EXHIBIT 2.01
THIS AGREEMENT (this "AGREEMENT") is made on February, 1998
BETWEEN:-
1. THE GENERAL ELECTRIC COMPANY, P.L.C. (registered in England No. 67307)
having its registered office at 1 Stanhope Gate, London W1A 1EH ("GEC");
AND
2. IFR SYSTEMS LIMITED (registered in England No. 3491978 ) having its
registered office at 61, Brook Street, London W1Y 2BL (the "PURCHASER");
AND
3. IFR SYSTEMS INC. incorporated in the State of Delaware, U.S.A. and having
its principal place of business at 10200 West York Street, Wichita,
Kansas, 67215-8999, USA (the "GUARANTOR").
WHEREAS GEC has agreed to sell and transfer, or procure the sale and transfer
of, the Shares, and the Purchaser has agreed to purchase or procure the
purchase of them, on the terms and conditions of this Agreement, and the
Guarantor has agreed to guarantee the Purchaser's obligations hereunder.
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 (other than those arising from acts
of the Purchaser or any of its subsidiaries or subsidiary undertakings)
and shall be sold with all rights attached or accruing to them at
Completion including, without limitation, the right to receive all
dividends, distributions and any return of capital hereafter declared,
paid or made in respect of periods commencing on or after Completion.
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3. CONSIDERATION
The total consideration for the sale of the Shares shall be the payment
by the Purchaser to GEC of the Aggregate Purchase Price, of which the
U.S. Purchase Price shall be attributed to the US Shares and the balance
to the UK Shares.
4. COMPLETION
4.1 Completion shall take place on the Completion date, immediately following
signature of this Agreement by each of the parties, 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.
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.
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 and in particular clause 12 (Remedies and
Waivers).
5. GEC'S WARRANTIES AND UNDERTAKINGS
5.1 Subject to clause 7 (Purchasers' Remedies and GEC's Limitations on
Liability) and Schedule 4, GEC warrants to the Purchaser in the terms of
the Warranties at the date of this Agreement but gives no further or
other warranties.
5.2 Subject to paragraph 2.2 of Schedule 4, each of the Warranties shall be
construed as a separate and independent warranty.
5.3 (A) GEC waives and will procure that other members of the GEC Group will
waive, any rights, remedies, or claims GEC or any other member of
the GEC Group may have against any Group Company or 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) or the Tax
Covenant.
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5.4 GEC undertakes that, except to the extent permitted by the licences in
clause 6.4 and clause 6.6, following Completion no member of the GEC
Group will use any confidential information (including, to the extent
they are confidential, trade secrets, know-how or financial or trading
information) proprietary to a 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 (to the extent such use would be reasonably
likely to harm or damage the business of any Group Company) or divulge to
any third party (other than GEC's professional advisers in which case GEC
will use its reasonable endeavours to procure that such advisers keep
such information confidential on terms equivalent to this Clause) any
confidential information proprietary to any Group Company and save only:
(A) insofar as the same has become public knowledge otherwise than,
directly or indirectly, through GEC's breach of this Clause 5.4 or
the failure of the officers, employees or professional advisers
referred to above to keep the same confidential; or
(B) to the extent required by law or by any supervisory body or
regulatory body; or
(C) to the extent GEC reasonably considers necessary solely for the
purposes of defending any claim by the Purchaser or any Group
Company against GEC or another member of the GEC Group; or
(D) to the extent GEC or any member of the GEC Group has a right (except
any right which it has obtained solely by reason of the GEC Group's
ownership of Group Companies) to make use of or divulge any
confidential information relating to the Group Companies on any
other account including, without limitation, in its capacity as a
customer of or distributor for the Group Companies.
(E)
5.5 GEC undertakes to procure that (except as provided in Clause 5.6 or as
otherwise agreed in writing with the Purchaser) no members of the GEC
Group will either solely or jointly with any other person, and whether
directly or indirectly:
(A) within the Territory for a period of 2 years from Completion carry
on or as an owner be interested in any business, enterprise or
venture materially competing with any of the businesses carried on
by the Group Companies at the date of Completion ("the Businesses")
which fall within the definition of the Restricted Business;
(B) for a period of 2 years from Completion solicit, canvass or entice
away (either on its own account or as the agent of any other person)
the custom of any
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person, firm or company who was at any time during the period of two
years immediately preceding Completion a client or customer of a
Group Company for the purpose of offering to such client or customer
goods or services similar to or materially competing with those of a
Group Company in a Restricted Business;
(C) for a period of 2 years from Completion solicit, canvass or entice
away any Employee whose basic salary at the date of Completion is in
excess of L30,000 and who is employed in a sales, technical,
engineering or managerial capacity to leave the service or
employment of any Group Company or any other member of the IFR Group
whether or not such person would commit a breach of contract by
reason of leaving service, provided that the foregoing restriction
shall not apply to an Employee who responds to a public
advertisement.
5.6 Nothing in this Agreement (but without prejudice to the express
provisions of clauses 6.4 and 6.6) shall prevent any member of the GEC
Group (or require GEC to prevent any member of the GEC Group) from:
(A) carrying on any business carried on by the relevant member of the
GEC Group at the date of this Agreement, or from developing or
extending such business in such manner as it sees fit including, for
such purpose, soliciting, canvassing or enticing away the custom of
any person, firm or company provided that the primary purpose of
such development or extension is not to enable the GEC Group to
re-enter the Restricted Business;
(B) establishing and carrying on any business consisting in whole or in
part of the distribution of products for any third party, whether or
not such products compete with any product offered by any Group
Company, but so that this paragraph shall not operate to release any
member of the GEC Group from any obligations it may have to any
Group Company under any other agreement (including, without
limitation, any exclusivity provisions under distribution
agreements);
(C) (i) acquiring any group, company or other entity or any business or
undertaking (the "Acquired Entity") which carries on or comprises or
includes a Restricted Business which competes with any of the
Businesses operating within the Restricted Business (the "Competing
Business"), provided that the turnover of the Competing Business
has in the last complete financial year of the Acquired Entity prior
to its acquisition by a member of the GEC Group represented less
than 40 per cent. of the turnover of all the businesses carried on
by the Acquired Entity (excluding turnover of businesses of the
Acquired Entity which are excluded from the acquisition by the GEC
Group so far as ascertainable from the last audited accounts of the
Acquired Entity) , or (ii) thereafter from carrying on the
Competing Business, or developing or extending the Competing
Business in such manner as it sees fit provided in each case that
the primary purpose of such acquisition, development or
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extension is not to enable the GEC Group to re-enter the
Restricted Business. For the purposes of this paragraph (C), a
group, company, other entity, undertaking or business shall be
deemed to carry on or comprise or include any business which
it owns directly or indirectly through one or more other
companies, entities, undertakings or businesses; or
(D) acquiring any shares listed on a recognised stock exchange not
exceeding 10 per cent of the issued voting share capital of the
relevant company, provided that the primary purpose of such
acquisition is not to enable the GEC Group to re-enter the
Restricted Business.
"Restricted Business" means the manufacture and distribution of microwave
and radio frequency test and measurement equipment and related services
to the communications and printed circuit board industries as carried on
by any Group Company at the date of this agreement, excluding equipment
with self-testing capability and existing competing businesses within the
GEC Group.
5.7 GEC confirms that it is not its intention to procure the termination at
or within 6 months of Completion by GEC Group Companies of the agreements
to which Disclosure Document 17-120 relates with Group Companies solely
by reason of the change of control of the Group Companies.
5.8 Each undertaking contained in Clause 5.5 shall be construed as a separate
undertaking and if one or more of the undertakings contained in such
sub-Clause is held to be against the public interest or unlawful or in
any way an unreasonable restraint of trade the remaining undertakings
shall continue to bind GEC.
5.9 If any undertaking contained in Clause 5.5 would be void as drawn but
would be valid if the period of application were reduced or if some part
of the undertaking were deleted, the undertaking in question shall apply
with such modification as may be necessary to make it valid and
effective.
5.10 GEC hereby grants and shall procure that each member of the GEC Group at
the date hereof grants, with effect from Completion, a non-exclusive,
irrevocable, non-transferable, royalty-free, perpetual worldwide licence
to the Purchaser for the benefit of itself, each member of the IFR Group
and each Group Company to use (which shall include the right to
sub-contract) all Intellectual Property (except for the Names) and any
confidential information or other know-how owned at Completion by any
member of the GEC Group for the purpose for which it was used by any
Group Company prior to the date of Completion and for the purpose of
developing, manufacturing and selling any improvement, modification or
adaptation of products manufactured or in the course of development at
Completion. If the Purchaser, any member of the IFR Group or any Group
Company wishes to extend the benefit of any of the rights granted to it
pursuant to this clause 5.10, then it shall notify the Head of the GEC
Patent Department in writing and GEC will promptly respond to such
request and will not unreasonably refuse and shall procure that each
member of the GEC
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Group shall not unreasonably refuse the grant of a licence on
reasonable terms to a third party licensed by a Group Company to
manufacture a product manufactured and sold by any such Group
Company at Completion provided that GEC shall not be obliged to
license or procure that the relevant member of the GEC Group
licenses such third party where the third party intends to
incorporate such product into another product, the sale or supply
of which would or might compete with any business of the GEC Group
at such time and provided further that GEC shall be obliged to
grant or procure the grant of such licence where the third party
manufacturer was licensed by a Group Company in circumstances where
the Group Company did not know and did not have grounds to believe
that the manufacture of the relevant product required a licence of
such rights from a member of the GEC Group.
5.11 To the extent that GEC or any member of the GEC Group is aware that any
registered Intellectual Property is subject to the licence granted
pursuant to clause 5.10, then it shall use its reasonable endeavours not
to allow any such registration to cease by virtue of non-payment of any
renewal fees without first offering to assign the relevant Intellectual
Property to the Purchaser and if the Purchaser requests an assignment GEC
or the relevant member of the GEC Group shall take all reasonable steps
necessary to effect such assignment at the cost of the Purchaser. If
such Intellectual Property is assigned it shall be deemed to be included
in the Intellectual Property licensed to the GEC Group pursuant to clause
6.4.
5.12 GEC and the Purchaser shall use their reasonable endeavours to ensure
that the patent and registered trade mark files relating to the
Intellectual Property owned by the Group Companies (including all
relevant files relating to the prosecution of patent and registered trade
mark applications and any disputes in relation to patents and registered
trade marks and applications therefor) are transferred to the Purchaser
in an orderly manner in the 6 month period following Completion and for
such period, at the written request and expense of the Purchaser, GEC
shall provide the services of the GEC Patent Department consistent with
those services provided immediately prior to Completion. While any such
file is in the possession of GEC, GEC shall, unless otherwise notified in
writing, pay on behalf of the Purchaser any renewal or other official
fees necessary to maintain in force any patent or registered trade mark
or continue the prosecution of any application for patent or trade mark
registration. The Purchaser shall promptly pay all reasonable costs of
GEC in providing such services (including all such fees paid by GEC on
behalf of the Purchaser) which may include assistance with existing
disputes relating to the business of the Group Companies. GEC shall, at
the request of the Purchaser, promptly deliver to the Purchaser to a site
in the UK all relevant files and documents relating to the Intellectual
Property owned by the Group Companies to the extent that such files and
documents are not already in the possession of any of the Group
Companies.
5.13 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
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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 use its reasonable endeavours to procure the
assignment of any such Intellectual Property to GEC or to a member
of the GEC Group nominated by GEC.
5.14 (A) The Purchaser shall give reasonable prior notice to GEC (with all
relevant details) of any payment which is proposed to be made by a
Group Company to any relevant executive of the Group Companies in
satisfaction in whole or in part of any sum due to such executive
by way of retention bonus or enhancement to the Management Bonus
Scheme as detailed in Disclosure Document 17-81. If GEC is
satisfied that the proposed payment is in accordance with such
arrangements, it will forthwith reimburse the relevant Group
Company the amount of the payment upon receipt of confirmation
from the Purchaser that the payment has been made, provided that
GEC's obligations under this sub-clause 5.14(A) shall not apply
with respect to any payment of any management bonus payable to
executives of Group Companies in the ordinary course.
(B) GEC will pay Peter Smith's management bonus which falls due
shortly after Completion. On Marconi (UK) being notified by GEC
that payment has been made the Purchaser will procure that Marconi
(UK) promptly reimburses such amount (excluding any retention
element or enhancement attributable to the sale of the Shares) to
GEC.
5.15 GEC undertakes that if:-
(i) the Purchaser shall have first specifically identified to GEC
those matters which it wishes to examine by reference to the Books
and Records of the GEC Group for the purposes of managing the
business of the Group; and
(ii) the GEC Group has Books and Records which can reasonably be
regarded as of assistance to the Purchaser in connection with the
matters specified by it pursuant to paragraph (i) above; and
(iii) the matters specified by the Purchaser pursuant to paragraph (i)
above may reasonably be regarded as proper matters for
investigation for the purposes of managing the business of the
Group and have no connection with any dispute between any member
of the GEC Group and any member of the IFR Group, whether such
dispute has already commenced or is within the contemplation of
the Purchaser (in which cases the normal rules of discovery will
apply)
GEC will itself, and will procure that each member of the GEC Group will,
during the period of six years from the date of this Agreement provide to
the Purchaser and any person authorised by the Purchaser such access to
those Books and Records of the GEC Group as may reasonably be regarded as
of assistance to the Purchaser in
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connection with the matters specified by it pursuant to paragraph
(i) above. Access to the Books and Records of the GEC Group
pursuant to this clause shall be given during normal business
hours, upon reasonable notice having been given and subject to the
giving of such undertakings as to confidentiality as GEC or the
relevant GEC Group member may reasonably require. GEC will
instruct the directors and employees or any relevant member of the
GEC Group promptly to provide to the Purchaser or any person
authorised by the Purchaser any further information or explanation
(to the extent known to such directors or employees) which the
Purchaser or any such person may reasonably request in connection
with any relevant matter.
5.16 The Purchaser acknowledges that the dispute over the termination by
Marconi (UK) of its distribution agreement with Marconi SpA has been
settled by the deduction by Marconi SpA of L95,000 from sums owing by
Marconi SpA to Marconi (UK) and by Marconi (UK)'s agreement to acquire
stock from Marconi SpA at prices which may be in excess of net book value
up to an aggregate excess amount of L15,000. GEC undertakes to pay the
Purchaser by way of adjustment to the Aggregate Purchase Price (i) the
amount of L95,000, within 3 working days of Completion, and (ii) promptly
upon its being given all relevant details, the amount of any excess
payment over net realisable value to Marconi SpA for stock up to an
aggregate amount of L15,000. The Purchaser will procure that Marconi
(UK) acknowledges that it will not take any action to recover from
Marconi SpA the amount so deducted.
5.17 The Purchaser undertakes to procure that Marconi (UK) keeps GEC fully
informed of all notices or other communications (written or oral)
received by Marconi (UK) from the Scottish Office in connection with any
possible requirement for the grant referred to in the disclosure in the
Disclosure Letter under Warranty 10 to be repaid and that Marconi (UK)
permits GEC the conduct on its behalf of all discussions and
correspondence with the Scottish Office which may arise in connection
with any such possible requirement. In the event that Marconi (UK) is
required to repay the whole or any part of the amount of such grant
received by it, GEC undertakes to the Purchaser to reimburse Marconi (UK)
forthwith the amount of any repayment of such grant made by Marconi (UK)
to the Scottish Office.
6. PURCHASER'S AND GUARANTOR'S WARRANTIES AND UNDERTAKINGS
6.1 Each of the Purchaser and the Guarantor warrants to GEC that in respect
of itself:-
(A) it has the requisite power and authority to enter into and perform
this Agreement and all or any other documents to be executed by it
and delivered at Completion in accordance with this Agreement;
(B) this Agreement constitutes and all or any other documents executed
by it which are to be delivered at Completion will, when executed,
constitute obligations binding on it; and
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(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 is a party or by which it or any member of
the Purchaser's Group is bound; or
(iii) require the consent of its shareholders;
and the Guarantor further warrants to GEC that it owns, directly or
indirectly, all the issued share capital of the Purchaser and is the
"ultimate parent entity" of the Purchaser within the meaning of Rule
801.1 promulgated under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
6.2 The Purchaser undertakes to use its reasonable endeavours to procure
that, as soon as reasonably practicable following Completion or (in the
case of any GEC Security of which GEC has not informed the Purchaser in
writing on or prior to the date hereof) as soon as reasonably practicable
after the Purchaser becomes aware of such GEC Security, 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 any such GEC Securities.
6.3 (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 or operate as an agreement to transfer any right, title or
interest in any of the Names to the Purchaser.
(B) The Purchaser will comply with, and procure the compliance by all
the Group Companies with, the provisions of Schedule 7. Subject as
provided in Schedule 7, the Purchaser undertakes that it shall not
and shall procure that no Group Company nor any other member of the
Purchaser's Group shall at any time after the period of nine months
commencing at Completion make any use of any trade marks or business
or corporate names consisting of or incorporating any of the Names
and/or any trade mark or business or corporate name confusingly
similar thereto in relation to any goods or services. The Purchaser
shall indemnify and hold harmless GEC and all members of the GEC
Group for any loss or damage of whatsoever nature
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which arises out of the use by the Group Companies of any of the
Names after Completion.
6.4 Subject to the provisions of clause 5.5, the Purchaser hereby grants and
shall procure that each of the Companies and their subsidiaries or
subsidiary undertakings at the date hereof (the "Present Group") 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 to use (which shall
include the right to sub-contract) for the purpose of the business of
each GEC Group Company at the date hereof all Intellectual Property and
any confidential information or other know-how owned at Completion by any
of the Group Companies for the purpose for which it was used by any GEC
Group Company prior to the date of Completion and for the purpose of
developing, manufacturing and selling any improvement, modification or
adaptation of products manufactured or in the course of development at
Completion. If any member of the GEC Group wishes to extend the benefit
of any of the rights granted to it pursuant to this clause 6.4, then it
shall notify the Purchaser in writing and the Purchaser will promptly
respond to such request and will not unreasonably refuse and shall
procure that the Present Group or such other member of the IFR Group that
owns such Intellectual Property shall not unreasonably refuse the grant
of a licence on reasonable terms in respect of any such extension to a
third party licensed by a member of the GEC Group to manufacture a
product manufactured and sold by any member of the GEC Group at
Completion provided that the Purchaser shall not be obliged to license or
procure a licence to such third party where the third party intends to
incorporate such product into another product, the sale or supply of
which would or might compete with any business of the IFR Group at such
time and provided further that the Purchaser shall be obliged to grant or
procure the grant of such licence where the third party manufacturer was
licensed by a member of the GEC Group in circumstances where the member
of the GEC Group did not know and did not have grounds to believe that
the manufacture of the relevant product required a licence of rights
owned at Completion by a Group Company.
6.5 To the extent that the Purchaser or any Group Company is aware that any
registered Intellectual Property is subject to the licence granted
pursuant to clause 6.4 then it shall use its reasonable endeavours not to
allow any such registration to cease by virtue of non-payment of renewal
fees without first offering to assign the relevant Intellectual Property
to GEC and if GEC requests an assignment the Purchaser or any relevant
Group Company shall take all reasonable steps necessary to effect such
assignment at the cost of GEC. If such Intellectual Property is
assigned, it shall be deemed to be included in the Intellectual Property
licensed to the Purchaser, any member of the IFR Group or to any of the
Group Companies pursuant to clause 5.10.
6.6 Subject to clause 5.5, the Purchaser hereby grants and shall procure that
each member of the Present Group grants, with effect from Completion, a
non-exclusive, irrevocable, royalty-free, perpetual licence to GEC for
the benefit of itself and any other member of the GEC Group at the date
hereof to use all rights under any patent
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or patent application (or any patent derived therefrom) owned by any
member of the Group at Completion for the purpose of carrying on any
business which does not compete with the businesses of the Group, it
being understood that any use of such rights for the purpose of carrying
on business which at the time the use commences does not compete with
the business of the Group may continue notwithstanding that the business
of the Group changes such that the business carried on competes with
such business. Any licence granted shall not include the right to
sub-license but 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.
6.7 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, at
its expense, to use its reasonable endeavours to procure the assignment
of any such Intellectual Property to the member of the Purchaser's Group
nominated by the Purchaser. Nothing in this clause 6.7 shall be deemed
to deprive the Purchaser of any claim it may have against GEC for breach
of any Warranties concerning Intellectual Property.
6.8 The Purchaser further warrants to GEC as follows:
(A) The Purchaser is purchasing the Shares partly for the Purchaser's
own account and partly for the account of another member of the IFR
Group 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 Securities Act. Neither the Purchaser nor any other
member of the IFR Group has any present intention of selling or
otherwise disposing of all or any portion of the Shares and no one
other than the Purchaser or another member of the IFR Group has or
will have following Completion, any beneficial ownership of any of
the Shares;
(B) The Purchaser is a sophisticated investor having such knowledge and
experience that it is capable of protecting its own interests in
connection with purchase of the Shares.
(C) At no time was the Purchaser presented with or solicited by any
publicly issued or circulated newspaper, mail, radio, television or
other form of general advertising or solicitation in connection with
the offer, sale and purchase of the Shares;
(D) The Purchaser understands that the Shares have not been registered
under the Securities Act or qualified under applicable state
securities laws or exemptions from such registration and
qualification requirements are available and may
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not be offered, sold or otherwise disposed of in violation of the
registration requirements of the Securities Act or any state
securities law.
6.9 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 access during normal business hours to the
premises and all the Books and Records and title deeds of the Group as
GEC or any person authorised by GEC may reasonably require in connection
with the conduct of the business 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 and
employees to give promptly all information and explanations to GEC or any
person authorised by GEC as they may reasonably request in connection
therewith.
6.10 As indicated in Clause 5.3, the Purchaser acknowledges directors and
Employees of Group Companies have been involved in matters relating to
GEC's proposals for the sale of the Shares. The Purchaser acknowledges
no charges in respect of any time spent by such directors or Employees
shall be made to GEC or any other member of the GEC Group. GEC
acknowledges that it will be responsible for the payment of any fees,
costs and/or expenses due to any professional advisers in relation to
GEC's proposals for the sale of the Shares and to the extent that any
such fees, costs and/or expenses have been invoiced to a Group Company,
GEC will pay the same or (if they have already been paid) forthwith
reimburse the relevant Group Company.
6.11 The Purchaser acknowledges that it is aware that the payment of the
Pre-Sale Dividend and related capital reorganisation of Marconi (UK),
details of which are set out in Schedule 12, has occurred and undertakes
that it will not and will procure that no member of the Group or the IFR
Group shall take any steps to challenge the validity or enforceability
thereof. If any successful challenge is made to the Pre-Sale Dividend or
related capital reorganisation of Marconi (UK), such that the whole or
any part of the Pre-Sale Dividend or other amounts specified in Schedule
12 has to be repaid to Marconi (UK), the Purchaser will pay to GEC, as
additional consideration for the sale of the Shares, a sum equal to that
part of the Pre-Sale Dividend or other specified payment so repaid less
(i) any reasonable costs and expenses (including taxes) of the Purchaser
and Marconi (UK) incurred as a result of or in connection with such a
challenge or repayment and (ii) an amount equal to the amount of any
claim for breach of any of the Warranties contained in paragraph 9.2 of
schedule 3 which has either been accepted as a liability by GEC or which
has been determined by a court of competent jurisdiction to be payable by
GEC or which the Purchaser is bona fide able to show reasonable grounds
for its belief that GEC is liable for the amount of such claim and has
been advised by leading counsel of at least 10 years call that it would
have reasonable prospects of success were it to pursue such claim in
legal proceedings provided that if GEC is subsequently found not to be
liable for such claim, the Purchaser shall immediately refund to GEC the
amount deducted, together
13
with interest from the date on which the payment would have been due had
the deduction not been made.
6.12 The Purchaser hereby confirms and undertakes to GEC that it has prior to
Completion made an offer to Peter Smith to employ him as from Completion
on overall terms (excluding pension terms) economically the same as or
better than those on which he was immediately prior thereto employed.
6.13 The Purchaser acknowledges that GEC has no liability under the Tax
Covenant or otherwise in respect of any tax which may fall to be payable
in respect of payments received from Rohde & Schwarz since the Accounts
Date.
7. PURCHASER'S REMEDIES AND GEC'S LIMITATIONS ON LIABILITY
7.1 The Purchaser's right to claim that a Warranty has been breached shall be
limited as set out in clause 7.2 and in Schedule 4, and no liability
shall attach to GEC in respect of claims under the Warranties or the Tax
Covenant, as the case may be, if and to the extent that such limitations
apply.
7.2 The Purchaser shall not be entitled to claim that any fact causes any of
the Warranties to be breached if it was fairly disclosed or deemed to be
disclosed in the Disclosure Letter or on the face of any document
delivered with or referred to in the Disclosure Letter. Notwithstanding
the foregoing GEC acknowledges that the Purchaser's right to claim under
the Tax Covenant or the Environmental Undertaking shall not be affected
or restricted by any disclosure in the Disclosure Letter or documents
delivered with or referred to in it.
7.3 If, following Completion, the Purchaser becomes aware that there has been
any material 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, in accordance with the provisions of paragraph 5 of
Schedule 4, be entitled to claim damages under this Agreement.
7.4 Each of the parties acknowledges that the restrictions contained in
clauses 5.4 and 17 shall continue to apply after the completion of the
sale and purchase of the Shares under this Agreement without limit in
time.
8. GUARANTEE
8.1 In consideration of GEC agreeing to sell the Shares on the terms set out
in this Agreement, the Guarantor hereby unconditionally and irrevocably
guarantees to GEC as a primary obligor and notwithstanding any want of
authority, invalidity or other defect the due and punctual performance
and observance by the Purchaser of all of its obligations, commitments
and undertakings under or pursuant to this Agreement or any other
document referred to in it and agrees to indemnify GEC in respect of any
breach by the Purchaser of any of its obligations, commitments and
undertakings
14
under or pursuant to this Agreement or any other document referred to
in it. The liability of the Guarantor under this Agreement or any other
document referred to in it shall not be released or diminished by any
variation of the terms of this Agreement or any other document referred
to in it (whether or not agreed by the Guarantor), any forbearance,
neglect or delay in seeking performance of the obligations hereby imposed
or any granting of time for such performance.
8.2 If and whenever the Purchaser defaults for any reason whatsoever in the
performance of any obligation, commitment or undertaking undertaken or
expressed to be undertaken under or pursuant to this Agreement or any
other document referred to in it, the Guarantor shall forthwith upon
demand unconditionally perform (or procure performance of) and satisfy
(or procure satisfaction of) the obligation, commitment or undertaking in
regard to which such default has been made in the manner prescribed by
this Agreement or any other document referred to in it and so that the
same benefits shall be conferred on GEC as would have been received if
such obligation, commitment or undertaking had been duly performed and
satisfied by the Purchaser.
8.3 This guarantee is to be a continuing guarantee and accordingly is to
remain in force until all the obligations of the Purchaser shall have
been performed or satisfied regardless of the legality, validity or
enforceability of any provisions of this Agreement and notwithstanding
the winding-up, liquidation, dissolution or other incapacity of the
Purchaser or any change in the status, control or ownership of the
Purchaser. This guarantee is in addition to, without limiting and not in
substitution for, any rights or security which GEC may now or after the
date of this Agreement have or hold for the performance and observance of
the obligations, commitments and undertakings of the Purchaser under or
in connection with this Agreement or any other document referred to in
it.
8.4 As a separate and independent stipulation, the Guarantor agrees that any
obligation, commitment or undertaking expressed to be undertaken by the
Purchaser (including, without limitation, any moneys expressed to be
payable under this Agreement) which may not be enforceable against or
recoverable from the Purchaser by reason of any legal limitation,
disability or incapacity on or of the Purchaser or any fact or
circumstance (other than any limitation imposed by this Agreement) 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.
8.5 If the Guarantor shall at any time after the date of this Agreement cease
to be the ultimate holding company of the Purchaser as a result of a
reorganisation of the IFR Group, GEC may require that the Guarantor and
the Purchaser procure such company as has become the ultimate holding
company of the Purchaser to assume (subject to the satisfaction of such
conditions precedent as GEC may reasonably require) all the liabilities
of the Guarantor hereunder and to enter into such documentation as GEC
15
may reasonably require in this connection. The Guarantor and the
Purchaser jointly and severally undertake to GEC to provide all such
co-operation and take all such steps as GEC may reasonably request for
the purposes of giving effect to this clause.
9. PATENT MATTERS
In this clause:-
"Cross Licence" means an agreement which involves (a)
the licensing by GEC of all or a
substantial part of the patent rights
of the GEC Group in a field or relating
to a specific period of time to another
company or group ("the other party");
and (b) the licensing by the other
party of all or a substantial part of
its patent rights in a field or
relating to a specific period of time
to the GEC Group
"Deed of Assignment" means the deed dated 5th February, 1998
in which Marconi (UK) agreed to assign
certain rights to GEC;
"FN and FM Matters" means the matters relating to the
alleged infringement by and possible
licensing of the FN and FM Patents to
Hewlett Packard disclosed in paragraph
18.5(K) of the Disclosure Letter (and
associated Disclosure Documents)
"Hewlett Packard" means Hewlett Packard Company and any
of its subsidiaries, affiliates or
associated companies
"HP Claims" means any claims made by Hewlett
Packard relating to Hewlett Packard
patents identified in paragraphs
18.4(F), (G), (H), (I), (K), (L) and
(O) of the Disclosure Letter (and
associated Disclosure Documents) or
which:
(i) relate to a patent subsisting at
Completion that covers products
sold or processes used by a Group
Company prior to Completion; and
(ii) are initiated or brought for the
first time within twelve months
of the later of
16
Completion and the date of issue
of any proceedings against Hewlett
Packard alleging infringement of
any of the FN or FM patents
"Infringer" shall have the meaning given to it in
clause 9.10
"Infringer Claim" means any claims made against any
member of the IFR Group or a Group
Company by an Infringer which:
(i) relate to a patent subsisting at
Completion that covers products
sold or processes used by a Group
Company prior to Completion; and
(ii) are initiated or brought for the
first time after GEC has taken
conduct or proceedings in
accordance with clause 9.10 and
communicated with an Infringer in
relation to the FN and FM Patents
"MI Field" means testing and measuring equipment
and/or systems for calibrating, testing
or monitoring the output and
performance of electrical, electronic
or telecommunications products or
components of the same
"Net Receipts" means all sums paid by an Infringer or
existing licensee after the date hereof
(excluding, for the avoidance of doubt,
Hewlett Packard) relating to the
enforcement or licensing of the FN and
FM Patents whether by way of damages,
account of profits, up front payment or
periodic licence fees or royalty,
contribution towards costs, expenses or
otherwise less all reasonable costs
incurred after Completion and paid by
the person with conduct of the
negotiations or litigation against the
Infringer to external lawyers, patent
agents (internal or external),
accountants or experts directly
attributable to the enforcement or
licensing of such rights.
17
HEWLETT PACKARD
9.1 GEC hereby indemnifies and shall keep indemnified the Purchaser and any
member of the IFR Group and any of the Group Companies against all costs,
claims, losses, damages arising out of any of the HP Claims, subject to
the provisions of clauses 9.2 to 9.8 and without limitation compliance by
the Purchaser, the IFR Group and the Group Companies of the undertakings
and obligations set out in clause 9.3 and 9.5.
9.2 Subject to clause 9.7, GEC shall have sole conduct of the HP Claims, but
shall keep the Purchaser regularly informed of all substantive matters
relating to the HP Claims.
9.3 The Purchaser undertakes that it shall not, and shall procure that the
Group Companies do not, directly or indirectly communicate with Hewlett
Packard in relation to the HP Claims or FN and FM Matters and undertakes
not to grant a licence to Hewlett Packard under the FN and FM Patents
without the consent of GEC.
9.4 The Purchaser shall at the cost of GEC use its best endeavours to procure
that GEC (or such other company within the GEC Group nominated by GEC) is
granted all rights and given all consents necessary to enforce the FN and
FM Patents against Hewlett Packard in the name of the registered
proprietor of such patents. Nothing in this clause 9.4 shall oblige the
Purchaser to assign or procure the assignment of any of the FN or FM
Patents to GEC or any member of the GEC Group.
9.5 The Purchaser shall procure that GEC is provided with all reasonable
assistance from relevant personnel within the Group Companies in relation
to the enforcement of the FN and FM Patents against or licensing of the
FN and FM Patents to Hewlett Packard or the defence or settlement of the
HP Claims consistent with the assistance provided to GEC Patent
Department prior to Completion. GEC shall pay all reasonable costs
associated with the provision of such assistance.
9.6 Subject to clause 9.7, the Purchaser shall or shall procure that the
proprietor of the FN and FM Patents shall, at the request and cost of
GEC, either grant a licence to Hewlett Packard under the FN and FM
Patents or grant to GEC the right to grant Hewlett Packard a sub-licence
under the FN and FM Patents.
9.7 GEC shall not and shall procure that no member of the GEC Group shall
settle any dispute with Hewlett Packard relating to the alleged
infringement of the FN and FM Patents unless (i) it uses its reasonable
endeavours to secure for the benefit of the businesses of the Group
Companies carried on at Completion in the MI Field a licence under any
patent that is the subject of an HP Claim at the date of any settlement;
or (ii) where the proposed settlement is a Cross Licence, GEC shall
procure that the licence granted by Hewlett Packard includes a licence
for the benefit of the businesses of the Group Companies carried on at
Completion in the MI Field. If, after having used the reasonable
endeavours referred to in (i) above, GEC proposes to conclude a
settlement with Hewlett Packard that does not involve the licence
contemplated by (i) above, then it shall notify the Purchaser of the
proposed settlement and take
18
account of all reasonable comments made by it in relation to the
proposed settlement. Nothing in this clause shall affect GEC's right to
require, where it has sole conduct pursuant to clause 9.2, that any
action against Hewlett Packard is pursued to a trial or other formal
determination by a court of competent jurisdiction.
9.8 GEC shall be entitled to all sums paid by Hewlett Packard which relate to
the enforcement or licensing of the FN and FM Patents after the deduction
of all reasonable costs incurred by any of the Group Companies and not
reimbursed pursuant to clause 9.5 whether paid by way of damages, account
of profits, up-front payment or periodic licence fees or royalty,
contribution towards costs, expenses or otherwise and whether such sums
are paid to GEC or to any of the Group Companies. Where any such sum is
payable to any of the Group Companies by Hewlett Packard the Purchaser
shall procure that (at GEC's option), all necessary steps are taken to
ensure that such sums are paid direct to GEC or that such sums are paid
over to GEC immediately after receipt and after deduction of the costs as
aforesaid. GEC's entitlement under this clause 9.8 to sums paid by
Hewlett Packard arises only to the extent that GEC does not have an
existing right to the sums in question by virtue of the Deed of
Assignment.
OTHER FN/FM CLAIMS
9.9 The Purchaser shall use its reasonable endeavours to prevent any third
party other than Hewlett Packard infringing or making unauthorised use
(or continuing to infringe or make unauthorised use) of the FN and FM
Patents, including the investigation of alleged infringers notified to
the Purchaser by GEC.
9.10 If within six months of being notified by GEC the Purchaser does not
commence or procure the commencement of proceedings against an alleged
infringer of the FN and FM Patents in circumstances where GEC has
notified the Purchaser that it has reasonable grounds for believing that
the FN and FM Patents are being infringed, then GEC shall have the right
to commence proceedings against such alleged infringer (and if necessary
to do so in the name of the Purchaser or the proprietor of the FN and FM
Patents at the relevant time). If GEC notifies the Purchaser that it
intends to pursue such alleged infringer (the "Infringer") then subject
to clause 9.13, GEC shall have the sole conduct of such proceedings, but
shall keep the Purchaser regularly informed of all substantive matters
relating to them. The Purchaser shall at GEC's cost use its best
endeavours to procure that GEC (or such other company within the GEC
Group nominated by GEC) is granted all rights and given all consents
necessary to enforce the FN and FM Patents in the name of the registered
proprietor of such patents. Nothing in this clause 9.10 shall oblige the
Purchaser to assign or procure the assignment of any of the FN or FM
Patents to GEC or any member of the GEC Group. After GEC has assumed
conduct of any proceedings, the Purchaser shall not and shall procure
that Group Companies do not directly or indirectly communicate with the
Infringer concerning the FN and FM Patents.
19
9.11 The Purchaser shall procure that GEC is provided with all reasonable
assistance from relevant personnel within Group Companies in relation to
the enforcement of the FN or FM Patents against or the licensing of the
FN or FM Patents to the Infringer consistent with the assistance provided
to the GEC Patent Department in similar circumstances prior to
Completion. GEC shall pay all reasonable costs associated with the
provision of such assistance.
9.12 Subject to clause 9.13, the Purchaser shall, at the request and cost of
GEC, either grant a licence to the Infringer under the FN and FM Patents
or grant to GEC the right to grant the Infringer a sub-licence under the
FN and FM Patents.
9.13 GEC shall not and shall procure that no member of the GEC Group shall
settle any dispute with an Infringer relating to the alleged infringement
of the FN and FM Patents unless (i) it uses its reasonable endeavours to
secure for the benefit of the businesses of the Group Companies carried
on at Completion in the MI Field a licence under any patent that is the
subject of an Infringer Claim at the date of any settlement; or (ii)
where the proposed settlement is a Cross Licence, GEC shall procure that
the licence granted by an Infringer includes a licence for the benefit of
the businesses of the Group Companies carried on at Completion in the MI
Field. If, after having used the reasonable endeavours referred to in
(i) above, GEC proposes to conclude a settlement with the Infringer that
does not involve the licence contemplated by (i) above, then it shall
notify the Purchaser of the proposed settlement and take account of all
reasonable comments made by it in relation to the proposed settlement.
Nothing in this clause shall affect GEC's right to require, where it has
conduct pursuant to clause 9.10, that any action against an Infringer is
pursued to a trial or other formal determination by a court of competent
jurisdiction.
9.14 GEC and the Purchaser shall each be entitled to 50 per cent. of Net
Receipts, whether the Infringer is pursued by the Purchaser or by GEC.
It is acknowledged that in the event that any proceedings taken against
an Infringer are unsuccessful, the party with conduct of the proceedings
shall not be entitled to claim a contribution for any costs incurred from
the other but such costs shall be deductible by the said party from Net
Receipts received under a settlement made with, or an award of court made
against, any other subsequent Infringer. In the event that an Infringer
pays to any member of the GEC Group or any member of the IFR Group
(including any Group Company) any sum relating to the enforcement or
licensing of the FN or FM Patents, then GEC or the Purchaser (as
appropriate) shall procure that 50 per cent. of the Net Receipts is paid
promptly to the other. GEC's entitlement to Net Receipts under this
clause 9.14 arises only to the extent that it does not have an existing
right to the amounts in question by virtue of the Deed of Assignment.
9.15 GEC shall indemnify the Purchaser and all members of the IFR Group and
the Group Companies against all costs, claims, losses or damages arising
out of any Infringer Claim subject to the provisions of clauses 9.9 to
9.14 and without limitation compliance by the Purchaser, the IFR Group
and the Group Companies with their undertakings and obligations set out
in clauses 9.10 and 9.11.
20
GENERAL
9.16 The provisions of clauses 9.1 and 9.15 shall take effect subject to
paragraph 1 of Schedule 4 and the following additional paragraphs of
Schedule 4: Paragraph 4: (Conduct of Litigation); Paragraph 5: (No
Liability If Loss Is Otherwise Compensated For); Paragraph 6: (Acts of
Purchaser): except that there shall be no exclusion from the ambit of the
indemnity in relation to the continued manufacture of products or use of
processes after Completion which were carried on prior to Completion;
Paragraph 7: (Allowance, Provision or Reserve in the Accounts); and
Paragraph 11: (No Liability For Contingent Or Non-Quantifiable Claims).
In the event of an inconsistency between Schedule 4 and the provisions of
this clause 9, then the provisions of this clause 9 shall prevail.
9.17 In the event that any provision of this clause 9 is alleged or held to be
invalid, illegal or unenforceable by any Court or competent authority
then the parties shall negotiate in good faith such other agreement as
achieves the equivalent effect and, without limitation, the parties
shall, at the request and cost of GEC, consider (a) assignment of the FN
and FM Patents and/or the right to bring proceedings in relation to such
patents to GEC so that any action against Hewlett Packard and/or any
Infringer may be commenced by GEC; or (b) the grant of such additional
rights under the FN and FM Patents as may be necessary to enable GEC to
litigate in its own name and, in any event, the commencement and conduct
of any litigation shall take account of the structure that will ensure
that Hewlett Packard and/or any Infringer pays damages in respect of all
loss or damage of whatsoever nature suffered by either the GEC Group or
the Group Companies.
9.18 Nothing in this clause 9 shall prevent the Purchaser or any Group Company
assigning the FN and FM Patents (i) to any member of the IFR Group, for
as long as such company remains a member of such group and in the event
that such member of the IFR Group leaves the IFR Group then the Purchaser
shall procure that such member assigns the FN and FM Patents to a member
of the IFR Group; and (ii) to a purchaser of a substantial part of the
business of the Group Companies which uses the FN and FM Patents,
provided that such purchaser (a) agrees to assume the obligations of the
Purchaser under this clause 9; and (b) undertakes promptly to enter into
a direct covenant or contractual arrangement with GEC in terms equivalent
to the provisions of this clause 9. Save as aforesaid, the Purchaser
shall procure that the FN and FM Patents are not assigned to a third
party without first offering for assignment the FN and FM Patents to GEC
on no less favourable terms and in any event the Purchaser shall procure
that any assignee of the FN and FM Patents enters into a direct
contractual arrangement with GEC in terms equivalent to the provisions of
this clause 9. In such circumstances assignment of the FN and FM Patents
to a third party shall not release the Purchaser and Group Companies from
their obligations under clause 9.5 and 9.11 or GEC of its obligations to
the Purchaser or any Group Company under clauses 9.1 and 9.15 provided
that the scope and extent of the indemnities are not extended by such
assignment.
20
21
9.19 GEC shall indemnify the Purchaser or any member of the IFR Group for any
tax paid by it in relation to sums paid by Hewlett Packard and received
by any member of the GEC Group in relation to any claim relating to any
infringement or alleged infringement of the FN and FM Patent, save to the
extent that the quantum of such tax has been increased as a result or
consequence of an assignment of the FN and FM Patents pursuant to clause
9. 18(i). Where any member of the IFR Group is required to pay tax in
relation to the 50 per cent. of Net Receipts received by any member of
the GEC Group, then: (a) if GEC is not obligated to pay any tax with
respect to its share, then GEC shall reimburse the IFR member for any
such tax; and (b) if GEC is obligated to pay tax with respect to its
share, then GEC and IFR shall negotiate in good faith an equal sharing of
the tax paid by the member of the IFR Group on the GEC 50 per cent. of
Net Receipts.
10. PENSION ARRANGEMENTS
Each of GEC and the Purchaser shall comply with Parts A and B of Schedule
5.
11. REAL PROPERTY AND ENVIRONMENTAL UNDERTAKINGS
Each of GEC and the Purchaser shall comply with Parts A and B of
Schedule 6.
12. REMEDIES AND WAIVERS
12.1 No delay or omission on the part of either 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 7 and Schedule 4.
12.2 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.
12.3 Rights, powers and remedies arising under this Agreement are cumulative
and (subject as provided in clause 7.3 and paragraph 5 of Schedule 4) not
exclusive of any other rights, powers and remedies provided by law.
22
13. ASSIGNMENT
13.1 This Agreement and the benefits (including the Warranties) and
obligations under it and any part of it shall not be assignable by the
Purchaser except that the Purchaser may, upon giving written notice to
GEC, assign the benefit (but not the burden) of this Agreement (i) by way
of security to a lender to whom security is given over the Shares or (ii)
to a member of the IFR Group, if the terms of any such assignment
provide:-
(A) (in the case of any such assignment under sub-paragraph (ii) above)
that the assignee remains a member of the IFR Group and that before
the assignee ceases to be a member of the IFR 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 IFR Group (any such further assignment to be
subject to the same conditions as above); and
(B) (in the case of any such assignment under sub-paragraph (i) or (ii)
above), 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.
13.2 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) 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.
13.3 The Warranties shall continue to have effect for all purposes in relation
to a Group Company notwithstanding that such Group Company has ceased to
be owned by a member of the IFR Group (a "Group Cessation"), provided
that the liability of GEC in respect of any claim under the Warranties
made after a Group Cessation shall not exceed the amount of the liability
(if any) which it would have had in respect of such claim had the claim
been made before a Group Cessation and provided further that
23
this clause 13.3 shall not impair or affect in any way the restrictions
on assignment under clause 13.1.
14. FURTHER ASSURANCE
14.1 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.
SEEBECK EFFECT MICROWAVE POWER SENSOR
14.2 GEC confirms that the Intellectual Property which arose directly out of
the funding by Marconi Instruments Limited of the research documented in
Report 16571B (June 1980) and commissioned in subsequent related purchase
orders and which specifically related to the deliverables under these
arrangements are owned by Marconi Instruments Limited. At the request of
the Purchaser, GEC shall procure a confirmatory assignment of such rights
to the Purchaser (or a nominated member of the IFR Group), subject to any
third party rights (if any). Without limiting the provisions of clause
6.4, the Purchaser shall procure the grant of a licence of such
Intellectual Property to GEC for research and development and will not
unreasonably withhold its consent to the extension of such licence on
reasonable terms.
GALLIUM ARSENIDE MONOLITHIC MICROWAVE INTEGRATED CIRCUITS
14.3 GEC Marconi Limited has or is in the process of conducting the following
work funded by MI (and managed by GEC - Marconi Materials Technology
Limited, a GEC Group company): HBT Modulators Report (August 1997), IQ
Modulators Reports (July and August 1997) and study of GaAs MMICs for
Electronic Attenuators (commenced December 1997) (together "the
Projects"). GEC confirms that the Intellectual Property which has been
or will be developed and which directly arises out of the funding by
Marconi Instruments Limited of the Projects and which specifically
relates to deliverables under these arrangements are and will be owned by
Marconi Instruments Limited. At the request of the Purchaser, GEC shall
procure a confirmatory assignment of such present and future rights to
the Purchaser (or a nominated member of the IFR Group), subject to any
third party rights (if any). Without limiting the provisions of clause
6.4, the Purchaser shall procure the grant of a licence of such
Intellectual Property to GEC-Marconi Limited for research and development
and will not unreasonably withhold its consent to the extension of such
licence on reasonable terms. It is agreed that the letter dated 3rd
February 1998 from GEC-Marconi to Marconi Instruments Limited shall have
no effect and is superseded by the provisions of this clause 14.3.
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15. ENTIRE AGREEMENT
15.1 This Agreement, the Tax Covenant, the Disclosure Letter and any other
documents referred to in this Agreement 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 this Agreement,
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.
15.2 Each party acknowledges that save to the extent expressly set out in this
Agreement, in entering into this Agreement, the Tax Covenant, the
Disclosure Letter and any other documents referred to in this Agreement
on the terms set out therein, it is not relying as against the other
party 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, the
KPMG Report 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 but so that this clause shall be
without prejudice to any rights which the Purchaser may have against KPMG
in respect of the KPMG Report.
15.3 Neither of the parties shall have any right of action against the 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 15.1 or 15.2 above (except in the
case of fraud and save to the extent expressly set out in this
Agreement).
15.4 The parties have entered into this Agreement in reliance on the express
terms hereof. In the event of either GEC or the Purchaser proving that
in entering into this Agreement or fulfilling its obligations hereunder
it has acted in reliance on a statement fraudulently made by the other or
would have acted differently but for the fraudulent withholding of
information by the other, the parties acknowledge that the provisions of
this Agreement shall have effect only to the extent consistent with
applicable law and shall not limit in any way the rights of GEC or the
Purchaser (as the case may be) against the other in respect of such
statement or withholding of information.
16. NOTICES
16.1 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.
25
16.2 (A) Any such notice or other communication shall be addressed as
provided in sub-clause 16.3 and sent by personal delivery or by
first class post or airmail (if to an overseas address).
(B) In the absence of evidence of earlier receipt, a notice or other
communication is deemed given or made:
(i) if sent by personal delivery, when left at the address
specified in clause 16.3;
(ii) if sent by first class post, two Business Days after it is
posted; or
(iii) if sent by airmail, five Business Days after it is posted
Provided that if, in accordance with the above provisions, any such
notice or other communication is given or made outside
Working Hours, such notice or other communication shall be deemed to
be given or made at the start of Working Hours on the next Business
Day.
16.3 The relevant addressee and address of each party for the purposes of this
Agreement, subject to sub-clause 16.4, are:-
NAME OF PARTY ADDRESSEE ADDRESS
------------- --------- -------
1. GEC Company Secretary 1 Stanhope Gate,
London, W1A 1EH
from 1st March, 1998
1 Bruton Street,
London
W1
with a copy to N. Boardman/F. Murphy Slaughter and May
35 Basinghall Street
London
EC2V 5DB
2. The Purchaser The Managing Director c/o Marconi Instruments
Longacres House
Norton Green Road
Stevenage
Hertfordshire
SG1 2BA
26
with a copy to A.N. Drake Boodle Hatfield,
61 Brook Street,
London W1Y 2BL
3. The Guarantor The Chief Executive 10200 West York Street,
Officer Wichita,
Kansas 67215-8999,
U.S.A.
with a copy to H. Sorensen Foulston & Siefkin L.L.P.,
Suite 700,
100 North Broadway,
Wichita,
Kansas 67202,
USA
Provided that failure to send a copy or copies of any notice as indicated
above shall not invalidate a notice duly served on any party to this
Agreement.
16.4 Either party may notify the other party to this Agreement of a change to
its name, relevant addressee or address for the purposes of
sub-clause 16.3 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
(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.
17. ANNOUNCEMENTS
17.1 Subject to sub-clause 17.2 any public announcement concerning the sale of
the Shares or any ancillary matter shall be made jointly by the parties
on the date of this Agreement and shall be in such form as shall be
mutually agreed.
17.2 Either 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 either 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 the other party
(if practicable).
17.3 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
27
18. 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.
19. 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, and subject to the provisions of
clause 6.10 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.
20. COUNTERPARTS
20.1 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.
20.2 Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same
instrument.
21. TIME OF ESSENCE
Save as otherwise expressly provided, time is of the essence of each
provision of this Agreement.
22. EFFECT OF COMPLETION
22.1 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 or the Tax Covenant.
22.2 Without prejudice to sub-clause 22.1 the Warranties shall not be
extinguished by Completion.
28
23. 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.
24. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
25. 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 either party's rights to take Proceedings against
the other in any other court of competent jurisdiction, nor shall the
taking of Proceedings in one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction, whether concurrently or not, to
the extent permitted by the law of such other jurisdiction.
26. AGENT FOR SERVICE
26.1 The Guarantor irrevocably appoints the Purchaser 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.
26.2 Any Service Document shall be deemed to have been duly served if marked
for the attention of the Company Secretary at the registered office for
the time being of the Purchaser or such other address within England or
Wales as may be notified 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 clear Business Days after
the date of posting.
29
26.3 If the agent at any time ceases for any reason to act as such, the
Purchaser shall 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 Purchaser to appoint a replacement agent to
act on the Purchaser's behalf. The provisions of this clause applying to
service on an agent apply equally to service on a replacement agent.
26.4 A copy of any Service Document served on an agent shall be sent by post
to the Purchaser. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
26.5 "SERVICE DOCUMENT" means a writ, summons, order, judgment or other
process issued out of the courts of England and Wales document 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 for the year ended on the Accounts
Date, including a balance sheet and profit
and loss account, copies of which are
included in the Disclosure Documents;
"ACCOUNTS DATE" 31st March, 1997;
"AGGREGATE PURCHASE PRICE" the aggregate of the Dollar Purchase Price
and the Sterling Purchase Price, as
adjusted following Completion pursuant to
paragraph 13 of Schedule 4;
"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;
"ASSURANCE" the transfer of the Longacres Property in
the Agreed Form;
"BOOKS AND RECORDS" has its common meaning and includes,
without limitation, all law notices,
correspondence, orders, inquiries,
drawings, plans, books of account and
other documents and all computer disks or
tapes or other machine legible programs or
other records and all files relating to
any disputes on litigation affecting any
Group Company;
"BUSINESS DAY" a day (other than a Saturday or a Sunday)
on which banks are open for business in
London;
"CGTA" the Capital Gains Tax Act 1979;
"CODE" The City Code on Take-overs and Mergers;
"COMPANIES ACTS" the Companies Act 1985, the Criminal
Justice Act 1993, the Companies
Consolidation (Consequential Provisions)
Act 1985 and the Companies Act 1989;
31
"COMPANIES" Marconi (UK) and Marconi (US) collectively
(and "Company" means either one of the
Companies individually);
"COMPLETION" completion of the sale and purchase of the
Shares under this Agreement;
"COMPLETION DATE" the date of this Agreement;
"CONTRACTOR'S WARRANTY" the Deed dated 14th February 1995 made
between Shepherd Construction Limited (1)
and GEC (2);
"DANGEROUS SUBSTANCE" any natural or artificial substance
(whether in solid or liquid form or in the
form of a gas or vapour or whether alone
or in combination with any other
substance) capable of causing harm to man
or any other living organism supported by
the Environment, or damaging the
Environment, public health or welfare
including but not limited to any
controlled, special, hazardous, toxic or
dangerous waste;
"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 7 and delivered to the
Purchaser's Solicitors before the
execution of this Agreement;
"DOLLAR PURCHASE PRICE" U.S. $64,350,000 (sixty four million,
three hundred and fifty thousand U.S.
dollars);
"EMPLOYEE" a person employed by any Group Company;
"ENVIRONMENT" any and all of 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 and
buildings structures or enclosures above
or below ground); and any living organisms
supported
32
by any or all of such media;
"ENVIRONMENTAL LAWS" any and all applicable laws in the
relevant jurisdiction (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, decisions,
statutes and subordinate legislation which
are applicable to the conduct of the
business of any Group Company 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 UNDERTAKING" the undertaking of GEC set out in
paragraph 1 of Part B of Schedule 6 to
this Agreement;
"ENVIRONMENTAL WARRANTY" any warranty contained in paragraph 21 of
Schedule 3;
"FN AND FM PATENTS" means the Fractional N and/or the DC
Coupled FM Patents brief details of which
are set out in Schedule 8;
"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 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),
details of which schemes are included in
the Disclosure Documents;
"GEC SECURITIES" 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
to secure any obligation of any Group
33
Company;
"GEC'S SOLICITORS" Slaughter and May;
"GROUP" the Companies and all subsidiaries or
subsidiary undertakings from time to time
of each Company, particulars of the
current subsidiaries of the Companies
being given in Part B of Schedule 10;
"GROUP COMPANY" any member of the Group (and "Group
Companies" means such members
collectively);
"GUNNELS WOOD PROPERTIES" the Properties referred to in Part A of
Schedule 11 and registered with Title
Numbers HD296865 and HD165022;
"ICTA 1988" the Income and Corporation Taxes Act 1988;
"IFR GROUP" the Guarantor and all its subsidiaries and
subsidiary undertakings as at Completion
and from time to time thereafter;
"INFORMATION MEMORANDUM" the information memorandum dated October
1997 in connection with the transaction
effected by this Agreement;
"INTELLECTUAL PROPERTY" patents, trade marks and service marks,
rights in designs, (whether or not any of
these is registered and including
applications for registration of any such
thing) semiconductor topography rights,
copyright (including software) 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;
"KPMG REPORT" the report on the Group prepared by KPMG
in connection with the transaction
effected by this Agreement;
"LONDON STOCK EXCHANGE" the London Stock Exchange Limited;
"LONGACRES PROPERTY" the Property referred to as Longacres
House in Part A of Schedule 11;
"MARCONI (UK)" Marconi Instruments Limited of which
particulars
34
are given in Part A of Schedule 10;
"MARCONI (US)" Marconi Instruments Inc. of which
particulars are given in Part A of
Schedule 10;
"NAMES" the names GEC, General Electric, General
Electric Company and Marconi;
"PANEL" the Panel on Take-overs and Mergers;
"PERMITS" as at the date of this Agreement 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 as conducted as at such date;
"PRE-SALE DIVIDEND" means the L23,000,000 dividend paid by
Marconi (UK) on 30th January 1998 and
related matters set out in Schedule 12;
"PROCEEDINGS" any proceeding, suit or action arising out
of or in connection with this Agreement;
"PROCESS" any industrial or other process or
activity which has been carried out at the
Properties;
"PROPERTIES" each of the freehold and leasehold
properties described in Schedule 11 (and
"Property" means any one of them);
"PURCHASER'S ATTORNEYS" Foulston & Siefkin LLP;
"PURCHASER'S GROUP" the Purchaser and all subsidiaries or
subsidiary undertakings from time to time
of the Purchaser;
"PURCHASER'S SOLICITORS" Boodle Hatfield;
"REGULATIONS" the Transfer of Undertakings (Protection
of Employment) Regulations 1981;
"REQUISITE CONSENT" the consent of the landlord of the
Longacres Property to the Assurance or to
the underletting of the Longacres Property
to the Purchaser, as the case may be;
35
"RTPA 1976" the Restrictive Trade Practices Act 1976;
"ST. ALBANS PROPERTY" the property at Longacres, St. Albans,
formerly owned and occupied by Marconi
(UK) and sold to Bryant Homes Southern
Limited under an Agreement for Sale and
Purchase dated 8th August, 1997 between
Marconi Instruments Limited (1) and Bryant
Homes Southern Limited (2), as more
particularly described in that Agreement
(a copy of which is Document 28 in File 36
No. 17 Additional Documents in the
Disclosure Documents);
"SCHEDULES" the schedules to this Agreement;
"SECURITIES ACT" the United States Securities Act of 1933,
as amended;
"SHARES" the issued shares in the Companies
specified in Part A of Schedule 10 (or in
any of the Companies);
"STERLING PURCHASE PRICE" L26,000,000 (twenty six million pounds
sterling);
"TAX COVENANT" the tax covenant referred to, inter alia,
in Schedule 3 and set out in Schedule 9;
"TCGA 1992" the Taxation of Chargeable Gains Act 1992;
"TERRITORY" any country in which a Group Company's
products have been sold or services
supplied, directly or through an agent or
distributor, during the two years prior to
the date of this Agreement;
"TRANSFERORS" GEC-Marconi Limited and Associated
Electrical Industries Holdings Limited (in
respect of the UK Shares) and GEC
Incorporated (in respect of the US
Shares);
"TULRCA" the Trade Union and Labour Relations
Consolidation Act 1992;
"UK GROUP" those members of the Group which are
incorporated in any part of the United
Kingdom;
"UK GROUP COMPANY" any member of the UK Group (and "UK Group
Companies" means such members
collectively);
36
"UK SHARES" the Shares in Marconi (UK);
"US PURCHASE PRICE" U.S. $6,000,000 (six million U.S.
dollars), being part of the Dollar
Purchase Price;
"US SHARES" the Shares in Marconi (US);
"VAT" the tax imposed by the Sixth Council
Directive of the European Communities;
"VATA" the Value Added Tax Act 1994;
"WARRANTIES" the warranties set out in Schedule 3
(Warranties) given by GEC and "WARRANTY"
shall be construed accordingly;
"WORKING HOURS" 9.30 a.m. to 5.30 p.m. on a Business Day.
(B) In this Agreement, unless otherwise specified:-
(i) references to clauses, sub-clauses, paragraphs, sub-paragraphs,
and Schedules are to clauses, sub-clauses, paragraphs,
sub-paragraphs of, and Schedules to, this Agreement;
(ii) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may
from time to time be, amended, modified or re-enacted except to
the extent that any amendment or modification made after the
date of this Agreement would increase or alter the liability of
any party under this Agreement;
(iii) 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;
(iv) references to a "COMPANY" shall be construed so as to include any
company, corporation or other body corporate, wherever and
however incorporated or established;
(v) the terms "SUBSIDIARY" and "SUBSIDIARY UNDERTAKING" shall bear
the same respective meanings as in the Companies Acts;
(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);
37
(vii) the term "RELIEF" shall bear the same meaning as in the Tax
Covenant and the term "PROFIT-SHARING PLAN" shall bear the
meaning given to it in paragraph 7.1 of Part B to Schedule 5;
(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 enquiries of
P.J. Smith, A.P. Warwick, D.J. Bradney, P.M. Drury, M. McCreary,
S. McQuillan, C. Purchase, C. Thurston, the GEC Group Taxation
Manager, the GEC Group Pensions Manager, GEC Estates Department,
the GEC Environmental Lawyer and the Head of the GEC Patent
Department.
(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;
(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, 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 Clause 5.5(C) and in any of the Warranties to an
amount expressed in pounds sterling shall, in any applicable
case, be construed as referring to the equivalent amount in any
other relevant currency (calculated
38
by reference to the rate of exchange for such currency prevailing
on the date of this Agreement); and
(xviii) references to any governmental or administrative authority or
agency in connection with any Group Company are references to the
relevant governmental or administrative authority or agency in
the jurisdiction in which the relevant Group Company is
incorporated.
39
SCHEDULE 2:
COMPLETION ARRANGEMENTS
PART 1
1. GEC'S OBLIGATIONS
1.1 At Completion, GEC shall deliver or procure the delivery to the Purchaser
(or its nominees) of:-
(A) (i) duly executed transfers in respect of the UK Shares in favour
of the Purchaser (or its nominee) and share certificates
representing the UK Shares in the name of the relevant
transferors; and
(ii) at the offices of Sidley & Austin at One First National Plaza,
Chicago, Illinois 60603 the share certificates representing
the US Shares duly endorsed in blank or accompanied by stock
powers duly endorsed in blank in proper form for transfer; and
(iii) the share certificates relating to any shares in the companies
listed in Part B of Schedule 10 which are not registered in
the name of any other Group Company or an Employee together
with duly executed stock transfer forms in respect thereof;
(B) a counterpart original of the Tax Covenant duly executed by GEC;
(C) to the extent not already within the control or possession of Group
Companies, the statutory books or any equivalent or additional
corporate documents, registers or records (which shall be written up
to but not including the Completion Date), the certificate of
incorporation (if any) (and any certificate of incorporation on
change of name) or any equivalent document and the common seal (if
any) of each of the Companies and other members of the Group;
(D) subject to applicable law, letters of resignation from the auditors
of each of the Companies and (where appointed) other members of the
Group containing so far as practicable an acknowledgement that they
have no claim against the relevant member of the Group for
compensation for loss of office or professional fees or (so far as
they are aware at the date of the letters) otherwise and (if
appropriate) a statement under Section 394(1) of the Companies Act
1985;
(E) irrevocable powers of attorney in Agreed Form executed by each of
the holders of the UK Shares in favour of the Purchaser (or its
nominee(s)) to enable the Purchaser (pending registration of the
transfers of the UK Shares)
40
to exercise all voting and other rights attaching to the UK Shares
and to appoint proxies for this purpose; and
(F) a certified copy of a board or board committee resolution of GEC
approving the entering into by GEC of this Agreement, the Tax
Covenant 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
[(or the shares referred to in paragraph 1.1A(iii) above)] shall be
approved for registration and (subject only to the transfer being duly
stamped, if so required) that each transferee be registered as the
holder of the Shares respectively in the register of members;
(B) such directors as are not Employees whose resignation as the Purchaser
shall have requested shall resign from their respective positions as
directors of the relevant Group Company, in each case acknowledging
under seal that they have no outstanding claims against the relevant
Group Company in connection with such resignation;
(C) each of the persons nominated by the Purchaser shall be appointed
directors, as the Purchaser shall direct, such appointments to take
effect from Completion; and
(D) the resignation of auditors (if applicable) shall be accepted;
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.
PART 2
2. PURCHASER'S OBLIGATIONS
2.1 The Purchaser shall before 3 p.m. (London time):-
(A) (i) pay to GEC to account number 0015034515 in the name of The
General Electric Company, p.l.c. at Chase Manhattan Bank N.A.,
London (Branch Sort Code: 60-92-42) the Dollar Purchase Price;
and
(ii) pay to GEC to account number 10010006 in the name of The
General Electric Company, p.l.c. at Midland Bank plc, 16 King
Street, Covent Garden, London WC2E 8JF (Branch Sort Code:
40-04-09) the Sterling Purchase Price;
41
(B) deliver to GEC, duly executed by the Purchaser, a counterpart
original of the Tax Covenant;
(C) deliver to GEC a certified copy of the board resolutions of the
Purchaser approving the entering into by the Purchaser of this
Agreement, the Tax Covenant and the transactions contemplated
hereby; and
(D) deliver to GEC a legal opinion from the Purchaser's Attorneys, legal
advisers to the Guarantor, addressed to GEC in the Agreed Form.
Payment of each of the Dollar Purchase Price and the Sterling Purchase
Price in full in accordance with the foregoing shall discharge all the
Purchaser's obligations with respect to the Aggregate Purchase Price.
3. The Purchaser and GEC shall sign and send a letter in the Agreed Form to
the National Westminster Bank Plc confirming that Completion has
occurred.
42
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 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 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 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 10 and 11 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 UK
Group Company to which such Accounts relate as at the Accounts
Date and of that UK Group Company's result (if any) for the
financial year ended on such date;
43
(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) comply with the relevant requirements of the Companies Act
1985;
(B) in respect of Marconi (US) 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 the accounts of the respective companies for the
immediately preceding accounting period.
(C) in respect of any other Group Company:-
(i) have been drawn up using local accounting principles and,
where the Accounts of the respective Group Company include
notes on accounting policies, subject to such notes; and
(ii) were prepared using accounting policies consistent with those
used in the preparation of the accounts of the respective
Group Company for the immediately preceding accounting period
except as described in any notes thereto.
2.2 The GEC standard accounts form in respect of the other Group Companies
referred to in paragraph 2.1(C) above for the year ended 31 March 1997
have been prepared for incorporation into 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 the GEC standard
accounts forms of the respective companies for the immediately preceding
accounting period.
2.3 The accounting records of each Group Company have, in the six years
ending on the date of this Agreement, been kept as then required by law.
2.4 For the purposes of this warranty, the term "Management Accounts" means
the figures shown under the heading "Actual" in those unaudited
aggregated management accounts for the Group as at 31st December, 1997
set out in pages 2, 3 and 5 of Disclosure Document 17-116.
Having regard to the purposes for which management accounts are prepared,
the Management Accounts:
(i) have been compiled from information properly extracted from
the books and records of the Group Companies;
44
(ii) have been based on management accounts of the Group Companies
prepared using accounting policies consistent with those
adopted by the respective companies for the purposes of
reporting to GEC at the Accounts Date which policies are
materially the same as those set out in the Accounts of
Marconi (UK); and
(iii) are not known by GEC to contain any material error or
omissions.
3. PENSIONS
3.1 There are no superannuation or retirement benefits or life assurance
funds schemes or arrangements provided by or on behalf of any UK Group
Company under which any of the Employees is entitled to life assurance
pension or other retirement benefits save those provided by or on behalf
of Marconi (UK) in accordance with the GEC Scheme.
3.2 No UK Group Company is under any contractual obligation nor is it a party
to any custom or practice, to provide life assurance, pension or other
retirement benefits or to pay, provide or contribute towards any
"relevant benefits" within the meaning of section 612, ICTA 1988 in
respect of any of the Employees or for the benefit of any dependants of
any Employee save Marconi (UK) 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 Marconi (UK) 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 The GEC Scheme:
(A) is an exempt approved scheme for the purposes of Chapter I of Part
XIV of ICTA 1988 and so far as GEC is aware there is no reason why
such approval might be withdrawn or cease to apply;
(B) is not a contracted-out scheme under Section 7(3) of the Pension
Schemes Act 1993; and
(C) conforms with the preservation requirements referred to in Section
69(2) of the Pension Schemes Act 1993.
3.6 The GEC Scheme has been operated in all material respects in accordance
with all the then applicable legal requirements in relation to each UK
Group 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 Group Company or any Employee other than routine
claims for benefits.
45
3.7 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 is entitled to life assurance, pension or other
retirement benefits, and of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA) stock options, stock purchases, compensation,
deferred compensation, severance or termination arrangements, and of each
other material plan, arrangement or policy relating to fringe benefits or
other employee benefits maintained, or contributed to, by any GEC Group
Company or Group Company for the benefit of any officers or employees of
Marconi (US) are included in the Disclosure Documents.
3.8 No UK Group Company in the twelve months ending with the Accounts Date or
during the period from the Accounts Date to the date of Completion has
made or proposed any voluntary or ex-gratia payments to any Employee of
any UK Group Company or the dependants of any such Employee in respect of
any relevant benefit (as defined in paragraph 3.2).
3.9 So far as GEC is aware no undertaking or assurance (whether legally
binding or not) has been given by a UK Group Company or GEC to any
Employee of a UK Group Company or the dependant of any such Employee as
to the continuance, introduction, increase or improvement of any such
benefit or scheme or arrangement as is referred to in paragraph 3.2
(including, for the avoidance of doubt, the GEC Scheme).
3.10 Material details of the GEC Scheme, as it relates to Employees of a UK
Group Company or the dependants of any such Employee, have been supplied
to the Purchaser or its legal advisers and (without limitation to the
foregoing) complete up to date and accurate copies of the following have
been disclosed:-
(a) all relevant trust deeds rules or other documents currently
governing the GEC Scheme;
(b) any announcements to members of the GEC Scheme which are not yet the
subject of formal amendment to the documentation of the GEC Scheme
(including any individual or group announcements made to or in
respect of any present or former employee or officer of a UK Group
Company);
(c) the current explanatory booklets and other explanatory literature
issued to persons who are (or are entitled to become) members of the
GEC Scheme;
(d) a list of those Employees of a UK Group Company who are members of
the GEC Scheme with full particulars of them relevant to their
membership of or interest therein and necessary to establish their
entitlements to benefits,
46
including full particulars of any early retirement options or
facilities, and of any benefit augmentations granted to them under
the GEC Scheme;
(e) the deed of participation under which each UK Group Company which
participates in the GEC Scheme does so;
(f) details of any discretionary benefits provided under, and
discretionary arrangements relating to, Employees of a UK Group
Company who are members of the GEC Scheme, or their dependants,
including any discretionary increases of deferred pensions or
pensions in payment.
3.11 Neither a UK Group Company, nor GEC nor the GEC Scheme is engaged in any
litigation or arbitration proceedings (other than routine claims for
benefits) in respect of any retirement benefits scheme (as defined in
s.611 Taxes Act) or any benefit provided thereunder in relation to the
Employees of a UK Group Company or their dependants or in respect of
which a UK Group Company may be liable to indemnify or compensate and GEC
has had no notice of any submissions to or referrals to the Pensions
Ombudsman or to the Occupational Pensions Advisory Service in respect of
the Employees of a UK Group Company or their dependants. So far as GEC
is aware there are no circumstances which may give rise to any such
complaints.
3.12 No Employee or former employee (excluding any former employee whose
employment terminated before 1st January 1992), of a UK Group Company who
is or was entitled by the rules of the GEC Scheme or by Article 119 of
the Treaty of Rome to membership of the GEC Scheme has been unlawfully
excluded from membership of the GEC Scheme.
3.13 The GEC Scheme has not at any time since 17th May, 1990 but prior to
Completion been operated in such a way as to discriminate between male
and female members of such Scheme.
3.14 The Pension Arrangements referred to in Part A of Schedule 5 do not
conflict with or breach the Trust Deed and/or Rules of the GEC Scheme.
3.15 No event has occurred which would or could result in or entitle any
person or body of persons to wind up, terminate or close the GEC Scheme
in whole or in part, or which is a "relevant insolvency event" in
relation to the GEC Scheme for the purposes of section 75 of the Pensions
Act 1995.
3.16 All life cover benefits are self insured, except for additional death
benefits under the Selected Benefit Scheme.
3.17 The assets, investments and policies held by the trustees of the GEC
Scheme are and will be sufficient to satisfy the liabilities and
obligations (both current and contingent) which the GEC Scheme has
to its members and will continue to be so
47
sufficient up to and including the Payment Date (as defined in Schedule 5
to this Agreement).
4. ARRANGEMENTS BETWEEN THE GEC GROUP AND THE GROUP
4.1 Save for indebtedness arising and contracts made in the ordinary course
of trading, no contract or other binding legal obligation which will
survive Completion and involves expenditure by either party in excess of
L50,000 is outstanding between any Group Company and any GEC Group
Company.
4.2 No payment has been made by any Group Company to any member of the GEC
Group for services to be provided by a member of the GEC Group during a
period falling wholly or partly after Completion in circumstances where:
(a) those services will not in fact be provided for any part of the
contracted period which falls after Completion as a result of the
relevant Group Company ceasing to be a member of the GEC Group (and no
rebate of the payment will be made) and (b) the amount of the payment
attributable to the contracted period falling after Completion during
which the services will not be provided (calculated on a time
apportionment basis) exceeds L25,000.
5. GROUP STRUCTURE
5.1 The Shares comprise the whole of each Company's issued and allotted share
capital. All the UK Shares are fully paid up and all the US Shares are
fully paid and non-assessable.
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 Group 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 Group Company which is incorporated in England and Wales has any
branch, place of business or permanent establishment outside the United
Kingdom.
5.6 Marconi (US) is duly organised, validly existing and in good standing
under the laws of Delaware.
48
5.7 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.
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, the shares in any of the companies referred to in Part B of
Schedule 10 or any of them and there is no agreement or commitment to
give or create any and, so far as GEC is aware, no claim has been made by
any person to be entitled to any, other than any arising from the acts of
the Purchaser, its subsidiaries or subsidiary undertakings.
7. STATUTORY RETURNS
7.1 The copies of the constitutional documents of each Group Company included
in the Disclosure Documents 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 such rights and restrictions attaching to each
class of share capital of that Group Company as are not implied by
relevant statutory law.
7.2 The registers of members (or the equivalent registers) and the other
statutory books (or equivalent books) (including all registers and minute
books) of each Group Company have in all material respects, during the
six 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 six years ended on the date of this Agreement.
7.3 All documents which should have been delivered within the last six years
by each UK Group Company to the Registrar of Companies, or by any other
Group Company to any equivalent registry in an overseas jurisdiction,
have, in all material respects, been properly so delivered.
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.
49
8.2 The Disclosure Documents include copies of all agency and distributorship
agreements, and agreements for the provision of consultancy services to
or by a Group Company, to which any Group Company is party.
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 is not outstanding any GEC Security.
8.5 No Group Company has received written notice or (so far as GEC is aware)
oral notice that it is in breach of any contracts with its customers
where there is a substantial likelihood that such breach would be
material in the context of the business of the Group as a whole.
8.6 The Disclosure Documents include details of the Group's contracts with
its 15 principal customers and with its 10 principal suppliers other than
factored product suppliers ("principal" for this purpose meaning those
representing the largest proportion of the Group's income or, as the case
may be, outgoings in the financial year ended on Accounts Date with all
non-sterling amounts converted into sterling at the rate of exchange
applicable as at the date of the particular contract). So far as GEC is
aware, no written notice has been received by any Group Company from any
such principal customer or principal supplier indicating that it will
cease dealing with the Group or substantially reduce the level of its
business with the Group, as a result of the proposed acquisition of the
Companies by the Purchaser or for any other reason.
8.7 The Disclosure Documents include details of all hire purchase contracts
and finance and operating or equipment leases which relate to assets used
by any Group Company to which such Group Company is a party and which
involve an annual charge in excess of L25,000. The aggregate annual
charge of any such contracts not included in the Disclosure Documents and
to which a Group Company is a party does not exceed L100,000.
8.8 There is no outstanding contract with a customer where the value of
deliveries to be made but outstanding at the date hereof exceeds
L1,000,000.
8.9 No Group Company is a party to any agreement which prevents it from
carrying on its business in the ordinary course anywhere in the world.
8.10 No one is entitled to receive from a Group Company a finder's fee,
brokerage or other commission in connection with the sale and purchase of
the Shares under this Agreement.
50
8.11 No powers of attorney (express or implied), other than to officers or
employees in the ordinary course of their duties, by which a person may
enter into a contract or incur an obligation on behalf of a Group Company
are subsisting.
8.12 There is no distributorship, agency or consultancy agreement to which a
Group Company has been party and which has terminated or expired during
the two years prior to the date of this Agreement or which will terminate
after Completion pursuant to a written notice of termination served prior
to 24th January 1998 or (so far as GEC is aware) since that date but
prior to Completion, in respect of whose termination or expiry any
payment not yet made is or will become due from the relevant Group
Company. No such payment has been made between the Accounts Date and
Completion which is not reflected in the management accounts of the Group
Companies for the period from the Accounts Date to 31st December, 1997.
8.13 So far as GEC is aware, no event has occurred or circumstances arisen
(save for the sale of the Shares pursuant hereto) such that any person is
entitled, or could with the giving of notice and/or lapse of time become
entitled, to require payment before its stated maturity of, or to take
any step to enforce any security for, any non-trading, financial
indebtedness of any member of the Group where such repayment or
enforcement would have a material and adverse effect on the business of
the Group as a whole.
9. EVENTS SINCE THE ACCOUNTS DATE
9.1 Since the Accounts Date:-
(A) the business of each Group Company has been carried on in its
ordinary course;
(B) no resolution of any Group Company in general meeting nor any
written resolution of any Group Company 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;
(D) no part of the business of any Group Companies has, so far as GEC is
aware, been affected to a material extent by any abnormal factor
which has not since the Accounts Date affected similar businesses to
a like extent;
(E) no Group Company has disposed of any material assets, otherwise than
in the ordinary course of business; and
(F) no Group Company has received any material amounts of income or any
material capital payments, nor incurred any material expenditure,
outside the ordinary course of trade.
51
In this Warranty 9.1, "material" means material in the context of the
Group's business as a whole.
9.2 Since 30th November, 1997:
(A) no dividends or other distributions have been paid, made or declared
by any Group Company save as provided in Schedule 12;
(B) the total amount of all non-trading indebtedness due to all GEC
Group Companies from all Group Companies has been repaid in full and
at Completion there is no outstanding non-trading indebtedness due
to any Group Company from any GEC Group Company;
(C) otherwise than in the ordinary course of business or reimbursements
of third party costs incurred by a GEC Group Company on behalf of
the Group Company and recharged to that Group Company, no payments
or transfers or surrenders of tax losses or cash entitlements have
been made, and no liability has been incurred, by or to any Group
Company to or by any GEC Group Company, other than those payments
and surrenders indicated in Schedule 12;
(D) other than loans to other Group Companies no loans have been made by
any Group Company otherwise than in the ordinary course of business
which have not been repaid in full before Completion; and
(E) no gratuitous payment in excess of L25,000 has been made by any
Group Company.
9.3 A list of all current individual legally binding capital commitments of
each Group Company in excess of L50,000 is included in the Disclosure
Documents.
9.4 No Group Company was at the Accounts Date or has since that date become
party to any borrowing or financing agreement outside the ordinary course
of its trading with any person whose business comprises the lending of
money or the financing of the purchase of assets, under which financing
facilities have been made available to the Group Company concerned on a
basis which would not, in accordance with any relevant legislation or
applicable accounting standards, be required to be disclosed in the
relevant Group Company's published accounts.
10. GRANTS
Details of all grants, 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
included in the Disclosure Documents and, except in relation to the sale
of the Shares, none of GEC, any GEC Group Company or any Group
52
Company has done or failed to do any act or thing which there is a
substantial likelihood could result, in all or any part of such grant aid
or subsidy becoming repayable or forfeited or being withheld.
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 and, so far as GEC is aware, is not
in breach of the terms or conditions of any such licences, consents,
permissions or approvals where such breach would have an adverse effect
which is material in the context of the Group's business as a whole.
11.2 All licences, consents, permissions and approvals referred to in
sub-paragraph 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 suspended, 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 except in relation to the sale of
the Shares.
11.3 No Group Company has exported or imported any products or technical data
which is the subject of the United Kingdom and/or United States export
regulations and laws without obtaining the necessary approvals and
licences from the relevant governmental authorities and without observing
the requirements of any such approvals or licences with respect to the
recording of the details of any transaction made or of any technical data
exported or imported.
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 included in
the Disclosure Documents.
12.2 The Disclosure Documents include details of all overdraft, loan and other
financial facilities available to the Group.
12.3 Except for borrowings between Group Companies, 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).
53
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, so far as GEC is aware, 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) Marconi Messtechnik GmbH has not itself filed nor, as far as GEC is
aware, has any other person filed a petition for the institution of
insolvency proceedings against Marconi Messtechnik GmbH nor has
Marconi Messtechnik GmbH offered or made a settlement or moratorium
in court or out of court with its creditors generally.
13.4 (A) No UK Group Company is insolvent, or unable to pay its debts within
the meaning of section 123 Insolvency Act 1986, or has stopped
paying its debts as they fall due.
(B) Marconi Instruments SA is not 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 fall due.
13.5 (A) No voluntary arrangement has been proposed under section 1
Insolvency Act 1986 in respect of any UK Group Company.
(B) Marconi Instruments SA has not applied, pursuant to French law No.
84-148 of 1st March, 1984, for the appointment of a conciliateur or
entered into an amicable settlement (REGLEMENT AMICABLE) with its
creditors or made any application to any court under Article 1244-1
of the French Civil Code. No corporate action, legal proceedings or
other steps have been taken pursuant to French law No. 85-98 of 25th
January, 1985 with respect to the appointment of an ADMINISTRATEUR
JUDICIAIRE, to any kind of term of payment with creditors or to any
judgment delivered with respect to its REDRESSEMENT JUDICIAIRE or
LIQUIDATION JUDICIAIRE or to the transfer of the whole or part of
its business (CESSION TOTALE OU PARTIELLE DE L'ENTRPRISE), its
reorganisation or its dissolution.
(C) No court of competent jurisdiction has entered an order or decree
under Title 11, UNITED SATES CODE, or any similar Federal or state
law for the relief of debtors (collectively, "US BANKRUPTCY LAWS")
that (i) is for relief against Marconi (US) in an involuntary case,
(ii) appoints a receiver, trustee, assignee, liquidator, custodian
or similar official (each, a "CUSTODIAN") of Marconi (US)
54
or for any substantial part of its property, or (iii) orders the
winding up or liquidation of the Company.
(D) Marconi (US) has not, pursuant to or within the meaning of any US
Bankruptcy Law, (i) commenced a voluntary case, (ii) consented to
the entry of an order for relief against it in an involuntary case,
(iii) consented to the appointment of a Custodian of it or for any
substantial part of its property, or (iv) made a general assignment
for the benefit of its creditors.
(E) Marconi Instrumentos S.A. has not filed a petition for the
institution of suspension of payments ("suspension de pagos") or
bankruptcy proceedings ("quiebra") and, as far as GEC is aware, no
bankruptcy of Marconi Instrumentos S.A. has been declared as the
result of a third party's petition, nor has Marconi Instrumentos
S.A. ceased paying its debts as they fall due.
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 would have a
material and adverse effect on the business of the Group as a whole, and
so far as GEC is aware there are no facts or circumstances which are
reasonably likely to give rise to such proceedings.
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.
15. COMPLIANCE WITH LAWS AND NO INVESTIGATION
15.1 No Group Company's business is being conducted in contravention of any
relevant legislation the consequences of which contravention have a
material and adverse effect on the business of the Group as a whole.
15.2 No Group Company has received written notification nor, so far as GEC is
aware, oral 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 reasonable 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.
55
15.3 So far as GEC is aware, no Group Company has committed or omitted to do
any act or thing which could give rise to any fine or penalty and no
Group Company is or has been a party to any agreement, practice or
arrangement which:
(A) contravenes the Trade Descriptions Act 1968;
(B) contravenes or is invalidated (in whole or in part) by or is subject
to registration under the Restrictive Trade Practices Acts 1976 and
1977;
(C) contravenes any provisions of the Treaty of Rome; or
(D) contravenes any other anti-trust, anti-monopoly or anti-cartel
legislation or regulations or constitutes an anti-competitive
practice as defined in the Competition Act 1980
in circumstances where the amount of the fine or penalty or the breach or
contravention is likely to have a material adverse effect on the business
of the Group as a whole.
16. OWNERSHIP OF ASSETS
16.1 Each of the tangible assets (other than the Properties) 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 L500 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 No Group Company has in its possession or under its control any jigs,
tooling, test or other equipment procured or provided under a contract
with the MOD and which is subject to MOD conditions of contract DEFCON 23
and/or DEFCON 527.
17. OWNERSHIP OF LAND
17.1 The Properties 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 each of the Properties referred to in Parts A and B of
Schedule 11:-
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(A) the relevant Group Company specified in Schedule 11 as registered
proprietor or Lessee of the Property (the "Owner") is solely legally
and beneficially entitled to the Property 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 subject to the leases, underleases,
sub-leases, tenancies or licences particulars of which are set out
in the Disclosure Documents but is otherwise in physical possession
and actual occupation of the Property;
(C) GEC has not been notified in writing nor is it aware that the Owner
has been notified in writing of a breach by it of any material
provision of any lease under which it holds the Property where such
breach is still outstanding;
(D) GEC has not received nor is it aware that the Owner as its owner has
received notice in writing of any outstanding material breach under
planning legislation in respect of the Property;
(E) GEC has not received nor is it aware that the Owner has received
notice in writing of any compulsory purchase order affecting the
Property which is currently in force;
(F) GEC has not received nor is it aware that the Owner has received
notice in writing of any legal proceedings (which in this context
also means proceedings under any legislation or statutory
regulations directions or similar matters not covered in Warranty
17.2(D)) or notice in writing of any circumstance which in the
reasonable opinion of GEC or the Owner will result in legal
proceedings in respect of the Property which are or are likely to be
material in the context of the business carried on by the Group as a
whole.
(G) GEC has not received nor is it aware that the Owner has received
notice in writing of any outstanding material breach of a condition
of any fire certificate issued in respect of the Property.
17.3 GEC has not 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 So far as GEC is aware, the Properties referred to in Part C of Schedule
11 are held pursuant to the tenancy agreement or licence described in
Part C of Schedule 11 and so far as GEC is aware it has neither received
nor been notified in writing nor is it aware of a material breach of that
tenancy agreement or licence (as the case may be) where that breach is
still outstanding.
57
18. INTELLECTUAL PROPERTY
18.1 Details of all registered Intellectual Property owned by a Group Company
and details of all applications for registration thereof are included in
the Disclosure Documents and such Intellectual Property is beneficially
owned by the relevant Group Company free from all charges or similar
encumbrances save for any licence disclosed pursuant to Warranty 18.3.
18.2 All renewal fees and administrative steps required for the maintenance of
the rights disclosed pursuant to sub-paragraph 18.1 have been paid or
taken and GEC is not aware of any challenge or attack by a third party or
competent authority to such rights.
18.3 Details of all licences (excluding shrink-wrap software licences) granted
to or by a Group Company in respect of any Intellectual Property and in
respect of any confidential information or know-how are set out in the
Disclosure Documents 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.
18.4 So far as GEC is aware, the processes and methods employed, the services
provided, the businesses 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 the rights of any other person in any
Intellectual Property or any confidential information or know-how.
18.5 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.
18.6 So far as GEC is aware, no employee of the Group or any other person has
made or has threatened to make any claim under the provisions of section
40 of the Patents Act 1977 in relation to the patents and patent
applications of the Group Companies.
18.7 So far as GEC is aware, none of the products or computer software of the
Group have been developed with funds provided by the United Kingdom
Ministry of Defence or the Government of the United States in
circumstances in which the relevant Government has a right to have
manufactured or used by a third party free of any payment the relevant
products or software and/or has the right to receive payment by way of
commercial exploitation levy or otherwise in respect of any sale of any
such products or licensing of any such software by any member of the
Group and where in any such case the products or software are material in
the context of the relevant Group Company's business.
18.8 GEC is not aware of any reason why IBM will refuse to grant to a Group
Company a licence on the terms laid down in the GEC-IBM cross-licence or
why GEC will not be able to grant to a Group Company a sub-licence
pursuant to the AT&T/Lucent cross-
58
licence and GEC undertakes to give all reasonable assistance to the
Purchaser at the Purchaser's cost and expense in relation to the grant of
such licences.
18.9 So far as GEC is aware, details of all use at Completion made by Group
Companies of patents owned by the GEC Group have been disclosed.
19. INSURANCES
Details of all material insurance policies maintained by or on behalf of
each Group Company are included in the Disclosure Documents, and 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 L50,000 under each such policy,
nor is GEC aware of any circumstances likely to give rise to such a
claim.
20. EMPLOYEES
20.1 The name and particulars of remuneration and material benefits of the
Employees as at 16th January, 1998 are included in the Disclosure
Documents and such particulars are true and accurate in all material
respects and since 31st July, 1997, no Employee with an annual basic
salary in excess of L50,000 has ceased to be an Employee, has been taken
on or has given notice terminating his contract of employment and no
person has been offered employment with an annual basic salary in excess
of L50,000. Since 16th January 1998 there has been no general change
made or announced in the remuneration payable to Employees or the
contractual obligations of relevant employers to Employees, and no change
made or announced in the remuneration payable to any Employee with an
annual basic salary in excess of L50,000 or in the contractual
obligations of the relevant employer to any such Employee.
20.2 The contract of employment of each Employee may be terminated by the
relevant employer without damages or compensation (other than that
payable by statute) by the giving of not more than 13 weeks' notice at
any time.
20.3 The Disclosure Documents contain copies of all the standard terms and
conditions, staff handbooks and policies which apply to the Employees.
20.4 No current Employee has any legally binding entitlement to any payment in
excess of a statutory redundancy payment on termination of the Employee's
contract of employment by reason of redundancy, except as set out in the
Disclosure Documents.
20.5 Neither any Group Company nor GEC has any outstanding notice of a claim
of any failure to comply in a material respect with any relevant
provisions of the Treaty of Rome, EC Directives, statutes, regulations,
collective agreements, terms and conditions of employment, or orders,
declarations and awards of any court or tribunal relevant to the
Employees or the relations between any Group Company and any
59
trade union, staff association or any other body representing workers.
Neither GEC nor any Group Company is aware of any circumstances which
might constitute material non-compliance with any of the above.
20.6 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.
20.7 Copies of all (if any) collective agreements and recognition agreements
for the time being affecting the Employees or their conditions of service
are included in the Disclosure Documents.
20.8 Within the year immediately preceding the date of this Agreement, no UK
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.
20.9 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.
20.10 There are no enquiries or investigations of which GEC or any Group
Company has notice existing, pending or threatened affecting any Group
Company in relation to any employees by the Equal Opportunities
Commission, the Commission for Racial Equality or the Health and Safety
Executive or any other bodies with similar functions or powers in
relation to employees.
20.11 No Employee has been offered, or has agreed to, any retention package
except as set out in the Disclosure Documents.
20.12 There are no amounts in excess of L5,000 per Employee owing from, or
agreed to be loaned or agreed to be advanced to any of the Employees,
other than any amounts representing remuneration accrued due for the
current pay period, accrued holiday pay or for reimbursement of expenses.
21. THE ENVIRONMENT
21.1 So far as GEC is aware, the business of each Group Company is being
conducted in compliance, insofar as material to the business of the Group
as a whole, with Environmental Laws and Permits and (without prejudice to
the generality of the forgoing) so far as GEC is aware each Group Company
has complied in all material respects with all Environmental Laws for the
time being in force in relation to the Properties or any Process.
21.2 So far as GEC is aware, each Group Company has all Permits necessary for
the operation of the business of such Group Company and no Group Company
has
60
received any written notice or other written or recorded communication of
any decision or proposal by any competent authority to revoke, modify or
vary any Permit.
21.3 So far as GEC is aware, 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 or granted and so far as
GEC is aware the sale of the Shares will not result ipso facto in any
such Permit being suspended or revoked.
21.4 So far as GEC is aware, 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.
21.5 At no time within the last three years has any Group Company received any
written notice, claim or other written or recorded communication alleging
any actual or potential breach of Environmental Laws which is outstanding
as at the date of this Agreement.
21.6 None of the Properties or property in which any Group Company formerly
had any estate or interest have been designated contaminated land by any
competent authority under the Environmental Laws or are subject to any
statutory notice requiring works due to contamination nor is GEC or any
Group Company aware of any circumstances rendering such designation or
such works likely.
21.7 In relation to the Environment and/or Environmental Laws in respect of
the current businesses of each Group Company and in respect of the
Properties and the Process GEC has, so far as it is aware, made available
to the Purchaser complete and accurate copies of all current Permits and
all GEC and third party environmental audit reports and GEC health and
safety reports produced in the last 3 years.
21.8 So far as GEC is aware no Group Company has in relation to the business
of the Company any liability in respect of any material breach of or
material non-compliance with any Environmental Laws and/or Permits in
respect of any freehold or leasehold property in which it formerly had
any estate or interest.
21.9 So far as GEC is aware, within the last three years no Group Company has
disposed of any Dangerous Substance in such a way that its disposal would
constitute a breach of Environmental Laws.
22. THE ACCOUNTS AND TAX
22.1 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:-
61
(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 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) customs duties or 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.
22.2 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.
22.3 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.
23. TAX EVENTS SINCE THE ACCOUNTS DATE
23.1 Since the Accounts Date:
(A) no Group Company has made any distribution of assets or repayment of
capital;
(B) no accounting period of any Group Company has ended;
(C) no Group Company has paid or become liable to pay any interest or
penalty in connection with any tax, or has otherwise paid any tax
after its due date for payment;
(D) no Group Company has received a payment for the surrender of group
relief in accordance with Chapter IV of Part X to ICTA 1988 or for
the surrender of advance corporation tax under section 240 ICTA 1988
which, so far as GEC is aware, it may be required to refund in whole
or in part, nor has any Group Company agreed to surrender any right
it may have to receive a tax refund under section 102 Finance Act
1989.
23.2 So far as GEC is aware, since the Accounts Date:
(A) no Group Company has paid any dividend by reference to which it will
or may be liable to Tax;
62
(B) 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;
(C) 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;
(D) 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;
(E) 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 a rate
proportionately no greater than the corresponding rate for the
accounting period ending on the Accounts Date;
(F) no Group Company has become liable to pay any interest or penalty in
connection with any tax 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;
(G) no Group Company has made or agreed to make a surrender of or claim
for group relief under Chapter IV of Part X to ICTA 1988, or a
surrender of any amount of advance corporation tax under ICTA 1988
section 240; for the avoidance of doubt, this warranty 23.2(G) does
not apply to any arrangements made under or pursuant to the Tax
Covenant.
24. TAX RETURNS, DISPUTES, RECORDS AND CLAIMS, ETC.
24.1 So far as GEC is aware, each Group Company has, within the requisite
periods, made or caused to be made all proper returns and notifications
required to be made and supplied or caused to be supplied all material
information (including computations) required to be supplied to any
revenue or income tax authority within the last six years.
24.2 So far as GEC is aware, there is no significant dispute or disagreement
outstanding nor is any contemplated at the date of this agreement with
any revenue authority
63
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.
24.3 So far as GEC is aware, 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.
24.4 So far as GEC is aware, each Group Company has duly submitted all claims,
elections and disclaimers which have been assumed to have been made for
the purposes of the Accounts.
24.5 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.
24.6 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, other than normal withholdings of
social security contributions or taxes on earnings.
24.7 All particulars furnished to any Tax authority in connection with an
application for any statutory consent or clearance on behalf of any Group
Company fully and accurately disclosed everything material to the
decision of the authority in question and any transaction for which
consent or clearance was obtained has been carried into effect (if at
all) only in accordance with the terms of the application and the consent
or clearance.
24.8 So far as GEC is aware, no Group Company has taken any action which has
prejudiced any arrangement or agreement which it has with a Tax
authority.
24.9 Any surrender of advance corporation tax by a member of the GEC Group to
a Group Company has been properly documented and (in particular) all
necessary claims in respect of such surrender have been submitted to the
Inland Revenue.
25. STAMP DUTY
So far as GEC is aware, 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, by virtue of which any
Group Company has any right
64
material to the business of the Group as a whole and which are in
the possession, power or control of any Group Company or to the
production of which any Group Company is entitled (including for
the avoidance of doubt the duplicate of the registered transfer of
the St. Albans Property dated 22nd August 1997) have been duly
stamped.
26. VALUE ADDED TAX
26.1 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 (including, without limitation, with regard to
record-keeping and the timing of its payment of any such tax) under any
legislation relating to such tax or arising from any directions issued
under such legislation.
26.2 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.
26.3 The only Group Companies which form part of the VAT Group (as defined in
the Tax Covenant) are Marconi Instruments International Limited of
Longacres House, Norton Green Road, Stevenage, Hertfordshire SG1 2BA
(registered in England No. 934595), Sanders Instruments Limited of
Longacres House, Norton Green Road, Stevenage, Hertfordshire SG1 2BA
(registered in England No. 607978) and Marconi (UK).
26.4 No election under paragraph 2 of Schedule 10 VATA 1994 to waive exemption
from VAT in relation to any of the Properties in the United Kingdom has
been made by a Group Company or, so far as GEC is aware, by a predecessor
in title.
26.5 No direction has been given by H.M. Customs & Excise under Schedule 9(A)
VATA 1994 in relation to any Group Company and, so far as GEC is aware,
there are no grounds under which such a direction is likely to be given.
27. 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.
28. TAX ON DISPOSAL OF ASSETS
On a disposal of all its assets by a Group Company for:-
65
(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
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.
29. NON-DEDUCTIBLE REVENUE OUTGOINGS
So far as GEC is aware, no Group Company is under any obligation to make
any future payment of a revenue nature which will be prevented (whether
on the grounds of being a distribution or for any other reason) from
being deductible for corporation tax purposes, whether as a deduction in
computing the profits of a trade or as an expense of management or as a
charge on income or (in the case of Group Companies subject to UK
corporation tax) as a non-trading debit under Chapter II Part IV Finance
Act 1996, by reason of any Tax legislation.
30. DEDUCTIONS AND WITHHOLDINGS
During the last six years, each Group Company has so far as GEC is aware
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 to the appropriate authority for all amounts so
deducted.
31. INTRA-GROUP TRANSACTIONS
No Group Company has, at any time within the seven years ending on the
Completion Date, 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.
66
32. RESIDENCE
(A) So far as GEC is aware, the country which is given in Schedule 8 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 10 in respect of it.
(B) No notice of the making of a direction under section 747 ICTA 1988
has been received by a Group Company and, so far as GEC is aware, no
circumstances exist which will lead to the making of such a
direction.
33. GROUP INCOME
33.1 No assessment has been made under section 247 ICTA 1988 on a Group
Company in respect of advance corporation tax which ought to have been
paid or income tax which ought to have been deducted.
33.2 Save as disclosed, no assessment may so far as GEC is aware be made under
section 247 ICTA 1988 on a Group Company in respect of advance
corporation tax which ought to have paid or income tax which ought to
have been deducted since the Accounts Date.
34. REDUCTION OR ADJUSTMENT OF LOSSES
No Group Company has engaged in or been a party to any transaction as a
result of which sections 176 or 177 TCGA would apply to reduce the
allowable loss on the disposal of any share or security by any Group
Company or as a result of which the chargeable gain or allowable loss
arising on the disposal of an asset by a Group Company would be adjusted
in accordance with section 30 TCGA 1992.
35. FOREIGN EXCHANGE AND FINANCIAL INSTRUMENTS
35.1 No Group Company has ever made any claims under section 139 Finance Act
1993 in respect of any foreign exchange or gain.
35.2 No Group Company has ever made any election to treat any qualifying
assets or qualifying liabilities as matched pursuant to the Exchange
Gains and Losses (Alternative Method of Calculation of Gain or Loss)
Regulations 1994.
35.3 So far as GEC is aware, no Group Company has since the Accounts Date
entered into a qualifying contract under Chapter II of Part IV Finance
Act 1994 which remains outstanding.
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35.4 Neither any Group Company nor the principal company of any group of which
a Group Company is (or has ever been) a member has made any election
under section 148 Finance Act 1994.
36. DATA PROTECTION
36.1 Each Group Company which is required to do so under the Data Protection
Act 1984 has duly registered as a data user.
36.2 So far as GEC is aware, each Group Company has complied in all material
aspects with the data protection principles set out in the Data
Protection Act 1984.
36.3 No individual has claimed compensation from a Group Company under the
Data Protection Act 1984.
37. SHARE CERTIFICATES
The share certificates relating to shares in the Group Companies
incorporated in England listed in Part B of Schedule 10 which are
registered in the name of Marconi (UK) or an Employee are in the
possession or control of Group Companies.
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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
Undertaking. The provisions of paragraphs 4, 5, 6, 7 and 11 shall apply
with respect to claims under clauses 9.1 and 9.15 of this Agreement as
they apply to claims under the warranties and shall be construed
accordingly.
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.
2.2 The only Warranties given:
(A) in respect of Intellectual Property 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;
(B) in respect of matters related to the Environment, are those
contained in paragraphs 14 and 21 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;
(C) in respect of any Property (excluding matters related to the
Environment which affect any Property, to which paragraph (B) above
applies), 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 the Properties; and
(D) in respect of Tax, are those contained in paragraphs 22 to 35 of
Schedule 3 and each of the other Warranties shall be deemed not to
be given in relation to Tax.
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 (other
than Warranties 3.17 and 9.2) or the Tax Covenant or the
Environmental Undertaking, except as follows:-
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(i) in respect of any individual claim, whether under the
Warranties (other than Warranties 3.17 and 9.2), the Tax
Covenant (not being a claim arising under clause 2A(iv), (v)
or (vi) of the Tax Covenant or in respect of the Pre-Sale
Dividend) or the Environmental Undertaking, unless the amount
for which GEC is finally liable exceeds L50,000; and
(ii) in respect of all such claims, unless and until, in the case
of claims under the Warranties other than Warranties 3.17 and
9.2 the aggregate amount of all such claims (but ignoring
claims made under the Tax Covenant and the Environmental
Undertaking) for which GEC is finally liable exceeds
L2,000,000, in which event the Purchaser shall be liable for
the full amount of the claims (excepting always those
individual claims excluded under sub-paragraph (i) above);
and GEC shall be finally liable only if the amount of each such
claim and the aggregate of all such claims which are admitted or
proved in a court of competent jurisdiction exceed the relevant
figure specified in sub-paragraph (i) or (ii) (as the case may be)
above.
(B) The total aggregate liability of GEC for breach of the Warranties
(other than Warranties 3.17 and 9.2) and under the Tax Covenant and
the Environmental Undertaking shall not in any event exceed
L40,000,000 (and GEC's liability under the Environmental Undertaking
shall not in any event exceed L10,000,000 within that cap), save
that the aggregate liability of GEC in respect of any breach or
breaches of any Warranties relating to GEC's title to the Shares
shall be unlimited.
(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
(A) 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 31st
December, 1999 or, in the case of claims arising under the
Environmental Warranties or under the Environmental Undertaking,
five years after the Completion Date or, in the case of claims
arising under the Warranties contained in paragraphs 22 to 35 of
Schedule 3, seven years from the Completion Date.
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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.
(B) No claim shall be brought against GEC under Warranty 3.17 after the
Transfer Amount (as defined in Schedule 5) has been paid in
accordance with Schedule 5.
4. 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 or the Environmental Undertaking (a "Claim"), the Purchaser
shall and shall procure that the relevant Group Company shall:-
(A) within 45 working 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 reasonably appears to the
Purchaser that any such Claim of a third party received by or coming
to the notice of the senior management of the Purchaser may result
in a claim under the Warranties or the Environmental Undertaking;
(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) 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
71
(D) subject as provided below and without prejudice to the generality of
the foregoing 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 incurred thereby, allow GEC to take the sole
conduct of actions under any Environmental Warranty or the
Environmental Undertaking as GEC may 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
such Claim;
(ii) provide the Purchaser with copies of such documentation
relating to such 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 such
Claim
PROVIDED ALWAYS THAT, if GEC wishes to take sole conduct of a Claim
under the Environmental Undertaking the following provisions shall
apply. If the aggregate of all costs, liabilities and expenses
arising out of such Claim (when aggregated with amounts paid or
payable by GEC in respect of prior Claims under the Environmental
Undertaking) (A) is reasonably expected to fall below L10 million,
then GEC shall be entitled to sole conduct of such Claim (subject to
paragraph (C) below); (B) is reasonably expected to exceed L10
million then GEC and the Purchaser shall have joint conduct of such
Claim and (C) was thought to be below L10 million but it becomes
apparent to GEC that it is likely that the aggregate will, in fact,
exceed L10 million then, in cases where GEC has taken sole conduct,
GEC shall promptly notify the Purchaser of the change in position
and the Purchaser shall thenceforth be entitled to assume joint
control of the Claim with GEC. In no event may GEC be required to
indemnify the Purchaser for an amount in respect of Claims under the
Environmental Undertaking in excess of L10 million.
If the Purchaser and GEC fail to agree whether GEC is entitled to
take sole conduct of a Claim, an expert opinion from an independent
environmental consultant of no less than ten years experience in
assessing the cost of environmental liability as to whether the
costs, liabilities and expenses related to any Claim are likely to
exceed L10 million (less any amounts paid or payable by GEC in
respect of prior Claims under the Environmental Undertaking) shall
be obtained whose opinion shall, in the absence of manifest error,
be final. The costs of obtaining such opinion shall be borne
72
equally by the parties. A copy of the opinion and any supporting
material shall be available to each party.
(E) The Purchaser undertakes to comply with its common law duties to
mitigate its loss and nothing in this Agreement shall derogate from
that duty.
(F) Notwithstanding the terms of sub-paragraph (B) of this paragraph 4,
GEC may not request the Purchaser to take any action against an
Employee (except where there has been fraud or theft by the
Employee).
5. 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 the same loss caused by a
breach of the Warranties or a claim to which the Environmental
Undertaking applies.
(ii) 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 or the Environmental Undertaking and vice versa.
(iii) The Purchaser shall have no rights or remedy whatsoever in
respect of any fact, matter or circumstance constituting a
breach of Warranty or giving rise to a claim under the
Environmental Undertaking except pursuant to a claim for such
breach under this Agreement, and the Purchaser hereby
irrevocably waives, releases, discharges and acquits GEC from
any other causes of action, known or unknown, and whether
based on statute, regulation or common law, in respect of such
fact, matter or circumstance, and from any claims, demands,
debt, controversies, damages, costs, losses and expenses in
respect thereof except as provided in this Agreement. Neither
the acceptance nor the delivery of this waiver and release
shall be construed as an admission of liability.
(B) Taxation
In calculating the liability of GEC for any breach of the Warranties
or under the Environmental Undertaking there shall be taken into
account the amount by which any Taxation for which the relevant
Group Company is now or in the
73
future accountable or liable to be assessed is or will be reduced as
a result of the matter giving rise to such liability, provided that
if any amount paid by GEC in respect of any breach of the Warranties
is held by a tax authority to be a taxable receipt of the Purchaser,
then the amount so paid (the "Original Sum") shall (to the extent
that such taxation has not already been taken into account in the
determination of the Original Sum) be increased to the amount which
after subtraction of the amount of tax paid on such increased amount
is equal to the Original Sum.
(C) Insurances
If, in respect of any matter which would give rise to a breach of
the Warranties or a claim under the Environmental Undertaking, 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. 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) (less the Purchaser's or the Group Company's reasonable
costs of recovering the same (to the extent directly attributable to
such recovery)) shall then be applied to reduce or extinguish any
such claims for breach of the Warranties or under the Environmental
Undertaking.
(D) Recovery from Third Parties
(i) Subject to and save as provided in paragraph 2(B) of Part B of
Schedule 6, 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 or under
the Environmental Undertaking 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, provided that GEC shall have given
the Purchaser such indemnities as the Purchaser may reasonably
require in connection therewith, 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
74
recovered, less all reasonable costs, charges and expenses
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.
(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 or under the Environmental
Undertaking or under any other 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, provided that
GEC shall have given the Purchaser such indemnities as the
Purchaser may reasonably require in connection therewith, 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.
6. ACTS OF THE PURCHASER
No claim shall lie against GEC under the Warranties or the Environmental
Undertaking 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 which could
reasonably have been avoided, carried out by the Purchaser or on
its behalf or by persons deriving title from the Purchaser on or
after Completion otherwise than in the ordinary course of business
and which the Purchaser knew or ought reasonably to have been aware
could result in a breach of Warranty; or
(iii) any admission of liability made in breach of paragraph 4(C) of this
Schedule after the date hereof by the Purchaser, a Group Company or
a member of the
75
Purchaser's Group or on their behalf or by persons
deriving title from the Purchaser on or after Completion.
7. ALLOWANCE, PROVISION OR RESERVE IN THE MANAGEMENT ACCOUNTS
No matter shall be the subject of a claim for breach of any of the
Warranties to the extent that allowance, provision or reserve in respect
of such matter shall have been made in the Management Accounts disclosed
in Disclosure Document 17-116 or has been included in calculating
creditors or deducted in calculating debtors in the said Management
Accounts and (in the case of creditors or debtors) is identified in the
records of the relevant Group Company or shall have been otherwise taken
account of or reflected in the said Management Accounts save that this
paragraph shall not apply to (i) the patent infringement provision
referred to in paragraph 2.1(iv) of the Disclosure Letter or (ii) the
excess rent provision for the Luton property.
8. LEGISLATION
No liability shall arise in respect of any breach of any of the
Warranties or under the Environmental Undertaking if and to the extent
that liability for such breach occurs or is increased wholly or partly as
a result of any legislation not in force at the date hereof or which
takes effect retrospectively PROVIDED THAT for the purposes of
establishing whether any liability has arisen under the Environmental
Warranties or under the Environmental Undertaking the new contaminated
land power introduced by section 57 of the Environmental Act 1995 to the
Environmental Protection Act 1990 and the first set of guidance and
regulations adopted under that power (but no subsequent modifications
thereto) shall be deemed to be in force and any retrospective effect of
such power guidance and regulations shall not be deemed grounds for the
avoidance of liability pursuant to this paragraph 8.
9. 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
76
(C) 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
(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.
10. THE PURCHASER'S KNOWLEDGE
GEC shall not be liable under the Warranties to the extent that the
Purchaser or any member of the Purchaser's Group (as the same is
constituted on the date hereof) or any of their respective relevant
employees or agents had knowledge on the date hereof of the matters
forming the basis of the claim.
For the purposes of this paragraph 10, the Purchaser or any member of the
Purchaser's Group at the date hereof or any of their respective employees
or agents shall be deemed to have knowledge of the matters forming the
basis of the relevant claim only if and to the extent that the employees
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 from which such fact was apparent provided
that no person shall be deemed to have knowledge of any matter to the
extent that the person who was given access to the relevant document or
other source of information could not reasonably be considered to be
capable of assessing the significance of such matter.
11. NO LIABILITY FOR CONTINGENT OR NON-QUANTIFIABLE CLAIMS
If any breach of the Warranties or under the Environmental Undertaking
arises by reason of some liability of any member of the Purchaser's Group
or of the Purchaser
77
or 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.
12. NO WARRANTIES GIVEN IN RESPECT OF FORECASTS, BUDGETS OR PROJECTIONS, THE
INFORMATION MEMORANDUM, THE KPMG REPORT OR THE DISCLOSURE DOCUMENTS.
The Purchaser acknowledges that no Warranties are given by GEC in respect
of forecasts, budgets or projections or, in respect of any statement
made, information given or opinion expressed in the Information
Memorandum, the KPMG Report or in any Disclosure Document.
13. PAYMENT TO BE ADJUSTMENTS OF PURCHASE PRICE
Subject to clause 9 of this agreement, any payment made by GEC in respect
of any claim under the Warranties or under the Environmental Undertaking
or the Tax Covenant and any payment received by GEC pursuant to this
Agreement shall constitute an adjustment to the Aggregate Purchase Price
payable under clause 3 (Consideration) of this Agreement.
14. FRAUD
For the avoidance of doubt, the provisions of this Schedule shall take
effect subject to the provisions of clause 15.4 of this Agreement.
15. ASIA
Neither GEC nor any member of the GEC Group shall have any liability
whatsoever to the Purchaser under any of the Warranties by reason of any
of the businesses of any Group Company being adversely affected (before
or after the date of this Agreement) by the economic conditions affecting
Asia or any part thereof.
78
SCHEDULE 5:
PENSION ARRANGEMENTS
PART A - MARCONI (UK)
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 to this Part of this
Schedule;
"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 6 months after the Pension
Transfer Date or such other date as shall
reasonably be agreed by SPT and the
Purchaser's Actuary;
"PENSIONABLE EARNINGS" has the meaning defined in the rules
governing the GEC Scheme from time to time;
"PENSIONS LEGISLATION" the Pensions Act 1995 and regulations
thereunder made or to be made in the
future;
"PENSION TRANSFER DATE" the date falling six months after
Completion or such earlier date as may be
notified in writing by the Purchaser to
GEC;
"PURCHASER'S ACTUARY" Moray Sharp of Lane, Clark & Peacock 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;
79
"TRANSFER AMOUNT" the amount calculated in accordance with
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;
"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 and who are still
in service with Marconi (UK) at the time of
such election.
2. The Purchaser undertakes to:
2.1 establish or procure the establishment of a retirement benefits
scheme or a personal pension 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 or Chapter IV
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 who remain members of the GEC
Scheme and who have not reached their normal retirement date to
become members of the Transferee Scheme with effect from the Pension
Transfer Date.
3.1 GEC undertakes that it will take all reasonable endeavours (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 GEC undertakes to procure that during the Interim Period no amendments
will be made to the GEC Scheme or payment made from the GEC Scheme which
will
80
adversely affect the Transfer Amount and that any increase in the
rate of contributions to the GEC Scheme shall not apply to the Company or
to any of the Transferring Employees without, in either case, GEC giving
such notice as is reasonably practicable in the circumstances, being at
least two weeks.
3.3 GEC undertakes to procure that the GEC Scheme will not be terminated or
commence to wind-up during the Interim Period without giving such notice
in writing as is reasonably practicable in the circumstances, being at
least two weeks.
4. Marconi (UK) 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 Marconi (UK) will pay to SPT contributions to be made by and in
respect of the Transferring Employees at the following rates:-
(a) Marconi (UK) six (6) per cent of Transferring Employees
Pensionable Earnings, or such other rates applicable to
participating employers generally as are in force under the
trust deed and rules governing the GEC Scheme from time to
time; and
(b) for each Transferring Employee, three (3) per cent of his
Pensionable Earnings or such other rates applicable to
participating employees generally as are in force under the
trust deed and rules governing the GEC Scheme from time to
time.
5.2 Marconi (UK) will pay a management charge to the principal company
of the GEC Scheme of 1.6% of Marconi (UK)'s Transferring Employees'
Pensionable Earnings in respect of the whole of the Interim Period;
5.3 the Purchaser will procure that Marconi (UK) 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 Marconi (UK) 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:
81
6.1 determine the Transfer Amount (as if for the purposes of this
calculation all the Transferring Employees are Transferring Members)
in accordance with the terms and assumptions set out in the
Actuary's Letter;
6.2 within 2 months of the Pension Transfer Date 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 3
months after the Pension Transfer Date.
7. Subject to the Purchaser complying with its obligations under this Part
of this Schedule and provided that SPT and the Purchaser's Actuary have
agreed the Transfer Amount in accordance with the provisions of
paragraphs 6 and 10 of this Part of this Schedule, 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 the
Pension Transfer Date which are reasonably agreed by the Purchaser's
Actuary and SPT as being no less favourable overall than the benefits for
such service to which the Transferring Members are entitled under the GEC
Scheme on the day before the Pension Transfer Date on the basis of the
actuarial assumptions in Appendix A to this Schedule or if the Transferee
Scheme is a defined contributions scheme that part of the Transfer Amount
which is reasonably agreed by SPT and the Purchaser's Actuary as being
applicable to each Transferring Member shall be credited in full to
provide benefits in respect of service prior to the Pension Transfer Date
for the relevant Transferring Member.
9. If any of the Transferring Members pay additional voluntary contributions
in respect of which the benefits are not related to pensionable service
or 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 to
an independent actuary to be nominated jointly by GEC and the Purchaser
or, failing agreement over the nomination,
82
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 9 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.
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.
14.1 The Purchaser agrees that it will procure that Marconi (UK) will
agree that GEC (or a subsidiary or associated company of GEC
determined, in its absolute discretion, by GEC) may after notifying
Marconi (UK) make all decisions and exercise all discretions in
relation to the GEC Scheme necessary or desirable by or under the
Pensions Legislation.
14.2 While Marconi (UK) remains a participating employer in the GEC
Scheme, the Purchaser shall procure that Marconi (UK) 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 reasonably directed from time to
time in writing by GEC;
(C) co-operate with GEC and SPT in providing information about,
and access to, the Transferring 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
83
under this sub-paragraph as may be reasonably considered
necessary or desirable by GEC; and
(E) if reasonably requested by GEC execute a deed irrevocably
appointing GEC as its attorney to execute (in the name of such
Group 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 Marconi (UK) 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;
(B) agree that the consultation required by section 35(5)(b) of
the Pensions Act 1995 by SPT with the employer in relation to
the written statement of investment principles may be with GEC
to its exclusion; and
(C) nominate GEC as its representative 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
Marconi (UK) in relation to the exercise of the authorities and
discretions envisaged as conferred on GEC by this paragraph.
84
APPENDIX A
STANHOPE PENSION TRUST LIMITED
Direct dial: (01785) 274730
Our ref: DOC/S/04 (07.05.1997)
- 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").
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.
85
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.
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 : 4.25 divided by the yield on the FTSE
precisely equal to) 55 Actuaries All-Share Index on the first
working day of the month in which the
Calculation Date occurs.
86
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.
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.
87
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.
Yours faithfully,
Philip E Read
Director
88
STANHOPE PENSION TRUST LIMITED
EXPENSES ON TRANSFER VALUES PAID AND RECEIVED
GROSS VALUE EXPENSES
L L L L
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
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.
89
APPENDIX B
----------
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 Trust 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:
.............................. ................................
90
Home address:
..................................................................
...............................................................................
......................................... Postcode:
..........................
PLEASE RETURN THIS TO [YOUR PERSONNEL DEPARTMENT] NO LATER THAN
[ ]
Issued by: Special Projects Department
Stanhope Pension Trust Limited
PO Box 20
Lichfield Road
Stafford ST17 4LN
91
PART B - MARCONI (US)
BENEFITS
1. As of the Completion Date, the Purchaser (or an affiliate thereof) will
extend to active Affected Employees of Marconi (US) benefit plans and
programs comparable to that offered similarly situated employees
presently employed by the Purchaser. For the purposes of this Part B,
"Affected Employee" means individuals who are employees of Marconi (US)
on the Completion Date. The Purchaser shall, as of the Completion Date,
offer to all Affected Employees membership of all the Guarantor's benefit
plans, including, without limitation, medical, health and dental plans.
on terms no less favourable than those generally available to other
members of each such plan .
ACCRUED VACATION
2. The Purchaser shall be responsible for all vacation, holiday, sickness
and personal days accrued by the employees of Marconi (US) as of the
Completion Date.
PARTICIPATION IN BENEFITS PLANS
3. Affected Employees shall be given credit for all service with Marconi
(US) under Purchaser's employee benefit plans and other benefit
arrangements for purposes of determining eligibility to become a
participant (and in the case of any retirement plan their vested
interest) based on their original date of hire with Marconi (US). For
each Affected Employee who was enrolled for group medical and dental
coverage on the Completion Date and who enrols in Purchaser's group
medical plan as of the Completion Date, the Purchaser shall (i) cause to
be waived any pre-existing condition limitation that might otherwise
apply to such Affected Employee and (ii) agrees to recognise (or cause to
be recognised) the dollar amount of all expenses incurred by such
Affected Employees during the calendar year in which the Completion Date
occurs for purposes of satisfying the calendar year deductible and
co-payments limitations in accordance with the terms of the Purchaser's
plan. GEC shall provide the Purchaser with a true and complete listing
of all amounts so expended and such other information as the Purchaser
may require in order properly to administer the provisions of this
Section.
PARTICIPATION IN GEC'S EMPLOYEE PENSION BENEFIT PLANS
4.1 As of the Completion Date, Affected Employees' participation in the
following plans shall terminate:-
GEC-USA Employees' Savings and Investment Plan ("GEC Savings Plan"), and
GEC-USA Employees' Retirement Plan ("GEC Retirement Plan").
92
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 respective terms of such plans. Prior to the
Completion Date, GEC shall take any and all actions necessary to effect
this termination of participation.
4.2 The Purchaser shall pay, or cause Marconi (US) 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 otherwise to 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 Marconi (US) as may be reasonably requested by GEC or one of
its affiliates with respect to the plans described above.
PARTICIPATION IN GEC'S EMPLOYEE WELFARE BENEFIT PLANS
5. As of the Completion Date, the participation of Affected Employees and
the dependants of any Affected 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 The GEC Welfare Plan shall pay in accordance with the terms of the plan,
claims covered by the plan which are incurred prior to or on the
Completion Date. 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 [clause deleted]
5.3 The Purchaser shall assume and satisfy the obligation of GEC, a direct or
indirect subsidiary of GEC, or the GEC Welfare Plan to offer on or after
the Completion Date continued medical and dental expense coverage with
respect to the Subsidiary Welfare Participants who incur a qualifying
event on or after the Completion Date which is required by Section 4980B
of the Internal Revenue Code of 1986, as amended, or Section 501 of the
Employee Retirement Income Security Act of 197, as amended. All other
liabilities and obligations arising under Code Section 4980B of ERISA
Section 501 shall remain with GEC and the GEC Welfare Plan.
5.4 The Purchaser shall pay, or cause Marconi (US) to pay, all amounts which
are paid by the GEC Welfare Trust under the GEC Flexible Spending Account
Program portion of the GEC Welfare Plan as a reimbursement or payment of
medical, dental and dependent care expenses and for which the GEC Welfare
Trust has not received payment from Marconi (US) as of the Completion
Date.
93
6. The Purchaser will indemnify and hold harmless GEC and the direct or
indirect subsidiaries of GEC from and against damages, including attorney
fees, arising from the failure of the Purchaser or Marconi (US) to
satisfy the obligations imposed on the Purchaser or Marconi (US) under
this Part of this Schedule. GEC (and each of its affiliates) shall
indemnify and hold Purchaser (and each of its affiliates) harmless from
and against damages, including attorney fees arising from the failure to
satisfy the obligation imposed on GEC (or any affiliate thereof) under
this part of this Schedule.
STATUS OF BENEFIT PLANS
7. A complete and accurate list of all plans, practices and arrangements
that provide retirement, medical, dental, life, accidental death,
dismemberment, severance or long term disability benefits (including any
section 125 plans that provide such benefits) to employees or former
employees which Marconi (US) or any of its subsidiaries maintains or
contributes to, or has any obligation to contribute to, or has or could
incur any liability (whether actual or contingent, directly or
indirectly) ("Benefits Plans")is Disclosure document 17-123. The
Benefits Plans have been administered and maintained in substantial
compliance with all laws, rules and regulations and all reports required
by any governmental agency have been filed. No Benefit Plan is a
"multi-employer plan" within a meaning of Section 3(37) of ERISA.
7.1 No event has occurred or is expected to occur in connection with any
Benefit Plan which could subject the Purchaser (or any affiliate thereof)
to any liability. Except as provided in paragraphs 4.2, 5.3 and 5.4
above, GEC shall retain and satisfy all liabilities, direct or indirect,
known or unknown, actual or contingent, associated with any Benefit
Plan(except for the Marconi (US) Severance Policy) (which shall subject
to paragraph 7.3 below include but shall not be limited to any liability,
other than a liability to Tax, arising from the exclusion of part-time
employees from the profit-sharing (401(k)) plan (the "Profit-Sharing
Plan")), and neither the Purchaser nor any of its affiliates shall have
any obligation or liability whatsoever with regard to any such Benefit
Plan. The provisions of this paragraph 7.1 and paragraph 6 above shall
survive the Completion Date.
7.2 With respect to any Benefit Plan that is subject to the provision of
Title IV of ERISA, (i) no such plan has been terminated so as to result,
directly or indirectly, in any liability, contingent or otherwise, to the
Purchaser (or any affiliate thereof); (ii) no complete or partial
withdrawal has been made which might result in any liability to the
Purchaser (or any affiliate thereof); (iii) no proceeding has been
initiated by any person (including the PBGC) to terminate any such plan;
(iv) no condition or event currently exists or is currently expected to
occur that could result, directly or indirectly, in any liability to the
Purchaser (or any affiliate thereof); (v) if any such plan were to be
terminated or if any person were to withdraw from such plan, neither the
Purchaser nor any of its affiliates would incur, directly or indirectly,
any liability; (vi) no reportable event (as defined in ERISA) has
occurred with respect to any such plan; (vii) no such plan has incurred
any accumulated funding deficiency, whether or
94
not waived, and no application has been made for waiver; (viii) each
contribution required to be made to each such plan has been made when
due.
7.3 At the request of GEC, and subject to GEC indemnifying the Purchaser
and/or the relevant Group Company to their reasonable satisfaction
against any liabilities, costs, damages or expenses which may be
reasonably and properly incurred thereby, the Purchaser shall allow GEC
to take the sole conduct of any discussions, negotiations or proceedings
with the Internal Revenue Service or any other Government authority or
organisation or court in connection with the exclusion of part-time
employees from the GEC-USA Employees' Savings and Investment Plan and in
that connection the Purchaser shall give or cause to be given to GEC all
such assistance as GEC may reasonably require in connection with settling
or compromising such discussions, negotiations or proceedings.
8. INDEMNITY
8.1 The Purchaser agrees to indemnify GEC, any member of the GEC Group and
the trustee and administrator of any Benefit Plan including, the GEC
Welfare Plan, against any COBRA Liabilities in respect of any Retained
Employees.
8.2 For the purposes of this paragraph 8:
"Retained Employees" means any Affected Employee who elects to continue
with medical, health and dental coverage under the GEC Welfare Plan after
the Completion Date.
"COBRA Liabilities" means all liabilities, losses, costs, damages, claims
or expenses relating to or in connection with the continuing medical,
health and dental coverage under the GEC Welfare Plan, to the extent that
such liabilities, losses, costs, damages, claims or expenses would have
been sustained or borne by the Guarantor or the medical health and dental
plan maintained by the Guarantor if the Retained Employee had in fact
elected to join such plan maintained by the Guarantor immediately after
the Completion Date less the premiums generally payable by similar
members of such plan.
8.3 GEC shall calculate and then agree with the Purchaser (such agreement not
to be unreasonably withheld or delayed) any amount payable under this
paragraph 8. The Purchaser shall furnish to GEC such information as may
be reasonably requested for the purposes of making such a calculation.
95
SCHEDULE 6:
PART A - REAL PROPERTY UNDERTAKINGS
1.1 GEC shall as soon as is reasonably practicable apply for and use its
reasonable endeavours to obtain the Requisite Consent as soon as
possible.
1.2 The Purchaser shall use its best endeavours to assist and shall procure
that Marconi (UK) assists GEC in obtaining the Requisite Consent and in
particular shall promptly provide all such information as GEC may
reasonably require in relation to the obtaining of such consent and such
other information as the landlord may be entitled to request under the
terms of the lease of the Longacres Property.
1.3 If reasonably required by the landlord the Purchaser will procure that
Marconi (UK) enters into a direct covenant with the landlord to observe
and perform the terms of the lease of the Longacres Property throughout
the remainder of the term and (if the landlord is so entitled) any
statutory extension of it.
1.4 If the landlord is entitled to require additional security in accordance
with the provisions of the lease of the Longacres Property and reasonably
withholds Requisite Consent to the transfer of the Longacres Property to
Marconi (UK) the Purchaser will take an Assurance in its own name of the
Longacres Property or guarantee the obligations of Marconi (UK) under the
lease and will enter into a direct covenant with the landlord to observe
and perform or (as the case may be) guarantee the observance and
performance of the terms of the lease of the Longacres Property
throughout the remainder of the term and (if the landlord is so entitled)
any statutory extension of it.
1.5 If the landlord is entitled to require additional security in accordance
with the provisions of the lease of the Longacres Property and reasonably
withholds Requisite Consent to the transfer of the Longacres property to
Marconi (UK) or the Purchaser or to Marconi (UK) guaranteed by the
Purchaser, GEC shall as soon as reasonably practicable apply for and use
its reasonable endeavours to obtain the Requisite Consent to the grant to
the Purchaser of an underlease of the Longacres Property on the same
terms as the terms of the lease of the Longacres Property and the
Purchaser shall take such an underlease of the Longacres Property within
five days of the grant of the Relevant Consent.
1.6 With effect from the Completion Date GEC will procure that the Longacres
Property is held on trust for Marconi (UK). Marconi (UK) shall on and
from the Completion Date be permitted to enter into occupation of the
Longacres Property as licensee of GEC and shall be entitled to receive
all profit and other income from it.
1.7 The Purchaser shall from the Completion Date until legal completion in
respect of the Longacres Property be responsible for the payment of all
outgoings in respect of the Longacres Property (save that any rent or
sums payable to the landlord shall be paid by the Purchaser to GEC not
less than 4 working days before they are due and GEC
96
shall promptly pay or procure payment of such sums to the landlord) and
shall procure that Marconi (UK) observes and performs the covenants,
agreements, conditions and stipulations on the part of the lessee to be
performed and observed under the lease of the Longacres Property and
shall indemnify GEC against any losses arising out of any breach of
those obligations.
1.8 If the Requisite Consent has not been obtained within 12 months after the
Completion Date or earlier if the landlord itself shall take proceedings
against GEC alleging a breach of the alienation covenant of the lease of
the Longacres Property then GEC shall at the joint cost of GEC and the
Purchaser make an application to a competent court for a declaration that
the Requisite Consent has been unreasonably withheld.
1.9 Notwithstanding the foregoing the Purchaser may at any time on giving
notice to GEC elect to take an assignment of the lease of the Longacres
Property in respect of which the Requisite Consent has not been obtained
and shall in that case provide to GEC in the Assurance of the Longacres
Property to itself an indemnity against all demands, claims, losses,
damages, costs, expenses and other liabilities whatsoever which may be
suffered or sustained by GEC as owner of the Longacres Property as a
result of such Assurance being completed without the Requisite Consent.
1.10 The Assurance of the Longacres Property shall be completed on whichever
is the latest of:-
(A) the Completion Date;
(B) the date five working days after the Requisite Consent shall have
been obtained; and
(C) where the Requisite Consent has not been obtained, the later of (i)
the date five working days after the Purchaser shall give notice to
GEC of its desire to exercise its rights in relation to the
Longacres Property pursuant to paragraph 1.9 and (ii) the date five
working days after a court or competent jurisdiction has issued a
declaration to the effect that the Requisite Consent has been
unreasonably withheld.
1.11 On legal completion of the Longacres Property GEC will execute an
Assurance of the Longacres Property to Marconi (UK) or to the Purchaser
as the case may be in the form of the Assurance and then the Purchaser
will or procure that Marconi (UK) shall execute the Assurance and deliver
a certified copy thereof to GEC. Marconi (UK) shall accept the title to
the Longacre Property without further enquiry requisition or objection.
1.12 On legal completion of the Longacres Property GEC will deliver to Marconi
(UK) or the Purchaser the title deeds and documents in GEC's possession
relating to the
97
Longacres Property together with the Requisite Consent duly executed by
the landlord.
1.13 On legal completion of the Longacres Property GEC will assign to Marconi
(UK) or to the Purchaser as the case may be an assignment of the
Contractors' Warranty in the Agreed Form.
2. The Purchaser shall pay to GEC a sum equal to any refund in the overall
business rates paid relating to the Gunnels Wood Properties and the
Longacres Property when it is received by the Purchaser after the
Completion Date for the period from 1st June, 1994 to the Completion
Date.
3.1 GEC shall procure that Picker International Limited ("Picker") vacates
all parts of the Gunnels Wood Properties which it currently occupies on
or before 1 August 1998.
3.2 If GEC is unable to procure that Picker vacate the premises the subject
of its tenancy on or before 1 August 1998 then GEC shall indemnify the
Purchaser and/or Marconi (UK) in full in relation to any costs expenses
or any other liability it incurs in relation to any steps the Purchaser
and/or Marconi (UK) take thereafter in order to terminate Picker's
tenancy and secure vacant possession of the premises the subject of the
said tenancy.
4. GEC undertakes, upon Marconi (UK) vacating the premises at Eaton Green
Road, The Airport, Luton ("the Luton Premises") on or about 25th
December, 1998, pay to the Purchaser by way of adjustment to the
Aggregate Purchase Price an amount equal to any costs, damages, expenses
and liabilities incurred by the Purchaser or Marconi (UK) arising out of
any claim against them by the Council of the Borough of Luton ("the
Council") or their successors in title in relation to
(A) any shortfall between the sum actually paid by Marconi (UK) to the
Council for its use and occupation of the premises for the period
from and including 25 December 1983 to Completion and the sum (if
any) found or held to be due to the Council in respect of rent
reviews during that period; and
(B) a claim by the Council in respect of dilapidations at the Luton
Premises
up to a maximum aggregate amount of L250,000 and PROVIDED THAT (i) the
Purchaser shall procure that GEC shall participate in all negotiations in
respect of such claims for unpaid rent or dilapidations and the Purchaser
further undertakes that it will not agree to settle any such claims
without the prior written consent of GEC (such consent not to be
unreasonably withheld or delayed); and (ii) the Purchaser shall procure
that Marconi UK shall take all reasonable steps to avoid any material
deterioration to the state of repair of the Luton Premises between
Completion and vacation of the Luton Premises and (iii) the Purchaser
shall procure that Marconi UK continues to maintain and repair such
premises on a basis consistent with its practice prior to Completion.
98
PART B - ENVIRONMENTAL UNDERTAKING
1. GEC undertakes with the Purchaser to keep the Purchaser and Marconi (UK)
fully indemnified against all costs, damages and expenses incurred by the
Purchaser or Marconi (UK) arising directly out of any claim against them
which results directly from the presence or effect of any Dangerous
Substance upon within or below land or water at or originating from the
St. Albans Property.
2. The undertaking in paragraph 1 above shall take effect subject to the
following:
(A) the liability of GEC thereunder shall not in any event exceed L10
million in aggregate and shall be subject to the further limitations
set out in Schedule 4 to this Agreement to the extent stated in
Schedule 4;
(B) without prejudice to paragraph 5(D) of Schedule 4, the Purchaser
shall not be entitled to make or bring any claim against GEC under
the undertaking in paragraph 1 above unless the Purchaser and/or
Marconi (UK) shall have first taken all reasonable steps to recover
any sum due from Bryant Homes Southern Limited or its successors in
title ("Bryant Homes") under paragraph 9.3 of an Agreement for Sale
and Purchase dated 8th August, 1997 between Marconi (UK) (1) and
Bryant Homes (2) being Document 28 in File 36 No. 17 Additional
Documents in the Disclosure Documents and the environmental
indemnity given by Bryant Homes contained in the registered transfer
of the St. Albans Property from Marconi (UK) to Bryant Homes dated
22nd August, 1997 being Disclosure Document 17-42 PROVIDED THAT
the steps required to be taken by the Purchaser and/or Marconi (UK)
to effect recovery from Bryant Homes shall not include the
commencement of insolvency proceedings or the appealing of a
judgment of a Court given in Bryant Homes' favour where Counsel of
at least ten years call and with relevant experience advises that
there is no reasonable prospect of the Purchaser and/or Marconi (UK)
succeeding in such appeal. In the event that the Purchaser and/or
Marconi (UK) recover any amount from Bryant Homes, the amount of
GEC's liability under this undertaking shall be reduced by the
amount recovered;
(C) if GEC takes sole conduct of any action under the Environmental
Undertaking pursuant to paragraph 4(D) of Schedule 4 then the
obligation of the Purchaser and/or Marconi (UK) to take any steps
against Bryant Homes under paragraph 2(B) of Part B of this Schedule
shall no longer apply save that GEC may take such action in the name
and on behalf of Marconi (UK) on the terms of paragraph 4(D) of
Schedule 4; and
(D) (for the avoidance of doubt) any liability of GEC that might subsist
in relation to the subject matter of the undertaking in paragraph 1
under paragraph 9.3 of an Agreement for Sale and Purchase dated 6th
August, 1997 between Marconi (UK) (1) and GEC (2), being Document 23
in File 36 No. 17
99
Additional Documents in the Disclosure Documents is irrevocably
waived, released, discharged and acquitted by virtue of
paragraph 5(A)(iii) of Schedule 4 of this Agreement.
100
SCHEDULE 7:
GEC AND MARCONI MARKS
The following provisions shall relate to the use by the Group Companies
of the GEC and Marconi marks.
GEC
1. All use of the GEC mark must cease at Completion.
MARCONI
2. Subject as set out below, all use of the Marconi name must cease at
Completion. In the case of each exception referred to below the Group
Companies shall in any event use all reasonable endeavours to cease all use
of the Marconi marks as soon as reasonably practicable.
CORPORATE NAMES
3. Any Group Company, which includes Marconi as part of its corporate name,
shall change its name to a name which does not include Marconi or any
confusingly similar name at Completion or as soon as possible thereafter
(but in any event within one month following Completion).
BROCHURES AND CATALOGUES
4. No new sales brochures and/or catalogues can be produced using the Marconi
name (whether in electronic or hard copy form). The words "formerly
Marconi Instruments Limited" in a form agreed by the parties prior to
Completion may be included in such new brochures and/or catalogues for a
period of 9 months after Completion.
5. For the existing catalogues/brochures, further deliveries can be taken
(against existing orders) for a period of 3 months after Completion. Such
catalogues/brochures may only be used if stickers are placed on the
catalogues to obliterate any reference to the GEC or Marconi marks. The
Purchaser shall use its reasonable endeavours to ensure that
catalogues/brochures in the possession of overseas distributors are also
blanked out in the same way.
THE DOMAIN NAME
6. The internet domain name for Group Companies shall be changed at Completion
to a name that does not include GEC or Marconi. A technical solution will
be considered to ensure that any enquiries made by third parties by
reference to the existing domain name are diverted to the new domain name
(web site). Consideration will be given to whether the Purchaser is
permitted to use "formerly Marconi Instruments Limited" on the new web
site.
101
BUILDINGS AND VEHICLES
7. All signage on buildings is to be removed within 9 months of Completion and
all references to the Marconi name on vehicles are to be removed within 1
month of Completion.
SOFTWARE
8. The Group Companies shall use their reasonable endeavours to remove
references to the Marconi mark from software as soon as reasonably
practicable, and in any event within 9 months from Completion.
PRODUCTS
9. No product manufactured after Completion may use the Marconi name after a
period of 9 months from Completion. Stock existing at the date of
Completion may continue to be sold bearing the Marconi name.
102
SCHEDULE 8:
FN AND FM PATENTS
FRACTIONAL N
United Kingdom GB 2140232
France (EP) 0125790
Germany P 3478780
Italy (EP) 0125790
Netherlands (EP) 0125790
USA 4609881
DC COUPLED FM
United Kingdom GB 2214012B
France (EP) 0322139
Germany P 3850075.2
Italy (EP) 0322139
Japan 63-325728 (pending)
Netherlands (EP) 0322139
USA 4870384
103
SCHEDULE 9:
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.
[CIRCULATED SEPARATELY]
104
SCHEDULE 10:
PART A - BASIC INFORMATION ABOUT THE COMPANIES
1. COMPANY NAME: Marconi Instruments Limited
PLACE OF
INCORPORATION/REGISTRATION: England and Wales
REGISTRATION NUMBER: 317241
DATE OF INCORPORATION: 6th August, 1936
REGISTERED OFFICE: Longacres House
Norton Green Road
Stevenage
Hertfordshire
SG1 2BA
TAX RESIDENCE: United Kingdom
SHARE CAPITAL - AUTHORISED: 5,000,000 ordinary shares of L1
- ISSUED: 700,000 ordinary shares of L1
REGISTERED SHAREHOLDER(S): GEC-Marconi Limited: 699,999
ordinary shares
Associated Electrical Industries
Holdings Limited: 1
ordinary share
BENEFICIAL OWNER(S) OF ISSUED
SHARES: The General Electric Company, p.l.c.
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: Marconi Instruments SA France
Marconi Messtechnik GmbH Germany
Marconi Instrumentos SA Spain
Marconi Instruments International
Limited
Sanders Instruments Limited
W H Sanders (Electronics) Limited
105
DIRECTORS: Peter John Smith
Andrew Plews Warwick
Dennis John Bradney
Christopher John Purchase
Phillip Michael Drury
Michael John McCreary
Stephen McQuillan
SECRETARY: Dennis John Bradney
106
2 COMPANY NAME: Marconi Instruments Inc.
PLACE OF
INCORPORATION/REGISTRATION: Delaware, USA
REGISTRATION NUMBER: 727041009
DATE OF INCORPORATION: 9th February, 1987
REGISTERED OFFICE: The Corporation Trust Co.
1209 Orange Street
Wilmington
DE 19801
TAX RESIDENCE: USA
SHARE CAPITAL - AUTHORISED: 10,000 shares of Common Stock, no par
value
- ISSUED: 6000 shares of Common Stock, no par
value
REGISTERED SHAREHOLDER(S): GEC Incorporated
BENEFICIAL OWNER(S) OF ISSUED
SHARES: GEC Incorporated
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: James R Koehn
Peter J Smith
Charles A Banham
Andrew P Warwick
SECRETARY: Charles A Banham
107
PART B - BASIC INFORMATION ABOUT SUBSIDIARIES OF THE COMPANIES
1 NAME OF SUBSIDIARY: Sanders Instruments Limited
PLACE OF
INCORPORATION/REGISTRATION: England and Wales
REGISTRATION NUMBER: 607978
DATE OF INCORPORATION: 15th July 1958
REGISTERED OFFICE: Longacres House
Norton Green Road
Stevenage
Hertfordshire
SG1 2BA
TAX RESIDENCE: United Kingdom
SHARE CAPITAL - AUTHORISED: 100 ordinary shares of L1
- ISSUED: 2 ordinary shares of L1
REGISTERED SHAREHOLDER(S): Marconi Instruments Limited: 1
ordinary share
Associated Electrical Industries
Holdings Limited: 1 ordinary share
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: Christopher John Purchase
Peter John Smith
Andrew Plews Warwick
SECRETARY: Dennis John Bradney
2 NAME OF SUBSIDIARY: W.H. Sanders (Electronics) Limited
PLACE OF
INCORPORATION/REGISTRATION: England and Wales
REGISTRATION NUMBER: 425854
DATE OF INCORPORATION: 16th December 1946
108
REGISTERED OFFICE: Longacres House,
Norton Green Road,
Stevenage,
Hertfordshire SG1 2BA
TAX RESIDENCE: United Kingdom
SHARE CAPITAL - AUTHORISED: 350,000 shares of L1
- ISSUED: 225,000 shares of L1
REGISTERED SHAREHOLDER(S): Marconi Instruments Limited: 224,900
shares of L1
Associated Electrical Industries
Holdings Limited: 100 shares of L1
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: P.J. Smith
A.P. Warwick
D.J. Bradney
SECRETARY: D.J. Bradney
3 NAME OF SUBSIDIARY: Marconi Instruments SA
PLACE OF
INCORPORATION/REGISTRATION: France
REGISTRATION NUMBER: R.C.S. EVRY B340588466 (87B00518)
DATE OF INCORPORATION: 26th March 1987
REGISTERED OFFICE: 18 rue du Plessis-Briard
Courcouronnes
91023 EVRY CEDEX
TAX RESIDENCE: France
SHARE CAPITAL - AUTHORISED: 600,000 shares
109
- ISSUED: 600,000 shares
REGISTERED SHAREHOLDER AND
OWNER(S) OF ISSUED SHARES: Marconi Instruments Limited
599,994 shares
Peter Smith 1 share
Dennis Bradney 1 share
Jean Chrisp 1 share
Andrew Warwick 1 share
Frank Mauritz 1 share
Christopher Purchase 1 share
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: Andrew Warwick
Peter Smith
Frank Mauritz
Noor Hussain
SECRETARY: (None officially appointed)
4 NAME OF SUBSIDIARY: Marconi Instruments International
Limited
PLACE OF
INCORPORATION/REGISTRATION: England and Wales
REGISTRATION NUMBER: 934595
DATE OF INCORPORATION: 27th June 1968
REGISTERED OFFICE: Longacres House
Norton Green Road
Stevenage
Hertfordshire
SG1 2BA
TAX RESIDENCE: United Kingdom
SHARE CAPITAL - AUTHORISED: 100 ordinary shares of L1
110
- ISSUED: 100 ordinary shares of L1
REGISTERED SHAREHOLDER(S): Marconi Instruments Limited 99 ordinary
shares
Associated Electrical
Industries Holdings Limited 1 ordinary
share
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: Dennis John Bradney
Peter John Smith
Andrew Plews Warwick
SECRETARY: Dennis John Bradney
5 NAME OF SUBSIDIARY: Marconi Instrumentos SA
PLACE OF
INCORPORATION/REGISTRATION: Spain
REGISTRATION NUMBER: Madrid Commercial Registry, Folder
7619, Book O, Section 8, Sheet No. M-
123230
DATE OF INCORPORATION: 28th February 1986
REGISTERED OFFICE: Calle Rozabella 6, 28230 Las Rozas,
Madrid
TAX RESIDENCE: Spain
SHARE CAPITAL - AUTHORISED: 40,000 shares of Pts 1,000
- ISSUED: 40,000 Shares of Pts 1,000. On those
shares issued under numbers 3-40,000
(inclusive), only 250 Pts per share has
been called up and the balance is to be
paid (under the company's Memorandum
and Articles of Association) not later
than 1st February 1999.
111
REGISTERED SHAREHOLDER(S): Marconi Instruments Limited
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: Agustin Redondo Sanz
SECRETARY: Maria Jose Aguirre
6 NAME OF SUBSIDIARY: Marconi Messtechnik GmbH
PLACE OF
INCORPORATION/REGISTRATION: Germany
COMMERCIAL REGISTER OF THE COURT
OF MUNICH HRB 6186
DATE OF INCORPORATION: 24th May 1963
SEAT: Germering
TAX RESIDENCE: Germany
AMOUNT OF PAID UP SHARE CAPITAL: DM 3,000,000
REGISTERED SHAREHOLDER(S): Marconi Instruments Limited
BENEFICIAL OWNER(S) OF ISSUED
SHARES: Marconi Instruments Limited
SUBSIDIARIES OR SUBSIDIARY
UNDERTAKINGS: None
DIRECTORS: Peter J. Smith (Geschaftsfuhrer)
Frank Mauritz (Geschaftsfuhrer)
Noor Hussain (Prokurist)
Erich Baumgartner (Prokurist)
Andrew P. Warwick (Prokurist)
SECRETARY: None
112
SCHEDULE 11:
IMMOVABLE PROPERTY OWNED BY THE MEMBERS OF THE GROUP
A. ENGLAND AND WALES
FREEHOLD PROPERTIES WITH REGISTERED TITLES
Registered proprietor Title number Nature of title Short description
--------------------- ------------ --------------- -----------------
Marconi Instruments Limited HD296865 Title Absolute Freehold land on the North East Side of Gunnels Wood
Road, Stevenage (known as the Gunnels Wood Building
and the Six Hills Way Building)
Marconi Instruments Limited HD165022 Title Absolute Land and buildings on the North East side of Gunnels
Wood Road, Stevenage (also known as the Sanders
Building and the Design Centre)
LEASEHOLD PROPERTIES WITH REGISTERED TITLES
Registered proprietor Title Nature of Parties Date of Current Short description
--------------------- number title and ------- expiry rental -----------------
------ Date of ------- -------
lease
---------
The General Electric HD332735 Title Frogmore 24th L347,700 Longacres House (formerly Imperial
Company, p.l.c. absolute Investments March p.a. House), Norton Green Road, Stevenage,
14th Limited (1) The 2020 Hertfordshire
February General
1995 Electric
Company, p.l.c.
(2)
113
LEASEHOLD PROPERTIES WITH UNREGISTERED TITLES
Lessee Title number Date of Parties Date of Expiry Current rental Short description
------ ------------ Lease ------- -------------- -------------- -----------------
-------
The General [In the course 18th Frogmore 24th March 2030 Peppercorn Additional parking area
Electric Company of registration August Investments Longacres House (formerly
plc (freehold title 1997 Limited (1) Imperial House), Norton
no. 110334157)] The General Green Road, Stevenage,
Electric Hertfordshire.
Company (2)
114
Lessee Date of Lease Parties Date of Expiry Current rental Short description
------ ------------- ------- -------------- -------------- -----------------
Marconi Instruments Lease not The Council of 24th December, L28,000 p.a. Ground Part 1st, 2nd Floors of
Limited completed, the Borough of 1998 Eaton Green Road, The Airport,
although Luton (1) Luton, Beds., LU2 9NS (19,404
heads of Marconi sq. ft.)
terms agreed Instruments
on 25th Limited (2)
December,
1978
Marconi Instruments There is no The Council of L10,672 p.a. Part 1st Floor of Eaton Green
Limited lease but the Borough of Road, The Airport, Luton, Beds.,
Marconi took Luton (1) LU2 9NS (6,468 sq. ft.)
the space on Marconi
1st April, Instruments
1988 Limited (2)
Marconi Instruments MI took the The Council of Informal L12,936 p.a. Part 2nd Floor of Eaton Green
Limited space on 1st the Borough of agreement Road, The Airport, Luton, Beds.,
January, 1995 Luton (1) expires on LU2 9NS (6,468 sq. ft.)
under an Marconi 25th December,
informal Instruments 1998
agreement Limited (2)
115
B. SCOTLAND
LEASEHOLD PROPERTY
Present lessee Date of lease Parties Unexpired Current rental Short description
-------------- ------------- ------- term -------------- -----------------
---------
Marconi Instruments Registered in Fife Council (1) 23 years L40,000 Lease of ground and buildings
Limited Books of Council Marconi Instruments thereon known as Unit AF20
and Session 9th Limited (2) Donibristle Industrial Estate
December 1997.
Registered in the
Land Registry of
Scotland under
title number
FFE022829
116
C. OVERSEAS PROPERTY
LEASEHOLD PROPERTIES
Country Date of Lease Parties Term of Lease Current Rental Short Description
- ------- ------------- ------- ------------- -------------- -----------------
USA 4th October, 1996 Hillwood 2470 120 months Month Suite 100, Forth Worth, Texas -
Limited (1) Marconi commencing on 1-12 $157,524 p.a. 15,784 square feet of office space
Instruments Inc. (2) 15th April 1997 13-36 $173,308 p.a.
37-60 $194,932 p.a.
61-84 $203,140 p.a.
85-120 $207,086 p.a.
USA 26th June, 1997 Haber Associates (1) One year $5,160 plus tax Unit B, 4155 Dow Road, W.
Marconi Instruments commencing 1st Melbourne, Florida 32934
Inc. (2) July, 1997
Germany Keithley Instruments Commenced 1st DM 29k per month (plus 1100 sq. m. office space and 380
GmbH, Munchen, April 1991. ancillary costs advance) sq. m. warehouse, 27 parking lots
Germany (1) Marconi Expires 31st in Germering, Germany
GmbH, Germering (2) March, 2001;
prolonged by
another year
unless
terminated
giving 12
months' advance
notice
117
Germany 10th March 1989 Gerhard Sommereisen, Expires on 3 DM 5,800 per month 450 sq. m. office space in
Bergkirchen, Germany months' notice (apparently including Gunding-Bergkirchen , Germany
(1) to 31st ancillary costs advance;
March/31st copy not fully readable)
Baumgartner September
Pruftechnik, Dachau,
Germany (2) monthly payable
Germany 29th August 1996; Marconi Messtechnik 1st October DM 3,150 per month. 134 sq. m. office and warehouse
GmbH, Germering, 1996 to 31st (excluding ancillary space; two parking lots in the
Germany (1) I.V.G. September, costs advance) underground car park at Robert-
Immobilien- 1999; DM 3,900 per month, Bosch-Str. 32, 63303 Dreieich,
Verwaltungsgesellsch (including ancillary Germany
aft mbH & Co. costs advance)
Verwaltungs- und
Gewerbebau KG,
Dreieich-
Sprendlingen,
Germany (2)
Germany Marconi GmbH, 1st February DM 4,200 per month 170 sq. m. office and warehouse
Germering, Germany 1993 to 31st (excluding ancillary space, 6 parking lots in
(1) Wicona January 1998 costs advance) Germering, Germany
Deutschland unless prolonged by
GmbH, Viernheim, another year
Germany (2) terminated
giving 12 DM 4,800 per month
months' advance (including ancillary
notice costs advance);
118
Germany 1 December 1994 Marconi GmbH, 1st December DM 1,700 per month 70 sq m. office and warehouse
Germering, Germany 1994 to 31st space, 2 parking lots
(1) January 1998
ESCO, Ernst Schonau prolonged by
jr. GmbH & Co., another year
Ditzingen, Germany unless
(2) terminated
giving 12
months' advance
notice
France 26th September, Selectinvest 6 (1) 9 years from 470k FF p.a. 18 Rue du Plessrs Briard, "Le
1996 Marconi Instruments 1st January, Canal", (91023) Evry
S.A. (2) 1997
France 22nd November, LA S.C.I. PACE (1) 9 years from 345k FF p.a. 69 sq. m. of office space of
1995 Marconi Instruments 1st December, Building E, 3 Avenue Des
S.A. (2) 1995 Peupliers, Commune de Cesson
Sevigne (35510)
France 30th May, 1997 SCI Cosmo Toulouse 9 years from 11.2k FF p.a. 28 sq. m. of 4th floor offices and
(1) Marconi 1st June, 1997 one outside parking space at
Instruments S.A. (2) Immeuble Burolines, 2 bis, Rue
Marcel Doret, 31700 Blagnac
119
Spain 24th November, Construcciones Commenced 1st 5,000,000 ptas p.a. 323 sq. m. of office space
1994 Hispano Argentinas March, 1995
(1) Marconi until 1st
Instrumentos S.A. March 1998
(2)
Netherlands 23rd August, 1989 Van der Weegen Annual to 28th Currently G4324 per 200 sq. m.
Beleggings en February. month
Exploitatie ma Termination
atschappij B.V. (1) subject to 6
Marconi Instruments months' notice
Ltd (2) before this
date
Hong Kong 29th January, Dora Wu Chung Lin 24th October, KH$ 31,467 1,234 sq. ft. - Rooms 702-703 on
1997 and David Wue Ta 1996 to 23rd the 7th floor of CC WV Building
Kwin (1) Marconi October, 1999
Instruments Ltd (2)
Hong Kong 1st April, 1997 Chow Kwong Chuen (1) 12th May, 1997 HK$ 37,000 per month Flat P, 7/F, Tower 12 Braemar Hill
(offer to lease Marconi Instruments to 31st May, Road
only) Ltd (2) 1999
120
Shanghai 20th October, Waiwell Shipping 20th October, US$ 1,862.40 per month 97.19 sq. m.
1997 Ltd. and Marconi 1997 to 19th
Instruments October, 1999
International Ltd.
Beijing Informal arrangements currently exist with Wogen Quangzhou Technology Ltd. until new or transferred leases
are agreed in these areas.
Singapore As set forth in Disclosure Document 17-117
121
SCHEDULE 12:
PRE SALE REORGANISATION
1. DIVIDENDS PAID CURRENCY L000
-------------- -------- ----
By Marconi Instrumentos S.A., Spain to ESP 75,600,000 301
Marconi (UK) - paid on 22 January 1998
By Marconi Instruments S.A., France to FRF 13,680,000 1,382
Marconi (UK) - paid on 20 January 1998
By Marconi (UK) to GEC Marconi Ltd - paid L23,000,000 23,000
on 30 January 1998
2. PREPAYMENTS OF NON-TRADING LOAN ACCOUNTS OUTSIDE MI GROUP
---------------------------------------------------------
By Marconi (UK) to GEC Marconi Ltd. - L4,994,349.33 4,994
paid on 30 January 1998
By Marconi (UK) to English Electric L287,500.00 288
Limited - paid on 30 January 1998
3. TAXATION
--------
Surrender to GEC Inc. by Marconi (US) of US$1,429,108 869
tax losses to 31 March 1997 for nil
consideration on 30 January 1998
Tax paid 1.1.98 by GEC on behalf of L1,024,359.19 1,024
Marconi (UK) and surrendered by GEC -
paid on 30 January 1998
4. SHARE CAPITAL INCREASE
----------------------
Issue by Marconi(UK) of 200,000 Ordinary L22,000,000 22,000
Shares of L1 each to GEC Marconi Ltd.
paid in cash on 30 January 1998
122
5. REORGANISATION
--------------
(A) Purchase by Marconi (UK) of all the L2.00
issued shares of Sanders Instruments
Ltd. from GEC
(B) Transfer of beneficial ownership of
entire issued share capital of
Marconi (UK) to GEC from GEC -
Marconi Ltd effected on 2 February
1998.
All currencies converted to sterling at Closing exchange rates on 31 December
1997 of:-
L1 = ESP 250.78
L1 = FRF 9.8985
L1 = US$ 1.6454
L1 = DEM 2.9585
123
SIGNED by )
)
for and on behalf of )
THE GENERAL ELECTRIC )
COMPANY, p.l.c. )
in the presence of:- )
SIGNED by )
)
for and on behalf of )
IFR SYSTEMS LIMITED )
in the presence of:- )
SIGNED by )
)
for and on behalf of )
IFR SYSTEMS INC. )
in the presence of:- )
DATED February, 1998
THE GENERAL ELECTRIC COMPANY, p.l.c.
and
IFR SYSTEMS LIMITED
and
IFR SYSTEMS INC.
--------------------------------------------------
SHARE SALE AND PURCHASE AGREEMENT
in respect of
the Marconi Instruments Group
--------------------------------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
(FM/MVC)
CONTENTS
PAGE
----
1. Interpretation 1
2. Sale and Purchase of the Shares 1
3. Consideration 2
4. Completion 2
5. GEC's Warranties and Undertakings 2
6. Purchaser's and Guarantor's Warranties and Undertakings 8
7. Purchaser's Remedies and GEC's Limitations on Liability 13
8. Guarantee 13
9. Patent Matters 15
10. Pension Arrangements 21
11. Real Property and Environmental Undertakings 21
12. Remedies and Waivers 21
13. Assignment 22
14. Further Assurance 23
15. Entire Agreement 24
16. Notices 24
17. Announcements 26
18. Restrictive Trade Practices Act 1976 27
19. Costs and Expenses 27
20. Counterparts 27
21. Time of Essence 27
22. Effect of Completion 27
23. Invalidity 28
24. Governing Law 28
25. Jurisdiction 28
26. Agent for Service 28
SCHEDULE 1: DEFINITIONS 30
SCHEDULE 2: COMPLETION ARRANGEMENTS 39
SCHEDULE 3: THE WARRANTIES 42
SCHEDULE 4: LIMITATIONS ON GEC'S LIABILITY UNDER THE WARRANTIES 68
SCHEDULE 5: PENSION ARRANGEMENTS 78
SCHEDULE 6: PART A - REAL PROPERTY UNDERTAKINGS 95
PART B - ENVIRONMENTAL UNDERTAKING 98
SCHEDULE 7: GEC AND MARCONI MARKS 100
SCHEDULE 8: FN AND FM PATENTS 102
SCHEDULE 9: TAX COVENANT 103
SCHEDULE 10: PART A - BASIC INFORMATION ABOUT THE COMPANIES 104
PART B - BASIC INFORMATION ABOUT SUBSIDIARIES OF THE
COMPANIES 107
SCHEDULE 11: IMMOVABLE PROPERTY OWNED BY THE MEMBERS OF THE
GROUP 112
SCHEDULE 12: PRE SALE REORGANISATION 121