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Exhibit 2.15
SHARE PURCHASE AGREEMENT
AMONG
KENDLE U.K. INC.,
AND
PAUL MARTIN
RELATING TO ALL OF THE ISSUED SHARE CAPITAL OF
SPECIALIST MONITORING SERVICES LIMITED
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TABLE OF CONTENTS
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Page
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1. Definitions.............................................................1
2. Purchase and Sale of SMS Shares.........................................7
(a) Basic Transaction..................................................7
(b) Purchase Price at Closing..........................................7
(c) Reduction of Purchase Price........................................7
(d) The Closing.......................................................10
(e) Deliveries at Closing.............................................10
(f) Pre-emption Rights Waiver.........................................10
3. Representations and Warranties Concerning the Transaction..............10
(a) Representations and Warranties of the Seller......................10
(i) Authorization of Transaction......................................10
(ii) Noncontravention...............................................11
(iii) Brokers' Fees..................................................11
(iv) Investment.....................................................11
(v) SMS Shares.....................................................11
(b) Representations and Warranties of Kendle..........................11
(i) Organization of Kendle............................................12
(ii) Authorization of Transaction...................................12
(iii) Noncontravention...............................................12
(iv) Capitalization.................................................12
(v) SEC Reports....................................................12
(vi) Brokers' Fees..................................................13
(vii) Investment.....................................................13
4. Representations and Warranties Concerning SMS..........................13
(a) Organization, Qualification, and Corporate Power..................13
(b) Capitalization....................................................14
(c) Noncontravention..................................................14
(d) Brokers' Fees.....................................................14
(e) Title to Assets...................................................14
(f) Subsidiaries......................................................15
(g) Audited Accounts..................................................15
(h) Management Accounts...............................................15
(i) Events Subsequent to Management Accounts..........................15
(j) Undisclosed Liabilities...........................................17
(k) Legal Compliance..................................................17
(l) Tax Matters.......................................................17
(m) Property..........................................................20
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(n) Intellectual Property............................................23
(o) Tangible Assets..................................................25
(p) Contracts........................................................26
(q) Notes and Book Debts.............................................27
(r) Powers of Attorney...............................................27
(s) Insurance........................................................27
(t) Litigation.......................................................28
(u) Employees and Pension Scheme.....................................28
(v) Guarantees.......................................................32
(w) Environmental, Health, and Safety Matters........................32
(x) Certain Business Relationships with SMS..........................33
(y) Financial Projections............................................33
5. Post-Closing Covenants................................................33
(a) General..........................................................33
(b) Litigation Support...............................................33
(c) Transition.......................................................34
(d) Confidentiality..................................................34
(e) Kendle Shares....................................................34
6. Conditions to Obligation to Close.....................................35
(a) Conditions to Obligation of Kendle...............................35
(b) Conditions to Obligation of the Seller...........................37
7. Remedies for Breaches of This Agreement...............................38
(a) Survival of Representations and Warranties.......................38
(b) Indemnification Provisions for Benefit of Kendle.................38
(c) Indemnification Provisions for Benefit of the Seller.............39
(d) Matters Involving Third Parties..................................39
(e) Determination of Adverse Consequences............................40
(f) Other Indemnification Provisions.................................40
8. Miscellaneous.........................................................41
(a) Press Releases and Public Announcements..........................41
(b) No Third-Party Beneficiaries.....................................41
(c) Entire Agreement.................................................41
(d) Succession and Assignment........................................41
(e) Counterparts.....................................................41
(f) Headings.........................................................41
(g) Notices..........................................................41
(h) Governing Law....................................................42
(i) Amendments and Waivers...........................................43
(j) Severability.....................................................43
(k) Expenses.........................................................43
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(l) Construction......................................................43
(m) Incorporation of Exhibits, Annexes, and Schedules.................44
SCHEDULES
Schedule 1 -- Seller, Share Holdings, Etc.
Schedule 2 -- Premises
Schedule 3 -- Subscription Agreement
Schedule 4 -- Limitations on the Liability of the Seller under the
Warranties and the Tax Deed
EXHIBITS
Exhibit 2(b) -- Escrow Agreement
Exhibit 4(n)(vi) -- A Definition of Year 2000 Conformity Requirements
(BSI Statement)
Exhibit 4(u)(iii) -- Specimen Existing Employment Contract
Exhibit 4(y) -- Financial Projections of SMS
Exhibit 6(a)(iv) -- Employment Agreements
Exhibit 6(a)(v) -- Releases
Exhibit 6(a)(vi) -- Covenants
Exhibit 6(a)(xii) -- Tax Deed
Exhibit 6(b)(vi) -- Personal Guarantees given by Paul Martin
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is dated August 31, 1999
BETWEEN:
(1) PAUL MARTIN of 1 Scarletts Cottage, Scarletts Lane, Kiln Green, Reading,
Berkshire RG10 9XF ("the Seller"); and
(2) KENDLE U.K. INC., an Ohio corporation, whose principal place of business is
at 700 Carew Tower, 441 Vine Street, Cincinnati, Ohio 45202, USA
("Kendle").
RECITALS
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A. The Seller and Shareholders, in the aggregate, own all of the issued
share capital of Specialist Monitoring Services Limited (Company No: 02665779),
a private company limited by shares registered in England and Wales and having
its registered office at 38 Wellington Business Park, Crowthorne, Berkshire,
RG45 6LS ("SMS").
B. Kendle will purchase from the Seller and the Shareholders, and the
Seller and the Shareholders will sell to Kendle, all of the issued share capital
of SMS in return for cash and Kendle Shares pursuant to the terms of this
Agreement.
THE PARTIES AGREE as follows:
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgements,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, Encumbrances, losses, expenses
and fees, including (without limitation) court costs and reasonable attorneys'
fees and expenses.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control of the Seller or SMS.
"AUDITED ACCOUNTS" means the audited balance sheet of the Company at
the 30th day of September 1998 and the audited profit and loss account of the
Company for the year ended on the 30th day of September 1998 (copies of which
are annexed to the Disclosure Letter).
"BASIS" means any known past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms
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or could form the basis for any specified consequence.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open for ordinary banking business in London and Ohio.
"CASH CLOSING PAYMENT" has the meaning set forth in ss.2(b) below.
"CLOSING" has the meaning set forth in ss.2(d) below.
"CLOSING DATE" has the meaning set forth in ss.2(d) below.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Exhibit
6(a)(vi).
"COVENANTS" has the meaning set forth in ss.6(a)(vi) below.
"DISCLOSURE LETTER" means the letter delivered by the Seller to Kendle
pursuant to section section 3 and 4 below. Nothing contained in the Disclosure
Letter shall be deemed adequate to disclose an exception to a representation or
warranty made in this Agreement unless the exception is identified in the
Disclosure Letter with reasonable particularity, describing the relevant facts
in reasonable detail.
"DOLLAR EQUIVALENT" means on the Closing Date, with respect to an
amount denominated in Sterling, the amount of Dollars which could be purchased
with that amount of Sterling at a rate of exchange of $1.61 = (pound)1.
"DOLLARS" and "$" mean dollars in the lawful currency of the United
States.
"EMPLOYEES" has the meaning set forth in Section 4(u)(i).
"EMPLOYMENT AGREEMENTS" has the meaning set forth in ss.6(a)(iv) below.
"ENCUMBRANCE" means any Security Interest, warrant, option, purchase
right, pre-emptive right, or other right or claim of any character that
restricts the transfer of share capital.
"ENVIRONMENTAL LAW" means any European Union, national or local
statute, law, rule, regulation arising through statute, subordinate legislation,
or common law or any relevant code of practice, issued by any competent
authority relating to the environment, health, safety, the protection of natural
amenity or Hazardous Materials, including without limitation the Health and
Safety at Work etc. Act 1974, the Control of Pollution Act 1974, the
Environmental Protection Act 1990, the Water Industry Act 1991, the Water
Resources Act 1991, the Statutory Water Companies Act 1991, the Water
Consolidation (Consequential Provisions) Act 1991, the Clean Air Acts, the
Alkali & c. Works Regulation Act 1906, the Planning Hazardous Substance
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Act 1990, the Public Health Acts and the Radioactive Substances Act 1960, and
the Environment Act 1995.
"ESCROW AGREEMENT" has the meaning set forth in ss.2(b) below and in
the form set forth in Exhibit 2(b).
"GAAP" means United Kingdom generally accepted accounting principles,
as in effect from time to time.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law; (c) any pollutant, or any hazardous, toxic,
noxious, corrosive or caustic substance whether in solid, liquid or gaseous
form; and (d) any other chemical, material or substance exposure to which is
prohibited, limited or regulated by any governmental authority.
"INDEMNIFIED PARTY" has the meaning set forth in ss.7(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in ss.7(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trade marks, service marks, rights (registered
or unregistered) in any designs, trade dress, logos, trade names, together with
all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including related technical documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
"KENDLE" has the meaning set forth in the preface above.
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"KENDLE MATERIAL ADVERSE CHANGE" has the meaning set forth in
section 6(b)(v) below.
"KENDLE SHARES" has the meaning set forth in section 2(b) below.
"KNOWLEDGE" means knowledge after due diligence and careful enquiry and
includes the knowledge after due diligence and careful enquiry of Seller and Ms.
Pearce but the obligations on the Seller under this definition shall not, in the
case of the Warranties relating to property in clause 4(m) below, include any
obligation on Seller to commission any survey on any of the Premises, carry out
any local or other searches on any of the Premises or make any enquiries of the
landlord of each of the Premises.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including (without limitation) any liability for Taxes.
"MANAGEMENT ACCOUNTS" means the management accounts of the Company for
the period from 1st October 1998 to 30th June 1999 (a copy of which is annexed
to the Disclosure Letter).
"MS. PEARCE" means Denise Pearce of Lavinia, Forest Road, Ascot,
Berkshire.
"NASDAQ" means the National Market System of the National Association
of Securities Dealers, Inc.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTIES" means collectively Kendle and the Seller.
"PERMITS" has the meaning set forth in Section 4(c).
"PENSION SCHEME" means a Group Personal Pension Plan issued through
Norwich Union.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organisation, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PREMISES" means the land and premises particulars of which are set out
in Schedule 2.
"PROFITS" means income, profits and gains, the value of any supply and
any other consideration, value or receipt used or charged for Tax purposes.
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"PURCHASE PRICE" has the meaning set forth in ss.2(b) below.
"RELEASE" has the meaning set forth in ss.6(a)(v) below.
"RELEVANT EMPLOYEE" means any past or present employee of SMS.
"SEC" has the meaning set forth in ss.3(b)(v) below.
"SECURITIES ACT" means the US Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the US Securities Exchange Act of 1934,
as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, assignment, hypothecation, security interest (including any created by
law), title retention or other security agreement or arrangement, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"SELLER" means Mr. Martin.
"SMS'S ACCOUNTANTS" means Grant Thornton.
"SELLER'S SOLICITORS" means Field Seymour Parkes of the Old Coroner's
Court No. 1 London Street Reading Berkshire RG1 4QW.
"SHAREHOLDERS" means the holders of shares in SMS other than the Seller
as set out in Schedule 1.
"SHARES" means all of the issued share capital in SMS comprising 1,157
Ordinary Shares of (pound)1 each, 4,742 "A" Ordinary Shares of (pound)1 each,
196 "B" Ordinary Shares of (pound)1 each, 219,800 "D" Ordinary Shares of
(pound)1 each and 5,496 "E" Ordinary Shares of (pound)1 each being the entire
issued share capital owned by the Shareholders and the Seller.
"SMS" has the meaning set forth in the first recital above and shall
include all predecessor entities.
"SMS MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, assets, liabilities, income, financial condition, operations, results
of operations or business prospects of SMS.
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"SMS SHARE" means any of the Ordinary Shares, "A" Ordinary Shares, "B"
Ordinary Shares, "C" Ordinary Shares, "D" Ordinary Shares and "E" Ordinary
Shares all of (pound)1.00 each of SMS.
"STERLING" and "(POUND)" shall mean the lawful currency for the time
being of the United Kingdom.
"SUBSIDIARY" means (a) when used to determine the relationship between
a company incorporated in England and another Person, any "subsidiary" and
"subsidiary undertaking" as defined in the Companies Act 1989, Sections 144 and
21 and Schedule 9 respectively, and (b) when used to determine the relationship
between a company not incorporated in England to another Person, any corporation
with respect to which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock (or similar interests) or has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors.
"TAX" means all forms of taxation, duties, imposts and levies,
whatsoever and whenever imposed and whether of the United Kingdom or elsewhere
and without prejudice to the generality of that expression includes income tax,
corporation tax, capital gains tax, inheritance tax, stamp duty reserve tax,
rates, value added tax, customs and other import duties and national insurance
contributions, any payment whatsoever which SMS may become bound to make to any
Person as a result of any enactment relating to taxation and any other taxes,
duties or levies supplementing or replacing any of the above including any
charge, interest, penalty or fine.
"TAXES ACT 1988" means Income and Corporation Taxes Act 1988.
"TAX DEED" means the tax deed between Kendle and the Seller of even
date in the form of Exhibit 6(a)(xii) hereto.
"TAX LIABILITY" means any liability with respect to Taxes.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in ss.7(d) below.
"UNAPPROVED SHARE OPTION PLAN" has the meaning set forth in ss.4(l)
(iii).
"US" or "UNITED STATES" means the United States of America.
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"U.S. GAAP" MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, AS IN EFFECT FROM TIME TO TIME.
"WARRANTIES" means the representations and warranties given by the
Seller to Kendle pursuant to ss.3 and 4 and the indemnities given by the Seller
to Kendle pursuant to ss.7.
2. PURCHASE AND SALE OF SMS SHARES
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, Kendle agrees to purchase from the Seller and the
Shareholders, and the Seller agrees to sell or procure the sale to Kendle, all
of the Shares for the consideration specified below in this section 2.
(b) PURCHASE PRICE AT CLOSING. At Closing, the Purchase
Price of (pound)5,500,000, (the "Purchase Price") shall be paid by Kendle as
follows. Kendle shall (i) pay to the Seller's Solicitors (pound)4,328,673 in
cash ("Cash Closing Payment"), (ii) procure the allotment of 141,680 shares of
Kendle International Inc. common stock, no par value ("Kendle Shares") to the
Seller and the Shareholders in the proportions set forth in the schedule to the
Subscription Agreement as set out in Schedule 3, (iii) procure the allotment of
97,066 Kendle Shares to Fifth Third Bank, as escrow agent under the Escrow
Agreement, and (iv) pay to Fifth Third Bank, as escrow agent under the Escrow
Agreement, the sum of (pound)71,327 in cash. The Cash Closing Payment shall be
paid to the Seller's Solicitors delivery to whom shall be a good discharge to
Kendle who shall not be obliged to see to the apportionment thereof as between
the Seller and the Shareholders or any of them.
(c) REDUCTION OF PURCHASE PRICE.
(i) The Purchase Price shall be reduced on the occurrence
of the following events:
(A) If the Seller submits a Resignation without Good
Reason prior to the second anniversary of the
Closing Date, there shall be a reduction of the
Purchase Price of such sum as is equivalent to
30% of the Purchase Price.
(B) If the Seller's employment is terminated by
reason of Termination for Cause prior to the
first anniversary of the Closing Date, there
shall be a reduction of the Purchase Price of
such sum as is equivalent to 20% of the Purchase
Price.
(C) If the Seller's employment is terminated by
reason of
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Termination for Cause on or after the first
anniversary of the Closing Date and prior to the
second anniversary of the Closing Date there
shall be a reduction of the Purchase Price of
such sum as is equivalent to 10% of the Purchase
Price.
(ii) For the purposes of this section 2(c) the terms
"Resignation without Good Reason" and "Termination
for Cause" shall have the meanings given in Clauses
15.1(b) and 15.1(d) respectively of the Employment
Agreement as hereinafter defined, between the Seller
and SMS without regard to whether such agreement is
amended or terminated in the future, unless Kendle
and Seller shall specifically agree in writing that
any such amendment or termination shall have the
effect of amending this section 2(c).
(iii) The Purchase Price reduction required by this
section 2(c) shall be calculated on the full amount
of the Purchase Price paid at Closing to the Seller
provided that the aggregate liability of the Seller
to pay a Purchase Price reduction as required by
this section 2(c) and/or for breach of any of the
Warranties and/or Tax Deed shall not exceed
(pound)3,800,000.
(iv) For the purposes of this section 2(c) "Arbitrator"
shall mean an appropriate arbitrator qualified in
employment law agreed by the Parties or failing such
agreement within 21 days appointed by the Advisory,
Conciliation and Arbitration Service (ACAS) on the
request of either Party and whose fees shall be
borne by the Parties in such proportion as such
Arbitrator shall determine. Any determination by the
Arbitrator shall be binding on the Parties save in
the case of manifest error. The arbitration shall be
held in London and shall be in accordance with the
provisions of the Arbitration Acts 1950 to 1979 and
any applicable rules of ACAS.
(v) In the event that the Seller wishes to resign his
employment with SMS prior to the second anniversary
of the Closing Date the Parties shall agree prior to
such resignation whether the resignation constitutes
a "Resignation without Good Reason". In the event
that the Parties cannot reach such an agreement the
Arbitrator shall be appointed by the Parties to
determine whether the proposed resignation
constitutes a "Resignation without Good Reason".
Save in exceptional circumstances such determination
shall take place prior to the resignation taking
effect.
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(vi) In the event that SMS wishes to terminate the
Seller's employment by reason of Termination for
Cause prior to the second anniversary of the
Closing Date and the Seller does not agree that it
is a Termination for Cause the Arbitrator shall
determine whether the proposed termination of the
Seller's employment amounts to a Termination for
Cause. Such determination shall take place prior
to the termination taking effect. Until such
determination takes place SMS shall be entitled to
suspend the Seller from his employment provided
that it continues to pay to the Seller his salary
and benefits in accordance with the terms of his
Employment Contract.
(vii) If the Arbitrator determines that there has been a
Termination for Cause or a Resignation without
Good Reason causing a Purchase Price reduction
pursuant to this section 2(c), Seller shall pay to
Kendle the full amount of such Purchase Price
reduction (without any deduction, set off or
counterclaim), and Kendle shall be entitled to
receive such amount within thirty (30) days after
the date of such decision, with interest thereon
at the rate of two per cent (2%) per annum above
the base lending rate of National Westminster Bank
Plc from time to time from such due date of
payment to the date of actual payment if such
payment is not made in full by such date.
(viii) If there are assets held under the Escrow
Agreement against which there is no claim pending
at the time Seller becomes obliged to refund a
portion of the Purchase Price under this
section 2(c), Kendle shall be obliged and have the
right to receive from the escrow available cash or
other assets to satisfy the obligations of Seller
to repay such portion of the Purchase Price, but
if the escrow is exhausted or unavailable for
whatever reason, Kendle shall have the right to
receive payment directly from Seller.
(ix) Kendle agrees that in the event that it claims
that Seller has submitted a Resignation without
Good Reason or that it is entitled to terminate
the Seller's employment for a Termination for
Cause and the Arbitrator decides that there has
been no Resignation without Good Reason or a
Termination for Cause, then it shall pay
liquidated damages to the Seller of (pound)500,000
if this occurs prior to the first anniversary of
the Closing Date or (pound)250,000 if it occurs on
or after the first but before the second
anniversary of the Closing Date in full and final
settlement of any claims, damages, costs and
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expenses to which the Seller may be entitled in
connection with or arising out of such resignation
or termination. Kendle shall pay such liquidated
damages (without any deduction, set off or
counterclaim) to the Seller within thirty (30)
days after the decision of the Arbitrator with
interest thereon at the rate of two per cent (2%)
per annum above the base lending rate of National
Westminster Bank Plc from time to time from such
due date of payment to the date of actual payment
of such payment is not made in full by such date.
Such liquidated damages shall be in addition to
the repayments to Seller of any amounts received
by Kendle under the Escrow Agreement pursuant to
this Clause 2(c).
(d) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Seller's
Solicitors, on 31 August 1999 following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as Kendle
and the Seller may mutually determine (the "CLOSING DATE").
(e) DELIVERIES AT CLOSING. At the Closing, (i) the Seller will
deliver to Kendle the various certificates, instruments and documents referred
to in ss.6(a) below, (ii) Kendle will deliver to the Seller the various
certificates, instruments and documents referred to in ss.6(b) below, (iii) the
Seller will deliver or procure the delivery to Kendle of SMS share certificates
representing all of the Shares, accompanied by duly executed transfers of such
share certificates endorsed in blank together with such waivers or consents as
Kendle may require to enable Kendle or its nominees to be registered as holders
of SMS shares, and (iv) Kendle will deliver by telegraphic transfer to the
Seller's Solicitors the consideration specified in ss.2(b) above.
(f) PRE-EMPTION RIGHTS WAIVER. The Seller waives and will
procure that the Shareholders waive all rights of pre-emption (if any) over the
Shares to which they may be entitled under the Articles of Association of SMS,
or otherwise, in relation to the sale and purchase of the Shares pursuant to
this Agreement.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES CONCERNING SELLER. The
Seller represents and warrants to Kendle that the statements contained in this
section 3(a) are correct and complete as of the date of this Agreement with
respect to himself and Ms. Pearce.
(i) AUTHORISATION OF TRANSACTION. The Seller has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of such Seller,
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enforceable in accordance with its terms and conditions. Such Seller
need not give any notice to, make any filing with, or obtain any
authorisation, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgement, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which such Seller is subject (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which such Seller is a party or by
which he is bound or to which any of his assets is subject.
(iii) BROKERS' FEES. The Seller has no Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which Kendle or SMS could become liable or obligated.
(iv) INVESTMENT. The Seller in connection with the
receipt of Kendle Shares (A) understands that Kendle Shares have not
been, and will not be, registered under the Securities Act, or under
any state securities laws and are being offered and sold in reliance
upon US federal and state exemptions for transactions not involving any
public offering within the meaning of the Securities Act, (B)
understands that the Kendle Shares may not be offered or sold within
the United States or to, or for the account of benefit of, US persons,
except pursuant to an exemption to the registration requirements to the
Securities Act provided by Rule 144 (if applicable) under the
Securities Act, (C) is not a US person as defined in Regulation S under
the Securities Act and is not acquiring the Kendle Shares, for the
account or benefit of a US person, and (D) has received certain
information concerning Kendle and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and
the risks inherent in holding Kendle Shares.
(v) SMS SHARES. The Seller and the Shareholders are
the registered and sole beneficial owners of the number of Shares set
forth next to his or her name in Schedule 1 free and clear of any
Encumbrances (other than restrictions on transfer imposed by any
applicable securities laws and regulations). Neither the Seller nor any
of the Shareholders are a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any share
capital of SMS.
(b) REPRESENTATIONS AND WARRANTIES OF KENDLE. Kendle
represents and
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warrants to the Seller that the statements contained in this section 3(b) are
correct and complete as of the date of this Agreement.
(i) ORGANISATION OF KENDLE. Kendle is a corporation
organised, validly existing and in good standing under the laws of the
State of Ohio.
(ii) AUTHORISATION OF TRANSACTION. Kendle has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Kendle, enforceable in accordance with its terms and
conditions. Assuming the truth and correctness of the Seller's
statements in ss.3(a)(v) of this Agreement, Kendle need not give any
notice to, make any filing with, or obtain any authorisation, consent,
or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgement, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which Kendle is subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any material agreement, contract, lease, license, instrument, or other
arrangement to which Kendle is a party or by which it is bound or to
which any of its assets is subject.
(iv) CAPITALISATION. Kendle International Inc.'s
authorised equity securities consist of Forty-Five Million (45,000,000)
shares of common stock, no par value per share, and One Hundred
Thousand (100,000) shares of undesignated preferred stock, no par value
per share. As of July 31, 1999, eleven million, three hundred and
thirty thousand, eight hundred and seventy six (11,330,876) shares of
common stock were issued and outstanding and no shares of undesignated
preferred stock were issued and outstanding. The Kendle Shares to be
received by the Seller and certain Shareholders in connection with the
transactions contemplated hereby will be duly authorised, validly
issued, fully paid and non-assessable shares of common stock free and
clear of any and all Encumbrances other than restrictions on transfer
imposed by US federal and state securities laws and regulations.
(v) SEC REPORTS. Kendle International Inc. has timely
filed with the US Securities and Exchange Commission ("SEC") all
materials and documents required to be filed by it under the US
Securities Exchange Act of 1934 (the "Exchange Act"). All the materials
and documents filed with the SEC by Kendle International Inc. since
July 2, 1997, including its initial Registration Statement on Form S-1,
are hereinafter referred to
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as the "Kendle SEC Reports." The Kendle SEC Reports, copies of which
have been delivered to the Seller, are true and correct in all material
respects, including the financial statements and other financial
information contained therein, and do not omit to state any material
fact necessary to make the statements in such Kendle SEC Reports, in
light of the circumstances in which they were made, not misleading. The
financial statements included in the Kendle SEC Reports fairly present
in all material respects the financial condition and the results of
operations, changes in stockholders' equity and cash flow of Kendle
International Inc. and its subsidiaries as at the respective dates of
and for the periods referred to in such financial statements, all in
accordance with U.S.GAAP. Since the date of the most recent Kendle SEC
Report, there has been no Kendle Material Adverse Change.
(vi) BROKERS' FEES. Other than liability or
obligation to Technomark Limited (which shall be the liability of
Kendle and not of SMS or Seller), Kendle has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Seller or SMS could become liable or obligated.
(vii) INVESTMENT. Kendle is not acquiring SMS Shares
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING SMS. The Seller represents
and warrants to Kendle that the statements contained in this ss.4 are correct
and complete as of the date of this Agreement and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this section 4, in
light of the circumstances under which they were made, not misleading, except as
set forth in the Disclosure Letter. In addition to anything else provided in
this Agreement or in the Tax Deed the liability of the Seller under the
warranties in section 3a and this section 4 shall be limited as provided in
Schedule 4.
(a) ORGANISATION, QUALIFICATION, AND CORPORATE POWER. SMS is a
private company limited by shares duly incorporated and registered, validly
existing under the laws of England and Wales. SMS is duly authorised to conduct
business under the laws of each jurisdiction set forth in section 4(a) of the
Disclosure Letter and the failure to so qualify in any other jurisdiction will
not result in an SMS Material Adverse Change. SMS has full corporate power and
authority and all licenses, permits, and authorisations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Section 4(a) of
the Disclosure Letter lists the directors and officers of SMS. The Seller has
delivered to Kendle correct and complete copies of the memorandum and articles
of association of SMS (as amended to date). The statutory and other books
(containing among other things the records of meetings of the stockholders, the
board of
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directors and any committees of the board of directors, the share certificates
and the share certificate records) of SMS are correct and complete. SMS is not
in default under or in violation of any provision of its memorandum or articles
of association.
(b) CAPITALISATION. The authorised share capital of SMS
consists of (pound)235,000 divided into 1,400 Ordinary Shares, 5,000 "A"
Ordinary Shares, 1,000 "B" Ordinary Shares, 100 "C" Ordinary Shares, 222,000 "D"
Ordinary Shares and 5,500 "E" Ordinary Shares and the issued share capital of
SMS consists of 1,157 Ordinary Shares, 4,742 "A" Ordinary Shares, 196 "B"
Ordinary Shares, 219,800 "D" Ordinary Shares and 5,496 "E" Ordinary Shares. All
of the Shares have been duly authorised, are validly issued, fully paid and
nonassessable, and are held legally and beneficially by the respective Seller
and Shareholders as set forth in Schedule 1. Except as set forth in section
4(b) of the Disclosure Letter, there are no outstanding or authorised options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require SMS to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorised stock appreciation, phantom stock, profit
participation, or similar rights with respect to SMS. SMS is not a party to any
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the share capital of SMS.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgement, order, decree, ruling, charge or any provision of the charter or
bylaws of SMS or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license instrument to which SMS is a party or by
which it is bound or to which any of its assets is subject; or (iii) result in
the imposition of any Security Interest upon any of its assets. SMS does not
need to give any notice to, make any filing with, or obtain any authorisation,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement. SMS
maintains, and section 4(c) of the Disclosure Letter sets forth, all operating
authorities, licenses, permits and approvals and other authorisations from all
governmental authorities (collectively, the "PERMITS") as are necessary for the
conduct of the business of SMS. Except as expressly designated on section 4(c)
of the Disclosure Letter, none of SMS's rights under each of the Permits will
terminate in connection with the change in control of SMS at Closing.
(d) BROKERS' FEES. SMS has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. SMS has good and marketable title to, or
a valid leasehold interest in, the properties and assets used by it, or shown on
the Audited Accounts or acquired
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after the date thereof, free and clear of all Encumbrances, excepting only
properties and assets disposed of in the Ordinary Course of Business since the
date of the Audited Accounts and certain other properties and assets involving
in the aggregate more than Fifteen Thousand Sterling ((pound)15,000) disposed of
other than in the Ordinary Course of Business as disclosed on the Disclosure
Letter.
(f) SUBSIDIARIES. SMS has no Subsidiary or Subsidiaries and
SMS has no branches trading overseas.
(g) AUDITED ACCOUNTS. The Audited Accounts (including the
notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis with previous audited accounts of SMS, present fairly in all
material respects the financial condition of SMS as at 30 September 1998 and the
results of operations of SMS for the period ending 30 September 1998 and are
consistent with the books and records of SMS.
(h) MANAGEMENT ACCOUNTS. The Management Accounts have been
prepared with due care and attention and in accordance with generally accepted
accounting principles, policies and bases which are consistent with those used
in the Audited Accounts and the Management Accounts are accurate in all material
respects and represent an accurate record of the assets, liabilities (including
contingent liabilities, whether for Tax or otherwise) and the state of affairs
of the Company as at the date of the Management Accounts and of the results of
the Company for the financial period to which they relate provided that the
Management Accounts are subject to normal year-end adjustments (which will not
be material individually or aggregate).
(i) EVENTS SUBSEQUENT TO MANAGEMENT ACCOUNTS. Except as set
forth in ss.4(i) of the Disclosure Letter, since 30 June 1999, there has not
been any SMS Material Adverse Change. Without limiting the generality of the
foregoing, since that date:
(i) SMS has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, involving in the
aggregate more than Fifteen Thousand Sterling ((pound)15,000) other
than for a fair consideration in the Ordinary Course of Business;
(ii) other than agreements and contracts with
customers, as to which FIFTY-EIGHT THOUSAND STERLING ((POUND)58,000)
shall be the disclosure threshold for ss.4(i) of the Disclosure Letter,
SMS has not entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) either
involving more than Fifteen Thousand Sterling ((pound)15,000) or
outside the Ordinary Course of Business;
(iii) no party (including SMS) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than Fifteen Thousand Sterling ((pound)15,000)
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to which SMS is a party or by which it is bound;
(iv) SMS has not imposed or permitted to be imposed
any Security Interest upon any of its assets, tangible or intangible;
(v) SMS has not made any capital expenditure (or
series of related capital expenditures) either involving more than
Fifteen Thousand Sterling ((pound)15,000) or outside the Ordinary
Course of Business;
(vi) SMS has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) either involving more than Fifteen Thousand Sterling
((pound)15,000) or outside the Ordinary Course of Business;
(vii) SMS has not issued any Share, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalised lease obligation either
involving more than Fifteen Thousand Sterling ((pound)15,000)
individually or Fifteen Thousand Sterling ((pound)15,000) in the
aggregate;
(viii) SMS has not delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary Course
of Business;
(ix) SMS has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than Fifteen Thousand Sterling ((pound)15,000) or
outside the Ordinary Course of Business;
(x) SMS has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorised in
the memoranda or articles of association or other constitutional
documents of SMS;
(xii) SMS has not declared, set aside, or paid any
dividend or made any distribution with respect to its share capital
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its share capital;
(xiii) SMS has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
assets and property in excess of Fifteen Thousand Sterling
((pound)15,000);
(xiv) SMS has not made any loan (that will remain
outstanding on the Closing Date) to or with any of its directors,
officers, and employees outside the Ordinary
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Course of Business;
(xv) SMS has not entered into any employment contract
or collective bargaining agreement, written or oral, or changed or
modified the terms of any existing such contract or agreement;
(xvi) SMS has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvii) SMS has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to the
Pension Schemes);
(xviii) SMS has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xix) there has not been any other material
occurrence, event or transaction outside the Ordinary Course of
Business; and,
(xx) SMS has not committed to any of the foregoing.
(j) UNDISCLOSED LIABILITIES. SMS has no Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), that individually or in the aggregate is material to the
results of operations or the financial or other condition of SMS except for (i)
Liabilities reflected or reserved against on the Audited Accounts or described
in ss.4(i) of the Disclosure Letter or in the notes to the Management Accounts;
or (ii) Liabilities which have arisen after September 30, 1998 in the Ordinary
Course of Business (none of which results from, arises out of or was caused by
any breach by SMS of any contract or warranty, by any SMS tort or infringement
or by any violation of law by SMS).
(k) LEGAL COMPLIANCE. SMS has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgements,
orders, decrees, rulings, and charges thereunder) of European Union, national,
local and foreign governments (and all agencies thereof), except where such
failure to comply would not, individually or in the aggregate, have an SMS
Material Adverse Effect; and to the Knowledge of the Seller, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any such failure to
comply.
(l) TAX MATTERS.
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(i) SMS is and always has been resident for Tax
purposes only in the jurisdiction in which it is incorporated.
(ii) SMS has filed all Tax Returns that they were
required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by SMS (whether or not shown on any Tax
Return) have been paid. SMS is not currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made by an authority in a jurisdiction where SMS does not
file Tax Returns that SMS is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of
SMS that arose in connection with any failure (or alleged failure) to
pay any Tax.
(iii) SMS has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other
third party or any shares or options concerning shares that are issued
to any employee or other third party and for the avoidance of doubt has
paid all Taxes including PAYE and National Insurance contributions that
may be required to be collected or paid by SMS pursuant to the creation
and execution of the Unapproved Share Option Plan dated 29 July 1999
("Unapproved Share Option Plan") and the exercise by any employee or
third party of any option to acquire Shares pursuant to such scheme and
the declaration of the scrip dividend on __ August 1999 and SMS has not
paid and has no liability to pay for the professional advisers who
devised or assisted with the creation or operation of the Unapproved
Share Option Plan, or scrip dividend.
(iv) Full provision or reserve has been made in the
Audited Accounts for all Tax liable to be assessed on SMS or for which
SMS is accountable in respect of income, profits or gains earned,
accrued or received on or before 30 September 1998 and any event on or
before 30 September 1998 and full provision has been made in the
Audited Accounts for deferred Tax calculated in accordance with GAAP.
(v) The Seller has no Knowledge of or anticipates
that any authority will assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of SMS either (A) claimed or raised by any
authority in writing or (B) as to which the Seller has Knowledge based
upon personal contact with any agent of such authority. The Seller has
delivered to Kendle correct and complete copies of all corporation tax
Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by SMS since September 30, 1998.
(vi) SMS has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
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(vii) Section 4(l)(vii) of the Disclosure Letter
contains particulars of all arrangements and agreements relating to the
transfer of Tax refunds to which SMS is or has been a party, and (A)
all claims by SMS for the transfer of Tax refunds were when made and
are now valid and have been or will be allowed by way of discharging
the liability of the recipient company to pay any corporation Tax, (B)
SMS has not made nor is liable to make any payment under any such
arrangement save in consideration for the transfer of Tax refunds
allowable to SMS by way of discharge from liability to corporation tax
and mergers equivalent to the taxation for which SMS would have been
liable would it not have been for the transfers, (C) SMS has received
all payments due to them under any such arrangement or agreement or
transfer of Tax refunds made by it and no such payment is likely to be
repaid, and (D) save in respect of this Agreement, there have not been
in existence in relation to SMS any such arrangements as are referred
to in Section 410 Taxes Act 1988.
(viii) No distribution within the meaning of Sections
209, 210 and 212 Taxes Act 1988 has been made by SMS except dividends
shown in its Audited Accounts nor is SMS bound to make any such
distribution.
(ix) No securities (within the meaning of Section
254(l) Taxes Act 1988) issued by SMS and remaining in issue at the date
hereof were issued in such circumstances that the interest payable
thereon falls to be treated as a distribution under Section
209(2)(e)(iii) Taxes Act 1988.
(x) SMS has not made or received any distribution
which is an exempt distribution within Section 213 Taxes Act 1988.
(xi) SMS has not received any capital distribution to
which the provisions of Section 189 TCGA 1992 could apply.
(xii) SMS has not used any credit, relief or set off
that may be disallowed pursuant to Section 237 Taxes Act 1988.
(xiii) SMS has not issued any share capital, nor
granted options or rights to any person which entitles that person to
require the issue of any share capital to which the provision of
Section 249 Taxes Act 1988 could apply.
(xiv) SMS has not since 8 October 1996 (A) treated as
franked investment income any qualifying distribution received which
would fall to be treated as if it were a foreign income dividend
pursuant to the provisions of Schedule 7 of the Finance Act 1997; or
(B) made any qualifying distribution which would fall to be treated as
a foreign income dividend pursuant to the provisions of Schedule 7 of
the Finance Act
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1997.
(xv) No tax authority in any jurisdiction in which
SMS does not file Tax Returns has made or asserted a claim that SMS (or
any Seller) is subject to taxation in that jurisdiction based on the
activities of SMS.
(xvi) The unpaid Taxes of SMS (A) did not, as of
September 30, 1998, exceed the reserve for Tax Liability (including any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Audited
Accounts (including any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of SMS in filing its Tax
Returns.
(m) PROPERTY.
(i) Section 4(m)(i) of the Disclosure Letter sets
forth a true and correct description of the particulars of all property
owned by SMS. With respect to each such Premises:
(A) SMS is the sole legal and beneficial
owner of entitled to and have good and marketable title and
exclusive occupation of such Premises; and
(B) SMS has good and marketable title to the
parcel of real property free and clear of any mortgage or
charge (whether legal or equitable, fixed or floating),
encumbrance, lease, sub-lease, tenancy, licence or right of
occupation, rent charge, exception, reservation, easement,
quasi-easement or privilege in favour of a third party.
(ii) Section 4(m)(ii) of the Disclosure Letter lists
all real property leased or subleased to SMS. The Seller has delivered
to Kendle correct and complete copies of the leases and subleases
listed in ss.4(m)(ii) of the Disclosure Letter (as amended to date).
With respect to each lease and sublease listed in ss.4(m)(ii) of the
Disclosure Letter:
(A) to the Knowledge of the Seller the lease
or sublease is in full force and effect and will continue to
be in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
(B) no party to the lease or sublease is in
material breach or material default or has repudiated such
lease or sublease, and no event has occurred which, with
notice or lapse of time, would constitute a material breach or
material default or permit termination, modification, or
acceleration thereunder;
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(C) SMS has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(D) all facilities leased or subleased
thereunder are supplied with utilities and other services and
have all licenses and permits that are material for the
operation of SMS's business as presently conducted thereat and
as presently proposed to be conducted thereat; and
(E) to the Knowledge of the Seller the owner
of each facility leased or subleased to SMS has good and
marketable title to the parcel of real property free and clear
of any Security Interest other than Security Interests that do
not materially impair SMS's use of such facility.
(iii) To the Knowledge of the Seller there are
appurtenant to each of the Premises all rights and easements necessary
for its current use and enjoyment (without restriction as to time or
otherwise) and the access for each of the Premises is over roads
adopted by the local authority and maintained at public expense.
(iv) SMS has not entered into positive covenants or
personal obligations (whether in a conveyance, transfer or assignment
to it or otherwise) neither does it have any personal rights under
which it has any subsisting liability (whether actual or contingent).
(v) To the Knowledge of the Seller none of the
Premises or any part thereof is affected by any of the following
matters or is to the Knowledge of the Seller likely to become so
affected:
(A) any outstanding dispute, notice or
complaint or any exception, reservation, fight, covenant,
restriction or condition which is of an unusual nature or
which affects or might in the future affect the use of any of
the Premises for the purpose for which it is now used (the
"current use") or which affects or might in the future affect
the value of the Premises;
(B) any notice, order, demand, requirement
or proposal of which the owner has notice or of which the
Seller is aware made or issued by or on behalf of any
government or statutory authority, department or body for
acquisition, clearance, demolition or closing, the carrying
out of any work upon any building, the modification of any
planning permission, the discontinuance of any use or the
imposition of any building or improvement line, the alteration
of any road or footpath or which otherwise affects any of the,
Premises or their current use or value;
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(C) any compensation received as a result of
any refusal of any application for planning consent or the
imposition of any restrictions in relation to any planning
consent;
(D) any commutation or agreement for the
commutation of rent or payment of rent in advance of the due
dates of payment thereof;
(E) any outstanding claim or liability
(contingent or otherwise) whether under the Planning Acts (as
that expression is defined in the Town and Country Planning
Act 1990) or otherwise;
(F) any outgoings except uniform business
rates and water rates; or
(G) the requirement of consent from any
third party to the charging of the Premises or any of them.
(vi) To the Knowledge of the Seller each of the
Premises is in a good state of repair and condition and fit for the
current use and no deleterious material (including without limit high
alumina cement, woodwool, calcium chloride, sea dredged aggregates or
asbestos material) was used in the construction, alteration or repair
thereof or of any of them and there are no development works,
redevelopment works or fitting out works outstanding in respect of any
of the Premises.
(vii) To the Knowledge of the Seller all
restrictions, conditions and covenants (including any imposed by or
pursuant to any lease, sub-lease, tenancy or agreement for any of the
same and whether SMS is the landlord or tenant thereunder and any
arising in relation to any superior title) affecting any of the
Premises have been observed and performed and no notice of any breach
of any of the same has been received or is to the Seller's Knowledge
likely to be received.
(viii) The current use of the Premises and all
machinery and equipment therein and the conduct of any business therein
complies in all respects with all relevant statutes and regulations
including without prejudice to the generality of the foregoing the
Factories Act 1961, the Offices Shops and Railway Premises Act 1963,
the Fire Precautions Act 1971, the Health and Safety at Work etc., Act
1974, the Betting, Gaming and Lotteries Act 1963 and with all rules
regulations and delegated legislation thereunder and all necessary
licences and consents required thereunder have been obtained.
(ix) To the Knowledge of the Seller there are no
restrictive covenants or provisions, legislation or orders, charges,
restrictions, agreements, conditions or other
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matters which preclude or limit the current use of any of the Premises
and the current use is the permitted user under the provisions of the
Planning Acts (including without limit Section 52 Town and Country
Planning Act 1971; Section 106 Town and Country Planning Act 1990; and
Section 278 Highways Act 1980) and regulations made thereunder and is
in accordance with the requirements of the Local Authorities and all
restrictions, conditions and covenants imposed by or pursuant to the
Planning Acts have been observed and performed and no agreements have
been entered into with any public authority or statutory authority in
respect of any of the Premises whether pursuant to the Planning Acts or
otherwise.
(x) To the Knowledge of the Seller all necessary
planning permissions, listed building consents, by-law consents,
building regulation consents and other permissions and approvals
(whether or not required by statute) for the construction, extension
and alteration of the Premises have been obtained and complied with,
and none of those permissions, consents and approvals has been given on
a temporary or personal basis nor does it require the removal at any
time of the works so authorised.
(xi) Any necessary or appropriate action to protect
the interests of SMS has been taken under the Landlord and Tenant Act
1954 and in relation to rent review provisions in relation to each
lease, sub-lease, tenancy or agreement for any of the same in respect
of which SMS is the landlord or the tenant thereunder and all
appropriate time limits have been complied with and no rent reviews are
outstanding at the date hereof or exercisable prior to the Closing.
(xii) Where the interest of SMS in any of the
Premises is leasehold, there is no right for the landlord to determine
the lease except in the event of nonpayment of rent or other breach of
covenant by the tenant.
(xiii) Except in relation to the Premises, SMS has no
liabilities (actual or contingent) arising out of the conveyance,
transfer, lease, tenancy, licence, agreement or other document relating
to land or premises or an interest in land or premises, including,
without limitations leasehold premises assigned or otherwise disposed
of.
(n) INTELLECTUAL PROPERTY.
(i) SMS owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
that is material to the operation of the businesses of SMS as presently
conducted and as presently proposed to be conducted. Except as set
forth on ss.4(n) of the Disclosure Letter, each such material item of
Intellectual Property will be owned or available for use by SMS on
identical terms and conditions immediately subsequent to the Closing
hereunder.
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(ii) Neither the Seller nor SMS has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claim that SMS must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Seller no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
any of SMS.
(iii) Section. 4(n)(iii) of the Disclosure Letter
identifies each patent or registration which has been issued to SMS
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which SMS
has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which SMS has
granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Seller has delivered to
Kendle correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to
date) and have made available to Kendle correct and complete copies of
all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. section 4(n)(iii) of the Disclosure
Letter also identifies each trade name or unregistered trademark used
by SMS in connection with any of its businesses. With respect to each
item of Intellectual Property required to be identified in
section 4(n)(iii) of the Disclosure Letter:
(A) SMS has all right, title, and interest
in and to the item, free and clear of any Encumbrance,
license, or other restriction;
(B) the item is not subject to any
outstanding injunction, judgement, order, decree, ruling, or
charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of the Seller is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) SMS has not agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4(n)(iv) of the Disclosure Letter
identifies each item of Intellectual Property that any third party owns
and that SMS uses pursuant to license, sublicense, agreement, or
permission. The Seller has delivered to Kendle correct and complete
copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual
Property required to be
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identified in section 4(n)(iv) of the Disclosure Letter:
(A) to the Knowledge of the Seller, the
license, sublicense, agreement, or permission covering the
item is in full force and effect and will continue to be in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in
section 2 above);
(B) to the Knowledge of the Seller, no party
to the license, sublicense, agreement, or permission is in
material breach or material default or has repudiated such
license, sublicense, agreement or permission, and no event has
occurred which with notice or lapse of time would constitute a
material breach or material default or permit termination,
modification, or acceleration thereunder;
(C) the Intellectual Property is not subject
to any outstanding injunction, judgement, order, decree,
ruling, or charge;
(D) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of the Seller and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of SMS, is threatened which challenges the
legality, validity, or enforceability of the Intellectual
Property; and
(E) SMS has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(v) Neither the Seller nor SMS has ever to the
Knowledge of the Seller or SMS interfered with, infringed upon,
misappropriated, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation
of its businesses as presently conducted and as presently proposed to
be conducted.
(vi) The technology of SMS is "Year 2000 compliant"
as defined by the BSI statement on a "Definition of Year 2000
Conformity Requirements", reference number DISC PD2000-1, a copy of
which is attached as Exhibit 4n(vi).
(o) TANGIBLE ASSETS. SMS owns or leases all facilities,
machinery, equipment, and other tangible assets necessary for the conduct of its
businesses as presently conducted and as presently proposed to be conducted.
Each such tangible asset has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used and
presently is proposed to be used.
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(p) CONTRACTS. Section 4(p) of the Disclosure Letter lists the
following contracts and other agreements to which SMS is a party:
(i) any agreement (or group of related agreements)
for the lease of personal property (other than capitalised lease
obligations) to or from any Person providing for lease payments in
excess of Fifteen Thousand Sterling ((pound)15,000) per annum;
(ii) other than agreements and contracts with
customers, as to which Three Hundred Thousand Sterling
((pound)300,000.00) shall be the disclosure threshold for section 4(p)
of the Disclosure Letter, any agreement (or group of related
agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to SMS, or
involve consideration in excess of Fifteen Thousand Sterling
((pound)15,000);
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of Fifteen Thousand Sterling ((pound)15,000);
(v) any agreement concerning confidentiality or
noncompetition other than standard provisions in contracts with SMS's
customers;
(vi) any agreement with the Seller and his Affiliates
(other than SMS and its Affiliates);
(vii) any profit sharing, stock option, stock
purchase, phantom stock, stock appreciation, deferred compensation,
severance, or other material plan or arrangement for the benefit of its
current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of Fifteen Thousand Sterling
((pound)15,000) or providing severance benefits in excess Fifteen
Thousand Sterling ((pound)15,000);
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
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(xi) any agreement, which if terminated could have a
material adverse effect on the business, financial condition,
operations, or future prospects of SMS, in respect of which SMS or any
of the other parties to the agreement is in default or has served
notice to terminate the same or in respect of which, to the Knowledge
of the Seller, there exist any circumstances whereby any such agreement
may be prematurely validly terminated or rescinded by any of such
parties; or
(xii) other than agreements or contracts with
customers, any other agreement (or group of related agreements) the
performance of which involves consideration in excess of Fifteen
Thousand Sterling ((pound)15,000).
The Seller has delivered to Kendle a correct and complete copy of each written
agreement listed in section 4(p) of the Disclosure Letter (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in ss.4(p) of the Disclosure Letter. With respect to each
such agreement: (A) to the Knowledge of the Seller, the agreement is in full
force and effect; (B) to the Knowledge of the Seller, the agreement will
continue to be in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) to the Knowledge of
the Seller, no party is in material breach or material default, and no event has
occurred which with notice or lapse of time would constitute a material breach
or material default, or permit termination, modification, or acceleration, under
the agreement; and (D) no party has repudiated any provision of the agreement.
Except as listed in section 4(p) of the Disclosure Letter, SMS is not a party to
any contract or agreement, relating to provision by SMS of services, with any
applicable governmental authority.
(q) NOTES AND BOOK DEBTS. All notes and all book debts of SMS
are reflected properly on their books and records, are valid receivables subject
to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Audited Accounts
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of SMS.
(r) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of SMS.
(s) INSURANCE. section 4(s) of the Disclosure Letter sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which SMS has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past five (5) years:
(i) the name, address, and telephone number of the
agent;
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(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retrospective premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) to the Knowledge of the Seller,
the policy is in full force and effect; (B) to the Knowledge of the Seller, the
policy will continue to be in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) to the Knowledge
of the Seller, neither SMS nor any other party to the policy is in material
breach or material default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or material default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. SMS has been covered
during the past five (5) years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section 4(s) of the Disclosure Letter describes any self-insurance
arrangements affecting SMS.
(t) LITIGATION. Section 4(t) of the Disclosure Letter sets
forth each instance in which SMS (i) is subject to any outstanding injunction,
judgement, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Seller is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any applicable jurisdiction or before
any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in section 4(t) of the Disclosure Letter is likely, if
adversely determined, to result in any SMS Material Adverse Change. Neither the
Seller nor the directors and officers (and employees with responsibility for
litigation matters) of SMS have any reason to believe that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened against
SMS.
(u) EMPLOYEES AND PENSION SCHEME.
(i) The individuals, details of whom are set forth in
section 4(u)(i) of the Disclosure Letter (the "EMPLOYEES") are all
employed by SMS at the date of this Agreement. There are no other
individuals employed by SMS at the date of this Agreement.
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(ii) The particulars shown in section 4(u)(i) of the
Disclosure Letter show true and complete details of the names, ages and
lengths of continuous service of all of the Employees and by reference
to each of the Employees remuneration payable and other benefits
provided by SMS or which SMS is bound to provide (whether now or in the
future) to each category of the Employees at Closing or any Person
connected with any such Person and (without limiting the generality of
the foregoing) include particulars of all profit sharing, incentive,
bonus, commission arrangements and any other benefit to which any such
category of the Employees is entitled or which is regularly provided or
made available to them (including details of their notice period and
their entitlement to holiday) in any case whether legally binding on
SMS or not.
(iii) All Employees (other than those set forth on
section 4(u)(iii) of the Disclosure Letter) have entered into and are
subject to the terms of employment contracts in substantially similar
form to the employment agreement attached hereto as Exhibit 4(u)(iii).
(iv) There are no subsisting contracts for the
provision by any person of any consultancy services to SMS.
(v) None of the Employees has given notice
terminating his contract of employment.
(vi) None of the Employees is under notice of
dismissal or has any outstanding dispute with SMS in connection with or
arising from his employment nor is there any liability outstanding to
such persons except for remuneration or other benefits accruing due and
no such remuneration or other benefit which has fallen due for payment
has not been paid.
(vii) During the period of six months ending with the
execution of this Agreement SMS has not terminated or accepted the
resignation of the employment of any person employed in or by SMS.
(viii) None of the Employees belongs or has belonged
at any material time to an independent trade union recognised by SMS.
(ix) There are no employee representatives
representing all or any of the Employees.
(x) SMS has complied with all of its statutory
obligations to inform and consult appropriate representatives as
required by law.
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(xi) There is no plan, scheme, commitment, policy,
custom or practice (whether legally binding or not) relating to
redundancy affecting any of the Employees more generous than the
statutory redundancy requirements.
(xii) All plans for the provision of benefits to the
Employees comply in all respects with all relevant statutes,
regulations and other laws and all necessary consents in relation to
such plans have been obtained and all governmental filings in relation
to such plans have been made.
(xiii) There are no loans owed by any of the
Employees to SMS.
(xiv) Except for the Pension Scheme, SMS is not under
any present or future liability to pay to any of the Employees or to
any other person who has been in any manner connected with SMS any
pension, superannuation allowance, death benefit, retirement gratuity
or like benefit or to contribute to any life assurance scheme, medical
insurance scheme, or permanent health scheme and SMS has not made any
such payments or contributions on a voluntary basis nor is it proposing
to do so.
(xv) There is no outstanding or threatened claim by
any person who is now or has been an employee of SMS or any dispute
outstanding with any of the said persons or with any unions or any
other body representing all or any of them in relation to their
employment by SMS or to the Knowledge of the Seller there are any
circumstances likely to give rise to any such dispute;
(xvi) Save for the Pension Scheme, SMS is not a party
to or participates in or contributes to any scheme, agreement or
arrangement (whether legally enforceable or not) for the provision of
any pension, retirement, death, incapacity, sickness, disability,
accident or other like benefits (including the payment after cessation
of employment with SMS of medical expenses) for any Relevant Employee
or for the widow, widower, child or dependent of any Relevant Employee.
(xvii) SMS has disclosed all material details
relating to the Pension Scheme, including without limitation the
following:
(A) details of all amendments (if any) to
the Pension Scheme which have been announced or are proposed
but which have not yet been formally made;
(B) details of all discretionary practices
(if any) which may have led any person to expect additional
benefits in a given set of circumstances (by way of example,
but without limitations, on retirement at the behest of SMS or
in the event of redundancy); and
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(C) details of the rate at which and basis
upon which SMS currently contribute to the Pension Scheme (and
confirmation that contributions by SMS and employees are
current and up to date), any change to that rate and/or basis
which is proposed or which is under consideration and all
contributions paid to the Pensions Scheme by SMS in the three
years prior to the date of this Agreement.
(xviii) Every person who has at any time had the
right to join, or apply to join, the Pension Scheme has been properly
advised of that right. No Relevant Employee has been excluded from
membership of the Pension Scheme or from any of the benefits thereunder
in contravention of Article 119 of the Treaty of Rome, the Pensions Act
1995 or other applicable laws or requirements or the provisions of the
Pension Scheme or otherwise.
(xix) There has not in the last four years been any
restructuring of the earnings of all or any members or prospective
members of the Pension Scheme (by way of example, but without
limitation, consolidation of bonuses into basic pay).
(xx) All benefits (other than any refund of members'
contributions with interest where appropriate) payable under the
Pension Scheme on the death of any person while in employment to which
the Pension Scheme relates are insured fully under a policy with an
insurance company of good repute and there are no grounds on which that
company might avoid liability under that policy.
(xxi) Contributions to the Pension Scheme are not
paid in arrears and all contributions and other amounts which have
fallen due for payment have been paid. No fee, charge or expense
relating to or in connection with the Pension Scheme has been incurred
but not paid. If any such fee, charge or expense has been paid by any
person other than the Pension Scheme, the Pension Scheme has reimbursed
that person if and to the extent that the Pension Scheme is or may
become liable so to do.
(xxii) SMS:
(A) has observed and performed those provisions of
the Pension Scheme which apply to it; and
(B) may (without the consent of any person or further
payment) terminate its liability to contribute to the Pension Scheme at
anytime subject only to giving such notice (if any) as is expressly
provided for in the documentation containing the current provisions
governing the Pension Scheme.
(xxiii) SMS is the only employer for the time being
participating in the
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Pension Scheme. No employer which has previously participated in the
Pension Scheme has any claim under the Pension Scheme and in respect of
any such employer the period of participation has been terminated and
benefits have been provided in accordance with the provisions of the
Pension Scheme.
(xxiv) All documentation and records in respect of
the Pension Scheme are up to date and so far as the Seller is aware
complete and accurate in all material respects.
(xxv) Neither the Pension Scheme nor SMS is engaged
or involved in any litigation or arbitration, investigation or
determination by the Pensions Ombudsman and/or the Occupational
Pensions Advisory Service or any complaint under the internal dispute
resolution procedure established in connection with the Pension Scheme
which relate to or are in connection with the Pension Scheme or the
benefits thereunder and no such proceedings are pending or threatened
and to the Knowledge of the Seller there are no facts likely to give
rise to any such proceedings.
(v) GUARANTEES. SMS is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(w) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
Except as disclosed in section 4(w) of the Disclosure Letter:
(i) Hazardous Materials have not at any time been generated,
used, treated or stored by SMS in violation in any material respect of
any applicable Environmental Law, or in any way which will hereafter
require material remedial action under any applicable Environmental
Law, and SMS has not received any notice of any such violation with
respect to Hazardous Materials;
(ii) to the Knowledge of the Seller, there has been no spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto any property owned or leased by SMS, or into the environment
surrounding any such property, of Hazardous Materials, other than
releases permissible under applicable Law or allowable under applicable
Permits;
(iii) SMS, its operations and any property owned, leased or
operated by them are in compliance in all material respects with (i)
all applicable Environmental Laws, and (ii) the requirements of any
Permits issued under such laws; and
(iv) there are no pending or threatened claims against SMS or
any property owned, leased or operated by them relating to Hazardous
Materials or environmental matters.
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None of the circumstances, conditions or occurrences disclosed in ss.4(w) of the
Disclosure Letter or reflected in the Audited Accounts involves or will result
in any material liability on the part of SMS.
(x) CERTAIN BUSINESS RELATIONSHIPS WITH SMS. Except as
contemplated or permitted by this Agreement, disclosed in ss.4(x) of the
Disclosure Letter or reflected in the Audited Accounts, the Seller is not
involved in any business arrangement or relationship with SMS and the Seller
does not own any material asset, tangible or intangible, which is used in the
business of SMS.
(y) FINANCIAL PROJECTIONS. The Seller has no Knowledge of any
fact or circumstance which is likely to result in the financial projections of
SMS for the period September 1999 to September 2000 (a copy of which is set out
in Exhibit 4(y) hereto) not being achieved in any material respect.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under ss.7
below). The Seller acknowledges and agrees that, from and after the Closing,
Kendle will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort within the
possession of, or under the control of, the Seller or SMS, relating to SMS
(other than such documents, books, records (including Tax records), agreements
and financial data that solely relate to the Seller personally).
(b) LITIGATION SUPPORT. Subject to Schedule 4 Limitations on
Warranties and the Tax Deed in the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving SMS, each of the other Parties will co-operate with him, her or it and
his, her or its counsel in the contest or defence, make available their
personnel, and provide such testimony and access to their books and records as
shall be reasonably necessary in connection with the contest or defence, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
section 7 below).
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(c) TRANSITION. The Seller will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of SMS from maintaining the same
business relationships with SMS after the Closing as it maintained with SMS
prior to the Closing.
(d) CONFIDENTIALITY. The Seller will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information (other than Confidential Information that solely relates to the
Seller personally) except in connection with this Agreement or the business of
SMS and will deliver promptly to Kendle or destroy, at the request of Kendle,
all copies of the Confidential Information which are in his possession. In the
event that the Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, the Seller will notify Kendle promptly of the request or
requirement so that Kendle may seek an appropriate protective order or waive
compliance with the provisions of this section 5(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is compelled
to disclose such Confidential Information, the Seller may disclose the
Confidential Information to the tribunal; PROVIDED, HOWEVER, that the Seller
shall use his reasonable best efforts to obtain, at the reasonable request of
Kendle, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as
Kendle shall designate.
(e) KENDLE SHARES. Each Kendle Share will be imprinted
with a legend substantially in the following form:
THE COMMON STOCK (THE "SHARES") OF KENDLE INTERNATIONAL INC. (THE "COMPANY")
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS, OR THE RULES AND
REGULATIONS THEREUNDER. THE HOLDER HEREOF AGREES FOR THE BENEFIT OF THE COMPANY
THAT THE SHARES MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN
(1) TO THE COMPANY, (2) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF
REGULATION S (RULES 901 THROUGH 905) UNDER THE SECURITIES ACT, (3) PURSUANT TO
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED
BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
NO HEDGING TRANSACTIONS INVOLVING THE SHARES MAY BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
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Each holder desiring to transfer a Kendle Share first must furnish Kendle with
(i) a written opinion reasonably satisfactory to Kendle in form and substance
from counsel reasonably satisfactory to Kendle by reason of experience to the
effect that the holder may transfer Kendle Shares as desired without
registration under the Securities Act and (ii) a written undertaking executed by
the desired transferee reasonably satisfactory to Kendle in form and substance
agreeing to be bound by the restrictions on transfer contained herein.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF KENDLE. The obligation of
Kendle to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) subject to the disclosures in the Disclosure
Letter and Schedule 3 the representations and warranties set forth in
ss.3(a) and ss.4 above shall be true and correct in all material
respects (other than representations and warranties having materiality
qualifiers, which shall be true and correct in all respects) at and as
of the Closing Date;
(ii) the Seller shall have performed and complied
with all of his covenants hereunder in all material respects through
the Closing;
(iii) Kendle's bank creditors shall have given their
written consent to the transaction contemplated by this Agreement and
shall have discharged all Encumbrances given by SMS in their favour;
(iv) Paul Martin and Denise Pearce and such other
employees of SMS as Kendle determines to be necessary and advisable
shall have entered into Employment Agreements substantially in the form
of Exhibit 6(a)(iv) hereto (the "EMPLOYMENT AGREEMENTS");
(v) the Seller and Ms. Pearce shall have executed and
delivered releases in the form of Exhibit 6(a)(v) hereto (the
"RELEASES");
(vi) the Seller and Ms. Pearce shall have executed
and delivered Non-Competition and Non-Disclosure Covenants in the form
of Exhibit 6(a)(vi) hereto (the "COVENANTS");
(vii) the Seller shall have procured the resignation
of the auditors of SMS in accordance with Section 392 of the Companies
Act 1985, accompanied by a written statement pursuant to Section 394 of
that Act that there are no circumstances connected with their
resignation which should be brought to the notice of the members or
creditors of each such company and that no fees are due to them and
deliver such
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resignation and statement to Kendle;
(viii) the Parties and SMS shall have received all
authorisations, consents, and approvals of governments and governmental
agencies referred to in section 3(a)(ii), section 3(b)(ii), and
section 4(c) above;
(ix) Kendle shall have received the resignations,
effective as of the Closing, of each director and officer of SMS (other
than Nyla Singh as Secretary), each delivering to Kendle a deed in form
and substance satisfactory to Kendle made out in favour of SMS
acknowledging that he or she has no claim outstanding for compensation
or otherwise and without any payment under the Employment Rights Act
1996;
(x) the Seller shall have executed and delivered the
Escrow Agreement;
(xi) Kendle shall have received all the statutory and
other books (duly written up to date) of SMS and its certificate(s) of
incorporation, any certificates of incorporation on change of name and
common seal(s);
(xii) Kendle shall have received an executed Tax
Deed;
(xiii) the Seller shall have procured board meetings
of SMS to be held at which there shall be (A) passed a resolution to
approve the transfers of SMS Shares, and (subject only to due stamping)
to register, in the register of members, each transferee as the holder
of the shares concerned; (B) appointed as directors and/or secretary
such Persons as Kendle may nominate such appointments to take effect at
the close of the meeting; (C) tendered and accepted the resignations
and acknowledgements of the directors referred to in section 6 (a)(ix)
each such acceptance to take effect at the close of the meeting; (D)
changed the situation of the registered office and (subject to the
Companies Acts) the accounting reference date, each as Kendle may
direct; (E) tendered and accepted the resignation of SMS's Accountants
and PricewaterhouseCoopers shall be appointed as new auditors of SMS;
and (F) approved and entered into the Employment Agreements referred to
in section 6(a)(iv);
(xiv) deliver to Kendle, certified as correct by the
secretary of SMS, the minutes of each board meeting referred to in
section 6(a)(xiii); and
(xv) all actions to be taken by the Seller in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Kendle.
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41
Kendle may waive any condition specified in this ss.6(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of
the Seller to consummate the transactions to be performed by him in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
section 3(b) above shall be true and correct in all material respects
(other than representations and warranties having materiality
qualifiers, which shall be true and correct in all respects) at and as
of the Closing Date;
(ii) Kendle shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavourable injunction, judgement, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgement, order, decree, ruling,
or charge shall be in effect);
(iv) Paul Martin and Denise Pearce shall have entered
into Employment Agreements with SMS;
(v) no material adverse change in the business,
assets, liabilities, income, financial condition or business prospects
of Kendle ("Kendle Material Adverse Change") shall have occurred since
the date of the latest Kendle SEC Report; provided, however, that if a
Kendle Material Adverse Change shall have occurred, the Seller and
Kendle shall negotiate in good faith with respect to a reasonable
adjustment to the Purchase Price. If agreement is not reached with
respect to such an adjustment, the Seller may terminate this Agreement
for failure of a condition precedent;
(vi) Kendle undertakes that as soon as reasonably
practicable it will use its best efforts to procure the release of Paul
Martin from the terms of the personal guarantees set forth in Exhibit
6(b)(vi) and shall indemnify and keep indemnified Paul Martin from all
losses, damages, costs and expenses incurred by him under such
guarantees from the Closing Date until such release is obtained for
such guarantees;
(vii) the Parties and SMS shall have received all
authorisations, consents, and approvals of governments and governmental
agencies referred to in
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42
section 3(a)(ii), section 3(b)(ii), and section 4(c) above;
(viii) Kendle and the Seller shall have executed and
delivered the Escrow Agreement;
(ix) all actions to be taken by Kendle in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this section 6(b) if he
executes in writing so stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller contained in section 4(a)-(j),
section 4(l)-(u) and section 4(w)-(x) above shall survive the Closing
hereunder and continue in full force and effect as set out in section 1.1 and
1.2 of Schedule 4. All of the other representations and warranties of the
Parties contained in this Agreement (including the representations and
warranties of the Seller contained in section 3(a) and section 4(k) above)
shall survive the Closing and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF KENDLE.
(i) In the event the Seller breaches (or in the event
any third party alleges facts that, if true, would mean the Seller has
breached) any of his representations, warranties, and covenants
contained herein (other than the covenants in section 2(a) above and
the representations and warranties in section 3(a) above), and, if
there is an applicable survival period pursuant to section 7(a) above,
provided that Kendle makes a written claim for indemnification against
the Seller pursuant to section 8(h) below within such survival period,
then the Seller agrees to indemnify Kendle from and against the
entirety of any Adverse Consequences Kendle may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences Kendle may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach) subject at all times to
the limitation on the Seller's liability as set out in Schedule 4.
(ii) In the event the Seller breaches (or in the
event any third party alleges facts that, if true, would mean the
Seller has breached) any of his covenants in section 2(a) above or any
of his representations and warranties in section 3(a) above, and, if
there is an applicable survival period pursuant to section 7(a) above,
provided that Kendle makes a written
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43
claim for indemnification against the Seller pursuant to section 8(g)
below within such survival period, then the Seller agrees to indemnify
Kendle from and against the entirety of any Adverse Consequences Kendle
may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences Kendle may suffer after the end of
any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged
breach) subject at all times to the limitation on the Seller's
liability as set out in Schedule 4.
(iii) Kendle may satisfy Seller's indemnification
obligations by recourse to the escrow fund held by Fifth Third Bank, as
escrow agent, pursuant to the Escrow Agreement but recourse to that
escrow fund shall not constitute Kendle's sole remedy or source for
satisfaction of indemnification claims under this Agreement.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In
the event Kendle breaches any of its representations, warranties, and covenants
contained herein (or in the event any third party alleges facts that, if true,
would mean Kendle has breached), and, if there is an applicable survival period
pursuant to section 7(a) above, provided that the Seller makes a written claim
for indemnification against Kendle pursuant to section 8(g) below within such
survival period, then Kendle agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences the
Seller may suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach). Kendle shall also indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer as a result of any
obligations or liability of SMS or any SMS Subsidiary (other than this
Agreement) guaranteed by the Seller.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this section 7, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof
in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so long
as (A) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party
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44
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim, (B) the Indemnifying
Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim
and fulfil its indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or
an adverse judgement with respect to, the Third Party Claim is
not, in the good faith judgement of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defence of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting
the defence of the Third Party Claim in accordance with section
7(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defence
of the Third Party Claim, (B) the Indemnified Party will not consent to
the entry of any judgement or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any judgement or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in
section 7(d)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of any
judgement or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this section 7.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money (using the base lending rate of
National Westminster Bank as the discount rate) in determining Adverse
Consequences for purposes of this ss.7. All indemnification payments under this
section 7 shall be deemed adjustments to the Purchase Price.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and
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45
Safety Requirements) any Party may have with respect to SMS or the transactions
contemplated by this Agreement.
8. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of Kendle and the Seller (which approval shall not be unreasonably withheld or
delayed); PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his, her or its rights, interests, or obligations hereunder without the
prior written approval of Kendle and the Seller; provided, however, that Kendle
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Kendle nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is
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46
sent (i) from and to the United Kingdom, by first class pre-paid post, recorded
delivery, or (ii) from or to any place outside the United Kingdom, by pre-paid
priority airmail, international recorded delivery (or the equivalent thereof),
in either case addressed to the intended recipient as set forth below:
If to the Seller: Paul Martin
----------------- 1 Scarletts Cottage
Scarletts Lane
Kiln Green
Reading, Berkshire RG10 9XF
Copy to: Ian Wood-Smith, Esq.
------- Field Seymour Parkes
The Old Coroner's Court
No. 1 London Street
P.O. Box 174
Reading, Berkshire RG1 4QW
If to Kendle: KENDLE INTERNATIONAL INC.
------------- 441 Vine Street
700 Carew Tower
Cincinnati, Ohio 45202
Attention: Paul F. Ritter, Esq.
General Counsel
Copy to: Kevin J. Alexander, Esq.
-------- Bracewell & Patterson, L.L.P.
33 Davies Street
London W1Y 1FN
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with English law. In relation to any legal action or
proceedings to enforce this Agreement or arising out of or in connection with
this Agreement, each of the Parties irrevocably submits to the jurisdiction of
the English courts and waives any objection to any proceedings in
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47
such courts on the grounds of venue or on the grounds that such proceedings have
been brought in an inconvenient forum.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Kendle and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear his, her or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Seller agrees that SMS shall not bear any of the Seller's costs and expenses
(including any of his legal fees and expenses or any brokerage fees) in
connection with this Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favouring or disfavouring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any European Union, national,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
References to, or any provision of, any treaty, statute, directive, regulation,
decision, order, instrument, by-law or any other law of, or having effect in,
any jurisdiction shall be construed also as references to such provisions as
replaced, amended or re-enacted from time to time. Any statute, statutory
instrument, regulation, by-law or other requirement of US federal, state or
local law and any US legal term of any action, remedy, method of judicial
proceeding, legal documents, legal status, procedure, court, official or any
legal concept or doctrine or other expression shall in respect of any non-US
jurisdiction be deemed to include that which most nearly approximates in such
non-US jurisdiction such US statute, statutory instrument, regulation, by-law or
other requirement of law or legal term. The word "including" shall mean
including without limitation. The Parties intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of relative levels of
specificity) which the Party has not breached shall not detract from or mitigate
the fact that the Party is in breach of the first representation, warranty or
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covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
AS WITNESS the hands of the duly authorised representatives of the Parties on
the date first before written.
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SIGNED by )
PAUL MARTIN )
in the presence of: /s/ Paul Martin )
Witness: /s/ Nyla Singh
Name: Nyla Singh
Address:
Occupation:
SIGNED by /s/ Nigel Page )
-------------------------- )
duly authorised for and on )
behalf of KENDLE )
U.K. INC. )
Witness: /s/ Ian Wood-Smith
Name: Ian Wood-Smith
Address:
Occupation:
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SCHEDULE 1
----------
VENDOR SCHEDULE
---------------
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Adam 116 Gloucester Rd 8
Wroath Bishopston
Bristol
BS7 8NL
Alison Begg 92 Queensborough 113
Gardens Glasgow
G12 9RX
Alison Flat 1 8
Burlton 2 Windsor Villas
Lower Weston
Bath
BA1 3DJ
Alison Kelly 10 Graham Road 8
Chiswick
London
W4 5DR
Alison Kenny 53 Old Wokingham 53
Road, Crowthorne
Berkshire
RG45 6SS
Alistair 17 Canada Road 30
Davison Rawdon
Leeds
LS19 6LR
Allyson 6 Victoria Place 30
Blackwell Sutton
Near Ely
Cambridgeshire
CB6 2NP
Amanda 36 Hanson Mews 38
Wright Offerton
Stockport
SK1 4HS
Andrew 33 Denholm Ave 75
Fleming Musselburgh
Scotland
51
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
EH21 6TX
Andy "Laneside" 38
Plowright Holly Grove
Dobcross
Saddleworth OL3 5JW
Angela Currie 11 Garland Hill 113
Manse Road
Belfast
BT8 6YL
Ann Ring 1 Maes y Capel 113
Pembrey
Burry Port
Carmarthenshire
SA16 OEG
Anna Kettle 20 Daws Lea 15
High Wycombe
Bucks
HP11 1QF
Anne Merklands 188
MacKenzie Dolphinton
West Linton
Peembleshire
EH46 7AB
Anne 67 Hunters Grove 15
Reece Hayes
Middlesex
UB3 3JF
Anne Soutar St Ola 45
32a Lindsay St
Kirriemuir
Angus
DD8 5DS
Billy Bahia Flat 23 Shelley Ct 8
46 London Road
Reading
Berkshire
RG1 5DG
Brendan Flat 16 23
47
52
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Kromer 169 Queenstown
Road, Battersea
London
SW8 3RL
Carole Creech Wyndale 23
White Lane
Ash Green
Surrey
GU12 6HN
Caroline 3 Portal Close 225
Crockatt Andover
Hampshire
SP11 8HE
Carolyn 74 Fotherby Ct 8
Adnitt Maidenhead
Berks
SL6 1SX
Catherine 95 Northenden Rd 225
Smith Sale
Cheshire
M33 2ED
Catherine 108 Hope Park Gdns 15
Raeburn Bathgate
EH48 2QX
Chris Prinsep Flat 3 8
15 Milton Avenue
Highgate
London
N6 5Q3
Christine 30 Atwell Close 8
Sloper Wallingford
Oxford
OX10 0LJ
Claire Lacey 14 Granville St 15
Monton
Manchester
M30 9PX
Clare Lindsay 39A Mill Lane 8
West Hampstead
48
53
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
London
NW6 1NB
Clare 3 Matthews Road 60
Macdonald RMAS
Camberley
Surrey GU15 4LP
Colin Meadow Cottage 8
McCarten 2 Donside
Stratton
Cirencester
Gloucestershire
GL7 2LX
Darren 4 Moorland Road 30
Garrard Maghull
Liverpool L31 5JN
Dawn Lobban 11 Imperial Court 15
36 Shepherds Hill
Highgate
London N6 5RT
Deborah 1 Manor Farm 23
Thomas Cottages
Manor Farm, Colby
Norfolk
NR11 7EB
Deborah 17 Bury Avenue 23
Venters Newport Pagnell
Bucks
MK16 0ED
Denise Finch 49 Banbury 8
Crown Wood
Bracknell
Berkshire
RG12 OQL
Duncan Flat 10 15
Emerton Sunninghill
Downs Avenue
Epsom Surrey
KT18 5HL
Emma Chiltern House 11
49
54
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Cunningham Pyle Hill
Woking
Surrey GU22 0SR
Emma 14, Kershaw Grove 23
Haldane Macclesfield
Cheshire
SK11 8TN
Emma Flat 5 8
Stephenson 83-85 Clyde Road
Didsbury
Manchester
M20 2WW
Fay Bacon 7 Crossleigh Court 23
West Drive
Tooting Bec
London SW16 1RS
Fezan Senai Dartridge House 23
Childerditch Lane
Childerditch
Brentwood
CM13 3EQ
Gillian 6 Maple Close 8
Beaumont Sandhurst
Berkshire
GU47 8HX
Hannah 129 Merewood Ave 8
Jenkins Sandhills
Oxford
OX3 8EQ
Helen Clarke 88 Magpie Way 15
Winslow
Buckinghamshire
MK18 3QT
Helen Eskdale 210 Park Road 15
Peterborough
Cambridgeshire
PE1 2UJ
Iain Searle 14 Eastern Avenue 15
50
55
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Reading
Berkshire
RG1 5RY
Ian Jurowski 126 Gillespie Road 8
London
N5 1LP
Jane Whiteman 7 Chestnut House 8
High Street
Crowthorne
Berkshire
RG45 7AN
Jennifer 85 Boundary Road 15
Chan-Evans Woking
Surrey
GU21 5BS
Jennifer Gray 15 Birchwood Ave 30
Leeds
LS17 8PJ
Jennifer Pine Trees 60
Osachoff Kingston Ridge
Kingston
Near Lewes
E Sussex BN7 3JU
Joanne Deeks 59 High Street 23
Hungerford
Berkshire
RG17 0NE
Joanne 50 Sherbourne Close 38
Fenwick Chesterton
Cambridge
CB4 1RT
John 103 Nottingham 15
Shirvington Road, Belper
Derbyshire
DE56 1JH
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56
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Judith Dawson 5 Clifton Terrace 60
Mumbles
Swansea
SA3 4EJ
Judy Gilbert 6 The Osiers 225
Buckden
Huntingdon
Cambridgeshire
PE18 9UX
Julia Griffiths 7 Hall Nook 60
Penketh
Warrington
Cheshire
WA5 2HL
Julia Keane 7 Elstree Gardens 23
Ilford
Essex
IG1 2QQ
Julie Hillside Cottage 15
Greenfield Syleham
Eye
Suffolk
IP21 4LL
Karen 46 Warren Close 75
Almeida Old Shirley
Southampton
Hampshire
SO16 6BJ
Karen Smith 8 Salcombe Road 188
Offerton
Stockport
Cheshire SK2 5AG
Karyn-Ann 8B Curwen Road 15
Marshall Shepherds Bush
London
W12 9AE
52
57
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Kathleen 1/Left 15
Milligan 15 Kennoway Drive
Partick
Glasgow G11 7TU
Kathryn 5 Abbots Road 45
Kearns Burghfield Common
Reading
Berkshire RG7 3LD
Kathy Still 90 Nursery Road 38
Sunbury-on-Thames
Middlesex
TW16 6LY
Kevin Owen 16 Rockfields 15
Nottage
Porthcawl
Mid Glamorgan
CF36 3NS
Lena Chapman Flat 7 8
Allison Court
136 Oxford Road
Reading
Berks RG1 7ND
Lesley 14 Ferndown 23
Shelford Pound Hill
Crawley
West Sussex
RH10 3SB
Louise Breen 2 Sutton Close 23
Macclesfield
Cheshire
SK11 7RW
Louise Cooper 4 Radcliffe Way 225
Binfield
Bracknell
Berkshire
RG42 1FR
Margaret Moss Evergreen 90
53
58
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
12 Little Warren
Guildford
Surrey GU4 8PW
Marie 6 Greenfell Ave 8
Meerstadt Maidenhead
Berkshire
SL6 1HQ
Mick Walker 18a Tennyson St 30
Narborough
Leicester
LE9 5FD
Nayana 2 Hobhouse Close 150
Roberts Southway Park
Bradford-on-Avon
Wiltshire
BA15 1UR
Nicola Bennett 22 Froxfield Down 15
Forest Park
Bracknell
Berkshire
RG12 9YB
Nigel Smeeton 414a Moseley Rd 23
Balsall Heath
Brimingham
B12 9AT
Nyla Singh 7 Causeway Cottages 600
The Cricket Green
Hartley Wintney
Hampshire
RG27 8PP
Pam Coward 5 Grovers Court 15
Wycombe Road
Princes Risborough
Buckinghamshire
HP27 0ET
Patricia Boon 1 Ivy House 23
Barkisland
Halifax
West Yorkshire
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59
NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
HX4 0DH
Raffaela Flat 2 38
Comacchio Kenlawn
72 Portmore Park
Road, Weybridge
Surrey KT13 8HH
Rajbant 109 Croftdown Rd 23
Sangha Harbourne
Birmingham
B17 8RE
Rebecca 4 Vale Close 15
Gibson Lower Bourne
Farnham Surrey
GU10 3HR
Reshma Shah 25 Redhill Drive 23
Edgware
Middlesex
HA8 5JL
Rosalyn 90 Kingshurst Rd 8
Coleman Northfield
Birmingham
B31 2LH
Ruth Hopper 21 Badcock Rd 8
Halingfield
Cambridge
CB3 7LF
Sally Harrop 53 Rawcliffe Dr 8
Clifton
York
YO30 6PD
Samantha 28F Merton Rd 38
Ireland Wandsworth
London
SW18 1QY
Sarah Ackrel 94 Church St 38
Bolington
Cheshire
SK10 5QD
Sarah Muller The Barn 8
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NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Binfield Lodge
Binfield
Bracknell
RG42 5QB
Shelly 3 Daleview Rd 75
Ibbotson Beauchief
Sheffield
S8 0EJ
Sue Blyden 116 Millhouse Rd 23
Yardley
Birmingham
B25 8QH
Sue Fitzpatrick 15 Beamish Close 38
Appleton
Warrington
Cheshire
WA4 5RJ
Sue Godfrey 31 Ynysddu 23
Pontyclun
Mid Glamorgan
CF72 9UA
Sue Teasdale Steen House 23
33 Beverley Parklands
Beverley
East Yorkshire
HU17 0RA
Thomas Ruane 46 The Cloisters 300
Frimley
Camberley
Surrey
GU16 5JR
Tracey Gough 23 Finmere 8
Northlake
Bracknell
Berks RG12 7WF
Verna 64 Grange Road 23
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NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Emembolu Banbury
Oxford
OX16 9AU
Vivien Head 70 Plover Rise 23
Ivybridge
Devon
PL21 9DA
Wendy Flat 4 8
Patterson Hetton Lodge
6 Ferndale
Tunbridge Wells
Kent TH2 3RU
Paul Martin 1 Scarletts Cottage 180,980 4,525
Scarletts Lane
Kiln Green
Reading
RG10 9XF
Denise Pearce Lavinia 166 35,500 888
Forest Road
Ascot
Berks SL5 8QF
John Hall The Red House 20 2,220 55
Chatter Alley
Dogmersfield
Hants RG27 8SS
David 42 The Thicket 10 1,100 28
Thompson Romley
Hants
Jacob Martin Byelands 75
Blakes Road
Wargrave
Berkshire
RG10 8LA
Sam Martin Byelands 75
Blakes Road
Wargrave
Berkshire
RG10 8LA
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NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
Douglas Martin 47 Hanbury Rd 75
Chaddesden
Derby
DE2 6FT
Kate Robinson 62 Upperhill St 75
Coventry
CV1 4AP
Oliver Martin 304 Wilbraham Rd 75
Chorlton
Manchester
M21 1UU
Laura Martin 304 Wilbraham Rd 75
Chorlton
Manchester
M21 1UU
Stephen Flynn 16 Rose Court 75
Garforth
Leeds
LS25 1NS
Martin Flynn 16 Rose Court 75
Garforth
Leeds
LS25 1NS
Richard Pearce Lavinia 143
Forest Road
Ascot
Berks SL5 8QF
Janet Hall The Red House 276
Chatter Alley
Dogmersfield
Hants RG27 8SS
Christine 42 The Thicket 138
Thompson Romley
Hants
----- ----- --- ------- -----
1,157 4,742 196 219,800 5,496
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NAME ADDRESS ORD "A" "B" "D" "E"
ORD ORD ORD ORD
--- --- --- ---
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SCHEDULE 2
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Premises
--------
1. Lease of 38 Wellington Business Park.
2. Lease of 25 Wellington Business Park.
3. Lease of First Floor, 172 Dukes Ride, Crowthorne, Berkshire.
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SCHEDULE 3
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SUBSCRIPTION AGREEMENT
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SCHEDULE 4
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1. Time Limits
-----------
Notwithstanding anything to the contrary in this Agreement the Seller
shall not have any liability for any claim made against him:-
1.1 in relation to the Warranties (other than in ss.3(a)) unless
written notification of the claim giving particulars of the
grounds on which it is based and so far as reasonably practicable
details of the amount of the claim is sent to the Seller on or
before the second anniversary of Closing. For the avoidance of
doubt, a claim based upon ss.3(a) shall not be subject to such
time limit; and
1.2 in relation to the Tax Deed and Warranties relating to Tax and
Environmental Law unless written notification of the claim giving
particulars of the grounds on which it is based and so far as
reasonably practicable details of the amount of the claim is sent
to the Seller on or before the seventh anniversary of Closing; and
1.3 in the event that Kendle does not issue proceedings in respect of
any claim within 12 months after notification of the claim.
2. Financial Limits
----------------
The Seller shall not be liable for any breach of any of the Warranties or under
the Tax Deed (except for a claim involving fraud in which case none of the
following limits shall apply):-
2.1 unless and until the aggregate of all claims against the Seller
for breach of any of the Warranties and/or Tax Deed shall exceed
the sum of (pound)37,500 but once exceeded the Seller shall be
liable for the whole of the claim and not merely the excess over
(pound)37,500, PROVIDED THAT any amount payable by the Seller with
respect to a claim pursuant to section 4(l)(iii) and which
relates to the Unapproved Share Option Scheme or scrip dividend
referred to therein, such amount shall not be taken into account
in assessing whether the (pound)37,500 threshold has been met;
2.2 to the extent that the aggregate liability of the Seller for
breach of any of the Warranties and/or Tax Deed (irrespective of
the number of claims) shall exceed (pound)3,800,000.
3. Disclosed and Agreed Matters
----------------------------
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The liability of the Seller in relation to the Warranties and/or Tax Deed shall
not apply in respect of:-
3.1 any matter provided for or referred to in this Agreement or
arising from its implementation;
3.2 any matter fairly disclosed in the Disclosure Letter;
3.3 any matter or thing done or omitted to be done prior to Closing at
the written request of or with the written approval of Kendle.
3.4 any claim that would not have arisen but for some voluntary act or
omission (which Kendle knew or ought reasonably to have known
would give rise to a claim) undertaken by Kendle or any of its
Affiliates or any of their respective officers agents or
successors in title on or after Closing.
4. Subsequent Recovery Under Insurance
-----------------------------------
In the event that the Seller pays to Kendle or SMS an amount in respect of a
claim for breach of any of the Warranties and/or the Tax Deed and Kendle or any
of its Affiliates subsequently recovers under a policy of insurance a sum which
is referable to that breach Kendle shall pay to the Seller:
4.1 An amount equal to the sum recovered under the insurance policy
less any reasonable out of pocket costs and expenses incurred by
Kendle or any of its Affiliates in recovering the same; or
4.2 If the resulting figure under sub-clause 4.1 is greater than the
amount paid by the Seller in respect of the relevant claim such
lesser sum as shall have been paid by the Seller.
5. Taxation and Changes in Law
---------------------------
No liability shall attach to the Seller for any claim in relation to the
Warranties and/or Tax Deed to the extent that such claim arises as a consequence
of a change in any law, rule or regulation (or their interpretation) or
administrative practice of any government, governmental department, agency or
regulatory body taking effect after the date of this Agreement.
6. Other Exclusions
----------------
6.1 No liability shall attach to the Seller for any claim in relation
to the Warranties and/or Tax Deed to the extent that such a claim
arises as a result of all or any of
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the following:-
6.1.1 an increase in the rates scope or method of calculation of
taxation after the date of the Audited Accounts;
6.1.2 any legislation or government regulation or any administrative
or judicial decision not in force at the date of this Agreement;
6.1.3 the withdrawal or alteration after the date of this Agreement of
any extra statutory concession made by the Inland Revenue (or
any fiscal authority) and presently in operation;
6.1.4 in the case of a claim under the Tax Deed or Warranties relating
to Tax in respect of Tax for which SMS is or becomes liable as a
result of transactions in the Ordinary Course of Business after
the date of the Audited Accounts;
6.1.5 the failure or omission of SMS to make any claim action
surrender or disclaimer or to give any notice or consent to do
any other thing the making or giving or doing of which was taken
into account in computing the reserve for Tax in the Audited
Accounts;
6.1.6 SMS waiving or surrendering after Closing any exemption relief
allowance credit deduction or set-off available to it relevant
to the computation of any liability to Tax or any credit against
Tax the subject of the warranties or the Tax Deed;
6.1.7 in respect of any Tax if and to the extent the claim would not
have arisen but for the fact that the accounting methods used or
the application thereof (including without limitation the
treatment of any assets or liabilities or of any Tax
attributable to any timing differences in the future accounts of
SMS) is different from the treatment or application of the same
utilised in preparing the Accounts;
6.1.8 if and to the extent that such claim would not have arisen or
would have been reduced or eliminated but for the failure or
omission on the part of Kendle or any of its Affiliates to make
any claim election surrender or disclaimer or give notice or
consent or do any other thing under the provisions of any
enactment or regulation relating to Tax after the Closing Date
the making giving or doing of which was taken into account in
computing the provision for taxation in the Audited Accounts;
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6.2 if the benefit of the Warranties are assigned then the liability
of the Seller shall be no greater than it would have been if
Kendle had remained the owner of the Shares and had retained the
benefit of the Warranties;
6.3 the amount of any claim for breach of the Warranties or under
the Tax Deed shall take into account the amount of any relief
from Tax arising by virtue of the loss or damage in respect of
which the claim was made;
6.4 nothing in this Agreement shall derogate from the Kendle's
obligation to mitigate any loss which it suffers in consequence
of a breach of the Warranties or the Tax Deed;
6.5 if in respect of any claim under the Warranties or under the Tax
Deed the liability is contingent only then the Seller shall not
be under any obligation to make any payment to Kendle until such
time as the liability ceases to be contingent and becomes
actual;
6.6 where the facts or circumstances could give rise to both a claim
under the Warranties and to a claim under the Tax Deed the
Seller shall not be liable in respect of both those claims and
in the event that a claim may be made by Kendle in respect of
any act and/or default under the Warranties and the Tax Deed
then the claim shall first be made under the Warranties. Any
amount payable under the Tax Deed to the Kendle, SMS or any of
Kendle's Affiliates shall be reduced to the extent of that
payable under the Warranties.
7. Access to Information
---------------------
If any claim under this Agreement is notified and without prejudice to its
validity Kendle shall allow the Seller and his professional advisers to
investigate the basis for that claim. For such purpose Kendle shall give all
such assistance as the Seller or his advisers may reasonably request including
access to and copies of any relevant documents or other information in the
possession of Kendle.
8. Any amounts payable by the Seller to Kendle under this Agreement shall
constitute a reduction of the Purchase Price received by him under this
Agreement.
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