Offer by OM Group-Pt.4

London Stock Exchange 29 August 2000 PART 4 OF 5 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES OM GROUP -------- OFFER FOR LONDON STOCK EXCHANGE PLC ----------------------------------- APPENDIX II ----------- CONDITIONS AND FURTHER TERMS OF THE OFFER ----------------------------------------- The Offer will be subject to the following conditions: (a) valid acceptances being received (and not, where permitted, withdrawn) by 3.00 pm on the first closing date of the Offer (or such later time(s) and/or date(s) as OM Group may, subject to the City Code on Takeovers and Mergers, decide), in respect of not less than 90 per cent. (or such lesser percentage as OM Group may decide) of the LSE Shares to which the Offer relates provided that this condition will not be satisfied unless OM Group shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, LSE Shares carrying more than 50 per cent. of the votes then normally exercisable at general meetings of LSE (on such basis as may be required by the Panel on Takeovers and Mergers), including for this purpose, to the extent (if any) required by the Panel on Takeovers and Mergers, any votes attaching to (or which would, if issued, attach to) LSE Shares which are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of conversion or subscription rights or otherwise; and for this purpose, the expression 'LSE Shares to which the Offer relates' shall be construed in accordance with sections 428 to 430F of the Companies Act 1985; (b) the passing at an Extraordinary General Meeting of LSE (or at any adjournment thereof) of such resolutions as may be required to amend the Articles of Association of LSE to permit OM Group to hold 100 per cent. of the issued share capital of LSE; (c) it having been established, in terms satisfactory to OM Group, that the proposed acquisition of LSE by OM Group and/or any matters arising therefrom will not be referred to the UK Competition Commission; (d) OM Group receiving in terms satisfactory to OM Group final approval for the acquisition of shares in LSE under the Swedish merger control rules; (e) the passing at an Extraordinary General Meeting of OM Group (or at any adjournment thereof) of such resolution(s) as may be required to issue the new OM Shares to be issued pursuant to the Offer; (f) the registration of the resolution(s) passed at the Extraordinary General Meeting of OM Group (or any adjournment thereof) at the Swedish Patent and Registration Office (Sw: Patent - och Registreringsverket); (g) the admission to the A List of the OM Stockholm Exchange of the new OM Shares to be issued pursuant to the Offer becoming effective in accordance with the applicable listing rules; (h) the resolution to approve a scheme of arrangement of LSE under section 425 of the Companies Act 1985 by which shares in the capital of iX-international exchanges plc are to be issued to relevant shareholders of LSE at a meeting convened by the High Court of Justice not being approved by the requisite majority; (i) no government or governmental, quasi-governmental, supranational, statutory or regulatory body, court, trade agency, association, institution or professional or environmental body or other person or body in any jurisdiction having, prior to the date when the Offer becomes otherwise unconditional in all respects, decided to take, instituted, implemented or threatened any action, suit, proceeding, investigation or enquiry, or enacted, made or proposed any statute or regulation or order, or taken any other step which would or might: (i) make the Offer or its implementation or the acquisition or proposed acquisition of any or all of LSE Shares or of control of LSE by OM Group void, illegal or unenforceable under the laws of any jurisdiction or, directly or indirectly, restrain, prohibit, delay or otherwise interfere in the implementation of, or impose additional conditions or obligations with respect to, or otherwise challenge the Offer or the acquisition or proposed acquisition of LSE by OM Group or its implementation or any acquisition of shares in LSE by OM Group or any other member of the OM Group; or (ii) result, directly or indirectly, in a delay in the ability of OM Group, or render OM Group unable, to acquire some or all of the LSE Shares; or (iii) require or prevent the divestiture by any member of the OM Group or any partnership, joint venture, firm or body corporate in which any member of the OM Group may be interested (an 'OM Group Associate', the OM Group Associates together with the OM Group being the 'wider OM Group') or by any member of LSE Group or any partnership, joint venture, firm or body corporate in which any member of LSE Group may be interested (a 'LSE Group Associate', LSE Group Associates together with LSE Group being the 'wider LSE Group') of all or any part of their respective businesses, assets or properties or impose any limitation on the ability of any of them to conduct their respective businesses or own their respective assets or properties; or (iv) impose any limitation on or result in a delay in the ability of any member of the wider OM Group to acquire or to hold or effectively to exercise, directly or indirectly, all or any rights of ownership of LSE Shares or on the ability of any member of LSE Group or of the OM Group to hold or effectively to exercise all or any rights of ownership of shares in or of any interest in any member of the wider LSE Group; or (v) require any member of the wider OM Group or the wider LSE Group to offer to acquire any shares owned by any third party in the capital of any LSE subsidiary or of any body corporate in which any such member has an interest; or (vi) otherwise adversely affect the business, profits or prospects of any member of the wider OM Group and/or of the wider LSE Group, and all applicable waiting and other time periods during which any such government, governmental, quasi-governmental, supranational or statutory or regulatory body, court, trade agency, association or institution or professional or environmental body or other person or body could decide to take, institute, implement or threaten any such action, suit, proceedings, investigation or enquiry having expired or been terminated; (j) all necessary filings having been made, all appropriate waiting periods (including any extension(s) thereof) under any applicable legislation or regulation in any jurisdiction (including, without limitation, the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the regulations made thereunder or the merger control regime of any other EU member state) having expired, lapsed or been terminated, in each case in respect of the Offer and the acquisition or proposed acquisition of any shares in, or control of, LSE by OM Group; (k) all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, certificates, permissions and approvals necessary or appropriate for or in respect of the Offer and the acquisition or proposed acquisition of any shares in, or control of, LSE by OM Group having been obtained in terms and in a form satisfactory to OM Group from all appropriate governments, governmental, quasi-governmental, supranational, statutory and regulatory bodies, courts, trade agencies, associations, institutions or professional or environmental bodies and from any other persons or bodies in any jurisdiction with whom any member of the wider LSE Group has entered into contractual arrangements and such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, certificates, permissions and approvals together with all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, certificates, permissions and approvals necessary or appropriate to carry on the business of each member of the wider LSE Group remaining in full force and effect and there being no intimation of any intention to revoke or not renew any of them and all necessary statutory or regulatory obligations in connection with the Offer in any jurisdiction having been complied with; (l) since 31 March 2000, other than as disclosed in the annual report and accounts of LSE for the year then ended or as publicly announced by LSE prior to the announcement of the Offer: (i) no member of the wider LSE Group having declared, paid or made or proposed the declaration, paying or making of, any dividend, bonus or other distribution in respect of any of its share capital other than distributions by any wholly-owned subsidiaries within LSE Group; (ii) no member of the wider LSE Group having, save as between LSE and wholly-owned subsidiaries of LSE or between wholly-owned subsidiaries of LSE or upon exercise of rights to convert into or subscribe for LSE Shares pursuant to the exercise of options under any LSE share schemes issued, or authorised or proposed the issue or grant of, additional shares of any class or securities convertible into or rights, warrants or options to subscribe for or acquire any such shares or convertible securities or redeemed, repaid or reduced any part of its share capital; (iii) no member of the wider LSE Group having issued, or proposed the issue of, any debentures or incurred or increased any indebtedness or contingent liability of an aggregate amount which might materially or adversely affect any member of LSE Group; (iv) there having been no material adverse change or deterioration of the businesses, financial or trading position or profits or prospects of any member of the wider LSE Group; (v) save for intra-group transactions, no member of the wider LSE Group having merged with any body corporate or acquired or disposed (in either case otherwise than in the ordinary course of trading) of any assets (including shares in subsidiaries, associates and trade investments) or made any change in its share or loan capital, or authorised or proposed or announced any intention to propose any merger, de-merger, acquisition, disposal or change as aforesaid; (vi) no material litigation or arbitration proceedings, prosecution or other legal proceedings having been instituted or threatened or remaining outstanding to which any member of the wider LSE Group is a party; (vii) no contingent liability having arisen which might be likely to affect adversely any member of the wider LSE Group; (viii) no member of the wider LSE Group having entered into any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is not in the ordinary course of business or is of a long-term or unusual nature or which involves or could involve an obligation of a nature or magnitude which is material in the context of LSE Group taken as a whole; (ix) no member of the wider LSE Group having mortgaged, charged, encumbered or created any other security interest over the whole or any part of the business, property or assets of any such member; (x) no member of the wider LSE Group having entered into or varied the terms of any service agreement with any of the Directors of LSE; (xi) no member of the wider LSE Group having taken any corporate action for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver or similar officer or had any such person appointed; (xii) no member of the wider LSE Group having proposed or entered into any agreement, arrangement or commitment with respect to any of the transactions or events referred to in this paragraph (l); and (xiii) no member of the wider LSE Group having passed any resolution in general meeting to sanction, approve, or implement any such issue, merger, de-merger, acquisition, disposal, change, transaction, contract or commitment as is referred to in this paragraph (l); (m) there being no provision of any arrangement, agreement, licence or other instrument to which any member of the wider LSE Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which could, as a consequence of the making of the Offer or the acquisition or proposed acquisition by OM Group of the share capital of LSE or any part thereof or otherwise, result in: (i) any monies borrowed by, or other indebtedness of, or grant available to any such member being or becoming repayable or being capable of being or becoming declared repayable immediately or prior to their or its stated maturity or the ability of any such member to incur any indebtedness being withdrawn or inhibited; (ii) the creation of any mortgage, charge or other security interest on or in relation to the whole or any part of the business, property or assets of any such member or any such security (whenever arising or having arisen) becoming enforceable; (iii) any such arrangement, agreement, licence or instrument being terminated or materially or adversely modified or affected or any action being taken or any obligation arising thereunder; (iv) any interest, assets or property of any such member being or becoming liable to be disposed of or charged otherwise than in the ordinary course of business; (v) the interests or business of any such member in or with any other venture, person, firm or body, or any arrangements relating to such interests or business, being terminated, or adversely modified or affected; (vi) any such member ceasing to be able to carry on business under any name under which it presently does so; or (vii) the respective financial or trading position or prospects of any such member being adversely affected, and no event having occurred which, under any provision of any arrangement, agreement, licence or other instrument to which any member of the wider LSE Group is a party, or to which any such member or any of its assets may be bound, entitled or subject, could result in any of the events or circumstances as are referred to in items (i) to (vii) of this paragraph (m); (n) OM Group not having discovered: (i) that any financial or business information about the wider LSE Group as contained in the information disclosed publicly by or on behalf of any member of the wider LSE Group (or any such member's advisers) is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make the information contained therein not materially misleading; (ii) that any member of the wider LSE Group is subject to any liability, contingent or otherwise, which is not disclosed in the audited consolidated financial statements of LSE for the financial year ended 31 March 2000; (iii) that there is any material liability (whether actual, prospective or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the wider LSE Group under any statute, regulation, order or decision of any government or governmental, quasi-governmental, state or local government, supranational, statutory or regulatory body, court, trade agency, professional association, institution or environmental body or any other person or body in any jurisdiction; OM Group reserves the right to waive all or any conditions (c), (d) and (h) to (n) above inclusive, in whole or in part. The Offer will lapse unless all the above conditions are fulfilled or (if capable of waiver) waived or, where appropriate, determined by OM Group to have been or remain satisfied by midnight on the day which is 21 days after the date on which the Offer becomes or is declared unconditional as to acceptances, or such later date as OM Group may, with the consent of the Panel, decide, provided that OM Group shall be under no obligation to waive or treat as fulfilled any of the conditions (c) (d) and (h) to (n) above inclusive by a date earlier than the latest date specified above for fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such conditions may not be capable of fulfilment. If OM Group is required by the Panel on Takeovers and Mergers to make an offer or offers for LSE Shares under the provisions of Rule 9 of the City Code on Takeovers and Mergers, OM Group may make such alterations to the conditions, including that in paragraph (a), as may be necessary to comply with the provisions of the Rule. FURTHER TERMS ------------- The Offer will comply with the rules of the Financial Services Authority, LSE and the City Code on Takeovers and Mergers. The LSE Shares will be acquired pursuant to the Offer free from all liens, equities, charges, encumbrances and other interests and together with the right to receive all rights now or hereafter attaching thereto, including the right to receive and retain all dividends and other distributions declared, made or paid after 29 August 2000. The Offer will lapse if it is referred to the Competition Commission before the first closing date or the date when the Offer becomes or is declared unconditional as to acceptances, whichever is the later. APPENDIX III ------------ TERMS OF THE LOAN NOTES ----------------------- The issue of Loan Notes will be conditional upon the Offer becoming or being declared unconditional in all respects. The Loan Note Alternative is not available to US persons or persons who are citizens or residents of certain other jurisdictions. The Loan Notes will be constituted by a loan note instrument (the 'Loan Note Instrument'), to be executed by OM as issuer, which will contain provisions, inter alia, to the following effect: 1. Form and status ------------------ The Loan Notes will be issued in amounts and integral multiples of GBP1 nominal and will constitute unsecured obligations of OM. The Loan Note Instrument will not contain any restrictions on borrowing, charging or disposal of assets by OM. 2. Interest ----------- (a) Interest will be payable by OM (subject to the deduction of any withholding tax required by United Kingdom law) on the principal amount of the Loan Notes by half-yearly instalments in arrears on 1 October and 1 April (each an 'Interest Payment Date') in each year at the rate of 0.5 per cent. per annum below the London Inter-Bank Offered Rate ('LIBOR') on the first business day of the relevant interest period except that the first payment of interest will be made on 1 April 2001 in respect of the period from the date falling 14 days after the date on which the Offer becomes or is declared wholly unconditional to such date, each such period being hereinafter called an 'interest period', and interest shall be payable in each case only to persons who are registered as holders of the Loan Notes (the 'Noteholders') at the close of business on the relevant record date. The 'record date' shall mean the thirtieth day before the relevant Interest Payment Date. (b) Interest shall accrue from day to day and shall be calculated on the basis of a 365-day year. 3. Repayment and Redemption --------------------------- (a) Any Loan Notes not previously redeemed or purchased under paragraph 3(b) or 4 will be repaid at par on the 5th anniversary of the Offer becoming unconditional in all respects (the 'Maturity Date') together with accrued interest. OM may, at any time not more than three months and no less than one month prior to the Maturity Date, by giving no less than 30 days' written notice to the Noteholders ending on or prior to the Maturity Date of its intention, pay the Noteholders in lieu of and in satisfaction of the principal amount in sterling of the Loan Notes to be redeemed on the Maturity Date, an amount in US dollars equal to the amount in US dollars that the sterling amount equal to the principal amount of such Loan Notes to be redeemed on the Maturity Date could have purchased on the fifth Business Day before the date of such notice from OM at the spot rate for the purchase of US dollars with sterling (the 'US dollars Redemption Amount') certified by OM as prevailing at 11.00 a.m. (London time) (rounded if necessary to the nearest cent (half a cent being rounded upwards)) on that day and if such day is not a Business Day the next following Business Day or as soon as practicable thereafter, provided that the US dollars Redemption Amount shall be not less than 99.75 per cent. or more than 100.25 per cent. (and if it would otherwise be less than 99.75 per cent. it shall be equal to 99.75 per cent. and if it would otherwise be more than 100.25 per cent. it shall be equal to 100.25 per cent.) of the amount in US dollars that the sterling principal amount of the Loan Notes to be redeemed could have purchased on the Maturity Date (at the US dollars Redemption Amount certified by OM). The certificate of OM shall, in the absence of manifest error, be final and binding. (b) Any Noteholder may require all or any part (being an amount of GBP1 nominal or an integral multiple thereof) of the principal amount of any Loan Notes held by him to be redeemed at par together with accrued interest on 1 April 2001 or on any subsequent Interest Payment Date falling prior to the Maturity Date by giving to OM not less than 30 days' prior notice in writing to expire on or before the relevant Interest Payment Date accompanied by the certificate(s) for all the Loan Notes to be redeemed. (c) OM shall, if at any time the aggregate principal amount of Loan Notes outstanding is less than 25 per cent. of the aggregate principal amount originally issued under the Offer, have the right to redeem all (but not some only) of the outstanding Loan Notes by payment of the nominal amount thereof with accrued interest to the date of redemption. Such right shall be exercised by the giving of notice to the holders of outstanding Loan Notes, such notice to expire on any Interest Payment Date falling no earlier than 1 April 2001 and prior to the Maturity Date and to be given no less than 30 days prior to such expiry. 4. Purchase and cancellation ---------------------------- OM, or any of the subsidiaries of OM, may at any time purchase any Loan Notes by tender (available to all holders alike) or by private treaty, at any price. All Loan Notes so purchased by OM, and all Loan Notes redeemed under paragraph 3 above, will be cancelled and shall not be available for reissue. 5. Winding-up of OM ------------------- Upon a winding-up of OM, the Noteholders will rank pari passu with other unsecured creditors of OM. 6. Modification --------------- The provisions of the Loan Note Instrument and the rights of the holders will be subject to modification, abrogation or compromise with the sanction of an extraordinary resolution of the holders of the Loan Notes as provided in the Loan Note Instrument and with the consent of OM. OM may amend the provisions of the Loan Note Instrument without such sanction or consent, if such amendment would not be prejudicial to the interests of the Noteholders or the amendment is of a formal, minor or technical nature or to correct a manifest error. 7. Registration, transfer and marketability ------------------------------------------- The Loan Notes will be evidenced by certificates and will be registered and will be transferable in amounts of GBP1 or integral multiples thereof. No application has been or is intended to be made to any stock exchange for the Loan Notes to be listed or otherwise traded thereon. The Loan Notes have not been and will not be registered under the US Securities Act 1933 (as amended) or under the securities law of any state of the United States nor have any steps been taken, nor will any be taken, to enable the Loan Notes to be offered in compliance with applicable securities laws of any state of the United States. 8. Unclaimed interest or principal ---------------------------------- Noteholders will cease to be entitled to amounts due in respect of principal or interest which remains unclaimed for a period of five years, in each case from the date on which the relevant payment first becomes due, and such amounts shall revert to OM upon the giving of 30 days' notice. 9. Further loan notes --------------------- Provision will be made in the Loan Note Instrument to enable OM to make further issues of loan notes so as to form a single series with the Loan Notes. 10. Governing Law ----------------- The Loan Notes and the Loan Note Instrument shall be governed by and construed in accordance with English law. APPENDIX IV ----------- FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER -------------------------------------------- The following table sets out, for illustrative purposes only and on the bases and assumptions set out in the notes below, the financial effects of acceptance of the Offer on capital value and income for a holder of one LSE Share, if the Offer becomes or is declared unconditional in all respects: Note GBP ---- --- (a) Increase in capital value Cash consideration 7.00 Market value of 0.65 new OM Shares (1) 20.19 ----- Value of consideration 27.19 Less market value of one LSE Share (2) (23.50) ------- Increase in capital value 3.69 ------ This represents an increase in capital value of (per cent.) (2) 15.7 (b) Increase in income The LSE has not historically paid a dividend Income from cash consideration (3) 0.40 Dividend income on 0.65 new OM Shares (4) 0.24 ------ Total income 0.64 Less dividend income on one LSE Share 0.00 ------ Increase/(decrease) in income 0.64 ------ Notes: No account has been taken in the above table of any liability to taxation or any elections for the Loan Note Alternative. 1. Based on the closing price of SEK425 per OM Share on 28 August 2000, the latest practicable date prior to this announcement, and an exchange rate of SEK13.68:GBP1 as published in the Financial Times on that date. 2. Based on the closing price of GBP23.50 per LSE Share on 25 August 2000 (the closing price prior to LSE's announcement of OM's approach). 3. The gross income from the cash consideration has been calculated on the assumption that the cash is re-invested to yield approximately 5.71 per cent. per annum, being the average gross redemption yield on medium coupon British Government fixed interest securities of maturities of five years, as derived from the FT Actuaries Government Securities Index as published in the Financial Times on 28 August 2000, the latest practicable date prior to this announcement. 4. The dividend income on new OM Shares is based on the dividend of SEK5 declared in respect of the financial year ended 31 December 1999 and the exchange rate of SEK13.55:GBP1 prevailing on 28 March 2000, the date it was paid, as sourced from Primark Datastream. APPENDIX V ----------- BASES AND SOURCES FOR CERTAIN INFORMATION ----------------------------------------- In this document, unless otherwise stated or the context otherwise requires, the following bases and sources have been used: (a) the price of an OM share is based on the closing price of SEK425 per OM share on 28 August 2000, the latest practicable date prior to this announcement, and an exchange rate of SEK13.68:GBP1 as published in the Financial Times on that date (b) LSE's market capitalisation and the offer premium relative to the price of an LSE share are calculated by reference to the closing price of GBP23.50 per LSE share on 25 August 2000, the closing price prior to LSE's announcement of OM's approach, as published by Cazenove & Co. on Bloomberg (c) the market capitalisation of OM is calculated by reference to 83,896,868 OM Shares in issue as at 28 August 2000, the latest practicable date prior to this announcement (d) the value of LSE implied by the Offer terms is calculated by reference to 29,700,000 LSE shares in issue as derived from the iX Information Document dated 15 July 2000 (e) historical financial information in respect of OM has been sourced from its annual accounts and converted from SEK to GBP using, in the case of profit and loss account items, financial year average exchange rates of SEK13.38:GBP1 in 1999 and SEK13.18:GBP1 in 1998, and in the case of balance sheet items, financial year end exchange rates of SEK13.78:GBP1 as at 31 December 1999 and SEK13.48:GBP1 as at 31 December 1998, all as sourced from Primark Datastream (f) historical financial information in respect of LSE has been sourced from the iX Information Document dated 15 July 2000 MORE TO FOLLOW

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