Exhibit 10.1
LRK/GECS/CAN.22.1
4 September 1999
Investment agreement
between
Inveresk Research Group Limited
▇▇▇▇▇▇ ▇▇▇▇▇ and others
and
Candover Investments PLC and others
Contents Page
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1. Interpretation 1
2. Conditions precedent 6
3. Completion and subsequent matters 6
4. Investor protection 7
5. Listing and Sale 10
6. Liaison and information 11
7. Exchange of information 12
8. Publicity 13
9. Representative at Board meetings 13
10. Corporate governance 13
11. Directors emoluments and pensions 13
12. Employee share scheme and Senior Management 14
13. Future business development 14
14. Other investments 14
15. Warranties 15
16. Warranty limitations 15
17. Fees and expenses 16
18. Further assurances 16
19. Notices 16
20. Undertakings by the Directors 17
21. ERISA 19
22. Applicable law 20
Schedules
Schedule 1 The Directors
Schedule 2 The Investors
Schedule 3 Conditions precedent
Schedule 4 Warranties
Schedule 5 Deed of Adherence
Agreed form of Documents
1. Accountants' Report
2. Loan Stock Instrument
3. Directors' Questionnaires
4. MMS Due Diligence Report
5. MMS Property Report
6. Strategy Document
7. Directors' Service Contracts and Letter of Appointment
8. Certificate relating to Newco
9. Resolutions
10. Applications for allotment of shares
11. Articles
12. Acquisition Agreement
13. Environmental Report
14. Facility Agreement
15. Insurance Report
16. Pensions Report
17. Marketing Report
THIS AGREEMENT IS MADE ON
between
(1) INVERESK RESEARCH GROUP LIMITED (registered number 198206) having its
registered office at Elphinstone ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ("▇▇▇▇▇");
(2) THE PERSONS whose names and addresses are set out in Schedule 1 (together
the "Directors" and each a "Director"); and
(3) THE PERSONS whose names and addresses are set out in Schedule 2 (together
the "Investors" and each an "Investor")
WHEREAS the Directors and the Investors have agreed to invest in Newco for the
purposes of and subject to the terms and conditions of this Agreement.
IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 Unless the context otherwise requires, the following expressions
used in this Agreement shall have the meanings set out below:
"Accountants' Report" means the report prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SC relating to the Targets and the documents annexed to such report
all in the Agreed Terms;
"Acquisition Agreement" means the agreement made between the Vendors
and Newco in the Agreed Terms whereby Newco shall purchase the
Target Shares;
"Agreed Terms" means in the form, or substantially in the form,
initialled for purposes of identification by or on behalf of the
parties or, in the case of any document not so initialled, in the
form executed by the parties thereto prior to or contemporaneously
with Completion;
"A Ordinary Shares" means cumulative convertible participating
ordinary shares of (pound)1 each in the capital of Newco having the
rights, and being subject to the restrictions, set out in the
Articles;
"Articles" means the articles of association of Newco in the Agreed
Terms adopted or to be adopted on the date hereof;
"Bank" means The Royal Bank of Scotland plc;
"Board" means the board of directors of Newco;
"B Ordinary Shares" means cumulative convertible participating
ordinary shares of (pound)1 each in the capital of Newco having the
rights and being subject to the restrictions set out in the
Articles;
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"Business Day" means a day (excluding Saturdays) on banks are
generally open in London for the transaction of normal banking
business;
"Claim" means a claim made by the Investors against the Warrantors
(or any of them) under the Warranties;
"Completion" means the occurrence of the events set out in Clause
3.1;
"Completion Date" means 20 September 1999 or such later date as may
be agreed in writing by the parties hereto;
"Connected Persons" or "person connected" means (in respect of any
person) any person or persons connected with that person within the
definition of connected persons contained in section 839 of the
Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"Directors' Questionnaires" means the questionnaires completed by
each of the Directors, each in the Agreed Terms;
"Directors' Service Contracts" means the management service
contracts entered or to be entered into by Newco with each of ▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ each in the Agreed Terms;
"Disclosure Letter" means the letter of disclosure of even date
herewith together with the documents annexed or scheduled thereto
from the Warrantors addressed to the Investors' Agent receipt of
which has been acknowledged in writing by or on behalf of the
Investors' Agent;
"emoluments" shall include all items referred to in paragraph 1(3)
of Schedule 6 to the Act;
"Employee Share Scheme" means a scheme for encouraging or
facilitating the holding of shares in Newco by or for the benefit of
employees or former employees or the wives, husbands, widows,
widowers, or children or step children under the age of 18 of such
employees or former employees of Newco or any other Group Company;
"Employee Trust" means a trust in terms approved by the Investors'
Agent, the beneficiaries of which are employees, former employees or
the wives, husbands, widows, widowers or children or step children
under the age of 18 of such employees or former employees of Newco
or any other Group Company;
"Environmental Report" means the report in Agreed Terms prepared by
RSK Environment Limited relating to environmental matters and
addressed to Newco, the Investors' Agent, the Bank and RBS Mezzanine
Limited;
"Equity Shares" means the Equity Shares as defined in the Articles;
"Facility Agreement" means the facility agreement of even date with
this Agreement between the Bank and Newco in the Agreed Terms;
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"Fees Letters" means the letters of even date with this Agreement
from Newco to the Investors' Agent relating to certain fees and
expenses in connection with this Agreement, the Acquisition
Agreement and the Facility Agreement;
"Group" means Newco and its subsidiary undertakings from time to
time and "Group Company" means any of them;
"Insurance Report" means the report in the Agreed Terms prepared by
▇▇▇▇▇ UK addressed to Newco, the Investors' Agent, the Bank and RBS
Mezzanine Limited;
"Investors' Agent" means Candover Partners Limited, ▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ in its capacity as agent for the Investors;
"Investors' Group" means the Investors, any subsidiary of the
Investors, any holding company of the Investors, any subsidiary of
such holding company, any fund, investment company or partnership
formed for bona fide financial reasons managed by any of the
foregoing, any unit holder, partner or shareholder in any such fund,
investment company or partnership acquiring assets in the same as a
result of a dissolution thereof for bona fide financial reasons, any
co-investment scheme for employees established by the Investors or
subsidiary or holding company or any other subsidiary of such
holding company thereof, and any nominee of any of the foregoing;
"Investors' Representative" has the meaning ascribed thereto in
Clause 9;
"Investors' Subscription Shares" means the Subscription Shares to be
subscribed by the Investors;
"Letter of Appointment" means the letter appointing Ian Sword as
chairman of Newco in the agreed terms;
"Listed Shares" means shares in the capital of Newco listed, or
dealt in, on the London Stock Exchange or on any other recognised
investment exchange;
"Listing" means a listing for, or commencement of dealings in, any
shares in the capital of Newco on the London Stock Exchange or on
any other recognised investment exchange;
"Life Policies" means the keyman life assurance policies insuring
the lives of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ Sword and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for minimum
amounts of (pound)1,000,000, (pound)500,000 and (pound)250,000
respectively for a term of not less than 5 years in the cases of
Messrs ▇▇▇▇▇ and ▇▇▇▇▇▇ and not less than 3 years in the case of Mr
Sword and otherwise in terms acceptable to the Investors;
"Loan Stock" means the (pound)27,037,500 loan stock of Newco
constituted or to be constituted by the Loan Stock Instrument;
"Loan Stock Instrument" means the loan stock instrument in the
Agreed Terms;
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"London Stock Exchange" means The London Stock Exchange Limited or
any successor of it;
"Management" means such members of senior management of the Group
(other than the Directors) as may be determined by the Directors
with the consent of the Investors' Agent ;
"Marketing" means any offer, sale or placing of shares in the
capital of Newco which is initiated or arranged by or on behalf of
Newco;
"Marketing Report" means the report in the agreed terms prepared by
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ addressed to Newco, the Investors' Agent, the Bank
and RBS Mezzanine Limited;
"MMS" means ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ of ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇;
"MMS Due Diligence Report" means a report in Agreed Terms by MMS
addressed to Newco, the Investors' Agent, the Bank and RBS Mezzanine
Limited concerning legal due diligence they have conducted in
relation to the Targets;
"MMS Property Report" means the reports on property owned or
occupied by the Targets in Agreed Terms by MMS of the same date as
this Agreement addressed to Newco, the Investors' Agent, the Bank
and RBS Mezzanine Limited concerning certain properties owned and/or
occupied by the Targets;
"Operating Budget" means in relation to any financial year of Newco
(as defined in the Act), the projected consolidated balance sheet,
profit and loss account and cash flow statement in relation to the
Group, together with the statement of projected capital expenditure
in relation to the Group for that financial year in form and content
approved by the Investors' Agent;
"Ordinary Shares" means ordinary shares of (pound)1 each in the
capital of the Newco having the rights, and being subject to the
restrictions, set out in the Articles;
"Partnership No 1" means the Candover 1997 US No 1 Limited
Partnership;
"Partnership No 3" means the Candover 1997 US No 3 Limited
Partnership;
"Pensions Report" means the report in the Agreed Terms prepared by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Company addressed to Newco, the Investors'
Agent, the Bank and RBS Mezzanine Limited;
"recognised investment exchange" means a recognised investment
exchange as defined in section 207 of the Financial Services ▇▇▇
▇▇▇▇;
"Reports" means the Accountants' Report, the Environmental Report,
the Insurance Report, the Marketing Report, the MMS Due Diligence
Report, the MMS Property Report and the Pensions Report and "Report"
means any of them;
"Special Director" means a director appointed pursuant to Article 25
of the Articles;
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"Strategy Document" means the strategy document relating to Newco
and the documents annexed to such strategy document in the Agreed
Terms;
"Subscription Shares" means the shares in the capital of Newco to be
subscribed for by the Directors and the Investors as provided by
this Agreement;
"Target Shares" means the entire issued share capitals of the
Targets;
"Targets" means SGS Health Sector Services Holdings Limited and
Inveresk Research (North America) Inc.;
"Trust Deed" means any trust deed entered into by Newco in terms
approved in writing by the Investors' Agent in relation to the
Employee Trust;
"Trustees" means the trustees from time to time of the Employee
Trust;
"Vendors" means SGS Health & Biosciences International BV and SGS
North America Inc.;
"Warranties" means the warranties set out in Schedule 4; and
"Warrantors" means the Directors .
1.2 Unless the context otherwise requires, where words and expressions
used in this Agreement are defined in the Companies ▇▇▇ ▇▇▇▇ (the
"Act") such words and expressions shall have the meanings attached
to them respectively by the Act.
1.3 References in this Agreement to any statute or statutory provision
shall be deemed to include references to any statute or statutory
provision which amends, extends, consolidates or replaces the same
(other than any such statute or statutory provision with
retrospective effect to the extent that it is retrospective) and
except to the extent that any amendments or modification enacted
after the date of this Agreement would extend or increase the
liability of any party to any other party under this Agreement and,
save as aforesaid, to any order, regulation, instrument or other
subordinate legislation made thereunder.
1.4 Reference to "Recitals", "Clauses" and "Schedules" and to
sub-divisions thereof are to recitals and clauses of and the
schedules to this Agreement and sub-divisions thereof. The Schedules
shall form part of this Agreement.
1.5 The headings in this Agreement are for convenience only and shall
not affect its construction or interpretation.
1.6 Unless the context otherwise requires:
1.6.1 words denoting the singular shall include the plural and vice versa;
1.6.2 words denoting a gender shall include all genders; and
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1.6.3 references to persons shall include natural persons, bodies
corporate, unincorporated associations, partnerships, joint
ventures, trusts or other entities or organisations of any kind,
including (without limitation) government entities (or political
subdivisions or agencies or instrumentalities thereof).
2. Conditions precedent
2.1 Completion is conditional upon the satisfaction or fulfilment (or
waiver in writing or deemed waiver by the Investors' Agent) of the
conditions set out in Schedule 3 on or prior to the Completion Date
and the same continuing to be fulfilled or satisfied at Completion.
2.2 The Company and each of the Directors shall use their reasonable
endeavours to procure that the conditions precedent set out in
Schedule 3 are satisfied on or before the Completion Date. The
Company shall give notice promptly to the Investors upon all such
conditions precedent having become satisfied or waived .
2.3 If the conditions set out in Schedule 3 are not satisfied on or
before the Completion Date, the Investors' Agent shall be entitled
forthwith by notice in writing to Newco to terminate this Agreement,
whereupon none of the parties hereto shall be under any liability
whatsoever to any other and the Investors shall not be bound to
subscribe for any share of Newco pursuant to this Agreement or
otherwise.
2.4 The Investors' Agent may waive in writing (at its sole and absolute
discretion and whether on further terms and/or conditions or not as
it thinks fit) any or all of the conditions set out in Schedule 3 if
they have not been fully satisfied in accordance with Clause 2.1
and, unless otherwise agreed, will be deemed to have so waived all
of such conditions upon the Investors making payment of the
subscription monies due on the Investors' Subscription Shares.
3. Completion and subsequent matters
3.1 Completion shall take place at such place as the parties shall agree
on the Completion Date when the Investors shall each subscribe (or
provide that their respective nominees subscribe) in cash for the
number of A Ordinary Shares and nominal amount of Loan Stock at the
prices set out opposite their respective names in Schedule 2, each
such subscription to be by way of telegraphic transfer to such
account or in such manner as the Investors shall have been notified
in writing by or on behalf of Newco prior to the Completion Date;
and, subject to the Investors complying with these provisions, Newco
shall allot and issue the A Ordinary Shares and Loan Stock to the
Investors (or their respective nominees) and shall enter the names
of the allottees in the register of members (or Loan Stock holders
as appropriate) of Newco and shall issue and deliver to the
Investors share and Loan Stock certificates duly executed by Newco
for the shares and Loan Stock subscribed by them (or their
respective nominees).
3.2 The proceeds of the subscription shall be used by Newco for the
purpose of paying the consideration due under the Acquisition
Agreement, paying the costs and expenses in connection with the
acquisition of the Target Shares and, in respect of the balance,
providing working capital for the Group.
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3.3 Immediately following Completion Newco shall procure that each of
the Facility Agreement and the Acquisition Agreement is completed to
the extent not already completed.
3.4 Newco undertakes that not later than 30 days after Completion it
shall effect the Life Policies on terms reasonably acceptable to the
Investors' Agent and provide evidence to the Investors' Agent of the
same having been effected as soon as practicable.
4. Investor protection
4.1 Newco hereby agrees with and undertakes to the Investors that:
4.1.1 it shall procure that each of its subsidiaries shall, to the extent
that it has profits available for distribution and so far as lawful,
declare and pay to Newco such dividends as are necessary and it
shall take or procure that all other reasonable steps (which may
include an application to the court for a reduction of capital in
respect of any relevant member of the Group and/or transfer of
assets to one or more new subsidiaries of the Newco) are taken in
order to ensure that the Newco has sufficient distributable profits
to pay all dividends in the amounts and on the dates required by the
Articles and to pay all interest on, and repay the outstanding
balance of, the Loan Stock in accordance with the provisions of the
Loan Stock Instrument; and
4.1.2 it shall not, without the prior consent of the Investors' Agent,
declare, make or pay any dividend (other than the dividends payable
on the A Ordinary Shares in terms of the Articles).
4.2 Newco shall not (and shall not cause or permit or suffer any
subsidiary of it to) without the previous written consent of the
Investors' Agent:
4.2.1 dispose of any share in the capital of any of its subsidiaries or
alter, increase or reduce the authorised or issued share capital of
any subsidiary;
4.2.2 subscribe for or purchase or acquire any share or debenture or
mortgage or security (or any interest in any of them);
4.2.3 re-organise or consolidate or sub-divide or convert any of the
shares for the time being in the capital of its subsidiaries or vary
any of the rights attaching to any of the shares for the time being
in the capital of its subsidiaries;
4.2.4 apply by way of capitalisation any sum in or towards paying up any
debenture or debenture stock;
4.2.5 (save, in the case of Newco, pursuant to any Employee Share Scheme
or Employee Trust established in accordance with the provisions of
Clause 12) issue or agree to issue or grant any option or right to
subscribe at a future date for (or issue or agree to issue any
security carrying a right to be converted at a future date into) any
share in its capital or in any subsidiary of it;
4.2.6 (save, in the case of Newco, pursuant to any Employee Share Scheme
or Employee Trust established in accordance with the provisions of
Clause 12) give any guarantee
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or indemnity or security (other than in respect of other members of
the Group) or permit any such guarantee or indemnity or security to
subsist or vary any such guarantee or indemnity or security or
provide any credit (other than normal trade credit in the ordinary
course of that company's business or to other members of the Group);
4.2.7 (save, in the case of Newco, pursuant to any Employee Share Scheme
or Employee Trust established in accordance with the provisions of
Clause 12) make any loan or advance other than to other members of
the Group or to employees not to exceed in any instance (pound)5,000
in amount;
4.2.8 create any mortgage or charge on any part of its undertaking,
property or assets other than the Security Documents as defined in
the Facility Agreement and save for any encumbrances arising
automatically by operation of law;
4.2.9 incur any capital expenditure or liability in respect of the
acquisition of any business or capital asset whatsoever in excess of
the amount specified in the budget approved by the Investors for
such acquisition or incur in any financial year aggregate capital
expenditure in excess of the amount set out in the Operating Budget
for such financial year;
4.2.10 enter into any new lease of or in respect of machinery or plant if
the machinery or plant concerned is of such importance in the
production process of the lessee and/or is of such specialised
design that such process would be substantially and adversely
affected were such machinery or plant to be repossessed by the
lessor for any reason (but for the avoidance of doubt this
sub-clause shall not prohibit leases in respect of computers used
only for accounting and administrative purposes);
4.2.11 during any financial year of the Newco, enter into any leases of or
in respect of vehicles, machinery or plant not reflected in the
Operating Budget;
4.2.12 borrow any money or incur any indebtedness (save for normal trade
credit) in the nature of borrowing other than borrowing and
indebtedness under or permitted by the terms of the Facility
Agreement;
4.2.13 (save, in the case of Newco, pursuant to any Employee Share Scheme
or Employee Trust established in accordance with the provisions of
Clause 12) enter into any contract or arrangement of a long term
(other than in the ordinary course of business) or unusual nature;
4.2.14 appoint or cause or permit or suffer to be appointed any committee
of its board of directors or discuss any matters or take any
decisions which are material to the Group as a whole otherwise than
at a board meeting;
4.2.15 enter into a service agreement (other than, in the case of Newco,
the Directors Service Contracts) with any director or vary to any
material extent any existing service agreement with a director;
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4.2.16 commence or terminate the employment of any of its directors or
Management (including, without limitation making any of the
Directors or member of the Management redundant);
4.2.17 appoint a chairman of its board of directors;
4.2.18 (save, in the case of Newco, for entering into the Directors Service
Contracts on the Completion Date) enter into any new service
agreement or new contract of or for services (or any series of
contracts for the services of the same person either direct or
indirectly) in the nature of an employment or consultancy or
advisory contract whereunder the liability of it and any of its
subsidiaries exceeds (pound)80,000 (taking into account all
associated costs, benefits, pensions, taxes, duties and perquisites)
in any period of twelve months or vary any such contract for or to a
term of more than one year;
4.2.19 enter into or amend any contract of service with any employee not
terminable on six months' notice or less (other than an amendment
made with the consent of the Remuneration Committee under Clause
11.4);
4.2.20 (save, in the case of Newco, pursuant to any Employee Share Scheme
or Employee Trust established in accordance with the provisions of
Clause 12) establish any new or amend to any material extent any
profit sharing, bonus or incentive scheme;
4.2.21 (save, in the case of Newco, for entering into the Directors'
Service Contracts on the Completion Date) enter into or amend any
contract or arrangement with any shareholder of any member of the
Group or with any director or with any person who is a Connected
Person of a shareholder or of any member of the Group or of any
Director or enter into or amend any contract or arrangement in which
any such person is interested, whether director or indirectly (save
as a shareholder of Newco);
4.2.22 save as provided or reflected in the relevant Operating Budget, sell
the undertaking of it or any of its subsidiaries or any substantial
part thereof or sell any fixed asset of it or any of its
subsidiaries having a book value or market value of more than
(pound)25,000 whether by a single transaction or a series of
transactions or part with control of any company which is for the
time being a member of the Group. For the purpose of this sub-clause
a company shall be deemed to part with control if as a result of any
transaction or series of transactions or any arrangement whether or
not involving a transfer of shares in the relevant subsidiary or the
issue by such subsidiary of further shares that company ceases
(either directly or indirectly) to be the holder of shares
representing the right to exercise 50 per cent. or more of the total
voting rights exercisable at any general meeting of that subsidiary;
4.2.23 save as provided or reflected in the relevant Operating Budget,
purchase or otherwise acquire any heritable or freehold or leasehold
property or any interest therein for an amount in excess of
(pound)25,000;
4.2.24 save as provided or reflected in the relevant Operating Budget, sell
or otherwise dispose of any heritable or freehold or leasehold
property or any interest therein for an amount in excess of
(pound)25,000;
4.2.25 alter its accounting reference date or change its auditors;
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4.2.26 use the name of the Investors' Agent or the Investors (or any of
them) in any context whatsoever or hold itself out as being
connected or associated with the Investors' Agent or the Investors
(or any of them) in any manner whatsoever (other than their
inclusion as a shareholder in returns and accounts required to be
prepared by Newco under the Act);
4.2.27 agree to waive or compromise any rights or claims it has under the
Acquisition Agreement or any documents ancillary thereto;
4.2.28 enter into any new borrowing facility or vary the terms of the
Facility Agreement;
4.2.29 make any alterations or additions to any terms and provisions of any
Trust Deed or Employee Trust or Employee Share Scheme once the same
has been created in accordance with the provisions of Clause 12;
and/or
4.2.30 save as envisaged in Clause 12, provide funds for the purpose of the
Employee Trust by way of gift or loan to the Trustees or by any
other means or provide a guarantee or give a security or undertaking
to any third party in respect of funds borrowed by the Trustees.
4.3 Newco further agrees with and undertakes to the Investors that it
shall not without the previous written consent of the Investors
Agent:
4.3.1 reduce the sum assured by the Life Policies or assign, charge or
otherwise dispose of any interest in or arising under the Life
Policies; or
4.3.2 make any application for a Listing or make any arrangements for any
other form of Marketing.
5. Listing and Sale
Newco and the Directors acknowledge and agree that:
5.1 if a Listing is obtained for any of the Equity Shares:
5.1.1 such Listing shall, at the option of the Investors, extend to the
Equity Shares held by the Investors; and
5.1.2 thereafter the Investors shall (subject to any orderly marketing
arrangements agreed by the Investors' Agent with Newco's brokers or
financial advisers) be entitled to deal freely in any Listed Shares
held by the Investors;
5.2 if any Marketing is made or proposed the Investors shall be entitled
to participate in such Marketing in respect of the same proportion
of their holdings of Equity Shares as the number of Equity Shares
being offered, sold or placed by all other shareholders
participating in such Marketing bears to the aggregate number of
Equity Shares held by all such other shareholders;
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5.3 if a Listing is obtained or in relation to any sale of shares in the
capital of Newco the Investors shall not be required to:
5.3.1 give any kind of representations, warranty, undertaking or indemnity
to any person in respect of any matter or participate in any escrow
fund or other form of retention in respect of liability in respect
of any representation, warranty, undertaking or indemnity given by
an other shareholder, other than a warranty as to title to any such
shares then held by the Investors; or
5.3.2 appoint the sponsor, financial adviser or broker to Newco to act as
their own agent in connection with a sale of any such shares.
6. Liaison and information
6.1 Newco agrees with the Investors that Newco will keep the Investors'
Agent informed of the progress of its business and that of each of
its subsidiaries and furnish the Investors' Agent to such extent and
in such form and detail as the Investors' Agent may from time to
time reasonably require with particulars of any matters concerned
with or arising out of the activities, financial position or
prospects of Newco and those of each of its subsidiary undertakings
and in particular, but without limiting the generality of the
foregoing, shall furnish the Investors' Agent with:
6.1.1 copies of the trading account and audited consolidated profit and
loss account and balance sheet in respect of each accounting
reference period of Newco and every subsidiary undertaking thereof
forthwith upon the same becoming available and not in any event
later than 3 months after the end of each such accounting reference
period;
6.1.2 monthly financial statements in such form as shall be agreed from
time to time between Newco and the Investors' Agent to be provided
within 25 days of the end of the month in question, such financial
statements:
6.1.2.1 to include a consolidated profit and loss account, balance sheet and
cash flow statement for the Group broken down according to the
principal divisions of the Group from time to time;
6.1.2.2 to refer to any material matter occurring in or relating to the
period in question;
6.1.2.3 to include a comparison of all such information with the projections
and forecasts in the relevant Operating Budget and with the
corresponding information (in so far as available) for the same
period in the preceding year and a statement of any material
variation from the Operating Budget;
6.1.2.4 to itemise all material transactions referred to in the statement of
projected capital expenditure included in the relevant Operating
Budget entered into by Newco or any of its subsidiary undertakings
during that period;
6.1.2.5 to have been approved by the finance director and one other director
of Newco as evidenced by their signature of the financial
statements;
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6.1.2.6 to include a commentary by the chief executive or finance director
of Newco on the state of the business of the Group; and
6.1.2.7 to include such other reports as the Investors' Agent may from time
to time reasonably require as to any matter relating to the
businesses or affairs of the Group or to its financial position or
assets;
6.1.3 an Operating Budget in respect of the next financial year, together
with a three year corporate plan, such Operating Budget to be
provided at least 30 days prior to the commencement of the financial
year to which it relates;
6.1.4 copies of any management letter produced by the auditors of Newco or
any of its subsidiary undertakings in connection with the annual
audit to be provided forthwith upon receipt of the same;
6.1.5 quarterly statements showing performance in relation to covenants
contained in the Facility Agreement which are tested during the
relevant month to be provided within 30 days of the month in
question; and
6.1.6 copies of any agendas, minutes and other documents circulated for
(or following) discussion at any meeting of the Board or the board
of any subsidiary at the same time they are given to the Board or
the board of the subsidiary.
6.2 If Newco fails to provide any of the information detailed in Clause
6.1 within the time specified then the Investors' Agent shall be
entitled at any time after having given Newco 14 days' notice of its
failure, to appoint accountants to do so at the cost of Newco and
Newco shall provide such accountants with any assistance which they
may reasonably request to allow them to carry out their task.
6.3 Newco shall ensure that (save for changes required to meet UK GAAP
from time to time):
6.3.1 its annual accounts and each set of management accounts referred to
in Clause 6.2 is prepared, so far as applicable, on the same basis
as that used in the preparation of the relevant Operating Budget and
the Strategy Document and in accordance with accounting principles
and practices generally accepted in the United Kingdom, consistently
applied; and
6.3.2 each report prepared under Clause 6.1.2.7 is in such format as may
reasonably be required by the Investors' Agent.
7. Exchange of information
Newco authorises the Investors' Agent, the Special Directors and the
Investors' Representative (if any) to consult fully with Newco's
bankers and auditors and with any other shareholders or potential
shareholders in Newco as to its affairs and the affairs of any of
Newco's subsidiary undertakings and to exchange information whether
oral or written in such manner as the Investors' Agent and the said
bankers, auditors and other shareholders or potential shareholders
shall deem necessary. This authority shall also extend to any
disclosures of information which the Investors are
13
required to make by law or to the London Stock Exchange or any other
stock exchange or any regulatory body to which the Investors or any
member of the Investors Group is subject and to any information
which the Investor is contractually obliged to provide to any fund
member, shareholder or investor of or in such Investor.
8. Publicity
The parties agree that they shall not (and in the case of Newco it
shall also procure that all other Group Companies shall not) issue
any press release or make any other public announcement in relation
to the subject matter of this Agreement except in accordance with
terms which have been agreed in writing by Newco and the Investors'
Agent or to the extent required by law, the London Stock Exchange or
any other stock exchange, or other regulatory authority to which the
relevant party is subject.
9. Representative at Board meetings
Newco and the Directors confirm that if the Investors have not for
the time being appointed a Special Director pursuant to the Articles
the Investors' Agent shall be entitled to nominate a representative
(the "Investors' Representative") to attend any meeting of the Board
or the board of any subsidiary.
10. Corporate governance
10.1 The management of the affairs of Newco shall be controlled by the
Board.
10.2 The Board shall meet as necessary to discharge its obligations set
out in Clause 10.1 but in any case no less frequently than 10 times
a year.
10.3 Save in the case of an emergency (when as much notice as practicable
shall be given) at least 72 hours' notice of each meeting of the
Board or the board of any subsidiary shall be given to each member
of the relevant board (and, if applicable, the Investors'
Representative) (whether or not he is absent from the United
Kingdom) unless in any particular case a majority of the directors
(including a Special Director or, if applicable, the Investors'
Representative) agree otherwise.
11. Directors emoluments and pensions
Newco hereby undertakes to set up a remuneration committee within 2
months after Completion for the purposes of making all decisions in
relation to the undernoted matters which concern Newco and/or other
members of the Group (the "Remuneration Committee"). The
Remuneration Committee shall comprise the chief executive of Newco
and not less than one, but not more than three, non-executive
directors of Newco (of which one must be a Special Director if such
an appointment has been made) but shall have no other members. The
Special Director (if one has been appointed failing whom one of the
non-executive directors) shall have a second or casting vote in
relation to any matter or decision which the Remuneration Committee
is required to decide. No decision shall be taken on any of the
following matters in relation to Newco and/or any other member of
the Group save with the consent in writing of a majority of the
members of the Remuneration Committee:
14
11.1 any increase in remuneration paid to any Directors or to any
directors of any member of the Group;
11.2 the granting by Newco to any Director or any director of any member
of the Group of any option to acquire, or the issue to any such
Director or to any director of any member of the Group of, shares in
the capital of Newco or any beneficial interest therein under any
employees' share scheme;
11.3 the provision of any money, whether by way of loan or gift or
otherwise, for the acquisition of shares in the capital of Newco in
connection with any employees' share scheme;
11.4 the making of any service agreement (other than the Management
Service Contracts) (or the varying or termination of any such
agreement) with any Director or any director of any member of the
Group, or with any employee of any member of the Group whose
aggregate remuneration is expected to exceed (pound)80,000 per
annum.
12. Employee share scheme and Senior Management
12.1 Subject to the consent in writing of the Investors' Agent, including
without prejudice to the foregoing generality consent as to the
price at which shares are issued (or rights to subscribe or purchase
shares are granted or the terms on which options over shares are
offered), it is acknowledged that following Completion it is the
intention, and Newco shall be entitled, to establish and operate an
Employee Share Scheme and/or an Employee Trust pursuant to which
employees of the Group will be offered an opportunity to subscribe
for B Ordinary Shares or rights to purchase or subscribe for options
over B Ordinary Shares up to a maximum of 28,906 B Ordinary Shares.
12.2 The parties acknowledge that following Completion it is the
intention (and the parties shall, so far as they are able to use
their powers so to do, procure) that the Management are offered an
opportunity to subscribe for up to 31,796 Ordinary Shares of
(pound)1.00 each in the ordinary share capital of Newco (the "Senior
Management Shares") on terms agreed by the Investors' Agent.
13. Future business development
Newco and the Directors agree with the Investors that they shall so
far as they are able procure that any expansion development or
evolution of the businesses of the Group shall only be effected
through Newco or wholly-owned subsidiaries of Newco.
14. Other investments
The Directors agree with the Investors that, save with prior written
consent of the Investors' Agent, they will not make any investment
in any other company save for investments not exceeding 3% in total
of any class of security dealt with on the London Stock Exchange or
any other recognised investment exchange.
15
15. Warranties
15.1 The Warrantors hereby jointly and severally represent and warrant to
the Investors in the terms set out in Schedule 4. The Warrantors
expressly acknowledge and agree that the Investors have entered into
this Agreement in reliance upon such representations and warranties.
15.2 Each of the Warranties shall be separate and independent and are
given subject to the matters fully and fairly disclosed in the
Disclosure Letter and shall not be limited by any constructive
knowledge of the Investors' Agent or the Investors or their agents
or professional advisers.
15.3 Each of the Warranties shall remain in full force and effect
notwithstanding Completion.
15.4 The Warrantors hereby severally undertake with the Investors that
they will each upon becoming aware, at any time after Completion, of
any material change affecting, or any breach of the Warranties, as
soon as is reasonably possible notify the Investors' Agent thereof
in writing and take all such steps as may be reasonably requested by
the Investors' Agent to remedy the same.
16. Warranty limitations
16.1 None of the Warrantors shall have any liability in respect of any
breach or breaches of the Warranties unless and until the aggregate
of all Claims exceed (pound)25,000 in which case the Warrantors
shall be liable for the whole amount and not just the excess.
16.2 No Claim shall be brought by the Investors' Agent against the
Warrantors in respect of any breach of the Warranties unless notice
of such Claim (specifying in as much detail as possible the nature
of the breach and so far as is practicable the amount claimed in
respect thereof) has been given to the Warrantors not later than the
second anniversary of the date of this Agreement (the "Claim Date")
and such Claim (if it has not been waived, withdrawn or settled)
shall be deemed to have been waived in respect of any particular
Warrantor on the date six months after the Claim Date unless
proceedings in respect thereof shall have been commenced against
such Warrantor before such date and for this purpose proceedings
shall be deemed to have been commenced if they have been served or
are deemed by law to have been served on the relevant Warrantor.
16.3 The aggregate liability of each of the Warrantors under the
Warranties shall not exceed:
16.3.1 in relation to ▇▇▇▇▇▇ ▇▇▇▇▇ the amount of (pound)100,000;
16.3.2 in relation to Ian Sword the amount of (pound)62,500; and
16.3.3 in relation to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ the amount of (pound)37,500.
16
16.4 The Investors undertake to the Warrantors that they shall and shall
use all reasonable endeavours to procure that Newco shall take all
reasonable steps to mitigate the amount of any Claim.
16.5 If any Investor makes any Claim against the Warrantors (or any of
them), none of the Directors shall have or pursue any claim or third
party action to join in, claim against, seek a contribution from or
otherwise claim or seek damages or compensation from any Group
Company in respect of any such Claim. Each of the Directors hereby
expressly waives any right of contribution counterclaim or set-off
or any other claim or right of recovery against any Group Company or
any of its officers, employees, auditors or advisers in relation to
any claim. Each of the Warrantors confirms to the Investors that no
Group Company has entered into any indemnity or other agreement or
arrangement concerning the liability of the Warrantors for any
breach of the Warranties or any other provision of this Agreement.
17. Fees and expenses
Newco shall pay the Investors' Agent an arrangement fee equal to
(pound)275,000 (plus any VAT). Such fee shall be payable on the date
of this Agreement. All legal and accountancy fees (plus any expenses
and VAT) of the Investors and the legal fees, subject to a maximum
of (pound)20,000 plus any VAT, of the Directors in relation to this
Agreement shall be for the account of Newco and shall be payable on
the date of this Agreement.
18. Further assurances
The parties (other than Newco) shall at all times (so far as lawful
and consistent with their fiduciary duties) use and exercise the
votes they control at both general meetings of Newco and/or meetings
of the board of directors of the Group to ensure that full force and
effect is given to the express terms of the provisions of the
Articles relating to variation of class rights including deemed
variation of class rights. The parties (other than Newco) shall use
and exercise the votes they control at both general meetings of
Newco and/or meetings of the boards of directors of the Group and
give such consents as may be necessary to enable Newco to comply
with Clause 4.1.
19. Notices
19.1 Any notices or other document to be served under this Agreement may
be delivered or sent by facsimile to the party to be served at its
address appearing in this Agreement or at such other address as it
may have notified to the other parties in accordance with this
Clause and shall (where the party to be served is not an individual)
be marked for the attention of the individual specified in this
agreement or such other individual as the relevant party may have
notified to the other parties in accordance with this Clause.
19.2 Any notice or document shall be deemed to have been served:
19.2.1 if delivered, at the time of delivery; or
19.2.2 if sent by facsimile, the time of despatch.
17
19.3 In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the facsimile message was
properly addressed and despatched as the case may be.
20. Undertakings by the Directors
20.1 Each of the Directors, other than Ian Sword, undertakes to the
Investors that he will, so long as he is employed by any Group
Company (the "employment"), devote the whole of his time and
attention during business hours to the duties of his employment with
Newco and will not be concerned in any other business without
consent from the Investors' Agent. Ian Sword undertakes to the
Investors that he will fulfill his obligations to Newco pursuant to
his appointment as chairman of Newco.
20.2 As each Director, in the course of his employment and directorship,
is likely from time to time to obtain knowledge of trade secrets and
other confidential information of Group Companies and to have
dealings with the customers and suppliers of Group Companies and in
order to protect such trade secrets and other confidential
information and the goodwill of Group Companies, each of the
Directors further undertakes to the Investors and, as a separate
undertaking, to Newco in the terms of Clause 20.3.
20.3 Each Director undertakes to Newco and the Investors that, without
prejudice to any other duty implied by law or equity, he will not,
for a period of 12 months (the "Restricted Period") after he ceases
to be either an employee of, or a consultant to, any Group Company
and does not continue in any such capacity (the "Termination Date"):
20.3.1 be concerned in any business which competes with any business of any
Group Company as carried on at the Termination Date (and in which
the Director was actively involved during the 12 months ending on
the Termination Date) in any territory in which such business was
carried on at such date;
20.3.2 directly or indirectly on his own account or on behalf of or in
conjunction with any person (except on behalf of a Group Company)
canvass or solicit business or custom for goods of a similar type to
those being manufactured or dealt in or services similar to those
being provided by any Group Company at the Termination Date and with
which the Director was actively involved in the course of his
employment during the 12 months ending on the Termination Date from
any person who has been at any time during the 12 months ending on
the Termination Date a customer or client of any Group Company and
with whom the Director was actively involved in the course of his
employment during the 12 months ending on the Termination Date;
20.3.3 directly or indirectly on his own account or on behalf of or in
conjunction with any person induce or attempt to induce any supplier
of any Group Company, with whom the Director was actively involved
in the course of his employment during the 12 months ending on the
Termination Date, to cease to supply, or to restrict or vary the
terms of supply to, any Group Company or otherwise interfere with
the relationship between such a supplier and any Group Company;
20.3.4 directly or indirectly on his own account or on behalf of or in
conjunction with any person induce or attempt to induce any employee
of any Group Company who is
18
engaged in any business or activity carried on by a Group Company at
the Termination Date, and with whom the Director during the 12
months ending on the Termination Date had material dealings in the
course of his employment, to leave the employment of that Group
Company (whether or not his would be a breach of contract by the
employee); or
20.3.5 use or (insofar as he can reasonably do so) allow to be used (except
by a Group Company) any trade name used by any Group Company at the
Termination Date, or any other name calculated or likely to be
confused with such a trade name.
20.4 The parties agree that the foregoing restrictions shall apply even
in circumstances where the relevant Director was made redundant or
was constructively or unfairly or wrongfully dismissed as determined
in accordance with the provisions of Clause 20.5 provided that in
such circumstances the Company shall pay to the relevant Director
each month during the Restricted Period a sum equal to the monthly
remuneration to which he was entitled immediately prior to the
termination.
20.5 Without prejudice to a Director's rights to claim constructive
and/or wrongful and/or unfair dismissal, for the purposes of
determining whether a Director has been constructively and/or
unfairly and/or wrongfully dismissed solely for the purposes of
Clause 20.4 of this Agreement the relevant Director or the
Investors' Agent may request the appointment of an independent
solicitor to determine whether the relevant Director has been
constructively and/or unfairly and/or wrongfully dismissed. Such
appointment shall be made by the relevant Director and the
Investors' Agent either jointly or, in default of an agreement
within seven days of one party notifying the other of its wish to
appoint an independent solicitor, by the President for the time
being of the Law Society of England and Wales on the application of
either party. The certification prepared by such independent
solicitor shall be final and binding on the relevant Director, Newco
and the Investors for the purposes of this Clause 20. Such
independent solicitor shall act as an expert and not as an arbiter.
Newco shall pay the charges of any independent solicitor appointed
in accordance with this Clause 20.5 unless the independent
solicitors determines that the Director was not constructively,
unfairly or wrongfully dismissed in which case the costs shall be
borne by the Director concerned.
20.6 For the purposes of this Clause:
20.6.1 a Director is concerned in a business if:
(i) he carries it on as principal or agent; or
(ii) he is a partner, director, employee, secondee, consultant or
agent in, of or to any person who carried on the business; or
(iii) he has any financial interest other than in accordance with
Clause 14 (as shareholder or otherwise) in any person who
carries on the business; or
(iv) he is a partner, director, employee, secondee, consultant or
agent in, of or to any person who has a financial interest (as
shareholder or otherwise) in any person who carried on the
business,
19
disregarding any financial interest of a person in securities which
are listed or dealt in on any stock exchange if that person, the
Director and any person connected with him are interested in
securities which amount to less than three per cent, of the issued
securities of the same class and which, in all circumstances, carry
less than three per cent, of the voting rights (if any) attaching to
the issued securities of that class; and
20.6.2 references to a Group Company include its successors in business.
20.7 Any of the undertakings on the part of a Director under this Clause
may be released either generally or in any particular case by the
Board with the consent of the Investors' Agent.
20.8 Each covenant contained in each paragraph or sub-clause above shall
be, and is, a separate covenant by each Director and shall be
enforceable separately against each Director and independently of
each of the other covenants and its validity shall not be affected
if any of the others is invalid; and if any of the covenants is void
but would be valid if some part of the covenant were deleted the
covenant in question shall apply with such modification as may be
necessary to make it valid.
20.9 Each Director, having obtained professional advice, acknowledges and
agrees that the covenants contained in this clause in favour of the
Investors are no more extensive than is reasonable to protect the
Investors as subscribers (or transferees) of the A Ordinary Shares.
21. ERISA
21.1 If and for so long as Partnership No 1 or its nominee or Partnership
No 3 or its nominee is a shareholder in Newco, the following
provisions of this Clause shall have effect but not otherwise.
21.2 Partnership No 1 and Partnership No 3 include limited partners which
are entities governed in the United States of America by the
Employee Retirement Income Security Act of 1974 as amended
("ERISA"). It has been agreed that, in order to permit the limited
partners governed by ERISA (the "ERISA Partners") to treat
Partnership No 1 and Partnership No 3 as a "venture capital
operating company" ("VCOC") for purposes of ERISA, each of
Partnership No 1 and Partnership No 3 will obtain certain management
rights in companies in which it invests in a manner and to an extent
that will permit Partnership No 1 and Partnership No 3 to qualify as
a VCOC. Accordingly, it is agreed by Newco and Partnership No 1 and
Partnership No 3 that:
21.2.1 So long as Partnership No 1 or its nominee or Partnership No 3 or
its nominee is a shareholder in Newco, the right to appoint and
remove directors of Newco in accordance with Article 25 of the
Articles may be exercised by Partnership No 1 and/or Partnership No
3.
21.2.2 Partnership No 1 and Partnership No 3 shall have the right, and
Newco grants to Partnership No 1 and Partnership No 3 the right in
so far as it is lawful, to consult with and advise the management of
Newco, at any time or from time to time, on all matters relating to
the operation of Newco, including, without limitation, significant
changes in management personnel and compensation or employee
benefits, the
20
introduction of new products or new lines of business, important
acquisitions or dispositions of plant and equipment, significant
research and development programmes, the purchase or sale of
important patents, trade marks, licences and concessions, and the
proposed compromise of any significant litigation.
21.2.3 Partnership No 1 and Partnership No 3 shall have the right, and
Newco shall grant to Partnership No 1 and Partnership No 3 the
right, in so far as it is lawful, to have its representatives (in
addition to its representatives that are directors) attend meetings
of the Board. Newco shall give, as appropriate to Partnership No 1
and Partnership No 3 (i) at least three days' prior written notice
of each regular meeting of the Board; (ii) such notice as is
necessary under the circumstances to enable Partnership No 1's
representatives and Partnership No 3's representatives to attend
each special or emergency meeting of the Board; (iii) on or prior to
the date of each meeting of the Board, all information given to the
directors at such meeting; and (iv) within 60 days following receipt
of minutes of the meeting of the Board, copies of the minutes of
such meeting.
21.2.4 Newco shall provide to Partnership No 1, if Partnership No 1 so
requests, and to Partnership No 3, if Partnership No 3 so requests,
true and correct copies of all monthly, quarterly and annual
financial reports and budgets prepared by or on behalf of Newco and
its subsidiaries and such other documents, reports, financial data
and other information as Partnership No 1 or Partnership No 3 (as
the case may be) may reasonably request, as such documents are
available to Newco. Newco shall permit any authorised
representatives designated by Partnership No 1 and Partnership No 3
to visit and inspect any of the properties of Newco or any of its
subsidiaries, including its and their books and records (and to make
copies and take extracts therefrom) and to discuss its and their
affairs, finances and accounts with its and their officers and their
current and prior independent public accountants (and by this
provision Newco authorises such accountants to discuss with such
representatives the affairs, finances and accounts of Newco and its
subsidiaries, whether or not a representative of Newco is present),
all at such reasonable times and as often as Partnership No 1 and/or
Partnership No 3 may reasonably request, in so far as it is lawful.
22. Applicable law
This Agreement shall be governed by and construed in accordance with
English law and all the parties hereto irrevocably submit to the
non-exclusive jurisdiction of the High Court in London as regards
any claim, dispute or matter arising out of or relating to this
Agreement or any of the documents to be executed pursuant to it.
AS WITNESS WHEREOF this Agreement has been executed on the date first above
written.
21
Schedule 1
The Directors
(1) (2) (3)
Name Number of Ordinary Shares Consideration
---- ------------------------- -------------
(pound)
▇▇▇▇▇▇ ▇▇▇▇▇ 31,797 100,000
Ian Sword 14,453 62,500
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8,672 37,500
22
Schedule 2
The Investors
(1) (2) (3) (4)
Name & Address Number of A Ordinary Shares Nominal Value of Consideration
-------------- --------------------------- ---------------- -------------
Loan Stock
----------
(pound) (pound)
Candover Investments PLC 48,970 3,180,882 3,229,853
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Candover Trustees Limited 5441 Nil 5441
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ Limited 159,318 9,313,623 9,472,941
Partnership, ▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ acting by
their general partner Candover
Partners Limited
Candover 1997 UK No 2 49,624 2,900,965 2,950,588
Limited Partnership, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
acting by their general partner
Candover Partners Limited
Candover 1997 US No 1 132,275 7,732,725 7,865,000
Limited Partnership, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
acting by their general partner
Candover Partners Limited
Candover 1997 US No 2 44,509 2,601,962 2,646,471
Limited Partnership, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
acting by their general partner
Candover Partners Limited
Candover 1997 US No 3 22,363 1,307,343 1,329,706
Limited Partnership)20 ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
acting by their general partner
Candover Partners Limited
Total 462,500 27,037,500 27,500,000
======= ========== ==========
23
Schedule 3
Conditions precedent
1. The Investors' Agent having received all of the following in form
and substance satisfactory in all respects to it:
1.1 certified true copies of the memorandum and articles of association
and the certificate of incorporation of Newco;
1.2 a certified true copy of the Acquisition Agreement (and of all
agreements, indemnities, deeds and documents to be executed and/or
delivered in terms thereof) and the Management Service Contracts and
the Letter of Appointment all as duly executed;
1.3 a certificate from MMS relating to Newco, in the Agreed Terms;
1.4 evidence that there have been duly passed resolutions of Newco in
the Agreed Terms, inter alia, creating and authorising the allotment
of the Subscription Shares and adopting the Articles as the articles
of association of Newco;
1.5 a duly signed copy of each of the Reports;
2. The Acquisition Agreement having become unconditional in all
respects and the satisfaction of or compliance with all matters
necessary for the due completion of the Acquisition Agreement by the
parties thereto in accordance with its terms save only for the
payment of the purchase price thereunder.
3. The Facility Agreement having become unconditional in all respects
except insofar as it is conditional upon this Agreement having
become unconditional.
4. The Investors' Agent being satisfied in all respects with Newco's
banking facilities and the securities to be granted in respect
thereof.
5. The Investors' Agent being satisfied with the Fees Letters.
6. The Investors' Agent being satisfied with the duly completed
Management Questionnaires.
7. The state of affairs and the prospects of Newco being no worse in
any respect than that shown in the Strategy Document.
8. Each of the persons referred to in Schedule 1 having subscribed in
cash pursuant to an application for allotment in the Agreed Terms
for the number of Ordinary Shares shown opposite his name in column
2 of Schedule 1.
24
Schedule 4
Warranties
1.1 Each of the Directors has carefully read and considered the Reports
and is not aware of any material omissions or inaccuracies in the
Reports.
1.2 None of the Directors has deliberately failed to disclose to the
authors of any of the Reports any material fact, circumstance or
opinion known or held by him which would be relevant to such
authors.
1.3 So far as the Directors are aware no part of the text of the Reports
has been rendered incorrect to any material extent by virtue of any
events or circumstances within the actual knowledge of the Directors
which have arisen since the date of such Report.
1.4 There is nothing known to the Directors which is not reflected in
the Reports which the Directors acting reasonably consider material
to the decision of Newco to purchase the Targets.
2. The Strategy Document was prepared after all reasonable enquiry and
in particular:-
2.1 so far as the Directors are aware all assumptions on which any
profit or cash flow forecasts and forecast balance sheets contained
in the Strategy Document have been based are set out therein and all
expressions of opinion intention or expectation contained in the
Strategy Document are fair and honest and are made on reasonable
grounds;
2.2 there are no material omissions from the Strategy Document known to
any of the Directors; and
2.3 so far as the Directors are aware, the historical factual
information (as opposed to projections and forecasts) contained in
the Strategy Document is true and accurate in all material respects.
3. Except for his shareholding in Newco and shares quoted on the Stock
Exchange or any other recognised investment exchange and held for
normal personal investment purposes or as disclosed in the relevant
Management Questionnaire none of the Directors has any interest in
any business or partnership nor is he interested in the shares of
any company nor (except for any service contract) does any of the
Directors or any persons connected with him have any interest in any
contract or agreement with Newco.
4. None of the Directors has been convicted of a criminal offence,
other than a Road Traffic offence not punishable by a custodial
sentence, and no order has been made against any of the Directors
pursuant to The Company Directors Disqualification Act 1986 and none
of the Directors is aware of any circumstances which would be likely
to lead to such an order being made against him pursuant to such
Act.
5. The entering into of this Agreement by Newco has been decided on by
all the Directors.
6. The information contained in the Directors' Questionnaires is true
and accurate in all respects and contains no omissions making any
information so contained misleading.
25
The warranties in this Schedule 4 shall be deemed to be given immediately before
the advance of monies by the Investors pursuant to the Agreement.
Notwithstanding any other provision in this Agreement the warranties contained
in paragraphs 1, 3, 4 and 6 shall be deemed to be given by each Director only in
relation to himself and (so far as applicable) his Connected Persons.
Where the expression "so far as the Directors are aware" or any similar
expression is used in this Schedule 4 it shall mean to the best of the
knowledge, information and belief of the Directors having made reasonable
enquiry of the senior managers of Inveresk Research (North America) Inc,
Inveresk Research International Limited and Inveresk Clinical Research Limited
("the Inveresk Companies"). The Directors shall be deemed to have made
reasonable enquiry of the senior managers of the Inveresk Companies if they have
enquired of such senior managers on 25 August 1999 as follows:
(i) if there is any pending litigation against the Targets or the
Inveresk Companies that they are aware of that has not yet been
disclosed to the Investors;
(ii) to confirm that the information they have given to finance and the
general managers regarding the forecast of the financial result for
1999 was accurate;
(iii) if there has been any change in value of assets in their areas of
responsibility; and
(iv) if there is any material fact affecting suppliers or clients within
their area of responsibility that could affect the value of the
Targets or the Inveresk Companies.
26
Schedule 5
Deed of Adherence
THIS Deed of Adherence is made the day of 199 between
(1) [ ] of [ ] (the "Investor"),
(2) [ ] of [ ] (the "Transferee") and
(3) Inveresk Research Group Limited of Elphinstone Research Centre,
Tranent (the "Company")
WHEREAS:
(A) Under the terms of an agreement dated [ ] 1999 (the "Investment
Agreement") and entered into between the Company, the Directors (as
defined therein) [ ], [ ] and [ ] the Investor is to
transfer to the Transferee certain of the A Ordinary Shares
previously subscribed by it or on its behalf subject to the parties
hereto entering into this Agreement.
(B) The Transferee wishes to accept a transfer of such shares and to
enter into this Agreement upon the terms of the Investment
Agreement.
IT IS HEREBY AGREED AS FOLLOWS:
1. Expressions defined in the Investment Agreement shall (unless the
context otherwise requires or unless otherwise specified) have the
same meaning when used in this Agreement.
2. In consideration of the sum of(pound)[ ] paid on [ ] (the "Effective
Date") the Investor shall forthwith transfer or procure the transfer
by [ ] to the Transferee of [ ] A Ordinary Shares together with the
right to receive all dividends accrued thereon as at the date of
transfer subject to the Articles of Association of the Company. Upon
receipt of the duly stamped stock transfer form the Company shall
issue and deliver to the Transferee a share certificate in its name
or that of its nominee for [ ] A Ordinary Shares.
3. The Transferee hereby undertakes to and covenants with all the
parties to the Investment Agreement (including any persons who have
become parties hereto by deed of adherence) to comply with the
provisions of and to perform all the obligations in the Investment
Agreement so far as it may do so and so far as they may remain to be
observed and performed as if the Transferee has been a party to such
agreements as an Investor.
4. The Transferee hereby acknowledges that it has received and read the
Investment Agreement and assumed the rights and obligations referred
to above on the basis of the exceptions and reservations contained
therein. The Transferee further acknowledges and agrees that it is
not relying on any warranties or representations made to it by any
Investor (as defined in the Investment Agreement).
5. The Transferee, hereby warrants to Newco and the Investors that it
has the legal capacity and has been duly authorised to enter into
this Deed of Adherence and that it
27
has the legal capacity to grant such warranties and to enter into
such indemnities as may be requested of the Transferee in connection
with any marketing or listing.
6. This Agreement shall be governed by and construed in accordance with
English law and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the English Courts as regards any
claim, dispute or matter arising out of or relating to this
Agreement.
AS WITNESS WHEREOF this Agreement was signed as a deed by the parties on the
date first above written.
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Inveresk Research Group Limited ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇, director ) Director
in the presence of this witness: )
Witness /s/ Graeme ▇.▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover Investments PLC ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇.▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover Trustees Limited ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇.▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
28
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover 1997 UK Limited Partnership ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
____________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover 1997 UK No 2 Limited Partnership ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover 1997 US No 1 Limited Partnership ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
29
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover 1997 US No 2 Limited Partnership ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed for and on behalf of ) /s/ Ian ▇▇▇▇▇ ▇▇▇▇
Candover 1997 US No 3 Limited Partnership ) ______________________________
acting by Ian ▇▇▇▇▇ ▇▇▇▇ as their attorney ) Attorney
in the presence of this witness: )
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed by ▇▇▇▇▇▇ ▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
) ______________________________
in the presence of this witness: ▇▇▇▇▇▇ ▇▇▇▇▇
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
Signed as a deed by Ian Sword ) /s/ Ian Sword
) ______________________________
in the presence of this witness: Ian Sword
Witness /s/ Graeme ▇. ▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor
30
Signed as a deed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
) ______________________________
in the presence of this witness: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Witness /s/ Graeme ▇.▇. ▇▇▇▇▇
_______________________________
Full Name Graeme ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Solicitor