<PAGE> 1
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- --------------------------------------------------------------------------------
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
AND
AMENDMENT NO. 1 TO
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
THE PETERSEN COMPANIES, INC.
(NAME OF SUBJECT COMPANY)
EMAP ACQUISITION CORP.
EMAP PLC
(BIDDERS)
------------------------
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
716335 10 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
DEREK WALMSLEY
EMAP ACQUISITION CORP.
C/O EMAP PLC
1 LINCOLN COURT
LINCOLN ROAD
PETERBOROUGH PE1 2RF
ENGLAND
(01733) 568900
DEREK WALMSLEY
EMAP PLC
1 LINCOLN COURT
LINCOLN ROAD
PETERBOROUGH PE1 2RF
ENGLAND
(01733) 568900
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
RICHARD HALL, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
------------------------
DECEMBER 16, 1998
------------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$1,196,711,947.72 $239,342.00
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</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of (1) 27,876,932 shares of Class A Common Stock, par value $0.01
per share, (2) 7,886,290 shares of Class B Common Stock, par value $0.01 per
share, and (3) up to 3,258 shares of Class A Common Stock subject to purchase
by employees under the employee stock purchase plans of The Petersen
Companies, Inc. Such number of shares represents all the shares of Class A
Common Stock and Class B Common Stock outstanding as of December 15, 1998,
plus the number of shares of Class A Common Stock issuable upon the exercise
of all stock options and warrants.
[ ] 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: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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<PAGE> 2
14D-1
<TABLE>
<S> <C> <C>
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CUSIP NO. 716335 10 4 PAGE 2 OF 7 PAGES
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</TABLE>
<TABLE>
<C> <S> <C> <C>
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NAME OF REPORTING PERSONS
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EMAP ACQUISITION CORP. (51-0385904)
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
2 (b) [ ]
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SEC USE ONLY
3
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SOURCE OF FUNDS
4
AF
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(e) or 2(f) [ ]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7
18,406,656*+
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CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
8 [ ]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
APPROXIMATELY 66.03% OF THE CLASS A COMMON STOCK OUTSTANDING ON A
FULLY DILUTED BASIS AS OF DECEMBER 15, 1998*+
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TYPE OF REPORTING PERSON
10
CO
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</TABLE>
* See footnote on page 3.
+ See footnote on page 3.
<PAGE> 3
14D-1
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CUSIP NO. 716335 10 4 PAGE 3 OF 7 PAGES
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</TABLE>
<TABLE>
<C> <S> <C> <C>
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NAME OF REPORTING PERSONS
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EMAP PLC
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
2 (b) [ ]
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SEC USE ONLY
3
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SOURCE OF FUNDS
4
BK, OO
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(e) or 2(f) [ ]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
ENGLAND
- -----------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7
18,406,656*+
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CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
8 [ ]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
APPROXIMATELY 66.03% OF THE CLASS A COMMON STOCK OUTSTANDING ON A
FULLY DILUTED BASIS AS OF DECEMBER 15, 1998*+
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TYPE OF REPORTING PERSON
10
CO
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</TABLE>
* On December 15, 1998, EMAP plc ("Parent") and EMAP Acquisition Corp. (the
"Purchaser") entered into a Stockholders' Agreement (the "Stockholder
Agreement") with certain of the directors and executive officers of The
Petersen Companies, Inc., a Delaware corporation (the "Company"), and certain
other persons (collectively, the "Selling Stockholders") pursuant to which
each Selling Stockholder has unconditionally agreed to tender into the Offer
(as hereinafter defined), and not to withdraw therefrom, all the shares of
Class A Common Stock, par value $0.01 per share (the "Class A Shares"), and
Class B Common Stock, par value $0.01 per share (the "Class B Shares" and,
together with the Class A Shares, the "Shares"), of the Company that such
Selling Stockholder owned on December 15, 1998 (comprising 18,406,656 Class A
Shares and 7,886,290 Class B Shares for all the Selling Stockholders) as well
as any Shares thereafter acquired by it, including upon the exercise of Stock
Options (as defined in the Offer to Purchase (as hereinafter defined)). In
addition, the Selling Stockholders have agreed to sell to the Purchaser, and
the Purchaser has agreed to purchase, all the Selling Stockholders' Shares
(including those acquired after the execution of the Stockholder Agreement) at
a price per share equal to the Offer Price (as hereinafter defined), subject
to certain conditions. Under the Stockholder Agreement, each Selling
Stockholder has granted to certain individuals designated by Parent an
irrevocable proxy with respect to the Shares subject to the Stockholder
Agreement to vote such Shares under certain circumstances. The Purchaser's
right to purchase and vote the Shares subject to the Stockholder Agreement is
reflected in Rows (7) and (9) of each of the tables above, which information
takes into account all Stock Options owned by the Selling Stockholders on
December 15, 1998. A copy of the Stockholder Agreement is attached hereto as
Exhibit (c)(2), and the Stockholder Agreement is described more fully in
Section 12 of the Offer to Purchase dated December 16, 1998 (the "Offer to
Purchase"), attached hereto as Exhibit (a)(1).
+ The Class B Shares are non-voting securities and are not a class of equity
securities which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended. Pursuant to the terms of the Agreement and
Plan of Merger dated as of December 15, 1998 among Parent, the Purchaser and
the Company (the "Merger Agreement"), the Purchaser has the right to exchange
each Class B Share received in the Offer for a Class A Share. On December 15,
1998, there were 7,886,290 Class B Shares outstanding, all of which were owned
by the Selling Stockholders. A copy of the Merger Agreement is attached hereto
as Exhibit (c)(1), and the Merger Agreement is described more fully in Section
12 of the Offer to Purchase.
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 also constitutes Amendment No. 1
to Statement on Schedule 13D with respect to the acquisition by the Purchaser
and Parent of beneficial ownership of the Class A Shares subject to the
Stockholder Agreement. The cover page above and item numbers and responses
thereto below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is The Petersen Companies, Inc., a
Delaware corporation, which has its principal executive offices at 6420 Wilshire
Boulevard, Los Angeles, California 90048.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Class A Shares"), of the Company at a price of $34.00 per Class A Share, net to
the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments and supplements thereto,
collectively constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively. The Purchaser is simultaneously
offering to purchase all outstanding shares of the Class B Common Stock, par
value $0.01 per share (the "Class B Shares" and, together with the Class A
Shares, the "Shares"), of the Company at the Offer Price. Information concerning
the number of outstanding Shares is set forth in "Introduction" of the Offer to
Purchase and is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of the Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 14D-1 is being filed by the Purchaser, a Delaware
corporation, and Parent, an English public limited company. The Purchaser is a
wholly owned subsidiary of Parent. Information concerning the principal business
and the address of the principal offices of the Purchaser and Parent is set
forth in Section 9 ("Certain Information Concerning the Purchaser and Parent")
of the Offer to Purchase and is incorporated herein by reference. Information
regarding the names, business addresses, principal occupation and occupations,
positions, offices or employments during the last five years as well as the
other information required by Item 2 with respect to directors and executive
officers of Parent and the Purchaser is set forth in Schedule I to the Offer to
Purchase and is incorporated herein by reference.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") and Section 15 ("Certain Legal Matters") of the Offer to
Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; the Stockholder Agreement") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stockholder Agreement") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Share Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction", Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; the Merger Agreement; the Stockholder
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; the Stockholder Agreement") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stockholder Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Share Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Merger Agreement and the Stockholder Agreement, copies of which
are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively,
is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
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(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement dated December 16, 1998.
(a)(8) Text of Press Release dated December 15, 1998, issued by
Parent.
(b)(1) Loan Agreement dated as of December 15, 1998, among Parent
and the Lenders party thereto.
(b)(2) Bridge Loan Agreement dated as of December 15, 1998, among
Parent and the Lenders party thereto.
(c)(1) Agreement and Plan of Merger dated as of December 15, 1998,
among Parent, the Purchaser and the Company.
(c)(2) Stockholders' Agreement dated as of December 15, 1998, among
Parent, the Purchaser and certain stockholders of the
Company.
(d) None.
(e) Not applicable.
(f) None.
(24) Power of Attorney from Parent to Christopher R. Innis, dated
as of December 14, 1998, evidencing such person's authority
to sign on behalf of Parent.
</TABLE>
5
<PAGE> 6
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
EMAP Acquisition Corp.,
by: /s/ CHRISTOPHER R. INNIS
----------------------------------------
Name: Christopher R. Innis
Title: President, Secretary and
Treasurer
EMAP plc,
by: /s/ CHRISTOPHER R. INNIS
----------------------------------------
Name: Christopher R. Innis
Title: Director of Corporate Strategy
Date: December 16, 1998
6
<PAGE> 7
EXHIBIT INDEX
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<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- ------- ------------ ------
<S> <C> <C>
(a)(1) Offer to Purchase...........................................
(a)(2) Letter of Transmittal.......................................
(a)(3) Notice of Guaranteed Delivery...............................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees..................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees..............................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.............................
(a)(7) Form of Summary Advertisement dated December 16, 1998.......
(a)(8) Text of Press Release dated December 15, 1998, issued by the
Company and Parent........................................
(b)(1) Loan Agreement dated as of December 15, 1998, among Parent
and the Lenders party thereto.............................
(b)(2) Bridge Loan Agreement dated as of December 15, 1998, among
Parent and the Lenders party thereto......................
(c)(1) Agreement and Plan of Merger dated as of December 15, 1998,
among Parent, the Purchaser and the Company...............
(c)(2) Stockholders' Agreement dated as of December 15, 1998, among
Parent, the Purchaser and certain stockholders of the
Company...................................................
(d) None........................................................
(e) Not applicable..............................................
(f) None........................................................
(24) Power of Attorney from Parent to Christopher R. Innis, dated
as of December 14, 1998, evidencing such person's
authority to sign on behalf of Parent.....................
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE PETERSEN COMPANIES, INC.
at
$34.00 NET PER SHARE
by
EMAP ACQUISITION CORP.
a wholly owned subsidiary of
EMAP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE PETERSEN COMPANIES, INC. (THE "COMPANY") HAS: (1)
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT (AS
DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY; (2) UNANIMOUSLY
RECOMMENDED THAT THE HOLDERS OF SHARES ACCEPT THE OFFER, TENDER THEIR SHARES
PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT; (3)
UNANIMOUSLY DETERMINED THAT EACH OF THE MERGER AGREEMENT, THE OFFER AND THE
MERGER IS FAIR TO THE STOCKHOLDERS OF THE COMPANY; (4) UNANIMOUSLY DETERMINED
THAT THE CONSIDERATION TO BE PAID FOR EACH SHARE IN THE OFFER AND THE MERGER IS
FAIR TO THE STOCKHOLDERS OF THE COMPANY; (5) UNANIMOUSLY DECLARED THAT THE
MERGER AGREEMENT IS ADVISABLE; AND (6) UNANIMOUSLY CONSENTED TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE (X) A MAJORITY OF ALL OUTSTANDING SHARES OF CLASS A
COMMON STOCK AND (Y) A MAJORITY OF ALL OUTSTANDING SHARES, IN EACH CASE, ON A
FULLY DILUTED BASIS (WITHOUT GIVING EFFECT TO THE CONVERSION OF CLASS B SHARES
INTO CLASS A SHARES) ON THE DATE OF PURCHASE; (2) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED; AND (3) THE OFFER HAVING RECEIVED THE
APPROVAL OF THE SHAREHOLDERS OF PARENT AT AN EXTRAORDINARY GENERAL MEETING.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
if required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal (or such facsimile), or, in the case of a book-entry
transfer effected pursuant to the procedure set forth in Section 2, an Agent's
Message (as defined herein), and any other required documents to the Depositary
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal (or facsimile) or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 prior to the expiration
of the Offer or (2) request such stockholder's broker, dealer, bank, trust
company or other nominee to effect the transaction for such stockholder. A
stockholder having Shares registered in the name of a broker, dealer, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
------------------------
The Dealer Manager for the Offer is:
SCHRODER & CO. INC.
December 16, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Introduction................................................ 1
The Tender Offer............................................ 4
1. Terms of the Offer...................................... 4
2. Procedure for Tendering Shares.......................... 5
3. Withdrawal Rights....................................... 8
4. Acceptance for Payment and Payment...................... 8
5. Certain U.S. Federal Income Tax Consequences............ 9
6. Price Range of the Shares; Dividends on the Shares...... 10
7. Effect of the Offer on the Market for the Shares; Share
Quotation; Exchange Act Registration; Margin Regulations.. 11
8. Certain Information Concerning the Company.............. 12
9. Certain Information Concerning the Purchaser and
Parent.................................................... 13
10. Source and Amount of Funds.............................. 13
11. Contacts and Transactions with the Company; Background
of the Offer.............................................. 14
12. Purpose of the Offer; the Merger Agreement; the
Stockholder Agreement..................................... 16
13. Dividends and Distributions............................. 26
14. Certain Conditions of the Offer......................... 27
15. Certain Legal Matters................................... 28
16. Fees and Expenses....................................... 29
17. Miscellaneous........................................... 30
Schedule I -- Directors and Executive Officers of Parent and
the Purchaser............................................. S-1
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock
of The Petersen Companies, Inc.
INTRODUCTION
EMAP Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of EMAP plc, an English public limited company
("Parent"), hereby offers to purchase all outstanding shares of Class A Common
Stock, par value $0.01 per share (the "Class A Shares"), and all outstanding
shares of Class B Common Stock, par value $0.01 per share (the "Class B Shares"
and, together with the Class A Shares, the "Shares"), of The Petersen Companies,
Inc., a Delaware corporation (the "Company"), at a price of $34.00 per Share,
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively 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 pursuant to the Offer. The
Purchaser will pay all fees and expenses of Schroder & Co. Inc., which is acting
as Dealer Manager ("Dealer Manager"), BankBoston, N.A., which is acting as the
Depositary (the "Depositary"), and Georgeson & Company Inc., which is acting as
the Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS: (1) UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT (AS DEFINED BELOW) AND THE
TRANSACTIONS CONTEMPLATED THEREBY; (2) UNANIMOUSLY RECOMMENDED THAT THE HOLDERS
OF SHARES ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT; (3) UNANIMOUSLY DETERMINED THAT EACH OF
THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO THE STOCKHOLDERS OF
THE COMPANY; (4) UNANIMOUSLY DETERMINED THAT THE CONSIDERATION TO BE PAID FOR
EACH SHARE IN THE OFFER AND THE MERGER REFERRED TO HEREIN IS FAIR TO THE
STOCKHOLDERS OF THE COMPANY; (5) UNANIMOUSLY DECLARED THAT THE MERGER AGREEMENT
IS ADVISABLE; AND (6) UNANIMOUSLY CONSENTED TO THE OFFER. THE FACTORS CONSIDERED
BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS DECISION TO APPROVE
THE OFFER AND THE MERGER AND TO RECOMMEND THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES ARE DESCRIBED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"),
WHICH IS BEING MAILED TO STOCKHOLDERS OF THE COMPANY HEREWITH.
MORGAN STANLEY & CO. INCORPORATED ("MORGAN STANLEY") AND DONALDSON, LUFKIN
& JENRETTE SECURITIES CORPORATION ("DLJ") HAVE ACTED AS THE COMPANY'S FINANCIAL
ADVISORS. THE OPINIONS OF MORGAN STANLEY AND DLJ, EACH DATED DECEMBER 14, 1998,
THAT, AS OF SUCH DATE, THE CONSIDERATION TO BE RECEIVED BY HOLDERS OF SHARES IN
THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH
HOLDERS, ARE SET FORTH IN FULL AS ANNEXES TO THE SCHEDULE 14D-9 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") ON THE DATE HEREOF.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES THAT WOULD CONSTITUTE (X) A MAJORITY OF ALL OUTSTANDING CLASS A
SHARES AND (Y) A MAJORITY OF ALL OUTSTANDING SHARES, IN EACH CASE, ON A FULLY
DILUTED BASIS (WITHOUT GIVING EFFECT TO THE CONVERSION OF CLASS B SHARES INTO
CLASS A SHARES) ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"); (ii) ANY
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT") APPLICABLE TO THE
PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED (THE
"HSR CONDITION"); AND (iii) THE OFFER HAVING RECEIVED THE APPROVAL OF THE
SHAREHOLDERS OF PARENT (THE "PARENT SHAREHOLDER APPROVAL") AT AN EXTRAORDINARY
GENERAL MEETING (AN "EGM"). The Purchaser reserves the right (subject to
obtaining the consent of the Company and the applicable rules and regulations of
the Commission), which it presently has no intention of exercising, to waive or
reduce the Minimum Condition. See Sections 1, 12 and 14.
1
<PAGE> 4
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 15, 1998 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Company (the "Merger"). In the Merger, each outstanding Share
will be converted into the right to receive an amount in cash equal to the price
per Share paid pursuant to the Offer, without interest thereon. See Section 12.
Consummation of the Merger is subject to a number of conditions, including
approval by stockholders of the Company if such approval is required under
applicable law. If the Purchaser acquires at least 90% of each class of the
outstanding Shares pursuant to the Offer or otherwise, the Purchaser would be
able to effect the Merger pursuant to the short-form merger provisions of the
Delaware General Corporation Law (the "DGCL"), without prior notice to, or any
action by, any other stockholder of the Company. See Section 12.
In connection with the execution of the Merger Agreement, the Purchaser and
Parent entered into a Stockholders' Agreement dated as of December 15, 1998 (the
"Stockholder Agreement"), with certain of the directors and executive officers
of the Company and certain other persons (collectively, the "Selling
Stockholders"), pursuant to which each Selling Stockholder has unconditionally
agreed to tender into the Offer, and not to withdraw therefrom, all the Shares
that such Selling Stockholder owned on December 15, 1998 (comprising 18,406,656
Class A Shares and 7,886,290 Class B Shares for all the Selling Stockholders),
as well as any Shares thereafter acquired by it, including upon the exercise of
Stock Options (as defined below). In addition, the Selling Stockholders have
agreed to sell to the Purchaser, and the Purchaser has agreed to purchase, all
the Selling Stockholders' Shares (including those acquired after the execution
of the Stockholder Agreement) at a price per Share equal to the Offer Price;
provided, that no Selling Stockholder shall be so obligated to sell any such
Shares if the Stockholder Agreement is terminated in accordance with its terms;
and provided, further, that (x) the Purchaser shall not be so obligated to
purchase the Shares and no Selling Stockholder shall be so obligated to sell any
such Shares if as of immediately prior to the expiration of the Offer, any
applicable waiting period (and any extension thereof) under the HSR Act relating
to the purchase of the Shares shall not have expired or been terminated, and (y)
the Purchaser shall not be so obligated to purchase the Shares if at any time
after the date of the Stockholder Agreement until the purchase and sale of the
Shares under the Stockholder Agreement any of the following conditions have
occurred and is continuing and no Selling Stockholder shall be so obligated to
sell any of such Shares if during such period any of the conditions set forth in
subparagraphs (i), (iii) and (iv) set forth below have occurred and is
continuing:
(i) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any final
or nonappealable order, ruling or injunction (that has not been vacated,
withdrawn or overturned), (A) restraining or prohibiting the acquisition by
Parent or the Purchaser of any Shares under the Stockholder Agreement or
the making of the Stockholder Agreement or consummation of the transactions
contemplated thereby or the Merger, or obtaining from the Company or the
Purchaser, any damages in connection with the aforesaid transactions that
are material in relation to the Company and its subsidiaries taken as a
whole, (B) prohibiting or materially limiting the ownership or operation by
the Company, Parent or the Purchaser or any of their respective
subsidiaries of a material portion of the business or assets of the Company
and its subsidiaries, or Parent and its subsidiaries, in each case taken as
a whole, or compelling the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a
whole, as a result of the Stockholder Agreement or any of the other
transactions contemplated by the Stockholder Agreement, (C) seeking to
impose material limitations on the ability of Parent or the Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Stockholder Agreement including,
without limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company, or (D) prohibiting Parent or
any of its subsidiaries from effectively controlling in any material
respect any significant portion of the business or operations of the
Company and its subsidiaries taken as a whole;
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<PAGE> 5
(ii) the Company shall not have performed or complied in any material
respect with any obligation or shall have failed to comply in any material
respect with any agreement or covenant required by the Merger Agreement to
be performed or complied with by the Company on or prior to the date of
consummation of the transactions contemplated by the Stockholder Agreement,
which failure to perform or comply is not substantially cured within 15
days after Parent provides the Company with notice of such failure;
(iii) any statute, rule or regulation enacted or promulgated by any
Federal, state, local or foreign government or any court of competent
jurisdiction, or other governmental, administrative or regulatory
authority, commission or agency, domestic or foreign (each a "Governmental
Entity"), that results, directly or indirectly, in any of the consequences
referred to in clauses (A) through (D) of paragraph (i) above;
(iv) if required in accordance with applicable law or stock exchange
regulations, Parent shall have held a vote at an EGM of Parent of the
holders of the outstanding ordinary shares of Parent that are entitled to
vote upon proposals to approve the Stockholder Agreement and the Merger
Agreement and any approval so required with respect to the Stockholder
Agreement or the Merger Agreement shall not have been obtained; or
(v) any breach of the representations and warranties of the Company
set forth in the Merger Agreement other than any breach that individually
or in the aggregate with each other such breach has not had and would not
reasonably be expected to have a material adverse effect on the Company or
its subsidiaries taken as a whole; provided, that for purposes of this
paragraph each such representation and warranty of the Company set forth in
the Merger Agreement shall be read without giving effect to any
qualification as to materiality or a material adverse effect on the Company
or its subsidiaries taken as a whole.
Under the Stockholder Agreement, each Selling Stockholder has granted
to certain individuals designated by Parent an irrevocable proxy with
respect to the Shares subject to the Stockholder Agreement to vote such
Shares under the circumstances described in Section 12.
The Merger Agreement and the Stockholder Agreement are more fully described
in Section 12.
The Company has informed the Purchaser that, as of December 15, 1998, there
were 26,871,538 Class A Shares and 7,886,290 Class B Shares issued and
outstanding, 970,394 Class A Shares reserved for issuance upon the exercise of
outstanding options to purchase Class A Shares from the Company ("Stock
Options") and a maximum of 35,000 Class A Shares issuable upon the exercise of
outstanding warrants to purchase Class A Shares ("Warrants"). Based upon the
foregoing, there would be 27,876,932 Class A Shares and 7,886,290 Class B
Shares, in each case, outstanding on a fully diluted basis and the Minimum
Condition will be satisfied if at least 13,938,467 Class A Shares and 17,881,612
Shares (including the 18,406,656 Class A Shares and 26,292,946 Shares subject to
the Stockholder Agreement) are validly tendered and not withdrawn prior to the
Expiration Date. The actual number of Shares required to be tendered to satisfy
the Minimum Condition will depend upon the actual number of Shares outstanding
on the date that the Purchaser accepts Shares for payment pursuant to the Offer.
If the Minimum Condition is satisfied and the Purchaser accepts for payment
Shares tendered pursuant to the Offer, the Purchaser will be able to elect a
majority of the members of the Company's Board of Directors and to effect the
Merger without the affirmative vote of any other stockholder of the Company. See
Section 12.
Certain U.S. Federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the Merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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<PAGE> 6
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 midnight, New York City time, on Thursday,
January 14, 1999, unless and until the Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), extends the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date on which the Offer, as so extended by the Purchaser,
will expire.
In the Merger Agreement, the Purchaser has agreed that, so long as neither
Parent nor the Purchaser has breached the Merger Agreement, it may, without the
consent of the Company, extend the Offer (i) if at the Expiration Date any of
the conditions to the Purchaser's obligation to purchase Shares is not satisfied
or waived, until such time as such condition is satisfied or waived, (ii) for a
period of not more than five business days beyond the then scheduled expiration
date of the Offer if on the date of such extension less than 90% of either the
outstanding Class A Shares or the outstanding Class B Shares have been validly
tendered and not properly withdrawn or (iii) for any period required by any
rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer. As used in this Offer to Purchase, "business
day" has the meaning set forth in Rule l4d-1 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the consent of the Company, (i) decrease the price per Share or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum
Condition, (iv) impose additional conditions or amend in any manner adverse to
the holders of Shares any of the conditions set forth in Section 14, (v) amend
any other term of the Offer in any manner adverse to the holders of Shares or
(vi) except as provided in the preceding paragraph, extend the Expiration Date.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, the Purchaser reserves the right (but shall not
be obligated), at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 14 shall have occurred, (i)
to extend the period of time during which the Offer is open, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) to amend the Offer
in any other respect by giving oral or written notice of such amendment to the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND
THE OFFER.
If by 12:00 midnight, New York City time, on Thursday, January 14, 1999 (or
any date or time then set as the Expiration Date), any or all of the conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions of the Merger
Agreement and to the applicable rules and regulations of the Commission, (i) to
terminate the Offer and not accept for payment or pay for any Shares and return
all tendered Shares to tendering stockholders, (ii) to waive all the unsatisfied
conditions and accept for payment and pay for all Shares validly tendered prior
to the Expiration Date and not theretofore withdrawn, (iii) to extend the Offer
and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (iv) to amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, Rule 14e-l(d) under the Exchange Act requires that the
announcement be issued no 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.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
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<PAGE> 7
stockholders of such change) and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Shares) for Shares or it is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in Section 3. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-l(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer, and by the terms of the Merger
Agreement, which require that the Purchaser pay for Shares accepted for payment
as soon as practicable after the Expiration Date.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including any waiver of the Minimum Condition, which waiver may not be made
without the Company's consent), the Purchaser will disseminate additional tender
offer materials and extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and l4e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of such offer or
information concerning such offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the HSR Condition and the other conditions set forth in Section 14.
Subject to the terms and conditions contained in the Merger Agreement, the
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. However, if the Purchaser waives or amends the Minimum
Condition (which action may not be taken without the Company's consent) during
the last five business days during which the Offer is open, the Purchaser will
be required to extend the Expiration Date so that the Offer will remain open for
at least five business days after the announcement of such waiver or amendment
is first published, sent or given to holders of Shares, and may also be required
to extend the Offer if other conditions to the Offer are waived, depending upon
the materiality of the waiver.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares, and will be furnished to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder lists, 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. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined below),
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 and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures set forth below prior to the Expiration
Date.
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<PAGE> 8
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "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 the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, 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 tendering
stockholder must comply with the guaranteed delivery procedures described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the 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
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 1, includes any participant
in the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each such
participant being an "Eligible Institution"). In all other cases, all signatures
on the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. 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 the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
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<PAGE> 9
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, 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 with respect to all such Shares),
together with a Letter of Transmittal (or 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, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange, Inc. (the
"NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after December 15, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager 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. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder
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<PAGE> 10
is not subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%. All stockholders surrendering Shares
pursuant to the Offer should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain stockholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Noncorporate foreign stockholders should complete and
sign the main signature form and a Form W-8, Certificate of Foreign Status, a
copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after Saturday, February 13,
1999.
For a withdrawal to be effective, a written 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 and must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares to be withdrawn, if different
from the name of the person who tendered the Shares. If certificates for Shares
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
delivered pursuant to the procedures for book-entry transfer set forth in
Section 2, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager 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.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
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), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. All determinations
concerning the satisfaction of such terms and conditions will be within the
Purchaser's sole discretion, which determinations will be final and binding. See
Sections 1 and 14. The Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares in order to comply in whole or
in part with any applicable law, including, without limitation, the HSR Act. Any
such delays will be effected in compliance with Rule 14e-l(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
Parent expects to file a Notification and Report Form with respect to the
Offer under the HSR Act on Wednesday, December 16, 1998 or as promptly as
practicable thereafter. If the filing is made on December 16, 1998, the waiting
period under the HSR Act with respect to the Offer will expire at 11:59 p.m.,
New York City time, on Thursday, December 31, 1998 unless early termination of
the waiting period is granted.
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<PAGE> 11
However, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by Parent with such
request. See Section 15 hereof for additional information concerning the HSR Act
and the applicability of antitrust laws to the Offer.
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
(or a timely Book-Entry Confirmation with respect to) such Shares, (ii) a Letter
of Transmittal (or 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, and (iii) any other documents required by the
Letter of Transmittal. Accordingly, tendering Stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES
TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. 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 an agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of a tender offer,
and to the terms of the Merger Agreement), the Depositary may, nevertheless, on
behalf of the Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser 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 wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser 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.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a tendering stockholder will recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
tendered by the stockholder and purchased pursuant to the Offer or converted in
the Merger, as the case may be. Gain or loss will be calculated separately for
each block of Shares tendered and purchased pursuant to the Offer or converted
in the Merger, as the case may be.
9
<PAGE> 12
If Shares are held by a stockholder as capital assets, gain or loss
recognized by the stockholder will be capital gain or loss, which will be
long-term capital gain or loss if the stockholder's holding period for the
Shares exceeds one year. Under present law, long-term capital gains recognized
by an individual stockholder will generally be taxed at a maximum Federal
marginal tax rate of 20%, and long-term capital gains recognized by a corporate
stockholder will be taxed at a maximum Federal marginal tax rate of 35%. In
addition, under present law the ability to use capital losses to offset ordinary
income is limited. Stockholders with a calendar year tax year will be treated as
having taxable gain or loss for the 1999 tax year.
A stockholder that tenders Shares may be subject to 31% backup withholding
unless the stockholder provides its TIN and certifies that such number is
correct or properly certifies that it is awaiting a TIN, or unless an exemption
applies. Exemptions are available for stockholders that are corporations and for
certain foreign individuals and entities. A stockholder that does not furnish a
required TIN may be subject to a penalty imposed by the IRS. See "Backup
Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Class A Shares are traded on the NYSE under the symbol "PTN", and have
been at all times since October 2, 1997. Prior to such time, there was no public
market in the Class A Shares. The Class B Shares are not traded on any
securities exchange and currently there is no public market in the Class B
Shares. The following table sets forth, for each of the periods indicated, the
high and low last reported sales prices per Class A Share as reported by the
NYSE and the Dow Jones News Retrieval Service.
THE PETERSEN COMPANIES, INC.
<TABLE>
<CAPTION>
HIGH LOW
-------- -------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1997:
From October 2, 1997...................................... $ 23.000 $17.125
FISCAL YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................. 28.375 20.000
Second Quarter............................................ 27.500 23.375
Third Quarter............................................. 33.625 22.125
Fourth Quarter (through December 15, 1998)................ 33.500 22.125
</TABLE>
On December 11, 1998, the last full trading day before the public
announcement of the discussions relating to the Merger Agreement, the last
reported sales price of the Class A Shares on the NYSE was $23.00 per Class A
Share. On December 15, 1998, the last full trading day before commencement of
the Offer, the last reported sales price of the Class A Shares on the NYSE was
$33.50 per Class A Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE CLASS A SHARES.
The Company has informed the Purchaser that it has never paid any dividends
on the Shares.
10
<PAGE> 13
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; SHARE QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Class A Shares pursuant to the
Offer will reduce the number of holders of Class A Shares and the number of
Class A Shares that might otherwise trade publicly and could adversely affect
the liquidity and market value of the remaining Class A Shares held by the
public.
Share Quotation. Depending upon the number of Class A Shares purchased
pursuant to the Offer, the Class A Shares may no longer meet the requirements of
the NYSE for continued listing. According to the NYSE's published guidelines,
the NYSE would consider delisting the Class A Shares if, among other things, the
record holders of at least 100 Class A Shares were to fall below 2,000, or the
number of total stockholders were to fall below 2,200 and the average monthly
trading volume of the Class A Shares were to fall below 100,000, or the number
of publicly held Class A Shares (exclusive of management or other concentrated
holdings) were to fall below 1,100,000 and the aggregate market value of
publicly held Class A Shares were to not exceed $40 million. According to the
Company, as of December 15, 1998, there were approximately 48 holders of record
of Class A Shares and there were 26,871,538 Class A Shares outstanding. If, as a
result of the purchase of Shares pursuant to the Offer or otherwise, the Class A
Shares no longer meet the requirements of the NYSE for continued listing and the
Class A Shares are no longer listed, the market for Class A Shares would be
adversely affected.
If the NYSE were to delist the Class A Shares, it is possible that the
Class A Shares would continue to trade on other securities exchanges or in the
over-the-counter market and that price quotations would be reported by such
exchanges or through the Nasdaq National Market or other sources. The extent of
the public market for the Class A Shares and the availability of such quotations
would, however, depend upon the number of holders of Class A Shares remaining at
such time, the interests in maintaining a market in Class A Shares on the part
of securities firms, the possible termination of registration of the Class A
Shares under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Class A Shares are currently registered
under the Exchange Act. Registration of the Class A Shares under the Exchange
Act may be terminated upon application of the Company to the Commission if the
Class A Shares are neither listed on a national securities exchange nor held by
300 or more holders of record. Termination of registration of the Class A Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Class A
Shares under the Exchange Act as soon as possible after the completion of the
Offer if the requirements for such termination are met.
If registration of the Class A Shares is not terminated prior to the
Merger, then the Class A Shares will be delisted from all stock exchanges and
the registration of the Class A Shares under the Exchange Act will be terminated
following the consummation of the Merger.
The Class B Shares are not currently registered under the Exchange Act.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
11
<PAGE> 14
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 6420
Wilshire Boulevard, Los Angeles, California 90048. The Company is a leading
multi-media marketing solutions and brand development company that primarily
publishes and markets special-interest magazines and annual publications.
Set forth below is certain selected financial information with respect to
the Company excerpted from the information contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 (the "Company 1997
10-K") and the Company's Quarterly Report on Form 10-Q for the three months
ended September 30, 1998 (the "Company 1998 10-Q"). More comprehensive financial
information is included in the Company 1997 10-K, the Company 1998 10-Q and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to the Company 1997 10-K, the
Company 1998 10-Q and such other documents and all the financial information
(including any related notes) contained therein. The Company 1997 10-K, the
Company 1998 10-Q and such other documents should be available for inspection
and copies thereof should be obtainable in the manner set forth below under
"Available Information".
THE PETERSEN COMPANIES, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY
---------------------------- -----------------------------------------------------------
12 MONTHS 10 MONTHS 4 1/2 MONTHS 12 MONTHS 9 MONTHS 9 MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
NOVEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996 1997 1997 1998
------------ ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operating Data:
Net revenue............... $214,515 $189,614 $53,277 $247,074 $183,829 $228,690
Operating income.......... 14,358 15,751 428 10,910 6,053 28,046
Net income (loss)......... 14,358 17,326 (10,605) (23,817) (22,633) (1,809)
Balance Sheet Data:
Working capital........... 5,760 (2,791) (18,484) (17,187) (7,463)
Total assets.............. 66,808 50,541 604,073 569,747 692,363
Total stockholders'
equity................. -- -- 154,454 273,527 271,315
</TABLE>
- ---------------
(1) The amounts set forth for the 12 months ended November 30, 1995 and for the
10 months ended September 30, 1996 are those of the publishing division of
Petersen Publishing Company prior to the leveraged acquisition by the
Company in September 1996.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports 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 and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in the Company's proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such information should be available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington, DC
20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West
Madison Street (Suite 1400), Chicago, IL 60661. Copies of such information
should be obtainable, by mail, upon payment of the Commission's customary
charges, by writing to the Commission's principal office at 450 Fifth Street,
N.W., Washington, DC 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's Web site address, http://www.sec.gov. Such material should also be
available for inspection at the library of the NYSE, 20 Broad Street, New York,
NY 10005.
12
<PAGE> 15
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation which is a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal office of the Purchaser is
located at the principal office of Parent. All outstanding shares of capital
stock of the Purchaser are owned by Parent.
Parent is an English public limited company with its principal office
located at 1 Lincoln Court, Lincoln Road, Peterborough PE1 2RF, England.
Parent's primary lines of business are consumer magazines, business information
and exhibitions and radio. Parent publishes, produces or holds some 400
magazines, exhibitions, events and information services each year. Parent is one
of the leading publishers of consumer magazines in Europe and has a growing
presence in Australia.
Available Information. Neither Parent nor the Purchaser is subject to the
information requirements of the Exchange Act and therefore, reports relating to
each of its business, financial condition and other matters have not been filed
with, and will not be available from, the Commission. However, copies of
Parent's Memorandum and Articles of Association, the audited consolidated
accounts of EMAP and its subsidiaries for the two years ended March 31, 1998 and
the interim results of Parent for the six months ended September 30, 1998, may
be inspected at the registered office of the Company and at the offices of
Slaughter and May, 35 Basinghall Street, London EC2V 5DB, England, during usual
business hours on any weekday (Saturdays and public holidays excepted) for a
period of 14 days following the date of the Merger Agreement.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer and the Merger
will be approximately $1.2 billion. The Purchaser plans to obtain all funds
needed for the Offer and the Merger through a capital contribution from Parent.
Parent intends to fund this capital contribution from bank facilities and an
issuance of ordinary shares of Parent that will be listed and traded on the
London Stock Exchange.
Bank Facilities. Parent will obtain a portion of the funds from a credit
facility (the "Credit Facility") pursuant to a loan agreement (the "Loan
Agreement"), dated December 15, 1998, among Parent, Barclays Bank PLC, as agent,
Barclays Capital, Den Danske Aktieselskab and Deutsche Bank AG London
(collectively with the lenders listed in Schedule 1 to the Loan Agreement, the
"Banks"). Under the Credit Facility, the Banks will provide Parent with a
multi-currency $880,000,000 term loan and a pound sterling 325,000,000 revolving
credit and bill acceptance facility, each maturing on December 15, 2003. The
Credit Facility will automatically terminate if the Purchaser has not accepted
for payment Shares tendered pursuant to the Offer within 150 days of the date of
signing of the Loan Agreement or if the Offer lapses or is terminated without
Shares having been accepted for payment pursuant to the Offer or purchased
pursuant to the Stockholder Agreement. The proceeds of the Credit Facility will
be used to finance, in part, the payment of cash consideration for Shares that
have been accepted for payment by the Purchaser and may also be used for general
corporate purposes, including repayment of existing indebtedness of Parent or
the Company and for working capital.
The Credit Facility carries interest at LIBOR plus a margin of .80% which
is subject to adjustment after March 31, 2000.
The Credit Facility is subject to various customary representations and
warranties, financial covenants, cancellation events and a change of control
provision.
13
<PAGE> 16
The availability of the Credit Facility to Parent is conditional upon
various conditions, including the listing of the Ordinary Shares issued by
Parent and the satisfaction of the Minimum Condition. In addition, if certain
representations or warranties are incorrect in any material respect when made or
deemed to be made and have not been remedied within 15 days thereof, Parent will
be in default and will not be able to obtain funds from the Credit Facility.
In addition to the foregoing, Parent will obtain funds from a bridge
facility (the "Bridge Facility" and, together with the Credit Facility, the
"Facilities") pursuant to an agreement, dated December 15, 1998, among Parent,
Barclays Bank PLC as agent, Barclays Capital, Den Danske Bank Aktieselskab and
Deutsche Bank AG London (collectively with the lenders listed in Schedule 1 to
that agreement, the "Bridge Banks"). Under the Bridge Facility, the Bridge Banks
will provide Parent with a L360,000,000 loan maturing on February 3, 1999. The
proceeds of the Bridge Facility will be used to finance, in part, the payment of
cash consideration for Shares that have been accepted for payment by the
Purchaser.
The Bridge Facility carries interest at LIBOR.
The availability of the Bridge Facility to Parent is conditional upon
various terms and conditions, including the listing of the Ordinary Shares and
the satisfaction of the Minimum Condition.
The foregoing descriptions of the Facilities are qualified in their
entirety by reference to the text of the Loan Agreement and the Bridge Loan
Agreement filed as Exhibits (b)(1) and (b)(2), respectively, to the Tender Offer
Statement on Schedule 14D-1 of Parent and the Purchaser filed with the
Commission in connection with the Offer (the "Schedule 14D-1") and is
incorporated herein by reference.
Issue of Ordinary Shares. In addition to obtaining funds from the
Facilities, Parent will obtain funds from the issuance of up to 42,047,517 new
ordinary shares (the "Ordinary Shares") by way of offering each qualifying
shareholder of Parent the right to receive one new ordinary share for every five
ordinary shares of Parent (the "Rights Issue") at a price of 875 pence per share
for an aggregate amount of approximately L359,000,000. The Rights Issue will be
underwritten in accordance with an underwriting agreement, dated December 15,
1998, among Parent, J. Henry Schroder & Co. Limited (together with Schroder &
Co. Inc., "Schroders") and BT Alex. Brown (the "Underwriting Agreement").
The Underwriting Agreement is conditional, among other things, upon: (i)
the passing of the resolution approving the Merger Agreement and the Stockholder
Agreement of Parent's shareholders at an EGM; and (ii) admission to the Official
List of the London Stock Exchange ("Admission") becoming effective by 10:00 a.m.
on January 5, 1999 or such later date as Parent, Schroders and BT Alex. Brown
may agree, not being later than January 12, 1999.
Under the Underwriting Agreement, Parent has given certain representations,
warranties and undertakings and an indemnity to Schroders and BT Alex. Brown. In
certain circumstances, including if a material breach of such representations,
warranties and undertakings occurs or is discovered before Admission, Schroders
and BT Alex. Brown have the right to terminate the Underwriting Agreement prior
to Admission becoming effective.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
In July 1998, a representative of DLJ approached Parent to discuss the
possibility of Parent pursuing an acquisition of the Company. DLJ indicated that
in certain circumstances and at a specified price, Willis Stein Partners L.P.
("Willis Stein"), a stockholder of the Company that acts on behalf of a
controlling group of stockholders of the Company, would consider selling its
Shares in connection with an acquisition of the Company.
Parent expressed an interest in pursuing an acquisition of the Company and
arranged a meeting in August 1998 with representatives of Willis Stein. During
that meeting, the representatives of Willis Stein, told the representatives of
Parent that certain stockholders of the Company would not consider selling their
Shares at a price below the highest traded share price to date, $33.625 per
share. Subsequently, Parent requested and the Company's advisors arranged a
meeting in September 1998 between the Company's management and Parent's
Chairman, Robin Miller, at which the Company's business strategy was discussed.
14
<PAGE> 17
An additional series of meetings between representatives of Parent and
James Dunning and other members of the Company's management were scheduled
during October 18, 1998 through October 21, 1998. At these meetings, the
Company's business and year-to-date financial performance were discussed in
detail.
Parent and the Company met on November 10, 1998 to discuss Parent's
preliminary views on valuation. At their meeting, Parent expressed an interest
in acquiring the Company at a price below $30.00 per share. The Company rejected
this offer proposal and suggested that Parent meet with one of its financial
advisors, Morgan Stanley. On the following day, representatives of Morgan
Stanley made a presentation to Parent and Schroders regarding the Company.
Immediately afterwards, Parent met with Richard Willis, Chief Financial Officer
of the Company, where financial matters were discussed.
On Thursday, November 12, 1998, following a meeting of Parent's Board of
Directors, Parent indicated that it would be willing to acquire the Company at a
price of at least $33.00 per share, and subsequent discussions among
representatives and advisors of each of Parent and the Company between November
12 and November 17 established that the Company was not prepared to sell at less
than $34.00 per share. The parties agreed that due diligence should proceed, and
a confidentiality agreement was executed on November 18, 1998.
Discussions and negotiations of the principal terms of the acquisition
among Parent and the Company and their respective financial and legal advisors
commenced on November 23, 1998. On December 4, 1998, James Dunning and Chip
Block from the Company attended a board meeting of Parent in London. Following a
presentation of the proposal and a discussion thereof, Parent approved a
proposed acquisition of the Company at a price of $34.00 per share and the
financing necessary to consummate the acquisition, subject to satisfactory
negotiation and completion of the Merger Agreement, the Stockholder Agreement
and any other related documentation and receipt of all required approvals and
consents. The parties and their respective legal and financial advisors
continued their due diligence review and negotiations of the terms of the
acquisition and the related documentation of the Company.
On December 14, 1998, each of the Company and Parent publicly announced
that it was engaged in discussions with the other regarding a potential
acquisition transaction.
On December 14, 1998, the Boards of Directors of the Company, Parent and
the Purchaser each approved the Merger Agreement and approved the transactions
set forth therein and the purchase price applicable to the Offer and the Merger.
Following such adoptions and approvals, the Merger Agreement and other related
agreements were executed and delivered, and the transaction was publicly
announced before financial markets in the United Kingdom opened on December 15,
1998.
Except as described in this Offer to Purchase (including Schedule I
hereto), none of the Purchaser, Parent or, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I hereto, or any
associate or majority-owned subsidiary of the Purchaser, Parent or any of the
persons so listed, beneficially owns any equity security of the Company, and
none of the Purchaser, Parent or, to the best knowledge of the Purchaser and
Parent, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days. The Purchaser and Parent disclaim beneficial ownership of any Shares
owned by any pension plan of Parent or any affiliate of Parent.
Except as described in this Offer to Purchase, as of the date hereof (i)
there have not been any contacts, transactions or negotiations between the
Purchaser or Parent, any of their respective subsidiaries or, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I hereto, on
the one hand, and the Company or any of its directors, officers or affiliates,
on the other hand, that are required to be disclosed pursuant to the rules and
regulations of the Commission and (ii) none of the Purchaser, Parent or, to the
best knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any person with respect to any securities of the Company. During the Offer,
the Purchaser and Parent intend to have ongoing contacts and negotiations with
the Company and its directors, officers and stockholders.
15
<PAGE> 18
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENT
Purpose
The purpose of the Offer is to enable Parent to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The purpose of the Merger is to acquire all Shares not tendered and
purchased pursuant to the Offer, the Stockholder Agreement or otherwise.
The Merger Agreement
The Merger Agreement provides that following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger", the Purchaser
will be merged with and into the Company, and each then outstanding Share (other
than Shares owned by Parent or the Company or any of their subsidiaries or by
stockholders, if any, who are entitled to and who properly exercise appraisal
rights under Delaware law) will be converted into the right to receive an amount
in cash equal to the price per Share paid pursuant to the Offer.
Vote Required To Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board of Directors and, if the "short-form" merger procedure
described below is not available, approved by the holders of a majority of the
Company's outstanding voting securities. The Board of Directors of the Company
has approved the Offer, the Merger and the Merger Agreement; consequently, the
only additional action of the Company that may be necessary to effect the Merger
is adoption of the Merger Agreement by the Company's stockholders if such
"short-form" merger procedure is not available. Under the DGCL, if stockholder
adoption of the Merger Agreement is required in order to consummate the Merger,
the vote required is the affirmative vote of the holders of a majority of the
combined voting power of the then outstanding Shares (including any Shares owned
by the Purchaser). If the Purchaser acquires, through the Offer, the Merger
Agreement, the Stockholder Agreement or otherwise, voting power with respect to
at least a majority of the outstanding Class A Shares on a fully diluted basis,
it would have sufficient voting power to effect the Merger without the
affirmative vote of any other stockholder of the Company.
The DGCL also provides that if a parent company owns at least 90% of the
outstanding shares of each class of stock of a subsidiary, the parent company
may merge that subsidiary into the parent company, or the parent company may
merge itself into that subsidiary, pursuant to the "short-form" merger
procedures without prior notice to, or the approval of, the other stockholders
of the subsidiary. In order to consummate the Merger pursuant to these
provisions of the DGCL, the Purchaser would have to own at least 90% of the
outstanding Class A Shares and at least 90% of the outstanding Class B Shares.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions: (i) if required by the DGCL,
the Merger having been approved by the affirmative vote of the holders of a
majority of the combined voting power of then outstanding Shares; (ii) any
applicable waiting period (and any extension thereof) under the HSR Act relating
to the Merger shall have expired or been terminated; (iii) no Governmental
Entity shall have enacted, issued or enforced any statute or regulation ("Law")
or decree, injunction or other order (an "Order") which has become final and
nonappealable and which prohibits the consummation of the Merger; provided,
however, that each of the Company, the Purchaser and Parent have used its best
efforts to prevent the entry of any such Order and to appeal as promptly as
possible any Order that may be entered prior to it having become final and
nonappealable; and (iv) the Purchaser shall have purchased pursuant to the Offer
all Shares validly tendered prior to the expiration thereof and not withdrawn or
shall have purchased pursuant to the Stockholder Agreement all Shares tendered
thereunder.
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the transactions contemplated thereby may be abandoned at any
time prior to the effective time of the Merger (notwithstanding any approval and
adoption of the Merger Agreement by the stockholders of the Company and by the
shareholders of Parent):
(i) by mutual written consent of the Company and Parent;
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(ii) by either Parent or the Company, if any permanent injunction or
action by any Governmental Entity or by any federal or state court of
competent jurisdiction (other than a temporary restraining order)
preventing the consummation of the Merger shall have become final and
nonappealable;
(iii) by either Parent or the Company, if the Merger shall not have
been consummated before June 30, 1999, unless the failure to consummate the
Merger is the result of a breach of the Merger Agreement by the party
seeking to terminate the Merger Agreement; provided, however, that the
Merger Agreement may be extended by written notice of either Parent or the
Company to a date not later than September 30, 1999, if the Merger shall
not have been consummated as a direct result of Parent or the Company
having failed by June 30, 1999, to receive all required approvals or
consents with respect to the Merger;
(iv) by the Company, at any time three business days or more following
termination or expiration of the Offer without the Purchaser purchasing
Shares thereunder, so long as no Shares have been purchased pursuant to the
Stockholder Agreement;
(v) by Parent, if the Offer shall have expired without the purchase of
the Shares thereunder and the Minimum Condition shall not have been
satisfied, or Parent or the Purchaser shall have terminated the Offer
without purchasing Shares thereunder in accordance with the Merger
Agreement, in each case so long as no Shares have been purchased pursuant
to the Stockholder Agreement and neither Parent nor the Purchaser has
breached any of its obligations under Section 1.01 of the Merger Agreement
or is in breach of any of their obligations under the Merger Agreement and
such breach has resulted in the failure of any condition to the Offer to be
satisfied;
(vi) by the Company, if the Merger shall fail to receive the requisite
vote for approval and adoption by the stockholders of the Company at a
special meeting of the Company's stockholders;
(vii) by the Company, if the Board of Directors of the Company fails
to make or withdraws or modifies its recommendation of approval and
adoption of the Merger Agreement, so long as the Board of Directors of the
Company, after consultation with and based upon the written advice of legal
counsel (who may be the Company's regularly engaged legal counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to
stockholders under applicable law and, after consultation with its
independent legal counsel and financial advisor, determines in good faith
that the Acquisition Proposal (as defined below) is a superior proposal (as
defined below); provided, that the Company may not terminate the Merger
Agreement pursuant to this paragraph after such time as the Purchaser has
purchased upon expiration of the Offer all Shares validly tendered in the
Offer and not withdrawn or Parent or the Purchaser has purchased Shares
pursuant to the Stockholder Agreement;
(viii) by either Parent or the Company, if the Merger shall fail to
receive the Parent Shareholder Approval at an EGM;
(ix) by Parent, in the event of any breach of the representations and
warranties of the Company set forth in the Merger Agreement, other than any
breach that, individually or in the aggregate with each other such breach
has not had and would not be reasonably expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole (provided that
for purposes of this paragraph, each such representation and warranty of
the Company set forth in the Merger Agreement shall be made without giving
effect to any qualification as to materiality or material adverse effect),
or if the Company breaches or fails to perform in any material respect any
of its covenants contained in the Merger Agreement, which breach or failure
to perform (A) would give rise to the failure of a condition described in
Section 14 and (B) has not been cured within 30 days after the giving of
written notice to Parent of such breach; provided, that Parent may not
terminate the Merger Agreement pursuant to this paragraph if (a) Parent or
the Purchaser is then in material breach of any covenant contained in the
Merger Agreement, (b) any Shares have been purchased in the Offer or (c)
any Shares have been purchased pursuant to the Stockholder Agreement;
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<PAGE> 20
(x) by the Company, in the event of any breach of the representations
and warranties of Parent or the Purchaser set forth in the Merger Agreement
that are qualified as to materiality or any breach of any representations
and warranties of Parent or the Purchaser set forth in the Merger Agreement
that are not so qualified in any material respect and, individually or in
the aggregate, such breach has had a material adverse effect on Parent and
its subsidiaries, taken as a whole, or if Parent or the Purchaser breaches
or fails to perform in any material respect any of its covenants contained
in the Merger Agreement, which breach or failure to perform has not been
cured within 30 days after the giving of written notice to the Company of
such breach; provided, that the Company may not terminate the Merger
Agreement pursuant to the terms of this paragraph if (A) the Company is
then in material breach of any covenant contained in the Merger Agreement,
(B) any Shares have been purchased in the Offer or (C) any Shares have been
purchased pursuant to the Stockholder Agreement; or
(xi) by the Company, if the EGM is not held on or prior to January 4,
1999; provided, however, that the Company may not terminate the Merger
Agreement pursuant to this paragraph if Parent has obtained the Parent
Shareholder Approval prior to delivery by the Company of its notice of
termination.
Takeover Proposals. The Merger Agreement provides that from and after the
date of the Merger Agreement, the Company shall not, and shall cause each of the
Company's subsidiaries and its and their respective officers, directors,
employees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
the Company's subsidiaries) not to, directly or indirectly, invite, initiate,
solicit or knowingly encourage (including by way of furnishing non-public
information or assistance), any inquiries or the making of any proposal that
constitutes any Acquisition Proposal (as defined below), or enter into or
maintain or continue discussions or negotiations with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its
respective officers, directors or employees or any of the Company's subsidiaries
or any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of the Company's subsidiaries to take any
such action; provided, however, that nothing contained in the Merger Agreement
shall prohibit the Board of Directors of the Company from (i) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal or (ii) (A) providing information in response to a request therefor by
a person who has made an unsolicited bona fide written Acquisition Proposal if
prior to providing such information the Board of Directors of the Company
informs such person in writing of the existence and the material terms of the
Stockholder Agreement and receives from such person an executed confidentiality
agreement on terms substantially equivalent to those contained in the
Confidentiality Agreement, dated as of November 18, 1988 and entered into
between Parent and the Company; (B) engaging in any negotiations or discussions
with any person who has made an unsolicited bona fide written Acquisition
Proposal; or (C) recommending such an Acquisition Proposal to the stockholders
of the Company, if and only to the extent that, (i) in each such case referred
to in clause (A), (B) or (C) above, the Board of Directors of the Company
determines in good faith after consultation with independent legal counsel (who
may be the Company's regularly engaged legal counsel) that such action is
necessary in order for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law and (ii) in each case
referred to in clause (B) or (C) above, the Board of Directors of the Company
determines in good faith (after consultation with its independent legal counsel,
who may be the Company's regularly engaged legal counsel, and financial advisor)
that such Acquisition Proposal is reasonably capable of being consummated,
taking into account all legal, financial and regulatory aspects of the proposal,
the terms of the Stockholder Agreement and the person making the proposal and
that such Acquisition Proposal would, if consummated, be more favorable, from a
financial point of view (either short or long-term), to the stockholders of the
Company, than the Offer and the Merger (any such more favorable Acquisition
Proposal satisfying all the criteria of this clause (ii) being referred to as a
"superior proposal"). The Merger Agreement provides that the term "Acquisition
Proposal" shall mean any of the following (other than the transactions between
the Company, Parent and the Purchaser contemplated thereunder) involving the
Company or any of its subsidiaries: (1) any merger, consolidation, share
exchange or other similar transaction involving the Company; (2) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of all or
substantially all of the assets of the Company and the Company's subsidiaries,
taken as a whole, in a single transaction or series of transactions; or (3) any
tender offer or exchange offer for
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<PAGE> 21
50% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act of 1933, as amended,
in connection therewith.
In addition to the obligations of the Company described in the preceding
paragraph, the Merger Agreement provides that the Company will promptly advise
Parent orally and in writing of any Acquisition Proposal or any inquiry with
respect to any Acquisition Proposal including any change to the material terms
of any such Acquisition Proposal or inquiry. The Company is further required
under the terms of the Merger Agreement to keep Parent fully informed of the
status including any change to the material terms of any such Acquisition
Proposal or inquiry.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all fees and expenses incurred in connection with the Offer, the Merger,
the Merger Agreement and the transactions contemplated by the Merger Agreement
will be paid by the party incurring such fees or expenses; provided, however,
that if the Merger is consummated, all such fees and expenses of the Company
shall be paid by the surviving entity.
Conduct of Business by the Company. The Merger Agreement provides that,
between the date of the Merger Agreement and continuing until the earlier to
occur of the date of the consummation of the Merger or the election of Parent's
designees representing a majority of the Board of Directors of the Company in
accordance with the Merger Agreement, unless Parent shall have consented in
writing, (a) the businesses of the Company and the Company's subsidiaries shall
be conducted in, and the Company and the Company's subsidiaries shall not take
any action except in the ordinary course of business, consistent with past
practice; (b) the Company shall, and shall cause the Company's subsidiaries to,
use their respective reasonable best efforts to preserve substantially intact
their respective business organizations, to keep available the services of their
respective current officers, employees and consultants and to preserve their
respective relationships with customers, suppliers, licensors, licensees,
distributors and other persons with which it or any of the Company's
subsidiaries has significant business relations as well as with officials and
employees of government agencies and other entities which regulate the Company,
the Company's subsidiaries and their business to the end that its goodwill and
ongoing business shall be unimpaired at the date of the consummation of the
Merger; (c) neither the Company nor any of the Company's subsidiaries shall
amend or otherwise change the certificate of incorporation, by-laws or other
comparable charter or organizational document of the Company or any subsidiary
of the Company; (d) neither the Company nor any of the Company's subsidiaries
shall (i) issue, deliver, grant or sell, or authorize the issuance or sale of,
any shares of capital stock of any class of, or any bonds, debentures, notes or
other indebtedness of the Company having the right to vote on any matters on
which holders of Shares may vote, or any other ownership interest in, the
Company or any of the Company's subsidiaries, or any options, warrants or other
securities or rights convertible into, exchangeable for, evidencing the right to
subscribe for or purchase, or otherwise providing for the right to acquire
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) of the Company or any of the Company's subsidiaries (other
than the issuance of shares of capital stock in connection with (A) the exercise
of the Stock Options or the Warrants, (B) the then current offering period in
effect under the Company's Employee Stock Discount Purchase Plan (the "Stock
Purchase Plan") as in effect on the date of the Merger Agreement or (C) the
conversion of shares of Class B Shares to Class A Shares at the request of the
holder thereof), or (ii) authorize the sale of any assets of it or any of the
Company's subsidiaries, except for sales in the ordinary course of business or
which, individually, do not exceed $1.0 million or which in the aggregate, do
not exceed $3.0 million, or (iii) amend, waive or otherwise modify any of the
terms of any option, warrant or stock option plan of the Company or any
subsidiary of the Company, including without limitation the Stock Options, the
Warrants and the Stock Purchase Plan; (e) neither the Company nor any of the
Company's subsidiaries shall (i) declare, set aside or pay any dividend on or
other actual, constructive or deemed distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock (other than a
dividend or distribution payable solely to the Company or a subsidiary of the
Company) or otherwise make any payments to stockholders in their capacity as
stockholders or (ii) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any capital stock of the Company
or any subsidiary of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities other than
Class B Shares upon conversion to Class A Shares at the request of the
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<PAGE> 22
holder thereof; (f) neither the Company nor any of the Company's subsidiaries
shall (i) acquire or agree to acquire (for cash, shares of stock or other
consideration) (including, without limitation, by merger, consolidation, or
acquisition of stock or assets or by any other manner) any corporation,
partnership, joint venture, association or other business organization or any
division thereof (or a substantial portion of the assets thereof) or any other
assets, except for (A) such acquisitions which, individually or in the
aggregate, do not exceed $1.0 million or, (B) any acquisition disclosed to the
Purchaser and Parent in the disclosure schedule to the Merger Agreement, (ii)
incur any indebtedness for borrowed money or issue or sell any debt securities
or warrants or other rights to acquire any debt securities or warrants or other
rights to acquire any debt securities of the Company or any subsidiary of the
Company, or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, or make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any direct
or indirect wholly owned subsidiary of the Company except (x) to finance any
acquisition permitted under the Merger Agreement or (y) borrowings under
existing bank lines of credit incurred in the ordinary course of business
consistent with past practices, or (iii) enter into or amend any contract,
agreement, commitment or arrangement to effectuate any prohibited matter set
forth in the Merger Agreement; (g) neither the Company nor any of the Company's
subsidiaries shall hire any employee with aggregate annual compensation and
benefits in excess of $100,000, or adopt, enter into, establish or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee that increase in any manner the
compensation, retirement, welfare or fringe benefits of any director, officer or
employee, or pay any benefit not required by any existing plan, agreement or
arrangement (including without limitation the granting of stock options or stock
appreciation rights) or take any action or grant any benefit not expressly
required under the terms of any existing agreements, trusts, plans, funds or
other such arrangements or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing, except pursuant to collective bargaining
agreements as presently in effect; (h) neither the Company nor any of the
Company's subsidiaries shall (i) take any action, other than as required by a
change in GAAP, with respect to accounting methods, practices, policies or
procedures, (ii) authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution of the Company or any
of its material subsidiaries or (iii) make or change any tax election or settle
or compromise any material tax liability or refund; (i) neither the Company nor
the Company's subsidiaries shall (i) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted, unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms of liabilities reflected or reserved against in the most recent
consolidated financial statements of the Company included in the documents the
Company has filed with the Commission or incurred in the ordinary course of
business consistent with past practice, (ii) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of substantial
value or (iii) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
subsidiary of the Company is a party; (j) other than in the ordinary course of
business consistent with past practice, neither the Company nor the Company's
subsidiaries shall waive any rights of substantial value or make any payment,
direct or indirect, of any material liability of the Company or any of the
Company's subsidiaries before the same comes due in accordance with its terms;
(k) neither the Company nor the Company's subsidiaries shall (i) fail to
maintain its existing insurance coverage of all types in effect or, in the event
any such coverage shall be terminated or lapse, to the extent available at
reasonable cost, procure substantially similar substitute insurance policies
which in all material respects are in at least such amounts and against such
risks as are currently covered by such policies, (ii) enter into any collective
bargaining agreement, (iii) sell, lease, license or otherwise dispose of or
subject to any lien on any properties or assets, except sales of inventory and
excess or obsolete assets in the ordinary course of business consistent with
past practice, (iv) make or agree to make any new capital expenditure that is in
excess of $500,000 (except to consummate any acquisition not prohibited by the
Merger Agreement, (v) initiate or threaten litigation against any third party,
(vi)(x) make any changes in advertising or subscription rates, policies or
procedures that are not consistent with past practices, or (y) make any material
change in advertising or subscription
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rates, policies or procedures (whether or not consistent with past practices) or
(vii) launch any new magazine or other product in excess of $1,000,000 (losses
to profits for whole project); and (l) neither the Company nor the Company's
subsidiaries shall authorize any of, or commit or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
Board of Directors. The Merger Agreement provides that promptly upon the
earlier of the purchase by the Purchaser of Shares pursuant to the Offer or the
Stockholder Agreement, and from time to time thereafter, the Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors on
the Board) as will give the Purchaser, representation on the Board of Directors
of the Company equal to the product of (x) the total number of directors on the
Board of Directors of the Company (giving effect to any increase in the number
of directors pursuant to the Merger Agreement) multiplied by (y) the percentage
that such number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall
promptly use its reasonable best efforts to satisfy the Board Percentage by, at
the option of the Company (i) increasing the size of the Board of Directors of
the Company or (ii) securing the resignations of such number of directors as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company and cause the Purchaser's designees promptly to be so
elected. In the Merger Agreement, the Company has represented that, (i) to
effect the Offer and the Merger, the Board of Directors of the Company has
approved, and has not withdrawn or amended, resolutions (x) to increase the
number of members of the Board of Directors of the Company from 11 to 15
directors, to be effective at such time as the Purchaser purchases Shares
pursuant to the Offer or purchases Shares pursuant to the Stockholder Agreement,
and (y) to elect each of Kevin Hand, David Grigson, Thomas Moloney and
Christopher Innis to fill the vacancies created by such increase in the number
of directors, effective upon such increase and (ii) each of the directors of the
Company (other than the Chairman of the Board) has delivered to the Company a
letter stating that such director has resigned from the Board of Directors of
the Company, and from each committee thereof, effective at such time as the
Purchaser purchases Shares pursuant to the Offer or purchases Shares pursuant to
the Stockholder Agreement to the extent such resignations are necessary to
provide Parent with its Board Percentage. The Company shall take, at the
Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided to the
Company's stockholders in the Schedule 14D-9.
In addition to the foregoing, following the election or appointment of the
Purchaser's designees prior to the consummation of the Merger, any amendment or
termination of the Merger Agreement, extension for the performance or waiver of
the obligations or other acts of Parent or the Purchaser or waiver of the
Company's rights thereunder, shall require the concurrence of a majority of
directors of the Company then in office who are directors on the date hereof.
Stock Options; Warrants. The Merger Agreement provides that immediately
prior to the date of the Merger and subject to obtaining all necessary consents,
each then outstanding Stock Option, whether or not then vested or exercisable,
shall be canceled by the Company and in consideration of such cancelation and
except to the extent that Parent or the Purchaser and the holder of any such
Stock Option otherwise agree, the Company (or, at Parent's option, the
Purchaser) shall pay to such holders of Stock Options an amount in respect
thereof equal to the product of (i) the excess, if any, of the price per Share
paid in the Offer over the exercise price per Share subject to each such Stock
Option multiplied by (ii) the number of Shares for which such Option shall not
theretofore have been exercised (net of withholding taxes and without interest).
The Merger Agreement also provides that the Company shall cause all stock
option or other equity based plans maintained with respect to the Shares,
including, without limitation, the Company's 1997 Long-Term-Equity Incentive
Plan and the Stock Purchase Plan (collectively, the "Stock Option Plans"), to
terminate as of the date of the Merger and the provisions in any other benefit
plan providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the date of the Merger, and the Company shall ensure that
following the date of the Merger no holder of a Stock Option or any participant
in the Stock Option Plans shall have any right thereunder to acquire any capital
stock of the Company, Parent or the Purchaser.
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In addition, immediately prior to the date of the Merger and subject to
obtaining all necessary consents, each then outstanding Warrant, whether or not
then exercisable, shall be cancelled by the Company and in consideration of such
cancellation and except to the extent that Parent or the Purchaser and the
holder of any such Warrant otherwise agree, the Company (or, at Parent's option,
the Purchaser) shall pay to such holders of the Warrants an amount in respect
thereof equal to the product of (i) the excess, if any, of the price per Share
paid in the Offer over the exercise price per Share subject to each such Warrant
multiplied by (ii) the number of Shares for which such Warrant shall not
theretofore have been exercised (net of withholding taxes and without interest).
Employee Benefits. The Merger Agreement provides that after the Merger and
except as otherwise may be provided pursuant to a collective bargaining
agreement, Parent shall cause the Company to maintain or provide the employees
of the Company and its subsidiaries for a period of one year after the date of
the Merger with employee benefits that are in the aggregate substantially
comparable to those provided by the Company. Moreover, after the Merger, the
Parent shall cause the Company to honor the terms of all employment agreements
of the Company and its subsidiaries, the existence of which do not violate the
terms of the Merger Agreement. In addition, Parent shall cause the Company to
honor all collective bargaining agreements by which the Company or any of its
subsidiaries is bound.
Indemnification. In the Merger Agreement, the Purchaser and Parent have
agreed that the certificate of incorporation and by-laws of the Company
following the consummation of the Merger shall contain the provisions with
respect to indemnification set forth in the certificate of incorporation and
by-laws of the Company as of the date of the Merger Agreement which provisions
all shall not be amended, repealed or otherwise modified for a period of six
years after the date of the Merger in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the date of the Merger
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the date of the Merger (including, without limitation,
the transactions contemplated by the Merger Agreement), unless such modification
is required by law.
Moreover, the Merger Agreement provides that from the date of the Merger,
the Company shall indemnify, defend and hold harmless the present and former
officers and directors of the Company against all losses, expenses, claims,
damages, liabilities or amounts that are paid in settlement of, with the
approval of the Company after the date of the Merger (which approval shall not
unreasonably be withheld), or otherwise incurred in connection with any claim,
action, suit, proceeding or investigation, based in whole or in part by reason
of the fact that such person is or was a director or officer of the Company and
arising out of actions, events or omissions occurring at or prior to the date of
the Merger (including, without limitation, the transactions contemplated by the
Merger), in each case to the full extent permitted under the DGCL (and shall pay
expenses in advance of the final disposition of any such action or proceeding to
each indemnified party to the fullest extent permitted under the DGCL, upon
receipt from the indemnified party to whom expenses are advanced of the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL);
provided, that the Company shall indemnify, defend and hold harmless the
indemnified parties, and pay expenses in advance, only to the same extent and on
the same terms (including with respect to advancement of expenses) provided for
in the Company's certificate of incorporation and by-laws in effect on the date
of the Merger Agreement (to the extent consistent with applicable law), which
rights pursuant to such provisions shall survive the Merger and continue in full
force and effect for a period of six years after the date of the Merger.
Reasonable Efforts. The Merger Agreement provides that, subject to the
terms and conditions contained therein, each party will use its commercially
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, and to assist and cooperate with the other parties in doing
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement including (i) the obtaining of
all necessary actions or nonactions, waivers, consents and approvals from
Government Entities and the making of all necessary registrations and filings
(including filings with Government Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Government Entity, (ii) the obtaining of
all necessary consents, approvals or
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waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the Merger
Agreement or the consummation of the transactions contemplated by the Merger
Agreement, including seeking to have any stay or temporary restraining order
entered by any court or other Government Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by the Merger Agreement and to fully carry out the
purposes of the Merger Agreement, except that no party need waive any
substantial rights or agree to any substantial limitation on its operation or to
dispose of any assets.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Amendments; No Waivers. Any provision of the Merger Agreement may be
amended or waived prior to the date of the Merger if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and Parent or in the case of a waiver, by the party against whom the
waiver is to be effective; provided, however, that after receipt of approval of
the Merger by the stockholders of the Company and approval of the Offer and
Merger by the shareholders of the Parent, there shall be made no amendment that
by law requires further approval by the stockholders of the Company or the
shareholders of Parent without the further approval of such stockholders or
shareholders, as the case may be; provided further, however, that after the
adoption of the Merger Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change in a manner adverse to the holders of any shares of capital
stock of the Company (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, (ii) any term of the
certificate of incorporation of the Company after the date of the Merger or
(iii) any of the terms or conditions of the Merger Agreement.
In addition to the foregoing, at any time prior to the date of the Merger,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement or (iii) subject to the
preceding paragraph, waive compliance with any of the agreements or conditions
contained in the Merger Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (c)(1)
to the Schedule 14D-1. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized above.
The Stockholder Agreement
Pursuant to the Stockholder Agreement, each of the Selling Stockholders has
agreed to sell to the Purchaser, and the Purchaser has agreed to purchase, all
Shares of such Selling Stockholder (including those acquired after the execution
of the Stockholder Agreement) at a price equal to the Offer Price; provided,
that no Selling Stockholder shall be so obligated to sell any such Shares if the
Stockholder Agreement is terminated in accordance with the terms of the
Stockholder Agreement; and provided, further, that (x) the Purchaser shall not
be so obligated to purchase the Shares and no Selling Stockholder shall be so
obligated to sell any such Shares if as of immediately prior to the expiration
of the Offer, any applicable waiting period (and any extension thereof) under
the HSR Act relating to the purchase of the Shares shall not have expired or
been terminated, and (y) the Purchaser shall not be so obligated to purchase the
Shares if at any time after the date of the Stockholder Agreement until the
purchase and sale of the Shares under the Stockholder Agreement any of the
following conditions have occurred and is continuing and no Selling Stockholder
shall be so obligated to sell any of such Shares if during such period any of
the conditions in subparagraphs (i), (iii) and (iv) set forth below have
occurred and is continuing:
(i) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any final
or nonappealable order, ruling or injunction (that has not been vacated,
withdrawn or overturned), (A) restraining or prohibiting the acquisition by
Parent or the Purchaser of any Shares under the Stockholder Agreement or
the making of the Stockholder Agreement or consummation of the transactions
contemplated thereby or the Merger, or obtaining from the
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Company or the Purchaser, any damages in connection with the aforesaid
transactions that are material in relation to the Company and its
subsidiaries taken as a whole, (B) prohibiting or materially limiting the
ownership or operation by the Company, Parent or the Purchaser or any of
their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, or Parent and its subsidiaries,
in each case taken as a whole, or compelling the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, or Parent and its subsidiaries, in
each case taken as a whole, as a result of the Stockholder Agreement or any
of the other transactions contemplated by the Stockholder Agreement, (C)
seeking to impose material limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Stockholder Agreement
including, without limitation, the right to vote such Shares on all matters
properly presented to the stockholders of the Company, or (D) prohibiting
Parent or any of its subsidiaries from effectively controlling in any
material respect any significant portion of the business or operations of
the Company and its subsidiaries taken as a whole;
(ii) the Company shall not have performed or complied in any material
respect with any obligation or shall have failed to comply in any material
respect with any agreement or covenant required by the Merger Agreement to
be performed or complied with by the Company on or prior to the date of
consummation of the transactions contemplated by the Stockholder Agreement,
which failure to perform or comply is not substantially cured within 15
days after Parent provides the Company with notice of such failure;
(iii) any statute, rule or regulation enacted or promulgated by any
Governmental Entity that results, directly or indirectly, in any of the
consequences referred to in clauses (A) through (D) of paragraph (i) above;
(iv) if required in accordance with applicable law or stock exchange
regulations, Parent shall have held a vote at an EGM of Parent of the
holders of the outstanding ordinary shares of Parent that are entitled to
vote upon proposals to approve the Stockholder Agreement and the Merger
Agreement and any approval so required with respect to the Stockholder
Agreement or the Merger Agreement shall not have been obtained; or
(v) any breach of the representations and warranties of the Company
set forth in the Merger Agreement other than any breach that individually
or in the aggregate with each other such breach has not had and would not
reasonably be expected to have a material adverse effect on the Company or
its subsidiaries taken as a whole; provided, that for purposes of this
paragraph each such representation and warranty of the Company set forth in
the Merger Agreement shall be read without giving effect to any
qualification as to materiality or a material adverse effect on the Company
or its subsidiaries taken as a whole.
Subject to the termination provisions described below, the obligation of
the Selling Stockholders to tender and not withdraw Shares is conditioned only
upon lawful commencement of the Offer and otherwise is unconditional. The
Stockholder Agreement shall terminate: (i) immediately upon (A) the termination
of the Offer or the Merger Agreement by Parent or the Purchaser in accordance
with the terms of the Merger Agreement prior to the expiration of the Offer; (B)
the termination of the Merger Agreement by Parent or the Purchaser in accordance
with the terms of the Merger Agreement following the expiration of the Offer; or
(C) the termination of the Merger Agreement by the Company for failure of Parent
to hold the EGM; (ii) upon delivery by the Selling Stockholders holding Shares
representing a majority of Shares subject to the Stockholder Agreement
("Majority Selling Stockholders") of a notice of termination to Parent or the
Purchaser at any time (A) after Parent or the Purchaser has terminated the
Offer, prior to the expiration of the Offer, in a manner which is not in
accordance with the terms of the Merger Agreement, or (B) in the event that
Parent or the Purchaser fails to purchase the Shares upon the expiration of the
Offer in accordance with Section 1.01 of the Merger Agreement and either (x)
each of the conditions to the Offer has either been satisfied or waived, or (y)
Parent or Purchaser is then in breach of any of its obligations under the
Stockholder Agreement or the Merger Agreement and such breach has resulted in
the failure of any condition to the Offer to be satisfied; or (iii) upon
delivery by Majority Selling Stockholders of a notice of termination to
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Parent or the Purchaser at any time more than 120 days after: (A) the expiration
of the Offer without the purchase of any Shares thereunder due to the failure of
a condition to the Offer to be satisfied and not waived (other than the Minimum
Condition which shall have been satisfied); or (B) the expiration of the Offer
without the purchase of any Shares thereunder due to the failure of the Minimum
Condition to be satisfied. Subject to the termination provisions described
above, any Shares not purchased in the Offer will be purchased by the Purchaser
immediately following the purchase of the Shares in the Offer. Notwithstanding
the foregoing, no Selling Stockholder shall be required to tender or otherwise
sell its Shares in the event the Purchaser has (a) decreased the price per Share
or changed the form of consideration payable in the Offer, (b) decreased the
number of Shares sought in the Offer, (c) amended or waived satisfaction of the
Minimum Condition, (d) imposed additional conditions or amended in any manner
adverse to the holders of Shares any of the conditions set forth in Section 14,
(e) amended any other term of the Offer in any manner adverse to the holders of
Shares or (f) extended the Expiration Date in a manner which requires the
consent of the Company under the Merger Agreement.
Under the Stockholder Agreement, each Selling Stockholder has granted to
certain individuals designated by Parent an irrevocable proxy with respect to
the Shares subject to the Stockholder Agreement to Parent to vote such Shares in
favor of the Merger, the adoption of the Merger Agreement and the approval of
each of the other transactions contemplated by the Merger Agreement and against
(i) any merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets, reorganization,
joint venture, recapitalization, dissolution, liquidation or winding up of or by
the Company and (ii) any amendment of the Company's certificate of incorporation
or its bylaws, as amended and restated, or other proposal or transaction
(including any consent solicitation to remove or elect any directors of the
Company) involving the Company, which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify the Offer, the Merger,
the Merger Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of common stock
or other voting securities of the Company.
Each Selling Stockholder has also agreed in the Stockholder Agreement that
it shall not, and shall use its reasonable best efforts to cause any officer,
director or employee of, or any investment banker, financial advisor, attorney,
accountant or other representative of any such Selling Stockholder not to,
directly or indirectly, (i) solicit, initiate or encourage (including by way of
furnishing information), or take any action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal. Each Selling Stockholder has
agreed to promptly advise Parent and the Purchaser orally and in writing of any
Acquisition Proposal or inquiry made to the Selling Stockholder with respect to
or that could lead to any Acquisition Proposal, the identity of the person
making any such Acquisition Proposal or inquiry and the material terms of any
such Acquisition Proposal or inquiry.
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed as
Exhibit (c)(2) to the Schedule 14D-1. The Stockholder Agreement should be read
in its entirety for a more complete description of the matters summarized above.
Plans for the Company
Parent's current intention is to continue the Company's operations under
the name EMAP Petersen in Los Angeles, California. Parent expects that the
Company will continue to publish and market its magazines and annual
publications and develop its various magazine brands and will support the
existing strategies of the current management of the Company. James Dunning will
be the Chairman and President of the Company and it is anticipated that he will
be invited to join the Board of Directors of Parent.
Appraisal Rights
The holders of Shares do not have appraisal rights as a result of the
Offer. However, if the Merger is consummated, holders of Shares at the effective
time of the Merger will have certain rights pursuant to the provisions of
Section 262 of the DGCL ("Section 262") to dissent and demand appraisal of their
Shares.
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Under Section 262, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of Shares could be based upon factors other
than, or in addition to, the price per Share to be paid in the Merger or the
market value of the Shares. The value so determined could be more or less than
the price per Share to be paid in the Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262. FAILURE TO FOLLOW THE
STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY
RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions. The Purchaser does not
believe that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the Merger and the consideration offered
to minority stockholders in the Merger be filed with the Commission and
disclosed to stockholders prior to the consummation of the Merger.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company, a sale or transfer of a
material amount of assets of the Company, any change in the Company's
capitalization or dividend policy or any other material change in the Company's
business, corporate structure or personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, between the date of the
Merger Agreement and the date of the Merger and unless Parent shall have
consented in writing, neither the Company nor the Company's subsidiaries shall
(i) issue, deliver, grant or sell, or authorize the issuance or sale of, any
shares of capital stock of any class of, or any bonds, debentures, notes or
other indebtedness of the Company having the right to vote on any matters on
which holders of Shares may vote, or any other ownership interest in, the
Company or any of the Company's subsidiaries, or any options, warrants or other
securities or rights convertible into, exchangeable for, evidencing the right to
subscribe for or purchase, or otherwise providing for the right to acquire
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) of the Company or any of the Company's subsidiaries (other
than the issuance of shares of capital stock in connection with (A) the exercise
of the Stock Options or the Warrants, (B) the current offering period in effect
under the Stock Purchase Plan as in effect on the date of this agreement or (C)
the conversion of shares of Class B Shares to Class A Shares at the request of
the holder thereof); (ii) declare, set aside or pay any dividend on or other
actual, constructive or deemed distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (other than a divided or
distribution payable solely to the Company or a subsidiary of the Company) or
otherwise make any payments to stockholders in their capacity as stockholders;
or (iii) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any capital stock of the Company or any
subsidiary of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities other than
Class B Shares upon conversion to Class A Shares at the request of the holder
thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or the Merger Agreement,
the Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after the termination or withdrawal of the
Offer), to pay for any Shares tendered pursuant to the Offer, and may terminate
or amend the Offer if (i) as of immediately prior to the Expiration
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<PAGE> 29
Date (A) the Minimum Condition shall not have been satisfied or (B) the HSR
Condition shall not have been satisfied or (ii) prior to the acceptance for
payment of or payment for the Shares and at any time on or after the date of the
Merger Agreement any of the following conditions shall have occurred and be
continuing:
(a) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any order
or ruling (that has not been vacated, withdrawn or overturned), (i)
restraining or prohibiting the acquisition by Parent or the Purchaser of
any Shares under the Offer or the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or obtaining from the Company, or the Purchaser
any damages in connection with the aforesaid transactions that are material
in relation to the Company and its subsidiaries taken as a whole, (ii)
prohibiting or materially limiting the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material
portion of the business or assets of the Company and its subsidiaries, or
Parent and its subsidiaries, in each case taken as a whole, or compelling
the Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company or Parent and its subsidiaries, in
each case taken as a whole, as a result of the Offer or any of the other
transactions contemplated by the Merger Agreement, (iii) seeking to impose
material limitations on the ability of Parent or the Purchaser to acquire
or hold, or exercise full rights of ownership of, any Shares to be accepted
for payment pursuant to the Offer including, without limitation, the right
to vote such Shares on all matters properly presented to the stockholders
of the Company, or (iv) prohibiting Parent or any of its subsidiaries from
effectively controlling in any material respect any significant portion of
the business or operations of the Company and its subsidiaries taken as a
whole;
(b) the Company shall not have performed or complied in any material
respect with any obligation or to comply in any material respect with any
agreement or covenant required by the Merger Agreement to be performed or
complied with by the Company on or prior to the date of consummation of the
Offer, which failure to perform or comply is not substantially cured within
15 days after Parent provides the Company with notice of such failure;
(c) any breach of the representations and warranties of the Company
set forth in the Merger Agreement, other than any breach that, individually
or in the aggregate with each other such breach has not had and would not
reasonably be expected to have a material adverse effect on the Company and
its subsidiaries, taken as a whole; provided that for purposes of this
paragraph, each such representation and warranty of the Company in the
Merger Agreement shall be read without giving effect to any qualification
as to materiality or material adverse effect;
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
(e) Parent and the Company shall have agreed that Parent shall
terminate the Offer;
(f) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Government Entity or court, that results, directly or indirectly or, in any
of the consequences referred to in clauses (i) through (iv) of paragraph
(a) above; or
(g) the Parent Shareholder Approval shall not have been obtained.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by the Purchaser, Parent or any other affiliate of
Parent at any time to exercise any of the foregoing rights will not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver of any such
right, the waiver of any such right with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time.
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15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company and discussions of representatives
of Parent with representatives of the Company, neither the Purchaser nor Parent
is aware of any license or regulatory permit that appears to be material to the
business of the Company that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action
by any Governmental Entity that would be required or desirable for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent currently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws". While (except as
otherwise expressly described in this Section 15) the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, 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 failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business or that certain parts of the Company's
business might not have to be disposed of if such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 14 for a description of certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Section 203 of the DGCL, in general, prohibits a Delaware corporation such
as the Company from engaging in a "Business Combination" (defined as a variety
of transactions, including mergers) with an "Interested Stockholder" (defined
generally as a person that is the beneficial owner of 15% or more of a
corporation's outstanding voting stock) for a period of three years following
the date that such person became an Interested Stockholder unless, among other
things, prior to the time such person became an Interested Stockholder, the
board of directors of the corporation approved either the Business Combination
or the transaction that resulted in the stockholder becoming an Interested
Stockholder. The Company's Board of Directors has approved the Merger Agreement,
the Stockholder Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and the Stockholder Agreement. Therefore,
Section 203 of the DGCL is inapplicable to the Merger.
Based on information supplied by the Company, the Purchaser does not
believe that any other state takeover statutes or similar laws to apply to the
Offer or the Merger. Neither the Purchaser nor Parent has currently complied
with any state takeover statute or regulation. The Purchaser reserves the right
to challenge the applicability or validity of any state law purportedly
applicable to the Offer or the Merger and nothing in this Offer to Purchase or
any action taken in connection with the Offer or the Merger is intended as a
waiver of such right. If it is asserted that any state takeover statute 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 or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to
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<PAGE> 31
the Offer, or be delayed in consummating the Offer or the Merger. In such case,
the Purchaser may not be obligated to accept payment or pay for any Shares
tendered pursuant to the Offer. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated after the
expiration of a 15-calendar day waiting period commenced by the filing by Parent
of a Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. Parent expects to make such filing on Wednesday, December 16, 1998,
or as soon as practicable thereafter. If, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional information
or material from Parent concerning the Offer, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Expiration or
termination of the applicable waiting period under the HSR Act is a condition to
the Purchaser's obligation to accept for payment and pay for Shares tendered
pursuant to the Offer.
The provisions of the HSR Act would similarly apply to any purchase, other
than pursuant to the Offer, of the Shares subject to the Stockholder Agreement,
except that the initial waiting period for any purchase of such Shares would
expire 30 calendar days following the filing of HSR Act Notification and Report
Forms by Parent and the Company. Parent expects to make such filing on
Wednesday, December 16, 1998, or as soon as practicable thereafter. A request
for additional information or material from Parent or the Company during the
initial 30-day waiting period would extend the waiting period until 11:59 p.m.
New York City time on the 20th calendar day after the date of substantial
compliance by Parent and the Company with such request. If the purchase of
Shares pursuant to the Stockholder Agreement is effected through a tender of
such Shares pursuant to the Offer, the HSR requirements applicable to the Offer
described in the prior paragraph would apply rather than the requirements
described in this paragraph.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the result thereof.
16. FEES AND EXPENSES
Schroders is acting as Dealer Manager in connection with the Offer and is
providing certain financial advisory services to the Purchaser and Parent in
connection with the Offer. Pursuant to an engagement letter dated December 11,
1998, between Parent and Schroders, fees of pound sterling 450,000 are currently
payable to Schroders. An additional fee of 0.75% of the fully diluted equity
value of the Company based on the terms of the Offer, less any amounts already
paid, will be payable to Schroders in the event the Offer is consummated. Parent
has also agreed to reimburse Schroders for its out-of-pocket expenses, including
the fees and expenses of its counsel and any other advisor retained by Schroders
in connection with its engagement, and to indemnify
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Schroders and certain related persons against certain liabilities and expenses,
including certain liabilities under Federal securities laws.
In the ordinary course of its business, Schroders engages in securities
trading, market-making and brokerage activities and may, at any time, hold long
or short positions and may trade or otherwise effect transactions in securities
of the Company. As of December 14, 1998, Schroders had no long or short
positions in Class A Shares held for its own accounts.
The Purchaser and Parent have retained Georgeson & Company Inc. to act as
the Information Agent and BankBoston, N.A. to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser
upon request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders 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. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent the Purchaser or
Parent becomes aware of any state law that would limit the class of offerees in
the Offer, the Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate dissemination
of such information to holders of Shares prior to the expiration of the Offer.
In any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the Commission).
EMAP ACQUISITION CORP.
December 16, 1998
30
<PAGE> 33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, age, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Parent are set forth
below. All such directors and executive officers listed below are citizens of
the United Kingdom except Timothy Ralph Schoonmaker, who is a citizen of the
United States, and Arnaud Roy de Puyfontaine, who is a citizen of France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME, AGE AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
------------------------------ -------------------------------
<S> <C>
ROBERT WILLIAM (ROBIN) MILLER (57).............. Chairman of EMAP plc. Mr. Miller has been a
EMAP plc Director of EMAP plc since 1976. Mr. Miller was
1 Lincoln Court Group Chief Executive of EMAP plc from 1985 to July
Lincoln Road 1998. He is also a Non-Executive Director of The
Peterborough PE1 2RF Horserace Totalisator Board and Moss Bros. Group
ENGLAND plc.
ADAM HUMPHREY CHARLES BROADBENT (62)............ Non-Executive Chairman of Arcadia Group plc. He
Arcadia Group plc also serves as Non-Executive Director of Carclo
Colerave House Engineering Group plc, Non-Executive Chairman of
70 Berners Street Dover Harbour Board and Non-Executive Director of
London W1P 3AE REL Consultancy Group Ltd. Mr. Broadbent was
ENGLAND Director of J. Henry Schroder & Co. Limited from
1968 to 1996, Chairman of Schroder Italia SIM S.p.A
from 1991 to June 1998, Chairman of Schroder
Securities Limited in London from 1992 to 1995,
Deputy Chairman of Schroder Wertheim & Co. Inc.
from 1990 to 1996, Chairman of Schroders Japan
Limited from 1988 to 1996 and Group Managing
Director, Investment Banking, of Schroders Public
Limited Company from 1990 to 1996.
HENRY ERIC STAUNTON (50)........................ Group Finance Director of Granada Group plc since
Granada Group plc March 1993 and a Non-Executive Director of Ashstead
Stornoway House Group plc.
13 Cleveland Row
London SW1A 1GGM
ENGLAND
BRENDAN RICHARD O'NEILL (49).................... Chief Operating Officer of ICI plc since May 1998.
ICI plc Mr. O'Neill was Managing Director of Guinness
9 Millbank Brewing Worldwide from 1993 to May 1998.
London SW1P 3JF
ENGLAND
KAREN ELISABETH DIND JONES (42)................. Consultant at The Pelican Group plc (restaurants).
31 Rosehill Road Ms. Jones was founder and Managing Director of The
London SW18 2NY Pelican Group plc from 1989 to 1998.
ENGLAND
</TABLE>
S-1
<PAGE> 34
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME, AGE AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
------------------------------ -------------------------------
<S> <C>
MARTIN BOASE (66)............................... Chairman of Heals plc, since March 1997 and
12 Bishops Bridge Road Chairman of The Maiden Group Ltd. since 1993. Mr.
London W2 6AA Boase served as Non-Executive Director of Matthew
ENGLAND Clarke plc from 1995 to December 1998. Mr. Boase
was also Chairman of Diversified Agency Services
Ltd. (formerly Omnicom UK plc) from 1989 to 1995
and Director of Omnicom Limited (formerly Boase
Massimi Pollit) from 1980 to 1995.
KEVIN LAWRENCE HAND (47)........................ Chief Executive of EMAP plc since July 1998. Mr.
EMAP plc Hand was previously Chief Executive of EMAP
1 Lincoln Court Consumer Magazines from 1978 to 1994 and Chairman
Lincoln Road and Chief Executive of EMAP France from 1994 to
Peterborough PE1 2RF 1998.
ENGLAND
DAVID JOHN GRIGSON (44)......................... Group Finance Director of EMAP plc since 1989.
EMAP plc
1 Lincoln Court
Lincoln Road
Petersborough PE1 2RF
ENGLAND
THOMAS CHARLES MOLONEY (39)..................... Executive Director of EMAP plc. Mr. Moloney has
EMAP Consumer Magazines been Chief Executive of EMAP Consumer Magazines
Priory Court since 1995. As of December 1998, Mr. Moloney is
30-32 Farringdon Lane also Chief Executive of EMAP UK Consumer Affairs.
London EC1R 3AU
ENGLAND
DEREK K. WALMSLEY (51).......................... Company Secretary of EMAP plc since 1991.
EMAP plc
1 Lincoln Court
Lincoln Road
Peterborough PE1 2RF
ENGLAND
TIMOTHY RALPH SCHOONMAKER (41).................. Chief Executive of EMAP Radio Division since 1990.
EMAP Radio
95 Tottenham Court Road
London W1P 9HF
ENGLAND
ARNAUD ROY DE PUYFONTAINE (34).................. Chief Executive of EMAP France (Directeur General)
EMAP France since July 1998. Mr. de Puyfontaine was a publisher
43, rue du Colonel Pierre Avia at Le Figaro until 1995 and was Chief Executive of
75574 Paris EMAP Star from 1995 to 1998.
Cedex 15
FRANCE
</TABLE>
S-2
<PAGE> 35
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME, AGE AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
------------------------------ -------------------------------
<S> <C>
DEREK RAYMOND ANTHONY CARTER (49)............... Chief Executive of EMAP Business Communications
EMAP Business Ltd. since July 1997. Mr. Carter served as Managing
Communications Ltd Director of EMAP MacLaren from 1989 to 1997.
Meed House
21 John Street
London WCIN 2BP
ENGLAND
GEOFFREY THOMAS STOTT (50)...................... Chief Executive of Frontline Ltd. for the past five
Frontline Ltd years.
Park House
117 Park Road
Peterborough PE1 2TS
ENGLAND
CHRISTOPHER LLEWELLYN (45)...................... Director of International Division of EMAP plc From
EMAP plc 1992 to 1998, Mr. Llewellyn was Directeur General
Scriptor Court of EMAP France.
155 Farringdon Road
London EC1R 3AD
ENGLAND
</TABLE>
S-3
<PAGE> 36
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, age,
business address, present principal occupation or employment and five-year
employment history of each of the directors and executive officers of the
Purchaser are set forth below. Christopher Innis is a citizen of Australia and
Alison Phillips is a citizen of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME, AGE AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
------------------------------ -------------------------------
<S> <C>
CHRISTOPHER ROBERT INNIS (38)................... Director of Corporate Strategy of EMAP plc since
Peakirk House 1994.
Peakirk
Peterborough PE6 7NF
ENGLAND
ALISON PHILLIPS (34)............................ Group Tax Manager of EMAP plc since July 1993. Ms.
EMAP plc Phillips was previously a Senior Tax Manager at
1 Lincoln Court Ernst & Young.
Lincoln Road
Peterborough PE1 2RF
ENGLAND
</TABLE>
S-4
<PAGE> 37
Manually signed facsimile copies of the Letter of Transmittal 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 such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
BankBoston, N.A. Securities Transfer & Reporting BankBoston, N.A.
Attention: Corporate Services, Inc. Attention: Corporate
Reorganization c/o EquiServe Reorganization
P.O. Box 8029 100 William Street, Galleria 150 Royall Street
Boston, MA 02266-8029 New York, NY 10038 Canton, MA 02021
</TABLE>
By Facsimile Transmission:
(781) 575-2233
For Confirmation of Facsimile:
(781) 575-3120
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone numbers and
location listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
TOLL FREE: (800) 223-2064
Banks and Brokers Call Collect: (212) 440-9800
The Dealer Manager for the Offer is:
[SCHRODER & CO. INC. LOGO]
787 Seventh Avenue
New York, New York 10019
TOLL FREE: (800) 635-3044
(212) 492-6000
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
THE PETERSEN COMPANIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 16, 1998
BY
EMAP ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
EMAP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
TO: BANKBOSTON, N.A., AS DEPOSITARY
By Hand:
Securities Transfer & Reporting Services, Inc.
c/o EquiServe
100 William Street, Galleria
New York, NY 10038
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Overnight Delivery:
BankBoston, N.A. (781) 575-2233 BankBoston, N.A.
Attention: Corporate Attention: Corporate
Reorganization Reorganization
P.O. Box 8029 150 Royall Street
Boston, MA 02266-8029 Canton, MA 02021
Confirm by Telephone:
(781) 575-3120
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------- --------------------------------------------------------
DESCRIPTION OF SHARES TENDERED DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------- --------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------- --------------------------------------------------------
NUMBER AND CLASS OF NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)(1) BY CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
described above are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT HAVE BEEN
LOST OR DESTROYED AND SEE INSTRUCTION 11.
NUMBER AND CLASS OF SHARES REPRESENTED BY THE LOST OR DESTROYED CERTIFICATES:
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility as
defined in and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase. Stockholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders". Stockholders whose certificates for Shares
are not immediately available or who cannot deliver either the 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 documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Account Number
Transaction Code Number
[ ] 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 Registered Owner(s)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
If delivered by Book-Entry Transfer check box
[ ] The Depository Trust Company
Account Number
Transaction Code Number
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to EMAP Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of EMAP plc, an
English public limited company ("Parent"), the above-described shares of Class A
Common Stock, par value $0.01 per share (the "Class A Shares"), and Class B
Common Stock, par value $0.01 per share (the "Class B Shares" and, together with
the Class A Shares, the "Shares"), of The Petersen Companies, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated December 16, 1998 (the "Offer
to Purchase"), and this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued in respect thereof on or after December 16, 1998),
and irrevocably constitutes and appoints BankBoston, N.A. (the "Depositary"),
the true and lawful agent and attorney-in-fact of the undersigned, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to the full extent of the undersigned's rights
with respect to such Shares (and any such other Shares or securities or rights)
(a) to deliver certificates for such Shares (and any such other Shares or
securities or rights) or transfer ownership of such Shares (and any such other
Shares or securities or rights) on the account books maintained by the
Book-Entry Transfer Facility together, in any such case, with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Purchaser,
(b) to present such Shares (and any such other Shares or securities or rights)
for transfer on the Company's books and (c) to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
such other Shares or securities or rights), all in accordance with the terms of
the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after December 16, 1998), and, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire good
title thereto, free and clear of all liens, restrictions, claims and
encumbrances and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any such other Shares or
other securities or rights).
All authority conferred or agreed to be conferred pursuant to 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 of Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Christopher Innis and Alison
Phillips in their respective capacities as officers of the Purchaser, and any
other designees of the Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual,
special or adjourned meeting of the Company's stockholders or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his substitute
shall in his sole discretion deem proper with respect to, and to otherwise act
as each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, the Shares tendered hereby that have
been accepted for payment by the Purchaser prior to the time any such action is
taken and with respect to which the undersigned is entitled to vote (and any and
all other Shares or other securities or rights issued in respect thereof on or
after December 16, 1998). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by the undersigned at any
time with
3
<PAGE> 4
respect to such Shares (and any such other Shares or securities or rights) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or 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 for Shares not tendered or
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 Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not accepted for
payment (and any accompanying documents, as appropriate) to, the person or
persons so indicated. Please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility. The undersigned recognizes that the Purchaser has
no obligation pursuant to the "Special Payment Instructions" to transfer any
Shares from the name of the registered holder thereof if the Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares are 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.
Issue: [ ] Check
[ ] Certificate(s) to:
Name
----------------------------------------------------
(Please Print)
Address
--------------------------------------------------
------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
(Employer Identification or
Social Security Number)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares are not tendered or
not accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that above.
Mail: [ ] Check
[ ] Certificate(s) to:
Name
----------------------------------------------------
(Please Print)
Address
--------------------------------------------------
------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
(Employer Identification or
Social Security Number)
------------------------------------------------------------
5
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
ARROW RIGHT
- --------------------------------------------------------------------------------
ARROW LEFT
ARROW RIGHT
- --------------------------------------------------------------------------------
ARROW LEFT
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- -----------------------------------------
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s):
------------------------------------------------------------------------
(Please Print)
- --------------------------------------------------------------------------------
Capacity (full title):
---------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Daytime Area Code and Telephone No.:
----------------------------------------------
Employer Identification or
Social Security No.:
---------------------------------------------------------------
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
Authorized Signature
- --------------------------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
Area Code and Telephone No.
Dated:
- -----------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof or (b) if such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution"). In
all other cases, all signatures on this Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message and any
other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either certificates
for tendered Shares must be received by the Depositary at one of such addresses
prior to the Expiration Date or Shares must be delivered pursuant to the
procedures for book-entry transfer set forth herein (and a Book-Entry
Confirmation must be received by the Depositary), in each case, prior to the
Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer to
Purchase.
Stockholders whose certificates for Shares 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 the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary prior to the Expiration Date and (c) the certificates for all
tendered Shares in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Shares), together with a Letter of Transmittal (or 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, and
any other required documents, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery
as provided in Section 2 of the Offer to Purchase. A "trading day" is any day on
which the New York Stock Exchange is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the 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
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED AND PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
7
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or 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
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered". In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance of payment
of, and payment for the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without 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 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.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered owner(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of certificates listed, 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.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s), or
if tendered certificates are registered in the name of any person(s) other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not accepted for payment are to
be returned to, 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 a person
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.
8
<PAGE> 9
8. WAIVER OF CONDITIONS. Subject to the terms set forth in the Offer to
Purchase, the Purchaser reserves the absolute right in its sole discretion to
waive any of the specified conditions of the Offer, in whole or in part, in the
case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in this Letter of Transmittal and certify under
penalties of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately following the
Description of Shares Tendered and indicating the number of Shares lost. The
stockholder will then be instructed as to the steps that must be taken in order
to replace the certificate. This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH
CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT TO, TENDERED SHARES
WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
9
<PAGE> 10
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: BANKBOSTON, N.A.
- ----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT -------------------------------
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number(s)
DEPARTMENT OF
THE TREASURY OR
INTERNAL REVENUE SERVICE
-------------------------------
Employer Identification
Number
-----------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2 -- CERTIFICATES -- Under penalties of perjury,
TAXPAYER IDENTIFICATION I certify that: PART 3 --
NUMBER (TIN) (1) the number shown on this form is my correct AWAITING TIN
Taxpayer Identification Number (or I am waiting for a
number to be issued for me) and [ ]
(2) I am not subject to backup withholding because: ---------------------------------
(a) I am exempt from backup withholding or (b) I have
not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup PART 4 --
withholding as a result of a failure to report EXEMPT
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup [ ]
withholding.
-----------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have
been notified by the IRS that you are subject to backup withholding because of under
reporting interest or dividends on your tax returns. However, if after being notified by
the IRS that you are subject to backup withholding, you received another notification
from the IRS stating that you are no longer subject to backup withholding, do not cross
out such item (2). If you are exempt from backup withholding, check the box in Part 4
above.
- ----------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------ -----------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the Depositary by the
time of payment, 31% of all reportable payments made to me will be withheld, but
will be refunded to me if I provide a certified taxpayer identification number
within 60 days.
<TABLE>
<S> <C>
Signature Date
- ------------------------------------------------------------ ----------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS 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
INFORMATION.
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and all other tender offer materials may be
directed to the Information Agent or the Dealer Manager, as set forth below, and
copies will be furnished promptly at the Purchaser's expense.
10
<PAGE> 11
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
TOLL FREE: (800) 223-2064
Banks and Brokers Call Collect: (212) 440-9800
The Dealer Manager for the Offer is:
[SCHRODER & CO. INC. LOGO]
787 Seventh Avenue
New York, New York 10019
TOLL FREE: (800) 635-3044
(212) 492-6000
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
THE PETERSEN COMPANIES, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of either Class A Common Stock, par
value $0.01 per share (the "Class A Shares"), or Class B Common Stock, par value
$0.01 per share (the "Class B Shares" and, together with the Class A Shares, the
"Shares"), as the case may be, of The Petersen Companies, Inc., a Delaware
corporation (the "Company"), are not immediately available or if the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). This form may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase). See
Section 2 of the Offer to Purchase.
The Depositary:
BANKBOSTON, N.A.
By Hand:
Securities Transfer & Reporting Services, Inc.
c/o EquiServe
100 William Street, Galleria
New York, NY 10038
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Overnight Courier:
BankBoston, N.A. (781) 575-2233 BankBoston, N.A.
Attention: Corporate Attention: Corporate
Reorganization Reorganization
P.O. Box 8029 150 Royall Street
Boston, MA 02266-8029 Canton, MA 02021
Confirm by Telephone:
(781) 575-3120
</TABLE>
THIS FORM 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.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to EMAP Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of EMAP plc, an
English public limited company ("Parent"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated December 16,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below, all pursuant to the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase.
------------------------------------------------------------
Number and Class of Shares
----------------------------
Certificate Nos.
(if available):
--------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(Check box if Shares will be tendered by
book-entry transfer)
[ ] The Depository Trust Company
Account Number
----------------------------------------
Dated:
----------------------------------------------------
- ------------------------------------------------------------
------------------------------------------------------------
Name(s) of Record Holder(s)
--------------------------
------------------------------------------------------------
------------------------------------------------------------
Please Print
Address(es)
----------------------------------------------
------------------------------------------------------------
Zip Code
Daytime Area Code
and Tel. No.:
---------------------------------------------
Signature(s):
---------------------------------------------
------------------------------------------------------------
- ------------------------------------------------------------
2
<PAGE> 3
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
three trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate this
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.
<TABLE>
<S> <C>
Name of Firm:
--------------------------------------
-----------------------------------------------
Authorized Signature
Address:
--------------------------------------------- Name:
-----------------------------------------------
Please Print
Title:
- ----------------------------------------------- -----------------------------------------------
Zip Code
Area Code and Tel No.:
---------------------------- Dated:
-----------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE PETERSEN COMPANIES, INC.
AT
$34.00 NET PER SHARE
BY
EMAP ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
EMAP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
December 16, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been engaged by EMAP Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of EMAP plc, an English public
limited company ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of Class A Common Stock,
par value $0.01 per share (the "Class A Shares"), and Class B Common Stock, par
value $0.01 per share (the "Class B Shares" and, together with the Class A
Shares, the "Shares"), of The Petersen Companies, Inc., a Delaware corporation
(the "Company"), at $34.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated December 16, 1998 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any supplements
or amendments thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated December 16, 1998;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board of Directors and Chief Executive Officer of the Company accompanied
by the Company's Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
<PAGE> 2
7. Return envelope addressed to BankBoston N.A., the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE (X) A MAJORITY OF ALL OUTSTANDING SHARES OF CLASS A
COMMON STOCK AND (Y) A MAJORITY OF ALL OUTSTANDING SHARES, IN EACH CASE, ON A
FULLY DILUTED BASIS (WITHOUT GIVING EFFECT TO THE CONVERSION OF CLASS B SHARES
INTO CLASS A SHARES) ON THE DATE OF PURCHASE; (2) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED; AND (3) THE OFFER HAVING RECEIVED THE
APPROVAL OF THE SHAREHOLDERS OF PARENT AT AN EXTRAORDINARY GENERAL MEETING.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
The Board of Directors of the Company has: (1) unanimously approved the
Merger Agreement (as defined below) and the Stockholder Agreement (as described
in the Offer to Purchase) and the transactions contemplated thereby; (2)
unanimously recommended that the holders of Shares accept the Offer, tender
their Shares pursuant to the Offer and approve and adopt the Merger Agreement;
(3) unanimously determined that each of the Merger Agreement, the Offer and the
Merger is fair to the stockholders of the Company; (4) unanimously determined
that the consideration to be paid for each share in the Offer and the Merger is
fair to the stockholders of the Company; (5) unanimously declared that the
Merger Agreement is advisable; and (6) unanimously consented to the Offer. The
factors considered by the Board of Directors of the Company in arriving at its
decision to approve the Offer and the Merger and to recommend that stockholders
of the Company accept the Offer and tender their Shares are described in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to the stockholders of the Company
herewith.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 15, 1998 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Company, with the Company surviving the merger as a wholly
owned subsidiary of Parent (the "Merger"). In the Merger, each outstanding Share
(other than Shares owned by the Company or any subsidiary of the Company or by
Parent, the Purchaser or any other subsidiary of Parent or by stockholders, if
any, who are entitled to and who properly exercise appraisal rights under
Delaware law) will be converted into the right to receive $34.00 per Share,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
Payment for Shares accepted for payment pursuant to the Offer in all cases
will be made only after timely receipt by the Depositary, of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares, (b) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer effected pursuant to the
procedures set forth in Section 2 of the Offer to Purchase, an Agent's Message
(as defined in the Offer to Purchase), and (c) any other documents required by
the Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES
TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
2
<PAGE> 3
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent or to the Dealer Manager at the respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
SCHRODER & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR LETTER OF
TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE PETERSEN COMPANIES, INC.
AT
$34.00 NET PER SHARE
BY
EMAP ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
EMAP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
December 16, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated December 16,
1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by EMAP Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of EMAP plc, an English public
limited company ("Parent"), to purchase shares of Class A Common Stock, par
value $0.01 per share (the "Class A Shares"), and Class B Common Stock, par
value $0.01 per share (the "Class B Shares" and, together with the Class A
Shares, the "Shares"), of The Petersen Companies, Inc., a Delaware corporation
(the "Company"), at $34.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to Stockholders of the Company from the Chairman and Chief Executive
Officer of the Company accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9").
WE ARE 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.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The offer price is $34.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has: (1) unanimously
approved the Merger Agreement (as defined below) and the Stockholder
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby; (2) unanimously recommended that the holders of
Shares accept the Offer, tender their Shares pursuant to the Offer and
approve and adopt the Merger Agreement; (3) unanimously determined that
each of the Merger Agreement, the Offer and the Merger is fair to the
stockholders of the Company; (4) unanimously determined that
<PAGE> 2
the consideration to be paid for each Share in the Offer and the Merger is
fair to the stockholders of the Company; (5) unanimously declared that the
Merger Agreement is advisable; and (6) unanimously consented to the Offer.
The factors considered by the Board of Directors of the Company in arriving
at its decision to approve the Offer and the Merger and to recommend that
stockholders of the Company accept the Offer and tender their Shares are
described in the Schedule 14D-9, which is being mailed to stockholders of
the Company herewith.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of December 15, 1998 (the "Merger Agreement"), among
Parent, the Purchaser and the Company pursuant to which, following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company with the
Company surviving the merger as a wholly owned subsidiary of Parent (the
"Merger"). In the Merger, each outstanding Share (other than Shares owned
by the Company as treasury stock or by any subsidiary of the Company or by
Parent, the Purchaser or any other subsidiary of Parent or by stockholders,
if any, who are entitled to and who properly exercise appraisal rights
under Delaware law) will be converted into the right to receive $34.00 per
Share, without interest, as set forth in the Merger Agreement and described
in the Offer to Purchase.
5. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED
BY THE PURCHASER (THE "EXPIRATION DATE").
6. The Offer is conditioned upon, among other things: (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares that would constitute (x) a majority of all
outstanding shares of Class A Common Stock and (y) a majority of all
outstanding Shares, in each case, on a fully diluted basis (without giving
effect to the conversion of Class B Shares into Class A Shares) on the date
of purchase; (2) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder
applicable to the purchase of Shares pursuant to the Offer having expired
or been terminated; and (3) the Offer having received the approval of the
shareholders of Parent at an extraordinary general meeting.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all 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 on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize the tender of
your Shares, all such Shares will be tendered unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded promptly to us in
ample time to permit us to submit a tender on your behalf prior to the
Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer in all cases
will be made only after timely receipt by BankBoston, N.A. (the "Depositary"),
of (a) certificates for (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer effected pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, an Agent's
Message (as defined in the Offer to Purchase), and (c) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates for Shares or
Book-Entry Confirmations with respect to Shares are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of 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 is being
made on behalf of the Purchaser by Schroder & Co. Inc., the Dealer Manager for
the Offer, 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
ALL OUTSTANDING SHARES OF COMMON STOCK OF
THE PETERSEN COMPANIES, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase of EMAP Acquisition Corp. dated December 16, 1998 and the related
Letter of Transmittal, relating to shares of Class A Common Stock, par value
$0.01 per share (the Class A Shares), and Class B Common Stock, par value $0.01
per share (the Class B Shares and, together with the Class A Shares, the
Shares), of The Petersen Companies, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
<TABLE>
<S> <C>
Number and Class of Shares
to be Tendered *
SIGN HERE
- --------- Shares
-----------------------------------------------------
Daytime Area Code
and Tel. No. ---------------------------------------
-----------------------------------------------------
Signature(s)
Taxpayer Identification
No. or Social
Security No. ---------------------------------------
-----------------------------------------------------
Dated: ---------------------------------------------- (Please print name(s) and address(es))
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
3
<PAGE> 1
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
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Sole proprietorship account The Owner(4)
9. A valid trust, estate, or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
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.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) 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, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
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.
- 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 exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times 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 renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments to 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 non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file 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 payment, other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
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 IRS. IRS uses the numbers for identification
purposes. 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 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
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 December
16, 1998 and the related Letter of Transmittal and is not being made to (nor
will tenders 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. In any jurisdiction the
securities laws of which require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of the Purchaser by the Dealer
Manager 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
of
The Petersen Companies, Inc.
at
$34.00 Net Per Share
by
EMAP Acquisition Corp.
a wholly owned subsidiary of
EMAP plc
EMAP Acquisition Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of EMAP plc, an English public limited company
("Parent"), is offering to purchase all outstanding shares of Class A Common
Stock, par value $0.01 per share (the "Class A Shares"), and all outstanding
shares of Class B Common Stock, par value $0.01 per share (the "Class B Shares"
and, together with the Class A Shares, the "Shares"), of The Petersen Companies,
Inc., a Delaware corporation (the "Company"), at a price of $34.00 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated December 16, 1998, and in the related
Letter of Transmittal (which, together with any supplements or amendments
thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 14, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE (x) A MAJORITY OF ALL OUTSTANDING CLASS A SHARES
AND (y) A MAJORITY OF ALL OUTSTANDING SHARES, IN EACH CASE, ON A FULLY DILUTED
BASIS (WITHOUT GIVING EFFECT TO THE CONVERSION OF CLASS B SHARES INTO CLASS A
SHARES) ON THE DATE OF PURCHASE; (2) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED; AND (3) THE OFFER HAVING RECEIVED THE
APPROVAL OF THE SHAREHOLDERS OF PARENT AT AN EXTRAORDINARY GENERAL MEETING.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of December 15, 1998 (the "Merger Agreement"), among the Purchaser, Parent
and the Company which provides that, following the consummation of the Offer and
subject to the terms and conditions of the Merger Agreement, the Purchaser will
be merged with and into the Company (the "Merger"). On the effective date of the
Merger, each outstanding Share (other than Shares that are owned by the Company,
any subsidiary of the Company, Parent, the Purchaser or any other subsidiary of
Parent or by stockholders, if any, who are entitled to and who properly exercise
appraisal rights under Delaware law) will be converted into the right to receive
$34.00 in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS: (1) UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT (AS DEFINED BELOW) AND THE
TRANSACTIONS CONTEMPLATED THEREBY; (2) UNANIMOUSLY RECOMMENDED THAT THE HOLDERS
OF SHARES ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT; (3) UNANIMOUSLY DETERMINED THAT EACH OF
THE MERGER AGREEMENT, THE OFFER AND THE MERGER IS FAIR TO THE STOCKHOLDERS OF
THE COMPANY; (4) UNANIMOUSLY DETERMINED THAT THE CONSIDERATION TO BE PAID FOR
EACH SHARE IN THE OFFER AND THE MERGER IS FAIR TO THE STOCKHOLDERS OF THE
COMPANY; (5) UNANIMOUSLY DECLARED THAT THE MERGER AGREEMENT IS ADVISABLE; AND
(6) UNANIMOUSLY CONSENTED TO THE OFFER.
The Purchaser and Parent have also entered into a Stockholder Agreement
dated as of December 15, 1998 (the "Stockholder Agreement") with certain holders
of Shares. Under the Stockholder Agreement, such holders have agreed to accept
the Offer and tender all of their Shares at a price of $34.00 net per share. In
addition, such holders have granted to certain individuals designated by Parent
an irrevocable proxy with respect to the Shares subject to the Stockholder
Agreement to Parent to vote such Shares in favor of the Merger.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 midnight, New York City time, on Thursday, January 14, 1999 (or, if the
Purchaser shall have extended the period of time for which the Offer is open,
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire) and, unless theretofore accepted for payment as provided herein,
may also be withdrawn after Saturday, February 13, 1999. To be effective, a
written 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 and must
specify the name of the person having deposited the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder, if
different from the name of the person who tendered the Shares. If certificates
for Shares 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 and the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution (as defined in Section
2 of the Offer to Purchase) except, with respect to signature guarantees, in the
case of Shares tendered by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 2 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility (as
defined in Section 2 of the Offer to Purchase) to be credited with the withdrawn
Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment and thereby purchased tendered Shares as, if and when the Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares.
The Purchaser reserves the right, subject to the terms and conditions
contained in the Merger Agreement, 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. The Purchaser shall not have
any obligation to pay interest on the purchase price for tendered Shares in the
event the Purchaser exercises its right to extend the period of time during
which the Offer is open. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL, WHICH ARE
BEING MAILED TO STOCKHOLDERS OF RECORD, CONTAIN IMPORTANT INFORMATION WHICH
SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and all other tender offer materials may be directed to the Information Agent or
the Dealer Manager as set forth below, and copies will be furnished promptly at
the Purchaser's expense. No fees or commissions will be payable to brokers,
dealers or other persons other than the Dealer Manager and the Information Agent
for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GRAPHIC OMITTED]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
SCHRODER & CO. INC.
Equitable Center
787 Seventh Avenue
New York, New York 10019
(212) 492-6000
TOLL-FREE: (800) 635-3044
December 16, 1998
<PAGE> 1
[emap LOGO]
NEWS RELEASE
EMAP PLC TO ACQUIRE THE PETERSEN COMPANIES IN A US$1.2 BILLION TRANSACTION
SECURING ENTRY INTO THE US
- - Acquisition will combine two leading special interest consumer magazine
publishers in the US and the UK
- - Recommended tender offer at $34 per share, valuing Petersen at US$1,216
million (pound sterling 720 million)
- - Shareholders representing 73.5 per cent of Petersen's fully diluted
share capital have irrevocably agreed to accept the tender offer
EMAP plc (EMA.L) and The Petersen Companies, Inc. (NYSE: PTN) today announced a
recommended tender offer at $34 per share to acquire the whole of the share
capital of Petersen, which values the company at US$1.2 billion. Shareholders
representing 73.5 per cent of Petersen's fully diluted share capital, which
includes certain of the company's management and other shareholders, have
irrevocably agreed to accept the tender offer.
With a market capitalisation of US$3.7 billion, EMAP is an international media
company based in London with operations in the UK, France, Germany, Australia
and Singapore. In addition to being one of the largest consumer magazine
publishers in Europe, EMAP is also a major publisher of business magazines and
has established a leading position within the UK commercial radio market.
Petersen, based in New York City and Los Angeles, is a leading special interest
consumer magazine publisher in the US, with a portfolio of over 130 titles (the
largest such portfolio in the US), including market-leading titles such as Hot
Rod, Motor Trend and Teen. EMAP's best-selling consumer magazine titles in the
UK include FHM, Smash Hits, Motorcycle News, and Q, and in France, Tele Star and
Modes & Travaux.
Both companies have established strong positions in a number of key
complementary magazine sectors including the automotive, outdoor, teen, sports
and young male markets. With their complementary activities in Europe and the
U.S., a combination of EMAP and Petersen will create a dynamic, broadly-based
international publishing business with strong brands and competitive positions
that are expected to generate strong cash flows to finance future development.
Furthermore, the combined group will create a strong platform for organic and
acquisitive growth including the launch of EMAP's international brands.
Following the acquisition, which has been approved by the boards of both
companies, Petersen will become a new division of EMAP. Jim Dunning, Petersen's
Chairman, President and Chief Executive Officer, will remain as Chairman and
President of the new division (which will be called EMAP Petersen). It is
anticipated that, upon completion of the deal, Dunning will be invited to join
the board of EMAP plc and will report directly to EMAP's Group Chief Executive,
Kevin Hand. The Board of EMAP Petersen will include the existing executive
directors of Petersen together with EMAP's own executive directors.
Commenting on EMAP's US expansion, Kevin Hand, Group Chief Executive of EMAP,
said:
"Petersen represents an outstanding opportunity for us to secure a successful,
well-managed business in the US the world's largest magazine market. This
acquisition is an important step towards fulfilling our international strategy.
With so many titles complementary to our own around the world, Petersen is an
excellent fit.
<PAGE> 2
"Petersen's experienced management team has delivered impressive growth and
developed Petersen into a leading special interest magazine publisher in the US.
With such an established presence in the US magazine market, Petersen provides
excellent opportunities for further growth, including acting as a platform for
launching EMAP's international titles in the US. We are excited about the impact
that Petersen will bring to the enlarged group."
Jim Dunning added:
"I am extremely excited to play a role in EMAP where the combination of the two
companies will expand opportunities for the magazines and employees and will
accelerate our growth in the US."
The transaction is subject to approval by EMAP shareholders and regulatory
approval in the US, as well as other customary conditions. The tender offer will
be effected pursuant to an agreement and plan of merger between EMAP and
Petersen pursuant to which a subsidiary of EMAP will make a cash tender offer at
$34 per share for all the outstanding Petersen shares. The tender offer is
expected to expire at 12:00 midnight on 14th January, 1999, unless extended. Any
Petersen shares not purchased in the tender offer will be converted in a
subsequent merger into a right to receive $34 in cash.
15TH DECEMBER, 1998
- -------------------------------------------------------------------------------
ENQUIRIES:
EMAP
Kevin Hand, Group Chief Executive (+44) 171 278 1452
David Grigson, Finance Director
FLEISHMAN HILLARD (NEW YORK)
Peter McCue
Michele Vana
Jeff Kruger (+212) 453 2000
SCHRODERS (LONDON)
Paul Staples (+44) 171 658 6000
John McNeil
SCHRODERS (NEW YORK)
Richard Broadbent (+212) 492 6000
FINANCIAL DYNAMICS (LONDON)
Tim Spratt (+44) 171 831 3113
THE PETERSEN COMPANIES, INC.
Jim Dunning (+212) 886 3954
SUSAN MAGRINO AGENCY (NEW YORK)
Susan Magrino
Daniel Courtney (+212) 957 3005
- -------------------------------------------------------------------------------
<PAGE> 3
NOTES TO EDITORS
INFORMATION ON EMAP
EMAP is comprised of four key divisions:
- - Consumer Magazines UK
- - EMAP France (consumer and business magazines)
- - Business Communications
- - Radio (commercial radio in the UK)
Incorporated in 1947, EMAP's origins lie in local regional newspapers in the UK.
It subsequently developed into consumer and business magazines and today it is
one of the largest consumer magazine groups in Europe with over 157 titles,
including such leading magazines as MORE, FHM, BLISS, SMASH HITS, YOURS, Q, TELE
STAR and MODES & TRAVAUX. In 1989, EMAP moved into UK commercial radio and today
is the second largest operator of such stations when ranked by listenership. In
1992, EMAP made its first acquisition in France, where it has grown rapidly --
it now has a 17 per cent share of the French consumer magazine market making it
No. 3 in the country. In 1997, EMAP made its first acquisition in Australia in
consumer magazines. In addition, EMAP's Business Communications division, a
business-to-business media company with operations in the UK, Germany,
Switzerland, Holland and Singapore, has built a leading position in a number of
key markets including healthcare, construction, automotive, media and retail.
The division now publishes 72 magazines, organises 38 exhibitions and has
significant information products, awards and conference activities.
In the year ended 31st March, 1998, EMAP reported pre-tax profits of pound
sterling 141.7 million (US$239.5 million) on turnover of pound sterling 772.6
million (US$1.3 billion). More recently, in the six months ended 30th September,
1998, EMAP reported pre-tax profits (excluding amortisation and exceptional
items) of pound sterling 75.0 million (US$126.8 million) on turnover of pound
sterling 410.2 million (US$693.2 million).
INFORMATION ON PETERSEN
Petersen was established in 1948 through the launch of Hot Rod, a magazine for
young auto enthusiasts. Since then, Petersen has built up a diverse portfolio of
more than 130 individual titles, including 41 monthly and 14 bi-monthly
magazines with market-leading positions in many of its target markets. This is
illustrated by the fact that, of Petersen's 15 key titles, nine were ranked
first in their respective markets based on annual paid circulation in 1997,
including two magazines that are the only national magazines published in their
respective markets.
Petersen, which is publicly listed on the New York Stock Exchange, now has the
largest special interest magazine portfolio in the US. The company, based
principally in Los Angeles and New York, has approximately 800 employees and is
organised into nine publishing groups: Automotive Performance; Motor Trend;
Youth; Motorcycle; Outdoor; Marine; Action Sport; Hi-Tech; and Sport. Each group
is organised around one or more of Petersen's core monthly publications that
target a distinct market segment including:
- - Motor Trend, a leading authority on new, domestic and imported
automobiles which, with 1.1 million subscribers, is among the
world's leading automotive magazines;
- - Teen, the largest paid circulation of Petersen's magazines at 2
million; and
- - Hot Rod, the company's original title, founded by previous owner
Robert E. Petersen, which is now a market-leading, internationally
recognised magazine with a paid circulation of nearly 800,000.
Petersen has established a proven track record of strong revenue growth and
increased profitability achieved by improving the performance of existing titles
and by successfully launching and acquiring new titles. In parallel, the company
has also focused on the development of new revenue streams, capitalising on its
recognised magazine brands. Petersen has developed broader marketing solutions
complementing standard on-
<PAGE> 4
the-page advertising including trade shows, consumer events, database marketing,
custom publishing, extensive brand licensing activity and broadcasting.
In the 12 months to 31st December, 1997, Petersen reported aggregate EBITDA
(excluding extraordinary items) of $61.1 million on total net revenues of $247.1
million.
In the nine months to 30th September, 1998, Petersen reported unaudited EBITDA
(excluding extraordinary items) of $59.4 million on total net revenues of $228.7
million, representing an increase in EBITDA of approximately 27.0 percent over
the comparable period in 1997. As a percentage of total net revenues, EBITDA in
the nine-month period to 30th September, 1998 increased to 26.0 percent compared
to 25.5 percent in the comparable period in 1997.
<PAGE> 1
CONFORMED COPY
Dated 15th December, 1998
EMAP PLC
AS BORROWER, PARENT AND GUARANTOR
THE LENDERS LISTED IN SCHEDULE 1
BARCLAYS CAPITAL
DEN DANSKE BANK AKTIESELSKAB
DEUTSCHE BANK AG LONDON
AS ARRANGERS
BARCLAYS BANK PLC
AS AGENT
---------------------------------------
LOAN AGREEMENT
POUND STERLING 325,000,000 MULTI-CURRENCY STERLING REVOlving Credit,
STERLING BILL ACCEPTANCE AND U.S.$880,000,000 DOLLAR TERM LOAN FACILITIES
---------------------------------------
For EMAP plc For the Lenders
SLAUGHTER AND MAY ALLEN & OVERY
35 BASINGHALL STREET ONE NEW CHANGE
LONDON EC2V 5DB LONDON EC4M 9QQ
<PAGE> 2
CONTENTS
CLAUSE PAGE
1. INTERPRETATION 1
2. THE FACILITIES 19
3. THE BORROWERS 20
4. THE LENDERS 21
5. FEES AND EXPENSES 22
6. CANCELLATION 22
7. ADVANCE OF FUNDS 23
8. CURRENCY OPTIONS FOR ADVANCES 27
9. INTEREST ON ADVANCES 29
10. REPAYMENT OF ADVANCES 31
11. PREPAYMENT OF ADVANCES 31
12. ACCEPTANCE FACILITY 33
13. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES 37
14. CHANGES OF CIRCUMSTANCES 39
15. PAYMENTS 44
16. LATE PAYMENT 47
17. SHARING AMONG LENDERS 47
18. GUARANTEE 49
19. GUARANTOR'S INDEMNITY 52
20. RELEASE OF GUARANTORS 52
21. REPRESENTATIONS 52
22. INFORMATION COVENANTS 55
23. FINANCIAL COVENANTS 55
<PAGE> 3
24. GENERAL COVENANTS 56
25. EVENTS OF DEFAULT 59
26. EVIDENCE AND CERTIFICATES 63
27. NOTICES 63
28. ASSIGNMENT 64
29. ADDITIONAL BORROWERS 68
30. WAIVERS AND AMENDMENTS 69
31. THE AGENT, THE ARRANGERS AND THE LENDERS 70
32. MISCELLANEOUS 74
33. LANGUAGE 76
34. JURISDICTION 77
35. LAW 77
SCHEDULE 1 LENDERS AND COMMITMENTS 79
SCHEDULE 2 CONDITIONS PRECEDENT 80
SCHEDULE 3 FORM OF ADVANCE REQUEST 83
SCHEDULE 4 FORM OF ACCEPTANCE UTILISATION REQUEST 85
SCHEDULE 5 FORM OF ADDITIONAL BORROWER AGREEMENT 87
SCHEDULE 6 FORM OF ADDITIONAL GUARANTOR AGREEMENT 88
SCHEDULE 7 FORM OF POWER OF ATTORNEY 92
SCHEDULE 8 FORM OF BILL OF EXCHANGE 94
SCHEDULE 9 COSTS RATE 96
SCHEDULE 10 FORM OF LEGAL OPINION FROM ARRANGERS' ADVISER 98
SCHEDULE 11 FORM OF COMPLIANCE CERTIFICATE 101
SCHEDULE 12 NOVATION CERTIFICATE 103
SCHEDULE 13 TIMETABLES 104
SIGNATURES 107
<PAGE> 4
1
THIS AGREEMENT is made the 15th day of December, 1998 BETWEEN:
1. EMAP PLC, a company incorporated in England (number 43580), of 1
Lincoln Court, Lincoln Road, Peterborough PE1 2RF as borrower,
parent and guarantor;
2. THE LENDERS listed in Schedule 1, as lenders;
3. BARCLAYS BANK PLC, as agent; and
4. BARCLAYS CAPITAL, DEN DANSKE BANK AKTIESELSKAB and
DEUTSCHE BANK AG LONDON, as arrangers.
BACKGROUND
At the request of the Parent, the Lenders are willing to provide facilities to
any Borrower on the terms of this Agreement. The facilities comprise a pound
sterling 325,000,000 Multi- currency revolving credit facility, incorporating a
revolving sterling bill acceptance facility and a $880,000,000 multi-currency
term loan facility. The facilities are to be guaranteed by the Guarantors.
The parties agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACCEPTANCE COMMISSION RATE" means the rate equal to the Applicable
Margin that would have been applicable to any Advance made on the
relevant Acceptance Utilisation Date. Acceptance Commission Rate is
calculated on the aggregate amount of Bills for the period from that
Acceptance Utilisation Date to the maturity date of such Bills on the
basis of a 365-day year and the actual number of days in such period.
"ACCEPTANCE UTILISATION" means a utilisation by a Borrower of the Bill
Acceptance Facility.
"ACCEPTANCE UTILISATION DATE" means the date, or proposed date, of a
utilisation of the Bill Acceptance Facility.
"ACCEPTANCE UTILISATION REQUEST" means a request signed by one
Authorised Signatory of the Parent or a relevant Nominated Borrower to
utilise the Bill Acceptance Facility, substantially in the form set out
in Schedule 4.
"ADDITIONAL BORROWER AGREEMENT" means an agreement in the form set out
in Schedule 5 with such amendments as the Agent may reasonably require.
<PAGE> 5
2
"ADDITIONAL GUARANTOR AGREEMENT" means an agreement in the form set out
in Schedule 6 with such amendments as the Agent may reasonably require.
"ADVANCE" means a Revolving Advance or a Term Advance.
"ADVANCE DATE" means the date, or proposed date, of an Advance.
"ADVANCE REQUEST" means a request signed by one Authorised Signatory of
the Parent or a relevant Nominated Borrower for an Advance,
substantially in the form set out in Schedule 3.
"AFFILIATE", in relation to any person, means a Subsidiary of that
person, a Holding Company of that person or another Subsidiary of that
Holding Company.
"AGENT" means Barclays Bank PLC in its capacity as agent for the
Lenders, acting through its office at 5 The North Colonnade, Canary
Wharf, London E14 4BB or any other office which it may notify to the
Parent and the Lenders. If there is a change of Agent in accordance
with Clause 31.9, "AGENT" will instead mean the new Agent appointed
under that Clause.
"APPLICABLE MARGIN" shall have the meaning given in Clause 9.6.
"ARRANGERS" means Barclays Capital, Den Danske Bank Aktieselskab and
Deutsche Bank AG London in their capacity as arrangers of the
Facilities.
"AMORTISATION DATE" means each date for the repayment of an instalment
of the Term Loan.
"AUTHORISED SIGNATORY" means any person authorised to sign documents on
behalf of any Obligor by virtue of a resolution of the directors (or,
in the case of the Parent, a resolution of the Treasury Committee ) of
that party, a certified copy of which has been delivered to the Agent.
A person will cease to be an Authorised Signatory upon notice by the
appointing party to the Agent.
"AVAILABLE COMMITMENT" means the amount of a Lender's Commitment which
is available to a Borrower. On any day it is the Lender's Commitment on
that day less that Lender's participation in all Advances and Bills
outstanding at such time in respect of the Facilities. Participations
in Term Advances in a currency other than dollars will be taken at
their Original Dollar Amount. Participations in Revolving
Advances in a currency other than sterling will be taken at their
Original Sterling Amount.
"AVAILABLE RELEVANT COMMITMENT" means, in respect of a Facility, the
Available Commitment.
"BILL" means a sterling bill of exchange accepted, or to be accepted,
under the Bill Acceptance Facility.
<PAGE> 6
3
"BILL ACCEPTANCE FACILITY" means the revolving sterling bill acceptance
facility referred to in Clause 2.1(A), the terms of which are set out
in this Agreement.
"BORROWED MONIES INDEBTEDNESS" of any person means, without double
counting:
(A) the principal amount of all indebtedness of that person
for borrowed money,
(B) the principal amount of all indebtedness under any
acceptance credit opened on behalf of that person, or in
relation to any letter of credit issued for the account of
that person,
(C) the aggregate principal amount advanced under any bills of
exchange for which that person is liable,
(D) the principal amount of all indebtedness of that person
under any bond, debenture, note or similar instrument,
(E) the nominal value of share capital in that person to the
extent that such share capital is redeemable prior to the date
falling two years after the Maturity Date,
(F) the net termination value of currency hedging transactions
which have the commercial effect of converting Borrowed Monies
Indebtedness or Cash Investments from one currency to another
currency,
(G) all payment obligations of that person under any finance
lease or deferred purchase price of assets where such deferral
was for the purpose of procuring financial accommodation,
(H) the face amount of any receivables sold or discounted
(other than on a non recourse basis),
(I) all liabilities of that person (actual or contingent)
under any guarantee, bond, security, indemnity or other
agreement in respect of any Borrowed Monies Indebtedness of
any other person, and
(J) any transaction having the commercial effect of a
borrowing and classified as a borrowing for the purpose of
GAAP;
all determined in accordance with GAAP but excluding Borrowed Monies
Indebtedness and indebtedness incurred by the Parent to any of its
Subsidiaries or Subsidiary Undertakings or by any of its Subsidiaries
or Subsidiary Undertakings to any member of the Group.
In the case of Borrowed Monies Indebtedness in currencies other than
sterling, the relevant amount shall be the sterling equivalent thereof
on the relevant date.
<PAGE> 7
4
"BORROWERS" means each of the Parent and any Nominated Borrower and a
"BORROWER" means any one of them.
"BREAKAGE AMOUNT" means in relation to a Lender's participation in an
Advance an amount equal to the (a) principal of that Lender's
participation in that Advance plus (b) interest accrued on the Advance
(or relevant part thereof) to the Repayment Date(s) of the Advance (or,
in the case of a Term Advance, the last day of the then current
Interest Period of that Term Advance) discounted at such normal
commercial rates applicable at the time notice of prepayment is given
by the Borrower for deposits of an amount and currency equal to the
Advance plus interest accrued thereon (or relevant part thereof) for
the period from the time of prepayment to the Repayment Date(s) of the
Advance (or, in the case of a Term Advance, the last day of the then
current Interest Period of that Term Advance) as the relevant Lender
may reasonably determine.
"BRIDGING FACILITY" means the Bridging Loan Facility of even date
herewith between the Parent and the financial institutions named
therein.
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are open for general interbank business in London and, if a
payment in dollars is required, in New York, and, if a payment in an
Optional Currency is required (other than sterling or dollars), in the
principal financial centre of the country of that Optional
Currency, and if a payment in euros is required, means a day on which
TARGET is operating.
"CASH INVESTMENTS" means:
(a) cash (including cash with banks);
(b) bank deposits maturing within 12 months and money at call
with banks provided in each case that such banks have debt
securities outstanding with ratings at least as high as
those specified in item (d) below;
(c) amounts maturing within 12 months represented by
certificates of deposit and for tax deposit made with the
Inland Revenue; and
(d) the market value of debt securities (1) for which a
recognised market exists, (2) in respect of which a price
is ascertainable, (3) which have a maturity of up to 12
months, (4) which are not encumbered in any way and (5)
which have either (i) a short term rating of at least 'A1'
from Standard & Poors or IBCA or 'P1' from Moodys or (ii)
a long term rating of at least 'A-' from Standard & Poors
or IBCA or 'A3' from Moodys or (iii) equivalent long or
short term ratings from other recognised rating agencies,
of the Group which are held in, or freely transferable back to, the
United Kingdom and readily available.
<PAGE> 8
5
"CLEAN-UP DATE" means the date falling 90 days from the Unconditional
Date except for the purpose of Clause 21.1(J) and Clause 24.1(I) when
it means a date falling 180 days from the Unconditional Date.
"CODE" means, on any date, the United States Internal Revenue Code of
1986, as amended and the regulations promulgated and rulings issued
thereunder, all as the same may be in effect at such date.
"COMMITMENT" means in relation to a Lender the aggregate of the
Revolving Credit Commitment and the Term Loan Commitment of that
Lender.
"COMMITMENT EXPIRY DATE" means the date falling 150 days after the date
of this Agreement.
"CONSOLIDATED EARNINGS BEFORE INTEREST AND TAX" means the consolidated
earnings of the Group attributable to the specified period before
exceptional and extraordinary items (which will include acquisition
restructuring costs), the amortisation of goodwill, taxation, minority
interests, interest payable and receivable and any element attributable
to interest comprised in payments to lessors (or from lessees) under
finance leases or to hirers (or from customers) under hire-purchase
agreements all determined in accordance with GAAP. For the purpose of
Clause 23(B), adjustments shall be made for the pro forma effect of any
disposal or acquisition during the relevant period.
"CONSOLIDATED NET INTEREST PAYABLE" means the amount (if any) by which
the aggregate of all amounts of interest and equivalent financial
expenses of the Group, calculated on a consolidated basis, attributable
to the specified period (whether payable in that period or a subsequent
period) including (without affecting the generality of the foregoing)
any discount, fees and any element attributable to finance charges
comprised in payments to lessors under finance leases or to hirers
under hire-purchase agreements exceeds the aggregate of all amounts of
interest accrued (excluding, in each case, interest payable between
members of the Group) to the Group, calculated on a consolidated basis,
attributable to such period (whether payable in that period or a
subsequent period) including (without affecting the generality of the
foregoing) any discount, fees and any element attributable to finance
charges comprised in payments from lessees under finance leases or from
customers under hire-purchase agreements all determined in accordance
with GAAP.
"CONSOLIDATED NET WORTH" means the aggregate of the amounts paid-up or
credited as paid-up on the Parent's issued share capital and the amount
of the consolidated capital and revenue reserves of the Group
(including any share premium account, capital redemption reserve and
any credit balance on the consolidated profit and loss account of the
Group) all as shown by the consolidated balance sheet and consolidated
profit and loss account of the Group as at the date of the Latest
Annual Accounts, but after adjusting for GAAP and after:
<PAGE> 9
6
(a) deducting any debit balance on such consolidated profit
and loss account;
(b) deducting goodwill (including goodwill arising on
consolidation) and other intangible assets but excluding
from such deduction any goodwill arising on acquisitions
after 31st March, 1998 and all acquired publishing rights,
titles, exhibitions and licences;
(c) deducting all amounts attributable to minority interests
in the Parent's Subsidiaries and Subsidiary Undertakings;
(d) deducting any sums set aside for taxation (other than
deferred taxation) to the extent that such sums are not
provided for therein;
(e) deducting any amounts distributed or proposed to be
distributed (except to any member of the Group by any of
the Parent's Subsidiaries or Subsidiary Undertakings) out
of profits accrued prior to the date of such consolidated
balance sheet, to the extent that such distribution is not
provided for therein;
(f) making such adjustments during any financial year as may
be appropriate to reflect any addition to the Parent's
share capital since the date of such Latest Annual
Accounts. For these purposes, any unissued shares in the
Parent which have been unconditionally underwritten at the
date of the determination and scheduled to be issued
within 60 days will be treated as having been issued; and
(g) deducting any amounts attributable to upward revaluation
of any assets after 31st March, 1998 other than as a
result of a bona fide revaluation of such assets,
all determined in accordance with GAAP.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Borrower are treated as a
single employer under Section 414 of the Code.
"COSTS RATE" means a rate per annum determined by the Agent and
notified to the Parent and, where appropriate, the Nominated Borrower.
This rate will be applied to an outstanding amount for a particular
period. It will be calculated in accordance with Schedule 9.
"DOLLAR EQUIVALENT AMOUNT" means the amount in an Optional Currency
(other than dollars) equivalent to a specified amount in dollars. The
"DOLLAR EQUIVALENT AMOUNT" will be calculated using the Exchange Rate
applicable to the date on which the amount in the Optional Currency is
to be or was advanced.
<PAGE> 10
7
"EURO" OR "E" means the currency introduced in the Third Stage.
"ELIGIBLE BANK" means, at any time, a bank whose acceptance of a bill
of exchange would, if such bill of exchange were otherwise eligible,
make such bill of exchange eligible for re-discount at the Bank of
England.
"ELIGIBLE BILL" means a sterling bill of exchange eligible for
re-discount at the Bank of England.
"ELIGIBLE BILL DISCOUNT RATE" means a discount rate per annum
determined by the Agent and notified to the Parent and, where
appropriate, the Nominated Borrower. This rate will be applied to the
face amount of a Bill for the Tenor of that Bill to determine the
amount payable to the Parent or Nominated Borrower in respect of that
Bill. It will be based on the rate (as determined by the Agent) at
which Eligible Bills of a comparable tenor and face amount could be
discounted in the London discount market on the Acceptance Utilisation
Date on which that Bill is accepted. The rate notified will be the rate
as at the Prescribed Time on the Acceptance Utilisation Date. The Agent
will calculate the aggregate of:
(A) this rate; and
(B) the Applicable Margin.
"ENCUMBRANCE" means any mortgage, charge, pledge or lien or security
interest or any other arrangement having the effect of conferring
security, including, without limitation, retention of title
arrangements.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute of similar
import, together with any rule or regulation issued thereunder.
"EVENT OF DEFAULT" has the meaning given in Clause 25.1.
"EXCHANGE RATE" means the Agent's spot rate of exchange for converting
an amount in sterling into dollars, or an amount in sterling or dollars
into an amount in another Optional Currency, or vice versa.
"FACILITIES" means the Revolving Credit Facility and the Term Loan
Facility and "FACILITY" means either one of them.
"FINANCIAL INDEBTEDNESS" means (without double-counting) any
indebtedness in respect of:
(a) borrowed money;
(b) any bond, debenture, note or similar instrument;
(c) any acceptance credit;
<PAGE> 11
8
(d) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable
where the advance or deferred payment was arranged primarily as a
method of raising finance or financing the acquisition of that
asset;
(e) any lease entered into primarily as a method of raising finance or
financing the acquisition of the asset leased;
(f) receivables sold or discounted (other than on a non-recourse
basis);
(g) any amount raised under any other transaction having the commercial
effect of borrowing money and classified as a borrowing for GAAP;
(h) any currency or interest rate swap or forward exchange contract,
floor, cap or collar arrangement or other derivative instrument,
and the amount of indebtedness in respect of the transaction will
be the net exposure (meaning the amount payable by the party liable
thereunder on termination or closing out of such arrangements as
determined on a mark to market basis) of the relevant member of the
Group; and
(i) any guarantee, indemnity or similar assurance against financial
loss of any person.
"GAAP" means accounting principles generally accepted and adopted in
the United Kingdom as at 31st March, 1998.
"GROUP" means the Parent, its Subsidiaries and Subsidiary Undertakings.
"GUARANTEE" means a guarantee of amounts due under this Agreement given
in accordance with Clause 18.
"GUARANTORS" means each member of the Group which has executed and
delivered an Additional Guarantor Agreement in accordance with Clause
18.11 and "GUARANTOR" means any one of them.
"HOLDING COMPANY" has the meaning described in section 736 of the
Companies Act 1985.
"INFORMATION MEMORANDUM" means an information memorandum prepared by or
on behalf of the Parent for the purposes of general syndication of the
Facilities.
"INSTRUCTING GROUP" means, at any time, Lenders:
(a) whose participation in the Loan then outstanding and whose undrawn
uncancelled Commitments aggregate more than 66 2/3 per cent. of the
aggregate of the Loan and Uncancelled Facility Amount; or
<PAGE> 12
9
(b) if there is no Loan then outstanding, whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments; or
(c) if there is no Loan then outstanding and the Total Commitments have
been reduced to nil, whose Commitments aggregated more than 66 2/3
per cent. of the Total Commitments immediately before the
reduction.
For the purposes of any calculation:
(a) Advances shall be taken at their Original Sterling Amount or
Original Dollar Amount, as appropriate; and
(b) the Original Dollar Amount of the Term Advances will be notionally
converted into sterling at the Exchange Rate determined by the
Agent on the day of calculation.
For so long as the original Lenders are the only Lenders references in
this definition to "66 2/3" will be deleted and replaced by "100".
"INTEREST PERIOD" means each period determined in accordance with
Clause 9.
"LATEST ANNUAL ACCOUNTS" means the annual audited consolidated accounts
of the Parent most recently submitted to the Agent pursuant to Clause
22(A) or, prior to the submission of any such accounts, such accounts
for the year ended 31st March, 1998.
"LENDER" means a lender listed in Schedule 1 acting through the office
appearing under its name on the signature pages or any other office
which it may notify to the Agent by not less than five Business Days'
notice. A Lender which acquires an interest in these Facilities by way
of assignment, novation or transfer will become a "LENDER" and will act
through its office notified to the Agent or such other as it may notify
to the Agent by not less than 5 Business Days' notice. The expression
also includes a successor in title to a Lender.
"LIBOR" means in relation to any Advance or unpaid sum, on any day, the
rate per annum determined by the Agent to be equal to:-
(i) the rate per annum quoted at or about 11.00 a.m. on the
Quotation Date for such period on that page of the Telerate
Screen which displays British Bankers Association Interest
Settlement Rates for deposits in the relevant currency for
such period or, if such page or service shall cease to be
available, such other page or such other service (as the case
may be) for the purpose of displaying British Bankers
Association Interest Settlement Rates for such currency as the
Agent, after consultation with the Parent, shall select,
provided that, if no such rate appears on the relevant page
for deposits in the specified currency and/or of the specified
term, LIBOR shall be determined in accordance with the
provisions of paragraph (ii) below; or
<PAGE> 13
10
(ii) in any other case, (including any case where the proviso to
paragraph (i) above applies) the arithmetic mean (rounded
upwards to four decimal places) of the respective rates per
annum notified to the Agent by the Reference Banks as the rate
at which it is offering deposits in the specified currency for
the specified term to prime banks in the London Interbank
Market at or about 11.00 a.m. on the Quotation Date for such
period,
and, for the purpose of this definition, "SPECIFIED CURRENCY" means the
currency of such Advance or, as the case may be, unpaid sum, and
"SPECIFIED TERM" means the term of such Advance or, as the case may be,
the period in respect of which LIBOR falls to be determined in relation
to such unpaid sum.
"LOAN" means the aggregate of the principal amount borrowed and not
repaid under the Facilities and the aggregate face amount of
outstanding Bills.
"MATERIAL ADVERSE EFFECT" means any matter having a material adverse
effect on the ability of the Obligors taken as a whole to comply with
their payment obligations under this Agreement or the ability of the
Parent to comply with its obligations under Clause 23.
"MATERIAL SUBSIDIARY" means any Subsidiary or Subsidiary Undertaking of
the Parent whose gross assets, net worth or earnings before interest
and tax (as determined in accordance with GAAP) exceeds 5 per cent. of
the consolidated gross assets of the Group (determined in accordance
with GAAP), the Consolidated Net Worth or, as the case may be, the
Consolidated Earnings Before Interest and Tax.
"MATURITY DATE" means the fifth anniversary of the date of this
Agreement.
"NET CONSOLIDATED BORROWINGS" means the aggregate of the amount of
Borrowed Monies Indebtedness less Cash Investments.
"NOMINATED BORROWER" means any Subsidiary or Subsidiary Undertaking of
the Parent from time to time which has been nominated by the Parent as
a borrower under this Agreement.
"OBLIGOR" means the Parent, any Borrower and any Guarantor.
"OFFER" means the tender offer for the Petersen Shares made or to be
made by the Parent (or on its behalf) as such offer may from time to
time be amended, extended, added to, revised, renewed or waived.
"OFFER DOCUMENT" means the documents to be sent by or on behalf of the
Parent to shareholders in Petersen in respect of the Offer.
"OFFER PERIOD" means the period from the date hereof until the earlier
of (i) the day which falls 150 days after the date of this Agreement
and (ii) the date on which the Offer lapses or is withdrawn.
<PAGE> 14
11
"OPTIONAL CURRENCY" means (i) in relation to the Revolving Credit
Facility, dollars and, following the start of the Third Stage, euros
and any other currency (other than sterling) which is freely
transferable and freely convertible into sterling and (ii) in relation
to the Term Loan Facility, sterling and, following the start of the
Third Stage, euros and any currency (other than dollars) which is
freely transferable and freely convertible into dollars.
"ORIGINAL DOLLAR AMOUNT" means the dollar equivalent of an amount in an
Optional Currency (other than dollars). The "ORIGINAL DOLLAR AMOUNT"
will be calculated using the Exchange Rate applicable to the date three
Business Days prior to the date on which the amount in the Optional
Currency was advanced.
"ORIGINAL STERLING AMOUNT" means the sterling equivalent of an amount
in an Optional Currency (other than sterling). The "ORIGINAL STERLING
AMOUNT" will be calculated using the Exchange Rate applicable to the
date three Business Days prior to the date on which the amount in the
Optional Currency was advanced.
"PARENT" means EMAP plc, the first party to this Agreement.
"PARTICIPATING MEMBER STATE" means any member state of the European
Union which adopts the euro in accordance with the Treaty establishing
the European Community.
"PARTY" means a party to this Agreement.
"PERMITTED ENCUMBRANCE" means:
(a) liens arising solely by operation of law or in the ordinary
course of business and any agreement for retention of title to
goods arising in the ordinary course of business;
(b) rights of set-off arising by operation of law or in the
ordinary course of trade or under pooling and netting
arrangements entered into by a member of the Group with banks
and other financial institutions in the ordinary course of its
business;
(c) all Encumbrances in existence at the date hereof and notified
to the Agent prior to the date of this Agreement provided that
the principal amount thereby secured has not been increased
since the date of this Agreement;
(d) all Encumbrances over or affecting any property where such
property is acquired by any member of the Group after the date
of this Agreement, but only if (i) such Encumbrance was not
created in contemplation of such acquisition and (ii) the
principal amount thereby secured has not been increased in
contemplation of, or since the date of, such acquisition;
<PAGE> 15
12
(e) all Encumbrances over or affecting any property of any company
or other legal entity which becomes a Subsidiary or Subsidiary
Undertaking of the Parent after the date hereof, where such
Encumbrance is created prior to the date on which such company
or other legal entity becomes a Subsidiary or Subsidiary
Undertaking of the Parent but only if (i) such Encumbrance was
not created in contemplation of such company or legal entity
becoming a Subsidiary or Subsidiary Undertaking of the Parent
and (ii) the principal amount thereby secured has not been
increased in contemplation of, or since the date of, such
company or other legal entity becoming a Subsidiary or
Subsidiary Undertaking of the Parent;
(f) any Encumbrance which the Agent (acting on the instructions of
the Instructing Group) has at any time agreed shall be a
Permitted Encumbrance;
(g) any Encumbrance the principal amount secured by which does not
exceed 10 per cent. of the Consolidated Net Worth at the time
of vesting created over an asset within 30 days of the
acquisition thereof for the purpose of securing indebtedness
incurred to acquire and/or develop such asset;
(h) any Encumbrance securing Borrowed Monies Indebtedness incurred
by a member of the Group for the financing of a specific
project or projects where no other member of the Group has any
liability, actual or contingent, in any way related to such
Borrowed Monies Indebtedness. This exception will, however,
only apply if the Encumbrance is created on an asset of the
relevant project and remains confined to that asset;
(i) any Encumbrance arising pursuant to an order of attachment,
distraint, garnishee or injunction restraining disposal of
assets or similar legal process (in respect of assets having a
value, in aggregate, of not more than pound sterling
5,000,000) arising in connection with court proceedings
being contested by the relevant member of the Group in good
faith with a reasonable prospect of success, provided that
when aggregated with the amount of all the assets secured by
all other Encumbrances falling within this paragraph (i) the
aggregate amount does not exceed 10 per cent. of the
Consolidated Net Worth;
(j) any Encumbrance (the "REPLACEMENT ENCUMBRANCE") created to
replace or renew or in substitution for any Encumbrance (the
"OLD ENCUMBRANCE") granted by a member of the Group referred
to in paragraph (d) or (e) above (whether upon a refinancing
or otherwise) where the Replacement Encumbrance is granted in
respect of the same asset as the Old Encumbrance and does not
secure an amount in excess of the amount secured on the Old
Encumbrance; and
(k) any Encumbrance (not falling within paragraphs (a) to (j)
above) the principal amount secured by which, when aggregated
with the principal
<PAGE> 16
13
amount secured by all other Encumbrances
falling within this paragraph (k), does not exceed 10 per
cent. of the Consolidated Net Worth.
"PETERSEN" means The Petersen Companies, Inc.
"PETERSEN GROUP" means Petersen and its Subsidiaries and Subsidiary
Undertakings.
"PETERSEN SHARES" means the existing issued and fully paid-up shares in
Petersen and any further shares in Petersen allotted or issued after
the date hereof (including, for the avoidance of doubt, both shares
allotted or issued as a result of the exercise of options granted under
any share schemes existing in respect of shares in Petersen and such
options themselves).
"PLAN" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which a Borrower or Guarantor or any member of
the Controlled Group has any obligation to contribute.
"POTENTIAL EVENT OF DEFAULT" means an event or state of affairs which
is mentioned in Clause 25.1 but which has not become an Event of
Default because a period has not elapsed and/or a notice has not been
given.
"PRESCRIBED TIME" means the times for certain actions under this
Agreement as set out in Schedule 13.
"PRESS RELEASE" means the press release issued by the Parent or on its
behalf on announcement of the Offer and the Rights Issue.
"QUALIFYING BANK" means a bank or financial institution which is:
(a) a bank for the purposes of section 349(3) of the Income and
Corporation Taxes Act 1988 and is beneficially entitled to and
within the charge to corporation tax on the interest received
by it under this Agreement; or
(b) resident (as such term is defined in the appropriate double
taxation treaty) in a country with which the United Kingdom
has an appropriate double taxation treaty under which that
institution is entitled to receive interest without deduction
or withholding of United Kingdom income tax and in respect of
which the Parent has received a direction from the United
Kingdom Inland Revenue that all payments of interest to or for
the account of such bank under any of the documents may be
made without deduction or withholding for or on account of tax
in the United Kingdom and for this purpose "double taxation
treaty" means any convention or agreement between the
Government of the United Kingdom and any other government for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on
<PAGE> 17
14
income and capital gains. The Parent will use all reasonable
endeavours to obtain any required direction as promptly as
practicable.
"QUOTATION DATE" in relation to any period for which an interest rate
is to be determined hereunder means:
(a) the first day of an Interest Period for an Advance denominated
in Sterling;
(b) the second TARGET Business Day before the first day of an
Interest Period for an Advance denominated in euros;
(c) the second Business Day before the first day of an Interest
Period for an Advance denominated in any currency other than
sterling or euros; or
(d) such other day as is generally treated as the rate fixing day
by market practice in the London interbank market for the
currency concerned, as notified by the Agent to the other
Parties by not less than 5 Business Days' notice.
"REFERENCE BANKS" means, initially, the principal London offices of
Barclays Bank PLC, Den Danske Bank Aktieselskab and Deutsche Bank AG
London. The Agent, following consultation with the Parent and the
Lenders, may replace a "REFERENCE BANK" with another Lender or an
Affiliate of a Lender. This replacement will take effect when notice is
delivered to the Parent and the Lenders. The Agent shall be obliged to
seek a replacement for a Reference Bank if it no longer has a
Commitment.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor).
"REGULATION D COSTS" means, in relation to its participation in an
Advance made to a Borrower incorporated in the U.S. (or deposits
maintained by a Lender to fund that participation), the amount (if any)
certified by a Lender to be the cost to it of complying with Regulation
D (or any similar reserve requirements) in respect of its participation
or those deposits.
"REPAYMENT DATE" means, for a Revolving Advance, the last day of its
Interest Period.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section with respect to
a Plan, excluding, however, such events as to which the U.S. Pension
Benefit Guaranty Corporation (or any successor thereto) by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided, however, that
a failure to meet the minimum funding standard of Section 412 of the
Code and of Section 302 of ERISA shall be a Reportable Event regardless
of the issuance of any such waiver of the notice
<PAGE> 18
15
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"RESERVATIONS" means (i) the principle that equitable remedies are
remedies which may be granted or refused at the discretion of the
court, (ii) the limitation of validity and/or enforcement by laws
relating to bankruptcy, insolvency, liquidation, reorganisation, court
schemes, moratoria, administration and other laws generally affecting
the rights of creditors, (iii) the time barring of claims under the
Limitation Acts, (iv) defences of set-off or counterclaim and similar
principles, (v) where a party to this Agreement is vested with a
discretion or may determine a matter in its opinion, that party may be
required to exercise its discretion reasonably or be required to hold
that opinion on reasonable grounds, (vi) any determination or
certificate made or given pursuant to any provision of this Agreement
which provides for such determination or certificate to be shown to
have been incorrect, unreasonable, or arbitrary or not to have been
given or made in good faith, (vii) if an English court were to construe
any provision of this Agreement as being in the nature of a penalty,
such provision would not be held to be valid and binding, (viii) the
award of enforcement costs is a discretionary remedy and (ix)
undertakings to pay stamp duty may be void under the Stamp Act 1891.
"REVOLVING ADVANCE" means a cash advance (as from time to time reduced
by repayment) made, or to be made, under the Revolving Credit Facility.
"REVOLVING CREDIT COMMITMENT" means the amount which a Lender has
committed to the Revolving Credit Facility. Each Lender's initial
"REVOLVING CREDIT COMMITMENT" is set out next to its name in Schedule
1. This may be reduced or revised in accordance with this Agreement. In
addition the amount of a Lender's "REVOLVING CREDIT COMMITMENT" may be
adjusted by assignments, transfers or novations in accordance with
Clause 28.2.
"REVOLVING CREDIT FACILITY" means the multi-currency revolving credit
facility referred to in Clause 2.1(A), the terms of which are set out
in this Agreement.
"RIGHTS ISSUE" means the offer of shares in the Parent by way of rights
to existing holders of shares as described in the Shareholders
Circular.
"SHAREHOLDERS CIRCULAR" means the circular to be sent by the Parent or
on its behalf to its shareholders in connection with the Offer and the
Rights Issue.
"STERLING EQUIVALENT AMOUNT" means the amount in an Optional Currency
(other than sterling) equivalent to a specified amount in sterling. The
"STERLING EQUIVALENT AMOUNT" will be calculated using the Exchange Rate
applicable to the date on which the amount in the Optional Currency is
to be or was advanced.
"SUBSIDIARY" has the meaning described in section 736 of the Companies
Act 1985.
<PAGE> 19
16
"SUBSIDIARY UNDERTAKING" has the meaning described in section 258 of
the Companies Act 1985.
"TARGET" means the Trans-European Automated Real-time Gross Settlement
Express Transfer System.
"TARGET BUSINESS DAY" means a day on which TARGET is operating.
"TENOR" means the period from the Acceptance Utilisation Date on which
a Bill is accepted until the maturity of that Bill as specified in the
relevant Acceptance Utilisation Request in accordance with Clause 12.1.
"TERM ADVANCE" means a cash advance (as from time to time reduced by
payment) made, or to be made, under the Term Loan Facility.
"TERM LOAN" means the aggregate principal amount borrowed and not
repaid under the Term Loan Facility.
"TERM LOAN COMMITMENT" means the amount which a Lender has committed to
the Term Loan Facility. Each Lender's initial "TERM LOAN COMMITMENT" is
set out next to its name in Schedule 1. This may be reduced or revised
in accordance with this Agreement. In addition the amount of a Lender's
"TERM LOAN COMMITMENT" may be adjusted by assignments, transfers or
novations in accordance with Clause 28.2.
"TERM LOAN FACILITY" means the term loan facility referred to in Clause
2.1(B), the terms of which are set out in this Agreement.
"THIRD STAGE" means the third stage of economic and monetary union
pursuant to the Treaty establishing the European Community.
"TOTAL AVAILABLE COMMITMENT" means the aggregate of the Available
Commitments of all the Lenders.
"TOTAL AVAILABLE RELEVANT COMMITMENTS" means the aggregate of the
Available Relevant Commitments in respect of the Term Loan Facility or
the Revolving Credit Facility.
"TOTAL COMMITMENTS" means the aggregate of the Commitments of all the
Lenders.
"UNCANCELLED FACILITY AMOUNT" means the aggregate of the uncancelled
Revolving Credit Facility and the uncancelled Term Loan Facility
translating the amount uncancelled under the Term Loan Facility into
sterling at the Exchange Rate determined by the Agent on the day the
Uncancelled Facility Amount is being determined.
<PAGE> 20
17
"UNCONDITIONAL DATE" means the date on which each of the conditions of
the Offer has been fulfilled or, alternatively, waived and the Offer is
declared unconditional in all respects.
1.2 INTERPRETATION OF CERTAIN REFERENCES
Unless a contrary intention is indicated:
(A) References to Clauses and Schedules are to Clauses
of, and the Schedules to, this Agreement. References
to paragraphs are to paragraphs in the same Clause.
(B) References to other documents include those documents
as they may be amended in the future.
(C) References to times are to London time.
(D) References to assets are to present and future assets
and include revenues.
(E) References to "pound sterling" and to "STERLING" are
to the lawful currency of the United Kingdom and
references to "$" and to "DOLLARS" are to lawful
currency of the United States of America.
(F) References to fees or expenses include any value
added tax on those fees or expenses.
(G) References to a "regulation" includes any regulation,
rule, official directive, request or guideline
(whether or not having the force of law) of any
governmental body, agency, department or regulatory,
self-regulatory or other authority or organisation.
1.3 HEADINGS
All headings and titles are inserted for convenience only. They are to
be ignored in the interpretation of this Agreement.
1.4 CALCULATIONS
Interest and commitment fees will be calculated using the following formula:
I = D x R x A
-----------------
Y
where:
I = the interest or commitment fee accrued
<PAGE> 21
18
D = the number of days in the period for which the
interest or commitment fee is to be calculated,
including the first day but excluding the last day
unless it is market practice in the London
inter-bank market to do otherwise when
market-practice shall prevail
R = the rate of interest or commitment fee, expressed
as a fraction
A = the amount on which interest or commitment fee is
being calculated
Y = unless otherwise agreed between the Parent and the
Agent, 365 for amounts in sterling or, in other
currencies, 360 unless it is market practice in the
London inter-bank market to do otherwise when
market-practice (as determined by the Agent) shall
prevail.
Interest and commitment fee will be treated as accruing uniformly over
each period on a daily basis. In some cases, "R" or "A" may change
during a period for which the interest or commitment fee is to be
calculated. In those cases the interest or commitment fee will be
calculated for successive periods and then aggregated. These successive
periods will be the periods during which "R" and "A" were constant.
1.5 REIMBURSEMENTS
If a party wishes to claim reimbursement of any amount to which it is
entitled, it will deliver a demand to the reimbursing party. This will
set out the losses, expenses or other amounts to be reimbursed. It must
also specify the currency of reimbursement. The reimbursing party
agrees to pay those amounts to the party entitled to them no later than
five Business Days after the delivery of the demand to the reimbursing
party. Where there is an outstanding Event of Default, payment will
instead be due on delivery of this demand.
1.6 INTRODUCTION OF THE EURO
Market practice relating to the method of rate fixing and the
calculation of interest on deposits in the inter-bank deposit market
in London may change following the start of the Third Stage and, as a
result, may differ from the method of rate fixing and the calculation
of interest prescribed under the terms of this Agreement. In this
event, the Agent will consult the Parent and specify the amendments to
this Agreement which are required to reflect and conform to these
changes. These amendments may be agreed before or after the start of
the Third Stage but must be in accordance with Clause 30.2. The
amendments may provide for the use of London inter-bank market offered
rates or inter-bank market offered rates from a wider European market
(or, in either case, screen rates reflecting these offered rates). They
may also change, amongst other things, the period of notice required
for an Advance, the rate fixing date, the definition of "Business Day"
and any elements of the formula (other than, for the avoidance of doubt
and without limitation, the Applicable Margin) set out in Clause 1.4.
The amendments will take effect on the later of the date specified in
the amending agreement and the date on which the Third Stage
<PAGE> 22
19
commences. The amendments will not apply to interest or fees which are
computed by reference to any period starting before the date the
amendments take effect. This Clause 1.6 may, in appropriate
circumstances, be invoked more than once.
1.7 ARRANGERS
Barclays Capital is the investment banking division of Barclays Bank
PLC and all references to Barclays Capital include Barclays Bank PLC.
This paragraph does not affect the rights and obligations of Barclays
Bank PLC under this Agreement.
2. THE FACILITIES
2.1 AMOUNT AND NATURE
The Facilities are:
(A) a pound sterling 325,000,000 multi-currency revolving credit
facility under which Revolving Advances may be made by the
Lenders to the Borrowers incorporating a revolving sterling
bill acceptance facility under which the Lenders may, at the
request of a Borrower, accept Bills drawn by that Borrower in
sterling; and
(B) a $880,000,000 multi-currency term loan facility under which
Term Advances may be made by the Lenders to the Borrowers.
2.2 PURPOSE
The proceeds of the Facilities will be used by the Borrowers:
(A) towards payment of consideration to be provided by the Parent
(or on its behalf) for the Petersen Shares acquired by it
pursuant to the Offer or otherwise and in respect of the cash
cancellation of options;
(B) after the Unconditional Date, to pay (or to repay loan notes
issued as) consideration to be provided by the Parent or any
other member of the Group for any other acquisition of a
company or business (except for any hostile bid or hostile
takeover);
(C) for the general corporate purposes of the Parent and its
Subsidiaries (including, without limitation, for the purpose
of meeting the whole or any part of the Parent's expenses in
connection with the Offer); and
(D) to repay and refinance all or part of the existing
indebtedness of the Group (including that incurred by the
Petersen Group in the acquisition of certain assets of Curtco
Freedom Group).
<PAGE> 23
20
Provided that the proceeds of the Term Loan Facility may only be used
for the purpose set out in paragraph (A) and (D). Neither the Term Loan
nor any Revolving Advance may be used for the purpose set out in
paragraph (A) above unless the Bridging Facility shall have been fully
drawn.
2.3 WITHOUT PREJUDICE TO THE OBLIGATIONS OF THE BORROWERS UNDER CLAUSE 2.2,
NEITHER THE AGENT, THE ARRANGERS NOR THE LENDERS NOR ANY OF THEM SHALL
BE OBLIGED TO INVESTIGATE OR CONCERN THEMSELVES WITH THE USE OR
APPLICATION OF AMOUNTS RAISED BY THE BORROWERS HEREUNDER.
2.4 AVAILABILITY
(A) The Parent may, after 4th January, 1999, from time to time
borrow under the Facilities after the Agent has received (i)
all the items listed in Part 1 of Schedule 2 in a form
satisfactory to the Agent and (ii) all the items listed in
Part 2 of Schedule 2, with all references to the Agent, the
Lenders or the terms of the Facilities or this Agreement in
such documents in a form approved by the Agent (such approval
not to be unreasonably withheld). The Agent agrees to notify
the Parent and the Lenders promptly upon such items being
received. Any Nominated Borrower may from time to time borrow
under the Facilities after the Agent has given the notice
referred to in Clause 29.1(C).
(B) The Facilities shall automatically terminate, and all
Commitments shall be cancelled, on the earlier of (a) the
Offer not having become unconditional in all respects on or
prior to the end of the Offer Period or (b) the Offer having
lapsed or been withdrawn.
2.5 EXPIRY OF AVAILABILITY
No Borrower may borrow under the Revolving Credit Facility or make
Acceptance Utilisations under the Bill Acceptance Facility after the
Maturity Date. No Borrower may borrow under the Term Loan Facility
after the Commitment Expiry Date.
3. THE BORROWERS
3.1 FACILITIES AVAILABLE TO ALL BORROWERS
No part of the Facilities is reserved for any individual
Borrower.
3.2 BORROWERS' OBLIGATIONS
The obligations of each Borrower under this Agreement are separate and
independent from the obligations of each other Borrower. No Borrower
will be liable for the obligations of any other Borrower under this
Agreement except that this Clause 3.2 will not affect the obligations
of a Borrower as a guarantor under the Guarantee.
<PAGE> 24
21
3.3 OBLIGORS' AGENT
Each Obligor (other than the Parent) irrevocably authorises and
instructs the Parent on its behalf as agent to give and receive all
notices and to take all other action (including the giving of consents,
the signing of certificates and the acceptance of any proposal) as may
be necessary or desirable in connection with the Facilities or this
Agreement. Each such Obligor confirms that it will be bound by any
action taken by the Parent under or in connection with the Facilities
or this Agreement.
4. THE LENDERS
4.1 RIGHTS AND OBLIGATIONS
The rights and obligations of each Lender under this Agreement are
separate and independent from the rights and obligations of each other
Lender. A Lender may take proceedings against an Obligor on its own
without joining any other Lender to those proceedings.
4.2 FAILURE TO PERFORM
If a Lender fails to perform its obligations a Borrower will have
rights solely against that Lender. The obligations of the Obligors to
the Agent, the Arrangers and the other Lenders will not be affected by
this failure.
4.3 PARTICIPATIONS
The participation of a Lender in an Advance or an Acceptance
Utilisation will be calculated using the following formula:
P = C x A
-
F
where:
P = the participation of that Lender in the Advance or
the face amount of the Bills to be accepted by that
Lender under the Acceptance Utilisation
C = the Available Relevant Commitment of that Lender on
the Advance Date or the Acceptance Utilisation Date
F = the Total Available Relevant Commitments on the
Advance Date or the Acceptance Utilisation Date
A = the amount of the Advance or the total face amount
of the Bills to be accepted under the Acceptance
Utilisation.
<PAGE> 25
22
Acceptance Utilisation Date will be treated as having
matured and been paid on that date. The Agent may round participations
upwards or downwards to the nearest unit of currency.
5. FEES AND EXPENSES
5.1 UNDERWRITING AND SYNDICATION FEES
The Parent agrees to pay underwriting and syndication fees to the
Arrangers. The amount of these fees and the timing of payment are
described in a letter from the Arrangers to the Parent dated the same
date as this Agreement.
5.2 AGENCY FEE
The Parent agrees to pay an agency fee to the Agent. The amount of this
fee and the timing of payment are described in a letter from the Agent
to the Parent dated the same date as this Agreement.
5.3 REIMBURSEMENT OF INITIAL EXPENSES
The Arrangers and the Agent have incurred and will incur expenses in
connection with the arrangement of the Facilities. The Parent agrees to
reimburse each of the Arrangers and the Agent in relation to these
expenses. The limit of the amount of this reimbursement and the timing
of payment are described in the letter from the Arrangers to the Parent
dated the same date as this Agreement and referred to in Clause 5.1.
5.4 COMMITMENT FEE
A commitment fee will accrue on the daily undrawn and uncancelled
amount of the Revolving Credit Commitment and the Term Loan Commitment
of each Lender. This fee will accrue from the date of this Agreement
until the Maturity Date. The rate of the fee will be 0.175 per cent.
per annum in respect of the Term Loan Commitment. The rate of the fee
in respect of the Revolving Credit Commitment will be 0.175 per cent.
per annum until the Unconditional Date. Thereafter, once the Revolving
Credit Facility is available, the rate of the fee will be 50 per cent.
of the Applicable Margin. The Parent agrees to pay the fee to each
Lender in arrear at quarterly intervals and on the Maturity Date and on
cancellation by the Parent of any Lender's Commitment.
6. CANCELLATION
6.1 VOLUNTARY CANCELLATION
The Parent may cancel the whole or any part of the Facilities by giving
notice to the Agent. This notice will take effect five Business Days
after it is received by the Agent unless a later date is specified in
the notice. In that case the notice will take effect on the specified
date. The Parent may only cancel a part of the undrawn portion of the
Facilities which is (i) in the case of the Revolving Credit
<PAGE> 26
23
Facility, a minimum amount of pound sterling 15,000,000 and an
integral multiple of pound sterling 5,000,000, and (ii) in the case of
the Term Loan Facility, a minimum amount of $20,000,000 and an integral
multiple of $5,000,000, in each case unless otherwise agreed between
the Parent and the Agent.
6.2 AUTOMATIC CANCELLATION OF TERM LOAN FACILITY
Any amount undrawn under the Term Loan Facility at the date falling
150 days after the date of this Agreement will be automatically
cancelled.
6.3 EFFECT OF CANCELLATION
Amounts so cancelled may not be drawn or re-drawn.
7. ADVANCE OF FUNDS
7.1 NOTICE
When a Borrower wishes to borrow under the Facilities, the relevant
Borrower will send to the Agent an Advance Request by no later than the
Prescribed Time. Such Advance Request must specify the identity of the
Borrower, the amount to be borrowed, the currency, the Advance Date
and, for a Revolving Advance, the Repayment Date and, for a Term
Advance, the length of the first Interest Period. The Agent will pass
on details of any request to the Lenders by no later than the
Prescribed Time.
7.2 LIMITATIONS ON ADVANCES
The following limitations apply to Advances:
(A) REVOLVING ADVANCES AND ACCEPTANCE UTILISATIONS:
No Revolving Advance or Acceptance Utilisation may
exceed the uncancelled and undrawn amount of the
Revolving Credit Facility. This limitation will be
applied as at the Advance Date. For the purpose of
this Clause 7.2:
(i) any part of the Revolving Credit Facility which
is subject to a notice of voluntary
cancellation will be treated as cancelled
(unless such cancellation is effective on or
later than the date on which the Revolving
Advance is due to be repaid);
(ii) any amount of any Revolving Advance due to be
repaid on the Advance Date will be treated as
having been repaid;
(iii) the amount of any Bills due to mature on the
Advance Date will be treated as having matured
and been paid on that date;
<PAGE> 27
24
(iv) any other Revolving Advances and any Acceptance
Utilisation due to be made on the Advance Date will
be treated as having been made; and
(v) Revolving Advances in Optional Currencies will be
taken at their Original Sterling Amount.
(B) The number of Revolving Advances and Acceptance Utilisations
outstanding on any date will not exceed ten. For the purpose
of this Clause 7.2:
(i) any amount of any Revolving Advance due to be repaid
on the Advance Date will be treated as having been
repaid;
(ii) the amount of any Bills due to mature on the Advance
Date will be treated as having matured and been paid
on that date; and
(iii) any other Revolving Advances and any Acceptance
Utilisation due to be made on the Advance Date will
be treated as having been made.
(C) TERM ADVANCES:
No Term Advance may exceed the uncancelled and
undrawn amount of the Term Loan Facility. This limitation will
be applied as at the Advance Date. For this purpose:
(i) any part of the Term Loan Facility which is subject
to a notice of voluntary cancellation will be treated
as cancelled (unless such cancellation is effective
on or later than the date on which the Term Advance
is due to be repaid);
(ii) any other Term Advance due to be made on the Advance
Date will be treated as having been made; and
(iii) Term Advances in Optional Currencies will be taken at
their Original Dollar Amount.
(D) The number of Term Advances outstanding on any date
will not exceed ten. For this purpose:
(i) any amount of any Term Advances due to be repaid on
the Advance Date will be treated as having been
repaid; and
(ii) any other Term Advances due to be made on the Advance
Date will be treated as having been made.
<PAGE> 28
25
(E) ALL ADVANCES:
Unless otherwise agreed between the Parent and the Agent:
(i) an Advance in sterling must be a minimum of pound
sterling 20,000,000 and an integral multiple of pound
sterling 5,000,000 or be the uncancelled and undrawn
amount of the relevant Facility;
(ii) an Advance in euros must be a minimum of E20,000,000
and an integral multiple of E5,000,000 or be the
uncancelled and undrawn amount of the relevant
Facility;
(iii) an Advance in dollars must be a minimum of
$30,000,000 and an integral multiple of $5,000,000 or
be the uncancelled and undrawn amount of the relevant
Facility;
(iv) an Advance in any Optional Currency other than
sterling, euros or dollars must be either:
(a) a round amount in that currency agreed by
the relevant Borrower with the Agent; or
(b) in the case of Advances on the Revolving
Credit Facility:
(i) the Sterling Equivalent Amount of such
minimum amount as is from time to time
agreed between the Agent and the relevant
Borrower, or failing agreement a minimum
of pound sterling 20,000,000 and an
integral multiple of pound sterling
5,000,000 (rounded on such basis as may
reasonably be determined by the Agent and
notified in advance to the relevant
Borrower); or
(ii) the Sterling Equivalent Amount of the
uncancelled and undrawn amount of such
Facility; or
(c) in the case of Advances on the Term Loan
Facility:
(i) the Dollar Equivalent Amount of a
minimum of $30,000,000 and an integral
multiple of $5,000,000 (rounded on such
basis as may reasonably be determined by
the Agent and notified in advance to the
relevant Borrower) or
(ii) the Dollar Equivalent Amount of the
uncancelled and undrawn amount of such
Facility.
(F) The Interest Period of each Advance must comply with Clause 9.
<PAGE> 29
26
(G) If the Advance is a Revolving Advance and it is not to be in
sterling, Clause 8 applies. If the Advance is a Term Advance
and it is not to be in dollars, Clause 8 applies.
(H) The Advance Date must be a Business Day before the Maturity
Date or, for a Term Advance, before the Commitment Expiry
Date.
(I) All Advances must be repaid on or before the Maturity Date.
7.3 CONDITIONS TO BORROWING
The Lenders will only be obliged to make an Advance to any
Borrower if:
(A) the Facilities are available in accordance with
Clause 2.4;
(B) an Advance Request has been received by the Agent;
(C) in respect of an Advance which is not a Rollover
Advance (for which see paragraph (D) below), there is
no Event of Default or Potential Event of Default
which has occurred or is occurring on the Advance
Date or would result from the Advance being made; and
(D) in respect of a new Advance to a Borrower to the
extent that it does not exceed an existing Advance in
the same currency made to such Borrower which is
repaid on the Advance Date of the new Advance (a
"Rollover Advance"), there is no Event of Default
which has occurred or is occurring on the Advance
Date or would result from the Advance being made.
7.4 OBLIGATION TO ADVANCE FUNDS
If the requirements of paragraphs 7.1 to 7.3 are satisfied, each Lender
agrees to advance its participation in the Advance to the Borrower
identified in the Advance Request. The Advance will be made on the
Advance Date specified in the request. If the Advance is not made in
full due to a fault of a Lender, then subject to the terms of this
Agreement, the relevant Lender agrees to reimburse the Borrower for the
reasonable amount of any losses and expenses incurred as a result. If
an existing Advance is to be repaid on the Advance Date and the new
Advance is in the same currency as such existing Advance, the Agent may
apply the participation of a Lender in the new Advance in or towards
repayment of its participation in the existing Advance.
7.5 CONSEQUENCES OF AN ADVANCE NOT BEING MADE
If an Advance Request is delivered but no Advance is made, the Lenders
may incur losses and expenses as a result. The losses and expenses may
include those incurred in liquidating or otherwise utilising amounts
borrowed by the Lenders to fund the Advance. They may also include the
losses and expenses incurred in terminating commitments relating to the
funding or incurred in
<PAGE> 30
27
hedging open positions resulting from the Advance not being made. They
will not, however, include loss of Applicable Margin. The Borrower
identified in the request for the Advance agrees to reimburse the
Lenders for the amount of these losses and expenses actually incurred.
This Clause 7.5 does not apply to a Lender if the Advance is not made
by reason of a default of that Lender.
8.0 CURRENCY OPTIONS FOR ADVANCES
8.1 REQUEST FOR OPTIONAL CURRENCY
This Clause 8.1 applies if an Advance Request for a Revolving Advance
specifies a currency other than sterling or an Advance Request for a
Term Advance specifies a currency other than dollars. In this case the
Advance requested will be made in the currency specified if all the
following are true:
(A) The currency specified is an Optional Currency.
(B) The Advance is required to be made under the terms
of this Agreement.
8.2 IMPRACTICALITY OF DRAWING IN OPTIONAL CURRENCY
All or a portion of an Advance which was to have been made in an
Optional Currency will not be required to be made in that currency if
all the following are true:
(A) An event described in Clause 8.3 occurs.
(B) The Agent notifies the Borrower which requested the Advance
by the Prescribed Time of this event and states that as a
result all or a portion of the Advance cannot be made in the
Optional Currency.
(C) In such event the portion of the Advance which would
otherwise have been made in an Optional Currency shall be
made in sterling, in the case of an Advance under the
Revolving Credit Facility, and in dollars in the case of an
Advance under the Term Loan Facility and treated as a
separate Advance.
8.3 EVENTS MAKING DRAWING IN OPTIONAL CURRENCY IMPRACTICAL
An event referred to in Clause 8.2 occurs if:
(A) in the reasonable opinion of a Lender, it is impracticable for
that Lender, to fund its participation in the Advance in the
Optional Currency in the ordinary course of business in the
London inter-bank market; or
(B) the use of the Optional Currency is, or might (in the
reasonable opinion of the Lender) be, restricted or prohibited by
any directive or regulation of any government body, agency or
department or regulatory or other
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28
authority (whether or not having the force
of law) in accordance with which that Lender is
accustomed to act.
8.4 TERM ADVANCES IN AN OPTIONAL CURRENCY
(A) For a Term Advance denominated in an Optional
Currency, there shall be calculated the difference
between the amount of the Term Advance (in that
Optional Currency) for the current Interest Period
and for the next Interest Period. The amount of the
Term Advance for the next Interest Period will be
determined by notionally converting into that
Optional Currency the Original Dollar Amount of the
Term Advance on the basis of the Exchange Rate three
Business Days before the commencement of that
Interest Period.
(B) At the end of the current Interest Period (but
subject always to paragraph (C) below):-
(i) if the amount of the Term Advance for the
next Interest Period is less than for the
preceding Interest Period, the relevant
Borrower shall repay the difference; or
(ii) if the amount of the Term Advance for the
next Interest Period is greater, each Bank
shall forthwith make available to the Agent
for that Borrower its participation in the
difference.
(C) If the Exchange Rate for the next Interest Period
shows an appreciation or depreciation of the Optional
Currency against dollars of less than five per cent.
when compared with the Original Exchange Rate, no
amounts are payable in respect of the difference. In
this Clause 8 "Original Exchange Rate" means the
Exchange Rate used for determining the amount of the
Optional Currency for the Interest Period which is
the later of the following:-
(i) the Interest Period during which the Term
Advance was first denominated in that
Optional Currency; and
(ii) the most recent Interest Period immediately
prior to which a difference was required to
be paid under this Clause 8.4.
8.5 PREPAYMENTS AND REPAYMENTS
If a Term Advance is to be repaid or prepaid by reference to
an Original Dollar Amount, the Optional Currency amount to be
repaid or prepaid shall be determined by reference to the
Exchange Rate last used for determining the Optional Currency
amount of that Term Advance under this Clause 8 or, if
applicable, the Original Exchange Rate.
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9. INTEREST ON ADVANCES
9.1 INTEREST PERIODS
(A) Revolving Advances: Each Revolving Advance will have
one Interest Period only.
(B) TERM ADVANCES: Each Term Advance will have a first
Interest Period commencing on its Advance Date.
Subsequent Interest Periods will commence on the last
day of the preceding Interest Period. A Term Advance
may be split into two or more Term Advances or
consolidated with another Term Advance made to the
same Borrower. A splitting or consolidation must take
effect on the first day of an Interest Period for all
Term Advances affected. No split can be made unless
in total no more than ten Term Advances will be
outstanding after that splitting.
9.2 DURATION OF INTEREST PERIODS
The Interest Period for each Advance must be a period of 7
days, 14 days, 1, 2, 3 or 6 months, unless otherwise agreed
between the Lenders and the Parent.
9.3 SELECTION OF INTEREST PERIODS
(A) The Parent or, if authorised by the Parent, the
relevant Nominated Borrower may select an Interest
Period in respect of an Advance either in its request
for an Advance or, in respect of Term Advances and in
the case of second and subsequent Interest Periods,
by separate notice to the Agent on or before the
Prescribed Time.
(B) When the Parent or the relevant Nominated Borrower
does not select an Interest Period in accordance with
paragraph (A), the Interest Period will be three
months.
9.4 ADJUSTMENT OF INTEREST PERIOD
(A) An Interest Period will end on the last Business Day
of a calendar month if it is for a number of complete
months and either:
(i) it commenced on the last Business Day of a
calendar month; or
(ii) it commenced on a day for which there is no
corresponding day in the month in which it
is due to end.
(B) Any Interest Period which would otherwise begin
before but end after the Maturity Date will end on
the Maturity Date.
(C) Any Interest Period in respect of a portion of the
Term Loan which is due to be repaid on the next
Amortisation Date and which would otherwise extend
beyond such date shall end on such Amortisation Date.
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30
9.5 RATE OF INTEREST
The rate of interest applicable during an Interest Period will
be a rate per annum equal to LIBOR for that Interest Period
plus the Applicable Margin plus, if relevant for an Advance,
the Costs Rate.
9.6 APPLICABLE MARGIN
The Applicable Margin for any Tenor or Interest Period shall
be determined as follows:
(A) Up to and including 31st March, 2000 the Applicable
Margin is 0.80 per cent. per annum.
(B) Thereafter, subject to paragraphs (C) and (D), the
Applicable Margin will be determined in accordance
with the table below by reference to the amount of
the Uncancelled Facility Amount
UNCANCELLED FACILITY AMOUNT Applicable Margin
Above pound sterling 650 million 0.80% pa
Equal to or below pound sterling 650 million
but above pound sterling 500 0.65% pa
million
Equal to or below pound sterling 500 million 0.55% pa
(C) Any adjustment to the Applicable Margin pursuant to
paragraph (B) will take effect from the beginning of
the next Interest Period in respect of any Term
Advance, or, in the case of the Revolving Credit
Facility, on the Advance Date or Acceptance
Utilisation Date for any subsequent utilisation.
(D) Notwithstanding the above paragraph, if an Event of
Default or a Potential Event of Default is
outstanding the Applicable Margin may not be
decreased.
9.7 PAYMENT OF INTEREST
Each Borrower agrees to pay interest accrued on each Advance
made to it in arrear on the last day of each Interest Period
in respect of that Advance. Where the Interest Period is
longer than six months that Borrower also agrees to pay
interest on each date falling at six monthly intervals after
the first day of that Interest Period.
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31
9.8 NOTIFICATION OF INTEREST RATE
The Agent will promptly notify the Lenders, the Parent and any
relevant Nominated Borrower of the determination of a rate of
interest under this Agreement.
9.9 REGULATION D
Each Borrower incorporated in the United States shall, on
demand by any Lender (through the Agent), pay to that Lender
the amount of any Regulation D Costs actually incurred by that
Lender in respect of its participation in any Advance made by
it to that Borrower.
10. REPAYMENT OF ADVANCES
10.1 Each Borrower agrees to repay each Revolving Advance
made to it on the Repayment Date for that Advance.
10.2 The Borrowers agree to repay the Term Advances in
accordance with the following schedule:
AMORTISATION DATE AMOUNT OF REPAYMENT INSTALMENT
($)
31st March, 2001 150,000,000
31st March, 2002 200,000,000
31st March, 2003 200,000,000
Fifth anniversary of date of this Agreement balance
10.3 If the amount outstanding under the Term Loan Facility on any
Amortisation Date is less than the amount specified for
repayment on such date by the schedule in paragraph 10.2, the
Borrowers will repay the whole of the outstanding balance (if
any) of the Term Advances.
11. PREPAYMENT OF ADVANCES
11.1 OPTIONAL PREPAYMENT
The Parent may give notice that a Borrower will repay early the
whole or part of an Advance made to that Borrower. In this
event the relevant Borrower shall pay an amount equal to the
Breakage Amount. The notice of repayment will be irrevocable
and must state:
(A) the date of prepayment, which will be at least five
Business Days after the notice is received by the Agent
unless otherwise agreed;
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32
(B) the amount to be prepaid which will be (i) in the case
of prepayments in respect of a Revolving Advance, a minimum of
pound sterling 10,000,000 and an integral multiple of pound
sterling 5,000,000 (ii) in the case of prepayments in respect
of a Term Advance, a minimum of $15,000,000 and an integral
multiple of $5,000,000 or (iii) in either case, the whole of
the relevant Advance (any amounts outstanding in an Optional
Currency being taken at their Original Sterling Amount, in the
case of the Revolving Credit Facility, or their Original Dollar
Amount, in the case of the Term Loan Facility); and
(C) whether the prepayment is to be made in respect of a
Term Advance or a Revolving Advance.
11.2 MANDATORY PREPAYMENT ON CHANGE OF CONTROL
If at any time any person or a group of persons acting in
concert acquires an interest in more than 50 per cent. of the
equity share capital of the Parent or the Parent merges with
any other person, the Parent will notify the Lenders promptly
and in any event within 7 days and each Lender may by notice to
the Parent:
(A) call for prepayment of its participation in all
outstanding Advances on the later of the date specified in
the notice and the date 30 days after the notice is
delivered to the Parent; and
(B) declare that its Commitments shall be cancelled on the
later of the date specified in the notice and the date 30
days after the notice is delivered to the Parent.
To the extent that Lenders whose aggregate Commitments exceed
one-third of Total Commitments so elect, the remaining Lenders
shall be deemed to have so elected, whether they have or not.
For this purpose and for the purpose of Clause 12.11 "acting in
concert" has the meaning described in the City Code on
Take-overs and Mergers and "interest" has the meaning given in
section 208 of the Companies Act 1985. In this event the
relevant Borrower agrees to pay an amount equal to the
Breakage Amount.
11.3 NO OTHER PREPAYMENT
The Borrower may not repay all or any part of any outstanding
Advance early except in the manner permitted or required by
this Agreement.
11.4 NO RE-BORROWING
No amount repaid or prepaid under the Term Loan Facility may be
re-borrowed. Except for prepayments arising through the
operation of Clause 14, amounts pre-paid under the Revolving
Credit Facility may be re-borrowed.
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33
11.5 EFFECT ON TERM LOAN
Prepayment of any Term Advance under Clause 11.1 will reduce
subsequent repayment instalments in respect of the Term Loan in
the order of maturity. Any other prepayment will reduce
subsequent instalments in respect of the Term Loan pro rata.
12. ACCEPTANCE FACILITY
12.1 RECEIPT OF ACCEPTANCE UTILISATION REQUESTS
A Borrower may utilise the Bill Acceptance Facility if the Agent
receives, not later than the Prescribed Time, a duly completed
Acceptance Utilisation Request. Each Acceptance Utilisation
Request is irrevocable.
12.2 FORM OF REQUESTS
An Acceptance Utilisation Request in respect of Bills will not
be regarded as being duly completed unless:-
(A) it specifies that is a utilisation of the Bill
Acceptance Facility;
(B) the Acceptance Utilisation Date is a Business Day
falling before the Maturity Date;
(C) the amount requested is:
(i) a minimum of pound sterling 20,000,000 and an integral
multiple of pound sterling 5,000,000; or
(ii) the balance of the undrawn amount of the Revolving
Credit Facility; or
(iii) such other amount as the Agent may agree;
(D) the amount selected under paragraph (C) above does
not cause Clause 7.2(A) to be contravened; and
(E) only one Tenor is specified which:-
(i) does not overrun the Maturity Date; and
(ii) is a period of between 7 and 187 days.
12.3 ACCEPTANCE OF BILLS
(A) The Agent shall promptly:
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34
(i) notify each Lender of the details of the
requested Bills and the aggregate principal
amount of the Bills to be accepted by it; and
(ii) shall deliver to each Lender, Bills completed
in accordance with Clause 12.5.
(B) Each Lender shall accept the Bills delivered to it in
accordance with paragraph (A) above.
(C) The Agent shall, not later than 11.30 a.m. on the
applicable Acceptance Utilisation Date notify the
Borrower and each Lender of the applicable Eligible
Bill Discount Rate.
(D) Subject to the terms of this Agreement, each Lender
shall pay to the Agent for the Borrower an amount
equal to:-
(i) the amount which the Lender would have
received as the proceeds of discounting if
it had discounted the Bills accepted by it
at the applicable Eligible Bill Discount
Rate; less
(ii) acceptance commission calculated at the
Acceptance Commission Rate on the aggregate
principal amount of those Bills.
12.4 REVOLVING ADVANCES AS AN ALTERNATIVE
(A) If, as a result of any law or regulation, it is
unlawful or impracticable for a Lender to accept any
Bills or a Lender is unwilling to accept Bills or it is
not an Eligible Bank, then it may notify the Agent
accordingly.
(B) If a Lender notifies the Agent in accordance with
paragraph (A) above, then, subject to the terms of this
Agreement, the Lender shall instead make a Revolving
Advance in sterling on the relevant Acceptance
Utilisation Date in a principal amount equal to the
aggregate principal amount of the Bills which it would
otherwise have been obliged to accept pursuant to this
Clause 12 and for a term equal to the term of those
Bills.
12.5 HOLDING AND COMPLETION OF BILLS
(A) A Borrower shall ensure that the Agent has a sufficient
stock of Bills before delivering any request in respect
of Bills.
(B) Each Bill will:
(i) be drawn by the Borrower is its own favour and
endorsed by it in blank;
(ii) be undated;
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35
(iii) have the maturity date and the face amount
left blank; and
(iv) be claused in a manner which complies with
the Bank of England's requirements for
Eligible Bills at that time.
(C) Subject to the terms of this Agreement, the Agent
shall:-
(i) date each Bill with its Acceptance
Utilisation Date;
(ii) insert in each Bill the name of the Lender
on which it is drawn, its face amount and
its maturity date; and
(iii) deliver the requisite number of completed
Bills to the Lenders for acceptance in
accordance with this Agreement.
12.6 ROUNDING OF PRINCIPAL AMOUNT OF BILLS
The Agent may round the principal amount of the relevant Bills
to be accepted by each Lender to ensure that each Bill has a
principal amount of an integral multiple of pound sterling
10,000, being not less than pound sterling 100,000 nor more than
pound sterling 5,000,000.
12.7 DISCOUNTING OF BILLS
Each Lender may arrange for a Bill accepted by it to be
discounted on its behalf in the London discount market or
elsewhere or discount the Bill itself.
12.8 INFORMATION RELATING TO BILLS
Each Borrower shall, promptly on request by a Lender or the
Agent, supply to the Agent for that Lender, Agent or Arranger
any information relating to any Bill (including the underlying
trade transaction for that Bill) as that Lender or the Agent
may reasonably require or which may be required by the Bank of
England or any other fiscal or monetary authority in the U.K.
12.9 ELIGIBLE BILLS
A Borrower shall ensure that each Bill drawn by it and
accepted by a Lender is, assuming that the relevant Lender is
a bank whose acceptances are then being treated as eligible
acceptances by the Bank of England, eligible for rediscounting
at the Bank of England.
12.10 MATURITY OF BILLS
(A) On the maturity date of each Bill, the relevant Borrower
identified in the Acceptance Utilisation Request agrees to
pay to the Agent, for the account of the Lender which
accepted that Bill, an amount in sterling equal to the face
amount of that Bill.
(B) The Borrower identified in an Acceptance Utilisation
Request will be entitled from time to time and at any time
upon giving not less than five
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36
Business Days' notice to the Agent (or such other notice
as the Agent may agree) to comply prematurely with its
obligation under Clause 12.10(A) in respect of Bills of a
principal amount of not less than pound sterling 500,000.
(C) If a Borrower prematurely complies with its obligations
under Clause 12.10(A) in respect of any Bill, then the
amount payable by that Borrower shall be discounted on the
basis of such normal commercial rates prevailing at the
time of notification for sterling deposits of an amount
equal to the face amount of the Bill for the period from
the time of prepayment to the maturity date of the Bill as
the Lender may reasonably determine.
12.11 CHANGE OF CONTROL
If at any time any person or a group of persons acting in concert
acquires an interest in more than 50 per cent. of the equity
share capital of the Parent or the Parent merges with any other
person, the Parent will notify the Lenders (through the Agent)
promptly and in any event within 7 days and each Lender may by
notice to the Parent:
(A) call for payment to an account nominated by the Agent of an
amount in sterling calculated in accordance with Clause
12.10(C) in respect of all its outstanding Bills on the
later of the date specified in the notice and the date 30
days after the notice is delivered to the Parent; and
(B) declare that the Bill Acceptance Facility shall be cancelled
on the later of the date specified in the notice and the
date 30 days after the notice is delivered to the Parent.
To the extent that Lenders whose aggregate Commitments exceed
one-third of Total Commitments so elect, the remaining Lenders
shall be deemed to have so elected, whether they have or not.
12.12 GENERAL
(A) The Agent agrees to ensure that Bills delivered to it under
this Agreement are kept secure and in safe custody and are
completed and issued only in accordance with the terms of
this Agreement. The Agent agrees that on the Maturity Date
it will cancel any blank Bills then held by it and will
return them to the Parent or the relevant Borrower as soon
as reasonably practicable.
(B) The Agent agrees to indemnify the relevant Borrower on
demand against all and any loss or costs and expenses
suffered by it as a result of the gross negligence or wilful
misconduct of the Agent either in the safekeeping of the
Bills or the performance by the Agent of its obligations
under this Clause 12.
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37
12.13 POWER OF ATTORNEY
A Borrower may deliver to the Agent a power of attorney substantially
in the form of Schedule 7. The Agent, on behalf of that Borrower,
agrees to draw, clause, endorse and deliver Bills to implement each
Acceptance Utilisation identifying that Borrower in satisfaction of
that Borrower's obligations in accordance with the terms of that
power of attorney.
13. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
13.1 MARKET DISRUPTION - GENERAL
(A) NATURE OF MARKET DISRUPTION: This Clause 13.1 applies if in
relation to any Advance under the Facilities any of the
following is true:
(i) the Agent believes that there are no reasonable means to
ascertain LIBOR because of circumstances generally
applicable in the London inter-bank market. This
determination may only be made after consultation with the
Reference Banks; or
(ii) Lenders with Commitments exceeding 40 per cent. of the Total
Commitments notify the Agent that they believe that, due to
circumstances generally applicable in the London inter-bank
market, LIBOR would not reflect accurately the cost to them
in such market of funding an amount equal to the Advance; or
(iii) LIBOR cannot be determined because fewer than two Reference
Banks provide quotations; or
(iv) Lenders with Commitments exceeding 40 per cent. of the total
Commitments notify the Agent that they are unable to fund
the total amount borrowed by way of Advances in the London
inter-bank market because of circumstances generally
applicable in that market.
(B) NOTICE: The Agent agrees promptly to notify the Parent if
paragraph (A) applies.
(C) ALTERNATIVE INTEREST RATE ARRANGEMENTS: If the Agent delivers a
notice of market disruption under
paragraph (B), each of the following applies:
(i) The means of determining the rates of interest
applicable to the Facilities will be suspended. Instead each
Borrower agrees to pay interest to the Lenders in the manner
requested by the Agent. A request by the Agent may specify
periods to be used for the computation of interest. It must
also specify the rate of interest to apply for a period.
This rate will be the rate determined by the Agent (with the
prior agreement of the Lenders) to reflect the cost
excluding any cost to the extent reflected in the Costs
<PAGE> 41
38
Rate to each Lender of funding for the
period plus the Applicable Margin plus, if relevant
for an Advance, the Costs Rate. In order to assist the
Agent in this determination each Lender agrees to
provide to the Agent any information which the Agent
may request. If this information is received by the
Agent within any time period reasonably specified by
the Agent it will be taken into account by the Agent
in making its determination.
(ii) The Parent and the Agent agree to
negotiate the terms of an alternative arrangement for
determining a rate of interest for the Facilities. The
negotiations will be carried on in good faith. Neither
party is bound to continue the negotiations after the
date 30 days after the Parent receives the Agent's
notice. If agreement is reached between the Parent and
the Agent (with the prior agreement of the Lenders),
the rate of interest will be determined in accordance
with the agreement. Paragraph (i) will not apply to
the extent that it is expressly excluded by such
agreement.
(iii) If all the Lenders do not agree an
alternative basis, each Lender (through the Agent)
shall certify on or before the last day of the
Interest Period to which the notification relates an
alternative basis for maintaining its participation in
that Advance. Any such alternative basis may include
an alternative method of fixing the interest rate,
alternate Interest Periods or alternative currencies
but it must reflect the cost to the Lender of funding
its participation in that Advance from whatever
sources it may reasonably select plus the Applicable
Margin and (if applicable) any Costs Rate and such
alternative basis so certified shall be binding on the
Obligor and the Certifying Lender and treated as part
of this Agreement.
(iv) If the circumstances described in
paragraph (A) cease to apply, the Agent will notify
the Parent and the Lenders. The notice will specify
the transitional arrangements proposed by the Agent
(with the prior agreement of the Lenders), in order
for the means of determining the rates of interest
applicable to the Facilities to return to the means by
which interest rates are normally calculated under
this Agreement. Each Borrower agrees to pay interest
to the Lenders in the manner described in this notice
unless a different arrangement is agreed by the Agent
and the Parent and approved by all the Lenders. In
this case each Borrower agrees to pay interest to the
Lenders in the manner agreed.
13.2 MARKET DISRUPTION - BILLS
(A) Nature of market disruption: This Clause 13.2 applies
if either of (i) or (ii) are true in relation to any
Bills:
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39
(i) adequate and fair means do not exist for
ascertaining the applicable Eligible Bill
Discount Rate; or
(ii) the Bills do not comply with the then
current Bank of England regulations for
sterling bankers' acceptances (other than
because a Lender is not an Eligible Bank).
(B) NOTICE: The Agent agrees promptly to notify the
Parent if paragraph (A) applies.
(C) ALTERNATIVE ARRANGEMENTS: If the Agent delivers a
notice of market disruption under paragraph (B) each
of the following applies:
(i) the obligations of each Lender under Clause
12 will not apply; and
(ii) in the case of paragraph (A)(i), no further
requests for an Acceptance Utilisation may
be delivered until the Agent notifies the
Parent that it is once again able to
determine the Eligible Bill Discount Rate.
The Agent will notify the Parent as soon as
practicable after making the determination.
(D) REPLACEMENT ADVANCE: This paragraph (D) applies if
the Lender delivers a notice of market disruption
under paragraph (B) after the issue of a request for
an Acceptance Utilisation. In this case Clause 12.4
will apply.
14. CHANGES OF CIRCUMSTANCES
14.1 ILLEGALITY
(A) NOTICE: Each Lender agrees to notify the Parent as
soon as reasonably practicable if by reason of any
change in applicable law or regulation, or in the
interpretation or application of applicable law or
regulation, in each case after the date of this
Agreement that Lender is or will be acting illegally
in relation to the Facilities or any of them. The
illegality may relate to the performance of the
Lender's obligations, the maintenance of the
Facilities or the Lender's funding arrangements or
otherwise.
(B) CANCELLATION AND PREPAYMENT: If a Lender delivers a
notice of illegality the Commitment of that Lender
will be cancelled on the date of that notice. Each
Borrower agrees to repay the participation of that
Lender in each Advance made to it on the last day of
the Interest Period of that Advance during which the
notice is received, unless the Lender certifies that,
because of a legal requirement or regulation
applicable to the Lender, it must be repaid earlier.
In this event that Borrower shall prepay the
appropriate proportion of the Breakage Amount by
reference to such participation on the date (or
dates) specified by the Lender. In
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addition, each Borrower agrees to pay to that Lender
the aggregate face amount of all outstanding Bills
issued by that Borrower and accepted by that Lender
under this Agreement on the respective maturity
dates of such Bills unless the Lender certifies
that, because of a legal requirement or regulation
applicable to the Lender, it must be paid earlier.
In this event that Borrower agrees to pay an amount
equal to the face amount of all outstanding Bills
accepted by the Lender from that Borrower discounted
on the basis of such normal commercial rates
prevailing at the time of notification for sterling
deposits of an amount equal to the face amount of
all outstanding Bills accepted by the Lender for the
period from the time of payment on the earlier date
(or dates) specified by the Lender to the respective
maturity dates of those Bills as each Lender may
reasonably determine.
14.2 INCREASED COSTS
(A) Types of increased costs: This Clause 14.2 applies
where all of (i), (ii) and (iii) are true:
(i) Either:
(a) there is a change after the date of this
Agreement in a legal or other requirement
applicable to the Lender or a change after
the date of this Agreement in its
interpretation or application; or
(b) a Lender or its Holding Company complies
with a direction or request of an authority
which has power or influence over the
activities of the Lender where the direction
or request is made after the date of this
Agreement.
(ii) As a result, any of the following occurs:
(a) the Lender or its Holding Company incurs an
expense; or
(b) the Lender's or its Holding Company's
effective return from the Facilities or any
of them or on its overall capital is
reduced; or
(c) any amount payable to the Lender or its
Holding Company is reduced; or
(d) the Lender or its Holding Company does not
recover an amount which would otherwise have
been paid to it.
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No account will be taken of any of the following:
(1) Tax on the overall net income of the Lender in
the country in which it has its principal
office or the office through which it is
acting for the purposes of this Agreement (or
any withholding tax incurred which, for the
avoidance of doubt, shall be dealt with in
clause 14.3).
(2) Any loss, reduction or expense to the extent
reflected in the Costs Rate or provided for by
Clause 9.9.
(iii) The losses, reductions and expenses arising as a
result are wholly or partly attributable to the
Facilities or any of them or the arrangements made by
the Lender in connection with the Facilities or any
of them.
(B) NOTICE: Each Lender agrees to notify the Parent through the
Agent as soon as practicable if it becomes aware that
paragraph (A) applies.
(C) PAYMENT OF ADDITIONAL AMOUNTS: The Parent agrees to reimburse
each Lender for the losses, reductions and expenses described
in paragraph (A) or a pro rata proportion thereof to the
extent that the same are only partly attributable to the
Facilities.
(D) PREPAYMENT: If a Lender delivers a notice of increased costs,
the Parent may deliver a notice of prepayment to that Lender.
Each Borrower to which an Advance is then outstanding agrees
to prepay the participation of that Lender in each Advance and
any outstanding Bills on a date specified in the notice of
prepayment and a corresponding portion of the relevant
Commitment shall be cancelled. In this event the relevant
Borrower shall repay an amount equal to the Breakage Amount
for each Lender by reference to such participation.
14.3 WITHHOLDING TAXES
(A) Withholdings and deductions: This Clause 14.3 applies if any
Obligor is required by law to make a payment under this
Agreement net of a withholding or deduction.
(B) NOTICE: The Parent agrees to notify the Agent if it becomes
aware that paragraph (A) applies.
(C) GROSSING UP: The relevant Obligor agrees to increase the
amount of any payment which is subject to a withholding or
deduction so that the person entitled to the payment receives
the same amount it would have received if there had been no
withholding or deduction.
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(D) PAYMENT OF TAX: The relevant Obligor will pay to the
appropriate authority all amounts withheld or
deducted by it. If a receipt or other evidence of
payment is issued by the relevant authority after
receipt of payment, the relevant Obligor agrees to
deliver this to the Agent as soon as practicable
after a request for the same.
(E) PREPAYMENT: If paragraph (A) applies, the Parent may
deliver a notice of prepayment to the Agent. This
notice may relate to any Advance (or part of an
Advance) or the interest thereon, in each case which
is subject to the withholding or deduction. The
relevant Obligor to which any such Advance is then
outstanding agrees to prepay the participation of the
Lenders in that Advance (or the part of it which is
affected) on a date specified in the notice of
prepayment and a corresponding portion of the
relevant Commitment shall be cancelled. In this event
the relevant Obligor shall repay an amount equal to
the Breakage Amount for each Lender by reference to
such participation.
(F) TAX CREDITS: This paragraph applies if:
(i) any Obligor pays any additional amount under this
Clause 14 (a "TAX PAYMENT");
(ii) a Lender effectively obtains a refund of tax, or
obtains and uses credit against tax, by reason of the
Tax Payment or the withholding or deduction that gave
rise to the Tax Payment (a "TAX CREDIT"); and
(iii) that Lender is able to identify the Tax Credit as
being attributable to the Tax Payment or such
withholding or deduction.
In this case the Lender agrees to reimburse to the relevant
Obligor the amount that the Lender determines in good faith to
be the proportion of the Tax Credit which will leave the
Lender (after that reimbursement) in no better or worse
position than it would have been in if the Tax Payment had not
been required. The Lender has an absolute discretion as to
whether to claim any Tax Credit and, if it does claim, the
extent, order and manner in which it does so. The Lender is
not obliged to disclose any information regarding its tax
affairs or computations to the Agent or any Obligor.
14.4 INLAND REVENUE TREATMENT OF THE LENDERS
(A) Each Lender warrants that it is a Qualifying Bank at
the date of this Agreement or, if later, at the date
it becomes a party to the Facilities and that it will
remain, until it notifies the Agent to the contrary,
a Qualifying Bank and undertakes to notify the Agent
immediately after it becomes aware that it is not or
will cease to be a Qualifying Bank.
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(B) No Obligor will be required to pay increased
amounts under Clause 14.3 in relation to any interest
if:
(i) the Lender is not or ceases to be a
Qualifying Bank; or
(ii) in the case of a Lender falling within
paragraph (a) of the definition of
"Qualifying Bank", that interest is not
beneficially owned by a person who is within
the charge to United Kingdom corporation tax
in respect of it.
This paragraph (B) applies only insofar as a withholding or
deduction is due to the circumstances set out in (i) or (ii)
above. It does not apply where the circumstances described in
(i) or (ii) above are a result of a subsequent change in law
or concession or change in the interpretation or application
of law or concession. Each Lender undertakes to notify the
Agent immediately after it becomes aware of any change in the
circumstances described in (i) or (ii) above.
14.5 US BORROWER
(A) With respect to each Advance to a Borrower that is
organised under the laws of the United States of
America, each Lender that is not organised under the
laws of the United States of America (a "Non-US
Lender") (i) represents at the date the Borrower
becomes a Party or, if later, at the date it becomes a
party to the Facilities that it is (and until it
notifies such Borrower and the Agent to the contrary
will remain) entitled to the benefit of a double
taxation treaty between the United States of America
and the jurisdiction in which that Non-US Lender is
resident under which payments of interest under this
Agreement may be made free of US withholding tax to
such Non-US Lender (a "US Treaty Bank") and (ii) shall
promptly deliver to such Borrower US Internal Revenue
Form 1001 (or successor form) claiming exemption from
US withholding tax on interest and, if it is proper and
lawful to do so, shall comply with requirements to keep
such exemption in effect.
(B) Clause 14.3 shall not apply to any US
withholding tax on any amount payable to a Non- US
Lender by such a Borrower (or by a Guarantor of such a
Borrower) to the extent that such US withholding tax
arises (i) as a result of such a Non-US Lender not
being or ceasing to be a US Treaty Bank (otherwise
than by reason of a subsequent change of law or
treaty) or (ii) due to a failure of such a US Treaty
Bank to comply with the obligations in paragraph
(A)(ii) above.
14.6 MITIGATION
This Clause 14.6 does not affect the obligations of any
Obligor under the other paragraphs of this Clause 14. If
any of Clause 14.1, 14.2 or 14.3 applies to a Lender,
that Lender will take all steps reasonably open to it
(including, without limitation, transferring the
Facilities to another bank acceptable to the Parent)
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to mitigate the effect of that clause on the relevant
Obligor. The Lender will not, however, be obliged to do
anything which in its opinion (acting in good faith) would
or would be reasonably likely to have an adverse economic
effect on it.
15 PAYMENTS
15.1 METHOD AND TIMING OF PAYMENTS
All payments under this Agreement must be made in
immediately available (or, in the case of dollars, same day)
and freely transferable funds. Each payment must be for
value on the due date.
15.2 CURRENCY OF PAYMENT
(A) In this Agreement, subject to paragraph (C):
(i) all payments by a Borrower in respect of an
Advance, whether of interest or principal,
shall be made in the currency (or the
denomination of the currency) in which that
Advance is denominated at the time of
payment;
(ii) all payments relating to costs, losses,
expenses or taxes shall be made in the
currency in which the relevant costs,
losses, expenses or taxes were incurred; and
(iii) any other amount payable under this
Agreement shall, except as otherwise
provided, be made in sterling.
(B) Subject to paragraph (C), following the start of the
Third Stage, any Advance requested to be denominated
in the national currency unit of a Participating
Member State shall be made in the national currency
unit requested and any Advance requested to be
denominated in euro shall be made in euro.
(C) If and to the extent that any legislation in relation
to the Third Stage provides that an amount
denominated either in euro or in the national
currency unit of a given Participating Member State
and payable within that Participating Member State by
crediting an account of the creditor can be paid by
the debtor either in euro or in that national
currency unit, a party shall be entitled to pay that
amount either in euro or in the national currency
unit.
15.3 PAYMENTS THROUGH THE AGENT
(A) Normal arrangements: All payments by an Obligor or by
a Lender under this Agreement will be made through
the Agent to its account at such office or bank as it
may notify to the Obligor or the Lender for this
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45
purpose. The Agent will pay on an amount received as
soon as the Agent has ascertained that it has been
received.
(B) ALTERNATIVE ARRANGEMENTS: If the Agent believes that
it is, or will be, illegal or impossible for it to
pay on to a Lender in accordance with paragraph (A),
it agrees to notify the relevant Borrower and that
Lender. In this case the Borrower and that Lender may
agree alternative arrangements for payments to be
made to that Lender. Paragraph (A) will not apply to
the extent excluded by those alternative
arrangements. That Lender agrees to provide notice of
the arrangements to the Agent and will notify the
Agent of payments in accordance with Clause 17.1.
15.4 PAYMENTS TO A BORROWER
Each payment by the Agent to a Borrower will be made to the
account of the Borrower in the principal financial centre of
the country concerned (or, in the case of euros, London or a
principal financial centre of a Participating Member
State) as the Parent may notify to the Agent from time to time
or such other account as may be agreed.
15.5 PAYMENTS TO THE LENDERS
Each payment by the Agent to each Lender will be made to such
account of that Lender in the principal financial centre of
the country concerned (or, in the case of euros, London or a
principal financial centre of a Participating Member State) as
the Lender may notify to the Agent from time to time.
15.6 CHANGE OF ACCOUNT
The Parent or a Lender may change any of its receiving
accounts, or those for a particular Borrower, by not less than
five Business Days' notice to the Agent. The Agent may change
any of its receiving accounts by not less than five Business
Days' notice to the Parent and each Lender.
15.7 REFUNDING OF PAYMENTS BY THE AGENT
This Clause 15.7 applies if the Agent makes a payment out in
the mistaken belief that it has received or will receive an
incoming payment on a particular day. In this case the person
which received the payment from the Agent agrees to return it
on request. It will also reimburse the Agent for all losses
and expenses incurred by the Agent as a result of the payment.
This Clause 15.7 does not affect the rights of the person
which received the payment against the person which failed to
make the payment to the Agent.
15.8 NON-BUSINESS DAYS
If a payment would be due on a day other than a Business Day,
the payment obligation will be deferred to the next Business
Day, unless that day is in another calendar month. Where that
next Business Day is in the next calendar
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46
month, the payment obligation will be brought forward to the
last Business Day of the current calendar month. Interest and
commitment fee payments will be adjusted accordingly. During
any extension of the due date for payment of any principal,
interest is payable on the principal at the rate payable on
the original due date.
15.9 PAYMENT IN FULL
All payments made by an Obligor under this Agreement will be
made without set-off or counterclaim. No payment will be made
net of a withholding or deduction, unless this is required by
law. In this event, Clause 14.3 applies.
15.10 PARTIAL PAYMENTS
(A) If in relation to a Facility the Agent receives a
payment insufficient to discharge all the amounts then due
and payable by an Obligor under this Agreement, the Agent
shall apply that payment towards the obligations of the
Obligor(s) in the following order:
(i) first, in or towards payment pro rata of any unpaid
fees, costs and expenses of the Agent;
(ii) secondly, in or towards payment pro rata of any
accrued interest and fees under Clause 5.4 due but
unpaid under this Agreement;
(iii) thirdly, in or towards payment pro rata of any
principal due but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other
sum due but unpaid under this Agreement.
(B) To the extent that a shortfall as described in
paragraph (A) arises in respect of both Facilities at
the same time, the Agent shall apportion amounts
between both Facilities on a pro rata basis to the
outstandings under the Facilities as determined by
reference to the applicable Exchange Rate .
(C) The Agent shall, if so directed by all the Lenders,
vary the order set out in sub-paragraphs (A)(ii) to
(iv) above. The Agent shall notify the relevant
Borrower of any such variation.
(D) Paragraphs (A), (B) and (C) above shall override any
appropriation made by an Obligor.
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16. LATE PAYMENT
16.1 DEFAULT INTEREST
Each Obligor agrees to pay interest on all amounts unpaid by
it under this Agreement after their due date for payment.
This interest will be computed by reference to successive
periods of a duration not exceeding six months selected by
the Agent (acting reasonably). The first of these periods
will start on the due date for payment of the unpaid amount.
The rate of interest applicable during each of these periods
will be a rate per annum equal to 1 per cent. plus LIBOR for
that period plus the Applicable Margin plus, if relevant for
an Advance, the Costs Rate. This interest will be paid in
arrear on the last day of each of these periods and on the
date of payment of the unpaid amount.
16.2 INDEMNITY
If any Obligor fails to make a payment on the due date, such
Obligor agrees to reimburse and indemnify the person entitled
to the payment for the losses and expenses (including loss of
profit) that person reasonably incurs, or will incur, as a
result. The computation of these losses and expenses will
take into account any amount received under Clause 16.1.
17. SHARING AMONG LENDERS
17.1 NOTICE
If an amount due to a Lender under this Agreement is
discharged other than by payment through the Agent, that
Lender (the "RECIPIENT") agrees to notify the Agent. This may
occur because of the exercise of a right of set-off, by
virtue of a combination of accounts or because of a voluntary
or involuntary payment by an Obligor direct to the Recipient.
The notification will provide details of the amount
discharged and will be delivered no later than 10 Business
Days after the discharge.
17.2 DETERMINATION BY THE AGENT
Where a Lender has issued a notice under Clause 17.1 the
Agent will determine what payments, if any, are due under
Clause 17.4. This determination will be made on the basis of
the information contained in all the notices delivered to the
Agent under Clause 17.1. The determination will be notified
to the Parent and the Lenders.
17.3 LITIGATION
In determining the amount due under Clause 17.4 no account
will be taken of an amount due to a Lender which has declined
to participate in legal proceedings which resulted in the
payment described in Clause 17.1. This only applies if that
Lender could have joined in the proceedings or could have
instituted its own proceedings, but failed to do so.
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17.4 PAYMENT TO THE AGENT
The Recipient agrees to pay to the Agent an amount calculated
as follows:
P = D (X - Y)
where
P = the amount payable to the Agent
D = the aggregate amount due to the Recipient out of
which an amount has been discharged
X = the fraction of D which has been discharged
Y = the fraction which has been discharged, if any, of
the aggregate amount due to the Lender which has the greatest
proportion of that amount still outstanding.
This amount will be paid no later than five Business Days
after receipt of a notice from the Agent under Clause 17.2.
17.5 OBLIGATIONS OF THE PARENT
Any amount due to the Recipient which would otherwise have
been discharged as described in Clause 17.1 will be treated
as not having been discharged to the extent of an amount
which is or will be payable under Clause 17.4 as a result.
Accordingly the Parent agrees to pay this amount to the
Recipient as if it had not been discharged. This payment is
required to be made whether or not the Agent has issued a
determination under Clause 17.2.
17.6 DISTRIBUTION
The Agent agrees to distribute to the Lenders the amount
received by it under Clause 17.4 as if that amount had been
received from an Obligor in discharge of an amount due under
the Agreement. That Obligor will then be treated as having
paid that amount.
17.7 RECOVERY
This Clause 17.7 applies if an amount discharged as described
in Clause 17.1 is recovered from, or is required to be repaid
by, the Recipient. In this case each Lender which received
the benefit of a payment made under Clause 17.4 agrees to
repay to the Recipient the amount it received. Each of these
Lenders will also reimburse the Recipient for any interest or
other losses or expenses which the Recipient has incurred in
connection with the discharged amount or its recovery or
repayment. The rights and obligations of the parties shall be
restored to the position before any payment became due under
Clause 17.4.
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18. GUARANTEE
18.1 GUARANTEE
Each Guarantor guarantees the due and punctual performance of
all obligations of each Borrower (other than itself) under
this Agreement. This guarantee is unconditional and
irrevocable.
18.2 AGREEMENT TO PAY
Each Guarantor agrees to pay as if it were principal obligor
within three Business Days of demand each amount due by each
Borrower (other than itself) which is unpaid after the due
date therefor. The demand may be made at any time after the
due date for payment. Payment will be made in the same
currency as the amount due by the relevant Borrower.
18.3 CONTINUING GUARANTEE
This guarantee is a continuing guarantee. No payment or other
settlement will discharge each Guarantor's obligations until
the obligations of all the Borrowers have been discharged in
full.
18.4 OTHER GUARANTEES AND SECURITY
This guarantee is in addition to, and independent of, any
other guarantee or security.
18.5 ENFORCEMENT
This guarantee may be enforced before any steps are taken
against any Borrower or under any other guarantee or
security.
18.6 PRESERVATION OF RIGHTS
Subject to the proviso in paragraph (A), this guarantee will
only be discharged by receipt of irrevocable payment in full.
It will not be discharged by any other action, omission or
fact. Each Guarantor's obligations will, therefore, not be
affected by:
(A) The obligations of any Borrower being or becoming
void, invalid, illegal or unenforceable, except where
such obligations become void, invalid, illegal or
unenforceable as a result directly or indirectly of
the negligence of the Agent or any Lender or the
default or breach by the Agent or any Lender of any
mandate or contract between the Agent or any Lender
and such Borrower or any other person.
(B) Any change, waiver or release of the obligations of
any Borrower or any other person.
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(C) Any concession or time being given to any Borrower or any
other person.
(D) The winding-up or reorganisation of any Borrower or any other
person.
(E) Any change in the condition, nature or status of any Borrower
or any other person.
(F) Any of the above events occurring in relation to another
Guarantor or provider of security or its obligations.
(G) Any failure to take, retain or enforce any other guarantee or
security.
Any receipt from any person other than a Guarantor will reduce the
outstanding balance only to the extent of the amount received.
18.7 REPRESENTATIONS OF THE GUARANTOR
Each Guarantor confirms that it does not have the benefit of any
Encumbrance in respect of this guarantee or the indemnity in Clause 19.
18.8 COVENANTS OF THE GUARANTOR
Each Guarantor agrees as follows:
(A) SECURITY: It will not have the benefit of any Encumbrance in
respect of this guarantee or the indemnity in Clause 19.
(B) EXERCISE OF RIGHTS: It will not:
(i) in competition with the Agent or any Lender take the
benefit of any right against any Borrower or any
other person in respect of amounts paid under this
guarantee; or
(ii) other than in connection with any inter-company loan
with a Borrower before a claim has been made under
this guarantee and except insofar as all sums due and
payable by such Borrower under this Agreement shall
have been paid in full, claim or exercise against any
Borrower any right to any payment (whether or not in
connection with this Agreement);
(iii) (until all sums due and payable by such Borrower
under this Agreement shall have been irrevocably paid
in full) be subrogated to any rights, security or
moneys held, received or receivable by any Lender (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 a
Guarantor's liability under this Clause 18;
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(iv) (after a claim has been made under
this Clause 18 and until all sums due and
payable by such Borrower under this
Agreement shall have been irrevocably paid
in full) receive, claim or have the benefit
of any payment, distribution or security
from or on account of any Obligor, or
exercise any right of set-off as against any
Obligor.
A Guarantor shall hold in trust for and forthwith pay or transfer to
the Agent any payment or distribution or benefit of security received
by it contrary to this Clause 18.
The obligations in this Clause 18.8 will cease to have effect when the
Facilities have ceased to be available and there are no amounts
outstanding under the Facilities.
18.9 DISCHARGE CONDITIONAL
Any settlement with, or discharge of, a Guarantor will be subject to a
condition. This condition is that the settlement or discharge will be
set aside if any prior payment, or any other guarantee or security
relating to the obligations under this Agreement, is set aside,
invalidated or reduced. In this event each Guarantor agrees to
reimburse the Lender for the value of the payment, guarantee or
security which is set aside, invalidated or reduced.
18.10 APPROPRIATIONS
Until all amounts which may be or become payable by the Obligors under
or in connection with this Agreement have been irrevocably paid in
full, each Lender (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 Lender (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 other) and no Guarantor
shall be entitled to the benefit of the same; and
(B) hold in a suspense account any moneys received from a
Guarantor or on account of a Guarantor's liability under this
Clause 18, and interest will accrue on those moneys on normal
commercial terms.
18.11 NEW GUARANTORS
Any Subsidiary or Subsidiary Undertaking of the Parent may become a
party to this Agreement as a Guarantor. The Parent shall procure such
Subsidiary or Subsidiary Undertaking to duly execute and deliver an
Additional Guarantor Agreement in the form set out in Schedule 6
together with the documents listed in the Schedule to Schedule 6. A
Subsidiary or Subsidiary Undertaking of the Parent will only become a
party to this Agreement as a Guarantor when the Agent receives, in form
and substance satisfactory to it, the documents listed in
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the Schedule to Schedule 6 and the Additional Guarantor
Agreement, and so notifies the Parent and the Lenders.
19. GUARANTOR'S INDEMNITY
19.1 INDEMNITY
If any Borrower fails to make a payment on the due date
therefor, each Guarantor agrees within three Business Days of
demand to reimburse the person entitled to the payment for the
losses and expenses that person incurs, or will incur, as a
result. Each Guarantor also agrees to reimburse the Agent or
each Lender for all losses and expenses reasonably incurred
and arising from any obligations of any Borrower being or
becoming void, invalid, illegal or unenforceable.
19.2 AMOUNT OF LOSS
For the purposes of this Clause 19, the Agent or any Lender
will be treated as having suffered a loss equal to the amount
expressed as being due to it by any Borrower. If this
treatment is incorrect the Agent or any Lender will produce
evidence of its loss.
20. RELEASE OF GUARANTORS
The Parent may request the release of any Guarantor (other
than the Parent) from its obligations under this Agreement by
sending a notice in writing to the Agent. The Agent agrees
that on a date not less than one month after receipt of such
notice such Guarantor shall (without prejudice to the
obligations of the other Guarantors) be released from its
obligations hereunder except with respect to any part of its
obligations incurred prior to that date and except insofar as
this would cause a breach of Clause 23(C) as at the date of
release or if an Event of Default or Potential Event of
Default is outstanding.
21. REPRESENTATIONS
21.1 INITIAL REPRESENTATIONS
Each Obligor confirms that each of the following is true:
(A) NATURE: It is a company duly incorporated and validly
existing under the laws of its jurisdiction of
incorporation.
(B) POWERS: It has power to sign and deliver this
Agreement and to exercise its rights and perform its
obligations under this Agreement. The signature and
delivery of this Agreement on its behalf and the
exercise of its rights and the performance of its
obligations under this Agreement have been duly
authorised.
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(C) LEGAL VALIDITY: Its obligations described in this
Agreement are legal and valid and enforceable subject
to the Reservations.
(D) NON-CONFLICT: The signature and delivery of this
Agreement on its behalf and its exercise of rights
and performance of obligations under this Agreement:
(i) are not prohibited by or will not contravene
any law or its Memorandum or Articles of
Association or its equivalent constitutional
documents; and
(ii) are not prohibited by, or will not
contravene any or do not constitute an event
of default under, any document or
arrangement to which it is a party.
(E) RANKING OF OBLIGATIONS: Its financial obligations
under this Agreement rank at least equally with all
its other present and future unsecured and
unsubordinated obligations. Certain categories of its
other obligations will, however, be preferred in a
liquidation by virtue of mandatory provisions of
statute. They will be ignored for the purposes of
this paragraph.
(F) NO EVENT OF DEFAULT: No Event of Default has occurred
and remains unremedied.
(G) NO BREACHES: No member of the Group is in breach of
or default under any agreement to which it is a party
or which is binding on it or any of its assets to an
extent or in a manner which could reasonably be
expected to have a Material Adverse Effect.
(H) SECURITY: Execution and performance of its
obligations under the Agreement will not result in an
Encumbrance.
(I) LITIGATION: Save as disclosed there is no litigation
or other proceedings current, or in so far as it is
aware, pending or threatened in writing against any
member of the Group which could reasonably be
expected to have a Material Adverse Effect. In
investigating the affairs of the Petersen Group, no
litigation or other proceedings have come to its
attention which could reasonably be considered to be
material in the context of the Facilities.
(J) COMPLIANCE WITH ENVIRONMENTAL LAWS It is in
compliance in all respects material in the context of
the Facilities with applicable laws relating to
environmental matters save that this paragraph shall
not apply to the Petersen Group until after the
Clean-up Date.
(K) ACCOUNTS: The Latest Annual Accounts were prepared in
accordance with generally accepted published
accounting principles accepted in the United Kingdom
at the time they were prepared. They give a true and
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fair view of the assets and liabilities of the Group
as at the date to which they were prepared and of the
Group's results for the financial period ended on
that date. To the extent that generally accepted
accounting principles have changed since the previous
financial year the Latest Annual Accounts either
contain or are accompanied by a commentary explaining
the principal differences.
(L) EVENTS SINCE THE ACCOUNT DATE: Since 31st March,
1998, there has been no material adverse change in
the financial or trading position of the Group taken
as a whole.
(M) U.S. REGULATORY REQUIREMENTS:
(i) No Borrower is an investment company under
the United States Investment Company Act of
1940, nor is it exempt from the provisions
of that Act pursuant to an exemption under
that Act, all of the conditions of which
have been and are being fulfilled.
(ii) None of the transactions contemplated in
this Agreement (including, without
limitation, the borrowings hereunder and the
use of the proceeds thereof) will violate or
result in a violation of Section 7 of the
Securities Exchange Act of 1934 (or any
regulations issued pursuant thereto,
including, without limitation, Regulations
T, U and X). "REGULATIONS T, U AND X" means,
respectively, regulations T, U and X of the
Board of Governors of the Federal Reserve
System of the United States (or any
successor).
(N) PUBLIC UTILITY HOLDING COMPANY ACT: No Borrower nor
any of the Subsidiaries or Subsidiary Undertakings of
any Borrower is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning
of the United States of America Public Utility
Holding Company Act of 1935.
(O) YEAR 2000: Any reprogramming required to permit the
proper functioning, in and following the year 2000 of
the computer systems of the Group (excluding systems
and equipment supplied by others with which the
systems of the Group are required to interface) will
be substantially completed by 30th September, 1999,
except where a failure to do so could not reasonably
be expected to result in a Material Adverse Effect.
21.2 REPETITION
The representations in Clauses 21.1(A), (B), (C), (D), (G),
(I) (except for the second sentence thereof), (J), (K), (M),
(N) and (O) will be deemed repeated by the relevant Obligor in
each Advance Request and on each Advance Date and each
Acceptance Utilisation Date and on the first day of each
Interest Period. This repetition will be with reference to the
facts on that day.
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22. INFORMATION COVENANTS
The Parent agrees to deliver each of the following to the
Agent (upon request in sufficient copies for all the Lenders):
(A) Annual audited consolidated accounts of the Parent
prepared in accordance with generally accepted
accounting principles in the United Kingdom within
120 days of its financial year end.
(B) Interim unaudited consolidated accounts for the half
year of the Parent prepared in accordance with
generally accepted accounting principles in the
United Kingdom within 90 days of the end of the first
half of the financial year.
(C) Annual audited accounts for each Nominated Borrower
and Guarantor (other than the Parent) prepared in
accordance with generally accepted accounting
principles in the jurisdiction of incorporation of
that entity within 270 days of the end of its
financial year.
(D) At the same time as (A) and (B) a certificate signed
by two directors of the Parent that the Group is in
compliance with the covenants set out in Clause 23
or, as the case may be, is not in
compliance with any of the same and including a
calculation relating to such covenants. The
certificate will be substantially in the form set out
in Schedule 11.
(E) All circulars and notices despatched to its
shareholders or classes of creditors.
(F) All information reasonably requested by the Agent
(including details of the then current Material
Subsidiaries at each financial year end).
(G) Notice of any Event of Default or any Potential Event
of Default immediately after any Obligor becomes
aware of the same.
(H) If the Agent has reasonable grounds for suspecting
that the same might exist, confirmation that no Event
of Default or Potential Event of Default is
outstanding, signed by two Directors of the Parent.
23. FINANCIAL COVENANTS
The Parent shall procure that:
(A) Consolidated Net Worth shall not at any time fall
below an amount equal to pound sterling 550,000,000.
(B) In respect of each period of twelve months ending on
the dates to which the Parent's half year and annual
accounts are made up the ratio of Net Consolidated
Borrowings to Consolidated Earnings Before Interest
and Tax will not exceed:
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(i) up to and including 31st March, 2000,
4.00:1;
(ii) thereafter up to and including 31st March,
2002, 3.75:1; and
(iii) thereafter 3.50:1.
(C) The aggregate of:
(i) Borrowed Monies Indebtedness of the Parent's
Subsidiaries that are not Guarantors
(excluding inter-company loans from any
member of the Group and any Advances or
Acceptance Utilisation under the
Facilities); and
(ii) the principal amount secured by Encumbrances
granted over assets of the Parent or its
Subsidiaries (ignoring for this purpose any
Permitted Encumbrance within the ambit of
paragraphs (a), (b), (f) or (i) of the
definition thereof)
shall not at any time exceed 10 per cent. of
Consolidated Net Worth at such time.
For the purposes of this paragraph, only net Borrowed
Monies Indebtedness incurred under any notional
pooling scheme to be operated by the Group for the
management of the Group's cash resources shall be
taken into account and until the Clean-Up Date
Borrowed Monies Indebtedness of, and Encumbrances
created by, the Petersen Group in existence at the
date of this Agreement shall be ignored.
(D) In respect of each period of twelve months ending on
the dates to which the Parent's half year and annual
accounts are made up (the first such period ending on
31st March, 1999), the ratio of Consolidated Earnings
Before Interest and Tax to Consolidated Net Interest
Payable shall not fall below 3.50:1.
(E) There shall be no change to its Accounting Reference
Date without the consent of an Instructing Group (not
to be unreasonably withheld or delayed).
24. GENERAL COVENANTS
24.1 COVENANTS
Each Obligor agrees as follows:
(A) RANKING OF OBLIGATIONS: Its obligations to each
Lender will rank as provided in Clause 21.1(E).
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(B) DISPOSALS: It shall not, and will procure that none of its
Subsidiaries or Subsidiary Undertakings (either in a single
transaction or in a series of transactions whether related or
not) shall sell, transfer, lease, lend or otherwise dispose of
(such transactions being referred to as "disposals") all or
any part of its assets, except for:
(i) disposals of assets in the ordinary course of
business;
(ii) disposals to any member of the Group;
(iii) disposals with the prior consent of an Instructing
Group (such consent not to be unreasonably withheld);
(iv) disposals of cash for purchases of assets in the
ordinary course of business and for the purchase of
the Petersen Shares;
(v) disposals of assets to the extent that the proceeds
therefrom are within 3 months before or after such
disposal, reinvested in or used to acquire shares or
assets in a business in a sector in which any member
of the Group is engaged at the time of the disposal;
(vi) disposals of assets to the extent that the proceeds
therefrom are within three months of such disposal,
used to repay or prepay either Facility or to the
extent that the Revolving Credit Facility is
cancelled in an amount equal to such proceeds; and
(vii) other disposals of assets which in each financial
year generate in aggregate 10 per cent. or less of
Consolidated Earnings Before Interest and Tax as at
the date of the Latest Annual Accounts.
(C) NEGATIVE PLEDGE: Neither it nor any of its Subsidiaries or
Subsidiary Undertakings will create or permit to subsist any
Encumbrance on the whole or any part of its assets other than
Permitted Encumbrances, and only if, even in the case of a
Permitted Encumbrance, it does not contravene Clause 23(C).
(D) INSURANCE: It shall maintain insurance cover with reputable
insurers or underwriters at a level and against such risks as
are usual for companies carrying on its business (but this
undertaking shall not apply to any member of the Petersen
Group until after the Clean-up Date).
(E) CHANGE OF BUSINESS: It shall ensure that no substantial change
is made to the general nature of the business of the Group
taken as a whole.
(F) ERISA: If there is a U.S. Borrower, each member of the
Controlled Group is in compliance with the applicable
provisions of law, including ERISA, the Code and the
applicable minimum funding standard requirements of ERISA and
the Code with respect to each Plan except where such
non-compliance could reasonably be expected not to have a
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Material Adverse Effect. No Reportable Event which has or
could reasonably be expected to result in any material
liability has occurred with respect to any Plan. No member of
the Controlled Group has:
(i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan; or
(ii) made any amendment to any Plan, which has resulted or
could result in the imposition of a lien or the
posting of a bond or other security under ERISA or
the Code.
Any member of the Petersen Group shall be ignored for the
purpose of this undertaking until after the Clean-up Date.
(G) HEDGING: within 3 months of the Unconditional Date the Parent
will hedge a minimum of 25 per cent. of the Group's exposure
to an increase in interest rates on its anticipated Net
Consolidated Borrowings for a minimum period of two years. For
this purpose "hedge" includes any interest rate swap, cap,
collar, option, hedge, forward rate or other similar agreement
designed to protect against fluctuations in interest rates or
any fixed rate basis.
(H) THE OFFER
The Parent shall:
(i) to the extent that it has not already done so, issue
the Press Release within 2 Business Days of the date
of this Agreement;
(ii) until the earlier of the date the Offer lapses or is
finally closed, comply in all material respects with
the Financial Services Act 1986 and the Companies Act
1985 and all other applicable laws and regulations
relevant in the context of the Offer;
(iii) provide each of the Arrangers with such information
regarding the progress of the Offer and the Rights
Issue as it may reasonably request;
(iv) not issue any press release or make any statement
during the course of the Offer which contains any
information or reference concerning this Agreement or
the Lenders without first obtaining the prior
approval of the information or reference from the
Arrangers, in each case such approval not to be
unreasonably withheld or delayed (it being
acknowledged that the Press Release, the Shareholder
Circular and the draft SEC filing made in relation to
the Offer has already been approved);
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(v) not declare the Offer unconditional as to acceptances
until it is entitled to acquire (whether pursuant to
the Offer or otherwise) more than 50 per cent. of the
Petersen Shares; and
(vi) ensure that Petersen is a wholly-owned Subsidiary of
the Parent within 150 days of the Unconditional Date.
(I) ENVIRONMENTAL LAWS: It will procure that all members of the
Group will comply with applicable laws relating to
environmental matters where non-compliance could reasonably be
expected to have a Material Adverse Effect save that this
undertaking shall not apply to the Petersen Group until after
the Clean-up Date.
(J) DISCHARGE OF SECURITY: The Parent shall ensure that all
Encumbrances in relation to the Petersen Group in existence on
the date that Petersen becomes a Subsidiary of the Parent
will, to the extent that they are not Permitted Encumbrances
except by reason of paragraph (e) of the definition thereof,
be released as soon as practicable and in any event within 90
days of the Unconditional Date.
(K) ACQUISITIONS: The Parent shall ensure that until 31st March,
2000 no member of the Group may acquire any asset (excluding
the Petersen Group and certain assets of the Curtco Freedom
Group) unless the aggregate debt element of the financing
costs of all acquisitions since the date of this Agreement is
less than pound sterling 200,000,000 (or its equivalent in
other currencies).
(L) UNDERWRITING AGREEMENT: The Parent shall ensure that the
underwriting agreement of even date herewith relating to the
Rights Issue will not be amended without the consent of the
Instructing Group. This prohibition does not apply to
amendments made to correct manifest errors.
24.2 DURATION OF COVENANTS
The obligations of the Obligors under Clause 24.1 will cease to have
effect when the Facilities have ceased to be available and there are no
amounts outstanding under the Facilities.
25. EVENTS OF DEFAULT
25.1 EVENTS OF DEFAULT
Each of the following is an Event of Default:
(A) NON-PAYMENT OF SUMS DUE: Any Obligor fails to pay an amount
due under this Agreement on its due date or (provided that
such failure is solely the result of any administrative or
technical error on the part of
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the Obligor or any bank) within three Business Days of receiving
written notice from the Agent of non-payment.
(B) BREACH OF ANY OTHER OBLIGATIONS: Any Obligor fails to perform
any other obligation under this Agreement and:
(i) if the failure is capable of remedy, it is not
remedied within 15 Business Days of the relevant
Obligor receiving written notice (specifying that
there is a Potential Event of Default) from the Agent
to remedy the same; or
(ii) if the failure is not capable of remedy, notice that
it is an Event of Default is given to the relevant
Obligor by the Agent.
However, neither the 15 Business Day grace period nor
the requirement to give notice will apply to a breach
of Clause 23(A), (B) or (D) or Clause 24.1(B).
(C) UNTRUE REPRESENTATIONS: Any representation or warranty made,
or deemed repeated, by any Obligor in this Agreement is
incorrect in any material respect when made or deemed repeated
and, if capable of remedy, it is not remedied within 15
Business Days.
(D) CROSS-DEFAULT: Any Financial Indebtedness of the Group
(excluding, until after the Cleanup Date, the Petersen Group)
exceeding pound sterling 25,000,000 (or the equivalent in
other currencies) in aggregate:
(i) is not paid or repaid when due or within any
applicable grace period; or
(ii) becomes (or is capable of being declared)
enforceable, redeemable or repayable prior to the due
date for payment thereof as a result of any actual
default (however described) by the relevant member of
the Group,
except, in either case, where there is a bona fide dispute as
to payment on the basis of favourable independent legal advice
or where such Financial Indebtedness of the Petersen Group
becomes or is capable of being declared enforceable,
redeemable or repayable solely as a result of the Offer or any
agreement that may be entered into in connection with the
Offer.
(E) ENFORCEMENT OF SECURITY: A receiver is appointed or an
encumbrancer takes possession of or a distress, execution or
other process is levied or enforced upon the whole or a
substantial part of the assets of any Obligor or Material
Subsidiary and, in the case of a distress, execution or other
process, is not discharged, dismissed or stayed within 15
Business Days.
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(F) INABILITY TO PAY DEBTS: Any Obligor or any Material Subsidiary
is unable to pay its debts as they fall due or makes admission
of the same within the meaning of sections 123(1)(e) or 123(2)
of the Insolvency Act 1986 or suspends making payments on all
or any class of debts or formally announces an intention to do
so or a moratorium is declared in respect of all or any class
of its indebtedness.
(G) WINDING-UP ETC.: Any Obligor or Material Subsidiary takes any
corporate action or other steps are taken or legal proceedings
are started for:
(i) the winding-up, dissolution, liquidation or
administration of an Obligor or Material Subsidiary,
other than:
(a) a bona fide reconstruction or amalgamation
of a company other than the Parent while
solvent for which the Instructing Group has
given its prior approval (which shall not be
unreasonably withheld); or
(b) a voluntary solvent winding-up of a
Subsidiary or Subsidiary Undertaking of the
Parent where the surplus assets of such
Subsidiary or Subsidiary Undertaking are
distributed to another member of the Group;
or
(c) the presentation of a petition for
winding-up by a creditor on vexatious or
frivolous grounds which is discharged within
15 Business Days;
(ii) the composition, assignment or arrangement with any
creditors of an Obligor or Material Subsidiary;
or
(iii) the appointment of an administrator, administrative
receiver, receiver, trustee or similar officer of its
or of any or all of its revenues and assets.
(H) REPUDIATION OF GUARANTEES: The Parent or any Guarantor
repudiates its obligations under a Guarantee.
(I) MATERIAL ADVERSE CHANGE: There is an adverse change in the
financial condition of the Group taken as a whole which could
reasonably be expected to have a Material Adverse Effect.
(J) CESSATION OF BUSINESS: Other than in relation to a disposal
permitted by Clause 24.1(B) any Obligor or Material Subsidiary
ceases to carry on its business.
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(K) ANALOGOUS PROCEEDINGS: There occurs in relation to any Obligor
or Material Subsidiary, in any country or territory in which
it carries on business, or to the jurisdiction of whose courts
it is subject any event which corresponds in that country or
territory with those mentioned in paragraphs (F) and (G)
subject to the same exceptions.
(L) BRIDGING FACILITY: An event of default under the Bridging
Facility occurs.
(M) UNLAWFULNESS:
(i) It becomes unlawful for an Obligor to perform its
payment obligations under this Agreement; or
(ii) the guarantee of any Guarantor is ineffective or
is alleged by an Obligor to be ineffective for any
reason,
and in any such case the relevant Obligor or Guarantor is not
discharged from this Agreement in accordance with Clause 20 or
29.2 within 15 Business Days.
25.2 CONSEQUENCES OF AN EVENT OF DEFAULT
If an Event of Default occurs, the Agent may by notice to the Parent:
(A) cancel the Facilities and the Total Commitments or any of
them; and/or
(B) demand immediate repayment of any of the Advances; and/or
(C) demand immediate payment in respect of all outstanding Bills
which it has accepted of an amount calculated in accordance
with Clause 12.
The Agent agrees to deliver a notice under this Clause 25.2 if an
Instructing Group instructs the Agent to do so. In the case of
cancellation, the Lenders will be under no further obligation to make
an Advance or accept any Bills. In the case of a demand for repayment,
each Borrower agrees to pay the Lenders in accordance with the notice.
25.3 REPAYMENT
If there is an Event of Default, the relevant Borrower agrees to pay on
the date repayment is due interest accrued on any Advance made to it up
to that date. If the date repayment of the Advance is due is not the
last day of an Interest Period applicable to it, the relevant Borrower
will reimburse the Lender for the losses and expenses the Lender has
reasonably incurred, or will incur, as a result. The losses and
expenses may include those incurred in liquidating or otherwise
utilising amounts borrowed by the Lender to fund its participation in
that Advance. They may also include losses and expenses incurred in
hedging open positions resulting from the repayment.
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25.4 INDEMNITY
If there is an Event of Default, the Parent agrees to reimburse each of
the Agent and the Lenders for the losses and expenses it reasonably
incurs, or will incur, as a result, except where such losses or
expenses are caused by its misconduct or negligence.
25.5 CURRENCY INDEMNITY
This Clause 25.5 applies where a payment due by any Obligor under or in
connection with this Agreement is made or is required to be made in a
currency other than the specified currency. To the extent that the
amount received, when converted into the specified currency, is less
than the amount due, the relevant Obligor agrees to reimburse the
Lender for the difference. For the purposes of the computation of this
amount the Lender will apply to the amount received a rate of exchange
prevailing on the date of receipt. If, however, the Lender is unable to
use the amount received to buy the specified currency on the date of
receipt, the rate of exchange prevailing on the first date on which the
Lender could buy the specified currency will be used instead. The
obligation in this Clause 25.5 is a separate and independent
obligation.
26. EVIDENCE AND CERTIFICATES
26.1 EVIDENCE OF DEBT
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Advance and the face
amount of any Bill accepted (and in each case the name of the Lender to
whom such sum relates), (b) the amount of all principal, interest and
other sums due or to become due from the Borrower to any of the Lenders
under the Facilities and each Lender's share therein and (c) the amount
of any sum received or recovered by the Agent hereunder and each
Lender's share therein.
26.2 CERTIFICATES
Each certificate delivered under this Agreement must contain reasonable
detail of the matters being certified, except that neither the Agent
nor any Lender is obliged to disclose its tax affairs or other
confidential information. Certificates delivered by the Agent will be
conclusive unless there is a proven error.
27. NOTICES
27.1 NATURE OF NOTICES
No notice delivered by any Obligor under this Agreement may be
withdrawn or revoked. Each notice delivered by any of them must be
unconditional. Unless this Agreement specifies otherwise, it must also
be given by an Authorised Signatory. All notices, consents,
certificates and other communications must be in writing.
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27.2 DELIVERY OF NOTICES
Any notice or other communication given or made shall, if addressed as
set out in the signature page, in the absence of earlier receipt, be
deemed to have been duly given or made as follows:
(A) if in writing and delivered in person or by courier, on the
date it is delivered;
(B) if sent by facsimile transmission, on the date that
transmission is received in legible form (it being agreed
that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the
sender's facsimile machine); and
(C) if sent by registered first class post or the equivalent
(return receipt requested), on the date that post is
delivered or its delivery is attempted.
Any notice or other communication given or made, or deemed to have
been given or made after the close of business on a Business Day will
be deemed not to have been given or made until the first following day
that is a Business Day.
27.3 NOTICES THROUGH THE AGENT
Each notice from an Obligor or a Lender will be delivered to the
Agent. The Agent agrees to pass on the details of notices received by
it to the appropriate recipient as soon as reasonably practicable.
27.4 ADDRESS DETAILS
Notices will be delivered to the address or number of the intended
recipient as set out on the signature page of this Agreement or other
document whereby it becomes a party to this Agreement. An Obligor or a
Lender may change its address or number by notice to the Agent. The
Agent may change its address or number by notice to the Parent and
each Lender.
28. ASSIGNMENT
28.1 OBLIGORS
The rights and obligations of the Obligors under this Agreement are
personal to them. Accordingly they are not capable of assignment.
28.2 LENDERS
(A) (i) Subject to sub-paragraph (A)(ii) below, a
Lender (the "Existing Lender") may assign, novate or
otherwise transfer its rights and obligations under
the Facilities in whole or in part to a Qualifying
Bank (the "New Lender"), provided, in the case of the
Revolving Facility only, it obtains the written
consent of the Parent in
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advance (not to be unreasonably withheld or
unreasonably delayed). No consent is required for an
assignment, transfer or novation to an Affiliate or
under the Term Loan Facility. Consent will be deemed
to have been given if not expressly refused within 5
Business Days.
(ii) Unless the Parent consents (such consent not to be
unreasonably withheld), a Lender falling within
paragraph (b) of the definition of "Qualifying Bank"
may not assign, novate or otherwise transfer its
rights under the Facilities in whole or in part to a
Lender falling within paragraph (a) of the definition
of "Qualifying Bank" unless the Advance in relation
to which such assignment, novation or transfer
relates was made by a bank within the meaning of
Section 349(3) of the Income and Corporation Taxes
Act 1988. Consent will be deemed to have been given
if not expressly refused within 10 Business Days.
(B) No assignment, novation or transfer of all or of part of a
Lender's rights or obligations under Clause 28.2 may:
(i) up to the date falling 60 days from close of general
syndication be on a non pro rata basis between the
Term Facility and Revolving Facility;
(ii) at any time if on a pro rata basis, be an amount of
less than pound sterling 5,000,000 (for the Revolving
Facility) and $5,000,000 (for the Term Facility);
(iii) thereafter if on a non pro rata basis, be an amount
of less than pound sterling 10,000,000 (for Revolving
Facility) and $5,000,000 (for the Term Facility) or
in each case the balance of its relevant Commitment.
(C) If, at any time, any Lender assigns any of its rights or
benefits hereunder or transfers all or any of its rights,
benefits and obligations hereunder or transfers its facility
office and, at the time of such assignment or transfer,
there arises an obligation on the part of a Borrower under
Clause 14 to pay to such Lender or its assignee or
transferee any amount in excess of the amount it would have
then been obliged to pay but for such assignment or
transfer, then that Borrower shall not be obliged to pay the
amount of such excess.
28.3 TRANSFERS BY LENDERS
(A) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with
Clause 28.4; or
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(ii) the New Lender confirms to the Agent and the
Parent that it undertakes to be bound by the terms of
this Agreement as a Lender in form and substance
satisfactory to the Agent and the Parent. On the
transfer becoming effective in this manner the Existing
Lender shall be relieved of its obligations under this
Agreement to the extent that they are transferred to
the New Lender.
(B) On each occasion (other than in connection with the initial
general syndication) an Existing Lender assigns, transfers or
novates any of its Commitment(s) rights and/or obligations under
the Agreement, the New Lender shall, on the date the assignment,
transfer and/or novation takes effect, pay to the Agent for its
own account a fee of pound sterling 1,000.
(C) An Existing Lender is not responsible to a New Lender for:
(i) the execution, genuineness, validity, enforceability or
sufficiency of this Agreement or any other document;
(ii) the collectability of amounts payable under this
Agreement; or
(iii) the accuracy of any statements (whether written or oral)
made in or in connection with this Agreement.
(D) Each New Lender confirms to the Existing Lender and the other
Lenders and the Agent and the Arrangers that it:
(i) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor 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 Existing Lender in
connection with this Agreement; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities
while any amount is or may be outstanding under this
Agreement or any Commitment is in force.
(E) Nothing in this Agreement obliges an Existing Lender to:
(i) accept a re-transfer from a New Lender of any of the rights
and/or obligations assigned, transferred or novated under
this Clause; or
(ii) support any losses incurred by the New Lender by reason of
the non-performance by any Obligor of its obligations under
this Agreement or otherwise.
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(F) Any reference in this Agreement to a Lender includes a New
Lender, but excludes a Lender if no amount is or may be owed to
or by that Lender under this Agreement and its Commitment(s)
has/have been cancelled or reduced to nil.
28.4 PROCEDURE FOR NOVATIONS
(A) A novation is effected if:
(i) the Existing Lender and the New Lender deliver to the Agent
a duly completed certificate, substantially in the form of
Schedule 14; and
(ii) the Agent executes it which it may do within 5 Business
Days of receipt.
(B) Each Party (other than the Existing Lender and the New Lender)
irrevocably authorises the Agent to execute any duly completed
novation certificate on its behalf.
(C) To the extent that they are expressed to be the subject of the
novation in the novation certificate:
(i) the Existing Lender and the other parties to this
Agreement (the "EXISTING PARTIES") will be released from
their obligations to each other (the "DISCHARGED
OBLIGATIONS");
(ii) the New Lender 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 Lender instead of the Existing Lender;
(iii) the rights of the Existing Lender against the existing
Parties and vice versa (the "DISCHARGED RIGHTS") will be
cancelled; and
(iv) the New Lender 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
lender instead of the Existing Lender,
all on the date of execution of the novation certificate by
the Agent or, if later, the date specified in the novation
certificate.
28.5 DISCLOSURE OF INFORMATION
(A) A Lender may disclose to one of its Affiliates 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:
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(i) a copy of this Agreement; and
(ii) any information which that Lender has acquired under or in
connection with this Agreement,
but only if the recipient of the information has agreed to
keep that information confidential on the terms of paragraph
(B) below.
(B) Each Lender shall keep confidential and shall not, without the
prior consent of the Parent, use any information (other than
information which is publicly available other than as a result of
a breach by that Lender of this paragraph (B)) supplied by or on
behalf of any Obligor under or in connection with this Agreement
otherwise than in connection with this Agreement. However, the
restriction set out in this paragraph (B) shall not apply to, and
each Lender shall be entitled to disclose, information:
(i) in connection with any legal proceedings arising out of
or in connection with this Agreement; or
(ii) if required to do so by an order of a court of competent
jurisdiction whether under any procedure for discovering
documents or otherwise; or
(iii) pursuant to any law or regulation in accordance with
which that Lender is require or accustomed to act; or
(iv) to a governmental, banking, taxation or other regulatory
authority of any competent jurisdiction; or
(v) to its accountants, legal advisers or other professional
advisers.
28.6 REGISTER
The Agent shall keep a register of all the Parties and shall supply
the Parent (free of charge) with a copy of the register on request.
The Agent shall notify the Parent within two Business Days of a change
in the composition of the Register.
29. ADDITIONAL BORROWERS
29.1 ADDITIONAL BORROWERS
(A) The Parent may nominate one or more of its Subsidiaries or
Subsidiary Undertakings as Nominated Borrowers if, unless the
Nominated Borrower is incorporated in the U.K., the Lenders agree
in advance.
(B) A Subsidiary or Subsidiary Undertaking will become a Nominated
Borrower upon the Agent receiving an Additional Borrower
Agreement
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duly executed by that Subsidiary or Subsidiary Undertaking and
the Parent, together with the documents referred to in Part 3 of
Schedule 2, each in a form and substance satisfactory to the
Agent.
(C) The Agent will notify the Parent and, where appropriate, the
Nominated Borrower promptly upon the requirements of paragraphs
(A) and (B) being met.
(D) Delivery of a duly executed Additional Borrower Agreement will
constitute confirmation by that Subsidiary or Subsidiary
Undertaking that the representations in Clause 21.1 are correct
on the date of the Additional Borrower Agreement, as if made by
it with reference to the facts and circumstances then existing.
29.2 WITHDRAWAL OF BORROWERS
(A) If no Event of Default or Potential Event of Default is
outstanding (other than under Clause 25.1(M)), the Parent may
procure that any Nominated Borrower ceases to be a Borrower under
this Agreement forthwith upon the Parent giving written notice to
the Agent.
(B) Upon such Nominated Borrower ceasing to be a Nominated Borrower
under this Agreement, the Parent shall immediately and without
further formality be substituted as the principal debtor in
respect of any amounts owed by such Nominated Borrower and the
Agent and each Lender shall thereupon cease to have any rights or
claims whatsoever against that Nominated Borrower in its capacity
as such, but without prejudice to any rights or claims against
that Nominated Borrower in its capacity as a Guarantor, Material
Subsidiary or otherwise. Following such substitution, all
references to such Nominated Borrower shall be construed and read
as if such references were to the Parent.
30. WAIVERS AND AMENDMENTS
30.1 WRITING REQUIRED
A waiver or amendment of a term of this Agreement will only be
effective if it is in writing.
30.2 AUTHORITY OF THE AGENT
If authorised by an Instructing Group, the Agent may grant waivers and
agree amendments with the Parent. These waivers and amendments will be
granted on behalf of the Lenders and be binding on all of them,
including those which were not part of an Instructing Group. This
Clause 30.2 does not authorise the Agent to grant any waiver or agree
any amendment affecting any of the following:
(A) The amount of the Facilities.
<PAGE> 73
70
(B) The amount or method of calculation of interest or commitment fee
if it might have the effect of reducing any amount payable under
this Agreement.
(C) The manner, currency or timing of repayment of the Loan or of the
payment of any other amount.
(D) An increase in any Commitment.
(E) The end of the period during which the Facilities are available.
(F) The definition of "Instructing Group".
(G) Any requirement (including the one in this Clause 30.2) that all
the Lenders or a certain proportion of them consent to a matter
or deliver a notice.
(G) Clauses 4 (The Lenders), 17 (Sharing among Lenders) or 31 (The
Agent and the Arrangers).
Waivers or amendments affecting these matters require the consent of
all Lenders. Waivers or amendments affecting the obligations of the
Agent may not be made without its consent.
30.3 EXPENSES
The Parent agrees to reimburse the Agent and each Lender for the
expenses they reasonably incur as a result of any request made by any
Obligor to waive or amend a term of this Agreement.
31. THE AGENT, THE ARRANGERS AND THE LENDERS
31.1 The Arrangers and each of the Lenders hereby appoints the Agent to act
as its agent in connection herewith and irrevocably authorises the
Agent to exercise such rights, powers and discretions as are
specifically delegated to the Agent by the terms hereof and in
connection with the Facilities together with all such rights, powers
and discretions as are reasonably incidental thereto.
31.2 THE AGENT MAY:
(A) assume that:
(i) any representation made by any Obligor in connection
herewith is true;
(ii) no event which is or may become an Event of Default or
Potential Event of Default has occurred; and
<PAGE> 74
71
(iii) no Obligor is in breach of or default under its obligations
hereunder
unless it has actual notice to the contrary from any Party;
(B) (i) assume that the facility office of each Lender is that
identified with its signature below until it has received
from such Lender a notice designating some other office of
such Lender to replace its facility office and act upon any
such notice until the same is superseded by a further such
notice; and
(ii) treat each Lender as a Lender entitled to payments under this
Agreement until it has received not less than five Business Days'
notice from that Lender to the contrary;
(C) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
(D) rely as to any matters of fact which might reasonably be expected
to be within the knowledge of any Obligor upon a certificate
signed by or on behalf of such Obligor;
(E) rely upon any communication or document reasonably believed by it
to be genuine;
(F) refrain from exercising any right, power or discretion vested in
it as agent hereunder unless and until instructed by an
Instructing Group as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as
to the manner in which it should be exercised;
(G) refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding arising
out of or in connection with the Facilities until it shall have
received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, expenses
(including legal fees) and liabilities which it will or may
expend or incur in complying with such instructions;
(H) act as agent or trustee or in a fiduciary or other capacity on
behalf of any other group of banks or financial institutions
providing facilities to any member or members of the group or any
associated company of any such member without regard to the
effect of exercising or omitting to exercise its rights,
discretions, powers and duties in such capacity on the interests
of the Lenders, and act or omit to act in such capacity as freely
in all respects as if the Agent had not been appointed to act as
agent for the Lenders; and
(I) subscribe for, hold or become beneficially entitled to, and
dispose of, shares or securities, or options or other rights to
and interests in shares
<PAGE> 75
72
or securities in any member or members of the Group or any
associated company of any such member (and, in each case, may do
so without liability to account).
31.3 The Agent shall:
(A) promptly inform each Lender of the contents of any notice or
document received by it in connection with the Facilities in its
capacity as Agent hereunder from any Obligor;
(B) promptly notify each Lender of the occurrence of any Event of
Default or any default by any Obligor in the due performance of
or compliance with its obligations under this Agreement of which
the Agent has actual notice;
(C) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by an Instructing
Group, which instructions shall be binding on all the Lenders;
and
(D) if so instructed by an Instructing Group, refrain from exercising
any right, power or discretion vested in it as agent hereunder.
31.4 Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
(A) be bound to enquire as to:
(i) whether or not any representation made by any Obligor in
connection herewith is true;
(ii) the occurrence or otherwise of any event which is or may
become an Event of Default or Potential Event of Default;
(iii) the performance by any Obligor of its obligations hereunder;
or
(iv) any breach of or default by any Obligor of or under its
obligations hereunder;
(B) be bound to account to any Lender for any sum or the profit
element of any sum received by it for its own account;
(C) be bound to disclose to any other person any information relating
to any member of the Group if such disclosure would or might in
its opinion constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person and the Agent
shall be deemed not to have any actual knowledge or actual notice
of the contents of any information; or
(D) be under any fiduciary duty towards any Lender or under any
obligations other than those for which express provision is made
herein.
<PAGE> 76
73
If it is also a Lender, the Agent and the Arrangers have the same
rights and powers under the facilities as though it were not the Agent
or an Arranger.
31.5 To the extent that the Agent is not indemnified on demand by the
Obligors and without limiting the liability of any Obligor, each Lender
shall, from time to time on demand by the Agent, indemnify the Agent
against any and all costs, claims, expenses (including legal fees and
value added tax thereon) and liabilities which the Agent may incur,
otherwise than by reason of its own negligence or wilful misconduct, in
acting in its capacity as agent hereunder. The liability of each Lender
under this Clause 31.5 will be limited to the share of the total losses
and expenses which corresponds to that Lender's share of the aggregate
of the Loan and the Uncancelled Facility Amount. If the losses or
expenses are attributable to an activity of the Agent which relates to
only some of the Lenders the Agent may instead notify the Lenders of a
different sharing arrangement.
31.6 Neither the agent nor the arrangers accepts any responsibility for the
accuracy and/or completeness of any information supplied (including,
without limitation, the information memorandum) or representation made
by any obligor at any time, in each case whether written or oral, in
connection herewith or for the legality, effectiveness, adequacy or
enforceability of this agreement and the agent shall not be under any
liability as a result of taking or omitting to take any action or
failing to make any enquiries of whatever nature in relation to this
agreement, save in the case of gross negligence or wilful misconduct.
31.7 Each party agrees that it will not assert or seek to assert against any
director, officer or employee of the Agent or of any Arranger any claim
it might have against any of them in respect of the matters referred to
in Clause 31.6.
31.8 The agent and the arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with obligors
and the other members of the group.
31.9 The Agent may resign its appointment notwithstanding its irrevocable
appointment hereunder at any time without assigning any reason therefor
by giving not less than 30 days' notice of its intention to do so to
the Parent and the Lenders. The Agent may be removed by notice given by
an Instructing Group to the Agent and the Parent. In either case, an
Instructing Group may appoint a successor acceptable to the Parent
during such notice period but if it does not appoint such a successor
the Agent may (with the agreement of the Parent) do so. Any such
successor must be a reputable and experienced bank or other financial
institution with an office in London. Upon any such successor as
aforesaid being appointed and accepting such appointment (but not
before), the retiring Agent shall be discharged from any further
obligation hereunder (save as specified below) as such and its
successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if
such successor had been a party hereto in place of the retiring Agent.
The provisions of this Clause 31.9 shall continue in effect for
<PAGE> 77
74
the benefit of the retiring Agent in respect of any actions taken or
omitted to be taken by it while it was acting as such Agent, but
subject thereto, and notwithstanding its retirement, the retiring Agent
shall remain liable for any action taken or omitted by it hereunder
while it was Agent. The retiring Agent shall make over to its successor
all such records as its successor requires to carry out its duties.
Notwithstanding the above, the Agent may resign its appointment
hereunder at any time by giving not less than 30 days' notice of its
intention to do so to the Parent and the Lenders and may forthwith
appoint one of its affiliates as successor Agent.
31.10 It is understood and agreed by each Lender that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the members
of the Group and the Petersen Group and, accordingly, each Lender
warrants to the Agent and the Arrangers that it has not relied and will
not hereafter rely on either the Agent or the Arrangers:
(A) to check or enquire on its behalf into the adequacy, accuracy
or completeness of any information provided by and any Obligor
in connection with the Facilities or the transactions herein
contemplated (whether or not such information has been or is
hereafter circulated to such Lender by the Agent or the
Arrangers); or
(B) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of any member of the Group and the Petersen Group.
31.11 The Agent shall perform its agency functions hereunder through the
office identified with its signature below or such other office in
London (or, with the prior written consent of the Parent, elsewhere) as
the Agent may from time to time select.
31.12 In acting as agent for the lenders, the agent's agency division shall
be treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this
clause 31.12, if the agent should act for any member of the group in
any capacity in relation to any other matter, any information given by
that member of the group to the agent in such other capacity may be
treated as confidential by the agent.
32. MISCELLANEOUS
32.1 EXERCISE OF RIGHTS
If the Agent or a Lender does not exercise a right or power when it is
able to do so, this will not prevent it exercising that right or power.
When it does exercise a right or power, it may do so again in the same
or a different manner. The Agent's and the Lenders' rights and remedies
under this Agreement are in
<PAGE> 78
75
addition to any other rights and remedies it may have. Those other
rights and remedies are not affected by this Agreement.
32.2 COUNTERPARTS
There may be several signed copies of this Agreement. There is intended
to be a single Agreement and each signed copy is a counterpart of that
Agreement.
32.3 ENFORCEMENT COSTS
The Parent shall within 7 days of demand pay to each Lender or the
Agent or an Arranger the amount of all costs and expenses (including
legal fees) incurred by it in connection with the enforcement of, or
the preservation of any rights under, this Agreement.
32.4 ACQUISITION FINANCING INDEMNITY
(A) The Parent shall within 5 Business Days of demand indemnify
the Agent, each of the Arrangers and each Lender against any
loss or liability which that Party suffers or incurs as a
consequence of any litigation proceeding arising, pending or
threatened against that Party as a result of the Offer
(whether or not made) or of it agreeing to finance or
refinance any acquisition by the Parent or any person acting
in concert with the Parent of any Petersen Shares or arising
out of the use of proceeds of these Facilities ("relevant
litigation") except to the extent caused by its negligence or
misconduct.
(B) The relevant Party shall notify the Parent promptly upon
becoming aware, and in reasonable detail, of any relevant
litigation and shall keep the Parent informed of its progress.
(C) The relevant Party shall conduct any relevant litigation in
good faith and will give careful consideration to the views of
the Parent in relation to the appointment of professional
advisers and the conduct of the litigation taking into account
(to the extent practicable) both its interests and the
interests of the Parent.
(D) The relevant Party may only concede or compromise any claim in
respect of any relevant litigation if it is acting reasonably
and has consulted the Parent before so doing.
(E) Notwithstanding paragraphs (A) to (D) above, a relevant Party
is not required to disclose to the Parent any matter in
respect of which it is under a duty of non-disclosure or which
is subject to any attorney/client privilege, or which relates
to a Party's policy. Any information disclosed by a Party to
the Parent under this Clause 32.4 shall be subject to the same
conditions of confidentiality as those set out in Clause 28.5
(Disclosure of information) in relation to disclosure to
potential transferees.
<PAGE> 79
76
32.5 STAMP DUTIES
The Parent shall pay and forthwith on demand indemnify each Lender or
the Agent or an Arranger against any liability it incurs in respect of
any stamp, registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of this
Agreement.
32.6 SEVERABILITY
If a provision of this Agreement 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 this Agreement; or
(B) the legality, validity or enforceability in other
jurisdictions of that or any other provision of this
Agreement.
32.7 SET-OFF
If an Event of Default or Potential Event of Default has occurred, a
Lender may set off any matured obligation owed by an Obligor under this
Agreement (to the extent beneficially owned by that Lender) against any
obligation (whether or not matured) owed by that Lender to that
Obligor, regardless of the place of payment, booking branch or currency
of either obligation. If the obligations are in different currencies,
the Lender 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 Lender may set
off in an amount estimated by it in good faith to be the amount of that
obligation.
33. LANGUAGE
(A) Any notice given under or in connection with this Agreement
shall be in English.
(B) All other documents provided under or in connection with this
Agreement shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English
translation shall prevail unless the document is a
statutory or other official document.
<PAGE> 80
77
34. JURISDICTION
34.1 SUBMISSION
For the benefit of the Agent and each Lender, each Obligor agrees that
the courts of England have jurisdiction to settle any disputes in
connection with this Agreement and accordingly submits to the
jurisdiction of the English courts.
34.2 SERVICE OF PROCESS
Without prejudice to any other mode of service, each Obligor (other
than an Obligor incorporated in England and Wales):
(A) irrevocably appoints the Parent as its agent for service of
process in relation to any proceedings before the English
courts in connection with this Agreement;
(B) agrees that failure by the Parent to notify the Obligor 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 27.
34.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD
Each Borrower:
(A) waives objection to the English courts on grounds of
inconvenient forum or otherwise as regards proceedings in
connection with this Agreement; and
(B) agrees that a judgment or order of an English court in
connection with this Agreement 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 the Agent or a Lender to
bring proceedings against an Obligor in connection with this Agreement:
(A) in any other court of competent jurisdiction; or
(B) concurrently in more than one jurisdiction.
35. LAW
This Agreement is to be governed by and construed in accordance with
English law.
<PAGE> 81
78
IN WITNESS whereof this Agreement has been signed on behalf of the
Parties.
<PAGE> 82
79
SCHEDULE 1
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
TERM LOAN
REVOLVING COMMITMENT COMMITMENT
LENDER POUND STERLING $
------ -------------------- ----------
<S> <C> <C>
BARCLAYS BANK PLC 108,333,333.34 293,333,333.34
DEN DANSKE BANK 108,333,333.33 293,333,333.33
AKTIESELSKAB
DEUTSCHE BANK AG 108,333,333.33 293,333,333.33
-------------- ---------------
LONDON
pound sterling 325,000,000.00 $880,000,000.00
=============== ===============
</TABLE>
<PAGE> 83
80
SCHEDULE 2
CONDITIONS PRECEDENT
Part 1
General
1. A copy of the Memorandum and Articles of Association and Certificate of
Incorporation of the Parent. The copy must be certified by a director
or the secretary of the Parent to be true, complete and in full force
and effect.
2. A copy of a resolution of the board of directors of the Parent
appointing a Committee and granting it authority to enter into loan
facilities and guarantees each up to the full amount of the Facilities
on behalf of the Parent. A copy of a resolution of the Committee
approving the Facilities, authorising the signature and delivery of
this Agreement and associated documents and appointing Authorised
Signatories. The copies must be certified by a director or the
secretary of the Parent to be true, complete and in full force and
effect.
3. Specimen signatures of Authorised Signatories appointed by the
resolution referred to in paragraph 2 above. These signatures must be
certified by a director or the secretary of the Parent to be genuine.
4. A legal opinion from Allen & Overy, legal advisers to the Arrangers, in
the form set out in Schedule 10.
5. A certificate of a director of the Parent confirming that utilisation
of the Facilities in full would not cause any borrowing limit binding
on it to be exceeded and that all defaults that may have been caused in
the Parent's existing banking facilities as a result of the Offer have
been waived.
6. A copy of the underwriting agreement relating to the Rights Issue. The
copy must be certified by a director or the secretary of the Parent to
be genuine and complete.
PART 2
OTHER DOCUMENTATION
1. A copy of the Offer Document (in a form not materially inconsistent
with the Press Release), the Shareholders Circular and the Press
Release. The copies must be certified by a director or the secretary of
the Parent to be genuine and complete.
2. Evidence that the Parent's shareholders have approved the acquisition
of Petersen and the increase in the Parent's borrowing powers.
<PAGE> 84
81
3. Evidence that the Parent, or its subsidiary, has accepted for payment
the Petersen Shares sufficient to satisfy the Minimum Condition (as
defined in the Offer) tendered and not withdrawn under the Offer or
under a stockholders agreement dated 15th December, 1998.
4. Evidence that the bilateral loan facilities entered into by the Parent
with various banks on or around 30th November, 1998 have been cancelled
with effect from the Unconditional Date.
5. Evidence that the Rights Issue has become unconditional and the new
shares admitted to listing in accordance with section 7.1 of the rules
of the London Stock Exchange.
6. Confirmation that all waiting periods under the Hart Scott Rodino Anti
Trust Improvement Act 1976 (as amended) and any regulations made under
it in relation to the Offer having expired.
7. A copy of the Petersen Solicitation/Recommendation Statement on
Schedule 14 D-9.
PART 3
NOMINATED BORROWER
1. An Additional Borrower Agreement, duly executed by the Nominated
Borrower and the Parent.
2. A copy of the Memorandum and Articles of Association and Certificate of
Incorporation of the Nominated Borrower (or, if the Nominated Borrower
is not incorporated in England and Wales, a copy of equivalent
constitutional documents). The copy must be certified by a director or
the secretary of the Nominated Borrower to be true, complete and in
full force and effect.
3. A copy of a resolution of the board of directors of the Nominated
Borrower approving the Facilities, authorising the signature and
delivery of the Additional Borrower Agreement, appointing Authorised
Signatories and authorising the Parent to act as agent pursuant to this
Agreement. The copy must be certified by a director or the secretary of
the Nominated Borrower to be a true, complete and in full force and
effect.
4. Specimen signatures of Authorised Signatories appointed by the
resolution referred to in paragraph 3 above. These signatures must be
certified by a director or the secretary of the Nominated Borrower to
be genuine.
5. Where the Nominated Borrower is not incorporated in England and Wales,
a legal opinion from counsel in the jurisdiction of incorporation of
the Nominated Borrower in form and substance satisfactory to the Agent.
<PAGE> 85
82
6. A legal opinion from a firm of solicitors, acting as English legal
advisers to the Agent, in form and substance satisfactory to the Agent.
7. A copy of any other authorisation or other document which is necessary
in connection with the entry into and performance of the Additional
Borrower Agreement, or the transactions contemplated by the Additional
Borrower Agreement, or for the validity or enforceability of the
Additional Borrower Agreement.
8. If produced, the latest audited accounts of the Nominated Borrower.
<PAGE> 86
83
SCHEDULE 3
FORM OF ADVANCE REQUEST
[Date]
Barclays Bank PLC
[Address]
Dear Sirs
Multi-currency Sterling Revolving Credit, Sterling Bill Acceptance and Dollar
Term Loan Facilities Agreement dated 15th December, 1998
We refer to the above agreement between yourselves as Agent and [us/EMAP plc] as
parent, borrower and guarantor (the "Agreement"). Terms defined in the Agreement
have the same meaning in this confirmation.
We [on our own behalf/as agent for [ ]] would like the Lenders to make an
Advance under the Agreement as follows:
Facility:
Borrower:
Advance Date:
Amount of the Advance:
Interest Period:
Day Count Fraction:
Settlement Instructions:
Payments by EMAP
Bank
Sort Code/Swift Code
Account number
Account name
<PAGE> 87
84
Payments to EMAP
Bank
Sort Code/Swift Code
Account number
Account name
We confirm that on [date of request] and on the Advance Date there was and will
be no Event of Default or [Potential Event of Default]* which has occurred or is
occurring or would result from the Advance.
Yours faithfully
AUTHORISED SIGNATORY
- -----------
* Delete to the extent Clause 7.3(D) applies.
<PAGE> 88
85
SCHEDULE 4
FORM OF ACCEPTANCE UTILISATION REQUEST
[Date]
Barclays Bank PLC
[Address]
Dear Sirs
BILL ACCEPTANCE FACILITY UNDER MULTI-CURRENCY STERLING REVOLVING CREDIT,
STERLING BILL ACCEPTANCE AND DOLLAR TERM LOAN FACILITIES AGREEMENT DATED 15TH
DECEMBER, 1998
CONTRACT REFERENCE: l
We refer to the above agreement between yourselves as Agent and [us/EMAP plc] as
parent, borrower and guarantor (the "Agreement"). Terms defined in the Agreement
have the same meaning in this confirmation.
We [on our own behalf/as agent for [ ]] would like the Lenders to accept Bills
under the Bill Acceptance Facility as follows:
Facility: Bill Acceptance Facility under the Revolving Credit Facility
Borrower:
Acceptance Utilisation Date:
Face amount of the Bills:
Tenor:
Settlement Instructions:
Payments by EMAP
Bank
Sort Code/Swift Code
Account number
Account name
<PAGE> 89
86
Payments to EMAP
Bank
Sort Code/Swift Code
Account number
Account name
We confirm that on [date of request] and on the Acceptance Utilisation Date
there was and will be no Event of Default or [Potential Event of Default]* which
has occurred or is occurring or would result from the Acceptance Utilisation.
Yours faithfully
AUTHORISED SIGNATORY
- ----------
* Delete if Rollover Utilisation -.
<PAGE> 90
87
SCHEDULE 5
FORM OF ADDITIONAL BORROWER AGREEMENT
[Date]
To: Barclays Bank PLC
[Address]
Dear Sirs
Multi-currency Sterling Revolving Credit, Sterling Bill Acceptance and Dollar
Term Loan Facilities Agreement dated 15th December, 1998
We refer to Clause 29.1 of the above agreement (the "Loan Agreement").
[Name of Company] of [Registered Office] (Registered no. [ ]) agrees to become a
Nominated Borrower and to be bound by the terms of the Loan Agreement as a
Nominated Borrower in accordance with Clause 29.1 of the Loan Agreement.
This Agreement and the Loan Agreement will be read and construed as one
document.
Our address and number for notices for the purpose of Clause 27 is:
[ ].
This Agreement is governed by English law.
Yours faithfully
AUTHORISED SIGNATORY AUTHORISED SIGNATORY
[Proposed Nominated Borrower]
AUTHORISED SIGNATORY AUTHORISED SIGNATORY
EMAP plc
<PAGE> 91
88
SCHEDULE 6
FORM OF ADDITIONAL GUARANTOR AGREEMENT
ADDITIONAL GUARANTOR AGREEMENT
DATE :
PARTIES
1. [ ], a company incorporated in [ ],
of [address] (the "NEW GUARANTOR")
2. EMAP PLC, a company incorporated in England (number l), of l on its own
behalf and on behalf of each Guarantor (as defined in the Loan
Agreement referred to below)
3. BARCLAYS BANK PLC on its own behalf and on behalf of each Lender (as
defined in the Loan Agreement) (the "AGENT").
BACKGROUND
A Multi-currency Sterling Revolving Credit, Sterling Bill Acceptance and Dollar
Term Loan Facilities Agreement (the "LOAN AGREEMENT") was made on 15th December,
1998 between (1) EMAP plc, (2) the Lenders, (3) the Arrangers and (4) the Agent
(each as defined in the Loan Agreement). Under the terms of the Loan Agreement
the Lenders agreed to provide to the Borrowers credit facilities of pound
sterling 325,000,000 and U.S. $880,000,000.
Under Clause 18.11 of the Loan Agreement the New Guarantor is to become a
Guarantor.
The parties agree as follows:
1. INTERPRETATION
Unless a contrary intention is indicated, words and expressions defined
in the Loan Agreement will have the same meanings when used in this
Agreement. References to the Loan Agreement are to that agreement as
amended or supplemented.
2. CONDITIONS PRECEDENT
Clause 3 will take effect when the Agent has received all the items
listed in the Schedule in a form satisfactory to the Agent.
3. INCORPORATION OF ADDITIONAL GUARANTOR
With effect from the date of this Agreement the New Guarantor will:
<PAGE> 92
89
(a) become a party to the Loan Agreement as if it had been an
original signatory as a guarantor; and
(b) become a "GUARANTOR" within the definition in Clause 1.1 of
the Loan Agreement.
The New Guarantor, the Borrowers, each other Guarantor, the Agent and
each Lender agree to be bound by the Loan Agreement on this basis.
4. REPRESENTATIONS BY THE NEW GUARANTOR
The New Guarantor confirms that the representations in Clause 21.1 of
the Loan Agreement, if stated at the date of this Agreement with
reference to the New Guarantor and the facts subsisting on the date of
this Agreement, are true.
5. CONSTRUCTION
This Agreement and the Loan Agreement will be read and construed as one
document. References in the Loan Agreement to the Loan Agreement
(however expressed) will be read and construed as references to the
Loan Agreement and this Agreement.
6. NOTICES
The notice details of the New Guarantor for the purpose of Clause 27.4
are as follows:
Address: [ ]
Telephone number: [ ]
Fax number: [ ]
Attention: [ ]
7. LAW
This Agreement is to be governed by and construed in accordance with
English law. The New Guarantor intends to execute this Agreement as a
deed and agrees to execute and deliver it as a deed.
<PAGE> 93
90
THE SCHEDULE
CONDITIONS PRECEDENT
1. A copy of the Certificate of Incorporation and the Memorandum and
Articles of Association of the New Guarantor (or, if the New Guarantor
is not incorporated in England and Wales, a copy of equivalent
constitutional documents). Each copy must be certified by a director or
the secretary of the New Guarantor to be true, complete and in full
force and effect.
2. A copy of a resolution of the board of directors of the New Guarantor
approving the Facilities and the Guarantee, authorising the signature
and delivery of this Agreement and appointing Authorised Signatories.
The copy must be certified by a director or the secretary of the New
Guarantor to be true, complete and in full force and effect.
3. Specimen signatures of Authorised Signatories appointed by the
resolution referred to in paragraph 2 above. These signatures must be
certified by a director or the secretary of the New Guarantor to be
genuine.
4. Where the New Guarantor is not incorporated in England and Wales, a
legal opinion from counsel in the jurisdiction of incorporation of the
New Guarantor in form and substance satisfactory to the Agent.
5. A legal opinion from a firm of solicitors, acting as English legal
advisers to the Agent, in form and substance satisfactory to the Agent.
6. A copy of any other authorisation or other document which is necessary
in connection with the entry into and performance of the Additional
Guarantor Agreement, or the transactions contemplated by the Additional
Guarantor Agreement, or for the validity or enforceability of the
Additional Guarantor Agreement.
7. If produced, the latest audited accounts of the New Guarantor.
<PAGE> 94
91
SIGNATURES
[Name of New Guarantor]
Executed as a deed by the signatures
of a director and the secretary or of
two directors of the company
By: (Director)
By: (Director/Secretary)
EMAP PLC
By:
[AGENT]
By:
<PAGE> 95
92
SCHEDULE 7
FORM OF POWER OF ATTORNEY
To: Barclays Bank PLC
Date: [ ]
Dear Sirs,
Multi-currency Sterling Revolving Credit, Sterling Bill Acceptance and Dollar
Term Loan Facilities Agreement dated 15th December, 1998
1. We refer to the above agreement between you as Agent, us as a Borrower
and various other parties (the "Agreement"). Terms defined in the
Agreement shall have the same meaning herein.
2. The Agreement envisages that a Borrower shall ensure upon delivery of
any Acceptance Utilisation Request that the Agent has a sufficient
stock of blank signed Bills to enable it to proceed with the Acceptance
Utilisation.
3. We hereby appoint you our true and lawful attorney for and in our name
and on our behalf to do or execute all or any of the acts and things
set out below upon receipt of an Acceptance Utilisation Request from
us:
(a) to draw a Bill or Bills on our behalf;
(b) to sign on each requested Bill as drawer on our behalf and, if
appropriate to endorse on our behalf an appropriate number of
Bills for appropriate amounts (in accordance with the terms of
the Agreement) drawn upon you (such endorsement to be at your
sole discretion a blank endorsement or a special endorsement
(as such expressions are defined in the Bills of Exchange Act
1882) to the order of the party with whom you have arranged
discounting of such Bill or Bills); and
in accordance with an Acceptance Utilisation Request PROVIDED that the
aforesaid signature and endorsement shall be executed in your name as
our agent by the signature of two of your authorised signatories.
4. We ratify and confirm and agree to ratify and confirm everything you
shall do or purport to do by virtue of this Power of Attorney.
5. We authorise and empower you to acknowledge in our name and as our act
and deed this Power of Attorney and to do any and every other act and
thing which
<PAGE> 96
93
may be necessary or proper for authenticating and giving full effect to
this Power of Attorney according to the laws of England.
6. In consideration of you agreeing to pay to us all proceeds pursuant to
Clause 12 of the Agreement, this Power of Attorney is given to secure
the performance of the obligations owed by us to you under the
Agreement and is therefore irrevocable for as long as those obligations
remain undischarged.
7. This Power of Attorney shall be governed by and construed in accordance
with English law.
SIGNED as a deed by [ )
] acting by its Director and its)
Director/Secretary ) ..............Director
..............Director/
Secretary
<PAGE> 97
94
SCHEDULE 8
FORM OF BILL OF EXCHANGE
Face of Bill
No. for pound sterling.................
............................................. 19....
To
On ............................................. 19.... pay against this Bill of
Exchange to our order the sum of .............................................
for value received against current receivables due in respect of consumer
magazine publishing, the provision of business to business communications media
and operating radio and cable TV stations.
Accepted by:
For and on behalf of For and on behalf of
[Accepting Lender] [The Borrower]
...................... .....................
Authorised Signatory Authorised Signatory
REVERSE OF BILL
For and on behalf of
[The Borrower]
.....................
Authorised Signatory
<PAGE> 98
96
SCHEDULE 9
COSTS RATE
The Costs Rate is an addition to the interest rate on an Advance to compensate
the Lenders for the cost attributable to an Advance resulting from the
imposition from time to time under or pursuant to the Bank of England Act 1998
(the Act) and/or by the Bank of England and/or the Financial Services Authority
(the FSA) (or other United Kingdom governmental authorities or agencies) of a
requirement to place non-interest-bearing or Special Deposits (whether interest
bearing or not) with the Bank of England and/or pay fees to the FSA calculated
by reference to liabilities used to fund the Advance.
The Costs Rate will be the rate determined by the Agent to be equal to the
arithmetic mean (rounded upward, if necessary, to four decimal places) of the
respective rates notified by each of the Reference Banks to the Agent as the
rate resulting from the application (as appropriate) of the following formulae:
in relation to Sterling Advances: XL + S(L - D) + F x 0.01
------------------------
100 - (X + S)
in relation to other Advances: F x 0.01
--------
300
where on the day of application of a formula:
X is the percentage of Eligible Liabilities (in excess of any stated
minimum) by reference to which such Reference Bank is required under or
pursuant to the Act to maintain cash ratio deposits with the Bank of
England;
L is the percentage rate per annum at which sterling deposits for the
relevant Period are offered by such Reference Bank to leading banks in
the London Interbank Market at or about 11.00 a.m. (London time) on
that day;
F is the rate of charge payable by such Reference Bank to the FSA
pursuant to paragraph 2.02/2.03 of the Fees Regulations (but where for
this purpose, the figure at paragraph 2.02b/2.03b shall be deemed to be
zero) and expressed in pounds per pound sterling 1 million of the Fee
Base of such Reference Bank;
S is the level of interest-bearing Special Deposits, expressed as a
percentage of Eligible Liabilities, which such Reference Bank is
required to maintain by the Bank of England (or other United Kingdom
governmental authorities or agencies); and
<PAGE> 99
97
D is the percentage rate per annum payable by the Bank of England to such
Reference Bank on Special Deposits.
(X,L, S and D are to be expressed in the formula as numbers and not as
percentages. A negative result obtained from subtracting D from L shall be
counted as zero.)
If any Reference Bank fails to notify any such rate to the Agent, the Costs
Rate shall be determined on the basis of the rate(s) notified to the Agent by
the remaining Reference Bank(s).
The Costs Rate attributable to an Advance or other sum for any period shall be
calculated at or about 11.00 a.m. (London time) on the first day of such period
for the duration of such period.
The determination of the Costs Rate in relation to any period shall, in the
absence of manifest error, be conclusive and binding on all parties hereto.
If there is any change in circumstance (including the imposition of alternative
or additional requirements) which in the reasonable opinion of the Agent renders
or will render either of the above formulae (or any element thereof, or any
defined term used therein) inappropriate or inapplicable, the Agent (following
consultation with the Borrower and an Instructing Group) shall be entitled to
vary the same. Any such variation shall, in the absence of manifest error, be
conclusive and binding on all parties and shall apply from the date specified in
such notice.
For the purposes of this Schedule:
The terms "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" shall bear the
meanings ascribed to them under or pursuant to the Act or by the Bank
of England (as may be appropriate), on the day of the application of
the formula.
"FEE BASE" has the meaning ascribed to it for the purposes of, and
shall be calculated in accordance with, the Fees Regulations.
"FEES REGULATIONS" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998; or
(b) such regulations as from time to time may be in force,
relating to the payment of fees for banking supervision in
respect of periods subsequent to 31 March 1999.
Any reference to a provision of any statute, directive, order or
regulation herein is a reference to that provision as amended or
re-enacted from time to time.
<PAGE> 100
98
SCHEDULE 10
FORM OF LEGAL OPINION FROM ARRANGERS' ADVISER
To: The Agent and the Lenders (as at the date
of the Credit Agreement) [Date]
Dear Sirs,
EMAP plc (the "Company") - Multi-currency Sterling Revolving Credit, Sterling
Bill Acceptance and Dollar Term Loan Facilities Agreement
dated 15th December, 1998 (the "Credit Agreement")
We have received instructions from and participated in discussions with [ ] in
connection with the Credit Agreement.
Unless otherwise defined in this opinion, terms defined in the Credit Agreement
have the same meaning in this opinion.
For the purposes of this opinion we have examined the following documents:-
(a) a signed copy of the Credit Agreement;
(b) a certified copy of the memorandum and articles of association and
certificate of incorporation of the Company;
(c) a certified copy of the minutes of a meeting of the board of directors
of the Company held on [ ] establishing a committee of the
Board; and
(d) a certified copy of the minutes of a meeting of the committee of the
Board of the Company held on [ ].
On [ ], 1998, we carried out a search of the Company at the
Companies Registry. On [ ], 1998, we made a telephone search of the
Company at the winding-up petitions at the Companies court.
The above are the only documents or records we have examined and the only
searches and enquiries we have carried out.
We assume that:
(i) the Company is not unable to pay its debts within the meaning of
section 123 of the Insolvency Act, 1986 at the time it enters into the
Credit Agreement and will not as a consequence of the entry into and
performance of the Credit Agreement, be unable to pay its debts within
the meaning of that section;
<PAGE> 101
99
(ii) no step has been taken to wind up the Company or appoint a receiver in
respect of it or any of its assets although the searches of the
Companies Registry referred to above give no indication that any
winding-up order or appointment of a receiver has been made;
(iii) all signatures and documents are genuine;
(iv) all documents are and remain up-to-date;
(v) the correct procedure was carried out at the board and committee
meetings referred to in paragraphs (c) and (d) above; for example,
there was a valid quorum, all relevant interests of directors were
declared and the resolutions were duly passed at each of the meetings;
(vi) any restrictions on borrowings or guarantees in the Company's Articles
of Association would not be contravened by the entry into and
performance by the Company of the Credit Agreement;
(vii) the Credit Agreement has been duly executed on behalf of the Company by
the persons authorised by the resolutions passed at the meetings
referred to in paragraph (d) above; and
(viii) the Credit Agreement is a legally binding, valid and enforceable
obligation of the parties to it (other than the Company).
Subject to the qualifications set out below and to any matters not disclosed to
us, it is our opinion that, so far as the present laws of England are concerned:
(1) STATUS: the Company is a company incorporated with limited liability
under the laws of England and is not in liquidation.
(2) POWERS AND AUTHORITY: the Company has the corporate power to enter into
and perform the Credit Agreement and has taken all necessary corporate
action to authorise the execution, delivery and performance of the
Credit Agreement.
(3) LEGAL VALIDITY: The Credit Agreement constitutes the legally binding,
valid and enforceable obligation of the Company.
(4) NON-CONFLICT: The execution, delivery and performance by the Company of
the Credit Agreement to which it is a party will not violate any
provision of (i) any existing English law applicable to companies
generally, or (ii) the memorandum or articles of association of the
Company.
(5) CONSENTS: No authorisations of governmental, judicial or public bodies
or authorities in England are required by the Company in connection
with the performance, validity or enforceability of the Credit
Agreement.
<PAGE> 102
100
(6) TAXES: All payments due from the Company under the Credit Agreement may
be made without deduction of any United Kingdom taxes, if, in the case
of any interest, the person that made the Advance to which the interest
relates was,
(a) at the time of making the relevant Advance, a "bank" as
defined in section 840A of the Income and Corporation Taxes
Act 1988 and the person beneficially entitled to the interest
is within the charge to United Kingdom corporation tax as
respects that interest at the time the interest is paid; or
(b) resident in a country with which the United Kingdom has an
appropriate double taxation treaty under which that
institution is entitled to receive interest without deduction
or withholding of UK income tax and in respect of which the
Company has received a direction from the UK Inland Revenue
enabling it to make payments without deduction or withholding
of tax.
(1) REGISTRATION REQUIREMENTS: It is not necessary or advisable to file,
register or record the Credit Agreement in any public place or
elsewhere in England.
(2) STAMP DUTIES: No stamp, registration or similar tax or charge is
payable in England in respect of the Credit Agreement.
This opinion is subject to the following qualifications:
(i) This opinion is subject to all insolvency and other laws affecting the
rights of creditors or secured creditors generally.
(ii) No opinion is expressed on matter of fact.
(iii) We assume that no foreign law affects the conclusions stated above.
(iv) The term "ENFORCEABLE" means that a document is of a type and form
enforced by the English courts. It does not mean that each obligation
will be enforced in accordance with its terms. Certain rights and
obligations may be qualified by the non-conclusively of certificates,
doctrines of good faith and fair conduct, the availability of equitable
remedies and other matters, but in our view these qualifications would
not defeat your legitimate expectations in any material respect.
This opinion is given for your sole benefit and may not be relied upon by or
disclosed to any other person.
Yours faithfully,
<PAGE> 103
101
SCHEDULE 11
FORM OF COMPLIANCE CERTIFICATE
EMAP plc
Compliance with bank covenants at x
December 1998 Facility
Financial Covenant 23(A)
Consolidated Net Worth shall not at any time fall below an amount equal to pound
sterling 550,000,000.
Consolidated Net Worth x
Minimum threshold pound sterling 550 million
FINANCIAL COVENANT 23(B)
In respect of each period of twelve months ending on the dates to which the
Parent's half year and annual accounts are made up the ratio of Net Consolidated
Borrowings to Consolidated Earnings Before Interest and Tax will not exceed:
(i) up to and including 31st March, 2000, 4.00:1;
(ii) up to and including 31st March, 2002, 3.75:1; and
(iii) thereafter 3.50:1.
Net Consolidated Borrowings: Consolidated Earnings Before Interest and x : x
Tax
FINANCIAL COVENANT 23(C)
The aggregate of:
(i) Borrowed Monies Indebtedness of the Parent's Subsidiaries that are not
Guarantors (excluding inter-company loans from any member of the Group
and any Advances or Acceptance Utilisation under the Facilities); and
(ii) the principal amount secured by Encumbrances granted over assets of the
Parent or its Subsidiaries (ignoring for this purpose any Permitted
Encumbrances within the ambit of paragraphs (a), (b), (f) or (i) of the
definition thereof)
shall not at any time exceed 10 per cent. of Consolidated Net Worth at such
time.
<PAGE> 104
102
For this purpose only net Borrowed Monies Indebtedness incurred under any
notional pooling scheme to be granted by the Group for the management of the
Group's cash resources shall be taken into account and until the Clean-Up Date
Borrowed Monies Indebtedness of the Petersen Group in existence at the date of
the Agreement shall be ignored.
Borrowed Monies Indebtedness of Subsidiaries that are not Guarantors x
Maximum Threshold x
FINANCIAL COVENANT 23(D)
In respect of each period of twelve months ending on the dates to which the
Parent's half year and annual accounts are made up (the first such period ending
on 31st March, 1999), the ratio of Consolidated Earnings Before Interest and Tax
to Consolidated Net Interest Payable shall not fall below 3.50:1.
Consolidated Earnings Before Interest and Tax: Consolidated Net x : x
Interest Payable
We confirm (a) the amounts of Consolidated Net Worth, Net Consolidated
Borrowings and the aggregate of Borrowed Monies Indebtedness of our Subsidiaries
that are not Guarantors (excluding inter-company loans) and the amount secured
by Encumbrances as aforesaid, all as the date to which our accounts are drawn
up, being [ ]; (b) the amounts of Consolidated Earnings before Interest
and Tax and Consolidated Net Interest Payable, both for the twelve month period
ending on the date to which the Parent's accounts were made up; (c) to the
extent necessary for monitoring the undertakings set out in Clause 23, the
ratios that such amounts bear to each other. Supporting calculations are
provided on the attached schedules.
......................... ..........................
DIRECTOR DIRECTOR
<PAGE> 105
103
SCHEDULE 12
NOVATION CERTIFICATE
To: BARCLAYS BANK PLC as Agent
From: [THE EXISTING LENDER] and [THE NEW LENDER] Date:[ ]
EMAP plc - Multi-currency Sterling Revolving Credit Sterling Bill Acceptance and
Dollar Term Loan Facilities Agreement dated 15th December, 1998
(the "Agreement").
We refer to Clause 28.3 of the Agreement.
- - We [ ] (the "EXISTING LENDER") and [ ] (the "NEW LENDER") agree to the
Existing Lender and the New Lender novating all of the Existing
Lender's Commitment(s) and/or rights and obligations as are referred to
in the Schedule in accordance with Clause 28.4 of the Agreement.
- - The specified date for the purposes of Clause 28.4(C) of the Agreement
is [date of novation].
- - The facility office and address for notices of the New Lender for the
purposes of Clause 27 of the Agreement are set out in the Schedule.
- - This Novation Certificate is governed by English law.
THE SCHEDULE
COMMITMENT(S)/RIGHTS AND OBLIGATIONS TO BE NOVATED
[Details of the Commitment(s)/rights and obligations of the Existing Lender to
be novated].
[NEW LENDER]
[Facility Office Address for notices]
[Existing Lender] [New Lender] [BARCLAYS BANK PLC]
By: By: By:
Date: Date: Date:
<PAGE> 106
104
SCHEDULE 13
TIMETABLES
In this Schedule 13:
A = Agent
D = Acceptance Utilisation Date or Advance Date
D-[x] = x Business Days before the relevant Acceptance Utilisation
Date or Advance Date
L = Lender
REVOLVING CREDIT FACILITY
<TABLE>
<CAPTION>
TIME
-----------------------------------
CLAUSE EVENT STERLING ANY OTHER CURRENCY
----------- -------------------------------------- ---------- ------------------
<S> <C> <C> <C>
7.1 A receives Advance Request D-1 D-3
3.00 p.m. 3.00 p.m.
7.1 A notifies Ls of details of Advance D-1 D-3
Request and amount of each L's 5.00 p.m. 5.00 p.m.
Advance
8.2 L notifies A that it cannot fund in an _ D-2
Optional Currency 10:45 a.m.
Definition LIBOR fixing D D-2
11.00 a.m. 11.00 a.m.
_ A notifies Borrower of LIBOR D D-2
11:30 a.m. 11:30 a.m.
8.2 A notifies Borrower that Advance will _ D-2
not be made 11.30 a.m.
</TABLE>
<PAGE> 107
105
TERM LOAN FACILITY
<TABLE>
<CAPTION>
TIME
-----------------------------------
CLAUSE EVENT STERLING ANY OTHER CURRENCY
----------- -------------------------------------- ---------- ------------------
<S> <C> <C> <C>
7.1 A receives Advance Request D-1 D-3
9.3(A) A receives notice of selection of 3.00 P.M. 3.00 P.M.
Interest Period
7.1 A notifies Ls of details of Advance D-1 D-3
Request/Interest Period and (in case of
9.3(A) Clause 7.1) amount of each L's 5.00 P.M. 5.00 P.M.
Advance
8.2 L notifies A that it cannot fund in an _ D-2
Optional Currency 9.30 A.M.
DEFINITION LIBOR fixing D D-2
11.00 A.M. 11.00 A.M.
_ A notifies Borrower of LIBOR D D-2
11:30 A.M. 11:30 A.M.
8.2 A notifies Borrower that Advance will _ D-2
not be made 11.30 A.M.
</TABLE>
BILL ACCEPTANCE FACILITY - CLAUSE 12
<TABLE>
<CAPTION>
CLAUSE EVENT TIME
------ ------------------------------------------------------- ----------
<S> <C> <C>
12.1 A receives Acceptance Utilisation Request D-1
3.00 P.M.
12.3 A notifies LS of details of Acceptance Utilisation D-1
Request and Bills to be accepted by each L 5.00 P.M.
12.4 IF applicable, L notifies A of election to make a D
Revolving Advance 10.30 A.M.
12.7 IF applicable, L notifies A that A will not be required D
to discount Bills 10.30 A.M.
</TABLE>
<PAGE> 108
106
<TABLE>
<S> <C> <C>
12.5 A elects whether or not to purchase any Bills D
11.00 A.M.
DEFINITION Eligible Bill Discount Rate fixing D
11.00 A.M.
12.4 If applicable, LIBOR fixing D
11.00 A.M.
12.3 A notifies the Borrower and relevant Ls of Eligible D
Bill Discount Rate 11.30 A.M.
12.3 If applicable, A delivers Bills to Ls D
noon
</TABLE>
<PAGE> 109
107
SIGNATURES
Parent
EMAP PLC
Address: 1 Lincoln Court, Lincoln Road, Peterborough PE1 2RF
Telephone Number: 01733 568900
Fax Number: 01733 562636
Attention: Group Treasurer
By:
Name: Derek Wolmsley
Position: Company Secretary
LENDERS
BARCLAYS BANK PLC
Address: 54 Lombard Street, London
Telephone Number: 0171 699 5000
Fax Number: 0171 699 3717
Attention: Large Corporate Banking (f.a.o. Ian Moseley)
By:
Name: Ian Moseley
Position: Relationship Director
<PAGE> 110
108
DEN DANSKE BANK AKTIESELSKAB
Address: 75 King William Street, London EC4N 7DT
Telephone Number: 0171 410 8000
Fax Number: 0171 410 8001
Attention: Kieran Ryan/Alan Pettigrew
By:
Name: D W Roberts Kieran P Ryan
Position: Head of Syndications Manager, Syndications
DEUTSCHE BANK AG LONDON
Address: 6 Bishopsgate, London EC2
Telephone Number: 0171 545 7130
Fax Number: 0171 545 4638 or 4924
Attention: Roger Penn, Credit Administration
By:
Name: S K Malone J Burgess
Position: Senior Associate Director Director
ARRANGERS
BARCLAYS CAPITAL
Address: 5 The North Colonnade, Canary Wharf, London E14 4BB
Telephone Number: 0171 623 2323
Fax Number: 0171 773 4894
Attention: Global Syndications and Loan Distribution
<PAGE> 111
109
By:
Name: S. A. Boylan
Position: Director
DEN DANSKE BANK AKTIESELSKAB
Address: 75 King William Street, London EC4N 7DT
Telephone Number: 0171 410 8000
Fax Number: 0171 410 8001
Attention: Kieran Ryan/Alan Pettigrew
By:
Name: D W Roberts Kieran P Ryan
Position: Head of Syndications Manager, Syndications
DEUTSCHE BANK AG LONDON
Address: 6 Bishopsgate, London EC2
Telephone Number: 0171 545 7130
Fax Number: 0171 545 4638 or 4924
Attention: Roger Penn, Credit Administration
By:
Name: S K Malone J Burgess
Position: Senior Associate Director Director
<PAGE> 112
110
AGENT
BARCLAYS BANK PLC
Address: 5 The North Colonnade, Canary Wharf, London E14 4BB
Telephone Number: 0171 623 2323
Fax Number: 0171 773 6087
Attention: GSU re: Emap plc
By:
Name: S. A. Boylan
Position: Director
<PAGE> 1
CONFORMED COPY
Dated 15th December, 1998
EMAP PLC
AS BORROWER
THE LENDERS LISTED IN SCHEDULE 1
BARCLAYS CAPITAL
DEN DANSKE BANK AKTIESELSKAB
DEUTSCHE BANK AG LONDON
AS ARRANGERS
BARCLAYS BANK PLC
AS AGENT
---------------------------------------
LOAN AGREEMENT
pound sterling 360,000,000 BRIDGING Loan Facility
---------------------------------------
For EMAP PLC For the LENDERS
SLAUGHTER AND MAY Allen & Overy
35 BASINGHALL STREET One New Change
LONDON EC2V 5DB London EC4M 9QQ
<PAGE> 2
58
CONTENTS
CLAUSE PAGE
1. INTERPRETATION 1
2. THE FACILITY 11
3. THE LENDERS 12
4. REIMBURSEMENT OF INITIAL EXPENSES 12
5. AUTOMATIC CANCELLATION 13
6. ADVANCE OF FUNDS 13
7. INTEREST ON ADVANCES 14
8. REPAYMENT OF ADVANCES 15
9. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES 15
10. CHANGES OF CIRCUMSTANCES 17
11. PAYMENTS 20
12. LATE PAYMENT 22
13. SHARING AMONG LENDERS 23
14. REPRESENTATIONS 24
15. INFORMATION COVENANTS 26
16. GENERAL COVENANTS 26
17. EVENTS OF DEFAULT 28
18. EVIDENCE AND CERTIFICATES 31
19. NOTICES 32
20. ASSIGNMENT 33
21. WAIVERS AND AMENDMENTS 34
22. THE AGENT, THE ARRANGERS AND THE LENDERS 35
23. MISCELLANEOUS 39
<PAGE> 3
24. LAW 40
SCHEDULE 1 LENDERS AND COMMITMENTS 42
SCHEDULE 2 CONDITIONS PRECEDENT 43
SCHEDULE 3 FORM OF ADVANCE REQUEST 45
SCHEDULE 4 COSTS RATE 47
SCHEDULE 5 FORM OF LEGAL OPINION FROM LENDERS' ADVISER 49
SIGNATURES 52
<PAGE> 4
THIS AGREEMENT is made the 15th day of December, 1998
BETWEEN:
1. EMAP PLC, a company incorporated in England (number 43580), of 1 Lincoln
Court, Lincoln Road, Peterborough PE1 2RF as borrower;
2. THE LENDERS listed in Schedule 1, as lenders;
3. BARCLAYS BANK PLC, as agent; and
4. BARCLAYS CAPITAL, DEN DANSKE BANK AKTIESELSKAB and DEUTSCHE BANK AG LONDON,
as arrangers.
BACKGROUND
At the request of the Borrower, the Lenders are willing to provide a bridging
loan facility of up to pound sterling 360,000,000 to the Borrower on the terms
of this Agreement.
The parties agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ADVANCE" means the advance made, or to be made, under Clause 6.
"ADVANCE DATE" means the date, or proposed date, of the Advance.
"ADVANCE REQUEST" means a request signed by one Authorised Signatory of
the Borrower for the Advance, substantially in the form set out in
Schedule 3.
"AFFILIATE", in relation to any person, means a Subsidiary of that
person, a Holding Company of that person or another Subsidiary of that
Holding Company.
"AGENT" means Barclays Bank PLC in its capacity as agent for the
Lenders, acting through its office at 5 The North Colonnade, Canary
Wharf, London E14 4BB or any other office which it may notify to the
Borrower and the Lenders. If there is a change of Agent in accordance
with Clause 22.9, "AGENT" will instead mean the new Agent appointed
under that Clause.
"ARRANGERS" means Barclays Capital, Den Danske Bank Aktieselskab and
Deutsche Bank AG London in their capacity as arrangers of the Facility.
"AUTHORISED SIGNATORY" means any person authorised to sign documents on
behalf of the Borrower by virtue of a resolution of the Treasury
Committee of the Borrower, a certified copy of which has been delivered
to the Agent. A
<PAGE> 5
person will cease to be an Authorised Signatory upon notice by the
appointing party to the Agent.
"BORROWED MONIES INDEBTEDNESS" of any person means, without double
counting:
(A) the principal amount of all indebtedness of that person for
borrowed money,
(B) the principal amount of all indebtedness under any acceptance
credit opened on behalf of that person, or in relation to any
letter of credit issued for the account of that person,
(C) the aggregate principal amount advanced under any bills of
exchange for which that person is liable,
(D) the principal amount of all indebtedness of that person under
any bond, debenture, note or similar instrument,
(E) the nominal value of share capital in that person to the
extent that such share capital is redeemable prior to the date
falling two years after the Maturity Date,
(F) the net termination value of currency hedging transactions
which have the commercial effect of converting Borrowed Monies
Indebtedness or Cash Investments from one currency to another
currency,
(G) all payment obligations of that person under any finance lease
or deferred purchase price of assets where such deferral was
for the purpose of procuring financial accommodation,
(H) the face amount of any receivables sold or discounted (other
than on a non recourse basis),
(I) all liabilities of that person (actual or contingent) under
any guarantee, bond, security, indemnity or other agreement in
respect of any Borrowed Monies Indebtedness of any other
person, and
(J) any transaction having the commercial effect of a borrowing
and classified as a borrowing for the purpose of GAAP,
all determined in accordance with GAAP but excluding Borrowed Monies
Indebtedness and indebtedness incurred by the Borrower to any of its
Subsidiaries or Subsidiary Undertakings or by any of its Subsidiaries
or Subsidiary Undertakings to any member of the Group.
In the case of Borrowed Monies Indebtedness in currencies other than
sterling, the relevant amount shall be the sterling equivalent thereof
on the relevant date.
<PAGE> 6
"BORROWER" means EMAP plc.
"BREAKAGE AMOUNT" means in relation to a Lender's participation in the
Advance an amount equal to (a) the principal of that Lender's
participation in that Advance plus (b) interest accrued on the Advance
(or relevant part thereof) to the last day of the then current Interest
Period discounted at such normal commercial rates applicable at the
time notice of prepayment is given by the Borrower for deposits of an
amount and currency equal to the Advance plus interest accrued thereon
(or relevant part thereof) for the period from the time of prepayment
to the last day of the then current Interest Period as the relevant
Lender may reasonably determine.
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are open for general interbank business in London.
"CASH INVESTMENTS" means:
(a) cash (including cash with banks);
(b) bank deposits maturing within 12 months and money at call
with banks provided in each case that such banks have debt
securities outstanding with ratings at least as high as those
specified in item (d) below;
(c) amounts maturing within 12 months represented by certificates
of deposit and for tax deposit made with the Inland Revenue;
and
(d) the market value of debt securities (1) for which a
recognised market exists, (2) in respect of which a price is
ascertainable, (3) which have a maturity of up to 12 months,
(4) which are not encumbered in any way and (5) which have
either (i) a short term rating of at least 'A1' from Standard
& Poors or IBCA or 'P1' from Moodys or (ii) a long term
rating of at least 'A-' from Standard & Poors or IBCA or 'A3'
from Moodys or (iii) equivalent long or short term ratings
from other recognised rating agencies,
of the Group which are held in, or freely transferable back to, the
United Kingdom and readily available.
"CLEAN-UP DATE" means a date falling 180 days from the Unconditional
Date.
"COMMITMENT" means in relation to a Lender the amount set out opposite
its name in Schedule 1.
"CONSOLIDATED EARNINGS BEFORE INTEREST AND TAX" means the consolidated
earnings of the Group attributable to the specified period before
exceptional and extraordinary items (which will include acquisition
restructuring costs), the amortisation of goodwill, taxation, minority
interests, interest payable and receivable and any element attributable
to interest comprised in payments to
<PAGE> 7
lessors (or from lessees) under finance leases or to hirers (or from
customers) under hire-purchase agreements all determined in accordance
with GAAP.
"CONSOLIDATED NET WORTH" means the aggregate of the amounts paid-up or
credited as paid-up on the Borrower's issued share capital and the
amount of the consolidated capital and revenue reserves of the Group
(including any share premium account, capital redemption reserve and
any credit balance on the consolidated profit and loss account of the
Group) all as shown by the consolidated balance sheet and consolidated
profit and loss account of the Group as at the date of the Latest
Annual Accounts, but after adjusting for GAAP and after:
(a) deducting any debit balance on such consolidated profit and
loss account;
(b) deducting goodwill (including goodwill arising on
consolidation) and other intangible assets but excluding from
such deduction any goodwill arising on acquisitions after 31st
March, 1998 and all acquired publishing rights, titles,
exhibitions and licences;
(c) deducting all amounts attributable to minority interests in
the Borrower's Subsidiaries and Subsidiary Undertakings;
(d) deducting any sums set aside for taxation (other than deferred
taxation) to the extent that such sums are not provided for
therein;
(e) deducting any amounts distributed or proposed to be
distributed (except to any member of the Group by any of the
Borrower's Subsidiaries or Subsidiary Undertakings) out of
profits accrued prior to the date of such consolidated balance
sheet, to the extent that such distribution is not provided
for therein;
(f) making such adjustments during any financial year as may be
appropriate to reflect any addition to the Borrower's share
capital since the date of such Latest Annual Accounts. For
these purposes, any unissued shares in the Borrower which have
been unconditionally underwritten at the date of the
determination and scheduled to be issued within 60 days will
be treated as having been issued; and
(g) deducting any amounts attributable to upward revaluation of
any assets after 31st March, 1998 other than as a result of a
bona fide revaluation of such assets, all determined in
accordance with GAAP.
"COSTS RATE" means a rate per annum determined by the Agent and
notified to the Borrower. This rate will be applied to an outstanding
amount for a particular period. It will be calculated in accordance
with Schedule 4.
<PAGE> 8
"ENCUMBRANCE" means any mortgage, charge, pledge or lien or security
interest or any other arrangement having the effect of conferring
security including, without limitation, retention of title
arrangements.
"EVENT OF DEFAULT" has the meaning given in Clause 17.
"FACILITY" means the loan facility provided by this Agreement.
"FINANCIAL INDEBTEDNESS" means (without double-counting) any
indebtedness in respect of:
(a) borrowed money;
(b) any bond, debenture, note or similar instrument;
(c) any acceptance credit;
(d) the acquisition cost of any asset to the extent payable before
or after the time of acquisition or possession by the party
liable where the advance or deferred payment was arranged
primarily as a method of raising finance or financing the
acquisition of that asset;
(e) any lease entered into primarily as a method of raising
finance or financing the acquisition of the asset leased;
(f) receivables sold or discounted (other than on a non-recourse
basis);
(g) any amount raised under any other transaction having the
commercial effect of borrowing money and classified as a
borrowing for GAAP;
(h) any currency or interest rate swap or forward exchange
contract, floor, cap or collar arrangement or other derivative
instrument, and the amount of indebtedness in respect of the
transaction will be the net exposure (meaning the amount
payable by the party liable thereunder on termination or
closing out of such arrangements as determined on a mark to
market basis) of the relevant member of the Group; and
(i) any guarantee, indemnity or similar assurance against
financial loss of any person.
"GAAP" means accounting principles generally accepted and adopted in
the United Kingdom as at 31st March, 1998.
"GROUP" means the Borrower, its Subsidiaries and Subsidiary
Undertakings.
"HOLDING COMPANY" has the meaning described in section 736 of the
Companies Act 1985.
"INSTRUCTING GROUP" means, at any time, all the Lenders.
<PAGE> 9
"INTEREST PERIOD" means each period determined in accordance with
Clause 7.
"LATEST ANNUAL ACCOUNTS" means the annual audited consolidated accounts
of the Borrower for the year ended 31st March, 1998.
"LENDER" means a lender listed in Schedule 1 acting through the office
appearing under its name on the signature pages or any other office
which it may notify to the Agent by not less than 5 Business Days'
notice. The expression also includes a successor in title to a Lender.
"LIBOR" means in relation to the Advance or unpaid sum, on any day, the
rate per annum determined by the Agent to be equal to:-
(i) the rate per annum quoted at or about 11.00 a.m. on the
Quotation Date for such period on Telerate Page 3750 for such
period or, if such page or service shall cease to be
available, such other page or such other service (as the case
may be) for the purpose of displaying British Bankers
Association Interest Settlement Rates for sterling as the
Agent, after consultation with the Borrower, shall select,
provided that, if no such rate appears on the relevant page
for deposits in sterling and/or of the specified term, LIBOR
shall be determined in accordance with the provisions of
paragraph (ii) below; or
(ii) in any other case, (including any case where the proviso to
paragraph (i) above applies) the arithmetic mean (rounded
upwards to four decimal places) of the respective rates per
annum notified to the Agent by the Reference Banks as the rate
at which it is offering deposits in sterling for the specified
term to prime banks in the London Interbank Market at or about
11.00 a.m. on the Quotation Date for such period, and, for the
purpose of this definition, "SPECIFIED TERM" means the period
in respect of which LIBOR falls to be determined.
"LOAN" means the aggregate of the principal amount borrowed and not
repaid under the Facility.
"MATERIAL ADVERSE EFFECT" means any matter having a material adverse
effect on the ability of the Borrower to comply with its payment
obligations under this Agreement.
"MATERIAL SUBSIDIARY" means any Subsidiary or Subsidiary Undertaking of
the Borrower whose gross assets, net worth or earnings before interest
and tax (as determined in accordance with GAAP) exceeds 5 per cent. of
the consolidated gross assets of the Group (determined in accordance
with GAAP), the Consolidated Net Worth or, as the case may be, the
Consolidated Earnings Before Interest and Tax.
"MATURITY DATE" means the day falling 50 days after the date of this
Agreement.
<PAGE> 10
"OFFER" means the tender offer for the Petersen Shares made or to be
made by the Borrower (or on its behalf) as such offer may from time to
time be amended, extended, added to, revised, renewed or waived.
"OFFER DOCUMENT" means the documents to be sent by or on behalf of the
Borrower to shareholders in Petersen in respect of the Offer.
"PERMITTED ENCUMBRANCE" means:
(a) liens arising solely by operation of law or in the ordinary
course of business and any agreement for retention of title to
goods arising in the ordinary course of business;
(b) rights of set-off arising by operation of law or in the
ordinary course of trade or under pooling and netting
arrangements entered into by a member of the Group with banks
and other financial institutions in the ordinary course of its
business;
(c) all Encumbrances over or affecting any property where such
property is acquired by any member of the Group after the date
of this Agreement, but only if (i) such Encumbrance was not
created in contemplation of such acquisition and (ii) the
principal amount thereby secured has not been increased in
contemplation of, or since the date of, such acquisition;
(d) all Encumbrances over or affecting any property of any company
or other legal entity which becomes a Subsidiary or Subsidiary
Undertaking of the Borrower after the date hereof, where such
Encumbrance is created prior to the date on which such company
or other legal entity becomes a Subsidiary or Subsidiary
Undertaking of the Borrower but only if (i) such Encumbrance
was not created in contemplation of such company or legal
entity becoming a Subsidiary or Subsidiary Undertaking of the
Borrower and (ii) the principal amount thereby secured has not
been increased in contemplation of, or since the date of, such
company or other legal entity becoming a Subsidiary or
Subsidiary Undertaking of the Borrower;
(e) any Encumbrance which the Agent (acting on the instructions of
the Instructing Group) has at any time agreed shall be a
Permitted Encumbrance;
(f) any Encumbrance the principal amount secured by which does not
exceed 10 per cent. of the Consolidated Net Worth at the time
of vesting created over an asset within 30 days of the
acquisition thereof for the purpose of securing indebtedness
incurred to acquire and/or develop such asset;
(g) any Encumbrance securing Borrowed Monies Indebtedness incurred
by a member of the Group for the financing of a specific
project or projects
<PAGE> 11
where no other member of the Group has any liability, actual or
contingent, in any way related to such Borrowed Monies Indebtedness.
This exception will, however, only apply if the Encumbrance is created
on an asset of the relevant project and remains confined to that asset;
(h) any Encumbrance arising pursuant to an order of attachment,
distraint, garnishee or injunction restraining disposal of
assets or similar legal process (in respect of assets having a
value, in aggregate, of not more than pound sterling
5,000,000) arising in connection with court proceedings being
contested by the relevant member of the Group in good faith
with a reasonable prospect of success, provided that when
aggregated with the amount of all the assets secured by all
other Encumbrances falling within this paragraph (i) the
aggregate amount does not exceed 10 per cent. of the
Consolidated Net Worth;
(i) any Encumbrance (the "REPLACEMENT ENCUMBRANCE") created to
replace or renew or in substitution for any Encumbrance (the
"OLD ENCUMBRANCE") granted by a member of the Group referred
to in paragraph (c) or (d) above (whether upon a refinancing
or otherwise) where the Replacement Encumbrance is granted in
respect of the same asset as the Old Encumbrance and does not
secure an amount in excess of the amount secured on the Old
Encumbrance; and
(j) any Encumbrance (not falling within paragraphs (a) to (i)
above) the principal amount secured by which, when aggregated
with the principal amount secured by all other Encumbrances
falling within this paragraph (j), does not exceed 10 per
cent. of the Consolidated Net Worth;
"PETERSEN" means The Petersen Companies, Inc.
"PETERSEN GROUP" means Petersen and its Subsidiaries and Subsidiary
Undertakings.
"PETERSEN SHARES" means the existing issued and fully paid-up shares in
Petersen and any further shares in Petersen allotted or issued after
the date hereof (including, for the avoidance of doubt, both shares
allotted or issued as a result of the exercise of options granted under
any share schemes existing in respect of shares in Petersen and such
options themselves).
"POTENTIAL EVENT OF DEFAULT" means an event or state of affairs which
is mentioned in Clause 17 but which has not become an Event of Default
because a period has not elapsed and/ or a notice has not been given.
"PRESS RELEASE" means the press release issued by the Borrower or on
its behalf on announcement of the Offer and the Rights Issue.
"QUALIFYING BANK" means a bank for the purposes of section 349 Income
and Corporation Taxes Act 1988.
<PAGE> 12
"QUOTATION DATE" in relation to any period for which an interest rate
is to be determined hereunder means the first day of the relevant
Interest Period.
"REFERENCE BANKS" means, initially, the principal London offices of
Barclays Bank PLC, Den Danske Bank Aktieselskab and Deutsche Bank AG
London. The Agent, following consultation with the Borrower and the
Lenders, may replace a "REFERENCE BANK" with another Lender or an
Affiliate of a Lender. This replacement will take effect when notice is
delivered to the Borrower and the Lenders. The Agent shall be obliged
to seek a replacement for a Reference Bank if it no longer has a
Commitment.
"RESERVATIONS" means (i) the principle that equitable remedies are
remedies which may be granted or refused at the discretion of the
court, (ii) the limitation of validity and/or enforcement by laws
relating to bankruptcy, insolvency, liquidation, reorganisation, court
schemes, moratoria, administration and other laws generally affecting
the rights of creditors, (iii) the time barring of claims under the
Limitation Acts, (iv) defences of set-off or counterclaim and similar
principles, (v) where a party to this Agreement is vested with a
discretion or may determine a matter in its opinion, that party may be
required to exercise its discretion reasonably or be required to hold
that opinion on reasonable grounds, (vi) any determination or
certificate made or given pursuant to any provision of this Agreement
which provides for such determination or certificate to be shown to
have been incorrect, unreasonable, or arbitrary or not to have been
given or made in good faith, (vii) if an English court were to construe
any provision of this Agreement as being in the nature of a penalty,
such provision would not be held to be valid and binding, (viii) the
award of enforcement costs is a discretionary remedy and (ix)
undertakings to pay stamp duty may be void under the Stamp Act 1891.
"RIGHTS ISSUE" means the offer of shares in the Borrower by way of
rights to existing holders of shares as described in the Shareholders
Circular.
"SHAREHOLDERS CIRCULAR" means the circular to be sent by the Borrower
or on its behalf to its shareholders in connection with the Offer and
the Rights Issue.
"SUBSIDIARY" has the meaning described in section 736 of the Companies
Act 1985.
"SUBSIDIARY UNDERTAKING" has the meaning described in section 258 of
the Companies Act 1985.
"TOTAL COMMITMENTS" means the aggregate of the Commitments of all the
Lenders.
"UNCONDITIONAL DATE" means the date on which each of the conditions of
the Offer has been fulfilled or, alternatively, waived and the Offer is
declared unconditional in all respects.
<PAGE> 13
"UNDERWRITING AGREEMENT" means the Agreement between the Borrower and
J. Henry Schroder & Co. Limited and Bankers Trust International PLC
(trading as B.T. Alex Brown International) under which J. Henry
Schroder & Co. Limited and Bankers Trust International PLC underwrite
the Rights Issue.
1.2 INTERPRETATION OF CERTAIN REFERENCES
Unless a contrary intention is indicated:
(A) References to Clauses and Schedules are to Clauses
of, and the Schedules to, this Agreement. References
to paragraphs are to paragraphs in the same Clause.
(B) References to other documents include those documents
as they may be amended in the future.
(C) References to times are to London time.
(D) References to assets are to present and future assets
and include revenues.
(E) References to "pound sterling" AND to "sterling" are
to the lawful currency of the United Kingdom.
(F) References to fees or expenses include any value
added tax on those fees or expenses.
(G) References to a "regulation" includes any regulation,
rule, official directive, request or guideline
(whether or not having the force of law) of any
governmental body, agency, department or regulatory,
self-regulatory or other authority or organisation.
1.3 HEADINGS
All headings and titles are inserted for convenience only. They are to
be ignored in the interpretation of this Agreement.
1.4 CALCULATIONS
Interest and commitment fees will be calculated using the following
formula:
I = D x R x A
-------------
Y
where:
I = the interest or commitment fee accrued
<PAGE> 14
D = the number of days in the period for which the
interest or commitment fee is to be calculated,
including the first day but excluding the last day
unless it is market practice in the London inter-bank
market to do otherwise when market-practice shall
prevail
R = the rate of interest or commitment fee, expressed
as a fraction
A = the amount on which interest or commitment fee is
being calculated
Y = 365
Interest and commitment fee will be treated as accruing uniformly over
each period on a daily basis. In some cases, "R" or "A" may change
during a period for which the interest or commitment fee is to be
calculated. In those cases the interest or commitment fee will be
calculated for successive periods and then aggregated. These successive
periods will be the periods during which "R" and "A" were constant.
1.5 REIMBURSEMENTS
If a party wishes to claim reimbursement of any amount to which it is
entitled, it will deliver a demand to the reimbursing party. This will
set out the losses, expenses or other amounts to be reimbursed. It must
also specify the currency of reimbursement. The reimbursing party
agrees to pay those amounts to the party entitled to them no later than
five Business Days after the delivery of the demand to the reimbursing
party. Where there is an outstanding Event of Default, payment will
instead be due on delivery of this demand.
1.6 ARRANGERS
Barclays Capital is the investment banking division of Barclays Bank
PLC and all references to Barclays Capital include Barclays Bank PLC.
This paragraph does not affect the rights and obligations of Barclays
Bank PLC under this Agreement.
2. THE FACILITY
2.1 AMOUNT AND NATURE
The Facility is a bridging loan facility of pound sterling 360,000,000
under which a single Advance may be made by the Lenders to the
Borrower.
2.2 PURPOSE
The proceeds of the Facility will be used by the Borrower towards
payment of consideration to be provided by the Borrower (or on its
behalf) for the Petersen Shares acquired by it pursuant to the Offer or
otherwise and in respect of the cash cancellation of options.
<PAGE> 15
2.3 Without prejudice to the obligations of the Borrower under Clause
2.2, neither the Agent, the Arrangers nor the Lenders nor any of them
shall be obliged to investigate or concern themselves with the use or
application of amounts raised by the Borrower hereunder.
2.4 Availability
THE BORROWER MAY, AFTER 4TH JANUARY, 1999, BORROW UNDER THE FACILITY
AFTER THE AGENT HAS RECEIVED (I) ALL THE ITEMS LISTED IN PART 1 OF
SCHEDULE 2 IN A FORM SATISFACTORY TO THE AGENT AND (II) ALL THE ITEMS
LISTED IN PART 2 OF SCHEDULE 2, WITH ALL REFERENCES TO THE AGENT, THE
LENDERS OR THE TERMS OF THE FACILITY OR THIS AGREEMENT IN SUCH
DOCUMENTS IN A FORM APPROVED BY THE AGENT (SUCH APPROVAL NOT TO BE
UNREASONABLY WITHHELD). THE AGENT AGREES TO NOTIFY THE BORROWER AND THE
LENDERS PROMPTLY UPON SUCH ITEMS BEING RECEIVED.
2.5 EXPIRY OF AVAILABILITY
The Borrower may not borrow under the Facility after the Maturity Date.
3. THE LENDERS
3.1 RIGHTS AND OBLIGATIONS
The rights and obligations of each Lender under this Agreement
are separate and independent from the rights and obligations
of each other Lender. A Lender may take proceedings against
the Borrower on its own without joining any other Lender to
those proceedings.
3.2 FAILURE TO PERFORM
If a Lender fails to perform its obligations the Borrower will
have rights solely against that Lender. The obligations of the
Borrower to the Agent, the Arrangers and the other Lenders
will not be affected by this failure.
3.3 PARTICIPATIONS
The participation of the Lenders in the Advance will be pro
rata to their Commitments.
4. REIMBURSEMENT OF INITIAL EXPENSES
The Arrangers and the Agent have incurred and will incur
expenses in connection with the arrangement of the Facility.
The Borrower agrees to reimburse each of the Arrangers and the
Agent in relation to these expenses. The limit of the amount
of this reimbursement and the timing of payment are described
in the letter from the Arrangers to the Borrower dated the
same date as this Agreement.
<PAGE> 16
5. AUTOMATIC CANCELLATION
Any amount undrawn under the Facility at the end of the
Advance Date will be automatically cancelled and may not be
drawn.
6. ADVANCE OF FUNDS
6.1 NOTICE
When the Borrower wishes to borrow under the Facility, the
Borrower will send to the Agent an Advance Request specifying
the amount to be borrowed and the Advance Date. Unless
otherwise agreed between the Agent and the Borrower, the
Advance Date must be no sooner than two Business Days after
the day on which the Agent receives the Advance Request. For
this purpose, if the Agent receives the Advance Request on a
day which is not a Business Day or after 10.00 a.m. on a
Business Day, it may be treated as having received the request
on the following Business Day.
6.2 CONDITIONS TO BORROWING
The Lenders will only be obliged to make the Advance to the
Borrower if:
(A) the Facility is available in accordance with Clause
2.4;
(B) an Advance Request has been received by the Agent;
(C) there is no Event of Default or Potential Event of
Default which has occurred or is occurring on the
Advance Date or would result from the Advance being
made.
6.3 OBLIGATION TO ADVANCE FUNDS
If the requirements of paragraphs 6.1 to 6.2 are satisfied,
each Lender agrees to advance its participation in the Advance
to the Borrower. The Advance will be made on the Advance Date
specified in the Advance Request. If the Advance is not made
in full due to a fault of a Lender, then subject to the terms
of this Agreement, the relevant Lender agrees to reimburse the
Borrower for the reasonable amount of any losses and expenses
incurred as a result.
6.4 CONSEQUENCES OF THE ADVANCE NOT BEING MADE
If the Advance Request is delivered but no Advance is made, the Lenders
may incur losses and expenses as a result. The losses and expenses may
include those incurred in liquidating or otherwise utilising amounts
borrowed by the Lenders to fund the Advance. They may also include the
losses and expenses incurred in terminating commitments relating to the
funding or incurred in hedging open positions resulting from the
Advance not being made. The Borrower agrees to reimburse the Lenders
for the amount of these losses and
<PAGE> 17
expenses actually incurred. This Clause 6.4 does not apply to a Lender
if the Advance is not made by reason of a default of that Lender.
7. INTEREST ON ADVANCES
7.1 INTEREST PERIODS
The Advance will have a first Interest Period commencing on the Advance
Date. Subsequent Interest Periods will commence on the last day of the
preceding Interest Period.
7.2 DURATION OF INTEREST PERIODS
The Interest Period must be a period of up to 14 days.
7.3 SELECTION OF INTEREST PERIODS
(A) The Borrower may select an Interest Period in respect of the
Advance either in its Advance Request or, in the case of
second and subsequent Interest Periods, by separate notice to
the Agent on or before 10.00 a.m. on the first day of the
relevant Interest Period.
(B) When the Borrower does not select an Interest Period in
accordance with paragraph (A), the interest shall accrue on an
overnight basis.
7.4 ADJUSTMENT OF INTEREST PERIOD
(A) If any Interest Period shall end on a day which is not a
Business Day, it shall be extended to the next Business Day.
(B) Any Interest Period which would otherwise begin before but end
after the Maturity Date will end on the Maturity Date.
7.5 RATE OF INTEREST
The rate of interest applicable during an Interest Period will be a
rate per annum equal to LIBOR for that Interest Period plus the Costs
Rate.
7.6 PAYMENT OF INTEREST
The Borrower agrees to pay interest accrued on the Advance in arrear on
the last day of each Interest Period.
7.7 NOTIFICATION OF INTEREST RATE
The Agent will promptly notify the Lenders and the Borrower of the
determination of a rate of interest under this Agreement.
<PAGE> 18
8. REPAYMENT OF ADVANCES
8.1 The Borrower agrees to repay the Advance no later than the Maturity
Date.
8.2 To the extent that the borrower receives unconditionally any proceeds
from the Rights Issue, they shall be placed on deposit with the lenders
pro rata to their commitments until the next interest payment date at
which time they shall be applied in repayment of the facility. Such
deposits shall bear interest at a rate which would have been reasonably
obtainable by the borrower had deposits of equivalent amounts been
placed in the market with third party banks for a period expiring on
the next interest payment date. Each lender will notify the borrower
and the agent of the relevant rate (and the amount of interest that
will accrue) as soon as practicable after determination. Each lender
shall be entitled to set off amounts earned by way of interest on such
deposits against the borrower's obligations to pay interest on the
advance.
8.3 The Borrower may not repay the Advance early except in the manner
permitted or required in this Agreement.
9. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
(9.1) MARKET DISRUPTION - GENERAL
(A) Nature of market disruption: This Clause 9.1 applies if in
relation to the Advance any of the following is true:
(i) the Agent believes that there are no reasonable means
to ascertain LIBOR because of circumstances generally
applicable in the London inter-bank market. This
determination may only be made after consultation
with the Reference Banks; or
(ii) Lenders with Commitments exceeding 40 per cent. of
the Total Commitments notify the Agent that they
believe that, due to circumstances generally
applicable in the London inter-bank market, LIBOR
would not reflect accurately the cost to them in such
market of funding an amount equal to the Advance; or
(iii) LIBOR cannot be determined because fewer than two
Reference Banks provide quotations; or
(iv) Lenders with Commitments exceeding 40 per cent. of
the Total Commitments notify the Agent that they are
unable to fund the total amount borrowed in the
London inter-bank market because of circumstances
generally applicable in that market.
(B) NOTICE: The Agent agrees promptly to notify the Borrower if
paragraph (A) applies.
<PAGE> 19
(C) ALTERNATIVE INTEREST RATE ARRANGEMENTS: If the Agent delivers
a notice of market disruption under paragraph (B), each of the
following applies:
(i) The means of determining the rates of interest
applicable to the Facility will be suspended. Instead
the Borrower agrees to pay interest to the Lenders in
the manner requested by the Agent. A request by the
Agent may specify periods to be used for the
computation of interest. It must also specify the
rate of interest to apply for a period. This rate
will be the rate determined by the Agent (with the
prior agreement of the Lenders) to reflect the cost
excluding any cost to the extent reflected in the
Costs Rate to each Lender of funding for the period
plus the Costs Rate. In order to assist the Agent in
this determination each Lender agrees to provide to
the Agent any information which the Agent may
request. If this information is received by the Agent
within any time period reasonably specified by the
Agent it will be taken into account by the Agent in
making its determination.
(ii) The Borrower and the Agent agree to negotiate the
terms of an alternative arrangement for determining a
rate of interest for the Facility. The negotiations
will be carried on in good faith. Neither party is
bound to continue the negotiations after the date 30
days after the Borrower receives the Agent's notice.
If agreement is reached between the Borrower and the
Agent (with the prior agreement of the Lenders), the
rate of interest will be determined in accordance
with the agreement. Paragraph (i) will not apply to
the extent that it is expressly excluded by such
agreement.
(iii) If all the Lenders do not agree an alternative basis,
each Lender (through the Agent) shall certify on or
before the last day of the Interest Period to which
the notification relates an alternative basis for
maintaining its participation in the Advance and such
alternative basis may include an alternative method
of fixing the interest rate of alternative Interest
Periods but it must reflect the cost to the Lender of
funding its participation in the Advance from
whatever sources it may reasonably select plus the
Costs Rate, and each alternative basis so certified
shall be binding on the Borrower and the certifying
Lender and treated as part of the Agreement.
(iv) If the circumstances described in paragraph (A) cease
to apply, the Agent will notify the Borrower and the
Lenders. The notice will specify the transitional
arrangements proposed by the Agent (with the prior
agreement of the Lenders), in order for the means of
determining the rates of interest applicable to the
Facility to return to the means by which interest
rates are normally calculated under this Agreement.
The Borrower agrees to pay interest to the Lenders in
the manner described in this notice
<PAGE> 20
unless a different arrangement is agreed by the Agent and the
Borrower and approved by all the Lenders. In this case the
Borrower agrees to pay interest to the Lenders in the manner
agreed.
10. CHANGES OF CIRCUMSTANCES
10.1 ILLEGALITY
(A) NOTICE: Each Lender agrees to notify the Borrower as soon as
reasonably practicable if by reason of any change in
applicable law or regulation, or in the interpretation or
application of applicable law or regulation, in each case
after the date of this Agreement that Lender is or will be
acting illegally in relation to the Facility. The illegality
may relate to the performance of the Lender's obligations, the
maintenance of the Facility or the Lender's funding
arrangements or otherwise.
(B) CANCELLATION AND PREPAYMENT: If a Lender delivers a notice of
illegality the Commitment of that Lender will be cancelled on
the date of that notice. The Borrower agrees to repay the
participation of that Lender in each Advance made to it on the
last day of the Interest Period of that Advance during which
the notice is received, unless the Lender certifies that,
because of a legal requirement or regulation applicable to the
Lender, it must be repaid earlier. In this event the Borrower
shall prepay the appropriate proportion of the Breakage Amount
by reference to such participation on the date (or dates)
specified by the Lender.
10.2 INCREASED COSTS
(A) Types of increased costs: This Clause 10.2 applies where all
of (i), (ii) and (iii) are true:
(i) Either:
(a) there is a change after the date of this
Agreement in a legal or other requirement
applicable to the Lender or a change after the
date of this Agreement in its interpretation or
application; or
(b) a Lender or its Holding Company complies with a
direction or request of an authority which has
power or influence over the activities of the
Lender where the direction or request is made
after the date of this Agreement.
(ii) As a result, any of the following occurs:
(a) the Lender or its Holding Company incurs an
expense; or
(b) the Lender's or its Holding Company's effective
return from the Facility or on its overall
capital is reduced; or
<PAGE> 21
(c) any amount payable to the Lender or its Holding
Company is reduced; or
(d) the Lender or its Holding Company does not
recover an amount which would otherwise have
been paid to it.
No account will be taken of any of the following:
(1) Tax on the overall net income of the Lender
in the country in which it has its
principal office or the office through
which it is acting for the purposes of this
Agreement (or any withholding tax incurred
which, for the avoidance of doubt, shall be
dealt with in clause 10.3).
(2) Any loss, reduction or expense to the
extent reflected in the Costs Rate.
(iii) The losses, reductions and expenses arising as a result
are wholly or partly attributable to the Facility or the
arrangements made by the Lender in connection with the
Facility.
(B) NOTICE: Each Lender agrees to notify the Borrower through the
Agent as soon as practicable if it becomes aware that
paragraph (A) applies.
(C) PAYMENT OF ADDITIONAL AMOUNTS: The Borrower agrees to
reimburse each Lender for the losses, reductions and expenses
described in paragraph (A) or a pro rata proportion thereof to
the extent that the same are only partly attributable to the
Facility.
(D) PREPAYMENT: If a Lender delivers a notice of increased costs,
the Borrower may deliver a notice of prepayment to that
Lender. The Borrower agrees to prepay the participation of
that Lender in each Advance on a date specified in the notice
of prepayment. In this event the Borrower shall repay an
amount equal to the Breakage Amount for each Lender by
reference to such participation.
10.3 WITHHOLDING TAXES
(A) Withholdings and deductions: This Clause 10.3 applies if the
Borrower is required by law to make a payment under this
Agreement net of a withholding or deduction.
(B) NOTICE: The Borrower agrees to notify the Agent if it becomes
aware that paragraph (A) applies.
<PAGE> 22
(C) GROSSING UP: The Borrower agrees to increase the amount of any
payment which is subject to a withholding or deduction so that
the person entitled to the payment receives the same amount it
would have received if there had been no withholding or
deduction.
(D) PAYMENT OF TAX: The Borrower will pay to the appropriate
authority all amounts withheld or deducted by it. If a receipt
or other evidence of payment is issued by the relevant
authority after receipt of payment, the Borrower agrees to
deliver this to the Agent as soon as practicable after a
request for the same.
(E) PREPAYMENT: If paragraph (A) applies, the Borrower may deliver
a notice of prepayment to the Agent. This notice may relate to
the Advance (or part of the Advance) or the interest thereon,
in each case which is subject to the withholding or deduction.
The Borrower agrees to prepay the participation of the Lenders
in the Advance (or the part of it which is affected) on a date
specified in the notice of prepayment and a corresponding
portion of the relevant Commitment shall be cancelled. In this
event the Borrower shall repay an amount equal to the Breakage
Amount for each Lender by reference to such participation.
(F) TAX CREDITS: This paragraph applies if:
(i) the Borrower pays any additional amount under this Clause
10 (a "TAX PAYMENT");
(ii) a Lender effectively obtains a refund of tax, or obtains
and uses credit against tax, by reason of the Tax Payment
or the withholding or deduction that gave rise to the Tax
Payment (a "TAX CREDIT"); and
(iii) that Lender is able to identify the Tax Credit as being
attributable to the Tax Payment or such withholding or
deduction.
In this case the Lender agrees to reimburse to the Borrower
the amount that the Lender determines in good faith to be the
proportion of the Tax Credit which will leave the Lender
(after that reimbursement) in no better or worse position than
it would have been in if the Tax Payment had not been
required. The Lender has an absolute discretion as to whether
to claim any Tax Credit and, if it does claim, the extent,
order and manner in which it does so. The Lender is not
obliged to disclose any information regarding its tax affairs
or computations to the Agent or the Borrower.
10.4 INLAND REVENUE TREATMENT OF THE LENDERS
(A) Each Lender warrants that it is a Qualifying Bank at the date
of this Agreement or, if later, at the date it becomes a party
to the Facility and that it will remain, until it notifies the
Agent to the contrary, a
<PAGE> 23
Qualifying Bank and undertakes to notify the Agent immediately
after it becomes aware that it is not or will cease to be a
Qualifying Bank.
(B) The Borrower will not be required to pay increased amounts
under Clause 10.3 in relation to any interest if:
(i) the Lender is not or ceases to be a Qualifying Bank;
or
(ii) that interest is not beneficially owned by a person
who is within the charge to United Kingdom
corporation tax in respect of it; or
This paragraph (B) applies only insofar as a withholding or
deduction is due to the circumstances set out in (i) or (ii)
above. It does not apply where the circumstances described in
(i) or (ii) above are a result of a subsequent change in law
or concession or change in the interpretation or application
of law or concession. Each Lender undertakes to notify the
Agent immediately after it becomes aware of any change in the
circumstances described in (i) or (ii) above.
10.5 MITIGATION
This Clause 10.5 does not affect the obligations of the Borrower under
the other paragraphs of this Clause 10. If any of Clause 10.1, 10.2 or
10.3 applies to a Lender, that Lender will take all steps reasonably
open to it (including, without limitation, transferring the Facility to
another bank acceptable to the Borrower) to mitigate the effect of that
clause on the Borrower. The Lender will not, however, be obliged to do
anything which in its opinion (acting in good faith) would or would be
reasonably likely to have an adverse economic effect on it.
11 PAYMENTS
11.1 METHOD AND TIMING OF PAYMENTS
All payments under this Agreement must be made in immediately available
and freely transferable funds in sterling. Each payment must be for
value on the due date.
11.2 PAYMENTS THROUGH THE AGENT
All payments by the Borrower or by a Lender under this Agreement will
be made through the Agent to its account at such office or bank as it
may notify to the Borrower or the Lender for this purpose. The Agent
will pay on an amount received as soon as the Agent has ascertained
that it has been received.
11.3 PAYMENTS TO THE BORROWER
Each payment by the Agent to the Borrower will be made to the account
of the Borrower as the Borrower may notify to the Agent from time to
time.
<PAGE> 24
11.4 PAYMENTS TO THE LENDERS
Each payment by the Agent to each Lender will be made to such account
of that Lender as the Lender may notify to the Agent from time to time.
11.5 CHANGE OF ACCOUNT
The Borrower or a Lender may change any of its receiving accounts by
not less than five Business Days' notice to the Agent. The Agent may
change any of its receiving accounts by not less than five Business
Days' notice to the Borrower and each Lender.
11.6 REFUNDING OF PAYMENTS BY THE AGENT
This Clause 11.6 applies if the Agent makes a payment out in the
mistaken belief that it has received or will receive an incoming
payment on a particular day. In this case the person which received the
payment from the Agent agrees to return it on request. It will also
reimburse the Agent for all losses and expenses incurred by the Agent
as a result of the payment. This Clause 11.6 does not affect the rights
of the person which received the payment against the person which
failed to make the payment to the Agent.
11.7 NON-BUSINESS DAYS
If a payment would be due on a day other than a Business Day, the
payment obligation will be deferred to the next Business Day, unless
that day is in another calendar month. Where that next Business Day is
in the next calendar month, the payment obligation will be brought
forward to the last Business Day of the current calendar month.
Interest and commitment fee payments will be adjusted accordingly.
During any extension of the due date for payment of any principal,
interest is payable on the principal at the rate payable on the
original due date.
11.8 PAYMENT IN FULL
All payments made by the Borrower under this Agreement will be made
without set-off or counterclaim. No payment will be made net of a
withholding or deduction, unless this is required by law. In this
event, Clause 10.3 applies.
11.9 SET-OFF
If the Borrower owes money to a Lender under this Agreement, such
Lender may set off this obligation against any moneys deposited with
such Lender under Clause 8.2. This sub-clause applies even where
amounts owed by the Lender to the Borrower are not due and payable, if
there is an outstanding Event of Default or Potential Event of Default.
If the Lender sets off an obligation under this Agreement, it will
notify the Borrower promptly of the amount set off.
<PAGE> 25
11.10 PARTIAL PAYMENTS
(A) If in relation to the Facility the Agent receives a payment
insufficient to discharge all the amounts then due and payable
by the Borrower under this Agreement, the Agent shall apply
that payment towards the obligations of the Borrower in the
following order:
(i) first, in or towards payment pro rata of any unpaid
fees, costs and expenses of the Agent;
(ii) secondly, in or towards payment pro rata of any
accrued interest and fees due but unpaid under this
Agreement;
(iii) thirdly, in or towards payment pro rata of any
principal due but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other
sum due but unpaid under this Agreement.
(B) The Agent shall, if so directed by all the Lenders, vary the
order set out in sub-paragraphs (A)(ii) to (iv) above. The
Agent shall notify the relevant Borrower of any such
variation.
(C) Paragraphs (A) and (B) above shall override any appropriation
made by the Borrower.
12. LATE PAYMENT
12.1 DEFAULT INTEREST
The Borrower agrees to pay interest on all amounts unpaid by it under
this Agreement after their due date for payment. This interest will be
computed by reference to successive periods of a duration not exceeding
six months selected by the Agent (acting reasonably). The first of
these periods will start on the due date for payment of the unpaid
amount. The rate of interest applicable during each of these periods
will be a rate per annum equal to 1.8 per cent. plus LIBOR for that
period plus the Costs Rate. This interest will be paid in arrear on the
last day of each of these periods and on the date of payment of the
unpaid amount.
12.2 INDEMNITY
If the Borrower fails to make a payment on the due date, the Borrower
agrees to reimburse and indemnify the person entitled to the payment
for the losses and expenses (including loss of profit) that person
reasonably incurs, or will incur, as a result. The computation of these
losses and expenses will take into account any amount received under
Clause 12.1.
<PAGE> 26
13. SHARING AMONG LENDERS
13.1 NOTICE
If an amount due to a Lender under this Agreement is discharged other
than by payment through the Agent, that Lender (the "RECIPIENT") agrees
to notify the Agent. This may occur because of the exercise of a right
of set-off, by virtue of a combination of accounts or because of a
voluntary or involuntary payment by the Borrower direct to the
Recipient. The notification will provide details of the amount
discharged and will be delivered no later than 10 Business Days after
the discharge.
13.2 DETERMINATION BY THE AGENT
Where a Lender has issued a notice under Clause 13.1 the Agent will
determine what payments, if any, are due under Clause 13.4. This
determination will be made on the basis of the information contained in
all the notices delivered to the Agent under Clause 13.1. The
determination will be notified to the Borrower and the Lenders.
13.3 LITIGATION
In determining the amount due under Clause 13.4 no account will be
taken of an amount due to a Lender which has declined to participate in
legal proceedings which resulted in the payment described in Clause
13.1. This only applies if that Lender could have joined in the
proceedings or could have instituted its own proceedings, but failed to
do so.
13.4 PAYMENT TO THE AGENT
The Recipient agrees to pay to the Agent an amount calculated as
follows:
P = D (X - Y)
where
P = the amount payable to the Agent
D = the aggregate amount due to the Recipient out of which an amount
has been discharged
X = the fraction of D which has been discharged
Y = the fraction which has been discharged, if any, of the aggregate
amount due to the Lender which has the greatest proportion of that
amount still outstanding.
This amount will be paid no later than five Business Days after receipt
of a notice from the Agent under Clause 13.2.
<PAGE> 27
13.5 OBLIGATIONS OF THE BORROWER
Any amount due to the Recipient which would otherwise have been
discharged as described in Clause 13.1 will be treated as not having
been discharged to the extent of an amount which is or will be payable
under Clause 13.4 as a result. Accordingly the Borrower agrees to pay
this amount to the Recipient as if it had not been discharged. This
payment is required to be made whether or not the Agent has issued a
determination under Clause 13.2.
13.6 DISTRIBUTION
The Agent agrees to distribute to the Lenders the amount received by it
under Clause 13.4 as if that amount had been received from the Borrower
in discharge of the amount due under the Agreement. The Borrower will
then be treated as having paid that amount.
13.7 RECOVERY
This Clause 13.7 applies if an amount discharged as described in Clause
13.1 is recovered from, or is required to be repaid by, the Recipient.
In this case each Lender which received the benefit of a payment made
under Clause 13.4 agrees to repay to the Recipient the amount it
received. Each of these Lenders will also reimburse the Recipient for
any interest or other losses or expenses which the Recipient has
incurred in connection with the discharged amount or its recovery or
repayment. The rights and obligations of the parties shall be restored
to the position before any payment became due under Clause 13.4.
14. REPRESENTATIONS
14.1 INITIAL REPRESENTATIONS
The Borrower confirms that each of the following is true:
(A) NATURE: It is a company duly incorporated and validly existing
under the laws of England and Wales.
(B) POWERS: It has power to sign and deliver this Agreement and to
exercise its rights and perform its obligations under this
Agreement. The signature and delivery of this Agreement on its
behalf and the exercise of its rights and the performance of
its obligations under this Agreement have been duly
authorised.
(C) LEGAL VALIDITY: Its obligations described in this Agreement
are legal and valid and enforceable subject to the
Reservations.
(D) NON-CONFLICT: The signature and delivery of this Agreement on
its behalf and its exercise of rights and performance of
obligations under this Agreement:
<PAGE> 28
(i) are not prohibited by or will not contravene any law
or its Memorandum or Articles of Association; and
(ii) are not prohibited by, or will not contravene any or
do not constitute an event of default under, any
document or arrangement to which it is a party.
(E) RANKING OF OBLIGATIONS: Its financial obligations under this
Agreement rank at least equally with all its other present and
future unsecured and unsubordinated obligations. Certain
categories of its other obligations will, however, be
preferred in a liquidation by virtue of mandatory provisions
of statute. They will be ignored for the purposes of this
paragraph.
(F) NO EVENT OF DEFAULT: No Event of Default has occurred and
remains unremedied.
(G) NO BREACHES: No member of the Group is in breach of or default
under any agreement to which it is a party or which is binding
on it or any of its assets to an extent or manner which could
reasonably be expected to have a Material Adverse Effect.
(H) SECURITY: Execution and performance of its obligations under
the Agreement will not result in an Encumbrance.
(I) LITIGATION: Save as disclosed there is no litigation or other
proceedings current, or in so far as it is aware, pending or
threatened in writing against any member of the Group which
could reasonably be expected to have a Material Adverse
Effect. In investigating the affairs of the Petersen Group, no
litigation or other proceedings have come to its attention
which could reasonably be considered to be material in the
context of the Facility.
(J) COMPLIANCE WITH ENVIRONMENTAL LAWS: It is in compliance in all
respects material in the context of the Facility with
applicable laws relating to environmental matters.
(K) ACCOUNTS: The Latest Annual Accounts were prepared in
accordance with generally accepted published accounting
principles accepted in the United Kingdom at the time they
were prepared. They give a true and fair view of the assets
and liabilities of the Group as at the date to which they were
prepared and of the Group's results for the financial period
ended on that date. To the extent that generally accepted
accounting principles have changed since the previous
financial year the Latest Annual Accounts, either contain or
are accompanied by a commentary explaining the principal
differences.
<PAGE> 29
(L) EVENTS SINCE THE ACCOUNT DATE: Since 31st March, 1998, there
has been no material adverse change in the financial or
trading position of the Group taken as a whole.
(M) YEAR 2000: Any reprogramming required to permit the proper
functioning in and following the year 2000 of the computer
systems of the Group (excluding systems and equipment supplied
by others with which the systems of the Group are required to
interface) will be substantially completed by 30th September,
1999 except when a failure to do so could not reasonably be
expected to have a Material Adverse Effect.
14.2 REPETITION
The representations in Clauses 14.1(A), (B), (C), (D), (G), (I) (except
for the second sentence thereof), (J), (K) and (M) will be deemed
repeated in each Advance Request, on the making of the Advance and on
the first day of each Interest Period. This repetition will be with
reference to the facts on that day.
15. INFORMATION COVENANTS
The Borrower agrees to deliver each of the following to the Agent (upon
request in sufficient copies for all the Lenders):
(A) All information reasonably requested by the Agent;
(B) Notice of any Event of Default or any Potential Event of
Default immediately after the Borrower becomes aware of the
same; and
(C) If the Agent has reasonable grounds for suspecting that the
same might exist, confirmation that no Event of Default or
Potential Event of Default is outstanding, signed by two
Directors of the Borrower.
16. GENERAL COVENANTS
The Borrower agrees as follows:
(A) Ranking of Obligations: Its obligations to each Lender will
rank as provided for in Clause 14.1(E).
(B) DISPOSALS: It shall not, and will procure that none of its
Subsidiaries or Subsidiary Undertakings (either in a single
transaction or in a series of transactions whether related or
not) shall sell, transfer, lease, lend or otherwise dispose of
(such transactions being referred to as "disposals") all or
any part of its assets, except for:
(i) disposals of assets in the ordinary course of
business;
(ii) disposals to any member of the Group;
<PAGE> 30
(iii) disposals with the prior consent of on Instructing
Group (such consent not to be unreasonably withheld);
(iv) disposals of cash for purchases of assets in the
ordinary course of business and for the purchase of
the Petersen Shares;
(v) disposals of assets to the extent that the proceeds
therefrom are within 3 months before or after such
disposal, reinvested in or used to acquire shares or
assets in a business in a sector in which any member
of the Group is engaged at the time of the disposal;
(vi) disposals of assets to the extent that the proceeds
therefrom are within three months of such disposal,
used to repay or prepay the Facility; and
(vii) other disposals of assets which in each financial
year generate in aggregate 10 per cent. or less of
Consolidated Earnings Before Interest and Tax as at
the date of the Latest Annual Accounts.
(C) NEGATIVE PLEDGE: Neither it nor any of its Subsidiaries or
Subsidiary Undertakings will create or permit to subsist any
Encumbrance on the whole or any part of its assets other than
Permitted Encumbrances.
(D) INSURANCE: It shall maintain insurance cover with reputable
insurers or underwriters at a level and against such risks as
are usual for companies carrying on its business.
(E) CHANGE OF BUSINESS: It shall ensure that no substantial change
is made to the general nature of the business of the Group
taken as a whole.
(F) THE OFFER
The Borrower shall:
(i) to the extent that it has not already done so, issue
the Press Release within 2 Business Days of the date
of this Agreement;
(ii) until the earlier of the date the Offer lapses or is
finally closed, comply in all material respects with
the Financial Services Act 1986 and the Companies Act
1985 and all other applicable laws and regulations
relevant in the context of the Offer;
(iii) provide each of the Arrangers with such information
regarding the progress of the Offer and the Rights
Issue as it may reasonably request;
(iv) not issue any press release or make any statement
during the course of the Offer which contains any
information or reference concerning this Agreement or
the Lenders without first obtaining
<PAGE> 31
the prior approval of the information or reference
from the Arrangers, in each case such approval not to
be unreasonably withheld or delayed (it being
acknowledged that the SEC filing made in relation to
the Offer has already been approved);
(v) not declare the Offer unconditional as to acceptances
until it is entitled to acquire (whether pursuant to
the Offer or otherwise) more than 50 per cent. of the
Petersen Shares; and
(vi) ensure that Petersen is a wholly-owned Subsidiary of
the Parent within 150 days of the Unconditional Date.
(G) ENVIRONMENTAL LAWS: It will procure that all members of the
Group will comply with applicable laws relating to
environmental matters where non-compliance could reasonably be
expected to have a Material Adverse Effect, save that this
undertaking shall not apply to the Petersen Group until after
the Clean-up Date.
(H) DISCHARGE OF SECURITY: The Borrower shall ensure that all
Encumbrances in relation to the Petersen Group in existence on
the date that Petersen becomes a Subsidiary of the Borrower
will, to the extent that they are not Permitted Encumbrances
except by reason of paragraph (e) of the definition thereof,
be released as soon as practicable and in any event within 90
days of the Unconditional Date.
(I) ACQUISITIONS: The Borrower shall ensure that until 31st March,
2000 no member of the Group may acquire any asset (excluding
the Petersen Group and certain assets of the Curtco Freedom
Group) unless the aggregate debt element of the financing
costs of all acquisitions since the date of this Agreement is
less than pound sterling 200,000,000 (or its equivalent in
other currencies).
(J) UNDERWRITING AGREEMENT: The Borrower shall ensure that the
Underwriting Agreement will not be amended without the consent
of the Instructing Group. This prohibition does not apply to
amendments made to correct manifest errors.
17. EVENTS OF DEFAULT
17.1 EVENTS OF DEFAULT
Each of the following is an Event of Default:
(A) NON-PAYMENT OF SUMS DUE: The Borrower fails to pay an amount
due under this Agreement on its due date or (provided that
such failure is solely the result of any administrative or
technical error on the part of the Borrower or any bank)
within three Business Days of receiving written notice from
the Agent of non-payment.
<PAGE> 32
(B) BREACH OF ANY OTHER OBLIGATIONS: The Borrower fails to perform
any other obligation under this Agreement and
(i) if the failure is capable of remedy, it is not
remedied within 15 Business Days of the Borrower
receiving written notice (specifying that it is a
Potential Event of Default) from the Agent to remedy
the same; or
(ii) if the failure is not capable of remedy, notice that
it is an Event of Default is given to the Borrower by
the Agent.
However, neither the 15 Business Day grace period nor the requirement
to give notice will apply to a breach of Clause 16(B).
(C) UNTRUE REPRESENTATIONS: Any representation or warranty made,
or deemed repeated, by the Borrower in this Agreement is
incorrect in any material respect when made or deemed
repeated, and, if capable of remedy, it is not remedied within
15 Business Days.
(D) CROSS-DEFAULT: Any Financial Indebtedness of the Group
(excluding, until after the CleanUp Date, the Petersen Group)
exceeding pound sterling 25,000,000 (or the equivalent in
other currencies) in aggregate:
(i) is not paid or repaid when due or within any
applicable grace period; or
(ii) becomes (or is capable of being declared)
enforceable, redeemable or repayable prior to the due
date for payment thereof as a result of any actual
default (however described) by the relevant member of
the Group,
except, in either case, where there is a bona fide
dispute as to payment on the basis of favourable
independent legal advice or where such Financial
Indebtedness of the Petersen Group becomes or is
capable of being declared enforceable, redeemable or
repayable solely as a result of the Offer or any
agreement that may be entered into in connection with
the Offer.
(E) ENFORCEMENT OF SECURITY: A receiver is appointed or an
encumbrancer takes possession of or a distress, execution or
other process is levied or enforced upon the whole or a
substantial part of the assets of the Borrower or any Material
Subsidiary and, in the case of a distress, execution or other
process, is not discharged, dismissed or stayed within 15
Business Days.
(F) INABILITY TO PAY DEBTS: The Borrower or any Material
Subsidiary is unable to pay its debts as they fall due or
makes admission of the same within the meaning of sections
123(1)(e) or 123(2) of the Insolvency Act 1986 or suspends
making payments on all or any class of its debts or
<PAGE> 33
formally announces an intention to do so or a moratorium is
declared in respect of all or any class of its indebtedness.
(G) WINDING-UP ETC.: The Borrower or any Material Subsidiary takes
any corporate action or other steps are taken or legal
proceedings are started for:
(i) the winding-up, dissolution, liquidation or administration of
the Borrower or any Material Subsidiary, other than:
(a) a bona fide reconstruction or amalgamation of the
Borrower while solvent for which the Instructing
Group has given its prior approval (which shall not
be unreasonably withheld); or
(b) a voluntary solvent winding-up of a Subsidiary or
Subsidiary Undertaking of the Borrower where the
surplus assets of such Subsidiary or Subsidiary
Undertaking are distributed to another member of the
Group; or
(c) the presentation of a petition for winding-up by a
creditor on vexatious or frivolous grounds which is
discharged within 15 Business Days;
(ii) the composition, assignment or arrangement with any creditors
of the Borrower or any Material Subsidiary;
or
(iii) the appointment of an administrator, administrative receiver,
receiver, trustee or similar officer of its or of any or all
of its revenues and assets.
(H) MATERIAL ADVERSE CHANGE: There is an adverse change in the
financial condition of the Group taken as a whole which could
reasonably be expected to have a Material Adverse Effect.
(I) CESSATION OF BUSINESS: Other than in relation to a disposal
permitted by Clause 16(B) the Borrower or any Material
Subsidiary ceases to carry on its business.
(J) ANALOGOUS PROCEEDINGS: There occurs in relation to the
Borrower or any Material Subsidiary, in any country or
territory in which it carries on business, or to the
jurisdiction of whose courts it is subject any event which
corresponds in that country or territory with those mentioned
in paragraphs (F) and (G) subject to the same exceptions.
<PAGE> 34
(K) RELATED FACILITY: An event of default occurs under the
Facility Agreement dated the date of this Agreement between
the parties to this Agreement in respect of a pound
sterling325,000,000 multi-currency sterling revolving credit,
sterling bill acceptance and U.S.$880,000,000 term loan
facilities.
(L) UNLAWFULNESS: It becomes unlawful for the Borrower to perform
its payment obligations under this Agreement.
17.2 CONSEQUENCES OF AN EVENT OF DEFAULT
If an Event of Default occurs, the Agent may by notice to the Borrower:
(A) cancel the Facility and the Total Commitments; and/or
(B) demand immediate repayment of the Facility.
The Agent agrees to deliver a notice under this Clause 17.2 if an
Instructing Group instructs the Agent to do so. In the case of a demand
for repayment, the Borrower agrees to pay the Lenders in accordance
with the notice.
17.3 REPAYMENT
If there is an Event of Default, the Borrower agrees to pay on the date
repayment is due interest accrued on the Advance up to that date. If
the date repayment is due is not the last day of an Interest Period,
the Borrower will reimburse the Lender for the losses and expenses the
Lender has reasonably incurred, or will incur, as a result. The losses
and expenses may include those incurred in liquidating or otherwise
utilising amounts borrowed by the Lender to fund its participation in
the Loan. They may also include losses and expenses incurred in hedging
open positions resulting from the repayment.
17.4 INDEMNITY
If there is an Event of Default, the Borrower agrees to reimburse each
of the Agent and the Lenders for the losses and expenses it reasonably
incurs, or will incur, as a result, except where such losses or
expenses are caused by its misconduct or negligence.
18. EVIDENCE AND CERTIFICATES
18.1 EVIDENCE OF DEBT
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of the Advance (and the name of
the Lender to whom such sum relates), (b) the amount of all principal,
interest and other sums due or to become due from the Borrower to any
of the Lenders under the Facility and each Lender's share therein and
(c) the amount of any sum received or recovered by the Agent hereunder
and each Lender's share therein.
<PAGE> 35
18.2 CERTIFICATES
Each certificate delivered under this Agreement must contain reasonable
detail of the matters being certified, except that neither the Agent
nor any Lender is obliged to disclose its tax affairs or other
confidential information. Certificates delivered by the Agent will be
conclusive unless there is a proven error.
19. NOTICES
19.1 NATURE OF NOTICES
No notice delivered by the Borrower under this Agreement may be
withdrawn or revoked. Each notice delivered by it must be
unconditional. Unless this Agreement specifies otherwise, it must also
be given by an Authorised Signatory. All notices, consents,
certificates and other communications must be in writing.
19.2 DELIVERY OF NOTICES
Any notice or other communication given or made shall, if addressed as
set out in the signature page, in the absence of earlier receipt, be
deemed to have been duly given or made as follows:
(A) if in writing and delivered in person or by courier, on the
date it is delivered;
(B) if sent by facsimile transmission, on the date that
transmission is received in legible form (it being agreed that
the burden of proving receipt will be on the sender and will
not be met by a transmission report generated by the sender's
facsimile machine); and
(C) if sent by registered first class post or the equivalent
(return receipt requested), on the date that post is delivered
or its delivery is attempted.
Any notice or other communication given or made, or deemed to have been
given or made after the close of business on a Business Day will be
deemed not to have been given or made until the first following day
that is a Business Day.
19.3 NOTICES THROUGH THE AGENT
Each notice from the Borrower or a Lender will be delivered to the
Agent. The Agent agrees to pass on the details of notices received by
it to the appropriate recipient as soon as reasonably practicable.
19.4 ADDRESS DETAILS
Notices will be delivered to the address or number of the intended
recipient as set out on the signature page. The Borrower may change its
address or number
<PAGE> 36
by notice to the Agent. The Agent may change its address or number by
notice to the Borrower and each Lender.
20. ASSIGNMENT
20.1 BORROWER
The rights and obligations of the Borrower under this Agreement are
personal to it. Accordingly they are not capable of assignment.
20.2 LENDERS
(A) No Lender may assign, novate or otherwise transfer its rights
under the Facility in whole or in part (including by way of
sub-participation).
(B) If, at any time, any Lender transfers its facility office and,
at the time of such transfer, there arises an obligation on
the part of the Borrower under Clause 10 to pay to such Lender
any amount in excess of the amount it would have then been
obliged to pay but for such transfer, then the Borrower shall
not be obliged to pay the amount of such excess.
20.3 DISCLOSURE OF INFORMATION
(A) A Lender may disclose to one of its Affiliates:
(i) a copy of this Agreement; and
(ii) any information which that Lender has acquired under
or in connection with this Agreement,
but only if the recipient of the information has agreed to
keep that information confidential on the terms of paragraph
(B) below.
(B) Each Lender shall keep confidential and shall not, without the
prior consent of the Borrower, use any information (other than
information which is publicly available other than as a result
of a breach by that Lender of this paragraph (B)) supplied by
or on behalf of the Borrower under or in connection with this
Agreement otherwise than in connection with this Agreement.
However, the restriction set out in this paragraph (B) shall
not apply to, and each Lender shall be entitled to disclose,
information:
(i) in connection with any legal proceedings arising out
of or in connection with this Agreement; or
(ii) if required to do so by an order of a court of competent
jurisdiction whether under any procedure for discovering
documents or otherwise; or
<PAGE> 37
(iii) pursuant to any law or regulation in accordance with which
that Lender is require or accustomed to act; or
(iv) to a governmental, banking, taxation or other regulatory
authority of any competent jurisdiction, or
(v) to its accountants, legal advisers or other professional
advisers.
21. WAIVERS AND AMENDMENTS
21.1 WRITING REQUIRED
A waiver or amendment of a term of this Agreement will only be
effective if it is in writing.
21.2 AUTHORITY OF THE AGENT
If authorised by an Instructing Group, the Agent may grant waivers and
agree amendments with the Borrower. These waivers and amendments will
be granted on behalf of the Lenders and be binding on all of them,
including those which were not part of an Instructing Group. This
Clause 21.2 does not authorise the Agent to grant any waiver or agree
any amendment affecting any of the following:
(A) The amount of the Facility.
(B) The amount or method of calculation of interest if it might have
the effect of reducing any amount payable under this Agreement.
(C) The manner, currency or timing of repayment of the Loan or of the
payment of any other amount.
(D) An increase in any Commitment.
(E) The end of the period during which the Facility is available.
(F) The definition of "Instructing Group".
(G) Any requirement (including the one in this Clause 21.2) that all
the Lenders or a certain proportion of them consent to a matter or
deliver a notice.
(H) Clauses 3 (The Lenders), 13 (Sharing among Lenders) or 22 (The
Agent, the Arrangers and the Lenders).
Waivers or amendments affecting these matters require the consent of
all Lenders. Waivers or amendments affecting the obligations of the
Agent may not be made without its consent.
<PAGE> 38
21.3 EXPENSES
The Borrower agrees to reimburse the Agent and each Lender for the
expenses they reasonably incur as a result of any request made by the
Borrower to waive or amend a term of this Agreement.
22. THE AGENT, THE ARRANGERS AND THE LENDERS
22.1 The Arrangers and each of the Lenders hereby appoints the Agent to act
as its agent in connection herewith and irrevocably authorises the
Agent to exercise such rights, powers and discretions as are
specifically delegated to the Agent by the terms hereof and in
connection with the Facility together with all such rights, powers and
discretions as are reasonably incidental thereto.
22.2 THE AGENT MAY:
(A) assume that:
(i) any representation made by the Borrower in connection
herewith is true;
(ii) no event which is or may become an Event of Default
or Potential Event of Default has occurred; and
(iii) the Borrower is not in breach of or default under its
obligations hereunder
unless it has actual notice to the contrary from any Party;
(B) (i) assume that the facility office of each Lender is
that identified with its signature below until it has
received from such Lender a notice designating some
other office of such Lender to replace its facility
office and act upon any such notice until the same is
superseded by a further such notice; and
(ii) treat each Lender as a Lender entitled to payments
under this Agreement until it has received not less
than five Business Days' notice from that Lender to
the contrary;
(C) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or
services may to it seem necessary, expedient or desirable and
rely upon any advice so obtained;
(D) rely as to any matters of fact which might reasonably be
expected to be within the knowledge of the Borrower upon a
certificate signed by or on behalf of such Borrower;
(E) rely upon any communication or document reasonably believed by
it to be genuine;
<PAGE> 39
(F) refrain from exercising any right, power or discretion vested
in it as agent hereunder unless and until instructed by an
Instructing Group as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised,
as to the manner in which it should be exercised;
(G) refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding
arising out of or in connection with the Facility until it
shall have received such security as it may require (whether
by way of payment in advance or otherwise) for all costs,
claims, expenses (including legal fees) and liabilities which
it will or may expend or incur in complying with such
instructions;
(H) act as agent or trustee or in a fiduciary or other capacity on
behalf of any other group of banks or financial institutions
providing facilities to any member or members of the group or
any associated company of any such member without regard to
the effect of exercising or omitting to exercise its rights,
discretions, powers and duties in such capacity on the
interests of the Lenders, and act or omit to act in such
capacity as freely in all respects as if the Agent had not
been appointed to act as agent for the Lenders; and
(I) subscribe for, hold or become beneficially entitled to, and
dispose of, shares or securities, or options or other rights
to and interests in shares or securities in any member or
members of the Group or any associated company of any such
member (and, in each case, may do so without liability to
account).
22.3 The Agent shall:
(A) promptly inform each Lender of the contents of any notice or
document received by it in connection with the Facilities in
its capacity as Agent hereunder from the Borrower;
(B) promptly notify each Lender of the occurrence of any Event of
Default or any default by the Borrower in the due performance
of or compliance with its obligations under this Agreement of
which the Agent has actual knowledge or actual notice;
(C) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by an Instructing
Group, which instructions shall be binding on all the Lenders;
and
(D) if so instructed by an Instructing Group, refrain from
exercising any right, power or discretion vested in it as
agent hereunder.
22.4 Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
(A) be bound to enquire as to:
<PAGE> 40
(i) whether or not any representation made by the
Borrower in connection herewith is true;
(ii) the occurrence or otherwise of any event which is or
may become an Event of Default or Potential Event of
Default;
(iii) the performance by the Borrower of its obligations
hereunder; or
(iv) any breach of or default by the Borrower of or under
its obligations hereunder;
(B) be bound to account to the Lender for any sum or the profit
element of any sum received by it for its own account;
(C) be bound to disclose to any other person any information
relating to any member of the Group if such disclosure would
or might in its opinion constitute a breach of any law or
regulation or be otherwise actionable at the suit of any
person and the Agent shall be deemed not to have any actual
knowledge or actual notice of the contents of any information;
or
(D) be under any fiduciary duty towards any Lender or under any
obligations other than those for which express provision is
made herein.
If it is also a Lender, the Agent and the Arrangers have the same
rights and powers under the facilities as though it were not the Agent
or an Arranger.
22.5 To the extent that the Agent is not indemnified on demand by the
Borrower and without limiting the liability of the Borrower, each
Lender shall, from time to time on demand by the Agent, indemnify the
Agent against any and all costs, claims, expenses (including legal fees
and value added tax thereon) and liabilities which the Agent may incur,
otherwise than by reason of its own negligence or wilful misconduct, in
acting in its capacity as agent hereunder. The liability of each Lender
under this Clause 22.5 will be limited to the share of the total losses
and expenses which corresponds to that Lender's share of the Total
Commitments. If the losses or expenses are attributable to an activity
of the Agent which relates to only some of the Lenders the Agent may
instead notify the Lenders of a different sharing arrangement.
22.6 Neither the agent nor the arrangers accepts any responsibility for the
accuracy and/or completeness of any information supplied (including,
without limitation, the information memorandum) or representation made
by the borrower at any time, in each case whether written or oral, in
connection herewith or for the legality, effectiveness, adequacy or
enforceability of this agreement and the agent shall not be under any
liability as a result of taking or omitting to take any action or
failing to make any enquiries of whatever nature in relation to this
Agreement, save in the case of gross negligence or wilful misconduct.
<PAGE> 41
22.7 Each Party agrees that it will not assert or seek to assert against any
director, officer or employee of the Agent or of any Arranger any claim
it might have against any of them in respect of the matters referred to
in Clause 22.6.
22.8 The agent and the arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with the
borrower and the other members of the group.
22.9 The Agent may resign its appointment notwithstanding its irrevocable
appointment hereunder at any time without assigning any reason therefor
by giving not less than 30 days' notice of its intention to do so to
the Borrower and the Lenders. The Agent may be removed by notice given
by an Instructing Group to the Agent and the Borrower. In either case,
an Instructing Group may appoint a successor acceptable to the Borrower
during such notice period but if it does not appoint such a successor
the Agent may (with the agreement of the Borrower) do so. Any such
successor must be a reputable and experienced bank or other financial
institution with an office in London. Upon any such successor as
aforesaid being appointed and accepting such appointment (but not
before), the retiring Agent shall be discharged from any further
obligation hereunder (save as specified below) as such and its
successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if
such successor had been a party hereto in place of the retiring Agent.
The provisions of this Clause 22.9 shall continue in effect for the
benefit of the retiring Agent in respect of any actions taken or
omitted to be taken by it while it was acting as such Agent, but
subject thereto, and notwithstanding its retirement, the retiring Agent
shall remain liable for any action taken or omitted by it hereunder
while it was Agent. The retiring Agent shall make over to its successor
all such records as its successor requires to carry out its duties.
Notwithstanding the above, the Agent may resign its appointment
hereunder at any time by giving not less than 30 days' notice of its
intention to do so to the Borrower and the Lenders and may forthwith
appoint one of its affiliates as successor Agent.
22.10 It is understood and agreed by each Lender that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the members
of the Group and the Petersen Group and, accordingly, each Lender
warrants to the Agent and the Arrangers that it has not relied and will
not hereafter rely on either the Agent or the Arrangers:
(A) to check or enquire on its behalf into the adequacy, accuracy
or completeness of any information provided by and the
Borrower in connection with the Facility or the transactions
herein contemplated (whether or not such information has been
or is hereafter circulated to such Lender by the Agent or the
Arrangers); or
<PAGE> 42
(B) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of any member of the Group and the Petersen Group.
22.11 The Agent shall perform its agency functions hereunder through the
office identified with its signature below or such other office in
London (or, with the prior written consent of the Borrower, elsewhere)
as the Agent may from time to time select.
22.12 IN ACTING AS AGENT FOR THE LENDERS, THE AGENT'S AGENCY DIVISION SHALL
BE TREATED AS A SEPARATE ENTITY FROM ANY OTHER OF ITS DIVISIONS OR
DEPARTMENTS AND, NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS
CLAUSE 22.12, IF THE AGENT SHOULD ACT FOR ANY MEMBER OF THE GROUP IN
ANY CAPACITY IN RELATION TO ANY OTHER MATTER, ANY INFORMATION GIVEN BY
THAT MEMBER OF THE GROUP TO THE AGENT IN SUCH OTHER CAPACITY MAY BE
TREATED AS CONFIDENTIAL BY THE AGENT.
23. MISCELLANEOUS
23.1 EXERCISE OF RIGHTS
If the Agent or a Lender does not exercise a right or power when it is
able to do so, this will not prevent it exercising that right or power.
When it does exercise a right or power, it may do so again in the same
or a different manner. The Agent's and the Lenders' rights and remedies
under this Agreement are in addition to any other rights and remedies
it may have. Those other rights and remedies are not affected by this
Agreement.
23.2 COUNTERPARTS
There may be several signed copies of this Agreement. There is intended
to be a single Agreement and each signed copy is a counterpart of that
Agreement.
23.3 ENFORCEMENT COSTS
The Borrower shall within 7 days of demand pay to each Lender, the
Agent or an Arranger the amount of all costs and expenses (including
legal fees) incurred by it in connection with the enforcement of, or
the preservation of any rights under, this Agreement.
23.4 ACQUISITION FINANCING INDEMNITY
(A) The Borrower shall within 5 Business Days of demand indemnify
the Agent, each of the Arrangers and each Lender against any
loss or liability which that Party suffers or incurs as a
consequence of any litigation proceeding arising, pending or
threatened against the Party as a result of the Offer (whether
or not made) or of it agreeing to finance or refinance any
acquisition by the Borrower or any person acting in concert
with the Borrower of any Petersen Shares or arising out of the
<PAGE> 43
use of proceeds of this Facility ("relevant litigation")
except to the extent caused by its negligence or misconduct.
(B) The relevant Party shall notify the Borrower promptly upon
becoming aware, and in reasonable detail, of any relevant
litigation and shall keep the Borrower informed of its
progress.
(C) The relevant Party shall conduct any relevant litigation in
good faith and will give careful consideration to the views of
the Borrower in relation to the appointment of professional
advisers and the conduct of the litigation taking into account
(to the extent practicable) both its interests and the
interests of the Borrower.
(D) The relevant Party may only concede or compromise any claim in
respect of any relevant litigation if it is acting reasonably
and has consulted the Borrower before so doing.
(E) Notwithstanding paragraphs (A) to (D) above, a relevant Party
is not required to disclose to the Borrower any matter in
respect of which it is under a duty of non-disclosure or which
is subject to any attorney/client privilege, or which relates
to that Party's policy. Any information disclosed by a Party
to the Borrower under this Clause 23.4 shall be subject to the
same conditions of confidentiality as those set out in Clause
20.5 (Disclosure of information) in relation to disclosure to
potential transferees.
23.5 STAMP DUTIES
The Borrower shall pay and forthwith on demand indemnify each Lender or
the Agent or an Arranger against any liability it incurs in respect of
any stamp, registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of this
Agreement.
23.6 SEVERABILITY
If a provision of this Agreement 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 this Agreement; or
(B) the legality, validity or enforceability in other
jurisdictions of that or any other provision of this
Agreement.
24. LAW
This Agreement is to be governed by and construed in accordance with
English law.
<PAGE> 44
IN WITNESS whereof this Agreement has been signed on behalf of the
Borrower and the Lenders.
<PAGE> 45
SCHEDULE 1
LENDERS AND COMMITMENTS
LENDER COMMITMENT
[pound sterling]
----------------
BARCLAYS BANK PLC 120,000,000
DEN DANSKE BANK AKTIESELSKAB 120,000,000
-----------
DEUTSCHE BANK AG LONDON 120,000,000
-----------
360,000,000
===========
<PAGE> 46
40
SCHEDULE 2
CONDITIONS PRECEDENT
Part 1
General
1. A copy of the Memorandum and Articles of Association and Certificate of
Incorporation of the Borrower. The copy must be certified by a director
or the secretary of the Borrower to be true, complete and in full force
and effect.
2. A copy of a resolution of the board of directors of the Borrower
appointing the Treasury Committee and granting it authority to enter
into this Facility on behalf of the Borrower. A copy of a resolution of
the Treasury Committee approving the Facility, authorising the
signature and delivery of this Agreement and associated documents and
appointing Authorised Signatories. The copies must be certified by a
director or the secretary of the Borrower to be true, complete and in
full force and effect.
3. Specimen signatures of Authorised Signatories appointed by the
resolution referred to in paragraph 2 above. These signatures must be
certified by a director or the secretary of the Borrower to be genuine.
4. A legal opinion from Allen & Overy, legal advisers to the Arrangers, in
the form set out in Schedule 5.
5. Confirmation from Lloyds TSB Registrars that all proceeds of the Rights
Issue received by Lloyds TSB Registrars will be paid to the Lenders as
soon as they are received.
6. A certificate from a director of the Borrower confirming that on the
assumption that the resolution referred to in paragraph 2 of Part 2
below is passed utilisation of the Facility in full would not cause any
borrowing limit binding on it to be exceeded and that all defaults that
may have been caused in the Borrower's existing banking facilities as a
result of the Offer have been waived.
7. A copy of the Underwriting Agreement. The copy must be certified by a
director or the secretary of the Borrower to be genuine and complete.
PART 2
OTHER DOCUMENTATION
1. A copy of the Offer Document, the Shareholders Circular and the Press
Release. The copies must be certified by a director or the secretary of
the Borrower to be genuine and complete.
2. Evidence that the Borrower's shareholders have approved the acquisition
of Petersen and the increase in the Borrower's borrowing powers.
<PAGE> 47
41
3. Evidence that the Borrower, or its subsidiary, has accepted for payment
the Petersen Shares sufficient to satisfy the Minimum Condition (as
defined in the Offer) tendered and not withdrawn under the Offer or
under a stockholders agreement dated 15th December, 1998.
4. Evidence that the bilateral loan facilities entered into by the
Borrower with various banks on or around 30th November, 1998 have been
cancelled with effect from the Unconditional Date.
5. Evidence that the Rights Issue has become unconditional and the new
shares admitted to listing in accordance with section 7.1 of the rules
of the London Stock Exchange.
6. Confirmation that waiting periods under the Hart Scott Rodino Anti
Trust Improvement Act 1976 (as amended) and any regulations made under
it in relation to the Offer having expired.
7. A copy of the Petersen Solicitation/Recommendation Statement on
Schedule 14 D-9.
8. Evidence that all necessary regulatory approvals for the Offer and the
Rights Issue have been received.
9. Evidence that all conditions to the Underwriting Agreement have been
satisfied or waived.
<PAGE> 48
42
SCHEDULE 3
FORM OF ADVANCE REQUEST
[Date]
Barclays Bank PLC
[Address]
Dear Sirs
pound sterling BRIDGING FACILITY DATED 15TH DECEMBER, 1998
We refer to the above agreement (the "Agreement"). Terms defined in the
Agreement have the same meaning in this confirmation.
We would like the Lenders to make the Advance under the Agreement as follows:
Advance Date:
Amount of the Advance:
Interest Period:
Settlement Instructions:
Payments by EMAP
Bank
Sort Code/Swift Code
Account number
Account name
Payments to EMAP
Bank
Sort Code/Swift Code
Account number
Account name
<PAGE> 49
43
We confirm that on [date of request] and on the Advance Date there was and will
be no Event of Default or Potential Event of Default which has occurred or is
occurring or would result from the Advance.
Yours faithfully
AUTHORISED SIGNATORY
<PAGE> 50
44
<PAGE> 51
45
SCHEDULE 4
COSTS RATE
The Costs Rate is an addition to the interest rate on an Advance to compensate
the Lenders for the cost attributable to an Advance resulting from the
imposition from time to time under or pursuant to the Bank of England Act 1998
(the Act) and/or by the Bank of England and/or the Financial Services Authority
(the FSA) (or other United Kingdom governmental authorities or agencies) of a
requirement to place non-interest-bearing or Special Deposits (whether interest
bearing or not) with the Bank of England and/or pay fees to the FSA calculated
by reference to liabilities used to fund the Advance.
The Costs Rate will be the rate determined by the Agent to be equal to the
arithmetic mean (rounded upward, if necessary, to four decimal places) of the
respective rates notified by each of the Reference Banks to the Agent as the
rate resulting from the application (as appropriate) of the following formula:
XL + S(L - D) + F x 0.01
------------------------
100 - (X + S)
where on the day of application of the formula:
X is the percentage of Eligible Liabilities (in excess of any
stated minimum) by reference to which such Reference Bank is
required under or pursuant to the Act to maintain cash ratio
deposits with the Bank of England;
L is the percentage rate per annum at which sterling deposits
for the relevant Interest Period are offered by such
Reference Bank to leading banks in the London Interbank
Market at or about 11.00 a.m. (London time) on that day;
F is the rate of charge payable by such Reference Bank to the
FSA pursuant to paragraph 2.02/2.03 of the Fees Regulations
(but where for this purpose, the figure at paragraph
2.02b/2.03b shall be deemed to be zero) and expressed in
pounds per pound sterling 1 million of the Fee Base of such
Reference Bank;
S is the level of interest-bearing Special Deposits, expressed
as a percentage of Eligible Liabilities, which such
Reference Bank is required to maintain by the Bank of
England (or other United Kingdom governmental authorities or
agencies); and
D is the percentage rate per annum payable by the Bank of
England to such Reference Bank on Special Deposits.
<PAGE> 52
46
(X, L, S and D are to be expressed in the formula as numbers and not as
percentages. A negative result obtained from subtracting D from L shall be
counted as zero.)
If any Reference Bank fails to notify any such rate to the Agent, the Costs Rate
shall be determined on the basis of the rate(s) notified to the Agent by the
remaining Reference Bank(s).
The Costs Rate attributable to an Advance or other sum for any period shall be
calculated at or about 11.00 a.m. (London time) on the first day of such period
for the duration of such period.
The determination of the Costs Rate in relation to any period shall, in the
absence of manifest error, be conclusive and binding on all parties hereto.
If there is any change in circumstance (including the imposition of alternative
or additional requirements) which in the reasonable opinion of the Agent renders
or will render either of the above formulae (or any element thereof, or any
defined term used therein) inappropriate or inapplicable, the Agent (following
consultation with the Borrower and an Instructing Group) shall be entitled to
vary the same. Any such variation shall, in the absence of manifest error, be
conclusive and binding on all parties and shall apply from the date specified in
such notice.
For the purposes of this Schedule:
The terms "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" shall bear the
meanings ascribed to them under or pursuant to the Act or by the Bank
of England (as may be appropriate), on the day of the application of
the formula.
"FEE BASE" has the meaning ascribed to it for the purposes of, and
shall be calculated in accordance with, the Fees Regulations.
"FEES REGULATIONS" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998; or
(b) such regulations as from time to time may be in force,
relating to the payment of fees for banking supervision in
respect of periods subsequent to 31 March 1999.
Any reference to a provision of any statute, directive, order or
regulation herein is a reference to that provision as amended or
re-enacted from time to time.
<PAGE> 53
47
<PAGE> 54
48
SCHEDULE 5
FORM OF LEGAL OPINION FROM LENDERS' ADVISER
To: The Agent and the Lenders (as at the date of the Credit Agreement)
[Date]
Dear Sirs,
EMAP plc (the "Company") - Bridging Facility Agreement
dated 15th December, 1998 (the "Credit Agreement")
We have received instructions from and participated in discussions with [ ] in
connection with the Credit Agreement.
Unless otherwise defined in this opinion, terms defined in the Credit Agreement
have the same meaning in this opinion.
For the purposes of this opinion we have examined the following documents:-
(a) a signed copy of the Credit Agreement;
(b) a certified copy of the memorandum and articles of association
and certificate of incorporation of the Company;
(c) a certified copy of the minutes of a meeting of the board of
directors of the Company held on [ ] establishing a
committee of the Board; and
(d) a certified copy of the minutes of a meeting of the committee
of the Board of the Company held on [ ].
On [ ], 1998, we carried out a search of the Company at the Companies
Registry.
On [ ], 1998, we made a telephone search of the Company at the winding-up
petitions at the Companies court.
The above are the only documents or records we have examined and the only
searches and enquiries we have carried out.
We assume that:
(i) the Company is not unable to pay its debts within the meaning
of section 123 of the Insolvency Act, 1986 at the time it
enters into the Credit Agreement and will not as a consequence
of the entry into and performance of the Credit Agreement, be
unable to pay its debts within the meaning of that section;
(ii) no step has been taken to wind up the Company or appoint a
receiver in respect of it or any of its assets although the
searches of the Companies Registry;
<PAGE> 55
49
referred to above give no indication that any winding-up order
or appointment of a receiver has been made;
(iii) all signatures and documents are genuine;
(iv) all documents are and remain up-to-date;
(v) the correct procedure was carried out at the board and
committee meetings referred to in paragraphs (c) and (d)
above; for example, there was a valid quorum, all relevant
interests of directors were declared and the resolutions were
duly passed at each of the meetings;
(vi) any restrictions on borrowings or guarantees in the Company's
Articles of Association would not be contravened by the entry
into and performance by the Company of the Credit Agreement;
(vii) the Credit Agreement has been duly executed on behalf of the
Company by the persons authorised by the resolutions passed at
the meetings referred to in paragraph (d) above; and
(viii) the Credit Agreement is a legally binding, valid and
enforceable obligation of the parties to it (other than the
Company).
Subject to the qualifications set out below and to any matters not
disclosed to us, it is our opinion that, so far as the present laws of
England are concerned:
(1) STATUS: the Company is a company incorporated with limited
liability under the laws of England and is not in liquidation.
(2) POWERS AND AUTHORITY: the Company has the corporate power to
enter into and perform the Credit Agreement and has taken all
necessary corporate action to authorise the execution,
delivery and performance of the Credit Agreement.
(3) LEGAL VALIDITY: The Credit Agreement constitutes the legally binding,
valid and enforceable obligation of the Company.
(4) NON-CONFLICT: The execution, delivery and performance by the Company of
the Credit Agreement to which it is a party will not violate any
provision of (i) any existing English law applicable to companies
generally, or (ii) the memorandum or articles of association of the
Company.
(5) CONSENTS: No authorisations of governmental, judicial or public bodies
or authorities in England are required by the Company in connection
with the performance, validity or enforceability of the Credit
Agreement.
(6) TAXES: All payments due from the Company under the Credit Agreement may
be made without deduction of any United Kingdom taxes, if, in the case
of any interest, the person that made the Advance to which the interest
relates was, at
<PAGE> 56
50
the time of making the relevant Advance, a "bank" as defined in section
840A of the Income and Corporation Taxes Act 1988 and the person
beneficially entitled to the interest is within the charge to United
Kingdom corporation tax as respects that interest at the time the
interest is paid.
(7) REGISTRATION REQUIREMENTS: It is not necessary or advisable to file,
register or record the Credit Agreement in any public place or
elsewhere in England.
(8) STAMP DUTIES: No stamp, registration or similar tax or charge is
payable in England in respect of the Credit Agreement.
This opinion is subject to the following qualifications:
(i) This opinion is subject to all insolvency and other laws affecting the
rights of creditors or secured creditors generally.
(ii) No opinion is expressed on matter of fact.
(iii) We assume that no foreign law affects the conclusions stated above.
(iv) The term "ENFORCEABLE" means that a document is of a type and form
enforced by the English courts. It does not mean that each obligation
will be enforced in accordance with its terms. Certain rights and
obligations may be qualified by the nonconclusively of certificates,
doctrines of good faith and fair conduct, the availability of equitable
remedies and other matters, but in our view these qualifications would
not defeat your legitimate expectations in any material respect.
This opinion is given for your sole benefit and may not be relied upon by or
disclosed to any other person.
Yours faithfully,
<PAGE> 57
51
<PAGE> 58
52
SIGNATURES
Parent
EMAP PLC
Address: 1 Lincoln Court, Lincoln Road, Peterborough PE1 2RF
Telephone Number: 01733 568900
Fax Number: 01733 562636
Attention: Group Treasurer
By:
Name: Derek Wolmsley
Position: Company Secretary
LENDERS
BARCLAYS BANK PLC
Address: 54 Lombard Street, London
Telephone Number: 0171 699 5000
Fax Number: 0171 699 3717
Attention: Large Corporate Banking (f.a.o. Ian Moseley)
By:
Name: Ian Moseley
Position: Relationship Director
<PAGE> 59
53
DEN DANSKE BANK AKTIESELSKAB
Address: 75 King William Street, London EC4N 7DT
Telephone Number: 0171 410 8000
Fax Number: 0171 410 8001
Attention: Kieran Ryan/Alan Pettigrew
By:
Name: D W Roberts A Pettigrew
Position: Head of Syndications Manager
DEUTSCHE BANK AG LONDON
Address: 6 Bishopsgate, London EC2
Telephone Number: 0171 545 7130
Fax Number: 0171 545 4638 or 4924
Attention: Roger Penn, Credit Administration
By:
Name: J Burgess S K Malone
Position: Director Senior Associate Director
ARRANGERS
BARCLAYS CAPITAL
Address: 5 The North Colonnade, Canary Wharf, London E14 4BB
Telephone Number: 0171 623 2323
Fax Number: 0171 773 4894
Attention: Global Syndications and Loan Distribution
<PAGE> 60
54
By:
Name: S. A. Boylan
Position: Director
DEN DANSKE BANK AKTIESELSKAB
Address: 75 King William Street, London EC4N 7DT
Telephone Number: 0171 410 8000
Fax Number: 0171 410 8001
Attention: Kieran Ryan/Alan Pettigrew
By:
Name: D W Roberts A Pettigrew
Position: Head of Syndications Manager
DEUTSCHE BANK AG LONDON
Address: 6 Bishopsgate, London EC2
Telephone Number: 0171 545 7130
Fax Number: 0171 545 4638 or 4924
Attention: Roger Penn, Credit Administration
By:
Name: S. K. Malone J Burgess
Position: Senior Associate Director Director
<PAGE> 61
55
AGENT
BARCLAYS BANK PLC
Address: 5 The North Colonnade, Canary Wharf, London E14 4BB
Telephone Number: 0171 623 2323
Fax Number: 0171 773 6087
Attention: GSU re: Emap plc
By:
Name: S. A. Boylan
Position: Director
<PAGE> 1
EXHIBIT (2)(B)
AGREEMENT AND PLAN OF MERGER
DATED AS OF
DECEMBER 15, 1998
AMONG
THE PETERSEN COMPANIES, INC.
EMAP ACQUISITION CORP.
AND
EMAP PLC
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
I - THE OFFER.....................................................................................................2
1.01 The Offer.......................................................................................2
1.02 Company Action..................................................................................3
1.03 Directors.......................................................................................5
II - THE MERGER...................................................................................................6
2.01 The Merger......................................................................................6
2.02 Conversion of Shares............................................................................7
2.03 Exchange of Shares..............................................................................7
2.04 Dissenting Shares...............................................................................9
2.05 Stock Options; Warrants........................................................................10
III - THE SURVIVING CORPORATION..................................................................................11
3.01 Certificate of Incorporation...................................................................11
3.02 Bylaws.........................................................................................11
3.03 Directors and Officers.........................................................................11
IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................................11
4.01 Organization and Qualification; Subsidiaries...................................................11
4.02 Certificate of Incorporation and By-Laws.......................................................12
4.03 Capitalization.................................................................................12
4.04 Authority Relative to this Agreement...........................................................14
4.05 No Conflict; Required Filings and Consents.....................................................14
4.06 Compliance.....................................................................................15
4.07 SEC Filings; Financial Statements..............................................................15
4.08 Disclosure Documents...........................................................................16
4.09 Absence of Certain Changes or Events...........................................................17
4.10 Taxes..........................................................................................18
4.11 Absence of Changes in Benefit Plans............................................................19
4.12 ERISA Compliance: Excess Parachute Payments....................................................20
4.13 Litigation.....................................................................................22
4.14 Environmental Matters..........................................................................22
4.15 Contracts......................................................................................23
4.16 Labor Matters..................................................................................23
4.17 Transactions with Affiliates...................................................................23
4.18 Brokers; Schedule of Fees and Expenses.........................................................24
4.19 Applicability of Section 203 of Delaware Law...................................................24
4.20 Voting Requirements............................................................................24
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
4.21 Opinion of Financial Advisors..................................................................24
4.22 Major Advertisers..............................................................................25
4.23 Intellectual Property..........................................................................25
4.24 Year 2000 Compliance...........................................................................25
V - REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................26
5.01 Organization and Qualification; Subsidiaries...................................................26
5.02 Certificate of Incorporation and By-Laws.......................................................26
5.03 Authority Relative to this Agreement...........................................................27
5.04 No Conflict; Required Filings and Consents.....................................................27
5.05 Documents Relating to Offer; Company Proxy Statement...........................................28
5.06 Financing......................................................................................28
5.07 Brokers........................................................................................28
5.08. Director Recommendations.......................................................................29
VI - COVENANTS OF THE COMPANY....................................................................................29
6.01 Conduct of the Company.........................................................................29
6.02 Stockholders' Meeting; Proxy Materials.........................................................32
6.03 Access to Information..........................................................................33
6.04 No Solicitations...............................................................................33
6.05 Notices of Certain Events......................................................................34
6.06 Debt Instruments...............................................................................35
6.07 Exchange of Shares of Class B Common...........................................................35
6.08 Consent to Revocation of Proxy.................................................................35
VII - COVENANTS OF BUYER.........................................................................................36
7.01 Confidentiality................................................................................36
7.02 Obligations of Merger Subsidiary...............................................................36
7.03 Voting of Shares...............................................................................36
7.04 Director and Officer Liability.................................................................36
7.05 Employee Benefits..............................................................................38
7.06 Repayment of Debt..............................................................................38
7.07 Notices of Certain Events......................................................................39
7.08 Shareholders' Meeting; Offering Circular.......................................................39
VIII - COVENANTS OF BUYER AND THE COMPANY........................................................................40
8.01 Reasonable Best Efforts........................................................................40
8.02 Certain Filings................................................................................41
8.03 Public Announcements...........................................................................41
8.04 Other Actions..................................................................................41
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
IX - CONDITIONS TO THE MERGER....................................................................................42
9.01 Conditions to the Obligations of Each Party....................................................42
X - TERMINATION; EXPENSES........................................................................................42
10.01 Termination....................................................................................42
10.02 Effect of Termination..........................................................................45
10.03 Fees and Expenses..............................................................................45
XI - MISCELLANEOUS...............................................................................................45
11.01 Notices........................................................................................45
11.02 Survival of Representations, Warranties and Covenants..........................................46
11.03 Amendments; No Waivers.........................................................................46
11.04 Successors and Assigns.........................................................................47
11.05 Governing Law; Consent to Jurisdiction.........................................................47
11.06 Counterparts; Effectiveness....................................................................48
11.07 Headings; Interpretations; Disclosure Schedules................................................48
11.08 No Third Party Beneficiaries...................................................................48
11.09 Entire Agreement...............................................................................48
11.10 Severability...................................................................................48
11.11 Definitions....................................................................................49
</TABLE>
- iii -
<PAGE> 5
- iv -
<PAGE> 6
EXHIBIT A - Conditions to the Offer
EXHIBIT B - Notice and Certificate
EXHIBIT C - Certificate of Incorporation
- v -
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT, dated as of December 15, 1998 (this "Agreement"),
among The Petersen Companies, Inc. a Delaware corporation (the "Company"), EMAP
plc, an English public limited company ("Buyer"), and EMAP Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Buyer ("Merger
Subsidiary").
PRELIMINARY STATEMENT
The Boards of Directors of Buyer, the Merger Subsidiary and
the Company have each approved the acquisition of the Company by Buyer upon the
terms and subject to the conditions set forth herein.
In furtherance of the acquisition of the Company by Buyer,
Buyer proposes to cause Merger Subsidiary to make a tender offer (as it may be
amended from time to time as permitted under this Agreement, the "Offer") to
purchase all the issued and outstanding shares of Class A Common Stock, par
value $0.01 per share, of the Company (the "Class A Common"), and all the issued
and outstanding shares of Class B Common Stock, par value $0.01 per share, of
the Company (the "Class B Common" and, together with Class A Common, the
"Shares"), at a price per Share of $34.00, net to the seller in cash, on the
terms and subject to the conditions set forth herein.
The Boards of Directors of Buyer, the Merger Subsidiary and
the Company have each approved the merger (the "Merger") of Merger Subsidiary
with and into the Company, or (at the election of Buyer) the Company with and
into Merger Subsidiary, in accordance with the terms of this Agreement and the
General Corporation Law of the State of Delaware (the "Delaware Law") and with
any other applicable law, whereby each issued Share not owned directly or
indirectly by Buyer or the Company shall be converted into the right to receive
the highest per share cash consideration paid pursuant to the Offer.
The Board of Directors of the Company has: (i) unanimously
determined that (x) the consideration to be paid for each Share in the Offer and
the Merger is fair to the stockholders of the Company and (y) the Offer and the
Merger are otherwise in the best interests of the Company and its stockholders;
(ii) unanimously approved this Agreement and the transactions contemplated
hereby; (iii) unanimously declared that this Agreement is advisable; (iv)
unanimously consented to the Offer; and (v) unanimously recommended that the
holders of Shares accept the Offer, tender their Shares pursuant to the Offer
and approve and adopt this Agreement.
Simultaneously with the execution and delivery of this
Agreement, Buyer and certain stockholders of the Company (the "Principal Company
Stockholders") are entering into an
<PAGE> 8
agreement (the "Company Stockholders Agreement" and, together with this
Agreement, the "Transaction Agreements") pursuant to which the Principal Company
Stockholders will agree to take specified actions in furtherance of the Offer
and the Merger.
AGREEMENTS
NOW, THEREFORE, in consideration of the forgoing and the
mutual premises, representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article X hereof and that none of the conditions
set forth in Exhibit A hereto shall have occurred and be continuing, Buyer and
Merger Subsidiary shall, promptly after the public announcement of the execution
and delivery of this Agreement (which announcement shall be made no later than
one business day following such execution and delivery), commence the Offer
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder, the
"Exchange Act")). The obligation of Merger Subsidiary to accept for payment and
to pay for any Shares tendered in the Offer shall be subject only to the
condition that there shall be validly tendered prior to the expiration date of
the Offer and not withdrawn a number of Shares which, together with the Shares
then owned by Buyer or Merger Subsidiary, represents (x) a majority of the
outstanding shares of Class A Common and (y) a majority of the outstanding
Shares, in each case on a fully diluted basis, after giving effect to the
exercise or conversion of all options, rights and securities exercisable or
convertible into such securities (other than conversion of the Class B Common)
("Fully Diluted Shares"), on the date of purchase (the "Minimum Condition"), and
to the other conditions set forth in Exhibit A hereto.
(b) Buyer and Merger Subsidiary expressly reserve the right to
modify the terms of the Offer, except that, without the prior written consent of
the Company, neither Buyer nor Merger Subsidiary shall (i) decrease the price
per Share or change the form of consideration payable in the Offer, (ii)
decrease the number of Shares sought in the Offer, (iii) amend or waive
satisfaction of the Minimum Condition, (iv) impose additional conditions to the
Offer or amend in any manner adverse to the holders of Shares any condition to
the Offer, (v) amend any other term of the Offer in any manner adverse in any
respect to the holders of Shares, or (vi) except as provided in the next
sentence, extend the expiration date of the Offer. Notwithstanding the
foregoing, subject to the
-2-
<PAGE> 9
Company's rights to terminate this Agreement pursuant to Article X and so long
as neither Buyer nor Merger Subsidiary has breached any of its representations
and warranties or obligations pursuant to this Agreement, Merger Subsidiary may,
without the consent of the Company, (i) extend the Offer, if at the then
scheduled expiration date of the Offer any of the conditions to Merger
Subsidiary's obligation to purchase Shares is not satisfied, until such time as
such condition is satisfied or waived, (ii) extend the Offer for a period of not
more than five (5) business days beyond the then scheduled expiration date of
the Offer, if on the date of such extension less than (x) 90% of the outstanding
shares of Class A Common or (y) 90% of the outstanding shares of Class B Common
have been validly tendered and not properly withdrawn pursuant to the Offer, and
(iii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer. Assuming the prior satisfaction or waiver of the conditions to the Offer,
upon the terms of the Offer, the Merger Subsidiary will accept for payment and
purchase, as soon as practicable after the expiration of the Offer, all Shares
validly tendered and not withdrawn prior to the expiration of the Offer;
provided, however, that Merger Subsidiary shall only be entitled to purchase
Shares validly tendered and not withdrawn prior to the expiration of the Offer
if it purchases all such Shares pursuant to the Offer.
(c) One business day following execution and delivery hereof
by the parties hereto, Buyer and Merger Subsidiary shall file or cause to be
filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain the offer to purchase and
related letter of transmittal and other ancillary Offer documents and
instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents") and shall contain (or
shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law. Each of Buyer and
Merger Subsidiary, on the one hand, and the Company, on the other hand, agree
promptly to correct any information provided by such party (or either of them,
in the case of Buyer or Merger Subsidiary) for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and Merger Subsidiary further agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed promptly with the SEC and
to be disseminated to the stockholders of the Company, in each case as and to
the extent required by applicable Federal securities law. The Company and its
counsel shall be given the opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the SEC.
SECTION 1.02 Company Action.
(a) The Company hereby approves and consents to the Offer, the
Merger and the other transactions contemplated by the Transaction Agreements
(collectively, the "Transactions") and represents that (i) the Company's Board
of Directors (the "Board") has at a meeting duly called
-3-
<PAGE> 10
and held unanimously (A) approved this Agreement and the Company Stockholder
Agreement and the Transactions, including the Offer and the Merger, (B)
recommended that holders of Shares accept the Offer, tender their Shares
pursuant to the Offer and approve and adopt this Agreement, (C) determined that
each of this Agreement, the Offer and the Merger is fair to and in the best
interests of the stockholders of the Company, (D) determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the stockholders of the Company, (E) declared that this Agreement is advisable,
and (F) consented to the Offer, and (ii) each of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and Morgan Stanley & Co. Incorporated ("Morgan
Stanley") has delivered to the Board its respective written opinion that the per
Share consideration to be received by the Company's stockholders pursuant to the
Offer and the Merger is fair to such stockholders from a financial point of
view.
(b) The Company will promptly furnish Buyer with a list of its
stockholders, mailing labels containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories, as of the most recent practicable date, and will provide to Buyer
such additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Buyer may reasonably request in connection with the Offer. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate any documents necessary to consummate the Merger or the
Offer, Buyer shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Merger and the Offer and, if this Agreement is terminated in accordance with
Section 10.01, shall, upon request, deliver to the Company all copies of such
information then in its possession and deliver copies of such information then
in the possession of any person who has obtained such information directly or
indirectly from Buyer.
(c) Contemporaneously with the commencement of the Offer as
provided for in Section 1.01, the Company will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "14D-9") which
shall reflect the recommendations and actions of the Board referred to above
(subject to the fiduciary duties of the Board under applicable law as advised by
independent legal counsel (who may be the Company's regularly engaged legal
counsel)) and shall mail the 14D-9 to the holders of the Shares. Each of the
Company, on the one hand, and Buyer and Merger Subsidiary, on the other hand,
agrees promptly to correct any information provided by such party (or either of
them, in the case of Buyer or Merger Subsidiary) for use in the 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
14D-9 as so corrected to be filed with the SEC and to be disseminated to the
stockholders of the Company, in each case as and to the extent required by
applicable Federal securities law. Buyer, Merger Subsidiary and their counsel
shall be given an opportunity to review and comment on the 14D-9 and any
amendments thereto prior to filing thereof with the SEC.
-4-
<PAGE> 11
SECTION 1.03 Directors.
(a) Promptly upon the earlier of the purchase by Buyer or any
of its subsidiaries of Shares pursuant to the Offer or the Company Stockholders
Agreement, and from time to time thereafter, Buyer shall be entitled to
designate such number of directors, rounded up to the next whole number (but in
no event more than one less than the total number of directors on the Board) as
will give Buyer, representation on the Board equal to the product of (x) the
total number of directors on the Board (giving effect to any increase in the
number of directors pursuant to this Section 1.03) multiplied by (y) the
percentage that such number of Shares so purchased bears to the aggregate number
of Shares outstanding (such number being, the "Board Percentage"), and the
Company shall promptly use its reasonable best efforts to satisfy the Board
Percentage by, at the option of the Company (i) increasing the size of the Board
or (ii) securing the resignations of such number of directors as is necessary to
enable Buyer's designees to be elected to the Board and shall use its reasonable
best efforts to cause Buyer's designees promptly to be so elected. The Company
shall take, at the Company's expense, all lawful action necessary to effect any
such election, including, without limitation, mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, unless such information has previously been provided to
the Company's stockholders in the 14D-9.
(b) The Company represents that, (i) to effect the
transactions contemplated by Section 1.03(a), the Board has approved, and has
not withdrawn or amended, resolutions (x) to increase the number of members of
the Board from 11 to 15 directors, to be effective at such time as Merger
Subsidiary purchases Shares pursuant to the Offer or purchases Shares pursuant
to the Company Stockholders Agreement, and (y) to elect each of Kevin Hand,
David Grigson, Thomas Moloney and Chris Innis to fill the vacancies created by
such increase in the number of directors, effective upon such increase and (ii)
each of the directors of the Company (other than the Chairman of the Board) has
delivered to the Company a letter stating that such director has resigned from
the Board, and from each committee thereof, effective at such time as Merger
Subsidiary purchases Shares pursuant to the Offer or purchases Shares pursuant
to the Company Stockholders Agreement to the extent such resignations are
necessary to provide Buyer with its Board Percentage.
(c) Following the election or appointment of Buyer's designees
pursuant to this Section 1.03 and prior to the Effective Time of the Merger, any
amendment or termination of this Agreement, extension for the performance or
waiver of the obligations or other acts of Buyer or Merger Subsidiary or waiver
of the Company's rights thereunder, shall require the concurrence of a majority
of directors of the Company then in office who are directors on the date hereof.
ARTICLE II
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THE MERGER
SECTION 2.01 The Merger.
(a) At the Effective Time (as defined in Section 2.01(b)),
Merger Subsidiary shall be merged with and into the Company in accordance with
Delaware Law and the terms and conditions of this Agreement, whereupon the
separate existence of Merger Subsidiary shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation"). Notwithstanding the
foregoing, Buyer may elect at any time prior to the Merger, instead of merging
Merger Subsidiary into the Company as provided above, to merge the Company with
and into Merger Subsidiary; provided, however, that the Company shall not be
deemed to have breached any of its representations, warranties or covenants set
forth in this Agreement solely by reason of such election. In such event, the
parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing. At the election of Buyer, any direct or indirect
subsidiary of Buyer may be substituted for Merger Subsidiary as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
(b) Subject to the terms and conditions of this Agreement,
Buyer, Merger Subsidiary and the Company will cause a Certificate of Merger (or,
if applicable, a Certificate of Ownership and Merger) to be executed and filed
on the Closing Date (as defined in Section 2.01(d)) with the Secretary of State
of the State of Delaware and make all other filings required by the Delaware Law
in connection with the Merger. The Merger shall become effective at such time
(the "Effective Time") as such Certificate of Merger (or, if applicable,
Certificate of Ownership and Merger) is duly filed with the Secretary of State
of the State of Delaware or at such later time as is specified in such
Certificate of Merger (or, if applicable, Certificate of Ownership and Merger).
(c) From and after the Effective Time, the Surviving
Corporation shall succeed to all the assets, rights, privileges, powers and
franchises and be subject to all of the liabilities, restrictions, disabilities
and duties of the Company and Merger Subsidiary, all as provided under the
Delaware Law. The Merger shall have the effects set forth in Section 259 of the
Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place
at 10:00 a.m., local time, on a date to be specified by the parties, which shall
be no later than the fifth business day after satisfaction or, to the extent
permitted by law, waiver of all of the conditions set forth in Article IX hereof
(the "Closing Date"), at the offices of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Street, New York, New York 10019, unless another time, date or
place is agreed to in writing by the parties hereto.
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SECTION 2.02 Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Merger Subsidiary:
(a) Each Share of capital stock of the Company held by the
Company as treasury stock or owned by Buyer or Merger Subsidiary immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled and retired and shall
cease to exist, and no payment shall be made with respect thereto and each share
that is owned by any subsidiary of the Company or Buyer (other than Merger
Subsidiary) shall automatically be converted into one fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation;
(b) Each share of capital stock of Merger Subsidiary issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and non-assessable share of capital stock of the
Surviving Corporation, par value $0.01 per share, with the same rights and
privileges as the shares so converted; and
(c) Each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in clause (a) above or as provided in
Section 2.04 with respect to Shares as to which appraisal rights have been
exercised, be converted into the right to receive $34.00, or any higher price
per Share paid in the Offer, in cash without any interest thereon (the "Merger
Consideration"). As of the Effective Time, all Shares shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any Shares shall cease to
have any rights with respect thereto, except the right to receive Merger
Consideration upon surrender of such certificate in accordance with Section
2.03, without interest.
SECTION 2.03 Exchange of Shares.
(a) Prior to the Effective Time, Buyer shall appoint a bank or
trust company to act as paying agent (the "Exchange Agent") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. Buyer
will make available to the Exchange Agent, as needed, the Merger Consideration
to be paid in respect of the Shares (such cash being hereinafter referred to as
the "Exchange Fund"). For purposes of determining the Merger Consideration to be
made available, Buyer shall assume that no stockholder of the Company will
perfect his right to appraisal of his, her or its Shares. Promptly after the
Effective Time, Buyer will send, or will cause the Exchange Agent to send, to
each holder of Shares (other than as provided in Section 2.02(c)) at the
Effective Time (i) a letter of transmittal for use in such exchange (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates shall pass, only upon delivery of the certificates to the Paying
Agent and shall be in such form and have such other provisions as Buyer
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may reasonably specify) and (ii) instructions for use in effecting the surrender
of the certificates in exchange for the Merger Consideration.
(b) After the Effective Time, each holder of Shares that have
been converted into a right to receive the Merger Consideration, upon surrender
to the Exchange Agent of a certificate or certificates representing any such
Shares, together with a properly completed letter of transmittal covering such
Shares, and such other documents as may reasonably be required by the Exchange
Agent, will be entitled to receive the Merger Consideration payable in respect
of such Shares and the certificate so surrendered shall forthwith be cancelled.
Until so surrendered, each such certificate shall (other than as provided in
Section 2.04), after the Effective Time, represent for all purposes only the
right to receive such Merger Consideration, and shall automatically be cancelled
and shall cease to exist. No interest shall be paid or accrued on such Merger
Consideration.
(c) If any portion of the Merger Consideration payable in
respect of any Share is to be paid to a person other than the registered holder
of the Shares represented by the certificate or certificates surrendered, it
shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a person other than the registered holder of such shares or have established
to the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) The Merger Consideration paid in accordance with the terms
of this Article II upon conversion of any Shares shall be deemed to have been
paid in full satisfaction of all rights pertaining to such Shares, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distribution with a record date prior to the Effective Time that may
have been declared or made by the Company on such Shares in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and the stock transfer books of the Company shall
be closed and there shall be no further registration of transfers of Shares. If,
after the Effective Time, any certificates formerly representing Shares are
presented to the Surviving Corporation or the Exchange Agent for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(e) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to paragraph (a) of this Section 2.03 that remains
unclaimed by the holders of Shares entitled thereto six months after the
Effective Time shall be returned to Buyer, upon demand, and any stockholder of
the Company who has not exchanged his Shares for the Merger Consideration in
accordance with this Section 2.03 prior to that time shall thereafter look only
to Buyer for payment of the Merger Consideration in respect of his Shares.
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<PAGE> 15
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to paragraph (a) of this Section 2.03 to pay for
Shares for which appraisal rights shall have been perfected shall be returned to
Buyer, upon demand.
(g) None of Buyer, Merger Subsidiary, the Company or the
Exchange Agent shall be liable to any holder of the Shares for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.05), any such shares, cash,
dividends or distributions in respect of such certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Buyer, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Buyer.
(i) Buyer shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares pursuant to this Agreement such amounts as Buyer is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by Buyer, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Buyer.
SECTION 2.04 Dissenting Shares. Notwithstanding any other
provision of this Agreement to the contrary, Shares ("Appraisal Shares")
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who is
entitled to demand and has properly demanded appraisal for such Shares pursuant
to and who complies in all respects with, Section 262 of the Delaware Law shall
not be converted into a right to receive the Merger Consideration, but rather
the holders of Appraisal Shares shall be entitled to payment of the fair market
value of such Appraisal Shares in accordance with Section 262 of the Delaware
Law, unless such holder fails to perfect or withdraws or otherwise loses his
right to appraisal. If, after the Effective Time, such holder fails to perfect
or withdraws or loses his right to appraisal, such Shares shall be treated as if
they had been converted as of the Effective Time into a right to receive the
Merger Consideration payable in respect of such Shares pursuant to Section 2.02.
The Company shall give Buyer prompt notice of any demands received by the
Company for appraisal of Shares, and Buyer shall have the right to participate
in and direct all negotiations and proceedings with respect to such demands.
The Company shall not, except with
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the prior written consent of Buyer, make any payment with respect to, or settle
or offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.05 Stock Options; Warrants.
(a) Immediately prior to the Effective Time, each then
outstanding option to purchase any shares of capital stock of the Company (in
each case, an "Option"), whether or not then vested or exercisable, shall be
cancelled by the Company and in consideration of such cancellation and except to
the extent that Buyer or Merger Subsidiary and the holder of any such Option
otherwise agree, the Company (or, at Buyer's option, Merger Subsidiary) shall
pay to such holders of Options an amount in respect thereof equal to the product
of (A) the excess, if any, of the Merger Consideration over the exercise price
per Share subject to each such Option multiplied by (B) the number of Shares for
which such Option shall not theretofore have been exercised (net of withholding
taxes and without interest).
(b) The Company shall cause all stock option or other equity
based plans maintained with respect to the Shares, including, without
limitation, the Company's 1997 Long-Term Equity Incentive Plan and the Stock
Purchase Plan (collectively, the "Stock Option Plans"), to terminate as of the
Effective Time and the provisions in any other benefit plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall ensure that following the Effective Time
no holder of an Option or any participant in the Stock Option Plans shall have
any right thereunder to acquire any capital stock of the Company, Buyer, Merger
Subsidiary or the Surviving Corporation.
(c) Prior to the Effective Time, the Company shall (i) obtain
all necessary consents from, and provide (in a form acceptable to Buyer) any
required notices to, holders of Options and Warrants (as defined in Section
2.05(d)) and (ii) amend the terms of the Stock Option Plans and Warrants, in
each case as is necessary to give effect to the provisions of paragraphs (a),
(b) and (d) of this Section 2.05. Notwithstanding anything to the contrary
contained in this Agreement, payment shall, at Buyer's request, be withheld in
respect of any Option or Warrants, as the case may be, until all necessary
consents are obtained.
(d) Immediately prior to the Effective Time, each then
outstanding warrant to purchase any shares of capital stock of the Company (the
"Warrants"), whether or not then exercisable, shall be canceled by the Company
and in consideration of such cancellation and except to the extent that Buyer or
Merger Subsidiary and the holder of any such Warrant otherwise agree, the
Company (or, at Buyer's option, Merger Subsidiary) shall pay to such holders of
the Warrants an amount in respect thereof equal to the product of (A) the
excess, if any, of the Merger Consideration over the exercise price per Share
subject to each such Warrant multiplied by (B) the
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number of Shares for which such Warrant shall not theretofore have been
exercised (net of withholding taxes and without interest).
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended at the Effective
Time to read substantially in the form of Exhibit C and, as so amended, such
Certificate of Incorporation shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
SECTION 3.02 Bylaws. The Bylaws of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein or in
accordance with applicable law.
SECTION 3.03 Directors and Officers. Immediately after the
Effective Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed in accordance with the
Certificate of Incorporation and Bylaws of Merger Subsidiary and with applicable
law, as the case may be, the directors of Merger Subsidiary at the Effective
Time shall be elected to serve as the directors of the Surviving Corporation,
and the officers of the Company at the Effective Time shall be elected to serve
as the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger
Subsidiary as follows:
SECTION 4.01 Organization and Qualification; Subsidiaries.
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(a) Each of the Company and each Company Subsidiary (as
defined below) is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals individually or in the
aggregate, has not had, and is not reasonably expected to have, a Company
Material Adverse Effect (as defined below). The Company and each Company
Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that individually or in the
aggregate, have not had, and are not reasonably expected to have, a Company
Material Adverse Effect. The term "Company Material Adverse Effect" means a
material adverse effect on the business, results of operations or financial
condition of the Company and the Company Subsidiaries (as defined below), taken
as a whole, or prevents or materially delays the ability of the Company to
perform its obligations under this Agreement or to consummate the Offer, the
Merger or the other Transactions; provided, however, that in determining whether
there has been a "Company Material Adverse Effect," the following shall be
disregarded: any material adverse effect that results substantially from (i) the
breach by Buyer or Merger Subsidiary of this Agreement or (ii) any decline in
the Company's stock price (which shall not, in and of itself, constitute a
"Material Adverse Effect").
(b) Section 4.01(b) of the schedule, dated as of the date of
this Agreement, from the Company to Buyer and Merger Subsidiary and entitled
"Company Disclosure Schedule" (the "Company Disclosure Schedule") lists each
Company Subsidiary and the Company's ownership interest therein. Each subsidiary
of the Company (a "Company Subsidiary") that constitutes a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X
of the SEC is referred to herein as a "Material Subsidiary."
SECTION 4.02 Certificate of Incorporation and By-Laws. The
Company has heretofore made available to Buyer a complete and correct copy of
the Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to the date of this Agreement, of the Company and of
each Material Subsidiary. Such Certificates of Incorporation, By-Laws and
equivalent organizational documents are in full force and effect. Neither the
Company nor any Material Subsidiary is in violation of any provision of its
Certificate of Incorporation, By-Laws or equivalent organizational documents,
except for such violations that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
SECTION 4.03 Capitalization. The authorized capital stock of
the Company consists of 75,000,000 shares of Class A Common Stock, par value
$0.01 per share (the "Class A
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Common"), 25,000,000 shares of Class B Common Stock, par value $0.01 per share
(the "Class B Common"), and 5,000,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock" and together with the Shares, the "Company
Capital Stock"). As of the close of business on December 14, 1998, (a) there
were 26,871,538 shares of Class A Common outstanding, (b) there were 7,886,290
shares of Class B Common outstanding, and (c) there were no shares of Preferred
Stock outstanding. All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
have no preemptive rights. As of the close of business on December 14, 1998,
there were 35,000 shares of Class A Common reserved for issuance upon exercise
of the Warrants and 2,041,269 shares of Class A Common reserved for issuance
upon exercise of the Options. As of the close of business on December 14, 1998,
the Company had granted Options (which had not expired) to acquire an aggregate
of 970,394 shares of Class A Common, of which Options to acquire an aggregate of
206,697 shares of Class A Common Stock were fully vested and exercisable as of
such date. At the close of business on December 14, 1998, the Company had issued
Warrants (which had not expired) to acquire an aggregate of 35,000 shares of
Class A Common, of which Warrants to acquire an aggregate of 35,000 shares of
Class A Common were fully vested and exercisable as of such date. Except for (i)
the Company's Employee Stock Discount Purchase Plan (the "Stock Purchase Plan"),
(ii) the Options, (iii) the Warrants, and (iv) the outstanding shares of Class B
Common, there are no options, warrants, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, or other rights, agreements, arrangements, commitments, contracts or
undertakings of any character to which the Company or any Company Subsidiary is
a party or by which any of them is bound (i) obligating the Company or any
Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other equity interests in, or any
securities convertible or exercisable or exchangeable for any capital stock of
or other equity interest in, the Company or of any Company Subsidiary or any
Voting Company Debt (as defined below), (ii) obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right security, commitment, contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to holders
of Company Capital Stock. All shares of the Class A Common subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable and not subject to or issued in
violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Delaware Law, the Certificate of Incorporation, the By-Laws or any contract
to which the Company is a party or otherwise bound. There are not any bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which holders of Shares may vote ("Voting Company Debt").
There are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of the Company
Capital Stock or any capital stock of any Company Subsidiary, or to make any
investment (in the
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form of a loan, capital contribution or otherwise) in any Company Subsidiary.
Each outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share is
owned by the Company or another Company Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "Liens").
SECTION 4.04 Authority Relative to this Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize any Transaction Agreement
or to consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding shares of Class A Common and the filing of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Buyer and Merger Subsidiary, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
proceedings in equity or at law).
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SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws or equivalent organizational
documents of the Company or any Company Subsidiary, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to any
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, or (iii) except as set
forth in Section 4.05 of the Company Disclosure Schedule, result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, result in the loss of a material benefit
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation (a "Contract") to which the Company
or any Company Subsidiary is a party or by which the Company or any Company
Subsidiary or any property or asset of the Company or any Company Subsidiary is
bound or affected, except, in the case of clauses (ii) and (iii) above, for any
such conflicts, violations, breaches, defaults, losses or other occurrences
which would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, license, authorization, registration, order or
permit of, or filing with or notification to, any Federal, state, local or
foreign government or any court of competent jurisdiction, or other
governmental, administrative or regulatory authority, commission or agency,
domestic or foreign (each a "Governmental Entity"), except for (A) applicable
requirements of the Exchange Act, (B) compliance with and filings under the
pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (C) filing of appropriate merger documents as required by
Delaware Law, and (D) such other consents, approvals, authorizations, permits,
filings or notifications not obtained or made prior to consummation of the Offer
the failure of which to be obtained or made, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 4.06 Compliance. Except as set forth in Section 4.06
of the Company Disclosure Schedule, the Company and the Company Subsidiaries are
in compliance with and are not in conflict with, or in default or violation of,
(a) any law, rule, regulation, order, judgment or decree (including, without
limitation, laws, rules and regulations relating to franchises) applicable to
the Company or any Material Subsidiary or by which any property or asset of the
Company or any Material Subsidiary is bound or affected, including those
relating to occupational
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health and safety and the environment ("Applicable Law"), or (b) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Material Subsidiary
is a party or by which the Company or any Material Subsidiary or any property or
asset of the Company or any Material Subsidiary is bound or affected, except for
such instances of noncompliance, conflicts, defaults or violations that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. Except as set forth in
Section 4.06 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary has received any written communication during the past two
years from a Governmental Entity that alleges that the Company or a Company
Subsidiary is not in compliance with any Applicable Law, except for such
instances of noncompliance that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
This Section 4.06 does not relate to matters with respect to Taxes, which are
the subject of Section 4.10.
SECTION 4.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, registration
statements, proxy statements, schedules and documents required to be filed by it
with the SEC since October 3, 1997 and has heretofore made available to Buyer,
in the form filed with the SEC (excluding any exhibits thereto), (i) its Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (the "Form
10-K"), (ii) its Quarterly Reports on Form 10-Q for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998 (the "Third Quarter Form 10-Q"),
(iii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since October 1, 1997 and (iv) all other forms,
reports, other registration statements and schedules (other than Quarterly
Reports on Form 10-Q not referred to in clause (ii) above and preliminary
materials) filed by the Company with the SEC since October 3, 1997 (the forms,
reports and other documents referred to in clauses (i), (ii), (iii) and (iv)
above being referred to herein, collectively, as the "Company SEC Reports"). The
Company SEC Reports and any forms, reports and other documents filed by the
Company with the SEC after the date of this Agreement (x) were prepared in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of circumstances under which they were made, not misleading. No
Company Subsidiary is required to file any form, report or other document with
the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company SEC Reports comply as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
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applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and fairly present in all material respects the
financial position, results of operations and cash flows of the Company and the
consolidated Company Subsidiaries, as the case may be, as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal year-end adjustments which were not and
are not expected, individually or in the aggregate, to be material in amount).
Except as set forth in the Filed Company SEC Documents (as defined in Section
4.09), neither the Company nor any Company Subsidiary has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto.
SECTION 4.08 Disclosure Documents.
(a) Each document filed or required to be filed by the Company
with the SEC in connection with the Transactions (the "Company Disclosure
Documents"), including, without limitation, the proxy or information statement
of the Company (the "Company Proxy Statement"), if any, to be filed with the SEC
in connection with the Merger, the 14D-9 and any amendments or supplements to
any thereof will comply as to form with the applicable requirements of the
Exchange Act and the rules and regulations thereunder.
(b) At the time the Company Proxy Statement or any amendment
or supplement thereto is mailed to stockholders of the Company, at the time such
stockholders vote on adoption of this Agreement and at the Effective Time, the
Company Proxy Statement as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact required therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading. At
the time of the filing with the SEC or any other governmental authority of any
Company Disclosure Documents and any amendment or supplement thereto (other than
the Company Proxy Statement), at the time such document is filed with the SEC,
at any time it is amended or supplemented and at the time of any distribution
thereof to the Company's stockholders and throughout the remaining pendency of
the Offer each such Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact required therein
or necessary in order to make the statements made therein not misleading. The
representations and warranties contained in this subsection (b) will not apply
to statements or omissions in the Company Disclosure Documents based upon
information furnished in writing to the Company by Buyer or Merger Subsidiary
specifically for use therein.
(c) The information with respect to the Company or any Company
Subsidiary furnished by the Company or its affiliates to Buyer in writing
specifically for use in the Offer and the Offer Documents shall not contain, as
of the date the Offer Documents are filed, any untrue
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<PAGE> 24
statement of a material fact or omit to state a material fact required therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If any such
information provided by the Company or its affiliates shall, after the filing of
the Offer Documents or any other document filed by Buyer or Merger Subsidiary
with the SEC, become false or misleading in any material respect, the Company
shall promptly notify Buyer and update such information in writing.
SECTION 4.09 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents") or in Section 4.09 of
the Company Disclosure Schedule, from the date of the most recent financial
statements included in the Filed Company SEC Documents to the date of this
Agreement, the Company has conducted its business only in the ordinary course,
and during such period there has not been:
(i) any event, change, effect or development that,
individually, in the aggregate or when taken together
with all such events, changes, effects and
developments that have occurred since January 1,
1998, has had or would reasonably be expected to have
a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash,
stock or property) with respect to any Company
Capital Stock or any repurchase for value by the
Company of any Company Capital Stock;
(iii) any split, combination or reclassification of any
Company Capital Stock or any issuance or the
authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for
shares of Company Capital Stock;
(iv) (A) any granting by the Company or any Company
Subsidiary to any director or executive officer of
the Company or any Company Subsidiary of any increase
in compensation, except in the ordinary course of
business consistent with prior practice or as was
required under employment agreements in effect as of
the date of the most recent financial statements
included in the Filed Company SEC Documents, (B) any
granting by the Company or any Company Subsidiary to
any such director or executive officer of any
increase in severance or termination pay, except as
was required under any employment, severance or
termination agreements in effect as of the date of
the most recent financial statements included in the
Filed Company SEC Documents, or (C) any entry by the
Company or any Company Subsidiary into any
employment, severance or termination agreement with
any such director or executive officer;
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<PAGE> 25
(v) any change in accounting methods, principles or
practices by the Company or any Company Subsidiary
materially affecting the consolidated assets,
liabilities or results of operations of the Company
and the Company Subsidiaries, except insofar as may
have been required by a change in GAAP; or
(vi) any elections with respect to Taxes (as defined in
Section 4.10) by the Company or any Company
Subsidiary or settlement or compromise by the Company
or any Company Subsidiary of any material Tax
liability or refund.
SECTION 4.10 Taxes.
(a) Each of the Company and each Company Subsidiary has timely
filed, or has caused to be timely filed on its behalf, all Tax Returns required
to be filed by it, and all such Tax Returns are true, complete and accurate in
all material respects. All Taxes shown to be due on such Tax Returns, or
otherwise owed, have been timely paid.
(b) The most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by
the Company and the Company Subsidiaries for all Taxable periods and portions
thereof through the date of such financial statements. No deficiency with
respect to any Taxes has been proposed, asserted or assessed in writing against
the Company or any Company Subsidiary, and no requests for waivers of the time
to assess any such Taxes are pending.
(c) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company or any
Company Subsidiary. Neither the Company nor any Company Subsidiary is bound by
any agreement with respect to Taxes.
(d) Since the formation of the Company, no Federal income Tax
Return of the Company or any Company Subsidiary consolidated in such Return has
been examined by or settled with the United States Internal Revenue Service.
(e) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
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<PAGE> 26
"Tax Return" means all Federal, state, local, provincial and
foreign Tax Returns, declarations, statements, reports, schedules, forms and
information Returns and any amended Tax Return relating to Taxes.
SECTION 4.11 Absence of Changes in Benefit Plans. Except as
disclosed in the Filed Company SEC Documents or in Section 4.11 of the Company
Disclosure Schedule, from the date of the most recent financial statements
included in the Filed Company SEC Documents to the date of this Agreement, there
has not been any adoption or amendment in any material respect by the Company or
any Company Subsidiary of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing benefits
to any current or former employee, officer or director of the Company or any
Company Subsidiary (collectively, "Company Benefit Plans"). Except as disclosed
in the Filed Company SEC Documents or in Section 4.11 of the Company Disclosure
Schedule, as of the date of this Agreement, there are not any employment,
consulting, indemnification, severance or termination agreements or arrangements
between the Company or any Company Subsidiary and any current or former
executive officer or director of the Company or general severance or termination
benefits plans or policies.
SECTION 4.12 ERISA Compliance: Excess Parachute Payments.
(a) Section 4.12 of the Company Disclosure Schedule contains a
list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Company Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
other Company Benefit Plans maintained, or contributed to, by the Company or any
Company Subsidiary for the benefit of any current or former employees, officers
or directors of the Company or any Company Subsidiary. The Company has made
available to Buyer true, complete and correct copies of (i) each Company Benefit
Plan (or, in the case of any unwritten Company Benefit Plan, a description
thereof), (ii) the two most recent annual reports on Form 5500 filed with the
Internal Revenue Service with respect to each Company Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is required and
(iv) each trust agreement and group annuity contract relating to any Company
Benefit Plan.
(b) Except as disclosed in Section 4.12 of the Company
Disclosure Schedule, all Company Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect that such
Company Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such determination
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letter has been revoked nor, to the knowledge of the Company, has revocation
been threatened, nor has any such Company Pension Plan been amended since the
date of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or materially increase its
costs. Each Company Benefit Plan has been administered in accordance with its
terms and applicable law, including the Code and ERISA.
(c) Except as disclosed in Section 4.12 of the Company
Disclosure Schedule, no Company Pension Plan, other than any Company Pension
Plan that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA (a "Company Multiemployer Pension Plan"), had, as of the respective last
annual valuation date for each such Company Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Buyer. None of the Company
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), whether or not waived. With
respect to any Pension Plan subject to Title IV of ERISA, the Company has not
incurred any material liability to such Company Pension Plan or to the Pension
Benefit Guaranty Corporation, other than for the payment of premiums, all of
which have been paid when due. None of the Company, any Company Subsidiary, any
officer of the Company or any of its Company Subsidiary or any of the Company
Benefit Plans which are subject to ERISA, including the Company Pension Plans,
any trusts created thereunder or any trustee or administrator thereof, has
engaged in a "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any Company Subsidiary or any
officer of the Company or any Company Subsidiary to the tax or penalty on
prohibited transactions imposed by such Section 4975 or to any liability under
Section 502(i) or 502(1) of ERISA. None of such Company Benefit Plans and trusts
has been terminated, nor has there been any reportable event (as that term is
defined in Section 4043 of ERISA) with respect to any Company Benefit Plan
during the last five years. Neither the Company nor any Company Subsidiary has
incurred a "complete withdrawal" or a "partial withdrawal" (as such terms are
defined in Sections 4203 and 4205, respectively, of ERISA) since the effective
date of such Sections 4203 and 4205 with respect to any of the Company
Multiemployer Pension Plans. The Company has not received any notification to
the effect that any Company Multiemployer Pension Plan is in reorganization or
is insolvent.
(d) With respect to any Company Benefit Plan that is an
employee welfare benefit plan, except as disclosed in Section 4.12 of the
Company Disclosure Schedule, (i) no such Company Benefit Plan is unfunded or
funded through a "welfare benefits fund" (as such term is defined in Section
419(e) of the Code), (ii) each such Company Benefit Plan that is a "group health
plan" (as such term is defined in Section 5000(b)(1) of the Code), complies with
the applicable requirements of Section 4980B(f) of the Code and (iii) each such
Company Benefit Plan (including any such Plan covering retirees or other former
employees) may be amended or terminated without
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<PAGE> 28
material liability to the Company and the Company Subsidiary on or at any time
after the Effective Time.
(e) Except as listed in Section 4.12 of the Company Disclosure
Schedule, no employee of the Company or any Company Subsidiary will be entitled
to any additional benefits or any acceleration of the time of payment or vesting
of any benefits under any Company Benefit Plan as a result of the Transactions.
Other than payments that may be made to the persons listed in the Company
Disclosure Schedule (the "Primary Company Executives"), any amount that could be
received (whether in cash or property or the vesting of property) as a result of
the Offer, the Merger or any other Transaction by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Company Benefit Plan currently in effect would not
be characterized as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code). Set forth in Section 4.12 of the Company Disclosure
Schedule is (i) the estimated maximum amount that could be paid to each Primary
Company Executive as a result of the Offer, the Merger and the other
Transactions under all employment, severance and termination agreements, other
compensation arrangements and Company Benefit Plans currently in effect and (ii)
the "base amount" (as defined in Section 280G(b)(3) of the Code) for each
Primary Company Executive calculated as of the date of this Agreement.
SECTION 4.13 Litigation. Except as disclosed in the Filed
Company SEC Documents or in Section 4.13 of the Company Disclosure Schedule,
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Company Subsidiary
(and the Company is not aware of any basis for any such suit, action or
proceeding) that, individually or in the aggregate, has had or would reasonably
be expected to have a Company Material Adverse Effect, nor is there any
judgment, order, or decree ("Judgment") outstanding against the Company or any
Company Subsidiary that has had or would reasonably be expected to have a
Company Material Adverse Effect.
SECTION 4.14 Environmental Matters.
(a) Neither the Company nor any Company Subsidiary (i) has
placed, held, located, released, transported or disposed of any Hazardous
Substances (as defined below) on, under, from or at any of the Company's or any
Company Subsidiary's properties or any other properties, other than in a manner
that would not, in all such cases taken individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect, (ii) is
aware of the presence of any Hazardous Substances on, under or at any of the
Company's or any Company Subsidiary's properties or any other property but
arising from the Company's or any Company Subsidiary's properties, other than in
a manner that could not, in all such cases taken individually or in the
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aggregate, reasonably be expected to result in a Company Material Adverse
Effect, or (iii) during the preceding five years, has received any written
notice (A) of any violation of any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity relating to any matter of
pollution, protection of the environment, environmental regulation or control or
regarding Hazardous Substances (collectively, "Environmental Laws") on or under
any of the Company's or any Company Subsidiaries' properties or any other
properties, (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any such violation, (C) requiring the response to or remediation
of Hazardous Substances at or arising from any of the Company's or any Company
Subsidiary's properties or any other properties, or (D) demanding payment for
response to or remediation of Hazardous Substances at or arising from any of the
Company's or any Company Subsidiary's properties or any other properties, except
in each case for the notices set forth in Section 4.14 of the Company Disclosure
Schedule and except for any such violations, suits, actions, claims,
proceedings, investigations, remediation requirements or payment as would not
reasonably be expected to have a Company Material Adverse Effect. For purposes
of this Agreement, the term "Hazardous Substance" shall mean any toxic or
hazardous wastes, materials or substances, including asbestos, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined as, or included in the definition of, "hazardous
substances," "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in Section 4.14 of the Company
Disclosure Schedule, no Environmental Law imposes any obligation upon the
Company or the Company Subsidiaries arising out of or as a condition to any
transaction contemplated by this Agreement, including, without limitation, any
requirement to modify or to transfer any permit or license, any requirement to
file any notice or other submission with any Governmental Entity, the placement
of any notice, acknowledgment or covenant in any land records, or the
modification of or provision of notice under any agreement, consent order or
consent decree, except for any such obligation the failure to comply with which
would not reasonably be expected to have a Company Material Adverse Effect. No
Lien has been placed upon any of the Company's or the Company Subsidiaries'
properties under any Environmental Law.
SECTION 4.15 Contracts. Except as disclosed in Section 4.15 of
the Company Disclosure Schedule, there are no contracts or agreements that are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and the Company
Subsidiaries taken as a whole. Neither the Company nor any of the Company
Subsidiaries is in violation of or in default in any material respect under any
contract disclosed in Section 4.15 of the Company Disclosure Schedule (nor does
there exist any condition which upon the passage of time or the giving of notice
would cause such a violation or default).
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SECTION 4.16 Labor Matters. Except as set forth in Section
4.16 of the Company Disclosure Schedule, there are no collective bargaining or
other labor union agreements to which the Company or any of the Company
Subsidiaries is a party or by which any of them is bound. To the best knowledge
of the Company, since December 31, 1997, neither the Company nor any of the
Company Subsidiaries has encountered any labor union organizing activity with
respect to its emphasis, or had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts.
SECTION 4.17 Transactions with Affiliates. Except as set forth
in Section 4.17 of the Company Disclosure Schedule or the Filed Company SEC
Documents, there is no agreement, contract or other arrangement between the
Company or any Company Subsidiary, on the one hand, and any affiliates of the
Company or any Company Subsidiary (other than the Company or a Company
Subsidiary), on the other hand, and none of such agreements will continue in
effect subsequent to the Closing. Except as set forth in Section 4.17 of the
Company Disclosure Schedule, after the Effective Time none of the Company's
affiliates (other than Merger Subsidiary or Buyer) will have any interest in any
property (real or personal, tangible or intangible) or contract used in or
pertaining to the business of the Surviving Corporation. Except as set forth in
Section 4.17 of the Company Disclosure Schedule, no affiliate of the Company
provides material services to the Company or any of the Company Subsidiaries.
SECTION 4.18 Brokers; Schedule of Fees and Expenses. Except
for DLJ and Morgan Stanley, whose fees will be paid by the Company, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of the Company or any Company Subsidiary
(or any director or officer thereof) who is entitled to any fee or commission
from the Company or any Company Subsidiary upon consummation of the transactions
contemplated by this Agreement. The estimated fees and expenses incurred and to
be incurred by the Company in connection with the Offer, the Merger and the
other Transactions (including the fees of DLJ and Morgan Stanley and the fees of
the Company's legal counsel) are set forth in Section 4.18 of the Company
Disclosure Schedule. The Company has furnished to Buyer a true and complete copy
of all agreements between the Company and DLJ and Morgan Stanley relating to the
Offer, the Merger and the other Transactions.
SECTION 4.19 Applicability of Section 203 of Delaware Law.
Section 203 of Delaware Law will not apply to the Offer, the acquisition of
Shares pursuant to the Offer or the Merger. The resolutions of the Board
referred to in Section 1.02(a) are sufficient to render inapplicable to Buyer
and Merger Subsidiary and the Transaction Agreements, the Offer, the Merger and
the other Transactions (i) the provisions of Section 203 of the Delaware Law and
(ii) the provisions of Article XI of the Certificate of Incorporation. To the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement, the Offer, the Merger or any other Transaction. The Company has
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been advised by each of its directors and executive officers that each such
person intends to tender all Shares owned by such person pursuant to the Offer,
except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
SECTION 4.20 Voting Requirements. In the event that Section
253 of Delaware Law is inapplicable and unavailable to effectuate the Merger,
the only vote of holders of any class or series of Company Capital Stock
necessary to approve and adopt this Agreement and the Merger is the adoption of
this Agreement by the holders of a majority of the outstanding shares of Class A
Common (the "Company Stockholder Approval"). The affirmative vote of the holders
of Company Capital Stock, or any of class or series of Company Capital Stock, is
not necessary to consummate the Offer or any Transaction other than the Merger.
The holders of Class B Common are not entitled to vote on the approval and
adoption of this Agreement.
SECTION 4.21 Opinion of Financial Advisors. The Company has
received the opinions of DLJ and Morgan Stanley to the effect that, as of the
date of this Agreement, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Buyer.
The Company has been authorized by DLJ and Morgan Stanley to permit the
inclusion of such opinion in its entirety in the 14D-9 and the Company Proxy
Statement, so long as such inclusion is in form and substance reasonably
satisfactory to DLJ and Morgan Stanley and their respective counsel.
SECTION 4.22 Major Advertisers. During the year ended December
31, 1997 and from January 1, 1998 through November 30, 1998, (i) no single
advertiser accounted for 5% or more of the consolidated revenues of the Company
and the Company Subsidiaries for such periods and (ii) the ten largest
advertisers of the Company and the Company Subsidiaries accounted for no more
than 25% of the consolidated revenues of the Company and the Company
Subsidiaries for such periods. From the date of the most recent financial
statements included in the Filed Company SEC Documents to the date of this
Agreement, none of the ten largest advertisers of the Company as of the date
hereof has informed the Company that such advertiser intends to cease doing
business with the Company.
SECTION 4.23 Intellectual Property. Section 4.23 of the
Company Disclosure Schedule lists all current registered and material
unregistered trademarks and service marks, trade names and any applications
therefor owned by the Company or the Company Subsidiaries (the "Company
Intellectual Property Rights"), and specifies the jurisdictions, if any, in
which each such Company Intellectual Property 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. Section 4.23 of the Company Disclosure Schedule
lists (i) all material licenses, sublicenses and other agreements as to which
the Company is a party
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and pursuant to which any person is authorized to use any Company Intellectual
Property Right and (ii) all material licenses, sublicenses and other agreements
as to which the Company is a party and pursuant to which the Company is
authorized to use any third party trademarks or service marks of a third party
in conjunction with any product or service, and identities of all parties
thereto and the trademarks or service marks licensed. Except as set forth in
Section 4.23 of the Company Disclosure Schedule, the Company or one of the
Company Subsidiaries owns, or has the right to use in the manner currently being
used by the Company or one of the Company Subsidiaries, without payment to any
other person, the Company Intellectual Property Rights listed in Section 4.23 of
the Company Disclosure Schedule and the consummation of the Transactions will
not conflict with, alter or impair any such rights.
SECTION 4.24 Year 2000 Compliance. Schedule 4.24 of the
Company Disclosure Schedule sets forth the Company's good faith assessment as to
whether the computer software used by the Company can reasonably be expected to
process information including the transition from December 31, 1999 to January
1, 2000 and dates in the year 2000 (and later years) as distinct from 1900's
years (commonly referred to as the "Year 2000" problem) in all material respects
in accordance with its intended purposes as of such dates, the steps that the
Company will likely be required to take to ensure that such computer software
used by the Company shall process such information in all material respects in
accordance with its intended purposes, and the Company's good faith assessment
of the expenditures that the Company is likely to incur in connection therewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries.
Each of Buyer and Merger Subsidiary is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals,
individually or in the aggregate, has not had, and would not reasonably be
expected to have a Buyer Material Adverse Effect (as defined below). Each of
Buyer and Merger Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that, individually
or in the aggregate, have not had, and would not
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reasonably expected to have a Buyer Material Adverse Effect. The term "Buyer
Material Adverse Effect" means a material adverse effect on the business,
results of operations or financial condition of Buyer and each of Buyer's
subsidiaries (collectively, the "Buyer Subsidiaries"), taken as a whole, or
prevents or materially delays the ability of Buyer or Merger Subsidiary to
perform its obligations under this Agreement or to consummate the Offer, the
Merger or the other Transactions; provided, however, any material adverse effect
that results substantially from the breach by the Company of this Agreement
shall be disregarded in determining whether there has been a "Buyer Material
Adverse Effect."
SECTION 5.02 Certificate of Incorporation and By-Laws. Buyer
has heretofore made available to the Company a complete and correct copy of the
Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to the date of the Agreement, of Buyer and Merger
Subsidiary. Such Certificates of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither Buyer nor Merger
Subsidiary is in violation of any provision of its Certificate of Incorporation,
By-Laws or equivalent organizational documents, except for such violation that
would not, individually or in the aggregate, have a Buyer Material Adverse
Effect.
SECTION 5.03 Authority Relative to this Agreement. Each of
Buyer and Merger Subsidiary has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject to
obtaining the Buyer Shareholder Approval (as defined below), to consummate the
Transactions. The execution and delivery of this Agreement by Buyer and Merger
Subsidiary and the consummation by Buyer and Merger Subsidiary of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the Transactions (other than the
approval of the Transaction Agreements, the Offer and the Merger by Buyer's
shareholders to the extent required under the rules of the London Stock Exchange
(the "Buyer Shareholder Approval") and, with respect to the Merger, the filing
of the appropriate merger documents with the Secretary of the State of Delaware
as required by Delaware Law). The Buyer Shareholder Approval shall require only
the affirmative vote of the holders of a majority of all of the outstanding
ordinary shares of Buyer that are entitled to vote upon the proposals to approve
the Transaction Agreements and are present or represented by proxy at the Buyer
Shareholders Meeting (as defined in Section 7.08). This Agreement has been duly
and validly executed and delivered by Buyer and Merger Subsidiary and, assuming
the due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of Buyer and Merger Subsidiary, enforceable
against Buyer and Merger Subsidiary in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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SECTION 5.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer and
Merger Subsidiary do not, and the consummation of the Offer, the Merger and the
other Transactions and compliance with the terms hereof will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of Buyer or Merger Subsidiary, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to Buyer
or any Buyer Subsidiary or by which any property or asset of Buyer or any Buyer
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of Buyer
or any Buyer Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or any Buyer Subsidiary is a party or by which Buyer
or any Buyer Subsidiary or any property or asset of Buyer or any Buyer
Subsidiary is bound or affected, except in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults or other
occurrences which, individually or in the aggregate, have not had and would not
reasonably be expected to have a Buyer Material Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer and
Merger Subsidiary do not, and neither the performance of this Agreement by Buyer
and Merger Subsidiary nor the consummation of the Transactions by the Company
will, require any consent, approval, authorization, order or permit of, or
filing with or notification to, any Governmental Entity, except for (A)
applicable requirements of the Exchange Act, (B) compliance with and filings
under the pre-merger notification requirements of the HSR Act, (C) filing of
appropriate merger documents with the Secretary of State of the State of
Delaware as required by Delaware Law, (D) Buyer Shareholder Approval and (E)
such other consents, approvals, authorizations or permits, filings or
notifications, not obtained or made prior to consummation of the Offer the
failure of which to be obtained or made would not prevent or delay consummation
of the Merger, or otherwise prevent Buyer or Merger Subsidiary from performing
its obligations under this Agreement in any material respect, and which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Buyer Material Adverse Effect.
SECTION 5.05 Documents Relating to Offer; Company Proxy
Statement. The Offer Documents and the Offer will comply in all material
respects with the applicable requirements of the Exchange Act, except that no
representation is made by Buyer or Merger Subsidiary with respect to information
supplied in writing by the Company specifically for use in the Offer Documents.
None of the information that may be supplied in writing by Buyer or its
affiliates specifically for use in the Company Proxy Statement, the 14D-9 or any
other document filed or to be filed with the SEC will contain any untrue
statement of a material fact or omit to state any material fact necessary in
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order to make the statements therein, in light of the circumstances under which
they were made, not misleading. If any such information provided by Buyer or its
affiliates shall, after the filing of the 14D-9, the Company Proxy Statement or
any other document filed by the Company with the SEC, become false or misleading
in any material respect, Buyer shall promptly notify the Company and update such
information in writing.
SECTION 5.06 Financing. Merger Subsidiary has, or Buyer will
cause Merger Subsidiary to have, sufficient funds available to purchase all
Shares outstanding for the Merger Consideration on the termination date of the
Offer and otherwise comply with the terms set forth herein (the "Financing").
SECTION 5.07 Brokers. Except for J. Henry Schroder & Co.
Limited , whose fees will be paid by Buyer, there is no investment banker,
broker, finder or other intermediary who might be entitled on account of any
agreement binding upon Buyer, Merger Subsidiary or any of their respective
affiliates to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
SECTION 5.08. Director Recommendations. The Directors of Buyer
have at a meeting duly called and held unanimously (a) approved the Agreement
and the Transactions, including the Offer and the Merger and (b) recommended
that the shareholders of Buyer approve this Agreement and all actions
contemplated hereby that require the approval of Buyer's shareholders.
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ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 Conduct of the Company. The Company covenants and
agrees that, between the date of this Agreement and continuing until the earlier
to occur of the Effective Time or the election of the Buyer's designees
representing a majority of the members of the Board in accordance with Section
1.03, unless Buyer shall have consented in writing, the businesses of the
Company and the Company Subsidiaries shall be conducted in, and the Company and
the Company Subsidiaries shall not take any action except in the ordinary course
of business, consistent with past practice, and the Company shall, and shall
cause the Company Subsidiaries to, use their respective reasonable best efforts
to preserve substantially intact their respective business organizations, to
keep available the services of their respective current officers, employees and
consultants and to preserve their respective relationships with customers,
suppliers, licensors, licensees, distributors and other persons with which it or
any of the Company Subsidiaries has significant business relations as well as
with officials and employees of government agencies and other entities which
regulate the Company, the Company Subsidiaries and their business to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time; provided, that notwithstanding the foregoing or the following provisions,
the Company may take all actions necessary and desirable to consummate the
Transactions and incur and pay the fees and expenses in connection therewith
disclosed in Section 4.18. By way of amplification and not limitation, except
(i) as expressly contemplated by this Agreement, or (ii) as set forth on Section
6.01 of the Company Disclosure Schedule, neither the Company nor any of the
Company Subsidiaries shall, between the date of this Agreement and the Effective
Time, directly or indirectly do, or propose or agree to do, any of the following
without the prior written consent of Buyer:
(a) amend or otherwise change the certificate of
incorporation, by-laws or other comparable charter or organizational document of
the Company or any Company Subsidiary;
(b) (i) issue, deliver, grant or sell, or authorize the
issuance or sale of, any shares of capital stock of any class of, or any Voting
Company Debt, or any other ownership interest in, the Company or any of the
Company Subsidiaries, or any options, warrants or other securities or rights
convertible into, exchangeable for, evidencing the right to subscribe for or
purchase, or otherwise providing for the right to acquire capital stock, or any
other ownership interest (including, without limitation, any phantom interest)
of the Company or any of the Company Subsidiaries (other than the issuance of
shares of capital stock in connection with (A) the exercise of the Options or
the Warrants, (B) the then current offering period in effect under the Stock
Purchase Plan as in effect on the date of this Agreement or (C) the conversion
of shares of Class B Common to Class A Common at the request of the holder
thereof), or (ii) authorize the sale of any assets of it or any of the Company
Subsidiaries, except for sales in the ordinary course of business or which,
individually,
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do not exceed $1.0 million or which, in the aggregate, do not exceed $3.0
million, or (iii) amend, waive or otherwise modify any of the terms of any
option, warrant or stock option plan of the Company or any Company Subsidiary,
including without limitation the Options, the Warrants and the Stock Purchase
Plan;
(c) declare, set aside or pay any dividend on or other actual,
constructive or deemed distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (other than a divided or
distribution payable solely to the Company or a Company Subsidiary) or otherwise
make any payments to stockholders in their capacity as stockholders;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any capital stock of the Company
or any Company Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities other than
shares of Class B Common upon conversion to Class A Common at the request of the
holder thereof;
(e) (i) acquire or agree to acquire (for cash, shares of stock
or other consideration) (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or by any other manner) any
corporation, partnership, joint venture, association or other business
organization or any division thereof (or a substantial portion of the assets
thereof) or any other assets, except for (A) such acquisitions which,
individually or in the aggregate, do not exceed $1.0 million or, (B) any
acquisition described in Section 6.01 of the Company Disclosure Schedule; (ii)
incur any indebtedness for borrowed money or issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company or any
Company Subsidiary, or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, or make any loans, advances or capital contributions to,
or investments in, any other person, other than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company, except (A) to finance
any acquisition permitted under this Section 6.01(e) or (B) borrowings under
existing bank lines of credit incurred in the ordinary course of business
consistent with past practices, or (iii) enter into or amend any contract,
agreement, commitment or arrangement to effectuate any prohibited matter set
forth in this Section 6.01(e);
(f) hire any employee with aggregate annual compensation and
benefits in excess of $100,000, or adopt, enter into, establish or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee that increase in any manner the
compensation, retirement, welfare or fringe benefits of any director, officer or
employee, or pay any benefit not
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required by any existing plan, agreement or arrangement (including without
limitation the granting of stock options or stock appreciation rights) or take
any action or grant any benefit not expressly required under the terms of any
existing agreements, trusts, plans, funds or other such arrangements or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing, except pursuant to collective bargaining agreements as presently in
effect;
(g) take any action, other than as required by a change in
GAAP, with respect to accounting methods, practices, policies or procedures;
(h) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the Company or
any of its Material Subsidiaries;
(i) make or change any Tax election or settle or compromise
any material Tax liability or refund;
(j) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted, unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their terms of
liabilities reflected or reserved against in the most recent consolidated
financial statements of the Company included in the Filed Company SEC Documents
or incurred in the ordinary course of business consistent with past practice,
(ii) cancel any material indebtedness (individually or in the aggregate) or
waive any claims or rights of substantial value or (iii) waive the benefits of,
or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any Company Subsidiary is a party;
(k) other than in the ordinary course of business consistent
with past practice, waive any rights of substantial value or make any payment,
direct or indirect, of any material liability of the Company or any of the
Company Subsidiaries before the same comes due in accordance with its terms;
(l) fail to maintain its existing insurance coverage of all
types in effect or, in the event any such coverage shall be terminated or lapse,
to the extent available at reasonable cost, procure substantially similar
substitute insurance policies which in all material respects are in at least
such amounts and against such risks as are currently covered by such policies;
(m) enter into any collective bargaining agreement;
(n) sell, lease, license or otherwise dispose of or subject to
any Lien (other than Permitted Liens) any properties or assets, except sales of
inventory and excess or obsolete assets in the ordinary course of business
consistent with past practice;
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(o) make or agree to make any new capital expenditure that is
in excess of $500,000 (except to consummate any acquisition not prohibited by
Section 6.01(e));
(p) initiate or threaten litigation against any third party;
(q) (i) make any changes in advertising or subscription rates,
policies or procedures that are not consistent with past practices or (ii) make
any material change in advertising or subscription rates, policies or procedures
(whether or not consistent with past practices);
(r) launch any new magazine or other product in excess of
$1,000,000 (losses to profits for whole project); or
(s) authorize any of, or commit or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
SECTION 6.02 Stockholders' Meeting; Proxy Materials. Unless
Buyer or Merger Subsidiary acquires at least (x) 90% of the outstanding shares
of the Class A Common, and (y) 90% of the outstanding shares of Class B Common,
in which case Buyer shall cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a vote of the Company's
stockholders as permitted under Delaware Law, if required by applicable law the
Company shall cause a special meeting of its stockholders (the "Company
Stockholders Meeting") to be duly called and held as soon as reasonably
practicable after the purchase of Shares pursuant to the Offer for the purpose
of acting upon proposals to adopt this Agreement and all actions contemplated
hereby that require the approval of the Company's stockholders. The Board shall
recommend approval and adoption of this Agreement by the Company's stockholders,
unless the Board after consultation with and based upon advice of legal counsel
(who may be the Company's regularly engaged legal counsel) determines in good
faith that such action is necessary for the Board to comply with its fiduciary
duties to stockholders under applicable law. In connection with the Company
Stockholders Meeting, the Company shall in accordance with applicable law and
after consultation with Buyer prepare and file with the SEC a preliminary
Company Proxy Statement relating to the matters to be considered at the Company
Stockholders Meeting, respond promptly to any comments made by the SEC with
respect to the preliminary Company Proxy Statement and cause a definitive
Company Proxy Statement to be mailed to its stockholders as promptly as
reasonably practicable after filing with the SEC.
SECTION 6.03 Access to Information. The Company will, and will
cause each of the Company Subsidiaries to, give Buyer, Buyer's officers,
employees, counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours during the period
prior to the Effective Time to all their respective employees, offices,
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properties, books and records of the Company and furnish to Buyer, its officers,
employees, counsel, financial advisors, auditors and authorized representatives
such financial and operating data and other information as such persons may
reasonably request, and will cause the Company's and the Company Subsidiaries'
employees, counsel and financial advisors to cooperate with Buyer, in each case
in order to facilitate an orderly transition of the ownership of the Company to
Buyer; provided, however, that the Company shall not be required to disclose
information that would otherwise jeopardize protections offered under the
attorney-client privilege or the work product doctrine or would violate an
existing confidentiality agreement under which the Company or a Company
Subsidiary is bound. Without limiting the generality of the foregoing, the
Company shall, within two business days of request therefor, provide to Buyer
the information described in Rule 14a-7(a)(2)(ii) under the Exchange Act and any
information to which a holder of Shares would be entitled under Section 220 of
the Delaware Law (assuming such holder met the requirements of such section).
SECTION 6.04 No Solicitations.
(a) From and after the date hereof until the termination of
this Agreement, the Company shall not, and shall cause each of the Company
Subsidiaries and its and their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of the
Company Subsidiaries) not to, directly or indirectly, invite, initiate, solicit
or knowingly encourage (including by way of furnishing non-public information or
assistance), any inquiries or the making of any proposal that constitutes any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiations with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its respective officers,
directors or employees or any of the Company Subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative retained
by it or any of the Company Subsidiaries to take any such action; provided,
however, that nothing contained in this Section 6.04 shall prohibit the Board,
or any of the Company's financial advisors or attorneys, officers, directors
from (i) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal or (ii) (A) providing information in response
to a request therefor by a person who has made an unsolicited bona fide written
Acquisition Proposal if prior to providing such information the Board informs
such person in writing of the existence and the material terms of the Company
Stockholders Agreement and receives from such person an executed confidentiality
agreement on terms substantially equivalent to those contained in the
Confidentiality Agreement (as defined in Section 7.01); (B) engaging in any
negotiations or discussions with any person who has made an unsolicited bona
fide written Acquisition Proposal; or (C) recommending such an Acquisition
Proposal to the stockholders of the Company, if and only to the extent that, (i)
in each such case referred to in clause (A), (B) or (C) above, the Board
determines in good faith after consultation with independent legal counsel (who
may be the Company's regularly engaged legal
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counsel) that such action is necessary in order for the Board to comply with its
fiduciary duties to stockholders under applicable law and (ii) in each case
referred to in clause (B) or (C) above, the Board determines in good faith
(after consultation with its independent legal counsel, who may be the Company's
regularly engaged legal counsel, and financial advisor) that such Acquisition
Proposal is reasonably capable of being consummated, taking into account all
legal, financial and regulatory aspects of the proposal, the terms of the
Company Stockholders Agreement and the person making the proposal and that such
Acquisition Proposal would, if consummated, be more favorable, from a financial
point of view (either short or long-term), to the stockholders of the Company
than the Transactions (any such more favorable Acquisition Proposal satisfying
all the criteria of this clause (ii) being referred to in this Agreement as a
"Superior Proposal"). For purposes of this Agreement, "Acquisition Proposal"
shall mean any of the following (other than the transactions between the
Company, Buyer and Merger Subsidiary contemplated hereunder) involving the
Company or any of the Company Subsidiaries: (i) any merger, consolidation, share
exchange or other similar transaction involving the Company; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of all or
substantially all of the assets of the Company and the Company Subsidiaries,
taken as a whole, in a single transaction or series of transactions; or (iii)
any tender offer or exchange offer for 50% or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith. The Company represents that neither it
nor, to its knowledge without independent inquiry having been made, any of its
stockholders is a party to or bound by any agreement with respect to an
Acquisition Proposal.
(b) The Company promptly shall advise Buyer orally and in
writing of any Acquisition Proposal or any inquiry with respect to any
Acquisition Proposal including any change to the material terms of any such
Acquisition Proposal or inquiry. The Company shall keep Buyer fully informed of
the status including any change to the material terms of any such Acquisition
Proposal or inquiry.
SECTION 6.05 Notices of Certain Events. The Company shall
promptly notify Buyer orally and in writing of and consult with Buyer with
respect to:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any
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Company Subsidiary on the date of this Agreement which will preclude the
consummation of the Transactions or result in, or is reasonably likely to result
in, a Company Material Adverse Effect;
(d) the occurrence, or non-occurrence, of any event which
would or is reasonably like to cause (i) any condition set forth in Exhibit A to
be unsatisfied at the time Buyer or Merger Subsidiary purchases Shares pursuant
to the Offer, or (ii) any condition set forth in Article IX hereof to be
unsatisfied at the Effective Time; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement; and
(e) any change (i) in the Company's annual budget, (ii) in the
Company's strategic objectives, (iii) or event which is material to the conduct
of any pending litigation (including any proposed settlement thereof) or (iv) or
event having, or which, would reasonably expected to have, a Company Material
Adverse Effect.
SECTION 6.06 Debt Instruments. Prior to the Effective Time,
the Company and each Company Subsidiary shall seek waivers from the parties
thereto with respect to the occurrence, as a result of the Merger, the Offer and
the other transactions contemplated by this Agreement, of a change in control or
any other event which constitutes a default (or an event which with notice or
lapse of time or both would become a default) under the Credit Agreement (as
defined in Section 7.06).
SECTION 6.07 Exchange of Shares of Class B Common. Upon
delivery by Merger Subsidiary to the Company of certificates representing shares
of Class B Common and a notice and certificate in substantially the form
attached as Exhibit B hereto, the Company shall immediately effect the exchange
of such shares for an equal number of shares of Class A Common and issue a
certificate representing such shares of Class A Common to Merger Subsidiary. The
Company hereby represents and warrants that upon such exchange, Merger
Subsidiary shall have the same rights with respect to shares of Class A Common
issued to it upon such exchange including, without limitation, voting rights, as
those of holders of shares of Class A Common on the date hereof.
SECTION 6.08 Consent to Revocation of Proxy. The Company
hereby expressly consents, to the extent that any such consent may be required,
to the revocation, as set forth in the Company Stockholders Agreement, of any
and all proxies granted by certain stockholders of the Company to Willis Stein &
Partners, L.P. pursuant to the Securityholders Agreement, dated as of September
30, 1996, as amended by Amendment No. 1 to Securityholders Agreement, dated as
of September 30, 1997, among the Company and the stockholders named therein.
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ARTICLE VII
COVENANTS OF BUYER
SECTION 7.01 Confidentiality. All information obtained by
Buyer in connection with the Transactions shall be kept confidential in
accordance with the Confidentiality Agreement, dated November 18, 1998, between
the Company and Buyer (the "Confidentiality Agreement"); provided, that any
provisions of the Confidentiality Agreement that would prohibit Buyer or Merger
Subsidiary from engaging in the Transactions shall be deemed to be modified to
the extent required to permit Buyer and Merger Subsidiary to engage in all such
Transactions.
SECTION 7.02 Obligations of Merger Subsidiary. Buyer will take
all action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement and shall be responsible for any and all breaches or
other violations of this Agreement by Merger Subsidiary.
SECTION 7.03 Voting of Shares. Buyer agrees to vote all Shares
owned by Buyer, Merger Subsidiary or any of their affiliates in favor of
approval and adoption of this Agreement at the Company Stockholders Meeting.
SECTION 7.04 Director and Officer Liability.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
officers and directors of the Company (collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages, liabilities or amounts that are
paid in settlement of, with the approval of the Surviving Corporation (which
approval shall not unreasonably be withheld), or otherwise incurred in
connection with any claim, action, suit, proceeding or investigation (a
"Claim"), based in whole or in part by reason of the fact that such person is or
was a director or officer of the Company and arising out of actions, events or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions
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contemplated by this Agreement), in each case to the full extent permitted under
Delaware Law (and shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the fullest extent
permitted under Delaware Law, upon receipt from the Indemnified Party to whom
expenses are advanced of the undertaking to repay such advances contemplated by
Section 145(e) of Delaware Law); provided, that the Surviving Corporation shall
indemnify, defend and hold harmless the Indemnified Parties, and pay expenses in
advance, only to the same extent and on the same terms (including with respect
to advancement of expenses) provided for in the Company's Certificate of
Incorporation and By-Laws in effect on the date hereof (to the extent consistent
with applicable law), which rights pursuant to such provisions shall survive the
Merger and continue in full force and effect for a period of six years after the
Effective Time.
(c) Without limiting the foregoing, in the event any Claim is
brought against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) such Indemnified Party may retain
the Company's regularly engaged independent legal counsel or other independent
legal counsel satisfactory to such person, provided that such other counsel
shall be reasonably acceptable to the Surviving Corporation, (ii) the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for such
Indemnified Party promptly as and which statements therefor are received and
(iii) the Surviving Corporation will use its reasonable best efforts to assist
in the vigorous defense of any such matter, provided that the Surviving
Corporation shall not be liable for any settlement of any Claim effected without
its written consent, which consent shall not be unreasonably withheld; provided,
that the Surviving Corporation shall indemnify, defend and hold harmless the
Indemnified Parties, and pay expenses in advance, only to the same extent and on
the same terms (including with respect to advancement of expenses) provided for
in the Company's Certificate of Incorporation and By-Laws in effect on the date
hereof (to the extent consistent with applicable law), which rights pursuant to
such provisions shall survive the Merger and continue in full force and effect
for a period of six years after the Effective Time. Any Indemnified Party
wishing to claim indemnification under this Section 7.04 upon learning of any
such Claim shall notify the Surviving Corporation (although the failure so to
notify the Surviving Corporation shall not relieve the Surviving Corporation
from any liability which the Surviving Corporation may have under this Section
7.04, except to the extent such failure materially prejudices the Surviving
Corporation's position with respect to such claim), and shall deliver to the
Surviving Corporation the undertaking contemplated by Section 145(e) of Delaware
Law. Indemnified Parties who are parties to the same action as a group may
retain no more than one law firm (in addition to local counsel) to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct (as determined by any counsel to the
Indemnified Parties), an actual conflict between the interests of any two or
more Indemnified Parties, in which event such additional counsel as may be
required may be retained by the Indemnified Parties.
(d) For a period of three years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the liability
insurance policies for directors and officers which are currently maintained by
the Company with respect to claims arising from facts
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or events which occurred before the Effective Time (provided that Buyer may
substitute therefor policies issued by insurance companies of comparable or
higher rating of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties). Notwithstanding the foregoing, Buyer shall not be required
to pay an annual premium for such insurance in excess of $250,000, but in such
case shall purchase as much coverage as possible for such amount. The Company
represents and warrants to Buyer that the last premium for such insurance paid
by the Company for the period from October 1, 1997 to October 1, 2000 was
$352,260.
(e) The Company and Buyer shall have no obligation under this
Section 7.04 to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. In the event
that it shall be determined in a final judicial proceeding that a person who has
received advance payments of expenses or indemnification sums pursuant to this
Section 7.04 shall not be entitled to indemnification hereunder such person
shall repay to Buyer or the Company, as the case may be, all such expenses and
sums, plus interest thereto to the date of repayment immediately following such
determination.
(f) Each Indemnified Party shall have rights as a third party
beneficiary under this Section 7.04 as separate contractual rights for his or
her benefit and such right shall be enforceable by such Indemnified Party, its
heirs and personal representatives and shall be binding on the Surviving
Corporation and its successors and assigns.
SECTION 7.05 Employee Benefits. Except as otherwise may be
provided pursuant to a collective bargaining agreement, Buyer shall cause the
Surviving Corporation to maintain or provide the employees of the Surviving
Corporation and its subsidiaries for a period of one (1) year after the
Effective Time with employee benefits that are in the aggregate substantially
comparable to those provided by the Company and the Company Subsidiaries on the
date hereof. Buyer shall cause the Surviving Corporation to honor the terms of
all employment agreements of the Company and the Company Subsidiaries, the
existence of which do not violate this Agreement. Buyer shall cause the
Surviving Corporation to honor all collective bargaining agreements by which the
Company or any of the Company Subsidiaries is bound.
SECTION 7.06 Repayment of Debt. With respect to debt issued by
the Company and/or a Company Subsidiary under the Credit Agreement, dated as of
March 31, 1998, as amended, among the Company, Petersen Publishing Company LLC
and certain financial institutions thereto (the "Credit Agreement"), following
the Effective Time Buyer shall repay all indebtedness thereunder (including any
premiums or penalties).
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SECTION 7.07 Notices of Certain Events. Buyer shall promptly
notify the Company) orally and in writing of and consult with the Company with
respect to:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting Buyer or any Buyer Subsidiary on the date of
this Agreement which will preclude the consummation of the transactions
contemplated by this Agreement or result in a Buyer Material Adverse Effect;
(d) the occurrence, or non-occurrence, of any event which
would cause (i) any condition set forth in Exhibit A to be unsatisfied at the
time Buyer or Merger Subsidiary purchases Shares pursuant to the Offer or (ii)
any condition set forth in Article IX hereof to be unsatisfied at the Effective
Time; and
(e) the occurrence of any event which would cause the
Directors of Buyer to modify or withdraw their approval or recommendations from
this Agreement and all actions contemplated hereby that require the approval of
Buyer's shareholders.
SECTION 7.08 Shareholders' Meeting; Offering Circular. Buyer
shall cause an extraordinary general meeting of its shareholders (the "Buyer
Shareholders Meeting") to be duly called and held as soon as reasonably
practicable and in no event later than January 4, 1999 for the purpose of acting
upon proposals to approve this Agreement and all actions contemplated hereby
that require the approval of Buyer's shareholders. Unless otherwise required
pursuant to their fiduciary duties to Buyer's shareholders (as determined in
good faith by the Directors of Buyer based upon the advice of independent legal
counsel), the Directors of Buyer shall not modify, withdraw or otherwise change
their prior recommendation that the Buyer's shareholders approve this Agreement
and all actions contemplated hereby that require the approval of Buyer's
shareholders. In connection with Buyer Shareholders Meeting, Buyer shall in
accordance with applicable law and stock exchange regulations, as soon as
practicable file with the London Stock Exchange a preliminary copy of its Super
Class 1 Offering Circular (the "Offering Circular") relating to the matters to
be considered at Buyer Shareholders Meeting, respond promptly to any comments
made by the London Stock Exchange with respect to the preliminary Offering
Circular and cause a definitive Offering Circular to be mailed to its
shareholders as promptly as practicable after filing with the London Stock
Exchange.
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ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.01 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement,
each party will use its commercially reasonable best efforts to take, or cause
to be taken, all action and to do, or cause to be done, and to assist and
cooperate with the other parties in doing all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, the Offer, the Merger and the other Transactions including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of this
Agreement. In connection with and without limiting the foregoing, the Company
and the Board shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
any Transaction or any Transaction Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to any Transaction
Agreement, take all action necessary to ensure that the Offer, the Merger and
the other Transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger and the other Transactions
and (iii) use reasonable efforts cooperate with Buyer and Merger Subsidiary
arrangements for obtaining the Financing. Nothing in this Agreement shall be
deemed to require any party to waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of any significant asset
or collection of assets. In case at any time after the Effective Time any
further action is necessary or desirable to consummate more effectively the
actions contemplated by this Agreement, at the request of the other party hereto
and at the expense of the party so requesting, Buyer and Merger Subsidiary, on
the one hand, and the Company, on the other hand, shall execute and deliver to
such requesting party such documents and take such other action as such
requesting party may reasonably request.
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(b) In the event any action, suit, claim, investigation or
other proceeding relating to this Agreement, the Merger or the other
Transactions hereby shall be commenced prior to the Effective Time, each of the
parties hereto agrees, to cooperate with each other party hereto and to use its
commercially reasonable best efforts to respond to and to defend vigorously
against such proceeding; provided, however, that nothing in this Section 8.01(b)
shall be interpreted to prohibit the Company from taking any action permitted by
Section 6.04(a).
SECTION 8.02 Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the Company
Disclosure Documents, the Offer Documents and the Offering Circular, and (b) in
determining whether any other action by or in respect of, or filing with, any
governmental body, agency or official, or authority or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts in connection with the consummation of the Transactions and (c) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents, the Offer Documents or the Offering Circular and
seeking timely to obtain any such actions, consents, approvals or waivers
(including, without limitation, as may be required under the HSR Act).
SECTION 8.03 Public Announcements. Buyer and the Company will
consult with each other before issuing or making, and provide each other the
opportunity to review and comment upon, any press release or public statement
with respect to this Agreement, the Offer, the Merger and the other
Transactions, and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or any listing agreement with any national securities exchange or the London
Stock Exchange.
SECTION 8.04 Other Actions. The Company and Buyer shall not,
and shall ensure that none of their respective subsidiaries shall, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of such party set forth in this Agreement
that is qualified as to materially becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) any condition to the Offer set forth in Exhibit A, or
any condition to the Merger set forth in Exhibit A, or any condition to the
Merger set forth in Article IX, not being satisfied.
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ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party. The
respective obligations of the Company, Buyer and Merger Subsidiary to consummate
the Merger are subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) if required by Delaware Law, this Agreement shall have
been approved and adopted by the stockholders of the Company in accordance with
Delaware Law (except that this condition shall be deemed satisfied if Buyer
and/or Merger Subsidiary shall have acquired (x) 90% or more of the outstanding
shares of Class A Common and (y) 90% or more of the outstanding shares of Class
B Common);
(b) any applicable waiting period (and any extension thereof)
under the HSR Act relating to the Merger shall have expired or been terminated;
(c) no Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued or enforced any statute,
regulation, decree, injunction or other order which has become final and
nonappealable and which prohibits the consummation of the Merger; provided,
however, that each of the parties shall have used its best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered prior to it
having become final and nonappealable; and
(d) Merger Subsidiary shall have purchased pursuant to the
Offer all Shares validly tendered prior to the expiration thereof and not
withdrawn or shall have purchased pursuant to the Company Stockholders Agreement
all Shares tendered thereunder.
ARTICLE X
TERMINATION; EXPENSES
SECTION 10.01 Termination. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Effective Time
(notwithstanding any approval and adoption of this Agreement by the stockholders
of the Company and by the shareholders of Buyer):
(a) by mutual written consent of the Company and Buyer;
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(b) by either Buyer or the Company, if any permanent
injunction or action by any Governmental Entity or by any federal or state court
of competent jurisdiction (other than a temporary restraining order) preventing
the consummation of the Merger shall have become final and nonappealable;
(c) by either Buyer or the Company, if the Merger shall not
have been consummated before June 30, 1999, unless the failure to consummate the
Merger is the result of a breach of this Agreement by the party seeking to
terminate this Agreement; provided, however, that this Agreement may be extended
by written notice of either Buyer or the Company to a date not later than
September 30, 1999, if the Merger shall not have been consummated as a direct
result of Buyer or the Company having failed by June 30, 1999, to receive all
required approvals or consents with respect to the Merger;
(d) by the Company, at any time three business days or more
following termination or expiration of the Offer without Merger Subsidiary
purchasing Shares thereunder, so long as no Shares have been purchased pursuant
to the Company Stockholders Agreement;
(e) by Buyer, if the Offer shall have expired without the
purchase of the Shares thereunder and the Minimum Condition shall not have been
satisfied, or Buyer or Merger Subsidiary shall, in accordance with Exhibit A
hereto, have terminated the Offer without purchasing Shares thereunder, in each
case so long as no Shares have been purchased pursuant to the Company
Stockholders Agreement and neither Buyer nor Merger Subsidiary has breached any
of its obligations under Section 1.01 of this Agreement or is in breach of any
of its other obligations under this Agreement and such breach has resulted in
the failure of any condition set forth in Exhibit A to be satisfied;
(f) by the Company, if the Merger shall fail to receive the
requisite vote for approval and adoption by the stockholders of the Company at
the Company Stockholders Meeting;
(g) by the Company, if the Board fails to make or withdraws or
modifies its recommendation referred to in Section 6.02 so long as the Board,
after consultation with and based upon the advice of legal counsel (who may be
the Company's regularly engaged legal counsel), determines in good faith that
such action is necessary for the Board to comply with its fiduciary duties to
stockholders under applicable law and, after consultation with its independent
legal counsel and financial advisor, determines in good faith that the
Acquisition Proposal is a Superior Proposal; provided, that the Company may not
terminate this Agreement pursuant to this Section 10.01(g) after such time as
Merger Subsidiary has purchased upon expiration of the Offer all Shares validly
tendered in the Offer and not withdrawn or Buyer or Merger Subsidiary has
purchased Shares pursuant to the Company Stockholders Agreement;
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(h) by either Buyer or the Company, if the Merger shall fail
to receive the requisite vote for approval by the shareholders of Buyer at the
Buyer Shareholders Meeting;
(i) by Buyer, in the event of any breach of the
representations and warranties of the Company set forth in this Agreement other
than any breach that individually or in the aggregate with each other such
breach has not had and would not reasonably be expected to have a Company
Material Adverse Effect; provided, that for purposes of this Section 10.01(i)
each such representation and warranty of the Company set forth in this Agreement
shall be read without giving effect to any qualification as to materiality or a
Company Material Adverse Effect, or if the Company breaches or fails to perform
in any material respect any of its covenants contained in this Agreement, which
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Exhibit A and (ii) has not been cured within 30 days after the
giving of written notice to Buyer of such breach; provided, that Buyer may not
terminate this Agreement pursuant to this Section 10.01(i) if (x) Buyer or
Merger Subsidiary is then in material breach of any covenant contained in this
Agreement, (y) any Shares have been purchased in the Offer or (z) any Shares
have been purchased pursuant to the Company Stockholders Agreement;
(j) by the Company, in the event of any breach of the
representations and warranties of Buyer or Merger Subsidiary set forth in this
Agreement that are qualified as to materiality or any breach of any
representations and warranties of Buyer or Merger Subsidiary set forth in this
Agreement that are not so qualified in any material respect and, individually or
in the aggregate, such breach has had a Buyer Material Adverse Effect or if
Buyer or Merger Subsidiary breaches or fails to perform in any material respect
any of its covenants contained in this Agreement, which breach or failure to
perform has not been cured within 30 days after the giving of written notice to
Company of such breach; provided, that the Company may not terminate this
Agreement pursuant to this Section 10.01(j) if (x) the Company is then in
material breach of any covenant contained in this Agreement, (y) any Shares have
been purchased in the Offer or (z) any Shares have been purchased pursuant to
the Company Stockholders Agreement; or
(k) by the Company, if the Buyer Shareholders Meeting is not
held on or prior to January 4, 1999; provided, however, that the Company may not
terminate this Agreement pursuant to this Section 10.01(k) if the Buyer has
obtained the approval of its shareholders of the Transactions prior to delivery
by the Company of its notice of termination hereunder.
The right of any party hereto to terminate this Agreement
pursuant to this Section 10.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto,
any person controlling or controlled by any such party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement.
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SECTION 10.02 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that the
agreements contained in Sections 4.19, 5.07, 7.01, this Section 10.02, Article
XI and Section 10.03 shall survive the termination hereof, and except that no
such termination shall relieve any party from liability for breach of this
Agreement or failure by such party to perform its obligations hereunder.
SECTION 10.03 Fees and Expenses. All out-of-pocket costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred directly or indirectly by the
parties hereto in respect of the Merger and the other Transactions shall be
borne by the party to this Agreement which has incurred such costs and expenses
(with respect to such party, its "Expenses"); provided, however, that if the
Merger is consummated all Expenses of the Company shall be paid by the Surviving
Corporation.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing including facsimile,
telex or similar writing) and shall be given,
If to Buyer or Merger Subsidiary, to:
EMAP plc
1 Lincoln Court
Lincoln Road
Peterborough PE1 2RF
England
Attention: Chief Executive Officer
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Richard Hall
Daniel P. Cunningham
if to the Company, to:
The Petersen Companies, Inc.
6420 Wilshire Boulevard
Los Angeles, CA 90048
Attention: Chief Financial Officer
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Weissenbach
Dennis M. Myers
or such other address, as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile and received at or
prior to 5:00 p.m. local time on a business day, upon confirmation of receipt,
and if given by facsimile and received at any other time, upon the next business
day or (ii) if given by any other means, when delivered at the address specified
in this Section 11.01.
SECTION 11.02 Survival of Representations, Warranties and
Covenants. The representations and warranties contained herein shall not survive
the Effective Time. This Section 11.02 shall not limit any covenant or agreement
of the parties which by its terms contemplate performance after the Effective
Time.
SECTION 11.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company and Buyer or in
the case of a waiver, by the party against whom the
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waiver is to be effective; provided, however, that after receipt of the Company
Stockholder Approval and Buyer Shareholder Approval, there shall be made no
amendment that by law requires further approval by the stockholders of the
Company or the shareholders of Buyer without the further approval of such
stockholders or shareholders, as the case may be; provided, further, that after
the adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change in a manner adverse to the holders of any shares of capital
stock of the Company (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, (ii) any term of the
Certificate of Incorporation of the Surviving Corporation or (iii) any of the
terms or conditions of this Agreement.
(b) At any time prior to the Effective Time, the parties may
(a) extend the time for the performance of any of the obligations or other acts
of the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the first proviso of Section 11.03(a), waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No failure or delay by any 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 further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04 Successors and Assigns. Subject to the following
provisos, the provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successor and assigns,
provided that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of the other
parties hereto; provided, further, that Merger Subsidiary may assign, in its
sole discretion, all its rights and, interests under this Agreement to Buyer or
to any direct or indirect wholly owned subsidiary of Buyer so long as Buyer or
such assignee also assumes all of Merger Subsidiary's obligations under this
Agreement and Buyer acknowledges to the Company in a way satisfactory to the
Company that Buyer will cause such assignee to satisfy all of such obligations,
but no such assignment shall relieve Merger Subsidiary of any of its obligations
under this Agreement.
SECTION 11.05 Governing Law; Consent to Jurisdiction. This
Agreement shall be construed in accordance with and governed in all respects,
including validity, interpretation and effect, by the law of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or
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injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any state
or federal court located in the State of Delaware in the event any dispute
arises out of this Agreement or any of the Transactions, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction or venue by motion or
other request for leave from any such court, (c) agrees that it will not bring
any action relating to this Agreement or any of the Transactions in any court
other than a state or federal court sitting in the State of Delaware (except
that the Company may seek to enforce any judgment in any such action), and (d)
waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any Transactions.
SECTION 11.06 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 11.07 Headings; Interpretations; Disclosure Schedules.
The table of contents and Section headings used in this Agreement are for
convenience only and shall be ignored in the construction and interpretation
hereof. When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
SECTION 11.08 No Third Party Beneficiaries. Except for the
provisions of Article II and Section 7.04 (which are intended to and shall
confer upon such persons all rights and remedies by reason of this Agreement as
if such person was a party hereto), no provision of this Agreement is intended
to, or shall, confer any third party beneficiary or other rights or remedies
upon any person other than the parties hereto.
SECTION 11.09 Entire Agreement. The Transaction Agreements
(together with the Company Disclosure Schedule, Buyer Disclosure Schedule and
the other documents delivered pursuant hereto) and the Confidentiality Agreement
constitute the entire agreements of the parties and supersede all prior
agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof; provided, however, that the
terms and provisions of Section 6 of the Confidentiality Agreement shall
terminate upon execution hereof.
SECTION 11.10 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other
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conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 11.11 Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
"Permitted Liens" means: (i) Liens created to secure existing
lines of credit; (ii) Liens imposed by law with respect to property or assets of
the Company and any of the Company Subsidiaries, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar Liens
incurred in the ordinary course of business for sums not constituting borrowed
money that are not overdue for a period of more than thirty (30) days or that
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP (if so
required); (iii) Liens (other than any Lien imposed by ERISA) with respect to
property or assets of the Company and the Company Subsidiaries incurred in the
ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of governmental insurance of benefits, or
to secure the performance of letters of credit, bids, tenders, statutory
obligations, surety and appeal bonds, leases, government contracts and other
similar obligations (other than obligations for borrowed money) entered into in
the ordinary course of business consist with past practice; (iv) Liens for
taxes, assessments or other governmental charges or statutory obligations that
are not delinquent or remain payable without any penalty or that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required); (v)
Liens securing purchase money indebtedness incurred in the ordinary course of
business consistent with past practice and not
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otherwise incurred in violation of Section 6.01 of this Agreement, provided that
the aggregate principal amount at any time outstanding of all indebtedness
secured by such Liens does not exceed $10,000,000, and provided further that any
such Lien (A) shall attach to such property concurrently with or within twenty
(20) days after the acquisition thereof by the Company or such Company
Subsidiary, (B) shall not exceed the lesser of (y) the fair market value of such
property or (z) the cost thereof to the Company or such Subsidiary and (C) shall
not encumber any other property of the Company or any of the Company
Subsidiaries; and the replacement, extension or renewal of any such Lien,
provided that such replacement, extension or renewal Lien shall not extend to or
cover any property other than the property subject to such Lien immediately
prior to such replacement, extension or renewal, and provided further that the
Indebtedness secured by such replacement, extension or renewal Lien is permitted
under this Agreement; (vi) any attachment or judgment Lien that is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required); (vii)
Liens arising from the filing, for notice purposes only, of financing statements
in respect of operating leases entered into in the ordinary course of business
consistent with past practice and not otherwise entered into in violation of
6.01 of this Agreement; (viii) Liens arising by operation of law in favor of
depositary banks and collecting banks, incurred in the ordinary course of
business consistent with past practice and not otherwise in violation of Section
6.01 and this Agreement; (ix) Liens consisting of restrictions on the transfer
of securities pursuant to applicable federal and state securities laws; (x)
interests of lessors and licensors under leases and licenses to which the
Company or any of the Company Subsidiaries is a party as of the date hereof;
(xi) with respect to any real property occupied by the Company or any of its
Subsidiaries, all easements, rights of way, licenses and similar encumbrances on
title that do not materially impair the use of such property for its intended
purposes; and (xii) Liens with respect to any assets acquired in transactions
permitted under Section 6.01 of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THE PETERSEN COMPANIES, INC.
By: /s/ James D. Dunning, Jr.
-------------------------------
Its: Chairman and Chief Executive
Officer
------------------------------
EMAP PLC
By: /s/ Christopher R. Innis
------------------------------
Its: President, Secretary and
Treasurer
------------------------------
EMAP ACQUISITION CORP.
By: /s/ Christopher R. Innis
------------------------------
Its: President, Secretary and
Treasurer
------------------------------
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EXHIBIT A
CONDITIONS TO THE OFFER
The capitalized terms used in this Exhibit A have the meanings
set forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or this
Agreement, Merger Subsidiary shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Merger Subsidiary's obligation to
pay for or return tendered Shares promptly after the termination or withdrawal
of the Offer), to pay for any Shares tendered pursuant to the Offer, and may
terminate or amend the Offer if (i) as of immediately prior to the expiration of
the Offer, (A) the Minimum Condition shall not have been satisfied or (B) the
applicable waiting period under the HSR Act shall not have expired or been
terminated or (ii) prior to the acceptance for payment of or payment for Shares
and at any time on or after the date of this Agreement, any of the following
conditions shall have occurred and be continuing:
(a) there shall be issued by any U.S. Federal or state court
of competent jurisdiction in connection with any legal proceeding, any
final or nonappealable order, ruling or injunction (that has not been
vacated, withdrawn or overturned), (i) restraining or prohibiting the
acquisition by Buyer or Merger Subsidiary of any Shares under the Offer
or the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by this
Agreement, or obtaining from the Company, or Merger Subsidiary any
damages in connection with the aforesaid transactions that are material
in relation to the Company and its subsidiaries taken as a whole, (ii)
prohibiting or materially limiting the ownership or operation by the
Company, Buyer or any of their respective subsidiaries of a material
portion of the business or assets of the Company and its subsidiaries,
or Buyer and its subsidiaries, in each case taken as a whole, or
compelling the Company or Buyer to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, or Buyer and its subsidiaries, in each case taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose material
limitations on the ability of Buyer or Merger Subsidiary to acquire or
hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer including, without
limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company, or (iv) prohibiting Buyer
or any of its subsidiaries from effectively controlling in any material
respect any significant portion of the business or operations of the
Company and its subsidiaries taken as a whole;
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(b) The Company shall not have performed or complied in any
material respect with any obligation or to comply in any material
respect with any agreement or covenant required by this Agreement to be
performed or complied with by the Company on or prior to the date of
consummation of the Offer, which failure to perform or comply is not
substantially cured within 15 days after Buyer provides the Company
with notice of such failure;
(c) Any breach of the representations and warranties of the
Company set forth in this Agreement other than any breach that
individually or in the aggregate with each other such breach has not
had and would not reasonably be expected to have a Company Material
Adverse Effect; provided, that for purposes of this paragraph (c) each
such representation and warranty of the Company set forth in this
Agreement shall be read without giving effect to any qualification as
to materiality or a Company Material Adverse Effect;
(d) This Agreement shall have been terminated in accordance
with its terms;
(e) Buyer and the Company shall have agreed that Buyer shall
terminate the Offer;
(f) There shall be any statute, rule or regulation enacted or
promulgated by any Governmental Entity applicable to the Offer or the
Merger, or any other action shall be taken by any Governmental Entity,
that results, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above; or
(g) Buyer shall have held a vote at the Buyer Shareholders
Meeting (as defined in Section 7.08 of the Merger Agreement) of the
holders of the outstanding ordinary shares of Buyer that are entitled
to vote upon the proposals to approve the Merger Agreement and the
transactions contemplated thereby (including the Offer and the Merger)
and the Buyer Shareholder Approval shall not have been obtained;
which, in the sole judgment of Merger Subsidiary or Buyer in any such
case, and regardless of the circumstances giving rise to any such
condition (including any action or inaction by Buyer or any of its
affiliates), makes it inadvisable to proceed with such acceptance for
payment or payment for the Shares.
The foregoing conditions in paragraphs (a) through (g) are for the sole
benefit of Merger Subsidiary and Buyer and may be asserted by Merger Subsidiary
or Buyer regardless of the circumstances giving rise to such condition or may be
waived by Merger Subsidiary and Buyer in whole or in part at any time and from
time to time in their sole discretion. The failure by Buyer,
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Merger Subsidiary or any other affiliate of Buyer at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
A-3
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EXHIBIT B
NOTICE AND CERTIFICATE
___________________________ ["_____"], as the holder of [ ]
shares of Class B Common Stock, par value $.01 per share, of The Petersen
Companies, Inc. (the "Company"), desires to exchange all of such shares for such
number of shares of Class A Common Stock, par value $.01 per share, of the
Company. The shares of Class A Common Stock to be issue to [________] pursuant
to this Notice and Certificate shall be issued in a single certificate in the
name of [________] as the holder thereof.
Dated as of [________]
By:_________________________________
Name:__________________________
Title:_________________________
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<PAGE> 63
EXHIBIT C
CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the
"Corporation") is [NAME OF CORPORATION].
ARTICLE II
The address of the Corporation's registered office in the
State of Delaware is /-/, Delaware. The name of the registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 1,000 shares of Common Stock having
the par value of $0.01 per share.
ARTICLE V
The number of directors of the Corporation shall be fixed from
time to time by the Board of Directors of the Corporation.
ARTICLE VI
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In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the
Corporation so require, the election of directors of the Corporation need not be
by written ballot.
ARTICLE VIII
To the fullest extent from time to time permitted by law, no
director of the Corporation shall be personally liable to any extent to the
Corporation or its stockholders for monetary damages for breach of his fiduciary
duty as a director.
ARTICLE IX
Each person who is or was or had agreed to become a director
or officer of the Corporation, and each such person who is or was serving or who
had agreed to serve at the request of the Corporation as a director, officer,
partner, member, employee or agent of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise (including the
heirs, executor, administrators or estate of such person), shall be indemnified
by the Corporation to the fullest extent permitted from time to time by
applicable law.
C-2
<PAGE> 1
Exhibit (2)(c)
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of December 15, 1998, among EMAP plc,
an English public company ("Buyer"), EMAP Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Buyer ("Merger Subsidiary"), and
the stockholders of The Petersen Companies, Inc., a Delaware corporation (the
"Company"), who are listed on and execute the signature pages attached hereto
(each a "Stockholder" and, collectively, the "Stockholders").
PRELIMINARY STATEMENT
Buyer, Merger Subsidiary and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for, among other
things: (i) the making of a cash tender offer (as such offer may be amended from
time to time as permitted under the Merger Agreement, the "Offer") by Merger
Subsidiary for all the outstanding shares of Class A Common Stock, par value
$0.01 per share, of the Company (the "Class A Common") and all of the
outstanding shares of Class B Common Stock, par value $0.01 per share, of the
Company (the "Class B Common" and, together with the Class A Common, the
"Shares") and (ii) the merger of Merger Subsidiary with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in the
Merger Agreement.
Each Stockholder is the record and beneficial owner of the number of
shares of Class A Common and/or Class B Common set forth opposite his, her or
its name on Schedule A attached hereto (such shares of Class A Common or Class B
Common, together with any other shares of capital stock of the Company acquired
by such Stockholder after the date hereof and during the term of this Agreement
(including through the exercise of any stock options, warrants or similar
instruments), being collectively referred to herein as the "Subject Shares" of
such Stockholder).
As a condition to their willingness to enter into the Merger Agreement,
Buyer and Merger Subsidiary have requested that each Stockholder enter into this
Agreement.
AGREEMENTS
NOW, THEREFORE, to induce Buyer and Merger Subsidiary to enter into,
and in consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. Purchase and Sale of Subject Shares.
<PAGE> 2
(1) Each Stockholder hereby agrees to sell to Merger Subsidiary, and
Merger Subsidiary hereby agrees to purchase, all Subject Shares of such
Stockholder at a price equal to $34.00 per share (or, if higher, the highest
price paid in the Offer), net to each Stockholder in cash (the "Offer Price"),
upon the termination or expiration of the Offer, as described in paragraphs (b)
and (e) below; provided, that no Stockholder shall be so obligated to sell any
such Subject Shares if this Agreement is terminated in accordance with Section
10 hereof; and provided, further, that (x) Merger Subsidiary shall not be so
obligated to purchase the Subject Shares and no Stockholder shall be so
obligated to sell any such Subject Shares if as of immediately prior to the
expiration of the Offer, any applicable waiting period (and any extension
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), relating to the purchase of the Shares shall not have
expired or been terminated, and (y) Merger Subsidiary shall not be so obligated
to purchase the Subject Shares if at any time after the date of this Agreement
until the purchase and sale of the Subject Shares under this Section 1 any of
the following conditions have occurred and is continuing and no Stockholder
shall be so obligated to sell any of such Subject Shares if during such period
any of the conditions set forth in subparagraphs (i), (iii) and (iv) of this
Section 1 have occurred and is continuing:
(1) there shall be issued by any U.S. Federal or state court of
competent jurisdiction in connection with any legal proceeding, any
final or nonappealable order, ruling or injunction (that has not been
vacated, withdrawn or overturned), (A) restraining or prohibiting the
acquisition by Buyer or Merger Subsidiary of any Subject Shares under
this Agreement or the making of this Agreement or consummation of the
transactions contemplated hereby or the Merger, or obtaining from the
Company, or Merger Subsidiary any damages in connection with the
aforesaid transactions that are material in relation to the Company and
its subsidiaries taken as a whole, (B) prohibiting or materially
limiting the ownership or operation by the Company, Buyer or any of
their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, or Buyer and its
subsidiaries, in each case taken as a whole, or compelling the Company
or Buyer to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, or Buyer and
its subsidiaries, in each case taken as a whole, as a result of this
Agreement or any of the other transactions contemplated by this
Agreement, (C) seeking to impose material limitations on the ability of
Buyer or Merger Subsidiary to acquire or hold, or exercise full rights
of ownership of, any Subject Shares to be accepted for payment pursuant
to this Agreement including, without limitation, the right to vote such
Subject Shares on all matters properly presented to the stockholders of
the Company, or (D) prohibiting Buyer or any of its subsidiaries from
effectively controlling in any material respect any significant portion
of the business or operations of the Company and its subsidiaries taken
as a whole;
(2) the Company shall not have performed or complied in any
material respect with any obligation or shall have failed to comply in
any material respect with any agreement or covenant required by the
Merger Agreement to be performed or complied with by the Company on or
prior to the date of consummation of the transactions contemplated
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<PAGE> 3
hereby, which failure to perform or comply is not substantially cured
within 15 days after Buyer provides the Company with notice of such
failure;
(3) any statute, rule or regulation enacted or promulgated by
any Governmental Entity that results, directly or indirectly, in any of
the consequences referred to in clauses (A) through (D) of paragraph
(i) above;
(4) if required in accordance with applicable law or stock
exchange regulations, Buyer shall have held a vote at the Buyer
Shareholders Meeting (as defined in Section 7.08 of the Merger
Agreement) of the holders of the outstanding ordinary shares of Buyer
that are entitled to vote upon the proposals to approve this Agreement
and the Merger Agreement and any approval so required with respect to
this Agreement or the Merger Agreement shall not have been obtained; or
(5) any breach of the representations and warranties of the
Company set forth in the Merger Agreement other than any breach that
individually or in the aggregate with each other such breach has not
had and would not reasonably be expected to have a Company Material
Adverse Effect (as such term is defined in Section 4.01(a) of the
Merger Agreement); provided, that for purposes of this Section 1(a)(v)
each such representation and warranty of the Company set forth in the
Merger Agreement shall be read without giving effect to any
qualification as to materiality or a Company Material Adverse Effect.
(2) Each Stockholder hereby agrees severally (and not jointly) to
accept the Offer with respect to all of the Subject Shares of the Stockholder
and to tender (or cause the record owner of such Shares to tender) all of his,
her or its Subject Shares into the Offer. Such tender shall be made within 10
business days following the date hereof and shall not be withdrawn. Subject to
Section 10 below, (i) the obligation of any Stockholder to tender and not
withdraw his, her or its Subject Shares is conditioned only upon lawful
commencement of the Offer and otherwise is unconditional and (ii) immediately
following the purchase of any Shares in the Offer, Merger Subsidiary shall
purchase all Subject Shares not purchased in the Offer.
(3) Notwithstanding the foregoing, no Stockholder shall be required to
tender his, her or its Subject Shares, not withdraw his, her or its Subject
Shares or otherwise sell his, her or its Subject Shares in accordance with the
terms of this Agreement in the event that, without the prior written consent of
such Stockholder, any of the following has occurred: (i) a decrease in the price
per Share or change in the form of consideration payable in the Offer, (ii) a
decrease in the number of Shares sought in the Offer, (iii) an amendment or
waiver of the Minimum Condition (as such term is defined in Section 1.01(a) of
the Merger Agreement), (iv) the imposition of additional conditions to the Offer
or amendment to any condition to the Offer that is adverse in any respect to the
holders of the Shares, (v) an amendment of any other term of the Offer in any
manner adverse in any respect to the holders of Shares, or (vi) an extension of
the expiration date of the Offer which requires the consent of the Company under
the Merger Agreement.
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<PAGE> 4
(4) Merger Subsidiary shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement such amounts as may
be required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended, or under any
provision of state, local or foreign tax law.
(5) If the Offer is terminated by Merger Subsidiary or Buyer, or the
Offer expires, and in either case, without the purchase of any Shares, subject
to Section 1(a) and Section 10 hereof, Merger Subsidiary shall purchase, and
each Stockholder shall sell, all of the Subject Shares hereunder within three
business days following such termination or expiration (including extensions
thereof); provided, however, that in the event any condition in Section 1(a) has
occurred and is continuing, Merger Subsidiary's obligation to purchase, and each
Stockholder's obligation to sell, the Subject Shares in accordance with the
foregoing shall not commence until the satisfaction (or waiver by Merger
Subsidiary) of all such conditions and; provided further, however, that no
Subject Shares shall be purchased pursuant to this Agreement unless all Subject
Shares (other than the Subject Shares which any Stockholder fails to deliver for
sale as contemplated hereunder in breach of its obligations hereunder) are so
purchased.
(6) Each of the Stockholders hereby permits Buyer and Merger Subsidiary
to publish and disclose in the Offer Documents (as such term is defined in
Section 1.01(c) of the Merger Agreement) his, her or its identity and ownership
of Subject Shares and the nature of his, her or its commitments, arrangements
and understandings under this Agreement.
2. Representations and Warranties of Each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Buyer and Merger
Subsidiary as of the date hereof, in respect of himself, herself or itself as
follows:
(1) Authority. Such Stockholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by such Stockholder, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary action on the part of such
Stockholder. This Agreement has been duly executed and delivered by such
Stockholder and, assuming due authorization, execution and delivery by Buyer and
Merger Subsidiary, constitutes a valid and binding obligation of such
Stockholder enforceable against such Stockholder in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium, or similar law affecting creditors' rights generally and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(2) No Conflicts. Except for (i) compliance with and filings under the
pre-merger notification requirements of the Merger Control Laws (as defined
below), (ii) the applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the
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<PAGE> 5
Securities Act of 1933, as amended (the "Securities Act") and (iii) the
applicable requirements of state securities laws, takeover laws or Blue Sky
laws, the execution and delivery of this Agreement do not, and the consummation
by such Stockholder of the transactions contemplated hereby and compliance with
the terms hereof will not, (A) conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any lien upon any of the properties or assets of such Stockholder under any
provision of, any trust agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, or instrument, applicable to such
Stockholder or to the property or assets of such Stockholder or (B) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to such
Stockholder or any of the properties or assets of such Stockholder, including
the Subject Shares, except for such conflicts, violations, breaches, defaults or
other occurrences which, individually or the aggregate, have not had and would
not reasonably be expected to prevent or materially delay the ability of the
Stockholder to perform its obligations under this Agreement (a "Stockholder
Material Adverse Effect"). For purposes hereof, "Merger Control Laws" means the
HSR Act and all amendments thereof, and all other applicable bills, acts,
decrees, regulations or ordinances relating thereto.
(3) No Consents. The execution and delivery of this Agreement by such
Stockholder does not, and neither the performance of this Agreement by such
Stockholder nor the consummation of the transactions contemplated hereby by such
Stockholder will, require any consent, approval, authorization, order or permit
of, or filing with or notification to, any Federal, state, local or foreign
government or any court of competent jurisdiction, or other governmental,
administrative or regulatory authority, commission or agency, domestic or
foreign (each a "Governmental Entity"), except for (i) applicable requirements
of the Exchange Act and the Securities Act, (ii) compliance with and filings
under the pre-merger notification requirements of the Merger Control Laws, (iii)
the applicable requirements of state securities laws, takeover laws or Blue Sky
laws, and (iv) such other consents, approvals, authorizations or permits,
filings or notifications, not obtained or made prior to the date hereof, the
failure of which to be obtained or made would not prevent or delay consummation
of the transactions contemplated hereby, or otherwise prevent such Stockholder
from performing its obligations under this Agreement in any material respect,
and which, individually or in the aggregate, have not had and would not
reasonably be expected to have a Stockholder Material Adverse Effect. If such
Stockholder is married and the Subject Shares of such Stockholder constitute
community property or otherwise need spousal or other approval to be legal,
valid and binding, this Agreement has been duly authorized, executed and
delivered by, and, assuming due authorization, execution and delivery by Buyer
and Merger Subsidiary and the Stockholder, constitutes a valid and binding
agreement of, such Stockholder's spouse enforceable against such spouse in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar law affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). No trust
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<PAGE> 6
of which such Stockholder is a trustee requires the consent of any beneficiary
to the execution and delivery of this Agreement or to be the consummation of the
transactions contemplated hereby.
(4) The Subject Shares. Such Stockholder is the record and beneficial
owner of, or is the trustee that is the record holder of, and whose
beneficiaries are the beneficial owners of, and has good and valid title to, the
Subject Shares set forth opposite his, her or its name on Schedule A attached
hereto, free and clear of any claims, liens, encumbrances, security interests,
options, charges and restrictions of any kind (other than restrictions pursuant
to applicable securities laws and pursuant to the Securityholders Agreement (as
defined herein)). Except as otherwise set forth on Schedule A attached hereto,
such Stockholder does not own, of record or beneficially, any shares of capital
stock of the Company other than the Subject Shares set forth opposite its name
on Schedule A attached hereto. Such Stockholder has the sole right to vote such
Subject Shares, and none of such Subject Shares are subject to any voting trust
or other agreement, arrangement or restriction with respect to the voting of
such Subject Shares, except in either case as contemplated by this Agreement and
the Securityholders Agreement, dated as of September 30, 1996, as amended by
Amendment No. 1 to Securityholders Agreement, dated as of September 30, 1997,
among the Company, the Stockholder and the other stockholders of the Company
named therein (the "Securityholders Agreement").
(5) No Brokers. Except for Donaldson, Lufkin & Jenrette Securities
Corporation and Morgan Stanley & Co. Incorporated, whose fees are payable by the
Company, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with this Agreement based upon arrangements made by or
on behalf of such Stockholder.
3. Representations and Warranties of Buyer and Merger Subsidiary. Buyer
and Merger Subsidiary hereby, jointly and severally, represent and warrant to
each of the Stockholders as of the date hereof as follows:
(1) Authority. Buyer and Merger Subsidiary have all necessary power and
authority to execute and deliver the Merger Agreement and this Agreement and to
consummate the transactions contemplated thereby and hereby. The execution and
delivery of the Merger Agreement and this Agreement by each of Buyer and Merger
Subsidiary, and the consummation of the transactions contemplated thereby and
hereby, have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of each of Buyer and Merger Subsidiary are
necessary to authorize this Agreement, the Merger Agreement or to consummate the
transactions contemplated hereby or thereby (other than, if required by
applicable law or stock exchange regulations, the approval of this Agreement and
the Merger Agreement by the Buyer's shareholders ("Buyer Shareholder Approval")
and, with respect to the Merger, the filing of the appropriate merger documents
with the Secretary of State of the State of Delaware as required by Delaware
General Corporation Law ("Delaware Law")). The Merger Agreement and this
Agreement each has been duly and validly executed and delivered by Buyer and
Merger Subsidiary and, assuming due
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<PAGE> 7
authorization, execution and delivery by the Company and each Stockholder,
respectively, constitutes a legal, valid and binding obligation of Buyer and
Merger Subsidiary enforceable against Buyer and Merger Subsidiary in accordance
with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar law affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(2) No Conflicts. The execution and delivery of the Merger Agreement
and this Agreement by Buyer and Merger Subsidiary do not, and the consummation
of the Offer, the Merger and the other Transactions (including this Agreement)
and compliance with the terms thereof and hereof will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws or equivalent organizational
documents of Buyer or Merger Subsidiary, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Buyer or any
subsidiary of Buyer (each, a "Buyer Subsidiary") or by which any property or
asset of Buyer or any Buyer Subsidiary is bound or affected or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of a material
benefit under or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Buyer or any Buyer Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Buyer or any Buyer
Subsidiary is a party or by which Buyer or any Buyer Subsidiary or any property
or asset of Buyer or any Buyer Subsidiary is bound or affected, except for (A)
compliance with and filings under the pre-merger notification requirements of
the Merger Control Laws, (B) the applicable requirements of the Exchange Act and
the Securities Act, (C) the applicable requirements of state securities laws,
takeover laws of Blue Sky laws and (D) in the case of clauses (ii) and (iii)
above, except for any such conflicts, violations, breaches, defaults or other
occurrences which, individually or in the aggregate, have not had and would not
reasonably be expected to have a Buyer Material Adverse Effect.
(3) No Consents. The execution and delivery of the Merger Agreement and
this Agreement by Buyer and Merger Subsidiary do not, and neither the
performance of the Merger Agreement and this Agreement by Buyer and Merger
Subsidiary nor the consummation of the Transactions by the Company will, require
any consent, approval, authorization, order or permit of, or filing with or
notification to, any Governmental Entity, except for (i) applicable requirements
of the Exchange Act and the Securities Act, (ii) compliance with and filings
under the pre-merger notification requirements of the Merger Control Laws, (iii)
filing of appropriate merger documents with the Secretary of State of the State
of Delaware as required by Delaware Law, (iv) Buyer Shareholder Approval, (v)
the applicable requirements of state securities laws, takeover laws or Blue Sky
laws and (vi) such other consents, approvals, authorizations or permits, filings
or notifications, not obtained or made prior to consummation of the transactions
contemplated hereby the failure of which to be obtained or made would not
prevent or delay consummation of the transactions contemplated hereby, or
otherwise prevent Buyer or Merger Subsidiary from performing its obligations
under the Merger Agreement or this Agreement in any material respect, and which,
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<PAGE> 8
individually or in the aggregate, have not had and would not reasonably be
expected to have a Buyer Material Adverse Effect.
(4) Securities Act. The Subject Shares will be acquired in compliance
with, and Merger Subsidiary will not offer to sell or otherwise dispose of any
Shares so acquired by it in violation of the registration requirements of, the
Securities Act.
(5) Financing. Merger Subsidiary has, or will have at the time that any
payment is required to be made to the Stockholders hereunder, the funds
necessary to make such payment to such Stockholders.
(6) No Brokers. Except for J. Henry Schroder & Co. Limited, whose fees
will be paid by Buyer, no broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Buyer, Merger
Subsidiary or any of their respective assignees.
4. Covenants of Each Stockholder. Each Stockholder hereby, severally
and not jointly, covenants and agrees as follows:
(1) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
in each case after such time as Merger Subsidiary has purchased the Subject
Shares of each Stockholder hereunder, and only if the record date for any such
vote precedes the date of the sale of such Subject Shares to Merger Subsidiary,
each Stockholder shall vote (or cause to be voted) the Subject Shares of such
Stockholder, including by executing a written consent solicitation if requested
by Buyer or Merger Subsidiary, in respect of which such Stockholder then has or
exercises voting control in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement.
(2) At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which such Stockholder's votes,
consents or other approvals are sought, in each case after such time as Merger
Subsidiary has purchased the Subject Shares of each Stockholder hereunder, and
only if the record date for any such vote precedes the date of the sale of such
Subject Shares to Merger Subsidiary, such Stockholder shall vote (or cause to be
voted) the Subject Shares of such Stockholder in respect of which such
Stockholder then has or exercises voting control against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company or
any other Acquisition Proposal (as such term is defined in Section 6.04(a) of
the Merger Agreement) and (ii)
-8-
<PAGE> 9
any amendment of the Company's certificate of incorporation or bylaws or other
proposal or transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would be reasonably likely to impede,
frustrate, prevent, delay or nullify the Offer, the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement or change
in any manner the voting rights of any class of common stock or other voting
securities of the Company. The Stockholder further agrees not to commit or agree
to take any action or enter into any agreement inconsistent with the foregoing.
(3) Such Stockholder shall not (i) sell, transfer, give, pledge, assign
or otherwise dispose of (including by gift) (collectively, "Transfer"), or
consent to any Transfer of, any or all of the Subject Shares of such Stockholder
or any interest therein or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the Transfer of, the
Subject Shares to any person other than Merger Subsidiary or Merger Subsidiary's
designee pursuant to the terms of the Offer or the Merger or otherwise to Merger
Subsidiary in accordance with Section 1 or (ii) enter into any other voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to the Subject Shares. Such Stockholder shall not
commit or agree to take any of the foregoing actions.
(4) Neither such Stockholder nor any of its officers, directors or
employees shall, and such Stockholder shall use its reasonable best efforts to
cause any investment banker, financial advisor, attorney, accountant or other
representative of any such Stockholder not to, directly or indirectly, (i)
solicit, initiate or encourage (including by way of furnishing information), or
take any other action to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Such Stockholder promptly shall advise Buyer and Merger
Subsidiary orally and in writing of any Acquisition Proposal or inquiry made to
such Stockholder with respect to or that could lead to any Acquisition Proposal,
the identity of the person making such Acquisition Proposal or inquiry and the
material terms of any such Acquisition Proposal or inquiry. The foregoing
provisions of this paragraph (d) shall not, however, prohibit an individual
Stockholder, or any partner, stockholder, officer or affiliate of a Stockholder
that is a legal entity, who is a director of the Company from performing his or
her legally required fiduciary duties as a director of the Company as permitted
or required under the Merger Agreement.
(5) Such Stockholder hereby consents to and approves the actions taken
by the Board of Directors of the Company in approving this Agreement, the Merger
Agreement, the Merger and the other transactions contemplated by the Merger
Agreement. Such Stockholder hereby waives, and agrees not to exercise or assert,
any appraisal rights under Section 262 of the Delaware Law in connection with
the Merger.
5. Covenants of Buyer and Merger Subsidiary. Buyer and Merger
Subsidiary hereby, severally and jointly, covenant and agree as follows:
-9-
<PAGE> 10
(1) If required in accordance with applicable law or stock exchange
regulations, Buyer shall cause an extraordinary general meeting of its
shareholders (the "Buyer Shareholders Meeting") to be duly called as soon as
reasonably practicable and in any event no later than January 4, 1999 (or such
later date if the failure to hold the meeting on January 4, 1999 does not result
in the termination of the Merger Agreement) for the purpose of acting upon
proposals to approve this Agreement, the Merger Agreement and all actions
contemplated hereby and thereby that require the approval of Buyer's
shareholders. If a meeting is so required, unless otherwise required pursuant to
their fiduciary duties to Buyer's shareholders (as determined in good faith by
the Directors of Buyer based upon the advice of independent legal counsel), the
Directors of Buyer shall recommend that the Buyer's shareholders approve this
Agreement, the Merger Agreement and all actions contemplated hereby and thereby,
including the Offer and the Merger.
(2) If any Subject Shares are purchased pursuant to this Agreement and
after such purchase Merger Subsidiary owns a majority of the outstanding shares
of Class A Common and a majority of the Shares, in each case on a fully diluted
basis, Merger Subsidiary shall consummate the Merger in accordance with the
terms of the Merger Agreement.
6. Grant of Irrevocable Proxy; Appointment of Proxy.
(1) Subject to its obligations under the Securityholders Agreement,
each Stockholder hereby irrevocably and severally grants to, and appoints, Buyer
and Merger Subsidiary and Chris Innis and Alison Phillips, or any of them, in
their respective capacities as officers of Merger Subsidiary, and any individual
who shall hereafter succeed to any such office of Merger Subsidiary, and each of
them individually, such Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Subject Shares, or grant a consent or
approval in respect of such Subject Shares, in a manner consistent with Section
4(a) and 4(b) hereof.
(2) Each Stockholder severally represents that any proxies heretofore
given in respect of such Stockholder's Subject Shares are not irrevocable or if
irrevocable, that, upon execution and delivery of this Agreement by Willis Stein
(as defined herein) and assuming receipt of the written consent of the Company
pursuant to Section 6.08 of the Merger Agreement, the valid consent to the
revocation of such proxies from the party or parties to whom such proxies were
heretofore granted will be obtained, and that any such proxies are hereby
revoked to the extent necessary to effect the transactions contemplated by
Sections 1, 4 and 6 hereof. Each Stockholder understands and acknowledges that
Buyer and Merger Subsidiary are entering into the Merger Agreement in reliance
upon such Stockholder's execution and delivery of this Agreement.
(3) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 6 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder in accordance
-10-
<PAGE> 11
with this Agreement. Such Stockholder hereby further affirms that the
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware Law. Such
irrevocable proxy shall be valid until the earlier to occur of (i) eleven months
from the date hereof and (ii) the termination of this Agreement pursuant to
Section 10.
(4) By its execution of this Agreement as a Stockholder, Willis Stein &
Partners, L.P. ("Willis Stein") hereby expressly consents to the revocation of
the proxy previously granted to Willis Stein pursuant to Section 2.3 of the
Securityholders Agreement for the sole purpose of effecting, and only to the
extent necessary to enable each other Stockholder to effect, the transactions
contemplated by Sections 1, 4 and 6 hereof, and immediately prior to
consummation of the sale of Willis Stein's Subject Shares pursuant to this
Agreement hereby releases each of the parties to the Securityholders Agreement
from its obligations pursuant to Section 2.2 of the Securityholders Agreement.
Upon consummation of the sale of any Subject Shares hereunder to Merger
Subsidiary, Merger Subsidiary agrees to be bound by the terms of the
Securityholders Agreement with respect to the Subject Shares so purchased.
7. Further Assurances. Upon the terms and subject to the conditions set
forth in this Agreement, each of Buyer and Merger Subsidiary agrees to comply
with its obligations under the Merger Agreement and each of the parties agrees
to use all reasonable best efforts to consummate and make effective the other
transactions contemplated by this Agreement. The foregoing provisions of this
Section shall not, however, prohibit an individual Stockholder, or any partner,
stockholder, officer or affiliate of a Stockholder that is a legal entity, who
is a director of the Company from performing his or her legally required
fiduciary duties as a director of the Company as permitted or required under the
Merger Agreement. Buyer shall cause Merger Subsidiary to consummate the
transactions contemplated hereby on the terms and subject to the conditions set
forth in this Agreement.
8. Certain Events.
(1) Each Stockholder agrees that prior to transferring any of such
Stockholder's Subject Shares such Stockholder shall obtain the written agreement
of the transferee thereof to comply with such Stockholder's obligations
hereunder and such obligations shall be binding upon any person or entity to
which legal or beneficial ownership of such Subject Shares shall pass, whether
by operation of law or otherwise, including such Stockholder's administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Class A Common, Class B Common, or the acquisition of
additional shares of Class A Common, Class B Common or other securities of the
Company by any Stockholder, the number of Subject Shares listed in Schedule A
beside the name of such Stockholder shall be deemed adjusted appropriately and
this Agreement and the obligations hereunder shall attach to any additional
shares of Class A Common, Class B Common or other securities of the Company
issued to or acquired by such Stockholder.
-11-
<PAGE> 12
(b) Each Stockholder agrees that it will deliver to the Company, within
10 business days after the date hereof (or, in the event Subject Shares are
acquired subsequent to the date hereof within 10 business days after the date of
such acquisition), any and all certificates representing such Stockholder's
Subject Shares solely for the purpose of the Company inscribing upon such
certificates the following legend:
"The shares of Class [A] or [B] Common Stock, $0.01 par value, of The
Petersen Companies, Inc., represented by this certificate are subject
to a Stockholders' Agreement, dated as of December 15, 1998, and may
not be sold or otherwise transferred, except in accordance therewith.
Copies of such Agreement may be obtained at the principal executive
offices of The Petersen Companies, Inc."
Upon request of the holder of any Subject Shares at any time after termination
of this Agreement, the Company shall issue to such holder in exchange for such
certificates new certificates of like tenor but not bearing the foregoing
legend.
9. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties, except that (i) Merger
Subsidiary may assign, in its sole discretion, any or all of its rights,
interests and obligations hereunder to any U.S. subsidiary of Buyer that may be
substituted for Merger Subsidiary in accordance with the terms of the Merger
Agreement so long as such subsidiary assumes all obligations of Merger
Subsidiary and Merger Subsidiary remains liable for all such obligations, and
(ii) Buyer may assign, in its sole discretion, any and all of its rights,
interests and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Buyer that assumes all of Buyer's obligations hereunder, provided
that Buyer will remain liable for its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
10. Termination. This Agreement shall terminate: (A) immediately upon
(i) the termination of the Offer or Merger Agreement by Buyer or Merger
Subsidiary in accordance with the terms of the Merger Agreement prior to the
expiration of the Offer, (ii) the termination of the Merger Agreement by Buyer
or Merger Subsidiary in accordance with the terms of the Merger Agreement
following the expiration of the Offer or (iii) the termination of the Merger
Agreement by the Company in accordance with Section 10.01(k) of the Merger
Agreement; (B) upon delivery by Stockholders holding Shares representing a
majority of the Subject Shares ("Majority Stockholders") of a notice of
termination to Buyer or Merger Subsidiary at any time (i) after Buyer or Merger
Subsidiary has terminated the Offer, prior to the expiration of the Offer, in a
manner which is not in accordance with the terms of the Merger Agreement, or
(ii) in the event that Buyer or Merger Subsidiary fails to purchase the Shares
upon the expiration of the Offer in accordance with Section 1.01 of the Merger
Agreement and either (x) each of the conditions set forth on Exhibit A
-12-
<PAGE> 13
to the Merger Agreement has either been satisfied or waived, or (y) Buyer or
Merger Subsidiary is then in breach of any of its obligations under this
Agreement or the Merger Agreement and such breach has resulted in the failure of
any condition set forth on Exhibit A to the Merger Agreement to be satisfied; or
(C) upon delivery by Majority Stockholders of a notice of termination to Buyer
or Merger Subsidiary at any time more than 120 days after: (i) the expiration of
the Offer without the purchase of any Shares thereunder due to the failure of a
condition set forth on Exhibit A to the Merger Agreement to be satisfied and not
waived (other than the Minimum Condition which shall have been satisfied); or
(ii) the expiration of the Offer without the purchase of any Shares thereunder
due to the failure of the Minimum Condition to be satisfied. Notwithstanding the
foregoing, Sections 9, 10, 12, 13 and 14 hereof shall survive any termination of
this Agreement.
11. Effectiveness. This Agreement shall be of no force and effect, and
shall be void ab initio, in the event that the Merger Agreement is not executed
by all parties thereto at or prior to 9:00 a.m., Eastern time, on December 15,
1998.
12. Several Obligations. Notwithstanding any other provision hereof,
each Stockholder's obligations hereunder are several, and not joint and several.
Upon execution hereof by Buyer, Merger Subsidiary and any Stockholder, this
Agreement shall be binding upon and inure to the benefit of Buyer, Merger
Subsidiary and each such Stockholder, regardless of the failure of any other
party listed on the signature page hereto to execute this Agreement.
13. General Provisions.
(1) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(2) Notice. All notices, requests and other communications to any party
hereunder shall be in writing, including facsimile, telex or similar writing,
and shall be deemed given if delivered to Buyer and Merger Subsidiary at the
address or telecopier number set forth in Section 11.01 of the Merger Agreement
and to the Stockholder at its address or telecopier number set forth on Schedule
A attached hereto (or at such other address or telecopier number for a party as
shall be specified by like notice). Each such notice, request or other
communication shall be effective (i) if given by facsimile and received at or
prior to 5:00 p.m. local time on a business day, upon confirmation of receipt,
and if given by facsimile and received at any other time, upon the next business
day or (ii) if given by any other means, when delivered at the address specified
in this Section 12(b).
(3) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. 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. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
-13-
<PAGE> 14
Capitalized terms used and not otherwise defined in this Agreement shall have
the respective meanings assigned to them in the Merger Agreement.
(4) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
(5) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(6) Governing Law. This Agreement shall be construed in accordance with
and governed in all respects, including validity, interpretation and effect, by
the law of the State of Delaware without giving effect to the principles of
conflicts of laws thereof. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any state
or federal court located in the State of Delaware in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
state or federal court sitting in the State of Delaware (except that the
Stockholder may seek to enforce in any English court any judgment obtained in
any such action) and (d) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement.
(7) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
14. Confidentiality; Public Announcements.
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<PAGE> 15
(1) Each Stockholder recognizes that successful consummation of the
transactions contemplated by this Agreement (including the Offer and the Merger)
may be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof by Buyer, Merger
Subsidiary and the Company, each Stockholder hereby agrees not to issue any
press release or make any other public statement or disclose or discuss such
matters with anyone not a party to this Agreement (other than such Stockholder's
counsel and advisors, if any) without the prior written consent of Buyer and the
Company, except for filings required pursuant to the Exchange Act and the rules
and regulations thereunder or as required by law.
(2) Subject to clause (a) above, Buyer and Merger Subsidiary, on the
one hand, and the Stockholder, on the other hand, will consult with each other
before issuing, and provide each other with a reasonable opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement and the Merger Agreement,
including the Offer and the Merger, and shall not issue, and Buyer shall ensure
that none of its subsidiaries shall issue, any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities quotation
system, in which case the party making such release will use reasonable efforts
to obtain comments from the other party before issuance of such release or
statement.
-15-
<PAGE> 16
IN WITNESS WHEREOF, Buyer, Merger Subsidiary and each Stockholder
listed on the attached signature pages have caused this Agreement to be duly
executed and delivered as of the date first written above.
EMAP PLC
By: /s/ Christopher R. Innis
-----------------------------------
Name: Christopher R. Innis
-----------------------------------
Title: Director of Corporate Strategy
-----------------------------------
EMAP ACQUISITION CORP.
By: /s/ Christopher R. Innis
-----------------------------------
Name: Christopher R. Innis
-----------------------------------
Title: President, Secretary and Treasurer
-----------------------------------
-16-
<PAGE> 17
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Willis Stein & Partners, L.P.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Daniel H. Blumenthal
--------------------------------------------
Name: Daniel H. Blumenthal
Title:
Number of Subject Shares owned as of
December 10, 1998:
7,209,409 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Willis Stein & Partners, L.P.
--------------------------------------------
227 West Monroe Street, Suite 4300
--------------------------------------------
Chicago, IL 60606
--------------------------------------------
Attention: Daniel H. Blumenthal
---------------------------------
<PAGE> 18
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Petersen Properties
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Robert E. Petersen
--------------------------------------------
Name: Robert E. Petersen
Title:
Number of Subject Shares owned as of
December 10, 1998:
3,204,705 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Petersen Properties
--------------------------------------------
6420 Wilshire Boulevard
--------------------------------------------
Los Angeles, CA 90048
--------------------------------------------
Attention: Robert E. Petersen
--------------------------------------------
<PAGE> 19
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Margie and Robert Petersen Foundation
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Robert E. Petersen
--------------------------------------------
Name: Robert E. Petersen
Title:
Number of Subject Shares owned as of
December 10, 1998:
400,000 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Margie and Robert Petersen Foundation
--------------------------------------------
c/o Petersen Properties
--------------------------------------------
6420 Wilshire Boulevard
--------------------------------------------
Los Angeles, CA 90048
--------------------------------------------
Attention: Robert E. Petersen
--------------------------------------------
<PAGE> 20
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Chase Equity Associates, L.P.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Brian J. Richmond
--------------------------------------------
Name: Brian J. Richmond
Title:
Number of Subject Shares owned as of
December 10, 1998:
1,236,400 shares of Class A Common Stock
------------------
1,397,823 shares of Class B Common Stock
------------------
Notice Address:
Chase Equity Associates, L.P.
--------------------------------------------
380 Madison Ave., 12th Floor
--------------------------------------------
New York, NY 10017-2951
--------------------------------------------
Attention: Brian J. Richmond
--------------------------------------------
<PAGE> 21
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Allstate Insurance Company
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ John M. Goesne
--------------------------------------------
Name: John M. Goesne
Title:
Number of Subject Shares owned as of
December 10, 1998:
2,162,823 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Allstate Insurance Company
--------------------------------------------
3075 Sanders Road, Suite G5D
--------------------------------------------
Northbrook, IL 60062-7127
--------------------------------------------
Attention: John M. Goesne
--------------------------------------------
<PAGE> 22
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Norwest Equity Capital, L.L.C.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ John E. Lindahl
--------------------------------------------
Name: John E. Lindahl
Title:
Number of Subject Shares owned as of
December 10, 1998:
689,241 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Norwest Equity Capital, L.L.C.
--------------------------------------------
2800 Piper Jaffray Tower
--------------------------------------------
222 S. Ninth Street
--------------------------------------------
Minneapolis, MN 55402-3388
--------------------------------------------
Attention: John E. Lindahl
--------------------------------------------
<PAGE> 23
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Nassau Capital Partners II, L.P.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ John G. Quigley
--------------------------------------------
Name: John G. Quigley
Title:
Number of Subject Shares owned as of
December 10, 1998:
717,376 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Nassau Capital Partners II L.P.
--------------------------------------------
22 Chambers Street
--------------------------------------------
Princeton, NJ 08542
--------------------------------------------
Attention: John G. Quigley
--------------------------------------------
<PAGE> 24
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
James D. Dunning, Jr.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ James D. Dunning, Jr.
--------------------------------------------
Name: James D. Dunning, Jr.
Number of Subject Shares owned as of
December 10, 1998:
1,079,656 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
James D. Dunning, Jr.
--------------------------------------------
c/o The Dunning Group
--------------------------------------------
333 Ludlow St., 5th Floor
--------------------------------------------
Stamford, CT 06902
--------------------------------------------
<PAGE> 25
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Trust f/b/o James Dorr Dunning III,
--------------------------------------------
J.D. Dunning, Jr. and H. Fitzgeorge Dunning
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ James D. Dunning, Jr.
--------------------------------------------
Name: James D. Dunning, Jr.
Title:
Number of Subject Shares owned as of
December 10, 1998:
7,209 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Trust f/b/o James Dorr Dunning III,
--------------------------------------------
J.D. Dunning, Jr. and H. Fitzgeorge Dunning
--------------------------------------------
c/o The Dunning Group
--------------------------------------------
333 Ludlow St., 5th Floor
--------------------------------------------
Stamford, CT 06902
--------------------------------------------
Attention: James D. Dunning, Jr.
--------------------------------------------
<PAGE> 26
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Trust f/b/o David Fitzgeorge Dunning,
--------------------------------------------
J.D. Dunning, Jr. and H. Fitzgeorge Dunning
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ James D. Dunning, Jr.
--------------------------------------------
Name: James D. Dunning, Jr.
Title:
Number of Subject Shares owned as of
December 10, 1998:
7,209 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Trust f/b/o David Fitzgeorge Dunning,
--------------------------------------------
J.D. Dunning, Jr. and H. Fitzgeorge Dunning
--------------------------------------------
c/o The Dunning Group
--------------------------------------------
333 Ludlow St., 5th Floor
--------------------------------------------
Stamford, CT 06902
--------------------------------------------
Attention: James D. Dunning, Jr.
--------------------------------------------
<PAGE> 27
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Karu Investments LP
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Stuart Karu
--------------------------------------------
Name: Stuart Karu
Title:
Number of Subject Shares owned as of
December 10, 1998:
281,290 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Karu Investments LP
--------------------------------------------
411 Old Ocean House Road
--------------------------------------------
Cape Elizabeth, MA 04107
--------------------------------------------
Attention: Stuart Karu
--------------------------------------------
<PAGE> 28
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
The Laurence H. Bloch and Cindy Bloch Trust
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Laurence H. Bloch
--------------------------------------------
Name: Laurence H. Bloch
Title:
Number of Subject Shares owned as of
December 10, 1998:
460,128 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
The Laurence H. Bloch and Cindy Bloch Trust
--------------------------------------------
P.O. Box 2273
--------------------------------------------
Rancho Santa Fe, CA 92067
--------------------------------------------
Attention: Laurence H. Bloch
--------------------------------------------
<PAGE> 29
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Block 1998 Charitable Remainder Trust
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Laurence H. Bloch
--------------------------------------------
Name: Laurence H. Bloch
Title:
Number of Subject Shares owned as of
December 10, 1998:
147,000 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Bloch 1998 Charitable Remainder Trust
--------------------------------------------
P.O. Box 2273
--------------------------------------------
Rancho Santa Fe, CA 92067
--------------------------------------------
Attention: Laurence. H. Bloch
--------------------------------------------
<PAGE> 30
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
D. Claeys Bahrenburg
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ D. Claeys Bahrenburg
--------------------------------------------
Name: D. Claeys Bahrenburg
Number of Subject Shares owned as of
December 10, 1998:
575,159 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
D. Claeys Bahrenburg
--------------------------------------------
c/o Petersen Publishing Company, L.L.C.
--------------------------------------------
110 Fifth Avenue, 2nd Floor
--------------------------------------------
New York, NY 10011
--------------------------------------------
<PAGE> 31
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
Richard S Willis
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Richard S Willis
--------------------------------------------
Name: Richard S Willis
Number of Subject Shares owned as of
December 10, 1998:
175,486 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
Richard S Willis
--------------------------------------------
c/o The Petersen Publishing Company, L.L.C.
--------------------------------------------
6420 Wilshire Boulevard
--------------------------------------------
Los Angeles, CA 90048
--------------------------------------------
<PAGE> 32
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
NAS Partners I L.L.C.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ John G. Quigley
--------------------------------------------
Name: John G. Quigley
Title:
Number of Subject Shares owned as of
December 10, 1998:
3,565 shares of Class A Common Stock
------------------
shares of Class B Common Stock
------------------
Notice Address:
NAS Partners I L.L.C.
--------------------------------------------
22 Chambers Street
--------------------------------------------
Princeton, NJ 08542
--------------------------------------------
Attention: John G. Quigley
--------------------------------------------
<PAGE> 33
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
BankAmerica Investment Corporation
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Marcus Wedner
--------------------------------------------
Name: Marcus Wedner
Title:
Number of Subject Shares owned as of
December 10, 1998:
shares of Class A Common Stock
------------------
2,595,387 shares of Class B Common Stock
------------------
Notice Address:
BankAmerica Investment Corporation
--------------------------------------------
c/o Continental Illinois Venture
--------------------------------------------
231 S. LaSalle Street
--------------------------------------------
Chicago, IL 60697
--------------------------------------------
Attention: Marcus Wedner
--------------------------------------------
<PAGE> 34
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
CIVC Partners II
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Marcus Wedner
--------------------------------------------
Name: Marcus Wedner
Title:
Number of Subject Shares owned as of
December 10, 1998:
shares of Class A Common Stock
------------------
288,376 shares of Class B Common Stock
------------------
Notice Address:
CIVC Partners II
--------------------------------------------
231 S. LaSalle Street
--------------------------------------------
Chicago, IL 60697
--------------------------------------------
Attention: Marcus Wedner
--------------------------------------------
<PAGE> 35
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
FUI, Inc.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ W. Barnes Hauptfhurer
--------------------------------------------
Name: W. Barnes Hauptfhurer
Title:
Number of Subject Shares owned as of
December 10, 1998:
shares of Class A Common Stock
------------------
1,802,352 shares of Class B Common Stock
------------------
Notice Address:
FUI, Inc.
--------------------------------------------
c/o First Union Investors, Inc.
--------------------------------------------
301 S. College Street, 5th Floor
--------------------------------------------
Charlotte, NC 28288-0604
--------------------------------------------
Attention: W. Barnes Hauptfhurer
--------------------------------------------
<PAGE> 36
SIGNATURE PAGE TO STOCKHOLDERS' AGREEMENT
Name of Stockholder:
CIBC WG Argosy Merchant Fund 2, L.L.C.
--------------------------------------------
(please print legal name of entity or
individual)
By: /s/ Ed Levy
--------------------------------------------
Name: Ed Levy
Title:
Number of Subject Shares owned as of
December 10, 1998:
shares of Class A Common Stock
------------------
1,802,352 shares of Class B Common Stock
------------------
Notice Address:
CIBC WG Argosy Merchant Fund 2, L.L.C.
--------------------------------------------
425 Lexington Avenue, 3rd Floor
--------------------------------------------
New York, NY 10017
--------------------------------------------
Attention: Ed Levy
--------------------------------------------
<PAGE> 37
SCHEDULE A
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
--------------------------------
NAME AND ADDRESS CLASS A COMMON CLASS B COMMON
-------------------------------------- -------------- --------------
<S> <C> <C>
Willis Stein & Partners, L.P. 7,209,409 --
227 West Monroe St
Suite 4300
Chicago, IL 60606
Attention: Daniel H. Blumenthal
Petersen Properties 3,204,705 --
6420 Wilshire Boulevard
Los Angeles, CA 90048
Attention: Robert E. Petersen
Margie and Robert Petersen Foundation 400,000 --
c/o Petersen Properties
6420 Wilshire Boulevard
Los Angeles, CA 90048
Attention: Robert E. Petersen
Chase Equity Associates, L.P. 1,236,400 1,397,823
380 Madison Ave., 12th Floor
New York, NY 10017-2951
Attention: Brian J. Richmond
Allstate Insurance Company 2,162,823 --
3075 Sanders Road, Suite G5D
Northbrook, IL 60062-7127
Attention: John M. Goesne
Norwest Equity Capital, L.L.C 689,241 --
2800 Piper Jaffray Tower
222 S. Ninth Street
Minneapolis, MN 55402-3388
Attention: John E. Lindahl
Nassau Capital Partners II L.P. 717,376 --
22 Chambers Street
Princeton, NJ 08542
Attention: John G. Quigley
</TABLE>
A-1
<PAGE> 38
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
--------------------------------
NAME AND ADDRESS CLASS A COMMON CLASS B COMMON
-------------------------------------- -------------- --------------
<S> <C> <C>
James D. Dunning, Jr 1,079,656 --
c/o The Dunning Group
333 Ludlow St., 5th Floor
Stamford, CT 06902
Trust f/b/o James Dorr Dunning III, J.D 7,209 --
Dunning, Jr. and H. Fitzgeorge Dunning
c/o The Dunning Group
333 Ludlow St., 5th Floor
Stamford, CT 06902
Attention: James D. Dunning, Jr
Trust f/b/o David Fitzgeorge Dunning, J.D 7,209 --
Dunning Jr. and H. Fitzgeorge Dunning
c/o The Dunning Group
333 Ludlow St., 5th Floor
Stamford, CT 06902
Attention: James D. Dunning, Jr
Karu Investments LP 281,290 --
411 Old Ocean House Road
Cape Elizabeth, MA 04107
The Laurence H. Bloch and Cindy Bloch 460,128 --
Trust
P.O. Box 2273
Rancho Santa Fe, CA 92067
Attention: Laurence H. Bloch
Bloch 1998 Charitable Remainder Trust 147,000
P.O. Box 2273
Rancho Santa Fe, CA 92067
Attention: Laurence H. Bloch
D. Claeys Bahrenburg 575,159 --
c/o Petersen Publishing Company, L.L.C
110 Fifth Avenue, 2nd Floor
New York, NY 10011
</TABLE>
A-2
<PAGE> 39
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
--------------------------------
NAME AND ADDRESS CLASS A COMMON CLASS B COMMON
-------------------------------------- -------------- --------------
<S> <C> <C>
Richard S Willis 175,486 --
c/o Petersen Publishing Company, L.L.C
6420 Wilshire Boulevard
Los Angeles, CA 90048
NAS Partners I L.L.C 3,565 --
22 Chambers Street
Princeton, NJ 08542
Attention: John G. Quigley
BankAmerica Investment Corporation -- 2,595,387
c/o Continental Illinois Venture
231 S. LaSalle Street
Chicago, IL 60697
Attention: Marcus Wedner
CIVC Partners II -- 288,376
231 S. LaSalle Street
Chicago, IL 60697
Attention: Marcus Wedner
FUI, Inc. -- 1,802,352
c/o First Union Investors, Inc.
301 S. College Street, 5th Floor
Charlotte, NC 28288-0604
Attention: W. Barnes Hauptfhurer
CIBC WG Argosy Merchant Fund 2, L.L.C -- 1,802,352
425 Lexington Avenue, 3rd Floor
New York, NY 10017
Attention: Ed Levy
</TABLE>
A-3
<PAGE> 1
CONFORMED COPY
POWER OF ATTORNEY
1. We, EMAP plc ("the Company"), of 1 Lincoln Court, Lincoln Road,
Peterborough, PE1 2RF hereby appoint Chris Innis of Apartment 12T, 15
West 53rd Street, New York, NY10019, USA as our true and lawful
attorney with power to execute in our name and on our behalf the
following documents:
(i) Agreement and Plan of Merger among EMAP plc, EMAP Acquisition
Corp. and Peterson Companies, Inc. (the "Merger Agreement");
(ii) Agreement among EMAP plc, EMAP Acquisition Corp. and certain
stockholders of Peterson Companies, Inc. (the "Stockholders
Agreement");
(iii) Schedule 13D and any amendment thereto for filing with SEC;
(iv) Schedule 14D-1 and any amendment thereto for filing with SEC;
(v) Form 3 for filing with SEC;
(vi) Hart-Scott-Rodino filing with FTC;
(vii) Information Agent Agreement between EMAP plc and Georgeson &
Company Limited;
(viii) Depositary Agreement between EMAP plc and Bank Boston, N.A.;
(ix) Dealer Manager Agreement between EMAP plc and Schroders;
(x) Indemnity Letter to Cravath, Swaine & Moore; and
(xi) Indemnity Letter to Schroders
and all other documents in connection therewith or relating thereto
(the "Documents"), subject in each case to such changes and amendments
as may be agreed by our attorney in his discretion and without
liability, and to execute such other documents and do such other things
in connection with the Documents or any of them as our attorney may
deem appropriate.
2. The execution by our attorney of any Document shall, as between
ourselves and all other parties to such Document, be conclusive as to
the authority of our attorney to do so on our and their behalf.
3. We hereby undertake to ratify everything which our attorney shall do or
purport to do pursuant to this Power of Attorney and will fully
indemnify our attorney against all
<PAGE> 2
losses, liabilities, costs, claims, actions, demands or expenses which
he may incur or which may be made against him as a result of or in
connection with anything lawfully done by virtue of this Power of
Attorney.
4. This Power of Attorney shall be governed by, and construed in
accordance with, English law and shall be irrevocable until 29th
December 1998.
IN WITNESS WHEREOF this Power of Attorney has been executed and delivered as a
deed.
Date: 14th December, 1998
The common seal of )
EMAP plc was affixed in the )
presence of: ) /s/ KEVIN HAND KEVIN HAND
(Director) (Print Name)
/s/ ROBIN MILLER ROBIN MILLER
(Director) (Print Name)
