UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) FEBRUARY 12, 1998
MITEL CORPORATION
----------------------------------------
(Exact name of registrant as specified in its charter)
CANADA 1-8139 NONE
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(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
350 Legget Drive
P.O. Box 13089
Kanata, Ontario, Canada K2K 1X3
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(Address of principal (Postal Code)
executive offices)
Registrant's telephone number, including area code: (613) 592-2122
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
(All amounts reported are in millions of United States dollars, unless
otherwise noted).
On February 12, 1998, Mitel Corporation (the "Company") and certain of its
wholly owned subsidiaries acquired 100 percent of the capital stock of four
affiliated entities which, together with their respective subsidiaries, comprise
the Plessey Semiconductors Group ("Plessey") from The General Electric Company,
p.l.c. ("GEC"), for a total consideration of $225.0 in cash. The acquisition was
financed with $310.0 of senior secured credit facilities consisting of: (i) 5
year Tranche A term loans amounting to $85.0; (ii) a 6 year Amortization
Extended Term Loan (AXELsm*) Series B amounting to $150.0; and (iii) a 5 year
revolving credit facility amounting to $75.0 that was unused at closing and
remains available for general corporate purposes. The credit facilities were
underwritten by Goldman Sachs Credit Partners L.P., as arranger and syndication
agent. Canadian Imperial Bank of Commerce is the administrative agent for the
credit facilities.
The acquisition will be accounted for by the purchase method with Plessey's
results from operations included in the consolidated accounts of the Company
from the date of acquisition. In accordance with such method, there may be
adjustments to the actual cost of the purchase with respect to incremental costs
directly associated with the acquisition.
Plessey, headquartered in Swindon, U.K., is an international semiconductor
manufacturer with five lines of business: applications specific integrated
circuits (ASICs), communications, media, PC systems, and power and automotive.
Its core competencies include design and technology, mixed signal expertise as
well as system integration. Plessey has capabilities in high performance CMOS
and leading edge bipolar technologies, including 0.35 micron CMOS and system
on-a-chip technologies. Plessey is ranked among the largest semiconductor
manufacturers in Europe and on a worldwide basis for mixed signal ASICs. Plessey
has three principal manufacturing and engineering facilities in the United
Kingdom, including a six inch bipolar fab at Swindon (7,086 square meters), an
eight inch CMOS fab at Plymouth (6,360 square meters), and a facility at Lincoln
(5,000 square meters) which manufactures, assembles and tests integrated circuit
components for power, automotive and communications applications. The Company
presently intends to use the plant, equipment and other physical property
acquired from GEC for the same business purposes as they were used prior to
consummation of the transaction. Plessey employed 2,275 people at January 31,
1998.
Subsequent to February 12, 1998, the name "Plessey" will no longer be used
by the acquired businesses. The principal U.K. entity acquired, Plessey
Semiconductors Limited, will operate as Mitel Semiconductor Limited, a
subsidiary of Mitel Telecom Limited. GEC Plessey Semiconductors Inc. will
operate as Mitel Semiconductor Americas Inc., a subsidiary of Mitel, Inc.
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Item 7. Financial Statements and Exhibits
Due to the difficulty in preparing the required financial information in a
timely manner, the registrant is exercising its right to a 60-day extension from
the due date (February 27, 1998) of this Form 8-K in order to file the Item 7
(a) and (b) financial statement information, pursuant to the rules and
regulations promulgated by the Securities and Exchange Commission. The Company
expects that the financial information required under Item 7 (a) and (b) will be
filed under cover of Form 8- K/A on or before April 28, 1998.
(a) Financial Statements of Business Acquired.
(1) Combined Balance Sheets for the four affiliated entities
acquired which, together with their respective subsidiaries, comprise
the Plessey Semiconductors Group ("Plessey"), as of March 31, 1997,
1996 and 1995 and the related Combined Statements of Income and
Retained Earnings and Cash Flows for each of the three years in the
period ended March 31, 1997 and Independent Auditors' Report. To be
filed no later than April 28, 1998.
(2) Consent of Independent Auditors. To be filed no later than April
28, 1998.
(b) Pro Forma Financial Information.
(1) Mitel Corporation Pro Forma Condensed Consolidated Balance Sheet
(unaudited) as at December 26 1997. To be filed no later than April
28, 1998.
(2) Mitel Corporation Pro Forma Condensed Consolidated Statement of
Income (unaudited) for the year ended March 28, 1997. To be filed no
later than April 28, 1998.
(3) Mitel Corporation Pro Forma Condensed Consolidated Statement of
Income (unaudited) for the nine months ended December 26, 1997. To be
filed no later than April 28, 1998.
(4) Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited). To be filed no later than April 28, 1998.
(c) Exhibits.
2.1 Share Sale and Purchase Agreement, dated February 12, 1998,
between The General Electric Company p.l.c., London, England and Mitel
Telecom Limited, Portskewett, Gwent, Wales and Mitel Corporation,
Kanata, Ontario, Canada.
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<PAGE>
2.2 Deed of Tax Covenant, dated February 12, 1998, between The General
Electric Company, p.l.c. and Mitel Telecom Limited.
2.3 Environmental Deed, dated February 12, 1998, between The General
Electric Company, p.l.c. and Mitel Telecom Limited.
10.1 Credit Agreement, dated as of February 12, 1998, between Goldman
Sachs Credit Partners L.P., as advisor, arranger and syndication
agent, Canadian Imperial Bank of Commerce, as administrative agent,
the Lenders listed therein, and Mitel Corporation, as borrower.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MITEL CORPORATION
(Registrant)
Date: February 27, 1998 /s/ Jean-Jacques Carrier
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Jean-Jacques Carrier
Vice President of Finance
and Chief Financial Officer
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Conformed Copy
DATED 12th February, 1998
THE GENERAL ELECTRIC COMPANY, P.L.C.
and
MITEL TELECOM LIMITED
and
MITEL CORPORATION
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SHARE SALE AND PURCHASE AGREEMENT
in respect of
the Plessey Semiconductors Group
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Slaughter and May
35 Basinghall Street
London EC2V 5DB
(NPB/RRO)
<PAGE>
Contents
Page
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1. INTERPRETATION 1
2. SALE AND PURCHASE OF THE SHARES 1
3. CONSIDERATION 2
4. COMPLETION 10
5. GEC'S WARRANTIES AND UNDERTAKINGS 11
6. RESTRICTIONS ON GEC GROUP 14
7. FURTHER WARRANTIES AND UNDERTAKINGS 16
8. PURCHASER'S REMEDIES AND GEC'S LIMITATIONS ON LIABILITY 22
9. PENSION AND OTHER ARRANGEMENTS 22
10. CROSS LICENCES AND ASSIGNMENTS 22
11. REMEDIES AND WAIVERS 23
12. ASSIGNMENT 23
13. FURTHER ASSURANCE 25
14. ENTIRE AGREEMENT 25
15. NOTICES 26
16. ANNOUNCEMENTS 27
17. RESTRICTIVE TRADE PRACTICES ACT 1976 27
18. COSTS AND EXPENSES 27
19. COUNTERPARTS 28
20. TIME OF ESSENCE 28
<PAGE>
21. EFFECT OF COMPLETION 28
22. INVALIDITY 28
23. GOVERNING LAW 28
24. JURISDICTION 28
25. AGENT FOR SERVICE 29
SCHEDULE 1: DEFINITIONS 30
SCHEDULE 2: COMPLETION ARRANGEMENTS 41
SCHEDULE 3: THE WARRANTIES 45
SCHEDULE 4: LIMITATIONS ON GEC'S LIABILITY UNDER THE WARRANTIES 72
SCHEDULE 5: PENSION ARRANGEMENTS PART 1 - GEC SCHEME 81
PART 2 - U.S. BENEFITS ARRANGEMENTS 97
SCHEDULE 6: TAX COVENANT 100
SCHEDULE 7: PART A - BASIC INFORMATION ABOUT THE COMPANIES 101
PART B - BASIC INFORMATION ABOUT SUBSIDIARIES OF THE COMPANIES 105
SCHEDULE 8 PROPERTY SCHEDULE 114
SCHEDULE 9 PART A GEC PLESSEY CONDUCTORS GROUP PRO FORMA
AGGREGATED BALANCE SHEET AS AT 31 DECEMBER 1997 124
PART B GPS SWINDON OPERATION 125
<PAGE>
THIS AGREEMENT (this "Agreement") is made on 12th February, 1998
BETWEEN:-
1. THE GENERAL ELECTRIC COMPANY, p.l.c. (registered in England No. 67307)
having its registered office at 1 Stanhope Gate, London W1A 1EH ("GEC")
AND
2. MITEL TELECOM LIMITED, (registered in England and Wales No. 1309629),
having its registered office at Portskewett, Gwent NP6 4YR (the
"Purchaser")
AND
3. MITEL CORPORATION, a Canadian corporation, having its principal place of
business at 350 Legget Drive, Kanata, Ontario, Canada K2K IX3 (the
"Guarantor")
WHEREAS:-
(A) GEC has agreed to sell and transfer, or procure the sale and transfer of,
the Shares, and the Purchaser has agreed to purchase them, on the terms of
this Agreement; and
(B) The Guarantor has agreed to guarantee the Purchaser's obligations on the
terms of this Agreement.
IT IS AGREED AS FOLLOWS:-
1. Interpretation
1.1 The Schedules form part of this Agreement and shall have the same force and
effect as if expressly set out in the body of this Agreement and any
reference to this Agreement shall include the Schedules.
1.2 Certain words and expressions used in this Agreement are defined in
Schedule 1.
2. Sale and Purchase of the Shares
GEC shall sell or procure the sale of the Shares with full title guarantee
and the Purchaser shall purchase or procure the purchase of the Shares. The
Shares shall be free from all claims, liens, charges, encumbrances and
equities whatsoever and shall be sold with all rights attached or accruing
to them at Completion including, without limitation, the right to receive
all dividends, distributions or any return of capital hereafter declared,
paid or made on or after Completion.
<PAGE>
2
3. Consideration
3.1 The total consideration for the sale of the Shares shall be the payment by
the Purchaser to GEC of the Purchase Price.
3.2 The Purchase Price shall be apportioned as follows:-
(A) US$185,299,835 for the Shares in Plessey;
(B) US$7,500,000 for the Shares in Plessey Inc;
(C) US$165 for the Shares in AEI; and
(D) US$32,200,000 for the Shares in Marconi.
3.3 (A) The Guarantor unconditionally and irrevocably guarantees to GEC the
due and punctual discharge and performance by the Purchaser of its
obligations pursuant to the Sale Documents including particularly (but
without limitation) the payment by the Purchaser of the Purchase Price
at Completion and agrees that if at any time or from time to time any
amount payable by the Purchaser or other obligation of the Purchaser
is not paid or performed in full on the due date therefor, the
Guarantor will promptly after being given not less than three Business
Days' notice of the failure of the Purchaser to make such payment or
perform such other obligation (and if such failure is not remedied by
the Purchaser in the interim) unconditionally pay or perform or
procure the payment or performance of the relevant amount or
obligation to GEC;
(B) The Guarantor shall be liable under paragraph (A) above as if it were
a primary obligor of the Purchaser's obligations contained in the Sale
Documents (the "Guaranteed Obligations");
(C) The obligations of the Guarantor under paragraphs (A) and (B) above:-
(i) shall be continuing obligations and shall not be satisfied,
discharged or affected by any intermediate payment or settlement
of account or any change in the constitution or control of, or
the insolvency of, or any liquidation, winding-up or analogous
proceedings relating to, the Purchaser or any change in the terms
or nature of the Guaranteed Obligations; and
(ii) shall not be discharged, prejudiced, lessened, affected or
impaired by any act, omission or circumstance whatsoever which
but for this provision might operate to release or exonerate the
Purchaser from all or any part of the Guaranteed Obligations;
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3
(D) As a separate and independent stipulation the Guarantor agrees that if
any of the Guaranteed Obligations are not enforceable against or
recoverable from the Purchaser by reason of any legal limitation,
disability or incapacity or any fact or circumstances or otherwise
(together "Factors"), they shall nevertheless be enforceable against
and recoverable from the Guarantor as though the same had been
incurred by the Guarantor and the Guarantor were the sole or principal
obligor in respect thereof and shall be performed or paid by the
Guarantor on demand provided that the foregoing provisions of this
paragraph (D) shall not be construed so as to impose on the Guarantor
any liabilities or obligations in excess of those the Purchaser would
have been under had such Factors not pertained;
(E) This guarantee shall constitute primary obligations of the Guarantor
and GEC shall not be obliged to make any demand on or enforce any
rights against the Purchaser or any other person before being entitled
to enforce its rights against the Guarantor under this clause 3.3.
3.4 (A) The Purchaser and GEC agree that Completion Balance Sheets and an
Aggregated Completion Balance Sheet shall be produced to identify the
results of trading between 31st December, 1997 and the Completion
Date, to determine the Closing Net Worth and the amount of the
Adjustment (if any) and agree in the following terms to produce such
balance sheets. To this end the Purchaser shall procure that as soon
as possible, and in any event within 60 days of the Completion Date,
drafts of the Completion Balance Sheets are prepared by the management
of the Group in accordance with clause 3.5 and delivered to GEC. GEC,
the Purchaser and the Group management shall discuss any issues
arising in the preparation of the draft Completion Balance Sheets
during their preparation.
(B) The Purchaser shall procure that the Group management shall prepare a
draft Aggregated Completion Balance Sheet showing the draft Closing
Net Worth of the Group as at the Completion Date. GEC, the Purchaser
and the Group management shall discuss any issues arising in the
preparation of the draft Aggregated Completion Balance Sheet during
its preparation. The draft Aggregated Completion Balance Sheet shall
be compiled from the draft Completion Balance Sheets in the same
manner as the Proforma Aggregated Balance Sheet as at 31st December,
1997 which is set out in Part A of Schedule 9 but subject to the
following:
(i) the Completion Balance Sheets of the non-UK Group Companies shall
be translated from the local currencies into pounds sterling at
the relevant Exchange Rate; and
(ii) no adjustment will be required in respect of the Restructuring
Plan as it will have been completed and the actual impact shall
be recorded in the books of the relevant companies before
Completion.
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4
(C) The Purchaser shall deliver to GEC as soon as possible and in any
event within 60 days after the Completion Date the draft Aggregated
Completion Balance Sheet showing the draft Closing Net Worth.
(D) GEC and GEC's Accountants shall be entitled to review the documents
delivered to GEC under clauses 3.4(A) and (C) and to conduct an
investigation of the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheet showing the draft Closing Net
Worth during the 60 day period following receipt of the draft
Completion Balance Sheets and the draft Aggregated Completion Balance
Sheet (provided that in the event that those documents are not
delivered on the same day such period shall start from the date on
which the last of such documents is delivered to GEC). At or before
the end of such 60 day period GEC shall either:
(i) confirm that no adjustments are proposed by GEC to the draft
Completion Balance Sheets and the draft Aggregated Completion
Balance Sheet showing the draft Closing Net Worth in which case
(or if no such adjustments are proposed by GEC within the period
referred to above) the draft Completion Balance Sheets and the
draft Aggregated Completion Balance Sheet shall become final and
the draft Closing Net Worth shown by the draft Aggregated
Completion Balance Sheet shall then constitute the Closing Net
Worth; or
(ii) notify the Purchaser of the adjustments that GEC may seek
including (without limitation) those in respect of the Overriding
Objective (together the "Proposed Adjustments") that GEC believes
necessary to the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheets.
(E) The Purchaser's Accountants shall review the Proposed Adjustments (if
any). In performing this review the Purchaser's Accountants shall have
reasonable access to the working papers of GEC and GEC's Accountants
prepared for the purpose of the investigation referred to in clause
3.4(D) above and also to the working papers of GEC's Accountants
prepared for the purposes of the audit of the Accounts. Following such
review and in any event not less than 15 days after receipt of the
Proposed Adjustments, the Purchaser will notify GEC which, if any, of
the Proposed Adjustments it accepts and both parties undertake to
attempt to reach agreement on the remainder of the Proposed
Adjustments. The Purchaser and GEC agree that the Proposed Adjustments
shall be considered in the context of the terms of clauses 3.4 and 3.5
including the Overriding Objective.
If agreement is reached, the Purchaser shall procure that the Group
management shall make the agreed adjustments to the draft Completion
Balance Sheets and the draft Aggregated Completion Balance Sheet and
these shall become final and the draft Closing Net Worth shown by the
draft Aggregated Completion Balance Sheet shall then constitute the
Closing Net
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5
Worth providing GEC and the Purchaser agree that the agreed
adjustments have been reflected properly therein.
If, or to the extent that, any of the Proposed Adjustments are not
accepted by the Purchaser and are not withdrawn by GEC within 30 days
following notification by GEC pursuant to clause 3.4(D)(ii) above such
adjustments only (the "Unresolved Adjustments") shall be referred for
final binding determination to such firm of accountants as GEC and the
Purchaser may agree or in the absence of agreement within 14 days, as
may be selected at the request of either party by the President of the
Institute of Chartered Accountants in England and Wales, with the
instructions that the firm so selected (either by the parties or
otherwise) shall act as expert (the "Expert") and not as arbitrator
and shall be instructed to make a decision on the dispute within 20
days of being instructed or such longer reasonable period as the
Expert may determine. The Unresolved Adjustments will be determined by
the Expert so selected insofar as they relate to the draft Completion
Balance Sheets and the draft Aggregated Completion Balance Sheet
showing the draft Closing Net Worth and such adjustments as are
required to be made as a result of the Expert's determination of the
Unresolved Adjustments shall be made by the parties in the calculation
of the Closing Net Worth. Each party shall provide or procure the
provision to the Expert of such information as the Expert may
reasonably require. The fees of the Expert shall be shared equally
between GEC and the Purchaser. Absent fraud or manifest error, the
decision of the Expert so selected will be binding on the parties.
(F) If the Closing Net Worth is equal to the Agreed Amount then the
Adjustment will equal zero. If the Closing Net Worth is greater than
the Agreed Amount, the Adjustment will also be zero. If the Closing
Net Worth is less than the Agreed Amount, the Adjustment will be an
amount equal to the amount by which the Closing Net Worth is less than
the Agreed Amount.
(G) Subject to paragraph (I), within seven Business Days of the agreement
or determination of the Closing Net Worth in accordance with clauses
3.4(A)-(F), if the Adjustment is an amount greater than (pound)5
million, GEC shall pay to the Purchaser an amount equal to the
difference between the Adjustment and (pound)5 million.
(H) Subject to paragraph (I), in addition to any payment under clause
3.4(G) GEC shall pay, together with the sum to be paid thereunder, a
further amount equivalent to interest thereon at a rate equal to the
sterling base rate from time to time of the National Westminster Bank
Plc, as if accrued from day to day from the Completion Date up to (but
not including) the date of the actual payment. All payments shall be
made by way of adjustment to the Purchase Price and apportioned to the
Companies to which they relate or in the event that an overall amount
is agreed the Adjustment shall be attributed solely to the Shares in
Plessey.
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6
(I) Any payment under this clause 3.4 shall be limited to the amount of
the Purchase Price.
3.5 (A) The draft Completion Balance Sheets shall be prepared in accordance
with the same accounting policies, principles, bases and methods and
the same level of prudence as actually adopted in the preparation by
the Group of the March 1997 management accounts (a copy of which is
included at item 4 of section 1.4 of the Schedule to the Disclosure
Letter) provided however that for the purpose of the preparation of
the draft Completion Balance Sheets the following principles shall be
applied:
(i) No account shall be taken of events occurring after the date of
delivery of the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheet (under clauses 3.4(A) and
(C));
(ii) Insurance prepayments in respect of the Group (or any Group
Company) at the Completion Date in respect of insurance cover
that is cancelled by GEC with effect from Completion or
thereafter will be written off in the Completion Balance Sheets;
(iii) No account shall be taken of (a) any change of control of the
Group (or any Group Company) contemplated by this Agreement
(including its effect on contracts of the Group) save in respect
of paragraphs (ii) above and (v) below and the Restructuring Plan
or (b) any proposals or arrangements (actual or proposed) in
connection with the financing of the Purchaser's acquisition of
the Shares (including granting any security in respect of the
Shares or the assets of any Group Company) or (c) any acts or
proposals of the Purchaser in relation to any Group Company's
dealings with its customers or suppliers, the Group's sales or
for which a provision would otherwise be made;
(iv) No account shall be taken of the costs of GEC or the Purchaser in
relation to this Agreement;
(v) (a) The following accounting entry reflected in the Accounts of
Plessey but not in the March 1997 management accounts shall
be reflected in the draft Completion Balance Sheet of
Plessey:
(pound)000s
Increase tax charge to profit and loss account for year
ended 31st March, 1997 1,473
Increase corporation tax recoverable (balance sheet) 146
Increase in deferred tax liability provision
(balance sheet) 1,619
(b) Provisions for Taxation in respect of those issues dealt
with in the Tax Covenant shall remain at the amounts
included in the December 1997 management accounts except for
adjustments
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7
in respect of cash movements since 31st December, 1997 and
no other provisions shall be made in respect of such issues.
(c) No Taxation shall be provided or credited in the draft
Completion Balance Sheets on the results other than the
above and the charge or credit for tax at 35 per cent. on
the difference between the net worth as shown in the
Proforma Aggregated Balance Sheet as at 31st December, 1997
(namely the Agreed Amount) and the Closing Net Worth before
taking account of such tax;
(vi) Depreciation will be provided on fixed assets as in the March
1997 management accounts but on a time pro-rata basis from 1st
April, 1997 to the Completion Date. For the avoidance of doubt in
respect of Fab 8 plant and equipment (which amounted at cost to
(pound)68,733,8l6 as at 1st July, 1997) the date from which
depreciation shall be charged was 1st July, 1997 and in respect
of Fab 6 plant and equipment (which amounted at cost to
(pound)14,602,588 at 2nd January, 1998) this date was 2nd
January, 1998.
No other provisions shall be made against fixed assets and no
amounts shall be written off or provided against fixed assets
except for the fair value provision against the Scotts Valley
lease obligations described in Part III of Schedule 8 which
amounted to US$2,990,725 as at the Accounts Date and from which
will be applied US$701,600 in the current financial year
pro-rated on a time basis from the Accounts Date until the
Completion Date;
(vii) Purchased material shall be valued at the relevant standard cost
adopted with effect from 1st April, 1997 for direct materials and
at the latest moving average cost price for all local plant stock
(for example- equipment spares, gases, chemicals, quartzwar and
consumables). Labour is charged to work in progress based on
direct labour hours at rates adopted from 1st April, 1997.
Overheads are charged to work in progress on machine hour rates
adopted from 1st April, 1997. Other standards which shall be used
in the evaluation of inventory, for example for production yield
shall be those adopted as at 1st April, 1997. A copy of the
relevant standard costs and rates is included in Part B of
Schedule 9. For the avoidance of doubt the method adopted for the
allocation of variances to stock shall be the same as that
adopted at the Accounts Date;
(viii) Each stock line of raw material stock including consumables as
at the Completion Date which:
(a) has not moved in the 24 month period immediately preceding
the Completion Date; or
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8
(b) is in excess of the amount required to fulfil orders,
shall be compared to the forecast usage of such stock which is
included in the business unit forecast set out at item 19 of
Section 1.11 of the Schedule to the Disclosure Letter and to the
extent that the stock balance as at the Completion Date exceeds
such forecast usage, the excess shall be provided in full.
Each stock line of work in progress and finished goods as at the
Completion Date:
(a) the date of production of which was more than 24 months
before the Completion Date; or
(b) which is in excess of the amount required to fulfil orders,
shall be compared to the forecast usage of such stock which is
included in the Business Unit Forecast and to the extent that the
stock balance as at the Completion Date exceeds such forecast
usage, the excess shall be provided in full.
The provisions for obsolescence on machine spares as at 31st
December, 1997 shall as at Completion be reduced by the amount of
any such provision that has been applied as a result of scrapping
or disposal of such stock, or released because of the use of such
stock and shall be increased by those items which have become
obsolete between 31st December, 1997 and the Completion Date.
In addition provision will be made on each machine spares stock
line for any stock line to the extent of any balance in excess of
the usage of such stock line in the 12 months immediately
preceding the Completion Date.
No other provisions shall be made against Group Stock.
(ix) General warranty reserves shall be made on the basis of 1.5 per
cent. of the value of sales during the 3 months immediately
preceding the Completion Date and with the exception of the
specific provisions made in addition in the December 1997
management accounts less any payments made subsequently, no other
warranty reserves shall be made;
(x) Provisions in respect of any matter that is the subject of clause
5.4 shall remain at the amounts included in the December 1997
management accounts less any payments made subsequently and no
other provisions or write-offs shall be made in respect of these
matters;
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9
(xi) Provision shall be made as follows for accounts receivable, other
than those due from customers in Italy, which as at the
Completion Date were:
Percentage of
Overdue by amount provided
more than 4 but less than 6 months 33%
more than 6 but less than 12 months 60%
more than 12 months 100%
and which at the Completion Date were not covered by credit
insurance or which have not paid by the date on which Completion
Balance Sheets are delivered to GEC. No other provisions or
write-offs shall be made against debtors;
(xii) There shall be no provision made against the TSMC option or any
write-off thereof included in the December 1997 management
accounts of Plessey at US$6.963 million or any write-off thereof.
For the avoidance of doubt the utilisation of the option
prepayment by the option cost of wafers (in excess of the base
load) delivered by TSMC between 31st December, 1997 and the
Completion Date shall be unaffected by this clause 3.4(A)(xii);
(xiii) Consultancy costs of SAP implementation of (pound)758,208 shall
be amortised on a time pro-rata straight line basis over the
eight months from 1st August, 1997;
(xiv) No additional provisions for redundancy, rationalisation or
restructuring costs will be made other than those made in the
December 1997 management accounts;
(xv) The Completion Balance Sheets of the overseas subsidiaries of
Plessey shall be translated using the relevant Exchange Rates;
(xvi) No provision shall be made for audit fees;
(xvii) There will be no charge to profit and loss in excess of 6 per
cent. of pay for GEC Scheme members for pension costs in respect
of the GEC Scheme;
(xviii) There will be no provision or accrual for retention bonuses
which GEC has agreed to pay in clause 9(B);
(xix) No provision shall be made for (pound)580,000 in respect of the
offer made on behalf of GEC in a fax dated 20th January, 1998
from Slaughter and May to Nick Fieldhouse to procure the
extension of the IBM cross licence to the "Election I" form; and
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10
(xx) No provision or write-off shall be made against the note
receivable from Green Hills, which amounts to $7,670,507 at 31st
December, 1997.
(B) For the purposes of determining the Group Stock as at the Completion
Date, the Group shall carry out physical stock takes in accordance
with the procedures set out in item 18 of section 1.11 of the Schedule
to the Disclosure Letter supervised by GEC and the Purchaser for the
purposes of determining the composition of the Group Stock in
conjunction with GEC's Accountants and the Purchaser's Accountants.
The composition of the stock so determined shall be used in evaluating
the stocks for the purpose of the Completion Balance Sheets. Until an
inventory of the Group Stock is agreed between GEC and the Purchaser,
the Purchaser shall procure that the records of all items of the Group
Stock used, completed and/or delivered after the Completion Date are
maintained on the same basis as those records are currently maintained
until the Closing Net Worth is agreed or determined in accordance with
the provisions of clause 3.4 and shall use its reasonable endeavours
to procure that there is no diminution on such Group Stock other than
the disposal of trading stock in the ordinary course of trading of the
relevant company.
3.6 The Purchaser shall give and shall procure that each Group Company shall
give to GEC, GEC's representatives and GEC's Accountants access to the
Group's management and all other relevant personnel and to relevant books,
records, calculations and working papers of each Group Company, of the
Purchaser and of the Purchaser's Accountants as GEC may reasonably require
for all purposes of clauses 3.4 and 3.5. The Purchaser will co-operate and
procure the co-operation of the Group's management and relevant employees
and that of the Purchaser's Accountants in connection therewith.
4. Completion
4.1 Completion shall take place immediately following execution of this
Agreement on the Completion Date at the offices of GEC's Solicitors.
4.2 At Completion, GEC shall do or procure the carrying out of those things
listed in Part 1 of Schedule 2 and the Purchaser shall do or procure the
carrying out of those things listed in Part 2 of Schedule 2 and GEC and the
Purchaser shall respectively do or procure the carrying out of those things
listed in Part 3 of Schedule 2 as set out therein.
4.3 Neither GEC nor the Purchaser shall be obliged to perform its obligations
in respect of Completion unless the other party complies in all material
respects with the requirements of sub-clause 4.2 and Part 1 or 2 of
Schedule 2. Each party agrees that the entry into of the contract of
employment described in clause 7.16 and paragraph 2.3 of Part 2 of Schedule
2 shall not be a condition of Completion and accordingly the failure of
such contract to be made for any reason shall not prevent Completion
occurring.
<PAGE>
11
4.4 Neither GEC nor the Purchaser shall be obliged to complete the sale and
purchase of any of the Shares unless the sale and purchase of all the
Shares is completed simultaneously. This sub-clause shall not limit any
other clause of this Agreement.
5. GEC's Warranties and Undertakings
5.1 (A) Subject as otherwise set out in this Agreement, GEC warrants to the
Purchaser in the terms of the Warranties at the date of this Agreement
and accepts that the Purchaser is entering into this Agreement in
reliance upon each of the Warranties.
(B) GEC further warrants that GEC has full power and authority to enter
into and perform this Agreement, the Environmental Deed and the Tax
Covenant which constitute or when executed will constitute binding
obligations in accordance with their respective terms.
5.2 Subject to paragraph 2.2 of Schedule 4, each of the Warranties shall be
construed as a separate and independent warranty and save as expressly
provided shall not be limited by reference to any other Warranty or
anything in this Agreement.
5.3 (A) GEC waives and will procure that other members of the GEC Group waive,
any rights, remedies, or claims GEC or any other member of the GEC
Group may have against any director of a Group Company or any Employee
with respect to claims arising out of any information, opinion or
advice supplied or given (or omitted to be supplied or given) to GEC
in connection with the proposed entering into of this Agreement and
the sale of such Group Company, other than in the case of fraud,
wilful misstatement or wilful omission;
(B) GEC agrees that any such rights, remedy or claim shall not constitute
a defence to any claim by the Purchaser under or in relation to this
Agreement (including the Warranties), the Environmental Deed or the
Tax Covenant.
(C) GEC waives, and will procure that other members of the GEC Group waive
any pre-emption rights it may have relating to the Shares whether
conferred by any Group Company's Articles of Association or otherwise.
5.4 GEC covenants to pay the Purchaser an amount equal to the aggregate of all
liabilities, losses, costs and expenses (including legal fees and experts'
fees reasonably incurred) which any Group Company may hereafter suffer or
incur in relation to the following matters:-
(A) The claims issued in the High Court of Justice Queens Bench Division
under action number: 1993 L 3009 by former employees of the Plessey
Company Limited or the other companies named as defendant in the said
action in respect of the withdrawal of free life long private health
care benefits for
<PAGE>
12
(inter alia) them and their spouses and other dependants for the rest
of their lives;
(B) any losses which Plessey or Marconi incur under their contractual
obligations to GEC Marconi Communications Limited in relation to the
supply by Plessey or Marconi to GEC Marconi Communications Limited or
Marconi Defence Systems Limited of varactor diodes incorporating
defective Kovar disks sourced by Demitron which have been installed in
TR8000 tactical radios used by the Swedish army, save, without
limitation to the proviso below, to the extent that such amounts are
recovered from Plessey's insurers or from Demitron and provided that
Plessey performs at cost the low pressure chemical vapour deposition
processing work to enable EEV Limited to fulfil its obligation to
provide replacement varactor diodes;
(C) the amounts required to be repaid by any member of the Group relating
to all grants, aids and subsidies made to any Group Company in
accordance with the terms and conditions upon which any such grant,
aid or subsidy was made as a consequence only of the sale and purchase
of the Shares pursuant to this Agreement or any breach of such terms
and conditions occurring prior to the Completion Date;
(D) any amounts payable by Plessey Inc. and/or Plessey in relation to a
cross-complaint for damages, injunctive and declaratory relief filed
by Mr. A. Ganesan with the Superior Court of California, County of
Santa Clara, as case number CV7635517;
(E) any losses which Plessey incurs under its contractual obligations to
Pace Micro Technology Limited in relation to losses incurred by Pace
Micro Technology Limited as a result of Plessey's delay in supplying
it with PCA 916 parts in March and April, 1996 pursuant to purchase
orders PAA21396A and PAA22819A;
(F) any losses which Plessey incurs under its contractual obligations to
Royce Thompson Limited relating to losses incurred by Royce Thompson
Limited as a result of difficulties with the AS102D electronic
controllers supplied by Plessey for installation in street lights, as
set out in a letter dated 17th February, 1997 and addressed to Ms.
Barbara Clarkson of GEC Plessey Semiconductors from Mr. Paul Farby of
Royce Thompson Limited;
(G) the cost of the replacements for the defective microwave car alarms
supplied by Plessey to Lucas Limited for installation in Rover and BMW
automobiles for the period of 12 months prior to the Completion Date
and up to(pound)84 for each automobile manufactured by Rover in which
such alarms have been installed for the period of 12 months prior to
Completion as a contribution toward the cost of the installation of
the replacement alarms by Lucas Limited in automobiles with defective
alarms and either (a) up to(pound)6.50 for each automobile
manufactured by BMW in which such alarms have been installed
<PAGE>
13
up to Completion or, in the event that Plessey offers and Lucas
accepts an extension to the warranty period therefor from 12 months to
24 months, (b) the cost of replacement alarms for BMW for such
additional 12 month period instead of the amount of up to(pound)6.50
referred to above, provided in the case of each matter referred to in
this paragraph (G) that such replacement is effected pursuant to a
contractual obligation on the part of Plessey;
(H) any losses which Plessey Inc. or Plessey incur under their respective
contractual obligations to ITT Industries or Lockheed Martin in
respect of the supply prior to Completion by Plessey Inc. and/or
Plessey to either company of defective 64K x 1 static random access
memory chips as referred to in paragraph 14.1(E) of the Disclosure
Letter including (without limitation) any liability as finally
determined by a court of competent jurisdiction arising under
proceedings issued in the United States District Court District of New
Jersey under case number 98-270/MTB between ITT
Aerospace/Communications, a division of ITT Industries Inc.
(Plaintiffs) and GEC Plessey Semiconductors Inc. and Plessey
Semiconductors Limited (Defendants);
(I) any loans owing at Completion by any of the Group Companies to any
other GEC Group Company;
(J) any liability of any Group Company to pay any finders fee, brokerage,
bonus or other commission to any third party in connection with the
sale and purchase of the Shares under this Agreement, but excluding
any Employee;
(K) any liabilities arising for rent, management charges and dilapidations
in respect of leases or underleases of premises assigned by any Group
Company prior to Completion or in respect of which assigned premises
any Group Company may have a liability as guarantor or surety
excluding in any such cases any premises of which a member of the
Group is now a tenant but including the premises at Carholme Road,
Lincoln, in relation to any liabilities therefor arising from the
state and condition of such premises at Completion;
(L) any dividend or other distribution whether made in cash or in kind
paid or made by any Group Company in favour of any GEC Group Company
at any time between 31st March 1997 and the Completion Date, other
than any such dividend or distribution, details of which are disclosed
in writing to the Purchaser in the Disclosure Letter;
(M) any contributions which Plessey Inc. is required by law to make to the
GEC-USA Savings and Investment Plan as a result of any unlawful
exclusion therefrom of its seasonal and part-time employees between
1st July, 1990 and 31st December, 1993;
(N) any losses which Plessey incurs under its contractual obligations to
customers in respect of defects in products falling within the
following categories which
<PAGE>
14
were manufactured under the LK process (as referred to in the Oldham
Agreements) and shipped to customers from 31st August, 1997 to 1st
November, 1997:
(i) the KESRX 02;
(ii) two devices relating to the optical data storage product group;
and
(iii) the NWK 914 network transceiver supplied to customers in the
Asia Pacific;
provided that the limitations set out in paragraphs 3.1(A)(i), (B), 3.2
(save that the period shall be six years from the Completion Date, and in
the proviso shall remain six months), 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9(B),
3.10 and 3.12 of Schedule 4 shall apply, mutatis mutandis, to this clause
5.4 except that any amount paid to the Purchaser pursuant to this clause
5.4 shall not be taken into account when calculating the aggregate amount
of claims for the purposes of sub-paragraph 3.1(A)(ii) of Schedule 4, but
shall form part of the aggregate liabilities of GEC for the purposes of
paragraph 3.1(B) of Schedule 4 and provided further that GEC agrees that if
GEC shall take sole conduct of an action pursuant to paragraph 3.3(C) of
Schedule 4 as it applies to this clause in respect of a matter for which
there is a provision in the Completion Balance Sheets, then GEC shall not
make any admission of liability, agreement, settlement or compromise with
any third party in relation to any such matter without the prior written
consent of the Purchaser (such consent not to be unreasonably withheld or
delayed) save that if GEC agrees with the relevant third party to settle or
compromise such a matter, and the Purchaser refuses to agree to such
settlement or compromise then, if the amount for which GEC subsequently
becomes liable exceeds the figure at which it would have so settled or
compromised the relevant matter, GEC shall not be liable for the excess
amount or any costs or liability incurred since the proposed date of
settlement or compromise.
6. Restrictions on GEC Group
6.1 No member of the GEC Group will use any confidential information which is
the property of a Group Company which it has obtained by reason of the GEC
Group's ownership of such Group Company in order to compete with such Group
Company and GEC shall not and shall procure that no member of the GEC Group
nor any officer or employee of GEC or any member of the GEC Group shall
make use of or divulge to any third party (other than GEC's professional
advisers in which case GEC will use all reasonable endeavours to procure
that such advisers keep such information confidential on terms equivalent
to this clause) any such confidential information relating to the Group
Companies save only:
(A) insofar as the same has become public knowledge otherwise than,
directly or indirectly, through GEC's breach of this clause 6.1 or the
failure of the officers, employees or professional advisers referred
to above to keep the same confidential; or
<PAGE>
15
(B) to the extent required by law or by any supervisory body or regulatory
body; or
(C) to the extent GEC reasonably considers necessary as a result of any
claim by the Purchaser for breach of Warranty or other provision of
this Agreement or in relation to a claim pursuant to clause 5.4; or
(D) to the extent GEC or any member of the GEC Group has a right to make
use of or divulge any such confidential information relating to the
Group Companies on any other account including, without limitation, in
its capacity as a customer of the Group Companies.
6.2 Save as otherwise agreed by the Purchaser and subject to clause 6.3, GEC
undertakes with the Purchaser (as trustee for itself and the Group
Companies) that it will not and that it will procure that no member of the
GEC Group will:-
(A) for a period of two years after the date of this Agreement, either on
its own account or in conjunction with or on behalf of any person,
firm or company, carry on anywhere in the world in competition with
the Group, the business of the manufacture of silicon semiconductor
devices utilising CMOS and/or bipolar technologies as components for
ultimate inclusion in third party end equipment, as such business is
conducted by the Group at the date of this Agreement (the "Restricted
Business");
(B) for a period of three years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any person,
firm or company, solicit or endeavour to entice away from the Group
Companies any person who at the date of this Agreement is a director,
officer, manager or is a member of the technical, information systems,
engineering or research and development staff or is an employee not
within those categories whose basic salary at the date of this
Agreement is in excess of(pound)50,000 per annum, in each case of any
of the Group Companies whether or not such person would commit a
breach of contract by reason of leaving service or office except a
person who responds to a public advertisement or who is first
approached when no longer an employee of a Group Company or any other
member of the Purchaser's Group.
6.3 Nothing in clause 6.2 shall restrict any member of the GEC Group from:-
(A) carrying on or developing the business currently carried on by the GEC
Group, including, without limitation, at the manufacturing facility at
Lansdowne Road, Oldham, except that the manufacture of the Retained
Products (as defined in the Oldham Agreements) shall require the
approval of the Purchaser to the extent not already approved in the
Oldham Agreements;
(B) acquiring the whole or any part of a body corporate which carries on
the Restricted Business or the whole or any part of a business which
includes the
<PAGE>
16
carrying on of the Restricted Business, except that where more than
one-third of the turnover of the body corporate or of the business
acquired as set out in the latest available audited accounts of that
body corporate or business consists of the Restricted Business, GEC
shall use its reasonable endeavours to procure the disposal of such
Restricted Business;
(C) holding less than 20 per cent. of any class of shares or debentures
listed on the London Stock Exchange or any other recognised stock
exchange; or
(D) acquiring or holding any interest in any joint venture (whether
incorporated or unincorporated) except where such joint venture is a
subsidiary of GEC.
6.4 GEC undertakes to take all reasonable steps to ensure compliance with the
terms of clause 6.2 above by employees of the GEC Group.
6.5 Subject to clause 6.6, GEC undertakes that it shall not and shall procure
that no member of the GEC Group shall use the trade mark or name "Plessey"
or any confusingly similar mark or name in relation to the Restricted
Business.
6.6 GEC shall use its reasonable endeavours to procure compliance with the
undertaking in clause 6.5 within 90 days of the date of this Agreement,
except for the Business (as defined in the Oldham Agreements) where the
period shall be 6 months.
6.7 Each of the undertakings in clause 6.2 is a separate and independent
undertaking and if one or more undertakings is held to be void or
unenforceable, the validity of the remaining undertakings shall not be
affected.
6.8 GEC agrees that the restrictions and undertakings contained in clauses 6.2
and 6.4 are reasonable and necessary for the protection of the Purchaser's
legitimate interests in the goodwill of the Group Companies but if any such
restriction or undertaking shall be found to be void or voidable, but would
be valid and enforceable if some part or parts of the restriction or
undertaking were deleted such restriction or undertaking shall apply with
such modifications as may be necessary to make it valid and enforceable.
6.9 Without prejudice to clause 6.8 if any restriction or undertaking is found
by any court or other competent authority to be void or unenforceable the
parties shall negotiate in good faith to replace such void or unenforceable
restriction or undertaking with a valid provision, which, as far as
possible, has the same legal and commercial effect as that which it
replaces.
7. Further Warranties and Undertakings
7.1 Each party warrants to the other as follows (save that the Purchaser and
the Guarantor give no warranties to each other):-
<PAGE>
17
(A) it has the requisite power and authority to enter into and perform
this Agreement and the other documents to be executed by it and
delivered at Completion in accordance with this Agreement;
(B) this Agreement constitutes and the other documents executed by it
which are to be delivered at Completion will, when executed,
constitute obligations binding on it; and
(C) the execution and delivery of, and the performance by it of its
obligations under this Agreement will (or with the giving of notice or
lapse of time or both would) not:-
(i) result in a breach of a statutory provision or regulation
applicable to it of any provision of its memorandum or articles
of association or other constitutional documents;
(ii) result in a breach of any order, judgment or decree of any court
or governmental agency to which it or any member of the
Purchaser's Group or the GEC Group as the case may be is a party
or by which it or any member of the Purchaser's Group or the GEC
Group as the case may be is bound; or
(iii) require the consent of its shareholders.
7.2 (A) The Purchaser undertakes to use its reasonable endeavours (which
reasonable endeavours shall include, if required to obtain such a
release, an offer by the Guarantor to enter into a covenant on behalf
of the beneficiary of the GEC Security on terms at least equivalent to
those contained in the GEC Security (the "Equivalent Offer")) to
procure that, as soon as reasonably practicable following Completion
in the case of those GEC Securities notified to the Purchaser by GEC
at Completion and, in the case of any other GEC Security, as soon as
reasonably practicable following the service by GEC of a notice to the
Purchaser to effect such a release, GEC and each other member of the
GEC Group is released from the GEC Securities and undertakes to hold
GEC, for itself and as trustee for its subsidiaries and the relevant
members of the GEC Group, indemnified and to keep it and them
indemnified from and against all actions, claims, proceedings, loss,
damage, payments, costs or expenses incurred by GEC or any member of
the GEC Group in relation to or arising out of all GEC Securities but,
if such liability does not relate to a liability incurred by a member
of the Group in the ordinary course of its business, only to the
extent that the liabilities arising under the GEC Securities are
fairly disclosed in the Disclosure Letter. Without prejudice to the
Purchaser's obligations in this clause 7.2(A), GEC agrees not to
disclose to the beneficiary of the relevant GEC Security the existence
of the Guarantor's obligation to make the Equivalent Offer without the
prior written consent of the Guarantor which shall not be unreasonably
withheld or delayed; and
<PAGE>
18
(B) (i) GEC agrees to maintain (so far as it is able):
(aa) the duty deferment arrangement for period entry imports set out
below:-
Name: Plessey Semiconductors Limited
C&E No: 7103124
Bond No: IBSU/83015975;
(bb) the VAT/Duty Deferment Bond set out below:-
Name: Plessey Semiconductors Limited
Approval No: 8708747
Bond No./Reference: IBSU/83017284,
and GEC's guarantee in respect thereof for a period of 21 days
after Completion provided that GEC shall have been granted an
indemnity by Lloyds Bank plc in the Agreed Form in respect of any
use of each of the above bonds on or after Completion; and
(ii) The Purchaser undertakes to put in place facilities and
guarantees replacing those described in paragraph (i) above as
soon as reasonably practicable following Completion and in any
event within 21 days following Completion.
7.3 (A) The Purchaser acknowledges that the Names are and shall remain the
property of the GEC Group and that nothing in this Agreement shall
transfer nor shall operate as an agreement to transfer any right,
title or interest in any of the Names to the Purchaser.
(B) Subject to sub-clause 7.4, the Purchaser further undertakes that it
shall not and shall procure that no Group Company nor any other member
of the Purchaser's Group shall make any use of any trade marks or
business or corporate names consisting of or incorporating any of the
Names and/or any trade mark or business or corporate name confusingly
similar thereto in relation to any goods or services and that it shall
procure that upon Completion each of the Companies and each other
member of the Group whose corporate name includes any of the Names
passes (and files with the Registrar of Companies) a resolution to
change its name to a name not incorporating any of the Names and that
a certified copy of each resolution effecting such changes of name is
provided to GEC at Completion and changes at Completion all internet
domain names so as not to incorporate any of the Names.
7.4 The Purchaser undertakes that it shall procure:
<PAGE>
19
(A) as soon as reasonably practicable and in any event no later than 90
days from the Completion Date, the removal of the Names from all
premises, signs and vehicles which are used by or in connection with
any Group Company; and
(B) that immediately following Completion no brochures, leaflets or
similar documents and no packaging containing any reference to the
Names shall be ordered from suppliers or printed by any Group Company
and, with respect to existing brochures, leaflets or similar documents
and packaging containing a reference to the Names, that the relevant
Group Company shall use its reasonable endeavours to ensure that as
soon as practicable after Completion such references are deleted,
pasted over or a sticker is put over such references.
7.5 Without prejudice to the generality of sub-clause 7.3(B), the Purchaser
undertakes to procure immediately following Completion that each Group
Company shall cease to use any stationery, purchase order, invoice, receipt
or other similar document containing any reference to any of the Names.
7.6 The Purchaser hereby grants and shall procure that each member of the Group
at the date hereof grants, with effect from Completion a non-exclusive,
irrevocable, non-transferable, royalty-free, perpetual worldwide licence to
GEC for the benefit of itself and each GEC Group Company (except Hevermill
Limited) to use (which includes the right to sub-contract but not to
sub-licence) for the purpose of the business of each GEC Group Company
(except the Business as defined in the Oldham Agreements) all Intellectual
Property owned at Completion by any of the Group Companies to the extent
used by any GEC Group Company prior to the Completion Date in any part of
the businesses of the GEC Group but so that no use of such rights shall
extend to use in relation to the Restricted Business.
7.7 In addition to the rights granted pursuant to sub-clause 7.6 above, the
Purchaser hereby grants and shall procure the grant by each member of the
Group Companies with effect from Completion of a non-exclusive,
irrevocable, royalty-free, perpetual worldwide licence to GEC for the
benefit of itself and each other company which is a member of the GEC Group
to use all right in the patents or patent applications (or any patent
derived therefrom) owned by any member of the Group or assigned to the
Purchaser (or any member of the Group ) at Completion in any business other
than the Restricted Business. The licence shall be transferable to a
purchaser (whether by shares or assets) of all or a substantial part of any
business using any or all of such patent rights to the extent that such
rights are used at such time.
7.8 If either GEC or the Purchaser discovers at any time after Completion that
any Group Company owns any Intellectual Property at the Completion Date
which relates exclusively to any business carried on by the GEC Group prior
to the Completion Date, it shall immediately notify the other. Thereafter,
at the request and expense of GEC, the Purchaser undertakes to procure the
assignment of any such Intellectual Property to the member of the GEC Group
nominated by GEC, subject to the grant by such member of the GEC Group of a
non-exclusive, irrevocable, non-transferrable,
<PAGE>
20
royalty-free, perpetual worldwide licence to the Purchaser for the benefit
of itself and each Group Company to use such intellectual property for the
purpose of the Restricted Business.
7.9 The Purchaser further warrants to GEC that it is purchasing the Shares for
the Purchaser's own account for investment purposes only and not with a
view to, or for sale in connection with, a distribution of the Shares
within the meaning of the U.S. Securities Act of 1933, as amended (the
"1933 Act"). The Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares and shall at no time offer to
sell or otherwise dispose of the Shares in violation of the registration
requirements of the 1933 Act or any state securities law;
7.10 The Purchaser undertakes itself to, and to procure that each Group Company
shall, provide to GEC and any person authorised by GEC for six years from
Completion such reasonable access to the premises, relevant employees and
all the Books and Records and title deeds of the Group as GEC or any
professional adviser authorised by GEC may reasonably require in connection
with the audit and taxation affairs of the GEC Group or the previous
ownership of the Group by the GEC Group upon reasonable notice and subject
to giving such undertakings as to confidentiality as the Purchaser or the
relevant Group Company may reasonably require and the Purchaser or the
relevant Group Company will instruct its directors to give promptly all
reasonable information and explanations to GEC or any such professional
advisers authorised by GEC as they may reasonably request exclusively for
such audit or taxation purposes.
7.11 GEC hereby grants and shall procure that each member of GEC Group at the
date hereof grants, with effect from Completion, a non-exclusive,
irrevocable, non-transferable (except to a purchaser from the Purchaser of
all or a substantial part of the Lincoln Business (as such term is defined
in clause 12.3) to the extent relevant to such business), royalty free,
perpetual, worldwide licence to the Purchaser for the benefit of itself and
each Group Company to use (which shall include the right to sub-contract,
but not sub-licence) for the purpose of the business of each Group Company
all Intellectual Property (except for the Names) which is both owned at
Completion by any member of the GEC Group and which is also used by any
Group Company prior to the Completion Date in any part of the business of
the Group to the extent currently used.
7.12 If either GEC or the Purchaser discovers at any time after Completion that
any GEC Group Company owns any Intellectual Property at the Completion Date
which relates exclusively to any business carried on by the Group prior to
the Completion Date, it shall immediately notify the other. Thereafter at
the request of the Purchaser, GEC undertakes to execute such documents as
the Purchaser may reasonably require in order to effect the assignment of
any such Intellectual Property to the member of the Purchaser's Group
nominated by the Purchaser subject to the grant by such member of the
Purchaser's Group of a non-exclusive, irrevocable, non-transferrable,
royalty-free, perpetual licence to GEC for the benefit of itself and each
Group Company to use such intellectual property, except in relation to
Restricted Business.
<PAGE>
21
7.13 The Purchaser hereby confirms and undertakes to GEC that it has on the date
hereof entered into those undertakings required by Her Majesty's Government
in the Agreed Form.
7.14 The Purchaser undertakes to hold GEC for itself and as trustee for its
subsidiaries, the relevant member of the GEC Group, Plessey Properties
Limited and The Plessey Company Ltd. indemnified and to keep it and them
indemnified from and against all actions, claims, proceedings, loss,
damage, payments, costs or expenses incurred by GEC, any member of the GEC
Group, Plessey Properties Limited or The Plessey Company Limited as a
result of its having been the tenant or its having guaranteed the
obligations of the tenant of the Crompton Road Property, the Tavistock Road
Property, the Altrincham Property, the Scotts Valley Property or the Cheney
Manor Property save insofar as such liabilities fall to be discharged by
GEC pursuant to the Environmental Deed.
7.15 GEC undertakes to procure that GEC France SA enters into an assignment of
such rights as GEC France SA has in respect of the property at 26 Rue
Augustin Fresnel, Chambrey Les Tours more fully described in Part III of
Schedule 8 to the extent that such rights are assignable to the Purchaser
or a member of the Purchaser's Group unless GEC France SA or another Group
Company enters into a lease of or other agreement relating to the
occupation of such property prior to Completion.
7.16 The Purchaser hereby confirms and undertakes to GEC that:
(i) it has prior to Completion made and not withdrawn (and will not
withdraw for 14 days following the Completion Date) an offer to Tom
Urwin to employ him as from Completion on the same terms as or better
than those on which he was immediately prior thereto employed; and
(ii) it will enter into a contract of employment on the basis described in
paragraph (i) above with Tom Urwin, subject to his consent having been
obtained thereto, at Completion or as soon as reasonably practicable
once his consent has been obtained.
7.17 GEC agrees to release or procure the release of Tom Urwin from any notice
period he is required to give pursuant to his contract of employment with
the GEC Group at Completion or as soon as reasonably practicable, in either
case, following a written request therefor from him in order to enable him
to accept the offer of employment referred to in clause 7.16.
7.18 The Purchaser and the Guarantor each warrant to GEC:
(A) in the terms of paragraph 13 of Schedule 3 (save paragraphs 13.3(B),
13.4(B) and 13.5(B) as if, for this purpose, the Purchaser were named
therein instead of the relevant Group Company and as if, for the
purpose of paragraph 13.1 thereof, the Purchaser and the Guarantor
were named therein instead of GEC; and
<PAGE>
22
(B) that the Purchaser is a wholly-owned subsidiary of the Guarantor.
8. Purchaser's Remedies and GEC's Limitations on Liability
8.1 The Purchaser's right to claim that a Warranty (which for the purposes of
this clause 8.1 shall exclude those warranties in clauses 5.1(B) and 7.1(A)
(so far as they relate to GEC) to which none of those limitations shall
apply) has been breached shall be limited as set out in this Agreement and
no liability shall attach to GEC in respect of claims under the Warranties,
the Environmental Deed or the Tax Covenant, as the case may be, if and to
the extent that such limitations apply.
8.2 The Purchaser shall not be entitled to claim that any fact causes any of
the Warranties to be breached, or gives rise to a claim under the
Environmental Deed (in relation to the Current Properties only (and not in
relation to the Former Properties)), if it was fairly disclosed in the
Disclosure Letter or in any Disclosure Document.
8.3 If, following Completion, the Purchaser becomes aware that there has been
any breach of the Warranties or any other term of this Agreement the
Purchaser shall not be entitled to treat this Agreement as terminated but
shall, subject as otherwise provided herein, be entitled to claim damages
under this Agreement.
8.4 Each of the parties acknowledges that the restrictions contained in clauses
6.1 and 16 shall continue to apply after the completion of the sale and
purchase of the Shares under this Agreement without limit in time.
8.5 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion or by giving time or other
indulgence by the Purchaser to GEC except a specific waiver or release by
the Purchaser in writing.
9. Pension and Other Arrangements
(A) Each of GEC and the Purchaser shall comply with Schedule 5.
(B) GEC hereby undertakes to the Purchaser (for itself and as trustee for
the Group Companies) to reimburse in full within 14 days of written
demand the payments made by Group Companies to Employees in relation
to the special bonus payments (relating to their retention) as
disclosed by GEC to the Purchaser in the Agreed Form but including in
addition any employer's national insurance and employer's pension
contribution relating thereto, if any.
10. Cross Licences and Assignments
10.1 GEC shall at the date of Completion grant a sub-licence in the Agreed Form
under the AT&T/Lucent Cross Licence.
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23
10.2 GEC shall procure the grant of a licence from IBM to Plessey in the Agreed
Form immediately after Completion. The Purchaser shall pay GEC,
(pound)30,000 on 1st January 1999 and (pound)12,500 on 1st January 2000 in
consideration for GEC procuring the grant of such licence. At the request
of the Purchaser within 60 days of Completion, GEC shall procure the grant
of a licence from IBM in "Election I" form (being the form set out in
Document 64 of Annex II of the Schedule to the Disclosure Letter) on
payment to GEC of (pound)580,000.
10.3 The Purchaser acknowledges that the patent rights owned by the Group
Companies which are the subject of the AT&T Lucent Cross Licence and the
IBM Cross Licence are subject to an irrevocable, royalty-free,
non-exclusive licence to Lucent pursuant to the AT&T/Lucent Cross Licence
and to IBM pursuant to the IBM Cross Licence.
10.4 GEC shall procure that at Completion the GEC Group Companies enter into and
deliver completed deeds of assignment in the Agreed Form and the assignment
of rights relating to the Plessey name in the Agreed Form.
11. Remedies and Waivers
11.1 No delay or omission on the part of any party to this Agreement in
exercising any right, power or remedy provided by law or under this
Agreement or any other documents referred to in it shall:-
(A) impair such right, power or remedy; or
(B) operate as a waiver thereof
except in respect of any right, power or remedy exercisable by the
Purchaser under the provisions relating to limitations on liability under
the Warranties as set out in clause 8 and Schedule 4 or in relation to
clause 5.4.
11.2 The single or partial exercise of any right, power or remedy provided by
law or under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
11.3 The rights, powers and remedies provided in this Agreement are cumulative
and (subject as expressly provided herein) not exclusive of any rights,
powers and remedies provided by law.
12. Assignment
12.1 This Agreement and the benefits (including the Warranties) and obligations
under it and any part of it shall not be assignable by the Purchaser or the
Guarantor except that the Purchaser may, upon giving written notice to GEC,
assign the benefit (but not the burden) of this Agreement to a member of
the Purchaser's Group and the terms of such assignment shall provide that:-
<PAGE>
24
(A) any such assignee remains a member of the Purchaser's Group; and
(B) before such assignee ceases to be a member of the Purchaser's Group,
the Purchaser will procure that the benefit of this Agreement is
assigned to the Purchaser or (upon giving further written notice to
GEC) to another company within the Purchaser's Group (any such further
assignment to be subject to the same conditions as above); and
(C) any assignee, including a subsequent assignee, shall agree with GEC
that if the liability of GEC shall be increased by reason of such
assignment, the assignee shall be entitled to claim against GEC only
such amount as would equal GEC's liability had no assignment taken
place.
12.2 This Agreement and the benefits and obligations under it and any part of it
shall not be assignable by GEC except that GEC may, upon giving written
notice to the Purchaser assign the benefit (but not the burden) of this
Agreement to a member of the GEC Group provided that:-
(A) any such assignee remains a member of the GEC Group; and
(B) before such assignee ceases to be a member of the GEC Group, GEC will
procure that the benefit of this Agreement is assigned to GEC or (upon
giving further written notice to the Purchaser) to another company
within the GEC Group (any such further assignment to be subject to the
same conditions as above); and
(C) any assignee, including a subsequent assignee, shall agree with the
Purchaser that if the liability of the Purchaser shall be increased by
reason of such assignment, the assignee shall be entitled to claim
against the Purchaser only such amount as would equal the Purchaser's
liability had no assignment taken place.
12.3 Notwithstanding the provisions of clauses 12.1 and 12.2 the Purchaser may
assign (the "Assignment Right") the benefit of the Environmental Deed
insofar as it relates to the Lincoln Business to a purchaser of the Lincoln
Business. The "Lincoln Business" means the business that will be carried on
by the Group Companies at the Properties in Lincoln identified in Schedule
8 and all assets relating to such business and such other businesses as may
be carried on at other Properties belonging to any Group Company at
Completion and which are ancillary to the business carried on at Lincoln.
The Purchaser and the Guarantor each undertake that they will not, and that
they will procure that no member of the Purchaser's Group does, disclose
the Assignment Right to an actual or prospective purchaser of the Lincoln
Business without the prior written consent of GEC which shall not be
unreasonably withheld or delayed. The provisions of clause 12.1(C) above
shall apply mutatis mutandis to any assignment pursuant to this clause.
<PAGE>
25
12.4 Subject to clause 12.3, the Warranties and the Environmental Deed shall
cease to have any effect for all purposes in relation to a Group Company
upon such Group Company ceasing to be owned by a member of the Purchaser's
Group.
13. Further Assurance
Each of the parties shall from time to time, on being required to do so by
the other, now or at any time in the future, execute or procure the
execution of all such documents in a form satisfactory to the party
concerned as the parties may, in each such case, reasonably consider
necessary for giving full effect to this Agreement and securing to the
Purchaser or GEC (as the case may be) the full benefit of the rights,
powers and remedies conferred upon them in this Agreement.
14. Entire Agreement
14.1 This Agreement, the Tax Covenant, the Environmental Deed, the Disclosure
Letter and any other documents referred to in this Agreement (together the
"Sale Documents") constitute the whole and only agreement between the
parties relating to the sale and purchase of the Shares and, save to the
extent expressly set out in those documents, supersede and extinguish any
prior drafts, agreements, undertakings, representations, warranties,
promises, assurances and arrangements of any nature whatsoever, whether or
not in writing relating thereto including those confidentiality agreements
and letters dated 5th November, 1997 and on or around 15th December, 1997
respectively (together the "Confidentiality Agreements") save that any
rights of members of the GEC Group which may have occurred or arisen prior
to the date hereof pursuant to such Confidentiality Agreements shall remain
subsisting.
14.2 Each party acknowledges that, save to the extent expressly set out in the
Sale Documents, in entering into the Sale Documents on the terms set out
therein, it is not relying upon any agreement, undertaking, representation,
warranty, promise, assurance or arrangement made or given by any other
party or any other person, whether or not in writing, at any time prior to
the execution of this Agreement (including without limitation any statement
made, information given or opinion expressed in the Information Memorandum
or in any Disclosure Document) or any warranty or condition implied by
statute or otherwise and no representations or warranties are given by GEC
save for the Warranties.
14.3 None of the parties shall have any right of action against any other party
to this Agreement arising out of or in connection with any agreement,
undertaking, representation, warranty, promise, assurance or arrangement
referred to in sub-clause 14.1 or 14.2 above (except in the case of fraud
and save to the extent expressly set out in the Sale Documents but
excluding the Disclosure Letter).
<PAGE>
26
15. Notices
15.1 Any notice or other communication given or made under or in connection with
the matters contemplated by this Agreement shall, unless expressly stated
otherwise, be in writing, other than writing on the screen of a visual
display unit or other similar device which shall not be treated as writing
for the purposes of this clause.
15.2 (A) Any such notice or other communication shall be addressed as provided
in sub-clause 15.3 and sent by personal delivery or by first class
post Provided that if, in accordance with the above provisions, any
such notice or other communication is sent given or made outside
Working Hours, such notice or other communication shall be deemed to
be sent given or made at the start of Working Hours on the next
Business Day.
(B) In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
(i) if sent by personal delivery, when left at the address specified
in clause 15.3; and
(ii) if sent by first class post, two Business Days after it is
posted.
15.3 The relevant addressee and address of each party for the purposes of this
Agreement, subject to sub-clause 15.4, are:-
Name of party Addressee Address
------------- --------- -------
GEC Company Secretary 1 Stanhope Gate,
London, W1A 1EH
with a copy to:
Slaughter and May
35 Basinghall Street
London, EC2V 5DB
Attention:- Nigel Boardman
The Purchaser Company Secretary Portskewett, Gwent NP6 4YR
The Guarantor Company Secretary 350 Legget Drive, Kanata,
Ontario, Canada K2K IX3
15.4 Each party may notify any other party to this Agreement of a change to its
name, relevant addressee or address for the purposes of sub-clause 15.3
Provided that such notification shall only be effective on:-
(A) the date specified in the notification as the date on which the change
is to take place; or
<PAGE>
27
(B) if no date is specified or the date specified is less than five clear
Business Days after the date on which notice is given, the date
falling five clear Business Days after notice of any such change has
been given.
16. Announcements
16.1 Subject to sub-clause 16.2 no public announcement concerning the sale of
the Shares or any ancillary matter shall be made by any party without the
prior written approval of the other, such approval not to be unreasonably
withheld or delayed.
16.2 Any party may make a public announcement concerning the sale of the Shares
or any ancillary matter if required by the law of any relevant jurisdiction
or any securities exchange or regulatory or governmental body to which such
party is subject, wherever situated, including (without limitation) the
London Stock Exchange or the Panel, whether or not the requirement has the
force of law, Provided that any such announcement shall be made only after
consultation with each other party (if practicable).
16.3 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
17. Restrictive Trade Practices Act 1976
If there is any provision of this Agreement, or of any agreement or
arrangement of which this Agreement forms part, which causes or would cause
this Agreement or that agreement or arrangement to be subject to
registration under the RTPA 1976, then that provision shall not take effect
until the day after particulars of this Agreement or of that agreement or
arrangement (as the case may be) have been furnished to the Director
General of Fair Trading pursuant to section 24 RTPA 1976.
18. Costs and Expenses
The Purchaser shall bear and pay the cost of all stamp duty, stamp duty
reserve tax and other similar duty, levy or tax and all registration fees
which may result in any jurisdiction from the execution and performance of
this Agreement and the other agreements entered into pursuant hereto and
the transfer of the Shares to the Purchaser and the transactions
contemplated hereby. Save as otherwise stated in this clause or in any
other provision of this Agreement, each party shall pay its own costs and
expenses in relation to the negotiations leading up to the sale and
transfer of the Shares and in relation to the preparation, execution and
carrying into effect of this Agreement and all other documents referred to
in it and the transactions contemplated hereby.
<PAGE>
28
19. Counterparts
19.1 This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
19.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same instrument.
20. Time of Essence
Save as otherwise expressly provided, time is of the essence only for the
purposes of clause 4 and Schedules 2 and 4.
21. Effect of Completion
21.1 All provisions of this Agreement shall, so far as they are capable of being
performed or observed, continue in full force and effect notwithstanding
Completion except in respect of those matters then already performed and
Completion shall not constitute a waiver of any of the Purchaser's rights
in relation to this Agreement, the Environmental Deed or the Tax Covenant.
21.2 Without prejudice to clause 21.1 the Warranties shall not be extinguished
by Completion.
22. Invalidity
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
then such provision will be deemed to be severed from this Agreement and if
possible replaced by a lawful provision which carries out, as closely as
possible, the intention of the parties under this Agreement and where
permissible that shall not affect or impair:-
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
23. Governing Law
This Agreement shall be governed by and construed in accordance with
English law.
24. Jurisdiction
Each party to this Agreement irrevocably agrees that any Proceedings
against it may be brought in the courts of England. Nothing contained in
this clause shall limit any
<PAGE>
29
party's rights to take Proceedings against the other in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction,
whether concurrently or not, to the extent permitted by the law of such
other jurisdiction.
25. Agent for Service
25.1 The Guarantor irrevocably appoints the Company Secretary of the Purchaser
of Porkskewett Gwent NP6 4YR to be its agent for the service of process in
England. It agrees that any Service Document may be effectively served on
it in connection with Proceedings in England and Wales by service on its
agent.
25.2 Any Service Document shall be deemed to have been duly served on the
Guarantor if marked for the attention of the Company Secretary of the
Purchaser at Porkskewett Gwent NP6 4YR (or such other address within
England or Wales as the agent may, on not less than three Business Days'
notice, notify GEC) and:
(A) left at the specified address; or
(B) sent to the specified address by first class post.
In the case of (A), the Service Document shall be deemed to have been
duly served when it is left. In the case of (B), the Service Document
shall be deemed to have been duly served two Business Days after the
date of posting.
25.3 If the agent at any time ceases for any reason to act as such, the
Guarantor shall immediately appoint a replacement agent having an address
for service in England or Wales and shall notify GEC of the name and
address of the replacement agent. Failing such appointment and
notification, GEC shall be entitled by notice to the Guarantor to appoint a
replacement agent to act on the Guarantor's behalf. The provisions of this
clause applying to service on an agent apply equally to service on a
replacement agent.
25.4 A copy of any Service Document served on an agent shall be sent by post to
the Guarantor. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
"Service Document" means a writ, summons, order, judgment or other process
issued out of the courts of England and Wales relating to or in connection
with any Proceedings.
AS WITNESS the hands of the duly authorised representatives of the parties
the day and year first above written.
<PAGE>
30
Schedule 1:
Definitions
(A) In this Agreement, unless otherwise specified the following terms and
expressions shall have the following respective meanings:-
"Accounts" the financial statements of each Group
Company (save PSSY Semiconductors Svenska
Aktiebolag) for the year ended on the
Accounts Date, copies of which are included
in sections 1.1. and 1.2 of the Schedule to
the Disclosure Letter;
"Accounts Date" 31st March, 1997;
"Adjustment" the amount established pursuant to clause
3.4(F);
"AEI" AEI Semiconductors Limited, of which
particulars are given in Part A of Schedule
7;
"AEI Names" the names AEI and Associated Electrical
Industries;
"Agreed Form" in relation to any document, such document in
a form agreed and initialled for the purposes
of identification by the Purchaser's
Solicitors on behalf of the Purchaser and
GEC's Solicitors on behalf of GEC;
"Agreed Amount" (pound)183,405,000;
"Aggregated Completion
Balance Sheet" an aggregation of the Completion Balance
Sheets drawn up as at the Completion Date in
the same manner as the Proforma Aggregated
Balance Sheet as at 31st December, 1997;
"Altrincham Property" the unregistered leasehold property
comprising Unit H2, Hanover Business Park,
Altrincham more fully described in section 2
of Part I of Schedule 8;
"AT&T/Lucent Cross Licence" a patent cross licence agreement effective as
of 1st July, 1983 between GEC and Lucent
Technologies Inc. as successor of AT&T Corp.;
"Books and Records" has its common law meaning and includes,
without limitation, all notices,
correspondence, orders, inquiries, drawings,
plans, books of account and other documents
and all computer disks or tapes or
<PAGE>
31
other machine legible programs or other
records;
"Business Day" a day (other than a Saturday or a Sunday) on
which banks are open for business in London;
"Carholme Road Property" the building of approximately 40,000 square
feet at a site at Carholme Road, Lincoln
occupied by Plessey more fully described in
paragraph 17.1 of the Disclosure Letter;
"Certificated Properties" each of the freehold and leasehold properties
described in Part II of Schedule 8 (and
"Certificated Property" means any of them);
"CGTA" the Capital Gains Tax Act 1979;
"Cheney Manor Property" the registered leasehold property at 106
Cheney Manor Industrial Estate with title
number WT114971 more fully described in
section 5 of Part II of Schedule 8;
"Closing Net Worth" the amount shown against Closing Net Worth in
the aggregated Completion Balance Sheet
agreed or determined pursuant to clause 3.4
as the case may be;
"Code" The City Code on Take-overs and Mergers;
"Companies Acts" the Companies Act 1985, the Criminal Justice
Act 1993, the Companies Consolidation
(Consequential Provisions) Act 1985 and the
Companies Act 1989;
"Companies" Plessey, Plessey Inc., Marconi and AEI
collectively (and "Company" means any one of
the Companies individually);
"Completion" completion of the sale and purchase of the
Shares under this Agreement;
"Completion Balance Sheets" balance sheets drawn up as at the Completion
Date for each Group Company and in addition
for Plessey, a consolidated balance sheet of
Plessey and its subsidiaries;
"Completion Date" the date of this Agreement;
<PAGE>
32
"Crompton Road Property" the unregistered leasehold property
comprising Unit 1, Groundwell Industrial
Estate more fully described in section 2 of
Part I of Schedule 8;
"Current Properties" means those properties in Parts I(1) and (2),
II and III of Schedule 8 of this Agreement
and "Current Property" means any one of them;
"Data Room" the data room established at the offices of
GEC's Solicitors in connection with the
transaction effected by this Agreement;
"Disclosure Documents" has the meaning given to it in the Disclosure
Letter;
"Disclosure Letter" the letter dated the date hereof written by
GEC to the Purchaser for the purposes of
clause 8 and delivered to the Purchaser's
Solicitors before the execution of this
Agreement;
"Employee" a person employed by any Group Company as of
the Completion Date but excluding (for the
avoidance of doubt) any person who is not so
employed but is seconded at Completion by a
third party to a Group Company;
"Environment" any and all organisms (including without
limitation man), ecosystems, property and the
following media: air, (including without
limitation, the air within buildings and the
air within other natural or man-made
structures whether above or below ground);
water (including without limitation, water
under or within land or in drains or sewers
and coastal and inland waters); and land
(including without limitation, land under
water);
"Environmental Deed" means the environmental deed in the Agreed
Form;
"Environmental Laws" any and all applicable laws in the relevant
jurisdiction (including for the avoidance of
doubt, common law) (excluding those laws
relating specifically to town planning
matters and to the health and safety of
workers in the work place) and European
Community or European Union regulations,
directives and decisions, statutes,
subordinate legislation (which for the
avoidance of doubt (notwithstanding paragraph
3.7 of Schedule 4 to this Agreement) shall
include Part IIA of the
<PAGE>
33
Environmental Protection Act 1990 and/or
Sections 161A - D of the Water Resources Act
1991 (both as enacted by Section 57 and
paragraph 162 of Schedule 22 respectively of
the Environment Act 1995) and the first set
of guidance notes and regulations adopted
under those provisions (but not subsequent
modifications, amendments or re-enactments of
those provisions or guidance notes or such
regulations to the extent that those
modifications, amendments or re-enactments
would otherwise increase the liability of GEC
under this Agreement)) which were, are, or
which may become applicable to the conduct of
the business of any Group Company or the use,
occupation or ownership of the Current
Properties or the Former Properties and which
have as a purpose or effect the protection
of, and/or the prevention of harm or damage
to, the Environment and/or the provision of
remedies in respect of harm or damage to the
Environment;
"Environmental Warranty" any warranty contained in paragraph 22 of
Schedule 3;
"Exchange Rate" the closing mid-market spot rate of exchange
in London for the conversion of the relevant
currency into pounds sterling quoted as the
"Closing mid-point" on the Completion Date
for pounds sterling against the relevant
foreign currency in the Financial Times
published in London on the Business Day
following the Completion Date; or
in the case of manifest error in the relevant
edition of the Financial Times or its
non-publication in London on the relevant
Business Day, the rate of exchange certified
by National Westminster Bank Plc as being the
equivalent, as nearly as practicable, of the
above mentioned closing spot rate of exchange
in London on the Completion Date;
"Disclosure" has the meaning given to it in the Disclosure
Letter;
"Former Properties" means any property (including, without
limitation, the Carholme Road Property and
the Oldham Properties) used, owned or
occupied at any time prior to Completion by
any Group Company other than those properties
listed in Part I(1) and (2), II
<PAGE>
34
and III of Schedule 8 of this Agreement;
"GEC's Accountants" Price Waterhouse;
"GEC Group" GEC and all subsidiaries or subsidiary
undertakings from time to time of GEC (other
than the Group);
"GEC Group Company" any member of the GEC Group (and "GEC Group
Companies" means such members collectively);
"GEC Names" the names GEC, General Electric and General
Electric Company;
"GEC Scheme" the retirement benefits scheme established by
GEC and known as the "GEC 1972 Plan"
established by a Definitive Trust Deed and
Rules dated 4th March, 1982 as amended;
"GEC Securities" those guarantees, indemnities, performance
bonds or other security or contingent
obligation in the nature of a financial
obligation including, without limitation,
letters of comfort or support which have or
may have been given by GEC or any GEC Group
Company or by Plessey Properties Limited or
by The Plessey Company Limited to the extent
that they secure the obligations of any Group
Company;
"GEC's Solicitors" Slaughter and May;
"Group" the Companies and all subsidiaries or
subsidiary undertakings of each Company,
particulars of the subsidiaries of the
Companies being given in Part B of Schedule
7;
"Group Company" any member of the Group (and "Group
Companies" means such members collectively);
"Group Stock" the stocks and work in progress owned by the
Group Companies at the Completion Date,
including (without limitation) goods and
other assets purchased for resale, stores,
raw materials, consumables, accessories, and
components purchased for incorporation into
or use in processing products or systems for
sale and all partly finished or finished
products of the Group Companies wherever
located and by whomsoever held, including
items which, although subject to
<PAGE>
35
reservation of title by the seller, are under
the control of the Group Companies;
"Hardware" any computer equipment used by any Group
Company including without limitation PC's,
mainframes, screens, terminals, keyboards,
disks, printers, but excluding all Software;
"IBM" International Business Machines Corporation;
"IBM Cross Licence" a patent cross licence agreement dated 1st
January, 1990 between GEC and International
Business Machines Corporation;
"ICTA 1988" the Income and Corporation Taxes Act 1988;
"Information Memorandum" the information memorandum dated September
1997 and published in connection with the
transaction effected by this Agreement;
"Intellectual Property" patents, trade marks and service marks,
rights in designs, copyrights (whether or not
any of these is registered and including
applications for registration of any such
thing) and all rights or forms of protection
of a similar nature or having an equivalent
or similar effect to any of these which may
subsist anywhere in the world;
"Information Technology" any Hardware, Software and communications
facilities;
"London Stock Exchange" the London Stock Exchange Limited;
"Lucent" Lucent Technologies Inc.;
"Management Accounts" means the financial data relating to the
Group, copies of which are found at section
1.4 of the Schedule to the Disclosure Letter;
"March 1997 Summary the unaudited management accounts of the
Management Accounts" Group for the year ended on the Accounts Date
a copy of which is disclosed at item 7,
section 1.4 of the Schedule to the Disclosure
Letter;
"Marconi" Marconi Electronic Devices Limited, of which
particulars are given in Part A of Schedule
7;
<PAGE>
36
"Marconi SA" Marconi Electronic Devices SA, of which
particulars are given in Part B of Schedule
7;
"Names" the GEC Names, the AEI Names and the name
Marconi, which is not for this purpose the
defined term;
"November 1997 Summary means the unaudited management accounts of
Management Accounts" the Group for the eight months ended 30th
November, 1997 a copy of which is disclosed
at item 7, section 1.4 of the Schedule to the
Disclosure Letter;
"Oldham Agreements" a business purchase agreement relating to the
business of Plessey at Lansdowne Road, Oldham
and Stockfield Road, Oldham, a wafer
processing and services agreement and a
retained process agreement, in each case
dated on or before the date hereof made
between Hevermill Limited and Plessey;
"Oldham Properties" the property of Plessey being factory and
offices at Landsdowne Road, Oldham, title to
which is registered at H.M. Land Registry
under title number GM175967 and the leasehold
property used by Plessey as a car park at
Stockfield Road, Oldham comprised in a lease
dated 29th January, 1988 between (i) The
North Western Electricity Board and (ii)
Ferranti plc;
"Overriding Objective" the overriding purpose for which the
Completion Balance Sheets and the Aggregated
Completion Balance Sheet shall be prepared is
to determine the impact of changes on the net
worth of the Group that take place after 31st
December, 1997 and before the Completion
Date. Any change in net worth that:
(a) arises as a result of a re-assessment of
the value of assets and liabilities which
is based on information, facts or matters
which were known or could reasonably be
expected to have been known at 31st
December, 1997; or
(b) does not arise as a result of an event:
(i) occurring after 31st December, 1997;
<PAGE>
37
or
(ii) anticipated in the December 1997
management accounts to occur between
31st December, 1997 and the
Completion Date failing so to occur,
shall be eliminated from the calculation of
Closing Net Worth;
"Overseas Offices" each of the overseas sales offices described
in Part III of Schedule 8 (and "Overseas
Office" means any one of them);
"Panel" the Panel on Take-overs and Mergers;
"Permits" any and all licences, consents, permits,
authorisations or the like made or issued
pursuant to or under, or required by,
Environmental Laws in relation to the conduct
of the business of each Group Company;
"Planning Acts" the Town and Country Planning Acts or any
other enactment for the time being in force
relating to the use development and enjoyment
of land and buildings;
"Plessey" Plessey Semiconductors Limited, of which
particulars are given in Part A of Schedule
7;
"Plessey Inc." GEC Plessey Semiconductors Inc., of which
particulars are given in Part A of Schedule
7;
"Plessey Inc. Shares" the Shares of Plessey Inc.;
"Proceedings" any proceeding, suit or action arising out of
or in connection with this Agreement;
"Proforma Aggregated the unaudited aggregated balance sheet of the
Balance Sheet as at Group as December, 1997 set out in Schedule
31st at 31st December, 1997" 9;
"Properties" each of the freehold and leasehold properties
described in Part I of Schedule 8 (and
"Property" means any one of them);
<PAGE>
38
"Purchase Price" US$225,000,000;
"Purchaser's Accountants" Ernst & Young;
"Purchaser's Group" the Purchaser and the Guarantor and all
subsidiaries or subsidiary undertakings from
time to time of the Purchaser and of the
Guarantor;
"Purchaser's Solicitors" Morgan Bruce;
"Restricted Business" has the meaning ascribed to it in clause 6.2;
"Restructuring Plan" the financial restructuring plan relating to
the Group, a copy of which is disclosed at
item 10 of section 1.2(A) of the Schedule to
the Disclosure Letter.
"RTPA 1976" the Restrictive Trade Practices Act 1976;
"Sale Documents" has the meaning ascribed to it in clause
14.1;
"Schedules" the schedules to this Agreement;
"Scotts Valley Property" the land located at Scotts Valley more
particularly described in Part III of
Schedule 8;
"Shares" the issued shares in the Companies specified
in Part A of Schedule 7 (or in any of the
Companies);
"Software" any set of instructions for execution by
microprocessor used by any Group Company;
"Tavistock the factory and offices at Tavistock Road,
Road Property" Roborough with title numbers DN174695
and DN176582 more fully described in
sections 4 and 5 of Part II of Schedule 8;
"Tax Covenant" the tax covenant referred to, inter alia, in
Schedule 4 and set out in Schedule 6;
"TCGA 1992" the Taxation of Chargeable Gains Act 1992;
"TULCRA" the Trade Union and Labour Relations
Consolidation Act 1992;
<PAGE>
39
"UK Group Company" each of Plessey, Marconi, AEI, GEC Plessey
Semiconductors Overseas Limited and UK
Cablevision Limited;
"UK Pensions Company" each of Plessey, Marconi, AEI and GEC Plessey
Semiconductors Overseas Limited;
"VAT" the tax imposed by the Sixth Council
Directive of the European Communities;
"VATA 1994" the Value Added Tax Act 1994;
"Warranties" the warranties set out in Schedule 3
(Warranties) given by GEC and "Warranty"
shall be construed accordingly;
"Working Hours" 9.30 a.m. to 5.30 p.m. on a Business Day.
(B) In this Agreement, unless otherwise specified:-
(i) references to clauses, sub-clauses, paragraphs, sub-paragraphs, and
Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of,
and Schedules to, this Agreement;
(ii) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted except to the extent that any
amendment or modification made after the date of this Agreement would
increase or alter the liability of GEC under this Agreement;
(iii) references to "(pound)" are references to the lawful currency for the
time being of the United Kingdom and references to "US$" or "$" are,
save where the context otherwise requires, references to the lawful
currency for the time being of the United States;
(iv) references to "Tax" or "Taxation" include, without limitation, all
taxes, levies, duties, imposts, charges and withholdings of any nature
whatsoever, whether of the United Kingdom or elsewhere, together with
all penalties, charges and interest relating to them;
(v) references to a "company" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(vi) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
<PAGE>
40
(vii) the term "Relief" shall bear the same meaning as in the Tax Covenant;
(viii) a person shall be deemed to be connected with another if that person
is connected with another within the meaning of section 839 ICTA 1988;
(ix) references to writing shall include any modes of reproducing words in
a legible and non-transitory form;
(x) references to the knowledge or awareness of GEC (or any similar
expression) in relation to the Warranties shall be deemed to refer to
the actual knowledge of GEC, having made all reasonable enquiries in
the context of the relevant Warranty of Ernest Pusey, Tom Urwin, Tony
Gallagher, Ian Cooper, Philip Wright, Joseph Hustein, Janice Rourke,
Tony Griffiths and Alan Capper;
(xi) words or phrases beginning with the introduction of the word "include"
or "including" are to be interpreted without limitation;
(xii) references to times of the day are to London time;
(xiii) headings to clauses and Schedules are for convenience only and do
not affect the interpretation of this Agreement;
(xiv) the Schedules and any attachments (but not the Tax Covenant) form
part of this Agreement and shall have the same force and effect as if
expressly set out in the body of this Agreement, and any reference to
this Agreement shall include the Schedules and attachments;
(xv) references to the masculine gender shall include the feminine and the
neuter (and vice versa) and references to the singular shall include
the plural (and vice versa);
(xvi) references to any English legal term for any action, remedy, method
of judicial proceeding, legal document, statutory provision, legal
status, court, official or any legal definition, concept or thing
shall in respect of any jurisdiction other than England be deemed to
include what most nearly approximates in that jurisdiction to the
English legal term save where specific reference is made to the
relevant term in such other jurisdiction;
(xvii) references in this Agreement to an amount expressed in pounds
sterling shall, where applicable, be construed as referring to the
equivalent amount in any other relevant currency calculated by
reference to the rate of exchange for such currency prevailing on the
date of this Agreement;
(xviii) the term "fairly disclosed" in relation to a disclosure means that
such disclosure contains adequate detail to enable a reasonable person
to assess the nature of the fact or matter in question, the Warranty
or Warranties to which it relates and a broad indication of the
significance of such fact or matter.
<PAGE>
41
Schedule 2:
Completion Arrangements
Part 1
1. GEC's Obligations
1.1 At Completion, GEC shall deliver or procure the delivery to the Purchaser
of:-
(A) (i) duly executed transfers in respect of the Shares of Plessey,
Marconi and AEI in favour of the Purchaser (or its nominee) and
share certificates representing such Shares in the name of the
relevant transferors;
(ii) the share certificates representing the Plessey Inc. Shares in
the name of the relevant transferor with the transfer form on the
reverse of each such share certificate duly executed in favour of
Mitel Inc.;
(iii) any power of attorney under which any document is executed;
(iv) any waiver, consents or other documents required to vest in the
Purchaser the full beneficial ownership of the Shares and enable
the Purchaser to procure them to be registered in the name of the
Purchaser or its nominees;
(v) all deeds and documents relating to the title of the Group
Companies to each of the Properties and the Certificated
Properties;
(vi) a certificate of title given by GEC's Solicitors in respect of
each of the Certificated Properties in the Agreed Form;
(vii) the written resignations of all directors and secretaries of the
Group Companies (other than any director or secretary whom the
Purchaser may wish to remain in office) executed as a deed (if
applicable) in the Agreed Form; and
(viii) the licences and assignments referred to in clause 10 in the
Agreed Form executed by the relevant members of the GEC Group
party thereto.
(B) a counterpart original of the Tax Covenant and the Environmental Deed
duly executed by GEC;
(C) the statutory books (which shall be written up to but not including
the Completion Date), the certificate of incorporation (and any
certificate of
<PAGE>
42
incorporation on change of name) and common seal (if any), of each UK
Group Company;
(D) subject to applicable law, letters of resignation from the auditors of
each of the Companies and other members of the Group in the Agreed
Form;
(E) irrevocable powers of attorney in the Agreed Form executed by each of
the holders of the Shares in favour of the Purchaser (or its
nominee(s)) to enable the Purchaser (pending registration of the
transfers of the Shares) to exercise all voting and other rights
attaching to the Shares and to appoint proxies for this purpose;
(F) a certified copy of a board or board committee resolution of GEC
approving the execution and entering into by GEC of this Agreement,
the Tax Covenant, the Disclosure Letter and the transactions
contemplated herein.
1.2 GEC shall procure that a board meeting of each of the Companies be held at
which:-
(A) it shall be resolved that each of the transfers relating to the Shares
shall be approved for registration and (subject only to the transfer
being duly stamped, if so required by applicable law) that each
transferee be registered as the holder of the Shares respectively in
the register of members;
(B) each of the persons nominated by the Purchaser shall be appointed
directors, as the Purchaser shall direct, such appointments to take
effect from Completion, provided the majority of such persons are
British nationals;
(C) the resignation of auditors (if applicable) shall be accepted and
auditors nominated by the Purchaser shall be appointed to replace them
(subject to their consent being obtained); and
(D) persons not employed by Group Companies (excluding Tom Urwin) shall be
removed from the bank mandates,
and that minutes of each duly held board meeting, certified as correct by
the secretary or other duly authorised officer of the relevant Company and
the resignations and acknowledgements referred to are delivered to the
Purchaser's Solicitors.
1.3 GEC shall comply with its obligations set out in Part 3 of this Schedule.
1.4 Immediately following Completion GEC shall deliver or procure the delivery
to the Purchaser of a licence to the Group Companies substantially in the
Agreed Form executed by IBM.
1.5 GEC shall grant the release described in clause 7.17 for the purposes set
out therein and if the conditions therefor have been satisfied.
<PAGE>
43
Part 2
2. Purchaser's Obligations
2.1 The Purchaser shall:-
(A) pay to GEC in immediately available funds by Federal Wire transfer to
account number 949-1-319993 in the name of The General Electric
Company plc at The Chase Manhattan Bank, New York, New York
ABA021000021 the Purchase Price and telephone Katherine Frasco, The
Chase Manhattan Bank, New York on (201) 599 6683 immediately
thereafter quoting the Federal Wire ID number of the payment;
(B) deliver to GEC, duly executed by the Purchaser, a counterpart original
of the Tax Covenant and the Environmental Deed;
(C) deliver to GEC a certified copy of the board resolutions of the
Purchaser approving the execution and entering into by the Purchaser
of this Agreement, the Tax Covenant, the Disclosure Letter, and the
transactions contemplated hereby;
(D) deliver to GEC a certified copy of each resolution referred to in
clause 7.3;
(E) deliver to GEC a legal opinion from legal advisers to the Guarantor in
Ontario, Canada reasonably acceptable to GEC addressed to GEC in the
Agreed Form; and
(F) deliver to GEC the licences and assignments referred to in clause 10
in the Agreed Form executed by the relevant members of the Purchaser's
Group party thereto.
Payment of the Purchase Price in full in accordance with the foregoing
shall discharge all the Purchaser's obligations with respect thereto, and
the Purchaser shall not be concerned as to the application of the Purchase
Price or any part thereof to which any beneficial owner of any of the
Shares may be entitled.
2.2 The Purchaser shall comply with its obligations set out in Part 3 of this
Schedule.
2.3 The Purchaser shall enter into the contract of employment described in
clause 7.16 with Tom Urwin if the conditions therefor have been satisfied.
Part 3
The Purchaser and GEC shall both procure that each GEC Group Company is released
from the cross-guarantees granted by the Group Companies and the GEC Group
Companies in relation to the GEC Group's and the Group Companies' banking offset
arrangements in the United Kingdom. At Completion the Purchaser and GEC shall
sign and send a letter in the
<PAGE>
44
Agreed Form to The National Westminster Bank Plc confirming that Completion has
occurred.
<PAGE>
45
Schedule 3:
The Warranties
1. Capacity of GEC and Factual Information in certain Schedules
1.1 GEC has the requisite power and authority to enter into and perform this
Agreement, the Tax Covenant, the Environmental Deed and the other documents
to be executed by GEC and delivered at Completion in accordance with this
Agreement.
1.2 This Agreement constitutes and the Tax Covenant, the Environmental Deed and
the other documents executed by GEC which are to be delivered at Completion
will, when executed, constitute binding obligations of GEC.
1.3 The execution and delivery of, and the performance by GEC of its
obligations under this Agreement, the Environmental Deed and the Tax
Covenant will not:-
(A) result in a breach of any provision of the memorandum or articles of
association of GEC;
(B) result in a breach of any order, judgment or decree of any court or
governmental agency to which GEC is a party or by which GEC is bound;
or
(C) require the consent of its shareholders.
1.4 The facts set out in Schedules 7 and 8 are true and accurate.
2. Accounts
2.1 The Accounts:-
(A) in respect of each UK Group Company,
(i) were, at the time they were prepared, prepared in accordance with
the then applicable Statements of Standard Accounting Practice,
as adopted by the Accounting Standards Board and published by the
Institute of Chartered Accountants in England and Wales, and the
then applicable Financial Reporting Standards, developed and
issued by the Accounting Standards Board, applicable to a United
Kingdom company;
(ii) showed a true and fair view of the state of affairs of the Group
Company to which such Accounts relate as at the Accounts Date and
of that Group Company's profit or loss for the financial year
ended on such date;
<PAGE>
46
(iii) were prepared using accounting policies consistent with those
used in the preparation of accounts for the immediately preceding
accounting period except as described in any notes thereto; and
(iv) complied with the relevant requirements of the Companies Act
1985;
(v) were not affected by any material extraordinary or material
exceptional item;
(vi) made provision for all liabilities outstanding at the Accounts
Date which were required to be made in order to give the true and
fair view aforesaid;
(vii) make provision or reserve in accordance with the principles set
out in the notes included in the Accounts for all Taxation liable
to be assessed or for which it may be accountable in respect of
the period ended on the Accounts Date.
(B) in respect of any other Group Company (other than Plessey Inc.)
(i) have been drawn up using local generally accepted accounting
principles and, in the case of Plessey GmbH, Plessey France and
Marconi SA, have been drawn up also on the bases set out in the
notes to the accounts; and
(ii) were prepared using accounting policies consistent with those
used in the preparation of accounts for the immediately preceding
accounting period except as described in any notes thereto.
(C) in respect of Plessey Inc., have been prepared for incorporation in
the consolidated accounts of GEC which are prepared in accordance with
UK generally accepted accounting principles, and were prepared using
accounting policies consistent with those used in the preparation of
accounts for the immediately preceding accounting period.
2.2 (A) The accounting records of each Group Company are in its possession and
have been fully, properly and accurately kept and completed to the
extent required by law.
(B) The March 1997 Summary Management Accounts and the November 1997
Summary Management Accounts have each:-
(i) been compiled from information available at the time they were
prepared and in accordance with the Group's policy for the
compilation of management accounts as disclosed in item 8,
section 1.4 of the Schedule to the Disclosure Letter;
<PAGE>
47
(ii) been compiled in accordance with the accounting policies set out
in the Accounts of Plessey;
(iii) been properly and accurately extracted from the accounting
records of the Group Companies;
(iv) been accurately aggregated, subject to and in accordance with
such policy aforesaid;
(v) are not known by GEC to contain any material error or omission.
(C) The March 1997 Summary Management Accounts summarised the financial
information used by GEC in the production of its consolidated
financial statements for the financial period ended on the Accounts
Date and no adjustment (other than an adjustment in the GEC
consolidated accounts for the expected loss on disposal) was made to
such financial information for such purposes.
2.3 In the Accounts of the UK Companies and Plessey Inc. the stock and work in
progress of each Group Company was treated in accordance with all
applicable Accounting Standards and in the other Group Companies Accounts'
the stock and work in progress was treated in accordance with local
equivalent standards.
2.4 No part of the amounts included in the Accounts as owing by any individual
debtor in excess of (pound)25,000 was overdue by more than 120 days at the
Accounts Date and was not provided for in full or subsequently paid.
3. Pensions
3.1 There are no superannuation or retirement benefits or life assurance funds
schemes or arrangements provided by or on behalf of each UK Pensions
Company under which any of the Employees is entitled to life assurance,
pension or other retirement benefits save in accordance with the GEC
Scheme.
3.2 No UK Pensions Company is under any contractual obligation to provide life
assurance, pension or other retirement benefits in respect of any of the
Employees save in accordance with the GEC Scheme.
3.3 No power to augment benefits under the GEC Scheme has been exercised prior
to Completion in relation to those of the Employees who are members of it.
3.4 Each UK Pensions Company is a participating employer for the purpose of the
GEC Scheme and has fulfilled all its obligations thereunder (including any
obligations to pay contributions).
3.5 Apart from the GEC Scheme, any statutory obligation and other schemes set
out in documents at File F of Annex 1 of the Schedule to the Disclosure
Letter no UK Group
<PAGE>
48
Company is under any legal liability or obligation or a party to any
ex-gratia arrangement or promise to pay pensions, gratuities,
superannuation or the like to or for any of its past or present officers or
employees or their dependants; and, save as aforesaid, there are no
retirement benefit, or pension or death benefit, or similar schemes or
arrangements in relation to or binding on any UK Group Company or to which
any UK Group Company contributes.
3.6 The GEC Scheme:
(A) is an exempt approved scheme for the purposes of Chapter I of Part XIV
of ICTA 1988;
(B) is not a contracted-out scheme under Section 7(3) of the Pension
Schemes Act 1993; and
(C) conforms with the preservation requirements referred to in Section
69(2) of the Pension Schemes Act 1993.
3.7 The GEC Scheme has been operated in all material respects in accordance
with all the then applicable legal requirements in relation to each UK
Pensions Company and the Employees and there are no outstanding claims or
so far as GEC is aware matters likely to give rise to claims against the
GEC Scheme by any UK Pensions Company or any Employee (other than routine
claims for benefits).
3.8 Material details of any superannuation or retirement benefits or life
assurance funds, schemes or arrangements (other than state schemes)
provided by or on behalf of each Group Company under which any of the
overseas Employees (save those in the United States) is entitled to life
assurance, pension or other retirement benefits have been disclosed in
Files G and H of Annex I of the Schedule to the Disclosure Letter. So far
as GEC is aware, such schemes have been operated in all material respects
in accordance with all the then legal applicable requirements in each
relevant jurisdiction and there are no outstanding material claims or
matters likely to give rise to such claims other than routine claims for
benefits.
3.9 The Plessey Inc. Scheme
(A) Generally. Files G and H of Annex 1 of the Schedule to the Disclosure
Letter contain a true and complete list of each plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits in
kind, whether funded or unfunded, including without limitation, each
"employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("Employee Plan") which is now maintained, contributed to, or required
to be contributed to by Plessey Inc. for the benefit of any current or
former employee, officer, independent contractor, agent or consultant
working for Plessey Inc. ("U.S. Employee"). Plessey Inc. will make
<PAGE>
49
available or provide to Purchaser prior to the Completion Date true
and complete copies of all documents, if any, embodying each Employee
Plan, including all amendments thereto and written interpretations
thereof, the two most recent annual reports filed (Form 5500 Series
with applicable schedules) with respect to each Employee Plan required
under ERISA; the most recent summary plan description, if any, with
respect to each Employee Plan required under ERISA; the most recent
favourable determination letter from the Internal Revenue Services
("IRS"), if applicable, with respect to each Employee Plan; and all
material communications, if any, to any U.S. Employee relating to each
Employee Plan.
(B) Qualified Plans. Except as otherwise set forth in this paragraph each
Employee Plan that is intended to be qualified under the Internal
Revenue Code of 1986, as amended ("the Code"), has received a
determination letter from the IRS to the effect that the form of such
Employee Plan and related trust are qualified and exempt from Federal
income taxes under Sections 401(a) and 501(a) of the Code,
respectively, such determination letter includes any new or modified
requirements under the Tax Reform Act of 1986 and subsequent
legislation enacted thereafter prior to the Uruguay Round Agreements
Act and no such determination letter has been revoked, nor to the
knowledge of Plessey Inc., has revocation been threatened. To Plessey
Inc.'s knowledge, and except as otherwise set forth in this paragraph,
nothing has occurred or is reasonably expected to occur that would
adversely affect the qualified status of the Employee Plan or any
related trust subsequent to the issuance of such determination letter.
Notwithstanding the foregoing the determination letter request for the
GEC - USA Employee Savings and Investment Plan is pending and
contributions may have to be made to such plans for seasonal and part
time employees excluded from the Plan between July 1, 1990 and
December 31, 1993.
(C) Compliance. Except as otherwise set forth in paragraph (B), Plessey
Inc. has performed in all material respects all obligations required
to be performed under each Employee Plan, and each Employee Plan has
been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or
the Code. No Employee Plan is a defined benefit plan within the
meaning of Section 3(35) of ERISA, nor a multi-employer plan within
the meaning of Section 3(37) of ERISA, and Plessey Inc, has no
liability with respect to any such plan as a result of having been
treated as part of a "single employer" within the meaning of Section
414(b), (c), (m), (n) and (o) of the Code, nor is there any basis for
such liability being imposed. Except as set forth in paragraph (B)
there are no investigations, claims, suits or proceedings pending or
so far as Plessey Inc. is aware, threatened or anticipated (other than
routine claims for benefits) against any Employee Plan or the assets
of any Employee Plan and so far as Plessey Inc. is aware, there are no
facts that could give rise to any material liability in the event of
any such investigation, claim, suit or proceeding. All
<PAGE>
50
outstanding indebtedness for services performed or accrued vacation or
holiday, sick or personal day pay, earned commissions, accrued bonuses
or their benefits owed to any U.S. Employee been paid when due or
accrued on the books of Plessey Inc. So far as Plessey Inc. is aware
no "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA has occurred with respect to any Employee
Plan; no action or failure to act with respect to any Employee Plan
could subject Plessey Inc., the Purchaser or any of its affiliates or
any Employee Plan to any material tax, penalty or other liability for
breach of fiduciary duty or otherwise, under ERISA or any other
applicable law, whether by way of indemnity or otherwise, except as
set forth in paragraph (B).
(D) No Post-Employment Obligations. Plessey Inc. has never promised,
represented to, or contracted with (orally or in writing) any U.S.
Employee (individually or as a group) that life insurance, medical or
other employee welfare benefits (other than severance and accrued
vacation and holiday pay) would be provided upon their retirement or
termination of employment, except to the extent required by statute.
(E) COBRA. Each "group health care" within the meaning of Section
498OB(g)(2) of the Code maintained by Plessey Inc. or any entity with
which it is considered a "single employer" within the meaning of
Section 414(b), (c), (m), (n) and (o) of the Code, has been
administered in good faith in compliance with the continuation
coverage requirements contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") as set forth at
Section 4980B of the Code and any regulations promulgated or proposed
thereunder.
(F) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either
alone or when taken together with any additional or subsequent events)
constitute an event under any Employee Plan that, by itself, will or
is reasonably likely to result in any payment, upon a change in
control or otherwise, whether of severance, accrued vacation or
otherwise, acceleration, vesting, distribution or increase in benefits
which will or may be made by Plessey Inc., the Purchaser or any of its
affiliates with respect to any U.S. Employee which will be
characterised as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
(G) Employment Matters. Plessey Inc. (i) is in compliance in all material
respects with all applicable federal and state laws, rules, and
regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with
respect to U.S. Employees; (ii) has withheld all amounts required by
law or by agreement to be withheld from the wages, salaries, and other
payments to U.S. Employees; (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (iv) (other than routine payments to be made in the
<PAGE>
51
normal course of business and consistent with past practice) is not
liable for any payment to any trust or other fund or to any
governmental or administrative authority with respect to unemployment
compensation benefits, Social Security or other benefits for U.S.
Employees, except in each case under (i) to (iv) above where the
failure to be in compliance would not, singly or in the aggregate,
have a material adverse effect on Plessey Inc., its financial
condition or business and except for contributions required to be made
to the GEC USA Employees' Savings and Investment Plan and the GEC USA
Employees Welfare Benefit Plan.
(H) No Other Employment Plans. There is no plan or commitment whether
legally binding or not, to establish any new Employee Plan, to modify
(other than by way of termination) any Employee Plan (except to the
extend required by law) or to enter into any new Employee Plan; nor
has any intention or commitment to do any of the foregoing been
communicated except that the GEC USA Employee Savings and Investment
Plan will be amended to include certain part-time employees for the
period commencing July 1, 1990 and ending December 31, 1993.
4. Arrangements between the GEC Group and the Group
So far as GEC is aware, save for indebtedness arising in the ordinary
course of trading, no indebtedness (actual or contingent) and no contract
other than at arm's length which is material in the context of the business
of the Group as a whole, is outstanding between any Group Company and any
GEC Group Company.
5. Group Structure
5.1 The Shares comprise the whole of each respective Company's issued and
allotted share capital and all of them are fully paid up.
5.2 There is no agreement or commitment outstanding which calls for the
allotment, issue or transfer of, or accords to any person the right
(conditionally or unconditionally) to call now or in the future for the
allotment or issue of, any shares (including the Shares) or debentures in
or securities of any Company.
5.3 Save for any interests held in another Group Company, no Group Company has
any interest in the share capital of any body corporate or undertaking.
5.4 No Group Company acts or carries on business in partnership or through a
joint venture with any other person or is a member (otherwise than through
the holding of share capital) of any corporate or unincorporated body,
undertaking or association or holds or is liable on any share or security
which is not fully paid up or which carries any liability.
5.5 No UK Group Company has any branch, place of business or permanent
establishment outside the United Kingdom.
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52
5.6 No Group Company has, at any time in the last three years, repaid, redeemed
or purchased (or agreed to repay, redeem or purchase) any of its shares, or
otherwise reduced (or agreed to reduce) its issued share capital or any
class of it or capitalised (or agreed to capitalise) in the form of shares,
debentures or other securities or in paying up any amounts unpaid on any
shares, debentures or other securities, any profits or reserves of any
class or description or passed (or agreed to pass) any resolution to do so.
5.7 The entire authorised capital stock of Plessey Inc. consists of 1000 common
shares all of which are issued and outstanding and no shares of Plessey
Inc. are held in treasury. All of the issued and outstanding shares of
Plessey Inc. have been duly authorised, are validly issued, fully paid, and
non assessable, and are held of record by GEC Inc. as set forth in Schedule
7 of this Agreement. There are no outstanding or authorised options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Plessey Inc.
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorised stock appreciation, phantom
stock, profit participation, or similar rights with respect to Plessey Inc.
capital stock. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of Plessey
Inc.
6. Options, Mortgages and Other Encumbrances
There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting the
Shares or any of them and there is no agreement or commitment to give or
create any and no claim has been made by any person to be entitled to any.
7. Statutory Returns
7.1 The copies of the constitutional documents of each Group Company which are
in the Data Room are complete and accurate in all material respects, have
attached to them copies of all resolutions and other documents required by
law to be so attached and set out to the extent required by applicable law
the rights and restrictions attaching to each class of share capital of
that Group Company.
7.2 The statutory books (including all registers and minute books) of each
Group Company have, in the three years ended on the date of this Agreement,
been properly kept as required by law and no written notice or allegation
that has not been complied with that any of them is incorrect or should be
rectified has been received in the three years ended on the date of this
Agreement.
7.3 All documents which should have been delivered within the last three years
by each Group Company to the Registrar of Companies (or its equivalent in
respect of jurisdictions other than England and Wales) have, in all
material respects, been properly so delivered.
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53
8. Contracts
8.1 There are no subsisting contracts to which any Group Company is a party
which were entered into otherwise than in the ordinary course of business
of that Group Company.
8.2 The details of the agency and distributorship agreements to which any Group
Company is party are attached to the Disclosure Letter.
8.3 There is not outstanding any guarantee, indemnity, performance bond or
suretyship given by any Group Company to secure any obligation of any
person not within the Group.
8.4 There are no GEC Securities.
8.5 Material details of the Group's only contracts under which deliveries are
still due to be made at the date hereof:-
(A) with its largest 22 customers by sales values measured on the basis of
the aggregate of (x) amounts billed by the Group for the period 1st
April, 1997 to 30th September, 1997 and (y) the value of outstanding
orders scheduled for delivery by 31st March, 1998; and
(B) with its largest ten suppliers (but ignoring suppliers of capital
equipment) measured by purchase values for the year ended 31st March,
1997;
are attached to the Disclosure Letter. For these purposes, "customer" and
"supplier" means a person (the "contracting party") together with its
subsidiaries and subsidiary undertakings who has contracted with a member
of the Group for the purchase or, as the case may be, the supply of goods
and, in the case of a customer, includes a person (a "sub-contractor") with
whom any such contracting party (including its subsidiaries and subsidiary
undertakings) has contracted for the purchase of goods of the same type
where the sub-contractor has contracted with the relevant member of the
Group for the purchase of such goods, taken as a single customer or, as the
case may be, as a single supplier.
8.6 There is attached to the Disclosure Letter a list of all hire purchase
contracts and finance and operating leases which relate to assets used by
any Group Company to which such Group Company is a party and which involves
an annual charge in excess of (pound)25,000 and the term of which will not
expire within 6 months from the date hereof. The aggregate annual charge
outstanding at 31st December, 1997 in respect of hire purchase contracts
and finance and operating leases (in each case the annual charge for which
does not exceed (pound)25,000) did not exceed (pound)100,000.
8.7 (A) The Group will not at Completion be in default (otherwise than arising
from any default relating to change of control) under contracts with
customers which will following Completion result in contractual
liabilities in relation to
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54
sales made before Completion (or only not made before Completion
because of default in delivery at the time stipulated in such
contract, but then only in relation to such late delivery) for such
default exceeding 1.75 per cent. of the Group's preceding 12 month's
sales but excluding any defaults which are the subject of the covenant
in clause 5.4 of this Agreement.
(B) There is attached at item 26 of section 7.2 of the Schedule to the
Disclosure Letter a list of the aggregate sales from 1st April, 1997
to 31st December, 1997 for each product for which such aggregated
sales (at invoiced value) were less than the aggregated GPS Standard
Cost for the Financial Year 1997 as set out at item 10 of section 1.11
of the Schedule to the Disclosure Letter.
8.8 No Group Company is in default under any obligations existing by reason of
membership of any association or body.
8.9 The Group will not at Completion be in default (otherwise than arising from
any default relating to change of control) under contracts with suppliers
which will result in such supplier validly claiming material damages from
the Group.
9. Events since the Accounts Date
9.1 Since the Accounts Date:-
(A) the business of the Group has been carried on in its ordinary course;
(B) no resolution of any Group Company in general meeting has been passed;
and
(C) no dividend or distribution has been declared, paid or made and no
share or loan capital has been issued or agreed to be issued or put
under option by any Group Company.
9.2 A list of all individual legally binding capital commitments of each Group
Company in excess of US$100,000 as at 30th September, 1997 is attached to
the Disclosure Letter.
10. Grants
A list of all grants and a summary of the amounts received and the
amounts outstanding, aid and subsidies paid or made to any Group
Company during the last six years by, and of all outstanding claims by
any Group Company for any such grant, aid or subsidy from, any
supra-national, national or local authority or government agency are
set out in the Disclosure Letter.
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55
11. Licences and restrictions on the business of each Group Company
11.1 Each Group Company has all material statutory and regulatory licences,
consents, permissions and approvals required for the carrying on of the
business now being carried on by it.
11.2 All licences, consents, permissions and approvals referred to in
sub-paragraph 11.1 above are in full force and effect and GEC is not aware
that there are any circumstances which indicate that there is a substantial
likelihood that any of such licences, consents, permissions or approvals
will or may be revoked or not renewed or which may confer a right of
revocation or that the terms may be altered to the detriment of the
relevant Group Company.
12. Bank Accounts and Borrowings
12.1 Details of all bank accounts maintained or used by each Group Company
(including, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) are set out in or
attached to the Disclosure Letter.
12.2 Details of all overdraft, loan and other financial facilities available to
the Group are set out in the Disclosure Letter.
12.3 Except for any borrowings under the overdraft, loan and other financial
facilities referred to in sub-paragraph 12.2 above, no Group Company has
any outstanding loan capital nor has any Group Company incurred or agreed
to incur any borrowing which it has not repaid or satisfied, or lent or
agreed to lend any money which has not been repaid to it or owns the
benefit of any debt present or future (other than debts due to it or owed
to it in the ordinary course of trading) save in any of the foregoing cases
for any such matters or arrangements between Group Companies.
13. Insolvency
13.1 No resolution has been passed for the winding up of any Group Company or
for a provisional liquidator to be appointed in respect of any Group
Company and no meeting has been convened and, so far as GEC is aware, no
petition has been presented for the purpose of winding up any Group
Company.
13.2 No administration order has been made and, no petition for such an order
has been presented in respect of any Group Company.
13.3 (A) No receiver (which expression shall include an administrative
receiver) has been appointed in respect of any Group Company or all or
any of its assets;
(B) Plessey GmbH has not itself filed nor has any other person filed a
petition for the institution of insolvency proceedings against Plessey
GmbH nor has
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56
Plessey GmbH offered or made a settlement or moratorium in court or
out of court with its creditors generally.
13.4 (A) No Group Company is insolvent, or unable to pay its debts within the
meaning of section 123 Insolvency Act 1986, or has stopped paying its
debts as they fall due.
(B) Neither Marconi SA or Plessey France SA is insolvent or unable to pay
its debts ("en etat de cessation des paiements") within the meaning of
French law No. 85-98 of 25th January 1985 or has stopped paying its
debts as they full due.
13.5 (A) No voluntary arrangement has been proposed under section 1 Insolvency
Act 1986 in respect of any Group Company.
(B) No voluntary arrangement ("Reglement amiable") has been proposed under
French law No. 84-148 of 1st March, 1984 in respect of Marconi SA or
Plessey France SA.
14. Litigation
14.1 Other than in respect of the payment and collection of debts in the
ordinary course of its business, no Group Company is engaged in any
litigation, arbitration or criminal proceedings, whether as plaintiff,
defendant or otherwise, and no litigation, arbitration or criminal
proceedings by or against any Group Company is pending, or (so far as GEC
is aware) threatened, the adverse determination of which will result in a
financial liability of more than(pound)50,000 for any Group Company or the
imposition of an injunction or similar order on it provided that this shall
not apply to contracts with customers to which the provisions of paragraph
8.7(A) above shall apply.
14.2 No Group Company is subject to any order or judgment given by any court
(including, without limitation, any injunction or order for specific
performance) which is still in force and has not given any undertaking to
any court arising out of any legal proceedings which remains outstanding.
14.3 No claims in excess of (pound)50,000 have been made against any Group
Company by any Employee in respect of any personal accident or injury that
occurred at the premises of a Group Company.
14.4 No Group Company has outstanding any written claim nor, so far as GEC is
aware, are any claims pending or threatened in writing in each case in
connection with the sale of those businesses, undertakings and companies
listed at item 7.6 of section 1 of the Schedule to the Disclosure Letter
alleging a failure on the part of the seller thereof to comply prior to
Completion with its obligations under those agreements listed at that item.
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57
15. Compliance with Laws and No Investigation
15.1 So far as GEC is aware, no Group Company's business is being conducted in
contravention of any relevant legislation which contravention has a
material and adverse effect on the business of the Group as a whole.
15.2 So far as GEC is aware, no Group Company has received written notification
that any non routine investigation or inquiry is being conducted by any
governmental or other regulatory body in respect of its affairs in respect
of which there is a substantial likelihood that such investigation or
inquiry will lead to proceedings, the adverse determination of which would
have a material and adverse effect on the business of the Group as a whole.
15.3 No Group Company is now, nor has it during the last six years been, a party
to any agreement or arrangement or concerted practice and it does not
conduct nor has it conducted its business affairs in a manner which:
(A) is subject to registration but not registered under the Restrictive
Trade Practices Acts 1976 and 1977;
(B) contravenes the provisions of the Resale Prices Act 1976 or the
Competition Act 1980;
(C) infringes either Article 85 or 86 of the Treaty of Rome establishing
the European Community; or
(D) is void or unenforceable (whether in whole or in part) by virtue of,
or may render it liable to proceedings under, the legislation referred
to in paragraphs 15.4 (A) to (C) below.
15.4 No Group Company is now nor has it during the last six years been, a party
to any agreement or arrangement or been involved in any business practice
in respect of which an undertaking has been given by or an order made
against or in relation to it pursuant to any anti-trust or similar
legislation in any jurisdiction in which it carries or carried on business
or has or had assets or sales, including (without limitation):
(A) Article 85 or 86 of the Treaty of Rome establishing the European
Community;
(B) the Restrictive Trade Practices Acts 1976 and 1977;
(C) the Resale Prices Act 1976;
(D) the Fair Trading Act 1973 or any secondary legislation adopted under
that Act; and
(E) the Competition Act 1980.
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58
15.5 No Group Company is now, nor has it during the last six years been, a party
to any agreement or arrangement or been involved in any business practice
in respect of which:
(A) any non-routine request for information, statement of objections or
similar matter has been received by any Group Company from any court,
tribunal, governmental, national or supra-national authority; or
(B) an application for negative clearance or exemption has been made to
the Commission of the European Communities.
15.6 So far as GEC is aware, no Group Company has received any aid granted by a
Member State of the European Union or through Member State resources in any
form whatsoever which distorts or threatens to distort competition by
favouring certain undertakings or the production of certain goods, which
aid affects trade between member states and is incompatible with the Common
Market.
16. Assets
16.1 Each of the tangible assets (other than the Properties, the Certificated
Properties and the Overseas Offices) included in the Accounts as being
owned by any Group Company, or acquired by such Group Company since the
Accounts Date and which, if acquired before such date, would have been
included in the Accounts, (other than assets sold, realised or applied in
the normal course of business) where such asset has a current net book
value in excess of(pound)1,000 and is used by or is available for use by
that Group Company at the date of this Agreement is owned both legally and
beneficially by that or another Group Company and no Group Company has
granted any option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance over any such asset, subject in any
case to retention of title and vendor's liens arising in the ordinary
course of business and liens arising by operation of law.
16.2 Plant and machinery, (but excluding vehicles), which had an original cost
in excess of (pound)100,000 and has an existing book value in excess of
(pound)25,000 used in the business of any Group Company is, taken as a
whole, in reasonable condition (subject to fair wear and tear) having
regard to its age and in satisfactory working order.
17. Ownership of Land
17.1 The Properties (save for those listed at paragraph 3 of Part I to Schedule
8), the Certificated Properties and the Overseas Offices are the only
immovable properties owned, used or occupied by a Group Company or in
respect of which any Group Company has any estate, interest, right or
ownership.
17.2 In relation to (a) the Overseas Offices at Scotts Valley, Santa Cruz and
(b) each of the Properties save for those listed at paragraph 3 of Part I
to Schedule 8:-
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59
(A) the relevant Group Company specified in Schedule 8 as owner of the
Property or Overseas Offices (the "Owner") is legally and beneficially
entitled to the Property or Overseas Offices and the Owner has under
its control all of the title deeds and documents listed in the
Disclosure Letter;
(B) the Owner holds the Property or Overseas Offices subject to the
leases, underleases, sub-leases, tenancies or licences particulars of
which are set out in the Disclosure Letter but is otherwise in
physical possession and actual occupation of the Property or Overseas
Offices;
(C) neither GEC nor the relevant Group Company has been notified in
writing nor is it aware of a material breach of any provision of any
lease under which the Owner holds the Property or Overseas Offices
where such breach is still outstanding;
(D) neither GEC nor the relevant Group Company has received nor is it
aware that the Owner as its owner has received notice in writing of
any outstanding breach under planning legislation in respect of the
Property or Overseas Offices;
(E) neither GEC nor the relevant Group Company has received nor is it
aware that the Owner has received notice in writing of any legal
proceedings or notice in writing of any circumstance which in the
reasonable opinion of GEC or Owner Company will result in legal
proceedings in respect of the Property or Overseas Offices which are
or are likely to be material in the context of the business carried on
by the Group as a whole.
17.3 Neither GEC nor the relevant Group Company has received nor is it aware
that any Group Company has received notice in writing of any liability
(whether actual or contingent) in relation to any leasehold property which
such Group Company has assigned or otherwise disposed of.
17.4 The information provided by GEC and by any member of the Group for the
purposes of each certificate of title is, so far as GEC is aware, true,
complete and accurate in all material respects and is not materially
misleading.
17.5 Each of the Overseas Offices is held pursuant to the tenancy agreement or
licence described in Part III of Schedule 8 and neither GEC nor the
relevant Group Company has received or been notified in writing or is aware
of a material or persistent breach of that tenancy agreement or licence (as
the case may be) where such breach is still outstanding.
17.6 In relation to each of the Properties save for those listed at paragraph 3
of Part I to Schedule 8:
(A) The Properties are free from any mortgage debenture, charge, rent
charge, lien or any other encumbrance securing the repayment of monies
or other
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60
obligation of monies or other obligation of liability of any of the
Group Companies or any other person.
(B) The Properties are not subject to any outgoings other than business
rates, water rates and insurance premiums and in the case of leasehold
properties rent and service charges.
(C) So far as GEC is aware the Properties are not subject to any
restrictive covenants, stipulations, easements, profits a prendre,
wayleaves, licences, grants, restrictions overriding interests or
other similar rights vested in third parties.
(D) So far as GEC is aware none of the Properties is affected by any
compulsory purchase order, notice or resolution.
(E) Where any of the matters referred to in paragraphs 17.6(A), (B) and
(C) have been disclosed in the Disclosure Letter, GEC is not aware
that it has received notice in writing of any breach that is still
outstanding.
(F) So far as GEC is aware the Properties are not subject to any option,
right of pre-emption or right of first refusal.
(G) So far as GEC is aware it has not received notice of any breach of
building regulations that is still outstanding.
(H) So far as GEC is aware the Group Companies have not received notice of
any breach of the terms of the following which is still outstanding:
(i) all permissions, orders and regulations applicable to the
Properties;
(ii) all agreements under the Town and Country Planning Act 1971 s52
made or planning obligations under the Town and Country Planning
Act 1990 s106 undertaken with respect to the Properties or other
relevant legislation; and
(iii) all agreements made under the Highways Act 1980 s38 with respect
to the Properties or other relevant legislation.
(I) The buildings and other structures on the Properties are in sufficient
repair to be fit for the purposes for which they are being used.
(J) So far as GEC is aware there are no outstanding disputes with any
adjoining or neighbouring owner with respect to boundary walls and
fences or with respect to any easement or right over or means of
access to any of the Properties.
(K) None of the Properties is affected by past or present mining activity.
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61
(L) No building or structure on the Properties is affected by structural
damage such that it is not fit for the purposes for which it is being
used.
(M) So far as GEC is aware it has not received any notice that any
licences, consents and approvals required from the landlords and
superior landlords under any leases of the Properties have not been
obtained nor that the covenants on the part of the tenant contained in
any licences consents and approvals have failed to be duly performed
and observed and there are no rent reviews under the leases of the
Properties held by any Group Company currently in progress.
(N) So far as GEC is aware no obligation necessary to comply with any
notice or other requirement given by the landlord under any leases (or
underleases) of the Properties is outstanding and unobserved or
unperformed.
(O) There is no obligation to reinstate any of the Properties by removing
or dismantling any alteration made to it by any Group Company or so
far as GEC is aware any predecessor in title to any Group Company.
17.7 In relation to each of the Properties (save for those listed at paragraph 3
of Part I to Schedule 8) and the Overseas Offices:
(A) So far as GEC is aware it has not received any notice of
non-compliance with applicable statutory and bylaw requirements with
respect to the Properties and the Overseas Offices and in particular
(but without limitation) with the requirements as to fire precautions
and under the Public Health Acts and the Offices Shops & Railway
Premises Act 1963, the Health & Safety at Work Act 1974 and the
Workplace (Health, Safety and Welfare) Regulations 1992 which is still
outstanding.
(B) So far as GEC is aware it has not received any notice of any
outstanding and unobserved or unperformed obligation with respect to
the Properties and the Overseas Offices necessary to comply with the
requirements (whether formal or informal) of any competent authority
exercising statutory or delegated powers.
(C) So far as GEC is aware each of the Properties and the Overseas Offices
is entitled to rights of access and rights to services sufficient for
the purposes for which the relevant Property or Overseas Office is
being used.
(D) So far as GEC is aware the principal means of access to the Properties
and the Overseas Offices is over roads which have been taken over by
the local or other highway authority and which are maintainable at the
public expense and no means of access to the Properties is shared with
any other party nor subject to rights of determination by any other
party.
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62
(E) Each of the Properties and the Overseas Offices enjoys the mains
services of water drainage electricity and gas.
(F) No licences are required whether under the Licensing Act 1988 or
otherwise in relation to any of the Properties or the Overseas
Offices.
17.8 The information contained in Schedule 8 Part I and Part III as to the
tenure of each of the Properties and the Overseas Offices, the principal
terms of the leases or licences held by a Group Company (and the principal
terms of the tenancies and licences subject to and with the benefit of
which the Properties and the Overseas Offices are held) is true and
accurate in all respects.
17.9 Except in relation to the Properties, the Certificated Properties and the
Overseas Offices, no Group Company has any liabilities (actual or
contingent) arising out of the conveyance, transfer, lease, tenancy,
licence agreement or other document relating to land or premises or an
interest in land or premises, including without limitation, leasehold
premises assigned or otherwise disposed of.
18. Intellectual Property
18.1 (A) Details of all registered Intellectual Property legally and
beneficially owned by a Group Company and details of all applications
for registration thereof are set out in the Disclosure Letter.
(B) Such intellectual property is free from all charges or similar
encumbrance, save for any licence disclosed pursuant to Warranty 18.4.
18.2 All renewal fees and administrative steps required for the maintenance of
the rights disclosed pursuant to Warranty 18.1 have been paid or taken. GEC
is not aware of any challenge or attack by a third party or competent
authority to such rights and no such challenge or attack has been
communicated to GEC (excluding routine patent and trade mark registry
actions). No claims have been made by any employee of a Group Company
pursuant to sections 40 and 41 of the Patents Act 1977 relating to patents
or patent applications disclosed pursuant to Warranty 18.1.
18.3 GEC is not aware that the effect of anything which has been done or omitted
to be done by a member of the GEC Group in relation to the prosecution and
maintenance of the rights disclosed pursuant to Warranty 18.1 has
prejudiced the validity or enforceability of such rights so as to have a
material adverse effect on the business of the Group Companies.
18.4 Details of all material licences (excluding shrink-wrap software licences)
granted to or by a Group Company in respect of any Intellectual Property
are set out in the Disclosure Letter and no Group Company is in material
breach of any such licence and so far as GEC is aware, no other party
thereto is in material breach of any such licence. Nothing has been done by
any Group Company which would entitle the
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63
other party to the licence to terminate such licence (excluding any
consequence of entering into the transactions contemplated by this
Agreement).
18.5 So far as GEC is aware the processes and methods of employed, the services
provided, the business conducted and the products used or dealt in by Group
Companies in relation to their business as carried on at the date of this
Agreement do not infringe or make unauthorised use of the rights of any
other person in any Intellectual Property (or confidential information). No
written claim has been communicated to GEC by a third party alleging the
infringement of any Intellectual Property or misuse of confidential
information through use of the processes and methods employed, services
provided or products used or dealt in by Group Companies.
18.6 So far as GEC is aware there is no unauthorised use or infringement by any
person of any Intellectual Property owned by a Group Company.
18.7 Save in the ordinary course of business or to its employees no Group
Company has disclosed any confidential information except under an
obligation of confidentiality.
18.8 The sub-licence in the Agreed Form relating to the AT&T/Licence Cross
Licence grants all rights capable of being granted by GEC for the business
of the Group Companies under the AT&T/Licence Cross Licence.
18.9 GEC has disclosed in the Disclosure Letter the Group Companies' plan in
respect of Year 2000 compliance.
18.10 So far as GEC is aware the Group is in substantial compliance with its
plan in respect of Year 2000 compliance.
18.11 Details of disaster recovery and security procedures relating to the Group
Companies have been disclosed in the Disclosure Letter.
18.12 The Hardware and Software operates and has been maintained so as to
support the businesses of the Group Companies at Completion and so far as
GEC is aware there are no defects or errors (excluding issues relating to
Year 2000 compliance) which are having a material adverse effect on the
business of the Group Companies.
19. Sale of Shares
No one is entitled to receive from any Group Company any finders fee,
brokerage or other commission in connection with the sale and purchase of
the Shares under this Agreement.
20. Insurances
20.1 (A) Details of the insurance policies maintained by or on behalf of each
Group Company are attached to the Disclosure Letter.
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64
(B) So far as GEC is aware, all such policies are in force and, so far as
GEC is aware, no Group Company has done anything or omitted to do
anything as a result of which any of such policies is void or voidable
and no claims are outstanding for amounts in excess of (pound)50,000
under each such policy.
21. Employees
21.1 (A) The name and particulars of remuneration, profit sharing, incentive
and bonus arrangements (including payments in connection with
termination of any office or employment and loyalty payments) and
material benefits of the Employees as at 9th January, 1998 are set out
in or attached to the Disclosure Letter and such particulars are true
and accurate in all material respects.
(B) Since that date, no Employee with a basic salary in excess of
(pound)50,000 per annum has ceased to be an Employee or has given
notice terminating his contract of employment and no such person has
been taken on by the Company.
21.2 The contract of employment of each Employee may be terminated by the
employer without damages or compensation (other than that payable by
statute) by giving at any time no more than 13 weeks notice.
21.3 There is no material dispute with any trade union or other such
representative body existing or, so far as GEC is aware, pending or
threatened in relation to the business of any Group Company.
21.4 Details of all collective agreements and recognition agreements for the
time being affecting the Employees or their conditions of service are
attached to the Disclosure Letter.
21.5 (A) Within the year immediately preceding the date of this Agreement, no
Group Company has given notice of any redundancies to the Secretary of
State or started consultations with any independent trade union under
the provisions of Part IV, TULRCA or failed in any material respect to
comply with any such obligation under the said Part IV or has
undertaken any corresponding steps applicable under the laws of
another jurisdiction.
(B) Plessey GmbH has not taken within the year immediately preceding this
Agreement any steps for mass dismissals requiring prior notice to be
given to the Labour Authority .
21.6 So far as GEC is aware, there is not outstanding any material dispute or
material claim by any Employee or any former employee of any Group Company,
nor is GEC aware of any circumstances which have arisen from which there is
a substantial likelihood of such claims or disputes.
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21.7 GEC is not aware of any complaint, enquiry or investigation which has been
made to or against any Group Company or Employee of any Group Company or
which is pending or threatened or expected in respect or race
discrimination, equal pay or unequal treatment or disability discrimination
by any Group Company or Employee of any Group Company.
22. The Environment
22.1 The business of each Group Company is in all material respects being
conducted in compliance with Environmental Laws and so far as GEC is aware,
each Group Company, its directors, officers and employees has in the last
three years complied in all material respects with Environmental Laws.
22.2 Each Group Company has all Permits necessary at the date of this Agreement
for the operation of the business of such Group Company.
22.3 No circumstance exists (other than the sale of the Shares) which is likely
to result to the material detriment of the Group as a whole, in suspension,
or revocation of any Permit or is likely to result in any such Permit not
being renewed.
22.4 No material work or material expenditure is required under any
Environmental Laws in order to carry on the business of any Group Company
where failure to carry out such work or to incur such expenditure as at the
date of this Agreement is a breach of Environmental Laws or any Permit.
22.5 So far as GEC is aware, no Group Company has in the last three years
received any written notice or other written or recorded communication from
which it reasonably appears that it is likely to be in breach of or liable
under Environmental Laws or under any Permit.
22.6 So far as GEC is aware, none of the sites currently used, owned or occupied
by any Group Company is now being or is polluted or contaminated to a
material extent as a result of:
(i) any process or operation (including without limitation waste
management operations) carried out there by any Group Company or any
third party; or
(ii) substances kept or used there by any Group Company or any third party.
22.7 No written notice or other written or recorded communication has been
received in the last three years by any Group Company from any competent
authority concerning the inclusion of any land currently or formerly used,
owned or occupied by any Group Company within any register of contaminated
sites or requiring any remediation works and GEC knows of no current
intention on the part of any competent authority to give such notice or
communication nor of any current investigations by any competent authority
which might give rise to such an intention.
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22.8 GEC is not aware of any circumstances which are reasonably likely to give
rise to a claim against any Group Company in respect of material pollution
or contamination on, under or in formerly owned sites.
22.9 Each Group Company is taking all necessary steps to ensure keeping,
treatment, consignment and disposal of wastes produced or handled in the
course of each Group Company's business so as to comply in all material
respects with Environmental Laws.
22.10 Each Group Company has, so far as GEC is aware, supplied to the competent
authorities such material information and assessments as to each Group
Company's processes, operations, substances, discharges, wastes and
effluents as is required by Environmental Laws to be supplied.
22.11 All such information given was, so far as GEC is aware, correct in all
material respects at the time the information was supplied and so far as
GEC is aware all such information contained on public registers as is
required by Environmental Laws is true and accurate.
22.12 Neither GEC (in relation to the operations of the Group) nor any Group
Company has applied for any information to be excluded from any public
register maintained in accordance with Environmental Laws on the grounds
of commercial confidentiality or otherwise.
22.13 So far as GEC is aware, each Group Company has carried out and made all
such assessments or plans as are required by and in accordance with
Environmental Laws in relation to that Group Company's substances,
processes, operations, discharges, wastes and effluents (including without
limitation those relating to hazardous substances, accident hazards,
releases to the environment and noise) and reasonably complete and
accurate records have been kept of such assessments and plans.
22.14 So far as GEC is aware, all remedial, preventative and protective measures
expressly required by Environmental Laws have been implemented and
maintained by each Group Company in all material respects.
22.15 For the avoidance of doubt, the Purchaser shall not be entitled to claim
under any of warranties 22.1, 22.3, 22.4, 22.7 or 22.9, in relation to
pollution or contamination of soil, surface water, groundwater or other
water in or below ground unless GEC is aware such pollution or
contamination was so caused.
23. The Accounts and Tax
23.1 No Group Company has any liability in respect of Taxation that is not
disclosed or provided for in the Accounts and, in particular, has no
outstanding liability for:-
(A) Taxation in any part of the world assessable or payable by reference
to profits, gains, income or distributions earned, received or paid or
arising or deemed to
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arise on or at any time prior to the Accounts Date or in respect of
any period ending on or before the Accounts Date; or
(B) purchase, value added, sales or other similar tax in any part of the
world referable to transactions effected on or before the Accounts
Date;
that is not provided for in the Accounts.
23.2 The amount of the provision for deferred Taxation in respect of each Group
Company contained in the Accounts was, at the Accounts Date, in accordance
with accountancy practices generally accepted in the United Kingdom or the
relevant jurisdiction of incorporation and commonly adopted by companies
carrying on businesses similar to those carried on by that Group Company.
23.3 If all facts and circumstances which are now known to the Group or to GEC
had been known at the time the Accounts were drawn up, the provision for
deferred Taxation that would be contained in the Accounts would be no
greater than the provision which is so contained.
24. Tax Events since the Accounts Date
Since the Accounts Date:
(A) no Group Company has paid any dividend or made any distribution of
assets or repayment of capital by reference to which it will or may be
liable to Tax;
(B) no accounting period of any Group Company has ended;
(C) there has been no disposal of any asset (including trading stock) or
supply of any service or business facility of any kind (including a
loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the
consideration actually received or receivable for such disposal or
supply was materially less than the consideration which could be
deemed to have been received for tax purposes;
(D) no event has occurred which will give rise to a tax liability on any
Group Company calculated by reference to deemed (as opposed to actual)
income, profits or gains or which will result in such Group Company
becoming liable to pay or bear a tax liability directly or primarily
chargeable against or attributable to another person, firm or company;
(E) no disposal has taken place or other event occurred which will or may
have the effect of crystallising a liability to Taxation which should
have been included in the provision for deferred Taxation contained in
the Accounts if such disposal or other event had been planned or
predicted at the Accounts Date;
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(F) no Group Company has incurred expenditure of a revenue nature or
entered into a commitment to incur expenditure of a revenue nature
which will not be deductible in computing trading profits for the
purposes of corporation tax, or be deductible as a management expense
of an investment company, other than expenditure at rate
proportionately no greater than the corresponding rate for the
accounting period ending on the Accounts Date;
(G) no Group Company has paid or become liable to pay any interest or
penalty in connection with any tax, has otherwise paid any tax after
its due date for payment or owes any tax the due date for payment of
which has passed or will arise in the 30 days after the date of this
agreement.
(H) no Group Company has taken any action which prejudiced any arrangement
or agreement which it had previously negotiated with any revenue or
income tax authority;
(I) no UK Group Company has made nor has any UK Group Company become
entitled to make a claim under section 24(2), section 48 or section
280 of or Schedule 4 to TCGA 1992.
25. Tax Returns, Disputes, Records and Claims, etc.
25.1 Each Group Company has made or caused to be made all proper returns
required to be made, and has supplied or caused to be supplied all
information required to be supplied, to any revenue or income tax authority
and within the requisite periods. All such returns were when made up to
date and correct.
25.2 So far as GEC is aware, there is no dispute or disagreement outstanding nor
is any contemplated at the date of this agreement with any revenue
authority regarding liability or potential liability to any tax or duty
(including in each case penalties or interest) recoverable from any Group
Company or regarding the availability of any relief from tax or duty to
such Group Company and there are no circumstances which make it likely that
any such dispute or disagreement will commence.
25.3 Each Group Company has sufficient records relating to past events,
including any elections made, to calculate the tax liability or relief
which would arise on any disposal or on the realisation of any asset owned
at the Accounts Date by that Group Company or acquired by that Group
Company since that date but before Completion.
25.4 Each Group Company has duly submitted all claims and disclaimers which have
been assumed to have been made for the purposes of the Accounts and all
particulars furnished to any revenue or income tax authority in connection
with the application for any statutory consent or clearance on behalf of
any Group Company or directly affecting any Group Company made since the
Accounts Date fully and accurately disclosed all facts and circumstances
material for the decision of the authority in question.
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25.5 The amount of tax chargeable on any Group Company during any accounting
period ending on or within six years before the Accounts Date has not, to
any material extent, depended on any concession, agreement or other formal
or informal arrangement with any revenue or income tax authority.
25.6 No Group Company has received any written notice from any revenue or income
tax authority which required or will or may require it to withhold tax from
any payment made since the Accounts Date or which will or may be made after
the date of this Agreement.
26. Stamp Duty
Each Group Company has duly paid any stamp duty or other similar duty, levy
or transaction tax for which it is liable and all documents which are
required to be stamped, which are in the possession of any Group Company
and by virtue of which any Group Company has any right material to the
business of the Group as a whole have been duly stamped.
27. Value Added Tax
27.1 Each Group Company has complied with any obligation to register for the
purposes of any purchase, value added, sales or other similar tax in any
part of the world and has complied in all material respects with its other
obligations under any legislation relating to such tax.
27.2 Each Group Company resident in a member state of the European Union has
been or will be able to recover or obtain credit for all amounts in respect
of VAT it has incurred since the Accounts Date.
28. Duties, etc.
All value added tax, import duty, excise duties and other similar taxes,
duties or charges payable to any tax authority upon the importation of
goods or in respect of any assets (including trading stock) imported, owned
or used by a Group Company have been paid in full.
29. Tax on Disposal of Assets
On a disposal of all its assets by a Group Company for:-
(A) in the case of each asset owned by a Group Company at the Accounts
Date, a consideration equal to the value attributed to that asset in
preparing the Accounts; or
(B) in the case of each asset acquired since the Accounts Date, a
consideration equal to the consideration given for the acquisition
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then either:-
(a) in respect of any asset falling within (A) above, the liability
to tax (if any) which would be incurred by a Group Company in
respect of that asset would not exceed the amount taken into
account in respect of that asset in computing the maximum
liability to deferred Taxation as stated in the Accounts; or
(b) in respect of any asset within (B) above, no tax liability would,
so far as GEC is aware, be incurred by a Group Company in respect
of that asset.
30. Non-Deductible Revenue Outgoings
No Group Company is under any obligation to make any future payment of a
revenue nature which will be prevented (whether on the grounds of being a
distribution or for any other reason) from being deductible for corporation
tax purposes, whether as a deduction in computing the profits of a trade or
as an expense of management or as a charge on income or (in the case of
Group Companies subject to UK corporation tax) as a non-trading debit under
Chapter II Part IV Finance Act 1996, by reason of any Tax legislation.
31. No UK Group Company has since 5th April 1965 repaid or agreed to repay or
redeemed or agreed to redeem its share capital or capitalised or agreed to
capitalise in the form of debentures or redeemable shares any profits or
reserves of any class or description.
32. No security (within the meaning of section 254(1) ICTA 1988) issued by any
UK Group Company and outstanding at the date of this agreement was issued
in such circumstances that the interest payable on it or any other payment
required to be made in respect of it falls to be treated as a distribution
under section 209 ICTA 1988.
33. Deductions and Withholdings
During the last six years, each Group Company has made all deductions in
respect or on account of any tax from any payments made or benefits
provided by it which it is obliged or entitled to make and has accounted in
full to the appropriate authority for all amounts so deducted.
34. Intra-Group Transactions
No Group Company has, at any time within the last six years, acquired any
asset from any other company which was, at the time of the acquisition, a
member of the same group of companies as that member for the purposes of
any tax such that, at Completion, there will be a charge to tax arising.
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35. Residence
The country which is given in Schedule 7 as the tax residence of each Group
Company is the only country whose tax authorities seek to charge tax on the
world-wide profits or gains of that Group Company and that Group Company
has never paid tax on income, profits or gains to any tax authority in any
other country except that mentioned in Schedule 7 in respect of it. There
has in the three years prior to Completion been no major change in the
nature or conduct of the trade of any Group Company for the purposes of
section 768 ICTA 1988.
36. Transfer Pricing
So far as GEC is aware, Plessey Inc. has received no enquiries from any
revenue or income tax authority relating to an actual or potential Transfer
Pricing Adjustment (as that term is defined in the Tax Covenant).
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Schedule 4:
Limitations on GEC's Liability under the Warranties
1. Agreements to which this Schedule is Applicable
The parties intend that the provisions in this Schedule apply to this
Agreement and, where so stated, to the Tax Covenant and the Environmental
Deed.
2. Warranties
2.1 Notwithstanding anything in this Agreement to the contrary, the provisions
of this Schedule shall operate to limit the liability of GEC in respect of
any claim by the Purchaser for any breach of the Warranties and, where so
stated, the Tax Covenant and the Environmental Deed.
2.2 The only Warranties given:
(A) in respect of defaults under contracts with customers are those
contained in paragraph 8.7(A) of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to defaults
under contracts with customers;
(B) in respect of defaults under contracts with suppliers are those
contained in paragraph 8.9 of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to defaults
under contracts with suppliers;
(C) in respect of Intellectual Property and Information Technology are
those contained in paragraph 18 of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to Intellectual
Property and Information Technology;
(D) in respect of matters related to the Environment, are those contained
in paragraph 22 of Schedule 3 and each of the other Warranties shall
be deemed not to be given in relation to any matter related to the
Environment;
(E) in respect of any Property, Certificated Property and Overseas Office
(as the case may be) are those contained in paragraph 17 of Schedule 3
and each of the other Warranties shall be deemed not to be given in
relation to any Property, Certificated Property and Overseas Office
(as the case may be); and
(F) in respect of Tax, are those contained in paragraphs 23 to 36 of
Schedule 3 and each of the other Warranties shall be deemed not to be
given in relation to Tax.
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3. Limitations on Liability under Warranties and Undertakings
3.1 Limitations on Amount
(A) The Purchaser shall not in any event be entitled to damages in respect
of any claim or claims under any of the Warranties (or, in relation to
A(i) below but not A(ii), the Tax Covenant and the Environmental
Deed), except as follows:-
(i) in respect of any individual claim, unless the amount for which
GEC is finally liable exceeds (pound)50,000; and
(ii) in respect of all such claims, unless and until the aggregate
amount of all such claims for which GEC is finally liable exceeds
US$8,000,000, being the aggregate of claims made under the
Warranties (but not, for the avoidance of doubt, where such claim
is capable of being made under Clauses 5.1, 5.4 or 7.1 or under
the Tax Covenant or under the Environmental Deed) in which case
GEC shall be liable for the whole of such sum and not merely the
excess;
(B) The total aggregate liability of GEC for breach of this Agreement
(save for Clause 2) and under the Tax Covenant and under the
Environmental Deed shall not in any event exceed the Purchase Price
(as reduced if applicable by the operation of Clause 3.4(G) and (H)).
(C) For the purpose of sub-paragraph 3.1(A)(i), claims arising out of the
same causal event, matter or practice shall be aggregated and treated
as a single claim.
3.2 Time Limits for Bringing Claim
No claim shall be brought against GEC in respect of any breach of the
Warranties unless the Purchaser shall have given to GEC written notice of
such claim specifying (in reasonable detail) the matter which gives rise to
the breach or claim, the nature of the breach or claim and the amount
claimed in respect thereof (detailing to the extent reasonably practicable
the calculation of the loss thereby alleged to have been suffered by the
Purchaser) on or before the date falling one year after the Completion Date
or, in the case of claims arising under the Warranties contained in
paragraph 22 of Schedule 3, four years from the Completion Date or, in the
case of claims arising under the Warranties contained in paragraphs 23 to
36 of Schedule 3, seven years from the Completion Date.
PROVIDED that the liability of GEC under this sub-paragraph shall
absolutely determine (if such claim has not been previously satisfied,
settled or withdrawn) if legal proceedings in respect of such claim shall
not have been commenced within six months of the service of such notice and
for this purpose proceedings shall not be deemed to have been commenced
unless they shall have been properly issued and validly served upon GEC.
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3.3 Conduct of Litigation
Upon the Purchaser becoming aware of any claim, action or demand against it
or matter likely to give rise to any of these in respect of the Warranties
(a "Claim"), the Purchaser shall and shall procure that the relevant Group
Company shall (except in relation to a Claim under the Warranties contained
in paragraph 22 of Schedule 3 in relation to a Protected Matter (as defined
in the Environmental Deed) which shall not be subject to this paragraph 3.3
and shall be governed by the Schedule to the Environmental Deed):-
(A) within 21 Business Days (or such shorter period as is necessary to
enable GEC to make a substantive response to any such Claim) notify
GEC by written notice as soon as it appears to the Purchaser that any
such Claim of a third party received by or coming to the notice of the
Purchaser may result in a claim under the Warranties;
(B) subject to GEC indemnifying the Purchaser and/or the relevant Group
Company to their reasonable satisfaction against any liability, costs,
damages or expenses which may be reasonably and properly incurred
thereby, take such action and give such information and, upon
reasonable notice, access to relevant personnel, premises, chattels,
documents and records to GEC and its professional advisers as GEC may
reasonably request and the relevant Group Company and/or the Purchaser
and/or the relevant member of the Purchaser's Group shall take such
action and give such information and assistance in order to avoid,
dispute, resist, mitigate, settle, compromise, defend or appeal any
Claim in respect thereof or adjudication with respect thereto as GEC
may reasonably require;
(C) at the request of GEC and subject to GEC indemnifying the Purchaser
and/or the relevant Group Company to their reasonable satisfaction
against any liability, costs, damages or expenses which may be
reasonably and properly incurred thereby, allow GEC to take the sole
conduct of such actions as GEC may reasonably deem appropriate in
connection with any such Claim in the name of the Purchaser or the
appropriate member of the Purchaser's Group and in that connection the
Purchaser shall give or cause to be given to GEC all such assistance
as GEC may reasonably require in avoiding, disputing, resisting,
settling, compromising, defending or appealing any such Claim. GEC
shall:-
(i) in response to reasonable requests from the Purchaser from time
to time, keep the Purchaser informed of the progress of the
Claim;
(ii) provide the Purchaser with copies of such documentation relating
to the Claim as it may reasonably request; and
(iii) give the Purchaser such opportunities as it may reasonably
request to make representations regarding the conduct of the
Claim.
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(D) make no admission of liability, agreement, settlement or compromise
with any third party in relation to any such Claim or adjudication
without the prior written consent of GEC (such consent not to be
unreasonably withheld or delayed). If GEC agrees with the third party
to settle or compromise a Claim, and the Purchaser refuses to agree to
such settlement or compromise then, if the amount for which GEC
subsequently becomes liable exceeds the figure at which it would have
so settled or compromised the relevant Claim, GEC shall not be liable
for the excess amount or any costs or liabilities incurred since the
proposed date of settlement or compromise; and
(E) the Purchaser undertakes to mitigate its loss and nothing in this
Agreement shall derogate from that duty.
3.4 No Liability if Loss is Otherwise Compensated For
(A) General
(i) The Purchaser and those deriving title from the Purchaser on or
after Completion shall not be entitled to recover damages or
otherwise obtain reimbursement or restitution more than once
between them in respect of any individual breach of the
Warranties or any matter giving rise to a claim under the
Environmental Deed;
(ii) The Purchaser shall not be entitled to seek damages or otherwise
obtain reimbursement or restitution in respect of any claim under
the Warranties if the loss occasioned to the Purchaser may
otherwise be recovered under the Tax Covenant, the Environmental
Deed or any undertaking, covenant or other provision of this
Agreement; and
(iii) No liability shall attach to GEC by reason of any breach of the
Warranties if the same loss occasioned to the Purchaser or the
relevant Group Company or a member of the Purchaser's Group by
reason of such breach has been recovered under the Tax Covenant,
the Environmental Deed and vice versa or under any other
provision of this Agreement.
(B) Taxation
In calculating the liability of GEC for any breach of the Warranties or
under the Environmental Deed there shall be taken into account any present
or future reduction in the liability to Taxation of any Group Company or
member of the Purchaser's Group which would not have arisen but for the
matter giving rise to such liability of GEC (such reduction to include any
reduction which results from claiming a surrender of Group Relief (as that
term is defined in the Tax Covenant)).
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(C) Insurances
If, in respect of any matter which would give rise to a breach of the
Warranties or a claim under the Environmental Deed, the Purchaser, a
member of the Purchaser's Group or a Group Company is entitled (or
would have been so entitled had there been maintained in force or but
for any change in the terms of the policies of insurance maintained by
or on behalf of a Group Company or policies providing equivalent cover
thereto) to claim under any policy of insurance, then the Purchaser
will notify GEC in writing of the matter giving rise to the claim, in
accordance with paragraph 3.2, but will not pursue the claim against
GEC unless and until the relevant Group Company, the Purchaser or a
member of the Purchaser's Group shall have made a claim against its
insurers and undertaken all reasonable steps to enforce such claim
provided that the period within which proceedings must be commenced
under the proviso to paragraph 3.2 shall be extended (if the Warranty
claim shall then be still outstanding) to the date falling six months
after GEC shall have notified the Purchaser in writing that it no
longer requires the Purchaser to enforce such claim. The amount
recovered from any such insurance claim (or any claim which could have
been made had such policies or their equivalents been maintained as
aforesaid) shall then be applied to reduce or extinguish any such
claims for breach of the Warranties or under the Environmental Deed.
(D) Recovery from Third Parties
(i) Where the Purchaser, a member of the Purchaser's Group and/or a
Group Company are at any time entitled to recover from some other
person any sum in respect of any matter giving rise to a claim
under the Warranties, the Environmental Deed or under any of the
other provisions of this Agreement, the Purchaser shall, and
shall procure that such Group Company or the relevant member of
the Purchaser's Group shall, undertake all reasonable steps to
enforce such recovery prior to taking action against GEC (other
than to notify GEC of the claim against GEC) and, in the event
that the Purchaser or such Group Company or relevant member of
the Purchaser's Group recover any amount from such other person,
the amount of the claim against GEC shall be reduced by the
amount recovered, less all reasonable costs, charges and expenses
properly incurred by the Purchaser or such Group Company or
relevant member of the Purchaser's Group recovering that sum from
such other person or if that sum is greater, the claim shall be
extinguished provided that the period within which proceedings
must be commenced under the proviso to paragraph 3.2 shall be
extended (if the third party claim shall then be still
outstanding) to the date falling six months after GEC shall have
notified the Purchaser in writing that it no longer requires the
Purchaser to enforce such claim;
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(ii) If GEC pays at any time to the Purchaser or the relevant member
of the Purchaser's Group an amount pursuant to a claim in respect
of the Warranties, the Environmental Deed or under any provisions
of this Agreement and the Purchaser or relevant member of the
Purchaser's Group subsequently becomes entitled to recover from
some other person any sum in respect of any matter giving rise to
such claim, the Purchaser shall, and shall procure that or the
relevant member of the Purchaser's Group shall take all
reasonable steps to enforce such recovery, and shall forthwith
repay to GEC so much of the amount paid by GEC to the Purchaser
or the relevant member of the Purchaser's Group as does not
exceed the sum recovered from such other person less all
reasonable costs, charges and expenses incurred by the Purchaser
or relevant member of the Purchaser's Group recovering that sum
from such other person; and
(iii) If any amount is repaid to GEC by the Purchaser or the relevant
member of the Purchaser's Group pursuant to sub-paragraph (D)(ii)
above, an amount equal to the amount so repaid shall be deemed
never to have been paid by GEC to the Purchaser for the purposes
of paragraph 3.1.
3.5 Acts of the Purchaser
No claim shall lie against GEC under the Warranties to the extent that such
claim is attributable to:-
(i) any voluntary act, omission, transaction or arrangement carried out at
the written request of or with the written consent of the Purchaser
before Completion;
(ii) any voluntary act, omission, transaction or arrangement carried out
otherwise than in the ordinary course of business by the Purchaser or
on its behalf or by persons deriving title from the Purchaser on or
after Completion (excluding the event of Completion itself); or
(iii) any admission of liability made after the date hereof by the
Purchaser, a Group Company or, a member of the Purchaser's Group or on
their behalf or by persons deriving title from the Purchaser on or
after Completion save any such admission made with the prior written
consent of GEC.
3.6 Allowance, Provision or Reserve in the Completion Balance Sheets
No matter shall be the subject of a claim for breach of any of the
Warranties or under the Environmental Deed to the extent that allowance,
provision or reserve in respect of such matter shall have been made in the
Completion Balance Sheets or has been included in calculating creditors or
deducted in calculating debtors in the Completion Balance Sheets and (in
the case of creditors or debtors) is identified in the records of
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the relevant Group Company or shall have been otherwise taken account of or
reflected in the Completion Balance Sheets.
3.7 Retrospective Legislation
No liability shall arise in respect of any breach of any of the Warranties
if and to the extent that liability for such breach occurs or is increased
as a result of any legislation not in force at the date hereof or which
takes effect retrospectively save and to the extent provided in the
definition of Environmental Laws in Schedule 1.
3.8 Taxation
GEC shall not be liable in any event in respect of any claim in respect of
any breach of the Warranties:-
(A) to the extent that that claim arises or is increased as a result only
of any increase in rates of Tax or any change in law or practice or
any withdrawal of any extra-statutory concession by a Tax authority or
any change in accountancy practice or principles, being an increase,
withdrawal or change made, in any such case, after Completion with
retrospective effect; or
(B) to the extent that that claim would not have arisen or would have been
reduced but for a failure or omission on the part of the Purchaser or
the relevant Group Company after Completion to make any election or
claim any Relief, the making or claiming of which was taken into
account in computing the provision or reserve for Tax in the Accounts;
or
(C) to the extent that that claim arises by reason of a voluntary
disclaimer by the relevant Group Company after Completion of the whole
or part of any allowance to which it is entitled under Part II of the
Capital Allowances Act 1990 or by reason of the revocation by the
relevant Group Company after Completion of any claim for Relief made
(whether provisionally or otherwise) by it prior to Completion; or
(D) to the extent that that claim arises as a result of any changes after
Completion in the bases, methods or policies of accounting of the
Purchaser or the relevant Group Company; or
(E) to the extent that any income, profits or gains to which that claim is
attributable were actually earned or received by or actually accrued
to the relevant Group Company but were not reflected in the Accounts;
or
(F) to the extent that that claim arises or is increased as a consequence
of any failure by the Purchaser to comply with any of its obligations
under the Tax Covenant; or
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(G) to the extent that that claim would not have arisen but for a
cessation of, or any change in the nature or conduct of, any trade
carried on by the relevant Group Company, being a cessation or change
occurring on or after Completion.
3.9 The Purchaser's Knowledge
(A) GEC shall not be liable under the Warranties or the Environmental Deed
to the extent that the Purchaser or any member of the Purchaser's
Group at the date hereof or any of their respective employees,
advisers or agents had knowledge at the date hereof of the matters
forming the basis of the claim. For the purposes of this paragraph
3.9(A), the Purchaser or any member of the Purchaser's Group at the
date hereof or any of their respective employees, advisers or agents
shall be deemed to have knowledge of the matters forming the basis of
the relevant claim if and to the extent that the employees, advisers
or agents of the Purchaser or relevant member of the Purchaser's Group
were given access to any document or other source of information which
fairly disclosed such fact or matter and the relevant employee,
adviser or agent of the Purchaser or of the relevant member of the
Purchaser's Group was of the appropriate seniority to be given such
access and such fact or matter was reasonably within such person's
area of skill, experience or competence.
(B) The Purchaser undertakes to notify GEC of any matter which may form
the basis of a claim for breach of Warranty or pursuant to the
Environmental Deed or payment under any undertaking, deed or covenant
promptly upon becoming aware of the same.
3.10 No Liability for Contingent or Non-Quantifiable Claims
If any breach of the Warranties or claim under the Environmental Deed
arises by reason of some liability of any member of the Purchaser's Group
or of the Purchaser or of a Group Company which, at the time such breach or
claim is notified to GEC, is contingent only or otherwise not capable of
being quantified, then GEC shall not be under any obligation to make any
payment in respect of such breach or claim unless and until such liability
ceases to be contingent or becomes capable of being quantified, as the case
may be.
3.11 No Warranties given in respect of prospects, forecasts, budgets or
projections, the Information Memorandum or Disclosure Documents
The Purchaser acknowledges that no Warranties are given by GEC in respect
of prospects, forecasts, budgets or projections or, save as expressly set
out in this Agreement, in respect of any statement made, information given
or opinion expressed in the Information Memorandum or any Disclosure
Document.
<PAGE>
80
3.12 Payment of Claim to be Reduction in Purchase Price
Any payment made by GEC in respect of any claim under the Warranties, the
Environmental Deed or the Tax Covenant, and any payment received by GEC
pursuant to this Agreement shall constitute an adjustment to the Purchase
Price payable under clause 3 (Consideration) of this Agreement.
<PAGE>
81
Schedule 5:
Pension Arrangements
Part 1 - GEC Scheme
1. In this part of this Schedule, the following expressions shall have the
meanings assigned to them below:
"Actuary's Letter" the letter from SPT to the Purchaser's
Actuary, a copy of which is appended hereto as
Appendix A;
"GEC Scheme" the retirement benefits scheme established by
GEC and known as "the G.E.C. 1972 Plan"
constituted by a Definitive Trust Deed and
Rules dated 4th March, 1982 as amended;
"Interim Period" the period commencing on the day immediately
following Completion and ending on the day
immediately preceding the Pension Transfer
Date;
"Payment Date" the date falling 7 months after the Pension
Transfer Date;
"Pensionable Earnings" has the meaning defined in the rules governing
the GEC Scheme from time to time;
"Pensions Legislation" the Pensions Act 1995 and regulations
thereunder made or to be made in the future;
"Pension Transfer Date" the date falling six months after Completion
or such other earlier date as may be agreed in
writing between the Purchaser and GEC;
"Purchaser's Actuary" Philip R. Watson of Aon Consulting Limited or
such other actuary appointed by the Purchaser
and notified in writing to GEC for the
purposes of this part of this Schedule;
"SPT" Stanhope Pension Trust Limited, being the
trustee for the time being of the GEC Scheme;
"Transfer Amount" the amount calculated in accordance with the
actuarial methods and assumptions set out in
the Actuary's Letter in respect of benefits
prospectively and contingently payable under
the GEC Scheme to and in respect of the
Transferring Members accrued up to the Pension
Transfer Date either as agreed by SPT and the
<PAGE>
82
Purchaser's Actuary or as determined by the
independent actuary in accordance with
paragraph 10 of this part of this Schedule;
"Transferee Scheme" the retirement benefits scheme or schemes to
be established or nominated by the Purchaser
under paragraph 2.1 of this part of this
Schedule;
"Transferring Employees" those Employees who are members of the GEC
Scheme at the date of this Agreement and who
are eligible to become members of the
Transferee Scheme; and
"Transferring Members" those Transferring Employees who join the
Transferee Scheme on the Pension Transfer Date
and who elect that their accrued rights under
the GEC Scheme are transferred to the
Transferee Scheme who are still in the service
of a UK Pensions Company at the time of such
election.
2. The Purchaser undertakes to:
2.1 establish or procure the establishment of a retirement benefits scheme
or schemes, by the Pension Transfer Date, in a form capable of
approval by the Board of Inland Revenue as an exempt approved scheme
under Chapter 1 of Part XIV of ICTA 1988 or nominate an existing
retirement benefits scheme which is so approved and which is able and
willing to accept a transfer payment from the GEC Scheme in respect of
each Transferring Member in accordance with the provisions of this
part of this Schedule;
2.2 notify GEC in writing with particulars of the Transferee Scheme; and
2.3 invite the Transferring Employees to become members of the Transferee
Scheme with effect from the Pension Transfer Date.
3. GEC undertakes that:
3.1 it will take all reasonable steps (including obtaining the consent of the
Pension Schemes Office of the Inland Revenue) as are necessary to permit
the Transferring Employees and the Company to continue to participate in
the GEC Scheme for all pension and death in service benefits during the
Interim Period as members and associated employer;
3.2 those of the Transferring Employees who do not become Transferring Members
will be provided with such benefits and options as may be provided for in
the GEC Scheme; and
<PAGE>
83
3.3 it will not at any time during the Interim Period, without giving the
Purchaser such prior notice in writing as is reasonable and practicable in
the circumstances, take any action which would cause the GEC Scheme to be
terminated or amended in any way which could prejudice the benefits
prospectively and contingently payable to and in respect of the
Transferring Members in respect of their participation up to the Pension
Transfer Date.
4. Each UK Pensions Company shall cease to participate in the GEC Scheme at
the end of the Interim Period.
5. In respect of the Interim Period, the Purchaser undertakes to GEC (for
itself and as agent for SPT) that:
5.1 each UK Pensions Company will pay to SPT the contributions to be made
by and in respect of its Transferring Employees at the rate prescribed
in the rules of the GEC Scheme for so long as each UK Pensions Company
remains in membership of the GEC Scheme;
5.2 each UK Pensions Company will pay a management charge to the principal
company of the GEC Scheme of 1.6% of its Transferring Employees'
Pensionable Earnings in respect of the whole of the Interim Period;
5.3 the Purchaser will procure that each UK Pensions Company complies with
the rules of the GEC Scheme; and
5.4 the Purchaser shall procure that the contributions payable by the
Transferring Employees at the rate prescribed by the rules of the GEC
Scheme shall be deducted from the remuneration of the Transferring
Employees.
Both the relevant UK Pensions Company's and the Transferring Employees'
contributions shall become due monthly in arrears on pay up to and
including the 5th of each month and shall be paid immediately to SPT.
6. Immediately after the Pension Transfer Date GEC shall use all reasonable
endeavours to procure that SPT shall:
6.1 determine the Transfer Amount in accordance with the terms and
assumptions set out in the Actuary's Letter within 2 months of the
Pension Transfer Date;
6.2 promptly communicate the results of its calculations to the
Purchaser's Actuary; and
6.3 agree the amount with the Purchaser's Actuary not later than 4 months
after the Pension Transfer Date.
7. Subject to the Purchaser complying with its obligations under paragraphs 2
and 5 of this part of this Schedule and provided that SPT and the
Purchaser's Actuary have
<PAGE>
84
agreed the Transfer Amount in accordance with the provisions of paragraph 6
of this part of this Schedule or otherwise determined in accordance with
paragraph 10, GEC shall use all reasonable endeavours to procure that SPT
shall (subject to the approval of the Board of Inland Revenue) transfer on
the Payment Date to the Transferee Scheme in cash the Transfer Amount in
respect of the Transferring Members from whom SPT has received a completed
election form substantially in the form of Appendix B to this part of this
Schedule.
8. Subject to the receipt of the Transfer Amount by the Transferee Scheme the
Purchaser will procure that the Transferee Scheme will provide (subject to
Inland Revenue limits not being exceeded) pensions (including spouses'
pensions where applicable) and other benefits for or in respect of each of
the Transferring Members in respect of service prior to Pension Transfer
Date which are determined by the Purchaser's Actuary on the basis disclosed
by the Purchaser's Actuary to SPT in a letter provided by the Purchaser's
Actuary to SPT prior to Completion as being equivalent in value to the
value of their entitlements under the GEC Scheme.
9. If any of the Transferring Members pay additional voluntary contributions
in respect of which the benefits are not related to final pensionable
earnings, the voluntary contributions and the additional benefits payable
as a result shall be disregarded for all the purposes of this part of this
Schedule. GEC shall use all its reasonable endeavours to procure that the
part of the voluntary contribution fund attributable to the Transferring
Members in accordance with the rules of the GEC Scheme is transferred to
the Transferee Scheme on the Payment Date.
10. GEC and the Purchaser shall, where there is any dispute between SPT and the
Purchaser's Actuary concerning the determination of the Transfer Amount or
of any other actuarial matters to be determined or agreed by them for the
purposes of this part of this Schedule, refer the matter in dispute to an
independent actuary to be nominated jointly by GEC and the Purchaser or,
failing agreement over the nomination, nominated by the President for the
time being of the Institute of Actuaries. The person so appointed shall act
as an expert and not as an arbitrator, his decision shall be final and
binding and his fees shall be borne equally by GEC and the Purchaser.
11. Each of SPT and the Purchaser's Actuary may request of each other, of GEC
or of the Purchaser information reasonably necessary for effecting the
transfer arrangements specified under paragraphs 6 to 10 of this part of
this Schedule, provided such information is within the possession or
control of the party from whom it is requested. GEC or the Purchaser, as
the case may be, shall use its best endeavours to procure that all such
information reasonably requested in writing shall be supplied to the party
requesting it within 14 days of each such request, and shall be accurate
and complete in all material respects.
12. No Employee who is not at Completion a member of the GEC Scheme shall be
entitled under this part of this Schedule to become a member thereof after
Completion.
<PAGE>
85
13. It is acknowledged that SPT and the trustees of the Transferee Scheme are
not parties to this Agreement and are not bound by the terms hereof.
14. GEC and the Purchaser acknowledge that the Pensions Legislation imposes
requirements and discretions on employers under and in relation to the GEC
Scheme and accordingly:
14.1 The Purchaser agrees that it will procure that each UK Pensions Company
will agree that GEC (or a subsidiary or associated company of GEC
determined, in its absolute discretion, by GEC) may make all decisions and
exercise all discretions in relation to the GEC Scheme envisaged or
desirable by or under the Pensions Legislation as though GEC (or the said
subsidiary or associated company) were the sole employer participating in
the GEC Scheme.
14.2 While any UK Pensions Company remains a participating employer in the GEC
Scheme, the Purchaser shall procure that such UK Pensions Company will in
relation to the GEC Scheme:
(A) exercise no right or discretion conferred on it by or under the
Pensions Legislation without the prior written consent of GEC (such
consent not to be unreasonably withheld);
(B) exercise each right or discretion conferred on it by or under the
Pensions Legislation (including, for the avoidance of doubt,
contracting out) as directed from time to time in writing by GEC;
(C) co-operate with GEC and SPT in providing information about, and access
to, its employees from time to time;
(D) from time to time execute all such deeds, documents, agreements,
consents or approvals for the purpose of complying with its
obligations under this sub-paragraph as may be considered necessary or
desirable by GEC; and
(E) if requested by GEC execute a deed irrevocably appointing GEC as its
attorney to execute (in the name of such UK Pensions Company or
otherwise) from time to time any such deeds, documents, agreements,
consents or approvals.
14.3 Without prejudice to the generality of the foregoing, the Purchaser shall
procure that each UK Pensions Company will at the request of GEC
irrevocably:
(A) nominate GEC as the "appropriate person" and the person to act for it
for the purposes of sub-section 21(9) of the Pensions Act 1995 (as to
be inserted by paragraph 1(1)(g) of Schedule 3 to the Occupational
Pension Schemes (Member-nominated Trustees and Directors) Regulations
1996) in relation to the GEC Scheme;
<PAGE>
86
(B) agree that the consultation required by section 35(5)(b) of the
Pensions Act 1995 by SPT with the employer in relation to the written
statement of investment principles may be with GEC to the exclusion of
such UK Pensions Company; and
(C) nominate GEC as the representative of such UK Pensions Company for the
purposes of section 58(4)(a) of the Pensions Act 1995 (as to be
amended by paragraph 2 of Schedule 5 to the Occupational Pension
Schemes (Minimum Funding Requirement and Actuarial Valuations)
Regulations 1996) in relation to the GEC Scheme.
14.4 GEC may exercise the authorities and discretions envisaged by this
paragraph in its absolute unfettered discretion and in its own interests.
GEC owes no duty or responsibility to the Purchaser or any UK Pensions
Company in relation to the exercise of the authorities and discretions
envisaged as conferred on GEC by this paragraph.
<PAGE>
87
Appendix A
Stanhope Pension Trust Limited
Direct dial: (01785) 274730
Our ref: DOC/S/04 (07.05.1997)
o 1998
Dear Sirs
The G.E.C. 1972 Plan
Stanhope Pension Trust Limited is the trustee of the G.E.C. 1972 Plan,
comprising The GEC Plan and the Selected Benefit Scheme, the latter being an
arrangement for additional voluntary contributions.
We offer to pay transfer values to the trustees of the Purchaser's Scheme in
respect of those employees who are members of the G.E.C. 1972 Plan.
Transfer values will be calculated as described below, based on benefits accrued
to the date of cessation of pensionable service and adjusted, as appropriate,
for increases to the date of calculation (the "Calculation Date").
<PAGE>
88
The GEC Plan
Interest
<TABLE>
<CAPTION>
In deferment In possession
Projected Discounted Net rate Increases Discounted Net rate
at at of at
<S> <C> <C> <C> <C> <C> <C>
"Basis 1" pension 4.0% 9.0% 4.81% 3.5% 8.0% 4.35%
"Basis 2" pension 0.0% 9.0% 9.00% 3.5% 8.0% 4.35%
"Basis 3" pension 8.0% 9.0% 0.93% 3.5% 8.0% 4.35%
</TABLE>
The projection of pensions will be adjusted for the timing of increases.
Pensions which have arisen from transfers into the Plan will be projected at
3.5% and discounted at 9.0% (leading to a net rate of 5.31% per annum) over the
period of deferment.
Benefits which do not attract the normal Plan increases of the lesser of 5% and
the increase in the retail prices index will be valued by allowing for the
appropriate rate of increase in possession.
Mortality
<TABLE>
<S> <C>
In deferment - PA90 tables, rated down two years for both males and females.
In possession - PA90 tables, rated down two years for both males and females.
Spouses' pensions - PA90 tables, rated down two years for both males and females.
</TABLE>
Other decrements
Nil.
Spouses' benefits
Wives are assumed to be three years younger than their husbands and 90% of
members are assumed to be married.
<PAGE>
89
Further adjustment:
The unit liability of all benefits within
the Plan will be increased by a factor of
1.05 if the member is aged less than 55
at the time of transfer. For members aged
greater than 55, an adjustment will be
calculated according to age,
interpolating between values of 1.05 for
members aged 55 and 1.0 for members aged
65.
Adjustment to market value:
The actuarial value of the benefits will be adjusted to market value by
multiplying by the following factors:
If age is less than (or precisely : 4.25 divided by the yield on the FTSE
equal to) 55 Actuaries All-Share Index on the first
working day of the month in which the
Calculation Date occurs.
If age is 65 : the lesser of
(i) the value of a unit holding in a 15
year stock with coupon of 8%, payable
annually in arrears valued at the
annualised yield on the FT-Actuaries
Fixed Interest 15 Year Medium Coupon
Index on the first working day of the
month in which the Calculation Date
occurs, and
(ii) the value of a unit holding in a 15
year stock with coupon of 3.85%, payable
annually in arrears valued at the
annualised yield on the FT-Actuaries
Index-Linked Over 5 years (5% inflation)
Index on the first working day of the
month in which the Calculation Date
occurs.
If age is between 55 and 65 : through linear interpolation, on the
first working day of the month in which
the Calculation Date occurs, according to
age, by reference to the values at ages
55 and 65.
In valuing benefits which are subject to fixed or no increases, (ii) above will
be ignored.
Minimum value
The transfer value for any member will be not less than the member's accumulated
contributions to The GEC Plan with credited interest to the Calculation Date.
<PAGE>
90
Selected Benefit Scheme (SBS)
The transfer value for each member will be the retirement credits accumulated to
the Calculation Date.
Aggregate transfer value
The aggregate transfer value before expenses for each member will be calculated
as the highest value produced under Bases 1, 2 and 3 (as described in the April
1997 edition of The GEC Plan explanatory booklet) and the minimum value referred
to above, together with any SBS retirement credits.
Expenses
A deduction for expenses will be made from the total of the aggregate transfer
values on the attached scale.
Guarantee of basis
Transfer values are guaranteed for three months from the Calculation Date after
which we would reserve the right to substitute a different basis.
Adjustment
The total transfer value net of expenses will be subject to interest between
Calculation Date and payment date at Midland Bank base rate.
TRANSFER AGREEMENT
This letter will be subject to the consent of members concerned and to a formal
agreement between the trustees of the respective pension schemes covering:
(i) Quantification of the transfer values.
(ii) Application of the transfer values.
(iii) Assurance regarding solvency of the Purchaser's pension scheme.
<PAGE>
91
Yours faithfully,
Philip E Read
Director
<PAGE>
92
Stanhope Pension Trust Limited
Expenses on transfer values paid and received
<TABLE>
<CAPTION>
Gross Value Expenses
(pound) (pound) (pound) (pound)
<S> <C> <C> <C>
0 Up to 20,000 2.50% of gross value
Over 20,000 Up to 50,000 500 plus 2.00% on gross value over 20,000
Over 50,000 Up to 100,000 1,100 plus 1.50% on gross value over 50,000
Over 100,000 Up to 500,000 1,850 plus 1.25% on gross value over 100,000
Over 500,000 Up to 1,000,000 6,850 plus 1.00% on gross value over 500,000
Over 1,000,000 Up to 2,000,000 11,850 plus 0.80% on gross value over 1,000,000
Over 2,000,000 Up to 5,000,000 19,850 plus 0.60% on gross value over 2,000,000
Over 5,000,000 Up to 10,000,000 37,850 plus 0.40% on gross value over 5,000,000
Over 10,000,000 Up to 20,000,000 57,850 plus 0.20% on gross value over 10,000,000
Over 20,000,000 Up to 50,000,000 77,850 plus 0.08% on gross value over 20,000,000
Over 50,000,000 Up to 100,000,000 101,850 plus 0.03% on gross value over 50,000,000
Over 100,000,000 116,850 plus 0.01% on gross value over 100,000,000
</TABLE>
<PAGE>
93
Note 1 For multiple transfers, total expenses will be allocated in the
proportion that each transfer value bears to the aggregate transfer
values.
2 Expenses are deducted from that part of a transfer value not
attributable to member's contributions and the balance of expenses, if
any, from member's contributions including AVCs.
<PAGE>
94
Appendix B
<PAGE>
95
Form of Agreement and Option
----------------------------
FORM OF AGREEMENT AND OPTION
From: [Merge 'NAME']
National Insurance No: [Merge 'NINO']
To: Trustee[s] of the [ Scheme]
and
Stanhope Pension Trust Limited (the Trustee of the G.E.C. 1972 Plan
comprising The GEC Plan and Selected Benefit Scheme)
I refer to the letters from Stanhope Pension Limited dated [ ] and the
[ Scheme] dated [ ].
PLEASE TICK ONE BOX ONLY TO SPECIFY YOUR REQUIREMENTS, AND SIGN AND DATE THIS
FORM AND ENTER YOUR HOME ADDRESS.
[ ] A I request the Trustee of the G.E.C. 1972 Plan ("the Plan") to retain
my rights to benefit under the Plan in respect of pensionable service
to [ ].
[ ] B I have become a member of the [ Scheme] and I require the Trustee of
the G.E.C. 1972 Plan ("the Plan") to transfer the value of all
benefits which have accrued to or in respect of me under the Plan to
the Trustee[s] of the [ Scheme] in accordance with the above letters.
[ ] C I wish to receive a Statement of Entitlement giving the transfer value
available to a Personal Pension Scheme with...........................
......................................................................
......................................................................
......................................................................
(insert name and address of pension provider)
I understand and acknowledge that following the making of a transfer to the
Trustee[s] of the [ Scheme] in accordance with option B above, neither I nor
any person claiming under or in respect of me (whether a spouse, dependant or
otherwise) will have any entitlement under the G.E.C. 1972 Plan.
Signature: ...................................... Date:.....................
- ------------------------------------------------- --------------------------
Home address:...................................................................
- --------------------------------------------------------------------------------
................................................. Postcode:.................
- ------------------------------------------------- --------------------------
<PAGE>
96
PLEASE RETURN THIS TO [YOUR PERSONNEL DEPARTMENT] NO LATER THAN [ ]
- --------------------------------------------------------------------------------
Issued by: Special Projects Department,
- ------------------------------------------------
Stanhope Pension Trust Limited
PO Box 20
Lichfield Road,
Stafford ST17 4LN
<PAGE>
97
Part 2 - U.S. Benefits Arrangements
1. Benefits. For 1 year following the Completion Date, the Purchaser shall
maintain, or shall cause Plessey Inc. to maintain, compensation and
employee benefit plans and arrangements for U.S. Employees Inc. who become
employees of the Purchaser or any subsidiary (including Plessey Inc.) after
the Completion Date ("Affected Employees") that are, in the aggregate,
substantially equivalent to those provided under the compensation, employee
benefit plans and arrangements maintained by the Purchaser or any
subsidiary for similarly situated employees in the United States. Provided
that the Purchaser or any subsidiary maintains such compensation and
employee benefit plans and arrangements for Affected Employees, the
Purchaser shall have the rights in the good faith exercise of its
managerial discretion, (1) to make changes or cause changes to be made in
compensation and employee benefit plans and arrangements, (2) to terminate
employee benefit plans and arrangements and (3) to terminate the employment
of any Affected Employee, such rights to be exercisable at any time
including during the 1 year following the Completion Date. Further, during
the one year period described above, the Purchaser shall maintain or cause
Plessey Inc. to maintain health and dental insurance benefit plans and
arrangements and severance plans for Affected Employees which are
substantially equivalent to those benefits provided under such plans and
arrangements maintained by Plessey Inc. prior to the Completion Date.
2. Accrued Vacation. The Purchaser shall be responsible for all vacation,
holiday, sickness and personal days accrued by the Employees of Plessey
Inc. as of the Completion Date.
3. Participation in Benefit Plans. Affected Employees shall be given credit
for all service with Plessey Inc. (and any entity owned, directly or
indirectly, twenty-five per cent. (25%) or more by GEC) under all severance
plans, employee benefit plans and other benefit arrangements with respect
to which the Affected Employees are or become participants after the
Completion Date for purposes of eligibility and vesting to the same extent
as if rendered to the Purchaser or any of its subsidiaries. The Purchaser
shall cause to be waived any pre-existing condition limitation that might
otherwise apply to an Affected Employee under any welfare plan with respect
to which the Affected Employees are or become participants after the
Completion Date. The Purchaser agrees to recognise (or cause to be
recognised) the dollar amount of all expenses incurred by Affected
Employees during the calendar year in which the Completion Date occurs for
purposes of satisfying the calendar year deductibles and co-payments
limitations for such year with respect to which the Affected Employees are
or become participants after the Completion Date.
4. Participation in GEC's Employee Pension Benefit Plans. As of the Completion
Date, Affected Employee's participation shall terminate in the GEC-USA
Employees' Savings and Investment Plan ("GEC Savings Plan"). Affected
Employees shall thereafter be entitled to the benefits which they have
accrued as of the Completion Date, to the extent then vested, in accordance
with the terms of the GEC Savings Plan. Prior to the Completion Date, GEC
shall take any and all actions necessary to effect this
<PAGE>
98
termination of participation. The Purchaser shall pay, or cause Plessey
Inc. to pay, to the trust which funds the GEC Savings Plan all
contributions required to be paid to such trust for periods ending prior to
or on the Completion Date in order for the plan to satisfy the requirements
of Section 401 of the Internal Revenue Code of 1986 or to otherwise satisfy
the terms of such plan, including but not limited to employee pre-tax and
after-tax contributions, employer matching contributions, and any other
employer contributions. The Purchaser shall also furnish to GEC or one of
its affiliates after the Completion Date such information from the books
and records of Plessey Inc. as may be reasonably requested by GEC or one of
its subsidiaries with respect to the GEC Savings Plan.
5. Participation in GEC's Employee Welfare Benefit Plans. As of the Completion
Date, the participation of Affected Employees, any former employee of
Plessey Inc. who was not employed by Plessey Inc. on the Completion Date,
or the dependants of any such Affected Employee or former employee
(collectively hereinafter referred to as "Subsidiary Welfare Participants")
in the GEC-USA Employees' Welfare Benefit Plan ("GEC Welfare Plan") shall
terminate provided that:
5.1 Except as otherwise provided by paragraph 5.2 below, the GEC Welfare
Plan shall pay, in accordance with the terms of the plan, claims or
expenses covered by the plan which are incurred prior to or on the
Completion Date with respect to Subsidiary Welfare Participants. For
this purpose, a life insurance claim is incurred on the date of death;
a long-term disability claim is incurred on the date the employee's
absence from work begins which qualifies the employee to receive
long-term disability benefits; and medical and dental claims are
incurred on the date the services are rendered.
5.2 Notwithstanding sub-paragraph 5.1 above, the Purchaser shall satisfy,
or cause Plessey Inc. to satisfy, long-term disability claims of
Subsidiary Welfare Participants payable under the GEC Welfare Plan
which are incurred prior to or on the Completion Date and with respect
to which the payment of long-term disability benefits had not
commenced as of 1 July, 1997.
5.3 The Purchaser shall pay, or cause Plessey Inc. to pay, to the GEC-USA
Employees' Welfare Benefit Trust ("GEC Welfare Trust") all amounts
which are paid in accordance with past practice in the normal course
of business by such trust by reason of medical, dental, and dependent
care expenses of Subsidiary Welfare Participants and for which the GEC
Welfare Trust has not received payment from Plessey Inc. as of the
Completion Date.
5.4 The Purchaser shall pay or cause Plessey Inc. to pay, to the GEC
Welfare Trust all amounts which are paid in accordance with past
practice in the normal course of business by such trust to provide
stop-loss insurance with respect to medical expenses of the Subsidiary
Welfare Participants and for which the GEC Welfare Trust has not
received payment from Plessey Inc. as of the Completion Date.
<PAGE>
99
5.5 The Purchaser shall pay, or cause Plessey Inc. to pay, to the GEC
Welfare Trust amounts which are charged to Plessey Inc. by the
Greensboro Associates, Inc. ("GAI"), the plan administrator of the GEC
Welfare Plan in accordance with past practice in the normal course of
business, for life insurance and long-term disability coverage
provided with respect to the Subsidiary Welfare Participants for
periods ending on or prior to the Completion Date which have not been
paid by Plessey Inc. as of the Completion Date.
5.6 The Purchaser shall assume and satisfy the obligation of GEC, a direct
or indirect subsidiary of GEC, or the GEC Welfare Plan to provide
after the Completion Date continued medial and dental expense coverage
with respect to the Subsidiary Welfare Participants which is required
by Section 4980B of the Internal Revenue Code of 1986, Section 601 of
the Employee Retirement Income Security Act of 1974, or the terms of
the GEC Welfare Plan.
5.7 Effective as of the Completion Date, any medical benefit contract
maintained by Plessey Inc. and which does not cover employees of any
other subsidiary of GEC, shall not be part of the GEC Welfare Plan and
the Purchaser and Plessey Inc. shall pay and satisfy any amounts
required to be paid under the terms of such contract. The Purchaser
shall provide, or cause Plessey Inc. to provide, such information as
may be reasonably requested by GAI in order to comply with
governmental reporting requirements imposed on the GEC Welfare Plan
for plan years including the Completion Date or plan years ending
before the Completion Date.
6. The Purchaser shall pay, or cause Plessey Inc. to pay, to GAI amounts
charged to Plessey Inc. in accordance with past practice in the normal
course of business for administrative services rendered to Plessey Inc.
with respect to the GEC Retirement Plan, the GEC Savings Plan, and the GEC
Welfare Plan for periods ending on or prior to the Completion Date which
have not been paid by Plessey Inc. as of the Completion Date.
7. The Purchaser will indemnify and hold harmless the Seller and the direct or
indirect subsidiaries of GEC from and against damages, including attorney
fees, arising from the failure of the Purchaser or Plessey Inc. to satisfy
the obligations imposed on the Purchaser or Plessey Inc. under this part of
this Schedule.
<PAGE>
100
Schedule 6:
Tax Covenant
The Tax Covenant shall be in the form of the deed prepared by GEC's Solicitors
which has (for the purposes of identification only) already been initialled by
GEC's Solicitors and the Purchaser's Solicitors.
<PAGE>
101
Schedule 7:
Part A - Basic Information about the Companies
1. Company Name: Plessey Semiconductors Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 705031
Date of Incorporation: 5th October, 1961
Registered Office: Cheney Manor
Swindon
Wiltshire SN2 2QW
Share capital - authorised: 200,000,000 Ordinary Shares of
(pound)1
- issued: 21,200,000 Ordinary Shares of
(pound)1
Registered Shareholder(s): The General Electric Company,
p.l.c 101,909,999
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: The General Electric Company,
p.l.c.
Subsidiaries or subsidiary undertakings: Plessey France S.A.
Plessey GmbH
Plessey Semiconductors SpA
Plessey Semiconductors Singapore
Pte Limited
GEC Plessey Semiconductors Japan
Limited
UK Cablevision Limited
GEC Plessey Semiconductors
Overseas Limited
PSSY Semiconductors Svenska
Aktiebolag
Directors: Mr. T. Urwin
Mr. A.P. Gallagher
Secretary: Mr. A.K. Griffiths
<PAGE>
102
2. Company Name: GEC Plessey Semiconductors Inc.
Place of Incorporation/Registration: Delaware, U.S.A.
Registration Number: FEI Number 94-2500132
Date of Incorporation: 2nd February, 1988
Registered Office: Corporation Trust Centre,
1209 Orange Street,
Wilmington, Delaware 19801
Share capital - authorised: 1,000 common shares of US$1
- issued: 1,000 common shares of US$1
Registered Shareholder(s): GEC Inc
Beneficial owner(s) of issued shares: GEC Inc
Subsidiaries or subsidiary undertakings: None
Directors: Tom Urwin, J.E. Hustein, P.A.
Hoffman
Secretary: Pat Hoffman
<PAGE>
103
3. Company Name: AEI Semiconductors Limited
Place of Incorporation: England and Wales
Registration Number: 270190
Date of Incorporation: 12th November, 1932
Registered Office: 1 Stanhope Gate
London W1A 1EH
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 100 Ordinary Shares of (pound)1
Registered Shareholder(s): Associated Electrical Industries
Holdings Limited 1
Associated Electrical Industries
Limited 99
Beneficial owner(s) of issued shares: Associated Electrical Industries
Limited 100
Subsidiaries or subsidiary undertakings: None
Directors: Mr. A.P. Gallagher
Mr. T. Urwin
Secretary: Mr A.K. Griffiths
<PAGE>
104
4 Company Name: Marconi Electronic Devices Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 337403
Date of Incorporation: 2nd March 1938
Registered Office: Cheney Manor
Swindon
Wiltshire SN2 2QW
Share capital - authorised: 25,000,000 Ordinary Shares of
(pound)1
- issued: 25,000,000 Ordinary Shares of
(pound)1
Registered Shareholder(s): The General Electric Company,
p.l.c 24,999,999
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: The General Electric Company,
p.l.c.
Subsidiaries or subsidiary undertakings: None
Directors: Mr. T. Urwin
Mr. A.P. Gallagher
Secretary: Mr. A.K. Griffiths
<PAGE>
105
Part B - Basic Information about Subsidiaries of the Companies
1. Name of Subsidiary: UK Cablevision Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 1652326
Date of Incorporation: 19th July 1982
Registered Office: Cheney Manor
Swindon
Wiltshire SN2 2QW
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 2 Ordinary Shares of (pound)1
Registered Shareholder(s): Plessey Semiconductors Limited 1
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Mr. T. Urwin
Mr. A.P. Gallagher
Secretary: Mr. A.K. Griffiths
<PAGE>
106
2. Name of Subsidiary: Plessey France SA
Place of Incorporation/Registration: France
Registration Number: R.C.S. Evry B 532 016 325
Date of Incorporation: 15th April, 1957
Registered Office: Z.A. Courtaboeuf
Miniparc - 6, avenue des Andes,
Bat 2-B.P. 142
91944 les Ulis Cedex A
Share capital - issued: FFR15,700,000 comprising 157,000
shares of FFR100 each
Registered Shareholder(s): Plessey Semiconductors Limited
156,994
Susan Ferguson 1
Philip Wright 1
Michael Buck 1
Didier Trin 1
Ernest Pusey 1
Tom Urwin 1
Subsidiaries or subsidiary undertakings: None
Directors: Michael Buck
Didier Trin
Philip Wright
Secretary: None
<PAGE>
107
3. Name of Subsidiary: Plessey GmbH
Place of Incorporation/Registration: Germany
Registration Number: Commercial Register of the Court
of Munich no. 45677
Date of Incorporation: 3rd April, 1973
Registered Office (seat): Grillparzerstrasse 16,
81675 Munich, Germany
Share capital - DM450,000
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Ernest Pusey
Philip Wright
<PAGE>
108
4. Name of Subsidiary: Plessey Semiconductors SpA
Place of Incorporation/Registration: Italy
Registration Number: Monza Register of Companies
51515
Date of Incorporation: 1st March, 1991
Registered Office: Via Fosse Ardeatine 4,
20092 Cinisello Balsamo
Milano
Share capital - authorised: ITL 2,700,000,000 comprising
270,000 shares of ITL 10,000
- issued: ITL 2,700,000,000 comprising
270,000 shares of ITL 10,000
Registered Shareholder(s): Plessey Semiconductors Limited
270,000
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Michael Buck
Ernest Pusey
Philip Wright
Secretary: None
<PAGE>
109
5. Name of Subsidiary: Plessey Semiconductors Singapore
Pte Ltd
Place of Incorporation/Registration: Singapore
Registration Number: 198403047 H
Date of Incorporation: 17th August, 1984
Registered Office: 3 Tai Seng Drive,
GEC Building,
Singapore 535216
Share capital - authorised: S$200,000 comprising 200,000
ordinary shares of S$1
- issued: S$200,000 comprising 200,000
ordinary shares of S$1
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: R. Ashman
Teo Chwee Teck
Secretary: Teo Chwee Teck
<PAGE>
110
6. Name of Subsidiary: PSSY Semiconductors Svenska
Aktiebolag
Place of Incorporation/Registration: Stockholm, Sweden
Registration Number: 556537-8022
Date of Incorporation: 30th December 1996
Registered Office: Box 7730
103 95 Stockholm,
Sweden
Share capital - authorised: SEK400,000
- issued: SEK100,000
Registered Shareholder(s): GEC Plessey Semiconductors
Overseas Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Ormonde Goldie
(Ian Cooper, registration pending)
Deputy Director: John Hane
<PAGE>
111
7. Name of Subsidiary: GEC Plessey Semiconductors
Overseas Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 464581
Date of Incorporation: 14th February 1949
Registered Office: Cheney Manor
Swindon
Wiltshire SN2 2QW
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 2 Ordinary Shares of (pound)1
Registered Shareholder(s): Plessey Semiconductors Limited 1
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Mr. T. Urwin
Mr. A.P. Gallagher
Secretary: Mr. A.K. Griffiths
<PAGE>
112
8. Name of Subsidiary: GEC Plessey Semiconductors Japan
Limited
Place of Incorporation/Registration: Japan
Registration Number: n/a
Date of Incorporation: 31st July 1991
Registered Office: CTS Kojimachi Building
12 Kojimachi 2-chome
Chiyoda-ku
Tokyo
Share capital - authorised: 800 shares of par value (Y)50,000
each
- issued: 200 shares of par value (Y)50,000
each
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Yoshitsugu Kudo
(Representative Director)
Ernest Pusey
Patrick Carroll
Secretary: Yoshiharu Kutsukawa
(statutory auditor)
<PAGE>
113
9. Company Name: Marconi Electronic Devices SA
Place of Incorporation/Registration: France
Registration Number: RCS Nanterre B 351 843 339
Date of Incorporation: 18th August, 1989
Registered Office: 2 Rue Henri Bergson,
92600 Asnieres
Share capital - issued: FFR9,650,000 comprising
96,500 shares of FFR100
Registered Shareholder(s): Plessey France SA 96,494
Nigel Coulthard 1
Anthony Gallagher 1
Philip Wright 1
Bernand Mercier 1
Ernst Pusey 1
Susan Ferguson 1
Subsidiaries or subsidiary undertakings: None
Directors: Susan Ferguson
Philip Wright
Nigel Coulthard
Secretary:
<PAGE>
114
Schedule 8
----------
Property Schedule
PART I - PROPERTIES
1. FREEHOLD PROPERTIES WITH REGISTERED TITLE
<TABLE>
<CAPTION>
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sportsground at Hyde Road and Ermin Street, WT139155 Sportsground Plessey Plessey
Swindon, Wiltshire
====================================================================================================================================
</TABLE>
<PAGE>
115
2. LEASEHOLD PROPERTIES WITH UNREGISTERED TITLE
<TABLE>
<CAPTION>
====================================================================================================================================
Date of Current
Property Lease Original Parties Term Current Rental Current Use Tenant
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unit 1, Groundwell Industrial 4.8.1988 TSB Group Pension Trust 25 years from (pound)82,000 p.a. Factory Plessey
Estate, Crompton Road, Limited (1) 1.8.1983
Swindon, Wiltshire Plessey Properties
Limited (2)
The Plessey Company plc (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Unit on ground and first 14.3.1996 Sun Alliance & London 15 years from (pound)314,000 p.a. Offices and Plessey
floors of Cherry Orchard Assurance Company Limited 14.3.1996 parking
North, Kembrey Park, Swindon, (1) Plessey Semiconductors
Wiltshire and 5 parking spaces Limited (2)
- ------------------------------------------------------------------------------------------------------------------------------------
69 parking spaces at Cherry 27.3.1997 Sun Alliance & London From 27.3.1997 (pound)21,600 p.a. Parking Plessey
Orchard North, Kembrey Assurance Company to 13.3.2011
Business Park, Swindon, Limited (1) Plessey
Wiltshire Semiconductors Limited (2)
====================================================================================================================================
</TABLE>
<PAGE>
116
<TABLE>
<CAPTION>
====================================================================================================================================
Date of Current
Property Lease Original Parties Term Current Rental Current Use Tenant
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Floor, East Wing, 8.12.1995 The Royal London Mutual 5 years from (pound)22,228 p.a Offices and Plessey
Terminal 4, 3B2 Complex, Insurance Society Ltd. (1) 8.12.1995 parking
Stonehill Green, West Lea, Plessey Semiconductors (2)
Wiltshire
- ------------------------------------------------------------------------------------------------------------------------------------
Unit H2, Hanover Business 25.12.1975 Tyne Tunnel Trading Estate 24 years from (pound)11,750 p.a. Workshop Marconi
Park, Altrincham, Cheshire Ltd. (1) 29.9.1975
GEC Elliott Traffic
Automation Ltd. (2)
====================================================================================================================================
</TABLE>
3. ASSIGNED LEASES
<TABLE>
<CAPTION>
====================================================================================================================================
Property Date of Original Parties Term Rental before Date of Legal Owner Assignee
Lease Assignment Assignment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit C, Wessex Road, 1.12.1972 Ravenseft Industrial 25 years from (pound)34,400 p.a. March 1987 Marconi Vistek
Bourne End, Bucks Estates Limited (1) 29.9.1972 (as at review Electronics
G. Ney (UK) on 29.9.1987) Limited
Limited (2)
====================================================================================================================================
</TABLE>
<PAGE>
117
<TABLE>
<CAPTION>
====================================================================================================================================
Property Date of Original Parties Term Rental before Date of Legal Owner Assignee
Lease Assignment Assignment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Factory and offices at 17.3.1979 Borough of Swindon 99 years from (pound)0.05 p.a. 28.4.1995 Marconi Semitron
Hargreaves Road, (1) Tectonic 12.3.1979 Industries
Groundwell Industrial Electronics Limited Limited
Estate, Swindon (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Car Park at Stockfield 29.1.1988 The North Western 5 years from (pound)750 p.a. 2.3.1992 Plessey Hevermill
Road, Oldham, Greater Electricity Board (1) 27.3.1987 Semicondutors Limited
Manchester Ferranti plc (2) Limited
====================================================================================================================================
</TABLE>
<PAGE>
118
PART II - CERTIFICATED PROPERTIES
4. FREEHOLD CERTIFICATED PROPERTIES WITH REGISTERED TITLE
<TABLE>
<CAPTION>
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
107/108 Cheney Manor Industrial Estate, WT137058 Factory and Offices Plessey Plessey
Swindon, Wiltshire
- ------------------------------------------------------------------------------------------------------------------------------------
109 Cheney Manor Industrial Estate, WY133655 Offices Plessey Plessey
Swindon, Wiltshire
- ------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices at Doddington Road, LL16432 Factory and Offices AEI
Lincoln, Lincolnshire
- ------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices at Doddington Road, LL29849 Factory and Offices Marconi
Lincoln, Lincolnshire
- ------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices adjacent to Tavistock DN174695 Factory and Offices Plessey Plessey
Road, Roborough, South Hams, Devon
- ------------------------------------------------------------------------------------------------------------------------------------
Land adjacent to Tamerton Road, Roborough, DN278749 Field - lying fallow U.K. Cablevision U.K. Cablevision
South Hams, Devon Limited Limited
====================================================================================================================================
</TABLE>
<PAGE>
119
5. LEASEHOLD CERTIFICATED PROPERTIES WITH REGISTERED TITLE
<TABLE>
<CAPTION>
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Factory at Tweedale Way, Oldham, Greater GM423330 Factory Plessey Plessey
Manchester
- ------------------------------------------------------------------------------------------------------------------------------------
106 Cheney Manor Industrial Estate, WT114971 Offices/ Plessey Plessey
Swindon, Wiltshire Workshops
- ------------------------------------------------------------------------------------------------------------------------------------
Factory and offices adjacent to Tavistock DN176582 Factory and Offices Plessey Plessey
Road, Roborough, South Hams, Devon
====================================================================================================================================
</TABLE>
<PAGE>
120
PART III - OVERSEAS OFFICES
<TABLE>
<CAPTION>
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
France 6 Avenue des Andes, Offices Leasehold Plessey France S.A. Term: 9 years from
Courtabouf 25.2.1997
Rent: FF213,000.00
(indexed to INSEE
construction index)
- ------------------------------------------------------------------------------------------------------------------------------------
France 26 Rue Augustin Fresnel, Offices Leasehold GEC France S.A. Letter in respect of one
Chambrey Les Tours and Factory year lease extension to
1.1.1999
- ------------------------------------------------------------------------------------------------------------------------------------
Germany 14/16 Grillparzerstrasse, Offices and Leasehold Plessey GmbH Term: 14.7.1997 to
Munich Car Parking (represented 13.7.2007
by Philip Wright) Basic Rent: 14582,30 DM
per month plus monthly
ancillary costs and VAT at 15%
Basic Rent increases by
2.5% every year
====================================================================================================================================
</TABLE>
<PAGE>
121
<TABLE>
<CAPTION>
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Cinisello Balsamo, Nr. Offices Leasehold Plessey Term: 1.12.1995 to
Milan Semiconductors 31.12.2001
S.P.A. Rent: L 47 million p.a.
plus expenses (subject to
review)
- ------------------------------------------------------------------------------------------------------------------------------------
Japan 86.79 tsubo (286.91 m2) on Offices. Leasehold GEC Plessey Term from 1.7.1993 to
4th Floor CTS Kojimachi Semiconductors 30.6.1997
Building Kojimachi 2-12 Japan Limited Renewed to 30.6.1999
Chiyoda-ku, Tokyo
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Cheon Woo Building, 736 Offices Leasehold GEC Plessey Term: 1.11.1995 to
Weoksam-Dong Kangnam-Ku, Semiconductors 31.10.1997
Seoul Overseas Limited Rent: the lease is
entered into on a Chonse
(fully refundable
security deposit) base
without a rent The lease
is being extended to
31.10.1998
====================================================================================================================================
</TABLE>
<PAGE>
122
<TABLE>
<CAPTION>
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Singapore Offices
No. 3 Tai Seng Drive, Licence Plessey Semi conductors Date: 16.1.1998
Singapore 535216 Singapore Pte. Limited Period: 6 months
Fee: $15,193 plus General
Sales Tax per month
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Worldwide House, 129-131 Offices and Leasehold Plessey Semiconductors Term: 1.2.1997 to
Min Sheng Road, Taipei and Parking Taiwan 31.1.2000 (with option to
renew)
Rent: from 1.2.1997 to
31.1.1998
NT$ 2,200 per ping per
month
Rent for parking space:
NT$ 9,500 per month
exclusive of VAT at 5%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Suite 355, City Block Offices Leasehold GEC Plessey Term : 5 years from
8413, City of Dallas, Semiconductors, Inc. 1.12.1994
Dallas County, Texas Basic Rent: $839.58 per
month
====================================================================================================================================
</TABLE>
<PAGE>
123
<TABLE>
<CAPTION>
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S.A. Suite 1, First Floor, 2 Offices Leasehold Plessey Semiconductor Term: 15.7.1990 to
Dedham Place, Dedham, Corporation 30.11.1999
Massachusetts Base Rent: $102,327 p.a.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Suite 830, 2600 Michelson, General Leasehold Plessey Inc. Term: 5 years from
Irvine, California Office 1.11.1993
Rent: $6,183.00 per month
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Land located in the City Any lawful Leasehold Ferranti Term: 13.3.1986 to
of Scotts Valley, County business or Interdesign Inc. 12.3.2001 (subject to
of Santa Cruz, California commercial option to extend)
purpose Base Rent: $1,095,924
p.a. subject to rental
adjustment
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Ground Floor, 1735 Sales and Leasehold Plessey Inc. Term: From 1.2.1991 to
Technology Drive, San engineering for 14.5.2001
Jose, California a Semiconductor Basic Rent: $13,741.39
Company per month
====================================================================================================================================
</TABLE>
<PAGE>
124
Schedule 9
Part A
GEC Plessey Semiconductors Group
Pro Forma Aggregated Balance Sheet as at 31 December 1997
<TABLE>
<CAPTION>
GEC PLESSEY SEMICONDUCTORS GROUP
PROFORMA AGGREGATED BALANCE SHEET AS AT 31 DECEMBER 1997
ACTUAL ADJUSTMENTS DIVIDENDS LOAN PAYMENTS
---------------------- ----------------------
USA FRANCE UK PSL &
MEDL CABLEVISION
(pound)000
<S> <C> <C> <C> <C> <C> <C>
Total Shareholders Equity 120,390 (1,329) (11,976) (363)
GEC Group Loans 66,365 6,886 19,422 (92,673)
--------------- ------------------- -------------- ------------ ----------- -------------------
186,755 (1,329) (5,090) (363) 19,422 (92,673)
=============== =================== ============== ============ =========== ===================
30
Fixed Assets at NBV 169,715
Net Inventory 39,313
Debtors & Prepaids - 3rd Party 35,085 (322)
GEC Group Trade Debtors 1,962
Creditors (29,027)
GEC Group Trade Creditors (41)
Advances on Contracts (105)
Provisions (5,545)
--------------- ------------------- -------------- ------------ ----------- -------------------
CAPITAL EMPLOYED 211,357 (322) 30
Singapore and Japan Net Assets
at 31 March 1997 466
Tax (4,998) (1,473)
Notes Receivable 4,593
Finance Leases (9,911)
Cash/(Bank Overdraft) - Net (14,286) (5,090) (363) 19,422 (92,703)
--------------- ------------------- -------------- ------------ ----------- -------------------
NET WORTH 188,755 (1,329) (5,090) (363) 19,422 (92,673)
=============== =================== ============== ============ =========== ===================
<CAPTION>
GROUP PURCHASE SALE OF
TAXES OF MEDSA OLDHAM
-------- --------- -------
(pound)000
<S> <C> <C> <C>
Total Shareholders Equity (117) (1,010) (2,900)
GEC Group Loans
------------- --------------- ------------
(117) (1,010) (2,900)
============= =============== ============
Fixed Assets at NBV (7,300)
Net Inventory (3,700)
Debtors & Prepaids - 3rd Party (300)
GEC Group Trade Debtors
Creditors 200
GEC Group Trade Creditors
Advances on Contracts
Provisions
------------- --------------- ------------
CAPITAL EMPLOYED (11,100)
Singapore and Japan Net Assets
at 31 March 1997
Tax (7,367)
Notes Receivable
Finance Leases
Cash/(Bank Overdraft) - Net 7,250 (1,010) 8,200
------------- --------------- ------------
NET WORTH (117) (1,010) (2,900)
============= =============== ============
<CAPTION>
ISSUE OF
SHARES TOTAL
-------- ------
(pound)000
<S> <C> <C>
Total Shareholders Equity 80,710 183,405
GEC Group Loans
------------- --------------
80,710 183,405
============= ==============
Fixed Assets at NBV 162,445
Net Inventory 35,613
Debtors & Prepaids - 3rd Party 34,463
GEC Group Trade Debtors 1,962
Creditors (28,827)
GEC Group Trade Creditors (41)
Advances on Contracts (105)
Provisions (5,545)
------------- --------------
CAPITAL EMPLOYED 199,965
Singapore and Japan Net Assets
at 31 March 1997 466
Tax (13,838)
Notes Receivable 4,593
Finance Leases (9,911)
Cash/(Bank Overdraft) - Net 80,710 2,130
------------- --------------
NET WORTH 80,710 183,405
============= ==============
Note: No tax provision on results for 9 months to 31.12.97
</TABLE>
<PAGE>
125
Part B
------
GPS Swindon Operation
STANDARD RECOVERY AS AT JANUARY 1998
Cost per hour at operation
- --------------------------
Labour Overhead
Wafer fab
Implant 6.95 1.81
Stepper 6.95 0.27
Align 6.95 0.89
Etch 6.95 1.21
Strip 6.95 0.32
Diffusion 6.95 0.24
Silox 6.95 1.43
Epitaxy 6.95 2.81
PVCD 6.95 1.13
CVD 6.95 0.57
Par. test 6.95 3.34
General 6.95 0.76
MET 6.95 0.39
Oxide 6.95 0.45
Probe/Test
ATF 9.28 79.99
A310 9.28 52.33
A312 9.28 52.33
A360 9.28 37.03
A370 9.28 37.03
A530A 9.28 85.48
J283 9.28 52.33
<PAGE>
126
Plymouth Std Recovery Rates FY97
- --------------------------------
Recovery Rate per Hour
- ----------------------
Labour Overhead Total
------ -------- -----
Fab 3 2.63 32.57 35.20
---- ----- -----
Fab 8
Photo 2.49 156.82 159.31
---- ------ ------
Diffusion 1.91 107.46 109.37
---- ------ ------
Etch 1.34 76.58 77.92
---- ----- -----
Films 2.30 115.10 117.40
---- ------ ------
Implant 7.78 173.14 180.92
---- ------ ------
Backgrind 11.26 272.56 283.82
----- ------ ------
Probe & Test
LTX (Synchro) 10.00 98.00 108.00
----- ----- ------
Credence (LT1000's) 10.00 67.00 77.00
----- ----- -----
Advantest 10.00 72.00 82.00
----- ----- -----
A300's 10.00 67.00 77.00
----- ----- -----
J941 10.00 59.00 69.00
----- ----- -----
<PAGE>
127
Lincoln Product Costing Rates - Major Processes
- -----------------------------------------------
Labour Overhead
------ --------
Process (pound)/hr (pound)/hr
IC Fab:-
- --------
Projection Litho 4.64 26.18
IC Etch 3.79 18.58
Stepper Litho 38.14 449.73
Diffusion 3.55 33.78
CVD 6.66 48.03
Sputter 33.94 407.15
Implant 11.62 73.74
Probe 1.57 0.83
Power Fab:-
- -----------
BU Test 19.91 48.57
Metal 5.62 34.57
Diffusion 2.33 14.17
Photolith 3.76 9.16
Power Etch 5.92 12.08
Alloy 2.59 16.94
Bevel 9.20 28.51
IC Test:-
- ---------
SOS 13.14 116.51
Bulk 4.75 40.37
Burn-In/General 1.92 8.23
Power Test:-
- ------------
Power Device Assembly & Test 10.29 25.11
IGBT Probe 3.46 11.38
IGBT Test & Module Assembly 10.82 40.01
Board Systems 6.36 12.88
<PAGE>
128
SIGNED on behalf of )
The General Electric ) /s/ G.D. Earle
Company, p.l.c. in the )
presence of: )
/s/ R.R. Ogle
SIGNED on behalf of )
Mitel Telecom Limited ) /s/ Paul Butcher
by Paul Butcher )
in the presence of: )
/s/ R.R. Ogle
SIGNED by Mitel )
Corporation acting by )
Donald McIntyre ) /s/ J. Millard
and John Millard ) /s/ D. McIntyre
under its authority )
)
Conformed Copy
DATED 12th February, 1998
THE GENERAL ELECTRIC COMPANY, P.L.C.
(the Covenantor)
and
MITEL TELECOM LIMITED
(the Purchaser)
-------------------------
DEED OF TAX COVENANT
-------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(GJA/WNCW)
<PAGE>
CONTENTS
Page
----
1. INTERPRETATION 1
2. COVENANT 8
3. LIMITS ON CLAUSE 2 9
4. EXCLUSIONS 11
5. MITIGATION 11
6. PAYMENT FOR GROUP RELIEF 12
7. OVER-PROVISIONS, RELIEFS, ETC 13
8. RECOVERY FROM OTHER PERSONS 14
9. CLAIMS PROCEDURE 14
10. TAX RETURNS 15
11. DUE DATE OF PAYMENT 16
12. DEDUCTIONS FROM PAYMENTS, ETC 17
13. SURRENDER OF GROUP RELIEF 18
14. COUNTER COVENANT 19
15. DEEMED END OF ACCOUNTING PERIOD 21
16. VAT 21
17. REMEDIES AND WAIVERS 21
18. ASSIGNMENT 22
19. FURTHER ASSURANCE 23
20. NOTICES 23
21. COUNTERPARTS 24
22. TIME OF ESSENCE 24
23. INVALIDITY 24
<PAGE>
24. GOVERNING LAW 24
25. JURISDICTION 24
<PAGE>
THIS DEED OF TAX COVENANT is made on the 12th day of February, 1998
BETWEEN: -
(1) THE GENERAL ELECTRIC COMPANY, p.l.c.(registered in England No. 67307),
having its registered office at 1 Stanhope Gate, London W1A 1EH (the
"Covenantor"); and
(2) MITEL TELECOM LIMITED (registered in England No. 1309629), having its
registered office at Portskewett, Gwent NP6 4YR(the "Purchaser").
NOW THIS DEED WITNESSES as follows:-
1. INTERPRETATION
In this deed of covenant:-
(i) the following expressions shall have the following meanings:-
"Accounts" means, in relation to each Group
Company, its audited balance sheet and
profit and loss account drawn up as at
the Accounts Date;
"Accounts Date" means 31st March, 1997;
"Agreement" means the agreement for the sale and
purchase of the Shares (as therein
defined) made between the Covenantor and
the Purchaser;
"Business Day" means a day (other than a Saturday or a
Sunday) on which banks are open for
business in London;
"Claim" means the issue of any notice, Tax
Assessment, letter or other document by
or on behalf of any Tax Authority or the
taking of any other action by or on
behalf of any Tax Authority from which
notice, letter, document or action it
appears either that a Tax Liability is
to be or has been imposed on a Group
Company or, in the context of clause 14
(Counter Covenant), that a liability or
increased liability to Tax is to be or
has been imposed on the Covenantor
and/or any of its subsidiaries;
"Completion" means completion of the sale and
purchase of the Shares under the
Agreement;
<PAGE>
2
"Covenantor's Group" means The General Electric Company,
p.l.c. and all its subsidiaries or
subsidiary undertakings from time to
time other than the Group Companies;
"Distribution" has the meaning given in paragraph
(iii)(c);
"Event" includes (without limitation):-
(a) any transaction, act or omission
(whether or not a Group Company is a
party to it);
(b) the actual or deemed earning,
receipt or accrual for any Tax
purpose of any Income, Profits or
Gains;
(c) the incurring for any Tax purpose of
any loss or expenditure;
(d) the declaration, payment or making
of any Distribution;
(e) the sale and purchase of the Shares
pursuant to the Agreement; and
(f) Completion;
"Group" has the meaning given to it in the
Agreement;
"Group Company" has the meaning given to it in the
Agreement;
"Group Relief" means any loss, allowance or other
amount eligible for surrender by way of
group relief in accordance with the
provisions contained in sections 402 to
413 ICTA and any advance corporation tax
eligible for surrender in accordance
with section 240 ICTA;
"ICTA" means the Income and Corporation Taxes
Act 1988;
"Income, Profits or Gains" has the meaning given in paragraph
(iii)(a);
"Marconi SA" has the meaning given to it in the
Agreement;
<PAGE>
3
"Plessey" means Plessey Semiconductors Limited,
registered in England No. 705031 and
having its registered office at Cheney
Manor, Swindon, Wiltshire SN2 2QW;
"Proceedings" means any proceeding, suit or action
arising out of or in connection with
this deed;
"Purchaser's Tax Relief" means any Relief arising after
Completion and any Relief which was
treated as an asset of a Group Company
in preparing the Accounts (including any
Relief which has been taken into account
in computing any provision for deferred
Tax which appears in the Accounts or
which would have appeared in the
Accounts but for the assumed
availability of such Relief);
"Relief" means any relief, allowance or credit in
respect of any Tax, any deduction in
computing Income, Profits or Gains for
the purposes of any Tax and any right to
repayment of Tax;
"Severance Date" has the meaning given to it in clause 16
(VAT);
"Shares" has the meaning given to it in the
Agreement;
"Tax" means: -
(a) within the United Kingdom, all forms
of tax, duty, rate, levy, related
charge or other imposition or
withholding whatever and by whatever
authority imposed and includes
(without limitation) income tax
(including income tax required to be
deducted or withheld from or
accounted for in respect of any
payment), corporation tax, advance
corporation tax, capital gains tax,
capital transfer tax, inheritance
tax, petroleum revenue tax, value
added tax, customs duties, excise
duties, lottery duty, air passenger
duty, insurance premium tax, rates
(including the uniform business
rate), stamp duty reserve tax,
national insurance and other similar
contributions, any liability arising
under section 419, section 601 or
section 703
<PAGE>
4
of ICTA and any other taxes, duties,
rates, levies, charges, imposts or
withholdings corresponding to,
similar to, replaced by or replacing
any of them, together with any
interest, penalty or fine in
connection with any Tax; and
(b) outside the United Kingdom, all
forms of tax, levy, duty, impost,
deduction, withholding or related
charge of any nature whatsoever,
including (without limitation) taxes
on gross or net Income, Profits or
Gains and taxes on receipts, sales,
use, capital, business, property,
consumption, transfer, occupation,
franchise, value added and personal
property, together with all
penalties, charges and interest
relating to any of them,
regardless (in either case) of whether
any such taxes, levies, duties, rates,
imposts, charges, withholdings,
penalties, fines and interest are
chargeable directly or primarily against
or attributable directly or primarily to
a Group Company or any other person and
of whether any amount in respect of any
of them is recoverable from any other
person as mentioned in clause 8
(Recovery from Other Persons);
"Tax Assessment" means any assessment, demand or other
similar formal notice of a Tax Liability
issued by or on behalf of any Tax
Authority by virtue of which a Group
Company or, in the context of clause 14
(Counter Covenant), the Covenantor or
any of its subsidiaries, either is
liable to make a payment of Tax or will,
with the passing of time, become so
liable (in the absence of any successful
application to postpone any such
payment);
"Tax Authority" means any taxing or other authority
(whether within or outside the United
Kingdom) competent to impose any Tax
Liability;
"Tax Liability" has the meaning given in paragraph
(ii)(a);
<PAGE>
5
"Transfer Pricing Adjustment" means any allocation, reallocation,
apportionment, distribution or
redistribution of price, gross or net
income, costs, expenses, deductions,
credits or allowances or the
redetermination or recharacterisation of
any feature of any transaction by a Tax
Authority in respect of a transaction
between a Group Company and any other
Group Company or any member of the
Covenantor's Group in order to reflect
the terms, conditions and arrangements
which would have prevailed or been made
if the parties to the transaction had
been independent persons dealing at
arm's length;
"VAT" means the tax imposed by the Sixth
Council Directive of the European
Communities;
"VATA" means the Value Added Tax Act 1994;
"VAT Group" means any group of companies for the
purposes of section 43 VATA of which a
Group Company is or has been a member on
or before Completion; and
"Working Hours" means 9.30 a.m. to 5.30 p.m. on a
Business Day;
(ii) (a) references to any "Tax Liability" of a Group Company shall mean
any such liability, inability or charge as is mentioned in clause
2(i) to clause 2(iv) and also:
(A) any other liability of a Group Company to make a payment in
respect of Tax (whether or not that company is primarily so
liable and whether or not that company has any right of
recovery from any other person);
(B) the failure to obtain the benefit of any repayment of Tax
which has been taken into account or otherwise assumed to be
available in the preparation of the Accounts;
(C) the utilisation of a Purchaser's Tax Relief in circumstances
where, but for such utilisation, any such liability to Tax
as is mentioned in (A) above would have arisen in respect of
which the Purchaser would have been able to make a claim
under this deed;
(D) the loss of a Purchaser's Tax Relief (other than a Relief
arising after Completion); and
<PAGE>
6
(E) any liability to repay the whole or any part of any payment
received or receivable by a Group Company in respect of a
surrender of Group Relief made before Completion;
and references to an "'A' Tax Liability", a "'B' Tax Liability"
(and so on) shall be construed accordingly; and
(b) in any case falling within sub-paragraph (a) of this paragraph,
the amount that is to be treated for the purposes of this deed as
a Tax Liability of the relevant Group Company shall be determined
as follows:-
(1) in respect of an 'A' Tax Liability, the amount of the
relevant payment which a Group Company is liable to make;
(2) in respect of a 'B' Tax Liability, the amount of the
relevant repayment the benefit of which is not obtained;
(3) in respect of a 'C' Tax Liability, the amount by which a Tax
Liability is reduced by means of the relevant utilisation of
a Purchaser's Tax Relief;
(4) in respect of a 'D' Tax Liability, the amount of Tax payable
(if any) which would not have been payable had there been no
loss of the relevant Purchaser's Tax Relief; and
(5) in respect of an 'E' Tax Liability, the amount of the
repayment which a Group Company is liable to make;
(iii) references to:-
(a) "Income, Profits or Gains" shall include development value and
any other standard or measure for the purposes of any Tax and
shall also include any income, profits or gains which are deemed
to be earned, accrued or received for the purposes of any Tax;
(b) Income, Profits or Gains (as defined in sub-paragraph (a) of this
paragraph) as being earned, accrued or received on or before a
particular date or in respect of a particular period shall mean
Income, Profits or Gains which are regarded as having been, or
are deemed to have been, earned, accrued or received on or before
that date or in respect of that period for the purposes of any
Tax;
(c) any "Distribution" shall include anything which is, or is deemed
to be, a dividend or distribution for the purposes of any Tax and
shall also include any other Event which gives rise to an
obligation to account for
<PAGE>
7
advance corporation tax or amounts corresponding to or similar to
advance corporation tax;
(d) any Distribution as occurring on or before a particular date
shall include any Distribution which has fallen due to be made on
or before that date for the purposes of any Tax; and
(e) any "subsidiary of the Covenantor" shall mean any company of
which the Covenantor has control for the purposes of section 416
ICTA; and
(iv) unless otherwise specified:-
(a) references to clauses, sub-clauses, paragraphs and sub-paragraphs
are to clauses, sub-clauses, paragraphs and sub-paragraphs of
this deed;
(b) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may
from time to time be, amended, modified or re-enacted;
(c) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state
or any joint venture, association or partnership (whether or not
having separate legal personality);
(d) references to a "company" shall be construed so as to include any
company, corporation or other body corporate, wherever and
however incorporated or established;
(e) the expression "body corporate" shall have the meaning given in
the Companies Act 1985;
(f) references to writing shall include any modes of reproducing
words in a legible and non-transitory form;
(g) references to times of the day are to London (United Kingdom)
time;
(h) headings to clauses and the schedule are for convenience only and
do not affect the interpretation of this deed;
(i) references to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official, or any legal concept or thing shall in respect
of any jurisdiction other than England be deemed to include what
most nearly approximates in that jurisdiction to the English
legal term; and
(j) (1) the rule known as the ejusdem generis rule shall not apply
and accordingly general words introduced by the word "other"
shall
<PAGE>
8
not be given a restrictive meaning by reason of the fact
that they are preceded by words indicating a particular
class of acts, matters or things; and
(2) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general words.
2. COVENANT
Subject to the provisions of this deed, the Covenantor hereby covenants with the
Purchaser to pay to the Purchaser (so far as possible by way of repayment of the
consideration paid under the Agreement for the Shares) an amount calculated in
accordance with clause 1(ii)(b) in respect of any Tax Liability of a Group
Company (including a Tax Liability resulting from a Transfer Pricing Adjustment)
which has arisen or may arise in consequence of or in connection with any Event
which occurred or is deemed to occur on or before Completion, whether or not
that Tax Liability has been discharged on or before Completion save to the
extent that such discharge is taken into account in the Accounts, and also an
amount equal to any of the following:
(i) (for the avoidance of doubt) any liability or increased liability to
Tax of a Group Company which is chargeable directly or primarily
against or attributable directly or primarily to any company, not
being a Group Company, that may be treated for the purposes of any Tax
as being, or as having at any time been, either a member of the same
group of companies as the Covenantor or otherwise associated with the
Covenantor (a "Relevant Company"), and which arises as a result of the
failure of any Relevant Company to discharge that liability or
increased liability; or
(ii) any liability of a Group Company to account for VAT on supplies made
by another member of the VAT Group (not being a Group Company) before
the Severance Date, and any inability of a Group Company to claim any
credit or deduction for any amounts in respect of VAT incurred on
supplies made to that Group Company in the period (if any) between
Completion and the Severance Date to which that Group Company would
have been entitled had it not continued to be a member of the VAT
Group in that period;
(iii) any liability of Plessey or Marconi SA to account for VAT in respect
of supplies made between them in the period between the Accounts Date
and Completion, including any related interest, fine or penalty but
taking into account any corresponding benefit accruing to the
recipient of the supply;
(iv) any stamp duty which is charged on any document to which a Group
Company has become a party before Completion and by virtue of which
any Group Company has any right material to the business of that Group
Company, in circumstances where:-
<PAGE>
9
(a) the production of that document is required by the Inland
Revenue; or
(b) that document must be produced before a registrar or other person
performing the functions of a registrar in order to establish the
title of a Group Company to any asset; or
(c) that document is to be given in evidence in civil proceedings in
the United Kingdom,
together with any interest, fine or penalty relating to any stamp duty
so charged; or
(v) any out-of-pocket legal and accounting costs and expenses reasonably
and properly incurred by the Purchaser and/or a Group Company in
connection either with any such Tax Liability, other liability,
inability or charge to stamp duty as is mentioned in this clause or
with any Claim therefor, or in taking or defending any action under
this deed or pursuant to clause 5 (Mitigation) or clause 6 (Payment
for Group Relief).
3. LIMITS ON CLAUSE 2
The covenant given in clause 2 (Covenant) shall not cover any Tax Liability of
any Group Company:-
(i) to the extent that provision or reserve in respect of that Tax
Liability was made in the Accounts; or
(ii) to the extent that that Tax Liability (not being such a liability,
inability or charge as is mentioned in clause 2(i) to clause 2(iv) nor
a Tax Liability resulting from a Transfer Pricing Adjustment) would
not have arisen but for an Event occurring in the ordinary course of
business of the relevant Group Company in the period between the
Accounts Date and Completion; or
(iii) to the extent that that Tax Liability arises or is increased as a
result only of any increase in rates of Tax or any change in law or
practice or any withdrawal of any extra-statutory concession by a Tax
Authority or any change in accountancy practice or principles
generally accepted in the relevant jurisdiction, being an increase,
withdrawal or change made, in any such case, after Completion with
retrospective effect; or
(iv) to the extent that that Tax Liability would not have arisen but for a
voluntary transaction, action or omission carried out or effected by a
Group Company at any time after Completion, other than any such
transaction, action or omission:-
(a) carried out or effected under a legally binding commitment
created on or before Completion; or
<PAGE>
10
(b) carried out or effected in the ordinary course of the trade
carried on by the relevant Group Company as at Completion; or
(c) involving the proper disclosure to a Tax Authority of any matter
which the Purchaser reasonably considers to be relevant to the
calculation of a liability to Tax; or
(v) to the extent that that Tax Liability would not have arisen or would
have been reduced but for a failure or omission on the part of the
Purchaser and/or a Group Company after Completion to make any election
or claim any Relief, the making or claiming of which was taken into
account in computing the provision or reserve for Tax in the Accounts;
or
(vi) to the extent that that Tax Liability arises by reason of a voluntary
disclaimer by a Group Company after Completion of the whole or part of
any allowance (not being a Purchaser's Tax Relief) to which it is
entitled under Part II of the Capital Allowances Act 1990 or by reason
of the revocation by a Group Company after Completion of any claim for
Relief (not being a Purchaser's Tax Relief) made (whether
provisionally or otherwise) by it prior to Completion; or
(vii) to the extent that that Tax Liability arises as a result of any
changes after Completion in the bases, methods or policies of
accounting of the Purchaser or a Group Company, save where (in the
case of the bases, methods or policies of accounting of a Group
Company) such changes are required to conform those bases, methods or
policies with generally accepted bases, methods or policies as they
apply in the relevant jurisdiction at Completion or where such changes
are otherwise required to correct an improper basis, method or policy;
or
(viii) to the extent that that Tax Liability has been made good by insurers
or otherwise compensated for without cost to the Purchaser and/or a
Group Company; or
(ix) to the extent that any Income, Profits or Gains to which that Tax
Liability is attributable were actually earned and received by a Group
Company but were not (in either such case) reflected in the Accounts;
or
(x) to the extent that that Tax Liability arises or is increased as a
consequence of any failure by the Purchaser or a Group Company to
comply with any of their respective obligations under clauses 5
(Mitigation), 9 (Claims Procedure), 10 (Tax Returns), 13 (Surrender of
Group Relief) or 14 (Counter Covenant); or
(xi) to the extent that that Tax Liability would not have arisen but for a
cessation of, or any change in the nature or conduct of, any trade
carried on by a Group Company, being a cessation or change occurring
on or after Completion or a gradual change which began before
Completion.
<PAGE>
11
4. EXCLUSIONS
(A) Save in relation to a Tax Liability arising from the fraud or wilful
misconduct of the Covenantor or a Group Company prior to Completion, the
Covenantor shall not be liable under this deed in respect of any Tax
Liability unless the Tax Liability in question shall have arisen within
seven years from Completion and the Purchaser shall by notice in writing to
the Covenantor have given such details of the Claim, the matter giving rise
to that Tax Liability and the amount claimed in respect thereof as are
available to it or to a Group Company.
(B) The provisions of sub-paragraph 3.1 of Schedule 4 to the Agreement shall,
to the extent that they refer to this deed, apply to this deed as if set
out herein.
5. MITIGATION
The Purchaser shall, at the direction in writing of the Covenantor, procure that
each Group Company take all such reasonable and lawful steps as the Covenantor
may specifically require by notice in writing following Completion to:-
(i) use in the manner hereinafter mentioned all such Reliefs other than
Purchaser's Tax Reliefs arising as a consequence of or by reference to
any Event occurring (or deemed to occur) on or before Completion or in
respect of a period ended on or before Completion as are available to
each Group Company to reduce or eliminate any Tax Liability in respect
of which the Purchaser would have been able to make a claim against
the Covenantor under this deed (such Reliefs including, without
limitation, Reliefs made available to a company by means of a
surrender from another company), the said use being to effect the
reduction or elimination of any such Tax Liability to the extent
specified by the Covenantor and permitted by law, and to provide to
the Covenantor, at the Covenantor's expense, a certificate from the
auditors (for the time being) of each relevant Group Company
confirming that all such Reliefs have been so used;
(ii) make all such claims and elections specified by the Covenantor in
respect of any accounting period of the relevant Group Company ending
on or before or deemed to end on or before Completion as have the
effect of reducing or eliminating any such Tax Liability as is
mentioned in paragraph (i), provided that no such claim or election
shall require that Group Company to use any Purchaser's Tax Relief;
and
(iii) allow the Covenantor to reduce or eliminate any Tax Liability by
surrendering or procuring the surrender by any company not being a
Group Company of Group Relief to any Group Company to the extent
permitted by law but without any payment being made in consideration
for such surrender.
<PAGE>
12
6. PAYMENT FOR GROUP RELIEF
(A) Subject to the following provisions of this clause 6, the Purchaser shall
procure that (to the extent permitted by law) Plessey shall, in respect of
any accounting period ended on or before Completion, make, give or enter
into such claims, elections, notices or consents (whether unconditional or
conditional, whether or not forming part of any other return or tax
document and whether provisional or final, and including amendments to or
withdrawals of earlier claims, elections, notices or consents) as the
Covenantor shall direct in writing in connection with the surrender of any
Group Relief by any member of the Covenantor's Group (the "Relevant
Member") to Plessey. Except where Group Relief is surrendered to Plessey by
the Relevant Member in order to reduce or eliminate a Tax Liability in
respect of which the Purchaser would otherwise have been able to make a
claim against the Covenantor under this deed, payment shall be made in
respect of any such surrender as provided in the following provisions of
this clause 6.
(B) If, in respect of any accounting period ended on or before Completion:-
(i) Plessey has paid Tax and a surrender effected pursuant to sub-clause
(A) above has the effect of causing a repayment of some or all of that
Tax; or
(ii) provision for Tax is made in the Accounts and a surrender effected
pursuant to sub-clause (A) has the effect of discharging all or part
of the liability represented by that provision,
the Purchaser shall procure that a payment for Group Relief shall be made
in respect of any such surrender by Plessey to the Relevant Member to the
extent, if any, provided for by sub-clause (C) and at the time provided for
by sub-clause (D).
(C) The amount of any such payment as is referred to in sub-clause (B) shall be
equal to:-
(i) in a case where paragraph (B)(i) applies, the amount of Tax so repaid
(together with any repayment supplement or interest relating thereto);
and
(ii) in a case where paragraph (B)(ii) applies, the amount of Tax saved as
a result of the relevant surrender, up to a maximum of the amount in
respect of which provision is made in the Accounts.
(D) Any payment under sub-clause (B) shall be made:-
(i) in a case where paragraph (B)(i) applies, on the date two Business
Days after the date on which such repayment is received or would be
received but for being offset by some other liability to Tax; and
(ii) in a case where paragraph (B)(ii) applies, on the later of the date on
which such Tax would have become due and payable and two Business Days
after
<PAGE>
13
the date on which notice is given by the Covenantor to the Purchaser
of such surrender.
(E) If a payment is made under sub-clause (B) and the surrender to which it
relates is subsequently determined to have been excessive, invalid or to
any extent ineffective, then the Covenantor shall procure that the payment
so made (or so much of it as relates to such part of the surrender found to
be excessive, invalid or ineffective) shall be refunded as soon as
practicable thereafter, together with interest from the date of payment
until the date of the refund at the rate of 2 per cent. above the base rate
from time to time of National Westminster Bank plc.
7. OVER-PROVISIONS, RELIEFS, ETC.
(A) If the auditors for the time being of the relevant Group Company shall
certify (at the request and expense of the Covenantor) that any provision
for Tax in the Accounts (excluding any provision for deferred Tax and, for
the avoidance of doubt, not including any provision for anything other than
Tax) has proved to be an over-provision, then the amount of such
over-provision shall be dealt with in accordance with sub-clause (C).
(B) If the auditors for the time being of the relevant Group Company shall
certify (at the request and expense of the Covenantor) that any Tax
Liability which has resulted in a payment having been made by the
Covenantor under this deed gives rise to a Relief for that Group Company
which would not otherwise have arisen, then the amount of that Relief shall
be dealt with in accordance with sub-clause (C); provided that if the
Relief in question is a deduction from or offset against Income, Profits or
Gains, the amount to be so dealt with shall be a sum equal to the amount of
Tax that is saved through the use of that Relief.
(C) Where it is provided under sub-clause (A) or (B) that any amount (the
"Relevant Amount") is to be dealt with in accordance with this sub-clause:-
(i) the Relevant Amount shall first be set off against any payment then
due from the Covenantor under this deed or in respect of the
warranties relating to Tax which appear in Schedule 3 to the Agreement
(the "Tax Warranties"); and
(ii) to the extent there is an excess, a refund shall be made to the
Covenantor of any previous payment or payments made by the Covenantor
under this deed or in respect of the Tax Warranties (and not
previously refunded under this clause) up to the amount of such
excess; and
(iii) to the extent that the excess referred to in paragraph (ii) of this
sub-clause is not exhausted under that paragraph, the remainder of
that excess shall be carried forward and set off against any future
payments which become due from the Covenantor under this deed or in
respect of the Tax Warranties.
<PAGE>
14
(D) Where any such certification as is mentioned in sub-clause (A) or (B) has
been made, the Covenantor, the Purchaser or the relevant Group Company may
(at the expense of the person making the request) request the auditors for
the time being of that Group Company to review such certification in the
light of all relevant circumstances, including any facts which have become
known only since such certification, and to certify whether such
certification remains correct or whether, in the light of those
circumstances, the amount that was the subject of such certification should
be amended.
(E) If the auditors certify under sub-clause (D) that an amount previously
certified should be amended, that amended amount shall be substituted for
the purposes of sub-clause (C) as the Relevant Amount in respect of the
certification in question in place of the amount originally certified, and
such adjusting payment (if any) as may be required by virtue of the
above-mentioned substitution shall be made as soon as practicable by the
Covenantor or (as the case may be) to the Covenantor.
8. RECOVERY FROM OTHER PERSONS
If, in the event of any payment becoming due from the Covenantor under clause 2
(Covenant), a Group Company either is immediately entitled at the due date for
the making of that payment to recover from any person (including any Tax
Authority) any sum in respect of the Tax Liability that has resulted in that
payment becoming due from the Covenantor, or at some subsequent date becomes
entitled to make such a recovery, then the Purchaser shall procure that the
Group Company entitled to make that recovery shall promptly notify the
Covenantor of its entitlement and shall, if so required in writing by the
Covenantor and at the Covenantor's sole expense, take appropriate steps to
enforce that recovery (keeping the Covenantor fully and promptly informed of the
progress of any action taken); and if the Covenantor has made a payment under
clause 2 (Covenant) in respect of the Tax Liability in question, the Purchaser
shall account to the Covenantor for whichever is the lesser of:-
(i) any sum so recovered by the relevant Group Company in respect of that
Tax Liability (including any interest or repayment supplement paid by
the Tax Authority or other person on or in respect thereof less any
Tax chargeable on that Group Company in respect of that interest); and
(ii) the amount paid by the Covenantor under clause 2 (Covenant) in respect
of that Tax Liability.
9. CLAIMS PROCEDURE
(A) Upon the Purchaser or a Group Company becoming aware of a Claim relevant
for the purposes of clause 2 of this deed, the Purchaser shall as soon as
reasonably practicable give written notice of that Claim to the Covenantor
or, as the case may be, shall procure that the relevant Group Company give
written notice of that Claim to the Covenantor as soon as reasonably
practicable, and the Purchaser shall further procure that the relevant
Group Company (if the Covenantor shall indemnify the
<PAGE>
15
Purchaser and/or the Group Company in question to their reasonable
satisfaction against all losses, costs, damages and expenses, including
interest on overdue Tax, which may be incurred thereby) take such action
and give such information and assistance in connection with the affairs of
the relevant Group Company as the Covenantor may reasonably and promptly by
written notice request to avoid, resist, appeal or compromise the Claim and
in particular, to the extent that a Claim relates to a Transfer Pricing
Adjustment, that the relevant Group Company send to the Covenantor a draft
of any letter or other document which it is proposed be sent or made
available to a Tax Authority and that before the letter or other document
is so sent or made available it is amended in accordance with any
reasonable request of the Covenantor made by notice in writing to the
Purchaser within 21 days of the date on which the said draft is sent to the
Covenantor;
PROVIDED THAT the Purchaser shall not be obliged to procure that a Group
Company appeal against any Tax Assessment if, the Covenantor having been
given written notice of the receipt of that Tax Assessment in accordance
with the preceding provisions of this sub-clause, that Group Company has
not within 21 days thereafter received specific instructions in writing
from the Covenantor, in accordance with the preceding provisions of this
sub-clause, to make that appeal and the Purchaser shall not be obliged to
procure that a Group Company contest any Tax Assessment before any court or
other appellate body (excluding the authority or body demanding the Tax in
question) unless the Covenantor furnishes the Purchaser with the written
opinion of tax counsel of not less than ten years' standing to the effect
that an appeal against the Tax Assessment in question is on a balance of
probabilities likely to be won or is (comparing the amount of Tax demanded
with the cost of making the appeal) otherwise reasonable.
(B) The actions which the Covenantor may reasonably request under sub-clause
(A) shall include (without limitation) the relevant Group Company applying
to postpone (so far as legally possible) the payment of any Tax and/or
allowing the Covenantor to take on or take over at its own expense the
conduct of all or any proceedings of whatsoever nature arising in
connection with the Claim in question, and, if the Covenantor takes on or
takes over the conduct of proceedings, the Purchaser shall provide and
shall procure that the relevant Group Company provide such information and
assistance as the Covenantor may reasonably require in connection with the
preparation for and conduct of those proceedings.
10. TAX RETURNS
(A) The Covenantor or its duly authorised agent shall prepare the Tax returns
of each Group Company and any related documentation required by a Tax
Authority for all accounting periods ended on or prior to the Accounts
Date, to the extent that the same shall not have been prepared before
Completion, and the Covenantor shall ensure that a copy of the Tax returns
and any such other documentation is received by the Purchaser not less than
ten Business Days before the date by which the Tax returns or documentation
are to be received by the relevant Tax Authority.
<PAGE>
16
(B) The Purchaser shall procure that the Group Companies shall cause the
returns mentioned in sub-clause (A) to be authorised, signed and submitted
to the appropriate authority without amendment or with such amendments as
the Covenantor shall agree and shall give the Covenantor or its agent all
such assistance as may be required to agree those returns with the
appropriate authorities;
PROVIDED THAT the Purchaser shall not be obliged to procure that a Group
Company take any such action as is mentioned in this sub-clause in relation
to any Tax return that is not true and accurate in all material respects.
(C) The Covenantor or its duly authorised agent shall prepare all documentation
and deal with all matters (including correspondence) relating to the Tax
returns of each Group Company for all accounting periods ended on or prior
to the Accounts Date and the Purchaser shall procure that each Group
Company shall afford such access to its books, accounts and records as is
necessary and reasonable to enable the Covenantor or its duly authorised
agent to prepare those returns and conduct matters relating thereto in
accordance with the Covenantor's rights under this clause.
(D) The Purchaser shall procure that the Covenantor is sent a draft of the Tax
returns of each Group Company for the accounting period beginning before
and ending on or after Completion at least one month before its intended
submission to a Tax Authority and that its final form contains such
alterations as the Covenantor may require in respect of any matter which
might give rise to a Transfer Pricing Adjustment and also, in the case of
Plessey, in respect of any matter which to a material extent affects or
might affect the amount of Group Relief available for surrender under
clause 13 (Surrender of Group Relief).
(E) Nothing done by any Group Company pursuant to this clause shall in any
respect restrict or reduce any rights the Purchaser may have to make a
claim against the Covenantor under this deed in respect of any such Tax
Liability as is mentioned in clause 2 (Covenant).
11. DUE DATE OF PAYMENT
(A) Where the Covenantor becomes liable to make any payment under clause 2
(Covenant) in respect of a charge to stamp duty, the due date for the
making of that payment shall be the date which is three days after the
Covenantor has been sent a copy of the document, duly stamped, which has
given rise to that liability and in addition to any amount so payable the
Covenantor shall add to that amount six days' interest, calculated on a
daily basis at the base rate from time to time of Midland Bank plc.
(B) In any other case where the Covenantor becomes liable to make any payment
under clause 2 (Covenant), the due date for the making of that payment
shall be the date falling seven days after the date when the Covenantor has
been served notice by the Purchaser that the Covenantor has a liability for
a determinable amount under clause 2 (Covenant) or, if later:-
<PAGE>
17
(i) in the case of an 'A' Tax Liability, the date three days before the
last date on which the relevant Group Company would have had to pay
the Tax that has given rise to the Covenantor's liability under this
deed in order to avoid incurring a liability to interest or a charge
or penalty in respect of that Tax Liability;
(ii) in the case of a 'B' Tax Liability, the date on which the relevant
repayment would have been made;
(iii) in the case of a 'C' Tax Liability, the date on which the amount of
Tax in question would have been payable but for the relevant
utilisation of a Purchaser's Tax Relief;
(iv) in the case of a 'D' Tax Liability, the date three days before the
date on which the Tax in question becomes payable as a result of the
loss of the relevant Purchaser's Tax Relief;
(v) in the case of an 'E' Tax Liability, the date three days before the
date on which the relevant repayment is to be made,
provided that, in the case of a 'B' Tax Liability, a 'C' Tax Liability, a
'D' Tax Liability or an 'E' Tax Liability, the Purchaser must when serving
notice also notify the Covenantor that the auditors for the time being of
the relevant Group Company have certified that the Covenantor has that
liability for a determinable amount.
(C) If any payment required to be made by the Covenantor under this deed is not
made by the due date for the making thereof, then, except to the extent
that the Covenantor's liability under clause 2 (Covenant) compensates the
Purchaser for the late payment by virtue of its extending to interest and
penalties, that payment shall carry interest from that due date until the
date when the payment is actually made at the rate of 2 per cent. above the
base rate from time to time of Midland Bank plc, calculated on a daily
basis.
12. DEDUCTIONS FROM PAYMENTS, ETC.
(A) All sums payable by the Covenantor to the Purchaser under this deed
(including for the avoidance of doubt all related or consequential costs
and expenses) shall be paid free and clear of all deductions or
withholdings whatsoever, save only as may be required by law.
(B) If any deductions or withholdings are required by law to be made from any
of the sums payable as mentioned in sub-clause (A), the Covenantor shall be
obliged to pay to the Purchaser such sum as will, after the deduction or
withholding has been made, leave the Purchaser with the same amount as it
would have been entitled to receive in the absence of any such requirement
to make a deduction or withholding.
<PAGE>
18
(C) If any sum payable by the Covenantor to the Purchaser under this deed
(other than interest under clause 11 (Due Date of Payment)) shall be
subject to a Tax Liability in the hands of the Purchaser, the Covenantor
shall be under the same obligation to make an increased payment in relation
to that Tax Liability as if the liability were a deduction or withholding
required by law.
13. SURRENDER OF GROUP RELIEF
(A) The Purchaser shall procure that Plessey shall surrender to the Covenantor
or to such subsidiary or subsidiaries of the Covenantor as the Covenantor
may specify all such Group Relief as the Covenantor may at its sole
discretion direct in writing in respect of any accounting period of Plessey
ended on or before Completion.
(B) The Purchaser hereby undertakes that it shall, and shall procure that
Plessey will, use all reasonable endeavours to procure that full effect is
given to the surrenders to be made under sub-clause (A) and that such
surrenders are allowed in full by the Inland Revenue and (without prejudice
to the generality of the foregoing) the Purchaser shall procure that
Plessey shall sign and submit to the Inland Revenue all such notices of
consent to surrender (including provisional or protective notices of
consent in cases where any relevant Tax computation has not yet been
agreed) and all such other documents and returns as may be necessary to
secure that full effect is given to this clause.
(C) In consideration of each of the surrenders to be made under sub-clause (A),
the Covenantor shall pay to Plessey in respect of the surrender in question
or, as the case may be, shall procure that the relevant subsidiary or
subsidiaries of the Covenantor shall pay to Plessey a sum equal to the
amount of corporation tax from which the company that is the claimant
company in respect of such surrender has been relieved by virtue of that
surrender being validly and effectively made; PROVIDED THAT the provisions
of this sub-clause shall not have effect if and to the extent that payment
in respect of any such surrender has been made on the basis specified in
the foregoing provisions of this sub-clause on or before the date of this
deed.
(D) Any sum payable under sub-clause (C) shall be paid on the date on which any
corporation tax chargeable on the taxable profits of the company that is
the claimant company in respect of the surrender in question for the
accounting period of its to which that surrender relates becomes due and
payable (or would have become due and payable had the claimant company
incurred any liability to corporation tax in respect of that accounting
period).
(E) If any sum is paid in accordance with sub-clause (C), the Purchaser shall
within three Business Days pay to the Covenantor an equivalent amount by
way of addition to the consideration payable under the Agreement.
<PAGE>
19
14. COUNTER COVENANT
(A) The Purchaser hereby covenants with the Covenantor to pay to the Covenantor
an amount equal to any of the following:-
(i) any liability or increased liability to Tax of the Covenantor or any
of its subsidiaries which arises as a result of or by reference to any
reduction or disallowance of Group Relief that would otherwise have
been available to the Covenantor or its relevant subsidiary or
subsidiaries where and to the extent that such reduction or
disallowance occurs as a result of or by reference to:-
(a) any total or partial withdrawal effected by a Group Company after
Completion, of its own accord or at the Purchaser's behest, of
any surrender of Group Relief that was submitted by that Group
Company to the Inland Revenue on or before Completion in respect
of any accounting period ended on or before Completion; or
(b) any total or partial disclaimer made by a Group Company after
Completion, of its own accord or at the Purchaser's behest, of
any capital allowances available to that Group Company in respect
of any accounting period ended on or before Completion
save where any such withdrawal or disclaimer is made at the express
written request of the Covenantor;
(ii) any liability or increased liability to Tax of the Covenantor or any
of its subsidiaries:-
(a) which is caused by the failure of a Group Company to discharge a
liability to Tax (a "Group Company Liability") which arises in
respect of an accounting period beginning before Completion; or
(b) which is otherwise properly attributable to a Group Company (also
a "Group Company Liability")
other than (in either case) a Group Company Liability in respect of
which the Purchaser could make a claim under clause 2 (Covenant); and
(iii) any reasonable out-of-pocket legal and accounting costs and expenses
reasonably and properly incurred by the Covenantor or any of its
subsidiaries in connection with any such liability or increased
liability to Tax (or Claim therefor) or in taking any action under
this clause.
(B) (i) Upon the Covenantor becoming aware of a Claim relevant for the
purposes of sub-clause (A), the Covenantor shall forthwith give
written notice of that Claim to the Purchaser, and the Covenantor
shall or, as the case may be, shall procure that the relevant
subsidiary will (if the Purchaser shall indemnify the
<PAGE>
20
Covenantor and/or the relevant subsidiary to the Covenantor's
reasonable satisfaction against all losses, costs, damages and
expenses, including interest on overdue Tax, which may be incurred
thereby) take such action and give such information and assistance in
connection with the affairs of the Covenantor and/or the relevant
subsidiary as the Purchaser may reasonably and promptly by written
notice request to avoid, resist, appeal or compromise the Claim;
PROVIDED THAT the Covenantor shall not be obliged to appeal against
any Tax Assessment or to procure that any subsidiary appeals against
any Tax Assessment if, the Purchaser having been given written notice
of the receipt of that Tax Assessment in accordance with the preceding
provisions of this sub-clause, the Covenantor or the relevant
subsidiary has not within 21 days thereafter received instructions in
writing from the Purchaser, in accordance with the preceding
provisions of this sub-clause, to make that appeal.
(ii) The actions which the Purchaser may reasonably request under paragraph
(i) of this sub-clause shall include (without limitation) the
Covenantor and/or the relevant subsidiary applying to postpone (so far
as legally possible) the payment of any Tax and/or allowing the
Purchaser to take on or take over at its own expense the conduct of
all or any proceedings of whatsoever nature arising in connection with
the Claim in question, and, if the Purchaser takes on or takes over
the conduct of proceedings, the Covenantor shall provide and/or shall
procure that the relevant subsidiary shall provide such information
and assistance as the Purchaser may reasonably require in connection
with the preparation for and conduct of those proceedings.
(C) (i) Where the Purchaser becomes liable to make any payment under
sub-clause (A), the due date for the making of that payment shall be
the date that is the last date on which the Covenantor or, as the case
may be, the relevant subsidiary, would have had to have paid to the
appropriate Tax Authority the Tax that has given rise to the
Purchaser's liability under sub-clause (A) in order to avoid incurring
a liability to interest or a charge or penalty in respect of that
amount of Tax.
(ii) If any payment required to be made by the Purchaser under sub-clause
(A) is not made by the due date for the making thereof, then, except
to the extent that the Purchaser's liability under sub-clause (A)
compensates the Covenantor for the late payment by virtue of its
extending to interest and penalties, that payment shall carry interest
from that due date until the date when the payment is actually made at
the rate of 2 per cent. above the base rate from time to time of
National Westminster Bank plc.
(D) (i) All sums payable by the Purchaser to the Covenantor under this clause
shall be paid free and clear of all deductions or withholdings
whatsoever, save only as may be required by law.
<PAGE>
21
(ii) If any deductions or withholdings are required by law to be made from
any of the sums payable as mentioned in paragraph (i) of this
sub-clause, the Purchaser shall be obliged to pay to the Covenantor
such sum as will, after the deduction or withholding has been made,
leave the Covenantor with the same amount as it would have been
entitled to receive in the absence of any such requirement to make a
deduction or withholding.
(iii) If any sum payable by the Purchaser to the Covenantor under this
clause (other than interest under sub-clause (C)) shall be subject to
a liability to Tax in the hands of the Covenantor, the Purchaser shall
be under the same obligation to make an increased payment in relation
to that liability to Tax as if the liability were a deduction or
withholding required by law.
15. DEEMED END OF ACCOUNTING PERIOD
For the purposes of any part of this deed other than clause 10 (Tax Returns),
the accounting period of each Group Company which began on 1st April, 1997 shall
be deemed to have ended at Completion.
16. VAT
The Covenantor shall procure that an application is made to H.M. Customs &
Excise pursuant to section 43(5) VATA for the exclusion of each Group Company
from the VAT Group (if any) of which that Group Company is currently a member
and for that exclusion to take effect at the earliest date on or after
Completion as is permitted by law (the "Severance Date").
17. REMEDIES AND WAIVERS
(A) No delay or omission on the part of any party to this deed in exercising
any right, power or remedy provided by law or under this deed or any other
documents referred to in it shall:-
(i) impair such right, power or remedy; or
(ii) operate as a waiver thereof.
(B) The single or partial exercise of any right, power or remedy provided by
law or under this deed shall not preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(C) The rights, powers and remedies provided in this deed are cumulative and
not exclusive of any rights, powers and remedies provided by law.
<PAGE>
22
18. ASSIGNMENT
(A) This deed and the benefits and obligations under it and any part of it
shall not be assignable except that the Purchaser may, upon giving written
notice to the Covenantor, assign the benefit (but not the burden) of this
deed to a member of the Purchaser's Group provided that
(i) any such assignee remains a member of the Purchaser's Group; and
(ii) before such assignee ceases to be a member of the Purchaser's Group,
the Purchaser will procure that the benefit of this deed is assigned
to the Purchaser or (upon giving further written notice to the
Covenantor) to another company within the Purchaser's Group (any such
further assignment to be subject to the same conditions as above); and
(iii) if the liability of the Covenantor shall be increased by reason of
such assignment, the assignee shall be entitled to claim against the
Covenantor only such amount as would equal the liability of the
Covenantor had no assignment taken place.
(B) This deed and the benefits and obligations under it and any part of it
shall not be assignable by the Covenantor except that the Covenantor may,
upon giving written notice to the Purchaser, assign the benefit (but not
the burden) of this deed to a member of the Covenantor's Group provided
that
(i) any such assignee remains a member of the Covenantor's Group; and
(ii) before such assignee ceases to be a member of the Covenantor's Group,
the Covenantor will procure that the benefit of this deed is assigned
to the Covenantor or (upon giving further written notice to the
Purchaser) to another company within the Covenantor's Group (any such
further assignment to be subject to the same conditions as above); and
(iii) if the liability of the Purchaser shall be increased by reason of
such assignment the assignee shall be entitled to claim against the
Covenantor only such amount as would equal the liability of the
Covenantor had no assignment taken place.
(C) Clause 2 (Covenant) shall cease to have effect for all purposes in relation
to any Group Company upon that Group Company ceasing to be owned by a
member of the Purchaser's Group.
(D) For the purposes of this clause "Purchaser's Group" means the Purchaser and
all its subsidiaries or subsidiary undertakings from time to time.
<PAGE>
23
19. FURTHER ASSURANCE
Each of the parties shall from time to time, on being required to do so by any
other party to this deed now or at any time in the future, execute or procure
the execution of all such documents in a form satisfactory to the party
concerned and except as provided elsewhere in, and subject to the terms of the
Agreement, each of the parties shall at its own expense do or, so far as it is
able, procure to be done, all such acts as the parties may, in each such case,
reasonably consider necessary for giving full effect to this deed and securing
to them the full benefit of the rights, powers and remedies conferred upon them
in this deed.
20. NOTICES
(A) Any notice or other communication given or made under or in connection with
the matters contemplated by this deed shall, unless expressly stated
otherwise, be in writing, other than writing on the screen of a visual
display unit or other similar device which shall not be treated as writing
for the purposes of this clause.
(B) Any such notice or other communication shall be addressed as provided in
sub-clause (C) and sent by personal delivery or by first class post
PROVIDED THAT if, in accordance with the above provisions, any such notice
or other communication is given or made outside Working Hours, such notice
or other communication shall be deemed to be given or made at the start of
Working Hours on the next Business Day.
(C) The relevant addressee and address of each party for the purposes of this
deed, subject to sub-clause (D), are:-
Name of party Addressee Address
------------- --------- -------
The Covenantor Company Secretary 1 Stanhope Gate,
London W1A 1EH
but from 1st March 1998,
1 Bruton Street,
London W1X 7AJ
The Purchaser Company Secretary 350 Legget Drive,
Kanata, Ontario,
Canada K2K 1X3
(D) A party may notify the other party to this deed of a change to its name,
relevant addressee or address for the purposes of sub-clause (C) PROVIDED
THAT such notification shall only be effective on:-
(i) the date specified in the notification as the date on which the change
is to take place; or
<PAGE>
24
(ii) if no date is specified or the date specified is less than five clear
Business Days after the date on which notice is given, the date
falling five clear Business Days after notice of any such change has
been given.
21. COUNTERPARTS
(A) This deed may be executed in any number of counterparts, and by the parties
on separate counterparts, but shall not be effective until each party has
executed at least one counterpart.
(B) Each counterpart shall constitute an original of this deed, but all the
counterparts shall together constitute but one and the same instrument.
22. TIME OF ESSENCE
Save as otherwise expressly provided, time is of the essence of each provision
of this deed.
23. INVALIDITY
If at any time any provision of this deed is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall not
affect or impair:-
(A) the legality, validity or enforceability in that jurisdiction of any other
provision of this deed; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this deed.
24. GOVERNING LAW
This deed shall be governed by and construed in accordance with English law.
25. JURISDICTION
Each party to this deed irrevocably agrees that any Proceedings against it may
be brought in the courts of England. Nothing contained in this clause shall
limit either party's rights to take Proceedings against the other in any other
court of competent jurisdiction, nor shall the taking of Proceedings in one or
more jurisdictions preclude the taking of Proceedings in any other jurisdiction,
whether concurrently or not, to the extent permitted by the law of such other
jurisdiction.
IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.
<PAGE>
Signed as a deed by )
THE GENERAL ELECTRIC ) /s/ JOHN MAYO
COMPANY, p.l.c. acting by ) ......................................
) Director
)
and ) /s/ N. PORTER
......................................
Director/Secretary
Signed as a deed by )
MITEL TELECOM LIMITED ) /s/ P. BUTCHER
acting by ) ......................................
) Director
)
and ) /s/ A. JONES
......................................
Director/Secretary
DATED 12th February 1998
THE GENERAL ELECTRIC COMPANY, P.L.C.
and
MITEL TELECOM LIMITED
-----------------------------------
ENVIRONMENTAL DEED
-----------------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(EFK/PDAD)
<PAGE>
CONTENTS
PAGE
1. INTERPRETATION 1
2. COVENANT 5
3. LIMITATIONS ON LIABILITY AND PROCEDURAL MATTERS 5
4. RELATIONSHIP WITH THE SALE AND PURCHASE AGREEMENT 5
SCHEDULE 7
PART A : LIMITATIONS 7
1. PRESUMPTION 7
2. TIME LIMIT FOR BRINGING CLAIM 7
3. TRIGGER CONDITION FOR BRINGING A CLAIM 8
4. MATTERS ARISING AFTER COMPLETION 8
5. FUTURE LAWS 9
6. LOSSES AND COST OF WORKS 9
7. OTHER LIMITATIONS AND EXCLUSIONS 10
8. RELATIONSHIP WITH SCHEDULE 4 OF THE SALE AND PURCHASE AGREEMENT 10
PART B : PROCEDURE 12
1. INVESTIGATIVE WORKS AND NOTIFICATION TO THIRD PARTIES 12
2. NOTICE OF CLAIMS 13
3. CONDUCT OF ACTIONS 13
PART C : PROTECTED MATTERS 17
<PAGE>
THIS DEED is made 12th February 1998
BETWEEN:-
1. The GENERAL ELECTRIC COMPANY, P.L.C. of 1 Stanhope Gate, London, W1A 1EH
(registered in England No. 67307) (the "Seller");
AND
2. MITEL TELECOM LIMITED (registered in England and Wales No. 1309629), having
its registered office at Portskewett, Gwent NP6 4YR (the "Purchaser")
NOW THIS DEED witnesses as follows:-
1. Interpretation
1.1 In this deed:-
"Action" means any Environmental Proceedings,
Works or other site visits, meetings,
negotiations, discussions or
correspondence involving any Protected
Person and relating to or affecting any
Protected Matter which gives rise or may
give rise to a claim under this deed or
the Environmental Warranties;
"Anticipated Development" means construction of an extension to
the buildings on a Current Property
and/or the construction of new buildings
on a Current Property up to an aggregate
additional floor area no greater than
20% of the aggregate floor area of the
buildings on the Current Property as at
the Completion Date, where such
construction is a natural expansion of
the business carried on at the Current
Property as at the Completion Date;
"Carholme Road Property" means the building of approximately
40,000 square feet at a site at Carholme
Road, Lincoln occupied by Plessey more
fully described in paragraph 17.1 of the
Disclosure Letter;
"Completion Date" means the date hereof;
<PAGE>
2
"Current Properties" means those properties listed in Parts
I(1) and (2), II and III of Schedule 8
of the Sale and Purchase Agreement and
"Current Property" means any one of
them;
"Environmental Laws" means any and all applicable laws in any
relevant jurisdiction (including, for
the avoidance of doubt, common law)
(excluding (but without prejudice to the
provisions of paragraph 7 of Part A of
the Schedule) those laws relating
specifically to town planning matters
and to the health and safety of workers
in the work place) and European
Community or European Union regulations,
directives and decisions, statutes,
subordinate legislation (which for the
avoidance of doubt (notwithstanding
paragraph 5 of Part A of the Schedule)
shall include Part IIA of the
Environmental Protection Act 1990 and/or
Sections 161A - D of the Water Resources
Act 1991 (both as enacted by Section 57
and paragraph 162 of Schedule 22
respectively of the Environment Act
1995) and the first set of guidance
notes and regulations adopted under
those provisions (but not subsequent
modifications, amendments or
re-enactments of those provisions or
guidance notes or such regulations to
the extent that those modifications,
amendments or re-enactments would
otherwise increase the liability of GEC
under this deed) ("the New Contaminated
Land Power")) which were, are, or which
may become applicable to the conduct of
the business of any Group Company or the
use, occupation or ownership of the
Current Properties or the Former
Properties and which have as a purpose
or effect the protection of, and/or the
prevention of harm or damage to, the
Environment and/or the provision of
remedies in respect of harm or damage to
the Environment;
<PAGE>
3
"Environment" any and all organisms (including without
limitation man), ecosystems, property
and the following media: air, (including
without limitation, the air within
buildings and the air within other
natural or man-made structures whether
above or below ground); water (including
without limitation, water under or
within land or in drains or sewers and
coastal and inland waters); and land
(including without limitation, land
under water);
"Environmental Authority" means a governmental agency or other
regulatory body with jurisdiction in
relation to Protected Matters and acting
under and in accordance with
Environmental Laws;
"Environmental Losses" means Losses resulting directly from
Protected Matters;
"Environmental Proceedings" means any criminal, civil, judicial,
regulatory or administrative proceeding,
suit, action or claim in relation to
Protected Matters under Environmental
Laws;
"Environmental Warranties" means the warranties in paragraph 22 of
schedule 3 of the Sale and Purchase
Agreement;
"Former Properties" means any property (including, without
limitation, the Carholme Road Property
and the Oldham Properties) used, owned
or occupied at any time prior to
Completion by any Group Company other
than those properties listed in Parts
I(1) and (2), II and III of Schedule 8
of the Sale and Purchase Agreement
"Investigative Works" means inspections, investigations,
assessments, audits, sampling or
monitoring;
<PAGE>
4
"Losses" means all fines, penalties, damages
(including liabilities to pay damages in
respect of natural resource damage),
liability to pay the costs of persons
undertaking Environmental Proceedings
against any Protected Person and
reasonable costs and expenses
(including, without limitation, the
reasonable cost of professional advisers
and the cost of Works);
"New Contaminated Land Power" has the meaning given in the definition
of "Environmental Laws";
"Oldham Properties" means the property of Plessey being
factory and offices at Lansdowne Road,
Oldham, title to which is registered at
H.M. Land Registry under title number
GM175967 and the leasehold property used
by Plessey as a car park at Stockfield
Road, Oldham comprised in a lease dated
29th January, 1988 between (1) The North
Western Electricity Board and (2)
Ferranti PLC;
"Protected Matters" means the matters referred to in Part C
of the Schedule;
"Protected Person" means the Purchaser and each and any
member of the Purchaser's Group and the
directors and employees of the
Purchaser's Group from time to time;
"Required Works" has the meaning given in paragraph 6(B)
of Part A of the Schedule;
"Sale and Purchase Agreement" means an agreement dated the date hereof
and made between the Seller (1) and the
Purchaser (2) as amended, supplemented
or novated from time to time;
"Third Party Claims" means a claim which satisfies the
Trigger Condition and is made by some
person other than an Environmental
Authority;
"Trigger Condition" has the meaning given in paragraph 3 of
Part A of the Schedule;
<PAGE>
5
"Works" means:-
(i) Investigative Works; and
(ii) any works (including the
installation, operation, repair or
replacement of plant or equipment)
in order to remove, remediate or
contain any Protected Matter or to
prevent a Protected Matter from
arising.
1.2 Words and expressions which are defined in the Sale and Purchase Agreement
shall have the same meaning when used in this deed.
2. Covenant
The Seller covenants with the Purchaser to pay to the Purchaser an amount
equal to
(i) all Environmental Losses of any Protected Person except in
relation to claims arising out of Anticipated Development or
Third Party Claims; and
(ii) fifty per cent. (50%) of all Environmental Losses of any
Protected Person in relation to claims arising out of Anticipated
Development or Third Party Claims,
subject to clause 3 below.
3. Limitations on liability and procedural matters
The exclusions, limitations and other provisions set out in the Schedule
shall apply (to the extent applicable) to any claim made by the Purchaser
under this deed or the Environmental Warranties in relation to a Protected
Matter.
4. Relationship with the Sale and Purchase Agreement
4.1 Clause 1 (Interpretation), clauses 5.1(B) and 5.3(B) (GEC's Warranties and
Undertakings), clauses 8.1 and 8.2 (in relation to the Current Properties
only (and not in relation to the Former Properties)) (Purchaser's Remedies
and GEC's Limitations on Liability), clause 11 (Remedies and Waivers),
clause 12 (Assignment), clause 13 (Further Assurance), clause 14 (Entire
Agreement), clause 15 (Notices), clause 18 (Costs and Expenses), clause 19
(Counterparts), clause 21 (Effect of Completion), clause 22 (Invalidity),
clause 23 (Governing Law) and clause 24 (Jurisdiction) shall apply to this
deed mutatis mutandis.
<PAGE>
6
4.2 In the event of any inconsistency between this deed and the Sale and
Purchase Agreement, this deed shall prevail.
IN WITNESS whereof this document has been executed as a deed the day and year
first before written.
<PAGE>
7
SCHEDULE
PART A : LIMITATIONS
1. Presumption
The Seller and the Purchaser acknowledge that, in order to establish
whether pollution or contamination in relation to the Current Properties
gives rise to a claim under this deed or the Environmental Warranties, it
will be necessary to establish whether such pollution or contamination was
first caused or first arose before or after the Completion Date. The Seller
and Purchaser therefore agree that:-
(i) if the relevant pollution or contamination is discovered by the
Purchaser and is notified to the Seller before the second
anniversary of the Completion Date, such pollution or
contamination shall be presumed to have been first caused or to
have first arisen on or before the Completion Date; and
(ii) if the relevant pollution or contamination is discovered by the
Purchaser and is notified to the Seller on or after the second
anniversary of the Completion Date, such pollution or
contamination shall be presumed to have been first caused or to
have first arisen after the Completion Date,
provided that the Seller and the Purchaser shall each be entitled to
provide factual and expert evidence rebutting such presumptions.
2. Time limit for bringing claim
The Purchaser shall not be entitled to claim under this deed or under the
Environmental Warranties in respect of a Protected Matter unless a Trigger
Condition has been satisfied in respect of such Protected Matter and, in
relation to a claim under this deed, the Purchaser has given notice to the
Seller of the claim as required under paragraph 2 of Part B below before
the seventh anniversary of Completion, provided that the liability of the
Seller in respect of such claim under this deed shall absolutely determine
(if such claim has not been satisfied, settled, or withdrawn) if legal
proceedings in respect of such claim shall not have been commenced by the
Purchaser against the Seller within 12 months of the service of notice by
the Seller requiring commencement of proceedings (a "Claim Commencement
Notice") and for this purpose proceedings shall not be deemed to have been
commenced unless they shall have been properly issued and validly served
upon the Seller, further provided that the Seller shall not be entitled to
serve a Claim Commencement Notice unless and until the date when the
relevant facts in relation to such claim have been determined or can
reasonably be predicted or estimated on the basis of such Actions as may
have occurred or been carried out in accordance with Part B below.
<PAGE>
8
3. Trigger Condition for bringing a claim
The Purchaser shall not be entitled to claim under this deed or under the
Environmental Warranties in relation to a Protected Matter unless
Environmental Proceedings by an Environmental Authority or some other
person who is not a Protected Person have occurred or been commenced or
expressly threatened in writing against a Protected Person in relation to
such Protected Matter (the "Trigger Condition"), provided that the Trigger
Condition is not satisfied where the relevant Environmental Authority
conducts Investigative Works in relation to the relevant Current Property
or Former Property, but does not take any further action involving the
relevant Protected Person as a result of those Investigative Works.
4. Matters arising after Completion
(A) The Purchaser shall not be entitled to claim under this deed or under
the Environmental Warranties in relation to a Protected Matter to the
extent that the claim would not have arisen but for, results from or
is increased by:-
(i) subject to paragraph 1 of this Schedule, any pollution or
contamination first existing or arising after Completion;
(ii) any act or omission by any Protected Person (except the Group,
its directors or employees) before Completion or by any Protected
Person after Completion which is unreasonable, reckless,
negligent or not in the normal course of the Business as at
Completion;
(iii) any change of use of, or the development, demolition, closure or
sale of or grant of any right or interest in relation to all or
any part of any Current Property after Completion except for
Anticipated Development;
(iv) the renewal or early termination of any lease or other agreement
or arrangement under which any Protected Person occupies or uses
any Current Property other than any such which was in the
contemplation of the Group at the Completion Date.
(B) The Purchaser shall only have an obligation to procure that each
Protected Person shall so far as reasonable take Action to avoid,
reduce and mitigate any claim under this deed or under the
Environmental Warranties in relation to a Protected Matter to the
extent that following notification of the Seller in accordance with
paragraph 2 of Part B of the Schedule the Seller has indicated in
writing to the Purchaser such Action as it may reasonably require and
for the avoidance of doubt, any Losses
<PAGE>
9
of any Relevant Person incurred in any such Action shall be
recoverable under this deed.
(C) The Purchaser shall not be entitled to claim under this deed or under
the Environmental Warranties in relation to a Protected Matter to the
extent that the claim would not have arisen but for, results from or
is increased by any failure by the Purchaser or any Protected Person
to comply with this deed.
5. Future laws
The Purchaser shall only be entitled to claim under this deed or under the
Environmental Warranties in relation to a Protected Matter to the extent
that the claim results from Environmental Laws which are in force and
directly binding on the relevant Protected Person at or prior to the date
of this deed and/or the New Contaminated Land Power. The Purchaser shall
not be entitled to be paid under this deed or under the Environmental
Warranties in relation to a Protected Matter to the extent that the claim
would not have arisen but for, results from or is increased by laws which
come into force after the date of this deed or changes in policy, guidance
or practice by the relevant Environmental Authority after the date of this
deed, except for (i) the coming into force of the New Contaminated Land
Power and/or (ii) the coming into force of any future requirement of law
under which any Protected Person becomes obliged to carry out Investigative
Works or make any disclosure in relation to any Protected Matter (in which
case this exception (ii) applies only to such obligation).
6. Losses and cost of Works
The Purchaser shall not be entitled to claim under this deed or under the
Environmental Warranties in relation to a Protected Matter in respect of:-
(A) loss of profits, loss of sales, loss of production, business
interruption, reduction in value of any asset or shares or any other
indirect or consequential loss or damage arising out of a Protected
Matter; or
(B) the cost of carrying out Works, except for the reasonable cost of the
Works ("Required Works") which are the minimum necessary to comply
with the final and lawful decision or settlement of Environmental
Proceedings, provided that the cost of carrying out Works shall where
practicable be those agreed in advance between the Seller and the
Purchaser acting in good faith and where the Works are approved in
advance by the Seller then the Works shall be Required Works and
further provided that the cost of the Works shall be reasonable (and
the Works shall be Required Works) where the Works achieve settlement
of the Environmental Proceedings at a cost which equitably balances
the Seller's concern to minimise its liability under this deed and the
<PAGE>
10
Purchaser's concern to minimise business interruption and any adverse
effect upon any Protected Person. Unless it is manifestly unreasonable
to do so, the cost of the Required Works shall be determined on the
basis of the least expensive of binding quotes obtained from three
reputable and independent contractors and such cost shall not be
payable by the Seller in relation to any particular Required Works
until such Required Works have been carried out.
7. Other limitations and exclusions
(A) The Purchaser shall not be entitled to claim under this deed or under
the Environmental Warranties in relation to a Protected Matter to the
extent that the relevant claim results from or is increased by matters
which relate to worker or occupational health and safety or town and
country planning (except in relation to Anticipated Development)
provided that where any requirement arises or may be imposed in
relation to a Protected Matter under any provision of law relating to
(i) worker or occupational health; or (ii) town and country planning
in relation to Anticipated Development then this deed shall apply to
it to the extent that that requirement could lawfully have been
imposed under Environmental Laws and any Actions in relation thereto
shall be covered by this deed and for the avoidance of doubt any cost
attributable to the proper protection of workers during the carrying
out any Works shall be covered by this deed.
(B) Where a claim arises out of Anticipated Development, the Losses which
can be claimed under this deed or the Environmental Warranties shall
not include any costs of the construction and related work which would
have been incurred irrespective of the existence of the relevant
Protected Matter.
8. Relationship with Schedule 4 of the Sale and Purchase Agreement
(A) Paragraphs 1, 2.1, 3.1 (other than paragraph 3.1(A)(ii)), 3.4, 3.6,
3.9 (but only in so far as it relates to the Current Properties (and
not in relation to the Former Properties)), 3.10 and 3.12 of Schedule
4 to the Sale and Purchase Agreement (Limitations on GEC's Liability
under the Warranties) shall apply to claims under this deed.
Paragraphs 2.2, 3.1(A)(ii), 3.2, 3.3, 3.5, 3.7, 3.8 and 3.11 of
Schedule 4 to the Sale and Purchase Agreement (Limitations on GEC's
Liability under the Warranties) shall not apply to claims under this
deed.
(B) All of the paragraphs of Schedule 4 to the Sale and Purchase Agreement
(Limitations on GEC's liability under the Warranties) shall apply to
claims under the Environmental Warranties in relation to Protected
Matters, except for paragraph 3.3.
<PAGE>
11
(C) This deed and the Environmental Warranties contain the Purchaser's
only rights to claim against the Seller in respect of Protected
Matters. The Purchaser shall not be entitled to claim against the
Seller under any of the Warranties (except for the Environmental
Warranties) or any other provisions of the Sale and Purchase Agreement
in respect of Protected Matters.
(D) The Purchaser (on behalf of itself and each Protected Person)
irrevocably releases and discharges the Seller and each member of the
Seller's Group from any claims or causes of action, known or unknown,
whether based on statute or other law in relation to Protected Matters
except for claims under this deed or the Environmental Warranties.
<PAGE>
12
PART B : PROCEDURE
1. Investigative Works and notification to third parties
Until the seventh anniversary of the Completion Date and unless and/or
until a Trigger Condition is satisfied in relation to a Protected Matter,
the Purchaser shall not and shall procure that no Protected Person shall
and shall use reasonable endeavours to procure that none of their
respective partners, agents, contractors, sub-contractors or consultants
shall:-
(A) carry out Investigative Works in relation to such Protected Matter
without the prior written consent of the Seller; or
(B) disclose information to any Environmental Authority or any other
person in relation to such Protected Matter without the prior written
consent of the Seller,
provided that the Seller's remedy in relation to any such Investigative
Works or disclosure in breach of sub-paragraphs (A) and (B) above shall be
that the Purchaser shall not be entitled to claim under this deed or the
Environmental Warranties in relation to that Protected Matter to the extent
that the relevant claim would not have arisen but for, results from or is
increased by any such unauthorised Investigative Works or disclosure,
provided that sub-paragraphs 1(A) and 1(B) above do not apply to the extent
that (prior to any such Investigative Works or disclosure):-
(i) there is specific and objective factual evidence that a Protected
Matter exists at the relevant Current Property which gives rise
to an immediate and substantial risk to the Environment; and/or
(ii) the relevant Investigative Works or disclosure are expressly and
specifically required by Environmental Law (whether as it is now
or in the future); and/or
(iii) the Investigative Works and/or disclosure are a necessary part
of any application by any Protected Person for the obtaining of
any Permit for the continued conduct of the Business as at the
Completion Date; and/or
(iv) the Investigative Works and/or disclosure are a necessary part of
any application by any Protected Person for town and country
planning permission for Anticipated Development; and/or
(v) the Investigative Works and/or disclosure are required by
contractual obligations which are in force and binding on any
Protected Person at the Completion Date; and/or
<PAGE>
13
(vi) the Investigative Works and/or disclosure are required by any
securities exchange or regulatory or governmental body to which
any Protected Person is subject wherever situated, including
(without limitation) the London Stock Exchange or the Panel on
Takeovers and Mergers, whether or not the requirement for
information has the force of law.
The provisos (i)-(vi) to this paragraph 1 are conditional on (save in
the case of an emergency) reasonable notice to the Seller and
reasonable consultation with the Seller before the relevant
Investigative Works are commenced or disclosure is made. For the
avoidance of doubt, compliance with this paragraph 1 shall not be
deemed to be an act or omission within paragraph 4(A)(ii) of Part A.
2. Notice of claims
The Purchaser shall provide prompt written notice to the Seller of any
Protected Matter of which the Purchaser or any other Protected Person
becomes aware which gives rise to or which may give rise to a claim under
this deed or the Environmental Warranties and shall notify the Seller
immediately upon a Trigger Condition being satisfied in relation to any
such Protected Matter.
3. Conduct of Actions
(A) The Seller shall have the right at any time to assume conduct of all
or any part of any Action relating to or affecting any Protected
Matter which gives rise to or may give rise to a claim under this deed
or the Environmental Warranties. The Purchaser shall have conduct to
the extent that the Seller does not assume conduct which for the
avoidance of doubt shall be taken to be the case if the Seller shall
not have within a reasonable time after the notification of a claim
notified the Purchaser in writing of it having assumed conduct (and
for the avoidance of doubt in any case, regardless of the
circumstances, a reasonable time shall not exceed the period of three
months, but may in appropriate circumstances be a shorter period).
(B) The Seller and the Purchaser shall promptly provide such reports,
documents, correspondence, information, assistance and facilities
relating to the relevant Protected Matter or Action as the other may
reasonably require such party to provide (including, if required by
the Seller, access to any Current Property or, so far as reasonably
practicable, adjacent or affected Current Property or any Former
Property).
(C) The person having conduct of any Action as provided for in
sub-paragraph 3(A) above (the "Conduct Party") shall ensure that:-
<PAGE>
14
(i) the other party shall be allowed a reasonable opportunity to
review and approve any reports, documents, correspondence or
information to be prepared and provided to the other persons or
bodies administering or involved in such Action and no such
reports, documents, correspondence or information shall be
provided or disclosed (whether orally or in writing) to any third
party unless required by law (whether as it is now or in the
future) without the prior written approval of the other party,
such approval not to be unreasonably withheld or delayed;
(ii) the other party shall be provided with advance notice of and be
allowed to attend and participate in any site visit, meeting,
negotiation or discussion involving the Conduct Party (or any
other Protected Person) and any other person or body relating to
or affecting such Action and shall be provided promptly with full
and accurate notes of such visit, meetings, negotiations or
discussions which the other party does not attend and participate
in;
(iii) copies of all correspondence and documents passing between the
persons or bodies administering or involved in such Action or in
the possession of the Conduct Party (or any Protected Person)
which relate to or affect such Action or the relevant Protected
Matter shall be provided promptly to the other party;
(iv) the other party shall be informed promptly of any material
information which comes to the knowledge of the Conduct Party (or
any Protected Person) and relates to or affects the relevant
Protected Matter or Action;
(v) detailed reports shall be provided to the other party regarding
the status and progress of such Action as frequently and in such
form and detail as the other party shall reasonably require;
(vi) all persons and bodies administering or involved in such Action
shall attend and participate as the other party shall reasonably
require, if the other party reasonably requests a site visit or
other meeting on reasonable notice;
(vii) no settlement or admission (including any failure to appeal or
decision not to do so) shall be agreed, made or offered in any
Action without the prior consent in writing of the other party,
provided that such consent is not to be unreasonably withheld or
delayed;
<PAGE>
15
(viii) the other party shall be provided with advance notice of any
proposal by the Conduct Party (or any other Protected Person) or
any third party to carry out any Works in relation to the Current
Property which may reasonably be expected to affect the Protected
Matter;
(ix) the Conduct Party shall not (and no other Protected Person shall)
carry out any Works which may reasonably be expected to affect
the Protected Matter except for (a) Required Works and (b) any
other Works to which the other party consents in writing, such
consent not to be unreasonably withheld or delayed and such
consent to be without prejudice to the exclusion in sub-paragraph
6(B) of Part A of any liability for the cost of Works which are
not Required Works;
(x) Works carried out by or on behalf of the Conduct Party or any
Protected Person in relation to the Current Property shall be
carried out using all reasonable skill and care and shall comply
with the decision, settlement or requirement referred to in
sub-paragraph 6(B) of Part A;
(xi) the other party shall be allowed to attend and inspect the
carrying out of Works in relation to the Current Property at any
time whilst they are being carried out;
(xii) any reasonable request of the other party in relation to any
Action shall be complied with provided that, where the Seller is
the Conduct Party and the request is made by the Purchaser as the
other party, it does not increase the Seller's liability under
this deed or the Environmental Warranties or any liability of any
Protected Person whether or not it is covered by this deed or the
Environmental Warranties;
(xiii) allow the other party a reasonable opportunity to review and
comment in advance upon written pleadings or other formal
documents to be prepared and provided to a relevant court or
other decision making body which administers the Environmental
Proceedings; and
(xiv) where Seller is the Conduct Party all reasonable efforts shall
be made to avoid any adverse effect on the carrying on of the
business of the Protected Person (including any adverse effect
upon any Protected Person's relationship or dealings with any
Environmental Authority) and (without limitation) in formulating
and carrying out any Action Seller shall take all
<PAGE>
16
reasonable steps to minimise the extent and duration of any
disruption to the Protected Person's business by any Action.
(D) Each party shall comply with reasonable requests of the other for
arrangements or procedures to maintain confidentiality or privilege in
relation to the obligations of each party under sub-paragraphs 3(B)
and 3(C).
<PAGE>
17
PART C : PROTECTED MATTERS
1. Subject to Part A, paragraph 1 of this Schedule pollution or contamination
of soil, sub-strata, surface water, sub-surface water or groundwater at or
from any of the Current Properties which was first caused or first arose
prior to the Completion Date and, for the avoidance of doubt, excluding the
existence or condition of any underground storage tanks, pipes or other
building, plant, machinery or structure above or below ground except to the
extent that they have given rise prior to the Completion Date to such
pollution or contamination.
2. Pollution or contamination of the Environment which was first caused or
first arose prior to the Completion Date at or from any Former Property.
3. Any liability relating to or arising from any other breach of Environmental
Law or Permit by any member of the Group prior to the Completion Date at
any Former Property.
SIGNED as a deed by )
The General Electric )
Company, p.l.c. acting )
by: )
/s/ JOHN MAYO
.........................................
Director
/s/ N. PORTER
.........................................
Director/Secretary
SIGNED as a deed by )
Mitel Telecom Limited )
acting by: )
/s/ P. BUTCHER
.........................................
Director
/s/ A. JONES
.........................................
Director/Secretary
EXECUTION
================================================================================
CREDIT AGREEMENT
DATED AS OF FEBRUARY 12, 1998
AMONG
MITEL CORPORATION,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Advisor, Arranger and Syndication Agent,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
================================================================================
<PAGE>
MITEL CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
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SECTION 1.
DEFINITIONS...................................................... 2
1.1 Certain Defined Terms...................................................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement............................................................................ 39
1.3 Other Definitional Provisions and Rules of Construction.................................... 39
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................................... 40
2.1 Commitments; Making of Loans; the Register; Optional Notes................................. 40
2.2 Interest on the Loans...................................................................... 48
2.3 Fees....................................................................................... 53
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments; Application
of Proceeds of Collateral and Payments Under Guaranties.................................... 53
2.5 Use of Proceeds............................................................................ 66
2.6 Special Provisions Governing Eurodollar Rate Loans......................................... 67
2.7 Increased Costs; Taxes; Capital Adequacy................................................... 70
2.8 Obligation of Lenders and Issuing Lenders to Mitigate...................................... 72
2.9 Defaulting Lenders......................................................................... 73
2.10 Removal or Replacement of a Lender......................................................... 75
2.11 Certain Provisions Regarding Determination of Dollar Equivalent............................ 76
SECTION 3.
LETTERS OF CREDIT................................................... 77
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.................................................................................... 77
3.2 Letter of Credit Fees...................................................................... 80
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit..................................................................................... 81
3.4 Obligations Absolute....................................................................... 85
3.5 Indemnification; Nature of Issuing Lenders' Duties......................................... 86
3.6 Increased Costs and Taxes Relating to Letters of Credit.................................... 87
3.7 Existing Letters of Credit................................................................. 88
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT....................................... 88
4.1 Conditions to Term Loans and Initial Revolving Loans and Swing
Line Loans................................................................................. 88
4.2 Conditions to All Loans....................................................................100
4.3 Conditions to Letters of Credit............................................................101
</TABLE>
(i)
<PAGE>
<TABLE>
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SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES.................................102
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries...............................................................................102
5.2 Authorization of Borrowing, etc............................................................103
5.3 Financial Condition........................................................................104
5.4 No Material Adverse Change; No Restricted Junior Payments..................................105
5.5 Title to Properties; Liens; Real Property..................................................105
5.6 Litigation; Adverse Facts..................................................................106
5.7 Payment of Taxes...........................................................................106
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts.........................................................................107
5.9 Governmental Regulation....................................................................107
5.10 Securities Activities......................................................................107
5.11 Employee Benefit Plans.....................................................................108
5.12 Certain Fees...............................................................................109
5.13 Environmental Protection...................................................................109
5.14 Employee Matters...........................................................................110
5.15 Solvency...................................................................................110
5.16 Matters Relating to Collateral.............................................................110
5.17 Related Agreements.........................................................................112
5.18 Employment and Labor Agreements............................................................113
5.19 Disclosure.................................................................................113
5.20 Subsidiary Guarantors......................................................................113
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS.....................................114
6.1 Financial Statements and Other Reports.....................................................114
6.2 Corporate Existence, etc...................................................................121
6.3 Payment of Taxes and Claims; Tax Consolidation.............................................121
6.4 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds............................................................122
6.5 Inspection Rights; Lender Meeting..........................................................124
6.6 Compliance with Laws, etc..................................................................125
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws..................................125
6.8 Execution of Guaranties and Personal Property Collateral Documents
by Certain Subsidiaries and Future Subsidiaries............................................128
6.9 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral........................................................................129
6.10 Certain Post-Closing Matters...............................................................133
6.11 Interest Rate Protection...................................................................134
SECTION 7.
COMPANY'S NEGATIVE COVENANTS.......................................134
7.1 Indebtedness...............................................................................134
7.2 Liens and Related Matters..................................................................135
7.3 Investments; Joint Ventures................................................................137
7.4 Contingent Obligations.....................................................................137
</TABLE>
(ii)
<PAGE>
<TABLE>
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7.5 Restricted Junior Payments.................................................................139
7.6 Financial Covenants........................................................................139
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions...........................143
7.8 Consolidated Capital Expenditures..........................................................145
7.9 Restriction on Operating Leases............................................................146
7.10 Sales and Lease-Backs......................................................................146
7.11 Sale or Discount of Receivables............................................................146
7.12 Transactions with Shareholders and Affiliates..............................................147
7.13 Disposal of Subsidiary Stock...............................................................147
7.14 Conduct of Business........................................................................147
7.15 Amendments or Waivers of Related Agreements; Amendments of
Documents Relating to Subordinated Indebtedness............................................147
7.16 Fiscal Year................................................................................148
SECTION 8.
EVENTS OF DEFAULT.............................................148
8.1 Failure to Make Payments When Due..........................................................148
8.2 Default in Other Agreements................................................................148
8.3 Breach of Certain Covenants................................................................149
8.4 Breach of Warranty.........................................................................149
8.5 Other Defaults Under Loan Documents........................................................149
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.......................................149
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........................................150
8.8 Judgments and Attachments..................................................................150
8.9 Dissolution................................................................................151
8.10 Employee Benefit Plans.....................................................................151
8.11 Material Adverse Effect....................................................................151
8.12 Change in Control..........................................................................151
8.13 Invalidity of Guaranties; Failure of Security; Repudiation of
Obligations................................................................................152
8.14 Failure to Consummate Acquisition..........................................................152
SECTION 9.
AGENTS..................................................154
9.1 Appointment................................................................................154
9.2 Powers and Duties; General Immunity........................................................156
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness...........................................................................157
9.4 Right to Indemnity.........................................................................158
9.5 Successor Agent............................................................................158
9.6 Collateral Documents and Guaranties........................................................159
SECTION 10.
MISCELLANEOUS..............................................160
10.1 Assignments and Participations in Loans and Letters of Credit..............................160
10.2 Expenses...................................................................................164
10.3 Indemnity..................................................................................165
10.4 Set-Off; Security Interest in Deposit Accounts.............................................166
10.5 Ratable Sharing............................................................................166
</TABLE>
(iii)
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10.6 Amendments and Waivers.....................................................................167
10.7 Independence of Covenants..................................................................168
10.8 Notices....................................................................................168
10.9 Survival of Representations, Warranties and Agreements.....................................169
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......................................169
10.11 Marshalling; Payments Set Aside............................................................169
10.12 Severability...............................................................................170
10.13 Obligations Several; Independent Nature of Lenders' Rights.................................170
10.14 Headings...................................................................................170
10.15 Applicable Law.............................................................................170
10.16 Successors and Assigns.....................................................................171
10.17 Consent to Jurisdiction and Service of Process.............................................171
10.18 Waiver of Jury Trial.......................................................................172
10.19 Confidentiality............................................................................172
10.20 Judgment Currency..........................................................................173
10.21 Counterparts; Effectiveness................................................................173
10.22 Supremacy of Credit Agreement..............................................................174
Signature pages ....................................................................... S-1
</TABLE>
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV FORM OF TRANCHE A TERM NOTE
V FORM OF AXEL SERIES B NOTE
VI-A FORM OF REVOLVING NOTE
VI-B FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII-A FORM OF OPINION OF RUBIN BAUM LEVIN CONSTANT &
FRIEDMAN
VIII-B FORM OF OPINION OF MCCARTHY TETRAULT
VIII-C FORM OF OPINION OF MORGAN BRUCE
VIII-D FORM OF OPINION OF LAGERLOF & LEMAN
VIII-E FORM OF OPINION OF LANG MICHENER
VIII-F FORM OF OPINION OF NIGEL BENNET
VIII-G FORM OF OPINION OF DONALD G. MCINTYRE
VIII-H FORM OF OPINION OF EDWARD J. SILBERHORN
IX FORM OF OPINION OF O'MELVENY & MYERS LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF AUDITOR'S LETTER
XII FORM OF FINANCIAL CONDITION CERTIFICATE
XIII FORM OF COMPANY SECURITY AGREEMENT (CANADA)
XIV FORM OF DEMAND DEBENTURE (CANADA)
XV FORM OF DEBENTURE PLEDGE AGREEMENT (CANADA)
XVI FORM OF DEED OF HYPOTHEC (QUEBEC)
XVII FORM OF COMPANY MASTER PLEDGE AGREEMENT
XVIII FORM OF COMPANY PATENT AND TRADEMARK SECURITY
AGREEMENT (U.S.)
XIX FORM OF SUBSIDIARY GUARANTY
XX FORM OF SUBSIDIARY PLEDGE AGREEMENT (U.S.)
XXI FORM OF SUBSIDIARY SECURITY AGREEMENT (U.S.)
XXII FORM OF SUBSIDIARY PATENT AND TRADEMARK SECURITY
AGREEMENT (U.S.)
XXIII FORM OF MORTGAGE (U.S.)
XXIV FORM OF GUARANTEE AND DEBENTURE (U.K.)
XXV FORM OF COMPANY PLEDGE AGREEMENT (U.K.)
XXVI FORM OF COMPANY PLEDGE AGREEMENT (SWEDEN)
XXVII FORM OF SUBSIDIARY SECURITY AGREEMENT (SWEDEN)
XXVIII FORM OF COMPANY SECURITY AGREEMENT (U.S.)
XXIX FORM OF COPYRIGHT SECURITY AGREEMENT (U.S.)
(v)
<PAGE>
SCHEDULES
1.1A EXISTING LETTERS OF CREDIT
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP;
MANAGEMENT
4.1H CLOSING DATE MORTGAGED PROPERTIES
4.1K CLOSING DATE ENVIRONMENTAL REPORTS
4.1L PLESSEY ENTITIES FINANCIAL STATEMENTS
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.16 INTELLECTUAL PROPERTY AND OTHER COLLATERAL MATTERS
5.18 EMPLOYMENT AGREEMENTS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
(vi)
<PAGE>
MITEL CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of February 12, 1998 and entered into by
and among MITEL CORPORATION, a corporation organized under the laws of Canada
("Company"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as advisor, arranger
and syndication agent (in such capacity, "Syndication Agent"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), and CANADIAN IMPERIAL BANK
OF COMMERCE ("CIBC"), as agent for Lenders (in such capacity, "Administrative
Agent").
R E C I T A L S
WHEREAS, on or before the Closing Date (this and other capitalized terms
used in these recitals without definition being used as defined in subsection
1.1) Company and/or certain of its Subsidiaries will purchase all of the
outstanding capital stock of the Plessey Entities pursuant to the Acquisition
Agreement;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, the proceeds of which will be used (i) to fund the Acquisition
Financing Requirements, and (ii) to provide financing for working capital and
other general corporate purposes of Company and its Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations hereunder and
under the other Loan Documents by granting to Administrative Agent, on behalf of
Lenders, a first priority Lien on substantially all of its personal property and
certain of its real property, including a pledge of all of the capital stock of
each of its Subsidiaries; and
WHEREAS, Company and certain of its Subsidiaries have agreed to guarantee
the Obligations hereunder and under the other Loan Documents and to secure their
guaranties by granting to Administrative Agent, on behalf of Lenders, a first
priority Lien on substantially all of their respective personal property and
certain of their respective real property, including a pledge of all of the
capital stock of certain of their respective Subsidiaries:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
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SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means the transactions contemplated by the Acquisition
Agreement.
"Acquisition Agreement" means collectively, (i) that certain Share Sale and
Purchase Agreement dated February 12, 1998 by and among Seller, Mitel Telecom
and Company, as guarantor, and the Oldham Agreements (as defined therein), (ii)
that certain Disclosure Letter dated February 12, 1998 by Seller to Mitel
Telecom, and (iii) that certain Tax Covenant (as defined in the Share Sale and
Purchase Agreement set forth in clause (i) above) and (iv) that certain
Environmental Deed dated February 12, 1998 between Seller and Mitel Telecom, in
each case in the form delivered to Administrative Agent, Syndication Agent and
Lenders prior to their execution of this Agreement and as such agreements may be
amended from time to time thereafter to the extent permitted under subsection
7.15A.
"Acquisition Financing Requirements" means the aggregate of all amounts
necessary (i) to finance the purchase price payable in connection with the
Acquisition, (ii) to refinance certain Indebtedness outstanding under the
Existing Credit Agreements, and (iii) to pay Transaction Costs.
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date
with respect to an Interest Period for a Eurodollar Rate Loan, the interest rate
per annum (rounded upward, if necessary, to the nearest 1/16 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such Interest Period which appears on the Telerate
Page 3750 as of 11:00 a.m. (New York time) two Business Days before the first
day of such Interest Period; provided, however, that if the rate described above
does not appear on the Telerate System on any applicable Interest Rate
Determination Date, the Adjusted Eurodollar Rate shall be the rate (rounded
upward as described above, if necessary for deposits in U.S. dollars for a
period substantially equal to the interest period on the Reuters Page "LIBO" or
such other page as may replace the LIBO page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London time) two Business Days before
the first day of such Interest Period.
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such Interest Period which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. (New York time) two Business Days before the first day of such
Interest Period as selected by the Administrative Agent. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for the date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00
a.m. (New York time) two Business Days before the first day of such
2
<PAGE>
Interest Period. In the event that Administrative Agent is unable to obtain any
such quotation as provided above, it will be deemed that the Adjusted Eurodollar
Rate for such Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Eurodollar Rate Reserve Percentage with respect to Eurocurrency
Liabilities, the Adjusted Eurodollar Rate for an Interest Period shall be equal
to the amount determined above for such Interest Period divided by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest
Period.
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"Affected Lender" has the meaning assigned to that term in subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" means, individually, each of Syndication Agent and Administrative
Agent, and "Agents" means Syndication Agent and Administrative Agent,
collectively.
"Agreement" means this Credit Agreement dated as of February 12, 1998, as
it may be amended, supplemented or otherwise modified from time to time.
"Applicable Leverage Ratio" means, with respect to any date of
determination, the Consolidated Leverage Ratio set forth in the Pricing
Certificate (as defined below) in effect for the Pricing Period (as defined
below) in which such date of determination occurs. For purposes of this
definition, (i) "Pricing Certificate" means an Officer's Certificate of Company
certifying as to the Consolidated Leverage Ratio as of the last day of any
Fiscal Quarter and setting forth the calculation of such Consolidated Leverage
Ratio in reasonable detail, which Officer's Certificate may be delivered to
Administrative Agent at any time on or after the date of delivery by Company of
the Compliance Certificate (the "Related Compliance Certificate") with respect
to the period ending on the last day of such Fiscal Quarter pursuant to
subsection 6.1(iv), and (ii) "Pricing Period" means each period commencing on
the first Business Day after the delivery to Administrative Agent of a Pricing
Certificate and ending on the first Business Day after the next Pricing
Certificate is delivered to Administrative Agent; provided that, anything
contained in this definition to the contrary notwithstanding, (a) the first
Pricing Period for purposes of calculating the Applicable Leverage Ratio shall
commence no earlier than the date which is six months after the Closing Date,
and the Pricing Certificate in respect of such first Pricing Period may be
delivered at any time on or after such six-month anniversary date and shall
relate to the most recent financial statements delivered by Company to
Administrative Agent prior to such date pursuant to subsection 6.1(ii) or
6.1(iii), (b) the Applicable Leverage Ratio for the period from the Closing Date
to but excluding the date of commencement of such first Pricing Period shall be
deemed to be 1.50:1.00 for purposes of making the relevant calculation referred
to
3
<PAGE>
above, and (c) in the event that, after the commencement of such first Pricing
Period, (X) Company fails to deliver a Pricing Certificate to Administrative
Agent setting forth the Consolidated Leverage Ratio as of the last day of any
Fiscal Quarter on or before the last day on which Company is required to deliver
the Related Compliance Certificate (such last day being the "Cutoff Date") and
(Y) Administrative Agent determines (each such determination being an "Agent
Determination") on or after the Cutoff Date (on the basis of the Related
Compliance Certificate or a Pricing Certificate delivered after the Cutoff Date)
that the Applicable Leverage Ratio that would have been in effect if Company had
delivered a Pricing Certificate on the Cutoff Date is greater than the
Consolidated Leverage Ratio set forth in the most recent Pricing Certificate
actually delivered by Company, then (1) the Applicable Leverage Ratio in effect
for purposes of making the relevant calculation referred to above for the period
from the Cutoff Date to the date of delivery by Company of the next Pricing
Certificate (or, if earlier, the next date on which an Agent Determination is
made) shall be the Consolidated Leverage Ratio determined pursuant to the Agent
Determination and (2) on the first Business Day after Administrative Agent
delivers written notice to Company of any Agent Determination, Company shall pay
to Administrative Agent, for distribution (as appropriate) to Lenders, an
aggregate amount equal to the additional interest and letter of credit fees
Company would have been required to pay in respect of all applicable Loans,
Letters of Credit or Commitments in respect of which any interest or fees have
been paid by Company during the period from the Cutoff Date to the date such
notice is given by Administrative Agent to Company if the amount of such
interest and fees had been calculated using the Applicable Leverage Ratio based
on such Agent Determination.
"Applicable Base Rate Margin" means (a) for the period from the Closing
Date up to (but excluding) the date of commencement of the first Pricing Period,
1.00% per annum for Tranche A Term Loans, 1.25% per annum for AXELs Series B and
1.00% per annum for Revolving Loans, and (b) for any date thereafter, a rate per
annum equal to the percentage set forth below opposite the Applicable Leverage
Ratio in effect as of such date of determination, any change in any such
Applicable Base Rate Margin to be effective on the date of any corresponding
change in the Applicable Leverage Ratio.
================================================================================
Applicable Base Rate Applicable Base Rate
Applicable Margin for Tranche Margin for AXELs
Leverage Ratio A Term Loans Series B
================================================================================
greater than or equal 1.00% 1.25%
to 1.50:1.00
- --------------------------------------------------------------------------------
less than 1.50:1.00 .75% 1.25%
but greater than or
equal to 1.00:1.00
- --------------------------------------------------------------------------------
less than 1.00:1.00 .50% 1.00%
================================================================================
"Applicable Eurodollar Rate Margin" means (a) for the period from the
Closing Date up to (but excluding) the date of commencement of the first Pricing
Period, 2.00% per annum for Tranche A Term Loans, 2.25% per annum for AXELs
Series B and 2.00% per annum for Revolving Loans, and (b) for any date
thereafter, a rate per annum equal to the percentage set forth below opposite
the Applicable Leverage Ratio in effect as of such date of determination, any
change in any such Applicable Eurodollar Rate Margin to be effective on the date
of any corresponding change in the Applicable Leverage Ratio.
4
<PAGE>
================================================================================
Applicable Eurodollar Rate Applicable Eurodollar
Applicable Margin for Tranche A Rate Margin for
Leverage Ratio Term Loans AXELs Series B
================================================================================
greater than or equal 2.00% 2.25%
to 1.50:1.00
- --------------------------------------------------------------------------------
less than 1.50:1.00 1.75% 2.25%
but greater than or
equal to 1.00:1.00
- --------------------------------------------------------------------------------
less than 1.00:1.00 1.50% 2.00%
================================================================================
"Asset Sale" means the sale by Company or any of its Subsidiaries to any
Person other than Company or any of its wholly-owned Subsidiaries of (i) any of
the stock of any of Company's Subsidiaries, (ii) substantially all of the assets
of any division or line of business of Company or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business,
(b) any sale of assets in connection with sales and lease-back transactions
expressly permitted pursuant to subsection 7.10, and (c) any such other assets
to the extent that the aggregate value of such assets sold in any single
transaction or related series of transactions is equal to $2,500,000 or less).
"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit X annexed hereto.
"Auditor's Letter" means a letter, substantially in the form of Exhibit XI
annexed hereto, acknowledged and agreed to by Company and Ernst & Young and
delivered to Administrative Agent pursuant to subsection 4.1T.
"AXEL(sm)* Series B" means a Loan made by a Lender to Company pursuant to
subsection 2.1A(ii) and "AXELs Series B" means any such Loan or Loans,
collectively.
"AXEL Series B Commitment" means the commitment of a Lender to make an AXEL
Series B to Company pursuant to subsection 2.1A(ii), and "AXEL Series B
Commitments" means such commitments of all Lenders in the aggregate.
"AXEL Series B Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the funding of the AXELs Series B, that Lender's
AXEL Series B Commitment and (ii) after the funding of the AXELs Series B, the
outstanding principal amount of the AXELs Series B of that Lender.
"AXEL Series B Notes" means any promissory notes of Company issued pursuant
to subsection 2.1E to evidence the AXELs Series B of any Lenders, substantially
in the form of Exhibit V annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
- ----------
* AXEL is a registered service mark of Goldman, Sachs & Co.
5
<PAGE>
"AXEL Series B Lender" means a Lender holding an outstanding AXEL Series B
or having an AXEL Series B Commitment, and "AXEL Series B Lenders" means any
such Lender or Lenders, collectively.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the New York Prime Rate
or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Loans" means the portion of a Loan bearing interest from time to
time at a rate determined by reference to the Base Rate as provided in
subsection 2.2A.
"Bromont Property" has the meaning assigned to that term in subsection
6.10B.
"Business Day" means (i) any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the Province of Ontario or the State
of New York or is a day on which banking institutions located in such province
or state are authorized or required by law or other governmental action to
close, and (ii) with respect to all notices, determinations, fundings and
payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate
Loans, any day that is a Business Day described in clause (i) above and that is
also a day for trading by and between banks in Dollar deposits in the London
interbank market.
"Canadian Dollars" and the sign "Cdn.$" means the lawful money of Canada.
"Canadian Prime Rate" means, at any time, the greater of (i) the per annum
rate of interest quoted, published and commonly known as the "prime rate" of the
Administrative Agent at its main office in Toronto, Ontario as the reference
rate of interest in order to determine interest rates for loans in Canadian
Dollars to its Canadian borrowers, adjusted automatically with each quoted or
published change in such rate, all without the necessity of any notice to
Company or any other Person; and (ii) the sum of (y) the average (rounded
upwards if necessary, to the nearest 0.01%, with five-thousandths of 1% being
rounded up) of the rates per annum for Canadian Dollar bankers' acceptances
having a term of 30 days that appears on the Reuters Screen CDOR Page as of
10:00 a.m. (Toronto time) on the date of determination, as reported by
Administrative Agent (and if such screen is not available, any successor or
similar service as may be selected by Administrative Agent), and (z) 0.75% per
annum.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means at any date of determination, any of the following
so long as the same are not subject to any Lien: (i) bonds, debentures, notes
and other evidence of indebtedness issued, guaranteed or insured by the
government of Canada or any province, the United States of America or any state,
or the United Kingdom, and maturing not
6
<PAGE>
more than 365 days after the relevant date; (ii) bonds, debentures, notes and
other evidences of indebtedness maturing not more than 265 days after the
relevant date and issued, guaranteed or insured by any Person rated A-1, P-1 or
R-1 low (or the then equivalent) or better by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's") or Dominion Bond Rating
Service respectively; (iii) commercial paper maturing not more than 265 days
after the relevant date issued, guaranteed or insured by a Person at arm's
length to Company and its Subsidiaries and rated A-1, P-1 or R-1 low (or the
then equivalent) or better by S&P, Moody's or Dominion Bond Rating Service,
respectively; (iv) certificates of deposit or acceptances with a maturity of 265
days or less of any financial institution that is a bank under the Bank Act
(Canada) or that is a member of the Federal Reserve System of the United States
of America, having combined capital and surplus and undivided profits of not
less than $500,000,000 (or the Equivalent Cdn. $ Amount) and, as applicable,
rated at least "A-" by S&P or at least "A3" by Moody's, or at least "A++" by
Canadian Bond Rating Service; (v) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
directly, unconditionally and fully guaranteed by the Government of Canada or
the United States of America, or issued by any agency thereof (provided that the
full faith and credit of Canada or the United States, as the case may be, is
pledged in support thereof), in each case maturing within one year from the date
of acquisition (provided that the terms of such agreements comply with the
guidelines set forth in the Cash and Securities Loan Agreement under Regulation
2200 of the Investment Dealers Association of Canada or the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985, as applicable,
or the equivalents thereof from time to time); and (vi) in the case of any
Subsidiary of Company organized under the laws of any jurisdiction other than
the United States of America or any state, Canada or any province or the United
Kingdom, high quality, short-term liquid Investments accorded the highest rating
available by any applicable rating service and made by such Subsidiary in the
ordinary course of managing its surplus cash position in a manner consistent
with past practices.
"CIBC" has the meaning assigned to that term in the introduction to this
Agreement.
"CIBC Letter of Credit" means the standby letter of credit issued by CIBC
to National Westminster Bank on the Closing Date in a stated amount of
(pound)41,000,000.
"Class" means, as applied to Lenders, each of the following three classes
of Lenders: (i) Lenders having Tranche A Term Loan Exposure, (ii) Lenders having
Revolving Loan Exposure and (iii) Lenders having AXEL Series B Exposure.
"Closing Date" means the date on or before March 31, 1998, on which the
initial Loans are made.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
"Collateral Documents" means the Company Master Pledge Agreement, the
Company Security Agreement (U.S.), the Company Patent and Trademark Security
Agreement (U.S.), the Subsidiary Pledge Agreements (U.S.), the Subsidiary
Security Agreements (U.S.), the Subsidiary Patent and Trademark Security
Agreements (U.S.), the Mortgages, the U.K. Pledge Agreement, the U.K. Guarantee
and Debenture, the Copyright Security Agreements (U.S.) and all other
instruments or documents delivered by any Loan Party pursuant to this Agreement
or any of the other Loan Documents in order to grant to Administrative Agent, on
behalf of Lenders, a Lien on any real, personal or mixed property of that Loan
Party as security for the Obligations.
7
<PAGE>
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set forth
in subsection 2.1A.
"Company" has the meaning assigned to such term in the introduction to this
Agreement.
"Company Certificate of Designations" means the provisions of Company's
Articles of Continuance, as amended through the Closing Date, relating to the
Company Preferred Stock, in the form delivered to Syndication Agent and
Administrative Agent prior to their execution of this Agreement and as such
provisions may be amended from time to time thereafter to the extent permitted
under subsection 7.15A.
"Company Master Pledge Agreement" means the Company Master Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit XVII annexed hereto.
"Company Preferred Stock" means Company's Cdn$2.00 Cumulative Redeemable
Convertible Preferred Shares 1983 R&D Series (Preferred Shares - R&D Series)
issued in accordance with, and subject to terms set forth in, the Company
Certificate of Designations.
"Company Security Agreement (U.S.)" means the Company Security Agreement
(U.S.) executed and delivered by Company on the Closing Date, substantially in
the form of Exhibit XXVIII annexed hereto.
"Company Patent and Trademark Security Agreement (U.S.)" means the Company
Patent and Trademark Security Agreement executed and delivered by Company on the
Closing Date, substantially in the form of Exhibit XVIII annexed hereto.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit VII annexed hereto delivered to Administrative Agent and Lenders by
Company pursuant to subsection 6.1(iv).
"Confidential Information Memorandum" means that certain Confidential
Information Memorandum relating to Company and the credit facilities to be
provided hereunder dated February, 1998.
"Conforming Leasehold Interest" means any Recorded Leasehold Interest as to
which the lessor has agreed in writing for the benefit of Administrative Agent
(which writing has been delivered to Administrative Agent), whether under the
terms of the applicable lease, under the terms of a Landlord Consent and
Estoppel, or otherwise, to the matters described in the definition of "Landlord
Consent and Estoppel," which interest, if a subleasehold or sub-subleasehold
interest, is not subject to any contrary restrictions contained in a superior
lease or sublease.
"Consolidated Adjusted EBITDA" means, for any period, the sum of the
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amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, and (vi) other non-cash
items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" means, for any period, the aggregate of
all expenditures (whether paid in cash or other consideration or accrued as a
liability and including that portion of Capital Leases which is capitalized on
the consolidated balance sheet of Company and its Subsidiaries) by Company and
its Subsidiaries during that period that, in conformity with GAAP, are included
in "additions to property, plant or equipment" or comparable items reflected in
the consolidated statement of cash flows of Company and its Subsidiaries.
"Consolidated Cash Capital Expenditures" means, for any period,
Consolidated Capital Expenditures made in cash.
"Consolidated Cash Interest Expense" means, for any period, Consolidated
Interest Expense for such period excluding, however, any interest expense not
payable in Cash (including amortization of discount and amortization of debt
issuance costs).
"Consolidated Current Assets" means, as at any date of determination, the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding Cash
and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP,
excluding the current portions of Funded Debt and Capital Leases.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts for
such period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures), (c) Consolidated Cash Interest Expense, (d)
cash dividends and other cash distributions on any shares of Company Preferred
Stock but only to the extent actually made and only to the extent such dividends
or other distributions are permitted pursuant to subsection 7.5 and (e) the
provision for current taxes based on income of Company and its Subsidiaries and
payable in cash with respect to such period.
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Cash Interest
Expense, (ii) provisions for cash taxes based on income, (iii) scheduled
principal payments of all Indebtedness, (iv) Consolidated Cash Capital
Expenditures and (v) dividend payments made pursuant to subsection 7.5, all of
the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
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<PAGE>
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Agreements, but excluding, however, any
amounts referred to in subsection 2.3 payable to Administrative Agent and
Lenders on or before the Closing Date.
"Consolidated Leverage Ratio" means, (i) as of the last day of the first
full Fiscal Quarter following the Closing Date, the ratio of (a) Consolidated
Total Debt as of such date to (b) Consolidated Adjusted EBITDA for the Fiscal
Quarter period ending on such date multiplied by four, (ii) as of the last day
of the first two full Fiscal Quarters following the Closing Date, the ratio of
(a) Consolidated Total Debt as of such date to (b) Consolidated Adjusted EBITDA
for the two-Fiscal Quarter period ending on such date multiplied by two, (iii)
as of the last day of the first three full Fiscal Quarters following the Closing
Date, the ratio of (a) Consolidated Total Debt as of such date to (b)
Consolidated Adjusted EBITDA for the three-Fiscal Quarter period ending on such
date multiplied by a fraction, the numerator of which is four and the
denominator of which is three, and (iv) as of the last day of any Fiscal Quarter
thereafter, the ratio of (a) Consolidated Total Debt as of such date to (b)
Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending on such
date.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"Consolidated Net Worth" means, as at any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Company and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate amount
of all rents paid or payable by Company and its Subsidiaries on a consolidated
basis during that period under all Operating Leases to which Company or any of
its Subsidiaries is a party as lessee (net of sublease income).
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries,
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determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination, the
excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"Copyright Security Agreement (U.S.)" means each Copyright Security
Agreement (U.S.) executed and delivered by Company and an existing Subsidiary
Guarantor on the Closing Date or executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with subsection
6.8, in each case substantially in the form of Exhibit XXIX annexed hereto, and
"Copyright Security Agreements (U.S.)" means all such Copyright Security
Agreements (U.S.), collectively.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"Deposit Account" means a demand, time, savings, passbook or like account
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<PAGE>
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Discounted Note Documents" means the Discounted Notes, Discounted Note
Terms and Conditions and any other documents or instruments executed in
connection therewith.
"Discounted Notes" means those certain Discounted Notes issued on the
Closing Date by Mitel Telecom to Mitel Barbados pursuant to those certain
Discounted Note Terms and Conditions, as such notes may be amended, supplemented
or otherwise modified from time to time in accordance with subsection 7.15A.
"Discounted Note Terms and Conditions" means those certain Terms and
Conditions for a Discounted Note Program established by Mitel Telecom and as in
effect on the Closing Date, as such terms and conditions may be amended,
supplemented or otherwise modified from time to time in accordance with
subsection 7.15A.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Eligible Assets" has the meaning assigned to that term in subsection
2.4B(iii)(a).
"Eligible Assignee" means (1)(A) with respect to the AXELs Series B and the
AXEL Series B Commitments, (i) a commercial bank organized under the laws of the
United States or any state thereof; (ii) a savings and loan association or
savings bank organized under the laws of the United States or any state thereof;
(iii) a commercial bank organized under the laws of any other country or a
political subdivision thereof; provided that (x) such bank is acting through a
branch or agency located in the United States or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country; and (iv)
any other entity which is an "accredited investor" (as defined in Regulation D
under the Securities Act) which extends credit or buys loans as one of its
businesses including, but not limited to, insurance companies, mutual funds and
lease financing companies; and (B) any Lender and any Affiliate of any Lender
and (2)(A) with respect to the Tranche A Term Loans, the Tranche A Term Loan
Commitments, the Revolving Loans and the Revolving Loan Commitments, (i) any
commercial bank, financial institution or other accredited investor resident in
Canada for tax purposes, and (ii) any Lender and any Affiliate of any Lender in
each case which is organized under the laws of Canada or a province thereof;
provided that no Affiliate of Company shall be an Eligible Assignee; provided
further that no "non-resident" of Canada within the meaning of the Income Tax
Act (Canada) shall be an Eligible Assignee with respect to the Tranche A Term
Loans, the Tranche A Term Loan Commitments, the Revolving Loans and the
Revolving Loan Commitments.
"Employee Benefit Plan" means any U.S. Employee Benefit Plan or any Foreign
Employee Benefit Plan.
"Environmental Claim" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any governmental authority or any other
Person, arising (i)
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pursuant to or in connection with any actual or alleged violation of, or
liability under, any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities or common law relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, ecosystems or water including ground water in any
manner applicable to Company or any of its Subsidiaries or any Facility, each as
amended or supplemented, any analogous present or future national, regional,
European Union, state, provincial, municipal or local statutes or laws, and any
regulations promulgated pursuant to any of the foregoing.
"Equivalent Cdn. $ Amount" means, at any relevant time, on any day and with
respect to any amount of Dollars, the amount of Canadian Dollars which would be
required to buy such amount of Dollars at the Bank of Canada noon rate at such
time (as quoted or published from time to time by the Bank of Canada).
"Equivalent U.S. $ Amount" means, on any day with respect to any amount of
Canadian Dollars, the amount of Dollars which would be required to buy such
amount of Canadian Dollars using the noon rate quoted by the Bank of Canada on
that day.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii)
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the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might constitute
grounds under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company, any
of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or
any of their respective ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan if there is any potential liability therefor, or the receipt by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act
or omission which could give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of a material amount of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate Loans" means the portion of a Loan bearing interest from
time to time at a rate determined by reference to the Adjusted Eurodollar Rate
as provided in subsection 2.2A.
"Eurodollar Rate Reserve Percentage" means, for any Interest Period for all
Eurodollar Rate Loans comprising part of the same borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined) having a term equal to such Interest
Period.
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"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Exchange Rate" means, on any date when an amount expressed in a currency
other than Dollars is to be determined with respect to any Letter of Credit, the
nominal rate of exchange of the applicable Issuing Lender in the New York
foreign exchange market for the purchase by such Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (Toronto time)
one Business Day prior to such date, expressed as a number of units of such
currency per one Dollar.
"Existing Credit Agreements" means (i) the Revolving Demand Credit
(Operating Line) provided by CIBC to Company for general purposes in the
aggregate amount of Cdn.$10 million, (ii) the Letter Loan Agreement dated
February 22, 1994 among the Company and NBD Bank providing a general operating
line of credit in the aggregate amount of US$10 million, and (iii) that certain
(a) bank overdraft facility of approximately (pound)35,000,000, (b) that certain
BACS facility of not more than (pound)6,000,000 and (c) that certain foreign
exchange line, in each case provided by National Westminster Bank to PSL and as
amended prior to the Closing Date.
"Existing Letters of Credit" means the letters of credit issued by CIBC
prior to the Closing Date pursuant to that certain Cdn.$15,000,000 Revolving
Demand Credit for Letters of Credit and Guarantees, which letters of credit are
listed on Schedule 1.1A annexed hereto and will, as of the Closing Date, be
deemed outstanding as Letters of Credit issued pursuant to subsection 3.1A and
3.7 of this Agreement.
"Facilities" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company or any of its Subsidiaries or any of
their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xiii).
"First Priority" means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that (i) such Lien has
priority over any other Lien on such Collateral (other than Permitted
Encumbrances) and (ii) such Lien is the only Lien (other than Permitted
Encumbrances and Liens permitted pursuant to subsection 7.2) to which such
Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
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"Fiscal Year" means the fiscal year of Company and its Subsidiaries ending
on the last Friday in March of each calendar year. For purposes of this
Agreement, any particular Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year ends.
"Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"Foreign Employee Benefit Plan" means any employee benefit plan, agreement,
scheme or arrangement (other than a U.S. Employee Benefit Plan) which is or was
maintained or contributed to by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates for the benefit of any employee or former employee
(or any of their dependents) who is not a citizen or resident of the United
States, including, without limitation, any pension, retirement savings, deferred
compensation, share option or profit sharing scheme (including without
limitation any registered retirement savings plan, deferred profit sharing plan,
or registered pension plan maintained contractually or pursuant to any provision
of the Income Tax Act of Canada or legislation of Canada or any Province thereof
governing any such plan), any health or welfare plan, or any plan, agreement,
scheme or arrangement relating to life, medical or similar benefits (whether
provided through the purchase of insurance or otherwise).
"Foreign Benefit Plan Event" means the occurrence of an event, act or
omission or the existence of facts or circumstances with respect to a Foreign
Employee Benefit Plan resulting in (i) the failure to comply in any material
respect with the terms of any Foreign Employee Benefit Plan or relevant
applicable law, (ii) the failure timely to make all required contributions, and
to pay all required taxes or expenses, to or with respect to any Foreign
Employee Benefit Plan in any material amount, (iii) the acceleration of any
funding requirements with respect to any Foreign Employee Benefit Plan in any
material amount, (iv) the imposition of judgments, damages, awards, liens,
fines, penalties, taxes or similar or related charges on any Loan Party or any
of its Subsidiaries with respect to a Foreign Employee Benefit Plan in any
material amount, or (v) the loss of qualification for beneficial tax treatment
under applicable relevant laws for any Foreign Employee Benefit Plan designed or
intended to qualify for such beneficial tax treatment.
"Foreign Pension Plan" means any Foreign Employee Benefit Plan that
provides, or is designed to provide, pensions, retirement income, retirement
savings or deferred compensation for the benefit of any employee or former
employee or any of their dependents.
"Funded Debt", as applied to any Person, means all Indebtedness of that
Person (including any current portions thereof) which by its terms or by the
terms of any instrument or agreement relating thereto matures more than one year
from, or is directly renewable or extendable at the option of that Person to a
date more than one year from (including an option of that Person under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of one year or more from), the date of the creation
thereof.
"Funding and Payment Office" means (i) the office of Administrative Agent
and Swing Line Lender located at Main Branch Commerce Court, 7th Floor, Toronto,
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Ontario or (ii) such other office of Administrative Agent and Swing Line Lender
as may from time to time hereafter be designated as such in a written notice
delivered by Administrative Agent to Company and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, at any time, subject to the limitations on the application
thereof set forth in subsection 1.2, accounting principles generally accepted in
Canada as recommended in the Handbook of the Canadian Institute of Chartered
Accountants at the relevant time applied on a consistent basis (except for
changes made with the prior written consent of the Administrative Agent and
approved by Company's independent auditors in accordance with promulgations of
the Canadian Institute of Chartered Accountants).
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any multi-national,
national, regional, federal, provincial, European Union, state, municipal or
local governmental authority, agency or court.
"Guaranties" means, collectively, the U.K. Guarantee and Debenture and the
Subsidiary Guaranties.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners, occupants or
any Persons in the vicinity of any Facility or to the indoor or outdoor
environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
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respectively.
"Immaterial Subsidiary" means any Subsidiary of Company which is not a
Subsidiary Guarantor, or is not required to become a Subsidiary Guarantor
pursuant to subsection 6.8.
"Indebtedness", as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency Agreements constitute
(X) in the case of Hedge Agreements, Contingent Obligations, and (Y) in all
other cases, Investments, and in neither case constitute Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Initial Period" means the period commencing on and including the Closing
Date and ending on (but excluding) the earlier of (i) the date on which
Syndication Agent notifies Company that it has concluded its primary syndication
of the Loans and Commitments and (ii) the date which is 60 days after the
Closing Date.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"Intercompany Note" has the meaning assigned to that term in subsection 7.1
and includes the Discounted Notes and any notes issued pursuant to the
IntraGroup Loan Agreement.
"Interest Payment Date" means (i) with respect to any Base Rate Loan or
Swing Line Loan, the first calendar day of each month of each year, commencing
on the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of six months,
"Interest Payment Date" shall also include the date that is three months after
the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which Company or any of its Subsidiaries is a party.
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"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor statute.
"IntraGroup Loan Agreement" means the IntraGroup Loan Agreement dated as of
the Closing Date between Mitel Telecom and Company relating to intercompany
loans among the foregoing entities, as such agreement may be amended,
supplemented or otherwise modified from time to time to add additional
Subsidiaries as parties thereto pursuant to subsection 6.8A and otherwise in
accordance with subsection 7.15A.
"Inventory" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"Investment" means (i) any direct or indirect purchase or other acquisition
by Company or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person (including any Subsidiary of Company), (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Company from any Person other than Company or any of
its Subsidiaries, of any equity Securities of such Subsidiary, (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Company or any of
its Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business, or (iv)
Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IP Collateral" means, collectively, the Collateral under the Company
Patent and Trademark Security Agreement (U.S.), the Subsidiary Patent and
Trademark Security Agreements (U.S.), the Copyright Security Agreement (U.S.)
and any similar Collateral under any of the other Collateral Documents.
"Issuing Lender" means, with respect to any Letter of Credit (including any
Existing Letter of Credit), the Lender which agrees or is otherwise obligated to
issue such Letter of Credit, determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership, limited liability company or
other legal form; provided that in no event shall any corporate Subsidiary of
any Person be considered to be a Joint Venture to which such Person is a party.
"Landlord Consent and Estoppel" means, with respect to any Leasehold
Property (other than any Leasehold Property located in the United Kingdom), a
letter, certificate or other instrument in writing from the lessor under the
related lease, satisfactory in form and substance to Administrative Agent,
pursuant to which such lessor agrees, for the benefit of Administrative Agent,
(i) that without any further consent of such lessor or any further action on the
part of the Loan Party holding such Leasehold Property, such Leasehold
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Property may be encumbered pursuant to a Mortgage and may be assigned to the
purchaser at a foreclosure sale or in a transfer in lieu of such a sale (and to
a subsequent third party assignee if Administrative Agent, any Lender, or an
Affiliate of either so acquires such Leasehold Property), (ii) that such lessor
shall not terminate such lease as a result of a default by such Loan Party
thereunder without first giving Administrative Agent notice of such default and
at least 30 days (or, if such default cannot reasonably be cured by
Administrative Agent within such period, such longer period as may reasonably be
required) to cure such default, (iii) to the matters contained in a collateral
access agreement in a form and substance reasonably satisfactory to
Administrative Agent, and (iv) to such other matters relating to such Leasehold
Property as Administrative Agent may reasonably request.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property, other than any such leasehold interest
designated from time to time by Administrative Agent in its sole discretion as
not being required to be included in the Collateral.
"Lender" and "Lenders" means the persons identified as "Lenders" and listed
on the signature pages of this Agreement, together with their successors and
permitted assigns pursuant to subsection 10.1; provided that the term "Lenders",
when used in the context of a particular Commitment, shall mean Lenders having
that Commitment.
"Lender Counterparties" means, collectively, the Lenders party from time to
time to any Hedge Agreement with Company.
"Lender Hedge Agreements" means, collectively, the Hedge Agreements entered
into from time to time by Company and one or more Lenders.
"Letter of Credit" or "Letters of Credit" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company pursuant to subsection 3.1, including the Existing
Letters of Credit.
"Letter of Credit Usage" means, as at any date of determination, the sum of
(i) the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B). For purposes of this definition, any amount described in clause (i) or
(ii) of the preceding sentence which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
hypothec charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Tranche A Term Loans, AXELs
Series B, Revolving Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of Credit
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(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Guaranties and the Collateral Documents.
"Loan Party" means each of Company and any of Company's Subsidiaries from
time to time executing a Loan Document, and "Loan Parties" means all such
Persons, collectively; provided that, for purposes of Section 5 hereof, "Loan
Party" and "Loan Parties" shall include the U.K. Plessey Entities.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries taken as a whole, or (ii) the
impairment of the ability of any Loan Party to perform, or of Administrative
Agent or Lenders to enforce, the Obligations.
"Material Contract" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
"Material Leasehold Property" means a Leasehold Property reasonably
determined by Administrative Agent to be of material value as Collateral or of
material importance to the operations of Company or any of its Subsidiaries;
provided, however, that, excepting any such Leasehold Properties set forth on
Schedule 4.1H annexed hereto, no Leasehold Property with respect to which the
aggregate amount of all rents payable during any one Fiscal Year does not exceed
$1,000,000 (or its equivalent in any other currency) shall be a "Material
Leasehold Property".
"Material Subsidiary" means Mitel Telecom, Mitel AB, Mitel, Inc., PSL and
any other Subsidiary of Company which, together with its consolidated
Subsidiaries, has (i) revenues which represent more than 10% of the revenues of
Company and its Subsidiaries on a consolidated basis, or (ii) assets which
represent more than 10% of the assets of the Company and its Subsidiaries on a
consolidated basis; provided, however, that "Material Subsidiary" shall not
include Mitel Barbados to the extent that the representation of Company
contained in subsection 5.20 is true and correct.
"MEDL" means Marconi Electronic Devices Limited, a company incorporated
under the laws of England and Wales.
"Mitel AB" means Mitel Semiconductors AB, a corporation organized under the
laws of Sweden.
"Mitel Barbados" means Mitel (Barbados) Ltd., a corporation organized under
the laws of Barbados.
"Mitel Telecom" means Mitel Telecom Limited, a company incorporated under
the laws of England and Wales.
"Mortgage" means (i) a security instrument (whether designated as a deed of
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trust or a mortgage or by any similar title) executed and delivered by any Loan
Party, substantially in the form of Exhibit XXIII annexed hereto or in such
other form as may be approved by Administrative Agent in its sole discretion, in
each case with such changes thereto as may be recommended by Administrative
Agent's local counsel based on local laws or customary local mortgage or deed of
trust practices, or (ii) at Administrative Agent's option, in the case of an
Additional Mortgaged Property (as defined in subsection 6.9), an amendment to an
existing Mortgage, in form satisfactory to Administrative Agent, adding such
Additional Mortgaged Property to the Real Property Assets encumbered by such
existing Mortgage, in either case as such security instrument or amendment may
be amended, supplemented or otherwise modified from time to time. "Mortgages"
means all such instruments, including the Closing Date Mortgages (as defined in
subsection 4.1H) and any Additional Mortgages (as defined in subsection 6.9),
collectively.
"Mortgaged Property" means a Closing Date Mortgaged Property (as defined in
subsection 4.1H) or an Additional Mortgaged Property (as defined in subsection
6.9).
"Multiemployer Plan" means any U.S. Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset Sale
(ii) value added taxes imposed by applicable law and (iii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or proceeds
received by Company or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Company or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Company or such Subsidiary in respect thereof.
"New York Prime Rate" means the rate that CIBC announces from time to time
as its prime lending rate for Loans in Dollars to United States borrowers, as in
effect from time to time. The New York Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. CIBC or any other Lender may make commercial loans or other loans at
rates of interest at, above or below the New York Prime Rate.
"Notes" means one or more of the Tranche A Term Notes, AXEL Series B Notes,
Revolving Notes or any combination thereof.
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"Notice of Borrowing" means a notice substantially in the form of Exhibit I
annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Obligations" means all obligations of every nature of each Loan Party from
time to time owed to Agents, Lenders or any of them under the Loan Documents,
whether for principal, interest, reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any U.S. Pension Plan or any Foreign Pension Plan.
"Permitted Acquisition" means, from and after the Closing Date, any
acquisition by Company or any of its Subsidiaries of an equity interest in, or
all or substantially all of the assets of, or any smaller portion that
constitutes an operating unit, business unit, technology unit or division of,
any Person as permitted pursuant to subsection 7.7(v).
"Permitted Encumbrances" means the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
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(ii) statutory Liens of landlords, statutory Liens of banks and rights
of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 5 days) are being contested
in good faith by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or resulting in a material diminution in the value
of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and
will not interfere in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b),
so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
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(xi) Liens against owners' or sublessors' interest in any Leasehold
Property;
(xii) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries; and
(xiii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Company Master Pledge Agreement and the Subsidiary Pledge
Agreements (U.S.) and any other share certificates, promissory notes or under
instruments pledged to Administrative Agent pursuant to the Collateral
Documents.
"Plessey Entities" means, collectively, each of PSL, MEDL, AEI
Semiconductors Limited and GEC Plessey Semiconductors Inc. (to be renamed Mitel
Semiconductor Americas Inc. as of the Closing Date) which companies and their
respective Subsidiaries are to be acquired by Company from Seller pursuant to
the Acquisition Agreement.
"Potential Event of Default" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default.
"Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to the Tranche A Term Loan Commitments or the Tranche A
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche A
Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term Loan
Exposure of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the AXEL Series B Commitments or the AXEL Series B of
any Lender, the percentage obtained by dividing (x) the AXEL Series B Exposure
of that Lender by (y) the aggregate AXEL Series B Exposure of all Lenders, (iii)
with respect to all payments, computations and other matters relating to the
Revolving Loan Commitment or the Revolving Loans of any Lender or any Letters of
Credit issued or participations therein purchased by any Lender or any
participations in any Swing Line Loans purchased by any Lender, the percentage
obtained by dividing (x) the Revolving Loan Exposure of that Lender by (y) the
aggregate Revolving Loan Exposure of all Lenders, and (iv) for all other
purposes with respect to each Lender, the percentage obtained by dividing (x)
the sum of the Tranche A Term Loan Exposure of that Lender plus the AXEL Series
B Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y)
the sum of the aggregate Tranche A Term Loan Exposure of all Lenders plus the
aggregate AXEL Series B Exposure of all Lenders plus the aggregate Revolving
Loan Exposure of all Lenders, in any such case as the applicable percentage may
be adjusted
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by assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share
of each Lender for purposes of each of clauses (i), (ii), (iii) and (iv) of the
preceding sentence is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
"PSL" means Plessey Semiconductors Limited, a company incorporated under
the laws of England and Wales.
"PTO" means the United States Patent and Trademark Office or any successor
or substitute office in which filings are necessary or, in the opinion of
Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"Recorded Leasehold Interest" means a Leasehold Property with respect to
which a Record Document (as hereinafter defined) has been recorded in all places
necessary or desirable, in Administrative Agent's reasonable judgment, to give
constructive notice of such Leasehold Property to third-party purchasers and
encumbrancers of the affected real property. For purposes of this definition,
the term "Record Document" means, with respect to any Leasehold Property, (a)
the lease evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor, or (b)
if such Leasehold Property was acquired or subleased from the holder of a
Recorded Leasehold Interest, the applicable assignment or sublease document,
executed and acknowledged by such holder, in each case in form sufficient to
give such constructive notice upon recordation and otherwise in form reasonably
satisfactory to Administrative Agent.
"Real Property Asset" means, at any time of determination, any interest
then owned by any Loan Party in any real property.
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in subsection
3.3B.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iv).
"Related Agreements" means, collectively, the Acquisition Agreement, the
IntraGroup Loan Agreement and the Discounted Note Documents.
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.
"Request for Issuance of Letter of Credit" means a notice substantially in
the form of Exhibit III annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
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"Requisite Class Lenders" means, at any time of determination (i) for the
Class of Lenders having Tranche A Term Loan Exposure, Lenders having or holding
at least 51% of the aggregate Tranche A Term Loan Exposure of all Lenders, (ii)
for the Class of Lenders having Revolving Loan Exposure, Lenders having or
holding at least 51% of the aggregate Revolving Loan Exposure of all Lenders and
(iii) for the Class of Lenders having AXEL Series B Exposure, Lenders having or
holding at least 51% of the aggregate AXEL Series B Exposure of all Lenders.
"Requisite Lenders" means Lenders having or holding at least 51% of the sum
of the aggregate Tranche A Term Loan Exposure of all Lenders plus the aggregate
AXEL Series B Exposure of all Lenders plus the aggregate Revolving Loan Exposure
of all Lenders; provided, however, that during the period commencing on the
Closing Date and continuing until such time as GSCP and Goldman Sachs Canada
Credit Partners Co., collectively hold less than 51% of the sum of the aggregate
Tranche A Term Loan Exposure of all Lenders plus the aggregate AXEL Series B
Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders, "Requisite Lenders" shall mean all Lenders.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means February 12, 2003.
"Revolving Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the termination of the Revolving Loan Commitments,
that Lender's Revolving Loan Commitment and (ii) after the termination of the
Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (b) in the event that Lender
is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all
Letters of Credit issued by that Lender (in each case net of any participations
purchased by other Lenders in such Letters of Credit or any unreimbursed
drawings thereunder) plus (c) the aggregate amount of all participations
purchased by that Lender in any outstanding Letters of Credit or any
unreimbursed drawings under any Letters of Credit plus (d) in the case of Swing
Line Lender, the aggregate outstanding principal amount of all Swing Line Loans
(net of any participations therein purchased by other Lenders) plus (e) the
aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans.
"Revolving Loans" means the Loans made by Lenders to Company pursuant
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to subsection 2.1A(iii).
"Revolving Notes" means any promissory notes of Company issued pursuant to
subsection 2.1E to evidence the Revolving Loans of any Lenders, substantially in
the form of Exhibit VI annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Seller" means The General Electric Company, P.L.C., a company organized
under the laws of England and Wales.
"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) Indebtedness of Company or
any of its Subsidiaries in respect of industrial revenue or development bonds or
financings, (ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company or any of
its Subsidiaries arising by virtue of the laws of any jurisdiction requiring
third party insurers, (iv) obligations with respect to Capital Leases or
Operating Leases of Company or any of its Subsidiaries, and (v) performance,
payment, deposit or surety obligations of Company or any of its Subsidiaries, in
any case if required by law or governmental rule or regulation or in accordance
with custom and practice in the industry; provided that Standby Letters of
Credit may not be issued for the purpose of supporting (a) trade payables or (b)
any Indebtedness constituting "antecedent debt" (as that term is used in Section
547 of the Bankruptcy Code).
"Subordinated Indebtedness" means any Indebtedness of Company subordinated
in right of payment to the Obligations pursuant to documentation containing
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maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance satisfactory to
Administrative Agent and Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Guarantor" means any Subsidiary of Company that executes and
delivers a counterpart to any Guaranty on the Closing Date or from time to time
thereafter pursuant to subsection 6.8.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and delivered
by existing Subsidiaries of Company on the Closing Date and to be executed and
delivered by additional Subsidiaries of Company from time to time thereafter in
accordance with subsection 6.8, substantially in the form of Exhibit XIX annexed
hereto.
"Subsidiary Pledge Agreement (U.S.)" means each Subsidiary Pledge Agreement
(U.S.) executed and delivered by an existing Subsidiary Guarantor on the Closing
Date or executed and delivered by any additional Subsidiary Guarantor from time
to time thereafter in accordance with subsection 6.8, in each case substantially
in the form of Exhibit XX annexed hereto, and "Subsidiary Pledge Agreements
(U.S.)" means all such Subsidiary Pledge Agreements, collectively.
"Subsidiary Patent and Trademark Security Agreement (U.S.)" means each
Subsidiary Patent and Trademark Security Agreement (U.S.) executed and delivered
by an existing Subsidiary Guarantor on the Closing Date or executed and
delivered by any additional Subsidiary Guarantor from time to time thereafter in
accordance with subsection 6.8, in each case substantially in the form of
Exhibit XXII annexed hereto, and "Subsidiary Patent and Trademark Security
Agreements (U.S.)" means all such Subsidiary Patent and Trademark Security
Agreements (U.S.), collectively.
"Subsidiary Security Agreement (U.S.)" means each Subsidiary Security
Agreement (U.S.) executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.8, in
each case substantially in the form of Exhibit XXI annexed hereto, and
"Subsidiary Security Agreements (U.S.)" means all such Subsidiary Security
Agreements (U.S.), collectively.
"Supplemental Collateral Agent" has the meaning assigned to that term in
subsection 9.1D.
"Swing Line Lender" means CIBC, or any Person serving as a successor
Administrative Agent hereunder, in its capacity as Swing Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line
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Lender to make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"Swing Line Loans" means the Loans made by Swing Line Lender to Company
pursuant to subsection 2.1A(iv).
"Swing Line Note" means any promissory note of Company issued pursuant to
subsection 2.1E to evidence the Swing Line Loans of Swing Line Lender,
substantially in the form of Exhibit VI-B annexed hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Syndication Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed and all related liabilities.
"Term Loans" means, collectively, the Tranche A Term Loans and the AXELs
Series B.
"Term Notes" means, collectively, the Tranche A Term Notes and the AXEL
Series B Notes.
"Title Company" means, collectively, Chicago Title Insurance Company, Ticor
Title Insurance Company and/or one or more other title insurance companies
reasonably satisfactory to Administrative Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of repaying any
Refunded Swing Line Loans or reimbursing the applicable Issuing Lender for any
amount drawn under any Letter of Credit but not yet so applied) plus (ii) the
Equivalent U.S. $ Amount of the aggregate principal amount of all outstanding
Swing Line Loans plus (iii) the Letter of Credit Usage.
"Tranche A Term Loan Commitment" means the commitment of a Lender to make a
Tranche A Term Loan to Company pursuant to subsection 2.1A(i), and "Tranche A
Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche A Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the Tranche A Term Loans, that
Lender's Tranche A Term Loan Commitment and (ii) after the funding of the
Tranche A Term Loans, the outstanding principal amount of the Tranche A Term
Loan of that Lender.
"Tranche A Term Loans" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(i).
"Tranche A Term Notes" means any promissory notes of Company issued
pursuant to subsection 2.1E to evidence the Tranche A Term Loans of any Lenders,
substantially in the form of Exhibit IV annexed hereto, as they may be amended,
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supplemented or otherwise modified from time to time.
"Transaction Costs" means the fees, costs and expenses payable by Company
on or before the Closing Date in connection with the transactions contemplated
by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"U.K. Guaranty and Debenture" means the Guarantee and Debenture (U.K.)
executed and delivered by Mitel Telecom on the Closing Date and to be executed
and delivered by additional U.K. Subsidiaries of Company from time to time
thereafter in accordance with subsection 6.8, substantially in the form of
Exhibit XXIV annexed hereto.
"U.K. Pledge Agreement" means the Company Pledge Agreement (U.K.) executed
and delivered by Company on the Closing Date, substantially in the form of
Exhibit XXV annexed hereto.
"U.K. Plessey Entities" means PSL, AEI Semiconductors Limited, MEDL, UK
Cablevision Limited and GEC Plessey Semiconductor Overseas Limited, each a U.K.
Subsidiary of Company after giving effect to the Acquisition.
"U.K. Subsidiary" means each Subsidiary of Company incorporated under the
laws of England and Wales, Scotland or Northern Ireland.
"U.S. Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates,
which is not exempted by Section 4(b)(4) of ERISA.
"U.S. GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in 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 each case as the same are applicable to the
circumstances as of the date of determination.
"U.S. Pension Plan" means any U.S. Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
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1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiii)
of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
D. Each reference herein to any Loan Document (including to any such Loan
Document as it may be separately defined herein) shall be deemed to include a
reference to such document as it may be amended, supplemented or otherwise
modified from time to time.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Optional Notes.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in subsections
2.1A(i), 2.1A(ii) and 2.1A(iii) and Swing Line Lender hereby agrees to make the
Loans described in subsection 2.1A(iv).
(i) Tranche A Term Loans. Each Lender severally agrees to lend to
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche A Term Loan Commitments to be used for
the purposes identified in subsection 2.5A. The amount of each Lender's
Tranche A
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Term Loan Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the Tranche A Term Loan Commitments is
$85,000,000; provided that the Tranche A Term Loan Commitments of Lenders
shall be adjusted to give effect to any assignments of the Tranche A Term
Loan Commitments pursuant to subsection 10.1B. Each Lender's Tranche A Term
Loan Commitment shall expire immediately and without further action on
February 20, 1998 if the Tranche A Term Loans are not made on or before
that date. Company may make only one borrowing under the Tranche A Term
Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) AXELs Series B. Each Lender severally agrees to lend to Company
on the Closing Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the AXEL Series B Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's AXEL
Series B Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the AXEL Series B Commitments is
$150,000,000; provided that the AXEL Series B Commitments of Lenders shall
be adjusted to give effect to any assignments of the AXEL Series B
Commitments pursuant to subsection 10.1B. Each Lender's AXEL Series B
Commitment shall expire immediately and without further action on February
20, 1998 if the AXELs Series B are not made on or before that date. Company
may make only one borrowing under the AXEL Series B Commitments. Amounts
borrowed under this subsection 2.1A(i) and subsequently repaid or prepaid
may not be reborrowed.
(iii) Revolving Loans. Each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company
from time to time during the period from the Closing Date to but excluding
the Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the Revolving Loan
Commitments to be used for the purposes identified in subsection 2.5B. The
original amount of each Lender's Revolving Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate original
amount of the Revolving Loan Commitments is $75,000,000; provided that the
Revolving Loan Commitments of Lenders shall be adjusted to give effect to
any assignments of the Revolving Loan Commitments pursuant to subsection
10.1B; and provided, further that the amount of the Revolving Loan
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4B(ii) and 2.4B(iii).
Each Lender's Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date; provided that
each Lender's Revolving Loan Commitment shall expire immediately and
without further action on February 20, 1998 if the Term Loans are not made
on or before that date. Amounts borrowed under this subsection 2.1A(iii)
may be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
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Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the Revolving Loan Commitments then in
effect.
(iv) Swing Line Loans. Swing Line Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment; provided, however, that, upon receipt
by Swing Line Lender of a notice from Administrative Agent that one or more
of the applicable conditions specified in subsection 4.1 or 4.2 are not
then satisfied, no further Swing Line Loans shall be made. The original
amount of the Swing Line Loan Commitment is Cdn. $5,000,000; provided that
any reduction of the Revolving Loan Commitments made pursuant to subsection
2.4B(ii) or 2.4B(iii) which reduces the aggregate Revolving Loan
Commitments to an amount less than the then current amount of the Swing
Line Loan Commitment shall result in an automatic corresponding reduction
of the Swing Line Loan Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the part of
Company, any Agent or Swing Line Lender. The Swing Line Loan Commitment
shall expire on the Revolving Loan Commitment Termination Date and all
Swing Line Loans and all other amounts owed hereunder with respect to the
Swing Line Loans shall be paid in full no later than that date; provided
that the Swing Line Loan Commitment shall expire immediately and without
further action on February 20, 1998 if the Term Loans are not made on or
before that date. Amounts borrowed under this subsection 2.1A(iv) may be
repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loans and the Swing Line Loan Commitment shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the Revolving Loan Commitments then in
effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Company), no later than 10:00 A.M. (Toronto time) on
the first Business Day in advance of the proposed Funding Date, a notice
(which shall be deemed to be a Notice of Borrowing given by Company)
requesting Lenders having Revolving Loan Exposure to make Revolving Loans
that are Base Rate Loans on such Funding Date in an amount equal to the
Equivalent U.S. $ Amount of such Swing Line Loans (the "Refunded Swing Line
Loans") outstanding on the date such notice is given which Swing Line
Lender requests such Lenders to prepay. Anything contained in this
Agreement to the contrary notwithstanding, (i) the proceeds of such
Revolving Loans
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made by such Lenders other than Swing Line Lender shall be immediately
converted by Administrative Agent to the Equivalent Cdn. $ Amount and
delivered by Administrative Agent to Swing Line Lender (and not to Company)
and applied to repay a corresponding portion of the Refunded Swing Line
Loans and (ii) on the day such Revolving Loans are made, Swing Line
Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to
be paid with the proceeds of a Revolving Loan made by Swing Line Lender,
and such portion of the Swing Line Loans deemed to be so paid shall no
longer be outstanding as Swing Line Loans and shall no longer be due under
the Swing Line Note, if any, of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans and
shall be due under the Revolving Note, if any, of Swing Line Lender.
Company hereby authorizes Administrative Agent and Swing Line Lender to
charge Company's accounts with Administrative Agent and Swing Line Lender
(up to the amount available in each such account) in order to immediately
pay Swing Line Lender the amount of the Refunded Swing Line Loans to the
extent the proceeds of such Revolving Loans made by Lenders having
Revolving Loan Exposure, including the Revolving Loan deemed to be made by
Swing Line Lender, are not sufficient to repay in full the Refunded Swing
Line Loans. If any portion of any such amount paid (or deemed to be paid)
to Swing Line Lender should be recovered by or on behalf of Company from
Swing Line Lender in bankruptcy, by assignment for the benefit of creditors
or otherwise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the request of
Swing Line Lender as provided in the immediately preceding paragraph in an
amount sufficient to repay any amounts owed to Swing Line Lender in respect
of any outstanding Swing Line Loans or (b) the Revolving Loan Commitments
are terminated at a time when any Swing Line Loans are outstanding, each
Lender having Revolving Loan Exposure shall be deemed to, and hereby agrees
to, have purchased a participation in Canadian Dollars in such outstanding
Swing Line Loans in an amount equal to its Pro Rata Share (calculated, in
the case of the foregoing clause (b), immediately prior to such termination
of the Revolving Loan Commitments) of the unpaid amount of such Swing Line
Loans together with accrued interest thereon. Upon one Business Day's
notice from Swing Line Lender, each such Lender shall deliver to Swing Line
Lender an amount in Canadian Dollars equal to its respective participation
in same day funds at the Funding and Payment Office. In order to further
evidence such participation (and without prejudice to the effectiveness of
the participation provisions set forth above), each Lender having Revolving
Loan Exposure agrees to enter into a separate participation agreement at
the request of Swing Line Lender in form and substance reasonably
satisfactory to Swing Line Lender. In the event any such Lender fails to
make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and thereafter at
the Base Rate. In the event Swing Line Lender receives a payment of any
amount in which other Lenders having Revolving Loan Exposure have purchased
participations as provided in this paragraph, Swing Line Lender shall
promptly distribute to each such other Lender its Pro Rata Share of such
payment.
Anything contained herein to the contrary notwithstanding, the
obligation of
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each Lender having Revolving Loan Exposure to make Revolving Loans for the
purpose of repaying any Refunded Swing Line Loans pursuant to the second
preceding paragraph and each such Lender's obligation to purchase a
participation in any unpaid Swing Line Loans pursuant to the immediately
preceding paragraph shall be absolute and unconditional and shall not be
affected by any circumstance, including (a) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Swing
Line Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event of
Default; (c) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries; (d) any breach of this Agreement or any other Loan
Document by any party thereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
that such obligations of each such Lender are subject to the condition that
(X) Swing Line Lender believed in good faith that all conditions under
Section 4 to the making of the applicable Refunded Swing Line Loans or
other unpaid Swing Line Loans, as the case may be, were satisfied at the
time such Refunded Swing Line Loans or unpaid Swing Line Loans were made or
(Y) the satisfaction of any such condition not satisfied had been waived in
accordance with subsection 10.6 prior to or at the time such Refunded Swing
Line Loans or other unpaid Swing Line Loans were made.
B. Borrowing Mechanics. Tranche A Term Loans or AXELs Series B or Revolving
Loans made on any Funding Date (other than Revolving Loans made pursuant to a
request by Swing Line Lender pursuant to subsection 2.1A(iv) for the purpose of
repaying any Refunded Swing Line Loans or Revolving Loans made pursuant to
subsection 3.3B for the purpose of reimbursing any Issuing Lender for the amount
of a drawing under a Letter of Credit issued by it) shall be in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
that amount. Whenever Company desires that Lenders make Term Loans or Revolving
Loans it shall deliver to Administrative Agent a Notice of Borrowing no later
than 10:00 A.M. (Toronto time) at least three Business Days in advance of the
proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one
Business Day in advance of the proposed Funding Date (in the case of a Base Rate
Loan). The Notice of Borrowing shall specify (i) the proposed Funding Date
(which shall be a Business Day), (ii) the amount and type of Loans requested,
(iii) with respect to any other Loans made during the Initial Period, that such
Loans shall be Base Rate Loans, (iii) in the case of Revolving Loans not made
during the Initial Period, whether such Loans shall be Base Rate Loans or
Eurodollar Rate Loans, (v) in the case of any Loans requested to be made as
Eurodollar Rate Loans, the initial Interest Period requested therefor, and (vi)
in the case of Swing Line Loans that such Loans shall bear interest by reference
to the Canadian Prime Rate. Term Loans and Revolving Loans may be continued as
or converted into Base Rate Loans and Eurodollar Rate Loans in the manner
provided in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.
Whenever Company desires that Swing Line Lender make a Swing Line Loan, it
shall deliver to Agent a Notice of Borrowing no later than 12:00 Noon (Toronto
time); provided that Swing Line Loans (i) may be made on the same day's
telephone request by Company to Administrative Agent, providing the same
information to Administrative Agent as would be contained in a Notice of
Borrowing (which shall be deemed to have been
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provided); and (ii) shall be made by Administrative Agent without notice from
Company in respect of any overdraft in Company's account with Swing Line Lender
or in connection with Company's "purchase card program" with Swing Line Lender
on Swing Line Lender's customary terms and conditions for such program. All
Swing Line Loans shall be made by Administrative Agent in accordance with the
terms of this Agreement and Swing Line Lender's usual and customary
documentation, if any, for the provision of swing line credit services.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to in this subsection 2.1B
that Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
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<PAGE>
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be of the proposed borrowing. Each Lender shall make the
amount of its Loan available to Administrative Agent not later than 12:00 Noon
(Toronto time) on the applicable Funding Date, and (other than with respect to
any Swing Line Loan made without notice from Company pursuant to subsection
2.1B) Swing Line Lender shall make the amount of its Swing Line Loan available
to Administrative Agent not later than 2:00 pm (Toronto time) on the applicable
Funding Date, in each case in same day funds in Dollars, at the Funding and
Payment Office. Except as provided in subsection 2.1A(iv) or subsection 3.3B
with respect to Revolving Loans used to repay Refunded Swing Line Loan or to
reimburse any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it, upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Closing Date) and
4.2 (in the case of all Loans), Administrative Agent shall make the proceeds of
such Loans available to Company on the applicable Funding Date by causing an
amount of same day funds in Dollars (or with respect to Swing Line Loans only,
in Canadian Dollars) equal to the proceeds of all such Loans received by
Administrative Agent from Lenders or Swing Line Lender, as the case may be, to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.
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<PAGE>
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses
of Lenders and the Commitments and Loans of each Lender from time to time
(the "Register"). The Register shall be available for inspection by Company
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Administrative Agent shall record in the Register the Tranche A
Term Loan Commitment, AXEL Series B Commitment and Revolving Loan
Commitment and the Tranche A Term Loan, AXEL Series B and Revolving Loans
from time to time of each Lender, the Swing Line Lone Commitment and the
Swing Line Loans from time to time of Swing Line Lender, and each repayment
or prepayment in respect of the principal amount of the Tranche A Term
Loan, AXEL Series B or Revolving Loans of each Lender or the Swing Line
Loans of Swing Line Lender. Any such recordation shall be conclusive and
binding on Company and each Lender, absent manifest error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect any Lender's Commitments or Company's Obligations in
respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including any
Notes held by such Lender) the amount of the Tranche A Term Loan, AXEL
Series B and each Revolving Loan made by it and each payment in respect
thereof. Any such recordation shall be conclusive and binding on Company,
absent manifest error; provided that failure to make any such recordation,
or any error in such recordation, shall not affect any Lender's Commitments
or Company's Obligations in respect of any applicable Loans; and provided,
further that in the event of any inconsistency between the Register and any
Lender's records, the recordations in the Register shall govern and be
conclusive and binding on such Lender, absent manifest error.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates CIBC to serve as Company's agent solely
for purposes of maintaining the Register as provided in this subsection
2.1D, and Company hereby agrees that, to the extent CIBC serves in such
capacity, CIBC and its officers, directors, employees, agents and
affiliates shall constitute Indemnitees for all purposes under subsection
10.3.
E. Optional Notes. If so requested by any Lender by written notice to
Company
39
<PAGE>
(with a copy to Administrative Agent) at least two Business Days prior to the
Closing Date or at any time thereafter, Company shall execute and deliver to
such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to subsection 10.1) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a promissory note or promissory notes to
evidence such Lender's Tranche A Term Loan, AXEL Series B, Revolving Loans or
Swing Line Loans, substantially in the form of Exhibit IV, Exhibit V, Exhibit VI
or Exhibit XXXII annexed hereto, respectively, with appropriate insertions.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Canadian Prime Rate. The applicable basis for
determining the rate of interest with respect to any Term Loan or any Revolving
Loan shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Term Loan or any Revolving
Loan may be changed from time to time pursuant to subsection 2.2D. If on any day
a Term Loan or Revolving Loan is outstanding with respect to which notice has
not been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, Tranche A
Term Loans and Revolving Loans shall bear interest through maturity as
follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Base Rate Margin for Tranche A Term Loans; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin for Tranche
A Term Loans.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the AXELs
Series B shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Base Rate Margin for AXELs Series B; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin for AXELs
Series B.
(iii) Subject to the provisions of subsections 2.2E and 2.7, the Swing
Line Loans shall bear interest through maturity at the sum of the Canadian
Prime Rate plus the Applicable Base Rate Margin for Tranche A Term Loans.
40
<PAGE>
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Tranche A
Term Loans shall extend beyond February 12, 2003, no Interest Period with
respect to any portion of the AXELs Series B shall extend beyond December
26, 2003, and no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
(vi) no Interest Period with respect to any portion of the Tranche A
Term Loans or AXELs Series B shall extend beyond a date on which Company is
required to make a scheduled payment of principal of the Tranche A Term
Loans or AXELs Series B, as the case may be, unless the sum of (a) the
aggregate principal amount of Tranche A Term Loans or AXELs Series B, as
the case may be, that are Base Rate Loans plus (b) the aggregate principal
amount of Tranche A Term Loans or AXELs Series B, as the case may be, that
are Eurodollar Rate Loans with Interest Periods expiring on or before such
date equals or exceeds the principal amount required to be paid on the
Tranche A Term Loans or AXELs Series B, as the case may be, on such date;
(vii) there shall be no more than five Interest Periods outstanding at
any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
41
<PAGE>
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Swing Line Loans or Base Rate Loans, respectively (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Tranche A Term Loans, AXELs Series B or Revolving Loans equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that amount from
Loans bearing interest at a rate determined by reference to one basis to Loans
bearing interest at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $5,000,000 and
integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate
Loan; provided, however, that a Eurodollar Rate Loan may only be converted into
a Base Rate Loan on the expiration date of an Interest Period applicable
thereto; provided further, however, that no Loan may be made as or converted
into a Eurodollar Rate Loan during the Initial Period.
Company shall deliver a Notice of Conversion/Continuation to Administrative
Agent no later than 10:00 A.M. (Toronto time) at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to a Base
Rate Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify
(i) the proposed conversion/continuation date (which shall be a Business Day),
(ii) the amount and type of the Loan to be converted/continued, (iii) the nature
of the proposed conversion/continuation, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of
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<PAGE>
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after
the related Interest Rate Determination Date, and Company shall be bound to
effect a conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and any interest
payments thereon not paid when due and any fees and other amounts then due and
payable hereunder, shall thereafter bear interest (including post-petition
interest in any proceeding under the Bankruptcy Code or other applicable
bankruptcy laws) payable upon demand (i) at a rate that is, to the extent
permitted by applicable law, 2% per annum in excess of the interest rate
otherwise payable at the time of the occurrence of such Event of Default under
this Agreement with respect to the applicable Loans (or, in the case of any such
fees and other amounts, at a rate which is, to the extent permitted by
applicable law, 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Base Rate Loans) and (ii) to the extent the increased
rate under clause (i) above is not permitted by applicable law, at the interest
rate otherwise payable at the time of the occurrence of such Event of Default
under this Agreement with respect to the applicable Loans (or, in the case of
any such fees and other amounts, at the interest rate otherwise payable under
this Agreement for Base Rate Loans); provided that, in the case of Eurodollar
Rate Loans, upon the expiration of the Interest Period in effect at the time any
Event of Default has occurred and is continuing, such Eurodollar Rate Loans
shall thereupon become Base Rate Loans and shall thereafter bear interest
payable upon demand (a) to the extent permitted by applicable law at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans and (b) to the extent the increased rate
under clause (a) above is not permitted by applicable law, at the interest rate
otherwise payable under this Agreement for Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i) in
the case of Base Rate Loans and Swing Line Loans bearing interest by reference
to the Canadian Prime Rate, on the basis of a 365-day or 366-day year, as the
case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
For the purposes of the Interest Act (Canada), (i) whenever any interest or
fee under this Agreement is calculated using a rate based on a year of 360 days,
such rate determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year of 360 days, (y)
multiplied by the actual number of days in the calendar year in which the period
for which such interest or fee is payable (or compounded) ends, and (z) divided
by 360, (ii) the principal of deemed reinvestment of interest does not apply to
any interest calculation under this Agreement, and (iii) the rates of
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interest stipulated in the Agreement are intended to be nominal rates and not
effective rates or yields.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender having Revolving Loan Exposure in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to the average of the daily excess of the Revolving Loan Commitments over
the sum of (i) the aggregate principal amount of outstanding Revolving Loans,
(but not any outstanding Swing Line Loans) plus (ii) the Letter of Credit Usage
multiplied by 1/2 of 1% per annum, such commitment fees to be calculated on the
basis of a 360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on March 1, June 1, September 1 and December 1 of each
year, commencing on the first such date to occur after the Closing Date, and on
the Revolving Loan Commitment Termination Date.
B. Other Fees. Company agrees to pay to Syndication Agent and
Administrative Agent such fees in the amounts and at the times separately agreed
upon between Company, Syndication Agent and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of Proceeds of
Collateral and Payments Under Guaranties.
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Tranche A Term Loans. Company shall make
principal payments on the Tranche A Term Loans in installments on the dates
and in the amounts set forth below:
================================================================================
Scheduled Repayment
Date of Tranche A Term Loans
- --------------------------------------------------------------------------------
June 26, 1998 $2,000,000
- --------------------------------------------------------------------------------
September 25, 1998 $2,000,000
- --------------------------------------------------------------------------------
December 25, 1998 $2,000,000
- --------------------------------------------------------------------------------
March 26, 1999 $4,000,000
- --------------------------------------------------------------------------------
June 25, 1999 $4,000,000
- --------------------------------------------------------------------------------
September 24, 1999 $4,000,000
- --------------------------------------------------------------------------------
December 24, 1999 $4,000,000
- --------------------------------------------------------------------------------
March 31, 2000 $4,000,000
- --------------------------------------------------------------------------------
June 30, 2000 $4,000,000
- --------------------------------------------------------------------------------
September 29, 2000 $4,000,000
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================================================================================
Scheduled Repayment
Date of Tranche A Term Loans
- --------------------------------------------------------------------------------
December 29, 2000 $4,000,000
- --------------------------------------------------------------------------------
March 30, 2001 $5,000,000
- --------------------------------------------------------------------------------
June 29, 2001 $5,000,000
- --------------------------------------------------------------------------------
September 28, 2001 $5,000,000
- --------------------------------------------------------------------------------
December 26, 2001 $5,000,000
- --------------------------------------------------------------------------------
March 29, 2002 $5,250,000
- --------------------------------------------------------------------------------
June 28, 2002 $5,250,000
- --------------------------------------------------------------------------------
September 27, 2002 $5,250,000
- --------------------------------------------------------------------------------
December 27, 2002 $5,250,000
- --------------------------------------------------------------------------------
February 12, 2003 $6,000,000
- --------------------------------------------------------------------------------
TOTAL $85,000,000
================================================================================
; provided that the scheduled installments of principal of the Tranche A
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche A Term Loans in
accordance with subsection 2.4B(iv); and provided, further that the Tranche
A Term Loans and all other amounts owed hereunder with respect to the
Tranche A Term Loans shall be paid in full no later than February 12, 2003,
and the final installment payable by Company in respect of the Tranche A
Term Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by Company
under this Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of AXELs Series B. Company shall make
principal payments on the AXELs Series B in installments on the dates and
in the amounts set forth below:
================================================================================
Scheduled
Repayment
Date of AXELs Series B
- --------------------------------------------------------------------------------
June 26, 1998 $750,000
- --------------------------------------------------------------------------------
September 25, 1998 $375,000
- --------------------------------------------------------------------------------
December 25, 1998 $375,000
- --------------------------------------------------------------------------------
March 26, 1999 $375,000
- --------------------------------------------------------------------------------
June 25, 1999 $375,000
- --------------------------------------------------------------------------------
September 24, 1999 $375,000
- --------------------------------------------------------------------------------
December 24, 1999 $375,000
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================================================================================
Scheduled
Repayment
Date of AXELs Series B
- --------------------------------------------------------------------------------
March 31, 2000 $375,000
- --------------------------------------------------------------------------------
June 30, 2000 $375,000
- --------------------------------------------------------------------------------
September 29, 2000 $375,000
- --------------------------------------------------------------------------------
December 29, 2000 $375,000
- --------------------------------------------------------------------------------
March 30, 2001 $375,000
- --------------------------------------------------------------------------------
June 29, 2001 $375,000
- --------------------------------------------------------------------------------
September 28, 2001 $375,000
- --------------------------------------------------------------------------------
December 26, 2001 $375,000
- --------------------------------------------------------------------------------
March 29, 2002 $375,000
- --------------------------------------------------------------------------------
June 28, 2002 $375,000
- --------------------------------------------------------------------------------
September 27, 2002 $375,000
- --------------------------------------------------------------------------------
December 27, 2002 $375,000
- --------------------------------------------------------------------------------
March 28, 2003 $35,625,000
- --------------------------------------------------------------------------------
June 27, 2003 $35,625,000
- --------------------------------------------------------------------------------
September 26, 2003 $35,625,000
- --------------------------------------------------------------------------------
December 26, 2003 $35,625,000
- --------------------------------------------------------------------------------
TOTAL $150,000,000
================================================================================
; provided that the scheduled installments of principal of the AXELs Series
B set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the AXELs Series B in accordance with subsection
2.4B(iv); and provided, further that the AXELs Series B and all other
amounts owed hereunder with respect to the AXELs Series B shall be paid in
full no later than December 26, 2003, and the final installment payable by
Company in respect of the AXELs Series B on such date shall be in an
amount, if such amount is different from that specified above, sufficient
to repay all amounts owing by Company under this Agreement with respect to
the AXELs Series B.
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B. Prepayments and Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic
notice to Administrative Agent on or prior to 12:00 Noon (Toronto time) on
the date of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay any Swing
Line Loan on any Business Day in whole or in part in any amount. Company
may, upon not less than one Business Day's prior written or telephonic
notice, in the case of Base Rate Loans, and three Business Days' prior
written or telephonic notice, in the case of Eurodollar Rate Loans, in each
case given to Administrative Agent by 12:00 Noon (New York City time) on
the date required and, if given by telephone, promptly confirmed in writing
to Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone
to each Lender), at any time and from time to time prepay any Term Loans or
Revolving Loans on any Business Day in whole or in part in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess
of that amount; provided, however, that a Eurodollar Rate Loan may only be
prepaid on the expiration of the Interest Period applicable thereto. Notice
of prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iv) and shall be accompanied by a
prepayment premium to the extent required pursuant to subsection 2.4B(v).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may,
upon not less than three Business Days' prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount. Company's notice
to Administrative Agent shall designate the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial
reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan
Commitments. Subject to the limitations set forth in subsection
2.4B(iv)(e), the Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments to be applied as set
forth below or as more specifically provided in subsection 2.4B(iv) and to
be accompanied by a prepayment premium to the extent required pursuant to
subsection 2.4B(v):
(a) Prepayments and Reductions From Net Asset Sale Proceeds. No
later than the first Business Day following the date of receipt by
Company or
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<PAGE>
any of its Subsidiaries of any Net Asset Sale Proceeds in respect of
any Asset Sale, Company shall prepay the Loans and/or the Revolving
Loan Commitments shall be permanently reduced in an aggregate amount
equal to such Net Asset Sale Proceeds; provided, however, that upon
receipt by Company or any of its Subsidiaries of any such Net Asset
Sale Proceeds, so long as no Potential Event of Default or Event of
Default shall have occurred and be continuing and to the extent that
the aggregate amount of Net Asset Sale Proceeds from the Closing Date
through the date of determination does not exceed $5,000,000 in the
aggregate in the 12 month period which commences on the Closing Date
or in any 12 month period which commences on each anniversary thereto,
Company may deliver to Administrative Agent an Officers' Certificate
setting forth (1) that portion of such Net Asset Sale Proceeds (such
portion being the "Proposed Asset Sale Reinvestment Proceeds") that
Company or such Subsidiary intends to reinvest in equipment or other
tangible or intangible productive assets of the general type used in
the business (excluding research and development costs) of Company and
its Subsidiaries (such equipment and other assets being "Eligible
Assets") within 180 days of such date of receipt and (2) the proposed
use of such Proposed Asset Sale Reinvestment Proceeds and such other
information with respect to such reinvestment as Administrative Agent
may reasonably request, and Company shall, or shall cause one or more
of its Subsidiaries to, promptly and diligently apply such Proposed
Asset Sale Reinvestment Proceeds to such reinvestment purposes;
provided, however, that at Company's option, such Proposed Asset Sale
Reinvestment Proceeds may be applied to prepay outstanding Revolving
Loans (without a reduction in Revolving Loan Commitments) to the full
extent thereof. In addition, Company shall, no later than 180 days
after receipt of such Proposed Asset Sale Reinvestment Proceeds that
have not theretofore been applied to the Obligations, make an
additional prepayment of the Loans (and/or the Revolving Loan
Commitments shall be reduced) in the full amount of all such Proposed
Asset Sale Reinvestment Proceeds that have not theretofore been so
reinvested in Eligible Assets; provided that Company shall not be
required to make any prepayment of the Loans to the extent that the
Net Asset Sale Proceeds from the Closing Date through the date of
determination does not exceed $500,000.
(b) Prepayments and Reductions from Net Insurance/ Condemnation
Proceeds. No later than the first Business Day following the date of
receipt by Administrative Agent or by Company or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds that are
required to be applied to prepay the Loans and/or reduce the Revolving
Loan Commitments pursuant to the provisions of subsection 6.4C,
Company shall prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an aggregate amount equal to the
amount of such Net Insurance/Condemnation Proceeds minus (if (1) no
Event of Default shall have occurred and be continuing and (2) Company
shall have delivered to Administrative Agent, on or before such first
Business Day, the Officers' Certificate described in subsection
6.4C(ii)), any Proposed Insurance Reinvestment Proceeds; provided,
however, that at Company's option, such Proposed Insurance
Reinvestment Proceeds may be applied to prepay outstanding Revolving
Loans (without a reduction in Revolving Loan Commitments) to the full
extent thereof. In addition, no later than 180 days after receipt of
any Proposed Insurance Reinvestment Proceeds,
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Company shall prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an amount equal to the amount of any
such Proposed Insurance Reinvestment Proceeds that have not
theretofore been applied to the costs of repairing, restoring or
replacing the applicable assets of Company or its Subsidiaries or
reinvested in Eligible Assets; provided that Company shall not be
required to make any prepayment of the Loans to the extent that the
Net Insurance/Condemnation Proceeds from the Closing Date through the
date of determination does not exceed $500,000.
(c) Prepayments Due to Issuance of Debt. On the date of receipt
by Company or any of its Subsidiaries of the Cash proceeds of any
Indebtedness, including debt Securities of Company or any of its
Subsidiaries (other than Indebtedness expressly permitted pursuant to
subsections 7.1(i) through 7.1(vi) (such proceeds, net of underwriting
discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses,
being the "Net Indebtedness Proceeds"), Company shall prepay the Loans
in an aggregate amount equal to such Net Indebtedness Proceeds;
provided however that payment or acceptance of amounts provided for in
this subsection 2.4B(iii)(c) shall not constitute a waiver of any
Event of Default resulting from the incurrence of such Indebtedness or
otherwise prejudice any rights or remedies of Agents or Lenders.
(d) Prepayments and Reductions Due to Issuance of Equity
Securities. On the date of receipt by Company of the Cash proceeds
(any such proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including
reasonable legal fees and expenses, being "Net Equity Proceeds") from
the issuance of any equity Securities of Company, Company shall prepay
the Loans and/or the Revolving Loan Commitments shall be permanently
reduced in an aggregate amount equal to (1) with respect to any such
Net Equity Proceeds received during the period commencing on the
Closing Date and continuing through the first anniversary of the
Closing Date, 75% of such Net Equity Proceeds and (2) at any time
following the first anniversary of the Closing Date, either (X) 75% of
such Net Equity Proceeds or, (Y) if the Consolidated Leverage Ratio is
not more than 1.25:1.0 on the date such Net Equity Proceeds are
received, 50% of such Net Equity Proceeds.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year commencing with Fiscal Year 1999, Company shall,
no later than 90 days after the end of such Fiscal Year, prepay the
Loans and/or the Revolving Loan Commitments shall be permanently
reduced in an aggregate amount equal to (1) with respect to
Consolidated Excess Cash Flow for Fiscal Year 1999, 75% of such
Consolidated Excess Cash Flow and (2) for each subsequent Fiscal Year,
either (X) 75% of such Consolidated Excess Cash Flow or, (Y) if the
Consolidated Leverage Ratio is not more than 1.25:1.0 on the last day
of any such Fiscal Year, 50% of such Consolidated Excess Cash Flow.
(f) Calculations of Net Proceeds Amounts; Additional Prepayments
and Reductions Based on Subsequent Calculations. Concurrently with any
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prepayment of the Loans and/or reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(e), Company shall
deliver to Administrative Agent an Officers' Certificate demonstrating
the calculation of the amount (the "Net Proceeds Amount") of the
applicable Net Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, the applicable Net Indebtedness Proceeds or Net Equity
Proceeds (as such terms are defined in subsections 2.4B(iii)(c) and
(d), or the applicable Consolidated Excess Cash Flow, as the case may
be, that gave rise to such prepayment and/or reduction. In the event
that Company shall subsequently determine that the actual Net Proceeds
Amount was greater than the amount set forth in such Officers'
Certificate, Company shall promptly make an additional prepayment of
the Loans (and/or, if applicable, the Revolving Loan Commitments shall
be permanently reduced) in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess.
(g) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall from time to time prepay first the
Swing Line Loan and second the Revolving Loans to the extent necessary
so that the Total Utilization of Revolving Loan Commitments shall not
at any time exceed the Revolving Loan Commitments then in effect.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to subsection
2.4B(i) shall be applied as specified by Company in the applicable
notice of prepayment; provided that in the event Company fails to
specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied first to repay outstanding Swing Line
Loans to the full extent thereof, second to repay outstanding
Revolving Loans to the full extent thereof, and third to repay
outstanding Term Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall be
applied to prepay the Tranche A Term Loans and the AXELs Series B on a
pro rata basis (in accordance with the respective outstanding
principal amounts thereof) and to reduce the scheduled installments of
principal of the Tranche A Term Loans and AXELs Series B set forth in
subsections 2.4A(i) and 2.4A(ii) on a pro rata basis.
(b) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(f) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to
the extent of any remaining portion of the Applied Amount, to prepay
the Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, third to the extent of any remaining portion of the
Applied Amount, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, and fourth, to the
extent of
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any remaining portion of the Applied Amount, to further permanently
reduce the Revolving Loan Commitments to the full extent thereof;
provided, however, that notwithstanding any other provision in this
Agreement to the contrary, to the extent that any such application of
any portion of any Applied Amount to the AXELs Series B would violate
the limitations set forth in subsection 2.4B(iv)(e), then such portion
of the Applied Amount, shall be applied first to prepay the Tranche A
Term Loans to the full extent thereof, second in the order as
otherwise set forth in clauses "second", "third" and "fourth" above
and third to the extent of any remaining portion of any such Applied
Amount, to the payment of any other amounts which may then be due and
owing by Company under any Loan Document (except to the extent any
such payment would violate the limitations set forth in subsection
2.4B(iv)(e)), and fourth, to be returned to Company.
(c) Application of Mandatory Prepayments of Term Loans to Tranche
A Term Loans and AXELs Series B and the Scheduled Installments of
Principal Thereof. Subject to the provisions of subsection
2.4B(iv)(b), any mandatory prepayments of the Term Loans pursuant to
subsection 2.4B(iii) shall be applied to prepay the Tranche A Term
Loans and the AXELs Series B on a pro rata basis in accordance with
the respective outstanding principal amounts thereof. Any mandatory
prepayments applied to the Tranche A Term Loans or the AXELs Series B
pursuant to this subsection 2.4B(iv)(c) shall be applied to reduce the
scheduled installments of principal of the Tranche A Term Loans or the
AXELs Series B, as the case may be, set forth in subsection 2.4A(i) or
2.4A(ii), respectively, as follows:
(1) Net Asset Sale Proceeds, Net Insurance/ Condemnation
Proceeds, Net Indebtedness Proceeds and Net Equity Proceeds. Any
such mandatory prepayments pursuant to subsections 2.4B(iii)(a),
(b), (c) and (d) (and any related such mandatory prepayments
pursuant to subsection 2.4B(iii)(f)) shall be applied on a pro
rata basis (in accordance with the respective outstanding
principal amounts thereof) to each such scheduled installment
that is unpaid at the time of such prepayment.
(2) Consolidated Excess Cash Flow. Any such mandatory
prepayments pursuant to subsections 2.4B(iii)(e) (and any related
such mandatory prepayments pursuant to subsection 2.4B(iii)(f))
shall be applied to reduce such scheduled installments in inverse
order of maturity.
(d) Waiver of Certain Mandatory Prepayments. Anything contained
herein to the contrary notwithstanding, so long as any Tranche A Term
Loans are outstanding, in the event Company is required to make any
mandatory prepayment (a "Waivable Mandatory Prepayment") of the AXELs
Series B pursuant to subsection 2.4B(iii)(e), (X) not less than three
Business Days prior to the date (the "Required Prepayment Date") on
which Company is required to make such Waivable Mandatory Prepayment,
Company shall notify Administrative Agent of the amount of such
prepayment, and Administrative Agent will promptly thereafter notify
each Lender holding an outstanding AXEL Series B of the amount of such
Lender's Pro Rata Share of such
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Waivable Mandatory Prepayment and such Lender's option to refuse such
amount, (Y) each such Lender may exercise such option by giving
written notice to Company and Administrative Agent of its election to
do so on or before the first Business Day (the "Cutoff Date") prior to
the Required Prepayment Date (it being understood that any Lender
which does not notify Company and Administrative Agent of its election
to exercise such option on or before the Cutoff Date shall be deemed
to have elected, as of the Cutoff Date, not to exercise such option),
and (Z) on the Required Prepayment Date, Company shall pay to
Administrative Agent the amount of the Waivable Mandatory Prepayment,
which amount shall be applied (1) in an amount equal to that portion
of the Waivable Mandatory Prepayment payable to those Lenders that
have elected not to exercise such option, to prepay the AXELs Series B
of such Lenders (which prepayment shall be applied to the scheduled
installments of principal of the AXELs Series B in accordance with
subsection 2.4B(iv)(c)) and (2) in an amount equal to that portion of
the Waivable Mandatory Prepayment otherwise payable to those Lenders
that have elected to exercise such option, to prepay the Tranche A
Term Loans (which prepayment shall be applied to the scheduled
installments of principal of the Tranche A Term Loans in accordance
with subsection 2.4B(iv)(c).
(e) Limitation on Mandatory Prepayments of AXELs Series B.
Anything contained herein to the contrary notwithstanding, during the
period commencing on the Closing Date and continuing through the fifth
anniversary of the Closing Date, in no event shall the sum of (X) the
aggregate amount of all mandatory prepayments of AXELs Series B
pursuant to subsection 2.4B(iii) plus (Y) the aggregate amount of all
scheduled prepayments of AXELs Series B pursuant to subsection
2.4A(ii) exceed an amount equal to 25% of the aggregate principal
amount of the AXELs Series B on the Closing Date, it being understood
and agreed that no such amount shall be payable or required to be paid
under this Agreement.
(f) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Considering Tranche A Term Loans, AXELs Series B and
Revolving Loans being prepaid separately, any prepayment thereof shall
be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
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(v) Prepayment Premium.
(a) Concurrently with any voluntary prepayments made pursuant to
subsection 2.4B(i) or any mandatory prepayments made pursuant to
subsection 2.4B(iii)(a), (b) or (c) the proceeds of which voluntary or
mandatory prepayment are applied to the AXELs Series B pursuant to
subsection 2.4B(iv), Company shall pay to Administrative Agent, for
distribution to the AXEL Series B Lenders (i) in the event such
prepayment is made on or prior to the first anniversary of the Closing
Date, a prepayment premium equal to 1.0% of the principal amount of
such prepayment, and (ii) in the event such prepayment is made during
the six month period next succeeding the first anniversary of the
Closing Date, a prepayment premium equal to 0.50% of the principal
amount of such prepayment. The prepayment of any amounts owing to an
AXEL Series B Lender pursuant to subsection 2.10 shall not require the
payment of any prepayment premium pursuant to this subsection 2.4B(v).
(b) Aggregate prepayment premiums received by Administrative
Agent shall be apportioned among all outstanding AXELs Series B to
which such prepayment premiums relate, in each case proportionately to
the AXELs Series B Lenders' respective Pro Rata Shares.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent
not later than 12:00 Noon (Toronto time) on the date due at the Funding and
Payment Office for the account of Lenders; funds received by Administrative
Agent after that time on such due date shall be deemed to have been paid by
Company on the next succeeding Business Day. Company shall make each
payment of Swing Line Loans in Canadian Dollars and each payment of
Revolving Loans and Term Loans in Dollars. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent in
order to cause timely payment to be made to Administrative Agent of all
principal, interest, fees and expenses due hereunder (subject to sufficient
funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro
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Rata Share of all such payments received by Administrative Agent, any
prepayment premiums payable to such Lender when received by Administrative
Agent pursuant to Section 2.4(v), and the commitment fees of such Lender
when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under Guaranties.
(i) Application of Proceeds of Collateral. Except as provided in
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as
defined in such Collateral Document) or Indebtedness (as defined in the
U.K. Guarantee and Debenture and the U.K. Pledge Agreement) in the
following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Administrative
Agent in connection therewith, and all amounts for which
Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under
such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to the
payment of all other such Secured Obligations or such Indebtedness for
the
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ratable benefit of the Agents, Lenders and Lender Counterparties; and
(c) thereafter, to the extent of any excess such proceeds, to the
payment to or upon the order of such Loan Party or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received
by Administrative Agent under any Guaranty shall be applied promptly from
time to time by Administrative Agent in the following order of priority:
(a) To the payment of the costs and expenses of any collection or
other realization under such Guaranty, including reasonable
compensation to Administrative Agent and its agents and counsel, and
all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, all in accordance with
the terms of this Agreement and such Guaranty;
(b) thereafter, to the extent of any excess such payments, to the
payment of all other Guarantied Obligations (as defined in the
Subsidiary Guaranty) or Indebtedness (as defined in the U.K. Guarantee
and Debenture), as applicable, for the ratable benefit of the Agents,
Lenders and Lender Counterparties; and
(c) thereafter, to the extent of any excess such payments, to the
payment to the applicable Subsidiary Guarantor or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
2.5 Use of Proceeds.
A. Term Loans. The proceeds of the Term Loans shall be applied by Company
to fund the Acquisition Financing Requirements.
B. Revolving Loans; Swing Line Loans. The proceeds of any Revolving Loans
shall be applied by Company (i) for general corporate purposes, which may
include the making of intercompany loans to any of Company's wholly-owned
Subsidiaries, in accordance with subsection 7.1(iv), for their own general
corporate purposes and (ii) to acquire equity interest or other business assets
and pay related expenses in connection with any Permitted Acquisition. The
proceeds of any Swing Line Loans shall be applied by Company for the purposes
set forth in clause (i) above.
C. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
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2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
10:00 A.M. (Toronto time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, then, and in any such event, such Lender shall be an
"Affected Lender" and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until
such notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected
Loans") shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with
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respect to the Affected Loans or when required by law, and (d) the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an
Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment or any conversion of
any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after
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the expiration of any Interest Period then in effect for that Loan and (ii)
subject to the provisions of subsection 2.6D, any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to a requested
borrowing or conversion/continuation that has not yet occurred shall be deemed
to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions of
subsection 2.7B (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any addition resulting from a higher rate of, or
from a change in the calculation of, income or capital tax relating to such
Lender's income or capital in general) with respect to this Agreement or
any of its obligations hereunder or any payments to such Lender (or its
applicable lending office) of principal, interest, fees or any other amount
payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, CDIC insurance, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
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B. Withholding of Taxes.
(i) All payments by Company hereunder under this Agreement shall be
made free and clear of and without deduction or withholding for any and all
Taxes imposed by Canada (or any political subdivision or taxing authority
thereof), unless such Taxes are required by applicable law to be deducted
or withheld. If Company shall be required by applicable law to deduct or
withhold any such Taxes from or in respect of any amount payable hereunder,
except as provided in the next sentence, (a) the amount payable shall be
increased (and for greater certainty, in the case of interest, the amount
of interest shall be increased) as may be necessary so that after making
all required deductions or withholdings (including deductions or
withholdings applicable to any additional amounts paid under this
subsection 2.7B), the affected Lenders or Administrative Agent, as the case
may be, receive an amount equal to the amount they would have received if
no such deduction or withholding had been made; (b) Company shall make such
deductions or withholdings; and (c) Company shall immediately pay the full
amount deducted or withheld to the relevant governmental entity in
accordance with applicable law. Company will not be required to pay any
such additional amounts to any Lender or Administrative Agent by reason of
that Lender being connected with Canada otherwise than merely by lending
money to the Company pursuant to this Agreement.
(ii) Company agrees to immediately pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, financial
institutions duties, debits taxes or similar levies (all such taxes,
charges, duties and levies being referred to as "Other Taxes" which arise
from any payment made by Company hereunder or from the execution, delivery
or registration of, or otherwise with respect to this Agreement.
(iii) Company agrees to indemnify Lenders and Administrative Agent for
the full amount of Taxes or Other Taxes not deducted or withheld and paid
by the Company in accordance with subsection 2.7B to the relevant taxation
or other authority and any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable by Company under this subsection 2.7B, paid by Lenders
or Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not any such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within
15 days from the date Administrative Agent or the relevant Lenders make
written demand therefor. A certificate as to the amount of such Taxes or
Other Taxes, providing reasonable details of the calculation thereof, and
evidence of payment thereof submitted to Company by Administrative Agent or
relevant Lender shall be prima facie evidence of the amount due from
Company to Administrative Agent or such Lender.
(iv) Company shall furnish to Administrative Agent and Lenders the
original or a certified copy of a receipt evidencing payment of Taxes or
Other Taxes made by Company within 30 days after the date of any payment of
Taxes or Other Taxes.
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in
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the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling such
Lender as a consequence of, or with reference to, such Lender's Loans or
Commitments or Letters of Credit or participations therein or other obligations
hereunder with respect to the Loans or the Letters of Credit to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
referred to in the next sentence, Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such additional
amounts, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses payable
by Company pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing Lender
to Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.
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2.9 Defaulting Lenders.
Anything contained herein to the contrary notwithstanding, in the event
that any Lender (a "Defaulting Lender") defaults (a "Funding Default") in its
obligation to fund any Revolving Loan (a "Defaulted Revolving Loan") in
accordance with subsection 2.1 as a result of the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority, then (i) during any Default Period (as defined
below) with respect to such Defaulting Lender, such Defaulting Lender shall be
deemed not to be a "Lender" for purposes of voting on any matters (including the
granting of any consents or waivers) with respect to any of the Loan Documents,
(ii) to the extent permitted by applicable law, until such time as the Default
Excess (as defined below) with respect to such Defaulting Lender shall have been
reduced to zero, (a) any voluntary prepayment of the Revolving Loans pursuant to
subsection 2.4B(i) shall, if Company so directs at the time of making such
voluntary prepayment, be applied to the Revolving Loans of other Lenders as if
such Defaulting Lender had no Revolving Loans outstanding and the Revolving Loan
Exposure of such Defaulting Lender were zero, and (b) any mandatory prepayment
of the Revolving Loans pursuant to subsection 2.4B(iii) shall, if Company so
directs at the time of making such mandatory prepayment, be applied to the
Revolving Loans of other Lenders (but not to the Revolving Loans of such
Defaulting Lender) as if such Defaulting Lender had funded all Defaulted
Revolving Loans of such Defaulting Lender, it being understood and agreed that
Company shall be entitled to retain any portion of any mandatory prepayment of
the Revolving Loans that is not paid to such Defaulting Lender solely as a
result of the operation of the provisions of this clause (b), (iii) such
Defaulting Lender's Revolving Loan Commitment and outstanding Revolving Loans
and such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage shall
be excluded for purposes of calculating the commitment fee payable to Lenders
pursuant to subsection 2.3A in respect of any day during any Default Period with
respect to such Defaulting Lender, and such Defaulting Lender shall not be
entitled to receive any commitment fee pursuant to subsection 2.3A with respect
to such Defaulting Lender's Revolving Loan Commitment in respect of any Default
Period with respect to such Defaulting Lender, and (iv) the Total Utilization of
Revolving Loan Commitments as at any date of determination shall be calculated
as if such Defaulting Lender had funded all Defaulted Revolving Loans of such
Defaulting Lender.
For purposes of this Agreement, (I) "Default Period" means, with respect to
any Defaulting Lender, the period commencing on the date of the applicable
Funding Default and ending on the earliest of the following dates: (A) the date
on which all Revolving Loan Commitments are cancelled or terminated and/or the
Obligations are declared or become immediately due and payable, (B) the date on
which (1) the Default Excess with respect to such Defaulting Lender shall have
been reduced to zero (whether by the funding by such Defaulting Lender of any
Defaulted Revolving Loans of such Defaulting Lender or by the non-pro rata
application of any voluntary or mandatory prepayments of the Revolving Loans in
accordance with the terms of this subsection 2.9 or by a combination thereof)
and (2) such Defaulting Lender shall have delivered to Company and
Administrative Agent a written reaffirmation of its intention to honor its
obligations under this Agreement with respect to its Revolving Loan Commitment,
and (C) the date on which Company, Administrative Agent and Requisite Lenders
waive all Funding Defaults of such Defaulting Lender in writing, and (II)
"Default Excess" means, with respect to any Defaulting Lender, the excess, if
any, of such Defaulting Lender's Pro Rata Share of the aggregate outstanding
principal amount of Revolving Loans of all Lenders (calculated as if all
Defaulting Lenders (other than such Defaulting Lender) had funded all of their
respective Defaulted Revolving Loans) over the
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aggregate outstanding principal amount of Revolving Loans of such Defaulting
Lender.
No Commitment of any Lender shall be increased or otherwise affected, and,
except as otherwise expressly provided in this subsection 2.9, performance by
Company of its obligations under this Agreement and the other Loan Documents
shall not be excused or otherwise modified, as a result of any Funding Default
or the operation of this subsection 2.9. The rights and remedies against a
Defaulting Lender under this subsection 2.9 are in addition to other rights and
remedies which Company may have against such Defaulting Lender with respect to
any Funding Default and which Administrative Agent or any Lender may have
against such Defaulting Lender with respect to any Funding Default.
2.10 Removal or Replacement of a Lender.
A. Anything contained in this Agreement to the contrary notwithstanding, in
the event that:
(i) (a) any Lender shall give notice to Company that such Lender is an
Affected Lender or that such Lender is entitled to receive payments under
subsection 2.7 or subsection 3.6 (any such Lender, an "Increased-Cost
Lender"), (b) the circumstances which have caused such Lender to be an
Affected Lender or which entitle such Lender to receive such payments shall
remain in effect, and (c) such Lender shall fail to withdraw such notice
within five Business Days after Company's request for such withdrawal; or
(ii) (a) any Lender shall become a Defaulting Lender, (b) the Default
Period for such Defaulting Lender shall remain in effect, and (c) such
Defaulting Lender shall fail to cure the default as a result of which it
has become a Defaulting Lender within five Business Days after Company's
request that it cure such default; or
(iii) (a) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions of
this Agreement as contemplated by clauses (i) through (v) of the first
provision to subsection 10.6A, the consent of Requisite Lenders shall have
been obtained but the consent of one or more of such other Lenders (each a
"Non-Consenting Lender") whose consent is required shall not have been
obtained, and (b) the failure to obtain Non-Consenting Lenders' consents
does not result solely from the exercise of Non-Consenting Lenders' rights
(and the withholding of any required consents by Non-Consenting Lenders)
pursuant to the second provision to subsection 10.6A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the "Terminated Lender") to the extent permitted by
subsection 2.10B.
B. Company may, by giving written notice to Administrative Agent and any
Terminated Lender of its election to do so:
(i) elect to (a) terminate the Revolving Loan Commitment, if any, of
such Terminated Lender upon receipt by such Terminated Lender of such
notice and (b) prepay on the date of such termination any outstanding Loans
made by such Terminated Lender, together with accrued and unpaid interest
thereon and any other amounts payable to such Terminated Lender hereunder
pursuant to subsection 2.3,
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subsection 2.6, subsection 2.7 or subsection 3.6 or otherwise; provided
that, in the event such Terminated Lender has any Loans outstanding at the
time of such termination, the written consent of Administrative Agent and
Requisite Lenders (which consent shall not be unreasonably withheld or
delayed) shall be required in order for Company to make the election set
forth in this clause (i); or
(ii) elect to cause such Terminated Lender (and such Terminated Lender
hereby irrevocably agrees) to assign its outstanding Loans and its
Revolving Loan Commitment, if any, in full to one or more Eligible
Assignees (each a "Replacement Lender") in accordance with the provisions
of subsection 10.1B; provided that (a) on the date of such assignment,
Company shall pay any amounts payable to such Terminated Lender pursuant to
subsection 2.3, subsection 2.6, subsection 2.7 or subsection 3.6 or
otherwise as if it were a prepayment and (b) in the event such Terminated
Lender is a Non-Consenting Lender, each Replacement Lender shall consent,
at the time of such assignment, to each matter in respect of which such
Terminated Lender was a Non-Consenting Lender;
provided that (X) Company may not make either of the elections set forth in
clauses (i) or (ii) above with respect to any Non-Consenting Lender unless
Company also makes one of such elections with respect to each other Terminated
Lender which is a Non-Consenting Lender and (Y) Company may not make either of
such elections with respect to any Terminated Lender that is an Issuing Lender
unless, prior to the effectiveness of such election, Company shall have caused
each outstanding Letter of Credit issued by such Issuing Lender to be cancelled.
C. Upon the prepayment of all amounts owing to any Terminated Lender and
the termination of such Terminated Lender's Revolving Loan Commitment, if any,
pursuant to clause (i) of subsection 2.10B, (i) Schedule 2.1 shall be deemed
modified to reflect any corresponding changes in the Revolving Loan Commitments
and (ii) such Terminated Lender shall no longer constitute a "Lender" for
purposes of this Agreement; provided that any rights of such Terminated Lender
to indemnification under this Agreement (including under subsections 2.6D, 2.7,
3.6, 10.2 and 10.3) shall survive as to such Terminated Lender.
2.11 Certain Provisions Regarding Determination of Dollar Equivalent.
A. For purposes of calculating the Total Utilization of Revolving Loan
Commitments, (i) the Equivalent U.S. $ Amount for Canadian Dollars shall be
calculated by Administrative Agent on the second Business Day of each week or,
more frequently, in the discretion of Administrative Agent, and (ii) the
Equivalent U.S. $ Amount for Canadian Dollars shall remain in effect until the
same is recalculated by the Administrative Agent as provided above and notice of
such recalculation is received by Company, it being understood that until such
notice is received, for purposes of calculating the Total Utilization of
Revolving Loan Commitments, the Equivalent U.S. $ Amount shall be that
Equivalent U.S. $ Amount as last reported to Company by the Administrative
Agent. Administrative Agent shall promptly notify Company and the Lenders of
each determination of the Equivalent U.S. $ Amount.
B. For purposes of determining pro rata allocations and "Pro Rata Share"
for purposes of payments or commitment reductions, or determining "Requisite
Class Lenders" or "Required Lenders", all Obligations and Commitments
denominated in Canadian Dollars shall be converted on a hypothetical basis to
Dollars at the Equivalent U.S. $ Amount for
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such currency as then in effect. Such hypothetical conversion shall be done only
for the purposes described above in this subsection 2.11B and shall not affect
the obligations of Company to repay an Obligation in the currency in which such
obligation is denominated.
C. For purposes of applying amounts received under the Loan Documents,
Administrative Agent receiving amounts under the Credit Documents on behalf of
Lenders may convert currencies so that payments are made in the currency in
which the obligation is denominated hereunder. Such conversion shall be made at
the rate at which Administrative Agent could purchase currency in which the
Obligation is denominated with the currency received by Administrative Agent
hereunder at or about 10:00 am (local time in the city in which such currency is
received) on the date payment to Lenders are to be made. Such right of
Administrative Agent shall not affect the obligations of Company to repay an
Obligation in the currency in which such obligation is denominated.
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.
A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(iii) and that Swing Line Lender make
Swing Line Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders having Revolving Loan Exposure issue
Letters of Credit for the account of Company for the purposes specified in the
definitions of Commercial Letters of Credit and Standby Letters of Credit;
provided that all such Commercial Letters of Credit shall provide for sight
drawings. Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties of Company herein set forth, any one or
more of such Lenders may, but (except as provided in subsection 3.1B(ii)) shall
not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Company shall not request that
any such Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Revolving Loan Commitments would exceed the Revolving
Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $20,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) five Business Days prior to the Revolving Loan
Commitment Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender from
agreeing that a Standby Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional period; and
provided, further that such Issuing Lender shall elect not to extend such
Standby Letter of Credit if it has knowledge that an Event of Default has
occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time
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such Issuing Lender must elect whether or not to allow such extension; or
(iv) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (X) the date which is 30 days prior to the
Revolving Loan Commitment Termination Date and (Y) the date which is 180
days from the date of issuance of such Commercial Letter of Credit or (b)
that is otherwise unacceptable to the applicable Issuing Lender in its
reasonable discretion.
B. Mechanics of Issuance.
(i) Request for Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to Administrative Agent a Request for
Issuance of Letter of Credit substantially in the form of Exhibit III
annexed hereto no later than 12:00 Noon (Toronto time) at least three
Business Days (in the case of Standby Letters of Credit) or five Business
Days (in the case of Commercial Letters of Credit), or in each case such
shorter period as may be agreed to by the Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Request for
Issuance of Letter of Credit shall specify (a) the proposed date of
issuance (which shall be a Business Day), (b) whether the Letter of Credit
is to be a Standby Letter of Credit or a Commercial Letter of Credit, (c)
the face amount of the Letter of Credit, (d) in the case of a Letter of
Credit which Company requests to be denominated in a currency other than
Dollars, the currency in which Company requests such Letter of Credit to be
issued, (e) the expiration date of the Letter of Credit, (f) the name and
address of the beneficiary, and (g) either the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents to be presented by the
beneficiary which, if presented by the beneficiary prior to the expiration
date of the Letter of Credit, would require the Issuing Lender to make
payment under the Letter of Credit; provided that the Issuing Lender, in
its reasonable discretion, may require changes in the text of the proposed
Letter of Credit or any such documents; and provided, further that no
Letter of Credit shall require payment against a conforming draft to be
made thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to which such draft
is required to be presented is located) that such draft is presented if
such presentation is made after 10:00 A.M. (in the time zone of such office
of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the
issuance of any Letter of Credit in the event that any of the matters to
which Company is required to certify in the applicable Request for Issuance
of Letter of Credit is no longer true and correct as of the proposed date
of issuance of such Letter of Credit, and upon the issuance of any Letter
of Credit Company shall be deemed to have re-certified, as of the date of
such issuance, as to the matters to which Company is required to certify in
the applicable Request for Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Administrative
Agent of a Request for Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and Administrative Agent shall be
the Issuing Lender with respect thereto. In the event that Administrative
Agent, in its sole discretion, elects not to issue such
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Letter of Credit, Administrative Agent shall promptly so notify Company,
whereupon Company may request any other Lender having Revolving Loan
Exposure to issue such Letter of Credit by delivering to such Lender a copy
of the applicable Request for Issuance of Letter of Credit. Any Lender so
requested to issue such Letter of Credit shall promptly notify Company and
Administrative Agent whether or not, in its sole discretion, it has elected
to issue such Letter of Credit, and any such Lender which so elects to
issue such Letter of Credit shall be the Issuing Lender with respect
thereto. In the event that all other Lenders having Revolving Loan Exposure
shall have declined to issue such Letter of Credit, notwithstanding the
prior election of Administrative Agent not to issue such Letter of Credit,
Administrative Agent shall be obligated to issue such Letter of Credit and
shall be the Issuing Lender with respect thereto, notwithstanding the fact
that the Letter of Credit Usage with respect to such Letter of Credit and
with respect to all other Letters of Credit issued by Administrative Agent,
when aggregated with Administrative Agent's outstanding Revolving Loans and
Swing Line Loans, may exceed Administrative Agent's Revolving Loan
Commitment then in effect; provided that Administrative Agent shall not be
obligated to issue any Letter of Credit denominated in a foreign currency
which in the judgment of Administrative Agent is not readily and freely
available.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter of
Credit the applicable Issuing Lender shall promptly notify Administrative
Agent and each other Lender of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit. Promptly after receipt of
such notice (or, if Administrative Agent is the Issuing Lender, together
with such notice), Administrative Agent shall notify each Lender having
Revolving Loan Exposure of the amount of such Lender's respective
participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each calendar
quarter ending after the Closing Date, so long as any Letter of Credit
shall have been outstanding during such calendar quarter, each Issuing
Lender shall deliver to each other Lender having Revolving Loan Exposure a
report setting forth for such calendar quarter the daily aggregate amount
available to be drawn under the Letters of Credit issued by such Issuing
Lender that were outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, and as of the Closing Date with
respect to each Existing Letter of Credit, each Lender having Revolving Loan
Exposure shall be deemed to, and hereby agrees to, have irrevocably purchased
from the Issuing Lender a participation in such Letter of Credit and any
drawings honored thereunder in an amount equal to such Lender's Pro Rata Share
of the maximum amount which is or at any time may become available to be drawn
thereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
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(i) with respect to each Standby Letter of Credit, (a) a fronting fee,
payable directly to the applicable Issuing Lender for its own account,
equal to .125% per annum of the daily amount available to be drawn under
such Standby Letter of Credit and (b) a letter of credit fee, payable to
Administrative Agent for the account of Lenders having Revolving Loan
Exposure, equal to 1.00% per annum of the daily amount available to be
drawn under such Standby Letter of Credit, each such fronting fee or letter
of credit fee to be payable in arrears on and to (but excluding) each March
1, June 1, September 1 and December 1 of each year and computed on the
basis of a 360-day year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a fronting
fee, payable directly to the applicable Issuing Lender for its own account,
equal to .125% per annum of the daily amount available to be drawn under
such Commercial Letter of Credit and (b) a letter of credit fee, payable to
Administrative Agent for the account of Lenders having Revolving Loan
Exposure, equal to 1.00% per annum of the daily amount available to be
drawn under such Commercial Letter of Credit, each such fronting fee or
letter of credit fee to be payable in arrears on and to (but excluding)
each March 1, June 1, September 1 and December 1 of each year and computed
on the basis of a 360-day year for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) and (ii) above),
documentary and processing charges payable directly to the applicable
Issuing Lender for its own account in accordance with such Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, (1) the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination and (2) any amount described in such clauses which is denominated
in a currency other than Dollars shall be valued based on the applicable
Exchange Rate for such currency as of the applicable date of determination.
Promptly upon receipt by Administrative Agent of any amount described in clause
(i)(b) or (ii)(b) of this subsection 3.2, Administrative Agent shall distribute
to each such Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In the
event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is
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denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Exchange Rate) and in same day funds equal to the amount of
such honored drawing; provided that, anything contained in this Agreement to the
contrary notwithstanding, (i) unless Company shall have notified Administrative
Agent and such Issuing Lender prior to 10:00 A.M. (Toronto time) on the date
such drawing is honored that Company intends to reimburse such Issuing Lender
for the amount of such honored drawing with funds other than the proceeds of
Revolving Loans, Company shall be deemed to have given a timely Notice of
Borrowing to Administrative Agent requesting Lenders to make Revolving Loans
that are Base Rate Loans on the Reimbursement Date in an amount in Dollars
(which amount, in the case of a drawing under a Letter of Credit which is
denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Exchange Rate) equal to the amount of such honored drawing and
(ii) subject to satisfaction or waiver of the conditions specified in subsection
4.2B, Lenders shall, on the Reimbursement Date, make Revolving Loans that are
Base Rate Loans in the amount of such honored drawing, the proceeds of which
shall be applied directly by Administrative Agent to reimburse such Issuing
Lender for the amount of such honored drawing; and provided, further that if for
any reason proceeds of Revolving Loans are not received by such Issuing Lender
on the Reimbursement Date in an amount equal to the amount of such honored
drawing, Company shall reimburse such Issuing Lender, on demand, in an amount in
same day funds equal to the excess of the amount of such honored drawing over
the aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in this
Agreement, and Company shall retain any and all rights it may have against any
Lender resulting from the failure of such Lender to make such Revolving Loans
under this subsection 3.3B.
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C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit.
(i) Payment by Lenders. In the event that Company shall fail for any
reason to reimburse any Issuing Lender as provided in subsection 3.3B in an
amount (calculated, in the case of a drawing under a Letter of Credit
denominated in a currency other than Dollars, by reference to the
applicable Exchange Rate) equal to the amount of any drawing honored by
such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall promptly notify each other Lender having Revolving Loan
Exposure of the unreimbursed amount of such honored drawing and of such
other Lender's respective participation therein based on such Lender's Pro
Rata Share. Each Lender having Revolving Loan Exposure shall make available
to such Issuing Lender an amount equal to its respective participation, in
Dollars and in same day funds, at the office of such Issuing Lender
specified in such notice, not later than 12:00 Noon (Toronto time) on the
first business day (under the laws of the jurisdiction in which such office
of such Issuing Lender is located) after the date notified by such Issuing
Lender. In the event that any Lender having Revolving Loan Exposure fails
to make available to such Issuing Lender on such business day the amount of
such Lender's participation in such Letter of Credit as provided in this
subsection 3.3C, such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the
rate customarily used by such Issuing Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right of
any such other Lender to recover from any Issuing Lender any amounts made
available by such Lender to such Issuing Lender pursuant to this subsection
3.3C in the event that it is determined by the final judgment of a court of
competent jurisdiction that the payment with respect to a Letter of Credit
by such Issuing Lender in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct on the part of such
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
In the event any Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it, such
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of all payments subsequently
received by such Issuing Lender from Company in reimbursement of such
honored drawing when such payments are received. Any such distribution
shall be made to a Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request.
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D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, interest on the amount paid by such Issuing Lender in
respect of each such honored drawing from the date such drawing is honored
to but excluding the date such amount is reimbursed by Company (including
any such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date such
drawing is honored to but excluding the Reimbursement Date, the rate then
in effect under this Agreement with respect to Revolving Loans that are
Base Rate Loans and (b) thereafter, a rate which is (1) to the extent
permitted by applicable law, 2% per annum in excess of the rate of interest
otherwise payable under this Agreement with respect to Revolving Loans that
are Base Rate Loans and (2) to the extent the increased rate under clause
(1) above is not permitted by applicable law, at the interest rate
otherwise payable under this Agreement with respect to Revolving Loans
which are Base Rate Loans. Interest payable pursuant to this subsection
3.3D(i) shall be computed on the basis of a 365-day or 366-day year, as the
case may be, for the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if no demand is made,
on the date on which the related drawing under a Letter of Credit is
reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Lender having Revolving Loan Exposure, out of the interest received by such
Issuing Lender in respect of the period from the date such drawing is
honored to but excluding the date on which such Issuing Lender is
reimbursed for the amount of such drawing (including any such reimbursement
out of the proceeds of Revolving Loans pursuant to subsection 3.3B), the
amount that such other Lender would have been entitled to receive in
respect of the letter of credit fee that would have been payable in respect
of such Letter of Credit for such period pursuant to subsection 3.2 if no
drawing had been honored under such Letter of Credit, and (b) in the event
such Issuing Lender shall have been reimbursed by other Lenders pursuant to
subsection 3.3C(i) for all or any portion of such honored drawing, such
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of any interest received by such
Issuing Lender in respect of that portion of such honored drawing so
reimbursed by other Lenders for the period from the date on which such
Issuing Lender was so reimbursed by other Lenders to but excluding the date
on which such portion of such honored drawing is reimbursed by Company. Any
such distribution shall be made to a Lender at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request.
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3.4 Obligations Absolute.
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
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3.5 Indemnification; Nature of Issuing Lenders' Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
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3.6 Increased Costs and Taxes Relating to Letters of Credit.
Subject to the provisions of subsection 2.7B (which shall be controlling
with respect to the matters covered thereby), in the event that any Issuing
Lender or Lender shall determine (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) that any
law, treaty or governmental rule, regulation or order, or any change therein or
in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by any Issuing Lender or
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any addition
resulting from a higher rate of, or from a change in the calculation of,
income or capital tax relating to such Lender's or such Issuing Lender's
income or capital in general) with respect to the issuing or maintaining of
any Letters of Credit or the purchasing or maintaining of any
participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by any particular
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, CDIC insurance, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
3.7 Existing Letters of Credit.
Notwithstanding anything to the contrary herein, as of the Closing Date,
all of the Existing Letters of Credit shall be deemed to be Letters of Credit
issued hereunder and shall be subject to all of the terms and provisions of this
Agreement, including all terms and provisions applicable to Letters of Credit
under this Agreement. Each Lender having
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Revolving Loan Exposure agrees that its obligations with respect to Letters of
Credit pursuant to subsection 3.3C shall include the Existing Letters of Credit
as of the Closing Date. With respect to each Existing Letter of Credit, for the
period commencing on the Closing Date to and including the expiration date of
any such Existing Letter of Credit, Company shall pay all fees and commissions
set forth in subsection 3.2 at the times and in the manner set forth therein.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans and Initial Revolving Loans and Swing Line Loans.
The obligations of Lenders to make the Term Loans and any Revolving Loans
to be made on the Closing Date are, in addition to the conditions precedent
specified in subsection 4.2, subject to prior or concurrent satisfaction of the
following conditions:
A. Loan Party Documents. On or before the Closing Date, Company shall, and
shall cause each other Loan Party to, deliver to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following with respect to Company or such
Loan Party, as the case may be, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from its
jurisdiction of incorporation and each other state, province or other
jurisdiction in which such Person is qualified as a foreign corporation to
do business and, to the extent requested by Administrative Agent or
Syndication Agent a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date
prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, Memoranda and Articles of
Association or equivalent governing documents, certified as of the Closing
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors (and, where appropriate,
of the shareholders) of such Person approving and authorizing the
execution, delivery and performance of the Loan Documents and Related
Agreements to which it is a party, certified as of the Closing Date by the
corporate secretary or an assistant secretary of such Person as being in
full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party; and
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(vi) Such other documents as Syndication Agent or Administrative Agent
may reasonably request.
B. No Material Adverse Effect. Since September 30, 1997 there shall not
have been (x) any adverse change, or any development involving a prospective
adverse change, in or affecting the general affairs, industry, management,
financial position, or results of operations of Company and its Subsidiaries
taken as a whole or (y) any information submitted to Syndication Agent or
Administrative Agent that proves to have been inaccurate, incomplete or
misleading, and which, in the case of either clause (x) or (y), Syndication
Agent or Administrative Agent, in their reasonable judgment, deem material.
C. Corporate and Capital Structure, Ownership, Management, Etc.
(i) Corporate Structure. The corporate structure of Company, the
Plessey Entities and their respective Subsidiaries after giving effect to
the Acquisition, and all the organizational documents of Company, the
Plessey Entities and their respective Subsidiaries shall be reasonably
satisfactory to Syndication Agent and Administrative Agent.
(ii) Capital Structure and Ownership. The capital structure and
ownership of Company and the Plessey Entities and their respective
Subsidiaries, both before and after giving effect to the Acquisition and
shall be as set forth on Schedule 4.1C annexed hereto.
(iii) Management; Employment Contracts. The management structure of
Company after giving effect to the Acquisition shall be as set forth on
Schedule 4.1C annexed hereto, and Administrative Agent shall have received
copies of, and shall be satisfied with the form and substance of, any and
all employment contracts with senior management of Company.
D. Related Agreements; Certificate of Designations. Syndication Agent and
Administrative Agent shall have received a fully executed or conformed copy of
each Related Agreement and the Certificate of Designations and any documents
executed in connection with the consummation of the transactions contemplated
thereby and each Related Agreement and the Certificate of Designations shall be
in full force and effect and no provision thereof shall have been modified or
waived in any respect reasonably determined by Syndication Agent or
Administrative Agent to be material, in each case without the consent of
Administrative Agent and Syndication Agent.
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E. Matters Relating to Existing Indebtedness.
(i) Termination of Existing Credit Agreements and Related Liens;
Existing Letters of Credit. On the Closing Date, Company and its
Subsidiaries shall have (a) repaid in full all Indebtedness outstanding
under the Existing Credit Agreements (other than that portion of the
Existing Indebtedness permitted remain outstanding hereunder as reflected
on Schedule 7.1 annexed hereto), (b) terminated any commitments to lend or
make other extensions of credit thereunder, (c) delivered to Administrative
Agent all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Company and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Syndication Agent and
Administrative Agent with respect to the cancellation of any letters of
credit outstanding thereunder unless permitted or the issuance of Letters
of Credit to support the obligations of Company and its Subsidiaries with
respect thereto.
(ii) Existing Indebtedness to Remain Outstanding. Administrative Agent
shall have received an Officers' Certificate of Company stating that, after
giving effect to the transactions described in this subsection 4.1E, the
Indebtedness of Loan Parties and the Plessey Entities (other than
Indebtedness under the Loan Documents) shall consist of (a) approximately
(pound)35,000,000 in aggregate principal amount of outstanding Indebtedness
described in Part I of Schedule 7.1 annexed hereto and (b) Indebtedness in
an aggregate amount not to exceed $60,000,000 in respect of Capital Leases
described in Part II of Schedule 7.1 annexed hereto. The terms and
conditions of all such Indebtedness shall be in form and in substance
satisfactory to Administrative Agent, Syndication Agent and Requisite
Lenders.
F. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Company and its Subsidiaries shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case that
are necessary or advisable in connection with the Acquisition, the other
transactions contemplated by the Loan Documents and the Related Agreements, and
the continued operation of the business conducted by Company, the Plessey
Entities and their respective Subsidiaries in substantially the same manner as
conducted prior to the consummation of the Acquisition, and each of the
foregoing shall be in full force and effect, in each case other than those the
failure to obtain or maintain which, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on the Acquisition or the financing thereof. No
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.
G. Consummation of Acquisition.
(i) The structure of the Acquisition shall be reasonably satisfactory
to Syndication Agent and Administrative Agent pursuant to documentation,
including, without limitation, the Acquisition Agreement, reasonably
satisfactory to Syndication Agent and Administrative Agent and all
conditions to the Acquisition contained in such documentation shall have
been satisfied or the fulfillment of such conditions shall have been waived
with the consent of Syndication Agent and Administrative Agent.
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(ii) the Acquisition Agreement shall be in full force and effect in
all material respects and concurrently with the Closing Date the
Acquisition shall have become effective in accordance with the terms of the
Acquisition Agreement;
(iii) The aggregate cash consideration paid to the holders of equity
interests in the Plessey Entities in respect of such equity interests in
connection with the Acquisition shall not exceed $225,000,000;
(iv) Transaction Costs shall not exceed $15,000,000, and
Administrative Agent shall have received evidence to its satisfaction to
such effect;
(v) Administrative Agent shall have received an Officers' Certificate
of Company to the effect set forth in clauses (i)-(iv) above and stating
that Company will proceed to consummate the Acquisition immediately upon
the making of the initial Loans; and
(vi) all security interests in and Liens on the assets of the Plessey
Entities shall have been terminated and released other than Permitted
Encumbrances and Administrative Agent shall have received all such releases
and evidence thereof as may have been requested by Administrative Agent or
Syndication Agent, which releases shall be in form and substance
satisfactory to Syndication Agent.
H. Closing Date Mortgages; Closing Date Mortgage Policies; Environmental
Indemnity; Etc. Administrative Agent shall have received from Company and each
applicable Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized Mortgages,
debentures or equivalent agreements reasonably satisfactory to
Administrative Agent and Syndication Agent (each a "Closing Date Mortgage"
and, collectively, the "Closing Date Mortgages"), in proper form for
recording in all appropriate places in all applicable jurisdictions,
encumbering each Real Property Asset listed in Schedule 4.1H annexed hereto
(each a "Closing Date Mortgaged Property" and, collectively, the "Closing
Date Mortgaged Properties");
(ii) Opinions of Local Counsel. Subject to the provisions of
subsection 6.10B with respect to the Bromont Property, an opinion of
counsel (which counsel shall be reasonably satisfactory to Administrative
Agent) in each state, province or other jurisdiction in which a Closing
Date Mortgaged Property is located with respect to the enforceability of
the form(s) of Closing Date Mortgages to be recorded in such state,
province or other jurisdiction and such other matters as Administrative
Agent or Syndication Agent may reasonably request, in each case in form and
substance reasonably satisfactory to Administrative Agent and Syndication
Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold Interests.
In the case of each Closing Date Mortgaged Property located in the United
States of America consisting of a Leasehold Property, (a) a Landlord
Consent and Estoppel with respect thereto and (b) evidence that such
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. With respect to any Closing Date Mortgaged
Property
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located in the United States of America, (a) ALTA mortgagee title insurance
policies or unconditional commitments therefor or equivalent policies or
commitments reasonably satisfactory to Administrative Agent and Syndication
Agent (the "Closing Date Mortgage Policies") issued by the Title Company
with respect to the Closing Date Mortgaged Properties listed in Part A of
Schedule 4.1H annexed hereto, in amounts not less than the respective
amounts designated therein with respect to any particular Closing Date
Mortgaged Properties, insuring fee simple title to, or a valid leasehold
interest in, as the case may be, each such Closing Date Mortgaged Property
vested in such Loan Party and assuring Administrative Agent that the
applicable Closing Date Mortgages create valid and enforceable First
Priority mortgage Liens on the respective Closing Date Mortgaged Properties
encumbered thereby, subject only to a standard survey exception, which
Closing Date Mortgage Policies (1) shall include an endorsement for
mechanics' liens, for future advances under this Agreement and for any
other matters reasonably requested by Administrative Agent or Syndication
Agent and (2) shall provide for affirmative insurance and such reinsurance
as Administrative Agent or Syndication Agent may reasonably request, all of
the foregoing in form and substance reasonably satisfactory to
Administrative Agent and Syndication Agent; and (b) evidence satisfactory
to Administrative Agent and Syndication Agent that such Loan Party has (i)
delivered to the Title Company all certificates and affidavits required by
the Title Company in connection with the issuance of the Closing Date
Mortgage Policies and (ii) paid to the Title Company or to the appropriate
governmental authorities all expenses and premiums of the Title Company in
connection with the issuance of the Closing Date Mortgage Policies and all
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Closing Date Mortgages in
the appropriate real estate records;
(v) Title Reports. With respect to each Closing Date Mortgaged
Property listed in Part B of Schedule 4.1H annexed hereto, a title report
issued by the Title Company with respect thereto (or title certificate,
report on title or equivalent report with respect to any such Closing Date
Mortgaged Property located outside the United States of America), dated not
more than 30 days prior to the Closing Date and satisfactory in form and
substance to Administrative Agent and Syndication Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title in the Closing Date
Mortgage Policies or in the title reports or title certificates delivered
pursuant to subsection 4.1H(v);
(vii) Matters Relating to U.S. Flood Hazard Properties. With respect
to any Closing Date Mortgaged Property located in the United States of
America, (a) evidence, which may be in the form of a letter from an
insurance broker or a municipal engineer, as to whether (1) any Closing
Date Mortgaged Property is a Flood Hazard Property and (2) the community in
which any such Flood Hazard Property is located is participating in the
National Flood Insurance Program, (b) if there are any such Flood Hazard
Properties, such Loan Party's written acknowledgement of receipt of written
notification from Administrative Agent (1) as to the existence of each such
Flood Hazard Property and (2) as to whether the community in which each
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, and (c) in the event any such Flood Hazard
Property is located in a community that participates in the National Flood
Insurance Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent
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required under the applicable regulations of the Board of Governors of the
Federal Reserve System;
(viii) Real Property Taxes. Evidence satisfactory to the
Administrative Agent and Syndication Agent of the payment by Company of all
unpaid real property taxes due and payable as of the Closing Date in
respect of Closing Date Mortgaged Properties in which Company or any of its
Subsidiaries has a fee simple title or a freehold interest;
(ix) Special U.K. Matters. Delivery to Administrative Agent of (i) the
results of H.M. Land Registry clear priority searches in form 94B in favor
of the Administrative Agent giving a priority period of not less than 28
days relating to Real Property Assets located in the United Kingdom owned
by any Loan Party or Plessey Entity or Subsidiary thereof or (in the case
of unregistered property) H.M. Land Charges Registry searches having an
unexpired priority period of not less than 28 days in respect of all estate
owners since the date of the root of title with any entries thereon
certified as not affecting, (ii) a duly completed and signed Land Registry
application form A4 for the registration of the U.K. Guarantee and
Debenture together with a cheque made payable to H.M. Land Registry in
respect of the registration fee, (iii) all title deeds to the property
located in Wales and identified on Schedule 4.1H annexed hereto, and (iv)
signed but undated Notices of Charge addressed to the landlord of each
Leasehold Property of Mitel Telecom together with a duplicate thereof; and
(x) Environmental Indemnity . If requested by Administrative Agent or
Syndication Agent, an environmental indemnity agreement, satisfactory in
form and substance to Administrative Agent, Syndication Agent and their
respective counsel, with respect to the indemnification of Administrative
Agent and Lenders for any liabilities that may be imposed on or incurred by
any of them as a result of any Hazardous Materials Activity.
I. Security Interests in Collateral. To the extent not otherwise satisfied
pursuant to subsection 4.1H, each of Syndication Agent and Administrative Agent
shall have received evidence satisfactory to it that Company and Subsidiary
Guarantors shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Administrative Agent
and Syndication Agent, desirable in order to charge or create in favor of
Administrative Agent, for the benefit of Lenders, a valid and (upon such filing
and recording) perfected First Priority security interest in or first ranking
mortgage, hypothec or charge on the entire Collateral, subject only to Permitted
Encumbrances. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Administrative
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to Administrative
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all capital stock pledged pursuant to the Company Master Pledge Agreement,
the Subsidiary Pledge Agreements (U.S.), the U.K. Guarantee and Debenture
and (b) all promissory notes (including any Intercompany
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Notes) or, to the extent required to be delivered to Administrative Agent
pursuant to the terms of the Collateral Documents, other instruments (in
each case duly endorsed, where appropriate, in a manner satisfactory to
Administrative Agent) evidencing any Collateral;
(iii) Lien Searches and Termination Statements. Delivery to
Administrative Agent of (a) the results of a recent search by a Person
satisfactory to Administrative Agent, of all effective personal property
financing statements, fixture filings or other similar filings and all
judgment and tax lien filings which may have been made with respect to any
personal or mixed property of any Loan Party, together with copies of all
such filings disclosed by such search, and (b) termination statements or
other discharges, as applicable, duly executed by all applicable Persons
for filing in all applicable jurisdictions as may be necessary to terminate
any effective personal property financing statements, fixture filings or
other similar filings disclosed in such search (other than any such
personal property financing statements, fixture filings or other similar
flings in respect of Liens permitted to remain outstanding pursuant to the
terms of this Agreement);
(iv) Financing Statements and Fixture Filings. Delivery to
Administrative Agent of personal property financing statements and, where
appropriate, fixture filings, and other similar filings duly executed by
each applicable Loan Party with respect to all personal and mixed property
Collateral of such Loan Party, for filing in all jurisdictions as may be
necessary or, in the opinion of Syndication Agent and Administrative Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents;
(v) IP Collateral Filings. Delivery to Administrative Agent of all
cover sheets or other documents or instruments required to be filed with
the PTO, the United States Copyright Office or equivalent authorities in
order to create or perfect Liens in respect of any IP Collateral; and
(vi) Opinions of Local Counsel. Delivery to Administrative Agent of an
opinion of counsel (which counsel shall be reasonably satisfactory to
Syndication Agent and Administrative Agent) under the laws of each
jurisdiction in which any Loan Party or any personal or mixed property
Collateral is located with respect to the creation and perfection of the
security interests in favor of Administrative Agent in such Collateral and
such other matters governed by the laws of such jurisdiction regarding such
security interests as Syndication Agent and Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Syndication Agent and Administrative Agent.
J. Certificates of Title. Administrative Agent shall have received a
Certificate of Title produced by Slaughter and May or a Report on Title produced
by Morgan Bruce relating to any interest owned by any of the Plessey Entities or
any of their respective Subsidiaries in any real property located in the United
Kingdom and in relation to the property located in Wales and identified on
Schedule 4.1H annexed hereto in a form reasonably satisfactory to the
Administrative Agent and Syndication Agent.
K. Environmental Reports. Administrative Agent shall have received reports
and other information, in form, scope and substance satisfactory to Syndication
Agent and Administrative Agent, regarding environmental matters relating to
Company, the Plessey
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Entities and their respective Subsidiaries and the Facilities, which reports
shall include (i) a Phase I environmental assessment for each of the Facilities
listed in Schedule 4.1K annexed hereto (collectively, the "Phase I Report")
which (a) conforms to the ASTM Standard Practice for Environmental Site
Assessments: Phase I Environmental Site Assessment Process, E 1527, (b) was
conducted by one or more environmental consulting firms reasonably satisfactory
to Administrative Agent, (c) includes an assessment of asbestos-containing
materials at such Facilities, and (d) includes an estimate of the reasonable
worst-case cost of investigating and remediating any Hazardous Materials
Activity identified in the Phase I Report as giving rise to an actual or
potential violation of any Environmental Law or as presenting a material risk of
giving rise to a material Environmental Claim, and (ii) a current compliance
audit setting forth an assessment of Company's, each Plessey Entity's and their
respective Subsidiaries' and such Facilities' current and past compliance with
Environmental Laws and an estimate of the cost of rectifying any non-compliance
with current Environmental Laws identified therein and the cost of compliance
with reasonably anticipated future Environmental Laws identified therein.
L. Financial Statements; Pro Forma Balance Sheet. On or before the Closing
Date, Lenders shall have received from Company (i) each of the financial
statements listed in clauses (i) through (iv) of subsection 5.3 and, with
respect to the items listed in clauses (i) and (ii) of subsection 5.3, certified
by the chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(ii) pro forma consolidated balance sheets of Company and its Subsidiaries as at
the Closing Date, reflecting the consummation of the Acquisition, the related
financings and the other transactions contemplated by the Loan Documents and the
Related Agreements, which pro forma financial statements shall be in form and
substance satisfactory to Lenders.
M. Financial Projections. Lenders shall have received from Company
financial projections for Company and its Subsidiaries after giving effect to
the Acquisition for a period of not less than six years following the Closing
Date, which financial projections shall be in form and substance satisfactory to
Syndication Agent and Administrative Agent.
N. Material Contracts. All Material Contracts, licenses, permits,
franchises, insurance policies and other intangible rights of Company, the
Plessey Entities and their respective Subsidiaries shall be reasonably
satisfactory to Syndication Agent and Administrative Agent.
O. Solvency Assurances. On the Closing Date, Administrative Agent,
Syndication Agent and Lenders shall have received (i) a letter from Houlihan,
Lokey, Howard & Zukin, dated the Closing Date and addressed to Syndication
Agent, Administrative Agent and Lenders, in form and substance satisfactory to
Syndication Agent and Administrative Agent and with appropriate attachments, and
(ii) a Financial Condition Certificate dated the Closing Date, substantially in
the form of Exhibit XII annexed hereto and with appropriate attachments, in each
case demonstrating that, after giving effect to the consummation of the
Acquisition, the related financings and the other transactions contemplated by
the Loan Documents and the Related Agreements, Company will be Solvent.
P. Evidence of Insurance. Syndication Agent and Administrative Agent shall
have received a certificate from Company's insurance broker or other evidence
satisfactory to Syndication Agent and Administrative Agent that all insurance
required to be maintained
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pursuant to subsection 6.4 is in full force and effect and that Administrative
Agent on behalf of Lenders has been named as additional insured and/or loss
payee thereunder to the extent required under subsection 6.4.
Q. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of Rubin Baum Levin Constant & Friedman, special
United States counsel for Loan Parties, McCarthy Tetrault, special Canadian
counsel for Loan Parties, Morgan Bruce, special British counsel for Loan
Parties, Lagerlof & Leman, special Swedish counsel for Loan Parties, Lang
Michener, special Ontario counsel for the Loan Parties, Nigel Bennet, special
Barbadian counsel for the Loan Parties, Donald G. McIntyre, general counsel to
Company, and Edward J. Silberhorn, general counsel to the U.S. Loan Parties, in
form and substance reasonably satisfactory to Syndication Agent, Administrative
Agent and their respective counsel, dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibits VIII-A,
VIII-B, VIII-C, VIII-D, VIII-E, VIII-F, VIII-G, and VIII-H, respectively,
annexed hereto and as to such other matters as Syndication Agent and
Administrative Agent acting on behalf of Lenders may reasonably request and (ii)
evidence satisfactory to Syndication Agent and Administrative Agent that Company
has requested such counsel to deliver such opinions to Lenders.
R. Opinions of Syndication Agents' Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Syndication Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX annexed hereto and as to such
other matters as Syndication Agent acting on behalf of Lenders may reasonably
request.
S. Opinions of Counsel Delivered Under Related Agreements. Syndication
Agent and Administrative Agent and their respective counsel shall have received
copies of each of the opinions of counsel delivered to the parties under the
Related Agreements, together with a letter from each such counsel (to the extent
not inconsistent with such counsel's established internal policies) authorizing
Lenders to rely upon such opinion to the same extent as though it were addressed
to Lenders.
T. Auditor's Letter. Administrative Agent shall have received an executed
Auditor's Letter.
U. Actuary's Letter. Administrative Agent shall have received a certified
copy of the executed Actuary's Letter referred to in Schedule 5 of the
Acquisition Agreement and a letter addressed to the Agents and Lenders from
Company's actuary confirming the adequacy of the basis of the calculation of the
Transfer Amount as provided in such Actuary's Letter, which letter shall be
satisfactory to Administrative Agent and Syndication Agent.
V. Mitel AB. Mitel AB shall have filed an application for exemption from
the relevant Swedish tax authority requesting permission for Mitel AB to become
a Subsidiary Guarantor and grant a charge on all its assets to Administrative
Agent for the benefit of Lenders, which application shall be in form and
substance reasonably satisfactory to Administrative Agent and Syndication Agent.
W. Intercompany Notes. Administrative Agent and Syndication Agent shall
have received original executed copies of the Discounted Note Documents and the
Intergroup Loan Agreement, in each case including all Intercompany Notes issued
thereunder to be pledged to
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the Administrative Agent pursuant to the Collateral Documents, which documents
shall be in form and substance satisfactory to Administrative Agent and
Syndication Agent.
X. Fees. Company shall have paid to Administrative Agent and Syndication
Agent the fees payable on the Closing Date referred to in subsection 2.3.
Y. Representations and Warranties; Performance of Agreements. Company shall
have delivered to Administrative Agent an Officers' Certificate, in form and
substance satisfactory to Syndication Agent and Administrative Agent, to the
effect that the representations and warranties in Section 5 hereof are true,
correct and complete in all material respects on and as of the Closing Date to
the same extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent, Syndication Agent and Requisite Lenders.
Z. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Syndication
Agent or Administrative Agent, acting on behalf of Lenders, and their respective
counsel shall be satisfactory in form and substance to Syndication Agent and
Administrative Agent and such counsel, and Syndication Agent and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Syndication Agent and Administrative Agent
may reasonably request.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date,
in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of Company or by any
executive officer of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Administrative
Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that
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would constitute an Event of Default or a Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall
not violate any law including Regulation G, Regulation T, Regulation U
or Regulation X of the Board of Governors of the Federal Reserve
System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation
or arbitration against or affecting Company or any of its Subsidiaries
or any property of Company or any of its Subsidiaries that has not
been disclosed by Company in writing pursuant to subsection 5.6 or
6.1(x) prior to the making of the last preceding Loans (or, in the
case of the initial Loans, prior to the execution of this Agreement),
and there shall have occurred no development not so disclosed in any
such action, suit, proceeding, governmental investigation or
arbitration so disclosed, that, in either event, in the opinion of
Administrative Agent, Syndication Agent or of Requisite Lenders, would
reasonably be expected to have a Material Adverse Effect; and no
injunction or other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to be issued
shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated by this Agreement or the making of Loans
hereunder.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Request for Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as the
applicable Issuing Lender may reasonably require in connection with the issuance
of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit
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were a Funding Date.
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders to purchase participations therein, Company represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Each Loan Party is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation as specified in Schedule 5.1
annexed hereto. Each Loan Party has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted and
as proposed to be conducted, to enter into the Loan Documents and Related
Agreements to which it is a party and to carry out the transactions contemplated
thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are, and after giving
effect to the Acquisition on the Closing Date will be, engaged only in the
businesses permitted to be engaged in pursuant to subsection 7.14.
D. Subsidiaries. The Plessey Entities and their respective Subsidiaries and
the Subsidiaries of Company are each identified in Schedule 5.1 annexed hereto.
The capital stock of each Plessey Entity, each Subsidiary thereof and each
Subsidiary of Company identified in Schedule 5.1 annexed hereto is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each Plessey Entity, each Subsidiary
thereof and each Subsidiary of Company identified in Schedule 5.1 annexed hereto
is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority has not had and will not have a Material Adverse Effect. Schedule
5.1 annexed hereto correctly sets forth the ownership interest of the Plessey
Entities, their respective Subsidiaries and each Subsidiary of Company
identified therein, both before and after giving effect to the Acquisition.
E. Permitted Acquisitions. Company and each Subsidiary making any Permitted
Acquisition shall have the corporate power to consummate such Permitted
Acquisition upon the consummation thereof, on the terms set forth in any
applicable purchase agreement,
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agreement of merger or other operative agreement. Upon the consummation of any
Permitted Acquisition, such Permitted Acquisition shall have been duly
authorized by all necessary action of Company and any of its Subsidiaries
participating therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by Loan Parties of
the Loan Documents and the Related Agreements to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and such
Related Agreements and the consummation of any Permitted Acquisition do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws (or comparable organizational documents) of
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of Company or
any of its Subsidiaries (other than, with respect to the exercise of certain
remedies under the U.K. Guarantee and Debenture, as such exercise may be
affected by certain government contracts in the United Kingdom), (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Loan Documents in favor of Administrative Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of its
Subsidiaries, except for such approvals or consents which will be or have been
obtained on or before the Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the application of the proceeds of the Loans and the consummation of
the transactions contemplated by the Loan Documents and such Related Agreements
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any multi-national, federal,
provincial, state, municipal, local or other governmental authority or
regulatory body except for such consents and approvals that have been obtained
on or prior to the Closing Date. As of the Closing Date, all consents or
approvals from or notice to or filing with any multi-national, federal,
provincial, state, municipal, local or other (domestic or foreign) regulatory
authority required to be obtained on or before such date in connection with the
Acquisition or documents referred to in the previous sentence and the
transactions contemplated thereby will have been accomplished in compliance in
all material respects with applicable laws and regulations.
D. Binding Obligation. Each of the Loan Documents and Related Agreements
has been duly executed and delivered by each Loan Party that is a party thereto
and is the legally valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
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5.3 Financial Condition.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries (other than the Plessey Entities
and their respective Subsidiaries) as at March 28, 1997 and the related
consolidated statements of income, stockholders equity and cash flows of Company
and its Subsidiaries (other than the Plessey Entities and their respective
Subsidiaries) for the Fiscal Year then ended, (ii) the unaudited consolidated
balance sheets of Company and its Subsidiaries (other than the Plessey Entities
and their respective Subsidiaries) for the period from March 28, 1997 to
December 31, 1997 and the related unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries (other than
the Plessey Entities and their respective Subsidiaries) for the nine months then
ended, (iii) pursuant to Schedule 4.1L annexed hereto, the financial statements
and financial schedules of the Plessey Entities and their respective
Subsidiaries with the exception of the dormant companies set forth on such
Schedule, and (iv) pursuant to Schedule 4.1L annexed hereto, the unaudited
financial statements of the Plessey Entities and their respective Subsidiaries
for the period from March 31, 1997 to December 31, 1997. All such statements set
forth in clauses (i) and (ii) above were prepared in conformity with GAAP and
all such statements set forth in clauses (iii) and (iv) above were prepared in
conformity with accounting principles generally accepted in the United Kingdom
or the applicable country, as the case may be, and all such statements set forth
in clauses (i) and (ii) fairly present, in all material respects, the financial
position of the entities described in such financial statements taken as a whole
as at the respective dates thereof and the results of operations and cash flows
of the entities described therein taken as a whole for each of the periods then
ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. All such
statements set forth in clauses (iii) and (iv) above fairly present, in all
material respects, the financial position of the entities described therein in
such financial statements as at the respective dates thereof and the results of
operations and cash flows of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Company does not (and will not following the funding of the initial Loans and
the consummation of the Acquisition) have any Contingent Obligation (except as
set forth on Schedule 7.4 annexed hereto), contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that is not
reflected in the foregoing financial statements or the notes thereto and which
in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or any of its Subsidiaries taken as a whole.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since September 30, 1997 and assuming consummation of the Acquisition, no
event or change has occurred that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect. Neither Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or set
apart any sum or property for, any Restricted Junior Payment or agreed to do so
except as permitted by subsection 7.5.
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5.5 Title to Properties; Liens; Real Property.
A. Title to Properties; Liens. Each Loan Party and each Subsidiary thereof
has (i) good, sufficient and legal title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case of
all other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial statements delivered pursuant to subsection 6.1, in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business or as otherwise permitted under subsection
7.7. Except as permitted by this Agreement, all such properties and assets are
free and clear of Liens.
B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto
contains a true, accurate and complete list of (i) all fee and freehold
properties of each Loan Party and its Subsidiaries and (ii) all leases,
subleases or assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each Real Property
Asset of any Loan Party, regardless of whether such Loan Party is the landlord
or tenant (whether directly or as an assignee or successor in interest) under
such lease, sublease or assignment. Except as specified in Schedule 5.5 annexed
hereto, each agreement listed in clause (ii) of the immediately preceding
sentence is in full force and effect and Company does not have knowledge of any
default that has occurred and is continuing thereunder, and each such agreement
constitutes the legally valid and binding obligation of each applicable Loan
Party, enforceable against such Loan Party in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles.
5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto, there are no actions,
suits, proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Company, any Plessey Entity or any of their respective
Subsidiaries) at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (including any Environmental Claims) that
are pending or, to the knowledge of Company, threatened against or affecting
Company, any Plessey Entity or any of their respective Subsidiaries or any
property of Company, any Plessey Entity or their respective Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of Company, any Plessey Entity or any of
their respective Subsidiaries (i) is in violation of any applicable laws
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.
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5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, (i) all tax returns and
reports of Company and its Subsidiaries and of the Plessey Entities listed on
Part A of Schedule 4.1L required to be filed by any of them have been timely
filed, and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Company and its
Subsidiaries and such Plessey Entities and upon their respective properties,
assets, income, businesses and franchises which are due and payable have been
paid when due and payable and (ii) to the best knowledge of Company, all tax
returns and reports of the Plessey Entities listed on Part B of Schedule 4.1L
required to be filed by any of them have been timely filed, and all taxes shown
on such tax returns to be due and payable and all assessments, fees and other
governmental charges upon such Plessey Entities and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. Company knows of no proposed tax assessment
against Company, any Plessey Entity or any of their respective Subsidiaries
which is not being actively contested by Company, such Plessey Entity or such
Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
Contracts.
A. None of Company, any Plessey Entity or any of their respective
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any, would not
have a Material Adverse Effect.
B. None of Company, any Plessey Entity or any of their respective
Subsidiaries is a party to or is otherwise subject to any agreements or
instruments or any charter or other internal restrictions which, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Closing Date. Except as described on
Schedule 5.8, all such Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
5.9 Governmental Regulation.
None of Company, any Plessey Entity or any of their respective Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
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5.10 Securities Activities.
A. None of Company, any Plessey Entity or 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 purchasing or carrying any
Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25% of
the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
A. Except as set forth in Schedule 5.11, each Loan Party and each of their
respective ERISA Affiliates are in material compliance with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each U.S. Employee Benefit Plan, and
have performed all of their obligations under each U.S. Employee Benefit Plan,
except where noncompliance or failure to perform could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party and each Subsidiary
is in material compliance with all applicable provisions and requirements of
relevant law with respect to each Foreign Benefit Plan, and have performed all
of their obligations under each Foreign Benefit Plan, except where noncompliance
or failure to perform could not reasonably be expected to have a Material
Adverse Effect.
B. Except as set forth in Schedule 5.11, (i) each U.S. Employee Benefit
Plan which is intended to qualify under Section 401(a) of the Internal Revenue
Code is so qualified and (ii) each Foreign Benefit Plan which is intended to
qualify for beneficial tax treatment under the laws of the relevant country is
so qualified.
C. Except as set forth in Schedule 5.11, no ERISA Event and no Foreign
Benefit Plan Event has occurred or is continuing in respect of which there is
any outstanding liability of any Loan Party, any of its Subsidiaries or any of
their respective ERISA Affiliates, except where such ERISA Event or Foreign
Benefit Plan Event could not reasonably be expected to have a Material Adverse
Effect. No ERISA Event or Foreign Benefit Plan Event is reasonably expected to
occur.
D. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of any Loan Party,
any of its Subsidiaries or any of their respective ERISA Affiliates.
E. Except as set forth on Schedule 5.11 annexed hereto, all Pension Plan
contributions required under applicable law have been made, and each Pension
Plan is fully funded on an ongoing basis (including, where applicable, the
making of adequate contributions to a pension insurance scheme in respect of
employees covered by a Foreign Pension Plan). As of the most recent valuation
date for any U.S. Pension Plan, the amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA), individually or in
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the aggregate for all U.S. Pension Plans (excluding for purposes of such
computation any U.S. Pension Plans with respect to which assets exceed benefit
liabilities), does not exceed $1,000,000. Except as set forth on Schedule 5.11
annexed hereto, no Loan Party and no Subsidiary would incur any material
liability upon the termination of any Foreign Pension Plan.
F. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of the Loan
Parties, their respective Subsidiaries and their respective ERISA Affiliates for
a complete withdrawal from such Multiemployer Plan (within the meaning of
Section 4203 of ERISA), when aggregated with such potential liability for a
complete withdrawal from all Multiemployer Plans, based on information available
pursuant to Section 4221(e) of ERISA, does not exceed $1,000,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) no Loan Party nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to
(a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity;
(ii) no Loan Party nor any of its Subsidiaries has received any letter
or request for information from an environmental regulatory agency with
jurisdiction over any Facility investigating the potential for or existence
of Releases either at the Facility or at a related off-site location.
(iii) there are and, to Company's knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against any Loan Party
or any of its Subsidiaries;
(iv) Company maintains an environmental management system for its and
each of its Subsidiaries' operations that demonstrates a commitment to
environmental compliance and includes procedures for (a) preparing and
updating written compliance manuals covering pertinent regulatory areas,
(b) tracking changes in applicable Environmental Laws and modifying
operations to comply with new requirements thereunder, (c) training
employees to comply with applicable environmental requirements and updating
such training as necessary, (d) performing regular internal compliance
audits of each Facility and ensuring correction of any incidents of
non-compliance detected by means of such audits, and (e) reviewing the
compliance status of off-site waste disposal facilities; and
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(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not, individually
or in the aggregate, have a reasonable possibility of giving rise to a
Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no event
or condition has occurred or is occurring with respect to any Loan Party or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 5.13 annexed hereto, any Loan Party which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Company, any Plessey Entity or any of their respective Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
5.15 Solvency.
Each Loan Party is and, upon the incurrence of any Obligations by such Loan
Party on any date on which this representation is made, will be, Solvent.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 4.1H, 4.1I, 6.8 and 6.9
and (ii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Lenders, as security for the respective Secured Obligations (as
defined in the applicable Collateral Document in respect of any Collateral), a
valid and (except as expressly provided in the U.K. Guarantee and Debenture)
perfected First Priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than (a) the filing of any UCC financing
statements or similar personal property or real property filings delivered to
Administrative Agent for filing (but not yet filed), (b) the periodic filing
of UCC or similar continuation statements in respect of UCC financing
statements or similar filings filed by or on behalf of Administrative Agent and
(c) the actions taken after the date hereof referred to in Part A of Schedule
5.16 in respect of Collateral located in the United Kingdom.
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Administrative Agent pursuant to any
of the Collateral Documents or (ii) the exercise by Administrative Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except (a) for filings or recordings contemplated by
subsection 5.16A, (b) the foregoing does not apply with respect to remedies as
they may be affected by certain government contracts in the United Kingdom and
(c) as may be required, in connection with the disposition of any Pledged
Collateral, by laws generally affecting the
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offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A, (i) no
effective UCC financing statement, fixture filing or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no effective filing covering all or any part of the IP
Collateral is on file in the PTO or the United States Copyright Office or any
equivalent office or central registry in any other country.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
F. Intellectual Property. Each Loan Party and its Subsidiaries own, or are
licensed to use, all Intellectual Property. Schedule 5.16 annexed hereto, as
such Schedule may be modified by Company to include any patent, trademark,
copyright registration and application therefor acquired or held by any such
Person, lists all patents, trademark and copyright registration and applications
therefor of each Loan Party and its Subsidiaries (including, each Plessey Entity
and its Subsidiaries). No claim has been asserted by any Person with respect to
the use of any Intellectual Property, or challenging or questioning the validity
or effectiveness of any Intellectual Property and neither Company knows of any
valid basis for any such claim which, in either case, could reasonably be
expected to result in a Material Adverse Effect. The use of the Intellectual
Property by each Loan Party and its Subsidiaries does not infringe on the rights
of any Person, subject to such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of any Loan Party or any of
its Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect. The consummation of the transactions contemplated by this
Agreement will not in any material manner or to any material extent impair the
ownership of (or the license to use, as the case may be) any Intellectual
Property by any Loan Party or any of its Subsidiaries.
5.17 Related Agreements.
A. Delivery of Related Agreements. Company has delivered to Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
B. Seller's Warranties. Except to the extent otherwise set forth herein or
in the schedules hereto, each of the representations and warranties given by
Seller to Company or any of its Subsidiaries in the Acquisition Agreement is
true and correct in all material respects as of the date hereof (or as of any
earlier date to which such representation and warranty specifically relates) and
will be true and correct in all material respects as of the Closing Date (or as
of such earlier date, as the case may be), in each case subject to the
qualifications set forth in the schedules to the Acquisition Agreement.
C. Warranties of Company. Subject to the qualifications set forth therein,
each of the representations and warranties given by Company and any of its
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Subsidiaries to Seller in the Acquisition Agreement is true and correct in all
material respects as of the date hereof and will be true and correct in all
material respects as of the Closing Date.
D. Survival. Notwithstanding anything in the Acquisition Agreement to the
contrary, the representations and warranties of Company set forth in subsections
5.17B and 5.17C shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
5.18 Employment and Labor Agreements
Except as disclosed on Schedule 5.18, there are no employment agreements
covering management employees of any Loan Party or any of its Subsidiaries and
there are no collective labor agreements covering any employees of any Loan
Party or any of its Subsidiaries. Each Loan Party and each of its Subsidiaries
is in compliance with the terms and conditions of all such collective bargaining
agreements except where failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
5.19 Disclosure.
No representation or warranty of any Loan Party or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
Related Agreement or in any other document, certificate or written statement
furnished to Lenders by or on behalf of any Loan Party or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement (including any Permitted Acquisition) contains any untrue statement of
a material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There are no facts known (or which should
upon the reasonable exercise of diligence be known) to Company (other than
matters of a general economic nature) that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.20 Subsidiary Guarantors.
A. Closing Date Subsidiary Guarantors. As of the Closing Date, each
Subsidiary of Company (other than Mitel AB, Mitel Barbados, Plessey GmbH,
Plessey France SA, Marconi Electronic Devices SA, PSL and MEDL) which owns
assets (including receivables) with an aggregate fair market value (without
netting such fair market value against any liability of such Subsidiary) in
excess of $10,000,000 is party to a Guaranty.
B. Mitel Barbados. Mitel Barbados has no assets (including receivables)
other than the Discounted Notes.
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SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Syndication Agent, Administrative Agent and
Lenders:
(i) Monthly Financials: as soon as available and in any event within
(x) 25 days after the end of each of the first two months in any Fiscal
Quarter commencing with February, 1998, (y) 45 days after the end of the
last month in each of the first three Fiscal Quarters in any Fiscal Year
and (z) 55 days after the last month in any Fiscal Year, (a) the financial
report prepared for presentation to senior management of Company and
including the consolidated balance sheets of Company and its Subsidiaries
as at the end of such month and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries
for such month and for the period from the beginning of the then current
Fiscal Year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the Financial
Plan for the current Fiscal Year to the extent prepared on a monthly basis,
and the combined statements of revenue and cash flows for the Plessey
Entities and their respective Subsidiaries, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, in each case on
a consolidated basis subject to changes resulting from audit and normal
year-end adjustments, and (b) a narrative report describing the operations
of Company and its Subsidiaries in the form prepared for presentation to
senior management for such month and for the period from the beginning of
the then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in any event
within (x) 45 days after the end of each of the first three Fiscal Quarters
in any Fiscal Year and (z) 90 days after the end of the fourth Fiscal
Quarter in any Fiscal Year, (a) the consolidated balance sheets of Company
and its Subsidiaries and the balance sheets of the Material Subsidiaries as
at the end of such Fiscal Quarter and the related consolidated statements
of income, stockholders' equity and cash flows of Company and its
Subsidiaries and the statements of income and stockholders' equity of the
Material Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, all in
reasonable detail and certified by the chief financial
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officer of Company that they fairly present, in all material respects, the
consolidated financial condition of Company and its Subsidiaries and the
financial condition of the Material Subsidiaries as at the dates indicated
and the consolidated results of its operations and consolidated cash flows
of Company and its Subsidiaries and the results of operations of the
Material Subsidiaries for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and (b) a narrative
report describing the operations of Company and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Quarter
and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated
balance sheets of Company and its Subsidiaries and the balance sheets of
the Material Subsidiaries as at the end of such Fiscal Year and the related
consolidated statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such Fiscal Year and the statements of
income and stockholders' equity of the Material Subsidiaries, setting forth
in each case in comparative form the corresponding figures for the previous
Fiscal Year covered by such financial statements, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present, in all material respects, the consolidated financial condition of
Company and its Subsidiaries and the financial condition of the Material
Subsidiaries as at the dates indicated and the consolidated results of
operations and consolidated cash flows of Company and its Subsidiaries and
the results of operations of the Material Subsidiaries for the periods
indicated, (b) a narrative report describing the operations of Company and
its Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) in the case of such consolidated financial
statements, a report thereon of Ernst & Young or other independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Syndication Agent and Administrative Agent,
which report shall be unqualified, shall not express any doubts about the
ability of Company and its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present, in
all material respects, the consolidated financial position of Company and
its Subsidiaries as at the dates indicated and the consolidated results of
their operations and their consolidated cash flows for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years (except as otherwise disclosed in such financial statements) and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iv) Officers' and Compliance Certificates; U.S. GAAP Reconciliation:
together with each delivery of financial statements of Company and its
Subsidiaries pursuant to subdivisions (i), (ii) and (iii) above, (a) an
Officers' Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed
the existence during or at the end of such accounting period, and that the
signers do not have knowledge of the existence as at the date of such
Officers' Certificate, of any condition or event that constitutes an Event
of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action Company has taken, is taking and proposes to take
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with respect thereto; (b) a Compliance Certificate demonstrating in
reasonable detail compliance during and at the end of the applicable
accounting periods with the restrictions contained in Section 7; and
(c)with respect to subdivisions (ii) and (iii) only, a written statement of
the chief accounting officer or chief financial officer of Company setting
forth a reconciliation of the differences between GAAP and U.S. GAAP as
applicable to such financial statements.
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii), (iii) or (xiii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then together with
the first delivery of financial statements pursuant to subdivision (i),
(ii), (iii) or (xiii) of this subsection 6.1 following such change, (a)
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) a written statement
of the chief accounting officer or chief financial officer of Company
setting forth the differences (including any differences that would affect
any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal
Year are not stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
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available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice (other than to Administrative Agent) or taken any
other action with respect to a claimed Event of Default or Potential Event
of Default, (b) that any Person has given any notice to Company or any of
its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, or (d) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Company to Lenders or (Y) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event or any Foreign Benefit Plan
Event, a written notice specifying the nature thereof, what action Company,
any of its Subsidiaries or any of their respective ERISA Affiliates has
taken, is taking or
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proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor, the
PBGC or any other government or governmental agency with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each U.S.
Pension Plan; (b) all notices received by Company, any of its Subsidiaries
or any of their respective ERISA Affiliates from a Multiemployer Plan
sponsor concerning an ERISA Event; (c) copies of any notices received from
a court, government or governmental agency with respect to a Foreign
Benefit Plan Event; and (d) copies of such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Syndication
Agent or Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 55 days following the beginning of the 1999 Fiscal Year and no
later than the beginning of each Fiscal Year thereafter, (a) a consolidated
plan and financial forecast for such Fiscal Year (the "Financial Plan" for
such Fiscal Year), including (x) a forecasted consolidated balance sheet
and forecasted consolidated statements of income and cash flows of Company
and its Subsidiaries for such Fiscal Year, together with a pro forma
Compliance Certificate for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, (y) forecasted consolidated
statements of income and cash flows of Company and its Subsidiaries for
each month of such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, and (z) such other
information and projections as any Lender may reasonably request, and (b) a
consolidated plan and financial forecast for the period commencing with
such Fiscal Year and continuing through and including the 2004 Fiscal Year
including annual forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for such period.
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Syndication Agent and Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be maintained
by Company and its Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written notice of
any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a Subsidiary
of Company, a written notice setting forth with respect to such Person (a)
the date on which such Person became a Subsidiary of Company, (b) the
capitalization of such Subsidiary and ownership interest of Company and its
Subsidiaries in such Subsidiary and (c) the jurisdiction of organization of
such Subsidiary;
(xvii) Material Contracts: promptly, and in any event within ten
Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement
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describing such event with copies of such material amendments or new
contracts, and an explanation of any actions being taken with respect
thereto;
(xviii) Personal Property Filing Search Report: As promptly as
practicable after the date of delivery to Administrative Agent of any
personal property financing statement or similar filing executed by any
Loan Party pursuant to subsection 4.1I(iv) or 6.8A, copies of completed
personal property filing or similar filing searches evidencing the proper
filing, recording and indexing of all such personal property financing
statements and similar filings and listing all other effective financing
statements that name such Loan Party as debtor, together with copies of all
such other financing statements not previously delivered to Administrative
Agent by or on behalf of Company or such Loan Party; and
(xix) Permitted Acquisitions: As soon as practicable but in no event
less than five Business Days prior to the date on which any Permitted
Acquisition is consummated, (a) financial statements of the target
(including any Person whose assets are to be acquired) of such Permitted
Acquisition and its Subsidiaries, if any, on a consolidated or combined
basis (or, if any such Permitted Acquisition is of assets, financial
statements of the business operation to be acquired), in each case, to the
extent available, for the most recently completed fiscal year of such
target, (b) copies of all other consolidated balance sheets and
consolidating balance sheets (to the extent consolidating balance sheets
are available) and related statements of operations and statements of cash
flows of such target and its Subsidiaries, if any, acquired in such
Permitted Acquisition, that are to be delivered to Company or any of its
Subsidiaries in connection with such Permitted Acquisition, (c) to the
extent then available, copies of all purchase agreements, agreements of
merger, letters of intent or other operative agreements entered into by
Company or any of its Subsidiaries in connection with such Permitted
Acquisition (it being understood and agreed that, to the extent such
agreements or letters of intent have not been entered into at such time,
copies of such agreements and letters of intent shall be delivered
reasonably promptly after the execution thereof), (d) a consolidated
balance sheet of Company and its Subsidiaries giving pro forma effect to
such Permitted Acquisition, (e) a Compliance Certificate of Company and its
Subsidiaries demonstrating pro forma compliance with the covenants
contained in Section 7 after giving effect to such Permitted Acquisition,
(f) any other information relating to such Permitted Acquisition reasonably
requested by Syndication Agent or Administrative Agent.
(xx) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
its corporate existence and all rights and franchises material to its business;
provided, however that neither Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the Board of Directors of
Company or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof is not disadvantageous in any
material respect to Company, such Subsidiary or Lenders.
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6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (1) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor and (2) in the case of a charge or claim which has or may become a
Lien against any of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim.
B. Company will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.
A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Company shall cause
each of its U.K. Subsidiaries to comply with the covenants set out clause 8 of
the U.K. Guarantee and Debenture, whether or not such Subsidiary is party to
such document.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Syndication Agent and Administrative Agent in their commercially
reasonable judgment. Each such policy of insurance shall (a) name Administrative
Agent for the benefit of Lenders as an additional insured thereunder as its
interests may appear and (b) in the case of each business interruption and
casualty insurance policy, contain a loss payable clause or
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endorsement, satisfactory in form and substance to Syndication Agent and
Administrative Agent, that names Administrative Agent for the benefit of Lenders
as the loss payee thereunder for any covered loss in excess of $1,000,000 and
provides for at least 30 days prior written notice to Administrative Agent of
any modification or cancellation of such policy (other than any such
modification in respect of an insurance policy issued in the United Kingdom).
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company or any of
its Subsidiaries of any business interruption insurance proceeds
constituting Net Insurance/Condemnation Proceeds, (a) so long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing, Company or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b) if an
Event of Default or Potential Event of Default shall have occurred and be
continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by Company
or any of its Subsidiaries of any Net Insurance/Condemnation Proceeds other
than from business interruption insurance, (a) so long as no Event of
Default or Potential Event of Default shall have occurred and be continuing
and so long as the aggregate amount of Net Insurance/Condemnation Proceeds
received from the Closing Date to the date of determination does not exceed
$15,000,000, Company may deliver to Administrative Agent an Officers'
Certificate setting forth (1) that portion of such Net
Insurance/Condemnation Proceeds (the "Proposed Insurance Reinvestment
Proceeds") that Company or such Subsidiary intends to use (or enter into a
contract to use) within 180 days of such date of receipt to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were received or
to reinvest in Eligible Assets and (2) the proposed use of the Proposed
Insurance Reinvestment Proceeds and such other information with respect to
such proposed use as Syndication Agent or Administrative Agent may
reasonably request, and Company shall, or shall cause one or more of its
Subsidiaries to, promptly and diligently apply such Proposed Insurance
Reinvestment Proceeds to pay or reimburse the costs of repairing, restoring
or replacing the assets in respect of which such Proposed Insurance
Reinvestment Proceeds were received or to reinvestment in Eligible Assets
or, to the extent the Net Insurance/Condemnation Proceeds received from the
Closing Date to the date of determination exceed $500,000 and are not so
applied, to prepay the Loans (and/or the Revolving Loan Commitments shall
be reduced) as provided in subsection 2.4B(iii)(b), and (b) if an Event of
Default shall have occurred and be continuing, Company shall apply an
amount equal to such Net Insurance/ Condemnation Proceeds to prepay the
Loans (and/or the Revolving Loan Commitments shall be reduced) as provided
in subsection 2.4B(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by Administrative
Agent. Upon receipt by Administrative Agent of any Net
Insurance/Condemnation Proceeds as loss payee, if and to the extent Company
would have been required to apply such Net Insurance/Condemnation Proceeds
(if it had received them directly) to prepay the Loans and/or reduce the
Revolving Loan Commitments, Administrative Agent shall, and Company hereby
authorizes Administrative Agent to, apply such Net
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Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b),
and (b) to the extent the foregoing clause (a) does not apply,
Administrative Agent shall deliver such Net Insurance/Condemnation Proceeds
to Company, and Company shall, or shall cause one or more of its
Subsidiaries to, promptly apply such Net Insurance/Condemnation Proceeds to
the costs of repairing, restoring, or replacing the assets in respect of
which such Net Insurance/Condemnation Proceeds were received or to
reinvestment in Eligible Assets; provided, however, that if at any time
Syndication Agent or Administrative Agent reasonably determines (A) that
Company or such Subsidiary is not proceeding diligently with such repair,
restoration or replacement or (B) that such repair, restoration or
replacement cannot be completed with the Net Insurance/Condemnation
Proceeds then held by Administrative Agent for such purpose, together with
funds otherwise available to Company for such purpose, or that such repair,
restoration or replacement cannot be completed within 180 days after the
receipt by Administrative Agent of such Net Insurance/Condemnation
Proceeds, Administrative Agent shall, and Company hereby authorizes
Administrative Agent to, apply such Net Insurance/ Condemnation Proceeds to
prepay the Loans (and/or the Revolving Loan Commitments shall be reduced)
as provided in subsection 2.4B(iii)(b).
6.5 Inspection Rights; Lender Meeting.
A. Inspection Rights. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. Lender Meeting. Company will, upon the request of Syndication Agent,
Administrative Agent or Requisite Lenders, participate in a meeting of Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or at such other location as may be agreed to by Company and Administrative
Agent) at such time as may be agreed to by Company and Administrative Agent.
6.6 Compliance with Laws, etc.
Company shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to cause, individually or in the aggregate, a Material Adverse Effect.
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6.7 Environmental Review and Investigation, Disclosure, Etc.; Company's Actions
Regarding Hazardous Materials Activities, Environmental Claims and
Violations of Environmental Laws.
A. Environmental Review and Investigation. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) in the event (a)
Administrative Agent reasonably believes that Company has breached any
representation, warranty or covenant contained in subsection 5.6, 5.13, 6.6 or
6.7 or that there has been a material violation of (or is or may be a material
liability under) Environmental Laws at any Facility or by Company or any of its
Subsidiaries at any other location or (b) an Event of Default has occurred and
is continuing, conduct its own investigation of any Facility; provided that, in
the case of any Facility no longer owned, leased, operated or used by Company or
any of its Subsidiaries, Company shall only be obligated to use its best efforts
to obtain permission for Administrative Agent's professional consultant to
conduct an investigation of such Facility. For purposes of conducting such a
review and/or investigation, Company hereby grants to Administrative Agent and
its agents, employees, consultants and contractors the right to enter into or
onto any Facilities currently owned, leased, operated or used by Company or any
of its Subsidiaries and to perform such tests on such property (including taking
samples of soil, groundwater and suspected asbestos-containing materials) as are
reasonably necessary in connection therewith. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at such Facility or to cause any damage or loss to any property at
such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7A will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that Company
acknowledges and agrees that (x) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or liabilities
relating to Company's use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
B. Environmental Disclosure. Company will deliver to Syndication Agent,
Administrative Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable following
receipt thereof, copies of all environmental audits, investigations,
analyses and reports of any kind or character, whether prepared by
personnel of Company or any of its Subsidiaries or by independent
consultants, governmental authorities or any other Persons, with respect to
significant environmental matters at any Facility which, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect or with respect to any Environmental Claims which, individually or
in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
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(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon
the occurrence thereof, written notice describing in reasonable detail (a)
any Release required to be reported to any national, regional, federal,
European Union, state or local governmental or regulatory agency under any
applicable Environmental Laws, (b) any remedial action taken by Company or
any other Person in response to (1) any Hazardous Materials Activities the
existence of which has a reasonable possibility of resulting in one or more
Environmental Claims having, individually or in the aggregate, a Material
Adverse Effect, or (2) any Environmental Claims that, individually or in
the aggregate, have a reasonable possibility of resulting in a Material
Adverse Effect, and (c) Company's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of any Facility that
could cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof
under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims, Releases,
Etc. As soon as practicable following the sending or receipt thereof by
Company or any of its Subsidiaries, a copy of any and all written
communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any national, regional, federal, European Union, state or local
governmental or regulatory agency, and (c) any request for information from
any governmental agency that suggests such agency is investigating whether
Company or any of its Subsidiaries may be potentially responsible for any
Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to (1) expose Company or any
of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Company or any of its
Subsidiaries to commence manufacturing or other industrial operations or to
modify current operations in a manner that could reasonably be expected to
subject Company or any of its Subsidiaries to any additional obligations or
requirements under any Environmental Laws that could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably requested
by Syndication Agent or Administrative Agent in relation to any matters
disclosed pursuant to this subsection 6.7.
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C. Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.
(i) Remedial Actions Relating to Hazardous Materials Activities.
Company shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim. In the event Company or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials, Company
or such Subsidiary shall conduct and complete such action in compliance
with all applicable Environmental Laws and in accordance with the policies,
orders and directives of all national, regional, federal, European Union,
state and local governmental authorities except when, and only to the
extent that, Company's or such Subsidiary's liability with respect to such
Hazardous Materials Activity is being contested in good faith by Company or
such Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Company shall promptly take, and shall cause each of
its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any material violation of (or liability under) applicable
Environmental Laws by Company or its Subsidiaries and (ii) make an
appropriate response to any Environmental Claim against Company or any of
its Subsidiaries and discharge any obligations it may have to any Person
thereunder.
6.8 Execution of Guaranties and Personal Property Collateral Documents by
Certain Subsidiaries and Future Subsidiaries.
A. U.K. Plessey Entities. Within 60 days following the Closing Date,
Company shall cause each of PSL and MEDL to (i) become a Subsidiary Guarantor
and execute and deliver to Administrative Agent an accession undertaking to the
U.K. Guarantee and Debenture and become a lender under the IntraGroup Loan
Agreement, (ii) deliver evidence satisfactory to the Administrative Agent and
Syndication Agent that such Subsidiary has complied with the provisions and
procedures required by sections 155 to 158 of the Companies Act 1985 in relation
thereto (including an auditor's letter addressed to the Agents and Lender in
form and substance reasonably satisfactory to Administrative Agent and
Syndication Agent) and (iii) take all such further actions and execute all such
further documents and instruments (including actions, documents and instruments
comparable to those described in subsections 4.1I and 6.9) as may be necessary
or, in the opinion of Administrative Agent or Syndication Agent, desirable to
create in favor of Administrative Agent, for the benefit of Lenders, a valid and
(except to the extent expressly provided in the U.K. Guarantee and Debenture)
perfected First Priority Lien on all of the personal and mixed property assets
of such Subsidiary described in the applicable forms of Collateral Documents;
provided, however, that Company shall not be required to cause MEDL to comply
with this subsection 6.8A in the event that, within 30 days of the Closing Date,
either (a) MEDL is merged with PSL or Mitel Telecom with PSL or Mitel Telecom,
as the case may be, being the surviving company or (b) MEDL is dissolved, its
business wound-up and all of its assets distributed to Mitel Telecom.
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B. Mitel AB. Company shall, and shall cause Mitel AB, to (i) use its best
efforts to obtain an exemption from the relevant Swedish tax authority to permit
Mitel AB to become a Subsidiary Guarantor and grant a charge on all its assets
to Administrative Agent for the benefit of Lenders and (ii) notify
Administrative Agent and Syndication Agreement of any notices received by Mitel
AB or its advisors in connection with such application. In the event such an
exemption is granted Administrative Agent and Syndication Agent may at any time
thereafter (so long as Administrative Agent and Syndication Agent shall have
received the real estate appraisals pursuant to subsection 6.10A) notify Company
that Mitel AB must become a Subsidiary Guarantor and execute and deliver a
Subsidiary Security Agreement (Sweden) substantially in the form of Exhibit
XXVII annexed hereto and must otherwise comply with the requirements set forth
in subsections 6.8C and 6.9 (including paying any applicable stamp taxes in
connection with the execution of any relevant Loan Documents) and Company shall
thereupon cause Mitel AB to take all such actions within ten Business Days of
such notice.
C. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In addition to the provisions set forth above in subsections 6.8A and
6.8B, in the event that any Subsidiary of Company existing on the Closing Date
(other than Plessey GmbH, Plessey France SA and Marconi Electronic Devices SA)
that has not previously executed a Guaranty hereafter owns or acquires assets
(including receivables) on a consolidated basis with an aggregate fair market
value (without netting such fair market value against any liability of such
Subsidiary) exceeding $10,000,000, or in the event that any Person becomes a
Subsidiary of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and, subject to clause (iii) below, cause such
Subsidiary (i) to execute and deliver to Administrative Agent a counterpart of
the Subsidiary Guaranty or, in the case such Subsidiary is a U.K. Subsidiary, an
accession undertaking to the U.K. Guarantee and Debenture, in each case with
such modifications thereto as may be reasonably requested by Administrative
Agent or Syndication Agent (including any such changes required to comply with
local law), (ii) to execute and deliver to Administrative Agent such pledge and
security agreements as Administrative Agent or Syndication Agent may reasonably
request and to take all such further actions and execute all such further
documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1I) as may be necessary or, in the
opinion of Administrative Agent or Syndication Agent, desirable to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and (except
to the extent expressly provided in the U.K. Guarantee and Debenture) perfected
First Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents and (iii)
in the case of any such Subsidiary which is a U.K. Subsidiary, cause such
Subsidiary to comply with the provisions of subsection 6.8A within 60 days of
such Subsidiary's becoming subject to this subsection 6.8C.
6.9 Conforming Leasehold Interests; Matters Relating to Additional Real
Property Collateral.
A. Conforming Leasehold Interests. If Company or any of its Subsidiaries
acquires any Material Leasehold Property, Company shall, or shall cause such
Subsidiary to, use its best efforts to cause such Leasehold Property to be a
Conforming Leasehold Interest.
B. Additional Mortgages, Etc. From and after the Closing Date, in the event
that (i) Company or any Subsidiary Guarantor acquires any fee or freehold
interest in
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real property or any Material Leasehold Property or (ii) at the time any Person
becomes a Subsidiary Guarantor, such Person owns or holds any fee or freehold
interest in real property or any Material Leasehold Property, in either case
excluding any such Real Property Asset the encumbrancing of which requires the
consent of any applicable lessor or (in the case of clause (ii) above)
then-existing senior lienholder, where Company and its Subsidiaries are unable
to obtain such lessor's or senior lienholder's consent (any such non-excluded
Real Property Asset described in the foregoing clause (i) or (ii) being an
"Additional Mortgaged Property"), Company or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor,
as the case may be, the following:
(i) Additional Mortgage. A fully executed and notarized Mortgage or
equivalent document reasonably acceptable to Administrative Agent and
Syndication Agent (an "Additional Mortgage"), in proper form for recording
in all appropriate places in all applicable jurisdictions, encumbering the
interest of such Loan Party in such Additional Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel to such
Loan Party, in form and substance satisfactory to Administrative Agent and
Syndication Agent and their respected counsel, as to the due authorization,
execution and delivery by such Loan Party of such Additional Mortgage and
such other matters as Administrative Agent or Syndication Agent may
reasonably request, and (b) if required by Administrative Agent or
Syndication Agent, an opinion of counsel (which counsel shall be reasonably
satisfactory to Administrative Agent and Syndication Agent) in the state,
province or other relevant jurisdiction in which such Additional Mortgaged
Property is located with respect to the enforceability of the form of
Additional Mortgage to be recorded in such state, province or other
relevant jurisdiction and such other matters (including any matters
governed by the laws of such state, province or other relevant jurisdiction
regarding personal property security interests in respect of any
Collateral) as Administrative Agent or Syndication Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Administrative Agent and Syndication Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In
the case of an Additional Mortgaged Property consisting of a Leasehold
Property, (a) a Landlord Consent and Estoppel and (b) evidence that such
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. With respect to such Additional Mortgaged
Property located in the United States of America, (a) if required by
Administrative Agent or Syndication Agent, an ALTA mortgagee title
insurance policy or an unconditional commitment therefor or an equivalent
policy or commitment therefor satisfactory to Administrative Agent and
Syndication Agent) (an "Additional Mortgage Policy") issued by the Title
Company with respect to such Additional Mortgaged Property, in an amount
satisfactory to Administrative Agent and Syndication Agent, insuring fee
simple title to, or a valid leasehold interest in, such Additional
Mortgaged Property vested in such Loan Party and assuring Administrative
Agent and Syndication Agent that such Additional Mortgage creates a valid
and enforceable First Priority mortgage Lien on such Additional Mortgaged
Property, subject only to a standard survey exception, which Additional
Mortgage Policy (1) shall include an endorsement for mechanics' liens, for
future advances under this Agreement and for any other matters
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reasonably requested by Administrative Agent or Syndication Agent and (2)
shall provide for affirmative insurance and such reinsurance as
Administrative Agent or Syndication Agent may reasonably request, all of
the foregoing in form and substance reasonably satisfactory to
Administrative Agent and Syndication Agent; and (b) evidence satisfactory
to Administrative Agent and Syndication Agent that such Loan Party has (i)
delivered to the Title Company all certificates and affidavits required by
the Title Company in connection with the issuance of the Additional
Mortgage Policy and (ii) paid to the Title Company or to the appropriate
governmental authorities all expenses and premiums of the Title Company in
connection with the issuance of the Additional Mortgage Policy and all
recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Additional Mortgage in the
appropriate real estate records;
(v) Title Report. If no Additional Mortgage Policy is required with
respect to such Additional Mortgaged Property, a title report issued by the
Title Company or (or title certificate, report on title or equivalent
report with respect to any Additional Mortgaged Property located outside
the United States of America) thereto, dated not more than 30 days prior to
the date such Additional Mortgage is to be recorded and satisfactory in
form and substance to Administrative Agent and Syndication Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title or otherwise referred to
in the Additional Mortgage Policy or title report delivered pursuant to
clause (v) or (vi) above;
(vii) Matters Relating to U.S. Flood Hazard Properties. To the extent
such Additional Mortgaged Property is located in the United States of
America, (a) evidence, which may be in the form of a letter from an
insurance broker or a municipal engineer, as to (1) whether such Additional
Mortgaged Property is a Flood Hazard Property and (2) if so, whether the
community in which such Flood Hazard Property is located is participating
in the National Flood Insurance Program, (b) if such Additional Mortgaged
Property is a Flood Hazard Property, such Loan Party's written
acknowledgement of receipt of written notification from Administrative
Agent and Syndication Agent (1) that such Additional Mortgaged Property is
a Flood Hazard Property and (2) as to whether the community in which such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event such Additional Mortgaged Property
is a Flood Hazard Property that is located in a community that participates
in the National Flood Insurance Program, evidence that Company has obtained
flood insurance in respect of such Flood Hazard Property to the extent
required under the applicable regulations of the Board of Governors of the
Federal Reserve System;
(viii) Real Property Taxes. Evidence satisfactory to the
Administrative Agent and Syndication Agent of the payment by such
Subsidiary Guarantor with respect to such Additional Mortgaged Property of
all unpaid real property taxes due and payable as of the date of the
applicable Additional Mortgage;
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(ix) Special U.K. Matters. Delivery to Administrative Agent of (i) the
results of H.M. Land Registry clear priority searches in form 94D in favor
of the Administrative Agent giving a priority period of not less than 28
days relating to Real Property Assets of any such Subsidiary Guarantor
located in the United Kingdom or (in the case of unregistered property)
H.M. Land Charges Registry searches having an unexpired priority period of
not less than 18 days in respect of all estate owners since the date of the
root of title with any entries thereon certified as not affecting, (ii) a
duly completed and signed Land Registry application form A4 for the
registration of the U.K. Guarantee and Debenture together with a cheque
made payable to H.M. Land Registry in respect of the registration fee,
(iii) all title deeds to any Additional Mortgaged Property located in the
United Kingdom, (iv) signed but undated Notices of Charge addressed to the
landlord of each Leasehold Property of any such Subsidiary Guarantor
located in the United Kingdom, together with a duplicate thereof; and
(x) Environmental Audit. If required by Administrative Agent or
Syndication Agent, reports and other information, in form, scope and
substance satisfactory to Administrative Agent and Syndication Agent and
prepared by environmental consultants satisfactory to Administrative Agent
and Syndication Agent, concerning any environmental hazards or liabilities
to which Company or any of its Subsidiaries may be subject with respect to
such Additional Mortgaged Property.
C. Real Estate Appraisals. Company shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Administrative Agent and Syndication Agent, upon reasonable notice, to visit and
inspect any Additional Mortgaged Property for the purpose of preparing an
appraisal of such Additional Mortgaged Property satisfying the requirements of
any applicable laws and regulations (in each case to the extent required under
such laws and regulations as determined by Administrative Agent and Syndication
Agent in its discretion).
6.10 Certain Post-Closing Matters.
A. Real Estate Appraisals. Within 60 days following the Closing Date,
Administrative Agent shall have received appraisals concerning the Closing Date
Mortgaged Properties, the properties located at Swindon (England), and
Plymouth (England) as more particularly described on Schedule 5.5 and any other
Real Estate Assets of Company or any of its Subsidiaries reasonably
requested by Administrative Agent or Syndication Agent on or before the Closing
Date, in each case from one or more independent real estate appraisers
reasonably satisfactory to Syndication Agent and Administrative Agent, in
form, scope and substance satisfactory to Syndication Agent and
Administrative Agent and satisfying the requirements of any applicable laws and
regulations, in each case to the extent required under such laws and regulations
as determined by Administrative Agent in its discretion.
B. Bromont. Within 30 days following the Closing Date, Company shall take
such actions and deliver to Administrative Agent such items as Administrative
Agent or Syndication Agent may reasonably request to ensure that Administrative
Agent has a First Priority Lien on all immovable property of Company located in
the Province of Quebec including the delivery to Administrative Agent of (i) a
title opinion from McCarthy Tetrault with respect to the Bromont property
located in the Province of Quebec as identified on Schedule 4.1H annexed hereto
(the "Bromont Property") (such title opinion to indicate that
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Company is the owner of the Bromont Property free and clear of any Liens (other
than Permitted Encumbrances) and that the Deed of Hypothec executed and
delivered by Company on the Closing Date substantially in the form of Exhibit
XVI annexed hereto is a valid First Priority Lien on the Bromont Property) and
(ii) a complete certificate of location, in each case in form and substance
satisfactory to Administrative Agent and Syndication Agent.
C. Lincoln. Within 30 days following the Closing Date, Company shall cause
legal and beneficial ownership of the property located at Lincoln, England, as
more specifically described on Schedule 5.5 annexed hereto, to vest in PSL.
D. Scotts Valley. Within 60 days following the Closing Date, Administrative
Agent shall have received each of the items described in subsection 4.1H with
respect to the property of Mitel Semiconductor Americas Inc. (formerly known as
GEC Plessey Semiconductors Inc.) located in Scotts Valley as identified on
Schedule 4.1H annexed hereto.
E. Discounted Notes. In the event Mitel Barbados receives any payments on
redemption of any Discounted Note, Company shall ensure that Mitel Barbados
applies the total amount of such payments (net of costs and applicable taxes) to
either (i) subscribe for additional Discounted Notes within 24 hours of such
repayment or (ii) make a dividend payment to Company within two Business Days of
such receipt; it being understood that such net payments may be applied under
clauses (i) and (ii) in such proportions as Mitel Barbados may determine.
F. NatWest Letter of Credit. Within ten Business Days of the Closing Date,
(i) Company shall have terminated any commitment to lend under, and repaid all
outstanding Indebtedness under, the credit facility between National Westminster
Bank and PSL and (ii) the CIBC Letter of Credit shall have expired or been
terminated and all Liens on any collateral securing Company's repayment
obligations with respect thereto shall have been released and terminated.
6.11 Interest Rate Protection.
At all times after the date which is 30 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, each such Interest Rate Agreement to be for a term and in
form and substance reasonably satisfactory to Syndication Agent and
Administrative Agent, which Interest Rate Agreements shall effectively limit the
Unadjusted Eurodollar Rate Component (as hereinafter defined) of the interest
costs to Company with respect to an aggregate notional principal amount of not
less than 50% of the aggregate principal amount of the Term Loans outstanding
from time to time (based on the assumption that such notional principal amount
was a Eurodollar Rate Loan with an Interest Period of three months) to a rate
equal to not more than 7.5% per annum. For purposes of this subsection 6.10, the
term "Unadjusted Eurodollar Rate Component" means that component of the interest
costs to Company in respect of a Eurodollar Rate Loan that is based upon the
rate obtained pursuant to the first two paragraphs of the definition of Adjusted
Eurodollar Rate.
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SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1 Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases in an aggregate amount
not to exceed $60,000,000 at any time outstanding; provided that such
maximum amount shall be increased by $5,000,000 on each anniversary of the
Closing Date;
(iv) Company may become and remain liable with respect to Indebtedness
to any of its wholly-owned Subsidiaries, and any wholly-owned Subsidiary of
Company may become and remain liable with respect to Indebtedness to
Company or any other wholly-owned Subsidiary of Company; provided that (a)
all such intercompany Indebtedness shall be evidenced by promissory notes
(each, an "Intercompany Note"), (b) all such intercompany Indebtedness owed
by Company to any of its Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations pursuant to the terms of
the applicable promissory notes or an intercompany subordination agreement,
and (c) any payment by any Subsidiary of Company under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by such Subsidiary to Company or to any of
its Subsidiaries for whose benefit such payment is made;
(v) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1 annexed hereto;
(vi) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $20,000,000 at any time outstanding.
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7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Liens on cash deposits at CIBC securing the Company's obligations
under the CIBC Letter of Credit pursuant to subsection 7.4(x);
and
(v) Other Liens securing Indebtedness in an aggregate amount not to
exceed $10,000,000 at any time outstanding.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement (other than any agreement
prohibiting only the creation of Liens securing Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
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7.3 Investments; Joint Ventures.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company and its Subsidiaries may (a) continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company, (b) make and maintain Investments in any Subsidiary Guarantor from
and after the Closing Date and (c) make Investments in Immaterial
Subsidiaries from and after the Closing Date in an aggregate cumulative
amount not to exceed $5,000,000; provided, however, that to the extent any
such Immaterial Subsidiary becomes a Subsidiary Guarantor after or as a
result of any such Investment under this clause (c), the amount of all
Investments in such Immaterial Subsidiary pursuant to this subsection
7.3(ii) shall not then be counted towards the foregoing $5,000,000
limitation;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto; and
(vi) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $10,000,000.
7.4 Contingent Obligations.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with respect
to Contingent Obligations in respect of the Guaranties;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit;
(iii) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements required under subsection 6.11
in an aggregate notional amount not to exceed the principal amount of the
Term Loans at any time outstanding; provided that Company shall not enter
into any Interest Rate Agreement for the purposes of arbitrage or
speculation;
(iv) Company may become and remain liable with respect to Contingent
Obligations under Currency Agreements entered into in the ordinary course
of
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Company's business and designed to hedge against fluctuations in currency
values; provided that (a) Company shall not enter into any such Currency
Agreement with a term in excess of 24 months and (b) the aggregate notional
principal amount outstanding at any date of determination under all such
Currency Agreements shall not exceed $500,000,000; it being understood and
agreed that Company shall not enter into any Currency Agreement for the
purposes of arbitrage or speculation;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(vi) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course
of business of the obligations of suppliers, customers, franchisees and
licensees of Company and its Subsidiaries in an aggregate amount not to
exceed at any time $10,000,000;
(vii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1(vi);
(viii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of surety bonds for business
communications systems bids to install PBX systems in an aggregate amount
not to exceed at any time $30,000,000;
(ix) Company and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations described in Schedule 7.4 annexed
hereto, it being understood and agreed that any Interest Rate Agreements or
Currency Agreements listed on such Schedule shall be included in the
calculations contained in subsections 7.4(iii) and 7.4(iv), as applicable;
(x) during the 14-day period next succeeding the Closing Date, Company
may become and remain liable with respect to the Contingent Obligations in
respect of the CIBC Letter of Credit;
(xi) Company may become and remain liable with respect to a guaranty
of the obligations of PSL pursuant to that certain Capital Lease in respect
of the property located at Plymouth, England; provided that Company's
aggregate liability under such guaranty at any time outstanding shall not
exceed $17,000,000; and
(xii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $10,000,000.
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7.5 Restricted Junior Payments.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby, Company may (a) make scheduled dividend payments to the holders
of the Company Preferred Stock pursuant to the terms of the Company Certificate
of Designations in an aggregate amount not to exceed Cdn$3,250,000 in any Fiscal
Year (b) make scheduled repurchases of shares of Company Preferred Stock
pursuant to the Company Certificate of Designations for an aggregate
consideration not to exceed Cdn$2,250,000 in any Fiscal Year, and (c) may redeem
or repurchase options to purchase shares of Company's common stock granted to
Company's employees in lieu of such employees exercising such options.
7.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. Company shall not permit the ratio of
(i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense as
measured on the last day of each Fiscal Quarter (the "Reference Date"),
commencing with the last day of the first Fiscal Quarter of Fiscal Year 1999,
for any four Fiscal Quarter period ending on any Reference Date, to be less than
the correlative ratio applicable below:
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================================================================================
Minimum
Interest
Reference Date Coverage Ratio
================================================================================
First Fiscal Quarter 1999 4.50:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 1999 4.75:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 1999 5.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 1999 5.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2000 7.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2000 7.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2000 7.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2000 7.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2001 10.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2001 10.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2001 10.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2001 10.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2002 10.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2002 10.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2002 10.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2002 10.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2003 10.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2003 10.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2003 10.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2003 10.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2004 10.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2004 10.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2004 10.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2004 10.00:1.00
================================================================================
B. Minimum Fixed Charge Coverage Ratio. Company shall not permit the ratio
of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges as
measured on the last day of each Fiscal Quarter (the "Reference Date"),
commencing with the last day of the
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first Fiscal Quarter of Fiscal Year 1999, for any four Fiscal Quarter period
ending on any Reference Date, to be less than the correlative ratio applicable
below:
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================================================================================
Minimum
Fixed Charge
Reference Date Coverage Ratio
================================================================================
First Fiscal Quarter 1999 1.05:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 1999 1.05:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 1999 1.05:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 1999 1.05:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2000 1.10:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2000 1.10:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2000 1.10:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2000 1.10:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2001 1.20:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2001 1.20:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2001 1.20:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2001 1.20:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2002 1.25:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2002 1.25:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2002 1.25:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2002 1.25:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2003 1.25:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2003 1.25:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2003 1.25:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2003 1.25:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2004 1.25:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2004 1.25:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2004 1.25:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2004 1.25:1.00
================================================================================
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C. Maximum Leverage Ratio. Company shall not permit the Consolidated
Leverage Ratio as measured on the last day of each Fiscal Quarter (the
"Reference Date"), commencing with the last day of the first Fiscal Quarter of
Fiscal Year 1999, for any four Fiscal Quarter period ending on any Reference
Date, to exceed the correlative ratio applicable below:
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================================================================================
Maximum
Reference Date Leverage Ratio
================================================================================
First Fiscal Quarter 1999 2.60:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 1999 2.40:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 1999 2.30:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 1999 2.10:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2000 1.50:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2000 1.50:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2000 1.50:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2000 1.50:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2001 1.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2001 1.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2001 1.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2001 1.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2002 1.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2002 1.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2002 1.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2002 1.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2003 1.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2003 1.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2003 1.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2003 1.00:1.00
- --------------------------------------------------------------------------------
First Fiscal Quarter 2004 1.00:1.00
- --------------------------------------------------------------------------------
Second Fiscal Quarter 2004 1.00:1.00
- --------------------------------------------------------------------------------
Third Fiscal Quarter 2004 1.00:1.00
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter 2004 1.00:1.00
================================================================================
D. Minimum Consolidated Net Worth. Company shall not permit Consolidated
Net Worth at any time during any Fiscal Quarter commencing with the first Fiscal
Quarter of the 1999 Fiscal Year to be less than the sum of (i) Consolidated Net
Worth as of the last day of the next preceding Fiscal Quarter plus (ii) 75% of
Consolidated Net Income during such Fiscal Quarter.
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7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Company shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of Company or any of its Subsidiaries,
or enter into any transaction of merger or consolidation, or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its business,
property or assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business of, or operating unit, business unit or
technology unit of any Person, except:
(i) (a) any Subsidiary of Company may be merged with or into Company
or any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary Guarantor; provided that, in the case of such a merger, Company
or such wholly-owned Subsidiary Guarantor shall be the continuing or
surviving corporation and (b) any Immaterial Subsidiary of Company may be
merged with or into any wholly-owned Immaterial Subsidiary of Company, or
be liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to any
wholly-owned Immaterial Subsidiary;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete, worn out
or surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;
(v) so long as no Event of Default has occurred and is continuing or
would be caused thereby, Company and its Subsidiaries may consummate the
Acquisition and may make Permitted Acquisitions; provided that Company
shall comply with any requirements set forth herein (including under
subsection 6.1(xviii)) and, to the extent such Permitted Acquisition is of
the equity interest of any Person, such Person shall be a Subsidiary of
Company upon giving effect to such Permitted Acquisition or shall be merged
with and into Company or one of its Subsidiaries within two days of the
consummation of such Permitted Acquisition; provided further that,
notwithstanding anything in the foregoing to the contrary, (a) during the
180 day period following the Closing Date, Company and its Subsidiaries may
not make (1) more than two Permitted Acquisitions and (2) any Permitted
Acquisition in one or a series of related transactions if (x) the aggregate
purchase price of such Permitted Acquisition exceeds $50,000,000 or (y) the
aggregate purchase price of all such Permitted Acquisitions during such 180
day period exceeds $75,000,000; and (b) from and after the 181st day
following the Closing Date, Company and its Subsidiaries shall not make any
Permitted Acquisition in one or a series of related transactions if (A) the
aggregate
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purchase price of such Permitted Acquisition exceeds $25,000,000 or (B) the
aggregate purchase price of all such Permitted Acquisitions since such
181st day exceeds $35,000,000; and
(vi) subject to subsection 7.13 and so long as no Event of Default has
occurred and is continuing or would be caused thereby, (a) PSL may make
Asset Sales in respect of the property and business located in Lincoln,
England as more fully described on Schedule 5.5 annexed hereto, (b) Company
and its Subsidiaries may make Asset Sales in connection with the closing of
offices of Company and its Subsidiaries which offices were made redundant
to the business of Company and its Subsidiaries as a result of the
Acquisition as determined by the Board of Directors of Company and (c)
Company and its Subsidiaries may make other Asset Sales of assets having a
fair market value not in excess of $25,000,000; provided that (x) the
consideration received for any assets in the foregoing clauses (a) through
(c) above shall be in an amount at least equal to the fair market value
thereof; (y) the sole consideration received shall be cash; and (z) the
proceeds of such Asset Sales shall be applied as required by subsection
2.4B(iii)(a).
7.8 Consolidated Capital Expenditures.
Company shall not, and shall not permit its Subsidiaries to, make or incur
Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount set forth below opposite
such Fiscal Year (the "Target Amount"); provided that if the aggregate amount of
Consolidated Capital Expenditures for the immediately preceding Fiscal Year
(commencing with the 1999 Fiscal Year) is less than the Target Amount for such
immediately preceding Fiscal Year, then 50% of the sum of (i) the Target Amount
for such immediately preceding Fiscal Year (as adjusted pursuant to this
subsection 7.8) minus (ii) the Consolidated Capital Expenditures for such
immediately preceding Fiscal Year, shall be added to the Target Amount for the
current Fiscal Year:
===========================================================
Maximum
Fiscal Year Consolidated
Capital
Expenditures
===========================================================
1999 $110,000,000
-----------------------------------------------------------
2000 $130,000,000
-----------------------------------------------------------
2001 $135,000,000
-----------------------------------------------------------
2002 $145,000,000
-----------------------------------------------------------
2003 $160,000,000
-----------------------------------------------------------
2004 $175,000,000
===========================================================
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7.9 Restriction on Operating Leases.
Company shall not, and shall not permit any of its Subsidiaries to, become
liable in any way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of the lessee under any Operating Lease (other than
intercompany leases between Company and its wholly owned Subsidiaries), unless,
immediately after giving effect to the incurrence of liability with respect to
such Operating Lease, the Consolidated Rental Payments at the time in effect
during the then current Fiscal Year shall not exceed $20,000,000.
7.10 Sales and Lease-Backs.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided, however, that Mitel Telecom may become and remain liable
as lessee with respect to (a) sales and lease-back transactions with respect to
assets with a fair market value not to exceed (pound)2,500,000 in the aggregate
for any Fiscal Year for the purpose of acquiring such assets and (b) sales and
lease-back transactions in existence on the Closing Date and set forth on
Schedule 7.10 annexed hereto.
7.11 Sale or Discount of Receivables.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries or (ii) reasonable and customary fees paid
to members of the Boards of Directors of Company and its Subsidiaries.
7.13 Disposal of Subsidiary Stock.
Except for any sale of 100% of the capital stock or other equity Securities
of any of its Subsidiaries in compliance with the provisions of subsection
7.7(v), Company shall not:
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(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to
qualify directors if required by applicable law.
7.14 Conduct of Business.
From and after the Closing Date, Company shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than the businesses
engaged in by Company and its Subsidiaries on the Closing Date and similar or
related businesses.
7.15 Amendments or Waivers of Related Agreements; Amendments of Documents
Relating to Subordinated Indebtedness.
A. Amendments or Waivers of Related Agreements. Neither Company nor any of
its Subsidiaries will agree to any material amendment to, or waive any of its
material rights under, any Related Agreement or the Company Certificate of
Designation after the Closing Date without in each case obtaining the prior
written consent of Requisite Lenders to such amendment or waiver.
B. Amendments of Documents Relating to Subordinated Indebtedness. Company
shall not, and shall not permit any of its Subsidiaries to, amend or otherwise
change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to
Company or Lenders.
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7.16 Fiscal Year
Company shall not change its Fiscal Year-end from the last Friday in March.
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; failure by Company to pay any interest on any Loan or
any fee or any other amount due under this Agreement within three days after the
date due; or failure by Company to pay any amount when due under any Lender
Hedge Agreement; or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in an individual principal amount of $500,000 or
more or with an aggregate principal amount of $750,000 or more, in each case
beyond the end of any grace period provided therefor; or (ii) breach or default
by Company or any of its Subsidiaries with respect to any other material term of
(a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or
be declared due and payable prior to its stated maturity or the stated maturity
of any underlying obligation, as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
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8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Company or such Loan Party becoming aware of such default
or (ii) receipt by Company and such Loan Party of notice from Syndication Agent,
Administrative Agent or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or (iii) a petition is presented or meeting convened or application
made for the purpose of appointing an administrator or for the making of an
administration order in respect of any U.K. Subsidiary; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property (or, in the case of any U.K. Subsidiary, shall be deemed to
be unable to pay its debts as they fall due for the purpose of section 123(1) of
the Insolvency Act 1986 of the United Kingdom as in effect from time to time (on
the basis that the words (a) "in a sum exceeding (pounds)750" are deemed
replaced in section 123(1) by the words "in a sum exceeding $500,000" and (b)
"proved to the satisfaction of the court" are deemed omitted from section
123(1)(e)); or Company or any of its Subsidiaries shall make any assignment
for the benefit of creditors; or (ii) Company or any of its Subsidiaries shall
be unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the Board of Directors of
Company or any of its Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or
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<PAGE>
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,000,000 or (ii)
in the aggregate at any time an amount in excess of $2,500,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, undisputed (in the case of a writ in the United Kingdom),
unvacated, unbonded or unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Company or any of
its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events or Foreign Benefit Plan Events
which individually or in the aggregate results in liability of Company, any of
its Subsidiaries or any of their respective ERISA Affiliates in excess of
$1,000,000 during the term of this Agreement; or there shall exist, as of any
valuation date for a Pension Plan, an excess of the actuarial present value
(determined on the basis of reasonable assumptions employed by the independent
actuary for such Pension Plan for funding purposes) of benefit liabilities,
whether or not vested, over the fair market value of the assets of such Pension
Plan (for a U.S. Pension Plan, the "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA); for a Foreign Pension Plan, the amount
of benefit liabilities for which assets have not been placed in trust or
adequate contributions made to a pension insurance scheme in respect of
employees covered by such Foreign Pension Plan), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which there is no such excess) which exceeds
$5,000,000; or
8.11 Material Adverse Effect.
Any event or change shall occur that has caused or evidences, either in any
case or in the aggregate a Material Adverse Effect; or
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8.12 Change in Control.
Either (i) any Person or any two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Company (or other Securities convertible into such
Securities) representing 35% or more of the combined voting power of all
Securities of Company entitled to vote in the election of directors, other than
Securities having such power only by reason of the happening of a contingency,
or (ii) at any point during any period of two consecutive years, individuals who
at the beginning of such period constituted Company's Board of Directors
(together with any new member of the Board of Directors whose election by
Company's Board of Directors or whose nomination for election by Company's
stockholders was approved by a vote of a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors then in office; or
8.13 Invalidity of Guaranties; Failure of Security; Repudiation of Obligations.
At any time after the execution and delivery thereof, (i) any Guaranty for
any reason, other than the satisfaction in full of all Obligations, shall cease
to be in full force and effect (other than in accordance with its terms) or
shall be declared to be null and void, (ii) any Collateral Document shall cease
to be in full force and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the satisfaction in
full of the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and void,
or Administrative Agent shall not have or shall cease to have a valid and
perfected First Priority Lien in any Collateral purported to be covered thereby,
in each case for any reason other than the failure of Administrative Agent or
any Lender to take any action within its control, or (iii) any Loan Party shall
contest the validity or enforceability of any Loan Document in writing or deny
in writing that it has any further liability, including with respect to future
advances by Lenders, under any Loan Document to which it is a party; or
8.14 Failure to Consummate Acquisition.
The Acquisition shall not be consummated in accordance with this Agreement
and the applicable Related Agreements concurrently with the making of the
initial Loans, or the Acquisition shall be unwound, reversed or otherwise
rescinded in whole or in part for any reason; or
8.15 Amendment of Certain Documents of Company.
Company shall agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of, any of the
Acquisition Agreement or the Company Certificate of Designations, in each case
as in effect on the Closing Date, in a manner adverse to Company or any of its
Subsidiaries or to Lenders without the prior written consent of Syndication
Agent, Administrative Agent and Requisite Lenders.
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THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(iv).
Notwithstanding anything contained in the second preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
Notwithstanding anything herein to the contrary, upon the occurrence of an
Event of Default, Company hereby acknowledges that it shall then be indebted to,
and shall be obligated to pay to Administrative Agent, as a separate and
absolute obligation, (i) all unpaid principal amount of and accrued interest on
the Loans, (ii) an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding, (iii) all other Obligations
and (iv) all amounts owing under or in respect of any Lender Hedge Agreement.
Administrative Agent shall distribute such proceeds among the Lenders and the
Lender Counterparties in accordance with the provisions of subsection 2.4D.
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Upon the payment in full of all Obligations, Administrative Agent shall
exercise, or refrain from exercising, any remedies provided for in this Section
8 with respect to the Guaranties and Collateral Documents in accordance with the
instructions of the holders of a majority of the aggregate notional amount (or,
with respect to any Lender Hedge Agreement that has been terminated in
accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Hedge Agreement) under all Lender Hedge Agreements with
all Lenders.
SECTION 9.
AGENTS
9.1 Appointment.
A. Appointment of Agents. GSCP is hereby appointed Syndication Agent
hereunder, and each Lender hereby authorizes Syndication Agent to act as its
agent in accordance with the terms of this Agreement and the other Loan
Documents. CIBC is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Each Lender Counterparty hereby appoints Administrative Agent to
act as its agent under the Guaranties and Collateral Documents. Each Agent
hereby agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agents and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, each Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or any
of its Subsidiaries. Syndication Agent, without consent of or notice to any
party hereto, may assign any and all of its rights or obligations hereunder to
any of its Affiliates.
B. Appointment of Supplemental Collateral Agents. It is the purpose of this
Agreement and the other Loan Documents that there shall be no violation of any
law of any jurisdiction denying or restricting the right of banking corporations
or associations to transact business as agent or trustee in such jurisdiction.
It is recognized that in case of litigation under this Agreement or any of the
other Loan Documents, and in particular in case of the enforcement of any of the
Loan Documents, or in case Administrative Agent deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the rights,
powers or remedies granted herein or in any of the other Loan Documents or take
any other action which may be desirable or necessary in connection therewith, it
may be necessary that Administrative Agent appoint an additional individual or
institution as a separate trustee, co-trustee, collateral agent or collateral
co-agent (any such additional individual or institution being referred to herein
individually as a "Supplemental Collateral Agent" and collectively as
"Supplemental Collateral Agents").
In the event that Administrative Agent appoints a Supplemental Collateral
Agent with respect to any Collateral, (i) each and every right, power, privilege
or duty expressed or intended by this Agreement or any of the other Loan
Documents to be exercised by or vested in or conveyed to Administrative Agent
with respect to such Collateral shall be
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exercisable by and vest in such Supplemental Collateral Agent to the extent, and
only to the extent, necessary to enable such Supplemental Collateral Agent to
exercise such rights, powers and privileges with respect to such Collateral and
to perform such duties with respect to such Collateral, and every covenant and
obligation contained in the Loan Documents and necessary to the exercise or
performance thereof by such Supplemental Collateral Agent shall run to and be
enforceable by either Administrative Agent or such Supplemental Collateral
Agent, and (ii) the provisions of this Section 9 and of subsections 10.2 and
10.3 that refer to Administrative Agent shall inure to the benefit of such
Supplemental Collateral Agent and all references therein to Administrative Agent
shall be deemed to be references to Administrative Agent and/or such
Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 Powers and Duties; General Immunity.
A. Powers; Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. No Agent shall have, by reason of this Agreement or any
of the other Loan Documents, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of
Company to any Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit
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Usage or the component amounts thereof.
C. Exculpatory Provisions. None of the Agents nor any of their officers,
partners, directors, respective employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Loan Documents except to the extent caused by such Agent's gross negligence
or willful misconduct. Each Agent shall be entitled to refrain from any act or
the taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until such Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6) and, upon receipt of such instructions from
Requisite Lenders (or such other Lenders, as the case may be), such Agent shall
be entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against any Agent as a result of such Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).
D. Agent Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include each Agent
in its individual capacity. Any Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall not have any responsibility
with respect to the accuracy of or the completeness of any information provided
to Lenders.
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9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as such
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to any Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. Upon
payment in full of the Obligations, Administrative Agent may request indemnity
from the Lender Counterparties and cease, or not commence, to do any acts under
any Guaranty or Collateral Document until such indemnity is furnished.
9.5 Successor Agent.
A. Successor Agent An Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall be discharged from its duties and obligations under this Agreement and
shall promptly (i) transfer to such successor Administrative Agent all sums,
securities and other items of Collateral held under any Collateral Document,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative
Agent under any Collateral Document, and (ii) execute and deliver to such
successor Administrative Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Administrative Agent of the security interests
created thereunder, whereupon such retiring or removed Administrative Agent
shall be discharged from its duties and obligations under the Collateral
Documents. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of CIBC or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon
its acceptance of such appointment,
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become the successor Swing Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made by the retiring
or removed Administrative Agent in its capacity as Swing Line Lender, (ii) upon
such prepayment, the retiring or removed Administrative Agent and Swing Line
Lender shall surrender any Swing Line Note held by it to Company for
cancellation, and (iii) if so requested by the successor Administrative Agent
and Swing Line Lender in accordance with subsection 2.1E, Company shall issue a
new Swing Line Note to the successor Administrative Agent and Swing Line Lender
substantially in the form of Exhibit VI-B annexed hereto, in the principal
amount of the Swing Line Loan Commitment then in effect and with other
appropriate insertions.
9.6 Collateral Documents and Guaranties.
Each Lender hereby further authorizes Administrative Agent, on behalf of
and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under the
Guaranties, and each Lender agrees to be bound by the terms of each Collateral
Document and each Guaranty; provided that Administrative Agent shall not (i)
enter into or consent to any material amendment, modification, termination or
waiver of any provision contained in any Collateral Document or Guaranty or (ii)
release any Collateral (except as otherwise expressly permitted or required
pursuant to the terms of this Agreement or the applicable Collateral Document),
in each case without the prior consent of Requisite Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6);
provided further, however, that, without further written consent or
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders (or such other Lenders as may be
required to give such instructions under subsection 10.6) have otherwise
consented or (b) release any Subsidiary Guarantor from any Guaranty if all of
the capital stock of such Subsidiary Guarantor is sold to any Person (other than
an Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders (or such other Lenders as may be
required to give such instructions under subsection 10.6) have otherwise
consented. Anything contained in any of the Loan Documents to the contrary
notwithstanding, Company, Administrative Agent and each Lender hereby agree that
(X) no Lender shall have any right individually to realize upon any of the
Collateral under any Collateral Document or to enforce any Guaranty, it being
understood and agreed that all powers, rights and remedies under the Collateral
Documents and the Guaranties may be exercised solely by Administrative Agent for
the benefit of Lenders in accordance with the terms thereof, and (Y) in the
event of a foreclosure by Administrative Agent on any of the Collateral pursuant
to a public or private sale, Administrative Agent or any Lender may be the
purchaser of any or all of such Collateral at any such sale and Administrative
Agent, as agent for and representative of Lenders (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
Each Lender hereby further authorizes Administrative Agent, on behalf of
and for the benefit of Lenders and in connection with the CIBC Letter of Credit,
to enter into that certain Subordination and Postponement Agreement dated as of
the Closing Date by and among Administrative Agent, GSCP, as a Lender, Company
and CIBC.
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SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided, further
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided, further that, anything
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender. In the case of a sale, assignment or transfer by a Lender of all
or any part of its Commitments or any Loan or Loans made by it or its Letters of
Credit or participations therein or any other interest herein or in any other
Obligation owed to such Lender to any Person as provided in subsection 10.1A or
10.1B, such Person shall be entitled to receive no greater amount pursuant to
subsection 2.7, on a cumulative basis, than the Lender that sold, assigned or
transferred such Commitments, Loan or Loans, Letters of Credit or participations
therein, or such other interest herein or in any other such Obligations owed to
such Person.
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B. Assignments.
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(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
Credit or participation therein, or other Obligation may (a) be assigned in
any amount to another Lender, or to an Affiliate of the assigning Lender or
another Lender, with the giving of notice to Company and with the consent
of Administrative Agent (which consent shall not be unreasonably withheld
or delayed) or (b) be assigned in an aggregate amount of not less than
$5,000,000 (or such lesser amount as shall constitute the aggregate amount
of the Commitments, Loans, Letters of Credit and participations therein,
and other Obligations of the assigning Lender) to any other Eligible
Assignee with the giving of notice to Company and with the consent of
Administrative Agent (which consent shall not be unreasonably withheld or
delayed); provided, however that assignments by GSCP in accordance with
either clause (a) or (b) above may be made without the consent of
Administrative Agent, upon the giving of notice to Company and
Administrative Agent. To the extent of any such assignment in accordance
with either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations or the portion
thereof so assigned; provided however, that any such obligation shall be
and remain the same obligation of Company. The parties to each such
assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement, together
with a processing and recordation fee of $1,000 in the case of assignments
pursuant to clause (a) above and assignments by GSCP or CIBC and $2,500 in
the case of all other assignments. Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in
such Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement, relinquish its
rights (other than any rights which survive the termination of this
Agreement under subsection 10.9B) and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto; provided that, anything contained in any of the Loan Documents to
the contrary notwithstanding, if such Lender is the Issuing Lender with
respect to any outstanding Letters of Credit such Lender shall continue to
have all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder). The
Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of any Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes, if any,
to Administrative Agent for cancellation, and thereupon new Notes shall, if
so requested by the assignee and/or the assigning Lender in accordance with
subsection 2.1E, be issued to the assignee and/or to the assigning Lender,
substantially in the form of Exhibit IV, Exhibit V or Exhibit VI annexed
hereto, as the case may be, with appropriate insertions, to reflect the new
Commitments and/or outstanding Tranche A Term Loans and/or AXELs Series B,
as the case may be, of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon
its
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receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent has consented to the
assignment evidenced thereby to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such assignment),
(b) record the information contained therein in the Register, and (c) give
prompt notice thereof to Company. Administrative Agent shall maintain a
copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the scheduled final maturity date of any Loan
allocated to such participation or (ii) a reduction of the principal amount of
or the rate of interest payable on any Loan allocated to such participation, and
all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are
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incorporated herein by this reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents and any consents, amendments,
waivers or other modifications thereto; (ii) all the costs of furnishing all
opinions by counsel for Company (including any opinions requested by Lenders as
to any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including with
respect to confirming compliance with environmental, insurance and solvency
requirements; (iii) the reasonable fees, expenses and disbursements of counsel
to Syndication Agent and counsel to Administrative Agent (including allocated
costs of internal counsel) in connection with the negotiation, preparation,
execution and administration of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and any other documents or matters
requested by Company; (iv) all the actual costs and reasonable expenses of
creating and perfecting Liens in favor of Administrative Agent on behalf of
Lenders pursuant to any Collateral Document, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums, and reasonable fees, expenses and disbursements of counsel
to Syndication Agent and counsel to Administrative Agent and of counsel
providing any opinions that Syndication Agent, Administrative Agent or Requisite
Lenders may request in respect of the Collateral Documents or the Liens created
pursuant thereto; (v) all the actual costs and reasonable expenses (including
the reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Syndication Agent or Administrative Agent and their
respective counsel) of obtaining and reviewing any appraisals provided for under
subsection 4.1J or 6.9C and any environmental audits or reports provided for
under subsection 4.1L or 6.9B(viii); (vi) the custody or preservation of any of
the Collateral; (vii) all other actual and reasonable costs and expenses
incurred by Syndication Agent or Administrative Agent in connection with the
syndication of the Commitments and the negotiation, preparation and execution of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and the transactions contemplated thereby; and (viii) after the
occurrence of an Event of Default, all costs and expenses, including reasonable
attorneys' fees (including allocated costs of internal counsel) and costs of
settlement, incurred by Syndication Agent, Administrative Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents by reason of such Event of
Default (including in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of any Guaranty) or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
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10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend (subject to Indemnitees' selection of counsel), indemnify, pay and
hold harmless Agents and Lenders, and the officers, partners, trustees,
directors, employees, agents and affiliates of Agents and Lenders (collectively
called the "Indemnitees"), from and against any and all Indemnified Liabilities
(as hereinafter defined); provided that Company shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from the gross negligence or
willful misconduct of that Indemnitee as determined by a final judgment of a
court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action necessary to
remove, remediate, clean up or abate any Hazardous Materials Activity), expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of (i) this Agreement or
the other Loan Documents or the Related Agreements or the transactions
contemplated hereby or thereby (including Lenders' agreement to make the Loans
hereunder or the use or intended use of the proceeds thereof or the issuance of
Letters of Credit hereunder or the use or intended use of any thereof, or any
enforcement of any of the Loan Documents (including any sale of, collection
from, or other realization upon any of the Collateral or the enforcement of any
Guaranty), (ii) the statements contained in the commitment letter delivered by
any Lender to Company with respect thereto, or (iii) any Environmental Claim or
any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of Company or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
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10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby authorized by Company at any time or from time to
time, without notice to Company or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of Company against and on
account of the obligations and liabilities of Company to that Lender under this
Agreement, the Letters of Credit and participations therein and the other Loan
Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
Syndication Agent, Administrative Agent and each Lender a security interest in
all deposits and accounts maintained with Administrative Agent or such Lender as
security for the Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment (other than a voluntary prepayment of Loans made and applied
in accordance with the terms of this Agreement), by realization upon security,
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder or
under the other Loan Documents (collectively, the "Aggregate Amounts Due" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify Administrative
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
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10.6 Amendments and Waivers.
A. No amendment, modification, termination or waiver of any provision of
the Loan Documents, or consent to any departure by Company therefrom, shall in
any event be effective without the written concurrence of Requisite Lenders;
provided that no such amendment, modification, termination, waiver or consent
shall, without the consent of each Lender (with Obligations directly affected in
the case of the following clause (i)): (i) extend the scheduled final maturity
of any Loan or Note, or waive, reduce or postpone any scheduled repayment set
forth in subsection 2.4A, or extend the stated expiration date of any Letter of
Credit beyond the Revolving Loan Commitment Termination Date, or reduce the rate
of interest on any Loan (other than any waiver of any increase in the interest
rate applicable to any Loan pursuant to subsection 2.2E) or any commitment fees
or letter of credit fees payable hereunder, or extend the time for payment of
any such interest or fees, or reduce the principal amount of any Loan or any
reimbursement obligation in respect of any Letter of Credit, (ii) amend, modify,
terminate or waive any provision of this subsection 10.6, (iii) reduce the
percentage specified in the definition of "Requisite Lenders" (it being
understood that, with the consent of Requisite Lenders, additional extensions of
credit pursuant to this Agreement may be included in the determination of
"Requisite Lenders" on substantially the same basis as the Tranche A Term Loan
Commitments, the Tranche A Term Loans, AXEL Series B Commitments, the AXELs
Series B, the Revolving Loan Commitments and the Revolving Loans are included on
the Closing Date), (iv) release all or substantially all of the Collateral or
all or substantially all the Subsidiaries from any Guaranty, except as expressly
provided in the Loan Documents, or (v) consent to the assignment or transfer by
Company of any of its rights and obligations under this Agreement; provided,
further that no such amendment, modification, termination or waiver shall (1)
increase the Commitments of any Lender over the amount thereof then in effect,
or extend the duration thereof, without the consent of such Lender (it being
understood that no amendment, modification or waiver of any condition precedent,
covenant, Potential Event of Default or Event of Default shall constitute an
increase or extension in the Commitment of any Lender, and that no increase in
the available portion of any Commitment of any Lender shall constitute an
increase in such Commitment of such Lender); (2) amend the definition of
"Requisite Class Lenders" without the consent of Requisite Class Lenders of each
Class, or alter the required application of any repayments or prepayments as
between Classes pursuant to subsection 2.4B(iv) without the consent of Requisite
Class Lenders of each Class which is being allocated a lesser repayment or
prepayment as a result thereof (although Requisite Lenders may waive, in whole
or in part, any mandatory prepayment so long as the application, as between
Classes, of any portion of such prepayment which is still required to be made is
not altered); (3) amend, modify, terminate or waive any obligation of Lenders
relating to the purchase of participations in Letters of Credit as provided in
subsection 3.1C without the written concurrence of Administrative Agent and of
each Issuing Lender which has a Letter of Credit then outstanding or which has
not been reimbursed for a drawing under a Letter of Credit issued it; (4) amend,
modify, terminate or waive any provision of Section 9 as the same applies to any
Agent, or any other provision of this Agreement as the same applies to the
rights or obligations of any Agent, in each case without the consent of such
Agent; or (5) amend, modify, terminate or waive any provision of subsection
2.1A(iv) or any other provision of this Agreement relating to the Swing Line
Loan Commitment or the Swing Line Loans, in each case without the consent of
Swing Line Lender.
B. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on
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behalf of that Lender. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on Company in any case shall entitle Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Syndication Agent or
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
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10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
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10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT,
COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
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10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with prudent lending
or investing practices, it being understood and agreed by Company that in any
event a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or by any direct or indirect contractual
counterparties (or the professional advisors thereto) in swap agreements
(provided that such swap counterparties and advisors are advised of and agree to
be bound by the provisions of this subsection 10.19) or disclosures required or
requested by any governmental agency or representative thereof or by the
National Association of Insurance Commissioners or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
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10.20 Judgment Currency.
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency" into another currency (the "Other Currency"), the parties hereto
agree, to the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the Original Currency with the Other
Currency on the Business Day immediately preceding the day on which any such
judgment, or any relevant part thereof, is paid or otherwise satisfied.
(b) The obligations of Company in respect of any sum due from it to the
Lenders hereunder shall, notwithstanding any judgment in such Other Currency, be
discharged only to the extent that on the Business Day following receipt by the
Administrative Agent of any sum adjudged to be so due in the Other Currency the
Administrative Agent may in accordance with normal banking procedures purchase
the Original Currency with the Other Currency; if the Original Currency so
purchased is less than the sum originally due to the Lenders in the Original
Currency, Company agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Lenders against such loss, and if the amount of the
Original Currency so purchased exceeds the sum originally due to the Lenders in
the Original Currency, the Lenders shall remit such excess to Company.
10.21 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
10.22 Supremacy of Credit Agreement.
If and to the extent there are conflicts or inconsistencies between the
provisions of this Agreement and any of the provisions of any other Loan
Document, this Agreement shall prevail, except that (a) nothing in this clause
shall be deemed, or serve, to limit or impair the obligations of Company or
any other Loan Party with respect to the creation, attachment, perfection or
preservation of any security interest (or local law equivalent in the
relevant jurisdictions); and (b) the provisions of the Guaranties will
prevail to the extent provided for therein.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
MITEL CORPORATION
By: ______________________________________________
Title: ___________________________________________
Notice Address:
Mitel Corporation
350 Leggett Drive
Kanata, Ontario
CANADA K2K 1X3
Attention: Donald G. McIntyre
Telephone: (613) 592-2122
Telecopy: (613) 592-4784
S-1
<PAGE>
LENDERS:
CANADIAN IMPERIAL BANK OF COMMERCE,
individually and as Administrative Agent
By:
-----------------------------------------------
Name:
Title:
Notice Address:
Canadian Imperial Bank of Commerce
Commerce Court West, 7th Floor
199 Bay Street
Toronto, Ontario M5L 1A2
Attention: Warren Lobo
Agent Loan Underwriting and Distribution
Group
Telephone: (416) 980-4412
Telecopy: (416) 980-5151
S-2
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS L.P.,
individually and as Syndication Agent
By:
------------------------------------------------
Authorized Signatory
Notice Address:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Stephen King
Telephone: 212-902-8123
Telecopy: 212-357-3000
with a copy to:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: John Makrinos
Telephone: 212-902-5977
Telecopy: 212-357-4597
S-3
<PAGE>
GOLDMAN SACHS CANADA CREDIT
PARTNERS CO.
By:
------------------------------------------------
Authorized Signatory
Notice Address:
Goldman Sachs Canada Credit Partners Co.
150 King Street, Suite 1201,
Toronto,
Ontario, M5H 1J9
Attention: Megan Sweeting
Telephone: 416-343-8827
Telecopy: 416-343-8750
with a copy to:
Goldman Sachs Credit Partners Co.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: John Makrinos
Telephone: 212-902-5977
Telecopy: 212-357-4597
S-4
