RESTATED SALE AND PURCHASE AGREEMENT
among
AVECIA INVESTMENTS LIMITED AND OTHERS
and
ARCH CHEMICALS, INC.
relating to the Avecia Pool and Spa Business
and Protection and Hygiene Business
dated 8th March 2004, restating an agreement made
between the parties on 4th March 2004
---------------------------------------
CONTENTS
1. DEFINITIONS AND INTERPRETATION/SCHEDULES..........................1
2. AGREEMENT TO SELL AND PURCHASE/ASSUMPTION OF LIABILITIES..........1
3. CONDITIONS PRECEDENT/TERMINATION RIGHTS...........................4
4. CONSIDERATION.....................................................9
5. GAP PERIOD UNDERTAKINGS..........................................17
6. COMPLETION/STATUS OF LOCAL AGREEMENTS............................22
7. WARRANTIES AND LIMITATIONS.......................................24
8. CLAIMS PROCEDURE.................................................28
9. REGISTRATION RIGHTS..............................................30
10. CONTRACTS........................................................35
11. EMPLOYEES........................................................36
12. EMPLOYEE BENEFIT ARRANGEMENTS....................................36
13. POST-COMPLETION OBLIGATIONS......................................36
14. GUARANTEES.......................................................41
15. VAT..............................................................42
16. THIRD PARTY RIGHTS...............................................44
17. COSTS............................................................44
18. ANNOUNCEMENTS/CONFIDENTIALITY....................................44
19. GENERAL..........................................................46
20. GOVERNING LAW/PROCESS AGENT......................................51
SCHEDULE 1 - Vendors, Shares and Target Businesses...................52
SCHEDULE 2 - The Target Companies....................................53
SCHEDULE 3 - Purchase Price Adjustment...............................55
SCHEDULE 4 - Warranties..............................................56
SCHEDULE 5 - Limitations.............................................85
SCHEDULE 6 - Ancillary Agreements....................................89
SCHEDULE 7 - Employment Matters......................................92
SCHEDULE 8 - Employee Benefit Matters................................93
SCHEDULE 9 - Completion..............................................94
SCHEDULE 10 - Definitions And Interpretation.........................97
AGREED FORM DOCUMENTS
AF1 Financial Statements
1A 2002 Accounts
1B 2003 Accounts
AF2 Fixed Assets List
2A UK Fixed Assets List
2B US Fixed Assets List
AF3 Employee List
AF4 Intellectual Property List
AF5 Property List
AF6 Transaction Breakdown
AF7 Tax Deed
AF8 Environmental Deed of Assignment
AF9 Environmental Pooling Agreement
AF10 Transitional Services Agreements
10A Transitional Services Agreement (Spain, Singapore)
10B Reverse Transitional Services Agreement (Japan)
10C USA Transitional Services Agreement
10D UK Transitional Services Agreement
AF11 Ongoing Services/Supplies
11A Site Services Agreement for Huddersfield
11B Site Services Agreement for Blackley
11C Manufacturing Services Agreement for Grangemouth Biocides Plant
11D Analytical Sciences Group Services Agreement
11E Site Services Agreement for New Castle
11F Site Services Agreement for Wilmington
11G Supply Agreement re Proxel GXL Antimicrobial and Vantocil IB
(USA)
11H Supply Agreement re Proxel GXL Antimicrobial (UK)
AF12 Assignment and Assumption Agreement re the PHMB Manufacturing
Services Agreement with Cytec Industries Inc.
AF13 Intellectual Property Agreements:
13A Know-how Assignment and Licence Agreement
13B Regulatory Data Transfer and Access Agreement
13C Patent Assignment (Avecia Limited)
13D Patent Assignment (Avecia Inc.)
13E Trade Mark Assignment (Avecia Limited)
13F Software Assignment Agreement (RABIT)
13G Trade Mark Assignment (Avecia Inc.)
13H Domain Name Assignment
13I Dainippon Inc. Contract Assignment
13J Eastman Kodak Contract Assignment
13K Syngenta Partial Contract Assignment
AF14 Property Documents
14A Underlease agreement relating to part of the North Laboratory
at Huddersfield
14B Court claims form relating to part of the North Laboratory at
Huddersfield
14C1 Deed of Covenant relating to part of the North Laboratory at
Huddersfield
14C2 Deed of Indemnity relating to part of the North Laboratory at
Huddersfield
14D Transfer of the lease for the Specialities East Plant at
Huddersfield
14E Assignment of beneficial interest in the Seal Sands land and
buildings
14F Form TR1 re transfer of legal title to Seal Sands
14G Lease of Biocides 1 and 2 Buildings, Blackley
14H Court Claim Form re Biocides 1 and 2 Buildings, Blackley
14I Lease of Part of Hexagon House, Blackley
14J Court Claim Form re Part of Hexagon House, Blackley
14K Lease Agreement for the Biocides Pool, New Castle
14L Lease Agreement for the Lab Parcel, New Castle
14M Assignment of Mt Pleasant Ground Lease
AF15 Other Transaction Agreements/Documents
15A Non-Competition Agreement
15B Deed of Covenant re Stahl
15C Actuary's Letter
15D Required Third Party Consents
15E Spanish Distribution Agreement
THIS AGREEMENT is made on 8th March 2004 among:
(1) AVECIA INVESTMENTS LIMITED a company incorporated in England and Wales
(company number 3768296) whose registered office is at Hexagon House,
Blackley, Manchester M9 8ZS (the "Principal Vendor");
(2) THE COMPANIES identified in Part 1 of Schedule 1 (the "Share Vendors");
(3) THE COMPANIES identified in Part 2 of Schedule 1 (the "Business
Vendors"); and
(4) ARCH CHEMICALS, INC. a company incorporated under the laws of the
Commonwealth of Virginia whose principal place of business is at 501
Merritt 7, P.O. Box 5204, Norwalk, CT 06856 - 5204, USA (the
"Purchaser").
BACKGROUND
(A) The Business Vendors and the Target Companies carry on the Business
and/or own assets relevant to the Business.
(B) The Share Vendors own the entire issued share capital of the Target
Companies.
(C) The Principal Vendor is an indirect parent company of the Business
Vendors and the Share Vendors.
(D) On 4th March 2004 the Vendors agreed to sell and the Purchaser agreed to
purchase the Operations (by way of acquisition of the Shares and the
Business Assets and the assumption of the Business Liabilities) as a
going concern on and subject to the terms and conditions set out in this
Agreement.
(E) On 4th March 2004 the Principal Vendor agreed to provide warranties,
covenants, indemnities and undertakings on and subject to the terms and
conditions set out in this Agreement.
(F) This Agreement restates the agreement reached between the parties on 4th
March 2004.
IT IS AGREED AS FOLLOWS
1. DEFINITIONS AND INTERPRETATION/SCHEDULES
1.1. Unless the context shall otherwise require, words and expressions in this
Agreement shall be given the meanings ascribed to them and shall be
interpreted in accordance with Schedule 10 and, if applicable, Part 5 of
Schedule 3.
1.2. The Schedules form part of and shall be construed as one with this
Agreement.
2. AGREEMENT TO SELL AND PURCHASE/ASSUMPTION OF LIABILITIES
2.1. On the terms and subject to the conditions of this Agreement
(including in particular the Conditions Precedent), on the
Completion Date, the Share Vendors shall sell and the Purchaser (or
a Local Purchaser) shall purchase the Shares and the Business
Vendors shall sell and the Purchaser (or a Local Purchaser) shall
purchase the Target Businesses and Business Assets as a going
concern, with the benefit of the warranties and undertakings
contained in this
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Agreement and together with all rights and advantages attaching
thereto at Completion. The Purchaser and the Local Purchasers shall
acquire no interest under this Agreement in the Excluded Assets.
2.2. The Purchaser or a Local Purchaser shall with effect from Completion
assume, duly and punctually pay, satisfy, discharge, perform or
fulfil all of the applicable Business Liabilities, provided that, in
the case of the Creditors, the assumption provided for in this
Clause 2.2 shall be satisfied by:
2.2.1. the Purchaser paying to the Principal Vendor no later than
the day falling 60 days after the Completion Date (or, if
that is not a Business Day, on the first succeeding
Business Day, and provided that the Principal Vendor shall
have complied with paragraph 1 of Part 2 of Schedule 3) an
amount (the "Interim Creditors Amount") equal to the
amount of the Avecia Payment Creditors shown in the Draft
Statements (as defined in Part 2 of Schedule 3) prepared
by the Principal Vendor;
2.2.2. if the actual amount of Creditors shown by the Completion
Working Capital Statement exceeds the Interim Creditors
Amount, the Purchaser paying an amount equal to such
excess on the Settlement Date; and
2.2.3. if the actual amount of Creditors shown by the Completion
Working Capital Statement is less than the Interim
Creditors Amount, the Principal Vendor repaying an amount
equal to such shortfall to the Purchaser on the Settlement
Date.
2.3. Except as otherwise expressly contemplated by this Agreement, the
Principal Vendor agrees with the Purchaser (for itself and in trust
for each member of the Purchaser's Group) that the Principal Vendor
shall, or shall procure that another Vendor shall, indemnify and
keep indemnified the Purchaser and each member of the Purchaser's
Group against:
2.3.1. any Excluded Liability, any Insured Liability and any
other Liability of the Business Vendors which is not a
Business Liability and which is not otherwise expressly
assumed by the Purchaser or a Local Purchaser under this
Agreement, including for the avoidance of doubt any such
Liability which is or is deemed to be or becomes a
Liability of a member of the Purchaser's Group by virtue
of applicable law, other than a Liability for which the
Purchaser would be obliged to indemnify the Principal
Vendor pursuant to the Tax Deed;
2.3.2. any Liability (other than a Business Liability) incurred
by any member of the Vendors' Group on its own behalf
which is or is deemed to be or becomes a Liability of any
Target Company by virtue of applicable law; and
2.3.3. any Losses which the Purchaser or a Local Purchaser may
suffer by reason of taking any reasonable action to avoid,
resist or defend against any Liability referred to in
Clause 2.3.1 or 2.3.2.
2.4. Except as otherwise expressly contemplated by this
Agreement, the Purchaser agrees with the Vendors (for
themselves and in trust for each member of the
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Vendors' Group) that the Purchaser shall, or shall procure
that a Local Purchaser shall, indemnify and keep
indemnified the Vendors and each member of the Vendors'
Group against:
2.4.1. all Business Liabilities and any other Liability (other
than any Excluded Liability), to the extent such other
Liability is incurred by the Purchaser's Group in carrying
on the Operations after Completion, including for the
avoidance of doubt, (i) any liability arising from the use
of the Avecia name as contemplated by Clause 13.7 and (ii)
any such Liability which is or is deemed to be or becomes
a Liability of a member of the Vendors' Group by virtue of
any applicable law, other than a Liability for which the
Principal Vendor would be obliged to indemnify the
Purchaser pursuant to the Tax Deed;
2.4.2. any Liability incurred by a Target Company on its own
behalf which is or is deemed to be or becomes a Liability
of any member of the Vendors' Group by virtue of
applicable law, other than a Liability for which the
Principal Vendor would be obliged to indemnify the
Purchaser pursuant to the Tax Deed;
2.4.3. any other Liability to the extent it has been provided
for, included as a Liability or reduced the value of an
asset in the Completion Working Capital Statement; and
2.4.4. any Losses which the Vendors may suffer by reason of the
Vendors taking any reasonable action to avoid, resist or
defend against any Liability referred to in Clause 2.4.1,
2.4.2 or 2.4.3.
2.5. The Purchaser shall be entitled to nominate by notice in writing to
the Principal Vendor at any time up to the date falling 20 days
after the date of this Agreement, one or more Local Purchasers
(being in each case a wholly-owned member of the Purchaser's Group
whose obligation to any Vendor under any Local Agreement or other
Ancillary Agreement shall be guaranteed by the Purchaser in the
terms set out in Clause 14) to purchase any of the relevant Shares
or Business Assets (and assume the relevant Business Liabilities)
provided that (i) the status or location of incorporation of any
such Local Purchaser does not necessitate further conditions to
completion other than those set out in Clause 3 and (ii) any such
nomination shall not increase any Liability of any member of the
Vendors' Group under this Agreement or restrict any of the rights of
any member of the Vendors' Group under this Agreement.
2.6. The Principal Vendor and the Purchaser shall after the date of this
Agreement continue to negotiate in good faith and investigate a
possible alternative structure in relation to the sale of the Target
Business of Avecia Comercial e Importada Limitada (by which such
Target Business would be transferred to a new company and the shares
in such new company sold to the Purchaser or a Local Purchaser at
Completion). If it is reasonably practicable to give effect to such
alternative structure without delaying Completion and without
otherwise prejudicing the parties, the Purchaser and the Principal
Vendor shall in good
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faith seek to agree changes to this Agreement to give effect to such
alternative structure.
3. CONDITIONS PRECEDENT/TERMINATION RIGHTS
CONDITIONS
3.1. Completion is conditional upon satisfaction (or, with respect to the
conditions described in Clauses 3.1.1 and 3.1.2, waiver by the
Purchaser and the Principal Vendor together or, with respect to the
conditions described in Clause 3.1.3, 3.1.4 and 3.1.5, waiver by the
Purchaser) of the following conditions, or their satisfaction
subject only to Completion:
3.1.1. any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), relating to the proposed acquisition of the
Operations has expired or been terminated provided always
that:
(a) the US Business Vendor and the Purchaser or the
relevant Local Purchaser shall each make, on the
first Business Day after the date of this
Agreement, an appropriate filing of notification
and report form pursuant to the HSR Act in
relation to the proposed acquisition of the
Operations;
(b) the US Business Vendor and the Purchaser or the
relevant Local Purchaser shall each supply
promptly any additional information and
documentary material that may be requested by
any United States antitrust authority pursuant
to the HSR Act (including, for the avoidance of
doubt, upon a "second request" being made); and
(c) the Principal Vendor, the Purchaser and the
relevant Local Purchaser shall use all
commercially reasonable endeavours to eliminate
each and every impediment that may be asserted
under any United States Federal or state
statute, law, ordinance, rule or regulation by
any government, governmental, supranational or
trade agency, court or regulatory body or any
other party so as to enable the parties to
complete expeditiously the proposed acquisition
of the Operations (provided that the Purchaser
and such Local Purchaser shall not be obliged to
negotiate, commit to and/or effect, by consent
decree, hold separate order or otherwise, the
sale or disposition of any portion of the
Operations or any portion of the business or
assets of the Purchaser or any member of the
Purchaser's Group in order to avoid the entry
of, or to effect the dissolution of, any
injunction, temporary restraining order or other
order in any suit or proceeding that would
otherwise have the effect of delaying or
preventing the consummation of the Purchaser's
or the relevant Local Purchaser's acquisition of
the Operations);
3.1.2. no applicable law or injunction enacted, entered,
promulgated, enforced or issued by any government,
governmental, supranational or trade
5
agency, court or regulatory body or other legal restraint
or prohibition preventing the proposed acquisition of any
portion of the Operations shall be in effect;
3.1.3. no action, suit or proceedings being (i) pending before
any court or (ii) threatened by any government,
governmental authority, supranational or trade agency or
regulatory body which:
(a) seeks to restrain, prohibit or otherwise
challenge the proposed acquisition of any
portion of the Operations or any other material
transaction contemplated by the Ancillary
Agreements; or
(b) seeks to obtain from the Purchaser or any member
of the Purchaser's Group damages in connection
with the acquisition of any portion of the
Operations as the result of or by reference to
any breach of any obligation entered into by a
member of the Vendors' Group;
3.1.4. no action, suit or proceedings having been brought or
threatened by any government, governmental authority,
supranational or trade agency or regulatory body (i)
seeking to prohibit or limit the ownership or operation by
the Purchaser or any member of the Purchaser's Group of
any portion of the Operations or any portion of the
business and assets of the Purchaser or any member of the
Purchaser's Group, or (ii) seeking to compel the Purchaser
or any member of the Purchaser's Group to dispose of or
hold separate any portion of the Operations or any portion
of the business or assets of the Purchaser or any member
of the Purchaser's Group, in each case as a result of the
proposed acquisition of any portion of the Operations or
any other material transaction contemplated by the
Ancillary Agreements; and
3.1.5. the consents described in the document in the Agreed Form
AF15D shall have been obtained.
RESPONSIBILITY FOR SATISFACTION
3.2. The Principal Vendor and the Purchaser hereby undertake (i) not to
take (and the Principal Vendor shall procure that no member of the
Vendors' Group shall take and the Purchaser shall procure that no
member of the Purchaser's Group shall take) any action that would
reasonably be expected to result in any of the conditions set out in
Clause 3.1 or the Spanish Condition not being satisfied and (ii) at
their own expense to use all reasonable endeavours to ensure the
satisfaction of the conditions set out in Clause 3.1 (save as
provided therein) and the Spanish Condition and the parties shall
each bear their own respective filing fees and other costs incurred
in relation to any anti-trust or similar filing required to be made
in any jurisdiction in connection with the acquisition of the
Operations by the Purchaser's Group. Without prejudice to the
foregoing, it is agreed that the Purchaser and the Principal Vendor
shall promptly notify each other of all requests and enquiries from
any government, governmental, supranational or trade agency, court
or regulatory body and those requests and enquiries shall be dealt
with by the Principal Vendor and the Purchaser in
6
consultation with each other and the Principal Vendor and the
Purchaser shall promptly co-operate with and provide all necessary
information and assistance reasonably required by such government,
agency, court or body upon being requested to do so by the other.
NOTICES REGARDING SATISFACTION
3.3. Each of the Purchaser and the Principal Vendor shall give notice to
the other of the satisfaction of the Condition Precedent set out in
Clause 3.1.1 or 3.1.5 promptly upon becoming aware of the same.
LONG STOP DATE
3.4. If the conditions in Clause 3.1 are not satisfied or waived on or
before the Long Stop Date otherwise than as a result of a breach by
a party of its obligations under Clause 3.1 or Clause 3.2 this
Agreement shall lapse and no party shall have any claim against any
other under it. If the Conditions in Clause 3.1 are not satisfied or
waived on or before the Long Stop Date as a result of a breach by a
party of its obligations under Clause 3.1 or Clause 3.2 then the
party not in breach of such obligations shall be entitled by notice
in writing to the other to terminate this Agreement without
prejudice to any claim arising from breach of the undertakings
contained in Clauses 3.1 and 3.2.
RIGHTS OF TERMINATION
3.5. If at any time after the date of this Agreement and before
Completion:
3.5.1. a Material Breach of Undertaking occurs;
3.5.2. a Material Breach of Warranty occurs;
3.5.3. a Material Adverse Change occurs; or
3.5.4. any of the conditions set out in Clause 3.1 shall have
become incapable of fulfilment on or before the Long Stop
Date otherwise than as a result of a breach by the
Purchaser of its obligations under Clause 3.1 or Clause
3.2 and shall not have been waived by the applicable party
or parties as set out in Clause 3.1,
the Purchaser shall be entitled, subject to the provisions of
Clauses 3.7 to 3.15, to terminate this Agreement before Completion,
by notice in writing to the Principal Vendor, without liability on
its part. If the Purchaser duly exercises its right of termination
hereunder it shall have no claim against any Vendor except as set
out in Clause 3.13 or Clause 3.14 (as appropriate). If the
Purchaser, having received notice of the relevant facts or matters
in accordance with Clause 5.4.4 and in the knowledge of its right to
terminate this Agreement as described in paragraph (ii)(B) of the
definition of the term "Material Breach of Warranty", elects not to
so terminate this Agreement (other than in respect of a breach
arising from facts or matters within the reasonable control of the
Vendors' Group), it shall thereafter have no claim against the
Principal Vendor in respect of the facts and circumstances giving
rise to such Material Breach of Warranty.
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3.6. If at any time after the date of this Agreement and before
Completion any of the conditions set out in Clause 3.1 shall have
become incapable of fulfilment on or before the Long Stop Date
otherwise than as a result of a breach by the Principal Vendor of
its obligations under Clause 3.1 or Clause 3.2 and shall not have
been waived by the applicable party or parties as set out in Clause
3.1, the Principal Vendor shall be entitled, subject to the
provisions of Clauses 3.7 to 3.15, to terminate this Agreement
before Completion, by notice in writing to the Purchaser, without
liability on its part. If the Principal Vendor duly exercises its
right of termination hereunder, it shall have no claim against the
Purchaser or any Local Purchaser except as set out in Clause 3.14.
3.7. If the Purchaser wishes to terminate this Agreement in accordance
with Clause 3.5 or the Principal Vendor wishes to terminate this
Agreement in accordance with Clause 3.6, the terminating party shall
forthwith give notice of its intention to do so (a "Termination
Notice") to the other by facsimile or by personal delivery in
accordance with Clause 19.20.
3.8. If the Purchaser serves a Termination Notice in accordance with
Clause 3.7 alleging that a Material Breach of Undertaking, Material
Breach of Warranty or Material Adverse Change has occurred, the
Principal Vendor may contest the validity of the Purchaser's right
to terminate by giving notice in writing to the Purchaser not later
than 5 pm on the date being three Business Days after the date of
receipt of such Termination Notice.
3.9. If the Principal Vendor gives valid notice to the Purchaser under
Clause 3.8, in respect of an alleged Material Breach of Undertaking
or Material Breach of Warranty then the parties shall seek the
advice of a leading commercial Queens Counsel (the "Legal Expert").
If the parties cannot agree on the Legal Expert within two Business
Days of the valid service by the Principal Vendor of a notice under
Clause 3.8, the Legal Expert shall be chosen by lot. The Legal
Expert shall give due weight to any representations put forward by
either party received by him and shall as a matter of urgency (and
in any event no later than three Business Days after the date of
appointment) advise the parties in writing if in his opinion, on the
basis of the information available, a Material Breach of Undertaking
or Material Breach of Warranty has occurred. If the Legal Expert's
opinion is that a Material Breach of Undertaking or Material Breach
of Warranty has occurred or if no opinion is issued by the Legal
Expert on or before the Long Stop Date, then the Purchaser shall not
be obliged to proceed to complete this Agreement. If the Legal
Expert opines on or before the Long Stop Date that no such Material
Breach of Undertaking or Material Breach of Warranty has occurred,
then the parties shall complete this Agreement in accordance with
its terms.
3.10. If the Principal Vendor gives valid notice to the Purchaser under
Clause 3.8 in respect of an alleged Material Adverse Change, then
the parties shall seek the advise of a senior investment banker in
London of an investment bank of international standing (not being
Goldman Sachs or JP Morgan) (the "IB Expert"). If the parties cannot
agree on the IB Expert within two Business Days of the valid service
by the Principal Vendor of a notice under Clause 3.12, the IB Expert
shall be chosen by lot. The IB Expert shall give due weight to any
representation put forward by either party received by him and shall
as a
8
matter of urgency (and in any event no later than three Business
Days after the date of appointment) advise the parties in writing if
in his opinion a Material Adverse Change has occurred. If the IB
Expert's opinion is that a Material Adverse Change has occurred or
if no opinion is issued by the IB Expert on or before the Long Stop
Date, then the Purchaser shall not be obliged to proceed to complete
this Agreement. If the IB Expert opines on or before the Long Stop
Date that no such Material Adverse Change has occurred then the
parties shall complete this Agreement in accordance with its terms.
3.11. In giving such advice the Legal Expert and the IB Expert shall each
act as an expert and not as an arbitrator. His or her fees shall be
payable by the unsuccessful party.
3.12. If the Purchaser serves a Termination Notice in respect of a
Material Breach of Undertaking, a Material Breach of Warranty or
Material Adverse Change and the validity of such Termination Notice
has not been resolved on or before the date falling five Business
Days before the date on which Completion would otherwise be due to
occur under Clause 6.1, then the date on which Completion shall
occur shall be the date falling five Business Days after such
validity has been resolved. This Clause is subject to Clauses 3.9
and 3.10 where the Legal Expert or IB Expert (as appropriate) has
not issued an opinion on or before the Long Stop Date.
EFFECT OF TERMINATION
3.13. If the Purchaser validly terminates this Agreement in accordance
with Clause 3.5.1 (Material Breach of Undertaking), Clause 3.5.2
(Material Breach of Warranty) (but only in respect of a Material
Breach of Warranty falling within paragraph (i) or (ii)(A) of the
definition of that term or a Material Breach of Warranty falling
within paragraph (ii)(B) of such definition arising by reason of
facts or matters within the reasonable control of the Vendors'
Group), or Clause 3.5.3 (Material Adverse Change) (but only in
respect of a Material Adverse Change arising by reason of facts or
matters within the reasonable control of the Vendors' Group) then
(i) the Principal Vendor shall pay to the Purchaser an amount equal
to all reasonable professional fees and out of pocket expenses (but
excluding any financing arrangement or commitment fees) together
with any amounts in respect of irrecoverable VAT on such fees and
expenses incurred by each member of the Purchaser's Group directly
in connection with the transactions contemplated by this Agreement
up to a maximum of US$2,500,000 and (ii) this Agreement shall lapse
without obligation or liability on the part of any party to this
Agreement except for any liability for any wilful breach by the
Principal Vendor of the terms and conditions of this Agreement.
3.14. If the Purchaser validly terminates this Agreement in accordance
with Clause 3.5.2 (Material Breach of Warranty) or 3.5.3 (Material
Adverse Change) (in each case except as provided for in Clause 3.13)
or 3.5.4 (conditions incapable of fulfilment) or the Principal
Vendor validly terminates this Agreement in accordance with Clause
3.6 (conditions incapable of fulfilment), then this Agreement shall
lapse without obligation or liability on the part of any party to
this Agreement except for any liability for any prior breach by such
party of the terms and conditions of this Agreement. Nothing in this
Clause shall be
9
deemed to impair the right of any party to compel specific
performance by any other party of its obligations under this
Agreement.
3.15. The provisions of Clauses 18.3 and 18.5 (and Clause 18.6 insofar as
such Clause relates to Clauses 18.3 and 18.5) relating to
confidentiality and the provisions of Clause 17 relating to certain
costs shall survive any termination of this Agreement.
4. CONSIDERATION
PURCHASE PRICE
4.1. Subject to Clauses 4.3 to 4.8, the aggregate consideration for the
purchase of the Operations (by way of acquisition of the Shares and
the Business Assets and the Target Businesses) shall (in addition to
the assumption of the Business Liabilities) be:
4.1.1. the payment of US$200,258,000 (being US$200,000,000 (i)
minus the aggregate of the Estimated Intra-Group
Indebtedness and the Estimated Third Party Indebtedness
and (ii) plus the Estimated Cash);
4.1.2. the issue of the Consideration Shares; and
4.1.3. the payment of the Deferred Consideration (as defined in
Part 5 of Schedule 3), if any.
The relevant amounts of the Purchase Price (other than the Deferred
Consideration, the Delayed Consideration Shares and, if the New
Castle Release Condition is not satisfied on or prior to the
Completion Date, the New Castle Consideration Shares) and Estimated
Intra-Group Indebtedness shall be discharged at Completion in
accordance with Schedule 9. The issue of the New Castle
Consideration Shares (if not issued at Completion), the Delayed
Consideration Shares, if any, the Spanish Consideration Shares (if a
Delayed Completion is required under Clause 4.23) and the payment of
the Deferred Consideration, if any, shall occur in accordance with
the relevant provisions of this Clause 4.
4.2. The Principal Vendor is authorised to receive the Purchase Price on
behalf of the other Vendors and payment to the Principal Vendor (or
as it may direct) shall constitute an absolute discharge for the
Purchaser.
AMENDMENTS TO INITIAL CONSIDERATION
4.3. If the Intra-Group Indebtedness Statement shows that the relevant
Intra-Group Indebtedness exceeds the relevant Estimated Intra-Group
Indebtedness, then on the Settlement Date the Principal Vendor shall
pay to the Purchaser an amount equal to such excess by way of
reduction in the cash component of the Purchase Price; and the
Purchaser shall (on behalf of the relevant Target Company) pay to
the Principal Vendor (on behalf of the relevant member of the
Vendors' Group) an equal amount by way of satisfaction of such
additional Intra-Group Indebtedness.
10
4.4. If the Intra-Group Indebtedness Statement shows that the Estimated
Intra-Group Indebtedness exceeds the Intra-Group Indebtedness, then
on the Settlement Date:
4.4.1. the Purchaser shall pay to the Principal Vendor an amount
equal to such excess by way of increase in the cash
component of the Purchase Price; and
4.4.2. the Principal Vendor shall (on behalf of the relevant
member of the Vendors' Group) repay to the Purchaser on
behalf of the relevant Target Company an equal amount by
way of repayment of the excess amount paid by or on behalf
of the relevant Target Company on account of the
Intra-Group Indebtedness at Completion.
4.5. If the Completion Working Capital and/or Target Companies Cash is
less than the Base Working Capital or Estimated Cash respectively,
the Principal Vendor shall on the Settlement Date pay to the
Purchaser an amount equal to such shortfall (or, if there is a
shortfall on both, the aggregate of them) by way of reduction in the
cash component of the Purchase Price.
4.6. If the Completion Working Capital and/or Target Companies Cash
exceeds the Base Working Capital or Estimated Cash respectively, the
Purchaser shall on the Settlement Date pay to the Principal Vendor
an amount equal to such excess (or if there is a excess on both, the
aggregate of them) by way of increase in the cash component of the
Purchase Price.
4.7. If the Third Party Indebtedness exceeds the Estimated Third Party
Indebtedness, the Principal Vendor shall on the Settlement Date pay
to the Purchaser an amount equal to the excess by way of reduction
in the cash component of the Purchase Price.
4.8. If the Third Party Indebtedness is less than the relevant Estimated
Third Party Indebtedness, the Purchaser shall on the Settlement Date
pay to the Principal Vendor an amount equal to the shortfall by way
of increase in the cash component of the Purchase Price.
4.9. The provisions of Schedule 3 shall apply in relation to the
preparation and agreement (or determination) of the Actual
Cash/Indebtedness Statement and the Completion Working Capital
Statement.
4.10. The Purchaser and the Principal Vendor shall off-set amounts due
between them under Clauses 4.3 to 4.8 and under Clause 2.2.2 or
Clause 2.2.3 so as to result in a single net payment being made in
relation to Completion. Such off-set does not relieve the Principal
Vendor (where it would have received a payment on behalf of another
member of the Vendors' Group) or the Purchaser (where it would have
received a payment on behalf of a Target Company) of its obligation
to account to such member of the Vendors' Group or the relevant
Target Company for the sum in question.
11
DEFERRED CONSIDERATION
4.11. The provisions of Part 5 of Schedule 3 shall apply in relation to (and
certain capitalised terms used in this Clause 4.11, and Clauses 4.12
and 4.13 are defined in Part 5 of Schedule 3):
4.11.1. the determination of the Product Deferred Consideration and
Effects Deferred Consideration;
4.11.2. certain warranties and undertakings by the Principal Vendor
regarding the conduct of the Operations between 1st January
2004 and Completion insofar as such conduct may affect the
Deferred Consideration; and
4.11.3. certain undertakings by the Purchaser regarding the conduct of
the Operations during the Earn-Out Period insofar as such
conduct may affect the Deferred Consideration.
4.12. The Purchaser shall on each Product Deferred Consideration Payment
Date pay to the Principal Vendor an amount equal to the Product
Interim Deferred Consideration or the Product Final Deferred
Consideration as applicable, payable on such date.
4.13. The Purchaser shall on each Effects Deferred Consideration Payment
Date pay to the Principal Vendor an amount equal to the Effects Interim
Deferred Consideration or the Effects Final Deferred Consideration, as
applicable, payable on such date.
PENSION DEFICIT ADJUSTMENT
4.14. After Completion and until the date on which the Adjusted Transfer
Value (as defined in Part 2 of Schedule 8) is agreed or determined,
the Principal Vendor and the Purchaser shall co-operate to perform the
calculations and all other actions contemplated by Part 2 of Schedule
8 in order to determine the Pension Deficit Reduction Adjustment
Amount and enable the issuance of the Delayed Consideration Shares, if
any, by the Purchaser.
CERTIFICATES IN RESPECT OF CONSIDERATION SHARES
4.15. So long as applicable, each certificate representing any portion of
the Consideration Shares shall be stamped or otherwise imprinted with
a legend in the following form (in addition to any legend required
under applicable U.S. state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OTHER THAN PURSUANT TO
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
12
After the above requirement for a legend is no longer applicable
because the Consideration Shares are freely transferable under the
Securities Act, the Purchaser shall remove such legend upon request
from a holder of such Consideration Shares, if outside counsel for
such holder reasonably determines that the transfer of such
Consideration Shares is no longer restricted by the Securities Act and
(i) outside counsel for the Purchaser reasonably concurs in such
determination or (ii) at such holder's option such holder's outside
counsel provides an opinion addressed to the Purchaser in form and
substance satisfactory to the Purchaser to the effect that the
transfer of the Consideration Shares is no longer restricted by the
Securities Act.
REGISTRATION RIGHTS
4.16. The Principal Vendor or any member of the Vendors' Group which from
time to time holds the Consideration Shares shall, after the issue of
any Consideration Shares in accordance with this Clause 4, be entitled
to the registration rights with respect to such Consideration Shares
set out in Clause 9.
DELAYED CONSIDERATION SHARES
4.17. No later than the Delayed Share Issue Date, the Purchaser shall
deliver to the US Business Vendor a certificate or certificates
representing the Delayed Consideration Shares, if any, which shall be
in definitive form and registered in the name of the US Business
Vendor and in a single certificate or in such denominations as the US
Business Vendor shall request not later than the fifth Business Day
after the Pension Transfer Determination Date.
PAYMENTS/INTEREST
4.18. All payments under this Clause shall (unless the parties agree
otherwise or the recipient notifies by at least five Business Days'
prior notice a suitable alternative bank account) be paid by
electronic transfer of cleared funds for same day value to:
4.18.1. in the case of the Principal Vendor, the Principal Vendor's
Bank Account; and
4.18.2. in the case of the Purchaser, the bank account of the
Purchaser in the US notified by the Purchaser to the Principal
Vendor at least five Business Days before the first payment is
to be made to the Purchaser.
4.19. All payments made under Clauses 4.3 to 4.8 shall bear interest from
the Completion Date to the date of actual payment at the Interest
Rate.
ALLOCATION OF THE PURCHASE PRICE
4.20. The parties have agreed a provisional allocation of the Purchase Price
which is as shown by the Transaction Breakdown. As soon as practicable
after all adjustments required to be made under this Clause 4 have
been determined, the Principal Vendor and the Purchaser shall seek to
agree (i) a revised allocation of the Purchase Price by allocating
each adjustment to the Business
13
Assets or Shares to which it most closely relates and (ii) an
allocation of the Purchase Price among individual asset categories
within each jurisdiction on an equitable basis. If they are unable to
do so within 30 days of the Settlement Date, either party may refer
the matter for determination to an independent expert and the
provisions of paragraphs 5 to 11 of Part 2 of Schedule 3 shall (with
such modifications as may be necessary) apply to such determination.
The parties agree to adopt the allocation agreed by them or determined
by the independent expert for all Taxation purposes and shall within
30 days of such agreement or determination execute a document between
them adopting such allocation.
4.21. The parties agree that any changes, pursuant to Clause 4.20 above, to
be made to the provisional allocation set out in the Transaction
Breakdown:
4.21.1. will reflect only the underlying differences between the
Intra-Group Indebtedness, Third Party Indebtedness, Completion
Working Capital and Target Companies Cash as compared with the
Estimated Intra-Group Indebtedness, Estimated Third Party
Indebtedness, Base Working Capital and Estimated Cash; and
4.21.2. will adopt the same methodology and practices as were used in
preparing such provisional allocation.
If the aggregate amount of the Deferred Consideration payable to the
Principal Vendor is different from that assumed by the Transaction
Breakdown, the difference will be allocated wholly as to goodwill in
the United Kingdom. If the aggregate amount of Consideration Shares
issued to the Principal Vendor or its nominee or designee is different
from that assumed by the Transaction Breakdown, the difference will be
allocated wholly to goodwill in the United States.
4.22. If any further payment (other than interest under Clause 19.17) is
made by a party to another party under this Agreement (whether as
damages for breach or under an indemnity or covenant to pay or as
Deferred Consideration), such payment shall so far as possible be made
by way of further adjustment to the Purchase Price and such further
adjustment shall be allocated as the parties may agree (or as
determined by an independent expert) on the same basis as is set out
in Clause 4.20 and Clause 4.21.
DELAYED COMPLETION
4.23. The parties agree that in the event that prior to the Completion Date:
4.23.1. clearance from the Spanish Servicio de Defensa de la
Competencia (the "Spanish Authority") is not obtained; and
4.23.2. a waiver from suspension by the Spanish Authority is not
granted,
(the satisfaction of Clause 4.23.1 or 4.23.2, the "Spanish
Condition"), all references in this Agreement to "Completion" shall be
deemed to exclude the transfer of any Business Assets and any portion
of the Target Businesses, and the assumption
14
of any Business Liabilities, attributable primarily to the Operations
located in Spain or otherwise constituting the Operations in Spain
(together, the "Spanish Operations"). In such event, Completion shall
occur on the Completion Date as otherwise contemplated by this
Agreement, except that:
4.23.3. the number of Completion Consideration Shares issuable at
Completion under Clause 4.1.2 shall be reduced by the number
of Spanish Consideration Shares; and
4.23.4. a delayed completion (the "Delayed Completion") shall take
place at the offices of the Vendors' Solicitors on the date
which is five Business Days after the date on which the
Spanish Condition is satisfied, or at such other place or date
as may be agreed in writing between the Purchaser and the
Principal Vendor (such date, the "Delayed Completion Date").
4.24. In the event that a Delayed Completion is required under Clause 4.23,
for purposes of determining the amount payable under Clause 4.5 or
Clause 4.6, as applicable, the Base Working Capital shall exclude the
Base Spanish Working Capital and the Completion Working Capital shall
exclude the Completion Spanish Working Capital. The provisions of
Schedule 3 shall apply to the determination of the Completion Spanish
Working Capital Statement, mutatis mutandis.
4.25. On the Delayed Completion Date, the Purchaser shall deliver to the US
Business Vendor a certificate or certificates representing the Spanish
Consideration Shares, which shall be in definitive form and registered
in the name of the US Business Vendor and in a single certificate or
in such other denominations as the US Business Vendor shall request
not later than five Business Days prior to the Delayed Completion
Date.
4.26. If the Completion Spanish Working Capital is less than the Base
Spanish Working Capital, the Principal Vendor shall on the Spanish
Settlement Date pay to the Purchaser an amount equal to such shortfall
by way of reduction in the cash component of the Purchase Price.
4.27. If the Completion Spanish Working Capital exceeds the Base Spanish
Working Capital, the Purchaser shall on the Spanish Settlement Date
pay to the Principal Vendor an amount equal to such excess by way of
increase in the cash component of the Purchase Price.
4.28. In the event that a Delayed Completion is required under Clause 4.23:
4.28.1. during the period between the Completion Date and the Delayed
Completion Date, the Principal Vendor shall and, so far as it
is able to do so, shall procure that the Business Vendors in
relation to the Spanish Operations shall, allow the Purchaser
and its agents access pursuant to Clause 5.1 as though all
references therein to the Operations were references to the
Spanish Operations, and shall and, so far as it is able to do
so, procure that the Business Vendors in relation to the
Spanish Operations shall, comply with Clause 5.2 as though all
references therein to Operations were references to the
Spanish Operations and all
15
references therein to Business Assets (or components thereof)
were references to Business Assets of the Spanish Operations;
provided that the Principal Vendor shall not be liable to the
Purchaser for breach of this Clause 4.28.1 between the
Completion Date and the Delayed Completion Date if and to the
extent the breach arose from:
(a) the failure by the Purchaser or a member of the
Purchaser's Group to manage the Operations sold at
Completion (the "Sold Operations") in a manner
consistent with Clause 4.28.4;
(b) any act or omission of any member of the management of
the Sold Operations taken after the Completion Date
with respect to the Sold Operations;
(c) any member of the management of the Spanish Operations
complying with an instruction given by management of
the Sold Operations after the Completion Date; or
(d) any member of the management of the Spanish Operations
disregarding any specific instruction of the Principal
Vendor as a result of complying with a specific
instruction given by management of the Sold Operations
or the Purchaser's Group after the Completion Date;
4.28.2. the Purchaser or a Local Purchaser will enter into the Supply
and Distribution Agreement identified as Agreed Form AF15E
(the "Spanish Distribution Agreement") on the Completion Date;
4.28.3. the Principal Vendor and the Purchaser will agree upon and put
in place such financial controls and procedures to ensure that
the assets, liabilities and operations of the Spanish
Operations are identifiable;
4.28.4. the Purchaser and the Principal Vendor shall procure that any
management services or management support which are required
for the carrying on of the business of the Spanish Operations
or the Sold Operations in the manner in which such business
was carried on immediately prior to Completion and which
immediately before Completion were provided by the Sold
Operations or the Spanish Operations is provided on the same
basis and at the same cost (if any) as immediately prior to
Completion;
4.28.5. in respect of any Intellectual Property which has been sold at
Completion to the Purchaser or a Local Purchaser or is held by
a Target Company sold at Completion and is required by the
Spanish Operations in order to carry on the business of the
Spanish Operations in the manner in which the Spanish
Operations carried on its business immediately prior to
Completion, the Purchaser shall make available or shall
procure that such Intellectual Property is made available to
the Spanish Operations (whether by way of licence or
otherwise) on the same terms and at the same cost (if any) as
such Intellectual Property was made available immediately
prior to Completion; and
16
4.28.6. subject to Clause 13.15, in respect of any Intellectual
Property, except for the Excluded IP, of the Spanish
Operations that is required by any of the Sold Operations in
order to carry on the business of the Sold Operations in the
manner in which the Sold Operations carried on its business
immediately prior to Completion, the Principal Vendor shall
make available or shall procure that such Intellectual
Property is made available to the Sold Operations (whether by
way of licence or otherwise) on the same terms and at the same
cost (if any) as such Intellectual Property was made available
immediately prior to Completion.
4.29. If the Spanish Condition is not satisfied on or before the Second Long
Stop Date, or if the Spanish Condition shall have become incapable of
fulfilment, then:
4.29.1. the Spanish Operations shall not be sold hereunder and the
terms of this Agreement (other than Clause 3.15) and any Local
Agreement relating to the Spanish Operations shall cease to
apply with respect to the Spanish Operations and neither party
shall have a claim (whether under the Warranties or otherwise)
against the other in relation to the Spanish Operations; and
4.29.2. the Purchaser shall be entitled, in its sole discretion, to
either:
(a) issue the Spanish Consideration Shares to the US
Business Vendor as contemplated by Clause 4.25, in
which case the Spanish Distribution Agreement shall
automatically be extended and continue in effect until
the tenth anniversary of the Completion Date; or
(b) terminate the Spanish Distribution Agreement, in which
case the Purchaser shall pay to the UK Business Vendor
an amount equal to 50% of the Cumulative Gross
(Variable) Margins earned by the Purchaser under the
Spanish Distribution Agreement from the Completion
Date to the date of such termination.
NEW CASTLE MATTERS
4.30. If the New Castle Release Condition is not satisfied on or before the
Completion Date but, subject to Clause 4.31, is subsequently
satisfied, the Purchaser shall within ten Business days of such
satisfaction:
4.30.1. deliver to the US Business Vendor a certificate or
certificates representing the New Castle Consideration Shares,
which shall be in definitive form and registered in the name
of the US Business Vendor and in a single certificate or in
such denominations as the US Business Vendor shall request not
later than five Business Days prior to such delivery; and
4.30.2. pay to the US Business Vendor an amount equal to any dividends
or other sums which would have been received by the US
Business Vendor
17
in respect of the New Castle Consideration Shares had they
been issued to it on the Completion Date.
4.31. If:
4.31.1. at any time after the date falling two years after the
Completion Date the New Castle Release Condition has not been
satisfied and written notice of termination of the New Castle
Release Condition is delivered by either of the Principal
Vendor or the Purchaser to the other; or
4.31.2. the Purchaser and the Principal Vendor, acting reasonably,
mutually agree in writing at any time prior to the end of such
two year period that the New Castle Release Condition will not
be satisfied before such date,
then:
4.31.3. as at the date of such notice or written agreement the
Purchaser shall be released from its obligation to issue the
New Castle Consideration Shares and the Principal Vendor and
the US Business Vendor shall be released from any obligation
under this Agreement or the New Castle Lab Lease to seek the
satisfaction of the New Castle Release Condition;
4.31.4. the New Castle Lab Lease shall automatically terminate on the
date which is six months after the date of such notice or
written agreement (the "Lab Lease Termination Date"); and
4.31.5. the US Business Vendor and the Purchaser or the relevant Local
Purchaser shall negotiate in good faith a fair market rent to
be paid to the US Business Vendor in respect of the period of
occupation of the New Castle Lab Property by the Purchaser or
the relevant Local Purchaser between the Completion Date and
the Lab Lease Termination Date. If the parties cannot agree on
a fair market rent for such period of occupation, the matter
shall be submitted for arbitration as provided in section
11.07 of the New Castle Lab Lease.
5. GAP PERIOD UNDERTAKINGS
5.1. The Principal Vendor undertakes to procure that, pending Completion
the Business Vendors in relation to the Operations and the Target
Companies shall, subject to their right to refuse access on the
grounds that access would be contrary to any applicable laws or
regulations, allow the Purchaser and its agents such access during
normal working hours to the books and records of or relating in whole
or in part to the Operations which are in the possession or otherwise
under the control of the Vendors' Group as the Purchaser may
reasonably request (upon reasonable notice in writing to the Principal
Vendor at such times and at such locations as the Purchaser may
reasonably request) in order to ensure the transfer of the management
and operation of the Operations in their current form in a smooth and
timely manner on and with effect from the Completion Date without
undue or unnecessary interference or interruption. As soon as
practicable after the date of this Agreement, the Principal Vendor
shall procure that each relevant member of the Vendors'
18
Group shall provide to the relevant members of the Purchaser's Group
or any designated payroll processor of any member of the Purchaser's
Group all Employee related data and information in possession or
otherwise under the control of such member of the Vendors' Group
that such members of the Purchaser's Group or any designated payroll
processor of any member of the Purchaser's Group may require in
order to process payroll in a timely manner as of Completion.
5.2. During the period from the date of this Agreement to Completion the
Principal Vendor shall procure that the Business Vendors in relation
to the Operations and the Target Companies shall (unless the
Purchaser otherwise provides prior written consent thereto) carry on
the Operations as a going concern in the ordinary course consistent
with past practice and use all reasonable endeavours to keep intact
the Operations, keep available the services of the Senior Employees
and preserve the relationship of the Operations with Employees,
customers, suppliers, licensors, licensees, distributors,
governmental authorities, regulatory bodies and others with whom the
Operations deal, in each case subject to any restrictions on so
doing imposed by this Agreement and the sale and purchase of the
Operations. In addition (and without limiting the generality of the
foregoing) except as expressly permitted or required by the terms of
this Agreement during the period from the date of this Agreement to
Completion, the Principal Vendor shall procure that the Business
Vendors (in relation to the Operations) and the Target Companies
shall not take any of the following actions (unless the Purchaser
otherwise provides prior written consent:
5.2.1. adopt, enter into, terminate or amend any Employee Benefit
Arrangement (or any arrangement that would be an Employee
Benefit Arrangement if adopted) except as required by
applicable law;
5.2.2. adopt, enter into, terminate or materially amend (or renew
on materially different terms) any collective bargaining
agreement or trade union recognition agreement or other
contract or arrangement with any labour organisation,
union or association except in each case as required by
applicable law;
5.2.3. grant to any Employee any increase in remuneration or
benefits (including the payment of any bonus, the grant or
improvement of any severance pay entitlement and the
acceleration of the vesting or payment of any compensation
or benefit under any Employee Benefit Arrangement) except
(i) in the ordinary course of trading consistent with past
practice, (ii) as required under existing agreements or
(iii) for increases for which the Vendors' Group will be
solely liable;
5.2.4. incur or enter into any agreement or commitment involving
any capital expenditure above US$100,000 (exclusive of
VAT) per item;
5.2.5. incur, enter into or permit, allow or suffer the creation
of any Encumbrances over the Assets other than (i)
Permitted Encumbrances and (ii) Encumbrances (other than
any Encumbrances securing
19
Indebtedness) arising by operation of law or in the
ordinary course of trading;
5.2.6. in respect of the Target Companies, incur any Indebtedness
otherwise than on arm's length commercial terms and as is
reasonably necessary to meet working capital requirements
of the Operations in the ordinary course of business in
the aggregate amount of no more than US$150,000;
5.2.7. waive any claims or rights otherwise than in the ordinary
course of trading or, in respect of the Target Companies,
cancel any material Indebtedness (individually or in the
aggregate);
5.2.8. create, allot or issue or redeem, repurchase or repay any
share or loan capital of any Target Company or create any
right to call for the allotment, issue or transfer of any
share or loan capital of any Target Company;
5.2.9. amend or waive in any respect or terminate the Product
Contract (as defined in Part 5 of Schedule 3) or enter
into, terminate prematurely (or permit other than in
accordance with the terms thereof as in effect on the date
of this Agreement the premature termination of) or vary
materially the terms of any other Material Contract other
than any Material Contract subject to Clause 5.2.2;
provided that (i) amendments to Material Contracts falling
within paragraph 5.2.1(n) of Schedule 4 shall be permitted
if such amendments would not be restricted by Clause
5.2.14 and (ii) in respect of any Material Contract
referred to in paragraphs (k), (l), and (m) of paragraph
5.2.1 of Schedule 4 with respect to which the aggregate
future liability, payment or receipt is less than
US$500,000, the Purchaser's consent required by this
Clause 5.2 shall not be withheld or delayed unreasonably;
5.2.10. (in respect of the Target Companies only) declare, make or
pay any dividends, bonus issues or other distributions;
5.2.11. make payments or transfer or lease assets to any member of
Vendors' Group or (in respect of the Target Companies
only) assume, incur or indemnify any liability for the
benefit of any member of the Vendors' Group (in each case
other than in the ordinary course of trading consistent
with past practice on arm's length commercial terms);
5.2.12. (in respect of the Target Companies only) change any
accounting reference date, method of accounting or
accounting practice or policy, other than those required
by the generally accepted accounting principles applicable
to such Target Company;
5.2.13. dismiss or give notice of termination to any Senior
Employee (unless circumstances exist justifying summary
dismissal or termination for cause) nor transfer any
Senior Employee out of the Operations;
5.2.14. employ or hire any person at Grade 33 or above (or with a
basic annual salary in excess of US$75,000) nor vary the
terms of any existing employment contracts such that they
would fall within this sub-clause
20
unless such variation represents an increase in the
anticipated value of remuneration currently payable of 3%
or less (or, in the case of such events occurring more
than one month after the date of this Agreement, 3% plus
0.5% for every such completed month);
5.2.15. acquire or dispose of any business or activity as a going
concern or discontinue or cease to operate all or any
material part of the Operations;
5.2.16. sell, lease, assign, license or otherwise dispose of any
Assets (other than Business IP and Intellectual Property
owned by a Target Company, each of which is subject to
Clause 5.2.18) whether or not ascribed a value in the 2003
Accounts, or any interest in any such Asset, other than
(i) finished goods and other inventories in the ordinary
course of trading on arm's length commercial terms
consistent with past practice and (ii) disposals of assets
no longer necessary or desirable for the conduct or
development of the Operations:
(a) made in the ordinary course of trading
consistent with past practice on arm's length
commercial terms;
(b) having an individual book or fair value not
exceeding US$100,000; and
(c) having an aggregate book or fair value not
exceeding US$250,000;
5.2.17. vary or permit to lapse or fail to renew their respective
policies of insurance which were in place immediately
prior to the date hereof;
5.2.18. sell, assign or otherwise dispose of, or grant any
licences or other rights to, the Business IP or any
Intellectual Property owned by a Target Company other
than:
(a) licences on arm's length commercial terms
consistent with past practice and in the
ordinary course of trading which provide for
payments by the licensee to accrue either by
reference to usage or to accrue evenly over the
term of the licence; or
(b) licences to a Target Company;
5.2.19. enter into any lease of real property or material personal
property except renewals of existing leases in the
ordinary course of business and consistent with past
practice;
5.2.20. dispose of or agree to dispose of or grant or agree to
grant any option to acquire any Property or any interest
therein;
5.2.21. (in respect of the Target Companies and, to the extent
capable of affecting the Purchaser or a Local Purchaser,
the Business Vendor Avecia Comercial e Importada Limitada
only) make any election for Tax purposes or for the
purposes of any Tax Return or enter into any
21
agreement, arrangement or settlement with a Tax Authority,
other than any such election, agreement, arrangement or
settlement that is made in the ordinary course consistent
with past practice;
5.2.22. fail to take any necessary steps to obtain and maintain
any and all registrations, and applications for
registration of Business Intellectual Property and
Intellectual Property of the Target Companies including,
without limitation, paying all application, renewal and
official fees on or before the due date for payment; or
5.2.23. commit, agree to take or specifically authorise, whether
in writing or otherwise, any of the actions set out in
above in this Clause 5.2.
5.3. As soon as available and in any event within 15 calendar days after
the last day of each calendar month between the Accounts Date and
Completion (other than the calendar month in which Completion occurs
and except as previously delivered to the Purchaser), the Principal
Vendor shall deliver to the Purchaser the unaudited proforma
financial statements of the Operations as at the last day of and for
such calendar month and for the year 2004 to the last day of such
calendar month, in each case prepared based on accounting practices
and accounting principles consistent with monthly management
accounts of the Operations produced during 2003.
5.4. Each of the Purchaser and the Principal Vendor shall between the
date of this Agreement and Completion promptly notify the other of
and furnish to the other any information it may reasonably request
with respect to:
5.4.1. any event or condition or the existence to the Purchaser's
or the Principal Vendor's awareness, as applicable, of any
fact that would cause any of the Conditions Precedent not
to be fulfilled;
5.4.2. any notice or other communication from any person alleging
that the consent of such person is or may be required in
connection with the transactions contemplated by this
Agreement;
5.4.3. any commencement of any litigation against such party in
respect of the transactions contemplated by this
Agreement; and
5.4.4. (i) it becoming aware of any facts or circumstances
indicating that any warranty in this Agreement was untrue
or inaccurate in any material respect on the date of this
Agreement or will be untrue or inaccurate in any material
respect at Completion or (ii) the failure of such party to
perform in any material respect any undertaking to be
performed by such party under this Agreement,
provided that no such notification shall affect the warranties or
undertakings of the parties or the Conditions Precedent under this
Agreement.
5.5. Prior to Completion, the Principal Vendor shall cause the Vendors
and the Target Companies to fulfil their legal obligations to inform
and consult employee representatives about the sale and purchase of
the Operations.
22
5.6. During the period from the date of this Agreement to Completion, the
Principal Vendor shall use commercially reasonable endeavours to
obtain a written, recordable easement by and between ICI Uniqema
Inc., as grantor, and the US Business Vendor, as grantee, granting
to the US Business Vendor a non-exclusive right of vehicular and
pedestrian ingress and egress across and through the area, including
any roadways, between what is commonly known as the laboratory
facility and the pool site located at New Castle, Delaware, USA.
5.7. The Principal Vendor and the Purchaser shall before Completion agree
the form of supply agreements to be entered into at Completion
between the relevant Local Purchasers (as suppliers) and Avecia BV
and NeoResins Inc. (as customers) on the same arm's length terms as
are in place for the relevant supplies as at the date of this
Agreement (it being acknowledged that such terms do not include any
minimum period or commitment to purchase).
HUDDERSFIELD SITE COSTS
5.8. The Purchaser shall be entitled to confirm before Completion the
charges payable in relation to the document in the Agreed Form AF11A
(the "Huddersfield Site Services Agreement") on the basis of actual
costs for 2003 (indexed) in a manner consistent with the method
previously used by such parties to produce and agree the 2003 budget
costs as previously shown in the Huddersfield Site Services
Agreement, but for the avoidance of doubt the form, categories of
charges, the period of charge and the methodology of calculation
used for the purpose of the 2003 budget costs as previously shown in
the Huddersfield Site Services Agreement shall not be open to
review. If the Purchaser and the Principal Vendor have not on or
before the Completion Date agreed and confirmed any proposed changes
to such charges as attached to the form of the Huddersfield Site
Services Agreement as at the date of this Agreement:
5.8.1. either of them may refer the matter to an independent
expert for determination and the provisions of paragraphs
5 to 11 of Part 2 of Schedule 3 shall (with such
modifications as may be necessary) apply to such
determination;
5.8.2. from the Completion Date until such time as such charges
are agreed or determined, the charges based on 2003 actual
costs (indexed) set out in the current form of the
Huddersfield Site Services Agreement shall apply; and
5.8.3. the charges as agreed between the Purchaser and the
Principal Vendor or as determined shall be applied under
the Huddersfield Site Services Agreement with effect from
the Completion Date and the parties to the Huddersfield
Site Services Agreement shall make such further payment or
repayment of charges as is necessary to give effect to
this.
6. COMPLETION/STATUS OF LOCAL AGREEMENTS
6.1. Subject to Clause 3 and subject as hereinafter provided, Completion
shall take place at the offices of the Vendors' Solicitors on the
Scheduled
23
Completion Date or at such other place or time as may be agreed in
writing between the Purchaser and the Principal Vendor.
6.2. On Completion, the parties will comply with their respective
obligations set out in Schedule 9. Neither party (treating for this
purpose the Vendors as a single party and the Purchaser and Local
Purchasers as a single party) shall be obliged to proceed to
Completion unless the other party is (save as set out below)
simultaneously ready and able to proceed to Completion. Except as
required by Clause 4.23, neither party shall be obliged to purchase
or sell only some of the Shares or the Business Assets.
6.3. If the provisions of Schedule 9 are not complied with by the
Principal Vendor or the Vendors or the Purchaser or a Local
Purchaser in all material respects by or on the date set for
Completion, the Purchaser, in the case of non-compliance by any
Vendor, or the Principal Vendor, in the case of non-compliance by
the Purchaser or a Local Purchaser, shall be entitled (in addition
to and without prejudice to all other rights or remedies available
to it including any applicable right to terminate this Agreement in
its entirety in accordance with Clauses 3.5 and 3.6 and the right to
claim damages) by written notice to the Principal Vendor or, as the
case may be, to the Purchaser served on such date:
6.3.1. to elect to terminate this Agreement;
6.3.2. to effect Completion so far as practicable having regard
to the defaults which have occurred; or
6.3.3. to fix a new date for Completion (not being less than
three nor more than ten Business Days after the agreed
date for Completion) in which case the provisions of
Schedule 9 shall apply to Completion as so deferred but
provided such deferral may only occur once unless
otherwise agreed in writing between the Principal Vendor
and the Purchaser.
6.4. The Principal Vendor shall procure that the relevant Vendors, and
the Purchaser shall enter into or shall procure that the relevant
Local Purchasers, enter into the relevant Local Agreements at
Completion. To the extent that the provisions of this Agreement are
inconsistent with or additional to the provisions of any Local
Agreement, the provisions of this Agreement shall prevail and the
Principal Vendor and the Purchaser shall procure that the provisions
of the relevant Local Agreement are adjusted, so far as permissible
under the laws of the relevant jurisdiction, to the extent necessary
to give effect to the provisions of this Agreement and/or that the
relevant Vendor and the Purchaser or the relevant Local Purchaser
comply with the provisions of this Agreement as though they were
bound by such provisions in place of the provisions of the relevant
Local Agreement.
6.5. If there is an adjustment to the Purchase Price (or the payments
made on account of the Purchase Price at Completion) under Clause 4
which is allocated to any part of the Shares, Business Assets or
Business Liabilities which is the subject of a Local Agreement, the
Principal Vendor and the Purchaser will procure that the parties to
such Local Agreement enter into a supplemental agreement reflecting
such adjustment, if appropriate.
24
6.6. The Purchaser shall not, and shall procure that no Local Purchaser
shall, bring any claim against a Vendor in respect of or based upon
the Local Agreements (nor any warranties, representations or other
obligations implied or imposed by law) save to the extent necessary
to implement any legal transfer of shares or assets agreed to be
sold hereunder in a manner consistent with the terms provided for by
this Agreement. To the extent that the Purchaser or any relevant
Local Purchaser does bring a claim (save as referred to above) the
Purchaser shall indemnify the Vendors against all Losses which any
Vendor may suffer through or arising from the bringing of such a
claim against it.
6.7. The Principal Vendor shall not, and shall procure that no Vendor
shall, bring any claim against the Purchaser or any relevant Local
Purchaser in respect of or based upon the Local Agreements (nor any
warranties, representations or other obligations implied or imposed
by law) save to the extent necessary to implement any legal transfer
of shares or assets sold hereunder in a manner consistent with the
terms provided for by this Agreement. To the extent that any Vendor
does bring a claim (save as referred to above), the Principal Vendor
shall indemnify the Purchaser and each relevant Local Purchaser
against all Losses which it may suffer through or arising from the
bringing of such a claim against it.
7. WARRANTIES AND LIMITATIONS
7.1. In consideration of the Purchaser entering into this Agreement the
Principal Vendor warrants on behalf of itself and the UK Business
Vendor to the Purchaser on behalf of itself and each Local Purchaser
(but on the basis that only the Purchaser shall be entitled to
enforce the rights, if any, of the Local Purchasers on their behalf)
that each of the Warranties is true and accurate as at the date of
this Agreement (as qualified by the matters fairly disclosed in or
by the Disclosure Letter) and each of the Warranties will be true
and accurate (as so qualified) on the Completion Date and each of
the Warranties set out in paragraph 21 of Schedule 4 shall be true
and accurate on the date of issue of any Consideration Shares. The
Principal Vendor and the UK Business Vendor acknowledge that the
Purchaser is entering into this Agreement in reliance on the
Warranties (as so qualified) and acknowledges and agrees that the
Warranties are not subject to or limited by any disclosures which
are not fairly made in or by the Disclosure Letter. In the event of
a Delayed Completion pursuant to Clause 4.23, and in consideration
of the Purchaser entering into this Agreement, the Principal Vendor
warrants on behalf of itself and the UK Business Vendor to the
Purchaser on behalf of itself and any Local Purchaser of the Spanish
Operations (but on the basis that only the Purchaser shall be
entitled to enforce the rights, if any, of such Local Purchaser on
its behalf) that each of the Warranties will be true and accurate on
the Delayed Completion Date insofar as they relate to the Spanish
Operations.
7.2. As between the Purchaser and the Vendors, the Purchaser undertakes
that it has relied only on the Warranties (as qualified by the
matters fairly disclosed in or by the Disclosure Letter),
indemnities and undertakings in this Agreement and the other
agreements to be entered into with any Vendor at Completion and not
on any statements or expressions of opinion or forecasts or
projections of future performance, nor any other warrantie or
representatins, indemnities
25
or undertakings of the Principal Vendor. The Purchaser further
undertakes that it has not relied upon any other warranties,
statements, representations or undertakings of any description given
by the Principal Vendor, any other member of the Vendors' Group or
any of the officers, employees, solicitors, accountants, other
agents or professional advisers of any member of the Vendors' Group.
7.3. The provisions of Schedule 5 shall have effect to regulate and limit
the Principal Vendor's and the UK Business Vendor's liability for
breach of the Warranties. Where expressly provided in Schedule 5, it
shall also regulate and limit the liability of the Vendors in
respect of other claims under this Agreement and the other
agreements to be entered into by the Vendors at Completion.
7.4. Save as expressly provided otherwise, the Warranties shall be
separate and independent and shall not be limited by reference to
any other Warranties. The Warranties shall not be extinguished or
affected by Completion. Without limiting the Purchaser's rights to
claim for breaches of Warranties under this Agreement, the Purchaser
shall be entitled to claim after Completion in respect of any breach
of Warranty of which it becomes aware between the date of this
Agreement and Completion.
7.5. Where a Warranty is expressed to be given "so far as the Principal
Vendor is aware", or is otherwise limited by words to that effect,
the Principal Vendor and the UK Business Vendor shall be deemed to
have knowledge only of the matters within the actual awareness of
the following individuals:
------------------------ ----------------------------------------
NAME POSITION
------------------------ ----------------------------------------
Martin Howden VP, Avecia Biocides
------------------------ ----------------------------------------
Simon Herriott General Manager, Avecia Pool & Spa
------------------------ ----------------------------------------
Mark Kenline Commercial Director
------------------------ ----------------------------------------
Jeremy Scudamore Chief Executive Officer, Avecia Group
------------------------ ----------------------------------------
Derrick Nicholson Chief Financial Officer, Avecia Group
------------------------ ----------------------------------------
David Greensmith Chief Operating Officer, Avecia
------------------------ ----------------------------------------
Duncan McLellan Group Controller, Avecia Group
------------------------ ----------------------------------------
Don Short Financial Controller, Avecia Inc.
------------------------ ----------------------------------------
Peter Whitehouse Business Controller, Biocides
------------------------ ----------------------------------------
Andrew Cree General Counsel, Avecia Group
------------------------ ----------------------------------------
Neil Denham Senior Legal Counsel, Avecia Group
------------------------ ----------------------------------------
Greg Kurey General Counsel, Avecia Inc.
------------------------ ----------------------------------------
Tom Shields VP, Manufacturing & SHE, Avecia Group
----------------------- ----------------------------------------
Fran Maloney SHE Manager, Avecia Inc.
------------------------ ----------------------------------------
Alistair Grant SVP, Human Resources, Avecia Group
------------------------ ----------------------------------------
Jim McEntire Director, Human Resources, Avecia Inc.
------------------------ ----------------------------------------
Peter Whyte Treasurer, Avecia Group
------------------------ ----------------------------------------
26
------------------------ ----------------------------------------
NAME POSITION
------------------------ ----------------------------------------
John Mayall Head of Intellectual Property, Avecia
Group
------------------------ ----------------------------------------
Peter Attwell Taxation Manager, Avecia Group
------------------------ ----------------------------------------
Eric Thompson Information Systems Manager, Avecia Group
------------------------ ----------------------------------------
Robert Sloss Research and Development Manager, Avecia
Biocides
7.6. Save in the case of fraud, the Principal Vendor and the UK Business
Vendor undertake not to make any claim against any Employee of the
Operations or any Target Company on whom it may have relied before
entering into any terms of this Agreement or the documents to be
entered into pursuant to this Agreement or in the preparation of the
Disclosure Letter (but this shall not preclude the Principal Vendor
from claiming against any other Vendor under any right of
contribution or indemnity to which it may be entitled). No right to
damages or compensation shall arise in favour of the Purchaser to
the extent that events occurring between the Completion Date and the
Delayed Completion Date, if any, occurred as a result of (i) the
failure by the Purchaser or a member of the Purchaser's Group to
manage the Sold Operations (as defined in Clause 4.28.1) in a manner
consistent with Clause 4.28.4, (ii) any act or omission of any
member of the management of the Sold Operations taken after the
Completion Date with respect to the Sold Operations, (iii) any
member of the management of the Spanish Operations complying with an
instruction given by management of the Sold Operations after the
Completion Date or (iv) any member of the management of the Spanish
Operations disregarding any specific instruction of the Principal
Vendor as a result of complying with a specific instruction given by
management of the Sold Operations or the Purchaser's Group after the
Completion Date.
7.7. The Purchaser warrants and undertakes to the Vendors that each of
the warranties set out in this Clause 7.7 is true and accurate as at
the date of this Agreement and that each of such warranties will be
true and accurate on the Completion Date by reference to the facts
and circumstances then subsisting:
7.7.1. the Purchaser is and each Local Purchaser is or will on
Completion be a company duly incorporated and validly
existing under its respective laws of incorporation;
7.7.2. the Purchaser has and each Local Purchaser will at
Completion have, the corporate power and authority to
enter into and perform such of this Agreement and any
other documents to be entered into pursuant to this
Agreement;
7.7.3. this Agreement constitutes, and the documents to be
entered into by the Purchaser or the Local Purchasers
pursuant to this Agreement when executed will constitute,
valid and binding obligations of the Purchaser and the
Local Purchasers, as applicable, in accordance with their
respective terms;
7.7.4. the execution and delivery of and the performance by the
Purchaser and each Local Purchaser of its obligations, as
applicable, under such of this Agreement and any other
documents to be delivered
27
pursuant to this Agreement as are relevant to the
Purchaser or such Local Purchaser will not:
(a) result in a breach of, or constitute a default
under, any material instrument to which the
Purchaser or the Local Purchaser is a party or
by which the Purchaser or the Local Purchaser is
bound; or
(b) result in a breach of any order, judgment or
decree of or undertaking to any court,
governmental agency or regulatory body to which
the Purchaser or the Local Purchaser is a party
or by which the Purchaser or the Local Purchaser
is bound;
7.7.5. the execution and delivery of this Agreement and the
documents to be delivered under it and the consummation of
the transactions contemplated hereby and thereby will not
(i) violate, conflict with or result in any breach of any
provision of the constitutional documents or by-laws of
the Purchaser or a Local Purchaser or (ii) violate,
conflict with or result in any breach of any statute, rule
or governmental regulation applicable to the Purchaser or
the Local Purchaser;
7.7.6. no consent, approval, authorisation, declaration of, or
notification to, any governmental authority (other than
competition notifications in jurisdictions other than the
United Kingdom and the United States) is required to be
made or obtained by the Purchaser or the Local Purchaser
as a condition of the execution or delivery of this
Agreement or the documents to be delivered under this
Agreement or, save as contemplated by Clause 3.1, the
consummation of the transactions contemplated hereby or
thereby;
7.7.7. the Purchaser has the financial resources required to
fulfil its obligations under this Agreement in respect of
the payment of the Purchase Price and, to the extent such
resources rely on third parties providing finance, the
Purchaser has committed facilities available to it which
are not subject to any conditions outside the Purchaser's
control;
7.7.8. the Consideration Shares have been duly authorised for
issuance and, when issued pursuant to the provisions of
this Agreement, will be validly issued, fully paid and
non-assessable;
7.7.9. assuming the accuracy of the Warranties of the Principal
Vendor set forth in paragraph 21 of Schedule 4, the
issuance of the Consideration Shares by the Purchaser in
the manner contemplated by this Agreement will be exempt
from the registration requirements of the Securities Act
by reason of Section 4(2) thereof and will be exempt from
the registration or qualification requirements of the laws
of any applicable state of the United States; and
7.7.10. the Purchaser has timely filed with the SEC all forms,
reports, schedules, proxy statements, registration
statements and other documents required to be filed by it
since 1 January 2003 pursuant to Sections 13(a) and 15(d)
of the Exchange Act (the "Purchaser SEC
28
Reports"); as of its respective date, each of the
Purchaser SEC Reports complied in all material respects
with all applicable requirements of Exchange Act and the
applicable rules and regulations of the SEC promulgated
thereunder, and did not, at the time filed, contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
8. CLAIMS PROCEDURE
8.1. If any party to this Agreement (the "Claimant") becomes aware of any
matter that may give rise to a claim against another party to this
Agreement (the "Recipient") under this Agreement (other than in
respect of a breach of a Warranty relating exclusively to Taxation
(where the claim shall be dealt with in the manner set out in clause
6 of the Tax Deed)) notice of that fact shall be given to the
Recipient as soon as reasonably practicable but any failure to give
such timely notice shall not affect the rights of the Claimant
except to the extent that the Recipient is prejudiced by such
failure.
8.2. Without prejudice to the validity of the claim or alleged claim in
question and subject to (i) the Claimant being paid all reasonable
out of pocket costs and expenses and (ii) the Recipient entering
into such undertakings relating to confidentiality as the Claimant
may reasonably require), the Claimant shall allow, and shall procure
that the relevant Associated Companies of the Claimant allow, the
Recipient and its accountants and professional advisers to
investigate the matter or circumstance alleged to give rise to such
claim and whether and to what extent any amount is payable in
respect of such claim and for such purpose the Claimant shall give,
and shall procure that the relevant Associated Companies of the
Claimant shall give, all such information and assistance, including
access to premises and personnel, and the right to examine and copy
or photograph any assets, accounts, documents and records, as the
Recipient or its accountants or professional advisers may reasonably
request.
8.3. If the claim in question is a result of or in connection with a
claim or liability to a third party then:
8.3.1. no admission of liability shall be made by or on behalf of
the Claimant or any Associated Company of the Claimant and
the claim shall not be compromised, disposed of or settled
without the consent of the Recipient (such consent not to
be unreasonably withheld or delayed);
8.3.2. the Recipient shall (subject to its agreeing that it is
liable and providing an indemnity in terms reasonably
satisfactory to the Claimant in respect of all costs and
expenses which may be incurred by the Claimant or any
Associated Company of the Claimant in complying with this
Clause 8.3.2) be entitled at its own expense in its
absolute discretion to take such action as it shall deem
necessary to avoid, dispute, deny, defend, resist, appeal,
compromise or contest such claim or liability (including,
without limitation, making counterclaims or other claims
against third
29
parties) in the name of and on behalf of the Claimant or
any Associated Company of the Claimant concerned; and
8.3.3. the Claimant will give and procure that the relevant
Associated Companies of the Claimant give, subject to
their being paid all reasonable out of pocket costs and
expenses, all such information and assistance, including
access to premises and personnel, and the right to examine
and copy or photograph any assets, accounts, documents and
records, for the purpose of avoiding, disputing, denying,
defending, resisting, appealing, compromising or
contesting any such claim or liability as the Recipient or
their professional advisers reasonably request. The
Recipient agrees to keep all such information confidential
and only to use it for such purpose.
This Clause 8.3 will not apply so as to give any of the Vendors any
rights in respect of the conduct of the defence by the Purchaser, a
Local Purchaser or a Target Company of claims made by a customer who
in the twelve months preceding the date of such claim purchased
goods or services of the Operations. Clause 8.3.2 will not apply as
to any third party claims seeking an injunction or other relief for
other than money damages against the Claimant that the Claimant
reasonably determines, after conferring with its outside counsel,
cannot be separated from any related claim for money damages. If
such claim can be separated from any related claim for money
damages, the Recipient, subject to complying with Clause 8.3.2,
shall be entitled to assume the defence of the portion relating to
money damages. The rights of the Recipient under this Clause in
respect of the negotiation, conduct, defence and settlement of
claims shall be subject, where applicable, to the rights of the
Claimant's insurers in respect of such matters.
8.4. The Purchaser agrees that after the Completion Date, the Purchaser
will or will procure that a Local Purchaser or a Target Company will
retain and exert reasonable endeavours to preserve the condition of
the relevant Books and Records and the books and records of the
Target Companies and ensure that no such books and records are
destroyed or disposed of or permitted to be destroyed or disposed of
during a seven year period from the Completion Date, provided that
the Purchaser may destroy or dispose of any such books and records
prior to the expiration of said seven years if the Principal Vendor
is provided with reasonable advance notice of the Purchaser's
intention to discard or destroy books and records generally
identifying the content of the same and the Principal Vendor either
agrees that such books and records may be destroyed or disposed of
or fails to make arrangements for the pickup and delivery of such
documents within thirty days of the date of the Purchaser's notice.
8.5. The Purchaser and the Principal Vendor undertake to (and shall
procure that each member of the Purchaser's Group or Vendors' Group
(as appropriate) shall) take all reasonable steps available to it to
mitigate any loss suffered by any such party in respect of any claim
under this Agreement.
8.6. Where any member of the Purchaser's Group or the Vendors' Group (as
appropriate) is entitled to recover from some other person any sum
in
30
respect of any loss which could give rise or has given rise to any
claim under this Agreement, the Purchaser or the Principal Vendor
shall promptly after becoming aware of such entitlement inform the
Principal Vendor or the Purchaser (as appropriate) of it and will
procure that there are taken all commercially reasonable steps to
recover that sum. Any such sum recovered (less any out of pocket
costs and expenses reasonably incurred in obtaining such recovery)
will reduce the amount which, without such recovery, could have
formed the whole or part of any claim under this Agreement provided
however that such entitled party shall not be obliged to pursue such
claim against the third party before or in preference to pursuing a
claim against the other party.
8.7. If any party pays an amount in discharge of any claim under this
Agreement and the recipient or one of its Associated Companies
subsequently recovers from a third party the same losses in respect
of which the relevant claim was made, the recipient shall repay an
amount equal to (i) the sum recovered from the third party less any
out of pocket costs and expenses reasonably incurred in obtaining
such recovery and less also any Taxation or other deductions
chargeable or suffered in respect of such sum or (ii) if less, the
amount previously paid by such party to the recipient.
9. REGISTRATION RIGHTS
9.1. For purposes of this Clause 9, the following terms shall have the
following meanings:
9.1.1. "Affiliate" of any person means another person that
directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person; for the purposes
of this definition, "control" when used with respect to
any person means the possession, directly or indirectly,
of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise;
and the terms "controlling" and "controlled" have meanings
correlative to the foregoing;
9.1.2. "Common Stock" means the shares of common stock, par value
US$1.00 per share, of the Purchaser; and
9.1.3. "Rule 144" means Rule 144 promulgated by the SEC under the
Securities Act.
9.2. On and after the date of Completion and until all of the
Consideration Shares issued under this Agreement may be sold without
volume limitation under Rule 144 by a person which is not an
Affiliate of the Purchaser, if the Purchaser proposes to file a
registration statement with respect to an offering of Common Stock
to the general public (other than a registration statement on Form
S-4 or Form S-8 (or any substitute form that may be adopted by the
SEC)) (any such registration statement, a "Registration Statement"),
then the Purchaser shall give written notice of such proposed filing
to the Principal Vendor as soon as practicable (but in no event less
than 15 Business Days before the anticipated filing date). Upon the
written request by the Principal Vendor, given within ten
31
Business Days after delivery of any such notice by the Purchaser, to
include in such Registration Statement such number of Consideration
Shares as the Principal Vendor may request, and as are held by the
Principal Vendor or any member of the Vendors' Group, the Purchaser
shall include all such Consideration Shares in such Registration
Statement on the same terms and conditions as the Common Stock
otherwise being offered and sold pursuant to such Registration
Statement. Notwithstanding anything contained herein, if the
Registration Statement is being filed for an underwritten offering
of Common Stock to the general public for the Purchaser's own
account (the "Primary Shares"), and the lead underwriter delivers a
written opinion to the Purchaser that the size of the offering that
the Purchaser, the Principal Vendor and the holders of any other
shares proposed to be included in the Registration Statement (the
"Other Shares") intend to make is such that the success of the
offering would be materially and adversely affected, then the number
of Primary Shares, Other Shares and Consideration Shares to be
included in such offering shall be reduced to the extent necessary
to reduce the total amount of securities to be included in such
offering to the amount recommended by such lead underwriter;
provided that priority shall be (i) first, Primary Shares and (ii)
second, pro rata among Other Shares and Consideration Shares.
Notwithstanding the foregoing and for the avoidance of doubt, the
Purchaser shall be entitled at any time to terminate or abandon any
registration process and related offering of Common Stock as such
process relates to all shares included in such registration and
offering.
9.3. Whenever the Purchaser is under an obligation pursuant to the
provisions of this Clause 9 to effect the registration of any
Consideration Shares, the Purchaser shall, as expeditiously as
practicable:
9.3.1. prepare and file with the SEC such amendments and
supplements to the Registration Statement and the
prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective
until the offer and sale of the Common Stock to the
general public pursuant to such Registration Statement is
complete and to comply with the provisions of the
Securities Act with respect to the sale or other
disposition of the Consideration Shares;
9.3.2. notify the Principal Vendor in writing promptly (i) of the
receipt by the Purchaser of any notification with respect
to the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or
prospectus or any amendment or supplement thereto or the
initiation or threatening of any proceeding for that
purpose and (ii) of the receipt by the Purchaser of any
notification with respect to the suspension of the
qualification of the Consideration Shares for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose;
9.3.3. furnish to the Principal Vendor such number of copies of a
summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the
requirements of the Securities Act;
32
9.3.4. notify the holders of the Consideration Shares of the
happening of any event as a result of which the prospectus
included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing;
9.3.5. list the Consideration Shares on any national securities
exchange on which any shares of the Common Stock are
listed; and
9.3.6. otherwise comply with all applicable rules and regulations
of the SEC and make available to its securityholders, as
soon as reasonably practicable, earnings statements (which
need not be audited) covering a period of 12 months
beginning within one month after the effective date of the
Registration Statement, which earnings statements shall
satisfy the provisions of Section 11(a) of the Securities
Act.
9.4. All fees and expenses incident to the performance of or compliance
with this Clause 9 by the Purchaser, including all fees and expenses
of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky
qualifications of the Consideration Shares), printing expenses,
messenger and delivery expenses, any registration or filing fees
payable under any US Federal or state securities or blue sky laws,
the fees and expenses incurred in connection with any listing of the
securities to be registered on any securities exchange or automated
quotation system, fees and disbursements of counsel for the
Purchaser and its independent certified public accountants
(including the expenses of any comfort letters required by or
incident to such performance), securities acts liability insurance
(if the Purchaser elects to obtain such insurance), the reasonable
fees and expenses of any special experts retained by the Purchaser
in connection with such registration and the fees and expenses of
other persons retained by the Purchaser, will be borne by the
Purchaser; it being understood and agreed that the Principal Vendor
will bear all fees and expenses incurred by it in connection with
any registration pursuant to this Clause 9 (including any
underwriting fees, discounts and commissions, transfer taxes and
fees and expenses of its counsel).
9.5. The Purchaser and the Principal Vendor and their Affiliates shall
reasonably cooperate and use all reasonable endeavours, and shall
each take all actions reasonably necessary or advisable, in
connection with the Purchaser's obligation to effect the
registration of the Consideration Shares with the SEC in accordance
with this Clause 9.
9.6. The Purchaser agrees to indemnify and hold harmless, to the fullest
extent permitted by law, the Principal Vendor, its Affiliates and
their respective officers, directors, agents, employees and partners
(each, an "indemnified party") against any and all losses, claims,
damages, fees, expenses (including reasonable fees, disbursements
and other charges of counsel and costs of investigation) or other
liabilities caused by any untrue or alleged untrue statement of
material fact contained in any Registration Statement, prospectus or
preliminary prospectus (each as amended and or supplemented, if the
33
Purchaser shall have furnished any amendments or supplements
thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading; provided
that the Purchaser shall not be required to indemnify any
indemnified party for any losses, claims, damages, fees, expenses or
other liabilities resulting from any such untrue statement or
omission if such untrue statement or omission is made in reliance on
and in conformity with any information with respect to the Principal
Vendor or any other indemnified parties furnished in writing to the
Purchaser by the Principal Vendor or such other indemnified parties
expressly for use therein.
9.7. In connection with any registration in which the Principal Vendor or
any of its Affiliates is participating, the Principal Vendor and its
Affiliates will furnish to the Purchaser in writing such information
with respect to the Principal Vendor or its Affiliates as the
Purchaser reasonably requests for use in connection with any such
Registration Statement, prospectus, or preliminary prospectus and
agrees to indemnify the Purchaser, its Affiliates and their
respective officers, directors, agents, employees and partners to
the same extent as the foregoing indemnity from the Purchaser to the
Principal Vendor or its Affiliates, but only with respect to
information relating to the Principal Vendor or its Affiliates
furnished to the Purchaser in writing by the Principal Vendor or its
Affiliates expressly for use in the Registration Statement, the
prospectus, any amendment or supplement thereto, or any preliminary
prospectus; provided, however, that the maximum amount of liability
in respect of such indemnification shall be limited to an amount
equal to the net proceeds actually received by the Principal Vendor
or its Affiliates from the sale of Consideration Shares effected
pursuant to such Registration Statement.
9.8. In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Clause 9.6 or 9.7 above, such
indemnified party shall promptly notify the person against whom such
indemnity may be sought (hereinafter in this Clause 9.8 and Clause
9.9 below called the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying
party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and the indemnified
party shall have been advised by counsel that representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that
the indemnifying party shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any
local counsel) for all such indemnified parties, and that all such
fees and expenses shall be
34
reimbursed as they are incurred. In the case of any such separate
firm for the indemnified parties, such firm shall be designated in
writing by the indemnified parties. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
9.9. lf the indemnification provided for in Clause 9.6 or 9.7 above from
the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to in Clause 9.6 or 9.7 above, then the
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as result of such losses, claims, damages, fees, expenses or
other liabilities in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified parties
in connection with the actions which resulted in such losses,
claims, damages, fees, expenses or other liabilities, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth in Clause 9.8 above, any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Clause
9.9 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to in this Clause 9.9. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. If
indemnification is available under Clause 9.6 or 9.7 above, the
indemnifying parties shall indemnify each indemnified party to the
full extent provided in Clause 9.6 or 9.7 above without regard to
the relative fault of said indemnifying party or any other equitable
consideration provided for in this Clause 9.9. Notwithstanding the
foregoing, in no event shall the amount contributed by the Principal
Vendor exceed the aggregate net offering proceeds received by the
Principal Vendor from the sale of Consideration Shares pursuant to
the Registration Statement.
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10. CONTRACTS
10.1. With effect from Completion and to the extent that the same is
lawful and permissible under the relevant Contract, each of the
Business Vendors assigns to the Purchaser (or the relevant Local
Purchaser) its rights under each Contract (other than Excluded
Assets).
10.2. To the extent that the assignments referred to in Clause 10.1 are
not lawful or permissible under a Contract (whether due to the
consent of the other party or parties to such contract not being
obtained or otherwise):
10.2.1. the Business Vendors shall insofar as required by and at
the request of the Purchaser use all reasonable endeavours
with the co-operation of the Purchaser to procure such
assignments; and
10.2.2. until such assignments have been procured:
(a) this Agreement shall not constitute an
assignment or attempted assignment of the
Contract but the relevant Business Vendors shall
hold the relevant Contract in trust for the
Purchaser or the relevant Local Purchaser
absolutely (but only if the relevant Business
Vendor can do so without causing an event of
default or termination and without a breach of
law);
(b) the relevant Business Vendor shall give all
reasonable assistance to the Purchaser to enable
the Purchaser to enforce the relevant Business
Vendor's rights under the relevant Contract and
the Purchaser shall reimburse the relevant
Business Vendor for any reasonable out of pocket
costs and expenses incurred in giving such
assistance but only:
(i) if (x) the Purchaser or the relevant
Local Purchaser receives (either
directly or through the relevant
Business Vendor) the economic claims,
rights and benefits, if any, under
such Contract or (y) the reason why
the Purchaser or the relevant Local
Purchaser does not receive such
economic claims, rights and benefits,
if any, is not the failure of the
relevant Contract to be assigned to
the Purchaser or the relevant Local
Purchaser; and
(ii) to the extent such costs and expenses
do not exceed the costs and expenses
the Purchaser would reasonably have
incurred in enforcing such rights, had
such Contract previously been assigned
to the Purchaser; and
(c) the parties shall co-operate (each at its own
expense) in making such other reasonable lawful
alternative arrangements regarding the relevant
Contract as may best achieve the transfer with
effect from Completion of the benefit and burden
of such Contract to the Purchaser or a Local
Purchaser.
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10.3. The Business Vendors will make any benefit received by them under a
Contract after Completion available to the Purchaser and the
Purchaser shall procure at its own expense the performance of the
Business Vendor's obligations under the Contract and shall be
responsible for the Business Liabilities, if any, arising under or
relating to such Contract, provided that the Purchaser shall
(subject to Clause 10.4) only be required to procure the performance
of such obligations and assume such Business Liabilities to the
extent it is able (whether directly or through such Business Vendor)
to receive such benefits and any claims and rights that would
otherwise have accrued to the Purchaser under such Contract had such
Contract been assigned to the Purchaser at Completion.
10.4. In relation to those Contracts under which a Business Vendor has
outstanding performance obligations as at Completion and where the
counterparty to such Contract refuses to agree to the effective
transfer of such performance obligations to the Purchaser, the
Purchaser shall nonetheless offer to such counterparty to undertake
such performance obligations in return for the receipt by the
Purchaser of the economic claims, rights and benefits, if any, under
such Contract.
11. EMPLOYEES
The provisions of Schedule 7 shall apply in relation to the Employees and the
transfer of the employment of the Employees (other than the Target Company
Employees) to the Purchaser or a Local Purchaser and ancillary matters.
12. EMPLOYEE BENEFIT ARRANGEMENTS
The provisions of Schedule 8 shall apply in relation to the Employee Benefit
Arrangements. Where a specific provision of Schedule 8 is inconsistent with
Schedule 7, Schedule 8 shall prevail.
13. POST-COMPLETION OBLIGATIONS
RELEASE OF GUARANTEES
13.1. Immediately following Completion the Purchaser shall use all
reasonable endeavours to procure the release of all securities,
guarantees and indemnities given by or binding upon any member of
the Vendors' Group in relation to any debt or obligation of any
Target Company. Pending such release the Purchaser shall indemnify
and keep indemnified the Principal Vendor for itself and as trustee
for each member of the Vendors' Group from and against all costs,
claims and demands arising out of or in connection with such
securities, guarantees and indemnities.
13.2. Immediately following Completion the Principal Vendor shall use all
reasonable endeavours to procure the release of all securities,
guarantees and indemnities given by or binding on any Target Company
in relation to any debt or obligation of any member of the Vendors'
Group. Pending such release the Principal Vendor shall indemnify and
keep indemnified the Purchaser for itself and as trustee for the
Target Companies from and against all costs, claims and demands
arising out of or in connection with any such securities, guarantees
and indemnities.
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RECEIPTS BY VENDORS' GROUP
13.3. If at any time after Completion any member of the Vendors' Group
receives any monies in respect of any Debtor or Claim then the
Principal Vendor shall procure that such member shall pay to the
Purchaser as soon as reasonably practicable the amount recovered
(less any costs of recovery).
RECEIPTS BY PURCHASER'S GROUP
13.4. If at any time after Completion any member of the Purchaser's Group
receives or has possession of any Excluded Asset or any monies
attributable to any Excluded Asset, the Purchaser shall procure that
the relevant member of the Purchaser's Group shall pay or forward to
the Principal Vendor as soon as reasonably practicable such Excluded
Asset or monies (less any costs of recovery).
FURTHER ASSURANCE
13.5. Each of the parties shall from time to time on being required to do
so by another, do or procure that there is done all such acts
reasonably in its power and/or execute and deliver all such further
documents as such other party may reasonably consider necessary for
giving full effect to this Agreement (provided that, for the
avoidance of doubt, if one party requires another to execute a
document pursuant to this Clause, the party making such request
shall bear the cost of preparation, execution and, where applicable,
filing of such document).
USE OF EXCLUDED NAMES
13.6. Subject to Clause 13.7 below, the Purchaser undertakes to the
Vendors that it shall not, and shall procure that no member of the
Purchaser's Group shall, after Completion, use in any way whatsoever
any registered or unregistered trademarks (including any logos or
other devices) incorporating the Excluded Names. Without prejudice
to the foregoing, the Purchaser shall procure that within 90 days of
Completion, any Target Company which has the word "Avecia" as part
of its corporate name shall effect a change of name so as to exclude
the word "Avecia" or any confusingly similar word (and the Purchaser
shall within such 90 day period provide evidence of such change of
name to the Principal Vendor).
13.7. The Purchaser, the Local Purchasers and the Target Companies shall
have the right to continue to use the trade mark "Avecia" or any
registered or unregistered trade marks, logos or other devices
incorporating "Avecia" on a royalty free, non-exclusive basis solely
(i) on labels, packaging and products for a period of one year from
Completion and (ii) on vehicles, stationery, premises, promotional
material, and on any other assets comprising part of the Business
Assets or owned by the Target Companies for a period of six months
from Completion, in each case to which such trade marks were in the
ordinary course of the Operations affixed before Completion, and
solely in the manner in which they were being used immediately
before Completion.
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POST-COMPLETION CLAIMS BY VENDORS' GROUP AND PURCHASER'S GROUP
13.8. Except as otherwise expressly provided in or contemplated by this
Agreement or any Ancillary Agreement, the Principal Vendor
undertakes that after Completion no member of the Vendors' Group
will make any claim on any Target Company and the Purchaser
undertakes that after any Completion no Target Company will make any
claim on any member of the Vendors' Group, in each case in respect
of transactions, acts or omissions occurring before Completion other
than to the extent that the amount claimed was provided for or
included as an asset or liability in determining the Completion
Working Capital or reduced the value of an asset therein or was
included as an Intra-Group Payable or Intra-Group Receivable in the
Intra-Group Indebtedness Statement.
ASSISTANCE WITH TAX RETURNS AND AUDIT
13.9. The Purchaser shall procure that the employees of the Purchaser's
Group from time to time shall provide such assistance to the
Vendors' Group (at the Purchaser's expense) as is reasonably
required for the purpose of:
13.9.1. completion of Tax Returns of members of the Vendors' Group
or Tax Returns of Target Companies which are part of a
group for Taxation purposes with members of the Vendors'
Group (including where applicable Tax Returns
incorporating information relating to the Target
Companies) within all relevant jurisdictions for the tax
period up to and including the Completion Date; and
13.9.2. preparation and finalisation of individual and
consolidated accounts of members of the Vendors' Group.
13.10. The Principal Vendor shall procure that the employees of the
Vendors' Group from time to time should provide such assistance to
the Purchaser's Group (at the Principal Vendor's expense) as is
reasonably required for the purpose of the Purchaser's Group's
completion of Tax Returns relating to the Operations.
PROCUREMENT OBLIGATIONS
13.11. Where this Agreement provides for a member of the Vendors' Group or
a member of the Purchaser's Group to be obliged in any way, such
provision shall be construed as including an obligation on the
Principal Vendor or the Purchaser respectively to procure that such
obligation is discharged. Where this Agreement provides for a member
of the Vendors' Group or a member of the Purchaser's Group enjoying
any benefit, such provision shall be construed as including an
obligation on the Purchaser or the Principal Vendor respectively to
ensure that such benefit is provided or made available by the
relevant member of its group.
CONSOLIDATED TAX GROUPS
13.12. The Principal Vendor and the Purchaser agree that where Target
Company is a member of a group together with a member of the
Vendors' Group which makes a consolidated return for any Taxation
purpose, arrangements shall be
39
made as soon as practicable to terminate any existing arrangements
between members of the Vendors' Group and that Target Company.
TRANSFER OF PERMITS
13.13. Where any Permit of a Business Vendor is capable of transfer to the
Purchaser or a Local Purchaser, the Principal Vendor shall or shall
procure that the relevant member of the Vendors' Group shall at its
own expense execute such documents as are necessary to effect such
transfer. Where any Permits of a Business Vendor are not so capable
of transfer, the Principal Vendor shall and shall procure that the
relevant members of the Vendors' Group shall offer such assistance
as the Purchaser may reasonably require for the renewal or reissue
of such Permit to it or another member of the Purchaser's Group.
CUSTOMERS AND SUPPLIERS
13.14. After Completion, the relevant Vendors shall, as soon as reasonably
practicable, join with the Purchaser (or relevant Local Purchaser)
in sending a notice in a form agreed between the Purchaser and the
Principal Vendor to the customers and suppliers and other business
contacts of the Operations informing them of the transfer of the
Operations.
INTELLECTUAL PROPERTY
13.15. If within the twelve month period following the Completion Date, the
Purchaser or any Vendor discovers that any Business IP is owned by
any member of the Vendors' Group, the Principal Vendor shall
promptly procure an assignment of such Intellectual Property to the
Purchaser (or as directed by the Purchaser) for nominal
consideration.
ASSISTANCE WITH LITIGATION AND CLAIMS
13.16. If and to the extent that:
13.16.1. the Vendors' Group has under this Agreement retained or
the Purchaser's Group has assumed responsibility for any
liability or claim; and
13.16.2. after Completion the Purchaser's Group or the Vendors'
Group, as appropriate (or their respective employees or
advisers) have information which would assist in the
investigation, defence or settlement of such liability or
claims,
then the Purchaser shall or shall procure that the relevant
member of the Purchaser's Group shall and the Vendor shall or shall
procure that the relevant member of the Vendors' Group shall at the
expense of the party requesting such assistance provide all such
reasonable assistance as may be required for the investigation,
defence or settlement of such liability or claim, including without
limitation: 13.16.3. reasonable access to records, premises,
personnel and advisers; and
40
13.16.4. making personnel and advisers available for the purpose of
taking affidavits and preparation for the attendance of
any court hearing or other legal or arbitral or
alternative dispute resolution procedures.
FINANCIAL STATEMENTS
13.17. Not later than 30 days after the Completion Date, the Principal
Vendor shall deliver to the Purchaser (in Microsoft Excel format
other than the notes thereto, which shall be in Microsoft Word
format) the Audited Non-Statutory Accounts, together with an
"Operating and Financial Review and Prospects" (with respect to (i)
the year ended 31st December 2002 compared to the year ended 31st
December 2001 and (ii) the year ended 31st December 2003 compared to
the year ended 31st December 2002, in each case in Microsoft Word
format) prepared in accordance with Item 5 of Form 20-F under the
Securities Act. The Audited Non-Statutory Accounts shall contain US
GAAP reconciliations prepared in accordance with US GAAP and the
applicable provisions of Regulation S-X and Form 20-F under the
Securities Act. The Principal Vendor shall be responsible for the
costs of preparation of the Audited Non-Statutory Accounts.
SEC FILINGS
13.18. For so long as the Consideration Shares are outstanding and are held
by the Principal Vendor or any member of the Vendors' Group, the
Purchaser shall file all reports required to be filed by the
Purchaser with the SEC under Section 13 or 15(d) of the Exchange
Act.
INTELLECTUAL PROPERTY LICENCES
13.19. If within the twelve month period following the Completion Date, the
Purchaser or any Vendor discovers that any Intellectual Property to
which this Clause 13.19 applies, which Intellectual Property was
owned by or licensed to a member of the Vendors' Group and was used
in the Operations in the twelve months preceding the Completion Date
and such use was material to the Operations in that period, has not
been assigned or licensed to the Purchaser hereunder or pursuant to
the Ancillary Agreements, the Principal Vendor shall promptly grant,
or procure the grant of, a non-exclusive, royalty free, perpetual
licence to the Purchaser, to use any such Intellectual Property in
the Target Businesses for the purposes used prior to Completion, but
for no other purpose whatsoever.
Where any Intellectual Property to which this Clause 13.19 applies
is licensed to the Principal Vendor or member of the Vendors' Group,
the Principal Vendor's only obligation hereunder shall be to grant,
or procure the grant of, a sub-licence and if such sub-licence
requires the consent of the licensor, to use its reasonable
endeavours to obtain such consent.
This Clause 13.19 applies to Intellectual Property other than (a)
Intellectual Property relating to computer software (b) the Excluded
Names, and (c) any registered or unregistered trade marks including
any logos or other devices incorporating the Excluded Names.
41
13.20. If within the twelve month period following the Completion Date, the
Purchaser or any Vendor discovers that any Business IP used by any
member of the Vendors' Group, other than in the Target Businesses,
in the twelve months preceding the Completion Date and such use was
material in that period, the Purchaser shall promptly grant, or
procure the grant of, a non-exclusive, royalty free, perpetual
licence to the relevant member of the Vendors' Group, to use any
such Intellectual Property in its business for the purposes used
prior to Completion, but for no other purpose whatsoever.
INSURANCE POLICIES
13.21. For so long as any Insured Liabilities remain outstanding, the
Principal Vendor agrees that it shall not (and will procure that no
member of the Vendors' Group shall):
13.21.1. revoke;
13.21.2. take any steps to vitiate or impair the legal validity of;
or
13.21.3. otherwise take any action which may have the effect of
vitiating, or impairing the legal validity of,
any insurance policy in force at the date of this Agreement
providing coverage in respect of such Insured Liability.
EMPLOYEE RECORDS
13.22. The Vendors shall transfer all records and data held by such Vendors
relating to the Employees (including Sensitive Personal Data (as
defined in Section 2 of the Data Protection Act 1998) to the extent
required to comply with TUPE or any other legal requirement but no
other Sensitive Personal Data) to the Purchaser or a Local Purchaser
on or as soon as reasonably practicable after Completion. For a
period of three months from Completion, the Purchaser may request
that the Vendors notify the Purchaser of any classes of Sensitive
Personal Data held by the Vendors relating to the Employees (other
than US Employees) which have not been provided to the Purchaser or
a Local Purchaser pursuant to this Clause 5.6. The Purchaser may
then request that the Vendors provide any of such Sensitive Personal
Data to it (such requested data being "Withheld Sensitive Personal
Data"). Subject to the Purchaser obtaining all consents from the
subjects of the Withheld Sensitive Personal Data necessary to allow
the Vendors to disclose such in compliance with their legal
obligations, the Vendors shall provide the Withheld Sensitive
Personal Data to the Purchaser.
14. GUARANTEES
14.1. In this Clause:
14.1.1. references to the "Guarantor" shall be construed both as a
reference to the Purchaser (in relation to the Local
Purchasers) and to the Principal Vendor (in relation to
the Business Vendors and the Share Vendors); and
42
14.1.2. references to the "Guaranteed Subsidiaries" means the
Local Purchasers (in relation to the Purchaser) and the
Business Vendors and the Share Vendors (in relation to the
Principal Vendor).
14.2. In consideration of the other parties entering into this Agreement
the Guarantor hereby unconditionally and irrevocably guarantees due
and punctual performance and observance by the Guaranteed
Subsidiaries of all their obligations under or for breach of this
Agreement and any agreement to be entered into pursuant to it
(including obligations to pay damages) (the "Guaranteed
Obligations"). The liability of the Guarantor under this Clause
shall not be released or diminished by any variation of the terms of
the Guaranteed Obligations, any forbearance, neglect or delay in
seeking performance of the Guaranteed Obligations or any granting of
time for such performance, or by any assignment of the benefit of
the Guaranteed Obligations in accordance with Clause 19.18 or 19.19.
14.3. If and whenever a Guaranteed Subsidiary defaults for any reason
whatsoever (and irrespective of the time during which such default
has been unremedied) in the performance of any of the Guaranteed
Obligations, the Guarantor shall forthwith upon demand
unconditionally and irrevocably perform (or procure performance of)
and satisfy (or procure the satisfaction of) the Guaranteed
Obligations in regard to which such default has been made.
14.4. The guarantees in this Clause are to be continuing guarantees and
accordingly are to remain in force until all the Guaranteed
Obligations shall have been irrevocably performed or satisfied. Such
guarantees are in addition to and without prejudice to and not in
substitution for any rights or security which the recipient of such
guarantees may now or hereafter have or hold for the performance and
observance of the Guaranteed Obligations.
14.5. As a separate and independent stipulation the Guarantor agrees that
any of the Guaranteed Obligations (including, without limitation,
any moneys payable) which may not be enforceable against or
recoverable from any Guaranteed Subsidiary by reason of any legal
limitation, disability or incapacity on or of the Guaranteed
Subsidiary or any other fact or circumstance (other than any
exclusion or limitation imposed by this Agreement or any agreement
entered into pursuant to this Agreement) shall nevertheless be
enforceable against and recoverable from the Guarantor as though the
same had been incurred by the Guarantor and the Guarantor were the
sole or principal obligor in respect thereof.
14.6. The guarantees in this Clause shall not be affected or impaired by
reason of any other fact or event which in the absence of this
provision would or might constitute or afford a legal or equitable
discharge or release or a defence to a guarantor.
15. VAT
15.1. The parties agree that the consideration given in respect of the
sale of the Target Businesses, the Business Assets and the sale of
the Target Companies is exclusive of any amounts in respect of VAT
which is properly chargeable in respect of such supplies. The
parties intend, if applicable, that the Target
43
Businesses and Business Assets shall be sold as a going concern for
VAT purposes and the Principal Vendor shall (or shall procure that
the relevant Business Vendor shall) and the Purchaser shall (or
shall procure that the relevant Local Purchaser shall) give notice
of such sale to the relevant Tax Authority as required by applicable
law.
15.2. The Principal Vendor shall (and shall procure that each Vendor
shall) and the Purchaser shall and shall procure that each Local
Purchaser shall preserve any VAT records relating to the Target
Businesses under their control in such a manner and for such period
as may be required by applicable law and will allow the other
parties, upon reasonable notice, reasonable access during working
hours to and copies at the requesting party's expense of such
records where reasonably required by such parties for their Taxation
purposes and will produce information from these records to the
relevant other parties and/or any relevant Tax Authority if such
other parties reasonably require it for their Taxation purposes.
15.3. The Principal Vendor shall (and shall procure that the relevant
Business Vendors shall) and the Purchaser shall (and shall procure
that the relevant Local Purchasers shall) use all reasonable
endeavours (including, for the avoidance of doubt, the making of an
election or application in respect of VAT to any Tax Authority) to
secure that the sale of the Business Assets located in the member
states of the European Community is treated as neither a supply of
goods nor a supply of services where the country in which the
Business Assets are located has given effect to Article 5(8) of the
EEC Sixth Directive (77/388/EEC). The Purchaser warrants that in
connection with the sale of the Business Assets located in the
member states of the European Community it (or the relevant Local
Purchaser) is or will become at the Completion Date a taxable person
for VAT purposes and that it (or the relevant Local Purchaser) will
use those Business Assets acquired in carrying on the same kind of
business (whether or not as part of any existing business) as that
carried on by the relevant Business Vendors before Completion.
15.4. To the extent that any state outside the European Community in which
any of the Business Assets are located provides for relief or
exemption from VAT on the transfer of a business or treats such a
transaction as being non-taxable for VAT purposes, the Purchaser and
the Principal Vendor shall use all reasonable endeavours (including,
for the avoidance of doubt, the making of an election or application
in respect of VAT to any Tax Authority) to secure such treatment.
15.5. The Purchaser shall or shall procure that the relevant Local
Purchaser shall, subject to the submission by the relevant Vendor of
a VAT invoice in accordance with the provisions of Clause 19.20, pay
on Completion or, if later, five Business Days before the relevant
Vendor is required to account for such VAT the amount of any VAT
properly payable in any jurisdiction in respect of the transfer of
any of the Business Assets (whether as a result of denial of a
relief sought under this Clause 15 or otherwise) in addition to any
consideration (monetary or non-monetary) expressed in this Agreement
or in any Local Agreement to be given by the Purchaser or the
relevant Local Purchaser.
44
15.6. After Completion the Purchaser or the relevant Local Purchaser shall
in relation to the Business Assets carry on the same kind of
business, whether or not as part of any existing business of the
Purchaser or the relevant Local Purchaser, as the relevant Business
Vendor carries on with the relevant Business Assets relating to that
jurisdiction.
16. THIRD PARTY RIGHTS
16.1. Subject to Clause 16.2, this Agreement shall not be
enforceable by any person who is not a party to it.
16.2. The provisions of Clauses 7.2 and 7.6 may be relied on and
enforced by each of the persons or categories of persons
referred to in such Clauses.
16.3. This Agreement may be amended in accordance with Clauses
19.13 and 19.14 without the consent of any person who is
not a party to it.
17. COSTS
Except where expressly provided otherwise, each party shall bear its own costs
in relation to the preparation, negotiation, execution and completion of (and
the performance of their obligations under) this Agreement and the agreements
to be delivered under it. All notarial fees, transfer taxes, stamp duties or
documentary taxes, capital taxes or duties, registration or filing fees or
similar expenses payable in connection with the transactions contemplated by
this Agreement shall be borne by the party legally responsible therefor.
18. ANNOUNCEMENTS/CONFIDENTIALITY
18.1. The Principal Vendor and the Purchaser shall, subject to the
requirements of law or any regulatory body or fiscal authority or
the rules and regulations of any recognised stock exchange, agree
together as to the terms of, the timetable for and manner of
publication of, any formal announcement or circular to the Employees
or any Vendor's or Target Company's customers, suppliers,
distributors or sub-contractors which either party may desire or be
obliged to make regarding this Agreement or the transactions
contemplated by this Agreement which circular or announcement is
made or distributed on or prior to the Completion Date. In addition,
the Purchaser and the Principal Vendor shall consult with each other
before issuing or making, and provide the other with reasonable
opportunity to review and make reasonable comment upon, any formal
announcement or circular to the media which the Purchaser or the
Principal Vendor may desire or be obliged to make regarding this
Agreement or the transactions contemplated by this Agreement which
circular or announcement is made or distributed on or prior to the
Completion Date.
18.2. The parties acknowledge that the Confidentiality Agreement shall,
insofar as it obliges the Purchaser to maintain the confidentiality
of information relating to the Operations, cease to have any force
or effect from Completion.
18.3. Subject to Clause 18.5, the Purchaser shall (and shall procure that
each member of the Purchaser's Group shall) and the Principal Vendor
shall (and shall procure that each member of the Vendors' Group
shall) treat as strictly
45
confidential and not use or disclose any information received or
obtained as a result of entering into or performing this Agreement
(or any other agreement entered into under or pursuant to this
Agreement) which relates to:
18.3.1. the provisions of this Agreement (or any such other
agreement);
18.3.2. the negotiations relating to this Agreement (and such
other agreements); or
18.3.3. any other parties and their Associated Companies and the
business carried on by each of them.
18.4. Subject to Clause 18.5, the Principal Vendor shall (and shall
procure that its Associated Companies shall) treat as strictly
confidential and not use or disclose any confidential or proprietary
information which relates to the Operations.
18.5. The provisions of Clauses 18.3 and 18.4 shall not prohibit
disclosure or use if and to the extent:
18.5.1. required by law or for the purpose of any judicial
proceedings arising out of this Agreement or any other
agreement entered into under or pursuant to this
Agreement;
18.5.2. required by the applicable rules of any stock exchange on
which the securities of the parties to this Agreement (or
one of their Associated Companies) are listed or quoted
(or on which it is proposed that such securities be listed
or quoted during the process of applying to become so
listed or quoted) or any other competent regulatory
authority or, in the reasonable opinion of the Purchaser
or the Principal Vendor (as appropriate) required to be
disclosed to or filed with the SEC to comply with
obligations under the Securities Act or the Exchange Act
or the rules of the SEC promulgated thereunder;
18.5.3. required to vest the full benefit of this Agreement in any
party;
18.5.4. made to or used on a confidential basis by the
professional advisers, auditors and bankers or other
funding parties or prospective funding parties of each
party or to the extent that disclosure is made to a Tax
Authority in connection with the Tax affairs of the
disclosing party or a holding company of that party;
18.5.5. it becomes publicly available (other than as a result of
disclosure by the relevant party to this Agreement or the
Confidentiality Agreement, or any other person, in breach
of such agreements);
18.5.6. that the other parties have given prior written approval
to the disclosure;
18.5.7. the information is subsequently obtained free of any
restrictions on use or obligations of confidentiality from
a third party which is itself free of
46
any restrictions on use or obligations of confidentiality
with respect to that information;
18.5.8. the information is already in the possession of that party
and is not subject to an obligation of confidentiality or
a restriction on use; or
18.5.9. the information is independently developed after
Completion,
provided that except where prohibited by any applicable law or
regulation prior to disclosure of any information pursuant to Clause
18.5.1the party concerned shall, where possible, promptly notify the
other party of such requirement with a view to providing the other
party with the opportunity to contest such disclosure or otherwise
to agree the timing of, conditions to and content of such
disclosure.
18.6. The restrictions contained in this Clause 18 shall continue to apply
for a period of five years from the Completion Date.
19. GENERAL
EXCLUSION OF LIMITATIONS ON FRAUD
19.1. Nothing in this Agreement shall operate to limit the liability of a
party (or the remedies available to the other party) in respect of a
fraudulent act or representation by it.
SET-OFF
19.2. Unless by express agreement between the parties (including set-off
under Clause 4.10), no amount due and payable by one party to the
other pursuant to this Agreement shall be set-off against any other
amount due and payable or alleged to be due and payable by that
other party to the first party whether pursuant to this Agreement or
otherwise.
WITHHOLDINGS AND DEDUCTIONS
19.3. All sums payable by any party to another party under this Agreement
shall be paid free and clear of all deductions or withholdings, save
only as may be required by law. If any deductions or withholdings
are required by law the payer shall (except (i) to the extent the
same has been taken into account in calculating the amount due under
any other provision of this Agreement; and/or (ii) in the case of
interest payable under Clause 19.17) be obliged to pay to the payee
such sum as will after such deduction or withholding has been made
leave the payee with the same amount as it would have been entitled
to receive in the absence of any such requirement to make a
deduction or withholding.
19.4. If a recipient of sums payable under this Agreement (other than
interest payable under Clauses 4.19 or 19.17 and, in the case of the
Vendors, other than the Purchase Price) is liable for Taxes in
respect of the such sum the payer shall be obliged to pay to the
payee such sums as will after the Tax liability has been discharged
leave the payee with the same amount as it would have been
47
entitled to receive and to retain in the absence of any such
requirement to pay Tax in respect of the receipt.
19.5. If the payee receives a credit for or refund of any Taxation payable
by it or similar benefit by reason of any deduction or withholding
for or on account of Taxation described in Clause 19.3, it shall
reimburse to the payer such part of such additional amounts paid to
it pursuant to Clause 19.3 above as will leave it (after such
reimbursement) in no better and no worse position than it would have
been if the payer had not been required to make such deduction or
withholding. The payee shall use all reasonable endeavours to obtain
any available credit, refund or similar benefit and shall where
possible claim credit or relief from or against its corporate
profits or similar tax liability in respect of the amount of such
deduction or withholding as aforesaid in priority to any other
reliefs or credits available to it. The principles of this Clause
19.5 shall also apply to Clause 19.4.
19.6. If any deduction or withholding is made from any payment as
contemplated in Clause 19.3, the payer shall supply to the payee
such official receipt, if any, or other evidence of payment to the
relevant authority of the amount deducted or withheld and shall give
all reasonable assistance to enable the payee to receive a credit or
refund or similar benefit by reason of the deduction or withholding
as promptly as possible.
CERTAIN PAYMENTS TO INCLUDE IRRECOVERABLE VAT
19.7. Where this Agreement or any contract or agreement entered into in
performance of this Agreement to which any party to this Agreement
is a party (each a "Contracting Party") requires any other
Contracting Party to indemnify, compensate or reimburse another
Contracting Party for a cost borne by that other Contracting Party,
or to make a payment to another Contracting Party determined wholly
or partly by reference to a payment made or cost borne by that other
party, the amount payable shall be calculated by taking into account
the underlying cost or payment exclusive of VAT, if any, other than
irrecoverable VAT.
EFFECT OF COMPLETION
19.8. The provisions of the Agreement shall remain in full force and
effect notwithstanding Completion so far as they remain to be
observed or performed.
ENTIRE AGREEMENT
19.9. This Agreement contains the whole agreement between the parties
relating to the subject matter of this Agreement at the date hereof
to the exclusion of any and all prior proposals, representations,
agreements and negotiations relating thereto, whether written, oral
or implied between the parties or any of them and also to the
exclusion of any terms implied by law which may be excluded by
contract. THE PURCHASER ACKNOWLEDGES THAT THE OPERATIONS, INCLUDING
THE TARGET BUSINESSES (WITH THE ASSETS AND LIABILITIES THEREOF)
INSOFAR AS SITUATED IN OR CONNECTED WITH THE UNITED STATES OF
AMERICA ARE BEING SOLD ON AN "AS
48
IS, WHERE IS, WITH ALL FAULTS" BASIS, WITHOUT ANY WARRANTIES, EITHER
EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER OTHER THAN THOSE
SPECIFICALLY SET FORTH HEREIN. THE VENDORS SPECIFICALLY DISCLAIM ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND/OR SATISFACTORY QUALITY AND
ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, PROVIDED
THAT NOTHING IN THIS OR THE PRECEDING SENTENCE SHALL OR SHALL BE
DEEMED TO MODIFY THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS AGREEMENT RELATING TO THE OPERATIONS INCLUDING THE TARGET
BUSINESSES.
19.10. So far as is permitted by law and except in the case of fraud, the
parties agree and acknowledge that the only right and remedy which
shall be available to the Purchaser in connection with or arising
out of or related to any of the statements contained in the
Warranties shall be damages in contract for breach of this Agreement
and not rescission of this Agreement, nor damages in tort or under
statute (whether under the Misrepresentation Act 1967 or otherwise),
nor any other remedy. The parties agree that irreparable damage may
occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to seek an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of England, this being in
addition to any other remedy to which they are entitled at law or in
equity.
19.11. In Clauses 19.8, 19.9 and 19.10, "this Agreement" includes the
Disclosure Letter and all documents entered into pursuant to this
Agreement.
BULK SALES LAWS
19.12. The Purchaser acknowledges that the US Business Vendor will not
comply with the provision of any bulk sales or transfer laws of any
jurisdiction within the United States of America in connection with
the transactions contemplated by this Agreement. To the extent
permitted by applicable US laws the Purchaser (for itself and on
behalf of the relevant Local Purchaser) hereby waives compliance by
the US Business Vendor with the provisions of the bulk sales or
transfer laws of all applicable jurisdictions within the United
States of America.
MODIFICATIONS/WAIVERS
19.13. No modification or alteration of this Agreement shall be enforceable
except by an amendment in writing duly executed by all the parties
hereto or, in the case of a waiver, duly executed by the party
waiving compliance.
APPOINTMENT OF PRINCIPAL VENDOR AS AGENT
19.14. The Business Vendors and the Share Vendors hereby irrevocably
appoint the Principal Vendor as their agent for the purposes of
agreeing to any modification or alteration of or granting any waiver
or other consent under this Agreement or the agreements to be
delivered pursuant to it.
49
DELAY/FORBEARANCE
19.15. Except where a specific time limit is specified, no delay or
forbearance by any party in exercising any right or remedy provided
by law under or pursuant to this Agreement shall impair such right
or remedy or operate or be construed as a waiver or variation of it
or preclude its exercise at any subsequent time and no single or
partial exercise of any right or remedy shall preclude any other or
further exercise of it or the exercise of any other right or remedy.
The rights and remedies of the parties under or pursuant to this
Agreement are cumulative (provided that no party may make recovery
more than once in respect of the same loss).
NO RESCISSION
19.16. This Agreement may not be rescinded after Completion.
INTEREST
19.17. Where in terms of or pursuant to this Agreement payment is expressed
to fall to be paid on a particular day or date or would have been
paid on a particular date but for the parties not having agreed the
amount of the payment or because the parties have required to seek
the determination of a court, arbitrator, or expert interest shall
be paid at the Interest Rate by the party due to make the payment of
principal from the date upon which payment would have been made had
the payment been agreed or the amount of the required payment been
known at the earliest point possible under this Agreement until the
date actually paid. Such interest shall accrue both before and after
judgment.
ASSIGNMENT
19.18. Subject to Clause 19.19, this Agreement and the Tax Deed are
personal to the parties to it. Accordingly, subject to Clause 19.19
neither the Purchaser or the Local Purchasers nor the Vendors may,
without the prior written consent of the Principal Vendor (in the
case of assignment by the Purchaser or a Local Purchaser) or the
Purchaser (in the case of assignment by a Vendor), assign the
benefit of all or any of the obligations of any other party under
this Agreement or the Tax Deed.
19.19. Except as otherwise expressly provided in this Agreement, either the
Purchaser or the Local Purchaser or the Vendors may, without the
consent of the others, assign to an Associated Company the benefit
of all or any of the other parties' obligations under this Agreement
and the Tax Deed provided however that if the assignee ceases to be
an Associated Company of the Principal Vendor, or as the case may be
the Purchaser, then the Principal Vendor or as the case may be the
Purchaser shall procure that the assignee re-assigns the benefit of
the assigned obligations to an Associated Company or to itself (and
pending such re-assignment, the assigned rights shall be
unenforceable) and provided further that the maximum liability of
any party hereunder for breach of any obligation under this
Agreement or under any covenant or indemnity contained in or entered
into pursuant to this Agreement shall be limited to the liability
which would have arisen in the absence of any such assignment.
50
NOTICES
19.20. All notices, requests, demands or other communications under this
Agreement or the Tax Deed to or upon a party shall be given by
delivery or by being sent by first class recorded mail or air mail
(a) in the case of the Principal Vendor or any Vendor, to the
registered office of that party as set forth in this Agreement or by
facsimile transmission to the number specified below and (b) in the
case of the Purchaser, to the address set forth in the preamble to
this Agreement or by facsimile transmission to the number specified
below. Any such notice, request, demand or communication shall:
19.20.1. if delivered personally (which shall include delivery by
courier), be deemed to have been received at the time of
such delivery or if delivery is not on a Business Day on
the Business Day following such delivery;
19.20.2. if given by first class recorded mail or air mail, be
deemed to have been received when actually received; and
19.20.3. if given by facsimile transmission, be deemed to have been
received upon production of a transmission report showing
complete transmission of the relevant document to the
appropriate number (or if the time of such transmission is
not during normal working hours on a Business Day in the
recipient country, at the commencement of normal working
hours on the next Business Day in the recipient country).
Unless and until notified otherwise to the Purchaser, all notices to
a Business Vendor or a Share Vendor may be served on the Principal
Vendor.
The facsimile numbers of the parties are:
Principal Vendor: + 44 161 721 1886
Purchaser: +1 203 229 2613
Any party may by notice in writing to the other in accordance with
this Clause 19.20 specify a different or additional address or
facsimile number for the service of notices or copies of notices.
All notices or communications to a Vendor shall be clearly marked on
the exterior and on the first page "for the urgent attention of the
Company Secretary" and shall be copied to (i) Avecia Holdings plc,
Hexagon House, Blackley, Manchester, M9 8ZS, UK (facsimile number +
44 161 721 1886) and (ii) the Vendors' Solicitors (facsimile number
+ 44 20 7628 0027) clearly marked on the exterior and on the first
page "Urgent: Ref: A112/024/ARD/JPU". All notices or communications
to the Purchaser shall be clearly marked on the exterior and on the
first page "for the urgent attention of the Corporate Secretary" and
shall be copied to the Purchaser's Counsel (facsimile number +1 212
474 3700).
51
COUNTERPARTS
19.21. This Agreement may be executed in any number of counterparts each of
which shall be deemed an original, but all the counterparts shall
together constitute one and the same instrument.
ILLEGALITY/SEVERANCE
19.22. If any of this Agreement is held to be illegal or unenforceable
against a party in any jurisdiction (in whole or in part), then to
the greatest extent permitted by law, such illegality or
unenforceability shall not limit or affect:
19.22.1. the enforcement of any other part of this Agreement;
19.22.2. enforcement in any other jurisdiction; or
19.22.3. enforcement against any other party.
20. GOVERNING LAW/PROCESS AGENT
20.1. This Agreement and the Tax Deed shall be governed by and construed
in accordance with English law and the parties, expressly waiving
their rights to any other forum to which they may be entitled,
irrevocably agree that the courts of England are to have exclusive
jurisdiction to settle all disputes which may arise out of or in
connection with this Agreement or the Tax Deed provided that this
Clause 20.1 shall not preclude the enforcement of or giving effect
to any judgment of an English Court in any relevant foreign
jurisdiction or the enforcement of any Local Agreement in the courts
of the relevant jurisdiction in a manner consistent with Clause 6.6
and Clause 6.7.
20.2. Each of the Vendors irrevocably appoints the Principal Vendor and
the Purchaser irrevocably appoints (and shall procure that each
Local Purchaser not incorporated in England shall irrevocably
appoint) Slaughter and May of One Bunhill Row, London EC1Y 8YY as
its agent for the service of process in England in relation to any
matter arising out of this Agreement or the Tax Deed, service upon
whom shall be deemed completed whether or not forwarded to or
received by any Vendor or the Purchaser (as appropriate).
20.3. Each of the parties shall inform the other, in writing, of any
change in the address of its process agents within 28 days.
20.4. If such process agents cease to have an address in England, the
relevant appointor irrevocably agrees to appoint new process agents
acceptable to the other parties and to deliver within 14 days a copy
of a written acceptance of appointment by its new process agents.
20.5. Nothing contained in this Agreement or the Tax Deed shall affect the
right to serve process in any other manner permitted by law.
SCHEDULE 1 - VENDORS, SHARES AND TARGET BUSINESSES
PART 1 - DETAILS OF THE SHARE VENDORS AND SHARES SOLD
- ------------------------------ --------------------- ----------------------------------
NAME OF SHARE VENDOR COUNTRY OF SHARES SOLD
INCORPORATION
- ------------------------------ --------------------- ----------------------------------
Avecia Holdings B.V. Netherlands 100% of Avecia SA (Uruguay)
- ------------------------------ --------------------- ----------------------------------
Avecia Holdings B.V. and Netherlands and UK 100% of Avecia Protection &
Avecia UK Holdings Limited Hygiene NV (Belgium)
- ------------------------------ --------------------- ----------------------------------
Avecia Holdings B.V. Netherlands 100% of Avecia Protection &
Hygiene AB (Sweden)
- ------------------------------ --------------------- ----------------------------------
Avecia, Inc. USA 100% of Splashes, Inc. (USA)
- ------------------------------ --------------------- ----------------------------------
PART 2 - DETAILS OF THE BUSINESS VENDORS AND SUMMARY
DETAILS OF THE TARGET BUSINESSES
- ------------------------------ ------------------- ----------------------------------------
NAME OF BUSINESS VENDOR COUNTRY OF SUMMARY OF TARGET BUSINESS
INCORPORATION
- ------------------------------ ------------------- ----------------------------------------
Avecia Inc. USA Manufacturing, research and
development, sales and services,
named owner of IP, licences and
registrations
- ------------------------------ ------------------- ----------------------------------------
Avecia KK Japan Sales and services
- ------------------------------ ------------------- ----------------------------------------
Avecia Limited UK Manufacturing, research and
development, sales and services,
named owner of IP, licences and
registrations
- ------------------------------ ------------------- ----------------------------------------
Avecia (SCDR) SARL France Sales and services
- ------------------------------ ------------------- ----------------------------------------
Avecia GmbH Germany Sales and services
- ------------------------------ ------------------- ----------------------------------------
Avecia Spain SL Spain Sales and services
- ------------------------------ ------------------- ----------------------------------------
Avecia Asia Pacific Pte Ltd Singapore Sales and services
- ------------------------------ ------------------- ----------------------------------------
Avecia Comercial e Importada
Limitada Brazil Sales and services
- ------------------------------ ------------------- ----------------------------------------
DTBA Limited UK Legal title to property at Seal Sands
- ------------------------------ ------------------- ----------------------------------------
---------------------------------------------------
SCHEDULE 2 - Vendors, Shares and Target Businessees
---------------------------------------------------
53
SCHEDULE 2 - THE TARGET COMPANIEs
Name: Splashes, Inc.
Principal Place of Business: 235 Cherry Lane, New Castle, DE 19720, USA
Place of Incorporation: Delaware, USA
Date of Incorporation: 29th January 2004
Federal ID Number: 13-4273886
Officers: Simon Herriott (Director and President)
Brenda Heffelfinger (Treasurer and Secretary)
Issued Share Capital: 100 shares of common stock of US$0.01 each
Shareholders: Avecia, Inc
% ownership by Vendors' Group: 100%
- -----------------------------------------------------------------------------
Name: Avecia S.A.
Principal Place of Business: Plaza Independencia 831 Of. 808
(11100) Montevideo
Uruguay
Place of Incorporation: Uruguay
Registered Number: RUC 21.381501.0014
Directors: Carlos Humberto Canoura Pereira
Mark Alan Kenline
Issued Share Capital: 7,369,716 ordinary shares of $1,00 each
Shareholder: Avecia Holdings B.V.
% ownership by Vendors' Group: 100%
- -----------------------------------------------------------------------------
Name: Avecia Protection & Hygiene NV
Registered Address: 13B Avenue de Tervueren, 1040 Brussels,
Belgium
Place of Incorporation: Belgium
Date of Incorporation: 30th December 2003
Registered Number: 0862.451.150
------------------------------------------
SCHEDULE 2- The Target Companies
------------------------------------------
54
Directors: Mark James Nugent
Robertus Theodorus Hendrikus Vink
Issued Share Capital: (euro) 61,500
Shareholders: Avecia Holdings B.V.,
Avecia UK Holdings Limited
% ownership by Vendors' Group: 100%
- -----------------------------------------------------------------------------
Name: Avecia Protection & Hygiene AB
Registered Address: Box 437, 40126 Goteborg, Sweden
Place of Incorporation: Sweden
Date of Incorporation: 14th October 2003
Registered Number: 556648-6808
Officers: Mark James Nugent (Sole Director)
Peter George Whitehouse (Deputy Director)
Issued Share Capital: SEK 100,000
Shareholder: Avecia Holdings B.V.
% ownership by Vendors' Group: 100%
- -----------------------------------------------------------------------------
---------------------------------------
SCHEDULE 2- The Target Companies
---------------------------------------
55
SCHEDULE 3 - PURCHASE PRICE ADJUSTMENT
[Omitted]*
* This Schedule contains certain information relating to the calculation of a
working capital adjustment, an adjustment based on levels of cash and
indebtedness at completion and certain deferred consideration, which will
be furnished supplementally to the Commission upon request.
-----------------------------------------
Schedule 3 - Purchase Price Adjustment
-----------------------------------------
56
SCHEDULE 4 - Warranties
Specific references in this Schedule 4 to a "Business Vendor" shall be deemed
to refer to such Business Vendor only in connection with the Target Business
carried on by and the Business Assets and Business Liabilities of such
Business Vendor (and not to any unrelated business or activity or assets and
liabilities).
1. AUTHORITY AND CAPACITY
1.1. The Vendors and the Target Companies are companies duly incorporated
and validly existing under their respective laws of incorporation.
1.2. The Vendors have the legal right and full power and authority to
enter into and perform such of this Agreement and any other documents
to be entered into by the Vendors pursuant to this Agreement. This
Agreement and such other documents when executed will constitute
valid and binding obligations of the Vendors in accordance with their
respective terms.
1.3. The execution and delivery of, and the performance by the Vendors of
their obligations under, such of this Agreement and any other
documents to be executed by the Vendors pursuant to this Agreement
(or any Local Agreement) as are relevant to such Vendors will not:
1.3.1. violate, conflict with or result in a breach of any
provision of the constitutional documents or by-laws of
any such Vendor or Target Company or, assuming the
provisions of Clause 10 are effective to avoid any breach
of the Contracts, violate, conflict with or result in a
breach of or constitute a default under any material
instrument to which any Vendor or Target Company is a
party or by which they are bound;
1.3.2. result in a breach of any order, judgment or decree of or
undertaking to any court, governmental agency or
regulatory body to which any Vendor or Target Company is a
party or by which any Vendor or Target Company is bound;
or
1.3.3. violate, conflict with or result in any breach of any
statute, legally binding rule or governmental regulation
applicable to any Vendor.
1.4. The Business Vendors and the Target Companies have the legal right
and power and authority to carry on the Operations (or, in each case,
the relevant part thereof). This Warranty shall not be construed as
extending to Intellectual Property matters, which are the subject of
paragraph 8.4.
1.5. All corporate action required by the Vendors validly and duly to
authorise the execution and delivery of, and to exercise their
respective rights and perform their obligations under, this Agreement
has been duly taken and all such action in relation to the other
documents to be executed by the Vendors pursuant to this Agreement or
any of the Local Agreements will have been taken by Completion.
---------------------------------
SCHEDULE 4 - Warranties
---------------------------------
57
1.6. No consent, approval or authorisation of or declaration or filing
with any governmental authority is required to be made or obtained
by any Vendor as a condition of the execution or delivery of this
Agreement or the documents to be delivered under this Agreement or,
save as contemplated by Clause 3, the consummation of the
transactions contemplated hereby or thereby.
2. ACCURACY AND ADEQUACY OF INFORMATION
2.1. The Disclosure Letter (other than documents attached thereto or
listed therein as agreed disclosures) has been prepared by the
Principal Vendor in good faith and the Principal Vendor has not
knowingly included any matter which is untrue, inaccurate or
misleading or knowingly omitted from it any matter the omission of
which would make its contents materially misleading in the context
in which they appear.
2.2. The documents attached to or incorporated by reference in the
Disclosure Letter are accurate and (except where manifestly not the
case) complete copies (in that all the pages relating to the
Operations have been included) of the document which they purport to
be.
2.3. The information contained in Schedule 2 insofar as it relates to the
Target Companies is true and accurate.
3. ACCOUNTS AND RECORDS
3.1. 2002 ACCOUNTS AND 2003 ACCOUNTS:
3.1.1. were prepared in accordance with UK GAAP;
3.1.2. were prepared applying bases, policies and methods of
accounting consistent with these used in preparing the
audited consolidated accounts of the Vendors' Group for
the year to 31st December 2002;
3.1.3. were not, except as disclosed therein, affected by any
exceptional or extraordinary items; and
3.1.4. fairly present the state of affairs and results of the
Operations as at the end of and for the periods to which
they relate.
3.2. ACCOUNTING AND OTHER RECORDS
The books of account and statutory books of the Target Companies and
the Books and Records (i) are in all material respects up-to-date
and have been in all material respects maintained in accordance with
all applicable legal requirements on a proper and consistent basis
and (ii) in all material respects contain complete and accurate
records of all matters required to be dealt with in such books. All
such books and records are in the possession (or under the control)
of the relevant Target Company or Business Vendor and no notice or
allegation that any is materially incorrect or should be rectified
has been received.
58
3.3. CHANGES SINCE ACCOUNTS DATE
During the period between the Accounts Date and the date of this
Agreement (inclusive):
3.3.1. no Vendor or Target Company has taken any action that, if
taken after the date of this Agreement, would constitute a
breach of Clause 5.2 (other than Clause 5.2.5 or Clause
5.2.9 thereof);
3.3.2. the Operations have been carried on in the ordinary course
consistent with past practice, without any interruption or
alteration in their nature, scope or manner, and so as to
maintain the same as a going concern;
3.3.3. there has been no Material Adverse Change; and
3.3.4. so far as the Principal Vendor is aware, no provision,
reserve or accrual in the 2003 Accounts has proved to be
materially inadequate in light of subsequent
circumstances.
3.4. UNDISCLOSED LIABILITIES
The 2003 Accounts properly account in accordance with UK GAAP for
all liabilities or obligations of any nature which are known to the
Vendors' Group and which would require to be reflected on a
consolidated balance sheet as at the Accounts Date or in the notes
thereto prepared under UK GAAP. Since the Accounts Date, the
Operations have not incurred any liabilities or obligations other
than in the ordinary course of the Operations consistent with past
practice and not in violation of this Agreement.
4. LEGAL MATTERS
4.1. COMPLIANCE WITH LAWS
The Operations have since 30th June 1999 been carried on and are
being carried on in such manner so that there have been no material
breaches of applicable laws (including laws concerning the health
and safety at work of the Employees), legal duties, regulations and
by-laws in each country in which they are carried on. There is no
order, decree, decision or judgment of, nor (so far as the Principal
Vendor is aware) any investigation or inquiry by any court,
tribunal, arbitrator, governmental agency or regulatory body
outstanding or anticipated against any Business Vendor or Target
Company or any person for whose acts or defaults they may be
vicariously liable which has had or may result in a Material Adverse
Change, nor has any notice or other communication from any court,
tribunal, arbitrator, governmental agency or regulatory body been
received with respect to an alleged material actual or potential
violation or failure to comply with any such applicable law,
regulation or by-law.
4.2. LICENCES AND CONSENTS
All Permits material to carrying on the Operations as now carried on
have been validly obtained, are validly held by a Business Vendor or
a Target Company,
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59
are in full force and effect and have since 30th June 1999 been and
are being complied with in all material respects. So far as the
Principal Vendor is aware, there is no investigation, enquiry or
proceeding outstanding or anticipated which is likely to result in
the suspension, cancellation, modification or revocation of any such
Permits. So far as the Principal Vendor is aware, none of such
Permits is likely to be suspended, cancelled, refused, modified or
revoked (whether as a result of the entry into of this Agreement or
any Local Agreement, Completion or otherwise). This Warranty is not
to be construed as extending to Intellectual Property matters, which
are the subject of paragraph 8.4.
4.3. LITIGATION
None of the Target Companies or the Business Vendors is involved
whether as plaintiff or defendant or other party in any material
claim, legal action, proceeding suit, litigation, prosecution,
arbitration or dispute resolution (other than as plaintiff in the
collection of debts arising in the ordinary course of trading which
in aggregate do not exceed US$150,000 and in aggregate for any
particular debtor do not exceed US$10,000) and, so far as the
Principal Vendor is aware, no such claim, legal action, proceeding,
suit, litigation, prosecution, arbitration or dispute resolution is
threatened by or against the Target Companies or any Business Vendor
nor, so far as the Principal Vendor is aware, is there any fact or
circumstance likely to give rise to any such claim, legal action,
proceeding, suit, litigation, prosecution, arbitration or dispute
resolution. So far as the Principal Vendor is aware, none of the
Business Vendors or Target Companies is a party or subject to or in
default under any material judgment, order or decree applicable to
the conduct of the Operations.
4.4. Environment
4.4.1. The Target Companies and the Business Vendors are and at
all times since 30th June 1999 have been in material
compliance with all Environmental Laws and Environmental
Permits. The Target Companies and Business Vendors have
not ceased operations at, sold or transferred any real
property since 30th June 1999.
4.4.2. The Target Companies and the Business Vendors have not
since 30th June 1999 received any claims, orders or
notices, including notices of proceedings, relating to:
(i) the violation of or any liability under
Environmental Laws; or
(ii) the failure to obtain or materially comply with
any Environmental Permits; or
(iii) the investigation or remediation of polluted or
contaminated land or water,
and so far as the Principal Vendor is aware, there are no
circumstances arising since 30th June 1999 that could give
rise to any such claim, order or notice.
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60
4.4.3. There are included in the Data Room copies of all external
audits, assessments, surveys, reports or investigations
relating to the Environment and/or formal health and
safety surveys, reports or investigations (other than
exclusively in relation to third party tollers) (i) in the
possession of the Vendors' Group or (ii) carried out by or
on behalf of any member of the Vendors' Group in respect
of any of the Properties or otherwise relevant to the
Operations since 30th June 1999.
4.4.4. The Disclosure Letter contains a list setting out in
reasonable detail (i) all claims made by any member of the
Vendors' Group or, so far as the Principal Vendor is
aware, any third party under the Environmental Deed and
(ii) any matters that so far as the Principal Vendor is
aware were or should have been the subject of a claim by a
member of the Vendors' Group under clause 9.1 of the
Environmental Deed.
4.4.5. So far as the Principal Vendor is aware, and other than as
set out in the audits, assessments, surveys, reports or
investigations referred to in paragraph 4.4.3, the
Principal Vendor is not aware of any specific and material
contamination or pollution at any of the Properties. The
Business Vendors and the Target Companies have not since
30th June 1999 created or exacerbated any condition at any
location or sent waste to an off-site location in
connection with any of the Business Properties or the
Operations that, in any such case, would (so far as the
Principal Vendor is aware) require abatement or clean-up
under Environmental Laws or would (so far as the Principal
Vendor is aware) subject the Business Vendors or the
Target Companies to Liabilities (including third-party
claims) under Environmental Laws.
4.5. INSOLVENCY
4.5.1. No order has been made, petition presented, resolution
passed or meeting convened for the winding up (or other
process whereby the business is terminated and the assets
of the company concerned are distributed amongst the
creditors and/or shareholders or other contributories) of
any Target Company or any Vendor and there are no cases or
proceedings under any applicable insolvency,
reorganisation or similar laws in any jurisdiction
concerning any Target Company or Vendor and no events have
occurred which, under applicable laws, would justify any
such cases or proceedings.
4.5.2. No petition has been presented or other proceedings have
been commenced for an administration order to be made (or
any other order to be made by which, during the period it
is in force, the affairs, business and assets of the
company concerned, are managed by a person appointed for
the purpose by a Court, governmental agency or similar
body or by any creditor or group of creditors) in relation
to any Target Company or Vendor, nor has any such order
been made.
4.5.3. No receiver (including an administrative receiver),
liquidator, trustee, administrator, custodian or similar
official has been appointed in any jurisdiction in respect
of the whole or any part of the business or assets
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61
of any Target Company or Vendor and no step has been taken
for or with a view to the appointment of such a person.
4.5.4. Prior to and after giving effect to the transactions
contemplated by this Agreement, no Target Company or
Vendor (i) is insolvent or unable to pay its debts as they
fall due or (ii) has stopped or will stop paying its debts
as they fall due.
4.5.5. No distress, restraint, charging order, garnishee order,
execution or other process has been levied or applied for
in respect of any of the Assets.
4.5.6. No event has occurred causing, or which upon instruction
or notice by any third party may cause, any floating
charge created by any Vendor to crystallise over any
Shares or Asset or any charge created by it to become
enforceable over any of the Shares or Assets. No such
crystallisation has occurred nor is any such enforcement
in process.
5. TRADING AND CONTRACTUAL ARRANGEMENTS
5.1. ARRANGEMENTS WITH CONNECTED PERSONS
5.1.1. No member of the Vendors' Group is party to any contract
or arrangement with any current or former employee of any
Target Company or Business Vendor or any current or former
director of any Target Company, other than on normal
commercial terms in the ordinary course of trading
consistent with past practice.
5.1.2. With the exception of the agreements to be entered into at
Completion as provided for in this Agreement, there are no
existing contracts or arrangements which will remain in
force or effect after the Completion Date (a) between or
involving any Target Company and any member of the
Vendors' Group or (b) between or involving any Business
Vendor and any member of the Vendors' Group relating to
the Operations.
5.1.3. Without prejudice to paragraph 5.1.2, there are no
arrangements or contracts between any member of the
Vendors' Group and any Employee by which:
(a) any member of the Vendors' Group has offered
employment (conditionally or otherwise) to any
Employee to take effect on or after Completion;
or
(b) payments or benefits may be received by such
Employee after Completion dependent on the
discretion of any member of the Vendors' Group
(or any person acting on its behalf or
instructions).
5.2. CONTRACTS
5.2.1. There is included in the Data Room a complete copy of each
Contract and each contract or arrangement to which any
member of the Vendors'
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62
Group is a party that arises out of, or is entered into in
connection with, the Operations (other than agreements for
the supply of goods, services or utilities to the Vendors'
Group the benefit of which is to be provided to the
Purchaser or a Local Purchaser under the Ancillary
Agreements) which as at the date of this Agreement falls
into any of the following descriptions (the "Material
Contracts"):
(a) a joint venture, consortium, partnership or
similar arrangement (other than membership of a
trade association in relation to which a Vendor
or Target Company has no liability or obligation
except for the payment of annual subscription or
membership fees);
(b) a contract or arrangement meeting the relevant
materiality criteria as set forth below in terms
of which by virtue of the completion of the
transactions contemplated by this Agreement:
(i) any other party will be relieved of
any obligations or entitled to
exercise any right (including any
right of termination or pre-emption);
(ii) any Business Vendor or any Target
Company will be in default or loses
any benefit, right or licence which it
currently enjoys or incurs or
increases any liability;
(iii) in respect of contracts or
arrangements held by Target Companies,
the consent of the other party(ies) to
such contract or arrangement is
required due to the change in the
control of such Target Company or the
other party or parties to such
contract or arrangement is granted any
preferential rights to purchase any
Asset; or
(iv) in respect of contracts or
arrangements held by a Business Vendor
relating to the Operations, the
consent of the other party(ies) to
such contract or arrangement is
required to transfer the benefit of
such contract or arrangement to the
Purchaser or a Local Purchaser (as
appropriate) or the other party or
parties to such contract or
arrangement is granted any
preferential rights to purchase any
Asset;
(c) a material contract or arrangement entered into
otherwise than by way of bargain at arm's length
and in the ordinary course of business;
(d) a contract or arrangement meeting the relevant
materiality criteria as set forth below (other
than leases of real property described in the
Property List) which cannot be terminated by the
relevant Business Vendor or Target Company at
any time on three months' notice or less without
giving rise to a breach of contract or liability
to pay compensation;
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SCHEDULE 4 - Warranties
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63
(e) a contract or arrangement which materially
restricts the freedom of the relevant Business
Vendor or Target Company to carry on its
business in any part of the world in such manner
as it thinks fit; or
(f) a finance lease or hire purchase agreement or
similar arrangement with any person under which
(i) a Business Vendor or Target Company is a
lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal
property owned by any person or (ii) a Business
Vendor or Target Company is a lessor or
sublessor of, or makes available for use by any
person any machinery, equipment, vehicle or
other tangible personal property owned or leased
by the relevant Business Vendor or Target
Company, in any such case which has an aggregate
future liability or receivable (as the case may
be) in excess of US$25,000;
(g) a contract or arrangement granting an
Encumbrance upon any Asset other than any
Permitted Encumbrance or Encumbrance arising by
operation of law or in the ordinary course of
trading or which will be released at Completion;
(h) a currency exchange, interest rate exchange,
commodity exchange or similar contract or
arrangement;
(i) a guarantee, indemnity or suretyship involving
third parties or other arrangement (including
any so-called take-or-pay or keepwell agreement)
by which (i) a Business Vendor or Target Company
is or may be obliged to pay, purchase or provide
funds in excess of US$25,000 (whether by the
advance of money, the purchase of or
subscription for shares or other securities, the
purchase of assets or services or otherwise) as
a consequence of the default of any other person
or (ii) any other person is or may be obliged to
pay, purchase or provide funds in excess of
US$25,000 (whether by the advance of money, the
purchase of or subscription for shares or other
securities, the purchase of assets or services
or otherwise) as a consequence of the default of
a Business Vendor or Target Company;
(j) a lease, sublease or similar contract or
arrangement with any person under which any
Business Vendor or Target Company is a lessor or
sublessor of, or makes available for use to any
person, or is a lessee or sublessee of, or is in
possession or occupancy of, (i) any Property or
(ii) any portion of any premises otherwise
occupied by any Business Vendor or Target
Company;
(k) (i) a continuing contract or arrangement for the
future purchase of materials, supplies or
equipment (other than purchase orders for
inventory in the ordinary course), (ii) a
management, service, tolling, consulting or
other similar contract or arrangement or (iii)
an advertising agreement or arrangement, in any
such case
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64
where any Business Vendor or Target Company has
an aggregate future liability to any person in
excess of US$100,000 or extending for a term of
more than six months from the date of this
Agreement (unless terminable without payment or
penalty upon no more than three months' notice);
(l) a contract or arrangement (including a purchase
order), involving the aggregate future payment
by any Business Vendor or Target Company of more
than US$100,000;
(m) a contract or arrangement providing for the
services of any dealer, distributor, sales
representative or similar representative
involving the payment or receipt over the life
of such contract or arrangement in excess of
US$100,000 by any Business Vendor or Target
Company;
(n) an employment agreement or employment contract
(i) with any Senior Employee or (ii) not
terminable by a Business Vendor or Target
Company by notice of six months or less or (iii)
not terminable by a Business Vendor or Target
Company for a cost of $10,000 or less (other
than (a) salary and benefits throughout the
relevant notice period (or payment in lieu
thereof), (b) payments under generally
applicable severance plans disclosed to the
Purchaser and (c) compensation payable under
statute or any other non-voluntary legal
requirement);
(o) a collective bargaining agreement or other
contract or arrangement with any labour
organisation, union or association;
(p) a licence or agreement relating to Intellectual
Property, Regulatory Data or Know-how entered
into by any of the Target Companies or Business
Vendors in relation to the Operations which are
material to the Operations;
(q) any outstanding offer made by a Business Vendor
or a Target Company which, if accepted, would
result in a contract or arrangement as described
in paragraphs (a) to (p) above.
For the purposes of sub-paragraphs (b) and (d) above a
contract, agreement or arrangement meets the relevant
materiality criteria if:
(i) the current annual turnover relating to products
which are the subject of such contract,
agreement or arrangement is in excess of 2% of
the turnover of the Operations for the year
ended on the Accounts Date; or
(ii) the contract, agreement or arrangement is of
fundamental importance to the Operations, taken
as a whole.
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65
5.3. MATERIAL CONTRACTS
All the Material Contracts are valid and binding obligations of each
Business Vendor and/or Target Company party thereto and, so far as
the Principal Vendor is aware, the counterparties thereto. No notice
of termination or of intention to terminate has been received in
respect thereof nor are there any grounds for termination by of any
counterparties thereto or, so far as the Principal Vendor is aware,
by any Business Vendor or Target Company, in each case prior to
their stated expiry date. None of the Business Vendors or Target
Companies is in breach of any of the material terms of any of the
Material Contracts and, so far as the Principal Vendor is aware,
neither is any of the counterparties.
5.4. MATERIAL SUPPLIERS
The Disclosure Letter sets out details of any single supplier from
whom the Operations purchased during 2003 goods or services for
which the aggregate purchase price exceeded 5% of the aggregate
purchase price of the total amount of goods and services purchased
by the Operations during 2003. Since the Accounts Date there has not
been (i) any material adverse change in the business relationship of
the Operations with any such supplier or (ii) any change in any
material term (including credit terms) of the supply agreements or
related arrangements with any such supplier.
5.5. MATERIAL CUSTOMERS
The Disclosure Letter sets out details of (i) the eight most
significant customers (by sales) of the Protection and Hygiene
business of the Operations during 2003 and the amount of sales
attributable to each such customer during 2003 and (ii) the six most
significant customers (by sales) of the Pool and Spa business of the
operations during 2003 and the amount of sales attributable to each
such customer during 2003. Since the Accounts Date, there has not
been (i) any material adverse change in the business relationship of
the Operations with any such customer or (ii) any change in any
material terms (including credit terms) of the sales agreements or
related agreements with any such customer. Since 30th June 1999, the
Business Vendors and the Target Companies have not received any
written or oral customer complaint concerning the products and
services of the Operations, nor have they had any such products
returned by a purchaser thereof (other than complaints and returns
made in the ordinary course of trading that, individually or in the
aggregate, have not resulted in a Material Adverse Change).
6. EMPLOYEES
6.1. EMPLOYMENT AND TERMS OF EMPLOYMENT
6.1.1. Each individual referred to in the Employee List was
employed by either the Business Vendor or a Target Company
at 18th February 2004 and was engaged primarily in the
Operations and there were on that date no other
individuals who were so engaged.
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66
6.1.2. Particulars of the terms of employment of each Senior
Employee who is not a party to a written contract of
employment are attached to or incorporated by reference
into the Disclosure Letter. The Data Room includes details
of the standard terms of employment generally applicable
to the other grades of employee.
6.1.3. No Senior Employee has given to any member of the Vendors'
Group nor has received from any member of the Vendors'
Group, notice of termination of his or her employment.
6.1.4. No person who is not an Employee has a right to return to
work or any right to be re-instated or re-employed by any
Target Company or Business Vendor in connection with the
Operations whether under statute or otherwise.
6.1.5. The terms of all current recognition, procedural,
collective or other agreements between any Business Vendor
or Target Company and any trade union or other body
representing the Employees or any of them have been
included in the Data Room.
6.1.6. The terms of all Employee Benefit Arrangements have been
included in the Data Room and a list of all Employee
Benefit Arrangements and Equity Schemes is set out in the
Disclosure Letter.
6.1.7. Except as provided under the terms of the Employee Benefit
Arrangements, neither the Business Vendors nor the Target
Companies have entered into any arrangement or agreement
imposing an obligation on that company to provide to the
Employees or any of them at any future date any share
incentive, share option, profit-related pay, profit share
bonus or other similar incentive schemes or any enhanced
severance payments.
6.1.8. In the last twelve months prior to the date of this
Agreement, no payment has been made or promised to be made
or benefits given or promised to be given by a Vendor as
consideration for the variation of any contract of
employment of any Employee or Employees, which are
material in the aggregate.
6.1.9. Since the Accounts Date, no change has been made in the
emoluments or other terms of engagement of any Employee or
Employees, which are material in the aggregate.
6.1.10. Other than amounts for which the Vendors' Group will be
solely liable or which will be provided for in the
Completion Working Capital Statement, paragraph 6.1.10 of
the Disclosure Letter sets out all amounts now due to or
in respect of any Employee or Employees (other than salary
for the month current at the date of this Agreement and
any normal out of pocket expenses incurred by such
Employee) which are material in the aggregate and are in
arrears and unpaid.
6.1.11. Other than amounts for which the Vendors' Group will be
solely liable or which will be provided for in the
Completion Working Capital
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67
Statement, paragraph 6.1.11 of the Disclosure Letter sets
out, or in relation to jurisdictions outside the United
States, refers to all written or unwritten contracts of
employment (including any severance or termination
agreement, plan or scheme) with an Employee which cannot
be terminated without payment in lieu of notice, damages
or compensation (other than that payable under applicable
law or pursuant to paragraph 1.5 of Part 1 of Schedule 7)
by giving at any time three months' notice or less in
writing.
6.1.12. All current consultancy agreements with any Vendor in
connection with the Operations have been included in the
Data Room.
6.1.13. Details of all applicable redundancy policies or practices
relevant to the Employees, whether or not contractually
binding and all arrangements or practices regarding
redundancy payments whether contractual, customary or
discretionary, above the minimum required by applicable
law have been included in the Data Room.
6.2. LIABILITIES TO AND FOR EMPLOYEES
6.2.1. No material liability (that has not been discharged) has
been incurred by any Business Vendor or any Target Company
for breach or termination of any contract of employment
with any Employee including, but not limited to, any
redundancy payments or compensation or damages for
dismissal or breach of contract.
6.2.2. Other than amounts for which the Vendors' Group will be
solely liable or which will be provided for in the
Completion Working Capital Statement, paragraph 6.2.2 of
the Disclosure Letter sets out all instances and
arrangements, other than those required by applicable law
or, with respect to actions described in this paragraph
6.2.2 that occur after the date of this Agreement, in the
ordinary course of business consistent with past practice,
whereby any Business Vendor or any Target Company has
agreed to make any non-contractual payment or provide any
non-contractual benefit to any Employee or any dependent
of any such Employee in connection with the actual or
proposed termination or suspension of employment or
variation of any employment contract of any such Employee.
6.3. CHANGE OF CONTROL
Other than amounts which will be provided for in the Completion
Working Capital Statement, paragraph 6.3 of the Disclosure Letter
sets out all arrangements under which any Employee will become
entitled by virtue of his or her contract of employment or otherwise
to any enhancement in or improvement to his or her remuneration,
severance or other benefits or terms and conditions of employment
(including any acceleration of the time of payment or vesting of any
remuneration or benefits) or any remuneration or benefits the value
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement by reason of the signing of this
Agreement and/or Completion.
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68
6.4. EMPLOYMENT DISPUTES ETC.
6.4.1. There is not, and during the six months before the date of
this Agreement, there has not been any dispute between any
Vendor and any trade union or other organisation formed
for a similar purpose or any industrial action affecting
any Business Vendor, or the Target Companies.
6.4.2. The Vendors and the Target Companies have not received any
threat of industrial action falling under paragraph 6.4.1
above.
6.4.3. So far as the Principal Vendor is aware, there are no
disputes with any trade union, works council or any other
employee representative representing all or any Employees
in relation to their employment in the operations or any
circumstances likely to give rise to any action as
described in paragraph 6.4.1 above.
6.4.4. No Employee is represented by any labour union with
respect to such Employee's employment by a Vendor.
6.4.5. Since 30th June 1999, none of the Business Vendors or
Target Companies has experienced any union organisation
attempts or work stoppages due to labour disagreements. No
grievance or arbitration proceeding arising out of a
collective bargaining or other labour union contract or
arrangement is pending or, so far as the Principal Vendor
is aware, threatened against any of the Business Vendors
or Target Companies.
6.4.6. During the period of six months before the date of this
Agreement, none of the Business Vendors or Target
Companies has given notice of redundancies to any
governmental authority or started consultations in respect
of redundancies with appropriate employee representatives
under any requirement of applicable law.
6.4.7. There are no outstanding applications for trade union
recognition or de-recognition relating to any of the
Employees and there is no staff association, works council
or similar employee body or employee representatives
relating to any of the Employees.
6.4.8. There are no litigation, arbitration, mediation,
administrative or criminal proceedings pending or
threatened by any Employee or third party in respect of
any accident or injury which concerns or may effect the
employment of any Employee.
6.5. UK/US/OTHER EMPLOYMENT BENEFIT ARRANGEMENTS
6.5.1. Each Employee Benefit Arrangement has been administered in
compliance in all material respects with its terms and the
terms of all collective bargaining agreements or other
contracts or arrangements with any labour organisation,
union or association, and all contributions have been made
in accordance with its terms and with applicable law. All
pension plans required to have been approved by any
governmental
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69
entity have been so approved or timely submitted for
approval; no such approval has been revoked (nor has
revocation been threatened) and no event has occurred
since the date of the most recent approval or application
therefor that would affect any such approval or increase
the costs relating thereto. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby (alone or in combination with any
other event) do not and will not require the funding
(whether through a grantor trust or otherwise) of, or
increase the cost of, any Employee Benefit Arrangement.
There are no unfunded Employee Benefit Arrangements
providing for benefits payable on retirement.
6.5.2. Other than Employee Benefit Arrangements that are Avecia's
Benefit Plans and any schemes providing pensions or
benefits to Employees which are administered by a
governmental authority and to which the relevant member of
the Vendors' Group's or a Target Company's only financial
obligation is to make specified contributions (an
"Independent Scheme") (together with Avecia's Benefit
Plans, the "Operations' Plans") the benefit or pensions
schemes set out or referred to at paragraph 6.5.2 of the
Disclosure Letter are the only schemes to which the
Business Vendor in relation to the Target Business and/or
the Target Companies make, are liable to make or have
agreed to make payments for providing retirement, death,
disability, medical or life assurance benefits in respect
of Employees. No proposal has been announced to establish
any other scheme for providing benefits in respect of any
Employee.
6.5.3. There are attached to the Disclosure Letter or included in
the Data Room copies of all material documents presently
governing the Operations' Plans.
6.5.4. So far as the Principal Vendor is aware, there is no
dispute about the benefits payable under the Operations'
Plans or the Employees' membership in such plans in
respect of any Employees.
6.5.5. Each member of the Vendors' Group in respect of the Avecia
UK Scheme (as defined in Part 2 of Schedule 8) holds or is
named in an appropriate contracting-out certificate
(within the meaning of the Pension Schemes Act 1993) in
respect of those of its Employees who are members of the
Avecia UK Scheme.
6.5.6. Except with respect to incentive compensation Employee
Benefit Arrangements for which the Vendors' Group will be
solely liable, the performance targets established for
2004 in connection with those incentive compensation
Employee Benefit Arrangements which are based on the
results of the Operations (as opposed to those of the
Vendors' Group) are set out in paragraph 6.5.6 of the
Disclosure Letter.
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7. TAXATION
7.1. RETURNS AND INFORMATION
All registrations, returns and computations which are or have been
required to be filed, made or given on or before the date of this
Agreement by each Target Company or any consolidated, combined,
affiliated, unitary or similar group that includes a Target Company
(to the extent it relates to any Target Company) for any Taxation
purpose (i) have been properly made or given within the requisite
periods and (ii) so far as the Principal Vendor is aware, are not
and are not likely to be the subject of any material dispute with
any Tax Authority. All such registrations, returns and computations
reflect in all material respects the liability for Taxes and all
other information required to be included in therein. All Taxes
shown as due and payable on such Tax Returns have been timely paid
in full or will be timely paid in full by the due date thereof so
far as the same require to be paid on or before the relevant
Completion Date for the relevant Target Company. To the extent that
the following Warranties 7.1.1, 7.1.2 and 7.1.3 below relate to
Business Assets and to the extent only that a breach of the
following Warranties 7.1.1, 7.1.2 and 7.1.3 below may result in the
imposition of an Encumbrance on any of the Business Assets or impose
a Liability on the Purchaser.
7.1.1 all registrations, returns and computations which are or
have been required to be filed, made or given on or before
the date of this Agreement have been properly made or
given within the requisite periods, and so far as the
Principal Vendor is aware, are not and are not likely to
be the subject of any material dispute with any Tax
Authority;
7.1.2 all such registrations, returns and computations reflect
in all material respects the liability for Taxes and all
other information required to be included therein; and
7.1.3 all Taxes shown are due and payable on such Tax Returns
have been timely paid in full or will be timely paid in
full by the date thereof.
7.2. TAXATION ARRANGEMENTS
The Disclosure Letter sets out particulars of any agreement,
arrangement or election relating to the Operations between any
Target Company or Vendor and any Tax Authority pursuant to which the
relevant Target Company or Vendor is authorised not to comply with
what but for such agreement, arrangement or election would be its
statutory obligations and no Target Company or Vendor has taken any
action which, so far as the Principal Vendor is aware, has had or
will have, nor, so far as the Principal Vendor is aware, will
anything contemplated by this Agreement have, the effect of
altering, prejudicing or in any way disturbing any such agreement,
arrangements or election.
7.3. COMPANY RESIDENCE
Each Target Company has been resident for tax purposes in the
country of its incorporation (save where stated in the Disclosure
Letter with express reference
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to this warranty) and has not been resident anywhere else at any
time since its incorporation and will be so resident at Completion
and so far as the Principal Vendor is aware the country of
incorporation is the only country whose Tax Authority has sought (in
writing) to charge Tax on the worldwide profits and gains of the
Target Company and no Target Company has ever paid Tax on income,
profit or gains to any Tax Authority in any other country. For the
avoidance of doubt, references to residence in this Warranty shall
be construed as references to residence as determined by the local
law of the jurisdiction or jurisdictions concerned and not by
reference to the provisions of any relevant double taxation
agreement or convention.
7.4. VALUE ADDED TAX ("VAT") AND TURNOVER TAX
7.4.1. Each Target Company is registered for VAT and is a taxable
person for the purposes of the relevant VAT legislation
and has complied in all respects with such legislation and
all regulations made or notices issued thereunder and has
maintained full, complete, correct, and up to date
records, invoices and other documents (as the case may be)
appropriate or requisite for the purposes thereof.
7.4.2. None of the Target Companies has been required by
appropriate fiscal authorities to give security under the
relevant VAT legislation.
7.4.3. To the extent that any liabilities of the Target
Businesses pass to the Purchaser (or Local Purchaser)
under any country's legislation relating to a transfer of
a business, the Warranties in 7.4.1 and 7.4.2 above apply.
7.4.4. None of the Business Assets is a "chargeable asset" for
the purposes of Section 44 of the Value Added Tax 1994
relating to the United Kingdom or equivalent provisions in
other relevant countries.
7.4.5. None of the Target Companies has waived the exemption in
respect of any exempted activity where the relevant VAT
legislation allows such a waiver.
7.5. DEDUCTION FROM PAYMENTS
So far as the Principal Vendor is aware, each Target Company has
complied in all material respects with all statutory provisions
relating to Taxation which require the deduction of Taxation from
any payment made by it, and has properly accounted for any such
Taxation which ought to have been accounted for.
7.6. STAMP, TRANSFER AND REGISTRATION DUTIES
All documents to which any Target Company is a party, or which form
part of the title to any asset owned or possessed by any Target
Company, or which any Target Company or the Purchaser or any Local
Purchaser may need to enforce or produce in evidence in any court of
law have (where required) been duly stamped and any stamp
registration and transfer duties relating to the same have been duly
paid.
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7.7. TAX EQUALISATION PAYMENTS
7.7.1. No Target Company is liable to make a payment for the
utilisation surrender or other transfer of any Taxation
Benefit ("Taxation Equalisation Payment"), nor is any
Taxation Equalisation Payment received by any Target
Company liable to be refunded.
7.7.2. No Target Company is under any obligation to surrender or
otherwise transfer any Relief (as defined in the Tax
Deed). 7.8. Ownership of United States Real Property
Interests
For United States federal income tax purposes, Avecia Inc.
is the owner of all Business Properties that are United
States Real Property Interests for purposes of Section 897
of the Internal Revenue Code of 1986, as amended.
7.9. TAX ON DISPOSAL OF ASSETS
On a disposal of all its assets by any Target Company for:
7.9.1 in the case of each asset owned by that Target Company at
the Accounts Date, a consideration equal to the value
attributed to that asset in preparing the 2003 Accounts;
or
7.9.2 in the case of each asset acquired since the Accounts
Date, a consideration equal to the consideration given for
the acquisition,
then either:
in respect of any asset falling within (A) above, the liability to
Tax (if any) which would be incurred by that Target Company in
respect of that asset would not exceed the amount taken into account
in respect of that asset in computing the maximum liability to
deferred Taxation as stated in the 2003 Accounts; or in respect of
any asset within (B) above, no Tax liability would be incurred by
that Target Company in respect of that asset.
7.10. INTRA-GROUP TRANSACTIONS
No Target Company has, at any time within the last six years,
acquired any asset from any other company which was, at the time of
the acquisition, a member of the same group of companies as that
company for the purposes of any Tax.
7.11. NON-ARM'S LENGTH TRANSACTIONS
As far as the Principal Vendor is aware, no Target Company is a party
to any transaction or arrangement, under which it may be required to
pay for any asset or services or facilities of any kind an amount
which is in excess of the market value of that asset or services or
facilities or will receive any such payment for any asset or
services or facilities of any kind that it has supplied or provided
or is liable to supply.
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7.12. CAPITAL GOODS SCHEME
None of the Business Assets are or have been subject to the Capital
Goods Adjustment Rules (in Part XV of The Value Added Tax
Regulations 1995), or any equivalent rule in any jurisdiction.
7.13. OPTION TO ELECT TO TAX
No election (or application to elect) has been made under paragraph
2 of Schedule 10 the UK Value Added Tax Act 1994 in relation to any
of the Business Properties or any part of any of them.
7.14. WASTING ASSETS
None of the Business Assets is a wasting asset within section 44 of
the Taxation of Chargeable Gains Act 1992 which does not qualify in
full for capital allowances.
7.15. NO TRANSFER OF UK TARGET BUSINESS
In connection with the sale of the Target Business of the UK
Business Vendor, such Target Business has not within the six months
prior to the date of this Agreement been subject to any transfer.
8. ASSETS AND LIABILITIES
8.1. TITLE
8.1.1. All the Assets (other than (i) Business Intellectual
Property, the Intellectual Property owned by the Target
Companies, Biocides Exclusive Data and Assigned Know-how
and the Properties (title to which is addressed in
paragraphs 8.3.1, 8.3.2 and 8.4.6 of this Schedule 4),
(ii) assets held under hire purchase arrangements or
finance leases on normal commercial terms and (iii) assets
subject to provisions regarding retention of title pending
payment of sums to the supplier) which are included as
assets in the 2003 Accounts were at the Accounts Date the
absolute property and in the possession or under the
control of a Target Company or Business Vendor. Save for
those subsequently disposed of or realised in the ordinary
course of trading on arm's length commercial terms
consistent with past practice, all such Assets and all
Assets (other than (i) Business Intellectual Property, the
Intellectual Property owned by the Target Companies,
Biocides Exclusive Data and Assigned Know-how and the
Properties (title to which is addressed in paragraphs
8.3.1, 8.3.2 and 8.4.6 of this Schedule 4), (ii) assets
held under hire purchase arrangements or finance leases on
normal commercial terms and (iii) assets subject to
provisions regarding retention of title pending payment of
sums to the supplier) which have subsequently been
acquired or arisen are the absolute property and in the
possession or under the control of a Target Company or
Business Vendor. None is the subject of any Encumbrance
(excepting only (a) liens arising by operation of law in
the ordinary course of trading, (b) Encumbrances of the
type described in (ii) and (iii) above and (c)
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Encumbrances which will be released before or with effect
from Completion).
8.1.2. There are no specific items of non-routine maintenance,
renewal or replacement that are required to correct any
material defect (ordinary wear and tear excepted) in any
Asset having an individual replacement value exceeding
US$150,000 (other than Stock, the Business IP, the
Intellectual Property owned by the Target Companies or the
Properties) which have not been carried out in the
ordinary course. All material Assets (other than Stock,
Business IP, Intellectual Property owned by the Target
Companies or the Properties) (the status if which is
addressed in paragraphs 8.3, 8.4 and 16 of this Schedule
4)) have since 1st January 2003 been maintained in all
material respects in accordance with the past practice of
the Operations and no repairs, replacements or regularly
scheduled maintenance relating to any such Assets has been
deferred otherwise than in the ordinary course of
business, consistent with the past practice of the
Operations.
8.1.3. Each of the Share Vendors is the sole and beneficial owner
of the Shares set forth opposite its name in Schedule 1.
The Share Vendors are entitled to sell and transfer to the
Purchaser or the Local Purchasers (as appropriate) the
full legal and beneficial ownership of the Shares on the
terms of this Agreement or any Local Agreement. Unless
otherwise specified in Schedule 2, the Shares comprise the
whole of the allotted and issued share capital of the
Target Companies, have been properly and validly allotted
and issued and are each fully paid.
8.1.4. No person has the right (whether exercisable now or in the
future and whether contingent or not) to call for any
allotment, conversion, issue, sale or transfer of any
share or loan capital or any other security giving rise to
a right over the capital of any Target Company under any
option, instrument or other agreement (including
conversion rights and rights of pre-emption) and there are
no Encumbrances over such capital or arrangements or
obligations to create any such Encumbrances.
8.2. INSURANCE
8.2.1. Summary particulars of the material insurances of the
Business Vendors and the Target Companies are contained in
the Data Room.
8.2.2. In respect of all such insurances:
(a) all premiums have been duly paid to date;
(b) so far as the Principal Vendor is aware no act,
omission, misrepresentation or non-disclosure by
or on behalf of any of the Business Vendors or
Target Companies has occurred which makes any of
such insurance policies voidable.
8.2.3. There are included in the Data Room or attached to the
Disclosure Letter copies of all risk assessment reports
received by the Vendors'
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75
Group in relation to the Operations from its insurance
brokers in the two years preceding the date of this
Agreement.
8.2.4. There is included in the Data Room a list prepared by
Marsh of all claims made or notified to Marsh by a Target
Company or a Business Vendor (to the extent it relates to
the Operations) since 30th June 1999 and so far as the
Principal Vendor is aware, such list is materially
complete. Marsh is the only insurance broker of the
Vendors' Group in respect of the Operations.
8.3. PROPERTIES
8.3.1. The Properties set out in the Property List, together with
all those properties made available to members of the
Purchaser's Group under the Ancillary Agreements, are the
only premises and land owned or occupied by the Business
Vendors in connection with the Operations and include the
only premises and land owned or occupied by or in which
the Target Companies has an interest as at the date of
this Agreement.
8.3.2. The details relating to those of the Properties which are
referred to in the Property List are in all material
respects true, complete and accurate and not misleading
and the Property Owner has under its control all of the
title deeds and documents in relation to the Properties
referred to in Part 1 and Part 3 of the Property List
listed in the Disclosure Letter which documents are
originals or properly examined extracts unless otherwise
stated.
8.3.3. The Business Vendors and the Target Companies have or will
have at the Completion Date exclusive possession and
occupation of all parts of the Properties to the extent
necessary for the carrying out of the Operations and none
of the Properties are subject to any lease, sublease,
tenancy, licence to occupy or agreement to grant any of
them.
8.3.4. Each of the Business Properties is owned (freehold or
leasehold as indicated) by the Business Vendor named as
its owner in the Property List. Each of the Target Company
Properties is owned (freehold or leasehold as indicated)
by the Target Company named as its owner in the Property
List.
8.3.5. The Property List sets out the address and description of
each parcel of Freehold Property. With respect to each
parcel of Freehold Property:
(a) the Property Owner is solely legally and
beneficially entitled to the Properties and has
good and indefeasible fee title, free and clear
of all Encumbrances except for Permitted
Encumbrances, to the New Castle Delaware
premises referred to in Part 3 of the Property
List; and
(b) there are no outstanding options, rights of
first offer or rights of first refusal to
purchase such Freehold Property or any portion
thereof or interest therein.
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8.3.6. The Property List sets out the addresses of each parcel of
Leasehold Property. With respect to each Leasehold
Property:
(a) the Property Owner is solely legally and
beneficially entitled to the Leasehold Property,
each lease of premises referred to in Part 3 of
the Property List to which a Property Owner is a
party is valid and in full force and effect and
no collateral assurances undertakings or
concessions have been made or given; and
(b) so far as the Principal Vendor is aware the
Property Owner has not received notice from the
landlord of any lease of any breach or default
under the lease of the Leasehold Property.
8.3.7. So far as the Principal Vendor is aware, all buildings and
structures, including the roof, foundations, load-bearing
walls and other structural elements thereof are in a
condition and state of repair which is sufficient for the
operation of the Operations.
8.3.8. In relation to the Properties set out in Part 3 of the
Property List there is no condemnation or expropriation,
pending or threatened, affecting any parcel of Property or
any portion thereof or interest therein.
8.3.9. All material certificates of occupancy, permits, licenses,
franchises, approvals and authorisations, including UK
planning legislation, of all governmental authorities,
board of fire underwriters, association or any other
entity having jurisdiction over the Properties, which are
required to use or occupy the Properties or operate the
Property Owner's business as currently conducted thereon,
have been issued and are in full force and effect.
8.3.10. As far as the Principal Vendor is aware none of the
Vendors or the Property Owners have received a notice that
the current use and occupancy of the Freehold Properties
and the operation of the Property Owner's business as
currently conducted thereon violates any easement,
covenant, condition, restriction or similar provision in
any instrument of record or other unrecorded agreement
affecting such Freehold Property.
8.3.11. In respect of the Specialities East Plant Huddersfield so
far as the Principal Vendor is aware the Property is in a
safe condition in accordance with good practice and
working methods generally applicable in the chemicals
industry and in accordance with all relevant statutory
codes of practice.
8.4. INTELLECTUAL PROPERTY
8.4.1. Details of all the Business IP and the Intellectual
Property owned by Target Companies which is registered or
the subject of any applications for registration at any
national or supranational patent, trade mark or other
intellectual property office (the "REGISTERED IP") and all
material trade names and logos which either form part of
Business IP or Intellectual Property owned by a Target
Company ("UNREGISTERED IP")
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are set out in the Intellectual Property List. Up to the
dates at which this Warranty is given, all application,
renewal or other official fees which are due in respect of
the Registered IP have been paid and all steps required
for the maintenance of any Registered IP have been taken.
So far as the Principal Vendor is aware, no Registered IP
or Unregistered IP or Regulatory Data, Know-how or
material unregistered IP, in each case, owned by or
licensed to any Business Vendor relating to the Operations
or owned by or licensed to any Target Company is the
subject of any current litigation or opposition,
revocation, cancellation or administrative proceedings and
no such litigation or proceedings has been threatened in
writing.
8.4.2. So far as the Principal Vendor is aware, no third party is
infringing or making unauthorised use of, or has in the 12
months prior to Completion infringed or made unauthorised
use of, any Business IP or any Intellectual Property,
Know-how or Regulatory Data owned by or licensed to any
Target Company or owned by or licensed to any Business
Vendor in relation to the Operations.
8.4.3. There are no pending claims or litigation by any third
party in which it is alleged that the conduct or
activities of any of the Operations infringes or makes
unauthorised use of, or has since 30th June 1999 infringed
or made unauthorised use of, any of the Intellectual
Property or Know-how of such third party and no such
claims or litigation have been threatened in writing. So
far as the Principal Vendor is aware, the conduct and
activities of the Operations do not infringe or make
unauthorised use of, and have not since 30th June 1999
infringed or made unauthorised use of, any Intellectual
Property or Know-how of a third party.
8.4.4. The licences and agreements relating to Intellectual
Property, the Regulatory Data and/or Know-how included in
the Data Room comprise all of the licences and agreements
relating to Intellectual Property, Regulatory Data and/or
Know-how entered into by any of the Target Companies or by
any Business Vendor in relation to the Operations, which
are material to the Operations. So far as the Principal
Vendor is aware, all of said licences and agreements are
in full force and effect. No notice has been given by any
party to terminate any of them. None of the relevant
Business Vendors or any Target Company is in breach of any
of the material terms of such licences and agreements and
so far as the Principal Vendor is aware, neither is any of
the relevant counterparties.
8.4.5. No Employee is making any claim against any member of the
Vendors' Group under any contract or applicable law for
any compensation, royalty, consideration or payment or for
any right or interest in respect of any of the Business
IP, Assigned Know-how or Intellectual Property or Know-how
owned by any Target Company and so far as the Principal
Vendor is aware, no such claim has been threatened in
writing and there are no grounds on which such a claim
might reasonably be expected to be made.
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78
8.4.6. All Registered IP, Biocides Exclusive Data, Assigned
Know-how and Know-how owned by any Target Company is owned
legally and beneficially by a member of the Vendors'
Group. There are no Encumbrances over the Business IP, the
Intellectual Property owned by any Target Company, the
Assigned Know-how, the Know-how owned by any Target
Company or the Biocides Exclusive Data and no exclusive or
sole licences have been granted to any third parties in
respect of such.
8.4.7. Other than in respect of any of the following:
(a) the Intellectual Property in computer software
and computer systems which is the subject matter
of the Ancillary Agreement identified as the
Transitional IT Services Agreement;
(b) the Excluded Names; and
(c) any registered or unregistered trademarks, logos
or other devices incorporating the Excluded
Names,
as far as the Principal Vendor is aware the Business IP
and the Intellectual Property owned by the Target
Companies together with any further Intellectual Property
being licensed to the Purchaser, pursuant to this
Agreement and the Intellectual Property licensed to the
Business Vendors or the Target Companies by third parties
pursuant to licences referred to under Warranty 8.4.4
comprises all the Intellectual Property necessary to carry
on the Operations in all material respects as presently
carried on.
8.4.8. So far as the Principal Vendor is aware, no Business
Vendor or Target Company has disclosed any material
Regulatory Data or material Know-how relating to the
Operations or any Assigned Know-how to any third party
other than under an undertaking of confidentiality by the
relevant third party.
8.4.9. The consummation of the proposed acquisition of the
Operations and the other transactions contemplated by this
Agreement do not conflict with, alter, prejudice or impair
the ownership of (a) the Registered IP or the Unregistered
IP by the Business Vendors or Target Companies or (b) the
Biocides Exclusive Data or the Assigned Know-how by the
Business Vendors, or (c) the Regulatory Data or Know-how
owned by the Target Companies or except to the extent that
the said proposed acquisition includes the transfer of
ownership of the Registered IP and Unregistered IP,
Biocides Exclusive Data, Assigned Know-how and the shares
in the Target Companies to the Purchaser.
8.4.10. So far as the Principal Vendor is aware, all material
Regulatory Data or material Know-how or any Assigned
Know-how relating to the Operations which is proprietary
to any of the Business Vendors or Target Companies has
been maintained in confidence in accordance with
protection procedures customarily used in the industry to
protect rights of like importance.
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8.4.11. Copies of all agreements whereby Business IP or
Intellectual Property or Know-how owned by Target
Companies, Biocides Exclusive Data or Assigned Know-how
has been licensed by any Business Vendor or Target Company
to any member of the Astra Zeneca Group and whereby any
Intellectual Property, Know-how or Regulatory Data used in
the Operations has been licensed by any member of the
Astra Zeneca Group to any Business Vendor or Target
Company (in each case in relation to the Operations) are
listed in the Disclosure Letter and included in the Data
Room.
8.4.12. No member of the Vendors' Group has entered into any
contract with Clariant, Prom or Thor which affects,
prejudices, or impairs any Biocides Exclusive Data owned
by any Business Vendor or Target Company.
8.4.13. All material confidentiality agreements relating to the
Operations and entered into by any member of the Vendors'
Group are set out in the Data Room.
8.4.14. No Target Company nor any Business Vendor is a party to
any confidentiality or other agreement, or subject to any
contractual duty, which restricts the free use or
disclosure of information forming part of the Assigned
Know-how or material Know-how or Regulatory Data owned by
a Target Company or Business Vendor relating to the
Operations.
8.4.15. All Regulatory Data required to carry on the Operations in
all material respects as presently carried on is owned by
or licensed to (under a licence referred to under Warranty
8.4.4) either a Target Company or a Business Vendor.
8.4.16. As far as the Principal Vendor is aware all Know-how
required to carry on the Operations in all material
respects as presently carried on is owned by or licensed
(under a licence referred to under paragraph 8.4.4) to
either a Target Company or a Business Vendor.
8.5. RECEIVABLES
All the book and other debts receivable by or owing to the Target
Companies or the Business Vendors, to the extent that they arose in
connection with the Operations, (a) represent actual indebtedness
incurred by the applicable account debtors and (b) have arisen from
bona fide transactions in the ordinary course of the Operations. As
far as the Principal Vendor is aware, all such receivables are good
and collectible at the aggregate recorded amounts thereof, net of
any applicable reserves for doubtful accounts reflected in the 2003
Accounts. Since the Accounts Date no receivables have been
written-off as uncollectible, except in the ordinary course of the
Operations consistent with past practice.
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8.6. SUFFICIENCY OF ASSETS
The Assets other than the Business IP, Intellectual Property owned
by the Target Companies, the Biocides Exclusive Data and the
Assigned Know-how (which are addressed in paragraph 8.4 of this
Schedule 4) (together with the other rights and services to be
provided by or in accordance with this Agreement and the other
agreements to be entered into at each Completion) comprise all the
assets necessary to carry on the Operations in substantially all
respects as carried on as at the date of this Agreement. The
Principal Vendor is not aware if any reason why it would not be able
to provide the goods and services to be provided under the Ancillary
Agreements.
8.7. TARGET COMPANIES' ASSETS AND ACTIVITIES
8.7.1. The Target Companies (i) only have properties, rights,
assets, Liabilities and employees related to the Business
and (ii) are not engaged in any operation or activity
other than the Business.
8.7.2. Prior to the transfer of a portion of the Operations to
each of Avecia Protection & Hygiene NV and Avecia
Protection & Hygiene AB, such Target Companies had no
liabilities of any nature (whether accrued, absolute,
contingent, unasserted or otherwise).
9. BANKING AND FINANCE
9.1. The Disclosure Letter sets out details of any loan agreement,
facility letter, or other agreement for Indebtedness (other than
Intra-Group Payables or Intra-Group Receivables) in excess of
(pound)150,000 as at the date of this Agreement for the provision of
credit or financing facilities to any Target Company or for the
sale, factoring or discounting of its debts.
9.2. Other than Third Party Indebtedness and Intra-Group Payables, no
Target Company has as at the date of this Agreement outstanding any
Indebtedness.
9.3. The Disclosure Letter sets out with respect to each Intra-Group
Payable, Intra-Group Receivable and item of Third Party Indebtedness
as at 31st December 2003:
9.3.1. the identity of the payer and payee; and
9.3.2. the amount of the obligation in the relevant currency.
10. COMPETITION AND FAIR TRADING
None of the acts, omissions, practices, agreements or arrangements
of any Business Vendor or Target Company:
10.1. is, so far as the Principal Vendor is aware, the subject of any
pending investigation, inquiry, proceedings, report or reference by
any governmental or regulatory authority or court under any law,
legislation or regulation (civil or criminal) relating to
competition, restrictive trade practices, anti-trust,
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81
monopolies, merger control, fair trading or restraint of trade in
any part of the world ("COMPETITION LAW"); or
10.2. is the subject of any enforceable undertaking or assurance given to
any governmental or regulatory authority or court under Competition
Law and nor has such undertaking or assurance been requested,
provided that in respect of any application of this Warranty after the date of
this Agreement, there shall be deemed to be excluded from its scope any matter
arising out of or relating to the sale of the Operations.
11. CONDUCT OF THE OPERATIONS
The Business Vendors and the Target Companies have carried on the relevant
Operations since 30th June 1999 to the date of this Agreement and no person
other than members of the Vendors' Group has had any ownership interest in the
Operations since 30th June 1999.
12. POWERS OF ATTORNEY
No Target Company has given any power of attorney or other authority (express,
implied or ostensible) which is still outstanding or effective to any person
to enter into any contract, agreement, arrangement or commitment on its behalf
other than to its employees to enter into routine trading contracts and
otherwise perform their duties.
13. INFORMATION TECHNOLOGY
13.1. The Operations have not since 1st January 2003 experienced any
material disruption in operations or activities as a result of (a)
any security breach in relation to any Information Technology, or
(b) any failure (whether arising from any bug, virus, defect or
otherwise), lack of capacity or other sub-standard performance of
any Information Technology.
13.2. Details of all domain names which are, or have been, used
exclusively in connection with the Operations and which are owned by
any Business Vendor or Target Company or other member of the
Vendors' Group are set out in the Intellectual Property List. All
registrations in relation to such domain names have been maintained
and all related fees and necessary administrative steps required for
the maintenance of such domain names up to Completion have been
(respectively) paid and taken.
13.3. Details of all material Information Technology which is used in the
Operations (including details with respect to the ownership and
license arrangements, if any, with respect to such Information
Technology), are included in the Data Room.
13.4. Details of all material agreements and arrangements relating to
Information Technology (including, without limitation, development,
security, disaster recovery, EDI, source code escrow, computer
bureau services, maintenance and support, facilities management, web
site, domain name and outsourcing agreements) entered into by, or
pursuant to which any benefit is obtained by, any Business Vendor or
member of the Vendors' Group in relation to the
----------------------------
SCHEDULE 4 - Warranties
----------------------------
82
Operations are included in the Data Room. So far as the Principal
Vendor is aware no third party is in breach of any such agreement or
arrangement.
14. GRANTS AND ALLOWANCES
In relation to the Operations, no grant, allowance, aid, subsidy, loan or
guarantee has been applied for or received from any supranational, national or
local authority or government agency since 30th June 1999.
15. INDUCEMENTS
No inducement (financial or otherwise) has been given to any person with a
view to any Business Vendor or Target Company entering into any contract or
other arrangement or obtaining any benefit in relation to the Operations which
was either unlawful or in violation of the Vendors' Group's applicable written
ethical policy. No such inducement has been received by any Business Vendor or
Target Company or any director or employee of them or any associate of any
such person.
16. STOCKS
The amounts of raw materials, work in progress, finished goods and packaging
and promotional material comprised in the Stock are appropriate and normal for
the present level of trading of the relevant Target Businesses.
17. DATA PROTECTION
17.1. The UK Business Vendor is either:
17.1.1. duly registered as a data controller under the Data
Protection Act 1998 (or is deemed to be so registered by
notification regulations made by virtue of section 19(3)
of that Act) for all purposes for which registration is
required in respect of the relevant Target Business; or
17.1.2. exempt from section 17(1) of the Data Protection Act 1998
under paragraph 2 of schedule 14 to that Act and is duly
registered as a data user under the Data Protection Act
1984 for all purposes for which registration is required
in respect of the relevant Target Business;
and details of the relevant registration is set out in the
Disclosure Letter.
17.2. The UK Business Vendor has not received any notice (including,
without limitation, any enforcement notice), letter or complaint
from the Information Commissioner alleging breach by it of the Data
Protection Act 1984 or the Data Protection Act 1998 and no threats
in writing have been made which would give the UK Business Vendor
reason to believe that there are any circumstances which exist which
might give rise to any such notice, letter or complaint being
served, given or made.
17.3. No individual has been awarded compensation from the UK Business
Vendor under the Data Protection Act 1984 or the Data Protection Act
1998, no claim for such compensation is outstanding and no threats
in writing have been made which would give the UK Business Vendor
reason to believe that any
----------------------------
SCHEDULE 4 - Warranties
----------------------------
83
circumstances exist which might lead to any claim for compensation
being made.
17.4. No order has been made against the UK Business Vendor for the
rectification, blocking, erasure or destruction of any data under
the Data Protection Act 1984 or the Data Protection Act 1998, no
application for such an order is outstanding and no threats in
writing have been made which would give the UK Business Vendor
reason to believe that any circumstances exist which might lead to
any application for such an order being made.
18. DELINQUENT AND WRONGFUL ACTS
So far as the Principal Vendor is aware, no investigation or inquiry is being
or has been conducted by any government, governmental, supranational or trade
agency, court or regulatory body in respect of the Operations.
19. DEFECTIVE PRODUCTS
The Disclosure Letter sets out details of all customer claims received by the
Operations since 1st January 2003 alleging that the products or services
provided by the Operations were defective or not to specification or not
compliant with legal requirements where the amounts claimed by the relevant
customer or the costs to the Operations of rectifying the defect have exceeded
or would exceed US$100,000. Since 1st January 2003, no Business Vendor nor any
Target Company has had to carry out any recall of products manufactured by the
Operations.
20. POSITION OF BUSINESS VENDORS
No member of the Vendors' Group other than the Business Vendors and the Target
Companies owns any Assets (or any interest in any Assets) necessary for the
carrying on of the Operations in substantially all respects as carried on at
the date of this Agreement.
21. CONSIDERATION SHARES
21.1. The US Business Vendor understands that the issuance of the
Consideration Shares by the Purchaser to the US Business Vendor is
intended to be exempt from registration under the Securities Act
pursuant to section 4(2) thereof.
21.2. The US Business Vendor (either alone or together with its advisors)
has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its
investment in the Consideration Shares and is capable of bearing the
economic risks of such investment.
21.3. The US Business Vendor is acquiring the Consideration Shares for its
own account (or for accounts over which it exercises investment
authority), and not with a view to the public resale or distribution
thereof, in violation of any securities law.
21.4. The US Business Vendor understands that the Consideration Shares will
be issued in a transaction exempt from the registration or
qualification
----------------------------
SCHEDULE 4 - Warranties
----------------------------
84
requirements of the Securities Act and applicable US state
securities laws, and that such securities must be held indefinitely
unless a subsequent disposition thereof is registered or qualified
under the Securities Act and such laws or is exempt from such
registration or qualification.
21.5. The US Business Vendor can bear the economic risk of (i) an
investment in the Consideration Shares indefinitely and (ii) a total
loss in respect of such investment, and has such knowledge and
experience in business and financial matters so as to enable it to
understand and evaluate the risks of and form an investment decision
with respect to its investment in the Consideration Shares and to
protect its own interest in connection with such investment.
----------------------------
SCHEDULE 4 - Warranties
----------------------------
SCHEDULE 5 - Limitations
1. The Principal Vendor's and the UK Business Vendor's liability in
respect of any claim under the Warranties shall be limited as
follows:
1.1 the Principal Vendor and the UK Business Vendor shall have
no liability for any breach of any of the Warranties
(other than a Specified Warranty), unless the amount of
such claim (excluding the Purchaser's own interest, costs
and expenses of enforcing the claim against the Principal
Vendor or the UK Business Vendor) when aggregated with
other like claims based on the same or a series of related
facts (including any such claims under the Tax Deed)
exceeds US$100,000;
1.2 the Principal Vendor and the UK Business Vendor shall have
no liability for any breach of any of the Warranties
(other than a Specified Warranty) until the aggregate
liability for all claims (other than those excluded by
paragraph 1.1 and excluding the Purchaser's own interest,
costs and expenses enforcing such claims against the
Principal Vendor or the UK Business Vendor) shall equal or
exceed US$2.25 million in which case the Principal Vendor
and the UK Business Vendor shall be liable for the whole
amount and not merely the excess over US$2.25 million;
1.3 the Principal Vendor and the UK Business Vendor shall not
be liable for any breach of the Warranties (other than the
Tax Warranties and the Environmental Warranties) unless a
written claim has been made by the Purchaser to the
Principal Vendor and the UK Business Vendor giving notice
as described in paragraph 10 of this Schedule 5 of the
relevant facts and the Warranty or Warranties which are
alleged to have been breached on or before 31st December
2005;
1.4 the Principal Vendor and the UK Business Vendor shall not
be liable in respect of a breach of any of the
Environmental Warranties unless a written claim has been
made by the Purchaser to the Principal Vendor and the UK
Business Vendor giving notice as described in paragraph 10
of this Schedule 5 of the relevant facts and the Warranty
or Warranties which are alleged to have been breached on
or before31st March 2008; and
1.5 the Principal Vendor and the UK Business Vendor shall not
be liable in respect of a breach of any of the Tax
Warranties unless a written claim has been made by the
Purchaser to the Principal Vendor and the UK Business
Vendor giving notice as described in paragraph 10 of this
Schedule 5 of the relevant facts and the Warranty or
Warranties which are alleged to have been breached on or
before 31st March 2009,
provided however that for the purposes only of determining the
Principal Vendor's and the UK Business Vendor liability in respect
of any breach of the Warranties (other than the Specified
Warranties), but for the avoidance of doubt not for the purpose of
determining whether there has been a breach of such Warranty on its
terms, the Warranties shall be deemed not to be qualified by any
references therein to materiality.
---------------------------------
SCHEDULE 5 - Limitations
---------------------------------
86
2. Subject to paragraph 13, the maximum aggregate liability of the
Vendors for all claims under this Agreement (other than claims for
breach of the Specified Warranties) or the documents in the Agreed
Form AF7, AF12, AF13 (other than AF13A and AF13B), AF15A and the
Local Agreements shall not exceed 50 per cent of the Purchase Price.
3. Any claim for breach of Warranties which is made within the time
limits specified above shall, unless previously satisfied, settled
or withdrawn, be deemed to be withdrawn and no longer enforceable
unless legal proceedings in respect thereof are commenced by validly
issuing and serving legal process within one year of the making of
such claim provided that in respect of claims in respect of losses
which remain contingent, the relevant time limit under this
paragraph 3 shall be one year after such contingency crystallises.
4. The Principal Vendor and the UK Business Vendor shall not be liable
in respect of any claim under the Warranties, except for claims
under the Specified Warranties, to the extent that such claim would
not have arisen but for a change or changes in law, rules,
regulation or published administrative practice of any government,
governmental department agency or regulatory body or legislation
(whether relating to rates or imposition of Tax or otherwise) made
after the date of this Agreement.
5. The Principal Vendor and the UK Business Vendor shall not be liable
under the Warranties:
5.1 to the extent that such claim would not have arisen but
for or is exacerbated by any voluntary act, omission,
transaction or arrangement of the Purchaser or the
Purchaser's Group or, after the Completion Date, any
Target Company outside the ordinary course of trading;
5.2 to the extent that such claim would not have arisen but
for or is increased by any change in practices or policies
of the Target Companies in respect of Taxation after
Completion other than one made to comply with standard Tax
practices and policies existing at Completion;
5.3 if and to the extent that such claim would not have arisen
but for or is increased by a change of accounting policy,
bases or practice of any the Operations after Completion
(other than ones effected in order to comply with
accounting standards or practices applicable at
Completion);
5.4 to the extent that the claim relates to any losses covered
under a policy of insurance in force for the benefit of
the Purchaser, the Purchaser's Group or any Target
Company;
5.5 to the extent that the claim arises or is increased as a
consequence of the failure of the Purchaser to comply with
or to procure the compliance of any Local Purchaser or
Target Company with their respective obligations under
this Agreement or to act or procure action in accordance
with the reasonable instructions of the Principal Vendor
or
---------------------------------
SCHEDULE 5 - Limitations
---------------------------------
87
its authorised representative under Clause 8 (Claims
Procedure) in respect of that claim;
5.6 to the extent the matter giving rise to the claim for
breach of Warranty was provided for or accrued in the 2003
Accounts or the Completion Working Capital Statement; or
5.7 to the extent such claim arises or is increased as a
result of in relation to Taxation any withdrawal of a
claim, election, surrender or disclaimer made, or notice
or consent in relation to Taxation given after Completion.
6. The Principal Vendor and the UK Business Vendor shall not be liable
under the Warranties to the extent the circumstances giving rise to
or representing the breach of Warranty were fairly disclosed in or
by the Disclosure Letter or the documents attached to or
incorporated by reference in the Disclosure Letter.
7. If in respect of any claim under the Warranties the losses of the
Purchaser or the Purchaser's Group are contingent only, the
Principal Vendor and the UK Business Vendor shall not be under any
obligation to make any payment to the Purchaser until such time as
the contingent losses cease to be contingent and become actual
provided always that this paragraph is without prejudice to the
ability of the Purchaser to notify the claim.
8. For the avoidance of doubt the amount of any claim for breach of the
Warranties shall take into account the amount of any Relief (as
defined in the Tax Deed) and any other corresponding saving or net
benefit enjoyed by the Purchaser or the Purchaser's Group.
9. The Purchaser and the Local Purchasers taken together shall not be
entitled to recover from the Principal Vendor (or any other Vendor)
under this Agreement or the documents to be entered into pursuant to
this Agreement more than once in respect of the same losses, and
accordingly the Principal Vendor and any other Vendor shall not be
liable under any one such document if and to the extent that the
losses are or have been recovered under another such document.
10. As soon as reasonably practicable after a member of the Purchaser's
Group becomes aware of any matter which may give rise to a claim
against the Principal Vendor or the UK Business Vendor for breach of
Warranty, the Purchaser shall give written notice of such matter to
the Principal Vendor and the UK Business Vendor and shall (then and
from time to time) take reasonable steps to provide to the Principal
Vendor and the UK Business Vendor all such information as may be in
its possession or under its control which is relevant to the
determination of the Principal Vendor's or the UK Business Vendor's
liability for such matter provided that any failure to give such
timely notice or information shall not affect the rights of the
Purchaser or any member of the Purchaser's Group except to the
extent the Principal Vendor or the UK Business Vendor is prejudiced
by such failure.
11. If the Purchaser has alleged that a breach of any of the Warranties
has occurred then to the extent that such breach or the effects of
such breach are capable of being remedied, the Principal Vendor and
the UK Business Vendor shall be
---------------------------------
SCHEDULE 5 - Limitations
---------------------------------
88
afforded an opportunity to effect such remedy within 30 days of its
receipt of written notice from the Purchaser of such alleged breach.
12. Notwithstanding any other provision of this Agreement, the Purchaser
acknowledges that neither the Principal Vendor nor any other member
of the Vendors' Group nor any of their directors, employees,
representatives, agents or advisers have given (nor shall they be
liable in respect of) any warranty, assurance, representation,
undertaking or covenant relating to any budget or forecast of the
financial or trading position of the Operations after the date of
this Agreement or the Completion.
13. Nothing in this Schedule shall operate to limit the liability of any
Vendor (or the remedies available to the Purchaser) in respect of a
fraudulent act or fraudulent misrepresentation by any such Vendor.
---------------------------------
SCHEDULE 5 - Limitations
---------------------------------
89
SCHEDULE 6 - ANCILLARY AGREEMENTS
The following agreements are the Ancillary Agreements to be executed and
delivered by the relevant parties at Completion. The Transitional IT Services
Agreement is to be signed simultaneously with this Agreement and accordingly
will not be an "Ancillary Agreement" solely for the purposes of the deliveries
to be made pursuant to Schedule 9.
PART 1 - TRANSITIONAL SERVICES AGREEMENTS
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
1. Transitional IT Services Agreement Avecia Limited N/A
and the Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
2. Transitional Services Agreement The Principal Vendor AF10A
(Spain, Singapore) and the Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
3. Reverse Transitional Services The Purchaser, Avecia AF10B
Agreement (Spain, Singapore) Limited and Avecia Inc.
- ------ --------------------------------------- ------------------------------ --------------------
4. USA Transitional Services Agreement Avecia Inc. and the Purchaser AF10C
- ------ --------------------------------------- ------------------------------ --------------------
5. UK Transitional Services Agreement Avecia Limited and AF10D
and the Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
PART 2 - ONGOING COMMERCIAL AGREEMENTS
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
1. Site Services Agreement relating to Avecia Limited and the AF11A
Huddersfield Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
2. Site Services Agreement relating to Avecia Limited and the AF11B
Blackley Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
3. Manufacturing Services Agreement Avecia Limited and the AF11C
relating to Grangemouth Biocides Plant Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
4. Analytical Sciences Group Services Avecia Limited and the AF11D
Agreement Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
5. Site Services Agreement for New Avecia Inc. and the AF11E
Castle Purchaser
- ----- ---------------------------------------- ------------------------------ --------------------
6. Site Services Agreement for Avecia Inc. and the AF11F
Wilmington Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
7. Supply Agreement re Proxel GXL Avecia Inc. and the AF11G
Antimicrobial and Vantocil IB (USA) Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
8. Supply agreement re Proxel GXL Avecia Limited and the AF11H
- ------ --------------------------------------- ------------------------------ --------------------
---------------------------------
SCHEDULE 6 - Ancillary Agreements
---------------------------------
90
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
Antimicrobial (UK) Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
PART 3 - IP ASSIGNMENTS, LICENCES OR OTHER AGREEMENTS
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
1. Know-how Assignment and Licence Avecia Limited and the AF13A
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
2. Regulatory Data Transfer and Access Avecia Limited and the AF13B
Agreement Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
3. Patent Assignment Avecia Limited and the AF13C
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
4. Patent Assignment Avecia Inc. and the AF13D
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
5. Trade Mark Assignment Avecia Limited and the AF13E
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
6. Software Assignment Agreement Avecia Limited and the AF13F
(RABIT) Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
7. Trade Mark Assignment Avecia Inc. and the AF13G
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
8. Domain Name Assignment Avecia Limited and the AF13H
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
9. Dainippon Inc. Contract Assignment Avecia Limited and the AF13I
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
10. Eastman Kodak Contract Assignment Avecia Limited and the AF13J
Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
11. Syngenta Partial Contract Avecia Limited and the AF13K
Assignment Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
PART 4 - PROPERTY DOCUMENTS
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
1. Underlease agreement relating to Avecia Limited and the AF14A
part of the ground floor of the North Purchaser
Laboratory at Huddersfield
- ------ --------------------------------------- ------------------------------ --------------------
2. Court claims form relating to part of Avecia Limited and the AF14B
the ground floor of the North Purchaser
Laboratory at Huddersfield
- ------ --------------------------------------- ------------------------------ --------------------
3. Deed of Covenant relating to part of Avecia Limited AF14C1
the ground floor of the North Purchaser and Syngenta
- ------ --------------------------------------- ------------------------------ --------------------
---------------------------------
SCHEDULE 6 - Ancillary Agreements
---------------------------------
91
- ------ --------------------------------------- ------------------------------ --------------------
Laboratory at Huddersfield Limited
- ------ --------------------------------------- ------------------------------ --------------------
4. Deed of Indemnity relating to part of Avecia Limited and the AF14C2
North Laboratory at Purchaser
Huddersfield
- ------ --------------------------------------- ------------------------------ --------------------
5. Transfer of the Lease for the Avecia Limited and the AF14D
Specialities East Plant at Purchaser
Huddersfield
- ------ --------------------------------------- ------------------------------ --------------------
6. Licence to Assign and Authorised Avecia Limited the N/A
Guarantee Agreement re the Purchaser and Syngenta
Specialities East Plant at Limited
Huddersfield
- ------ --------------------------------------- ------------------------------ --------------------
7. Assignment of beneficial interest in Avecia Limited and the AF14E
the Seal Sands land and buildings Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
8. Transfer of legal title to the Seal DTBA Limited and the AF14F
Sands land and buildings Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
9. Lease of Biocide 1 and first floor of Avecia Limited and the AF14G
Biocide 2 buildings, Blackley Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
10. Court Claim Form re Biocide 1 and Avecia Limited and the AF14H
first floor of Biocide 2 buildings, Purchaser
Blackley
- ------ --------------------------------------- ------------------------------ --------------------
11. Lease of part of tenth floor, Hexagon Avecia Limited and the AF14I
Tower, Blackley Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
12. Court Claim Form re part of tenth Avecia Limited and the AF14J
floor, Hexagon Tower, Blackley Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
13. Lease Agreement for the Biocides Avecia Inc. and the AF14K
Pool, New Castle Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
14. Lease Agreement for the Lab Parcel, Avecia Inc. and the AF14L
New Castle Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
15. Assignment of Mt Pleasant Ground Avecia Inc. and the AF14M
lease Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
PART 5 - OTHER TRANSACTIONAL DOCUMENTS
- ------ --------------------------------------- ------------------------------ --------------------
DESCRIPTION OF AGREEMENT PARTIES AGREED FORM
NUMBER
- ------ --------------------------------------- ------------------------------ --------------------
1. Non-Competition Agreement Principal Vendor, Avecia AF15A
Limited, Avecia, Inc.,
Avecia Comercial e
Importada Limitada and
the Purchaser
- ------ --------------------------------------- ------------------------------ --------------------
2. Deed of Covenant in favour of Stahl The Target Companies AF15B
Netherlands I B.V.
- ------ --------------------------------------- ------------------------------ --------------------
3. Assignment of the PHMB Avecia Inc. and the AF12A
Manufacturing Services Agreement Purchaser
with Cytec Industries Inc.
- ------ --------------------------------------- ------------------------------ --------------------
---------------------------------
SCHEDULE 6 - Ancillary Agreements
---------------------------------
92
SCHEDULE 7 - EMPLOYMENT MATTERS
[Omitted]*
* This Schedule contains certain information relating to employee matters,
which will be furnished supplementally to the Commission upon request.
---------------------------------
SCHEDULE 7 - Employment Matters
---------------------------------
93
SCHEDULE 8 - EMPLOYEE BENEFIT MATTERS
[Omitted]*
* This Schedule contains certain information relating to employee benefits and
pension-related matters, which will be furnished supplementally to the
Commission upon request.
---------------------------------------
SCHEDULE 8 - Employment Benefit Matters
---------------------------------------
94
SCHEDULE 9 - COMPLETION
1. At Completion, the Principal Vendor shall or shall procure that the
relevant Vendor shall deliver or make available to the Purchaser or
a Local Purchaser the following:
1.1 evidence satisfactory to the Purchaser (acting reasonably)
of the fulfilment of the Conditions Precedent for which
the Principal Vendor is responsible;
1.2 those Business Assets held by a Business Vendor which are
capable of transfer by delivery (such delivery to take
place where such Business Assets are actually located);
1.3 the Ancillary Agreements duly executed by the relevant
members of Vendors' Group;
1.4 duly executed documentation sufficient to transfer (or to
the extent agreed by the Principal Vendor and the
Purchaser allow the Purchaser to implement the transfer)
into the name of the Purchaser or the relevant Local
Purchaser all of the Shares held by the Share Vendors;
1.5 a global release of security over the Shares and the
Assets of a Business Vendor or a Target Company, and of
the guarantees by a Target Company granted, in each case,
in favour of JP Morgan Europe Limited in relation to the
borrowings of the Vendors' Group;
1.6 the following property documents:
1.6.1 the title deeds to the Seal Sands property;
1.6.2 a DS1 executed by Chase Manhattan International
Limited ("CMIL") releasing the Specialties East
Plant, Huddersfield from the registered charge
dated 30th June 1999 in favour of CMIL;
1.6.3 the title deeds, including the relevant lease,
to the Specialties East Plant, Huddersfield;
1.6.4 a letter of consent to the underlease of part of
the ground floor, North Laboratory, Huddersfield
signed by CMIL as mortgagee pursuant to a
debenture dated 30th June 1999;
1.6.5 a letter of consent to the lease of Biocide 1
and first floor, Biocide 2 buildings signed by
CMIL as mortgagee pursuant to a debenture dated
30th June 1999; and
1.6.6 a letter of consent to the lease of part of the
tenth floor, Hexagon Tower signed by CMIL as
mortgagee pursuant to a debenture dated 30th
June 1999;
---------------------------------
SCHEDULE 9 - Completion
---------------------------------
95
1.7 an affidavit that the transfer of the shares of Splashes,
Inc. does not constitute a transfer of a US real property
interest under Section 897 of the US Internal Revenue Code
of 1986;
1.8 an affidavit of non-foreign status of the US Business
Vendor conforming to the model certification in Section
1.1445-2(b)(2) of the United States Treasury Regulations;
and
1.9 an assignment of the benefit (insofar as relating to
information pertaining to the Operations) of the
confidentiality undertakings entered into between Goldman
Sachs International and prospective purchasers of the
Operations, together with (i) copies of the relevant
confidentiality undertakings and (ii) copies of any
notices or demands served on such prospective purchasers
for the return or destruction of information or documents.
2. At Completion the Principal Vendor shall procure that the following
occur, provided that sufficient notice is given by the Purchaser to
allow the same to occur at Completion:
2.1 any person nominated by the Purchaser for appointment as a
director, secretary, auditor or other officer of each
Target Company shall (subject only to being qualified so
to act) be so appointed;
2.2 if requested by the Purchaser, each of the current
directors, secretaries or other officers of the Target
Companies (other than those who are Employees) shall
resign or be removed from office without compensation; and
2.3 if requested by the Purchaser, the current auditors of
each Target Company shall, where permissible, resign or be
removed from office without compensation.
3. At Completion, the Purchaser shall (for itself and on behalf of the
Local Purchasers as appropriate) pay to the Principal Vendor (for
itself and on behalf of the other Vendors as appropriate) by
electronic transfer of cleared funds for same day value to the
Principal Vendor's Bank Account an amount which is equal to
US$200,258,000, being the number calculated in accordance with
Clause 4.1.1.
4. At Completion, the Purchaser shall deliver to the US Business Vendor
a certificate or certificates representing the Completion
Consideration Shares, which shall be in definitive form and
registered in the name of the US Business Vendor and in a single
certificate or in such other denominations as the US Business Vendor
shall request not later than five Business Days prior to the
Completion Date.
5. At Completion:
5.1 the Purchaser shall (on behalf of the Target Companies)
pay to the Principal Vendor (on behalf of the relevant
member of the Vendors' Group) by electronic transfer of
cleared funds for same day value to the
---------------------------------
SCHEDULE 9 - Completion
---------------------------------
96
Principal Vendor's Bank Account an amount equal to the
Estimated Intra-Group Payables attributable to the Target
Companies; and
5.2 the Principal Vendor on behalf of the relevant members of
the Vendors' Group shall pay to the Purchaser on behalf of
the Target Companies an amount equal to the Estimated
Intra-Group Receivables attributable to the Target
Companies.
The Principal Vendor may direct that any sums it would be liable to
pay under paragraph 5.2 shall be off-set against sums it is to
receive under paragraph 3 or paragraph 5.1. Any such off-set shall
not relieve the Purchaser of its obligation to account to the Target
Companies for the sum which, but for such off-set, it would have
received on their behalf.
6. At Completion, the Purchaser shall or shall procure that the
relevant Local Purchaser shall deliver or make available to the
Principal Vendor:
7.1 evidence satisfactory to the Principal Vendor (acting
reasonably) of the fulfilment of the Conditions Precedent
for which the Purchaser is responsible; and
7.2 the Ancillary Agreements duly executed by the Purchaser or
the relevant Local Purchaser.
8. Each of the parties shall, subject to sufficient advance notice of
the relevant request being received to allow the same to occur at
Completion, at Completion do or procure that there is done all such
acts reasonably in its power and/or execute and deliver all such
further documents as such other party may reasonably consider
necessary for giving full effect to this Agreement and the
transactions and agreements contemplated by this Agreement.
9. If the New Castle Release Condition is satisfied on or before the
Completion Date, the Purchaser shall at Completion deliver to the US
Business Vendor a certificate or certificates representing the New
Castle Consideration Shares, which shall be in definitive form and
registered in the name of the US Business Vendor and in a single
certificate or in such denominations as the US Business Vendor shall
request not later than five Business Days prior to the Completion
Date.
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SCHEDULE 10 - DEFINITIONS AND INTERPRETATION
1. DEFINITIONS
In this Agreement, the following words and expressions shall bear the meanings
given to them below:
"2002 Accounts" means the unaudited non-statutory financial statements of the
Operations as at and for the year ended 31st December 2002 in the Agreed Form
AF1A;
"2003 Accounts" means the unaudited non-statutory financial statements of the
Operations as at and for the year ended on the Accounts Date in the Agreed
Form AF1B;
"Accounts Date" means 31st December 2003;
"Actual Cash/Indebtedness Statements" means the Intra-Group Indebtedness
Statement, the Third Party Indebtedness Statement and the Cash Statement;
"Actuary's Letter" means the letter from Hewitt Bacon & Woodrow to Lane Clark
& Peacock in the Agreed Form AF15C;
"Agreed Form" means a form agreed between or identified by the parties for the
purposes of this Agreement and signed or initialled for identification
purposes by them or on their behalf;
"Ancillary Agreements" means the agreements described in Schedule 6;
"Assets" means the Business Assets and all the property, rights and assets
owned by any of the Target Companies;
"Assigned Know-how" means all Know-how owned by the Business Vendors and used
exclusively in the Target Businesses in the twelve months prior to Completion;
"Associated Company" means a company which is from time to time a subsidiary
of the party concerned or which is a holding company of such party or a
subsidiary of such holding company;
"Audited Non-Statutory Accounts" means the non-statutory financial statements
of the Operations (including a statement of income and statement of cash flows
for the year to 31st December 2001, a balance sheet, statement of
shareholders' equity, statement of income and statement of cash flows as at
and for the year to 31st December 2002 and a balance sheet, statement of
shareholders' equity, statement of income and statement of cash flows as at
and for the year to 31st December 2003) prepared and audited in accordance
with UK GAAP together with an audited reconciliation of such financial
statements to a US GAAP basis of preparation;
"Avecia's Benefit Plans" is defined in paragraph 1.4, Part 1 of Schedule 7;
"Avecia Payment Creditors" means those Creditors which are (i) creditors
ledger items, accruals for goods received not invoiced or accruals for
manufacturing, production or operational services and tolling, or (ii)
non-trade operating creditors owed by the Business Vendors as at the Effective
Time to the extent they arose in
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98
connection with the Operations, relating to deductions made from payroll
processing, including but not limited to amounts owing in respect of payroll
taxes, social security, and payments to pension funds;
"Base Allocation" means, in respect of any Transfer of Operations, the amount
shown in the Transaction Breakdown;
"Base Spanish Working Capital" means the Base Working Capital in respect of
the Spanish Operations, as shown in the Transaction Breakdown;
"Base Working Capital" means the amount shown in the Transaction Breakdown;
"Basic Warranties" means the Warranties set out at the following paragraphs of
Schedule 4: 1 (Authority and Capacity); 2 (Accuracy and Adequacy of
Information); 3.1 (2002 Accounts and 2003 Accounts); 3.2 (Accounting and Other
Records); 4.5 (Insolvency); 5.1 (Arrangements with Connected Persons); 6.2.2
(non-contracted payments to Employees) 6.3 (Change of Control); 8.1.1 (Title
to Assets); 8.1.3 and 8.1.4 (Title to Shares); 8.4.6 and 8.4.7 (Title to and
Sufficiency of IP); 8.4.9 (No Conflicts with IP); 8.6 (Sufficiency of Assets);
8.7 (Target Companies' Assets and Activities); 9 (Banking and Finance), 10
(Competition and Fair Trading); 11 (Conduct of the Operations) and 21
(Consideration Shares);
"Biocides Exclusive Data" bears the meaning assigned to it under the
Regulatory Data Transfer and Access Agreement in the Agreed Form AF13B;
"Books and Records" means the Business Vendors' books and records as at the
Effective Time (in whatever form) (including details of customers and
suppliers and the terms of trading with them) to the extent that they relate
to the Business;
"Business" means:
(i) the research, design, development, manufacture, packaging,
distribution, marketing, sale and/or provision of anti-microbials
(including, but not limited to, bactericides, algaecides, virucides
and fungicides), in each case:
(a) to provide non-medicinal and non-phytochemical
anti-microbial effects to consumers; and/or
(b) for the preservation, odour control and disinfection of
industrial and recreational media, such media including,
but not limited to, aqueous emulsions, solutions and
suspensions, household and personal care products, mineral
slurries, inks, agrochemicals, adhesives, sealants, dyes,
pigments, paper, starches, industrial cleaning products,
metal working fluids, paints, architectural structures,
chemicals, plastics materials, textiles, leather, timber,
pet litter and water systems (including, but not limited
to, baths, pools and spas);
(ii) the research, design, development, manufacture, packaging,
distribution, marketing, sale and/or provision of automated
micro-organism and biocides enumeration technologies in the fields
defined in sub-paragraphs (i)(a) and (i)(b) above;
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99
(iii) the research, design, development, manufacture, packaging,
distribution, marketing, sale and/or provision of (a) chemicals
other than anti-microbials (including but not limited to fragrances,
filtration aids, cleaners, oxidizers and titrants for water testing)
for use in the treatment of recreational water; (b) equipment
accessory products for use in the maintenance of pools, baths and
spas; and (c) aromatherapy candles;
(iv) (a) the research, design, development, manufacture, packaging,
distribution, marketing, sale and/or provision of any and
all products currently or in the past three years sold,
offered for sale, designed, developed, manufactured,
packaged, distributed or marketed using any of the
Intellectual Property on the Intellectual Property List
and/or any of the Assigned Know-how (other than by using
any of the Assigned Know-how licensed back to the Business
Vendors or any of them in the Avecia's Field (as defined
in the Know-how Assignment and Licence Agreement in the
Agreed Form AF13A) pursuant to the Know-how Assignment and
Licence Agreement); and
(b) the research, design, development, manufacture, packaging,
distribution, marketing, sale and/or provision of the
"Biocides Exclusive Compounds" listed on the Products
List, including but not limited to
polyhexamethylenebiguanide ("PHMB"), benzisothiazolinone
(BIT), N-butylbenzisothiazolin-3-one (BBIT),
Dithio-2,2-bis (benzmethylamide) (DTBA) and Hexamethylene
bis dicyanodiamide (HMBDA), without limitation of field,
EXCLUDING, for the avoidance of doubt in the case of sub-paragraphs
(iv)(a) and (iv)(b) above, the research, design, development,
manufacture, packaging, distribution, marketing, sale and/or
provision of any and all non-anti-microbial inkjet printing products
which contain PHMB (but not PHMB itself) and the purification, anion
exchange, packaging, distribution, marketing, re-sale and/or
provision of PHMB (but for avoidance of doubt, not the research,
design, development of PHMB for any application other than for
non-anti-microbial applications in the inkjet printing market or the
manufacture of PHMB) for use in non-anti-microbial applications
solely in the inkjet printing market,
and for the purposes of this definition the sale of anti-microbials
(including, but not limited to, PHMB) to third parties for use in formulations
for topical disinfection (including, but not limited to, wound treatment
and/or contact lens cleaning) does not constitute the sale of anti-microbials
to provide a medicinal effect to consumers; and for the avoidance of doubt the
terms "medicinal" and "non-medicinal" apply to both humans and animals;
"Business Assets" means:
(i) the Plant and Equipment;
(ii) the Stock;
(iii) the Debtors;
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(iv) the Goodwill;
(v) the Business IP;
(vi) the Books and Records;
(vii) the benefit (subject to the burden) of the Contracts;
(viii) the Business Properties;
(ix) any Permits of a Business Vendor that are capable of transfer to the
Purchaser or a Local Purchaser in accordance with Clause 13.13;
(x) the benefit (so far as the same can lawfully be assigned or
transferred to or held in trust for the Purchaser or a Local
Purchaser) of the Claims (including but not limited to the right to
receive the proceeds of any claim under any insurance policy of any
Vendor in respect of any Business Liability);
(xi) the Biocides Exclusive Data and the Assigned Know-how; and
(xii) all other property, assets and rights of the Business Vendors (not
being Intellectual Property, Regulatory Data or Know-how, which are
addressed at (v) and (xi) above) primarily used in the Operations or
in connection with the Business Properties at Completion,
but, in each case, not including the Excluded Assets;
"Business Day" means a day (other than a Saturday, Sunday or public holiday)
on which banks are open for normal business both in London and New York City;
"Business IP" or "Business Intellectual Property" means:
(i) the Intellectual Property (other than the Excluded IP and
Intellectual Property in computer software) owned by the Business
Vendors which at Completion is or has been used or enjoyed
predominantly in connection with the Target Businesses including
without limitation the registered (and applications for registration
of) Intellectual Property set out in the list in the Agreed Form AF4
but excluding any and all Intellectual Property owned by the
Business Vendors in Regulatory Data and Know-how other than any
Intellectual Property owned by the Business Vendors in the Biocides
Exclusive Data and the Assigned Know-how; and
(ii) the Intellectual Property owned by the Business Vendors in computer
software which at Completion is or has been used or enjoyed
exclusively in connection with the Target Businesses;
"Business Liabilities" means:
(i) the Creditors;
(ii) all other Liabilities of the Business Vendors incurred in relation
to or in carrying on the Business and existing, outstanding or in
force at Completion or arising, accruing or assessed after
Completion in consequence of any
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transaction or event incurred or entered into or occurring in
relation to or in carrying on the Business prior thereto including
without limitation, the Liabilities assumed under Clause 10.3;
(iii) Liabilities relating to the Environment insofar as they relate to or
arise from the Business Assets or the Operations;
(iv) any other Liabilities included in the Completion Working Capital
Statement; and
(v) all Liabilities otherwise expressly assumed by the Purchaser under
this Agreement,
but, in each case, excluding the Excluded Liabilities and the Insured
Liabilities;
"Business Properties" means the freehold and leasehold properties and
interests in real property in each case vested in the Business Vendors at the
date of this Agreement and specified as such in the Property List;
"Cash" means cash on hand or credited to an account with a financial
institution;
"Cash Determination Date" means the date on which the process described in
Part 2 of Schedule 3 for the agreement or determination of the Cash Statement
is complete;
"Cash Statement" means a statement of the Target Companies Cash to be prepared
pursuant to Clause 4 in accordance with the provisions of Part 2 of Schedule 3
as agreed (or deemed to be agreed) or as finally determined in accordance with
the relevant provisions of Schedule 3;
"Claimant" bears the meaning given in Clause 8.1;
"Claims" means all rights and claims of the Business Vendors arising at any
time (whether before or after Completion) out of or in connection with the
Business (whether arising under any warranties, conditions, guarantees,
indemnities, contracts, agreements (in each case whether express or implied)
or otherwise howsoever) insofar as they relate to any of the Business Assets
or any Business Liability but excluding rights and claims under (i) any
insurance policy (save to the extent expressly included in the definition of
Business Assets) or (ii) without prejudice to the Environmental Deed of
Assignment, the agreements by which the Principal Vendor and certain of its
Associated Companies contracted to acquire the Zeneca Specialties business
from Zeneca Limited and others in 1999;
"Completion" means the completion to occur pursuant to Clause 6.1;
"Completion Consideration Shares" means 446,500 shares of common stock of the
Purchaser less, in the event that a Delayed Completion is required under
Clause 4.25, the number of Spanish Consideration Shares (such number of shares
to be appropriately adjusted in the event of any share split, stock
combination, stock dividend or similar reclassification or other change
applicable to shares of common stock of the Purchaser after the date of this
Agreement and before the issuance of the Completion Consideration Shares);
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102
"Completion Date" means the date on which Completion occurs;
"Completion Spanish Working Capital" means the amount of net consolidated
working capital of the Spanish Operations as at the effective time of the
Delayed Completion as set out in the Completion Spanish Working Capital
Statement;
"Completion Spanish Working Capital Statement" means the statement of the
consolidated net working capital of the Spanish Operations as at the effective
time of the Delayed Completion as agreed (or deemed to be agreed) or as
finally determined in accordance with the relevant provisions of Schedule 3;
"Completion Working Capital" means, the amount of consolidated net working
capital of the Target Companies and the Target Businesses as at the Effective
Time as set out in the Completion Working Capital Statement;
"Completion Working Capital Determination Date" means the date on which the
process described in Part 2 of Schedule 3 for the agreement or determination
of the Completion Working Capital Statement is complete;
"Completion Working Capital Statement" means the statement of the consolidated
net working capital of the Target Companies and the Target Businesses as at
the Effective Time as agreed (or deemed to be agreed) or as finally determined
in accordance with the relevant provisions of Schedule 3;
"Conditions Precedent" means the conditions to Completion set out in Clause
3.1;
"Confidentiality Agreement" means the confidentiality agreement dated 4th June
2003 between the Purchaser and Goldman Sachs International;
"Consideration Shares" means the shares of common stock of the Purchaser to be
issued to the US Business Vendor as Completion Consideration Shares, New
Castle Consideration Shares or Delayed Consideration Shares in partial
satisfaction of the Purchase Price, in accordance with Schedule 9;
"Contracts" means any contract, agreement or other legally binding
arrangement, whether oral or written, entered into by any of the Business
Vendors and subsisting at Completion (including, without limitation, contracts
with customers or suppliers of goods or services and operating or finance
leases and licences and agreements relating to Intellectual Property) to the
extent it relates to the Business provided that (i) any such contract or
agreement shall not be a "Contract" to the extent it relates to an Excluded
Asset or an Excluded Liability, (ii) where a Contract is of a type dealt with
more specifically in this Agreement (such as employment agreements) and those
other provisions are inconsistent with the provisions relating to Contracts
generally, such more specific provisions shall prevail and (iii) the term
"Contracts" shall not include those agreements for the supply of goods,
services or utilities to the Vendors' Group the benefit of which is to be
provided to the Purchaser or a Local Purchaser under the Ancillary Agreements;
"Conversion Rate" means the average of the spot selling and buying rates for a
transaction between the two currencies in question as quoted on the relevant
Reuters page as at the close of business (London time) on the Business Day
prior to the
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103
Relevant Conversion Date (as defined in paragraph 3 of this Schedule) or, if
no such rate is quoted on that date, on the preceding date on which such rates
are quoted;
"CP Satisfaction Date" means the date on which the Conditions Precedent in
Clause 3.1 are all satisfied or deemed to be satisfied or waived;
"Creditors" means all amounts owed by a Business Vendor as at the Effective
Time to the extent they arose in connection with the Business (whether or not
due and payable) and including without limitation amounts owed to trade
creditors for the supply of goods or services but excluding Indebtedness;
"Cumulative Gross (Variable) Margin" means net sales less costs of raw
materials and intermediates less variable production cost less variable
selling and distribution expenses;
"Current Use" means, in relation to the Properties, the use given for such
Property in the Property List;
"Data Room" means the documents listed in Appendices 1 and 2 to the Disclosure
Letter;
"Debtors'" means the book and other debts receivable by or owing to the
Business Vendors to the extent that they arose in connection with the Business
(and whether or not yet due or payable) as at the Effective Time but
excluding:
(i) debts owing by any employee who is not an Employee;
(ii) debts due from any Taxation Authority; and
(iii) Cash;
"Delayed Consideration Shares" means the number of shares of common stock of
the Purchaser equal to the quotient obtained by dividing (i) US$5.0 million
minus the Pension Deficit Reduction Adjustment Amount by (ii) US$22.3964, but
not to exceed 223,250 shares (such number of shares to be appropriately
adjusted in the event of any share split, stock combination, stock dividend or
similar reclassification or other change applicable to shares of common stock
of the Purchaser after the date of this Agreement and before the issuance of
the Delayed Consideration Shares);
"Delayed Share Issue Date" means the date falling ten Business Days after the
date on which the payment required by paragraph 5.1 (and, if applicable,
paragraph 7.2) of Part 2 of Schedule 8 is made;
"Disclosure Letter" means the letter of even date with this Agreement from the
Principal Vendor to the Purchaser (together with its attachments) disclosing:
(i) information constituting exceptions to the Warranties; and
(ii) details of other matters referred to in this Agreement;
"Effective Time" means 23:59 hours on the Completion Date;
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"Employee Benefit Arrangements" means the schemes or arrangements operated or
maintained by the Business Vendors or Target Companies or in which the
Business Vendors or any Target Company participates or contributes in respect
of Employees (other than (i) mandatory state or statutory social security,
unemployment, insurance, workers compensation or pension arrangements and (ii)
schemes relating solely to the issue or transfer or ownership of shares in
Avecia Holdings plc) and providing for benefits payable during employment or
on retirement, death or disability and voluntary withdrawal from or
involuntary termination of employment, including each "employee benefit plan"
within the meaning of Section 3(3) of ERISA and each other life assurance,
accidental death and dismemberment schemes, medical benefit arrangements
(including retiree medical benefits) and termination indemnity payments,
profit sharing, incentive arrangements, life, accident and health insurances,
hospitalisation, savings, holiday, holiday bonus, vacation, severance pay,
sick pay, sick leave, tuition refund, service awards, company car,
scholarship, relocation or any other employee or executive benefits;
"Employee List" means the list in the Agreed Form AF3;
"Employees" means the Target Companies Employees, the US Employees, the UK
Employees and the Overseas Employees;
"Employment Costs" means, in respect of any Employee, a sum equivalent to the
aggregate of (i) the amount payable or paid to or in respect of the employment
of the relevant Employee (including, but not limited to, salary, wages, tax
and social security contributions, employer's pension contributions, bonus,
insurance premia, payments or allowances or any other consideration for
employment) and (ii) the cost of providing any non-cash benefits, which the
employer is required to provide, by law or contract or customarily provides in
connection with such employment;
"Employment Liabilities" means any and all Liabilities arising out of or
connected with employment or the employment relationship, or termination of
employment, or of the employment relationship (including, but not limited to,
all Liabilities in connection with any claim for redundancy pay, or damages or
compensation for unfair or wrongful dismissal or breach of contract);
"Encumbrance" means any charge, mortgage, security, lien, option, equity,
power of sale, hypothecation or other similar third party right;
"Environment" has the meaning given in the Environmental Deed;
"Environmental Deed" means the environmental deed of covenant dated 30th June
1999 among Zeneca Limited (now Syngenta Limited) and others, AstraZeneca plc
and the Principal Vendor;
"Environmental Deed of Assignment" means the deed in the Agreed Form AF8 to be
entered into between the Principal Vendor, the Purchaser and the Local
Purchasers at Completion;
"Environmental Laws" has the meaning given in the Environmental Deed provided
that all references to Completion in such definition in the Environmental Deed
shall be deemed to be references to the date of this Agreement;
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105
"Environmental Liabilities" has the meaning given in the Environmental Deed;
"Environmental Permits" means all Permits required under Environmental Laws to
conduct the Operations;
"Environmental Pooling Agreement" means the deeds of adherence in the Agreed
Form AF9 to be entered into between the Principal Vendor and the Purchaser and
the Local Purchaser at Completion;
"Environmental Warranties" means the Warranties set out at paragraph 4.4 of
Schedule 4;
"Equity Schemes" means (i) the schemes or arrangements operated or maintained
by the Business Vendors or Target Companies or in which any Business Vendor,
Target Company or Employee participates or contributes in respect of Employees
(including any individual arrangement with any Employee) that relate to the
issue or transfer or ownership of shares in Avecia Holdings plc and (ii) the
arrangements set out in paragraph 5.1.3 (b) of the Disclosure Letter;
"ERISA" means the US Employee Retirement Income Security Act of 1974, as
amended;
"Estimated Cash" means the amount of Cash shown in the Transaction Breakdown;
"Estimated Intra-Group Indebtedness" means the aggregate of the Estimated
Intra-Group Payables of the Target Companies minus the aggregate of the
Estimated Intra-Group Receivables of the Target Companies;
"Estimated Intra-Group Payables" means, in respect of each Target Company, the
amount of Intra-Group Payables shown in the Transaction Breakdown;
"Estimated Intra-Group Receivables" means, in respect of each Target Company,
the amount of Intra-Group Receivables shown in the Transaction Breakdown;
"Estimated Third Party Indebtedness" means the amount of Third Party
Indebtedness shown in the Transaction Breakdown;
"Exchange Act" means the US Securities Exchange Act of 1934, as amended;
"Excluded Assets" means:
(i) any Cash of the Business Vendors;
(ii) the benefit of or sums owed under any insurance policy relating to
the Operations or otherwise incepted by or on behalf of the Vendors'
Group (save to the extent expressly included in the definition of
Business Assets);
(iii) any rights in or to the Excluded Names;
(iv) any right to receive a repayment of Taxation and (to the extent
possible to exclude from the sale and purchase under this Agreement)
any other Taxation benefit or advantage of the Business Vendors
(including losses, reliefs, deductions or credits available in
computing liability for Taxation) to the extent
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106
that such right, benefit or advantage relates to Taxation that is an
Excluded Liability;
(v) the benefit of any amount owed at the Effective Time to the Business
Vendors by another member of the Vendors' Group (other than the
Target Companies and other than ordinary course trading balances
included in calculating Completion Working Capital);
(vi) the following assets at the Grangemouth site:
(a) caustic storage tank 46/222 and associated equipment;
(b) HCI storage tank 43/233 and associated equipment;
(c) main plant effluent tank;
(d) biocides finished product warehouse and associated storage
slab;
(e) North Site, West area storage slab;
(f) the warm room that is used to heat IBCs of Bisulphate and
other non-biocides products;
(vii) photocopiers at the Blackley site;
(viii) assets primarily used by the Vendors' Group prior to Completion to
provide services to the Target Businesses and Target Companies under
the Ancillary Agreements; (ix) any rights in the Vendors' Group
business information processing systems including without limitation
SAP or network servers on which such systems run;
(x) the contract between the US Business Vendor and Ceridian Corporation
relating to the provision of human resource and payroll services
dated 31st July 2002; and
(xi) any other asset of the Business Vendors which is not primarily used
in the conduct of the Business;
"Excluded IP" means the Excluded Names and any registered or unregistered
trade marks, logos or other devices incorporating the Excluded Names and the
domain name aveciabiocides.com;
"Excluded Liabilities" means any Liabilities of the Business Vendors (other
than those included in the Completion Working Capital Statement to the extent
so included) to the extent they represent:
(i) Indebtedness or any security, guarantee or indemnity in respect of
Indebtedness;
(ii) Taxation (other than Taxation relating to Employees);
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107
(iii) any sum owed at Completion by the Business Vendors to another member
of the Vendors' Group (other than the Target Companies other than
ordinary course trading balances included in calculating Completion
Working Capital);
(iv) any Liability to the extent expressly reserved to a Business Vendor
or in respect of which and to the extent an indemnity or covenant to
pay is given by the Principal Vendor under this Agreement;
(v) any Liability relating to or arising from Equity Schemes;
(vi) any Liability in respect of the arrangements described at paragraph
6.3(a) of the Disclosure Letter;
(vii) any Liability in respect of the removal of asbestos as described at
paragraph 4.4.5 of the Disclosure Letter;
(viii) any Liability in respect of the Rodriguez claim referred to at
paragraph 4.3 of the Disclosure Letter;
(ix) any Liability in respect of the enhanced severance terms (including
enhanced notice periods) for Shivers, Heffelfinger, Polkus, Sipple,
Dever, Giofre, Palermo, Herriott and Kenline referred to at
paragraphs 6.1.2 or 6.1.11 of the Disclosure Letter to the extent
the relevant employee is dismissed by the Purchaser, or a Local
Purchaser, prior to the first anniversary of Completion and then
only to the extent such Liability exceeds the regular severance
benefits that would be payable under the written terms of the Avecia
Severance Plan (as defined in paragraph 1 of Part 1 of Schedule 8)
as in effect on the date of this Agreement determined as if, solely
for purposes of determining the Liability excluded by this paragraph
(ix), the Avecia Severance Plan was in effect at such time; and
(x) any fines or penalties imposed by the Florida Department of
Agriculture and Consumer Services in respect of the lack of
registration issue referred to at paragraph 4.1(vii) of the
Disclosure Letter, to the extent such fines or penalties relate to
sales of the relevant product made prior to Completion;
"Excluded Names" means the name "Avecia" and any other names confusingly
similar to its logos;
"Freehold Properties" means those of the Properties identified in the Property
List as being freehold or owned in fee simple by a Business Vendor or a Target
Company;
"Goodwill" means the goodwill of the Business Vendors in connection with the
Business together with the exclusive right (so far as the Business Vendors
have the right to grant the same) for the Purchaser or the relevant Local
Purchaser to represent itself as carrying on the Target Businesses in
succession to the Business Vendors and includes the goodwill associated with
the trade marks included in the Business IP but excludes all other goodwill
associated with the Excluded Names or any trade marks or names not included in
the Business IP;
"HSR Act" bears the meaning given in Clause 3.1.1;
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108
"Indebtedness" means:
(i) all monies borrowed or raised from any persons outside the Vendors'
Group (whether under or not under normal commercial lending terms or
upon the issue of bills, bonds, debentures, notes, loan stock or
other evidence of indebtedness or borrowing);
(ii) obligations in respect of foreign exchange contracts and all
derivative instruments (including, without limitation, any interest
or currency protection, hedging or financial future transactions) of
the Operations; and
(iii) obligations in respect of any guarantee, counter-indemnity, letter
of credit, indemnity or similar assurance against the financial loss
of any person other than the Target Companies;
"Information Technology" means computer hardware, software, networks and/or
other information technology whether embedded or otherwise;
"Insured Liabilities" means the Lechner, Stepler and potential employment
related personal injury claims referred to at paragraph 4.3 of the Disclosure
Letter together with legal defence costs incurred in connection with such
claims, provided that any portion of such claim or costs in respect of which
the Vendors' Group is not actually covered by insurance (and for the avoidance
of doubt the amount of any deductible is not to be treated as being covered by
insurance) shall not be an "Insured Liability" and shall be a "Business
Liability";
"Intellectual Property" or "IP" means trade marks and service marks and all
goodwill associated with such marks, trade names, business names, logos,
get-up, patents, inventions, registered and unregistered design rights,
copyrights (including copyrights in computer software), semi-conductor
topography rights, database rights and all other similar proprietary rights
which may subsist in any part of the world (whether or not registered) and
including, where such rights are obtained or enhanced by registration, any
registration of such rights and applications including, without limitation,
pending patent applications, and rights to apply for such registrations;
"Intellectual Property List" means the list of Intellectual Property in the
Agreed Form AF4;
"Interest Rate" means LIBOR plus 2%, accruing daily and compounding on the
last Business Day of each calendar quarter;
"Intra-Group Indebtedness" means the aggregate amount of the Intra-Group
Payables minus the aggregate amount of the Intra-Group Receivables of the
Target Companies;
"Intra-Group Indebtedness Determination Date" means the date on which the
process described in Part 2 of Schedule 3 for the agreement or determination
of the Intra-Group Indebtedness Statement is complete;
"Intra-Group Indebtedness Statement" means a statement of Intra-Group
Indebtedness identifying separately each of the Intra-Group Payables and
Intra-Group Receivables to be prepared pursuant to Clause 4 in accordance with
the provisions of
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109
Part 2 of Schedule 3 as agreed (or deemed to be agreed) or as finally
determined in accordance with the relevant provisions of Schedule 3;
"Intra-Group Payables" means all outstanding loans or other liabilities or
obligations owed by a Target Company to a member of Vendors' Group as at the
Effective Time, but excluding any item which falls to be included in
calculating Target Companies Cash, Third Party Indebtedness or Completion
Working Capital;
"Intra-Group Receivables" means all outstanding loans or other liabilities or
obligations owed by a member of the Vendors' Group to a Target Company as at
the Effective Time, but excluding any item which falls to be included in
calculating Target Companies Cash, Third Party Indebtedness or Completion
Working Capital;
"Know-how" means confidential industrial, technical or commercial information
and techniques in any form (including paper, electronically stored data,
magnetic media, film and microfilm) including (without limiting the foregoing)
drawings, laboratory notebooks, formulae, test results, reports, research
reports, project reports and testing procedures, shop practices, instruction
and training manuals, tables of operating conditions, market forecasts,
marketing methods and procedures, show-how and advertising copy but excluding
Regulatory Data;
"Leasehold Properties" means those of the Properties identified in the
Property List as being leased by a Business Vendor or a Target Company;
"Liabilities" means all liabilities, duties and obligations of every
description, whether deriving from contract, common law, statute or otherwise,
whether present or future, actual or contingent, ascertained or unascertained
or disputed and whether owed or incurred severally or jointly or as principal
or surety;
"LIBOR" means in respect of pounds sterling or euros or US dollars, the London
inter-bank offered rate for three month deposits of the relevant currency
quoted by the Financial Times in London on the first Business Day of each
calendar quarter (or if no such rate is quoted on that day, on the first
preceding day on which such a rate was quoted);
"Local Agreements" means the agreements for the sale and purchase of the
Shares and/or Business Assets (and assumption of Business Liabilities) in
particular jurisdictions;
"Local Purchasers" means the persons nominated pursuant to Clause 2.5 to
purchase any of the Shares or the Business Assets (and assume the Business
Liabilities);
"Long Stop Date" means 31st August 2004;
"Losses" means all losses, Liabilities, costs (including without limitation
reasonable legal costs), charges and expenses;
"Material Adverse Change" means any materially adverse change or effect on the
condition (financial or otherwise), turnover, results of operations, business,
properties or assets of the Operations taken as a whole (not being an event
affecting or likely to affect to a similar extent generally companies carrying
on a similar business or businesses in the territories within which the
Operations carry on business);
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110
"Material Breach of Undertaking" means a breach in any material respect by the
Principal Vendor of any of its undertakings in Clause 5.2 or Clause 6.3;
"Material Breach of Warranty" means:
(i) as of the date of this Agreement (except to the extent expressly
made as of a specified date, in which case as of such specified
date), any failure of the Warranties, to the extent the Warranties
are qualified by materiality or material adverse effect, to be true
and correct, and any failure of the Warranties, to the extent the
Warranties are not so qualified, to be true and correct in all
material respects; and
(ii) as of the Completion Date (except to the extent expressly made as of
a specified date, in which case as of such specified date), (A) any
failure of the Basic Warranties, to the extent the Basic Warranties
are qualified by materiality or material adverse effect, to be true
and correct, and any failure of the Basic Warranties, to the extent
the Basic Warranties are not so qualified, to be true and correct in
all material respects, and (B) any failure of the Non-Basic
Warranties to be true and correct, except to the extent that the
facts or matters as to which the Non-Basic Warranties are not true
and correct as of such date (without giving effect to any
qualifications as to materiality or material adverse effect set
forth therein), individually or in the aggregate, do not have and
would not be reasonably expected to have a Material Adverse Change;
"Material Contracts" bears the meaning given in paragraph 5.2.1 of Schedule 4;
"New Castle Consideration Shares" means 223,250 shares of common stock of the
Purchaser (such number of shares to be appropriately adjusted in the event of
any share split, stock combination, stock dividend or similar reclassification
or other change applicable to shares of common stock of the Purchaser after
the date of this Agreement and before the issuance of the New Castle
Consideration Shares);
"New Castle Lab Lease" means the document in the Agreed Form AF14L;
"New Castle Lab Property" means the property which is the subject of the New
Castle Lab Lease and which is located at 235 Cherry Lane, New Castle,
Delaware, USA;
"New Castle Release Condition" means the first to occur of the following
circumstances (i) and (ii):
(i) the delivery to the Purchaser of all of:
(a) a recordable original of the New Castle Lab Lease or a
memorandum thereof, duly executed by the US Business
Vendor and subject only to Permitted Encumbrances (as such
term is defined in the New Castle Lab Lease);
(b) a release of that certain mortgage ("Mortgage") held by
Chase Manhattan International Limited ("CMIL") dated 30th
June 1999 in the original amount of US$16,500,000 with
respect to the New Castle Lab Property or a
non-disturbance agreement from CMIL, in a form
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SCHEDULE 10 - Definitions and Interpretation
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111
reasonably acceptable to the Purchaser, in respect of the
New Castle Lab Lease; and
(c) an opinion from Delaware counsel in a form acceptable to
the Purchaser acting reasonably opining that the New
Castle Lab Lease is valid and enforceable under the laws
of the State of Delaware; or
(ii) the occurrence of all of:
(a) the receipt by the US Business Vendor of Subdivision
Approval (as such term is defined in the New Castle Lab
Lease);
(b) a release of the Mortgage with respect to the New Castle
Lab Property; and
(c) the transfer of fee simple title to the New Castle Lab
Property from the US Business Vendor to the Purchaser or a
Local Purchaser in accordance with article II of the New
Castle Lab Lease;
"Non-Basic Warranties" means the Warranties other than the Basic Warranties;
"Operations" means the Target Businesses and the operations and activities of
the Target Companies;
"Overseas Employees" means all the persons employed by the Business Vendors
(other than the US Employees and the UK Employees) wholly or mainly in
connection with the Target Businesses at Completion (being as at 18th February
2004 those identified as such in the Employee List);
"Pension Deficit Reduction Adjustment Amount" bears the meaning given in
paragraph 6.1 of Part 2 of Schedule 8;
"Permits" means all certificates, consents, licences, permits, authorisations,
orders, warrants, confirmations, permissions and approvals by a Business
Vendor or Target Company that are necessary for or used, held for use or
intended to be used primarily in connection with the Operations;
"Permitted Encumbrances" means with respect to each parcel of Business
Property: (i) real estate taxes, assessments and other governmental levies,
fees or charges imposed with respect to such Business Property which are not
due and payable as of Completion, or which are being contested in good faith;
(ii) landlord's liens arising by operation of law in the ordinary course of
business for sums which are not overdue; (iii) planning, building codes and
other land use laws regulating the use or occupancy of such Business Property
or the activities conducted thereon which are imposed by any governmental
authority having jurisdiction over such Business Property which are not
violated by the current use or occupancy of such Business Property or the
operation of the Target Businesses as currently conducted thereon; and (iv)
easements, covenants, conditions, restrictions and other similar matters of
record affecting title to such Business Property which do not materially
impair the continued use or occupancy of such Business Property in the
operation of the Target Businesses as currently conducted thereon;
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112
"Plant and Equipment" means the fixed and loose plant and machinery, tools,
Information Technology, office equipment, furniture, fittings and other
personal property owned by the Business Vendors which at Completion is used
primarily in connection with the Business including the assets described on
the list in the Agreed Form AF2;
"Principal Vendor's Bank Account" means:
(i) in respect of payments to be made in Euros, the bank account of
Avecia Limited with JP Morgan Chase Bank, Frankfurt, SWIFT code
CHASDEFX, account number 6231400604 for account of JP Morgan Chase
Bank, London, SWIFT code CHASGB2L, account number 23423205, for
account of Avecia Limited;
(ii) in respect of payments to be made in pounds sterling, the bank
account of Avecia Limited with JP Morgan Chase Bank, London, SWIFT
code CHASGB2L, sort code 60-92-42, account number 23423207; and
(iii) in respect of payments to be made in US dollars, the bank account of
Avecia Limited with JP Morgan Chase Bank, New York, SWIFT code
CHASUS33, account number 001-0-962009 for account of JP Morgan Chase
Bank, London, SWIFT code CHASGB2L, account number 23423211 for
account of Avecia Limited,
or in each case such other account as the Principal Vendor may have notified
to the Purchaser at least 5 Business Days in advance of the relevant payment
requiring to be made;
"Products List" means the list of biocides compounds set out in schedule 1 of
the Regulatory Data Transfer and Access Agreement in the Agreed Form AF13B;
"Properties" means the Business Properties and the Target Companies
Properties;
"Property List" means the list of properties in the Agreed Form AF5;
"Property Owner" means, in relation to any Property, the relevant Business
Vendor or Target Company named as its freehold or leasehold owner in the
Property List;
"Purchase Price" mean the aggregate consideration payable for the Shares, the
Target Businesses and the Business Assets under Clause 4;
"Purchaser's Counsel" means Cravath, Swaine & Moore LLP, 825 Eighth Avenue,
New York, NY 10019, USA - Attn: Robert I Townsend III;
"Purchaser's Group" means the Purchaser and any holding company of the
Purchaser and any subsidiary of such holding company from time to time
including after Completion the Target Companies;
"Recipient" bears the meaning given in Clause 8.1;
"Regulatory Data" means, in relation to a molecule used to make a product, or
a product, information:
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SCHEDULE 10 - Definitions and Interpretation
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113
(i) required to facilitate the making of an application for a regulatory
approval (or to facilitate confirmation of legal compliance in order
to be able to sell) or to maintain a regulatory approval (or
confirmation of legal compliance in order to be able to sell) for
that molecule or product; or
(ii) which relates to employee health and safety, hazard prevention and
environmental protection and is required for the completion of
safety data labelling and classification sheets, as well as such
safety data, labelling and classification sheets;
"Relevant Period" means the period from 1st January 2004 to 31st December 2005
(both dates inclusive);
"Reporting Accountants" means a Chartered Accountant or firm of Chartered
Accountants to be agreed by the Principal Vendor and the Purchaser within
seven days of a notice by one to the other requiring such agreement or failing
such agreement to be nominated on the application of either of them by or on
behalf of the President for the time being of the Institute of Chartered
Accountants in England and Wales;
"Scheduled Completion Date" shall be determined as follows:
(i) if the CP Satisfaction Date occurs before 2nd April 2004, the
Scheduled Completion Date shall be 2nd April 2004;
(ii) if the CP Satisfaction Date occurs on 3rd April 2004, the Scheduled
Completion Date shall be 5th April 2004;
(iii) if the CP Satisfaction Date occurs from 4th April 2004 to 7th April
2004 (inclusive), the Scheduled Completion Date shall be 8th April
2004;
(iv) if the CP Satisfaction Date occurs on 8th or 9th April 2004, the
Scheduled Completion Date shall be 13th April 2004;
(v) if the CP Satisfaction Date occurs after 9th April 2004 and:
(a) is any day other than Friday, the Scheduled Completion
Date shall be the next Friday that is a Business Day; or
(b) is a Friday, the Scheduled Completion Date shall be the
next Business Day;
"SEC" means the US Securities and Exchange Commission;
"Second Long Stop Date" means 31st October 2004;
"Securities Act" means the US Securities Act 1933, as amended;
"Senior Employee" means an employee of the Vendors' Group classified as being
at Grade 33 or above or having an annual basic salary in excess of US$75,000;
"Settlement Date" means the date falling five Business Days after the Cash
Determination Date, Completion Working Capital Determination Date, Intra-Group
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114
Indebtedness Determination Date or Third Party Indebtedness Determination
Date, whichever is the latest;
"Shares" means the shares in the capital of the Target Companies as specified
in Part 1 of Schedule 2;
"Spanish Consideration Shares" means 111,625 shares of common stock of the
Purchaser (such number of shares to be appropriately adjusted in the event of
any share split, stock combination, stock dividend or similar reclassification
or other change applicable to shares of common stock of the Purchaser after
the date of this Agreement and before the Delayed Completion Date);
"Spanish Settlement Date" means the date falling five Business Days after the
date the Completion Spanish Working Capital Statement is determined;
"Specified Warranties" means the Warranties set out in the following
paragraphs of Schedule 4:
(i) 1 (Authority and Capacity);
(ii) 4.5 (Insolvency);
(iii) 8.1 (Title);
(iv) 8.3.4 (Ownership of Properties);
(v) 8.4.1 (Ownership of IP);
(vi) 8.7 (Target Companies' Assets and Activities);
"Spot Rate" means in respect of the conversion of any currency into US
dollars, the foreign currency exchange rate notified to the UK Business Vendor
by JP Morgan as the spot rate for such currency exchange in respect of the
third last Business Day of the calendar month in which the Completion Date
falls (being, for illustrative purposes 29th March 2004 in respect of a
Completion Date of 31st March 2004);
"Stock" means the raw materials, stock-in-trade, work-in-progress, finished
goods, suppliers, parts, spare parts and other inventories owned or agreed to
be bought by the Business Vendors primarily in connection with the Business as
at the close of business on the Effective Time;
"Target Businesses" means the operations and activities of the Business
Vendors in conducting the Business as at and up to the Effective Time;
"Target Companies" means the companies identified in Schedule 2;
"Target Companies Cash" means, in relation to each Target Company, the amount
of its Cash as set out in its cash ledger as at the Effective Time;
"Target Companies Creditors" means all trade and non-trade creditors of the
Target Companies as at the Effective Time including balances due to the
Vendors' Group, but excluding any item which falls to be included in
calculating Intra-Group Indebtedness;
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SCHEDULE 10 - Definitions and Interpretation
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115
"Target Companies Debtors" means all trade and non trade debtors of the Target
Companies as at the Effective Time including balances due from the Vendors'
Group, but excluding any item which falls to be included in calculating
Intra-Group Indebtedness;
"Target Companies Employees" means the persons employed by any of the Target
Companies at Completion (being as at 18th February 2004 those identified as
such in the Employee List);
"Target Companies Properties" means the freehold and leasehold properties and
interests in real property in each case vested in the Target Companies at the
date hereof and listed and identified as such in the Property List;
"Taxation" or "Tax" have the meaning given to them in the Tax Deed;
"Taxation Benefits" means any Taxation benefit or advantage or repayment of
Taxation, including any loss, relief, allowance, exemption, set-off, deduction
or credit available in the computation of any liability to Taxation;
"Tax Authority" has the meaning given to it in the Tax Deed;
"Tax Deed" means the deed of covenant in respect of Taxation in the Agreed
Form AF7 to be entered into between the Principal Vendor and the Purchaser at
Completion;
"Tax Return" bears the meaning given in the Tax Deed;
"Tax Warranties" means the Warranties set out at paragraph 7 of Schedule 4;
"Third Party Indebtedness" means the aggregate amount (including interest,
prepayment penalties and other costs of discharge) as at the Effective Time of
(i) all outstanding loans and finance leases owing by the Target Companies to
any third party other than a member of the Vendors' Group (ii) if applicable,
finance leases owing by the Business Vendors to the extent that such leases
fall within the definition of Contracts for the purposes of this Agreement
but, in each case, excluding any item included in respect of such Completion
in the calculation of Cash balances or Intra-Group Indebtedness or Completion
Working Capital;
"Third Party Indebtedness Determination Date" means the date on which the
process described in Part 2 of Schedule 3 for the agreement or determination
of a Third Party Indebtedness Statement is complete;
"Third Party Indebtedness Statement" means the statement of Third Party
Indebtedness to be prepared pursuant to Clause 4 in accordance with the
provisions of Part 2 of Schedule 3 as agreed (or deemed to be agreed) or as
finally determined in accordance with the relevant provisions of Schedule 3;
"Transaction Breakdown" means the document bearing that title in the Agreed
Form AF6 and identifying in relation to each Transfer of Operations the Base
Allocation, the Base Working Capital, the Estimated Cash, the Estimated Third
Party Indebtedness, the Estimated Intra-Group Payables and the Estimated
Intra-Group Receivables;
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116
"Transfer of Operations" means, separately, each sale by a Vendor and each
transfer to the Purchaser or a Local Purchaser of:
(i) the Shares; and
(ii) the Target Businesses;
"TUPE" means the Transfer of Undertakings (Protection of Employment)
Regulations 1981, as amended;
"UK Business Vendor" means Avecia Limited, one of the Business Vendors;
"UK Employees" means all the persons employed by the UK Business Vendor wholly
or mainly in connection with the Target Businesses as at Completion (being as
at 18th February 2004 those identified as such in the Employee List);
"UK GAAP" means generally accepted accounting principles in the United
Kingdom, consistently applied; "US Business Vendor" means Avecia Inc, one of
the Business Vendors;
"US GAAP" means generally accepted accounting principles in the United States,
consistently applied;
"US Employees" means all the persons employed by the US Business Vendor wholly
or mainly in connection with the Business as at Completion (being as at 18th
February 2004 those identified as such in the Employee List);
"VAT" means within the European Community such Tax as may be levied in
accordance with (but subject to derogations from) the Directive 77/388/EEC and
outside the European Community any Taxation levied by reference to added value
or sales of goods or services;
"Vendors" means the Business Vendors, the Share Vendors and the Principal
Vendor;
"Vendors' Group" means the Principal Vendor and any holding company of the
Principal Vendor and any subsidiary of such holding company from time to time
but excluding for the purposes of the definitions of Intra-Group Payables,
Intra-Group Receivables and Third Party Indebtedness, the Target Companies;
"Vendors' Solicitors" means Dickson Minto W.S., Royal London House, 22-25
Finsbury Square, London, EC2A 1DX; and
"Warranties" means the warranties contained in paragraph 8 of Part 5 of
Schedule 3 and in Schedule 4.
2. INTERPRETATION
In this Agreement:
2.1. the masculine gender shall be deemed to include the feminine and
neuter and the singular number shall be deemed to include the plural
and vice versa;
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SCHEDULE 10 - Definitions and Interpretation
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117
2.2. the Clause headings, use of bold or italic type and contents page
are for convenience of reference only and shall not affect its
construction or interpretation;
2.3. references to Recitals, Clauses, and Schedules are to the recitals
and clauses of and the schedules to this Agreement and references to
paragraphs are to the paragraphs of a Schedule;
2.4. reference to any statute or statutory provision shall include any
statute or statutory provision which amends, extends, consolidates
or replaces the same, or which has been amended, extended,
consolidated or replaced by the same, and shall include any orders,
regulations, instruments or other subordinate legislation made under
the relevant statute, provided that no such amendment, extension,
consolidation replacement, order, regulation, instrument or other
subordinate legislation made after the date of this Agreement shall
increase the liability of any party;
2.5. references to persons shall include references to firms,
corporations or unincorporated associations;
2.6. where a word or expression is given a particular meaning, other
parts of speech and grammatical forms of that word or expression
have a corresponding meaning;
2.7. the expressions "subsidiary", "holding company" and "group
undertaking" shall have the same meanings in this Agreement as their
respective definitions in the Companies Act 1985;
2.8. references to any English legal term or concept (including, without
limitation, those for any action, remedy, method or judicial
proceeding, document, statute, court official, governmental
authority or agency) shall in respect of any jurisdiction other than
England be construed as references to the term or concept which most
nearly corresponds to it in that jurisdiction; and
2.9 any reference to the date of this Agreement shall be construed as
meaning 4th March 2004.
3. CURRENCY CONVERSION
Any amount to be converted from one currency into a second currency for the
purposes of the following provisions of this Agreement and the Tax Deed shall
be converted into an equivalent amount at the Relevant Conversion Date at the
Conversion Rate prevailing at the Relevant Conversion Date. The "Relevant
Conversion Date" for the purposes of:
3.1. paragraphs 1.1 and 1.2 of Schedule 5 and paragraphs 3.2.1 and 5.8 of
the Tax Deed shall be the date on which the relevant claim was made;
and
3.2. paragraph 2 of Schedule 5 and paragraph 3.2.2 of the Tax Deed shall
be the date(s) on which the Principal Vendor makes payment(s) in
respect of the relevant claims.
In relation to the determination of the Cash, Third Party Indebtedness,
Intra-Group Indebtedness and the Completion Working Capital, the Spot Rate
shall apply as provided for in Part 1 of Schedule 3.
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118
In relation to the calculation of Effects Sales and Product Margins, any sales
not made in US dollars will be converted to US dollars at the rate adopted by
the Purchaser for the purpose of its own audited accounts in respect of the
year in question or such other rate as the Purchaser and the Principal Vendor
acting reasonably shall agree.
4. AVOIDANCE OF OVERLAP OF CERTAIN DEFINITIONS
The definitions of each component of the Business Assets stated above shall be
deemed to exclude any item which falls within the definition of "Excluded
Assets" and which would otherwise be included within such definitions.
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SCHEDULE 10 - Definitions and Interpretation
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EXECUTED AS FOLLOWS:
Executed on behalf of
AVECIA INVESTMENTS LIMITED
by:
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Attorney
Executed on behalf of
AVECIA HOLDINGS BV
by:
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Attorney
Executed on behalf of
AVECIA UK HOLDINGS LIMITED
by:
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Attorney
Executed on behalf of
AVECIA, INC.
by:
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Attorney
Executed on behalf of
AVECIA KK
by:
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Attorney
Executed on behalf of
AVECIA LIMITED
by:
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Attorney
Executed on behalf of
AVECIA (SCDR) SARL
by:
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Attorney
Executed on behalf of
AVECIA GMBH
by:
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Attorney
Executed on behalf of
AVECIA SPAIN SL
by:
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Attorney
Executed on behalf of
AVECIA ASIA PACIFIC PTE LIMITED
by:
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Attorney
Executed on behalf of
AVECIA COMERCIAL E IMPORTADA LIMITADA
by:
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Attorney
Executed on behalf of
DTBA LIMITED
by:
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Attorney
Executed on behalf of
ARCH CHEMICALS, INC.
by:
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Attorney/Duty Authorised Officer