the
Agreement.
9.5 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein including the Confidentiality Agreement and the
Option Agreement), except as expressly provided in Section 6.6(c) hereof,: (a)
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof; (b) except as set forth herein, is not intended to confer
upon any other person any rights or remedies hereunder; (c) shall not be
assigned by operation of law or otherwise, except that the Purchaser and the
Merger Sub may assign all or any portion of their rights under this Agreement to
any direct or indirect wholly-owned subsidiary of Parent, and except that this
Agreement may be assigned by operation of law to any corporation with or into
which the Purchaser may be merged; but no such assignment shall relieve Parent,
the Purchaser and the Merger Sub of their obligations hereunder, and (d) shall
be governed in all respects, including validity, interpretation and effect, by
the internal laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
9.6 Survival of Representations and Warranties. The representations and
warranties of the parties set forth herein shall be deemed to be continuing as
if made as of the date of any determination hereunder; provided, however, that
such representations and warranties shall terminate as of the time Parent, the
Purchaser or the Merger Sub acquires Shares pursuant to the Offer, or upon the
termination of this Agreement pursuant to Section 8.1.
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<PAGE> 36
IN WITNESS WHEREOF, Parent, the Purchaser, the Merger Sub and the Company
have caused this Agreement and Plan of Merger to be executed as of the date
first written above by their respective officers thereunder duly authorized.
SIEBE PLC
By: /s/ GEORGE W. SARNEY
--------------------------------
Name: George W. Sarney
Its: Director
S ACQUISITION CORP.
By: /s/ JAMES C. BAYS
--------------------------------
Name: James C. Bays
Its: President
S SUB CORP.
By: /s/ JAMES C. BAYS
--------------------------------
Name: James C. Bays
Its: President
SIMULATION SCIENCES INC.
By: /s/ ROBERT E. GRICE, JR.
--------------------------------
Name: Robert E. Grice, Jr.
Its: Executive Vice President
Chief Financial Officer
<PAGE> 37
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Agreement and Plan of Merger
(the "Agreement") or the Offer but subject to Section 1.1(c) of the Agreement,
the Purchaser shall not be required to accept for payment, purchase or pay for
any Shares tendered, or may postpone the acceptance, purchase or payment for
Shares, or may amend (to the extent permitted by the Agreement) or terminate (to
the extent permitted by the Agreement) the Offer (1) if the Minimum Condition is
not satisfied as of the expiration of the Offer; (2) any applicable waiting
period under the Hart-Scott-Rodino Act in respect of the Offer shall not have
expired or been terminated prior to the expiration of the Offer; or (3) if, upon
the scheduled expiration date of the Offer and before acceptance of such Shares
for payment (or, in respect of paragraph (g), the latest date permitted in
accordance with Rule 14d-1(c) of the Securities Exchange Act of 1934, as
amended), any of the following conditions exists or is continuing (each of
paragraphs (a) through (g) providing a separate and independent condition to the
Purchaser's obligations pursuant to the Offer):
(a) there shall be any statute, rule, injunction or other order
promulgated, enacted, entered or enforced by any court or governmental
agency or other regulatory or administrative agency or commission,
domestic or foreign of competent jurisdiction (other than the routine
application to the Offer, the Merger or other subsequent business
combination of waiting, review and investigation periods under the
Hart-Scott-Rodino Act and similar foreign antitrust laws and published
rules, and routine application of federal securities laws and published
rules), (i) making the purchase of some or all of the Shares pursuant to
the Offer or the Merger illegal, or resulting in a material delay in the
ability of the Purchaser or the Merger Sub to purchase some or all of the
Shares, (ii) invalidating or rendering unenforceable any material
provision of the Agreement, (iii) imposing material limitations on the
ability of the Purchaser or the Merger Sub effectively to acquire or hold
or to exercise full rights of ownership of the Shares acquired by it,
including but not limited to, the right to vote the Shares purchased by it
on all matters properly presented to the stockholders of the Company, (iv)
imposing material limitations on the ability of any of Parent, the
Purchaser, or the Company to continue to own or operate effectively all or
any material portion of its respective business as heretofore conducted or
to continue to own or operate effectively all or any material portion of
its respective assets as heretofore owned or operated, (v) imposing
material limitations on the ability of the Purchaser to continue
effectively all or any material portion of the Company's business as
heretofore conducted or to own or operate effectively all or any material
portion of the Company's assets as heretofore operated, or (vi) to the
effect that the Offer or the Merger is violative of any applicable law
which would reasonably be expected to result in any of the consequences
described in clauses (i) through (v) above;
(b) there shall be any law, statute, rule or regulation, domestic or
foreign, enacted or promulgated that, directly or indirectly, results or
would reasonably be expected to result in any of the consequences referred
to in paragraph (a) above, or any
<PAGE> 38
action, suit or proceeding shall have been commenced by a governmental or
regulatory authority or body seeking to restrain, enjoin or otherwise
prohibit the Offer, the Merger, or the completion of the transactions
contemplated by the Agreement;
(c) there shall be (i) any general suspension of, or limitation on
prices for, trading in securities on any national securities exchange or
in the over the counter market in the United States or on the London Stock
Exchange, (ii) the declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States or the United
Kingdom, (iii) any limitation by any governmental authority which would
reasonably be expected to materially adversely affect, the extension of
credit by banks or other lending institutions in the United States or the
United Kingdom, (v) from the date of this Agreement through the close of
business on the business day immediately prior to the date of termination
or scheduled expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) except as set forth in the SEC Reports or the Disclosure
Schedule, any change shall since the date of the Agreement have occurred
or be threatened which individually or in the aggregate has had or is
continuing to have or would reasonably be expected to have a Material
Adverse Effect on the Company (as defined in the Agreement) and its
subsidiaries, taken as a whole;
(e) (x) any of the representations and warranties of the Company in
the Agreement shall not be true and correct (i) in all material respects
on the date of the Agreement or (ii) in all respects as if made on the
date of any scheduled expiration of the Offer, except in the case of
clause (ii), in the case of any one or the aggregate of all inaccuracies,
as would not have a Material Adverse Effect on the Company, and except for
those representations and warranties that address matters only as of a
particular date (which representations and warranties shall have been true
and correct except as would not have a Material Adverse Effect on the
Company as of such particular date), it being understood that, for
purposes of determining whether inaccurate representations and warranties
would have a Material Adverse Effect on the Company, "Material Adverse
Effect" and "materiality" qualifications and limitations in the
representations and warranties shall not be given effect; or (y) the
Company shall have breached in any material respect or shall not have
performed in all material respects each covenant and complied with each
agreement to be performed and complied with by it under the Agreement; or
(f) the Agreement shall have been terminated pursuant to its terms.
which, in the good faith judgment of the Purchaser, in any such case, and
regardless of the circumstances giving rise to any such condition (except in the
case any such condition is not satisfied as the direct result of a breach by
Parent or Purchaser of obligations under the Agreement), make it inadvisable to
proceed with acceptance for payment or purchase of or payment for the Shares.
<PAGE> 39
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser and Parent regardless of the
circumstances (except in the case any such condition is not satisfied as the
direct result of a breach by Parent or Purchaser of obligations under the
Agreement) giving rise to such conditions, or may be waived (except for the
Minimum Condition) by the Purchaser or the Merger Sub in whole at any time or in
part from time to time in their sole discretion. The failure by the Purchaser or
the Parent at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time.
<PAGE> 1
EXHIBIT - (c)(2)
STOCK OPTION AGREEMENT
Stock Option Agreement (this "Agreement") dated as of April 15, 1998,
between Siebe plc, a United Kingdom public limited company ("Parent"), and
Simulation Sciences Inc., a Delaware corporation ("Company").
Recitals
A. Concurrently herewith, Parent, S Acquisition Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Parent ("Purchaser"), S
Sub Corp., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Merger Sub"), and the Company are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which Purchaser has agreed to make
a tender offer (the "Offer") for all outstanding shares of Common Stock at
$10.00 per share (the "Offer Price"), net to the seller in cash, to be followed
by a merger of Merger Sub with and into the Company.
B. As a condition to the willingness of Parent to enter into the Merger
Agreement, Parent has required that the Company agree, and in order to induce
Parent to enter into the Merger Agreement, the Company has agreed, to grant to
Parent the option set forth herein to purchase authorized but unissued shares of
Company Common Stock;
In consideration of the mutual covenants and agreements contained herein
and other good and valuable consideration, the adequacy of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Definitions. Capitalized terms used but not defined herein shall have
the same meanings as in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to Parent an option (the "Option") to purchase
authorized and unissued shares of Company Common Stock in an aggregate amount up
to 15% of the Company's issued and outstanding shares of Company Common Stock as
of the date hereof (the "Option Shares") (subject to Section 8), at a price per
share equal to $10.00 (the "Purchase Price") payable in cash as provided in
Section 4 hereof.
3. Exercise of Option. (a) Parent may exercise the Option, in whole or
in part, at any time or from time to time during the period (the "Option
Exercise Period") commencing from the time a Purchase Event (as defined below)
shall have occurred and terminating 5:00 p.m. New York time on the date which is
180 days following the occurrence of the Purchase Event (the "Termination
Date"), whereupon the Option, to the extent it shall not have been exercised,
shall terminate and be of no further force and effect. If the Option cannot be
exercised prior to the Termination Date as a result of any injunction, order or
similar restraint issued by a court of competent jurisdiction, the Option
Exercise Period shall terminate on the later of (i) the Termination Date and
(ii) the 10th business day after such injunction, order or restraint shall have
<PAGE> 2
been dissolved or shall have become permanent and no longer subject to appeal,
as the case may be, but in no event later than 18 months after the occurrence of
a Purchase Event.
(b) This Agreement shall terminate, if but only if no Purchase Event
shall have occurred prior thereto, upon the occurrence of any of the following,
as applicable:
(i) the date on which Purchaser purchases all shares of Company
Common Stock tendered and not withdrawn pursuant to the Offer; or
(ii) upon the termination of the Merger Agreement pursuant to its
terms (subject to clause (c) of this Section 3).
(c) As used herein, a "Purchase Event" shall have occurred if the
Merger Agreement shall have been terminated by the Company or Parent
under Section 6.6(b), 8.1(e)(iii) or 8.1(c) as the case may be.
(d) As used herein, the terms "Beneficial Ownership," "Beneficial Owner"
and "Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3
under the Exchange Act. As used herein, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(e) Whenever Parent wishes to exercise the Option, it shall deliver to
the Company a written notice (a "Notice of Exercise") (the date of receipt of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it intends to purchase pursuant to such exercise, and (ii) a
place and date not earlier than two business days nor later than 60 calendar
days from the Notice Date for the closing of such purchase (a "Closing Date");
provided that if any closing of the purchase and sale pursuant to the Option (a
"Closing") cannot be consummated by reason of any applicable law (including,
without limitation, the Hart-Scott Rodino Antitrust Improvements Act of 1976
("HSR"), the period of time that otherwise would run from the Notice Date
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided further
that, without limiting the foregoing, if prior notification to or approval of
any governmental authority (including, without limitation, under HSR, is
required in connection with such purchase, Parent and, if applicable, the
Company shall promptly file the required notice or application for approval and
shall expeditiously process the same (and the Company shall cooperate with
Parent in the filing of any such notice or application and the obtaining of any
such approval), and the period of time that otherwise would run from the Notice
Date pursuant to this sentence shall run instead from the date on which, as the
case may be, (i) any required notification period has expired or been terminated
or (ii) such approval has been obtained, and in either event, any requisite
waiting period has passed.
(f) In the event (i) Parent receives official notice that an approval of
any governmental authority required for the purchase of Option Shares would not
be issued or granted or (ii) the Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval (including expiration of any required
2
<PAGE> 3
waiting period under HSR), Parent shall be entitled to exercise its right as set
forth in Section 7 or, to the extent legally permitted, to exercise the Option
in connection with the resale of Option Shares pursuant to a registration
statement as provided in Section 8. The provisions of this Section 3 and Section
6 shall apply with appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates. (a) At each Closing, Parent
shall pay to the Company the aggregate Purchase Price for the Option Shares
purchased at such Closing pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated not later than one
business day prior to the Closing Date for such Closing by the Company.
(b) At such Closing, simultaneously with the delivery of the aggregate
Purchase Price as provided in Section 4(a) hereof, the Company shall deliver to
Parent a certificate or certificates representing the number of Option Shares
then being purchased by Parent, registered in the name of Parent or as
designated in writing by Parent, which Option Shares shall be fully paid and
nonassessable and free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever.
(c) If at the time of issuance of any Option Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase rights
or similar securities ("Rights") to holders of any class of Company Common
Stock, then, subject to the terms and conditions of any plan governing such
Rights, each such Option Share shall also represent rights with terms
substantially the same as and at least as favorable to Parent as those issued to
other holders of Company Common Stock.
(d) Certificates for Option Shares delivered at any Closing hereunder
shall be endorsed with a restrictive legend, which shall read substantially as
follows:
"The shares represented by this certificate are subject to certain
provisions of an agreement between the registered holder hereof and
Simulation Sciences Inc., a copy of which is on file at the principal
office of Simulation Sciences Inc., and to resale restrictions arising
under the Securities Act of 1933, as amended, and any applicable state
securities laws. A copy of such agreement will be provided to the holder
hereof without charge upon receipt by Simulation Sciences Inc. of a
written request therefor."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend in connection with a transfer
or sale if (i) the Company has been furnished with an opinion of counsel,
reasonably satisfactory to counsel for the Company, that such transfer or sale
will not violate the Securities Act or applicable securities laws of any state
or (ii) such transfer or sale shall have been registered and qualified pursuant
to the Securities Act and any applicable state securities laws.
5. Representations and Warranties; Covenants. (a) The Company hereby
represents and warrants to Parent that (i) the Company has full corporate right,
power and authority to execute and deliver this Agreement and to perform all of
its obligations hereunder; (ii) such
3
<PAGE> 4
execution, delivery and performance have been duly authorized by the Board of
Directors of the Company, and no other corporate proceedings are necessary
therefor; (iii) this Agreement has been duly and validly executed and delivered
by the Company; and (iv) the Company has taken all necessary corporate action to
authorize and reserve and permit it to issue, and at all times from the date
hereof through the date of the exercise in full or the expiration or termination
of the Option, shall have reserved for issuance upon exercise of the Option, a
number of shares of Company Common Stock equal to 15% of the Company's issued
and outstanding Common Stock as of the date hereof (subject to adjustment as
provided herein), all of which, upon issuance in accordance with the terms of
this Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable and shall be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights of
any stockholder of the Company.
(b) Parent hereby represents and warrants to the Company that (i) Parent
has full corporate right, power and authority to execute and deliver this
Agreement and to perform all of its obligations hereunder; (ii) such execution,
delivery and performance have been duly authorized by all requisite corporate
action by Parent, and no other corporate proceedings are necessary therefor;
(iii) this Agreement has been duly and validly executed and delivered by Parent
and represents a valid and legally binding obligation of Parent, enforceable
against Parent in accordance with its terms; and (iv) any Company Common Stock
acquired by Parent upon exercise of the Option will not be transferred or
otherwise disposed of except in compliance with the Securities Act.
(c) the Company hereby covenants that any rights agreement, plan or
other instrument which may be adopted or entered into governing any Rights
(collectively, the "Rights Agreement") shall provide that neither the ownership
or exercise of the Option or any portion thereof nor the purchase or ownership
of any of the Option Shares, in and of itself, shall trigger any of the
provisions of the Rights Agreement.
6. Adjustment upon Changes in Capitalization. In the event of any change
in Company Common Stock by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number of shares subject to the
Option and the Purchase Price shall be adjusted appropriately. In the event that
the Company enters into a merger with another company in which the shares of
Company Common Stock are converted into the right to receive cash, securities or
other property, then the Company will make appropriate provision so that the
Option will be adjusted so that it becomes an option to acquire the cash,
securities or other property that the holder thereof would have received in such
merger if it had exercised the Option immediately prior to such merger.
7. Repurchase. (a) If, during the Option Exercise Period, a notice of
exercise has been given but the related Closing has not occurred, at the option
of the Company exercised by written notice delivered to Parent not less than two
Business Days prior to date scheduled for such Closing during the period from
the Notice Date to the Closing Date (the "Repurchase Period"), the Company shall
repurchase the Option in its entirety from Parent together with all
4
<PAGE> 5
(but not less than all) Option Shares previously purchased by Parent pursuant
thereto with respect to which Parent then has Beneficial Ownership, at a price
equal to the sum of:
(i) In the case of Options as to which Option Shares have not
been issued, the difference between (A) the "Market/Tender Offer Price"
for shares of Company Common Stock (defined as the higher of (x) the
highest price per share at which a tender or exchange offer has been
made and not withdrawn for shares of Company Common Stock during the
Option Exercise Period or (y) the highest closing price per share of
Company Common Stock as reported by the NASDAQ National Market for any
day within that portion of the Repurchase Period which precedes the date
the Company gives notice of the required repurchase under this Section
7) and (B) the Purchase Price (subject to adjustment as provided in
Section 6), multiplied by the number of Option Shares with respect to
which the Option has not been exercised or has been exercised but the
related Closing has not occurred, but only if such Market/Tender Offer
Price is greater than such exercise price; and
(ii) In the case of Option Shares, the greater of the
Market/Tender Offer Price and the Purchase Price paid for any Option
Shares acquired upon exercise of the Option, multiplied by the number of
Option Shares so acquired.
(b) In the event the Company exercises its rights under this Section 7,
the Company shall, within three business days thereafter, pay the required
amount to Parent by wire transfer of immediately available funds to an account
designated by Parent, and Parent shall surrender to the Company the Option and
the certificates evidencing any Option Shares acquired thereunder with respect
to which Parent then has Beneficial Ownership
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent nationally
recognized investment banking firm mutually selected by Parent and the Company.
8. Limitation on Total Profit. If at any time from the date hereof,
Parent or any of Parent's affiliates effects a sale, transfer or other
disposition of the Option Shares or any rights or options therein (a "Sale")
then Parent shall cause to be paid to the Company (in cash or in the form of the
other consideration, if any, received pursuant to the Sale), the amount by
which: (i) the Proceeds of such Sale, together with the proceeds of all previous
Sales, exceed by more than $14,250,000 (ii) the aggregate Purchase price paid,
if any, with respect to the Option Shares subject to such Sale or Sales. For
purposes of this Section, the "Proceeds" of a Sale shall mean the aggregate
amount of the proceeds (in cash or in kind) paid to Parent or any of its
affiliates pursuant to such Sale, including without limitation pursuant to
Section 7 hereof (with any non-cash proceeds being valued at the fair market
value thereof). This Option shall not be transferable by Parent, except to a
direct or indirect wholly-owned subsidiary of Parent who agrees to be bound by
the terms hereof applicable to Parent.
9. Registration Rights; Listing. (a) At any time after a Closing, the
Company shall, if requested by any holder or Beneficial Owner of Option Shares
(each a "Holder"), as
5
<PAGE> 6
expeditiously as possible file a registration statement on a form for general
use under the Securities Act if necessary in order to permit the sale or other
disposition of Option Shares in accordance the intended method of sale or other
disposition requested by any such Holder. Each such Holder shall provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. The Company shall use its
reasonable efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sales or other dispositions. The
registration effected under this Section 9(a) shall be at the Company's expense
except for underwriting commissions and the fees and disbursements of such
Holders' counsel attributable to the registration of such Option Shares. In no
event shall the Company be required to effect more than one registration
hereunder. The filing or effectiveness of any registration statement required
hereunder may be delayed (and use of a prospectus thereunder may be suspended)
for such period of time (not to exceed 90 days) as may reasonably be required to
comply with applicable law, facilitate any public distribution by the Company of
Company Common Stock, if a special audit of the Company would otherwise be
required in connection therewith during which the Company is in possession of
material information concerning it, its business affairs or a material
transaction in each case the public disclosure of which could have a material
adverse effect on the Company or significantly disrupt such material
transaction. If requested by any such Holder in connection with such
registration, the Company shall become a party to any underwriting agreement
relating to the sale of such shares on terms and including obligations and
indemnities which are customary for parties similarly situated. Upon receiving
any request for registration under this Section 9(a) from any Holder, the
Company agrees to send a copy thereof to any other person known to the Company
to be entitled to registration rights under this Section 9(a), in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
(b) If Company Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on any national securities exchange, the
Company, upon the request of Parent, will promptly file an application to list
the Option Shares or other securities to be acquired upon exercise of the Option
on all such exchanges and will use its best efforts to obtain approval of such
listings as soon as practicable.
10. Survival. The representations, warranties, covenants and agreements
of the parties hereto shall survive any Closing.
11. Severability. Any term, provision, covenant or restriction contained
in this Agreement held by a court or other governmental authority of competent
jurisdiction to be invalid, void or unenforceable shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
6
<PAGE> 7
12. Expenses. Each of the parties hereto shall pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, except as otherwise
provided herein.
13. Entire Agreement. This Agreement, the Merger Agreement (including
the documents and the instruments referred to therein), the Confidentiality
Agreement constitute the entire agreement between the parties and supersede all
prior agreements and understandings, agreements or representations by or between
the parties, written and oral, with respect to the subject matter hereof and
thereof.
14. Successors; No Third Party Beneficiaries. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
15. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 9.2 of the Merger Agreement (which is incorporated
herein by reference).
16. Counterparts. This Agreement may be executed in counterparts, and
each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
17. Further Assurances. In the event of any exercise of the Option by
Parent, the Company and Parent shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
18. Specific Performance. The parties hereto agree that if for any
reason Parent or the Company shall have failed to perform its obligations under
this Agreement, then either party hereto seeking to enforce this Agreement
against such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that either party hereto may have
against the other party hereto for any failure to perform its obligations under
this Agreement.
19. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the conflict of laws principles
thereof. Each party hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in the State of Delaware, for any Action (and
agrees not to commence any Action except in any such court), and further agrees
7
<PAGE> 8
that service of process, summons, notice or document by U.S. registered mail to
its respective address set forth in Section 9.2 of the Merger Agreement shall be
effective service of process for any Action brought against it in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Action in the courts of the State of Delaware or of
the United States of America located in the State of Delaware, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any Action brought in any such court has been brought in
an inconvenient forum.
20. Section 16(b). Periods of time that otherwise would run pursuant to
this Agreement shall also be extended to the extent necessary in order to avoid
liability under Section 16(b) of the Exchange Act.
21. Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
8
<PAGE> 9
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
SIEBE PLC
By: /s/ GEORGE W. SARNEY
----------------------------------------
Name: George W. Sarney
Title: Director
SIMULATION SCIENCES INC.
By: /s/ ROBERT E. GRICE, JR.
----------------------------------------
Name: Robert E. Grice, Jr.
Title: Executive Vice President
Chief Financial Officer
<PAGE> 1
EXHIBIT - (c)(3)
MUTUAL NONDISCLOSURE AGREEMENT
In connection with consideration of a possible negotiated transaction
between Simulation Sciences Inc. (the "Company") and Siebe plc ("Siebe"), the
Company and Siebe expect to make available to one another certain non-public
information concerning their respective businesses, subsidiaries, financial
condition, operations, assets and liabilities. As a condition to such
information being furnished to each party and its directors, officers,
employees, agents or advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors) (collectively,
"Representatives"), each party agrees to treat any non-public information
concerning the other party (whether prepared by the disclosing party, its
Representatives or otherwise and irrespective of the form of communication)
which is furnished hereunder to a party or to its Representatives (the
"Recipient") now or in the future by or on behalf of the disclosing party
(herein collectively referred to as the "Evaluation Material") in accordance
with the provisions of this Mutual Nondisclosure Agreement ("Agreement"), and to
take or abstain from taking certain other actions hereinafter set forth.
1. Evaluation Material. The term "Evaluation Material" also means all
information that is furnished to a Recipient or its Representatives by a party
or its Representatives (the "Discloser") that concerns the Discloser, its
affiliates or subsidiaries, and which is either confidential, proprietary or
otherwise not generally available to the public. The term "Evaluation Material"
also shall be deemed to include all notes, analyses, compilations, studies,
interpretations or other documents prepared by each party or its Representatives
which contain, reflect or are based upon, in whole or in part, the information
furnished to such party or its Representatives pursuant hereto which is not
available to the general public. The term "Evaluation Material" does not include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by the receiving party or its Representatives, (ii)
was within the receiving party's knowledge or possession prior to its being
furnished to the receiving party by or on behalf of the disclosing party
pursuant hereto, provided that the source of such information was not known by
the receiving party to be in breach of an applicable confidentiality agreement
with or other contractual, legal or fiduciary obligation of confidentiality to
the disclosing party or any other party with respect to such information, (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the disclosing party or any of its Representatives, provided
that such source is not known by the receiving party to be in breach of an
applicable confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the disclosing party or any other
party with respect to such information, or (iv) is independently invented,
conceived or discovered by the receiving party or its employees or agents
without access to the Evaluation Materials.
2. Purpose of Disclosure of Evaluation Material. It is understood and
agreed by each party that any exchange of information under this Agreement shall
be solely for the purpose of evaluating a potential transaction between the
parties and that such information exchange is not to affect, in any way, either
party's relative competitive position regarding the other party or other
entities. It is further agreed that the information to be disclosed by each
party shall only be that information which is reasonably necessary to evaluate a
proposed transaction and that
<PAGE> 2
information which is not reasonably necessary for such purposes shall not be
disclosed or exchanged. In addition, competitively sensitive information such as
information concerning product development or marketing plans, product prices or
pricing plans, cost data, customers or similar information which has been
determined to be reasonably necessary to a potential transaction, shall be
limited only to each party's "Control Group." For purposes of this Agreement, a
party's "Control Group" means only those senior executives and Representatives
who are involved in evaluating or negotiating a potential transaction or
approving the value of a potential transaction and who have a need to know such
competitively sensitive information for purposes of such evaluation, negotiation
or approval.
3. Use of Evaluation Material. Each party hereby agrees that it and its
Representatives shall use the other's Evaluation Material solely for the purpose
of evaluating a possible transaction between the parties, and that the
Discloser's Evaluation Material will be kept confidential; provided, however,
that (i) the Recipient may make any disclosure of such information as to which
the Discloser gives its prior written consent and (ii) any of such information
may be disclosed to the Recipient's Representatives who (x) need to know such
information for the sole purpose of evaluating a possible transaction between
the parties and who (y) agree to keep such information confidential. The
Recipient will not disclose the Evaluation Material to any person other than as
permitted hereby and will use its best efforts to safeguard the Evaluation
Material from unauthorized disclosure. Nothing in this Agreement shall obligate
either party, however, to use any greater care in the protection of the
Evaluation Material against disclosure than the care it uses generally with
respect to information relating to it which is similar in type to the Evaluation
Material. The term "person" as used in this Agreement shall be broadly
interpreted to include without limitation any corporation, company, partnership
or individual.
4. Nondisclosure. In addition, each party agrees that, without the prior
written consent of the other party, neither it nor its Representatives will
disclose to any other person the fact that any Evaluation Material has been made
available hereunder, that discussions or negotiations are taking place
concerning a possible transaction involving the parties or any of the terms,
conditions or other facts with respect thereto (including the status thereof);
provided, that a party may make such disclosure pursuant to the procedures set
forth herein if, in the written opinion of a party's outside counsel, such
disclosure is necessary to avoid committing a violation of law. In such event,
the disclosing party shall use its best efforts to give advance notice to the
other party.
5. Required Disclosure. In the event that a party or its Representatives
are requested or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the other party's Evaluation
Material, the party requested or required to make the disclosure shall provide
the other party with prompt written notice of any such request or requirement so
that the other party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Agreement. If, in the absence of a
protective order or other remedy or the receipt of a waiver by such other party,
the party requested or required to make the disclosure or any of its
Representatives are nonetheless legally compelled to disclose the other party's
2
<PAGE> 3
Evaluation Material to any tribunal or else stand liable for contempt or suffer
other significant censure or penalty, the party requested or required to make
the disclosure or its Representative may, without liability hereunder, disclose
to such tribunal only that portion of the other party's Evaluation Material that
is legally required to be disclosed, provided that the party requested or
required to make the disclosure exercises its best efforts to preserve the
confidentiality of the other party's Evaluation Material, including, without
limitation, by cooperating with the other party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the other party's Evaluation Material by such tribunal.
6. Termination of Discussions. If either party decides that it does not
wish to proceed with a transaction with the other party, the party so deciding
will promptly inform the other party by way of a notice of that decision. The
written Evaluation Material, except for that portion of the Evaluation Material
that may be found in analyses, compilations, studies or other documents prepared
by or for the Recipient, will be returned to the Discloser immediately upon the
Discloser's request, and no copies shall be retained by the Recipient or its
Representatives. Recipient shall certify in writing within five (5) business
days that all such Evaluation Material has been returned and that the other
provisions of this material Nondisclosure Agreement have been complied with by
it. For the purposes of this Agreement, "written" Evaluation Material shall
include, without limitation, information contained in printed, magnetic or other
tangible media, or in information storage and retrieval systems. That portion of
the Evaluation Material that may be found in analyses, compilations, studies or
other documents prepared by or for a Recipient, oral Evaluation Material and
written Evaluation Material not so requested or returned will be held by the
Recipient and kept subject to the terms of this Agreement, or destroyed.
Notwithstanding the return or destruction of the Evaluation Material, each party
and its Representatives will continue to be bound by its obligations of
confidentiality and other obligations hereunder.
7. No Representation of Accuracy. Each party understands and acknowledges
that although the agreements and covenants of the parties contained herein shall
be binding, neither party nor any of its Representatives makes any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material made available to it. Only those
representations or warranties that are made in a final definitive agreement
regarding any transaction contemplated hereby, when, as and if executed, and
subject to such limitations and restrictions as may be specified therein, will
have any legal effect. Each party agrees that, except as contemplated by the
preceding sentence, neither party nor any of its Representatives shall have any
liability to the other party or to any of its Representatives relating to or
resulting from the use by the other of the providing party's Evaluation Material
or any errors therein or omissions therefrom.
8. Definitive Agreements. Each party understands and agrees that no
contract or agreement providing for any transaction involving the parties shall
be deemed to exist between the parties unless and until a final definitive
agreement has been executed and delivered. Each party also agrees that unless
and until a final definitive agreement regarding a transaction between the
parties has been executed and delivered, neither party will be under any legal
obligation of any kind whatsoever with respect to completing or negotiating such
a transaction
3
<PAGE> 4
by virtue of this Agreement or any written or oral expression with respect to
such a transaction by any of its respective directors, officers, employees,
agents or any other Representatives except, in the case of this Agreement, for
the matters specifically agreed to herein. Both parties further acknowledge and
agree that each party reserves the right, in its sole discretion, to provide or
not provide Evaluation Material to the receiving party under this Agreement, to
reject any and all proposals made by the other party or any of its
Representatives with regard to a transaction between the parties, and to
terminate discussions and negotiations at any time.
9. Ownership of Evaluation Material. All information, and any Derivatives
(as defined below) thereof whether created by Discloser or Recipient, remains
the property of Discloser and no license or other rights to information is
granted or implied hereby. For purposes of this Agreement, "Derivatives" shall
mean: (i) for copyrightable or copyrighted material, any translation,
abridgment, revision or other form in which an existing work may be recast,
transformed or adapted; (ii) for patentable or patented material, any
improvement thereon and (iii) for material which is protected by trade secret,
any new material derived from such existing trade secret material, including new
material which may be protected by copyright, patent or trade secret. For the
purposes of this Section 9, "information" is deemed to include all information
furnished by either party to the other, whether or not Evaluation Material.
10. Independent Development. Each party understands that the other party
may currently or in the future be developing information internally or receiving
information from other parties that may be similar to that received from a
Discloser. Accordingly, nothing in this Agreement will be construed as a
representation, inference or agreement that either party will not develop
products, or have products developed for it, that, without violation of this
Agreement, compete with the products or systems contemplated by the other's
Evaluation Material.
11. No License. Nothing in this Agreement is intended to grant any rights
to either party under any patent, mask work right or copyright of the other
party, nor shall this Agreement grant any party any rights in or to the
Evaluation Material of the other party except as expressly set forth herein.
12. Waiver. It is understood and agreed that no failure or delay by either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or future exercise thereof or the exercise of any other right, power or
privilege hereunder.
13. Standstill. Beginning on the date of this letter and continuing for a
period of 12 months after the date of a notice of termination under Section 6
above, each party and its affiliates will not (and each party and its affiliates
will not assist or encourage others to), directly or indirectly, unless
specifically requested to do so in writing in advance by the other party's Board
of Directors:
(a) acquire or agree, offer, seek or propose to acquire, or cause to
be acquired, ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of any of the other party's
4
<PAGE> 5
assets (other than in the ordinary course of business) or businesses or any
voting securities issued by the other party, or any rights or options to acquire
such ownership, including from a third party; or
(b) make, or in any way participate, in any solicitation of proxies
or consents with respect to any securities of the other party which are, or may
be, entitled to vote in the election of the other party's directors ("Voting
Schedule"), become a "participant" in any "election contest" (as such terms are
defined or used in Rule 14a-11 under the Exchange Act) with respect to the other
party; or seek to advise, encourage or influence any person or entity with
respect to the voting of any Voting Securities; or demand a copy of the other
party's stock ledger, list of its stockholders or other books and records; or
call or attempt to call any meeting of the stockholders of the other party; or
(c) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the matters described
in (a) or (b) above; provided, however, that the restrictions contained in this
Section 13 shall not apply if (i) another person or entity (including the
Company) shall have commenced a tender or exchange offer for 50% or more of the
Company's securities or (ii) another person or entity or the Company has made
public disclosure of a transaction to acquire 50% or more of the securities of
the Company.
14. No Market Disclosures. Each party understands and agrees that
information "leaks" or rumors of a potential transaction between the parties
would be disruptive to stock market transactions, customer relationships and
potential customer transactions. Accordingly, each party specifically agrees to
take all commercially reasonable actions to prevent any such disclosure
(including by specifically notifying its directors, officers, employees and
Representatives that have knowledge of this transaction of the requirements of
this paragraph), to notify the other party immediately of any such "leak" or
rumor of which it becomes aware, to assist in tracing the source of any such
"leak" or rumor and providing that information to the other party, and to being
held legally responsible, at law, in equity, in arbitration or otherwise, for
any breach of the provisions of this Agreement.
15. No Solicitation. From and after the date of this Agreement until its
termination under Section 6 hereof, neither party nor any of their respective
Representatives shall (i) solicit, encourage or take any other action which is
intended to induce any employee of the other party to terminate its employment
with such other party, or (ii) interfere in any manner with any contractual or
employment relationship between such other party and its employees; provided,
however, that nothing in this paragraph shall preclude either party from hiring
or offering employment to any employee of the other as a consequence of such
employee's unsolicited response to a general public advertisement of employment
or such employee being identified as a candidate as part of a non-directed
executive search.
16. Injunctive Relief. It is further understood and agreed that money
damages would not be a sufficient remedy for any breach of this Agreement by
either party or any of its Representatives and that the non-breaching party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach. Such remedies shall not
5
<PAGE> 6
be deemed to be the exclusive remedies for a breach of this Agreement but shall
be in addition to all other remedies, if any, available at law or equity. In the
event of litigation relating to this Agreement, if a court of competent
jurisdiction determines that either party or any of its Representatives have
breached this Agreement, then the breaching party shall be liable and pay to the
non-breaching party the reasonable legal fees incurred in connection with such
litigation, including any appeal therefrom.
17. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns.
18. Jurisdiction and Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
regard to the conflicts of laws doctrine thereof.
19. Miscellaneous. Each party agrees to be responsible for any breach of
this agreement by any of its Representatives. No failure or delay by either
party or any of its Representatives in exercising any right, power or privileges
under this Agreement shall operate as a waive thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege hereunder. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of the agreement shall not in any way be affected or
impaired thereby.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be enforceable as against the party actually signing, and all of
which together shall constitute one agreement.
In witness of the foregoing agreements, the undersigned parties have
entered into this Agreement as of April 7, 1998.
SIMULATION SCIENCES INC. SIEBE PLC
By: /s/ Charles R. Harris By: /s/ George Sarney
----------------------------- ------------------------------------
Title: President and Title: President and
Chief Executive Officer Chief Operation Officer
6
<PAGE> 1
EXHIBIT (g)(1)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.................................................... F-2
Audited Consolidated Financial Statements:
Audited Consolidated Profit and Loss Account for the years ended
April 5, 1997 and April 6, 1996............................................. F-3
Audited Consolidated Balance Sheet as of April 5, 1997 and April 6, 1996.... F-4
Audited Consolidated Cash Flow Statement for the years ended
April 5, 1997 and April 6, 1996............................................. F-5
Audited Consolidated Statement of Total Recognized Gains and
Losses for the years ended April 5, 1997 and April 6, 1996.................. F-6
Audited Reconciliation of Movements in Consolidated Shareholders'
Funds for the years ended April 5, 1997 and April 6, 1996................... F-6
Audited Company Balance Sheet as of April 5, 1997 and April 6, 1996......... F-7
Accounting Policies......................................................... F-8
Notes to the Accounts....................................................... F-10
Unaudited Interim Consolidated Financial Statements:
Unaudited Consolidated Profit and Loss Account for the six months ended
September 30, 1997 and September 30, 1996................................... F-35
Unaudited Consolidated Balance Sheet as of September 30, 1997,
September 30, 1996 and April 5, 1997........................................ F-36
Unaudited Consolidated Cash Flow Statement for the six months ended
September 30, 1997 and 1996................................................. F-37
Unaudited Consolidated Statement of Total Recognized Gains and Losses for
the six months ended September 30, 1997 and 1996............................ F-38
Unaudited Reconciliation of Movements in Consolidated Shareholders'
Funds for the six months ended September 30, 1997 and 1996.................. F-38
Unaudited Notes to the Interim Consolidated Financial Statements............ F-39
</TABLE>
F-1
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Siebe plc:
We have audited the consolidated financial statements of Siebe plc and its
subsidiaries as listed in the accompanying "Index to Financial Statements --
Audited Consolidated Financial Statements" on page F-1. These consolidated
financial statements are the responsibility of the management of Siebe plc. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Siebe plc and its
subsidiaries as at April 5, 1997 and April 6, 1996, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles in the United Kingdom.
KPMG AUDIT PLC
Chartered Accountants and Registered Auditors
London, England
May 28, 1997
F-2
<PAGE> 3
AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED 5 APRIL 1997 AND 6 APRIL 1996 NOTES 1997 1996
- -------------------------------------------------------- ----- ---- ----
(POUND)M (POUND)M
<S> <C> <C> <C>
TURNOVER
- continuing operations............................. 2,585.8 2,599.1
- acquisitions...................................... 419.5 --
------- -------
2 3,005.3 2,599.1
Net operating charges................................. 3 (2,535.4) (2,227.9)
OPERATING PROFIT
- continuing operations............................. 415.9 371.2
- acquisitions...................................... 54.0 --
------- -------
469.9 371.2
Profit on sale of fixed assets........................ 5.2 3.8
Profit on sale of businesses.......................... 7.0 4.4
------- -------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST......... 2 482.1 379.4
Interest receivable................................... 7.1 8.8
Interest payable and similar charges.................. 6 (65.1) (57.1)
------- -------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION......... 6 424.1 331.1
Tax on profit on ordinary activities.................. 8 (156.9) (126.8)
------- -------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION.......... 267.2 204.3
Minority interests - equity........................... (13.4) (11.3)
------- -------
PROFIT ATTRIBUTABLE TO MEMBERS OF SIEBE PLC........... 9 253.8 193.0
Dividends on equity shares............................ 10 (73.4) (57.2)
------- -------
TRANSFER TO REVENUE RESERVE........................... 180.4 135.8
======= =======
Earnings per share.................................... 11 54.1p 45.0p
======= =======
</TABLE>
F-3
<PAGE> 4
AUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AT 5 APRIL 1997 AND AT 6 APRIL 1996 NOTES 1997 1996
- ----------------------------------- ----- ---- ----
(POUND)M (POUND)M
<S> <C> <C> <C>
FIXED ASSETS
Intangible assets..................................... 12 429.6 359.7
Tangible assets....................................... 13 1,083.6 954.1
Investments........................................... 14 19.2 109.9
------- -------
1,532.4 1,423.7
------- -------
CURRENT ASSETS
Stocks................................................ 15 500.7 489.3
Debtors............................................... 16 906.3 751.0
Cash and deposits..................................... 27 210.8 282.3
------- -------
1,617.8 1,522.6
Creditors:
Amounts falling due within one year:
Short-term borrowings................................. 17 (77.2) (83.2)
Other creditors....................................... 17 (873.2) (749.3)
------- -------
(950.4) (832.5)
------- -------
NET CURRENT ASSETS.................................... 667.4 690.1
------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES................. 2,199.8 2,113.8
Creditors:
Amounts falling due after more than one year:
Loans and other borrowings............................ 18 (698.0) (631.4)
Other creditors....................................... (59.2) (47.8)
------- -------
(757.2) (679.2)
------- -------
Provisions for liabilities and charges................ 21 (294.6) (293.2)
------- -------
1,148.0 1,141.4
======= =======
CAPITAL AND RESERVES
Called up share capital............................... 22 118.4 107.2
Share premium account................................. 23 389.2 385.2
Other reserves........................................ 23 (146.6) 11.6
Revenue reserve....................................... 23 655.6 558.3
------- -------
SHAREHOLDERS' FUNDS - EQUITY.......................... 1,016.6 1,062.3
MINORITY INTERESTS - EQUITY........................... 131.4 79.1
------- -------
1,148.0 1,141.4
======= =======
</TABLE>
F-4
<PAGE> 5
AUDITED CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED 5 APRIL 1997 AND 6 APRIL 1996 NOTES 1997 1997 1996 1996
- -------------------------------------------------------- ----- ---- ---- ---- ----
(POUND) (POUND) (POUND) (POUND)
M M M M
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
NET CASH INFLOW FROM OPERATING ACTIVITIES............. 27 522.0 437.1
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received..................................... 7.3 8.7
Interest paid......................................... (59.3) (53.4)
Interest element of finance lease rentals payments.... (3.5) (4.0)
Dividends paid to minority interests.................. (1.9) (1.2)
Dividends paid to former Unitech shareholders......... (3.0) --
------- -----
(60.4) (49.9)
TAXATION.............................................. (88.6) (75.9)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS.........
Purchase of tangible and intangible fixed assets...... (241.7) (184.0)
Sale of tangible and intangible fixed assets.......... 43.9 37.7
Purchase of trade investments......................... (4.9) (104.6)
Sale of trade investment.............................. 2.5 1.9
------ ------
ACQUISITIONS AND DISPOSALS............................ (200.2) (249.0)
Purchase of associated undertakings................... -- (1.1)
Sale of associated undertakings....................... 0.6 --
Purchase of subsidiary undertakings (net of
shares issued) 27 (157.8) (101.2)
Net overdrafts and cash acquired...................... (35.7) 4.8
Cash in subsidiary undertakings sold.................. (0.3) 17.5
Purchase of minority interests........................
(9.0) (5.5)
------ ------
(202.2) (85.5)
EQUITY DIVIDENDS PAID................................. (54.0) (48.5)
MANAGEMENT OF LIQUID RESOURCES........................
Movement in short-term deposits....................... (2.8) 0.6
FINANCING
Issue of ordinary share capital....................... 4.1 0.6
Debts due within one year:
Loans raised....................................... 43.1 11.3
Net loans repaid................................... (63.5) (65.8)
Debts due after more than one year:
New unsecured loan notes repayable in 2007......... 157.2 --
Other loans raised................................. -- 794.0
Net loans repaid................................... (101.1) (640.2)
Capital element of finance lease repayments........... (13.5) (18.4)
------ ------
26.3 81.5
------ ------
(DECREASE)/INCREASE IN CASH........................... 27 (59.9) 10.4
====== ======
</TABLE>
F-5
<PAGE> 6
AUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED 5 APRIL 1997 AND 6 APRIL 1996 NOTES 1997 1996
- -------------------------------------------------------- ----- ---- ----
(POUND)M (POUND)M
<S> <C> <C> <C>
Profit attributable to members of Siebe plc................... 23 253.8 193.0
Currency translation differences (on foreign currency net
investments).................................................. 23 (158.2) 21.9
------ ----
TOTAL RECOGNIZED GAINS AND LOSSES FOR THE YEAR................ 95.6 214.9
====== ====
</TABLE>
AUDITED RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED 5 APRIL 1997 AND 6 APRIL 1996 1997 1996
- -------------------------------------------------------- ---- ----
(POUND)M (POUND)M
<S> <C> <C>
Profit attributable to members of Siebe plc................... 253.8 193.0
Dividends..................................................... (73.4) (57.2)
Currency translation differences (on foreign currency net (158.2) 21.9
investments)..................................................
Share capital issued, including scrip dividends............... 383.3 3.9
Transfer to goodwill ......................................... 3.9 --
Goodwill on acquisitions in the period........................ (455.1) (65.5)
------- -------
(45.7) 96.1
Opening shareholders' funds................................... 1,062.3 966.2
------- -------
CLOSING SHAREHOLDERS' FUNDS................................... 1,016.6 1,062.3
======= =======
</TABLE>
F-6
<PAGE> 7
AUDITED COMPANY BALANCE SHEET
<TABLE>
<CAPTION>
AT 5 APRIL 1997 AND 6 APRIL 1996 NOTES 1997 1996
- -------------------------------- ----- ---- ----
(POUND)M (POUND)M
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets............................................... 13 2.7 2.4
Investments................................................... 14 624.8 183.5
------- -------
627.5 185.9
------- -------
CURRENT ASSETS
Debtors:
Amounts falling due within one year......................... 16 333.9 422.6
Amounts falling due after more than one year................ 16 1,074.9 626.1
------- -------
1,408.8 1,048.7
Cash and deposits............................................. 3.9 15.5
------- -------
1,412.7 1,064.2
Creditors:
Amounts falling due within one year:
Short-term borrowings..................................... 17 (96.5) (38.5)
Other creditors........................................... 17 (146.8) (122.7)
------- -------
(243.3) (161.2)
NET CURRENT ASSETS............................................ 1,169.4 903.0
------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES......................... 1,796.9 1,088.9
Creditors:
Amounts falling due after more than one year:
Loans and other borrowings................................ 18 (565.2) (251.5)
Other creditors........................................... (24.0) (20.1)
------- -------
(589.2) (271.6)
Provisions for liabilities and charges........................ 21 (6.5) (7.6)
------- -------
1,201.2 809.7
------- -------
CAPITAL AND RESERVES
Called up share capital....................................... 22 118.4 107.2
Share premium account......................................... 23 389.2 385.2
Other reserves................................................ 23 578.6 217.3
Revenue reserve............................................... 23 115.0 100.0
------- -------
SHAREHOLDERS' FUNDS -- EQUITY................................. 1,201.2 809.7
======= =======
</TABLE>
F-7
<PAGE> 8
ACCOUNTING POLICIES
The following paragraphs describe the main accounting policies of the Group.
CHANGES IN ACCOUNTING PRESENTATION
Changes in the presentation of the Group cash flow statement have been made
consequent upon the adoption of the revised Financial Reporting Standard No 1
"Cash Flow Statements". Comparative figures have been restated in accordance
with the revised presentation.
BASIS OF CONSOLIDATION
These accounts have been prepared under the historical cost convention and
in accordance with applicable accounting standards and incorporate the accounts
of Siebe plc and its subsidiaries. The results of subsidiaries sold or acquired
are included in the profit and loss account up to, or from, the date control
passes.
TURNOVER
Turnover represents sales by Group companies to third parties, including
sales to associated undertakings, but excluding value added tax.
DEPRECIATION
Depreciation of the Group's tangible and intangible fixed assets is provided
at the following annual percentages on their cost or net book value at the
beginning of the year or the cost of fixed assets purchased during the year less
the estimated residual value:
<TABLE>
<S> <C>
Freehold land........................................... Nil
Freehold buildings...................................... 2 -2.5%
Plant and machinery..................................... 6 - 20%
Motor vehicles ......................................... 25%
Patents and other intangibles........................... 6 - 33%
Computer software....................................... 10 - 25%
</TABLE>
Depreciation of the Group's leasehold properties is provided so as to
amortize them over their remaining useful lives.
DEFERRED TAXATION
Deferred taxation is provided using the liability method in respect of the
taxation effect of all timing differences to the extent that it is probable that
liabilities will crystallize in the foreseeable future. Deferred taxation on
pension balances and provisions for post-retirement obligations is recognized in
full.
FOREIGN CURRENCY TRANSLATION
Foreign currency assets and liabilities are translated into sterling at
rates of exchange ruling at the balance sheet date. The trading results of
overseas subsidiary and associated undertakings have been translated into
sterling at average rates of exchange ruling during the year.
The differences on exchange attributable to the translation of the opening
net assets of overseas undertakings and their retained profits for the year, net
of the related foreign currency loans, have been adjusted through the exchange
variation reserve. Other exchange differences are taken to the profit and loss
account.
STOCKS
Stocks are valued at the lower of cost and estimated net realizable value.
Cost includes raw materials and labor costs with an appropriate amount of
factory overheads.
F-8
<PAGE> 9
ACCOUNTING POLICES (CONTINUED)
RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research and development is written off when incurred except
for development prototype expenditure and associated software costs on defined
commercial projects which are included within intangible assets. These are
amortized over a period of between three to ten years commencing with the
commercial production or application of the product.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Investments in subsidiary undertakings are held at cost less provisions.
GOODWILL
Goodwill arising on consolidation representing the excess of the fair value
of the purchase consideration over the fair value of the net assets acquired, is
written off against reserves in the year of acquisition.
Goodwill previously eliminated against reserves is written back in so far as
it relates to disposals in the year.
LEASES
Assets held under finance leases have been capitalized together with their
related lease obligations and are disclosed within tangible fixed assets and
borrowings, respectively.
Depreciation is provided at rates designed to write off the cost less
estimated residual value in equal annual amounts over the shorter of the
estimated useful lives of the assets or the period of the leases.
Expenditure on operating leases is charged to the profit and loss account
evenly over the life of the leases.
POST-EMPLOYMENT BENEFITS
The Group operates pension schemes covering the majority of employees. The
schemes are funded by contributions partly from the employees and partly from
the companies at rates determined by independent actuaries. These contributions
are invested separately from the Group's assets. Pension costs have been
calculated in accordance with SSAP24 for United Kingdom schemes. As it is
impractical to comply with SSAP24 for non-United Kingdom schemes, costs have
been calculated in accordance with FAS87 for United States schemes and local
best practice for all other overseas schemes.
Post-retirement and post-employment benefits other than pensions have been
reflected through the profit and loss account in accordance with UITF6.
F-9
<PAGE> 10
NOTES TO THE ACCOUNTS
1 BASIS OF PREPARATION
The profit and loss account covers the 52 weeks from 7 April 1996 to 5 April
1997 and the balance sheets for 1996 and 1997 have been drawn up at 6 April 1996
and 5 April 1997 (or to 31 March where applicable).
2 ANALYSIS OF CONSOLIDATED TURNOVER, PROFIT BEFORE INTEREST AND TAX, AND
OPERATING NET ASSETS
<TABLE>
<CAPTION>
PROFIT PROFIT
BEFORE BEFORE
INTEREST INTEREST OPERATING OPERATING
TURNOVER TURNOVER AND TAX AND TAX NET ASSETS NET ASSETS
1997 1996 1997 1996 1997 1996
---- ---- ------- ------- ---------- ----------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
PRODUCT CATEGORY:
Control systems.................. 1,072.8 987.8 182.3 155.7 879.4 934.2
Temperature and appliance
controls......................... 1,392.6 1,060.1 226.6 154.7 1,138.8 889.3
Industrial equipment............. 539.9 551.2 61.0 60.8 221.1 214.2
------- ------- ----- ----- ------- -------
3,005.3 2,599.1 469.9 371.2 2,239.3 2,037.7
------- ------- ----- ----- ------- -------
Profit on sale of fixed assets... 5.2 3.8 -- --
Profit on sale of businesses..... 7.0 4.4 -- --
----- ----- ------- -------
482.1 379.4 2,239.3 2,037.7
----- ----- ------- -------
GEOGRAPHICAL ANALYSIS BY
LOCATION:
United Kingdom................... 329.4 252.5 77.0 54.8 147.3 104.3
Rest of Europe................... 815.6 747.6 92.7 90.4 468.7 515.7
North America.................... 1,335.3 1,250.5 207.4 159.2 1,235.9 1,169.3
South America.................... 78.5 72.8 16.9 16.6 53.9 46.9
Pacific.......................... 391.6 247.7 70.4 47.1 315.7 190.8
Africa and the Middle East....... 54.9 28.0 5.5 3.1 17.8 10.7
------- ------- ----- ----- ------- -------
3,005.3 2,599.1 469.9 371.2 2,239.3 2,037.7
------- ------- ----- ----- ------- -------
Profit on sale of fixed assets... 5.2 3.8 -- --
Profit on sale of businesses..... 7.0 4.4 -- --
----- ----- ------- -------
482.1 379.4 2,239.3 2,037.7
----- -----
Borrowings....................... (775.2) (714.6)
Cash and deposits................ 210.8 282.3
Provisions for liabilities and
charges.......................... (294.6) (293.2)
Taxation......................... (162.8) (113.6)
Dividends........................ (69.5) (57.2)
------- -------
Net assets per consolidated
balance sheet.................... 1,148.0 1,141.4
======= =======
GEOGRAPHICAL ANALYSIS OF SALES BY
DESTINATION:
United Kingdom................... 237.7 179.7
Rest of Europe................... 831.5 784.6
North America.................... 1,257.2 1,167.9
South America.................... 101.9 83.2
Pacific.......................... 460.4 304.2
Africa and the Middle East....... 116.6 79.5
------- -------
3,005.3 2,599.1
======= =======
</TABLE>
F-10
<PAGE> 11
NOTES TO THE ACCOUNTS (CONTINUED)
3 NET OPERATING CHARGES
<TABLE>
<CAPTION>
CONTINUING 1997 1996
OPERATIONS ACQUISITIONS TOTAL TOTAL
---------- ------------ ----- -----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
Change in stocks of finished goods and work in
progress......................................... 20.4 10.6 31.0 6.7
Own work capitalized............................. (58.4) (9.3) (67.7) (55.0)
Other operating income........................... (10.8) (6.2) (17.0) (15.7)
Raw materials and consumables.................... 851.8 153.2 1,005.0 892.2
Other external charges........................... 341.6 39.6 381.2 318.9
Staff costs (See note 4)......................... 843.7 115.3 959.0 868.3
Depreciation..................................... 130.8 15.8 146.6 121.4
Other operating charges.......................... 51.1 46.5 97.6 91.6
Share of profits of associated undertakings (See
note 5).......................................... (0.3) -- (0.3) (0.5)
------- ----- ------- -------
Net operating charges............................ 2,169.9 365.5 2,535.4 2,227.9
======= ===== ======= =======
</TABLE>
4 STAFF NUMBERS AND COSTS
The average number of persons employed by the Group (including directors)
during the year was as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Management.................................................... 976 834
Administration................................................ 3,897 3,047
Production and sales staff.................................... 37,230 31,944
------ ------
42,103 35,825
------ ------
</TABLE>
The aggregate payroll costs of these persons were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
(POUND)M (POUND)M
<S> <C> <C>
Wages and salaries............................................ 777.8 692.2
Social security costs......................................... 102.9 94.3
Other pension costs........................................... 78.3 81.8
----- -----
959.0 868.3
----- -----
</TABLE>
5 SHARE OF PROFITS OF ASSOCIATED UNDERTAKINGS
<TABLE>
<CAPTION>
1997 1996
---- ----
(POUND)M (POUND)M
<S> <C> <C>
Attributable to the Group's interest:
Profit before taxation........................................ 0.3 0.5
Taxation...................................................... (0.1) (0.1)
---- ----
Profit after taxation, transferred to reserves (see note 14).. 0.2 0.4
---- ----
</TABLE>
The principal associated undertakings are as follows:
<TABLE>
<CAPTION>
PERCENTAGE
OF EQUITY
CAPITAL
ATTRIBUTABLE
COUNTRY OF TO THE
INCORPORATION COMPANY'S
REGISTRATION INTEREST VIA
AND SUBSIDIARY
NATURE OF BUSINESS OPERATION UNDERTAKINGS
------------------ --------- ------------
<S> <C> <C> <C> <C>
PT Foxboro Perkind Indonesia...... Control systems Indonesia 40
Foxboro (Malaysia) Sendirian Berhad Control systems Malaysia 40
Foxboro (Thailand) Co Ltd......... Control systems Thailand 40
Eberle Pte. Limited............... Temperature and appliance controls Singapore 30
Jonan Denshi K.K.................. Temperature and appliance controls Japan 45
Holman Brothers (Nigeria) Ltd..... Compressed air Nigeria 40
GE Fanuc Eberle Automation GmbH... Control systems Germany 50
</TABLE>
F-11
<PAGE> 12
NOTES TO THE ACCOUNTS (CONTINUED)
6 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit on ordinary activities before taxation is stated after charging the
following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(POUND)M (POUND)M
<S> <C> <C>
Operating lease rentals:
Hire of plant and machinery............................................. 33.6 34.3
Other................................................................... 35.6 32.1
Reorganization costs........................................................ 17.8 18.6
Research and development:
Pure and applied (less recoveries)...................................... 67.1 45.2
Other costs............................................................. 73.8 69.7
Auditors' remuneration:
Audit fees.............................................................. 3.6 3.1
Interest payable on:
-------- --------
Bank loans and overdrafts............................................... 58.1 50.0
Other loans............................................................. 3.5 3.4
Finance leases:
Plant and machinery..................................................... 2.2 1.6
Other................................................................... 1.3 2.1
-------- --------
65.1 57.1
</TABLE>
Fees paid to the auditors of the parent company for services other than the
statutory audit supplied to the Company and its United Kingdom subsidiary
undertakings during the year ended 5 April 1997 amounted to (pound)0.8 million
(1996 (pound)0.6 million). Fees paid to the auditors of overseas subsidiary
undertakings for services other than the statutory audit during the year ended 5
April 1997 amounted to (pound)1.5 million (1996 (pound)1.4 million).
7 EMOLUMENTS OF DIRECTORS AND EMPLOYEES
Aggregate emoluments of the directors of the Company were as follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
(POUND)M (POUND)M
<S> <C> <C>
Fees................................................................... 307,500 302,625
Salary................................................................. 1,539,605 1,058,191
Benefits............................................................... 104,812 84,433
Performance related pay................................................ 564,728 467,022
Pension contributions.................................................. 221,944 123,741
--------- ---------
2,738,589 2,036,012
--------- ---------
</TABLE>
The number of directors and of those Group employees whose emoluments,
excluding pension contributions, exceed (pound)30,000 are set out in bands in
the following table.
F-12
<PAGE> 13
NOTES TO THE ACCOUNTS (CONTINUED)
7 EMOLUMENTS OF DIRECTORS AND EMPLOYEES (CONTINUED)
<TABLE>
<CAPTION>
EMPLOYEES EMPLOYEES
DIRECTORS COMPANY GROUP
EMOLUMENTS ----------- ----------- -----------
(POUND) 1997 1996 1997 1996 1997 1996
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
10,001-15,000.................................. -- 1
15,001-20,000.................................. 2 1
20,001-25,000.................................. 2 2
25,001-30,000.................................. 1 1
30,001-35,000.................................. -- -- 4 5 1,870 1,455
35,001-40,000.................................. -- -- 6 9 1,112 923
40,001-45,000.................................. -- -- 5 5 696 682
45,001-50,000.................................. -- -- 2 3 483 415
50,001-55,000.................................. -- -- 2 -- 331 293
55,001-60,000.................................. -- -- 1 1 192 178
60,001-65,000.................................. -- -- 3 1 116 112
65,001-70,000.................................. -- -- -- -- 96 94
70,001-75,000.................................. -- -- 1 -- 78 55
75,001-80,000.................................. -- -- -- 2 57 46
80,001-85,000.................................. -- -- 3 1 32 27
85,001-90,000.................................. -- -- 2 1 33 21
90,001-95,000.................................. -- -- -- -- 25 11
95,001-100,000................................. -- -- 1 1 15 19
100,001-105,000................................ -- -- -- -- 9 12
105,001-110,000................................ -- -- -- -- 20 17
110,001-115,000................................ -- -- -- 1 7 8
115,001-120,000................................ -- -- -- -- 6 6
120,001-125,000................................ -- -- -- -- 10 4
125,001-130,000................................ -- -- 1 -- 7 7
130,001-135,000................................ -- -- -- -- 9 2
135,001-140,000................................ -- -- -- -- 1 5
140,001-145,000................................ -- -- 1 1 3 2
145,001-150,000................................ -- -- -- -- 3 1
150,001-155,000................................ -- -- -- 1 1 3
155,001-160,000................................ -- -- 1 2 2 3
160,001-165,000................................ -- -- 1 -- 3 2
165,001-170,000................................ 1 1 2 1 3 3
175,001-180,000................................ -- -- -- -- -- 5
180,001-185,000................................ -- -- -- -- -- 1
185,001-190,000................................ -- -- -- -- 2 1
190,001-195,000................................ 1 -- -- -- -- 2
195,001-200,000................................ -- -- 1 -- -- --
200,001-205,000................................ -- -- -- -- -- 1
205,001-210,000................................ -- -- -- -- 1 1
210,001-215,000................................ -- -- -- -- -- 2
220,001-225,000................................ 1 1 -- -- -- --
230,001-235,000................................ -- -- -- -- 1 --
245,001-250,000................................ -- -- -- -- -- 1
300,001-305,000................................ -- -- -- -- -- 1
320,001-325,000................................ -- -- -- -- 1 --
345,001-350,000................................ 1 -- -- -- -- --
355,001-360,000................................ -- 1 -- -- -- --
365,001-370,000................................ 1 -- -- -- -- --
435,001-440,000................................ -- 1 -- -- -- --
465,001-470,000................................ 1 -- -- -- -- --
625,001-630,000................................ -- 1 -- -- -- --
640,001-645,000................................ 1 -- -- -- -- --
</TABLE>
The number of directors shown above includes directors who held office for
only part of each year.
F-13
<PAGE> 14
NOTES TO THE ACCOUNTS (CONTINUED)
8 TAX ON PROFIT ON ORDINARY ACTIVITIES
The charge for taxation is as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(POUND)M (POUND)M
<S> <C> <C>
United Kingdom Corporation tax on income at 33% (1996 33%).................... 48.1 62.1
Less relief for overseas tax.................................................. (13.6) (20.4)
----- -----
34.5 41.7
Deferred tax.................................................................. 10.1 12.0
Overseas tax.................................................................. 114.6 67.9
Prior year.................................................................... (2.3) 5.2
----- -----
156.9 126.8
----- -----
</TABLE>
9 PROFIT ATTRIBUTABLE TO THE HOLDING COMPANY
The profit dealt with in the accounts of the holding company, Siebe plc, is
(pound)80.0 million (1996 (pound)79.3 million).
In accordance with the exemption granted under the Companies Act 1985, a
separate profit and loss account for the Company has not been presented.
10 DIVIDENDS
<TABLE>
<CAPTION>
1997 1996
-------- --------
(POUND)M (POUND)M
<S> <C> <C>
Final 1995/96 of 8.87p per share, equivalent with tax credit to 11.0875p
per share on shares issued to acquire Unitech plc ..................... 3.9 --
Interim of 4.90p (1996 4.44p) per share, equivalent with tax credit to
6.125p (1996 5.55p) per share.......................................... 23.1 19.1
Final of 9.80p (1996 8.87p) per share, equivalent with tax credit to
12.25p (1996 11.0875p) per share....................................... 46.4 38.1
---- ----
73.4 57.2
---- ----
</TABLE>
11 EARNINGS PER SHARE
The earnings per share on a net basis have been calculated using 469.5
million shares (1996 428.8 million), being the weighted average number of shares
in issue during the year and the profit after taxation and minority interests of
(pound)253.8 million (1996 (pound)193.0 million).
Figures for fully diluted earnings per share based on outstanding share
options are not provided as the effect on the earnings per share is not
material.
F-14
<PAGE> 15
NOTES TO THE ACCOUNTS (CONTINUED)
12 INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
DEVELOPMENT
COSTS PATENTS,
INCLUDING LICENSES
COMPUTER AND PAYMENTS
SOFTWARE TRADEMARKS ON ACCOUNT TOTAL
-------- ---------- ---------- -----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
GROUP COST
At 1 April 1995 .......................... 175.2 336.9 2.2 514.3
New subsidiary undertakings .............. 0.2 8.7 -- 8.9
Additions ................................ 30.1 3.4 0.5 34.0
Exchange adjustments ..................... 7.9 20.3 (0.1) 28.1
----- ----- ----- -----
213.4 369.3 2.6 585.3
Disposals ................................ (3.8) (0.7) -- (4.5)
----- ----- ----- -----
At 6 April 1996 .......................... 209.6 368.6 2.6 580.8
New subsidiary undertakings .............. 15.1 107.8 -- 122.9
Additions ................................ 42.9 6.8 -- 49.7
Exchange adjustments ..................... (20.9) (42.6) (0.4) (63.9)
----- ----- ----- -----
246.7 440.6 2.2 689.5
Disposals ................................ (1.5) (3.1) (2.2) (6.8)
----- ----- ----- -----
At 5 April 1997........................... 245.2 437.5 -- 682.7
----- ----- ----- -----
DEPRECIATION
At 1 April 1995........................... 69.8 97.8 0.4 168.0
Charge for the year ...................... 24.7 19.5 0.5 44.7
Disposals................................. (1.7) (0.3) -- (2.0)
Exchange adjustments ..................... 4.0 6.5 (0.1) 10.4
----- ----- ----- -----
At 6 April 1996........................... 96.8 123.5 0.8 221.1
Charge for the year ...................... 24.1 27.1 -- 51.2
Disposals................................. (0.9) (0.7) (0.6) (2.2)
Exchange adjustments ..................... (8.6) (8.2) (0.2) (17.0)
----- ----- ----- -----
At 5 April 1997........................... 111.4 141.7 -- 253.1
----- ----- ----- -----
NET BOOK VALUE
At 5 April 1997........................... 133.8 295.8 -- 429.6
----- ----- ----- -----
At 6 April 1996........................... 112.8 245.1 1.8 359.7
----- ----- ----- -----
At 2 April 1995........................... 105.4 239.1 1.8 346.3
----- ----- ----- -----
</TABLE>
Development costs consist principally of prototype costs, net book value of
(pound)95.1 million (1996 (pound)82.5 million and 1995 (pound)75.3 million) and
computer software.
F-15
<PAGE> 16
NOTES TO THE ACCOUNTS (CONTINUED)
13 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
LONG SHORT
FREEHOLD LEASEHOLD LEASEHOLD PLANT &
PROPERTY PROPERTY PROPERTY EQUIPMENT TOTAL
-------- -------- -------- --------- -----
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C>
GROUP COST
At 2 April 1995........................ 248.8 12.8 17.4 938.2 1,217.2
New subsidiary undertakings............ 10.3 -- -- 23.1 33.4
Additions.............................. 6.5 -- 1.2 147.4 155.1
Change in category..................... 2.2 -- (0.8) (1.4) --
Exchange adjustments .................. 4.1 -- 0.6 32.9 37.6
----- ---- ---- ------- -------
271.9 12.8 18.4 1,140.2 1,443.3
Disposal of subsidiary undertakings.... (0.1) -- -- (15.3) (15.4)
Disposals.............................. (22.8) (0.1) (2.0) (21.1) (46.0)
----- ---- ---- ------- -------
At 6 April 1996........................ 249.0 12.7 16.4 1,103.8 1,381.9
New subsidiary undertakings............ 57.0 1.3 6.4 105.1 169.8
Additions.............................. 13.4 -- 3.5 186.1 203.0
Change in category..................... 3.2 -- 1.8 (5.0) --
Exchange adjustments .................. (37.7) (0.1) (2.1) (113.8) (153.7)
----- ---- ---- ------- -------
284.9 13.9 26.0 1,276.2 1,601.0
Disposal of subsidiary undertakings.... -- -- (0.1) (1.2) (1.3)
Disposals.............................. (21.5) (5.5) (0.2) (29.2) (56.4)
----- ---- ---- ------- -------
At 5 April 1997........................ 263.4 8.4 25.7 1,245.8 1,543.3
----- ---- ---- ------- -------
DEPRECIATION
At 2 April 1995........................ 23.9 0.7 5.3 330.8 360.7
Charge for the year.................... 2.4 -- 1.1 73.2 76.7
Change in category..................... 0.4 -- (0.2) (0.2) --
Exchange adjustments................... 0.8 -- 0.2 11.9 12.9
----- ---- ---- ------- -------
27.5 0.7 6.4 415.7 450.3
Disposal of subsidiary undertakings.... -- -- -- (7.8) (7.8)
Disposals.............................. (3.1) -- (0.8) (10.8) (14.7)
----- ---- ---- ------- -------
At 6 April 1996........................ 24.4 0.7 5.6 397.1 427.8
Charge for the year.................... 5.0 -- 1.8 88.6 95.4
Change in category..................... (0.6) -- 0.6 -- --
Exchange adjustments................... (3.2) -- (0.5) (38.3) (42.0)
----- ---- ---- ------- -------
25.6 0.7 7.5 447.4 481.2
Disposal of subsidiary undertakings.... -- -- -- (0.1) (0.1)
Disposals.............................. (2.7) (0.6) (0.1) (18.0) (21.4)
----- ---- ---- ------- -------
At 5 April 1997........................ 22.9 0.1 7.4 429.3 459.7
----- ---- ---- ------- -------
NET BOOK VALUE
At 5 April 1997........................ 240.5 8.3 18.3 816.5 1,083.6
----- ---- ---- ------- -------
At 6 April 1996........................ 224.6 12.0 10.8 706.7 954.1
----- ---- ---- ------- -------
At 2 April 1995........................ 224.9 12.1 12.1 607.4 856.5
----- ---- ---- ------- -------
</TABLE>
Within cost of freehold property (pound)176.3 million (1996 (pound)166.4
million and 1995 (pound)159.9 million) relates to depreciable assets.
F-16
<PAGE> 17
NOTES TO THE ACCOUNTS (CONTINUED)
13 TANGIBLE FIXED ASSETS (CONTINUED)
Amounts included in respect of assets held under finance leases are:
<TABLE>
<CAPTION>
LAND & PLANT &
BUILDINGS EQUIPMENT TOTAL
--------- --------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
NET BOOK VALUE
At 5 April 1997.............................................. 3.0 30.1 33.1
---- ---- ----
At 6 April 1996.............................................. 5.4 32.5 37.9
---- ---- ----
At 2 April 1995.............................................. 10.8 36.5 47.3
---- ---- ----
DEPRECIATION
Charge for the year ended 5 April 1997....................... 0.1 5.8 5.9
---- ---- ----
Charge for the year ended 6 April 1996....................... 0.3 7.4 7.7
---- ---- ----
</TABLE>
During the period the Group entered into finance lease arrangements in
respect of assets with a total capital value at the inception of the leases of
(pound)5.1 million (1996 (pound)6.1 million and 1995 (pound)11.6 million).
<TABLE>
<CAPTION>
SHORT
FREEHOLD LEASEHOLD PLANT &
PROPERTY PROPERTY EQUIPMENT TOTAL
-------- --------- --------- -----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
COMPANY COST
At 2 April 1995................................... 2.3 0.2 0.9 3.4
Additions......................................... -- -- 1.1 1.1
----- ---- ---- ----
2.3 0.2 2.0 4.5
Disposals......................................... (1.2) -- -- (1.2)
----- ---- ---- ----
At 6 April 1996................................... 1.1 0.2 2.0 3.3
Additions......................................... 0.7 6.1 0.6 7.4
----- ---- ---- ----
1.8 6.3 2.6 10.7
Disposals......................................... (0.7) (6.1) (0.2) (7.0)
----- ---- ---- ----
At 5 April 1997................................... 1.1 0.2 2.4 3.7
----- ---- ---- ----
DEPRECIATION
At 2 April 1995................................... 0.7 -- 0.4 1.1
Charge for the year............................... -- -- 0.2 0.2
Disposals......................................... (0.3) -- (0.1) (0.4)
----- ---- ---- ----
At 6 April 1996................................... 0.4 -- 0.5 0.9
Charge for the year............................... -- -- 0.1 0.1
----- ---- ---- ----
At 5 April 1997................................... 0.4 -- 0.6 1.0
----- ---- ---- ----
NET BOOK VALUE
At 5 April 1997................................... 0.7 0.2 1.8 2.7
----- ---- ---- ----
At 6 April 1996................................... 0.7 0.2 1.5 2.4
----- ---- ---- ----
At 2 April 1995................................... 1.6 0.2 0.5 2.3
----- ---- ---- ----
</TABLE>
Within cost of freehold property (pound)1.0 million (1996 (pound)1.0 million
and 1995 (pound)2.3 million) relates to depreciable assets.
F-17
<PAGE> 18
NOTES TO THE ACCOUNTS (CONTINUED)
13 TANGIBLE FIXED ASSETS (CONTINUED)
Amounts included in respect of assets held under finance
leases are:
<TABLE>
<CAPTION>
LAND & PLANT &
BUILDINGS EQUIPMENT TOTAL
--------- --------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
NET BOOK VALUE
At 5 April 1997.............................................. -- 0.3 0.3
---- --- ---
At 6 April 1996.............................................. -- 0.4 0.4
---- --- ---
At 2 April 1995.............................................. 1.0 0.4 1.4
---- --- ---
DEPRECIATION
Charge for the year ended 5 April 1997....................... -- 0.1 0.1
---- --- ---
Charge for the year ended 6 April 1996....................... -- 0.1 0.1
---- --- ---
</TABLE>
F-18
<PAGE> 19
NOTES TO THE ACCOUNTS (CONTINUED)
14 FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
GROUP COMPANY
----------------- ---------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
Associated undertakings.......................... 2.2 2.7 -- --
Trade investments................................ 17.0 107.2 0.2 103.1
Subsidiary undertakings.......................... -- -- 624.6 80.4
---- ----- ----- -----
19.2 109.9 624.8 183.5
---- ----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
GROUP
SHARE OF
POST-ACQUISITION
SHARES PROFITS/
AT COST (LOSSES) TOTAL
------- -------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
ASSOCIATED UNDERTAKINGS
GROUP
At 2 April 1995.............................................. 3.3 0.1 3.4
Additions.................................................... 1.1 -- 1.1
Disposals.................................................... (1.0) (1.3) (2.3)
Share of profit for the year (See note 5).................... -- 0.4 0.4
Exchange adjustments......................................... -- 0.1 0.1
---- ----- -----
At 6 April 1996.............................................. 3.4 (0.7) 2.7
New subsidiary undertakings.................................. 0.1 -- 0.1
Additions.................................................... 0.1 -- 0.1
Disposals.................................................... (0.3) (0.5) (0.8)
Share of profit for the year (See note 5).................... -- 0.2 0.2
Exchange adjustments......................................... (0.1) -- (0.1)
---- ----- -----
At 5 April 1997.............................................. 3.2 (1.0) 2.2
---- ----- -----
COMPANY
At 2 April 1995 0.4 -- 0.4
Disposals (0.4) -- (0.4)
---- ----- -----
At 6 April 1996 -- -- --
---- ----- -----
</TABLE>
A list of associated undertakings is given in note 5.
F-19
<PAGE> 20
NOTES TO THE ACCOUNTS (CONTINUED)
14 FIXED ASSET INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
LISTED UNLISTED
AT COST AT COST TOTAL
------- -------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
TRADE INVESTMENTS
GROUP
At 2 April 1995.............................................. 3.2 1.4 4.6
New subsidiary undertakings.................................. -- 0.3 0.3
Additions.................................................... 103.1 1.6 104.7
Disposals.................................................... -- (1.9) (1.9)
Exchange adjustments......................................... (0.4) (0.1) (0.5)
----- ---- -----
At 6 April 1996 ............................................. 105.9 1.3 107.2
New subsidiary undertakings.................................. 4.8 9.2 14.0
Additions.................................................... 0.1 4.8 4.9
Transfer to subsidiary undertakings.......................... (103.1) -- (103.1)
Disposals.................................................... (0.2) (2.3) (2.5)
Exchange adjustments......................................... (1.5) (2.0) (3.5)
----- ---- -----
At 5 April 1997 ............................................. 6.0 11.0 17.0
----- ---- -----
</TABLE>
At 5 April 1997, the market value of listed investments (all of which are
listed on recognized stock exchanges) was (pound)5.2 million (1996 (pound)125.7
million and 1995 (pound)3.2 million).
<TABLE>
<CAPTION>
LISTED UNLISTED
AT COST AT COST TOTAL
------- --------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
COMPANY
Additions.................................................... 103.1 -- 103.1
At 6 April 1996.............................................. 103.1 -- 103.1
------ ---- ------
Additions.................................................... -- 0.2 0.2
Transfer to investments in subsidiary undertakings........... (103.1) -- (103.1)
------ ---- ------
At 5 April 1997.............................................. -- 0.2 0.2
------ ---- ------
</TABLE>
At 6 April 1996, the market value of listed investments (which are listed on
a recognized stock exchange) was (pound)122.3 million.
F-20
<PAGE> 21
NOTES TO THE ACCOUNTS (CONTINUED)
14 FIXED ASSET INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NET BOOK
COST PROVISION VALUE
---- --------- -----
(POUND)M (POUND)M (POUND)M
<S> <C> <C> <C>
INVESTMENT IN SUBSIDIARY UNDERTAKINGS
COMPANY
At 2 April 1995.............................................. 81.8 (1.7) 80.1
Additions.................................................... 0.3 -- 0.3
----- ---- -----
At 6 April 1996.............................................. 82.1 (1.7) 80.4
Additions.................................................... 544.2 -- 544.2
----- ---- -----
At 5 April 1997.............................................. 626.3 (1.7) 624.6
----- ---- -----
</TABLE>
Investment in subsidiary undertakings includes the Company's 50.6%
shareholding in Nemic-Lambda KK. Nemic-Lambda KK is quoted on the Tokyo Stock
Exchange - First Tier and on 5 April 1997 the imputed value of the Company's
50.6% shareholding was (pound)118.3 million, translated at Yen 203.62/(pound)1
(2 May 1996 (pound)314.1 million, translated at Yen 157.03/(pound)1). At 28 May
1997 the imputed value of the Group's 50.6% shareholding was (pound)197.1
million, translated at Yen 189.56/(pound)1.
15 STOCKS
<TABLE>
<CAPTION>
1997 1996
-------- --------
GROUP (POUND)M (POUND)M
<S> <C> <C>
Raw materials........................................................... 156.6 130.6
Work in progress........................................................ 130.1 143.0
Finished goods and goods for resale..................................... 207.1 208.4
Consumable stock........................................................ 6.9 7.3
----- -----
500.7 489.3
----- -----
</TABLE>
F-21
<PAGE> 22
NOTES TO THE ACCOUNTS (CONTINUED)
16 DEBTORS
<TABLE>
<CAPTION>
GROUP COMPANY
----------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
Amounts falling due within one year:
Trade debtors ................................... 553.9 485.1 -- --
Amounts owed by subsidiary undertakings.......... -- -- 310.8 405.3
Amounts owed by associated undertakings.......... 1.6 2.8 -- --
Other debtors.................................... 172.5 123.5 19.9 15.2
Prepayments and accrued income................... 102.6 68.1 3.2 2.1
----- ----- ------- -------
830.6 679.5 333.9 422.6
----- ----- ------- -------
Amounts falling due after more than one year:
Amounts owed by subsidiary undertakings.......... -- -- 1,074.7 625.8
Other debtors.................................... 36.6 27.8 0.2 0.3
Deferred taxation................................ 39.1 43.7 -- --
----- ----- ------- -------
75.7 71.5 1,074.9 626.1
----- ----- ------- -------
906.3 751.0 1,408.8 1,048.7
----- ----- ------- -------
</TABLE>
The deferred tax asset relates to provisions for post-employment benefit
schemes in the United States.
17 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
Bank and other loans
-- secured..................................... 4.1 9.6 -- --
-- unsecured................................... 42.6 43.4 34.4 --
Bank overdrafts
-- secured..................................... -- 4.2 -- --
-- unsecured................................... 23.4 18.5 61.8 38.2
Finance leases................................... 7.1 7.5 0.3 0.3
----- ----- ----- -----
SHORT-TERM BORROWINGS............................ 77.2 83.2 96.5 38.5
----- ----- ----- -----
Payments received on account..................... 35.2 30.4 -- --
Trade creditors.................................. 351.6 304.3 -- --
Bills of exchange ............................... 14.4 24.8 -- --
Amounts owed to subsidiary undertakings.......... -- -- 40.2 30.4
Taxation:
Corporation and overseas tax..................... 162.8 113.6 19.8 27.5
Other tax........................................ 18.4 18.3 0.1 0.1
----- ----- ----- -----
181.2 131.9 19.9 27.6
Social security.................................. 13.1 11.8 -- --
Other creditors.................................. 69.3 45.8 3.6 1.9
Accruals......................................... 138.9 143.1 13.6 5.6
Proposed dividend ............................... 69.5 57.2 69.5 57.2
----- ----- ----- -----
OTHER CREDITORS.................................. 873.2 749.3 146.8 122.7
----- ----- ----- -----
</TABLE>
F-22
<PAGE> 23
NOTES TO THE ACCOUNTS (CONTINUED)
18 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
----------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
LOANS AND OTHER BORROWINGS
Finance leases..................................... 16.9 22.6 0.2 0.5
Bank and other loans (see note 19)................. 681.1 608.8 565.0 251.0
----- ----- ----- -----
698.0 631.4 565.2 251.5
----- ----- ----- -----
</TABLE>
19 BANK AND OTHER LOANS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY
------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
UNSECURED
Wholly repayable within 5 years.................. 518.6 594.6 412.5 251.0
Repayable in more than 5 years by installments... 1.7 0.4 -- --
Repayable in more than 5 years other than by
installments.................................... 152.4 0.7 152.5 --
----- ----- ----- -----
672.7 595.7 565.0 251.0
----- ----- ----- -----
SECURED
Wholly repayable within 5 years ................. 2.1 4.0 -- --
Repayable in more than 5 years by installments .. 3.2 6.1 -- --
Repayable in more than 5 years other than by
installments..................................... 3.1 3.0 -- --
----- ----- ----- -----
8.4 13.1 -- --
----- ----- ----- -----
681.1 608.8 565.0 251.0
----- ----- ----- -----
</TABLE>
An analysis of the loans by due date of repayment is set out below:
<TABLE>
<CAPTION>
GROUP COMPANY
-------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
1-2 years ....................................... 41.9 3.8 -- --
2-5 years........................................ 480.8 598.3 412.5 251.0
In 5 or more years
-- by installments............................. 2.9 3.0 -- --
-- not by installments......................... 155.5 3.7 152.5 --
----- ----- ----- -----
681.1 608.8 565.0 251.0
----- ----- ----- -----
</TABLE>
Of total unsecured bank and other loans of (pound)672.7 million,
(pound)152.5 million is repayable January 2007 and is at a fixed rate of
interest of 7.125% per annum, (pound)86.2 million is repayable by installments
commencing 1999 and ceasing January 2001 and is at a fixed rate of interest of
11.22% per annum and (pound)17.7 million is repayable December 1998 at a fixed
rate of interest of 9.12% per annum. Substantially all of the balance is
repayable by November 2000 and the interest rate related to LIBOR and varies
accordingly.
Interest rate swaps totalling (pound)205.0 million have been entered into in
respect of borrowings denominated in Sterling, United States Dollars,
Deutschmarks, Yen and Canadian Dollars with maturity dates between January 1999
and April 2000.
The secured bank and other loans totalling (pound)12.5 million are secured
against assets of certain overseas subsidiary undertakings.
F-23
<PAGE> 24
NOTES TO THE ACCOUNTS (CONTINUED)
20 FINANCE LEASE COMMITMENTS
At 5 April 1997 future minimum payments under finance leases and similar
hire purchase arrangements are as follows:
<TABLE>
<CAPTION>
GROUP COMPANY
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- -------
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
Payable within 1 year............................ 9.9 10.8 0.3 0.4
Payable between 1 and 2 years.................... 8.6 8.9 0.2 0.3
Payable between 2 and 5 years.................... 11.3 16.3 0.1 0.3
Payable after 5 years............................ 3.2 8.3 -- --
---- ----- ---- ----
Total gross payments............................. 33.0 44.3 0.6 1.0
Less finance charges included above.............. (9.0) (14.2) (0.1) (0.2)
---- ----- ---- ----
24.0 30.1 0.5 0.8
---- ----- ---- ----
</TABLE>
21 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
OTHER
INCLUDING
POST-RETIREMENT REORGANIZATION DEFERRED
OBLIGATIONS PENSIONS AND WARRANTY TAX TOTAL
----------- -------- ------------ --- -----
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C>
GROUP
At 2 April 1995....................... 124.3 37.1 54.0 54.7 270.1
New subsidiary undertakings.......... -- 1.9 3.5 (1.4) 4.0
Transfers............................. -- -- -- (0.2) (0.2)
Utilized in year -- net............... (9.3) (1.0) (18.5) -- (28.8)
Charged in year....................... 7.1 3.8 2.9 14.3 28.1
Advance corporation tax............... -- -- -- 9.9 9.9
Exchange adjustments.................. 7.9 0.7 1.5 -- 10.1
----- ---- ---- ---- -----
At 6 April 1996....................... 130.0 42.5 43.4 77.3 293.2
----- ---- ---- ---- -----
New subsidiary undertakings.......... -- 15.5 22.5 7.5 45.5
Transfers............................. -- -- -- 2.0 2.0
Utilized in year -- net............... (11.1) (4.0) (23.3) -- (38.4)
Charged in year....................... 0.9 1.8 11.2 7.6 21.5
Advance corporation tax............... -- -- -- (0.1) (0.1)
Exchange adjustments.................. (8.0) (9.1) (5.0) (7.0) (29.1)
----- ---- ---- ---- -----
At 5 April 1997....................... 111.8 46.7 48.8 87.3 294.6
----- ---- ---- ---- -----
</TABLE>
Other, including reorganization and warranty provisions of (pound)48.8
million (1996 (pound)43.4 million and 1995 (pound)54.0 million), includes
(pound)nil million (1996 (pound)7.8 million and 1995 (pound)15.0 million) for
the integration and reorganization costs arising on the restructuring of
acquired businesses. (pound)7.0 million was utilized in the year (1996
(pound)7.2 million and 1995 (pound)15.1 million).
F-24
<PAGE> 25
NOTES TO THE ACCOUNTS (CONTINUED)
21 PROVISIONS FOR LIABILITIES AND CHARGES (CONTINUED)
<TABLE>
<CAPTION>
DEFERRED
TAX TOTAL
-------- -----
(POUND)M (POUND)M
<S> <C> <C>
COMPANY
At 2 April 1995......................................................... 13.6 13.6
Charged in year......................................................... (11.9) (11.9)
Advance corporation tax................................................. 5.9 5.9
----- -----
At 6 April 1996......................................................... 7.6 7.6
----- -----
Charged in year......................................................... (1.0) (1.0)
Advance corporation tax................................................. (0.1) (0.1)
----- -----
At 5 April 1997......................................................... 6.5 6.5
----- -----
</TABLE>
<TABLE>
<CAPTION>
DEFERRED TAX
------------------------------------------
1997 1996
1997 FULL 1996 FULL
AMOUNT POTENTIAL AMOUNT POTENTIAL
PROVIDED LIABILITY PROVIDED LIABILITY
-------- --------- -------- ---------
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
GROUP
Excess tax allowances over depreciation........... 21.1 142.7 16.7 89.4
Other timing differences.......................... 78.0 78.0 72.3 72.3
Advance corporation tax........................... (11.8) (11.8) (11.7) (11.7)
----- ----- ----- -----
87.3 208.9 77.3 150.0
----- ----- ----- -----
COMPANY
Excess tax allowances over depreciation........... 0.2 0.2 0.2 0.2
Other timing differences.......................... 18.1 18.1 19.1 19.1
Advance corporation tax........................... (11.8) (11.8) (11.7) (11.7)
----- ----- ----- -----
6.5 6.5 7.6 7.6
----- ----- ----- -----
</TABLE>
No provision has been made for the taxation liabilities which could arise in
the Group if certain freehold properties and other fixed assets were realized at
their balance sheet values. The potential liability is estimated at (pound)190.3
million (1996 (pound)211.3 million).
No provision has been made for additional taxation liabilities which may
arise if retained profits of certain overseas subsidiary and associated
undertakings are remitted to the United Kingdom.
22 CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1997 1996
---- ----
(POUND)M (POUND)M
<S> <C> <C>
AUTHORIZED: 960,000,000 (1996 480,000,000) ordinary shares of 25p each....... 240.0 120.0
----- -----
ISSUED, ALLOTTED AND FULLY PAID: 473,495,708 (1996 428,997,343)
ordinary shares of 25p each............................................... 118.4 107.2
----- -----
</TABLE>
On 10 April 1996, 189,224 shares and on 1 October 1996, 623,509 shares at
nominal value 25p each were issued in lieu of dividends for nominal value of
(pound)0.2 million (value (pound)7.0 million). A further 755,492 shares at
nominal value 25p each were issued under the share option scheme for proceeds of
(pound)4.2 million.
During the year, the Company issued 42,930,140 shares in connection with the
acquisition of Unitech plc.
F-25
<PAGE> 26
NOTES TO THE ACCOUNTS (CONTINUED)
22 CALLED UP SHARE CAPITAL (CONTINUED)
At 5 April 1997, options were outstanding as follows:
<TABLE>
<CAPTION>
NO. OF SHARES
--------------------
OPTION
1997 1996 DESCRIPTION PRICE
----- ----- ----------- ------
<S> <C> <C> <C> <C>
Executive Scheme (August 1987 grant) .... 6,447 6,447 Ordinary (pound)2.6566
Executive Scheme 1993 (December 1993
grant)................................. 759,000 1,505,000 Ordinary (pound)5.6250
Executive Scheme 1993 (July 1994 grant).. 80,000 105,000 Ordinary (pound)5.9950
Executive Scheme 1993 (December 1994
grant) ................................ 135,000 140,000 Ordinary (pound)5.3650
Executive Scheme 1993 (July 1995 grant).. 245,000 300,000 Ordinary (pound)6.4850
Executive Scheme 1993 (December 1995
grant) ................................ 1,620,000 1,670,000 Ordinary (pound)7.8850
Executive Scheme 1993 (July 1996 grant).. 480,000 -- Ordinary (pound)9.3550
Executive Scheme 1993 (December 1996
grant) ................................ 655,000 -- Ordinary (pound)9.9450
Unitech Executive Scheme Rollover
(September 1995) ...................... 150,681 -- Ordinary (pound)6.9100
Savings Related Share Option Scheme 1996
(January 1997) ........................ 660,357 -- Ordinary (pound)8.6900
Unitech Savings Related Share Option
Scheme Rollover (Various)................ 288,092 -- Ordinary (pound)1.47-(pound)5.15
</TABLE>
For all the executive schemes options are exercisable in normal
circumstances between the third and the tenth anniversary of the date of grant.
Under the Savings Related Share Option Scheme 1996 options for 235,226 shares
are exercisable on the third anniversary and for 425,131 shares on the fifth
anniversary from the start of the savings contract. The options granted under
the Unitech Savings Related Share Option Scheme Rollover are exercisable on the
fifth anniversary of the start of the savings contract.
23 RESERVES
<TABLE>
<CAPTION>
OTHER
RESERVES
SHARE EXCHANGE TOTAL
PREMIUM MERGER VARIATION OTHER REVENUE
ACCOUNT RESERVE RESERVE RESERVES RESERVE
----- ------ ----- ------ -----
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C>
GROUP
At 1 April 1995 ..................... 393.4 -- (10.3) (10.3) 476.0
Reallocation in respect of scrip
dividends.......................... (8.7) -- -- -- 8.7
Profit attributable to the members of
Siebe plc ......................... -- -- 21.9 21.9 193.0
Dividends -- total .................. -- -- -- -- (57.2)
Less scrip element ................ (0.1) -- -- -- 3.3
New share capital subscribed ........ 0.6 -- -- -- --
Goodwill written off ................ -- -- -- -- (65.5)
----- ------ ------ ------ -----
At 6 April 1996 ..................... 385.2 -- 11.6 11.6 558.3
----- ------ ------ ------ -----
Profit attributable to the members of
Siebe plc ......................... -- -- -- -- 253.8
Dividends -- total .................. -- -- -- -- (73.4)
Less scrip element ................ -- -- -- -- 6.8
Currency translation differences (on
foreign currency net investments).. -- -- (158.2) (158.2) --
New share capital subscribed ........ 4.0 361.3 -- 361.3 --
Transfer to goodwill ................ -- -- -- -- 3.9
Goodwill written off ................ -- (361.3) -- (361.3) (93.8)
----- ------ ------ ------ -----
At 5 April 1997 ..................... 389.2 -- (146.6) (146.6) 655.6
----- ------ ------ ------ -----
</TABLE>
F-26
<PAGE> 27
NOTES TO THE ACCOUNTS (CONTINUED)
23 RESERVES (CONTINUED)
Transfer to goodwill of (pound)3.9 million represents a transfer from
Revenue Reserve to goodwill written off relating to the 1995/96 final dividend
on shares issued to acquire Unitech plc which is part of the total consideration
paid for Unitech plc.
The cumulative amount to goodwill resulting from acquisitions which has been
written off between 1 April 1984 and 5 April 1997 is (pound)810.3 million (1996
(pound)355.2 million and 1995 (pound)289.7 million), of which (pound)578.6
million (1996 (pound)217.3 million and 1995 (pound)217.3 million) has been
charged to Merger Reserve and (pound)231.7 million (1996 (pound)137.9 million
and 1995 (pound)72.4 million) to Revenue Reserve.
<TABLE>
<CAPTION>
OTHER
RESERVES
SHARE EXCHANGE TOTAL
PREMIUM MERGER VARIATION OTHER REVENUE
ACCOUNT RESERVE RESERVE RESERVES RESERVE
----- ----- ------- ----- ----
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C>
COMPANY
At 1 April 1995.......................... 393.4 217.3 -- 217.3 64.1
Reallocation in respect of scrip
dividends.............................. (8.7) -- -- -- 8.7
Profit for year.......................... -- -- -- -- 79.3
Dividends - total........................ -- -- -- -- (57.2)
Less scrip element..................... (0.1) -- -- -- 3.3
Exchange variations...................... -- -- -- -- 1.8
New share capital subscribed............. 0.6 -- -- -- --
----- ----- ---- ----- -----
At 6 April 1996.......................... 385.2 217.3 -- 217.3 100.0
----- ----- ---- ----- -----
Profit for year.......................... -- -- -- -- 80.0
Dividends - total........................ -- -- -- -- (73.4)
Less scrip element..................... -- -- -- -- 6.8
Exchange variations...................... -- -- -- -- 1.6
New share capital subscribed............. 4.0 361.3 -- 361.3 --
----- ----- ---- ----- -----
At 5 April 1997.......................... 389.2 578.6 -- 578.6 115.0
----- ----- ---- ----- -----
</TABLE>
Following a review of the Company's scrip dividend scheme in Fiscal 1996 it
was concluded that shares which have been issued as an alternative to cash
dividends have the legal form of a bonus issue. Accordingly, the accounting
treatment was changed to reflect this. Previously, scrip dividends were dealt
with as if the cash alternative had been received by the shareholders and
immediately reinvested in shares.
F-27
<PAGE> 28
NOTES TO THE ACCOUNTS (CONTINUED)
24 COMMITMENTS
Capital expenditure authorized and contracted at the balance sheet date but
for which no provision has been made in the accounts amounted to (pound)9.1
million (1996 (pound)17.8 million).
Payments under operating leases in the year to 4 April 1998 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------- ------------------------------
OTHER OTHER
LAND & OPERATING LAND & OPERATING
BUILDINGS LEASES TOTAL BUILDINGS LEASES TOTAL
--------- --------- ----- --------- --------- ----
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
GROUP
Leases expiring
Within 1 year............................ 4.5 6.4 10.9 2.5 5.4 7.9
Between 2 and 5 years.................... 7.3 28.5 35.8 5.3 32.1 37.4
More than 5 years........................ 21.1 5.1 26.2 17.9 4.0 21.9
---- ---- ---- ---- ---- ----
32.9 40.0 72.9 25.7 41.5 67.2
---- ---- ---- ---- ---- ----
COMPANY
Leases expiring
Between 2 and 5 years.................... -- 0.3 0.3 -- 0.3 0.3
More than 5 years........................ 0.5 -- 0.5 1.0 -- 1.0
---- ---- ---- ---- ---- ----
0.5 0.3 0.8 1.0 0.3 1.3
---- ---- ---- ---- ---- ----
</TABLE>
25 PENSIONS
The Group operates pension schemes for the majority of employees. The larger
schemes, in the United Kingdom and United States, are of the defined benefit
type, and costs are assessed with the advice of independent qualified actuaries
using the projected unit method. These schemes cover 25.4% of Group employees.
The assets of these schemes are held in separate trustee administered funds.
The dates of the latest actuarial valuations fall between 31 January 1996
and 31 March 1997 and the market value of the assets of the principal schemes
was (pound)434.0 million.
For the purposes of assessing funding levels and contributions under SSAP24
and FAS87, the principal actuarial assumptions used were investment returns of
8% to 9.5% per annum and pay growth of 4% to 6.5% per annum. Actuarial asset
values were determined for the United Kingdom schemes using discounted future
investment income methods assuming dividend growth rates of 4.5% per annum. For
the remainder, market or smoothed market value methods were adopted. The
aggregate actuarial value of assets in the main funds in the United Kingdom and
the United States represented 100.9% of the benefits which had accrued to
members after allowing for expected increases in earnings.
Debtors falling due within one year, creditors falling due within one year
and creditors falling due after more than one year include (pound)37.8 million,
(pound)2.5 million and (pound)12.3 million, respectively, for pension
prepayments and accruals (1996 (pound)35.4 million, (pound)2.0 million and
(pound)18.6 million, respectively).
OTHER POST-EMPLOYMENT BENEFITS The Group operates a number of plans under
which approximately 15,000 employees are eligible to receive benefits after
retirement. These plans are principally in the United States and are in respect
of medical benefits. The method of accounting for these is similar to that used
for defined benefit pension schemes. The United States arrangements were
actuarially valued as at 5 April 1997; the principal assumptions are that the
long-term increase in health costs will be in the range of 4% to 8% per annum
and a discount rate of 7.75%. The cost of these benefits charged to the profit
and loss account was (pound)4.4 million (1996 (pound)5.4 million). In addition,
the Group makes payments to various ex-employees under medical and workers'
compensation agreements.
26 CONTINGENT LIABILITIES
GROUP There are contingent liabilities in respect of guarantees and bank
indemnities totalling (pound)96.4 million (1996 (pound)104.0 million).
COMPANY The Company has contingent liabilities in respect of guarantees of
subsidiary undertakings' bank loans and overdrafts and bank indemnities
totalling (pound)65.0 million (1996 (pound)408.1 million).
F-28
<PAGE> 29
NOTES TO THE ACCOUNTS (CONTINUED)
27 CASH FLOW STATEMENT
Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1997 1996
------ ------
(POUND)M (POUND)M
<S> <C> <C>
Operating profit ................................................. 469.9 371.2
Depreciation charges ............................................. 146.6 121.4
Profit in associated undertakings ................................ (0.3) (0.5)
Decrease in stocks ............................................... 29.9 7.8
Increase in debtors .............................................. (67.6) (60.9)
Decrease in creditors/provisions ................................. (56.5) (1.9)
----- -----
Net cash inflow from operating activities......................... 522.0 437.1
----- -----
</TABLE>
Analysis of the net outflow of cash in respect of the purchase of
subsidiary undertakings
<TABLE>
<CAPTION>
1997 1996
------ ------
(POUND)M (POUND)M
<S> <C> <C>
Cash consideration ............................................... 260.9 101.2
Less paid in the year ended 6 April 1996 ......................... (103.1) --
----- -----
157.8 101.2
----- -----
</TABLE>
Reconciliation of net cash flow to movement in net debt
<TABLE>
<CAPTION>
1997 1996
------ ------
(POUND)M (POUND)M
<S> <C> <C>
(Decrease)/increase in cash in the period ........................ (59.9) 10.4
Cash inflow from increase in debt and lease financing ............ (22.2) (80.9)
Cash outflow/(inflow) from increase/(decrease) in liquid resources 2.8 (0.6)
Change in net debt resulting from cash flows ..................... (79.3) (71.1)
Loans and finance leases acquired with subsidiary undertakings ... (87.2) (10.1)
New finance leases ............................................... (5.1) (5.1)
Translation differences .......................................... 39.5 (35.0)
Movement in net debt in the year ................................. (132.1) (121.3)
Net debt at the start of the year ................................ (432.3) (311.0)
------ ------
Net debt at the end of the year .................................. (564.4) (432.3)
------ ------
</TABLE>
Analysis of changes to net debt
<TABLE>
<CAPTION>
ACQUISITIONS
(EXCLUDING OTHER
AT CASH AND NON-CASH EXCHANGE AT
1 APRIL 1995 CASH FLOW OVERDRAFTS) CHANGES* MOVEMENT 6 APRIL 1996
------ ------- ------- ------- ------ ------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand... 158.2 7.3 (2.6) 162.9
Overdrafts................. (25.1) 3.1 (0.7) (22.7)
10.4
Debt due within 1 year..... (111.0) 54.5 (4.3) 11.3 (3.5) (53.0)
Debt due after 1 year...... (411.9) (153.8) (5.8) (11.3) (26.0) (608.8)
Finance leases............. (43.1) 18.4 -- (5.1) (0.3) (30.1)
(80.9)
Short-term deposits........ 121.9 (0.6) -- -- (1.9) 119.4
------ ------ ------- ------- ------ ------
Total...................... (311.0) (71.1) (10.1) (5.1) (35.0) (432.3)
------ ------ ------- ------- ------ ------
Cash at bank and in hand... 158.2 162.9
Short-term deposits........ 121.9 119.4
------ ------
Cash and deposits.......... 280.1 282.3
------ ------
</TABLE>
* Other movements comprise transfers between categories of debt and new finance
leases.
F-29
<PAGE> 30
NOTES TO THE ACCOUNTS (CONTINUED)
27 CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
ACQUISITIONS
(EXCLUDING OTHER
AT CASH AND NON-CASH EXCHANGE AT
6 APRIL 1996 CASH FLOW OVERDRAFTS) CHANGES* MOVEMENT 5 APRIL 1997
------------ --------- ----------- -------- -------- ------------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand 162.9 (54.9) (19.6) 88.4
Overdrafts ............. (22.7) (5.0) 4.3 (23.4)
(59.9)
Debt due within 1 year . (53.0) 20.4 (12.1) (9.9) 7.9 (46.7)
Debt due after 1 year .. (608.8) (56.1) (90.1) 9.9 64.0 (681.1)
Finance leases ......... (30.1) 13.5 (4.6) (5.1) 2.3 (24.0)
(22.2)
Short-term deposits .... 119.4 2.8 19.6 -- (19.4) 122.4
----- ----- ---- ---- ---- -----
Total .................. (432.3) (79.3) (87.2) (5.1) 39.5 (564.4)
----- ----- ---- ---- ---- -----
Cash at bank and in hand 162.9 88.4
Short-term deposits .... 119.4 122.4
----- -----
Cash and deposits ...... 282.3 210.8
----- -----
</TABLE>
* Other movements comprise transfers between categories of debt and new finance
leases.
28 ACQUISITIONS AND DISPOSALS
During Fiscal 1997, the Group acquired 100% of the issued share capital of
Unitech Limited, previously Unitech plc ('Unitech'), ERO Electronic S.p.A.,
Controlli SpA, Satchwell Controls Limited, Barcol Air AG, Elbit-ATI, Predictive
Control Limited and the trade and assets of Demag Mannesmann and VTA Power
Application Division. The purchase consideration, including professional and
associated costs, amounted to (pound)622.8 million.
Investment in subsidiary undertakings shown in the consolidated cash flow
statement is the cash payment for acquisitions noted above.
UNITECH The acquisition of Unitech was completed during the year. In March
1996, the Company purchased a 25% interest in Unitech for a cash consideration
of (pound)103.1 million. Following a recommended offer made on 11 April 1996,
the Company acquired substantially all of the balance of the Unitech shares on 2
May 1996, and acquired the balance of the Unitech shares at various dates during
June and July 1996 for consideration comprising the issue of 42,930,140 ordinary
shares of 25p each in the Company and additional cash consideration, including
expenses, of (pound)21.7 million. The fair value of the total consideration was
(pound)496.9 million.
F-30
<PAGE> 31
NOTES TO THE ACCOUNTS (CONTINUED)
28 ACQUISITIONS AND DISPOSALS (CONTINUED)
The following table analyzes the fair value of the net assets of Unitech
acquired during the year:
<TABLE>
<CAPTION>
FAIR
ACCOUNTING VALUE
BOOK POLICY FAIR VALUE OF
VALUE ADJUSTMENT ADJUSTMENT NET ASSETS
---- ---- --- -----
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C>
GROUP
Intangible fixed assets .............. -- 89.6 -- 89.6
Tangible fixed assets ................ 107.3 -- 20.7 128.0
Trade investments .................... 15.1 (0.8) -- 14.3
Stocks ............................... 80.8 (5.9) -- 74.9
Debtors .............................. 126.0 -- -- 126.0
Cash and deposits .................... 34.6 -- -- 34.6
Short-term loans ..................... (33.4) -- -- (33.4)
Long-term debt ....................... (90.8) -- -- (90.8)
Short-term creditors ................. (85.1) -- (7.9) (93.0)
Provisions for liabilities and charges (13.9) -- (9.5) (23.4)
Minority interest .................... (68.7) (16.3) (1.3) (86.3)
---- ---- --- -----
71.9 66.6 2.0 140.5
---- ---- --- -----
Consideration -- paid in cash ........ 124.8
-- paid in shares ...... 372.1
-----
Goodwill ............................. 356.4
-----
</TABLE>
Unitech contributed in 1996/1997 (11 months) profit before tax of
(pound)43.0 million, after allocating group interest and head office costs.
Unitech contributed in 1996/1997 (11 months) (pound)85.0 million to the
Group's net cash inflow from operating activities, paid (pound)8.9 million in
respect of net returns on investments and servicing of finance, paid (pound)16.9
million in respect of taxation, utilized (pound)33.8 million for capital
expenditure and financial investments and paid (pound)3.0 million of equity
dividends.
An amount of (pound)0.5 million has been charged to the Group profit and
loss account in respect of costs incurred in reorganizing, restructuring and
integrating the acquisition in the period from 2 May 1996 to 5 April 1997.
The summarized profit and loss account for the period from 1 June 1995
to 2 May 1996 shown on the basis of the accounting policies of Unitech prior to
the acquisition, is as follows:
<TABLE>
<CAPTION>
(POUND)M
-----
<S> <C>
Turnover .................................... 376.9
-----
Operating profit, before exceptional items .. 35.6
Profit on ordinary activities before taxation 25.3
Tax on profit on ordinary activities ........ (12.8)
-----
Profit on ordinary activities after taxation 12.5
Minority interests .......................... (5.3)
-----
Profit for the financial period ............. 7.2
-----
</TABLE>
Profit on ordinary activities before tax is arrived at after charging
exceptional costs of (pound)7.3 million, comprising (pound)2.2 million of costs
relating to the Siebe plc bid for Unitech and provision for legal disputes
arising in the normal course of business. In the year ended 31 May 1995 the
profit after taxation and minority interests was (pound)18.7 million.
Total recognized gains and losses for the period from 1 June 1995 and 2
May 1996 comprise the profit for the financial period of (pound)7.2 million and
translation gain on foreign currency net investments of (pound)5.6 million.
F-31
<PAGE> 32
NOTES TO THE ACCOUNTS (CONTINUED)
28 ACQUISITIONS AND DISPOSALS (CONTINUED)
OTHER ACQUISITIONS
The following table analyzes the fair value of the net assets acquired for
the other acquisitions during the year:
<TABLE>
<CAPTION>
FAIR
ACCOUNTING VALUE
POLICY FAIR VALUE OF NET
BOOK VALUE ADJUSTMENT ADJUSTMENT ASSETS
---- ---- ---- ----
(POUND)M (POUND)M (POUND)M (POUND)M
GROUP
<S> <C> <C> <C> <C>
Intangible fixed assets............................ 5.7 27.6 -- 33.3
Tangible fixed assets.............................. 28.4 -- 13.4 41.8
Investments in associated undertakings............. 0.1 -- -- 0.1
Stocks............................................. 23.8 -- -- 23.8
Debtors............................................ 43.1 -- -- 43.1
Cash and deposits.................................. 0.9 -- -- 0.9
Short-term loans................................... (30.3) -- -- (30.3)
Long-term debt..................................... (3.9) -- -- (3.9)
Short-term creditors............................... (31.9) -- -- (31.9)
Long-term creditors................................ (1.3) -- -- (1.3)
Provisions for liabilities and charges............. (20.0) -- (2.0) (22.0)
Minority interest.................................. -- (0.9) -- (0.9)
---- ---- ---- ----
14.6 26.7 11.4 52.7
---- ---- ---- ----
Consideration -- paid in cash...................... 117.8
-- deferred consideration............ 8.1
----
Goodwill........................................... 73.2
----
</TABLE>
<TABLE>
<CAPTION>
(POUND)M
----
<S> <C>
Goodwill on the acquisition of:
ERO Electronic S.p.A ................... 11.2
Controlli SpA .......................... 4.8
Satchwell Controls Limited ............. 46.1
Barcol Air AG .......................... 9.1
Elbit - ATI ............................ 1.6
Predictive Control Limited ............. 1.9
Demag Mannesmann Compressed Air Division (2.6)
VTA Power Application Division ......... 1.1
----
73.2
----
</TABLE>
In the fair value tables, the fair values attributed to intangible fixed
assets represent market values of intangible fixed assets acquired, principally
patents, licenses and trademarks, and have been based upon professional
valuations. The fair values attributed to the tangible fixed assets represent
revaluations of tangible fixed assets acquired and have been based upon
professional valuations, on the basis of their open market existing use or
depreciated replacement cost as appropriate. The minority interest adjustments
comprise the minority interest share of these fixed asset adjustments.
The other accounting policy adjustment relates principally to an alignment
of stock provisions in Unitech with those adopted by Siebe plc.
Fair value adjustments for provisions for liabilities and charges comprise
recognition of unprovided amounts in respect of pensions ((pound)4.5 million)
and tax liabilities ((pound)7.0 million) and fair value adjustments to
short-term creditors comprise recognition of unprovided amounts in respect of
onerous contracts and other liabilities.
The Group also paid (pound)18.3 million in cash relating to deferred
payments for companies acquired in the prior year.
The acquisitions (excluding Unitech) contributed profit before tax of
(pound)5.4 million, after allocating group interest and head office costs. The
acquisitions (excluding Unitech) incurred losses before tax of (pound)4.4
million for the period from the start of their financial year to the date of
acquisition and earned profits before tax of (pound)10.6 million for the
previous financial year.
F-32
<PAGE> 33
NOTES TO THE ACCOUNTS (CONTINUED)
28 ACQUISITIONS AND DISPOSALS (CONTINUED)
The acquisitions (excluding Unitech) contributed (pound)13.1 million to the
Group's cash inflow from operating activities, paid (pound)4.0 million in
respect of net returns on investments and servicing of finance, received
(pound)1.5 million in respect of taxation and utilized (pound)0.4 million for
capital expenditure and financial investments during 1997.
In addition, the Group acquired further minority interests, principally the
remaining 51% in Mahle GmbH, a further 8% in Gestra AG and the remaining 17% in
Eliwell S.p.A. for a total cash and deferred consideration of (pound)35.6
million with resulting goodwill of (pound)25.5 million.
During fiscal 1996, the Group acquired 100% of the issued share capital of
Form Rite Corp, Form Rite (Canada) Ltd, Foxboro L & N (formerly L & N SCADA), P
& W Ventil-und Regler Service GmbH, 80% of Siebe Fluid Systems Ltda (formerly
Tubotecnica Termoplasticos Ltda), the remaining 65% of Triconex Solutions SA not
already owned by the Group and 49% of Mahle Kompressoren GmbH and its subsidiary
AGRE-Kompressoren Druckluftgerate Ges.m.b.H (over which the Group exercises a
dominant influence) with a commitment to acquire a further 2%. The purchase
consideration, including professional and associated costs, amounted to
(pound)86.9 million.
The above acquisitions contributed profit before tax of (pound)3.2 million,
after allocating group interest and head office costs.
The acquisitions earned profit before tax of (pound)1.2 million for the
period from the start of their financial year to the date of acquisition and
earned profit before tax of (pound)6.5 million for the previous financial year.
Investment in subsidiary undertakings shown in the consolidated cash flow
statement is the cash payment for acquisitions noted above.
The following table analyzes the fair value of the net assets acquired
during fiscal 1996:
<TABLE>
<CAPTION>
FAIR
VALUE
FAIR VALUE OF NET
BOOK VALUE ADJUSTMENT ASSETS
---------- ---------- ------
(POUND)M (POUND)M (POUND)M
GROUP
<S> <C> <C> <C>
Intangible fixed assets.................................. 1.8 7.1 8.9
Tangible fixed assets.................................... 18.7 14.7 33.4
Investments in associated undertakings................... 0.3 -- 0.3
Stocks................................................... 22.3 -- 22.3
Debtors.................................................. 19.8 -- 19.8
Cash at bank and in hand................................. 4.8 -- 4.8
Short-term loans......................................... (4.3) -- (4.3)
Long-term debt........................................... (5.8) -- (5.8)
Short-term creditors..................................... (18.8) -- (18.8)
Long-term creditors...................................... (3.7) -- (3.7)
Deferred tax 1.4 -- 1.4
Provisions for liabilities and charges................... (5.4) -- (5.4)
Minority interest........................................ (9.6) -- (9.6)
---- ---- ----
21.5 21.8 43.3
---- ---- ----
Consideration -- paid in cash............................ 79.1
-- deferred cash........................... 7.8
-- transfer from associated undertakings... 2.5
----
Goodwill................................................. 46.1
----
</TABLE>
The Group also paid (pound)22.1 million in cash relating to deferred
payments for companies acquired in the prior year.
The subsidiary undertakings acquired during 1996 contributed (pound)11.6
million to the Group's net operating cash flows and paid (pound)1.0 million in
respect of net returns on investments and servicing of finance, paid (pound)0.5
million in respect of taxation and utilized (pound)8.8 million for investing
activities.
In addition, the Group acquired the remaining 40% minority interest in
Fabex, Inc., a further 11.3% of the share capital of Gestra AG and a further
8.3% of the share capital of Eliwell S.p.A. for a total consideration of
(pound)34.0 million of which (pound)5.5 million was paid in cash and (pound)28.5
million as deferred cash consideration with resulting goodwill of (pound)19.4
million.
F-33
<PAGE> 34
NOTES TO THE ACCOUNTS (CONTINUED)
28 ACQUISITIONS AND DISPOSALS (CONTINUED)
Goodwill on the acquisition of:
<TABLE>
<CAPTION>
(POUND)M
----
<S> <C>
Form Rite Corp, including Form Rite (Canada) 32.7
Fabex Inc. (40%) ........................... 18.6
Other ...................................... 14.2
----
65.5
----
</TABLE>
29 POST BALANCE SHEET EVENT
On 15 May 1997, the Company made a recommended offer for APV plc ('APV') on
the basis of 0.10955 new Siebe shares for each APV share or alternatively 97.5p
in cash for each APV share, which values the issued and to be issued ordinary
share capital of APV at approximately (pound)338.4 million.
F-34
<PAGE> 35
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED 30 ENDED 30
FOR THE SIX MONTHS ENDED 30 SEPTEMBER SEPTEMBER, SEPTEMBER,
1997 AND 30 SEPTEMBER 1996 NOTES 1997 1996
----- ---------- -----------
(POUND)M (POUND)M
<S> <C> <C> <C>
TURNOVER..............................
Continuing Operations................. 1,448.9 1,471.4
Acquisitions.......................... 257.6 --
---------- -----------
1 1,706.5 1,471.4
---------- -----------
OPERATING PROFIT
Continuing Operations................. 237.2 216.0
Acquisitions.......................... 14.2 --
---------- -----------
1 251.4 216.0
Profit on sale of fixed assets........ 2.8 2.8
Profit on sale of businesses.......... -- --
---------- -----------
PROFIT BEFORE INTEREST................ 254.2 218.8
Interest - net........................ (32.5) (28.4)
---------- -----------
PROFIT BEFORE TAXATION................ 221.7 190.4
Taxation.............................. 2 (79.4) (71.4)
---------- -----------
PROFIT AFTER TAXATION................. 142.3 119.0
Minority interests.................... (5.4) (6.9)
---------- -----------
PROFIT ATTRIBUTABLE TO MEMBERS OF SIEBE 136.9 112.1
PLC.................................
Dividends............................. 3 (30.2) (27.0)
---------- -----------
TRANSFER TO REVENUE RESERVE........... 106.7 85.1
---------- -----------
EARNINGS PER SHARE.................... 4 27.7p 24.0p
Average exchange rates for the period
US$/(pound)1.......................... 1.63 1.54
Yen/(pound)1.......................... 194.01 167.11
DM/(pound)1........................... 2.87 2.33
</TABLE>
The figures for the six months to 30 September 1997 have been prepared
on the same basis of accounting as for the 52 weeks to 5 April 1997 and are
unaudited.
F-35
<PAGE> 36
UNAUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 1997 30, 1996
------- -------
(POUND)M (POUND)M
<S> <C> <C>
FIXED ASSETS
Intangible assets................ 489.3 434.6
Tangible assets.................. 1,237.7 1,086.1
Investment in associated
undertakings..................... 5.7 2.1
Trade investments................ 11.0 19.5
------- -------
1,743.7 1,542.3
------- -------
CURRENT ASSETS
Stock and work in progress....... 606.4 534.0
Debtors.......................... 1,149.3 901.7
Cash and deposits................ 250.3 270.3
------- -------
2,006.0 1,706.0
Creditors:
amounts falling due within one
year
Short-term borrowings............ (43.8) (68.9)
Other creditors.................. (1,080.0) (800.4)
------- -------
(1,123.8) (869.3)
------- -------
NET CURRENT ASSETS............... 882.2 836.7
------- -------
Total assets less current
liabilities.................... 2,625.9 2,379.0
Creditors:
amounts falling due after more
than one year
Loans and other borrowings....... (875.5) (775.6)
Other creditors.................. (49.3) (46.1)
------- -------
(924.8) (821.7)
Provisions for liabilities and
charges........................ (355.1) (294.4)
------- -------
NET ASSETS....................... 1,346.0 1,262.9
======= =======
CAPITAL AND RESERVES
Share capital.................... 126.1 118.0
Share premium.................... 390.4 385.2
Other reserves................... (68.5) (29.9)
Revenue reserve.................. 763.9 633.1
------- -------
SHAREHOLDERS' FUNDS -- EQUITY.... 1,211.9 1,106.4
MINORITY INTERESTS -- EQUITY..... 134.1 156.5
------- -------
CAPITAL EMPLOYED................. 1,346.0 1,262.9
------- -------
NET BORROWINGS................... 669.0 574.2
GEARING -- SHAREHOLDERS' FUNDS... 55.2% 51.9%
-- CAPITAL EMPLOYED ..... 49.7% 45.4%
------- -------
Period end exchange rates
US$/(pound)1..................... 1.61 1.56
Yen/(pound)1..................... 197.08 174.37
DM/(pound)1...................... 2.84 2.39
</TABLE>
F-36
<PAGE> 37
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED 30 SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 1997 AND SEPTEMBER 1996 NOTES 30 SEPTEMBER, 1997 30 SEPTEMBER, 1996
--- -------------------- ----------------------
(POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
NET CASH FLOW FROM OPERATING
ACTIVITIES..................... 5 226.3 192.3
RETURNS ON INVESTMENT AND SERVICING
OF FINANCE
Interest received................ 3.0 3.5
Interest paid.................... (35.2) (29.5)
Interest element of finance lease
rental payments................ (0.7) (2.2)
Dividends paid to minority interests (1.2) (1.4)
Dividends paid to former
APV/Unitech shareholders....... (5.0) --
------ -------
(39.1) (29.6)
TAXATION......................... (35.8) (39.4)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENTS
Purchase of tangible and intangible
fixed assets................... (127.0) (107.1)
Sale of tangible and intangible
fixed assets................... 17.3 15.1
Purchase of trade investments.... (0.1) (4.8)
Sale of trade investments........ 6.4 2.0
------ -------
(103.4) (94.8)
ACQUISITIONS AND DISPOSALS
Purchase of associated undertakings.... (3.2) --
Sale of associated undertakings.. 0.6 0.6
Purchase of subsidiary undertakings.... (52.5) (56.0)
Net overdrafts and cash acquired (net of
shares issued)................. 21.5 (12.7)
Purchase of minority interests... (10.5) (7.8)
------ -------
(44.1) (75.9)
EQUITY DIVIDENDS PAID............ (21.5) (20.6)
MANAGEMENT OF LIQUID RESOURCES
Movement in short-term deposits.. 6.7 6.9
FINANCING
Issue of ordinary share capital.. 1.3 --
Capital provided by minority 0.3 --
interests......................
Debts due within one year:
Loans raised................... -- 20.0
Net loans repaid............... (39.9) (41.5)
Debts due after more than one year:
Other loans raised............. 110.7 67.3
Net loans repaid............... -- (4.2)
Capital element of finance lease
repayments..................... (3.9) --
------ -------
68.5 41.6
------ ------
INCREASE/(DECREASE) IN CASH...... 5 57.6 (19.5)
====== ======
</TABLE>
F-37
<PAGE> 38
UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 30
SEPTEMBER, SEPTEMBER,
1997 1996
----- -----
(POUND)M (POUND)M
<S> <C> <C>
Profit attributable to members of Siebe plc .... 136.9 112.1
Currency translation differences (on foreign
currency net investments) .................... (3.4) (41.5)
----- -----
Total recognized gains and losses for the period 133.5 70.6
----- -----
</TABLE>
UNAUDITED RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 30
SEPTEMBER, SEPTEMBER,
1997 1996
------- -------
(POUND)M (POUND)M
<S> <C> <C>
Profit for the period ......................... 136.9 112.1
Dividends ..................................... (30.2) (27.0)
Currency translation differences (on foreign
currency net investments) ................... (3.4) (41.5)
Share capital issued, including scrip dividends 311.7 373.6
Goodwill on acquisitions in the period ........ (219.7) (373.1)
------- -------
195.3 44.1
Opening shareholders' funds ................... 1,016.6 1,062.3
------- -------
CLOSING SHAREHOLDERS' FUNDS ................... 1,211.9 1,106.4
------- -------
</TABLE>
F-38
<PAGE> 39
UNAUDITED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION
The accompanying interim consolidated financial statements of Siebe plc
and its subsidiaries as at and for the six months ended 30 September 1997 and 30
September 1996 are unaudited. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for the fair presentation
of the financial statements have been included therein. The results of these
interim periods are not necessarily indicative of results for the entire year.
1 ANALYSIS OF CONSOLIDATED TURNOVER, PROFIT BEFORE INTEREST AND TAX AND
OPERATING NET ASSETS
<TABLE>
<CAPTION>
PROFIT PROFIT
BEFORE BEFORE
INTEREST INTEREST OPERATING OPERATING
TURNOVER TURNOVER AND TAX AND TAX NET ASSETS NET ASSETS
30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER
1997 1996 1997 1996 1997 1996
------- ------- ------- ------- ------- -------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
PRODUCT CATEGORY:
Control systems ............ 777.6 516.2 108.7 80.9 1,209.2 978.2
Temperature and appliance 669.4 695.9 114.6 103.9 1,239.4 1,177.8
controls .................
Industrial equipment ....... 259.5 259.3 28.1 31.2 213.6 201.5
------- ------- ------- ------- ------- -------
1,706.5 1,471.4 251.4 216.0 2,662.2 2,357.5
------- ------- ------- ------- ------- -------
Profit on sale of fixed 2.8 2.8
assets ...................
Profit on sale of businesses -- --
------- -------
254.2 218.8
------- -------
GEOGRAPHICAL ANALYSIS BY
LOCATION:
United Kingdom ............. 209.8 139.0 42.1 26.5 170.4 139.7
Rest of Europe ............. 469.9 405.9 47.6 45.9 584.3 515.9
North America .............. 719.4 676.1 108.3 99.5 1,506.0 1,331.6
South America .............. 42.1 36.6 9.5 7.7 59.1 46.0
Pacific .................... 233.2 189.3 41.0 34.4 323.6 316.2
Africa and the Middle East . 32.1 24.5 2.9 2.0 18.8 8.1
------- ------- ------- ------- ------- -------
1,706.5 1,471.4 251.4 216.0 2,662.2 2,357.5
------- ------- ------- ------- ------- -------
Profit on sale of fixed 2.8 2.8
assets ...................
Profit on sale of businesses -- --
------- -------
254.2 218.8
------- -------
Borrowings ................. (919.3) (844.5)
Cash and deposits .......... 250.3 270.3
Provisions for liabilities
and charges .............. (355.1) (294.4)
Taxation ................... (216.0) (160.9)
Dividends .................. (76.1) (65.1)
------- -------
(1,316.2) (1,094.6)
------- -------
NET ASSETS PER CONSOLIDATED
BALANCE SHEET 1,346.0 1,262.9
------- -------
GEOGRAPHICAL ANALYSIS OF
SALES BY DESTINATION:
United Kingdom ........... 151.7 104.4
Rest of Europe ........... 470.2 417.1
North America ............ 676.9 628.3
South America ............ 52.8 48.9
Pacific .................. 282.7 222.2
Africa and the Middle East 72.2 50.5
------- -------
1,706.5 1,471.4
------- -------
</TABLE>
F-39
<PAGE> 40
UNAUDITED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER
1997 1996
---- ----
(POUND)M (POUND)M
<S> <C> <C>
United Kingdom corporation tax on income at 31% 14.9 14.1
Less relief for overseas tax .................. (0.2) (1.8)
---- ----
14.7 12.3
Deferred tax .................................. 4.1 3.6
Overseas tax .................................. 59.4 54.7
Prior year .................................... 1.2 0.8
---- ----
79.4 71.4
---- ----
</TABLE>
3 DIVIDENDS
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER
1997 1996
---- ----
(POUND)M (POUND)M
<S> <C> <C>
Final 1996/97 of 9.80p per share on shares issued to
acquire APV plc .................................. 3.0 --
Final 1995/96 of 8.87p per share on shares issued to
acquire Unitech plc .............................. -- 3.9
Interim ............................................ 27.2 23.1
---- ----
30.2 27.0
---- ----
</TABLE>
An interim dividend of 5.40p per share net (1996 4.90p per share net)
will be payable on 8 April 1998 to shareholders on the Register at the close of
business on 13 March 1998.
A final 1996/97 dividend of 9.80p per share net was paid on 6 October
1997 to shareholders on the Register at close of business on 15 August 1997.
4 EARNINGS PER SHARE
The earnings per share on a net basis have been calculated using 493.6
million shares (30 September, 1996 466.2 million, 1997 year 469.5 million),
being the weighted average number of shares in issue during the period, and the
profit after taxation and minority interests of (pound)136.9 million (30
September, 1996 (pound)112.1 million, 1997 year (pound)253.8 million).
5 CASH FLOW STATEMENT
Reconciliation of operating profit to net cash flow from operating activities
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER
1997 1996
----- -----
(POUND)M (POUND)M
<S> <C> <C>
Operating profit ........................ 251.4 216.0
Depreciation charges .................... 88.8 75.1
(Increase)/decrease in stocks ........... (17.2) 15.7
Decrease/(increase) in debtors .......... 5.3 (37.2)
Decrease in creditors and provisions .... (102.0) (77.3)
----- -----
NET CASH INFLOW FROM OPERATING ACTIVITIES 226.3 192.3
----- -----
</TABLE>
F-40
<PAGE> 41
UNAUDITED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5 CASH FLOW STATEMENT CONTINUED
Reconciliation of net cash flow to movement in net debt
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER
1997 1996
----- -----
(POUND)M (POUND)M
<S> <C> <C>
Increase/(decrease) in cash in the period .................... 57.6 (19.5)
Cash inflow from increase in debt and lease financing ........ (66.9) (41.7)
Cash (inflow)/outflow from (decrease)/increase in liquid
resources .................................................. (6.7) (6.9)
----- -----
Change in net debt resulting from cash flows ................. (16.0) (68.1)
Loans and finance leases acquired with subsidiary undertakings (82.0) (78.4)
New finance leases ........................................... (0.5) (1.5)
Translation differences ...................................... (6.1) 6.1
----- -----
Movement in net debt in period ............................... (104.6) (141.9)
Net debt at start of period .................................. (564.4) (432.3)
----- -----
NET DEBT AT END OF PERIOD .................................... (669.0) (574.2)
----- -----
</TABLE>
Analysis of changes to net debt
<TABLE>
<CAPTION>
ACQUISITIONS
(EXCLUDING OTHER
5 APRIL CASH CASH AND NON-CASH EXCHANGE 30 SEPTEMBER
1997 FLOW OVERDRAFTS) CHANGES* MOVEMENT 1997
------- ------- ------- ------- ------- -------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand 88.4 44.5 - - (1.0) 131.9
Overdrafts (23.4) 13.1 - - - (10.3)
57.6
Debt due within 1 year (46.7) 39.9 (21.5) - 1.0 (27.3)
Debt due after 1 year (681.1) (110.7) (57.6) - (9.1) (858.5)
Finance leases (24.0) 3.9 (2.9) (0.5) 0.3 (23.2)
(66.9)
Short-term deposits 122.4 (6.7) - - 2.7 118.4
(6.7)
------- ------- ------- ------- ------- -------
NET DEBT (564.4) (16.0) (82.0) (0.5) (6.1) (669.0)
------- ------- ------- ------- ------- -------
Cash at bank and in hand 88.4 131.9
Short-term deposits 122.4 118.4
------- -------
Cash and deposits 210.8 250.3
------- -------
</TABLE>
* Other non-cash changes comprise new finance leases
F-41
<PAGE> 42
UNAUDITED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reconciliation of net cash flow from operating activities to net surplus cash
flow before tax and dividends
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER
1997 1996
----- -----
(POUND)M (POUND)M
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES ........ 226.3 192.3
Net interest paid ................................ (32.9) (28.2)
Tangible and intangible fixed assets acquired .... (127.0) (107.1)
Finance leases undertaken ........................ (0.5) (1.5)
Tangible and intangible fixed assets sold ........ 17.3 15.1
------ ------
NET SURPLUS CASH FLOW BEFORE TAX AND DIVIDENDS ... 83.2 70.6
------ ------
</TABLE>
F-42
