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Exhibit (b)(1)
DATED 31ST JULY, 2000
PEARSON PLC
- AND -
GOLDMAN SACHS INTERNATIONAL
- AND -
CAZENOVE & CO.
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A G R E E M E N T
RELATING TO A RIGHTS ISSUE
OF ORDINARY SHARES
OF 25P EACH IN
PEARSON PLC
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Slaughter and May
35 Basinghall Street
London EC2V 5DB
(DRJ/ARR)
CE003695632
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CONTENTS
PAGE
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1. Interpretation 1
2. Admission to listing and trading 6
3. Obligations of the Company 7
4. Conditions 8
5. Certain Overseas Qualifying Holders 10
6. Allotment 10
7. Subscription of New Shares 11
8. Underwriting 14
9. Announcements 16
10. Warranties 17
11. Commissions and Expenses 17
12. Indemnity 19
13. Miscellaneous 22
14. Contracts (Rights of Third Parties) Act 1999 22
15. Notices 22
16. Governing Law 24
Schedule 1 25
Schedule 2 27
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THIS AGREEMENT is made on 31st July, 2000
BETWEEN:
(1) PEARSON PLC (registered in England with number 53723) whose registered
office is at 3 Burlington Gardens, London W1X 1LE (the "COMPANY");
(2) GOLDMAN SACHS INTERNATIONAL of Peterborough Court, 133 Fleet Street,
London EC4A 2BB ("GOLDMAN SACHS"); and
(3) CAZENOVE & CO. of 12 Tokenhouse Yard, London EC2R 7AN ("CAZENOVE").
WHEREAS:
(A) The Company proposes to issue the New Shares pursuant to the Rights
Issue and the Directors have authority and have been empowered under
Sections 80 and 95 of the Companies Act 1985, respectively, to allot
the New Shares and to do so otherwise than in compliance with Section
89 of that Act.
(B) Goldman Sachs and Cazenove have agreed, on the terms and subject to the
conditions referred to in this Agreement, to underwrite the Rights
Issue and have sought and are proposing to seek sub-underwriters of the
Rights Issue.
WHEREBY IT IS AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 In this Agreement (including the Schedules) the following expressions
shall, unless the context otherwise requires, have the following
meanings:-
"ACCEPTANCE DATE" means the date for acceptance and
payment in full under the Rights
Issue expected to fall 21 days after
the Posting Date Provided always
that it shall not be later than the
date falling three Dealing Days
before the day falling 43 days after
the date of this Agreement;
"ACCOUNTS DATE" means 31st December 1999;
"ACQUISITION" means the proposed acquisition by a
wholly owned subsidiary of the
Company of National Computer
Systems, Inc. to be effected by
means of the tender offer (and
subsequent merger)as detailed in the
Acquisition Documents;
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"ACQUISITION DOCUMENTS" means the merger agreement between
the Company, a wholly-owned
subsidiary of the Company and
National Computer Systems, Inc.
dated 30th July 2000 (the "Merger
Agreement") and a tender offer
document to be sent to National
Computer Systems Inc.'s
shareholders;
"AUSTRALIAN HOLDERS" means Qualifying Holders with
registered addresses in the
Commonwealth of Australia, its
territories or possessions;
"BROKERS" means Cazenove & Co. and Goldman
Sachs in their capacity as brokers
to the Company;
"CIRCULAR" means the circular to be issued by
the Company to its shareholders
giving details of the Rights Issue,
the Interim Results, and the
Acquisition, and constituting a
Prospectus;
"COMMENCEMENT OF DEALINGS" means the commencement of dealings
in the New Shares (nil paid) on and
with the authority of the London
Stock Exchange;
"DEALING DAY" means a day upon which dealings in
domestic securities may take place
on and with the authority of the
London Stock Exchange;
"DIRECTORS" means the directors of the Company;
"EXCLUDED HOLDERS" means Qualifying Holders to whom, in
accordance with Clause 5, no
Provisional Allotment Letter is to
be sent;
"GROUP" means the Company and its
subsidiaries and subsidiary
undertakings;
"INTERIM RESULTS" means the unaudited interim results
of the Group for the six months
ended 30th June, 2000 as set out in
the Press Announcement;
"IRISH HOLDERS" means Qualifying Holders with
registered addresses in the Republic
of Ireland;
"LISTING RULES" means the current edition of the
publication entitled "The Listing
Rules" produced by the UK Listing
Authority and incorporating the
listing rules made by the UK Listing
Authority pursuant to Part IV of the
Financial Services Act 1986;
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"LONDON STOCK EXCHANGE" means the London Stock Exchange plc;
"NEW SHARES" means the 170,500,067 new Ordinary
Shares to be allotted pursuant to
the Rights Issue;
"NORTH AMERICAN HOLDERS" means Qualifying Holders with
registered addresses either in the
United States of America or any of
its states, territories or
possessions, including the District
of Columbia;
"OFFICIAL LIST" means the Official List of the UK
Listing Authority;
"ORDINARY SHARES" means ordinary shares of 25p each in
the capital of the Company;
"ORDINARY SHAREHOLDERS" means holders of Ordinary Shares;
"POSTING DATE" means the date not later than 17th
August, 2000 or such other date as
the Company and the Underwriters may
agree in writing that the Circular
and Provisional Allotment Letter
are, subject to clause 5, issued by
the Company to Qualifying Holders;
"PRESS ANNOUNCEMENT" means the press announcement giving
details of the Rights Issue, the
Interim Results and the Acquisition
in the form of the draft initialled
by or on behalf of the Company and
the Underwriters for the purpose of
identification only and MARKED "A";
"PROSPECTUS" means a prospectus for the
purposes of the listing rules
made by the UK Listing
Authority pursuant to Part IV
of the Financial Services Act
1986 relating to the Company
and the New Shares;
"PROVISIONAL ALLOTMENT LETTER" means the form of the renounceable
provisional allotment letter to be
issued by the Company, subject to
CLAUSE 5, to Qualifying Holders in
connection with the Rights Issue;
"QUALIFYING HOLDERS" means Ordinary Shareholders on the
register of members of the Company
as at the close of business on the
Record Date;
"RECEIVING BANKER" means Lloyds TSB Registrars, The
Causeway, Worthing, West Sussex BN99
6DA;
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"RECORD DATE" means the close of business on 28th
July, 2000;
"REPORT AND ACCOUNTS" means the published annual report
and audited accounts of the Group as
at and for the financial period
ended on the Accounts Date;
"RIGHTS ISSUE" means the offer of New Shares by way
of rights to Qualifying Holders
(other than Excluded Holders) at the
Subscription Price on the basis of:-
3 New Shares
for every
11 Ordinary Shares
held as at the close of business on
the Record Date and otherwise on the
terms and subject to the conditions
in the Circular and Provisional
Allotment Letter;
"STANDARDS" means the current edition of the
Admission and Disclosure Standards
produced by the London Stock
Exchange;
"SUBSCRIPTION PRICE" means a price of(pound)10.00 per New
Share;
"SUPPLEMENTARY PROSPECTUS" means any Prospectus published by
the Company pursuant to Section 147
of the Financial Services Act 1986
supplementary to the Prospectus
contained in the Circular;
"UK LISTING AUTHORITY" means the Financial Services
Authority in its capacity as the
competent authority under Part IV of
the Financial Services Act 1986 and
in the exercise of its function in
respect of admission to the Official
List otherwise than in accordance
with Part IV of the Financial
Services Act 1986;
"UNDERWRITERS" means Goldman Sachs and Cazenove;
"UNDERWRITTEN NEW SHARES" means 150,000,000 New Shares.
1.2 In this Agreement unless otherwise specified:-
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(A) references to clauses, sub-clauses, paragraphs and schedules
are to clauses, sub-clauses, paragraphs of, and schedules to,
this Agreement;
(B) words and expressions defined in the Companies Act 1985 shall
bear the same meaning;
(C) 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,
provided that no amendment, modification or re-enactment
subsequent to the date of this Agreement shall increase or
extend the liability of any party under this Agreement;
(D) references to this Agreement are to it as amended or
supplemented from time to time ;
(E) references to times of the day are to London time; and
(F) headings to clauses and schedules are for convenience only and
do not affect the interpretation of this Agreement.
1.3 The document referred to in this Agreement marked "A" (the Press
Announcement), may be amended by agreement between the Company and the
Underwriters in accordance with CLAUSE 3.7 and references in this
Agreement to such documents shall, where appropriate, be construed as
references to such documents as so amended.
2. ADMISSION TO LISTING AND TRADING
2.1 The Company undertakes to the Underwriters that it has, at its own
expense, through the Brokers made an application to the UK Listing
Authority for permission to be granted for the admission of the New
Shares to the Official List in accordance with the Listing Rules and an
application to the London Stock Exchange for permission to be granted
for the admission of the New Shares to trading on the London Stock
Exchange.
2.2 The Company will, in conjunction with the Brokers, use its best
endeavours:-
(A) to obtain the permissions referred to in CLAUSES 2.1 (subject
only to the despatch of Provisional Allotment Letters) by not
later than the Posting Date; and
(B) to procure that the admission of the New Shares to the
Official List becomes effective in accordance with paragraph
7.1 of the Listing Rules and the admission of the New Shares
to trading becomes effective in accordance with paragraph 2.1
of the Standards by not later than 8.30 a.m. on the first
Dealing Day after the Posting Date.
The Company will supply all such information, give all such
undertakings, execute all such documents, pay all such fees and do or
procure to be done all such things as may be reasonably necessary or
required by the UK Listing Authority and/or the London Stock Exchange
for the purpose of obtaining such approval, permissions and admissions.
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3. OBLIGATIONS OF THE COMPANY
3.1 The Company shall:-
(A) so far as it is able procure that forthwith, and in any event
by not later than 8.30 a.m. on the date of this Agreement, the
Press Announcement is released to the London Stock Exchange;
(B) use its best endeavours to procure delivery to the
Underwriters of the documents referred to in paragraph 1 of
Schedule 1 by not later than the time at which copies of the
Circular are delivered to the Registrar of Companies in
England and Wales in accordance with CLAUSE 3.2(A);
(C) subject to the allotment of the New Shares pursuant to CLAUSE
6. 1, procure that there are delivered to the Underwriters the
documents referred to in PARAGRAPH 2 of SCHEDULE 1 as provided
therein.
3.2 Subject to the prior receipt from the UK Listing Authority of formal
approval of the Circular as a Prospectus, the Company shall procure
that:-
(A) two copies of the Circular are delivered by or on behalf of
the Company to the Registrar of Companies in England and Wales
for registration pursuant to Section 149 of the Financial
Services Act 1986 by not later than the Posting Date;
(B) subject to the fulfilment of CLAUSE 3.2(A), further copies of
the Circular, together with the Report and Accounts, are made
available by or on behalf of the Company in accordance with
paragraphs 8.4, 8.4A, 8.5, 8.6 and 8.21 of the Listing Rules;
(C) subject to the fulfilment of CLAUSE 3.2(A) and the provisional
allotments of the New Shares having been made subject to and
in accordance with CLAUSE 6.1, the Circular and Provisional
Allotment Letters are posted, subject to CLAUSE 5, to all
Qualifying Holders (other than Excluded Holders) by not later
than the Posting Date with such Provisional Allotment Letters
recording the respective entitlements of each such Qualifying
Holder to subscribe New Shares; and
(D) the relevant announcements referred to in paragraph 4.20 of
the Listing Rules shall be lodged with the Company
Announcements Office of the London Stock Exchange as required
by such paragraph.
3.3 The Company shall notify the Underwriters forthwith of any event
referred to in paragraph (a) or (b) of Section 147(1) of the Financial
Services Act 1986 which arises between the time of publication of the
Circular and the Commencement of Dealings and, without prejudice to
CLAUSES 4.1(D) AND 9.2, shall deal with every such matter in accordance
with Section 147 of that Act and paragraphs 5.14, 5.15, 5.16 and 8.20
of the Listing Rules.
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3.4 The Company undertakes that it will not, without the consent in writing
of the Underwriters, prior to completion of the Acquisition make any
material increase in the terms of the tender offer.
3.5 The Company shall not make any material amendment to the Circular, the
Press Announcement or the Provisional Allotment Letter without the
prior written consent of the Underwriters, such consent not to be
unreasonably withheld or delayed.
4. CONDITIONS
4.1 The obligations of the Underwriters under CLAUSES 7 (other than CLAUSES
7.6 TO 7.8) AND 8 are conditional upon:-
(A) the release of the Press Announcement to the London Stock
Exchange in accordance with CLAUSE 3.1(A);
(B) the posting of the Circular and Provisional Allotment Letters
in accordance with CLAUSE 3.2(C);
(C) none of the representations, warranties or undertakings being
breached or untrue or inaccurate or misleading in any respect
when made which in any such case is material in the context of
the Rights Issue or the underwriting of the New Shares and
there being no change in fact or circumstance or in the
knowledge, opinion, intention or expectation such that, if
repeated at any time up to immediately prior to the
Commencement of Dealings by reference to the facts and
circumstances and the knowledge, opinions, intentions and
expectations of the Directors then existing, any of such
representations, warranties or undertakings would be breached
or untrue or inaccurate or misleading in any respect, which in
any such case is material in the context of the Rights Issue
or the underwriting of the New Shares;
(D) no event referred to in paragraph (a) or (b) of Section 147(1)
of the Financial Services Act 1986 arising between the time of
publication of the Circular and the Commencement of Dealings
and no Supplementary Prospectus being published by or on
behalf of the Company;
(E) the admission of the New Shares to the Official List becoming
effective in accordance with paragraph 7.1 of the Listing
Rules and the admission of the New Shares to trading becoming
effective in accordance with paragraph 2.1 of the Standards by
not later than 8.30 a.m. on the first Dealing Day after the
Posting Date;
(F) the Acquisition not ceasing to be capable of completion by
reason of any condition in Exhibit A to the Merger Agreement
being invoked; and
(G) no act of the Company having been carried out in breach of
CLAUSE 3.4 (whether prior to or after the Commencement of
Dealings).
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4.2 The conditions referred to in CLAUSE 4.1 (other than those set out in
CLAUSES 4.1(B) AND (E)) may be waived, in whole or in part, by notice
in writing given by the Underwriters to the Company and the respective
times for satisfaction of the conditions referred to in CLAUSE 4.1 may
be extended by notice in writing given by the Underwriters to the
Company.
4.3 If the conditions referred to in CLAUSE 4.1 are not fulfilled (or
waived) on or by the required times or dates therefor, the Company
shall forthwith make an announcement to the London Stock Exchange to
that effect and this Agreement (other than Clauses 7.6 to 7.8) shall
ipso facto cease and terminate and neither party shall have any claim
against the other for any costs, damages, compensation or otherwise
under this Agreement except:-
(A) as regards any breach of any provision of this Agreement which
has occurred prior to such termination; and
(B) that the provisions of CLAUSES 11 AND 12 shall still apply in
accordance with their respective terms.
5. CERTAIN OVERSEAS QUALIFYING HOLDERS
5.1 Provisional Allotment Letters sent to Qualifying Holders with
registered addresses in South Africa will carry no right to renounce.
5.2 Provisional Allotment Letters will not be sent to North American
Holders without the prior written consent of the Underwriters.
5.3 The Company will not exercise any right reserved to it to reject a
Provisional Allotment Letter in the circumstances referred to in the
Circular without first consulting with the Underwriters.
5.4 The parties will investigate in good faith the feasibility of making
the Rights Issue available to Excluded Holders.
6. ALLOTMENT
6.1 Subject to:-
(A) the formal approval by the UK Listing Authority of the
Circular as a Prospectus by not later than the Posting Date;
(B) the delivery of two copies of the Circular to the Registrar of
Companies in England and Wales in accordance with CLAUSE
3.2(A); and
(C) the UK Listing Authority having granted permission for the New
Shares to be admitted to the Official List and the London
Stock Exchange having granted permission for the New Shares to
be admitted to trading on the London Stock Exchange's market
for listed securities (subject only to the despatch of
Provisional Allotment Letters),
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the New Shares will be provisionally allotted on the Posting Date to
Qualifying Holders (other than Excluded Holders) on the basis referred
to in the definition of "Rights Issue" in CLAUSE 1.1 pursuant to a
resolution of the Board of Directors (or a duly authorised Committee of
such Board) and in accordance with CLAUSE 6.2.
6.2 The provisional allotment of the New Shares referred to in CLAUSE 6.1
will be made upon the terms and subject to the conditions set out in
the Circular and the Provisional Allotment Letter and on the basis
referred to in CLAUSE 6.4 for acceptance and payment in full by not
later than 3.00 p.m. on the Acceptance Date and will be expressed to be
subject to the admission of the New Shares to the Official List
becoming effective in accordance with paragraph 7.1 of the Listing
Rules and to the admission of the New Shares to trading becoming
effective in accordance with paragraph 2.1 of the Standards by not
later than 8.30 a.m. on the first Dealing Day after the Posting Date
(or such later time and/or date as the Company and the Underwriters may
agree). Fractions of New Shares shall not be allotted to Qualifying
Holders. All such fractions will be aggregated and the resultant
aggregate number of New Shares and the New Shares attributable to
Excluded Holders will be dealt with in accordance with CLAUSES 7.1 AND
7.2.
6.3 Subject to:-
(A) the provisional allotments of the New Shares referred to in
CLAUSE 6.1 having been made; and
(B) the admission of the New Shares to the Official List and to
trading on the London Stock Exchange having become effective
as referred to in Clause 6.2,
the provisional allotments of the New Shares which have been taken up
will be confirmed and the provisional allotments of the New Shares
which have not been taken up will be cancelled and new allotments
thereof made in favour of the persons who, pursuant to CLAUSES 7.6
AND/OR 8, are subscribing such New Shares pursuant to a resolution of
the Board of Directors (or a duly authorised Committee of such Board)
in each case by not later than the third Dealing Day after the
Acceptance Date.
6.4 The New Shares will be allotted on terms that, when fully paid, they
are free from all liens, charges and encumbrances and that they will
rank pari passu in all respects with the existing issued Ordinary
Shares save that they will not rank for the interim dividend in respect
of the six months ended 30th June, 2000 announced on 31st July, 2000.
7. SUBSCRIPTION OF NEW SHARES
7.1 By not later than 5.00 p.m. on the Dealing Date prior to the Posting
Date the Company will (or will procure that the Receiving Banker will)
notify the Underwriters in writing of the number of New Shares which
represents the aggregate of fractional entitlements arising in respect
of the Rights Issue and of the number of New Shares attributable to
Excluded Holders under the Rights Issue. On the Dealing Day before the
Acceptance Date (or such earlier date as the Underwriters may specify
subject to the consent of the Company, such consent not to be
unreasonably withheld or delayed), the Underwriters will, as agents of
the Company, instruct
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the Brokers to endeavour to procure (a) purchaser(s) for so many of the
rights to such New Shares as can be sold nil paid at a premium net of
expenses (including value added tax). As soon as reasonably practicable
thereafter the Underwriters will account to the Receiving Banker for
the net proceeds of sale (after deduction of expenses, including
Broker's commission) of so many of such rights to New Shares as shall
have been so sold nil paid against delivery to the Underwriters (or as
they may direct) of nil paid Provisional Allotment Letters in respect
of the rights to the New Shares so sold in such names and denominations
as the Underwriters may require. Such sales will be deemed to have been
made in the first instance in respect of rights to New Shares
attributable to Excluded Holders and, to the extent that there are
sufficient such sales, thereafter in respect of rights to New Shares
attributable to fractional entitlements. If any of the rights to such
New Shares are not so sold by 3.00 p.m. on the Acceptance Date, such
New Shares will be dealt with as New Shares not taken up in accordance
with CLAUSE 7.6.
7.2 The Company will procure that the Receiving Banker pays to Excluded
Holders pro rata to their holdings of Ordinary Shares as at the close
of business on the Record Date the net proceeds received by the
Receiving Banker in respect of the sale of rights to New Shares
attributable to Excluded Holders pursuant to CLAUSE 7.1 as soon as
practicable after receipt (save that individual amounts of less than
(pound)3.00 per holding shall not be so paid but shall be retained by
the Company). The Company will procure that the Receiving Banker pays
to relevant Qualifying Holders pro rata to their fractional
entitlements to New Shares the net proceeds received by the Receiving
Banker in respect of the sale of such fractional entitlements pursuant
to CLAUSE 7.1 as soon as practicable after receipt (save that
individual amounts of less than (pound)3.00 per holding shall not be so
paid but shall be retained by the Company).
7.3 If, by 3.00 p.m. on the Acceptance Date, all of the New Shares shall
have been taken up, or are subsequently deemed to have been taken up by
such time pursuant to the proviso to CLAUSE 7.4, the obligations of the
Underwriters under CLAUSES 7.6 AND 8 shall thereupon terminate.
7.4 Subject to CLAUSE 7.5, New Shares comprised in Provisional Allotment
Letters which, by 3.00 p.m. on the Acceptance Date, shall be lodged for
acceptance (whether by the person to whom they were provisionally
allotted or by renouncees of the right to accept allotment) in
accordance with the terms of the Circular and the Provisional Allotment
Letter, accompanied by cheques or other remittances for the full amount
payable in respect of such New Shares (and whether or not such cheques
or other remittances shall be honoured) are referred to in this
Agreement as having been "taken up" provided that (i) cheques
dishonoured or other applications rejected by 3.00 p.m. on Acceptance
Date and notified to the Underwriters in accordance with 7.6 shall not
be treated as taken up and (ii) at the discretion of the Company New
Shares shall for the purpose of this Agreement be deemed to have been
taken up by 3.00 p.m. on the Acceptance Date if a cheque or other
remittance for the full amount payable in respect of such New Shares
(and whether or not such cheque or other remittance shall be honoured)
is received prior to 3.00 p.m. on the Acceptance Date from an
authorised person (as defined in the Financial Services Act 1986)
identifying the New Shares concerned and undertaking to lodge the
relevant Provisional Allotment Letter duly completed in due course.
7.5 Notwithstanding CLAUSE 7.4, New Shares shall be deemed not to have been
taken up where they are comprised in a Provisional Allotment Letter
which has been lodged for acceptance and in respect of which, by not
later than 7.30 a.m. on the first Dealing Day after the Acceptance
Date,
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the Company has notified the Underwriters that it is with the consent
of the Underwriters rejecting such Provisional Allotment Letter on the
basis that, verification of the identity of the applicant having been
required and a reasonable period having elapsed, the Receiving Banker
has advised the Company that it is unable to process such Provisional
Allotment Letter in accordance with the Money Laundering Regulations
1993.
7.6 As soon as practicable after 3.00 p.m. on the Acceptance Date and by
not later than 7.30 a.m. on the first Dealing Day after the Acceptance
Date, the Company will (or will procure that the Receiving Banker will)
notify the Underwriters in writing of the number of New Shares which
have not been taken up or deemed taken up. The Underwriters will, as
agents of the Company, instruct the Brokers to endeavour to procure (a)
subscriber(s) for such New Shares (or as many as can be so procured)
upon the terms (in so far as the same are applicable) of the Circular
and the Provisional Allotment Letter as soon as reasonably practicable
and in any event by not later than 3.00 p.m. on the second Dealing Day
after the Acceptance Date if a premium over the total of the
Subscription Price and expenses of procurement (including value added
tax) can be obtained provided that the Underwriters may, at any time
after 3.00 p.m. on the Acceptance Date, instruct the Brokers no longer
to endeavour to procure any such subscriber(s) if they have been
informed by the Brokers that, in the reasonable opinion of the Brokers,
it is unlikely that any such subscriber(s) can be so procured at such a
premium by such time. The Underwriters shall not be under any
obligation to endeavour to procure any such subscriber(s) save as
expressly set out in this Agreement. The Underwriters will procure
payment to the Receiving Banker of the net proceeds of any such
subscriptions by not later than the third Dealing Day after the
Acceptance Date against delivery to the Underwriters (or as they may
direct) of duly receipted fully paid Provisional Allotment Letters in
respect of the New Shares for which subscribers are procured pursuant
to this CLAUSE 7.6 in such names and denominations as the Underwriters
may require.
7.7 The Company will procure that the Receiving Banker pays the excess of
the net proceeds of subscription over the Subscription Price (less
expenses, including value added tax) received by the Receiving Banker
pursuant to CLAUSE 7.6 to the non-accepting Qualifying Holders to whom
the relevant New Shares were provisionally allotted pro rata to their
lapsed provisional entitlements as soon as practicable after receipt
(save that individual amounts of less than (pound)3.00 will not be so
paid but will be retained by the Company). The Company shall be
entitled to retain for its own use aNd benefit the Subscription Price
for each New Share subscribed and received by the Receiving Banker
pursuant to CLAUSE 7.6.
7.8 Any transactions carried out by the Underwriters pursuant to this
CLAUSE 7 will constitute transactions carried out at the Company's
request and as its agent and not for the Underwriters' own account. The
Underwriters shall, however, be entitled to receive and/or retain
and/or allow the Brokers and/or its other agents to receive and/or
retain any commission or brokerages paid to it or its agents in
connection with the implementation of any such transactions and shall
not be under any liability to account for any benefit or advantage
derived from such transactions by it or any company connected with it.
Neither the Underwriters nor the Brokers are to be responsible, whether
to the Company, any Qualifying Holder or any other shareholder or
otherwise, for any loss or damage to any person arising from any such
transactions or for any insufficiency or alleged insufficiency of any
dealing price at which any rights to New Shares may be sold or
subscribers for New Shares may be procured by them or
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for the timing of any such sale or subscription or any failure to
procure any sale or subscription unless and to the extent that the same
result from the negligence or wilful default of the Underwriters or of
the Brokers.
8. UNDERWRITING
8.1 The Underwriters shall, as agents of the Company, procure subscribers,
or to the extent such subscribers are not procured themselves as
principal subscribe, on the terms and subject to the conditions and on
the basis of the information contained in the Circular and the
Provisional Allotment Letter (other than as to the time and method of
acceptance and payment) for any of the New Shares notified to them in
accordance with CLAUSE 7.6 as not taken up and for which subscribers
are not procured pursuant to CLAUSE 7.6, provided that this obligation
shall be limited to the number of Underwritten New Shares after
deducting any New Shares taken up or for which subscribers are procured
under pursuant to CLAUSE 7.6 (and for the avoidance of doubt if the
number of New Shares taken up or for which subscribers are procured
pursuant to CLAUSE 7.6 is equal to or exceeds the number of
Underwritten New Shares, the obligations of the Underwriters under this
CLAUSE 8.1 shall terminate).
8.2 The Underwriters shall procure payment of the Subscription Price for
the Underwritten New Shares for which the Underwriters subscribe or
procure subscribers pursuant to CLAUSE 8.1 to the Company (or to the
Receiving Banker) by not later than the fourth Dealing Day after the
Acceptance Date against delivery to the Underwriters (or as they may
direct) of duly receipted fully paid Provisional Allotment Letters in
respect of such Underwritten New Shares in such names and denominations
as the Underwriters may require. In default of the Underwriters so
doing in respect of any such Underwritten New Shares, the Company is
hereby irrevocably authorised to treat this Agreement as an application
by the Underwriters on the terms and subject to the conditions and on
the basis of the information contained in the Circular and the
Provisional Allotment Letter (other than as to the time and method of
acceptance and payment) for such Underwritten New Shares and to allot
and issue the same to the Underwriters on such terms and conditions,
and payment of the Subscription Price in respect thereof shall be made
by the Underwriters against delivery to them (or as they may direct) of
duly receipted fully paid Provisional Allotment Letters in respect of
such Underwritten New Shares in such names and denominations as they
shall require.
8.3 The obligations of the Underwriters under this CLAUSE 8 are separate,
each Underwriter being responsible only for its proportionate share of
the Underwritten New Shares as set out below:
(A) in respect of the first 82,000,000 Underwritten New Shares:
Goldman Sachs 72.222%
Cazenove 27.778%
(B) in respect of any Underwritten New Shares in excess of
82,000,000:
Goldman Sachs 50%
<PAGE>
13
Cazenove 50%
and for the avoidance of doubt one of the Underwriters shall not have
any liability or obligation in respect of any default by the other.
9. ANNOUNCEMENTS
9.1 The Company will not, and will procure that no other member of the
Group will, between the date of this Agreement and the fourth Dealing
Day after the Acceptance Date (inclusive) save for the Acquisition
enter into any commitment or agreement, or put itself in a position
where it is obliged to announce that any commitment or agreement may be
entered into, which is or may be material in the context of the Group
or issue any shares or options over shares (other than pursuant to and
in accordance with entitlements described in the Circular) or enter
into any agreement or undertaking to do the same without in any such
case the prior written consent of the Underwriters, not to be
unreasonably withheld or delayed.
9.2 The Company undertakes to the Underwriters that, save for the release
of the Press Announcement and the posting of the Circular and
Provisional Allotment Letters in accordance with the terms of this
Agreement, or as may be required by law or the requirements of the
Listing Rules or by the tender offer document and any other US listing
documentation no:-
(A) public announcement or communication concerning any member of
the Group which is or may be material in the context of the
Rights Issue or the underwriting of New Shares;
(B) notice, bill, poster or document announcing the publication or
despatch of the Circular or the Provisional Allotment Letters
or the issue of the New Shares and indicating the essential
characteristics of the New Shares; or
(C) document relating to the admission of the New Shares to the
Official List and to trading on the London Stock Exchange,
will be published, made or despatched by or on behalf of any member of
the Group between the date hereof and the fourth Dealing Day after the
Acceptance Date (inclusive) without the prior written consent of the
Underwriters or as may be required by law or the requirements of the
Listing Rules or by the tender offer document and any other US Listing
documentation. The Underwriters shall not withhold or delay such
consent in circumstances where such publication is required pursuant to
any applicable law or regulation.
10. WARRANTIES
10.1 Execution of this Agreement by the Company shall constitute a
representation, warranty and undertaking by the Company to the
Underwriters in the terms set out in SCHEDULE 2.
10.2 The Company accepts that the Underwriters are entering into this
Agreement in reliance upon each of such representations, warranties and
undertakings. Each of such representations, warranties and undertakings
shall be construed separately and shall not be limited or restricted
<PAGE>
14
by reference to or inference from the terms of any other of such
representations, warranties and undertakings or any other term of this
Agreement.
10.3 The Company will notify the Underwriters immediately if it comes to the
knowledge of the Company or any of the Directors that any of the
representations, warranties and undertakings referred to in CLAUSE 10.1
was breached or untrue or inaccurate or misleading in any respect when
made and/or that any of such representations, warranties and
undertakings is or would be breached or untrue or inaccurate or
misleading in any respect if it were to be repeated by reference to the
facts and circumstances or the knowledge, opinions, intentions or
expectations of any of the Directors subsisting at any time up to
immediately prior to the Commencement of Dealings.
10.4 The representations, warranties and undertakings referred to in CLAUSE
10.1 shall remain in full force and effect notwithstanding completion
of this Agreement.
11. COMMISSIONS AND EXPENSES
11.1 In consideration of their services under this Agreement, the Company
will pay to the Underwriters:-
(A) a commission of 0.5 per cent. of the value of the Underwritten
New Shares at the Subscription Price; and
(B) a commission of 0.1 per cent. of the value of the Underwritten
New Shares at the Subscription Price in respect of each period
of seven days or part thereof from (and including) the date
falling 30 days after the date of this Agreement to (and
including) the earlier of (a) the day on which
sub-underwriters are informed either in writing or by the
publication of an announcement on the Stock Exchange
Regulatory News Service of the number of New Shares for which
they are required to subscribe or (b) the third Dealing Day
after the Acceptance Date or (c) the date on which the
announcement referred to in CLAUSE 4.3 is made.
11.2 The commissions referred to in CLAUSE 11.1 shall be paid to the
Underwriters whether or not they shall be called upon to subscribe or
procure subscribers for any of the New Shares under this Agreement and
whether or not any of the obligations of the Underwriters under this
Agreement terminate or fail to become unconditional. Out of such
commissions the Underwriters shall pay sub-underwriting commissions to
such persons, if any, as they may procure to subscribe New Shares
pursuant to CLAUSE 8.
11.3 The commissions referred to in CLAUSE 11.1 shall be paid by the Company
to the Underwriters by not later than 3.00 p.m. on the fourth Dealing
Day after the Acceptance Date or, if earlier, on the first Dealing Day
after the date on which the obligations of the Underwriters under this
Agreement terminate or fail to become unconditional. The Underwriters
shall be entitled to deduct some or all of such commissions from any
amount otherwise payable by the Underwriters to the Company under this
Agreement.
<PAGE>
15
11.4 In addition to the commissions referred to in CLAUSE 11.1, all costs
and expenses of, and in connection with, the Acquisition, this
Agreement, the Rights Issue and the allotment and issue of the New
Shares shall be borne by the Company including, without limitation to
the generality of the foregoing, any stamp duty or stamp duty reserve
tax (other than any stamp duty reserve tax chargeable under sections 93
or 96 of the Finance Act 1986) and all listing fees, admission fees,
registrars' fees, Receiving Banker's fees, legal fees and expenses of
the Company and (to the extent the same are reasonable) those of the
Underwriters, the Company's accountancy fees and expenses, costs of
printing, advertising and circulating the Press Announcement, the
Circular, Provisional Allotment Letters and any Supplementary
Prospectus and the Company's and the Underwriters' out-of-pocket
expenses.
11.5 The Company shall forthwith upon request by the Underwriters pay or
reimburse the Underwriters the amount of any expenses which are to be
borne by the Company and which the Underwriters may have paid.
11.6 Where in pursuance of CLAUSE 11.4 OR 11.5 or CLAUSE 12 a sum (a
"RELEVANT SUM") is to be reimbursed to either Goldman Sachs or Cazenove
in respect of any cost, charge or expense and that cost, charge or
expense includes an amount in respect of value added tax (the "VAT
ELEMENT"), the Company shall pay an amount to Goldman Sachs and/or
Cazenove by reference to the VAT Element that shall be determined as
follows:-
(A) if the Relevant Sum constitutes for value added tax purposes
(without regard to Section 47(3) Value Added Tax Act 1994) the
reimbursement of the consideration for a supply of goods or
services made to Goldman Sachs and/or Cazenove (and so not to
the Company), a sum equal to the proportion of the VAT Element
that Goldman Sachs and/or Cazenove certifies as representing
irrecoverable input tax in the hands of Goldman Sachs and/or
Cazenove, that certificate to be conclusive save in the case
of manifest error; and
(B) if the Relevant Sum constitutes for value added tax purposes
the reimbursement of a cost or expense incurred by Goldman
Sachs and/or Cazenove as agent for the Company, a sum equal to
the whole of the VAT Element,
and where a sum equal to the VAT Element has been reimbursed to Goldman
Sachs and/or Cazenove under PARAGRAPH (B) above, Goldman Sachs and/or
Cazenove shall provide the Company with an appropriate tax invoice in
respect of the supply to which the Relevant Sum relates, that is to say
a tax invoice naming the Company as the recipient of the supply and
issued either by Goldman Sachs and/or Cazenove or, if Goldman Sachs
and/or Cazenove have treated the relevant cost or expense as a
disbursement for value added tax purposes, by the person making the
supply.
12. INDEMNITY
12.1 The Company will not make any claim against Goldman Sachs or any
subsidiary undertaking or parent company of Goldman Sachs or any
subsidiary undertaking of any such parent company or any of their
respective affiliates, directors, officers, partners, agents or
employees and controlling persons (if any) (together "Goldman Sachs
Indemnified Persons" and, separately,
<PAGE>
16
each "Goldman Sachs Indemnified Person") or Cazenove or any subsidiary
undertaking or parent company of Cazenove or any subsidiary undertaking
of any such parent company or any of their respective affiliates,
directors, officers, partners, agents or employees and controlling
persons (if any) together "Cazenove Indemnified Persons" and,
separately, each "Cazenove Indemnified Person") (Goldman Sachs
Indemnified Persons and Cazenove Indemnified Persons together being
"Indemnified Persons") to recover any loss or damage which the Company
or the Directors or any other person may suffer by reason of or arising
out of the carrying out or performance by any Indemnified Person or on
their behalf of their obligations or services under this Agreement or
in connection with the Rights Issue unless and to the extent that in
the case of a Goldman Sachs Indemnified Person such loss or damage
results from the negligence or wilful default of a Goldman Sachs
Indemnified Person, a breach by a Goldman Sachs Indemnified Person of
his or its duties or obligations under the FSA or under the regulatory
system (as defined in the Rules of the Securities and Futures Authority
Limited) or of his or its duties or obligations under this Agreement
and in the case of a Cazenove Indemnified Person such loss or damage
result from the negligence or wilful default of a Cazenove Indemnified
Person, a breach by a Cazenove Indemnified Person of his or its duties
or obligations under the FSA or under the regulatory system (as defined
in the Rules of the Securities and Futures Authority Limited) or of his
or its duties or obligations under this Agreement.
12.2 Without limitation to clause 12.1, the Company agrees with, and
acknowledges to, Goldman Sachs and Cazenove that none of the
Indemnified Persons shall be responsible, in the absence of specific
written agreement to the contrary, to such other parties for verifying
the accuracy and/or fairness of any information in the Circular or
otherwise published or caused to be published by the Company in
connection with the Rights Issue.
12.3 The Company undertakes to Goldman Sachs to hold each Goldman Sachs
Indemnified Person and to Cazenove to hold each Cazenove Indemnified
Person fully and effectively indemnified against all claims, actions,
demands, liabilities, proceedings and judgements brought or established
or threatened to be brought against that Indemnified Person (whether or
not successful, compromised or settled) and against all losses, costs,
charges and expenses (including, without limitation, legal fees and
expenses properly incurred) which that Indemnified Person may suffer or
incur (including, without prejudice to the generality of the foregoing,
all costs, charges and expenses which such Indemnified Person suffers
or incurs in investigating or disputing any such claim, action or
demand) and the reasonable costs and expenses of such Indemnified
Person enforcing its rights under this CLAUSE 12.3 and which in any
case is occasioned by or results from or is attributable to or would
not have arisen but for, directly or indirectly:-
(A) any breach by the Company of any of its obligations under this
Agreement and/or breach of the warranties;
(B) the carrying out or performance by the Underwriters or on
their behalf of any of their obligations or services under
this Agreement or in connection with the Rights Issue;
(C) the issue of the New Shares, the publication, release or
despatch of the Press Announcement and/or the Circular and/or
any of the Provisional Allotment Letters and/or any
Supplementary Prospectus; or
<PAGE>
17
(D) any breach or alleged breach of any of the representations,
warranties and undertakings in this Agreement,
unless and to the extent that such losses, costs, charges or expenses
result (i) in respect of indemnification of a Goldman Sachs Indemnified
Person from the negligence or wilful default of a Goldman Sachs
Indemnified Person, a breach by a Goldman Sachs Indemnified Person of
his or its duties or obligations under the FSA or under the regulatory
system (as defined in the Rules of the Securities and Futures Authority
Limited) or of his or its duties or obligations under this agreement or
(ii) in respect of indemnification of a Cazenove Indemnified Person
from the negligence or wilful default of a Cazenove Indemnified Person,
a breach by a Cazenove Indemnified Person of his or its duties or
obligations under the FSA or under the regulatory system (as defined in
the Rules of the Securities and Futures Authority Limited) or of his or
its duties or obligations under this agreement and provided that an
Indemnified Person shall not be entitled to be indemnified pursuant to
this Clause 12.3 in respect of any losses, costs, charges and expenses
suffered or incurred by such Indemnified Person as a result of it
having been required to subscribe New Shares pursuant to Clause 8
unless and to the extent that such losses, costs, charges and expenses
are occasioned by, or result from, or are attributable to or would not
have arisen but for (in each case directly or indirectly) any breach by
the Company of any of its obligations under this Agreement or any
breach of the representations, warranties and undertakings referred to
in CLAUSE 10.1 or any circumstances which constitute such a breach.
12.4 If the United Kingdom Inland Revenue or any other taxing authority
beings into any charge to taxation any sum payable under the indemnity
contained in CLAUSE 12.3, the amount so payable shall be grossed up by
such amount as will ensure that after deduction of the tax so
chargeable there shall remain a sum equal to the amount than would
otherwise have been payable under CLAUSE 12.3 provided that there shall
be taken into account, in computing the amount payable hereunder in
respect of the loss, cost, charge or expense indemnified, any amount by
which the liability to tax of the Indemnified Person is reduced in
consequence of such loss, cost, charge or expense.
13. MISCELLANEOUS
13.1 The Company confirms that it has instructed or will instruct the
Receiving Banker and the Company's registrars to act as receiving
banker and registrars respectively in connection with the Rights Issue
and to perform the obligations assigned to it or them under the
Circular, the Provisional Allotment Letters and this Agreement as
receiving banker and registrar respectively.
13.2 No delay or omission on the part of the Underwriters in exercising any
right, power or remedy under this Agreement shall impair such right,
power or remedy or operate as a waiver thereof. The single or partial
exercise of any right, power or remedy by the Underwriters under this
Agreement shall not preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The rights, powers
and remedies of the Underwriters provided in this Agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law.
<PAGE>
18
13.3 Any time, date or period mentioned in any Clause of or Schedule to this
Agreement may be extended by agreement between the Company and the
Underwriters but as regards any time, date or period originally fixed
or any time, date or period so extended, time shall be of the essence.
13.4 If the performance by Goldman Sachs and/or Cazenove of any of their
obligations under this Agreement shall represent for value added tax
purposes the making by Goldman Sachs and/or Cazenove of any supply of
goods or services to the Company that is taxable at a positive rate,
the Company shall pay to Goldman Sachs and/or Cazenove, in addition to
the amounts otherwise payable by the Company to Goldman Sachs and/or
Cazenove pursuant to this Agreement, an amount equal to the value added
tax chargeable on any such supply, that payment to be made within seven
days of Goldman Sachs and/or Cazenove requesting the same and against
production by Goldman Sachs and/or Cazenove of an appropriate tax
invoice.
14. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
The parties to this Agreement do not intend that any term of this Agreement,
should be enforceable by virtue of the Contracts (Rights of Third Parties) Act
1999 by any person who is not a party to this Agreement.
15. NOTICES
15.1 Any notice or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing
(not including 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 Any such notice or other communication shall be addressed as provided
in CLAUSE 15.3 and, if so addressed, shall be deemed to have been duly
given or made as follows:-
(A) if sent by personal delivery, upon delivery at the relevant
address of the relevant party;
(B) if sent by first class post, two Dealing Days after the date
of posting; and
(C) if sent by facsimile, when received.
15.3 The relevant addressee, address and facsimile number of each party for
the purposes of this Agreement, subject to CLAUSE 15.4, are:-
Name of Party Address Facsimile No.
------------- ------- -------------
The Company 3 Burlington Gardens 020 7411 2254
London W1X 1LE
F.A.O. Gary Rinck
<PAGE>
19
Goldman Sachs Peterborough Court 020 7774 4212
133 Fleet Street
London EC4A 2BB
F.A.O. Richard Murley
Cazenove 12 Tokenhouse Yard 020 7796 2118
London EC2R 7AN
F.A.O. John Paynter
15.4 A party may notify the other party to this Agreement of a change to its
name, relevant addressee, address or facsimile number for the purposes
of this Clause 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
(B) if no date is specified or the date specified is less than
five Dealing Days after the date on which notice is given, the
date falling five Dealing Days after notice of any such change
has been given.
16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
<PAGE>
20
SCHEDULE 1
DOCUMENTS TO BE DELIVERED
1. The following documents are to be delivered by the Company to the
Underwriters as referred to in CLAUSE 3.1(B):-
(A) a certified copy of the Memorandum and Articles of Association
of the Company;
(B) a certified copy of the resolution of the Board of Directors
(or of the duly authorised Committee of such Board) approving
the Rights Issue and the Acquisition and approving and
authorising the issue and/or execution of the Circular, the
Provisional Allotment Letter, the Acquisition Documents, the
Press Announcement and this Agreement (and, if the said
resolution is of such a Committee, a certified copy of the
resolution of the Board of Directors appointing such
Committee);
(C) the Circular;
(D) certified copies of letters to the UK Listing Authority signed
by all the Directors containing the confirmation required by
paragraph 5.5 of the Listing Rules;
(E) certified copies of any power of attorney pursuant to which
any Director signed any of the documents mentioned above in a
form reasonably acceptable to the Underwriters;
(F) letters to the Underwriters from the solicitors to the Company
in connection with the Rights Issue and the auditors to the
Company in each case in relation to the matters referred to in
paragraph 2.8 of the Listing Rules in a form reasonably
acceptable to the Underwriters;
(G) the working capital report relating to the Group in the form
reasonably acceptable to the Underwriters;
(H) a letter to the Underwriters from the Company's auditors
relating to the said working capital report and the financial
information contained in the in the Circular, in a form
reasonably acceptable to the Underwriters; and
(I) a letter to the Underwriters from the Company relating to the
adequacy of the Group's working capital in the form of the
draft initialled by or on behalf of the Company and the
Underwriters for the purpose of identification only and marked
"B".
2. The following document is to be delivered by the Company to the
Underwriters forthwith after the provisional allotment of the New
Shares pursuant to CLAUSE 6.1:-
a certified copy of the resolution of the Board of Directors
(or of the duly authorised Committee of such Board)
provisionally allotting the New Shares as referred to in
CLAUSE 6.1 (and, if the said resolution is of such a
Committee, a certified copy of the
<PAGE>
21
resolution of the Board of Directors appointing such Committee
(if not previously delivered to the Underwriters)).
3. The following document is to be delivered by the Company to the
Underwriters forthwith after the confirmation of allotments and/or new
allotments of the New Shares pursuant to CLAUSE 6.3:-
a certified copy of the resolution of the Board of Directors
(or of the duly authorised Committee of such Board) confirming
the allotments of the New Shares taken up and making new
allotments of the New Shares not taken up as referred to in
CLAUSE 6.3 (and, if the said resolution is of such a
Committee, a certified copy of the resolution of the Board of
Directors appointing such Committee (if not previously
delivered to the Underwriters)).
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22
SCHEDULE 2
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
(A) All statements contained in the Press Announcement (other than
expressions of opinion, intention or expectation of the Directors) are
true and accurate in all material respects and not misleading in any
material respect and all expressions of opinion, intention or expectation
of the Directors contained therein are made on reasonable grounds and are
truly and honestly held by the Directors and are fairly based and there
are no other facts known or which could on reasonable inquiry have been
known to the Directors the omission of which would make any such
statement or expression in the Press Announcement misleading in any
material respect or which are or might be material in the context of the
Acquisition, the Rights Issue or the underwriting of the New Shares.
(B) All statements contained in the Circular (other than expressions of
opinion, intention or expectation of the Directors) will, when published,
be true and accurate in all material respects and not misleading in any
material respect and all expressions of opinion, intention or expectation
of the Directors contained therein will, when published, be made on
reasonable grounds and will be truly and honestly held by the Directors
and will be fairly based and there will be no other facts known or which
could on reasonable inquiry have been known to the Directors the omission
of which would make any such statement or expression in the Circular
misleading in any material respect or which will or might be material in
the context of the Acquisition, the Rights Issue or the underwriting of
the New Shares.
(C) The Circular will, when published, contain all such information as
investors and their professional advisers would reasonably require, and
reasonably expect to find there, for the purpose of making an informed
assessment of the assets and liabilities, financial position, profits and
losses, and prospects of the Company and the rights attaching to the New
Shares having regard to the matters specified in Section 146(3) of the
Financial Services Act 1986.
(D) With respect to the Report and Accounts and each announcement made by or
on behalf of the Company to the London Stock Exchange or the UK Listing
Authority since the date of publication of the Report and Accounts
("PREVIOUS ANNOUNCEMENTS"), at the date the Report and Accounts were
published or, as the case may be, at the date such announcement was made,
(and save as disclosed in any such document or announcement issued or
made after the publication of the Report and Accounts or any other
previous announcement) all statements contained therein (other than
expressions of opinion, intention or expectation of the Directors) were
true and accurate in all material respects and not misleading in any
material respect and all expressions of opinion, intention or expectation
of the Directors contained therein were made on reasonable grounds and
were truly and honestly held by the Directors and were fairly based and
all previous announcements complied, in all material respects, with the
Companies Act 1985, the Financial Services Act 1986, the rules and
regulations of the UK Listing Authority and the London Stock Exchange and
all regulations made thereunder (including the Listing Rules).
(E) All statements contained in any Supplementary Prospectus (other than
expressions of opinion, intention or expectation of the Directors) will,
when published, be true and accurate in all material respects and not
misleading in any material respect and all expressions of opinion,
<PAGE>
23
intention or expectation of the Directors contained therein will, when
published, be made on reasonable grounds and will be truly and honestly
held by the Directors and will be fairly based and there will be no other
facts known or which could on reasonable inquiry have been known to the
Directors the omission of which would make any such statement or
expression in any such Supplementary Prospectus misleading in any
material respect or which will be or might be material in the context of
the Rights Issue or the underwriting of the New Shares.
(F) If any Supplementary Prospectus is published, then the Circular, together
with such Supplementary Prospectus, will, when the Supplementary
Prospectus is published, contain all such information as investors and
their professional advisers would reasonably require, and reasonably
expect to find there, for the purpose of making an informed assessment of
the assets and liabilities, financial position, profits and losses, and
prospects of the Company and the rights attaching to the New Shares
having regard to the matters specified in Section 146(3) of the Financial
Services Act 1986.
(G) The Interim Results contain an accurate statement in all material
respects of the turnover, profit before tax and profit after tax of the
Group for the six months ended 30th June, 2000 and, save for the fact
that they are unaudited, have been prepared in accordance with generally
accepted accounting principles consistently applied (and applied
consistently with those used in the preparation of the Report and
Accounts) and all relevant Statements of Standard Accounting Practice and
comply with the Companies Act 1985 as applicable.
(H) The Report and Accounts give a true and fair view of the state of affairs
of the Company and of the Group at the Accounts Date and of the results
and source and application of funds of the Group for the financial period
then ended and have been prepared in accordance with generally accepted
accounting principles consistently applied and all relevant Statements of
Standard Accounting Practice and comply in all material respects with the
Companies Act 1985 as applicable.
(I) Since the Accounts Date, save as disclosed in the Circular or any
previous announcement, the business of the Group has been carried on in
the ordinary and usual course and there has been no material adverse
change in the financial or trading position of the Group.
(J) Save as disclosed in the Circular, no member of the Group is engaged in
any legal or arbitration proceedings which may have or have had during
the 12 months preceding the date hereof a significant effect on the
financial position of the Group or which individually or collectively are
material for disclosure in the context of the Acquisition, the Rights
Issue or the underwriting of the New Shares.
(K) The allotment and issue of the New Shares, the issue of the Press
Announcement, the Circular, the Forms of Proxy and the Provisional
Allotment Letters and the making of the Rights Issue will comply with the
Companies Act 1985, the Financial Services Act 1986, the rules and
regulations of the UK Listing Authority and the London Stock Exchange and
all regulations made thereunder (including the Listing Rules and the
Standards), and, in each case so far as the Directors are aware, having
made such enquiries (if any) as are reasonable, the rules and regulations
of any other exchange or securities market on which any of the securities
of the Company are listed, quoted or traded and all other relevant laws
and regulations of the United Kingdom and
<PAGE>
24
elsewhere and there are no matters other than those disclosed in the
Circular or otherwise in writing to the UK Listing Authority which should
be taken into account by the UK Listing Authority in considering the
suitability for listing of the New Shares.
(L) The Company and the Directors have power under the Memorandum and
Articles of Association of the Company to allot and issue the New Shares
in the manner contemplated by this Agreement without any sanction or
consent by members of the Company or any class of them and there are no
consents required by the Company for the allotment and issue of the New
Shares which have not been unconditionally obtained.
(M) So far as the Directors are aware, having made such enquiries (if any) as
are reasonable, entering into and performance of this Agreement by the
Company and the issue of the New Shares will comply in all material
respects with all agreements to which any member of the Group is a party
or by which it or any of them or any of their respective properties or
assets is bound.
(N) So far as the Directors are aware, having made such enquiries (if any) as
are reasonable, no event has occurred or circumstance arisen such that
any person is entitled, or could, with the giving of notice and/or lapse
of time and/or the fulfilment of any condition and/or the making of any
determination, become entitled, to require repayment before its stated
maturity of, or to take any step to enforce any security for, any
indebtedness of any member of the Group.
(O) The working capital forecast of the Group contained in the memorandum
dated 28th July, 2000 has been approved by the Board of Directors or a
Committee thereof and has been made after due and careful inquiry, all
statements of fact therein are true and accurate in all material respects
and not misleading in any material respect, all expressions of opinion,
intention or expectation contained therein are made on reasonable grounds
and are fairly based, all the assumptions on which that forecast is based
are reasonable assumptions, so far as the Directors are aware, having
made such inquiries (if any) as are reasonable and there are no other
assumptions on which that forecast ought to have been based which have
not been made.
(P) Neither the Company, nor any affiliate of the Company, nor any person
acting on its or their behalf has offered or sold the Rights or the New
Shares by means of any (i) general solicitation or general advertising
within the meaning of Rule 502(c) under the United States Securities Act
of 1933 (the "Securities Act") or (ii) directed selling efforts within
the meaning of Rule 903 under the Securities Act and the Company has
complied and will comply with the offering restriction requirements of
such Rule 903.
<PAGE>
25
IN WITNESS whereof the parties hereto have entered into this Agreement the day
and year first before written.
SIGNED BY )
duly authorised for and on )
behalf of )
PEARSON PLC )
SIGNED BY )
duly authorised for and on )
behalf of GOLDMAN )
SACHS INTERNATIONAL )
SIGNED BY )
duly authorised for and on )
behalf of )
CAZENOVE & CO. )
