Exhibit 2
DATED 8 AUGUST, 2000
---------------------------
OXFORD MOLECULAR GROUP PLC (1)
MOLECULAR SIMULATIONS, INC. (2)
AND
PHARMACOPEIA, INC. (3)
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AGREEMENT
FOR THE SALE AND PURCHASE OF
THE ENTIRE ISSUED SHARE CAPITAL OF
OXFORD MOLECULAR LIMITED AND
CHEMICAL DESIGN HOLDINGS PLC
AND ALL THE OUTSTANDING STOCK OF
OXFORD MOLECULAR GROUP, INC.
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[LETTERHEAD]
CONTENTS
CLAUSE HEADING PAGE
1 Definitions and interpretation. . . . . . . . . . . . . . . . . . . . . . . . .1
2 Conditions, pre-Completion restrictions, sale of the Sale Shares, and the
Vendor's title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3 Consideration for the sale of the Sale Shares . . . . . . . . . . . . . . . . .9
4 Intra Group Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5 Completion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
6 Post-Completion matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7 Restrictive covenants in favour of the Purchaser. . . . . . . . . . . . . . . 15
8 Warranties and Representations. . . . . . . . . . . . . . . . . . . . . . . . 19
9 Breach of Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11 Payments to the Vendor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13 Choice of law, submission to jurisdiction and service of process. . . . . . . 27
14 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15 Undertakings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SCHEDULE
1 The Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Part A - The Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Part B - Subsidiaries of the Companies. . . . . . . . . . . . . . . . . . . . 35
2 Completion Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Conditions and pre-Completion restrictions. . . . . . . . . . . . . . . . . . 44
Part A - The Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Part B - pre-Completion restrictions. . . . . . . . . . . . . . . . . . . . . 44
4 The Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6 The Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7 Software owned by the Group Companies (as referred to in schedule 5,
paragraph 5)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8 Listed Intellectual Property Rights (as referred to in schedule 5,
paragraph 6)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Part A - Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Part B - Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9 Tax Deed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10 Calculation and payment of the Consideration. . . . . . . . . . . . . . . . .103
11 Guarantees and liabilities of the Group Companies . . . . . . . . . . . . . .108
12 Apportionment of Consideration. . . . . . . . . . . . . . . . . . . . . . . .109
APPENDICES*
A Audited Accounts
B Management Accounts
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* Omitted in accordance with Regulation S-K Item 601(b)(2).
C Reorganisation accrual schedule
D List of finance and capital leases
E Form 9100 filing and supporting affidavits
AGREED FORM DOCUMENTS*
Disclosure Letter
Property Documents
Circular (to include Notice of EGM and text of resolution)
Indemnity for lost share certificate
Resignations of directors, secretary and auditors
Solicitors instruction letter re escrow account
----------------
* Omitted in accordance with Regulation S-K Item 601(b)(2).
THIS AGREEMENT is made on 2000 BETWEEN:
(1) OXFORD MOLECULAR GROUP PLC (Company Number 2869950) whose registered
office is situated at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ("THE VENDOR");
(2) MOLECULAR SIMULATIONS, INC., a Delaware corporation having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇ ("THE
PURCHASER"); and
(3) PHARMACOPEIA, INC., a Delaware corporation having its principal place of
business at CN 5350, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, ▇▇▇ ("THE
GUARANTOR");
(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:
"ACCOUNTS" means the audited balance sheet as at the Balance Sheet Date
and the audited profit and loss account for the year ended on the
Balance Sheet Date of each Group Company and each of the Subsidiaries
(such accounts not being audited in the case of companies incorporated
in the USA) together with the notes, directors' reports, statements of
stockholders equity and cashflow and other documents annexed to them;
(and for the purposes of identification only copies of the Accounts have
been signed by or on behalf of the Parties to this Agreement and are
annexed as appendix "A");
"ASSOCIATE" means any person with whom the Vendor may be connected
within the meaning of section 839 of the Taxes Act other than any of the
Group Companies;
"AUDITORS" means the auditors of the Companies, namely KPMG Audit Plc of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"BALANCE SHEET DATE" means 31 December 1999;
"BUSINESS" means the business carried on by the Group as at, and prior
to, the date of this Agreement and includes any part or parts of such
business;
"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;
"CA 1985" means the Companies ▇▇▇ ▇▇▇▇;
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"COMPANIES" means together Oxford Molecular Limited, Chemical Design
Holdings plc and Oxford Molecular Group Inc., further details of which
are set out in part A of schedule 1;
"COMPLETION" means completion of the sale and purchase of the Sale
Shares by the performance by the Parties of their respective obligations
under clause 5 and schedule 2;
"COMPLETION DATE" means the second Business Day after the date on which
the OMG Shareholder Condition is fulfilled or such later date as the
Vendor and the Purchaser may agree;
"CONDITIONS" means the conditions described in part A of schedule 3;
"CONSIDERATION" has the meaning set out in clause 3.1;
"DISCLOSURE LETTER" means the letter in the Agreed Form from the Vendor
to the Purchaser dated as at the date of this Agreement;
"EVENT" includes any act, omission, transaction or circumstance
(including any of such matters provided for under this Agreement);
"GBP" means pounds sterling;
"GROUP" means the Companies and the Subsidiaries and "GROUP COMPANY" and
"MEMBER OF THE GROUP" shall be construed accordingly;
"GUARANTEE" means any guarantee, indemnity, suretyship, letter of
comfort or 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);
"INITIAL PAYMENT" has the meaning set out in clause 3.1;
"INTELLECTUAL PROPERTY RIGHTS" has the definition set out in part 6 of
schedule 5;
"INTRA GROUP DEBT" means the aggregate net amount owing at Completion to
the Vendor's Group by the Companies and/or each of the Subsidiaries
together with accrued interest including any amounts which have arisen
in the ordinary and normal course of business in respect of goods and/or
services supplied to or by the Vendor's Group by or to the relevant
Company and/or the Subsidiaries;
"LISTING RULES" means the listing rules made under section 142 Financial
Services ▇▇▇ ▇▇▇▇ and for the time being in force;
"MANAGEMENT ACCOUNTS" means the management accounts of the Group
Companies for the period from the Balance Sheet Date to 31 May 2000 (and
for
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the purposes of identification only, copies of the Management Accounts
have been signed by and on behalf of the Parties to this Agreement and
are annexed as Appendix "B");
"OMG SHAREHOLDER CONDITION" means the condition described in paragraph 1
of part A of schedule 3;
"PROPERTIES" means the properties briefly described in the Property
Schedule or any one or more of them or any part of or interest in any
such properties;
"PROPERTY DOCUMENTS" means:
(a) the agreement for surrender to be made between Magdalen
Development Company Limited and Prudential Development
Management Limited (1) and the Vendor (2); and
(b) the agreement for lease to be made between Magdalen Development
Company Limited and Prudential Development Management Limited
(1), Oxford Molecular Limited (2), the Guarantor (3) and the
Vendor (4),
in each case in the agreed form (but subject to such non-material
amendments as the landlord may reasonably require) relating to the first
and second floors of the Medawar Centre, Oxford Science Park;
"PROPERTY SCHEDULE" means schedule 4;
"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 shall include, after Completion, each of the Group Companies and
"MEMBER OF THE PURCHASER'S GROUP" shall be construed accordingly;
"PURCHASER'S SOLICITORS" means Dechert of ▇ ▇▇▇▇▇▇▇▇▇' ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇;
"RETENTION" means US$2,000,000 as set out in clause 3.1 and schedule 6;
"RETIRING DIRECTOR" has the meaning given in paragraph 3.2(c) of
schedule 2;
"RETIRING SECRETARY" has the meaning given in paragraph 3.2(d) of
schedule 2;
"SALE SHARES" means the entire issued share capital (and, in the case of
Oxford Molecular Group Inc., all the outstanding stock) of the Companies
at Completion, subject to clause 4, as detailed in schedule 1;
"SECURITY INTEREST" means any claim, mortgage, lien, pledge, charge,
encumbrance, equity, hypothecation, right of pre-emption or other
security interest or any other restriction or right exercisable by, or
in favour of, any third party (or an agreement or commitment to create
any of them);
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"SHARE TRANSFERS" has the meaning given in paragraph 2.2 of schedule 2;
"SUBSIDIARY" means a subsidiary (as defined by sections 736 and 736A CA
1985);
"SUBSIDIARIES" means the companies listed in part B of schedule 1 or any
one or more of them;
"TAXATION" shall have the meaning ascribed thereto in the Tax Deed;
"TAX AUTHORITY" has the same meaning as that set out in the Tax Deed;
"TAX DEED" means a deed in the form set out in schedule 9;
"TAXES ACT" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"TRANSACTION DOCUMENTS" means this Agreement, the Tax Deed and each of
the documents referred to in this Agreement as being in the Agreed Form
and any document from time to time entered into pursuant to the terms of
this Agreement or any other such document;
"US$" means United States of America dollars;
"VENDOR'S GROUP" means the Vendor, any subsidiary of the Vendor, any
holding company of the Vendor and any subsidiary of any holding company
of the Vendor, in each case for the time being but, for the avoidance of
doubt, excluding the Group Companies and "MEMBER OF THE VENDOR'S GROUP"
shall be construed accordingly;
"VENDOR'S SOLICITORS" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ IHQ; and
"WARRANTIES" means the representations, warranties and undertakings on
the part of the Vendor contained in schedule 5 and which are made by the
Vendor pursuant to clause 8.
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). 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:
(a) a document expressed to be "IN THE AGREED FORM" means a document
in a form which has been agreed by the Parties at or before the
execution of
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this Agreement and which has, for the purposes of
identification, been signed or initialled by them or on their
behalf;
(b) references to a clause, schedule, part or annexure are to a
clause of, or a schedule, part of such 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;
(c) 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;
(d) 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);
(e) 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;
(f) the word "company", except where used in reference to the
Companies, 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
(g) the words and phrases other", "including" and "in particular"
shall not limit the generality of any preceding words and any
words which follow them shall not be construed as being limited
in scope to the same class as the preceding words where a wider
construction is possible.
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
5
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 Completion would impose
any greater obligations or liabilities on, or reduce the benefit to,
any Party.
1.6 WARRANTIES QUALIFIED BY REFERENCE TO THE VENDOR'S AWARENESS
If any Warranty is qualified by the expression "to the best of the
Vendor's knowledge information and belief" or "so far as the Vendor is
aware" or any similar expression, that expression shall be deemed to
include a warranty by the Vendor that the Warranty has been given by it
after reasonable enquiry, including enquiry of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ but for the
avoidance of doubt, the Vendor's knowledge shall be deemed to include
that of ▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇.
1.7 REFERENCES TO ENGLISH LEGAL TERMS
References to any English term including any reference to any action,
remedy, method of juridical proceedings, legal document, legislation,
statutory provision, legal status, planning permission or other required
consent or any other legal concept or thing shall in respect of any
relevant jurisdiction other than England be deemed to include the legal
concept or thing that most nearly approximates in that jurisdiction to
the English legal term.
2 CONDITIONS, PRE-COMPLETION RESTRICTIONS, SALE OF THE SALE SHARES, AND
THE VENDOR'S TITLE
2.1 CONDITION PRECEDENT TO BE FULFILLED
Completion of the sale and purchase of the Sale Shares under this
Agreement is subject to fulfilment of the Conditions. If the Conditions
are not fulfilled (or in the case of the Condition in paragraph 2 of
part A of schedule 3, waived by the Purchaser) on or before 31 August
2000, or such later date as the Parties shall agree, all obligations of
the Parties hereunder shall cease and determine save for obligations of
the Vendor under clause 12.10 and save in respect of the Vendor's
liability in respect of any breach of this Agreement by it.
2.2 PURCHASER'S WARRANTY
The Purchaser and the Guarantor hereby represent, warrant and undertake
to the Vendor that the Purchaser and the Guarantor are not at the date
hereof required to obtain any consent from any third party or
governmental authority in connection with the execution, delivery or
performance of this Agreement or any of the other agreements or
documents referred to in this Agreement or the consummation of the
purchase of the Sale Shares by the Purchaser and that they have not
received notice and are not otherwise aware of any such notice or threat
6
or investigation as referred to in sub-paragraph (b) of the Condition
contained in paragraph 2 of part A of schedule 3.
2.3 PRE-COMPLETION RESTRICTIONS
The provisions of part B of schedule 3 shall apply in the period between
the date of this Agreement and Completion or earlier termination of this
Agreement in accordance with its terms.
2.4 SALE OF THE SALE SHARES
The Vendor shall sell to the Purchaser and the Purchaser shall purchase
from the Vendor the Sale Shares.
2.5 THE VENDOR'S TITLE TO THE SALE SHARES
The Vendor shall sell and transfer to the Purchaser the Sale Shares with
full title guarantee and free from any Security Interest (and whether or
not the Vendor knows or could reasonably be expected to know about such
matters).
2.6 TITLE TO SALE SHARES TO PASS ON COMPLETION
Title to, beneficial ownership of, and any risk attaching to, the Sale
Shares shall pass on Completion and the Sale Shares shall be sold and
purchased together with all rights and benefits attached or accruing to
them at, or at any time on or after, Completion (including the right to
receive all dividends, distributions or any return of capital declared,
paid or made by the Companies in respect of any such shares on or after
Completion).
2.7 PARTIES TO ENTER INTO PROPERTY DOCUMENTS
As soon as reasonably practicable following the date of this Agreement,
the Vendor and the Guarantor will enter into the Property Documents and
use their respective reasonable endeavours to procure that all other
parties to the Property Documents also enter into them.
2.8 REGULATION SX AUDIT OF THE GROUP
(a) As soon as reasonably practicable following the date of this
Agreement, the Parties shall instruct KPMG (including signing
such engagement letter as KPMG may reasonably require in
connection therewith) to:
(i) prepare an audit report in respect of the Group in respect of
the three years ended on the Balance Sheet Date in accordance
with Rule 3 - 05 (Financial Statements of Businesses Acquired or
to be Acquired) made under Regulation SX promulgated by the
Securities and Exchange Commission (the "REG SX AUDIT REPORT");
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(ii) prepare and sign a consent to incorporate the Reg SX
Audit Report into the Guarantor's filings with the
Securities and Exchange Commission ("SEC") as
required by SEC regulations or, if such filings are
not finalised at the time the Reg SX Audit Report is
delivered by KPMG, written confirmation from KPMG
that it will give such consent (the "KPMG CONSENT");
and
(iii) review, in accordance with SAS71, the unaudited
accounts of the Group for the six months ended on 30
June 2000 that are delivered by the Vendor in a form
appropriate for filing under SEC Regulation SX as
required by clause 6.14.
(b) The parties shall co-operate in good faith with any request for
information or otherwise by KPMG in connection with the Reg SX
Audit Report and shall use their respective reasonable
endeavours to procure that KPMG delivers to the Guarantor a duly
signed Reg SX Audit Report and the KPMG Consent as soon as
reasonably practicable following Completion and in any event
within 65 days after the date of this Agreement (the "CUT-OFF
DATE").
(c) If KPMG delivers the duly signed Reg SX Audit Report and the
KPMG Consent on or before the Cut-off Date, the fees of KPMG in
connection with the Reg SX Audit Report shall be for the account
of the Purchaser and the Purchaser undertakes to pay, or to
procure that some or all of the Companies and/or the
Subsidiaries pay, such fees within the period for payment
thereof as specified in the relevant engagement letter and the
Purchaser undertakes to indemnify and to keep the Vendor fully
and effectually indemnified in respect of such fees.
(d) If KPMG delivers the duly signed Reg SX Audit Report and the
KPMG Consent after the Cut-off Date, the fees of KPMG in
connection with the Reg SX Audit Report shall be for the account
of the Vendor and the Vendor undertakes to pay such fees within
the period for payment thereof as specified in the relevant
engagement letter and the Vendor undertakes to indemnify and to
keep the Purchaser (for itself and as trustee for each member of
the Group) fully and effectually indemnified in respect of such
fees.
2.9 REGULATION 9100 FILING
The Vendor shall procure that Oxford Molecular Group, Inc. files Form
9100 and supporting affidavits in the form set out in Appendix E, duly
signed by or on behalf of Oxford Molecular Group, Inc. and the deponents
or makers of the accompanying affidavits with the Internal Revenue
Service prior to Completion together with applicable filing fees.
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3 CONSIDERATION FOR THE SALE OF THE SALE SHARES
3.1 PAYMENT OF THE CONSIDERATION
The consideration for the sale of the Sale Shares shall be determined
pursuant to schedule 10 ("CONSIDERATION"). On Completion the Purchaser
will pay the Vendor US$26,962,500 less the amounts specified in
paragraph 5 of schedule 10 (the "INITIAL PAYMENT") in cash in accordance
with the provisions of clause 11 and the Purchaser shall pay
US$2,000,000 (the "RETENTION", as defined in schedule 6), into an escrow
account in accordance with the provisions of schedule 6. The
Consideration payable for the Sale Shares shall be apportioned as set
out in schedule 12.
3.2 If any sum shall become payable to the Purchaser out of the Escrow
Account the Consideration will be abated by the amount so payable.
4 INTRA GROUP DEBT
4.1 The Vendor undertakes that immediately prior to Completion it shall
procure the capitalisation of the entire net amount of Intra Group Debt
outstanding and payable for any and all reasons immediately prior to
Completion by subscribing in cash an amount equal to such Intra Group
Debt for new shares in the relevant debtor Group Companies and by
causing such debtor Group Companies to repay such Intra Group Debt out
of the proceeds of such subscription or, in the case of companies
incorporated in the USA, by making a capital contribution thereto so
that at and after Completion the Vendor's Group shall owe no amount to
the Group and the Group shall owe no amount to the Vendor's Group. Such
shares in the Group Companies shall be sold by the Vendor to the
Purchaser on the terms of this Agreement as if they were Sale Shares,
provided that no additional consideration shall be paid to the Vendor
for such shares.
5 COMPLETION
5.1 LOCATION AND TIME
Completion shall take place at the offices of the Vendor's Solicitors or
at such other place as the Parties may agree on the Completion Date when
the Parties shall comply with all (but, subject to clause 5.2 and to
clause 5.3, 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 Sale Shares unless the purchase of all the Sale Shares is
completed simultaneously.
5.2 IF COMPLETION DOES NOT TAKE PLACE ON THE COMPLETION DATE DUE TO THE
VENDOR'S FAILURE
If the Vendor shall fail or be unable to comply with any of its
obligations as set out in schedule 2 on the Completion Date, the
Purchaser may:
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(a) defer Completion to a date not more than 28 days after that date
(in which case the provisions of this clause 5.2 shall apply to
Completion as so deferred); or
(b) proceed to Completion so far as practicable but without
prejudice to the Purchaser's rights (whether under this
Agreement generally or under this clause 5) in respect of such
failure or inability to comply.
5.3 IF COMPLETION DOES NOT TAKE PLACE ON THE COMPLETION DATE DUE TO THE
PURCHASER'S FAILURE
If the Purchaser shall fail or be unable to comply with any of its
obligations as set out in schedule 2 on the Completion Date, the Vendor
may:
(a) defer Completion to a date not more than 28 days after that date
(in which case the provisions of this clause 5.3 shall apply to
Completion as so deferred); or
(b) proceed to Completion so far as practicable but without
prejudice to the Vendor's rights (whether under this Agreement
generally or under this clause 5) in respect of such failure or
inability to comply.
6 POST-COMPLETION MATTERS
6.1 DEALINGS IN THE SALE SHARES PENDING REGISTRATION OF TRANSFERS
The Vendor hereby declares that, for so long as it remains the
registered holder of any of the Sale Shares after Completion, it will:
(a) hold such Sale 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; and
(b) deal with and dispose of the Sale Shares and all such dividends,
distributions and rights as are described in clause 6.1(a) only
as the Purchaser or any such successor may direct.
6.2 APPOINTMENT OF THE PURCHASER AS ATTORNEY FOR THE VENDOR
The Vendor hereby irrevocably and unconditionally appoints any director
of the Purchaser for the time being acting severally as its lawful
attorney (and to the complete exclusion of any rights that it may have
in such regard) for the purpose of exercising any and all voting and
other rights and receiving any and all benefits and entitlements which
may at any time after Completion attach to or arise in respect of any of
the Sale Shares and receiving notices of and attending and voting at all
meetings of the members of the Companies (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 the Sale Shares as the
attorney
10
may think fit but excluding the payment of any stamp duty or stamp
duty reserve tax or other similar documentary or registration duty or
charge which shall be paid by the Purchaser and excluding the passing
of any resolution pursuant to section 49 CA 1985 (or equivalent US
legislation) to reregister the Companies as an unlimited company, in
each case from Completion to the day on which the Purchaser or its
nominee is entered in the register of members as the holder of the
Sale Shares. For such purpose, the Vendor hereby authorises and
instructs the Companies to send all notices in respect of the Sale
Shares to the Purchaser during such period.
6.3 RELEASE OF GUARANTEES GIVEN IN FAVOUR OF THE VENDOR BY ANY GROUP COMPANY
The Vendor shall:
(a) secure as soon as practicable prior to or at Completion (but
with effect from Completion) the release of each Group Company
from all Guarantees and liabilities and Security Interests given
or undertaken by any Group Company to secure or support the
obligations of any of:
(i) the Vendor;
(ii) any other member of the Vendor's Group
(including, if required, offering its own Guarantee or liability
on the same terms, modified as necessary, as and in substitution
for the existing Guarantee or other liability of the relevant
Group Company); and
(b) indemnify and keep indemnified the Purchaser against all
actions, proceedings, losses, costs, claims, damages,
liabilities and expenses which it or any Group Company may
suffer or incur in respect of any claim made under any
Guarantees or liabilities or Security Interests referred to in
clause 6.3(a) after Completion.
6.4 RELEASE OF GUARANTEES GIVEN IN FAVOUR OF ANY GROUP COMPANY BY THE VENDOR
The Purchaser shall:
(a) use its best endeavours to secure as soon as practicable after
Completion (but with effect from Completion) the release of the
Vendor without cost to the Vendor from all Guarantees and
liabilities given or undertaken by any of:
(i) the Vendor:
(ii) any other member of the Vendor's Group
to secure or support the obligations of any Group Company
(including, if required, offering its own Guarantee or liability
or that of another appropriate member of the Purchaser's Group
(including the Guarantor
11
which the Guarantor hereby agrees to provide) in relation
only to those Guarantees and liabilities listed in schedule 11
on the same terms, modified as necessary, as and in
substitution for the existing Guarantee or other liability of
the Vendor); and
(b) indemnify and keep indemnified the Vendor against all actions,
proceedings, losses, costs, claims, damages, liabilities and
expenses which the Vendor or any member of the Vendor's Group
may suffer or incur in respect of any claim made under any
Guarantees or liabilities referred to in clause 6.4(a) after
Completion.
6.5 FURTHER ASSURANCE BY THE VENDOR
The Vendor shall execute or, so far as it is able, procure the execution
of, all such documents and/or do or, so far as it is able, procure the
doing of, such acts and things as the Purchaser shall after Completion
reasonably require in order to give effect to the provisions of this
Agreement and any other Transaction Document and to give to the
Purchaser the full benefit of this Agreement or any other such document
but nothing in this clause shall require the Vendor to pay any stamp
duty or stamp duty reserve tax or any similar documentary or
registration duty or charge which shall be paid by the Purchaser.
6.6 NOVATION OF LEASING AGREEMENTS
Subject to clauses 6.9 and 6.10, the Vendor undertakes to the Purchaser
that as soon as possible following signing of this Agreement it will
procure the assignment to or novation with the Group Companies at no
cost to them of such of the leasing or similar agreements relating to
assets used in the business of the Group Companies but not owned by them
at signing as the Purchaser shall direct.
6.7 INDEMNITY RELATING TO RESIGNING OFFICERS
The Vendor shall indemnify the Purchaser and the Group Companies against
all claims which may be made against them by any person whose
resignation from office or relinquishment of rights the Vendor may be
obliged to procure in order to comply with this Agreement by reason of
the resignation or removal from office or termination of employment of
such person and against all costs reasonably incurred by them in
connection with any such claim.
6.8 VENDOR'S CONTINUED ACCESS TO PREMISES ETC.
For a period of up to 6 months following the Completion Date and without
the Vendor being required to make any payment therefor, the Purchaser
shall procure that the Companies allow ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any
liquidator of the Vendor during normal business hours to have such
reasonable access to, and use of office accommodation, parking spaces
and other facilities (including telephone, fax and other similar
services) within, the Companies' Oxford premises as the Companies shall
reasonably designate to allow the Vendor to
12
undertake an orderly winding-up of its activities and, without prejudice
to the generality of the foregoing:
(a) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any liquidator of the Vendor shall during
such time be permitted reasonable access to the Companies'
computer network (including the provision of such passwords or
other information as may be necessary to permit such access) for
the purposes of sending and receiving e-mail and printing
documents;
(b) the Purchaser will procure that during such time the Companies
shall provide to the Vendor payroll and similar services so that
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ continues to receive his salary and other
benefits through the Companies as if Completion had not
occurred, subject to the Vendor paying to the Purchaser or the
Companies on a cash book basis any amounts required to be paid
by the Companies to such employees not later than the Business
Day on which such payment is required to be made; and
(c) the Vendor shall observe all proper and reasonable requests from
the Purchaser as to the use of the facilities provided to it and
the Purchaser may from time to time allocate alternative
facilities within the Oxford premises provided the same are not
materially less suitable than those originally provided or no
facilities at all if the landlord of the premises shall object;
any such rights of access are by way of licence only and it is not the
intention of the parties to create any relationship of landlord and
tenant. The Purchaser undertakes that it will not make any approach to
the landlord with respect to the Vendor's rights under this clause 6.8
by or on behalf of the Purchaser or any Group Company. At the end of
such six month period the Vendor shall procure the release of the Group
from all obligations with respect to salary, pension and other
liabilities to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and hereby confirms that the Group has
no such obligations with respect to other employees of the Vendor's
Group.
6.9 LEASE PAYMENTS
Following Completion, the Purchaser shall, and shall procure that the
Companies shall, hold on trust absolutely for the Vendor and account to
the Vendor, within 5 Business Days of receipt, for any amounts any of
them may receive from Millennium Pharmaceuticals, Inc., Millennium
Pharmaceuticals Limited (formerly Cambridge Discovery Chemistry Limited)
or Cambridge Drug Discovery Limited in respect of sale and leaseback or
similar arrangements relating to assets used in the business of any such
company in respect of which a deduction is made under paragraph 5.2 of
schedule 10 ("LEASED ASSETS"). The Purchaser undertakes to the Vendor
not to amend the terms (including in particular, payments of rent or
other lease payments made thereunder) on which any Leased Assets are
leased or otherwise made available to any such company.
13
6.10 SALE OF LEASED ASSETS
If following Completion, the Purchaser or any of the Companies pays all
outstanding amounts under any sale and leaseback or similar arrangements
relating to any of the Leased Assets, the Purchaser shall, or shall
procure that the relevant Company shall, use its reasonable endeavours
to sell the relevant Leased Assets to the company in whose business the
relevant Leased Assets are used for the best price reasonably obtainable
and shall account to the Vendor promptly for the full amount of any sale
proceeds receivable by it in respect of such Leased Assets. Pending any
such sale, the provisions of clause 6.9 shall continue to apply.
6.11 NOVATION OF DISCOVERY SOLUTIONS DIVISIONS CONTRACTS
The Purchaser acknowledges the provisions of schedule 11 of the
agreement dated 6th July 2000 between the Vendor (1) and Millennium
Pharmaceuticals, Inc. (2) relating to the sale by the Vendor of its
Discovery Solutions Divisions and in connection therewith:
(a) the Purchaser undertakes to the Vendor to procure that the
Companies shall hold on trust absolutely for the Vendor and
account to the Vendor, within 5 Business Days of receipt, for
any amounts any of them may receive which are referred to in
such provisions as being held on trust for Millennium
Pharmaceuticals, Inc. or Millennium Pharmaceuticals Limited
(formerly Cambridge Discovery Chemistry Limited), but for the
avoidance of doubt only insofar as such receipts relate to the
provision of goods or services by the companies (or the
businesses thereof) sold by the Vendor to Millennium
Pharmaceuticals, Inc. and not insofar as such receipts relate to
the provision of goods or services by the Group or the
Purchaser's Group;
(b) the Purchaser undertakes to the Vendor to procure that the
Companies shall promptly on demand by the Vendor enter into such
assignments and or novations as the Vendor may reasonably
require to give effect to the provisions of such schedule; and
(c) the Vendor warrants to the Purchaser that, despite the Group
being a party to such Contracts (as defined in paragraph 1 of
schedule 11 of such agreement of 6 July 2000), the Group has no
liability or obligations thereunder (save as referred to in
clause 6.11(a)) and agrees with the Purchaser to indemnify the
Group against all obligations and liabilities under such
Contracts (save in respect of the Purchaser's obligations
referred to in clause 6.11(a)).
6.12 VENDOR'S SHARE OPTION SCHEMES
Subject to the rules of the Vendor's Approved Executive Share Option
Scheme and Unapproved Executive Share Option Scheme and subject to
applicable laws and regulations, the Vendor agrees to exercise any
discretion it has to allow
14
employees of the Group a period of six months after Completion (or
such shorter period as shall end on the date of an extraordinary
general meeting of the Vendor convened to pass a resolution to wind
up the Vendor voluntarily) to exercise their options over shares in
the Vendor and the Vendor agrees with the Purchaser that it will
apply the provisions of Rules 9.10 and 9.11 of the Vendor's
Unapproved Executive Share Option Scheme and will co-operate with the
relevant Group Company in that regard.
6.13 ASSIGNMENT OF CERTAIN IPR
The Vendor hereby assigns with full title guarantee and free from any
Security Interest to the Purchaser (for the benefit of the Group) any
Intellectual Property Rights which it owns which are used in the
Business and so far as may lawfully be allowed under the terms of any
licence, assign or sub licence any licences granted to it to use
Intellectual Property Rights which are vested in the Vendor and are used
in the Business, including in each case Intellectual Property Rights in
Software and Source Codes.
6.14 DELIVERY OF ACCOUNTS TO 30 JUNE 2000
The Vendor shall deliver to the Purchaser within 65 days of the date of
this Agreement the unaudited accounts of the Group referred to in
clause 2.8(a)(iii) and, for the purposes of preparing such accounts, the
Purchaser shall procure that each Group Company co-operates with the
Vendor and supplies such information as the Vendor may reasonably
require in connection therewith.
7 RESTRICTIVE COVENANTS IN FAVOUR OF THE PURCHASER
7.1 DEFINITIONS USED IN THIS CLAUSE 7
In this clause 7 the following expressions have the meanings given to
them:
"CONFIDENTIAL INFORMATION" means any trade or business information
(including formulae, processes, methods, knowledge and Know-how) in
connection with the products manufactured, produced, distributed and
sold and the services supplied by any Group Company and the customers,
suppliers, finances, business policy and expansion or forward planning
programmes of any Group Company and which are for the time being
confidential to any Group Company;
"DIRECTLY OR INDIRECTLY" means (without prejudice to the generality of
the expression) either alone or jointly or in partnership with any other
person, firm or company or as the holder of any interest in or as an
employee, director, agent or representative of or consultant to any
other person firm or company;
"KNOW-HOW" means all industrial and commercial information and
techniques, instruction manuals, operating conditions and procedures,
information as to suppliers and customers and all other accounts,
records and information (wherever situated) relating to the activities
of any Group Company;
15
"PROHIBITED AREA" means the United Kingdom, the Republic of Ireland, the
Channel Islands, Japan, Europe and the United States of America;
"RESTRICTED PRODUCTS" means:
(a) all products which are manufactured, produced, distributed or
sold by any Group Company at the Completion Date (including
software products for use in the drug discovery, biotechnology,
chemical and pharmaceutical industries); and
(b) any other products which are of a type similar to and competing
with any of the products referred to in (a) above; and
"RESTRICTED SERVICES" means:
(a) all services which are supplied by any Group Company at the
Completion Date (including information technology services for
use in the drug discovery, biotechnology, chemical and
pharmaceutical industries); and
(b) any other services which are of a type similar to and competing
with any of the services referred to in (a) above.
7.2 RESTRICTIVE COVENANT IN FAVOUR OF THE COMPANIES AND THE PURCHASER
The Vendor undertakes with the Purchaser (for itself and as trustee for
each Group Company) that, without the prior consent in writing of the
Purchaser, it will not directly or indirectly whether by itself, its
employees or agents and whether on its own behalf or on behalf of any
other person or otherwise howsoever:
(a) for a period of 3 years from the date of Completion carry on, be
employed or otherwise engaged, concerned or interested in any
capacity (whether for reward or otherwise) in, provide any
technical, commercial or professional advice to, or in anyway
assist, any person which is or is about to be engaged in the
manufacture, production, distribution or sale of the Restricted
Products or any of them or the supply of the Restricted Services
or any of them in the Prohibited Area in competition with the
Business as carried on at the date of this Agreement provided
that the restriction in this clause 7.2(a) shall not operate to
prohibit the Vendor from holding in aggregate up to 3 per cent
of the nominal value of shares of any class of any company whose
shares are listed or dealt in on a recognised stock exchange;
(b) for a period of 3 years from the date of Completion in relation
to the Restricted Products or any of them or the Restricted
Services or any of them, or in relation to a business which may
in any way be the same as or similar to or in competition with
the Business, solicit, canvass, accept orders from or otherwise
deal with any person who:
16
(i) was a customer of any Group Company at any time during
the 3 years prior to Completion; or
(ii) at the date of Completion was in the process of
negotiating or contemplating doing business with any
Group Company;
(c) at any time for a period of 3 years from the date of Completion
knowingly assist any competitor of any Group Company to a
material extent in carrying on or developing any business which
may in any way be the same as or similar to or in competition
with the Business; or
(d) at any time during the period of 3 years from the date of
Completion seek to contract with or engage any person who has
been contracted with or engaged to manufacture, assemble, supply
or deliver products, goods, materials or services to any Group
Company at any time during the period of three years prior to
the date of this Agreement; or
(e) save in respect of the employment of continuing employees of the
Vendor, for a period of 3 years from the date of Completion
solicit or entice away or endeavour to solicit or entice away
from any Group Company, or employ, engage or conclude any
contract for services with, any director or senior manager
employed or otherwise engaged by that company on the date of
Completion, whether or not that person would commit any breach
of his contract of employment by reason of his leaving the
service of that company; or
(f) for a period of 3 years from the date of Completion employ or
otherwise engage, or conclude any contract for services with,
any person who at the date of Completion or during the period of
2 years prior thereto was employed or otherwise engaged (whether
as a director, employee, consultant or agent) by any Group
Company and who by reason thereof is or is reasonably likely to
be in possession of any Confidential Information; or
(g) at any time after Completion solicit or entice, or endeavour to
entice, any employee or consultant of the Group or the Purchaser
away from the Group or the Purchaser or employ or engage such a
person, or at any time entice or endeavour to entice any person
to breach his contract for services with the Group or the
Purchaser;
(h) at any time after Completion falsely represent itself as being
connected with or interested in the Group; or
(i) except as required by law at any time do or say anything likely
or calculated to lead any person, firm or company to withdraw
from or cease to continue offering to the Group any rights
(whether of purchase, sale, import, distribution, agency or
otherwise) then enjoyed by it or in any other way to cease to do
business or reduce the amount of business it transacts with any
member of the Group; or
17
(j) at any time after Completion carry on a business under the name
"Oxford Molecular" or "Chemical Design", "Health Designs",
"Genetics Computer Group", "GCG" or any part, combination or
abbreviation thereof or any similar or other name likely to
confuse or mislead any part of the public, provided that the
Purchaser acknowledges that the Vendor's corporate name will
remain as Oxford Molecular Group PLC until the extraordinary
general meeting of the Vendor to be held on 11th September 2000
but the Vendor undertakes with the Purchaser that, from
Completion, it will not use the Oxford Molecular pillar device.
7.3 USE OF CONFIDENTIAL INFORMATION
(a) The Vendor undertakes with the Purchaser (for itself and as
trustee for each Group Company) that:
(i) it will not at any time after Completion directly or
indirectly (subject to clause 7.3(b)) without the
consent of the relevant Group Company use, whether on
its own behalf or on behalf of any other person, or
divulge to any other person, any Confidential
Information; and
(ii) if any Group Company shall have obtained any
Confidential Information from any third party under
an agreement including any restriction on disclosure
known to the Vendor, it will not at any time without
the consent of relevant Group Company infringe that
restriction.
(b) The restrictions in clause 7.3(a) shall not apply:
(i) in respect of any Confidential Information which is
in or becomes part of the public domain, other than
through a breach of the obligations of
confidentiality set out in this Agreement; or
(ii) to the Vendor to the extent that it is required to
disclose Confidential Information 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 to which it is subject, and in such an event the
Vendor shall first notify the Purchaser and consult
with the Purchaser to the extent practicable.
7.4 ACKNOWLEDGEMENT BY THE VENDOR IN RELATION TO THE NATURE AND EXTENT OF
THE RESTRICTIVE COVENANTS IN THIS CLAUSE 7
(a) The Vendor agrees with the Purchaser (for itself and as trustee
for each Group Company) that the restrictive covenants in this
clause 7 are reasonable and necessary for the protection of the
value of the Sale Shares having regard to that fact those
covenants do not work harshly on it.
18
(b) The Vendor acknowledges that it has had the opportunity to take
independent advice on the restrictions in this clause 7.
7.5 PARTIES TO AMEND TO THE RESTRICTIONS IN THIS CLAUSE 7 IN CERTAIN
CIRCUMSTANCES
Whilst the Parties acknowledge that the restrictions in this clause 7
are considered by them to be reasonable in all the circumstances, it is
agreed that if any of those restrictions, by themselves or taken
together, shall be adjudged to go beyond what is reasonable in all the
circumstances for the protection of the legitimate interests of the
Purchaser but would be adjudged reasonable if part or parts of the
wording in this clause 7 (including clause 7.1) were deleted or amended
or qualified or the periods thereof were reduced or the range of
products and services or area dealt with were thereby reduced in scope,
then the relevant restriction or restrictions shall apply on the basis
of such modification or modifications to this clause 7 as may either be
necessary or as may reasonably be required by the Purchaser to make it
or them valid and effective.
7.6 RESTRICTIVE COVENANTS
The Vendor confirms that from Completion, it will hold on trust (in
respect of which the Vendor shall act in accordance with the reasonable
instructions of the Purchaser but subject only thereto, may act in its
absolute discretion) for the Purchaser absolutely the benefit of any
non-compete obligations contained in the terms of employment of any
employees of any member of the Vendor's Group expressed to be entered
into for the benefit of any of the Group Companies.
8 WARRANTIES AND REPRESENTATIONS
8.1 Subject to the limitations on the Vendor's liability pursuant to the
provisions of clause 10 and schedule 13, the Vendor represents and
warrants to and undertakes with the Purchaser that, save only as and to
the extent fairly disclosed to the Purchaser in this Agreement or in the
Disclosure Letter, each of the Warranties is now true and accurate and
will continue to be true and accurate on each day from now up to and
including Completion as if repeated on each such day with reference to
the facts which shall then exist.
8.2 The Vendor acknowledges that it has previously made representations to
the Purchaser in the terms of the Warranties with the intention of
inducing the Purchaser to enter into this Agreement; and the Purchaser
confirms and the Vendor acknowledges that the Purchaser has relied on
those representations and has accordingly been induced by the Vendor to
enter into this Agreement.
8.3 Each of the Warranties, covenants, indemnities and undertakings set out
in this Agreement or the Tax Deed is separate and independent.
8.4 The Vendor agrees with the Purchaser for itself and as trustee for each
Group Company and each of their respective officers and employees to
irrevocably and unconditionally waive any rights remedies or claims
which it may have in respect of any misrepresentation in or omission
from any information or advice
19
supplied or given by the Companies and the Subsidiaries or their
respective officers, employees or agents and on which they have relied
in giving the Warranties, in preparing the Disclosure Letter or in
agreeing to give the Tax Deed unless such misrepresentation or
omission was made fraudulently.
9 BREACH OF WARRANTY
9.1 Without restricting the rights or the ability of the Purchaser to claim
damages on any basis if it shall be found that any matter which is the
subject of any of the Warranties is not as represented, warranted or
undertaken then, if the Purchaser shall so elect by notice in writing to
them, the Vendor shall on demand pay to the Purchaser:
(a) a sum equal to the amount by which the value (or amount) at
Completion of any asset or liability of the Companies or any of
the Subsidiaries (computed for this purpose on the basis that
full provision was made for the facts and circumstances in
relation to which such breach arose) was less or, in the case of
a liability, greater than the value (or amount) at Completion of
such asset or liability (computed for this purpose on the
assumption that the facts and circumstances had been such as to
involve no such breach); and
(b) all costs and expenses incurred by the Companies and/or the
Subsidiaries and/or the Purchaser as a result of such breach,
together with such other amounts as shall be required to
compensate them for any other loss or damage which they shall
have suffered including loss of prospective profits.
9.2 The Vendor will forthwith notify (in writing) the Purchaser of any
matter or thing which may arise or become known to any of them after the
date of this Agreement (whether or not prior to Completion) which is
inconsistent with any of the Warranties or which might give rise to a
claim under the Tax Deed or which is or may reasonably be anticipated to
be material to be known by a purchaser for value of the Sale Shares.
9.3 Any matter or thing so notified shall not be and shall not be deemed to
be a disclosure for the purpose of qualifying or limiting the liability
of the Vendor pursuant to this Agreement or the Tax Deed.
9.4 If before Completion:
(a) any breach or breaches of the Warranties or liability of the
Vendor under the Tax Deed comes to the notice of the Purchaser
in respect of which the liability the Vendor in aggregate would
exceed US$1,000,000; or
(b) the Vendor is in material breach of any obligation on its part
under this Agreement or any related agreement and, where that
breach is capable of remedy, it is not remedied to the
Purchaser's satisfaction;
20
the Purchaser may (without prejudice to any other rights or remedies
available to the Purchaser and without any liability to the Vendor)
elect not to complete the purchase of the Sale Shares by giving notice
in writing to the Vendor's Solicitors.
10 LIMITATION OF LIABILITY
10.1 The provisions of this clause shall operate to limit the liability of
the Vendor under the Warranties and, where expressly provided, the Tax
Deed and references to "breach", "claim" and "liability" (and any
similar expression) shall, unless the context otherwise requires, be
references to a breach of or a claim or liability arising under the
Warranties and, where expressly provided, the Tax Deed notwithstanding
any other provisions contained in this Agreement or the Tax Deed.
10.2 No claim shall be made under the Warranties or the Tax Deed unless the
Vendor shall have been given written notice of that claim by or on
behalf of the Purchaser together with such material details of which the
Purchaser shall then be aware of the specific matter in respect of which
a claim is made prior to the first anniversary of the date of Completion
other than in respect of a liability which shall arise from fraud or
wilful default in which case there shall be no limitation.
10.3 Notwithstanding any other provision of this Agreement or the Tax Deed,
the maximum aggregate liability of the Vendor under the Warranties,
schedule 10 (other than the deductions to be made on Completion under
paragraph 5 of schedule 10) and the Tax Deed shall not exceed
$2,000,000, any such liability to be satisfied by the release of the
Retention to the Purchaser in accordance with the provisions of schedule
6 (Retention) and not by direct payment from the Vendor.
10.4 The provisions of schedule 13 (Vendor protection schedule) shall apply
to limit the liability of the Vendor under the Warranties and, where
expressly provided, the Tax Deed.
11 PAYMENTS TO THE VENDOR
11.1 Any amounts payable to the Vendor pursuant to this Agreement may be paid
by telegraphic transfer to the following account of the Vendor's
Solicitors (or such other account of the Vendor's Solicitors as may be
notified to the Purchaser in writing by the Vendor for this purpose from
time to time):
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Account name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co Client Account
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11.2 VENDOR'S SOLICITORS AUTHORISED TO RECEIVE PAYMENTS
The Vendor's Solicitors are hereby irrevocably authorised by the Vendor
so to receive any such amount and receipt of any such amount in such an
account and the receipt of the Vendor's Solicitors for any such amount
shall be good, valid and effectual discharge for the Purchaser respect
of such amount.
12 GENERAL
12.1 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 Purchaser's rights in relation to this
Agreement or any other Transaction Document.
12.2 ANNOUNCEMENTS AND CIRCULARS
Save as (but only to the extent) expressly required by law or by the
Listing Rules or by any relevant national or supra-national regulatory,
governmental or quasi-governmental body or authority, all announcements
or circulars by, of or on behalf of any of the Parties and 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.
12.3 RELEASES AND WAIVERS
(a) Either Party may, in its discretion, in whole or in part
release, compound, compromise, 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 in respect of
that obligation or liability without in any way prejudicing or
affecting the liability of, or its rights against, any other of
that Party in respect of the same or a like obligation or
liability.
22
(b) Subject to clause 12.3(c), neither the single or partial
exercise or temporary or partial waiver by either Party of any
right, nor the failure by either 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 either 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.
(c) All references in clause 12.3(b) to:
(i) 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, either Party; and
(ii) any failure to do something shall include any delay in
doing it.
(d) The giving by either 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.
12.4 NOTICES
(a) Any notice or other document to be given under this Agreement
shall be in writing in the English language.
(b) Notice details for the Parties are as follows:
ADDRESSEE/MARKED FOR
PARTY ADDRESS THE ATTENTION OF
-------------------------------------------------------------------
The Vendor Its registered office Chairman
for the time being
-------------------------------------------------------------------
The Purchaser ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
-------------------------------------------------------------------
The Guarantor CN 5350 Chief Executive Officer
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
▇▇▇
-------------------------------------------------------------------
A Party may change its notice details for the purpose of this
clause 12.4 by giving notice to all the Parties to this
Agreement in accordance with this clause 12.4.
23
(c) PROOF OF NOTICE BEING PROPERLY GIVEN
In proving the giving of a notice, it shall be conclusive
evidence to prove:
(i) if delivered by hand, that the notice was left at the
appropriate address specified in clause 12.4(b); or
(ii) if sent by post, that the envelope containing such
notice was properly addressed and posted.
(d) WHEN NOTICES ARE TO BE DEEMED RECEIVED
If a notice is:
(i) delivered by hand between 9.00 am and 5.00 pm on a
Business Day (such time period being referred to in
this clause 12.4(d) 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;
(ii) sent by post:
(A) if the notice was posted on a Business Day, it
shall be deemed received at 9.00 am on the
second Business Day after the day the
envelope containing such notice was posted; or
(B) if the notice was not posted on a Business Day,
it shall be deemed received at 9.00 am on the
third Business Day after the day on which the
envelope containing such notice was posted.
(e) Any reference in this clause 12.4 to a particular time is to
that time in the location of the recipient of the relevant
notice.
12.5 TIME
(a) 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.
(b) Save where stated otherwise in clause 12.4, all references to
time in this Agreement are to London time
24
12.6 ENTIRE AGREEMENT
(a) This Agreement (together with all of the other Transaction
Documents) sets out the entire agreement and understanding
between the Parties in connection with the sale and purchase of
the Sale Shares and other matters described in them.
(b) 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.
12.7 ALTERATIONS
No purported alteration of this Agreement shall be effective unless it
is in writing, refers specifically to this Agreement and is duly
executed by each Party to this Agreement.
12.8 SEVERABILITY
(a) 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 for impaired.
(b) If any provision of this Agreement is illegal or unenforceable
as a result of any time period being stated to endure for a
period in excess of that permitted by a regulatory authority,
that provision shall take effect with a time period that is
acceptable to the relevant regulatory authority subject to it
not negating the commercial intent and purpose of the Parties in
entering into this Agreement.
12.9 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.
25
12.10 PAYMENT OF COSTS
(a) Other than in the circumstances specified in clause 12.10 (c),
if the circular contemplated by clause 15.1(b)(i) below is
posted but the resolution referred to in the OMG Shareholder
Condition is not passed on or before 31st August 2000
notwithstanding that the recommendation from the directors of
the Vendor contained in the circular referred to in 15.1(b)(i)
below to vote in favour of the resolution had not been
withdrawn, the Vendor shall pay to the Purchaser the sum of
US$500,000 in cash for value within 5 UK Business Days of 31st
August 2000.
(b) Other than in the circumstances specified in clause 12.10 (c),
if the circular contemplated by clause 15.1(b)(i) below:
(i) is not posted in accordance with clause 15.1(b)(i)
below; or
(ii) is posted in accordance with clause 15.1(b)(i) below
but the resolution referred to in the OMG Shareholder
Condition is not passed on or before 31st August 2000
in circumstances other than as referred to in clause
12.10(a),
the Vendor shall pay to the Purchaser the sum of US$1,500,000 in
cash for value within 5 UK Business Days of 31st August 2000.
(c) If the resolution referred to in the OMG Shareholder Condition
is not passed on or before 31st August 2000 and on or before
that date any person has made or indicated a firm intention to
make an offer or tender for shares in the Vendor (in each case
as determined under the rules of the UK Panel on Takeovers and
Mergers), the Vendor shall pay to the Purchaser the sum of
US$200,000 in cash for value within 5 UK Business Days of 31st
August 2000.
(d) For the avoidance of doubt, the Vendor shall not in any
circumstances be obliged to make payment under more than one of
sub-paragraphs (a), (b) and (c) above.
(e) If clause 12.10(a), (b) or (c) applies, this Agreement shall
terminate immediately (but without prejudice to the Vendor's
obligations under clause 12.10(a), (b) or (c)) and the parties
shall have no further obligations to each other save in respect
of the Purchaser's accrued rights arising from any prior breach
of this Agreement.
(f) Each of the Parties shall be responsible for its respective
legal and other costs and expenses incurred in relation to the
negotiation, preparation and completion of this Agreement and
all ancillary documents subject to the break fee arrangement
referred to above.
26
(g) For the avoidance of doubt, any legal, investment banking,
accounting or other costs incurred by the Vendor or the
Companies in relation to the negotiation, preparation and
completion of this Agreement and all ancillary documents shall
be borne by the Vendor and not by the Companies.
12.11 SUCCESSORS AND ASSIGNS
(a) This Agreement shall be binding on, and shall enure for the
benefit of, the successors in title of each Party.
(b) Neither Party may be entitled to assign the benefit of any
rights under this Agreement.
(c) Pursuant to section 1 (2)(a) Contracts (Rights of Third Parties)
▇▇▇ ▇▇▇▇, the Parties intend that no term of this Agreement may
be enforced by any third party and reserve the right pursuant to
section 2(3)(a) of that Act to vary the contract made by this
Agreement without the consent of any other person.
13 CHOICE OF LAW, SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS
13.1 CHOICE OF LAW
(a) 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.
(b) 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 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.
13.2 SUBMISSION TO JURISDICTION
(a) 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.
(b) Each Party irrevocably waives any right that it may have:
(i) 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
27
inconvenient forum, or to claim that the Courts of
England and Wales do not have jurisdiction. The
waiver contained in this clause 13.2(b)(i) includes
(without limitation) a waiver of all formal and
substantive requirements of any otherwise competent
jurisdiction in relation to this clause 13.2(b)(i);
(ii) to oppose the enforcement of any judgment of any
court of England and Wales whether on any ground
referred to in clause 13.2(b)(i) or otherwise.
13.3 SERVICE OF PROCESS
(a) 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 12.4.
(b) Notwithstanding and without prejudice to the foregoing, the
Purchaser appoints the Purchaser's Solicitors as its agent to
receive service of process in respect of any proceedings
commenced by the Purchaser in the Courts of England and Wales
arising out of or in connection with this Agreement.
(c) 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 its
address given in this Agreement (or such other address of the
Purchaser's Solicitors in England as the Purchaser's Solicitors
or the Purchaser may notify in writing to the Vendor) pursuant
to the Rules of Civil Procedure for the time being in force
shall constitute good service on the Purchaser. The Purchaser
undertakes 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.
14 EXCLUSIVITY
-----------
14.1 The Vendor agrees that, pending Completion or the earlier termination of
the obligations of the parties under this Agreement, it will not, and
will procure that none of its subsidiaries, nor any director, officer,
employee, agent or adviser of the Vendor or any such member, will
solicit any offers or indications of interest from any parties in
relation to an offer for the whole of the share capital of the Vendor or
any of its direct or indirect subsidiaries or the purchase of any of the
property, assets or undertakings of the Vendor or its direct or indirect
subsidiaries (or any substantial part thereof).
28
14.2 Pending Completion, the Vendor shall notify the Purchaser promptly upon
receipt of any offer or indication of interest of the kind referred to
in clause 14.1.
15 UNDERTAKINGS
------------
15.1 UNDERTAKING BY THE VENDOR TO CONVENE MEETING
The Vendor specifically undertakes, without prejudice to its obligations
under clause 12.10:
(a) to post, and do nothing to prevent or delay the posting of, a
circular in the agreed form complying with the requirements of
the Listing Rules to the shareholders of the Vendor not later
than the third UK Business Day following the date of this
Agreement (or, if later, the Business Day following the date on
which the UKLA stamps or otherwise indicates its approval to the
form of such circular, and the Vendor undertakes to submit such
circular to the UKLA for such stamping or approval not later
than the second UK Business Day following the date of this
Agreement) and containing, subject always to the fiduciary
duties of the directors of the Vendor and to their obligations
under the UK Takeover Code, a recommendation to such
shareholders to vote in favour of the resolution referred to in
the OMG Shareholder Condition and incorporating a notice of
extraordinary general meeting in the agreed form convening such
meeting for the earliest possible date following the posting of
the circular as referred to above;
(b) subject always to the fiduciary duties of the directors of the
Vendor and to their obligations under the UK Takeover Code, not
to adjourn the meeting to pass the resolution referred to in
clause 15.1(a) save as may be required by law or pursuant to the
articles of association of the Vendor; and
(c) subject always to the fiduciary duties of the directors of the
Vendor and to their obligations under the UK Takeover Code, to
procure that any poll at the meeting to pass the resolution
referred to in clause 15.1(a) shall be held forthwith.
16 GUARANTEE
---------
16.1 In this clause the expression the "PURCHASER'S OBLIGATIONS" means all
the obligations and liabilities (including contingent liabilities) of
the Purchaser under or otherwise arising out of or in connection with
this Agreement or the Tax Deed (as any of such obligations and
liabilities may from time to time be varied, extended, increased or
replaced).
16.2 In consideration of the Vendor entering into this Agreement or the Tax
Deed the Guarantor unconditionally and irrevocably guarantees to the
Purchaser the due and punctual performance of all the Purchaser's
Obligations and undertakes to keep the Vendor fully indemnified against
all liabilities, losses, proceedings,
29
claims, damages, costs and expenses of whatever nature which the
Vendor may suffer or incur as result of any failure or delay by the
Purchaser in the performance of any of the Purchaser's Obligations.
The obligations of the Guarantor hereunder are as principal obligor
and not merely as surety (with the intention that any amount not
recoverable for any reason from the Guarantor under this Agreement or
the Tax Deed on the basis of a guarantee shall nevertheless be
recoverable from the Guarantor as if the Guarantor were the sole
principal debtor).
16.3 The Guarantor's obligations under this clause are continuing obligations
which:
(a) shall continue in full force and effect notwithstanding the
winding-up or dissolution of the Purchaser or the Guarantor or
any change in the status, function, control or ownership of the
Purchaser or the Guarantor;
(b) shall not be satisfied by any intermediate payment or
satisfaction of any part of any of the Purchaser's Obligations;
(c) shall remain in operation while any of the Purchaser's
Obligations remain potentially outstanding; and
(d) shall be in addition to and not in substitution for or in
derogation of any other security held by the Vendor in respect
of the Purchaser's Obligations.
16.4 The Guarantor agrees that its obligations shall not be in any way
discharged or impaired by any forbearance (whether as to payment or
otherwise) or any time or other indulgence given to the Purchaser in
relation to all or any of the Purchaser's Obligations or by any act,
thing, omission or means which, but for this provision, would or might
constitute a legal or equitable discharge or defence of the Guarantor.
16.5 The Guarantor agrees that so long as any of the Purchaser's Obligations
are or may be due or owed by the Purchaser to the Vendor, any rights
which the Guarantor may at any time have by reason of performance by the
Guarantor of its obligations hereunder to be indemnified by the
Purchaser or to be subrogated to the rights of the Purchaser shall not
be exercised by the Guarantor in competition with the Vendor.
16.6 If the Purchaser is wound up, goes into liquidation or makes any
composition or arrangement with its creditors, neither the existence of
the guarantee contained in this clause nor any monies received or
recovered by the Purchaser pursuant thereto shall impair the right of
the Vendor to prove in such winding up, liquidation, composition or
arrangement for the total amount due for the time being from the
Purchaser. The Guarantor agrees not to prove in competition with the
Vendor but if for any reason it should receive a dividend or other
payment in such liquidation, composition or arrangement it will apply
the amount thereof in satisfying any outstanding liabilities it may have
to the Vendor under this clause 16.
30
16.7 To the extent permitted by law, the Guarantor hereby waives and agrees
not to assert or take advantage of:
(a) any right to require the Vendor to proceed against the Purchaser
or any other person or to proceed against the Purchaser at any
time or to pursue any other remedy in the Vendor's power or
under any other agreement before proceeding against the
Guarantor under this Agreement;
(b) any defence that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or
the failure of the Vendor to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding)
of any other person or persons;
(c) demand, presentment for payment, notice of non-payment, protest,
notice of protest and all other notices of any kind, or the lack
of any thereof, including, without limiting the generality of
the foregoing, notice of the existence, creation or incurring of
any new or additional obligation or of any action or non-action
on the part of the Purchaser, the Vendor, any creditor of the
Vendor or of the Guarantor or on the part of any other person
whomsoever under this or any other instrument in connection with
any of the Purchaser's Obligations;
(d) any defence based upon an election of remedies by the Vendor;
(e) any right or claim or right to cause a marshalling of the assets
of the Vendor;
(f) any duty on the part of the Vendor to disclose to the Guarantor
any facts the Vendor may hereafter know about the Purchaser or
its business and assets (including the Group), it being
understood and agreed that the Guarantor is fully responsible
for being and keeping informed of the financial condition of the
Purchaser, of the condition of the Purchaser or its business and
assets (including the Group) and of any and all circumstances
bearing on the risk that liability may be incurred by the
Guarantor under this Agreement;
(g) except to the extent that such matters excuse the Purchaser's
performance of the Purchaser's Obligations, any invalidity,
irregularity or unenforceability, in whole or in part, of this
Agreement;
(h) except to the extent such matters excuse the Purchaser's
performance under this Agreement, any deficiency in the ability
of the Vendor to collect or to obtain performance from any
persons or entities now or hereafter liable for the payment and
performance of any of the Purchaser's Obligations hereby
guaranteed;
(i) any assertion or claim that the automatic stay provided by 11
U.S.C. Section 362 (arising upon the voluntary or involuntary
bankruptcy proceeding of the Purchaser) or any other stay
provided under any other debtor relief
31
law (whether statutory, common law, case law or otherwise) of
any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit
the ability of the Vendor to enforce any of its rights,
whether now or hereafter required, which the Vendor may have
against the Guarantor; or
(j) any modifications of this Agreement or any obligation of the
Purchaser relating to this Agreement by agreement between the
Purchaser and the Vendor and/or by operation of law or by action
of any court, whether pursuant to the United States Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or
otherwise.
IN WITNESS whereof this Agreement has been entered into as a Deed on the
date specified above.
32
SCHEDULE 1
THE GROUP
PART A - THE COMPANIES
1 OXFORD MOLECULAR LIMITED
------------------------
1.1 Date of incorporation: 20th March 1989
1.2 Registered number: 2363378
1.3 Registered office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
1.4 Authorised share capital: GBP35,000 divided into 1,700,000
ordinary shares of 1p each,
300,000 preferred ordinary
shares of 1p each and 1,500,000
B preferred ordinary shares of
1p each
1.5 Issued share capital: GBP32,229.59 divided into
1,522,959 ordinary shares of 1p,
300,000 preferred ordinary
shares of 1p and 1,400,000 B
preferred ordinary shares of 1p.
1.6 Directors: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
1.7 Secretary: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
1.8 Accounting reference date: 31st December
1.9 Outstanding mortgages or charges: None
1.10 Options or warrants: None
2 CHEMICAL DESIGN HOLDINGS PLC
----------------------------
2.1 Date of incorporation: 16 May 1996
2.2 Registered number: 3199820
2.3 Registered office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
2.4 Authorised share capital: GBP1,600,000 divided into
16,000,000
shares of 10p each
2.5 Issued share capital: 6,705,095 ordinary shares of 10p
33
2.6 Directors: ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
2.7 Secretary: ▇▇▇▇▇▇ ▇▇▇▇▇▇
2.8 Accounting reference date: 31st December
2.9 Outstanding mortgages or charges: None
2.10 Options or Warrants: None
3 OXFORD MOLECULAR GROUP INC.
---------------------------
3.1 Date of incorporation: 4th April 1986 (Delaware)
3.2 Registered number: 2087653
3.3 Authorised share capital: 300,000 shares of Class A common
stock
100,000 shares of Class B common
stock
3.4 Issued share capital: 135,424 shares of Class A common
stock
40,000 shares of Class B common
stock
3.5 Officers: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
3.6 Accounting reference date: 31st December
3.7 Outstanding mortgages or charges: None
3.8 Options or Warrants: None
34
PART B - SUBSIDIARIES OF THE COMPANIES
1 CHEMICAL DESIGN LIMITED
-----------------------
1.1 Data incorporation: 14 February 1983
1.2 Registered number: 1699068
1.3 Registered office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
1.4 Authorised share capital: 12,000 ordinary shares of GBP1
1.5 Issued share capital: 10, 889 ordinary shares of GBP1
1.6 Directors: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
1.7 Secretary: ▇▇▇▇▇▇ ▇▇▇▇▇▇
1.8 Accounting reference date: 31 December
1.9 Outstanding mortgages or charges: None
1.10 Option or warrants: None
2 CHEMICAL DESIGN INTERNATIONAL LIMITED
-------------------------------------
2.1 Date of incorporation: 29 April 1988
2.2 Registered number: 2249786
2.3 Registered office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
2.4 Authorised share capital: 1,000 ordinary shares of GBP1
2.5 Issued share capital: 100 ordinary shares of GBP1
2.6 Directors: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
2.7 Secretary: ▇▇▇▇▇▇ ▇▇▇▇▇▇
2.8 Outstanding mortgages and charges: None
2.9 Accounting reference date: 31 December
35
2.10 Options or warrants: None
3 CHEMICAL DESIGN (SUPPLIES) LIMITED
----------------------------------
3.1 Date of incorporation: 23 April 1996
3.2 Registered number: 3189311
3.3 Registered office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇
3.4 Authorised share capital: 100 ordinary shares of GBP1
3.5 Issued share capital: 4 ordinary shares of GBP1
3.6 Directors: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
3.7 Secretary: ▇▇▇▇▇▇ ▇▇▇▇▇▇
3.8 Accounting reference date: 31 December
3.9 Outstanding mortgages or charges: None
3.10 Options and warrants: None
4 CHEMICAL DESIGN SARL
--------------------
4.1 Registered number: 41449088800016
4.2 Registered office: ▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
4.3 Authorised Share Capital Ffr 50,000
4.4 Issued Share Capital Ffr 500
4.5 Officers: L ▇▇▇▇▇▇▇▇▇ (Gerant)
4.6 Accounting reference date: 31st December
4.7 Outstanding mortgages or charges: None
4.8 Options and warrants: None
5 CHEMICAL DESIGN INC.
--------------------
5.1 Date of incorporation: 5 June 1985 (New Jersey)
5.2 Authorised share capital: 100
36
5.3 Issued share capital: 20
5.4 Officer: ▇▇▇▇ ▇▇▇▇▇▇▇
5.5 Accounting reference date: 31 December
5.6 Outstanding mortgages or charges: None
5.7 Options and warrants: None
6 CHEMICAL DESIGN (WEST COAST) INC.
---------------------------------
6.1 Date of Incorporation: 14th May 1997 (California)
6.2 Registered number: 1908079
6.3 Authorised share capital: 25,000 shares of common stock
6.4 Issued share capital:
6.5 Officers: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ Bogdiukiewicz, ▇▇▇▇▇▇▇ ▇▇▇▇
6.6 Accounting reference date: 31st December
6.7 Outstanding mortgages or charges: None
6.8 Options and warrants: None
7 OXFORD MOLECULAR SA
-------------------
7.1 Registered number: 38809641400023
7.2 Registered office: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
7.3 Authorised Share Capital Ffr 250,000 divided into 2,500
shares of ▇▇▇ ▇▇▇ each
7.4 Issued Share Capital: Ffr 250,000
7.5 Officers: ▇▇ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ (President)
▇▇▇▇ ▇▇▇▇▇ (Secretary)
7.6 Accounting reference date: 31st December
7.7 Outstanding mortgages or charges: None
37
7.8 Options and warrants: None
8 HEALTH DESIGNS INC.
8.1 Date of incorporation: 17 July 1978 (New York)
8.2 Authorised share capital: 4,000,000 common shares of US$0.01
8.3 Issued share capital: 2,557,038 common shares of US$0.01
8.4 Directors: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
8.5 Officers:
8.6 Accounting reference date: 31 December
8.7 Outstanding mortgages or charges: None
8.8 Options and warrants: None
9 GENETICS COMPUTER GROUP, INC.
9.1 Date of incorporation: 9 November 1989 (Wisconsin)
9.2 Authorised share capital: 2,800 shares (without par value)
9.3 Issued share capital: 750 shares (without par value)
9.4 Directors: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
9.5 Officers: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
9.6 Accounting reference date: 31 December
9.7 Outstanding mortgages or charges: None
9.8 Options and warrants: None
38
SCHEDULE 2
Completion Matters
1 GENERAL
1.1 This schedule 2 is set out in the following paragraphs:
1 General.
2 Documents and other items to be delivered by the Vendor.
3 Obligations of the Vendor.
4 Obligations of the Purchaser.
5 Joint obligations of the Purchaser and the Vendor.
2 DOCUMENTS AND OTHER ITEMS TO BE DELIVERED BY THE VENDOR
2.1 The following documents and other items set out in the remainder of this
paragraph 2 shall be delivered by the Vendor to the Purchaser at
Completion.
THE SALE SHARES
2.2 Transfers in respect of the Sale Shares (together with any transfers
referred to in paragraph 2.3, "the Share Transfers") duly executed and
completed in favour of the Purchaser or its nominee(s)
2.3 Duly executed transfers (in favour of such person or persons as the
Purchaser may direct or have directed) of all shares, stock or other
interests in any Subsidiary not registered in the name of the Companies
or any other Group Company.
2.4 Certificates for the Sale Shares and any shares in any subsidiary of the
Companies or an indemnity in respect of any lost share certificate in
the agreed form.
2.5 Duly executed powers of attorney or other authorities in the agreed form
under which any of the Share Transfers has been executed.
2.6 Such other documents as may be required to give a good title to the Sale
Shares and to enable the Purchaser or its nominees to become the
registered holders thereof, provided that, for the avoidance of doubt,
the Vendor shall not, notwithstanding any other provision of this
Agreement, be responsible for any stamp duty or stamp duty reserve tax
in respect of the sale and transfer of the Sale Shares under this
Agreement.
39
BOARD MINUTES OF THE VENDOR AND MINUTES AND RESOLUTIONS OF EGM
2.7 Certified copies of the board minutes for the Vendor recording the
resolution of the Board of Directors of the Vendor authorising:
(a) the sale of the Sale Shares held by the Vendor;
(b) the execution of the transfers in respect of such Sale Shares;
(c) the execution of this Agreement and all relevant Transaction
Documents; and
(d) the payment up of any shares allotted in accordance with clause
4.
2.8 Certified copies of the minutes and resolutions passed at an
extraordinary general meeting of the Vendor approving this Agreement
referred to in part A of schedule 3.
STATUTORY RECORDS AND MINUTE BOOKS
2.9 As agent for each Group Company:
(a) all its statutory and minute books (duly written up to
immediately preceding Completion);
(b) its common seal (if any);
(c) its certificate of incorporation, any certificate or
certificates of incorporation on change of name;
(d) copies of its memorandum and articles of association; and
(e) management accounts of the Companies for the period to 30 June
2000 which the Vendor undertakes with the Purchaser to procure
are prepared on the same basis as the Management Accounts
(assuming compliance with the Warranty relating thereto).
DIRECTORS' AND SECRETARIES' RESIGNATIONS AND CONFIRMATIONS
2.10 Written resignations of the Retiring Directors and the Retiring
Secretary in the agreed form resigning their respective offices.
EVIDENCE OF RELEASE OF GUARANTEES
2.11 Evidence in a form satisfactory to the Purchaser that all Guarantees and
Security Interests given by any Group Company in respect of liabilities
of:
(a) the Vendor;
(b) any member of the Vendor's Group
40
have been released.
2.12 all deeds and documents of title relating to the Properties (including
all insurance policies, premium receipts, maintenance contracts and
other documents relating to the Properties) and certified copies of any
documents being held by mortgagees;
2.13 a letter from the Vendor specifying the whereabouts of any other
documents, books and records of the Companies and the Subsidiaries which
are not held at the Properties including any books and records of the
Group held by the Vendor and directing the holders of them to deliver
them up to the Purchaser's authorised representatives immediately upon
request;
2.14 certificates from each of the banks at which the Companies and the
Subsidiaries maintain accounts of the amounts standing to the credit or
debit of such accounts at the close of business on the second business
day preceding Completion together with a list of all unpresented cheques
and uncleared lodgements which upon presentation or clearance would be
debited or credited to such accounts;
2.15 a letter signed by the Vendor either confirming that there are no
matters or things which have arisen or become known to it which ought to
be notified to the Purchaser in accordance with clause 9.2 or giving
full details of any such matters or things; and
2.16 the Tax Deed duly executed by the Vendor.
3 OBLIGATIONS OF THE VENDOR
CONDITIONS PRECEDENT
3.1 The Vendor shall produce evidence of the fulfilment of the OMG
Shareholder Condition.
BOARD MEETING
3.2 The Vendor shall procure that a duly convened and quorate board meeting
of each Group Company is held at which:
REGISTRATION OF THE SHARE TRANSFERS
(a) 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 relevant
Group Company and any shares are allotted in accordance with
clause 4 (specifying the amount of indebtedness repaid by such
allotment);
APPOINTMENTS AND RESIGNATIONS OF DIRECTOR(S) AND SECRETARY
(b) the following persons are validly appointed as additional
directors of the relevant Group Company specified below:
41
NAME OF NEW DIRECTOR TO BE A DIRECTOR OF (NAME OF
GROUP COMPANY)
-------------------------------------------------------
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ All
-------------------------------------------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇ All
-------------------------------------------------------
(c) on the appointments referred to in paragraph 3.2(b) being made,
the following persons ("THE RETIRING DIRECTORS") cease to be
directors and employees of the relevant Group Company specified
below:
NAME OF RETIRING DIRECTOR NAME OF GROUP COMPANY
FROM WHICH THE RETIRING
DIRECTOR IS RETIRING AS A
DIRECTOR
-------------------------------------------------------
▇ ▇ ▇▇▇▇▇▇▇▇▇ All of which he is a director
-------------------------------------------------------
▇▇ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇ All of which he is a director
-------------------------------------------------------
P ▇▇▇▇▇▇ All of which he is a director
-------------------------------------------------------
▇▇ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ All of which he is a director
-------------------------------------------------------
(d) The following persons are appointed as secretary of the Group
Company specified in place of the relevant ("RETIRING
SECRETARY"):
NAME OF GROUP NAME OF NEW NAME OF RETIRING
COMPANY SECRETARY SECRETARY
--------------------------------------------------------
All ▇▇▇▇▇ ▇ ▇▇▇▇▇ P ▇▇▇▇▇▇
--------------------------------------------------------
AUDITORS
(e) the Auditors shall resign their office as auditors of each Group
Company by depositing their written notice of resignation in the
agreed form at the relevant 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 relevant Group
Company.
REPAYMENT OF AMOUNTS OWED
42
(f) The Vendor shall repay to the relevant Group Company, or procure
repayment to the relevant Group Company of, all indebtedness
outstanding at Completion from any director of the Vendor or of
any subsidiary of the Vendor.
4 OBLIGATIONS OF THE PURCHASER
4.1 The Purchaser shall pay the Initial Payment by electronic funds transfer
for value on the day of Completion in accordance with the provisions of
clause 11.
4.2 The Purchaser shall deliver to the Vendor a duly executed counterpart of
the Tax Deed at Completion.
5 JOINT OBLIGATIONS OF THE PURCHASER AND THE VENDOR
5.1 The Purchaser and the Vendor shall at Completion join in procuring that:
(a) Ernst & Young shall be appointed auditors of each Group Company
in place of the Auditors; and
(b) all existing bank mandates in force for each Group Company shall
be altered (in such manner as the Purchaser shall at Completion
require) to reflect the resignations and appointments referred
to in paragraph 3.2.
43
SCHEDULE 3
CONDITIONS AND PRE-COMPLETION RESTRICTIONS
PART A - THE CONDITIONS
1 The passing of a resolution by the shareholders of the Vendor in the
Agreed Form approving the transactions contemplated by this Agreement.
2 By the date due for Completion:
(a) no temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the
transactions contemplated hereby shall have been issued by any
court of competent jurisdiction or competent governmental agency
and remain in effect and there shall not be any law or
regulation enacted or deemed applicable to the transactions
contemplated hereby that makes Completion illegal; and
(b) no notice having been received by the Purchaser or the Vendor of
any threatened or pending investigation by a governmental
authority which:
(i) may reasonably result in such an order or injunction as
is referred to in sub-paragraph (a) above being made; or
(ii) would otherwise have a material adverse effect on the
Purchaser if the purchase of the Sale Shares hereunder
were to be consummated.
PART B - PRE-COMPLETION RESTRICTIONS
1 The Vendor undertakes with the Purchaser that prior to Completion it
will procure that:
(a) no action will be taken or omitted to be taken whereby any of
the Warranties would not at or before Completion be true and
accurate;
(b) no Group Company shall permit any of its insurance policies to
lapse or do or omit to do anything the doing or omission of
which could make any such insurance policy void or voidable or
which would or might result in an increase in the rate of
premiums of such policy of insurance;
(c) without prejudice to (g) below, each Group Company shall
continue to be provided with working capital to carry on its
business in the ordinary and normal course in the same amounts
and on the terms which currently prevail;
(d) the Purchaser and any person whom it may authorise for this
purpose shall be allowed reasonable access to all the books and
the records, agreements and other documents and assets belonging
to each Group
44
Company and the Vendor shall supply any information reasonably
required by the Purchaser relating to the Group;
(e) the business of the Group will be carried on prudently in the
ordinary and normal course, no transaction outside the ordinary
and normal course will be carried out without the prior written
consent of the Purchaser, the net assets of the Group will not
be depleted save in the ordinary and normal course of trading
and no action will be taken without the prior written consent of
the Purchaser which could have a material adverse effect upon
the Purchaser's conduct of the business of the Group;
(f) the proposed restructuring of the Group will continue as
previously disclosed to the Purchaser (details of which are
contained in the Disclosure Letter);
(g) the Group will continue to pay liabilities of the Group as they
fall due;
(h) no Group Company is involved in any discounting in respect of
its product sales which is unusual or otherwise than in the
ordinary and normal course of business; and
(i) no Group Company is involved in any factoring or discounting of
accounts receivable.
2 Without prejudice to the generality of paragraph 1, pending Completion
or the earlier termination of the obligations of the Parties under this
Agreement (except as required pursuant to this Agreement or with the
prior written consent of the Purchaser) the Vendor shall procure that no
Group Company shall:
(a) resolve to change its name or to alter its Memorandum or
Articles of Association;
(b) allot or issue or agree to allot or issue any shares or any
securities or grant or agree to grant rights which confer on the
holder any right to acquire any shares or other such interest;
(c) declare, pay or make any dividend or other distribution;
(d) repay, redeem or purchase any of its share capital;
(e) reduce its share capital;
(f) resolve to be voluntarily wound up;
(g) dismiss or make any material change in the terms or conditions
of employment or engagement of its employees, officers or
consultants save in accordance with the proposed restructuring
of the Group, details of which are contained in the Disclosure
Letter;
(h) enter into any settlement of a legal dispute;
45
(i) appoint new auditors; or
(j) appoint any additional director.
3 Without prejudice to the generality of paragraph 1 the Vendor shall
procure that none of the following matters shall be effected without the
prior consent in writing of the Purchaser:
(a) the modification of any of the rights attached to any shares in
any Group Company and the creation or issue of any shares or the
grant or agreement to grant any option or rights over any shares
or uncalled capital of any Group Company or the issue of any
obligations convertible into shares;
(b) the capitalisation or repayment of any amount standing to the
credit of any reserve of any Group Company or any reorganisation
of the share capital of any Group Company;
(c) the admission of any person (other than a Party to this
Agreement) whether by subscription or transfer or transmission
as a member of any Group Company;
(d) the sale or disposal of any part of the undertaking or the
assets of any Company other than in the ordinary course of
business or the acquisition of any assets other than trading
stock from any company which is a member of the same group (as
defined in section 170 TCGA) as the relevant Group Company;
(e) the giving by any Group Company of any guarantee or indemnity;
(f) the making of capital commitments or expenditure by any Group
Company in excess of GBP10,000 in aggregate or entering into any
contract in relation thereto;
(g) the acquisition by any Group Company of any shares of any other
company or the participation by any Group Company in any
partnership or joint venture;
(h) the borrowing of any money in excess of existing overdraft
limits by any Group Company;
(i) the creation or issue or allowing to come into being of any
Security Interest (save for liens arising by operation of law in
favour of trade suppliers in the ordinary course of business for
amounts not yet due) upon any part of the business, undertaking,
property or assets or uncalled capital of any Group Company or
the creation or issue of any debenture or debenture stock or the
obtaining of any advance or credit in any form other than normal
trade credit; or
46
(j) the acquisition, or agreement to acquire, by any Group Company
of equity interests in, or a substantial portion of the assets
of, any entity.
4 Prior to Completion the Vendor shall in relation to the management of
the Group's business consult with the Purchaser, allow the Purchaser or
its representatives freely to converse with the Group's employees.
5 The Purchaser shall not disclose to any third party (other than its
professional advisers) any confidential information relating to the
business of any Group Company which shall be obtained during the period
between the date of this Agreement and Completion, without the Vendor's
consent (which shall not be unreasonably withheld or delayed).
6 If at any time on or before Completion the Vendor fails to comply with
all or any of its obligations in accordance with this clause then the
Purchaser may, by written notice given by it or the Purchaser's
Solicitors to the Vendor or to the Vendor's Solicitors, elect to rescind
this agreement without prejudice to its remedies against the Vendor.
7 Nothing in this schedule shall operate to stop the Vendor settling or
otherwise dealing with any of the matters falling within the
Restructuring Liabilities, the Finance Lease Liabilities, the Additional
Liabilities and the Non-Assumed Liabilities (in each case as defined in
schedule 10).
47
SCHEDULE 4
The Properties
1. First and second floors of the Medawar Centre, Oxford Science Park,
Oxford.
2. Lease of Suite 14940 on the 1st floor of ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ dated 14th July 1997 and made between ▇▇▇▇▇▇▇
Realty I Limited Partnership (1) and Oxford Molecular Group, Inc. (2)
and Lease amendment dated 16th August 1999.
3. Lease of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ dated 23rd June 1998 and made between
University Research Park Facilities Corp (1) and Genetics Computer
Group, Inc. (2) and an amendment to Lease dated 1 May 1998.
4. Lease of Suite 1100 of Executive Plaza 111, 11350 ▇▇▇▇▇▇▇▇▇ Road, ▇▇▇▇
Valley MD 2103 dated 3rd July 1998 and made between Hill Management
Services Inc (1) and Oxford Molecular Group, Inc. (2) together with a
commencement addendum dated 1st January 1999.
5. Lease of ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ dated 3rd
September 1998 and made between Berkshire Realty Company (1) and Oxford
Molecular Group, Inc. (2).
6. Sub-lease of parts of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ dated April
1999 and made between Visient, Inc (1) and Oxford Molecular Group, Inc.
(2). Head lease dated 14th December 1995 and made between California
Public Employees Retirement System (1) and Object Technology Solutions,
LLC (2) (the predecessor in interest of Visient, Inc).
48
SCHEDULE 5
WARRANTIES
PART 1
GENERAL
1.1 APPLICABILITY OF WARRANTIES TO EACH GROUP COMPANY AND TO THE
SUBSIDIARIES
1.1.1 References in this schedule to the "Company" mean, save where otherwise
stated and where the context so permits, each member of the Group.
1.1.2 Each of the representations and warranties set out in this schedule
applies (where the context so permits) in relation to each of the
Subsidiaries as it applies to the Companies.
1.2 THE VENDOR
1.2.1 The Vendor is the beneficial and legal owner of the Sale Shares as set
out in schedule 1 and is entitled to sell the Sale Shares to the
Purchaser free from all liens charges and encumbrances without the
consent of any third party.
1.2.2 The Vendor has full power and authority to enter into this Agreement and
the other documents to be executed in connection with it, all of which
constitute (or will when executed constitute) legal and valid binding
obligations on it enforceable in accordance with their respective terms.
1.3 THE SALE SHARES
The Sale Shares constitute the whole of the issued and allotted share
capital of the Companies and are validly issued, fully paid or credited
as fully paid, and not subject to any lien.
1.4 ACCURACY OF INFORMATION
Save for earlier versions of documents attached to the Disclosure Letter
by reference to specific Warranties (for example the aged creditor
listing referred to in Warranty 7.2), all factual information contained
in the documents listed in the Data Room index or otherwise given by the
Vendor or its agents to the Purchaser or its agents relating to the
business, activities, affairs or assets or liabilities of the Companies
(other than the Accounts, Management Accounts and other financial
information relating to the Companies in respect of which warranty 3
below only shall apply) (including, without limitation, the replies made
by the Vendor or the Vendor's Solicitors to the questionnaires sent by
the Purchaser's Solicitors in relation to the Group) in the course of
the negotiations leading up to this Agreement was, when given, and is
now true, complete and accurate and not misleading (or, where any such
information constitutes forecasts or statements of belief or opinion,
that such forecasts were when given
49
and remain reasonably believed to be correct and achievable and such
statements were when made and remain honestly held on the basis of
reasonable enquiry and where any such information comprises copies
of documents produced by persons other than the Vendor, the
Companies or their respective employees, that such copies are accurate
copies of the original document).
1.5 ACCURACY OF DISCLOSURE LETTER
All statements of fact and information contained or referred to in and
all documents annexed to the Disclosure Letter (other than the Accounts,
Management Accounts and other financial information relating to the
Companies in respect of which warranty 3 below only shall apply) was,
when given to the Purchaser or its agents, and is now, true, complete
and accurate and not misleading (or, where any such information
constitutes forecasts or statements of belief or opinion, that such
forecasts were when given and remain reasonably believed to be correct
and achievable and such statements were when made and remain honestly
held on the basis of reasonable enquiry and where any such information
comprises copies of documents produced by persons other than the Vendor,
the Companies or their respective employees, that such copies are
accurate copies of the original document).
1.6 LICENCES TO PURCHASE SHARES
Subject to satisfaction of the OMG Shareholder Condition, all necessary
licences, authorisations, orders, grants, consents, permissions and
approvals to the sale of the Sale Shares by the Vendor have been
obtained and remain in full force and effect and there are no
circumstances which indicate that any of such licences, authorisations,
orders, grants, consents, permissions or approvals may be revoked or not
renewed, in whole or in part.
1.7 OVERSEAS SUBSIDIARIES
The representations and warranties set out in this schedule shall apply
(with any necessary amendments) to such of the Group Companies as are
incorporated or carry on business outside the United Kingdom. For this
purpose, the references to any statutory provision enacted, or
accounting principles applying, in the United Kingdom shall include
references to any corresponding provision in the local legislation and
(where relevant) to generally accepted accounting principles applying in
the country or state of incorporation; and the references to any
governmental or administrative authority or agency shall include
references to the equivalent federal state or local governmental or
administrative authority or agency; and the references to memoranda and
articles of association shall include references to the equivalent
documents (including bye laws, charters or statutes) which describe the
constitution of the relevant company.
50
PART 2
THE GROUP COMPANIES
2.1 THE COMPANIES
The information set out in part A of schedule 1 is correct.
2.2 SUBSIDIARIES
2.2.1 A Group Company is the sole beneficial owner of all the issued or
allotted shares of the Subsidiaries, all such shares are validly issued,
fully paid or credited as fully paid and, with respect to US companies
in the Group, non assessable, free of all Security Interests, and the
information set out in part B of schedule 1 and in schedule 11 is
correct.
2.2.2 Save for the Subsidiaries the Companies do not have, have not in the
past three years had and have not agreed to acquire any subsidiaries or
subsidiary undertakings; nor are they or have they in the past three
years been and have not agreed to become the legal or beneficial owner
of any share or loan capital of any company.
2.3 DIRECTORS
The Company does not have any directors, shadow directors or alternate
or associate directors other than the persons listed in schedule 1.
2.4 TRADING NAMES ETC
Save for the names of its software products, the Company uses (and
during the past three years has used) no name other than its corporate
name for any purpose.
2.5 AGENTS
2.5.1 No person is authorised to act as agent for the Company or to bind the
Company otherwise than the directors of the Company acting as the Board.
2.5.2 There are no powers of attorney given by the Company which are in force.
2.6 OVERSEAS AGENCIES
Other than as set out in schedule 1, the Company does not have any
branch, agency or any permanent establishment outside the United
Kingdom.
2.7 SHARE CAPITAL
2.7.1 Since the Balance Sheet Date, no share or convertible securities of the
Company (or any rights or interests therein) have been created, allotted
or issued or agreed to be created, allotted or issued.
51
2.7.2 There are no outstanding rights to call for the creation, allotment,
issue, transfer or conversion at any time of any share or loan capital
of the Company (or any rights or interests therein).
2.7.3 No shares in the capital of the Company have been issued and no transfer
of shares in the capital of the Company has been registered otherwise
than in accordance with the Articles of the Company for the time being
in force and, save for transfer of the Sale Shares under this Agreement,
all such transfers have been duly stamped.
2.8 STATUTORY AND OTHER REGULATIONS
2.8.1 The Company has at all times carried on business and conducted its
affairs in all respects in accordance with its Memorandum and Articles
of Association or other organisational documents for the time being in
force.
2.8.2 All licences, authorisations, orders, grants, consents, permissions,
declarations or filings with any applicable governmental authority and
approvals necessary to the proper carrying on of the business of the
Company have been obtained and are in full force and effect and:
2.8.2.1 the Company is not in breach of any of their terms or
conditions; and
2.8.2.2 so far as the Vendor is aware there are no circumstances which
would indicate that any of them may be revoked or not renewed, in whole
or in part, whether or not in the ordinary course of events.
2.8.3 Neither the Company nor, so far as the Vendor is aware, any of its
officers is in breach of or has failed to comply in full with any
statutory or municipal rules, regulations and provisions applying to or
affecting the business or activities of the Company and the Company has
no liability arising out of any such breach by any such officers
(whether or not the Vendor is aware of such breach).
2.8.4 All documents required by the Companies Act or any other legislation to
be filed with the Registrar of Companies or any other relevant body in
respect of the Company have been duly filed and were correct and due
compliance has been made with all other legal requirements in connection
with the formation of the Company and its conduct and all issues and
allotments of shares, debentures and other securities.
2.8.5 So far as the Vendor is aware, there are no investigations or enquiries
(pending, threatened or in existence) by or on behalf of any
governmental or other body in respect of the affairs of the Company. The
Company has not received any notice from a governmental authority
regarding any actual or possible violation of laws, rules or
regulations.
2.9 DATA PROTECTION ACT
The Company has complied with all requirements of the Data Protection
Act
52
1998.
2.10 STATUTORY BOOKS AND MEMORANDA AND ARTICLES OF ASSOCIATION
2.10.1 The Register of Members and other registers required by the Companies
Act or equivalent legislation to be kept by the Company (other than
accounting records to which Warranty 3.3 below only shall apply) contain
an accurate and complete record of the matters which they are required
to contain and there has been no notice of any proceedings to correct or
rectify any such books.
2.10.2 There is attached to the Disclosure Letter a true copy of the Memorandum
and Articles of Association of the Company which has embodied in it or
annexed to it a copy of every such resolution and agreement as is
referred to in section 380 of the Companies Act.
2.10.3 With respect of each Company organised in a state of the United States
of America, true and complete copies of the organisational documents and
minutes of director, committee and stockholder meetings have been
delivered to the Purchaser.
2.11 INSOLVENCY
2.11.1 The Company has never been a party to any transaction to which the
provisions of sections 238 to 246 (inclusive) of the Insolvency ▇▇▇ ▇▇▇▇
(or equivalent legislation) may be applicable.
2.11.2 No order has been made or petition presented or resolution passed for
the winding up or administration of the Company, no receiver or
administrator or administrative receiver has been appointed in respect
of the Company or, could lawfully be appointed by any person of the
Company's business or assets or any part thereof, the Company is not
insolvent and has not stopped payment of its liabilities. The Company
is not unable to pay its debts (within the meaning of section 123 of the
Insolvency ▇▇▇ ▇▇▇▇ or equivalent legislation) and the Company is
capable of meeting its liabilities at the date of this Agreement and at
Completion as and when they fall due.
2.12 PURCHASE OF SHARES
2.12.1 No person is entitled to receive from the Company any fees, brokerages
or other commissions in connection with the purchase or sale of the Sale
Shares under this Agreement.
2.12.2 The Company has not at any time acted in breach of section 151 of the
Companies Act (or equivalent legislation) nor has it ever given
financial assistance in connection with the acquisition of its own or
any holding company's shares in accordance with the provisions of
section 155 of the Companies Act (or equivalent Act).
2.12.3 The Company has never reduced, purchased or redeemed its share capital
or
53
agreed to do so.
2.13 POSSESSION OF DOCUMENTS
All title deeds relating to the assets of the Company and an executed
copy of all agreements to which the Company is a party and the original
copies of all other documents which are owned by, or which ought to be
in the possession of, the Company are in its possession.
PART 3
THE ACCOUNTS
3.1 THE ACCOUNTS
The Accounts:
3.1.1 have been prepared in accordance with the historical cost convention;
3.1.2 comply with the requirements of the Companies Act (if required to so
comply), all relevant SSAP's and FRS's and other generally accepted
accounting practices applicable to companies incorporated in England and
Wales ("GAAP") and have been audited in accordance with the Auditing
Standards issued by the Auditing Practices Board (or the foreign
equivalent), it being acknowledged that in respect of those Companies
incorporated in jurisdictions other than England and Wales, the accounts
of such companies forming part of the Accounts have been prepared in
accordance with GAAP and that the provisions of clause 1.7 and the
second sentence of paragraph 1.7 above shall not apply to this paragraph
3;
3.1.3 have been prepared on the same bases and policies of accounting as the
published statutory accounts of the Company for the preceding three
accounting reference periods (and in particular, save as stated in such
accounts, there has been no change in any practice or policy or in any
methods or bases of valuation or any accountancy treatment relating to
the keeping of any such accounts);
3.1.4 give a true and fair view of the state of affairs of each of the
Companies and the Subsidiaries respectively at the Balance Sheet Date
and of its profit or loss for the financial period ended on the Balance
Sheet Date;
3.1.5 subject to the acknowledgement in paragraph 3.1.2 above, disclose in
accordance with GAAP all the assets of each Group Company as at the
Balance Sheet Date;
3.1.6 contain proper provision or reserves or appropriate notes in respect of
all liabilities (whether actual or contingent, quantified or disputed)
of each Group Company as at the Balance Sheet Date, to the extent
required to be provided for, reserved or noted, by GAAP;
3.1.7 subject to the acknowledgement in paragraph 3.1.2 above, contain proper
54
provision for depreciation and for any obsolescence of assets (all rates
of depreciation being as stated in the Accounts and being consistent
over the three financial years preceding the Balance Sheet Date) and the
policy of depreciation has been applied in accordance with SSAP 12 (or
the foreign equivalent);
3.1.8 disclose in accordance with GAAP all capital and leasing commitment of
each Group Company as at the Balance Sheet Date; and
3.1.9 are not affected by any extraordinary or non recurring items.
3.2 PAST ACCOUNTS
The published statutory accounts of each Group Company for the three
accounting reference periods preceding the period to which the Accounts
relate comply with the same criteria as described in relation to the
Accounts in paragraph 3.1 in relation to the periods in respect of which
and the date to which they were each prepared.
3.3 BOOK DEBTS SHOWN IN THE ACCOUNTS
The debts shown in the Accounts (less the amount of any provision or
reserve in respect thereof made in the Accounts) realised the net amount
thereof.
3.3 ACCOUNTING RECORDS
All accounting records of the Company are in the possession of the
Company and have been kept and completed in all material respects in
accordance with generally accepted accounting principles and standards
and statutory requirements for the time being applicable thereto.
3.4 MANAGEMENT ACCOUNTS
The Management Accounts for the period from the 1 January 2000 to 30 May
2000 have been prepared by the Company with due care and attention in
accordance with the same accounting policies as the Accounts and show a
reasonably accurate and fair view of the state of affairs and profit or
loss of the Company as at the date and for the period in respect of
which they have been prepared and are not affected by any non recurring
items outside the ordinary and normal course of business or exceptional
items.
PART 4
THE PROPERTIES
4.1 INTRODUCTION
4.1.1 The Properties comprise all the freehold and leasehold land and premises
owned, occupied or otherwise used by the Company.
4.1.2 The details relating to the Properties which are set out in the Property
Schedule
55
are true, complete and accurate and not misleading.
4.1.3 The replies given by the Vendor's Solicitors to the preliminary
enquiries raised by the Purchaser's Solicitors in relation to the
Properties in the course of the negotiations leading up to this
agreement and the information contained in the Property Schedule are
true, complete and accurate in all respects and not misleading.
4.1.4 There are no matters or liens of which the Vendor is aware which may
adversely affect its interest in the Properties or cast any doubt on the
right or title of the Company to the Properties.
4.1.5 The Company is not under any liability (actual or contingent) in respect
of any obligation which it may have undertaken as tenant, licensee,
assignee or surety relating to property other than as disclosed in the
Property Schedule.
4.2 TITLE
4.2.1 The Company has good and marketable title (legal and beneficial) to the
Properties.
4.3 LEASEHOLD PROPERTIES
4.3.1 In this paragraph 4.3 "LEASES" means each of the leases, tenancies,
licences and agreements under which the Properties are held by the
Company, details of all of which are contained in the Property Schedule
and in the case of a licence, references to landlord, tenant and rent
are references to the licensor, licensee and the licence fee
respectively.
4.3.2 The Leases are on terms negotiated at arms' length as between a willing
landlord and a willing tenant.
4.3.3 There are no arrears of rent or other monies payable under the Leases.
4.3.4 There are no rent or licence fee reviews in the course of being
negotiated or determined or exercisable by the landlord pursuant to any
of the Leases.
4.3.5 The Leases create tenancies which at the date of this agreement would
have the protection of Part II of the Landlord and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
(although circumstances may alter after the date of this agreement
whereby the Company is deprived of this protection).
4.3.6 No alterations have been made to the Properties at the expense of the
Company without all necessary consents and approvals and all alterations
are to be disregarded on rent reviews.
56
PART 5
FIXED AND CURRENT ASSETS
5.1 OWNERSHIP OF ASSETS
The Company owns free from all liens, charges, encumbrances, options or
adverse claims (including any hiring, licensing or rental agreements or
reservations of title) all the assets included in the Accounts or
acquired after the Balance Sheet Date (subject in each case to sales of
current assets in the ordinary and normal course of its trading) or
which are now in its possession or under its control or which it uses in
its business and the Company has not agreed to create or grant any lien
(save for liens arising by operation of law in favour of trade suppliers
in the ordinary and normal course of business for amounts not yet due),
charge, option or other encumbrance over such assets.
5.2 ASSETS USED IN THE BUSINESS
5.2.1 The assets owned by the Company together with any assets held by the
Company under any hire or hire purchase rental or leasing agreement (the
material details of which are contained in the Disclosure Letter)
comprise all the assets used in the Company's business as now carried
on.
5.2.2 The Company does not use in the course of its business any asset which
belongs to or is hired, leased or licensed to or is otherwise in the
possession or under the control of the Vendor's Group.
5.3 PLANT AND MACHINERY
The Company does not own or use any plant or machinery (other than
computers).
5.4 COMPUTER EQUIPMENT AND SOFTWARE
5.4.1 The Company has in force maintenance contracts for all critical items of
computer hardware and there is no reason to believe that these
maintenance contracts will not be renewed by the other contracting party
upon their expiry (if so required by the Company) upon substantially
similar terms to those now applicable.
5.4.2 The Company did not suffer any failures or breakdowns of or bugs in the
computer hardware or software which it now uses during the year
preceding the date of this Agreement which have materially affected the
ability of the Company to conduct its business
5.5 COMPUTER SOFTWARE
5.5.1 In this paragraph and paragraph 5.6:
"SOFTWARE" means the computer software products owned or distributed by
the
57
relevant Group Company the details of which are set out in schedule
7 including all programs and data in such software and all manuals and
operator guides relating to such software;
"THIRD PARTY SOFTWARE" means any significant computer software licensed
to a Group Company the details of which have been disclosed in the
Disclosure Letter (each a "Software Licence") including all programs and
data in such software and all manuals and operator guides relating to
such software; and
"SOURCE CODES" means the source codes which are included in or relate to
the Software and the source codes which are included in or relate to the
Third Party Software in each case deposited on magnetic media, all
information in human readable form necessary to enable a reasonably
skilled programmer or analyst to maintain or enhance the Software and
the Third Party Software without the assistance of any other person or
reference to any other materials, including, all maintenance tools (test
programs and program specifications), proprietary or third party system
utilities (compiler and assembler descriptions), a description of the
system/program generation and all comments, logic manuals and flow
charts made by developers of such source codes which relate to such
source codes.
5.5.2 The Software and the Third Party Software is all the business critical
computer software owned, used, required or supplied by the relevant
Group Company in connection with its business.
5.5.3 The Company has in force various software support contracts the terms of
which have been disclosed in the Disclosure Letter and there is no
reason to believe that these software support contracts will not be
renewed by the other contracting party upon their expiry (if so required
by the Company) upon substantially similar terms to those now
applicable.
5.5.4 None of the Company's employees or, so far as the Vendor is aware,
independent contractors involved in the development of the Software
were, during the period of such development, under any obligation to any
third party (whether in relation to any previous service contract or
contract for services or otherwise) which would or might have an adverse
effect on the Company's claim to ownership of the Software or the Source
Codes of the Software.
5.5.5 The Company has complied in all material respects with all its
obligations pursuant to any arrangements which require the Company to
develop or supply any of the Software or the Third Party Software. In
particular, any Software or Third Party Software so developed or
supplied conforms in all material respects to the specifications
contained or referred to in the relevant arrangement and is fully
capable of performing all tasks and functions for which it has been
developed or supplied.
5.5.6 The Company has used all reasonable care and skill in the development of
the Software and has carried out reasonable investigations and taken all
other steps which may be desirable so as to ensure that any Third Party
Software which the
58
Company supplies with or for use in conjunction with any of the Software
is capable of being used for the particular tasks and functions for
which it is supplied.
5.5.7 The Company owns and is in possession of up to date and accurate copies
of the Source Codes of the Software.
5.5.8 The Software Licences authorise the Company to use the computer software
that is not owned by the Company in the ways in which they are in fact
used or are required to be used in connection with the business of the
Company as it is now carried on.
5.5.9 The Software Licences are enforceable by the Company in accordance with
their terms and there has not been any default (or any event which with
notice or lapse of time or both would constitute a default) under any of
them by the Company or, so far as the Vendor is aware, by any other
party to such Software Licences.
5.6 INTEGRITY OF COMPUTER SYSTEMS
5.6.1 The Company has taken proper precautions to preserve the availability,
confidentiality and integrity of its computer systems.
5.6.2 All the Third Party Software used by the Company for its own computer
systems is adequate for the Company to run the business and machine
readable. So far as the Vendor is aware, all media on which such Third
Party Software is stored contain no programs or data which are either
intended to or which may have the effect of modifying, deleting or
otherwise impairing such software (or any of the programs or data in
such software) or any other programs or data which are either intended
to or which may have the effect of impairing any computer hardware.
5.6.3 The Vendor is not aware of any case where unauthorised access to the
Company's computer systems has taken place, or where any of the software
or data in those computer systems has been modified without the
Company's express authority or where fraud has been committed against
the Company by use or abuse of its computer systems whether alone or in
conjunction with any third party.
5.7 BOOK DEBTS
5.7.1 None of the debts which are due to the Company at the date of this
Agreement are overdue by more than eight weeks nor have any of those
debts been written off or proved to be irrecoverable to any extent.
5.7.2 The full amount of all debts which shall be owing to the Company at
the date of this Agreement (whenever arising) will, so far as the
Vendor is aware, be recovered in full free of any counter claim or
set off (less the amount of any provision or reserve which would have
been calculated on the same basis as that
59
applied in the Accounts or disclosed in the Disclosure Letter) in the
ordinary and normal course of business and in any event not later
than eight weeks after the debt shall become due.
5.7.3 Since the Balance Sheet Date no other obligations due to the Company
have been written off or written down or have proved to be irrecoverable
in whole or in part or are now regarded as irrecoverable nor has there
been any agreement for the release of any person under any liability to
the Company.
5.8 The aged debtor analysis annexed to the Disclosure Letter accurately
shows the amounts owed to each Group Company by its trade debtors as at
the dates stated therein and the dates of the invoices pursuant to which
such debts shall be due.
PART 6
INTELLECTUAL PROPERTY
6.1 DEFINITIONS
In this part 6:
"INTELLECTUAL PROPERTY RIGHTS" includes patents, trade marks, service
marks, registered designs, design rights, semi-conductor, topography
rights, copyrights, database rights, know-how, get up, confidential
information, business names, internet domain names and any other similar
protected rights in any country together with pending applications for
registration or recording thereof;
"LICENSED RIGHTS" means the Intellectual Property Rights not owned by a
Group Company but used or required by a Group Company in connection with
its businesses including the Intellectual Property Rights in the Third
Party Software and the Source Codes of the Third Party Software;
"LISTED INTELLECTUAL PROPERTY RIGHTS" means the Intellectual Property
Rights which are listed in schedule 8; and
"SOFTWARE", "THIRD PARTY SOFTWARE" and "SOURCE CODES" shall bear the
same meanings given to those expressions in paragraph 5.5.
6.2 LISTED INTELLECTUAL PROPERTY RIGHTS
6.2.1 The Listed Intellectual Property Rights are all the registered
Intellectual Property Rights owned by the relevant Group Company.
6.2.2 The details of the Listed Intellectual Property Rights which are
contained in schedule 8 are materially true, complete and accurate.
6.2.3 Full details of all material Licensed Rights have been disclosed to the
Purchaser. The relevant Group Company has a licence to use the Licensed
Rights. All such licences are in full force and effect, the terms of
such licences have been fully
60
disclosed in the Disclosure Letter and such licences are enforceable
by the Company in accordance with the terms and there has not been
any default (or any event which with notice or lapse of time or both
would constitute a default) under any of them by the Company or, so
far as the Vendor is aware, by any other party to such licences.
6.2.4 The relevant Group Company is the sole beneficial owner of the Listed
Intellectual Property Rights and the Intellectual Property Rights in the
Software and the Source Codes of the Software, free from liens, charges
and encumbrances, each of such Rights is valid and enforceable and so
far as the Vendor is aware none of them is being claimed, opposed or
attacked by any other person.
6.2.5 So far as the Vendor is aware, none of the Listed Intellectual Property
Rights is being used by any other person and none of the Intellectual
Property Rights in the Software and the Source Codes of the Software are
being used by any other person other than in accordance with the terms
of licences granted by or on behalf of the Company.
6.2.6 All formulae, processes and other information forming part of the Listed
Intellectual Property Rights or of the Licensed Rights (including in
each case know-how and confidential information) are adequately
documented and to the extent that they are confidential or material to
the business of the Company have not been (and nor is there any
agreement that they will be) disclosed to any third party.
6.2.7 All documents material to the title to any Listed Intellectual Property
Rights and are in the possession of the Company.
6.3 NO INFRINGEMENTS
The business of the Company (and, so far as the Vendor is aware, of any
licensee under a licence granted by the Company) as now carried on does
not and is not likely to infringe any Intellectual Property Rights of
any other person or give rise to a liability to pay compensation
pursuant to sections 40 and 41 Patents ▇▇▇ ▇▇▇▇ (or equivalent
legislation).
6.4 NO RIGHTS GRANTED BY THE COMPANY
6.4.1 No right has been granted by or on behalf of the Company or the Vendor
to any person to do any thing which would or might otherwise infringe
the Listed Intellectual Property Rights or the Licensed Rights and no
act has been done by the Company or omission permitted by the Company to
have occurred whereby they or any of them have ceased or might cease to
be valid and enforceable.
6.4.2 No right has been granted by or on behalf of the Company or the Vendor
to any person to do any thing which would or might otherwise infringe
the Intellectual Property Rights in the Software otherwise by way of a
non-exclusive licence to use the Software granted on a commercial basis
in the ordinary course of the
61
business of the Company.
6.4.3 The terms of any licence granted by or on behalf of the Company or the
Vendor to use the Software have, save for non-material amendments to the
terms of shrink wrap licences for RS(3) and standard licences for
Diamond Discovery products, been fully disclosed in the Disclosure
Letter and such licences are enforceable by the Company in accordance
with their terms and there has not been any default (or any event which
with notice or lapse of time or both would constitute a default)
under any of them by the Company or, so far as the Vendor is aware,
by any other party to such licences.
6.4.4 Every copy of the Software supplied pursuant to the licences referred to
in paragraph 6.4.3 has included appropriate copyright notices.
6.4.5 No right has been granted by or on behalf of the Company or the Vendor
to any person to do any thing which would or might otherwise infringe
the Intellectual Property Rights in the Source Codes of the Software and
no act has done by the Company or omission permitted by the Company to
have occurred whereby they or any of them have ceased or might cease to
be valid and enforceable.
PART 7
FINANCIAL POSITION AND PROSPECTS
7.1 EVENTS SINCE THE BALANCE SHEET DATE
Since the Balance Sheet Date, save as fairly disclosed in the Management
Accounts:
7.1.1 there has been no material adverse change in the financial or trading
position or, so far as the Vendor is aware, prospects of the Company;
7.1.2 the business of the Company has been carried on in the ordinary and
normal course without any interruption and without any alteration in its
nature, conduct, scale, scope or manner and no unusual or abnormal
contract differing from the ordinary contracts necessitated by the
nature of its business has been entered into by the Company;
7.1.3 there has been no change in:
7.1.3.1 the manner or time of payment of creditors or the issue of invoices or
collection of debts; or
7.1.3.2 the policy of reserving for debtors;
7.1.4 no substantial customer of the Company in relation to support and
maintenance services (being a customer who, during the period covered by
the Accounts purchased more than 5% of the invoice value of all of such
services) has ceased or substantially reduced its trade with the Company
for such services.
62
7.1.5 no asset has been acquired or disposed of or has been agreed to be
acquired or disposed of (save for assets acquired or disposed of in the
ordinary and normal course of business on arm's length terms) and no
contract involving expenditure by it on capital account has been entered
into by the Company;
7.1.6 the Company has not paid or become liable to pay any management, service
or other such charges to the Vendor or to any person with whom the
Vendor is connected (within the meaning of section 839 Taxes Act) other
than in respect of goods and services supplied in the ordinary and
normal course of business on commercial terms;
7.1.7 the Company has neither disbursed nor received any cash except in the
ordinary and normal course of its business and all amounts received by
or on behalf of the Company have been deposited with its bankers and
appear in the appropriate books of account;
7.1.8 the Company has not declared, paid or made any dividends or other
distributions within the meaning of the Taxes Act;
7.1.9 the Company has not made any loans or incurred any borrowings except in
the ordinary and normal course of its business; and
7.1.10 the accounting reference period of the Company has not ended or been
extended.
7.2 AMOUNTS DUE TO CREDITORS
The aged creditor analysis annexed to the Disclosure Letter accurately
shows all amounts owed by each Group Company to its trade creditors as
at the dates stated therein and the dates of the invoices pursuant to
which such debts shall be due.
7.3 BANK AND OTHER BORROWINGS
7.3.1 Full details of all limits on the Company's bank overdraft and other
borrowing facilities together with true, complete and accurate copies of
all letters of credit, guarantees and other financial instruments issued
on behalf of or for the benefit of the Company and which remain in force
are contained in the Disclosure Letter.
7.3.2 The total amount borrowed by the Company does not exceed any limitation
on its borrowing contained in its Memorandum or Articles of Association
or in any other document which it is a party and the amount borrowed
from its bankers does not exceed its overdraft facilities (if any).
7.3.3 No overdraft or other financial facilities of the Company are dependent
upon a guarantee of, or a security provided by, the Vendor or any third
party.
7.3.4 The Company does not have outstanding and has not agreed to create or
issue any loan capital; nor has it factored or discounted any of its
debts (or agreed to
63
do so), or been engaged in financing of a type which would not
require to be shown or reflected in the Accounts; or borrowed any
money which it has not repaid (save for borrowings not exceeding the
amounts shown in the Accounts).
7.3.5 The Company has not since the Balance Sheet Date, repaid, or become
liable to repay, any loan or indebtedness in advance of its stated
maturity.
7.3.6 Neither the acquisition of the Sale Shares by the Purchaser nor the
compliance of any terms of this Agreement will entitle (and no other
event has occurred which would entitle) any third party (with or without
the giving of notice) to call for the repayment of any indebtedness of
the Company prior to its normal maturity date.
7.4 WORKING CAPITAL
Taking into account banking and other facilities now available to the
Company, the Company has adequate working capital to allow it to pay its
creditors as they fall due.
7.3.2 INTRA-GROUP DEBT
7.3.3 The amount due by the Company in respect of the Intra Group Debt is
unsecured and repayable by the Company on demand.
7.3.4 The Intra Group Debt is still outstanding by the Company in full, is not
subject to any counter claim or set off (except to the extent already
provided for in calculating the amount of the Intra Group Debt specified
in clause 1 and eliminated pursuant to clause 4) has not been released
or written off in whole or in part and is beneficially owned by the
Vendor free from all liens, charges and encumbrances.
PART 8
TAXATION
8.1 DEFINITIONS
In this part 8:
"CAA" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"IHTA" means the Inheritance Tax ▇▇▇ ▇▇▇▇;
"TCGA" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"US COMPANIES" means Oxford Molecular Group, Inc.; Chemical Design Inc.,
Chemical Design (West Coast) Inc, Health Designs Inc, and Genetics
Computer Group, Inc. and references to a "US COMPANY" shall be construed
accordingly; and
64
"VAT" means value added tax.
8.2 GENERAL
8.2.1 All returns, amended returns, computations and payments which should
have been made by the Company for any Taxation purpose have been
prepared on a proper basis and submitted within the prescribed time
limits and were when submitted correct and are up to date and none of
them is now the subject or so far as the Vendor is aware is likely to be
the subject of any dispute with any Tax Authority.
8.2.2 All particulars furnished to any Tax Authority in connection with the
application for any consent or clearance on behalf of the Company
accurately disclosed all facts and circumstances material to the
decision of the Tax Authority concerned and any such transaction for
which such consent or clearance has previously been obtained has been
carried into effect only in accordance with the terms of the relevant
application and consent for clearance.
8.2.3 The Company is not the subject of a back duty investigation or in-depth
enquiry by any Tax Authority and so far as the Vendor is aware there are
no facts which may give rise to the same.
8.2.4 All income tax under the PAYE system and payments due in respect of
employees' contributions to national insurance and graduated state
pension have been properly deducted by the Company and (together with
any employer's contribution) have been correctly paid to the appropriate
Tax Authority and proper records thereof have been maintained in respect
thereof.
8.2.5 All Taxation required to be deducted from any payments made by the
Company which it is obliged or entitled to make has been deducted and,
where required by law, accounted for to the appropriate Tax Authority.
8.2.6 The Company has never been requested to furnish information pursuant to
any notice served under section 745 or 778 Taxes Act which remains
outstanding.
8.2.7 Since the Balance Sheet Date no transactions have been undertaken
falling within sections 765 or 765A Taxes Act.
8.2.8 The Company is not and has at no time been a close investment company
for Taxation purposes.
8.2.9 The Company has not since the Balance Sheet Date taken any action which
has had, or so far as the Vendor is aware might have, the result of
altering or prejudicing or in any way disturbing any arrangement or
agreement which it has previously negotiated with any Tax Authority.
8.2.10 The Company is and has always been resident only in its country of
incorporation for Taxation purposes and has never carried on any trade
or business or established any branch or agency outside its country of
incorporation
65
other than the export of its goods and/or services in the ordinary and
normal course of its business.
8.2.11 The Accounts make adequate provision in accordance with generally
accepted accounting practices for all Taxation for which the relevant
Company is liable or may become liable in respect of the period to which
they relate.
8.3 TAXABLE PROFITS
8.3.1 The Company has not since the Balance Sheet Date directly or indirectly
paid any remuneration, emoluments or compensation for loss of office or
made any gratuitous payment or transferred any assets to any of its
present or former directors or employees, the cost of which will not (on
the basis of the law and practice in force at the date hereof) be
deductible for Taxation purposes.
8.3.2 The Company has not since the Balance Sheet Date made and is under no
obligation pursuant to which it is or at any time may become liable to
make any payment of interest, annuity or other annual payment such as
may (on the basis of the law and practice in force at the date hereof)
be disallowed as a deduction as a set-off or as a charge on income or
otherwise be unrelieved for corporation tax purposes whether by virtue
of section 125 or section 787 Taxes Act.
8.3.3 No transactions or arrangements involving the Company have taken place
such that the provisions of section 770 and/or section 770A and Schedule
28AA Taxes Act could be or have been applied so as to give rise to a
charge to Taxation on the Company.
8.4 CAPITAL ASSETS
8.4.1 Save as provided for in the Accounts the values (other than trading
stock and work in progress) attributed to each of the assets of the
Company in or for the purposes of the Accounts is such that if those
assets were disposed of at Completion for a consideration equal to such
value (ignoring any reliefs and allowances available to the Company
other than amounts falling to be deducted under section 38 TCGA and
indexation relief) no chargeable gain or allowable loss would arise.
8.4.2 Since the Balance Sheet Date no asset has been acquired otherwise than
by way of a bargain made at arm's length.
8.4.3 The Company has not effected or been a party to any exempt demerger such
as is mentioned in sections 213 to 218 Taxes Act.
8.4.4 The Company does not own and has not since the Balance Sheet Date owned
any relevant discounted securities or qualifying corporate bonds (as
defined in Schedule 13 Finance ▇▇▇ ▇▇▇▇ or section 117 TCGA
respectively) and the Company has never issued any such securities or
bonds which remain in issue or which remained in issue at the Balance
Sheet Date.
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8.4.5 The Company has (based on the law and practice in force at the date of
this Agreement) sufficient information contained in its records to
calculate any chargeable gain or allowable loss which would arise if the
Company were to dispose at Completion for a consideration equal to their
value in the Accounts of the assets owned by the Company at the Balance
Sheet Date.
8.5 CAPITAL ALLOWANCES
8.5.1 The book value of each of the assets of the Company in or adopted for
the purposes of the Accounts on which capital allowances have been
calculated separately does not exceed the written down value of such
asset for the purposes of the CAA and the aggregate book value of plant
and machinery for which capital allowances have been claimed under Part
II of that Act does not exceed the written down value of the qualifying
expenditure under the CAA.
8.5.2 The Company has not been a party to or involved in any transaction
whereby a balancing allowance would be denied or reduced by virtue of
section 5 CAA.
8.5.3 No allowances have been claimed by the Company which are liable to be
reduced or withdrawn by virtue of sections 1(6), 42 or 47 CAA.
8.5.4 No capital expenditure has been incurred since the Balance Sheet Date
which is subject to the provisions of section 75 CAA.
8.6 GROUP ARRANGEMENTS
8.6.1 The Company has not since the Balance Sheet Date ceased to be a member
of a group of companies for the purposes of sections 178 and 179 TCGA.
8.6.2 The Company has not at any time within the period of six years ending
with the date of this Agreement, acquired any assets other than trading
stock from any company which, at the time of the acquisition, was a
member of the same group (as defined in section 170 TCGA) as the
Company.
8.6.3 The Disclosure Letter sets out details of any surrender or agreement to
surrender, or acceptance or agreement to accept the surrender, by the
Company of any amount by way of group relief under the provisions of
sections 402, 403 and 407 to 413 Taxes Act in respect of any period
commencing in the three years ending on the date of this Agreement.
8.6.4 All claims for group relief made by the Company within the six years
ended on the date of this Agreement were valid and have been or will be
allowed by way of relief from corporation tax and the Company is not and
will not, as a result of anything done before the date of this
Agreement, become liable to make any payment for an amount surrendered
by any other company (other than another Group Company) under or in
connection in with the provisions of section 402 Taxes Act.
8.6.5 The Company is not a party to any arrangement falling within section 410
Taxes
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Act whereby it may be treated as not being a member of the same
group for the purposes of group relief or as any other Group Company.
8.6.6 There are set out in the Disclosure Letter details of all outstanding
elections made by the Company under section 247 Taxes Act.
8.6.7 The Company is not liable to be assessed to any Taxation under the
provisions of section 190 TCGA in respect of any chargeable gain
accruing to any company (other than another Group Company).
8.6.8 In the 3 years ending with the date of this Agreement, no Group Company
has been treated as a member of the same group for Taxation purposes as
any other company other than any Group Company or any member of the
Vendor's Group.
8.7 DISTRIBUTIONS
8.7.1 The Company has not since the Balance Sheet Date done anything which
could be treated as a distribution for the purposes of sections 209 or
210 Taxes Act.
8.7.2 The Company does not own any share capital to which the provisions of
section 249 Taxes Act or section 141 TCGA could apply.
8.8 STAMP DUTY
8.8.1 All instruments (other than those which have ceased to have a legal
effect) and which form part of the legal title to any asset of the
Company or which the Company may need to register in any register or
rely on in any proceedings in any United Kingdom court (and which are or
were subject to stamp duty) have been duly stamped and the Company has
not executed any other instrument relating to any property situate in,
or to any matter or thing done or to be done in, any part of the United
Kingdom.
8.8.2 The Company has no liability to stamp duty reserve tax.
8.9 ANTI-AVOIDANCE
8.9.1 The Company has not been party to any other transaction or arrangement
of any nature which could give rise to a charge to Taxation under Part
XVII Taxes Act.
8.10 CLOSE COMPANY
8.10.1 The Company is not and has never been a close company for the purposes
of the Taxes Act.
8.11 EVENTS SINCE THE LAST ACCOUNTING DATE
Since the Balance Sheet Date:-
8.11.1 the Company has not disposed of any asset (including trading stock) or
made
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any supply of any service or business facility of any kind (including
a loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the
consideration actually received or receivable for such disposal or
supply is less than the consideration which could be deemed to have been
received for the purposes of Taxation;
8.11.2 no event has occurred which gives rise to a liability to Taxation to the
Company on deemed (as opposed to actual) income, profits or gains or
which results in the Company becoming liable to pay or bear a liability
to Taxation directly or primarily chargeable against or attributable to
another person, firm or company (other than another Group Company);
8.11.3 the Company has not made or received any distributions for any Taxation
purpose.
8.12 VALUE ADDED TAX
8.12.1 In relation to VAT the Company has complied in all material respects
with all statutory provisions, rules, regulations, orders and directions
and made all necessary returns; and within the prescribed time limits
provided all necessary information and documents to and paid all amounts
due to HM Customs and Excise.
8.12.2 The Company has at all times kept complete correct and up-to-date
records, invoices and other documents required for the purposes of VAT
and preserved such records for such period of time as required by law.
8.12.3 The Company has not been required by HM Customs and Excise to give
security under paragraph 4 of schedule 11 to the VATA.
8.12.4 All VAT payable by the Company upon the importation of goods and all
duties of customs and excise payable by the Company in respect of any
assets (including trading stock) imported and owned by the Company have
been paid in full.
8.12.5 The Commissioners have not issued to the Company a direction under
paragraph 2 of Schedule 1 VATA.
8.12.6 The Company is not liable and will not (in respect of anything done
before Completion) be liable to any interest, penalty or surcharge in
respect of VAT and in particular (but without prejudice to the
generality of the foregoing) the Company is and will not be so liable to
any penalty, interest or surcharge pursuant to sections 59, 63 to 70 and
74 VATA.
8.12.7 The Company is not and will not (in respect of anything done before
Completion) be liable to a penalty under sections 60, 61 or 62 VATA.
8.12.8 The Company is not and has not at any time been a member of a group of
companies for VAT purposes.
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8.12.9 The Company is not and has not agreed to become an agent, manager or
factor for the purposes of sections 47 or 48 VATA of any person who is
not resident in the United Kingdom.
8.12.10The Company does not own any capital items to which the provisions of
Part XV of The Value Added Tax Regulations 1995 may apply to the
Company.
8.12.11Adequate provision has been made in the Accounts for all input tax owing
or which may become due to any of the Company's suppliers and for any
refund of value added tax owing or which may become due from the Company
to any of the Company's customers at the Balance Sheet Date.
8.13 VAT ON PROPERTY
8.13.1 The Company does not own the fee simple in any building or civil
engineering work which is uncompleted or which was completed (within the
meaning of Note (2) to Group 1 Schedule 9 VATA) less than three years
before the date of this Agreement.
8.13.2 The Disclosure Letter contains particulars of:
8.13.2.1 any election under paragraph 2 Schedule 10 VATA to waive
exemption from VAT in relation to any land owned by the Company
and made by the Company or by any relevant associate of the
Company (as defined in paragraph 3(7) Schedule 10 VATA); and
8.13.2.2 any agreement or other arrangement to which the Company is a
party whereby the Company has agreed not to waive exemption
from VAT pursuant to paragraph 2 Schedule 10 VATA in relation
to any land in which it has any estate interest or right.
8.13.3 The Company has not given or accepted any certificate as to zero-rating
under the provisions referred to in section 62 VATA.
8.14 EMPLOYEE SHARE SCHEMES
8.14.1 The Disclosure Letter contains details of all share schemes (including
those approved by the Inland Revenue and unapproved schemes) which the
Company operates or in which its UK, US, French or other employees are
entitled to participate.
8.14.2 The Company has complied with section 85 Finance ▇▇▇ ▇▇▇▇ and section
140H Taxes Act.
8.14.3 The Company does not operate any profit related pay scheme approved by
the Inland Revenue.
8.14.4 The Disclosure Letter sets out details of the outstanding Options
granted under the Oxford Molecular Group PLC Unapproved Share Option
Scheme in respect
70
of the exercise of which the Company may have a liability to account
for income tax under PAYE or national insurance contributions.
8.15 INHERITANCE TAX
8.15.1 No shares in or assets of the Company are subject to any such power of
sale, charge or mortgage as is mentioned in section 212 IHTA and there
are no circumstances which might lead to such a power arising.
8.16 LOAN RELATIONSHIPS
All interest, discounts or premiums paid by the Company since the
Balance Sheet Date in respect of its loan relationships within the
meaning of Chapter II of Part IV of the Finance ▇▇▇ ▇▇▇▇ are capable of
being brought into account as a debit for the purposes of that Chapter
as and to the extent that they are from time to time recognised in the
Company's accounts (assuming that the accounting policies and methods
adopted for the purpose of the Accounts continue to be so adopted).
8.17 CUSTOMS DUTIES
The Company has complied in all material respects with all statutory
provisions, rules, regulations, orders and directions and made all
necessary returns in relation to the collection and payment of customs
duties and excise duties and has provided all necessary information and
documentation and paid all amounts due to HM Customs and Excise in
relation to such duties within the prescribed time limits.
8.18 US COMPANIES
8.18.1 No proposed adjustment, claim or legal proceeding is pending or, so far
as the Vendor is aware, has been threatened against or with respect to
any US Company in respect of Taxation by any Tax Authority. Each US
Company has paid all Taxation which it has become liable to pay on or
before the due date for payment thereof and has no liability for
interest or penalties relating to Taxation. There are no liens related
to Taxation upon any of the assets of any US Company except liens for
current Taxation not yet due and payable. None of the US Companies:
(i) has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code;
(ii) has elected to be treated as a sub-chapter S corporation
pursuant to section 1362 of the Code; or
(iii) has made any elections pursuant to the Code that would have an
adverse effect on it.
None of the US Companies will be required to include any adjustment in
taxable
71
income for any tax period (or portion thereof) ending prior to
Completion pursuant to Section 481 or 263A of the Code as a result of
transactions or events occurring, or accounting methods employed,
prior to the Completion. None of the US Companies has been the
subject of a Taxation-related ruling or closing agreement with a Tax
Authority that has continuing effect.
8.18.2 There is no agreement, plan, arrangement or other contract covering any
employee or independent contractor or former employee or independent
contractor of any of the US Companies that could reasonably by expected
to give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the
Code. None of the US Companies is, or has ever been, a party to or bound
by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar contract. Except as set forth in the Disclosure
Letter, none of the US Companies has ever been a member of a
consolidated group of corporations or analogous group under state or
local law for which it could be liable for the Taxation of any legal or
natural person (other than any Group Company) following the Completion
and none has any liability to Taxation of any entity under Treasury
Regulation 1.1502-6 (or any similar provision of state, local or foreign
law) as a transferee or successor, by contract or otherwise.
PART 9
CONTRACTS AND COMMITMENTS
9.1 CAPITAL COMMITMENTS
The Company had no capital commitments at the Balance Sheet Date and
since then the Company has not made any capital expenditure or incurred
any capital commitments.
9.2 SUBSISTING CONTRACTS
The Disclosure Letter contains true, complete and accurate copies
(incorporating all the material terms which currently apply) of every
contract, covenant, commitment or arrangement ("Contract") to which the
Company is a party (excluding for the purpose of this Warranty 9.2
Contracts relating to employment or consultancy arrangements (in respect
of which part 11 of this schedule 5 only shall apply), leases and other
Contracts relating to the Company's interests in freehold and leasehold
land and buildings (in respect of which part 4 of this schedule 5 only
shall apply) and Contracts relating to pensions arrangements (in respect
of which part 10 of this schedule 5 only shall apply)) and in respect of
which any party to them has or may have any outstanding liability and
which:
9.2.1 is of an unusual or abnormal nature, or outside the ordinary and normal
course of business;
9.2.2 is for a fixed term of more than six months;
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9.2.3 is of a long-term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months after the
date on which it was entered into or undertaken);
9.2.4 is incapable of termination in accordance with its terms, by the
Company, on sixty days' notice or less;
9.2.5 is, in relation to contracts for the development of software for third
parties, of a loss making nature (that is, known to be likely to result
in a loss to the Company on completion or performance) or is known to be
likely not to be fulfilled or performed by the Company on time;
9.2.5 involves payment by the Company by reference to fluctuations in the
index of retail prices, or any other index or in the rate of exchange
for any currency;
9.2.6 involve an aggregate outstanding expenditure by or an aggregate
outstanding payment to the Company of more than GBP10,000;
9.2.7 involves, or is likely to involve, the supply of goods the aggregate
sales (or purchase) value of which will represent in excess of 10 per
cent of the turnover for the preceding financial year of the Company;
9.2.8 is a contract for hire or rent, hire purchase, or purchase by way of
credit sale (excluding purchases in the ordinary and normal course of
business on usual credit terms) or periodical payment;
9.2.9 is a contract whereby the Company has been appointed to act or has
appointed someone else to act as an agent or as a distributor or
franchisee;
9.2.10 is an agreement for the supply of services (other than for gas, water or
electricity or otherwise in the ordinary and normal course of the
Company's business);
and (save as so disclosed) the Company has not entered into any such
contract, covenant, commitment or arrangement.
9.3 MORTGAGES ETC
The Company has not created nor has it agreed to create any loan capital
or any mortgage, debenture, lien (other than a lien arising by operation
of law in favour of trade suppliers in the ordinary and normal course of
business for amounts not yet due), charge or other similar encumbrance
or security interest over all or any of its property, assets,
undertaking, goodwill, reserves or share capital.
9.4 GUARANTEES ETC
There are no guarantees, suretyships, indemnities or similar commitments
(whether secured or unsecured) given by the Company in respect of the
liabilities and/or obligations of any person other than another of the
Companies and/or Subsidiaries in respect of which obligations or
liabilities (whether actual
73
or contingent) are still outstanding.
9.5 NO LOANS
The Company has not made any loans or advanced any monies or credit to
any person, firm or company (other than credit given on normal
commercial terms and advances to employees against expenses incurred by
them in the ordinary and normal course of business) not exceeding
GBP10,000 in the aggregate).
9.6 NO PARTNERSHIP
The Company is not a member of any partnership, joint venture, trade
association, society or other group, whether formal or informal and
whether or not having a separate legal identity in respect of which the
Company has any outstanding obligations.
9.7 DISCOUNTS, REBATES AND SIMILAR ARRANGEMENTS
The Disclosure Letter contains full details of the policy and practice
of the Company with respect to the offer or grant by it to its customers
of discounts, rebates, allowances and other special terms or similar
arrangements on a regular basis as opposed to under the terms of
individually negotiated contracts.
9.8 FORWARD CONTRACTS
The Company does not have any unmatched open positions with respect to
forward purchases and/or sales of any commodity, stock or foreign
currency and none of such open positions will involve the Company in a
loss.
9.7 OUTSTANDING OFFERS
There is no offer or tender (or the like) given or made by the Company
which is still outstanding and capable of giving rise to a contract
merely by the unilateral act of any third party.
9.8 INSIDER CONTRACTS
None of the Vendor nor any of its Associates nor any person in which any
of them has or had any interest (direct or indirect, either solely or
jointly with any other party and whether as shareholder, employee,
director, consultant or otherwise) has (or has ever had) a trading
relationship with the Company nor has any of them ever entered into any
other type of transaction or arrangement with the Company (other than in
the capacity as a shareholder or employee of the Company); and none of
them provides (or has in the past provided) goods or services in
competition with the Company.
9.8 NON-ARMS LENGTH CONTRACTS
The Company is not a party to, nor have its profits or financial
position during the three years prior to the date hereof been affected
by, any contract or
74
arrangement which is not of any entirely arms length nature made on
open market terms.
9.9 DEFAULTS, ETC
9.9.1 None of the obligations owed by any third party to the Company is
unenforceable and no event has occurred as regards the Company which
would entitle any third party to terminate any contract to which the
Company is a party.
9.9.2 The Company nor any other party to any agreement, commitment,
transaction or arrangement with the Company is in default to any
material extent thereunder and there are no circumstances likely to give
rise to such a default.
9.10 PRODUCT LIABILITY
9.10.1 The Company has not manufactured, sold or supplied products which do not
comply in any respect with any warranties or representations expressly
or impliedly made by the Company or with all applicable regulations,
standards and requirements binding on the Company.
9.10.2 The Company is not subject to any liability or obligation (save as may
be implied by law or the terms on which the product was licenced to the
relevant customer of the Company (copies of which terms are attached to
the Disclosure Letter)) to service, repair, maintain, take back or
otherwise do (or not do) anything in respect of any goods that have been
delivered by it.
9.11 LIABILITIES
9.11.1 There are no liabilities (including contingent liabilities) which are
outstanding on the part of the Company other than:
9.11.1.1 those liabilities disclosed in the Accounts; or
9.11.1.2 liabilities incurred in the ordinary and normal course of
trading since the Balance Sheet Date; or
9.11.1.3 the items defined in paragraph 3 of schedule 10.
9.11.2 There is no indebtedness or liability due, owing or incurred by the
Company to the Vendor or any of its Associates whether actually or
contingently, whether solely or jointly with any other person and
whether as principal or surety and there is no such indebtedness or
liability due, owing or incurred to the Company by the Vendor or any of
its Associates.
9.11.3 There are no outstanding liabilities or commitments on the Company
arising from any arrangements for the disposal of any shares, property
or other assets (other than in the ordinary and normal course of
business) previously owned by the Company.
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9.12 NO DISCLOSURES OF CONFIDENTIAL INFORMATION
The Company has never disclosed to any person (save in the ordinary and
normal course of business or other than to the Purchaser or to its
professional advisers) any of its secret or confidential information
(including any of its know-how, trade connections, price lists, lists of
customers or suppliers, financial information, profit margins or
projections); and so far as the Vendor is aware no unauthorised
disclosure of such information has ever been made.
9.13 NO RESTRICTIONS ON COMPANY
The Company is not a party to any secrecy or confidentiality agreement
or arrangement which may restrict the use or disclosure of information
nor has it given any covenants limiting or excluding its right to do
business and/or compete in any area or field with any other person.
9.14 RELATIONSHIPS WITH THIRD PARTIES
9.14.1 No person presently doing business with the Company nor any customer or
supplier who is in the habit of purchasing from or selling to the
Company (as the case may be) is, so far as the Vendor is aware, likely
to cease to do so or otherwise substantially reduce its purchases from
or supplies to the Company during the twelve calendar months following
Completion.
9.14.2 There is no contract or arrangement (whether written or oral) to which
the Company is a party which will or may be determined or under which
any right of the Company may be adversely affected (or pursuant to which
any other party may require the adoption of terms less favourable to the
Company than those subsisting in the absence of any change) by reason of
the sale of the Sale Shares to the Purchaser or the implementation of
any provision of this Agreement.
9.15 LICENCING AND DISTRIBUTION ARRANGEMENTS
All inter-company licencing and distribution arrangements are available
and have been properly documented.
PART 10
PENSIONS
10. PENSIONS
10.1 The warranties set out in paragraphs 10.2 to 10.7 shall apply only to
benefit schemes operated in the UK.
10.2 Other than the group personal pension plan with Scottish Equitable and
the Oxford Molecular Executive Retirement & Death Benefit Scheme (each a
"Pension Scheme", and together the "Pension Schemes"), the Companies are
not nor have they been, a party to any agreement or arrangement for the
provision of pensions, allowances, lump sums or other similar benefits
on
76
retirement, for the benefit of any current or former employee of the
Companies (or their dependants) nor have the Companies provided or
promised to provide any ex-gratia pensions, lump sums or similar
benefits for any current or former employee of the Companies or their
dependants in relation to which the Companies have any continuing
liability (actual or contingent). In particular, the Companies are not
under any obligation to pay contributions to any other personal pension
scheme in respect of any employee.
10.3 All material particulars of each Pension Scheme have been disclosed to
the Purchaser, including (without limitation):
(a) the trust deed and rules governing the Oxford Molecular
Executive Retirement & Death Benefit Scheme;
(b) all announcements in respect of the Pension Scheme, to Scheme
members of current effect; and
(c) a schedule of members including details of contributions payable
by members and employer.
10.4 All contributions to the Pension Schemes which are due have been paid by
the due date for payment. There are no expenses (other than expenses
payable by the members) outstanding in relation to either Pension
Scheme. In respect of any employee who is covered for lump sum death
benefits, those benefits are fully insured with an insurance company on
normal terms and all premiums payable have been paid.
10.5 The Pension Schemes are approved by the Board of Inland Revenue for the
purposes of Chapter I or Chapter IV of Part XIV of the Taxes Act and so
far as the Vendor is aware (having made due and careful enquiry), have
at all times and in all respects complied with the provisions of all
relevant statutes, regulations and requirements.
10.6 Save for lump sum death in service benefits, the Pension Schemes provide
only money purchase benefits within the meaning of Section 181 of the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
10.7 There are no claims or actions in progress or pending, nor, so far as
the Vendor is aware, any reason for such claims or actions, in respect
of any pension arrangement of the Companies.
PART 11
OFFICERS AND EMPLOYEES
11.1 DETAILS
The Disclosure Letter contains an accurate and complete list of all
officers and employees of the Company as at the date of this Agreement,
showing all
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remuneration payable and other benefits provided or which the Company
is now bound to provide either now or in the future.
11.2 STATUTORY NOTICES
All appropriate notices have been properly issued under the Employment
Rights ▇▇▇ ▇▇▇▇ to all employees (including directors) of the Company.
11.3 TERMS OF EMPLOYMENT AND CONSULTANCY
The Disclosure Letter contains true, complete and accurate copies
(incorporating all the material terms which currently apply or a
memorandum of such terms) of all service agreements, consultancy
agreements and letters of engagement which have been made with any
employee or consultant of the Company and of specimens of the standard
terms of employment on which any employee of the Company is now employed
together with a note showing which employees are employed under which
type of standard terms.
11.4 NO BONUS OR COMMISSION ARRANGEMENTS
The Company is not bound or accustomed to make periodical or other
payments (other than normal fixed salaries and wages) to employees,
ex-employees, officers, consultants or others and no employee,
officer or consultant has remuneration on a profit sharing or
commission basis or by reference to the turnover, profits, sales or
assets of the Company.
11.5 NO SHARE OPTION SCHEME
Other than as disclosed in the Disclosure Letter, the Company does not
have and never has had any share option, share incentive, profit sharing
or any other similar scheme.
11.6 TERMINATION OF EMPLOYMENT
11.6.1 All contracts of employment between the Company and its officers or
employees are lawfully determinable by the Company without compensation
by notice (not exceeding the relevant statutory minimum period of
notice).
11.6.2 No director or executive of the Company, who is in receipt of
remuneration in excess of GBP20,000 per annum has given or received
notice terminating his employment, except as expressly contemplated in
this Agreement and no such executive will be entitled to give such
notice as a result of the sale of the Sale Shares to the Purchaser.
11.6.3 The Company has no known legal grounds to dismiss any of its employees
who is entitled to remuneration of at least GBP20,000 per annum.
11.7 CLAIMS BY OR AGAINST EMPLOYEES
11.7.1 The Company is not now, nor to its knowledge is it likely to be, and has
not
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since the Balance Sheet Date been, engaged in any legal proceedings or
arbitration whether as plaintiff or defendant with any trade union or
any person who is or has at any time been a director or an employee of
the Company.
11.7.2 No person who is or was a director or employee of the Company has made
any claim (which has not yet been settled) for any compensation or other
payment by reason of the termination of his employment (whether such
termination constitutes unfair or wrongful dismissal redundancy or
otherwise) or any breach by the Company of his terms of engagement or
employment; there are no circumstances arising as a consequence of a
default by the Company or, so far as the Vendor is aware, otherwise
likely to lead to any such claims being made; and no gratuitous payment
has been made or promised by the Company in connection with the
termination or proposed termination of employment of any past or present
director or employee.
11.7.3 No order has been or may be made for the reinstatement or re-engagement
of any employee of the Company.
11.8 INDUSTRIAL RELATIONS
There is not and never has been any strike, picket, lock-out, go-slow,
work-to rule or any other form of industrial dispute taken or threatened
against the Company and, so far as the Vendor is aware, there are no
facts or circumstances which might lead to any such industrial dispute.
11.9 TRADE UNION RECOGNITION
No claim has been made by any trade union for recognition or for any
improvement or amendment to the terms or conditions of employment of any
employees of the Company and no claim for recognition has been referred
to the Advisory Conciliation and Arbitration Service or to the Central
Arbitration Committee nor is any trade union recognised by the Company
in respect of any class of employees for any purpose whatsoever.
11.10 BENEFIT PLANS
11.10.1 Set forth in the Disclosure Letter is a true and complete list of each
(i) "employee benefit plan," as defined in Section 3(3) of the United
States' Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including any "multiemployer plan" as defined in
Section 3(37) of ERISA), and (ii) all other pension, retirement,
supplemental retirement, deferred compensation, excess benefit, profit
sharing, bonus, incentive, stock purchase, stock ownership, stock
option, stock appreciation right, severance, salary continuation,
termination, change-of-control, health, life, disability, group
insurance, vacation, holiday and fringe benefit plan, program or
arrangement (each such plan, program or arrangement described in the
foregoing clauses (i) and (ii) other than a Pension Scheme or other
arrangement covered by paragraph 10, a "Plan") currently maintained,
contributed to, or required to be contributed to, by the Company or any
ERISA Affiliate of the Company or
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under which the Company or any ERISA Affiliate of the Company have
any liability (collectively the "Company Plans"). An "ERISA
Affiliate" means, with respect to the Company, (i) any corporation
included with the Company in a controlled group of corporations
within the meaning of Section 414(b) of the United States Internal
Revenue Code of 1986, as amended (the "Code"); (ii) any trade or
business (whether or not incorporated) which is under common control
with the Company within the meaning of Section 414(c) of the Code;
(iii) any member of an affiliate service group of which the Company
is a member within the meaning of Section 414(m) of the Code; or (iv)
any other person or entity treated as an affiliate of the Company
under Section 414(o) of the Code.
11.10.2 Each Company Plan which is intended to be qualified under Section 401(a)
of the Code has received a favourable determination from the United
States Internal Revenue Service (the "IRS") covering the provisions of
the United States Tax Reform Act of 1986 stating that such Company Plan
is so qualified.
11.10.3 Except as otherwise disclosed in the Disclosure Letter:
(i) The Company and all ERISA Affiliates of the Company are in
compliance in all material respects with the provisions of ERISA
and the Code applicable to the Company Plans. Each Company Plan
has been maintained, operated and administered in compliance in
all material respects with its terms and any related documents
or agreements and the applicable provisions of ERISA and the
Code.
(ii) No Company Plan is subject to Title IV of ERISA and no Company
Plan is a "multiemployer plan" as defined in Section 3(37) of
ERISA.
(iii) The Company Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are
intended to meet the qualification requirements of Section
401(a) of the Code now meet, and at all times since their
inception have met, the requirements for such qualification, and
the related trusts are now, and at all times since their
inception have been, exempt from taxation under Section 501(a)
of the Code.
(iv) Except for claims for benefits in the normal operation of the
Company Plans, there is no pending or threatened audit,
assessment, complaint, proceeding or investigation or any kind
in any court or governmental agency with respect to any Company
Plan.
(v) Neither a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code nor any breach of any
duty imposed by Title 1 of ERISA has occurred with respect to
any Company Plan for which the Company may be directly or
indirectly liable or which could give rise to any obligation of
the Company.
(vi) With respect to each Company Plan that is a "group health plan"
within the meaning of ERISA Section 607(1) and that is subject
to Code Section
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4980B, the Company complies in all material respects with the
continuation coverage requirements of those provisions and
Part 6 of Title 1 of ERISA.
(vi) No Company Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of
service or retirement other than (i) coverage mandated by
law, or (ii) death or retirement benefits under a Company
Plan qualified under Code Section 401(a).
US EMPLOYEE TRUST FUND
11.11 The trust fund established by the Genetics Computer Group, Inc. Grantor
Trust Agreement, a copy of which is attached to the Disclosure Letter as
document 2.13, has no unfunded liabilities, actual or contingent.
PART 12
INSURANCE
12.1 PAST COVER
The Company has been at all material times covered by valid insurance
against such normal risks and for such reasonable amounts of cover as
are commonly insured for the type of business carried on and assets and
stock in trade owned or used by it.
12.2 DETAILS OF INSURANCE COVER
The Disclosure Letter contains accurate summary details of all policies
of insurance maintained by the Company (or which is maintained by a
third party but in which the Company has an interest) and nothing has
been done or omitted to be done which could make any such policy of
insurance void or voidable.
12.3 PREMIUMS PAID
All premiums payable on or before the date of Completion in respect of
any insurance policy in which the Company has an interest have been duly
paid.
12.4 NO OUTSTANDING CLAIMS
There are no claims outstanding by the Company under any insurance
policy nor, so far as the Vendor is aware, are there any circumstances
likely to give rise to any such claim or which would or might be
required under any insurance policy to be notified to the insurers or
which might lead to any liability under such insurance policies being
avoided by the insurers or the premiums being increased.
12.5 EFFECT OF THIS AGREEMENT
No cover afforded by any policy of insurance which is maintained by the
Company or which is maintained by a third party but in which the Company
has
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an interest will terminate by reason of the implementation of this
Agreement.
PART 13
LITIGATION AND LEGAL PROCEEDINGS
13.1 DEFAULTS BY THE COMPANY
The Company is not and since the Balance Sheet Date has not been:
13.1.1 in default under any agreement, deed, instrument, arrangement or
covenant to which it is a party or in respect of any other obligations
or restrictions binding upon it;
13.1.2 liable in respect of any representations or warranties (whether express
or implied) or other matters giving rise to a duty of care on the part
of the Company; or
13.1.3 liable to any fine or penalty as a result of committing or omitting to
do any act or thing which could give rise to such a liability; or
13.1.4 subject to any order or judgment given by any Court or government agency
and has not been party to any undertaking or assurance given to any
Court or governmental agency which is still in force.
13.2 LEGAL PROCEEDINGS
The Company is not and has not since the Balance Sheet Date been engaged
in, and there are no circumstances caused by a default by the Company
or, so far as the Vendor is aware, otherwise likely to lead to the
Company becoming engaged in, any legal proceedings (civil or criminal)
or arbitration as plaintiff, defendant or otherwise howsoever except as
plaintiff in normal debt collection and in respect of which the
aggregate amount of debts due to the Company does not exceed GBP5000.
13.3 DISPUTES WITH GOVERNMENT DEPARTMENTS
There is no dispute with any revenue or other government, local
authority, administrative, official department entity or agency in the
United Kingdom or elsewhere, in relation to the affairs of the Company
and, there are no facts caused by a default by the Company or, so far as
the Vendor is aware, otherwise which are likely to give rise to any such
dispute.
13.4 DEMANDS TO PAY
No demand has been served upon the Company under section 123 of the
Insolvency ▇▇▇ ▇▇▇▇ (or equivalent legislation) and the Company has not
received notice (whether formal or informal) from any lenders of money
to the Company requiring repayment or intimating the enforcement by such
lenders of any security which they may hold over any assets of the
Company and there are
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no such circumstances likely to give rise to any such notice being
given.
PART 14
14 ENVIRONMENTAL MATTERS
14.1 The Vendor is not aware (without having made any enquiry of third
parties) of any specific breaches by any former occupier of the
Properties of relevant environmental laws which may give rise to any
liability on the part of the relevant Group Company.
PART 15
15 NON-CONTRAVENTION
15.1 The execution, delivery or performance of this Agreement and the other
agreements referred to in this Agreement will not directly or indirectly
(with or without notice or lapse of time):
15.1.2 contravene, conflict with or result in a violation of, any law, rule or
regulation or any order, writ, injunction, judgement or decree to which
the Vendor or the Company, or any material assets owned or used by any
of them, is subject;
15.1.3 contravene, conflict with or result in a violation of any of the terms
or requirements of any material license, permit or other governmental
authorisation that is held by the Company or that otherwise relates to
the business of the Company or to any material assets owned or used by
the Company; or
15.1.4 contravene, conflict with or result in a violation or breach of, or
result in a default under, or result in the creation of any lien with
respect to the assets of the Company pursuant to any provisions of any
contract listed on the Disclosure Letter.
15.2 Except as contemplated by this Agreement neither the Vendor nor the
Company is or will be required to make any filing with or give any
notice to, or to obtain any consent from, any governmental body or third
person in connection with the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement.
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SCHEDULE 6
THE RETENTION
In this schedule:
"CLAIM" means a claim pursuant this Agreement and/or Tax Deed which shall be
notified to the Vendor in accordance with this Agreement and/or the Tax Deed
prior to the Release Date and which shall specify the amount alleged to be due
in respect of it from the Vendor to the Purchaser;
"ESCROW ACCOUNT" means an interest bearing deposit account to be opened with
National Westminster Bank PLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ in the joint names
of the Purchaser's Solicitors and the Vendor's Solicitors which account shall
only be operated on the instructions of the authorised signatories from each
firm and in accordance with the terms of this Agreement and shall be free from
any lien charge encumbrance set off or counterclaim (other than as referred to
in this clause);
"OUTSTANDING CLAIMS" means the aggregate of all Claims in respect of which at
any particular time the Vendor's liability shall not have been finally
determined or agreed between the Parties and in respect of which the Purchaser
shall have issued and served on the Vendor proceedings not later than the date
which is 6 months after the date on which the relevant claim was first notified
to the Vendor for the purpose of this Agreement.
"RELEASE DATE" means the first anniversary of Completion; and
"RETENTION" means the sum of US$2,000,000 to be retained out of the
Consideration and paid into the Escrow Account and to be dealt with in
accordance with this schedule or (as the case may be) the balance of such sum
for the time being retained pursuant to this schedule.
1 The Purchaser shall at Completion pay the Retention into the Escrow
Account and the Retention shall be dealt with on the terms of this
schedule.
2 The Retention shall be retained in the Escrow Account until the Release
Date (subject to any earlier release to the Purchaser in accordance with
this schedule) but if no Claim shall be made by the Purchaser by the
Release Date the Retention shall forthwith be released to the Vendor.
3 An amount equal to the extent of the Vendor's agreed or finally
determined liability in respect of a particular Claim (including any
costs awarded or agreed but excluding any amount which the Vendor shall
have paid directly to the Purchaser to discharge or satisfy that Claim)
shall be paid to the Purchaser out of the Escrow Account within seven
days after the extent of that liability shall have been finally
determined or agreed between the Parties.
4 An amount equal to the Retention (that is after deducting any amounts
paid to the Purchaser pursuant to paragraph 3) less the Outstanding
Claims shall be paid
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to the Vendor on the Release Date; and the balance shall continue to be
retained in the Escrow Account.
5 Any amount which shall continue to be retained in the Escrow Account
after the Release Date pursuant to paragraph 4 shall be dealt with as
follows:
(a) the terms of paragraph 3 shall apply to the extent that the
Vendor's liability in respect of any particular Claims shall be
finally determined or agreed between the Parties from time to
time;
(b) within seven days after it shall have been finally determined or
agreed between the Parties that the Vendor shall not be liable
in respect of a particular Claim (or the Purchaser has agreed to
withdraw a Claim in whole or in part) there shall be paid to the
Vendor out of the Escrow Account the amount retained on account
of that Claim (or the relevant part) or (if less) that part of
the Retention as shall exceed the Outstanding Claims for the
time being; and
(c) any amount which shall continue to be retained in the Escrow
Account after the Release Date in respect of a particular Claim
or (if less) that part (if any) of the Retention as shall exceed
the Outstanding Claims for the time being shall nevertheless be
released to the Vendor twelve months after the Claim shall have
been made or (if earlier) six months after the Release Date
unless the Purchaser shall have commenced legal proceedings in
respect of that Claim by the earlier of those two dates.
6 A Claim shall be deemed to be finally determined if and when determined
by a court of competent jurisdiction from which there is no appeal or
from whose judgment the Vendor or the Purchaser (as the case may be) do
or does not appeal within any applicable time limit.
7 For the purposes of this Agreement, legal proceedings shall not be
deemed to have been commenced by the Purchaser unless they have been
both issued and served on the Vendor.
8 Any sums paid out of the Escrow Account in accordance with this schedule
shall be paid together with any interest which shall have accrued on the
sums so paid.
9 Unless payable to the Vendor or the Purchaser in accordance with the
terms of this Agreement neither the Purchaser nor the Vendor nor any
liquidator or similar officer appointed in respect of the Vendor shall
have any right to any payment from the Escrow Account.
10 On Completion the Vendor and the Purchaser shall deliver irrevocable
instructions to their respective Solicitors in the Agreed Form to
operate with the Escrow Account in accordance with the provisions of
this schedule.
11 Any amount of or representing interest paid out of the Escrow Account
shall be paid subject to the deduction of any Taxation required by law.
An amount equal
85
to Taxation on interest earned in respect of monies on the Escrow
Account shall be paid out of the Escrow Account to any person who
shall be liable to any such Taxation liability by the date on which
such Taxation shall be first due for payment (unless and to the
extent that such monies shall already have been paid to such person)
provided that the payee shall have delivered a copy of any tax demand
(or other good evidence of the liability) to the other Parties.
86
SCHEDULE 9
TAX DEED
THIS DEED is made on 2000
BETWEEN:
(1) OXFORD MOLECULAR GROUP PLC a company incorporated in England and Wales
under number 2869950 whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("COVENANTOR"); and
(2) MOLECULAR SIMULATIONS, INC. a Delaware corporation having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇
("BUYER").
1 INTRODUCTION
1.1 By an agreement ("AGREEMENT") of [ ] and made between (1)
the Covenantor (2) the Buyer and (3) Pharmacopeia, Inc., the Buyer
agreed to purchase the Sale Shares (as defined in the Agreement).
1.2 The Agreement provides that the Covenantor will deliver today a duly
executed deed in this form.
2 DEFINITIONS AND INTERPRETATION
2.1 In this deed expressions defined in clause 1.1 of the Agreement shall
bear the same meanings unless the context otherwise requires or unless
they are expressly given different meanings.
2.2 In this deed unless the context otherwise requires:
"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;
"AUDITORS" means the auditors for the time being of the Company;
"CLAIM" means any notice, demand, assessment, letter or other document
issued, or action taken, by or on behalf of any Tax Authority whether of
the United Kingdom or elsewhere, or any form of return, computation or
self-assessment required by law from which it appears that the Company
is subject or is sought to be made subject to, or will or might become
subject to a Taxation Liability;
"COMPANY" means each of the Group Companies or any one or more of them;
87
"COVENANTOR'S RELIEF" means any Relief which is or becomes available to
the Company, other than a Post-Completion Relief;
"DEEMED TAXATION LIABILITY" means the setting off of a
Post-Completion Relief against an Actual Taxation Liability of the
Company in respect of which the Covenantor would have been liable
under clause 3.1 of this deed or (as the case may be) against income,
profits or gains which would have given rise to such an Actual
Taxation Liability in which event the amount of the Deemed Taxation
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;
"EVENT" includes any act, omission, transaction or circumstance,
including (without limitation) any change in the residence of, or the
death of, any person, the execution of the Agreement and Completion;
"GROUP RELIEF" means relief surrendered or claimed pursuant to Chapter
IV of Part X Taxes Act, advance corporation tax surrendered or claimed
pursuant to section 240 Taxes Act and any tax refund surrendered or
claimed pursuant to section 102 Finance ▇▇▇ ▇▇▇▇;
"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 clause 10.2);
"RELIEF" includes any loss, allowance, exemption, set-off, credit
deduction or other relief from any Taxation or relevant to the
computation of any Taxation or of any income profits or gains or any
right to repayment of Taxation;
"TAX" OR "TAXATION" means all forms of taxation and duties (including
stamp duty), levies, imposts, charges, withholdings in the nature of
taxation, national insurance and other contributions and rates in the
nature of taxation and PAYE liabilities whenever created or imposed and
whether of the United Kingdom or elsewhere and any penalty, fine,
interest or surcharge imposed by a Tax Authority related or incidental
thereto but shall not include uniform business rates, water rates,
community charge, council tax or any tax, charge, rate or duty similar
to, corresponding with, replacing or replaced by any of them or any
fine, penalty, interest or surcharge related or incidental thereto ;
"TAX AUTHORITY" means any authority or person whether of the United
Kingdom, United States or elsewhere competent to impose, assess or
collect any Taxation;
"TAXATION LIABILITY" means any Actual Taxation Liability, any Deemed
Taxation Liability, any liability falling within clause 3.1.6 and any
costs, fees and expenses falling within clause 3.1.7 of this deed; and
88
"TAXATION WARRANTIES" means the representations, warranties and
undertakings on the part of the Covenantor contained in paragraphs 8.1
to 8.18 of schedule 5 to the Agreement.
2.3 In this deed references to an "Event" shall be deemed to include any
combination of two or more Events only the first or some or part of
which shall have occurred or be deemed to have occurred on or before
that date where the Event or Events occurring after that date is or are:
2.3.1 the completion of the disposal of any asset which was contracted
to be sold on or before Completion or the performance of any
other act by virtue of an obligation entered into on or before
Completion;
2.3.2 the satisfaction of a condition to which the disposal of any
asset pursuant to a contract entered into on or before
Completion is subject (in which case the disposal shall, for the
purposes of this deed be treated as having being made before
Completion and any Taxation Liability arising from such disposal
shall be treated as having arisen before Completion);
2.3.3 the failure of any person (other than a Group Company) to
discharge a liability for Taxation within a specified period or
the expiry of such a period;
2.3.4 the bringing into the United Kingdom of any document executed
prior to Completion outside the United Kingdom or the
presentation of any document executed prior to Completion for
stamping where the Company is required by law or any court in
the United Kingdom to bring such document into the United
Kingdom or where the bringing of such document into the United
Kingdom is required for the purposes of enabling the Company to
register its title to any asset owned by it;
2.3.5 the making of any chargeable payment (as defined in section 214
Taxes Act); or
2.3.6 the disposal by the Company of any asset pursuant to the
exercise of any option granted on or before Completion.
2.4 The covenants contained in clause 3 of this deed shall be construed as
separate and independent and none of them shall be affected or
restricted by any other except to the extent that any payment made by
the Covenantor and received by the Buyer in respect of one covenant
shall discharge the same liability under the other covenants which shall
arise out of the same subject matter.
2.5 Any reference in this deed to any amount being paid by the Covenantor
shall include a reference to any amount being paid to or at the
direction of the Buyer out of the Escrow Account pursuant to schedule 6.
3 COVENANTS
89
3.1 Subject to the provisions of, or referred to in clause 4, the Covenantor
covenants with the Buyer to pay to the Buyer an amount equal to:
3.1.1 any Actual Taxation Liability of the Company in respect of or by
reference to any income, profits or gains earned, accrued or
received or deemed for Taxation purposes to have been or treated
as or regarded for Taxation purposes as earned, accrued or
received on or before Completion;
3.1.2 any Actual Taxation Liability of the Company in respect of, by
reference to or in consequence of any Event which occurred or is
deemed for Taxation purposes to have occurred on or before
Completion;
3.1.3 any Actual Taxation Liability of the Company for which neither
the Company nor any other Group Company is primarily liable in
respect of, by reference to or in consequence of any Event which
occurred or is deemed for Taxation purposes to have occurred on
or before Completion;
3.1.4 any Actual Taxation Liability of the Company which is also a
liability to Taxation of another person (other than a Group
Company) which was at any time prior to Completion treated for
Taxation purposes as a member of the same group, as controlled
by or as having control of or as otherwise associated with the
Company and which is payable by the Company by virtue of both
such relationship and the other person failing to discharge such
liability to Taxation;
3.1.5 any Deemed Taxation Liability;
3.1.6 any liability of the Company (other than to a Group Company) to
repay the whole or any part of any payment received for Group
Relief pursuant to any agreement or arrangement entered into by
the Company on or before Completion; and
3.1.7 any reasonable third party costs, fees and expenses reasonably
incurred by the Buyer or the Company as a result of:
(a) any Actual Taxation Liability within clause 3.1.1 ,
3.1.2, 3.1.3 or 3.1.4;
(b) any Deemed Taxation Liability within clause 3.1.5; or
(c) any liability falling within clause 3.1.6
to the extent that, in any such case, the Covenantor is liable
to make a payment under this clause 3.1 in respect thereof or in
successfully taking any action under this clause 3.
3.2.1 Any sum payable by either party under clause 3.1 or clause 12
of this deed shall be paid free and clear of all deductions or
withholdings or
90
rights of counterclaim or set-off unless the deduction or
withholding is required by law.
3.2.2 If either party ("THE PAYER") is required by law to make any
deduction or withholding from any payment under clause 3.1 or
clause 12 of this deed, the sum due from the payer in respect of
such payment shall be increased to the extent necessary to
ensure that after the making of such deduction or withholding
the party entitled to such payment receives and retains a net
sum equal to the sum it would have received had no deduction or
withholding been required to be made.
3.2.3 If any amount paid or due to either party (the "Recipient")
under clause 3.1 or clause 12 of this deed results in an Actual
Taxation Liability of the Recipient the party liable to make
such payment (the "Payer") covenants with the Recipient to pay
the Recipient such further sum as will ensure that the net
amount received and retained by the Recipient after such Actual
Taxation Liability is taken into account shall equal the full
amount which would have been received and retained by the
Recipient in the absence of such Actual Taxation Liability.
4 EXCLUSIONS AND LIMITATIONS
4.1 The Covenantor shall not be liable for breach of any of the Taxation
Warranties in respect of any Taxation Liability (or where the loss,
liability or damage arising in consequence of a breach of any of the
Taxation Warranties is any Taxation Liability) or for any claim under
this deed in respect of any Taxation Liability to the extent that:
4.1.1 it has been included in any of the Completion Liability Lists in
accordance with Schedule 10 to the Agreement or has been
deducted or paid from the Retention in accordance with
paragraphs 7, 9, 10 or 11 of Schedule 10 of the Agreement or an
amount in respect thereof has been paid to the Buyer pursuant to
paragraph 10.1 of Schedule 10;
4.1.2 it arises in consequence of, or would have been reduced or
eliminated but for:
(a) save where requested in writing by the Covenantor under
clause 7 or 11, any voluntary act or omission of the
Company or a member of the Purchaser's Group after
Completion otherwise than in the ordinary course of the
business of the Company as carried on at Completion and
otherwise than pursuant to a legally binding obligation
of the Company in existence at Completion;
(b) save as provided in clause 2.3, the combined effect of
any Event occurring before Completion and any Event
occurring after Completion;
91
(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;
(d) the Company changing the date to which it makes up its
accounts or changing any of its accounting policies,
bases or practices (including, without limitation, the
treatment of timing differences and the bases on which
the Company values its assets) in either case after
Completion save where such changes are necessary to
comply with relevant law or generally accepted
accounting practices as applied before Completion;
(f) the Company disposing of any capital asset (save as
provided in clause 2.3), or ceasing to be a member of a
group for the purposes of any Taxation, after
Completion;
(g) 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 account in computing and so reducing any
provision which appears in the Accounts or the
Completion Liability Lists (or eliminating any provision
which would otherwise have appeared in the Accounts or
the Completion Liability Lists and which was disclosed
in writing in sufficient detail and time by the
Covenantor to the Buyer to enable the same reasonably to
be made, given or done or the withdrawal or amendment by
the Company after Completion of any such claim,
election, surrender, disclaimer, notice or consent made
by the Company prior to Completion;
(h) save where requested in writing by the Covenantor under
clause 7 or 11, any claim, election, surrender,
disclaimer, notice or consent for Taxation purposes made
by the Company after Completion, the making or doing of
which was not taken into account in computing and so
reducing any provision which appears in the Accounts or
the Completion Liability Lists (or eliminating any
provision which, would otherwise have appeared in the
Accounts or the Completion Liability Lists);
(i) any failure by the Buyer or the Company to comply with
its obligations under clause 7 (Conduct) or clause 11
(Taxation Computations);
(j) any legislation or any change in the rate of any
Taxation or any imposition of Taxation or change in the
published practice of, or general concession operated
by, any Tax Authority or change in interpretation of law
in each case coming into effect after Completion;
92
(k) the rate or average rate of any Taxation for any period
which is applicable to the Company increasing as a
result of the sale and purchase of the Company under the
Agreement, including (without limitation) the Company
ceasing to be subject to corporation tax at the small
companies' rate (or qualifying for relief under section
13(2) Taxes Act) and becoming subject to corporation tax
at the rate applicable to companies generally;
(l) the Buyer has recovered damages or any other amount
under the Agreement (whether for breach of warranty or
otherwise) under this deed or otherwise in respect of
the same loss, liability, damage or Event or the Buyer
or the Company have otherwise obtained reimbursement or
restitution from the Covenantor;
(m) it arises as a result of the exercise by any director or
employee of the Company of any option to acquire shares
in the Vendor in accordance with clause 6.12 of the
Agreement where such exercise takes effect after
Completion.
4.1.4 any Covenantor's Relief is or becomes available (or is made
available) to the Company to mitigate the Taxation Liability or
breach;
4.1.5 it arises in consequence of an Event in the ordinary course of
business of the Company since the Balance Sheet Date and,
without limitation, for the purposes of this clause 4.1.5 each
of the following Taxation Liabilities shall be deemed to so
arise:
(a) any liability to corporation tax in respect of actual
(as opposed to deemed) income profits or gains earned,
accrued or received by the Company since the Balance
Sheet Date;
(b) any Taxation Liability which is discharged after the
Balance Sheet Date, or may be so discharged, out of
monies deducted or withheld for the purpose by the
Company;
(c) any liability to VAT in respect of any supply,
importation or acquisition of or by the Company since
the Balance Sheet Date;
(d) anything done by the Company at the written request of
the Buyer between the date of the Agreement and
Completion;
and further for the purposes of this clause 4.1.5 (and
without prejudice to the generality hereof) none of the
following shall be regarded as arising or being in the ordinary
course of business of the Company:
(e) a liability arising under part XVII (other than Chapter
II) Taxes Act;
(f) a distribution within the meaning of section 209 Taxes
Act;
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(g) an acquisition, disposal or supply or deemed acquisition
disposal or supply of assets, goods, services or
business facilities of any kind (including a loan of
money or a letting, hiring or licensing of tangible or
intangible property) for a consideration which is
treated for Taxation purposes as more than the actual
consideration paid or received in which event only the
additional Taxation payable as a result thereof shall be
treated as within this paragraph (g);
(h) any liability for Taxation for which the Company is not
primarily liable;
(i) a liability arising as a result of a failure by the
Company to deduct, withhold or account for Taxation;
(j) a liability arising as a result of the Company ceasing
for Taxation purposes to be a member of any group or
associated with any other company.
4.2 The provisions of clause 10 and paragraphs 2, 3 (other than
sub-paragraphs (b) (c) and (d) thereof), 6 and 8 of schedule 13 to
the Agreement shall apply to this deed as if set out in full herein.
5 WAIVER
Without prejudice to the provisions of and referred to in clause 4 no
delay or omission of the Buyer in exercising any rights under this deed
shall prejudice such rights or be construed as a waiver or partial
waiver of such rights, nor shall it exclude the further exercise of such
rights.
6 PAYMENT
6.1 If the Covenantor becomes liable to pay any amount under clause 3.1 of
this deed in respect of:
6.1.1 an Actual Taxation Liability, the Covenantor shall pay such
amount on or before the date 5 Business Days after the date of
written notice from the Buyer to the Covenantor of the amount
which the Covenantor is 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;
6.1.2 a Deemed Taxation Liability, the Covenantor shall pay such
amount on the later of the date which is 5 Business Days after
the date of written notice from the Buyer to the Covenantor of
the amount which the Covenantor is required to pay and
requesting payment, and the date on which the Actual Taxation
Liability which would have arisen but for the set off of the
relevant Post-Completion Relief would otherwise have become due
for payment;
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6.1.3 any liability referred to in clause 3.1.6, the Covenantor shall
pay such amount on the later of the date which is 5 Business
Days after the date of written notice from the Buyer to the
Covenantor of the amount which the Covenantor is required to pay
and requesting payment or, if later, the date 2 Business Days
before the date on which the liability in question is due for
payment;
6.1.4 any amount within clause 3.1.7, the Buyer will notify the
Covenantor 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
Covenantor shall pay such amount on or before the date 5
business days after the date of such notice or, if later, the
date 2 Business Days before the date on which the costs fees or
expenses in question are due for payment.
6.2 If any sum due for payment under this deed is not paid by any party on
the due date for payment then such sum shall bear interest (which shall
accrue from day to day after as well as before any judgement for the
same) at the annual rate of 4 percentage points above the base rate of
Barclays Bank plc from time to time from the due date up to and
including the day of actual payment of such sums, such interest to be
compounded quarterly and paid on demand by the party entitled thereto.
7 CONDUCT OF CLAIMS
7.1 If the Buyer or any Group Company (or any of their officers, employees,
servants or agents) becomes aware of a Claim which will or may give rise
to a claim against the Covenantor under this deed or any of the Taxation
Warranties, the Buyer shall or shall procure that the relevant Group
Company shall as soon as reasonably practicable (taking into account any
statutory or other time limit applicable for responding to or appealing
against the Claim) give written notice of the Claim to the Covenantor
but so that the giving of such notice shall not be a condition precedent
to the liability of the Covenantor hereunder. Such written notice shall
include an estimate (based on the information then available to the
Buyer or any Group Company) of the Covenantor's liability under this
deed in respect of such Claim, the basis of calculation of that estimate
and such details of the Claim as are then available to the Buyer or the
relevant Group Company.
7.2 The Buyer shall and shall procure that the Company shall take such
action (and provide such relevant information assistance and
documentation to the Covenantor in relation thereto) as the Covenantor
may reasonably request (having regard to the balance for the time being
standing to the credit of the Escrow Account referred to in Schedule 6
to the Agreement) to avoid, dispute, resist, appeal, reduce, compromise
or defend any Claim referred to in clause 7.1 and any adjudication in
respect thereof ("DISPUTE") subject to the Buyer and the Company being
indemnified to the Buyer's reasonable satisfaction by the Covenantor
against all losses, damages, interest, penalties and surcharges and
reasonable costs and expenses thereby incurred.
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7.3 Subject to the provisions of this clause 7.3 and 7.4, any dispute
relating to a Claim referred to in clause 7.1 shall if the Covenantor
requests be conducted by the Covenantor but:
7.3.1 the Covenantor shall keep the Buyer informed of all relevant
matters relating to the dispute and shall promptly forward or
procure to be forwarded to the Buyer copies of all relevant
correspondence with any Tax Authority and other relevant
information and documentation other than, in any event, any
advice to the Covenantor as to its liability in respect of the
relevant Claim or dispute under this deed or the Agreement;
7.3.2 all material communications written or otherwise relating to the
dispute which are to be transmitted to a Tax Authority shall
first be submitted to the Buyer for approval and shall only be
finally transmitted if such approval is given such approval not
to be unreasonably withheld or delayed;
7.3.3 the appointment of solicitors or other professional advisers
(other than the Vendors' own solicitors or the Vendors' own
accountants) shall be subject to the prior written approval of
the Buyer such approval not to be unreasonably withheld or
delayed;
7.3.4 the Covenantor shall make no settlement or compromise of the
dispute nor agree any matter in the conduct of such dispute
which is likely to increase the amount thereof or adversely
affect the future liability of the Buyer or the Company to
Taxation without the prior approval of the Buyer such approval
not to be unreasonably withheld or delayed.
7.4 Subject to the Buyer having complied with its obligations under clause
7.1 and 7.2 the Buyer or the Company may without reference to the
Covenantor admit, settle, discharge, compromise or otherwise deal with
any particular Claim to which clause 7.1 applies (without prejudice to
their rights under this deed) if:
7.4.1 the Covenantor serves a written notice on the Buyer to the
effect that in relation to any such Claim (or any dispute in
relation to such Claim) it does not wish to take up or continue
the conduct thereof;
7.4.2 a period of 45 Business Days has expired following the service
of a written notice by the Buyer on the Covenantor pursuant to
this clause 7.4.2 where either (a) the Covenantor has not made a
request to the Buyer in accordance with clause 7.2 in relation
to the relevant Claim or (b) where the Covenantor has made a
request pursuant to clause 7.3 in respect of the relevant Claim
but has failed to provide an indemnity pursuant to clause 7.3;
7.4.3 a period of 30 Business Days has expired following the service
of written notice under this clause 7.4.3 by the Buyer or the
Company on the Covenantor to the effect that the Covenantor is
not conducting the
96
dispute relating to a Claim in respect of which it has made a
request under clause 7.2 in a reasonably timely manner, if by
the expiry of that period the Covenantor has not taken steps
to so conduct the dispute; or
7.4.4 the Covenantor or the Company have committed any acts or
omissions prior to Completion which constitute fraud or
fraudulent conduct in relation to the Taxation affairs of the
relevant Company.
7.5 If the Covenantor does not exercise its right to request the Buyer to
take action pursuant to clause 7.2, it shall at the written request of
the Buyer supply or procure the supply to, the Company and the Buyer
free of charge with all information, books, papers and other documents
in the possession or under the control of the Covenantor in relation to
the relevant Claim other than, in any event, any advice to the
Covenantor as to its liability in respect of the relevant Claim or
dispute under this deed or the Agreement.
8. MITIGATION OF LIABILITY
8.1 The Covenantor may, in particular but without limitation, by notice in
writing to the Buyer avoid or reduce any liability which the Covenantor
would, apart from this clause 8.1, have under clause 3 of this deed or
for breach of any of the Taxation Warranties by surrendering or
procuring the surrender to the Company of Group Relief (without the
Buyer or any Group Company being liable to make any payment in
consideration for such surrender) and the liability of the Covenantor
under clause 3 of this deed or for breach of any of the Taxation
Warranties shall be satisfied or avoided to the extent of the amount of
Taxation which is or could be satisfied or avoided as a result of such
surrender. The Buyer shall procure that each Group Company takes (at the
reasonable cost and expense of the Covenantor) all such steps, including
(without limitation) making and giving all such claims and consents as
the Covenantor may request in writing to effect any such surrender.
9 RECOVERY FROM THIRD PARTIES
9.1 If the Covenantor has made a payment to the Buyer under clause 3 of this
deed or for breach of any of the Taxation Warranties or is liable to
make such a payment the due date of which has not yet arisen in
accordance with clause 6 and the Company or any other Group Company is
entitled to recover from any third party (including any Tax Authority)
any sum in consequence of any Event to which the payment made by the
Covenantor relates the Buyer shall and shall procure that each relevant
Group Company shall (at the reasonable cost and expense of the
Covenantor) use all reasonable endeavours to effect such recovery and
the Covenantor may require the Buyer by notice in writing to take and to
procure that each relevant Group Company takes (at the reasonable cost
and expense of the Covenantor) such action as the Covenantor reasonably
requests to recover such sums.
9.2 The Buyer covenants with the Covenantor to pay to the Covenantor an
amount equal to any sum (up to but not exceeding the amount paid by the
Covenantor to
97
the Buyer under clause 3 of this deed or under the Taxation
Warranties) referred to in clause 9.1 (including any interest or
repayment supplement) which any Group Company or any member of the
Purchaser's Group actually recovers (whether or not pursuant to any
action requested under clause 9.1) less any reasonable costs, fees or
expenses incurred by the Buyer or any Group Company in respect of the
matter in question 5 Business Days after recovering such sums.
10 OVER-PROVISIONS AND RELIEFS
10.1 The Buyer shall at the request of the Covenantor require the Auditors to
determine (as experts and not as arbitrators and at the reasonable
expense of the Covenantor) whether any provision for Taxation in the
Completion Liability Lists has proved to be an over-provision and if so
its amount and if the Auditors determine that there has proved to be any
such over-provision the amount of such over-provision shall be dealt
with in accordance with clause 10.3.
10.2 The Buyer shall at the request of the Covenantor require the Auditors to
determine (as experts and not as arbitrators and at the reasonable
expense of the Covenantor) 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
Covenantor under clause 3.1 of this Deed or for breach of any of the
Taxation Warranties has given rise to a Relief which would not otherwise
have arisen, and:
(a) a liability of any Group Company or any member of the
Purchaser's Group 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
(b) 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
clause10.3.
10.3 Where it is provided under clause 10.1 or clause 10.2 that any amount is
to be dealt with in accordance with this clause 10.3:
(a) the amount shall first be set off against any payment then due
from the Covenantor under this deed or for breach of any of the
Taxation Warranties;
(b) to the extent there is an excess, a refund shall be made to the
Covenantor of any previous payment made by the Covenantor under
this deed or for breach of any of the Taxation Warranties and
not previously refunded under this clause up to the amount of
such excess; and
(c) to the extent that the excess referred to in clause 10.3(b) is
not exhausted thereunder, the remainder of that excess shall be
carried forward and set
98
off against any future payment which becomes due from the
Covenantor under this deed or for breach of any of the Taxation
Warranties.
10.4 Where such determination by the Auditors as is mentioned in clause 10.1
or clause 10.2 has been made, the Covenantor or the Buyer 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.
10.5 If the Auditors determine under clause 10.4 that an amount previously
determined should be amended, that amended amount shall be substituted
for the purposes of clause 10.1 or clause 10.2, 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 Covenantor to the Buyer or, as the case may be, by the
Buyer to the Covenantor.
11 TAXATION COMPUTATIONS
11.1 Subject to complying with the provisions of clause 11.2 below, the
Covenantor or its duly authorised agents shall have the right, at the
cost and expense of the relevant Group Company, to prepare the
corporation tax returns of each Group Company for all accounting periods
ending on or prior to the Balance Sheet Date to the extent that the same
shall not have been prepared before the date hereof. The Covenantor or
its duly authorised agents shall have the right, at the cost and expense
of the Company, to 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 Balance
Sheet Date.
11.2 The Covenantor covenants with the Buyer:
(a) to keep the Buyer and its duly authorised agents and the
relevant Group Company informed of all material matters relating
to the submission, negotiation and agreement of such corporation
tax returns and computations;
(b) 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 Tax
Authority without first being submitted to the Buyer and the
relevant Group Company or their duly authorised agents for their
comments and for the Buyer's approval and shall only finally be
submitted or transmitted on the receipt of the written approval
of the Buyer or its duly authorised agent, such approval not to
be unreasonably withheld or delayed.
99
11.3 In the event that the provisions of clause 11.2 have been complied with
by the Covenantor the Buyer shall procure that each relevant Group
Company shall cause the returns mentioned in clause 11.1 (and all
claims, elections, disclaimers, surrenders and consents assumed to be
made or given therein) to be authorised, signed and submitted to the
appropriate Tax Authority and generally do all such things as may be
necessary to give effect to such returns, claims, elections,
disclaimers, surrenders or consents save that the Buyer shall not be
bound to procure any such actions to the extent that the same may be
unlawful or may increase the Taxation Liability of any Group Company or
the Buyer for accounting periods ending after Completion.
11.4 The Buyer shall (if requested in writing by the Covenantor and at the
reasonable cost and expense of the Covenantor) procure that each Group
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 Accounts or any of the Completion Liability Lists (or in
eliminating any provision which would have so appeared) or which relate
to any Covenantor's Relief and which are permitted by law, and generally
does all such things as may be necessary to give effect to such returns,
claims, elections, surrenders or consents and which are permitted by
law.
11.5 If at any time the Covenantor has not exercised its right pursuant to
clause 11.1, the provisions of clause 11.2 shall apply as if reference
to "the Covenantor" are references to "the Buyer", as if references to
"the Buyer" are references to "the Covenantor" and as if the words "and
the relevant Group Company" in clauses 11.2(a) and 11.2(b) are deleted.
11.6 The Buyer acknowledges that trading losses and other amounts eligible
for surrender by Group Relief by the Group Companies (other than the US
Companies (as defined in paragraph 8.1 of schedule 5 to the Agreement))
for the accounting period current at Completion of up to GBP1,000,000
(but in any event no more than is required by the Vendor to eliminate
gains previously realised on the sale of Cambridge Discovery Chemistry
Limited pursuant to the agreement referred to in clause 6.11 of the
Agreement) are to be surrendered for no payment to the Covenantor and/or
a member of the Vendor's Group for the purpose of Group Relief to the
extent allowed by sections 402-413 Taxes Act. No correspondence
concerning or computation implying the date when arrangements for the
transfer of any Group Company to the Buyer came into existence or the
amount of the trading losses or other amounts available for the purpose
of Group Relief shall be sent by the Buyer or any person acting on its
behalf to any Tax Authority without the prior written approval of the
Covenantor.
11.7 The Buyer shall provide, and shall procure that each Group Company
provides, the Covenantor (at the reasonable expense of the Covenantor)
with such documents, information and assistance (including, without
limitation, access to books, accounts, records and personnel) as the
Covenantor may reasonably
100
require in connection with its conduct of the Group Companies Taxation
affairs pursuant to this clause 11 or in connection with the exercise
of the Covenantor's rights under this deed (including, without
limitation, clause 7).
12 BUYER'S COVENANT
12.1 The Buyer covenants with the Covenantor (for itself and as trustee for
each company (other than any Group Company) which is controlled or has
at any time before or after Completion been controlled by the
Covenantor, each such company being referred to in this clause 12 as a
"VENDOR COMPANY") to pay to the Covenantor or, as the case may be the
relevant Vendor Company an amount equal to any Actual Taxation Liability
of the Covenantor or, as the case may be, of the relevant Vendor Company
plus any reasonable costs and expenses incurred by the Covenantor or the
relevant Vendor Company in relation to such Actual Taxation Liability or
in successfully making any claim under this clause 12.1) where such
Actual Taxation Liability arises as a result of the failure by a Group
Company to discharge after Completion an Actual Taxation Liability for
which that Group Company is primarily liable and which is not within
clause 3.1 of this deed.
13 REDUCTION OF CONSIDERATION
Any amounts payable by the Covenantor pursuant to this deed shall be
deemed to constitute a reduction in the Consideration.
14. GENERAL, NOTICES, GOVERNING LAW AND JURISDICTION AND COUNTERPARTS
The provisions of clauses 12.3 (Releases and Waivers), 12.4 (Notices),
12.7 (alterations), 12.8 (severability), 12.9 (counterparts) and 12.11
(successors and assigns) and13 (choice of law submission to jurisdiction
and service of process) of the Agreement shall apply equally to this
deed.
Executed as a deed by OXFORD )
MOLECULAR GROUP PLC by ) ----------------------
the signature of a director and the ) Director
secretary or of two directors of the company )
----------------------
Director/secretary
Executed as a deed by MOLECULAR )
----------------------
101
SIMULATIONS, INC. acting by ) Authorised officer
----------------------
Authorised officer
102
SCHEDULE 10
CALCULATION AND PAYMENT OF THE CONSIDERATION
1 The Consideration for the Sale Shares shall be US$26,962,500 less the
amount agreed or determined in accordance with this schedule of:
1.1 the Restructuring Liabilities;
1.2 the Finance Lease Liabilities;
1.3 the Additional Liabilities; and
1.4 the Non-Assumed Liabilities
as all those expression are defined in paragraph 3 below.
2 As at the date of this Agreement:
2.1 the Restructuring Liabilities are estimated to be US$3,100,000
("ESTIMATED RESTRUCTURING LIABILITIES AMOUNT");
2.2 the Finance Lease Liabilities are currently estimated to be
US$2,800,000 ("ESTIMATED FINANCE LEASE LIABILITY AMOUNT"); and
2.3 the Non-Assumed Liabilities are currently estimated to be
US$1,300,000 ("ESTIMATED NON-ASSUMED LIABILITIES AMOUNT").
3 For the purposes of this Agreement, the following expressions shall have
the following meanings:
3.1 "RESTRUCTURING LIABILITIES" means any and all liabilities of the
Group, actual or contingent, known or unknown, as at the
Completion Date or due thereafter which relate to the specific
restructuring costs specified in the reorganisation accrual
schedule prepared by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, a copy of which has
been signed by and on behalf of the Parties to this Agreement
and are annexed as Appendix "C", including, whether or not
specified in such schedule, any and all liabilities of the
Group, actual or contingent, known or unknown, as at the
Completion Date or due thereafter which relate to the closure of
the Group's French office;
3.2 "FINANCE LEASE LIABILITIES" means any and all liabilities of the
Group, actual or contingent, known or unknown, present or
future, in respect of finance and other capital leases (but for
the avoidance of doubt excluding leases relating to the
occupation of land and/or buildings) to which the Group is a
party at the Completion Date, including those specified in the
103
list of finance and capital leases, a copy of which has been
signed by and on behalf of the Parties to this Agreement and is
annexed as Appendix "D";
3.3 "ADDITIONAL LIABILITIES" means any and all other liabilities of
the Group, actual or contingent, known or unknown, present or
future incurred pursuant to the conduct of the Business up to
the Completion Date but for the avoidance of doubt excluding:
(a) any amount falling within the Restructuring
Liabilities, the Finance Lease Liabilities and the
Non-Assumed Liabilities; and
(b) any such amounts in respect of trade and other
creditors (which for the avoidance of doubt shall
exclude all borrowings and indebtedness and
obligations in the nature of borrowings and all
interest, penalties, charges and other liabilities
associated with such borrowings, indebtedness and
obligations and liabilities arising out of any
litigation or adverse judgments (whether or not the
relevant matter arose in the ordinary and normal
course of business of the Group)) incurred in the
ordinary and normal course of business of the Group
and which:
(i) in the case of trade creditors, have remained
unpaid for 45 days or less since the date of
invoice; and
(ii) in the case of any other creditors, have
remained unpaid for 45 days or less since the
due date for payment; and
3.4 "NON-ASSUMED LIABILITIES" means any and all liabilities of the
Group, actual or contingent, known or unknown incurred pursuant
to the conduct of the Business up to the Completion Date, in
respect of trade and other creditors (which for the avoidance of
doubt shall exclude all borrowings and indebtedness and
obligations in the nature of borrowings and all interest,
penalties, charges and other liabilities associated with such
borrowings, indebtedness and obligations and liabilities arising
out of any litigation or adverse judgments (whether or not the
relevant matter arose in the ordinary and normal course of
business of the Group)) incurred in the ordinary and normal
course of business of the Group and which:
(a) in the case of trade creditors, have remained unpaid for
more than 45 days since the date of invoice; and
(b) in the case of any other creditors, have remained unpaid
for more than 45 days since the due date for payment.
4 No later than 3 Business Days prior to the Completion Date, the
Vendor shall procure the preparation of lists of the Restructuring
Liabilities, the Finance Lease Liabilities, the Additional
Liabilities and the Non-Assumed Liabilities
104
known by the Group (such lists prepared in accordance with this
paragraph being referred to in this schedule as the "COMPLETION
LIABILITY LISTS"), such lists to be prepared:
4.1 on the basis of the Vendor's best estimate of the liabilities of
each Group Company falling within the Restructuring Liabilities,
the Finance Lease Liabilities, the Additional Liabilities and
the Non-Assumed Liabilities;
4.2 subject only to paragraph 4.3, using the same accounting
policies as those used in the Accounts; and
4.3 so that such liabilities are otherwise calculated in accordance
with GAAP.
5 The Purchaser shall deduct from the US$26,962,500 consideration payable
for the Sale Shares at Completion:
5.1 in respect of the Restructuring Liabilities, the Estimated
Restructuring Liabilities Amount or, if less or more, the
aggregate amount of the Restructuring Liabilities as shown in
the relevant Completion Liability List, provided that, for
the amount of any liability in respect of the restructuring
costs specified in Appendix "C" to be included in the
relevant Completion Liability List at a lower outstanding
amount than that specified in Appendix "C", the Vendor must
produce with the relevant Completion Liability List evidence
in a form reasonably satisfactory to the Purchaser that the
relevant amount of the liability has been paid or otherwise
settled prior to the Completion Date or other evidence
reasonably satisfactory to the Purchaser that the relevant
liability will not be incurred at all or at a reduced amount
or, if the relevant Restructuring Liability is a non-cash
accounting entry item (such as a write-off of assets or
accelerated depreciation), evidence reasonably satisfactory
to the Purchaser that the relevant accounting entry has been
made properly in accordance with GAAP in the accounting
records of the relevant Group company;
5.2 in respect of the Finance Lease Liabilities, the Estimated
Finance Lease Liability Amount or, if less or more, the
aggregate amount of the Finance Lease Liabilities as shown in
the relevant Completion Liability List, provided that, for the
amount of any liability in respect of a finance or capital lease
specified in Appendix "D" to be included in the relevant
Completion Liability List at a lower outstanding amount than
that specified in Appendix "D", the Vendor must produce with the
relevant Completion Liability List evidence in a form reasonably
satisfactory to the Purchaser that the relevant amount of the
liability has been paid to the relevant lessor and of the
reduced liability from the Group to that lessor or to the extent
that another party (not a Group Company) has assumed the
relevant Group Company's obligations under the relevant lease
with the consent of the relevant lessor in circumstances where
the
105
relevant Group Company is released from its obligations under
the relevant lease;
5.3 in respect of the Additional Liabilities, the aggregate amount
of the Additional Liabilities as shown in the relevant
Completion Liability List; and
5.4 in respect of the Non-Assumed Liabilities, the Estimated
Non-Assumed Liabilities Amount or, if less or more, the
aggregate amount of the Non-Assumed Liabilities as shown in
the relevant Completion Liability List provided that the
relevant Completion Liability List is accompanied by an up to
date listing of the Group's trade creditors at the date of
the relevant Completion Liability List; and
5.5 the sum of US$2,000,000 in respect of the Retention which shall
be dealt with in accordance with schedule 6.
6 For the purpose of this schedule, US$ amounts of liabilities shown in
the Appendix "C", Appendix "D" and the Completion Liability Lists in
Sterling shall be converted at a US$: Sterling exchange rate in London
as shown in the London edition of the Financial Times on the date of
this Agreement.
7 If following Completion and prior to the Release Date (as defined in
schedule 6) it shall be agreed between the Purchaser and the Vendor or
finally determined (as referred to in paragraph 6 of schedule 6) that,
as at Completion, the Group had any Restructuring Liabilities which were
not included within the relevant Completion Liability List then the
Purchaser shall be entitled to be paid from the Retention an amount
equal to the US$ amount of such Restructuring Liabilities to the extent
not included in the relevant Completion Liability List (determined at
the exchange rate referred to in paragraph 6 above).
8 The Purchaser undertakes to the Vendor to use its reasonable endeavours
to minimise any liability which the Group may incur in settling,
compromising, agreeing, paying or otherwise dealing with any of the
matters forming part of the Restructuring Liabilities at any amounts
higher than those appearing in the Completion Liability List.
9 If following Completion and prior to the Release Date (as defined in
schedule 6) it shall be agreed between the Purchaser and the Vendor or
finally determined (as referred to in paragraph 6 of schedule 6) that,
as at Completion, the Group had any Finance Lease Liabilities which were
not included within the relevant Completion Liability List then the
Purchaser shall be entitled to be paid from the Retention an amount
equal to the US$ amount of such Finance Lease Liabilities to the extent
not included in the relevant Completion Liability List (determined at
the exchange rate referred to in paragraph 6 above).
10 In relation to the Non-Assumed Liabilities:
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10.1 if following Completion and prior to 30 September 2000 it shall
be agreed between the Purchaser and the Vendor or finally
determined (as referred to in paragraph 6 of schedule 6) that,
as at Completion, the Group had any Non-Assumed Liabilities
which were not included within the relevant Completion Liability
List then the Vendor shall on 30 September 2000 pay to the
Purchaser in cash an amount (determined at the exchange rate
referred to in paragraph 6 above) equal to the US$ amount of
such Non-Assumed Liabilities to the extent not included in the
relevant Completion Liability List; and
10.2 if following 30 September 2000 and prior to the Release Date (as
defined in schedule 6) it shall be agreed between the Purchaser
and the Vendor or finally determined (as referred to in
paragraph 6 of schedule 6) that, as at Completion, the Group had
any Non-Assumed Liabilities which were not included within the
relevant Completion Liability List or paid by the Vendor under
paragraph 10.1, then the Purchaser shall be entitled to be paid
from the Retention an amount equal to the US$ amount (determined
at the exchange rate referred to in paragraph 6 above) of such
Non-Assumed Liabilities to the extent not included in the
relevant Completion Liability List or paid by the Vendor under
paragraph 10.1.
11 If following Completion and prior to the Release Date (as defined in
schedule 6) it shall be agreed between the Purchaser and the Vendor or
finally determined (as referred to in paragraph 6 of schedule 6) that,
as at Completion, the Group had any Additional Liabilities which were
not included within the relevant Completion Liability List then the
Purchaser shall, subject to the remaining provisions of this paragraph
11, be entitled to be paid from the Retention an amount equal to the US$
amount of such Additional Liabilities (determined at the exchange rate
referred to in paragraph 6 above). To the extent that any such
Additional Liabilities relate to:
11.1 any matter in respect of which the Vendor would be liable under
the Warranties; or
11.2 any Taxation Liability (as defined in the Tax Deed) and any
other amount in respect of which an indemnity is given under the
terms of the Tax Deed,
then the provisions of clause 10, the Tax Deed and schedule 13 (other
than paragraph 2(b) of schedule 13), modified as necessary, shall apply
to limit the Purchaser's entitlement to such payment from the Retention
as if the matter giving rise to the Additional Liability had formed the
basis of a claim by the Purchaser under the Warranties or the Tax Deed
as appropriate.
12 The Vendor undertakes to the Purchaser to pay to the landlord of the
Group's premises at the Medawar Centre, Oxford, the L75,000 costs
applicable to the air conditioning at such premises.
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SCHEDULE 11
GUARANTEES AND LIABILITIES OF THE GROUP COMPANIES
(REFERRED TO IN CLAUSE 6.4)
1 Guarantee given by the Vendor in favour of Barclays Bank PLC to support
the obligations of Oxford Molecular Limited in respect of its banking
facilities (including deferred VAT facility and company credit cards).
2 Guarantee to be given by the Vendor under the new lease to be entered
into by Oxford Molecular Limited (as tenant) in respect of the first and
second floors of the Medawar Centre, Oxford Science Park.
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SCHEDULE 12
APPORTIONMENT OF CONSIDERATION
Chemical Design Holdings plc US$1
Oxford Molecular Limited 35% of the Consideration
Oxford Molecular Group, Inc 65% of the Consideration
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SCHEDULE 13
LIMITATION OF LIABILITY
1 LIMITATIONS
The provisions of this schedule shall operate to limit the liability of
the Vendor under the Warranties and, where expressly provided, the Tax
Deed and references to "breach", "claim" and "liability" (and any
similar expression) shall, unless the context otherwise requires, be
references to a breach of or a claim or liability arising under the
Warranties and where expressly provided the Tax Deed.
2 THRESHOLDS
The liability of the Vendor under the Warranties and the Tax Deed shall
not:
(a) arise in respect of any single claim (with claims arising in
respect of the same or similar or related events, acts,
omissions, transactions, defaults, liabilities or subject matter
being aggregated for this purpose) where the liability of the
Vendor but for the operation of this paragraph would not exceed
$5,000; and
(b) arise unless the liability of the Vendor in respect of all
claims (other than claims excluded by sub-paragraph (a) above)
made (or which would have been made but for the operation of
this paragraph) in aggregate exceeds $100,000 but in which event
the Purchaser shall be entitled to recover the whole amount of
the Vendor's liability in respect of all such claims, and not
merely the excess over $100,000.
3 SPECIFIC MATTERS FOR WHICH THE VENDOR IS NOT LIABLE
No claim shall be made and the Vendor shall have no liability to the
Purchaser:
(a) in respect of any warranty, representation, indemnity, covenant,
undertaking or otherwise arising out of or in connection with
the Sale Shares, except where the same is expressly contained in
this Agreement or the Tax Deed;
(b) if and to the extent that the matter or thing giving rise to the
claim is specifically provided for or reserved in the Accounts
or the Completion Liability Lists (as defined in schedule 10);
(c) in respect of any liability or other matter or thing which
occurs or arises as a result of or is otherwise attributable to
any legislation not in force at the date hereof or any change of
law or administrative practice which comes into force after the
date hereof or any increase in the rate of taxation in force at
the date hereof;
(d) as a result of any claim resulting from a change in the
accounting or taxation policies of any Group Company or the
Purchaser after
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Completion (assuming for these purposes Warranty 3.1.2 to be
accurate); and
(e) in respect of any liability or other matter or thing under the
Warranties or the Tax Deed if that liability, matter or thing
would not have arisen or occurred but for an act, omission or
transaction done, made or carried out before Completion at the
written request of the Purchaser or any of its officers, agents,
employees or advisers.
4 THIRD PARTY RECOVERY
If the Vendor pays to the Purchaser an amount in discharge of a claim
(other than under the Tax Deed, to which the provisions of clause 9 of
the Tax Deed shall apply) for a breach and the Purchaser subsequently
recovers from a third party (including insurers) a payment which is
specifically referable to the matter giving rise to the claim the
Purchaser shall provided no other sums are due by the Vendor hereunder
and save to the extent that the Purchaser's Claims (as defined in
schedule 6) exceed the amount of the Retention, repay to the Vendor:
(a) an amount equal to the sum recovered from the third party less
out-of-pocket expenses and other losses incurred by the
Purchaser in recovering the same; or
(b) if the figure resulting under sub-paragraph (a) above is greater
than the amount paid by the Vendor to the Purchaser in respect
of the relevant claim, such lesser amount as shall have been so
paid by the Vendor.
5 THIRD PARTY CLAIMS
5.1 If the Purchaser or any Group Company shall receive any claim made by a
third party (other than a Tax Authority or a Claim as defined in the Tax
Deed, as to which the conduct of claims provisions of the Tax Deed shall
apply) ("THIRD PARTY CLAIM") which will give rise to a liability on the
Vendor for breach of Warranty the Vendor shall be entitled to require
the Purchaser at the expense of the Vendor to take or procure to be
taken all such reasonable steps or proceedings as the Vendor may
reasonably require (having regard to the balance for the time being
standing to the Escrow Account) in order to avoid, dispute, resist,
mitigate, compromise, defend or appeal against any relevant third party
claim (the identity of legal or other professional advisors shall be
subject to approval by the Purchaser, not to be unreasonably withheld or
delayed, and the Purchaser shall not, and shall procure that no Group
Company shall, accept or pay or compromise the third party claim or make
any admission in respect of it without the prior written consent of the
Vendor (such consent not to be unreasonably withheld or delayed))
provided that:
(c) the Vendor agrees in writing to indemnify the Purchaser and the
Group against all damages, losses, claims, liabilities, costs
and expenses suffered or incurred by them in connection with the
taking of such steps or proceedings;
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(d) the dispute, defence, compromise or settlement of such third
party claim or other proposals of the Vendor in connection
therewith will not in the opinion of the Purchaser have any
material adverse effect on the business of the Purchaser and/or
the Group;
(e) the Purchaser shall not be obliged to compromise or settle any
third party claim at an amount required by the Vendor if such
amount exceeds the amount at which the Purchaser is itself
prepared to compromise or settle such claim;
(f) the third party claim is and continues to be a claim for
monetary damages only,
(collectively the "LITIGATION CONDITIONS"). In the event that the
Litigation Conditions are not or cease to be satisfied in respect of
any third party claim, the Vendor's right under this paragraph 5.1 in
respect of such third party claim shall terminate.
6 NO DOUBLE LIABILITY
The Vendor shall not be liable (liability for this purpose including a
deduction from the Consideration having been made in respect thereof
under paragraph 1 of schedule 10) under the Warranties and/or the Tax
Deed or any other provision of this Agreement in respect of the same
liability.
7 MITIGATION
Nothing in this Agreement shall affect any common law duty of the
Purchaser to mitigate its loss and if, in relation to any claim, no such
common law duty shall apply (whether because the claim is under an
indemnity or because an indemnity basis of damages applies or
otherwise), the Purchaser nevertheless shall act as if such duty did
apply provided that for the avoidance of doubt, this paragraph shall not
restrict the Purchaser or the Group from taking or refraining from
taking any action which is reasonably prudent so as to avoid, reduce or
minimise the amount of, or the continuation of, any liability or
unlawful activity or accounting practice not in accordance with GAAP.
8 US INCOME TAX LIABILITY
The Vendor shall not have any liability (liability for this purpose
including a deduction from the Consideration being made on Completion in
respect thereof under schedule 10) under the Warranties and/or the Tax
Deed or any other provision of this Agreement with respect to any United
States state or federal income tax liability (including any interest,
fines or penalties relating thereto) of the US Companies (as defined in
paragraph 8.1 of schedule 5).
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Executed as a deed by OXFORD ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
MOLECULAR GROUP PLC by ) ------------------------
the signature of a director and the ) Director
secretary or of two directors of the company ) /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Director/secretary
Executed as a deed by MOLECULAR ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SIMULATIONS, INC. acting by ) ------------------------
Authorised officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Authorised officer
Executed as a deed by ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PHARMACOPEIA, INC. acting by ) ------------------------
Authorised officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Authorised officer
113