<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
AMENDMENT NO. 1
TO STATEMENT ON
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------------
FORE Systems, Inc.
(Name of Subject Company)
GEC Acquisition Corp.
GEC Incorporated
The General Electric Company, p.l.c.
(Not Affiliated with the U.S. Based Corporation With a Similar Name)
(Bidders)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
34 5449 102
(CUSIP Number of Class of Securities)
Patricia A. Hoffman
GEC Incorporated
1500 Mittel Boulevard
Wood Dale, IL 60191-1073
(c/o Videojet Systems International, Inc.)
(630) 238-3995
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copies To:
Philip A. Gelston, Esq. Cravath, Jeffrey I. Gordon, Esq. Mayer, Brown &
Swaine & Moore Worldwide Plaza 825 Platt Bucklersbury House 3 Queen
Eighth Avenue New York, NY 10019 Victoria Street London EC4N 8EL
Telephone: (212) 474-1000 England
Telephone: 011-44-171-246-6200
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
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$4,841,736,550 $968,348
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* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 138,335,330 shares of Common Stock, par value $.01 per share,
of FORE Systems, Inc. (the "Company"). Such number of shares represents all
the shares of Common Stock outstanding as of April 24, 1999 plus the number
of shares of Common Stock issuable upon the exercise of outstanding options
to purchase 21,815,995 shares of Common Stock, in each case as represented by
the Company.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: None Filing party: N/A
Form or registration no.: N/A Date filed: N/A
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CUSIP No. 34 5449 102
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GEC Acquisition Corp.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) (x)
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
AF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7)SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
------------------------------------------------------
(8)SHARED VOTING POWER
28,118,876
------------------------------------------------------
(9) SOLE DISPOSITIVE POWER
------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
28,118,876
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,118,876
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
(See Instructions)
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 24.13% of the Common Stock Outstanding
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(14) TYPE OF REPORTING PERSON
CO
2
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CUSIP No. 34 5449 102
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GEC Incorporated
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) (x)
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
BK
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7)SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
------------------------------------------------------
(8)SHARED VOTING POWER
28,118,876
------------------------------------------------------
(9) SOLE DISPOSITIVE POWER
------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
28,118,876
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,118,876
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
(See Instructions)
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 24.13% of the Common Stock
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(14) TYPE OF REPORTING PERSON
CO
3
<PAGE>
CUSIP No. 34 5449 102
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The General Electric Company, p.l.c.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) (x)
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
BK, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
England
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(7)SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
------------------------------------------------------
(8)SHARED VOTING POWER
28,118,876
------------------------------------------------------
(9) SOLE DISPOSITIVE POWER
------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
28,118,876
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,118,876
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
(See Instructions)
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 24.13% of the Common Stock
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(14) TYPE OF REPORTING PERSON
CO
4
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ITEM 1.SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is FORE Systems, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive
offices is 1000 FORE Drive, Warrendale, Pennsylvania 15086-7502.
(b) This Schedule 14D-1 relates to the offer by GEC Acquisition Corp. (the
"Purchaser") to purchase all outstanding shares of Common Stock, par value
$.01 per share (the "Shares"), of the Company at a price of $35.00 per Share,
net to seller in cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated April 30, 1999 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments and
supplements thereto, collectively constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. Information
concerning the number of outstanding Shares is set forth in "Introduction" of
the Offer to Purchase and is incorporated herein by reference.
(c) Information concerning the principal markets in which the Shares are
traded, and the high and low last sales prices of the Shares for each
quarterly period during the past two years is set forth in Section 6 ("Price
Range of the Shares; Dividends on the Shares") of the Offer to Purchase and is
incorporated herein by reference.
ITEM 2.IDENTITY AND BACKGROUND
This Schedule 14D-1 is being filed by the Purchaser, a Delaware corporation
and a wholly owned subsidiary of GEC Incorporated, a Delaware corporation
("Parent"), which is a wholly owned subsidiary of The General Electric
Company, p.l.c., a public limited company organized under the laws of England
and Wales ("GEC, p.l.c."). Information concerning the principal business and
the address of the principal offices of the Purchaser, Parent and GEC, p.l.c.
is set forth in Section 9 ("Certain Information Concerning the Purchaser,
Parent and GEC, p.l.c.;") of the Offer to Purchase and is incorporated herein
by reference. This filing shall not be construed as an admission that GEC,
p.l.c. is, for purposes of Regulation 14D under the Securities Exchange Act of
1934, as amended, a bidder on whose behalf this tender offer is being made.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and GEC, p.l.c. is set forth in
Schedule I to the Offer to Purchase and is incorporated herein by reference.
During the last five years, none of the Purchaser, Parent or GEC, p.l.c.,
or, to the best knowledge of the Purchaser, Parent or GEC, p.l.c., any of
their respective executive officers or directors, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors),
nor has any of them been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3.PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
the Merger Agreement; the Stock Option Agreement; the Stockholder Agreement;
Other Agreements; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
the Merger Agreement; the Stock Option Agreement; the Stockholder Agreement;
Other Agreements; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
5
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ITEM 4.SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5.PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stock Option Agreement; the Stockholder Agreement; Other
Agreements; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6.INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser, Parent and GEC, p.l.c."), Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; the Merger Agreement; the Stock Option
Agreement; the Stockholder Agreement; Other Agreements; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in "Introduction," Section 9 ("Certain Information
Concerning the Purchaser, Parent and GEC, p.l.c."), Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; the Stock Option Agreement; the
Stockholder Agreement; Other Agreements; Plans for the Company") of the Offer
to Purchase is incorporated herein by reference.
ITEM 8.PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9.FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Because the only consideration in the Offer and Merger (as defined in the
Offer to Purchase) is cash, and in view of the amount of consideration payable
in relation to the financial capability of GEC, p.l.c. and its affiliates, the
Purchaser, Parent and GEC, p.l.c. believe the financial condition of GEC,
p.l.c. and its affiliates is not material to a decision by a holder of Shares
whether to sell, tender or hold Shares pursuant to the Offer.
ITEM 10.ADDITIONAL INFORMATION
(a) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stock Option Agreement; the Stockholder Agreement; Other
Agreements; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
6
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(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of April 26, 1999 among
the Purchaser, Parent and the Company (the "Merger Agreement"), the Stock
Option Agreement dated as of April 26, 1999 between the Company and the
Purchaser and the Stockholder Agreement dated as of April 26, 1999 among the
Purchaser, Parent and certain stockholders of the Company, copies of which are
attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively,
is incorporated herein by reference. The Merger Agreement provides that the
Purchaser may assign any or all of its rights and obligations (including the
right to purchase Shares in the Offer) to any affiliate of Parent, but no such
assignment shall relieve the Purchaser of its obligations under the Merger
Agreement.
ITEM 11.MATERIAL TO BE FILED AS EXHIBITS
(a)(1)Offer to Purchase.
(a)(2)Letter of Transmittal.
(a)(3)Notice of Guaranteed Delivery.
(a)(4)Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5)Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
(a)(6)Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7)Text of Press Release dated April 26, 1999, issued by GEC, p.l.c.
(b)The Euro 6,000,000,000 Syndicated Credit Facility dated March 25, 1998,
among GEC, p.l.c., HSBC Investment Bank PLC, as Agent, Marine Midland
Bank, as US Swingline Agent, and certain other financial
institutions.
(c)(1)Agreement and Plan of Merger dated as of April 26, 1999, among the
Purchaser, Parent and the Company.
(c)(2)Stock Option Agreement dated as of April 26, 1999, between the
Company and the Purchaser.
(c)(3)Stockholder Agreement dated as of April 26, 1999, among the
Purchaser, Parent and certain stockholders of the Company.
(c)(4)Confidentiality Agreement dated March 17, 1999, between GEC, p.l.c.
and the Company.
(d)None.
(e)Not appliable.
(f)None.
7
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
GEC ACQUISITION CORP.,
/s/ John C. Mayo
By __________________________________
Name: John C. Mayo
Title: President
GEC INCORPORATED,
/s/ Michael Lester
By __________________________________
Name: Michael Lester
Title: Director
THE GENERAL ELECTRIC COMPANY,
P.L.C.,
/s/ John C. Mayo
By __________________________________
Name: John C. Mayo
Title: Director
Dated: April 30, 1999
8
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Name Number
------- ------------ ------
<C> <S> <C>
(a)(1) Offer to Purchase.............................................
(a)(2) Letter of Transmittal.........................................
(a)(3) Notice of Guaranteed Delivery.................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees......................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees..................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9........................................
(a)(7) Text of Press Release dated April 26, 1999, issued by GEC,
p.l.c.........................................................
(b) The Euro 6,000,000,000 Syndicated Credit Facility dated March
25, 1998, among GEC, p.l.c., HSBC Investment Bank PLC, as
Agent, Marine Midland Bank, as US Swingline Agent, and certain
other financial institutions..................................
(c)(1) Agreement and Plan of Merger dated as of April 26, 1999, among
the Purchaser, Parent and the Company.........................
(c)(2) Stock Option Agreement dated as of April 26, 1999, between the
Company and the Purchaser.....................................
(c)(3) Stockholder Agreement dated as of April 26, 1999, among the
Purchaser, Parent and certain stockholders of the Company.....
(c)(4) Confidentiality Agreement dated March 17, 1999, between GEC,
p.l.c. and the Company........................................
(d) None..........................................................
(e) Not applicable................................................
(f) None..........................................................
</TABLE>
9
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
FORE Systems, Inc.
at
$35.00 Per Share
by
GEC Acquisition Corp.
A Wholly Owned Subsidiary of
GEC Incorporated
A Wholly Owned Subsidiary of
The General Electric Company, p.l.c.
(Not affiliated with the U.S. based corporation with a similar name)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MAY 27, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF FORE SYSTEMS, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, an Agent's Message
(as defined herein), and any other required documents to the Depositary (as
defined herein) and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal (or a facsimile thereof) or
deliver such Shares pursuant to the procedure for book-entry transfer set
forth in Section 2 or (ii) request such stockholder's broker, dealer, bank,
trust company or other nominee to effect the transaction for such stockholder.
A stockholder having Shares registered in the name of a broker, dealer, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if such stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration
of the Offer, such stockholder's tender may be effected by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
April 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.............................................................. 1
1. Terms of the Offer.................................................. 3
2. Procedure for Tendering Shares...................................... 4
3. Withdrawal Rights................................................... 7
4. Acceptance for Payment and Payment.................................. 7
5. Certain Federal Income Tax Consequences............................. 9
6. Price Range of the Shares; Dividends on the Shares.................. 10
7. Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations....................... 11
8. Certain Information Concerning the Company.......................... 12
9. Certain Information Concerning the Purchaser, Parent and GEC,
p.l.c.................................................................. 14
10. Source and Amount of Funds.......................................... 16
11. Contacts and Transactions with the Company; Background of the
Offer.................................................................. 17
12. Purpose of the Offer; the Merger Agreement; the Stock Option
Agreement; the Stockholder Agreement; Other Agreements; Plans for the
Company.............................................................. 19
13. Dividends and Distributions......................................... 30
14. Certain Conditions of the Offer..................................... 31
15. Certain Legal Matters............................................... 32
16. Fees and Expenses................................................... 36
17. Miscellaneous....................................................... 36
</TABLE>
Schedule I--Directors and Executive Officers
<PAGE>
To the Holders of Shares of
FORE Systems, Inc.
INTRODUCTION
GEC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of GEC Incorporated, a Delaware corporation ("Parent"), which
is a wholly owned subsidiary of The General Electric Company, p.l.c., a public
limited company organized under the laws of England and Wales ("GEC, p.l.c."),
hereby offers to purchase all outstanding shares of Common Stock (the "Common
Stock"), par value $.01 per share (the "Shares"), of FORE Systems, Inc., a
Delaware corporation (the "Company"), at $35.00 per Share (the "Offer Price"),
net to seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 26, 1999 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares
owned by the Company as treasury stock, and Shares owned by Parent or any
direct or any indirect wholly owned subsidiary of Parent or of the Company)
will be converted into the right to receive $35.00 in cash (the "Per Share
Merger Consideration"), without interest thereon. The Merger Agreement
provides that the Purchaser may assign any or all of its rights and
obligations (including the right to purchase Shares in the Offer) to any
affiliate of Parent, but no such assignment shall relieve the Purchaser of its
obligations under the Merger Agreement. The Merger is subject to a number of
conditions, including the adoption of the Merger Agreement by stockholders of
the Company, if required by applicable law. In the event the Purchaser
acquires 90% or more of the outstanding Shares pursuant to the Offer or
otherwise, the Purchaser would be able to effect the Merger pursuant to the
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, any other stockholder of
the Company. In such event, the Purchaser could, and intends to, effect the
Merger without prior notice to, or any action by, any other stockholder of the
Company. See Section 12.
Simultaneously with entering into the Merger Agreement, the Purchaser and
the Company have entered into a Stock Option Agreement dated as of April 26,
1999, pursuant to which the Company has granted the Purchaser an option (the
"Option") to purchase up to 19.9% of the outstanding Shares of the Company at
a price per Share equal to the Offer Price. The Option is exercisable in most
cases when the Termination Fee (as defined herein) is payable under the Merger
Agreement. In addition, the Option is exercisable following the Purchaser's
acceptance of Shares for payment pursuant to the Offer to the extent the
effect of such exercise would result in Parent owning, directly or indirectly,
immediately after such exercise 90% of the then outstanding Shares. In
addition, on April 26, 1999, Parent and the Purchaser entered into a
Stockholder Agreement (the "Stockholder Agreement") with two of the founding
stockholders of the Company (the "Founding Stockholders"), pursuant to which
each Founding Stockholder has agreed, among other things, to sell to the
Purchaser all the Shares that he beneficially owns at a price per Share equal
to the Offer Price. The Founding Stockholders have also agreed to tender such
Shares in the Offer at a price per Share equal to the Offer Price if directed
to do so by the Purchaser. The Founding Stockholders collectively own
approximately 4.2% of all outstanding Shares.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Shareholders who hold their Shares through their broker or bank should consult
with such institution as to whether there are any fees applicable to a tender
of Shares. Parent will pay all fees and expenses of Warburg Dillon Read LLC,
which is acting as Dealer Manager (the "Dealer Manager" or "Warburg Dillon
Read"), ChaseMellon Shareholder Services, L.L.C., which is acting as the
Depositary (the "Depositary"), and Georgeson & Company Inc., which is acting
as Information Agent (the "Information Agent"), incurred in connection with
the Offer. See Section 16.
1
<PAGE>
The Board of Directors of the Company (the "Board") has unanimously approved
the Offer and the Merger and determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders
and unanimously recommends that the Company's stockholders accept the Offer
and tender their Shares pursuant to the Offer. The factors considered by the
Board in arriving at its decision to approve the Offer and the Merger and to
recommend that stockholders of the Company accept the Offer and tender their
Shares are described in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which also is being mailed to
stockholders of the Company. The Company's financial advisor, Goldman, Sachs &
Co. ("Goldman Sachs") has delivered its opinion to the Board dated April 26,
1999 that, as of such date, and subject to the conditions and limitations set
forth therein, the consideration to be received by holders of Shares in the
Offer and the Merger is fair, from a financial point of view. Such opinion is
set forth in full as an exhibit to the Schedule 14D-9.
The Company has advised Parent and the Purchaser that each member of the
Board and each of the Company's executive officers intends to tender all
Shares owned by such persons pursuant to the Offer, except to the extent of
any restrictions created by Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The Offer is conditioned upon, among other things, (a) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of all outstanding Shares on
a fully diluted basis (the "Minimum Condition"), (b) any waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the purchase of Shares pursuant to the Offer having
expired or been terminated (the "HSR Act Condition"), (c) the period of time
for any applicable review process by the Committee on Foreign Investment in
the United States ("CFIUS") relating to the determination of any threat to
national security having expired or terminated, and CFIUS not having taken any
action or made any recommendation to the President of the United States to
block or to prevent consummation of the Offer or the Merger, in each case
under Section 721 of the Defense Production Act of 1950, as amended (the
"Exon-Florio Act") (the "Exon-Florio Act Condition") and (d) receiving the
regulatory and antitrust clearances that are described in greater detail in
Section 4 from the applicable authorities in Germany, Italy, Ireland, Sweden
and the United Kingdom (the "European Regulatory Conditions" and,
collectively, with the HSR Act Condition and the Exon-Florio Condition, the
"Regulatory Conditions"). The Purchaser reserves the right (subject to the
terms of the Merger Agreement and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC")) to waive or reduce the Minimum
Condition and to elect to purchase, pursuant to the Offer, fewer than the
minimum number of Shares necessary to satisfy the Minimum Condition. For
purposes herein, Shares on a fully diluted basis means all outstanding Shares,
after giving effect to the exercise or conversion of all options, warrants,
rights and securities exercisable or convertible into Shares. See Sections 1
and 14.
The Company has informed the Purchaser that, as of April 26, 1999, there
were 116,519,333 Shares outstanding and 21,815,997 Shares authorized for
issuance pursuant to the exercise of outstanding options to purchase Shares
("Stock Options"). As a result, as of such date, the Minimum Condition would
be satisfied if the Purchaser acquired 69,167,666 Shares.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1.Terms of the Offer
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, May 27, 1999, unless and until the Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
The Purchaser expressly reserves the right to modify the terms of the Offer,
except that without the consent of the Company, the Purchaser shall not (a)
reduce the number of Shares to be subject to the Offer, (b) reduce the Offer
Price, (c) modify or add to the conditions to the Offer in any manner adverse
to the holders of the Shares, (d) except as provided in the next paragraph,
extend the Offer, (e) change the form of consideration payable in the Offer or
(f) otherwise amend the Offer in any manner adverse to the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (a) extend the Offer, if at the scheduled Expiration Date of the
Offer (the initial scheduled Expiration Date being 20 business days following
the commencement of the Offer), any of the conditions to the Purchaser's
obligation to accept for payment, and pay for, Shares are not satisfied, until
such time as such conditions are satisfied or waived; provided, however, that
the Expiration Date shall not be later than the Termination Date (as defined
herein) as a result of such extension, (b) extend the Offer for a period of
not more than 10 business days beyond the latest Expiration Date that would
otherwise be permitted under clause (a) of this sentence, if on the date of
such extension (x) less than 90% of the outstanding Shares on a fully diluted
basis have been validly tendered and not properly withdrawn pursuant to the
Offer and (y) the Purchaser has permanently waived all of the conditions to
the Offer (other than the conditions that are not legally capable of being
waived and conditions that have not been satisfied because of the willful or
intentional action or inaction of the Company) and (c) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer. If on any scheduled
Expiration Date, any of the conditions of the Offer have not been satisfied or
waived and such unsatisfied conditions are still capable of being satisfied,
the Company may require Purchaser to extend the Expiration Date for a period
of not more than 10 business days; provided, however, that Purchaser shall not
be required to extend the Expiration Date later than the Termination Date.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 14 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (b)
except as set forth above, amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. Under no circumstances
will interest be paid on the purchase price for tendered Shares, whether or
not the Purchaser exercises its right to extend the Offer.
If by 12:00 Midnight, New York City time, on Thursday, May 27, 1999 (or any
date or time then set as the Expiration Date), any of or all of the conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the
right (but shall not be obligated), subject to the terms and conditions
contained in the Merger Agreement and to the applicable rules and regulations
of the SEC, to (a) terminate the Offer and not accept for payment or pay for
any Shares and return all tendered Shares to tendering stockholders, (b)
except as set forth above with respect to the Minimum Condition, waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn, (c)
extend the Offer and, subject to the right of stockholders to withdraw Shares
until the Expiration Date, retain the Shares that have been tendered during
the period or periods for which the Offer is extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer, except if required to do so. Any extension, amendment or
termination will be followed as promptly as practicable by public
announcement. In the case of an extension, Rule 14e-1(d) under the Exchange
Act requires that the
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announcement be issued no later than 9:00 a.m., New York City time on the next
business day after the previously schedule Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to
inform stockholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will
not have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of Shares (whether before or after its acceptance for
payment of Shares) or it is unable to accept for payment or pay for Shares
pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-
1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including, subject to the Merger Agreement, a waiver of the Minimum
Condition), the Purchaser will disseminate additional tender offer materials
and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and
14e-1 under the Exchange Act. The minimum period during which an offer must
remain open following material changes in the terms of the Offer or
information concerning the Offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
The Company has provided or will provide the Purchaser with the Company's
stockholder list and security position listing for the purpose of
disseminating the Offer to holder of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed by
the Purchaser to record holders of Shares and will be furnished to brokers,
dealers, banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the Company's stockholder list, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2.Procedure for Tendering Shares
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of such delivery, including an Agent's Message (as defined
below), must be received by the Depositary), in each case prior to the
Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth
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on the back cover of this Offer to Purchase prior to the Expiration Date, or
the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." Delivery of documents to
the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. Shares
will be deemed delivered only when actually received by the Depositary
(including, in the case of a book-entry transfer, by Book-Entry Confirmation).
If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's system whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Exchange Act
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed in the manner described above. See Instructions 1 and
5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market (the "Nasdaq
National Market") operated by the National Association of Securities
Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
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Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary. Under no circumstances
will any interest be paid on the purchase price of the Shares, regardless of
any extension of the Offer or any delay in making such payment.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after April 26, 1999. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Parent, GEC, p.l.c., the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the Substitute Form W-9 included as part of the Letter of Transmittal to
provide the information and certification necessary to avoid
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backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 9 to the Letter of Transmittal.
3.Withdrawal Rights
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after Monday, June
28, 1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedure for book-entry transfer as set forth in Section 2, any notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, GEC, p.l.c., the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
4.Acceptance for Payment and Payment
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered prior to the Expiration Date, and not properly
withdrawn in accordance with Section 3, promptly after the Expiration Date.
All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 14. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act and the Exon-Florio Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the
Exchange Act, which requires that a tender offeror pay the consideration
offered or return the tendered securities promptly after termination or
withdrawal of a tender offer.
GEC, p.l.c. will file a Notification and Report Form with respect to the
Offer under the HSR Act. The waiting period under the HSR Act with respect to
the Offer will expire at 11:59 p.m., New York City time, on the 15th day after
day such form is filed, unless early termination of the waiting period is
granted. However, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend
the waiting period by requesting additional information or documentary
material from GEC, p.l.c. If such a request is made, such waiting period will
expire at 11:59 p.m., New York City time, on the 10th day after substantial
compliance by GEC, p.l.c. with such request. See Section 15.
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The Purchaser and the Company will make a filing under the Exon-Florio Act.
The time period for CFIUS to determine whether to undertake an investigation
will expire on the 30th day following the acceptance of such filing by CFIUS.
In the event that CFIUS determines to undertake an investigation, such
investigation must be completed within forty-five days after such
determination. The President has fifteen days following the presentation by
CFIUS of its recommendation to the President in which to suspend or prohibit
the proposed acquisition or seek other appropriate relief. See Section 15.
In addition, GEC, p.l.c. is seeking confirmation, in terms satisfactory to
GEC, p.l.c. and the Company, from the U.K. Office of Fair Trading ("OFT") that
it is not the intention of the U.K. Secretary of State for Trade and Industry
("Secretary of State") to refer the proposed acquisition of the Company to the
U.K. Competition Commission under the U.K. Fair Trading Act 1973. There is an
informal timetable of up to 45 working days from the date of notification for
the Secretary of State to make his decision. The Offer is conditioned upon
receiving such confirmation or, in any case, receiving the approval of the
proposed acquisition from the applicable U.K. authorities.
The proposed acquisition of the Company is also being notified to the German
Federal Cartel Office ("FCO") pursuant to the German Act Against Restraints on
Competition (the "German Act"). The FCO has one month from the date of
notification under the German Act to notify the parties that it has entered
into a detailed examination of the proposed acquisition (which can last a
maximum of a further three months) or the FCO may issue a confirmation that
the conditions for a prohibition in section 36 paragraph 1 of the German Act
are not fulfilled. The Offer is conditioned upon receiving such confirmation,
or if no such confirmation is received, the one month time limit having
expired without being notified by the FCO that is entered into such detailed
examination or, in any case, receiving the approval of the proposed
acquisition from the applicable German authorities.
The proposed acquisition may be notified to the Irish Minister for
Enterprise, Trade & Employment (the "Irish Minister") pursuant to the Mergers,
Take-Overs and Monopolies (Control) Act, 1978 (as amended) (the "Irish
Takeovers Act"). Where applicable, a notification must be made (by both
parties) to the Irish Minister within 30 days of an offer capable of being
accepted. The Irish Minister has 30 days from the date of notification in
which to decide whether to institute further proceedings by referring the
proposed acquisition to the Irish Competition Authority. The Offer is
conditioned upon receiving confirmation that the Irish Minister will not
institute such proceedings, or if no such confirmation is received, such 30
day period limit expiring without the initiation of such proceedings or, in
any case, receiving the approval of the proposed acquisition from the
applicable Irish authorities.
The proposed acquisition of the Company is being notified to the Italian
Autorita Garante dell Concorrenza e del Mercato (the "Italian Authority")
under Law no. 287 of October 10, 1990. The Italian Authority has 30 days from
the date of notification (with the ability to suspend such 30 day term if the
information supplied with the notification is incomplete) to notify the
parties that it intends to initiate a second stage investigation of the
acquisition of the Company or any matters arising therefrom under Article 16
of Law no. 287 of October 10, 1990 (which can last a maximum of a further 75
days, in the case of an opening of a second stage investigation) or to clear
the acquisition. The Offer is conditioned upon receiving confirmation that it
is not the intention of the Italian Authority to initiate such a second stage
investigation or, in any case, receiving the approval of the proposed
acquisition from the applicable Italian authorities.
The proposed acquisition is being notified to the Swedish Competition
Authority (the "SCA") under Section 37 of the Swedish Competition Act. The SCA
has 30 calendar days from the date of receipt of a complete notification to
either adopt a clearance decision or a decision to initiate a phase two
investigation. The Offer is conditioned upon receipt of such clearance
decision or, if earlier, receipt of confirmation that the SCA will not
initiate such a phase two investigation or, in any case, receiving the
approval of the proposed acquisition from the applicable Swedish authorities.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of Shares pursuant to the Offer.
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For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. Under no
circumstances will interest be paid on the purchase price of any Shares to be
paid by the Purchaser, regardless of any extension of the Offer or any delay
in making such payment.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may, nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to an affiliate of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
5.Certain Federal Income Tax Consequences
The following is a general discussion of certain United States Federal
income tax consequences of the receipt of cash by a holder of Shares pursuant
to the Offer or the Merger. Except as specifically noted, this discussion
applies only to a U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one
or more United States fiduciaries have the authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is a holder of Shares
that is not a U.S. Holder.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for Federal income tax purposes, a U.S. Holder will recognize gain or loss
equal to the difference between the amount of cash received by the U.S. Holder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares purchased pursuant
to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 39.6% if, at
the time the Purchaser accepts the Shares for payment (or the Shares are
canceled pursuant to the Merger)
9
<PAGE>
the stockholder held the Shares for not more than one year and (ii) 20% if the
stockholder held such Shares for more than one year at such time. Capital
gains of corporations generally are taxed at the Federal income tax rates
applicable to corporate ordinary income. In addition, under present law, the
ability to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies.
A stockholder that does not furnish its TIN may be subject to a penalty
imposed by the IRS. See "--Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the
IRS. If backup withholding results in an overpayment of tax, a refund can be
obtained by the stockholder upon filing an income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation or with respect to holders of Shares who are subject to special
tax treatment under the Code, such as Non-U.S. Holders, life insurance
companies, tax-exempt organizations, financial institutions, dealers in
securities or currencies, persons who hold Shares as a position in a
"straddle" or as part of a "hedging" or "conversion" transaction and persons
that have a functional currency other than the U.S. dollar, and may not apply
to a holder of Shares in light of individual circumstances. Stockholders are
urged to consult their own tax advisors to determine the particular tax
consequences to them (including the application and effect of any state, local
or foreign income and other tax laws) of the Offer and the Merger.
6.Price Range of the Shares; Dividends on the Shares
The Shares are quoted on the Nasdaq National Market under the symbol "FORE".
The following table sets forth the range of high and low sale prices per
Share as reported on the Nasdaq National Market for the fiscal periods
indicated. The information set forth in the table has been adjusted
retroactively to reflect a two-for-one stock split which occurred on June 3,
1996.
<TABLE>
<CAPTION>
Price of Shares
---------------
High Low
------- -------
<S> <C> <C>
Fiscal Year
1997
First Quarter (ended June 30, 1996)........................ $44.750 $27.250
Second Quarter (ended September 30, 1996).................. 43.625 23.500
Third Quarter (ended December 31, 1996).................... 43.500 30.375
Fourth Quarter (ended March 31, 1997)...................... 36.000 14.375
1998
First Quarter (ended June 30, 1997)........................ $17.875 $10.000
Second Quarter (ended September 30, 1997).................. 21.500 13.250
Third Quarter (ended December 31, 1997) 21.813 13.250
Fourth Quarter (ended March 31, 1998) 17.938 13.625
1999
First Quarter (ended June 30, 1998)........................ $26.750 $15.500
Second Quarter (ended September 30, 1998).................. 28.000 14.750
Third Quarter (ended December 31, 1998).................... 20.500 9.250
Fourth Quarter (ended March 31, 1999)...................... 22.063 12.500
2000
First Quarter (through April 29, 1999)..................... 34.625 19.000
</TABLE>
10
<PAGE>
On April 23, 1999, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $24.50 per Share. The
Offer Price of $35.00 represents a 43% premium over this closing price. On
April 29, 1999, the last full trading day before the commencement of the
Offer, the last reported sales price of the Shares on the Nasdaq National
Market was $33.625 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
Stockholders are urged to obtain current market quotations for the Shares.
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange
Act Registration; Margin Regulations
Market for Shares. The purchase of Shares pursuant to the Offer will reduce
the number of holders of Shares and the number of Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of
the remaining Shares held by the public.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market, which among other things
require that an issuer have either (i) at least 750,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at
least $5,000,000 and net tangible assets of at least $4,000,000 and at least
two registered and active market makers for the shares or (ii) at least
1,100,000 publicly held shares, held by at least 400 stockholders of round
lots, with a market value of at least $15,000,000 and either (x) a market
capitalization of at least $50,000,000 or (y) total assets and total revenue
of at least $50,000,000 each for the most recently completed fiscal year or
two of the last three most recently completed fiscal years and at least four
registered and active market markers. The Shares might nevertheless continue
to be included in the NASD's Nasdaq Stock Market (the "Nasdaq Stock Market")
with quotations published in the Nasdaq "additional list" or in one of the
"local lists", but if the number of holders of the Shares were to fall below
300, or if the number of publicly held Shares were to fall below 100,000 or
there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the Shares would no longer be
"qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market
would cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are
not considered as being publicly held for this purpose. If, as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer
meet the requirements of the NASD for continued inclusion in the Nasdaq
National Market or in any other tier of the Nasdaq Stock Market and the Shares
are no longer included in the Nasdaq National Market or in any other tier of
the Nasdaq Stock Market, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are not
listed on a national securities exchange, quoted on an automated inter-dealer
quotation system or held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its stockholders
and to the SEC
11
<PAGE>
and would make certain provisions of the Exchange Act no longer applicable to
the Company, such as the short-swing profit recovery provisions of Section
16(b) of the Exchange Act, the requirement of furnishing a proxy statement
pursuant to Section 14(a) of the Exchange Act in connection with stockholders'
meetings and the related requirement of furnishing an annual report to
stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), may be
impaired or eliminated. The Purchaser intends to seek to cause the Company to
apply for termination of registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such
termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In any event, the Shares will cease
to be "margin securities" if registration of the Shares under the Exchange Act
is terminated.
8.Certain Information Concerning the Company
According to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998, the Company is a Delaware corporation and is a leader in
the design, development, manufacture and sale of high-performance networking
products based on Asynchronous Transfer Mode ("ATM") technology. ATM provides
significantly greater scalability, total capacity and resiliency than
conventional networking technologies. ATM improves the performance of today's
network applications, and also enables new applications that integrate video,
audio and data communications. The Company believes that it currently offers
the most comprehensive ATM product line available, including ForeRunner(R) ATM
switches for enterprise applications, TNX(TM) ATM switches for service
provider applications, PowerHub(R) local area network ("LAN") switches, ES-
2810/3810 and 4810 Ethernet switches for ATM connectivity, TS-2800 switches
for token ring to ATM connectivity, ForeRunner ATM adapter cards, CellPath(TM)
wide area network ("WAN") multiplexing products for WAN access, ForeThought(R)
internetworking software, ForView(R) network management software and
StreamRunner(TM) ATM video products. The Company's networking products enable
customers to connect computers to form clusters, workgroups and LANs, to build
backbones for enterprise-wide networks and to provide transparent, end-to-end
LAN and WAN connectivity. The Company's networking products are designed to be
both flexible and scalable, allowing customers to increase the capacity and
extend the utility of their existing networks or to install a new ATM-based
network. The Company's principal offices are located at 1000 FORE Drive,
Warrendale, Pennsylvania 15086-7502.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries, which is excerpted from the
information contained in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1998, and the Company's Report on 10-Q for the
nine months ended December 31, 1998. More comprehensive financial information
is included in such reports and other documents filed by the Company with the
SEC, and the following summary is qualified in its entirety by reference to
such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and such other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
12
<PAGE>
FORE SYSTEMS INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
Ended December 31, Year Ended March 31,
------------------- ---------------------------
1998 1997 1998 1997 1996
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue....................... $ 444,208 $327,161 $458,369 $395,347 $235,189
Gross profit.................. $ 243,023 $182,839 $255,196 $226,229 $136,523
Merger-related expenses....... $ -- $ -- $ -- $ 1,747 $ 29,375
Purchased research and
development.................. $ 199,316 $ -- $ -- $ -- $ --
Restructuring charges......... $ 5,100 $ -- $ -- $ -- $ --
Income from operations........ $(166,991) $ 23,335 $ 36,572 $ 61,637 $ 10,689
Litigation settlement
charges...................... $ -- $ -- $ -- $ (8,257) $ --
Net income.................... $(168,005) $ 22,002 $ 35,155 $ 41,470 $ 9,737
Net income per common share--
basic........................ $ (1.61) $ 0.22 $ 0.35 $ 0.45 $ 0.12
Net income per common share--
diluted...................... $ (1.61) $ 0.22 $ 0.35 $ 0.41 $ 0.11
Total assets.................. $ 704,820 $585,710 $621,207 $538,577 $424,362
Total liabilities............. $ 148,049 $ 95,663 $114,189 $ 84,398 $ 88,372
Total stockholders' equity.... $ 556,771 $490,047 $507,018 $454,179 $335,990
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located
at Seven World Trade Center, 13th Floor, New York, NY 10049 and Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of
such information should be obtainable, by mail, upon payment of the SEC's
customary charges, by writing to the SEC's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material should also be available
for inspection at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington D.C. 20006. The SEC maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. Such reports, proxy and information
statements and other information may be found on the SEC's web site address,
http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, Parent and GEC, p.l.c. do not have any
knowledge that any information is untrue, none of the Purchaser, Parent or
GEC, p.l.c. takes any responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information.
Certain Company Projections. During the course of discussions between
representatives of GEC, p.l.c. and the Company, the Company provided GEC,
p.l.c. or its representatives with certain non-public business and financial
information about the Company. The following is a summary of selected
projected financial information provided by the Company.
<TABLE>
<CAPTION>
Projections for
Year Ending March
31,
------------------
2000 2001 2002
---- ------ ------
(In millions,
except per share
data)
<S> <C> <C> <C>
Net sales.............................................. $901 $1,171 $1,522
Net income............................................. 105 142 188
Net income per share................................... 0.85 1.13 1.44
</TABLE>
13
<PAGE>
The Company has advised the Purchaser, Parent and GEC, p.l.c. that it does
not as a matter of course make public any projections as to future performance
or earnings, and the projections set forth above are included in this Offer to
Purchase only because the information was provided to GEC, p.l.c. The
projections were not prepared with a view to public disclosure or compliance
with the published guidelines of the SEC or the guidelines established by the
American Institute of Certified Public Accountants regarding projections or
forecasts. The Company's internal operating projections are, in general,
prepared solely for internal use and capital budgeting and other management
decisions and are subjective in many respects and thus susceptible to various
interpretations and periodic revision based on actual experience and business
developments. The projections were based on a number of assumptions that are
beyond the control of the Company, the Purchaser, Parent or GEC, p.l.c. or
their respective financial advisors, including economic forecasting (both
general and specific to the Company's business), which is inherently uncertain
and subjective. None of the Purchaser, Parent or GEC, p.l.c. or their
respective financial advisors assumes any responsibility for the accuracy of
any of the projections. The inclusion of the foregoing projections should not
be regarded as an indication that the Company, the Purchaser, Parent or GEC,
p.l.c. or any other person who received such information considers it an
accurate prediction of future events. None of the Company, the Purchaser,
Parent or GEC, p.l.c. intends to update, revise or correct such projections if
they become inaccurate (even in the short term).
9.Certain Information Concerning the Purchaser, Parent and GEC, p.l.c.
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acting as an acquisition vehicle. It has not conducted any
unrelated activities since its incorporation. The principal executive office
of the Purchaser is located at 1500 Mittel Boulevard, Wood Dale, IL 60191-1073
(c/o Videojet Systems International, Inc.). All outstanding shares of common
stock of Purchaser are owned by Parent.
The principal executive office of Parent, a Delaware corporation and a
wholly owned indirect subsidiary of GEC, p.l.c., is located at 1500 Mittel
Boulevard, Wood Dale, IL 60191-1073 (c/o Videojet Systems International,
Inc.). Parent is a holding company of substantially all of the United States
operations of GEC, p.l.c. All outstanding shares of common stock of Parent are
indirectly owned by GEC, p.l.c.
GEC, p.l.c. is a public limited company organized under the laws of England
and Wales with its principal executive office at One Bruton Street, London WIX
8AQ. GEC, p.l.c., its subsidiaries and associated companies are principally
engaged in the provision and support of intelligent electronic systems. On
April 27, 1999, GEC, p.l.c. entered into an agreement with British Aerospace
Public Limited Company ("British Aerospace") regarding a reconstruction which
would involve the separation from GEC, p.l.c. of its aerospace and defense
activities and the merger of such activities with British Aerospace. As part
of these transactions, GEC, p.l.c. shareholders will receive ordinary shares
in and other securities of British Aerospace. This transaction is subject to,
among other things, regulatory, court and shareholder approvals. Upon its
completion, GEC, p.l.c. will be a high technology company focused on
communications and on technology applied to medical and commercial systems. In
addition, on April 8, 1999, a wholly owned subsidiary of GEC, p.l.c. completed
a tender offer for the common stock of RELTEC Corporation ("RELTEC"). On April
13, 1999, this subsidiary merged with and into RELTEC, and RELTEC became a
wholly owned subsidiary of GEC, p.l.c.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and GEC, p.l.c. are set forth in
Schedule I hereto.
Except as described in this Offer to Purchase, none of the Purchaser, Parent
or GEC, p.l.c. (together, the "Corporate Entities") or, to the best knowledge
of the Corporate Entities, any of the persons listed in Schedule I or any
associate or majority-owned subsidiary of the Corporate Entities or any of the
persons so listed, beneficially owns any equity security of the Company, and
none of the Corporate Entities or, to the best
14
<PAGE>
knowledge of the Corporate Entities, any of the other persons referred to
above, or any of the respective directors, executive officers or subsidiaries
of any of the foregoing, has effected any transaction in any equity security
of the Company during the past 60 days. See Section 11.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand and the
Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
SEC and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement understanding or relationship with any person with respect to any
securities of the Company.
Set forth below is a summary of certain selected consolidated financial
information with respect to GEC, p.l.c. for the fiscal years ended March 31,
1996, 1997 and 1998 and the six months ended September 30, 1997 and 1998. The
selected consolidated financial information is stated in pounds sterling. Such
information is provided for supplemental information purposes only. Because
the only consideration in the Offer and Merger is cash and the Offer covers
all outstanding Shares, and in view of the absence of a financing condition
and the amount of consideration payable in relation to the financial
capability of GEC, p.l.c. and its affiliates, the Purchaser believes the
financial condition of GEC, p.l.c. and its affiliates is not material to a
decision by a holder of Shares whether to sell, tender or hold Shares pursuant
to the Offer. On April 29, 1999, The Wall Street Journal reported that, as of
April 28, 1999, one pound sterling equaled 1.6145 U.S. dollars.
GEC, p.l.c.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
((Pounds) millions)
<TABLE>
<CAPTION>
Six Months
Ended
September 30, Year Ended March 31,
--------------------------- -------------------------------------------
1998 1997 1998 1997 1996
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Profit and Loss Data:
Turnover(1)........... (Pounds)3,352 (Pounds)3,317 (Pounds)7,165 (Pounds)11,147 (Pounds)10,990
Profit on ordinary
activities before
taxation(2).......... 1,393 415 1,028 707 981
Profit on ordinary
activities
attributable to the
shareholders(2)...... 1,108 261 658 408 623
</TABLE>
<TABLE>
<CAPTION>
at September 30, Year Ended March 31,
--------------------------- -----------------------------------------
1998 1997 1998 1997 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Fixed assets.......... (Pounds)2,805 (Pounds)1,947 (Pounds)1,717 (Pounds)1,919 (Pounds)2,110
Current assets........ 4,703 4,369 4,094 4,240 4,545
Creditors: due within
one year............. 2,936 2,311 2,131 2,333 2,462
Equity shareholders'
interest............. 3,607 2,887 2,594 2,687 3,112
</TABLE>
- --------
(1) Turnover for the six months ended September 30, 1997 and 1998 and for the
fiscal year ended March 31, 1998 includes share of joint ventures.
Turnover for the fiscal years ended March 31, 1996 and 1997 includes share
of joint ventures and associates. In the Interim Statement for the six
months ended September 30, 1998, Alstom, previously a joint venture, is
included as an associate and comparative figures for the six months ended
September 30, 1997 and for the fiscal year ended March 31, 1998 have been
restated accordingly.
(2) In the Interim Statement for the six months ended September 30, 1998, the
adoption of United Kingdom Financial Reporting Standard 12, Provisions,
Contingent Liabilities and Contingent Assets resulted in a charge of
(Pounds)27m in exceptional items--continuing operations for the six months
to September 30, 1997 and the fiscal year ended March 31, 1998. Profit on
ordinary activities before taxation and profit on ordinary activities
attributable to the shareholders for these periods have been restated
accordingly.
15
<PAGE>
Summary of Certain Significant Differences Between U.K. and U.S. GAAP
The consolidated accounts of Parent are prepared in accordance with U.K.
GAAP, which differs in certain respects from U.S. GAAP. The following is a
general summary of the significant differences:
Goodwill. Under U.K. GAAP for acquisitions prior to March 31, 1998, the
excess of the purchase consideration over the fair value of the attributable
net assets of the acquired businesses at the acquisition date is written-off
against shareholders' equity. In accordance with United Kingdom Financial
Reporting Standard ("FRS") 10--Goodwill and Intangible Assets, which applies
to financial statements relating to accounting periods ending on or after
December 23, 1998, purchased goodwill arising in respect of acquisitions since
April 1, 1998 is capitalized and amortized over its useful economic life, not
to exceed 20 years.
Under U.S. GAAP, goodwill arising on acquisitions accounted for under the
purchase method is capitalized and amortized using the straight line method
over its estimated useful life, not to exceed forty years. Goodwill is
computed under U.S. GAAP after ascribing fair values to all assets acquired
including identifiable intangible assets.
Restructuring Costs. Under U.K. GAAP prior to the implementation of FRS 12--
Provisions, Contingent Liabilities and Contingent Assets, provisions were made
for severance and other costs related to restructuring at the time the
decision to restructure had been made. FRS 12, which applies to financial
statements relating to accounting periods ending on or after March 23, 1999,
requires an entity to have detailed formal plan and to have raised a valid
expectation in those affected that it will carry out the restructuring prior
to recording a provision.
Under U.S. GAAP, the requirements that have to be satisfied prior to
charging restructuring costs to income are significant, particularly for
employee termination benefits. Those affected must have been informed and must
be aware of their termination package. Other actions arising from the
restructuring plan and their completion dates have to be identified by the
balance sheet date.
Deferred Taxation. Under U.K. GAAP, deferred taxation is provided at the
rates at which the taxation is expected to become payable to the extent that
it is expected to crystallize in the foreseeable future.
Under U.S. GAAP, deferred taxation is provided on a full liability basis at
rates at which the taxation would be payable in the relevant future year.
Pension Expense. U.K. and U.S. GAAP differ notably in the permitted
valuation methods and in the way surpluses and deficits are accounted for.
Under U.K. GAAP assets are valued at the discounted present value of income
streams while under U.S. GAAP market related values are used.
Dividends. Under U.K. GAAP, dividends are included in the financial
statements when recommended by the Board of Directors to the shareholders.
Under U.S. GAAP, dividends are not included in the financial statements
until declared by the Board of Directors.
Capitalization of Interest. Under U.K. GAAP, interest on borrowings used to
finance assets in the course of construction is not required to be included in
the cost of the asset.
Under U.S. GAAP, such interest is capitalized during the period of
construction until the date that the asset is placed in service. Such interest
cost is amortized over the estimated useful life of the related asset.
10.Source and Amount of Funds
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares pursuant to the Offer, to pay cash to holders of Stock
Options pursuant to the Merger Agreement and to pay fees and
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expenses related to the Offer will be approximately $4.5 billion ($4.2 billion
after taking into account cash available at the Company). The Purchaser will
obtain such funds directly or indirectly from GEC, p.l.c. Such funds will be
obtained by GEC, p.l.c. from existing cash resources or from borrowings
pursuant to the Euro 6,000,000,000 Syndicated Credit Facility dated March 25,
1998 (the "Credit Facility Agreement") among GEC p.l.c., HSBC, p.l.c., HSBC
Investment Bank PLC, as Agent, Marine Midland Bank, as U.S. Swingline Agent,
and certain other financial institutions. The Credit Facility Agreement
includes a 364 day revolving credit facility up to the amount of Euro
1,500,000,000 (the "364 Day Facility") and a five year revolving credit
facility up to the amount of Euro 4,500,000,000 (the "Five Year Facility").
Any such borrowings will be unsecured and repayable (with a right to reborrow)
on the last day of each borrowing period of up to six months. Such borrowings
can be made in Euro, U.K. pounds sterling, U.S. Dollars or in any other
currency which is readily available and freely transferable in the London
foreign exchange market. The 364 Day Facility will terminate on March 23, 2000
and the Five Year Facility will terminate on March 25, 2003. Any such
borrowings would bear interest at a rate equal to the aggregate of the London
inter-bank offered rate plus 0.175 percent per annum. On April 29, 1999, The
Wall Street Journal reported that, as of April 28, 1999, one Euro equaled
1.0638 U.S. Dollars. The Credit Facility Agreement includes customary
covenants and events of default. There are no current plans to refinance any
such borrowings made under the Credit Facility Agreement. Parent is a
designated borrower under the Credit Facility Agreement. GEC, p.l.c. otherwise
intends to make available, directly or indirectly, to the Purchaser funds to
enable it to complete the acquisition of all outstanding Shares, upon the
terms and conditions set forth in the Merger Agreement.
11. Contacts and Transactions with the Company; Background of the Offer
On March 4, 1999, representatives of Warburg Dillon Read, on behalf of GEC,
p.l.c., contacted Thomas J. Gill, Chief Executive Officer of the Company, in
order to determine whether the Company would be interested in discussing a
possible acquisition of the Company by GEC, p.l.c. In addition, in early March
1999, Jack Fryer, the Strategic Planning Director of GEC, p.l.c., contacted
Robert Musslewhite, the Senior Vice President of Corporate Development of the
Company, to arrange a meeting the following week.
On March 11, 1999, John C. Mayo, Finance Director of GEC, p.l.c., and Mr.
Fryer met in London, England with Mr. Gill and Mr. Musslewhite regarding
various strategic alternatives, including the sale of the Company. At this
meeting, Mr. Mayo and Mr. Fryer were presented with information about the
Company's business and product plans.
On March 17, 1999, representatives of GEC, p.l.c., including Mr. Fryer, met
in Pittsburgh, Pennsylvania with Mr. Gill, Mr. Musslewhite and several other
executives of the Company. At this meeting, the Company's business and product
plans were reviewed. Prior to this meeting, GEC, p.l.c. entered into the
Confidentiality Agreement (as defined herein) with the Company under which
GEC, p.l.c. agreed, among other things, not to acquire or propose to acquire
any securities of the Company or seek a change of control of the management of
the Company or the Board, directly or through an affiliate, without the
consent of the Board.
On April 6, 1999, representatives of GEC, p.l.c., including Mr. Mayo and Mr.
Fryer, counsel to GEC, p.l.c. and Warburg Dillon Read, met in Pittsburgh,
Pennsylvania with Mr. Gill, Dr. Eric Cooper, the Chairman of the Board of
Directors of the Company, and representatives of Goldman Sachs. At this
meeting, the parties discussed an outline of general terms and structure
regarding the potential acquisition of the Company by GEC, p.l.c.
On April 8, 1999, a meeting among representatives of GEC, p.l.c., including
Lord Simpson, Chief Executive Officer of GEC, p.l.c., Mr. Mayo and Mr. Fryer,
representatives of Warburg Dillon Read and executives of the Company,
including Mr. Gill was held by teleconference. At this meeting, the parties
discussed the Company's projections for the fiscal years 2000 and 2001 and the
potential synergies inherent in a business combination between the Company and
GEC, p.l.c.
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On April 10, 1999, GEC, p.l.c. made a written proposal to acquire the
Company. The proposal did not contain a price. The letter transmitting the
proposal emphasized GEC, p.l.c.'s experience in completing acquisitions. An
attachment to the letter set out a due diligence process and a commitment by
GEC, p.l.c. to complete its due diligence review within a three-day time
period. The proposal contained protective termination provisions and a grant
by the Company of an option to purchase 19.9% of the then outstanding Shares.
The letter requested an exclusivity period of sixteen days and expressed a
deadline of mid-day on April 11, 1999, following which the proposal would be
withdrawn if not accepted.
On April 13, 1999, a representative of GEC, p.l.c. communicated to a
representative of the Company a price per Share in cash at which GEC, p.l.c.
would be willing to purchase the Shares and extended the deadline referenced
in the April 10 letter to April 13. The proposal was not accepted by the
Company.
On April 21, 1999, Lord Simpson and Mr. Mayo, met with Mr. Gill in
Pittsburgh, Pennsylvania to discuss the potential acquisition of the Company
by GEC, p.l.c.
On April 22, 1999, GEC, p.l.c. made a revised written proposal to acquire
the Company on substantially the terms set forth in the April 10 proposal. The
revised proposal stated that GEC, p.l.c. would complete its due diligence
review and execute definitive documents within a four day time period if its
offer were accepted and if it was granted an exclusivity period through May 3,
1999. This written proposal requested a response prior to the opening of
business on April 23 and increased the cash purchase price per Share proposed
by GEC, p.l.c. from the price proposal on April 13. During the night of April
22, Mr. Mayo received a telephone call from Mr. Gill, representatives of
Goldman Sachs and representatives of counsel to the Company to discuss the
terms of GEC, p.l.c.'s offer and certain modifications thereto requested by
the Company. During this conversation, Mr. Mayo was informed that the Company
was prepared to accept the proposal made by GEC, p.l.c. and to grant the
requested exclusivity period if GEC, p.l.c. raised its price to a specified
level and agreed to modify various protective provisions, including a
provision which would enable the Company, following execution of definitive
agreements, to accept a proposal from any party if such proposal was superior
from a financial point of view to the Company's stockholders. Also during this
conversation, the scope and scheduling of GEC, p.l.c.'s due diligence review
of the Company were discussed.
On April 23, 1999, GEC, p.l.c. agreed to increase the cash price per Share
proposed by GEC, p.l.c. to the level specified by the Company and agreed to
the various modifications requested by the Company to the terms that had been
proposed by GEC, p.l.c. On this same date, GEC, p.l.c.'s counsel transmitted
drafts of the Merger Agreement, Stockholder Agreement and Stock Option
Agreement to counsel for the Company and several conversations about these
agreements took place between counsel to the Company and counsel to GEC,
p.l.c.
From April 23, 1999 through April 26, 1999, representatives of GEC, p.l.c.,
its counsel and Warburg Dillon Read undertook a due diligence review of the
Company's business and financial condition and engaged in various discussions
and meetings with management and employees of the Company and representatives
of Company counsel and Goldman Sachs in Pittsburgh. During this period, the
Merger Agreement, Stockholder Agreement and Stock Option Agreement were
negotiated, finalized and entered into among the respective parties thereto
and their counsel.
On April 26, 1999, Mr. Mayo had a telephone conversation with Mr. Gill and
representatives of Goldman Sachs during which Mr. Gill and representatives of
Goldman Sachs informed Mr. Mayo that the Offer, the Stockholder Agreement, the
Merger Agreement and the Stock Option Agreement were unanimously approved by
the Board of Directors of the Company at a meeting that had commenced on April
25, 1999, provided that GEC, p.l.c. would increase the price per Share to
$35.00.
On April 26, 1999, the Board of Directors of GEC, p.l.c. met in London and
approved Parent and the Purchaser entering into the Merger Agreement, the
Stockholder Agreement and the Stock Option Agreement. Following this meeting,
the Merger Agreement, the Stock Option Agreement, the Stockholder Agreement
and the employment agreements described in Section 12 were executed and the
transaction was publicly announced.
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12. Purpose of the Offer; the Merger Agreement; the Stock Option Agreement;
the Stockholder Agreement; Other Agreements; Plans for the Company
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to the
Merger", the Purchaser will be merged with and into the Company, and each
outstanding Share (other than Shares held by stockholders who perfect their
appraisal rights under Delaware law, Shares owned by the Company as treasury
stock and Shares owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company) will be converted into the right to
receive the Per Share Merger Consideration, without interest.
(1) Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company be
approved by the Board and generally by a majority of the holders of the
Company's outstanding voting securities. The Board has approved the Offer and
the Merger. Consequently, the only additional action of the Company that may
be necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the
DGCL, the affirmative vote of holders of a majority of the outstanding Shares
(including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares
(which would be the case if the Minimum Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to the Offer),
it would have sufficient voting power to effect the Merger without the vote of
any other stockholder of the Company. However, the DGCL also provides that if
a parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a short-form merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a
result of the Offer or otherwise, the Purchaser acquires or controls the
voting power of at least 90% of the outstanding Shares, the Purchaser could,
and intends to, effect the Merger without prior notice to, or any action by,
any other stockholder of the Company.
(2) Conditions to Obligations of Each Party Under The Merger Agreement. The
respective obligations of Parent and the Purchaser to effect the Merger under
the Merger Agreement are subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived
by Parent and the Purchaser, in whole or in part, to the extent permitted by
applicable law: (a) the Merger Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company,
if required by applicable law; (b) no court or governmental authority shall
have enacted, issued, promulgated, enforced or entered any law or order
(whether temporary, preliminary or permanent) which is in effect and which has
the effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger; (c) the applicable waiting period under the HSR Act shall have
expired or been terminated; and (d) the Purchaser, Parent or their affiliates
shall have accepted for payment and purchased Shares pursuant to and subject
to the conditions of the Offer.
(3) Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Offer and the Merger may be abandoned at any time
(notwithstanding approval of the Merger by the stockholders of the Company)
prior to the Effective Time: (a) by mutual written consent of Parent, the
Purchaser and the Company; (b) by Parent, the Purchaser or the Company if any
court of competent jurisdiction or other governmental authority shall have
issued a final order or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order or other action is or shall have become nonappealable; (c) by Parent or
the Purchaser if due to an occurrence or circumstance which would result in a
failure to satisfy any of the conditions set forth in Section 14, the
Purchaser shall have (i) failed to commence the Offer within the time required
by Regulation 14D under the Exchange Act, (ii) terminated the Offer without
purchasing the Shares pursuant to the Offer or (iii) failed to accept for
payment Shares pursuant to the Offer prior to July 16, 1999, (the "Termination
Date"); (d) by the Company if (i) there shall not have been (x) any
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breach or breaches of any representation or warranty that, individually or in
the aggregate, have resulted in or would reasonably be expected to result in a
material adverse effect on the Company or (y) any breach or breaches of a
covenant or agreement on the part of the Company under this Agreement or the
Stock Option Agreement that, individually or in the aggregate, materially
adversely affect (or materially delay) the consummation of the Offer and the
Purchaser shall have (A) failed to commence the Offer within the time required
by Regulation 14D under the Exchange Act, (B) terminated the Offer without
purchasing any Shares pursuant to the Offer or (C) failed to accept for
payment Shares pursuant to the Offer prior to the Termination Date, or (ii)
prior to the purchase of Shares pursuant to the Offer, concurrently with the
execution of an Acquisition Agreement (as defined herein) under the
circumstances described below under "Acquisition Proposals", provided that
such termination under this clause (ii) shall not be effective unless the
Company and the Board shall have complied with all their obligations described
below under "Acquisition Proposals" and until payment of the Termination Fee
(as defined herein); (e) by Parent or the Purchaser prior to the purchase of
Shares pursuant to the Offer, if (i) the Purchaser is entitled to terminate
the Offer pursuant to clause (a) under Section 14 ("Certain Conditions of the
Offer") there shall have been any breach of any covenant or agreement on the
part of the Company under this Agreement or the Stock Option Agreement which
materially adversely affects (or materially delays) the consummation of the
Offer, which shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Offer expires; provided, however, that the Company shall have no
right to cure any breach of the provisions described below under "Acquisition
Proposals", (iii) the Board or any committee thereof shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner adverse to
the Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement or shall have recommended to the Company's stockholders a
Third Party Acquisition (as defined herein), or (iv) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer at
least a majority of the Shares on a fully diluted basis; or (f) by the Company
prior to the purchase of any Shares pursuant to the Offer if (i) there shall
have been a breach of any representation or warranty in the Merger Agreement
on the part of Parent or the Purchaser which materially adversely affects (or
materially delays) the consummation of the Offer or (ii) there shall have been
a breach of any covenant or agreement in the Merger Agreement on the part of
Parent or the Purchaser which materially adversely affects (or materially
delays) the consummation of the Offer which shall not have been cured prior to
the earliest of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires.
(4) Acquisition Proposals. Pursuant to the Merger Agreement, the Company has
agreed that it will not, and will not permit any of its subsidiaries, or any
of its or their officers, directors, employees, representatives, agents or
affiliates, including any investment banker, attorney or accountant retained
by the Company or any of its subsidiaries (collectively, "Representatives")
to, directly or indirectly, (a) initiate, solicit or encourage or otherwise
facilitate (including by way of furnishing information) or take any other
action to facilitate, any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal (as defined herein), (b) enter into or maintain or continue
discussions or negotiate with any person regarding an Acquisition Proposal or
in furtherance of such inquiries or to obtain an Acquisition Proposal, or (c)
agree to, approve, recommend or endorse any Acquisition Proposal, or authorize
or permit any of the Representatives of the Company or any of its subsidiaries
to take any such action, and the Company shall promptly notify Parent of any
such inquiries and proposals hereafter received by the Company or any of its
subsidiaries or by any such Representative, relating to any of such matters;
provided, however, that nothing contained in the Merger Agreement shall
prohibit the Board, at any time prior to the earlier to occur of acceptance
for payment of Shares pursuant to the Offer and adoption of the Merger
Agreement by the stockholders of the Company, from furnishing information
(pursuant to a customary confidentiality agreement no more favorable to the
party receiving information than the Confidentiality Agreement (as defined
herein) and consistent with the Company's obligations under the Merger
Agreement) to, or engaging in discussions or negotiations with, any person in
response to an unsolicited bona fide written Acquisition Proposal of such
person that the Board determines is reasonably likely to constitute a
Qualifying Proposal (as defined herein), if, and only to the extent that, (i)
the Board, after consultation with outside legal counsel to the Company,
determines in good faith that failure to do so would result in a breach of the
fiduciary duty of the Board to the stockholders of the Company under
applicable law, and (ii) prior to furnishing such information to, or entering
into discussions
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or negotiations with, such person the Company provides written notice to
Parent to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person and the Company complies with
certain notification provisions of the Merger Agreement. The Company has also
agreed to cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any persons conducted
heretofore by it or its Representatives with respect to any Acquisition
Proposal. It is understood that any violation of the restrictions described
above by any Representative of the Company or any of its subsidiaries, whether
or not such person is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of the Merger Agreement by the Company.
The Merger Agreement provides further that, except as described below
neither the Board nor any committee thereof shall (a) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent or the
Purchaser, the approval or recommendation by the Board of the Offer or the
Merger, (b) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, or (c) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Acquisition
Proposal. Notwithstanding the foregoing, prior to the earlier to occur of
acceptance for payment of Shares pursuant to the Offer or adoption of the
Merger Agreement by the stockholders of the Company, the Board may terminate
the Merger Agreement but only (a) to the extent that the Board after
consultation with outside legal counsel to the Company, determines in good
faith that failure to do so would result in a breach of the fiduciary duty of
the Board to the stockholders of the Company under applicable law, (b) if the
Company and the Board have complied with all the provisions described in this
subsection on "Acquisition Proposals", (c) after the second business day
following Parent's receipt of written notice advising Parent that the Board is
prepared to accept a Qualifying Proposal, specifying the principal terms and
conditions of such Qualifying Proposal and identifying the person making such
Qualifying Proposal (during which two day period the Company will negotiate in
good faith with Parent or Purchaser concerning any amendments proposed by
Parent or Purchaser) and (d) if concurrently with such termination, the
Company enters into an Acquisition Agreement with respect to such Qualifying
Proposal and pays to Parent the Termination Fee.
In addition, under the Merger Agreement the Company has agreed to promptly
advise Parent, orally and in writing, of any request for information or of any
Acquisition Proposal, the principal terms and conditions of such request or
Acquisition Proposal and the identity of the person making such request or
Acquisition Proposal. The Company shall keep Parent reasonably informed of the
status and details (including amendments or proposed amendments) of any such
request or Acquisition Proposal.
Nothing contained in the Merger Agreement shall prohibit the company from
taking and disclosing to the stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which the Board, after consultation with outside legal
counsel to the Company, determines in good faith is required by applicable
law; provided that neither the Board nor any committee thereof approves or
recommends, or publicly proposes to approve or recommend, an Acquisition
Proposal unless the Company and the Board have complied with the terms of the
Merger Agreement. Notwithstanding anything to the contrary, the Company will
duly call, give notice and hold the stockholders meeting, if required by the
DGCL, for the purpose of considering and taking action upon this Agreement and
the Merger whether or not the Board has determined at any time after the date
hereof it is no longer advisable for the stockholders of the Company to adopt
the Merger Agreement.
"Acquisition Proposal" means an inquiry, offer or proposal that is made
after the date of the Merger Agreement regarding any of the following (other
than the transactions contemplated by the Merger Agreement) involving the
Company: (a) any merger, consolidation, share exchange, recapitalization,
liquidation, dissolution, business combination or other similar transaction;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of a substantial portion of the assets of the Company and its subsidiaries,
taken as a whole, or of any Material Business (as defined herein) or of any
subsidiary or subsidiaries responsible for a Material Business in a single
transaction or series of related transactions; (c) any acquisition of 15% or
more of the outstanding shares of capital stock of the Company or the filing
of a registration statement under the Securities
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Act in connection therewith or any other acquisition or disposition the
consummation of which would prevent or materially diminish the benefits to
Parent of the Merger; or (d) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. "Qualifying Proposal" means any written proposal made by a third
party after the date of the Merger Agreement to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or other similar transaction, all the Shares then
outstanding or the assets of the Company and its Subsidiaries as an entirety
which the Board determines in good faith (x) (based on the advice of a
financial advisor of nationally recognized reputation) that such proposal has
a reasonable likelihood of being consummated and (y) (based on the written
opinion of a financial advisor of nationally recognized reputation) that such
proposal would, if consummated, be superior to the Company's stockholders from
a financial point of view (taking into account any changes to the financial
terms of the Merger Agreement proposed by Parent or Purchaser in response to
such proposal) when compared to the Offer, the Merger and the transactions
contemplated by the Merger Agreement, taken as a whole. "Material Business"
means any business (or the assets needed to carry out such business) that
contributed or represented 15% or more of the net sales, the net income or the
assets (including equity securities) of the Company and its subsidiaries taken
as a whole. "Third Party Acquisition" means (a) the acquisition of the Company
by merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction by any person
(which includes for these purposes a "person" as defined in Section 13(d)(3)
of the Exchange Act) other than Parent, the Purchaser or any affiliate thereof
(a "Third Party"); (b) the acquisition by a Third Party of more than 50% of
the assets of the Company and its subsidiaries taken as a whole; (c) the
acquisition by a Third Party of 50% or more of the outstanding Shares or 50%
or more of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company; (d) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary
dividend; or (e) the purchase by the Company or any of its subsidiaries of
more than 30% of the outstanding Shares.
(5) Fees and Expenses. Except with respect to the circumstances described
below, the Merger Agreement provides that each of Parent, the Purchaser and
the Company will bear its own fees and expenses in connection with the Merger
Agreement.
The Merger Agreement provides that (a) if Parent or the Purchaser terminates
the Merger Agreement pursuant to the provisions described above under clause
(e)(i) of "Termination of the Merger Agreement" (other than a termination
resulting from an event or circumstance that causes a material adverse effect
with respect to the Company after the date of the Merger Agreement, which
event or circumstance was not caused by the willful or intentional action or
inaction by the Company), the provisions described above under clause (e)(ii)
of "Termination of the Merger Agreement" (other than as a result of a breach
of the provisions described above under "Acquisition Proposals") or the
provisions described under clause (e)(iv) of "Termination of the Merger
Agreement", and in any such case, any proposal for a Third Party Acquisition
shall have been made on or prior to the date of such termination and in any
such case, within 12 months thereafter the Company enters into an agreement
with respect to the consummation of, or otherwise consummates, a Third Party
Acquisition, (b) Parent or the Purchaser terminates the Merger Agreement
pursuant to the provisions described above under clause (e)(ii) of
"Termination of the Merger Agreement" as a result of a breach of the
provisions described above under "Acquisition Proposals" or pursuant to the
provisions described above under clause (e)(iii) of "Termination of the Merger
Agreement" or (c) the Company terminates the Merger Agreement pursuant to the
provisions described above under clause (d)(ii) of "Termination of the Merger
Agreement", then, in each case, the Company (A) shall pay to Parent, within
two business days following the execution and delivery of such agreement or
such occurrence, as the case may be, or simultaneously with such termination
pursuant to the provisions described above under clause (d)(ii) of
"Termination of the Merger Agreement", a fee, in cash, of $135 million (a
"Termination Fee"); plus, in the event that the Stock Option Agreement
terminates in connection with the termination of the Merger Agreement giving
rise to the Termination Fee, an additional amount, not in excess of $22.5
million, as reimbursement for Expenses (as defined herein).
(6) Conduct of Business of the Company. Pursuant to the Merger Agreement,
the Company has agreed that, prior to the Effective Time, unless otherwise
expressly contemplated by the Merger Agreement or consented
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to in writing by Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent with past
practices; (b) use reasonable efforts to preserve intact its business
organization, maintain its rights and franchises, retain the services of its
respective key employees and maintain its relationships with its respective
customers and suppliers and others having business dealings with it; (c)
maintain and keep its properties and assets in as good repair and condition as
at present, ordinary wear and tear excepted, and maintain supplies and
inventories in quantities consistent with its customary business practice; and
(d) use reasonable efforts to keep in full force and effect insurance and
bonds comparable in amount and scope of coverage to that currently maintained.
(7) Prohibited Actions by the Company. Under the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Parent, from the date of the
Merger Agreement until the Effective Time, it will not do, and will not permit
any of its subsidiaries to do, any of the following: (a)(i) increase the
compensation payable to or to become payable to any director or employee,
except for increases in salary or wages of employees in the ordinary course of
business and consistent with past practice; (ii) grant any severance or
termination pay (other than pursuant to the normal severance policy or
practice of the Company or its subsidiaries as in effect on the date of the
Merger Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish, adopt,
enter into or amend in any material respect any collective bargaining
agreement or Benefit Plan (as defined in the Merger Agreement) of the Company
or its subsidiaries except as required by applicable law; or (iv) take any
action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with past
practice, under any collective bargaining agreement or Benefit Plan of the
Company or its subsidiaries; (b) declare, set aside or pay any dividend on, or
make any other distribution in respect of (whether in cash, stock or
property), outstanding shares of capital stock, except for dividends by a
wholly owned subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company; (c) redeem, purchase or otherwise acquire, or offer
to redeem, purchase or otherwise acquire any outstanding shares of capital
stock of, or other equity interests in, or any securities that are convertible
into or exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries (other than (i) any such acquisition by the
Company or any of its wholly owned subsidiaries directly from any wholly owned
subsidiary of the Company in exchange for capital contributions or loans to
such subsidiary or (ii) any purchase, forfeiture or retirement of Shares or
the Stock Options occurring pursuant to the terms (as in effect on the date of
the Merger Agreement) of any existing Benefit Plan of the Company or any of
its subsidiaries; (d) effect any reorganization or recapitalization, or split,
combine or reclassify any of the capital stock of, or other equity interests
in, the Company or any of its subsidiaries or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of such capital stock or such equity interests; (e)
offer, sell, issue or grant, or authorize the offering, sale, issuance or
grant of, any shares of capital stock of, or other equity interests in, any
securities convertible into or exchangeable for any shares of capital stock
of, or other equity interests in, or any options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interests in,
or any bonds, debentures, notes or other indebtedness of the Company having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may
vote or other voting securities, of the Company or any of its subsidiaries, or
any "phantom" stock, "phantom" stock rights, stock appreciation rights or
stock-based performance units, other than issuances of Shares upon the
exercise of the Stock Options outstanding at the date of the Merger Agreement
in accordance with the terms thereof (as in effect on the date of the Merger
Agreement); (f) acquire or agree to acquire by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any
assets of any other person (other than the purchase of assets from suppliers
or vendors in the ordinary course of business and consistent with past
practice); (g) sell, lease, exchange or otherwise dispose of, or grant any
lien with respect to any of the properties or assets (including technological
assets) of the Company or any of its subsidiaries, except for dispositions of
excess or obsolete assets, sales of inventories in the ordinary course of
business and consistent with past practice and the licensing of software to
customers consistent with past
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practice; (h) adopt any amendments to its certificate of incorporation or
bylaws or other organizational documents; (i) effect any change in any
accounting methods, principles or practices of the Company, except as may be
required by a change in generally accepted accounting principles, or any
change in tax accounting; (j) (i) incur any indebtedness, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person other, than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company; (k) enter into any
contract which, if such contract is entered into, would be a material
contract; (l) make or agree to make any new capital expenditure or
expenditures other than the capital expenditures contemplated by the Company's
annual operating plan for 1999, a copy of which was furnished to Parent prior
to the execution of the Merger Agreement; (m) make any non-routine tax
election or settle or compromise any material tax liability or refund; (n) (i)
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the documents filed with the SEC from April 1, 1997 to the date of
the Merger Agreement or incurred in the ordinary course of business consistent
with past practice or (ii) cancel any material indebtedness (individually or
in the aggregate) or waive any claims or rights of substantial value; (o)
enter into any new agreements with, or commitments to, insurance brokers or
advisers extending beyond one year or extend any insurance policy beyond one
year (including, for the avoidance of doubt, the directors' and officers'
liability insurance policies described under "Indemnification of Directors");
or (p) agree in writing or otherwise to do any of the foregoing.
(8) Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by the Purchaser for, any Shares
pursuant to the Offer, the Purchaser shall be entitled to designate such
number of directors on the Board as will give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
equal to at least that number of directors, rounded up to the next whole
number, which is the product of (a) the total number of directors on the Board
(giving effect to the directors elected pursuant to this sentence) multiplied
by (b) the percentage that (i) such number of Shares so accepted for payment
and paid for by the Purchaser plus the number of Shares otherwise owned by the
Purchaser or any other subsidiary of Parent bears to (ii) the number of such
Shares outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be so elected; provided, however, that in the event that the
Purchaser's designees are appointed or elected to the Board, until the
Effective Time the Board shall have at least two directors who are directors
on the date of the Merger Agreement (the "Independent Directors"); and
provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining
Independent Director shall be entitled to designate a person to fill such
vacancies who shall be deemed to be an Independent Director for purposes of
the Merger Agreement or, if no Independent Directors then remain, the other
directors promptly shall designate two persons to fill such vacancies who
shall not be officers, employees, stockholders or affiliates of Parent or the
Purchaser, and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Subject to applicable law, the Company has
agreed to take all action requested by Parent necessary to effect any such
election, including mailing to its stockholders the information statement
required under Rule l4f-1 containing the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder, which information
statement is attached as Schedule I to the Schedule 14D-9. The Purchaser's
designees shall be divided between the classes of directors as necessary to
comply with the requirements of the Company's bylaws. In connection with the
foregoing, the Company shall, at the option of the Purchaser, either increase
the size of the Board or obtain the resignation of such number of its current
directors as is necessary to enable Purchaser's designees to be elected or
appointed to the Board as provided above.
(9) Stock Options. The Merger Agreement provides that upon consummation of
the Merger, all then outstanding Stock Options and all Shares subject to a
vesting requirement ("Restricted Stock") shall be canceled
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in exchange for a cash payment to the holder of a Stock Option or Restricted
Stock award equal to (a) in the case of Stock Options, the product of (x) the
difference between the Per Share Merger Consideration and the per share
exercise price of the holder's Company Stock Option multiplied by (y) the
number of shares of Company Common Stock subject to the holder's Stock Option
and (b) in the case of Restricted Stock, the number of shares of the holder's
Restricted Stock times the Per Share Merger Consideration. In the case of all
unvested Stock Options, such cash payment shall be made on the date that is 90
days after the Effective Time. Following the expiration of the Offer and the
purchase of Shares pursuant thereto and prior to the Effective Time, Parent
may, at its option, provide to each holder of an outstanding Stock Option who
is an "accredited investor" (within the meaning of the Securities Act of
1933), in lieu of the cash payment pursuant to the foregoing sentence, an
alternative, at such holder's option, of converting such Stock Option into
phantom stock units, having the same economic value and terms of such Stock
Options and the value of which will thereafter be based on the market value of
the ordinary shares of GEC, p.l.c. Except as provided in the Merger Agreement
or as otherwise agreed to by the parties, (a) the Stock Option Plans shall
terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant by the Company or
any of its subsidiaries of any interest in respect of the capital stock of the
Company or any of its subsidiaries shall be terminated as of the Effective
Time, and (b) following the Effective Time no holder of Stock Options or
Restricted Stock or any participant in such plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
(10) Indemnification of Directors and Officers. In the Merger Agreement, the
Purchaser has agreed that all rights to indemnification for acts or omissions
occurring prior to the Effective Time in favor of the current or former
directors or officers of the Company and its subsidiaries as provided in their
respective certificates of incorporation or bylaws shall survive the Merger
and shall continue in full force and effect in accordance with their terms for
a period of six years from the Effective Time. Parent shall cause to be
maintained for a period of six years from the Effective Time the Company's
current directors', officers' and employees' insurance and indemnification
policy (the "D&O Insurance") and the current fiduciary liability insurance
policy (the "Fiduciary Insurance") (provided that Parent may substitute
therefor policies or financial guarantees with reputable and financially sound
carriers or other obligors of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) to the extent
that such insurance policies provide coverage for events occurring prior to
the Effective Time for all persons who are directors and officers of the
Company on the date of the Merger Agreement, so long as the amount per annum
to be paid by the Company after the date of the Merger Agreement for such D&O
Insurance and Fiduciary Insurance is not greater than 200% of the current
annual premiums paid by the Company for such insurance. Parent may cause to be
obtained D&O Insurance and Fiduciary Insurance that satisfies the foregoing
pursuant to which premiums are paid for the entire six-year period or, if
applicable, for the remainder of such period. If, during such six-year period,
such insurance coverage cannot be obtained at all or can only be obtained for
an amount (including amounts paid by the Company after the date of the Merger
Agreement) in excess of the per annum limit described above, Parent shall use
all reasonable efforts to cause to be obtained as much D&O Insurance and
Fiduciary Insurance as can be obtained for the remainder of such six-year
period (including amounts paid by the Company after the date of the Merger
Agreement) not in excess of such limit on terms and conditions no less
advantageous than the existing D&O Insurance and the existing Fiduciary
Insurance, respectively.
(11) Reasonable Efforts. The Merger Agreement provides that, subject to the
terms of the Merger Agreement, each of the parties has agreed to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws to consummate and make effective as soon as reasonably
practicable the transactions contemplated by the Merger Agreement; provided,
that neither Parent nor any of its subsidiaries shall be required to divest
any asset or enter into any consent decree.
(12) Directors and Officers. The directors of the Purchaser immediately
prior to the Effective Time and/or any individuals designated by Parent shall
be the directors of the Surviving Corporation, each to hold office in
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accordance with the certificate of incorporation and bylaws of the Surviving
Corporation, and the officers of the Company immediately prior to the
Effective Time and/or any individuals designated by Parent shall be the
officers of the Surviving Corporation, in each case until the earlier of their
resignation or removal or until their respective successors are duly elected
or appointed and qualify.
(13) Employment Agreements. Pursuant to the Merger Agreement, Parent
acknowledged and agreed that all employment agreements, severance agreements,
deferred compensation agreements and supplemental retirement agreements with
employees of the Company and its subsidiaries set forth in the Company's
Disclosure Letter (as defined in the Merger Agreement) will be binding and
enforceable obligations of the Surviving Corporation to the same extent as
they were binding and enforceable obligations of the Company and its
subsidiaries as of the date of the Merger.
(14) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
(15) Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that in the event the Purchaser's designees are appointed
or elected to the Board as described above under "Directors", the approval of
a majority of the Independent Directors is required to amend the Merger
Agreement, to terminate the Merger Agreement, or to waive any condition to the
obligations of the Company.
Stock Option Agreement.
Pursuant to the Stock Option Agreement, the Company granted to the Purchaser
an option ("Option") to purchase up to 19.9% of the outstanding Shares of the
Company at a price per Share equal to the Offer Price. The Option is
exercisable when the Termination Fee (a "Purchase Event") is payable under the
Merger Agreement. In addition, the Option is exercisable following the
Purchaser's acceptance of Shares for payment pursuant to the Offer to the
extent the effect of such exercise would result in Parent owning, directly or
indirectly, immediately after such exercise 90% of the then outstanding
Shares. The Option terminates and is of no further force and effect upon the
earliest to occur of (i) the Effective Time, (ii) 15 months after the
occurrence of a Purchase Event (including any Purchase Event occurring after
termination of the Merger Agreement) and (iii) termination of the Merger
Agreement in accordance with its terms prior to the occurrence of any Purchase
Event, unless, in the case of this clause (iii), the Purchaser is or may be
entitled to receive a Termination Fee under the Merger Agreement following
such termination, subject to certain exceptions specified in the Stock Option
Agreement, in which case the Option shall not terminate pursuant to this
clause (iii) until the Purchaser could no longer under any circumstances
become entitled to receive a Termination Fee. To the extent the exercise of
the Option is the result of a Purchase Event, during the period commencing on
such Purchase Event and ending on the termination of the Option, the Purchaser
has the right in lieu of exercising the Option, to surrender the Option to the
Company for cancellation in exchange for a cash payment at least equal to the
value of the Option, subject to a minimal floor which guarantees the Option
will have at least some value. In addition, to the extent the exercise of the
Option is the result of a Purchase Event, in no event shall the profit that
the Purchaser can make from the Option exceed, when aggregated with the
Termination Fee, in the aggregate $135 million, plus an additional amount, not
in excess of $22.5 million, as reimbursement for out-of-pocket fees and
expenses incurred by Parent, Purchaser or their respective affiliates in
connection with the transactions contemplated by the Merger Agreement and the
Stock Option Agreement, including all fees and expenses of their counsel,
accountants, investment bankers, experts and consultants (collectively
"Expenses").
The Stockholder Agreement.
Pursuant to the Stockholder Agreement, each Founding Stockholder has agreed,
among other things, to sell to the Purchaser all the Shares that he
beneficially owns at a price per Share equal to the Offer Price. The Founding
Stockholders have also agreed to tender such Shares in the Offer at a price
per Share equal to the Offer Price if directed to do so by the Purchaser. In
addition, each Founding Stockholder has granted the Purchaser an option to
purchase all his Shares at a price per Share equal to the Offer Price under
certain circumstances and subject to certain conditions.
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Each Founding Stockholder severally has agreed that: (a) such Founding
Stockholder will not (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of such Founding
Stockholder's Shares to any person other than the Purchaser or the Purchaser's
designee, (ii) enter into any voting arrangement, whether by proxy, voting
agreement, voting trust, power-of-attorney or otherwise, with respect to such
Founding Stockholder's Shares or (iii) take any other action that would in any
way restrict, limit or interfere with the performance of its obligations under
the Stockholder Agreement or the transactions contemplated thereby, (b) until
the Merger is consummated or the Merger Agreement is terminated, such Founding
Stockholder will not, nor will such Founding Stockholder permit any investment
banker, financial adviser, attorney, accountant or other representative or
agent of such Founding Stockholder to, directly or indirectly (i) solicit,
initiate or encourage (including by way of furnishing information), or take
any other action designed or reasonably likely to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal, (c) at any meeting of
stockholders of the Company called to vote upon the Merger and the Merger
Agreement or at any adjournment thereof or in any other circumstances upon
which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Merger Agreement is sought, such Founding
Stockholder will, including by initiating a written consent solicitation if
requested by Parent, vote (or cause to be voted) such Founding Stockholder's
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the
Merger Agreement and (d) at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which such Founding
Stockholder's vote, consent or other approval is sought, such Founding
Stockholder will vote (or cause to be voted) such Founding Stockholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding
up of or by the Company or any other Acquisition Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's certificate
of incorporation or bylaws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Offer, the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (collectively, "Frustrating
Transactions"). The Stockholder Agreement provides that each Founding
Stockholder executed the Stockholder Agreement solely in his or her capacity
as the beneficial owner of such Founding Stockholder's Shares and nothing
therein shall limit or affect any actions taken by a Founding Stockholder in
its capacity as an officer or director of the Company or any subsidiary of the
Company to the extent specifically permitted by the Merger Agreement.
Under the Stockholder Agreement each Founding Stockholder has irrevocably
granted to, and appointed, Patricia Hoffman and Thomas Edeus and any other
individual who shall thereafter be designated by Parent, and each of them,
such Founding Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Founding
Stockholder, to vote such Founding Stockholder's Shares, or grant a consent or
approval in respect of such Shares, at any meeting of stockholders of the
Company or at any adjournment thereof or in any other circumstances upon which
their vote, consent or other approval is sought, in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement and against any Alternative Transaction or Frustrating Transaction.
Employment Agreements.
The following are summaries of certain employment arrangements entered into
by the Company with certain of its employees in conjunction with the execution
of the Merger Agreement. Each of the following agreements are exhibits to the
Schedule 14D-9. In addition, it is anticipated that similar arrangements may
be made with other employees of the Company prior to the completion of the
Merger.
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Consulting Agreement with Eric Cooper. Dr. Eric Cooper has entered into a
Consulting Agreement with the Company, dated April 26, 1999, pursuant to which
he agreed that he will (i) retire from employment with the Company immediately
prior to the closing of the Merger and (ii) waive any right to separation or
other benefits under the Company's Change in Control Separation Plan (the "CIC
Plan") (other than tax gross-up protection upon the imposition of excise taxes
under Section 280G of the Internal Revenue Code of 1986 (the "Code") under
certain circumstances). The Company agreed to retain Dr. Cooper as a
consultant for a period of two years from the date of his retirement. In
exchange for these consulting services, Dr. Cooper will receive a consulting
fee of $300,000, all of which is payable upon the closing of the Merger. In
addition, Dr. Cooper agrees that during the term of the agreement and for one
year thereafter, he will refrain from competing against the Company, as well
as from soliciting the Company's principal customers or employees. As
consideration for these noncompetition and nonsolicitation agreements, the
Company agreed to pay Dr. Cooper an additional $600,000 in a single lump-sum
cash payment.
Agreement with Thomas Gill. Mr. Thomas Gill entered into an agreement with
the Company, dated April 26, 1999, that becomes effective immediately prior to
the closing of the Merger. Under this agreement, Mr. Gill is to continue to be
employed by the Company as President and Chief Executive Officer and act as a
member of the Board for an indefinite term until terminated in accordance with
the terms of the agreement. Mr. Gill agreed to waive any right to separation
or other benefits under the CIC Plan (other than tax gross-up protection upon
the imposition of excise taxes under Section 280G of the Code under certain
circumstances). The agreement with Mr. Gill provides that Mr. Gill will
receive, among other things, an initial annual base salary of $500,000, and
that he will be entitled to participate in various benefit plans made
available to senior executives of the Company. Mr. Gill will (contingent on
his purchasing $1 million of ordinary shares of GEC, p.l.c. within 90 days
after the effective date of the agreement) receive a grant of $1 million of
restricted phantom shares of GEC, p.l.c. (to vest on the second anniversary of
the effective date of the agreement) and a phantom option on the number of
phantom shares of GEC, p.l.c. equal to $1 million divided by the fair market
value of GEC, p.l.c. shares immediately following the closing of the Merger
(to vest on the third anniversary of the effective date of the Merger) (in
both cases, immediate vesting would occur at death, disability or termination
upon a change of control or termination without cause or resignation for good
reason). In addition, Mr. Gill agrees that during the term of the agreement
and for 24 months following the date of termination of Mr. Gill's employment
for any reason, he will refrain from competing against the Company, as well as
from soliciting the Company's principal customers or employees. In the event
that Mr. Gill's employment is terminated by the Company without cause, or he
resigns from employment for good reason, prior to attaining age 65, subject to
certain conditions, he will be eligible to receive a cash payment equal to his
base compensation (two times his base compensation if such termination occurs
during the first two years of the agreement, or thereafter within two years of
a subsequent change in control), plus continuation of certain benefits; and as
additional consideration for the confidentiality, noncompetition and
nonsolicitation agreements, he will receive an additional cash payment equal
to his base compensation.
Agreement with Robert Sansom. Dr. Robert Sansom entered into an agreement
with the Company, dated April 26, 1999, that becomes effective immediately
prior to the closing of the Merger. Under this agreement, Dr. Sansom is to
continue to be employed by the Company on substantially the same terms and
conditions as in effect prior to the closing of the Merger. Dr. Sansom agreed
to waive any right to separation or other benefits under the CIC Plan (other
than tax gross-up protection upon the imposition of excise taxes under Section
280G of the Code under certain circumstances). The Company agreed that, at Dr.
Sansom's election, to be made on or prior to December 31, 1999, it will enter
into either a consulting agreement with Dr. Sansom with terms and conditions
substantially the same as those in the agreement with Dr. Cooper described
above, or an employment agreement with Dr. Sansom with terms and conditions
substantially the same as those in the agreement with Mr. Bruce Haney
described below. In addition, Dr. Sansom agreed that for 36 months following
the effective date of this agreement, he will refrain from competing against
the Company, as well as from soliciting the Company's principal customers or
employees.
Agreement with Bruce Haney. Mr. Bruce Haney entered into an agreement with
the Company, dated April 26, 1999, that becomes effective immediately prior to
the closing of the Merger. Under this agreement, Mr. Haney is to continue to
be employed by the Company for an indefinite term until terminated in
accordance with
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the terms of the agreement . Mr. Haney agreed to waive any right to separation
or other benefits under the CIC Plan (other than tax gross-up protection upon
the imposition of excise taxes under Section 280G of the Code under certain
circumstances). The agreement provides that Mr. Haney will receive, among
other things, an initial annual base salary of $275,000. He is also entitled
to participate in short-term and long-term incentive compensation programs
established by the Company for senior executives. Mr. Haney will receive a
phantom option on the number of phantom shares of GEC, p.l.c. equal to twice
his base salary divided by the fair market value of GEC, p.l.c. shares
immediately following the closing of the Merger (to vest in 25% increments on
each of the first four anniversaries of the effective date of the Merger;
immediate vesting would occur at death, disability or termination without
cause). In addition, Mr. Haney agreed that during the term of the agreement
and for 12 months following the termination of his employment for any reason,
he will refrain from competing against the Company, as well as from soliciting
the Company's principal customers or employees. In the event that Mr. Haney's
employment is terminated by the Company without cause, or he resigns from
employment for good reason, prior to attaining age 65, subject to certain
conditions, he will be eligible to receive a cash payment equal to his base
compensation (two times his base compensation if such termination occurs
during the first two years of the agreement), plus continuation of certain
insurance benefits for two years; and as additional consideration for the
confidentiality, noncompetition and nonsolicitation agreements, he will
receive an additional cash payment equal to his base compensation.
Agreements with Robert Musslewhite, Kevin Nigh, J. Niel Viljoen, Donal
Byrne, Ronald McKenzie. Messrs. Musslewhite, Nigh, Viljoen, Byrne and McKenzie
have each entered into agreements with the Company, each dated April 26, 1999,
that become effective immediately prior to the closing of the Merger. Under
these agreements, each of them are to continue to be employed by the Company
as executives for an indefinite term until terminated in accordance with the
terms of the agreement. These agreements have terms and conditions
substantially the same as the agreement with Mr. Haney, except that upon
termination by the Company of such party's employment without cause, such
party will receive a cash payment equal to one year's base compensation, plus
an additional one year's base salary as consideration for the confidentiality,
noncompetition and nonsolicitation agreements.
Confidentiality Agreement. Pursuant to the Confidentiality Agreement dated
March 17, 1999, between GEC, p.l.c. and the Company (the "Confidentiality
Agreement"), the Company and GEC, p.l.c. agreed to keep confidential certain
information exchanged between such parties. The Confidentiality Agreement also
contains customary non-solicitation and standstill provisions. The Merger
Agreement provides that the provisions of the Confidentiality Agreement shall
remain binding and in full force and effect and that the parties shall comply
with and shall cause their respective representatives to comply with, all of
their respective obligations under the Confidentiality Agreement until the
Purchaser purchases a majority of the outstanding Shares pursuant to the
Offer.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the
shares, including asset values and the investment value of the Shares. The
fair value so determined could be more or less than the Offer Price or the Per
Share Merger Consideration.
If any holder of shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provide in the DGCL, the shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
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Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the
Merger unless the Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Merger and the consideration
offered to minority shareholders be filed with the SEC and disclosed to
minority shareholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such
changes could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or GEC, p.l.c. have any current plans or proposals that
would relate to, or result in, any extraordinary corporate transaction
involving the Company or any of its subsidiaries, such as a merger,
reorganization or liquidation involving the Company, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any
change in the Company's capitalization or dividend policy or any other
material change in the Company's business, corporate structure or personnel.
13.Dividends and Distributions
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after April 26, 1999, the Company should (a) split, combine or
otherwise change the Shares of its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the exercise of Stock Options outstanding at April 26, 1999, in accordance
with the terms thereof (as in effect on April 26, 1999)), shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire,
any of the foregoing, then, subject to the provisions of Section 14, the
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after April 26, 1999, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares or any additional Shares, shares of any other class of
capital stock, other voting securities of any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation or transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will
30
<PAGE>
promptly be remitted to the Purchaser. Pending such remittance and subject to
applicable law, the Purchaser will be entitled to all rights and privileges as
owner of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer Price or deduct from the Offer Price the amount or
value thereof, as determined by the Purchaser in its sole discretion.
14.Certain Conditions of the Offer
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless the Minimum
Condition, the HSR Act Condition, the Exon-Florio Condition and the other
Regulatory Conditions shall have been satisfied. Furthermore, notwithstanding
any other term of the Offer or the Merger Agreement, the Purchaser shall not
be required to accept for payment, or subject as aforesaid, pay for any Shares
not theretofore accepted for payment or paid for, and may terminate or amend
the Offer, with the consent of the Company or if, at any time on or after the
date of the Merger Agreement and before the acceptance of Shares for payment
or the payment therefor, any of the following conditions exists:
(a) any representation and warranty of the Company in the Merger
Agreement that is qualified as to materiality shall not be true and correct
or any such representation and warranty that is not so qualified shall not
be true and correct in any material respect, as of the date of the
Agreement and as of such time, except to the extent such representation and
warranty expressly relates to an earlier date (in which case on and as of
such earlier date) (provided that, in each case, the condition set forth in
this clause (a) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, individually or in
the aggregate, have not had and would not reasonably be expected to have a
material adverse effect on the Company);
(b) the Company shall have breached any of its covenants or agreements
contained in the Agreement or the Stock Option Agreement which materially
adversely affects (or materially delays) the consummation of the Offer;
(c) there shall be threatened or pending any suit, action or proceeding
by any governmental authority, or any suit, action or proceeding by any
other person that has a reasonable likelihood of success, (i) challenging
the acquisition by Parent or the Purchaser of any shares, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger,
or seeking to obtain from the Company, Parent or any of their respective
subsidiaries or affiliates any damages in an amount that would result in a
material adverse effect in respect of the Company, taken as a whole, and in
the case of Parent or any of its subsidiaries or affiliates relating to the
transactions contemplated by the Merger Agreement, (ii) seeking to prohibit
or limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries or affiliates of any material portion of the
business or assets of the Company, Parent or any of their respective
subsidiaries or affiliates, or to compel the Company, Parent or any of
their respective subsidiaries or affiliates to dispose of or hold separate
any material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries or affiliates, as a result of the
Offer, the Merger or any of the other transactions contemplated by the
Merger Agreement or (iii) which otherwise is reasonably likely to have a
material adverse effect on the Company;
(d) there shall be any statute, regulation, legislation, interpretation,
judgment, order or injunction threatened, proposed, sought, enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, any consent or approval withheld with respect to, (i)
Parent, the Company or any of their respective subsidiaries or affiliates
or (ii) the Offer or the Merger by any governmental authority that has or
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in paragraph (c) above;
(e) since the date of the Merger Agreement there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a material adverse
effect on the Company;
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<PAGE>
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or in the United Kingdom, (ii) a declaration of a banking
moratorium by any governmental authority or any suspension of payments by
any governmental authority in respect of banks in the United States or in
the United Kingdom, (iii) any general limitation (whether or not mandatory)
by any governmental authority in the United States or in the United Kingdom
on the extension of credit by banks or other lending institutions or (iv)
in the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration or worsening thereof;
(g) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than the Purchaser, any of its
affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 15 percent of the outstanding
Shares or shall have entered into a definitive agreement or any agreement
in principle with the Company with respect to a tender offer or exchange
offer for any Shares or a merger, consolidation or other business
combination with or involving the Company or any of its subsidiaries; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the sole and reasonable judgment of the Purchaser or Parent, in
any such case, and regardless of the circumstances giving rise to any such
condition (including any action or inaction by Parent or any of its
affiliates), makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their sole
and reasonable judgment; provided that the Minimum Condition may be waived or
modified only by the mutual consent of the Purchaser and the Company. The
failure by Parent, the Purchaser or any other affiliate of Parent at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
15.Certain Legal Matters
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly
available information concerning the Company, none of the Purchaser, Parent or
GEC, p.l.c. is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's
subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock
of the Company's subsidiaries) as contemplated herein or of any approval or
other action by any governmental entity that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser, Parent
and GEC, p.l.c. currently contemplate that such approval or the action will be
sought, except as described below under "State Takeover Laws". While, except
as otherwise expressly described in this Section 15, the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions
32
<PAGE>
were not taken or in order to obtain any such approval or other action. If
certain types of adverse action are taken with respect to the matters
discussed below, the Purchaser could, subject to the terms and conditions of
the Merger Agreement, decline to accept for payment or pay for any Shares
tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that make the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain circumstances. Subsequently,
a number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) for a period of three years from the time such
interested stockholders became the holders of 15% or more of such Shares
unless, among other things, the corporation's board of directors had given its
prior approval to either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder". The Board
has approved the Merger Agreement and the Stockholder Agreement and the
Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Section 203 of the DGCL is inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity of applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchaser nor
any action taken in connection with the Offer or the Merger is intended as a
waiver of that right. In the event that any state takeover statute is found
applicable to the Offer or the Merger, the Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Merger. In such case, the
Purchaser might not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
Antitrust.
United States Antitrust Law. Under the provisions of the HSR applicable to
the Offer, the acquisition of Shares under the Offer may be consummated
following the expiration of a 15-calendar day waiting period following the
filing by GEC, p.l.c. of a Notification and Report Form with respect to the
Offer, unless GEC, p.l.c. receives a request for additional information or
documentary material from the Antitrust Division or the FTC or unless early
termination of the waiting period is granted. GEC, p.l.c. is in the process of
making such filing, If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information or material from
GEC, p.l.c. concerning the Offer, the waiting will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by GEC, p.l.c. with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of GEC, p.l.c. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or
the FTC raises substantive issues in connection with a proposed transaction,
the parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction which such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act
is a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
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<PAGE>
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offeror the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or GEC, p.l.c. or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon a preliminary examination of
information provided by the Company relating to the businesses in which GEC,
p.l.c. and the Company are engaged, Parent and the Purchaser believe that the
acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof.
UK Competition Law. Under the UK Fair Trading Act 1973, the OFT has
jurisdiction to investigate the proposed acquisition of the Company. The OFT
will then advise the Secretary of State whether to refer the proposed
acquisition to the U.K. Competition Commission. There is an informal timetable
of up to forty five working days from the date of notification for the
Secretary of State to make his decision. If the proposed acquisition is
referred to the U.K. Competition Commission, the U.K. Competition Commission
has a maximum of six months (which is extendible by one additional period of
no more than three months) to investigate the acquisition and report to the
Secretary of State. If the U.K. Competition Commission determines that the
acquisition is likely to operate against the public interest, the Secretary of
State may prohibit the acquisition or require undertakings and/or divestments
from GEC, p.l.c. It is possible to consummate the Offer prior to receiving
clearance in respect of the foregoing, if the Purchaser should wish to do so.
German Competition Law. The proposed acquisition of the Company may be
required to be notified to the FCO pursuant to section 39 of the German Act.
The Offer may not be consummated until confirmation is received from the FCO
that the conditions for a prohibition in section 36 paragraph 1 of the German
Act are not fulfilled or, if no such confirmation is received, that the one
month time limit (from the date of notification) as laid down in section 40
paragraph 1 of the German Act has expired without the parties having been
notified by the FCO that it has entered into a detailed examination of the
proposed acquisition of the Company (which may take a maximum of a further
three months). If the conditions for a prohibition in section 36 paragraph 1
of the German Act are fulfilled, the FCO must prohibit the consummation of the
Offer.
Irish Competition Law. The proposed acquisition of the Company must be
notified to the Irish Minister pursuant to the Irish Takeovers Act. The Irish
Minister has 30 days from the date of notification in which to decide whether
to institute further proceedings by referring the proposed acquisition to the
Irish Competition Authority. The Irish Minister has an additional two months
in which to decide whether or not to issue an order prohibiting the proposed
acquisition (or issuing a conditional order). If additional information is
required in the initial 30-day period, that 30-day period will only continue
on receipt of the requested information. The proposed transaction may not be
consummated unless the Irish Minister has stated in writing that she has
decided not to issue an order prohibiting the proposed acquisition or has
decided to issue a conditional order or does not refer the proposed
acquisition to the Irish Competition Authority (whichever occurs first).
Italian Competition Law. Under Law no. 287 of October 10, 1990, the proposed
acquisition must also be notified to the Italian Authority. The Italian
Authority has 30 days from the date of notification (with the ability to
suspend such 30-day term is the information supplied with the notification is
incomplete) in which to decide whether to institute such an investigation
(which may take a maximum of a further 75 days, in the case of an opening of a
second stage investigation), but there is no prohibition on consummating the
Offer prior to receiving clearance, if the Purchaser should wish to do so. If
the Italian Authority concludes that the acquisition will create or strengthen
a dominant position as a result of which competition is eliminated or
substantially reduced in the Italian market, the Italian Authority may
prohibit consummation of the Offer, permit consummation subject to conditions
or, if the Offer has already been consummated, order divestment.
34
<PAGE>
Swedish Competition Law. Under Section 37 of the Swedish Competition Act,
the proposed acquisition must be notified to the SCA. The SCA must no later
than 30 calendar days after the receipt of a complete notification either
adopt a clearance decision or a decision to initiate a phase two
investigation. During this initial 30-day investigation period, the parties
may not take actions to implement the transaction. If the SCA has decided to
proceed with a phase two investigation, it must within three months from such
a decision either adopt a clearance decision or initiate proceedings before
the District Court of Stockholm (this time limit may exceptionally be
extended). If the conditions in Section 34 of the Swedish Competition Act are
fulfilled, the Court must prohibit the transaction.
Other Laws.
Exon-Florio Act. The Exon-Florio Act applies to all acquisitions proposed or
pending on or after August 23, 1988, by or with foreign persons which could
result in foreign control of persons engaged in interstate commerce in the
United States. The Exon-Florio Act empowers the President of the United States
to prohibit or suspend mergers, acquisitions or takeovers by or with foreign
persons if the President finds, after investigation, credible evidence that
the foreign person might take action that threatens to impair the national
security of the United States and that other provisions of existing law do not
provide adequate and appropriate authority to protect the national security.
The President has designated CFIUS as the agency authorized under the Exon-
Florio Act to receive notices and other information and to conduct a review
process which consists of a determination whether an investigation should be
undertaken and making any such investigation. Any determination by CFIUS that
an investigation is called for must be made within thirty days after its
acceptance of written notification concerning a proposed transaction. In the
event that CFIUS determines to undertake an investigation, such investigation
must be completed within forty-five days after such determination. Upon
completion or termination of any such investigation, CFIUS must report to the
President and present its recommendation. The President then has fifteen days
in which to suspend or prohibit the proposed transaction or to seek other
appropriate relief. In order for the President to exercise his authority to
suspend or prohibit a proposed transaction, the President must make two
findings: (i) that there is credible evidence that leads the President to
believe that the foreign interest exercising control might take action that
threatens to impair national security and (ii) that provisions of law other
than the Exon-Florio Act and the International Emergency Economic Powers Act
do not in the President's judgment provide adequate and appropriate authority
for the President to protect the national security in connection with the
acquisition. Such findings are not subject to judicial review. If the
President makes such findings, he may take action for such time as he
considers appropriate to suspend or prohibit the relevant acquisition. The
President may direct the Attorney General to seek appropriate relief,
including divestment relief, in the District Courts of the United States in
order to implement and enforce the Exon-Florio Act. The Exon-Florio Act does
not obligate the parties to a proposed acquisition to notify CFIUS of a
proposed transaction. However, if notice of a proposed acquisition is not
submitted to CFIUS, then the transaction remains indefinitely subject to
review by the President under the Exon-Florio Act, unless it is determined
that CFIUS does not have jurisdiction over the transaction.
The Purchaser and the Company will make a filing under the Exon-Florio Act.
There can be no assurance that CFIUS will not determine to conduct an
investigation of the proposed acquisition of the Company and, if an
investigation is commenced, there can be no assurance regarding the outcome of
such investigation. If the results of such investigation are adverse to the
Purchaser, the Purchaser is not obligated to accept for payment or pay for any
Shares tendered pursuant to the Offer.
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<PAGE>
16.Fees and Expenses
Warburg Dillon Read is acting as Dealer Manager in connection with the
Purchaser's acquisition of the Company and is acting as financial advisor to
GEC, p.l.c. in connection with the Offer. Warburg Dillon Read will receive
customary compensation for its services as financial advisor and Dealer
Manager in connection with the Offer. GEC, p.l.c. has also agreed to reimburse
Warburg Dillon Read for its reasonable out-of-pocket expenses related to such
services, including the reasonable fees and expenses of its counsel, and to
indemnify Warburg Dillon Read and certain related persons against certain
liabilities and expenses, including certain liabilities and expenses under the
Federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
None of the Purchaser, Parent or GEC, p.l.c. will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by the Purchaser upon request for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
17.Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser, Parent or GEC, p.l.c. becomes
aware of any state law that would limit the class of offerees in the Offer,
the Purchaser reserves the right to amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser, Parent or GEC, p.l.c. not contained
in this Offer to Purchase or in the Letter of Transmittal and, if given or
made, such information or representation must not be relied upon as having
been authorized.
The Purchaser, Parent and GEC, p.l.c. have filed with the SEC the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the SEC).
GEC ACQUISITION CORP.
April 30, 1999
36
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
GEC, P.L.C., PARENT AND THE PURCHASER
Directors and Executive Officers of The General Electric Company, p.l.c.
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of The General Electric Company, p.l.c. All
the directors and officers listed below are citizens of the United Kingdom,
except for Mr. Seitz, who is a citizen of the United States. Directors are
indicated by an asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------------------ ----------------------------------------------------
<S> <C>
Sir Roger Hurn* Chairman of The General Electric Company, p.l.c.
The General Electric Company, p.l.c. (1998-present);
One Bruton Street Chairman of Smiths Industries plc (1994-1998).
London, WIX 8AQ (England)
Lord Simpson of Dunkeld* Executive Director and Chief Executive of The
The General Electric Company, p.l.c. General Electric Company, p.l.c. (1996-present);
One Bruton Street Chief Executive of Lucas Industries plc (1994-1996).
London, WIX 8AQ (England)
Ronald Edward Artus* Non-executive Director and Deputy Chairman of The
8 Mercers Place Securities and Futures Authority Limited (1994-
Brook Green present).
London, W6 7B (England)
William Martin Castell* Chief Executive of Nycomed Amersham plc (formerly
Nycomed Amersham plc Amersham International plc) (1994-present).
Little Chalfont
Buckinghamshire, HP7 9NA
(England)
The Rt Hon The Baroness Dunn* Executive Director of John Swire & Sons Ltd. (1996-
John Swire & Sons Ltd. present); Senior Member of The Hong Kong Executive
59 Buckingham Gate Council (1994-1995).
London, SW1E 6AJ (England)
Peter Oliver Gershon* Executive Director of The General Electric Company,
Marconi Electronic Systems Limited p.l.c. (1994-present); Managing Director of Marconi
The Grove, Warren Lane Electronic Systems Limited (formerly GEC-Marconi
Stanmore, Middlesex HA7 4LY Limited) (1994-present).
(England)
Sir Christopher Harding* Chairman of United Utilities PLC (1997-present);
United Utilities PLC 55 Grosvenor Chairman of Legal & General Group Plc (1994-
Street London, WIX 9DA (England) present).
Michael Lester* Executive Director of The General Electric Company,
The General Electric Company, p.l.c. p.l.c. (1994-present); Vice Chairman of The General
One Bruton Street Electric Company, p.l.c. (1994-present).
London, WIX 8AQ (England)
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------------------ ----------------------------------------------------
<S> <C>
Sir Charles Masefield* Executive Director and Vice Chairman of The General
The General Electric Company, p.l.c. Electric Company, p.l.c. (1998-present); Head of
One Bruton Street Defence Export Services at the U.K. Ministry of
London WIX 8AQ (England) Defence (1994-1998).
<CAPTION>
John Charles Mayo* Finance Director of The General Electric Company,
The General Electric Company, p.l.c. p.l.c. (1997-present); Finance Director of ZENECA
One Bruton Street Group PLC (1994-1997).
London, WIX 8AQ (England)
<S> <C>
Robert Ian Meakin* Executive Director of The General Electric Company,
The General Electric Company, p.l.c. p.l.c. (1998-present); Personnel Director of The
One Bruton Street General Electric Company, p.l.c. (1996-present);
London, WIX 8AQ (England) Personnel Director of British Aerospace PLC (1994-
1996).
Chairman of WS Atkins plc (1997-present); Deputy
Dr. Alan Walter Rudge* Chief Executive of British Telecommunications plc
WS Atkins plc (1996-1997); Managing Director, Development and
77 Cornhill Procurement, of British Telecommunications plc
London, EC3V 3QQ (England) (1994-1995).
Hon Raymond G. H. Seitz* Vice Chairman of Lehman Brothers International
Lehman Brothers International (Europe) (1995-present); American Ambassador to the
One Broadgate Court of St. James's (1994).
London, EC2M 7HA (England)
Nigel John Stapleton* Chief Executive of Reed Elsevier plc (1998-present);
Reed Elsevier plc Chairman of Reed Elsevier plc (1996-1998); Chief
25 Victoria Street Financial Officer of Reed Elsevier plc (1994-1996).
London, SW1H OEX (England)
Norman Charles Porter Secretary of The General Electric Company, p.l.c.
The General Electric Company, p.l.c. (1994-present).
One Bruton Street
London, WIX 8AQ (England)
</TABLE>
I-2
<PAGE>
Directors and Executive Officers of GEC Incorporated
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Incorporated. All the directors and
officers listed below are citizens of the United States, except for Mr.
Lester, who is a citizen of the United Kingdom. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------------------ ----------------------------------------------------
<S> <C>
Michael Lester* Executive Director of The General Electric Company,
The General Electric Company, p.l.c. p.l.c. (1994-present); Vice Chairman of The General
One Bruton Street Electric Company, p.l.c. (1994-present).
London, WIX 8AQ (England)
William B. Korb* President and CEO of Gilbarco Inc. (1994-present).
Gilbarco Inc.
7300 W. Friendly Avenue
P.O. Box 22087
Greensboro, NC 27420
William Judson Cull, Sr.* Vice President and General Counsel of Picker
Picker International, Inc. International, Inc. (1994-present).
595 Miner Road
Highland Hts., OH 44143
Thomas R. Edeus Treasurer of GEC Incorporated (1997-present);
GEC Incorporated Videojet Systems International, Inc. (1997-present)
c/o Videojet Systems International, and A. B. Dick Company (1994-1997).
Inc. 1500 Mittel Boulevard
Wood Dale, IL 60191-1073
Patricia A. Hoffman Secretary of GEC Incorporated (1997-present);
GEC Incorporated Attorney for Videojet Systems International, Inc.
c/o Videojet Systems International, (1997-present) and A.B. Dick Company (1994-1997).
Inc.
1500 Mittel Boulevard
Wood Dale, IL 60191-1073
</TABLE>
I-3
<PAGE>
Directors and Executive Officers of GEC Acquisition Corp.
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Acquisition Corp. All the directors
and officers listed below are citizens of the United States, except for Mr.
Mayo, who is a citizen of the United Kingdom. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Business Address and Five-Year Employment History
- ------------------------------------ ----------------------------------------------------
<S> <C>
John Charles Mayo* President and Treasurer of GEC Acquisition Corp.
The General Electric Company, p.l.c. (1999-present); Finance Director of The General
One Bruton Street Electric Company, p.l.c. (1997-present); Finance
London, WIX 8AQ (England) Director of ZENECA Group PLC (1994-1997).
William B. Korb* Vice President of GEC Acquisition Corp. (1999-
Gilbarco Inc. present); President and CEO of Gilbarco Inc. (1994-
7300 W. Friendly Avenue present).
P.O. Box 22087
Greensboro, NC 27420
Patricia A. Hoffman* Vice President and Secretary of GEC Acquisition
GEC Incorporated Corp. (1999-present); Secretary of GEC Incorporated
c/o Videojet Systems International, (1997-present); Attorney for Videojet Systems
Inc. International, Inc. (1997-present) and A. B. Dick
1500 Mittel Boulevard Company (1994-1997).
Wood Dale, IL 60191-1073
</TABLE>
I-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
By Facsimile Confirm by Telephone:
Transmission: (For
Eligible Institutions
Only)
(201) 296-4860
(201) 296-4293
By Mail: By Overnight Courier: By Hand:
Reorganization Department Reorganization Reorganization Department
P.O. Box 3301 South Department 85 Challenger 120 Broadway 13th Floor
Hackensack, NJ 07606 Road Mail Stop--Reorg New York, NY 10271
Ridgefield Park, NJ
07660
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Call Collect: (212) 821-2881
<PAGE>
Exhibit (A)(2)
LETTER OF TRANSMITTAL
To Tender
Shares of Common Stock
of
FORE Systems, Inc.
Pursuant to the Offer to Purchase
Dated April 30, 1999
by
GEC Acquisition Corp.
a wholly owned subsidiary of
GEC Incorporated
a wholly owned subsidiary of
The General Electric Company, p.l.c.
(Not affiliated with the U.S. based corporation with a similar name)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, MAY 27, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is
ChaseMellon Shareholder Services, L.L.C.
By Mail: By Hand:
Reorganization Department Reorganization Department
PO Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
By Facsimile Transmission:
By Overnight Courier: (for Eligible Institutions Only)
Reorganization Department
85 Challenger Road (201) 296-4293
Mail Stop-Reorg
Ridgefield Park, NJ 07660 Confirm by Telephone:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
Name(s) and Address(es) of
Registered Holder(s) (Please
fill in, if blank, exactly as
name(s) appear(s) on Share Shares Tendered
Certificate(s)) (Attach additional signed list if necessary)
- ---------------------------------------------------------------------------
Total Number of
Shares
Share Represented by Number
Certificate Share of Shares
Number(s)* Certificate(s)* Tendered**
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total
Shares
- ---------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4. IF ANY OF THE CERTIFICATES
REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED SEE
INSTRUCTION 11.
<PAGE>
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 2 of the Offer
to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificate Stockholders". Stockholders whose
certificates for Shares are not immediately available or who cannot deliver
either the certificates for, or a Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to, their Shares and all other documents
required hereby to the Depositary prior to the Expiration Date (as defined in
the Offer to Purchase) must tender their Shares in accordance with the
guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. See Instruction 2. Delivery of documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivered by book-entry transfer check box: [_]
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation ("Parent"), a wholly owned subsidiary of
The General Electric Company, p.l.c., a public limited company organized under
the laws of England and Wales ("GEC, p.l.c."), the above-described shares of
Common Stock, par value $.01 per share (the "Shares"), of FORE Systems, Inc.,
a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 30, 1999
(the "Offer to Purchase"), and this Letter of Transmittal (which, together
with any amendments or supplements thereto or hereto, collectively constitute
the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued in respect thereof on or after April 26,
1999) and irrevocably constitutes and appoints ChaseMellon Shareholder
Services, L.L.C. (the "Depositary"), the true and lawful agent and attorney-
in-fact of the undersigned, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
the full extent of the undersigned's rights with respect to such Shares (and
any such other Shares or securities or rights) (a) to deliver certificates for
such Shares (and any such other Shares or securities or rights) or transfer
ownership of such Shares (and any such other Shares or securities or rights)
on the account books maintained by a Book-Entry Transfer Facility together, in
any such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Purchaser, (b) to present such Shares (and any
such other Shares or securities or rights) for transfer on the Company's books
and (c) to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any such other Shares or securities
or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after April 26, 1999) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any such other Shares or other securities
or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer of Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Patricia Hoffman and Thomas
Edeus, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-
fact and proxy or his or her substitute shall in his or her sole discretion
deem proper with respect to, to execute any written consent concerning any
matter as each such attorney-in-fact and proxy or his or her substitute shall
in his or her sole discretion deem proper with respect to, and to otherwise
act as each such attorney-in-fact and proxy or his or her substitute shall in
his sole discretion deem proper with respect to, the Shares tendered hereby
that have been accepted for payment by the Purchaser prior to the time any
such action is taken and with respect to which the undersigned is entitled to
vote (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after April 26, 1999). This
appointment is effective when, and only to the extent that, the Purchaser
accepts for payment such Shares as provided in the Offer to Purchase. This
power of attorney and proxy are irrevocable and are granted in consideration
of the acceptance for payment of such Shares in accordance with the terms of
the Offer. Upon such acceptance for payment, all prior powers of attorney,
proxies and consents given by the undersigned with respect to such Shares (and
any such other Shares or securities or rights) will, without further action,
be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective) by the
undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s)
<PAGE>
appearing under "Description of Shares Tendered". Similarly, unless otherwise
indicated under "Special Delivery Instructions", please mail the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered". In the event that both the "Special Delivery Instructions" and the
"Special Payment Instructions" are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so
indicated. Please credit any Shares tendered herewith by book-entry transfer
that are not accepted for payment by crediting the account at the Book-Entry
Transfer Facility designated above. The undersigned recognizes that the
Purchaser has no obligation pursuant to "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number, Class and Series of Shares represented by the lost or destroyed
certificates: _________________________________________________________________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7) (See Instructions 5, 6 and 7)
To be completed ONLY if certif- To be completed ONLY if certif-
icates for Shares not tendered or icates for Shares not tendered or
not accepted for payment and/or not accepted for payment and/or
the check for the purchase price the check for the purchase price
of Shares accepted for payment of Shares accepted for payment is
are to be issued in the name of to be sent to someone other than
someone other than the under- the undersigned or to the under-
signed. signed at an address other than
that above.
Issue [_] Check [_] Certificate(s)
to: Mail [_] Check [_] Certificates
to:
Name _____________________________
(Please Print) Name______________________________
(Please Print)
Address __________________________
Address __________________________
__________________________________
(Include Zip Code) __________________________________
(Include Zip Code)
__________________________________
(Employer Identification or __________________________________
Social Security Number) (Employer Identification or
Social Security Number)
<PAGE>
SIGN HERE
(Also Complete Substitute Form W-9 below)
____________________________________________________
____________________________________________________
(Signature(s) of Stockholder(s))
Dated: _________ 1999
(Must be signed by registered holder(s) as name(s)
appear(s) on the certificate(s) for the Shares or
on a security position listing or by person(s)
authorized to become registered holder(s) by
certificates and documents transmitted herewith. If
signature is by trustees, executors,
administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a
fiduciary or representative capacity, please
provide the following information and see
Instruction 5.)
Name(s)_____________________________________________
______________________________________________
(Please Print)
Capacity (full title) ______________________________
Address_____________________________________________
______________________________________________
(Include Zip Code)
Daytime Area Code and Telephone Number _____________
Employer Identification or
Social Security Number _____________________________
(See Substitute Form W-9)
Guarantee of Signature(s)
(If Required--See Instructions 1 and 5)
Authorized Signature _______________________________
Name _______________________________________________
(Please Print)
Title ______________________________________________
Name of Firm _______________________________________
Address ____________________________________________
(Include Zip Code)
Daytime Area Code and Telephone Number _____________
Dated: ___________ 1999
(right arrow) (left
(right arrow) arrow)
(left
arrow)
(left
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<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction, includes
any participant in the Book-Entry Transfer Facilities' system whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are
tendered for the account of a firm that is a participant in the Security
Transfer Agents Medallion Program or the New York Stock Exchange Guarantee
Program or the Stock Exchange Medallion Program or by any other "eligible
guarantor institution", as such term is defined in Rule 17-Ad-15 under the
Securities Exchange Act of 1934, as amended (each, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in the
Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
(and a Book-Entry Confirmation (as defined in the Offer to Purchase) must be
received by the Depositary), in each case, prior to the Expiration Date, or
(b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth below and in Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser must be received
by the Depositary prior to the Expiration Date and (c) the certificates for
all tendered Shares in proper form for transfer (or a Book-Entry Confirmation
with respect to all such Shares), together with a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery as provided in Section 2 of the Offer to Purchase. A
"trading day" is any day on which the Nasdaq National Market operated by the
National Association of Securities Dealers, Inc. is open for business.
"Agent's Message" means a message transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation, that states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
The method of delivery of Shares, this Letter of Transmittal and all other
required documents, including delivery through any Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. Shares
will be deemed delivered only when actually received by the Depositary
(including, in the case of a book- entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail, with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered". In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old
<PAGE>
certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the acceptance of payment of, and payment for the Shares
tendered herewith. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued
to a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as
the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s),
or if tendered certificates are registered in the name of any person(s) other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
9. 31% Backup Withholding. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below in this Letter of Transmittal and certify
under penalties of perjury that such TIN is correct and that such stockholder
is not subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on
such stockholder and payment of cash to such stockholder pursuant to the Offer
may be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
<PAGE>
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. Requests for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares so
lost, destroyed or stolen, or call the Transfer Agent at 1-800-777-3674. The
stockholder will then be instructed by the Depositary as to the steps that
must be taken in order to replace the certificate. This Letter of Transmittal
and related documents cannot be processed until the procedures for replacing
lost or destroyed certificates have been followed.
IMPORTANT: This Letter of Transmittal (or a manually signed facsimile
thereof) together with any signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other required documents, must be
received by the Depositary prior to the Expiration Date and either
certificates for tendered Shares must be received by the Depositary or Shares
must be delivered pursuant to the procedures for book- entry transfer, in each
case prior to the Expiration Date, or the tendering stockholder must comply
with the procedures for guaranteed delivery.
<PAGE>
PAYER'S NAME: ChaseMellon Shareholder Services, L.L.C.
- ------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social Security
SUBSTITUTE TIN IN THE BOX AT RIGHT AND Number(s) or
Form W-9 CERTIFY BY SIGNING AND Employer Identification
DATING BELOW. Number
----------------------
------------------------------------------------------
Department of the Part 2--Certification Under penalties of perjury, I
Treasury Internal certify that (1) the number shown on this form is my
Revenue Service correct Taxpayer Identification Number (or I am
waiting for a number to be issued for me) and (2) I
am not subject to backup withholding because: (a) I
am exempt from backup withholding or (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
------------------------------------------------------
Payer's Request for Certification Instructions--You must
Taxpayer cross out item (2) in Part 2 above if Part 3
Identification you have been notified by the IRS
Number (TIN) that you are subject to backup with- Awaiting
holding because of under reporting TIN [_]
interest or dividends on your tax re- ---------------
turns. However, if after being noti-
fied by the IRS that you are subject Part 4
to backup withholding, you received
another notification from the IRS Exempt
stating that you are no longer sub- TIN [_]
ject to backup withholding, do not
cross out such item (2). If you are
exempt from backup withholding, check
the box in Part 4 above.
-------------------------------------------------------
- -------------------------------------------------------------------------------
Signature: ___________________________ Date: _________________________
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- ------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number to the Depositary, 31% percent of all reportable
payments made to me will be withheld, but will be refunded to me if I
provide a certified taxpayer identification number within 60 days.
Signature _____________________________________________ Date ____________
- -------------------------------------------------------------------------------
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is
ChaseMellon Shareholder Services, L.L.C.
By Mail: By Overnight Courier: By Hand:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ Mail Stop--Reorg New York, NY 10271
07606 Ridgefield Park, NJ 07660
By Facsimile Transmission:
(for Eligible Institutions Only)
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
---------------
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Call Collect (212) 821-2881
<PAGE>
Exhibit (A)(3)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
FORE Systems, Inc.
(Not to be used for signature guarantees)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer
(as defined below) if certificates representing shares of Common Stock, par
value $.01 per share (the "Shares"), of FORE Systems, Inc., a Delaware
corporation (the "Company"), are not immediately available or if the
procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date (as defined in the Offer to Purchase). This form may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution (as defined in the Offer to Purchase). See Section 2 of
the Offer to Purchase.
The Depositary:
ChaseMellon Shareholder Services, L.L.C.
By Mail: By Overnight Courier:
Reorganization Department
Reorganization Department 85 Challenger Road
PO Box 3301 Mail Stop--Reorg
South Hackensack, NJ 07606 Ridgefield Park, NJ 07660
By Hand: By Facsimile Transmission:
(for Eligible Institutions Only)
Reorganization Department (201) 296-4293
120 Broadway, 13th Floor Confirm by Telephone:
New York, NY 10271 (201) 296-4860
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation, which is a wholly owned subsidiary of
The General Electric Company, p.l.c., a public limited company organized under
the laws of England and Wales ("GEC, p.l.c.") (which is not affiliated with
the U.S. based corporation with a similar name), upon the terms and subject to
the conditions set forth in the Purchaser's Offer to Purchase dated April 30,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, the number
of Shares set forth below, all pursuant to the guaranteed delivery procedures
set forth in Section 2 of the Offer to Purchase.
Name(s) of
(Record Holder(s):_________________
Number of Shares____________________ -----------------------------------
Certificate Nos. (if available)_____ -----------------------------------
Please Print
(Check box if Shares will be
tendered by book-entry transfer) Address(es): ______________________
[_] The Depository Trust Company -----------------------------------
(Zip Code)
Account Number______________________
Daytime Area Code & Tel. No.: _____
Dated_______________________________
Signature(s): _____________________
GUARANTEE
-----------------------------------
(Not to be used for signature guarantee)
The undersigned, a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or an "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Depositary either the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, in any such case together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees, or an Agent's Message (as defined in
the Offer to Purchase), and any other required documents, within three trading
days (as defined in the Letter of Transmittal) after the date hereof.
<PAGE>
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: ______________________
-----------------------------------
Address: ___________________________ Authorized Signature
Name: _____________________________
Please Type or Print
------------------------------------
Zip Code -----------------------------------
Please Print
Area Code and Tel. No: _____________
Title: ____________________________
Dated: ____________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (A)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
FORE Systems, Inc.
at
$35.00 Per Share
by
GEC Acquisition Corp.
a wholly owned subsidiary of
GEC Incorporated
a wholly owned subsidiary of
The General Electric Company, p.l.c.
(Not Affiliated with the U.S. Based Corporation with a Similar Name)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MAY 27, 1999, UNLESS THE OFFER IS EXTENDED.
April 30, 1999
To Brokers, Dealers, Banks,
Trust Companies and other Nominees:
We have been engaged by GEC Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GEC Incorporated, a Delaware
corporation ("Parent"), which is a wholly owned subsidiary of The General
Electric Company, p.l.c., a public limited company organized under the laws of
England and Wales ("GEC, p.l.c."), and Parent to act as Dealer Manager in
connection with the Purchaser's offer to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of FORE Systems, Inc.,
a Delaware corporation (the "Company"), at $35.00 per share (the "Offer
Price"), net to seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
April 30, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Please furnish copies of the enclosed
materials to those of your clients for whom you hold Shares registered in your
name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated April 30, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery with respect to Shares; and
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
<PAGE>
OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES
ON A FULLY DILUTED BASIS, (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED, (C) THE PERIOD
OF TIME FOR ANY APPLICABLE REVIEW PROCESS BY THE COMMITTEE ON FOREIGN
INVESTMENT IN THE UNITED STATES ("CFIUS") RELATING TO THE DETERMINATION OF ANY
THREAT TO NATIONAL SECURITY HAVING EXPIRED OR TERMINATED, AND CFIUS NOT HAVING
TAKEN ANY ACTION OR MADE ANY RECOMMENDATION TO THE PRESIDENT OF THE UNITED
STATES TO BLOCK OR TO PREVENT CONSUMMATION OF THE OFFER OR THE MERGER AND (D)
RECEIPT OF CERTAIN REGULATORY AND ANTITRUST CLEARANCES FROM THE APPLICABLE
AUTHORITIES IN CERTAIN EUROPEAN NATIONS.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 midnight, New York City time, on
Thursday, May 27, 1999, unless extended;
The Board of Directors of the Company has unanimously approved the Offer and
the Merger and determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the stockholders of the Company, and
recommends that the stockholders of the Company accept the Offer and tender
their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 30, 1999 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a wholly owned subsidiary
of Parent. At the effective time of the Merger, each outstanding Share (other
than Shares held by stockholders who perfect their appraisal rights under
Delaware law, Shares owned by the Company as treasury stock and Shares owned
by the Parent or any direct or indirect wholly owned subsidiary of Parent or
of the Company) will be converted into the right to receive $35.00 in cash,
without interest thereon, as set forth in the Merger Agreement and described
in the Offer to Purchase. The Merger Agreement provides that the Purchaser may
assign any or all of its rights and obligations (including the right to
purchase Shares in the Offer) to any affiliate of Parent, but no such
assignment shall relieve the Purchaser of its obligations under the Merger
Agreement.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares, (b) a Letter of Transmittal (or a facsimile
thereof), properly completed, and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 2 of the Offer to Purchase, an Agent's message
(as defined in the Offer to Purchase), and (c) any other documents required by
the Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
Under no circumstances will interest be paid on the purchase price of the
Shares to be paid by the Purchaser, regardless of any extension of the Offer
or any delay in making such payment.
None of the Purchaser, Parent or GEC, p.l.c. will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager, the Depositary and the Information Agent as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. You will be reimbursed by the Purchaser upon request for customary
mailing and handling expenses incurred by you in forwarding the enclosing
Offering materials to your customers.
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent or to the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
WARBURG DILLON READ LLC
2
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, GEC, P.L.C., THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF
OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO
PURCHASE OR THE LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit (A)(5)
Offer to Purchase for Cash
All Outstanding Shares of
Common Stock
of
FORE Systems, Inc.
at
$35.00 Per Share
by
GEC Acquisition Corp.
a wholly owned subsidiary of
GEC Incorporated
a wholly owned subsidiary of
The General Electric Company, p.l.c.
(Not Affiliated with the U.S. Based Corporation with a Similar Name)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MAY 27, 1999, UNLESS THE OFFER IS EXTENDED.
April 30, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated April 30, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation ("Parent"), which is a wholly owned
subsidiary of The General Electric Company, p.l.c., a public limited company
organized under the laws of England and Wales ("GEC, p.l.c."), to purchase all
outstanding shares of Common Stock, par value $.01 per share (the "Shares"),
of FORE Systems, Inc., a Delaware corporation (the "Company"), upon the terms
and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to Stockholders of the Company from the Chairman of the Board of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9.
We (or our nominees) are the holder of record of shares held by us for your
account. A tender of such shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used to tender shares
held by us for your account.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The offer price is $35.00 per Share net to seller in cash, without
interest thereon, upon the term and subject to the conditions of the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and recommends that the stockholders of the
Company accept the Offer and tender their Shares.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of April 26, 1999 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable
following the consummation of the Offer and the satisfaction or waiver of
certain conditions, the Purchaser will be merged with and into the Company
with the Company surviving the merger as a wholly owned subsidiary of
Parent (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held by stockholders who perfect their
appraisal rights under Delaware law, Shares owned by the Company as
treasury stock and Shares owned by Parent or any direct or indirect wholly
owned subsidiary of Parent) will be converted into the right to receive
$35.00 in cash, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase. The Merger Agreement provides that the
Purchaser may assign any or all of its rights and obligations (including
the right to purchase Shares in the Offer) to any affiliate of Parent, but
no such assignment shall relieve the Purchaser of its obligations under the
Merger Agreement.
5. THE OFFER AND WITHDRAWAL RIGHT EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MAY 27, 1999 (THE "EXPIRATION DATE"), UNLESS THE OFFER
IS EXTENDED BY THE PURCHASER, IN WHICH EVENT THE TERM "EXPIRATION DATE"
SHALL MEAN THE LATEST TIME AT WHICH THE OFFER, AS SO EXTENDED BY THE
PURCHASER, WILL EXPIRE.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date such number
of Shares that would constitute at least a majority of all outstanding
Shares on a fully diluted basis, (2) any waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to
the purchase of Shares pursuant to the Offer having expired or been
terminated and (3) receipt of certain regulatory and antitrust clearances
from the applicable authorities in certain European nations.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
8. Tendering Shareholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Information Agent
or, except as set forth in Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by Purchaser pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing. executing, detaching and
returning to us the instruction form on the detachable part hereof. An
envelope to return your instructions to us is enclosed. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified on the detachable part hereof. Your instructions should be forwarded
to us in ample time to permit us to submit a tender on your behalf prior to
the Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such
Shares, (b) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed. with any required signature guarantees, or, in
the case of a book-entry transfer effected pursuant to the procedure set forth
in Section 2 of the Offer to Purchase, an Agent's Message, and (c) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
for Shares
2
<PAGE>
or Book-Entry Confirmations with respect to Shares are actually received by
the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser, Parent or GEC, p.l.c. becomes
aware of any state law that would limit the class of Offerees in the Offer,
the Purchaser reserves the right to amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by Warburg Dillon Read, the Dealer
Manager for the Offer, or one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF FORE SYSTEMS, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of GEC Acquisition Corp. dated May [3], 1999 (the "Offer to Purchase"), and
the related Letter of Transmittal relating to shares of Common Stock, par
value $.01 per share (the "Shares"), of FORE Systems, Inc., a Delaware
corporation.
This will instruct you to tender the number of shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and related Letter of
Transmittal.
Number of Shares to be Tendered:*
Shares
SIGN HERE
-------------------------------------
Signature(s)
-------------------------------------
-------------------------------------
Please Type or Print Name(s)
-------------------------------------
-------------------------------------
Please Type or Print Address(es)
-------------------------------------
Area Code and Telephone Number
-------------------------------------
Taxpayer Identification or Social
Security Number
Date: , 1999
- --------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
<PAGE>
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
Give the
SOCIAL SECURITY
For this type of account: number of--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(l)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(l)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(l)
(grantor is also
trustee)
b. So-called trust account The actual owner
that is not a legal or (1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of--
---
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
---
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (a)(7)
FOR IMMEDIATE RELEASE
26 April 1999
For Distribution in the UK and the US
GEC agrees to acquire FORE Systems, Inc.
for $35 per share
in Cash Transaction valued in excess of $4 billion
LONDON, ENGLAND AND PITTSBURGH, PENNSYLVANIA, US--26 APRIL 1999--The General
Electric Company, p.l.c. ("GEC") and FORE Systems, Inc. ("FORE Systems")
(Nasdaq: FORE) today announced that they have entered into an agreement for
the acquisition of FORE Systems for total consideration of $4.5 billion
((Pounds)2.8 billion) ($4.2 billion, net of cash) at an agreed price of $35
per share in cash. This represents a premium of 43% to the FORE Systems
closing price on Friday 23 April 1999. The definitive merger agreement
provides for an affiliate of GEC to commence a cash tender offer for all of
FORE Systems' shares at $35 per share on or before 30 April 1999. Upon
completion of the Offer, GEC will effect a merger between this affiliate and
FORE Systems, following which FORE Systems will become a wholly owned
subsidiary of GEC.
FORE Systems, with revenues of $632 million in the year ended 31 March 1999,
is a leading global supplier of high performance, Internet switching equipment
based on a "best in class" portfolio of products featuring Asynchronous
Transfer Mode ("ATM"), Internet Protocol ("IP"), Gigabit Ethernet, and
Firewall switching technologies. These systems are used in the backbone of
some of the largest enterprise and Internet service provider networks in the
world. FORE Systems' award-winning solutions are recognised in the industry
for their ability to handle the stringent and dramatic capacity, scaling, and
resiliency requirements of today's rapidly growing Internet. This is why a
major portion of the global Internet traffic is switched by FORE Systems
equipment. In addition, FORE Systems' products support the advanced Quality Of
Service (QoS) and traffic management necessary to deliver a scalable
multiservice switching solution for the emerging New Public Network.
The combination of ATM and IP switching from FORE Systems and GEC's MARCONI
Communications' call control (SS7) and Intelligent Networking provides the
"best in class" switching foundation for the New Public Network. Along with
MARCONI Communications' leading optical networking solutions and next
generation access products (recently acquired with Reltec), GEC is positioned
at the forefront of the rapidly growing global communications infrastructure
market. This acquisition strengthens the GEC Group's presence in the United
States, which is the world's largest market for telecommunications equipment.
In addition, this transaction provides GEC with access to the high growth
enterprise networking market, which is becoming increasingly integrated with
the carrier market. The combined company will be able to bring a broader range
of products and technology with greater strength and scale to address
enterprise businesses world-wide. As a result, FORE Systems will enhance its
ability to experience significant growth rates that outpace the overall
industry average.
George Simpson, Chief Executive of GEC, said:
"This acquisition reinforces our position as a leading supplier of voice and
data networking technology. The purchase of FORE Systems provides us with
access to new markets and new customers and extends our product portfolio into
the increasingly important ATM and IP switching sector. This is also a big
boost to MARCONI Communications' already considerable technology base. We will
now be in a position to capture the full benefits of the impact of the
explosive growth of Internet and other data traffic on the demand for
communications equipment and systems."
1
<PAGE>
Thomas J. Gill, President and Chief Executive Officer of FORE Systems, said:
"The combination of FORE Systems, Reltec, and MARCONI Communications will
create one of the world's foremost global telecommunications and networking
equipment companies. Together we can provide our customers with a
comprehensive range of integrated solutions to accommodate the rapid growth of
high-speed data, voice and video services on a global basis. Joining forces
with GEC will provide further new and exciting opportunities for FORE Systems
employees throughout the world, and allow us to accelerate the growth of our
business. We are committed to driving FORE Systems to achieve its full
potential within the GEC Group."
FORE Systems--A leader in ATM and IP Switching
FORE Systems, based in Pittsburgh, Pennsylvania is a leading designer and
producer of high performance networking products based on ATM and IP
technologies. FORE Systems has approximately 2,000 employees, of whom
approximately 1,450 are based in the United States.
FORE Systems' range of products includes ATM and Ethernet switches, adapter
cards, multiplexing products, internetworking software, network management
software and video products.
FORE Systems is a leader in the enterprise and private networks market,
where its key customers and partners include numerous departments of the US
Government, several universities, and commercial enterprises such as Delta
Airlines, Donaldson Lufkin & Jenrette, Disney Animation, Chrysler, Intel,
Lloyds TSB, Microsoft, Prudential Insurance, Shell Oil and Unisys. FORE
Systems also has a strong and rapidly growing presence in the carrier market,
where its key customers include Cable and Wireless USA, GTE, Level 3, MCI
WorldCom and UUNet.
FORE Systems reported sales of $632 million for the year to 31 March 1999
(an increase of 35 per cent over $467 million for 1998). Operating income
before interest, taxes and non-recurring items was $55.4 million in 1999 (up
48 per cent from $37.5 million in 1998).
As of 31 March 1999, FORE Systems had net assets of $680 million including
cash and short term investments of $361 million.
Mr. Tom Gill will continue as FORE Systems' CEO and President, and will
report directly to George Simpson, Chief Executive of GEC. FORE Systems will
operate as a wholly owned subsidiary of GEC and will continue to run its
business accordingly, while continuing to use the name of FORE Systems. In
addition, FORE Systems will work aggressively with MARCONI Communications to
exploit the natural synergies between both units to take a leadership position
in delivering a new generation of public network solutions.
Strategic rationale for the acquisition
The dramatic growth of the Internet has resulted in data traffic becoming a
rapidly growing percentage of total network traffic, with Internet data
traffic expected to exceed voice traffic in total volume this year. In
addition, the telecom service industry is becoming increasingly competitive
due to deregulation and the emergence of new telecom service providers. The
pressure on carriers to reduce costs and increase the flexibility of their
networks has become intense. The combination of these factors has meant that
telecom service providers have increasingly focused on new data networking
technologies, which are efficient at handling large volumes of data. This is
referred to in the industry as "The New Public Network". This is driving the
rapid growth in demand for ATM and IP switching systems and optical
transmission networks equipment, software and systems. FORE Systems is a
leading supplier of ATM and IP solutions, and MARCONI Communications is a
leading supplier of optical networking solutions.
2
<PAGE>
FORE Systems represents an attractive acquisition for the following reasons:
. Strong technology: The acquisition will provide MARCONI Communications
with industry leading technology in ATM and IP switching, the technology
that is critical for building next generation telecommunications
networks. Combining this with MARCONI Communications' broad portfolio of
telecommunications products will enable MARCONI Communications to
establish a leadership position in defining and building out New Public
Network infrastructures and solutions and to service more effectively
its existing customers.
. Enhanced penetration of the carrier market: The acquisition will
substantially expand MARCONI Communications' customer presence in the
United States. In particular, the acquisition will provide access to the
fastest growing telecom carriers in the U.S. including Internet Service
Providers and new Competitive Local Exchange Carriers, which will
provide significant opportunities for cross selling.
. Entry into the enterprise market: The acquisition provides GEC with a
significant presence in the enterprise data networking market, opening
additional channels for sales for other products to corporations and
access to new technologies.
. Enhanced development capabilities: The acquisition brings to MARCONI
Communications "state of the art" development capability in rapidly
evolving technological fields, for example ASIC based IP packet
processing and switch fabric design. These developing resources will
enable MARCONI Communications to respond quickly to new market
opportunities and service customers' future needs more effectively.
In summary, the FORE Systems acquisition provides GEC with technology and
market positions in a key and very rapidly growing area of the telecoms
equipment and systems market and provides a complementary product range, which
will provide substantial opportunities for increased sales.
Financial impact on GEC
It is expected that the acquisition will be broadly neutral to proforma new
GEC earnings per share before goodwill (assuming that the demerger of MARCONI
Electronic Systems and associated transactions are completed) in the year to
31 March 2000 and thereafter it is expected to be earnings enhancing. GEC will
finance the acquisition from cash resources and from drawings under its Euro 6
billion group bank facilities.
Further details of the transaction structure
GEC Incorporated and FORE Systems have entered into a definitive merger
agreement (the "Merger Agreement") under which a US subsidiary of GEC
("Acquisition Corp.") will commence a cash tender offer (the "Offer") on or
before 30 April 1999 for all of FORE Systems' shares at $35 per share.
Following the completion of the Offer, GEC and FORE Systems have agreed to
effect a merger between Acquisition Corp. and FORE Systems (the "Merger"), in
which the remaining shareholders of FORE Systems will receive the same price
per share paid in the Offer. Upon completion of this Merger, FORE Systems will
be a wholly owned subsidiary of GEC.
The Merger Agreement provides that FORE Systems will pay a termination fee
to GEC in the event that the Merger Agreement is terminated under certain
circumstances.
In addition, GEC and FORE Systems have entered into a Stock Option Agreement
(the "Stock Option Agreement") whereby FORE systems has granted an option to
Acquisition Corp. to purchase up to 19.9% of the shares of FORE Systems at the
offer price, which shall be exercisable in most cases when the termination fee
is payable and in certain other limited circumstances.
3
<PAGE>
Simultaneously, on entering into the Merger Agreement, certain members of
the management and board of FORE Systems have entered into a stockholder
agreement (the "Stockholders Agreement") whereby they have agreed to sell
their shares in FORE Systems to Acquisition Corp. and to vote in favour of the
merger. The senior management group has also entered into new employment
agreements.
The Merger Agreement and the Stock Option Agreement have been approved by
the Boards of Directors of GEC and FORE Systems and the Stockholders Agreement
has been approved by the Board of Directors of GEC. The Offer and the Merger
are conditional upon, inter alia, receipt of the required regulatory approvals
and clearances. Assuming regulatory approvals and clearances are received, it
is anticipated that the acquisition of FORE Systems will be completed in June
1999.
<TABLE>
<CAPTION>
Enquiries
---------
<S> <C>
GEC FORE Systems
Alasdair Jeffrey Donal Byrne
+44 171 306 1330 +1 724 742 6672
Martin Sixsmith Bruce Haney
+44 171 306 1383 +1 724 742 7809
Warburg Dillon Read Goldman Sachs
Chris Brodie Matthew G. L'Heureux
+44 171 568 2929 +1 650 234 3620
Aidan Clegg Gregg Lemkau
+44 171 568 2295 +1 212 902 5293
Brunswick
Susan Gilchrist
+44 171 404 5959
</TABLE>
4
<PAGE>
Notes to Editors
Supplementary Information
1.GEC
GEC is a major high technology company, focused on defence electronics,
communications and technology applied to medical and commercial systems. In
January 1999, GEC announced an agreement in principle to separate and merge
its defence electronics business with British Aerospace.
MARCONI Communications, a subsidiary of GEC, is a major supplier of
transmission and access products outside the United States. On 9 April 1999
GEC announced the completion of its tender offer for Reltec, a provider of a
broad range of systems, products and services to wireline and wireless service
providers and telecommunications OEMs in North America and around the globe.
Reltec has approximately 6,600 employees world-wide, with approximately 4,700
located in the US. In addition, GEC has other operations in the US including
Gilbarco, Picker International and Videojet which together employ around
10,000 personnel in the US.
The Group is headquartered in London and has a market capitalisation of
(Pounds)15.5 billion ($25.1 billion). For the year ended 31 March 1998, the
Group reported revenues of (Pounds)11.1 billion ($18.0 billion) and profits
before exceptional items and tax of (Pounds)1.1 billion ($1.8 billion).
GEC is not affiliated with the similarly named company, which is based in
the United States.
2.FORE Systems
FORE Systems is a leading global supplier of integrated multiservice
networking solutions specialising in providing scalable, reliable, and high-
capacity ATM and IP/Ethernet switching solutions to meet the demands of large
enterprise businesses and service providers. FORE Systems is leveraging the
explosive growth of the Internet with its high performance switching equipment
to deliver network solutions to top tier and emerging service providers who
are focused on building out the next generation Internet and new public
network facilities. FORE Systems products and solutions are used by modern
enterprise businesses that are leveraging the power of networking technology
to compete in the age of the Internet economy.
FORE Systems is a leader in ATM switching solutions for the enterprise and
an emerging leader in providing ATM core backbones for Internet service
providers. FORE Systems' product line includes a broad range of ATM switches,
Ethernet switches, Customer Premise access equipment and ATM NIC cards. In
September 1998, FORE Systems significantly enhanced its solution offering with
the acquisition of Berkeley Networks, which delivered new generation Gigabit
Ethernet and IP routing switch products. In addition, the acquisition
delivered innovative technology and products in the areas of Firewall
Switching, Directory Enabled Networking, Policy Based Network Management, and
Web based management. In February 1999, FORE Systems acquired Euristix Ltd.; a
telecommunications software company based in Dublin, Ireland delivering
service provider network management solutions and intelligent Networking
software expertise.
(a) FORE Systems: Summary financial record
<TABLE>
<CAPTION>
Years Ended March 31
-----------------------------
1997 ($m) 1998 ($m) 1999 ($m)
--------- --------- ---------
<S> <C> <C> <C>
Revenues................................... 402.1 467.3 632.4
Gross profit............................... 229.6 259.2 345.7
Income from Operations..................... 64.3 37.5 55.4
Net income................................. 49.1 36.0 50.9
Diluted EPS ($)............................ 0.48 0.34 0.44
</TABLE>
The above table includes Euristix, Ltd., results for all years presented.
Excluded are purchased research and development and restructuring charges
related to the acquisition of Berkeley Networks, Inc., compensation and
restructuring charges related to the acquisition of Euristix Ltd., and a
nonrecurring charge for the disposition of
5
<PAGE>
inventory and related fixed assets and costs incurred in fulfilling certain
fourth quarter and future commitments related to the phase-out of the PowerHub
product line. Year ended 31 March 1997 excludes merger related expenses and
litigation settlement charges.
(b) Sales and employees by region:
At 31 March 1999, FORE Systems employed 2,006 individuals on a full-time
basis. Of these, 563 were involved in engineering, 1,001 in sales, marketing
and customer support, 200 in manufacturing and the remaining 242 in executive
management, administration, finance and strategic planning.
FORE Systems delivers networking solutions to thousands of customers,
including Fortune 500 companies, telecommunications service providers,
government agencies, research institutions and universities. The Company
markets its products internationally, and sales outside the United States
accounted for approximately 28% of FORE Systems' revenue for the year ended 31
March 1999.
(c) Key business locations:
FORE Systems is headquartered in Pittsburgh, Pennsylvania. FORE Systems
leases facilities in various parts of the United States and in foreign
countries, including San Jose, California; Vienna, Virginia; New York, New
York; Watford, England; Hong Kong, China; and Tokyo, Japan. FORE Systems
opened its first international manufacturing facility in Dublin, Ireland in
May 1997. Following the recent acquisition of Euristix, Ltd. FORE Systems also
has an R&D facility located in Dublin.
(d) Key product offerings:
FORE Systems is a leader in the design, development, manufacture and sale of
high-performance networking products based on ATM, IP, and Ethernet switching
technology. FORE Systems offers a most comprehensive switching product line,
including the ASX family of ATM switches for the backbone of large networks,
and the ESX family of integrated Ethernet and ATM Layer-2 and Layer- 3/4
routing switches for the edge of the network. In addition the ES-2810/3810 and
4810 Ethernet switches with ATM connectivity provide low cost, high density
Ethernet desktop switching ForeRunner ATM adapter cards, CellPath(TM) wide
area network ("WAN") multiplexing products, ForeThought(R) internetworking
software, ForeView(R) network management software and StreamRunner(TM) ATM
video products.
(e) FORE Systems: Customers
FORE Systems' customers can be divided among four main groups:
<TABLE>
<CAPTION>
Commercial Service Providers University Government
- ---------- ------------------------- ----------------------------- ----------------------------
<S> <C> <C> <C>
Boeing Computer Services Ameritech Carnegie Mellon University NASA Lewis Research Centre
Delta Airlines AT&T Columbia University National Weather Service
DHL Systems Bell Atlantic Cornell University Naval Research Laboratory
Disney Corp. Bellcore Pennsylvania State University Sandia National Laboratories
Ford Motor Company Cable & Wireless MIT United States Department of
Gulfstream Cox Communications National University of Defense
Lloyds TSB Michigan State University Singapore United States Department of
Hewlett-Packard Deutsche Telecom Energy
Microsoft France Telecom United States Department of
Office Depot GTE Justice
Prudential Insurance Helsinki Telecom Voice of America
Rockwell Internet MCI World Health Organisation
Shell Oil Level 3
Tippett Studios Nippon Telegraph &
TRW Systems Telephone
Unisys Norwegian Telecom
Westinghouse Research
Sprint
Southwest Bell
TCI/TCG
Telkom South Africa
Time Warner Cable
UUNet
</TABLE>
6
<PAGE>
FORE Systems: Senior management team
Thomas J. Gill has served as a director and President and Chief Executive
Officer of FORE Systems since January 1998. He served as Chief Operating
Officer from January 1997 to January 1998 and Vice President of Finance, Chief
Financial Officer and Treasurer from December 1993 to January 1998. From
February 1993 to December 1993 he served as Treasurer and Controller of the
Company. Prior to joining FORE Systems Mr. Gill was employed in various
financial capacities by Cimflex Teknowledge Corporation (a supplier of factory
automation systems and software), most recently as Vice President of Finance
and Treasurer.
Donal M. Byrne is Senior Vice President, Corporate Marketing of FORE
Systems. In that role, he is responsible for corporate positioning and overall
communications for the company. Mr. Byrne joined FORE Systems as a result of
the company's acquisition of Berkeley Networks in 1998 where he was the VP of
Marketing and a co-founder of the company. Mr. Byrne has over 12 years of
experience in the telecommunications and networking industry. Previously he
was a Director at Bay Networks and an engineering manager at Digital Equipment
Corporation.
Michael I. Green is Senior Vice President, Corporate Sales of FORE Systems.
He has more than 18 years of experience in sales and sales management for
high-speed networking companies, including Network Systems Corporation and
Ultra Network Technologies.
Bruce E. Haney is FORE Systems' Senior Vice President and Chief Financial
Officer. Mr. Haney most recently served as President of The Gustine Company, a
privately held Pittsburgh-based real estate development company. Mr. Haney
earned his Bachelor's degree from the Wharton School of Business at the
University of Pennsylvania and his Master's degree from DePaul University.
Ronald E. McKenzie is Senior Vice President and General Manager of FORE
Systems Volume Products Business Unit. He is responsible for coordinating
sales and marketing efforts with the company's partners to capitalize on
business opportunities. Mr. McKenzie has more than 12 years of marketing
experience and formerly held management positions at Hewlett-Packard and
Silicon Graphics.
Robert C. Musslewhite is FORE Systems Senior Vice President, Corporate
Development. In that role, he is responsible for M&A, business development,
and strategic planning. Mr. Musslewhite has more than 20 years of experience
in product development, engineering and sales and marketing. He formerly held
management positions with Trillium, Sprint and Tekelec.
Kevin E. Nigh is Senior Vice President, Worldwide Engineering of FORE
Systems. He is responsible for overall product research and development, as
well as worldwide support. Mr. Nigh formerly held positions with Sun
Microsystems, Inc., Cimflex Teknowledge and AT&T Microelectronics.
Robert D. Sansom, Ph.D., is Senior Vice President, Chief Technology Officer
and co-founder of FORE Systems. Currently responsible for FORE Systems
corporate technical strategy, Dr. Sansom was formerly a member of the Computer
Science research facility at Carnegie Mellon University.
J. Niel Viljoen is Senior Vice President and General Manager, Service
Provider Business Unit of FORE Systems. He has overall responsibility for
product management, business planning and field sales communication for the
service provider market. Since joining FORE Systems in 1996, Mr. Viljoen has
played a key role on the company's product development and engineering teams.
3.Exchange rate
Dollar and Pound Sterling equivalents are based on an exchange rate (at the
close of business on 23 April 1999) of $1.62 per Pound Sterling.
4.Basis of calculation of Offer Value
The total net consideration of $4,533 billion is based on an offer price of
$35 per share applied to 116.5 million shares in issue and the cost of
compensation for holders of FORE Systems' 21.4 million shares under option as
at 23 April 1999 expected to amount to some $455 million and FORE Systems' net
cash at 31 March 1999 of $361 million.
7
<PAGE>
Exhibit (b)
<PAGE>
CONFORMED COPY
AGREEMENT
DATED 25TH MARCH, 1998
EURO 6,000,000,000
SYNDICATED CREDIT FACILITY
FOR
THE GENERAL ELECTRIC COMPANY, p.l.c.
ARRANGED BY
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
BANQUE NATIONALE DE PARIS
BARCLAYS CAPITAL
CHASE MANHATTAN plc
MIDLAND BANK plc
J. P. MORGAN SECURITIES LTD.
SBC WARBURG DILLON READ
WESTDEUTSCHE LANDESBANK GIROZENTRALE
as Joint Lead Arrangers
with
HSBC INVESTMENT BANK PLC
as Agent
and
MARINE MIDLAND BANK
as US Swingline Agent
ALLEN & OVERY CLIFFORD CHANCE
London London
for the Borrower for the Banks
<PAGE>
- --------------------------------------------------------------------------------
INDEX
Clause Page
1. Interpretation........................................................1
2. The Facilities.......................................................16
3. Purpose..............................................................18
4. Conditions Precedent.................................................18
5. Advance Facilities...................................................18
6. Bill Facility........................................................22
7. Bills................................................................24
8. Repayment............................................................25
9. Prepayment and Cancellation..........................................26
10. Interest.............................................................29
11. Payments.............................................................30
12. Taxes................................................................33
13. Market Disruption....................................................37
14. Availability of Currencies...........................................38
15. Increased Costs......................................................40
16. Illegality and Mitigation............................................41
17. Guarantee............................................................42
18. Representations and Warranties.......................................44
19. Undertakings.........................................................46
20. Default..............................................................47
21. The Agents and the Joint Lead Arrangers..............................49
22. Fees.................................................................54
23. Expenses.............................................................56
24. Stamp Duties.........................................................56
25. Indemnities..........................................................56
26. Evidence and Calculations............................................57
27. Amendments and Waivers...............................................58
28. Changes to the Parties...............................................59
29. Disclosure of Information............................................62
30. Set-Off..............................................................63
31. Pro Rata Sharing.....................................................63
32. Severability.........................................................64
33. Counterparts.........................................................64
34. Notices..............................................................64
35. Language.............................................................66
36. Jurisdiction.........................................................66
37. Governing Law........................................................67
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Schedule Page
1. Part I - Banks and Commitments.......................................68
Part II - Swingline Banks and Swingline Commitments..................69
2. Original Borrowers...................................................70
3. Conditions Precedent Documents.......................................71
Part I - To Be Delivered Before The First Advance....................71
Part II - To Be Delivered By An Additional Borrower..................72
4. Calculation of the MLA Cost..........................................73
5. Form of Request......................................................75
6. Forms of Accession Documents.........................................76
Part I - Novation Certificate........................................76
Part II - Borrower Accession Agreement...............................78
Part III - Form of Borrower Novation Agreement.......................79
7. Form of Bill.........................................................81
Signatories...................................................................82
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THIS AGREEMENT is dated 25th March, 1998 BETWEEN:
(1) THE GENERAL ELECTRIC COMPANY, p.l.c. (Company No. 67307) (the "Parent");
(2) THE SUBSIDIARIES OF THE PARENT listed in Schedule 2 (if any) as original
borrowers (the "Original Borrowers");
(3) BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH, BANQUE NATIONALE DE
PARIS, BARCLAYS CAPITAL, CHASE MANHATTAN plc, MIDLAND BANK plc, J. P.
MORGAN SECURITIES LTD., SWISS BANK CORPORATION (acting through its division
SBC WARBURG DILLON READ), WESTDEUTSCHE LANDESBANK GIROZENTRALE each as a
joint lead arranger (each a "Joint Lead Arranger");
(4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks;
(5) HSBC INVESTMENT BANK PLC as agent (the "Agent"); and
(6) MARINE MIDLAND BANK as US swingline agent (in this capacity the "US
Swingline Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Acceptance Commission Rate"
means 0.175 per cent, per annum.
"Additional Borrower"
means a Subsidiary of the Parent which becomes a Borrower in accordance
with Clause 28.4 (Additional Borrowers).
"Advance"
means a Tranche A Advance, a Tranche B Advance or a Swingline Advance.
"Advance Facility"
means the facility to draw Tranche A Advances, Tranche B Advances or
Swingline Advances referred to in sub-clauses 2.1(a), (b) and (c)
(Facilities) respectively.
"Affiliate"
for the purposes of this Agreement means a Subsidiary or a holding company
(as defined in Section 736 of the Companies Act 1985) of a person and any
other Subsidiary of that holding company.
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"Agent's Spot Rate of Exchange"
means the spot rate of exchange as determined by the Agent for the purchase
of the relevant Optional Currency in the London foreign exchange market
with euros at the relevant time on a particular day, but for the purpose of
any conversion after the Commencement Date between the euro and a national
currency unit (and vice versa) the rate shall be that determined in
accordance with EMU legislation.
"Agreed Percentage"
means in relation to a Bank (other than a Swingline Bank) and a Swingline
Advance, the amount of its Tranche B Commitment expressed as a percentage
of the Tranche B Total Commitments.
"Anniversary"
means an anniversary of the Signing Date.
"Applicable Taxes"
means any tax levied or imposed by the United Kingdom or any country in
which any Borrower is incorporated or any jurisdiction from or through
which any payment under this Agreement is made.
"Banks"
means those financial institutions listed in Schedule 1 and their
respective successors and assigns which are for the time being
participating in the Facilities.
"Barclays Capital"
means Barclays Capital Group, the investment banking division of Barclays
Bank PLC.
"Bill"
means a Sterling bill of exchange substantially in the form of Schedule 7.
"Bill Facility"
means the facility to draw Bills for acceptance by the Banks under Tranche
A or Tranche B referred to in sub-clauses 2.1(a) and (b) (Facilities)
respectively.
"Borrower"
means the Parent, the Original Borrowers and each Additional Borrower.
"Borrower Accession Agreement"
means a letter substantially in the form of Part II of Schedule 6 with such
amendments as the Agent may, at the request of the Parent, approve.
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"Borrowings"
means any indebtedness (whether as principal or surety) for or in respect
of money borrowed (including amounts raised by acceptances under any
acceptance credit, bills, bonds, debentures and similar securities and
finance leases arranged primarily to raise finance) and the net amount of
any liability under any treasury transaction with a bank or financial
institution but excluding in each case any such indebtedness:
(a) arising for or in respect of assets or services acquired or sold in
the ordinary course of business (except to the extent it is a treasury
transaction or would be treated as a loan, overdraft or obligation
under a finance lease in the audited consolidated annual accounts of
the Group); and
(b) owing by one member of the Group to another member of the Group.
"Business Day"
means:
(a) a day (other than a Saturday or Sunday) on which banks are open for
general interbank business (other than operation only of business in
euros) in:
(i) London in relation to the day any Request (except a Request for
Swingline Advances in U.S. Dollars or euros) is made and, unless
(b) below applies, for any other purpose;
(ii) if a payment is required in an Optional Currency (including but
not limited to Sterling), the principal financial centre of the
country of that Optional Currency; and
(iii) if a payment is required in ECU (at any time prior to the
Commencement Date), Paris and Brussels; and
(b) in relation to a payment or rate fixing in or other matter relating to
euros, a day on which the Trans-European Automated Real-time Gross
settlement Express Transfer system (TARGET) is operating.
"Code"
means, on any date, the United States Internal Revenue Code of 1986, as
amended and the regulations promulgated and rulings issued thereunder, all
as the same may be in effect at such date.
"Commencement Date"
means the date of commencement of the third stage of EMU as contemplated by
the Treaty (at the date of this Agreement, expected to be 1st January,
1999).
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"Commitment"
means, in respect of a Bank, the aggregate of its Tranche A Commitment and
Tranche B Commitment (including its Swingline Commitment or the Swingline
Commitment of its Swingline Affiliate, if applicable), in each case to the
extent not cancelled or reduced under this Agreement.
"Controlled Group"
means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which,
together with any Obligor are treated as a single employer under Section
414 of the Code.
"Default"
means an Event of Default or an event which, with the giving of any notice
or expiry of any grace period, in each case specified in Clause 20
(Default), would constitute an Event of Default.
"EBDR"
means the rate determined by the Agent to be the arithmetic mean (rounded,
if necessary, to the nearest five decimal places with the midpoint rounded
upwards) of the respective rates notified to the Agent by the Reference
Banks (provided at least two Reference Banks are quoting) at or about 10.30
a.m. on the Utilisation Date for a Bill at which Eligible Bills with a face
amount of (Pounds)1,000,000 and of an equivalent tenor can be discounted in
the London discount market at or about that time.
"ECU"
means the ECU, as referred to in Article 109g of the Treaty and as defined
in Council Regulation (EC) No. 3320/94, that is from time to time used as
the unit of account of the European Communities; changes to the ECU may be
made by the European Communities, in which event the ECU will change
accordingly.
"Eligible Bill"
means a Sterling bill of exchange eligible for rediscounting at the Bank of
England.
"EMU"
means Economic and Monetary Union as contemplated in the Treaty.
"EMU legislation"
means legislative measures of the European Council for the introduction of,
changeover to, or operation of, a single or unified European currency.
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5
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"ERISA"
means the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time and any successor statute of similar import, together
with any rule or regulation issued thereunder.
"euro" or "euros"
means the single currency to be introduced on the Commencement Date but,
prior to the Commencement Date, references to the "euro" or to "euros" will
be read as references to ECU in accordance with Clause 11.4(b) (Currency).
"euro unit"
means a unit of the euro as defined in EMU legislation.
"Event of Default"
means an event specified as such in Clause 20 (Default).
"Facility"
means any of the Advance Facilities or the Bill Facility.
"Facility Office"
means the office(s) notified by a Bank to the Agent and the Parent:
(a) on or before the date it becomes a Bank; or
(b) subject to Clause 28.6 (Change of Facility Office), by not less than
five Business Days' notice to the Agent and the Parent,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Federal Funds Rate"
means, for any period, a fluctuating interest rate per annum equal for each
day during such period to the weighted average of the rates on overnight
United States Federal funds transactions with members of the United States
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a New York Business Day, for the
immediately preceding New York Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a New
York Business Day, the average of the quotations for such day on such
transactions received by the US Swingline Agent from three Federal funds
brokers of recognised standing selected by it.
"Fee Letters"
means each letter dated on or about the Signing Date:
(a) between the Agent and the Parent; and
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(b) between the Joint Lead Arrangers and the Parent,
in each case setting out the amount of various fees referred to in Clause
22 (Fees).
"Finance Document"
means this Agreement, each Fee Letter, a Bill, a Novation Certificate, a
Borrower Accession Agreement, each Novation Agreement entered into as
contemplated by Clause 9.5(b)(iii) (Changes to Borrowers) or any other
document designated in writing as such by the Agent and the Parent.
"Finance Party"
means each Joint Lead Arranger, a Bank, the Agent and the US Swingline
Agent.
"Group"
means the Parent and its Subsidiaries.
"Interest Period"
in relation to a Term-out Advance, has the meaning given to it in Clause
10.1 (Interest Periods for Term-out Advances).
"LIBOR"
means in relation to any Advance or unpaid sum:
(a) the rate per annum of the offered quotation for deposits in the
currency of the relevant Advance or unpaid sum for a period equal to
or as near as possible to the required period which appears on
Telerate Page 3750 or Telerate Page 3740 (as appropriate) at or about
11.00 a.m. on the applicable Rate Fixing Day; or
(b) if the rate cannot be determined under paragraph (a) above, the rate
determined by the Agent to be the arithmetic mean (rounded, if
necessary, to the nearest five decimal places with the midpoint
rounded upwards) of the respective rates notified to the Agent by each
of the Reference Banks quoting (provided that at least two Reference
Banks are quoting) as the rate at which it is offering deposits in the
required currency and for the required period in an amount comparable
to the participation of that Reference Bank (or, if it is not a Bank,
the participation of its Affiliate which is a Bank) in the Advance or
unpaid sum to prime banks in the London interbank market at or about
11.00 a.m. on the Rate Fixing Day for such period.
For the purpose of this definition:
(i) "required period" means the applicable Interest Period for a Term-out
Advance, the Term for Tranche A Advances (except Term-out Advances) or
for Tranche B Advances or the period in respect of which LIBOR falls
to be determined in relation to such unpaid sum; and
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7
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(ii) "Telerate Page 3750" means the display designated as Page 3750, and
"Telerate Page 3740" means the display designated as Page 3740, in
each case on the Telerate Service (or such other pages as may replace
page 3750 or Page 3740 on that service or such other service as may be
nominated by the British Bankers' Association (including the Reuters
Screen) as the information vendor for the purposes of displaying
British Bankers' Association Interest Settlement Rates for deposits in
the currency concerned).
"Majority Banks"
means, at any time:
(a) if any Utilisations are outstanding, Banks with an aggregate Original
Euro Amount of Advances or Bills at that time of more than 66 2/3 per
cent. of the aggregate Original Euro Amount of all Advances and Bills
then outstanding; or
(b) if no Utilisations are outstanding, Banks whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments (or, if
the Total Commitments have been reduced to zero, aggregated more than
66 2/3 per cent. of the Total Commitments immediately before the
reduction).
"Mandatory Prepayment Event"
means the event specified in Clause 9.4 (Mandatory Prepayment Event).
"Margin"
means 0.175 per cent. per annum.
"Maturity Date"
means the last day of the Term of an Advance or a Bill.
"MLA Cost"
means in relation to an Advance in Sterling, the cost of compliance with
the Mandatory Liquid Assets requirements of the Bank of England during its
Term or Interest Period, determined in accordance with Schedule 4.
"national currency unit"
means the unit of currency (other than a euro unit) of a Treaty Country.
"New York Business Day"
means a day (other than a Saturday or Sunday) on which banks are open for
interbank business generally in New York.
"Novation Certificate"
has the meaning given to it in Clause 28.3(a)(i) (Procedure for novations).
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8
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"Obligor"
means the Parent and each Borrower.
"Optional Currency"
means, in relation to any Advance or proposed Advance, Sterling, U.S.
Dollars or any other currency other than euros which is readily available
and freely transferable in the London foreign exchange market in sufficient
amounts to fund that Advance.
"Original Euro Amount"
means:
(a) the principal amount of an Advance denominated in euros; or
(b) the principal amount of an Advance denominated in any other currency
or a Bill, translated into euros on the basis of the Agent's Spot Rate
of Exchange on the date of receipt by the Agent of the Request for
that Advance or Bill.
"Party"
means a party to this Agreement.
"PBGC"
means the U.S. Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Security Interest"
means:
(a) a lien or right of set-off arising by operation of law (or by
agreement evidencing a lien or right of set-off) and in each case in
the ordinary course of business;
(b) any Security Interest securing any Borrowings of any Obligor which
becomes a member of the Group after the Signing Date which was in
existence when that Obligor became a member of the Group and was not
created in contemplation of that Obligor becoming a member of the
Group;
(c) a Security Interest over an asset acquired by an Obligor after the
Signing Date and to which such asset was subject at the time of such
acquisition provided it was not created in contemplation of that
acquisition;
(d) any Security Interest the principal purpose and effect of which is to
allow the setting-off or netting of obligations:
(i) with those of a financial institution; or
(ii) under swaps or other derivative agreements,
in the ordinary course of the cash management arrangements of the
Group;
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9
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(e) any retention of title reserved by any seller of goods or any Security
Interest imposed, reserved or granted over goods supplied by such
seller in the ordinary course of business;
(f) any Security Interest arising out of or in connection with pre-
judgement legal process or a judgement or a judicial award relating to
security for costs;
(g) a Security Interest securing any refinancing of amounts secured under
(b) or (c)above provided the amount secured does not exceed the amount
originally secured;
(h) a Security Interest which the Majority Banks have at any time agreed
in writing shall be a Permitted Security Interest; and
(i) Security Interests (other than Security Interests permitted by
paragraphs (a) to (h) above) which secure, in aggregate, Borrowings in
an amount not exceeding 15 per cent. of the Total Consolidated Assets
of the Group.
"Plan"
means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which an Obligor or any member of the Controlled Group has any
obligation to contribute.
"Prime Rate"
means the prime commercial lending rate for U.S. Dollars from time to time
announced by the US Swingline Agent. Each change in the interest rate on a
Swingline Advance which results from a change in the Prime Rate becomes
effective on the day on which the change in the Prime Rate becomes
effective.
"Qualifying Bank"
means a bank or institution which is:
(a) a bank as defined in Section 840A of the Income and Corporation Taxes
Act 1988 which is within the charge to corporation tax as regards any
interest received by it under this Agreement; or
(b) resident (as such term is defined in the appropriate double taxation
treaty) in a country with which the United Kingdom has an appropriate
double taxation treaty under which that institution is entitled to
exemption from United Kingdom tax on interest and is entitled to apply
under the Double Taxation Relief (Taxes on Income) (General)
Regulations 1970 to have interest paid to its Facility Office without
withholding or deduction for or on account of United Kingdom tax (and
does not carry on business in the United Kingdom through a permanent
establishment with which the investments under this Agreement in
respect of which the interest is paid are effectively connected); and
for this purpose "double taxation treaty" means any convention or
agreement between the government of the United Kingdom and any other
government for the
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10
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avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and capital gains.
"Rate Fixing Day"
means:
(a) the Utilisation Date for an Advance denominated in Sterling; and
(b) the second Business Day before the Utilisation Date for an Advance
denominated in euros or any Optional Currency other than Sterling (or
such other day as is generally treated as the rate fixing day by
market practice in the London interbank market for the currency
concerned).
"Reference Banks"
means, subject to Clause 28.5 (Reference Banks), Barclays Bank PLC,
National Westminster Bank Plc and Midland Bank plc.
"Reportable Event"
means a reported event as defined in Section 4043 of ERISA and the
regulations issued under such section with respect to a Plan, excluding,
however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
"Request"
means a request made by a Borrower to utilise a Facility, substantially in
the form of Schedule 5.
"Requested Amount"
means the amount requested in a Request.
"Rollover"
means, in relation to a particular date, one or more Advances (including,
but not limited to, the Term-out Advances):
(a) whose proposed Utilisation Date is the same as the Maturity Date of
one or more existing Advances;
(b) whose aggregate principal amount is the same as or less than the
aggregate outstanding principal amount of all existing Advances whose
Maturity Date is the same as that Utilisation Date; and
(c) which are to be denominated in the same currency or a legal
denomination of the currency as the existing Advance(s) whose Maturity
Date is the same as that
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11
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Utilisation Date (or, if there is more than one such existing Advance
and such Advances are denominated in different currencies, in the same
or lesser respective amounts of the same or legally equivalent
currencies as for such existing Advances).
"Security Interest"
means a mortgage, charge, pledge, lien or similar security interest.
"Signing Date"
means the date of this Agreement.
"Subsidiary"
means a subsidiary within the meaning of Section 736 of the Companies Act
1985, as amended by Section 144 of the Companies Act 1989.
"Swingline Advance"
means an advance made or to be made by a Swingline Bank under the Swingline
Facility.
"Swingline Affiliate"
means, in relation to a Bank, any Swingline Bank that is an Affiliate of
that Bank and which is notified to the Agent and the US Swingline Agent by
that Bank in writing to be its Swingline Affiliate.
"Swingline Bank"
means, subject to Clause 28.2 (Transfers by Banks), a Bank listed in Part
II of Schedule 1.
"Swingline Commitment"
means in respect of a Swingline Bank, the amount in euros set opposite its
name in Part II of Schedule 1 to the extent not transferred, cancelled or
reduced under this Agreement.
"Swingline Facility"
means the committed swingline facility available in U.S. Dollars, Sterling
or euros, forming part of Tranche B and referred to in Clause 2.1(c)
(Facilities).
"Swingline Rate"
means, on any day:
(a) in relation to Swingline Advances in U.S. Dollars, the higher of:
(i) the Prime Rate; and
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(ii) the aggregate of the Federal Funds Rate and one per cent. per
annum,
on that day; and
(b) in relation to Swingline Advances in Sterling, the aggregate of:
(i) one per cent. per annum;
(ii) the Bank of England's fixed repo rate (being the Bank of
England's operational rate) at which it conducts its daily money
market operations as at the time the Request is served and at
9.00 a.m. for each subsequent day; and
(iii) the MLA Cost,
on that day; and
(c) in relation to Swingline Advances in euros, the aggregate of:
(i) one per cent. per annum; and
(ii) the cost of same day euro funds certified to the Agent by each
Swingline Bank for each day the relevant Swingline Advance in
euros is outstanding as at the time the Request is served and at
9.00 a.m. for each subsequent day,
on that day.
"Swingline Total Commitments"
means the aggregate for the time being of the Swingline Commitments, being
euro 1,000,000,000 at the date of this Agreement.
"Term"
means the period selected by a Borrower in a Request for which the relevant
Advance or Bill is to be outstanding.
"Term-out Advances"
means the Tranche A Advances, if any, drawn under Clause 8.1(b) (Repayment
of Tranche A Advances).
"Total Commitments"
means the aggregate of the Tranche A Total Commitments and Tranche B Total
Commitments (including the Swingline Total Commitments) from time to time.
"Total Consolidated Assets"
means the aggregate from time to time of the Group's consolidated fixed
assets (including investments but excluding goodwill and intangible assets)
and consolidated current assets, all determined in accordance with
applicable accounting standards from time to time used in preparation of
the Group's audited consolidated annual accounts.
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"Tranche A"
has the meaning given to it in Clause 2.1(a) (Facilities).
"Tranche A Advance"
means an Advance made by a Bank under Tranche A.
"Tranche A Availability Period"
means the period from the Signing Date up to and including 24th March, 1999
(being the date which is 364 days after the Signing Date).
"Tranche A Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 1 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche A Term Date"
means the last day of the Tranche A Availability Period or, if that day is
not a Business Day, the preceding Business Day.
"Tranche A Term-out Option"
means the option available to the Borrowers to draw Term-out Advances under
Tranche A pursuant to Clause 8.1(b) (Repayment of Tranche A Advances).
"Tranche A Total Commitments"
means the aggregate for the time being of the Tranche A Commitments, being
euro 1,500,000,000 at the date of this Agreement.
"Tranche B"
has the meaning given to it in Clause 2.1 (b) (Facilities).
"Tranche B Advance"
means an Advance made by a Bank under Tranche B.
"Tranche B Availability Period"
means the period from and including the Signing Date to and including the
Tranche B Final Maturity Date.
"Tranche B Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 2 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche B Final Maturity Date"
means the fifth Anniversary or such later date as may be agreed in
accordance with Clause 5.7 (Extension of Tranche B Availability Period).
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"Tranche B Total Commitments"
means the aggregate for the time being of the Tranche B Commitments, being
euro 4,500,000,000 at the date of this Agreement (up to euro 1,000,000,000
of which is available under the Swingline Facility).
"Treaty"
means the Treaty Establishing the European Community being the Treaty of
Rome of 25th March, 1957, as amended by the Single European Act 1986 and
the Maastricht Treaty (which was signed at Maastricht on 7th February, 1992
and came into force on 1st November, 1993), as amended from time to time.
"Treaty Country"
means each state described as a participating Member State in any EMU
legislation, whether in the first wave or subsequently.
"U.K." or "United Kingdom"
means the United Kingdom of Great Britain and Northern Ireland.
"United States"
means the United States of America.
"U.S. Borrower"
means a Borrower incorporated in any state of the United States.
"U.S. Qualifying Bank"
has the meaning given to it in Clause 12.3(a) (U.S. Taxes).
"Utilisation"
means:
(a) in the case of a Utilisation comprising Advances, all the Advances
made or to be made; or
(b) in the case of a Utilisation comprising Bills, all the Bills accepted
or to be accepted,
following the giving by a Borrower of a Request for those Advances or
Bills.
"Utilisation Date"
means:
(a) in the case of an Advance or Utilisation comprising Advances, the date
for the making of the relevant Advance or Advances; and
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(b) in the case of a Bill or Utilisation comprising Bills, the date for
the acceptance of the relevant Bill or Bills.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in the
next calendar month, except that, if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that calendar month;
a "principal amount" in relation to a Bill is a reference to the face
amount of that Bill;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law but, if
not, being of a type which banks operating in the relevant
jurisdiction generally and the Bank affected in particular are
accustomed to complying with) of any governmental body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
a reference to the currency of a country is to the lawful currency or
currencies of that country for the time being, "(Pounds)" and
"Sterling" is a reference to the lawful currency or currencies of the
United Kingdom for the time being and "U.S. $" and "U.S. Dollars" is
a reference to the lawful currency of the United States for the time
being; and
a "treasury transaction" is a reference to any interest rate or
cross-currency swap;
(ii) a provision of a law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its permitted successors, transferees and assigns;
(v) a Finance Document or another document is a reference to that Finance
Document or that other document as amended, novated or supplemented;
and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
(d) Any provision of this Agreement that states that it will come into effect
as from the Commencement Date shall, to the extent that any such provision
relates to any currency of a state which is not a Treaty Country on the
Commencement Date, come into effect in relation to the currency of such
state on and from the date on which such state becomes a Treaty Country.
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2. THE FACILITIES
2.1 Facilities
The Banks grant to the Borrowers the following facilities:
(a) a committed multicurrency revolving 364 day credit facility, with an
option to draw Term-out Advances, to be designated as Tranche A, under
which the Banks will, when requested by a Borrower, make cash advances
in euros or Optional Currencies to (or accept Bills in Sterling drawn
by) that Borrower on a revolving basis during the Tranche A
Availability Period;
(b) a committed multicurrency revolving credit facility, to be designated
as Tranche B, under which the Banks will, when requested by a
Borrower, make cash advances in euros or Optional Currencies to (or
accept Bills in Sterling drawn by) that Borrower on a revolving basis
during the Tranche B Availability Period; and
(c) a committed swingline advance facility (which is a sub-division of
Tranche B) under which the Swingline Banks will, when requested by a
Borrower, make to that Borrower Swingline Advances in U.S. Dollars,
Sterling or euros during the Tranche B Availability Period except that
Swingline Advances in euros will only be made subject to availability
of same day funding in euros in the London interbank market,
in all cases subject to the terms of this Agreement.
2.2 Overall facility limit
(a) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of all outstanding Utilisations:
(i) under Tranche A, shall not at any time exceed the Tranche A Total
Commitments at that time;
(ii) under Tranche B (including the Swingline Facility), shall not at any
time exceed the Tranche B Total Commitments at that time;
(iii) under the Swingline Facility, shall not at any time exceed the
Swingline Total Commitments at that time; and
(iv) under all the Facilities, shall not at any time exceed the Total
Commitments.
(b) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of:
(i) Tranche A Advances made, and the principal amount of Bills under
Tranche A accepted, by a Bank shall not at any time exceed its Tranche
A Commitment at that time;
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(ii) Tranche B Advances (including Swingline Advances) made, and the
principal amount of Bills under Tranche B accepted, by a Bank plus
that Bank's and, if applicable, that Bank's Swingline Affiliate's
outstanding Swingline Advances shall not at any time exceed its
Tranche B Commitment at that time; and
(iii) Swingline Advances made by a Swingline Bank shall not at any time
exceed its Swingline Commitment at that time.
2.3 Number of Requests and Advances
No more than one Request may be delivered on any one day, but that Request
may specify any number of Utilisations and Terms from either Tranche A or
Tranche B (or a Swingline Advance) or all of them. A maximum of 20
Utilisations may be outstanding at any one time (unless the Agent and the
Parent otherwise agree).
2.4 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are several.
Failure of a Finance Party to carry out those obligations does not relieve
any other Party of its obligations under the Finance Documents. No Finance
Party is responsible for the obligations of any other Finance Party under
the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights and accordingly a Finance Party may, except as otherwise stated in
the Finance Documents, separately enforce those rights.
2.5 Obligors' Representative
Each Obligor irrevocably authorises the Parent to give and receive as
representative on its behalf all notices (including Requests) and sign all
documents in connection with the Finance Documents on its behalf (including
Novation Agreements under Clause 9.5(b) (Changes to Borrowers)) and take
such other action as may be necessary or desirable under or in connection
with the Finance Documents and confirms that it will be bound by any action
taken by the Parent under or in connection with the Finance Documents.
2.6 Actions of Parent
The respective liabilities of each of the Obligors under the Finance
Documents shall not be in any way affected by:
(a) any irregularity (or purported irregularity) in any act done by or any
failure (or purported failure) by the Parent; or
(b) the Parent acting (or purporting to act) in any respect outside any
authority conferred upon it by any Obligor; or
(c) the failure (or purported failure) by, or inability (or purported
inability) of, the Parent to inform any Obligor of receipt by it of
any notification under a Finance Document.
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3. PURPOSE
(a) Each Utilisation will be applied:
(i) in the case of Tranche A Advances or Bills, in or towards providing
bridging and liquidity finance for the Group's financial requirements
including, but not limited to, meeting dividend and tax payments and
for backing commercial paper programmes (or refinancing Swingline
Advances); and
(ii) in the case of Tranche B Advances (including Swingline Advances) or
Bills, in or towards the general corporate purposes of the Group
including, but not limited to, acquisitions, capital expenditure,
working capital financing, share buy-backs and other capital
distributions and supporting commercial paper programmes (provided
that a Swingline Advance may not be applied in or towards refinancing
another Swingline Advance).
(b) Without affecting the obligations of any Borrower in any way, no Finance
Party is bound to monitor or verify the application of the proceeds of any
Advance.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to any Borrower under this Agreement
are subject to the condition precedent that the Agent has notified the
Parent and the Banks that it has received all of the documents set out in
Part I of Schedule 3 in form and substance satisfactory to the Agent. The
Agent will promptly notify the Parent upon such receipt.
4.2 Further conditions precedent
The obligations of each Bank to participate in a Utilisation (or make any
payment under Clause 5.10(b)(ii)) are subject to the further conditions
precedent that on the date of the Request and on its Utilisation Date:
(a) except in the case of a Rollover, the representations and warranties
in Clause 18 (Representations and Warranties) to be repeated in
accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately
after the Utilisation; and
(b) except in the case of a Rollover, no Default has occurred which is
continuing or would result from the Utilisation and no notice has been
given by the Parent under Clause 9.4 (Mandatory Prepayment Event).
5. ADVANCE FACILITIES
5.1 Receipt of Requests
(a) A Borrower may borrow Advances under Tranche A or Tranche B if the Agent
receives, not later than 3.00 p.m. on the third Business Day before the
proposed Utilisation Date, or, in the
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case of an Advance in Sterling, not later than 3.00 p.m. one Business Day
before the proposed Utilisation Date, a duly completed Request copied to
the US Swingline Agent.
(b) A Borrower may borrow Swingline Advances if:
(i) in the case of Swingline Advances in U.S. Dollars, the US Swingline
Agent receives, not later than 11.00 a.m. (New York City time) on the
proposed Utilisation Date;
(ii) in the case of Swingline Advances in Sterling or euros, the Agent
receives, not later than 9.00 a.m. (London time) on the proposed
Utilisation Date,
a duly completed Request (copied to the Agent or US Swingline Agent as the
case may be).
5.2 Completion of Requests for non Swingline Advances
A Request (other than a Request for a Swingline Advance) will not be
regarded as having been duly completed unless:
(a) the Utilisation Date is a Business Day during the Tranche A
Availability Period (in respect of a Tranche A Advance) or Tranche B
Availability Period (in respect of a Tranche B Advance);
(b) only one currency is specified for each separate Advance, such
currency is the euro or an Optional Currency, and the Requested Amount
for each separate Advance is:
(i) in the case of Advances denominated in euros, a minimum of euro
100,000,000 or, if more, in integral multiples of euro
10,000,000; or
(ii) in the case of any currency other than the euro, a minimum
Original Euro Amount of euro 100,000,000 or, if more, in
integral multiples of euro 10,000,000; or
(iii) the undrawn balance of the Tranche A Total Commitments or the
Tranche B Total Commitments (as the case may be); or
(iv) such other amount as the Agent and the Parent may agree,
and the Agent and the Parent may agree to round the amount of Advances
which are not denominated in euros on such basis as they may
reasonably consider to be appropriate;
(c) only one Term or, in the case of Term-out Advances, Interest Period,
for each separate Advance is specified which:
(i) does not overrun the Tranche A Term Date (in respect of a
Tranche A Advance (other than a Term-out Advance)) or the
Tranche B Final Maturity Date (in respect of a Tranche B
Advance); and
(ii) is a period of one month, two, three or six months (which, in
the case of Term-out Advances only, does not overrun the third
Anniversary) or, in any case,
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such other period as all the banks may previously have agreed for
the purposes of such Advance; and
(d) the currencies specified are either euros or subject to Clause
11.4(c) (Currency), Optional Currencies.
5.3 Completion of Requests for Swingline Advances
A Request for Swingline Advances will not be regarded having been duly
completed unless:
(a) the Utilisation Date is:
(i) in the case of Swingline Advances in U.S. Dollars, a New York
Business Day; or
(ii) in the case of Swingline Advances in Sterling or euros, a
Business Day,
in each case falling before the Tranche B Final Maturity Date;
(b) it is specified that the Swingline Advances are to be made in U.S.
Dollars, Sterling or euros under the Swingline Facility;
(c) the Requested Amount is a minimum Original Euro Amount of euro
10,000,000 or such other amount as the Agent or, as the case may be,
US Swingline Agent and the relevant Borrower may agree which, if
borrowed, would not cause the Original Euro Amount of all Utilisations
under Tranche B to exceed the Tranche B Total Commitments;
(d) only one Term is specified, which:
(i) does not overrun the Tranche B Final Maturity Date; and
(ii) is a period not exceeding 7 days.
5.4 Amount of each Bank's Advance
The amount of a Bank's Advance will be the proportion of the Requested
Amount which:
(a) in the case of a Tranche A Advance, its Tranche A Commitment bears to
Tranche A Total Commitments;
(b) in the case of a Tranche B Advance, its Tranche B Commitment bears to
the Tranche B Total Commitments; and
(c) in the case of a Swingline Advance, its Swingline Commitment bears to
the Swingline Total Commitments,
in each case on the date of receipt of the relevant Request.
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5.5 Notification of the Banks
The Agent (or, in the case of Swingline Advances in U.S. Dollars, the US
Swingline Agent) will promptly notify each Bank (or, as the case may be,
Swingline Bank) of the details of the requested Advances and the amount of
its Advance.
5.6 Payment of Proceeds
Subject to the terms of this Agreement, each Bank (or, as the case may be,
Swingline Bank) will make its Advance available to the Agent (or, in the
case of Swingline Advances in U.S. Dollars, the US Swingline Agent) for the
Borrower for value on the relevant Utilisation Date.
5.7 Extension of Tranche B Availability Period
The Tranche B Final Maturity Date in respect of each Bank's Tranche B
Commitment may, at the Parent's request, be extended from time to time for
any period up to a date falling no later than seven years from the Signing
Date. However, each Bank may, in its sole discretion, decline to extend
the Tranche B Maturity Date in respect of its own Tranche B Commitment, in
which case:
(a) the Tranche B Commitment of that Bank will automatically cancel on the
then applicable Tranche B Final Maturity Date; and
(b) that Bank will be repaid in full upon the then applicable Tranche B
Final Maturity Date and will cease to be a Bank at such time,
irrespective of whether any other Bank has agreed to extend the Tranche B
Availability Period in respect of its own Tranche B Commitment.
5.8 Currency and limit on ECU drawings
No Request may specify an Advance or Advances denominated in ECU to be
drawn down on the same day in an aggregate principal amount exceeding ECU
1,000,000,000, and in any event not more than ECU 2,000,000,000 of Advances
denominated in ECU may be outstanding at any one time (but this Clause 5.8
does not apply after the Commencement Date).
5.9 Currency of Term-out Advances
Subject to Clause 11.4 (Currency), once the currency of a Term-out Advance
has been selected in the applicable Request, it will remain in that
currency throughout its Term.
5.10 Term-out Advances in Optional Currencies
(a) If a Term-out Advance is denominated in an Optional Currency (other than an
Optional Currency that is redenominated under Clause 11.4 (Currency)),
there shall be calculated in respect of each applicable Interest Period the
difference between the amount of the Term-out Advance (in that Optional
Currency) for the current Interest Period and for the next Interest Period.
The amount of the Term-out Advance for the next Interest Period will be
determined by notionally converting into that Optional Currency the
Original Euro Amount of the Term-
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out Advance on the basis of the Agent's Spot Rate of Exchange three
Business Days before the start of that Interest Period.
(b) At the end of the current Interest Period (but subject always to paragraph
(c) below):
(i) if the amount of the Term-out Advance for the next Interest Period is
less than for the preceding Interest Period, the relevant Borrower
shall repay the difference; or
(ii) if the amount of the Term-out Advance for the next Interest Period is
greater, each Bank shall, provided the conditions specified in Clause
4.2 (Further Conditions Precedent) are satisfied, forthwith make
available to the Agent for the relevant Borrower its participation in
the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period shows an
appreciation or depreciation of the Optional Currency against the euro of
less than five per cent. when compared with the Original Exchange Rate, no
amounts are payable in respect of the difference. In this Clause 5.10 and
in Clause 5.11 (Prepayments and repayments) "Original Exchange Rate" means
the Agent's Spot Rate of Exchange used for determining the amount of the
Optional Currency for the Interest Period which is the later of the
following:
(i) the first Interest Period applicable to the Term-out Advance; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 5.10.
5.11 Prepayments
If a Term-out Advance is to be prepaid by reference to an Original Euro
Amount, the Optional Currency amount to be prepaid shall be determined by
reference to the Agent's Spot Rate of Exchange last used for determining
the Optional Currency amount of that Term-out Advance under this Clause 5
or, if applicable, the Original Exchange Rate (as defined in Clause 5.10
(Term-out Advances in Optional Currencies)).
5.12 Notification
The Agent shall notify the Banks and the Parent of Optional Currency
amounts (and the applicable Agent's Spot Rate of Exchange) promptly after
they are ascertained.
6. BILL FACILITY
6.1 Receipt of Requests
Each Borrower may utilise the Bill Facility under Tranche A or Tranche B if
the Agent receives, not later than 10.00 a.m. on the Business Day before
the proposed Utilisation Date, a duly completed Request.
6.2 Form of Requests
A Request will not be regarded as being duly completed unless:
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(a) the Utilisation Date is a Business Day;
(b) the Requested Amount is a minimum of (Pounds)50,000,000 (or the
undrawn balance of the Tranche A Total Commitments or Tranche B Total
Commitments as the case may be) or such other amount as the Agent and
the Borrower may agree; and
(c) only one Term is specified which:
(i) does not overrun the Tranche A Term Date (in respect of Tranche A
Bills) or the Tranche B Final Maturity Date (in respect of
Tranche B Bills); and
(ii) is a period of between 14 days and 187 days.
6.3 Amount of Bills to be accepted by each Bank
The aggregate principal amount of the Bills to be accepted by a Bank will
be the proportion of the Requested Amount which:
(a) in the case of Tranche A Bills, its Tranche A Commitment bears to the
Tranche A Total Commitments; and
(b) in the case of Tranche B Bills, its Tranche B Commitment bears to the
Tranche B Total Commitments,
in each case on receipt of the relevant Request.
6.4 Notification of the Banks
The Agent shall, not later than 1.00 p.m. on the Business Day before the
proposed Utilisation Date, notify each Bank of the details of the requested
Bills and the aggregate principal amount of the Bills to be accepted by it.
6.5 Acceptance of Bills
(a) The Agent shall, not later than 11.00 a.m. on the proposed Utilisation
Date, deliver to each Bank Bills completed in accordance with Clause 7.1
(Holding and completion of Bills).
(b) Each Bank shall accept the Bills delivered to it in accordance with
paragraph (a) above by the proposed Utilisation Date.
(c) The Agent shall, not later than 11.30 a.m. on the proposed Utilisation
Date, notify the Parent and each Bank of the applicable EBDR.
(d) Subject to the terms of this Agreement, each Bank shall pay to the Agent
for the relevant Obligor an amount equal to:
(i) the amount which the Bank would have received as the proceeds of
discounting if it had discounted the Bills accepted by it at the
applicable EBDR; less
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(ii) commission calculated at the Acceptance Commission Rate on the
aggregate principal amount of those Bills.
6.6 Advances as an alternative
(a) If it is unlawful, impracticable or contrary to the Bank of England's
limits on the discounting of Bills applicable to any Bank for a Bank to
accept any Bills, or if a Bank's acceptances are ineligible for discounting
at the Bank of England, then it may notify the Agent accordingly by no
later than 4.00 p.m. on the Business Day before the proposed Utilisation
Date.
(b) If a Bank notifies the Agent in accordance with paragraph (a) above, then,
subject to the terms of this Agreement, the Bank shall instead make an
Advance in accordance with Clause 5 (Advance Facilities) in Sterling on the
relevant Utilisation Date in a principal amount equal to the aggregate
principal amount of the Bills which it would otherwise have been obliged to
accept pursuant to this Clause 6 (Bill Facility) and for a Term equal to
the Term of those Bills.
7. BILLS
7.1 Holding and completion of Bills
(a) Each Borrower shall ensure that the Agent has a sufficient stock of Bills
before delivering any Request for a Utilisation comprising Bills.
(b) Each Bill shall:
(i) be drawn by the Borrower in its own favour and endorsed by it in
blank;
(ii) be undated;
(iii) have the Maturity Date, the drawee and the face amount left blank;
and
(iv) be claused in a manner which complies with the Bank of England's
requirements for Eligible Bills at that time.
(c) Subject to the terms of this Agreement, the Agent shall and is irrevocably
authorised by the Borrowers to:
(i) sign each Bill on behalf of the Borrower concerned and date it with
its Utilisation Date;
(ii) insert in each Bill the name of the Bank on which it is drawn, its
face amount and its Maturity Date; and
(iii) deliver each completed Bill to the Bank on which it is drawn for
acceptance in accordance with this Agreement.
(d) The Agent shall at the request of a Borrower notify that Borrower what
stock of Bills (and in what denominations) are held by the Agent.
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7.2 Rounding of principal amount of Bills
If necessary, the Agent may round the principal amount of the relevant
Bills to be accepted by each Bank to ensure that each Bill has a principal
amount of an integral multiple of (Pounds)10,000, being not less than
(Pounds)250,000 nor more than (Pounds)5,000,000.
7.3 Discounting of Bills
Each Bank may arrange for a Bill accepted by it to be discounted on its
behalf in the London discount market or elsewhere or discount the Bill
itself.
7.4 Information relating to Bills
Each Borrower shall, promptly on request by a Finance Party, supply to the
Agent for that Finance Party any information relating to any Bill
(including the underlying trade transaction for that Bill) as that Finance
Party may reasonably require or which may be required by the Bank of
England or any other fiscal or monetary authority in the U.K.
7.5 Eligible Bills
Each Borrower shall ensure that any Bill drawn by it and accepted by a Bank
is, assuming that the relevant Bank is a bank whose acceptances are then
being treated as eligible acceptances by the Bank of England, eligible for
rediscounting at the Bank of England.
8. REPAYMENT
8.1 Repayment of Tranche A Advances
(a) Each Borrower shall repay each Tranche A Advance made to it in full on its
Maturity Date to the Agent for the relevant Bank but since Tranche A is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. Subject to paragraph (b) below, no Tranche A
Advance may be outstanding after the Tranche A Term Date.
(b) At any time and from time to time prior to the Tranche A Term Date, any
Borrower may, by delivery of a duly completed Request to the Agent under
Clause 5 (Advance Facilities) (who shall send a copy of the same to the
Banks), elect to draw one or more Advances (each a "Term-out Advance")
under Tranche A with a Maturity Date after the Tranche A Term Date. No
Term-out Advance, once repaid or prepaid, may be reborrowed (other than
under Clause 5.10 (b) (Term-out Advances in Optional Currencies)).
(c) No Tranche A Advance, other than a Term-out Advance, may be outstanding
after the Tranche A Term Date. No Term-out Advance may be outstanding
after the date falling on the third Anniversary.
8.2 Repayment of Tranche B Advances
Each Borrower shall repay each Tranche B Advance made to it in full on its
Maturity Date to the Agent for the relevant Banks but since Tranche B is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. No Tranche B Advance may be outstanding after
the Tranche B Final Maturity Date.
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8.3 Payment of Bills
Each Borrower shall pay an amount equal to the principal amount of each
Bill on its Maturity Date to the Agent for the relevant Bank. No Tranche A
Bill may be outstanding after the Tranche A Term Date and no Tranche B Bill
may be outstanding after the Tranche B Final Maturity Date.
8.4 Repayment of Swingline Advances
(a) Each Borrower shall repay each Swingline Advance made to it on its Maturity
Date to the Agent or, in the case of Swingline Advances in U.S. Dollars,
the US Swingline Agent for the Swingline Banks. No Swingline Advance may
be outstanding after the Tranche B Final Maturity Date.
(b) Each Swingline Advance shall be repaid on its Maturity Date in accordance
with paragraph (a) above. In the event that a Swingline Advance is not so
repaid each Bank (other than a Swingline Bank) will within four Business
Days of a demand to that effect from the Agent or, as the case may be, the
US Swingline Agent pay to the Agent or, as the case may be, the US
Swingline Agent on behalf of the Swingline Banks and their Swingline
Affiliates an amount equal to its Agreed Percentage of the principal of
such Swingline Advance and accrued interest (including default interest)
thereon to the date of actual payment by such Bank. The relevant Borrower
shall forthwith reimburse the Banks (through the Agent or, as the case may
be, the US Swingline Agent) in full for each payment made by the Banks
under this paragraph (b). Each amount the relevant Borrower is required to
reimburse to the Banks under this paragraph (b) shall be deemed to be an
overdue amount under Clause 10.4 (Default Interest) which fell due for
payment by the relevant Borrower on the day on which the payment by the
Banks giving rise to the reimbursement obligation was made and shall accrue
default interest under Clause 10.4 (Default Interest) accordingly.
9. PREPAYMENT AND CANCELLATION
9.1 Automatic Cancellation of the Total Commitments
(a) The undrawn Tranche A Commitment of each Bank shall be automatically
cancelled at the close of business in London on the last day of the Tranche
A Availability Period.
(b) The Tranche B Commitment of each Bank (including the Swingline Commitments
of the Swingline Banks) shall be automatically cancelled at the close of
business in London on the last day of the Tranche B Availability Period.
9.2 Voluntary Cancellation
(a) The Parent may, by giving not less than five days' prior written notice to
the Agent specifying the relevant Tranche(s), cancel the unutilised portion
of the Tranche A Total Commitments or the Tranche B Total Commitments or
both, in whole or in part (but, if in part, in a minimum amount of euro
50,000,000 and in integral multiples of euro 10,000,000 in aggregate for
both Tranches). Any cancellation in part of the Tranche B Total Commitments
shall be applied against the Tranche B Commitment of each Bank pro rata.
Any cancellation in part of the
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Tranche B Total Commitments shall be applied against the Tranche B
Commitment of each Bank pro rata.
(b) Whenever part of the Tranche B Total Commitments are cancelled, the
Swingline Commitments shall not be cancelled unless (i) the amount of the
Swingline Total Commitments would exceed the Tranche B Total Commitments
after such cancellation or (ii) the Swingline Commitment of any Swingline
Bank would exceed its Tranche B Commitment after such cancellation. In any
such case, the Swingline Total Commitments shall, at the same time as the
cancellation of the Tranche B Total Commitments takes effect, be cancelled
by such amount as is necessary to ensure that after the relevant
cancellation of the Tranche B Total Commitments the Swingline Total
Commitments do not exceed the Tranche B Total Commitments and the Swingline
Commitment of each Swingline Bank does not exceed its Tranche B Commitment.
9.3 Voluntary prepayment
(a) Any Borrower may, by giving not less than five days' prior notice to the
Agent, prepay without premium or penalty the whole or any part of any
Advance made to it under Tranches A or B (but, if in part, in an aggregate
minimum Original Euro Amount, taking all prepayments made by all the
Borrowers under both Tranches on the same day together, of euro 50,000,000
and in integral multiples of euro 10,000,000).
(b) Any voluntary prepayment under paragraph (a) above will:
(i) be applied against Tranche A or B in such proportions as may be
specified by the Borrower in the notice of prepayment or, if not
specified, against Tranche A; and
(ii) be applied against all the Advances of all the Banks in the relevant
Tranche(s) pro rata.
9.4 Mandatory Prepayment Event
If at any time any single person, or group of persons acting in concert (as
defined in the City Code on Takeovers and Mergers), acquires control (as
defined in Section 416 of the Income and Corporation Taxes Act 1988) of the
Parent then the Parent will notify the Agent within thirty days and the
Agent will, if instructed to do so by the Majority Banks, by notice to the
Parent given no earlier than ninety days after the date that notice is
given to the Agent:
(a) call for prepayment of all the Advances on such date as it may specify
in such notice whereupon all the Advances shall become due and payable
on such date together with accrued interest and any other sums then
owed by the Obligors under the Finance Documents;
(b) call for each Borrower to perform its obligations under Clause 8.3
(Payment of Bills) in respect of all outstanding Bills on such date as
it may specify in such notice as if such date were the Maturity Date
of each of those Bills; and
(c) declare that the Total Commitments shall be cancelled, whereupon the
Total Commitments shall be cancelled and the Commitment of each Bank
shall be cancelled and reduced to zero.
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9.5 Changes to Borrowers
(a) Any Borrower (other than the Parent) in respect of which no Utilisation,
interest or related amount is outstanding may, at the request of the
Parent, cease to be a Borrower by giving not less than two Business Days'
notice to the Agent, which, upon taking effect, shall discharge that
Borrower's obligations under this Agreement. No such discharge will take
effect, however, if at the time or immediately thereafter any Default has
occurred which is continuing.
(b) Any Borrower (the "Existing Borrower") will be released from its
obligations under this Agreement as a Borrower (and thereupon cease to be a
"Borrower") upon another Borrower (the "Substitute Borrower") assuming the
obligations in respect thereof of the Existing Borrower provided that:
(i) any such substitution shall take effect on and from the later of the
day upon which the Agent notifies the Parent in writing that it is
satisfied with the compliance with the matters set out in paragraph
(b)(iii) below and the date for substitution specified in the relevant
notice under paragraph (b)(ii) below;
(ii) notice of the proposed substitution has been delivered by the Parent
to the Agent not less than two Business Days prior to the proposed
substitution; and
(iii) the Substitute Borrower enters into a Novation Agreement with the
Existing Borrower, the Parent and the Agent on behalf of the Finance
Parties in the form of Part III of Schedule 6 together with such
amendments as the Agent may, at the request of the Parent, approve.
Each Bank authorises the Agent to sign on its behalf any Novation Agreement
entered into in accordance with this paragraph (b).
9.6 Right of prepayment and cancellation
If any Borrower is required to pay or is notified by any Bank in writing
that it will be required to pay any amount to a Bank under Clause 12
(Taxes) or Clause 15 (Increased Costs), or if circumstances exist such that
a Borrower will be required to pay any amount to a Bank under Clause 12
(Taxes), the Parent may, whilst the circumstances giving rise or which will
give rise to the requirement continue, serve a notice of prepayment and
cancellation on that Bank through the Agent. On the date falling three
Business Days after the date of service of the notice:
(a) each Borrower shall prepay all outstanding Advances made to it by that
Bank;
(b) each Borrower shall perform its obligations under Clause 8.3 (Payment
of Bills) in respect of all outstanding Bills accepted by that Bank as
if such third Business Day were the Maturity Date of each of those
Bills; and
(c) the Bank's Tranche A Commitment, and its Tranche B Commitment
(including its Swingline Commitment (if any)) shall be permanently
cancelled on the date of service of the notice.
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9.7 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of any
such notice.
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and any other amounts due under this
Agreement in respect of that prepayment (including, but not limited to, any
amounts payable under Clause 25.2(b) (Other indemnities) if not made on a
Maturity Date for the relevant Tranche A Advance, Tranche B Advance or
Swingline Advance).
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) Subject to the terms of this Agreement, any amount prepaid under Clause 9.3
(Voluntary prepayment) in respect of Tranche A (other than in respect of a
Term-out Advance) or Tranche B may be reborrowed. No amount of the Tranche
A Total Commitments or Tranche B Total Commitments (including the Swingline
Total Commitments) cancelled under this Agreement may subsequently be
reinstated.
10. INTEREST
10.1 Interest Periods for Term-Out Advances
The life of each Term-out Advance is divided into successive periods (each
an "Interest Period") for the calculation of interest. The first Interest
Period will be the period selected in the Request for that Term-out Advance
and each subsequent Interest Period will be the period selected by the
relevant Borrower by notice to the Agent received not later than 3.00 p.m.
on the third Business Day before the end of the then current Interest
Period or, in the case of a Term-out Advance in Sterling, not later than
3.00 p.m. on the day before the last day of the then current Interest
Period (being one month, two, three or six months or in any case such other
period as the Agent and all the Banks may agree from time to time which
does not overrun the third Anniversary). If no such selection notice is
received within the time limit mentioned above, the new Interest Period
will be three months or such shorter period as is required to ensure that
it does not overrun the third Anniversary.
10.2 Interest rate for all Advances
(a) The rate of interest on each Tranche A Advance (except a Term-out Advance)
and Tranche B Advance for its Term and for each Term-out Advance for its
Interest Period is the rate per annum determined by the Agent to be the
aggregate of:
(i) the Margin;
(ii) LIBOR; and
(iii) the MLA Cost, if applicable.
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(b) The rate of interest on each Swingline Advance during its Term is the rate
per annum determined by the Agent or, in respect of Swingline Advances in
U.S. Dollars, the US Swingline Agent, to be the Swingline Rate for each day
during its Term.
10.3 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Advance is payable by the relevant Borrower on its Maturity Date (or the
last day of an Interest Period for a Term-out Advance) and also, in the
case of any Advance with a Term or Interest Period longer than six months,
at six-monthly intervals during its Term or Interest Period for so long as
the Term or Interest Period continues.
10.4 Default interest
(a) If a Borrower fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Agent pay interest on the overdue
amount from the due date up to the date of actual payment, both before and
after judgment, at a rate (the "default rate") determined by the Agent or,
as the case may be, the US Swingline Agent to be one per cent. per annum
above the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Tranche A Advance in the
currency of the overdue amount for such successive Terms of such duration
as the Agent may determine (each a "Designated Term") provided that, in the
case of principal falling due before its Maturity Date, the default rate up
to that Maturity Date will be one per cent. per annum above the rate
applicable to that principal immediately before it fell due.
(b) The default rate will be determined on each Business Day or the first day
of, or two Business Days before the first day of, the relevant Designated
Term, as appropriate.
(c) If the Agent or, as the case may be, the US Swingline Agent determines that
deposits in the currency of the overdue amount are not at the relevant time
being made available by the Reference Banks to leading banks in the London
interbank market, the default rate will be determined by reference to the
cost of funds to each Bank from whatever sources it may reasonably select
after consultation with the Reference Banks.
(d) Default interest will be compounded at the end of each Designated Term.
10.5 Notification of rates of interest
The Agent or, as the case may be, the US Swingline Agent will promptly
notify each relevant Party of the determination of a rate of interest under
this Agreement.
11. PAYMENTS
11.1 Place of Payment
All payments by an Obligor or a Bank under this Agreement shall be made to
the Agent or (if the payment relates to Swingline Advances in U.S. Dollars)
the US Swingline Agent to its account at such office or bank in the
principal financial centre of the country of the currency concerned (or, in
the case of euros, in the principal financial centre of such of the Treaty
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Countries or London as it may reasonably specify) as it may notify to the
Obligor or Bank for this purpose.
11.2 Funds
Payments under this Agreement to the Agent or (if the payment relates to
Swingline Advances in U.S. Dollars) the US Swingline Agent shall be made
for value on the due date at such times and in such funds as it may
specify to the Party concerned as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
11.3 Distribution
(a) Each payment received by the Agent or, as the case may be, the US
Swingline Agent, under this Agreement for another Party shall, subject to
paragraphs (b) and (c) below, be made available by the Agent or, as the
case may be, the US Swingline Agent to that Party by payment (on the date
and in the currency and funds of receipt) to its account with such bank in
the principal financial centre of the country of the relevant currency
(or, in the case of euros, in the principal financial centre of such of
the Treaty Countries or London as the Agent or, as the case may be, the US
Swingline Agent, may reasonably specify) as it may notify to the Agent or,
as the case may be, the US Swingline Agent, for this purpose by not less
than five Business Days' prior notice.
(b) The Agent or, as the case may be, the US Swingline Agent may apply any
amount received by it for an Obligor in or towards payment (on the date
and in the currency and funds of receipt) of any amount due from an
Obligor under this Agreement or in or towards the purchase of any amount
of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent or, as the
case may be, the US Swingline Agent for the account of another Party, the
Agent or, as the case may be, the US Swingline Agent is not obliged to pay
that sum to that Party until it has established that it has actually
received that sum. The Agent or, as the case may be, the US Swingline
Agent may, however, assume that the sum has been paid to it in accordance
with this Agreement and, in reliance on that assumption, make available to
that Party a corresponding amount. If the sum has not been made available
but the Agent or, as the case may be, the US Swingline Agent has paid a
corresponding amount to another Party, that Party shall forthwith on
demand refund the corresponding amount to the Agent or, as the case may
be, the US Swingline Agent, together with interest on that amount from the
date of payment to the date of receipt, calculated at a rate reasonably
determined by the Agent or, as the case may be, the US Swingline Agent, to
reflect its cost of funds.
11.4 Currency
(a) In this Agreement:
(i) a repayment or prepayment of an Advance is payable in the currency
in which the Advance is denominated;
(ii) interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated;
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(iii) amounts payable in respect of costs, expenses, taxes and the like
are payable in the currency in which they are incurred; and
(iv) any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in euros.
(b) Until the Commencement Date, all references to euros will be construed as
references to ECU and will be payable in or calculated by reference to ECU
at the rate of one ECU for one euro.
(c) On and after the Commencement Date:
(i) any Advance in the currency of a Treaty Country will be made in the
euro unit;
(ii) each obligation under this Agreement which has been denominated in a
national currency unit shall only be redenominated into the euro
unit at the time provided for and in accordance with EMU
legislation; and
(iii) any amount payable by the Agent to the Banks under this Agreement in
the currency of a Treaty Country will be paid in the euro unit.
(d) If and to the extent that any EMU legislation provides that an amount
denominated either in the euro unit or in the national currency unit of a
given Treaty Country and payable within that Treaty Country by crediting
an account of the creditor can be paid by the debtor either in the euro
unit or in that national currency unit, each Party shall be entitled to
pay or repay that amount either in the euro unit or in the national
currency unit.
11.5 Set-off and counterclaim
All payments made by an Obligor under this Agreement shall be made without
set-off or counterclaim.
11.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not). If, however, the extension of the due date would mean
that a Bill would have a Term of more than 187 days, then the due date for
that payment shall instead be the preceding Business Day.
(b) During any extension of the due date for payment of any principal under
this Clause 11.6 interest is payable on the principal at the rate payable
on the original due date.
11.7 Partial payments
If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by an Obligor under this Agreement, the Agent shall
apply that payment towards the obligations of the Obligors under this
Agreement in the following order:
(a) first, in or towards payment pro rata of any unpaid costs, fees and
expenses of the Agent under this Agreement;
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(b) secondly, in or towards payment of any accrued fees due but unpaid
under Clause 22.3 (Up-front fee);
(c) thirdly, in or towards payment pro rata of any accrued fees due but
unpaid under Clauses 22.1 (Commitment fee) and 22.4 (Utilisation fee);
(d) fourthly, in or towards payment pro rata of any interest due but
unpaid under this Agreement;
(e) fifthly, in or towards payment pro rata of any principal due but
unpaid under this Agreement; and
(f) sixthly, in or towards payment pro rata of any other sum due but
unpaid under this Agreement.
The Agent shall, if so directed by all the Banks, vary the order set out in
paragraphs (c), (d) and (e) above.
12. TAXES
12.1 Gross-up
(a) All payments by an Obligor under the Finance Documents shall be made free
and clear of and without deduction for or on account of any Applicable
Taxes, except to the extent that the Obligor is required by law to make
payment subject to any Applicable Taxes. Subject to paragraph (b) below
and Clauses 12.2 (Qualifying Bank) and 12.3 (U.S. Taxes), if any Applicable
Taxes or amounts in respect of Applicable Taxes must be deducted or
withheld from any amounts payable or paid by an Obligor, or paid or payable
by the Agent or, as the case may be, the US Swingline Agent, to a Finance
Party under the Finance Documents, the Obligor shall pay such additional
amounts as may be necessary to ensure that the relevant Finance Party
receives and retains (after any deduction or withholding in respect of such
additional amounts) a net amount equal to the full amount which it would
have received and so retained had payment not been made subject to
Applicable Taxes.
(b) An Obligor is not obliged to pay any additional amount pursuant to
paragraph (a) above in respect of any deduction which would not have been
required if the relevant Finance Party had obtained any exemption from the
deduction or withholding of Applicable Taxes which it is able to obtain.
(c) Each Obligor will, within thirty days of the later of:
(i) any payment being made in respect of which tax is required by law to
be deducted or withheld; or
(ii) the date on which the Obligor is required to account for the amount
deducted or withheld to the appropriate tax authority,
deliver to the Agent for the relevant Bank evidence (including any relevant
tax receipts) that the amount deducted or withheld has been duly accounted
for to the appropriate tax authority.
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12.2 Qualifying Bank
(a) If:
(i) on the Signing Date, any Bank which is a Party on the Signing Date
is not a Qualifying Bank; or
(ii) after the Signing Date, a Bank ceases to be a Qualifying Bank other
than as a result of the introduction of, suspension, withdrawal or
cancellation of, or change in, or change in the official
interpretation, administration or official application of, any law,
regulation having the force of law, tax treaty or any published
practice or published concession of the U.K. Inland Revenue or any
other relevant taxing or fiscal authority in any jurisdiction with
which the relevant Bank has a connection, occurring after the
Signing Date; or
(iii) on the date of any novation, transfer or assignment under Clause 28
(Changes to the Parties), a New Bank (as such term is defined in
that Clause) is not a Qualifying Bank,
then no Obligor shall be liable to pay to that Bank under Clause 12.1
(Gross-up) any amount in respect of taxes levied or imposed by the U.K. or
any taxing authority of or in the U.K. in excess of the amount it would
have been obliged to pay if that Bank had been a Qualifying Bank on such
date or had not ceased to be a Qualifying Bank.
(b) Each Bank represents to each Obligor that on the date on which it becomes
a Party to this Agreement (and on the date that the Bank designates a new
Facility Office) it is a Qualifying Bank and a U.S. Qualifying Bank. Each
Bank will notify the Parent through the Agent as soon as practicable if it
ceases to be a Qualifying Bank or a U.S. Qualifying Bank.
12.3 U.S. Taxes
(a) No U.S. Borrower shall be required to pay any additional amount pursuant
to Clause 12.1 (Gross-up) in respect of United States federal income,
branch profits or franchise taxes with respect to a sum payable by it
pursuant to this Agreement to a Bank if such Bank:
(i) on the date it becomes a Party to this Agreement or has designated a
new Facility Office either:
(1) in the case of a Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code), is not
entitled to submit a Form 1001 or Form W-8 (relating to such
Bank and claiming a complete exemption from withholding on
interest payable pursuant to this Agreement) or a Form 4224
(relating to interest payable pursuant to this Agreement) (or
any successor forms) with respect to interest payable pursuant
to this Agreement; or
(2) in the case of a Bank which is a United States person, if Clause
12.1 (Gross-up) would apply (other than as a result of the
introduction of, suspension, withdrawal or cancellation of, or
change in the official interpretation, administration or
official application of, any law, regulation having the force
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of law, tax treaty or any published practice or published
concession of the United States Internal Revenue Service or any
other relevant taxing or fiscal authority in any jurisdiction
with which the relevant Bank has a connection, occurring after
the date the Bank becomes a Party to this Agreement or has
designated a new Facility Office); or
(ii) has failed to submit any form, certificate or other information with
respect to such sum payable that it was required to file pursuant to
paragraph (b) below and is entitled to file under applicable law,
and a Bank (or its Facility Office designated in respect of payments made
by a U.S. Borrower) will be a "U.S. Qualifying Bank" for the purposes of
lending to a U.S. Borrower unless it falls within paragraphs (i) or (ii)
above.
(b) If a Bank is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall (if and to the extent that it is entitled
to do so under applicable law) submit as soon as reasonably practicable in
duplicate to each U.S. Borrower duly completed and signed copies of either
Form 1001 (or, in the case of payment made after 31st December, 1998, Form
W-8) of the United States Internal Revenue Service (relating to such Bank
and claiming complete exemption from withholding on all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower) as a result of a tax treaty concluded with the
United States or Form 4224 of the United States Internal Revenue Service
(relating to all amounts (to which such withholding would otherwise apply)
to be received by such Bank, including fees, pursuant to this Agreement in
connection with any borrowing by such U.S. Borrower). Thereafter and from
time to time at the request of a U.S. Borrower, such Bank shall (if and to
the extent that it is entitled to do so under applicable law) submit to
each U.S. Borrower such additional duly completed and signed copies of one
or the other such Forms (or such successor Forms as shall be adopted from
time to time by the relevant United States taxation authorities) or any
additional information as may be required under then current United States
law or regulations to claim the inapplicability of or exemption from United
States withholding taxes on payments in respect of all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower.
(c) If a Bank is a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall, on the date hereof, and thereafter upon
the request of each U.S. Borrower, submit in duplicate to each U.S.
Borrower a certificate to the effect that it is such a United States person
and shall (if and to the extent that it is entitled to do so under
applicable law) upon the request of a U.S. Borrower submit any additional
information that may be necessary to avoid United States withholding taxes
on all payments, including fees, (to which such withholding would otherwise
apply) to be received pursuant to this Agreement in connection with any
borrowing by such U.S. Borrower.
(d) To the extent that any U.S. Borrower becomes aware of the need for any
other such Form or information it will notify the relevant Banks as soon as
reasonably practicable thereafter and such Bank shall (if and to the extent
that it is entitled to do so under applicable law) submit as soon as
practicable in duplicate to each U.S. Borrower duly completed and signed
copies of any such Form or information.
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12.4 Collecting Agents Rules
In relation to the Facilities, each Bank represents to the Agent that, on
the date on which it becomes a Party to this Agreement, it is:
(a) either:
(i) not resident in the United Kingdom for United Kingdom tax
purposes; or
(ii) a bank as defined in section 840A of the Income and Corporation
Taxes Act 1988 and resident in the United Kingdom; and
(b) beneficially entitled to the principal and interest payable by the
Agent to it under this Agreement,
and it shall forthwith notify the Agent if either representation ceases to
be correct.
12.5 Tax Credit
(a) If an Obligor makes a payment pursuant to Clause 12.1 (Gross up) for the
account of any Finance Party and such Finance Party has received or been
granted a credit against, or relief or remission or repayment of, any tax
paid or payable by it (a "Tax Credit") which is attributable to that
payment or the corresponding payment under the Finance Document such
Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or
repayment, pay to the Obligor concerned such amount as is attributable to
such payments and which will leave the Finance Party (after such payment)
in no better or worse position than it would have been if the Obligor
concerned had not been required to make any deduction or withholding.
(b) Nothing in this Clause 12.5 shall interfere with the right of a Finance
Party to arrange its tax affairs in whatever manner it thinks fit and
without limiting the foregoing no Finance Party shall be under any
obligation to claim a Tax Credit or to claim a Tax Credit in priority to
any other claims, relief, credit or deduction available to it (however,
each Bank shall, if practicable, seek any Tax Credit available to it
consequent upon any deductions for tax being made from any payment to it
under Clause 12.1 (Gross up)). No Finance Party shall be obliged to
disclose any confidential information relating to its tax affairs or any
computations in respect thereof.
(c) If any Finance Party makes any payment to an Obligor pursuant to paragraph
(a) above and that Finance Party (acting reasonably) subsequently
determines that the credit, relief, remission or repayment in respect of
which such payment was made was not available to it or has been withdrawn
from it or that it was unable to use such credit, relief, remission or
repayment in full, the Obligor shall reimburse that Finance Party to the
extent (but not exceeding the relevant payment by that Finance Party under
paragraph (a) above) that it determines (acting reasonably) to have been
required to place it in the same after-tax position as it would have been
in if such credit, relief, remission or repayment had been obtained and
fully used and retained by that Finance Party.
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13. MARKET DISRUPTION
13.1 Absence of quotations
If, in relation to any Advance, LIBOR is to be determined in accordance
with paragraph (b) of its definition but a Reference Bank does not supply
an offered rate by 1.00 p.m. on a Rate Fixing Day, the applicable LIBOR
shall, subject to Clause 13.2 (Market disturbance), be determined on the
basis of the quotations of the remaining Reference Banks.
13.2 Market disturbance
Notwithstanding anything to the contrary herein contained, if and each
time that prior to or on a Utilisation Date relative to an Advance to be
made:
(a) LIBOR is to be determined in accordance with paragraph (b) of its
definition and only one or no Reference Bank supplies a rate for the
purposes of determining LIBOR; or
(b) only one or no Reference Bank supplies a rate for the purposes of
determining EBDR; or
(c) the Agent is notified by the Majority Banks that:
(i) deposits in the currency of that Advance are not in the
ordinary course of business available in the London interbank
market for a period equal to the Term or Interest Period
concerned in amounts sufficient to fund their participations in
that Advance; or
(ii) by reason of circumstances affecting the London interbank
market generally, adequate and fair means do not exist for
ascertaining the LIBOR applicable to such Advance during its
Term or Interest Period or LIBOR does not adequately represent
the cost of funding to the Majority Banks; or
(iii) adequate and fair means do not exist for ascertaining EBDR,
the Agent shall promptly give written notice of such determination or
notification to the Parent and to each of the Banks.
13.3 Alternative Rates
If the Agent gives a notice under Clause 13.2 (Market disturbance):
(a) the Parent and the Banks may (through the Agent) agree that, if not
already drawn, the Advances concerned shall not be borrowed or Bills
should not be drawn; or
(b) in the absence of such agreement:
(i) the Term or Interest Period of the Advances concerned shall be
one month;
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(ii) in the case of Clause 13.2(c) (Market disturbance), the
Advances shall be made in euros, in an amount equal to the
Original Euro Amount of the Advance concerned;
(iii) in the case of Bills where Clauses 13.2(b) and (c)(iii) apply,
the relevant Bills shall not be accepted and the relevant Banks
will instead make an Advance in Sterling in accordance with
Clause 6.6 (Advances as an alternative); and
(iv) during the Term or Interest Period of each Advance concerned
(other than an Advance under (b)(iii) above unless Clause
13.2(a) or (c) (Market Disturbance) applies to that Advance)
the rate of interest applicable to the participation of each
Bank in such Advance shall be the Margin plus, if applicable,
MLA Cost plus the rate per annum notified by the Bank concerned
to the Agent before the last day of such Term or Interest
Period to be that which expresses as a percentage rate per
annum the cost to such Bank of funding its participation in
such Advance from whatever sources it may reasonably select
with a view to providing funding at the lowest reasonably
practicable rate.
14. AVAILABILITY OF CURRENCIES
14.1 Revocation of currency
If the currency selected in accordance with Clause 5.2(b) (Completion of
Requests) is an Optional Currency other than Sterling or U.S. Dollars,
and, before 9.30 a.m. on any Rate Fixing Day relating to the start of any
Term, the Agent receives notice from a Bank that:
(a) it is impossible for that Bank to fund its participation in the
relevant Advance in the relevant Optional Currency during its Term in
the ordinary course of business in the London interbank market;
and/or
(b) the use of the proposed Optional Currency would contravene any law or
regulation,
the Agent shall give notice to the relevant Borrower to that effect before
11.00 a.m. on that day. In this event:
(i) the relevant Borrower and the Bank may agree that the Advance will
not be made; or
(ii) in the absence of agreement:
(1) that Bank's participation in the Advance (or, if more than one
Bank is similarly affected, those Banks' participations in the
Advance) shall be treated as a separate Advance denominated in
Sterling; and
(2) in the definition of "LIBOR" (insofar as it applies to that
Advance) in Clause 1.1 (Definitions) there shall be substituted
for the time "11.00 a.m." the time "1.00 p.m.".
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14.2 ECU
(a) If, at any time prior to the Commencement Date:
(i) the ECU ceases to be utilised as the basic accounting unit of the
European Union, (otherwise than as a result of the introduction of
the euro); or
(ii) the ECU ceases to be used in the European Monetary System
(otherwise than as a result of the introduction of the euro); or
(iii) for reasons affecting the market in ECU generally, ECU are not
freely traded between banks in the London interbank market; or
(iv) it becomes illegal or impossible for payments to be made under this
Agreement in ECU,
then:
(1) the Agent shall notify the Parent and the Banks promptly upon
becoming aware of the event;
(2) the Banks shall not be obliged to make any Advances denominated in
ECU on or after the date of that notification; and
(3) subsequently each amount which would otherwise have been payable by
the Borrowers under this Agreement in ECU shall be paid by the
Borrowers in Sterling or another currency acceptable to the
Majority Banks (the "replacement currency") and the amount of the
replacement currency so payable will be determined in accordance
with paragraph (b) below.
(b) (i) The equivalent in the replacement currency of any Advance in ECU
for the purposes of paragraph (a) above will be calculated by the
Agent as the sum of the equivalent in the replacement currency of
the components of the ECU;
(ii) the components of the ECU for this purpose will be the currency
amounts that were components of the ECU when the ECU was most
recently used in the European Monetary System, except that, if the
ECU is being used for the settlement of transactions by public
institutions of or within the European Community, or was so used
after its most recent use in the European Monetary System, the
components will be:
(1) the currency amounts that are components of the ECU as so used
on the day the calculation of the amount of the replacement
currency is to be made (the "day of valuation"); or
(2) the currency amounts that were components of the ECU when it
was most recently so used, as appropriate;
(iii) the rates to be used by the Agent for the above purposes will be
its rates for the purchase in the London foreign exchange market of
the replacement currency with each
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of the components at or about 11.00 am on the day of valuation for
value on the day the relevant payment in the replacement currency
is due; and
(iv) the day of valuation will be the day determined by the Agent for
the purposes of calculating the equivalent in the replacement
currency of any amount in ECU and will be the day two Business Days
before the relevant payment in the replacement currency is due.
(c) Clauses 14.2 (a) and (b) will not apply after the Commencement Date.
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.2 (Exceptions), the Parent shall within five Business
Days of demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or any of its holding companies as a result
of any change in (or change in any official or judicial interpretation of)
or introduction of any law or regulation (including any relating to
taxation or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "increased cost" means:
(i) an additional cost incurred by a Finance Party or any of its holding
companies as a result of it performing, maintaining or funding its
obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party or
any of its holding companies in making, funding or maintaining all
or any advances comprised in a class of advances formed by or
including the Advances made or to be made by it under this Agreement
as is attributable to it making, funding or maintaining its
Advances; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement or on its
capital (or the capital of any of its holding companies); or
(iv) the amount of any payment made by a Finance Party, or the amount of
interest or other return foregone by a Finance Party, calculated by
reference to any amount received or receivable by a Finance Party
from any other Party under this Agreement.
(c) A Finance Party shall notify the Parent promptly upon becoming aware that
it has incurred an increased cost as a result of any law or regulation
referred to in paragraph (a) above and shall provide calculations in
reasonable detail of the basis of such increased cost and its allocation
to this Agreement.
15.2 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the MLA Cost; or
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(b) any part of which is attributable to the delay by a Bank in notifying
the Parent of the increased cost; or
(c) attributable to any tax or amounts in respect of tax which must be
deducted from any amounts payable or paid by a Borrower or paid or
payable by the Agent to a Finance Party under the Finance Documents
(or which would have been payable but for Clause 12.2 (Qualifying
Bank)); or
(d) which is, or is attributable to, any tax on the overall net income,
profits or gains of a Bank or any of its holding companies (or the
overall net income, profits or gains of a division or branch of the
Bank or any of its holding companies); or
(e) resulting from a Finance Party breaching a regulation imposed on it
after the Signing Date by any fiscal, monetary or other regulatory
authority; or
(f) which is attributable to the introduction of the euro (other than an
increased cost which the Majority Banks reasonably determine is being
incurred generally and on a consistent basis by banks (or a class of
banks of which a Bank forms part) transacting euro business in the
London interbank market).
16. ILLEGALITY AND MITIGATION
16.1 Illegality
If it becomes unlawful or contrary to any regulation in any jurisdiction
for a Bank to give effect to any of its obligations as contemplated by
this Agreement or to fund or maintain any Advance, then the Bank may
notify the Parent through the Agent accordingly and thereupon:
(a) each Borrower shall, to the extent required and within the period
allowed by such regulation or, if no period is allowed, forthwith:
(i) repay any Advances made to it by that Bank together with all
other amounts payable by it to that Bank under this Agreement;
and
(ii) perform its obligations under Clause 8.3 (Payment of Bills) in
respect of all outstanding Bills accepted by that Bank as if
that day were the Maturity Date of each of those Bills; and
(b) the Bank's Tranche A Commitment and Tranche B Commitment shall be
cancelled.
16.2 Mitigation
Notwithstanding the provisions of Clauses 12 (Taxes), 15 (Increased Costs)
and 16.1 (Illegality), if in relation to a Bank or (as the case may be)
the Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to in
Clause 12 (Taxes); or
(b) any increased cost of the nature referred to in Clause 15 (Increased
Costs); or
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(c) a notification pursuant to Clause 16.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the Agent, such Bank shall promptly upon becoming
aware of the same notify the Agent thereof (whereupon the Agent shall
promptly notify the Parent) and such Bank shall endeavour to transfer its
participation in the Facility and its rights hereunder and under the
Finance Documents to another financial institution or Facility Office not
affected by the circumstances having the results set out in (a), (b) or
(c) above and shall otherwise take such reasonable steps as may be open to
it to mitigate the effects of such circumstances. No Bank, however, is
required to take any action which would be prejudicial to it or which
would conflict with its general banking policies, or give rise to any
material cost or expense.
17. GUARANTEE
17.1 Guarantee
The Parent irrevocably and unconditionally:
(a) as principal obligor, guarantees to each Finance Party prompt
performance by each Borrower (other than the Parent) of all its
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower does not
pay any amount when due under or in connection with any Finance
Document, the Parent shall upon demand by the Agent given no earlier
than on the expiry of any grace period applicable under Clause 20
(Default) pay that amount as if the Parent instead of the relevant
Borrower were expressed to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by the Parent
is or becomes unenforceable, invalid or illegal.
17.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Borrowers under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any Borrower
or any security for those obligations or otherwise) is made in whole or in
part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of the Parent
under this Clause 17 shall continue as if the discharge or arrangement had
not occurred (but only to the extent that such payment, security or other
disposition is avoided or restored).
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
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17.4 Waiver of defences
The obligations of the Parent under this Clause 17 will not be affected by
any act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 17
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, any Borrower or
other person;
(b) the taking, variation, compromise, exchange, renewal or release of,
or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, any Borrower or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members or status of a Borrower or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to that
Finance Document in this Clause 17 shall include each variation or
replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the Parent's obligations under this
Clause 17 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity; and
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Borrower under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the Parent's
obligations under this Clause 17 be construed as if there were no
such circumstance.
17.5 Immediate recourse
The Parent waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Parent under this Clause 17.
17.6 Appropriations
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Parent shall not be
entitled to the benefit of the same; and
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(b) hold in a suspense account (bearing interest at a commercial rate)
any moneys received from the Parent or on account of the Parent's
liability under this Clause 17, without liability to pay interest on
those moneys.
17.7 Non-competition
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been paid in full, the
Parent shall not, after a claim has been made and by virtue of any payment
or performance by it under this Clause 17:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of the
Parent's liability under this Clause 17; or
(b) claim, rank, prove or vote as a creditor of any Borrower or its
estate in competition with any Finance Party (or any trustee or agent
on its behalf); or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Borrower or exercise any right of
set-off as against any Borrower.
The Parent shall within five Business Days of receipt pay or transfer to
the Agent for the Finance Parties any payment or distribution or benefit
of security received by it contrary to this Clause 17.7.
17.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by any Finance Party.
18. REPRESENTATIONS AND WARRANTIES
18.1 Representations and warranties
Each Obligor represents and warrants that:
(a) due incorporation: it has been duly incorporated in accordance with
the laws of its place of incorporation and is validly existing;
(b) powers and authority: this Agreement is within its powers and the
execution, delivery and performance thereof has been duly authorised;
(c) validity: subject to any qualifications as to matters of law in the
relevant forms of opinion referred to in Schedule 3, this Agreement
constitutes its legal, valid and binding obligation; and
(d) no breach: this Agreement and the transactions hereby contemplated do
not and will not contravene in any material respect (i) its
constitutional documents, (ii) any law or
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regulation in its country of incorporation, or (iii) any loan stock,
debenture, mortgage or other contract in respect of any Borrowings to
which it is party;
(e) no Event of Default: no Event of Default has occurred and is
continuing;
(f) accounts: the most recent audited annual consolidated profit and loss
account and balance sheet of the Parent which have been delivered to
the Agent from time to time together with the notes thereto give a
true and fair view of the results of the operations of the Parent and
its Subsidiaries for the period to which they relate and the
financial position of the Parent and its Subsidiaries as at the date
to which they were prepared;
(g) U.S. Borrowers: no U.S. Borrower is an investment company under the
United States Investment Company Act of 1940, as amended, or is
exempt from the provisions of that Act pursuant to an exemption under
that Act, all of the conditions of which have been and are being
fulfilled;
(h) ERISA: if there is a U.S. Borrower, each member of the Controlled
Group is in compliance with the applicable provisions of law,
including ERISA, the Code and the applicable minimum funding standard
requirements of ERISA and the Code with respect to each Plan except
where such non compliance could reasonably be expected not to have a
material adverse effect on the ability of any Obligor to perform its
obligations under the Finance Documents. No Reportable Event which
has or could reasonably be expected to result in any material
liability has occurred with respect to any Plan. No member of the
Controlled Group has:
(i) sought a waiver of the minimum funding standard under Section
412 of the Code in respect of any Plan; or
(ii) made any amendment to any Plan, which has resulted or could
result in the imposition of a lien or the posting of a bond or
other security under ERISA or the Code; and
(i) Margin Stock: none of the proceeds of any Advance shall be used,
directly or indirectly, and whether immediately, ultimately or
incidentally, for any purpose which entails a violation of, or that
is inconsistent with, the provisions of Regulation U or Regulation X
of the regulations of the Board of Governors of the Federal Reserve
System of the United States. None of the Obligors nor any of their
respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of buying or carrying "margin stock" (within the meaning of
such Regulation U).
18.2 Times for making representations and warranties
The representation and warranties contained in Clause 18.1:
(a) will be made by the Parent and the Original Borrowers on the Signing
Date;
(b) will be deemed to be repeated by each Obligor on each Utilisation
Date and first day of each Interest Period for Term-out Advances with
reference to the facts and circumstances then existing; and
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(c) will be deemed to be made by an Additional Borrower on the date it
executes a Borrower Accession Agreement under Clause 28.4 (Additional
Borrowers) with reference to the facts and circumstances then
existing.
19. UNDERTAKINGS
19.1 Financial Information
The Parent will supply to the Agent in sufficient copies for the Banks:
(a) as soon as practicable after publication (and in any event within the
periods specified below):
(i) in the case of the Parent, the audited consolidated accounts of
the Group for that financial year, within 180 days of the end of
each of its financial years; and
(ii) in the case of any other Borrower, its unaudited (or, if
available, audited) unconsolidated accounts for that financial
year, within 180 days of the end of each of its financial years;
and
(b) as soon as practicable after publication (and in any event within 90
days of the end of the first half of each of its financial years) the
unaudited consolidated interim accounts of the Group for that half-
year; and
(c) all documents despatched by it to its shareholders (or any class of
them) in their capacity as such as soon as practicable after the time
they are so despatched.
19.2 Authorisations
Each Obligor will promptly obtain, maintain and comply with the terms of
any authorisation required under any law or regulation in any applicable
jurisdiction to enable it to perform its obligations under, or for the
validity or enforceability of, this Agreement in all material respects.
19.3 Pari passu ranking
Each Obligor will procure that its obligations under this Agreement do and
will rank at least pari passu with all its other present and future
unsecured and unsubordinated obligations, except for obligations which are
mandatorily preferred by law.
19.4 Negative Pledge
No Obligor will create or permit to subsist any Security Interest over all
or any part of its assets to secure any Borrowings except for any Permitted
Security Interest.
19.5 Notification of Event of Default
Each Obligor will notify the Agent of the occurrence of any Event of
Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of it.
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20. DEFAULT
20.1 Events of Default
Each of the events set out in Clauses 20.2 (Non-Payment) to 20.12 (Material
Adverse Change), both inclusive, is an Event of Default (whether or not
caused by any reason whatsoever outside the control of any Obligor).
20.2 Non-Payment
Any Obligor fails to pay within five Business Days of the Agent giving
notice to the Parent of such non-payment any amount payable by it under
this Agreement in respect of principal or interest at the place at and in
the currency in which it is expressed to be payable.
20.3 Breach of other obligations
Any Obligor fails to comply with any provision of this Agreement (other
than those referred to in Clause 20.2 (Non-Payment)) and, if that default
is capable of remedy, the Obligor fails to cure that default within thirty
days of the Agent giving notice to the Parent requiring remedy.
20.4 Misrepresentation
Any representation or warranty made or repeated in this Agreement is
incorrect in any material respect when made or deemed to be repeated and,
in the case of a matter capable of being remedied, is not remedied within
thirty days of the Agent giving notice to the Parent requiring remedy.
20.5 Cross Acceleration
Any other Borrowings of any Obligor are:
(a) declared due and payable prior to their normal maturity date as a
result of a default (however described) by that Obligor; or
(b) not paid within five Business Days of their due date or, if longer,
within any applicable grace period,
unless, in any such case, the aggregate amount of the Borrowings is less
than euro 50,000,000 or its equivalent or the payment in question is being
contested by the Obligor owing the amount by reason of a bona fide dispute.
20.6 Suspension of payments
Any Obligor is unable to pay its debts as they fall due or suspends making
payments (whether of principal or interest) with respect to all or any
class of its debts as a result of financial difficulties.
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20.7 Insolvency proceedings
A resolution is passed at a meeting of any Obligor for (or to petition
for) its winding up or administration or any Obligor presents any petition
for the winding up or administration of that Obligor or an order for the
winding up or administration of that Obligor is made unless in each case
it is a voluntary solvent winding up, amalgamation, reconstruction or
reorganisation or part of a solvent scheme of arrangement.
20.8 Creditors' arrangements
An Obligor agrees to any kind of composition, rescheduling, scheme,
compromise or arrangement involving that Obligor and its creditors
generally (or any class of them) as a result of financial difficulties.
20.9 Creditors' process
Any administrative or other receiver or any manager of substantially all
of the assets of an Obligor is appointed or an encumbrancer takes
possession of, or any execution or distress is levied against,
substantially all of the assets of any Obligor, in all cases:
(a) in respect of Borrowings in an aggregate principal amount of not less
than euro 50,000,000 or its equivalent; and
(b) which is not paid out or discharged within thirty days after such
appointment, taking of possession or levy.
20.10 Insolvency equivalent
There occurs, in relation to any Obligor, in any country or territory in
which it carries on business or to the jurisdiction of whose courts it or
any of its assets are subject, any event which corresponds in that country
or territory with any of those mentioned in Clauses 20.7 (Insolvency
proceedings), 20.8 (Creditors' arrangements) or 20.9 (Creditors' process)
inclusive above (subject to the same thresholds, grace periods and
exceptions).
20.11 Ownership of Borrowers
Any Borrower ceases to be a wholly-owned Subsidiary of the Parent (unless
the Majority Banks have otherwise agreed).
20.12 Material Adverse Change
There has been a material adverse change in the financial condition of the
Group taken as a whole since the date of the latest annual accounts
delivered to the Agent pursuant to Clause 19.1 (Financial information)
which has had or will have a material adverse effect on the ability of the
Parent to comply with its payment obligations under this Agreement.
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20.13 Acceleration
On and at any time after the occurrence of an Event of Default, provided
that the event is continuing, the Agent may, and shall if so directed by
the Majority Banks, by notice to the Parent:
(a) declare the Advances to be forthwith due and payable together with
interest thereon and all other amounts payable hereunder,
notwithstanding that their respective Maturity Dates may not have
occurred, and the same shall thereupon become due and payable; and/or
(b) declare that each Borrower's obligations under Clause 8.3 (Payment of
Bills) in respect of all outstanding Bills are immediately due and
payable, whereupon they shall become immediately due and payable;
and/or
(c) cancel the Total Commitments (or such part of them as may be
specified in such notice); and/or
(d) demand that all Advances and obligations in respect of Bills be
payable on demand, whereupon they will immediately become payable on
demand.
21. THE AGENTS AND THE JOINT LEAD ARRANGERS
21.1 Appointment and duties of the Agents
Each Finance Party (other than the Agent) irrevocably appoints the Agent
to act as its agent under and in connection with the Finance Documents and
each Swingline Bank appoints the US Swingline Agent to act as its agent in
relation to the US Swingline Facility, and each Finance Party irrevocably
authorises the Agent or, as the case may be, the US Swingline Agent on its
behalf to perform the duties and to exercise the rights, powers and
discretions that are specifically delegated to it under or in connection
with the Finance Documents, together with any other incidental rights,
powers and discretions. The Agent or, as the case may be, the US Swingline
Agent shall have only those duties which are expressly specified in this
Agreement. Those duties are solely of a mechanical and administrative
nature.
21.2 Role of the Joint Lead Arrangers
Except as otherwise provided in this Agreement, the Joint Lead Arrangers
have no obligations of any kind to any other Party under or in connection
with any Finance Document.
21.3 Relationship
The relationship between the Agent or, as the case may be, the US
Swingline Agent and the other Finance Parties is that of agent and
principal only. Nothing in this Agreement constitutes the Agent or, as the
case may be, the US Swingline Agent as trustee or fiduciary for any other
Party or any other person and the Agent or, as the case may be, the US
Swingline Agent need not hold in trust any moneys paid to it for a Party
or be liable to account for interest on those moneys.
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21.4 Majority Banks' directions
The Agent or, as the case may be, the US Swingline Agent will be fully
protected if it acts in accordance with the instructions of the Majority
Banks in connection with the exercise of any right, power or discretion or
any matter not expressly provided for in the Finance Documents. Any such
instructions given by the Majority Banks will be binding on all the Banks.
In the absence of such instructions the Agent or, as the case may be, the
US Swingline Agent may act as it considers to be in the best interests of
all the Banks.
21.5 Delegation
The Agent or, as the case may be, the US Swingline Agent may act under the
Finance Documents through its personnel and agents.
21.6 Responsibility for documentation
Neither the Agent, the US Swingline Agent nor any of the Joint Lead
Arrangers is responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
21.7 Default
(a) The Agent or, as the case may be, the US Swingline Agent is not obliged to
monitor or enquire as to whether or not a Default or a Mandatory
Prepayment Event has occurred. Neither the Agent nor the US Swingline
Agent will be deemed to have knowledge of the occurrence of a Default or a
Mandatory Prepayment Event. However, if the Agent or, as the case may be,
the US Swingline Agent receives notice from a Party referring to this
Agreement, describing the Default or Mandatory Prepayment Event and
stating that the event is a Default or a Mandatory Prepayment Event, it
shall promptly notify the Banks.
(b) The Agent or, as the case may be, the US Swingline Agent may require the
receipt of security satisfactory to it, whether by way of payment in
advance or otherwise, against any liability or loss which it will or may
incur in taking any proceedings or action arising out of or in connection
with any Finance Document before it commences these proceedings or takes
that action.
21.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent or, as the case may be,
the US Swingline Agent will not be liable to any other Party for any
action taken or not taken by it under or in connection with any Finance
Document, unless directly caused by its gross negligence or wilful
misconduct.
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(b) No Party may take any proceedings against any officer, employee or agent
of the Agent or, as the case may be, the US Swingline Agent in respect of
any claim it might have against the Agent or, as the case may be, the US
Swingline Agent or in respect of any act or omission of any kind
(including gross negligence or wilful misconduct) by that officer,
employee or agent in relation to any Finance Document.
21.9 Reliance
The Agent or, as the case may be, the US Swingline Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's or, as the case may
be, the US Swingline Agent's employment and those representing a
Party other than the Agent or, as the case may be, the US Swingline
Agent).
21.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Agent, the US Swingline Agent or a Joint Lead Arranger in connection
with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under the Finance Documents or any
Commitment is in force.
21.11 Information
(a) The Agent or, as the case may be, the US Swingline Agent shall promptly
forward to the person concerned the original or a copy of any document
which is delivered to the Agent or, as the case may be, the US Swingline
Agent by a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clauses 4 (Conditions Precedent) and 28.4
(Additional Borrowers) upon the request of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent or,
as the case may be, the US Swingline Agent is not obliged to review or
check the accuracy or completeness of any document it forwards to another
Party.
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(d) Except as provided above, the Agent or, as the case may be, the US
Swingline Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank with
any credit or other information concerning the financial condition or
affairs of any Obligor or any related entity of any Obligor whether
coming into its possession or that of any of its related entities
before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance with
this Agreement, to request any certificates or other documents from
any Obligor.
21.12 The Agents and the Joint Lead Arrangers individually
(a) If it is also a Bank, each of the Agent, the US Swingline Agent and the
Joint Lead Arrangers has the same rights and powers under this Agreement
as any other Bank and may exercise those rights and powers as though it
were not the Agent, the US Swingline Agent or a Joint Lead Arranger.
(b) Each of the Agent, the US Swingline Agent and the Joint Lead Arrangers
may:
(i) carry on any business with an Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
21.13 Indemnities
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Bank shall forthwith on demand indemnify the Agent or, as the case
may be, the US Swingline Agent for its proportion of any liability or loss
incurred by the Agent or, as the case may be, the US Swingline Agent in
any way relating to or arising out of its acting as the Agent or, as the
case may be, the US Swingline Agent, except to the extent that the
liability or loss arises directly from the Agent's or, as the case may be,
the US Swingline Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which the Original Euro Amount of its
Utilisation(s) bears to the Original Euro Amount of all Utilisation(s)
outstanding on the date of the demand. If, however, no Utilisation(s) are
outstanding on the date of demand, then the proportion will be the
proportion which its Commitment bears to the Total Commitments at the date
of demand or, if the Total Commitments have been cancelled, bore to the
Total Commitments immediately before being cancelled.
(c) The Parent shall within five Business Days of demand reimburse each Bank
for any payment made by it under paragraph (a) above.
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21.14 Compliance
(a) The Agent or, as the case may be, the US Swingline Agent may refrain from
doing anything which might, in its opinion, constitute a breach of any law
or regulation or be otherwise actionable at the suit of any person, and
may do anything which, in its opinion, is necessary or desirable to comply
with any law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent or, as the case may be,
the US Swingline Agent need not disclose any information relating to any
Obligor or any of its related entities if the disclosure might, in the
opinion of the Agent, or, as the case may be, the US Swingline Agent,
constitute a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
21.15 Resignation and removal of Agents
(a) The Majority Banks may, by notice to the Agent or, as the case may be, the
US Swingline Agent, remove either or both of them and replace them with a
successor agent approved by the Parent (such approval not to be
unreasonably withheld).
(b) Notwithstanding its irrevocable appointment, the Agent or, as the case may
be, the US Swingline Agent may resign by giving notice to the Banks and
the Parent, in which case the Agent or, as the case may be, the US
Swingline Agent may forthwith appoint one of its Affiliates as successor
Agent, or as the case may be successor US Swingline Agent or, failing
that, the Majority Banks may, with the prior written consent of the Parent
(such consent not to be unreasonably withheld), appoint a successor Agent
or, as the case may be, successor US Swingline Agent.
(c) If the appointment of a successor Agent or, as the case may be, successor
US Swingline Agent is to be made by the Majority Banks under paragraph (b)
above but they have not, within 30 days after notice of resignation,
appointed a successor Agent or, as the case may be, successor US Swingline
Agent which accepts the appointment, the retiring Agent or, as the case
may be, retiring US Swingline Agent may, with the prior written consent of
the Parent (such consent not to be unreasonably withheld), appoint a
successor Agent or, as the case may be, successor US Swingline Agent.
(d) The resignation or removal of the retiring Agent or, as the case may be,
retiring US Swingline Agent and the appointment of any successor Agent or,
as the case may be, successor US Swingline Agent will both become
effective only upon the successor Agent or, as the case may be, successor
US Swingline Agent notifying all the Parties that it accepts the
appointment and provided the successor Agent or, as the case may be,
successor US Swingline Agent has, if required under paragraphs (a), (b) or
(c) above, been approved by the Parent. On giving the notification and
receiving such approval, the successor Agent or, as the case may be,
successor US Swingline Agent will succeed to the position of the retiring
Agent or, as the case may be, retiring US Swingline Agent and the term
"Agent" or, as the case may be, "US Swingline Agent" will mean the
successor Agent or, as the case may be, successor US Swingline Agent.
(e) The retiring Agent or, as the case may be, retiring US Swingline Agent
shall, at its own cost, make available to the successor Agent or, as the
case may be, successor US Swingline Agent such documents and records and
provide such assistance as the successor Agent or, as the case may be,
successor US Swingline Agent may reasonably request for the purposes of
performing
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its functions as the Agent or, as the case may be, the US Swingline Agent
under this Agreement.
(f) Upon its resignation or removal becoming effective, this Clause 21 shall
continue to benefit the retiring Agent or, as the case may be, retiring US
Swingline Agent in respect of any action taken or not taken by it under or
in connection with the Finance Documents while it was the Agent or, as the
case may be, the US Swingline Agent, and, subject to paragraph (e) above,
it shall have no further obligation under any Finance Document.
21.16 Banks
The Agent or, as the case may be, US Swingline Agent may treat each Bank
as a Bank, entitled to payments under this Agreement and as acting through
its Facility Office(s) until it has received notice from the Bank to the
contrary by not less than five Business Days prior to the relevant
payment.
21.17 Chinese Wall
In acting as Agent, US Swingline Agent or Joint Lead Arranger, the agency
and syndications division of each of the Agent, US Swingline Agent and
Joint Lead Arrangers shall be treated as a separate entity from its other
divisions and departments. Any information acquired at any time by the
Agent, US Swingline Agent or any Joint Lead Arranger otherwise than in the
capacity of Agent, US Swingline Agent or Joint Lead Arranger through its
agency and syndications division (whether as financial advisor to any
member of the Group or otherwise) may be treated as confidential by the
Agent, US Swingline Agent or Joint Lead Arranger and shall not be deemed
to be information possessed by the Agent, US Swingline Agent or Joint Lead
Arranger in its capacity as such. Each Finance Party acknowledges that the
Agent, US Swingline Agent and the Joint Lead Arrangers may, now or in the
future, be in possession of, or provided with, information relating to the
Obligors which has not or will not be provided to the other Finance
Parties. Each Finance Party agrees that, except as expressly provided in
this Agreement, neither the Agent, US Swingline Agent nor the Joint Lead
Arrangers will be under any obligation to provide, or under any liability
for failure to provide, any such information.
22. FEES
22.1 Commitment fee
(a) The Parent shall pay to the Agent for distribution to each Bank pro rata
to the proportion its Commitment bears to the Tranche A Total Commitments
or, as the case may be, Tranche B Commitment bears to the Tranche B Total
Commitments, from time to time a commitment fee at the rate of:
(i) 0.035 per cent. per annum in relation to the Tranche A Commitments;
and
(ii) 0.075 per cent. per annum in relation to the Tranche B Commitments,
on, in each case, any undrawn, uncancelled amount of the Tranche A Total
Commitments or the Tranche B Total Commitments, as the case may be, on
each day.
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(b) The commitment fee is calculated and accrues on a daily basis from the
Signing Date and is payable quarterly in arrear with the first payment due
three months after the Signing Date. Accrued commitment fee is also
payable to the Agent for the relevant Bank(s) on the cancelled amount of
its Tranche A Commitment or, as the case may be, Tranche B Commitment at
the time the cancellation takes effect.
22.2 Agent's fee
The Parent shall pay to the Agent for its own account an agency fee in the
amounts and on the dates agreed in the relevant Fee Letter.
22.3 Up-front fee
The Parent shall pay to the Joint Lead Arrangers an up-front fee, in each
case in the amount and on the dates specified in the relevant Fee Letter.
22.4 Utilisation Fee
(a) The Parent shall pay to the Agent for distribution to each Bank (pro rata
to the proportion the principal amount of its outstanding Tranche B
Advances and Bills drawn under Tranche B bears to the aggregate principal
outstanding Tranche B Advances and Bills drawn under Tranche B in each
currency on each day) a utilisation fee on the aggregate principal amount
each day of all outstanding Utilisations under Tranche B at the rate
specified in Column (1) below if on that day the Original Euro Amount of
all outstanding Utilisations under Tranche B falls within the range set
opposite that rate in Column (2) below:
(1) (2)
UTILISATION FEE ORIGINAL EURO AMOUNT OF ALL
% PER ANNUM OUTSTANDING DRAWN
TRANCHE B ADVANCES
AND TRANCHE B BILLS
Nil 0-2,500,000,000
0.025 Above 2,500,000,000 up to and including
3,500,000,000
0.050 Above 3,500,000,000
(b) Utilisation fee is calculated and, if payable, accrues on a daily basis
and is payable quarterly in arrear in the same currencies as the
Utilisations to which it relates with the first such payment, if any, due
three months after the Signing Date. Accrued utilisation fee, if any, is
also payable to the Agent for the relevant Banks on the Tranche B Final
Maturity Date.
(c) The Parent shall pay an additional utilisation fee of 0.05 per cent. flat
on the principal amount of any Term-out Advance in the same currency as
that Term-out Advance to the Agent for distribution to each Bank (pro rata
to the participation of that Bank in that Term-out Advance). Such amount,
if any, is payable on the Utilisation Date for that Term-out Advance.
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23. EXPENSES
23.1 Initial costs
The Parent shall within five Business Days of demand pay the Joint Lead
Arrangers the amount of all their out-of-pocket costs (including travel,
telecommunication and printing expenses) and other expenses (including the
legal fees of no more than one firm of solicitors and any value added tax
thereon) reasonably incurred by them in connection with:
(a) the arranging, underwriting and primary syndication of the
Facilities; and
(b) the negotiation, preparation, printing and execution of this
Agreement and any other documents referred to in this Agreement.
23.2 Enforcement costs
The Parent shall within five Business Days of demand pay to each Finance
Party the amount of all reasonable costs and expenses (including legal
fees) properly incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.
24. STAMP DUTIES
The Parent shall pay and within five Business Days of demand indemnify
each Finance Party against any liability it incurs in respect of any
stamp, registration and similar tax which is or becomes payable in the
U.K. or the jurisdiction of the place of incorporation of any Borrower
directly attributable to the entry into, performance or enforcement of
this Agreement (other than a Novation Certificate).
25. INDEMNITIES
25.1 Currency indemnity
Subject to Clause 11.4 (Currency), if a Finance Party receives an amount
in respect of an Obligor's liability under the Finance Documents or if
that liability is converted into a claim, proof, judgment or order in a
currency other than the currency (the "contractual currency") in which the
amount is expressed to be payable under the relevant Finance Document:
(a) that Obligor shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(b) if the amount received by that Finance Party, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Obligor concerned shall within five Business Days of demand pay
to that Finance Party an amount in the contractual currency equal to
the deficit; and
(c) the Obligor shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable properly incurred in connection with
any such conversion.
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25.2 Other indemnities
The Parent shall forthwith on demand indemnify each Finance Party against
any loss or liability which that Finance Party directly incurs as a
consequence of:
(a) the occurrence of any Event of Default or Mandatory Prepayment Event;
(b) any payment of principal or an overdue amount being received from any
source otherwise than:
(i) in the case of Tranche A Advances and Tranche B Advances, on its
Maturity Date (and, for the purposes of this paragraph (b), the
Maturity Date of an overdue amount is the last day of each
Designated Term (as defined in Clause 10.4 (Default interest)));
or
(ii) in the case of Term-out Advances, on the last day of its
applicable Interest Period;
(c) (other than by reason of negligence or default by a Finance Party) a
Utilisation not being effected after a Borrower has delivered a
Request for that Utilisation.
The Parent's liability in each case includes any loss or expense (other
than loss of Margin) on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any amount
repaid or prepaid or any Advance or Bill.
26. EVIDENCE AND CALCULATIONS
26.1 Accounts
Accounts maintained by a Finance Party in connection with this Agreement
are, in the absence of manifest error, prima facie evidence of the matters
to which they relate.
26.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount
under this Agreement is, in the absence of manifest error, prima facie
evidence of the matters to which it relates.
26.3 Calculations
Interest (and any MLA Cost) and the fees payable under Clause 22.1
(Commitment fee) and Clause 22.4 (Utilisation fee) accrue from day to day
and are calculated on the basis of the actual number of days elapsed and a
year of 360 days, or, in the case of interest payable on an amount
denominated in Sterling, 365 days. Acceptance commission is calculated on
the basis of the number of days in the relevant Term and a year of 365
days.
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27. AMENDMENTS AND WAIVERS
27.1 Procedure
(a) Subject to Clause 27.2 (Exceptions), any provision of the Finance
Documents may be amended or waived with the agreement of the Parent and
the Majority Banks. The Agent will and is authorised to effect, on behalf
of the Finance Parties, an amendment or waiver to which the Majority Banks
(or all Banks) and the Parent have agreed.
(b) In addition to (a) above, the Agent may agree with the Parent (after
consultation by the Agent with the Banks) that any references in this
Agreement to a Business Day, day-count fraction or other convention
(whether for the calculation of interest, determination of payment dates
or otherwise) shall, with effect from or after the Commencement Date, if
different, be amended to comply with any generally accepted conventions
and market practice from time to time applicable to euro-denominated
obligations in the London interbank market. The agreement of the Agent and
the Parent under this Clause 27.1(b) is not to be unreasonably withheld or
delayed.
(c) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraphs (a) or (b) above, and any such amendment
or waiver shall be binding on all the Parties.
27.2 Exceptions
An amendment or waiver under paragraph 27.1(a) above which relates to:
(a) the definition of "Majority Banks" in Clause 1.1 (Definitions); or
(b) an extension of the date for, or a decrease in an amount or a change
in the currency of, any payment under the Finance Documents; or
(c) an increase in a Bank's Commitment; or
(d) a term of a Finance Document which expressly requires the consent of
each Bank; or
(e) Clause 31 (Pro Rata Sharing) or this Clause 27 (Amendments and
Waivers); or
(f) a change to, or the release of the Parent from any of its obligations
under, Clause 17 (Guarantee),
may not be effected without the consent of each Bank. No amendment may be
effected under this Clause 27 which would increase the obligations, rights
or duties of the Agent without the consent of the Agent.
27.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
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(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
28. CHANGES TO THE PARTIES
28.1 Transfers by Obligors
Subject to Clause 9.5 (Changes to Borrowers), no Obligor may assign,
transfer, novate or dispose of any of, or any interest in, its rights
and/or obligations under this Agreement.
28.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement, but only to
another bank or institution which is a Qualifying Bank and a U.S.
Qualifying Bank (the "New Bank"), and only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the New Bank is another Bank or an Affiliate of a Bank in which
case no such consent is required. Any such assignment, transfer or
novation must be in a minimum aggregate amount of euro 25,000,000 (unless
to an Affiliate or the Agent and the Parent agree otherwise) and, except
in the case of an assignment, transfer or novation to an Affiliate, must
be pro rata between Tranches A and B. In the case of an assignment,
transfer or novation by a Swingline Bank, a portion of that Swingline
Bank's Swingline Commitment must also be assigned, transferred or novated
to the extent necessary (if at all) to ensure that the Swingline Bank's
Swingline Commitment does not exceed its Tranche B Commitment after the
assignment, transfer or novation.
(b) A Bank may at any time sub-participate any of its rights and/or
obligations under this Agreement but only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the sub-participant is another Bank or an Affiliate of a Bank in
which case no consent is required.
(c) The consent of the Parent will be deemed to be given under paragraph (a)
or, as the case may be, (b) above if:
(i) the Existing Bank has given notice to the Parent addressed to the
Treasurer and the Finance Director requesting such consent (which
expressly states that the consent of the Parent is required under
this Clause 28.2, specifies the full name of the New Bank and amount
of the proposed transaction and states that consent will be deemed to
have been given if no response is given by the Parent within the
period specified in this paragraph (c)) and the Parent has not
responded within 10 days; and
(ii) after expiry of that 10 day period the Existing Bank has given a
further notice to the Parent addressed in the same way and in similar
terms (referring to the earlier notice) and the Parent has not
responded within a further five London Business Days (being business
days when banks in London are open for business generally in the
London interbank market).
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(d) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 28.3 (Procedure
for novations); or
(ii) the New Bank confirms to the Agent and the Parent that it undertakes
to be bound by the terms of this Agreement as a Bank in form and
substance satisfactory to the Agent and the Parent. On the transfer
becoming effective in this manner the Existing Bank shall be relieved
of its obligations under this Agreement to the extent that they are
transferred to the New Bank.
(e) On each occasion an Existing Bank assigns, transfers or novates any of its
rights and/or obligations under this Agreement, the New Bank shall, on the
date the assignment, transfer and/or novation takes effect, pay to the
Agent for its own account a fee of (Pounds)750.
(f) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(ii) the collectability of amounts payable under any Finance Document; or
(iii) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
(g) Each New Bank confirms to the Existing Bank and the other Finance Parties
that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Bank in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under this Agreement or any
Commitment is in force.
(h) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the non-
performance by any Obligor of its obligations under this Agreement or
otherwise.
(i) Any reference in this Agreement to a Bank includes a New Bank but excludes
a Bank if no amount is or may be owed to or by it under this Agreement and
its Commitment has been cancelled or reduced to nil.
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28.3 Procedure for novations
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent (with a copy
to the Parent) a duly completed certificate (a "Novation
Certificate"), substantially in the form of Part I of Schedule 6 or
such other form as the Agent and the Parent may agree (which may be
delivered by fax and confirmed by delivery of a hard copy original
but the fax will be effective irrespective of whether confirmation
is received); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate on
its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Bank instead of
the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the Agent or,
if later, the date specified in the Novation Certificate.
28.4 Additional Borrowers
(a) If the Parent wishes one of its Subsidiaries to become an Additional
Borrower, then it may deliver to the Agent the documents listed in Part II
of Schedule 3. Any Additional Borrower must be a wholly owned Subsidiary
of the Parent unless the Majority Banks agree otherwise.
(b) On delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, the Subsidiary concerned will become an
Additional Borrower. However, it may not submit a Request or become a
Substitute Borrower under Clause 9.5(b) (Changes to Borrowers) until the
Agent confirms to the other Finance Parties and the Parent that it has
received all the documents referred to in paragraph (a) above.
(c) Delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, constitutes confirmation:
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(i) by that Subsidiary and the Parent that the representations and
warranties set out in Clause 18.1 (Representations and warranties)
to be made by them on the date of the Borrower Accession Agreement
are correct, as if made by them with reference to the facts and
circumstances then existing; and
(b) by the Parent that such Subsidiary is a wholly owned Subsidiary of
the Parent (unless the Majority Banks have otherwise agreed).
28.5 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Parent) appoint another Bank or an Affiliate of a
Bank which is not a Reference Bank to replace that Reference Bank.
28.6 Change of Facility Office
Each Bank will participate in any Utilisation and receive the benefit of
any payment due to it under this Agreement at its Facility Office. No Bank
may change its Facility Office to a different jurisdiction to that notified
to the Agent and the Parent on or before the date it became a Bank without
the prior written consent of the Parent (such consent not to be
unreasonably withheld or delayed).
28.7 Additional Costs
If, at the time of or immediately after any novation, transfer, sub-
participation or assignment by a Bank or any change of Facility Office,
circumstances exist which, but for this Clause 28.7, would require any
Obligor to pay to the New Bank, transferee or assignee (or, in the case of
a change of Facility Office, the Bank concerned) any amount under this
Agreement in excess of the amount it would otherwise have been required to
pay to that Bank in the absence of that novation, transfer, sub-
participation, assignment or change of Facility Office, no Obligor will be
required to pay that excess.
28.8 Register
The Agent shall keep a register of all the Parties (including in the case
of Banks the details of their Facility Office notified to the Agent from
time to time) and shall supply any other Party (at that Party's expense)
with a copy of the register on request.
29. DISCLOSURE OF INFORMATION
(a) Subject to paragraph (b) below, a Bank may disclose to one of its
Affiliates or any person with whom it is proposing to enter, or has entered
into, any kind of transfer, participation or other agreement in relation to
this Agreement:
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in connection
with any Finance Document,
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provided that a Bank shall not disclose any such information to a person
unless that person has provided to the Parent a confidentiality undertaking
addressed to the Parent in such other form as the Parent may reasonably
require.
(b) If the consent of the Parent is required under Clause 28.2 (Transfers by
Banks) for any proposed assignment, transfer, novation, or sub-
participation then a Bank may only disclose confidential information
referred to in paragraph (a)(ii) above to a proposed New Bank if it has
obtained the Parent's prior written consent (such consent not to be
unreasonably withheld).
30. SET-OFF
After an Event of a Default which is continuing, a Finance Party may set
off any matured obligation owed by an Obligor under this Agreement (to the
extent beneficially owned by that Finance Party) against any obligation
(whether or not matured) owed by that Finance Party to that Obligor,
regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Finance
Party may convert either obligation at a market rate of exchange in its
usual course of business for the purpose of the set-off. If either
obligation is unliquidated or unascertained, the Finance Party may set off
in an amount estimated by it in good faith to be the amount of that
obligation.
31. PRO RATA SHARING
31.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance Party
(the "recovering Finance Party") is discharged by payment, set-off or any
other manner other than through the Agent in accordance with Clause 11
(Payments) (a "recovery"), then:
(a) the recovering Finance Party shall, within three Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of the
amount which the recovering Finance Party would have received had
the recovery been received by the Agent and distributed in
accordance with Clause 11 (Payments);
(c) subject to Clause 31.3 (Exception), the recovering Finance Party
shall, within three Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment by
the Obligor concerned under Clause 11 (Payments); and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above and that Obligor will owe the recovering Finance
Party a debt which is equal to the redistribution, immediately
payable and of the type originally discharged.
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31.2 Reversal of redistribution
If under Clause 31.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or
an amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution in relation
to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid to
that Finance Party. Thereupon the subrogation in Clause 31.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
31.3 Exceptions
(a) A recovering Finance Party need not pay a redistribution to the extent that
it would not, after the payment, have a valid claim against the Obligor
concerned in the amount of the redistribution pursuant to Clause 31.1(e)
(Redistribution).
(b) If a Finance Party has become a recovering Finance Party by virtue of
having started an action or proceeding in any court to enforce it rights,
that recovering Finance Party will not be required to share any portion of
any recovery with any Bank that has the legal right to, but does not join
such action or proceeding or start a separate action or proceeding to
enforce its rights in the same or another court. Any Finance Party
instituting legal proceedings to recover sums owing to it under this
Agreement will, as soon as practicable thereafter, give notice to the Agent
which will, as soon as practicable, give notice to all the other Finance
Parties.
32. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
34. NOTICES
34.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
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(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a non-
working day or after business hours in the place of receipt will only be
deemed to be given on the next working day in that place. Facsimile
requests are to be confirmed by the relevant Borrower in writing (but may
be relied upon by the Agent and the Banks irrespective of receipt of such
confirmation).
34.2 Addresses for notices
(a) The address and facsimile number of each Party (other than the Agent, the
US Swingline Agent and the Parent) for all notices under or in connection
with this Agreement are:
(i) that notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent by
not less than five Business Days' notice.
(b) The address and facsimile numbers of the Agent are:
HSBC Investment Bank plc
Vinters Place
68 Upper Thames Street
London EC4V 3BJ
Contact: Specialised Financing Support
Facsimile: (0171) 336 9293
(0171) 336 9302,
or such other as the Agent may notify to the other Parties by not less than
five Business Days' notice.
(c) The address and facsimile numbers of the US Swingline Agent are:
Marine Midland Bank
26th Floor
One Marine Midland Center
Buffalo, NY 14203
U.S.A.
Contact: Lynn M. Griffin
Telephone: 001 716 841 1362
Facsimile: 001 716 841 2325,
- --------------------------------------------------------------------------------
<PAGE>
66
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or such other as the US Swingline Agent may notify to the other Parties by
not less than five New York Business Days' notice.
(d) The address and facsimile numbers of the Parent are:
One Bruton Street
London W1X 8AQ
Attention: The Secretary
Facsimile: 0171 493 1974,
or such other as the Parent may notify to the other Parties by not less
than five Business Days' notice.
(e) The Agent shall, promptly upon request from any Party, give to that Party
the address or facsimile number of any other Party applicable at the time
for the purposes of this Clause.
35. LANGUAGE
(a) Any notice given under or in connection with any Finance Document shall be
in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English translation
and, in this case, the English translation shall prevail unless the
document is a statutory or other official document.
36. JURISDICTION
36.1 Submission
For the benefit of each Finance Party, each Obligor agrees that the courts
of England have jurisdiction to settle any disputes in connection with any
Finance Document and accordingly submits to the jurisdiction of the English
courts.
36.2 Service of process
Without prejudice to any other mode of service, each Obligor (other than an
Obligor incorporated in England and Wales):
(a) irrevocably appoints the Parent as its agent for service of process
relating to any proceedings before the English courts in connection
with any Finance Document;
(b) agrees that failure by a process agent to notify the Obligor of the
process will not invalidate the proceedings concerned; and
- --------------------------------------------------------------------------------
<PAGE>
67
- --------------------------------------------------------------------------------
(c) consents to the service of process relating to any such proceedings
by prepaid posting of a copy of the process to its address for the
time being applying under Clause 34.2 (Addresses for notices).
36.3 Forum convenience and enforcement abroad
Each Obligor:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order of an English court in connection
with a Finance Document is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
36.4 Non-exclusivity
Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
37. GOVERNING LAW
This Agreement is governed by English law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
- --------------------------------------------------------------------------------
<PAGE>
68
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SCHEDULE 1
PART I
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Column 1 Column 2
Bank Tranche A Tranche B
Commitments Commitments
euro euro
<S> <C> <C> <C> <C>
Banca Commerciale Italiana S.p.A., London Branch 65,250,000 195,750,000
Barclays Bank PLC 65,250,000 195,750,000
Banque Nationale de Paris 65,000,000 195,000,000
The Chase Manhattan Bank 65,000,000 195,000,000
Midland Bank plc 65,000,000 195,000,000
Morgan Guaranty Trust Company of New York 65,000,000 195,000,000
Swiss Bank Corporation 65,000,000 195,000,000
Westdeutsche Landesbank Girozentrale 65,000,000 195,000,000
Banca Nazionale del Lavoro S.p.A., London Branch 62,500,000 187,500,000
Bayerische Landesbank Girozentrale London Branch 62,500,000 187,500,000
Citibank, N.A. 62,500,000 187,500,000
Credit Suisse First Boston 62,500,000 187,500,000
Den Danske Bank Aktieselskab 62,500,000 187,500,000
Deutsche Bank AG London 62,500,000 187,500,000
National Westminster Bank Plc 62,500,000 187,500,000
Australia and New Zealand Banking Group Limited (acting 60,500,000 181,500,000
through its ANZ Investment Bank division)
Banco Central Hispanoamericano, S.A. London Branch 60,500,000 181,500,000
Commerzbank Aktiengesellschaft, London Branch 60,500,000 181,500,000
The Royal Bank of Scotland plc 60,500,000 181,500,000
L-Bank 50,000,000 150,000,000
ABN AMRO Bank N.V. London Branch 31,250,000 93,750,000
Banca di Roma S.p.A. - London Branch 31,250,000 93,750,000
Banca Monte dei Paschi di Siena SpA 31,250,000 93,750,000
Banco Bilbao Vizcaya 31,250,000 93,750,000
The Bank of Tokyo-Mitsubishi, Ltd. 31,250,000 93,750,000
CARIPLO - Cassa di Risparmio delle Provincie Lombarde 31,250,000 93,750,000
S.p.A., London Branch
Credito Italiano SpA 31,250,000 93,750,000
Istituto Bancario San Paolo di Torino S.p.A. 31,250,000 93,750,000
----------------- -----------------
euro 1,500,000,000 euro 4,500,000,000
----------------- -----------------
</TABLE>
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<PAGE>
69
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SCHEDULE 1
PART II
SWINGLINE BANKS AND SWINGLINE COMMITMENTS
Swingline Bank* Swingline Commitments
euro
Banca Commerciale Italiana S.p.A., London Branch 125,000,000
Barclays Bank PLC 125,000,000
Banque Nationale de Paris 125,000,000
The Chase Manhattan Bank 125,000,000
Midland Bank plc 125,000,000
Morgan Guaranty Trust Company of New York 125,000,000
Swiss Bank Corporation 125,000,000
Westdeutsche Landesbank Girozentrale 125,000,000
--------------------
Total euro 1,000,000,000
--------------------
- ---------------------
* in each case lending through its Facility Office in the United States
notified to the Agent for the purposes of US Swingline Advances.
- --------------------------------------------------------------------------------
<PAGE>
70
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SCHEDULE 2
ORIGINAL BORROWERS
(if any)
- --------------------------------------------------------------------------------
<PAGE>
71
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SCHEDULE 3
CONDITIONS PRECEDENT DOCUMENTS
PART I
TO BE DELIVERED BEFORE THE FIRST ADVANCE
1. A copy (certified as a true copy by a director or officer of an Obligor) of
the memorandum and articles of association and certificate of incorporation
(or equivalent constitutional documents) of each Obligor.
2. A copy (certified as a true copy by a director or officer of an Obligor) of
a resolution of the board of directors of each Obligor:
(a) approving the terms of, and the transactions contemplated by, the
Finance Documents and resolving that it execute and, where applicable,
deliver the Finance Documents to which it is a party;
(b) authorising a specified person or persons to execute and, where
applicable, deliver the Finance Documents to which it is a party on
its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all documents and notices
(including Requests) to be signed and/or despatched by it under or in
connection with the Finance Documents.
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above.
4. A favourable legal opinion of Clifford Chance in relation to English law.
- --------------------------------------------------------------------------------
<PAGE>
72
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PART II
TO BE DELIVERED BY AN ADDITIONAL BORROWER
1. A Borrower Accession Agreement, duly executed by the Additional Borrower
and the Parent.
2. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of the memorandum and articles of association and certificate of
incorporation (or equivalent constitutional documents) of the Additional
Borrower.
3. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of a resolution of the board of directors of the Additional
Borrower:
(a) approving the terms of, and the transactions contemplated by, the
Borrower Accession Agreement and resolving that it execute the
Borrower Accession Agreement;
(b) authorising a specified person or persons to execute the Borrower
Accession Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all other documents and
notices (including Requests) to be signed and/or despatched by it
under or in connection with this Agreement.
4. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 3 above.
5. A favourable legal opinion from lawyers approved by the Agent and the
Parent in the place of incorporation of the Additional Borrower, addressed
to the Finance Parties.
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<PAGE>
73
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SCHEDULE 4
CALCULATION OF THE MLA COST
(a) The MLA Cost for an Advance denominated in Sterling is calculated in
accordance with the following formula:
BY + L(Y-X) + S(Y-Z) % per annum = MLA Cost
--------------------
100-(B + S)
where on the day of application of the formula:
B is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;
Y is the arithmetic mean of the respective rates at which Sterling
deposits are offered by each Reference Bank to leading banks in the
London interbank market at or about 11.00 a.m. on that day for the
relevant period;
L is the arithmetic mean of the respective percentage of eligible
liabilities which the Bank of England requires each Reference Bank to
maintain as secured money with members of the London Discount Market
Association and/or as secured call money with certain money brokers
and gilt-edged primary market makers;
X is the arithmetic mean of the respective rates at which secured Sterling
deposits in the relevant amount may be placed by each Reference Bank
with members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged primary
market makers at or about 11.00 a.m. on that day for the relevant
period;
S is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on special
deposits.
(b) For the purposes of this Schedule 4:
(i) "eligible liabilities" and "special deposits" have the meanings given
to them at the time of application of the formula by the Bank of
England;
(ii) "relevant period" in relation to an Advance, means:
(A) if its Term or Interest Period is three months or less, its Term
or Interest Period; or
- --------------------------------------------------------------------------------
<PAGE>
74
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(B) if its Term or Interest Period is more than three months, each
successive period of three months and any necessary shorter
period comprised in that Term or Interest Period.
(c) In the application of the formula, B, Y, L, X, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the Term or Interest Period of the relevant Advance.
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded upward to four decimal places.
(e) If a change in circumstances has rendered, or will render, the formula
inappropriate, the Agent (after consultation with the Reference Banks and
the Parent) shall notify the Parent of the manner in which the MLA Cost
will subsequently be calculated so as to leave the Obligors and the Banks,
so far as is practicable, in no better or worse a position than they were
in prior to that change. The manner of calculation so notified by the
Agent shall, in the absence of manifest error, be binding on all the
Parties.
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<PAGE>
75
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SCHEDULE 5
FORM OF REQUEST
To: HSBC Investment Bank plc as Agent/Marine Midland Bank as US Swingline
Agent*
From: [BORROWER] Date: [ ]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated 25th March, 1998
We wish to utilise Tranche A* and/or*/Tranche B* by way of Advance(s)* and/or
Bills and/or Swingline Advances as follows:
(a) Utilisation Date: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(b) Requested Amount (including currency): Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(c) Term*: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(d) Payment Instructions: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(e) Initial Interest Period
(for Term-out Advances only)*
(f) Maturity Date
(for Term-out Advances only)* Tranche A: [ ]*
(g) Clausing (for Bills only)* Tranche A: [ ]*
Tranche B: [ ]*
We confirm that no Default has occurred which is continuing and the
representations and warranties in Clause 18 (Representations and Warranties) to
be repeated in accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately after the
Utilisation referred to above except in all cases to the extent waived by the
Majority Banks.
By:
[BORROWER]
Authorised Signatory
- -----------------------------------
* Delete as appropriate.
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<PAGE>
76
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SCHEDULE 6
FORMS OF ACCESSION DOCUMENTS
PART I
NOVATION CERTIFICATE
To: HSBC Investment Bank plc as Agent and on behalf of the Obligors
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
The General Electric Company, p.l.c. - euro 6,000,000,000 Syndicated Credit
Agreement dated 25th March, 1998
We refer to Clause 28.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New Bank")
agree to the Existing Bank and the New Bank novating all the Existing
Bank's rights and obligations referred to in the Schedule in accordance
with Clause 28.3 (Procedure for novations).
2. The specified date for the purposes of Clause 28.3(c) (Procedure for
novations) is [date of novation].
3. The prior written consent of The General Electric Company, p.l.c. [is not
required]* [has been obtained]* in accordance with Clause 28 (Changes to
the Parties).
4. The Facility Office and address for notices of the New Bank for the
purposes of Clause 34.2 (Addresses for notices) are set out in the
Schedule.
5. This Novation Certificate is governed by English law.
- ----------------------------------
* Delete as appropriate.
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<PAGE>
77
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THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] [ ]
By: By: By:
Date: Date: Date:
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<PAGE>
78
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PART II
BORROWER ACCESSION AGREEMENT
To: HSBC Investment Bank plc as Agent
From: [PROPOSED BORROWER] and The General Electric Company, p.l.c.
[Date]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated
25th March, 1998 (the "Credit Agreement")
We refer to Clause 28.4 (Additional Borrowers).
[Name of company] of [address] (Registered no. [ ], if any) (the "Proposed
Borrower") is a Subsidiary of The General Electric Company, p.l.c. as required
by the Credit Agreement and agrees to become an Additional Borrower and to be
bound by the terms of the Credit Agreement as an Additional Borrower in
accordance with Clause 28.4 (Additional Borrowers).
The address for notices of the Proposed Borrower for the purposes of Clause 34.2
(Addresses for notices) is:
[
]
This Agreement is governed by English law.
By:
[PROPOSED BORROWER]
Authorised Signatory
By:
THE GENERAL ELECTRIC COMPANY, P.L.C.
Authorised Signatory
- --------------------------------------------------------------------------------
<PAGE>
79
- --------------------------------------------------------------------------------
PART III
FORM OF BORROWER NOVATION AGREEMENT
A NOVATION AGREEMENT dated [ ]
BETWEEN:
(1) [ ] (the "Existing Borrower");
(2) [ ] (the "Substitute Borrower");
(3) THE GENERAL ELECTRIC COMPANY, p.l.c. on behalf of itself and each other
Borrower (as such capitalised term is defined in the Credit Agreement
referred to below) (the "Parent"); and
(4) HSBC INVESTMENT BANK PLC as agent (the "Agent") on behalf of itself and the
Banks (as defined in the Credit Agreement referred to below),
and is supplemental to the Syndicated Credit Agreement dated [ ], 1998
(the "Credit Agreement") and made between The General Electric Company, p.l.c.,
the subsidiaries of the Parent listed in Schedule 2 thereto, the financial
institutions listed in Schedule 1 thereto, and the Agent.
IT IS AGREED:
1. Novation
In consideration of a payment made by the Existing Borrower to the
Substitute Borrower and the release of the Existing Borrower from its
obligations and liabilities (actual or contingent) specified in the
Schedule hereto under the Credit Agreement and with effect on and from
[ ] (the "Effective Date") the Substitute Borrower hereby undertakes
to observe and perform all the obligations and liabilities (actual or
contingent) of the Existing Borrower under the Credit Agreement in respect
of the Advances and Bills specified in the Schedule.
2. Integration
This Novation Agreement shall be read as one with the Credit Agreement so
that any reference therein to "this Agreement", "hereunder" and similar
shall include and be deemed to include this Novation Agreement.
3. Continuing Liability
The Parent acknowledges and confirms that its obligations under Clause 17
of the Credit Agreement apply to the obligations and liabilities assumed by
the Substitute Borrower hereunder.
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<PAGE>
80
- --------------------------------------------------------------------------------
SCHEDULE
[
]
IN WITNESS whereof the parties hereto have caused this Novation Agreement
to be duly executed on the date first written above.
.........................................
For and on behalf of
[The Existing Borrower]
.........................................
For and on behalf of
[The Substitute Borrower]
.........................................
For and on behalf of the
Parent
.........................................
For and on behalf of each
Bank and the Agent
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<PAGE>
81
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SCHEDULE 7
FORM OF BILL
Face of Bill
No. for (Pounds) ..............
....................19....
To
On.................19.. pay against this Bill of Exchange to our order the sum
of ............................... for value received against [ ].
Accepted by:
For and on behalf of For and on behalf of
[ACCEPTING BANK] [BORROWER]
........................... ...........................
Authorised signatory Authorised signatory
Reverse of Bill
For and on behalf of
[BORROWER]
...........................
Authorised signatory
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<PAGE>
82
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SIGNATORIES
Parent
THE GENERAL ELECTRIC COMPANY, p.l.c.
By: John Mayo
Original Borrowers
[if any]
Joint Lead Arrangers
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
BARCLAYS CAPITAL
By: G.M. Rody
CHASE MANHATTAN plc
By: Janin Campos
MIDLAND BANK plc
By: Doug Lack
J. P. MORGAN SECURITIES LTD.
By: S. Juyoung Shin
SBC WARBURG DILLON READ
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
- --------------------------------------------------------------------------------
<PAGE>
83
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Agent
HSBC INVESTMENT BANK PLC
By: David Stent
US Swingline Agent
MARINE MIDLAND BANK
By: David Stent
Banks
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BARCLAYS BANK PLC
By: G.M. Rody
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
THE CHASE MANHATTAN BANK
By: Sinead English
MIDLAND BANK plc
By: D.G. Lack
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: S. Juyoung Shin
SWISS BANK CORPORATION
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
BANCA NAZIONALE DEL LAVORO S.p.A., LONDON BRANCH
By: L.F. Wybraniec D.A. Rosser
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<PAGE>
84
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BAYERISCHE LANDESBANK GIROZENTRALE LONDON BRANCH
By: Kevin Buck
CITIBANK, N.A.
By: J.W.G. Parsons
CREDIT SUISSE FIRST BOSTON
By: L. Smith-Morgan Andrew Nimmo
DEN DANSKE BANK AKTIESELSKAB
By: S. Juyoung Shin
DEUTSCHE BANK AG LONDON
By: B.D. Stevenson R.H. Sedlacek
NATIONAL WESTMINSTER BANK Plc
By: A.J. Gill
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED (ACTING THROUGH ITS ANZ
INVESTMENT BANK DIVISION)
By: R.J. Heyhoe
BANCO CENTRAL HISPANOAMERICANO,
S.A. LONDON BRANCH
By: H.J.W. Bright J.M. Inches
COMMERZBANK AKTIENGESELLSCHAFT,
LONDON BRANCH
By: Bernd Meist James Weber
THE ROYAL BANK OF SCOTLAND plc
By: Dean White
L-BANK
By: S. Juyoung Shin
- --------------------------------------------------------------------------------
<PAGE>
85
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ABN AMRO BANK N.V. LONDON BRANCH
By: S. Juyoung Shin
BANCA DI ROMA S.p.A. - LONDON BRANCH
By: J.G. Connolly Raymond Pandolfino
BANCA MONTE DEI PASCHI DI SIENA SpA
By: G.N.H. Furzland Roberto Boccanera
BANCO BILBAO VIZCAYA
By: S. Juyoung Shin
BANK OF TOKYO-MITSUBISHI, LTD
By: C.B. Griffiths
CARIPLO - CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.p.A., LONDON BRANCH
By: L.K. Barnes
CREDITO ITALIANO SpA
By: Robert G.A. Sanderson
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.p.A.
By: S. Juyoung Shin
- --------------------------------------------------------------------------------
<PAGE>
Exhibit (c)(1)
<PAGE>
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
Among
GEC
INCORPORATED
GEC
ACQUISITION CORP.
and
FORE SYSTEMS, INC.
Dated as of April 26, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
<S> <C>
SECTION 1.01. Definitions.................................................................................... 2
SECTION 1.02. Rules of Construction.......................................................................... 2
ARTICLE II
The Offer
SECTION 2.01. The Offer ................................................................................ 2
SECTION 2.02. Company Actions................................................................................ 4
SECTION 2.03. Stockholder Lists.............................................................................. 5
SECTION 2.04. Composition of the Board of
Directors; Section 14(f)..................................................................... 5
ARTICLE III
The Merger
SECTION 3.01. The Merger..................................................................................... 7
SECTION 3.02. Effective Time ................................................................................ 7
SECTION 3.03. Effect of the Merger........................................................................... 7
SECTION 3.04. Certificate of
Incorporation; By-laws....................................................................... 7
SECTION 3.05. Directors and Officers......................................................................... 8
SECTION 3.06. Stock Options ................................................................................ 8
SECTION 3.07. Stockholders' Meeting.......................................................................... 9
ARTICLE IV
Conversion of Securities; Exchange of Certificates
SECTION 4.01. Merger Consideration;
Conversion and
Cancellation of Securities...................................................... 10
SECTION 4.02. Exchange of Certificates....................................................................... 11
SECTION 4.03. Dissenting Shares.............................................................................. 13
SECTION 4.04. Closing ................................................................................ 13
SECTION 4.05. Stock Transfer Books........................................................................... 13
</TABLE>
<PAGE>
<TABLE>
<CAPTION> Contents, p. 2
Page
----
ARTICLE V
Representations and Warranties of the Company
---------------------------------------------
<S> <C>
SECTION 5.01. Organization and
Qualification;
Subsidiaries................................................................................ 14
SECTION 5.02. Certificate of Incorporation
and By-laws................................................................................. 14
SECTION 5.03. Capitalization................................................................................ 15
SECTION 5.04. Authorization of Agreement.................................................................... 16
SECTION 5.05. Approvals..................................................................................... 17
SECTION 5.06. No Violation.................................................................................. 18
SECTION 5.07. Reports and Financial
Statements.................................................................................. 18
SECTION 5.08. No Undisclosed Liabilities.................................................................... 19
SECTION 5.09. No Material Adverse Effect;
Conduct..................................................................................... 20
SECTION 5.10. Schedule 14D-9; Offer
Documents; Proxy Statement.................................................................. 21
SECTION 5.11. Properties and Assets......................................................................... 22
SECTION 5.12. Material Contracts............................................................................ 22
SECTION 5.13. Litigation; Compliance with
Laws........................................................................................ 23
SECTION 5.14. Employee Benefit Plans........................................................................ 23
SECTION 5.15. Labor Matters................................................................................. 26
SECTION 5.16. Taxes......................................................................................... 26
SECTION 5.17. Environmental Matters......................................................................... 28
SECTION 5.18. Intellectual Property......................................................................... 29
SECTION 5.19. Brokers....................................................................................... 33
SECTION 5.20. Opinion of Financial Advisor.................................................................. 33
SECTION 5.21. Year 2000..................................................................................... 33
SECTION 5.22. Insurance..................................................................................... 34
ARTICLE VI
Representations and Warranties of the Parent Companies
------------------------------------------------------
SECTION 6.01. Organization and
Qualification;
Subsidiaries................................................................................ 34
SECTION 6.02. Authorization of Agreement.................................................................... 34
SECTION 6.03. Approvals..................................................................................... 35
SECTION 6.04. No Violation.................................................................................. 35
SECTION 6.05. Proxy Statement; Schedule
14D-9....................................................................................... 36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Contents, p. 3
Page
----
<S> <C>
SECTION 6.06. Sufficient Funds.............................................................................. 36
SECTION 6.07. Brokers....................................................................................... 37
ARTICLE VII
Covenants
---------
SECTION 7.01. Conduct of Business of the
Company. .................................................................................. 37
SECTION 7.02. Prohibited Actions by the
Company.................................................................................... 37
SECTION 7.03. No Solicitation............................................................................... 40
SECTION 7.04. Access to Information......................................................................... 44
SECTION 7.05. Confidentiality Agreement..................................................................... 44
SECTION 7.06. Reasonable Efforts............................................................................ 45
SECTION 7.07. Public Announcements.......................................................................... 45
SECTION 7.08. Employee Agreements........................................................................... 45
SECTION 7.09. State Takeover Statutes....................................................................... 46
SECTION 7.10. Employee Benefit Plans........................................................................ 46
SECTION 7.11. Indemnification of Directors
and Officers............................................................................... 47
SECTION 7.12. Event Notices and Other
Actions.................................................................................... 48
SECTION 7.13. Third Party Standstill
Agreements; Tortious
Interference............................................................................... 49
ARTICLE VIII
Closing Conditions
------------------
ARTICLE IX
Termination, Amendment and Waiver
---------------------------------
SECTION 9.01. Termination................................................................................... 50
SECTION 9.02. Effect of Termination......................................................................... 52
SECTION 9.03. Amendment..................................................................................... 52
SECTION 9.04. Extension; Waiver............................................................................. 52
SECTION 9.05. Fees, Expenses and Other
Payments................................................................................... 52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Contents, p. 4
Page
----
ARTICLE X
General Provisions
------------------
<S> <C>
SECTION 10.01. Nonsurvival of
Representations,
Warranties and Agreements.....................................................................54
SECTION 10.02. Notices..........................................................................................54
SECTION 10.03. Headings.........................................................................................55
SECTION 10.04. Severability.....................................................................................55
SECTION 10.05. Entire Agreement.................................................................................55
SECTION 10.06. Assignment.......................................................................................56
SECTION 10.07. Parties in Interest..............................................................................56
SECTION 10.08. Failure or Indulgence Not
Waiver; Remedies
Cumulative....................................................................................56
SECTION 10.09. GOVERNING LAW ...................................................................................56
SECTION 10.10. Enforcement......................................................................................56
SECTION 10.11. Counterparts.....................................................................................57
</TABLE>
ANNEXES
Annex A - Schedule of Defined Terms
Annex B - Conditions of the Offer
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of April 26, 1999
(this "Agreement"), among GEC INCORPORATED, a Delaware
---------
corporation ("Parent"), GEC ACQUISITION CORP., a Delaware
------
corporation and a wholly owned subsidiary of PARENT
("Purchaser"), and FORE SYSTEMS, INC., a Delaware corporation
---------
(the "Company"). Parent and Purchaser are sometimes referred to
-------
herein as the "Parent Companies."
----------------
WHEREAS the respective Boards of Directors of the Company, Parent, and
Purchaser have unanimously approved the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement.
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the issued and
-----
outstanding shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") at a price per share of Company Common Stock of $35.00,
- ----------------------
net to the seller in cash, upon the terms and subject to the conditions set
forth in this Agreement.
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware, Purchaser will merge with and into the Company and the Company will be
the Surviving Corporation (as defined below).
WHEREAS, simultaneously with the delivery and execution of this
Agreement and as an inducement to Parent and Purchaser to enter into this
Agreement, the Company and Purchaser are entering into a stock option agreement
dated the date hereof (the "Option Agreement").
----------------
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent and Purchaser, on the one hand, and certain stockholders of
the Company are entering into an agreement dated the date hereof (the
"Stockholders Agreement") pursuant to which such stockholders have agreed to
- -----------------------
take specified actions in furtherance of the transactions contemplated by this
Agreement.
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. Certain capitalized and other terms used
------------
in this Agreement are defined in Annex A hereto and are used herein with the
meanings ascribed to them therein.
SECTION 1.02. Rules of Construction. When a reference is made in
----------------------
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Unless the context otherwise requires, as
used in this Agreement: (a) a term has the meaning ascribed to it; (b) "or" is
not exclusive; (c) whenever the words "include," "includes" or "including" are
used, they shall be deemed to be followed by the words "without limitation"; and
(d) words in the singular include the plural and words in the plural include the
singular.
ARTICLE II
The Offer
---------
SECTION 2.01. The Offer. (a) Subject to the conditions of this
----------
Agreement including those set forth in Annex B hereto, as promptly as
practicable but in no event later than five Business Days after the date of this
Agreement, Purchaser shall, and Parent shall cause Purchaser to, commence the
Offer within the meaning of the applicable Regulations of the SEC. The
obligation of Purchaser to, and of Parent to cause Purchaser to, commence the
Offer or accept for payment, or pay for, any shares of Company Common Stock
tendered pursuant to the Offer shall be subject to the conditions set forth in
Annex B (any of which may be waived by Purchaser in its sole and reasonable
judgment provided that, without the consent of the Company, Purchaser may not
--------
waive the Minimum Tender Condition) and to the other provisions of this
Agreement. The initial expiration date of the Offer shall be the 20th Business
Day following the commencement of the Offer (determined using Rule 14d-1(e)(6)
under the Exchange Act). Purchaser expressly reserves the right to modify the
terms of the Offer, except that, without the consent of the Company, Purchaser
shall not (i) reduce
<PAGE>
3
the number of shares of Company Common Stock subject to the
Offer, (ii) reduce the price per share of Company Common Stock to be paid
pursuant to the Offer, (iii) modify or add to the conditions set forth in Annex
B in any manner adverse to the holders of shares of Company Common Stock, (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer or (vi) otherwise amend the Offer in any
manner adverse to the holders of shares of Company Common Stock. Notwithstanding
the foregoing, Purchaser may, without the consent of the Company, (i) extend the
Offer, if at the scheduled expiration date of the Offer any of the conditions to
Purchaser's obligation to purchase shares of Company Common Stock are not
satisfied, until such time as such conditions are satisfied or waived; provided,
--------
however, that the expiration date shall not be later than the Termination Date
- -------
as a result of such extension, (ii) extend the Offer for a period of not more
than 10 Business Days beyond the expiration date that would otherwise be
permitted under clause (i) of this sentence, if on the date of such extension
(x) less than 90% of the Fully Diluted Shares have been validly tendered and not
properly withdrawn pursuant to the Offer and (y) Purchaser has permanently
waived all of the conditions to the Offer set forth in Annex B (other than
conditions that are not legally capable of being satisfied and conditions that
have not been satisfied because of the willful or intentional action or inaction
of the Company), and (iii) extend the Offer for any period required by any
Regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer. If, on any scheduled expiration date of the Offer, any
of the conditions set forth in Annex B have not been satisfied or waived and
such unsatisfied conditions are still capable of being satisfied, the Company
may require Purchaser to extend the expiration date of the Offer for a period of
not more than 10 Business Days; provided, however, that Purchaser shall not be
-------- -------
required to extend the expiration date later than the Termination Date. On the
terms and subject to the conditions of the Offer and this Agreement, Purchaser
shall, and Parent shall cause Purchaser to, pay for all shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Offer that Purchaser
becomes obligated to purchase pursuant to the Offer as soon as practicable after
the expiration of the Offer.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent and Purchaser shall not be required to commence the Offer in
any jurisdiction other than the United States of America.
<PAGE>
4
(c) On the date of the commencement of the Offer, Purchaser shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer ("Schedule 14D-1") which will contain an offer to purchase and form of the
--------------
related letter of transmittal (the Schedule 14D-1 and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, collectively, the "Offer Documents"). Parent, Purchaser,
---------------
and the Company each agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Parent and Purchaser further
agree to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and be disseminated to holders of shares of Company
Common Stock, in each case, as and to the extent required by applicable federal
securities Laws. Parent and Purchaser agree to give the Company and its counsel
a reasonable opportunity to review and comment on the Offer Documents prior to
the filing of the Offer Documents with the SEC. Purchaser agrees to provide the
Company and its counsel in writing with any comments Purchaser and its counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt thereof.
SECTION 2.02. Company Actions. The Company hereby consents to the
----------------
Offer and represents that its Board of Directors (at a meeting duly called and
held) has unanimously (a) determined that the Offer and the Merger are fair to
the stockholders of the Company and are in the best interests of the
stockholders of the Company, (b) approved this Agreement, the Offer, the Merger
and the other Transaction Agreements, including for purposes of Section 203 of
the DGCL, and (c) recommended acceptance of the Offer and approval and adoption
of this Agreement and the Merger by the stockholders of the Company which
approval constitutes approval of each of the Transactions for purposes of the
applicable provisions of the DGCL. The Financial Advisor has delivered to the
Board of Directors of the Company its opinion that the consideration to be
received by the holders of shares of Company Common Stock in the Offer and the
Merger is fair to the holders of shares of Company Common Stock from a financial
point of view. The Company hereby agrees to file a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing such recommendation with the SEC (and
--------------
the information required by Section 14(f) of the Exchange Act) and to mail such
Schedule 14D-9 to the stockholders of the Company; provided that such
--------
recommendation may be withdrawn, modified or amended by the Company's Board of
Directors only to the
<PAGE>
5
extent permitted by Section 7.03(b). Such Schedule 14D-9 shall be filed on the
same date as Purchaser's Schedule 14D-1 is filed and mailed together with the
Offer Documents. Each of the Company, Parent, and Purchaser agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the
holders of shares of Company Common Stock, in each case, as and to the extent
required by applicable federal securities Laws. The Company agrees to give
Purchaser and its counsel a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to the Company's filing of the Schedule 14D-9 with the SEC.
The Company agrees to provide Purchaser and its counsel in writing with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt thereof.
SECTION 2.03. Stockholder Lists. In connection with the Offer, the
------------------
Company will promptly furnish Purchaser with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of shares of Company Common Stock as of a recent
date and of those Persons becoming record holders subsequent to such date (to
the extent available), together with all other information in the Company's
possession or control regarding the beneficial owners of shares of Company
Common Stock and shall furnish Purchaser with such information and assistance
(including, to the extent available, updated lists of stockholders, security
position listings and computer files) as Purchaser or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
shares of Company Common Stock.
SECTION 2.04. Composition of the Board of Directors; Section 14(f).
-----------------------------------------------------
Promptly upon the acceptance for payment of, and payment by Purchaser for, any
shares of Company Common Stock pursuant to the Offer, Purchaser shall be
entitled to designate such number of directors on the Board of Directors of the
Company as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors, rounded up to the next whole number, which is
the product of (a) the total number of directors on the Company's Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) such number of shares of Company
Common Stock so accepted for
<PAGE>
6
payment and paid for by Purchaser plus the number of shares of Company Common
Stock otherwise owned by Purchaser or any other Subsidiary of Parent bears to
(ii) the number of such shares outstanding, and the Company shall, at such time,
cause Purchaser's designees to be so elected; provided, however, that in the
-------- -------
event that Purchaser's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time the Board of the Directors of
the Company shall have at least two directors who are directors on the date of
this Agreement (the "Independent Directors"); and provided further that, in such
--------------------- ----------------
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Director then
remains, the other directors promptly shall designate two persons to fill such
vacancies who shall not be officers, employees, stockholders or Affiliates of
Parent or Purchaser, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable Law, the Company
shall take all action reasonably requested by Parent necessary to effect any
such election, including mailing to its stockholders the information statement
required under Rule 14f-1 containing the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company shall
make such mailing with the mailing of the Schedule 14D-9. Purchaser's designees
shall be divided between the classes of directors as necessary to comply with
the requirements of the Company's bylaws. In connection with the foregoing, the
Company shall promptly, at the option of Purchaser, either increase the size of
the Board of Directors of the Company or obtain the resignation of such number
of its current directors as is necessary to enable Purchaser's designees to be
elected or appointed to the Board of Directors of the Company as provided above.
The date on which Purchaser's designees constitute a majority of the Company's
Board of Directors is herein referred to as the "Control Date." Following the
------------
Control Date but prior to the Effective Time, no amendment or waiver of this
Agreement on the Company's behalf pursuant to Sections 9.03 and 9.04,
respectively, and no termination of this Agreement pursuant to Section 9.01(a)
shall be valid, unless a majority of Independent Directors approve such
amendment, waiver or termination, as the case may be.
<PAGE>
7
ARTICLE III
The Merger
----------
SECTION 3.01. The Merger. Subject to the terms and conditions and in
-----------
reliance upon the representations, warranties, covenants and agreements
contained herein, Purchaser shall merge with and into the Company at the
Effective Time (the "Merger"). The terms and conditions of the Merger and the
------
mode of carrying the same into effect shall be as set forth in this Agreement.
As a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the Surviving Corporation. At the
election of Parent, subject to Section 10.06, Parent or any Affiliate of Parent
may be substituted for Purchaser as a constituent corporation in the Merger.
SECTION 3.02. Effective Time. As soon as practicable after the
---------------
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
---------------------
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL.
SECTION 3.03. Effect of the Merger. At the Effective Time, the
---------------------
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Purchaser and the Company shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Purchaser and the Company shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 3.04. Certificate of Incorporation; By-laws. (a) The
--------------------------------------
Certificate of Incorporation of the Purchaser in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until amended in accordance with applicable law; provided that the
--------
name of the Surviving Corporation as set forth in its Certificate of
Incorporation shall be changed at the Effective Time to reflect FORE Systems,
Inc. as the name of the Surviving Corporation.
(b) The By-laws of Purchaser as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or
<PAGE>
8
amended as provided therein or by applicable Law; provided, however, that the
-------- -------
By-laws of Purchaser shall be amended prior to the Effective Time to the extent
necessary to comply with Purchaser's obligations under the first sentence of
Section 7.11(a).
SECTION 3.05. Directors and Officers. The directors of Purchaser
-----------------------
immediately prior to the Effective Time and/or any individuals designated by
Parent shall be the directors of the Surviving Corporation, each to hold office
in accordance with the certificate of incorporation and bylaws of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time and/or any individuals designated by Parent shall be the officers of the
Surviving Corporation, in each case until the earlier of their resignation or
removal or until their respective successors are duly elected or appointed and
qualify.
SECTION 3.06. Stock Options. (a) Except as provided herein, upon
--------------
consummation of the Merger, all then outstanding vested and unvested Company
Stock Options and all Company Common Stock subject to a vesting requirement
("Restricted Stock") shall be cancelled in exchange for a cash payment from the
- ------------------
Company to the holder of a Company Stock Option or Restricted Stock equal to (i)
in the case of Company Common Stock Options, the product of (x) the difference
between the Per Share Merger Consideration and the per share exercise price of
the holder's Company Stock Option multiplied by (y) the number of shares of
Company Common Stock subject to the holder's Company Stock Option and (ii) in
the case of Restricted Stock, the number of shares of the holder's Restricted
Stock multiplied by the per share Merger Consideration. In the case of all
unvested Company Stock Options, such cash payment shall be made on the date that
is 90 days after the Effective Time. All applicable Taxes shall be withheld
from any proceeds payable under this Section 3.06(a). Following the expiration
of the Offer and the purchase of Shares pursuant thereto and prior to the
Effective Time, Parent may, at its option, provide to each holder of an
outstanding Company Stock Option who is an "accredited investor" (within the
meaning of the Securities Act), in lieu of the cash payment pursuant to the
foregoing sentence, an alternative, at such holder's option, of converting such
Company Stock Option into phantom stock units, having the same economic value
and terms of such Company Stock Options and the value of which will thereafter
be based on the market value of the ordinary shares of The General Electric
Company, p.l.c.
(b) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company Option Plans shall
<PAGE>
9
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant by the Company or any of its
Subsidiaries of any interest in respect of the capital stock of the Company or
any of its Subsidiaries shall be terminated as of the Effective Time, and (ii)
following the Effective Time no holder of Company Stock Options or any
participant in the Company Option Plans or any other such plans, programs or
arrangements shall have any right thereunder to acquire any equity securities of
the Company, the Surviving Corporation or any Subsidiary thereof.
SECTION 3.07. Stockholders' Meeting. (a) If the adoption of this
----------------------
Agreement by the Company's stockholders is required by Law, the Company shall,
at Parent's request, as soon as practicable following the expiration of the
Offer, prepare and file with the SEC the Proxy Statement in preliminary form,
and each of the Company and Parent shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC or its staff with
respect thereto. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. If at any time
prior to receipt of the Company Stockholder Approval there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects, unless such
mailing is required by Law. The Company shall use its reasonable best efforts
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after filing with the SEC.
(b) If the adoption of this Agreement by the Company's stockholders
is required by Law, the Company shall, at Parent's request, as soon as
practicable following the expiration of the Offer and the purchase of Shares
pursuant thereto, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of seeking
-----------------------------
the Company Stockholder Approval. The Company shall, through the Board of
Directors of the Company, give the recommendation referred to in Section 2.02.
Without
<PAGE>
10
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 3.07(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Acquisition Proposal. Notwithstanding the foregoing, (i) if Purchaser or
any other Subsidiary of Parent shall acquire at least 90% of the outstanding
shares of Company Common Stock, the parties shall, at the request of Parent,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 253 of the DGCL and (ii) the
parties shall, at the request of Parent, take all necessary and appropriate
action to effect the Merger through a written consent in lieu of the Company
Stockholders' Meeting to the extent permitted by, and in accordance with,
applicable Law.
(c) Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement and will
vote, or cause to be voted, all shares of Company Common Stock owned by it or
its Subsidiaries in favor of the adoption of this Agreement.
ARTICLE IV
Conversion of Securities; Exchange of Certificates
--------------------------------------------------
SECTION 4.01. Merger Consideration; Conversion and Cancellation of
----------------------------------------------------
Securities. At the Effective Time, by virtue of the Merger and without any
- -----------
action on the part of the Parent Companies, the Company or the holders of any of
the following securities:
(a) Subject to Section 4.03, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (excluding
any shares of Company Common Stock described in Section 4.01(c)) shall be
converted into the right to receive $35.00 in cash, without interest
thereon (the "Per Share Merger Consideration").
------------------------------
(b) All shares of Company Common Stock converted pursuant to Section
4.01(a) shall cease to be outstanding and shall automatically be cancelled
and retired, and each holder of a Certificate previously evidencing such
shares of Company Common Stock shall cease to have any rights as a
stockholder of the Company, except the right to receive the Per Share
Merger Consideration for each such share.
<PAGE>
11
(c) Each share of Company Common Stock that is owned by the Company,
Parent or Purchaser immediately prior to the Effective Time shall be
cancelled and retired and shall cease to exist and no consideration shall
be delivered in exchange therefor. Each share of Company Common Stock
owned by any Subsidiary of the Company or Parent (other than Purchaser)
immediately prior to the Effective Time shall remain outstanding without
change.
(d) Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding as one fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 4.02. Exchange of Certificates. (a) Exchange Fund. Parent
------------------------- --------------
shall deposit, or cause to be deposited, on a timely basis as and when the
Paying Agent requires after the Effective Time with the Paying Agent in the
Exchange Fund, for the payment of the Merger Consideration through the Paying
Agent upon surrender of Certificates in accordance with Section 4.02(c), cash in
an amount sufficient to make the cash payments due under Section 4.01(a). The
Exchange Fund shall not be used for any other purpose except as specified in
this Section 4.02.
(b) Letter of Transmittal. As soon as reasonably practicable after
----------------------
the Effective Time, Parent will cause the Paying Agent to send a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) to each record holder of shares of
Company Common Stock immediately prior to the Effective Time, along with other
appropriate materials for use in surrendering Certificates to the Paying Agent.
(c) Exchange Procedures. As soon as reasonably practicable after the
--------------------
Effective Time, the Paying Agent shall distribute to each former holder of
shares of Company Common Stock, upon surrender to the Paying Agent for
cancellation of one or more Certificates, the Merger Consideration. If the
Merger Consideration is to be paid to a Person other than the Person in whose
name the surrendered Certificate or Certificates are registered, it shall be a
condition of payment of the Merger Consideration that the surrendered
Certificate or Certificates shall be properly endorsed, with signatures
guaranteed, or otherwise in proper form for
<PAGE>
12
transfer and that the Person requesting such payment shall pay any transfer or
other Taxes required by reason of the payment of the Merger Consideration to a
Person other than the registered holder of the surrendered Certificate or
Certificates or such Person shall establish to the satisfaction of Parent that
such Tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 4.02(c), each Certificate shall be deemed from and after the
Effective Time to represent only the right to receive upon such surrender the
Per Share Merger Consideration for each share of Company Common Stock evidenced
by such Certificate. In no event shall the holder of any such surrendered
Certificate be entitled to receive interest on any cash to be received in the
Merger. Neither the Paying Agent nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any amount paid to a public
official or Governmental Authority pursuant to any applicable abandoned
property, escheat, or similar Law. If any Certificate has not been surrendered
prior to the date which is five years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Authority), any such cash in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
-----------------------------
which remains unclaimed by the former holders of shares of Company Common Stock
for six months after the Effective Time shall be delivered to Parent, upon
demand, and any former holders of shares of Company Common Stock who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for any cash payment to which they are entitled.
(e) Investment of Exchange Fund. The Paying Agent shall invest any
----------------------------
cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Parent.
(f) Withholding of Tax. Parent or any of its Affiliates shall be
-------------------
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of shares of Company Common
Stock such amounts as Parent (or any Affiliate thereof) is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or
<PAGE>
13
foreign Tax Law. To the extent that amounts are so withheld by Parent and paid
by Parent to the applicable taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent.
SECTION 4.03. Dissenting Shares. Notwithstanding anything in this
------------------
Agreement to the contrary, shares of Company Common Stock ("Dissenting Shares")
-----------------
which are issued and outstanding immediately prior to the Effective Time and
that are held by any Person who is entitled to demand and properly demands
appraisal of such Dissenting Shares pursuant to, and who complies in all
respects with, Section 262 of the DGCL ("Section 262") shall not be converted as
-----------
provided in Section 4.01(a), but rather the holders of Dissenting Shares shall
be entitled only to payment of the fair value of such Dissenting Shares in
accordance with Section 262; provided, however, that if any such holder shall
-------- -------
fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid the fair
value of such holder's Dissenting Shares shall cease and such Dissenting Shares
shall be treated as if they had been converted as of the Effective Time into the
Merger Consideration as provided in Section 4.01(a). The Company shall serve
prompt notice to Parent of any demands received by the Company for appraisal of
any shares of Company Common Stock, and Parent shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 4.04. Closing. The closing (the "Closing") of the Merger
-------- -------
shall take place at the offices of Cravath, Swaine & Moore, at 825 Eighth
Avenue, New York, NY at 10 a.m. on a date as soon as practicable following the
date on which the conditions to the Closing (other than those that, by their
terms, are to be satisfied at the Closing) have been satisfied or waived, or at
such other place, time and date as the parties hereto may agree. At the
conclusion of the Closing on the Closing Date, the parties hereto shall cause
the Certificate of Merger to be filed with the Secretary of State of the State
of Delaware.
SECTION 4.05. Stock Transfer Books. At the Effective Time, the stock
---------------------
transfer books of the Company shall be closed and there shall be no further
registration
<PAGE>
14
of transfers of shares of Company Common Stock thereafter on the records of the
Company.
ARTICLE V
Representations and Warranties of the Company
---------------------------------------------
Except as set forth in the Company SEC Documents filed and available
prior to the date of this Agreement or, with respect to any Section of this
Article V, as set forth in the section of the Company's Disclosure Letter that
specifically relates to such Section, the Company hereby represents and warrants
to the Parent Companies that:
SECTION 5.01. Organization and Qualification; Subsidiaries. The
---------------------------------------------
Company and each Subsidiary of the Company are legal entities duly organized,
validly existing and in good standing under the Laws of their respective
jurisdictions of incorporation or organization, have all requisite power and
authority and possess all governmental franchises and Permits necessary to
enable them to own, lease and operate their respective properties and assets and
to carry on their business as it is now being conducted and are duly qualified
and in good standing to do business in each jurisdiction in which the nature of
the business conducted by them or the ownership or leasing of their respective
properties and assets makes such qualification necessary, other than such
franchises and Permits and qualifications the lack of which, individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect on the Company. Section 5.01 of the Company's
Disclosure Letter sets forth, as of the date of this Agreement, a true and
complete list of all the Company's directly or indirectly owned Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock or other equity
interests owned of record or beneficially by the Company or another Subsidiary
of the Company. Except for such Subsidiaries and as disclosed in Section 5.01
of the Company's Disclosure Letter, neither the Company nor any of its
Subsidiaries owns an equity interest in any partnership or joint venture
arrangement or other business entity.
SECTION 5.02. Certificate of Incorporation and By-laws. The Company
-----------------------------------------
has heretofore furnished or made available to Parent complete and correct copies
of the certificate of incorporation and the bylaws or the equivalent
organizational documents, in each case as amended or restated to the date
hereof, of the Company. Neither the
<PAGE>
15
Company nor any of its Subsidiaries is in violation of any of the provisions of
its certificate of incorporation or bylaws (or equivalent organizational
documents).
SECTION 5.03. Capitalization. (a) The authorized capital stock of
---------------
the Company consists of (i) 300,000,000 shares of Company Common Stock of which,
as of April 24, 1999, 116,519,333 shares were issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights, and (ii) 5,000,000 shares of preferred stock, none
of which are issued and outstanding. As of April 24, 1999, there were
21,815,997 shares of Company Common Stock reserved for future issuance pursuant
to outstanding Company Stock Options granted pursuant to the Company Option
Plans.
(b) Except as set forth in Section 5.03(a), no shares of Company
Common Stock are reserved for issuance, and, except for the Company Stock
Options, as listed in Section 5.03(b) of the Company's Disclosure Letter, there
are no options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, contracts, agreements, commitments or arrangements obligating the Company
(i) to offer, sell, issue or grant any shares of, or any options, warrants or
rights of any kind to acquire any shares of, or any securities that are
convertible into or exchangeable for any shares of, capital stock of the
Company, (ii) to redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding shares of, or any outstanding options, warrants or rights of any
kind to acquire any shares of, or any outstanding securities that are
convertible into or exchangeable for any shares of, capital stock of the Company
or (iii) to grant any Lien on any shares of capital stock of the Company.
(c) Except as set forth in Section 5.03(c) of the Company's
Disclosure Letter, (i) the issued and outstanding shares of capital stock of, or
other equity interests in, each of the Subsidiaries of the Company that are
owned by the Company or any of its Subsidiaries have been duly authorized and
are validly issued, and, with respect to capital stock, are fully paid and
nonassessable, and were not issued in violation of any preemptive or similar
rights of any past or present equity holder of such Subsidiary; (ii) all such
issued and outstanding shares, or other equity interests, that are indicated as
owned by the Company or one of its Subsidiaries in Section 5.03(c) of the
Company's Disclosure Letter are owned (A) beneficially as set forth therein and
(B) free and clear of all Liens except as
<PAGE>
16
described therein; (iii) no shares of capital stock of, or other equity
interests in, any Subsidiary of the Company are reserved for issuance, and there
are no options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, contracts, agreements, commitments or arrangements obligating the Company
or any of its Subsidiaries (A) to offer, sell, issue, grant, pledge, dispose of
or encumber any shares of capital stock of, or other equity interests in, or any
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
any of the Subsidiaries of the Company or (B) to redeem, purchase or acquire, or
offer to purchase or acquire, any outstanding shares of capital stock of, or
other equity interests in, or any outstanding options, warrants or rights of any
kind to acquire any shares of capital stock of, other equity interests in, or
any outstanding securities that are convertible into or exchangeable for, any
shares of capital stock of, or other equity interests in, any of the
Subsidiaries of the Company or (C) to grant any Lien on any outstanding shares
of capital stock of, or other equity interests in, any of the Subsidiaries of
the Company.
(d) Except as set forth in Section 5.03(d) of the Company's
Disclosure Letter and the Company Option Plans listed in Section 5.03(b) of the
Company's Disclosure Letter, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound with respect to the voting of any shares of capital stock
of the Company or any of its Subsidiaries or with respect to the future
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its Subsidiaries under the Securities Act.
(e) There are not any bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote ("Voting Company Debt").
-------------------
SECTION 5.04. Authorization of Agreement. (a) The Company has all
---------------------------
requisite corporate power and authority to execute and deliver each Transaction
Agreement to which it is a party and each instrument required hereby to be
executed and delivered by it prior to or at the Closing, to perform its
obligations hereunder and thereunder
<PAGE>
17
and to consummate the Transactions. The execution and delivery by the Company of
each Transaction Agreement to which it is a party and each instrument required
hereby to be executed and delivered by it prior to or at the Closing and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Company
(other than, with respect to the Merger, the adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock in
accordance with the DGCL). Each Transaction Agreement to which it is a party has
been duly executed and delivered by the Company and (assuming due authorization,
execution and delivery hereof by the other parties hereto) constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as the same may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
Laws relating to creditors' rights generally, and (ii) legal principles of
general applicability governing the application and availability of equitable
remedies.
(b) The only vote of holders of any class or series of capital stock
of the Company necessary to adopt or approve this Agreement and the Merger is
the adoption of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval"). The
----------------------------
affirmative vote of the holders of any capital stock of the Company, or any of
them, is not necessary to consummate the Offer or any other Transaction, other
than the Merger.
SECTION 5.05. Approvals. Except for the applicable requirements, if
----------
any, of (a) the Exchange Act, (b) state securities Laws or blue sky Laws, (c)
the HSR Act, (d) the antitrust laws or regulations of Germany, Ireland, Italy,
Sweden and the United Kingdom (the "European Antitrust Laws"), (e) Exon-Florio,
-----------------------
(f) the filing and recordation of appropriate merger documents as required by
the DGCL and (g) those Laws and Orders noncompliance with which would not
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations under each Transaction Agreement to which it
is a party or to have a Material Adverse Effect on the Company, no filing or
registration with, no waiting period imposed by and no Permit or Order of, any
Governmental Authority is required under any Law or Order applicable to the
Company or any of its Subsidiaries to permit the Company to execute, deliver or
perform each Transaction Agreement to which it is a party or any instrument
required hereby or thereby to be executed and delivered by it prior to or at the
Closing.
<PAGE>
18
SECTION 5.06. No Violation. Assuming effectuation of all filings and
-------------
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 5.05 and adoption of this Agreement by the
stockholders of the Company as required by the DGCL, neither the execution and
delivery by the Company of any Transaction Agreement to which it is a party or
any instrument required hereby or thereby to be executed and delivered by it
prior to or at the Closing nor the performance by the Company of its obligations
hereunder or thereunder will (a) conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a Material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary of the Company under, any provision of (i) any Law or Order
applicable to the Company, (ii) the certificate of incorporation or bylaws of
the Company or (iii) any contract or agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties or assets is bound, or (b) with the
passage of time, the giving of notice or the taking of any action by a third
Person, have any of the effects set forth in clause (a) of this Section, except
in any such case for any matters described in this Section that would not
reasonably be expected to have a Material Adverse Effect on the Company. Prior
to the execution of this Agreement, the Board of Directors of the Company has
taken all necessary action to cause this Agreement and the other Transaction
Agreements and the Transactions to be exempt from the provisions of Section 203
of the DGCL. To the Company's Knowledge, no other state takeover statute or
similar Law or Regulation applies or purports to apply to the Company with
respect to this Agreement, the other Transaction Agreements, the Offer, the
Merger or any other Transaction. The Company has been advised by each of its
directors and executive officers that each such Person currently intends to
tender all shares of Company Common Stock owned by such Person pursuant to the
Offer, except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
SECTION 5.07. Reports and Financial Statements. (a) The Company has
---------------------------------
filed all SEC Reports required to be filed by the Company with the SEC since
April 1, 1997 (the "Company SEC Documents"). As of its respective date, each
---------------------
Company SEC Document complied in all material respects with
<PAGE>
19
the requirements of the Exchange Act or the Securities Act, as the case may be,
applicable to such Company SEC Document, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been revised
or superseded by a later filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No Subsidiaries of the Company are SEC reporting companies.
(b) Since March 31, 1998, the Company and its Subsidiaries have filed
all Reports required to be filed with any Governmental Authorities other than
the SEC, including state securities administrators, except where the failure to
file any such Reports of the Company would not reasonably be expected to have a
Material Adverse Effect on the Company. Such Reports of the Company, including
all those filed after the date of this Agreement and prior to the Effective
Time, were or will be prepared in all material respects in accordance with the
requirements of applicable Law.
(c) The Company Consolidated Financial Statements and any
consolidated financial statements of the Company (including any related notes
thereto) contained in any SEC Reports of the Company filed with the SEC (i) have
been or will have been prepared in accordance with applicable accounting
requirements and the published Regulations of the SEC and in accordance with
GAAP consistently applied (except (A) to the extent required by changes in GAAP
and (B) with respect to SEC Reports of the Company filed prior to the date of
this Agreement, as may be indicated in the notes thereto) and (ii) fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated (and include, in the
case of any unaudited interim financial statements, reasonable accruals for
normal year-end adjustments).
SECTION 5.08. No Undisclosed Liabilities. (a) Except as set forth in
---------------------------
Section 5.08(a) of the Company's Disclosure Letter, there exist no liabilities
or obligations of the Company and its Subsidiaries that are Material to the
Company, whether accrued, absolute, contingent or otherwise,
<PAGE>
20
which would be required to be reflected, reserved for or disclosed under GAAP in
consolidated financial statements of the Company (including the notes thereto)
as of and for the most recent period ended prior to the date this representation
and warranty is given or required to be true to satisfy any condition to the
Offer or the Merger, other than (a) liabilities or obligations that are
adequately reflected, reserved for or disclosed in the Company's Consolidated
Financial Statements and (b) liabilities or obligations incurred in the ordinary
course of business of the Company since the Balance Sheet Date.
(b) Section 5.08(b) of the Company's Disclosure Letter sets forth a
complete and correct list of all Derivative Financial Instruments (including the
face, contract or notional amount of and any open position relating to such
Derivative Financial Instruments and a brief summary of the nature and terms
thereof) as of March 31, 1999 which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is subject or bound (including funds of the
Company or any of its subsidiaries invested by any other person). For purposes
of this Agreement "Derivative Financial Instrument" means any option, futures,
-------------------------------
forward, swap option or swap contract, or any other financial instrument with
similar characteristics and/or generally characterized as a "derivative
product".
SECTION 5.09. No Material Adverse Effect; Conduct. Except as
------------------------------------
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents") or in Section 5.09 of
---------------------------
the Company's Disclosure Letter, from the date of the most recent audited
financial statements included in the Filed Company SEC Documents, the Company
has conducted its business only in the ordinary course, and during such period
there has not been:
(a) any event, change, effect or development that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend on, or
other distribution in respect of (whether in cash, stock or property), any
capital stock of the Company or any repurchase for value by the Company of
any capital stock of the Company;
<PAGE>
21
(c) any split, combination or reclassification of any capital stock of
the Company or of any other equity interests in the Company, or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of
the Company or of any other equity interests in the Company;
(d) (i) any granting by the Company or any Subsidiary of the Company
to any director or executive officer of the Company or any Subsidiary of
the Company of any increase in compensation, except in the ordinary course
of business consistent with past practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (ii) any
granting by the Company or any Subsidiary of the Company to any such
director or executive officer of any increase in severance or termination
pay, except as was required under any employment, severance or termination
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, or (iii) any entry
by the Company or any Subsidiary of the Company into any employment,
severance or termination agreement with any such director or executive
officer; or
(e) any change in accounting methods, principles or practices by the
Company or any Subsidiary of the Company materially affecting the
consolidated assets, liabilities or results of operations of the Company,
except insofar as may have been required by a change in GAAP.
SECTION 5.10. Schedule 14D-9; Offer Documents; Proxy Statement. None
-------------------------------------------------
of the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published or sent or given to holders of
shares of Company Common Stock, and, in the case of the Proxy Statement, at the
time that it or any amendment or supplement thereto is mailed to the Company's
stockholders, at the time of the Company Stockholders' Meeting or at the
Effective Time, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading; provided, that
--------
<PAGE>
22
the foregoing shall not apply to information supplied by or on behalf of Parent
or the Purchaser specifically for inclusion or incorporation by reference in any
such document. Schedule 14D-9 will comply as to form in all material respects
with the provisions of the Exchange Act, except that no representation is made
by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Purchaser for inclusion or
incorporation by reference therein.
SECTION 5.11. Properties and Assets. Except as set forth in Section
----------------------
5.11 of the Company's Disclosure Letter, the Company and its Subsidiaries own or
have rights to use all properties and assets necessary to permit the Company and
its Subsidiaries to continue to conduct their businesses as currently being
conducted except where the failure to own or have the right to use such
properties and assets would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Except as set forth
in Section 5.11 of the Company's Disclosure Letter, each of the Company and its
Subsidiaries has good and indefeasible fee title to, or valid leasehold
interests in, all its material real property, free and clear of all Liens.
SECTION 5.12. Material Contracts. Section 5.12 of the Company's
-------------------
Disclosure Letter contains a true and complete list of the SEC Contracts of the
Company and its Subsidiaries. The Company has made available to Parent or
Purchaser all contracts, agreements, arrangements and understandings to which it
is a party that impose liabilities or obligations that, individually or in the
aggregate, have or would reasonably be expected to have a Material Adverse
Effect in respect to the Company. All Material Contracts to which the Company
or any of its Subsidiaries is a party are in full force and effect, the Company
or the Subsidiary of the Company that is a party to or bound by such Material
Contract has performed its obligations thereunder to date and, to the Knowledge
of the Company, each other party thereto has performed its obligations
thereunder to date, other than any failure of a Material Contract to be in full
force and effect or any nonperformance thereof that would not reasonably be
expected to have a Material Adverse Effect on the Company. As of the date of
this Agreement, except where the same would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, to the Company's Knowledge, neither the Company nor any of its
Subsidiaries has received any written notice of the intention of any party to
terminate any Material Contract,
<PAGE>
23
whether as a termination for convenience or for default of the Company or any
Subsidiary thereunder.
SECTION 5.13. Litigation; Compliance with Laws. There are no actions,
---------------------------------
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 5.13 of the Company's Disclosure Letter or as set forth in the
Company SEC documents filed and available prior to the date of this Agreement,
or (b) individually or, with respect to multiple actions, suits or proceedings
that allege similar theories of recovery based on similar facts, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company. Except as set forth in Section 5.13 of the Company's Disclosure
Letter, the Company and its Subsidiaries are in compliance with all applicable
Laws and Regulations and are not in default with respect to any Order applicable
to the Company or any of its Subsidiaries, except such events of noncompliance
or defaults that, individually or in the aggregate, have not and would not
reasonably be expected to have a Material Adverse Effect on the Company. Since
January 1, 1994, to the date hereof, neither the Company nor any Subsidiary of
the Company has received any written notice of any administrative or civil or
criminal investigation or audit (other than Tax audits) by any Governmental
Authority.
SECTION 5.14. Employee Benefit Plans. (a) Each Benefit Plan of the
-----------------------
Company and its Subsidiaries is listed in Section 5.14(a) of the Company's
Disclosure Letter, including, with respect to Terminated Benefit Plans, the date
of termination.
(b) No event has occurred and, to the Knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any of its Subsidiaries could be subject to any liability under the terms of
any Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under
the Code or any other applicable Law, other than any condition or set of
circumstances that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company. Each of the Benefit
Plans has been administered in material compliance with its terms and with the
applicable provisions of ERISA, the Code and any other applicable Law.
(c) As to any Benefit Plan of the Company intended to be qualified
under Section 401 of the Code, such
<PAGE>
24
Benefit Plan has been determined by the IRS to satisfy in form the requirements
of such Section, no event has occurred that, individually or in the aggregate,
could be reasonably expected to result in the disqualification of such Benefit
Plan (disregarding correction methods under the Employee Plans Compliance
Resolution System) and there has been no termination or partial termination of
such Benefit Plan within the meaning of Section 411(d)(3) of the Code.
(d) As to any Terminated Benefit Plan intended to have been qualified
under Section 401 of the Code, such Terminated Benefit Plan received a favorable
determination letter from the IRS with respect to its termination all
liabilities with respect to each such plan have been satisfied by the purchase
of annuities or otherwise, and each Terminated Benefit Plan has been terminated
in accordance with the requirements of law and the terms of the plan.
(e) There are no investigations, audits, actions, suits or claims
pending (other than routine claims for benefits) or, to the Knowledge of the
Company, threatened against, or with respect to, any Benefit Plan or its assets
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company.
(f) To the Knowledge of the Company, there is no matter pending
(other than routine qualification determination filings) with respect to any
Benefit Plan before the IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made by the Company or the
Company's Subsidiaries to any Benefit Plan pursuant to its terms and provisions
have been timely made.
(h) As to any Current Benefit Plan subject to Title IV of ERISA, (i)
there has been no event or condition which presents a material risk of plan
termination, (ii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred within six years prior to date of this Agreement, (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the disclosure
requirements of Regulation Section 2615.3 promulgated by the PBGC have not been
waived) has occurred within six years prior to the date of this Agreement, (iv)
no notice of intent to terminate such Benefit Plan has been given under Section
4041 of ERISA, (v) no proceeding has been instituted under Section 4042 of ERISA
to terminate such Benefit Plan, (vi) no liability to the PBGC has been incurred
(other than with respect to required premium payments) and (vii) the
<PAGE>
25
assets of the Benefit Plan equal or exceed the actuarial present value of the
benefit liabilities, within the meaning of Section 4041 of ERISA, under such
Benefit Plan, based upon actuarial assumptions and the asset valuation
principles for terminating plans under Section 4044 of ERISA.
(i) No employee of the Company or any Subsidiary of the Company or
any fiduciary of a Benefit Plan has a material liability with respect to a
Benefit Plan.
(j) Except as set forth in Section 5.14(j) of the Company's
Disclosure Letter, in connection with the consummation of the Transactions, no
payments have been or will be made under any Current Benefit Plan or any other
program, agreement, policy or arrangement which would be nondeductible under
Section 280G of the Code.
(k) Except as set forth in Section 5.14(k) of the Company's
Disclosure Letter, the execution and delivery of this Agreement and the
consummation of the Transactions will not (i) require the Company or any of its
Subsidiaries to pay greater compensation or make a larger contribution to, or
pay greater benefits or accelerate payment or vesting of a benefit under, any
Current Benefit Plan or any other program, agreement, policy or arrangement or
(ii) create or give rise to any additional vested rights or service credits
under any Current Benefit Plan or any other program, agreement, policy or
arrangement.
(l) Except as set forth in Section 5.14(l) of the Company's
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to
or is bound by any severance agreement, program or policy. True and correct
copies of all employment agreements with officers of the Company and its
Subsidiaries, and all vacation, overtime and other compensation policies of the
Company and its Subsidiaries relating to their employees have been made
available to Parent.
(m) Except as set forth in Section 5.14(m) of the Company's
Disclosure Letter, no Benefit Plan provides retiree medical or retiree life
insurance benefits to any Person and neither the Company nor any of its
Subsidiaries is contractually or otherwise obligated (whether or not in writing)
to provide any Person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the provisions of Sections
601 through 608 of ERISA and Section 4980B of the Code.
<PAGE>
26
(n) Neither the Company nor any of its Subsidiaries contributes or
has an obligation to contribute, and neither has within six years prior to the
date of this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(o) Except as disclosed in Section 5.14(o) of the Company's
Disclosure Letter, no compensation payable by the Company or any of its
Subsidiaries to any of their employees under any Current Benefit Plan or other
program, agreement, policy or arrangement is subject to disallowance under
Section 162(m) of the Code.
(p) Except as set forth in Section 5.14(p) of the Company's Disclosure
Letter, all liabilities of Benefit Plans required to be included in the
Company's financial statements under financial accounting standards has been so
included in the Financial statements.
(q) Except as set forth in Section 5.14(q) of the Company's Disclosure
Letter, the Company or a Subsidiary of the Company has retained the right to
terminate, suspend or amend any Benefit Plan.
SECTION 5.15. Labor Matters. Except as set forth in Section 5.15 of
--------------
the Company's Disclosure Letter, no collective bargaining agreement to which the
Company or any of its Subsidiaries is a party is currently in effect or is being
negotiated by the Company or any of its Subsidiaries. There is no pending or, to
the Knowledge of the Company, threatened labor dispute, strike or work stoppage
against the Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company. To the Knowledge of the Company, neither the Company or any of its
Subsidiaries nor any representative or employee of the Company or any of its
Subsidiaries has committed any unfair labor practices in connection with the
operation of the business of the Company and its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened charge or complaint
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable agency of any state of the United States. The Company
and its Subsidiaries are in material compliance with all applicable federal,
state, local or foreign labor Laws.
SECTION 5.16. Taxes. (a) Except as disclosed in Section 5.16(a) of
------
the Company's Disclosure Letter, (i) the Company and each Subsidiary of the
Company, and any affiliated group, within the meaning of Section 1504 of the
<PAGE>
27
Code, of which the Company or any Subsidiary of the Company is or has been a
member, has filed or will file in a timely manner (within any applicable
extension periods) all material Tax Returns required to be filed by the Code or
by applicable state, local or foreign tax Laws, and all such Tax Returns are or
will be true, complete and accurate in all material respects, (ii) all Taxes
with respect to taxable periods covered by such Tax Returns, and all other Taxes
for which the Company or any Subsidiary of the Company is or might otherwise be
liable, have been timely paid in full or will be timely paid in full by the due
date thereof and the most recent audited financial statements contained in the
Filed Company SEC Documents for the Company reflect an adequate reserve for all
Taxes accruing or payable by the Company and its Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements, and
(iii) there are no material liens for Taxes with respect to any of the assets or
properties of the Company or any Subsidiary of the Company.
(b) Except as disclosed in Section 5.16(b) of the Company's
Disclosure Letter, no Tax Return of the Company or of any Subsidiary of the
Company is under examination by the Internal Revenue Service, and no written
notice of such an audit or examination has been received by the Company or any
Subsidiary of the Company.
(c) Except as disclosed in Section 5.16(c) of the Company's
Disclosure Letter, (i) each deficiency resulting from any audit or examination
relating to Taxes by any Taxing Authority has been timely paid and (ii) no
material issues relating to Taxes were raised by the relevant Taxing Authority
in any completed audit or examination that can reasonably be expected to recur
in a later taxable period.
(d) Except as disclosed in Section 5.16(d) of the Company's
Disclosure Letter, neither the Company nor any Subsidiary of the Company is
party to or bound by any tax sharing agreement, tax indemnity obligation or
similar agreement, arrangement or practice with respect to Taxes (including any
advance pricing agreement, closing agreement or other agreement relating to
Taxes with any Taxing Authority).
(e) Except as disclosed in Section 5.16(e) of the Company's
Disclosure Letter or as disclosed in the most recent audited financial
statements included in the Filed Company SEC Documents, neither the Company nor
any Subsidiary of the Company shall be required to include in a taxable period
ending after the Effective Time taxable income attributable to income that
accrued in a Pre-
<PAGE>
28
Effective Time Tax period but that was not recognized in any Pre-Effective Time
Tax period as a result of the installment method of accounting, the completed
contract or percentage contract methods of accounting (including the look-back
method under Section 460(b)(2) of the Code), the cash method of accounting or
Section 481 of the Code or any comparable provision of state, local, or foreign
Tax law, or for any other reason.
(f) Except as disclosed in Section 5.16(f) of the Company's
Disclosure Letter, (i) there are no outstanding agreements or waivers extending,
or having the effect of extending, the statutory period of limitation applicable
to any Tax Returns required to be filed with respect to the Company or any
Subsidiary of the Company, (ii) neither the Company nor any Subsidiary of the
Company, nor any affiliated group, within the meaning of Section 1504 of the
Code, of which the Company or any Subsidiary of the Company is or has ever been
a member, has requested any extension of time within which to file any Tax
Return, which return has not yet been filed , and (iii) no power of attorney
with respect to any Taxes has been executed or filed with any Taxing Authority
by or on behalf of the Company or any Subsidiary of the Company.
(g) Except as disclosed in Section 5.16(g) of the Company's
Disclosure Letter, the Company and its Subsidiaries have complied in all
material respects with all applicable Laws relating to the payment and
withholding of Taxes (including withholding of Taxes pursuant to Sections 1441,
1442, 3121 and 3402 of the Code or any comparable provision of any state, local
or foreign Laws) and have, within the time and in the manner prescribed by
applicable Law, withheld from and paid over to the proper Taxing Authorities all
amounts required to be so withheld and paid over under applicable Laws.
(h) To the Company's knowledge, no person who holds five percent or
more of the stock of the Company is a "foreign person" as defined in Section
1445 of the Code.
(i) Except as set forth in Section 5.16(i) of the Company's
Disclosure Letter, none of the Company and its Subsidiaries, has been a member
of an affiliated group filing a consolidated Federal income Tax Return other
than the affiliated group of which the Company is the common parent corporation.
SECTION 5.17. Environmental Matters. Except for matters disclosed in
----------------------
Section 5.17 of the Company's Disclosure Letter or as described in Reports,
copies of
<PAGE>
29
which have been provided to Parent, and except for matters that, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, (a) the properties, operations and activities of the
Company and its Subsidiaries are in compliance with all Environmental Laws; (b)
the Company and its Subsidiaries and the properties, operations and activities
of the Company and its Subsidiaries are not subject to, and have not received
written notice of, any existing, pending or, to the Knowledge of the Company,
threatened action, suit, investigation, inquiry or proceeding by or before any
Court or Governmental Authority under any Environmental Law; (c) all Permits or
applications therefor required to be obtained or filed by the Company or any of
its Subsidiaries under any Environmental Law in connection with the properties,
operations and activities of the Company and its Subsidiaries have been obtained
or filed and are valid and currently in full force and effect, and, to the
Company's Knowledge, there are no facts or circumstances that would cause such
Permits to be revoked, modified or not renewed under current conditions or in
connection with the transactions contemplated by this Agreement; (d) there has
been no release of any hazardous substance, pollutant or contaminant into the
environment by the Company or its Subsidiaries or in connection with their
properties, operations or activities; (e) there has been no exposure
(attributable to the action of the Company or its Subsidiaries) of any Person or
property to any hazardous substance, pollutant or contaminant in connection with
the properties, operations and activities of the Company and its Subsidiaries;
and (f) neither the Company nor its Subsidiaries have assumed, whether by
contract, operation of Law or otherwise, any liabilities or obligations arising
under Environmental Laws in connection with their respective formerly owned
properties, businesses, divisions, Subsidiaries, companies or other entities.
SECTION 5.18. Intellectual Property.
----------------------
Section 5.18 of the Company's Disclosure Schedule contains a complete list of
all Patents, registered Trademarks, and, to the Knowledge of the Company, all
material unregistered Trademarks, which are owned by the Company or its
Subsidiaries. Except as set forth in Sections 5.06 and 5.18 of the Company's
Disclosure Schedule and except to the extent that the inaccuracy of any of the
following, or the circumstances giving rise to such inaccuracy, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect:
(a) The rights of the Company in and to each item of Intellectual
Property are owned or licensed by the
<PAGE>
30
Company, free and clear of any Liens (except, in the case of licensed
Intellectual Property, as set forth in the license therefor). All of the
Company's rights in and to such Intellectual Property owned by the Company
are freely assignable by it or its Subsidiaries, including the right to
create derivative works. As of the date of this Agreement and to the
Knowledge of the Company, it is under no obligation to pay any royalty,
license fee or other similar consideration to any third party or to obtain
any approval or consent for use of any of the Intellectual Property
(except, in the case of licensed Intellectual Property, as set forth in the
license therefor). None of the Intellectual Property owned by the Company
or its Subsidiaries is subject to any outstanding judgment, order, decree,
or injunction issued by a court of competent jurisdiction; no complaint,
action, suit, proceeding, or hearing, is pending or, to the Knowledge of
the Company, no charge, investigation, claim or demand, is threatened,
which challenges the legality, validity, enforceability, or ownership of
any of the Intellectual Property owned or currently used by the Company or
its Subsidiaries.
(b) To the Knowledge of the Company, no material breach or default (or
event which with notice or lapse of time or both would result in an event
of default) by the Company exists or has occurred, but not been cured,
under any License-In or other agreement pursuant to which the Company uses
any Intellectual Property, and the consummation of the transactions
contemplated by this Agreement will not violate or conflict with or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) or result in a forfeiture under, or
constitute a basis for termination of, any such License-In or other
agreement.
(c) To the Knowledge of the Company, it owns or, based on a due
diligence review of its records, represents that it has the right to: (i)
use all the Intellectual Property necessary to provide, produce, sell or
license the services and products currently provided, produced, sold or
licensed by the Company, (ii) to conduct the Company's business as
presently conducted or planned to be conducted, and that (iii) the
consummation of the transactions contemplated hereby will not impair any
such rights, including any right of the Company to use or sublicense any
Intellectual Property owned by others. To the Knowledge of the Company,
the Intellectual Property covers all rights which are necessary to operate
the business of the Company as it is presently conducted
<PAGE>
31
and currently planned and to satisfy and perform the contracts,
commitments, arrangements and understandings with customers of the Company.
The Company has no Knowledge of any reason the Company will not be able to
continue to own, use, license or sub-license all Intellectual Property
without infringing any enforceable intellectual property rights of any
third party.
(d) To the Knowledge of the Company, except for Licensed-In
Intellectual Property, no Intellectual Property owned or used by the
Company, and no product or service licensed or sold by the Company,
infringes any trademark, trade name, copyright or patent, or
misappropriates any trade secret, right of publicity, right of privacy or
other proprietary right of any Person or would give rise to an obligation
to render an accounting to any Person as a result of co-authorship or co-
invention. The Company has received no written notice of any adversely held
patent, trademark, copyright, service mark, trade name or trade secret of
any other Person alleging or threatening to assert that the Company's use
of any of the Intellectual Property infringes upon or is in conflict with
any intellectual property or proprietary rights of any third party. The
Company has no Knowledge of any substantial basis for any charge, claim,
suit or action asserting any such infringement or asserting that the
Company does not have the legal right to use any such Intellectual
Property.
(e) All the Company's Patents and registered Trademarks listed in
Section 5.18 of the Company's Disclosure Schedule as having been filed in,
issued by or registered with the United States Patent and Trademark Office
or the corresponding offices of other countries have been so duly filed,
registered or issued, as the case may be, and have been properly maintained
and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and each such other
country. The Company has used reasonable efforts to diligently protect its
rights in such Intellectual Property, and, to the Knowledge of the Company,
there have been no acts or omissions by the Company, the result of which
would be to compromise the rights of the Company to apply for or enforce
appropriate legal protection of such Intellectual Property in the United
States or in such countries as the Company has done $500,000.00 (U.S.) or
more of business within the past year.
<PAGE>
32
(f) Each of the Company's employees and those independent contractors
retained by the Company who, either alone or in concert with others,
created or creates, developed or develops, invented or invents, discovered
or discovers, derived or derives, programmed or programs or designed or
designs any of the Intellectual Property, has entered into a written
agreement with the Company providing, in substance, that all such
Intellectual Property shall be owned by, or otherwise assigned to, the
Company and that the Company's Proprietary Information shall not be used,
or disclosed to any third party except as authorized by the Company. To
the Knowledge of the Company, no former employees or independent
contractors of the Company have any claim or right to any of the
Intellectual Property necessary for the lawful conduct of the Company's
business as now conducted. To the Knowledge of the Company, no employee of
the Company is a party to or otherwise bound by any agreement with or
obligated to any other Person (including, any former employer) which
prevents such employee from performing any material obligation or
commitment of such employee to the Company under any agreement to which he
or she is currently a party.
(g) The Company and each of its Subsidiaries has used its reasonable
efforts to protect the proprietary and, as appropriate, confidential nature
of all Proprietary Information that it presently owns or uses.
For purposes of this Agreement, "Intellectual Property" means all of the
---------------------
following which is owned by, licensed by, licensed to, used by the Company and
its Subsidiaries (including all authorized copies and embodiments thereof that
are fixed in a tangible media or form): (i) all registered and unregistered
trademarks, service marks, logos, trade names, and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction, and applications in any jurisdiction to register (the
"Trademarks"); (ii) all issued U.S. and foreign patents and pending patent
----------
applications (including, without limitation, divisionals, continuation,
continuation in part, continuing and renewal applications)(the "Patents"); (iii)
-------
all registered and unregistered copyrights and all applications to register the
same (the "Copyrights"), (iv) all protectable items of trade dress used by the
----------
Company and its Subsidiaries, (v) all computer software and protectable
databases owned by the Company or under development by, or specifically on
behalf of, the Company (the "Software"); (vi) all licenses and agreements
--------
pursuant to which the Company has acquired rights in or to
<PAGE>
33
the Trademarks, Patents, Copyrights or Software (excluding software and
databases licensed to the Company under standard (except for immaterial
deviations), nonexclusive software licenses granted to end-user customers by
third parties in the ordinary course of such third parties' business)
("Licenses-In"), (vii) all licenses and agreements pursuant to which the
-----------
Company has licensed or transferred the rights in and to Company Intellectual
Property (excluding software licensed by the Company under standard (except for
immaterial deviations) non-exclusive software licenses granted to end-user
customers by the Company as part of the sale of the Company's products)
("Licenses Out"'); and (viii) all confidential and proprietary trade secrets,
------------
know-how, processes, procedures, drawings, specifications, designs, plans,
proposals, or technical data. ("Proprietary Information").
-----------------------
SECTION 5.19. Brokers. No broker, finder or investment banker (other
--------
than the Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company. The estimated fees and expenses incurred and to
be incurred by the Company in connection with the Offer, the Merger and the
other Transactions (including the fees of the Financial Adviser and the fees of
the Company's legal counsel) are set forth in Section 5.19 of the Company's
Disclosure Letter. The Company has furnished to Parent a true and complete copy
of all agreements between the Company and the Financial Advisor relating to the
Merger and the other Transactions.
SECTION 5.20. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of the Financial Advisor in customary form, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the Company's stockholders is fair to the
Company's stockholders from a financial point of view.
SECTION 5.21. Year 2000. The computer software and hardware operated
----------
by the Company and its Subsidiaries that is used in the conduct of their
business is capable of providing or is in the process of being adapted to
provide uninterrupted millennium functionality to record, store, process and
present calendar dates falling on or after January 1, 2000 in substantially the
same manner and with the same functionality as such software and hardware
records, stores, processes and presents such calendar dates falling on or before
December 31, 1999 other than such interruptions in millennium functionality that
would not,
<PAGE>
34
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 5.22. Insurance. The Company and its Subsidiaries maintain
----------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are in the
Company's judgment, reasonable for the assets and properties of the Company and
its Subsidiaries and as are customary in the Company's industry. As of the date
of this Agreement, except as set forth in Section 5.22 of the Company's
Disclosure Letter, all such policies are in full force and effect, all premiums
due and payable thereon have been paid, and no notice of cancellation or
termination has been received with respect to any such policy.
ARTICLE VI
Representations and Warranties of the Parent Companies
------------------------------------------------------
The Parent Companies hereby represent and warrant to the Company that:
SECTION 6.01. Organization and Qualification; Subsidiaries. Parent
---------------------------------------------
and Purchaser are legal entities duly organized, validly existing and in good
standing under the Laws of their respective jurisdictions of incorporation or
organization, have all requisite power and authority to own, lease and operate
their respective properties and assets and to carry on their business as it is
now being conducted and are duly qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by them or
the ownership or leasing of their respective properties and assets makes such
qualification necessary, other than such qualifications the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on Parent.
SECTION 6.02. Authorization of Agreement. Each of Parent and
---------------------------
Purchaser has all requisite corporate power and authority to execute and
deliver, each Transaction Agreement to which it is a party and each instrument
required hereby to be executed and delivered by it prior to or at the Closing,
to perform its obligations hereunder and thereunder and to consummate the
Transactions. The execution and delivery by Parent and Purchaser of each
Transaction Agreement to which it is a party and each instrument required hereby
to be executed and delivered by Parent or Purchaser prior to or at the Closing
and the
<PAGE>
35
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by all requisite corporate action (including
stockholder action) on the part of Parent and Purchaser, respectively. Each
Transaction Agreement to which it is a party has been duly executed and
delivered by Parent and Purchaser and (assuming due authorization, execution and
delivery hereof by the other party hereto) constitutes a legal, valid and
binding obligation of Parent and Purchaser, enforceable against Parent and
Purchaser in accordance with its terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar Laws relating to creditors' rights generally and (b) legal
principles of general applicability governing the application and availability
of equitable remedies.
SECTION 6.03. Approvals. Except for the applicable requirements, if
----------
any, of (a) the Exchange Act, (b) state securities Laws or blue sky Laws, (c)
the HSR Act, (d) the European Antitrust Laws, (e) Exon-Florio, (f) the filing
and recordation of appropriate merger documents as required by the DGCL (and
other state Laws where Purchaser or the Company are qualified to do business)
and (g) those Laws and Orders noncompliance with which would not reasonably be
expected to have a material adverse effect on the ability of Parent or Purchaser
to perform its obligations under each Transaction Agreement to which it is a
party, no filing or registration with, no waiting period imposed by and no
Permit or Order of, any Governmental Authority is required under any Law or
Order applicable to Parent or Purchaser to permit Parent or Purchaser to
execute, deliver or perform each Transaction Agreement to which it is a party or
any instrument required hereby or thereby to be executed and delivered by it
prior to or at the Closing.
SECTION 6.04. No Violation. Assuming effectuation of all filings and
-------------
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 6.03, neither the execution and delivery by
Parent or Purchaser of any Transaction Agreement to which it is a party or any
instrument required hereby or thereby to be executed and delivered by Parent or
Purchaser prior to or at the Closing nor the performance by Parent or Purchaser
of their respective obligations hereunder or thereunder will (a) conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a Material
<PAGE>
36
benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or result in the creation of any Lien upon any
of the properties or assets of Parent or any Subsidiary of Parent under, any
provision of (i) any Law or Order applicable to Parent or Purchaser, (ii) the
certificate of incorporation or bylaws of Parent or Purchaser or (iii) any
contract or agreement to which Parent or any of its Subsidiaries is a party or
by which it or any of its properties or assets is bound, or (b) with the passage
of time, the giving of notice or the taking of any action by a third Person,
have any of the effects set forth in clause (a) of this Section, except in any
such case for any matters described in this Section that would not reasonably be
expected to have a material adverse effect upon the ability of Parent or
Purchaser to perform its obligations under this Agreement or any other
Transaction Agreement.
SECTION 6.05. Proxy Statement; Schedule 14D-9. None of the
--------------------------------
information supplied or to be supplied by or on behalf of Parent or Purchaser
for inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published or given to holders of shares
of Company Common Stock, and, in the case of the Proxy Statement, at the time
that it or any amendment or supplement thereto is mailed to the Company's
stockholders, at the time of the Company Stockholders' Meeting or at the
Effective Time, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading; provided that the foregoing shall not apply to
--------
information supplied by or on behalf of the Company specifically for inclusion
or incorporation by reference in any such document. The Offer Documents will
comply as to form in all material respects with the provisions of the Exchange
Act, except that no representations is made by Parent or Purchaser with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference therein.
SECTION 6.06. Sufficient Funds. Parent and Purchaser have access to
-----------------
sufficient funds to consummate the Offer and the Merger on the terms
contemplated by this Agreement.
<PAGE>
37
SECTION 6.07. Brokers. Except for Warburg Dillon Read, no broker,
--------
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by and on behalf of Parent or Purchaser.
ARTICLE VII
Covenants
---------
SECTION 7.01. Conduct of Business of the Company. The Company hereby
-----------------------------------
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
it will and will cause each of its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use reasonable efforts to preserve intact its business
organization, maintain its material rights and franchises, retain the
services of its respective key employees and maintain its relationships
with its respective customers and suppliers and others having business
dealings with it;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
supplies and inventories in quantities consistent with its customary
business practice; and
(d) use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that currently
maintained.
SECTION 7.02. Prohibited Actions by the Company. Without limiting the
----------------------------------
generality of Section 7.01, except as set forth in Section 7.02 of the Company's
Disclosure Letter, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, it will not do, and
will not permit any of its Subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become payable to
any director or employee, except for increases in salary or wages of
employees in the ordinary course of business and consistent with past
<PAGE>
38
practice; (ii) grant any severance or termination pay (other than pursuant
to the normal severance policy or practice of the Company or its
Subsidiaries as in effect on the date of this Agreement) to, or enter into
or amend in any material respect any employment or severance agreement
with, any employee; (iii) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or Benefit Plan of the
Company or its Subsidiaries except as required by applicable Law or (iv)
take any action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with past
practice, under any collective bargaining agreement or Benefit Plan of the
Company or its Subsidiaries;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property),
outstanding shares of capital stock, except for dividends by a wholly owned
Subsidiary of the Company to the Company or another wholly owned Subsidiary
of the Company;
(c) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any outstanding shares of capital stock of,
or other equity interests in, or any securities that are convertible into
or exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, the
Company or any of its Subsidiaries (other than (i) any such acquisition by
the Company or any of its wholly owned Subsidiaries directly from any
wholly owned Subsidiary of the Company in exchange for capital
contributions or loans to such Subsidiary or (ii) any purchase, forfeiture
or retirement of shares of Company Common Stock or the Company Stock
Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
Subsidiaries;
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its Subsidiaries or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of such capital stock or such equity interests;
<PAGE>
39
(e) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interests in, or any Voting Company Debt or other voting
securities of, the Company or any of its Subsidiaries, or any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than issuances of shares of Company Common Stock
upon the exercise of the Company Stock Options outstanding at the date of
this Agreement in accordance with the terms thereof (as in effect on the
date of this Agreement);
(f) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any
assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets (including technological
assets) of the Company or any of its Subsidiaries, except for (i)
dispositions of excess or obsolete assets, (ii) sales of inventories in the
ordinary course of business and consistent with past practice and (iii) the
licensing of software to customers consistent with past practice;
(h) adopt any amendments to its certificate of incorporation or bylaws
or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices of the Company, except as may be required by a change in GAAP, or
any change in Tax accounting;
(j) (i) incur any indebtedness, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement
<PAGE>
40
to maintain any financial statement condition of another Person or enter
into any arrangement having the economic effect of any of the foregoing,
except for short-term borrowings pursuant to existing lines of credit
incurred in the ordinary course of business consistent with past practice
or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than to or in the Company or any
direct or indirect wholly owned Subsidiary of the Company;
(k) enter into any contract which, if such contract is entered into,
would be a Material Contract;
(l) make or agree to make any new capital expenditure or expenditures
other than the capital expenditures contemplated by the Company's annual
operating plan for 1999, a copy of which has been furnished to Parent prior
to the execution of this Agreement;
(m) make any nonroutine Tax election or settle or compromise any Tax
liability or refund;
(n) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents or
incurred in the ordinary course of business consistent with past practice
or (ii) cancel any Material indebtedness (individually or in the aggregate)
or waive any claims or rights of substantial value;
(o) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to in
Section 7.11); or
(p) agree in writing or otherwise to do any of the foregoing.
SECTION 7.03. No Solicitation. (a) From the date of this Agreement
----------------
until the Effective Time or the
<PAGE>
41
termination of this Agreement pursuant to Section 9.01, the Company agrees that
it will not, and will not permit any of its Subsidiaries, or any of its or their
officers, directors, employees, representatives, agents, or Affiliates,
including any investment banker, attorney, or accountant retained by the Company
or any of its Subsidiaries (collectively, "Representatives"), to, directly or
---------------
indirectly (i) initiate, solicit or encourage or otherwise facilitate (including
by way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal or offer that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal, (ii) enter into or
maintain or continue discussions or negotiate with any Person regarding an
Acquisition Proposal or in furtherance of such inquiries or to obtain an
Acquisition Proposal, or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of the Representatives of the
Company or any of its Subsidiaries to take any such action, and the Company
shall promptly notify Parent of any such inquiries and proposals hereafter
received by the Company or any of its Subsidiaries or by any such
Representative, relating to any of such matters. Any violation of the
restrictions set forth in this Section 7.03 by any Representative of the Company
or any of its Subsidiaries, whether or not such Person is purporting to act on
behalf of the Company or otherwise, shall be deemed to be a breach of this
Section 7.03 by the Company. Notwithstanding the foregoing, the Board of
Directors of the Company may, at any time prior to the earlier to occur of
acceptance for payment of shares of Company Common Stock pursuant to the Offer
and adoption of this Agreement by the stockholders of the Company, furnish
information (pursuant to a customary confidentiality agreement no more favorable
to the party receiving information than the Confidentiality Agreement and
consistent with the Company's disclosure and other obligations under this
Agreement, including Section 7.03(c)) to, or engage in discussions or
negotiations with, any Person in response to an unsolicited bona fide written
Acquisition Proposal of such Person that the Board of Directors of the Company
determines is reasonably likely to constitute a Qualifying Proposal, if, and
only to the extent that, (A) the Board of Directors of the Company, after
consultation with outside legal counsel to the Company, determines in good faith
that failure to do so would result in a breach of the fiduciary duty of the
Board of Directors of the Company to the stockholders of the Company under
applicable Law, and (B) prior to furnishing such information to, or entering
<PAGE>
42
into discussions or negotiations with, such Person the Company provides written
notice to Parent to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such Person and the Company complies with
Section 7.03(c). The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Persons conducted heretofore by it or its Representatives with respect
to any Acquisition Proposal.
(b) Except as expressly permitted by this Section 7.03, (i) neither
the Board of Directors of the Company nor any committee thereof shall (A)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent or Purchaser, the approval or recommendation by such Board of
the Offer or the Merger as set forth in Section 2.02, (B) approve or recommend,
or propose publicly to approve or recommend, any Acquisition Proposal, or (C)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other agreement (each, an "Acquisition Agreement")
---------------------
related to any Acquisition Proposal and (ii) the Company shall not enter into
any Acquisition Agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the earlier to occur of acceptance for
payment of shares of Company Common Stock pursuant to the Offer and adoption of
this Agreement by the stockholders of the Company, the Board of Directors of the
Company may terminate this Agreement but only (A) to the extent that the Board
of Directors of the Company, after consultation with outside legal counsel to
the Company, determines in good faith that failure to do so would result in a
breach of the fiduciary duty of the Board of Directors to the stockholders of
the Company under applicable Law, (B) if the Company and the Board of Directors
of the Company have complied with all the provisions of this Section 7.03, (C)
after the second Business Day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company is prepared to accept
a Qualifying Proposal, specifying the principal terms and conditions of such
Qualifying Proposal and identifying the Person making such Qualifying Proposal
(during which two day period the Company will negotiate in good faith with
Parent or Purchaser concerning any amendments proposed by Parent or Purchaser)
and (D) if concurrently with such termination, the Company enters into an
Acquisition Agreement with respect to such Qualifying Proposal and pays to
Parent the Termination Fee.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.03, the Company shall promptly advise
Parent, orally and in writing, of any request for information or of any
Acquisition Proposal, the principal terms and conditions of
<PAGE>
43
such request or Acquisition Proposal and the identity of the Person making such
request or Acquisition Proposal. The Company shall keep Parent reasonably
informed of the status and details (including amendments or proposed amendments)
of any such request or Acquisition Proposal.
(d) "Acquisition Proposal" means an inquiry, offer or proposal that
--------------------
is made after the date of this Agreement regarding any of the following (other
than the Transactions) involving the Company: (i) any merger, consolidation,
share exchange, recapitalization, liquidation, dissolution, business combination
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a substantial portion of the assets of the
Company and its Subsidiaries, taken as a whole, or of any Material Business or
of any Subsidiary or Subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any acquisition of
15% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith or any other acquisition or disposition the consummation of which
would prevent or materially diminish the benefits to Parent of the Merger; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. "Qualifying
----------
Proposal" means any written proposal made by a third party after the date of
- --------
this Agreement to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction all the shares of Company Common Stock then outstanding or the
assets of the Company and its Subsidiaries as an entirety which the Board of
Directors of the Company determines in good faith (x) (based on the advice of a
financial advisor of nationally recognized reputation) that such proposal has a
reasonable likelihood of being consummated and (y) (based on the written opinion
of a financial advisor of nationally recognized reputation) that such proposal
would, if consummated, be superior to the Company's stockholders from a
financial point of view (taking into account any changes to the financial terms
of this Agreement proposed by Parent or Purchaser in response to such proposal)
when compared to the Offer, the Merger and the other Transactions, taken as a
whole. "Material Business" means any business (or the assets needed to carry
-----------------
out such business) that contributed or represented 15% or more of the net sales,
the net income or the assets (including equity securities) of the Company and
its Subsidiaries taken as a whole.
<PAGE>
44
(e) Nothing contained in this Section 7.03 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which the Board of Directors of the Company, after
consultation with outside legal counsel to the Company, determines in good faith
is required by applicable Law; provided that neither the Board of Directors of
--------
the Company nor any committee thereof approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied with all the provisions of
this Section 7.03. Notwithstanding anything to the contrary, the Company will
duly call, give notice and hold the Stockholders Meeting, if required by the
DGCL, for the purpose of considering and taking action upon this Agreement and
the Merger whether or not the Board of Directors of the Company has determined
at any time after the date hereof it is no longer advisable for the stockholders
of the Company to adopt this Agreement.
SECTION 7.04. Access to Information. Between the date of this
----------------------
Agreement and the Effective Time, the Company shall, and shall cause its
Subsidiaries to, (a) afford to Parent and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives full
reasonable access during normal business hours and at all other reasonable times
to the officers, employees, agents, properties, offices and other facilities of
the Company and its Subsidiaries and to their books and records and (b) furnish
promptly to Parent and its representatives a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities Laws and such other
information concerning the business, properties, contracts, records and
personnel of the Company and its Subsidiaries (including financial, operating
and other data and information) as may be reasonably requested, from time to
time, by or on behalf of Parent.
SECTION 7.05. Confidentiality Agreement. Subject to Section 7.07,
--------------------------
the parties agree that the provisions of the Confidentiality Agreement shall
remain binding and in full force and effect and that the terms of the
Confidentiality Agreement are incorporated herein by reference; provided,
--------
however, that any consents from the Company necessary under the Confidentiality
- -------
Agreement for Parent and Purchaser to consummate the Transactions shall be
deemed to have been made. The parties shall comply with, and shall cause their
respective representatives to comply with, all of their respective obligations
under the
<PAGE>
45
Confidentiality Agreement until Purchaser purchases Shares pursuant to, and
subject to the conditions of, the Offer.
SECTION 7.06. Reasonable Efforts. Subject to the terms and
-------------------
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable Laws to consummate and make effective as soon as reasonably
practicable the Transactions including (a) cooperating in the preparation and
filing of all applications, requests, consents and other filings required by
applicable Governmental Authorities or Courts, including filings required by the
HSR Act and Exon-Florio, the Offer Documents, the Schedule 14D-9, the Proxy
Statement and any amendments and supplements to any thereof; (b) taking all
action reasonably necessary, proper or advisable to secure any necessary
consents, approvals or waivers from third parties, including under existing debt
obligations of the Company and its Subsidiaries or to amend the notes,
indentures or agreements relating to such existing debt obligations to the
extent required by such notes, indentures or agreements, or to redeem or
repurchase such debt obligations; (c) contesting any pending legal proceeding,
whether judicial or administrative, relating to the Offer or the Merger,
including seeking to have any stay or temporary restraining order entered by any
Court or other Governmental Authority vacated or reversed; and (d) executing any
additional instruments necessary to consummate the Transactions. In case at any
time after the Effective Time any further action is necessary to carry out the
purposes of this Agreement, the proper officers and directors of each party
hereto shall use all reasonable efforts to take all such necessary action.
SECTION 7.07. Public Announcements. Parent, Purchaser and the
---------------------
Company will consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer or the Merger
or this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation (and affording the other party or
parties an opportunity to comment thereon), except as may be required by
applicable Law or Court process or by obligations pursuant to any listing
agreement with the NASD or any securities exchange.
SECTION 7.08. Employee Agreements. Parent acknowledges and agrees
--------------------
that all employment agreements, severance agreements, deferred compensation
agreements, and supplemental retirement agreements with the employees of the
Company and its Subsidiaries that are listed in Section 7.08
<PAGE>
46
of the Company's Disclosure Letter will be binding and enforceable obligations
of the Surviving Corporation to the same extent as they were binding and
enforceable obligations of the Company and its Subsidiaries as of the date of
this Agreement, except as the parties thereto may otherwise agree.
SECTION 7.09. State Takeover Statutes. The Company will take all
------------------------
steps necessary (a) to exempt the Transactions from Section 203 of the DGCL, (b)
to ensure that no other state takeover statute or similar Law or Regulation is
or becomes applicable to any Transaction Agreement and (c) if any state takeover
statute or similar Law or Regulation becomes applicable to any Transaction
Agreement, to ensure that the Offer, the Merger and the other Transactions may
be consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such Law or
Regulation on the Offer, the Merger and the other Transactions.
SECTION 7.10. Employee Benefit Plans. Until 24 months from the
-----------------------
Effective Date, Parent shall provide, or cause to be provided, to all employees
of the Company and its Subsidiaries compensation, incentive pay and benefits
that, taken as a whole, are substantially comparable in the aggregate to the
compensation, incentive pay and benefits (without taking into account any
equity-based compensation, incentive pay or benefits) provided to such employees
by the Company and its Subsidiaries as of the Offer Closing Date. From and after
the Effective Time, Parent shall grant all employees of the Surviving
Corporation and its Subsidiaries on the Effective Time credit for vesting and
eligibility purposes (but not for benefit accrual purposes) for all service with
the Surviving Corporation and any Subsidiary of the Surviving Corporation prior
to the Effective Time under all Benefit Plans of Parent or its Subsidiaries
(other than the Surviving Corporation and its Subsidiaries) in which such
employees shall become eligible to participate as if such service with the
Surviving Corporation or any Subsidiary of the Surviving Corporation and their
respective predecessors was service with Parent or any Subsidiary of Parent
(other than the Surviving Corporation and its Subsidiaries). Except as set
forth in Section 7.10 of the Company's Disclosure Letter, in the event any
severance agreement, program or policy requires the payment of benefits solely
as a result of the transactions contemplated under agreement, the Company will
prior to the Closing amend such agreement, program or policy to prevent the
payment of benefits solely as a result of the transactions contemplated under
this agreement.
<PAGE>
47
SECTION 7.11. Indemnification of Directors and Officers. (a)
------------------------------------------
Purchaser agrees that all rights to indemnification for acts or omissions
occurring prior to the Effective Time in favor of the current or former
directors, officers or employees of the Company and its Subsidiaries as provided
in their respective certificates of incorporation or bylaws shall survive the
Merger and shall continue in full force and effect in accordance with their
terms for a period of six years from the Effective Time. Parent shall cause to
be maintained for a period of six years from the Effective Time the Company's
current directors', officers' and employees' insurance and indemnification
policy (the "D&O Insurance") and the current fiduciary liability insurance
-------------
policy (the "Fiduciary Insurance") (provided that Parent may substitute therefor
------------------- --------
policies or financial guarantees with reputable and financially sound carriers
or other obligors of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors, officers or employees of the Company on or prior
to the date of this Agreement, so long as the amount per annum to be paid by the
Company after the date of this Agreement for such D&O Insurance and Fiduciary
Insurance is not greater than 200% of the current annual premiums paid by the
Company for such insurance. Parent may cause to be obtained D&O Insurance and
Fiduciary Insurance that satisfies the foregoing pursuant to which premiums are
paid for the entire six-year period or, if applicable, for the remainder of such
period. If, during such six-year period, such insurance coverage cannot be
obtained at all or can only be obtained for an amount (including amounts paid by
the Company after the date of this Agreement) in excess of the per annum limit
described above, Parent shall use all reasonable efforts to cause to be obtained
as much D&O Insurance and Fiduciary Insurance as can be obtained for the
remainder of such six-year period (including amounts paid by the Company after
the date of this Agreement) not in excess of such limit on terms and conditions
no less advantageous than the existing D&O Insurance and the existing Fiduciary
Insurance, respectively.
(b) If any claim or claims shall, subsequent to the Effective Time
and within six years thereafter, be made in writing against any present or
former director, officer or employee of the Company based on or arising out of
the services of such Person prior to the Effective Time in the capacity of such
Person as a director, officer or employee of the Company (and such director,
officer or employee shall have given Parent written notice of such claim or
claims
<PAGE>
48
within such six year period), the provisions of subsection (a) of this
Section respecting the rights to indemnity for current or former directors,
officers or employees under the certificate of incorporation and bylaws of the
Company and its Subsidiaries shall continue in effect until the final
disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 7.11,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
SECTION 7.12. Event Notices and Other Actions. (a) From and after
--------------------------------
the date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of (i) the occurrence or nonoccurrence
of any event, the occurrence or nonoccurrence of which has resulted in, or could
reasonably be expected to result in, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied, (ii) the failure of such party to comply with any covenant or
agreement to be complied with by it pursuant to this Agreement which has
resulted in, or could reasonably be expected to result in, any condition to the
Offer set forth in Annex B, or any condition to the Merger set forth in Article
VIII, not being satisfied and (iii) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect. No delivery
of any notice pursuant to this Section 7.12(a) shall cure any breach of any
representation or warranty of such party contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party or
parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of
their respective Subsidiaries to, take any action or nonaction that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) except
as otherwise permitted by Section 7.03, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied.
<PAGE>
49
SECTION 7.13. Third Party Standstill Agreements; Tortious
-------------------------------------------
Interference. During the period from the date of this Agreement through the
- -------------
Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill or similar agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent).
Subject to the foregoing, during such period, the Company agrees to enforce, to
the fullest extent permitted under applicable Law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
Court of the United States or any state thereof having jurisdiction.
Notwithstanding the foregoing, nothing in this Section 7.13 is intended to
prevent the Company from exercising its rights under Section 7.03(a) in
accordance with the provisions of Section 7.03.
ARTICLE VIII
Closing Conditions
------------------
SECTION 8.01. The obligations of the Parent Companies to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions, any or all of which may be waived by the Parent
Companies, in whole or in part, to the extent permitted by applicable Law:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if
required by applicable Law.
(b) No Court or Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(c) The applicable waiting period under the HSR Act shall have
expired or been terminated, the approvals under the European Antitrust Laws
shall have been obtained from the applicable Governmental Authorities, and
the period of time for any applicable review process by CFIUS under Exon-
Florio shall have expired, and CFIUS shall not have taken any action or
made any recommendation to the President of the United
<PAGE>
50
States to block or prevent the consummation of the Offer or the Merger.
(d) The Purchaser, Parent or their Affiliates shall have accepted for
payment and purchased shares of Company Common Stock pursuant to and
subject to the conditions of the Offer.
ARTICLE IX
Termination, Amendment and Waiver
---------------------------------
SECTION 9.01. Termination. This Agreement may be terminated and the
------------
Offer and the Merger may be abandoned at any time (notwithstanding approval of
the Merger by the stockholders of the Company) prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent, Purchaser or the Company if any Court of competent
jurisdiction or other Governmental Authority shall have issued a final
Order or taken any other final action restraining, enjoining or otherwise
prohibiting the consummation of the Offer or the Merger and such Order or
other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex B hereto, Purchaser shall have (i) failed to commence the Offer
within the time required by Regulation 14D under the Exchange Act, (ii)
terminated the Offer without purchasing any shares of Company Common Stock
pursuant to the Offer or (iii) failed to accept for payment shares of
Company Common Stock pursuant to the Offer prior to July 16, 1999 (the
"Termination Date");
-----------------
(d) by the Company if (i) there shall not have been (x) any breach or
breaches of any representation or warranty that, individually or in the
aggregate, have resulted in or would reasonably be expected to result in a
Material Adverse Effect on the Company or (y) any breach or breaches of a
covenant or agreement on the part of the Company under this Agreement or
the Option Agreement that, individually or in the aggregate, materially
adversely affect (or materially delay) the consummation of the Offer and
Purchaser shall have (A) failed to commence the Offer within the
<PAGE>
51
time required by Regulation 14D under the Exchange Act, (B) terminated the
Offer without purchasing any shares of Company Common Stock pursuant to the
Offer or (C) failed to accept for payment shares of Company Common Stock
pursuant to the Offer prior to the Termination Date, or (ii) prior to the
purchase of shares of Company Common Stock pursuant to the Offer,
concurrently with the execution of an Acquisition Agreement under the
circumstances permitted by Section 7.03; provided that such termination
--------
under this clause (ii) shall not be effective unless the Company and the
Board of Directors of the Company shall have complied with all their
obligations under Section 7.03 and until payment of the Termination Fee
pursuant to Section 9.05(b);
(e) by Parent or Purchaser prior to the purchase of shares of Company
Common Stock pursuant to the Offer, if (i) Purchaser shall be entitled to
terminate the Offer pursuant to paragraph (b)(i) of Annex B, (ii) there
shall have been any breach of any covenant or agreement on the part of the
Company under this Agreement or the Option Agreement which materially
adversely affects (or materially delays) the consummation of the Offer,
which shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two Business Days prior to the date
on which the Offer expires, provided, however, that the Company shall have
-------- -------
no right to cure a breach of Section 7.03, (iii) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified
(including by amendment of Schedule 14D-9) in a manner adverse to Purchaser
its approval or recommendation of the Offer, the Merger or this Agreement
or shall have recommended to the Company's stockholders a Third Party
Acquisition, or (iv) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer at least a majority of the
Fully Diluted Shares; or
(f) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer if (i) there shall have been a breach of
any representation or warranty in this Agreement on the part of Parent or
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or (ii) there shall have been a breach of any
covenant or agreement in this Agreement on the part of Parent or Purchaser
which materially adversely affects (or materially delays) the consummation
of the Offer which shall not have been cured prior to the earliest
<PAGE>
52
of (A) 10 days following notice of such breach and (B) two Business Days
prior to the date on which the Offer expires.
SECTION 9.02. Effect of Termination. In the event of the termination
----------------------
and abandonment of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its Affiliates, directors, officers or stockholders, other
than the provisions of this Section 9.02 and Sections 5.19, 6.07, 7.05 and 9.05
and Article X. Nothing contained in this Section 9.02 shall relieve any party
from liability for any antecedent breach of this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by action
----------
taken by the Company, Parent and Purchaser at any time before or after any
adoption of this Agreement by the stockholders of the Company (whether or not
such adoption is required); provided that after the date of adoption of this
--------
Agreement by the stockholders of the Company, no amendment shall be made that by
Law requires further approval of such stockholders without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
------------------
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (c) waive compliance with any of the agreements or conditions of the
other parties hereto contained herein; provided that after the date of adoption
--------
of the Merger by the stockholders of the Company, no extensions or waivers shall
be made that by Law requires further approval by such stockholders without the
approval of such stockholders. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.05. Fees, Expenses and Other Payments. (a) Except as
----------------------------------
provided in Section 9.05(b) of this Agreement, all fees and expenses incurred by
the parties hereto shall be borne solely and entirely by the party which has
incurred such fees and expenses.
<PAGE>
53
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 9.01(e)(i) (other than a termination resulting from an event
or circumstance that causes a Material Adverse Effect with respect to
the Company after the date of this Agreement, which event or
circumstance was not caused by the willful or intentional action or
inaction by the Company) or (iv) or pursuant to Section 9.01(e)(ii)
other than as a result of a breach of Section 7.03, and in any such
case, any proposal for a Third Party Acquisition shall have been made
on or prior to the date of such termination and in any such case,
within 12 months thereafter the Company enters into an agreement with
respect to the consummation of a Third Party Acquisition or a Third
Party Acquisition is otherwise consummated;
(ii) Parent or Purchaser terminates this Agreement pursuant to
Section 9.01(e)(ii) as a result of a breach of Section 7.03 or
pursuant to Section 9.01(e)(iii); or
(iii) the Company terminates this Agreement pursuant to Section
9.01(d)(ii);
then, in each case, the Company shall pay to Parent, within two Business Days
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such termination pursuant to Section
9.01(d)(ii), a fee, in cash, of $135 million (a "Termination Fee") plus, in the
---------------
event that the Option Agreement terminates in connection with the termination of
this Agreement giving rise to the Termination Fee, an additional amount, not in
excess of $22.5 million, as reimbursement for Expenses.
(c) Any payment required to be made pursuant to Section 9.05(b) of
this Agreement shall be made to Parent by wire transfer of immediately available
funds to an account designated by Parent.
(d) For purposes of this Section 9.05, this Agreement shall be deemed
terminated by Parent or Purchaser pursuant to a provision giving rise to the
payment of the Termination Fee if at the time of any termination hereunder
Parent or Purchaser was so entitled to terminate this Agreement pursuant to such
provision.
<PAGE>
54
ARTICLE X
General Provisions
------------------
SECTION 10.01. Nonsurvival of Representations, Warranties and
----------------------------------------------
Agreements. None of the representations and warranties in this Agreement or in
- -----------
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 10.02. Notices. All notices and other communications given
--------
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses or sent by electronic transmission to the telecopier number
specified below:
(a) If to either of the Parent Companies, to:
GEC Incorporated and
GEC Acquisition Corp.
c/o Videojet Systems International, Inc.
1500 Mittel Boulevard
Wood Dale, IL 60191-1073
Attention: Patricia A. Hoffman
Telecopier No.: (630) 238-3998
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Philip A. Gelston
Telecopier No.: (212) 474-3700
<PAGE>
55
(b) If to the Company, to:
FORE Systems, Inc.
1000 Fore Drive
Warrendale, PA 15086-7502
Attention: Christopher H. Gebhardt
Telecopier No.: (724) 742-7654
with a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219-6401
Attention: Marlee S. Myers
Telecopier No.: (412) 560-3399
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed received on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed received three
days after the date the same is postmarked.
SECTION 10.03. Headings. The headings contained in this Agreement
---------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.04. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.05. Entire Agreement. This Agreement (together with the
-----------------
Annexes, the Company's Disclosure Letter, the Confidentiality Agreement and the
other Transaction
<PAGE>
56
Agreements) constitutes the entire agreement of the parties, and supersedes all
prior agreements and undertakings, both written and oral, among the parties,
with respect to the subject matter hereof.
SECTION 10.06. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of Law or otherwise by any of the parties without
the prior written consent of the other parties, except that Purchaser may
assign, in its sole discretion, any of or all its rights (including the right to
purchase Shares in the Offer), interests and obligations under this Agreement to
Parent or to an Affiliate of Parent, but no such assignment shall relieve
Purchaser of any of its obligations under this Agreement. Any attempted
assignment in violation of this Section 10.06 shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 10.07. Parties in Interest. This Agreement shall be binding
--------------------
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Article III and Section 7.11
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies or any nature whatsoever
under or by reason of this Agreement.
SECTION 10.08. Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS
OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW.
SECTION 10.10. Enforcement. The parties agree that irreparable
------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent
<PAGE>
57
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Delaware state court or any Federal court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware in the event any
dispute arises out of this Agreement or any transaction contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any Delaware
state court or any Federal court sitting in the State of Delaware and (d) waives
any right to trial by jury with respect to any action related to or arising out
of this Agreement or any transaction contemplated by this Agreement. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or of the United
States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 10.11. Counterparts. This Agreement may be executed in
-------------
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE>
58
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers or directors thereunto duly authorized.
GEC INCORPORATED,
by
---------------------------------
Name:
Title:
GEC ACQUISITION CORP.,
by
---------------------------------
Name:
Title:
FORE SYSTEMS, INC.,
by
---------------------------------
Name:
Title:
<PAGE>
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings
set forth below unless the context shall otherwise require:
"Acquisition Agreement" shall have the meaning ascribed to such term
---------------------
in Section 7.03(b).
"Acquisition Proposal" shall have the meaning ascribed to such term in
--------------------
Section 7.03(d).
"Affiliate" shall mean, with respect to any Person, any other Person
---------
that controls, is controlled by or is under common control with the former
Person.
"Agreement" shall mean the Agreement and Plan of Merger dated as of
---------
April 26, 1999 among Parent, Purchaser and the Company, including any amendments
thereto and each Annex (including this Annex A) and Schedule thereto (including
the Company's Disclosure Letter).
"Balance Sheet Date" shall mean March 31, 1998.
------------------
"Benefit Plans" shall mean any employee pension benefit plan (whether
-------------
or not insured), as defined in Section 3(2) of ERISA, any employee welfare
benefit plan (whether or not insured) as defined in Section 3(1) of ERISA, any
plans that would be employee pension benefit plans or employee welfare benefit
plans if they were subject to ERISA, such as foreign plans and plans for
directors, any employment contracts, severance or termination pay arrangements,
any stock bonus, stock ownership, stock option, stock purchase, stock
appreciation rights, phantom stock or other stock plan (whether qualified or
nonqualified), and any bonus or incentive compensation plan sponsored,
maintained or contributed to by the Company or any of its Subsidiaries for the
benefit of any of the present or former directors, officers, employees, agents,
consultants or other similar representatives providing services to or for the
Company or any of its Subsidiaries in connection with such services or any such
plans which have been so sponsored, maintained, or contributed to within six
years prior to the date of this Agreement; provided, however, that such term
shall not include (a) routine employment policies and procedures developed and
applied in the ordinary course of business and consistent with past practice,
including wage, vacation, holiday and sick or other leave policies, (b) workers
compensation insurance and (c) directors and officers liability insurance.
<PAGE>
2
"Business Day" means any day other than a day on which banks in New
------------
York are authorized or obligated to be closed.
"Certificate" shall mean an outstanding stock certificate which
-----------
immediately prior to the Effective Time represented shares of Company Common
Stock.
"Certain Stockholders" shall have the meaning ascribed to such term in
--------------------
the recitals to the Agreement.
"Certificate of Merger" shall have the meaning ascribed to such term
---------------------
in Section 3.02.
"CFIUS" shall mean Committee on Foreign Investment in the United
-----
States, an interagency committee chaired by a representative of the United
States Secretary of the Treasury.
"Closing" shall have the meaning ascribed to such term in Section
-------
4.04.
"Closing Date" shall mean the date of the Closing as determined
------------
pursuant to Section 4.04.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
the Regulations promulgated thereunder.
"Company" shall mean FORE Systems, Inc., a Delaware corporation.
-------
"Company Common Stock" shall have the meaning ascribed to such term in
--------------------
the recitals to the Agreement.
"Company Option Plans" shall mean the Incentive Stock Option and
--------------------
Nonqualified Stock Option Plan; the 1994 Stock Option Plan; the 1994 Employee
Stock Purchase Plan; the 1995 Stock Incentive Plan; the 1996 Stock Option Plan;
1998 Stock Option Plan; the Berkeley Networks, Inc. Substitute Stock Option
Plan; the Alantec Corporation Second Amended and Restated 1991 Stock Option
Plan; the Alantec Corporation 1994 Stock Option Plan; and the Change in Control
Separation Plan and any other arrangement pursuant to which options to acquire
Company Common Stock have been granted to current or former directors or
employees.
"Company SEC Documents" shall have the meaning ascribed to such term
---------------------
in Section 5.07(a).
<PAGE>
3
"Company Stock Options" shall mean stock options granted pursuant to
---------------------
the Company Option Plans.
"Company Stockholder Approval" shall have the meaning ascribed to such
----------------------------
term in Section 5.04(b).
"Company Stockholders' Meeting" shall have the meaning ascribed to
-----------------------------
such term in Section 3.07(b).
"Company's Audited Consolidated Financial Statements" shall mean the
---------------------------------------------------
consolidated balance sheets of the Company and its Subsidiaries as of March 31,
1998 and March 31, 1997 and the related consolidated statements of income and
cash flows for the fiscal years ended March 31, 1998, 1997 and 1996, together
with the notes thereto, all as audited by Price Waterhouse LLP, under their
report with respect thereto dated April 22, 1998 and included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1998 filed with
the SEC.
"Company's Consolidated Financial Statements" shall mean the Company's
-------------------------------------------
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter dated the date of
---------------------------
the Agreement delivered by the Company to the Parent Companies concurrently with
the execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
V and covenants contained in Article VII by specific section and subsection
references.
"Company's Unaudited Consolidated Financial Statements" shall mean the
-----------------------------------------------------
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
December 31, 1998, and the related consolidated statements of income and cash
flows for the nine-month periods ended December 31, 1998 and December 31, 1997.
"Copyrights" shall have the meanings ascribed to such term in Section
----------
5.18.
"Confidentiality Agreement" shall mean that certain confidentiality
-------------------------
agreement between Parent and the Company dated March 17, 1999.
"Control Date" shall have the meaning ascribed to such term in Section
------------
2.04.
<PAGE>
4
"Court" shall mean any court of the United States, any foreign country
-----
or any domestic or foreign state, and any political subdivision thereof, or any
arbitration tribunal and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
---------------------
maintained, or contributed to by the Company or any of its Subsidiaries as of
the date of this Agreement.
"D&O Insurance" shall have the meaning ascribed to such term in
-------------
Section 7.11(a).
"Derivative Financial Instrument" shall have the meaning ascribed to
-------------------------------
such term in Section 5.08(b).
"DGCL" shall mean the General Corporation Law of the State of
----
Delaware.
"Dissenting Shares" shall have the meaning ascribed to such term in
-----------------
Section 4.03.
"Effective Time" shall mean the date and time of the completion of the
--------------
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 3.02 or such later time as Parent and the
Company may agree and specify in such certificate.
"Environmental Law or Laws" shall mean any and all Laws, enforceable
-------------------------
requirements or Orders of any Governmental Authority pertaining to health or the
environment currently in effect and applicable to a specified Person and its
Subsidiaries, including the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
------
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Hazardous & Solid Waste
----
Amendments Act of 1984, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
the Oil Pollution Act of 1990, as amended ("OPA"), any state or local Laws
---
implementing the foregoing federal Laws, and all other environmental
conservation or protection Laws. For purposes of the Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA;
provided, however, that, to the extent the Laws of the state or locality in
- -------- -------
which the property is located establish a meaning for "hazardous substance" or
"release" that is broader than that specified in CERCLA, such broader meaning
shall apply within the jurisdiction of
<PAGE>
5
such state or locality, and the term "hazardous substance" shall include all
dehydration and treating wastes, waste (or spilled) oil, and waste (or spilled)
petroleum products, by-products and derivatives thereof, polychlorinated
biphenyls, asbestos, and radioactive material, even if such are specifically
exempt from classification as hazardous substances or hazardous wastes pursuant
to CERCLA or RCRA or the analogous statutes of any jurisdiction applicable to
the specified Person or its Subsidiaries or any of their respective properties
or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, and the Regulations promulgated thereunder.
"European Antitrust Laws" shall have the meaning ascribed to such term
-----------------------
in Section 5.05.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
------------
Regulations promulgated thereunder.
"Exchange Fund" shall mean the fund of cash deposited with the Paying
-------------
Agent pursuant to Section 4.02.
"Expenses" shall have the meaning ascribed to such term in the Option
--------
Agreement.
"Exon-Florio" shall mean Section 721 of the Defense Production Act, 50
-----------
App. U.S.C.A. (S) 2170 (West 1991 & Supp. 1998).
"Fiduciary Insurance" shall have the meaning ascribed to such term in
-------------------
Section 7.11(a).
"Filed Company SEC Documents" shall have the meaning ascribed to such
---------------------------
term by Section 5.09.
"Financial Advisor" shall mean Goldman, Sachs & Co., the financial
-----------------
advisor to the Company with respect to the Transactions.
"Fully Diluted Shares" shall have the meaning ascribed to such term in
--------------------
Annex B.
"GAAP" shall mean accounting principles generally accepted in the
----
United States consistently applied by a specified Person.
"Governmental Authority" shall mean any governmental agency or
----------------------
authority (other than a Court) of the United States, any foreign country, or any
domestic or
<PAGE>
6
foreign state, and any political subdivision or agency thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the Regulations promulgated thereunder.
"Independent Directors" shall have the meaning ascribed to such term
---------------------
in Section 2.04.
"Intellectual Property" shall have the meaning ascribed to such term
---------------------
in Section 5.18.
"IRS" shall mean the Internal Revenue Service.
---
"Knowledge" shall mean, with respect to either the Company or Parent,
---------
the actual knowledge (after reasonable inquiry) of, in the case of the Company,
any executive officer of the Company listed in such party's 1998 annual report
to stockholders and, in the case of Parent, any executive officer of Parent.
"Laws" shall mean all laws, statutes, ordinances and Regulations of
----
the United States, any foreign country, or any domestic or foreign state, and
any political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Leaseholds" shall mean, with respect to any Person, all the right,
----------
title and interest of such Person as lessee or licensee, in, to and under
leases, licenses, improvements and/or fixtures.
"Licenses-In" shall have the meaning ascribed to such term in Section
-----------
5.18.
"Licenses-Out" shall have the meaning ascribed to such term in Section
------------
5.18.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Material" shall mean is or will be material to the business,
--------
properties, assets, condition (financial and
<PAGE>
7
other) or results of operations of a specified Person and its Subsidiaries, if
any, taken as a whole.
"Material Adverse Effect" shall mean any change or effect that is
-----------------------
material and adverse to the business, properties, assets, condition (financial
and other) or results of operations of a specified Person and its Subsidiaries,
if any, taken as a whole, including a material adverse effect on the ability of
a specified Person to perform its obligations under each Transaction Agreement
to which it is a party, other than any such effect arising out of or resulting
from, in the case of a determination with respect to the Company and its
Subsidiaries (i) changes in general economic conditions, (ii) general changes or
developments in the industries in which the Company and its Subsidiaries operate
and (iii) facts or events that are primarily and directly attributable to the
announcement of this Agreement and the Transactions.
"Material Business" shall have the meaning ascribed to such term in
-----------------
Section 7.03(d).
"Material Contract" shall mean each contract, lease, indenture,
-----------------
agreement, arrangement or understanding to which the Company or any of its
Subsidiaries is a party or to which any of the properties, assets or operations
of the Company or any of its Subsidiaries is subject that is material to the
business, properties, assets, condition (financial and other) or results of
operations of the Company and its Subsidiaries, taken as a whole, including any
SEC Contract.
"Merger" shall have the meaning ascribed to such term in Section 3.01.
------
"Merger Consideration" shall mean, as to any Certificate, the amount
--------------------
to be paid to the holder thereof pursuant to the Merger, which amount shall be
equal to the product of the number of shares of Company Common Stock evidenced
by such Certificate, multiplied by the Per Share Merger Consideration.
"Minimum Tender Condition" shall have the meaning ascribed to such
------------------------
term in Annex B.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"Offer" shall have the meaning ascribed to such term in the recitals
-----
to the Agreement.
<PAGE>
8
"Offer Closing Date" shall mean the date on which the acceptance for
------------------
payment and payment by Purchaser for shares of Company Common Stock tendered
pursuant to the Offer occurs.
"Offer Documents" shall have the meaning ascribed to such term in
---------------
Section 2.01(c).
"Option Agreement" shall have the meaning ascribed to such term in the
----------------
recitals to the Agreement.
"Order" shall mean any judgment, order or decree of any Court or
-----
Governmental Authority, federal, foreign, state or local.
"Parent" shall mean GEC Incorporated, a Delaware corporation.
------
"Parent Companies" shall have the meaning ascribed to such term in the
----------------
first paragraph of the Agreement.
"Patents" shall have the meaning ascribed to such term in Section
-------
5.18.
"Paying Agent" shall mean a bank or trust company designated and
------------
appointed by Parent to act in the capacities required thereof under Section
4.02.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Per Share Merger Consideration" shall have the meaning ascribed to
------------------------------
such term in Section 4.01(a).
"Permits" shall mean any and all permits, licenses, authorizations,
-------
orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Person" shall mean an individual, partnership, limited liability
------
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but shall not include a Governmental Authority.
"Proprietary Information" shall have the meaning ascribed to such term
-----------------------
in Section 5.18.
"Proxy Statement" shall mean a proxy statement conforming to the
---------------
requirements of the Exchange Act and
<PAGE>
9
relating to the adoption of this Agreement by the Company's stockholders, if
such adoption is required by Law.
"Purchaser" shall mean GEC Acquisition Corp., a Delaware corporation
---------
and a wholly owned Subsidiary of Parent.
"Qualifying Proposal" shall have the meaning ascribed to such term in
-------------------
Section 7.03(d).
"Regulation" shall mean any rule or regulation of any Governmental
----------
Authority having the effect of Law.
"Reports" shall mean, with respect to a specified Person, all reports,
-------
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the SEC).
"Representatives" shall have the meaning ascribed to such term in
---------------
Section 7.03(a).
"Restricted Stock" shall have the meaning ascribed to such term in
----------------
Section 3.06(a).
"Schedule 14D-1" shall have the meaning ascribed to such term in
--------------
Section 2.01(c).
"Schedule 14D-9" shall have the meaning ascribed to such term in
--------------
Section 2.02.
"SEC" shall mean the Securities and Exchange Commission.
---
"SEC Contract" shall mean any "material contract" within the meaning
------------
of Item 10 of Regulation S-K promulgated by the SEC.
"SEC Reports" shall mean (a) all Annual Reports on Form 10-K, (b) all
-----------
Quarterly Reports on Form 10-Q, (c) all proxy statements relating to meetings of
stockholders (whether annual or special), (d) all Current Reports on Form 8-K
and (e) all other reports, schedules, registration statements or other documents
required to be filed during a specified period by a Person with the SEC pursuant
to the Securities Act or the Exchange Act.
"Section 262" shall have the meaning ascribed to such term in Section
-----------
4.03.
<PAGE>
10
"Securities Act" shall mean the Securities Act of 1933 and the
--------------
Regulations promulgated thereunder.
"Software" shall have the meaning ascribed to such term in Section
--------
5.18.
"Stockholders Agreement" shall have the meaning ascribed to such term
----------------------
in the recitals to this Agreement.
A "Subsidiary" of a specified Person shall mean any corporation,
----------
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50% or more of the stock or other
equity or partnership interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Surviving Corporation" shall mean the Company as the corporation
---------------------
surviving the Merger.
"Tax" or "Taxes" shall mean all Federal, state, county, local,
--- -----
municipal, foreign and other taxes, assessments, duties or similar charges of
any kind whatsoever, including all corporate franchise, income, sales, use, ad
valorem, receipts, value added, profits, license, withholding, payroll,
employment, excise, premium, property, customs, net worth, capital gains,
transfer, stamp, documentary, social security, environmental, alternative
minimum, occupation, recapture and other taxes, and including all interest,
penalties and additions imposed with respect to such amounts, and all amounts
payable pursuant to any agreement or arrangement with respect to Taxes.
"Taxing Authority" shall mean any domestic, foreign, federal,
----------------
national, state, county or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising tax regulatory authority.
"Tax Return" or "Tax Returns" shall mean all returns, declarations of
---------- -----------
estimated tax payments, reports, estimates, information returns and statements,
including any related or supporting information with respect to any of the
foregoing, filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
<PAGE>
11
"Terminated Benefit Plans" shall mean Benefit Plans that were
------------------------
sponsored, maintained, or contributed to by the Company or any of its
Subsidiaries within six years prior to the date of the Agreement but which have
been terminated prior to the date of the Agreement.
"Termination Date" shall have the meaning ascribed to such term in
----------------
Section 9.01(c).
"Termination Fee" shall have the meaning ascribed to such term in
---------------
Section 9.05(b).
"Third Party Acquisition" shall mean (a) the acquisition of the
-----------------------
Company by merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction by any Person
(which includes for these purposes a "person" as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or any Affiliate thereof (a
"Third Party"); (b) the acquisition by a Third Party of more than 50% of the
- ------------
assets of the Company and its Subsidiaries, taken as a whole; (c) the
acquisition by a Third Party of 50% or more of the outstanding Company Common
Stock or 50% or more of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Company; (d) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (e) the purchase by the Company or any of its
Subsidiaries of more than 30% of the outstanding shares of Company Common Stock.
"Trademarks" shall have the meaning ascribed to such term in Section
----------
5.18.
"Transaction Agreements" shall mean, collectively, the Agreement, the
----------------------
Stockholders Agreement and the Option Agreement.
"Transactions" shall mean, collectively, the transactions contemplated
------------
by the Transaction Agreements.
"Voting Company Debt" shall have the meaning ascribed to such term in
-------------------
Section 5.03(e).
<PAGE>
ANNEX B
CONDITIONS OF THE OFFER
(a) Notwithstanding any other term of the Offer or the Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Company Common Stock promptly after the termination or withdrawal of
the Offer), to pay for any shares of Company Common Stock tendered pursuant to
the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer that number of shares of Company Common
Stock which would represent at least a majority of the Fully Diluted Shares (the
"Minimum Tender Condition"), (ii) any waiting period under the HSR Act
------------------------
applicable to the purchase of shares of Company Common Stock pursuant to the
Offer shall have expired or been terminated, (iii) the approvals under the
European Antitrust Laws shall have been obtained from the applicable
Governmental Authority and (iv) the period of time for any applicable review
process by CFIUS under Exon-Florio shall have expired, and CFIUS shall not have
taken any action or made any recommendation to the President of the United
States to block or prevent the consummation of the Offer or the Merger. The
term "Fully Diluted Shares" means all outstanding securities entitled generally
--------------------
to vote in the election of directors of the Company on a fully diluted basis,
after giving effect to the exercise or conversion of all options, warrants,
rights and securities exercisable or convertible into such voting securities.
(b) Furthermore, notwithstanding any other term of the Offer or the
Agreement, Purchaser shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, with the consent of the Company or if, at any time on or after the date
of the Agreement and before the acceptance of such shares for payment or the
payment therefor, any of the following conditions exists:
(i) any representation and warranty of the Company in this
Agreement that is qualified as to materiality shall not be true and
correct or any such representation and warranty that is not so
qualified shall not be true and correct in any material respect, as of
the date of the Agreement and as of such time, except to the extent
such
<PAGE>
2
representation and warranty expressly relates to an earlier date
(in which case on and as of such earlier date) (provided that, in each
--------
case, the condition set forth in this clause (i) shall be deemed
satisfied so long as any failures of such representations and
warranties to be true and correct, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material
Adverse Effect on the Company);
(ii) the Company shall have breached any of its covenants or
agreements contained in the Agreement or the Option Agreement which
materially adversely affects (or materially delays) the consummation
of the Offer (it being understood that a breach of Section 7.12 of the
Agreement shall not result in a failure of this condition to be
satisfied unless such breach results in the failure of the condition
specified in paragraph (i) above); or
(iii) there shall be threatened or pending any suit, action or
proceeding by any Governmental Authority, or any suit, action or
proceeding brought by any other Person that has a reasonable
likelihood of success, (A) challenging the acquisition by Parent or
Purchaser of any Company Common Stock, seeking to restrain or prohibit
the making or consummation of the Offer or the Merger, or seeking to
obtain from the Company, Parent or any of their respective
Subsidiaries or Affiliates any damages in an amount that would result
in a Material Adverse Effect in respect of the Company, taken as a
whole, and in the case of Parent or any of its Subsidiaries or
Affiliates relating to the Transaction, (B) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of
their respective Subsidiaries or Affiliates of any Material portion of
the business or assets of the Company, Parent or any of their
respective Subsidiaries or Affiliates, or to compel the Company,
Parent or any of their respective Subsidiaries or Affiliates to
dispose of or hold separate any Material portion of the business or
assets of the Company, Parent or any of their respective Subsidiaries
or Affiliates, as a result of the Offer, the Merger or any of the
other Transactions or (C) which otherwise is reasonably likely to have
a Material Adverse Effect on the Company;
<PAGE>
3
(iv) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed,
sought, enacted, entered, enforced, promulgated, amended or issued
with respect to, or deemed applicable to, or any consent or approval
withheld with respect to, (A) Parent, the Company or any of their
respective Subsidiaries or Affiliates or (B) the Offer or the Merger
by any Governmental Authority that has or is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in paragraph (iii) above;
(v) except as disclosed in the Company Disclosure Letter, since
the date of the Agreement there shall have occurred any event, change,
effect or development that, individually or in the aggregate, has had
or is reasonably likely to have, a Material Adverse Effect on the
Company;
(vi) there shall have occurred and be continuing (A) any general
suspension of trading in, or limitation on prices for, securities on
any national securities exchange or in the over-the-counter market in
the United States or in the United Kingdom,(B) a declaration of a
banking moratorium by any Governmental Authority or any suspension of
payments by any Governmental Authority in respect of banks in the
United States or in the United Kingdom, (C) any general limitation
(whether or not mandatory) by any Governmental Authority in the United
States or in the United Kingdom on the extension of credit by banks or
other lending institutions or (D) in the case of any of the foregoing
existing on the date of the Agreement, a material acceleration or
worsening thereof;
(vii) any Person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Purchaser,
any of its Affiliates, or any group of which any of them is a member
shall have acquired beneficial ownership of more than 15% of the
outstanding shares of Company Common Stock or shall have entered into
a definitive agreement or an agreement in principle with the Company
with respect to a tender offer or exchange offer for any shares of
Company Common Stock or a merger, consolidation or other business
combination with or involving the Company or any of its Subsidiaries;
or
<PAGE>
4
(viii) the Agreement shall have been terminated in accordance
with its terms;
which, in the sole and reasonable judgment of Purchaser or Parent, in any such
case, and regardless of the circumstances giving rise to any such condition
(including any action or inaction by Parent or any of its Affiliates), makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by Purchaser and
Parent in whole or in part at any time and from time to time in their sole and
reasonable judgment; provided that the Minimum Tender Condition may be waived or
--------
modified only by the mutual consent of Purchaser and the Company. The failure
by Parent, Purchaser or any other Affiliate of Parent at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
<PAGE>
Exhibit (c)(2)
<PAGE>
EXECUTION COPY
STOCK OPTION AGREEMENT dated as of April 26, 1999, between
FORE SYSTEMS, INC., a Delaware corporation ("Issuer"), and GEC
------
ACQUISITION CORP., a Delaware corporation ("Grantee").
-------
WHEREAS, concurrently with the execution and delivery of this
Agreement, Issuer, Grantee and GEC Incorporated ("Parent") have entered into an
------
Agreement and Plan of Merger (as the same may be amended or supplemented, the
"Merger Agreement"; terms used but not defined herein have the meanings set
- -----------------
forth in the Merger Agreement), providing for, among other things, the merger of
Grantee with and into Issuer whereby Issuer will be the surviving corporation
and will be a wholly owned subsidiary of Parent; and
WHEREAS, as a condition and inducement to Grantee's and Parent's
willingness to enter into the Merger Agreement, Grantee and Parent have
requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Grant of Option. Subject to the terms and conditions set
----------------
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 23,187,340 (as adjusted as set forth herein) shares
------
(the "Option Shares") of Common Stock, par value $.01 per share ("Issuer Common
------------- -------------
Stock"), of Issuer at a purchase price of $35.00 (as adjusted as set forth
- -----
herein) per Option Share (the "Purchase Price"); provided, however, that in no
-------------- -------- -------
event shall the number of shares for which this Option is exercisable exceed
19.9% of the issued and outstanding shares of Issuer Common Stock.
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option,
-------------------
with respect to any of or all the Option Shares at any time or from time to
time, subject to the provisions of Section 2(c), (i) after the occurrence of any
event as a result of which the Grantee is entitled (without any further
contingencies) to receive a Termination Fee pursuant to the terms of the Merger
Agreement (a "Purchase Event") and (ii) following Grantee's acceptance of shares
--------------
of Issuer Common Stock for payment pursuant to the Offer, to the extent the
effect of such exercise would result in Parent owning, directly or indirectly,
immediately
<PAGE>
2
after such exercise 90% of the then outstanding shares of Issuer
Common Stock (a "Top Up Event"); provided, however, that (i) except as provided
------------ -------- -------
in the last sentence of this Section 2(a), the Option shall terminate and be of
no further force and effect upon the earliest to occur of (A) the Effective
Time, (B) 15 months after the occurrence of a Purchase Event (including any
Purchase Event occurring after termination of the Merger Agreement), and (C)
termination of the Merger Agreement in accordance with its terms prior to the
occurrence of any Purchase Event, unless, in the case of this clause (C),
Grantee is or may be entitled to receive a Termination Fee under the Merger
Agreement following such termination pursuant to Section 9.05(b)(i) (but only to
the extent the Merger Agreement was terminated pursuant to Section 9.01(e)(iv)
thereof), 9.05(b)(ii) or 9.05(b)(iii) of the Merger Agreement, in which case the
Option shall not terminate pursuant to this clause (C) until Grantee could no
longer under any circumstances become entitled to receive a Termination Fee. Any
purchase of Option Shares upon exercise of the Option shall be subject to
compliance with the HSR Act and the obtaining or making of any consents,
approvals, orders, notifications or authorizations (the "Regulatory Approvals"),
--------------------
the failure of which to have obtained or made would have the effect of making
the issuance of Option Shares unlawful. Notwithstanding the termination of the
Option, Grantee shall be entitled to purchase the Option Shares if it has
exercised the Option in accordance with the terms hereof prior to the
termination of the Option and the termination of the Option shall not affect any
rights hereunder that by their terms do not terminate or expire prior to or as
of such termination.
(b) The exercise of the Option shall be effected by Grantee sending
to Issuer a written notice (an "Exercise Notice"; the date of which being herein
---------------
referred to as the "Notice Date") to that effect. An Exercise Notice shall
-----------
specify the number of Option Shares Grantee wishes to purchase pursuant to this
Section 2(b), whether such exercise is the result of a Purchase Event or a Top
Up Event, the denominations of the certificate or certificates evidencing the
Option Shares that Grantee wishes to purchase pursuant to this Section 2(b) and
a date (subject to obtaining applicable Regulatory Approvals) not earlier than
three business days from the Notice Date for the closing of such purchase (the
"Option Closing Date"). Any Option Closing will be at the offices of Cravath,
- --------------------
Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019 at
10:00 a.m. (New York City time) on the applicable Option Closing Date or at such
later date as may be necessary so as to comply with clause (ii) of Section 2(a).
<PAGE>
3
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable Laws and Regulations, which may prohibit the purchase
of all the Option Shares specified in the Exercise Notice without first
obtaining or making certain Regulatory Approvals. In such event, if the Option
is otherwise exercisable and Grantee wishes to exercise the Option, the Option
may be exercised in accordance with Section 2(b) and Grantee shall acquire the
maximum number of Option Shares specified in the Exercise Notice that Grantee is
then permitted to acquire under the applicable Laws and Regulations, and if
Grantee thereafter obtains the Regulatory Approvals to acquire the remaining
balance of the Option Shares specified in the Exercise Notice, then Grantee
shall be entitled to acquire such remaining balance. Issuer agrees to use its
reasonable best efforts to assist Grantee in seeking the Regulatory Approvals.
SECTION 3. Payment and Delivery of Certificates. (a) At any Option
-------------------------------------
Closing Date, Grantee shall pay to Issuer in immediately available funds by wire
transfer to a bank account designated in writing by Issuer an amount equal to
the Purchase Price multiplied by the number of Option Shares to be purchased at
such Option Closing Date.
(b) At any Option Closing Date, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing Date, which Option Shares shall be free and
clear of all Liens.
(c) Certificates for the Option Shares delivered at an Option Closing
Date shall have typed or printed thereon a restrictive legend, which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
It is understood and agreed that the reference to restrictions arising under the
Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act upon
<PAGE>
4
receipt of an opinion of counsel to such effect in form and substance reasonably
satisfactory to Issuer and its counsel or Grantee has delivered to Issuer a copy
of a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Issuer and its counsel, to the effect that
such legend is not required for purposes of the Securities Act.
SECTION 4. Cash-Out Right. (a) To the extent the exercise of this
---------------
Option is the result of a Purchase Event, during the period commencing on such
Purchase Event and ending on the termination of the Option in accordance with
Section 2, Grantee shall have the right (the "Cash-Out Right"), in lieu of
--------------
exercising the Option, to surrender to Issuer for cancellation of the Option
with respect to such number of Option Shares as Grantee specifies in the Cash-
Out Notice (as hereinafter defined) in exchange for the payment by Issuer of an
amount in cash (the "Cash-Out Amount") equal to the greater of (i) $0.05 per
---------------
Option Share the subject of such Exercise Notice and (ii) such number of Option
Shares multiplied by the amount by which (A) the average closing price, for the
ten trading days commencing on the 12th trading day immediately preceding the
Cash-Out Notice Date (as hereinafter defined), per share of Issuer Common Stock
as quoted on the Nasdaq National Market (the "NASDAQ"), as reported in The Wall
------ --------
Street Journal (Northeast edition), or, if not reported thereby, any other
- --------------
authoritative source (the "Closing Price") exceeds (B) the Purchase Price.
-------------
(b) The Cash-Out Right may be exercised by Grantee sending to Issuer
a written notice (a "Cash-Out Notice"; the date of which being herein referred
---------------
to as the "Cash-Out Notice Date") indicating Grantee's election to exercise the
--------------------
Cash-Out Right. A Cash-Out Notice shall specify the number of Option Shares
covered by the portion of the Option to be surrendered to Issuer for
cancellation and a date not earlier than three business days from the Cash-Out
Notice Date for the closing of such cancellation and payment of the Cash-Out
Amount in respect thereof. Such closing will be at an agreed location and time
in New York, New York, on the date so specified. At such closing, Issuer shall
pay to Grantee the Cash-Out Amount in immediately available funds by wire
transfer to a bank account designated in writing by Grantee.
(c) Notwithstanding the termination of the Option, Grantee shall be
entitled to exercise its rights under this Section 4 if it has exercised such
rights in accordance with the terms hereof prior to the termination of the
Option.
<PAGE>
5
SECTION 5. Profit Limitations. (a) Notwith-standing any other
-------------------
provision of this Agreement, to the extent the exercise of this Option is the
result of a Purchase Event, in no event shall the Total Option Profit (as
hereinafter defined) exceed, when aggregated with the Termination Fee, in the
aggregate $135 million and, if any payment to be made to Grantee otherwise would
cause such aggregate amount to be exceeded, the Grantee, at its sole election,
shall either (i) reduce the number of shares of Issuer Common Stock subject to
this Option, (ii) deliver to the Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to the Issuer, or (iv) any
combination thereof, so that the Total Option Profit, when aggregated with such
Termination Fee so paid to Grantee, shall not exceed $135 million after taking
into account the foregoing actions, plus an additional amount, not in excess of
$22.5 million, as reimbursement for out-of-pocket fees and expenses incurred by
Parent, Purchaser or their respective Affiliates in connection with the
Transactions, including all fees and expenses of their counsel, accountants,
investment bankers, experts and consultants (collectively "Expenses").
--------
(b) Notwithstanding any other provision of this Agreement, to the
extent the exercise of this Option is the result of a Purchase Event, this
Option may not be exercised for a number of shares of Issuer Common Stock as
would, as of the date of exercise, result in a Notional Total Option Profit (as
hereinafter defined) which would exceed, when aggregated with the Termination
Fee, in the aggregate $135 million, plus an additional amount, not in excess of
$22.5 million, as reimbursement for Expenses, and, if it otherwise would exceed
such amount, the Grantee, at its sole election, shall either (i) reduce the
number of shares of Issuer Common Stock subject to such exercise, (ii) deliver
to the Issuer for cancellation Option Shares previously purchased by Grantee,
(iii) pay cash to the Issuer, or (iv) any combination thereof, so that the
Notional Total Option Profit, when aggregated with such Termination Fee so paid
to Grantee shall not exceed $135 million after taking into account the foregoing
actions, plus an additional amount, not in excess of $22.5 million, as
reimbursement for Expenses; provided, however, that this paragraph (b) shall not
-------- -------
be construed as to restrict any exercise of the Option that is not prohibited
hereby on any subsequent date.
(c) As used herein, the term "Total Option Profit" shall mean the
-------------------
aggregate amount (before taxes) of the following: (i) any Cash-Out Amount
received or then entitled to be received by Grantee pursuant to Section 4, (ii)
(x) the net consideration, if any, received by Grantee
<PAGE>
6
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) purchased by Grantee pursuant to an
exercise of this Option following a Purchase Event to any unaffiliated party,
valuing any non-cash consideration at its fair market value (as defined below),
less (y) the Purchase Price and any cash paid by Grantee to Issuer pursuant to
- ----
Section 5(a)(iii) or Section 5(b)(iii), as the case may be, and (iii) the net
consideration, if any, received by Grantee from, the transfer of the Option (or
any portion thereof) to any unaffiliated party, valuing any non-cash
consideration at its fair market value (as defined below).
(d) As used herein, the term "Notional Total Option Profit" with
----------------------------
respect to any number of shares of Issuer Common Stock as to which Grantee has
delivered an Exercise Notice shall be the Total Option Profit determined as of
the date of such proposal assuming that the Option were exercised on such date
for such number of shares of Issuer Common Stock and assuming that such shares,
together with all other Option Shares held by Grantee and its Affiliates as of
such date, were sold for cash at the closing market price for the Issuer Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions or underwriting discounts).
(e) As used herein the "fair market value" of any non-cash
-----------------
consideration consisting of:
(i) securities listed on a national securities exchange or traded on
the NASDAQ shall be equal to the average closing price per share of such
security as reported on such exchange or NASDAQ for the five trading days
after the date of determination; and
(ii) consideration which is other than cash or securities of the form
specified in clause (i) above shall be determined by a nationally
recognized independent investment banking firm mutually agreed upon by the
parties within five business days of the event requiring selection of such
banking firm; provided, however, that if the parties are unable to agree
-------- -------
within two business days after the date of such event as to the investment
banking firm, then the parties shall each select one firm, and those firms
shall select a third nationally recognized independent investment banking
firm, which third firm shall make such determination.
<PAGE>
7
SECTION 6. Representations and Warranties of Issuer. Issuer hereby
-----------------------------------------
represents and warrants to Grantee as follows:
(a) Issuer has taken all necessary corporate and other action to
authorize and reserve and, subject to the expiration or termination of any
required waiting period under the HSR Act, to permit it to issue, and, at all
times from the date hereof until the obligation to deliver Option Shares upon
the exercise of the Option terminates, shall have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock sufficient for Grantee to
exercise the Option in full, and Issuer shall take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 8 upon
exercise of the Option.
(b) The shares of Issuer Common Stock to be issued upon due exercise
of the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable upon exercise of the Option or any other
securities which may be issued pursuant to Section 8, upon issuance pursuant
hereto, when paid for in accordance herewith, will be duly and validly issued,
fully paid and nonassessable, and will be delivered free and clear of all liens,
including any preemptive rights of any stockholder of Issuer.
SECTION 7. Representations and Warranties of Grantee. Grantee hereby
------------------------------------------
represents and warrants to Issuer that any Option Shares purchased by Grantee
will be acquired for investment only and not with a view to public distribution
thereof, and Grantee will not offer to sell or otherwise dispose of any Option
Shares so acquired by it in violation of the registration requirements of the
Securities Act.
SECTION 8. Adjustment upon Changes in Capitalization, Etc. (a) In
-----------------------------------------------
the event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price thereof, shall be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee shall receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date
<PAGE>
8
therefor, as applicable. Subject to Section 1, and without limiting the parties'
relative rights and obligations under the Merger Agreement, if any additional
shares of Issuer Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 8(a)),
the number of shares of Issuer Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals 19.9% of the number of shares
of Issuer Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that Issuer enters into an agreement
(i) to consolidate with or merge into any person, other than Grantee or one of
its subsidiaries, and Issuer will not be the continuing or surviving corporation
in such consolidation or merger, (ii) to permit any person, other than Grantee
or one of its subsidiaries, to merge into Issuer and Issuer will be the
continuing or surviving corporation, but in connection with such merger, the
shares of Issuer Common Stock outstanding immediately prior to the consummation
of such merger will be changed into or exchanged for stock or other securities
of Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will, after such merger, represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all its assets to any person, other than Grantee or one of
its subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of stock or other
securities or cash or other property that Grantee would have received in respect
of Issuer Common Stock if the Option had been exercised immediately prior to
such consolidation, merger, sale, or transfer, or the record date therefor, as
applicable, and make any other necessary adjustments.
SECTION 9. Registration Rights. Issuer shall, if requested by
--------------------
Grantee at any time and from time to time within one year of the exercise of the
Option, as expeditiously as possible prepare and file one, and only one,
registration statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of securities that
<PAGE>
9
have been acquired by or are issuable to Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use reasonable best
efforts to qualify such shares or other securities under any applicable state
securities laws. Issuer shall use reasonable best efforts to cause such
registration statement to become effective, to obtain all consents or waivers of
other parties that are required therefor, and to keep such registration
statement effective for such period not in excess of 180 calendar days from the
day such registration statement first becomes effective (which period shall be
extended for any period during which use of such registration statement is
suspended after it becomes effective pursuant to the next sentence) as may be
reasonably necessary to effect such sale or other disposition. The obligations
of Issuer hereunder to file such registration statement and to maintain its
effectiveness may be suspended for up to 45 calendar days in the aggregate if
the Board of Directors of Issuer shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
premature disclosure of material nonpublic information. Such registration
statement prepared and filed under this Section 9, and any sale covered thereby,
shall be at Issuer's expense except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto. Grantee will provide all information reasonably requested by Issuer for
inclusion in such registration statement to be filed hereunder. If, during the
time periods referred to in the first sentence of this Section 9, Issuer effects
a registration under the Securities Act of Issuer Common Stock for its own
account or for any other stockholders of Issuer (other than on Form S-4 or Form
S-8, or any successor form), it shall allow Grantee the right to participate in
such registration, and such participation shall not affect the obligation of
Issuer to effect the demand registration statement for Grantee under this
Section 9; provided, however, that, if the managing underwriters of such
offering advise Issuer in writing that in their opinion the number of shares of
Issuer Common Stock requested to be included in such registration exceeds the
number which can be sold in such offering, Issuer shall include the shares
requested to be included therein by Grantee pro rata with the shares intended to
be included therein by Issuer. In connection with such registration pursuant to
this Section 9, Issuer and Grantee shall provide each other and any underwriter
of the offering with customary representations, warranties, covenants,
<PAGE>
10
indemnification, and contribution in connection with such registration.
SECTION 10. Listing. If Issuer Common Stock or any other securities
--------
to be acquired upon exercise of the Option are then traded on the NASDAQ (or any
national securities exchange or other national securities quotation system),
Issuer, upon the request of Grantee, will promptly file an application to list
the shares of Issuer Common Stock or other securities to be acquired upon
exercise of the Option on the NASDAQ (and any such national securities exchange
or other national securities quotation system) and will use reasonable best
efforts to obtain approval of such listing as promptly as practicable.
SECTION 11. Loss or Mutilation. Upon receipt by Issuer of evidence
-------------------
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered will constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any time be
enforceable by anyone.
SECTION 12. Miscellaneous. (a) Expenses. Except as otherwise
-------------- ---------
provided in this Agreement or the Merger Agreement, each of the parties hereto
will bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants, and
counsel.
(b) Amendment. This Agreement may not be amended, except by an
----------
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive
------------------
any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement
-----------------------------------------------
and the Merger Agreement (including the documents and instruments attached
thereto as
<PAGE>
11
exhibits or schedules or delivered in connection therewith) (i) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of this
Agreement, and (ii) except as provided in Section 10.7 of the Merger Agreement,
are not intended to confer upon any person other than the parties any rights or
remedies.
(e) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED
--------------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS
THEREOF.
(f) Notices. All notices, requests, claims, demands, and other
--------
communications under this Agreement shall be given in accordance with Section
10.2 of the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any of the
-----------
rights, interests, or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by Issuer or Grantee without
the prior written consent of the other, except that Grantee may assign all its
rights under Section 9 to any person who acquires from Grantee any Option
Shares; provided, however, that Grantee may assign any of its rights, interests
-------- -------
or obligations under this Agreement to Parent or any Affiliate of Parent without
the consent of the Issuer, but no such assignment shall relieve Grantee of its
obligations hereunder. Any purported assignment in violation of the preceding
sentence will be void. Subject to the first and second sentences of this
Section 12(g), this Agreement will be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective successors and permitted
assigns.
(h) Further Assurances. In the event of any exercise of the Option
-------------------
by Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
<PAGE>
12
(i) Enforcement. The parties agree that irreparable damage would
------------
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Delaware state court or any
Federal court located in the State of Delaware, the foregoing being in addition
to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Delaware state court or any Federal court located
in the State of Delaware in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than any Delaware state court or any Federal
court sitting in the State of Delaware and (iv) waives any right to trial by
jury with respect to any action related to or arising out of this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have duly executed this
Agreement, all as of the day and year first written above.
FORE SYSTEMS, INC.,
by
-----------------------------
Name:
Title:
GEC ACQUISITION CORP.,
by
-----------------------------
Name:
Title:
<PAGE>
Exhibit (c)(3)
<PAGE>
EXECUTION COPY
STOCKHOLDER AGREEMENT, as of April 26, 1999, among GEC
INCORPORATED, a Delaware corporation ("Parent"), GEC ACQUISITION
------
CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and the persons listed on Schedule A hereto
---------
(each a "Stockholder" and, collectively, the "Stockholders").
----------- ------------
WHEREAS, concurrently with the execution of this Agreement, Parent,
Purchaser and FORE Systems, Inc., a Delaware corporation (the "Company"), are
-------
entering into an Agreement and Plan of Merger dated as of the date hereof (as
the same may be amended or supplemented, the "Merger Agreement"; terms used but
----------------
not defined herein have the meanings set forth in the Merger Agreement)
providing for the making of a cash tender offer (as such offer may be amended
from time to time as permitted under the Merger Agreement, the "Offer") by
-----
Purchaser for shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock") and the merger of the Company and Purchaser (the "Merger");
------------ ------
WHEREAS, each Stockholder is the beneficial owner of the shares of
Common Stock set forth opposite such Stockholder's name on Schedule A hereto;
such shares of Common Stock, as such shares may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with shares of Common Stock that may be acquired after the
date hereof by such Stockholder, including shares of Common Stock issuable upon
the exercise of options to purchase Common Stock (as the same may be adjusted as
aforesaid), being collectively referred to herein as the "Shares" of such
------
Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
<PAGE>
2
SECTION 1. Agreement to Sell; Tender.
--------------------------
(a) Subject to Section 8, as promptly as practicable following the
expiration of the Offer (but in no event later than 10:00 a.m., New York City
time, immediately after such expiration), each Stockholder hereby severally and
not jointly agrees to sell to Purchaser, and Purchaser agrees to purchase, all
the Shares owned by such Stockholder not tendered pursuant to Section 1(b) at a
price per Share equal to the price per Share paid by Purchaser in the Offer (the
"Offer Price"). The obligations of each Stockholder to sell its Shares pursuant
-----------
to this Section 1(a) is conditioned upon Purchaser purchasing shares of Common
Stock pursuant to the Offer.
(b) In addition, each Stockholder hereby severally and not jointly
agrees that if such Stockholder is directed to tender the Shares it owns as of
the date hereof and any Shares it may acquire prior to the expiration of the
Offer by Purchaser pursuant to the following sentence, it shall promptly tender
all such Shares in the Offer, and it shall not withdraw any Shares so tendered
(it being understood that the obligation contained in this sentence is
unconditional, subject to Section 8). In the event that Purchaser wishes to
direct a Stockholder to tender its Shares, Purchaser shall give written notice
to such Stockholder to such effect and specifying the number (if less than all)
of such Stockholder's Shares. Section 1(a) above shall be deemed satisfied upon
completion of the purchase of such Shares in the Offer.
(c) In addition, each Stockholder hereby severally and not jointly
grants to Purchaser an irrevocable option (as to each Stockholder, the "Option")
------
to purchase any of or all the Shares owned by such Stockholder and any of or all
the Shares for which any stock options owned by such Stockholder are then
exercisable on the date the Option is exercised by the Purchaser (on any date,
the "Vested Options") in each case at a price per Share equal to the Offer
--------------
Price. Subject to Section 8, the Option may be exercised at any time and from
time to time after any breach by such Stockholder of Section 4(b) or after
Parent is entitled to a Termination Fee pursuant to the Merger Agreement as a
result of a breach of Section 7.03 thereof. In the event that Purchaser wishes
to exercise the Option as to a Stockholder, Purchaser shall give written notice
(the date of such notice being called the "Notice Date") to such Stockholder and
-----------
to the Company specifying the number (if less than all) of such Stockholder's
Shares, including shares of Common Stock underlying Vested Options, and a
<PAGE>
3
place, time and date not later than 10 Business Days from the Notice Date for
the closing of such purchase.
SECTION 2. Representations and Warranties of the Stockholders. Each
---------------------------------------------------
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) Authority. Such Stockholder has all requisite power and
----------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. If such Stockholder is not an individual, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by such
Stockholder. This Agreement has been duly executed and delivered by such
Stockholder and constitutes a valid and binding obligation of the Stockholder
enforceable against such Stockholder in accordance with its terms, except as the
same may be limited by (a) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar Laws (as defined in the Merger Agreement)
relating to creditors' rights generally and (b) legal principles of general
applicability governing the application and availability of equitable remedies.
Except for the expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), neither the execution, delivery or performance of this Agreement by such
- ---
Stockholder nor the consummation by such Stockholder of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any Governmental Authority (as defined in the Merger
Agreement), (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation or acceleration under, or
result in the creation of any Lien (as defined in the Merger Agreement) upon any
of the properties or assets of such Stockholder under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
permit, concession, franchise, contract, agreement or other instrument or
obligation (a "Contract") to which such Stockholder is a party or by which such
--------
Stockholder or any of such Stockholder's properties or assets, including such
Stockholder's Shares, may be bound or (iii) violate any Order (as defined in the
Merger Agreement) or any Law applicable to such Stockholder or any of such
Stockholder's properties or assets, including such Stockholder's Shares, other
than, in the case of clause (ii) above, such items that, individually or in the
<PAGE>
4
aggregate, have not and could not reasonably be expected to have a material
adverse effect on the ability of such Stockholder to perform its obligations
under this Agreement.
(b) The Shares. Such Stockholder's Shares and the certificates
-----------
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, and such Stockholder is the legal and beneficial owner of and
has good and marketable title to such Shares, free and clear of any Liens,
proxies, voting trusts or agreements, understandings or arrangements, except for
any such Liens or proxies arising hereunder.
(c) Brokers. No broker, investment banker, financial advisor or
--------
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such Stockholder.
(d) Merger Agreement. Such Stockholder understands and acknowledges
-----------------
that Parent is entering into, and causing Purchaser to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
SECTION 3. Representations and Warranties of Parent and the
------------------------------------------------
Purchaser. Parent and the Purchaser hereby represent and warrant to the
- ----------
Stockholders as follows:
(a) Authority. Each of Parent and such Purchaser has the requisite
----------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and such Purchaser and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and such Purchaser. This
Agreement has been duly executed and delivered by Parent and such Purchaser and
constitutes a valid and binding obligation of Parent and Purchaser enforceable
in accordance with its terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar Laws relating to creditors' rights generally and (b) legal
principles of general applicability governing the application and availability
of equitable remedies.
<PAGE>
5
(b) Securities Act. The Shares will be acquired in compliance with,
---------------
and such Purchaser will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of the registration requirements of, the Securities
Act of 1933, as amended.
SECTION 4. Covenants of the Stockholders. Each Stockholder agrees
------------------------------
as follows:
(a) Such Stockholder shall not, except as contemplated by the terms
of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any Contract, option or other arrangement (including any profit
sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares to any person other than
Purchaser or Purchaser's designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby.
(b) Subject to Section 11 hereof, until the Merger is consummated or
the Merger Agreement is terminated, such Stockholder shall not, nor shall such
Stockholder permit any investment banker, financial adviser, attorney,
accountant or other representative or agent of such Stockholder to, directly or
indirectly (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal (as defined in
the Merger Agreement) or (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by an investment banker, financial advisor, attorney, accountant or
other representative or agent of such Stockholder shall be deemed to be a
violation of this Section 4(b) by such Stockholder.
(c) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
such Stockholder shall vote (or cause
<PAGE>
6
to be voted) such Stockholder's Shares in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the other Transactions
(as defined in the Merger Agreement). At any meeting of stockholders of the
Company or at any adjournment thereof or in any other circumstances upon which
the Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Stockholder's Shares against (i) any
merger agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company or
any other Acquisition Proposal (collectively, "Alternative Transactions") or
-------------------------
(ii) any amendment of the Company's certificate of incorporation or bylaws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Offer, the Merger, the Merger Agreement or any
of the other Transactions (collectively, "Frustrating Transactions").
------------------------
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy. (a)
-------------------------------------------------
Each Stockholder hereby irrevocably grants to, and appoints, Patricia Hoffman
and Thomas Edeus and any other individual who shall hereafter be designated by
Parent, and each of them, such Stockholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or approval
in respect of such Shares, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other transactions contemplated by the Merger Agreement and against any
Alternative Transaction or Frustrating Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder under this
<PAGE>
7
Agreement. Such Stockholder hereby further affirms that the irrevocable proxy is
coupled with an interest and may under no circumstances be revoked, subject to
Section 8. Such Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance with
the provisions of the General Corporation Law of the State of Delaware. Such
irrevocable proxy shall be valid until the termination of this Agreement
pursuant to Section 8.
SECTION 6. Further Assurances. Each Stockholder will, from time to
-------------------
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent or Purchaser may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement and to
vest the power to vote such Stockholder's Shares as contemplated by Section 5.
Parent and Purchaser jointly and severally agree to use reasonable efforts to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements that may be imposed with respect to the transactions
contemplated by this Agreement (including any applicable legal requirements of
the HSR Act).
SECTION 7. Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to an Affiliate (as defined in the Merger
Agreement) of Parent, but no such assignment shall relieve Purchaser of any of
its obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns. Each Stockholder
agrees that this Agreement and the obligations of such Stockholder hereunder
shall attach to such Stockholder's Shares and shall be binding upon any person
or entity to which legal or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise, including such Stockholder's heirs,
guardians, administrators or successors.
SECTION 8. Termination. This Agreement shall terminate upon the
------------
earlier of (i) the Effective Time and (ii) the termination of the Merger
Agreement in accordance with its terms, except that, with respect to each
Stockholder, Section 1(c) shall (x) survive (A) any
<PAGE>
8
termination pursuant to clause (ii) above in the event that such termination was
the result of a breach by the Company of Section 7.03 of the Merger Agreement or
(B) if at the time of such termination, such Stockholder is in breach Section
4(b) and (y) shall remain in effect so long as Purchaser has the right to
exercise the option granted by the Company under the Option Agreement.
SECTION 9. Stop Transfer. The Company agrees with, and covenants to,
--------------
Parent and Purchaser that the Company shall not register the transfer of any
certificate representing any Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
SECTION 10. General Provisions. (a) Payments. All payments required
------------------- --------
to be made to any party to this Agreement shall be made by wire transfer of
immediately available funds to an account designated by such party at least one
trading day prior to such payment.
(b) Expenses. All costs and expenses incurred in connection with
---------
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
-----------
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery) or mailed
by registered or certified mail (return receipt requested)
<PAGE>
9
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(i) if to Parent or Purchaser, to:
GEC Incorporated and
GEC Acquisition Corp.
c/o Videojet Systems International, Inc.
1500 Mittel Boulevard
Wood Dale, IL 60191-1073
Attention: Patricia A. Hoffman
Telecopier No.: (630) 238-3998
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Philip A. Gelston, Esq.
Telecopy No: (212) 474-3700
and
(ii) if to a Stockholder, to the address set forth under the name of
such Stockholder on Schedule A hereto
with a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219-6401
Attention: Marlee S. Myers
Telecopier No.: (412) 569-3399
(e) Interpretation. When a reference is made in this Agreement to a
---------------
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words
<PAGE>
10
"without limitation". Words in the singular include the plural, and words in the
plural include the singular.
(f) Counterparts. This Agreement may be executed in multiple
-------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
-----------------------------------------------
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflict of
Law.
(i) Publicity. Except as otherwise required by Law, court process or
----------
the rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, no Stockholder shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement or the Merger Agreement without the consent of
Parent, which consent shall not be unreasonably withheld.
SECTION 11. Stockholder Capacity. No person executing this Agreement
---------------------
makes any agreement or understanding herein in his or her capacity as a director
or officer of the Company or any subsidiary of the Company. Each Stockholder
signs solely in his or her capacity as the beneficial owner of such
Stockholder's Shares and nothing herein shall limit or affect any actions taken
by a Stockholder in its capacity as an officer or director of the Company or any
subsidiary of the Company to the extent specifically permitted by the Merger
Agreement.
SECTION 12. Performance by Purchaser. Parent covenants and agrees
-------------------------
for the benefit of the Stockholders that it shall cause Purchaser to perform in
full each obligation of Purchaser set forth in this Agreement.
<PAGE>
11
SECTION 13. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court located in the state
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or of the United
States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
<PAGE>
12
IN WITNESS WHEREOF, each of Parent and Purchaser has caused this
Agreement to be signed by its officer or director thereunto duly authorized and
each Stockholder has signed this Agreement, all as of the date first written
above.
GEC INCORPORATED,
By________________________
Name:
Title:
GEC ACQUISITION CORP.,
By________________________
Name:
Title:
<PAGE>
13
STOCKHOLDERS
--------------------------
Eric C. Cooper
--------------------------
Robert D. Sansom
<PAGE>
14
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 9:
FORE SYSTEMS, INC.,
By________________________
Name:
Title:
<PAGE>
15
Schedule A
----------
Total number Total number
of shares of shares
underlying
stock options
------------ -------------
Eric C. Cooper 2,154,978 960,000
Robert D. Sansom 2,776,558 606,000
<PAGE>
EXHIBIT (c)(4)
March 17, 1999
The General Electric Company, p.l.c.
One Bruton Street
London WIX 8AQ
United Kingdom
Attention: Mr. John Mayo
Dear Sirs:
You have requested information from FORE Systems, Inc. (the "Company") in
connection with our consideration of a possible negotiated transaction between
us (a "Transaction"). The Company is willing to furnish such information to
you only for the purpose of evaluating such Transaction and pursuant to the
terms of this letter agreement (this "Agreement"). You agree that such
information and any other information the Company or its Representatives (as
hereinafter defined) furnish to you or your Representatives, including,
without limitation, financial, technical, scientific, trade secret or other
proprietary information of the Company with which you or your Representatives
may come into contact in the course of your investigation, whether before or
after the date of this Agreement, together with any reports, analyses,
compilations, memoranda, notes and any other writings prepared by you or your
Representatives which contain, reflect or are based upon such information
(collectively, the "Evaluation Material"), will be kept confidential, used
only for the purpose of evaluating a Transaction and will not be used by you
in any way detrimental to the Company; provided, however, that (i) any of such
information may be disclosed to officers, directors, employees, counsel,
investment bankers and other representatives (such persons being generally
referred to herein as "Representatives") of yours and your subsidiaries who
need to know such information for the purpose of evaluating a Transaction
between us (it being understood that you will cause your Representatives to
treat such information in a confidential manner and in accordance with the
terms hereof) and (ii) any disclosure of such information may be made to which
the Company consents in writing.
You agree that, other than as permitted herein, neither you, your
affiliates, nor any Representatives of you or your affiliates will without the
prior written consent of the Company, directly or indirectly, (i) enter into
any agreement, arrangement or understanding, or any discussions that might
lead to such agreement, arrangement or understanding, with any other person
regarding a possible transaction involving the Company, (ii) disclose to any
other person either the fact that discussions or negotiations are taking place
concerning a possible transaction or any of the terms, conditions or other
facts with respect to any such possible transaction, including the status
thereof, or (iii) disclose to any other person that you have received or
produced any Evaluation Material. The term "person" as used in this Agreement
shall be broadly interpreted to include, without limitation, the media and any
corporation, company, group, partnership or individual. The term "affiliate"
as used in this Agreement shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
In the event that you or any of your Representatives are required to
disclose any Evaluation Material (i) in connection with any judicial or
administrative proceedings (by oral questions, interrogatories, requests for
information or documents, subpoena, Civil Investigation Demand or similar
process) or (ii) in order, in the opinion of your outside solicitor or
barrister, to avoid violating the securities laws, you will in advance of such
disclosure provide the Company with prompt notice of such requirement(s). You
also agree, to the extent legally permissible, to provide the Company, in
advance of any such disclosure, with copies of any Evaluation Material you
intend to disclose (and, if applicable, the text of the disclosure language
itself) and to cooperate with the Company to the extent it may seek to limit
such disclosure. If, in the absence of a protective order or the receipt of a
waiver from the Company after a request in writing therefor is made by you
(such request to be made as soon as practicable to allow the Company a
reasonable amount of time to respond thereto), you or your
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The General Electric Company, p.l.c.
Page 2
March 17, 1999
Representatives are legally required to disclose Evaluation Material to any
tribunal or in order to comply with the federal securities laws, you may
disclose such information without liability hereunder.
In consideration for being furnished with the Evaluation Material, you agree
that for a period of three years from the date of this Agreement, unless the
Company's Board of Directors shall otherwise request in writing in advance,
you will not, and shall cause your affiliates not to (and you and they will
not assist or form a group within the meaning of Section 13(d)(3) of the
Exchange Act, act in concert or participate with or encourage other persons
to), directly or indirectly, (i) acquire or offer to acquire, seek, propose or
agree to acquire, by means of a purchase, tender or exchange offer, business
combination or in any other manner, beneficial ownership of any securities or
assets of the Company, including rights or options to acquire such ownership,
(ii) seek or propose to influence, advise, change or control the management,
Board of Directors, governing instruments or policies or affairs of the
Company, including, without limitation, by means of a solicitation of proxies
(as such terms are defined in Rule 14a-1 of Regulation 14A promulgated
pursuant to Section 14 of the Exchange Act, disregarding clause (iv) of Rule
14a-1(l)(2) and including any exempt solicitation pursuant to Rule 14a-
2(b)(1)), contacting any person relating to any of the matters set forth in
this Agreement or seeking to influence, advise or direct the vote of any
holder of voting securities of the Company or making a request to amend or
waive this provision or any other provision of this paragraph or the second
paragraph of this letter, or (iii) make any public disclosure, or take any
action which could require the Company to make any public disclosure, with
respect to any of the matters set forth in this Agreement.
In the event that no Transaction is effected after you have been furnished
with Evaluation Material, you will (and you will cause your Representatives
to) promptly, upon the request of the Company, deliver to the Company the
Evaluation Material, including any notes relating thereto, without retaining
any copy thereof. If requested by the Company, an appropriate officer of yours
will certify to the Company that all such material has been so delivered.
Notwithstanding the delivery of the Evaluation Material required by this
paragraph, any and all duties and obligations existing under this Agreement
shall remain in full force and effect.
For a period of one year from the date hereof, you agree that you and your
affiliates will not, directly or indirectly, solicit for employment any
employee of the Company with whom you have had contact or who became known to
you in connection with the Transaction. The term "solicit" shall not include
any general advertisements not directed specifically to such Company
employees.
The term "Evaluation Material" shall not be deemed to include, and the above
undertakings do not apply to any information which can be demonstrated:
(i) to be in or to have come into the public domain otherwise than as a
result of a breach of those undertakings or of any other duty of
confidentiality to any person;
(ii) already to be in your possession on a non-confidential basis at the
time that it is first supplied by us or thereafter to have been received by
you at any time in good faith from a third party who is not bound by any
obligation of confidentiality in relation thereto; or
(iii) (in the case of technical information) to have been independently
developed by employees of yours to whom no disclosure has been made of the
Evaluation Material supplied by us.
Although we have endeavored to include in the Evaluation Material
information known to us which we believe to be relevant for the purpose of
your investigation, you understand that we do not make any representation or
warranty as to the accuracy or completeness of the Evaluation Material and
that only those representations and warranties made by us in a definitive
agreement, if any, shall have any legal effect. You
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The General Electric Company, p.l.c.
Page 3
March 17, 1999
agree that other than as may be set forth in such definitive agreement neither
the Company nor its Representatives shall have any liability to you or any of
your Representatives, including, without limitation, in contract, tort or
under federal or state securities laws, resulting from the use of the
Evaluation Material supplied by us or our Representatives.
It is agreed that no failure or delay by the Company in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege.
The Company, without prejudice to any rights to judicial relief it may
otherwise have, shall be entitled to seek equitable relief, including
injunction, in the event of any breach of the provisions of this Agreement.
You agree that you will not oppose the granting of such relief on the basis
that the Company has an adequate remedy at law.
It is further understood and agreed that unless and until the execution and
delivery of a definitive agreement with respect to a Transaction, neither the
Company nor you intends to be, nor shall either of us be, under any legal
obligation of any kind whatsoever with respect to such Transaction or
otherwise, by virtue of any written or oral expressions by our respective
Representatives with respect to such Transaction, except for the matters
specifically agreed to in this Agreement. This provision may only be modified
or waived by a separate writing signed by the Company and you expressly so
modifying or waiving this provision.
You hereby confirm that you are aware and that your Representatives have
been advised that the United States securities laws prohibit any person who
has material non-public information about a company from purchasing or selling
securities of such company.
If at any time you cease to consider a Transaction, you agree promptly to
notify us of such decision in writing.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware.
It is understood and agreed that if any provision contained in this
Agreement or the application thereof to you, the Company, or any other person
or circumstance shall be invalid, illegal or unenforceable in any respect
under any applicable law as determined by a court of competent jurisdiction,
the validity, legality and enforceability of the remaining provisions
contained in this Agreement, or the application of such provision to such
persons or circumstances other than those as to which it has been held invalid
or unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
This Agreement shall benefit and bind successors and assigns of you and of
the Company. Any assignment of this Agreement by you without prior written
consent of the Company shall be void.
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The General Electric Company, p.l.c.
Page 4
March 17, 1999
If you are in agreement with the foregoing, please so indicate by signing
and returning one copy of this Agreement, whereupon this Agreement will
constitute our agreement with respect to the subject matter hereof.
Very truly yours,
FORE Systems, Inc.
By:
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Name: Thomas J. Gill
Title: President and Chief
Executive Officer
CONFIRMED AND AGREED TO:
The General Electric Company, p.l.c.
By:
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Title:
Dated:
