Conformed Copy
DATED 12th February, 1998
THE GENERAL ELECTRIC COMPANY, P.L.C.
and
MITEL TELECOM LIMITED
and
MITEL CORPORATION
----------------------------------------------------------------
SHARE SALE AND PURCHASE AGREEMENT
in respect of
the Plessey Semiconductors Group
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Xxxxxxxxx and May
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
(NPB/RRO)
Contents
Page
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1. INTERPRETATION 1
2. SALE AND PURCHASE OF THE SHARES 1
3. CONSIDERATION 2
4. COMPLETION 10
5. GEC'S WARRANTIES AND UNDERTAKINGS 11
6. RESTRICTIONS ON GEC GROUP 14
7. FURTHER WARRANTIES AND UNDERTAKINGS 16
8. PURCHASER'S REMEDIES AND GEC'S LIMITATIONS ON LIABILITY 22
9. PENSION AND OTHER ARRANGEMENTS 22
10. CROSS LICENCES AND ASSIGNMENTS 22
11. REMEDIES AND WAIVERS 23
12. ASSIGNMENT 23
13. FURTHER ASSURANCE 25
14. ENTIRE AGREEMENT 25
15. NOTICES 26
16. ANNOUNCEMENTS 27
17. RESTRICTIVE TRADE PRACTICES ACT 1976 27
18. COSTS AND EXPENSES 27
19. COUNTERPARTS 28
20. TIME OF ESSENCE 28
21. EFFECT OF COMPLETION 28
22. INVALIDITY 28
23. GOVERNING LAW 28
24. JURISDICTION 28
25. AGENT FOR SERVICE 29
SCHEDULE 1: DEFINITIONS 30
SCHEDULE 2: COMPLETION ARRANGEMENTS 41
SCHEDULE 3: THE WARRANTIES 45
SCHEDULE 4: LIMITATIONS ON GEC'S LIABILITY UNDER THE WARRANTIES 72
SCHEDULE 5: PENSION ARRANGEMENTS PART 1 - GEC SCHEME 81
PART 2 - U.S. BENEFITS ARRANGEMENTS 97
SCHEDULE 6: TAX COVENANT 100
SCHEDULE 7: PART A - BASIC INFORMATION ABOUT THE COMPANIES 101
PART B - BASIC INFORMATION ABOUT SUBSIDIARIES OF THE COMPANIES 105
SCHEDULE 8 PROPERTY SCHEDULE 114
SCHEDULE 9 PART A GEC PLESSEY CONDUCTORS GROUP PRO FORMA
AGGREGATED BALANCE SHEET AS AT 31 DECEMBER 1997 124
PART B GPS SWINDON OPERATION 125
THIS AGREEMENT (this "Agreement") is made on 12th February, 1998
BETWEEN:-
1. THE GENERAL ELECTRIC COMPANY, p.l.c. (registered in England No. 67307)
having its registered office at 0 Xxxxxxxx Xxxx, Xxxxxx X0X 0XX ("GEC")
AND
2. MITEL TELECOM LIMITED, (registered in England and Wales No. 1309629),
having its registered office at Xxxxxxxxxxx, Xxxxx XX0 0XX (the
"Purchaser")
AND
3. MITEL CORPORATION, a Canadian corporation, having its principal place of
business at 000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx, Xxxxxx K2K IX3 (the
"Guarantor")
WHEREAS:-
(A) GEC has agreed to sell and transfer, or procure the sale and transfer of,
the Shares, and the Purchaser has agreed to purchase them, on the terms of
this Agreement; and
(B) The Guarantor has agreed to guarantee the Purchaser's obligations on the
terms of this Agreement.
IT IS AGREED AS FOLLOWS:-
1. Interpretation
1.1 The Schedules form part of this Agreement and shall have the same force and
effect as if expressly set out in the body of this Agreement and any
reference to this Agreement shall include the Schedules.
1.2 Certain words and expressions used in this Agreement are defined in
Schedule 1.
2. Sale and Purchase of the Shares
GEC shall sell or procure the sale of the Shares with full title guarantee
and the Purchaser shall purchase or procure the purchase of the Shares. The
Shares shall be free from all claims, liens, charges, encumbrances and
equities whatsoever and shall be sold with all rights attached or accruing
to them at Completion including, without limitation, the right to receive
all dividends, distributions or any return of capital hereafter declared,
paid or made on or after Completion.
2
3. Consideration
3.1 The total consideration for the sale of the Shares shall be the payment by
the Purchaser to GEC of the Purchase Price.
3.2 The Purchase Price shall be apportioned as follows:-
(A) US$185,299,835 for the Shares in Plessey;
(B) US$7,500,000 for the Shares in Plessey Inc;
(C) US$165 for the Shares in AEI; and
(D) US$32,200,000 for the Shares in Marconi.
3.3 (A) The Guarantor unconditionally and irrevocably guarantees to GEC the
due and punctual discharge and performance by the Purchaser of its
obligations pursuant to the Sale Documents including particularly (but
without limitation) the payment by the Purchaser of the Purchase Price
at Completion and agrees that if at any time or from time to time any
amount payable by the Purchaser or other obligation of the Purchaser
is not paid or performed in full on the due date therefor, the
Guarantor will promptly after being given not less than three Business
Days' notice of the failure of the Purchaser to make such payment or
perform such other obligation (and if such failure is not remedied by
the Purchaser in the interim) unconditionally pay or perform or
procure the payment or performance of the relevant amount or
obligation to GEC;
(B) The Guarantor shall be liable under paragraph (A) above as if it were
a primary obligor of the Purchaser's obligations contained in the Sale
Documents (the "Guaranteed Obligations");
(C) The obligations of the Guarantor under paragraphs (A) and (B) above:-
(i) shall be continuing obligations and shall not be satisfied,
discharged or affected by any intermediate payment or settlement
of account or any change in the constitution or control of, or
the insolvency of, or any liquidation, winding-up or analogous
proceedings relating to, the Purchaser or any change in the terms
or nature of the Guaranteed Obligations; and
(ii) shall not be discharged, prejudiced, lessened, affected or
impaired by any act, omission or circumstance whatsoever which
but for this provision might operate to release or exonerate the
Purchaser from all or any part of the Guaranteed Obligations;
3
(D) As a separate and independent stipulation the Guarantor agrees that if
any of the Guaranteed Obligations are not enforceable against or
recoverable from the Purchaser by reason of any legal limitation,
disability or incapacity or any fact or circumstances or otherwise
(together "Factors"), they shall nevertheless be enforceable against
and recoverable from the Guarantor as though the same had been
incurred by the Guarantor and the Guarantor were the sole or principal
obligor in respect thereof and shall be performed or paid by the
Guarantor on demand provided that the foregoing provisions of this
paragraph (D) shall not be construed so as to impose on the Guarantor
any liabilities or obligations in excess of those the Purchaser would
have been under had such Factors not pertained;
(E) This guarantee shall constitute primary obligations of the Guarantor
and GEC shall not be obliged to make any demand on or enforce any
rights against the Purchaser or any other person before being entitled
to enforce its rights against the Guarantor under this clause 3.3.
3.4 (A) The Purchaser and GEC agree that Completion Balance Sheets and an
Aggregated Completion Balance Sheet shall be produced to identify the
results of trading between 31st December, 1997 and the Completion
Date, to determine the Closing Net Worth and the amount of the
Adjustment (if any) and agree in the following terms to produce such
balance sheets. To this end the Purchaser shall procure that as soon
as possible, and in any event within 60 days of the Completion Date,
drafts of the Completion Balance Sheets are prepared by the management
of the Group in accordance with clause 3.5 and delivered to GEC. GEC,
the Purchaser and the Group management shall discuss any issues
arising in the preparation of the draft Completion Balance Sheets
during their preparation.
(B) The Purchaser shall procure that the Group management shall prepare a
draft Aggregated Completion Balance Sheet showing the draft Closing
Net Worth of the Group as at the Completion Date. GEC, the Purchaser
and the Group management shall discuss any issues arising in the
preparation of the draft Aggregated Completion Balance Sheet during
its preparation. The draft Aggregated Completion Balance Sheet shall
be compiled from the draft Completion Balance Sheets in the same
manner as the Proforma Aggregated Balance Sheet as at 31st December,
1997 which is set out in Part A of Schedule 9 but subject to the
following:
(i) the Completion Balance Sheets of the non-UK Group Companies shall
be translated from the local currencies into pounds sterling at
the relevant Exchange Rate; and
(ii) no adjustment will be required in respect of the Restructuring
Plan as it will have been completed and the actual impact shall
be recorded in the books of the relevant companies before
Completion.
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(C) The Purchaser shall deliver to GEC as soon as possible and in any
event within 60 days after the Completion Date the draft Aggregated
Completion Balance Sheet showing the draft Closing Net Worth.
(D) GEC and GEC's Accountants shall be entitled to review the documents
delivered to GEC under clauses 3.4(A) and (C) and to conduct an
investigation of the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheet showing the draft Closing Net
Worth during the 60 day period following receipt of the draft
Completion Balance Sheets and the draft Aggregated Completion Balance
Sheet (provided that in the event that those documents are not
delivered on the same day such period shall start from the date on
which the last of such documents is delivered to GEC). At or before
the end of such 60 day period GEC shall either:
(i) confirm that no adjustments are proposed by GEC to the draft
Completion Balance Sheets and the draft Aggregated Completion
Balance Sheet showing the draft Closing Net Worth in which case
(or if no such adjustments are proposed by GEC within the period
referred to above) the draft Completion Balance Sheets and the
draft Aggregated Completion Balance Sheet shall become final and
the draft Closing Net Worth shown by the draft Aggregated
Completion Balance Sheet shall then constitute the Closing Net
Worth; or
(ii) notify the Purchaser of the adjustments that GEC may seek
including (without limitation) those in respect of the Overriding
Objective (together the "Proposed Adjustments") that GEC believes
necessary to the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheets.
(E) The Purchaser's Accountants shall review the Proposed Adjustments (if
any). In performing this review the Purchaser's Accountants shall have
reasonable access to the working papers of GEC and GEC's Accountants
prepared for the purpose of the investigation referred to in clause
3.4(D) above and also to the working papers of GEC's Accountants
prepared for the purposes of the audit of the Accounts. Following such
review and in any event not less than 15 days after receipt of the
Proposed Adjustments, the Purchaser will notify GEC which, if any, of
the Proposed Adjustments it accepts and both parties undertake to
attempt to reach agreement on the remainder of the Proposed
Adjustments. The Purchaser and GEC agree that the Proposed Adjustments
shall be considered in the context of the terms of clauses 3.4 and 3.5
including the Overriding Objective.
If agreement is reached, the Purchaser shall procure that the Group
management shall make the agreed adjustments to the draft Completion
Balance Sheets and the draft Aggregated Completion Balance Sheet and
these shall become final and the draft Closing Net Worth shown by the
draft Aggregated Completion Balance Sheet shall then constitute the
Closing Net
5
Worth providing GEC and the Purchaser agree that the agreed
adjustments have been reflected properly therein.
If, or to the extent that, any of the Proposed Adjustments are not
accepted by the Purchaser and are not withdrawn by GEC within 30 days
following notification by GEC pursuant to clause 3.4(D)(ii) above such
adjustments only (the "Unresolved Adjustments") shall be referred for
final binding determination to such firm of accountants as GEC and the
Purchaser may agree or in the absence of agreement within 14 days, as
may be selected at the request of either party by the President of the
Institute of Chartered Accountants in England and Wales, with the
instructions that the firm so selected (either by the parties or
otherwise) shall act as expert (the "Expert") and not as arbitrator
and shall be instructed to make a decision on the dispute within 20
days of being instructed or such longer reasonable period as the
Expert may determine. The Unresolved Adjustments will be determined by
the Expert so selected insofar as they relate to the draft Completion
Balance Sheets and the draft Aggregated Completion Balance Sheet
showing the draft Closing Net Worth and such adjustments as are
required to be made as a result of the Expert's determination of the
Unresolved Adjustments shall be made by the parties in the calculation
of the Closing Net Worth. Each party shall provide or procure the
provision to the Expert of such information as the Expert may
reasonably require. The fees of the Expert shall be shared equally
between GEC and the Purchaser. Absent fraud or manifest error, the
decision of the Expert so selected will be binding on the parties.
(F) If the Closing Net Worth is equal to the Agreed Amount then the
Adjustment will equal zero. If the Closing Net Worth is greater than
the Agreed Amount, the Adjustment will also be zero. If the Closing
Net Worth is less than the Agreed Amount, the Adjustment will be an
amount equal to the amount by which the Closing Net Worth is less than
the Agreed Amount.
(G) Subject to paragraph (I), within seven Business Days of the agreement
or determination of the Closing Net Worth in accordance with clauses
3.4(A)-(F), if the Adjustment is an amount greater than (pound)5
million, GEC shall pay to the Purchaser an amount equal to the
difference between the Adjustment and (pound)5 million.
(H) Subject to paragraph (I), in addition to any payment under clause
3.4(G) GEC shall pay, together with the sum to be paid thereunder, a
further amount equivalent to interest thereon at a rate equal to the
sterling base rate from time to time of the National Westminster Bank
Plc, as if accrued from day to day from the Completion Date up to (but
not including) the date of the actual payment. All payments shall be
made by way of adjustment to the Purchase Price and apportioned to the
Companies to which they relate or in the event that an overall amount
is agreed the Adjustment shall be attributed solely to the Shares in
Plessey.
6
(I) Any payment under this clause 3.4 shall be limited to the amount of
the Purchase Price.
3.5 (A) The draft Completion Balance Sheets shall be prepared in accordance
with the same accounting policies, principles, bases and methods and
the same level of prudence as actually adopted in the preparation by
the Group of the March 1997 management accounts (a copy of which is
included at item 4 of section 1.4 of the Schedule to the Disclosure
Letter) provided however that for the purpose of the preparation of
the draft Completion Balance Sheets the following principles shall be
applied:
(i) No account shall be taken of events occurring after the date of
delivery of the draft Completion Balance Sheets and the draft
Aggregated Completion Balance Sheet (under clauses 3.4(A) and
(C));
(ii) Insurance prepayments in respect of the Group (or any Group
Company) at the Completion Date in respect of insurance cover
that is cancelled by GEC with effect from Completion or
thereafter will be written off in the Completion Balance Sheets;
(iii) No account shall be taken of (a) any change of control of the
Group (or any Group Company) contemplated by this Agreement
(including its effect on contracts of the Group) save in respect
of paragraphs (ii) above and (v) below and the Restructuring Plan
or (b) any proposals or arrangements (actual or proposed) in
connection with the financing of the Purchaser's acquisition of
the Shares (including granting any security in respect of the
Shares or the assets of any Group Company) or (c) any acts or
proposals of the Purchaser in relation to any Group Company's
dealings with its customers or suppliers, the Group's sales or
for which a provision would otherwise be made;
(iv) No account shall be taken of the costs of GEC or the Purchaser in
relation to this Agreement;
(v) (a) The following accounting entry reflected in the Accounts of
Plessey but not in the March 1997 management accounts shall
be reflected in the draft Completion Balance Sheet of
Plessey:
(pound)000s
Increase tax charge to profit and loss account for year
ended 31st March, 1997 1,473
Increase corporation tax recoverable (balance sheet) 146
Increase in deferred tax liability provision
(balance sheet) 1,619
(b) Provisions for Taxation in respect of those issues dealt
with in the Tax Covenant shall remain at the amounts
included in the December 1997 management accounts except for
adjustments
7
in respect of cash movements since 31st December, 1997 and
no other provisions shall be made in respect of such issues.
(c) No Taxation shall be provided or credited in the draft
Completion Balance Sheets on the results other than the
above and the charge or credit for tax at 35 per cent. on
the difference between the net worth as shown in the
Proforma Aggregated Balance Sheet as at 31st December, 1997
(namely the Agreed Amount) and the Closing Net Worth before
taking account of such tax;
(vi) Depreciation will be provided on fixed assets as in the March
1997 management accounts but on a time pro-rata basis from 1st
April, 1997 to the Completion Date. For the avoidance of doubt in
respect of Fab 8 plant and equipment (which amounted at cost to
(pound)68,733,8l6 as at 1st July, 1997) the date from which
depreciation shall be charged was 1st July, 1997 and in respect
of Fab 6 plant and equipment (which amounted at cost to
(pound)14,602,588 at 2nd January, 1998) this date was 2nd
January, 1998.
No other provisions shall be made against fixed assets and no
amounts shall be written off or provided against fixed assets
except for the fair value provision against the Scotts Valley
lease obligations described in Part III of Schedule 8 which
amounted to US$2,990,725 as at the Accounts Date and from which
will be applied US$701,600 in the current financial year
pro-rated on a time basis from the Accounts Date until the
Completion Date;
(vii) Purchased material shall be valued at the relevant standard cost
adopted with effect from 1st April, 1997 for direct materials and
at the latest moving average cost price for all local plant stock
(for example- equipment spares, gases, chemicals, quartzwar and
consumables). Labour is charged to work in progress based on
direct labour hours at rates adopted from 1st April, 1997.
Overheads are charged to work in progress on machine hour rates
adopted from 1st April, 1997. Other standards which shall be used
in the evaluation of inventory, for example for production yield
shall be those adopted as at 1st April, 1997. A copy of the
relevant standard costs and rates is included in Part B of
Schedule 9. For the avoidance of doubt the method adopted for the
allocation of variances to stock shall be the same as that
adopted at the Accounts Date;
(viii) Each stock line of raw material stock including consumables as
at the Completion Date which:
(a) has not moved in the 24 month period immediately preceding
the Completion Date; or
8
(b) is in excess of the amount required to fulfil orders,
shall be compared to the forecast usage of such stock which is
included in the business unit forecast set out at item 19 of
Section 1.11 of the Schedule to the Disclosure Letter and to the
extent that the stock balance as at the Completion Date exceeds
such forecast usage, the excess shall be provided in full.
Each stock line of work in progress and finished goods as at the
Completion Date:
(a) the date of production of which was more than 24 months
before the Completion Date; or
(b) which is in excess of the amount required to fulfil orders,
shall be compared to the forecast usage of such stock which is
included in the Business Unit Forecast and to the extent that the
stock balance as at the Completion Date exceeds such forecast
usage, the excess shall be provided in full.
The provisions for obsolescence on machine spares as at 31st
December, 1997 shall as at Completion be reduced by the amount of
any such provision that has been applied as a result of scrapping
or disposal of such stock, or released because of the use of such
stock and shall be increased by those items which have become
obsolete between 31st December, 1997 and the Completion Date.
In addition provision will be made on each machine spares stock
line for any stock line to the extent of any balance in excess of
the usage of such stock line in the 12 months immediately
preceding the Completion Date.
No other provisions shall be made against Group Stock.
(ix) General warranty reserves shall be made on the basis of 1.5 per
cent. of the value of sales during the 3 months immediately
preceding the Completion Date and with the exception of the
specific provisions made in addition in the December 1997
management accounts less any payments made subsequently, no other
warranty reserves shall be made;
(x) Provisions in respect of any matter that is the subject of clause
5.4 shall remain at the amounts included in the December 1997
management accounts less any payments made subsequently and no
other provisions or write-offs shall be made in respect of these
matters;
9
(xi) Provision shall be made as follows for accounts receivable, other
than those due from customers in Italy, which as at the
Completion Date were:
Percentage of
Overdue by amount provided
more than 4 but less than 6 months 33%
more than 6 but less than 12 months 60%
more than 12 months 100%
and which at the Completion Date were not covered by credit
insurance or which have not paid by the date on which Completion
Balance Sheets are delivered to GEC. No other provisions or
write-offs shall be made against debtors;
(xii) There shall be no provision made against the TSMC option or any
write-off thereof included in the December 1997 management
accounts of Plessey at US$6.963 million or any write-off thereof.
For the avoidance of doubt the utilisation of the option
prepayment by the option cost of wafers (in excess of the base
load) delivered by TSMC between 31st December, 1997 and the
Completion Date shall be unaffected by this clause 3.4(A)(xii);
(xiii) Consultancy costs of SAP implementation of (pound)758,208 shall
be amortised on a time pro-rata straight line basis over the
eight months from 1st August, 1997;
(xiv) No additional provisions for redundancy, rationalisation or
restructuring costs will be made other than those made in the
December 1997 management accounts;
(xv) The Completion Balance Sheets of the overseas subsidiaries of
Plessey shall be translated using the relevant Exchange Rates;
(xvi) No provision shall be made for audit fees;
(xvii) There will be no charge to profit and loss in excess of 6 per
cent. of pay for GEC Scheme members for pension costs in respect
of the GEC Scheme;
(xviii) There will be no provision or accrual for retention bonuses
which GEC has agreed to pay in clause 9(B);
(xix) No provision shall be made for (pound)580,000 in respect of the
offer made on behalf of GEC in a fax dated 20th January, 1998
from Xxxxxxxxx and May to Xxxx Xxxxxxxxxx to procure the
extension of the IBM cross licence to the "Election I" form; and
10
(xx) No provision or write-off shall be made against the note
receivable from Green Hills, which amounts to $7,670,507 at 31st
December, 1997.
(B) For the purposes of determining the Group Stock as at the Completion
Date, the Group shall carry out physical stock takes in accordance
with the procedures set out in item 18 of section 1.11 of the Schedule
to the Disclosure Letter supervised by GEC and the Purchaser for the
purposes of determining the composition of the Group Stock in
conjunction with GEC's Accountants and the Purchaser's Accountants.
The composition of the stock so determined shall be used in evaluating
the stocks for the purpose of the Completion Balance Sheets. Until an
inventory of the Group Stock is agreed between GEC and the Purchaser,
the Purchaser shall procure that the records of all items of the Group
Stock used, completed and/or delivered after the Completion Date are
maintained on the same basis as those records are currently maintained
until the Closing Net Worth is agreed or determined in accordance with
the provisions of clause 3.4 and shall use its reasonable endeavours
to procure that there is no diminution on such Group Stock other than
the disposal of trading stock in the ordinary course of trading of the
relevant company.
3.6 The Purchaser shall give and shall procure that each Group Company shall
give to GEC, GEC's representatives and GEC's Accountants access to the
Group's management and all other relevant personnel and to relevant books,
records, calculations and working papers of each Group Company, of the
Purchaser and of the Purchaser's Accountants as GEC may reasonably require
for all purposes of clauses 3.4 and 3.5. The Purchaser will co-operate and
procure the co-operation of the Group's management and relevant employees
and that of the Purchaser's Accountants in connection therewith.
4. Completion
4.1 Completion shall take place immediately following execution of this
Agreement on the Completion Date at the offices of GEC's Solicitors.
4.2 At Completion, GEC shall do or procure the carrying out of those things
listed in Part 1 of Schedule 2 and the Purchaser shall do or procure the
carrying out of those things listed in Part 2 of Schedule 2 and GEC and the
Purchaser shall respectively do or procure the carrying out of those things
listed in Part 3 of Schedule 2 as set out therein.
4.3 Neither GEC nor the Purchaser shall be obliged to perform its obligations
in respect of Completion unless the other party complies in all material
respects with the requirements of sub-clause 4.2 and Part 1 or 2 of
Schedule 2. Each party agrees that the entry into of the contract of
employment described in clause 7.16 and paragraph 2.3 of Part 2 of Schedule
2 shall not be a condition of Completion and accordingly the failure of
such contract to be made for any reason shall not prevent Completion
occurring.
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4.4 Neither GEC nor the Purchaser shall be obliged to complete the sale and
purchase of any of the Shares unless the sale and purchase of all the
Shares is completed simultaneously. This sub-clause shall not limit any
other clause of this Agreement.
5. GEC's Warranties and Undertakings
5.1 (A) Subject as otherwise set out in this Agreement, GEC warrants to the
Purchaser in the terms of the Warranties at the date of this Agreement
and accepts that the Purchaser is entering into this Agreement in
reliance upon each of the Warranties.
(B) GEC further warrants that GEC has full power and authority to enter
into and perform this Agreement, the Environmental Deed and the Tax
Covenant which constitute or when executed will constitute binding
obligations in accordance with their respective terms.
5.2 Subject to paragraph 2.2 of Schedule 4, each of the Warranties shall be
construed as a separate and independent warranty and save as expressly
provided shall not be limited by reference to any other Warranty or
anything in this Agreement.
5.3 (A) GEC waives and will procure that other members of the GEC Group waive,
any rights, remedies, or claims GEC or any other member of the GEC
Group may have against any director of a Group Company or any Employee
with respect to claims arising out of any information, opinion or
advice supplied or given (or omitted to be supplied or given) to GEC
in connection with the proposed entering into of this Agreement and
the sale of such Group Company, other than in the case of fraud,
wilful misstatement or wilful omission;
(B) GEC agrees that any such rights, remedy or claim shall not constitute
a defence to any claim by the Purchaser under or in relation to this
Agreement (including the Warranties), the Environmental Deed or the
Tax Covenant.
(C) GEC waives, and will procure that other members of the GEC Group waive
any pre-emption rights it may have relating to the Shares whether
conferred by any Group Company's Articles of Association or otherwise.
5.4 GEC covenants to pay the Purchaser an amount equal to the aggregate of all
liabilities, losses, costs and expenses (including legal fees and experts'
fees reasonably incurred) which any Group Company may hereafter suffer or
incur in relation to the following matters:-
(A) The claims issued in the High Court of Justice Queens Bench Division
under action number: 1993 L 3009 by former employees of the Plessey
Company Limited or the other companies named as defendant in the said
action in respect of the withdrawal of free life long private health
care benefits for
12
(inter alia) them and their spouses and other dependants for the rest
of their lives;
(B) any losses which Plessey or Marconi incur under their contractual
obligations to GEC Marconi Communications Limited in relation to the
supply by Plessey or Marconi to GEC Marconi Communications Limited or
Marconi Defence Systems Limited of varactor diodes incorporating
defective Xxxxx disks sourced by Demitron which have been installed in
TR8000 tactical radios used by the Swedish army, save, without
limitation to the proviso below, to the extent that such amounts are
recovered from Plessey's insurers or from Demitron and provided that
Plessey performs at cost the low pressure chemical vapour deposition
processing work to enable EEV Limited to fulfil its obligation to
provide replacement varactor diodes;
(C) the amounts required to be repaid by any member of the Group relating
to all grants, aids and subsidies made to any Group Company in
accordance with the terms and conditions upon which any such grant,
aid or subsidy was made as a consequence only of the sale and purchase
of the Shares pursuant to this Agreement or any breach of such terms
and conditions occurring prior to the Completion Date;
(D) any amounts payable by Plessey Inc. and/or Plessey in relation to a
cross-complaint for damages, injunctive and declaratory relief filed
by Xx. X. Xxxxxxx with the Superior Court of California, County of
Santa Xxxxx, as case number CV7635517;
(E) any losses which Plessey incurs under its contractual obligations to
Pace Micro Technology Limited in relation to losses incurred by Pace
Micro Technology Limited as a result of Plessey's delay in supplying
it with PCA 916 parts in March and April, 1996 pursuant to purchase
orders PAA21396A and PAA22819A;
(F) any losses which Plessey incurs under its contractual obligations to
Xxxxx Xxxxxxxx Limited relating to losses incurred by Xxxxx Xxxxxxxx
Limited as a result of difficulties with the AS102D electronic
controllers supplied by Plessey for installation in street lights, as
set out in a letter dated 17th February, 1997 and addressed to Xx.
Xxxxxxx Xxxxxxxx of GEC Plessey Semiconductors from Xx. Xxxx Xxxxx of
Xxxxx Xxxxxxxx Limited;
(G) the cost of the replacements for the defective microwave car alarms
supplied by Plessey to Xxxxx Limited for installation in Rover and BMW
automobiles for the period of 12 months prior to the Completion Date
and up to(pound)84 for each automobile manufactured by Rover in which
such alarms have been installed for the period of 12 months prior to
Completion as a contribution toward the cost of the installation of
the replacement alarms by Xxxxx Limited in automobiles with defective
alarms and either (a) up to(pound)6.50 for each automobile
manufactured by BMW in which such alarms have been installed
13
up to Completion or, in the event that Plessey offers and Xxxxx
accepts an extension to the warranty period therefor from 12 months to
24 months, (b) the cost of replacement alarms for BMW for such
additional 12 month period instead of the amount of up to(pound)6.50
referred to above, provided in the case of each matter referred to in
this paragraph (G) that such replacement is effected pursuant to a
contractual obligation on the part of Plessey;
(H) any losses which Plessey Inc. or Plessey incur under their respective
contractual obligations to ITT Industries or Lockheed Xxxxxx in
respect of the supply prior to Completion by Plessey Inc. and/or
Plessey to either company of defective 64K x 1 static random access
memory chips as referred to in paragraph 14.1(E) of the Disclosure
Letter including (without limitation) any liability as finally
determined by a court of competent jurisdiction arising under
proceedings issued in the United States District Court District of New
Jersey under case number 98-270/MTB between ITT
Aerospace/Communications, a division of ITT Industries Inc.
(Plaintiffs) and GEC Plessey Semiconductors Inc. and Plessey
Semiconductors Limited (Defendants);
(I) any loans owing at Completion by any of the Group Companies to any
other GEC Group Company;
(J) any liability of any Group Company to pay any finders fee, brokerage,
bonus or other commission to any third party in connection with the
sale and purchase of the Shares under this Agreement, but excluding
any Employee;
(K) any liabilities arising for rent, management charges and dilapidations
in respect of leases or underleases of premises assigned by any Group
Company prior to Completion or in respect of which assigned premises
any Group Company may have a liability as guarantor or surety
excluding in any such cases any premises of which a member of the
Group is now a tenant but including the premises at Carholme Road,
Lincoln, in relation to any liabilities therefor arising from the
state and condition of such premises at Completion;
(L) any dividend or other distribution whether made in cash or in kind
paid or made by any Group Company in favour of any GEC Group Company
at any time between 31st March 1997 and the Completion Date, other
than any such dividend or distribution, details of which are disclosed
in writing to the Purchaser in the Disclosure Letter;
(M) any contributions which Plessey Inc. is required by law to make to the
GEC-USA Savings and Investment Plan as a result of any unlawful
exclusion therefrom of its seasonal and part-time employees between
1st July, 1990 and 31st December, 1993;
(N) any losses which Plessey incurs under its contractual obligations to
customers in respect of defects in products falling within the
following categories which
14
were manufactured under the LK process (as referred to in the Oldham
Agreements) and shipped to customers from 31st August, 1997 to 1st
November, 1997:
(i) the KESRX 02;
(ii) two devices relating to the optical data storage product group;
and
(iii) the NWK 914 network transceiver supplied to customers in the
Asia Pacific;
provided that the limitations set out in paragraphs 3.1(A)(i), (B), 3.2
(save that the period shall be six years from the Completion Date, and in
the proviso shall remain six months), 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9(B),
3.10 and 3.12 of Schedule 4 shall apply, mutatis mutandis, to this clause
5.4 except that any amount paid to the Purchaser pursuant to this clause
5.4 shall not be taken into account when calculating the aggregate amount
of claims for the purposes of sub-paragraph 3.1(A)(ii) of Schedule 4, but
shall form part of the aggregate liabilities of GEC for the purposes of
paragraph 3.1(B) of Schedule 4 and provided further that GEC agrees that if
GEC shall take sole conduct of an action pursuant to paragraph 3.3(C) of
Schedule 4 as it applies to this clause in respect of a matter for which
there is a provision in the Completion Balance Sheets, then GEC shall not
make any admission of liability, agreement, settlement or compromise with
any third party in relation to any such matter without the prior written
consent of the Purchaser (such consent not to be unreasonably withheld or
delayed) save that if GEC agrees with the relevant third party to settle or
compromise such a matter, and the Purchaser refuses to agree to such
settlement or compromise then, if the amount for which GEC subsequently
becomes liable exceeds the figure at which it would have so settled or
compromised the relevant matter, GEC shall not be liable for the excess
amount or any costs or liability incurred since the proposed date of
settlement or compromise.
6. Restrictions on GEC Group
6.1 No member of the GEC Group will use any confidential information which is
the property of a Group Company which it has obtained by reason of the GEC
Group's ownership of such Group Company in order to compete with such Group
Company and GEC shall not and shall procure that no member of the GEC Group
nor any officer or employee of GEC or any member of the GEC Group shall
make use of or divulge to any third party (other than GEC's professional
advisers in which case GEC will use all reasonable endeavours to procure
that such advisers keep such information confidential on terms equivalent
to this clause) any such confidential information relating to the Group
Companies save only:
(A) insofar as the same has become public knowledge otherwise than,
directly or indirectly, through GEC's breach of this clause 6.1 or the
failure of the officers, employees or professional advisers referred
to above to keep the same confidential; or
15
(B) to the extent required by law or by any supervisory body or regulatory
body; or
(C) to the extent GEC reasonably considers necessary as a result of any
claim by the Purchaser for breach of Warranty or other provision of
this Agreement or in relation to a claim pursuant to clause 5.4; or
(D) to the extent GEC or any member of the GEC Group has a right to make
use of or divulge any such confidential information relating to the
Group Companies on any other account including, without limitation, in
its capacity as a customer of the Group Companies.
6.2 Save as otherwise agreed by the Purchaser and subject to clause 6.3, GEC
undertakes with the Purchaser (as trustee for itself and the Group
Companies) that it will not and that it will procure that no member of the
GEC Group will:-
(A) for a period of two years after the date of this Agreement, either on
its own account or in conjunction with or on behalf of any person,
firm or company, carry on anywhere in the world in competition with
the Group, the business of the manufacture of silicon semiconductor
devices utilising CMOS and/or bipolar technologies as components for
ultimate inclusion in third party end equipment, as such business is
conducted by the Group at the date of this Agreement (the "Restricted
Business");
(B) for a period of three years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any person,
firm or company, solicit or endeavour to entice away from the Group
Companies any person who at the date of this Agreement is a director,
officer, manager or is a member of the technical, information systems,
engineering or research and development staff or is an employee not
within those categories whose basic salary at the date of this
Agreement is in excess of(pound)50,000 per annum, in each case of any
of the Group Companies whether or not such person would commit a
breach of contract by reason of leaving service or office except a
person who responds to a public advertisement or who is first
approached when no longer an employee of a Group Company or any other
member of the Purchaser's Group.
6.3 Nothing in clause 6.2 shall restrict any member of the GEC Group from:-
(A) carrying on or developing the business currently carried on by the GEC
Group, including, without limitation, at the manufacturing facility at
Lansdowne Road, Oldham, except that the manufacture of the Retained
Products (as defined in the Oldham Agreements) shall require the
approval of the Purchaser to the extent not already approved in the
Oldham Agreements;
(B) acquiring the whole or any part of a body corporate which carries on
the Restricted Business or the whole or any part of a business which
includes the
16
carrying on of the Restricted Business, except that where more than
one-third of the turnover of the body corporate or of the business
acquired as set out in the latest available audited accounts of that
body corporate or business consists of the Restricted Business, GEC
shall use its reasonable endeavours to procure the disposal of such
Restricted Business;
(C) holding less than 20 per cent. of any class of shares or debentures
listed on the London Stock Exchange or any other recognised stock
exchange; or
(D) acquiring or holding any interest in any joint venture (whether
incorporated or unincorporated) except where such joint venture is a
subsidiary of GEC.
6.4 GEC undertakes to take all reasonable steps to ensure compliance with the
terms of clause 6.2 above by employees of the GEC Group.
6.5 Subject to clause 6.6, GEC undertakes that it shall not and shall procure
that no member of the GEC Group shall use the trade xxxx or name "Plessey"
or any confusingly similar xxxx or name in relation to the Restricted
Business.
6.6 GEC shall use its reasonable endeavours to procure compliance with the
undertaking in clause 6.5 within 90 days of the date of this Agreement,
except for the Business (as defined in the Oldham Agreements) where the
period shall be 6 months.
6.7 Each of the undertakings in clause 6.2 is a separate and independent
undertaking and if one or more undertakings is held to be void or
unenforceable, the validity of the remaining undertakings shall not be
affected.
6.8 GEC agrees that the restrictions and undertakings contained in clauses 6.2
and 6.4 are reasonable and necessary for the protection of the Purchaser's
legitimate interests in the goodwill of the Group Companies but if any such
restriction or undertaking shall be found to be void or voidable, but would
be valid and enforceable if some part or parts of the restriction or
undertaking were deleted such restriction or undertaking shall apply with
such modifications as may be necessary to make it valid and enforceable.
6.9 Without prejudice to clause 6.8 if any restriction or undertaking is found
by any court or other competent authority to be void or unenforceable the
parties shall negotiate in good faith to replace such void or unenforceable
restriction or undertaking with a valid provision, which, as far as
possible, has the same legal and commercial effect as that which it
replaces.
7. Further Warranties and Undertakings
7.1 Each party warrants to the other as follows (save that the Purchaser and
the Guarantor give no warranties to each other):-
17
(A) it has the requisite power and authority to enter into and perform
this Agreement and the other documents to be executed by it and
delivered at Completion in accordance with this Agreement;
(B) this Agreement constitutes and the other documents executed by it
which are to be delivered at Completion will, when executed,
constitute obligations binding on it; and
(C) the execution and delivery of, and the performance by it of its
obligations under this Agreement will (or with the giving of notice or
lapse of time or both would) not:-
(i) result in a breach of a statutory provision or regulation
applicable to it of any provision of its memorandum or articles
of association or other constitutional documents;
(ii) result in a breach of any order, judgment or decree of any court
or governmental agency to which it or any member of the
Purchaser's Group or the GEC Group as the case may be is a party
or by which it or any member of the Purchaser's Group or the GEC
Group as the case may be is bound; or
(iii) require the consent of its shareholders.
7.2 (A) The Purchaser undertakes to use its reasonable endeavours (which
reasonable endeavours shall include, if required to obtain such a
release, an offer by the Guarantor to enter into a covenant on behalf
of the beneficiary of the GEC Security on terms at least equivalent to
those contained in the GEC Security (the "Equivalent Offer")) to
procure that, as soon as reasonably practicable following Completion
in the case of those GEC Securities notified to the Purchaser by GEC
at Completion and, in the case of any other GEC Security, as soon as
reasonably practicable following the service by GEC of a notice to the
Purchaser to effect such a release, GEC and each other member of the
GEC Group is released from the GEC Securities and undertakes to hold
GEC, for itself and as trustee for its subsidiaries and the relevant
members of the GEC Group, indemnified and to keep it and them
indemnified from and against all actions, claims, proceedings, loss,
damage, payments, costs or expenses incurred by GEC or any member of
the GEC Group in relation to or arising out of all GEC Securities but,
if such liability does not relate to a liability incurred by a member
of the Group in the ordinary course of its business, only to the
extent that the liabilities arising under the GEC Securities are
fairly disclosed in the Disclosure Letter. Without prejudice to the
Purchaser's obligations in this clause 7.2(A), GEC agrees not to
disclose to the beneficiary of the relevant GEC Security the existence
of the Guarantor's obligation to make the Equivalent Offer without the
prior written consent of the Guarantor which shall not be unreasonably
withheld or delayed; and
18
(B) (i) GEC agrees to maintain (so far as it is able):
(aa) the duty deferment arrangement for period entry imports set out
below:-
Name: Plessey Semiconductors Limited
C&E No: 7103124
Bond No: IBSU/83015975;
(bb) the VAT/Duty Deferment Bond set out below:-
Name: Plessey Semiconductors Limited
Approval No: 8708747
Bond No./Reference: IBSU/83017284,
and GEC's guarantee in respect thereof for a period of 21 days
after Completion provided that GEC shall have been granted an
indemnity by Lloyds Bank plc in the Agreed Form in respect of any
use of each of the above bonds on or after Completion; and
(ii) The Purchaser undertakes to put in place facilities and
guarantees replacing those described in paragraph (i) above as
soon as reasonably practicable following Completion and in any
event within 21 days following Completion.
7.3 (A) The Purchaser acknowledges that the Names are and shall remain the
property of the GEC Group and that nothing in this Agreement shall
transfer nor shall operate as an agreement to transfer any right,
title or interest in any of the Names to the Purchaser.
(B) Subject to sub-clause 7.4, the Purchaser further undertakes that it
shall not and shall procure that no Group Company nor any other member
of the Purchaser's Group shall make any use of any trade marks or
business or corporate names consisting of or incorporating any of the
Names and/or any trade xxxx or business or corporate name confusingly
similar thereto in relation to any goods or services and that it shall
procure that upon Completion each of the Companies and each other
member of the Group whose corporate name includes any of the Names
passes (and files with the Registrar of Companies) a resolution to
change its name to a name not incorporating any of the Names and that
a certified copy of each resolution effecting such changes of name is
provided to GEC at Completion and changes at Completion all internet
domain names so as not to incorporate any of the Names.
7.4 The Purchaser undertakes that it shall procure:
19
(A) as soon as reasonably practicable and in any event no later than 90
days from the Completion Date, the removal of the Names from all
premises, signs and vehicles which are used by or in connection with
any Group Company; and
(B) that immediately following Completion no brochures, leaflets or
similar documents and no packaging containing any reference to the
Names shall be ordered from suppliers or printed by any Group Company
and, with respect to existing brochures, leaflets or similar documents
and packaging containing a reference to the Names, that the relevant
Group Company shall use its reasonable endeavours to ensure that as
soon as practicable after Completion such references are deleted,
pasted over or a sticker is put over such references.
7.5 Without prejudice to the generality of sub-clause 7.3(B), the Purchaser
undertakes to procure immediately following Completion that each Group
Company shall cease to use any stationery, purchase order, invoice, receipt
or other similar document containing any reference to any of the Names.
7.6 The Purchaser hereby grants and shall procure that each member of the Group
at the date hereof grants, with effect from Completion a non-exclusive,
irrevocable, non-transferable, royalty-free, perpetual worldwide licence to
GEC for the benefit of itself and each GEC Group Company (except Hevermill
Limited) to use (which includes the right to sub-contract but not to
sub-licence) for the purpose of the business of each GEC Group Company
(except the Business as defined in the Oldham Agreements) all Intellectual
Property owned at Completion by any of the Group Companies to the extent
used by any GEC Group Company prior to the Completion Date in any part of
the businesses of the GEC Group but so that no use of such rights shall
extend to use in relation to the Restricted Business.
7.7 In addition to the rights granted pursuant to sub-clause 7.6 above, the
Purchaser hereby grants and shall procure the grant by each member of the
Group Companies with effect from Completion of a non-exclusive,
irrevocable, royalty-free, perpetual worldwide licence to GEC for the
benefit of itself and each other company which is a member of the GEC Group
to use all right in the patents or patent applications (or any patent
derived therefrom) owned by any member of the Group or assigned to the
Purchaser (or any member of the Group ) at Completion in any business other
than the Restricted Business. The licence shall be transferable to a
purchaser (whether by shares or assets) of all or a substantial part of any
business using any or all of such patent rights to the extent that such
rights are used at such time.
7.8 If either GEC or the Purchaser discovers at any time after Completion that
any Group Company owns any Intellectual Property at the Completion Date
which relates exclusively to any business carried on by the GEC Group prior
to the Completion Date, it shall immediately notify the other. Thereafter,
at the request and expense of GEC, the Purchaser undertakes to procure the
assignment of any such Intellectual Property to the member of the GEC Group
nominated by GEC, subject to the grant by such member of the GEC Group of a
non-exclusive, irrevocable, non-transferrable,
20
royalty-free, perpetual worldwide licence to the Purchaser for the benefit
of itself and each Group Company to use such intellectual property for the
purpose of the Restricted Business.
7.9 The Purchaser further warrants to GEC that it is purchasing the Shares for
the Purchaser's own account for investment purposes only and not with a
view to, or for sale in connection with, a distribution of the Shares
within the meaning of the U.S. Securities Act of 1933, as amended (the
"1933 Act"). The Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares and shall at no time offer to
sell or otherwise dispose of the Shares in violation of the registration
requirements of the 1933 Act or any state securities law;
7.10 The Purchaser undertakes itself to, and to procure that each Group Company
shall, provide to GEC and any person authorised by GEC for six years from
Completion such reasonable access to the premises, relevant employees and
all the Books and Records and title deeds of the Group as GEC or any
professional adviser authorised by GEC may reasonably require in connection
with the audit and taxation affairs of the GEC Group or the previous
ownership of the Group by the GEC Group upon reasonable notice and subject
to giving such undertakings as to confidentiality as the Purchaser or the
relevant Group Company may reasonably require and the Purchaser or the
relevant Group Company will instruct its directors to give promptly all
reasonable information and explanations to GEC or any such professional
advisers authorised by GEC as they may reasonably request exclusively for
such audit or taxation purposes.
7.11 GEC hereby grants and shall procure that each member of GEC Group at the
date hereof grants, with effect from Completion, a non-exclusive,
irrevocable, non-transferable (except to a purchaser from the Purchaser of
all or a substantial part of the Lincoln Business (as such term is defined
in clause 12.3) to the extent relevant to such business), royalty free,
perpetual, worldwide licence to the Purchaser for the benefit of itself and
each Group Company to use (which shall include the right to sub-contract,
but not sub-licence) for the purpose of the business of each Group Company
all Intellectual Property (except for the Names) which is both owned at
Completion by any member of the GEC Group and which is also used by any
Group Company prior to the Completion Date in any part of the business of
the Group to the extent currently used.
7.12 If either GEC or the Purchaser discovers at any time after Completion that
any GEC Group Company owns any Intellectual Property at the Completion Date
which relates exclusively to any business carried on by the Group prior to
the Completion Date, it shall immediately notify the other. Thereafter at
the request of the Purchaser, GEC undertakes to execute such documents as
the Purchaser may reasonably require in order to effect the assignment of
any such Intellectual Property to the member of the Purchaser's Group
nominated by the Purchaser subject to the grant by such member of the
Purchaser's Group of a non-exclusive, irrevocable, non-transferrable,
royalty-free, perpetual licence to GEC for the benefit of itself and each
Group Company to use such intellectual property, except in relation to
Restricted Business.
21
7.13 The Purchaser hereby confirms and undertakes to GEC that it has on the date
hereof entered into those undertakings required by Her Majesty's Government
in the Agreed Form.
7.14 The Purchaser undertakes to hold GEC for itself and as trustee for its
subsidiaries, the relevant member of the GEC Group, Plessey Properties
Limited and The Plessey Company Ltd. indemnified and to keep it and them
indemnified from and against all actions, claims, proceedings, loss,
damage, payments, costs or expenses incurred by GEC, any member of the GEC
Group, Plessey Properties Limited or The Plessey Company Limited as a
result of its having been the tenant or its having guaranteed the
obligations of the tenant of the Crompton Road Property, the Tavistock Road
Property, the Altrincham Property, the Scotts Valley Property or the Xxxxxx
Manor Property save insofar as such liabilities fall to be discharged by
GEC pursuant to the Environmental Deed.
7.15 GEC undertakes to procure that GEC France SA enters into an assignment of
such rights as GEC France SA has in respect of the property at 00 Xxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx Les Tours more fully described in Part III of
Schedule 8 to the extent that such rights are assignable to the Purchaser
or a member of the Purchaser's Group unless GEC France SA or another Group
Company enters into a lease of or other agreement relating to the
occupation of such property prior to Completion.
7.16 The Purchaser hereby confirms and undertakes to GEC that:
(i) it has prior to Completion made and not withdrawn (and will not
withdraw for 14 days following the Completion Date) an offer to Xxx
Xxxxx to employ him as from Completion on the same terms as or better
than those on which he was immediately prior thereto employed; and
(ii) it will enter into a contract of employment on the basis described in
paragraph (i) above with Xxx Xxxxx, subject to his consent having been
obtained thereto, at Completion or as soon as reasonably practicable
once his consent has been obtained.
7.17 GEC agrees to release or procure the release of Xxx Xxxxx from any notice
period he is required to give pursuant to his contract of employment with
the GEC Group at Completion or as soon as reasonably practicable, in either
case, following a written request therefor from him in order to enable him
to accept the offer of employment referred to in clause 7.16.
7.18 The Purchaser and the Guarantor each warrant to GEC:
(A) in the terms of paragraph 13 of Schedule 3 (save paragraphs 13.3(B),
13.4(B) and 13.5(B) as if, for this purpose, the Purchaser were named
therein instead of the relevant Group Company and as if, for the
purpose of paragraph 13.1 thereof, the Purchaser and the Guarantor
were named therein instead of GEC; and
22
(B) that the Purchaser is a wholly-owned subsidiary of the Guarantor.
8. Purchaser's Remedies and GEC's Limitations on Liability
8.1 The Purchaser's right to claim that a Warranty (which for the purposes of
this clause 8.1 shall exclude those warranties in clauses 5.1(B) and 7.1(A)
(so far as they relate to GEC) to which none of those limitations shall
apply) has been breached shall be limited as set out in this Agreement and
no liability shall attach to GEC in respect of claims under the Warranties,
the Environmental Deed or the Tax Covenant, as the case may be, if and to
the extent that such limitations apply.
8.2 The Purchaser shall not be entitled to claim that any fact causes any of
the Warranties to be breached, or gives rise to a claim under the
Environmental Deed (in relation to the Current Properties only (and not in
relation to the Former Properties)), if it was fairly disclosed in the
Disclosure Letter or in any Disclosure Document.
8.3 If, following Completion, the Purchaser becomes aware that there has been
any breach of the Warranties or any other term of this Agreement the
Purchaser shall not be entitled to treat this Agreement as terminated but
shall, subject as otherwise provided herein, be entitled to claim damages
under this Agreement.
8.4 Each of the parties acknowledges that the restrictions contained in clauses
6.1 and 16 shall continue to apply after the completion of the sale and
purchase of the Shares under this Agreement without limit in time.
8.5 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion or by giving time or other
indulgence by the Purchaser to GEC except a specific waiver or release by
the Purchaser in writing.
9. Pension and Other Arrangements
(A) Each of GEC and the Purchaser shall comply with Schedule 5.
(B) GEC hereby undertakes to the Purchaser (for itself and as trustee for
the Group Companies) to reimburse in full within 14 days of written
demand the payments made by Group Companies to Employees in relation
to the special bonus payments (relating to their retention) as
disclosed by GEC to the Purchaser in the Agreed Form but including in
addition any employer's national insurance and employer's pension
contribution relating thereto, if any.
10. Cross Licences and Assignments
10.1 GEC shall at the date of Completion grant a sub-licence in the Agreed Form
under the AT&T/Lucent Cross Licence.
23
10.2 GEC shall procure the grant of a licence from IBM to Plessey in the Agreed
Form immediately after Completion. The Purchaser shall pay GEC,
(pound)30,000 on 1st January 1999 and (pound)12,500 on 1st January 2000 in
consideration for GEC procuring the grant of such licence. At the request
of the Purchaser within 60 days of Completion, GEC shall procure the grant
of a licence from IBM in "Election I" form (being the form set out in
Document 64 of Annex II of the Schedule to the Disclosure Letter) on
payment to GEC of (pound)580,000.
10.3 The Purchaser acknowledges that the patent rights owned by the Group
Companies which are the subject of the AT&T Lucent Cross Licence and the
IBM Cross Licence are subject to an irrevocable, royalty-free,
non-exclusive licence to Lucent pursuant to the AT&T/Lucent Cross Licence
and to IBM pursuant to the IBM Cross Licence.
10.4 GEC shall procure that at Completion the GEC Group Companies enter into and
deliver completed deeds of assignment in the Agreed Form and the assignment
of rights relating to the Plessey name in the Agreed Form.
11. Remedies and Waivers
11.1 No delay or omission on the part of any party to this Agreement in
exercising any right, power or remedy provided by law or under this
Agreement or any other documents referred to in it shall:-
(A) impair such right, power or remedy; or
(B) operate as a waiver thereof
except in respect of any right, power or remedy exercisable by the
Purchaser under the provisions relating to limitations on liability under
the Warranties as set out in clause 8 and Schedule 4 or in relation to
clause 5.4.
11.2 The single or partial exercise of any right, power or remedy provided by
law or under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
11.3 The rights, powers and remedies provided in this Agreement are cumulative
and (subject as expressly provided herein) not exclusive of any rights,
powers and remedies provided by law.
12. Assignment
12.1 This Agreement and the benefits (including the Warranties) and obligations
under it and any part of it shall not be assignable by the Purchaser or the
Guarantor except that the Purchaser may, upon giving written notice to GEC,
assign the benefit (but not the burden) of this Agreement to a member of
the Purchaser's Group and the terms of such assignment shall provide that:-
24
(A) any such assignee remains a member of the Purchaser's Group; and
(B) before such assignee ceases to be a member of the Purchaser's Group,
the Purchaser will procure that the benefit of this Agreement is
assigned to the Purchaser or (upon giving further written notice to
GEC) to another company within the Purchaser's Group (any such further
assignment to be subject to the same conditions as above); and
(C) any assignee, including a subsequent assignee, shall agree with GEC
that if the liability of GEC shall be increased by reason of such
assignment, the assignee shall be entitled to claim against GEC only
such amount as would equal GEC's liability had no assignment taken
place.
12.2 This Agreement and the benefits and obligations under it and any part of it
shall not be assignable by GEC except that GEC may, upon giving written
notice to the Purchaser assign the benefit (but not the burden) of this
Agreement to a member of the GEC Group provided that:-
(A) any such assignee remains a member of the GEC Group; and
(B) before such assignee ceases to be a member of the GEC Group, GEC will
procure that the benefit of this Agreement is assigned to GEC or (upon
giving further written notice to the Purchaser) to another company
within the GEC Group (any such further assignment to be subject to the
same conditions as above); and
(C) any assignee, including a subsequent assignee, shall agree with the
Purchaser that if the liability of the Purchaser shall be increased by
reason of such assignment, the assignee shall be entitled to claim
against the Purchaser only such amount as would equal the Purchaser's
liability had no assignment taken place.
12.3 Notwithstanding the provisions of clauses 12.1 and 12.2 the Purchaser may
assign (the "Assignment Right") the benefit of the Environmental Deed
insofar as it relates to the Lincoln Business to a purchaser of the Lincoln
Business. The "Lincoln Business" means the business that will be carried on
by the Group Companies at the Properties in Lincoln identified in Schedule
8 and all assets relating to such business and such other businesses as may
be carried on at other Properties belonging to any Group Company at
Completion and which are ancillary to the business carried on at Lincoln.
The Purchaser and the Guarantor each undertake that they will not, and that
they will procure that no member of the Purchaser's Group does, disclose
the Assignment Right to an actual or prospective purchaser of the Lincoln
Business without the prior written consent of GEC which shall not be
unreasonably withheld or delayed. The provisions of clause 12.1(C) above
shall apply mutatis mutandis to any assignment pursuant to this clause.
25
12.4 Subject to clause 12.3, the Warranties and the Environmental Deed shall
cease to have any effect for all purposes in relation to a Group Company
upon such Group Company ceasing to be owned by a member of the Purchaser's
Group.
13. Further Assurance
Each of the parties shall from time to time, on being required to do so by
the other, now or at any time in the future, execute or procure the
execution of all such documents in a form satisfactory to the party
concerned as the parties may, in each such case, reasonably consider
necessary for giving full effect to this Agreement and securing to the
Purchaser or GEC (as the case may be) the full benefit of the rights,
powers and remedies conferred upon them in this Agreement.
14. Entire Agreement
14.1 This Agreement, the Tax Covenant, the Environmental Deed, the Disclosure
Letter and any other documents referred to in this Agreement (together the
"Sale Documents") constitute the whole and only agreement between the
parties relating to the sale and purchase of the Shares and, save to the
extent expressly set out in those documents, supersede and extinguish any
prior drafts, agreements, undertakings, representations, warranties,
promises, assurances and arrangements of any nature whatsoever, whether or
not in writing relating thereto including those confidentiality agreements
and letters dated 5th November, 1997 and on or around 15th December, 1997
respectively (together the "Confidentiality Agreements") save that any
rights of members of the GEC Group which may have occurred or arisen prior
to the date hereof pursuant to such Confidentiality Agreements shall remain
subsisting.
14.2 Each party acknowledges that, save to the extent expressly set out in the
Sale Documents, in entering into the Sale Documents on the terms set out
therein, it is not relying upon any agreement, undertaking, representation,
warranty, promise, assurance or arrangement made or given by any other
party or any other person, whether or not in writing, at any time prior to
the execution of this Agreement (including without limitation any statement
made, information given or opinion expressed in the Information Memorandum
or in any Disclosure Document) or any warranty or condition implied by
statute or otherwise and no representations or warranties are given by GEC
save for the Warranties.
14.3 None of the parties shall have any right of action against any other party
to this Agreement arising out of or in connection with any agreement,
undertaking, representation, warranty, promise, assurance or arrangement
referred to in sub-clause 14.1 or 14.2 above (except in the case of fraud
and save to the extent expressly set out in the Sale Documents but
excluding the Disclosure Letter).
26
15. Notices
15.1 Any notice or other communication given or made under or in connection with
the matters contemplated by this Agreement shall, unless expressly stated
otherwise, be in writing, other than writing on the screen of a visual
display unit or other similar device which shall not be treated as writing
for the purposes of this clause.
15.2 (A) Any such notice or other communication shall be addressed as provided
in sub-clause 15.3 and sent by personal delivery or by first class
post Provided that if, in accordance with the above provisions, any
such notice or other communication is sent given or made outside
Working Hours, such notice or other communication shall be deemed to
be sent given or made at the start of Working Hours on the next
Business Day.
(B) In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
(i) if sent by personal delivery, when left at the address specified
in clause 15.3; and
(ii) if sent by first class post, two Business Days after it is
posted.
15.3 The relevant addressee and address of each party for the purposes of this
Agreement, subject to sub-clause 15.4, are:-
Name of party Addressee Address
------------- --------- -------
GEC Company Secretary 0 Xxxxxxxx Xxxx,
Xxxxxx, X0X 0XX
with a copy to:
Xxxxxxxxx and May
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX0X 0XX
Attention:- Xxxxx Xxxxxxxx
The Purchaser Company Secretary Xxxxxxxxxxx, Xxxxx XX0 0XX
The Guarantor Company Secretary 000 Xxxxxx Xxxxx, Xxxxxx,
Xxxxxxx, Xxxxxx X0X XX0
15.4 Each party may notify any other party to this Agreement of a change to its
name, relevant addressee or address for the purposes of sub-clause 15.3
Provided that such notification shall only be effective on:-
(A) the date specified in the notification as the date on which the change
is to take place; or
27
(B) if no date is specified or the date specified is less than five clear
Business Days after the date on which notice is given, the date
falling five clear Business Days after notice of any such change has
been given.
16. Announcements
16.1 Subject to sub-clause 16.2 no public announcement concerning the sale of
the Shares or any ancillary matter shall be made by any party without the
prior written approval of the other, such approval not to be unreasonably
withheld or delayed.
16.2 Any party may make a public announcement concerning the sale of the Shares
or any ancillary matter if required by the law of any relevant jurisdiction
or any securities exchange or regulatory or governmental body to which such
party is subject, wherever situated, including (without limitation) the
London Stock Exchange or the Panel, whether or not the requirement has the
force of law, Provided that any such announcement shall be made only after
consultation with each other party (if practicable).
16.3 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
17. Restrictive Trade Practices Act 1976
If there is any provision of this Agreement, or of any agreement or
arrangement of which this Agreement forms part, which causes or would cause
this Agreement or that agreement or arrangement to be subject to
registration under the RTPA 1976, then that provision shall not take effect
until the day after particulars of this Agreement or of that agreement or
arrangement (as the case may be) have been furnished to the Director
General of Fair Trading pursuant to section 24 RTPA 1976.
18. Costs and Expenses
The Purchaser shall bear and pay the cost of all stamp duty, stamp duty
reserve tax and other similar duty, levy or tax and all registration fees
which may result in any jurisdiction from the execution and performance of
this Agreement and the other agreements entered into pursuant hereto and
the transfer of the Shares to the Purchaser and the transactions
contemplated hereby. Save as otherwise stated in this clause or in any
other provision of this Agreement, each party shall pay its own costs and
expenses in relation to the negotiations leading up to the sale and
transfer of the Shares and in relation to the preparation, execution and
carrying into effect of this Agreement and all other documents referred to
in it and the transactions contemplated hereby.
28
19. Counterparts
19.1 This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
19.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same instrument.
20. Time of Essence
Save as otherwise expressly provided, time is of the essence only for the
purposes of clause 4 and Schedules 2 and 4.
21. Effect of Completion
21.1 All provisions of this Agreement shall, so far as they are capable of being
performed or observed, continue in full force and effect notwithstanding
Completion except in respect of those matters then already performed and
Completion shall not constitute a waiver of any of the Purchaser's rights
in relation to this Agreement, the Environmental Deed or the Tax Covenant.
21.2 Without prejudice to clause 21.1 the Warranties shall not be extinguished
by Completion.
22. Invalidity
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
then such provision will be deemed to be severed from this Agreement and if
possible replaced by a lawful provision which carries out, as closely as
possible, the intention of the parties under this Agreement and where
permissible that shall not affect or impair:-
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(B) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
23. Governing Law
This Agreement shall be governed by and construed in accordance with
English law.
24. Jurisdiction
Each party to this Agreement irrevocably agrees that any Proceedings
against it may be brought in the courts of England. Nothing contained in
this clause shall limit any
29
party's rights to take Proceedings against the other in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction,
whether concurrently or not, to the extent permitted by the law of such
other jurisdiction.
25. Agent for Service
25.1 The Guarantor irrevocably appoints the Company Secretary of the Purchaser
of Xxxxxxxxxxx Xxxxx XX0 0XX to be its agent for the service of process in
England. It agrees that any Service Document may be effectively served on
it in connection with Proceedings in England and Wales by service on its
agent.
25.2 Any Service Document shall be deemed to have been duly served on the
Guarantor if marked for the attention of the Company Secretary of the
Purchaser at Xxxxxxxxxxx Xxxxx XX0 0XX (or such other address within
England or Wales as the agent may, on not less than three Business Days'
notice, notify GEC) and:
(A) left at the specified address; or
(B) sent to the specified address by first class post.
In the case of (A), the Service Document shall be deemed to have been
duly served when it is left. In the case of (B), the Service Document
shall be deemed to have been duly served two Business Days after the
date of posting.
25.3 If the agent at any time ceases for any reason to act as such, the
Guarantor shall immediately appoint a replacement agent having an address
for service in England or Wales and shall notify GEC of the name and
address of the replacement agent. Failing such appointment and
notification, GEC shall be entitled by notice to the Guarantor to appoint a
replacement agent to act on the Guarantor's behalf. The provisions of this
clause applying to service on an agent apply equally to service on a
replacement agent.
25.4 A copy of any Service Document served on an agent shall be sent by post to
the Guarantor. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
"Service Document" means a writ, summons, order, judgment or other process
issued out of the courts of England and Wales relating to or in connection
with any Proceedings.
AS WITNESS the hands of the duly authorised representatives of the parties
the day and year first above written.
30
Schedule 1:
Definitions
(A) In this Agreement, unless otherwise specified the following terms and
expressions shall have the following respective meanings:-
"Accounts" the financial statements of each Group
Company (save PSSY Semiconductors Svenska
Aktiebolag) for the year ended on the
Accounts Date, copies of which are included
in sections 1.1. and 1.2 of the Schedule to
the Disclosure Letter;
"Accounts Date" 31st March, 1997;
"Adjustment" the amount established pursuant to clause
3.4(F);
"AEI" AEI Semiconductors Limited, of which
particulars are given in Part A of Schedule
7;
"AEI Names" the names AEI and Associated Electrical
Industries;
"Agreed Form" in relation to any document, such document in
a form agreed and initialled for the purposes
of identification by the Purchaser's
Solicitors on behalf of the Purchaser and
GEC's Solicitors on behalf of GEC;
"Agreed Amount" (pound)183,405,000;
"Aggregated Completion
Balance Sheet" an aggregation of the Completion Balance
Sheets drawn up as at the Completion Date in
the same manner as the Proforma Aggregated
Balance Sheet as at 31st December, 1997;
"Altrincham Property" the unregistered leasehold property
comprising Xxxx X0, Xxxxxxx Xxxxxxxx Xxxx,
Xxxxxxxxxx more fully described in section 2
of Part I of Schedule 8;
"AT&T/Lucent Cross Licence" a patent cross licence agreement effective as
of 1st July, 1983 between GEC and Lucent
Technologies Inc. as successor of AT&T Corp.;
"Books and Records" has its common law meaning and includes,
without limitation, all notices,
correspondence, orders, inquiries, drawings,
plans, books of account and other documents
and all computer disks or tapes or
31
other machine legible programs or other
records;
"Business Day" a day (other than a Saturday or a Sunday) on
which banks are open for business in London;
"Carholme Road Property" the building of approximately 40,000 square
feet at a site at Carholme Road, Lincoln
occupied by Plessey more fully described in
paragraph 17.1 of the Disclosure Letter;
"Certificated Properties" each of the freehold and leasehold properties
described in Part II of Schedule 8 (and
"Certificated Property" means any of them);
"CGTA" the Capital Gains Tax Xxx 0000;
"Xxxxxx Manor Property" the registered leasehold property at 000
Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxx with title
number WT114971 more fully described in
section 5 of Part II of Schedule 8;
"Closing Net Worth" the amount shown against Closing Net Worth in
the aggregated Completion Balance Sheet
agreed or determined pursuant to clause 3.4
as the case may be;
"Code" The City Code on Take-overs and Mergers;
"Companies Acts" the Companies Xxx 0000, the Criminal Justice
Xxx 0000, the Companies Consolidation
(Consequential Provisions) Xxx 0000 and the
Companies Xxx 0000;
"Companies" Plessey, Plessey Inc., Marconi and AEI
collectively (and "Company" means any one of
the Companies individually);
"Completion" completion of the sale and purchase of the
Shares under this Agreement;
"Completion Balance Sheets" balance sheets drawn up as at the Completion
Date for each Group Company and in addition
for Plessey, a consolidated balance sheet of
Plessey and its subsidiaries;
"Completion Date" the date of this Agreement;
32
"Crompton Road Property" the unregistered leasehold property
comprising Xxxx 0, Xxxxxxxxxx Xxxxxxxxxx
Xxxxxx more fully described in section 2 of
Part I of Schedule 8;
"Current Properties" means those properties in Parts I(1) and (2),
II and III of Schedule 8 of this Agreement
and "Current Property" means any one of them;
"Data Room" the data room established at the offices of
GEC's Solicitors in connection with the
transaction effected by this Agreement;
"Disclosure Documents" has the meaning given to it in the Disclosure
Letter;
"Disclosure Letter" the letter dated the date hereof written by
GEC to the Purchaser for the purposes of
clause 8 and delivered to the Purchaser's
Solicitors before the execution of this
Agreement;
"Employee" a person employed by any Group Company as of
the Completion Date but excluding (for the
avoidance of doubt) any person who is not so
employed but is seconded at Completion by a
third party to a Group Company;
"Environment" any and all organisms (including without
limitation man), ecosystems, property and the
following media: air, (including without
limitation, the air within buildings and the
air within other natural or man-made
structures whether above or below ground);
water (including without limitation, water
under or within land or in drains or sewers
and coastal and inland waters); and land
(including without limitation, land under
water);
"Environmental Deed" means the environmental deed in the Agreed
Form;
"Environmental Laws" any and all applicable laws in the relevant
jurisdiction (including for the avoidance of
doubt, common law) (excluding those laws
relating specifically to town planning
matters and to the health and safety of
workers in the work place) and European
Community or European Union regulations,
directives and decisions, statutes,
subordinate legislation (which for the
avoidance of doubt (notwithstanding paragraph
3.7 of Schedule 4 to this Agreement) shall
include Part IIA of the
33
Environmental Protection Xxx 0000 and/or
Sections 161A - D of the Water Resources Act
1991 (both as enacted by Section 57 and
paragraph 162 of Schedule 22 respectively of
the Environment Act 1995) and the first set
of guidance notes and regulations adopted
under those provisions (but not subsequent
modifications, amendments or re-enactments of
those provisions or guidance notes or such
regulations to the extent that those
modifications, amendments or re-enactments
would otherwise increase the liability of GEC
under this Agreement)) which were, are, or
which may become applicable to the conduct of
the business of any Group Company or the use,
occupation or ownership of the Current
Properties or the Former Properties and which
have as a purpose or effect the protection
of, and/or the prevention of harm or damage
to, the Environment and/or the provision of
remedies in respect of harm or damage to the
Environment;
"Environmental Warranty" any warranty contained in paragraph 22 of
Schedule 3;
"Exchange Rate" the closing mid-market spot rate of exchange
in London for the conversion of the relevant
currency into pounds sterling quoted as the
"Closing mid-point" on the Completion Date
for pounds sterling against the relevant
foreign currency in the Financial Times
published in London on the Business Day
following the Completion Date; or
in the case of manifest error in the relevant
edition of the Financial Times or its
non-publication in London on the relevant
Business Day, the rate of exchange certified
by National Westminster Bank Plc as being the
equivalent, as nearly as practicable, of the
above mentioned closing spot rate of exchange
in London on the Completion Date;
"Disclosure" has the meaning given to it in the Disclosure
Letter;
"Former Properties" means any property (including, without
limitation, the Carholme Road Property and
the Oldham Properties) used, owned or
occupied at any time prior to Completion by
any Group Company other than those properties
listed in Part I(1) and (2), II
34
and III of Schedule 8 of this Agreement;
"GEC's Accountants" Price Waterhouse;
"GEC Group" GEC and all subsidiaries or subsidiary
undertakings from time to time of GEC (other
than the Group);
"GEC Group Company" any member of the GEC Group (and "GEC Group
Companies" means such members collectively);
"GEC Names" the names GEC, General Electric and General
Electric Company;
"GEC Scheme" the retirement benefits scheme established by
GEC and known as the "GEC 1972 Plan"
established by a Definitive Trust Deed and
Rules dated 4th March, 1982 as amended;
"GEC Securities" those guarantees, indemnities, performance
bonds or other security or contingent
obligation in the nature of a financial
obligation including, without limitation,
letters of comfort or support which have or
may have been given by GEC or any GEC Group
Company or by Plessey Properties Limited or
by The Plessey Company Limited to the extent
that they secure the obligations of any Group
Company;
"GEC's Solicitors" Xxxxxxxxx and May;
"Group" the Companies and all subsidiaries or
subsidiary undertakings of each Company,
particulars of the subsidiaries of the
Companies being given in Part B of Schedule
7;
"Group Company" any member of the Group (and "Group
Companies" means such members collectively);
"Group Stock" the stocks and work in progress owned by the
Group Companies at the Completion Date,
including (without limitation) goods and
other assets purchased for resale, stores,
raw materials, consumables, accessories, and
components purchased for incorporation into
or use in processing products or systems for
sale and all partly finished or finished
products of the Group Companies wherever
located and by whomsoever held, including
items which, although subject to
35
reservation of title by the seller, are under
the control of the Group Companies;
"Hardware" any computer equipment used by any Group
Company including without limitation PC's,
mainframes, screens, terminals, keyboards,
disks, printers, but excluding all Software;
"IBM" International Business Machines Corporation;
"IBM Cross Licence" a patent cross licence agreement dated 1st
January, 1990 between GEC and International
Business Machines Corporation;
"ICTA 1988" the Income and Corporation Taxes Xxx 0000;
"Information Memorandum" the information memorandum dated September
1997 and published in connection with the
transaction effected by this Agreement;
"Intellectual Property" patents, trade marks and service marks,
rights in designs, copyrights (whether or not
any of these is registered and including
applications for registration of any such
thing) and all rights or forms of protection
of a similar nature or having an equivalent
or similar effect to any of these which may
subsist anywhere in the world;
"Information Technology" any Hardware, Software and communications
facilities;
"London Stock Exchange" the London Stock Exchange Limited;
"Lucent" Lucent Technologies Inc.;
"Management Accounts" means the financial data relating to the
Group, copies of which are found at section
1.4 of the Schedule to the Disclosure Letter;
"March 1997 Summary the unaudited management accounts of the
Management Accounts" Group for the year ended on the Accounts Date
a copy of which is disclosed at item 7,
section 1.4 of the Schedule to the Disclosure
Letter;
"Marconi" Marconi Electronic Devices Limited, of which
particulars are given in Part A of Schedule
7;
36
"Xxxxxxx XX" Marconi Electronic Devices SA, of which
particulars are given in Part B of Schedule
7;
"Names" the GEC Names, the AEI Names and the name
Marconi, which is not for this purpose the
defined term;
"November 1997 Summary means the unaudited management accounts of
Management Accounts" the Group for the eight months ended 30th
November, 1997 a copy of which is disclosed
at item 7, section 1.4 of the Schedule to the
Disclosure Letter;
"Oldham Agreements" a business purchase agreement relating to the
business of Plessey at Lansdowne Road, Oldham
and Stockfield Road, Oldham, a wafer
processing and services agreement and a
retained process agreement, in each case
dated on or before the date hereof made
between Hevermill Limited and Plessey;
"Oldham Properties" the property of Plessey being factory and
offices at Landsdowne Road, Oldham, title to
which is registered at H.M. Land Registry
under title number GM175967 and the leasehold
property used by Plessey as a car park at
Stockfield Road, Oldham comprised in a lease
dated 29th January, 1988 between (i) The
North Western Electricity Board and (ii)
Xxxxxxxx plc;
"Overriding Objective" the overriding purpose for which the
Completion Balance Sheets and the Aggregated
Completion Balance Sheet shall be prepared is
to determine the impact of changes on the net
worth of the Group that take place after 31st
December, 1997 and before the Completion
Date. Any change in net worth that:
(a) arises as a result of a re-assessment of
the value of assets and liabilities which
is based on information, facts or matters
which were known or could reasonably be
expected to have been known at 31st
December, 1997; or
(b) does not arise as a result of an event:
(i) occurring after 31st December, 1997;
37
or
(ii) anticipated in the December 1997
management accounts to occur between
31st December, 1997 and the
Completion Date failing so to occur,
shall be eliminated from the calculation of
Closing Net Worth;
"Overseas Offices" each of the overseas sales offices described
in Part III of Schedule 8 (and "Overseas
Office" means any one of them);
"Panel" the Panel on Take-overs and Mergers;
"Permits" any and all licences, consents, permits,
authorisations or the like made or issued
pursuant to or under, or required by,
Environmental Laws in relation to the conduct
of the business of each Group Company;
"Planning Acts" the Town and Country Planning Acts or any
other enactment for the time being in force
relating to the use development and enjoyment
of land and buildings;
"Plessey" Plessey Semiconductors Limited, of which
particulars are given in Part A of Schedule
7;
"Plessey Inc." GEC Plessey Semiconductors Inc., of which
particulars are given in Part A of Schedule
7;
"Plessey Inc. Shares" the Shares of Plessey Inc.;
"Proceedings" any proceeding, suit or action arising out of
or in connection with this Agreement;
"Proforma Aggregated the unaudited aggregated balance sheet of the
Balance Sheet as at Group as December, 1997 set out in Schedule
31st at 31st December, 1997" 9;
"Properties" each of the freehold and leasehold properties
described in Part I of Schedule 8 (and
"Property" means any one of them);
38
"Purchase Price" US$225,000,000;
"Purchaser's Accountants" Ernst & Young;
"Purchaser's Group" the Purchaser and the Guarantor and all
subsidiaries or subsidiary undertakings from
time to time of the Purchaser and of the
Guarantor;
"Purchaser's Solicitors" Xxxxxx Xxxxx;
"Restricted Business" has the meaning ascribed to it in clause 6.2;
"Restructuring Plan" the financial restructuring plan relating to
the Group, a copy of which is disclosed at
item 10 of section 1.2(A) of the Schedule to
the Disclosure Letter.
"RTPA 1976" the Restrictive Trade Practices Xxx 0000;
"Sale Documents" has the meaning ascribed to it in clause
14.1;
"Schedules" the schedules to this Agreement;
"Scotts Valley Property" the land located at Scotts Valley more
particularly described in Part III of
Schedule 8;
"Shares" the issued shares in the Companies specified
in Part A of Schedule 7 (or in any of the
Companies);
"Software" any set of instructions for execution by
microprocessor used by any Group Company;
"Tavistock the factory and offices at Tavistock Road,
Road Property" Roborough with title numbers DN174695
and DN176582 more fully described in
sections 4 and 5 of Part II of Schedule 8;
"Tax Covenant" the tax covenant referred to, inter alia, in
Schedule 4 and set out in Schedule 6;
"TCGA 1992" the Taxation of Chargeable Gains Xxx 0000;
"TULCRA" the Trade Union and Labour Relations
Consolidation Xxx 0000;
39
"UK Group Company" each of Plessey, Marconi, AEI, GEC Plessey
Semiconductors Overseas Limited and UK
Cablevision Limited;
"UK Pensions Company" each of Plessey, Marconi, AEI and GEC Plessey
Semiconductors Overseas Limited;
"VAT" the tax imposed by the Sixth Council
Directive of the European Communities;
"VATA 1994" the Value Added Tax Xxx 0000;
"Warranties" the warranties set out in Schedule 3
(Warranties) given by GEC and "Warranty"
shall be construed accordingly;
"Working Hours" 9.30 a.m. to 5.30 p.m. on a Business Day.
(B) In this Agreement, unless otherwise specified:-
(i) references to clauses, sub-clauses, paragraphs, sub-paragraphs, and
Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of,
and Schedules to, this Agreement;
(ii) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted except to the extent that any
amendment or modification made after the date of this Agreement would
increase or alter the liability of GEC under this Agreement;
(iii) references to "(pound)" are references to the lawful currency for the
time being of the United Kingdom and references to "US$" or "$" are,
save where the context otherwise requires, references to the lawful
currency for the time being of the United States;
(iv) references to "Tax" or "Taxation" include, without limitation, all
taxes, levies, duties, imposts, charges and withholdings of any nature
whatsoever, whether of the United Kingdom or elsewhere, together with
all penalties, charges and interest relating to them;
(v) references to a "company" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(vi) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
40
(vii) the term "Relief" shall bear the same meaning as in the Tax Covenant;
(viii) a person shall be deemed to be connected with another if that person
is connected with another within the meaning of section 839 ICTA 1988;
(ix) references to writing shall include any modes of reproducing words in
a legible and non-transitory form;
(x) references to the knowledge or awareness of GEC (or any similar
expression) in relation to the Warranties shall be deemed to refer to
the actual knowledge of GEC, having made all reasonable enquiries in
the context of the relevant Warranty of Xxxxxx Xxxxx, Xxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx,
Xxxx Xxxxxxxxx and Xxxx Xxxxxx;
(xi) words or phrases beginning with the introduction of the word "include"
or "including" are to be interpreted without limitation;
(xii) references to times of the day are to London time;
(xiii) headings to clauses and Schedules are for convenience only and do
not affect the interpretation of this Agreement;
(xiv) the Schedules and any attachments (but not the Tax Covenant) form
part of this Agreement and shall have the same force and effect as if
expressly set out in the body of this Agreement, and any reference to
this Agreement shall include the Schedules and attachments;
(xv) references to the masculine gender shall include the feminine and the
neuter (and vice versa) and references to the singular shall include
the plural (and vice versa);
(xvi) references to any English legal term for any action, remedy, method
of judicial proceeding, legal document, statutory provision, legal
status, court, official or any legal definition, concept or thing
shall in respect of any jurisdiction other than England be deemed to
include what most nearly approximates in that jurisdiction to the
English legal term save where specific reference is made to the
relevant term in such other jurisdiction;
(xvii) references in this Agreement to an amount expressed in pounds
sterling shall, where applicable, be construed as referring to the
equivalent amount in any other relevant currency calculated by
reference to the rate of exchange for such currency prevailing on the
date of this Agreement;
(xviii) the term "fairly disclosed" in relation to a disclosure means that
such disclosure contains adequate detail to enable a reasonable person
to assess the nature of the fact or matter in question, the Warranty
or Warranties to which it relates and a broad indication of the
significance of such fact or matter.
41
Schedule 2:
Completion Arrangements
Part 1
1. GEC's Obligations
1.1 At Completion, GEC shall deliver or procure the delivery to the Purchaser
of:-
(A) (i) duly executed transfers in respect of the Shares of Plessey,
Marconi and AEI in favour of the Purchaser (or its nominee) and
share certificates representing such Shares in the name of the
relevant transferors;
(ii) the share certificates representing the Plessey Inc. Shares in
the name of the relevant transferor with the transfer form on the
reverse of each such share certificate duly executed in favour of
Mitel Inc.;
(iii) any power of attorney under which any document is executed;
(iv) any waiver, consents or other documents required to vest in the
Purchaser the full beneficial ownership of the Shares and enable
the Purchaser to procure them to be registered in the name of the
Purchaser or its nominees;
(v) all deeds and documents relating to the title of the Group
Companies to each of the Properties and the Certificated
Properties;
(vi) a certificate of title given by GEC's Solicitors in respect of
each of the Certificated Properties in the Agreed Form;
(vii) the written resignations of all directors and secretaries of the
Group Companies (other than any director or secretary whom the
Purchaser may wish to remain in office) executed as a deed (if
applicable) in the Agreed Form; and
(viii) the licences and assignments referred to in clause 10 in the
Agreed Form executed by the relevant members of the GEC Group
party thereto.
(B) a counterpart original of the Tax Covenant and the Environmental Deed
duly executed by GEC;
(C) the statutory books (which shall be written up to but not including
the Completion Date), the certificate of incorporation (and any
certificate of
42
incorporation on change of name) and common seal (if any), of each UK
Group Company;
(D) subject to applicable law, letters of resignation from the auditors of
each of the Companies and other members of the Group in the Agreed
Form;
(E) irrevocable powers of attorney in the Agreed Form executed by each of
the holders of the Shares in favour of the Purchaser (or its
nominee(s)) to enable the Purchaser (pending registration of the
transfers of the Shares) to exercise all voting and other rights
attaching to the Shares and to appoint proxies for this purpose;
(F) a certified copy of a board or board committee resolution of GEC
approving the execution and entering into by GEC of this Agreement,
the Tax Covenant, the Disclosure Letter and the transactions
contemplated herein.
1.2 GEC shall procure that a board meeting of each of the Companies be held at
which:-
(A) it shall be resolved that each of the transfers relating to the Shares
shall be approved for registration and (subject only to the transfer
being duly stamped, if so required by applicable law) that each
transferee be registered as the holder of the Shares respectively in
the register of members;
(B) each of the persons nominated by the Purchaser shall be appointed
directors, as the Purchaser shall direct, such appointments to take
effect from Completion, provided the majority of such persons are
British nationals;
(C) the resignation of auditors (if applicable) shall be accepted and
auditors nominated by the Purchaser shall be appointed to replace them
(subject to their consent being obtained); and
(D) persons not employed by Group Companies (excluding Xxx Xxxxx) shall be
removed from the bank mandates,
and that minutes of each duly held board meeting, certified as correct by
the secretary or other duly authorised officer of the relevant Company and
the resignations and acknowledgements referred to are delivered to the
Purchaser's Solicitors.
1.3 GEC shall comply with its obligations set out in Part 3 of this Schedule.
1.4 Immediately following Completion GEC shall deliver or procure the delivery
to the Purchaser of a licence to the Group Companies substantially in the
Agreed Form executed by IBM.
1.5 GEC shall grant the release described in clause 7.17 for the purposes set
out therein and if the conditions therefor have been satisfied.
43
Part 2
2. Purchaser's Obligations
2.1 The Purchaser shall:-
(A) pay to GEC in immediately available funds by Federal Wire transfer to
account number 000-0-000000 in the name of The General Electric
Company plc at The Chase Manhattan Bank, New York, New York
ABA000000000 the Purchase Price and telephone Xxxxxxxxx Xxxxxx, The
Chase Manhattan Bank, New York on (000) 000 0000 immediately
thereafter quoting the Federal Wire ID number of the payment;
(B) deliver to GEC, duly executed by the Purchaser, a counterpart original
of the Tax Covenant and the Environmental Deed;
(C) deliver to GEC a certified copy of the board resolutions of the
Purchaser approving the execution and entering into by the Purchaser
of this Agreement, the Tax Covenant, the Disclosure Letter, and the
transactions contemplated hereby;
(D) deliver to GEC a certified copy of each resolution referred to in
clause 7.3;
(E) deliver to GEC a legal opinion from legal advisers to the Guarantor in
Ontario, Canada reasonably acceptable to GEC addressed to GEC in the
Agreed Form; and
(F) deliver to GEC the licences and assignments referred to in clause 10
in the Agreed Form executed by the relevant members of the Purchaser's
Group party thereto.
Payment of the Purchase Price in full in accordance with the foregoing
shall discharge all the Purchaser's obligations with respect thereto, and
the Purchaser shall not be concerned as to the application of the Purchase
Price or any part thereof to which any beneficial owner of any of the
Shares may be entitled.
2.2 The Purchaser shall comply with its obligations set out in Part 3 of this
Schedule.
2.3 The Purchaser shall enter into the contract of employment described in
clause 7.16 with Xxx Xxxxx if the conditions therefor have been satisfied.
Part 3
The Purchaser and GEC shall both procure that each GEC Group Company is released
from the cross-guarantees granted by the Group Companies and the GEC Group
Companies in relation to the GEC Group's and the Group Companies' banking offset
arrangements in the United Kingdom. At Completion the Purchaser and GEC shall
sign and send a letter in the
44
Agreed Form to The National Westminster Bank Plc confirming that Completion has
occurred.
45
Schedule 3:
The Warranties
1. Capacity of GEC and Factual Information in certain Schedules
1.1 GEC has the requisite power and authority to enter into and perform this
Agreement, the Tax Covenant, the Environmental Deed and the other documents
to be executed by GEC and delivered at Completion in accordance with this
Agreement.
1.2 This Agreement constitutes and the Tax Covenant, the Environmental Deed and
the other documents executed by GEC which are to be delivered at Completion
will, when executed, constitute binding obligations of GEC.
1.3 The execution and delivery of, and the performance by GEC of its
obligations under this Agreement, the Environmental Deed and the Tax
Covenant will not:-
(A) result in a breach of any provision of the memorandum or articles of
association of GEC;
(B) result in a breach of any order, judgment or decree of any court or
governmental agency to which GEC is a party or by which GEC is bound;
or
(C) require the consent of its shareholders.
1.4 The facts set out in Schedules 7 and 8 are true and accurate.
2. Accounts
2.1 The Accounts:-
(A) in respect of each UK Group Company,
(i) were, at the time they were prepared, prepared in accordance with
the then applicable Statements of Standard Accounting Practice,
as adopted by the Accounting Standards Board and published by the
Institute of Chartered Accountants in England and Wales, and the
then applicable Financial Reporting Standards, developed and
issued by the Accounting Standards Board, applicable to a United
Kingdom company;
(ii) showed a true and fair view of the state of affairs of the Group
Company to which such Accounts relate as at the Accounts Date and
of that Group Company's profit or loss for the financial year
ended on such date;
46
(iii) were prepared using accounting policies consistent with those
used in the preparation of accounts for the immediately preceding
accounting period except as described in any notes thereto; and
(iv) complied with the relevant requirements of the Companies Xxx
0000;
(v) were not affected by any material extraordinary or material
exceptional item;
(vi) made provision for all liabilities outstanding at the Accounts
Date which were required to be made in order to give the true and
fair view aforesaid;
(vii) make provision or reserve in accordance with the principles set
out in the notes included in the Accounts for all Taxation liable
to be assessed or for which it may be accountable in respect of
the period ended on the Accounts Date.
(B) in respect of any other Group Company (other than Plessey Inc.)
(i) have been drawn up using local generally accepted accounting
principles and, in the case of Plessey GmbH, Plessey France and
Xxxxxxx XX, have been drawn up also on the bases set out in the
notes to the accounts; and
(ii) were prepared using accounting policies consistent with those
used in the preparation of accounts for the immediately preceding
accounting period except as described in any notes thereto.
(C) in respect of Plessey Inc., have been prepared for incorporation in
the consolidated accounts of GEC which are prepared in accordance with
UK generally accepted accounting principles, and were prepared using
accounting policies consistent with those used in the preparation of
accounts for the immediately preceding accounting period.
2.2 (A) The accounting records of each Group Company are in its possession and
have been fully, properly and accurately kept and completed to the
extent required by law.
(B) The March 1997 Summary Management Accounts and the November 1997
Summary Management Accounts have each:-
(i) been compiled from information available at the time they were
prepared and in accordance with the Group's policy for the
compilation of management accounts as disclosed in item 8,
section 1.4 of the Schedule to the Disclosure Letter;
47
(ii) been compiled in accordance with the accounting policies set out
in the Accounts of Plessey;
(iii) been properly and accurately extracted from the accounting
records of the Group Companies;
(iv) been accurately aggregated, subject to and in accordance with
such policy aforesaid;
(v) are not known by GEC to contain any material error or omission.
(C) The March 1997 Summary Management Accounts summarised the financial
information used by GEC in the production of its consolidated
financial statements for the financial period ended on the Accounts
Date and no adjustment (other than an adjustment in the GEC
consolidated accounts for the expected loss on disposal) was made to
such financial information for such purposes.
2.3 In the Accounts of the UK Companies and Plessey Inc. the stock and work in
progress of each Group Company was treated in accordance with all
applicable Accounting Standards and in the other Group Companies Accounts'
the stock and work in progress was treated in accordance with local
equivalent standards.
2.4 No part of the amounts included in the Accounts as owing by any individual
debtor in excess of (pound)25,000 was overdue by more than 120 days at the
Accounts Date and was not provided for in full or subsequently paid.
3. Pensions
3.1 There are no superannuation or retirement benefits or life assurance funds
schemes or arrangements provided by or on behalf of each UK Pensions
Company under which any of the Employees is entitled to life assurance,
pension or other retirement benefits save in accordance with the GEC
Scheme.
3.2 No UK Pensions Company is under any contractual obligation to provide life
assurance, pension or other retirement benefits in respect of any of the
Employees save in accordance with the GEC Scheme.
3.3 No power to augment benefits under the GEC Scheme has been exercised prior
to Completion in relation to those of the Employees who are members of it.
3.4 Each UK Pensions Company is a participating employer for the purpose of the
GEC Scheme and has fulfilled all its obligations thereunder (including any
obligations to pay contributions).
3.5 Apart from the GEC Scheme, any statutory obligation and other schemes set
out in documents at File F of Annex 1 of the Schedule to the Disclosure
Letter no UK Group
48
Company is under any legal liability or obligation or a party to any
ex-gratia arrangement or promise to pay pensions, gratuities,
superannuation or the like to or for any of its past or present officers or
employees or their dependants; and, save as aforesaid, there are no
retirement benefit, or pension or death benefit, or similar schemes or
arrangements in relation to or binding on any UK Group Company or to which
any UK Group Company contributes.
3.6 The GEC Scheme:
(A) is an exempt approved scheme for the purposes of Chapter I of Part XIV
of ICTA 1988;
(B) is not a contracted-out scheme under Section 7(3) of the Xxxxxxx
Xxxxxxx Xxx 0000; and
(C) conforms with the preservation requirements referred to in Section
69(2) of the Xxxxxxx Xxxxxxx Xxx 0000.
3.7 The GEC Scheme has been operated in all material respects in accordance
with all the then applicable legal requirements in relation to each UK
Pensions Company and the Employees and there are no outstanding claims or
so far as GEC is aware matters likely to give rise to claims against the
GEC Scheme by any UK Pensions Company or any Employee (other than routine
claims for benefits).
3.8 Material details of any superannuation or retirement benefits or life
assurance funds, schemes or arrangements (other than state schemes)
provided by or on behalf of each Group Company under which any of the
overseas Employees (save those in the United States) is entitled to life
assurance, pension or other retirement benefits have been disclosed in
Files G and H of Annex I of the Schedule to the Disclosure Letter. So far
as GEC is aware, such schemes have been operated in all material respects
in accordance with all the then legal applicable requirements in each
relevant jurisdiction and there are no outstanding material claims or
matters likely to give rise to such claims other than routine claims for
benefits.
3.9 The Plessey Inc. Scheme
(A) Generally. Files G and H of Annex 1 of the Schedule to the Disclosure
Letter contain a true and complete list of each plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits in
kind, whether funded or unfunded, including without limitation, each
"employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("Employee Plan") which is now maintained, contributed to, or required
to be contributed to by Plessey Inc. for the benefit of any current or
former employee, officer, independent contractor, agent or consultant
working for Plessey Inc. ("U.S. Employee"). Plessey Inc. will make
49
available or provide to Purchaser prior to the Completion Date true
and complete copies of all documents, if any, embodying each Employee
Plan, including all amendments thereto and written interpretations
thereof, the two most recent annual reports filed (Form 5500 Series
with applicable schedules) with respect to each Employee Plan required
under ERISA; the most recent summary plan description, if any, with
respect to each Employee Plan required under ERISA; the most recent
favourable determination letter from the Internal Revenue Services
("IRS"), if applicable, with respect to each Employee Plan; and all
material communications, if any, to any U.S. Employee relating to each
Employee Plan.
(B) Qualified Plans. Except as otherwise set forth in this paragraph each
Employee Plan that is intended to be qualified under the Internal
Revenue Code of 1986, as amended ("the Code"), has received a
determination letter from the IRS to the effect that the form of such
Employee Plan and related trust are qualified and exempt from Federal
income taxes under Sections 401(a) and 501(a) of the Code,
respectively, such determination letter includes any new or modified
requirements under the Tax Reform Act of 1986 and subsequent
legislation enacted thereafter prior to the Uruguay Round Agreements
Act and no such determination letter has been revoked, nor to the
knowledge of Plessey Inc., has revocation been threatened. To Plessey
Inc.'s knowledge, and except as otherwise set forth in this paragraph,
nothing has occurred or is reasonably expected to occur that would
adversely affect the qualified status of the Employee Plan or any
related trust subsequent to the issuance of such determination letter.
Notwithstanding the foregoing the determination letter request for the
GEC - USA Employee Savings and Investment Plan is pending and
contributions may have to be made to such plans for seasonal and part
time employees excluded from the Plan between July 1, 1990 and
December 31, 1993.
(C) Compliance. Except as otherwise set forth in paragraph (B), Plessey
Inc. has performed in all material respects all obligations required
to be performed under each Employee Plan, and each Employee Plan has
been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or
the Code. No Employee Plan is a defined benefit plan within the
meaning of Section 3(35) of ERISA, nor a multi-employer plan within
the meaning of Section 3(37) of ERISA, and Plessey Inc, has no
liability with respect to any such plan as a result of having been
treated as part of a "single employer" within the meaning of Section
414(b), (c), (m), (n) and (o) of the Code, nor is there any basis for
such liability being imposed. Except as set forth in paragraph (B)
there are no investigations, claims, suits or proceedings pending or
so far as Plessey Inc. is aware, threatened or anticipated (other than
routine claims for benefits) against any Employee Plan or the assets
of any Employee Plan and so far as Plessey Inc. is aware, there are no
facts that could give rise to any material liability in the event of
any such investigation, claim, suit or proceeding. All
50
outstanding indebtedness for services performed or accrued vacation or
holiday, sick or personal day pay, earned commissions, accrued bonuses
or their benefits owed to any U.S. Employee been paid when due or
accrued on the books of Plessey Inc. So far as Plessey Inc. is aware
no "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA has occurred with respect to any Employee
Plan; no action or failure to act with respect to any Employee Plan
could subject Plessey Inc., the Purchaser or any of its affiliates or
any Employee Plan to any material tax, penalty or other liability for
breach of fiduciary duty or otherwise, under ERISA or any other
applicable law, whether by way of indemnity or otherwise, except as
set forth in paragraph (B).
(D) No Post-Employment Obligations. Plessey Inc. has never promised,
represented to, or contracted with (orally or in writing) any U.S.
Employee (individually or as a group) that life insurance, medical or
other employee welfare benefits (other than severance and accrued
vacation and holiday pay) would be provided upon their retirement or
termination of employment, except to the extent required by statute.
(E) COBRA. Each "group health care" within the meaning of Section
498OB(g)(2) of the Code maintained by Plessey Inc. or any entity with
which it is considered a "single employer" within the meaning of
Section 414(b), (c), (m), (n) and (o) of the Code, has been
administered in good faith in compliance with the continuation
coverage requirements contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") as set forth at
Section 4980B of the Code and any regulations promulgated or proposed
thereunder.
(F) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either
alone or when taken together with any additional or subsequent events)
constitute an event under any Employee Plan that, by itself, will or
is reasonably likely to result in any payment, upon a change in
control or otherwise, whether of severance, accrued vacation or
otherwise, acceleration, vesting, distribution or increase in benefits
which will or may be made by Plessey Inc., the Purchaser or any of its
affiliates with respect to any U.S. Employee which will be
characterised as an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
(G) Employment Matters. Plessey Inc. (i) is in compliance in all material
respects with all applicable federal and state laws, rules, and
regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with
respect to U.S. Employees; (ii) has withheld all amounts required by
law or by agreement to be withheld from the wages, salaries, and other
payments to U.S. Employees; (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (iv) (other than routine payments to be made in the
51
normal course of business and consistent with past practice) is not
liable for any payment to any trust or other fund or to any
governmental or administrative authority with respect to unemployment
compensation benefits, Social Security or other benefits for U.S.
Employees, except in each case under (i) to (iv) above where the
failure to be in compliance would not, singly or in the aggregate,
have a material adverse effect on Plessey Inc., its financial
condition or business and except for contributions required to be made
to the GEC USA Employees' Savings and Investment Plan and the GEC USA
Employees Welfare Benefit Plan.
(H) No Other Employment Plans. There is no plan or commitment whether
legally binding or not, to establish any new Employee Plan, to modify
(other than by way of termination) any Employee Plan (except to the
extend required by law) or to enter into any new Employee Plan; nor
has any intention or commitment to do any of the foregoing been
communicated except that the GEC USA Employee Savings and Investment
Plan will be amended to include certain part-time employees for the
period commencing July 1, 1990 and ending December 31, 1993.
4. Arrangements between the GEC Group and the Group
So far as GEC is aware, save for indebtedness arising in the ordinary
course of trading, no indebtedness (actual or contingent) and no contract
other than at arm's length which is material in the context of the business
of the Group as a whole, is outstanding between any Group Company and any
GEC Group Company.
5. Group Structure
5.1 The Shares comprise the whole of each respective Company's issued and
allotted share capital and all of them are fully paid up.
5.2 There is no agreement or commitment outstanding which calls for the
allotment, issue or transfer of, or accords to any person the right
(conditionally or unconditionally) to call now or in the future for the
allotment or issue of, any shares (including the Shares) or debentures in
or securities of any Company.
5.3 Save for any interests held in another Group Company, no Group Company has
any interest in the share capital of any body corporate or undertaking.
5.4 No Group Company acts or carries on business in partnership or through a
joint venture with any other person or is a member (otherwise than through
the holding of share capital) of any corporate or unincorporated body,
undertaking or association or holds or is liable on any share or security
which is not fully paid up or which carries any liability.
5.5 No UK Group Company has any branch, place of business or permanent
establishment outside the United Kingdom.
52
5.6 No Group Company has, at any time in the last three years, repaid, redeemed
or purchased (or agreed to repay, redeem or purchase) any of its shares, or
otherwise reduced (or agreed to reduce) its issued share capital or any
class of it or capitalised (or agreed to capitalise) in the form of shares,
debentures or other securities or in paying up any amounts unpaid on any
shares, debentures or other securities, any profits or reserves of any
class or description or passed (or agreed to pass) any resolution to do so.
5.7 The entire authorised capital stock of Plessey Inc. consists of 1000 common
shares all of which are issued and outstanding and no shares of Plessey
Inc. are held in treasury. All of the issued and outstanding shares of
Plessey Inc. have been duly authorised, are validly issued, fully paid, and
non assessable, and are held of record by GEC Inc. as set forth in Schedule
7 of this Agreement. There are no outstanding or authorised options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Plessey Inc.
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorised stock appreciation, phantom
stock, profit participation, or similar rights with respect to Plessey Inc.
capital stock. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of Plessey
Inc.
6. Options, Mortgages and Other Encumbrances
There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting the
Shares or any of them and there is no agreement or commitment to give or
create any and no claim has been made by any person to be entitled to any.
7. Statutory Returns
7.1 The copies of the constitutional documents of each Group Company which are
in the Data Room are complete and accurate in all material respects, have
attached to them copies of all resolutions and other documents required by
law to be so attached and set out to the extent required by applicable law
the rights and restrictions attaching to each class of share capital of
that Group Company.
7.2 The statutory books (including all registers and minute books) of each
Group Company have, in the three years ended on the date of this Agreement,
been properly kept as required by law and no written notice or allegation
that has not been complied with that any of them is incorrect or should be
rectified has been received in the three years ended on the date of this
Agreement.
7.3 All documents which should have been delivered within the last three years
by each Group Company to the Registrar of Companies (or its equivalent in
respect of jurisdictions other than England and Wales) have, in all
material respects, been properly so delivered.
53
8. Contracts
8.1 There are no subsisting contracts to which any Group Company is a party
which were entered into otherwise than in the ordinary course of business
of that Group Company.
8.2 The details of the agency and distributorship agreements to which any Group
Company is party are attached to the Disclosure Letter.
8.3 There is not outstanding any guarantee, indemnity, performance bond or
suretyship given by any Group Company to secure any obligation of any
person not within the Group.
8.4 There are no GEC Securities.
8.5 Material details of the Group's only contracts under which deliveries are
still due to be made at the date hereof:-
(A) with its largest 22 customers by sales values measured on the basis of
the aggregate of (x) amounts billed by the Group for the period 1st
April, 1997 to 30th September, 1997 and (y) the value of outstanding
orders scheduled for delivery by 31st March, 1998; and
(B) with its largest ten suppliers (but ignoring suppliers of capital
equipment) measured by purchase values for the year ended 31st March,
1997;
are attached to the Disclosure Letter. For these purposes, "customer" and
"supplier" means a person (the "contracting party") together with its
subsidiaries and subsidiary undertakings who has contracted with a member
of the Group for the purchase or, as the case may be, the supply of goods
and, in the case of a customer, includes a person (a "sub-contractor") with
whom any such contracting party (including its subsidiaries and subsidiary
undertakings) has contracted for the purchase of goods of the same type
where the sub-contractor has contracted with the relevant member of the
Group for the purchase of such goods, taken as a single customer or, as the
case may be, as a single supplier.
8.6 There is attached to the Disclosure Letter a list of all hire purchase
contracts and finance and operating leases which relate to assets used by
any Group Company to which such Group Company is a party and which involves
an annual charge in excess of (pound)25,000 and the term of which will not
expire within 6 months from the date hereof. The aggregate annual charge
outstanding at 31st December, 1997 in respect of hire purchase contracts
and finance and operating leases (in each case the annual charge for which
does not exceed (pound)25,000) did not exceed (pound)100,000.
8.7 (A) The Group will not at Completion be in default (otherwise than arising
from any default relating to change of control) under contracts with
customers which will following Completion result in contractual
liabilities in relation to
54
sales made before Completion (or only not made before Completion
because of default in delivery at the time stipulated in such
contract, but then only in relation to such late delivery) for such
default exceeding 1.75 per cent. of the Group's preceding 12 month's
sales but excluding any defaults which are the subject of the covenant
in clause 5.4 of this Agreement.
(B) There is attached at item 26 of section 7.2 of the Schedule to the
Disclosure Letter a list of the aggregate sales from 1st April, 1997
to 31st December, 1997 for each product for which such aggregated
sales (at invoiced value) were less than the aggregated GPS Standard
Cost for the Financial Year 1997 as set out at item 10 of section 1.11
of the Schedule to the Disclosure Letter.
8.8 No Group Company is in default under any obligations existing by reason of
membership of any association or body.
8.9 The Group will not at Completion be in default (otherwise than arising from
any default relating to change of control) under contracts with suppliers
which will result in such supplier validly claiming material damages from
the Group.
9. Events since the Accounts Date
9.1 Since the Accounts Date:-
(A) the business of the Group has been carried on in its ordinary course;
(B) no resolution of any Group Company in general meeting has been passed;
and
(C) no dividend or distribution has been declared, paid or made and no
share or loan capital has been issued or agreed to be issued or put
under option by any Group Company.
9.2 A list of all individual legally binding capital commitments of each Group
Company in excess of US$100,000 as at 30th September, 1997 is attached to
the Disclosure Letter.
10. Grants
A list of all grants and a summary of the amounts received and the
amounts outstanding, aid and subsidies paid or made to any Group
Company during the last six years by, and of all outstanding claims by
any Group Company for any such grant, aid or subsidy from, any
supra-national, national or local authority or government agency are
set out in the Disclosure Letter.
55
11. Licences and restrictions on the business of each Group Company
11.1 Each Group Company has all material statutory and regulatory licences,
consents, permissions and approvals required for the carrying on of the
business now being carried on by it.
11.2 All licences, consents, permissions and approvals referred to in
sub-paragraph 11.1 above are in full force and effect and GEC is not aware
that there are any circumstances which indicate that there is a substantial
likelihood that any of such licences, consents, permissions or approvals
will or may be revoked or not renewed or which may confer a right of
revocation or that the terms may be altered to the detriment of the
relevant Group Company.
12. Bank Accounts and Borrowings
12.1 Details of all bank accounts maintained or used by each Group Company
(including, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) are set out in or
attached to the Disclosure Letter.
12.2 Details of all overdraft, loan and other financial facilities available to
the Group are set out in the Disclosure Letter.
12.3 Except for any borrowings under the overdraft, loan and other financial
facilities referred to in sub-paragraph 12.2 above, no Group Company has
any outstanding loan capital nor has any Group Company incurred or agreed
to incur any borrowing which it has not repaid or satisfied, or lent or
agreed to lend any money which has not been repaid to it or owns the
benefit of any debt present or future (other than debts due to it or owed
to it in the ordinary course of trading) save in any of the foregoing cases
for any such matters or arrangements between Group Companies.
13. Insolvency
13.1 No resolution has been passed for the winding up of any Group Company or
for a provisional liquidator to be appointed in respect of any Group
Company and no meeting has been convened and, so far as GEC is aware, no
petition has been presented for the purpose of winding up any Group
Company.
13.2 No administration order has been made and, no petition for such an order
has been presented in respect of any Group Company.
13.3 (A) No receiver (which expression shall include an administrative
receiver) has been appointed in respect of any Group Company or all or
any of its assets;
(B) Plessey GmbH has not itself filed nor has any other person filed a
petition for the institution of insolvency proceedings against Plessey
GmbH nor has
56
Plessey GmbH offered or made a settlement or moratorium in court or
out of court with its creditors generally.
13.4 (A) No Group Company is insolvent, or unable to pay its debts within the
meaning of section 123 Insolvency Xxx 0000, or has stopped paying its
debts as they fall due.
(B) Neither Xxxxxxx XX or Plessey France SA is insolvent or unable to pay
its debts ("en etat de cessation des paiements") within the meaning of
French law No. 85-98 of 25th January 1985 or has stopped paying its
debts as they full due.
13.5 (A) No voluntary arrangement has been proposed under section 1 Insolvency
Xxx 0000 in respect of any Group Company.
(B) No voluntary arrangement ("Reglement amiable") has been proposed under
French law Xx. 00-000 xx 0xx Xxxxx, 0000 in respect of Xxxxxxx XX or
Plessey France SA.
14. Litigation
14.1 Other than in respect of the payment and collection of debts in the
ordinary course of its business, no Group Company is engaged in any
litigation, arbitration or criminal proceedings, whether as plaintiff,
defendant or otherwise, and no litigation, arbitration or criminal
proceedings by or against any Group Company is pending, or (so far as GEC
is aware) threatened, the adverse determination of which will result in a
financial liability of more than(pound)50,000 for any Group Company or the
imposition of an injunction or similar order on it provided that this shall
not apply to contracts with customers to which the provisions of paragraph
8.7(A) above shall apply.
14.2 No Group Company is subject to any order or judgment given by any court
(including, without limitation, any injunction or order for specific
performance) which is still in force and has not given any undertaking to
any court arising out of any legal proceedings which remains outstanding.
14.3 No claims in excess of (pound)50,000 have been made against any Group
Company by any Employee in respect of any personal accident or injury that
occurred at the premises of a Group Company.
14.4 No Group Company has outstanding any written claim nor, so far as GEC is
aware, are any claims pending or threatened in writing in each case in
connection with the sale of those businesses, undertakings and companies
listed at item 7.6 of section 1 of the Schedule to the Disclosure Letter
alleging a failure on the part of the seller thereof to comply prior to
Completion with its obligations under those agreements listed at that item.
57
15. Compliance with Laws and No Investigation
15.1 So far as GEC is aware, no Group Company's business is being conducted in
contravention of any relevant legislation which contravention has a
material and adverse effect on the business of the Group as a whole.
15.2 So far as GEC is aware, no Group Company has received written notification
that any non routine investigation or inquiry is being conducted by any
governmental or other regulatory body in respect of its affairs in respect
of which there is a substantial likelihood that such investigation or
inquiry will lead to proceedings, the adverse determination of which would
have a material and adverse effect on the business of the Group as a whole.
15.3 No Group Company is now, nor has it during the last six years been, a party
to any agreement or arrangement or concerted practice and it does not
conduct nor has it conducted its business affairs in a manner which:
(A) is subject to registration but not registered under the Restrictive
Trade Practices Acts 1976 and 1977;
(B) contravenes the provisions of the Resale Prices Xxx 0000 or the
Competition Xxx 0000;
(C) infringes either Article 85 or 86 of the Treaty of Rome establishing
the European Community; or
(D) is void or unenforceable (whether in whole or in part) by virtue of,
or may render it liable to proceedings under, the legislation referred
to in paragraphs 15.4 (A) to (C) below.
15.4 No Group Company is now nor has it during the last six years been, a party
to any agreement or arrangement or been involved in any business practice
in respect of which an undertaking has been given by or an order made
against or in relation to it pursuant to any anti-trust or similar
legislation in any jurisdiction in which it carries or carried on business
or has or had assets or sales, including (without limitation):
(A) Article 85 or 86 of the Treaty of Rome establishing the European
Community;
(B) the Restrictive Trade Practices Acts 1976 and 1977;
(C) the Resale Prices Xxx 0000;
(D) the Fair Trading Act 1973 or any secondary legislation adopted under
that Act; and
(E) the Competition Xxx 0000.
58
15.5 No Group Company is now, nor has it during the last six years been, a party
to any agreement or arrangement or been involved in any business practice
in respect of which:
(A) any non-routine request for information, statement of objections or
similar matter has been received by any Group Company from any court,
tribunal, governmental, national or supra-national authority; or
(B) an application for negative clearance or exemption has been made to
the Commission of the European Communities.
15.6 So far as GEC is aware, no Group Company has received any aid granted by a
Member State of the European Union or through Member State resources in any
form whatsoever which distorts or threatens to distort competition by
favouring certain undertakings or the production of certain goods, which
aid affects trade between member states and is incompatible with the Common
Market.
16. Assets
16.1 Each of the tangible assets (other than the Properties, the Certificated
Properties and the Overseas Offices) included in the Accounts as being
owned by any Group Company, or acquired by such Group Company since the
Accounts Date and which, if acquired before such date, would have been
included in the Accounts, (other than assets sold, realised or applied in
the normal course of business) where such asset has a current net book
value in excess of(pound)1,000 and is used by or is available for use by
that Group Company at the date of this Agreement is owned both legally and
beneficially by that or another Group Company and no Group Company has
granted any option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance over any such asset, subject in any
case to retention of title and vendor's liens arising in the ordinary
course of business and liens arising by operation of law.
16.2 Plant and machinery, (but excluding vehicles), which had an original cost
in excess of (pound)100,000 and has an existing book value in excess of
(pound)25,000 used in the business of any Group Company is, taken as a
whole, in reasonable condition (subject to fair wear and tear) having
regard to its age and in satisfactory working order.
17. Ownership of Land
17.1 The Properties (save for those listed at paragraph 3 of Part I to Schedule
8), the Certificated Properties and the Overseas Offices are the only
immovable properties owned, used or occupied by a Group Company or in
respect of which any Group Company has any estate, interest, right or
ownership.
17.2 In relation to (a) the Overseas Offices at Scotts Valley, Santa Xxxx and
(b) each of the Properties save for those listed at paragraph 3 of Part I
to Schedule 8:-
59
(A) the relevant Group Company specified in Schedule 8 as owner of the
Property or Overseas Offices (the "Owner") is legally and beneficially
entitled to the Property or Overseas Offices and the Owner has under
its control all of the title deeds and documents listed in the
Disclosure Letter;
(B) the Owner holds the Property or Overseas Offices subject to the
leases, underleases, sub-leases, tenancies or licences particulars of
which are set out in the Disclosure Letter but is otherwise in
physical possession and actual occupation of the Property or Overseas
Offices;
(C) neither GEC nor the relevant Group Company has been notified in
writing nor is it aware of a material breach of any provision of any
lease under which the Owner holds the Property or Overseas Offices
where such breach is still outstanding;
(D) neither GEC nor the relevant Group Company has received nor is it
aware that the Owner as its owner has received notice in writing of
any outstanding breach under planning legislation in respect of the
Property or Overseas Offices;
(E) neither GEC nor the relevant Group Company has received nor is it
aware that the Owner has received notice in writing of any legal
proceedings or notice in writing of any circumstance which in the
reasonable opinion of GEC or Owner Company will result in legal
proceedings in respect of the Property or Overseas Offices which are
or are likely to be material in the context of the business carried on
by the Group as a whole.
17.3 Neither GEC nor the relevant Group Company has received nor is it aware
that any Group Company has received notice in writing of any liability
(whether actual or contingent) in relation to any leasehold property which
such Group Company has assigned or otherwise disposed of.
17.4 The information provided by GEC and by any member of the Group for the
purposes of each certificate of title is, so far as GEC is aware, true,
complete and accurate in all material respects and is not materially
misleading.
17.5 Each of the Overseas Offices is held pursuant to the tenancy agreement or
licence described in Part III of Schedule 8 and neither GEC nor the
relevant Group Company has received or been notified in writing or is aware
of a material or persistent breach of that tenancy agreement or licence (as
the case may be) where such breach is still outstanding.
17.6 In relation to each of the Properties save for those listed at paragraph 3
of Part I to Schedule 8:
(A) The Properties are free from any mortgage debenture, charge, rent
charge, lien or any other encumbrance securing the repayment of monies
or other
60
obligation of monies or other obligation of liability of any of the
Group Companies or any other person.
(B) The Properties are not subject to any outgoings other than business
rates, water rates and insurance premiums and in the case of leasehold
properties rent and service charges.
(C) So far as GEC is aware the Properties are not subject to any
restrictive covenants, stipulations, easements, profits a prendre,
wayleaves, licences, grants, restrictions overriding interests or
other similar rights vested in third parties.
(D) So far as GEC is aware none of the Properties is affected by any
compulsory purchase order, notice or resolution.
(E) Where any of the matters referred to in paragraphs 17.6(A), (B) and
(C) have been disclosed in the Disclosure Letter, GEC is not aware
that it has received notice in writing of any breach that is still
outstanding.
(F) So far as GEC is aware the Properties are not subject to any option,
right of pre-emption or right of first refusal.
(G) So far as GEC is aware it has not received notice of any breach of
building regulations that is still outstanding.
(H) So far as GEC is aware the Group Companies have not received notice of
any breach of the terms of the following which is still outstanding:
(i) all permissions, orders and regulations applicable to the
Properties;
(ii) all agreements under the Town and Country Planning Act 1971 s52
made or planning obligations under the Town and Country Planning
Act 1990 s106 undertaken with respect to the Properties or other
relevant legislation; and
(iii) all agreements made under the Highways Act 1980 s38 with respect
to the Properties or other relevant legislation.
(I) The buildings and other structures on the Properties are in sufficient
repair to be fit for the purposes for which they are being used.
(J) So far as GEC is aware there are no outstanding disputes with any
adjoining or neighbouring owner with respect to boundary walls and
fences or with respect to any easement or right over or means of
access to any of the Properties.
(K) None of the Properties is affected by past or present mining activity.
61
(L) No building or structure on the Properties is affected by structural
damage such that it is not fit for the purposes for which it is being
used.
(M) So far as GEC is aware it has not received any notice that any
licences, consents and approvals required from the landlords and
superior landlords under any leases of the Properties have not been
obtained nor that the covenants on the part of the tenant contained in
any licences consents and approvals have failed to be duly performed
and observed and there are no rent reviews under the leases of the
Properties held by any Group Company currently in progress.
(N) So far as GEC is aware no obligation necessary to comply with any
notice or other requirement given by the landlord under any leases (or
underleases) of the Properties is outstanding and unobserved or
unperformed.
(O) There is no obligation to reinstate any of the Properties by removing
or dismantling any alteration made to it by any Group Company or so
far as GEC is aware any predecessor in title to any Group Company.
17.7 In relation to each of the Properties (save for those listed at paragraph 3
of Part I to Schedule 8) and the Overseas Offices:
(A) So far as GEC is aware it has not received any notice of
non-compliance with applicable statutory and bylaw requirements with
respect to the Properties and the Overseas Offices and in particular
(but without limitation) with the requirements as to fire precautions
and under the Public Health Acts and the Offices Shops & Railway
Premises Xxx 0000, the Health & Safety at Work Xxx 0000 and the
Workplace (Health, Safety and Welfare) Regulations 1992 which is still
outstanding.
(B) So far as GEC is aware it has not received any notice of any
outstanding and unobserved or unperformed obligation with respect to
the Properties and the Overseas Offices necessary to comply with the
requirements (whether formal or informal) of any competent authority
exercising statutory or delegated powers.
(C) So far as GEC is aware each of the Properties and the Overseas Offices
is entitled to rights of access and rights to services sufficient for
the purposes for which the relevant Property or Overseas Office is
being used.
(D) So far as GEC is aware the principal means of access to the Properties
and the Overseas Offices is over roads which have been taken over by
the local or other highway authority and which are maintainable at the
public expense and no means of access to the Properties is shared with
any other party nor subject to rights of determination by any other
party.
62
(E) Each of the Properties and the Overseas Offices enjoys the mains
services of water drainage electricity and gas.
(F) No licences are required whether under the Licensing Xxx 0000 or
otherwise in relation to any of the Properties or the Overseas
Offices.
17.8 The information contained in Schedule 8 Part I and Part III as to the
tenure of each of the Properties and the Overseas Offices, the principal
terms of the leases or licences held by a Group Company (and the principal
terms of the tenancies and licences subject to and with the benefit of
which the Properties and the Overseas Offices are held) is true and
accurate in all respects.
17.9 Except in relation to the Properties, the Certificated Properties and the
Overseas Offices, no Group Company has any liabilities (actual or
contingent) arising out of the conveyance, transfer, lease, tenancy,
licence agreement or other document relating to land or premises or an
interest in land or premises, including without limitation, leasehold
premises assigned or otherwise disposed of.
18. Intellectual Property
18.1 (A) Details of all registered Intellectual Property legally and
beneficially owned by a Group Company and details of all applications
for registration thereof are set out in the Disclosure Letter.
(B) Such intellectual property is free from all charges or similar
encumbrance, save for any licence disclosed pursuant to Warranty 18.4.
18.2 All renewal fees and administrative steps required for the maintenance of
the rights disclosed pursuant to Warranty 18.1 have been paid or taken. GEC
is not aware of any challenge or attack by a third party or competent
authority to such rights and no such challenge or attack has been
communicated to GEC (excluding routine patent and trade xxxx registry
actions). No claims have been made by any employee of a Group Company
pursuant to sections 40 and 41 of the Patents Xxx 0000 relating to patents
or patent applications disclosed pursuant to Warranty 18.1.
18.3 GEC is not aware that the effect of anything which has been done or omitted
to be done by a member of the GEC Group in relation to the prosecution and
maintenance of the rights disclosed pursuant to Warranty 18.1 has
prejudiced the validity or enforceability of such rights so as to have a
material adverse effect on the business of the Group Companies.
18.4 Details of all material licences (excluding shrink-wrap software licences)
granted to or by a Group Company in respect of any Intellectual Property
are set out in the Disclosure Letter and no Group Company is in material
breach of any such licence and so far as GEC is aware, no other party
thereto is in material breach of any such licence. Nothing has been done by
any Group Company which would entitle the
63
other party to the licence to terminate such licence (excluding any
consequence of entering into the transactions contemplated by this
Agreement).
18.5 So far as GEC is aware the processes and methods of employed, the services
provided, the business conducted and the products used or dealt in by Group
Companies in relation to their business as carried on at the date of this
Agreement do not infringe or make unauthorised use of the rights of any
other person in any Intellectual Property (or confidential information). No
written claim has been communicated to GEC by a third party alleging the
infringement of any Intellectual Property or misuse of confidential
information through use of the processes and methods employed, services
provided or products used or dealt in by Group Companies.
18.6 So far as GEC is aware there is no unauthorised use or infringement by any
person of any Intellectual Property owned by a Group Company.
18.7 Save in the ordinary course of business or to its employees no Group
Company has disclosed any confidential information except under an
obligation of confidentiality.
18.8 The sub-licence in the Agreed Form relating to the AT&T/Licence Cross
Licence grants all rights capable of being granted by GEC for the business
of the Group Companies under the AT&T/Licence Cross Licence.
18.9 GEC has disclosed in the Disclosure Letter the Group Companies' plan in
respect of Year 2000 compliance.
18.10 So far as GEC is aware the Group is in substantial compliance with its
plan in respect of Year 2000 compliance.
18.11 Details of disaster recovery and security procedures relating to the Group
Companies have been disclosed in the Disclosure Letter.
18.12 The Hardware and Software operates and has been maintained so as to
support the businesses of the Group Companies at Completion and so far as
GEC is aware there are no defects or errors (excluding issues relating to
Year 2000 compliance) which are having a material adverse effect on the
business of the Group Companies.
19. Sale of Shares
No one is entitled to receive from any Group Company any finders fee,
brokerage or other commission in connection with the sale and purchase of
the Shares under this Agreement.
20. Insurances
20.1 (A) Details of the insurance policies maintained by or on behalf of each
Group Company are attached to the Disclosure Letter.
64
(B) So far as GEC is aware, all such policies are in force and, so far as
GEC is aware, no Group Company has done anything or omitted to do
anything as a result of which any of such policies is void or voidable
and no claims are outstanding for amounts in excess of (pound)50,000
under each such policy.
21. Employees
21.1 (A) The name and particulars of remuneration, profit sharing, incentive
and bonus arrangements (including payments in connection with
termination of any office or employment and loyalty payments) and
material benefits of the Employees as at 9th January, 1998 are set out
in or attached to the Disclosure Letter and such particulars are true
and accurate in all material respects.
(B) Since that date, no Employee with a basic salary in excess of
(pound)50,000 per annum has ceased to be an Employee or has given
notice terminating his contract of employment and no such person has
been taken on by the Company.
21.2 The contract of employment of each Employee may be terminated by the
employer without damages or compensation (other than that payable by
statute) by giving at any time no more than 13 weeks notice.
21.3 There is no material dispute with any trade union or other such
representative body existing or, so far as GEC is aware, pending or
threatened in relation to the business of any Group Company.
21.4 Details of all collective agreements and recognition agreements for the
time being affecting the Employees or their conditions of service are
attached to the Disclosure Letter.
21.5 (A) Within the year immediately preceding the date of this Agreement, no
Group Company has given notice of any redundancies to the Secretary of
State or started consultations with any independent trade union under
the provisions of Part IV, TULRCA or failed in any material respect to
comply with any such obligation under the said Part IV or has
undertaken any corresponding steps applicable under the laws of
another jurisdiction.
(B) Plessey GmbH has not taken within the year immediately preceding this
Agreement any steps for mass dismissals requiring prior notice to be
given to the Labour Authority .
21.6 So far as GEC is aware, there is not outstanding any material dispute or
material claim by any Employee or any former employee of any Group Company,
nor is GEC aware of any circumstances which have arisen from which there is
a substantial likelihood of such claims or disputes.
65
21.7 GEC is not aware of any complaint, enquiry or investigation which has been
made to or against any Group Company or Employee of any Group Company or
which is pending or threatened or expected in respect or race
discrimination, equal pay or unequal treatment or disability discrimination
by any Group Company or Employee of any Group Company.
22. The Environment
22.1 The business of each Group Company is in all material respects being
conducted in compliance with Environmental Laws and so far as GEC is aware,
each Group Company, its directors, officers and employees has in the last
three years complied in all material respects with Environmental Laws.
22.2 Each Group Company has all Permits necessary at the date of this Agreement
for the operation of the business of such Group Company.
22.3 No circumstance exists (other than the sale of the Shares) which is likely
to result to the material detriment of the Group as a whole, in suspension,
or revocation of any Permit or is likely to result in any such Permit not
being renewed.
22.4 No material work or material expenditure is required under any
Environmental Laws in order to carry on the business of any Group Company
where failure to carry out such work or to incur such expenditure as at the
date of this Agreement is a breach of Environmental Laws or any Permit.
22.5 So far as GEC is aware, no Group Company has in the last three years
received any written notice or other written or recorded communication from
which it reasonably appears that it is likely to be in breach of or liable
under Environmental Laws or under any Permit.
22.6 So far as GEC is aware, none of the sites currently used, owned or occupied
by any Group Company is now being or is polluted or contaminated to a
material extent as a result of:
(i) any process or operation (including without limitation waste
management operations) carried out there by any Group Company or any
third party; or
(ii) substances kept or used there by any Group Company or any third party.
22.7 No written notice or other written or recorded communication has been
received in the last three years by any Group Company from any competent
authority concerning the inclusion of any land currently or formerly used,
owned or occupied by any Group Company within any register of contaminated
sites or requiring any remediation works and GEC knows of no current
intention on the part of any competent authority to give such notice or
communication nor of any current investigations by any competent authority
which might give rise to such an intention.
66
22.8 GEC is not aware of any circumstances which are reasonably likely to give
rise to a claim against any Group Company in respect of material pollution
or contamination on, under or in formerly owned sites.
22.9 Each Group Company is taking all necessary steps to ensure keeping,
treatment, consignment and disposal of wastes produced or handled in the
course of each Group Company's business so as to comply in all material
respects with Environmental Laws.
22.10 Each Group Company has, so far as GEC is aware, supplied to the competent
authorities such material information and assessments as to each Group
Company's processes, operations, substances, discharges, wastes and
effluents as is required by Environmental Laws to be supplied.
22.11 All such information given was, so far as GEC is aware, correct in all
material respects at the time the information was supplied and so far as
GEC is aware all such information contained on public registers as is
required by Environmental Laws is true and accurate.
22.12 Neither GEC (in relation to the operations of the Group) nor any Group
Company has applied for any information to be excluded from any public
register maintained in accordance with Environmental Laws on the grounds
of commercial confidentiality or otherwise.
22.13 So far as GEC is aware, each Group Company has carried out and made all
such assessments or plans as are required by and in accordance with
Environmental Laws in relation to that Group Company's substances,
processes, operations, discharges, wastes and effluents (including without
limitation those relating to hazardous substances, accident hazards,
releases to the environment and noise) and reasonably complete and
accurate records have been kept of such assessments and plans.
22.14 So far as GEC is aware, all remedial, preventative and protective measures
expressly required by Environmental Laws have been implemented and
maintained by each Group Company in all material respects.
22.15 For the avoidance of doubt, the Purchaser shall not be entitled to claim
under any of warranties 22.1, 22.3, 22.4, 22.7 or 22.9, in relation to
pollution or contamination of soil, surface water, groundwater or other
water in or below ground unless GEC is aware such pollution or
contamination was so caused.
23. The Accounts and Tax
23.1 No Group Company has any liability in respect of Taxation that is not
disclosed or provided for in the Accounts and, in particular, has no
outstanding liability for:-
(A) Taxation in any part of the world assessable or payable by reference
to profits, gains, income or distributions earned, received or paid or
arising or deemed to
67
arise on or at any time prior to the Accounts Date or in respect of
any period ending on or before the Accounts Date; or
(B) purchase, value added, sales or other similar tax in any part of the
world referable to transactions effected on or before the Accounts
Date;
that is not provided for in the Accounts.
23.2 The amount of the provision for deferred Taxation in respect of each Group
Company contained in the Accounts was, at the Accounts Date, in accordance
with accountancy practices generally accepted in the United Kingdom or the
relevant jurisdiction of incorporation and commonly adopted by companies
carrying on businesses similar to those carried on by that Group Company.
23.3 If all facts and circumstances which are now known to the Group or to GEC
had been known at the time the Accounts were drawn up, the provision for
deferred Taxation that would be contained in the Accounts would be no
greater than the provision which is so contained.
24. Tax Events since the Accounts Date
Since the Accounts Date:
(A) no Group Company has paid any dividend or made any distribution of
assets or repayment of capital by reference to which it will or may be
liable to Tax;
(B) no accounting period of any Group Company has ended;
(C) there has been no disposal of any asset (including trading stock) or
supply of any service or business facility of any kind (including a
loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the
consideration actually received or receivable for such disposal or
supply was materially less than the consideration which could be
deemed to have been received for tax purposes;
(D) no event has occurred which will give rise to a tax liability on any
Group Company calculated by reference to deemed (as opposed to actual)
income, profits or gains or which will result in such Group Company
becoming liable to pay or bear a tax liability directly or primarily
chargeable against or attributable to another person, firm or company;
(E) no disposal has taken place or other event occurred which will or may
have the effect of crystallising a liability to Taxation which should
have been included in the provision for deferred Taxation contained in
the Accounts if such disposal or other event had been planned or
predicted at the Accounts Date;
68
(F) no Group Company has incurred expenditure of a revenue nature or
entered into a commitment to incur expenditure of a revenue nature
which will not be deductible in computing trading profits for the
purposes of corporation tax, or be deductible as a management expense
of an investment company, other than expenditure at rate
proportionately no greater than the corresponding rate for the
accounting period ending on the Accounts Date;
(G) no Group Company has paid or become liable to pay any interest or
penalty in connection with any tax, has otherwise paid any tax after
its due date for payment or owes any tax the due date for payment of
which has passed or will arise in the 30 days after the date of this
agreement.
(H) no Group Company has taken any action which prejudiced any arrangement
or agreement which it had previously negotiated with any revenue or
income tax authority;
(I) no UK Group Company has made nor has any UK Group Company become
entitled to make a claim under section 24(2), section 48 or section
280 of or Schedule 4 to TCGA 1992.
25. Tax Returns, Disputes, Records and Claims, etc.
25.1 Each Group Company has made or caused to be made all proper returns
required to be made, and has supplied or caused to be supplied all
information required to be supplied, to any revenue or income tax authority
and within the requisite periods. All such returns were when made up to
date and correct.
25.2 So far as GEC is aware, there is no dispute or disagreement outstanding nor
is any contemplated at the date of this agreement with any revenue
authority regarding liability or potential liability to any tax or duty
(including in each case penalties or interest) recoverable from any Group
Company or regarding the availability of any relief from tax or duty to
such Group Company and there are no circumstances which make it likely that
any such dispute or disagreement will commence.
25.3 Each Group Company has sufficient records relating to past events,
including any elections made, to calculate the tax liability or relief
which would arise on any disposal or on the realisation of any asset owned
at the Accounts Date by that Group Company or acquired by that Group
Company since that date but before Completion.
25.4 Each Group Company has duly submitted all claims and disclaimers which have
been assumed to have been made for the purposes of the Accounts and all
particulars furnished to any revenue or income tax authority in connection
with the application for any statutory consent or clearance on behalf of
any Group Company or directly affecting any Group Company made since the
Accounts Date fully and accurately disclosed all facts and circumstances
material for the decision of the authority in question.
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25.5 The amount of tax chargeable on any Group Company during any accounting
period ending on or within six years before the Accounts Date has not, to
any material extent, depended on any concession, agreement or other formal
or informal arrangement with any revenue or income tax authority.
25.6 No Group Company has received any written notice from any revenue or income
tax authority which required or will or may require it to withhold tax from
any payment made since the Accounts Date or which will or may be made after
the date of this Agreement.
26. Stamp Duty
Each Group Company has duly paid any stamp duty or other similar duty, levy
or transaction tax for which it is liable and all documents which are
required to be stamped, which are in the possession of any Group Company
and by virtue of which any Group Company has any right material to the
business of the Group as a whole have been duly stamped.
27. Value Added Tax
27.1 Each Group Company has complied with any obligation to register for the
purposes of any purchase, value added, sales or other similar tax in any
part of the world and has complied in all material respects with its other
obligations under any legislation relating to such tax.
27.2 Each Group Company resident in a member state of the European Union has
been or will be able to recover or obtain credit for all amounts in respect
of VAT it has incurred since the Accounts Date.
28. Duties, etc.
All value added tax, import duty, excise duties and other similar taxes,
duties or charges payable to any tax authority upon the importation of
goods or in respect of any assets (including trading stock) imported, owned
or used by a Group Company have been paid in full.
29. Tax on Disposal of Assets
On a disposal of all its assets by a Group Company for:-
(A) in the case of each asset owned by a Group Company at the Accounts
Date, a consideration equal to the value attributed to that asset in
preparing the Accounts; or
(B) in the case of each asset acquired since the Accounts Date, a
consideration equal to the consideration given for the acquisition
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then either:-
(a) in respect of any asset falling within (A) above, the liability
to tax (if any) which would be incurred by a Group Company in
respect of that asset would not exceed the amount taken into
account in respect of that asset in computing the maximum
liability to deferred Taxation as stated in the Accounts; or
(b) in respect of any asset within (B) above, no tax liability would,
so far as GEC is aware, be incurred by a Group Company in respect
of that asset.
30. Non-Deductible Revenue Outgoings
No Group Company is under any obligation to make any future payment of a
revenue nature which will be prevented (whether on the grounds of being a
distribution or for any other reason) from being deductible for corporation
tax purposes, whether as a deduction in computing the profits of a trade or
as an expense of management or as a charge on income or (in the case of
Group Companies subject to UK corporation tax) as a non-trading debit under
Chapter II Part IV Finance Xxx 0000, by reason of any Tax legislation.
31. No UK Group Company has since 5th April 1965 repaid or agreed to repay or
redeemed or agreed to redeem its share capital or capitalised or agreed to
capitalise in the form of debentures or redeemable shares any profits or
reserves of any class or description.
32. No security (within the meaning of section 254(1) ICTA 1988) issued by any
UK Group Company and outstanding at the date of this agreement was issued
in such circumstances that the interest payable on it or any other payment
required to be made in respect of it falls to be treated as a distribution
under section 209 ICTA 1988.
33. Deductions and Withholdings
During the last six years, each Group Company has made all deductions in
respect or on account of any tax from any payments made or benefits
provided by it which it is obliged or entitled to make and has accounted in
full to the appropriate authority for all amounts so deducted.
34. Intra-Group Transactions
No Group Company has, at any time within the last six years, acquired any
asset from any other company which was, at the time of the acquisition, a
member of the same group of companies as that member for the purposes of
any tax such that, at Completion, there will be a charge to tax arising.
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35. Residence
The country which is given in Schedule 7 as the tax residence of each Group
Company is the only country whose tax authorities seek to charge tax on the
world-wide profits or gains of that Group Company and that Group Company
has never paid tax on income, profits or gains to any tax authority in any
other country except that mentioned in Schedule 7 in respect of it. There
has in the three years prior to Completion been no major change in the
nature or conduct of the trade of any Group Company for the purposes of
section 768 ICTA 1988.
36. Transfer Pricing
So far as GEC is aware, Plessey Inc. has received no enquiries from any
revenue or income tax authority relating to an actual or potential Transfer
Pricing Adjustment (as that term is defined in the Tax Covenant).
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Schedule 4:
Limitations on GEC's Liability under the Warranties
1. Agreements to which this Schedule is Applicable
The parties intend that the provisions in this Schedule apply to this
Agreement and, where so stated, to the Tax Covenant and the Environmental
Deed.
2. Warranties
2.1 Notwithstanding anything in this Agreement to the contrary, the provisions
of this Schedule shall operate to limit the liability of GEC in respect of
any claim by the Purchaser for any breach of the Warranties and, where so
stated, the Tax Covenant and the Environmental Deed.
2.2 The only Warranties given:
(A) in respect of defaults under contracts with customers are those
contained in paragraph 8.7(A) of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to defaults
under contracts with customers;
(B) in respect of defaults under contracts with suppliers are those
contained in paragraph 8.9 of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to defaults
under contracts with suppliers;
(C) in respect of Intellectual Property and Information Technology are
those contained in paragraph 18 of Schedule 3 and each of the other
Warranties shall be deemed not to be given in relation to Intellectual
Property and Information Technology;
(D) in respect of matters related to the Environment, are those contained
in paragraph 22 of Schedule 3 and each of the other Warranties shall
be deemed not to be given in relation to any matter related to the
Environment;
(E) in respect of any Property, Certificated Property and Overseas Office
(as the case may be) are those contained in paragraph 17 of Schedule 3
and each of the other Warranties shall be deemed not to be given in
relation to any Property, Certificated Property and Overseas Office
(as the case may be); and
(F) in respect of Tax, are those contained in paragraphs 23 to 36 of
Schedule 3 and each of the other Warranties shall be deemed not to be
given in relation to Tax.
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3. Limitations on Liability under Warranties and Undertakings
3.1 Limitations on Amount
(A) The Purchaser shall not in any event be entitled to damages in respect
of any claim or claims under any of the Warranties (or, in relation to
A(i) below but not A(ii), the Tax Covenant and the Environmental
Deed), except as follows:-
(i) in respect of any individual claim, unless the amount for which
GEC is finally liable exceeds (pound)50,000; and
(ii) in respect of all such claims, unless and until the aggregate
amount of all such claims for which GEC is finally liable exceeds
US$8,000,000, being the aggregate of claims made under the
Warranties (but not, for the avoidance of doubt, where such claim
is capable of being made under Clauses 5.1, 5.4 or 7.1 or under
the Tax Covenant or under the Environmental Deed) in which case
GEC shall be liable for the whole of such sum and not merely the
excess;
(B) The total aggregate liability of GEC for breach of this Agreement
(save for Clause 2) and under the Tax Covenant and under the
Environmental Deed shall not in any event exceed the Purchase Price
(as reduced if applicable by the operation of Clause 3.4(G) and (H)).
(C) For the purpose of sub-paragraph 3.1(A)(i), claims arising out of the
same causal event, matter or practice shall be aggregated and treated
as a single claim.
3.2 Time Limits for Bringing Claim
No claim shall be brought against GEC in respect of any breach of the
Warranties unless the Purchaser shall have given to GEC written notice of
such claim specifying (in reasonable detail) the matter which gives rise to
the breach or claim, the nature of the breach or claim and the amount
claimed in respect thereof (detailing to the extent reasonably practicable
the calculation of the loss thereby alleged to have been suffered by the
Purchaser) on or before the date falling one year after the Completion Date
or, in the case of claims arising under the Warranties contained in
paragraph 22 of Schedule 3, four years from the Completion Date or, in the
case of claims arising under the Warranties contained in paragraphs 23 to
36 of Schedule 3, seven years from the Completion Date.
PROVIDED that the liability of GEC under this sub-paragraph shall
absolutely determine (if such claim has not been previously satisfied,
settled or withdrawn) if legal proceedings in respect of such claim shall
not have been commenced within six months of the service of such notice and
for this purpose proceedings shall not be deemed to have been commenced
unless they shall have been properly issued and validly served upon GEC.
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3.3 Conduct of Litigation
Upon the Purchaser becoming aware of any claim, action or demand against it
or matter likely to give rise to any of these in respect of the Warranties
(a "Claim"), the Purchaser shall and shall procure that the relevant Group
Company shall (except in relation to a Claim under the Warranties contained
in paragraph 22 of Schedule 3 in relation to a Protected Matter (as defined
in the Environmental Deed) which shall not be subject to this paragraph 3.3
and shall be governed by the Schedule to the Environmental Deed):-
(A) within 21 Business Days (or such shorter period as is necessary to
enable GEC to make a substantive response to any such Claim) notify
GEC by written notice as soon as it appears to the Purchaser that any
such Claim of a third party received by or coming to the notice of the
Purchaser may result in a claim under the Warranties;
(B) subject to GEC indemnifying the Purchaser and/or the relevant Group
Company to their reasonable satisfaction against any liability, costs,
damages or expenses which may be reasonably and properly incurred
thereby, take such action and give such information and, upon
reasonable notice, access to relevant personnel, premises, chattels,
documents and records to GEC and its professional advisers as GEC may
reasonably request and the relevant Group Company and/or the Purchaser
and/or the relevant member of the Purchaser's Group shall take such
action and give such information and assistance in order to avoid,
dispute, resist, mitigate, settle, compromise, defend or appeal any
Claim in respect thereof or adjudication with respect thereto as GEC
may reasonably require;
(C) at the request of GEC and subject to GEC indemnifying the Purchaser
and/or the relevant Group Company to their reasonable satisfaction
against any liability, costs, damages or expenses which may be
reasonably and properly incurred thereby, allow GEC to take the sole
conduct of such actions as GEC may reasonably deem appropriate in
connection with any such Claim in the name of the Purchaser or the
appropriate member of the Purchaser's Group and in that connection the
Purchaser shall give or cause to be given to GEC all such assistance
as GEC may reasonably require in avoiding, disputing, resisting,
settling, compromising, defending or appealing any such Claim. GEC
shall:-
(i) in response to reasonable requests from the Purchaser from time
to time, keep the Purchaser informed of the progress of the
Claim;
(ii) provide the Purchaser with copies of such documentation relating
to the Claim as it may reasonably request; and
(iii) give the Purchaser such opportunities as it may reasonably
request to make representations regarding the conduct of the
Claim.
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(D) make no admission of liability, agreement, settlement or compromise
with any third party in relation to any such Claim or adjudication
without the prior written consent of GEC (such consent not to be
unreasonably withheld or delayed). If GEC agrees with the third party
to settle or compromise a Claim, and the Purchaser refuses to agree to
such settlement or compromise then, if the amount for which GEC
subsequently becomes liable exceeds the figure at which it would have
so settled or compromised the relevant Claim, GEC shall not be liable
for the excess amount or any costs or liabilities incurred since the
proposed date of settlement or compromise; and
(E) the Purchaser undertakes to mitigate its loss and nothing in this
Agreement shall derogate from that duty.
3.4 No Liability if Loss is Otherwise Compensated For
(A) General
(i) The Purchaser and those deriving title from the Purchaser on or
after Completion shall not be entitled to recover damages or
otherwise obtain reimbursement or restitution more than once
between them in respect of any individual breach of the
Warranties or any matter giving rise to a claim under the
Environmental Deed;
(ii) The Purchaser shall not be entitled to seek damages or otherwise
obtain reimbursement or restitution in respect of any claim under
the Warranties if the loss occasioned to the Purchaser may
otherwise be recovered under the Tax Covenant, the Environmental
Deed or any undertaking, covenant or other provision of this
Agreement; and
(iii) No liability shall attach to GEC by reason of any breach of the
Warranties if the same loss occasioned to the Purchaser or the
relevant Group Company or a member of the Purchaser's Group by
reason of such breach has been recovered under the Tax Covenant,
the Environmental Deed and vice versa or under any other
provision of this Agreement.
(B) Taxation
In calculating the liability of GEC for any breach of the Warranties or
under the Environmental Deed there shall be taken into account any present
or future reduction in the liability to Taxation of any Group Company or
member of the Purchaser's Group which would not have arisen but for the
matter giving rise to such liability of GEC (such reduction to include any
reduction which results from claiming a surrender of Group Relief (as that
term is defined in the Tax Covenant)).
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(C) Insurances
If, in respect of any matter which would give rise to a breach of the
Warranties or a claim under the Environmental Deed, the Purchaser, a
member of the Purchaser's Group or a Group Company is entitled (or
would have been so entitled had there been maintained in force or but
for any change in the terms of the policies of insurance maintained by
or on behalf of a Group Company or policies providing equivalent cover
thereto) to claim under any policy of insurance, then the Purchaser
will notify GEC in writing of the matter giving rise to the claim, in
accordance with paragraph 3.2, but will not pursue the claim against
GEC unless and until the relevant Group Company, the Purchaser or a
member of the Purchaser's Group shall have made a claim against its
insurers and undertaken all reasonable steps to enforce such claim
provided that the period within which proceedings must be commenced
under the proviso to paragraph 3.2 shall be extended (if the Warranty
claim shall then be still outstanding) to the date falling six months
after GEC shall have notified the Purchaser in writing that it no
longer requires the Purchaser to enforce such claim. The amount
recovered from any such insurance claim (or any claim which could have
been made had such policies or their equivalents been maintained as
aforesaid) shall then be applied to reduce or extinguish any such
claims for breach of the Warranties or under the Environmental Deed.
(D) Recovery from Third Parties
(i) Where the Purchaser, a member of the Purchaser's Group and/or a
Group Company are at any time entitled to recover from some other
person any sum in respect of any matter giving rise to a claim
under the Warranties, the Environmental Deed or under any of the
other provisions of this Agreement, the Purchaser shall, and
shall procure that such Group Company or the relevant member of
the Purchaser's Group shall, undertake all reasonable steps to
enforce such recovery prior to taking action against GEC (other
than to notify GEC of the claim against GEC) and, in the event
that the Purchaser or such Group Company or relevant member of
the Purchaser's Group recover any amount from such other person,
the amount of the claim against GEC shall be reduced by the
amount recovered, less all reasonable costs, charges and expenses
properly incurred by the Purchaser or such Group Company or
relevant member of the Purchaser's Group recovering that sum from
such other person or if that sum is greater, the claim shall be
extinguished provided that the period within which proceedings
must be commenced under the proviso to paragraph 3.2 shall be
extended (if the third party claim shall then be still
outstanding) to the date falling six months after GEC shall have
notified the Purchaser in writing that it no longer requires the
Purchaser to enforce such claim;
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(ii) If GEC pays at any time to the Purchaser or the relevant member
of the Purchaser's Group an amount pursuant to a claim in respect
of the Warranties, the Environmental Deed or under any provisions
of this Agreement and the Purchaser or relevant member of the
Purchaser's Group subsequently becomes entitled to recover from
some other person any sum in respect of any matter giving rise to
such claim, the Purchaser shall, and shall procure that or the
relevant member of the Purchaser's Group shall take all
reasonable steps to enforce such recovery, and shall forthwith
repay to GEC so much of the amount paid by GEC to the Purchaser
or the relevant member of the Purchaser's Group as does not
exceed the sum recovered from such other person less all
reasonable costs, charges and expenses incurred by the Purchaser
or relevant member of the Purchaser's Group recovering that sum
from such other person; and
(iii) If any amount is repaid to GEC by the Purchaser or the relevant
member of the Purchaser's Group pursuant to sub-paragraph (D)(ii)
above, an amount equal to the amount so repaid shall be deemed
never to have been paid by GEC to the Purchaser for the purposes
of paragraph 3.1.
3.5 Acts of the Purchaser
No claim shall lie against GEC under the Warranties to the extent that such
claim is attributable to:-
(i) any voluntary act, omission, transaction or arrangement carried out at
the written request of or with the written consent of the Purchaser
before Completion;
(ii) any voluntary act, omission, transaction or arrangement carried out
otherwise than in the ordinary course of business by the Purchaser or
on its behalf or by persons deriving title from the Purchaser on or
after Completion (excluding the event of Completion itself); or
(iii) any admission of liability made after the date hereof by the
Purchaser, a Group Company or, a member of the Purchaser's Group or on
their behalf or by persons deriving title from the Purchaser on or
after Completion save any such admission made with the prior written
consent of GEC.
3.6 Allowance, Provision or Reserve in the Completion Balance Sheets
No matter shall be the subject of a claim for breach of any of the
Warranties or under the Environmental Deed to the extent that allowance,
provision or reserve in respect of such matter shall have been made in the
Completion Balance Sheets or has been included in calculating creditors or
deducted in calculating debtors in the Completion Balance Sheets and (in
the case of creditors or debtors) is identified in the records of
78
the relevant Group Company or shall have been otherwise taken account of or
reflected in the Completion Balance Sheets.
3.7 Retrospective Legislation
No liability shall arise in respect of any breach of any of the Warranties
if and to the extent that liability for such breach occurs or is increased
as a result of any legislation not in force at the date hereof or which
takes effect retrospectively save and to the extent provided in the
definition of Environmental Laws in Schedule 1.
3.8 Taxation
GEC shall not be liable in any event in respect of any claim in respect of
any breach of the Warranties:-
(A) to the extent that that claim arises or is increased as a result only
of any increase in rates of Tax or any change in law or practice or
any withdrawal of any extra-statutory concession by a Tax authority or
any change in accountancy practice or principles, being an increase,
withdrawal or change made, in any such case, after Completion with
retrospective effect; or
(B) to the extent that that claim would not have arisen or would have been
reduced but for a failure or omission on the part of the Purchaser or
the relevant Group Company after Completion to make any election or
claim any Relief, the making or claiming of which was taken into
account in computing the provision or reserve for Tax in the Accounts;
or
(C) to the extent that that claim arises by reason of a voluntary
disclaimer by the relevant Group Company after Completion of the whole
or part of any allowance to which it is entitled under Part II of the
Capital Allowances Act 1990 or by reason of the revocation by the
relevant Group Company after Completion of any claim for Relief made
(whether provisionally or otherwise) by it prior to Completion; or
(D) to the extent that that claim arises as a result of any changes after
Completion in the bases, methods or policies of accounting of the
Purchaser or the relevant Group Company; or
(E) to the extent that any income, profits or gains to which that claim is
attributable were actually earned or received by or actually accrued
to the relevant Group Company but were not reflected in the Accounts;
or
(F) to the extent that that claim arises or is increased as a consequence
of any failure by the Purchaser to comply with any of its obligations
under the Tax Covenant; or
79
(G) to the extent that that claim would not have arisen but for a
cessation of, or any change in the nature or conduct of, any trade
carried on by the relevant Group Company, being a cessation or change
occurring on or after Completion.
3.9 The Purchaser's Knowledge
(A) GEC shall not be liable under the Warranties or the Environmental Deed
to the extent that the Purchaser or any member of the Purchaser's
Group at the date hereof or any of their respective employees,
advisers or agents had knowledge at the date hereof of the matters
forming the basis of the claim. For the purposes of this paragraph
3.9(A), the Purchaser or any member of the Purchaser's Group at the
date hereof or any of their respective employees, advisers or agents
shall be deemed to have knowledge of the matters forming the basis of
the relevant claim if and to the extent that the employees, advisers
or agents of the Purchaser or relevant member of the Purchaser's Group
were given access to any document or other source of information which
fairly disclosed such fact or matter and the relevant employee,
adviser or agent of the Purchaser or of the relevant member of the
Purchaser's Group was of the appropriate seniority to be given such
access and such fact or matter was reasonably within such person's
area of skill, experience or competence.
(B) The Purchaser undertakes to notify GEC of any matter which may form
the basis of a claim for breach of Warranty or pursuant to the
Environmental Deed or payment under any undertaking, deed or covenant
promptly upon becoming aware of the same.
3.10 No Liability for Contingent or Non-Quantifiable Claims
If any breach of the Warranties or claim under the Environmental Deed
arises by reason of some liability of any member of the Purchaser's Group
or of the Purchaser or of a Group Company which, at the time such breach or
claim is notified to GEC, is contingent only or otherwise not capable of
being quantified, then GEC shall not be under any obligation to make any
payment in respect of such breach or claim unless and until such liability
ceases to be contingent or becomes capable of being quantified, as the case
may be.
3.11 No Warranties given in respect of prospects, forecasts, budgets or
projections, the Information Memorandum or Disclosure Documents
The Purchaser acknowledges that no Warranties are given by GEC in respect
of prospects, forecasts, budgets or projections or, save as expressly set
out in this Agreement, in respect of any statement made, information given
or opinion expressed in the Information Memorandum or any Disclosure
Document.
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3.12 Payment of Claim to be Reduction in Purchase Price
Any payment made by GEC in respect of any claim under the Warranties, the
Environmental Deed or the Tax Covenant, and any payment received by GEC
pursuant to this Agreement shall constitute an adjustment to the Purchase
Price payable under clause 3 (Consideration) of this Agreement.
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Schedule 5:
Pension Arrangements
Part 1 - GEC Scheme
1. In this part of this Schedule, the following expressions shall have the
meanings assigned to them below:
"Actuary's Letter" the letter from SPT to the Purchaser's
Actuary, a copy of which is appended hereto as
Appendix A;
"GEC Scheme" the retirement benefits scheme established by
GEC and known as "the G.E.C. 1972 Plan"
constituted by a Definitive Trust Deed and
Rules dated 4th March, 1982 as amended;
"Interim Period" the period commencing on the day immediately
following Completion and ending on the day
immediately preceding the Pension Transfer
Date;
"Payment Date" the date falling 7 months after the Pension
Transfer Date;
"Pensionable Earnings" has the meaning defined in the rules governing
the GEC Scheme from time to time;
"Pensions Legislation" the Xxxxxxxx Xxx 0000 and regulations
thereunder made or to be made in the future;
"Pension Transfer Date" the date falling six months after Completion
or such other earlier date as may be agreed in
writing between the Purchaser and GEC;
"Purchaser's Actuary" Xxxxxx X. Xxxxxx of Aon Consulting Limited or
such other actuary appointed by the Purchaser
and notified in writing to GEC for the
purposes of this part of this Schedule;
"SPT" Stanhope Pension Trust Limited, being the
trustee for the time being of the GEC Scheme;
"Transfer Amount" the amount calculated in accordance with the
actuarial methods and assumptions set out in
the Actuary's Letter in respect of benefits
prospectively and contingently payable under
the GEC Scheme to and in respect of the
Transferring Members accrued up to the Pension
Transfer Date either as agreed by SPT and the
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Purchaser's Actuary or as determined by the
independent actuary in accordance with
paragraph 10 of this part of this Schedule;
"Transferee Scheme" the retirement benefits scheme or schemes to
be established or nominated by the Purchaser
under paragraph 2.1 of this part of this
Schedule;
"Transferring Employees" those Employees who are members of the GEC
Scheme at the date of this Agreement and who
are eligible to become members of the
Transferee Scheme; and
"Transferring Members" those Transferring Employees who join the
Transferee Scheme on the Pension Transfer Date
and who elect that their accrued rights under
the GEC Scheme are transferred to the
Transferee Scheme who are still in the service
of a UK Pensions Company at the time of such
election.
2. The Purchaser undertakes to:
2.1 establish or procure the establishment of a retirement benefits scheme
or schemes, by the Pension Transfer Date, in a form capable of
approval by the Board of Inland Revenue as an exempt approved scheme
under Chapter 1 of Part XIV of ICTA 1988 or nominate an existing
retirement benefits scheme which is so approved and which is able and
willing to accept a transfer payment from the GEC Scheme in respect of
each Transferring Member in accordance with the provisions of this
part of this Schedule;
2.2 notify GEC in writing with particulars of the Transferee Scheme; and
2.3 invite the Transferring Employees to become members of the Transferee
Scheme with effect from the Pension Transfer Date.
3. GEC undertakes that:
3.1 it will take all reasonable steps (including obtaining the consent of the
Pension Schemes Office of the Inland Revenue) as are necessary to permit
the Transferring Employees and the Company to continue to participate in
the GEC Scheme for all pension and death in service benefits during the
Interim Period as members and associated employer;
3.2 those of the Transferring Employees who do not become Transferring Members
will be provided with such benefits and options as may be provided for in
the GEC Scheme; and
83
3.3 it will not at any time during the Interim Period, without giving the
Purchaser such prior notice in writing as is reasonable and practicable in
the circumstances, take any action which would cause the GEC Scheme to be
terminated or amended in any way which could prejudice the benefits
prospectively and contingently payable to and in respect of the
Transferring Members in respect of their participation up to the Pension
Transfer Date.
4. Each UK Pensions Company shall cease to participate in the GEC Scheme at
the end of the Interim Period.
5. In respect of the Interim Period, the Purchaser undertakes to GEC (for
itself and as agent for SPT) that:
5.1 each UK Pensions Company will pay to SPT the contributions to be made
by and in respect of its Transferring Employees at the rate prescribed
in the rules of the GEC Scheme for so long as each UK Pensions Company
remains in membership of the GEC Scheme;
5.2 each UK Pensions Company will pay a management charge to the principal
company of the GEC Scheme of 1.6% of its Transferring Employees'
Pensionable Earnings in respect of the whole of the Interim Period;
5.3 the Purchaser will procure that each UK Pensions Company complies with
the rules of the GEC Scheme; and
5.4 the Purchaser shall procure that the contributions payable by the
Transferring Employees at the rate prescribed by the rules of the GEC
Scheme shall be deducted from the remuneration of the Transferring
Employees.
Both the relevant UK Pensions Company's and the Transferring Employees'
contributions shall become due monthly in arrears on pay up to and
including the 5th of each month and shall be paid immediately to SPT.
6. Immediately after the Pension Transfer Date GEC shall use all reasonable
endeavours to procure that SPT shall:
6.1 determine the Transfer Amount in accordance with the terms and
assumptions set out in the Actuary's Letter within 2 months of the
Pension Transfer Date;
6.2 promptly communicate the results of its calculations to the
Purchaser's Actuary; and
6.3 agree the amount with the Purchaser's Actuary not later than 4 months
after the Pension Transfer Date.
7. Subject to the Purchaser complying with its obligations under paragraphs 2
and 5 of this part of this Schedule and provided that SPT and the
Purchaser's Actuary have
84
agreed the Transfer Amount in accordance with the provisions of paragraph 6
of this part of this Schedule or otherwise determined in accordance with
paragraph 10, GEC shall use all reasonable endeavours to procure that SPT
shall (subject to the approval of the Board of Inland Revenue) transfer on
the Payment Date to the Transferee Scheme in cash the Transfer Amount in
respect of the Transferring Members from whom SPT has received a completed
election form substantially in the form of Appendix B to this part of this
Schedule.
8. Subject to the receipt of the Transfer Amount by the Transferee Scheme the
Purchaser will procure that the Transferee Scheme will provide (subject to
Inland Revenue limits not being exceeded) pensions (including spouses'
pensions where applicable) and other benefits for or in respect of each of
the Transferring Members in respect of service prior to Pension Transfer
Date which are determined by the Purchaser's Actuary on the basis disclosed
by the Purchaser's Actuary to SPT in a letter provided by the Purchaser's
Actuary to SPT prior to Completion as being equivalent in value to the
value of their entitlements under the GEC Scheme.
9. If any of the Transferring Members pay additional voluntary contributions
in respect of which the benefits are not related to final pensionable
earnings, the voluntary contributions and the additional benefits payable
as a result shall be disregarded for all the purposes of this part of this
Schedule. GEC shall use all its reasonable endeavours to procure that the
part of the voluntary contribution fund attributable to the Transferring
Members in accordance with the rules of the GEC Scheme is transferred to
the Transferee Scheme on the Payment Date.
10. GEC and the Purchaser shall, where there is any dispute between SPT and the
Purchaser's Actuary concerning the determination of the Transfer Amount or
of any other actuarial matters to be determined or agreed by them for the
purposes of this part of this Schedule, refer the matter in dispute to an
independent actuary to be nominated jointly by GEC and the Purchaser or,
failing agreement over the nomination, nominated by the President for the
time being of the Institute of Actuaries. The person so appointed shall act
as an expert and not as an arbitrator, his decision shall be final and
binding and his fees shall be borne equally by GEC and the Purchaser.
11. Each of SPT and the Purchaser's Actuary may request of each other, of GEC
or of the Purchaser information reasonably necessary for effecting the
transfer arrangements specified under paragraphs 6 to 10 of this part of
this Schedule, provided such information is within the possession or
control of the party from whom it is requested. GEC or the Purchaser, as
the case may be, shall use its best endeavours to procure that all such
information reasonably requested in writing shall be supplied to the party
requesting it within 14 days of each such request, and shall be accurate
and complete in all material respects.
12. No Employee who is not at Completion a member of the GEC Scheme shall be
entitled under this part of this Schedule to become a member thereof after
Completion.
85
13. It is acknowledged that SPT and the trustees of the Transferee Scheme are
not parties to this Agreement and are not bound by the terms hereof.
14. GEC and the Purchaser acknowledge that the Pensions Legislation imposes
requirements and discretions on employers under and in relation to the GEC
Scheme and accordingly:
14.1 The Purchaser agrees that it will procure that each UK Pensions Company
will agree that GEC (or a subsidiary or associated company of GEC
determined, in its absolute discretion, by GEC) may make all decisions and
exercise all discretions in relation to the GEC Scheme envisaged or
desirable by or under the Pensions Legislation as though GEC (or the said
subsidiary or associated company) were the sole employer participating in
the GEC Scheme.
14.2 While any UK Pensions Company remains a participating employer in the GEC
Scheme, the Purchaser shall procure that such UK Pensions Company will in
relation to the GEC Scheme:
(A) exercise no right or discretion conferred on it by or under the
Pensions Legislation without the prior written consent of GEC (such
consent not to be unreasonably withheld);
(B) exercise each right or discretion conferred on it by or under the
Pensions Legislation (including, for the avoidance of doubt,
contracting out) as directed from time to time in writing by GEC;
(C) co-operate with GEC and SPT in providing information about, and access
to, its employees from time to time;
(D) from time to time execute all such deeds, documents, agreements,
consents or approvals for the purpose of complying with its
obligations under this sub-paragraph as may be considered necessary or
desirable by GEC; and
(E) if requested by GEC execute a deed irrevocably appointing GEC as its
attorney to execute (in the name of such UK Pensions Company or
otherwise) from time to time any such deeds, documents, agreements,
consents or approvals.
14.3 Without prejudice to the generality of the foregoing, the Purchaser shall
procure that each UK Pensions Company will at the request of GEC
irrevocably:
(A) nominate GEC as the "appropriate person" and the person to act for it
for the purposes of sub-section 21(9) of the Pensions Act 1995 (as to
be inserted by paragraph 1(1)(g) of Schedule 3 to the Occupational
Pension Schemes (Member-nominated Trustees and Directors) Regulations
1996) in relation to the GEC Scheme;
86
(B) agree that the consultation required by section 35(5)(b) of the
Pensions Xxx 0000 by SPT with the employer in relation to the written
statement of investment principles may be with GEC to the exclusion of
such UK Pensions Company; and
(C) nominate GEC as the representative of such UK Pensions Company for the
purposes of section 58(4)(a) of the Pensions Act 1995 (as to be
amended by paragraph 2 of Schedule 5 to the Occupational Pension
Schemes (Minimum Funding Requirement and Actuarial Valuations)
Regulations 1996) in relation to the GEC Scheme.
14.4 GEC may exercise the authorities and discretions envisaged by this
paragraph in its absolute unfettered discretion and in its own interests.
GEC owes no duty or responsibility to the Purchaser or any UK Pensions
Company in relation to the exercise of the authorities and discretions
envisaged as conferred on GEC by this paragraph.
87
Appendix A
Stanhope Pension Trust Limited
Direct dial: (01785) 274730
Our ref: DOC/S/04 (07.05.1997)
o 1998
Dear Sirs
The G.E.C. 1972 Plan
Stanhope Pension Trust Limited is the trustee of the G.E.C. 1972 Plan,
comprising The GEC Plan and the Selected Benefit Scheme, the latter being an
arrangement for additional voluntary contributions.
We offer to pay transfer values to the trustees of the Purchaser's Scheme in
respect of those employees who are members of the G.E.C. 1972 Plan.
Transfer values will be calculated as described below, based on benefits accrued
to the date of cessation of pensionable service and adjusted, as appropriate,
for increases to the date of calculation (the "Calculation Date").
88
The GEC Plan
Interest
In deferment In possession
Projected Discounted Net rate Increases Discounted Net rate
at at of at
"Basis 1" pension 4.0% 9.0% 4.81% 3.5% 8.0% 4.35%
"Basis 2" pension 0.0% 9.0% 9.00% 3.5% 8.0% 4.35%
"Basis 3" pension 8.0% 9.0% 0.93% 3.5% 8.0% 4.35%
The projection of pensions will be adjusted for the timing of increases.
Pensions which have arisen from transfers into the Plan will be projected at
3.5% and discounted at 9.0% (leading to a net rate of 5.31% per annum) over the
period of deferment.
Benefits which do not attract the normal Plan increases of the lesser of 5% and
the increase in the retail prices index will be valued by allowing for the
appropriate rate of increase in possession.
Mortality
In deferment - PA90 tables, rated down two years for both males and females.
In possession - PA90 tables, rated down two years for both males and females.
Spouses' pensions - PA90 tables, rated down two years for both males and females.
Other decrements
Nil.
Spouses' benefits
Wives are assumed to be three years younger than their husbands and 90% of
members are assumed to be married.
89
Further adjustment:
The unit liability of all benefits within
the Plan will be increased by a factor of
1.05 if the member is aged less than 55
at the time of transfer. For members aged
greater than 55, an adjustment will be
calculated according to age,
interpolating between values of 1.05 for
members aged 55 and 1.0 for members aged
65.
Adjustment to market value:
The actuarial value of the benefits will be adjusted to market value by
multiplying by the following factors:
If age is less than (or precisely : 4.25 divided by the yield on the FTSE
equal to) 55 Actuaries All-Share Index on the first
working day of the month in which the
Calculation Date occurs.
If age is 65 : the lesser of
(i) the value of a unit holding in a 15
year stock with coupon of 8%, payable
annually in arrears valued at the
annualised yield on the FT-Actuaries
Fixed Interest 15 Year Medium Coupon
Index on the first working day of the
month in which the Calculation Date
occurs, and
(ii) the value of a unit holding in a 15
year stock with coupon of 3.85%, payable
annually in arrears valued at the
annualised yield on the FT-Actuaries
Index-Linked Over 5 years (5% inflation)
Index on the first working day of the
month in which the Calculation Date
occurs.
If age is between 55 and 65 : through linear interpolation, on the
first working day of the month in which
the Calculation Date occurs, according to
age, by reference to the values at ages
55 and 65.
In valuing benefits which are subject to fixed or no increases, (ii) above will
be ignored.
Minimum value
The transfer value for any member will be not less than the member's accumulated
contributions to The GEC Plan with credited interest to the Calculation Date.
90
Selected Benefit Scheme (SBS)
The transfer value for each member will be the retirement credits accumulated to
the Calculation Date.
Aggregate transfer value
The aggregate transfer value before expenses for each member will be calculated
as the highest value produced under Bases 1, 2 and 3 (as described in the April
1997 edition of The GEC Plan explanatory booklet) and the minimum value referred
to above, together with any SBS retirement credits.
Expenses
A deduction for expenses will be made from the total of the aggregate transfer
values on the attached scale.
Guarantee of basis
Transfer values are guaranteed for three months from the Calculation Date after
which we would reserve the right to substitute a different basis.
Adjustment
The total transfer value net of expenses will be subject to interest between
Calculation Date and payment date at Midland Bank base rate.
TRANSFER AGREEMENT
This letter will be subject to the consent of members concerned and to a formal
agreement between the trustees of the respective pension schemes covering:
(i) Quantification of the transfer values.
(ii) Application of the transfer values.
(iii) Assurance regarding solvency of the Purchaser's pension scheme.
91
Yours faithfully,
Xxxxxx E Read
Director
92
Stanhope Pension Trust Limited
Expenses on transfer values paid and received
Gross Value Expenses
(pound) (pound) (pound) (pound)
0 Up to 20,000 2.50% of gross value
Over 20,000 Up to 50,000 500 plus 2.00% on gross value over 20,000
Over 50,000 Up to 100,000 1,100 plus 1.50% on gross value over 50,000
Over 100,000 Up to 500,000 1,850 plus 1.25% on gross value over 100,000
Over 500,000 Up to 1,000,000 6,850 plus 1.00% on gross value over 500,000
Over 1,000,000 Up to 2,000,000 11,850 plus 0.80% on gross value over 1,000,000
Over 2,000,000 Up to 5,000,000 19,850 plus 0.60% on gross value over 2,000,000
Over 5,000,000 Up to 10,000,000 37,850 plus 0.40% on gross value over 5,000,000
Over 10,000,000 Up to 20,000,000 57,850 plus 0.20% on gross value over 10,000,000
Over 20,000,000 Up to 50,000,000 77,850 plus 0.08% on gross value over 20,000,000
Over 50,000,000 Up to 100,000,000 101,850 plus 0.03% on gross value over 50,000,000
Over 100,000,000 116,850 plus 0.01% on gross value over 100,000,000
93
Note 1 For multiple transfers, total expenses will be allocated in the
proportion that each transfer value bears to the aggregate transfer
values.
2 Expenses are deducted from that part of a transfer value not
attributable to member's contributions and the balance of expenses, if
any, from member's contributions including AVCs.
94
Appendix B
95
Form of Agreement and Option
----------------------------
FORM OF AGREEMENT AND OPTION
From: [Merge 'NAME']
National Insurance No: [Merge 'NINO']
To: Trustee[s] of the [ Scheme]
and
Stanhope Pension Trust Limited (the Trustee of the G.E.C. 1972 Plan
comprising The GEC Plan and Selected Benefit Scheme)
I refer to the letters from Stanhope Pension Limited dated [ ] and the
[ Scheme] dated [ ].
PLEASE TICK ONE BOX ONLY TO SPECIFY YOUR REQUIREMENTS, AND SIGN AND DATE THIS
FORM AND ENTER YOUR HOME ADDRESS.
[ ] A I request the Trustee of the G.E.C. 1972 Plan ("the Plan") to retain
my rights to benefit under the Plan in respect of pensionable service
to [ ].
[ ] B I have become a member of the [ Scheme] and I require the Trustee of
the G.E.C. 1972 Plan ("the Plan") to transfer the value of all
benefits which have accrued to or in respect of me under the Plan to
the Trustee[s] of the [ Scheme] in accordance with the above letters.
[ ] C I wish to receive a Statement of Entitlement giving the transfer value
available to a Personal Pension Scheme with...........................
......................................................................
......................................................................
......................................................................
(insert name and address of pension provider)
I understand and acknowledge that following the making of a transfer to the
Trustee[s] of the [ Scheme] in accordance with option B above, neither I nor
any person claiming under or in respect of me (whether a spouse, dependant or
otherwise) will have any entitlement under the G.E.C. 1972 Plan.
Signature: ...................................... Date:.....................
------------------------------------------------- --------------------------
Home address:...................................................................
--------------------------------------------------------------------------------
................................................. Postcode:.................
------------------------------------------------- --------------------------
96
PLEASE RETURN THIS TO [YOUR PERSONNEL DEPARTMENT] NO LATER THAN [ ]
--------------------------------------------------------------------------------
Issued by: Special Projects Department,
------------------------------------------------
Stanhope Pension Trust Limited
XX Xxx 00
Xxxxxxxxx Xxxx,
Xxxxxxxx XX00 0XX
97
Part 2 - U.S. Benefits Arrangements
1. Benefits. For 1 year following the Completion Date, the Purchaser shall
maintain, or shall cause Plessey Inc. to maintain, compensation and
employee benefit plans and arrangements for U.S. Employees Inc. who become
employees of the Purchaser or any subsidiary (including Plessey Inc.) after
the Completion Date ("Affected Employees") that are, in the aggregate,
substantially equivalent to those provided under the compensation, employee
benefit plans and arrangements maintained by the Purchaser or any
subsidiary for similarly situated employees in the United States. Provided
that the Purchaser or any subsidiary maintains such compensation and
employee benefit plans and arrangements for Affected Employees, the
Purchaser shall have the rights in the good faith exercise of its
managerial discretion, (1) to make changes or cause changes to be made in
compensation and employee benefit plans and arrangements, (2) to terminate
employee benefit plans and arrangements and (3) to terminate the employment
of any Affected Employee, such rights to be exercisable at any time
including during the 1 year following the Completion Date. Further, during
the one year period described above, the Purchaser shall maintain or cause
Plessey Inc. to maintain health and dental insurance benefit plans and
arrangements and severance plans for Affected Employees which are
substantially equivalent to those benefits provided under such plans and
arrangements maintained by Plessey Inc. prior to the Completion Date.
2. Accrued Vacation. The Purchaser shall be responsible for all vacation,
holiday, sickness and personal days accrued by the Employees of Plessey
Inc. as of the Completion Date.
3. Participation in Benefit Plans. Affected Employees shall be given credit
for all service with Plessey Inc. (and any entity owned, directly or
indirectly, twenty-five per cent. (25%) or more by GEC) under all severance
plans, employee benefit plans and other benefit arrangements with respect
to which the Affected Employees are or become participants after the
Completion Date for purposes of eligibility and vesting to the same extent
as if rendered to the Purchaser or any of its subsidiaries. The Purchaser
shall cause to be waived any pre-existing condition limitation that might
otherwise apply to an Affected Employee under any welfare plan with respect
to which the Affected Employees are or become participants after the
Completion Date. The Purchaser agrees to recognise (or cause to be
recognised) the dollar amount of all expenses incurred by Affected
Employees during the calendar year in which the Completion Date occurs for
purposes of satisfying the calendar year deductibles and co-payments
limitations for such year with respect to which the Affected Employees are
or become participants after the Completion Date.
4. Participation in GEC's Employee Pension Benefit Plans. As of the Completion
Date, Affected Employee's participation shall terminate in the GEC-USA
Employees' Savings and Investment Plan ("GEC Savings Plan"). Affected
Employees shall thereafter be entitled to the benefits which they have
accrued as of the Completion Date, to the extent then vested, in accordance
with the terms of the GEC Savings Plan. Prior to the Completion Date, GEC
shall take any and all actions necessary to effect this
98
termination of participation. The Purchaser shall pay, or cause Plessey
Inc. to pay, to the trust which funds the GEC Savings Plan all
contributions required to be paid to such trust for periods ending prior to
or on the Completion Date in order for the plan to satisfy the requirements
of Section 401 of the Internal Revenue Code of 1986 or to otherwise satisfy
the terms of such plan, including but not limited to employee pre-tax and
after-tax contributions, employer matching contributions, and any other
employer contributions. The Purchaser shall also furnish to GEC or one of
its affiliates after the Completion Date such information from the books
and records of Plessey Inc. as may be reasonably requested by GEC or one of
its subsidiaries with respect to the GEC Savings Plan.
5. Participation in GEC's Employee Welfare Benefit Plans. As of the Completion
Date, the participation of Affected Employees, any former employee of
Plessey Inc. who was not employed by Plessey Inc. on the Completion Date,
or the dependants of any such Affected Employee or former employee
(collectively hereinafter referred to as "Subsidiary Welfare Participants")
in the GEC-USA Employees' Welfare Benefit Plan ("GEC Welfare Plan") shall
terminate provided that:
5.1 Except as otherwise provided by paragraph 5.2 below, the GEC Welfare
Plan shall pay, in accordance with the terms of the plan, claims or
expenses covered by the plan which are incurred prior to or on the
Completion Date with respect to Subsidiary Welfare Participants. For
this purpose, a life insurance claim is incurred on the date of death;
a long-term disability claim is incurred on the date the employee's
absence from work begins which qualifies the employee to receive
long-term disability benefits; and medical and dental claims are
incurred on the date the services are rendered.
5.2 Notwithstanding sub-paragraph 5.1 above, the Purchaser shall satisfy,
or cause Plessey Inc. to satisfy, long-term disability claims of
Subsidiary Welfare Participants payable under the GEC Welfare Plan
which are incurred prior to or on the Completion Date and with respect
to which the payment of long-term disability benefits had not
commenced as of 1 July, 1997.
5.3 The Purchaser shall pay, or cause Plessey Inc. to pay, to the GEC-USA
Employees' Welfare Benefit Trust ("GEC Welfare Trust") all amounts
which are paid in accordance with past practice in the normal course
of business by such trust by reason of medical, dental, and dependent
care expenses of Subsidiary Welfare Participants and for which the GEC
Welfare Trust has not received payment from Plessey Inc. as of the
Completion Date.
5.4 The Purchaser shall pay or cause Plessey Inc. to pay, to the GEC
Welfare Trust all amounts which are paid in accordance with past
practice in the normal course of business by such trust to provide
stop-loss insurance with respect to medical expenses of the Subsidiary
Welfare Participants and for which the GEC Welfare Trust has not
received payment from Plessey Inc. as of the Completion Date.
99
5.5 The Purchaser shall pay, or cause Plessey Inc. to pay, to the GEC
Welfare Trust amounts which are charged to Plessey Inc. by the
Greensboro Associates, Inc. ("GAI"), the plan administrator of the GEC
Welfare Plan in accordance with past practice in the normal course of
business, for life insurance and long-term disability coverage
provided with respect to the Subsidiary Welfare Participants for
periods ending on or prior to the Completion Date which have not been
paid by Plessey Inc. as of the Completion Date.
5.6 The Purchaser shall assume and satisfy the obligation of GEC, a direct
or indirect subsidiary of GEC, or the GEC Welfare Plan to provide
after the Completion Date continued medial and dental expense coverage
with respect to the Subsidiary Welfare Participants which is required
by Section 4980B of the Internal Revenue Code of 1986, Section 601 of
the Employee Retirement Income Security Act of 1974, or the terms of
the GEC Welfare Plan.
5.7 Effective as of the Completion Date, any medical benefit contract
maintained by Plessey Inc. and which does not cover employees of any
other subsidiary of GEC, shall not be part of the GEC Welfare Plan and
the Purchaser and Plessey Inc. shall pay and satisfy any amounts
required to be paid under the terms of such contract. The Purchaser
shall provide, or cause Plessey Inc. to provide, such information as
may be reasonably requested by GAI in order to comply with
governmental reporting requirements imposed on the GEC Welfare Plan
for plan years including the Completion Date or plan years ending
before the Completion Date.
6. The Purchaser shall pay, or cause Plessey Inc. to pay, to GAI amounts
charged to Plessey Inc. in accordance with past practice in the normal
course of business for administrative services rendered to Plessey Inc.
with respect to the GEC Retirement Plan, the GEC Savings Plan, and the GEC
Welfare Plan for periods ending on or prior to the Completion Date which
have not been paid by Plessey Inc. as of the Completion Date.
7. The Purchaser will indemnify and hold harmless the Seller and the direct or
indirect subsidiaries of GEC from and against damages, including attorney
fees, arising from the failure of the Purchaser or Plessey Inc. to satisfy
the obligations imposed on the Purchaser or Plessey Inc. under this part of
this Schedule.
100
Schedule 6:
Tax Covenant
The Tax Covenant shall be in the form of the deed prepared by GEC's Solicitors
which has (for the purposes of identification only) already been initialled by
GEC's Solicitors and the Purchaser's Solicitors.
101
Schedule 7:
Part A - Basic Information about the Companies
1. Company Name: Plessey Semiconductors Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 705031
Date of Incorporation: 5th October, 1961
Registered Office: Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Share capital - authorised: 200,000,000 Ordinary Shares of
(pound)1
- issued: 21,200,000 Ordinary Shares of
(pound)1
Registered Shareholder(s): The General Electric Company,
p.l.c 101,909,999
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: The General Electric Company,
p.l.c.
Subsidiaries or subsidiary undertakings: Plessey France S.A.
Plessey GmbH
Plessey Semiconductors SpA
Plessey Semiconductors Singapore
Pte Limited
GEC Plessey Semiconductors Japan
Limited
UK Cablevision Limited
GEC Plessey Semiconductors
Overseas Limited
PSSY Semiconductors Svenska
Aktiebolag
Directors: Xx. X. Xxxxx
Xx. X.X. Xxxxxxxxx
Secretary: Mr. A.K. Xxxxxxxxx
102
2. Company Name: GEC Plessey Semiconductors Inc.
Place of Incorporation/Registration: Delaware, U.S.A.
Registration Number: FEI Number 00-0000000
Date of Incorporation: 2nd February, 1988
Registered Office: Corporation Trust Centre,
0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000
Share capital - authorised: 1,000 common shares of US$1
- issued: 1,000 common shares of US$1
Registered Shareholder(s): GEC Inc
Beneficial owner(s) of issued shares: GEC Inc
Subsidiaries or subsidiary undertakings: None
Directors: Xxx Xxxxx, X.X. Xxxxxxx, P.A.
Xxxxxxx
Secretary: Xxx Xxxxxxx
103
3. Company Name: AEI Semiconductors Limited
Place of Incorporation: England and Wales
Registration Number: 270190
Date of Incorporation: 12th November, 1932
Registered Office: 0 Xxxxxxxx Xxxx
Xxxxxx X0X 0XX
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 100 Ordinary Shares of (pound)1
Registered Shareholder(s): Associated Electrical Industries
Holdings Limited 1
Associated Electrical Industries
Limited 99
Beneficial owner(s) of issued shares: Associated Electrical Industries
Limited 100
Subsidiaries or subsidiary undertakings: None
Directors: Xx. X.X. Xxxxxxxxx
Xx. X. Xxxxx
Secretary: Mr A.K. Xxxxxxxxx
104
4 Company Name: Marconi Electronic Devices Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 337403
Date of Incorporation: 2nd March 1938
Registered Office: Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Share capital - authorised: 25,000,000 Ordinary Shares of
(pound)1
- issued: 25,000,000 Ordinary Shares of
(pound)1
Registered Shareholder(s): The General Electric Company,
p.l.c 24,999,999
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: The General Electric Company,
p.l.c.
Subsidiaries or subsidiary undertakings: None
Directors: Xx. X. Xxxxx
Xx. X.X. Xxxxxxxxx
Secretary: Mr. A.K. Xxxxxxxxx
105
Part B - Basic Information about Subsidiaries of the Companies
1. Name of Subsidiary: UK Cablevision Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 1652326
Date of Incorporation: 19th July 1982
Registered Office: Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 2 Ordinary Shares of (pound)1
Registered Shareholder(s): Plessey Semiconductors Limited 1
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xx. X. Xxxxx
Xx. X.X. Xxxxxxxxx
Secretary: Mr. A.K. Xxxxxxxxx
106
2. Name of Subsidiary: Plessey France SA
Place of Incorporation/Registration: France
Registration Number: R.C.S. Evry B 532 016 325
Date of Incorporation: 15th April, 1957
Registered Office: Z.A. Courtaboeuf
Miniparc - 0, xxxxxx xxx Xxxxx,
Xxx 0-X.X. 142
91944 les Ulis Cedex A
Share capital - issued: FFR15,700,000 comprising 157,000
shares of FFR100 each
Registered Shareholder(s): Plessey Semiconductors Limited
156,994
Xxxxx Xxxxxxxx 1
Xxxxxx Xxxxxx 1
Xxxxxxx Xxxx 1
Didier Trin 1
Xxxxxx Xxxxx 1
Xxx Xxxxx 1
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxxxx Xxxx
Didier Trin
Xxxxxx Xxxxxx
Secretary: None
107
3. Name of Subsidiary: Plessey GmbH
Place of Incorporation/Registration: Germany
Registration Number: Commercial Register of the Court
of Munich no. 45677
Date of Incorporation: 3rd April, 1973
Registered Office (seat): Xxxxxxxxxxxxxxxxxx 00,
00000 Xxxxxx, Xxxxxxx
Share capital - DM450,000
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxxx Xxxxx
Xxxxxx Xxxxxx
108
4. Name of Subsidiary: Plessey Semiconductors SpA
Place of Incorporation/Registration: Italy
Registration Number: Monza Register of Companies
51515
Date of Incorporation: 1st March, 1991
Registered Office: Via Fosse Ardeatine 4,
20092 Cinisello Xxxxxxx
Milano
Share capital - authorised: ITL 2,700,000,000 comprising
270,000 shares of ITL 10,000
- issued: ITL 2,700,000,000 comprising
270,000 shares of ITL 10,000
Registered Shareholder(s): Plessey Semiconductors Limited
270,000
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Secretary: None
109
5. Name of Subsidiary: Plessey Semiconductors Singapore
Pte Ltd
Place of Incorporation/Registration: Singapore
Registration Number: 198403047 H
Date of Incorporation: 17th August, 1984
Registered Office: 0 Xxx Xxxx Xxxxx,
XXX Xxxxxxxx,
Xxxxxxxxx 000000
Share capital - authorised: S$200,000 comprising 200,000
ordinary shares of S$1
- issued: S$200,000 comprising 200,000
ordinary shares of S$1
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: X. Xxxxxx
Teo Chwee Teck
Secretary: Teo Chwee Teck
110
6. Name of Subsidiary: PSSY Semiconductors Svenska
Aktiebolag
Place of Incorporation/Registration: Stockholm, Sweden
Registration Number: 556537-8022
Date of Incorporation: 30th December 1996
Registered Office: Xxx 0000
000 00 Xxxxxxxxx,
Xxxxxx
Share capital - authorised: SEK400,000
- issued: SEK100,000
Registered Shareholder(s): GEC Plessey Semiconductors
Overseas Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxxxx Xxxxxx
(Xxx Xxxxxx, registration pending)
Deputy Director: Xxxx Xxxx
111
7. Name of Subsidiary: GEC Plessey Semiconductors
Overseas Limited
Place of Incorporation/Registration: England and Wales
Registration Number: 464581
Date of Incorporation: 14th February 1949
Registered Office: Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Share capital - authorised: 100 Ordinary Shares of (pound)1
- issued: 2 Ordinary Shares of (pound)1
Registered Shareholder(s): Plessey Semiconductors Limited 1
Associated Electrical Industries
Holdings Limited 1
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xx. X. Xxxxx
Xx. X.X. Xxxxxxxxx
Secretary: Mr. A.K. Xxxxxxxxx
112
8. Name of Subsidiary: GEC Plessey Semiconductors Japan
Limited
Place of Incorporation/Registration: Japan
Registration Number: n/a
Date of Incorporation: 31st July 1991
Registered Office: CTS Kojimachi Building
12 Kojimachi 2-chome
Chiyoda-ku
Tokyo
Share capital - authorised: 800 shares of par value (Y)50,000
each
- issued: 200 shares of par value (Y)50,000
each
Registered Shareholder(s): Plessey Semiconductors Limited
Beneficial owner(s) of issued shares: Plessey Semiconductors Limited
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxxxxxxx Xxxx
(Representative Director)
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx
Secretary: Yoshiharu Kutsukawa
(statutory auditor)
113
9. Company Name: Marconi Electronic Devices SA
Place of Incorporation/Registration: France
Registration Number: RCS Nanterre B 351 843 339
Date of Incorporation: 18th August, 1989
Registered Office: 0 Xxx Xxxxx Xxxxxxx,
00000 Asnieres
Share capital - issued: FFR9,650,000 comprising
96,500 shares of FFR100
Registered Shareholder(s): Plessey France SA 96,494
Xxxxx Xxxxxxxxx 1
Xxxxxxx Xxxxxxxxx 1
Xxxxxx Xxxxxx 1
Xxxxxxx Xxxxxxx 1
Xxxxx Xxxxx 1
Xxxxx Xxxxxxxx 1
Subsidiaries or subsidiary undertakings: None
Directors: Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx
Secretary:
114
Schedule 8
----------
Property Schedule
PART I - PROPERTIES
1. FREEHOLD PROPERTIES WITH REGISTERED TITLE
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
------------------------------------------------------------------------------------------------------------------------------------
Sportsground at Hyde Road and Xxxxx Street, WT139155 Sportsground Plessey Plessey
Swindon, Wiltshire
====================================================================================================================================
115
2. LEASEHOLD PROPERTIES WITH UNREGISTERED TITLE
====================================================================================================================================
Date of Current
Property Lease Original Parties Term Current Rental Current Use Tenant
------------------------------------------------------------------------------------------------------------------------------------
Unit 1, Groundwell Industrial 4.8.1988 TSB Group Pension Trust 25 years from (pound)82,000 p.a. Factory Plessey
Estate, Crompton Road, Limited (1) 1.8.1983
Swindon, Wiltshire Plessey Properties
Limited (2)
The Plessey Company plc (3)
------------------------------------------------------------------------------------------------------------------------------------
Unit on ground and first 14.3.1996 Sun Alliance & London 15 years from (pound)314,000 p.a. Offices and Plessey
floors of Cherry Orchard Assurance Company Limited 14.3.1996 parking
North, Kembrey Park, Swindon, (1) Plessey Semiconductors
Wiltshire and 5 parking spaces Limited (2)
------------------------------------------------------------------------------------------------------------------------------------
69 parking spaces at Cherry 27.3.1997 Sun Alliance & London From 27.3.1997 (pound)21,600 p.a. Parking Plessey
Orchard North, Kembrey Assurance Company to 13.3.2011
Business Park, Swindon, Limited (1) Plessey
Wiltshire Semiconductors Limited (2)
====================================================================================================================================
116
====================================================================================================================================
Date of Current
Property Lease Original Parties Term Current Rental Current Use Tenant
------------------------------------------------------------------------------------------------------------------------------------
1st Floor, East Wing, 8.12.1995 The Royal London Mutual 5 years from (pound)22,228 p.a Offices and Plessey
Terminal 4, 3B2 Complex, Insurance Society Ltd. (0) 0.00.0000 parking
Stonehill Green, Xxxx Xxx, Plessey Semiconductors (2)
Wiltshire
------------------------------------------------------------------------------------------------------------------------------------
Xxxx X0, Xxxxxxx Business 25.12.1975 Tyne Tunnel Trading Estate 24 years from (pound)11,750 p.a. Workshop Marconi
Park, Altrincham, Cheshire Ltd. (1) 29.9.1975
GEC Xxxxxxx Traffic
Automation Ltd. (2)
====================================================================================================================================
3. ASSIGNED LEASES
====================================================================================================================================
Property Date of Original Parties Term Rental before Date of Legal Owner Assignee
Lease Assignment Assignment
------------------------------------------------------------------------------------------------------------------------------------
Xxxx X, Xxxxxx Xxxx, 0.00.0000 Xxxxxxxxx Industrial 25 years from (pound)34,400 p.a. March 0000 Xxxxxxx Xxxxxx
Xxxxxx Xxx, Xxxxx Xxxxxxx Limited (0) 00.0.0000 (as at review Electronics
X. Xxx (UK) on 29.9.1987) Limited
Limited (2)
====================================================================================================================================
117
====================================================================================================================================
Property Date of Original Parties Term Rental before Date of Legal Owner Assignee
Lease Assignment Assignment
------------------------------------------------------------------------------------------------------------------------------------
Factory and offices at 17.3.1979 Borough of Swindon 99 years from (pound)0.05 p.a. 28.4.1995 Marconi Semitron
Hargreaves Road, (1) Tectonic 12.3.1979 Industries
Groundwell Industrial Electronics Limited Limited
Estate, Swindon (2)
------------------------------------------------------------------------------------------------------------------------------------
Car Park at Stockfield 29.1.1988 The North Western 5 years from (pound)750 p.a. 2.3.1992 Plessey Hevermill
Road, Oldham, Greater Electricity Board (0) 00.0.0000 Semicondutors Limited
Manchester Xxxxxxxx plc (2) Limited
====================================================================================================================================
118
PART II - CERTIFICATED PROPERTIES
4. FREEHOLD CERTIFICATED PROPERTIES WITH REGISTERED TITLE
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
------------------------------------------------------------------------------------------------------------------------------------
000/000 Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxx, WT137058 Factory and Offices Plessey Plessey
Swindon, Wiltshire
------------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxx, XX000000 Offices Plessey Plessey
Swindon, Wiltshire
------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices at Xxxxxxxxxx Xxxx, XX00000 Factory and Offices AEI
Lincoln, Lincolnshire
------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices at Xxxxxxxxxx Xxxx, XX00000 Factory and Offices Marconi
Lincoln, Lincolnshire
------------------------------------------------------------------------------------------------------------------------------------
Factory and Offices adjacent to Tavistock DN174695 Factory and Offices Plessey Plessey
Road, Roborough, South Hams, Devon
------------------------------------------------------------------------------------------------------------------------------------
Land adjacent to Tamerton Road, Roborough, DN278749 Field - lying fallow U.K. Cablevision U.K. Cablevision
South Hams, Devon Limited Limited
====================================================================================================================================
119
5. LEASEHOLD CERTIFICATED PROPERTIES WITH REGISTERED TITLE
====================================================================================================================================
Property Title Number Use Legal Owner Beneficial Owner
------------------------------------------------------------------------------------------------------------------------------------
Factory at Tweedale Way, Oldham, Greater GM423330 Factory Plessey Plessey
Manchester
------------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxx, XX000000 Offices/ Plessey Plessey
Swindon, Wiltshire Workshops
------------------------------------------------------------------------------------------------------------------------------------
Factory and offices adjacent to Tavistock DN176582 Factory and Offices Plessey Plessey
Road, Roborough, South Hams, Devon
====================================================================================================================================
120
PART III - OVERSEAS OFFICES
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
------------------------------------------------------------------------------------------------------------------------------------
France 6 Avenue des Andes, Offices Leasehold Plessey France S.A. Term: 9 years from
Courtabouf 25.2.1997
Rent: FF213,000.00
(indexed to INSEE
construction index)
------------------------------------------------------------------------------------------------------------------------------------
France 00 Xxx Xxxxxxxx Xxxxxxx, Offices Leasehold GEC France S.A. Letter in respect of one
Chambrey Les Tours and Factory year lease extension to
1.1.1999
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx 00/00 Xxxxxxxxxxxxxxxxxx, Offices and Leasehold Plessey GmbH Term: 14.7.1997 to
Munich Car Parking (represented 13.7.2007
by Xxxxxx Xxxxxx) Basic Rent: 14582,30 DM
per month plus monthly
ancillary costs and VAT at 15%
Basic Rent increases by
2.5% every year
====================================================================================================================================
121
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Italy Cinisello Xxxxxxx, Xx. Offices Leasehold Plessey Term: 1.12.1995 to
Milan Semiconductors 31.12.2001
S.P.A. Rent: L 47 million p.a.
plus expenses (subject to
review)
------------------------------------------------------------------------------------------------------------------------------------
Japan 86.79 tsubo (286.91 m2) on Offices. Leasehold GEC Plessey Term from 1.7.1993 to
4th Floor CTS Kojimachi Semiconductors 30.6.1997
Building Kojimachi 0-00 Xxxxx Limited Renewed to 30.6.1999
Chiyoda-ku, Tokyo
------------------------------------------------------------------------------------------------------------------------------------
Korea Xxxxx Xxx Building, 736 Offices Leasehold GEC Plessey Term: 1.11.1995 to
Weoksam-Dong Kangnam-Ku, Semiconductors 31.10.1997
Seoul Overseas Limited Rent: the lease is
entered into on a Chonse
(fully refundable
security deposit) base
without a rent The lease
is being extended to
31.10.1998
====================================================================================================================================
122
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
------------------------------------------------------------------------------------------------------------------------------------
Singapore Offices
No. 3 Xxx Xxxx Drive, Licence Plessey Semi conductors Date: 16.1.1998
Xxxxxxxxx 000000 Xxxxxxxxx Pte. Limited Period: 6 months
Fee: $15,193 plus General
Sales Tax per month
------------------------------------------------------------------------------------------------------------------------------------
Taiwan Worldwide House, 129-131 Offices and Leasehold Plessey Semiconductors Term: 1.2.1997 to
Min Sheng Road, Taipei and Parking Taiwan 31.1.2000 (with option to
renew)
Rent: from 1.2.1997 to
31.1.1998
NT$ 2,200 per ping per
month
Rent for parking space:
NT$ 9,500 per month
exclusive of VAT at 5%
------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Xxxxx 000, Xxxx Xxxxx Offices Leasehold GEC Plessey Term : 5 years from
8413, City of Dallas, Semiconductors, Inc. 1.12.1994
Dallas County, Texas Basic Rent: $839.58 per
month
====================================================================================================================================
123
====================================================================================================================================
Country Address Use Tenure Tenant/Licensee Details of lease or licence
------------------------------------------------------------------------------------------------------------------------------------
X.X.X. Xxxxx 0, Xxxxx Xxxxx, 0 Offices Leasehold Plessey Semiconductor Term: 15.7.1990 to
Dedham Place, Dedham, Corporation 30.11.1999
Massachusetts Base Rent: $102,327 p.a.
------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Suite 830, 2600 Xxxxxxxxx, General Leasehold Plessey Inc. Term: 5 years from
Irvine, California Office 1.11.1993
Rent: $6,183.00 per month
------------------------------------------------------------------------------------------------------------------------------------
U.S.A. Land located in the City Any lawful Leasehold Xxxxxxxx Term: 13.3.1986 to
of Scotts Valley, County business or Interdesign Inc. 12.3.2001 (subject to
of Santa Cruz, California commercial option to extend)
purpose Base Rent: $1,095,924
p.a. subject to rental
adjustment
------------------------------------------------------------------------------------------------------------------------------------
X.X.X. Xxxxxx Xxxxx, 0000 Sales and Leasehold Plessey Inc. Term: From 1.2.1991 to
Technology Drive, San engineering for 14.5.2001
Xxxx, California a Semiconductor Basic Rent: $13,741.39
Company per month
====================================================================================================================================
124
Schedule 9
Part A
GEC Plessey Semiconductors Group
Pro Forma Aggregated Balance Sheet as at 31 December 1997
GEC PLESSEY SEMICONDUCTORS GROUP
PROFORMA AGGREGATED BALANCE SHEET AS AT 31 DECEMBER 1997
ACTUAL ADJUSTMENTS DIVIDENDS LOAN PAYMENTS
---------------------- ----------------------
USA FRANCE UK PSL &
MEDL CABLEVISION
(pound)000
Total Shareholders Equity 120,390 (1,329) (11,976) (363)
GEC Group Loans 66,365 6,886 19,422 (92,673)
--------------- ------------------- -------------- ------------ ----------- -------------------
186,755 (1,329) (5,090) (363) 19,422 (92,673)
=============== =================== ============== ============ =========== ===================
30
Fixed Assets at NBV 169,715
Net Inventory 39,313
Debtors & Prepaids - 3rd Party 35,085 (322)
GEC Group Trade Debtors 1,962
Creditors (29,027)
GEC Group Trade Creditors (41)
Advances on Contracts (105)
Provisions (5,545)
--------------- ------------------- -------------- ------------ ----------- -------------------
CAPITAL EMPLOYED 211,357 (322) 30
Singapore and Japan Net Assets
at 31 March 1997 466
Tax (4,998) (1,473)
Notes Receivable 4,593
Finance Leases (9,911)
Cash/(Bank Overdraft) - Net (14,286) (5,090) (363) 19,422 (92,703)
--------------- ------------------- -------------- ------------ ----------- -------------------
NET WORTH 188,755 (1,329) (5,090) (363) 19,422 (92,673)
=============== =================== ============== ============ =========== ===================
GROUP PURCHASE SALE OF
TAXES OF MEDSA OLDHAM
-------- --------- -------
(pound)000
Total Shareholders Equity (117) (1,010) (2,900)
GEC Group Loans
------------- --------------- ------------
(117) (1,010) (2,900)
============= =============== ============
Fixed Assets at NBV (7,300)
Net Inventory (3,700)
Debtors & Prepaids - 3rd Party (300)
GEC Group Trade Debtors
Creditors 200
GEC Group Trade Creditors
Advances on Contracts
Provisions
------------- --------------- ------------
CAPITAL EMPLOYED (11,100)
Singapore and Japan Net Assets
at 31 March 1997
Tax (7,367)
Notes Receivable
Finance Leases
Cash/(Bank Overdraft) - Net 7,250 (1,010) 8,200
------------- --------------- ------------
NET WORTH (117) (1,010) (2,900)
============= =============== ============
ISSUE OF
SHARES TOTAL
-------- ------
(pound)000
Total Shareholders Equity 80,710 183,405
GEC Group Loans
------------- --------------
80,710 183,405
============= ==============
Fixed Assets at NBV 162,445
Net Inventory 35,613
Debtors & Prepaids - 3rd Party 34,463
GEC Group Trade Debtors 1,962
Creditors (28,827)
GEC Group Trade Creditors (41)
Advances on Contracts (105)
Provisions (5,545)
------------- --------------
CAPITAL EMPLOYED 199,965
Singapore and Japan Net Assets
at 31 March 1997 466
Tax (13,838)
Notes Receivable 4,593
Finance Leases (9,911)
Cash/(Bank Overdraft) - Net 80,710 2,130
------------- --------------
NET WORTH 80,710 183,405
============= ==============
Note: No tax provision on results for 9 months to 31.12.97
125
Part B
------
GPS Swindon Operation
STANDARD RECOVERY AS AT JANUARY 1998
Cost per hour at operation
--------------------------
Labour Overhead
Wafer fab
Implant 6.95 1.81
Stepper 6.95 0.27
Align 6.95 0.89
Etch 6.95 1.21
Strip 6.95 0.32
Diffusion 6.95 0.24
Silox 6.95 1.43
Epitaxy 6.95 2.81
PVCD 6.95 1.13
CVD 6.95 0.57
Par. test 6.95 3.34
General 6.95 0.76
MET 6.95 0.39
Oxide 6.95 0.45
Probe/Test
ATF 9.28 79.99
A310 9.28 52.33
A312 9.28 52.33
A360 9.28 37.03
A370 9.28 37.03
A530A 9.28 85.48
J283 9.28 52.33
000
Xxxxxxxx Xxx Recovery Rates FY97
--------------------------------
Recovery Rate per Hour
----------------------
Labour Overhead Total
------ -------- -----
Fab 3 2.63 32.57 35.20
---- ----- -----
Fab 8
Photo 2.49 156.82 159.31
---- ------ ------
Diffusion 1.91 107.46 109.37
---- ------ ------
Etch 1.34 76.58 77.92
---- ----- -----
Films 2.30 115.10 117.40
---- ------ ------
Implant 7.78 173.14 180.92
---- ------ ------
Backgrind 11.26 272.56 283.82
----- ------ ------
Probe & Test
LTX (Synchro) 10.00 98.00 108.00
----- ----- ------
Credence (LT1000's) 10.00 67.00 77.00
----- ----- -----
Advantest 10.00 72.00 82.00
----- ----- -----
A300's 10.00 67.00 77.00
----- ----- -----
J941 10.00 59.00 69.00
----- ----- -----
127
Lincoln Product Costing Rates - Major Processes
-----------------------------------------------
Labour Overhead
------ --------
Process (pound)/hr (pound)/hr
IC Fab:-
--------
Projection Litho 4.64 26.18
IC Etch 3.79 18.58
Stepper Litho 38.14 449.73
Diffusion 3.55 33.78
CVD 6.66 48.03
Sputter 33.94 407.15
Implant 11.62 73.74
Probe 1.57 0.83
Power Fab:-
-----------
BU Test 19.91 48.57
Metal 5.62 34.57
Diffusion 2.33 14.17
Photolith 3.76 9.16
Power Etch 5.92 12.08
Alloy 2.59 16.94
Bevel 9.20 28.51
IC Test:-
---------
SOS 13.14 116.51
Bulk 4.75 40.37
Burn-In/General 1.92 8.23
Power Test:-
------------
Power Device Assembly & Test 10.29 25.11
IGBT Probe 3.46 11.38
IGBT Test & Module Assembly 10.82 40.01
Board Systems 6.36 12.88
128
SIGNED on behalf of )
The General Electric ) /s/ X.X. Xxxxx
Company, p.l.c. in the )
presence of: )
/s/ X.X. Xxxx
SIGNED on behalf of )
Mitel Telecom Limited ) /s/ Xxxx Xxxxxxx
by Xxxx Xxxxxxx )
in the presence of: )
/s/ X.X. Xxxx
SIGNED by Mitel )
Corporation acting by )
Xxxxxx XxXxxxxx ) /s/ X. Xxxxxxx
and Xxxx Xxxxxxx ) /s/ X. XxXxxxxx
under its authority )
)
