Exhibit 99.1
DATED 2004
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▇▇▇▇▇ ▇▇▇▇▇▇ AND OTHERS (1)
AND
CELGENE UK MANUFACTURING LIMITED (2)
AND
CELGENE CORPORATION (3)
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SHARE ACQUISITION AGREEMENT
FOR THE PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF
PENN T LIMITED
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▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TELEPHONE +44 [0] ▇▇ ▇▇▇▇ ▇▇▇▇ FAX +44 [0]
20 7071 9000
WEBSITE ▇▇▇.▇▇▇.▇▇.▇▇ DX 155 LONDON CDE
CONTENTS
CLAUSE PAGE
1 DEFINITIONS AND INTERPRETATION........................................1
2 SALE AND PURCHASE....................................................10
3 CONSIDERATION........................................................11
4 COMPLETION...........................................................13
5 POST-COMPLETION MATTERS..............................................14
6 WARRANTIES AND REPRESENTATIONS.......................................14
7 RESTRICTIVE COVENANTS IN FAVOUR OF THE PURCHASER.....................17
8 PAYMENTS.............................................................18
9 GENERAL..............................................................19
10 CHOICE OF LAW, SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS.....24
11 TERMINATION..........................................................26
12 OPTION AGREEMENT: CONFLICT AND SURVIVAL..............................26
13 VENDORS' REPRESENTATIVES AND WARRANTORS' REPRESENTATIVE..............26
14 PENN SHARES - RIGHT OF FIRST REFUSAL AND LAST REFUSAL................27
15 CELGENE GUARANTEE....................................................27
SCHEDULES
1 The Company..........................................................28
2 Completion Matters...................................................29
3 Tax..................................................................34
Part 1 - General.....................................................34
Part 2 - Taxation Covenant...........................................46
Part 3 - Taxation Warranties.........................................49
4 Part 1 - The Warranties..............................................55
Part 2 - The Representations.........................................75
5 Part 1 - The Vendors.................................................76
Part 2 - The Warrantors..............................................78
6 The Completion Accounts..............................................80
7 Provisions for the protection of the Warrantors......................83
8 Rights of First Refusal and Last Refusal.............................89
9 Celgene Guarantee....................................................94
10 Trustees Covenants and Warranties....................................96
11 Relevant documents for paragraph 1.1 of part 1 of Schedule 4.........98
ANNEXURES
1. Celgene Pharmion Agreement..........................................100
2. Penn Celgene Manufacturing Agreement................................101
3. Option Agreement....................................................102
4. Articles of Association of Penn.....................................103
AGREED FORM DOCUMENTS
Acknowledgement and Release
Officers' resignations
Powers of attorney pending registration of the Sale Shares
Auditors' resignation
Deed of Termination
Escrow Deed
Deed of Release and Consent
Escrow Account Instruction Letter
Run-Off Insurance Confirmation Letter
Technical Services Agreement
THIS AGREEMENT is dated 2004 and is made as a deed BETWEEN:
(1) THE PERSONS whose names and addresses are stated in part 1 of schedule 5
(together THE "VENDORS");
(2) CELGENE UK MANUFACTURING LIMITED, a company incorporated in England and
Wales under number 5262329 whose registered office is at 7th Floor,
Beaufort House, ▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "PURCHASER");
and
(3) CELGENE CORPORATION, a Delaware corporation whose principal place of
business is at ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("CELGENE");
(together "THE PARTIES" and each a "PARTY").
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Defined terms used in this Agreement
------------------------------------
In this Agreement, unless the context otherwise requires:
"ACTUAL TAXATION LIABILITY" has the meaning given in part 1 of schedule
3;
"AGGREGATE THRESHOLD" means (pound)275,000;
"AUDITORS" means ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇;
"BUSINESS" means the business carried on by the Company prior to and at
the Completion Date being the procurement of manufacture and the sale
and/or distribution of Sauramide, Thalomid, Pharmion Thalidomide and any
formulation that contains thalidomide;
"BUSINESS DAY" means a day other than a Saturday or a Sunday on which
clearing banks are open for business in London for dealings in Sterling;
"BL&H AGREEMENT" means the distributorship agreement between the Company
and BL&H International Corp., as amended and restated from time to time
prior to the date hereof;
"CASH" means the cash book balance of the Company at the time of
Completion (taking into account cash at bank and in hand, unpresented
cheques issued by the Company prior to such time and uncleared cheques
in favour of the Company prior to such time);
"CA 1985" means the Companies ▇▇▇ ▇▇▇▇;
"CELGENE AFFILIATE" means any entity which is controlled by, under
common control with, or in control of, Celgene and for the purposes of
this definition,
1
"control" shall mean the power whether by reason of voting control,
contract rights or otherwise, to direct the business and affairs of an
entity;
"CELGENE LICENSEE" means any entity that is licensed or otherwise
authorised by Celgene or a Celgene Affiliate to manufacture, market or
sell any formulation containing thalidomide or thalidomide analogs,
homologs or prodrugs thereof, including, without limitation, the
thalidomide drugs known as Thalomid, Sauramide and Pharmion Thalidomide
and any formulation that contains thalidomide;
"CELGENE PHARMION AGREEMENT" means the licence agreement dated 16
November 2001 between Celgene (1) and Pharmion GmbH (2) and Pharmion
Corporation (3) (as amended and restated from time to time prior to the
date hereof);
"CLOSING CURRENT ASSETS" means all current assets of the Company at the
time of Completion as set out in the Closing Balance Sheet including
stock, Cash and amounts due from trade debtors and other receivables;
"CLOSING BALANCE SHEET" means the audited balance sheet of the Company
as at the time of Completion, as set out in the Completion Accounts
prepared in accordance with Schedule 6;
"CLOSING DEBT" means all sums or amounts due from the Company at the
time of Completion to third parties in the form of loans, overdrafts,
guarantees or other indebtedness for borrowed money (excluding the Penn
Group Indebtedness, the RBS Indebtedness and the Closing Current
Liabilities) as set out in the Closing Balance Sheet (including any
accrued interest and early repayment charges);
"CLOSING CURRENT LIABILITIES" means all current liabilities of the
Company at the time of Completion as set out in the Closing Balance
Sheet including trade creditors and accruals and other liabilities
(including Tax);
"CLOSING NET FINANCIAL POSITION" means Closing Current Assets less
Closing Current Liabilities (and also less Closing Debt, to the extent
the same is not repaid by the Company on or prior to Completion);
"COMPANY" means Penn T Limited (No. 4272045), further details of which
are set out in schedule 1;
"COMPLETION" means completion of the sale and purchase of the Shares by
the performance by the Parties of their respective obligations under
clause 4.1 and schedule 2;
"COMPLETION ACCOUNTS" means an audited profit and loss account of the
Company from and including 1 April 2004 up to and including the
Completion Date and the Closing Balance Sheet, together with a statement
of the Closing Net Financial Position and a cash flow statement for the
same period or as at the Completion Date, to be prepared in accordance
with Schedule 6;
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"COMPLETION DATE" means the date on which Completion occurs in
accordance with the terms of this Agreement;
"CONFIDENTIAL INFORMATION" means all information and data including,
without limitation, proprietary information and materials (whether or
not patentable) regarding the Company's technology, products, business
information or objectives, as well as trade secrets and information
equivalent to them of the Company (including, but not limited to,
formulae, processes, methods, knowledge and Know-how) in connection with
the Business including (without limitation) that which relates to the
customers and suppliers relating thereto and which are for the time
being confidential;
"DEED OF RELEASE AND CONSENT" means the deed of release and consent in
the agreed form to be executed and delivered on Completion by Royal Bank
of Scotland plc (and others), in favour of the Company releasing it from
obligations under a Guarantee, Debenture and Inter-Creditor Agreement
and confirming that there are no amounts owing by the Company to such
bankers;
"DEED OF TERMINATION" means a deed of termination, in the agreed form,
terminating, with effect from the Completion Date, the Option Agreement;
"DISCLOSURE LETTER" means the letter (including its annexures and
documents and matters deemed incorporated therein) of the same date as
this Agreement from the Warrantors to the Purchaser containing the
disclosures to the Warranties and the Representations which has been
delivered to the Purchaser prior to the execution of this Agreement;
"ESCROW ACCOUNT" means the UK sterling account details of which are set
out in the Escrow Deed;
"ESCROW ACCOUNT INSTRUCTION LETTER" means the letter in the agreed form
to be given to the Purchaser's Solicitors and the Vendors' Solicitors by
the Purchaser, Celgene and the Vendors;
"ESCROW AMOUNT" means the sum of (pound)2,800,000 to be paid into the
Escrow AccounT on Completion and dealt with in accordance with the
provisions of the Escrow Deed;
"ESCROW DEED" means the deed of escrow, in the agreed form, to be
entered into on Completion by the Warrantors and the Purchaser;
"GUARANTEE" means any guarantee, indemnity, suretyship, letter of
comfort or any other assurance, security or right of set-off given or
undertaken directly or indirectly by a person to secure or support the
obligations (actual or contingent) of any third party;
"HOLDING COMPANY" means a holding company (as defined in sections 736
and 736A CA 1985) or a parent undertaking (as defined in section 258 CA
1985);
"ICTA" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
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"INDEPENDENT ACCOUNTANT" means a single chartered accountant or firm of
chartered accountants, nominated by agreement between the Vendors'
Representatives and the Purchaser or, in default of such agreement
within 15 Business Days after the date upon which the relevant dispute
arises, nominated by the President for the time being of the Institute
of Chartered Accountants in England and Wales (or by such person as such
President may appoint for the purpose of making such nomination) on the
application of the Vendors' Representatives or the Purchaser;
"INDIVIDUAL THRESHOLD" means (pound)27,500;
95(A - B)
"INITIAL PAYMENT" means (pound)51,117,533.69 being ----------- where:-
100
A = (pound)61,750,000; and
B = the aggregate of the Penn Group Indebtedness and the RBS
Indebtedness;
"INTELLECTUAL PROPERTY" means:
(i) patents, trade marks, service marks, registered designs,
applications for any of those rights, trade and business names
(including internet domain names and e-mail address names),
unregistered trade marks and service marks, copyrights, design
rights and rights in semiconductor topographies, moral rights,
rights in performances (as set out in Part II Copyright Designs
and Patents Act 1988), database rights, rights in know-how and
designs and inventions;
(ii) rights of the equivalent or similar effect or nature to those in
paragraph (i); and
(iii) rights under licences, consent orders, statutes or otherwise in
relation to a right in paragraphs (i) or (ii),
in each case in any jurisdiction where any of the above may exist.
"INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property owned,
used or required to be used by the Company in or in connection with its
business including, but not limited to, the registered Intellectual
Property listed in the Disclosure Letter;
"KEY AGREEMENTS" means the Penn Pharmion Agreement and the Penn Celgene
Manufacturing Agreement, full details of which are set out in the
Disclosure Letter;
"KNOW-HOW" means all designs, specifications, datasheets, techniques,
operating procedures and materials, processes, inventions, formulations
and formulae, performance data, product and pre-clinical and clinical
trial data and records, calculations and other manufacturing and
technical data and information which, prior to or at the Completion
Date, is owned, used or required to be used by the Company in or in
connection with its business;
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"LATEST ACCOUNTS" means the audited individual accounts of the Company
(as defined in section 226 CA 1985) comprising profit and loss account,
balance sheet and directors and auditors report (and associated notes)
for its financial year ended on the Latest Accounts Date, if any;
"LATEST ACCOUNTS DATE" means 31 March 2004;
"LATEST MANAGEMENT ACCOUNTS" means the latest management accounts of the
Company for the period commencing on 1 April 2004 and ending on 30
September 2004, a true copy of which has been provided to the Purchaser
prior to Completion;
"LEAD INVESTOR" means Barrington House Nominees Limited Customers B,
details of which are set out in Part 1 of Schedule 6;
"OPTION AGREEMENT" means the option agreement entered into between ▇▇▇▇▇
▇▇▇▇▇▇ and others and Celgene and dated 16 November 2001, a true and
complete copy of which is attached as annexure 6 to this Agreement;
"PENN" means Penn Pharmaceuticals Holdings Limited, a company
incorporated in England and Wales under number 4294120, whose registered
office is at ▇▇▇▇▇ ▇▇/▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇ ▇▇▇;
"PENN CELGENE MANUFACTURING AGREEMENT" means the agreement dated
December 1995 between Penn Pharmaceuticals Limited (1) and Celgene (2)
as amended and restated from time to time prior to the date hereof and
any other amendments or related agreements, a true and complete copy of
which is attached to the Disclosure Letter;
"PENN GROUP" means Penn, any subsidiary of Penn, any holding company of
Penn and any subsidiaries of any holding company of Penn, in each case
for the time being, and "MEMBER OF THE PENN GROUP" shall be construed
accordingly;
"PENN GROUP INDEBTEDNESS" means all sums or amounts due from the Company
at the time of Completion in respect of indebtedness for borrowed money
to the Penn Group together with all early repayment charges and other
sums or amounts payable in respect of the repayment of such indebtedness
upon Completion;
"PENN PHARMION AGREEMENT" means the agreement dated 7 March 2001 between
Pharmion GmbH (1) and the Company (2) as amended and restated from time
to time (including by a subsequent agreement dated 16 November 2001)
prior to the date hereof and any other amendments or related agreements,
and a true and complete copy of which is attached to the Disclosure
Letter;
"PHARMION COMFORT LETTER" means the letter to be signed by Pharmion
Corp. and/or Pharmion GmbH and delivered to the Purchaser on the date of
this Agreement;
"PHARMION THALIDOMIDE" means any formulation or product containing
thalidomide as the active ingredient, as distributed by Pharmion from
time to
5
time and for the time being, including, without limitation, that
distributed under the Penn Pharmion Agreement and the Celgene Pharmion
Agreement;
"PPL" means Penn Pharmaceuticals Limited, a company incorporated in
England and Wales under number 4037849, whose registered office is at
▇▇▇▇▇ ▇▇/▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇;
"PPSL" means Penn Pharmaceutical Services Limited, a company
incorporated in England and Wales under number 1331447 whose registered
office is at ▇▇▇▇▇ ▇▇/▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇ ▇▇▇;
"PURCHASE PRICE" means an amount equal to the sum of (pound)61,750,000
less the Penn Group Indebtedness and the RBS Indebtedness, subject to
adjustment in accordance with clause 3.5;
"PURCHASER'S ACCOUNTANTS" means KPMG LLP of ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other firm of accountants as the Purchaser
may from time to time appoint as its accountants for any purpose
connected with this Agreement;
"PURCHASER'S ATTORNEYS" means Proskauer Rose of ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, ▇▇▇;
"PURCHASER'S GROUP" means the Purchaser, any subsidiary of the
Purchaser, any holding company of the Purchaser and any subsidiary of
any holding company of the Purchaser, in each case for the time being
and "MEMBER OF THE PURCHASER'S GROUP" shall be construed accordingly;
"PURCHASER'S SOLICITORS" means ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ of Beaufort House,
▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇;
"RBS INDEBTEDNESS" means all sums or amounts due from the Company at the
time of Completion in respect of indebtedness for borrowed money to
Royal Bank of Scotland plc together with all early repayment charges and
other sums or amounts payable in respect of the repayment of such
indebtedness upon Completion;
"RELEVANT EARNINGS" means (pound)750,000;
"RELEVANT PROPORTION" means, in relation to any Vendor, the proportion
of the Purchase Price to which such Vendor is entitled as set out in
part 1 of schedule 5;
"RELIEF" has the meaning given in part 1 of schedule 3;
"REPRESENTATIONS" means the representations set out in Part 2 of
Schedule 4;
"RESTRICTED PERSON" means, in relation to the covenants set out in
clause 7, the Warrantors;
"RESTRICTED PRODUCTS" means the thalidomide drugs known as Thalomid,
Sauramide and Pharmion Thalidomide;
6
"RETIRING DIRECTORS" has the meaning given in paragraph 2.1.3 of
schedule 2;
"RETIRING SECRETARY" has the meaning given in paragraph 2.1.4 of
schedule 2;
"RHC AGREEMENT" means the distributorship agreement between the Company
and RHC USA Corp., as amended and restated from time to time prior to
the date hereof;
"THE ▇▇▇▇▇ ▇▇▇▇▇ INTEREST IN POSSESSION TRUST" or "THE TRUST" means the
interest in possession trust made on 30 June 1997 and evidenced by a
statutory declaration made by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ dated 14 August 2000
and accompanying exhibits including RSJ2 and an undated settlement
executed by the said ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇;
"SECONDARY RESTRICTED PRODUCTS" means any formulation containing
thalidomide or thalidomide analogs, homologs or prodrugs thereof
including, without limitation, any formulation that contains thalidomide
but excluding the thalidomide drugs known as Thalomid, Sauramide and
Pharmion Thalidomide;
"SECURITY INTEREST" means any claim, mortgage, lien, pledge, charge,
encumbrance, equity, hypothecation, right of pre-emption or other
security interest or any other restriction or right exercisable by, or
in favour of, any third party (or an agreement or commitment to create
any of them);
"SHARES" means the entire issued share capital of the Company at
Completion;
"SHARE TRANSFERS" has the meaning given in paragraph 1.1.1 of schedule
2;
"STERLING" means the lawful currency of the United Kingdom for the time
being;
"SUBSIDIARY" means a subsidiary (as defined by sections 736 and 736A CA
1985) or a subsidiary undertaking (as defined by section 258 CA 1985);
"TAX" and "TAXATION" have the meaning given in part 1 of schedule 3;
"TAX COVENANT" means part 2 of schedule 3;
"TAXATION WARRANTIES" means the warranties contained in part 3 of
schedule 3;
"TECHNICAL SERVICES AGREEMENT" means the agreement in the agreed form
pursuant to which Penn or a member of the Penn Group will provide
certain manufacturing and support services to the Company following
Completion;
"TERMINATED KEY AGREEMENTS" means the BL&H Agreement and the RHC
Agreement, true and complete copies of which are annexed to the
Disclosure Letter;
"TERRITORY" means all territories covered in any and all agreements
entered into by (or assigned or novated to) the Company and which relate
to the formulation, storage, supply, sale or distribution of any
Restricted Product (including, without limitation, the Key Agreements)
or any other agreement with any third party to do the same;
7
"TRANSACTION DOCUMENTS" means this Agreement and each of the documents
referred to in this Agreement as being in the agreed form and any
document from time to time entered into pursuant to the terms of this
Agreement or any other such document;
"VENDORS' ACCOUNTANTS" means PricewaterhouseCoopers LLP of ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ or such other firm of accountants as the Vendors'
Representatives on behalf of the Vendors may from time to time appoint
as their accountants for any purpose connected with this Agreement;
"VENDORS' REPRESENTATIVE" means ▇▇▇▇▇ ▇▇▇▇▇▇ or such other person(s)
(being a Vendor) that the Vendors acting jointly may from time to time
nominate in writing to the Purchaser;
"VENDORS' SOLICITORS" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"WARRANTIES" means the warranties set out in clause 6, Part 1 of
Schedule 4, the Taxation Warranties and the warranties and covenants set
out in Schedule 10;
"WARRANTORS" means the persons whose names and addresses are stated in
part 2 of schedule 6; and
"WARRANTORS' REPRESENTATIVE" means ▇▇▇▇▇ ▇▇▇▇▇▇ or such other person
(being a Warrantor) that the Warrantors acting jointly may from time to
time nominate in writing to the Purchaser.
1.2 Terms Defined Elsewhere in this Agreement
-----------------------------------------
In addition to the terms defined in clause 1.1, certain other terms are
defined elsewhere in this Agreement (denoted by capitalised words in
quotes and bold type). Each such term shall have the meaning stated for
the purpose of the provision in which it is defined and, if used
elsewhere in this Agreement, where so used, unless the context otherwise
requires.
1.3 Interpretation of words and expressions used in this Agreement
--------------------------------------------------------------
In this Agreement, unless the context otherwise requires:
1.3.1 a document expressed to be "IN THE AGREED FORM" means a document
in a form which has been agreed by or on behalf of the Parties
at or before the execution of this Agreement and which has, for
the purposes of identification, been signed or initialled by
them or on their behalf;
1.3.2 references to a clause, schedule or annexure are to a clause of,
or a schedule or annexure to, this Agreement respectively;
references to this Agreement include its schedules and annexures
and references in a schedule or part of a schedule to a
paragraph are to a paragraph of that schedule or that part of
that schedule respectively; further, the schedules and annexures
form part of this Agreement, shall be deemed to be incorporated
in this Agreement and shall be read as though set out in this
Agreement in full;
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1.3.3 references to this Agreement or any other document or to any
specified provision of this Agreement or any other document are
to this Agreement, that document or that provision as in force
for the time being and as amended from time to time in
accordance with the terms of this Agreement or that document, as
the case may be;
1.3.4 references to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
Court, official or any legal concept or thing shall, in respect
of any jurisdiction other than England and Wales, be deemed to
include what most nearly approximates in that jurisdiction to
the English legal term;
1.3.5 words importing the singular include the plural and vice versa,
words importing a gender include every gender and references to
a "PERSON" include any individual, corporation, firm,
partnership, joint venture, association, body of persons,
organisation or trust (in each case whether or not having
separate legal personality);
1.3.6 words and phrases which are generally defined for the purposes
of CA 1985 shall bear the meanings attributed to them by that
Act as at the date of this Agreement;
1.3.7 a person shall be deemed to be "ASSOCIATED WITH" another person
or an "ASSOCIATED PERSON" of that other person if such person is
an associate of the other person within the meaning of section
435 Insolvency ▇▇▇ ▇▇▇▇;
1.3.8 the word "COMPANY", except where used in reference to the
Company, shall be deemed to include any corporation, firm,
partnership, joint venture, association, organisation or other
body of persons, whether incorporated or not incorporated and
whether now existing or to be formed after the date of this
Agreement; and
1.3.9 without prejudice to the right of assignment conferred by clause
9.11.3, nothing in this Agreement shall confer any rights or
obligations on any person who has not executed this Agreement
(or such person's successors or assigns) nor shall the consent
of any person who has not so executed this Agreement (or such
person's successors or assigns) be needed to make any
modification, amendment, variation or release of the terms
hereof and the Parties expressly agree for the purposes of the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ that they do not
intend any person other than a Party to this Agreement or any
assignee of the Purchaser permitted pursuant to clause 9.11.3 to
be able to enforce any term of this Agreement.
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1.4 Contents table and headings
---------------------------
In this Agreement, the contents table and the descriptive headings to,
and within, clauses, schedules and paragraphs are inserted for
convenience only, have no legal effect and shall be ignored in the
interpretation and construction of this Agreement.
1.5 References to statutory provisions
----------------------------------
In this Agreement, unless the context otherwise requires, references to
statutory provisions or subordinate legislation (as defined by section
21(1) Interpretation Act 1978) shall be construed as references to those
provisions or that subordinate legislation as respectively replaced,
amended or re-enacted (whether before or after the date of this
Agreement) from time to time and shall include any provisions or
subordinate legislation of which they are re-enactments (whether with or
without modification) and any subordinate legislation made under such
provisions save to the extent that such replacements, amendments or
re-enactments taking effect after the date of this Agreement would
impose any greater obligations or liabilities on, or reduce the benefit
to, any Party.
2 SALE AND PURCHASE
2.1 Each Vendor shall sell with full title guarantee, and the Purchaser
shall purchase, those Shares set opposite his/its name in Part 1 of
Schedule 6 with effect from Completion free from any Security Interest
and together with all rights and benefits attaching to them including
all dividends declared or paid in relation to the Shares on or after the
date of this Agreement.
2.2 Each of the Vendors waives any pre-emption rights over the Shares
whether conferred by the articles of association of the Company or
otherwise.
2.3 Each of the Vendors severally warrants, in relation to himself/itself,
to each other Party that:
2.3.1 he or it has the requisite power and authority under its
constitutional documents (if relevant) and otherwise to execute,
deliver and perform his/its obligations under this Agreement and
any other Transaction Document to be executed by him/it;
2.3.2 in the case of any Vendor which is a body corporate, the
execution and delivery of, and the performance of its
obligations under this Agreement and each of the other
Transaction Documents to be executed by it have been duly
authorised by all necessary corporate action on its part whether
under its memorandum and articles of association or otherwise;
2.3.3 other than pursuant to the Option Agreement there is not (nor is
there pending or applicable) any option, right to acquire,
mortgage, charge, pledge, lien or other form of security or
encumbrance on, over or affecting any of the Shares to be sold
by him/it, there is no agreement or commitment to give or create
any of the foregoing, and so far as he/it is
10
aware, no person has either made or is likely to make any claim
to be entitled to any of the foregoing;
2.3.4 he or it will, at Completion, be entitled and empowered to sell
and transfer, or procure the sale and transfer of, the full
legal and beneficial ownership in those Shares to be sold by
him/it on the terms set out in this Agreement; and
2.3.5 this Agreement constitutes, and the other Transaction Documents
executed or to be executed by him/it will, when executed,
constitute legal, valid and binding obligations of him/it
enforceable in accordance with their respective terms.
2.4 Each of Celgene and the Purchaser severally warrants, in relation to
itself, to each Vendor that:
2.4.1 it has the requisite power and authority under its
constitutional documents and otherwise to execute, deliver and
perform its obligations under this Agreement and any other
Transaction Document to be executed by it; and
2.4.2 the execution and delivery of, and the performance of the
obligations of it under this Agreement and each of the other
Transaction Documents have been duly authorised by all necessary
corporate action on its part whether under its constitutional
documents or otherwise.
3 CONSIDERATION
3.1 Consideration
-------------
The consideration for the sale and purchase of the Shares shall be the
Purchase Price, payable in accordance with this clause 3.
3.2 Apportionment of the Purchase Price between the Vendors
-------------------------------------------------------
The Purchase Price, including any further amount payable by the
Purchaser pursuant to clause 3.6, shall be apportioned between the
Vendors as follows:
3.2.1 by the payment of an amount equal to the accrued but unpaid
preferential dividend to the Lead Investor;
3.2.2 by the payment of any preferential amounts payable to the
holders of the A Preference Shares and the B Preference Shares
in the capital of the Company; and
3.2.3 by the payment of any balance to the Vendors in the Relevant
Proportions.
3.3 Payment on account at Completion
--------------------------------
On Completion, the Purchaser shall pay the Initial Payment to the
Vendors in cash in Sterling on account of the Purchase Price, of which
(pound)48,317,533.69 shall
11
be paid to the Vendors in accordance with the provisions of clause 8.1
and the balance, being the Escrow Amount, shall be paid in accordance
with the provisions of clause 3.4.
3.4 Payment of Escrow Amount
------------------------
On Completion, the Purchaser shall pay the Escrow Amount into the Escrow
Account out of the consideration to be received by the Warrantors. The
Escrow Amount shall be dealt with in accordance with the terms of the
Escrow Deed.
3.5 Determination of the Purchase Price and Completion Accounts
-----------------------------------------------------------
3.5.1 Immediately following Completion, the Parties shall comply with
their respective obligations pursuant to the provisions of
Schedule 7.
3.5.2 The Purchase Price is subject to adjustment in accordance with
this clause 3.5. There shall be added on a (pound) for (pound)
basis the amount by which the Closing Net Financial Position
less the Relevant Earnings exceeds zero or, as the case may be,
there shall be deducted on a (pound) for (pound) basis the
amount by which the Closing Net Financial Position less the
Relevant Earnings is less than zero.
3.6 Adjustments following determination of the Purchase Price
---------------------------------------------------------
If the Purchase Price, as finally agreed or determined pursuant to this
Agreement:
3.6.1 is less than (pound)51,117,533.69, each Vendor shall repay to
the Purchaser his/its proportiOn of the shortfall, such
proportion being determined by reference to the amount received
by such Vendor of the amounts paid in accordance with clause
3.3;
3.6.2 is greater than (pound)51,117,533.69, the Purchaser shall pay to
each Vendor his/its RelEvant Proportion of the excess; or
3.6.3 is equal to (pound)51,117,533.69, no balancing payment shall be
made pursuant to this clause.
3.7 Payment of amounts under clause 3.6
-----------------------------------
Any amount payable pursuant to clause 3.6.1 or clause 3.6.2 shall be
paid in cash (in Sterling) within 10 Business Days of final agreement or
determination of the Purchase Price in accordance with Schedule 7.
Interest shall be payable on any amounts due pursuant to clause 3.6.1 or
3.6.2 at a rate per annum of one per cent. above the base rate from time
to time of Barclays Bank plc for the entire period from the date of
Completion until the date on which such amount is paid in full. Interest
shall accrue and be payable from day to day.
12
4 COMPLETION
4.1 Location and time
-----------------
Completion shall take place at the offices of the Vendors' Solicitors
(or at such other place as the Vendors' Representatives on the one part
and the Purchaser on the other may agree) immediately following
execution of this Agreement when the Parties shall comply with all (but,
subject to clause 4.2 and to clause 4.3, not part) of their respective
obligations as set out in schedule 2. The Purchaser shall not be obliged
to complete the purchase of any of the Shares unless the purchase of all
the Shares is completed simultaneously.
4.2 If Completion does not take place on the Completion Date because of any
-----------------------------------------------------------------------
of the Vendors
--------------
If any of the Vendors shall fail or be unable to comply with any of
his/its obligations as set out in schedule 2 on the Completion Date, the
Purchaser may (but without prejudice to the Purchaser's rights or any
remedy or action the Purchaser may have (whether under this Agreement or
otherwise) in respect of such failure or inability to comply):
4.2.1 defer Completion to a date not more than 10 Business Days (or as
mutually agreed in writing between the Purchaser and the
Vendors' Representative on behalf of the Vendors) after that
date (in which case the provisions of this clause 4.2 shall
apply to Completion as so deferred and the provisions of this
Agreement shall apply as if that other date is the date set for
Completion in clause 4.1); or
4.2.2 proceed to Completion so far as practicable; or
4.2.3 terminate this Agreement.
4.3 If Completion does not take place on the Completion Date because of the
-----------------------------------------------------------------------
Purchaser
---------
If the Purchaser shall fail or be unable to comply with any of its
obligations as set out in clause 3.3 or in schedule 2 on the Completion
Date, the Vendors' Representatives may on behalf of the Vendors (but
without prejudice to the Vendors' rights or any remedy or action the
Vendors may have (whether under this Agreement or otherwise) in respect
of such failure or inability to comply):
4.3.1 defer Completion to a date not more than 10 Business Days (or as
mutually agreed in writing between the Purchaser and the
Vendors' Representatives on behalf of the Vendors) after that
date (in which case the provisions of this clause 4.3 shall
apply to Completion as so deferred and the provisions of this
Agreement shall apply as if that other date is the date set out
for Completion in clause 4.1); or
4.3.2 proceed to Completion so far as practicable; or
4.3.3 terminate this Agreement.
13
5 POST-COMPLETION MATTERS
5.1 Dealings in the Sale Shares pending registration of transfers
-------------------------------------------------------------
Each Vendor hereby declares that, for so long as he/it remains the
registered holder of any of the Shares after Completion, he/it will:
5.1.1 hold such Shares and any dividends and other distributions of
profits or surplus or other assets declared, paid or made in
respect of them after Completion and all rights arising out of
or in connection with them in trust for the Purchaser and its
successors in title or assignees; and
5.1.2 deal with and dispose of the Shares and all such dividends,
distributions and rights as are described in clause 5.1.1 only
as the Purchaser or any such successor or assignee may direct in
writing.
5.2 Name and Logo
-------------
5.2.1 Notwithstanding any other provision of this Agreement, if the
Company owns or uses the names "Penn" and/or any other name or
any of the logos disclosed in the Disclosure Letter with
specific reference to this clause 5.2, or any name or ▇▇▇▇
confusingly similar to any of them including any name or ▇▇▇▇
which incorporates the name "Penn" and/or the logos referred to
above (or any name or ▇▇▇▇ confusingly similar to any of them),
the Purchaser shall, and shall procure that the Company shall,
on the Completion Date or as soon as reasonably practicable
thereafter (and save as provided in the licence referred to in
Clause 5.2.2 below), cease to use any such name or ▇▇▇▇ and
shall within 7 days following a request to do so by the Vendors'
Representative procure that the Company shall assign, as the
Vendors' Reprsesentative may direct, free of any Security
Interest, all rights of the Company in any such name or ▇▇▇▇ by
way of an assignment in a form which is reasonably satisfactory
to the Vendors' Representatives.
5.2.2 If, at Completion, the Company uses any names or logos as part
of its business under any licences or other arrangements
(written or unwritten) with any companies in the Penn Group, the
Vendors shall procure that the Company is granted by the
relevant company in the Penn Group (insofar as that company is
legally able) a royalty-free, non-exclusive licence in terms to
be agreed by the parties to continue to use such names or logos
for a period of 12 months after Completion (or such longer
period as mutually agreed in writing between the Vendors'
Representative, Penn and the Purchaser).
6 WARRANTIES AND REPRESENTATIONS
6.1 The Warrantors, upon the execution of this Agreement, jointly and
severally warrant to the Purchaser in the terms of the Warranties and
represent to the Purchaser in the terms of the Representations. The
Representations have been given with the intention of inducing the
Purchaser to enter into this Agreement.
14
6.2 The Warranties and Representations shall continue in full force and
effect notwithstanding Completion.
6.3 Disclosure Letter
-----------------
The Warranties and Representations are given subject only to any fact,
matter or circumstance to the extent the same is fairly disclosed in the
Disclosure Letter.
6.4 Independence of Warranties and Representations
----------------------------------------------
Each of the Warranties and the Representations shall be separate and
independent and save where this Agreement provides otherwise, shall not
be limited by reference to any other warranty, indemnity, representation
or any other provision of this Agreement.
6.5 Waiver of claim(s) by any Warrantor against the Company's directors or
----------------------------------------------------------------------
employees, agents and advisers
------------------------------
Each Warrantor agrees with the Purchaser (for itself and as trustee for
the Company and the directors, employees, agents and advisers of the
Company):
6.5.1 that the giving by the Company and/or any of its directors,
employees, agents or advisers of any information or opinion in
connection with the Warranties, the Representations, the Tax
Covenant or the Disclosure Letter or otherwise in relation to
the business or affairs of the Company or in connection with the
negotiation and preparation of this Agreement or any other
Transaction Document shall not be deemed to be a representation,
warranty or guarantee to the Warrantors of the accuracy of any
such information or opinion;
6.5.2 to waive any right or claim which he/it may have against the
Company and/or any of its directors, employees agents or
advisers for any error, omission or misrepresentation in any
such information or opinion or any action taken on or before the
Completion Date; and
6.5.3 that any such right or claim shall not constitute a defence to
any claim by the Purchaser under or in relation to this
Agreement or any other Transaction Document.
6.6 General provisions in relation to the Warranties etc
----------------------------------------------------
6.6.1 Subject to clause 9.6 (Entire Agreement) which shall, in so far
as is possible and legally enforceable, prevail, the rights and
remedies conferred on any Party under this Agreement are
cumulative and are additional to, and not exclusive of, any
rights or remedies provided by law or otherwise available at any
time to that Party in respect of any breach of this Agreement
(including the right to damages for any loss or additional loss
suffered by that Party).
6.6.2 Any payment made in respect of any of the Warranties,
Representations or under the Tax Covenant shall, to the extent
possible, be deemed to be an adjustment in the Purchase Price.
15
6.6.3 Neither the Warranties, the Representations, nor any rights or
remedies in respect of them, shall in any respect be
extinguished or affected by Completion.
6.6.4 Where any Warranty or Representation is limited by reference to
the knowledge, awareness or belief of any person, such Warranty
or Representation shall be deemed to refer to the knowledge,
awareness or belief of the relevant Warrantor having made all
reasonable enquiry of the following persons only in relation to
such Warranty or Representation, as the case may be:
(i) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇;
(ii) ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(iii) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
(iv) ▇▇▇▇▇ ▇▇▇▇▇▇▇; and
(v) ▇▇▇▇▇ ▇▇▇▇▇.
Where any Warranty or Representation is so limited by reference
to the knowledge, awareness or belief of any person, for the
avoidance of doubt no Warrantor shall be required to make
enquiry of any other person in giving such Warranty or
Representation.
6.6.5 For the avoidance of doubt, in no circumstances shall the
Warranties or Representations be given or deemed to be given to
any extent by the Lead Investor.
6.7 Subsequent Disposal
-------------------
If the Purchaser makes a disposal (the "DISPOSAL") of some or all of the
Shares or some or all of the undertaking in the Company to a third party
purchaser (the "THIRD PARTY Purchaser") and as a term of such Disposal,
the Purchaser provides warranties to the Third Party Purchaser in
relation to the Company and the operation of the Business prior to the
Completion Date and in so doing relies on the Warranties then, provided
always that the Vendors shall have no greater liability to either the
Purchaser or (if applicable) the Third Party Purchaser under or in
respect of a breach of this Agreement than they would have had to the
Purchaser under the Agreement in respect of such breach if the Disposal
had not been made and the Purchaser had not so relied on the Warranties,
the Vendors acknowledge and agree that their liability for any claim
that the Purchaser would have had, but for the Disposal, shall not be
extinguished, reduced or limited solely by reason of the Disposal.
6.8 Taxation
--------
The provisions of schedule 3 shall be incorporated into this Agreement.
6.9 Trustees
--------
As trustees of the ▇▇▇▇▇ ▇▇▇▇▇ Interest in Possession Trust, ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ jointly and severally warrant and covenant
to the Purchaser in the terms set out in schedule 10.
16
7 RESTRICTIVE COVENANTS IN FAVOUR OF THE PURCHASER
7.1 Restrictive Covenants
---------------------
Each Restricted Person undertakes with the Purchaser that without the
prior consent in writing of the Purchaser, he will not, directly or
indirectly, whether by himself, his employees or agents and whether on
his own behalf or on behalf of any other person, firm or company, for a
period of five years from the date of Completion:
RESTRICTED PRODUCTS
7.1.1 (subject to clause 7.3) carry on, be employed or otherwise
engaged, concerned or interested in, any business which is
engaged in (or arranges with any third party for) the
manufacture, procurement of manufacture, distribution or sale of
the Restricted Products or any of them in the Territory (a
"COMPETING BUSINESS");
7.1.2 (subject to clause 7.3) in relation to the manufacture,
production, distribution or sale of Restricted Products or any
of them in the Territory, solicit or canvass, accept orders from
or otherwise deal with any person, firm, company or other
organisation who was a customer of the Company, at any time
during the 12 months prior to Completion and with whom that
Restricted Person had personal dealings;
7.1.3 solicit or entice away or endeavour to solicit or entice way or
hire from the Company, any person employed or otherwise engaged
by the same in the manufacture, procurement of manufacture,
distribution or sale of the Restricted Products or any of them
in the Territory, whether or not that person would commit any
breach of his contract of employment by reason of his leaving
the service of the same;
SECONDARY RESTRICTED PRODUCTS
7.1.4 (subject to clause 7.3) carry on, be employed or otherwise
engaged, concerned or interested in, any business which is
engaged in (or arranges with any third party for) the
manufacture, procurement of manufacture, distribution or sale of
the Secondary Restricted Products or any of them in the
Territory (a "SECONDARY COMPETING BUSINESS");
7.1.5 (subject to clause 7.3) in relation to the manufacture,
production, distribution or sale of Secondary Restricted
Products or any of them in the Territory, solicit or canvass,
accept orders from or otherwise deal with any person, firm,
company or other organisation who was a customer of the Company,
at any time during the 12 months prior to Completion and with
whom that Restricted Person had personal dealings;
7.1.6 solicit or entice away or endeavour to solicit or entice way or
hire from the Company, any person employed or otherwise engaged
by the same in the manufacture, procurement of manufacture,
distribution or sale of the Secondary Restricted Products or any
of them in the Territory, whether
17
or not that person would commit any breach of his contract of employment
by reason of his leaving the service of the same.
7.2 Subject to clause 7.3, each Restricted Person undertakes with the
Purchaser that he will not at any time after Completion directly or
indirectly, whether by himself, his employees or agents or otherwise
howsoever:
7.2.1 in the course of carrying on any trade or business, claim,
represent or otherwise indicate any present association with the
Company; or
7.2.2 use, whether on his own behalf or on behalf of any third party,
or disclose any of the Confidential Information.
7.3 The restrictions in clause 7.1 and 7.2 shall not operate to prohibit any
Restricted Person from holding in aggregate up to 3 per cent of the
shares of any company operating a Competing Business or a Secondary
Competing Business (as the case may be), the shares of which are listed
or dealt in on a recognised stock exchange or from being or becoming an
employee, director, shareholder or consultant of Penn or any other
member of the Penn Group and performing his duties as such.
7.4 The restriction in clause 7.2.2 shall not apply:
7.4.1 in respect of any of the Confidential Information which is in or
becomes part of the public domain other than through a breach of
the obligations of confidentiality, whether set out in this
Agreement or otherwise; or
7.4.2 to the extent that disclosure of Confidential Information is
required by any applicable law, governmental order, decree,
regulation, licence or rule or pursuant to the regulations of
any securities exchange or regulatory or governmental body.
7.5 Each of the undertakings contained in clauses 7.1 and 7.2 is a separate
undertaking by each Restricted Person in relation to himself and his
interests and shall be enforceable by the Purchaser separately and
independently of its right to enforce any one or more of the other
covenants contained in clauses 7.1 and 7.2. If a covenant is held to be
illegal, invalid or unenforceable but would be legal, valid or
enforceable if some part were deleted or the period or area of
application were reduced or modified, then the covenant shall apply with
such modification as may be necessary to make it legal, valid and
enforceable.
8 PAYMENTS
8.1 Payments to the Vendors
-----------------------
Any amounts payable to the Vendors or any of them pursuant to this
Agreement (or the Escrow Deed), including for the avoidance of doubt any
payments to be made pursuant to clause 3.6, may be paid in Sterling by
telegraphic transfer to the following account of the Vendors' Solicitors
(or such other account of the Vendors' Solicitors as may be notified to
the Purchaser in writing by the Vendors' Representatives for this
purpose from time to time):
18
-------------------------------- ---------------------------------------
Account Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Client Account
-------------------------------- ---------------------------------------
Name of bank: The Royal Bank of Scotland plc
-------------------------------- ---------------------------------------
Bank address and postcode: ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
-------------------------------- ---------------------------------------
Sort code: 16-00-02
-------------------------------- ---------------------------------------
Account number: 11122897
-------------------------------- ---------------------------------------
8.2 Vendors' Solicitors authorised to receive payments
--------------------------------------------------
The Vendors' Solicitors are hereby irrevocably authorised by the Vendors
and each of them so to receive any such amount and receipt of any such
amount in such an account or the receipt of the Vendors' Solicitors for
any such amount shall be good, valid and effectual discharge for the
Purchaser respect of such amount.
8.3 Allocation of payments between Vendors
--------------------------------------
Provided that the Purchaser shall have duly complied with its payment
obligations wherever expressed in this Agreement, the Purchaser shall
have no obligation relating to the distribution of any such payment
between the Vendors or any of them (including, without limitation, the
apportionment pursuant to clause 3.2).
8.4 Payments to the Purchaser
-------------------------
Any amounts payable to the Purchaser pursuant to this Agreement shall be
paid by telegraphic transfer to the following account of the Purchaser
(or such other account in the United Kingdom of the Purchaser (or its
nominee) as may be notified to the Vendors' Representatives in writing
by the Purchaser for this purpose from time to time):
-------------------------------- ---------------------------------------
Account name: Celgene Corporation Operating Account
-------------------------------- ---------------------------------------
Name of bank: PNC Bank, Pittsburgh PA
-------------------------------- ---------------------------------------
Account number: 8100 901 961
-------------------------------- ---------------------------------------
ABA#: 031 207 607
-------------------------------- ---------------------------------------
Swift code: ▇▇▇▇▇▇▇▇
-------------------------------- ---------------------------------------
9 GENERAL
9.1 Continuing effect of this Agreement
-----------------------------------
All provisions of this Agreement and any other Transaction Document
shall, so far as they are capable of being performed or observed,
continue in full force and effect notwithstanding Completion, except in
respect of those matters then already performed and Completion shall not
constitute a waiver of any of the Parties' rights in relation to this
Agreement or any other Transaction Document.
19
9.2 Announcements
-------------
Save as (but only to the extent) required by law or by any relevant
national or supra-national regulatory, governmental or
quasi-governmental body or authority, all announcements by, of or on
behalf of any of the Parties relating to the subject matter of this
Agreement or the transaction contemplated by this Agreement shall be in
terms to be agreed between the Parties in advance of issue.
9.3 Releases and waivers
--------------------
9.3.1 Any Party may, in its discretion, in whole or in part, in
writing, release, compound, compromise, vary, amend, abrogate or
waive its rights or grant time or indulgence in respect of, any
liability or obligation to it under this Agreement or any
Transaction Document and may do so as regards any one or more of
the other Parties in respect of that obligation or liability
without in any way prejudicing or affecting the liability of, or
its rights against, any other of the other Parties in respect of
the same or a like obligation or liability.
9.3.2 Neither the single or partial exercise or temporary or partial
waiver by any Party of any right, nor the failure by any Party
to exercise in whole or in part any right or to insist on the
strict performance of any provision of this Agreement or any
other Transaction Document, nor the discontinuance, abandonment
or adverse determination of any proceedings taken by any Party
to enforce any right or any such provision shall (except for the
period or to the extent covered by any such temporary or partial
waiver) operate as a waiver of, or preclude any exercise or
enforcement or (as the case may be) further or other exercise or
enforcement by that Party of, that or any other right or
provision.
9.3.3 All references in clause 9.3.2 to:
(a) any right shall include any power, right or remedy
conferred by this Agreement or any other Transaction
Document on, or provided by law or otherwise available
to, any Party; and
(b) any failure to do something shall include any delay in
doing it.
9.3.4 The giving by any Party of any consent to any act which by the
terms of this Agreement or any other Transaction Document
requires such consent shall not prejudice the right of that
Party to withhold or give consent to the doing of any similar
act.
9.4 Notices
-------
LANGUAGE OF NOTICES
9.4.1 Any notice or other document to be given under this Agreement
shall be in writing in the English language.
20
ADDRESSES AND FAX NUMBERS FOR NOTICES
9.4.2 Notice details for the Parties are as follows:
---------------- ------------------------------ ----------------
PARTY ADDRESS AND FAX NUMBER ADDRESSEE/MARKED
FOR THE
ATTENTION OF
---------------- ------------------------------ ----------------
The Vendors c/o Penn Pharmaceuticals ▇▇▇▇▇ ▇▇▇▇▇▇
or the Vendors' Services Limited
Representative ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tredegar
Gwent
Fax: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
---------------- ------------------------------ ----------------
The Purchaser Celgene Corporation ▇▇▇ ▇▇▇▇▇
or Celgene ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
(Copy to
(i) Vice President
Legal and Chief
Counsel
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
(ii) the Purchasers'
Solicitors
(ref: ▇▇▇▇ ▇▇▇▇▇▇)
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇)
(iii) Proskauer Rose (ref:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇)
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
---------------- ------------------------------ ----------------
A Party may change its notice details for the purpose of this clause 9.4
to any other address in the United Kingdom by giving notice to all the
Parties to this Agreement in accordance with this clause 9.4.
PROOF OF NOTICE BEING PROPERLY GIVEN
9.4.3 In proving the giving of a notice, it shall be conclusive
evidence to prove:
(a) if delivered by hand, that the notice was left at the
appropriate address specified in clause 9.4.2;
(b) if sent by post, that the envelope containing such
notice was properly addressed and posted (by way of
courier in the case of notice being sent from or to an
address outside the United Kingdom); or
21
(c) if sent by fax, that a fax transmission report was
obtained by the sender confirming the fax transmission
to the relevant number stated in clause 9.4.2.
WHEN NOTICES ARE TO BE DEEMED RECEIVED
9.4.4 If a notice is:
(a) delivered by hand between 9.00 am and 5.00 pm on a
Business Day (such time period being referred to in this
clause 9.4.4 as within "BUSINESS HOURS"), it shall be
deemed received when so delivered or, if delivered by
hand outside Business Hours, it shall be deemed received
at 9.00 am on the next Business Day after the time of
delivery;
(b) sent by post:
(i) if the notice was posted on a Business Day, it
shall be deemed received at 9.00 am on the
fourth Business Day (second Business Day in the
case of courier) after the day the envelope
containing such notice was posted; or
(ii) if the notice was not posted on a Business Day,
it shall be deemed received at 9.00 am on the
fourth Business Day (second Business Day in the
case of courier) after the day on which the
envelope containing such notice was posted; or
(c) sent by fax during Business Hours, it shall be deemed
received when so delivered or, if sent by fax outside
Business Hours, it shall be deemed received at 9.00 am
on the next Business Day after the time that the fax was
sent to the relevant number stated in clause 9.4.2.
9.4.5 Any reference in this clause 9.4 to a particular time is to that
time in the location of the recipient of the relevant notice.
9.5 Time
----
9.5.1 Time shall be of the essence for the purposes of this Agreement
as regards any time, date or period fixed by this Agreement for
the performance of any obligation by any of the Parties to this
Agreement, whether as originally fixed or as altered in any
manner provided in this Agreement.
9.5.2 Save where stated otherwise in clause 9.5, all references to
time in this Agreement are to London time.
9.6 Entire Agreement
----------------
9.6.1 This Agreement (together with all of the other Transaction
Documents) sets out the entire agreement and understanding
between the Vendors on
22
the one part and the Purchaser on the other in connection with
the sale and purchase of the Shares and other matters described
therein.
9.6.2 Each of the Parties acknowledges that it is not relying on any
statements, warranties or representations given or made by any
of the Parties in relation to the subject matter of this
Agreement, save for those expressly set out in this Agreement
and the other Transaction Documents and that it shall have no
rights or remedies with respect to such subject matter otherwise
than under this Agreement and any of the other Transaction
Documents, but provided that this clause shall not exclude
liability for fraud, wilful non-disclosure or fraudulent
misrepresentation.
9.7 Alterations
-----------
Without prejudice to the provisions of clause 9.3.1 no purported
alteration of this Agreement shall be effective unless it is in writing,
refers specifically to this Agreement and is duly executed by all
Parties to this Agreement.
9.8 Severability
------------
Each provision of this Agreement is severable and distinct from the
others. The Parties intend that every such provision shall be and remain
valid and enforceable to the fullest extent permitted by law. If any
such provision is or at any time becomes to any extent invalid, illegal
or unenforceable under any enactment or rule of law, it shall to that
extent be deemed not to form part of this Agreement but (except to that
extent in the case of that provision) it and all other provisions of
this Agreement shall continue in full force and effect and their
validity, legality and enforceability shall not be thereby affected or
impaired.
9.9 Counterparts
------------
This Agreement may be entered into in the form of two or more
counterparts, each executed by one or more of the Parties but, taken
together, executed by all and, provided that all the Parties so enter
into this Agreement, each of the executed counterparts, when duly
exchanged and delivered, shall be deemed to be an original, but, taken
together, they shall constitute one instrument.
9.10 Payment of costs
----------------
Each of the Parties shall be responsible for his/its respective legal
and other costs and expenses incurred in relation to the negotiation,
preparation and completion of this Agreement and all ancillary
documents. For the avoidance of doubt, it is agreed that the Company
shall not be responsible for any of the costs incurred in relation to
any such matters.
9.11 Successors and Assigns
----------------------
9.11.1 This Agreement shall be binding on, and shall enure for the
benefit of, the successors in title and (where relevant) the
personal representatives and estate of each Party.
23
9.11.2 Save as contemplated by clause 9.11.3 none of the Parties to
this Agreement may be entitled to assign the benefit of any
rights under this Agreement.
9.11.3 The benefit of this Agreement may be assigned in whole or in
part at any time by the Purchaser to any one or more third
parties (including, without limitation, any member of the
Purchaser's Group, any Celgene Affiliate or any successor of the
Purchaser).
The Vendors shall have no greater liability to an assignee of
the Purchaser under, or in respect of a breach of, this
Agreement than they would have had to the Purchaser under the
Agreement in respect of such breach if the assignment had not
been made.
In this respect it is acknowledged by the Vendors that, in the
event that the Purchaser either assigns this Agreement, in whole
or in part, in accordance with the provisions of this Agreement,
or directs that Shares be transferred directly to such third
parties (pursuant to paragraph 1.1.1 of Schedule 2), the
Purchaser may receive payment in respect of such assignment or
transfer, which payment may be greater than or less than the
appropriate proportion of the Purchase Price. For the avoidance
of doubt, such payment to the Purchaser shall not give rise to
any obligation of the Purchaser to make any payment to the
Vendors over and above the Purchase Price due to the Vendors in
accordance with the terms of this Agreement.
9.11.4 If the benefit of this Agreement is assigned or otherwise
transferred to a third party in accordance with this clause
9.11, the relevant Party or the personal representatives of such
Party shall give written notice of such assignment or transfer
to the other Parties as soon as reasonably practicable.
9.12 Full amounts payable
--------------------
All amounts payable under this Agreement shall be paid in full
notwithstanding any rights of set-off, counterclaim or similar rights.
10 CHOICE OF LAW, SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS
10.1 Choice of Law
-------------
10.1.1 This Agreement shall be governed by and construed in accordance
with English law, and all claims and disputes between the
Parties or any of them arising out of or in connection with this
Agreement (whether or not contractual in nature) shall be
determined in accordance with English law.
10.1.2 If in any court any party argues that a court other than the
Courts of England and Wales has jurisdiction to determine any
dispute or difference between the Parties or any of them arising
out of or in connection with this Agreement that issue shall be
determined in
24
accordance with English law, and any right any Party might otherwise
have to rely upon the law of the forum or any other law is hereby
irrevocably and unconditionally waived.
10.2 Submission to jurisdiction
--------------------------
10.2.1 Each Party submits to the exclusive jurisdiction of the Courts
of England and Wales in relation to all claims, disputes,
differences or other matters arising out of or in connection
with this Agreement.
10.2.2 Each Party irrevocably waives any right that it may have:
(a) to object on any ground to an action being brought in
the Courts of England and Wales, to claim that the
action brought in the Courts of England and Wales has
been brought in an inconvenient forum, or to claim that
the Courts of England and Wales do not have
jurisdiction. The waiver contained in this clause
10.2.2(a) includes (without limitation) a waiver of all
formal and substantive requirements of any otherwise
competent jurisdiction in relation to this clause
10.2.2(a);
(b) to oppose the enforcement of any judgment of any court
of England and Wales whether on any ground referred to
in clause 10.2.2(a) or otherwise.
10.3 Service of process
------------------
10.3.1 Each Party agrees that, without prejudice to the validity of any
other mode of service, any document in an action (including, but
not limited to, any claim form, application notice or other
originating process) may be served on any party by being
delivered to or left for that party at its address for service
of notices under clause 9.4.
10.3.2 Notwithstanding and without prejudice to the foregoing the
Purchaser and the Guarantor appoint the Purchaser's Solicitors
as its agent to receive service of process in respect of any
proceedings commenced in the Courts of England and Wales arising
out of or in connection with this Agreement.
10.3.3 Without prejudice to the effectiveness of service pursuant to
any other method recognised by the Rules of Civil Procedure,
service of such process upon the Purchaser's Solicitors at their
address given in this Agreement or elsewhere within the
jurisdiction of the Courts of England and Wales pursuant to the
Rules of Civil Procedure for the time being in force shall
constitute good service on the Purchaser. The Purchaser and the
Guarantor undertake not to contest in any court in any
jurisdiction the enforcement in that jurisdiction of any
judgment of the Courts of England and Wales against it on the
ground that the Courts of England and Wales did not have
jurisdiction over it or that service of process (being service
in accordance with this clause) was invalid or ineffective or
resulted in it not having due or adequate notice of the
proceedings.
25
11 TERMINATION
If at any time on or before Completion, the Purchaser exercises its, or
the Vendors exercise their, right of termination under clause 4.2 or
clause 4.3 (Completion), each Party's further rights and obligations
under this Agreement shall cease immediately on termination but
termination shall not affect a party's accrued rights and obligations at
the date of termination and the provisions of clauses 1 (Definitions), 9
(General), 10 (Choice of Law), 12 (Option Agreement), 13 (Appointment of
Vendors' Representatives and Warrantors' Representative) and 15 (Celgene
Guarantee) shall remain in full force and effect.
12 OPTION AGREEMENT: CONFLICT AND SURVIVAL
In the event of any conflict between the provisions of this Agreement
and the provisions of the Option Agreement, the provisions of this
Agreement shall prevail.
13 VENDORS' REPRESENTATIVES AND WARRANTORS' REPRESENTATIVE
13.1 Subject to the provisions of clause 13.2 and save in respect of clause
7, the Vendors' Representatives shall represent the interests of Vendors
for all purposes of this Agreement and the Transaction Documents.
Without giving notice to Vendors, the Vendors' Representative shall have
full and irrevocable authority as duly appointed attorney on behalf of
the Vendors (a) to deal with the other parties to this Agreement or the
Transaction Documents, (b) to accept and give notices and other
communications relating to this Agreement or the Transaction Documents,
(c) to settle any dispute relating to the terms of this Agreement or the
Transaction Documents, (d) to waive any condition to the obligations of
Vendors found in this Agreement or the Transaction Documents, (e) to
modify or amend this Agreement or the Transaction Documents except with
respect to the Purchase Price to be received by the Vendors, (f) to
execute any instrument or document that the Vendors' Representatives may
determine is necessary or desirable in the exercise of their authority
under this clause 13, (g) to transfer Shares in accordance with this
Agreement and (h) to act in connection with all matters arising out of,
based upon, or in connection with this Agreement or the Transaction
Documents and the transactions contemplated hereby or thereby.
13.2 The Warrantors' Representative shall exclusively represent the interests
of the Warrantors for the purposes of clause 6, schedule 3, schedule 4
and schedule 7 of this Agreement and for the purposes of the Escrow Deed
and the Escrow Account Instruction Letter. The Warrantors'
Representative shall have full and irrevocable authority, to the
exclusion of the Vendors' Representatives, as duly appointed attorney on
behalf of the Warrantors, to do all things which are referred to in
clause 13.1(a) to (g) inclusive, to the extent that the same relate to
any of the provisions of this Agreement referred to above and/or the
provisions of the Escrow Deed.
26
14 PENN SHARES - RIGHT OF FIRST REFUSAL AND LAST REFUSAL
The Vendors hereby severally undertake to the Purchaser and Celgene in
the terms set out in schedule 8.
15 CELGENE GUARANTEE
Celgene hereby undertakes to guarantee certain obligations of the
Purchaser in the terms set out in schedule 9.
IN WITNESS whereof this Agreement has been executed and delivered as a deed on
the date specified above.
27
SCHEDULE 1
The Company
-----------
1 Date and place of incorporation: 16th August 2001
2 Registered number: 4272045
3 Registered office: ▇▇▇▇▇ ▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
4 Authorised share capital: (pound)119,405.30 divided into 275,000 A
ordinary shares of 0.2p each, 225,000 B
ordinary shares of 2p each, 5,479,000 A
preference shares of 2p each and 238,765
B preference shares of 2p each
5 Issued share capital: 275,000 A ordinary shares all fully paid
225,000 B ordinary shares all fully paid
2,739,500 A preference shares
198,971 B preference shares
6 Shareholders: the issued share capital is held at the
date of this Agreement as detailed in
column 3 of part 1 of schedule 6
7 Directors: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
8 Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
9 Auditors: PricewaterhouseCoopers LLP
10 Bankers: Royal Bank of Scotland
11 Accounting reference date: 31st March
12 Outstanding mortgages or charges: N/A
28
SCHEDULE 2
Completion Matters
------------------
1 DOCUMENTS AND OTHER ITEMS TO BE DELIVERED BY THE VENDORS
1.1 There shall be delivered to the Purchaser at Completion:
The Shares
----------
1.1.1 by each Vendor, transfers in respect of the Shares held by
him/it (together the "SHARE TRANSFERS") duly executed and
completed in favour of the Purchaser or any one or more third
parties (including, without limitation, any affiliate of
Celgene) as the Purchaser may, by notice in writing to the
Vendors' Representative, direct:
1.1.2 by each Vendor, share certificates for the Shares held by him/it
or an indemnity in respect of any lost share certificate in the
agreed form; and
1.1.3 by each Vendor, a certified copy of any duly executed powers of
attorney pursuant to which any of the Share Transfers relating
to shares held by him/it has been executed;
Statutory records and minute books
----------------------------------
1.1.4 by the Warrantors, as agents for the Company:
(a) all its statutory and minute books;
(b) its common seal (if any);
(c) its certificate of incorporation, any certificate or
certificates of incorporation on change of name; and
(d) copies of its memorandum and articles of association.
Directors' and secretary's resignations
---------------------------------------
1.1.5 by the Warrantors, written resignations of the Retiring
Directors (other than any appointed by any Lead Investor) and
the Retiring Secretary in the agreed form resigning their
respective offices and waiving any claims whatsoever against the
Company;
1.1.6 by any Lead Investor, written resignations of the Retiring
Directors appointed by that Lead Investor in the agreed form
resigning their respective offices and waiving any claims
whatsoever against the Company;
Powers of Attorney
------------------
1.1.7 by each Vendor, a power of attorney in the agreed form duly
executed by that Vendor appointing the Purchaser
29
and any director of the Purchaser for the time being for the
purpose of exercising voting and other rights and receiving
benefits and entitlements which attach to or arise in respect of
any of the Shares held by him/it and receiving notices of and
attending and voting at all meetings of the members of the
Company (or any class thereof) and generally executing or
approving such deeds or documents and doing any such acts or
things in relation to any of such Shares as the attorney may
think fit.
Other Documents
---------------
1.1.8 by each Vendor, a duly executed release of all claims which it
may have against the Company in the agreed form;
1.1.9 by each Vendor, a duly executed counterpart of the Deed of
Termination;
1.1.10 by each Warrantor, a duly executed counterpart of the Escrow
Deed;
1.1.11 by Penn, PPSL and the Company, a duly executed counterpart of
the Technical Services Agreement;
1.1.12 by each Warrantor, a duly executed counterpart of the Disclosure
Letter;
1.1.13 by Royal Bank of Scotland plc and others, the Deed of Release
and Consent, duly executed and dated;
1.1.14 by Royal Bank of Scotland plc, a completion statement setting
out the amount required (including any charges and accrued
interest) to repay the RBS Indebtedness;
1.1.15 by Penn, a completion statement setting out the amount required
(including any charges and accrued interest) to repay the Penn
Group Indebtedness and confirmation that the Company owes no
other amounts to any member of the Penn Group;
1.1.16 by the Vendors, duly executed copies of the agreements
terminating the Terminated Key Agreements;
1.1.17 by the Vendors, a duly executed counterpart of the Escrow
Account Instruction Letter; and
1.1.18 by the Vendors, written confirmation of the inception from
Completion of (a) the run-off insurance cover in favour of the
Company on such terms as have been agreed between the Purchaser
and the Vendors and (b) the other insurance policies that Penn
is obliged to take out pursuant to the Technical Services
Agreement.
2 OBLIGATIONS OF THE VENDORS
Company Board Meeting
---------------------
2.1 The Vendors shall procure that a duly convened and quorate board meeting
of the Company is held at which:
30
REGISTRATION OF THE SHARE TRANSFERS
2.1.1 the Share Transfers are resolved to be registered (subject only
to their being duly stamped) notwithstanding any provision to
the contrary in the articles of association of the Company;
APPOINTMENTS AND RESIGNATIONS OF DIRECTOR(S) AND SECRETARY
2.1.2 such persons as the Purchaser may nominate are validly appointed
as additional directors of the Company;
2.1.3 on the appointments referred to in paragraph 2.1.2 being made,
all other then current directors of the Company ("THE RETIRING
DIRECTORS") cease to be directors of the Company;
2.1.4 such person as the Purchaser may nominate is validly appointed
as secretary of the Company in place of the then current
secretary ("THE RETIRING SECRETARY").
AUDITORS
2.1.5 the Auditors shall resign their office as auditors of the
Company by depositing their written notice of resignation in the
agreed form at its registered office in accordance with section
392 CA 1985 along with a statement under section 394 of that Act
that there are no circumstances connected with their ceasing to
hold office which they consider should be brought to the
attention of the members or creditors of the Company;
APPROVAL OF TECHNICAL SERVICE AGREEMENT
2.1.6 the Company's entering into the Technical Services Agreement is
approved.
Repayment of Vendor indebtedness
--------------------------------
2.2 Each Vendor shall repay to the Company, or procure the repayment to the
Company of, all indebtedness outstanding at Completion from:
2.2.1 that Vendor;
2.2.2 any person associated with that Vendor,
(other than any indebtedness in respect of any trading in the ordinary
course of business by the Company to the extent the same has been
disclosed in the Disclosure Letter which shall be repaid in accordance
with then existing arrangements in the normal course).
31
3 OBLIGATIONS OF THE PURCHASER
3.1 The Purchaser shall:
Payment of Initial Payment
--------------------------
3.1.1 pay the Initial Payment less the Escrow Amount by electronic
funds transfer for value on the day of Completion in accordance
with the provisions of clause 8;
Payment of Escrow Amount
------------------------
3.1.2 pay the Escrow Amount by electronic funds transfer for value on
the day of Completion into the Escrow Account;
Disclosure Letter
-----------------
3.1.3 deliver to the Vendors' Solicitors the Disclosure Letter
counter-signed by the Purchaser;
Repayment of Indebtedness
-------------------------
3.1.4 immediately following Completion, procure the repayment by the
Company of the Penn Group Indebtedness and the RBS Indebtedness;
Deed of Termination
-------------------
3.1.5 deliver to the Vendors' Solicitors a duly executed counterpart
of the Deed of Termination;
Escrow Deed
-----------
3.1.6 deliver to the Vendors' Solicitors a duly executed counterpart
of the Escrow Deed;
Technical Services Agreement
----------------------------
3.1.7 deliver to the Vendors' Solicitors a duly executed counterpart
of the Technical Services Agreement; and
Escrow Account Instruction Letter
---------------------------------
3.1.8 deliver to the Vendors' Solicitors a counterpart of the Escrow
Account Instruction Letter duly executed by Celgene and the
Purchaser.
4 JOINT OBLIGATIONS OF THE PURCHASER AND THE VENDORS
4.1 The Purchaser and the Vendors shall join in procuring that:
4.1.1 such firm as the Purchaser shall nominate shall be appointed
auditors of the Company in place of the Auditors;
32
4.1.2 all existing bank mandates in force for the Company shall be
altered (in such manner as the Purchaser shall at Completion
require) to reflect the resignations and appointments referred
to in paragraph 2.1;
4.1.3 the current accounting reference period of the Company shall be
altered so as to end on such date as the Purchaser may require;
4.1.4 the registered office of the Company shall be changed to such
place as the Purchaser may require; and
4.1.5 there shall be passed a special resolution of the Company
changing its name to one not including the word "Penn", which
the Purchaser shall then procure is filed at the Companies
Registry as soon as practicable.
33
SCHEDULE 3
Tax
---
Part 1 - General
----------------
1 INTERPRETATION
1.1 In this schedule (unless the context otherwise requires):
"ACCOUNTS RELIEF" means any Relief to the extent to which it is shown as
an asset in the Completion Accounts or is taken into account in
computing (and so reducing or eliminating) any provision for deferred
Taxation which appears, or which but for the presumed availability of
the Relief would have appeared, in the Completion Accounts;
"ACTUAL TAXATION LIABILITY" means a liability to make an actual payment
of Taxation whether or not such Taxation is also or alternatively
chargeable against or attributable to any other person;
"CAA" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"CLAIM" means:
(a) any notice, demand, assessment, including self-assessment,
determination, letter or other document issued or action taken
by or on behalf of a Tax Authority; or
(b) any other circumstance in relation to the operation of the
corporation tax pay and file or corporation tax self assessment
regimes concerning the running of the Company's Tax affairs and
whether issued or taken before or after the date of this
Agreement and whether satisfied or not at the date of this
Agreement); or
(c) any return, amended return, computation, accounts or any other
documents required for the purposes of Taxation,
in each case, indicating that:
(i) the Company has suffered or incurred or may suffer or incur a
Taxation Liability; or
(ii) the Company will be required to make increased or further
payments to a Taxation Authority; or
(iii) any of the assets of the Company or the Purchaser (including any
shares in the Company) are subject to any power of sale,
mortgage or charge resulting from or in consequence of any
liability to inheritance tax;
34
"DEEMED TAXATION LIABILITY" means:
(a) the setting off of a Post-Completion Relief against an Actual
Taxation Liability of the Company in respect of which the
Warrantors would have been liable under paragraph 1.1.1 or 1.1.2
of part 2 or (as the case may be) against income, profits or
gains which would have given rise to such an Actual Taxation
Liability (a "Set Off Liability"), in which event the amount of
the Set Off Liability is in the former case the amount of the
Actual Taxation Liability eliminated by such setting off and in
the latter case the amount of the Actual Taxation Liability of
the Company which would have arisen but for such setting off;
(b) the unavailability of an Accounts Relief in consequence of an
Event occurring on or before Completion in which event the
amount of the Deemed Taxation Liability is:
(i) where the Accounts Relief unavailable is a deduction
from or set-off against either Taxation or income,
profits or gains (an "Unavailable Relief Liability"),
the amount of the earliest Actual Taxation Liability of
the Company to arise which would not have arisen or
could have been avoided but for such unavailability; and
(ii) where the Accounts Relief unavailable is a right to a
repayment of Taxation (an "Unavailable Repayment
Liability"), the amount of Taxation which would have
been repaid but for such unavailability;
"EVENT" means any event, transaction, act, occurrence, dealing or
omission whatsoever, including the death of any person, the execution of
the Agreement, Completion, the acquisition, disposal or realisation of
any asset;
"GROUP RELIEF" has the meaning given to that expression by section 402
ICTA;
"IHTA" means the Inheritance Tax ▇▇▇ ▇▇▇▇;
"INDEPENDENT EXPERT" means a member of the Chartered Institute of
Taxation or the Institute of Chartered Accountants in England and Wales
independent of the Parties who has had a specialised Taxation practice
for at least ten years and who shall be appointed by agreement between
the relevant Parties or (failing such agreement and upon the first
application made by any such party) by the President of the Chartered
Institute of Taxation or the Institute of Chartered Accountants in
England and Wales;
"POST-COMPLETION RELIEF" means any Relief which arises wholly in
consequence of or by reference to an Event occurring or deemed to occur
after Completion and not in consequence of or by reference to any Event
occurring or deemed to occur on or before Completion (but shall not
include any Relief referred to in paragraph 4.2);
"RELIEF" means any loss, allowance, exemption, set-off, deduction,
credit or other relief from any Taxation or in the computation of
income, profits or gains for the purpose of any Taxation and any right
to a repayment of Taxation;
35
"TAX or TAXATION" means:
(a) any form of tax, and any levy, duty, impost, deduction or
withholding of any kind, in each case in the nature of tax,
whether governmental, statutory, state, provincial, local,
governmental or municipal whenever created or imposed and
whether of the United Kingdom, part of the United Kingdom or
elsewhere (but not including, water rates, community charge or
council tax or any tax, charge, rate or duty similar to,
corresponding with, replacing or replaced by any of them) and
(b) all charges, surcharges, interest, penalties and fines relating
to any Taxation falling within paragraph (a) of this definition;
and regardless of whether such taxes, duties, levies charges,
contributions, imposts, deductions or withholdings, interest, penalties
or fines are chargeable directly or primarily against or attributable
directly or primarily to the Company or any other person and of whether
any amount in respect of any of them is recoverable from any other
person;
"TAXATION AUTHORITY" means any authority or person, whether of the
United Kingdom, part of the United Kingdom or elsewhere, imposing,
assessing or collecting any Taxation;
"TAXATION LIABILITY" means any Actual Taxation Liability, any Deemed
Taxation Liability and any costs, fees and expenses falling within
paragraph 1.1.5 of part 2;
"TAX REFUND" means a tax refund relating to an accounting period within
the meaning of section 102 FA 1989;
"TCGA" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"UNAVAILABILITY" means, in relation to an amount of a Relief, the
reduction, modification, claw-back, counteraction, disallowance or
cancellation of or failure to obtain that amount of that Relief but does
not include the set-off of any Relief against Taxation or any income,
profits or gains and "UNAVAILABLE" shall be construed accordingly; and
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇.
"VENDOR'S RELIEF" means any Relief which is or becomes available to the
Company, other than an Accounts Relief or a Post-Completion Relief;
1.2 In this schedule (unless the context otherwise requires):
1.2.1 references to persons include an individual, corporation,
partnership, unincorporated association, or body of persons and
any state or any agency thereof;
1.2.2 references to parts are references to parts of this schedule and
reference in any part to a paragraph shall, unless otherwise
stated, be to the paragraph of that part.
36
1.3 Any payments made pursuant to this schedule or for breach of any
Warranty shall, so far as possible, be treated as an adjustment to the
consideration paid by the Purchaser for the Shares under this Agreement.
1.4 References to "income, profits or gains", earned, accrued or received on
or before a particular date or in respect of a particular period include
income, profits or gains which are deemed for the purposes of the
Taxation in question to have been earned, accrued or received at or
before that date or in respect of that period;
1.5 References to a payment or distribution made on or before a particular
date shall include:
(a) any payment or distribution which for the purposes of the
Taxation in question is treated as having been made on or before
that date; and
(b) any act or transaction which has occurred on or before that date
and is or has been deemed to be a payment or distribution for
the purposes of any Taxation assessment.
1.6 The rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall not be
given a restrictive meaning by reason of the fact that they are preceded
by words indicating a particular class of acts, matters or things; and
1.7 General words shall not be given a restrictive meaning by reason of the
fact that they are followed by particular examples intended to be
embraced by the general words.
2 EXCLUSIONS AND LIMITATIONS
2.1 The Warrantors shall not be liable for breach of any Taxation Warranty
in respect of any Taxation Liability (or where the loss, liability or
damage arising in consequence of a breach of any Tax Warranty is any
Taxation Liability) or under part 2 in respect of any Taxation Liability
to the extent that:
2.1.1 provision or reserve for it is made in the Completion Accounts
or payment or discharge of it is taken into account therein;
2.1.2 any Vendor's Relief is or becomes available (or is made
available at no cost to the Company) to mitigate the Taxation
Liability or breach (and where the Warrantors request the
Purchaser to utilise a Vendor's Relief the Warrantors shall
indemnify the Purchaser for any material third party
professional costs incurred by the Purchaser in using a Vendor's
Relief);
2.1.3 it arises in consequence of, or would have been reduced or
eliminated but for:
(a) any voluntary act or omission of the Company or any
member of the Purchaser's Group carried out after
Completion which the Company or the relevant member of
the Purchaser's Group knew or ought reasonably to have
known would give rise to the
37
relevant Taxation Liability provided that this exclusion
shall not apply:
(i) if the act or omission was carried out by the
Company in the ordinary course of business of
the Company; or
(ii) if the Company carried out the act or omission
to comply with a binding legal commitment
created on or before Completion or with any law
or court order or direction or regulation having
the force of law in each case in force at
Completion or to ensure that the Company's
accounts complied with any generally accepted
accounting practices or standards applicable as
at Completion; or
(b) the combined effect of any Event occurring before
Completion and any Event occurring after Completion
except where the Event occurring before Completion is
outside the ordinary course of business of the Company
and the Event occurring after Completion is within the
ordinary course of business of the Company;
(c) the Company ceasing to carry on any trade or business
after Completion or effecting a major change after
Completion in the nature or conduct of any trade or
businesses carried on by it at Completion (in each case,
within the meaning of section 768, ICTA);
(d) the Company changing the date to which it makes up its
statutory accounts or changing any of its accounting
policies (including, without limitation, the treatment
of timing differences and the bases on which the Company
values its assets) in either case after Completion
except to the extent that such changes are necessary to
ensure that such accounting policies comply with
generally accepted accounting practices and standards
applicable as at Completion;
(e) the Company disposing of any capital asset acquired
after Completion, or ceasing after Completion to be a
member of a group for the purposes of any Taxation;
(f) the failure by the Company after Completion to make any
claim, election, surrender or disclaimer or to give any
notice or consent or to do any other thing, the making,
giving or doing of which was permitted by law and which
is taken in to account:
(i) in computing and so reducing any provision which
appears in the Completion Accounts (or
eliminating any provision which would otherwise
have appeared in the Completion Accounts);
38
(ii) in computing any right to repayment of Taxation
which appears in the Completion Accounts;
and which was properly disclosed to the Purchaser in the
Disclosure Letter or the making, giving or doing of
which is notified by the Warrantors to the Purchaser at
least 5 Business Days' prior to the expiration of the
time limit to make such election, surrender or
disclaimer or the withdrawal or amendment by the Company
after Completion of any such claim, election, surrender,
disclaimer, notice or consent validly made by the
Company prior to Completion;
(g) any failure by the Purchaser or the Company to comply
with its obligations under paragraph 6 ("Appeals and
conduct of claims") or paragraph 8 ("Taxation
Computations");
(h) any legislation or any change in the rate of any
Taxation or any imposition of Taxation or change in the
published practice, published interpretations or
concessions of any Taxation Authority in each case
coming into effect after Completion;
(i) the Company ceasing to be subject to corporation tax at
the small companies' rate (or qualifying for relief
under section 13(2) ICTA) and becoming subject to
corporation tax at the rate applicable to companies
generally as a result of the sale and purchase of the
Company on the terms of this Agreement;
2.1.4 the Purchaser has recovered damages or any other amount under
this Agreement (whether for breach of warranty, under this
schedule or otherwise) in respect of the same loss, liability,
or damage or the Purchaser or the Company have otherwise
obtained reimbursement or restitution from the Warrantors.
3 MITIGATION OF LIABILITY
3.1 The Warrantors may, in particular but without limitation, by notice in
writing to the Purchaser avoid or reduce any liability which the
Warrantors would, apart from this paragraph 3.1, have under part 2 or
for breach of any Taxation Warranty by procuring the surrender to the
Company of Group Relief, advance corporation tax or a Tax Refund
(without the Purchaser or the Company being liable to make any payment
in consideration for such surrender) and the liability of the Warrantors
under part 2 or for breach of any Taxation Warranty shall be validly
satisfied or avoided to the extent of the amount of Taxation which has
been validly satisfied or avoided as a result of such surrender. The
Purchaser shall procure that the Company takes all such steps (at no
cost to the Company), including (without limitation) making and giving
all such claims and consents as the Warrantors may reasonably request to
effect any such surrender.
39
4 OVER-PROVISIONS AND RELIEFS
4.1 The Purchaser shall at the request of the Warrantors (or the Vendors
Representative on behalf of the Warrantors) require the Auditors to
determine (as experts and not as arbitrators and at the expense of the
Warrantors) whether:
4.1.1 any provision for Taxation in the Completion Accounts has proved
to be an over-provision and if so its amount;
4.1.2 any right to a repayment of Taxation treated as an asset in the
Completion Accounts has proved to be understated and if so its
amount or, where no right to repayment of Taxation was treated
as an asset in the Completion Accounts, whether any such amount
should have been treated as an asset in the Completion Accounts
the Closing Balance Sheet and if so the amount; or
4.1.3 any Actual Taxation Liability which arises or would otherwise
have arisen (other than one which would otherwise have given
rise to a corresponding liability of the Warrantors under
paragraph 1 of part 2) is avoided or reduced or any repayment of
an amount of Taxation is obtained in either case by the use of a
Vendor's Relief, and, if so, the amount of Taxation so saved or
the amount of that repayment; and
if the Auditors determine that there has proved to be any such
over-provision, understatement or amount, the amount of such
over-provision, understatement or amount (as the case may be) shall be
dealt with in accordance with paragraph 4.3.
4.2 The Purchaser shall at the request of the Warrantors (or the Vendors'
Representative on behalf of the Warrantors) require the Auditors to
determine (as experts and not as arbitrators and at the expense of the
Warrantors) whether any Taxation Liability (or the Event giving rise to
such Taxation Liability or the discharge of it) which has resulted in
any sum having been paid or becoming payable by the Warrantors under
part 2 or for breach of any Taxation Warranty has given rise to a Relief
(or would give rise to a Relief assuming that all reasonable steps are
taken to obtain such Relief) which would not otherwise have arisen, and:
4.2.1 a liability of the Company to make an actual payment or
increased payment of Taxation has been satisfied or avoided in
whole or in part by the use of that Relief; or
4.2.2 a right to a repayment of Taxation has arisen as a result of the
use of that Relief;
and, if the Auditors so determine, the amount by which that liability
has been satisfied or avoided or an amount equal to the amount of that
repayment (as the case may be) shall be dealt with in accordance with
paragraph 4.3 (for the avoidance of doubt this shall not avoid the
Warrantors making a payment in respect of any Taxation Liability if the
determination by the Auditors has not been completed or the Relief as so
determined by the Auditors is not available
40
by the time of the due date for payment by the Warrantors under part 2
in respect of such Taxation Liability).
4.3 Where it is provided under paragraph 4.1 or 4.2 that any amount is to be
dealt with in accordance with this paragraph 4.3:
4.3.1 the amount shall first be set off against any payment then due
from the Warrantors under part 2 or for breach of any Taxation
Warranty;
4.3.2 to the extent there is an excess, a refund shall be made to the
Warrantors, within 5 business days of the auditor's
determination referred to in paragraph 4.1, of any previous
payment made by the Warrantors under part 2 or for breach of any
Taxation Warranty and not previously refunded under this clause
up to the amount of such excess; and
4.3.3 to the extent that the excess referred to in paragraph 4.3.1 is
not exhausted thereunder, the remainder of that excess shall be
carried forward and set off against any future payment which
becomes due from the Warrantors under part 2 or for breach of
any Taxation Warranty.
4.4 Where such determination by the Auditors as is mentioned in paragraph
4.1 or 4.2 has been made, the Warrantors (or the Vendors' Representative
on behalf of the Warrantors) or the Purchaser may request the Auditors
to review such determination (at the expense of the person making the
request) in the light of all relevant circumstances, including any facts
which have become known only since such determination, and to determine
whether such determination remains correct or whether, in the light of
those circumstances, the amount that was the subject of such
determination should be amended.
4.5 If the Auditors determine under paragraph 4.4 that an amount previously
determined should be amended, that amended amount shall be substituted
for the purposes of paragraph 4.1 or 4.2, as the case may be, in place
of the amount originally determined and such adjusting payment (if any)
as may be required by virtue of such substitution shall forthwith be
made by the Warrantors to the Purchaser or, as the case may be, by the
Purchaser to the Warrantors.
5 RECOVERY FROM THIRD PARTIES
If, in the event of any payment becoming due from the Warrantors under
part 2 or for breach of any Taxation Warranty and the Company either is
immediately entitled at the due date for the making of that payment to
recover from some other person any sum in respect of the Taxation
Liability that has resulted in that payment becoming due from the
Warrantors, or at some subsequent date becomes entitled to make such a
recovery, then the Purchaser shall procure that the Company shall (in
either of those cases) but without prejudice to the Warrantors'
obligations to make payment under part 2 or for breach of any Taxation
Warranties on the due date, promptly notify the Warrantors of its
entitlement and the Purchaser shall procure, if so required by the
Warrantors, (provided the Warrantors shall first indemnify the Company
to the Purchaser's reasonable satisfaction against all losses, damages,
reasonable costs and expenses which may be incurred by the Company) that
the Company takes such
41
reasonable steps as the Warrantors shall reasonably request to enforce
that recovery (keeping the Warrantors informed of the progress of any
action taken) and shall account to the Warrantors for so much of any sum
so recovered (less (a) any Tax payable by the Company thereon, and (b)
all reasonable charges, costs and expenses incurred by the Company in
recovering such sum) as does not exceed the amount which the Warrantors
have paid or that is due to be paid by the Warrantors under this Deed).
6 APPEALS AND CONDUCT OF CLAIMS
6.1 If the Purchaser or the Company (or any of their officers, employees,
servants or agents) becomes aware of a Claim, the Purchaser shall or
shall procure that the Company shall as soon as reasonably practicable
give written notice of the Claim to the Warrantors and, in any event,
where a statutory or other time limit is applicable for responding to or
appealing against the Claim or to any assessment, notice, demand or
other document issued (or deemed to be issued) or action taken which
constitutes the Claim, the Purchaser shall give written notice of the
Claim to the Warrantors at least 14 days prior to the expiry of such
time limit. To the extent reasonably possible, having regard to the
information and time available, such written notice shall include an
estimate of the Warrantors' liability under this schedule in respect of
such Claim, the basis of calculation of that estimate and such details
of the Claim as are then available to the Purchaser or the Company.
6.2 The Purchaser shall, and shall procure that the Company shall, take such
action to appeal, protest against, mitigate, reduce, avoid, dispute,
resist or compromise the Claim and make available such documents,
information and assistance in connection with the Claim as the
Warrantors (or the Vendors' Representatives on behalf of the Warrantors)
may by written notice request provided the Warrantors shall indemnify
the Purchaser and the Company to their reasonable satisfaction against
reasonable costs and expenses and any fines, penalties, surcharges,
interest or additional Taxation which the Purchaser or the Company
incurs as a result of taking such action or providing such information
and assistance.
6.3 The Warrantors (or the Vendors' Representatives on behalf of the
Warrantors) may, if the Warrantors (or the Vendors' Representatives on
behalf of Warrantors) request in writing and the Purchaser consents
(such consent not to be unreasonably withheld or delayed) to such
request, elect to have any action referred to in paragraph 6.2 conducted
by professional advisers acting in the name of the Company but reporting
to, and taking instructions from, the Warrantors (or the Vendors'
Representatives on behalf of the Warrantors) in which event the
provisions of paragraph 6.4 shall apply.
6.4 The Warrantors hereby undertake to the Purchaser to:
6.4.1 keep the Purchaser informed of all matters relating to the
action and deliver to the Purchaser copies of all material
correspondence relating to the action;
6.4.2 obtain the prior written approval of the Purchaser (not to be
unreasonably withheld or delayed) to the content and sending of
written communications relating to the action to a Taxation
Authority; and
42
6.4.3 obtain the prior written approval of the Purchaser (not to be
unreasonably withheld or delayed) to:
(a) the settlement or compromise of the Claim which is the
subject of the action; and
(b) the agreement of any matter in the conduct of the action
which is likely to affect the amount of the Claim.
6.5 The Purchaser shall not be obliged to procure that the Company take any
action under this clause which involves contesting a Claim before any
appellate tribunal or court unless the Warrantors furnish the Purchaser
with the written opinion of Counsel of at least ten years call approved
by the Purchaser (such approval not to be unreasonably withheld or
delayed) who is experienced in the subject matter of the Claim to the
effect that an appeal in respect of the matter in question has a
reasonable prospect of being won.
6.6 If at any time the Warrantors request that the Purchaser take, or
procure that the Company take, any action referred to in paragraph 6.2,
but do not make any request referred to in paragraph 6.3 (or the
Purchaser does not consent to any such request), the provisions of
paragraph 6.4 shall apply as if references to "the Warrantors" are
references to "the Purchaser" and reference to "the Purchaser" are
references to "the Warrantors".
7 DISPUTES
7.1 In the event of any dispute under paragraph 3, 4, 5, 6 or 8 of this
schedule, such dispute shall if the Parties so agree be determined by
the Independent Expert (acting as expert and not as arbitrator) and in
the absence of manifest error his determination shall be conclusive and
binding on the Parties. The proper charges and disbursements of the
Independent Expert shall be paid and borne on each occasion by the
Parties concerned in such proportions as the Independent Expert may in
his absolute discretion consider fair and reasonable.
7.2 If the Vendors' Representative (as agent of the Warrantors) on the one
hand or the Purchaser on the other is dissatisfied with any
determination of the Auditors, the matter shall be referred to the
Independent Expert for determination in accordance with the provisions
of paragraph 7.
8 CONDUCT OF PRE-COMPLETION TAXATION AFFAIRS
8.1 Subject to complying with the provisions of paragraph 8.2 below, the
Warrantors or their duly authorised agents shall, at the cost and
expense of the Company (save where in accordance with good practice or a
legal requirement such returns should have been prepared before
Completion in which case the cost and expense shall be that of the
Warrantors) prepare the corporation tax returns of the Company for all
accounting periods ending on or prior to the Latest Accounts Date to the
extent that the same shall not have been prepared before
43
Completion. The Warrantors or their duly authorised agents shall, at the
cost and expense of the Company (save where in accordance with good
practice or a legal requirement such returns should have been prepared
before Completion in which case the cost and expense shall be that of
the Warrantors) prepare all documentation and deal with all matters
(including correspondence) relating to the corporation tax returns of
the Company for all accounting periods ending on or prior to the Latest
Accounts.
8.2 The Warrantors covenant with the Purchaser:
8.2.1 to keep the Purchaser and its duly authorised agents and the
Company informed of all material matters relating to the
submission, negotiation and agreement of such corporation tax
returns and computations;
8.2.2 that no such computations or returns nor any material
correspondence pertaining to the negotiations or agreement of
such computations or returns shall be transmitted to any
Taxation Authority without first being submitted to the
Purchaser and the Company or their duly authorised agents for
their comments and for the Purchaser's approval and shall only
finally be submitted or transmitted on the receipt of the
written approval of the Purchaser or its duly authorised agent,
such approval not to be unreasonably withheld or delayed.
8.3 In the event that the provisions of paragraph 8.2 have been complied
with by the Warrantors the Purchaser shall procure that the Company
shall cause the returns mentioned in paragraph 8.2 (and all claims,
elections, disclaimers, surrenders and consents assumed to be made or
given therein) to be authorised, signed and submitted to the appropriate
Taxation Authority and generally do all such things as may be necessary
to give effect to such returns, claims, elections, disclaimers,
surrenders or consents provided that the Purchaser shall not be required
to procure any such action where in the Purchaser's reasonable opinion,
it considers the relevant returns, documents or correspondence do not
make proper disclosure of any relevant matters or are legally deficient
in any other regard.
8.4 The Purchaser shall (if requested in writing by the Warrantors or the
Vendors' Representative on their behalf) procure that the Company
promptly makes or gives such returns, claims, elections, disclaimers,
surrenders and consents in relation to Taxation which it was assumed
would be made or given in computing any provision which appears in the
Completion Accounts (or in eliminating any provision which would have so
appeared) or which relate to any Vendors Relief, and generally does all
such things as may be necessary to give effect to such returns, claims,
elections, surrenders or consents.
8.5 The Purchaser shall procure that the Company keeps the Warrantors fully
informed of its Taxation affairs in respect of the accounting period of
the Company current at Completion and shall promptly provide the
Warrantors with copies of all relevant documents and not submit any
correspondence or submit or agree any return or computation for such
period to any Taxation Authority without giving the Warrantors a
reasonable opportunity to make representations thereon and without the
written consent of the Warrantors (such consent not to be unreasonably
withheld or delayed).
8.6 The Purchaser shall provide, and shall procure that the Company
provides, the Warrantors with access to such documents, information and
assistance (including without limitation, access to, and to take copies
of, books, accounts
44
and records) as the Warrantors may reasonably require in connection with
its conduct of the Company's Taxation affairs pursuant to this paragraph
8.
9 PURCHASER'S COVENANT
9.1 The Purchaser covenants with each Warrantor to pay to that Warrantor an
amount equal to any Actual Taxation Liability of that Warrantor or of
any company which is under the control of that Warrantor (or of that
Warrantor and/or any other Warrantor or Vendor) at any time after
Completion (and any costs and expenses incurred by that Warrantor or
that company in relation to such Actual Taxation Liability or in making
any claim under this paragraph 9.1), where such Actual Taxation
Liability:
9.1.1 arises as a result of the failure by the Company to discharge
after Completion an Actual Taxation Liability for which the
Company is primarily liable and which is not within paragraph 1
of part 2; or
9.1.2 arises as a result of the Company paying after Completion an
abnormal amount by way of dividend (within the meaning of
section 709(4) ICTA) in the circumstances specified in section
704C ICTA.
9.2 If the Purchaser becomes liable to make a payment under paragraph 9.1,
the Purchaser shall pay such amount in cleared immediately available
funds on or before the later of the date 2 business days before that
Actual Taxation Liability is finally due and payable and the date 2
business days after the date of written demand on the Purchaser by the
relevant Warrantor.
9.3 The provisions of paragraph 6 of this part shall apply mutatis mutandis
to this paragraph 9, and for these purposes any reference in those
paragraphs to the Warrantors shall be read as a reference to the
Purchaser and vice versa (as appropriate).
45
Part 2 - Taxation Covenant
--------------------------
1 COVENANT BY THE WARRANTORS
1.1 Subject to the provisions of part 1 and of schedule 8, the Warrantors
hereby covenant with the Purchaser to pay to the Purchaser an amount
equal to:
1.1.1 any Actual Taxation Liability of the Company arising as a result
of:
(a) an Event occurring or deemed to have occurred on or
before Completion; or
(b) any income, profits or gains earned, accrued or received
on or before or in respect of any period ended on or
before the date of Completion and for these purposes the
period from the date of the last statutory accounts
until the date of the Completion Accounts shall be
treated as a period for Taxation purposes;
1.1.2 any Actual Taxation Liability of the Company arising pursuant to
section 179 TCGA as a result of (a) a disposal of the Shares
before Completion; or (b) the sale and purchase of the Shares
pursuant to this Agreement;
1.1.3 any Deemed Taxation Liability;
1.1.4 any Actual Taxation Liability in respect of inheritance tax
which:
(a) is at Completion a charge on, or gives rise to a power
to sell, mortgage or charge, any of the shares or assets
of the Company; or
(b) after Completion becomes a charge on, or gives rise to a
power to sell, mortgage or charge, any of the shares or
assets of the Company being an Actual Taxation Liability
arising as a result of the death of any person within
seven years after a transfer of value (or a deemed
transfer of value) if a charge on or power to sell,
mortgage or charge any such shares or assets could, if
the death had occurred immediately before Completion and
the inheritance tax payable as a result thereof had not
been paid, have existed at Completion; or
(c) arises as a result of a transfer of value occurring or
being deemed to occur on or before Completion (whether
or not in conjunction with the death of any person
whenever occurring) which increased or decreased the
value of the estate of the Company;
In determining the amount of any such Actual Taxation Liability
in respect of inheritance tax and whether a charge on or power
to sell, mortgage or charge any of the shares or assets of the
Company exists at any time the fact that any Taxation is not yet
payable or may be paid by instalments shall be disregarded and
such Taxation shall be treated as becoming due and a charge or
power to sell, mortgage or charge as arising on the date of the
transfer of value or other date or event on or in respect of
which it becomes payable or arises and the provisions of section
213 Inheritance Tax Act 1984 shall not apply thereto;
1.1.5 any reasonable third party costs, fees and expenses reasonably
incurred by the Purchaser or the Company as a result of any
Actual Taxation Liability within
46
paragraph 1.1.1, 1.1.2, 1.1.4 or 1.1.6 any Deemed Taxation
Liability within paragraph 1.1.3 or in successfully taking or
defending any action under this part 2.
1.1.6 any Actual Taxation Liability of the Company which arises in
respect of the exercise after Completion of any options to
acquire shares in the Company or any member of the Vendor's
Group which were granted by the Company or any member of the
Vendor's Group to any person in respect of their position as a
director or employee before Completion;
1.1.7 any Taxation Liability of the Company which arose as a result
of:
(a) the liquidation of Inhoco 2387 Limited; or
(b) the acquisition of the Thalidomide business by the
Company from Inhoco 2387 Limited pursuant to an
agreement dated 16 November 2001.
2 PAYMENT
2.1 If the Warrantors are or become liable to make a payment under this part
2 in respect of:
2.1.1 an Actual Taxation Liability, the Warrantors shall pay such
amount on or before the date 5 business days after the date of
written notice from the Purchaser to the Warrantors of the
amount which the Warrantors are required to pay and requesting
payment or, if later, the date 2 business days before the date
on which the Actual Taxation Liability in question is due for
payment;
2.1.2 a Deemed Taxation Liability, the Warrantors shall pay such
amount by the later of 5 business days after the date of written
notice from the Purchaser to the Warrantors of the amount which
the Warrantors are required to pay and requesting payment, and:
(a) in the case of a Set Off Liability, the date 2 business
days before the date on which the Actual Taxation
Liability referred to in the definition of that term
would otherwise have become due for payment;
(b) in the case of an Unavailable Relief Liability, 2
business days before the date on which the Actual
Taxation Liability referred to in the definition of that
term is actually due for payment; or
(c) in the case of an Unavailable Repayment Liability, the
date on which the repayment of Taxation would have been
made but for that unavailability; or
2.1.3 any amount within paragraph 1.1.4 the Purchaser will notify the
Warrantors in writing of such amount specifying details of the
services for which those costs, fees and expenses were incurred
and the circumstances in which they were obtained and the
Warrantors shall pay such amount on or before the date 5
business days after the date of such notice.
2.2 Sums not paid by the Warrantors on the dates specified in paragraphs
2.1.1 and 2.1.2 shall bear interest (which shall accrue from day to day
after, as well as
47
before, judgment) at the base rate from time to time of Barclays plc
from the date following the specified date up to and including the day
of actual payment of such sums.
3 TAX ON PAYMENTS BY THE WARRANTORS
3.1 The Warrantors shall be entitled to deduct or withhold from any payment
made under this part 2 or for breach of any Warranty, any deduction or
withholding (whether in respect of Taxation or otherwise) required by
law.
3.2 If any amount paid to the Purchaser under this part 2 is subject to
Taxation (other than any amount paid under paragraph 2.2), whether by
way of deduction or withholding from the payment paid to the Purchaser
or by way of Taxation on the amount received by the Purchaser, the
Warrantors covenant to pay to the Purchaser such further sum as will
ensure that the Purchaser receives and retains a net amount (after
taking into account such Taxation) equal to the full amount which it
would have received and retained had the payment in question not been
subject to Taxation. In the event that the Company receives any credit
or benefit in respect of any such Taxation deduction or withholding it
shall forthwith pay an amount equal to such credit or benefit to the
Warrantors.
3.3 If the benefit of this schedule is assigned (in whole or in part) the
Warrantors shall have no greater liability under this schedule to any
person to whom the benefit has been assigned than they would have had to
the Purchaser in the absence of such assignment.
48
Part 3 - Taxation Warranties
----------------------------
1 POST LATEST ACCOUNTS DATE
1.1 Since the Latest Accounts Date:
1.1.1 no accounting period (as defined in section 12 ICTA) of the
Company has ended as referred to in section 12(3) ICTA;
1.1.2 the Company has not paid any Taxation after its due date for
payment;
1.1.3 the Company has not declared or paid any dividend or made any
other distribution for the purposes of any Taxation.
1.2 The Latest Accounts make proper provision or reserve for Taxation
(including deferred taxation) for which the Company was liable or in
respect of the accounting period of the Company ended on the Latest
Accounts Date.
2 COMPLIANCE
2.1 There is no dispute between the Company and any Taxation Authority, the
Company is not and has not at any time in the last 3 years been the
subject of an investigation, audit or non-routine visit, by any Taxation
Authority and as far as the Warrantors are aware (having made reasonable
enquiries of persons other than any Tax Authority) there are no facts
which are likely to give rise to any such dispute or investigation.
2.2 The Company is not and has not at any time within the 3 years prior to
the date hereof been liable to pay any penalty, fine, surcharge,
interest or similar amount in relation to Taxation and its Taxation
reporting obligations and as far as the Warrantors are aware (having
made reasonable enquiries of persons other than any Tax Authority) there
are no facts which are likely to cause it to become liable to pay any
such penalty, fine, surcharge, interest or similar amount.
2.3 Within the last 3 years, the Company has duly and punctually complied
with all its obligations to deduct Taxation from payments made by it and
to account for such Taxation to any Taxation Authority and in particular
has properly operated the PAYE system, by duly deducting tax and
national insurance contributions (as appropriate) from all payments
made, or treated as made, to its employees and former employees, and
accounting to the Taxation Authorities for all amounts so deducted
insofar as the time for so accounting has fallen due and has maintained
proper records of these payments and deductions and has complied with
all its reporting obligations in connection with the benefits provided
for its employees and directors.
2.4 All payments, returns, self-assessments, self-certificates,
notifications, computations and payments, accounts, notices, statements,
reports and registrations which have been or should have been made or
filed by or in respect of the Company for any Taxation purpose (i) have
been made or filed within the requisite periods and on a proper basis
and are complete, up-to-date and are true and accurate in all material
respects.
49
2.5 All Taxation for which the Company is liable (and the due date for
payment of which has fallen due) has been duly paid and the Company has
not incurred any liabilities to interest or penalties in relation to
Taxation.
2.6 The disclosure letter contains details of any written dispensation,
concession or special arrangements affecting the Company requested from
or agreed by any Taxation Authority.
3 CLOSE COMPANIES
3.1 The Company is not and has never been a close investment-holding company
within the meaning of section 13A ICTA.
3.2 The Company has not at any time:
3.2.1 made or agreed to make any loan or advance which loan or advance
remains outstanding or effected or agreed to effect any
transaction within section 419, 421 or 422 ICTA or since the
Latest Accounts Date released or written off or agreed to
release or write off the whole or any part of any such loan or
advance; or
3.2.2 made a transfer of value within the provisions of section 94
IHTA; or
3.2.3 made or agreed to make any distribution within section 418 ICTA.
4 DISTRIBUTIONS AND PAYMENTS
4.1 No distribution (within the meaning of sections 209 and 210 ICTA) has
been made by the Company during the 6 years ended on the Latest Accounts
Date (except as provided in the Accounts).
4.2 The Company has not made or received any exempt distribution within the
meaning of section 213 ICTA, and has at no time been a relevant company
in relation to an exempt distribution for the purposes of that section
or concerned in an exempt distribution for the purposes of section 214
ICTA.
4.3 The Company has not at any time received a capital distribution to which
section 189 TCGA could apply.
4.4 The Company has not paid, and has not elected that any dividend it has
paid or declared be treated as, a foreign income divided as described in
Chapter VA Part VI ICTA.
4.5 The Company has not on or after 6th April 1965:
4.5.1 repaid, redeemed or purchased or agreed to repay, redeem or
purchase any of its share capital; or
4.5.2 capitalised or agreed to capitalise in the form of shares or
debentures, any profits or reserves of any class or description,
or otherwise issued or agreed to issue share capital otherwise
than for new consideration (as defined in section 254 ICTA).
50
5 EMPLOYEE BENEFITS
5.1 The Completion Disclosure Letter contains full details of all the long
term incentive plans, share option schemes and profit share schemes
established by the Company whether or not approved by the Company.
5.2 The Disclosure Letter sets out details of all interests in or rights to
acquire shares in the Company to which directors are or may be entitled
in respect of which:
5.2.1 the Company is or may be required to notify to the Inland
Revenue under relevant provisions of ITEPA; or
5.2.2 the Company may have liabilities to account for income tax
and/or national insurance contributions.
5.3 The Company has not established a qualifying employee share ownership
trust within the meaning of section 74 and schedule 5 FA 1989.
6 GROUP TRANSACTIONS
6.1 The Company is not/has not been a member of a group.
6.2 No asset of the Company shall be deemed disposed of and reacquired under
s179 TCGA by virtue of or in consequence of the sale of the Shares
pursuant to this Agreement or any other event occurring on or before
Completion.
6.3 The Company is not liable to pay any amount of Taxation which is
primarily a liability of any other person and in respect of which the
Company is so liable as a result of the failure of that other person to
discharge such Taxation within a specified period.
7 RESIDENCE AND OFFSHORE INTERESTS
7.1 The Company is and has at all times been resident only in the United
Kingdom for Tax purposes and is not and has not been treated as resident
or as having a branch, agency, place of business or permanent
establishment in any other jurisdiction for any Taxation purpose
(including under any double taxation treaty or agreement) and is not
liable to Tax (other than any tax withheld or deducted at source) in any
other jurisdiction.
7.2 The Company is not liable for any Taxation as the agent or tax
representative of any other person or business and does not constitute a
permanent establishment of any other person, business or enterprise for
any Taxation purposes.
7.3 The Company does not and has at no time owned a beneficial interest in
the capital of a company which is resident outside the United Kingdom
and which would be a close company if it were resident in the United
Kingdom, in circumstances such that a chargeable gain accruing to that
other company could be appointed to the Company under section 13 TCGA.
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8 NON-ARM'S LENGTH TRANSACTIONS
8.1 There is no outstanding Inland Revenue charge (as defined in section 237
IHTA) over any asset of the Company or over any of the Shares and there
are no circumstances in which such a charge could arise.
8.2 There are in existence no circumstances by virtue of which any such
power as is mentioned in section 212 IHTA could be exercised in relation
to any asset of the Company or to any of the Sale Shares or by virtue of
which any such power could be exercised but for the provisions of
section 204(6) IHTA.
8.3 The Company has not been a party to associated operations in relation to
a transfer of value within the meaning of section 268 IHTA.
8.4 The Company has not received any asset by way of gift as mentioned in
section 282 TCGA.
8.5 No expenditure incurred by the Company on the acquisition of any shares
is liable to be reduced under the provisions of section 125 TCGA.
9 VAT
9.1 The Company is duly registered for the purposes of VATA. Such
registration is not subject to any conditions imposed by or agreed with
the Commissioners of Customs and Excise. Within the last 3 years, the
Company has complied in all material respects with VATA and all orders,
provisions, directions or other conditions made or imposed thereunder
(including for the avoidance of doubt any regulations) or under any
other law relating to VATA and the Company has at all times punctually
paid and made all payments and returns required under the legislation.
9.2 The Company is not and has never been a member of a group for the
purpose of section 43 VATA.
9.3 No direction has been issued to the Company under schedule 9A VATA and
there are no circumstances in which such a direction could be issued.
9.4 The Company has not within the two years ending on the date of this
Agreement been served with any penalty liability notice under section 64
VATA or any surcharge liability notice under section 59 VATA or been
issued with any written warning under section 76(2) VATA.
9.5 Details of all elections made by the Company or a relevant associate of
it (within the meaning of paragraph 3, schedule 10 VATA) pursuant to
paragraph 2, schedule 10 VATA are set out in the Completion Disclosure
Letter and there are no circumstances in which a supply relating to the
grant of an interest in right over a licence to occupy any land or
building or any part of any land or building comprised within such an
election could be other than a taxable supply by virtue of paragraph
2(3AA), schedule 10 VATA or otherwise.
52
9.6 The Company has not registered, and is not required to register, for VAT
purposes (or for the purposes of any similar tax on added value or
turnover) in any country other than the United Kingdom.
9.7 Any transfer of assets made to the Company since its incorporation have
qualified as a transfer of a going concern for the purposes of section
49 VATA.
9.8 The Company does not own any assets to which Part XV of the Value Added
Tax Regulations 1995 applies.
9.9 The Company is, and has in respect of all its prescribed accounting
records ending after the Accounts Date, been able to obtain credit for
all input tax (as defined in section 24 VATA) which it has incurred and
has not carried out any transaction which might result in it becoming
exempt or partially exempt for VAT purposes.
9.10 The Company has not received a notice or is not otherwise aware of
anything which indicates that the grant to the Company of an interest in
or right over land or of a licence to occupy land will not be an exempt
supply because of an election under Schedule 10 VATA.
10 INSURANCE PREMIUM TAX
10.1 The Company is not nor has ever been an insurer (as defined by section
73 FA 1994) or a taxable intermediary (as defined by section 52A FA
1994) for the purposes of insurance premium tax.
10.2 The Company is not liable for nor to account for any amount in respect
of insurance premium tax.
11 STAMP DUTY AND STAMP DUTY RESERVE TAX AND STAMP DUTY LAND TAX
11.1 All documents which confer any right or title upon the Company to which
the Company was a party as a purchaser, lessee or assignee and which
attract stamp or transfer duty in the United Kingdom have been duly
stamped.
11.2 The Company has not been party to any transaction whereby the Company is
or could become liable to or to account for stamp duty reserve tax.
11.3 The Company does not have any undischarged liability to pay any stamp
duty land tax ("SDLT").
12 AIR PASSENGER DUTY
12.1 The Company does not own and has never owned a chargeable aircraft (as
defined by section 28 FA 1994) for the purposes of air passenger duty.
12.2 The Company is not liable for nor to account for any amount in respect
of air passenger duty.
53
13 LANDFILL TAX
13.1 The Company is not and has never been a landfill site operator within
the meaning of section 41 FA 1996.
13.2 The Company is not liable for nor to account for any amount of landfill
tax.
13.3 The Company is not a party to any contract to which the provisions of
any of paragraphs 45 to 47 (inclusive) of schedule 5 FA 1996 apply or
could apply.
14 CAPITAL ALLOWANCES
14.1 The Company has not incurred any expenditure on plant and machinery
(including fixtures) within Part 2 CAA.
14.2 The Company does not own any assets which qualify or have qualified as
industrial buildings for the purposes of CAA.
15 CAPITAL GAINS
15.1 The Company has sufficient records to enable it to determine the base
cost of any capital asset held as at Completion.
16 LOAN RELATIONSHIPS, ETC
16.1 The Company is not indebted in circumstances in which any interest or
other return on indebtedness will or may be treated as a distribution or
disallowed as a deduction under section 209 ICTA (definition of
distribution), or paragraph 13 Schedule 9 Finance ▇▇▇ ▇▇▇▇ (loan
relationships for unallowable purposes).
16.2 The Company is not a party to any loan relationship to which paragraph
11 Schedule 9 Finance ▇▇▇ ▇▇▇▇ applies or may apply (transactions not at
arm's length) or to which sections 92 (convertible securities etc), 93
(relationships linked to the value of chargeable assets) or Schedule 13
(relevant discounted securities) Finance ▇▇▇ ▇▇▇▇ apply.
16.3 The Company does not have in issue or own any deep discount securities,
deep gain securities or convertible securities which were issued or
acquired prior to 1 April 1996.
54
SCHEDULE 4
Part 1 - The Warranties
-----------------------
1 FACTUAL STATEMENTS AND INFORMATION
1.1 To the best of the Warrantors' knowledge, information and belief, the
information contained in the documents listed in Schedule 11 is in all
material respects true and accurate and not misleading in any material
respect.
1.2 The information contained in Schedules 1 and 5 to this Agreement is in
all material respects true and complete and not misleading in any
material respects.
2 CONSTITUTION AND STRUCTURE OF THE COMPANY
2.1 The Company has no subsidiaries.
2.2 The Company has no:
2.2.1 interest in the share capital of, or other investment in, any
body corporate;
2.2.2 interest in any partnership, joint venture, consortium or other
unincorporated association or arrangement for sharing profit; or
2.2.3 branch, agency, place of business or permanent establishment
outside the United Kingdom ("OVERSEAS BRANCH") or substantial
assets outside the United Kingdom,
and has no outstanding obligation to acquire any such interest or
overseas branch or in respect of any such interest or overseas branch
formerly owned by it or agreed to be acquired by it.
2.3 There is no shadow director of the Company.
3 COMPLIANCE WITH LEGAL REQUIREMENTS
3.1 Compliance has been made in all respects with all legal and procedural
requirements and other formalities in relation to the Company
concerning:
3.1.1 the memorandum and articles of association (including all
resolutions passed or purported to have been passed); and
3.1.2 issues of shares, debentures or other securities.
3.2 The Company has obtained all licences, permissions, consents, permits
and other approvals which are necessary to be obtained by it for the
carrying on of the Company's business in the places and in the manner in
which such business is now carried on and the lack of which would be
likely to have a material adverse effect upon such business or to
require a material alteration in the manner in
55
which such business is carried on; such licences, permissions, consents,
permits and approvals, so far as the Warrantors are aware, are in full
force and effect, are unconditional or subject only to conditions that
have been satisfied and have been complied with in all material respects
and there are no circumstances (including, without limitation, the
execution or performance of this Agreement or any document to be
executed pursuant to it) known to the Warrantors which indicate that it
is likely that any of such licences, permissions, consents, permits or
approvals might be suspended, cancelled or revoked prior to its stated
expiry date or not renewed.
3.3 All statutory registers required by law to be kept by the Company have
been properly written up and the Company has not received any
application or request for rectification of its statutory registers or
any notice or allegation that any of them is incorrect.
4 SHARE CAPITAL
4.1 There is no option, right to acquire or Security Interest on, over or
affecting any shares in the capital of the Company, there is no
agreement, arrangement, obligation or commitment to give or create any
of the foregoing and so far as the Warrantors are aware, no person has
made any claim to be entitled to any of the foregoing.
4.2 No part of the unissued share capital of the Company is under option or
is agreed or resolved conditionally or unconditionally to be issued or
put under option.
4.3 The numbers of the Shares set opposite the names of each of the Vendors
in part 1 of schedule 6 are legally and beneficially owned by them.
4.4 The Shares set opposite the names of the Vendors in part 1 of Schedule 5
constitute the entire allotted and issued share capital of the Company,
have been properly allotted and issued and are fully paid or credited as
fully paid.
4.5 No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for and there is no agreement,
arrangement or obligation relating to, the allotment, issue, transfer,
redemption or repayment of any share or loan capital of the Company
whether under any option, right of pre-emption or conversion or
otherwise.
4.6 So far as the Warrantors are aware none of the Shares was or represents
assets which were, the subject of a transfer at an undervalue (within
the meaning of sections 238 or 339 Insolvency Act 1986) within the
previous five years.
5 CONSTITUTIONAL MATTERS
5.1 The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied
in it or annexed to it copies of all resolutions and agreements as are
referred to in section 380(2) of the CA 1985.
56
5.2 The statutory books, minute books and other books which the CA 1985
requires the Company to keep (other than accounting records), are up to
date, in its possession and comprise a complete and accurate record of
the matters which the Company is required by the Act to record. To the
Warrantors' knowledge, no notice or allegation that any of them is
incorrect or should be rectified has been received by the Company.
5.3 The Company has properly prepared and filed all returns, resolutions,
particulars and other documents which it is required to file with the
Registrar of Companies or any other governmental or regulatory body or
agency.
5.4 Due compliance has been made with all the provisions of the CA 1985 in
connection with the formation of the Company, the allotment, issue,
purchase, redemption, repayment or conversion of shares, debentures and
other securities in the Company or the grant of options in any
securities in the Company, the reduction of the authorised and issued
share capital of the Company (if any) and the payment of dividends by
the Company.
5.5 The information contained in schedule 1 is complete and accurate in all
respects and not misleading in any respect.
5.6 Copies of the constitutional documents of the Company attached to the
Disclosure Letter are complete and accurate copies of the relevant
original documents.
6 LATEST ACCOUNTS
6.1 The Latest Accounts (a copy of which is annexed to the Disclosure
Letter) show a true and fair view of the state of affairs and the assets
and liabilities of the Company as at the Latest Accounts Date and of the
profits and losses of the Company for the financial year ended on the
Latest Accounts Date.
6.2 The Latest Accounts have been prepared and audited on a recognised and
consistent basis in accordance with the law and applicable standards,
principles and practices generally accepted in the United Kingdom
("Accounting Practice") and make all required and appropriate
disclosures.
6.3 In the Latest Accounts:
6.3.1 and in the audited accounts for the preceding accounting
periods, the rates of depreciation and amortisation were
sufficient to write down the value of the fixed assets of the
Company to nil not later than the end of their useful working
lives. The bases and rates of depreciation and amortisation used
in the Latest Accounts were the same as those used in the
audited accounts of the Company for the preceding accounting
periods;
6.3.2 stock and work in progress (except long-term contract balances)
were valued in the same way as in the audited accounts of the
Company for the three preceding accounting periods and on the
basis of the lower of cost or net realisable value at the Latest
Accounts Date. The long-term
57
contract balances were valued in the same way as in the audited
accounts of the Company for the preceding accounting periods and
on the basis of net cost less foreseeable losses and payments on
account at the Latest Accounts Date. All redundant and obsolete
stock was written off and all slow-moving and damaged stock was
written down appropriately;
6.3.3 provision or reserve (as appropriate) in accordance with UK
generally accepted accounting principles has been made for all
bad and doubtful debts, all liabilities and obligations (actual,
contingent or disputed) and all financial commitments existing
at the Latest Accounts Date; and
6.3.4 provision or reserve (as appropriate) in accordance with UK
generally accepted accounting principles has been made for all
Tax liable to be assessed on the Company or for which the
Company is or may become accountable (whether primarily or
otherwise).
6.4 The accounting policies adopted for the purpose of preparing the Latest
Accounts are the same as those adopted for the purpose of preparing the
audited accounts of the Company for the preceding accounting periods
(except as stated in the Accounts or any of those preceding accounts)
and none of those preceding accounts were qualified by the auditors.
6.5 The profits and losses of the Company shown by the Latest Accounts and
by the audited accounts of the Company for the preceding accounting
periods and the trend of profits and losses thereby shown have not
(except as disclosed in such accounts) been affected by any
extraordinary, exceptional or non-recurring item, by transactions of an
unusual nature or entered into other than on normal commercial terms
(including any pension contribution holiday or any rental or other
outgoing at below market rates) or by any other matter making such
profits or losses for a period unusually high or low.
6.6 The accounting records of the Company have been maintained in accordance
with the requirements of section 221 CA 1985.
6.7 The Latest Management Accounts of the Company have been prepared in the
ordinary course of business and, having regard to the purpose for which
they have been prepared, reflect the financial performance of the
business of the Company for the period to which they respectively relate
in a manner which is not materially misleading.
7 BUSINESS SINCE THE LATEST ACCOUNTS DATE
7.1 Since the Latest Accounts Date:
7.1.1 the Company has carried on its business in the usual course
without any interruption or alteration in the nature, scope or
manner of its business and so as to maintain it as a going
concern;
7.1.2 there has been no material adverse change in the financial or
trading position of the Company and, so far as the Warrantors
are aware, there exists no fact, matter or circumstance that
could give rise to the same;
58
7.1.3 no material adverse change has occurred in the assets and
liabilities shown in the Latest Accounts and there has been no
reduction in the value of the net tangible assets of the Company
on the basis of the valuations used in the Latest Accounts;
7.1.4 the Company has not acquired or disposed of nor agreed to
acquire or dispose of any material assets nor assumed or
incurred or agreed to assume or incur any material liabilities
(including contingent liabilities) other than in, in each case,
the usual course of business;
7.1.5 the Company has not made or agreed to make any capital
expenditure and no commitments involving capital expenditure
have been entered into or agreed to be entered into, in total in
excess of (pound)50,000;
7.1.6 the Company has not declared, paid or made a dividend or
distribution except as provided in the Latest Accounts;
7.1.7 the Company has not made a payment which will not be deductible
for corporation tax purposes either in computing the Company's
trading profits or in computing the corporation tax chargeable
on the Company which alone or when aggregated with other such
payments made since the Latest Accounts Date exceeds the
aggregate of non-deductible payments made over a similar period
during the currency of the Latest Accounts;
7.1.8 the Company has not changed its accounting reference period;
7.1.9 no resolution of the shareholders the Company has been passed;
and
7.1.10 the Company has not created, allotted, issued, acquired, repaid
or redeemed share or loan capital or granted any options in any
share capital or made any agreement or arrangement or
undertaking to do any of those things.
8 BORROWINGS AND BANK FACILITIES
8.1 The Company has not exceeded any limit on the amount it may borrow or
raise in any agreement or arrangement with its lenders or providers of
credit to it (whether under any overdraft facility or otherwise). So far
as the Warrantors are aware, the Company is not in breach of the terms
of any other such facilities and the total amount borrowed or raised by
the Company from whatsoever source does not exceed any limitation on its
borrowings and other powers contained in the Company's articles of
association or in any debenture or loan stock deed or any other
instrument or agreement to which the Company is a party.
8.2 Full details of all overdrafts, loans, credit facilities, other
borrowings or indebtedness in the nature of borrowings outstanding or
available to the Company are contained in the Disclosure Letter and so
far as the Warrantors are aware, none of the Vendors or the Company has
done or omitted to do anything whereby the continuance of any such
facilities in full force and effect might be affected or prejudiced or
the availability thereof terminated.
59
8.3 A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days
before the date of Completion is attached to the Disclosure Letter.
Since such statement there have been no payments out of any such
accounts except for routine payments in the usual course of business and
the balances on current account are not now substantially different from
the balance shown on such statements.
8.4 The Company has not received notice from any lender or provider of
credit to it (whether under any overdraft, loan, credit acceptance,
▇▇▇▇, discounting, note purchase or other agreement or arrangement)
requiring payment thereof cancelling the availability thereof or placing
any indebtedness thereunder (in each case) on demand or otherwise
altering to the disadvantage of the Company, the terms of any such
agreement or arrangement and, so far as the Warrantors are aware, there
are no circumstances which would now (or which could with the giving of
notice, lapse of time, the making of any determination, or otherwise)
give rise to any such notice.
8.5 The Company has not received notice of enforcement or demand for
payment, or intention to enforce or make demand for payment, from or of
steps being taken to enforce or to demand payment under, any debenture,
mortgage, charge, guarantee, indemnity, letter of comfort or other
security or assurance for payment.
8.6 The Company has no outstanding loan capital nor has it factored its
debts.
8.7 The Company has not created or agreed to create any Security Interest.
8.8 The Company has not engaged in any borrowing or financing not required
to be shown or reflected in the statutory accounts of the Company.
9 GRANTS
9.1 Full particulars of all material grants, allowances, subsidies, loans or
financial assistance ("grants") paid or pledged to the Company during
the last two years by any person are set out in the Disclosure Letter.
9.2 There are no facts or circumstances (including as a result of the
entering into of this Agreement) of which the Warrantors are aware which
could reasonably be expected to entitle early repayment of or refusal of
an application for, a grant in whole or in part.
10 GUARANTEES AND INDEMNITIES
10.1 There is no outstanding guarantee, indemnity, letter of comfort,
assurance for payment, mortgage, charge, debenture or other agreement or
arrangement to secure or incur a financial or other obligation with
respect to its or another person's obligation given for the benefit of
the Company or by the Company other than as disclosed in the Latest
Accounts.
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11 DEBTORS AND CREDITORS
11.1 To the best of the Warrantors' knowledge, information and belief, each
debt now owed to the Company (less the amount of any specific provision
or reserve specifically disclosed in the Disclosure Letter, the Latest
Accounts or the Latest Management Accounts and determined on the same
basis as that applied in the Latest Accounts) will realise its full face
value and be good and collectable in the usual course of business. None
of such debts is subject to any counterclaim or set-off (except to the
extent of any such provision or reserve).
11.2 No debt included in the Latest Accounts, the Latest Management Accounts
or the Company's accounting records (for the period covered by the
Latest Accounts or Latest Management Accounts) has been realised for
materially less than its book value in the Latest Accounts or Latest
Management Accounts or has been deferred or subordinated to any extent
nor has been released or to the best of the Warrantors' knowledge,
information and belief, is irrecoverable to any extent.
11.3 No debt now owed to the Company is overdue by more than 12 weeks (except
to the extent of any provision or reserve disclosed in the Disclosure
Letter, the Latest Accounts or the Latest Management Accounts).
11.4 The Company has paid its creditors within the times agreed with them. No
debt owing by it has been due for more than 30 days.
11.5 No single debtor owes to the Company an amount which exceeds, in
aggregate, 15 per cent of the total of the debts owing to the Company at
the date of this Agreement.
11.6 To the best of the Warrantors' knowledge, information and belief, the
attitudes and actions of customers, suppliers and employees with regard
to the Company will not be materially adversely affected by the
completion by the Purchaser of the purchase of the Shares.
12 TRADING AND CONTRACTUAL ARRANGEMENTS
12.1 The Company is not a party to nor is liable under:
12.1.1 any partnership, joint venture, European Economic Interest
Grouping or consortium, association (other than a bona fide
trade association) or any agreement for sharing commissions or
other income;
12.1.2 a distributorship, agency, franchise or management agreement or
arrangement;
12.2 The Company is not a party to nor is liable under:
12.2.1 any agreement or arrangement which, so far as the Warrantors are
aware, is liable to be terminated by another party or, so far as
the Warrantors are aware, under which rights of any person are
liable to arise or be affected as a result of any change in the
control, management or shareholders of the Company;
61
12.2.2 any contract of a long-term nature (that is to say, unlikely to
have been fully performed, in accordance with its terms, more
than twelve months after the date on which it was entered into);
12.2.3 any agreement or arrangement of a loss making nature to any
material extent (that is to say, now known to be likely to
result in a material loss on completion of performance);
12.2.4 any agreement or arrangement limiting or excluding its right to
do business or use or exploit any of its assets including
restrictions or prohibitions on competing in any geographical
area or in any field of activity or with any person;
12.2.5 any agreement or arrangement of an unusual nature or which is
not entered into on an arm's length basis or in the usual course
of the Company's business;
12.2.6 a sale or purchase, option or purchase agreement, arrangement or
obligation affecting an asset owned, occupied, possessed or used
by the Company or by which the Company is bound;
12.2.7 any agreement or arrangement which involves payment by reference
to fluctuations in the index of retail prices or any other index
or in the rate of exchange for any currency.
12.3 So far as the Warrantors are aware, no agreement or arrangement to which
the Company is a party or is liable under (including specifically but
without limitation the Key Agreements), is invalid and so far as the
Warrantors are aware there are no grounds upon which any other party
thereto may terminate, rescind, avoid or repudiate such agreement or
arrangement.
12.4 Neither the Company nor any party with whom the Company has entered into
an agreement or arrangement (including without limitation the Key
Agreements) has given notice of termination or sought to repudiate or
disclaim the agreement or arrangement or taken any action or failed to
take any action inconsistent with the continuance of any agreement nor
arrangement.
12.5 The Company has no outstanding bid, tender, sale or service proposal
which, if accepted, would give rise to a legally binding obligation upon
the Company.
12.6 Neither the Company nor (so far as the Warrantors are aware) any party
to an agreement or arrangement (including any of the Key Agreements)
with the Company, is in violation or breach of, or in default under, any
such agreement or arrangement, and to the best of the Warrantors'
knowledge there are no facts or circumstances likely to give rise to
such a violation, breach or default.
12.7
12.7.1 The execution, delivery and performance of each of the Key
Agreements and the Terminated Key Agreements by the Company was
duly and validly authorised by all necessary corporate action on
the part of the Company. Each of the Key Agreements was duly and
validly executed
62
and delivered by the Company and, so far as the Warrantors are
aware, each of the other parties thereto and each of the Key
Agreements constitutes legal, valid and binding obligations on
each of the Company and, so far as the Warrantors are aware, the
other the relevant parties.
12.7.2 The execution and delivery of this Agreement and the other
Transaction Documents by each of the Vendors, the Company, PPSL
and/or Purchaser do not, and the performance of this Agreement
and the other Transaction Documents by each of the same will
not, result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, or, so far as the Warrantors are aware, entitle
any party to any Key Agreement to rights and privileges that it
was not entitled to receive immediately before this Agreement
(or the other Transaction Documents) were executed, or create
any obligation on the part of the Company that it did not have
immediately before this Agreement and the other Transaction
Documents were executed, or so far as the Warrantors are aware
give to any such party any rights of termination, amendment,
acceleration or cancellation, or require the consent, approval
or waiver of any party, in respect of any Key Agreement.
12.7.3 Each of the Key Agreements is in full force and effect.
12.7.4 No consent, approval or waiver of any third party was required
to be obtained by the Company or (so far as the Warrantors are
aware) any other party to any Key Agreement or Terminated Key
Agreement in connection with the execution, delivery or
performance of the Key Agreements or Terminated Key Agreements
which consent, approval or waiver was not so obtained.
12.8 None of the records, systems, data or information of the Company is
recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means (including an
electronic, mechanical or photographic process computerised or not)
which is not under the exclusive ownership and direct control of the
Company.
12.9 True and complete copies of each and every Key Agreement or Terminated
Key Agreement (or, to the extent there are no written terms, a true and
complete summary of the terms thereof) are annexed to the Disclosure
Letter.
12.10 The Company is not a party to nor is liable under any distribution
and/or licensing agreements or arrangements other than the Key
Agreements.
12.11 True and complete copies of each and every sale agreement or arrangement
(or, to the extent there are no written terms, a true and complete
summary of the terms thereof) to which the Company has been party in the
last two years in respect of which consideration in excess of
(pound)100,000 was payable to the Company are attached to the Disclosure
Letter.
12.12 Neither the Company nor (so far as the Warrantors are aware) any other
party to the Terminated Key Agreement was, prior to the termination of
such
63
agreements, in violation or breach of, or in default under, any such
agreement and to the best of the Warrantor's knowledge at the time of
termination, there were no facts or circumstances likely to give rise to
such a violation, breach or default or any grounds upon which any party
to the Terminated key Agreements could have terminated, rescinded,
waived or repudiated any such agreement.
12.13 The Terminated Key Agreements have been validly and effectively
terminated and no party has any continuing rights, privileges,
obligations or liabilities under any such agreement.
13 COMPETITION
13.1 The Company is not and has not been a party to any agreement or
concerted practice:
13.1.1 which infringes article 81(1) of the Treaty of Rome (the
"TREATY") or the Chapter I prohibition under the Competition ▇▇▇
▇▇▇▇ (the "1998 ACT") (other than one which is exempt pursuant
to a Commission decision in application of article 81(3) of the
Treaty or pursuant to an exemption by category enacted pursuant
to article 83 of the Treaty or in respect of which an exemption
under sections 4, 6 or 10 of the 1998 Act applies, as the case
may be);
13.1.2 which had prior to 1 May 2004 been notified to the Commission of
the European Communities or EFTA Surveillance Authority for an
exemption under article 81(3) of the Treaty or article 53(3) of
the Agreement on the European Economic Area or pursuant to any
exemption by category or for which an application has been made
to the Commission or EFTA Surveillance Authority for a negative
clearance under articles 81 or 82 of the Treaty of Rome or
Articles 53 and 54 of the Agreement on the European Economic
Area or which had prior to 1 May 2004 been notified to the
Office of Fair Trading (or prior to June 2003 to the Director
General of Fair Trading (the "DIRECTOR")) under sections 13, 14,
21 or 22 of the 1998 Act; or
13.1.3 which is prohibited by competition or anti-trust law in any
jurisdiction or which has been notified to any other competition
or anti-trust authority for guidance or a decision.
13.2 No action, practice or course of conduct now or previously done or
carried on by the Company and no agreement to which the Company is or
was a party or any part of any such agreement:
13.2.1 causes or caused the Seller to breach article 82 of the Treaty,
article 54 of the Agreement on the European Economic Area, the
Chapter II prohibition under the 1998 Act or any anti-monopoly
legislation or regulations in any other jurisdiction;
13.2.2 has been investigated by or, prior to 1 May 2004, has been
notified to the Office of Fair Trading (or prior to June 2003 to
the Director) for
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guidance or a decision in respect of the Chapter II prohibition
under the 1998 Act; or
13.2.3 has been notified to or investigated by any other competition
authority in relation to the abuse or potential abuse of a
dominant or monopoly position.
13.3 The Company has not at any time received nor (so far as the Warrantors
are aware) has the Company any grounds for believing that the Company
may receive any communication or request for information with reference
to any aspect of the Company's activities from the Director, the
Competition Appeals Tribunal, the Office of Fair Trading, the
Competition Commission, the Secretary of State for Trade and Industry,
the Commission of the European Communities, EFTA Surveillance Authority
or from any other person in any jurisdiction whose task it is to
investigate, report or decide upon matters relating to monopolies,
mergers or anti-competitive agreements or practices. Nothing has been
done by the Company which the Company has been notified has been or (so
far as the Warrantors are aware) might be the subject of any report,
decision, order, regulation, judgment or injunction made, taken or
obtained by any of such persons.
13.4 The Company has not given an undertaking or written assurance to
(legally binding or not) and is not subject to any order, decision or
administrative letter from, a governmental authority or an authority of
the European Communities or European Economic Area under the Fair
Trading ▇▇▇ ▇▇▇▇, the 1998 Act, the Enterprise ▇▇▇ ▇▇▇▇, the Treaty, the
Agreement on the European Economic Area or other statute or legal
instrument of the United Kingdom or any other jurisdiction.
13.5 The Company has never received nor (so far as the Warrantors are aware)
is the Company expecting to receive any aid from a member state of the
European Community or through state resources which is not compatible
with the common market having regard to article 87 of the Treaty.
13.6 So far as the Warrantors are aware, no director, officer, employee or
agent of the Company has engaged in any conduct falling within section
188 of the Enterprise Act 2002 or any other legislation in any
jurisdiction that criminalises anti-competitive behaviour.
14 INTELLECTUAL PROPERTY RIGHTS
14.1 Each of the Intellectual Property Rights is:
14.1.1 valid and enforceable and, so far as the Warrantors are aware,
nothing has been done or omitted to be done by which it may
cease to be valid and enforceable or affect the right of the
Company to use the same in its business; and
14.1.2 legally and beneficially owned by the Company alone (except
where it falls within paragraph 14.3), free from any
encumbrance, restriction on use or disclosure obligations.
65
14.2 The Disclosure Letter contains details of all of the registered
Intellectual Property Rights in respect of which the Company is the
registered owner or applicant for registration. No notice has been
received by the Company of any dispute, claim or opposition from a
person (including an employee of the Company) as to title, validity,
enforceability, entitlement or otherwise and so far as the Warrantors
are aware there are no circumstances in existence which would give rise
to any such dispute, claim or opposition.
14.3 All agreements relating to the use by the Company of Intellectual
Property (including any Intellectual Property in software) owned by
another person are listed in the Disclosure Letter. The agreements
relating to that Intellectual Property contain all the terms relative to
the use by the Company of the same.
14.4 So far as the Warrantors are aware no party to an agreement relating to
the use:
14.4.1 by the Company of Intellectual Property owned by another person;
or
14.4.2 of any Intellectual Property Rights owned by the Company by
another person,
is, or has at any time been, in breach of the agreement and, so far as
the Warrantors are aware, no circumstances exist which would give rise
to any breach of any such agreement or to any such agreement being
terminated, suspended, varied or revoked without the Company's consent
(other than termination without cause upon notice in accordance with the
terms of the agreement).
14.5 The Know-How is confidential and has not been disclosed nor is the
Company obliged to disclose it, to any person in whole or in part (other
than to employees of the Company in circumstances where the
confidentiality of the Know How has been drawn to their attention and
steps taken to preserve such confidentiality) and there is no Claim that
has been, or so far as the Warrantors are aware, can be made by any
person alleging that the Know-How has been disclosed to the Company in
circumstances amounting to a breach of confidence.
14.6 All Know-How is adequately documented to enable the Purchaser to acquire
and retain its full benefit.
14.7 The Company has not granted and is not obliged to grant any licences of,
nor are there any subsisting agreements under which the Company has
granted to any person, any right, interest, assignment or consent under
or in connection with the Intellectual Property Rights or the Know-How.
14.8 So far as the Warrantors are aware, none of the processes, products or
activities of the business of the Company infringes any right of any
other person relating to Intellectual Property or involves the
unlicensed use of information confidential to any person or gives rise
to a liability for any royalty or similar payment other than by virtue
of an agreement relating to licensed Intellectual Property listed in the
Disclosure Letter.
14.9 The Company does not trade under any name other than its full corporate
name.
66
15 TITLE AND CONDITION OF ASSETS
15.1 Except for assets disposed of by the Company in the usual course of
trading, the Company is the legal and beneficial owner of and has good
title to all assets included in the Latest Accounts and all assets which
have been acquired by the Company since the Latest Accounts Date, all of
which assets are in the Company's possession or under its control,
situated in the United Kingdom and free from any Security Interest. Such
assets comprise all material assets now used in the Business and which
are necessary for the Company to carry on the Business effectively.
15.2 All plant and machinery (including fixed plant and machinery), vehicles
and computer, office and other equipment owned or used by the Company
are in a condition commensurate with their age and fair wear and tear
and are in working order and have been regularly and properly
maintained; and, so far as the Warrantors are aware, none is dangerous,
or, so far as the Warrantors are aware, in need of repair or replacement
in order to continue in operation the business of the Company in the
ordinary course for the period of six months following Completion, where
such repair or replacement would cost in excess of (pound)10,000.
15.3 There are maintenance contracts with independent specialist contractors
in respect of all assets of the Company for which it is normal to have
maintenance contracts and in respect of all assets which the Company is
obliged to maintain or repair under a lease or similar agreement. Such
assets have been regularly maintained in accordance with safety
regulations required to be observed in relation to them and the
provisions of any applicable leasing or similar agreement.
15.4 The Company's asset register (a copy of which is attached to the
Disclosure Letter) is a complete and accurate record in all material
respects of the fixed assets owned or used by it.
15.5 Full details of all hire, hire purchase, credit sale, conditional
purchase, rental and similar agreements and arrangements granted by the
Company or to which its is subject where the annual payments under any
such agreement or arrangement is more than (pound)50,000 per annum (or
the total annual payments under all such agreements and arrangements
exceed (pound)50,000) are contained in the Disclosure Letter (together
with a schedule listing the assets subject to such agreement or
arrangement) and none of the Warrantors or the Company has done or
omitted to do anything whereby such agreements or arrangements might be
affected or prejudiced or the availability thereof terminated.
15.6 The Company has not agreed to acquire any asset on terms that the
property in such asset does not pass to it until full payment is made.
15.7 The Company's stock is in good condition and so far as the Warrantors
are aware, saleable in the usual course of its business in accordance
with the Company's current price list without any rebate, discount or
allowances (other than normal rebates, discounts or allowances granted
to customers).
67
15.8 So far as the Warrantors are aware, the Company has not supplied or
agreed to supply defective or unsafe goods or goods which fail to comply
with their terms of sale.
15.9 No goods in a state ready for supply by the Company, are so far as the
Warrantors are aware, defective or unsafe or will fail to comply with
terms of sale the same as terms of sale on which similar goods have
previously been supplied by the Company.
15.10 The Company's level of stock is reasonable having regard to current and
anticipated demand.
15.11 The work in progress of the Company is adequate to maintain cash flow
and profitability at a level disclosed in the Latest Management
Accounts.
16 TITLE DEEDS
16.1 All documents which in any way affect the right, title or interest of
the Company in or to any of its property, undertakings or assets and all
agreements to which the Company is a party are in the possession of the
Company and are properly stamped (if applicable).
17 VENDORS' ARRANGEMENTS
17.1 There is no contract or arrangement between the Company and any Vendor
or a director of the Company or any person connected with any Vendor or
such director pursuant to which any indebtedness (actual or contingent)
is outstanding.
17.2 No Vendor and, so far as the Warrantors are aware, no person connected
with any Vendor has any interest, direct or indirect, in any business
which competes or has competed with any business now carried on by the
Company or intends to acquire any such interest.
17.3 No Vendor is entitled to any claim against the Company, any of its
officers, employees, principal customers or suppliers and no Vendor has
assigned to any third party the benefit of any claim to which he was
previously entitled.
18 OFFICERS AND EMPLOYEES
18.1 Those persons named as such in the Disclosure Letter are the only
directors of the Company and the secretary of the Company, respectively.
The full terms of the contract of employment or other contract of
engagement between the Company and any of its directors and the
secretary of the Company are annexed to the Disclosure Letter together
with details of any payment or benefits (whether or not legally binding
on the Company) which is not included in the written terms of employment
or engagement. The Company is not a party to any consultancy contract.
18.2 No person is or has been a shadow director (within the meaning of
section 741 of the Act) of the Company.
68
18.3 No person is employed by the Company or retained on a consultancy basis
nor has any person been so employed or retained since the date of
incorporation of the Company and, so far as the Warrantors are aware,
there is no commitment to do so.
19 PENSIONS
19.1 The Company has no legal or moral obligation to pay any pension,
gratuity, superannuation allowance, death benefit, retirement gratuity
or like benefit or make any other payment after disability, retirement
or death or contribute to any life assurance, on behalf of the Company
or for any director or any person who is now or has been an officer or
employee of the Company or any predecessor in business (or the
widow/widower or dependant of any such person) and is not a party to any
scheme or arrangement having as its purpose the making of such payments
or the provision of such benefits.
20 INSURANCES
20.1 All the assets of the Company which are of an insurable nature have at
all material times been and are at the date of this Agreement insured in
amounts reasonably regarded as adequate against each risk normally
insured against by companies operating the type of business operated by
the Company or owning property of a similar nature.
20.2 The Disclosure Letter contains particulars of all insurance and
indemnity policies maintained by the Company and currently in force
("THE POLICIES"). In respect of all such Policies:
20.2.1 all premiums have been duly paid to date and so far as the
Warrantors are aware the Company has not done anything or
omitted to do anything which is likely to result in a material
increase in the premium payable under any such policy;
20.2.2 no notice has been received by the Company that any Policy is
not valid or enforceable or void or voidable and so far as the
Warrantors are aware the Company has not done anything or
omitted to do anything which might make any of the policies void
or voidable or which might prejudice the ability to effect such
insurance in the future;
20.2.3 in the Warrantors' reasonable belief (without enquiry), there
are no special or unusual terms or restrictions;
20.2.4 no claim exceeding (pound)5,000 is outstanding and so far as the
Warrantors are aware no facts or circumstances exist which may
give rise to any such claim and no insurer has disputed or given
an indication that it intends to refuse to meet any outstanding
claim to any extent; and
20.2.5 none of the Policies contain any provisions as to change of
control or ownership of the insured.
20.3 No insurer has ever cancelled or refused to accept or continue any
insurance in relation to the Company.
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21 COMPLIANCE WITH LAWS
21.1 The Company and (so far as the Warrantors are aware) each of its
affiliates, sub-contractors, distributors and licensees has conducted
its business and dealt with its assets in all material respects in
accordance with all applicable laws and regulations.
21.2 The Company has not at any time received any notice or request for
information from either the Data Protection Registrar or a data subject
in relation to compliance with data protection legislation by the
Company and has at all relevant times complied with the Data Protection
▇▇▇ ▇▇▇▇.
22 LITIGATION, CLAIMS AND INVESTIGATIONS
22.1 Neither the Company, nor any person for whose acts or defaults the
Company may be vicariously liable, is engaged or has during the period
since its incorporation been engaged, in any civil, criminal,
arbitration, administrative, prosecution or other legal proceedings or
in any other proceedings or hearings before any statutory or
governmental body, department, board or agency in any jurisdiction and
so far as the Warrantors are aware none is pending or threatened by or
against the Company or such person. So far as the Warrantors are aware
there are no facts or circumstances which may give rise to any civil,
criminal, arbitration, administrative, prosecution or other legal
proceedings or other proceedings or hearings before any statutory or
governmental body, department, board or agency in any jurisdiction being
commenced by or against the Company, or a person for whose acts or
defaults the Company may be vicariously liable. Proceedings referred to
in this paragraph 24.1 include, without limitation, proceedings in
respect of death or injury to any person as a result of any product
manufactured or supplied by the Company.
22.2 None of the officers of the Company is being prosecuted for any criminal
offence, there are no such prosecutions pending or threatened and so far
as the Warrantors are aware there are no facts or circumstances which
may give rise to any such prosecution.
22.3 There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator, governmental agency or other
regulatory body in any jurisdiction against the Company or so far as the
Warrantors are aware a person for whose acts or defaults the Company may
be vicarious liable. The Company is not a party to any undertaking or
assurance given to any court, tribunal, arbitrator, governmental agency
or other regulatory body in any jurisdiction which is still in force. So
far as the Warrantors are aware there are no facts or circumstances
which in the reasonable opinion of the Warrantors are on the balance of
probabilities likely to result in the Company becoming subject to any
such order, judgment, decree, arbitral award or decision or being
required to be a party to any such undertaking or assurance.
22.4 No notice has been received that there is or has been any investigation
or enquiry of or disciplinary proceedings made against, the Company or
any of its officers or employees, in any jurisdiction by any
governmental or other body, and so far as the Warrantors are aware no
such investigation, enquiry or
70
disciplinary proceedings are pending or threatened and, so far as the
Warrantors are aware there are no facts or circumstances which may give
rise to such investigation, enquiry or proceedings.
23 GROUP COMPANIES
23.1 The Company has no and has never had any subsidiary undertakings and has
never had any legal or beneficial interest in the shares of any body
corporate and has not agreed to acquire any such shares.
23.2 The Company does not have a branch, agency or place of business or a
permanent establishment (as that expression is defined in the relevant
double taxation treaty) outside the United Kingdom.
24 POWERS OF ATTORNEY
24.1 The Company has not given a power of attorney or other authority
(express, implied or ostensible) by which a person may enter into any
contract, arrangement or obligation on its behalf (other than any
authority to an executive director or an employee to enter into an
agreement in the usual course of that person's duties).
25 COMMISSION
25.1 No person is entitled to receive from the Company any finder's fee,
brokerage or other commission in connection with the acquisition of the
Shares under this Agreement.
26 INSOLVENCY
26.1 No receiver or administrative receiver has been appointed of the whole
or any part of the assets or undertaking of the Company.
26.2 No petition has been presented, order made or resolution passed for the
winding-up of the Company or for the appointment of a provisional
liquidator to the Company and no administration order has been made in
relation to the Company and no petition for such an order has been
presented.
26.3 No proposal has been made for a voluntary arrangement under section 1
Insolvency Act 1986 nor is in the contemplation of the Company. No
compromise or arrangement has been proposed, agreed to or sanctioned
under section 425 of the Act in respect of the Company.
26.4 The Company has not stopped payment to its creditors as they fall due
nor is it insolvent or unable to pay its debts within the meaning of
section 123 Insolvency ▇▇▇ ▇▇▇▇.
26.5 No unsatisfied judgement or court order is outstanding against the
Company.
26.6 No distress, execution or other process has been levied on an asset of
the Company.
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26.7 No action is being taken by the Registrar of Companies to strike the
Company off the register under section 652 of the Act.
26.8 The Company has not at any time during the two years before the date of
this Agreement entered into a transaction with any person at an
undervalue (as referred to in section 238(4) Insolvency Act 1986) or
been given a preference by any person (as referred to in section 239(4)
Insolvency Act 1986).
27 PROPERTIES
The Company does not have any interest in or over any property, nor is
there any agreement for sale or other disposal or commitment to dispose
or grant any interest, lease, tenancy, licence or other right in or over
any property. The Company has not at any time acquired, disposed of, had
vested in it, guaranteed or entered into any other commitment in respect
of any freehold or leasehold property.
28 ENVIRONMENTAL MATTERS
28.1 In this schedule the following words have the following meanings:
"AUTHORISATION" means any authorisation, licence, consent, permit,
registration, waiver, order, exemption, reporting or notice requirement,
certificate of compliance and any other approval obtained or required
under any Environmental Law necessary for the carrying on of the
Business;
"ENVIRONMENT" means air, groundwater, surface waters (including ▇▇▇▇▇▇,
streams, canals, lakes, rivers, territorial and coastal waters), water
in drains and sewers, land, soil and subsurface strata and all living
organisms, ecosystems and man-made and natural structures to be found
in, on or under each of the foregoing. Air includes the air within
buildings, and the air within other natural or man-made structures above
or below ground;
"ENVIRONMENTAL LAW" means all European Community legislation, national
and local statutes and other laws concerning Environmental Matters in
force at the date of Completion, including the common law, rules,
regulations, by-laws, codes of practice, circulars, statutory guidance,
guidance notes and the like made thereunder; and judicial or
administrative interpretation of each of the foregoing but only insofar
as the same are legally binding;
"ENVIRONMENTAL MATTERS" means all matters relating to human health or
the Environment including discharges, emissions, releases, escapes,
spills, leaks or leaching into, onto or under land, air or water; Waste;
contamination; nuisance; noise; heat; vibration; the manufacture,
processing, use, possession, handling, treatment, storage, labelling,
recovery, recycling, transport and disposal of any Hazardous Substance;
nature conservation and health and safety;
"HAZARDOUS SUBSTANCE" means any natural or artificial substance (whether
solid, liquid, gas, vapour, noise, electromagnetic radiation or ionising
radiation, and whether alone or in combination with any other substance)
that is capable of
72
causing significant harm to people or that may have a significant
adverse affect the Environment; and
"WASTE" means industrial, commercial or domestic waste, radioactive
waste, agricultural waste, mineral waste, decommissioned explosives and
packaging waste including any Hazardous Substance or any substance that
is classified as dangerous under Environmental Law.
28.2 The replies to written enquiries made by the Purchaser's Attorneys
concerning any Environmental Matters have been given after making due
and diligent enquiry and are true and accurate.
28.3 The Company has not entered into any arrangement, agreement or
understanding with any person relating to any potential or actual
contamination or pollution of the Environment.
CONTAMINATION
28.4 To the best of the Vendors knowledge no contamination or pollution of
the Environment is or may be, attributable to the Company's acts or
omissions.
28.5 The Company has not received any written request, written notification,
notice or other written communication from any person relating to any
potential or actual contamination or pollution of the Environment or its
potential or actual remediation. The Vendors are not aware of any
circumstances that may give rise to the receipt of any such request,
notification, notice or other communication.
AUTHORISATION AND COMPLIANCE
28.6 The Company has, and always has had, all Authorisations and is now and
always has been in full compliance with the terms and conditions of any
Authorisation.
28.7 The Vendors are not aware of any circumstance that would require the
Company to incur any material capital expenditure to comply fully with
the terms and conditions of any Authorisations that it currently holds
or will be required to hold under current Environmental Laws, including
but not limited to the Pollution Prevention and Control (England and
Wales) Regulations 2000, as amended.
28.8 No Authorisation that the Company has or has had, has been modified,
varied, suspended or revoked and no application by the Company for an
Authorisation or a modification to or variation of an Authorisation has
been refused.
28.9 The Company has not received any written request, written notification,
notice or other written communication from any person that requires,
refers to the possibility of or threatens, modification, variation,
suspension or revocation of any Authorisation and the Vendors are not
aware of any circumstance that might give rise to such modification,
variation, suspension or revocation.
28.10 The Company is in full compliance and so far as the Vendors are aware
always has fully complied, in all material respects with all
Environmental Laws.
73
28.11 To the best of the Warrantors' knowledge neither the Company nor any of
its directors or officers has received or, is likely to receive any
formal written complaint or claim relating to any Environmental Matter
from any person connected with or arising out of the Business.
28.12 Neither the Company nor any of its directors or officers has received
or, to the best of the Warrantors' knowledge, is likely to receive any
notice, order or other formal written communication from any person
relating to any Environmental Matter connected with or arising out of
the Business and no civil or criminal litigation is pending or, to the
best of the Warrantors' knowledge, threatened against the Company or any
current or former director or officer, of the Company which relates to
or arises out of any Environmental Matter connected with or arising out
of the Business.
REPORTS
28.13 Copies of all environmental assessments, reports and audits commissioned
by the Company and relating to the Business, and any property previously
owned or occupied by the Company have been disclosed to the Purchaser
and all reasonable steps to comply with the recommendations contained in
such assessments, reports and audits have been implemented.
28.14 Copies of all written communications from the Medicine Control Agency,
Health & Safety Executive, US Food & Drug Administration and other
regulatory authorities, health and safety action plans, health and
safety policies, health and safety risk assessment reports and similar
documents have been disclosed to the Purchaser.
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SCHEDULE 4
Part 2 - The Representations
----------------------------
1 The Company has not violated or breached and is not in default of any
terms of the Penn Pharmion Agreement.
2 So far as the Warrantors are aware, Pharmion GmbH has not violated or
breached, and is not in default of, any of the terms of the Penn
Pharmion Agreement and to the best of, the Warrantors' knowledge there
are no facts or circumstances likely to give rise to such a violation,
breach or default.
3 The Company has not been notified by Pharmion GmbH of the termination,
repudiation, rescission, avoidance or disclaimer of the Penn Pharmion
Agreement by Pharmion and the Company has not terminated, repudiated,
rescinded, avoided or disclaimed the Penn Pharmion Agreement, and so far
as the Warrantors are aware, there are no grounds upon which the Penn
Pharmion Agreement may be terminated, repudiated, rescinded, avoided or
disclaimed by the Company or Pharmion.
4 So far as the Warrantors are aware, the execution, delivery and
performance of this Agreement and the other Transaction Documents to
which the Company is a party will not result in any breach of, or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, the Penn Pharmion Agreement or
entitle Pharmion to any rights and privileges that it was not entitled
to receive immediately before this Agreement and the other Transaction
Documents were executed, or create any obligation on the part of the
Company that it did not have immediately before this Agreement and the
other Transaction Documents were executed, or give Pharmion any right of
termination, amendment, acceleration or cancellation, or require the
consent, approval or waiver of Pharmion.
75
SCHEDULE 5
Part 1 - The Vendors
--------------------
---------------------- --------------------- ------------------- ---------------
(1) (2) (3) (4)
NAME ADDRESS/ NUMBER AND RELEVANT
REGISTERED OFFICE CLASS OF SHARES PROPORTION
CURRENTLY HELD
---------------------- --------------------- ------------------- ---------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ Pontefelin House 14,000 B 2.8
New Inn ordinary shares
Pontypool
Gwent ▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇ Ry-mels Villa 10,000 B ▇
▇▇▇▇▇▇▇ ▇▇▇▇ ordinary shares
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Cluny 14,000 B 2.8
Knaresborough Road ordinary shares
Harrogate
▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇▇ ▇▇▇▇ South Riding 10,000 B ▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ordinary shares
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ c/o Battle House 25,000 B 5
and ▇▇▇ ▇▇▇▇▇ as the Battle ordinary shares
trustees of The ▇▇▇▇▇ Brecon
▇▇▇▇▇ Interest in Powys
Possession Trust ▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇ Renwood 90,000 B ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ordinary shares
Beaconsfield 198,971 B
Bucks HP9 1EN preference shares
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 5,000 B ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ordinary shares
Govilon
Near Abergavenny
Gwent ▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇ ▇▇▇▇▇ Whitefriars 5,000 B ▇
▇▇▇▇▇▇ ▇▇▇▇ ordinary shares
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 15 Windsor House 18,667 B 3.7334
Castle Court ordinary shares
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
76
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Ivy Cottage 14,000 B 2.8
Llanfrynach ordinary shares
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 10 Jasmine Close 11,833 B 2.3666
Worcester ordinary shares
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇ ▇▇▇▇▇▇ 49 Coed Camlas 7,500 B 1.5
New Inn ordinary shares
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇
---------------------- --------------------- ------------------- ---------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇,▇▇▇ A 55
Nominees Limited London ordinary shares
Customers B ▇▇▇▇ ▇▇▇ 2,739,500 A
preference shares
---------------------- --------------------- ------------------- ---------------
Total ___________ 275,000 A 100
ordinary shares
225,000 B
ordinary shares
2,739,500 A
preference shares
198,971 B
preference shares
---------------------- --------------------- ------------------- ---------------
77
Part 2 - The Warrantors
-----------------------
--------------------------------------- ----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ Ry-mels ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Cluny
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Battle House
▇▇▇ ▇▇▇▇▇ Battle
Brecon
Powys ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Blaenavon Road
Govilon
Near Abergavenny
Gwent ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇▇ Whitefriars
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
78
--------------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ 49 Coed ▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
--------------------------------------- ----------------------------------------
79
SCHEDULE 6
The Completion Accounts
-----------------------
1 The first draft of the Completion Accounts shall be prepared by Penn and
the Company at the direction of the Vendors' Representatives on behalf
of the Vendors as soon as reasonably practicable and in any event within
15 Business Days of Completion. The Purchaser shall ensure that the
Vendors Representatives and the Vendors' Accountants are allowed all
reasonable access to all relevant information, personnel and records of,
or under the control of, the Company solely for that purpose and the
Vendors shall not be in breach of their obligations pursuant to this
Schedule to the extent the Purchaser fails to ensure the same.
2 The Purchaser's Accountants shall, on the Completion Date, carry out a
full physical stock-take in respect of the stock of the Company as at
the Completion Date.
3 The Vendors shall instruct:
3.1 the Vendors' Accountants to audit the profit and loss account
and the Closing Balance Sheet (which form part of the Completion
Accounts) as soon as practicable thereafter (and in any event
within 15 Business Days of the provision of first draft of the
Completion Accounts pursuant to paragraph 1); and
3.2 no later than 5 Business Days after completion of such audit the
Vendors' Representatives to prepare a statement ("THE
STATEMENT") setting out, in their opinion, the Closing Net
Financial Position, the Closing Debt and the Purchase Price and
deliver a copy of the Statement and the Completion Accounts to
the Purchaser and the Purchaser's Solicitors as soon as
practicable thereafter.
4 The Completion Accounts shall be prepared:
4.1 in accordance with bases, policies, principles and procedures
consistent with those employed in the worked example set out in
annexure 1 to this Agreement; and
4.2 in the event that bases, policies, principles, practices and
procedures set out in annexure 1 to this Agreement do not
specify the treatment to be applied in relation to a particular
item, then in accordance with appropriate accounting bases,
policies, principles, practices and procedures generally
accepted in the United Kingdom.
5 The Purchaser shall review the Statement and the Completion Accounts
following delivery of the same by the Vendors' Representatives pursuant
to paragraph 3 and shall, within 20 Business Days of such delivery,
deliver to the Vendors' Representatives a letter ("THE LETTER")
specifying any disputes or differences they may have in connection with
the Statement or the Completion Accounts, failing which (or if the
Purchaser confirms in writing to the Vendors'
80
Representatives that it proposes no adjustments to the Statement or
Completion Accounts) the Statement and the Completion Accounts shall be
final and binding.
6 The Vendors shall ensure that the Purchaser and the Purchaser's
Accountants are allowed all reasonable access to all relevant
information, personnel and records (including (provided the Purchaser
and the Purchaser's Accountants agree to such terms in connection
therewith as the Vendors' Accountants may reasonably require) all access
to the working papers of the Vendors' Accountants relating to the
preparation of the profit and loss account and the Closing Balance Sheet
(which form part of the Completion Accounts) and relating to the
preparation of the Statement and (to the extent required) all relevant
information, personnel and records of, or under the control of Penn or
any member of Penn Group) for the purposes of their review of the
Statement.
7 The Vendors jointly on the one part and the Purchaser on the other shall
each use their reasonable endeavours to resolve any disputes or
differences that may be specified in the Letter in connection with the
Statement or any matter stated in it within 15 Business Days following
the delivery of the Letter. If the Vendors and the Purchaser agree on
the adjustments to be made to the Statement and/or the Completion
Accounts they shall jointly incorporate such adjustments into the
Statement and the Completion Accounts and the Statement and the
Completion Accounts shall be final and binding. Failing resolution of
the same within such period (or longer period as the Purchaser and the
Vendors' Representatives may agree in writing) any such disputes or
differences shall forthwith be referred to the decision of the
Independent Accountant and so that:
7.1 the Independent Accountant shall act as an expert and not as an
arbitrator in connection with the giving of a determination;
7.2 each determination of the Independent Accountant shall be final
and binding on the Parties (save in the case of manifest error)
and shall be notified to the Parties by means of a written
determination of the Independent Accountant; and
7.3 the Statement and the Completion Accounts as so determined by
the Independent Accountant shall be final and binding.
8 In the event that an Independent Accountant is so appointed, the Vendors
jointly on the one part and the Purchaser on the other, shall be
entitled to make such written submissions to the Independent Accountant
as they shall respectively think fit during such period for making such
submissions as the Independent Accountant shall determine (but which
period shall be no longer than 10 Business Days from appointment of the
Independent Accountant).
9 Each of the Vendors and the Purchaser will promptly provide to the
Independent Accountant all such information and documentation as the
Independent Accountant may reasonably require.
10 The Independent Accountant shall have the right to such professional
assistance and advice as the Independent Accountant may reasonably
require.
81
11 The fees and expenses of the Independent Accountant and other
professional fees incurred by the Independent Accountant shall be
apportioned between the Vendors on the one part and the Purchaser on the
other, as the Independent Accountant shall see fit in his determination.
82
SCHEDULE 7
Provisions for the protection of the Warrantors
-----------------------------------------------
1 INTERPRETATION
1.1 In this schedule 7, unless the context otherwise requires:
"EXPENSES" means all reasonable third party costs and expenses
(including legal expenses); and
"WARRANTY CLAIMS" means all and any claims against the Warrantors (or
any of them) under any of the Warranties, or the Representations
including any claim for breach of contract, misrepresentation resulting
from any breach of the Warranties or the Representations, save that in
paragraphs 5.1.2, 6.2, 7.1, 8, 9 and 13 "WARRANTY CLAIM" shall not
include any claim under the Tax Warranties (to which schedule 3 shall
apply).
2 MAXIMUM LIABILITY
2.1 The maximum liability of the Warrantors in respect of all Warranty
Claims and claims under the Tax Covenant shall not exceed the aggregate
of the Purchase Price, the Penn Group Indebtedness and the RBS
Indebtedness remaining on Completion (in accordance with the terms of
this Agreement) (such aggregate being the "AGGREGATE AMOUNT") multiplied
by the aggregate of the Relevant Proportions attributable to the
Warrantors.
3 LIABILITY OF EACH WARRANTOR
3.1 The maximum liability of each Warrantor in respect of all Warranty
Claims and claims under the Tax Covenant shall not exceed his Relevant
Proportion of the Aggregate Amount.
4 SMALL CLAIMS AND THRESHOLD
4.1 Notwithstanding any other provision of this Agreement:
4.1.1 no Warranty Claim or claim under the Tax Covenant shall be
brought if the loss sustained in respect of which such a claim
may properly be brought would otherwise be less than the
Individual Threshold; and
4.1.2 subject to paragraph 4.1.1, no Warranty Claim or claim under the
Tax Covenant shall be brought unless the loss sustained in
respect of such claim (when aggregated with any other Warranty
Claims and claims under the Tax Covenant) exceeds the Aggregate
Threshold in which case the Purchaser shall be able to claim for
the full amount of such Warranty Claim or claim under the Tax
Covenant.
5 TIME LIMITS
5.1 No Warranty Claim or claim under the Tax Covenant shall be brought
against any of the Warrantors unless:
83
5.1.1 notice in writing of such claim (specifying in reasonable detail
the nature of the breach, or matter giving rise to such claim,
and so far as is practicable the amount claimed in respect of
it) has been given to each Warrantor by the Purchaser by not
later than:
(a) the date that falls 7 years after the Completion Date in
respect of any Warranty Claim under the Tax Warranties
or any claim under the Tax Covenant; and
(b) the date that falls 2 years after the Completion Date in
respect of any other Warranty Claim; and
5.1.2 proceedings in respect of such Warranty Claim shall have been
both issued and served on any Warrantor(s) not later than 6
months after the relevant date specified in paragraph 5.1.1 (or,
if later, the first date upon which the Purchaser is permitted
to take steps to recover against the Warrantors pursuant to
paragraph 8.1 in this Schedule 8).
6 GENERAL LIMITATIONS
6.1 The Warrantors shall not have any liability in respect of any Warranty
Claim and accordingly no Warranty Claim may be brought if and to the
extent that:
6.1.1 the Warranty Claim arises wholly or partly out of or in
connection with any fact, matter or circumstance fairly
disclosed in the Disclosure Letter or in the schedules to this
Agreement;
6.1.2 save in relation to the Warranties in paragraph 27 and 28 of
Schedule 4, the Warranty Claim arises in relation to or out of
any Environmental matters or the Property or the ownership,
occupation or use of the Property or any other property at that
time;
6.1.3 save in relation to the Warranties in paragraph 14 of Schedule
4, the Warranty Claim arises in relation to or out of the
Intellectual Property or the ownership, occupation or use of the
Intellectual Property or any other intellectual property at that
time.
6.2 The Warrantors shall not have any liability in respect of any Warranty
Claim and accordingly no Warranty Claim may be brought if and to the
extent that one or more of the following provisions apply:
6.2.1 the Purchaser or any other member of the Purchaser's Group
successfully recovers an amount against any loss or damage under
the terms of any insurance policy for the time being in force
(or could have so recovered under the policies of insurance of
the Company in force at Completion had they been maintained in
force for the benefit of the Company and/or the Purchaser) in
each case in respect of the matter giving rise to the Warranty
Claim;
6.2.2 the Warranty Claim arises wholly or partly out of or in
connection with:
84
(a) any matter provided for or contemplated in each case
(specifically and expressly) by the terms of this
Agreement or any other Transaction Document;
(b) any voluntary act, omission, transaction or arrangement
of the Purchaser or the Purchaser's Group at any time or
of the Company after Completion or any of their
respective officers, agents or successors in title (to
the extent only that the Purchaser was aware that such
change would give rise to a Warranty Claim);
(c) any matter specifically provided for in the Latest
Accounts or any previous accounts of the Company;
(d) any matter taken into account in the determination of
the Purchase Price or the preparation of the Completion
Accounts in each case in accordance with the provisions
of this Agreement;
(e) any asset acquired by the Company after Completion;
(f) the disposal by the Company of any asset after
Completion;
(g) the passing of a resolution for the winding up of the
Company after Completion;
(h) any change in the nature of the business of the Company
(or in the manner of conducting it) after Completion (to
the extent only that the Purchaser was aware that such
change would give rise to a Warranty Claim);
(i) any statutory provision not in force at the date of
Completion or any change in any statutory provision
after the date of Completion or any decision of the
Courts after the date of this Completion altering the
accepted interpretation of any statutory provision;
(j) any departure from the format, matter, bases, priorities
and principles used in the preparation of the audited
accounts of the Company after Completion; or
(k) any change on or after Completion of the accounting
reference date of the Company;
6.2.3 the Warranty Claim arises in connection with any matter or thing
done or omitted prior to Completion by the Company at the
written request of or with the prior written approval of any
member of the Purchaser's Group or their representatives or
professional advisers;
6.2.4 the loss or liability to which such Warranty Claim relates has
been or is made good or otherwise compensated for at no expense
to the Company, the Purchaser or any member of the Purchaser
Group; or
85
6.2.6 the loss or liability suffered or incurred by the Purchaser to
which the Warranty Claim relates is contingent, future or
unascertainable and no Warranty Claim may be brought in respect
of such loss or liability until such time as the Purchaser shall
have actually suffered the loss or incurred the liability in
question.
7 SUBSEQUENT RECOVERY FROM THIRD PARTY
7.1 The Purchaser shall reimburse to each Warrantor forthwith an amount
equal to any sum paid by him in respect of any Warranty Claim which is
subsequently recovered by or paid to the Purchaser or any other member
of the Purchaser's Group by any other person in respect of the matter
giving rise to the Claim (less any Expenses incurred in making such
recovery and any Taxation thereon (if any)).
7.2 Any amount paid by the Purchaser pursuant to paragraphs 4.3 or 7.1 or
Part 1 of schedule 3 shall be taken into account, with retrospective
effect, in ascertaining whether the amounts in paragraph 4.1 above are
exceeded. Any amount previously paid by the Warrantors in respect of any
Warranty Claim which would not otherwise have been payable as a
consequence of this paragraph 7.2 shall be repaid immediately.
8 CLAIMS AGAINST THIRD PARTY
8.1 Where the Purchaser or any other member of the Purchaser's Group may be
entitled (whether by reason of insurance or payment discount or
otherwise) to recover from some other person any sum in respect of any
damage or liability the subject of a Warranty Claim, the Purchaser shall
first take steps or procure that the relevant member of the Purchaser's
Group takes steps (including the commencement and prosecution of
proceedings in circumstances where the Warrantors reasonably consider
that there is a reasonable chance of recovery) to enforce such recovery
before taking steps (other than notice pursuant to paragraph 5.1.1)
against the Warrantors in respect of such Warranty Claim.
8.2 Whether before or after the Warrantors have made payment in respect of
any Warranty Claim, the Purchaser shall, if so required by the
Warrantors, and, subject to payment of any Expenses by the Warrantors,
take, or (as the case may require) procure that the relevant member of
the Purchaser's Group (and the Purchaser's officers or the officers of
the relevant member of the Purchaser's Group as applicable) take, all
steps (whether by way of a claim against its insurers or otherwise) in
relation to such Warranty Claim as the Warrantors may reasonably require
to enforce such recovery and shall keep the Warrantors informed to their
reasonable satisfaction of the progress of any action taken. Thereafter
any Warranty Claim shall be limited (in addition to the limitations on
the liability of the Warrantors referred to in this schedule 7) to the
amount by which the loss or damage suffered by the Purchaser as a result
of such breach shall exceed the amount (if any) so recovered.
86
9 CLAIMS BY THIRD PARTY
9.1 If grounds for any Warranty Claim arise as a result of, or in connection
with, a claim by, or alleged liability to, a third party (a "THIRD PARTY
CLAIM"), the Third Party Claim shall not be compromised or settled
without the prior written consent of the Warrantors and the Purchaser,
such consent not to be unreasonably withheld or delayed. If requested
promptly in writing by the Warrantors and, subject to the Purchaser
being indemnified to its reasonable satisfaction by the Warrantors
against all associated Expenses, the Purchaser shall:
9.1 take, and shall procure that each member of the Purchaser's
Group (and the Purchaser's officers or the officers of the
relevant member of the Purchaser's Group, as applicable) take,
all such action as the Warrantors may reasonably request to
avoid, dispute, resist, appeal or compromise the Third Party
Claim; and
9.2 make available, and procure that each member of the Purchaser's
Group (and the Purchasers officers or the officers of the
relevant member of the Purchaser's Group, as applicable) shall
make available, to the Warrantors on request all information and
reasonable assistance which is relevant for that purpose. The
Warrantors shall not use or disclose any such information for
any other purpose.
10 DUTY TO MITIGATE
10.1 Nothing in this Agreement shall be deemed to relieve the Purchaser from
its common law duty to mitigate its loss.
11 NO DOUBLE CLAIM
11.1 Neither the Purchaser nor any member of the Purchaser's Group shall be
entitled to recover damages or any other amount in respect of any
Warranty Claim or any claim under the Tax Covenant or otherwise obtain
reimbursement or restitution more than once in respect of the same
matter, loss or liability and for this purpose any payment by the
Warrantors under the Tax Covenant shall be deemed to satisfy any
Warranty Claim in respect of the same loss or liability and VICE VERSA.
12 RESCISSION
12.1 No breach of any of the Warranties or the Representations or any other
provision of this Agreement shall entitle the Purchaser to rescind this
Agreement after Completion.
12.2 The provisions of this schedule 8 shall remain in full force and be
fully applicable all circumstances and, in particular, shall not be
discharged by any breach of this Agreement of any nature or by any
determination or rescission by the Purchaser of the whole or any part of
this Agreement.
87
13 RELIEFS
13.1 No Warranty Claim shall extend to any part of any loss or damage
suffered by the Purchaser or the Company to the extent that such part
shall be used or shall be capable of being used by the Purchaser or the
Company or any present or future subsidiaries of either of them to
offset in whole or in part any past, present or future liability for Tax
14 APPLICATION TO THIRD PARTIES
14.1 Any third party which is entitled under the terms of this Agreement to
claim against the Warrantors or any of them shall be subject to the
provisions of this schedule 7 as if it were the Purchaser.
15 LIABILITY OF TRUSTEES
15.1 The aggregate liabilities of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ under
this Agreement as trustees of the ▇▇▇▇▇ ▇▇▇▇▇ Interest in Possession
Trust shall not exceed an amount equal to the value for the time being
of the net assets of the ▇▇▇▇▇ ▇▇▇▇▇ Interest in Possession Trust held
by them.
15.2 For the purpose of this paragraph 15, the net assets of the ▇▇▇▇▇ ▇▇▇▇▇
Interest in Possession Trust shall be the immediately realisable value
in pounds sterling of the assets less any liability (actual or
contingent) in respect of Tax and professional fees and expenses.
16 NO CLAIMS BY THE COMPANY
16.1 The Purchaser undertakes to each Warrantor that neither it nor Celgene
has actual knowledge of any fact, matter or circumstance which it is
actually aware would constitute a breach of Warranty and/or would give
rise to a claim under the Tax Covenant and in respect of which the
Purchaser intends after the date hereof to make a claim.
17 REDUCTION IN CONSIDERATION
17.1 Any payment in respect of any Warranty Claim or claim under the Tax
Covenant shall take effect as an adjustment to the Purchase Price.
18 FRAUD
18.1 Nothing in this schedule 7 shall operate to limit or exclude liability
of any person for fraud, wilful non-disclosure or fraudulent
misrepresentation.
88
SCHEDULE 8
Rights of First Refusal and Last Refusal
----------------------------------------
1 The provisions of this schedule 8 shall only apply in the event of a
Relevant Transaction and not otherwise and shall following a CR Disposal
terminate and be of no further effect in relation to ▇▇▇▇▇ ▇▇▇▇▇▇ and
shall following an LI Disposal terminate and be of no further effect in
relation to the Lead Investor and shall following an Asset Sale
terminate and be of no further effect.
2 Subject to the provisions of paragraph 1 of this schedule 8 (which shall
for the avoidance of doubt prevail), in the event that any person wishes
to effect a Relevant Transaction then:
2.1 if the Relevant Transaction results from an Unsolicited Offer
being received from a Third Party, the provisions of paragraphs
6 to 11 inclusive of this schedule 8 shall apply; or
2.2 if the Relevant Transaction does not result from such an
Unsolicited Offer, then the board of directors of Penn (the
"PENN BOARD") shall serve on the Purchaser a transfer notice in
respect of the Offered Shares or Offered Assets, as the case may
be, in accordance with paragraph 3 of this schedule 8 (a
"TRANSFER NOTICE").
3 A Transfer Notice served by the Penn Board in accordance with paragraph
2.2 above shall:
3.1 state the number of Offered Shares or, in the case of an Asset
Sale, describe in reasonable detail the Offered Assets;
3.2 (to the extent possible without breaching the terms of any
confidentiality agreement to which Penn, any member of the Penn
Group or any shareholder of Penn is party) state the full name
and address of the proposed offeree (if any);
3.3 state the terms (including as to price, type of consideration
and any restrictions on the receipt of cash (or its equivalent)
consideration, if any) upon which the Offeror wishes to effect
the Relevant Transaction or, if an offer has been received
which, if accepted, would result in a Relevant Transaction, the
terms of such offer (the "OFFER TERMS"); and
3.4 invite the Purchaser to make an offer to acquire all of the
Offered Shares or Offered Assets, as the case may be, upon terms
that are no less favourable than the Offer Terms within 14 days
of the date of the Transfer Notice (the "FIRST REFUSAL PERIOD").
4 If, within the First Refusal Period, the Purchaser makes no response to
the Transfer Notice or confirms that it does not wish to make an offer
for the Offered Shares or Offered Assets, as the case may be, on the
Offer Terms at that time or makes an offer for the Offered Shares or
Offered Assets on terms that are less favourable than the Offer Terms,
then the Penn Board may offer for sale and transfer the Offered Shares
or Offered Assets at any time within the next six
89
months to a third party purchaser on any terms (including as to price)
provided that these are no less favourable than the Offer Terms. If no
third party offer for the Offered Shares or Offered Assets is received
within the said six month period, then the provisions of paragraph 2
shall apply.
5 If, within the First Refusal Period, the Purchaser makes an offer for
the Offered Shares or Offered Assets, as the case may be, on terms
which, taken as a whole (including as to price, type of consideration
and any restrictions on the receipt of cash (or its equivalent)
consideration), are no less favourable than the Offer Terms (the "FIRST
REFUSAL OFFER"), then the Offeror shall accept the First Refusal Offer
and the provisions of paragraph 11 shall apply.
6 If an Unsolicited Offer is received by an Offferor from a third party
purchaser (the "THIRD PARTY PURCHASER") which the Offeror is minded to
accept, then the Offeror shall, prior to completion of the Relevant
Transaction, serve on the Purchaser a notice in writing of the Third
Party Purchaser's offer (the "THIRD PARTY OFFER NOTICE").
7 The Third Party Offer Notice shall:
7.1 state the number of Offered Shares or, in the case of an Asset
Sale, describe in reasonable detail the Offered Assets;
7.2 (to the extent possible without breaching the terms of any
confidentiality agreement to which Penn, any member of the Penn
Group or any shareholder of Penn is party) state the full name
and address of the Third Party Purchaser; and
7.3 invite the Purchaser to make an offer to acquire all of the
Offered Shares or Offered Assets, as the case may be, within 14
days of the date of receipt by the Purchaser of the
confidentiality undertaking referred to in paragraph 8 below or,
if the Purchaser does not enter into such a confidentiality
undertaking, within 14 days of the date of the Third Party Offer
Notice (the "LAST REFUSAL PERIOD").
8 ▇▇▇▇▇ ▇▇▇▇▇▇ shall procure, or shall procure that Penn shall procure,
that a confidentiality undertaking executed by the Third Party Purchaser
in a form that is in all material respects no more onerous than that
agreed between the Offeror and the Third Party Purchaser and which
expressly permits the Offeror to disclose the terms (including as to
price, type of consideration and any restrictions on the receipt of cash
(or its equivalent) consideration, if any) of the Unsolicited Offer (the
"THIRD PARTY OFFER TERMS") is delivered to the Purchaser as soon as
practicable following delivery of the Third Party Offer Notice. Within
24 hours of the Purchaser executing such confidentiality undertaking,
the Offeror shall notify the Purchaser of the terms (including as to
price, type of consideration and any restrictions on the receipt of cash
(or its equivalent) consideration, if any) of the Unsolicited Offer (the
"THIRD PARTY OFFER TERMS").
9 If, within the Last Refusal Period, the Purchaser makes no response to
the Third Party Offer Notice or confirms that it does not wish to make
an offer for the Offered Shares or Offered Assets, as the case may be,
at that time or makes an offer for the
90
Offered Shares or Offered Assets on terms that are less favourable than
the Third Party Offer Terms, then the Offeror may offer for sale and
transfer the Offered Shares or Offered Assets at any time within the
next six months to the Third Party Purchaser on terms including as to
price that in all material respects are no less favourable than the
Third Party Offer Terms.
10 If, within the Last Refusal Period, the Purchaser makes an offer for the
Offered Shares or Offered Assets, as the case may be, on terms which,
taken as a whole (including as to price, type of consideration and any
restrictions on the receipt of cash (or its equivalent) consideration),
are no less favourable than the Third Party Offer Terms (the "LAST
REFUSAL OFFER"), then the Offeror shall accept the Last Refusal Offer
and the provisions of paragraph 11 shall apply.
11 If the Offeror notifies the Purchaser that it accepts either the First
Refusal Offer or the Last Refusal Offer (as the case may be), then the
Offeror shall be bound to sell and the Purchaser shall be bound to
purchase all of the Offered Shares or Offered Assets, as the case may
be, within 14 days of the date of the notice of acceptance (or such
longer period as the Offeror and the Purchaser shall agree in writing).
Between the date of the notice of acceptance and the expiry of the 14
day period, the Offeror shall permit the Purchase to undertake a
reasonable due diligence exercise and the Purchaser and the Offeror
shall negotiate in good faith to agree the terms of the transaction
including, without limitation, the extent of the warranties and
indemnities to be given by the Offeror; provided always that: (a) in no
circumstances shall either the Lead Investor of its Permitted
Transferees be required to give any warranties or indemnities (other
than warranties in relation to title to shares and capacity) and (b) in
no circumstances shall the Offeror be required to give any warranties or
accept any liability to the extent that the same is greater than that
required by the Third Party Purchaser. The Purchaser shall be
responsible for payment of any stamp duties on any sale of Offered
Shares to it pursuant to this schedule 8. If the terms of the
transaction are not agreed within such 14 day period referred to above
(or such longer period as the Offeror and the Purchaser shall agree in
writing), then the provisions of clause 4 or 9 shall apply as if the
Purchaser had made no response to the Transfer Notice or Third Party
Offer Notice (whichever is applicable).
12 If the Articles are amended or replaced and at the relevant time it is
possible under the terms of this schedule that one or more Relevant
Transactions could take place, the Vendors shall procure that the
amended or replacement Articles include provisions on the same, or
substantially the same, terms as those set out at Article 6.6 of the
Articles.
13 The Vendors shall use their reasonable endeavours to ensure that any
confidentiality agreement entered into by Penn, any member of the Penn
Group or any shareholder of Penn does not operate to prevent the full
name and address of any Third Party Purchaser being disclosed to the
Purchaser in accordance with paragraphs 3.2 and 7.2.
14 In this Schedule, unless the context otherwise requires:
91
"ARTICLES" means the articles of association of Penn at the date hereof,
a copy of which is annexed hereto;
"ASSET SALE" means any transaction which results in all or substantially
all of the assets, business and undertaking of Penn Pharmaceutical
Services Limited being transferred to a Third Party;
"CONTROL" means the power to exercise a majority of the voting rights at
general meeting of Penn, whether through the ownership of the legal
and/or beneficial interest in a majority of the issued shares in the
capital of Penn or by contract or otherwise;
"CR DISPOSAL" means any transaction pursuant to which ▇▇▇▇▇ ▇▇▇▇▇▇
transfers to any person other than a Permitted Transferee the legal or
beneficial interest in some or all of his shares in Penn and as a result
of which ▇▇▇▇▇ ▇▇▇▇▇▇ ceases to control Penn or, if ▇▇▇▇▇ ▇▇▇▇▇▇ does
not control Penn immediately prior to such transaction, following which
he does not obtain control of Penn;
"CR OFFERED SHARES" means either (a) those shares in Penn held by ▇▇▇▇▇
▇▇▇▇▇▇ or his Permitted Transferees that are the subject of the Relevant
Transaction or (b) if those shares would not, when acquired by the
Purchaser, allow the Purchaser to exercise a majority of the voting
rights in general meeting of Penn, all of the shares in Penn held by
▇▇▇▇▇ ▇▇▇▇▇▇ or his Permitted Transferees or, if less, such number of
shares in Penn held by ▇▇▇▇▇ ▇▇▇▇▇▇ or his Permitted Transferees as
would allow the Purchaser to exercise such a majority;
"LI DISPOSAL" means any transaction which results in the Lead Investor
transferring to any person or persons other than ▇▇▇▇▇ ▇▇▇▇▇▇ or its
Permitted Transferee the legal and/or beneficial interest in some or all
of its shares in Penn where any such person or persons would acquire the
same or similar rights and privileges in relation to Penn as were held
by the Lead Investor at the date of Completion;
"OFFERED ASSETS" means the assets, business or undertaking to be
transferred pursuant to an Asset Sale;
"OFFERED SHARES" means (a) where the Relevant Transaction is a CR
Disposal, the CR Offered Shares, (b) where the Relevant Transaction is
an LI Disposal, those shares in Penn held by the Lead Investor or its
Permitted Transferees that are the subject of the Relevant Transaction,
and (c) where the Relevant Transaction is both a CR Disposal and an LI
Disposal, the CR Offered Shares and those shares in Penn held by the
Lead Investor or its Permitted Transferees that are the subject of the
Relevant Transaction;
"OFFEROR" means (a) where the Relevant Transaction is a CR Disposal,
▇▇▇▇▇ ▇▇▇▇▇▇ or his Permitted Transferees, (b) where the Relevant
Transaction is an LI Disposal, the Lead Investor or its Permitted
Transferees, and (c) where the Relevant Transaction is an Asset Sale,
Penn or (d) where the Relevant Transaction is both a CR Disposal and an
LI Disposal, ▇▇▇▇▇ ▇▇▇▇▇▇ and the Lead Investor or their respective
Permitted Transferees;
92
"PENN" includes the ultimate holding company of Penn;
"PERMITTED TRANSFEREES" means any person to whom a permitted transfer
could be made in accordance with Article 6.2 of the Articles;
"RELEVANT TRANSACTION" means a CR Disposal, an LI Disposal or an Asset
Sale;
"THIRD PARTY" means any person that is not a Permitted Transferee; and
"UNSOLICITED OFFER" means an offer (whether legally binding or not)
which, if accepted, would result in a Relevant Transaction and which has
not been solicited by any shareholder or officer of Penn or any adviser
to Penn or which does not result in any way from any kind of marketing
of, or offer to sell, any of the shares, assets or control rights of
Penn in respect of which the offer is received.
93
SCHEDULE 9
Celgene Guarantee
-----------------
1 In consideration of the Vendors entering into this Agreement with the
Purchaser, Celgene hereby irrevocably and unconditionally:
1.1 undertakes and guarantees the due and punctual performance and
observance by the Purchaser of each obligation of the Purchaser
under this Agreement; and
1.2 undertakes to the Vendor on demand to pay to the Vendor any sum
which the Purchaser is at any time liable to pay to the Vendor
under or arising out of this Agreement and which is not paid at
the time of the demand.
2 Celgene's obligations under paragraph 1 are primary obligations and not
those of a mere surety. If an obligation of the Purchaser is void,
voidable or unenforceable for any reason, Celgene's obligation under
this Schedule are unaffected and Celgene shall perform the Purchaser's
obligations as if it were primarily liable for the performance.
3 The guarantee contained in paragraph 1 is a continuing guarantee and
shall remain in force until all the obligations of the Purchaser under
this Agreement have been fully performed and all sums payable by the
Purchaser have been fully paid.
4 The obligations of Celgene shall not be satisfied, discharged or
affected by any act, omission, matter or thing which, but for this
provision, might operate to diminish or discharge the liability of
Celgene from its obligations or provide a defence to it or otherwise
affect its obligations whether or not known to Celgene including:
4.1 any time or other indulgence, waiver, release or consent at any
time given to the Purchaser or any other person in relation to
the terms of this Agreement;
4.2 any compromise or release of or abstention from perfecting or
enforcing any right or remedy against the Purchaser or any other
person;
4.3 any legal limitation, disability, incapacity or other
circumstance relating to the Purchaser or any other person or
any amendment to or variation of the terms of this Agreement or
any other document referred to in this Agreement whether the
same is made with or without the assent or knowledge of Celgene;
4.4 any irregularity, illegality, unenforceability or invalidity of
any obligations of the Purchaser under this Agreement or the
winding-up, the dissolution, amalgamation, reconstruction, other
change in the constitution or control of or the compounding with
or accepting composition from or insolvency of the Purchaser;
94
4.5 any intermediate payment or settlement of account by the
Purchaser; and
4.6 any variation, renewal, termination or discharge of a party to
other securities or guarantees held by the Vendors or any
realisation of all or any of those securities or guarantees.
5 The guarantee contained in paragraph 1 may be enforced by the Vendors
without the Vendors first taking any steps or proceedings against the
Purchaser.
6 All payments to be made by Celgene shall be made in full, without
set-off or counterclaim and without any deduction whatsoever except to
the extent required by law.
7 So long as the Purchaser is under an actual or contingent obligation
under this Agreement, Celgene shall not exercise any right it may at any
time have by reason of the performance of its obligations under
paragraphs 1, 2 and 3, to take the benefit (wholly or partly and by way
of subrogation or otherwise) of any of the Vendors rights under this
Agreement or of any other security taken by the Vendors in connection
with this Agreement.
95
SCHEDULE 10
Trustees Covenants and Warranties
---------------------------------
1 COVENANTS
As trustees of the ▇▇▇▇▇ ▇▇▇▇▇ Interest in Possession Trust, each of
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ (the "TRUSTEES") covenants to and
undertakes with the Purchaser that in relation to Trust and during the
period commencing on the date of Completion and ending on the seventh
anniversary of the date of Completion:
(a) he will neither resign nor retire as a Trustee of the Trust nor
exercise any right or power to appoint any additional or new
trustee of the Trust (the "NEW TRUSTEE") without notifying the
Purchaser accordingly and without procuring that any New Trustee
shall as a condition precedent to such appointment execute and
deliver to the Purchaser a deed of adherence in the agreed terms
and on the entering into, completion, and delivery to the
Purchaser of such a deed by the New Trustee the retiring or
resigning Trustee shall (except in relation to any claim notice
of which has previously been given) thereupon be discharged from
all or any liability under this Agreement;
(b) he will not distribute any Trust capital from the sole control
of him and his fellow trustees without first notifying the
Purchaser and procuring that any beneficiary or transferee of
such a distribution shall as a condition precedent to such a
distribution execute and deliver to the Purchaser a deed to
indemnify the Purchaser (in a form reasonably satisfactory to
the Purchaser) from and against all liabilities in respect of
which the Trustees are liable to the Purchaser under the terms
of this Agreement to a maximum amount of the amount or value of
the assets comprised in the distribution at the date thereof
(the "DISTRIBUTION VALUE");
(c) he will not without the written consent of the Purchaser make
any distribution, loan or transfer out of the assets subject to
the Trust at any time after notice shall have been received by
him of a claim or claims (together with a bona fide estimate
thereof) by the Purchaser against him under the provisions of
this Agreement, without first setting aside and retaining as
part of the assets of the Trust an amount of cash equal to the
amount of such claim or bona fide estimate.
(d) he will not without the written consent of the Purchaser, such
consent not to be unreasonably withheld or delayed, change the
governing law of the Trust from English law.
2 LEGAL OWNERS OF SHARES
Each of the Trustees in relation to the Trust (with the intention of
binding not only themselves but also their respective successors and
assignees) hereby
96
severally warrants to the Purchaser that they or their nominees are the
legal owners of the Shares shown in Schedule 5, Part 1 as being held by
them and those Shares will at Completion be transferred free from all
pledges, liens, charges, equities, encumbrances rights of pre-emption or
interests in favour of any other person, body or authority and they will
have power to transfer the full legal and beneficial interest in the
Shares to the Purchaser.
3 POWER AND AUTHORITY
Each of the Trustees in relation to the Trust hereby severally warrants
to the Purchaser that he has the requisite power and authority to enter
into this deed and to give and to undertake the warranties and
obligations given and undertakes by him in his capacity as a Trustee,
Vendor and Warrantor under this deed.
97
SCHEDULE 11
Relevant documents for paragraph 1.1 of part 1 of Schedule 4
------------------------------------------------------------
References in column 1 are to document numbers in the disclosure bundle.
--------------------------------------------------------------------------------
KEY AGREEMENTS
---------- ---------------------------------------------------------------------
4.3 Distribution and licence agreement dated 7 March 2001 between
Pharmion GMBH and Penn Pharmaceuticals Limited
---------- ---------------------------------------------------------------------
4.4 Amended and restated distribution and licence agreement dated 7
March 2001 between Pharmion GmbH and Inhoco 2388 Limited (now Penn
T Limited)
---------- ---------------------------------------------------------------------
4.5 Supplementary agreement to amended and restated distribution and
licence agreement dated 18 June 2003 between Pharmion GmbH and Penn
T Limited
---------- ---------------------------------------------------------------------
4.6 Amendment number 1 to amended and restated distribution and licence
agreement dated 4 March 2003 between Pharmion GmbH and Penn T
Limited
---------- ---------------------------------------------------------------------
4.7 Distribution agreement dated 1 July 2002 between Penn T Limited and
RHC USA Corporation
---------- ---------------------------------------------------------------------
4.8 Amended distribution agreement dated 10 May 2004 between Penn T
Limited and RHC USA Corporation
---------- ---------------------------------------------------------------------
4.9 Distribution agreement, undated, between Penn T Limited and BL & H
International Corp
---------- ---------------------------------------------------------------------
4.13 Manufacturing agreement dated December 1995 between Penn
Pharmaceuticals Limited and Celgene Corporation
---------- ---------------------------------------------------------------------
4.14 Letter agreement dated 14 August 2000 amending the manufacturing
agreement entered into in December 1995 by and between Penn
Pharmaceuticals Limited and Celgene Corporation
---------- ---------------------------------------------------------------------
7.1 Letter dated 16 June 2003
---------- ---------------------------------------------------------------------
SAURAMIDE
---------- ---------------------------------------------------------------------
2.16 Details of sales of Sauramide between 1 July 2004 and 31 August
2004
---------- ---------------------------------------------------------------------
2.17 List of current Sauramide customers and Sauramide sales between
01/07/03 and 30/06/04
---------- ---------------------------------------------------------------------
98
---------- ---------------------------------------------------------------------
2.24 Sales Process for Penn Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
15.1 Sauramide: Customer details report
---------- ---------------------------------------------------------------------
15.2 E-mail dated 2 September 2004 - relating to timelines for approval
of Thalidomide
---------- ---------------------------------------------------------------------
INSURANCE
---------- ---------------------------------------------------------------------
4.1 Insurance register for Penn Pharmaceuticals Limited date of issue 9
January 2004
---------- ---------------------------------------------------------------------
4.18 Table of Syndicates for Insurance Policy 12 December 2003
---------- ---------------------------------------------------------------------
4.19 Lloyd's Insurance Policy 12 November 2003
---------- ---------------------------------------------------------------------
LICENSES
---------- ---------------------------------------------------------------------
8.1 Manufacturer's special licence dated 19 December 2001 granted to
Penn Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
8.2 Manufacturers licence dated 19 December 2001 granted to Penn
Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
8.3 Wholesale dealers (importation from non-EC countries) licence dated
15 July 1999 granted to Penn Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
8.4 Wholesale dealers licence dated 29 October 1999 granted to Penn
Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
8.5 Manufacturers authorisation - investigational medicinal products
dated 1 May 2004 granted to Penn Pharmaceutical Services Limited
---------- ---------------------------------------------------------------------
99
Annexure 1
----------
Celgene Pharmion Agreement
--------------------------
100
Annexure 2
----------
Penn Celgene Manufacturing Agreement
------------------------------------
101
Annexure 3
----------
Option Agreement
----------------
102
Annexure 4
----------
Articles of Association of Penn
-------------------------------
103
EXECUTED and delivered as a DEED )
by ▇▇▇ ▇▇▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
104
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇▇ ▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and )
▇▇▇ ▇▇▇▇▇ ) ...................................
as trustees of The ▇▇▇▇▇ ▇▇▇▇▇ Interest )
in Possession Trust in the )
presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
105
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇ ▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇ ▇▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
106
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
EXECUTED and delivered as a DEED )
by ▇▇▇▇ ▇▇▇▇▇▇ )
in the presence of: ) ...................................
.........................................
Witness signature
.........................................
Witness name (Block Capitals)
.........................................
Witness occupation
107
EXECUTED and delivered as a DEED )
by barrington house nominees )
LIMITED CUSTOMERS B acting by: ) ...................................
Director
...................................
Director/Secretary
EXECUTED and delivered as a DEED )
by CELGENE CORPORATION )
acting by: ) ...................................
Director
...................................
Director/Secretary
EXECUTED and delivered as a DEED )
by celgene uk manufacturing )
limited acting by: ) ...................................
Director
...................................
Director/Secretary
108