<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
RELTEC Corporation
________________________________________________________________________________
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
________________________________________________________________________________
(Title of Class of Securities)
759527-10-4
_______________________________________________________________
(CUSIP Number)
Patricia A. Hoffman
GEC Incorporated
c/o Videojet Systems International, Inc.
Wood Dale, IL 60191-1073
(630) 860-7300
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copies To:
Jeffrey I. Gordon, Esq. Philip Gelston, Esq.
Mark S. Wojciechowski, Esq. Cravath, Swaine & Moore
Mayer, Brown & Platt Worldwide Plaza
1675 Broadway 825 Eighth Avenue
New York, NY 10019 New York, NY 10019
Telephone: (212) 506-2500 Telephone: (212) 474-1000
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
March 1, 1999
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See (S)240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
- -----------------------
CUSIP NO. 759527-10-4
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GEC Acquisition Corp.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 45,831,283*
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
45,831,283*
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
45,831,283*
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 81.2% OF THE COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*See Note on page 5.
2
<PAGE>
- -----------------------
CUSIP NO. 759527-10-4
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GEC Incorporated
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 45,831,283*
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
45,831,283*
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
45,831,283*
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 81.2% OF THE COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*See Note on page 5.
3
<PAGE>
- -----------------------
CUSIP NO. 759527-10-4
- -----------------------
- -------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The General Electric Company, p.l.c.
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- -------------------------------------------------------------------------------
SEC USE ONLY
3
- -------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
BK, OO
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [_]
5
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZAITON
6
England
- -------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER OF 7
SHARES ---------------------------------------------------------------
SHARED VOTING POSER
BENEFICIALLY 8
45,831,283*
OWNED BY ---------------------------------------------------------------
SOLE DISPOSITIVE POWER
EACH 9
REPORTING ---------------------------------------------------------------
SHARED DISPOSITIVE POWER
PERSON 10
45,831,283*
WITH
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
45,831,283*
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 (SEE INSTRUCTIONS)
[_]
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
APPROXIMATELY 81.2% OF THE COMMON STOCK OUTSTANDING
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- -------------------------------------------------------------------------------
*See Note on page 5.
4
<PAGE>
*On March 1, 1999, GEC Incorporated ("Parent") and GEC Acquisition Corp. (the
"Purchaser") entered into a Stockholder Agreement and Proxy (the "Stockholder
Agreement") with certain affiliates of Kohlberg Kravis Roberts & Co., L.P.
(such affiliates referred to herein, collectively, as the "Principal
Stockholders"), pursuant to which each Principal Stockholder has agreed, among
other things, to sell in the Offer (as defined in the Offer to Purchase (as
defined below)) all the shares of Common Stock, par value $0.01 per share (the
"Shares") of RECTEL Corporation (the "Company") that they beneficially own at a
price per Share equal to the Offer Price (as defined in the Offer to Purchase).
In addition, the Principal Stockholders have granted the Purchaser an option to
purchase all the Principal Stockholders' Shares at a price equal to the Offer
Price under certain circumstances and subject to certain conditions. Under the
Stockholder Agreement, each Principal 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 8 and 10 of each of the tables
above. A copy of the Stockholder Agreement is attached hereto as Exhibit 2(c),
and the Stockholder Agreement is described more fully in Section 12 of the Offer
to Purchase dated March 5, 1999 (the "Offer to Purchase") attached hereto as
Exhibit 2(a).
Item 1. Security and Issuer
(a) This Schedule 13D relates to the Common Stock, par value $0.01 per share
of RELTEC Corporation.
(b) The Issuer is RELTEC Corporation, a Delaware corporation.
(c) The address of the Issuer's principal executive office is 5900
Landerbrook Drive, Suite 300, Cleveland, Ohio 44124-4019.
Item 2. Identity and Background
(a)-(c) and (f) This Schedule 13D is being filed by the Purchaser, a Delaware
corporation and a wholly owned subsidiary of Parent, a Delaware corporation,
which is a wholly owned subsidiary of The General Electric Company, p.l.c., a
public limited company organized under the laws of England and Wales ("GEC,
p.l.c."). Information concerning the principal business and the address of the
principal offices of the Purchaser, Parent and GEC, p.l.c. is set forth in
Section 9 ("Certain Information Concerning the Purchaser, Parent and GEC,
p.l.c.") of the Offer to Purchase and is incorporated herein by reference. This
filing shall not be construed as an admission that GEC, p.l.c. is, for purposes
of Regulation 13D under the Securities Exchange Act of 1934, as amended, a
bidder on whose behalf this tender offer is being made. The name, citizenship,
business address, present principal occupation or employment and five-year
employment history of each of the directors and executive officers of the
Purchaser, Parent and GEC, p.l.c. is set forth in Schedule I to the Offer to
Purchase and is incorporated herein by reference.
(d) and (e) During the last five years, none of the Purchaser, Parent or GEC,
p.l.c. or, to the best knowledge of the Purchaser, Parent or GEC, p.l.c., any of
their respective executive officers or directors, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has any of them been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration
The information set forth in Section 10 ("Source and Amount of Funds") of the
Offer to Purchase is incorporated herein by reference.
Item 4. Purpose of Transaction
(a)-(g) and (j) 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.
5
<PAGE>
(h) and (i) 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.
Item 5. Interest in Securities of the Issuer
(a)-(c) The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Section 12 ("Purpose of
the Offer, the Merger Agreement; the Stockholder Agreement") of the Offer to
Purchase is incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
The information set forth in "Introduction", Section 9 ("Certain Information
Concerning the Purchaser and Parent"), 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. Material to Be Filed as Exhibits
(1) The Euro 6,000,000,000 Syndicated Credit Facility dated March 25, 1998,
among GEC, p.l.c. HSBC Investment Bank PLC, as Agent Marine Midland Bank,
as US Swingline Agent, and certain other financial institutions.
(2) (a) Offer to Purchase dated March 5, 1999
(2) (b) Agreement and Plan of Merger dated as of March 1, 1999, among the
Purchaser, Parent and the Company.
(2) (c) Stockholder Agreement and Proxy dated as of March 1, 1999, among the
Purchaser, Parent and certain stockholders of the Company.
(3) See Exhibits (2)(a), (2)(b) and (2)(c).
6
<PAGE>
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.
Dated: March 5, 1999
GEC ACQUISITION CORP.,
By: /s/ John C. Mayo
-----------------------------
Name: John C. Mayo
Title: President
GEC INCORPORATED,
By: /s/ Michael Lester
-----------------------------
Name: Michael Lester
Title: Director
THE GENERAL ELECTRIC COMPANY, P.L.C.
By: /s/ John C. Mayo
-----------------------------
Name: John C. Mayo
Title: Director
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
<S> <C> <C>
(1) The Euro 6,000,000,000 Syndicated Credit Facility dated March 25,
1998, among GTEC, p.l.c., HSBC Investment Bank PLC, as Agent, Marine
Midland Bank, as US Swingline Agent, and certain other financial
institutions..........................................................
(2)(a) Offer to Purchase.....................................................
(2)(b) Agreement and Plan of Merger dated as of March 1, 1999, among the
Purchaser, Parent and the Company.....................................
(2)(c) Stockholder Agreement and Proxy dated as of March 1, 1999, among the
Purchaser, Parent and certain stockholders of the Company.............
</TABLE>
8
<PAGE>
EXHIBIT 1
<PAGE>
CONFORMED COPY
AGREEMENT
DATED 25TH MARCH, 1998
EURO 6,000,000,000
SYNDICATED CREDIT FACILITY
FOR
THE GENERAL ELECTRIC COMPANY, p.l.c.
ARRANGED BY
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
BANQUE NATIONALE DE PARIS
BARCLAYS CAPITAL
CHASE MANHATTAN plc
MIDLAND BANK plc
J. P. MORGAN SECURITIES LTD.
SBC WARBURG DILLON READ
WESTDEUTSCHE LANDESBANK GIROZENTRALE
as Joint Lead Arrangers
with
HSBC INVESTMENT BANK PLC
as Agent
and
MARINE MIDLAND BANK
as US Swingline Agent
ALLEN & OVERY CLIFFORD CHANCE
London London
for the Borrower for the Banks
<PAGE>
- --------------------------------------------------------------------------------
INDEX
Clause Page
1. Interpretation........................................................1
2. The Facilities.......................................................16
3. Purpose..............................................................18
4. Conditions Precedent.................................................18
5. Advance Facilities...................................................18
6. Bill Facility........................................................22
7. Bills................................................................24
8. Repayment............................................................25
9. Prepayment and Cancellation..........................................26
10. Interest.............................................................29
11. Payments.............................................................30
12. Taxes................................................................33
13. Market Disruption....................................................37
14. Availability of Currencies...........................................38
15. Increased Costs......................................................40
16. Illegality and Mitigation............................................41
17. Guarantee............................................................42
18. Representations and Warranties.......................................44
19. Undertakings.........................................................46
20. Default..............................................................47
21. The Agents and the Joint Lead Arrangers..............................49
22. Fees.................................................................54
23. Expenses.............................................................56
24. Stamp Duties.........................................................56
25. Indemnities..........................................................56
26. Evidence and Calculations............................................57
27. Amendments and Waivers...............................................58
28. Changes to the Parties...............................................59
29. Disclosure of Information............................................62
30. Set-Off..............................................................63
31. Pro Rata Sharing.....................................................63
32. Severability.........................................................64
33. Counterparts.........................................................64
34. Notices..............................................................64
35. Language.............................................................66
36. Jurisdiction.........................................................66
37. Governing Law........................................................67
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Schedule Page
1. Part I - Banks and Commitments.......................................68
Part II - Swingline Banks and Swingline Commitments..................69
2. Original Borrowers...................................................70
3. Conditions Precedent Documents.......................................71
Part I - To Be Delivered Before The First Advance....................71
Part II - To Be Delivered By An Additional Borrower..................72
4. Calculation of the MLA Cost..........................................73
5. Form of Request......................................................75
6. Forms of Accession Documents.........................................76
Part I - Novation Certificate........................................76
Part II - Borrower Accession Agreement...............................78
Part III - Form of Borrower Novation Agreement.......................79
7. Form of Bill.........................................................81
Signatories...................................................................82
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<PAGE>
- --------------------------------------------------------------------------------
THIS AGREEMENT is dated 25th March, 1998 BETWEEN:
(1) THE GENERAL ELECTRIC COMPANY, p.l.c. (Company No. 67307) (the "Parent");
(2) THE SUBSIDIARIES OF THE PARENT listed in Schedule 2 (if any) as original
borrowers (the "Original Borrowers");
(3) BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH, BANQUE NATIONALE DE
PARIS, BARCLAYS CAPITAL, CHASE MANHATTAN plc, MIDLAND BANK plc, J. P.
MORGAN SECURITIES LTD., SWISS BANK CORPORATION (acting through its division
SBC WARBURG DILLON READ), WESTDEUTSCHE LANDESBANK GIROZENTRALE each as a
joint lead arranger (each a "Joint Lead Arranger");
(4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks;
(5) HSBC INVESTMENT BANK PLC as agent (the "Agent"); and
(6) MARINE MIDLAND BANK as US swingline agent (in this capacity the "US
Swingline Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Acceptance Commission Rate"
means 0.175 per cent, per annum.
"Additional Borrower"
means a Subsidiary of the Parent which becomes a Borrower in accordance
with Clause 28.4 (Additional Borrowers).
"Advance"
means a Tranche A Advance, a Tranche B Advance or a Swingline Advance.
"Advance Facility"
means the facility to draw Tranche A Advances, Tranche B Advances or
Swingline Advances referred to in sub-clauses 2.1(a), (b) and (c)
(Facilities) respectively.
"Affiliate"
for the purposes of this Agreement means a Subsidiary or a holding company
(as defined in Section 736 of the Companies Act 1985) of a person and any
other Subsidiary of that holding company.
- --------------------------------------------------------------------------------
<PAGE>
2
- --------------------------------------------------------------------------------
"Agent's Spot Rate of Exchange"
means the spot rate of exchange as determined by the Agent for the purchase
of the relevant Optional Currency in the London foreign exchange market
with euros at the relevant time on a particular day, but for the purpose of
any conversion after the Commencement Date between the euro and a national
currency unit (and vice versa) the rate shall be that determined in
accordance with EMU legislation.
"Agreed Percentage"
means in relation to a Bank (other than a Swingline Bank) and a Swingline
Advance, the amount of its Tranche B Commitment expressed as a percentage
of the Tranche B Total Commitments.
"Anniversary"
means an anniversary of the Signing Date.
"Applicable Taxes"
means any tax levied or imposed by the United Kingdom or any country in
which any Borrower is incorporated or any jurisdiction from or through
which any payment under this Agreement is made.
"Banks"
means those financial institutions listed in Schedule 1 and their
respective successors and assigns which are for the time being
participating in the Facilities.
"Barclays Capital"
means Barclays Capital Group, the investment banking division of Barclays
Bank PLC.
"Bill"
means a Sterling bill of exchange substantially in the form of Schedule 7.
"Bill Facility"
means the facility to draw Bills for acceptance by the Banks under Tranche
A or Tranche B referred to in sub-clauses 2.1(a) and (b) (Facilities)
respectively.
"Borrower"
means the Parent, the Original Borrowers and each Additional Borrower.
"Borrower Accession Agreement"
means a letter substantially in the form of Part II of Schedule 6 with such
amendments as the Agent may, at the request of the Parent, approve.
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<PAGE>
3
- --------------------------------------------------------------------------------
"Borrowings"
means any indebtedness (whether as principal or surety) for or in respect
of money borrowed (including amounts raised by acceptances under any
acceptance credit, bills, bonds, debentures and similar securities and
finance leases arranged primarily to raise finance) and the net amount of
any liability under any treasury transaction with a bank or financial
institution but excluding in each case any such indebtedness:
(a) arising for or in respect of assets or services acquired or sold in
the ordinary course of business (except to the extent it is a treasury
transaction or would be treated as a loan, overdraft or obligation
under a finance lease in the audited consolidated annual accounts of
the Group); and
(b) owing by one member of the Group to another member of the Group.
"Business Day"
means:
(a) a day (other than a Saturday or Sunday) on which banks are open for
general interbank business (other than operation only of business in
euros) in:
(i) London in relation to the day any Request (except a Request for
Swingline Advances in U.S. Dollars or euros) is made and, unless
(b) below applies, for any other purpose;
(ii) if a payment is required in an Optional Currency (including but
not limited to Sterling), the principal financial centre of the
country of that Optional Currency; and
(iii) if a payment is required in ECU (at any time prior to the
Commencement Date), Paris and Brussels; and
(b) in relation to a payment or rate fixing in or other matter relating to
euros, a day on which the Trans-European Automated Real-time Gross
settlement Express Transfer system (TARGET) is operating.
"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.
"Commencement Date"
means the date of commencement of the third stage of EMU as contemplated by
the Treaty (at the date of this Agreement, expected to be 1st January,
1999).
- --------------------------------------------------------------------------------
<PAGE>
4
- --------------------------------------------------------------------------------
"Commitment"
means, in respect of a Bank, the aggregate of its Tranche A Commitment and
Tranche B Commitment (including its Swingline Commitment or the Swingline
Commitment of its Swingline Affiliate, if applicable), in each case to the
extent not cancelled or reduced under this Agreement.
"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 Obligor are treated as a single employer under Section
414 of the Code.
"Default"
means an Event of Default or an event which, with the giving of any notice
or expiry of any grace period, in each case specified in Clause 20
(Default), would constitute an Event of Default.
"EBDR"
means the rate determined by the Agent to be the arithmetic mean (rounded,
if necessary, to the nearest five decimal places with the midpoint rounded
upwards) of the respective rates notified to the Agent by the Reference
Banks (provided at least two Reference Banks are quoting) at or about 10.30
a.m. on the Utilisation Date for a Bill at which Eligible Bills with a face
amount of (Pounds)1,000,000 and of an equivalent tenor can be discounted in
the London discount market at or about that time.
"ECU"
means the ECU, as referred to in Article 109g of the Treaty and as defined
in Council Regulation (EC) No. 3320/94, that is from time to time used as
the unit of account of the European Communities; changes to the ECU may be
made by the European Communities, in which event the ECU will change
accordingly.
"Eligible Bill"
means a Sterling bill of exchange eligible for rediscounting at the Bank of
England.
"EMU"
means Economic and Monetary Union as contemplated in the Treaty.
"EMU legislation"
means legislative measures of the European Council for the introduction of,
changeover to, or operation of, a single or unified European currency.
- --------------------------------------------------------------------------------
<PAGE>
5
- --------------------------------------------------------------------------------
"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.
"euro" or "euros"
means the single currency to be introduced on the Commencement Date but,
prior to the Commencement Date, references to the "euro" or to "euros" will
be read as references to ECU in accordance with Clause 11.4(b) (Currency).
"euro unit"
means a unit of the euro as defined in EMU legislation.
"Event of Default"
means an event specified as such in Clause 20 (Default).
"Facility"
means any of the Advance Facilities or the Bill Facility.
"Facility Office"
means the office(s) notified by a Bank to the Agent and the Parent:
(a) on or before the date it becomes a Bank; or
(b) subject to Clause 28.6 (Change of Facility Office), by not less than
five Business Days' notice to the Agent and the Parent,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Federal Funds Rate"
means, for any period, a fluctuating interest rate per annum equal for each
day during such period to the weighted average of the rates on overnight
United States Federal funds transactions with members of the United States
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a New York Business Day, for the
immediately preceding New York Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a New
York Business Day, the average of the quotations for such day on such
transactions received by the US Swingline Agent from three Federal funds
brokers of recognised standing selected by it.
"Fee Letters"
means each letter dated on or about the Signing Date:
(a) between the Agent and the Parent; and
- --------------------------------------------------------------------------------
<PAGE>
6
- --------------------------------------------------------------------------------
(b) between the Joint Lead Arrangers and the Parent,
in each case setting out the amount of various fees referred to in Clause
22 (Fees).
"Finance Document"
means this Agreement, each Fee Letter, a Bill, a Novation Certificate, a
Borrower Accession Agreement, each Novation Agreement entered into as
contemplated by Clause 9.5(b)(iii) (Changes to Borrowers) or any other
document designated in writing as such by the Agent and the Parent.
"Finance Party"
means each Joint Lead Arranger, a Bank, the Agent and the US Swingline
Agent.
"Group"
means the Parent and its Subsidiaries.
"Interest Period"
in relation to a Term-out Advance, has the meaning given to it in Clause
10.1 (Interest Periods for Term-out Advances).
"LIBOR"
means in relation to any Advance or unpaid sum:
(a) the rate per annum of the offered quotation for deposits in the
currency of the relevant Advance or unpaid sum for a period equal to
or as near as possible to the required period which appears on
Telerate Page 3750 or Telerate Page 3740 (as appropriate) at or about
11.00 a.m. on the applicable Rate Fixing Day; or
(b) if the rate cannot be determined under paragraph (a) above, the rate
determined by the Agent to be the arithmetic mean (rounded, if
necessary, to the nearest five decimal places with the midpoint
rounded upwards) of the respective rates notified to the Agent by each
of the Reference Banks quoting (provided that at least two Reference
Banks are quoting) as the rate at which it is offering deposits in the
required currency and for the required period in an amount comparable
to the participation of that Reference Bank (or, if it is not a Bank,
the participation of its Affiliate which is a Bank) in the Advance or
unpaid sum to prime banks in the London interbank market at or about
11.00 a.m. on the Rate Fixing Day for such period.
For the purpose of this definition:
(i) "required period" means the applicable Interest Period for a Term-out
Advance, the Term for Tranche A Advances (except Term-out Advances) or
for Tranche B Advances or the period in respect of which LIBOR falls
to be determined in relation to such unpaid sum; and
- --------------------------------------------------------------------------------
<PAGE>
7
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(ii) "Telerate Page 3750" means the display designated as Page 3750, and
"Telerate Page 3740" means the display designated as Page 3740, in
each case on the Telerate Service (or such other pages as may replace
page 3750 or Page 3740 on that service or such other service as may be
nominated by the British Bankers' Association (including the Reuters
Screen) as the information vendor for the purposes of displaying
British Bankers' Association Interest Settlement Rates for deposits in
the currency concerned).
"Majority Banks"
means, at any time:
(a) if any Utilisations are outstanding, Banks with an aggregate Original
Euro Amount of Advances or Bills at that time of more than 66 2/3 per
cent. of the aggregate Original Euro Amount of all Advances and Bills
then outstanding; or
(b) if no Utilisations are outstanding, Banks whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments (or, if
the Total Commitments have been reduced to zero, aggregated more than
66 2/3 per cent. of the Total Commitments immediately before the
reduction).
"Mandatory Prepayment Event"
means the event specified in Clause 9.4 (Mandatory Prepayment Event).
"Margin"
means 0.175 per cent. per annum.
"Maturity Date"
means the last day of the Term of an Advance or a Bill.
"MLA Cost"
means in relation to an Advance in Sterling, the cost of compliance with
the Mandatory Liquid Assets requirements of the Bank of England during its
Term or Interest Period, determined in accordance with Schedule 4.
"national currency unit"
means the unit of currency (other than a euro unit) of a Treaty Country.
"New York Business Day"
means a day (other than a Saturday or Sunday) on which banks are open for
interbank business generally in New York.
"Novation Certificate"
has the meaning given to it in Clause 28.3(a)(i) (Procedure for novations).
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"Obligor"
means the Parent and each Borrower.
"Optional Currency"
means, in relation to any Advance or proposed Advance, Sterling, U.S.
Dollars or any other currency other than euros which is readily available
and freely transferable in the London foreign exchange market in sufficient
amounts to fund that Advance.
"Original Euro Amount"
means:
(a) the principal amount of an Advance denominated in euros; or
(b) the principal amount of an Advance denominated in any other currency
or a Bill, translated into euros on the basis of the Agent's Spot Rate
of Exchange on the date of receipt by the Agent of the Request for
that Advance or Bill.
"Party"
means a party to this Agreement.
"PBGC"
means the U.S. Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Security Interest"
means:
(a) a lien or right of set-off arising by operation of law (or by
agreement evidencing a lien or right of set-off) and in each case in
the ordinary course of business;
(b) any Security Interest securing any Borrowings of any Obligor which
becomes a member of the Group after the Signing Date which was in
existence when that Obligor became a member of the Group and was not
created in contemplation of that Obligor becoming a member of the
Group;
(c) a Security Interest over an asset acquired by an Obligor after the
Signing Date and to which such asset was subject at the time of such
acquisition provided it was not created in contemplation of that
acquisition;
(d) any Security Interest the principal purpose and effect of which is to
allow the setting-off or netting of obligations:
(i) with those of a financial institution; or
(ii) under swaps or other derivative agreements,
in the ordinary course of the cash management arrangements of the
Group;
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(e) any retention of title reserved by any seller of goods or any Security
Interest imposed, reserved or granted over goods supplied by such
seller in the ordinary course of business;
(f) any Security Interest arising out of or in connection with pre-
judgement legal process or a judgement or a judicial award relating to
security for costs;
(g) a Security Interest securing any refinancing of amounts secured under
(b) or (c)above provided the amount secured does not exceed the amount
originally secured;
(h) a Security Interest which the Majority Banks have at any time agreed
in writing shall be a Permitted Security Interest; and
(i) Security Interests (other than Security Interests permitted by
paragraphs (a) to (h) above) which secure, in aggregate, Borrowings in
an amount not exceeding 15 per cent. of the Total Consolidated Assets
of the Group.
"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 an Obligor or any member of the Controlled Group has any
obligation to contribute.
"Prime Rate"
means the prime commercial lending rate for U.S. Dollars from time to time
announced by the US Swingline Agent. Each change in the interest rate on a
Swingline Advance which results from a change in the Prime Rate becomes
effective on the day on which the change in the Prime Rate becomes
effective.
"Qualifying Bank"
means a bank or institution which is:
(a) a bank as defined in Section 840A of the Income and Corporation Taxes
Act 1988 which is within the charge to corporation tax as regards any
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
exemption from United Kingdom tax on interest and is entitled to apply
under the Double Taxation Relief (Taxes on Income) (General)
Regulations 1970 to have interest paid to its Facility Office without
withholding or deduction for or on account of United Kingdom tax (and
does not carry on business in the United Kingdom through a permanent
establishment with which the investments under this Agreement in
respect of which the interest is paid are effectively connected); 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
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avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and capital gains.
"Rate Fixing Day"
means:
(a) the Utilisation Date for an Advance denominated in Sterling; and
(b) the second Business Day before the Utilisation Date for an Advance
denominated in euros or any Optional Currency other than Sterling (or
such other day as is generally treated as the rate fixing day by
market practice in the London interbank market for the currency
concerned).
"Reference Banks"
means, subject to Clause 28.5 (Reference Banks), Barclays Bank PLC,
National Westminster Bank Plc and Midland Bank plc.
"Reportable Event"
means a reported 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 PBGC 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 requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
"Request"
means a request made by a Borrower to utilise a Facility, substantially in
the form of Schedule 5.
"Requested Amount"
means the amount requested in a Request.
"Rollover"
means, in relation to a particular date, one or more Advances (including,
but not limited to, the Term-out Advances):
(a) whose proposed Utilisation Date is the same as the Maturity Date of
one or more existing Advances;
(b) whose aggregate principal amount is the same as or less than the
aggregate outstanding principal amount of all existing Advances whose
Maturity Date is the same as that Utilisation Date; and
(c) which are to be denominated in the same currency or a legal
denomination of the currency as the existing Advance(s) whose Maturity
Date is the same as that
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Utilisation Date (or, if there is more than one such existing Advance
and such Advances are denominated in different currencies, in the same
or lesser respective amounts of the same or legally equivalent
currencies as for such existing Advances).
"Security Interest"
means a mortgage, charge, pledge, lien or similar security interest.
"Signing Date"
means the date of this Agreement.
"Subsidiary"
means a subsidiary within the meaning of Section 736 of the Companies Act
1985, as amended by Section 144 of the Companies Act 1989.
"Swingline Advance"
means an advance made or to be made by a Swingline Bank under the Swingline
Facility.
"Swingline Affiliate"
means, in relation to a Bank, any Swingline Bank that is an Affiliate of
that Bank and which is notified to the Agent and the US Swingline Agent by
that Bank in writing to be its Swingline Affiliate.
"Swingline Bank"
means, subject to Clause 28.2 (Transfers by Banks), a Bank listed in Part
II of Schedule 1.
"Swingline Commitment"
means in respect of a Swingline Bank, the amount in euros set opposite its
name in Part II of Schedule 1 to the extent not transferred, cancelled or
reduced under this Agreement.
"Swingline Facility"
means the committed swingline facility available in U.S. Dollars, Sterling
or euros, forming part of Tranche B and referred to in Clause 2.1(c)
(Facilities).
"Swingline Rate"
means, on any day:
(a) in relation to Swingline Advances in U.S. Dollars, the higher of:
(i) the Prime Rate; and
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(ii) the aggregate of the Federal Funds Rate and one per cent. per
annum,
on that day; and
(b) in relation to Swingline Advances in Sterling, the aggregate of:
(i) one per cent. per annum;
(ii) the Bank of England's fixed repo rate (being the Bank of
England's operational rate) at which it conducts its daily money
market operations as at the time the Request is served and at
9.00 a.m. for each subsequent day; and
(iii) the MLA Cost,
on that day; and
(c) in relation to Swingline Advances in euros, the aggregate of:
(i) one per cent. per annum; and
(ii) the cost of same day euro funds certified to the Agent by each
Swingline Bank for each day the relevant Swingline Advance in
euros is outstanding as at the time the Request is served and at
9.00 a.m. for each subsequent day,
on that day.
"Swingline Total Commitments"
means the aggregate for the time being of the Swingline Commitments, being
euro 1,000,000,000 at the date of this Agreement.
"Term"
means the period selected by a Borrower in a Request for which the relevant
Advance or Bill is to be outstanding.
"Term-out Advances"
means the Tranche A Advances, if any, drawn under Clause 8.1(b) (Repayment
of Tranche A Advances).
"Total Commitments"
means the aggregate of the Tranche A Total Commitments and Tranche B Total
Commitments (including the Swingline Total Commitments) from time to time.
"Total Consolidated Assets"
means the aggregate from time to time of the Group's consolidated fixed
assets (including investments but excluding goodwill and intangible assets)
and consolidated current assets, all determined in accordance with
applicable accounting standards from time to time used in preparation of
the Group's audited consolidated annual accounts.
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"Tranche A"
has the meaning given to it in Clause 2.1(a) (Facilities).
"Tranche A Advance"
means an Advance made by a Bank under Tranche A.
"Tranche A Availability Period"
means the period from the Signing Date up to and including 24th March, 1999
(being the date which is 364 days after the Signing Date).
"Tranche A Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 1 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche A Term Date"
means the last day of the Tranche A Availability Period or, if that day is
not a Business Day, the preceding Business Day.
"Tranche A Term-out Option"
means the option available to the Borrowers to draw Term-out Advances under
Tranche A pursuant to Clause 8.1(b) (Repayment of Tranche A Advances).
"Tranche A Total Commitments"
means the aggregate for the time being of the Tranche A Commitments, being
euro 1,500,000,000 at the date of this Agreement.
"Tranche B"
has the meaning given to it in Clause 2.1 (b) (Facilities).
"Tranche B Advance"
means an Advance made by a Bank under Tranche B.
"Tranche B Availability Period"
means the period from and including the Signing Date to and including the
Tranche B Final Maturity Date.
"Tranche B Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 2 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche B Final Maturity Date"
means the fifth Anniversary or such later date as may be agreed in
accordance with Clause 5.7 (Extension of Tranche B Availability Period).
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"Tranche B Total Commitments"
means the aggregate for the time being of the Tranche B Commitments, being
euro 4,500,000,000 at the date of this Agreement (up to euro 1,000,000,000
of which is available under the Swingline Facility).
"Treaty"
means the Treaty Establishing the European Community being the Treaty of
Rome of 25th March, 1957, as amended by the Single European Act 1986 and
the Maastricht Treaty (which was signed at Maastricht on 7th February, 1992
and came into force on 1st November, 1993), as amended from time to time.
"Treaty Country"
means each state described as a participating Member State in any EMU
legislation, whether in the first wave or subsequently.
"U.K." or "United Kingdom"
means the United Kingdom of Great Britain and Northern Ireland.
"United States"
means the United States of America.
"U.S. Borrower"
means a Borrower incorporated in any state of the United States.
"U.S. Qualifying Bank"
has the meaning given to it in Clause 12.3(a) (U.S. Taxes).
"Utilisation"
means:
(a) in the case of a Utilisation comprising Advances, all the Advances
made or to be made; or
(b) in the case of a Utilisation comprising Bills, all the Bills accepted
or to be accepted,
following the giving by a Borrower of a Request for those Advances or
Bills.
"Utilisation Date"
means:
(a) in the case of an Advance or Utilisation comprising Advances, the date
for the making of the relevant Advance or Advances; and
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(b) in the case of a Bill or Utilisation comprising Bills, the date for
the acceptance of the relevant Bill or Bills.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in the
next calendar month, except that, if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that calendar month;
a "principal amount" in relation to a Bill is a reference to the face
amount of that Bill;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law but, if
not, being of a type which banks operating in the relevant
jurisdiction generally and the Bank affected in particular are
accustomed to complying with) of any governmental body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
a reference to the currency of a country is to the lawful currency or
currencies of that country for the time being, "(Pounds)" and
"Sterling" is a reference to the lawful currency or currencies of the
United Kingdom for the time being and "U.S. $" and "U.S. Dollars" is
a reference to the lawful currency of the United States for the time
being; and
a "treasury transaction" is a reference to any interest rate or
cross-currency swap;
(ii) a provision of a law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its permitted successors, transferees and assigns;
(v) a Finance Document or another document is a reference to that Finance
Document or that other document as amended, novated or supplemented;
and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
(d) Any provision of this Agreement that states that it will come into effect
as from the Commencement Date shall, to the extent that any such provision
relates to any currency of a state which is not a Treaty Country on the
Commencement Date, come into effect in relation to the currency of such
state on and from the date on which such state becomes a Treaty Country.
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2. THE FACILITIES
2.1 Facilities
The Banks grant to the Borrowers the following facilities:
(a) a committed multicurrency revolving 364 day credit facility, with an
option to draw Term-out Advances, to be designated as Tranche A, under
which the Banks will, when requested by a Borrower, make cash advances
in euros or Optional Currencies to (or accept Bills in Sterling drawn
by) that Borrower on a revolving basis during the Tranche A
Availability Period;
(b) a committed multicurrency revolving credit facility, to be designated
as Tranche B, under which the Banks will, when requested by a
Borrower, make cash advances in euros or Optional Currencies to (or
accept Bills in Sterling drawn by) that Borrower on a revolving basis
during the Tranche B Availability Period; and
(c) a committed swingline advance facility (which is a sub-division of
Tranche B) under which the Swingline Banks will, when requested by a
Borrower, make to that Borrower Swingline Advances in U.S. Dollars,
Sterling or euros during the Tranche B Availability Period except that
Swingline Advances in euros will only be made subject to availability
of same day funding in euros in the London interbank market,
in all cases subject to the terms of this Agreement.
2.2 Overall facility limit
(a) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of all outstanding Utilisations:
(i) under Tranche A, shall not at any time exceed the Tranche A Total
Commitments at that time;
(ii) under Tranche B (including the Swingline Facility), shall not at any
time exceed the Tranche B Total Commitments at that time;
(iii) under the Swingline Facility, shall not at any time exceed the
Swingline Total Commitments at that time; and
(iv) under all the Facilities, shall not at any time exceed the Total
Commitments.
(b) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of:
(i) Tranche A Advances made, and the principal amount of Bills under
Tranche A accepted, by a Bank shall not at any time exceed its Tranche
A Commitment at that time;
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(ii) Tranche B Advances (including Swingline Advances) made, and the
principal amount of Bills under Tranche B accepted, by a Bank plus
that Bank's and, if applicable, that Bank's Swingline Affiliate's
outstanding Swingline Advances shall not at any time exceed its
Tranche B Commitment at that time; and
(iii) Swingline Advances made by a Swingline Bank shall not at any time
exceed its Swingline Commitment at that time.
2.3 Number of Requests and Advances
No more than one Request may be delivered on any one day, but that Request
may specify any number of Utilisations and Terms from either Tranche A or
Tranche B (or a Swingline Advance) or all of them. A maximum of 20
Utilisations may be outstanding at any one time (unless the Agent and the
Parent otherwise agree).
2.4 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are several.
Failure of a Finance Party to carry out those obligations does not relieve
any other Party of its obligations under the Finance Documents. No Finance
Party is responsible for the obligations of any other Finance Party under
the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights and accordingly a Finance Party may, except as otherwise stated in
the Finance Documents, separately enforce those rights.
2.5 Obligors' Representative
Each Obligor irrevocably authorises the Parent to give and receive as
representative on its behalf all notices (including Requests) and sign all
documents in connection with the Finance Documents on its behalf (including
Novation Agreements under Clause 9.5(b) (Changes to Borrowers)) and take
such other action as may be necessary or desirable under or in connection
with the Finance Documents and confirms that it will be bound by any action
taken by the Parent under or in connection with the Finance Documents.
2.6 Actions of Parent
The respective liabilities of each of the Obligors under the Finance
Documents shall not be in any way affected by:
(a) any irregularity (or purported irregularity) in any act done by or any
failure (or purported failure) by the Parent; or
(b) the Parent acting (or purporting to act) in any respect outside any
authority conferred upon it by any Obligor; or
(c) the failure (or purported failure) by, or inability (or purported
inability) of, the Parent to inform any Obligor of receipt by it of
any notification under a Finance Document.
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3. PURPOSE
(a) Each Utilisation will be applied:
(i) in the case of Tranche A Advances or Bills, in or towards providing
bridging and liquidity finance for the Group's financial requirements
including, but not limited to, meeting dividend and tax payments and
for backing commercial paper programmes (or refinancing Swingline
Advances); and
(ii) in the case of Tranche B Advances (including Swingline Advances) or
Bills, in or towards the general corporate purposes of the Group
including, but not limited to, acquisitions, capital expenditure,
working capital financing, share buy-backs and other capital
distributions and supporting commercial paper programmes (provided
that a Swingline Advance may not be applied in or towards refinancing
another Swingline Advance).
(b) Without affecting the obligations of any Borrower in any way, no Finance
Party is bound to monitor or verify the application of the proceeds of any
Advance.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to any Borrower under this Agreement
are subject to the condition precedent that the Agent has notified the
Parent and the Banks that it has received all of the documents set out in
Part I of Schedule 3 in form and substance satisfactory to the Agent. The
Agent will promptly notify the Parent upon such receipt.
4.2 Further conditions precedent
The obligations of each Bank to participate in a Utilisation (or make any
payment under Clause 5.10(b)(ii)) are subject to the further conditions
precedent that on the date of the Request and on its Utilisation Date:
(a) except in the case of a Rollover, the representations and warranties
in Clause 18 (Representations and Warranties) to be repeated in
accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately
after the Utilisation; and
(b) except in the case of a Rollover, no Default has occurred which is
continuing or would result from the Utilisation and no notice has been
given by the Parent under Clause 9.4 (Mandatory Prepayment Event).
5. ADVANCE FACILITIES
5.1 Receipt of Requests
(a) A Borrower may borrow Advances under Tranche A or Tranche B if the Agent
receives, not later than 3.00 p.m. on the third Business Day before the
proposed Utilisation Date, or, in the
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case of an Advance in Sterling, not later than 3.00 p.m. one Business Day
before the proposed Utilisation Date, a duly completed Request copied to
the US Swingline Agent.
(b) A Borrower may borrow Swingline Advances if:
(i) in the case of Swingline Advances in U.S. Dollars, the US Swingline
Agent receives, not later than 11.00 a.m. (New York City time) on the
proposed Utilisation Date;
(ii) in the case of Swingline Advances in Sterling or euros, the Agent
receives, not later than 9.00 a.m. (London time) on the proposed
Utilisation Date,
a duly completed Request (copied to the Agent or US Swingline Agent as the
case may be).
5.2 Completion of Requests for non Swingline Advances
A Request (other than a Request for a Swingline Advance) will not be
regarded as having been duly completed unless:
(a) the Utilisation Date is a Business Day during the Tranche A
Availability Period (in respect of a Tranche A Advance) or Tranche B
Availability Period (in respect of a Tranche B Advance);
(b) only one currency is specified for each separate Advance, such
currency is the euro or an Optional Currency, and the Requested Amount
for each separate Advance is:
(i) in the case of Advances denominated in euros, a minimum of euro
100,000,000 or, if more, in integral multiples of euro
10,000,000; or
(ii) in the case of any currency other than the euro, a minimum
Original Euro Amount of euro 100,000,000 or, if more, in
integral multiples of euro 10,000,000; or
(iii) the undrawn balance of the Tranche A Total Commitments or the
Tranche B Total Commitments (as the case may be); or
(iv) such other amount as the Agent and the Parent may agree,
and the Agent and the Parent may agree to round the amount of Advances
which are not denominated in euros on such basis as they may
reasonably consider to be appropriate;
(c) only one Term or, in the case of Term-out Advances, Interest Period,
for each separate Advance is specified which:
(i) does not overrun the Tranche A Term Date (in respect of a
Tranche A Advance (other than a Term-out Advance)) or the
Tranche B Final Maturity Date (in respect of a Tranche B
Advance); and
(ii) is a period of one month, two, three or six months (which, in
the case of Term-out Advances only, does not overrun the third
Anniversary) or, in any case,
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such other period as all the banks may previously have agreed for
the purposes of such Advance; and
(d) the currencies specified are either euros or subject to Clause
11.4(c) (Currency), Optional Currencies.
5.3 Completion of Requests for Swingline Advances
A Request for Swingline Advances will not be regarded having been duly
completed unless:
(a) the Utilisation Date is:
(i) in the case of Swingline Advances in U.S. Dollars, a New York
Business Day; or
(ii) in the case of Swingline Advances in Sterling or euros, a
Business Day,
in each case falling before the Tranche B Final Maturity Date;
(b) it is specified that the Swingline Advances are to be made in U.S.
Dollars, Sterling or euros under the Swingline Facility;
(c) the Requested Amount is a minimum Original Euro Amount of euro
10,000,000 or such other amount as the Agent or, as the case may be,
US Swingline Agent and the relevant Borrower may agree which, if
borrowed, would not cause the Original Euro Amount of all Utilisations
under Tranche B to exceed the Tranche B Total Commitments;
(d) only one Term is specified, which:
(i) does not overrun the Tranche B Final Maturity Date; and
(ii) is a period not exceeding 7 days.
5.4 Amount of each Bank's Advance
The amount of a Bank's Advance will be the proportion of the Requested
Amount which:
(a) in the case of a Tranche A Advance, its Tranche A Commitment bears to
Tranche A Total Commitments;
(b) in the case of a Tranche B Advance, its Tranche B Commitment bears to
the Tranche B Total Commitments; and
(c) in the case of a Swingline Advance, its Swingline Commitment bears to
the Swingline Total Commitments,
in each case on the date of receipt of the relevant Request.
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5.5 Notification of the Banks
The Agent (or, in the case of Swingline Advances in U.S. Dollars, the US
Swingline Agent) will promptly notify each Bank (or, as the case may be,
Swingline Bank) of the details of the requested Advances and the amount of
its Advance.
5.6 Payment of Proceeds
Subject to the terms of this Agreement, each Bank (or, as the case may be,
Swingline Bank) will make its Advance available to the Agent (or, in the
case of Swingline Advances in U.S. Dollars, the US Swingline Agent) for the
Borrower for value on the relevant Utilisation Date.
5.7 Extension of Tranche B Availability Period
The Tranche B Final Maturity Date in respect of each Bank's Tranche B
Commitment may, at the Parent's request, be extended from time to time for
any period up to a date falling no later than seven years from the Signing
Date. However, each Bank may, in its sole discretion, decline to extend
the Tranche B Maturity Date in respect of its own Tranche B Commitment, in
which case:
(a) the Tranche B Commitment of that Bank will automatically cancel on the
then applicable Tranche B Final Maturity Date; and
(b) that Bank will be repaid in full upon the then applicable Tranche B
Final Maturity Date and will cease to be a Bank at such time,
irrespective of whether any other Bank has agreed to extend the Tranche B
Availability Period in respect of its own Tranche B Commitment.
5.8 Currency and limit on ECU drawings
No Request may specify an Advance or Advances denominated in ECU to be
drawn down on the same day in an aggregate principal amount exceeding ECU
1,000,000,000, and in any event not more than ECU 2,000,000,000 of Advances
denominated in ECU may be outstanding at any one time (but this Clause 5.8
does not apply after the Commencement Date).
5.9 Currency of Term-out Advances
Subject to Clause 11.4 (Currency), once the currency of a Term-out Advance
has been selected in the applicable Request, it will remain in that
currency throughout its Term.
5.10 Term-out Advances in Optional Currencies
(a) If a Term-out Advance is denominated in an Optional Currency (other than an
Optional Currency that is redenominated under Clause 11.4 (Currency)),
there shall be calculated in respect of each applicable Interest Period the
difference between the amount of the Term-out Advance (in that Optional
Currency) for the current Interest Period and for the next Interest Period.
The amount of the Term-out Advance for the next Interest Period will be
determined by notionally converting into that Optional Currency the
Original Euro Amount of the Term-
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out Advance on the basis of the Agent's Spot Rate of Exchange three
Business Days before the start 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-out 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-out Advance for the next Interest Period is
greater, each Bank shall, provided the conditions specified in Clause
4.2 (Further Conditions Precedent) are satisfied, forthwith make
available to the Agent for the relevant Borrower its participation in
the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period shows an
appreciation or depreciation of the Optional Currency against the euro 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 5.10 and
in Clause 5.11 (Prepayments and repayments) "Original Exchange Rate" means
the Agent's Spot Rate of Exchange used for determining the amount of the
Optional Currency for the Interest Period which is the later of the
following:
(i) the first Interest Period applicable to the Term-out Advance; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 5.10.
5.11 Prepayments
If a Term-out Advance is to be prepaid by reference to an Original Euro
Amount, the Optional Currency amount to be prepaid shall be determined by
reference to the Agent's Spot Rate of Exchange last used for determining
the Optional Currency amount of that Term-out Advance under this Clause 5
or, if applicable, the Original Exchange Rate (as defined in Clause 5.10
(Term-out Advances in Optional Currencies)).
5.12 Notification
The Agent shall notify the Banks and the Parent of Optional Currency
amounts (and the applicable Agent's Spot Rate of Exchange) promptly after
they are ascertained.
6. BILL FACILITY
6.1 Receipt of Requests
Each Borrower may utilise the Bill Facility under Tranche A or Tranche B if
the Agent receives, not later than 10.00 a.m. on the Business Day before
the proposed Utilisation Date, a duly completed Request.
6.2 Form of Requests
A Request will not be regarded as being duly completed unless:
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(a) the Utilisation Date is a Business Day;
(b) the Requested Amount is a minimum of (Pounds)50,000,000 (or the
undrawn balance of the Tranche A Total Commitments or Tranche B Total
Commitments as the case may be) or such other amount as the Agent and
the Borrower may agree; and
(c) only one Term is specified which:
(i) does not overrun the Tranche A Term Date (in respect of Tranche A
Bills) or the Tranche B Final Maturity Date (in respect of
Tranche B Bills); and
(ii) is a period of between 14 days and 187 days.
6.3 Amount of Bills to be accepted by each Bank
The aggregate principal amount of the Bills to be accepted by a Bank will
be the proportion of the Requested Amount which:
(a) in the case of Tranche A Bills, its Tranche A Commitment bears to the
Tranche A Total Commitments; and
(b) in the case of Tranche B Bills, its Tranche B Commitment bears to the
Tranche B Total Commitments,
in each case on receipt of the relevant Request.
6.4 Notification of the Banks
The Agent shall, not later than 1.00 p.m. on the Business Day before the
proposed Utilisation Date, notify each Bank of the details of the requested
Bills and the aggregate principal amount of the Bills to be accepted by it.
6.5 Acceptance of Bills
(a) The Agent shall, not later than 11.00 a.m. on the proposed Utilisation
Date, deliver to each Bank Bills completed in accordance with Clause 7.1
(Holding and completion of Bills).
(b) Each Bank shall accept the Bills delivered to it in accordance with
paragraph (a) above by the proposed Utilisation Date.
(c) The Agent shall, not later than 11.30 a.m. on the proposed Utilisation
Date, notify the Parent and each Bank of the applicable EBDR.
(d) Subject to the terms of this Agreement, each Bank shall pay to the Agent
for the relevant Obligor an amount equal to:
(i) the amount which the Bank would have received as the proceeds of
discounting if it had discounted the Bills accepted by it at the
applicable EBDR; less
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(ii) commission calculated at the Acceptance Commission Rate on the
aggregate principal amount of those Bills.
6.6 Advances as an alternative
(a) If it is unlawful, impracticable or contrary to the Bank of England's
limits on the discounting of Bills applicable to any Bank for a Bank to
accept any Bills, or if a Bank's acceptances are ineligible for discounting
at the Bank of England, then it may notify the Agent accordingly by no
later than 4.00 p.m. on the Business Day before the proposed Utilisation
Date.
(b) If a Bank notifies the Agent in accordance with paragraph (a) above, then,
subject to the terms of this Agreement, the Bank shall instead make an
Advance in accordance with Clause 5 (Advance Facilities) in Sterling on the
relevant 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 6 (Bill Facility) and for a Term equal to
the Term of those Bills.
7. BILLS
7.1 Holding and completion of Bills
(a) Each Borrower shall ensure that the Agent has a sufficient stock of Bills
before delivering any Request for a Utilisation comprising Bills.
(b) Each Bill shall:
(i) be drawn by the Borrower in its own favour and endorsed by it in
blank;
(ii) be undated;
(iii) have the Maturity Date, the drawee 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 and is irrevocably
authorised by the Borrowers to:
(i) sign each Bill on behalf of the Borrower concerned and date it with
its Utilisation Date;
(ii) insert in each Bill the name of the Bank on which it is drawn, its
face amount and its Maturity Date; and
(iii) deliver each completed Bill to the Bank on which it is drawn for
acceptance in accordance with this Agreement.
(d) The Agent shall at the request of a Borrower notify that Borrower what
stock of Bills (and in what denominations) are held by the Agent.
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7.2 Rounding of principal amount of Bills
If necessary, the Agent may round the principal amount of the relevant
Bills to be accepted by each Bank to ensure that each Bill has a principal
amount of an integral multiple of (Pounds)10,000, being not less than
(Pounds)250,000 nor more than (Pounds)5,000,000.
7.3 Discounting of Bills
Each Bank 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.
7.4 Information relating to Bills
Each Borrower shall, promptly on request by a Finance Party, supply to the
Agent for that Finance Party any information relating to any Bill
(including the underlying trade transaction for that Bill) as that Finance
Party may reasonably require or which may be required by the Bank of
England or any other fiscal or monetary authority in the U.K.
7.5 Eligible Bills
Each Borrower shall ensure that any Bill drawn by it and accepted by a Bank
is, assuming that the relevant Bank 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.
8. REPAYMENT
8.1 Repayment of Tranche A Advances
(a) Each Borrower shall repay each Tranche A Advance made to it in full on its
Maturity Date to the Agent for the relevant Bank but since Tranche A is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. Subject to paragraph (b) below, no Tranche A
Advance may be outstanding after the Tranche A Term Date.
(b) At any time and from time to time prior to the Tranche A Term Date, any
Borrower may, by delivery of a duly completed Request to the Agent under
Clause 5 (Advance Facilities) (who shall send a copy of the same to the
Banks), elect to draw one or more Advances (each a "Term-out Advance")
under Tranche A with a Maturity Date after the Tranche A Term Date. No
Term-out Advance, once repaid or prepaid, may be reborrowed (other than
under Clause 5.10 (b) (Term-out Advances in Optional Currencies)).
(c) No Tranche A Advance, other than a Term-out Advance, may be outstanding
after the Tranche A Term Date. No Term-out Advance may be outstanding
after the date falling on the third Anniversary.
8.2 Repayment of Tranche B Advances
Each Borrower shall repay each Tranche B Advance made to it in full on its
Maturity Date to the Agent for the relevant Banks but since Tranche B is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. No Tranche B Advance may be outstanding after
the Tranche B Final Maturity Date.
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8.3 Payment of Bills
Each Borrower shall pay an amount equal to the principal amount of each
Bill on its Maturity Date to the Agent for the relevant Bank. No Tranche A
Bill may be outstanding after the Tranche A Term Date and no Tranche B Bill
may be outstanding after the Tranche B Final Maturity Date.
8.4 Repayment of Swingline Advances
(a) Each Borrower shall repay each Swingline Advance made to it on its Maturity
Date to the Agent or, in the case of Swingline Advances in U.S. Dollars,
the US Swingline Agent for the Swingline Banks. No Swingline Advance may
be outstanding after the Tranche B Final Maturity Date.
(b) Each Swingline Advance shall be repaid on its Maturity Date in accordance
with paragraph (a) above. In the event that a Swingline Advance is not so
repaid each Bank (other than a Swingline Bank) will within four Business
Days of a demand to that effect from the Agent or, as the case may be, the
US Swingline Agent pay to the Agent or, as the case may be, the US
Swingline Agent on behalf of the Swingline Banks and their Swingline
Affiliates an amount equal to its Agreed Percentage of the principal of
such Swingline Advance and accrued interest (including default interest)
thereon to the date of actual payment by such Bank. The relevant Borrower
shall forthwith reimburse the Banks (through the Agent or, as the case may
be, the US Swingline Agent) in full for each payment made by the Banks
under this paragraph (b). Each amount the relevant Borrower is required to
reimburse to the Banks under this paragraph (b) shall be deemed to be an
overdue amount under Clause 10.4 (Default Interest) which fell due for
payment by the relevant Borrower on the day on which the payment by the
Banks giving rise to the reimbursement obligation was made and shall accrue
default interest under Clause 10.4 (Default Interest) accordingly.
9. PREPAYMENT AND CANCELLATION
9.1 Automatic Cancellation of the Total Commitments
(a) The undrawn Tranche A Commitment of each Bank shall be automatically
cancelled at the close of business in London on the last day of the Tranche
A Availability Period.
(b) The Tranche B Commitment of each Bank (including the Swingline Commitments
of the Swingline Banks) shall be automatically cancelled at the close of
business in London on the last day of the Tranche B Availability Period.
9.2 Voluntary Cancellation
(a) The Parent may, by giving not less than five days' prior written notice to
the Agent specifying the relevant Tranche(s), cancel the unutilised portion
of the Tranche A Total Commitments or the Tranche B Total Commitments or
both, in whole or in part (but, if in part, in a minimum amount of euro
50,000,000 and in integral multiples of euro 10,000,000 in aggregate for
both Tranches). Any cancellation in part of the Tranche B Total Commitments
shall be applied against the Tranche B Commitment of each Bank pro rata.
Any cancellation in part of the
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Tranche B Total Commitments shall be applied against the Tranche B
Commitment of each Bank pro rata.
(b) Whenever part of the Tranche B Total Commitments are cancelled, the
Swingline Commitments shall not be cancelled unless (i) the amount of the
Swingline Total Commitments would exceed the Tranche B Total Commitments
after such cancellation or (ii) the Swingline Commitment of any Swingline
Bank would exceed its Tranche B Commitment after such cancellation. In any
such case, the Swingline Total Commitments shall, at the same time as the
cancellation of the Tranche B Total Commitments takes effect, be cancelled
by such amount as is necessary to ensure that after the relevant
cancellation of the Tranche B Total Commitments the Swingline Total
Commitments do not exceed the Tranche B Total Commitments and the Swingline
Commitment of each Swingline Bank does not exceed its Tranche B Commitment.
9.3 Voluntary prepayment
(a) Any Borrower may, by giving not less than five days' prior notice to the
Agent, prepay without premium or penalty the whole or any part of any
Advance made to it under Tranches A or B (but, if in part, in an aggregate
minimum Original Euro Amount, taking all prepayments made by all the
Borrowers under both Tranches on the same day together, of euro 50,000,000
and in integral multiples of euro 10,000,000).
(b) Any voluntary prepayment under paragraph (a) above will:
(i) be applied against Tranche A or B in such proportions as may be
specified by the Borrower in the notice of prepayment or, if not
specified, against Tranche A; and
(ii) be applied against all the Advances of all the Banks in the relevant
Tranche(s) pro rata.
9.4 Mandatory Prepayment Event
If at any time any single person, or group of persons acting in concert (as
defined in the City Code on Takeovers and Mergers), acquires control (as
defined in Section 416 of the Income and Corporation Taxes Act 1988) of the
Parent then the Parent will notify the Agent within thirty days and the
Agent will, if instructed to do so by the Majority Banks, by notice to the
Parent given no earlier than ninety days after the date that notice is
given to the Agent:
(a) call for prepayment of all the Advances on such date as it may specify
in such notice whereupon all the Advances shall become due and payable
on such date together with accrued interest and any other sums then
owed by the Obligors under the Finance Documents;
(b) call for each Borrower to perform its obligations under Clause 8.3
(Payment of Bills) in respect of all outstanding Bills on such date as
it may specify in such notice as if such date were the Maturity Date
of each of those Bills; and
(c) declare that the Total Commitments shall be cancelled, whereupon the
Total Commitments shall be cancelled and the Commitment of each Bank
shall be cancelled and reduced to zero.
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9.5 Changes to Borrowers
(a) Any Borrower (other than the Parent) in respect of which no Utilisation,
interest or related amount is outstanding may, at the request of the
Parent, cease to be a Borrower by giving not less than two Business Days'
notice to the Agent, which, upon taking effect, shall discharge that
Borrower's obligations under this Agreement. No such discharge will take
effect, however, if at the time or immediately thereafter any Default has
occurred which is continuing.
(b) Any Borrower (the "Existing Borrower") will be released from its
obligations under this Agreement as a Borrower (and thereupon cease to be a
"Borrower") upon another Borrower (the "Substitute Borrower") assuming the
obligations in respect thereof of the Existing Borrower provided that:
(i) any such substitution shall take effect on and from the later of the
day upon which the Agent notifies the Parent in writing that it is
satisfied with the compliance with the matters set out in paragraph
(b)(iii) below and the date for substitution specified in the relevant
notice under paragraph (b)(ii) below;
(ii) notice of the proposed substitution has been delivered by the Parent
to the Agent not less than two Business Days prior to the proposed
substitution; and
(iii) the Substitute Borrower enters into a Novation Agreement with the
Existing Borrower, the Parent and the Agent on behalf of the Finance
Parties in the form of Part III of Schedule 6 together with such
amendments as the Agent may, at the request of the Parent, approve.
Each Bank authorises the Agent to sign on its behalf any Novation Agreement
entered into in accordance with this paragraph (b).
9.6 Right of prepayment and cancellation
If any Borrower is required to pay or is notified by any Bank in writing
that it will be required to pay any amount to a Bank under Clause 12
(Taxes) or Clause 15 (Increased Costs), or if circumstances exist such that
a Borrower will be required to pay any amount to a Bank under Clause 12
(Taxes), the Parent may, whilst the circumstances giving rise or which will
give rise to the requirement continue, serve a notice of prepayment and
cancellation on that Bank through the Agent. On the date falling three
Business Days after the date of service of the notice:
(a) each Borrower shall prepay all outstanding Advances made to it by that
Bank;
(b) each Borrower shall perform its obligations under Clause 8.3 (Payment
of Bills) in respect of all outstanding Bills accepted by that Bank as
if such third Business Day were the Maturity Date of each of those
Bills; and
(c) the Bank's Tranche A Commitment, and its Tranche B Commitment
(including its Swingline Commitment (if any)) shall be permanently
cancelled on the date of service of the notice.
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9.7 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of any
such notice.
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and any other amounts due under this
Agreement in respect of that prepayment (including, but not limited to, any
amounts payable under Clause 25.2(b) (Other indemnities) if not made on a
Maturity Date for the relevant Tranche A Advance, Tranche B Advance or
Swingline Advance).
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) Subject to the terms of this Agreement, any amount prepaid under Clause 9.3
(Voluntary prepayment) in respect of Tranche A (other than in respect of a
Term-out Advance) or Tranche B may be reborrowed. No amount of the Tranche
A Total Commitments or Tranche B Total Commitments (including the Swingline
Total Commitments) cancelled under this Agreement may subsequently be
reinstated.
10. INTEREST
10.1 Interest Periods for Term-Out Advances
The life of each Term-out Advance is divided into successive periods (each
an "Interest Period") for the calculation of interest. The first Interest
Period will be the period selected in the Request for that Term-out Advance
and each subsequent Interest Period will be the period selected by the
relevant Borrower by notice to the Agent received not later than 3.00 p.m.
on the third Business Day before the end of the then current Interest
Period or, in the case of a Term-out Advance in Sterling, not later than
3.00 p.m. on the day before the last day of the then current Interest
Period (being one month, two, three or six months or in any case such other
period as the Agent and all the Banks may agree from time to time which
does not overrun the third Anniversary). If no such selection notice is
received within the time limit mentioned above, the new Interest Period
will be three months or such shorter period as is required to ensure that
it does not overrun the third Anniversary.
10.2 Interest rate for all Advances
(a) The rate of interest on each Tranche A Advance (except a Term-out Advance)
and Tranche B Advance for its Term and for each Term-out Advance for its
Interest Period is the rate per annum determined by the Agent to be the
aggregate of:
(i) the Margin;
(ii) LIBOR; and
(iii) the MLA Cost, if applicable.
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(b) The rate of interest on each Swingline Advance during its Term is the rate
per annum determined by the Agent or, in respect of Swingline Advances in
U.S. Dollars, the US Swingline Agent, to be the Swingline Rate for each day
during its Term.
10.3 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Advance is payable by the relevant Borrower on its Maturity Date (or the
last day of an Interest Period for a Term-out Advance) and also, in the
case of any Advance with a Term or Interest Period longer than six months,
at six-monthly intervals during its Term or Interest Period for so long as
the Term or Interest Period continues.
10.4 Default interest
(a) If a Borrower fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Agent pay interest on the overdue
amount from the due date up to the date of actual payment, both before and
after judgment, at a rate (the "default rate") determined by the Agent or,
as the case may be, the US Swingline Agent to be one per cent. per annum
above the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Tranche A Advance in the
currency of the overdue amount for such successive Terms of such duration
as the Agent may determine (each a "Designated Term") provided that, in the
case of principal falling due before its Maturity Date, the default rate up
to that Maturity Date will be one per cent. per annum above the rate
applicable to that principal immediately before it fell due.
(b) The default rate will be determined on each Business Day or the first day
of, or two Business Days before the first day of, the relevant Designated
Term, as appropriate.
(c) If the Agent or, as the case may be, the US Swingline Agent determines that
deposits in the currency of the overdue amount are not at the relevant time
being made available by the Reference Banks to leading banks in the London
interbank market, the default rate will be determined by reference to the
cost of funds to each Bank from whatever sources it may reasonably select
after consultation with the Reference Banks.
(d) Default interest will be compounded at the end of each Designated Term.
10.5 Notification of rates of interest
The Agent or, as the case may be, the US Swingline Agent will promptly
notify each relevant Party of the determination of a rate of interest under
this Agreement.
11. PAYMENTS
11.1 Place of Payment
All payments by an Obligor or a Bank under this Agreement shall be made to
the Agent or (if the payment relates to Swingline Advances in U.S. Dollars)
the US Swingline Agent to its account at such office or bank in the
principal financial centre of the country of the currency concerned (or, in
the case of euros, in the principal financial centre of such of the Treaty
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Countries or London as it may reasonably specify) as it may notify to the
Obligor or Bank for this purpose.
11.2 Funds
Payments under this Agreement to the Agent or (if the payment relates to
Swingline Advances in U.S. Dollars) the US Swingline Agent shall be made
for value on the due date at such times and in such funds as it may
specify to the Party concerned as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
11.3 Distribution
(a) Each payment received by the Agent or, as the case may be, the US
Swingline Agent, under this Agreement for another Party shall, subject to
paragraphs (b) and (c) below, be made available by the Agent or, as the
case may be, the US Swingline Agent to that Party by payment (on the date
and in the currency and funds of receipt) to its account with such bank in
the principal financial centre of the country of the relevant currency
(or, in the case of euros, in the principal financial centre of such of
the Treaty Countries or London as the Agent or, as the case may be, the US
Swingline Agent, may reasonably specify) as it may notify to the Agent or,
as the case may be, the US Swingline Agent, for this purpose by not less
than five Business Days' prior notice.
(b) The Agent or, as the case may be, the US Swingline Agent may apply any
amount received by it for an Obligor in or towards payment (on the date
and in the currency and funds of receipt) of any amount due from an
Obligor under this Agreement or in or towards the purchase of any amount
of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent or, as the
case may be, the US Swingline Agent for the account of another Party, the
Agent or, as the case may be, the US Swingline Agent is not obliged to pay
that sum to that Party until it has established that it has actually
received that sum. The Agent or, as the case may be, the US Swingline
Agent may, however, assume that the sum has been paid to it in accordance
with this Agreement and, in reliance on that assumption, make available to
that Party a corresponding amount. If the sum has not been made available
but the Agent or, as the case may be, the US Swingline Agent has paid a
corresponding amount to another Party, that Party shall forthwith on
demand refund the corresponding amount to the Agent or, as the case may
be, the US Swingline Agent, together with interest on that amount from the
date of payment to the date of receipt, calculated at a rate reasonably
determined by the Agent or, as the case may be, the US Swingline Agent, to
reflect its cost of funds.
11.4 Currency
(a) In this Agreement:
(i) a repayment or prepayment of an Advance is payable in the currency
in which the Advance is denominated;
(ii) interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated;
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(iii) amounts payable in respect of costs, expenses, taxes and the like
are payable in the currency in which they are incurred; and
(iv) any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in euros.
(b) Until the Commencement Date, all references to euros will be construed as
references to ECU and will be payable in or calculated by reference to ECU
at the rate of one ECU for one euro.
(c) On and after the Commencement Date:
(i) any Advance in the currency of a Treaty Country will be made in the
euro unit;
(ii) each obligation under this Agreement which has been denominated in a
national currency unit shall only be redenominated into the euro
unit at the time provided for and in accordance with EMU
legislation; and
(iii) any amount payable by the Agent to the Banks under this Agreement in
the currency of a Treaty Country will be paid in the euro unit.
(d) If and to the extent that any EMU legislation provides that an amount
denominated either in the euro unit or in the national currency unit of a
given Treaty Country and payable within that Treaty Country by crediting
an account of the creditor can be paid by the debtor either in the euro
unit or in that national currency unit, each Party shall be entitled to
pay or repay that amount either in the euro unit or in the national
currency unit.
11.5 Set-off and counterclaim
All payments made by an Obligor under this Agreement shall be made without
set-off or counterclaim.
11.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not). If, however, the extension of the due date would mean
that a Bill would have a Term of more than 187 days, then the due date for
that payment shall instead be the preceding Business Day.
(b) During any extension of the due date for payment of any principal under
this Clause 11.6 interest is payable on the principal at the rate payable
on the original due date.
11.7 Partial payments
If 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 Obligors under this
Agreement in the following order:
(a) first, in or towards payment pro rata of any unpaid costs, fees and
expenses of the Agent under this Agreement;
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(b) secondly, in or towards payment of any accrued fees due but unpaid
under Clause 22.3 (Up-front fee);
(c) thirdly, in or towards payment pro rata of any accrued fees due but
unpaid under Clauses 22.1 (Commitment fee) and 22.4 (Utilisation fee);
(d) fourthly, in or towards payment pro rata of any interest due but
unpaid under this Agreement;
(e) fifthly, in or towards payment pro rata of any principal due but
unpaid under this Agreement; and
(f) sixthly, in or towards payment pro rata of any other sum due but
unpaid under this Agreement.
The Agent shall, if so directed by all the Banks, vary the order set out in
paragraphs (c), (d) and (e) above.
12. TAXES
12.1 Gross-up
(a) All payments by an Obligor under the Finance Documents shall be made free
and clear of and without deduction for or on account of any Applicable
Taxes, except to the extent that the Obligor is required by law to make
payment subject to any Applicable Taxes. Subject to paragraph (b) below
and Clauses 12.2 (Qualifying Bank) and 12.3 (U.S. Taxes), if any Applicable
Taxes or amounts in respect of Applicable Taxes must be deducted or
withheld from any amounts payable or paid by an Obligor, or paid or payable
by the Agent or, as the case may be, the US Swingline Agent, to a Finance
Party under the Finance Documents, the Obligor shall pay such additional
amounts as may be necessary to ensure that the relevant Finance Party
receives and retains (after any deduction or withholding in respect of such
additional amounts) a net amount equal to the full amount which it would
have received and so retained had payment not been made subject to
Applicable Taxes.
(b) An Obligor is not obliged to pay any additional amount pursuant to
paragraph (a) above in respect of any deduction which would not have been
required if the relevant Finance Party had obtained any exemption from the
deduction or withholding of Applicable Taxes which it is able to obtain.
(c) Each Obligor will, within thirty days of the later of:
(i) any payment being made in respect of which tax is required by law to
be deducted or withheld; or
(ii) the date on which the Obligor is required to account for the amount
deducted or withheld to the appropriate tax authority,
deliver to the Agent for the relevant Bank evidence (including any relevant
tax receipts) that the amount deducted or withheld has been duly accounted
for to the appropriate tax authority.
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12.2 Qualifying Bank
(a) If:
(i) on the Signing Date, any Bank which is a Party on the Signing Date
is not a Qualifying Bank; or
(ii) after the Signing Date, a Bank ceases to be a Qualifying Bank other
than as a result of the introduction of, suspension, withdrawal or
cancellation of, or change in, or change in the official
interpretation, administration or official application of, any law,
regulation having the force of law, tax treaty or any published
practice or published concession of the U.K. Inland Revenue or any
other relevant taxing or fiscal authority in any jurisdiction with
which the relevant Bank has a connection, occurring after the
Signing Date; or
(iii) on the date of any novation, transfer or assignment under Clause 28
(Changes to the Parties), a New Bank (as such term is defined in
that Clause) is not a Qualifying Bank,
then no Obligor shall be liable to pay to that Bank under Clause 12.1
(Gross-up) any amount in respect of taxes levied or imposed by the U.K. or
any taxing authority of or in the U.K. in excess of the amount it would
have been obliged to pay if that Bank had been a Qualifying Bank on such
date or had not ceased to be a Qualifying Bank.
(b) Each Bank represents to each Obligor that on the date on which it becomes
a Party to this Agreement (and on the date that the Bank designates a new
Facility Office) it is a Qualifying Bank and a U.S. Qualifying Bank. Each
Bank will notify the Parent through the Agent as soon as practicable if it
ceases to be a Qualifying Bank or a U.S. Qualifying Bank.
12.3 U.S. Taxes
(a) No U.S. Borrower shall be required to pay any additional amount pursuant
to Clause 12.1 (Gross-up) in respect of United States federal income,
branch profits or franchise taxes with respect to a sum payable by it
pursuant to this Agreement to a Bank if such Bank:
(i) on the date it becomes a Party to this Agreement or has designated a
new Facility Office either:
(1) in the case of a Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code), is not
entitled to submit a Form 1001 or Form W-8 (relating to such
Bank and claiming a complete exemption from withholding on
interest payable pursuant to this Agreement) or a Form 4224
(relating to interest payable pursuant to this Agreement) (or
any successor forms) with respect to interest payable pursuant
to this Agreement; or
(2) in the case of a Bank which is a United States person, if Clause
12.1 (Gross-up) would apply (other than as a result of the
introduction of, suspension, withdrawal or cancellation of, or
change in the official interpretation, administration or
official application of, any law, regulation having the force
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of law, tax treaty or any published practice or published
concession of the United States Internal Revenue Service or any
other relevant taxing or fiscal authority in any jurisdiction
with which the relevant Bank has a connection, occurring after
the date the Bank becomes a Party to this Agreement or has
designated a new Facility Office); or
(ii) has failed to submit any form, certificate or other information with
respect to such sum payable that it was required to file pursuant to
paragraph (b) below and is entitled to file under applicable law,
and a Bank (or its Facility Office designated in respect of payments made
by a U.S. Borrower) will be a "U.S. Qualifying Bank" for the purposes of
lending to a U.S. Borrower unless it falls within paragraphs (i) or (ii)
above.
(b) If a Bank is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall (if and to the extent that it is entitled
to do so under applicable law) submit as soon as reasonably practicable in
duplicate to each U.S. Borrower duly completed and signed copies of either
Form 1001 (or, in the case of payment made after 31st December, 1998, Form
W-8) of the United States Internal Revenue Service (relating to such Bank
and claiming complete exemption from withholding on all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower) as a result of a tax treaty concluded with the
United States or Form 4224 of the United States Internal Revenue Service
(relating to all amounts (to which such withholding would otherwise apply)
to be received by such Bank, including fees, pursuant to this Agreement in
connection with any borrowing by such U.S. Borrower). Thereafter and from
time to time at the request of a U.S. Borrower, such Bank shall (if and to
the extent that it is entitled to do so under applicable law) submit to
each U.S. Borrower such additional duly completed and signed copies of one
or the other such Forms (or such successor Forms as shall be adopted from
time to time by the relevant United States taxation authorities) or any
additional information as may be required under then current United States
law or regulations to claim the inapplicability of or exemption from United
States withholding taxes on payments in respect of all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower.
(c) If a Bank is a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall, on the date hereof, and thereafter upon
the request of each U.S. Borrower, submit in duplicate to each U.S.
Borrower a certificate to the effect that it is such a United States person
and shall (if and to the extent that it is entitled to do so under
applicable law) upon the request of a U.S. Borrower submit any additional
information that may be necessary to avoid United States withholding taxes
on all payments, including fees, (to which such withholding would otherwise
apply) to be received pursuant to this Agreement in connection with any
borrowing by such U.S. Borrower.
(d) To the extent that any U.S. Borrower becomes aware of the need for any
other such Form or information it will notify the relevant Banks as soon as
reasonably practicable thereafter and such Bank shall (if and to the extent
that it is entitled to do so under applicable law) submit as soon as
practicable in duplicate to each U.S. Borrower duly completed and signed
copies of any such Form or information.
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12.4 Collecting Agents Rules
In relation to the Facilities, each Bank represents to the Agent that, on
the date on which it becomes a Party to this Agreement, it is:
(a) either:
(i) not resident in the United Kingdom for United Kingdom tax
purposes; or
(ii) a bank as defined in section 840A of the Income and Corporation
Taxes Act 1988 and resident in the United Kingdom; and
(b) beneficially entitled to the principal and interest payable by the
Agent to it under this Agreement,
and it shall forthwith notify the Agent if either representation ceases to
be correct.
12.5 Tax Credit
(a) If an Obligor makes a payment pursuant to Clause 12.1 (Gross up) for the
account of any Finance Party and such Finance Party has received or been
granted a credit against, or relief or remission or repayment of, any tax
paid or payable by it (a "Tax Credit") which is attributable to that
payment or the corresponding payment under the Finance Document such
Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or
repayment, pay to the Obligor concerned such amount as is attributable to
such payments and which will leave the Finance Party (after such payment)
in no better or worse position than it would have been if the Obligor
concerned had not been required to make any deduction or withholding.
(b) Nothing in this Clause 12.5 shall interfere with the right of a Finance
Party to arrange its tax affairs in whatever manner it thinks fit and
without limiting the foregoing no Finance Party shall be under any
obligation to claim a Tax Credit or to claim a Tax Credit in priority to
any other claims, relief, credit or deduction available to it (however,
each Bank shall, if practicable, seek any Tax Credit available to it
consequent upon any deductions for tax being made from any payment to it
under Clause 12.1 (Gross up)). No Finance Party shall be obliged to
disclose any confidential information relating to its tax affairs or any
computations in respect thereof.
(c) If any Finance Party makes any payment to an Obligor pursuant to paragraph
(a) above and that Finance Party (acting reasonably) subsequently
determines that the credit, relief, remission or repayment in respect of
which such payment was made was not available to it or has been withdrawn
from it or that it was unable to use such credit, relief, remission or
repayment in full, the Obligor shall reimburse that Finance Party to the
extent (but not exceeding the relevant payment by that Finance Party under
paragraph (a) above) that it determines (acting reasonably) to have been
required to place it in the same after-tax position as it would have been
in if such credit, relief, remission or repayment had been obtained and
fully used and retained by that Finance Party.
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13. MARKET DISRUPTION
13.1 Absence of quotations
If, in relation to any Advance, LIBOR is to be determined in accordance
with paragraph (b) of its definition but a Reference Bank does not supply
an offered rate by 1.00 p.m. on a Rate Fixing Day, the applicable LIBOR
shall, subject to Clause 13.2 (Market disturbance), be determined on the
basis of the quotations of the remaining Reference Banks.
13.2 Market disturbance
Notwithstanding anything to the contrary herein contained, if and each
time that prior to or on a Utilisation Date relative to an Advance to be
made:
(a) LIBOR is to be determined in accordance with paragraph (b) of its
definition and only one or no Reference Bank supplies a rate for the
purposes of determining LIBOR; or
(b) only one or no Reference Bank supplies a rate for the purposes of
determining EBDR; or
(c) the Agent is notified by the Majority Banks that:
(i) deposits in the currency of that Advance are not in the
ordinary course of business available in the London interbank
market for a period equal to the Term or Interest Period
concerned in amounts sufficient to fund their participations in
that Advance; or
(ii) by reason of circumstances affecting the London interbank
market generally, adequate and fair means do not exist for
ascertaining the LIBOR applicable to such Advance during its
Term or Interest Period or LIBOR does not adequately represent
the cost of funding to the Majority Banks; or
(iii) adequate and fair means do not exist for ascertaining EBDR,
the Agent shall promptly give written notice of such determination or
notification to the Parent and to each of the Banks.
13.3 Alternative Rates
If the Agent gives a notice under Clause 13.2 (Market disturbance):
(a) the Parent and the Banks may (through the Agent) agree that, if not
already drawn, the Advances concerned shall not be borrowed or Bills
should not be drawn; or
(b) in the absence of such agreement:
(i) the Term or Interest Period of the Advances concerned shall be
one month;
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(ii) in the case of Clause 13.2(c) (Market disturbance), the
Advances shall be made in euros, in an amount equal to the
Original Euro Amount of the Advance concerned;
(iii) in the case of Bills where Clauses 13.2(b) and (c)(iii) apply,
the relevant Bills shall not be accepted and the relevant Banks
will instead make an Advance in Sterling in accordance with
Clause 6.6 (Advances as an alternative); and
(iv) during the Term or Interest Period of each Advance concerned
(other than an Advance under (b)(iii) above unless Clause
13.2(a) or (c) (Market Disturbance) applies to that Advance)
the rate of interest applicable to the participation of each
Bank in such Advance shall be the Margin plus, if applicable,
MLA Cost plus the rate per annum notified by the Bank concerned
to the Agent before the last day of such Term or Interest
Period to be that which expresses as a percentage rate per
annum the cost to such Bank of funding its participation in
such Advance from whatever sources it may reasonably select
with a view to providing funding at the lowest reasonably
practicable rate.
14. AVAILABILITY OF CURRENCIES
14.1 Revocation of currency
If the currency selected in accordance with Clause 5.2(b) (Completion of
Requests) is an Optional Currency other than Sterling or U.S. Dollars,
and, before 9.30 a.m. on any Rate Fixing Day relating to the start of any
Term, the Agent receives notice from a Bank that:
(a) it is impossible for that Bank to fund its participation in the
relevant Advance in the relevant Optional Currency during its Term in
the ordinary course of business in the London interbank market;
and/or
(b) the use of the proposed Optional Currency would contravene any law or
regulation,
the Agent shall give notice to the relevant Borrower to that effect before
11.00 a.m. on that day. In this event:
(i) the relevant Borrower and the Bank may agree that the Advance will
not be made; or
(ii) in the absence of agreement:
(1) that Bank's participation in the Advance (or, if more than one
Bank is similarly affected, those Banks' participations in the
Advance) shall be treated as a separate Advance denominated in
Sterling; and
(2) in the definition of "LIBOR" (insofar as it applies to that
Advance) in Clause 1.1 (Definitions) there shall be substituted
for the time "11.00 a.m." the time "1.00 p.m.".
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14.2 ECU
(a) If, at any time prior to the Commencement Date:
(i) the ECU ceases to be utilised as the basic accounting unit of the
European Union, (otherwise than as a result of the introduction of
the euro); or
(ii) the ECU ceases to be used in the European Monetary System
(otherwise than as a result of the introduction of the euro); or
(iii) for reasons affecting the market in ECU generally, ECU are not
freely traded between banks in the London interbank market; or
(iv) it becomes illegal or impossible for payments to be made under this
Agreement in ECU,
then:
(1) the Agent shall notify the Parent and the Banks promptly upon
becoming aware of the event;
(2) the Banks shall not be obliged to make any Advances denominated in
ECU on or after the date of that notification; and
(3) subsequently each amount which would otherwise have been payable by
the Borrowers under this Agreement in ECU shall be paid by the
Borrowers in Sterling or another currency acceptable to the
Majority Banks (the "replacement currency") and the amount of the
replacement currency so payable will be determined in accordance
with paragraph (b) below.
(b) (i) The equivalent in the replacement currency of any Advance in ECU
for the purposes of paragraph (a) above will be calculated by the
Agent as the sum of the equivalent in the replacement currency of
the components of the ECU;
(ii) the components of the ECU for this purpose will be the currency
amounts that were components of the ECU when the ECU was most
recently used in the European Monetary System, except that, if the
ECU is being used for the settlement of transactions by public
institutions of or within the European Community, or was so used
after its most recent use in the European Monetary System, the
components will be:
(1) the currency amounts that are components of the ECU as so used
on the day the calculation of the amount of the replacement
currency is to be made (the "day of valuation"); or
(2) the currency amounts that were components of the ECU when it
was most recently so used, as appropriate;
(iii) the rates to be used by the Agent for the above purposes will be
its rates for the purchase in the London foreign exchange market of
the replacement currency with each
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of the components at or about 11.00 am on the day of valuation for
value on the day the relevant payment in the replacement currency
is due; and
(iv) the day of valuation will be the day determined by the Agent for
the purposes of calculating the equivalent in the replacement
currency of any amount in ECU and will be the day two Business Days
before the relevant payment in the replacement currency is due.
(c) Clauses 14.2 (a) and (b) will not apply after the Commencement Date.
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.2 (Exceptions), the Parent shall within five Business
Days of demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or any of its holding companies as a result
of any change in (or change in any official or judicial interpretation of)
or introduction of any law or regulation (including any relating to
taxation or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "increased cost" means:
(i) an additional cost incurred by a Finance Party or any of its holding
companies as a result of it performing, maintaining or funding its
obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party or
any of its holding companies in making, funding or maintaining all
or any advances comprised in a class of advances formed by or
including the Advances made or to be made by it under this Agreement
as is attributable to it making, funding or maintaining its
Advances; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement or on its
capital (or the capital of any of its holding companies); or
(iv) the amount of any payment made by a Finance Party, or the amount of
interest or other return foregone by a Finance Party, calculated by
reference to any amount received or receivable by a Finance Party
from any other Party under this Agreement.
(c) A Finance Party shall notify the Parent promptly upon becoming aware that
it has incurred an increased cost as a result of any law or regulation
referred to in paragraph (a) above and shall provide calculations in
reasonable detail of the basis of such increased cost and its allocation
to this Agreement.
15.2 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the MLA Cost; or
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(b) any part of which is attributable to the delay by a Bank in notifying
the Parent of the increased cost; or
(c) attributable to any tax or amounts in respect of tax which must be
deducted from any amounts payable or paid by a Borrower or paid or
payable by the Agent to a Finance Party under the Finance Documents
(or which would have been payable but for Clause 12.2 (Qualifying
Bank)); or
(d) which is, or is attributable to, any tax on the overall net income,
profits or gains of a Bank or any of its holding companies (or the
overall net income, profits or gains of a division or branch of the
Bank or any of its holding companies); or
(e) resulting from a Finance Party breaching a regulation imposed on it
after the Signing Date by any fiscal, monetary or other regulatory
authority; or
(f) which is attributable to the introduction of the euro (other than an
increased cost which the Majority Banks reasonably determine is being
incurred generally and on a consistent basis by banks (or a class of
banks of which a Bank forms part) transacting euro business in the
London interbank market).
16. ILLEGALITY AND MITIGATION
16.1 Illegality
If it becomes unlawful or contrary to any regulation in any jurisdiction
for a Bank to give effect to any of its obligations as contemplated by
this Agreement or to fund or maintain any Advance, then the Bank may
notify the Parent through the Agent accordingly and thereupon:
(a) each Borrower shall, to the extent required and within the period
allowed by such regulation or, if no period is allowed, forthwith:
(i) repay any Advances made to it by that Bank together with all
other amounts payable by it to that Bank under this Agreement;
and
(ii) perform its obligations under Clause 8.3 (Payment of Bills) in
respect of all outstanding Bills accepted by that Bank as if
that day were the Maturity Date of each of those Bills; and
(b) the Bank's Tranche A Commitment and Tranche B Commitment shall be
cancelled.
16.2 Mitigation
Notwithstanding the provisions of Clauses 12 (Taxes), 15 (Increased Costs)
and 16.1 (Illegality), if in relation to a Bank or (as the case may be)
the Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to in
Clause 12 (Taxes); or
(b) any increased cost of the nature referred to in Clause 15 (Increased
Costs); or
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(c) a notification pursuant to Clause 16.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the Agent, such Bank shall promptly upon becoming
aware of the same notify the Agent thereof (whereupon the Agent shall
promptly notify the Parent) and such Bank shall endeavour to transfer its
participation in the Facility and its rights hereunder and under the
Finance Documents to another financial institution or Facility Office not
affected by the circumstances having the results set out in (a), (b) or
(c) above and shall otherwise take such reasonable steps as may be open to
it to mitigate the effects of such circumstances. No Bank, however, is
required to take any action which would be prejudicial to it or which
would conflict with its general banking policies, or give rise to any
material cost or expense.
17. GUARANTEE
17.1 Guarantee
The Parent irrevocably and unconditionally:
(a) as principal obligor, guarantees to each Finance Party prompt
performance by each Borrower (other than the Parent) of all its
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower does not
pay any amount when due under or in connection with any Finance
Document, the Parent shall upon demand by the Agent given no earlier
than on the expiry of any grace period applicable under Clause 20
(Default) pay that amount as if the Parent instead of the relevant
Borrower were expressed to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by the Parent
is or becomes unenforceable, invalid or illegal.
17.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Borrowers under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any Borrower
or any security for those obligations or otherwise) is made in whole or in
part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of the Parent
under this Clause 17 shall continue as if the discharge or arrangement had
not occurred (but only to the extent that such payment, security or other
disposition is avoided or restored).
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
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17.4 Waiver of defences
The obligations of the Parent under this Clause 17 will not be affected by
any act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 17
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, any Borrower or
other person;
(b) the taking, variation, compromise, exchange, renewal or release of,
or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, any Borrower or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members or status of a Borrower or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to that
Finance Document in this Clause 17 shall include each variation or
replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the Parent's obligations under this
Clause 17 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity; and
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Borrower under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the Parent's
obligations under this Clause 17 be construed as if there were no
such circumstance.
17.5 Immediate recourse
The Parent waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Parent under this Clause 17.
17.6 Appropriations
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Parent shall not be
entitled to the benefit of the same; and
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(b) hold in a suspense account (bearing interest at a commercial rate)
any moneys received from the Parent or on account of the Parent's
liability under this Clause 17, without liability to pay interest on
those moneys.
17.7 Non-competition
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been paid in full, the
Parent shall not, after a claim has been made and by virtue of any payment
or performance by it under this Clause 17:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of the
Parent's liability under this Clause 17; or
(b) claim, rank, prove or vote as a creditor of any Borrower or its
estate in competition with any Finance Party (or any trustee or agent
on its behalf); or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Borrower or exercise any right of
set-off as against any Borrower.
The Parent shall within five Business Days of receipt pay or transfer to
the Agent for the Finance Parties any payment or distribution or benefit
of security received by it contrary to this Clause 17.7.
17.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by any Finance Party.
18. REPRESENTATIONS AND WARRANTIES
18.1 Representations and warranties
Each Obligor represents and warrants that:
(a) due incorporation: it has been duly incorporated in accordance with
the laws of its place of incorporation and is validly existing;
(b) powers and authority: this Agreement is within its powers and the
execution, delivery and performance thereof has been duly authorised;
(c) validity: subject to any qualifications as to matters of law in the
relevant forms of opinion referred to in Schedule 3, this Agreement
constitutes its legal, valid and binding obligation; and
(d) no breach: this Agreement and the transactions hereby contemplated do
not and will not contravene in any material respect (i) its
constitutional documents, (ii) any law or
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regulation in its country of incorporation, or (iii) any loan stock,
debenture, mortgage or other contract in respect of any Borrowings to
which it is party;
(e) no Event of Default: no Event of Default has occurred and is
continuing;
(f) accounts: the most recent audited annual consolidated profit and loss
account and balance sheet of the Parent which have been delivered to
the Agent from time to time together with the notes thereto give a
true and fair view of the results of the operations of the Parent and
its Subsidiaries for the period to which they relate and the
financial position of the Parent and its Subsidiaries as at the date
to which they were prepared;
(g) U.S. Borrowers: no U.S. Borrower is an investment company under the
United States Investment Company Act of 1940, as amended, or is
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;
(h) 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
material adverse effect on the ability of any Obligor to perform its
obligations under the Finance Documents. 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; and
(i) Margin Stock: none of the proceeds of any Advance shall be used,
directly or indirectly, and whether immediately, ultimately or
incidentally, for any purpose which entails a violation of, or that
is inconsistent with, the provisions of Regulation U or Regulation X
of the regulations of the Board of Governors of the Federal Reserve
System of the United States. None of the Obligors nor any of their
respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of buying or carrying "margin stock" (within the meaning of
such Regulation U).
18.2 Times for making representations and warranties
The representation and warranties contained in Clause 18.1:
(a) will be made by the Parent and the Original Borrowers on the Signing
Date;
(b) will be deemed to be repeated by each Obligor on each Utilisation
Date and first day of each Interest Period for Term-out Advances with
reference to the facts and circumstances then existing; and
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(c) will be deemed to be made by an Additional Borrower on the date it
executes a Borrower Accession Agreement under Clause 28.4 (Additional
Borrowers) with reference to the facts and circumstances then
existing.
19. UNDERTAKINGS
19.1 Financial Information
The Parent will supply to the Agent in sufficient copies for the Banks:
(a) as soon as practicable after publication (and in any event within the
periods specified below):
(i) in the case of the Parent, the audited consolidated accounts of
the Group for that financial year, within 180 days of the end of
each of its financial years; and
(ii) in the case of any other Borrower, its unaudited (or, if
available, audited) unconsolidated accounts for that financial
year, within 180 days of the end of each of its financial years;
and
(b) as soon as practicable after publication (and in any event within 90
days of the end of the first half of each of its financial years) the
unaudited consolidated interim accounts of the Group for that half-
year; and
(c) all documents despatched by it to its shareholders (or any class of
them) in their capacity as such as soon as practicable after the time
they are so despatched.
19.2 Authorisations
Each Obligor will promptly obtain, maintain and comply with the terms of
any authorisation required under any law or regulation in any applicable
jurisdiction to enable it to perform its obligations under, or for the
validity or enforceability of, this Agreement in all material respects.
19.3 Pari passu ranking
Each Obligor will procure that its obligations under this Agreement do and
will rank at least pari passu with all its other present and future
unsecured and unsubordinated obligations, except for obligations which are
mandatorily preferred by law.
19.4 Negative Pledge
No Obligor will create or permit to subsist any Security Interest over all
or any part of its assets to secure any Borrowings except for any Permitted
Security Interest.
19.5 Notification of Event of Default
Each Obligor will notify the Agent of the occurrence of any Event of
Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of it.
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20. DEFAULT
20.1 Events of Default
Each of the events set out in Clauses 20.2 (Non-Payment) to 20.12 (Material
Adverse Change), both inclusive, is an Event of Default (whether or not
caused by any reason whatsoever outside the control of any Obligor).
20.2 Non-Payment
Any Obligor fails to pay within five Business Days of the Agent giving
notice to the Parent of such non-payment any amount payable by it under
this Agreement in respect of principal or interest at the place at and in
the currency in which it is expressed to be payable.
20.3 Breach of other obligations
Any Obligor fails to comply with any provision of this Agreement (other
than those referred to in Clause 20.2 (Non-Payment)) and, if that default
is capable of remedy, the Obligor fails to cure that default within thirty
days of the Agent giving notice to the Parent requiring remedy.
20.4 Misrepresentation
Any representation or warranty made or repeated in this Agreement is
incorrect in any material respect when made or deemed to be repeated and,
in the case of a matter capable of being remedied, is not remedied within
thirty days of the Agent giving notice to the Parent requiring remedy.
20.5 Cross Acceleration
Any other Borrowings of any Obligor are:
(a) declared due and payable prior to their normal maturity date as a
result of a default (however described) by that Obligor; or
(b) not paid within five Business Days of their due date or, if longer,
within any applicable grace period,
unless, in any such case, the aggregate amount of the Borrowings is less
than euro 50,000,000 or its equivalent or the payment in question is being
contested by the Obligor owing the amount by reason of a bona fide dispute.
20.6 Suspension of payments
Any Obligor is unable to pay its debts as they fall due or suspends making
payments (whether of principal or interest) with respect to all or any
class of its debts as a result of financial difficulties.
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20.7 Insolvency proceedings
A resolution is passed at a meeting of any Obligor for (or to petition
for) its winding up or administration or any Obligor presents any petition
for the winding up or administration of that Obligor or an order for the
winding up or administration of that Obligor is made unless in each case
it is a voluntary solvent winding up, amalgamation, reconstruction or
reorganisation or part of a solvent scheme of arrangement.
20.8 Creditors' arrangements
An Obligor agrees to any kind of composition, rescheduling, scheme,
compromise or arrangement involving that Obligor and its creditors
generally (or any class of them) as a result of financial difficulties.
20.9 Creditors' process
Any administrative or other receiver or any manager of substantially all
of the assets of an Obligor is appointed or an encumbrancer takes
possession of, or any execution or distress is levied against,
substantially all of the assets of any Obligor, in all cases:
(a) in respect of Borrowings in an aggregate principal amount of not less
than euro 50,000,000 or its equivalent; and
(b) which is not paid out or discharged within thirty days after such
appointment, taking of possession or levy.
20.10 Insolvency equivalent
There occurs, in relation to any Obligor, in any country or territory in
which it carries on business or to the jurisdiction of whose courts it or
any of its assets are subject, any event which corresponds in that country
or territory with any of those mentioned in Clauses 20.7 (Insolvency
proceedings), 20.8 (Creditors' arrangements) or 20.9 (Creditors' process)
inclusive above (subject to the same thresholds, grace periods and
exceptions).
20.11 Ownership of Borrowers
Any Borrower ceases to be a wholly-owned Subsidiary of the Parent (unless
the Majority Banks have otherwise agreed).
20.12 Material Adverse Change
There has been a material adverse change in the financial condition of the
Group taken as a whole since the date of the latest annual accounts
delivered to the Agent pursuant to Clause 19.1 (Financial information)
which has had or will have a material adverse effect on the ability of the
Parent to comply with its payment obligations under this Agreement.
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20.13 Acceleration
On and at any time after the occurrence of an Event of Default, provided
that the event is continuing, the Agent may, and shall if so directed by
the Majority Banks, by notice to the Parent:
(a) declare the Advances to be forthwith due and payable together with
interest thereon and all other amounts payable hereunder,
notwithstanding that their respective Maturity Dates may not have
occurred, and the same shall thereupon become due and payable; and/or
(b) declare that each Borrower's obligations under Clause 8.3 (Payment of
Bills) in respect of all outstanding Bills are immediately due and
payable, whereupon they shall become immediately due and payable;
and/or
(c) cancel the Total Commitments (or such part of them as may be
specified in such notice); and/or
(d) demand that all Advances and obligations in respect of Bills be
payable on demand, whereupon they will immediately become payable on
demand.
21. THE AGENTS AND THE JOINT LEAD ARRANGERS
21.1 Appointment and duties of the Agents
Each Finance Party (other than the Agent) irrevocably appoints the Agent
to act as its agent under and in connection with the Finance Documents and
each Swingline Bank appoints the US Swingline Agent to act as its agent in
relation to the US Swingline Facility, and each Finance Party irrevocably
authorises the Agent or, as the case may be, the US Swingline Agent on its
behalf to perform the duties and to exercise the rights, powers and
discretions that are specifically delegated to it under or in connection
with the Finance Documents, together with any other incidental rights,
powers and discretions. The Agent or, as the case may be, the US Swingline
Agent shall have only those duties which are expressly specified in this
Agreement. Those duties are solely of a mechanical and administrative
nature.
21.2 Role of the Joint Lead Arrangers
Except as otherwise provided in this Agreement, the Joint Lead Arrangers
have no obligations of any kind to any other Party under or in connection
with any Finance Document.
21.3 Relationship
The relationship between the Agent or, as the case may be, the US
Swingline Agent and the other Finance Parties is that of agent and
principal only. Nothing in this Agreement constitutes the Agent or, as the
case may be, the US Swingline Agent as trustee or fiduciary for any other
Party or any other person and the Agent or, as the case may be, the US
Swingline Agent need not hold in trust any moneys paid to it for a Party
or be liable to account for interest on those moneys.
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21.4 Majority Banks' directions
The Agent or, as the case may be, the US Swingline Agent will be fully
protected if it acts in accordance with the instructions of the Majority
Banks in connection with the exercise of any right, power or discretion or
any matter not expressly provided for in the Finance Documents. Any such
instructions given by the Majority Banks will be binding on all the Banks.
In the absence of such instructions the Agent or, as the case may be, the
US Swingline Agent may act as it considers to be in the best interests of
all the Banks.
21.5 Delegation
The Agent or, as the case may be, the US Swingline Agent may act under the
Finance Documents through its personnel and agents.
21.6 Responsibility for documentation
Neither the Agent, the US Swingline Agent nor any of the Joint Lead
Arrangers is responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
21.7 Default
(a) The Agent or, as the case may be, the US Swingline Agent is not obliged to
monitor or enquire as to whether or not a Default or a Mandatory
Prepayment Event has occurred. Neither the Agent nor the US Swingline
Agent will be deemed to have knowledge of the occurrence of a Default or a
Mandatory Prepayment Event. However, if the Agent or, as the case may be,
the US Swingline Agent receives notice from a Party referring to this
Agreement, describing the Default or Mandatory Prepayment Event and
stating that the event is a Default or a Mandatory Prepayment Event, it
shall promptly notify the Banks.
(b) The Agent or, as the case may be, the US Swingline Agent may require the
receipt of security satisfactory to it, whether by way of payment in
advance or otherwise, against any liability or loss which it will or may
incur in taking any proceedings or action arising out of or in connection
with any Finance Document before it commences these proceedings or takes
that action.
21.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent or, as the case may be,
the US Swingline Agent will not be liable to any other Party for any
action taken or not taken by it under or in connection with any Finance
Document, unless directly caused by its gross negligence or wilful
misconduct.
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(b) No Party may take any proceedings against any officer, employee or agent
of the Agent or, as the case may be, the US Swingline Agent in respect of
any claim it might have against the Agent or, as the case may be, the US
Swingline Agent or in respect of any act or omission of any kind
(including gross negligence or wilful misconduct) by that officer,
employee or agent in relation to any Finance Document.
21.9 Reliance
The Agent or, as the case may be, the US Swingline Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's or, as the case may
be, the US Swingline Agent's employment and those representing a
Party other than the Agent or, as the case may be, the US Swingline
Agent).
21.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:
(a) 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
Agent, the US Swingline Agent or a Joint Lead Arranger in connection
with any Finance Document; and
(b) 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 the Finance Documents or any
Commitment is in force.
21.11 Information
(a) The Agent or, as the case may be, the US Swingline Agent shall promptly
forward to the person concerned the original or a copy of any document
which is delivered to the Agent or, as the case may be, the US Swingline
Agent by a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clauses 4 (Conditions Precedent) and 28.4
(Additional Borrowers) upon the request of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent or,
as the case may be, the US Swingline Agent is not obliged to review or
check the accuracy or completeness of any document it forwards to another
Party.
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(d) Except as provided above, the Agent or, as the case may be, the US
Swingline Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank with
any credit or other information concerning the financial condition or
affairs of any Obligor or any related entity of any Obligor whether
coming into its possession or that of any of its related entities
before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance with
this Agreement, to request any certificates or other documents from
any Obligor.
21.12 The Agents and the Joint Lead Arrangers individually
(a) If it is also a Bank, each of the Agent, the US Swingline Agent and the
Joint Lead Arrangers has the same rights and powers under this Agreement
as any other Bank and may exercise those rights and powers as though it
were not the Agent, the US Swingline Agent or a Joint Lead Arranger.
(b) Each of the Agent, the US Swingline Agent and the Joint Lead Arrangers
may:
(i) carry on any business with an Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
21.13 Indemnities
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Bank shall forthwith on demand indemnify the Agent or, as the case
may be, the US Swingline Agent for its proportion of any liability or loss
incurred by the Agent or, as the case may be, the US Swingline Agent in
any way relating to or arising out of its acting as the Agent or, as the
case may be, the US Swingline Agent, except to the extent that the
liability or loss arises directly from the Agent's or, as the case may be,
the US Swingline Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which the Original Euro Amount of its
Utilisation(s) bears to the Original Euro Amount of all Utilisation(s)
outstanding on the date of the demand. If, however, no Utilisation(s) are
outstanding on the date of demand, then the proportion will be the
proportion which its Commitment bears to the Total Commitments at the date
of demand or, if the Total Commitments have been cancelled, bore to the
Total Commitments immediately before being cancelled.
(c) The Parent shall within five Business Days of demand reimburse each Bank
for any payment made by it under paragraph (a) above.
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21.14 Compliance
(a) The Agent or, as the case may be, the US Swingline Agent may refrain from
doing anything which might, in its opinion, constitute a breach of any law
or regulation or be otherwise actionable at the suit of any person, and
may do anything which, in its opinion, is necessary or desirable to comply
with any law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent or, as the case may be,
the US Swingline Agent need not disclose any information relating to any
Obligor or any of its related entities if the disclosure might, in the
opinion of the Agent, or, as the case may be, the US Swingline Agent,
constitute a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
21.15 Resignation and removal of Agents
(a) The Majority Banks may, by notice to the Agent or, as the case may be, the
US Swingline Agent, remove either or both of them and replace them with a
successor agent approved by the Parent (such approval not to be
unreasonably withheld).
(b) Notwithstanding its irrevocable appointment, the Agent or, as the case may
be, the US Swingline Agent may resign by giving notice to the Banks and
the Parent, in which case the Agent or, as the case may be, the US
Swingline Agent may forthwith appoint one of its Affiliates as successor
Agent, or as the case may be successor US Swingline Agent or, failing
that, the Majority Banks may, with the prior written consent of the Parent
(such consent not to be unreasonably withheld), appoint a successor Agent
or, as the case may be, successor US Swingline Agent.
(c) If the appointment of a successor Agent or, as the case may be, successor
US Swingline Agent is to be made by the Majority Banks under paragraph (b)
above but they have not, within 30 days after notice of resignation,
appointed a successor Agent or, as the case may be, successor US Swingline
Agent which accepts the appointment, the retiring Agent or, as the case
may be, retiring US Swingline Agent may, with the prior written consent of
the Parent (such consent not to be unreasonably withheld), appoint a
successor Agent or, as the case may be, successor US Swingline Agent.
(d) The resignation or removal of the retiring Agent or, as the case may be,
retiring US Swingline Agent and the appointment of any successor Agent or,
as the case may be, successor US Swingline Agent will both become
effective only upon the successor Agent or, as the case may be, successor
US Swingline Agent notifying all the Parties that it accepts the
appointment and provided the successor Agent or, as the case may be,
successor US Swingline Agent has, if required under paragraphs (a), (b) or
(c) above, been approved by the Parent. On giving the notification and
receiving such approval, the successor Agent or, as the case may be,
successor US Swingline Agent will succeed to the position of the retiring
Agent or, as the case may be, retiring US Swingline Agent and the term
"Agent" or, as the case may be, "US Swingline Agent" will mean the
successor Agent or, as the case may be, successor US Swingline Agent.
(e) The retiring Agent or, as the case may be, retiring US Swingline Agent
shall, at its own cost, make available to the successor Agent or, as the
case may be, successor US Swingline Agent such documents and records and
provide such assistance as the successor Agent or, as the case may be,
successor US Swingline Agent may reasonably request for the purposes of
performing
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its functions as the Agent or, as the case may be, the US Swingline Agent
under this Agreement.
(f) Upon its resignation or removal becoming effective, this Clause 21 shall
continue to benefit the retiring Agent or, as the case may be, retiring US
Swingline Agent in respect of any action taken or not taken by it under or
in connection with the Finance Documents while it was the Agent or, as the
case may be, the US Swingline Agent, and, subject to paragraph (e) above,
it shall have no further obligation under any Finance Document.
21.16 Banks
The Agent or, as the case may be, US Swingline Agent may treat each Bank
as a Bank, entitled to payments under this Agreement and as acting through
its Facility Office(s) until it has received notice from the Bank to the
contrary by not less than five Business Days prior to the relevant
payment.
21.17 Chinese Wall
In acting as Agent, US Swingline Agent or Joint Lead Arranger, the agency
and syndications division of each of the Agent, US Swingline Agent and
Joint Lead Arrangers shall be treated as a separate entity from its other
divisions and departments. Any information acquired at any time by the
Agent, US Swingline Agent or any Joint Lead Arranger otherwise than in the
capacity of Agent, US Swingline Agent or Joint Lead Arranger through its
agency and syndications division (whether as financial advisor to any
member of the Group or otherwise) may be treated as confidential by the
Agent, US Swingline Agent or Joint Lead Arranger and shall not be deemed
to be information possessed by the Agent, US Swingline Agent or Joint Lead
Arranger in its capacity as such. Each Finance Party acknowledges that the
Agent, US Swingline Agent and the Joint Lead Arrangers may, now or in the
future, be in possession of, or provided with, information relating to the
Obligors which has not or will not be provided to the other Finance
Parties. Each Finance Party agrees that, except as expressly provided in
this Agreement, neither the Agent, US Swingline Agent nor the Joint Lead
Arrangers will be under any obligation to provide, or under any liability
for failure to provide, any such information.
22. FEES
22.1 Commitment fee
(a) The Parent shall pay to the Agent for distribution to each Bank pro rata
to the proportion its Commitment bears to the Tranche A Total Commitments
or, as the case may be, Tranche B Commitment bears to the Tranche B Total
Commitments, from time to time a commitment fee at the rate of:
(i) 0.035 per cent. per annum in relation to the Tranche A Commitments;
and
(ii) 0.075 per cent. per annum in relation to the Tranche B Commitments,
on, in each case, any undrawn, uncancelled amount of the Tranche A Total
Commitments or the Tranche B Total Commitments, as the case may be, on
each day.
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(b) The commitment fee is calculated and accrues on a daily basis from the
Signing Date and is payable quarterly in arrear with the first payment due
three months after the Signing Date. Accrued commitment fee is also
payable to the Agent for the relevant Bank(s) on the cancelled amount of
its Tranche A Commitment or, as the case may be, Tranche B Commitment at
the time the cancellation takes effect.
22.2 Agent's fee
The Parent shall pay to the Agent for its own account an agency fee in the
amounts and on the dates agreed in the relevant Fee Letter.
22.3 Up-front fee
The Parent shall pay to the Joint Lead Arrangers an up-front fee, in each
case in the amount and on the dates specified in the relevant Fee Letter.
22.4 Utilisation Fee
(a) The Parent shall pay to the Agent for distribution to each Bank (pro rata
to the proportion the principal amount of its outstanding Tranche B
Advances and Bills drawn under Tranche B bears to the aggregate principal
outstanding Tranche B Advances and Bills drawn under Tranche B in each
currency on each day) a utilisation fee on the aggregate principal amount
each day of all outstanding Utilisations under Tranche B at the rate
specified in Column (1) below if on that day the Original Euro Amount of
all outstanding Utilisations under Tranche B falls within the range set
opposite that rate in Column (2) below:
(1) (2)
UTILISATION FEE ORIGINAL EURO AMOUNT OF ALL
% PER ANNUM OUTSTANDING DRAWN
TRANCHE B ADVANCES
AND TRANCHE B BILLS
Nil 0-2,500,000,000
0.025 Above 2,500,000,000 up to and including
3,500,000,000
0.050 Above 3,500,000,000
(b) Utilisation fee is calculated and, if payable, accrues on a daily basis
and is payable quarterly in arrear in the same currencies as the
Utilisations to which it relates with the first such payment, if any, due
three months after the Signing Date. Accrued utilisation fee, if any, is
also payable to the Agent for the relevant Banks on the Tranche B Final
Maturity Date.
(c) The Parent shall pay an additional utilisation fee of 0.05 per cent. flat
on the principal amount of any Term-out Advance in the same currency as
that Term-out Advance to the Agent for distribution to each Bank (pro rata
to the participation of that Bank in that Term-out Advance). Such amount,
if any, is payable on the Utilisation Date for that Term-out Advance.
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23. EXPENSES
23.1 Initial costs
The Parent shall within five Business Days of demand pay the Joint Lead
Arrangers the amount of all their out-of-pocket costs (including travel,
telecommunication and printing expenses) and other expenses (including the
legal fees of no more than one firm of solicitors and any value added tax
thereon) reasonably incurred by them in connection with:
(a) the arranging, underwriting and primary syndication of the
Facilities; and
(b) the negotiation, preparation, printing and execution of this
Agreement and any other documents referred to in this Agreement.
23.2 Enforcement costs
The Parent shall within five Business Days of demand pay to each Finance
Party the amount of all reasonable costs and expenses (including legal
fees) properly incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.
24. STAMP DUTIES
The Parent shall pay and within five Business Days of demand indemnify
each Finance Party against any liability it incurs in respect of any
stamp, registration and similar tax which is or becomes payable in the
U.K. or the jurisdiction of the place of incorporation of any Borrower
directly attributable to the entry into, performance or enforcement of
this Agreement (other than a Novation Certificate).
25. INDEMNITIES
25.1 Currency indemnity
Subject to Clause 11.4 (Currency), if a Finance Party receives an amount
in respect of an Obligor's liability under the Finance Documents or if
that liability is converted into a claim, proof, judgment or order in a
currency other than the currency (the "contractual currency") in which the
amount is expressed to be payable under the relevant Finance Document:
(a) that Obligor shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(b) if the amount received by that Finance Party, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Obligor concerned shall within five Business Days of demand pay
to that Finance Party an amount in the contractual currency equal to
the deficit; and
(c) the Obligor shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable properly incurred in connection with
any such conversion.
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25.2 Other indemnities
The Parent shall forthwith on demand indemnify each Finance Party against
any loss or liability which that Finance Party directly incurs as a
consequence of:
(a) the occurrence of any Event of Default or Mandatory Prepayment Event;
(b) any payment of principal or an overdue amount being received from any
source otherwise than:
(i) in the case of Tranche A Advances and Tranche B Advances, on its
Maturity Date (and, for the purposes of this paragraph (b), the
Maturity Date of an overdue amount is the last day of each
Designated Term (as defined in Clause 10.4 (Default interest)));
or
(ii) in the case of Term-out Advances, on the last day of its
applicable Interest Period;
(c) (other than by reason of negligence or default by a Finance Party) a
Utilisation not being effected after a Borrower has delivered a
Request for that Utilisation.
The Parent's liability in each case includes any loss or expense (other
than loss of Margin) on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any amount
repaid or prepaid or any Advance or Bill.
26. EVIDENCE AND CALCULATIONS
26.1 Accounts
Accounts maintained by a Finance Party in connection with this Agreement
are, in the absence of manifest error, prima facie evidence of the matters
to which they relate.
26.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount
under this Agreement is, in the absence of manifest error, prima facie
evidence of the matters to which it relates.
26.3 Calculations
Interest (and any MLA Cost) and the fees payable under Clause 22.1
(Commitment fee) and Clause 22.4 (Utilisation fee) accrue from day to day
and are calculated on the basis of the actual number of days elapsed and a
year of 360 days, or, in the case of interest payable on an amount
denominated in Sterling, 365 days. Acceptance commission is calculated on
the basis of the number of days in the relevant Term and a year of 365
days.
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27. AMENDMENTS AND WAIVERS
27.1 Procedure
(a) Subject to Clause 27.2 (Exceptions), any provision of the Finance
Documents may be amended or waived with the agreement of the Parent and
the Majority Banks. The Agent will and is authorised to effect, on behalf
of the Finance Parties, an amendment or waiver to which the Majority Banks
(or all Banks) and the Parent have agreed.
(b) In addition to (a) above, the Agent may agree with the Parent (after
consultation by the Agent with the Banks) that any references in this
Agreement to a Business Day, day-count fraction or other convention
(whether for the calculation of interest, determination of payment dates
or otherwise) shall, with effect from or after the Commencement Date, if
different, be amended to comply with any generally accepted conventions
and market practice from time to time applicable to euro-denominated
obligations in the London interbank market. The agreement of the Agent and
the Parent under this Clause 27.1(b) is not to be unreasonably withheld or
delayed.
(c) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraphs (a) or (b) above, and any such amendment
or waiver shall be binding on all the Parties.
27.2 Exceptions
An amendment or waiver under paragraph 27.1(a) above which relates to:
(a) the definition of "Majority Banks" in Clause 1.1 (Definitions); or
(b) an extension of the date for, or a decrease in an amount or a change
in the currency of, any payment under the Finance Documents; or
(c) an increase in a Bank's Commitment; or
(d) a term of a Finance Document which expressly requires the consent of
each Bank; or
(e) Clause 31 (Pro Rata Sharing) or this Clause 27 (Amendments and
Waivers); or
(f) a change to, or the release of the Parent from any of its obligations
under, Clause 17 (Guarantee),
may not be effected without the consent of each Bank. No amendment may be
effected under this Clause 27 which would increase the obligations, rights
or duties of the Agent without the consent of the Agent.
27.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
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(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
28. CHANGES TO THE PARTIES
28.1 Transfers by Obligors
Subject to Clause 9.5 (Changes to Borrowers), no Obligor may assign,
transfer, novate or dispose of any of, or any interest in, its rights
and/or obligations under this Agreement.
28.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement, but only to
another bank or institution which is a Qualifying Bank and a U.S.
Qualifying Bank (the "New Bank"), and only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the New Bank is another Bank or an Affiliate of a Bank in which
case no such consent is required. Any such assignment, transfer or
novation must be in a minimum aggregate amount of euro 25,000,000 (unless
to an Affiliate or the Agent and the Parent agree otherwise) and, except
in the case of an assignment, transfer or novation to an Affiliate, must
be pro rata between Tranches A and B. In the case of an assignment,
transfer or novation by a Swingline Bank, a portion of that Swingline
Bank's Swingline Commitment must also be assigned, transferred or novated
to the extent necessary (if at all) to ensure that the Swingline Bank's
Swingline Commitment does not exceed its Tranche B Commitment after the
assignment, transfer or novation.
(b) A Bank may at any time sub-participate any of its rights and/or
obligations under this Agreement but only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the sub-participant is another Bank or an Affiliate of a Bank in
which case no consent is required.
(c) The consent of the Parent will be deemed to be given under paragraph (a)
or, as the case may be, (b) above if:
(i) the Existing Bank has given notice to the Parent addressed to the
Treasurer and the Finance Director requesting such consent (which
expressly states that the consent of the Parent is required under
this Clause 28.2, specifies the full name of the New Bank and amount
of the proposed transaction and states that consent will be deemed to
have been given if no response is given by the Parent within the
period specified in this paragraph (c)) and the Parent has not
responded within 10 days; and
(ii) after expiry of that 10 day period the Existing Bank has given a
further notice to the Parent addressed in the same way and in similar
terms (referring to the earlier notice) and the Parent has not
responded within a further five London Business Days (being business
days when banks in London are open for business generally in the
London interbank market).
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(d) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 28.3 (Procedure
for novations); or
(ii) the New Bank confirms to the Agent and the Parent that it undertakes
to be bound by the terms of this Agreement as a Bank in form and
substance satisfactory to the Agent and the Parent. On the transfer
becoming effective in this manner the Existing Bank shall be relieved
of its obligations under this Agreement to the extent that they are
transferred to the New Bank.
(e) On each occasion an Existing Bank assigns, transfers or novates any of its
rights and/or obligations under this Agreement, the New Bank shall, on the
date the assignment, transfer and/or novation takes effect, pay to the
Agent for its own account a fee of (Pounds)750.
(f) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(ii) the collectability of amounts payable under any Finance Document; or
(iii) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
(g) Each New Bank confirms to the Existing Bank and the other Finance Parties
that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of 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 Bank in connection with any Finance Document; 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.
(h) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the non-
performance by any Obligor of its obligations under this Agreement or
otherwise.
(i) Any reference in this Agreement to a Bank includes a New Bank but excludes
a Bank if no amount is or may be owed to or by it under this Agreement and
its Commitment has been cancelled or reduced to nil.
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28.3 Procedure for novations
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent (with a copy
to the Parent) a duly completed certificate (a "Novation
Certificate"), substantially in the form of Part I of Schedule 6 or
such other form as the Agent and the Parent may agree (which may be
delivered by fax and confirmed by delivery of a hard copy original
but the fax will be effective irrespective of whether confirmation
is received); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate on
its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Bank instead of
the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the Agent or,
if later, the date specified in the Novation Certificate.
28.4 Additional Borrowers
(a) If the Parent wishes one of its Subsidiaries to become an Additional
Borrower, then it may deliver to the Agent the documents listed in Part II
of Schedule 3. Any Additional Borrower must be a wholly owned Subsidiary
of the Parent unless the Majority Banks agree otherwise.
(b) On delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, the Subsidiary concerned will become an
Additional Borrower. However, it may not submit a Request or become a
Substitute Borrower under Clause 9.5(b) (Changes to Borrowers) until the
Agent confirms to the other Finance Parties and the Parent that it has
received all the documents referred to in paragraph (a) above.
(c) Delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, constitutes confirmation:
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(i) by that Subsidiary and the Parent that the representations and
warranties set out in Clause 18.1 (Representations and warranties)
to be made by them on the date of the Borrower Accession Agreement
are correct, as if made by them with reference to the facts and
circumstances then existing; and
(b) by the Parent that such Subsidiary is a wholly owned Subsidiary of
the Parent (unless the Majority Banks have otherwise agreed).
28.5 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Parent) appoint another Bank or an Affiliate of a
Bank which is not a Reference Bank to replace that Reference Bank.
28.6 Change of Facility Office
Each Bank will participate in any Utilisation and receive the benefit of
any payment due to it under this Agreement at its Facility Office. No Bank
may change its Facility Office to a different jurisdiction to that notified
to the Agent and the Parent on or before the date it became a Bank without
the prior written consent of the Parent (such consent not to be
unreasonably withheld or delayed).
28.7 Additional Costs
If, at the time of or immediately after any novation, transfer, sub-
participation or assignment by a Bank or any change of Facility Office,
circumstances exist which, but for this Clause 28.7, would require any
Obligor to pay to the New Bank, transferee or assignee (or, in the case of
a change of Facility Office, the Bank concerned) any amount under this
Agreement in excess of the amount it would otherwise have been required to
pay to that Bank in the absence of that novation, transfer, sub-
participation, assignment or change of Facility Office, no Obligor will be
required to pay that excess.
28.8 Register
The Agent shall keep a register of all the Parties (including in the case
of Banks the details of their Facility Office notified to the Agent from
time to time) and shall supply any other Party (at that Party's expense)
with a copy of the register on request.
29. DISCLOSURE OF INFORMATION
(a) Subject to paragraph (b) below, a Bank 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:
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in connection
with any Finance Document,
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provided that a Bank shall not disclose any such information to a person
unless that person has provided to the Parent a confidentiality undertaking
addressed to the Parent in such other form as the Parent may reasonably
require.
(b) If the consent of the Parent is required under Clause 28.2 (Transfers by
Banks) for any proposed assignment, transfer, novation, or sub-
participation then a Bank may only disclose confidential information
referred to in paragraph (a)(ii) above to a proposed New Bank if it has
obtained the Parent's prior written consent (such consent not to be
unreasonably withheld).
30. SET-OFF
After an Event of a Default which is continuing, a Finance Party may set
off any matured obligation owed by an Obligor under this Agreement (to the
extent beneficially owned by that Finance Party) against any obligation
(whether or not matured) owed by that Finance Party to that Obligor,
regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Finance
Party may convert either obligation at a market rate of exchange in its
usual course of business for the purpose of the set-off. If either
obligation is unliquidated or unascertained, the Finance Party may set off
in an amount estimated by it in good faith to be the amount of that
obligation.
31. PRO RATA SHARING
31.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance Party
(the "recovering Finance Party") is discharged by payment, set-off or any
other manner other than through the Agent in accordance with Clause 11
(Payments) (a "recovery"), then:
(a) the recovering Finance Party shall, within three Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of the
amount which the recovering Finance Party would have received had
the recovery been received by the Agent and distributed in
accordance with Clause 11 (Payments);
(c) subject to Clause 31.3 (Exception), the recovering Finance Party
shall, within three Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment by
the Obligor concerned under Clause 11 (Payments); and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above and that Obligor will owe the recovering Finance
Party a debt which is equal to the redistribution, immediately
payable and of the type originally discharged.
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31.2 Reversal of redistribution
If under Clause 31.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or
an amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution in relation
to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid to
that Finance Party. Thereupon the subrogation in Clause 31.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
31.3 Exceptions
(a) A recovering Finance Party need not pay a redistribution to the extent that
it would not, after the payment, have a valid claim against the Obligor
concerned in the amount of the redistribution pursuant to Clause 31.1(e)
(Redistribution).
(b) If a Finance Party has become a recovering Finance Party by virtue of
having started an action or proceeding in any court to enforce it rights,
that recovering Finance Party will not be required to share any portion of
any recovery with any Bank that has the legal right to, but does not join
such action or proceeding or start a separate action or proceeding to
enforce its rights in the same or another court. Any Finance Party
instituting legal proceedings to recover sums owing to it under this
Agreement will, as soon as practicable thereafter, give notice to the Agent
which will, as soon as practicable, give notice to all the other Finance
Parties.
32. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
34. NOTICES
34.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
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(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a non-
working day or after business hours in the place of receipt will only be
deemed to be given on the next working day in that place. Facsimile
requests are to be confirmed by the relevant Borrower in writing (but may
be relied upon by the Agent and the Banks irrespective of receipt of such
confirmation).
34.2 Addresses for notices
(a) The address and facsimile number of each Party (other than the Agent, the
US Swingline Agent and the Parent) for all notices under or in connection
with this Agreement are:
(i) that notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent by
not less than five Business Days' notice.
(b) The address and facsimile numbers of the Agent are:
HSBC Investment Bank plc
Vinters Place
68 Upper Thames Street
London EC4V 3BJ
Contact: Specialised Financing Support
Facsimile: (0171) 336 9293
(0171) 336 9302,
or such other as the Agent may notify to the other Parties by not less than
five Business Days' notice.
(c) The address and facsimile numbers of the US Swingline Agent are:
Marine Midland Bank
26th Floor
One Marine Midland Center
Buffalo, NY 14203
U.S.A.
Contact: Lynn M. Griffin
Telephone: 001 716 841 1362
Facsimile: 001 716 841 2325,
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or such other as the US Swingline Agent may notify to the other Parties by
not less than five New York Business Days' notice.
(d) The address and facsimile numbers of the Parent are:
One Bruton Street
London W1X 8AQ
Attention: The Secretary
Facsimile: 0171 493 1974,
or such other as the Parent may notify to the other Parties by not less
than five Business Days' notice.
(e) The Agent shall, promptly upon request from any Party, give to that Party
the address or facsimile number of any other Party applicable at the time
for the purposes of this Clause.
35. LANGUAGE
(a) Any notice given under or in connection with any Finance Document shall be
in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English translation
and, in this case, the English translation shall prevail unless the
document is a statutory or other official document.
36. JURISDICTION
36.1 Submission
For the benefit of each Finance Party, each Obligor agrees that the courts
of England have jurisdiction to settle any disputes in connection with any
Finance Document and accordingly submits to the jurisdiction of the English
courts.
36.2 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
relating to any proceedings before the English courts in connection
with any Finance Document;
(b) agrees that failure by a process agent to notify the Obligor of the
process will not invalidate the proceedings concerned; and
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(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 34.2 (Addresses for notices).
36.3 Forum convenience and enforcement abroad
Each Obligor:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order of an English court in connection
with a Finance Document is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
36.4 Non-exclusivity
Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
37. GOVERNING LAW
This Agreement is governed by English law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
PART I
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Column 1 Column 2
Bank Tranche A Tranche B
Commitments Commitments
euro euro
<S> <C> <C> <C> <C>
Banca Commerciale Italiana S.p.A., London Branch 65,250,000 195,750,000
Barclays Bank PLC 65,250,000 195,750,000
Banque Nationale de Paris 65,000,000 195,000,000
The Chase Manhattan Bank 65,000,000 195,000,000
Midland Bank plc 65,000,000 195,000,000
Morgan Guaranty Trust Company of New York 65,000,000 195,000,000
Swiss Bank Corporation 65,000,000 195,000,000
Westdeutsche Landesbank Girozentrale 65,000,000 195,000,000
Banca Nazionale del Lavoro S.p.A., London Branch 62,500,000 187,500,000
Bayerische Landesbank Girozentrale London Branch 62,500,000 187,500,000
Citibank, N.A. 62,500,000 187,500,000
Credit Suisse First Boston 62,500,000 187,500,000
Den Danske Bank Aktieselskab 62,500,000 187,500,000
Deutsche Bank AG London 62,500,000 187,500,000
National Westminster Bank Plc 62,500,000 187,500,000
Australia and New Zealand Banking Group Limited (acting 60,500,000 181,500,000
through its ANZ Investment Bank division)
Banco Central Hispanoamericano, S.A. London Branch 60,500,000 181,500,000
Commerzbank Aktiengesellschaft, London Branch 60,500,000 181,500,000
The Royal Bank of Scotland plc 60,500,000 181,500,000
L-Bank 50,000,000 150,000,000
ABN AMRO Bank N.V. London Branch 31,250,000 93,750,000
Banca di Roma S.p.A. - London Branch 31,250,000 93,750,000
Banca Monte dei Paschi di Siena SpA 31,250,000 93,750,000
Banco Bilbao Vizcaya 31,250,000 93,750,000
The Bank of Tokyo-Mitsubishi, Ltd. 31,250,000 93,750,000
CARIPLO - Cassa di Risparmio delle Provincie Lombarde 31,250,000 93,750,000
S.p.A., London Branch
Credito Italiano SpA 31,250,000 93,750,000
Istituto Bancario San Paolo di Torino S.p.A. 31,250,000 93,750,000
----------------- -----------------
euro 1,500,000,000 euro 4,500,000,000
----------------- -----------------
</TABLE>
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SCHEDULE 1
PART II
SWINGLINE BANKS AND SWINGLINE COMMITMENTS
Swingline Bank* Swingline Commitments
euro
Banca Commerciale Italiana S.p.A., London Branch 125,000,000
Barclays Bank PLC 125,000,000
Banque Nationale de Paris 125,000,000
The Chase Manhattan Bank 125,000,000
Midland Bank plc 125,000,000
Morgan Guaranty Trust Company of New York 125,000,000
Swiss Bank Corporation 125,000,000
Westdeutsche Landesbank Girozentrale 125,000,000
--------------------
Total euro 1,000,000,000
--------------------
- ---------------------
* in each case lending through its Facility Office in the United States
notified to the Agent for the purposes of US Swingline Advances.
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SCHEDULE 2
ORIGINAL BORROWERS
(if any)
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SCHEDULE 3
CONDITIONS PRECEDENT DOCUMENTS
PART I
TO BE DELIVERED BEFORE THE FIRST ADVANCE
1. A copy (certified as a true copy by a director or officer of an Obligor) of
the memorandum and articles of association and certificate of incorporation
(or equivalent constitutional documents) of each Obligor.
2. A copy (certified as a true copy by a director or officer of an Obligor) of
a resolution of the board of directors of each Obligor:
(a) approving the terms of, and the transactions contemplated by, the
Finance Documents and resolving that it execute and, where applicable,
deliver the Finance Documents to which it is a party;
(b) authorising a specified person or persons to execute and, where
applicable, deliver the Finance Documents to which it is a party on
its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all documents and notices
(including Requests) to be signed and/or despatched by it under or in
connection with the Finance Documents.
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above.
4. A favourable legal opinion of Clifford Chance in relation to English law.
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PART II
TO BE DELIVERED BY AN ADDITIONAL BORROWER
1. A Borrower Accession Agreement, duly executed by the Additional Borrower
and the Parent.
2. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of the memorandum and articles of association and certificate of
incorporation (or equivalent constitutional documents) of the Additional
Borrower.
3. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of a resolution of the board of directors of the Additional
Borrower:
(a) approving the terms of, and the transactions contemplated by, the
Borrower Accession Agreement and resolving that it execute the
Borrower Accession Agreement;
(b) authorising a specified person or persons to execute the Borrower
Accession Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all other documents and
notices (including Requests) to be signed and/or despatched by it
under or in connection with this Agreement.
4. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 3 above.
5. A favourable legal opinion from lawyers approved by the Agent and the
Parent in the place of incorporation of the Additional Borrower, addressed
to the Finance Parties.
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SCHEDULE 4
CALCULATION OF THE MLA COST
(a) The MLA Cost for an Advance denominated in Sterling is calculated in
accordance with the following formula:
BY + L(Y-X) + S(Y-Z) % per annum = MLA Cost
--------------------
100-(B + S)
where on the day of application of the formula:
B is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;
Y is the arithmetic mean of the respective rates at which Sterling
deposits are offered by each Reference Bank to leading banks in the
London interbank market at or about 11.00 a.m. on that day for the
relevant period;
L is the arithmetic mean of the respective percentage of eligible
liabilities which the Bank of England requires each Reference Bank to
maintain as secured money with members of the London Discount Market
Association and/or as secured call money with certain money brokers
and gilt-edged primary market makers;
X is the arithmetic mean of the respective rates at which secured Sterling
deposits in the relevant amount may be placed by each Reference Bank
with members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged primary
market makers at or about 11.00 a.m. on that day for the relevant
period;
S is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on special
deposits.
(b) For the purposes of this Schedule 4:
(i) "eligible liabilities" and "special deposits" have the meanings given
to them at the time of application of the formula by the Bank of
England;
(ii) "relevant period" in relation to an Advance, means:
(A) if its Term or Interest Period is three months or less, its Term
or Interest Period; or
- --------------------------------------------------------------------------------
<PAGE>
74
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(B) if its Term or Interest Period is more than three months, each
successive period of three months and any necessary shorter
period comprised in that Term or Interest Period.
(c) In the application of the formula, B, Y, L, X, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the Term or Interest Period of the relevant Advance.
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded upward to four decimal places.
(e) If a change in circumstances has rendered, or will render, the formula
inappropriate, the Agent (after consultation with the Reference Banks and
the Parent) shall notify the Parent of the manner in which the MLA Cost
will subsequently be calculated so as to leave the Obligors and the Banks,
so far as is practicable, in no better or worse a position than they were
in prior to that change. The manner of calculation so notified by the
Agent shall, in the absence of manifest error, be binding on all the
Parties.
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<PAGE>
75
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SCHEDULE 5
FORM OF REQUEST
To: HSBC Investment Bank plc as Agent/Marine Midland Bank as US Swingline
Agent*
From: [BORROWER] Date: [ ]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated 25th March, 1998
We wish to utilise Tranche A* and/or*/Tranche B* by way of Advance(s)* and/or
Bills and/or Swingline Advances as follows:
(a) Utilisation Date: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(b) Requested Amount (including currency): Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(c) Term*: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(d) Payment Instructions: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(e) Initial Interest Period
(for Term-out Advances only)*
(f) Maturity Date
(for Term-out Advances only)* Tranche A: [ ]*
(g) Clausing (for Bills only)* Tranche A: [ ]*
Tranche B: [ ]*
We confirm that no Default has occurred which is continuing and the
representations and warranties in Clause 18 (Representations and Warranties) to
be repeated in accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately after the
Utilisation referred to above except in all cases to the extent waived by the
Majority Banks.
By:
[BORROWER]
Authorised Signatory
- -----------------------------------
* Delete as appropriate.
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<PAGE>
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SCHEDULE 6
FORMS OF ACCESSION DOCUMENTS
PART I
NOVATION CERTIFICATE
To: HSBC Investment Bank plc as Agent and on behalf of the Obligors
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
The General Electric Company, p.l.c. - euro 6,000,000,000 Syndicated Credit
Agreement dated 25th March, 1998
We refer to Clause 28.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New Bank")
agree to the Existing Bank and the New Bank novating all the Existing
Bank's rights and obligations referred to in the Schedule in accordance
with Clause 28.3 (Procedure for novations).
2. The specified date for the purposes of Clause 28.3(c) (Procedure for
novations) is [date of novation].
3. The prior written consent of The General Electric Company, p.l.c. [is not
required]* [has been obtained]* in accordance with Clause 28 (Changes to
the Parties).
4. The Facility Office and address for notices of the New Bank for the
purposes of Clause 34.2 (Addresses for notices) are set out in the
Schedule.
5. This Novation Certificate is governed by English law.
- ----------------------------------
* Delete as appropriate.
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<PAGE>
77
- --------------------------------------------------------------------------------
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] [ ]
By: By: By:
Date: Date: Date:
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<PAGE>
78
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PART II
BORROWER ACCESSION AGREEMENT
To: HSBC Investment Bank plc as Agent
From: [PROPOSED BORROWER] and The General Electric Company, p.l.c.
[Date]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated
25th March, 1998 (the "Credit Agreement")
We refer to Clause 28.4 (Additional Borrowers).
[Name of company] of [address] (Registered no. [ ], if any) (the "Proposed
Borrower") is a Subsidiary of The General Electric Company, p.l.c. as required
by the Credit Agreement and agrees to become an Additional Borrower and to be
bound by the terms of the Credit Agreement as an Additional Borrower in
accordance with Clause 28.4 (Additional Borrowers).
The address for notices of the Proposed Borrower for the purposes of Clause 34.2
(Addresses for notices) is:
[
]
This Agreement is governed by English law.
By:
[PROPOSED BORROWER]
Authorised Signatory
By:
THE GENERAL ELECTRIC COMPANY, P.L.C.
Authorised Signatory
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<PAGE>
79
- --------------------------------------------------------------------------------
PART III
FORM OF BORROWER NOVATION AGREEMENT
A NOVATION AGREEMENT dated [ ]
BETWEEN:
(1) [ ] (the "Existing Borrower");
(2) [ ] (the "Substitute Borrower");
(3) THE GENERAL ELECTRIC COMPANY, p.l.c. on behalf of itself and each other
Borrower (as such capitalised term is defined in the Credit Agreement
referred to below) (the "Parent"); and
(4) HSBC INVESTMENT BANK PLC as agent (the "Agent") on behalf of itself and the
Banks (as defined in the Credit Agreement referred to below),
and is supplemental to the Syndicated Credit Agreement dated [ ], 1998
(the "Credit Agreement") and made between The General Electric Company, p.l.c.,
the subsidiaries of the Parent listed in Schedule 2 thereto, the financial
institutions listed in Schedule 1 thereto, and the Agent.
IT IS AGREED:
1. Novation
In consideration of a payment made by the Existing Borrower to the
Substitute Borrower and the release of the Existing Borrower from its
obligations and liabilities (actual or contingent) specified in the
Schedule hereto under the Credit Agreement and with effect on and from
[ ] (the "Effective Date") the Substitute Borrower hereby undertakes
to observe and perform all the obligations and liabilities (actual or
contingent) of the Existing Borrower under the Credit Agreement in respect
of the Advances and Bills specified in the Schedule.
2. Integration
This Novation Agreement shall be read as one with the Credit Agreement so
that any reference therein to "this Agreement", "hereunder" and similar
shall include and be deemed to include this Novation Agreement.
3. Continuing Liability
The Parent acknowledges and confirms that its obligations under Clause 17
of the Credit Agreement apply to the obligations and liabilities assumed by
the Substitute Borrower hereunder.
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<PAGE>
80
- --------------------------------------------------------------------------------
SCHEDULE
[
]
IN WITNESS whereof the parties hereto have caused this Novation Agreement
to be duly executed on the date first written above.
.........................................
For and on behalf of
[The Existing Borrower]
.........................................
For and on behalf of
[The Substitute Borrower]
.........................................
For and on behalf of the
Parent
.........................................
For and on behalf of each
Bank and the Agent
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<PAGE>
81
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SCHEDULE 7
FORM OF BILL
Face of Bill
No. for (Pounds) ..............
....................19....
To
On.................19.. pay against this Bill of Exchange to our order the sum
of ............................... for value received against [ ].
Accepted by:
For and on behalf of For and on behalf of
[ACCEPTING BANK] [BORROWER]
........................... ...........................
Authorised signatory Authorised signatory
Reverse of Bill
For and on behalf of
[BORROWER]
...........................
Authorised signatory
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<PAGE>
82
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SIGNATORIES
Parent
THE GENERAL ELECTRIC COMPANY, p.l.c.
By: John Mayo
Original Borrowers
[if any]
Joint Lead Arrangers
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
BARCLAYS CAPITAL
By: G.M. Rody
CHASE MANHATTAN plc
By: Janin Campos
MIDLAND BANK plc
By: Doug Lack
J. P. MORGAN SECURITIES LTD.
By: S. Juyoung Shin
SBC WARBURG DILLON READ
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
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<PAGE>
83
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Agent
HSBC INVESTMENT BANK PLC
By: David Stent
US Swingline Agent
MARINE MIDLAND BANK
By: David Stent
Banks
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BARCLAYS BANK PLC
By: G.M. Rody
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
THE CHASE MANHATTAN BANK
By: Sinead English
MIDLAND BANK plc
By: D.G. Lack
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: S. Juyoung Shin
SWISS BANK CORPORATION
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
BANCA NAZIONALE DEL LAVORO S.p.A., LONDON BRANCH
By: L.F. Wybraniec D.A. Rosser
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<PAGE>
84
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BAYERISCHE LANDESBANK GIROZENTRALE LONDON BRANCH
By: Kevin Buck
CITIBANK, N.A.
By: J.W.G. Parsons
CREDIT SUISSE FIRST BOSTON
By: L. Smith-Morgan Andrew Nimmo
DEN DANSKE BANK AKTIESELSKAB
By: S. Juyoung Shin
DEUTSCHE BANK AG LONDON
By: B.D. Stevenson R.H. Sedlacek
NATIONAL WESTMINSTER BANK Plc
By: A.J. Gill
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED (ACTING THROUGH ITS ANZ
INVESTMENT BANK DIVISION)
By: R.J. Heyhoe
BANCO CENTRAL HISPANOAMERICANO,
S.A. LONDON BRANCH
By: H.J.W. Bright J.M. Inches
COMMERZBANK AKTIENGESELLSCHAFT,
LONDON BRANCH
By: Bernd Meist James Weber
THE ROYAL BANK OF SCOTLAND plc
By: Dean White
L-BANK
By: S. Juyoung Shin
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<PAGE>
85
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ABN AMRO BANK N.V. LONDON BRANCH
By: S. Juyoung Shin
BANCA DI ROMA S.p.A. - LONDON BRANCH
By: J.G. Connolly Raymond Pandolfino
BANCA MONTE DEI PASCHI DI SIENA SpA
By: G.N.H. Furzland Roberto Boccanera
BANCO BILBAO VIZCAYA
By: S. Juyoung Shin
BANK OF TOKYO-MITSUBISHI, LTD
By: C.B. Griffiths
CARIPLO - CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.p.A., LONDON BRANCH
By: L.K. Barnes
CREDITO ITALIANO SpA
By: Robert G.A. Sanderson
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.p.A.
By: S. Juyoung Shin
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<PAGE>
EXHIBIT (2)(a)
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
RELTEC Corporation
at
$29.50 Per Share
by
GEC Acquisition Corp.
A Wholly Owned Subsidiary of
GEC Incorporated
A Wholly Owned Subsidiary of
The General Electric Company, p.l.c.
(Not affiliated with the U.S. based corporation with a similar name)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 1, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF RELTEC CORPORATION (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS. CERTAIN STOCKHOLDERS OF
THE COMPANY AFFILIATED WITH KOHLBERG KRAVIS ROBERTS & CO., L.P.
THAT COLLECTIVELY OWN APPROXIMATELY 81.2% OF ALL OUTSTANDING
SHARES HAVE AGREED TO SELL THEIR SHARES IN THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, 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 (as
defined herein) and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal (or a facsimile thereof) or
deliver such Shares pursuant to the procedure for book-entry transfer set
forth in Section 2 or (ii) 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.
If a stockholder desires to tender Shares 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
of the Offer, such stockholder's tender may be effected 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:
CREDIT FIRST
SUISSE BOSTON
March 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Introduction............................................................ 1
1. Terms of the Offer................................................. 3
2. Procedure for Tendering Shares..................................... 4
3. Withdrawal Rights.................................................. 7
4. Acceptance for Payment and Payment................................. 7
5. Certain 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; Stock Quotation;
Exchange Act Registration; Margin Regulations...................... 11
8. Certain Information Concerning the Company......................... 12
9. Certain Information Concerning the Purchaser, Parent and GEC,
p.l.c. ............................................................ 15
10. Source and Amount of Funds......................................... 16
11. Contacts and Transactions with the Company; Background of the
Offer.............................................................. 17
12. Purpose of the Offer; The Merger Agreement; Stockholder Agreement;
Plans for the Company.............................................. 18
13. Dividends and Distributions........................................ 29
14. Certain Conditions of the Offer.................................... 30
15. Certain Legal Matters.............................................. 32
16. Fees and Expenses.................................................. 35
17. Miscellaneous...................................................... 35
Schedule I--Directors and Executive Officers
</TABLE>
<PAGE>
To the Holders of Shares of
RELTEC Corporation:
INTRODUCTION
GEC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of GEC Incorporated, a Delaware corporation ("Parent"), which
is a wholly owned subsidiary of The General Electric Company, p.l.c., a public
limited company organized under the laws of England and Wales ("GEC, p.l.c."),
hereby offers to purchase all outstanding shares of Common Stock (the "Common
Stock"), par value $.01 per share (the "Shares"), of RELTEC Corporation, a
Delaware corporation (the "Company"), at $29.50 per Share (the "Offer Price"),
in cash, without interest thereon, 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").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of March 1, 1999 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable 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"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares
owned by the Company as treasury stock and Shares owned by Parent or any
direct or any indirect wholly owned subsidiary of Parent or of the Company)
will be converted into the right to receive $29.50 in cash (the "Per Share
Merger Consideration"), without interest thereon. The Merger Agreement
provides that the Purchaser may assign its rights and obligations (including
the right to purchase Shares in the Offer), in whole or in part, to any direct
or indirect subsidiary of GEC, p.l.c. (or the successor to the non-defense
business of GEC, p.l.c.) so long as the transferee agrees in writing to be
bound by the Merger Agreement, but no such assignment shall relieve Parent or
the Purchaser of its obligations under the Merger Agreement if such transferee
does not perform such obligations. The Merger is subject to a number of
conditions, including the adoption of the Merger Agreement by stockholders of
the Company, if required by applicable law. In the event the Purchaser
acquires 90% or more 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. In such event, the Purchaser could, and intends to, effect the
Merger without prior notice to, or any action by, any other stockholder of the
Company. See Section 12.
Simultaneously with entering into the Merger Agreement, Parent, the
Purchaser and CMT Associates, L.P., KKR Partners II, L.P. and KKR Associates,
L.P. (collectively, the "Principal Stockholders") entered into the Stockholder
Agreement and Proxy dated as of March 1, 1999 (the "Stockholder Agreement"),
whereby each Principal Stockholder has agreed, among other things, to sell its
Shares in the Offer at the Offer Price. The Principal Stockholders are
affiliates of Kohlberg Kravis Roberts & Co., L.P. ("KKR"), and they
collectively own 45,831,283 Shares (approximately 81.2% of all outstanding
Shares). In addition, the Principal Stockholders have agreed to exercise
rights to require holders of an additional 4,590,259 Shares (approximately
8.1% of all outstanding Shares) to tender their Shares. These obligations
would not be affected by any revision in the Company's position concerning the
Offer or the Merger. Therefore, as described in greater detail below, the
effect of the Stockholder Agreement is that at the expiration of the Offer,
the Purchaser should acquire enough of the outstanding Shares to satisfy the
Minimum Condition (as defined below) and to effect the Merger under Delaware
law. See Section 12.
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.
Shareholders who hold their Shares through their broker or bank should consult
with such institution as to
<PAGE>
whether there are any fees applicable to a tender of Shares. Parent will pay
all fees and expenses of Credit Suisse First Boston Corporation, which is
acting as Dealer Manager ("Credit Suisse First Boston" or the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C., which is acting as the
Depositary (the "Depositary"), and Georgeson & Company Inc., which is acting
as Information Agent (the "Information Agent"), incurred in connection with
the Offer. See Section 16.
The Board of Directors of the Company (the "Board") has unanimously approved
the Offer and the Merger and determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders
and unanimously recommends that the Company's stockholders accept the Offer
and tender their Shares pursuant to the Offer. The factors considered by the
Board 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.
The Company has advised Parent and the Purchaser that each member of the
Board and each of the Company's executive officers intends to tender all
Shares owned by such persons pursuant to the Offer, except to the extent of
any restrictions created by Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Each of the Company's financial advisors, Morgan Stanley & Co. Incorporated
and Salomon Smith Barney Inc., has delivered to the Board a written opinion
dated February 28, 1999 to the effect that, as of such date and based upon and
subject to certain matters stated in their respective opinions, the $29.50 per
Share consideration to be received in the Offer and the Merger by holders of
Shares (other than Parent and its affiliates) pursuant to the Merger Agreement
was fair, from a financial point of view, to such holders. Such opinions are
set forth in full as annexes to the Schedule 14D-9 and should be read
carefully in their entirety.
The Offer is conditioned upon, among other things, (a) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of all outstanding Shares on
a fully diluted basis (the "Minimum Condition"), (b) any waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the purchase of Shares pursuant to the Offer having
expired or been terminated (the "HSR Act Condition") and (c) receiving certain
regulatory and antitrust clearances from the applicable authorities in Canada,
Germany, Italy and the United Kingdom (together with the HSR Act Condition,
the "Regulatory Conditions"). The Purchaser reserves the right (subject to the
terms of the Merger Agreement and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC")) to waive or reduce the Minimum
Condition and to elect to purchase, pursuant to the Offer, fewer than the
minimum number of Shares necessary to satisfy the Minimum Condition. The
Purchaser may not waive the Minimum Condition without the consent of the
Company, and neither the Purchaser nor the Company currently intends to waive
the Minimum Condition. At the time the Principal Stockholders tender their
Shares in accordance with the Stockholder Agreement, the Minimum Condition
will be satisfied. For purposes herein, Shares on a fully diluted basis means
all outstanding Shares, after giving effect to the exercise or conversion of
all options, warrants, rights and securities exercisable or convertible into
Shares other than options that are not exercisable during the term of the
Offer. See Sections 1 and 14.
The Company has informed the Purchaser that, as of February 19, 1999, there
were 56,420,703 Shares outstanding and 4,287,824 Shares authorized for
issuance pursuant to the exercise of outstanding options to purchase Shares,
which are exercisable prior to expiration of the Offer ("Stock Options"). As a
result, as of such date, the Minimum Condition would be satisfied if the
Purchaser acquired 30,354,264 Shares (assuming all such Stock Options are
exercised). As noted above, the Principal Stockholders collectively own
45,831,283 Shares, and pursuant to the Stockholder Agreement, the Principal
Stockholders agreed to sell all these Shares in the Offer. In addition, the
Principal Stockholders have agreed to exercise rights to require holders of an
additional 4,590,259 Shares to tender their Shares in the Offer.
2
<PAGE>
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer 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.
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, April 1, 1999, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, waive the Minimum Condition. The Purchaser
expressly reserves the right to modify the terms of the Offer, provided that,
unless previously approved by the Company in writing, no change may be made
that decreases the price per Share payable in the Offer, changes the form of
consideration payable in the Offer, reduces the maximum number of Shares to be
purchased in the Offer, imposes additional conditions to the Offer, changes
the expiration date of the Offer or otherwise amends, adds or waives any term
or condition of the Offer in any manner adverse to the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer, if at the scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligation to purchase Shares
are not satisfied, until such time as such conditions are satisfied or waived,
(ii) extend the Offer for a period of not more than 5 business days beyond the
expiration date that would otherwise be permitted under clause (i) of this
sentence, if on the date of such extension (x) less than 90% of the Shares on
a fully diluted basis have been validly tendered and not properly withdrawn
pursuant to the Offer and (y) Purchaser has permanently waived all of the
other conditions to the Offer (other than the condition requiring, among other
things, that no law or court order prohibiting the completion of the Offer is
in effect), and (iii) extend the Offer for any period required by any
regulation, rule, interpretation or position of the SEC or the staff thereof
applicable to the Offer. If, on any scheduled expiration date of the Offer but
prior to July 1, 1999, the Regulatory Conditions have not been satisfied or
waived, at the written request of the Company, the Purchaser shall, from time
to time, extend the expiration date of the Offer for the period set forth in
such written requests.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, 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 hereof shall have
occurred, to (a) 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 (b)
except as set forth above, 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, April 1, 1999 (or any
date or time then set as the Expiration Date), any of 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
contained in the Merger Agreement and to the applicable rules and regulations
of the SEC, to (a) terminate the Offer and not accept for payment or pay for
any Shares and return all tendered Shares to tendering stockholders, (b)
except as set forth
3
<PAGE>
above with respect to the Minimum Condition, 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, (c) 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 (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer, except if required to do so. Any extension, amendment or
termination will be followed as promptly as practicable by public
announcement. In the case of an extension, Rule 14e-1(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 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 Shares (whether before or after its acceptance for
payment of Shares) or it 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-
1(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 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 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, subject to the Merger Agreement, a waiver of the Minimum
Condition), 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 the Offer or
information concerning the 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.
The Company has provided or will provide the Purchaser with the Company's
stockholder list and security position listing 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 Company's stockholder list, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. Procedure for Tendering Shares
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date 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
confirmation of such delivery, including an Agent's Message (as defined
below), 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.
4
<PAGE>
The Depositary will establish accounts 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 a 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 (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's system whose name
appears on a security position listing as the owner of the 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 (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Exchange Act
(each, 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 in the manner described above. 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;
(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
5
<PAGE>
(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 properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), 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.
("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.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation 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, an Agent's
Message, 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
such Shares are actually received by the Depositary. Under no circumstances
will any interest be paid on the purchase price of the Shares, regardless of
any extension of the Offer or any delay in making such payment.
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 March 1, 1999. 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, GEC, p.l.c., 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
6
<PAGE>
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 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 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 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 Monday, May 3,
1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of 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 procedure for book-entry transfer as 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, GEC, p.l.c., 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 questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See
7
<PAGE>
Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, 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-1(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.
GEC, p.l.c. will file a Notification and Report Form with respect to the
Offer under the HSR Act. The waiting period under the HSR Act with respect to
the Offer will expire at 11:59 p.m., New York City time, on the 15th day after
the day such form is filed, unless early termination of the waiting period is
granted. 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 GEC, p.l.c. 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 GEC, p.l.c. with such request. See Section 15.
GEC, p.l.c. will also file a short-form pre-merger notification filing and a
request for an advance ruling certificate with respect to the Offer under Part
IX and section 102 of the Competition Act (Canada), respectively. The waiting
period under the Competition Act (Canada) will expire at 11:59, New York time,
on the seventh day after the day such filing is made and receipted by the
Canadian Competition Bureau. However, the Director of Investigation and
Research (the "Director") of the Competition Bureau may request a long-form
pre-merger notification filing under Part IX of the Competition Act (Canada)
within the initial seven day waiting period referred to above, which would
have the effect of extending the statutory waiting period an additional 21
days from the day a long-form filing is receipted by the Competition Bureau.
Parent and the Purchaser believe the request for a long-form pre-merger
notification filing is unlikely; however, no assurances can be made in this
regard. See Section 15.
In addition, GEC, p.l.c. is seeking confirmation, in terms satisfactory to
GEC, p.l.c. and the Company, from the UK Office of Fair Trading ("OFT") that
it is not the intention of the U.K. Secretary of State for Trade and Industry
("Secretary of State") to refer the proposed acquisition of the Company to the
U.K. Monopolies and Mergers Commission ("MMC") under the U.K. Fair Trading Act
1973. There is an informal timetable of up to 45 working days from the date of
notification for the Secretary of State to make his decision.
The proposed acquisition of the Company is also being notified to the German
Federal Cartel Office ("FCO") pursuant to the German Act Against Restraints on
Competition (the "German Act"). The FCO has one month from the date of
notification under the German Act to notify the parties that it has entered
into a detailed examination of the proposed acquisition (which can last a
maximum of a further three months) or confirm that the conditions for a
prohibition in section 36 paragraph 1 of the German Act are not fulfilled.
Finally, the proposed acquisition of the Company is being notified to the
Italian Autorita Garante della Concorrenza e del Mercato (the "Italian
Authority") under Law no.287 of October 10, 1990. The Italian Authority has 30
days from the date of notification (with the ability to suspend such 30 day
term if the information supplied with the notification is incomplete) to
notify the parties that it intends to initiate a second stage investigation of
the acquisition of the Company or any matters arising therefrom under Article
16 of Law no. 287 of October 10, 1990 (which can last a maximum of a further
75 days, in the case of an opening of a second stage investigation) or to
clear the acquisition.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a 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 (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of Shares pursuant to the Offer.
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
8
<PAGE>
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. Under no circumstances
will interest be paid on the purchase price of any Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making
such payment.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it 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-1(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 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 a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate 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 an affiliate 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 Federal Income Tax Consequences
The following is a general discussion of certain United States Federal
income tax consequences of the receipt of cash by a holder of Shares pursuant
to the Offer or the Merger. Except as specifically noted, this discussion
applies only to a U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one
or more United States fiduciaries have the authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is a holder of Shares
that is not a U.S. Holder.
The receipt of cash for Shares 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 U.S. Holder will recognize gain or loss
equal to the difference between the amount of cash received by the U.S. Holder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares purchased pursuant
to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 39.6% if, at
the time the Purchaser accepts the Shares for payment (or the Shares are
canceled pursuant to the Merger) the stockholder held the Shares for not more
than one year and (ii) 20% if the stockholder held such Shares for
9
<PAGE>
more than one year at such time. Capital gains of corporations generally are
taxed at the Federal income tax rates applicable to corporate ordinary income.
In addition, under present law, the ability to use capital losses to offset
ordinary income is limited.
A stockholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger 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.
A stockholder that does not furnish its 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. Holders, life insurance
companies, tax-exempt organizations, financial institutions, dealers in
securities or currencies, persons who hold Shares as a position in a
"straddle" or as part of a "hedging" or "conversion" transaction and persons
that have a functional currency other than the U.S. dollar, 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 Shares are quoted on the NYSE under the symbol "RLT".
The following table sets forth, for each of the periods indicated, the range
of high and low last sales prices per Share.
<TABLE>
<CAPTION>
Last Sales
Prices of Shares
-----------------
Calendar Year High Low
------------- -------- --------
<S> <C> <C>
1998
First Quarter (From March 13, 1998)..................... $ 36.13 $ 34.75
Second Quarter.......................................... 49.13 35.00
Third Quarter........................................... 43.81 11.88
Fourth Quarter.......................................... 25.69 12.75
1999
First Quarter (through March 3, 1999)................... 29.38 17.38
</TABLE>
On February 26, 1999, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the NYSE was $21.75 per Share. The Offer Price of
$29.50 represents a 36% premium over this closing price. On March 4, 1999, the
last full trading day before the commencement of the Offer, the last reported
sales price of the Shares on the NYSE was $29.19 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
Stockholders are urged to obtain current market quotations for the Shares.
10
<PAGE>
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange
Act Registration; Margin Regulations
Market for the Shares.
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Stock Quotation.
Depending upon the number of Shares purchased pursuant to the Offer, the
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 Shares, if among other things, the total number of stockholders
(including the holders of record and beneficial holders of stock held in the
name of NYSE member organizations) were to fall below 400, or such number of
total stockholders were to fall below 1,200 and the average monthly trading
volume of the Shares were to fall below 100,000, the number of publicly held
Shares (exclusive of management or other concentrated holdings) were to fall
below 600,000 or the aggregate market value of publicly held Shares were not
to exceed $8 million. According to the Company, as of February 19, 1999, there
were approximately 355 holders of record of Shares and there were 56,420,703
Shares outstanding. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the NYSE for
continued listing and the Shares are no longer listed, the market for Shares
would be adversely affected.
If the NYSE were to delist the Shares, it is possible that the 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 through
the Nasdaq National Market or other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interests in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
Exchange Act Registration.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange, quoted on an automated inter-dealer quotation system or held by 300
or more holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC 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 (the "Securities Act"), may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
11
<PAGE>
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. In any event, the Shares will cease to be "margin securities"
if registration of the Shares under the Exchange Act is terminated.
8. Certain Information Concerning the Company
The Company is a Delaware corporation and was formed in July 1995 by
management and certain affiliates of KKR to acquire Reliance Comm/Tec
Corporation from Reliance Electric Company, a subsidiary of Rockwell
International Corporation. The Company is a leader in the design, manufacture
and sale of a broad range of telecommunications systems, products and
services. Its Access Systems and Network Components and Services are sold to
wireline and wireless service providers and original equipment manufacturers
around the globe. The Company operates in North America, Europe, Asia/Pacific
and Latin America and has over 6,600 employees worldwide, and its principal
offices at 5900 Landerbrook Drive, Suite 300, Cleveland, Ohio 44124-4019.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries, some of which was excerpted from
the information contained in the Company's Form S-1 Registration Statement
under the Securities Act of 1933, which was filed as part of the Company's
initial public offering and contains audited financial statements for the two
fiscal years ended December 31, 1997. The following information provided for
the year ended December 31, 1998 is based on unaudited financial information
furnished by the Company to Parent and reflects all adjustments which are, in
the opinion of management, necessary to a fair presentation of the results for
the year ended December 31, 1998. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
SEC, and the following summary is qualified in its entirety by reference to
such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and such other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
12
<PAGE>
RELTEC Corporation
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1998 1997 1996
----------- ------ -------
(unaudited)
<S> <C> <C> <C>
Statement of Operations Data:
Net sales........................................ $1,066.8 $887.2 $ 689.4
Cost of sales(1)................................. 757.2 633.4 482.9
-------- ------ -------
Gross profit..................................... 309.6 253.8 206.5
Operating expenses:
Research and product engineering................. 70.6 55.7 46.5
Selling and administrative....................... 128.4 94.1 75.7
Goodwill and intangible amortization............. 35.7 31.9 24.5
Write-off of acquired in-process research and
development..................................... 46.0 0.7 8.9
Other expense (income)........................... 27.8 (1.8) (0.2)
-------- ------ -------
Total operating expenses......................... 308.5 180.6 155.4
======== ====== =======
Operating income................................. 1.1 73.2 51.1
Interest expense, net............................ 14.7 18.6 25.6
Income tax provision............................. 22.7 29.6 17.4
Extraordinary charge and cumulative effect of
change in accounting method, net of tax
benefit......................................... -- -- 6.3
-------- ------ -------
Net income (loss)(2)............................. $ (36.3) $ 25.0 $ 1.8
======== ====== =======
Basic earnings (loss) per share
Income (loss) before extraordinary
charge(3)(4).................................. $ (0.66) $ 0.51 $ 0.20
Net income (loss)(4)........................... (0.66) 0.51 0.04
Diluted earnings (loss) per share
Income (loss) before extraordinary
charge(3)(5).................................. (0.66) 0.50 0.20
Net income (loss)(5)........................... (0.66) 0.50 0.04
Other Financial Data:
Net cash (used for) provided by operating
activities...................................... $ (8.7) $ 33.9 $ 61.6
Net cash used for investing activities........... (262.9) (64.2) (111.9)
Net cash provided by financing activities........ 285.5 33.5 54.6
Adjusted EBITDA(6)............................... 139.8 126.1 103.9
Capital expenditures............................. 42.7 26.5 16.9
<CAPTION>
December 31,
---------------------------
1998 1997 1996
----------- ------ -------
(unaudited)
<S> <C> <C> <C>
Balance Sheet Data:
Working capital.................................. $ 218.5 $127.2 $ 89.5
Total assets..................................... 1,148.1 804.6 740.3
Total long-term obligations(7)................... 395.4 285.4 313.0
Stockholders' equity............................. 490.0 343.5 270.0
</TABLE>
- --------
(1) For the years ended December 31, 1998 and 1996, cost of sales includes
nonrecurring purchase accounting charges of $5.1 million and $1.3 million,
respectively, related to the write-off of inventory acquisition step-up.
(2) The Company's net loss for the year ended December 31, 1998 includes
nonrecurring charges of $46.0 million of acquired in-process research and
development charges, $5.1 million of acquired inventory acquisition step-
up charges, $9.0 million of restructuring and other charges, $20.5 million
of charges related to litigation and $1.5 million of gain related to the
favorable settlement of accrued contract termination costs. The Company's
net income for the year ended
13
<PAGE>
December 31, 1997 includes nonrecurring charges of $0.7 million of acquired
in-process research and development charges, $6.5 million of gain on
curtailment of pension benefits and $5.0 million reserve for an investment.
The year ended December 31, 1996 includes $8.9 million of acquired in-
process research and development charges, $1.3 million of acquired
inventory acquisition step-up charges, $2.5 million of facility closing and
relocation costs and a $2.5 million receipt from software settlement
agreement.
(3) Income (loss) before extraordinary charge represents earnings (loss) per
share before an extraordinary charge of $6.3 million or $(0.16) per share
for the year ended December 31, 1996.
(4) Calculated based on a weighted average number of shares outstanding of
55,138,916, 48,837,053 and 39,498,277 for the years ended December 31,
1998, 1997 and 1996, respectively.
(5) Calculated based on a weighted average number of shares and options
outstanding of 55,138,916, 49,705,758 and 39,834,904 for the years ended
December 31, 1998, 1997 and 1996, respectively.
(6) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation, goodwill and intangible amortization expense and other
nonrecurring charges. See (2) above for nonrecurring charges.
(7) Includes redeemable preferred stock, redeemable common stock, long-term
debt obligations, pension and postretirement benefits and other noncurrent
obligations.
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 proxy
statements distributed to the Company's stockholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC 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 SEC's
customary charges, by writing to the SEC's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material should also be available
for inspection at the library of the NYSE, 20 Broad Street, New York, NY
10005. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. Such reports, proxy and information statements
and other information may be found on the SEC's web site address,
http://www.sec.gov.
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 SEC and other publicly available
information. Although the Purchaser, Parent and GEC, p.l.c. do not have any
knowledge that any such information is untrue, none of the Purchaser, Parent
or GEC, p.l.c. 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.
Certain Company Projections. During the course of discussions between
representatives of GEC, p.l.c. and the Company, the Company provided GEC,
p.l.c. or its representatives with certain non-public business and financial
information about the Company. The following is a summary of selected
projected financial information for the year ended December 31, 1999 provided
by the Company.
<TABLE>
<S> <C>
Net sales (in millions)............................................ $1,302.5
Earnings before interest and income taxes (in millions)............ 125.0
Net income (in millions)........................................... 57.4
Net income per Share (diluted)..................................... $ 0.98
</TABLE>
The Company has advised the Purchaser, Parent and GEC, p.l.c. that it does
not as a matter of course make public any projections as to future performance
or earnings, and the projections set forth above are included in this Offer to
Purchase only because the information was provided to GEC, p.l.c.
14
<PAGE>
The projections were not prepared with a view to public disclosure or
compliance with the published guidelines of the SEC or the guidelines
established by the American Institute of Certified Public Accountants
regarding projections or forecasts. The Company's internal operating
projections are, in general, prepared solely for internal use and capital
budgeting and other management decisions and are subjective in many respects
and thus susceptible to various interpretations and periodic revision based on
actual experience and business developments. The projections were based on a
number of assumptions that are beyond the control of the Company, the
Purchaser, Parent or GEC, p.l.c. or their respective financial advisors,
including economic forecasting (both general and specific to the Company's
business), which is inherently uncertain and subjective. None of the Company,
the Purchaser, Parent or GEC, p.l.c. or their respective financial advisors
assumes any responsibility for the accuracy of any of the projections. The
inclusion of the foregoing projections should not be regarded as an indication
that the Company, the Purchaser, Parent or GEC, p.l.c. or any other person who
received such information considers it an accurate prediction of future
events. None of the Company, the Purchaser, Parent or GEC, p.l.c. intends to
update, revise or correct such projections if they become inaccurate (even in
the short term).
9. Certain Information Concerning the Purchaser, Parent and GEC, p.l.c.
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acquiring the Company and has not conducted any unrelated
activities since its incorporation. The initial name of the Purchaser, and the
name under which it executed the Merger Agreement and the Stockholder
Agreement, was George Acquisition Corp. The principal executive office of the
Purchaser is located at 1500 Mittel Boulevard, Wood Dale, IL 60191-1073 (c/o
Videojet Systems International, Inc.). All outstanding shares of common stock
of Purchaser are owned by Parent.
The principal executive office of Parent, a Delaware corporation and a
wholly owned indirect subsidiary of GEC, p.l.c., is located at 1500 Mittel
Boulevard, Wood Dale, IL 60191-1073 (c/o Videojet Systems International,
Inc.). Parent is a holding company of substantially all of the United States
operations of GEC, p.l.c. All outstanding shares of common stock of Parent are
indirectly owned by GEC, p.l.c.
GEC, p.l.c. is a public limited company organized under the laws of England
and Wales with its principal executive office at One Bruton Street, London WIX
8AQ. GEC, p.l.c., its subsidiaries and associated companies are principally
engaged in the provision and support of intelligent electronic systems. On
January 19, 1999, GEC, p.l.c. announced it had reached an agreement with
British Aerospace Public Limited Company ("British Aerospace"), on the
principal terms of a proposed reconstruction which will involve the separation
from GEC, p.l.c. of its aerospace and defense activities and the merger of
such activities with British Aerospace. As part of these transactions, GEC,
p.l.c. shareholders will receive ordinary shares in and other securities of
British Aerospace. This transaction is still pending; upon its completion,
GEC, p.l.c. will be a high technology company focused on communications and on
technology applied to medical and commercial systems.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and GEC, p.l.c. is set forth in
Schedule I hereto.
Except as described in this Offer to Purchase, none of the Purchaser, Parent
or GEC, p.l.c. (together, the "Corporate Entities") or, to the best knowledge
of the Corporate Entities, any of the persons listed in Schedule I or any
associate or majority-owned subsidiary of the Corporate Entities or any of the
persons so listed, beneficially owns any equity security of the Company, and
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, 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. See Section 11.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the
15
<PAGE>
Corporate Entities, any of the persons listed in Schedule I, 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 SEC and (b) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Because the only consideration in the Offer and Merger is cash, and in view
of the amount of consideration payable in relation to the financial capability
of GEC, p.l.c. and its affiliates, the Purchaser believes the financial
condition of GEC, p.l.c. and its affiliates is not material to a decision by a
holder of Shares whether to sell, tender or hold Shares pursuant to the Offer.
Set forth below is a summary of certain selected consolidated financial
information with respect to GEC, p.l.c. for the fiscal years ended March 31,
1996, 1997 and 1998 and the six months ended September 30, 1997 and 1998. The
selected consolidated financial information is stated in pounds sterling. Such
information is provided for supplemental information purposes only and is
neither intended nor required to comply with the requirements of the Exchange
Act. On March 4, 1999, The Wall Street Journal reported that, as of March 3,
1999, one pound sterling equalled 1.6138 U.S. dollars. The following
information was prepared in accordance with accounting principles generally
accepted in the United Kingdom (and has not been reconciled to generally
accepted accounting principles in the United States).
GEC, p.l.c.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
((Pounds) millions)
<TABLE>
<CAPTION>
Six Months Ended September
30, Year Ended March 31,
--------------------------- -------------------------------------------
1998 1997 1998 1997 1996
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Profit and Loss Data:
Turnover(1)............. (Pounds)3,352 (Pounds)3,317 (Pounds)7,165 (Pounds)11,147 (Pounds)10,990
Profit on ordinary
activities before
taxation(2)............ 1,393 415 1,028 707 981
Profit on ordinary
activities attributable
to the
shareholders(2)........ 1,108 261 658 408 623
<CAPTION>
at September 30, at March 31,
--------------------------- -------------------------------------------
1998 1997 1998 1997 1996
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Fixed assets............ (Pounds)2,805 (Pounds)1,947 (Pounds)1,717 (Pounds) 1,919 (Pounds) 2,110
Current assets.......... 4,703 4,369 4,094 4,240 4,545
Creditors: due within
one year............... 2,936 2,311 2,131 2,333 2,462
Equity shareholders'
interest............... 3,607 2,887 2,594 2,687 3,112
</TABLE>
- --------
(1) Turnover for the six months ended September 30, 1997 and 1998 and for the
fiscal year ended March 31, 1998 includes share of joint ventures.
Turnover for the fiscal years ended March 31, 1996 and 1997 includes share
of joint ventures and associates. In the Interim Statement for the six
months ended September 30, 1998, Alstom, previously a joint venture, is
included as an associate and comparative figures for the six months ended
September 30, 1997 and for the fiscal year ended March 31, 1998 have been
restated accordingly.
(2) In the Interim Statement for the six months ended September 30, 1998, the
adoption of United Kingdom Financial Reporting Standard 12, Provisions,
Contingent Liabilities and Contingent Assets resulted in a charge of
(Pounds)27m in exceptional items--continuing operations for the six months
to September 30, 1997 and the fiscal year ended March 31, 1998. Profit on
ordinary activities before taxation and profit on ordinary activities
attributable to the shareholders for these periods have been restated
accordingly.
10. Source and Amount of Funds
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares on a fully diluted basis pursuant to the Offer and to pay
fees and expenses related to the Offer will be approximately $1.8
16
<PAGE>
billion. The Purchaser will obtain such funds directly or indirectly from GEC,
p.l.c. Such funds will be obtained by GEC, p.l.c. from existing cash resources
or from borrowings pursuant to the Euro 6,000,000,000 Syndicated Credit
Facility dated March 25, 1999 (the "Credit Facility Agreement") among GEC,
p.l.c., HSBC, p.l.c., HSBC Investment Bank PLC, as Agent, Marine Midland Bank,
as U.S. Swingline Agent, and certain other financial institutions. The Credit
Facility Agreement includes a 364 day revolving credit facility up to the
amount of Euro 1,500,000,000 (the "364 Day Facility") and a five year
revolving credit facility up to the amount of Euro 4,500,000,000 (the "Five
Year Facility"). Any such borrowings will be unsecured and repayable (with a
right to reborrow) on the last day of each borrowing period of up to six
months. Such borrowings can be made in Euro, U.K. pounds sterling, U.S.
Dollars or in any other currency which is readily available and freely
transferable in the London foreign exchange market. The 364 Day Facility will
terminate on March 24, 1999 and the Five Year Facility will terminate on March
25, 2003. Any such borrowings would bear interest at a rate equal to the
aggregate of the London inter-bank offered rate plus 0.175 percent per annum.
On March 4, 1999, The Wall Street Journal reported, that as of March 3, 1999,
one Euro equalled 1.088 U.S. Dollars. The Credit Facility Agreement includes
customary covenants and events of default. There are no current plans to
refinance any such borrowings made under the Credit Facility Agreement.
Parent is a designated borrower under the Credit Facility Agreement.
Pursuant to a letter dated February 28, 1999 from GEC, p.l.c. to the Company,
GEC, p.l.c. has agreed to cause the availability of the commitment under the
Credit Facility Agreement to be an amount necessary to complete the
acquisition of the Shares upon the terms and conditions set forth in the
Merger Agreement. GEC, p.l.c. otherwise intends to make available to, directly
or indirectly, to the Purchaser funds to enable it to complete the acquisition
of all outstanding Shares, upon the terms and conditions set forth in the
Merger Agreement.
11. Contacts and Transactions with the Company; Background of the Offer
In mid-1998, representatives of GEC, p.l.c. and Marconi Communications
(defined below) had discussions with representatives of the Company regarding
potential commercial and strategic options of the Company and Marconi
Communications. Dudley P. Sheffler, President, Chief Executive Officer and a
director of the Company participated in one of these discussions.
In response to a call from a representative of the Financial Advisors, on
February 3, 1999, John C. Mayo, Finance Director of GEC, p.l.c., called
Alexander Navab, Jr., a director of the Company and a director of KKR, to
discuss the possibility of a strategic transaction with the Company. On
February 4 and February 5, Mr. Mayo and Mr. Navab had several conversations
concerning the possibility of such a transaction. Subsequent to those
conversations, on February 8, Henry R. Kravis, a director of the Company and a
founding partner of KKR called Lord Simpson, the Chief Executive Officer of
GEC, p.l.c. to discuss a potential sale of the Company and GEC, p.l.c.'s
interest in the Company. On February 10, 1999, GEC, p.l.c. entered into a
confidentiality agreement with the Company.
On February 12, 1999, representatives of GEC, p.l.c., including Mr. Mayo,
met in Cleveland, Ohio with representatives of the Company, including Mr.
Navab and Mr. Sheffler. During this meeting, representatives of the Company
made presentations about the business of the Company, including certain
financial information, and representatives of GEC, p.l.c. made a presentation
on its business and technology.
On February 16 and 17, 1999, representatives of the Company and GEC, p.l.c.
met at the Company's Montreal, Quebec facilities to discuss and review some of
the Company's current product offerings and new product developments. On
February 17, 1999, representatives of GEC, p.l.c., including Mr. Mayo, and
representatives of the Company, including Mr. Navab and Mr. Sheffler,
participated in a video conference to discuss the possible sale of the
Company, the scope and timing of GEC, p.l.c.'s due diligence review of the
Company and certain financial, tax and legal matters. Counsel to Parent
received a draft of a proposed merger agreement prepared by counsel to the
Company on this date.
17
<PAGE>
On February 18, 1999, the Company received a proposal from GEC, p.l.c. to
acquire the Company on terms that were not acceptable to the Company. From
February 15, 1999, through February 24, 1999, negotiations between
representatives of GEC, p.l.c., Credit Suisse First Boston, the Company, the
Financial Advisors and KKR took place concerning the purchase price for the
Company and the willingness of the Principal Stockholders, owning
approximately 81.2% of the outstanding Shares, to agree to sell GEC, p.l.c.
their Shares pursuant to the terms of a stockholder agreement.
On February 24, 1999, Parent's counsel transmitted a proposed merger
agreement and stockholder agreement to the Company setting forth the basis
upon which Parent was prepared to proceed with a transaction to acquire the
Company.
On February 25, 1999, Mr. Mayo and counsel to GEC, p.l.c. met in New York
with Mr. Kravis, Mr. Navab and James H. Greene, Jr., a director of the Company
and a partner of KKR, to negotiate the terms of a possible transaction,
including the purchase price. At the end of this meeting, the parties
preliminarily agreed that GEC, p.l.c. or one of its United States affiliates
would acquire all outstanding Shares at a purchase price of $29.50 per Share,
subject to additional due diligence, the terms and conditions of a definitive
agreement to be negotiated, approval by the Board and the Board of Directors
of GEC, p.l.c. and certain regulatory approvals. Mr. Mayo indicated that it
was a condition of GEC, p.l.c.'s willingness to have Parent and the Purchaser
enter into the Merger Agreement that the Principal Stockholders enter into the
Stockholder Agreement.
From February 26, 1999, through February 28, 1999, representatives of GEC,
p.l.c., its counsel and Credit Suisse First Boston undertook a due diligence
review of the Company's business and financial condition, engaging in various
discussions and meetings with management and employees of the Company in
Cleveland, Ohio and in Dallas, Texas.
Following further negotiations, the Merger Agreement and the Stockholder
Agreement were finalized and entered into among the respective parties
thereto. Mr. Navab advised Mr. Mayo that the Offer, the Merger, the Merger
Agreement and the Stockholder Agreement were unanimously approved by Board of
Directors of the Company at a meeting on February 28, 1999. On March 1, 1999,
the full Board of Directors of GEC, p.l.c. met in London and approved Parent
and Purchaser entering into the Merger Agreement and the Stockholder
Agreement. On March 5, 1999, the Purchaser commenced the Offer.
Marconi Communications Limited ("Marconi Communications"), a company
incorporated in the United Kingdom and registered in England and Wales and a
wholly owned subsidiary of GEC, p.l.c., has an ongoing relationship with
RELTEC (UK) Limited ("RELTEC (UK)") (f/k/a Rainford Group Limited), a company
incorporated in the United Kingdom and registered in England and Wales and a
wholly owned subsidiary of the Company, whereby RELTEC (UK) supplies Marconi
Communications with base station cabinet enclosure systems. Pursuant to this
relationship, RELTEC (UK) sold Marconi Communications approximately $10.6,
$17.5 and $32.5 million in equipment during the years ended March 1996, 1997
and 1998.
12. Purpose of the Offer; The Merger Agreement; Stockholder Agreement; Plans
for the Company
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to the
Merger", the Purchaser will be merged with and into the Company,
18
<PAGE>
and each outstanding Share (other than Shares held by stockholders who perfect
their appraisal rights under Delaware law, Shares owned by the Company as
treasury stock and Shares owned by Parent or any direct or indirect wholly
owned subsidiary of Parent or of the Company) will be converted into the right
to receive the Per Share Merger Consideration, without interest.
Vote Required to Approve the 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 and generally by a majority of the holders of the
Company's outstanding voting securities. The Board has approved the Offer and
the Merger. Consequently, the only additional action of the Company that may
be necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the
DGCL, the affirmative vote of holders of a majority of the outstanding Shares
(including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares
(which would be the case if the Minimum Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to the Offer),
it would have sufficient voting power to effect the Merger without the vote of
any other stockholder of the Company. However, the DGCL also provides that if
a parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a short-form merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a
result of the Offer or otherwise, the Purchaser acquires or controls the
voting power of at least 90% of the outstanding Shares, the Purchaser could,
and intends to, effect the Merger without prior notice to, or any action by,
any other stockholder of the Company.
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to effect the Merger under the Merger Agreement are
subject to the satisfaction at or prior to the effective time of the Merger
(the "Effective Time") of the following conditions, any or all of which may be
waived by Parent, the Purchaser and the Company, in whole or in part, to the
extent permitted by applicable law: (a) if required by the DGCL, the Merger
Agreement and the Merger shall have been approved and adopted by the requisite
vote of the stockholders of the Company in accordance with the DGCL; (b) no
court or governmental authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, ruling, injunction or other order that prohibits the
Merger or makes the Merger illegal; and (c) any applicable waiting period
under the HSR Act shall have expired or been terminated, and the other
Governmental Approvals (as defined herein), the failure of which to obtain
would be reasonably expected to have a Material Adverse Effect (as defined
herein) or a Parent Material Adverse Effect (as defined herein) (collectively
the "Required Approvals") shall have been obtained or satisfied, as the case
may be, on terms satisfactory to Parent in its reasonable discretion; provided
that this condition may not be asserted by the Company with respect to any
Required Approval if the potential penalty for any failure to receive such
Required Approval will be borne only by Parent or the Purchaser; and (d) the
Purchaser, Parent or their affiliates shall have accepted for payment and
purchased Shares pursuant to and subject to the conditions of the Offer or the
Principal Stockholder Shares (as defined herein) upon the exercise of the
Option (as defined herein) pursuant to the Stockholder Agreement.
Termination of the Merger Agreement. The Merger Agreement may be terminated
and the Offer and the Merger may be abandoned at any time (notwithstanding
approval of the Merger by the stockholders of the Company) prior to the
Effective Time: (a) by mutual written consent of Parent, the Purchaser and the
Company; (b) by Parent or the Company if any court of competent jurisdiction
or other Governmental Entity (as defined herein) shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become final and nonappealable; (c) by Parent or the
Company, if the Purchaser shall have (i) failed to commence the Offer as
provided in the Merger Agreement, (ii) terminated or withdrawn the Offer
without purchasing any Shares pursuant to the Offer or (iii) failed to pay for
Shares pursuant to the Offer by July 1, 1999 (the "Termination Date");
provided that the right to terminate the Merger Agreement as described in this
subparagraph (c) shall not be available (x) to any party (including the
Purchaser's failure in the case of Parent) whose failure to fulfill any
obligation under the Merger Agreement has been the cause or resulted in one of
the circumstances described in clause (i), (ii) or (iii), (y) to the Company
in the event that the Offer has expired or has otherwise been
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terminated and any Principal Stockholder has failed to tender all of its
Shares in accordance with the Stockholder Agreement or has withdrawn any of
its Shares tendered in the Offer prior to such expiration or termination, or a
breach of the Stockholder Agreement by any Principal Stockholder has been the
cause or resulted in one of the circumstances described in clause (i), (ii) or
(iii) or (z) to any party if the Purchaser, Parent or their affiliates shall
have exercised the Option unless such exercise subsequently is voided under
the terms of the Stockholder Agreement; (d) by Parent or the Purchaser, at any
time prior to the purchase by the Purchaser, Parent or their affiliates of
Shares pursuant to and subject to the conditions of the Offer or the purchase
of the Principal Stockholder Shares upon the exercise of the Option pursuant
to the Stockholder Agreement, if (i) any representation or warranty of the
Company contained in the Merger Agreement or of the Principal Stockholders
contained in the Stockholder Agreement that is qualified as to materiality
shall not be true and correct or any representation or warranty of the Company
contained in the Merger Agreement or of the Principal Stockholders contained
in the Stockholder Agreement that are not so qualified shall not be true and
correct in any material respect, (ii) there shall have been a breach of any
covenant or agreement (including the Company Lock-up Provisions (as defined
herein)) of the Company contained in the Merger Agreement or of the Principal
Stockholders contained in the Stockholder Agreement (including the Stockholder
Lock-up Provisions (as defined herein)) which would materially adversely
affect (or materially delay) the consummation of the Offer or the Merger or
the transactions contemplated by the Stockholder Agreement, which shall not
have been cured prior to the earlier of 10 business days following notice of
such breach and two business days prior to the date the Offer expires;
provided, however, the Company will have no right to cure a breach of the
Company Lock-up Provisions; or (e) by the Company prior to the purchase by the
Purchaser, Parent or their affiliates of Shares pursuant to and subject to the
conditions of the Offer or the purchase of any Principal Stockholder Shares
upon exercise of the Option pursuant to the Stockholders Agreement, if (i)
there shall have been a material breach of any representation or warranty in
the Merger Agreement or the Stockholder Agreement on the part of Parent or the
Purchaser which adversely affects (or materially delays) the consummation of
the Offer or (ii) there shall have been a material breach of any covenant or
agreement in the Merger Agreement or the Stockholder Agreement on the part of
Parent or the Purchaser which adversely affects (or materially delays) the
consummation of the Offer which shall not have been cured prior to the earlier
of (A) 10 business days following notice of such breach and (B) two business
days prior to the date on which the Offer expires.
Acquisition Proposals. Pursuant to the Merger Agreement, the Company has
agreed to immediately cease any existing discussions or negotiations with any
third parties conducted prior to the date of the Merger Agreement with respect
to any Acquisition Proposal (as defined below). The Company has agreed that it
will not, directly or indirectly, through any officer, director, employee,
representative, agent or affiliates, including any investment banker, attorney
or accountant (collectively, "Representatives") retained by the Company or any
of its subsidiaries, directly or indirectly (a) solicit, initiate, encourage
or otherwise facilitate (including by way of furnishing information) any
inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of 15% or more of shares of
capital stock (including, without limitation, by way of a tender offer) or
similar transactions involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Merger Agreement or the Stockholder
Agreement (any of the foregoing inquiries or proposals being referred to as an
"Acquisition Proposal") or (b) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal.
The Merger Agreement provides further that, except as described below,
neither the Board nor any committee thereof shall (a) subject to the following
paragraph, withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent or the Purchaser, the approval or recommendation by the
Board or such committee of the Offer or the Merger Agreement, (b) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal, or
(c) cause or permit the Company to enter into any agreement, including an
agreement in principle or letter of intent (each, an "Acquisition Agreement")
relating to any Acquisition Proposal. In addition, under the Merger Agreement,
the Company has agreed to notify Parent immediately (and no later than 24
hours) after receipt by the Company of any Acquisition Proposal or any request
for non-public information in connection with an Acquisition Proposal or for
access to the properties, books or records of the
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Company by any person or entity that informs the Company that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact.
Nothing contained in the Merger Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any legally required
disclosure to the stockholders of the Company. Notwithstanding anything else
to the contrary, neither the Company nor the Board shall take any action that
would (x) prevent, impede or delay the Offer, the stockholder meeting relating
to the Merger or the ability of the stockholders of the Company to hold a
meeting to vote on the Merger or adopt the Merger Agreement, (y) prevent,
impede or delay (i) the ability of the stockholders of the Company (A) to
tender or sell their Shares in the Offer and (B) to approve and adopt the
Merger Agreement, the Merger and the other transactions contemplated by the
Merger Agreement, or (ii) the ability of the Company, Parent or the Purchaser
from effecting the Offer or, after the stockholders of the Company have voted
in favor of the Merger and adopted the Merger Agreement, from effecting the
Merger in accordance with the DGCL or (z) result in the Board not having taken
all Board action required to satisfy all applicable requirements of the DGCL
in connection with the Merger Agreement, the Merger and the other transactions
contemplated thereby. Notwithstanding anything to the contrary, the Company
will duly call, give notice and hold a stockholders meeting, if required by
the DGCL, for the purpose of considering and taking action upon the Merger
Agreement and the Merger whether or not the Board has determined at any time
after the date of the Merger Agreement it is no longer advisable for the
stockholders of the Company to adopt the Merger Agreement. The provisions
described in this and the preceding two paragraphs are referred to herein as
the "Company Lock-up Provisions".
Fees and Expenses. The Merger Agreement provides that each of Parent, the
Purchaser and the Company will bear its own fees and expenses in connection
with the Merger Agreement and the transactions contemplated thereby.
Conduct of Business of the Company. Pursuant to the Merger Agreement, the
Company has agreed that, prior to the Effective Time, unless otherwise
expressly contemplated by the Merger Agreement or consented to in writing by
Parent, it will and its subsidiaries will each: (a) conduct its operations
according to its ordinary course of business; (b) use its reasonable best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing relationships
with licensors, licensees, suppliers, bankers, insurers, contractors,
distributors, customers and others having business relationships with it.
Prohibited Actions by the Company. Under the Merger Agreement, the Company
has agreed that, except as expressly contemplated by the Merger Agreement or
otherwise consented to in writing by Parent, from the date of the Merger
Agreement until the Effective Time, neither the Company nor any of its
subsidiaries will do any of the following:
(a) amend or propose to amend its certificate or articles of
incorporation or bylaws or equivalent organizational documents;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity
equivalents (including, without limitation, stock appreciation rights and
indebtedness that has or may have voting rights), except as required by
options agreements as in effect as of the date hereof, or except as
contemplated by the Merger Agreement, amend any of the terms of any such
securities or agreements outstanding as of the date hereof;
(c) effect any reorganization or recapitalization or split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock or redeem, repurchase
or otherwise acquire any of its securities or any securities of its
subsidiaries;
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(d) (i) incur any indebtedness for borrowed money (except for short term
indebtedness incurred in the ordinary course of business pursuant to
existing lines of credit) or issue any debt securities or, except in the
ordinary course of business, assume, guarantee or endorse the obligations
of any other person, except for intercompany indebtedness between the
Company and its wholly owned subsidiaries or between any of the Company's
wholly owned subsidiaries; (ii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company) except in the ordinary course of
business; (iii) pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries except in the ordinary course of
business; (iv) enter into or invest in any derivative financial instruments
except in the ordinary course of business consistent with the Company's
current investment and risk management policies (it being understood that
the Company shall continue its current investment and risk management
policies); or (v) mortgage or pledge any of its assets, tangible or
intangible, or except in the ordinary course of business, create or suffer
to exist any lien thereupon, provided that, notwithstanding anything to the
contrary and without limiting the generality of the foregoing, no
transaction described in clauses (iv) and (v) shall be permitted without
Parent's consent for any such transaction (or series of related
transactions) the value of which is in excess of $20 million;
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, or (except, in the case of employees who are
not officers or directors, for normal compensation increases in the
ordinary course of business that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company)
increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan or
arrangement as in effect as of the date of the Merger Agreement (including,
without limitation, the granting of stock options, restricted stock, stock
appreciation rights, "phantom" stock rights or performance units);
(f) sell, lease or otherwise dispose of, or grant any lien with respect
to any assets or properties of the Company and its subsidiaries, or enter
into any contract, agreement, commitment or transaction with respect to the
foregoing that are, individually or in the aggregate, material to any of
the Company and its subsidiaries, taken as a whole, except for dispositions
of excess or obsolete assets and sales of inventories in the ordinary
course of business;
(g) change any of the accounting principles used by it, except as may be
required as a result of a change in law, SEC guidelines or generally
accepted accounting principles;
(h) (i) acquire (by merger, consolidation, acquisition of stock or assets
(including technology assets) or otherwise) any corporation, partnership or
other business organization or division thereof, (ii) authorize any new
capital expenditure or expenditures which, individually, is in excess of
$2,500,000 or, in the aggregate, are in excess of $10,000,000; (iv) settle
any litigation for amounts in excess of the greater of $200,000,
individually, or $1,000,000, in the aggregate, or, with respect to any
litigation as to which reserves have been recorded on the books of the
Company, the amount reserved for such litigation; or (v) enter into or
amend any contract, agreement, commitment or arrangement with respect to
any of the foregoing;
(i) make any tax election or settle or compromise any tax liability,
other than in the ordinary course of business;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of claims, liabilities or
obligations in the ordinary course of business or in accordance with their
terms, or reflected or reserved against in the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
subsidiaries or incurred in the ordinary course of business;
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(k) (i) terminate, modify, amend or waive compliance with any material
provision of any of its significant agreements, or fail to take any
reasonable action necessary to preserve the material benefits of any
significant agreement to the Company or any of its subsidiaries or (ii)
enter into any agreement which, if such agreement is entered into, would be
a significant agreement;
(l) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to below);
or
(m) take, or agree in writing or otherwise to take, any of the foregoing
actions.
Directors. The Merger Agreement provides that promptly upon the purchase by
the Purchaser of a majority of the outstanding Shares pursuant to the Offer or
the purchase by the Purchaser of the Principal Stockholder Shares upon
exercise of the Option pursuant to the Stockholder Agreement, and from time to
time thereafter, the Purchaser shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board that
equals the product of (i) the total number of directors on the Board (giving
effect to the election of any additional directors pursuant to this provision)
multiplied by (ii) the percentage that the number of Shares owned by the
Purchaser and its affiliates (including any Shares purchased pursuant to the
Offer and the Stockholder Agreement) bears to the total number of outstanding
Shares; provided, however, that until the Effective Time there shall be at
least two Continuing Directors (as defined herein); and the Company shall,
upon request by the Purchaser, promptly either increase the size of the Board
or use its best efforts to secure the resignation of such number of directors
as is necessary to enable the Purchaser's designees to be elected to the Board
and shall cause the Purchaser's designees to be so elected. Promptly upon
request by the Purchaser, the Company will use its best efforts to cause
persons designated by the Purchaser to constitute the same percentage as is on
the Board of (i) each committee of the Board, (ii) each board of directors of
each subsidiary of the Company designated by the Purchaser and (iii) each
committee of each such board. Notwithstanding the foregoing, until the time
the Purchaser purchases Shares representing a majority of the Company's voting
power on a fully-diluted basis, the Company shall use its best efforts to
ensure that all of the members of the Board and such boards and committees as
of the date of the Merger Agreement who are not employees of the Company or
affiliates of the Principal Stockholders shall remain members of the Board and
such boards and committees until the Effective Time.
The Company's obligations to appoint designees to the Board shall be subject
to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated thereunder.
The Company shall promptly take all actions required pursuant to Section 14(f)
and Rule 14f-1 in order to fulfill its obligations under the foregoing
provisions of the Merger Agreement and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1. Parent or the Purchaser will
supply to the Company in writing and be solely responsible for any information
with respect to either of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
After the time that the Purchaser's designees constitute at least a majority
of the Board and until the Effective Time, any action by the Company with
respect to the Merger Agreement and the transactions contemplated hereby which
materially and adversely affects the interests of the stockholders of the
Company other than Parent and its affiliates, shall require the approval of a
majority of the then serving directors, if any, who are directors as of the
date hereof (the "Continuing Directors"). If there is more than one Continuing
Director and, prior to the Effective Time, the number of Continuing Directors
is reduced for any reason, the remaining Continuing Director shall be entitled
to designate a person to fill such vacancies, who shall be deemed a Continuing
Director for purposes of the Merger Agreement. In the event there is only one
Continuing Director and he or she resigns or is removed or if all Continuing
Directors resign or are removed, he, she or they, as applicable, shall be
entitled to designate his, her or their successors, as the case may be, each
of whom shall be deemed a Continuing Director for purposes of the Merger
Agreement. The Board shall not delegate any of the foregoing matters to any
committee of the Board.
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Stock Options and Warrants. (a) Each unvested, outstanding option to
purchase Shares (including any time options or performance options) ("Employee
Options") issued pursuant to the Amended and Restated 1995 Stock Purchase and
Option Plan for Employees of RELTEC Holdings, Inc. (the "1995 Plan") and its
Subsidiaries and the 1998 Equity Participation Plan of the Company
(collectively, the "Company Stock Plans") may be accelerated in connection
with any change of control (as defined in the applicable Company Stock Plans)
that results from the Offer or the Merger, except for the following:
(i) Employee Options issued under the 1995 Plan to former employees of
Rainford Group, plc that vest based on performance will not be accelerated
but shall be converted as of the Effective Time into options that vest in
equal installments over the performance measurement period remaining after
the Effective Time;
(ii) Employee Options issued to former employees of Positron Fiber
Systems Corporation that by their current terms terminate upon a change of
control will terminate; and
(iii) Employee Options issued since the Company's initial public offering
in March 1998 will not be accelerated (other than so-called "Stock in the
Future" options which will accelerate).
(b) At the Effective Time, each outstanding vested Employee Option
(including any such option which has vested as a result of acceleration as set
forth in paragraph (a) above) shall, subject to paragraph (d) below, be
canceled by the Company, and each holder of any such canceled vested Employee
Option shall be entitled to receive from the Company or, at Parent's option,
any subsidiary of the Company (in each case, with funds provided, directly or
indirectly, by GEC, p.l.c. (or any successor to the non-defense business)) in
consideration for cancelation an amount in cash (less applicable withholding
taxes) equal to the product of (i) the number of Shares subject to such vested
Employee Option multiplied by (ii) the excess, if any, of the Per Share Merger
Consideration over the exercise price per Share previously subject to such
vested Employee Option.
(c) At the Effective Time, each outstanding unvested Employee Option (other
than options that by their terms are canceled or terminated) shall not be
canceled or exercised but shall be amended and converted into phantom stock
units equivalent to a number of ordinary shares of GEC, p.l.c. ("GEC Shares")
(rounded down to the nearest whole share) determined by multiplying the number
of Shares subject to such unvested Employee Option by the Conversion Ratio (as
defined below), at a price per GEC Share equivalent (rounded up to the nearest
whole penny) equal to (A) the exercise price for the Shares previously
purchasable pursuant to such unvested Employee Option converted into pounds
sterling at the Noon Buying Rate (as defined below) divided by (B) the
Conversion Ratio (each, as so adjusted, a "Substitute Phantom Unit"). The
value of each Substitute Phantom Unit will be payable upon exercise (less
applicable withholding taxes), at Parent's election, in cash or GEC Shares
(provided that such GEC Shares are publicly traded on the London Stock
Exchange (the "LSE") or a U.S. stock exchange) valued at the closing sales
price for a GEC Share on the London Stock Exchange on the date of exercise and
shall have other terms and conditions comparable to those of the unvested
Employee Option replaced by such Substitute Phantom Unit. The "Conversion
Ratio" shall be equal to the Per Share Merger Consideration converted into
pounds sterling at the noon buying rate in New York City for cable transfers
in pounds sterling as certified for customs purposes by the Federal Reserve
Bank of New York on the date of the Effective Time (the "Noon Buying Rate")
divided by an amount equal to the average of the closing price for a GEC Share
on the LSE for the twenty trading days preceding the Effective Time and
weighted for trading volumes of GEC Shares on each such day. In the event
another company becomes the successor ultimate parent of Parent, the shares of
such successor will be substituted for GEC Shares on an equitable basis.
(d) Subject to the need to comply with applicable legal requirements, Parent
shall provide to each holder of a vested Employee Option that is to be
canceled at the Effective Time in lieu of the positive cash payment pursuant
to paragraph (b) above, an alternative of converting such vested Employee
Option into Substitute Phantom Units on the same basis described in paragraph
(c) above.
Indemnification of Directors and Officers. In the Merger Agreement, Parent
and the Purchaser have agreed that, from and after the Effective Time, Parent
and the Purchaser shall indemnify and hold harmless each person who is, or has
been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer,
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director or employee of the Company or any of its subsidiaries (collectively,
the "Indemnified Parties" and individually, the "Indemnified Party") against
all losses, liabilities, expenses, claims or damages in connection with any
claim, suit, action, proceeding or investigation based in whole or in part on
the fact that such Indemnified Party is or was a director, officer or employee
of the Company or any of its subsidiaries or as trustees or fiduciaries of any
plan for the benefit of employees and arising out of acts or omissions
occurring prior to and including the Effective Time (including but not limited
to the transactions contemplated by the Merger Agreement) to the fullest
extent permitted by applicable law, for a period of not less than six years
following the Effective Time; provided that in the event any claim or claims
are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
Parent has also agreed to cause the certificate of incorporation and by-laws
of the Surviving Corporation and its subsidiaries to include provisions for
the limitation of liability of directors and indemnification of the
Indemnified Parties to the fullest extent permitted under the DGCL and not to
permit the amendment of such provisions in any manner adverse to the
Indemnified Parties, as the case may be, without the prior written consent of
such persons, for a period of six years from and after the date of the Merger
Agreement.
For six years after the Effective Time, the Surviving Corporation shall
cause to be maintained the current policies of directors' and officers'
liability insurance maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are substantially equivalent) with
respect to matters occurring prior to the Effective Time, to the extent such
policies are available; provided that in no event shall the Surviving
Corporation be required to expend, in order to maintain or procure such
insurance coverage, any amount per annum greater than 150% of the current
annual premiums paid by the Company for such insurance (which the Company
represented and warranted in the Merger Agreement to be not more than
$305,375).
Reasonable Best Efforts. The Merger Agreement provides that, subject to the
terms of the Merger Agreement, each of the parties has agreed to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable on
their part under the Merger Agreement or applicable laws and regulations to
consummate and make effective the transactions contemplated by the Merger
Agreement and the Stockholder Agreement. Without limiting the generality of
the foregoing, Parent, the Purchaser, Principal Stockholders and the Company
agreed to cooperate with one another (i) in the preparation and filing of the
Offer Documents, the Schedule 14D-9, the Proxy Statement and any required
filings in connection with the Required Approvals and any other applicable
laws; (ii) in determining whether action by or in respect of, or filing with,
any Governmental Entity is required, proper or advisable or any actions,
consents, waivers or approvals are required to be obtained from parties to any
contracts, in connection with the transactions contemplated by this Agreement
and the Stockholder Agreement; (iii) in taking all action reasonably
necessary, proper or advisable to secure any necessary consents, approvals or
waivers from third parties, including under existing debt obligations of the
Company and its subsidiaries or to amend the notes, indentures or agreements
relating to such existing debt obligations to the extent required by such
notes, indentures or agreements, or to redeem or repurchase such debt
obligations; (iv) in contesting any pending legal proceeding, whether judicial
or administrative, relating to the Offer or the Merger including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed; (v) executing any additional
instruments necessary to consummate the transactions contemplated hereby; and
(vi) in seeking timely to obtain any such actions, consents and waivers and to
make any such filings. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall take
all such necessary action.
Directors and Officers. The directors of the Purchaser at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation and until his or her successor is duly elected and
qualified. The officers of the Purchaser at the Effective Time, and/or any
individuals designated by Parent, shall be the initial officers of the
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Surviving Corporation, each to hold office in accordance with the certificate
of incorporation and bylaws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
Employee Matters. For a period of at least two years after the Effective
Time, Parent shall cause the Surviving Corporation to provide benefit plans
(other than any stock-based plans, programs or arrangements) that are in the
aggregate substantially as favorable as the Company's existing compensation,
welfare and pension benefit plans, programs and arrangements for the benefit
of current and former employees and directors of the Company (subject to such
modification as may be required by applicable law).
If any employee of the Company or any of its subsidiaries becomes a
participant in any employee benefit or compensation plan, arrangement,
practice or policy of Parent or any affiliate of Parent, such employee shall
be given credit for eligibility and vesting under such plan, arrangement,
practice or policy for all service prior to the Effective Time with the
Company, any of its subsidiaries, affiliates or any predecessors for which the
employee would have been credited in the Company's plans immediately prior to
the Effective Time.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Procedure for Amendment, Extension or Waiver. Subject to the third paragraph
under "Directors and Officers" above, the Merger Agreement may be amended by
action taken by the Company, Parent and the Purchaser at any time before or
after adoption of the Merger by the stockholders of the Company (if required
by applicable law) but, after any such approval, no amendment shall be made
that requires the approval by the Company's stockholders without obtaining
such approval. The Merger Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties thereto.
Subject to the third paragraph under "Directors and Officers" above, the
Company, on the one hand, and Parent and the Purchaser, on the other hand, may
(i) extend the time for the performance of any of the obligation or other acts
of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained in the Merger Agreement or in any
document, certificate or writing delivered pursuant thereto, or (iii) waive
compliance by the other party with any of the agreements or conditions
contained in the Merger Agreement. Any agreement on the part of any party to
the Merger Agreement to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
Assignment. The Merger Agreement provides that the Purchaser may assign its
rights and obligations (including the right to purchase Shares in the Offer),
in whole or in part, to any direct or indirect subsidiary of GEC, p.l.c. (or
the successor to the non-defense business of GEC, p.l.c.) so long as the
transferee agrees in writing to be bound by the Merger Agreement, but no such
assignment shall relieve Parent or the Purchaser of its obligations under the
Merger Agreement if such transferee does not perform such obligations.
The Stockholder Agreement. Pursuant to the Stockholder Agreement, each of
the Principal Stockholders has unconditionally agreed to tender into the
Offer, and not to withdraw therefrom prior to the termination, withdrawal or
expiration date of the Offer (or any extension thereof), all of the Shares
beneficially owned by such Principal Stockholder (the "Principal Stockholders
Shares"). Each Principal Stockholder also agreed pursuant to the Stockholder
Agreement (i) promptly to exercise any "drag-along" or other rights that
permit it to require any other person to sell its Shares upon a sale by such
Principal Stockholder of its Shares ("Drag-Along Rights") to cause the person
subject to such Drag-Along Rights to tender in the Offer, and not withdraw,
any Shares held by such person and (ii) promptly to use its reasonable best
efforts to cause each of its affiliates to exercise any Drag-Along Rights held
by such affiliate to cause the person subject to such Drag-Along Rights to
tender in the Offer, and not withdraw, any Shares held by such person.
Each Principal Stockholder will receive the Offer Price with respect to the
Shares tendered by it in the Offer. On the business day after the date the
Shares are accepted for payment and purchased by the Purchaser pursuant to the
Offer, the Purchaser or Parent, as the case may be, shall make payment by wire
transfer of immediately
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available funds to each Principal Stockholder of the purchase price for such
Principal Stockholder's Shares to an account designated by such Principal
Stockholder.
In addition, each Principal Stockholder has granted to the Purchaser an
irrevocable option (collectively, with respect to all the Principal
Stockholders' Shares, the "Option") to purchase all, but not less than all,
such Principal Stockholder's Shares subject to the following two paragraphs.
The exercise price for each Principal Stockholder's Share shall be the Offer
Price. In the event of any change in the number or kind of such Principal
Stockholder's Shares by reason of stock dividends, stock splits,
recapitalizations, combinations, reclassifications, exchanges or changes of
shares, then the exercise price for such Principal Stockholder's Shares shall
be adjusted appropriately so that the total amount to be paid upon exercise in
whole of the Option with respect to such Principal Stockholder's Shares would
remain unchanged.
The Option may be exercised prior to the termination of the Stockholder
Agreement in the event that the Offer has expired or has otherwise been
terminated and any Principal Stockholder has failed to tender all of its
Shares or has withdrawn any of its Shares tendered in the Offer prior to such
expiration or termination. Parent and the Purchaser agree that, in the event
that the Option is exercised, the Purchaser will agree to purchase from any
holder of Shares with tag-along or similar rights granted by any Principal
Stockholder that wishes to sell its shares of Common Stock to the Purchaser of
all shares of Common Stock of such holder on the same terms of the purchase
pursuant to the exercise of the Option.
The obligations of each Principal Stockholder to deliver, and the Purchaser
to purchase and pay for, such Principal Stockholder's Shares, or any portion
thereof, upon exercise of the Option are subject to the conditions that (i) no
preliminary or permanent injunction or other order prohibiting the delivery of
such Principal Stockholder's Shares issued by a court of competent
jurisdiction shall be in effect and (ii) any waiting period applicable to the
Merger under the HSR Act shall have terminated or expired and the other
Required Approvals, shall have been obtained or satisfied, as the case may be,
on terms satisfactory to Parent in its reasonable discretion; provided that
this condition may not be asserted by any Principal Stockholder with respect
to any Required Approval if the potential penalty for any failure to receive
such Required Approval will be borne only by Parent or the Purchaser. In the
event that any of the aforesaid conditions have not been satisfied at or prior
to the scheduled time of closing in respect of the Option, the closing shall
be delayed for such period as shall be necessary in order for such conditions
to be satisfied, but in no event shall the closing be delayed by more than 60
days. If the closing does not occur within such period, the Option and the
exercise of the Option shall terminate and be void. Termination of the
Stockholder Agreement after a notice has been properly delivered thereunder
will not terminate or otherwise affect the parties' obligations thereunder as
to the exercise of the Option pursuant to such notice.
The obligation of the Purchaser to purchase and pay for such Principal
Stockholder's Shares, or any portion thereof, upon exercise of the Option is
also subject to the fulfillment, or waiver by the Purchaser, of the conditions
(which may be waived by the Purchaser in its sole discretion) that (i) such
Principal Stockholder's representations and warranties contained in this
Agreement, and the Company's representations and warranties contained in the
Merger Agreement shall be true and correct on and as of the date of the
closing, as though such representations and warranties were made on such date,
(ii) such Principal Stockholder shall have performed in all material respects
all of its covenants and agreements under the Stockholder Agreement required
to be performed at or prior to the closing or the Company shall have performed
in all material respects all of its covenants and agreements under the Merger
Agreement required to be performed at or prior to the closing hereunder, and
(iii) such Principal Stockholder shall have delivered to Parent and the
Purchaser on the date of the closing a certificate to such effect, and the
Company shall have delivered to Parent and the Purchaser on the date of the
closing a certificate to such effect executed by the Chief Executive Officer
of the Company.
Except pursuant to the Stockholder Agreement, no Principal Stockholder
shall, without the prior written consent of Parent, directly or indirectly (i)
during the term of the Stockholder Agreement grant any proxies or enter into
any voting trust, power of attorney or other agreement or arrangement with
respect to the voting of such Principal Stockholder's Shares, (ii) acquire,
sell, assign, transfer, encumber or otherwise dispose of, or enter
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into any contract, option or other arrangement or understanding with respect
to the direct or indirect acquisition or sale, assignment, transfer,
encumbrance or other disposition of any of such Principal Stockholder's Shares
during the term of the Stockholder Agreement or (iii) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby. Each Principal
Stockholder agrees not to seek or solicit any such acquisition or sale,
assignment, transfer, encumbrance or other disposition or any such contract,
option or other arrangement or assignment or understanding and agrees to
notify Parent promptly and to provide all details requested by Parent if such
Principal Stockholder shall be approached or solicited, directly or
indirectly, by any person with respect to any of the foregoing. Each Principal
Stockholder agrees to use its reasonable best endeavours to cause the Company
to perform its obligations under the Merger Agreement. The provisions set
forth in this paragraph are referred to herein as the "Stockholder Lock-up
Provisions".
Under the Stockholder Agreement, each Principal Stockholder agreed, to the
extent such Principal Stockholder continues to own, or have legal rights in
respect of, its Shares, that (i) at any meeting of stockholders of the Company
called to vote upon the Merger, the Merger Agreement or the other transactions
contemplated by the Merger Agreement or upon which a vote, consent or other
approval with respect to the Merger, the Merger Agreement or the other
transactions contemplated by the Merger Agreement is sought, such Principal
Stockholder shall vote (or cause to be voted) or shall consent, execute a
consent or cause to be executed a consent in respect of such Principal
Stockholder's Shares in favor of the Merger, the execution and delivery 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; and (ii) at
any meeting of stockholders of the Company or at any adjournment thereof or in
any other circumstances upon which their vote, consent or other approval is
sought, such Principal Stockholder shall vote (or cause to be voted) such
Principal Stockholder's Shares against (x) any Acquisition Proposal or any
action which is a component of any Acquisition Proposal or would be a
component of an Acquisition Proposal if it were contained in a proposal, (y)
any merger agreement or merger (other than the Merger Agreement and the
Merger), reorganization, recapitalization, dissolution, liquidation or winding
up of or by the Company or (z) any amendment of the Company's Certificate of
Incorporation or By-laws which amendment would in any manner partially or
wholly prevent or materially impede, interfere with or delay the Merger, the
Merger Agreement or any of the other transactions contemplated by the Merger
Agreement (each of the foregoing in clause (x), (y) or (z) above, a "Competing
Transaction").
Under the Stockholder Agreement, each Principal Stockholder has irrevocably
granted to, and appointed, Patricia Hoffman and Thomas Edeus and any other
individual who is designated by Parent, until the termination of the
Stockholder Agreement, an irrevocable proxy, coupled with an interest, and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Principal Stockholder, with respect to all such Principal
Stockholder's Shares, to vote such Principal Stockholder's Shares, or grant or
execute a consent or approval, in the complete discretion of Parent or the
Purchaser, as the case may be, at any meeting of stockholders of the Company
or at any adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought (i) in favor of the Merger and any
transactions contemplated by, or necessary or desirable to consummate the
transactions contemplated by, the Merger Agreement and the adoption of the
Merger Agreement and (ii) against any Competing Transaction. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 212(e) of the DGCL.
Confidentiality Agreement. Pursuant to a Confidentiality Agreement dated as
of February 4, 1999 (the "Confidentiality Agreement"), GEC, p.l.c. and the
Company agreed to keep confidential certain information exchanged between such
parties. The Confidentiality Agreement also contains customary non-
solicitation and standstill provisions. The Merger Agreement provides that the
provisions of the Confidentiality Agreement shall remain binding and in full
force and effect and that the parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement until the Purchaser purchases a majority
of the outstanding Shares pursuant to the Offer.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Sections 262 of
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the DGCL to dissent and demand appraisal of, and to receive payment in cash of
the fair value of, their Shares. If the statutory procedures were complied
with, such rights could lead to a judicial determination of the fair value
required to be paid in cash to such dissenting holders for their Shares. Any
such judicial determination of the fair value of Shares could be based upon
considerations other than or in addition to the Offer Price or the market
value of the Shares, including asset values and the investment of the Shares.
The fair value so determined could be more or less than the Offer Price or the
Per Share Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
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 Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act 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 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Merger and the consideration
offered to minority shareholders be filed with the SEC and disclosed to
minority shareholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such
changes could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or GEC, p.l.c. have any current plans or proposals that
would relate to, or result in, any extraordinary corporate transaction
involving the Company or any of its subsidiaries, such as a merger,
reorganization or liquidation involving the Company, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, 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, the Company may not, without
the prior written consent of Parent, effect any reorganization or
recapitalization or split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether
in cash, stock, or property or any combination thereof) in respect of its
capital stock or redeem, repurchase or otherwise acquire any of its securities
or any securities of its subsidiaries.
If, on or after March 1, 1999, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the exercise of stock options outstanding at March 1, 1999 in accordance with
the terms thereof (as in effect on March 1, 1999)), shares of any other class
of capital stock, other voting securities or any securities convertible into,
or rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, then, subject to the provisions of Section 14,
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the Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after March 1, 1999, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares or any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return Shares promptly
after termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer, and may postpone the acceptance for payment or, subject
to the restriction referred to above, payment for any Shares tendered pursuant
to the Offer, and may terminate the Offer and not accept for payment any
Shares, if (i) upon expiration of the Offer as determined in accordance with
the Merger Agreement, the Minimum Condition shall not have been satisfied,
(ii) upon expiration of the Offer as determined in accordance with the Merger
Agreement, the HSR Act Condition shall not have been satisfied, (iii) Parent,
the Purchaser and the Company shall not have obtained, on terms satisfactory
to Parent in its reasonable discretion, from (A) the German Federal Cartel
Office, during the one month time limit referred to in Section 40 paragraph 1
of the Act against Restraints on Competition, confirmation that the conditions
for a prohibition in Section 36 paragraph 1 of the Act against Restraints on
Competition are not fulfilled, or, if no such confirmation is received, the
one month time limit having expired without the parties having been notified
by the Federal Cartel Office that it has entered into the examination of the
proposed concentration, (B) the consents, authorizations and approvals
required by the Competition Act (Canada); (C) confirmation from the Italian
Autorita Garante della Concorrenza e del Mercato that it does not intend to
initiate a second stage investigation of the transactions contemplated by the
Merger Agreement (including the Merger) or any matters arising therefrom under
Article 16 of Law no.287 of October 10, 1990; and (D) confirmation from the
U.K. Office of Fair Trading that it is not the intention of the U.K. Secretary
of State for Trade and Industry to refer the transactions contemplated by the
Merger Agreement or any matters arising therefrom to the U.K. Monopoly and
Mergers Commission, (iv) any other authorizations, consents, orders or
approvals of, or declarations or filing with, or expirations of waiting
periods imposed by, any governmental or regulatory (including any stock
exchange) authority, agency, court, commission, body or other governmental
entity (including the U.K. Panel on Takeovers and Mergers) ("Governmental
Entity"), the failure of which to obtain would reasonably be expected to have
a material adverse effect on the business, properties, assets, conditions
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), a material
adverse effect on the business, properties, assets, conditions (financial or
otherwise) or results of operations of Parent and its subsidiaries, taken as a
whole, ("Parent Material Adverse Effect") or a material adverse effect on the
ability of the Company, Parent or the Purchaser to perform its obligations
under the Merger Agreement, shall not have been obtained or satisfied on terms
satisfactory to Parent
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in its reasonable discretion or (v) at any time on or after March 1, 1999 and
prior to the acceptance for payment of Shares, any of the following conditions
occurs or has occurred:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity, that has a reasonable likelihood of success, (A)
challenging the acquisition by Parent or the Purchaser of any Shares,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or seeking to obtain from the Company, Parent or any of their
respective subsidiaries or affiliates any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (B) seeking
to prohibit or limit the ownership or operation by the Company, Parent or
any of their respective subsidiaries or affiliates of any material portion
of the business or assets of the Company, Parent or any of their respective
subsidiaries or affiliates, or to compel the Company, Parent or any of
their respective subsidiaries or affiliates to dispose of or hold separate
any material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries or affiliates which are material to
Parent and its subsidiaries, taken as a whole, or the Company and its
subsidiaries, taken as a whole, as the case may be, as a result of the
Offer, the Merger or any of the other transactions contemplated by the
Agreement or (C) which otherwise is reasonably likely to have a Material
Adverse Effect or a material adverse effect on the ability of the Company
to perform its obligations hereunder; or
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to (A)
Parent, the Company or any of their respective subsidiaries or affiliates
or (B) the Offer or the Merger by any Governmental Entity that has or is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in paragraph (a) above; or
(c) there shall have occurred (A) any general suspension of trading in,
or limitation on prices for, securities on any securities exchange or in
the over-the-counter market in the United States or the United Kingdom for
a period of five or more business days, (B) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or United Kingdom (whether or not mandatory) or (C) any material and
mandatory limitation, by any United States or United Kingdom governmental
authority or agency on the extension of credit by banks or other financial
institutions generally; or
(d) since March 1, 1999, there shall have occurred any event, change,
effect or development that, individually or in the aggregate, has had or
would reasonably likely have a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its obligations
hereunder; or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement
(including the Company Lock-up Provisions), or any Principal Stockholder
shall have breached or failed to perform in any material respect any of its
covenants or agreements under the Stockholder Agreement (including the
Stockholder Lock-up Provisions), which shall not have been cured prior to
10 business days prior to the date the Offer expires; provided, however,
the Company will have no right to cure a breach of the Company Lock-up
Provisions and no Principal Stockholder shall have any right to cure a
breach of the Stockholder Lock-up Provisions; or
(f) any of the representations and warranties of the Company set forth in
the Merger Agreement or of any Principal Stockholder set forth in the
Stockholder Agreement that are qualified as to materiality shall not be
true and correct or any of the representations and warranties of the
Company set forth in the Merger Agreement or of any Principal Stockholder
set forth in the Stockholder Agreement that are not so qualified shall not
be true and correct in any material respect, in each case as if such
representations and warranties were made at the time of such determination
(or, in the case of any representation and warranty made as of a specified
date, as of such date) and which inaccuracy shall not have been cured prior
to the earlier of 10 business days following the notice of such inaccuracy
and two business days prior to the date the Offer expires; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
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which, in the sole judgment of Parent or the Purchaser in any such case, and
regardless of the circumstances (including any action or omission by the
Purchaser) giving rise to any such condition makes it inadvisable to proceed
with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such condition or may be waived, subject to
the Merger Agreement that the Minimum Condition may not be waived without the
written consent of the Company, by the Purchaser in whole or in part at any
time or from time to time in their sole discretion. The failure by Parent or
the Purchaser 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 or circumstances shall not be deemed a waiver with respect
to any other facts or circumstances, and each such right shall be deemed an
ongoing right that may be asserted at any time or from time to time.
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 SEC and other publicly
available information concerning the Company, none of the Purchaser, Parent or
GEC, p.l.c. is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's
subsidiaries) as contemplated herein or of any approval or other action by any
governmental entity that would be required for the acquisition or ownership of
Shares by the Purchaser as contemplated herein. Should any such approval or
other action be required, the Purchaser, Parent and GEC, p.l.c. 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, subject to the terms and
conditions of the Merger Agreement, decline to accept for payment or pay for
any Shares tendered. See Section 14 for 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 circumstances. 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 limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) for a period of three years from the time such
interested stockholders became the holders of 15% or more of such Shares
unless, among other things, the corporation's board of directors has given its
prior approval to either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder". The Board
has approved the Merger Agreement and the Stockholder
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Agreement and the Purchaser's acquisition of Shares pursuant to the Offer and,
therefore, Section 203 of the DGCL is inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor
any action taken in connection with the Offer or the Merger is intended as a
waiver of that right. In the event that any state takeover statute is found
applicable to the Offer or the Merger, the Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Merger. In such case, the
Purchaser might not be obligated to accept for payment or pay for any Shares
tendered. 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 following the
expiration of a 15-calendar day waiting period following the filing by GEC,
p.l.c. of a Notification and Report Form with respect to the Offer, unless
GEC, p.l.c. 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. GEC, p.l.c. is in the process of making such
filing. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from GEC,
p.l.c. 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 GEC, p.l.c. 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 GEC, p.l.c. 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 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 GEC, p.l.c. or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon a preliminary examination of
information provided by the Company relating to the businesses in which GEC,
p.l.c. and the Company are engaged, Parent and the Purchaser believe that the
acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, 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.
Other Foreign Laws.
Canadian Competition Law. Under the provisions of the Competition Act
(Canada) applicable to the Offer, the acquisition of the Shares under the
Offer may be consummated following either: (i) the issuance by the Director of
an advance ruling certificate in respect of the acquisition of the Shares
under the Offer; or (ii) the expiration of a seven calendar day waiting period
following the filing by GEC, p.l.c. of a short-form pre-merger notification
filing pursuant to Part IX of the Competition Act (Canada), with respect to
the Offer, unless GEC, p.l.c. is required by the Director to file a long-form
pre-merger notification filing. GEC, p.l.c. is in the process of making its
filing of a short-form pre-merger notification filing and its request for an
advance ruling certificate. If, within the initial seven day waiting period,
the Director requests a long-form filing in respect of the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the 21st calendar day
33
<PAGE>
after the requested long-form filing had been receipted by the Canadian
Competition Bureau. Thereafter, such waiting period may be extended only by
order of the Canadian Competition Tribunal. In addition, if the Director
raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such discussions and negotiations continue. Expiration or termination of
the applicable waiting period under the Competition Act (Canada) is a
condition to the Purchaser's obligation to accept for payment and pay for the
Shares tendered pursuant to the Offer.
The Director and the Canadian Competition Bureau frequently assess whether
transactions, such as the Purchaser's proposed acquisition of the Company,
will or will be likely to prevent or lessen competition substantially in any
relevant market. At any time before and within three years after the
Purchaser's acquisition of the Shares pursuant to the Offer, the Director may
file an application with the Canadian Competition Tribunal to, among other
things, 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 the substantial assets of the Company or
its subsidiaries or GEC, p.l.c. or its subsidiaries. If the Director issues an
advance ruling certificate in respect of the acquisition of the Shares under
the Offer, the Director will have no further ability to challenge the Offer.
Private parties may not bring legal action under the Competition Act (Canada)
with respect to the proposed acquisition of Shares by the Purchaser. Based
upon a preliminary examination of information provided by the Company relating
to the businesses in which GEC, p.l.c. and the Company are engaged, Parent and
the Purchaser believe that the acquisition of Shares by the Purchaser will not
prevent or lessen competition substantially in any relevant market.
Nevertheless, there can be no assurance that a challenge to the Offer by the
Director will not be made or, if such a challenge is made, of the result
thereof.
UK Competition Law. Under the UK Fair Trading Act 1973, the OFT has
jurisdiction to investigate the proposed acquisition of the Company. The OFT
will then advise the Secretary of State whether to refer the proposed
acquisition to the MMC. There is an informal timetable of up to forty five
working days from the date of notification for the Secretary of State to make
his decision. If the proposed acquisition is referred to the MMC, the MMC has
a maximum of six months to investigate the acquisition and report to the
Secretary of State. If the MMC determines that the acquisition is likely to
operate against the public interest, the Secretary of State may prohibit the
acquisition or require undertakings and/or divestments from GEC, p.l.c. It is
a condition of the Offer that confirmation is received from the OFT that it is
not the intention of the Secretary of State to refer the proposed acquisition
to the MMC, but it is possible to consummate the Offer prior to receiving such
confirmation, if the Purchaser should wish to do so.
German Competition Law. The proposed acquisition of the Company must be
notified to the FCO pursuant to section 39 of the German Act. The Offer may
not be consummated until confirmation is received from the FCO that the
conditions for a prohibition in section 36 paragraph 1 of the German Act are
not fulfilled or, if no such confirmation is received, that the one month time
limit (from the date of notification) as laid down in section 40 paragraph 1
of the German Act has expired without the parties having been notified by the
FCO that it has entered into a detailed examination of the proposed
acquisition of the Company (which may take a maximum of a further three
months). The Offer is conditional upon receipt of such confirmation or the
expiration of the time period without such notification by the FCO. If the
conditions for a prohibition in section 36 paragraph 1 of the German Act are
fulfilled, the FCO must prohibit the consummation of the Offer.
Italian Competition Law. Under Law no.287 of October 10, 1990, the proposed
acquisition must also be notified to the Italian Authority. The offer is
conditional upon receipt of confirmation that the Italian Authority does not
intend to initiate a second stage investigation of the transaction
contemplated by the Merger Agreement or any matters arising therefrom under
Article 16 of Law no.287 of October 10, 1990. The Italian Authority has 30
days from the date of notification (with the ability to suspend such 30 day
term if the information supplied with the notification is incomplete) in which
to decide whether to institute such an investigation (which may take a maximum
of a further 75 days, in the case of an opening of a second stage
investigation), but there is no prohibition on consummating the Offer prior to
receiving clearance, if the Purchaser should wish to do so. If the Italian
Authority concludes that the acquisition will create or strengthen a dominant
position as a result of which
34
<PAGE>
competition is eliminated or substantially reduced in the Italian market, the
Italian Authority may prohibit consummation of the Offer, permit consummation
subject to conditions or, if the Offer has already been consummated, order
divestment.
16. Fees and Expenses
Credit Suisse First Boston is acting as Dealer Manager in connection with
the Purchaser's acquisition of the Company and is acting as financial advisor
to GEC, p.l.c. in connection with the Offer. Credit Suisse First Boston will
receive reasonable and customary compensation for its services as financial
advisor and Dealer Manager in connection with the Offer. GEC, p.l.c. has also
agreed to reimburse Credit Suisse First Boston for its reasonable out-of-
pocket expenses related to such services, including the reasonable fees and
expenses of its counsel, and to indemnify Credit Suisse First Boston and
certain related persons against certain liabilities and expenses, including
certain liabilities and expenses under the Federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. 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.
None of the Purchaser, Parent or GEC, p.l.c. will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and 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. To the extent the Purchaser, Parent or GEC, p.l.c. becomes
aware of any state law that would limit the class of offerees in the Offer,
the Purchaser reserves the right to 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, Parent or GEC, p.l.c. not contained
in this Offer to Purchase 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, Parent and GEC, p.l.c. have filed with the SEC 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 such 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 SEC).
GEC Acquisition Corp.
March 5, 1999
35
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
GEC, P.L.C., PARENT AND THE PURCHASER
Directors and Executive Officers of The General Electric Company, p.l.c.
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of The General Electric Company, p.l.c. All
the directors and officers listed below are citizens of the United Kingdom,
except for Mr. Seitz, who is a citizen of the United States. Directors are
indicated by an asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------- ------------------------------------------
<S> <C>
Sir Roger Hurn* Chairman of The General Electric Company, p.l.c. (1998-
The General Electric present); Chairman of Smithe Industries plc (1994-
Company, p.l.c. 1998).
One Bruton Street
London, WIX 8AQ
(England)
The Rt Hon Lord Simpson* Executive Director and Managing Director of The General
The General Electric Electric Company, p.l.c. (1996-present); Chief
Company, p.l.c. Executive of Lucas Industries plc (1994-1996).
One Bruton Street
London, WIX 8AQ
(England)
Ronald Edward Artus* Non-executive Director of The Securities and Futures
The Securities and Authority Limited (1994-present).
Futures Authority
Limited
Cottons Centre
Cottons Lane
London, SE1 2QB
(England)
William Martin Castell* Chief Executive of Nycomed Amersham plc (formerly
Nycomed Amersham plc Amersham International plc) (1994-present).
Little Chalfont
Buckinghamshire, HP7 9NA
(England)
The Rt Hon The Baroness Executive Director of John Swire & Sons Ltd. (1996-
Dunn* present); Senior Member of The Hong Kong Executive
John Swire & Sons Ltd. Council (1994-1995).
59 Buckingham Gate
London, SW1E 6AJ
(England)
Peter Oliver Gershon* Executive Director of The General Electric Company,
Marconi Electronic p.l.c. (1994-present); Managing Director of Marconi
Systems Limited Electronic Systems Limited (formerly GEC-Marconi
The Grove, Warren Lane Limited) (1994-present).
Stanmore, Middlesex HA7
4LY (England)
Sir Christopher Harding* Chairman of United Utilities PLC (1997-present);
United Utilities PLC Chairman of Legal & General Group Plc (1994-present).
55 Grosvenor Street
London, WIX 9DA
(England)
Sir Charles Masefield* Executive Director and Vice Chairman of The General
The General Electric Electric Company, p.l.c. (1998-present); Head of
Company, p.l.c. Defence Export Services at the U.K. Ministry of Defence
One Bruton Street (1994-1998).
London W1X 8AQ (England)
Michael Lester* Executive Director of The General Electric Company,
The General Electric p.l.c. (1994-present); Vice Chairman of The General
Company, p.l.c. Electric Company, p.l.c. (1994-present).
One Bruton Street
London, WIX 8AQ
(England)
John Charles Mayo* Finance Director of The General Electric Company,
The General Electric p.l.c. (1997-present); Finance Director of Zeneca Group
Company, p.l.c. PLC (1994-1997).
One Bruton Street
London, WIX 8AQ
(England)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------- ------------------------------------------
<S> <C>
Robert Ian Meakin* Executive Director of The General Electric Company,
The General Electric p.l.c. (1998-present); Personnel Director of The
Company, p.l.c. General Electric Company, p.l.c. (1996-present);
One Bruton Street Personnel Director of British Aerospace plc (1994-
London, WIX 8AQ 1996).
(England)
Dr. Alan Walter Rudge* Chairman of WS Atkins plc (1997-present); Deputy Chief
WS Atkins plc Executive of British Telecommunications plc (1996-
25 Old Broad Street 1997); Managing Director, Development and Procurement,
London, EC2N 1HN of British Telecommunications plc (1994-1995).
(England)
The Hon Raymond G. H. Vice-Chairman of Lehman Brothers International (1995-
Seitz* present); American Ambassador to the Court of St.
Lehman Brothers James's (1994).
International
One Broadgate
London, EC2M 7HA
(England)
Nigel John Stapleton* Co-Chairman of Reed Elsevier plc (1996-present);
Reed Elsevier plc Chairman of Reed International PLC (1997-present);
25 Victoria Street Deputy Chairman of Reed International PLC (1994-1997);
London, SW1H OEX Chief Financial Officer of Reed Elsevier plc (1994-
(England) 1996).
Norman Charles Porter Secretary of The General Electric Company, p.l.c.
The General Electric (1994-present).
Company, p.l.c.
One Bruton Street
London, WIX 8AQ
(England)
</TABLE>
<PAGE>
Directors and Executive Officers of GEC Incorporated
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Incorporated. All the directors and
officers listed below are citizens of the United States, except for Mr.
Lester, who is a citizen of the United Kingdom. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
------------------------- ------------------------------------------
<C> <S>
Executive Director of The General Electric
Michael Lester* Company, p.l.c.
The General Electric Company, p.l.c. (1994-present); Vice Chairman of The General
One Bruton Street Electric Company, p.l.c. (1994-present).
London, WIX 8AQ (England)
William B. Korb* President and CEO of Gilbarco Inc. (1994-present).
Gilbarco Inc
7300 W. Friendly Avenue
P.O. Box 22087
Greensboro, NC 27420
Cary J. Nolan* President and CEO of Picker International,
Picker International, Inc. Inc. (1994-present).
595 Miner Road
Highland Hts., OH 44143
Thomas R. Edeus Treasurer of GEC Incorporated (1997-present);
GEC Incorporated Videojet Systems International, Inc. (1997-
c/o Videojet Systems International, Inc. present) and A.B. Dick Company (1994-1997).
1500 Mittel Boulevard
Wood Dale, IL 60191-1073
Patricia A. Hoffman Secretary of GEC Incorporated (1997-present);
GEC Incorporated Attorney for Videojet Systems International,
c/o Videojet Systems International, Inc. Inc. (1997-present) and A. B. Dick Company
1500 Mittel Boulevard (1994-1997).
Wood Dale, IL 60191-1073
</TABLE>
Directors and Executive Officers of GEC Acquisition Corp.
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Acquisition Corp. All the directors
and officers listed below are citizens of the United States, except for Mr.
Mayo, who is a citizen of the United Kingdom. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
------------------------- ------------------------------------------
<C> <S>
John Charles Mayo* President and Treasurer of GEC Acquisition
The General Electric Company, p.l.c. Corp. (1999-present); Finance Director of The
One Bruton Street General Electric Company, p.l.c. (1997-
London, WIX 8AQ (England) present); Finance Director of Zeneca Group
PLC(7) (1994-1997).
William B. Korb* Vice President of GEC Acquisition Corp. (1999-
Gilbarco Inc. present); President and CEO of Gilbarco Inc.
7300 W. Friendly Avenue (1994-present).
P.O. Box 22087
Greensboro, NC 27420
Patricia A. Hoffman* Vice President and Secretary of GEC
GEC Incorporated Acquisition Corp. (1999-present); Secretary of
c/o Videojet Systems International, Inc. GEC Incorporated (1997-present); Attorney for
1500 Mittel Boulevard Videojet Systems International, Inc. (1997-
Wood Dale, IL 60191-1073 present) and A. B. Dick Company (1994-1997).
</TABLE>
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or 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:
ChaseMellon Shareholder Services, L.L.C.
By Facsimile Confirm by Telephone:
Transmission:
(For Eligible
Institutions Only)
(201) 296-4293 (201) 296-4860
By Mail: By Overnight Courier: By Hand:
Reorganization Reorganization Reorganization
Department Department Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ Mail Stop--Reorg 13th Floor
07606 Ridgefield Park, NJ New York, NY 10271
07660
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 the Dealer Manager at their
respective addresses and telephone numbers 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.
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:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll-Free (800) 646-4543
<PAGE>
EXHIBIT (2)(b)
<PAGE>
CONFORMED COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
By and Among
GEC Incorporated
George Acquisition Corp.
and
Reltec Corporation
Dated as of March 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
The Offer
---------
SECTION 1.1. The Offer................................... 2
SECTION 1.2. Company Action.............................. 4
SECTION 1.3. Boards of Directors and Committees;......... 6
Section 14(f)
ARTICLE II
The Merger
----------
SECTION 2.1. The Merger.................................. 8
SECTION 2.2. Effective Time; Closing..................... 8
SECTION 2.3. Effects of the Merger; Subsequent........... 9
Actions
SECTION 2.4. Certificate of Incorporation and............ 9
By-Laws
SECTION 2.5. Directors................................... 10
SECTION 2.6. Officers.................................... 10
SECTION 2.7. Conversion of Shares........................ 10
SECTION 2.8. Employee Stock Options...................... 10
SECTION 2.9. Stockholders' Meeting....................... 12
ARTICLE III
Dissenting Shares; Exchange of Shares
-------------------------------------
SECTION 3.1. Dissenting Shares........................... 13
SECTION 3.2. Exchange of Certificates.................... 14
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
SECTION 4.1. Organization and Qualification;............. 16
Subsidiaries
SECTION 4.2. Capitalization of the Company and........... 17
its Subsidiaries
SECTION 4.3. Authority Relative to this Agreement........ 18
SECTION 4.4. Non-Contravention; Required Filings......... 20
and Consents
SECTION 4.5. Reports..................................... 21
<PAGE>
SECTION 4.6. Absence of Certain Changes;................. 23
Derivatives
SECTION 4.7. Schedule 14D-9; Offer Documents;............ 24
Proxy Statement
SECTION 4.8. Finder's Fee................................ 25
SECTION 4.9. Absence of Litigation....................... 25
SECTION 4.10. Taxes....................................... 26
SECTION 4.11. Employee Benefits........................... 28
SECTION 4.12. Compliance; Permits......................... 31
SECTION 4.13. Environmental Matters....................... 32
SECTION 4.14. Intellectual Property....................... 35
SECTION 4.15. Significant Agreements...................... 39
SECTION 4.16. Insurance................................... 40
SECTION 4.17. Labor Matters............................... 40
SECTION 4.18. Year 2000................................... 40
ARTICLE V
Representations and Warranties of Parent.and
--------------------------------------------
Acquisition Sub
---------------
SECTION 5.1. Organization................................ 41
SECTION 5.2. Authority Relative to this Agreement........ 41
SECTION 5.3. Non-Contravention; Required Filings......... 42
and Consents
SECTION 5.4. Offer Documents; Schedule 14D-9;............ 43
Proxy Statement
SECTION 5.5. No Prior Activities......................... 44
SECTION 5.6. Finder's Fee................................ 44
SECTION 5.7. Financing................................... 44
SECTION 5.8. Parent Not an Interested Stockholder........ 44
ARTICLE VI
Covenants
---------
SECTION 6.1. Conduct of Business of the Company.......... 45
SECTION 6.2. Proxy Statements............................ 48
SECTION 6.3. Access to Information; Confidentiality...... 48
Agreement
SECTION 6.4. Reasonable Best Efforts..................... 49
SECTION 6.5. Public Announcements........................ 50
SECTION 6.6. Indemnification; Insurance.................. 50
SECTION 6.7. Notification of Certain Matters............. 51
SECTION 6.8. Employee Plans.............................. 52
SECTION 6.9. No Solicitation............................. 53
SECTION 6.10. Agreements With Sellers (or their........... 54
affiliates)
ii
<PAGE>
SECTION 6.11. Employee Matters.......................... 55
SECTION 6.12. Acquisition Sub........................... 55
SECTION 6.13. FIRPTA Affidavit.......................... 55
SECTION 6.14. Third Party Standstill Agreements;........ 55
Tortious Interference
ARTICLE VII
Conditions to Consummation of the Merger
----------------------------------------
SECTION 7.1. Conditions to the Company's, Parent's....... 56
and Acquisition Sub's Obligation
to Effect the Merger
ARTICLE VIII
Termination; Amendment; Waiver
------------------------------
SECTION 8.1. Termination................................. 57
SECTION 8.2. Effect of Termination....................... 58
SECTION 8.3. Fees and Expenses........................... 58
SECTION 8.4. Amendment................................... 58
SECTION 8.5. Extension; Waiver........................... 59
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1. Non-Survival of Representations and......... 59
Warranties
SECTION 9.2. Entire Agreement; Assignment................ 60
SECTION 9.3. Notices..................................... 60
SECTION 9.4. Governing Law............................... 62
SECTION 9.5. Parties in Interest......................... 62
SECTION 9.6. Remedies.................................... 63
SECTION 9.7. Severability................................ 63
SECTION 9.8. Interpretation.............................. 63
SECTION 9.9. Certain Definitions......................... 64
SECTION 9.10. Counterparts................................ 65
Annex A - Offer Conditions
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of March 1,
1999, is by and among RELTEC CORPORATION, a Delaware
corporation (the "Company"), GEC Incorporated, a Delaware
-------
corporation ("Parent"), and GEORGE ACQUISITION CORP., a
------
Delaware corporation ("Acquisition Sub").
---------------
WHEREAS, the Boards of Directors of Parent, Acquisition Sub, and the
Company have each approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that Acquisition Sub
shall make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to acquire all outstanding shares of common
-----
stock, par value $0.01 per share, of the Company (the "Shares"), for a cash
------
amount of $29.50 per Share net to the selling stockholders (such amount, or any
greater amount per Share paid pursuant to the Offer, being hereinafter referred
to as the "Per Share Amount") in accordance with the terms and subject to the
----------------
conditions provided for herein;
WHEREAS, simultaneously with the execution and delivery hereof,
Parent, Acquisition Sub, KKR Associates, L.P., KKR Partners II, L.P. and CMT
Associates, L.P. (collectively, the "Sellers"), are entering into a stockholder
-------
agreement and proxy (the "Stockholder Agreement") pursuant to which the Sellers
---------------------
have agreed, among other things, to tender all of the Shares held by the Sellers
(the "KKR Shares") to Acquisition Sub pursuant to the Offer and grant to
----------
Acquisition Sub an option to purchase the KKR Shares (the "Option");
------
WHEREAS, the Board of Directors of the Company (the "Board") has (i)
-----
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer, the Merger and the transactions
contemplated by the Stockholder Agreement and (iii) recommended in satisfaction
of all applicable requirements for Board action under Section 251 of the General
Corporation Law of the State of Delaware ("Delaware Law") in order for the
------------
Merger to be validly approved that the stockholders of the Company accept the
Offer, tender their Shares thereunder and, to the extent required by applicable
law, approve and adopt this Agreement and the Merger; and
<PAGE>
WHEREAS, the Boards of Directors of Parent and Acquisition Sub have
each approved the merger (the "Merger") of Acquisition Sub with and into the
------
Company following the Offer in accordance with the Delaware Law upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Acquisition Sub hereby agree as follows.
ARTICLE I
The Offer
---------
SECTION 1.1. The Offer.
---------
(a) Subject to the conditions of this Agreement including those set
forth in Annex A hereto, as promptly as practicable, but in no event later
than the fifth business day following the initial public announcement of
the terms of this Agreement (which shall occur as promptly as practicable
but in no event later than 24 hours after the execution hereof),
Acquisition Sub shall commence (within the meaning of Rule 14d-2(a) of the
Exchange Act) the Offer to purchase all of the outstanding Shares at the
Per Share Amount net to the seller in cash. The obligation of Acquisition
Sub to accept for payment and pay for Shares tendered pursuant to the Offer
shall be subject to the condition that a number of Shares representing not
less than a majority of the Company's outstanding Shares (on a fully
diluted basis excluding any Employee Options (as defined in Section 2.8)
which are not exercisable as of the date of such calculation) shall have
been validly tendered and not withdrawn prior to the expiration date of the
Offer (the "Minimum Condition"), and the obligation of Acquisition Sub to
-----------------
commence the Offer and accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the other conditions set forth in
Annex A hereto. The initial expiration date of the Offer shall be the 20th
business day following the commencement of the Offer (determined using Rule
14-1(c)(6) under the Exchange Act). If, on any scheduled expiration date of
the Offer, the conditions set forth in clauses (ii), (iii) or (iv) of Annex
A have not been satisfied or waived, at the written request of the Company,
Acquisition Sub shall, from time to time, extend the expiration date of the
Offer for the period set forth in such written requests. It is agreed that
the
2
<PAGE>
Minimum Condition and the other conditions set forth in Annex A hereto
are for the sole benefit of Acquisition Sub and may be asserted by
Acquisition Sub regardless of the circumstances giving rise to any such
condition. Acquisition Sub expressly reserves the right in its sole
discretion to waive, in whole or in part at any time or from time to time,
any such condition, to increase the price per Share payable in the Offer or
to make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, no
--------
change may be made that decreases the price per Share payable in the Offer,
changes the form of consideration payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, imposes conditions to the
Offer in addition to those set forth in Annex A hereto, changes the
expiration date of the Offer or otherwise amends, adds or waives any term
or condition of the Offer in any manner adverse to the holders of Shares,
and provided, further, that Acquisition Sub shall not waive the Minimum
-------- -------
Condition without the prior written consent of the Company.
Notwithstanding the foregoing, Acquisition Sub may, without the consent of
the Company, (i) extend the Offer, if at the scheduled expiration date of
the Offer any of the conditions to Acquisition Sub's obligation to purchase
Shares are not satisfied, until such time as such conditions are satisfied
or waived, (ii) extend the Offer for a period of not more than 5 business
days beyond the expiration date that would otherwise be permitted under
clause (i) of this sentence, if on the date of such extension (x) less than
90% of the Shares on a fully diluted basis have been validly tendered and
not properly withdrawn pursuant to the Offer and (y) Acquisition Sub has
permanently waived all of the conditions to the Offer set forth in Annex A
(other than the conditions set forth in clause (v)(b) of Annex A) and (iii)
extend the Offer for any period required by any regulation, rule,
interpretation or position of the Securities and Exchange Commission
("SEC") or the staff thereof applicable to the Offer. On the terms and
---
subject to the conditions of the Offer and this Agreement, Acquisition Sub
shall, and Parent shall cause Acquisition Sub to, pay for all Shares
validly tendered and not withdrawn pursuant to the Offer that Acquisition
Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer and in any event no later
than the close of business on the business day following the expiration of
the Offer. Notwithstanding anything to the contrary contained in this
Agreement, Parent and Acquisition Sub shall not be required to commence the
3
<PAGE>
Offer in any jurisdiction other than the United States of America.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Acquisition Sub shall file with the SEC a Tender Offer Statement
on Schedule 14D-1 with respect to the Offer which will contain the Offer to
Purchase and the related Letter of Transmittal (collectively and together
with any supplements or amendments thereto, the "Offer Documents"). The
---------------
Offer Documents will comply in all material respects with the provisions of
applicable federal law. Parent, Acquisition Sub and the Company each
agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and Parent and Acquisition Sub each
further agrees to take all steps necessary to cause the Offer Documents as
so corrected to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their
filing with the SEC and shall be provided with any comments Parent,
Acquisition Sub and their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such
comments.
SECTION 1.2. Company Action.
--------------
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board, at a meeting duly called and held
on February 28, 1999, unanimously (i) determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby,
including the Offer, the Merger and the transactions contemplated by the
Stockholder Agreement and (iii) recommended in satisfaction of all
applicable requirements for Board action under Section 251 of the Delaware
Law in order for the Merger to be validly approved that the stockholders of
the Company accept the offer, tender their Shares thereunder and, to the
extent required by applicable law, approve and adopt this Agreement and the
Merger. The Company further represents and warrants that each of Morgan
Stanley & Co. Incorporated and Salomon Smith Barney Inc. (collectively, the
"Company's Financial
--------------------
4
<PAGE>
Advisors") has delivered to the Board its opinion dated as of February 28,
---------
1999 to the effect that, as of such date, the consideration to be received
by the holders of Shares (other than Parent and its affiliates) pursuant to
this Agreement and Plan of Merger is fair to such holders from a financial
point of view (the "Fairness Opinions"). As of the date hereof, the Company
-----------------
has been authorized by the Company's Financial Advisors to permit the
inclusion of the Fairness Opinions in their entirety or reference thereto
(subject to the Company's Financial Advisors prior approval of any such
reference) in the Offer to Purchase, the Schedule 14D-9, the Proxy
Statement or any other document required to be distributed to the Company's
stockholders referred to below. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Board
described in this Section 1.2(a).
(b) The Company shall file with the SEC and mail to holders of Shares
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the "Schedule 14D-9") containing the
--------------
recommendations described in Section 1.2(a), and shall mail the Schedule
14D-9 to the stockholders of the Company promptly after the commencement of
the Offer. Such Schedule 14D-9 shall be filed on the same date as the
Schedule 14D-1 is filed and mailed together with the Offer Documents. The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws. Subject to Section 6.9(d), the
Schedule 14D-9 shall at all times contain the determinations, approvals and
recommendations described in Section 1.2(a). Parent, Acquisition Sub and
the Company each agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect and the Company agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to
be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws.
Parent, Acquisition Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its filing
with the SEC and shall be provided with any comments the Company and its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of such comments. Parent and Acquisition Sub
agree to provide such information necessary for the preparation of the
exhibits and
5
<PAGE>
schedules to the Schedule 14D-9 which the Company shall reasonably request.
(c) In connection with the Offer, the Company will promptly furnish
Acquisition Sub with mailing labels, security position listings and any
available listing or computer file containing the names and addresses of
the record holders of the Shares as of a recent date and shall furnish
Acquisition Sub with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists
of securities positions) as Acquisition Sub or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Acquisition Sub and its
affiliates and associates shall hold in confidence the information
contained in such labels, listings and files, will use such information
only in connection with the Offer or the Merger, and, if this Agreement
shall be terminated, will promptly deliver to the Company all copies of
such information then in their possession.
SECTION 1.3. Boards of Directors and Committees; Section 14(f).
-------------------------------------------------
(a) Promptly upon the purchase by Acquisition Sub of a majority of the
outstanding Shares pursuant to the Offer or the purchase by Acquisition Sub
of the KKR Shares upon exercise of the Option pursuant to the stockholder
agreement, and from time to time thereafter, Acquisition Sub shall be
entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board that equals the product of (i) the total
number of directors on the Board (giving effect to the election of any
additional directors pursuant to this Section) multiplied by (ii) the
percentage that the number of Shares owned by Acquisition Sub and its
affiliates (including any Shares purchased pursuant to the Offer and the
Stockholder Agreement) bears to the total number of outstanding Shares;
provided, however, that until the Effective Time there shall be at least
-------- -------
two Continuing Directors (as defined herein); and the Company shall, upon
request by Acquisition Sub, promptly either increase the size of the Board
or use its best efforts to secure the resignation of such number of
directors as is necessary to enable Acquisition Sub's designees
6
<PAGE>
to be elected to the Board and shall cause Acquisition Sub's designees to
be so elected. Promptly upon request by Acquisition Sub, the Company will
use its best efforts to cause persons designated by Acquisition Sub to
constitute the same percentage as is on the Board of (i) each committee of
the Board, (ii) each board of directors of each subsidiary of the Company
designated by Acquisition Sub and (iii) each committee of each such board.
Notwithstanding the foregoing, until the time Acquisition Sub purchases
Shares representing a majority of the Company's voting power on a fully-
diluted basis, the Company shall use its best efforts to ensure that all of
the members of the Board and such boards and committees as of the date
hereof who are not employees of the Company or affiliates of the Sellers
shall remain members of the Board and such boards and committees until the
Effective Time (as defined in Section 2.2).
(b) The Company's obligations to appoint designees to the Board shall
be subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The
------------
Company shall promptly take all actions required pursuant to Section 14(f)
and Rule l4f-1 in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under Section
14(f) and Rule 14f-1. Parent or Acquisition Sub will supply to the Company
in writing and be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) After the time that Acquisition Sub's designees constitute at
least a majority of the Board and until the Effective Time, any action by
the Company with respect to this Agreement and the transactions
contemplated hereby which materially and adversely affects the interests of
the stockholders of the Company other than Parent and its affiliates, shall
require the approval of a majority of the then serving directors, if any,
who are directors as of the date hereof (the "Continuing Directors"). If
--------------------
there is more than one Continuing Director and, prior to the Effective
Time, the number of Continuing Directors is reduced for any reason, the
remaining Continuing Director shall be entitled to designate a person to
fill such vacancies, who shall be deemed a Continuing Director for purposes
of this Agreement. In the event
7
<PAGE>
there is only one Continuing Director and he or she resigns or is removed
or if all Continuing Directors resign or are removed, he, she or they, as
applicable, shall be entitled to designate his, her or their successors, as
the case may be, each of whom shall be deemed a Continuing Director for
purposes of this Agreement. The Board shall not delegate any matter set
forth in this Section 1.3 to any committee of the Board.
ARTICLE II
The Merger
----------
SECTION 2.1. The Merger. At the Effective Time and upon the terms
----------
and subject to the conditions of this Agreement and Delaware Law, Acquisition
Sub shall be merged with and into the Company, whereupon the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). At Acquisition Sub's
---------------------
option, subject to Section 9.2 hereof, the Merger may be structured so that any
direct or indirect wholly owned subsidiary of The General Electric Company,
p.l.c. ("GEC, p.l.c.") (or the successor to the non-defense business of GEC,
-----------
p.l.c.) other than Acquisition Sub is merged with and into the Company; provided
--------
that Parent shall continue to be responsible for its and Acquisition Sub's
obligations hereunder. In the event of such election, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
election.
SECTION 2.2. Effective Time; Closing. As soon as practicable after
-----------------------
the satisfaction or waiver of the conditions set forth in Article VII, the
parties hereto will file a certificate of merger or, in the event Acquisition
Sub holds 90% or more of the outstanding Shares, a Certificate of Ownership and
Merger, in either case, in form and substance satisfactory to Parent and the
Company, with the Secretary of State of the State of Delaware and make all other
filings or recordings required by Delaware Law in connection with the Merger
(the "Certificate of Merger"). The Merger shall become effective at such time as
---------------------
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware (the "Effective Time"). Prior to such filing, a closing (the
--------------
"Closing") shall be held at the place designated by Parent in New York, New York
- --------
for the purpose of confirming the satisfaction or waiver of the conditions set
forth in Article VII. The date on which the Closing occurs is referred to
herein as the "Closing Date".
------------
8
<PAGE>
SECTION 2.3. Effects of the Merger; Subsequent Actions.
-----------------------------------------
(a) The Merger shall have the effects set forth in Delaware Law.
Without limiting the generality of the foregoing, and subject thereto and
any other applicable laws, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Acquisition
Sub shall vest in the Surviving Corporation, and all debts liabilities,
restrictions, disabilities and duties of the Company and Acquisition Sub
shall become the debts, liabilities, restrictions, disabilities and duties
of the Surviving Corporation.
(b) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of the Company or Acquisition Sub acquired
or to be acquired by the Surviving Corporation as a result of or in
connection with the Merger, or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or
Acquisition Sub, all such deeds, bills of sale, assignments, assumption
agreements and assurances and to take and do, in the name and on behalf of
each of such corporations or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or
assets of the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2.4. Certificate of Incorporation and By-Laws.
----------------------------------------
(a) The Certificate of Incorporation of Acquisition Sub in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law; provided that the name of the Surviving Corporation as set
--------
forth in its Certificate of Incorporation shall be changed at the Effective
Time to reflect RELTEC CORPORATION as the name of the Surviving
Corporation.
(b) The By-Laws of Acquisition Sub in effect at the Effective Time
shall be the By-Laws of the
9
<PAGE>
Surviving Corporation until amended in accordance with applicable law.
SECTION 2.5. Directors. The directors of Acquisition Sub at the
---------
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation and until his or her successor is duly elected and
qualified.
SECTION 2.6. Officers. The officers of Acquisition Sub at the
--------
Effective Time, and/or any individuals designated by Parent, shall be the
initial officers of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving Corporation
and until his or her successor is duly appointed and qualified.
SECTION 2.7. Conversion of Shares. At the Effective Time, by virtue
--------------------
of the Merger and without any action on the part of Parent, Acquisition Sub, the
Company or the holder of any of the following securities:
(a) Subject to Section 2.7(b), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares referred to in
Section 2.7(b) hereof and Dissenting Shares (as hereinafter defined)),
shall by virtue of the Merger and without any action on the part of the
holder thereof be converted into the right to receive an amount equal to
the Per Share Amount in cash, without interest (the "Merger
------
Consideration").
-------------
(b) Each Share that is owned by the Company or by any wholly owned
subsidiary of the Company and each Share that is owned by Parent,
Acquisition Sub or any other wholly owned subsidiary of Parent shall
continue to be outstanding and shall not be cancelled or retired and no
consideration shall be delivered in exchange therefor.
(c) Each share of Common Stock, par value $0.01 per share, of
Acquisition Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 2.8. Employee Stock Options. (a) Each unvested, outstanding
-----------------------
option to purchase Shares (including any time options or performance options)
("Employee Options") issued pursuant to the Amended and Restated 1995 Stock
- ------------------
Purchase and Option Plan for Employees of Reltec
10
<PAGE>
Holdings, Inc. (the "1995 Plan") and Subsidiaries and The 1998 Equity
---------
Participation Plan of Reltec Corporation (collectively, the "Company Stock
-------------
Plans") may be accelerated in connection with any change of control (as defined
- -----
in the applicable Company Stock Plans) that results from the Offer or the
Merger, except for the following:
(i) Employee Options issued under the 1995 Plan to former employees
of Rainford Group, plc that vest based upon performance will not be
accelerated but shall be converted as of the Effective Time into options
that vest in equal installments over the performance measurement period
remaining after the Effective Time;
(ii) Employee Options issued to former employees of Positron Fiber
Systems Corporation that by their current terms terminate upon a change of
control will terminate;
(iii) Employee Options issued since the Company's initial public
offering in March 1998 will not be accelerated (other than so-called "Stock
in the Future" options which will accelerate).
(b) At the Effective Time, each outstanding vested Employee Option
(including any such option which has vested as a result of acceleration as set
forth in Section 2.8(a)) shall, subject to Section 2.8(d), be cancelled by the
Company, and each holder of any such cancelled vested Employee Option shall be
entitled to receive from the Company or, at Parent's option, any subsidiary of
the Company (in each case, with funds provided, directly or indirectly, by GEC,
p.l.c. (or any successor to the non-defense business)) in consideration for
cancellation an amount in cash (less applicable withholding Taxes (as defined in
Section 4.10 hereof)) equal to the product of (i) the number of Shares subject
to such vested Employee Option multiplied by (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such vested Employee Option.
(c) At the Effective Time, each outstanding unvested Employee Option
(other than options that by their terms are cancelled or terminated) shall not
be cancelled or exercised but shall be amended and converted into phantom stock
units equivalent to a number of ordinary shares of GEC, p.l.c. ("GEC Shares")
----------
(rounded down to the nearest whole share) determined by multiplying the number
of Shares subject to such unvested Employee Option by the Conversion Ratio (as
defined below), at a price per GEC Share equivalent (rounded up to the nearest
whole penny) equal to (A) the exercise price for the Shares previously
purchasable
11
<PAGE>
pursuant to such unvested Employee Option converted into pounds sterling at the
Noon Buying Rate (as defined below) divided by (B) the Conversion Ratio (each,
as so adjusted, a "Substitute Phantom Unit"). The value of each Substitute
-----------------------
Phantom Unit will be payable upon exercise (less applicable withholding Taxes),
at Parent's election, in cash or GEC Shares (provided that such GEC Shares are
--------
publicly traded on the London Stock Exchange or a U.S. stock exchange) valued at
the closing sales price for a GEC Share on the London Stock Exchange (the "LSE")
---
on the date of exercise and shall have other terms and conditions comparable to
those of the unvested Employee Option replaced by such Substitute Phantom Unit.
The "Conversion Ratio" shall be equal to the Merger Consideration converted into
----------------
pounds sterling at the noon buying rate in New York City for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York on the date of the Effective Time (the "Noon Buying Rate") divided by
-----------------
an amount equal to the average of the closing price for a GEC Share on the LSE
for the twenty trading days preceding the Effective Time and weighted for
trading volumes of GEC Shares on each such day. In the event another company
becomes the successor ultimate parent of Parent, the shares of such successor
will be substituted for GEC Shares on an equitable basis.
(d) Subject to the need to comply with applicable legal requirements,
Parent shall provide to each holder of a vested Employee Option that is to be
cancelled at the Effective Time in lieu of the positive cash payment pursuant to
Section 2.8(b), an alternative of converting such vested Employee Option into
Substitute Phantom Units on the same basis described in Section 2.8(c).
SECTION 2.9. Stockholders' Meeting. (a) If the adoption of this
---------------------
Agreement by the stockholders of the Company is required by Delaware Law, the
Company, acting through the Board, shall as soon as practicable after the
purchase of Shares by Acquisition Sub pursuant to the Offer or the Stockholder
Agreement:
(i) duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of considering and taking action upon this
Agreement and the Merger (the "Stockholders Meeting"). Without limiting
--------------------
the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 2.9(a)(i) shall not be affected by the
commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal (as defined herein).
12
<PAGE>
(ii) include in the Proxy Statement (as defined in Section 4.7) the
recommendation of the Board sufficient to satisfy all applicable
requirements for Board action under Section 251 of the Delaware Law in
order for the Merger to be validly approved.
(iii) use its reasonable best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby.
(b) At the Stockholders' Meeting, each of Parent and Acquisition Sub
will vote (and will cause each of their respective affiliates to vote) all
Shares owned by it (or their respective affiliates) in favor of adoption of this
Agreement and the transactions contemplated hereby.
(c) Notwithstanding the foregoing, (i) if GEC, p.l.c., Acquisition Sub
or any other Subsidiary of Parent shall own, in the aggregate, at least 90% of
the outstanding Shares, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without the Stockholders Meeting in accordance with
Section 253 of the Delaware Law and (ii) the parties shall, at the request of
Parent, take all necessary and appropriate action to effect the Merger through a
written consent in lieu of the Stockholders Meeting to the extent permitted by,
and in accordance with, applicable law.
ARTICLE III
Dissenting Shares; Exchange of Shares
-------------------------------------
SECTION 3.1. Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, 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 has demanded appraisal for such Shares in accordance
with Section 262 of Delaware Law ("Dissenting Shares") shall not be converted
-----------------
into a right to receive the Merger Consideration 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 without interest
thereon. The Company shall give Acquisition Sub prompt notice of any demands
received by the Company for appraisal of Shares, and, prior to the Effective
Time, Acquisition Sub shall have the right to participate in all negotiations
and proceedings
13
<PAGE>
with respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Acquisition Sub, make any payment
with respect to, or settle or offer to settle, any such demands.
SECTION 3.2. Exchange of Certificates.
------------------------
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent
(the "Paying Agent") in effecting the payment of the Merger Consideration
------------
upon surrender of certificates (the "Certificates") that, prior to the
------------
Effective Time, represented Shares. Upon the surrender of each such
Certificate formerly representing Shares, together with a properly
completed letter of transmittal, the Paying Agent shall pay the holder of
such Certificate the Merger Consideration multiplied by the number of
Shares formerly represented by such Certificate, in exchange therefor, and
such Certificate shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing
Dissenting Shares or Shares held by Parent, Acquisition Sub or the Company,
or any direct or indirect subsidiary thereof) shall represent solely the
right to receive the Merger Consideration. No interest shall be paid or
accrue to the holders of Shares in respect of the Merger Consideration. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate formerly
representing Shares surrendered in exchange therefor is registered, it
shall be a condition to such exchange that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such exchange shall pay to the Paying Agent any
transfer or other Taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
(b) Parent or Acquisition Sub shall deposit, or cause to be deposited
on a timely basis, as and when the Paying Agent requires after the
Effective Time, in trust with the Paying Agent the Merger Consideration to
which holders of Shares shall be entitled at the Effective Time pursuant to
Section 2.7(a) hereof, provided that no such deposit shall relieve Parent
--------
of its obligation to pay the Merger Consideration pursuant to Section
2.7(a). Subject to Section 3.2(c) and
14
<PAGE>
3.2(e), Parent shall cause the Paying Agent to hold the amounts deposited
with it for the benefit of the holders of Shares.
(c) The Merger Consideration shall be invested by the Paying Agent, as
directed by Parent, on a timely basis. Any interest and other income
resulting from such investments shall be paid to Parent.
(d) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates that immediately prior to the Effective
Time represented Shares a form of letter of transmittal and instructions
reasonably acceptable to the Company for use in surrendering such
Certificates and receiving the Merger Consideration in exchange therefor.
(e) Promptly following the date that is six months after the Effective
Time, the Paying Agent shall deliver to Parent all cash and documents in
its possession relating to the transactions described in this Agreement,
and the Paying Agent's duties shall terminate. Thereafter, each holder of
a Certificate formerly representing a Share may surrender such Certificate
to the Surviving Corporation and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
(f) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to
the Surviving Corporation or the Paying Agent, they shall be cancelled and
exchanged for the Merger Consideration, as provided in this Article III,
subject to applicable law in the case of Dissenting Shares.
(g) Parent or any of its affiliates shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of Shares such amounts as Parent (or any
affiliate thereof) is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986 (the
"Code"), or any provision of state, local or foreign tax law. To the
----
extent that amounts are so withheld by Parent (or any affiliate thereof)
and paid by Parent (or any affiliate thereof) to the applicable taxing
authority, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the former holder
15
<PAGE>
of Shares in respect of which such deduction and withholding was made by
Parent (or any affiliate thereof).
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Acquisition Sub as
follows:
SECTION 4.1. Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect") or a material adverse effect
-----------------------
on the ability of the Company to perform its obligations hereunder.
Notwithstanding anything to the contrary, the term "Material Adverse
Effect" shall not include (i) any change, circumstance, event or effect
that relates to or results primarily from the announcement or other
disclosure or consummation of the transactions contemplated by this
Agreement, or (ii) changes in general economic conditions, financial
markets (including fluctuations in the price of shares of Company Common
Stock or shares of capital stock of GEC, p.l.c.) or conditions in the
telecommunications or technology sectors generally.
(b) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction
(including any foreign country) in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect.
16
<PAGE>
(c) The Company has heretofore furnished or made available to Parent
complete and correct copies of the Company's Restated Certificate of
Incorporation and By-Laws and the equivalent organizational documents of
each of its subsidiaries listed in Schedule 4.1(c) (the "Material
--------
Subsidiaries"), each as amended to the date hereof, as requested by Parent,
------------
except for certain organizational documents of non-U.S. subsidiaries that
will be furnished or made available in English prior to the Effective Time.
Such Restated Certificate of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect and no other
organizational documents are applicable to or binding upon the Company or
its Material Subsidiaries. The Company is not in violation of any of the
provisions of its Restated Certificate of Incorporation or By-Laws and no
Material Subsidiary of the Company is in violation of any of the provisions
of such subsidiary's equivalent organizational documents.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct list of the subsidiaries of the Company, which list
sets forth the percentage of total capital stock of or other equity
interests in such subsidiaries owned by the Company, directly or
indirectly. No subsidiary of the Company that is not a Material Subsidiary
is, individually or when taken together with all other subsidiaries of the
Company that are not Material Subsidiaries, material to the business of the
Company and its subsidiaries taken as a whole. Except as set forth in
Schedule 4.1(d), no entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or when taken
together with all other such entities, material to the business of the
Company and its subsidiaries, taken as a whole. No subsidiary of the
Company that is not a Material Subsidiary has any material liabilities.
SECTION 4.2. Capitalization of the Company and its Subsidiaries. The
--------------------------------------------------
authorized capital stock of the Company consists of (i) 150,000,000 Shares of
which, as of February 19, 1999, 56,419,890 Shares were issued and outstanding
and (ii) 20,000,000 shares of Preferred Stock, par value of $0.01 per share, of
which, as of February 19, 1999, no shares were issued and outstanding. All
outstanding shares of capital stock of the Company have been validly issued, and
are fully paid, nonassessable and free of preemptive rights. As of February 19,
1999, Employee Options to purchase an aggregate of 6,569,342 Shares were
outstanding and the weighted average exercise price of such Employee Options was
$14.21 per Share. Except
17
<PAGE>
as set forth above or in Schedule 4.2, and except as a result of the exercise of
Employee Options outstanding as of February 26, 1999, there are outstanding (i)
no shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, (iii) no options, subscriptions,
warrants, convertible securities, calls or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or sell any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company and (iv) no equity
equivalents, "phantom" stock rights, stock appreciation rights, performance
shares, interests in the ownership or earnings of the Company or other similar
rights issued by the Company (collectively, "Company Securities"). Except as set
-------------------
forth in Schedule 4.2 or as contemplated by this Agreement or the Stockholders
Agreement, there are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
Except as set forth in Schedule 4.2, each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and is directly or indirectly owned by the Company,
free and clear of all security interests, liens, claims, pledges, charges,
voting agreements or other encumbrances of any nature whatsoever (collectively,
"Liens"). Except as set forth in Schedule 4.2, there are no existing options,
- -----
calls or commitments of any character relating to the issued or unissued capital
stock or other securities of any subsidiary of the Company. Except as set forth
in Schedule 4.2, and the Stockholders Agreement, there are no voting trusts,
proxies or other agreements, commitments or understandings of any character to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound with respect to the voting of any shares of
capital stock of the Company or any of its subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its subsidiaries under the Securities Act. There are not
any bonds, debentures, notes or other indebtedness of the Company or its
subsidiaries having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote ("Voting Company Debt").
-------------------
SECTION 4.3. 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
18
<PAGE>
transactions contemplated hereby, subject in the case of the Merger, to the
adoption of this Agreement and approval of the Merger by the stockholders of the
Company to the extent so required by the Delaware Law. The Board, at a meeting
duly called and held on February 28, 1999, (i) determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the stockholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer, the Merger and the transactions contemplated by the Stockholder Agreement
and (iii) recommended in satisfaction of all applicable requirements for Board
action under Section 251 of the Delaware Law in order for the Merger to be
validly approved that the stockholders of the Company accept the Offer, tender
their Shares thereunder and, to the extent required by applicable law, approve
and adopt this Agreement and the Merger. Such approvals constitute all Board
action required to be taken in connection with this Agreement, the Merger and
the other transactions contemplated hereby by Section 251 of the Delaware Law in
order for the Merger to be validly approved. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than and only to the extent required by Delaware Law, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the outstanding Shares and the filing of the Certificate of Merger). The
Board has taken all action necessary with respect to the transactions
contemplated hereby and by the Stockholder Agreement so as to render
inapplicable to such transactions, including, without limitation, the Merger and
the purchase of Shares pursuant to the Stockholder Agreement, the restrictions
on business combinations contained in Section 203 of the Delaware Law. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming it constitutes a valid and binding agreement of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors generally,
or by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
19
<PAGE>
SECTION 4.4. Non-Contravention; Required Filings and Consents.
------------------------------------------------
(a) Except as set forth in Schedule 4.4, the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby (including the Merger) do not and will not
(i) contravene or conflict with the Restated Certificate of Incorporation
or By-Laws of the Company or the equivalent organizational documents of any
of its Material Subsidiaries; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been properly made,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, any of its subsidiaries or any of their
respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or give rise to
any right of termination, cancellation, or loss of any benefit to which the
Company or any of its subsidiaries is entitled under any provision of any
agreement, contract, license or other instrument binding upon the Company,
any of its subsidiaries or any of their respective properties, or allow the
acceleration of the performance of, any obligation of the Company or any of
its subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective assets or properties is subject or
bound; or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults, cancellations, losses,
accelerations and Liens which would not individually or in the aggregate
have a Material Adverse Effect or be reasonably expected to prevent or
materially delay the consummation by the Company of the transactions
contemplated by this Agreement or otherwise have a material adverse effect
on the ability of the Company to perform its other obligations hereunder.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby
(including the
20
<PAGE>
Merger) by the Company require no filings, notices, declarations, consents
or other actions to be made by the Company with, nor are any approvals or
other confirmations or consents required to be obtained by the Company
from, any governmental or regulatory (including Stock exchange) authority,
agency, court, commission, body or other governmental entity (including the
U.K. Panel on Takeovers and Mergers) ("Governmental Entity") (except those
---------------------
the failure of which to make, give or obtain, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect or prevent or materially delay the Company's ability to consummate
the transactions contemplated hereby or otherwise have a material adverse
effect on the ability of the Company to perform its other obligations
hereunder), other than filings, notices, approvals, confirmations,
consents, declarations or decisions (i) relating to the filing of the
Certificate of Merger in accordance with Delaware Law; (ii) required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"); (iii) required by the Exchange Act and state securities, takeover
---
and Blue Sky laws; (iv) required by the Canadian Competition Act; (v) from
the Italian Autorita Garante della Concorrenza e del Mercato that it does
not intend to initiate a second stage investigation of the transactions
contemplated hereby (including the Merger) or any matters arising therefrom
under Article 16 of Law no.287 of October 10, 1990; (vi) from the German
Federal Cartel Office, during the one month time limit referred to in
Section 40 paragraph 1 of the Act against Restraints on Competition, that
the conditions for a prohibition in Section 36 paragraph 1 of the Act
against Restraints on Competition are not fulfilled, or, if no such
confirmation is received, this one month time limit having expired without
the parties having been notified by the Federal Cartel Office that it has
entered into the examination of the proposed concentration; and (vii) from
the U.K. Office of Fair Trading that it is not the intention of the U.K.
Secretary of State for Trade and Industry ("U.K. Secretary of State") to
-----------------------
refer the transactions contemplated hereby or any matters arising therefrom
to the U.K. Monopoly and Mergers Commission ("MMC") (collectively clauses
---
(i) through (vii) are the "Company Governmental Approvals").
------------------------------
SECTION 4.5. Reports.
-------
(a) The Company has filed all required forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since March 12,
---
1998. The
21
<PAGE>
Company has made available to Parent, in the form filed with the
SEC, the Company's (i) Registration Statement on Form S-1 and the
Prospectus dated March 12, 1998, included therein relating to the initial
public offering of the Shares, (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998 and
(iii) all other reports or registration statements filed by the Company
with the SEC since March 12, 1998 (collectively, the "SEC Reports"). The
-----------
Company also has made available to Parent, a draft dated February 24, 1999
of the Company's financial statements for the year ended December 31, 1998
and the related draft of Management's Discussion and Analysis of Results of
Operations (the "1998 Draft Report"). The SEC Reports were prepared in
-----------------
accordance with all applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act and the 1998 Draft
--------------
Report has been prepared on a consistent basis with the SEC Reports. As of
their respective dates, none of the SEC Reports including, without
limitation, any financial statements or schedules included therein,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of its date, the financial statements contained
in the 1998 Draft Report fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis, the
consolidated financial position of the Company and its consolidated
subsidiaries and their consolidated results of operations (subject to the
lack of complete footnote disclosure). The audited consolidated financial
statements and unaudited condensed consolidated interim financial
statements of the Company included in the SEC Reports fairly present, in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments and the lack of footnote disclosure (to the extent
permitted by SEC rules in the case of the SEC Reports) in the case of any
unaudited interim financial statements).
(b) Except as disclosed in the SEC Reports filed prior to the date of
this Agreement or as set forth in
22
<PAGE>
Schedule 4.5(b), the Company and its subsidiaries have no liabilities of
any nature (whether accrued, absolute, contingent or otherwise) which would
be required to be reflected, reserved for or disclosed under generally
accepted accounting principles in consolidated financial statements of the
Company (including the notes thereto), except for liabilities incurred in
the ordinary course of business since December 31, 1997 or liabilities
which would not, individually or in the aggregate, have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
SECTION 4.6. Absence of Certain Changes; Derivatives.
---------------------------------------
(a) Since December 31, 1997 to the date hereof, except as disclosed in
the SEC Reports filed prior to the date of this Agreement or as set forth
in Schedule 4.6(a), neither the Company nor any of its Material
Subsidiaries has (i) declared, set aside or paid any dividend or other
distribution (whether in cash, stock, or property or any combination
thereof) in respect of its capital stock (other than to the Company or to
any wholly owned subsidiary of the Company) (ii) entered into, adopted or
amended or materially increased the benefits paid or payable under any
severance, termination or deferred compensation agreement or arrangement
with any director, officer or employee, (iii) changed any of the accounting
principles or practices used by the Company, except as required as a result
of a change in law, SEC guidelines or generally accepted accounting
principles, (iv) settled or compromised, or agreed to settle or compromise,
any litigation, or agreed to assign any claims, which involve a payment or
waiver by the Company or any subsidiary of the Company of amounts in excess
of $3 million in the aggregate, or (v) entered into any transaction, or
conducted its business or operations, except in the ordinary course of
business or where such transactions or conduct would not, individually or
in the aggregate, have a Material Adverse Effect or a material adverse
effect on the ability of the Company to perform its obligations hereunder.
Since December 31, 1997, except as set forth in Schedule 4.6(a) or as
disclosed in the SEC Reports filed prior to the date of this Agreement,
there has not been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect or a material adverse effect on the
23
<PAGE>
ability of the Company to perform its obligations hereunder.
(b) Schedule 4.6(b) sets forth a complete and correct list of all
Derivative Financial Instruments (including the face, contract or notional
amount of and any open position relating to such Derivative Financial
Instruments and a brief summary of the nature and terms thereof) as of
December 31, 1998 which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of their
respective assets or properties is subject or bound (including, without
limitation, funds of the Company or any of its subsidiaries invested by any
other person). For purposes of this Agreement "Derivative Financial
--------------------
Instrument" means any option, futures, forward, swap option or swap
----------
contract, or any other financial instrument with similar characteristics
and/or generally characterized as a "derivative product".
SECTION 4.7. Schedule 14D-9; Offer Documents, Proxy Statement.
------------------------------------------------
(a) Neither the Schedule 14D-9, nor any of the information provided or
to be provided by the Company or by its auditors, attorneys, financial
advisors or other consultants or advisers specifically for use in the Offer
Documents and any other documents to be filed with the SEC in connection
with the transactions contemplated hereby, including any amendment or
supplement to such documents, shall, on the respective dates the Schedule
14D-9, the Offer Documents and any other documents to be filed with the SEC
in connection with the transactions contemplated hereby or any supplements
or amendments thereto are filed with the SEC or on the date first
published, sent or given to the Company's stockholders, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in
24
<PAGE>
light of the circumstances under which they were made, not misleading. The
proxy or information statement or similar materials distributed, if any, to
the Company's stockholders in connection with the Merger, including any
amendments or supplements thereto (the "Proxy Statement"), shall not, at
the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders Meeting, if any, or at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information
provided by Parent, Acquisition Sub or their auditors, attorneys, financial
advisors or other consultants or advisors specifically for use in the
Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and the Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 4.8. Finder's Fee. Neither any broker, finder, investment
------------
banker or other intermediary (other than the Company's Financial Advisors and
Kohlberg Kravis Roberts & Co., L.P., the fees of which collectively shall not
exceed the amount set forth in Schedule 4.8) is entitled to any brokerage,
finder's or other fee (including any exit or management fee) or commission in
connection with the transactions contemplated by this Agreement or by the
Stockholder Agreement based upon arrangements made by and on behalf of the
Company.
SECTION 4.9. Absence of Litigation. Except as disclosed in the SEC
---------------------
Reports filed prior to the date hereof, the 1998 Draft Report or in Schedule
4.9, there is no action, suit, claim, investigation or proceeding pending
against, or to the knowledge of the Company, threatened against, the Company or
any of its subsidiaries or any of their respective properties before any court
or arbitrator or any administrative, regulatory or governmental body, or any
agency or official which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the Company to perform its obligations hereunder (other than
litigation related to, challenging or seeking to prevent, enjoin, alter or delay
the Offer, the Merger or the other transactions contemplated hereby or by the
Stockholder Agreement). Except as disclosed in the SEC Reports filed prior to
the date of this Agreement, the Draft 1998 Report or in Schedule 4.9, there is
no action, suit, claim, investigation or proceeding pending against, or to the
knowledge of the Company, threatened against, the Company or any of its
subsidiaries or any of their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official which alleges criminal action or inaction which, if proved, would
have a Material Adverse Effect. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, the Draft Annual Report or in Schedule 4.9,
neither the Company nor any of its subsidiaries nor any of their respective
properties is
25
<PAGE>
subject to any order, writ, judgment, injunction, consent agreement, decree,
determination or award having, or which would reasonably be expected to have, a
Material Adverse Effect or which would prevent or materially delay the
consummation of the transactions contemplated hereby or otherwise have a
material adverse effect on the ability of the Company to perform its other
obligations hereunder.
SECTION 4.10. Taxes. Except as set forth in the SEC Reports filed
-----
prior to the date of this Agreement, the 1998 Draft Report or in Schedule 4.10,
(a) the Company and its subsidiaries have filed, been included in or sent, all
material returns, material declarations and reports and information returns and
statements required to be filed or sent by or relating to any of them relating
to any Taxes (as defined below) with respect to any material income, properties
or operations of the Company or any of its subsidiaries (collectively,
"Returns"); (b) as of the time of filing, the Returns correctly reflected in all
-------
material respects the facts regarding the income, business, assets, operations,
activities and status of the Company and its subsidiaries and any other material
information required to be shown therein; (c) the Company and its subsidiaries
have timely paid or made provision for all material Taxes due and payable; (d)
the Company and its subsidiaries have made or will make provision for all
material Taxes payable for any periods that end before the Effective Time for
which no Returns have yet been filed and for any periods that begin before the
Effective Time and end after the Effective Time to the extent such Taxes are
attributable to the portion of any such period ending at the Effective Time; (e)
the charges, accruals and reserves for taxes reflected on the books of the
Company and its subsidiaries are adequate under generally accepted accounting
principles to cover the Tax liabilities accruing or payable by the Company and
its subsidiaries in respect of periods prior to the date hereof; (f) neither the
Company nor any of its subsidiaries is delinquent in the payment of any material
Taxes or has requested any extension of time within which to file or send any
material Return (other than extensions granted to the Company for the filing of
its Returns as set forth in Schedule 4.10), which Return has not since been
filed or sent; (g) no material deficiency for any Taxes has been proposed,
26
<PAGE>
asserted or assessed in writing against the Company or any of its subsidiaries
(or any member of any affiliated or combined group of which the Company or any
of its subsidiaries is or has been a member for which either the Company or any
of its subsidiaries could be liable) other than those asserted deficiencies
being contested in good faith by appropriate proceedings and set forth in
Schedule 4.10 (which shall set forth the nature of the proceeding, the type of
return, the deficiencies proposed, asserted or assessed and the amount thereof,
and the taxable year in question); (h) neither the Company nor any of its
subsidiaries has granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being contested in good faith by
appropriate proceedings and set forth in Schedule 4.10; (i) neither the
Company nor any of its subsidiaries is subject to liability for Taxes of any
person (other than the Company or its subsidiaries), including, without
limitation, liability arising from the application of U.S. Treasury Regulation
Section 1.1502-6 or any analogous provision of state, local or foreign law; (j)
neither the Company nor any of its subsidiaries is or has been a party to any
material tax sharing agreement with any corporation which is not currently a
member of the affiliated group of which the Company is currently a member, other
than such tax indemnification agreements set forth in Schedule 4.10; (k) to the
best of the Company's knowledge and as of the date hereof, no person who holds
five percent (5%) or more of the stock of the Company is a "foreign person" as
defined in Section 1445 of the Code; and (l) all Taxes that the Company and each
of its subsidiaries are required by law to withhold or collect, including
without limitation, sales and use taxes, and amounts required to be withheld for
Taxes of employees and other withholding taxes, have been duly withheld or
collected and, to the extent required, have been paid over to the proper
governmental agencies or are held in separate bank accounts for such purpose,
except for Taxes the failure of which to withhold or collect would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
"Tax" or "Taxes" shall mean all Federal, state, local, foreign and
--- -----
other taxes, charges, fees, duties (including customs duties), levies or other
assessments, including without limitation, income, gross receipts, net proceeds,
alternative or add-on minimum, ad valorem, value added, turnover, real and
personal property (tangible and intangible), sales, use, franchise, excise,
value added, stamp, leasing, lease, user, transfer, fuel, excess profits,
occupational, interest equalization, windfall profits, severance, license,
payroll, environmental, capital stock, disability, employee's income
withholding, other withholding, unemployment and Social Security taxes, which
are imposed by any governmental authority (domestic or foreign), and such term
shall include any interest, penalties or additions to tax attributable thereto.
27
<PAGE>
SECTION 4.11. Employee Benefits.
-----------------
(a) Schedule 4.11 (a) contains a true and complete list of each
material employment contract, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination pay,
hospitalization or other medical, dental, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
savings or retirement plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
-----
Affiliate"), that together with the Company would be deemed a "single
---------
employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), for the benefit of any
-----
employee, terminated employee or non-employee director of the Company or
any ERISA Affiliate (the "Plans"). Schedule 4.11(a) identifies each of the
-----
Plans that is an "employee benefit plan," as that term is defined in
Section 3(3) of ERISA (the "ERISA Plans").
-----------
(b) With respect to each Plan, the Company has heretofore delivered or
made available to Parent true and complete copies of each of the following
documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual report and actuarial
report, if required under ERISA, and the most recent report prepared
with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial report prepared with
respect thereto in accordance with Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Non-Pension Post
Retirement Benefits.
(iv) a copy of the most recent actuarial report prepared with
respect thereto in accordance with the Statement of Financial
Accounting Standards NO. 106 Employers Accounting for Post-Retirement
Benefits;
28
<PAGE>
(v) a copy of the most recent Summary Plan Description;
(vi) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof; and
(vii) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify
under section 401(a) of the Code.
(c) With respect to each ERISA Plan subject to Title IV of ERISA, no
material liability (other than liabilities for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums have been paid when
----
due)) under Title IV of ERISA has been incurred by the Company or any ERISA
Affiliate that has not been satisfied in full, and, to the knowledge of the
Company, no condition exists that presents a material risk to the Company
or any ERISA Affiliate of incurring a material liability under such Title.
To the extent this representation applies to Sections 4041, 4064, 4069 or
4204 of Title IV of ERISA, it is made not only with respect to each ERISA
Plan but also with respect to any employee benefit plan, program, agreement
or arrangement subject to Title IV of ERISA to which the Company or any
ERISA Affiliate made, or was required to make, contributions during the
five year period ending on the Effective Time.
(d) To the Company's knowledge, the PBGC has not instituted
proceedings to terminate any ERISA Plan and, to the knowledge of the
Company, no condition exists that presents a material risk that such
proceedings will be instituted.
(e) Neither the Company nor any ERISA Affiliate, nor, to the knowledge
of the Company, any ERISA Plan, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection
with which the Company or any ERISA Affiliate, any ERISA Plan, any such
trust, or any trustee or administrator thereof, or any party dealing with
any ERISA Plan or any such trust could be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed
pursuant to section 4975 or 4976 of the Code, except for such penalties and
Taxes which would not, individually or in the aggregate, have a Material
Adverse Effect or a material adverse effect on the
29
<PAGE>
ability of the Company to perform its obligations hereunder.
(f) To the Company's knowledge, no ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
------------------------------
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
as of the last day of the most recent fiscal year of each ERISA Plan ended
prior to the Effective Time and all contributions required to be made with
respect thereto (whether pursuant to the terms of any ERISA Plan or
otherwise) on or prior to the Effective Time have been timely made.
(g) No ERISA Plan is a "multiemployer pension plan", as defined in
--------------------------
Section 3(37) of ERISA, nor is any ERISA Plan a plan described in Section
4063(a) of ERISA.
(h) To the knowledge of the Company, each Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
(i) Except as set forth on Schedule 4.11(i), each ERISA Plan intended
to be "qualified" within the meaning of Section 401(a) of the Code has been
---------
drafted with the intention to be so qualified and has been or will be
submitted to the Internal Revenue Service along with a request for a
favorable determination letter on or before the date hereof, and it is
anticipated that each such plan will be modified so as to incorporate any
conforming amendments requested or required by the Internal Revenue Service
as a condition to the issuance of such favorable determination letter.
(j) To the Company's knowledge, except as reasonably estimated and as
set forth on Schedule 4.11(j), no amounts payable by the Company or its
subsidiaries could fail to be deductible for federal income tax purposes by
application of Section 280G of the Code.
(k) Except as set forth in Schedule 4.11(k), no Plan provides
benefits, including without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees of the Company
or any ERISA Affiliate beyond their retirement, disability or other
termination of service (other than (i) coverage mandated by applicable law
or (ii) death benefits or retirement benefits under any "employee
30
<PAGE>
pension plan," as that term is defined in Section 3(2) of ERISA).
(l) Except as provided in Schedule 4.11(l), the consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee or officer or non-employee director of the
Company or any ERISA Affiliate to severance pay, unemployment compensation
or any other payment, except as expressly provided in this Agreement or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer or non-employee director.
(m) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(n) The Company has reserved the right to amend or terminate any Plan
which is an employee benefit plan, as that term is defined in Section 3(3)
of ERISA.
(o) Except as set forth in Schedule 4.11(o), the Merger will not
constitute a "Change in Control" under the terms of any Plan.
-----------------
SECTION 4.12. Compliance; Permits. (a) Neither the Company nor any
-------------------
of its subsidiaries is in violation of, or has violated, any applicable
provisions of (i) any laws, rules, statutes, orders, ordinances or regulations
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, which individually or in the aggregate, would have or be reasonably
expected to result in a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder.
(b) The Company and its subsidiaries hold all permits, licenses,
easements, variances, exceptions, consents, certificates, orders and approvals
from Governmental Entities that are material to the operation of the business of
the Company and its subsidiaries, taken as a whole (collectively, the "Company
-------
Permits"), except where the failure to hold or maintain any of the foregoing
- -------
would not, in the aggregate, have a Material Adverse Effect. The Company and
its subsidiaries are in compliance with the
31
<PAGE>
terms of the Company Permits, except where the failure to so comply would not,
in the aggregate, have a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder.
SECTION 4.13. Environmental Matters. (a) Except as disclosed in the
---------------------
SEC Reports filed prior to the date hereof, the 1998 Draft Report or in Schedule
4.13:
(i) the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below) (which compliance
includes, but is not limited to, the possession by the Company and its
subsidiaries of all permits and other governmental authorizations required
under applicable Environmental Laws (collectively, "Environmental
-------------
Permits"), and compliance with the terms and conditions thereof), except
for any noncompliance that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its obligations
hereunder. Except as set forth in Schedule 4.13, neither the Company nor
any of its subsidiaries has received any written communication, whether
from a governmental authority that alleges that the Company is not in such
compliance, and there are no past or present actions, activities,
circumstances, conditions, events or incidents that may prevent or
interfere with such compliance in the future, except, in each case, for any
actions, activities, circumstances, conditions, events or incidents that,
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of the
Company to perform its obligations hereunder;
(ii) there is no Environmental Claim (as defined below) pending or,
to the knowledge of the Company, threatened against the Company or any of
its subsidiaries, or to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of
its subsidiaries has retained or assumed either contractually or by
operation of law, which individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect or a material adverse effect
on the ability of the Company to perform its obligations hereunder;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents (including, without
limitation, the release,
32
<PAGE>
emission, discharge, presence or disposal of any Hazardous Material) (as
defined below) which could form the basis of any Environmental Claim
against the Company or any of its subsidiaries, or, to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has or may have retained or
assumed either contractually or by operation of law, which individually or
in the aggregate would reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder;
(iv) neither the Company nor any of its subsidiaries has, and to the
knowledge of Company, no other person has Released (as defined below),
placed, stored, buried or dumped Hazardous Materials on, beneath or
adjacent to any property owned, operated or leased or formerly owned,
operated or leased by the Company or any of its subsidiaries and neither
the Company nor any of its subsidiaries has received notice that it is a
potentially responsible party for the Cleanup (as defined below) of any
property, whether or not owned or operated by the Company or any of its
subsidiaries, which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder;
(v) the Company and its subsidiaries have delivered or otherwise made
available for inspection to Parent true, complete and correct copies and
results of any material reports, studies, analyses, tests or monitoring
possessed or initiated by the Company or any of its subsidiaries within the
last three years pertaining to Hazardous Materials on, beneath or adjacent
to the property owned or leased by the Company or any of its subsidiaries
or regarding the Company's and its subsidiaries' compliance with applicable
Environmental Laws;
(vi) no transfers of permits or other governmental authorizations
under Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit the
Company and its subsidiaries or the Surviving Corporation and its
subsidiaries, as the case may be, to be in full compliance all applicable
Environmental Laws for the period immediately following the transactions
contemplated hereby, as conducted by the Company and its subsidiaries
immediately prior to the date hereof; and to the extent
33
<PAGE>
that such transfers or additional permits and other governmental
authorizations are required, the Company and its subsidiaries agree to use
best efforts to effect such transfers and obtain such permits and other
governmental authorizations at the time such transfers, permits and other
governmental authorizations are required by law, except for any of the
foregoing that would not, individually or in the aggregate, have a Material
Adverse Effect; and
(vii) neither the Company nor any of its subsidiaries will be
required by any Governmental Entity or Environmental Law to make any
expenditure, whether for emission control, waste materials or wastewater
treatment, or otherwise, to assure the compliance of the Company and its
subsidiaries with all applicable Environmental Laws and Environmental
Permits as of the Closing Date, except for any of the foregoing that would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) The following terms as used in this Section shall have the
following meanings:
"Cleanup" means all actions required by governmental entities or
-------
Environmental Laws to: (1) clean-up, remove, treat or remediate Hazardous
Materials in the indoor or outdoor environment; (2) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (3)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (4) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation or Hazardous Materials in the indoor
or outdoor environment.
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation or written notice by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, monitoring costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release into the indoor
or outdoor environment, of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any of its subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
34
<PAGE>
"Environmental Laws" means all federal, state, local and foreign laws
------------------
and regulations relating to pollution or protection of human health or the
environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"Hazardous Materials" means all substances defined as Hazardous
-------------------
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such
by, or regulated as such by, or regulated as such under any Environmental Law.
"Release" means any release, spill, emission, discharge, leaking,
-------
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater or property.
SECTION 4.14. Intellectual Property. Schedule 4.14 of the Agreement
---------------------
contains a complete list of all Patents and Trademarks (each as defined herein)
(completed or in process), including all registered rights, which are owned by
the Company for use in or necessary for the conduct of the business of the
Company as such business is currently conducted and presently contemplated to be
conducted. The Company and each of its Subsidiaries has used its reasonable
efforts to protect the proprietary nature of each item of Intellectual Property
(as defined below) that it considers confidential, and to maintain in confidence
all trade secrets and confidential information that it presently owns or uses.
Except as set forth in Schedule 4.14 and except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect or a material adverse effect on the ability of
the Company to perform its obligations hereunder:
(a) The rights of the Company in and to each item of Intellectual
Property are owned or licensed by the
35
<PAGE>
Company, free and clear of any Liens or other restrictions (except, in the
case of licensed Intellectual Property, as set forth in the license
therefor). All of the Company's rights in and to such Intellectual Property
are freely assignable in its own name, including the right to create
derivative works, and the Company is under no obligation to pay any royalty
or other compensation to any third party or to obtain any approval or
consent for use of any of the Intellectual Property (except, in the case of
licensed Intellectual Property, as set forth in the license therefor). None
of the Intellectual Property is subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is pending or,
to the knowledge of the Company, threatened, which challenges the legality,
validity, enforceability, the Company's use or ownership of any of the
Intellectual Property.
(b) No material breach or default (or event which with notice or lapse
of time or both would result in an event of default) by the Company exists
or has occurred under any License-In (as defined below) or other agreement
pursuant to which the Company uses any Intellectual Property, and the
consummation of the transactions contemplated by this Agreement will not
violate or conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or result in a
forfeiture under, or constitute a basis for termination of, any such
License-In or other agreement.
(c) The Company owns or has the right to use all the Intellectual
Property necessary to provide, produce, sell and license the services and
products currently provided, produced, sold and licensed by the Company,
and to conduct the Company's business as presently conducted and
contemplated to be conducted, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights, including any
right of the Company to use or sublicense any Intellectual Property owned
by others. To the knowledge of the Company, the Intellectual Property
covers all rights which are necessary to operate the business of the
Company as it is presently conducted and currently contemplated to be
conducted and to satisfy and perform the contracts, commitments,
arrangements and understandings with customers of the Company. The Company
has no knowledge of any reason the Company will not be able to continue to
own, possess or have access to, and to use, license and sub-
36
<PAGE>
license on reasonable terms, all Intellectual Property and other
proprietary rights necessary for the lawful conduct of its business as
presently conducted and currently contemplated to be conducted, without any
infringement with the rights of others.
(d) To the knowledge of the Company, no Intellectual Property owned or
used by the Company, and no Intellectual Property, product or service
practiced, offered, licensed by, sold or under development by the Company,
infringes any trademark, trade name, copyright, trade secret, patent, right
of publicity, right of privacy or other proprietary right of any Person or
would give rise to an obligation to render an accounting to any Person as a
result of co-authorship, co-invention or an express or implied contract for
any use or transfer. The Company has received no written notice of any
adversely held patent, invention, trademark, copyright, service mark, trade
name or trade secret of any other Person alleging or threatening to assert
that the Company's use of any of the Intellectual Property infringes upon
or is in conflict with any intellectual property or proprietary rights of
any third party. The Company has no knowledge of any basis for any charge
or claim, threatened claim or any suit or action asserting any such
infringement or asserting that the Company does not have the legal right to
own, enforce, sell, license, lease or otherwise use any such Intellectual
Property, process, product or service.
(e) All the Company's Patents and Trademarks (each, as defined below)
listed in Schedule 4.14 and material registered Copyrights as having been
issued by, registered with or filed with the United States Patent and
Trademark Office or Register of Copyrights or the corresponding offices of
other countries have been so duly registered, filed in or issued, as the
case may be, and have been properly maintained and renewed in accordance
with all applicable provisions of law and administrative regulations in the
United States and each such other country. The Company has used its
reasonable efforts to diligently protect its rights in the Intellectual
Property and any related apparatus or processes and there have been no acts
or omissions by the Company, the result of which would be to compromise the
rights of the Company to apply for or enforce appropriate legal protection
of such Intellectual Property.
(f) Each of the Company's employees and those independent contractors
retained by the Company who,
37
<PAGE>
either alone or in concert with others, created or creates, developed or
develops, invented or invents, discovered or discovers, derived or derives,
programmed or programs or designed or designs any of the Intellectual
Property, has entered into a written agreement with the Company providing,
in substance, that all such Intellectual Property and information is
proprietary to the Company and is not to be divulged or misused and
obligating the disclosure and transfer to the Company, in consideration for
normal salary and continued employment or consultant fees, as the case may
be, of all inventions, developments and discoveries and work-product which
during the period of his or her employment or consultancy with the Company,
as the case may be, such employee and independent contractor made or makes
or conceived or conceives of either solely or jointly with others, that
related or relate to any subject matter with which such employee's or
independent contractor's work for the Company was concerned, or related or
relates to or were or are connected with the business, products or projects
of the Company, or involved or involve the use of the Company's time,
material or facilities. To the knowledge of the Company, no former
employees or independent contractors of the Company have any claim or right
to any of the Intellectual Property necessary for the lawful conduct of the
Company's business as now conducted and currently contemplated to be
conducted. To the knowledge of the Company, no employee of the Company is a
party to or otherwise bound by any agreement with or obligated to any other
Person (including, any former employer) which in any respect conflicts with
any obligation or commitment of such employee to the Company under any
agreement to which currently he or she is a party or otherwise.
For purposes of this Agreement, "Intellectual Property" means all of the
---------------------
following which is owned by, licensed by, licensed to, used or held for use by
the Company (including all copies and embodiments thereof, in whatever media):
(i) all registered and unregistered trademarks, trade dress, service marks,
logos, trade names, corporate names and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction,
and applications in any jurisdiction to register (the "Trademarks"); (ii) all
----------
issued U.S. and foreign patents and pending patent applications (including,
without limitation, divisionals, continuation, continuation in part, continuing
and renewal applications), patent disclosures and improvements thereto (the
"Patents"); (iii) all registered and unregistered copyrights and all
- --------
applications to register the same (the "Copyrights"), (iv) all computer software
----------
and
38
<PAGE>
databases owned by the Company or under development for the Company (the
"Software"); (v) all licenses and agreements pursuant to which the Company has
- ---------
acquired rights in or to the Trademarks, Patents, Copyrights or Software
(excluding software and databases licensed to the Company under standard (except
for immaterial deviations), nonexclusive software licenses granted to end-user
customers by third parties in the ordinary course of such third parties'
business) ("Licenses-In"), (vi) all licenses and agreements pursuant to which
-----------
the Company has licensed or transferred the rights in and to Company
Intellectual Property ("Licenses Out"'); and (vii) all categories of trade
------------
secrets, know-how, inventions (whether or not patentable and whether or not
reduced to practice), processes, procedures, drawings, specifications, designs,
plans, proposals, technical data, copyrightable works and other proprietary
technical information ("Proprietary Rights").
------------------
SECTION 4.15. Significant Agreements. Schedule 4.15 sets forth a
----------------------
complete and correct list of all written and, to the Company's knowledge, oral
contracts, agreements and commitments to which the Company or any of its
subsidiaries is a party which would be listed as an exhibit to the Company's
Annual Report on Form 10-K if filed on the date of this Agreement (the
"Significant Agreements"). The Company has heretofore furnished or made
- -----------------------
available to Parent complete and correct copies of the Significant Agreements,
each as amended or modified to the date hereof (including any waivers with
respect thereto). Except as set forth on Schedule 4.4 or Schedule 4.15, each of
the Significant Agreements is in full force and effect and enforceable in
accordance with its terms; neither the Company nor any of its subsidiaries has
received any written notice of cancellation or termination of, or any expression
or indication of an intention or desire to cancel or terminate, any of the
Significant Agreements; no Significant Agreement is the subject of, or, to the
knowledge of the Company, has been threatened to be made the subject of, any
arbitration, suit or other legal proceeding; with respect to any Significant
Agreement which by its terms will terminate as of a certain date unless renewed
or unless an option to extend such Significant Agreement is exercised neither
the Company nor any of its subsidiaries has received any notice (written or
oral), or otherwise has any knowledge, that any such Significant Agreement will
not be so renewed or that any such extension option will not be exercised; and
there exists no event of default or occurrence, condition or act on the part of
the Company or any of its subsidiaries or, to the knowledge of the Company, on
the part of the other parties to the Significant Agreements which constitutes or
would constitute (with notice or lapse of time or both) a breach of or default
under any of the Significant
39
<PAGE>
Agreements, except to the extent that the inaccuracy of the foregoing would not,
individually or in the aggregate, have a Material Adverse Effect and would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Company to perform its obligations hereunder.
SECTION 4.16. Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are in the
Company's judgment, reasonable for the assets and properties of the Company and
its subsidiaries and as are customary in the Company's industry and, as of the
date of this Agreement, except (i) as set forth in Schedule 4.16 or (ii) as
would not have, individually or in the aggregate, a Material Adverse Effect or a
material adverse effect on the ability of the Company to perform its obligations
hereunder, all such policies are in full force and effect, all premiums due and
payable thereon have been paid, and no notice of cancellation or termination has
been received with respect to any such policy.
SECTION 4.17. Labor Matters. Except as set forth in Schedule 4.17,
-------------
and except for normal and customary labor arrangements outside of North America,
neither the Company nor any of its subsidiaries is a party to any collective
bargaining or other labor union contract applicable to persons employed by the
Company or any of its Material Subsidiaries, no collective bargaining agreement
is being negotiated by the Company or any of its Material Subsidiaries and the
Company has no knowledge of any activities or proceedings of any labor union to
organize any of their respective employees. There is no labor dispute, strike or
work stoppage against the Company or any of its subsidiaries pending or, to the
Company's knowledge, threatened which may interfere with the respective business
activities of the Company or any of its subsidiaries, except where such dispute,
strike or work stoppage would not reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
SECTION 4.18. Year 2000. The computer software and hardware operated
---------
by the Company and its subsidiaries that is used in the conduct of their
business is capable of providing or being adapted to provide uninterrupted
millennium functionality to record, store, process and present calendar dates
falling on or after January 1, 2000 in substantially the same manner and with
the same functionality as such software and hardware records, stores, processes
and presents such calendar dates falling on or before December 31, 1999 other
than such interruptions in
40
<PAGE>
millennium functionality that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on the ability of the Company to perform its obligations hereunder.
ARTICLE V
Representations and Warranties of Parent and
--------------------------------------------
Acquisition Sub
---------------
Each of Parent and Acquisition Sub represents and warrants to the
Company as follows:
SECTION 5.1. Organization. Each of Parent and Acquisition Sub is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Acquisition Sub has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to have
such power and authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties, assets, condition
(financial or otherwise) or results of operations of Parent and its
subsidiaries, taken as a whole, (a "Parent Material Adverse Effect") or on the
------------------------------
ability of the Parent or Acquisition Sub to perform its obligations hereunder.
Parent owns, directly or indirectly, all the capital stock of Acquisition Sub.
GEC, p.l.c. owns, directly or indirectly, all the capital stock of Parent.
SECTION 5.2. Authority Relative to this Agreement. Each of Parent and
------------------------------------
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the board of directors of Acquisition Sub
and Parent and by Parent as the sole stockholder of Acquisition Sub, and no
other corporate proceedings on the part of Parent, Acquisition Sub, GEC, p.l.c.
or any of its subsidiaries are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by each of Parent and Acquisition Sub and,
assuming it constitutes a valid and binding agreement of each of the other
parties hereto, constitutes a legal, valid and binding agreement of each of
Parent and Acquisition Sub, enforceable against each of Parent and Acquisition
Sub in accordance with its terms , except as such enforceability may be limited
by bankruptcy,
41
<PAGE>
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 5.3. Non-Contravention, Required Filings and Consents.
------------------------------------------------
(a) The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the transactions contemplated
hereby (including the Merger) do not and will not (i) contravene or
conflict with the Certificate of Incorporation or By-Laws of Parent or
Acquisition Sub, (ii) assuming that all consents, authorizations and
approvals contemplated by subsection (b) below have been obtained and all
filings described therein have been properly made, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Parent
or Acquisition Sub or any of their respective properties; (iii) conflict
with, or result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice or the lapse of
time or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which Parent or Acquisition Sub is
entitled under any provision of any agreement, contract, license or other
instrument binding upon Parent, Acquisition Sub or any of their respective
properties, or allow the acceleration of the performance of, any obligation
of Parent or Acquisition Sub under any indenture, mortgage, deed of trust,
lease, license, contract, instrument or other agreement to which Parent or
Acquisition Sub is a party or by which Parent or Acquisition Sub or any of
their respective assets or properties is subject or bound; or (iv) result
in the creation or imposition of any Lien on any asset of Parent or
Acquisition Sub, except in the case of clauses (ii), (iii) and (iv) for any
such contraventions, conflicts, violations, breaches, terminations,
defaults, cancellations, losses, accelerations and Liens which,
individually or in the aggregate, would not reasonably be expected to
prevent, or materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the transactions contemplated
hereby (including the Merger) by Parent and Acquisition Sub
42
<PAGE>
require no filings, notices, declarations, consents or other actions to be
made by Parent or Acquisition Sub with, nor are any approvals or other
confirmations or consents required to be obtained by Parent or Acquisition
Sub from, any Governmental Entity (except those the failure of which to
make, give or obtain, individually or in the aggregate, would not
reasonably be expected to prevent or materially delay Parent's or
Acquisition Sub's ability to consummate the transactions contemplated
hereby), other than filings, notices, approvals, confirmations, consents,
declarations or decisions (i) relating to the filing of the Certificate of
Merger in accordance with Delaware Law; (ii) required by the HSR Act; (iii)
required by the Exchange Act and state securities, takeover and Blue Sky
laws; (iv) required by the Canadian Competition Act; (v) from the Italian
Autorita Garante della Concorrenza e del Mercato that it does not intend to
initiate a second stage investigation of the transactions contemplated
hereby (including the Merger) or any matters arising therefrom under
Article 16 of Law no.287 of October 10, 1990; (vi) from the German Federal
Cartel Office, during the one month time limit referred to in Section 40
paragraph 1 of the Act against Restraints on Competition, that the
conditions for a prohibition in Section 36 paragraph 1 of the Act against
Restraints on Competition are not fulfilled, or, if no such confirmation is
received, this one month time limit having expired without the parties
having been notified by the Federal Cartel Office that it has entered into
the examination of the proposed concentration; and (vii) from the U.K.
Office of Fair Trading that it is not the intention of the U.K. Secretary
of State to refer the transactions contemplated hereby or any matters
arising therefrom to the MMC (clauses (i) through (vii) are referred to
herein as the "Parent Governmental Approvals").
-----------------------------
SECTION 5.4. Offer Documents; Schedule 14D-9; Proxy Statement.
------------------------------------------------
Neither the Offer Documents, nor any of the information provided or to be
provided by Parent or Acquisition Sub or their auditors, attorneys, financial
advisors or other consultants or advisors specifically for use in the Schedule
14D-9 and any other documents to be filed with the SEC in connection with the
transactions contemplated hereby, including any amendment or supplement to such
documents, shall, on the respective dates the Offer Documents, the Schedule 14D-
9 and any other documents to be filed with the SEC in connection with the
transactions contemplated hereby or any supplements or amendments thereto are
filed with the SEC or on the date first published, sent or given to the
Company's stockholders, as the case may be,
43
<PAGE>
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, neither Parent nor Acquisition Sub
makes any representation or warranty with respect to any information provided by
the Company or by its auditors, attorneys, financial advisors or other
consultants or advisors specifically for use in the Offer Documents. None of the
information provided by Parent or Acquisition Sub or by their auditors,
attorneys, financial advisors or other consultants or advisors specifically for
use in the Proxy Statement shall, at the time filed with the SEC, at the time
mailed to the Company's stockholders, at the time of the Stockholders' Meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein in light of the circumstances under which
they are made, not misleading. The Offer Documents will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
SECTION 5.5. No Prior Activities. Since the date of its
-------------------
incorporation, Acquisition Sub has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with
arranging any financing required to consummate the transactions contemplated
hereby.
SECTION 5.6. Finder's Fee. No Broker, finder, investment banker or
------------
other intermediary (other than Credit Suisse First Boston) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or by the Stockholder Agreement
based upon arrangements made by and on behalf of Parent or Acquisition Sub.
SECTION 5.7. Financing. Parent has available, and will make
---------
available to Acquisition Sub, sufficient funds to consummate the Offer and the
Merger on the terms contemplated by this Agreement.
SECTION 5.8. Parent Not an Interested Stockholder. As of the date
------------------------------------
hereof, (i) neither Parent nor any of its affiliates is, with respect to the
Company, an "Interested Stockholder", as such term is defined in Section 203 of
Delaware Law and (ii) except to the extent that Parent and its affiliates may be
deemed to hold Shares as a result of this Agreement or the Stockholder
Agreement, Parent and its affiliates collectively do not hold directly
44
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or indirectly five percent (5%) or more of the outstanding voting securities of
the Company.
ARTICLE VI
Covenants
---------
SECTION 6.1. Conduct of Business of the Company. Except as otherwise
----------------------------------
expressly provided in this Agreement or consented to by Parent, during the
period from the date hereof to the Effective Time, the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business and the Company and its subsidiaries will each use its reasonable
best efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing relationships
with licensors, licensees, suppliers, bankers, insurers, contractors,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, and except as specifically
contemplated by this Agreement or disclosed in the SEC Reports filed prior to
the date of this Agreement, the 1998 Draft Report or as set forth in Schedule
6.1, prior to the Effective Time, neither the Company nor any of its
subsidiaries will, without the prior written consent of Parent:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws or equivalent organizational documents,
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity
equivalents (including, without limitation, stock appreciation rights and
Voting Company Debt), except as required by option agreements as in effect
as of the date hereof, or except as contemplated by Section 2.8, amend any
of the terms of any such securities or agreements outstanding as of the
date hereof,
(c) effect any reorganization or recapitalization or split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock, or property or any
combination thereof) in respect of its capital stock or redeem, repurchase
or otherwise
45
<PAGE>
acquire any of its securities or any securities of its subsidiaries;
(d) (i) incur any indebtedness for borrowed money (except for short
term indebtedness incurred in the ordinary course of business pursuant to
existing lines of credit) or issue any debt securities or, except in the
ordinary course of business, assume, guarantee or endorse the obligations
of any other person, except for intercompany indebtedness between the
Company and its wholly owned subsidiaries or between any of the Company's
wholly owned subsidiaries; (ii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company) except in the ordinary course of
business; (iii) pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries except in the ordinary course of
business; (iv) enter into or invest in any Derivative Financial Instruments
except in the ordinary course of business consistent with the Company's
current investment and risk management policies (it being understood that
the Company shall continue its current investment and risk management
policies); or (v) mortgage or pledge any of its assets, tangible or
intangible, or except in the ordinary course of business, create or suffer
to exist any Lien thereupon, provided that, notwithstanding anything to the
-------- ----
contrary and without limiting the generality of the foregoing, no
transaction described in clauses (iv) and (v) shall be permitted without
Parent's consent for any such transaction (or series of related
transactions) the value of which is in excess of $20 million;
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee, or (except, in the case of employees who are
not officers or directors, for normal compensation increases in the
ordinary course of business that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company)
increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan or
arrangement as in effect as of the date hereof (including, without
limitation, the
46
<PAGE>
granting of stock options, restricted stock, stock appreciation rights,
"phantom" stock rights or performance units);
(f) sell, lease or otherwise dispose of, or grant any Lien with
respect to any assets (including technology assets) or properties of the
Company and its subsidiaries, or enter into any contract, agreement,
commitment or transaction with respect to the foregoing that are,
individually or in the aggregate, material to any of the Company and its
subsidiaries, taken as a whole, except for dispositions of excess or
obsolete assets and sales of inventories in the ordinary course of
business;
(g) change any of the accounting principles or practices used by it,
except as may be required as a result of a change in law, SEC guidelines or
generally accepted accounting principles;
(h) (i) acquire (by merger, consolidation, acquisition of stock or
assets (including technology assets) or otherwise) any corporation,
partnership or other business organization or division thereof, (ii)
authorize any new capital expenditure or expenditures which, individually,
is in excess of $2,500,000 or, in the aggregate, are in excess of
$10,000,000; (iv) settle any litigation for amounts in excess of the
greater of $200,000 individually or $1,000,000 in the aggregate or, with
respect to any litigation as to which reserves have been recorded on the
books of the Company, the amount reserved for such litigation; or (v) enter
into or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(i) make any Tax election or settle or compromise any Tax liability,
other than in the ordinary course of business;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business or in accordance with their terms, or reflected or reserved
against in the consolidated financial statements (or the notes thereto) of
the Company and its consolidated subsidiaries or incurred in the ordinary
course of business;
(k) (i) terminate, modify, amend or waive compliance with any material
provision of any of the
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Significant Agreements, or fail to take any reasonable action necessary to
preserve the material benefits of any Significant Agreement to the Company
or any of its subsidiaries or (ii) enter into any agreement which, if such
agreement is entered into, would be a Significant Agreement;
(1) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to in
Section 6.6); or
(m) take, or agree in writing or otherwise to take, any of the actions
described above in Section 6.1.
SECTION 6.2. Proxy Statements.
----------------
To the extent that the Company is required by Section 2.9 hereof to
hold the Stockholders Meeting, the Company shall, as promptly as practicable
following the date hereof, prepare and file the Proxy Statement with the SEC
under the Exchange Act. As soon as practicable following completion of review
of the Proxy Statement by the SEC, the Company shall mail the Proxy Statement to
its stockholders who are entitled to vote at the Stockholders' Meeting. The
Proxy Statement shall contain the recommendation of the Board sufficient to
satisfy all applicable requirements for Board action under Section 251 of the
Delaware Law in order for the Merger to be validly approved.
SECTION 6.3. Access to Information; Confidential ity Agreement.
-------------------------------------------------
(a) Between the date hereof and the Effective Time, the Company will
give each of Parent and Acquisition Sub and their counsel, financial
advisors, auditors, and other authorized representatives reasonable access
during normal business hours to all management employees, plants, offices,
warehouses and other facilities and to all books and records of the Company
and its subsidiaries, will permit each of Parent and Acquisition Sub and
their respective counsel, financial advisors, auditors and other authorized
representatives to make such inspections as Parent or Acquisition Sub may
reasonably require and will cause the Company's officers and those of its
subsidiaries to furnish Parent or Acquisition Sub or their representatives
with such financial and operating data and other information with respect
to the business
48
<PAGE>
and properties of the Company and any of its subsidiaries as Parent or
Acquisition Sub may from time to time reasonably request, in all such
cases, however, subject to existing confidentiality and similar non-
disclosure obligations and preservation of attorney client work product
privileges. Without limiting the generality of the foregoing but subject to
the limitations contained therein, the Company shall provide to Parent all
information in respect of the Company and its business that Parent shall
from time to time reasonably request to enable Parent or its affiliates to
comply with all U.K. statutory and other legal and regulatory provisions
(including the U.K. Companies Act 1985, the U.K. Financial Services Act
1986 and the rules and regulations promulgated thereunder, and the rules
and requirements of the London Stock Exchange, and including in respect of
any documentation or information that Parent or its affiliates is required
to issue or file from time to time, whether or not such documentation or
information is issued or filed as a result of, or in connection with, the
Offer or Merger).
(b) The parties agree that the provisions of the Confidentiality
Agreement dated as of February 4, 1999 (the "Confidentiality Agreement")
-------------------------
shall remain binding and in full force and effect and that the terms of the
Confidentiality Agreement are incorporated herein by reference and that all
information provided by the Company pursuant to this Section 6.3 shall be
subject to such agreement; provided, however, that any consents from the
-------- -------
Company necessary under the Confidentiality Agreement for Parent and
Acquisition Sub to consummate the transactions contemplated by this
Agreement and the Stockholders Agreement shall be deemed to have been made.
The parties shall comply with, and shall cause their respective
Representatives (as defined below) to comply with, all of their respective
obligations under the Confidentiality Agreement until Acquisition Sub
purchases a majority of the outstanding Shares pursuant to the Offer.
SECTION 6.4. Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable on
their part under this Agreement or laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Stockholder
Agreement. Without limiting the generality of the foregoing, Parent,
Acquisition Sub, Sellers and the
49
<PAGE>
Company shall cooperate with one another (i) in the preparation and filing of
the Offer Documents, the Schedule 14D-9, the Proxy Statement and any required
filings in connection with the Company Governmental Approvals, the Parent
Governmental Approvals and any other applicable laws; (ii) in determining
whether action by or in respect of, or filing with, any Governmental Entity is
required, proper or advisable or any actions, consents, waivers or approvals are
required to be obtained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and the Stockholder Agreement; (iii)
in taking all action reasonably necessary, proper or advisable to secure any
necessary consents, approvals or waivers from third parties, including under
existing debt obligations of the Company and its subsidiaries or to amend the
notes, indentures or agreements relating to such existing debt obligations to
the extent required by such notes, indentures or agreements, or to redeem or
repurchase such debt obligations; (iv) in contesting any pending legal
proceeding, whether judicial or administrative, relating to the Offer or the
Merger including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed; (v) executing any
additional instruments necessary to consummate the transactions contemplated
hereby and (vi) in seeking timely to obtain any such actions, consents and
waivers and to make any such filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 6.5. Public Announcements. Parent and Acquisition Sub, on
--------------------
the one hand, and the Company, on the other hand, will consult with each other
before issuing any press release with respect to the transactions contemplated
by this Agreement and the Stockholder Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation (and
affording the other party or parties an opportunity to comment thereon), except
as may be required by applicable law or by applicable rules of any securities
exchange.
SECTION 6.6. Indemnification, Insurance.
--------------------------
(a) From and after the Effective Time, Parent and Acquisition Sub
shall indemnify and hold harmless each person who is, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time,
an officer, director or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties" and individually, the "Indemnified
------------------- -----------
Party")
-----
50
<PAGE>
against all losses, liabilities, expenses, claims or damages in
connection with any claim, suit, action, proceeding or investigation based
in whole or in part on the fact that such Indemnified Party is or was a
director, officer or employee of the Company or any of its subsidiaries or
as trustee or fiduciaries of any plan for the benefit of employees and
arising out of acts or omissions occurring prior to and including the
Effective Time (including but not limited to the transactions contemplated
by this Agreement) to the fullest extent permitted by applicable law, for a
period of not less than six years following the Effective Time; provided
--------
that in the event any claim or claims are asserted or made within such six-
year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(b) Parent shall cause the Certificate of Incorporation and By-Laws of
the Surviving Corporation and its subsidiaries to include provisions for
the limitation of liability of directors and indemnification of the
Indemnified Parties to the fullest extent permitted under Delaware Law and
shall not permit the amendment of such provisions in any manner adverse to
the Indemnified Parties, as the case may be, without the prior written
consent of such persons, for a period of six years from and after the date
hereof.
(c) For six years after the Effective Time, the Surviving Corporation
shall cause to be maintained the current policies of directors' and
officers' liability insurance maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are substantially
equivalent) with respect to matters occurring prior to the Effective Time,
to the extent such policies are available; provided, that in no event shall
the Surviving Corporation be required to expend, in order to maintain or
procure insurance coverage pursuant to this Section 6.6(c), any amount per
annum greater than 150% of the current annual premiums paid by the Company
for such insurance (which the Company represents and warrants to be not
more than $305,375.
SECTION 6.7. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent or Acquisition Sub, and Parent or Acquisition Sub shall
give prompt notice to the Company, upon becoming aware of (i) the occurrence or
nonoccurrence of any event, the occurrence or
51
<PAGE>
nonoccurrence of which has resulted in, or could reasonably be expected to
result in, any condition to the Offer set forth in Annex A, or any condition to
the Merger set forth in Article VII, not being satisfied, (ii) the failure of
such party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
the occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence,
of which would cause any representation or warranty contained in this Agreement
to be untrue or inaccurate, which has resulted in, or could be reasonably
expected to result in any condition to the Offer set forth in Annex A not to be
satisfied. The delivery of any notice pursuant to this Section 6.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.8. Employee Plans.
--------------
(a) Except as may be otherwise agreed to by Parent and the Company,
the Company Stock Plans shall terminate as of the Effective Time. Prior to
the purchase by Parent, Acquisition Sub and their affiliates of Shares
pursuant to the Offer or the KKR Shares upon the exercise of the Option
pursuant to the Stockholder Agreement, the Board (or, if appropriate, any
committee thereof) shall adopt such resolutions or take such other actions
as are required to (i) effect the transactions contemplated by Section 2.8
hereof and (ii) with respect to any stock option, stock appreciation or
other stock benefit plan of the Company or any of its subsidiaries not
addressed by the preceding clause, ensure that the Company or any duly
appointed committee will not use its discretion to accelerate the vesting
of any award under any such Plan and following the Effective Time, no
participant therein shall have any right thereunder to acquire any capital
stock of the Surviving Corporation or any subsidiary thereof.
(b) Between the date of this Agreement and the Effective Time, the
Company shall reasonably cooperate with Parent and Acquisition Sub in
structuring transactions (including those described in Section 2.8 with
respect to Employee Options) so as to optimize the
52
<PAGE>
tax treatment of the Company, Parent and Acquisition Sub in connection
therewith.
SECTION 6.9. No Solicitation.
---------------
(a) The Company will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). The Company shall
not directly or indirectly, through any officer, director, employee,
representative, agent or affiliates, including any investment banker,
attorney, or accountant (collectively, "Representatives") retained by the
---------------
Company or any of its Subsidiaries or affiliates, (i) solicit, initiate,
encourage or otherwise facilitate (including by way of furnishing
information) any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of
15% or more of shares of capital stock (including, without limitation, by
way of a tender offer) or similar transactions involving the Company or any
of its subsidiaries, other than the transactions contemplated by this
Agreement or the Stockholders Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition
-----------
Proposal"), or (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Acquisition Proposal.
(b) Neither the Board nor any committee thereof shall (i) subject to
Section 6.9(d), withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Acquisition Sub, the approval or recommendation
by the Board or such committee of the Offer, the Agreement; (ii) approve
or recommend, or propose to approve or recommend, any Acquisition Proposal;
or (iii) cause or permit the Company or any of its subsidiaries to enter
into any agreement, including an agreement in principle or letter of intent
relating to an Acquisition Proposal (an "Acquisition Agreement").
---------------------
(c) The Company shall notify Parent immediately (and no later than 24
hours) after receipt by the Company of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company
by any person or entity that informs the Company that it is considering
making,
53
<PAGE>
or has made, an Acquisition Proposal. Such notice shall be made orally and
in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(d) Nothing contained in this Section 6.9 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any legally
required disclosure to the stockholders of the Company. Notwithstanding
anything else to the contrary, neither the Company nor the Board shall take
any action that would (x) prevent, impede or delay the Offer, the
Stockholder Meeting or the ability of the stockholders to hold a meeting to
vote on the Merger or adopt this Agreement, (y) prevent, impede or delay
(i) the ability of the stockholders of the Company (A) to tender or sell
their Shares in the Offer and (B) to approve and adopt this Agreement, the
Merger and the other transactions contemplated hereby, or (ii) the ability
of the Company, Parent or Acquisition Sub from effecting the Offer or,
after the stockholders of the Company have voted in favor of the Merger and
adopted the Merger Agreement, from effecting the Merger in accordance with
Delaware Law or (z) result in the Board not having taken all Board action
required to satisfy all applicable requirements of Delaware Law in
connection with this Agreement, the Merger and the other transactions
contemplated hereby. Notwithstanding anything to the contrary, the Company
will duly call, give notice and hold the Stockholders Meeting, if required
by the Delaware Law, for the purpose of considering and taking action upon
this Agreement and the Merger whether or not the Board has determined at
any time after the date hereof it is no longer advisable for the
stockholders of the Company to adopt this Agreement. It is understood that
any violation of the restrictions set forth in this Section 6.9 by any
Representative of the Company or any of its subsidiaries, whether or not
such person is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of this Section 6.9 by the Company.
SECTION 6.10. Agreements With Sellers (or their affiliates).
---------------------------------------------
Notwithstanding anything to the contrary contained in any contract, agreement or
commitment between the Company or any of its subsidiaries, on the one hand, and
Sellers or any of their affiliates (other than the Company and its
subsidiaries), on the other hand (the "Sellers' Agreements"), the Sellers'
-------------------
Agreements set forth on
54
<PAGE>
Schedule 6.10 shall terminate as of the Effective Time without liability on the
part of any of the parties thereto.
SECTION 6.11. Employee Matters.
----------------
(a) For a period of at least two years after the Effective Time,
Parent shall cause the Surviving Corporation to provide compensation and
benefit plans (other than any stock-based plans, programs or arrangements)
that are in the aggregate substantially as favorable as the Company's
existing compensation, welfare and pension benefit plans, programs and
arrangements for the benefit of current and former employees and directors
of the Company (subject to such modification as may be required by
applicable law).
(b) If any employee of the Company or any of its subsidiaries becomes
a participant in any employee benefit or compensation plan, arrangement,
practice or policy of Parent or any affiliate of Parent, such employee
shall be given credit for eligibility and vesting under such plan
arrangement, practice or policy for all service prior to the Effective Time
with the Company, any of its subsidiaries, affiliates or any predecessors
for which the employee would have been credited in the Company's plans
immediately prior to the Effective Time.
SECTION 6.12. Acquisition Sub . Parent will take all action
----------------
necessary to cause Acquisition Sub to perform its obligations hereunder and to
consummate the Offer and the Merger on the terms and conditions set forth
herein.
SECTION 6.13. FIRPTA Affidavit. The Company will use its best
----------------
efforts to cause each person who holds five percent (5%) or more of the stock of
the Company to deliver an affidavit stating, under penalties of perjury, such
person's U.S. taxpayer identification number and that such person is not a
"foreign person" as defined in Section 1445 of the Code.
SECTION 6.14. Third Party Standstill Agreements; Tortious
-------------------------------------------
Interference. During the period from the date of this Agreement through the
- ------------
Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill or similar agreement to which the
Company or any of its subsidiaries is a party (other than any involving Parent).
Subject to the foregoing, during such period, the Company agrees to enforce, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and
55
<PAGE>
to enforce specifically the terms and provisions thereof in any court having
jurisdiction.
ARTICLE VII
Conditions to Consummation of the Merger
----------------------------------------
SECTION 7.1. Conditions to the Company's, Parent's and Acquisition
-----------------------------------------------------
Sub's Obligation to Effect the Merger. The respective obligations of Company,
- -------------------------------------
Parent and Acquisition Sub to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with Delaware Law;
(b) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and the other Company Governmental
Approvals and Parent Governmental Approvals, the failure of which to obtain
would be reasonably expected to have a Material Adverse Effect or a Parent
Material Adverse Effect ("Required Approvals"), shall have been obtained or
------------------
satisfied, as the case may be, on terms satisfactory to Parent in its
reasonable discretion; provided that this condition may not be asserted by
--------
the Company with respect to any Required Approval if the potential penalty
for any failure to receive such Required Approval will be borne only by
Parent or Acquisition Sub;
(c) no statute, rule, regulation, executive order, decree, ruling,
injunction or other order shall have been enacted, entered, promulgated or
enforced by any court or other Governmental Authority of competent
jurisdiction that prohibits the Merger or makes the Merger illegal; and
(d) Acquisition Sub, Parent or their affiliates shall have accepted
for payment and purchased Shares pursuant to and subject to the conditions
of the Offer or the KKR Shares upon the exercise of the Option pursuant to
the Stockholder Agreement.
56
<PAGE>
ARTICLE VIII
Termination; Amendment; Waiver
------------------------------
SECTION 8.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent, Acquisition Sub and the
Company;
(b) by Parent or the Company if any court or other Governmental Entity
of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable;
(c) by Parent or the Company, if Acquisition Sub shall have (i) failed
to commence the Offer as provided in Section 1.1, (ii) terminated or
withdrawn the Offer without purchasing any Shares pursuant to the Offer or
(iii) failed to pay for Shares pursuant to the Offer by July 1, 1999 (the
"Termination Date"); provided, that the right to terminate this Agreement
----------------- --------
under this subparagraph (c) shall not be available (x) to any party
(including Acquisition Sub's failure in the case of Parent) whose failure
to fulfill any obligation under this Agreement has been the cause or
resulted in one of the circumstances described in clause (i), (ii) or
(iii), (y) to the Company if any of the events specified in Section 6.2(d)
of the Stockholder Agreement shall have occurred, or a breach of the
Stockholder Agreement by any Seller has been the cause or resulted in one
of the circumstances described in clause (i), (ii), or (iii) or (z) to any
party if Acquisition Sub, Parent or their affiliates shall have exercised
the Option unless such exercise subsequently is voided under the terms of
the Stockholder's Agreement;
(d) by Parent or Acquisition Sub, at any time prior to the purchase by
Acquisition Sub, Parent or their affiliates of Shares pursuant to and
subject to the conditions of the Offer or the purchase of the KKR Shares
upon the exercise of the Option pursuant to the Stockholder Agreement, if
(i) any representation or warranty of the Company contained herein or of
the Sellers contained in the Stockholder Agreement that is qualified as to
materiality shall not be true and
57
<PAGE>
correct or any representation or warranty of the Company contained herein
or of the Sellers contained in the Stockholder Agreement that are not so
qualified shall not be true and correct in any material respect, (ii) there
shall have been a breach of any covenant or agreement (including Section
6.9) of the Company contained herein or of the Sellers contained in the
Stockholder Agreement (including Section 8 thereof) which would materially
adversely affect (or materially delay) the consummation of the Offer or the
Merger or the transactions contemplated by the Stockholder Agreement, which
shall not have been cured prior to the earlier of 10 business days
following notice of such breach and two business days prior to the date the
Offer expires, provided, however, the Company will have no right to cure a
------- --------
breach of Section 6.9; or
(e) by the Company prior to the purchase by Acquisition Sub, Parent or
their affiliates of Shares pursuant to and subject to the conditions of the
Offer or the purchase of any KKR Shares upon exercise of the Option
pursuant to the Stockholders Agreement, if (i) there shall have been a
material breach of any representation or warranty in this Agreement or the
Stockholders Agreement on the part of Parent or Acquisition Sub which
adversely affects (or materially delays) the consummation of the Offer or
(ii) there shall have been a material breach of any covenant or agreement
in this Agreement or the Stockholders Agreement on the part of Parent or
Acquisition Sub which adversely affects (or materially delays) the
consummation of the Offer which shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B) two
business days prior to the date on which the Offer expires.
SECTION 8.2. Effect of Termination. In the event of the termination
---------------------
and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto, other than the provisions of this Section 8.2 and Sections
4.8, 5.6, 6.3(b) and 8.3 and Article IX. The termination of this Agreement shall
not relieve any party from liability for any willful breach of any covenant
contained in this Agreement.
SECTION 8.3. Fees and Expenses. Each party shall bear its own
-----------------
expenses and costs in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4. Amendment. Subject to Section 1.3(c), this Agreement
---------
may be amended by action
58
<PAGE>
taken by the Company, Parent and Acquisition Sub at any time before or after
adoption of the Merger by the stockholders of the Company (if required by
applicable law) but, after any such approval, no amendment shall be made that
requires the approval by the Company's stockholders without obtaining such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any
-----------------
time prior to the Effective Time, the Company, on the one hand, and Parent and
Acquisition Sub, on the other hand, may (i) extend the time for the performance
of any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document, certificate or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto 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 failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
No delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which the parties hereto may otherwise have at law or in equity.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1. Non-Survival of Representations and Warranties. None of
----------------------------------------------
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article IX. Each party hereto
59
<PAGE>
agrees that, except for the representations and warranties contained in this
Agreement and the Stockholder Agreement, (i) none of the Company, Parent or
Acquisition Sub or any of their respective officers, directors, employees,
affiliates, agents, financial or legal advisors or other representatives makes
any other representations or warranties, whatsoever, oral or written, express or
implied, and each hereby disclaims any other representations and warranties made
by itself or any of its officers, directors, employees, affiliates, agents,
financial and legal advisors or other representatives, with respect to the
execution and delivery of this Agreement, the documents and the instruments
referred to herein, or the transactions contemplated hereby or thereby,
notwithstanding the delivery or disclosure to the other party or the other
party's representatives of any documentation or other information with respect
to any one or more of the foregoing, and (ii) none of the parties hereto is
relying on any disclosure, statement, representation or warranty, oral or
written, express or implied, made by any other party hereto or such party's
officers, directors, employees, affiliates, agents, financial or legal advisors
or other representatives.
SECTION 9.2. Entire Agreement; Assignment. This Agreement (including
----------------------------
the Schedules hereto), the Confidentiality Agreement and the Stockholder
Agreement (i) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise; provided that Acquisition Sub may assign its rights and obligations
--------
(including the right to purchase Shares in the Offer) in whole or in part to any
direct or indirect subsidiary of GEC, p.l.c. (or the successor to the non-
defense business of GEC, p.l.c.) (provided that such transferee agrees in
writing to be bound by this Agreement), but no such assignment shall relieve
Parent or Acquisition Sub of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 9.3. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile, overnight courier or by registered or certified
60
<PAGE>
mail (postage prepaid, return receipt requested), to the other party as follows:
if to Parent or Acquisition Sub:
GEC Incorporated and
George Acquisition Corp.
c/o Videojet Systems International, Inc.
1500 Mittel Boulevard
Wood Dale, Illinois 60191-1073
Attention: Patricia A. Hoffman, Secretary
Facsimile: (630) 238-3998
with copies to:
Mayer, Brown & Platt
Bucklersbury House
3, Queen Victoria Street
London, EC4N 8EL, ENGLAND
Attention: Jeffrey I. Gordon
Facsimile: 011-44-171-329-4455
and
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York, 10019
Attention: Philip A. Gelston
Facsimile: (212) 474-3700
if to the Company:
Reltec Corporation
5900 Landerbrook Drive, Suite 300
Cleveland, Ohio 44124-4019
Attention: Valerie Gentile Sachs,
Vice President and General Counsel
Facsimile: (440) 460-3690
with copies to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Attention: Peter F. Kerman
Facsimile: (650) 463-4600
61
<PAGE>
Attention: Peter F. Kerman
Facsimile: (650) 463-4600
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4. Governing Law. This Agreement shall be governed by and
-------------
cons irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the States of Delaware and of the United States of
America located in the State of Delaware or any appellate court thereof (the
"Delaware Courts") for any litigation arising out of or relation to this
-------- ------
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such Delaware Courts), waives any
objection to the laying of venue of any such litigation in the Delaware Court
that such litigation brought therein has been brought in an inconvenient forum.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in Section 9.3. Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv)
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.4.
SECTION 9.5. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and its successors and
62
<PAGE>
permitted assigns, and, except as provided in Article II (other than Section
2.8), Section 1.3(c) and Section 6.6 nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies or any nature whatsoever under or by reason of this
Agreement.
SECTION 9.6. Remedies. The parties hereto agree that irreparable
--------
damage would occur in the event any provision of this agreement was not
performed in accordance with the terms hereof or otherwise breached and that the
parties shall be entitled to specific performance of the terms hereof or to an
injunction to prevent such breach, in addition to any other remedy at law or in
equity.
SECTION 9.7. Severability. The provisions of this Agreement shall be
------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity and enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 9.8. Interpretation. The descriptive headings herein are
--------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. When a reference is
made in this Agreement to Sections, Exhibits or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. It is understood and agreed that neither the specifications of any
dollar amount in this Agreement nor the inclusion of any specific item in the
Schedules or Exhibits is intended to imply that such amounts or higher or lower
amounts, or the items so included or other items, are or are not material, and
neither party shall use the fact or setting or such amounts or the fact of the
inclusion of such item in the Schedules or Exhibits in any dispute or
controversy between the parties as to whether any obligation, item or matter is
or is not material for purposes hereof.
63
<PAGE>
SECTION 9.9. Certain Definitions. For purposes of this Agreement,
-------------------
the term:
(a) "affiliate" of a person means a person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "business day" shall mean any day other than a Saturday, Sunday or
------------
federal holiday;
(c) "control" (including the terms "controlled by" and "under common
-------
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
----------------------------------------
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, in each case applied on a basis consistent
with the manner in which the audited financial statements for the fiscal
year of the Company ended December 31, 1997 were prepared;
(e) "including" means including, without limitation;
---------
(f) "person" means an individual, corporation, partnership,
------
association, trust, unincorporated organization, Governmental Entity, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act), and
(g) "subsidiary" or "subsidiaries" of any person means any
---------- ------------
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation, partnership, joint venture or other legal entity.
64
<PAGE>
SECTION 9.10. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
65
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
RELTEC CORPORATION
By: /s/ Scott A. Fine
-----------------
Name:Scott A. Fine
Title:Vice President
GEC INCORPORATED
By: /s/ Michael Lester
------------------
Name:Michael Lester
Title:Director
GEORGE ACQUISITION CORP.
By: /s/ John Mayo
-------------
Name:John Mayo
Title:Director
<PAGE>
ANNEX A
OFFER CONDITIONS
The capitalized terms used in this Annex 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 and the term "Commission" shall be
----------
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Acquisition Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-l(c) under the Exchange
Act (relating to Acquisition Sub's obligation to pay for or return Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may terminate the Offer and not accept for payment
any Shares, if (i) upon expiration of the Offer as determined in accordance with
the Merger Agreement the Minimum Condition shall not have been satisfied, (ii)
upon expiration of the Offer as determined in accordance with the Merger
Agreement any applicable waiting period under the HSR Act shall not have expired
or been terminated, (iii) Parent, Acquisition Sub and the Company shall not
have obtained, on terms satisfactory to Parent in its reasonable discretion,
from (A) the German Federal Cartel Office, during the one month time limit
referred to in Section 40 paragraph 1 of the Act against Restraints on
Competition, confirmation that the conditions for a prohibition in Section 36
paragraph 1 of the Act against Restraints on Competition are not fulfilled, or,
if no such confirmation is received, the one month time limit having expired
without the parties having been notified by the Federal Cartel Office that it
has entered into the examination of the proposed concentration, (B) the
consents, authorizations and approvals required by the Canadian Competition Act;
(C) confirmation from the Italian Autorita Garante della Concorrenza e del
Mercato that it does not intend to initiate a second stage investigation of the
transactions contemplated hereby (including the Merger) or any matters arising
therefrom under Article 16 of Law no.287 of October 10, 1990; and (D)
confirmation from the U.K. Office of Fair Trading that it is not the intention
of the U.K. Secretary of State to refer the transactions contemplated hereby or
any matters arising therefrom to the MMC, (iv) any other authorizations,
consents, orders or approvals of, or declarations or filing with, or expirations
of waiting periods imposed by, any Governmental Entity, the failure of which to
obtain would reasonably be expected to have a Material Adverse
<PAGE>
Effect, a Parent Material Adverse Effect or a material adverse effect on the
ability of the Company, Parent or Acquisition Sub to perform its obligations
under the Merger Agreement, shall not have been obtained or satisfied on terms
satisfactory to Parent in its reasonable discretion or (v) at any time on or
after the date of the Merger Agreement and prior to the acceptance for payment
of Shares, any of the following conditions occurs or has occurred:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity, that has a reasonable likelihood of success, (A)
challenging the acquisition by Parent or Acquisition Sub of any Shares,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or seeking to obtain from the Company, Parent or any of their
respective subsidiaries or affiliates any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (B) seeking
to prohibit or limit the ownership or operation by the Company, Parent or
any of their respective subsidiaries or affiliates of any material portion
of the business or assets of the Company, Parent or any of their respective
subsidiaries or affiliates, or to compel the Company, Parent or any of
their respective Subsidiaries or affiliates to dispose of or hold separate
any material portion of the business or assets of the Company, Parent or
any of their respective Subsidiaries or affiliates which are material to
Parent and its subsidiaries, taken as a whole, or the Company and its
subsidiaries, taken as a whole, as the case may be, as a result of the
Offer, the Merger or any of the other transactions contemplated by the
Agreement or (C) which otherwise is reasonably likely to have a Material
Adverse Effect or a material adverse effect on the ability of the Company
to perform its obligations hereunder;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to (A)
Parent, the Company or any of their respective Subsidiaries or affiliates
or (B) the Offer or the Merger by any Governmental Authority that has or is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in paragraph (a) above;
(c) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any securities exchange or
in the over-
2
<PAGE>
the-counter market in the United States or the United Kingdom for a period
of 5 or more business days, (B) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
United Kingdom (whether or not mandatory) or (C) any material and mandatory
limitation, by any United States or United Kingdom governmental authority
or agency on the extension of credit by banks or other financial
institutions generally; or
(d) since the date of the Merger Agreement, there shall have occurred
any event, change, effect or development that, individually or in the
aggregate, has had or would reasonably likely have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement (including Section 6.9 thereof), or any Seller shall have
breached or failed to perform in any material respect any of its covenants
or agreements under the Stockholder Agreement which shall not have been
cured prior to the earlier of 10 business days prior to the date the Offer
expires; provided, however, the Company will have no right to cure a breach
of Section 6.9 of the Merger Agreement and no Seller shall have any right
to cure a breach of Section 8 of the Stockholder Agreement; or
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement or of any Seller set forth in the Stockholder
Agreement that are qualified as to materiality shall not be true and
correct or any of the representations and warranties of the Company set
forth in the Merger Agreement or of any Seller set forth in the Stockholder
Agreement that are not so qualified shall not be true and correct in any
material respect, in each case as if such representations and warranties
were made at the time of such determination (or, in the case of any
representation and warranty made as of a specified date, as of such date)
and which inaccuracy shall not have been cured prior to the earlier of 10
business days following the notice of such inaccuracy and two business days
prior to the date the Offer expires; or
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
3
<PAGE>
which, in the sole judgment of Parent or Acquisition Sub in any such case, and
regardless of the circumstances (including any action or omission by Acquisition
Sub) giving rise to any such condition makes it inadvisable to proceed with such
acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and
Acquisition Sub and may be asserted by Parent or Acquisition Sub regardless of
the circumstances giving rise to any such condition or may be waived, subject to
Section 1.1 of the Merger Agreement that the Minimum Condition may not be waived
without the written consent of the Company, by Acquisition Sub in whole or in
part at any time or from time to time in their sole discretion. The failure by
Parent or Acquisition Sub 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 or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time or from time to time.
4
<PAGE>
EXHIBIT (2)(c)
<PAGE>
CONFORMED COPY
STOCKHOLDER AGREEMENT AND PROXY (this
"Agreement"), dated as of March 1, 1999, by and among
---------
GEC Incorporated, a Delaware corporation ("Parent"),
------
George Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent, organized under the
laws of Delaware ("Acquisition Sub"), and the limited
---------------
partnerships affiliated with KKR Associates, L.P. whose
names are set forth on the signature pages hereof
(each, a "Stockholder");
-----------
WHEREAS each Stockholder has beneficial ownership of the number of
shares of common stock, $0.01 par value, of Reltec Corporation, a Delaware
corporation (the "Company"), set forth opposite the name of such Stockholder on
-------
Schedule A (such class of stock sometimes referred to herein as the "Company
-------
Common Stock", and the shares of Company Common Stock, including such shares
- ------------
that are acquired as a result of a stock dividend, stock split,
recapitalization, combination, reclassification, exchange, or change of such
shares, that are, from time to time, beneficially owned by each Stockholder
sometimes referred to herein as "such Stockholder's Shares");
-------------------------
WHEREAS, simultaneously with the execution and delivery hereof,
Parent, Acquisition Sub and the Company have entered into an Agreement and Plan
of Merger (the "Merger Agreement"), dated as of the date hereof, which Merger
----------------
Agreement has been unanimously approved by the Board of Directors of the
Company, and has been approved by the Board of Directors of Parent and
Acquisition Sub. The directors of the Company unanimously voted in favor of the
adoption of the Merger Agreement and the recommendation that stockholders of the
Company approve the merger (the "Merger") contemplated by the Merger Agreement
------
and tender their shares of Company Common Stock pursuant to the Offer (as
defined below) to be commenced by Acquisition Sub pursuant to the Merger
Agreement;
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub, or other
wholly owned subsidiary of Parent will commence an offer (the "Offer") for all,
-----
but not less than a majority on a fully-diluted basis, of the shares of
outstanding Company Common Stock at the Per Share Amount (as defined in the
Merger Agreement) in cash; and
<PAGE>
WHEREAS, as a condition to entering into the Merger Agreement and
commencing the Offer, Parent and Acquisition Sub have required that each of the
Stockholders enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, each of the Stockholders, severally, agrees with
Parent and Acquisition Sub as follows:
Section 1. Capitalized Terms. Capitalized terms used but not defined
-----------------
herein shall have the meanings assigned to such terms in the Merger Agreement.
Section 2. Representations and Warranties of Stockholders. Each
----------------------------------------------
Stockholder represents and warrants to Parent and Acquisition Sub as follows:
(a) Such Stockholder is a limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction under
which it is organized.
(b) Such Stockholder has all necessary partnership power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by such Stockholder, and no other partnership
proceedings on the part of such Stockholder are necessary to authorize this
Agreement or to consummate the transactions so contemplated.
(d) This Agreement has been duly and validly executed and delivered
by such Stockholder and, assuming this Agreement constitutes a valid and
binding obligation of each of Parent and Acquisition Sub, constitutes a
legal, valid and binding agreement of such Stockholder enforceable against
such Stockholder in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
-2-
<PAGE>
(e) The execution, delivery and performance by such Stockholder of
this Agreement and the consummation of the transactions contemplated hereby
do not and will not (i) contravene or conflict with its partnership
agreement or certificate of limited partnership, (ii) assuming that all
consents, authorizations and approvals contemplated by subsection (f) below
have been obtained and all filings described therein have been made,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to such Stockholder or any of its properties; (iii) conflict
with, or result in the breach or termination of or constitute a default
(with or without the giving of notice or the lapse of time or both) under,
or give rise to any right of termination, cancellation, or loss of any
benefit to which such Stockholder is entitled under any provision of any
agreement, contract, license or other instrument binding upon such
Stockholder or any of its properties, or allow the acceleration of the
performance of any obligation of such Stockholder under any indenture,
mortgage, deed of trust, lease, license, contract, instrument or other
agreement to which such Stockholder is a party or by which such Stockholder
its assets or properties is subject or bound; or (iv) result in the
creation or imposition of any Lien on any asset of such Stockholder, except
in the case of clauses (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations, defaults, cancellations,
losses, accelerations and Liens which would not individually or in the
aggregate be reasonably expected to prevent, materially delay or materially
impair the consummation by such Stockholder of the transactions
contemplated by this Agreement.
(f) The execution, delivery and performance by such Stockholder of
this Agreement and the consummation of the transactions contemplated hereby
by such Stockholder require no filings, notices, declarations, consents or
other actions to be made by such Stockholder with, nor are any approvals or
other confirmations or consents required to be obtained by such Stockholder
from any Governmental Entity (except those the failure of which to make,
give or obtain, individually or in the aggregate, would not reasonably be
expected to prevent or materially delay such Stockholder's ability to
consummate the transactions contemplated hereby), other than filings,
notices, approvals, confirmations, consents, declarations or decisions (i)
required by the HSR Act; (ii) required by
-3-
<PAGE>
the Exchange Act and state securities, takeover and Blue Sky laws; (iii)
required by the Canadian Competition Act; (iv) from the Italian Autorita
Garante della Concorrenza e del Mercato that it does not intend to initiate
a second stage investigation of the transactions contemplated hereby
(including the Merger) or any matters arising therefrom under Article 16 of
Law no.287 of October 10, 1990; (v) from the German Federal Cartel Office,
during the one month time limit referred to in Section 40 paragraph 1 of
the Act against Restraints on Competition, that the conditions for a
prohibition in Section 36 paragraph 1 of the Act against Restraints on
Competition are not fulfilled, or, if no such confirmation is received,
this one month time limit having expired without the parties having been
notified by the Federal Cartel Office that it has entered into the
examination of the proposed concentration; and (vi) from the U.K. Office of
Fair Trading that it is not the intention of the U.K. Secretary of State to
refer the transactions contemplated hereby or any matters arising therefrom
to the MMC (clauses (i) through (vi) are referred to herein as the
"Stockholder Governmental Approvals").
----------------------------------
(g) As of the date hereof, there is no action, suit, claim,
investigation or proceeding pending against, or to the knowledge of such
Stockholder, threatened against any Stockholder or properties before any
court or arbitrator or any administrative, regulatory or governmental body,
or any agency or official which challenges or seeks to prevent, enjoin,
alter or delay the Offer or the Merger or any of the other transactions
contemplated hereby or by the Merger Agreement. As of the date hereof,
such Stockholder is not and none of its properties is subject to any order,
writ, judgment, injunction, decree, determination or award which would
prevent or delay the consummation of the transactions contemplated hereby.
(h) Such Stockholder has, and at any Closing (as defined below)
hereunder such Stockholder will have, good and valid title to such
Stockholder's Shares, free and clear of, except as set forth in Schedule
2(1), any Liens, proxies, voting trusts or agreements, understandings or
arrangements, except for any Liens or proxies arising hereunder.
(i) Except as set forth in Schedule 2(1), there are no options or
rights to acquire, or any agreements to which such Stockholder is a party
relating to such Stockholder's Shares, other than this Agreement.
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<PAGE>
(j) The transfer of such Stockholder's Shares hereunder will transfer
to Acquisition Sub good and valid title to such Stockholder's Shares, free
and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any Liens or proxies arising
hereunder.
(k) Such Stockholders' Shares described in Schedule A represent all
of the Shares beneficially owned (within the meaning of Rule 13d-3 under
the Exchange Act) by such Stockholder.
(l) Schedule 2(1) sets forth a complete and correct list of all
contracts, agreements and commitments (oral or written), together with a
description of monetary obligations thereof, between the Company or any of
its subsidiaries, on the one hand, and such Stockholder, on the other hand.
(m) Such Stockholder is not a "foreign person" as defined in Section
1445(f)(3) of the Code.
(n) Such Stockholder understands and acknowledges that Parent is
entering into, and causing Acquisition Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of
this Agreement.
Section 3. Representations and Warranties of Parent and Acquisition
--------------------------------------------------------
Sub. Each of Parent and Acquisition Sub represents and warrants to the
- ---
Stockholders as follows:
(a) Each of Parent and Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Each of Parent and Acquisition Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the board of directors of each of Parent and
Acquisition Sub, and no other corporate proceedings on the part of Parent
or Acquisition Sub are necessary to authorize this Agreement or to
consummate the transactions so contemplated.
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<PAGE>
(d) This Agreement has been duly and validly executed and delivered
by each of Parent and Acquisition Sub and, assuming this Agreement
constitutes a valid and binding obligation of each Stockholder, constitutes
a legal and binding agreement of each of Parent and Acquisition Sub
enforceable against each of Parent and Acquisition Sub in accordance with
its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(e) The execution, delivery and performance by each of Parent and
Acquisition Sub of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
constitutional documents of Parent or Acquisition Sub, (ii) assuming that
all consents, authorizations and approvals contemplated by subsection (f)
below have been obtained and all filings described therein have been made,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to Parent or Acquisition Sub or, any of their respective
subsidiaries or properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or give rise to
any right of termination, cancellation, or loss of any benefit to which
Parent or Acquisition Sub or any of their respective subsidiaries is
entitled under any provision of any agreement, contract, license or other
instrument binding upon Parent or Acquisition Sub, any of their respective
subsidiaries or any of their respective properties, or allow the
acceleration of the performance of any obligation of Parent or Acquisition
Sub or any of their respective subsidiaries under any indenture, mortgage,
deed of trust, lease, license, contract, instrument or other agreement to
which Parent or Acquisition Sub or any of their respective subsidiaries is
a party or by which Parent or Acquisition Sub or any of their respective
subsidiaries or any of their respective assets or properties is subject or
bound; or (iv) result in the creation or imposition of any Lien on any
asset of Parent or Acquisition Sub or any of their respective
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<PAGE>
subsidiaries, except in the case of clauses (iii) and (iv) for any such
contraventions, conflicts, violations, breaches, terminations, defaults,
cancellations, losses, accelerations and Liens which would not individually
or in the aggregate be reasonably expected to prevent, materially delay or
materially impair the consummation by such Stockholder of the transactions
contemplated by this Agreement.
(f) The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the transactions contemplated
hereby by Parent and Acquisition Sub require no filings, notices,
declarations, consents or other actions to be made by Parent or Acquisition
Sub with, nor are any approvals or other confirmations or consents required
to be obtained by Parent or Acquisition Sub from, any Governmental Entity
(except those the failure of which to make, give or obtain, individually or
in the aggregate, would not reasonably be expected to prevent or materially
delay Parent's or Acquisition Sub's ability to consummate the transactions
contemplated hereby), other than filings, notices, approvals,
confirmations, consents, declarations or decisions (i) required by the HSR
Act; (ii) required by the Exchange Act and state securities, takeover and
Blue Sky laws; (iii) required by the Canadian Competition Act; (iv) from
the Italian Autorita Garante della Concorrenza e del Mercato that it does
not intend to initiate a second stage investigation of the transactions
contemplated hereby (including the Merger) or any matters arising therefrom
under Article 16 of Law no.287 of October 10, 1990; (v) from the German
Federal Cartel Office, during the one month time limit referred to in
Section 40 paragraph 1 of the Act against Restraints on Competition, that
the conditions for a prohibition in Section 36 paragraph 1 of the Act
against Restraints on Competition are not fulfilled, or, if no such
confirmation is received, this one month time limit having expired without
the parties having been notified by the Federal Cartel Office that it has
entered into the examination of the proposed concentration; and (vi) from
the U.K. Office of Fair Trading that it is not the intention of the U.K.
Secretary of State to refer the transactions contemplated hereby or any
matters arising therefrom to the MMC (clauses (i) through (vi) are referred
to herein as "Parent Governmental Approvals").
-----------------------------
Section 4. Agreement to Tender. (a) Each Stockholder agrees that,
-------------------
promptly after receipt of the Offer
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<PAGE>
Documents, such Stockholder will tender all of such Stockholder's Shares
pursuant to the Offer and will not withdraw such Shares prior to the termination
withdrawal or expiration date of the Offer (or any extension thereof) (it being
understood that the obligation contained in this section is unconditional,
subject to Section 17).
(b) Each Stockholder will receive the same Per Share Amount received
by other stockholders of the Company in the Offer with respect to the Shares
tendered by it in the Offer. On the business day after the date the Shares are
accepted for payment and purchased by Acquisition Sub pursuant to the Offer,
Acquisition Sub or Parent, as the case may be, shall make payment by wire
transfer of immediately available funds to each Stockholder of the purchase
price for such Stockholder's Shares to an account designated by such
Stockholder.
Section 5. Agreement to Vote; Proxy. (a) Each Stockholder agrees, to
------------------------
the extent such Stockholder continues to own, or have legal rights in respect
of, its Shares, with, and covenants to, Parent and Acquisition Sub as follows:
(i) At any meeting of stockholders of the Company called to vote upon
the Merger, the Merger Agreement or the other transactions contemplated by
the Merger Agreement or upon which a vote, consent or other approval with
respect to the Merger, the Merger Agreement or the other transactions
contemplated by the Merger Agreement is sought, such Stockholder shall vote
(or cause to be voted) or shall consent, execute a consent or cause to be
executed a consent in respect of such Stockholder's Shares in favor of the
Merger, the execution and delivery 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.
(ii) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, such Stockholder shall vote (or cause
to be voted) such Stockholder's Shares against (x) any Acquisition Proposal
or any action which is a component of any Acquisition Proposal or would be
a component of an Acquisition Proposal if it were contained in a proposal,
(y) any merger agreement or merger (other than the Merger Agreement and the
Merger), reorganization, recapitalization, dissolution, liquidation or
winding up of or by the Company or
-8-
<PAGE>
(z) any amendment of the Company's Certificate of Incorporation or By-laws
which amendment would in any manner partially or wholly prevent or
materially impede, interfere with or delay the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement (each
of the foregoing in clause (x), (y) or (z) above, a "Competing
---------
Transaction").
-----------
(iii) In furtherance and not in derogation of the foregoing, such
Stockholder agrees with, and covenants to, Parent and Acquisition Sub that,
at the request of Parent, such Stockholder shall use all reasonable
efforts, and shall cooperate in all respects with Parent, Acquisition Sub
and the Company, (i) to satisfy any legal, regulatory or other stock
exchange requirements that apply to approving the Merger, the Merger
Agreement and the other transactions contemplated by the Merger Agreement
by written consent pursuant to Section 228 of the Delaware Law and (ii)
subject to satisfaction of the foregoing, to effect a written consent
satisfying the requirements of Section 228 of the Delaware Law in favor of
the adoption and approval for purposes of Section 251 of the Delaware Law
of the Merger, the Merger Agreement and each of the other transactions
contemplated by the Merger Agreement.
(b) Each Stockholder hereby grants to, and appoints, Patricia Hoffman
and Thomas Edeus and any other individual who is designated by Parent, until the
termination of this Agreement pursuant to Section 17, an irrevocable proxy,
coupled with an interest, and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, with
respect to all such Stockholder's Shares, to vote such Stockholder's Shares, or
grant or execute a consent or approval, in the complete discretion of Parent or
Acquisition Sub, as the case may be, at any meeting of stockholders of the
Company or at any adjournment thereof or in any other circumstances upon which
their vote, consent or other approval is sought (i) in favor of the Merger and
any transactions contemplated by, or necessary or desirable to consummate the
transactions contemplated by, the Merger Agreement and the adoption of the
Merger Agreement and (ii) against any Competing Transaction. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 212(e) of the Delaware Law. Each Stockholder agrees that
this Agreement, including the provisions of this Section 5 will be recorded in
the books and records of the Company.
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<PAGE>
Section 6. Purchaser's Option. The parties further agree as follows:
------------------
(a) Each Stockholder does hereby grant to Acquisition Sub an
irrevocable option (collectively, with respect to all the Stockholders'
Shares the "Option") to purchase all, but not less than all, such
------
Stockholder's Shares, subject to the terms and conditions of this Section
and Section 17.
(b) The exercise price for each Share of Stockholders Shares shall be
the Per Share Amount.
(c) In the event of any change in the number or kind of such
Stockholder's Shares by reason of stock dividends, stock splits,
recapitalizations, combinations, reclassifications, exchanges or changes of
shares, then the exercise price for such Stockholder's Shares shall be
adjusted appropriately so that the total amount to be paid upon exercise in
whole of the Option with respect to such Stockholder's Shares would remain
unchanged.
(d) The Option may be exercised prior to the termination of this
Agreement specified in Section 17 in the event that the Offer has expired
or has otherwise been terminated and any Stockholder has failed to tender
all of its Shares in accordance with Section 4 or has withdrawn any of its
Shares tendered in the Offer prior to such expiration or termination.
(e) In the event Acquisition Sub wishes to exercise the Option,
Acquisition Sub shall send a written notice (the "Notice") to each
------
Stockholder specifying a date (not sooner than two nor later than ten
business days from the date the Notice is given) for the closing of such
purchase of all of such Stockholder's Shares (the "Closing"). The Closing
-------
will take place at such location in New York, New York, as Acquisition Sub
shall specify in the Notice. At the Closing, payment for such Stockholder's
Shares then being purchased shall be made to such Stockholder by wire
transfer in immediately available funds in the amount of the aggregate
exercise price, against delivery to Acquisition Sub of (i) a certificate or
certificates registered in its name evidencing such Shares duly endorsed
for transfer and (ii) an affidavit of such Stockholder that is not a
"foreign person" as defined in Section 1445(f)(3) of the Code. Such Shares
will be imprinted with any legends required by applicable securities laws.
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<PAGE>
(f) Parent and Acquisition Sub agree that, in the event that the
Option is exercised, Acquisition Sub will agree to purchase from any holder
of Shares with tag-along or similar rights granted by any Stockholder that
wishes to sell its shares of Company Common Stock to Acquisition Sub of all
shares of Company Common Stock of such holder on the same terms of the
purchase pursuant to the exercise of the Option.
(g) The obligations of such Stockholder to deliver, and Acquisition
Sub to purchase and pay for, such Stockholder's Shares, or any portion
thereof, upon exercise of the Option are subject to the conditions that (i)
no preliminary or permanent injunction or other order prohibiting the
delivery of such Stockholder's Shares issued by a court of competent
jurisdiction shall be in effect and (ii) any waiting period applicable to
the Merger under the HSR Act shall have terminated or expired and the other
Company Governmental Approvals and Parent Governmental Approvals, the
failure of which to obtain would be reasonably expected to have a Material
Adverse Effect or a Parent Material Adverse Effect ("Required Approvals"),
------------------
shall have been obtained or satisfied, as the case may be, on terms
satisfactory to Parent in its reasonable discretion; provided that this
--------
condition may not be asserted by any Stockholder with respect to any
Required Approval if the potential penalty for any failure to receive such
Required Approval will be borne only by Parent or Acquisition Sub. In the
event that any of the aforesaid conditions has not been satisfied at or
prior to the scheduled time of Closing, the Closing shall be delayed for
such period as shall be necessary in order for such conditions to be
satisfied, but in no event shall the Closing be delayed by more than 60
days. If the Closing does not occur within such period, the Option and the
exercise of the Option shall terminate and be void. Termination of this
Agreement after a Notice has been properly delivered under this Agreement
will not terminate or otherwise affect the parties' obligations hereunder
as to the exercise of the Option pursuant to such Notice.
(h) The obligation of Acquisition Sub to purchase and pay for such
Stockholder's Shares, or any portion thereof, upon exercise of the Option
is also subject to the fulfillment, or waiver by Acquisition Sub, of the
conditions (which may be waived by Acquisition Sub in its sole discretion)
that (i) such Stockholder's representations and warranties contained in
this Agreement, and the Company's representations and
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<PAGE>
warranties contained in the Merger Agreement shall be true and correct on
and as of the date of the Closing, as though such representations and
warranties were made on such date, (ii) such Stockholder shall have
performed in all material respects all of its covenants and agreements
under this Agreement required to be performed at or prior to the Closing or
the Company shall have performed in all material respects all of its
covenants and agreements under the Merger Agreement required to be
performed at or prior to the Closing hereunder, and (iii) such Stockholder
shall have delivered to Parent and Acquisition Sub on the date of the
Closing a certificate to such effect, and the Company shall have delivered
to Parent and Acquisition Sub on the date of the Closing a certificate to
such effect executed by the Chief Executive Officer of the Company.
(i) Notwithstanding anything to the contrary, Parent and Acquisition
Sub agree that, upon completion of the purchase of each Stockholder's
Shares pursuant to the Option, there shall be no conditions to effect the
Merger under the Merger Agreement or otherwise, except for the conditions
set forth in Section 7.1(a) and (c) of the Merger Agreement.
(j) Parent and Acquisition Sub agree not to terminate the Offer prior
to its scheduled expiration date (determined in the manner provided in the
Merger Agreement) if at such time, any Stockholder has failed to tender all
of its Shares in accordance with Section 4 unless Parent or Acquisition Sub
has first provided the Stockholders with one business days' prior written
notice of its intent to terminate the Offer.
Section 7. Additional Covenants. Except pursuant to this Agreement,
--------------------
no Stockholder shall, without the prior written consent of Parent, directly or
indirectly (i) during the term of this Agreement grant any proxies or enter into
any voting trust, power of attorney or other agreement or arrangement with
respect to the voting of such Stockholder's Shares, (ii) acquire, sell, assign,
transfer, encumber or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to the direct or indirect
acquisition or sale, assignment, transfer, encumbrance or other disposition of
any of such Stockholder's Shares during the term of this Agreement or (iii) take
any other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby. Each Stockholder agrees not to seek or solicit any such
-12-
<PAGE>
acquisition or sale, assignment, transfer, encumbrance or other disposition or
any such contract, option or other arrangement or assignment or understanding
and agrees to notify Parent promptly and to provide all details requested by
Parent if such Stockholder shall be approached or solicited, directly or
indirectly, by any Person with respect to any of the foregoing. Each Stockholder
agrees to use its reasonable best endeavors to cause the Company to perform its
obligations under the Merger Agreement. Each Seller agrees (i) promptly to
exercise any "drag-along" or other rights that permit it to require any other
person to sell its Shares upon a sale by such Seller of its Shares ("Drag-Along
----------
Rights") to cause the person subject to such Drag-Along Rights to tender in the
- ------
Offer, and not withdraw, any shares held by such person and (ii) promptly to use
its reasonable best efforts to cause each of its affiliates to exercise any
Drag-Along Rights held by such affiliate to cause the person subject to such
Drag-Along Rights to tender in the Offer, and not withdraw, any shares held by
such person.
Section 8. No Solicitations. Each Stockholder and its affiliates
----------------
(other than the Company and its subsidiaries will immediately cease any existing
discussions or negotiations with any third parties conducted prior to the date
hereof with respect to any Acquisition Proposal. Each Stockholder agrees that it
will not, and will use its best efforts to cause such affiliates not to,
directly or indirectly, solicit, initiate or knowingly encourage inquiries or
proposals that constitute, or could reasonably be expected to lead to an
Acquisition Proposal or engage in negotiations or discussions concerning to, or
provide any confidential information relating to, any Acquisition Proposal or
agree to approve or recommend or participate in any Acquisition Proposal or
sell, transfer or otherwise dispose of any Shares or participation in any
Acquisition Proposal (other than pursuant to this Agreement or the Merger
Agreement). Each Stockholder agrees that it or any of such affiliates will
promptly advise Parent of, and communicate to Parent the terms of, any such
inquiry or proposal it or any of such affiliates may receive, and will promptly
advise Parent if it or any of such affiliates provides any such information to
any such person. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by an
investment banker, financial advisor, attorney, accountant or other
representative or agent of any Stockholder shall be deemed to be a violation of
this Section 8 by such Stockholder. In addition, during the period from the
date of this Agreement through the Effective Time, the Stockholders shall not
terminate, amend, modify or
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<PAGE>
waive any provision of any confidentiality or standstill agreement relating to
the Company to which it or any of its affiliates is a party. During such period,
the Stockholders shall, and shall cause the Company to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreement,
including by seeking to obtain injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court of the United States of America or of any state having jurisdiction.
Section 9. Actions by Board. No action taken by the Board shall
----------------
modify, alter, change or otherwise affect the obligations of the Stockholders
hereunder.
Section 10. Governing Law. This Agreement shall be governed by the
-------------
internal laws of the State of Delaware without regard to the principles of
conflicts of law. Each of the parties hereto irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the States of
Delaware and of the United States of America located in the State of Delaware or
any appellate court thereof (the "Delaware Courts") for any litigation arising
---------------
out of or relation to this agreement and the transactions contemplated hereby
(and agrees not to commence any litigation relating thereto except in such
Delaware Courts), waives any objection to the laying of venue of any such
litigation in the Delaware Court that such litigation brought therein has been
brought in an inconvenient forum. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 11. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH
WAIVERS, (ii) IT
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<PAGE>
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.
Section 11. Notices. Notices under this Agreement shall be deemed to
-------
be duly given when delivered in person, by cable, telegram, telex or facsimile,
by overnight courier or by registered or certified mail (postage prepaid, return
receipt requested) in writing as follows:
If to Parent or Acquisition Sub, to:
GEC Incorporated and
George Acquisition Corp.
c/o Videojet Systems International, Inc.
1500 Mittel Boulevard
Wood Dale, Illinois 60191-1073
Attention: Patricia A. Hoffman, Secretary
Facsimile: (630) 238-3998
with copies to:
Mayer, Brown & Platt
Bucklersbury House
3, Queen Victoria Street
London, EC4N 8EL, ENGLAND
Attention: Jeffrey I. Gordon
Facsimile: 011-44-171-329-4455
and
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York, 10019
Attention: Philip A. Gelston
Facsimile: (212) 474-3700
If to any Stockholder, to such
Stockholder at the address set
forth on Schedule A hereto
Section 12. Entire Agreement; Amendments. This Agreement
-----------------------------------------
constitutes the entire understanding of the parties with respect to the subject
matter hereof. There are
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<PAGE>
no restrictions, agreements, promises, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter and is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. This Agreement may be amended only by a written instrument
duly executed by Acquisition Sub and the holders of all the Stockholder's
Shares.
Section 13. Assignment. Notwithstanding any other provision of this
----------
Agreement, this Agreement shall not be assignable by any party hereto except by
Parent or Acquisition Sub to any direct or indirect wholly owned subsidiary of
The General Electric Company, p.l.c.; provided, however, that no such assignment
-------- -------
shall relieve either Parent or Acquisition Sub from its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable against, (i) as to each Stockholder, such
Stockholder and such Stockholder's beneficiaries and representatives, and (ii)
Parent and Acquisition Sub and their successors and permitted assigns. Each
Stockholder agrees that this Agreement and the obligations of such Stockholder
hereunder shall attach to such Stockholder's Shares and shall be binding upon
any person or entity to which legal or beneficial ownership of such Shares shall
pass, whether by operation of law or otherwise, including such Stockholder's
heirs, guardians, administrators or successors.
Section 14. Severability. The provisions of this Agreement shall be
------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity and enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
Section 15. Stop Transfer Order. In furtherance of this Agreement,
-------------------
concurrently herewith each Stockholder shall and hereby does authorize Parent
and Acquisition Sub to notify the Company's transfer agent that there is a stop
transfer order with respect to all of such Stockholder's
-16-
<PAGE>
Shares subject to the terms of this Agreement (and that this Agreement places
limits on the voting and transfer of such Shares). The Stockholders further
agree to cause the Company not to register the transfer of any certificate
representing any Stockholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
Section 16. Further Action. From time to time, at the request of
--------------
Parent or Acquisition Sub and without further consideration, each Stockholder
shall execute and deliver to Parent and Acquisition Sub such documents and take
such action as Parent or Acquisition Sub may reasonably request in order to
consummate the transactions contemplated hereby, including vesting in
Acquisition Sub good and valid title to such Stockholder's Shares.
Section 17. Termination. This Agreement, including the Option, shall
-----------
terminate and be of no further force and effect upon the earliest to occur of
(a) the Effective Time, (b) a date selected by Parent, at its option, by written
notice to the Stockholders, (c) the termination of the Merger Agreement pursuant
to its terms or (d) the Termination Date, as it may be extended under the Merger
Agreement; provided, however, that if Acquisition Sub exercises the Option by
-------- -------
sending a Notice on or prior to the date on which this Agreement would terminate
pursuant to this Section 17, but the Closing with respect to such Notice does
not occur on or before such date, whether due to the failure of a condition set
forth in Section 6(g) or otherwise, then the termination date shall be
postponed, and this Agreement shall terminate on the earlier to occur of (i) the
first day following such Closing and (ii) 60 days after the exercise of the
Option, at which time this Agreement, the Option and the exercise thereof shall
terminate and be void. Notwithstanding the foregoing, this Agreement will not
terminate pursuant to clause (d) of the prior sentence if at the Termination
Date the Company cannot otherwise terminate the Merger Agreement under Section
8.1 of the Merger Agreement unless Parent or Acquisition Sub terminates the
Merger Agreement.
Section 18. Survival. None of the representations, warranties,
--------
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations and warranties (other than those made in Section 2(j)),
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time, and
this Section 18 and Sections 10, 11, 13, 15, 16, 21 and 22. Each party hereto
agrees that, except for the representations and warranties contained in this
Agreement, (i) none of the Stockholders, Parent or Acquisition Sub or any of
their respective officers, directors, employees, affiliates, agents, financial
or legal
-17-
<PAGE>
advisors or other representatives makes any other representations or warranties,
whatsoever, oral or written, express or implied, and each hereby disclaims any
other representations and warranties made by itself or any of its officers,
directors, employees, affiliates, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement,
the documents and the instruments referred to herein, or the transactions
contemplated hereby or thereby, notwithstanding the delivery or disclosure to
the other party or the other party's representatives of any documentation or
other information with respect to any one or more of the foregoing, and (ii)
none of the parties hereto is relying on any disclosure, statement,
representation or warranty, oral or written, express or implied, made by any
other party hereto or such party's officers, directors, employees, affiliates,
agents, financial or legal advisors or other representatives.
Section 19. Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
Section 20. Announcements. So long as this Agreement is in effect,
-------------
except as required by applicable law or applicable SEC, stock exchange or the
National Association of Securities Dealers, Inc. requirements, the parties
hereto and their representatives shall not issue or cause the publication of any
press release, public announcement or other public statement, with respect to
the transactions contemplated by this Agreement without the prior consent of the
other parties hereto, which consent shall not be unreasonably withheld.
Section 21. Specific Performance. The Stockholders, Parent and
--------------------
Acquisition Sub acknowledge that this Agreement and such Stockholders' Shares
are unique and that no party will have an adequate remedy at law if any other
party breaches any covenant herein or fails to perform its obligations
hereunder. Accordingly, the Stockholders, Parent and Acquisition Sub agree that
the others shall have the right, in addition to any other rights which it may
have, to specific performance and equitable injunctive relief if any party shall
fail or threaten to fail to perform any of its obligations under this Agreement.
Section 22. Expenses. Whether or not the Option is exercised, all
--------
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that the costs and expenses of the Stockholders shall be paid by
the Company.
-18-
<PAGE>
Section 23. Limited Liability of Partners. Notwithstanding any other
------------------------------
provision of this Agreement, no general partner or limited partner, nor any
future general or limited partner of any Stockholder, shall have any personal
monetary liability for performance of any obligation of such Stockholder under
this Agreement. Any monetary liability of the Stockholder under this Agreement
shall be satisfied solely out of the assets of the Stockholder.
Section 24. Stockholder Capacity. Each Stockholder signs solely in
--------------------
its capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by any officer or director of the
Company or its subsidiaries in his or her capacity as an officer or director of
the Company to the extent permitted by the Merger Agreement (including causing
its representatives to take actions permitted by the Merger Agreement).
Section 25. Parent Actions. Parent shall cause Acquisition Sub to
---------------
perform each of its obligations hereunder.
-19-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its representatives thereunto duly authorized, all
as of the day and year first above written.
GEC INCORPORATED
By: /s/ Michael Lester
------------------
Name: Michael Lester
Title: Director
GEORGE ACQUISITION CORP.
By: /s/ John Mayo
-------------
Name: John Mayo
Title: Director
CMT ASSOCIATES, L.P.
By: /s/ Alex Navab, Jr.
-------------------------
Name: Alex Navab, Jr.
Title: Attorney-In-Fact
KKR PARTNERS II, L.P.
By: /s/ Alex Navab, Jr.
-------------------------
Name: Alex Navab, Jr.
Title: Attorney-In-Fact
KKR ASSOCIATES, L.P.
By: /s/ Alex Navab, Jr.
-------------------
Name: Alex Navab, Jr.
Title: Attorney-In-Fact
-20-
<PAGE>
Schedule 2(1)
1. Securities Purchase Agreements between the Company and the Stockholders.
The Company may owe the Stockholders certain amounts pursuant to the
expense reimbursement provisions contained in such agreements.
2. Registration Rights Agreements between the Company and the Stockholders.
3. Stockholder Agreements between the Company, the Stockholders and certain
stockholders of the Company.
<PAGE>
Schedule A
TO THE
STOCK PURCHASE AGREEMENT
Capitalized terms used in this Schedule A and not otherwise, defined in
this Schedule A have the respective meanings assigned to such terms in the
attached Stockholders Agreement.
<TABLE>
<CAPTION>
Name and address of each Stockholder Number of Shares
- ------------------------------------ ----------------
<S> <C>
CMT Associates, L.P. 45,042,183 Shares
c/o Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York
Attention: James H. Greene, Jr.
with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Attention: Peter F. Kerman
KKR Partners II, L.P. 392,600 Shares
c/o Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York
Attention: James H. Greene, Jr.
with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Attention: Peter F. Kerman
KKR Associates, L.P. 396,500 Shares
c/o Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York
Attention: James H. Greene, Jr.
with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
Attention: Peter F. Kerman
Total
----------
45,831,283 Shares
</TABLE>
