CONFORMED COPY
EXHIBIT 4.22
To: Barclays Bank PLC (the ("LENDER")
5 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
6 August 2002
Dear Sirs
THE SWAP TRANSACTIONS LISTED IN SCHEDULE 1 AND ENTERED INTO BETWEEN THE COMPANY
AND THE LENDER PURSUANT TO THE ISDA MASTER AGREEMENT DATED 16 SEPTEMBER 1999
(THE "SWAPS")
1. INTERPRETATION
Terms defined in the syndicated credit facility agreement dated 25
March 1998 between Marconi Corporation plc (formerly known as The
General Electric Company, p.l.c.), HSBC Investment Bank plc as agent
and others (as amended from time to time, the "FACILITY AGREEMENT")
shall, unless otherwise defined herein, have the same meaning when used
in this letter.
2. CLOSE OUT OF THE SWAPS
We confirm our agreement to terminate the Swaps and any and all of the
Lender's and the Company's payment obligations (whether absolute or
contingent) thereunder with effect from 7 August 2002 (the "CLOSE OUT
DATE"). As a consequence of such termination the net sum in an
aggregate amount of USD $24,812,156.25 (the "SETTLEMENT AMOUNT") will
become due from the Company to the Lender on the Close Out Date.
3. DEEMED ADVANCE
This Letter sets out our mutual agreement to treat the Settlement
Amount as an advance (the "CLOSE OUT ADVANCE") deemed to have been lent
to the Company by the Lender on the Close Out Date.
4. INTEREST
(a) Interest shall accrue on the Close Out Advance from and
including the Close Out Date to (but excluding) the date on
which the Close Out Advance is repaid in full at the rate per
annum determined by the Lender to be the aggregate of:
(i) LIBOR (which shall be the interest rate per annum
applicable to U.S. Dollar Advances under the Facility
Agreement or, if (x) no such rate is calculated under
the Facility Agreement, it shall be the rate offered
by the Lender to prime banks in the London interbank
market or, if (y) the interest rate applicable to
Advances under the Facility Agreement falls to be
determined pursuant to the provisions of Clause 13.3
(Alternative
Rates) of the Facility Agreement, the interest rate
applicable to the Close Out Advance shall be the rate
per annum which expresses the cost to the Lender of
funding the Close Out Advance from whatever sources
it may reasonably select with a view to providing
funding at the lowest reasonable practicable rate);
(ii) 2.25 per cent. per annum; and
(iii) an amount (as determined by the Lender acting
reasonably and calculated in accordance with the
current LMA recommended formula) sufficient to
indemnify the Lender for the costs (if any) imputed
to the Lender of compliance with the requirements of
the Financial Services Authority or the European
Central Bank in respect of the Close Out Advance;
(b) Interest payable on the Close Out Advance shall be calculated
by reference to interest periods (each an "INTEREST Period"):
(i) the first Interest Period shall commence on the Close
Out Date and end on the day before the next Rollover
Date for outstanding Advances under the Facility
Agreement;
(ii) subsequent Interest Periods shall have a duration of
one month or such other period as the Lender and the
Company may agree; and
(iii) to the extent practicable, Interest Periods shall be
managed in order to ensure that the last day of each
Interest Period for the Close Out Advance shall fall
on the due date for the payment of interest on the
outstanding Advances under the Facility Agreement;
(c) Interest due from the Company under this Letter shall:
(i) accrue from day to day at the rate calculated under
(a) above;
(ii) be payable in arrear on the last day of each Interest
Period; and
(iii) be calculated on the basis of the actual number of
days elapsed and a 360 day year.
5. REPAYMENT
The Close Out Advance shall be repayable by the Company (together with
interest accrued thereon and any other amounts due or owing to the
Lender under this Letter at such time) upon the demand of the Lender at
any time (the "REPAYMENT DATE"), provided that the Lender shall not
make demand until the earlier of:
(a) the date on which the Agent serves notice of acceleration
pursuant to the terms of the letter dated 22 March 2002 from
the Company and Marconi plc to the Agent;
(b) the date on which (i) a resolution is passed at a meeting of
the Company for (or to petition for) its winding up, or (ii)
the Company presents any petition for its
- 2 -
winding up or administration, or (iii) an order for the
winding up or administration of the Company is made, or (iv)
analogous procedures occur in relation to the Company in any
other country (including without limitation any moratorium or
suspension of payment proceedings and any voluntary or
involuntary proceedings under the United States Bankruptcy
Code);
(c) the date on which any scheme of arrangement in respect of the
Company is not approved by the relevant class of creditors at
the relevant meeting of creditors and/or such scheme is not
sanctioned at the relevant court hearing; or
(d) 25 March 2003 or such other date as the Company and the Lender
may agree in writing;
6. COSTS AND EXPENSES
The Company shall promptly on demand pay the Lender the amount of all
costs and expenses (including legal fees) reasonably incurred by any of
them in connection with the negotiation, preparation, printing and
execution of this Letter;
7. ILLEGALITY
If it becomes unlawful or contrary to any regulation in any
jurisdiction for the Lender to give effect to any of its obligations as
contemplated by this Letter or to fund or maintain the Close Out
Advance, then the Lender may notify the Company accordingly and
thereupon the Company shall, to the extent required and within the
period allowed by such regulation or, if no period is allowed,
forthwith, repay the Close Out Advance (together with interest accrued
thereon and any other amounts due or owing to the Lender under this
Letter at such time) PROVIDED THAT, without in any way limiting,
reducing or otherwise qualifying the rights of the Lender, the Lender
shall promptly upon becoming aware of the same notify the Company
thereof and the Lender shall endeavour to transfer its rights and
obligations in respect of the Close Out Advance to another financial
institution not affected by the circumstances giving rise to such
illegality, and shall otherwise take such reasonable steps as may be
open to it to mitigate such circumstances. The Lender is not, however,
required to take any action which would be prejudicial to it or which
would conflict with its general banking policies, or give rise to any
material cost or expense;
8. PARI PASSU STATUS
All claims of the Lender under this Letter shall rank pari passu with
the claims of the Finance Parties under the Facility Agreement;
9. TRANSFER
The Lender may, following reasonable consultation with the Company,
assign, transfer, novate or dispose of any of, or any interest in, its
rights and/or obligations under this Letter to an Affiliate or to
another bank or financial institution;
10. CONFIDENTIALITY
- 3 -
The Lender may disclose to any of its Affiliates or any person with
whom it is proposing to enter, or has entered into, any kind of
transfer, participation or other agreement in relation to this Letter:
(i) a copy of this Letter; and
(ii) any information which the Lender has acquired under or in
connection with this Letter;
PROVIDED THAT the Lender shall not disclose any such information to a
person unless that person has provided to the Company a confidentiality
undertaking addressed to the Company in such form as the Company may
reasonably require.
11. DEFAULT INTEREST
(a) If the Company fails to pay any amount payable by it under
this Letter, it shall forthwith on demand by the Lender pay
interest on the overdue amount from the due date up to the
date of actual payment, both before and after judgment, at a
rate (the "DEFAULT RATE") determined by the Lender to be one
per cent. per annum above the rate which would have been
payable if the overdue amount had, during the period of
non-payment, constituted a Close Out Advance in the currency
of the overdue amount for such successive Interest Periods of
such duration as the Lender may determine (each a "DESIGNATED
TERM").
(b) The default rate will be determined two Business Days before
the first day of the relevant Designated Term.
(c) Default interest will be compounded at the end of each
Designated Term.
12. TAXES
(a) All payments by the Company under this Letter shall be made
free and clear of and without deduction for or on account of
any Applicable Taxes (and for the purposes of this Letter, the
reference to "Borrower" in the definition of Applicable Taxes
in the Facility Agreement shall be deemed to be a reference to
the Company) except to the extent that the Company is required
by law to make payment subject to any Applicable Taxes.
Subject to paragraph (b) below, if any Applicable Taxes or
amounts in respect of Applicable Taxes must be deducted or
withheld from any amounts payable or paid by the Company to
the Lender under this Letter, the Company shall pay such
additional amounts as may be necessary to ensure that the
Lender receives and retains (after any deduction or
withholding in respect of such additional amounts) a net
amount equal to the full amount which it would have received
and so retained had payment not been made subject to
Applicable Taxes.
(b) The Company is not obliged to pay any additional amount
pursuant to paragraph (a) above in respect of any deduction
which would not have been required if the Lender had obtained
any exemption from the deduction or withholding of Applicable
Taxes which it is able to obtain.
- 4 -
(c) The Company will, within thirty days of the later of:
(i) any payment being made in respect of which tax is
required by law to be deducted or withheld; or
(ii) the date on which the Company is required to account
for the amount deducted or withheld to the
appropriate tax authority,
deliver to the Lender evidence (including any relevant tax
receipts) that the amount deducted or withheld has been duly
accounted for to the appropriate tax authority.
(d) The provisions of Clause 12.2 (a) (Qualifying Bank) of the
Facility Agreement shall apply in the same manner to the
Company's obligations under this paragraph 2 (with such
conforming changes as may be necessary to give effect to the
provisions of this Letter and the transactions contemplated
hereunder, including without limitation:
(i) references to the "Signing Date" shall be deemed to
be references to the date of this Letter;
(ii) references to "Bank" and "Obligor" shall be deemed to
be references to respectively the Lender and the
Company; and
(iii) sub-paragraph (iii) of Clause 12.2(a) of the Facility
Agreement shall be deemed to refer to an assignment,
transfer, novation or disposition by the Lender
pursuant to paragraph 9 of this Letter).
(e) The provisions of Clause 12.5 (Tax Credit) of the Facility
Agreement shall apply in the same manner to any payment made
by the Company pursuant to this paragraph 2 (with such
conforming changes as may be necessary to give effect to the
provisions of this Letter and the transactions contemplated
hereunder, including without limitation:
(i) references to "Obligor" shall be deemed to be
references to the Company;
(ii) references to "Finance Party" and "Bank" shall be
deemed to be references to the Lender;
(iii) references to "Finance Document" shall be deemed to
be references to this Letter; and
(iv) references to all or any part of Clause 12 of the
Facility Agreement shall be deemed to be references
to paragraph 2 of this Letter).
13. INCREASED COSTS
(a) Subject to paragraph (c) below, the Company shall within five
Business Days of demand by the Lender pay the Lender the
amount of any increased cost incurred by it or any of its
holding companies as a result of any change in (or change in
any official or judicial interpretation of) or introduction of
any law or regulation
- 5 -
(including any relating to taxation or reserve asset, special
deposit, cash ratio, liquidity or capital adequacy
requirements or any other form of banking or monetary
control).
For the purposes of this Letter "INCREASED COST" shall have
the meaning given to such term in Clause 15.1(b) of the
Facility Agreement, PROVIDED THAT:
(i) references to "Finance Party" or "Party" shall be
deemed to be references to the "Lender";
(ii) references to "Advance(s)" shall be deemed to be
references to the Close Out Advance; and
(iii) references to "Agreement" shall be deemed to be
references to this Letter.
(b) The Lender shall notify the Company promptly upon becoming
aware that it has incurred an increased cost as a result of
any law or regulation referred to in paragraph (a) above and
shall provide calculations in reasonable detail of the basis
of such increased cost and its allocation to this Letter.
(c) Paragraph (a) does not apply to any increased cost:
(i) compensated for by the payment of the costs referred
to in sub-paragraph (a)(iii) of paragraph 4 of this
Letter; or
(ii) any part of which is attributable to the delay by the
Lender in notifying the Company of the increased
cost; or
(iii) attributable to any tax or amounts in respect of tax
which must be deducted from any amounts payable or
paid by the Company to the Lender under this Letter
(or which would have been payable but for paragraph
12(d); or
(iv) which is, or is attributable to, any tax on the
overall net income, profits or gains of the Lender or
any of its holding companies (or the overall net
income, profits or gains of a division or branch of
the Lender or any of its holding companies); or
(v) resulting from the Lender breaching a regulation
imposed on it after the date of this Letter by any
fiscal, monetary or other regulatory authority.
14. ENFORCEMENT COSTS
The Company shall within five Business Days of demand pay to the Lender
the amount of all reasonable costs and expenses (including legal fees)
properly incurred by it in connection with the enforcement of, or the
preservation of any rights under this Letter.
15. STAMP DUTIES
The Company shall pay and within five Business Days of demand indemnify
the Lender against any liability it incurs in respect of any stamp,
registration and similar tax which is or becomes payable in the U.K.
directly attributable to the entry into, performance or
- 6 -
enforcement of this Letter (other than in respect of any assignment,
transfer, novation or disposition by the Lender pursuant to paragraph 9
of this Letter).
16. MISCELLANEOUS PROVISIONS
The provisions of Clauses 27.3 (Waivers and remedies cumulative) and 32
(Severability) of the Facility Agreement shall apply in the same manner
to this Letter, with such conforming changes as may be necessary,
including without limitation:
(i) references to the "Finance Documents" shall be deemed to be
references to this Letter; and
(ii) references to the "Finance Party" shall be deemed to be
references to the Lender.
17. NOTICES
Any notice or demand to be served by one person on another pursuant to
this Letter may be served by leaving it at the address specified below
(or such other address as such person may have most recently specified)
or by letter posted by prepaid first-class post to such address (which
shall be deemed to have been served on the second Business Day
following the date of posting), or by fax to the fax number specified
below (or such other number as such person may most recently have
specified) (which shall be deemed to have been received when actually
received by the recipient marked for the attention of the department or
officer (if any) specified by the recipient for such purpose).
Address for notices:
COMPANY:
Address: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attention: Group Treasurer/Group Assistant Treasurer
THE LENDER
Address: 5 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: 020 7773 6811
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇
- 7 -
18. REPRESENTATIONS
The Company hereby represents to the Lender that:
(a) it has been duly incorporated in accordance with its laws of
its place of incorporation and is validly existing;
(b) this Letter is within its powers and the execution, delivery
and performance thereof has been duly authorised;
(c) this Letter constitutes its legal, valid, binding and
enforceable obligation (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general
application); and
(d) this Letter and the transactions contemplated thereunder do
not and will not contravene in any material respect (i) its
constitutional documents, (ii) any law or regulation in its
country of incorporation, or (iii) any loan stock, debenture,
mortgage in respect of Borrowings to which it is a party.
19. COUNTERPARTS
This Letter may be executed in any number of counterparts and this has
the same effect as if the signatures on the counterparts were on a
single copy of this Letter.
20. GOVERNING LAW AND JURISDICTION
This Letter shall be governed by English Law and, for the Lender's
benefit, the English courts shall have exclusive jurisdiction to settle
any dispute which may arise from or in connection with it.
Please confirm your agreement to the above by signing and returning to us the
enclosed copy of this Letter.
Yours faithfully
▇▇▇▇▇ ▇▇▇▇ (signed)
-------------------
For and on behalf of
MARCONI CORPORATION PLC
We hereby agree the above.
▇▇▇▇▇ ▇▇▇▇ (signed)
-------------------
For and on behalf of
BARCLAYS BANK PLC
- 8 -
SCHEDULE 1
"THE SWAPS"
REFERENCE NO: EFFECTIVE DATE: NOTIONAL AMOUNT:
117803B 3 May 1999 USD 150,000,000
120692B 4 May 1999 USD 75,000,000
118204B 4 May 1999 USD 125,000,000
154404B 30 March 2000 EUR 250,000,000
- 9 -