SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
[ X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 1999
Commission file number 0-27570
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1640186
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
3151 Seventeenth Street
Wilmington, North Carolina 28412
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (910) 251-0081
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
Effective January 31, 1999, Pharmaceutical Product Development, Inc. (the
"Company") sold its environmental sciences consulting and management
subsidiaries (the "environmental sciences segment") in a management buyout
to Environ Holdings, Inc. ("ENVIRON") for total consideration of
$26,431,000. All of the shareholders of ENVIRON are former employees of
the Company and Joseph H. Higland, Chief Executive Officer of ENVIRON, was
an affiliate of the Company prior to the sale. ENVIRON acquired all of the
issued and outstanding shares of capital stock of APBI Environmental
Sciences Group, Inc., a Virginia corporation, all of the issued and
outstanding ordinary shares constituting the share capital of
Environmental Assessment Group Limited, a private company formed under the
laws of England and Wales, and all of the issued and outstanding ordinary
shares of Environ International Limited, a private company formed under
the laws of England and Wales. The Company received as consideration cash
of $1,431,000, a four-year note in the amount of $7,000,000 ($1,488,330
due within the first year) and a twelve-year note in the amount of
$18,000,000. The amount of the consideration was determined through arm's
length negotiations between the Company and ENVIRON. The Company received
an opinion from Lehman Brothers to the effect that the consideration
received is fair from a financial standpoint. ENVIRON was sold for an
amount which approximates book value. The Company will not recognize a
material pre-tax gain or loss due to the sale of the environmental
sciences segment. The Company entered into a three year consulting
agreement with ENVIRON whereby the Company will provide certain consulting
services for $500,000 per year.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial
information
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
PRO FORMA
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Actual ----------------------------
December 31, Adjustments December 31,
1998 Note 2 (a) 1998
-------------------------------------------
Current assets
<S> <C> <C> <C>
Cash and cash equivalents $34,083 $(2,977) $31,106
Accounts receivable and unbilled
services, net 126,815 (18,488) 108,327
Investigator advances 1,505 - 1,505
Prepaid expenses and other current
assets 7,812 57 7,869
Deferred tax asset 2,751 - 2,751
------ ------- ------
Total current assets 172,966 (21,408) 151,558
Property, plant and equipment, net 42,509 (4,224) 38,285
Goodwill, net 14,869 (3,868) 11,001
Other assets, net 6,238 23,291 29,529
------ ------- ------
Total assets $236,582 $(6,209) $230,373
======== ======== ========
Current Liabilities:
Current maturities of long-term debt $3,580 $0 $3,580
Accounts payable 7,812 (980) 6,832
Payable to investigators 5,204 - 5,204
Other accrued expenses 28,007 (5,050) 22,957
Unearned income 34,446 - 34,446
------- -- -------- ------
Total current liabilities 79,049 (6,030) 73,019
Long-term debt, less current maturities 161 - 161
Deferred rent and other 1,962 (179) 1,783
------ ------- ------
Total liabilities 81,172 (6,209) 74,963
------ ------ ------
Shareholders' equity:
Common stock 2,343 2,343
Paid-in capital 123,709 123,709
Retained earnings 29,929 29,929
Unrealized gain on investment - - -
Cumulative translation adjustment (571) - (571)
Total shareholders' equity 155,410 - 155,410
------ ------- -------
Total shareholders'
equity and liabilities $236,582 $(6,209) $230,373
========= ======= ========
</TABLE>
3
<PAGE>
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Actual -------------------------
Twelve Twelve
months months
ended ended
December Adjustments December 31,
31, 1998 Note 2(b) 1998
--------------------------------------
<S> <C> <C> <C>
Net revenue $285,609 $50,056 $235,553
Direct costs 156,810 35,562 121,248
Selling, general and administrative expenses 82,759 4,975 77,784
Depreciation and amortization 14,210 1,893 12,317
Acquired in-process research and
development costs 3,163 - 3,163
------ ----- ------
Total operating expenses 256,942 42,430 214,512
Operating income 28,667 7,626 21,041
Other income (expense), net 3,562 - 3,562
Income before provision for income tax 32,229 7,626 24,603
Provision for income taxes 12,460 3,012 9,448
------ ----- ------
Net income $19,769 $4,614 $15,155
======== ======= =======
Net income (loss) per share:
Basic $0.85 $0.65
====== =====
Diluted $0.85 $0.65
====== =====
Weighted average number of shares outstanding:
Basic 23,186 23,186
Dilutive effect of stock options 169 169
------ ------
Diluted 23,355 22,885
====== ======
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro Forma
Actual --------------------------
Twelve Twelve
months ended months ended
December 31, Adjustments December 31,
1997 Note 2 (b) 1997
------------------------------------------
<S> <C> <C> <C>
Net revenue $235,272 $47,785 $187,487
Direct costs 130,199 33,431 96,768
Selling, general and administrative
expenses 68,797 5,977 62,820
Depreciation and amortization 12,394 1,514 10,880
Merger costs and special charges 558 - 558
Acquired in-process research and
development costs 9,112 - 9,112
-------- ------- --------
Total operating expenses 221,060 40,922 180,138
======== ======= =======
Operating income 14,212 6,863 7,349
Other income (expense), net 1,464 - 1,464
Income before provision for income tax 15,676 6,863 8,813
Provision for income taxes 6,074 2,711 3,363
-------- ------- --------
Net income $9,602 $4,152 $5,450
======== ======= ========
Net income per share:
Basic $0.42 $0.24
====== =====
Diluted $0.42 $0.24
====== =====
Weighted average number of shares outstanding:
Basic 22,825 22,825
Dilutive effect of stock options 60 60
-------- --------
Diluted 22,885 22,885
======== ========
</TABLE>
5
<PAGE>
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
--------------------------
Actual Twelve
Twelve months
months ended ended
December 31, Adjustments December 31,
1996 Note 2 (b) 1996
------------------------------------------
<S> <C> <C> <C>
Net revenue $197,796 $45,492 $152,304
Direct costs 110,852 31,744 79,108
Selling, general and administrative
expenses 61,571 6,118 55,453
Depreciation and amortization 10,436 1,538 8,898
Merger costs and special charges 16,114 1,341 14,773
-------- ------- --------
Total operating expenses 198,973 40,741 158,232
Operating income (loss) (1,177) 4,751 (5,928)
Other income (expense), net 1,804 - 1,804
Income (loss) before provision for
income tax 627 4,751 (4,124)
Provision for income taxes 4,134 1,877 2,257
-------- ------- --------
Net income (loss) ($3,507) $2,874 ($6,381)
======== ======= ========
Net income (loss) per share:
Basic ($0.17) ($0.30)
======= =======
Diluted ($0.17) ($0.30)
======= =======
Weighted average number of shares outstanding:
Basic 21,168 21,168
Dilutive effect of stock options - -
------ ------
Diluted 21,168 21,168
====== ======
</TABLE>
6
<PAGE>
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The pro forma financial information presented herein includes all the pertinent
information related to the assets and liabilities disposed of and all the
financial information required pursuant to Article 11 of Regulation S-X.
The unaudited Pro Forma Consolidated Condensed Financial Statements of the
Company set forth herein include the Pro Forma Consolidated Balance Sheet as of
December 31, 1998 and the Pro Forma Consolidated Condensed Statements of
Operations for the years ended December 31, 1998, December 31, 1997 and December
31, 1996. The Pro Forma Condensed Statements of Operations reflect the
disposition as if it had occurred as of January 1, 1998, January 1, 1997 and
January 1, 1996, respectively. The Pro Forma Balance Sheet gives effect to the
sale of the environmental sciences segment as if it occurred on December 31,
1998.
The unaudited Pro Forma Consolidated Condensed Financial Statements give effect
to the adjustments set forth on the statements and are not necessarily
indicative of the results of operations and financial position which would have
been achieved had the disposition of the environmental sciences segment been
completed as of the beginning of the periods presented, nor are they necessarily
indicative of the results of future operations. The unaudited Pro Forma
Condensed Financial Statements have been prepared by management and are based on
certain assumptions and estimates that are subject to change. The unaudited Pro
Forma Condensed Financial Statements should be read in conjunction with the
historical financial statements of the Company.
2. PRO FORMA ADJUSTMENTS:
(a) The pro forma adjustments to the December 31, 1998 balance sheet
represent the removal of the assets, liabilities and shareholders' equity
of the Company's environmental services segment and represents adjustments
required to reflect terms of the sale transaction as of December 31, 1998.
(See Item 2. Disposition of Assets).
(b) The pro forma adjustments to the Company's consolidated statement of
operations for the years ended December 31, 1998, December 31, 1997 and
December 31, 1996 reflect the disposition of the Company's environmental
services segment as if it had occurred as of January 1, 1998, January 1,
1997 and January 1, 1996, respectively.
7
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
c) Exhibits
2.5 Stock Purchase Agreement among Applied Bioscience International Inc.,
PPD UK Holdings Limited and Environ Holdings Inc. for the acquisition of
all the capital stock of APBI Environmental Sciences Group, Inc.,
Environmental Assessment Group Limited and Environ International
Limited, dated January 31, 1999.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
------------------------------------------
(Registrant)
By /s/ Rudy C. Howard
---------------------------------------
Chief Financial Officer,
Vice President of Finance and
Treasurer
(Principal Financial Officer)
DATE: FEBRUARY 16, 1999
9
exhibit 2.5
STOCK PURCHASE AGREEMENT
among
APPLIED BIOSCIENCE INTERNATIONAL INC.
PPD UK HOLDINGS LIMITED
(the "SELLERS")
and
ENVIRON HOLDINGS, INC.
(the "BUYER")
for the acquisition of all the capital stock of
APBI ENVIRONMENTAL SCIENCES GROUP, INC.
ENVIRONMENTAL ASSESSMENT GROUP LIMITED
and
ENVIRON INTERNATIONAL LIMITED
Dated: January 31, 1999
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. Definitions...................................................... 1
2. Sale and Transfer of Shares; Closing............................. 11
2.1 Shares..................................................... 11
2.2 Purchase Price............................................. 11
2.3 Closing.................................................... 12
2.4 Closing Obligations........................................ 12
2.5 Adjustment Amount.......................................... 13
2.6 Adjustment Procedure....................................... 14
3. Representations and Warranties of Sellers........................ 15
3.1 Organization and Good Standing............................. 15
3.2 Authority; No Conflict..................................... 15
3.3 Capitalization............................................. 16
3.4 Financial Statements....................................... 17
3.5 Books and Records.......................................... 18
3.6 Title to Properties; Encumbrances.......................... 18
3.7 Relationships with Related Persons......................... 18
3.8 Labor Relations; Compliance................................ 19
3.9 No Undisclosed Liabilities................................. 19
3.10 Taxes...................................................... 19
3.11 Employee Benefits.......................................... 27
3.12 Compliance with Legal Requirements; Governmental
Authorizations............................................. 30
3.13 Legal Proceedings; Orders.................................. 30
3.14 Absence of Certain Changes and Events...................... 31
3.15 Contracts; No Defaults..................................... 31
3.16 Insurance.................................................. 32
3.17 Environmental Matters...................................... 32
3.18 Intellectual Property...................................... 32
3.19 Disclosure................................................. 32
3.20 Brokers or Finders......................................... 33
i
<PAGE>
SECTION PAGE
- ------- ----
4. Representations and Warranties of Buyer.......................... 33
4.1 Organization and Good Standing............................. 33
4.2 Authority; No Conflict..................................... 33
4.3 Capitalization............................................. 34
4.4 Investment Intent.......................................... 34
4.5 Certain Proceedings........................................ 34
4.6 Brokers or Finders......................................... 35
5. Covenants of Sellers Prior to Closing Date....................... 35
5.1 Access and Investigation................................... 35
5.2 Operation of the Businesses of the Acquired Companies...... 35
5.3 Negative Covenant.......................................... 35
5.4 Required Approvals......................................... 36
5.5 Notification............................................... 36
5.6 Certain Benefit Matters.................................... 36
5.7 No Negotiation............................................. 37
5.8 Best Efforts............................................... 37
5.9 Releases................................................... 37
5.10 UK Resolutions and Waivers................................. 38
6. Covenants of Buyer Prior to Closing Date......................... 38
6.1 Approvals of Governmental Bodies........................... 38
6.2 Best Efforts............................................... 38
6.3 Releases................................................... 38
6.4 Insurance.................................................. 39
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.............. 39
7.1 Accuracy of Representations................................ 39
7.2 Sellers' Performance....................................... 39
7.3 Consents................................................... 39
7.4 Additional Documents....................................... 39
7.5 No Proceedings............................................. 40
7.6 No Claim Regarding Stock Ownership or Sale Proceeds........ 40
7.7 No Prohibition............................................. 40
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE............. 40
8.1 Accuracy of Representations................................ 40
8.2 Buyer's Performance........................................ 41
8.3 Consents................................................... 41
8.4 Additional Documents....................................... 41
8.5 No Injunction.............................................. 41
8.6 Fairness Opinion........................................... 41
ii
<PAGE>
SECTION PAGE
- ------- ----
9. TERMINATION...................................................... 41
9.1 Termination Events......................................... 41
9.2 Effect of Termination...................................... 42
10. INDEMNIFICATION; REMEDIES........................................ 42
10.1 Survival; Waiver........................................... 42
10.2 Indemnification and Payment of Damages by Sellers.......... 43
10.3 Indemnification and Payment of Damages by Sellers -
Tax Matters................................................ 44
10.4 Indemnification and Payment of Damages by Buyer............ 44
10.5 Procedure for Indemnification--Third Party Claims........... 45
10.6 Procedure for Indemnification--Other Claims................. 46
11. BUYER'S POST-CLOSING COVENANTS................................... 46
11.1 Litigation Support......................................... 46
11.2 Access To Books and Records................................ 47
11.3 Tax Election............................................... 47
11.4 Audits..................................................... 47
11.5 Subsequent Sale............................................ 48
11.6 Joinder of EAG............................................. 48
12. SELLER'S POST-CLOSING COVENANTS.................................. 48
12.1 Litigation Support......................................... 48
12.2 Access to Books and Records................................ 49
12.3 Disclosure of Tax Returns.................................. 49
13. GENERAL PROVISIONS............................................... 49
13.1 Expenses................................................... 49
13.2 Public Announcements....................................... 50
13.3 Confidentiality............................................ 50
13.4 Notices.................................................... 50
13.5 Further Assurances......................................... 51
13.6 Waiver..................................................... 51
13.7 Entire Agreement and Modification.......................... 52
13.8 Disclosure Letter.......................................... 52
13.9 Assignments, Successors, and No Third-Party Rights........ 52
13.10 Severability............................................... 52
13.11 Section Headings, Construction............................. 53
13.12 Time of Essence............................................ 53
13.13 Governing Law.............................................. 53
13.14 Counterparts............................................... 53
iii
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of January 31,
1999, by ENVIRON HOLDINGS, INC., a Delaware corporation (the "Buyer"), APPLIED
BIOSCIENCE INTERNATIONAL INC., a Delaware corporation ("ABI") and PPD UK
HOLDINGS LIMITED, a private company incorporated in England and Wales ("PPDUK")
(ABI and PPDUK are referred to herein individually as a "Seller" and
collectively as the "Sellers").
RECITALS
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares of capital stock of APBI ENVIRONMENTAL SCIENCES
GROUP, INC., a Virginia corporation, all of the issued and outstanding ordinary
shares constituting the share capital of ENVIRONMENTAL ASSESSMENT GROUP LIMITED,
a private company limited by shares incorporated in England and Wales and all of
the issued and outstanding ordinary shares of ENVIRON INTERNATIONAL LIMITED, a
private company limited by shares incorporated in England and Wales, for the
consideration and on the terms set forth in this Agreement;
NOW THEREFORE, in consideration of the premises set forth herein, for good
and valuable consideration and intending to be legally bound, the parties hereto
hereby agree as follows:
AGREEMENT
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ABI" -- as defined in the first paragraph of this Agreement.
"APBI" -- APBI Environmental Sciences Group, Inc., a Virginia corporation,
and all of its Subsidiaries.
"APBI Acquisition Date" -- September 26, 1996.
"APBI Shares" -- as defined in Section 3.3.
"Acquired Companies" -- APBI, EAG and EIL, collectively, and individually
an "Acquired Company".
1
<PAGE>
"Acquired Companies Employees" -- all employees of the Acquired Companies
who will remain employees of the Acquired Companies following the Closing Date
and any Person who becomes an employee of the Acquired Companies on or after the
Closing Date.
"Acquisition Note" - as defined in Section 2.4(b)(ii)(2).
"Actual Closing Date" -- as defined in the definition of Closing Date.
"Adjustment Amount" -- as defined in Section 2.5.
"Applicable Contract" -- any Contract (a) under which any Acquired Company
has or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound.
"Balance Sheets" -- as defined in Section 3.4.
"Best Efforts" -- all reasonable efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"Breach" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Buyer's Advisors" - as defined in Section 5.1.
"Buyer's Closing Documents" -- as defined in Section 4.2(a).
"Buyer Shares" -- as defined in Section 4.3.
"Buyer's Releases" - as defined in Section 6.3.
"Closing" -- as defined in Section 2.3.
"Closing Date" -- the effective date of the Closing, which shall be
January 31, 1999; provided however, that for federal income tax purposes the
Closing Date shall be the date and time on which the Closing actually takes
place, if different from January 31, 1999, and which is referred to herein as
the "Actual Closing Date."
2
<PAGE>
"Closing Financial Statements" -- as defined in Section 2.6(a).
"Company Plan" -- any Plan of which an Acquired Company or an ERISA
Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires otherwise.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Consulting Agreement" -- as defined in Section 2.4(c).
"Contemplated Transactions" -- all of the transactions contemplated by
this Agreement, including, without limitation:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Promissory Note,
the Security Agreement, the Sellers' Releases, the Buyer's Releases, the
Sublease and the Consulting Agreement;
(c) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Acquired Companies.
"Contract" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Credit and Security Agreement" - as defined in Section 2.4(e).
"Customs" -- H.M. Customs and Excise in the United Kingdom.
"Damages" -- as defined in Section 10.2.
"Disclosure Letter" -- the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"Dispute Resolution Accountants" -- as defined in Section 2.6(a).
"EAG" -- Environmental Assessment Group Limited, a private company limited
by shares incorporated in England and Wales, and all of its Subsidiaries.
3
<PAGE>
"EAG Shares" -- as defined in Section 3.3.
"EIL" -- Environ International Limited, a private company limited by
shares incorporated in England and Wales, and all of its Subsidiaries.
"EIL Shares" -- as defined in Section 3.3.
"Encumbrance" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and responses,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended.
4
<PAGE>
"Environmental Law" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees and the public of
intended or actual releases of pollutants or Hazardous Materials, violations of
discharge limits, or other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have significant impact
on the Environment;
(b) regulating Hazardous Activity;
(c) assuring that products are designed, formulated, packaged and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(d) protecting resources, species, or ecological amenities;
(e) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(f) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that act or any
successor law.
"ERISA Affiliate" -- with respect to an Acquired Company, any other Person
that, together with such Acquired Company, would be treated as a single employer
under IRC ss. 414.
"Excluded Companies" -- Environ International Investments, Inc., a
Delaware corporation, Environmental Testing and Certification Corporation, a
Delaware corporation, (including but not limited to its Astrix division and
business), Landis International, Inc., a Georgia corporation, and PACE
Incorporated, a Minnesota corporation, and all Subsidiaries of any of the
foregoing companies.
"Facilities" -- any real property, buildings, plants, or structures
currently owned, leased, licensed or operated by any Acquired Company.
"GAAP" -- generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheets and the other
financial statements referred to in Section 3.4 were prepared.
"Governmental Authorization" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
5
<PAGE>
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials into the Environment, and any other
act, business, operation, or thing that increases the danger, or risk of danger,
or poses an unreasonable risk of harm to persons or property.
"Hazardous Materials" -- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, toxic, a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or
any successor law, and regulations and rules issued pursuant to that act or any
successor law.
"ICTA" - the UK Income and Corporation Taxes Act 1988.
"Indemnified Persons" - as defined in Section 10.2.
"Inland Revenue" -- the United Kingdom Inland Revenue and any successor
agency.
"Intellectual Property Assets" -- (a) the names "APBI Environmental
Sciences Group, Inc.", "Environmental Assessment Group Limited", "ENVIRON", any
other corporate or trade name incorporating the term "ENVIRON" or "Environ," and
all other fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications, currently used in the business of
all Acquired Companies;
(b) all patents, patent applications, and inventions and
discoveries of the Acquired Companies that may be patentable;
6
<PAGE>
(c) all copyrights in both published works and unpublished
works of the Acquired Companies; and
(d) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints owned, used, or licensed by any Acquired
Company as licensee or licensor.
"Interim Balance Sheets" -- as defined in Section 3.4.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter without further investigation or inquiry. A Person (other
than an individual) will be deemed to have "Knowledge" of a particular fact or
other matter if any individual who is currently serving as a director, officer,
partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty of the United
States, the United Kingdom or any other jurisdiction.
"Material Interest" -- a direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"Multi-Employer Plan" -- has the meaning given in ERISA ss. 3(37)(A).
"Other Benefit Obligations" -- means all obligations, arrangements, or
customary practices, to provide benefits, other than salary, as compensation for
services rendered, to present or former directors, employees, or agents owed,
adopted, or followed by an Acquired Company or an ERISA Affiliate of an Acquired
Company, other than obligations, arrangements, and practices that are Plans.
Other Benefit Obligations include consulting agreements under which the
compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, and fringe benefits within the
meaning of IRC ss. 132.
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and
7
<PAGE>
any program, whether governmental or private (including those promulgated or
sponsored by industry associations and insurance companies), designed to provide
safe and healthful working conditions.
"Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" -- a) the articles or certificate of
incorporation and the bylaws of a US corporation; (b) the memorandum and
articles of association of any UK company; (c) the partnership agreement and any
statement of partnership of a general partnership; (d) the limited partnership
agreement and the certificate of limited partnership of a limited partnership;
(e) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (e) any amendment to any
of the foregoing.
"PBGC" -- the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" -- has the meaning given in ERISA ss. 3(2)(A).
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" -- has the meaning given in ERISA ss. 3(3).
"Plan Sponsor" -- has the meaning given in ERISA ss. 3(16)(B).
"Policies" - as defined in Section 3.16(a)(i).
"PPDI" -- Pharmaceutical Product Development, Inc., a North Carolina
corporation.
8
<PAGE>
"PPDUK" -- as defined in the first paragraph of this Agreement.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Promissory Note" -- as defined in Section 2.4(b)(ii)(1).
"Purchase Price" - as defined in Section 2.2.
"Qualified Plan" -- means any Plan that meets or purports to meet the
requirements of IRC ss. 401(a).
"Related Person" -- with respect to a particular individual:
(a) any other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person who serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
9
<PAGE>
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"Release" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants and financial advisors.
"Revolving Credit Note" - as defined in Section 2.4(b)(ii)(3).
"Securities Act" -- the Securities Act of 1933, as amended, or any
successor law and regulations and rules issued pursuant to that act or any
successor law.
"Security Agreement" -- as defined in Section 2.4(b)(iii).
"Sellers" -- as defined in the first paragraph of this Agreement.
"Sellers' Indemnified Persons" - as defined in Section 10.4.
"Sellers' Releases" -- as defined in Section 5.9.
"Shares" -- as defined in Section 3.3.
"Sublease" -- as defined in Section 2.4(d).
"Subsidiary" -- a Person whose securities or other interests having the
power to elect a majority of that Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of a Person are held by another Person or one or more of its
Subsidiaries.
"TCGA 1992" -- UK Taxation of Chargeable Gains Act 1992.
"Tax" -- any and all federal, state, county, local, foreign and other tax
of any nature, kind or description (including, without limitation, income,
profits, excise, sales, use, gross receipts, franchise, property, UK National
Insurance, Social Security, or other similar contributions, value-added, payroll
and withholding tax and imposts, customs and other import and export duties, and
stamp duties, and license, registration and recording fees) whether or not
measured in whole or in
10
<PAGE>
part by net income, and including interest, additions, surcharges and penalties
with respect thereto.
"Tax Deed" - as defined in Section 2.4(a)(v).
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement had been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"Title IV Plans" -- means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. ss. 1301 et seq., other than Multi-Employer Plans.
"Update Period" - as defined in Section 2.6(a).
"VAT" -- as defined in Section 3.10(b)(xi).
"VATA" -- as defined in Section 3.10(b)(xi)A.
"VEBA" -- means a voluntary employees' beneficiary association under IRC
ss. 501(c)(9).
"Welfare Plan" -- has the meaning given in ERISA ss. 3(1).
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Sellers.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares, will be
$26,431,148.00 (Twenty-Six Million Four Hundred Thirty One Thousand One Hundred
Forty-Eight Dollars) plus the Adjustment Amount. The portion of the Purchase
Price paid for the APBI Shares will be $23,531,048.00 (Twenty-Three Million Five
Hundred Thirty-One Thousand Forty-Eight
11
<PAGE>
Dollars), the portion of the Purchase Price paid for the EAG Shares will be
$2,900,000 (Two Million Nine Hundred Thousand Dollars), and the portion of the
Purchase Price paid for the EIL Shares will be $100.00 (One Hundred Dollars),
plus, in each case, the applicable portion of the Adjustment Amount.
2.3 CLOSING
The purchase and sale of the Shares (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at One Penn Center,
1617 JFK Blvd., Philadelphia, PA 19103, at 10:00 a.m. (local time) on the later
of (i) January 31, 1999 or (ii) at such other time and place as the parties may
agree. Subject to the provisions of Section 9, failure to consummate the
purchase and sale of the Shares provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 2.3 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer and in the case
of EAG and EIL duly executed transfers of the EAG Shares, the EIL Shares and the
shares of their Subsidiaries;
(ii) the Sellers' Releases;
(iii) resignations of any Persons who are not Acquired
Companies Employees from any positions held as directors or officers of the
Acquired Companies and in the case of any directors or officers of EAG or EIL
acknowledging by deed that such Person has no claim against the Acquired
Companies whether for loss of office or otherwise; and
(iv) a certificate executed by Sellers representing and
warranting to Buyer that each of Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the Disclosure Letter that were
delivered by Sellers to Buyer prior to the Closing Date in accordance with
Section 5.5); and
(v) a Tax Deed in the form of Exhibit 2.4(a)(v) (the "Tax
Deed").
(b) Buyer will deliver to Sellers:
(i) a bank cashier's or certified check payable to the order
of or by wire transfer to an account specified by PPDUK in the amount of
$1,431,148.00 (One Million Four Hundred Thirty One Thousand One Hundred Forty
Eight Dollars).
12
<PAGE>
(ii) (1) a promissory note payable to ABI in the principal
amount of $18,000,000.00 (Eighteen Million Dollars) and in the form of Exhibit
2.4(b)(ii)(1) (the "Promissory Note");
(2) a promissory note payable to ABI and PPDUK in the
principal amount of $7,000,000.00 (Seven Million Dollars) and in the form of
Exhibit 2.4(b)(ii)(2) (the "Acquisition Note"); and
(3) a revolving credit note payable to ABI in the
maximum principal amount of $3,500,000.00 (Three Million Five Hundred Thousand
Dollars).
(iii) a pledge and security agreement in the form of Exhibit
2.4(b)(iii) (the "Security Agreement");
(iv) UCC - 1s
(v) the Buyer's Releases; and
(vi) a certificate executed by Buyer to the effect that,
except as otherwise stated in such certificate, each of Buyer's representations
and warranties in this Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the Closing Date as if made
on the Closing Date.
(c) Buyer and PPDI will enter into a consulting agreement in the
form of Exhibit 2.4(c) (the "Consulting Agreement").
(d) ABI and Buyer will enter into a sublease for certain equipment
in the form of Exhibit 2.4(d) (the "Sublease").
(e) ABI and Buyer will enter into a Credit and Security Agreement in
the form of Exhibit 2.4(e) (the "Credit and Security Agreement").
2.5 ADJUSTMENT AMOUNT
(a) The Adjustment Amount (which may be a positive or negative
number) will be equal to (1) the aggregate of (a) the consolidated stockholders'
equity of APBI as of the Closing Date determined in accordance with GAAP, as
reflected on the Closing Financial Statements plus (b) the consolidated
stockholders' equity of EAG as of the Closing Date determined in accordance with
GAAP, as reflected on the Closing Financial Statements plus (c) the consolidated
stockholders' equity of EIL as of the Closing Date determined in accordance with
GAAP, as reflected on the Closing Financial Statements, minus (2) the aggregate
of (a) the consolidated stockholders' equity of APBI as reflected on the APBI
Interim Balance Sheet plus (b) the consolidated stockholders' equity of EAG as
reflected on the EAG Interim Balance Sheet
13
<PAGE>
plus (c) the consolidated stockholders' equity of EIL as reflected on the EIL
Interim Balance Sheet.
(b) For purposes of determining the Adjustment Amount, the APBI
Interim Balance Sheet, the EAG Interim Balance Sheet and the EIL Interim Balance
Sheet each shall be adjusted to reflect that all intercompany receivables and
payables have been satisfied, and the APBI Interim Balance Sheet shall be
adjusted to properly reflect deferred United States federal and state income
taxes as if no IRC Section 338(h)(10) election, as provided for at Buyer's
option in Section 3.10(a)(v) of this Agreement, has been made. If an IRC Section
338(h)(10) election is made, the Closing Financial Statements shall not include
deferred United States federal and state income taxes, since the income tax
deductions upon which such asset is based will be deductible on the consolidated
PPDI federal income tax return for the year including the actual Closing Date.
The Interim Balance Sheets for APBI, EAG and EIL, adjusted as described above,
are set forth as Exhibit 2.5 and are agreed to fairly and accurately present the
results of operations and the financial condition of the Acquired Companies at
November 30, 1998.
2.6 ADJUSTMENT PROCEDURE
(a) Sellers will prepare consolidated financial statements (the
"Closing Financial Statements") of APBI, EAG and EIL as of the Closing Date,
including a consolidated balance sheet and a computation of consolidated
stockholders' equity for APBI, EAG and EIL as of the Closing Date. The Closing
Financial Statements shall update and supplement the Interim Balance Sheets and
related consolidated statements of income for the 11 months ending November 30,
1998, so as to fairly and accurately present the results of operations and
financial condition of the Acquired Companies for the period from the date of
the Interim Balance Sheets through the Closing Date (the "Update Period").
Sellers will deliver the Closing Financial Statements to Buyer within forty-five
days after the Closing Date. If within thirty days following delivery of the
Closing Financial Statements, Buyer has not given Sellers notice of its
objection to the Closing Financial Statements (such notice must contain a
statement of the basis of Buyer's objection; provided that no objection may be
made which relates to any item on the Interim Balance Sheets), then the
consolidated stockholders' equity reflected in the Closing Financial Statements
will be used in computing the Adjustment Amount. If Buyer gives such notice of
objection, then the issues in dispute will be submitted to
PriceWaterhouseCoopers LLP, certified public accountants (the "Dispute
Resolution Accountants"), for resolution. If issues in dispute are submitted to
the Dispute Resolution Accountants for resolution, (i) each party will furnish
to the Dispute Resolution Accountants such work papers and other documents and
information relating to the disputed issues as the Dispute Resolution
Accountants may request and are available to that party (or its independent
public accountants ), and will be afforded the opportunity to present to the
Dispute Resolution Accountants any material relating to the determination and to
discuss the determination with the Dispute Resolution Accountants; (ii) the
determination by the Dispute Resolution Accountants, as set forth in a notice
delivered to both parties by the Dispute Resolution Accountants, will be binding
and conclusive on the parties; and (iii) the non-prevailing party will pay the
fees of the Dispute Resolution Accountants for such determination, except that
if neither party substantially prevails (as determined in the sole
14
<PAGE>
discretion of the Dispute Resolution Accountants), Buyer and Sellers will each
bear 50% of the fees of the Dispute Resolution Accountants for such
determination.
(b) On the tenth business day following the final determination of
the Adjustment Amount, if the Purchase Price is greater than the aggregate of
the payment made pursuant to Section 2.4(b)(i) and the principal amount of the
Promissory Note and the Acquisition Note, Buyer will pay the difference to
Sellers, and if the Purchase Price is less than such aggregate amount, Sellers
will pay the difference to Buyer. All payments will be made together with
interest at 8% compounded daily beginning on the Closing Date and ending on the
date of payment. Payments must be made in immediately available funds. Payments
to Sellers or to Buyer hereunder will be allocated in the proportions set forth
in Section 2.2. In addition, payments to Sellers or Buyer must be made by
cashier's or certified check, or by wire transfer to such bank account as
Sellers or Buyer, as the case may be, will specify.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which, to the Knowledge of Sellers, it is
authorized to do business, and its capitalization (including the identity of
each stockholder and the number of shares held by each). Each Acquired Company
is a corporation duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to own the properties and assets that it purports to own.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with its terms,
subject as to enforceability to general equitable principles and to the laws of
bankruptcy, insolvency or similar laws governing the rights of creditors. Upon
the execution and delivery by Sellers of the Sellers' Release, by ABI of the
Sublease and by PPDI of the Consulting Agreement, each such document will
constitute the legal, valid, and binding obligation of the respective party
thereto, enforceable against such party in accordance with its terms, subject as
to enforceability to general equitable principles and to the laws of bankruptcy,
insolvency or similar laws governing the rights of creditors. Sellers have the
right, power, authority, and capacity to execute and deliver this Agreement and
the Sellers' Releases and to perform their obligations under this Agreement.
PPDI and ABI have the right, power, authority, and capacity to execute, deliver
and perform their obligations under the Consulting Agreement and the Sublease,
respectively.
15
<PAGE>
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Sellers or any Sellers'
Related Person, other than the Acquired Companies, or (B) any resolution adopted
by the board of directors or the stockholders of Sellers or any Sellers' Related
Person, other than the Acquired Companies;
(ii) violate any resolution, Order or Contract of Sellers or
any Sellers' Related Person, other than the Acquired Companies, or, to Sellers
knowledge, any Legal Requirement to which Sellers, or any Sellers' Related
Person, other than the Acquired Companies, may be subject or bound; or
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired Company.
(c) Except as set forth in Part 3.2 of the Disclosure Letter, no
Seller is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation of any of the Contemplated Transactions.
(d) ABI is acquiring the Promissory Note for its own account and not
with a view to distribution within the meaning of Section 2(11) of the
Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of APBI consist of 1,000 shares of common
stock, par value $.01 per share, of which 100 shares are issued and outstanding
(the "APBI Shares"); the authorized share capital of EAG consists of 100,000
ordinary shares, of (UK) L 1 each, of which 99,000 are issued and fully paid up
(the "EAG Shares"); and the authorized share capital of EIL consists of 100
ordinary shares of (UK) L1, of which 76 are issued and fully paid up (the "EIL
Shares"); (the APBI Shares, the EAG Shares and the EIL Shares are collectively
referred to herein as the "Shares"). ABI is and will be on the Closing Date, the
record and beneficial owner and holder of the APBI Shares, and PPDUK is and will
be on the Closing Date, the record and beneficial owner of the EAG Shares and
the EIL Shares, respectively, in each case free and clear of all Encumbrances.
With the exception of the Shares (which are owned by Sellers), all of the
outstanding equity securities and other securities of each Acquired Company are
owned of record and beneficially by one or more of the Acquired Companies, free
and clear of all Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities of any
Acquired Company. All of the outstanding equity securities of each Acquired
Company have been duly authorized and validly issued and are fully paid and
nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of any equity securities or other securities of any Acquired Company.
None of the outstanding equity securities or other securities of any Acquired
Company was issued in violation of the Securities
16
<PAGE>
Act or any other Legal Requirement. No Acquired Company owns, or has any
Contract to acquire, any equity securities or other securities of any Person
(other than Acquired Companies) or any direct or indirect equity or ownership
interest in any other business. With respect to all Companies in any part of the
UK, each Seller waives (and shall obtain the waiver by its nominee(s) of) all
rights of pre-emption which it (or such nominees) may have (whether under any
such Acquired Company's articles of association or otherwise) with respect to
the transfer to the Buyer of the shares of such Acquired Company.
3.4 FINANCIAL STATEMENTS
Buyer has in its possession: (a) separate consolidated balance sheets of
APBI, EAG and EIL as at December 31, 1996, and the related consolidated
statements of income, for the fiscal year then ended, (b) separate consolidated
balance sheets of APBI, EAG and EIL as at December 31, 1997 (including the notes
thereto, the "Balance Sheets"), and the related consolidated statements of
income, for the fiscal year then ended and (c) separate consolidated balance
sheets of APBI, EAG and EIL as at November 30, 1998 (the "Interim Balance
Sheets") and the related consolidated statements of income, for the 11 months
then ended, including in each case the notes thereto. Except as set forth in
Part 3.4 of the Disclosure Letter and the last sentence of this Section 3.4,
such financial statements and notes fairly present the financial condition and
the results of operations of the Acquired Companies as at the respective dates
of and for the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial statements, to
normal recurring year-end adjustments the effect of which will not, individually
or in the aggregate, be materially adverse and the absence of notes that, if
presented, would not differ materially from those included in the Balance
Sheets; the financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved. In making certain representations and warranties contained in this
Section 3.4 and in connection with the preparation of the Balance Sheets,
Interim Balance Sheets and other financial statements referenced in this Section
3.4, Sellers have relied upon the accuracy and completeness of statements made
and information provided to Sellers by one or more of the Acquired Companies and
their respective Representatives. Notwithstanding anything in this Section 3.4
to the contrary, to the extent a Breach of any of the representations or
warranties of Sellers contained in this Section 3.4 would result, in whole or in
part, from the inaccuracy or incompleteness of statements made or information
provided to Sellers by the Acquired Companies or their respective
Representatives, then in such case no such Breach shall be considered to have
occurred, to the extent that such Breach results from the inaccuracy or
incompleteness of such statements made or information provided to Sellers, and
neither Buyer nor any of the Acquired Companies shall have a right of
indemnification under this Agreement from Sellers with respect to any such
Breach.
17
<PAGE>
3.5 BOOKS AND RECORDS
Except as set forth in Part 3.5 of the Disclosure Letter, the books of
account, minute books, stock record books, and other corporate records of the
Acquired Companies maintained by Sellers or by PPDI, all of which have been made
available to Buyer, have been maintained in a materially complete and accurate
manner since the APBI Acquisition Date. In making certain representations and
warranties contained in this Section 3.5, Sellers have relied upon the accuracy
and completeness of statements made and information provided to Sellers by one
or more of the Acquired Companies and their respective Representatives.
Notwithstanding anything in this Section 3.5 to the contrary, to the extent a
Breach of any of the representations or warranties of Sellers contained in this
Section 3.5 would result, in whole or in part, from the inaccuracy or
incompleteness of statements made or information provided to Sellers by the
Acquired Companies or their respective Representatives, then no such Breach
shall be considered to have occurred, to the extent that such Breach results
from the inaccuracy or incompleteness of such statements made or information
provided to Sellers, and neither Buyer nor any of the Acquired Companies shall
have a right of indemnification under this Agreement from Sellers with respect
to any such Breach.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a list of the Facilities of the
Acquired Companies of which Sellers have Knowledge and a description of whether
such Facilities are leased, licensed, owned, or otherwise held. Except as set
forth in Part 3.6 of the Disclosure Letter, as of the Closing Date all right,
title to and interest in the fee simple, lease or other interest in the
Facilities as set forth in Part 3.6 of the Disclosure Letter will be held by the
Buyer or the Acquired Companies.
3.7 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth in Part 3.7 of the Disclosure Letter, no Seller or any
Sellers' Related Person, other than the Acquired Companies, has, or since
December 31,1997 has had, any interest in any property (whether real, personal,
or mixed and whether tangible or intangible), used in or pertaining to the
Acquired Companies' businesses. No Seller or any Sellers' Related Person, other
than the Acquired Companies, has, or since December 31, 1997 has owned (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person (other than a Sellers' Related Person) that has had
business dealings or a material financial interest in any transaction with any
Acquired Company. Except as set forth in Part 3.7, Part 5.9 and Part 6.3 of the
Disclosure Letter, no Seller or any Sellers' Related Person, other than the
Acquired Companies, is a party to any Contract with, or has any claim or right
against, any Acquired Company.
18
<PAGE>
3.8 LABOR RELATIONS; COMPLIANCE
Except as set forth in Part 3.8 of the Disclosure Letter, since the APBI
Acquisition Date, neither ABPI nor, to Sellers' Knowledge, EAG and EIL, has been
or is a party to any collective bargaining or other labor Contract.
3.9 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.9 of the Disclosure Letter, to Sellers'
Knowledge, the Acquired Companies have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) of which the Buyer or the Acquired Companies do not have knowledge,
except for liabilities or obligations reflected or reserved against in the
Balance Sheets or the Interim Balance Sheets and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof.
3.10 TAXES
(a) With respect to the Acquired Companies other than EAG and EIL:
(i) The Acquired Companies have filed or caused to be filed
(on a timely basis since December 31, 1992) all United States federal, state,
and local income Tax Returns that are or were required to be filed by or with
respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Sellers have delivered
to Buyer copies of, and Part 3.10 of the Disclosure Letter contains a complete
and accurate list of, all such United States federal, state, and local income
Tax Returns filed for each taxable year after the taxable year ending December
31, 1992. The Acquired Companies have paid, or made provision for the payment
of, all United States federal, state, and local income Taxes that have or may
have become due pursuant to those United States federal, state, and local income
Tax Returns or otherwise, or pursuant to any assessment received by Sellers or
any Acquired Company.
(ii) The United States federal, state, and local income Tax
Returns of each Acquired Company subject to such Taxes have been audited by the
IRS or relevant state or local tax authorities or are closed by the applicable
statute of limitations for all taxable years through December 31, 1991. Part
3.10 of the Disclosure Letter contains a complete and accurate list of all
audits of all such Tax Returns filed for taxable years ending after December 31,
1991, including a reasonably detailed description of the nature and outcome of
each audit. All deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described in Part 3.10 of the Disclosure
Letter, are being contested in good faith by appropriate proceedings. Part 3.10
of the Disclosure Letter describes all adjustments to the United States federal
income Tax Returns filed by any Acquired Company or any group of corporations
including any Acquired Company for all taxable years since December 31, 1991,
and the resulting deficiencies proposed by the IRS. Except as described in Part
3.10 of the Disclosure Letter, no Seller or Acquired Company has given or been
requested to give waivers or extensions
19
<PAGE>
(or is or would be subject to a waiver or extension given by any other Person)
of any statute of limitations relating to the payment of United States federal,
state and local income Taxes of any Acquired Company or for which any Acquired
Company may be liable.
(iii) The charges, accruals, and reserves with respect to
United States federal, state and local income Taxes on the respective books of
each Acquired Company are adequate (determined in accordance with GAAP). There
exists no proposed tax assessment for United States federal, state, and local
income Taxes against any Acquired Company except as disclosed in the Balance
Sheets, Interim Balance Sheets or in Part 3.10 of the Disclosure Letter. No
consent to the application of Section 341(f)(2) of the IRC has been filed with
respect to any property or assets held, acquired, or to be acquired by any
Acquired Company. All United States federal, state, and local income Taxes that
any Acquired Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(iv) Except as set forth in Part 3.10 of the Disclosure
Letter, all United States federal, state, and local Income Tax Returns filed by
(or that include on a consolidated basis) any Acquired Company are true,
correct, and complete. There is no tax sharing agreement that will require any
payment by any Acquired Company after the date of this Agreement.
(v) At the option of Buyer, PPDI will join in making an
election and cooperate in allocating the Purchase Price to the extent
permissible under IRC Section 338(h)(10) with respect to the purchase of the
Shares. At the option of Sellers, Buyer will cause APBI to make an election with
Seller under IRC Regulation 1.1502-20(g) to reattribute losses, including but
not limited to capital loss carry forwards, to PPDI, such that under said
election PPDI will be entitled to the full benefit and utilization of such
losses.
(b) With respect to EAG and EIL:
(i) since July 1, 1998 the Tax Returns or computations which
ought to have been made by EAG and EIL for any Tax purpose have been duly made
and all Tax Returns and any other notices, accounts and information supplied to
the Inland Revenue or H.M. Commissioners of Customs and Excise ("Customs") or
other Tax authority concerned for any such purposes are up-to-date, correct and
have been made on a proper basis and submitted on a timely basis and none of
such returns, notices, accounts or information is disputed in any material
respect by the Tax authority concerned and there is no fact known to the Sellers
which might give rise to any such dispute or of any liability to Tax not
provided for in the Interim Balance Sheets in respect of transactions occurred
during the period from July 1, 1998 to the date of the Interim Balance Sheets.
(ii) All Tax for which either EAG or EIL has become liable
since July 1, 1998 and which ought to have been paid has been paid and, without
limiting the generality of the foregoing, since July 1, 1998 all income tax
deductible and payable under the PAYE system (including, but not limited to,
income tax in relation to the sub-contractor's tax deduction scheme, casual
labor and employee benefits) has so far as required been deducted from all
20
<PAGE>
payments made by either EAG or EIL; all amounts due to be paid to the Inland
Revenue in respect of such income Tax have been paid, and since July 1, 1998 all
deductions and payments required to be made by either EAG or EIL in respect of
UK National Insurance contributions (including employer's contributions) have
been made, and all payments required to be made by either EAG or EIL by way of
statutory sick pay pursuant to section 151 of the UK Social Security
Contributions and Benefits Act 1992 and regulations thereunder have been duly
made.
(iii) To Sellers' Knowledge, no payment has been made by
either EAG or EIL to or in respect of any of its directors or of the Sellers
(including, but not limited to, pension contributions) which will not be
deductible for corporation tax purposes, either in computing its income profits
or in computing the corporation tax payable by it.
(iv) The provisions included in the Interim Balance Sheets are
sufficient to cover all Tax (other than Tax which has been paid at the date of
the Interim Balance Sheets) in respect of all transactions, events, acts, or
omissions from July 1, 1998 to the date of the Interim Balance Sheet for which
either EAG or EIL was then or might at any time thereafter become or have become
liable including (without limitation) Tax (other than Tax which has been paid at
the date of the Interim Balance Sheets) in respect of distributions made and
interest and charges on income in the period from July 1, 1998 to the date of
the Interim Balance Sheets.
(v) To Sellers' Knowledge, the amount of Tax chargeable on EAG
and EIL during any accounting period ending since the APBI Acquisition Date has
not, to any material extent, depended on any unpublished concession, agreement
or other formal or informal arrangement with any Tax authority.
(vi) Neither EAG nor EIL is nor has ever been a close company
within the terms of section 414 ICTA.
(vii) Since the date of the Interim Balance Sheets :
(A) EAG and EIL have not made or agreed to make any
such loan or advance or release or written off any such debt as is within
sections 419 to 422 ICTA;
(B) except as provided in the Interim Balance Sheets
no dividend has been declared or paid on and no distribution of capital made in
respect of any share capital and no loan or loan capital has been repaid by EAG
or EIL in whole or in part;
(C) neither EAG nor EIL has made any claim under
section 279 or sections 152, 153, or 154 TCGA 1992;
(D) neither EAG nor EIL has done or agreed to do
anything as a result of which any investment grant paid to EAG or EIL is or may
be liable to be refunded in whole or in part;
21
<PAGE>
(E) no expenditure has been secured nor has any rent,
interest, or other payment been paid or is liable to be paid by EAG or EIL which
are wholly or partly disallowable as a deduction or a charge on income in
computing profits for the purposes of corporation tax (other than expenditures
in the nature and in the approximately amount of expenditure revealed to be
disallowed in the corporation tax computation of the relevant company for the
previous three years);
(F) no event has occurred which will result in either
EAG or EIL becoming liable to pay or bear a Tax liability directly or primarily
chargeable against or attributable to another person, firm or company;
(G) to Sellers' Knowledge, no disposal has taken place
or other event occurred which will or may have the effect of crystallizing a
liability to Tax which should have been included in the provision for deferred
taxation contained in the Interim Balance Sheets if such disposal or other event
had been planned or predicted at the date of the Interim Balance Sheets;
(H) neither EAG nor EIL has been involved in any
transaction which has given or may give rise to a liability to Tax on EAG or EIL
(or would have given or might give rise to such a liability but for the
availability of any relief) other than Tax in respect of normal trading income
or receipts of EAG or EIL arising from transactions entered into by it in the
Ordinary Course of Business.
(viii) To Sellers' Knowledge, full disclosure has been made to
the Buyer of all capital expenditure qualifying for capital allowances and all
balancing adjustments pursuant to the Capital Allowances Act 1990 and Chapter I
Part XIII ICTA in respect of any accounting period of EAG or EIL ended in the
two years before the date of the Interim Balance Sheets.
(ix) To Sellers' Knowledge, in respect of all plant and
machinery held by EAG or EIL under any lease, hire purchase or conditional sale
agreement, such plant and machinery is and has at all times been used for a
qualifying purpose in the requisite period in accordance with Chapter V, Part II
of the UK Capital Allowances Act 1990.
(x) To Sellers' Knowledge, except as disclosed in the Interim
Balance Sheet, since the end of the last such accounting period referred to in
paragraph (xii) above, neither EAG nor EIL has done or omitted to do or agreed
to do or permitted to be done any act as a result of which there may be made
either a balancing charge in respect of such capital expenditure within the
provisions referred to in paragraph (xii) above or any recovery of excess relief
within section 47 of the UK Capital Allowances Act 1990.
(xi) No balancing charge in respect of any capital allowances
claimed or given will arise if any assets of either EAG or EIL or the plant or
machinery taken as a whole were to be realized for a consideration equal to the
amount of the book value thereof as shown or
22
<PAGE>
included in the Interim Balance Sheet, except to the extent that such charge is
fully provided for in the Interim Balance Sheet.
(xii) To Sellers' Knowledge, disregarding any relief or
allowance, including indexation relief, available to EAG or EIL (other than
amounts allowable under section 38 TCGA) no chargeable gain or profit would
arise if any asset of EAG or EIL (other than trading stock) were to be realized
for a consideration equal to the book value thereof as shown or include in the
Interim Balance Sheets.
(xiii) To Sellers' Knowledge, neither EAG nor EIL has on or
after the APBI Acquisition Date:
(A) repaid, redeemed or purchased or agreed to repay,
redeem or purchase any of its share capital; or
(B) capitalized or agreed to capitalize in the form of
shares or debentures, any profits or reserves of any class or description, or
otherwise issued or agreed to issue share capital otherwise than for new
consideration (as defined in section 254 ICTA).
(xiv) To Sellers' Knowledge, neither EAG nor EIL has made any
disposals to which section 35 TCGA applies (1982 rebasing).
(xv) To Sellers' Knowledge, in relation to UK Value Added Tax
("VAT"):
(A) EAG and EIL are registered and taxable persons for
the purposes of the Value Added Tax Act 1994 ("VATA") and have since July 1,
1998 complied in all material respects with VATA and any statutory modification
or re-enactment thereof and all orders, provisions, directions or other
conditions made or imposed thereunder or under any other law relating to VAT;
(B) neither EAG nor EIL is currently a member of a VAT
Group under section 43 VATA;
(C) in respect of the period from July 1, 1998 to
Closing, all amounts due to be paid by EAG or EIL to Customs prior to Closing
will have been paid at the date thereof, no dispute exists between the Company
and Customs and there are no present circumstances which will likely to give
rise to any such dispute;
(D) all statutory records required to be kept by both
EAG or EIL have since July 1, 1998 been properly kept and since July 1, 1998 all
statutory returns required to be made by either EAG or EIL have been correctly
made up to the date hereof;
(E) neither EAG nor EIL has made and nor make exempt
supplies for VAT purposes (except such exempt supplies as may be disregarded in
calculating
23
<PAGE>
the amount of input tax for which EAG or EIL may claim a credit or repayment
under section 24 of VATA);
(F) neither EAG nor EIL has made an election pursuant
to paragraph 2, Schedule 10 VATA;
(G) no asset of either EAG or EIL is a capital item
the input tax on which may be subject to adjustment in accordance with the
provisions of Part XV of the VAT Regulations 1995;
(H) neither EAG nor EIL is and has not at any time
been liable, nor has it taken any action likely to make it liable, to a
self-supply charge under paragraph 6, Schedule 10 VATA;
(I) neither EAG nor EIL is required to make payments
on account of VAT for which it may become liable in a prescribed accounting
period (pursuant to the VAT (Payments on Account) Order 1993 and the VAT
Regulations 1995); and
(J) neither EAG nor EIL has been required by Customs
to give security under paragraph 4, Schedule 11 VATA.
(xvi) To Sellers' Knowledge, all chargeable assets of either
EAG or EIL were acquired at market value at the time of acquisition and there
are no circumstances giving rise or which may give rise to liability or loss
under or pursuant to any of sections 139, 140, 176, 177, 178 and 179 TCGA 1992
or sections 17 or 30 TCGA 1992 and no loss fails to be restricted under section
18 (3) TCGA 1992 as a result of the proposed sale of the Sale Shares or of any
other transaction.
(xvii) Since the APBI Acquisition Date:
(A) there has been no major change in the nature or
conduct of a trade carried on by either EAG or EIL; and
(B) the scale of activities of any trade carried on by
either EAG or EIL has not been small or negligible within the meaning of section
245 and 768 ICTA.
(xviii) To Sellers' Knowledge, neither EAG nor EIL has been a
party to or involved or concerned in any transaction within the last six years
in which the following provisions have been or could be applied except where all
applicable clearances (based on full disclosure of material facts and
circumstances) have been obtained:
(A) sections 139 or 140 TCGA 1992;
(B) sections 703 and 704 ICTA;
24
<PAGE>
(C) sections 765 and 766 ICTA;
(D) section 776 ICTA;
(E) sections 779 to 785 (inclusive) ICTA;
(F) sections 135, 136 and 137 TCGA 1992;
(G) sections 213 and 218 (inclusive) ICTA and section
192 TCGA 1992; and
(H) sections 219 to 229 (inclusive) ICTA.
(xix) To Sellers' Knowledge, full disclosure has been made in
the Disclosure Letter of all matters relating to Tax in respect of which either
EAG or EIL has, or will at Closing have, an outstanding entitlement under any
Tax statute to make:
(A) any appeal against any assessment to taxation; or
(B) any application for postponement of taxation.
(xx) Neither the Inland Revenue nor Customs nor any other Tax
authority has at any time within the last 2 years carried out or is at present
conducting any investigation into the business or affairs of either EAG or EIL
(or any aspect thereof) and the Sellers know of no reason why any such
investigation should be initiated.
(xxi) Neither EAG nor EIL has registered or applied to
register a profit-related pay scheme with the Inland Revenue.
(xxii) All interest, discounts or premiums by EAG or EIL in
respect of its loan relationships within the meaning of Chapter II of Part IV of
the Finance Act of 1996 are capable of being brought into account as a debit for
purposes of that Chapter as and to the extent that they are from time to time
recognized in the relevant accounts (assuming that the accounting policies and
methods adopted for the purpose of the Interim Balance Sheet continue to be so
adopted).
(xxiii) The Disclosure Letter gives details of every written
agreement that either EAG or EIL has since the APBI Acquisition Date entered
into for the claim or surrender of group relief under the provisions of s.402 to
s.413 (inclusive) Taxes Act 1988 or of Advance Corporation Tax under the
provisions of s.240 Taxes Act 1988.
(xxiv) Except as provided in the Interim Balance Sheet or the
Closing Financial Statements, neither EAG nor EIL is or will be under any
obligation to make or have any entitlement to receive in respect of any period
ending on or before the Accounts Date but
25
<PAGE>
since the APBI Acquisition Date any payment for group relief as defined in
s.402(6) Taxes Act 1998 or any payment for the surrender of the benefit of an
amount of Advance Corporation Tax or a repayment of such a payment.
(xxv) To the Sellers' Knowledge, each of EAG is and has since
the APBI Acquisition Date been resident in the United Kingdom for corporation
tax purposes and is not and has not been treated as a resident in any other
jurisdiction for any tax purpose to the Seller's Knowledge. To the Sellers'
knowledge, neither EAG nor EIL has or has had a branch, agency or permanent
establishment outside the United Kingdom and neither EAG nor EIL has ceased to
be resident in the United Kingdom.
(xxvi) To the Sellers' Knowledge, neither EAG nor EIL has
since the APBI Acquisition Date carried out or caused or permitted to be carried
out any of the transactions (i) specified at the relevant time in s.765(1) Taxes
Act 1988 otherwise than with the prior consent of H.M. Treasury and (in the case
of a special as opposed to general consent) full particulars of which are
contained in the Disclosure Letter or (ii) specified at the relevant time in
3.765A Taxes Act 1988 without having duly provided the required information to
the Board of Inland Revenue.
(xxvii) To the Sellers' Knowledge, neither EAG nor EIL has
since the APBI Acquisition Date had any interest in a controlled foreign company
as defined in Chapter IV Part XVII Taxes Act 1988 nor any material interest in
an offshore fund as defined in s.759 Taxes Act 1988.
(xxviii) To the Sellers' Knowledge, neither EAG nor EIL had
since the APBI Acquisition Date either received or become entitled to any income
which is unremittable "overseas income" within the meaning of s.584 Taxes Act
1988, no gain has accrued to any Company to which the provisions of 3.279 TCGA
1992 could apply.
(xxix) To the Sellers' Knowledge, since the APBI Acquisition
Date, neither EAG nor EIL has been a party to or otherwise involved in any
transaction to which any of the following provisions could apply:
s.729 to s.746 or s.774 to s.787 in Part XVII Taxes Act 1988;
s.801A Taxes Act 1988;
Schedule 5AA Taxes Act 1988;
Schedule 23A Taxes Act 1988.
(xxx) To the Sellers' Knowledge, since the APBI Acquisition
Date, neither EAG nor EIL has been involved in any transaction or series of
transactions which, or any part of which, may for any tax purposes be
disregarded or reconstructed by reason of any motive to avoid, reduce or delay a
possible liability to tax.
(xxii) All documents in the enforcement of which EAG or EIL
may be interested have been duly stamped and neither EAG nor EIL has since the
date of the Interim
26
<PAGE>
Balance Sheet Accounts Date incurred any liability to or been accountable for
any stamp duty reserve tax and there has been no conditional agreement within
s.87(1) Finance Act 1986 which would lead to either EAG or EIL incurring such a
liability or becoming so accountable.
(c) In making certain representations and warranties contained in
this Section 3.10 and in connection with the preparation and filing of the Tax
Returns referenced in this Section 3.10, Sellers have relied upon the accuracy
and completeness of statements made and information provided to Sellers by one
or more of the Acquired Companies and their respective Representatives.
Notwithstanding anything in this Section 3.10 to the contrary, to the extent a
Breach of any of the representations or warranties of Sellers contained in this
Section 3.10 would result in whole or in part, from the inaccuracy or
incompleteness of statements made or information provided to Sellers by the
Acquired Companies or their respective Representatives, then no such Breach
shall be considered to have occurred, to the extent that such Breach results
from the inaccuracy or incompleteness of such statements made or information
provided to Sellers, and neither Buyer nor any of the Acquired Companies shall
have a right of indemnification under this Agreement from Sellers with respect
to any such Breach.
3.11 EMPLOYEE BENEFITS
(a) Part 3.11(a) of the Disclosure Letter contains a complete and
accurate list of all Company Plans and Other Benefit Obligations and identifies
as such all Company Plans that are (A) Qualified Plans or (B) Title IV Plans.
Part 3.11(a) of the Disclosure Letter contains a complete and accurate list of
(A) all ERISA Affiliates of each Acquired Company, and (B) all Plans of which
any such ERISA Affiliate is or was a Plan Sponsor, in which any such ERISA
Affiliate participates or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(b) Except as set forth in Part 3.11(b) of the Disclosure Letter, no
Acquired Company or any ERISA Affiliate of an Acquired Company or any employee
of an Acquired Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, or has any present or future liability in connection
with any Multi-Employer Plan or VEBA.
(c) Except as set forth in Part 3.11(c) of the Disclosure Letter:
(i) Sellers have and have caused the Acquired Companies to
have performed all of their respective obligations under all Company Plans and
Other Benefit Obligations.
(ii) The Acquired Companies, with respect to all Company Plans
and Other Benefits Obligations, are, and each Company Plan and Other Benefit
Obligation is, in full compliance with ERISA, the IRC, and other applicable
Legal Requirements.
(A) no transaction prohibited by ERISA ss. 406 and no
"prohibited transaction" under IRC ss. 4975(c) have occurred with respect to any
Company Plan.
27
<PAGE>
(B) no Seller or Acquired Company has any liability to
the IRS with respect to any Plan, including any liability imposed by Chapter 43
of the IRC.
(C) no Seller or Acquired Company has any liability to
the PBGC with respect to any Plan.
(D) all filings required by ERISA and the IRC as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely provided.
(E) all contributions and payments made or accrued
with respect to all Company Plans and Other Benefit Obligations are deductible
under IRC ss. 162 or ss. 404. No amount, or any asset of any Company Plan, is
subject to tax as unrelated business taxable income.
(iii) since the date of the Balance Sheets, there has been no
establishment or amendment of any Company Plan or Other Benefit Obligation.
(iv) other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving, any Company
Plan or Other Benefit Obligation is pending or, to Sellers' Knowledge, is
Threatened.
(v) each Qualified Plan of each Acquired Company is qualified
in form and, to Sellers' Knowledge, operation under IRC ss. 401(a); each trust
for each such Plan is exempt from federal income Tax under IRC ss. 501(a); and,
to Sellers' Knowledge, no event has occurred or circumstance exists that will or
could give rise to disqualification or loss of Tax-exempt status of any such
Plan or trust.
(vi) each Acquired Company and each ERISA Affiliate of an
Acquired Company has met the minimum funding standard, and has made all
contributions required, under ERISA ss. 302 and IRC ss. 412.
(vii) except as set forth in Part 3.11(c) of the Disclosure
Letter, no Company Plan is subject to Title IV of ERISA.
(viii) no Acquired Company or any ERISA Affiliate of an
Acquired Company has ceased operations at any facility or has withdrawn from any
Title IV Plan in a manner that would subject Sellers or any of the Acquired
Companies to liability under ERISA ss. 4062(e), ss. 4063, or ss. 4064.
(ix) no ERISA Affiliate of an Acquired Company has filed a
notice of intent to terminate any Plan or has adopted any amendment to treat a
Plan as terminated. The PBGC has not instituted proceedings to treat any Company
Plan as terminated. No event has
28
<PAGE>
occurred or circumstance exists that may constitute grounds under ERISA ss. 4042
for the termination of, or the appointment of a trustee to administer, any
Company Plan.
(x) no accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or circumstance
exists that may result in an accumulated funding deficiency as of the last day
of the current plan year of any such Plan.
(xi) since the last valuation date for each pension Plan of
each Acquired Company and each ERISA Affiliate of an Acquired Company, no event
has occurred or circumstance exists that would increase the amount of benefits
under any such Plan or that would cause the excess of Plan assets over benefit
liabilities (as defined in ERISA ss. 4001) to decrease, or the amount by which
benefit liabilities exceed assets to increase.
(xii) no reportable event (as defined in ERISA ss. 4043 and in
regulations issued thereunder) has occurred.
(xiii) no Seller has Knowledge of any facts or circumstances
that may give rise to any liability of any Seller, any Acquired Company, or
Buyer to the PBGC under Title IV of ERISA.
(xiv) except to the extent required under ERISA ss. 601 et
seq. and IRC ss. 4980B, no Acquired Company provides health or welfare benefits
for any retired or former employee or is obligated to provide health or welfare
benefits to any active employee following such employee's retirement or other
termination of service.
(xv) each Acquired Company has the right to modify and
terminate benefits to retirees (other than pensions) with respect to both
retired and active employees.
(xvi) Sellers and all Acquired Companies have complied with
the provisions of ERISA ss. 601 et seq. and IRC ss. 4980B.
(xvii) no payment that is owed or may become due to any
director, officer, employee, or agent of any Acquired Company will be
non-deductible to the Acquired Companies or subject to Tax under IRC ss. 280G or
ss. 4999; nor will any Acquired Company be required to "gross up" or otherwise
compensate any such person because of the imposition of any excise tax on a
payment to such person.
(xviii) the consummation of the Contemplated Transactions will
not result in the payment, vesting, or acceleration of any benefit, unless
otherwise set forth in this Agreement.
(d) In making certain representations and warranties contained in
this Section 3.11, Sellers have relied upon the accuracy and completeness of
statements made and information provided to Sellers by one or more of the
Acquired Companies and their respective Representatives. Notwithstanding
anything in this Section 3.11 to the contrary, to the extent a
29
<PAGE>
Breach of any of the representations or warranties of Sellers contained in this
Section 3.11 would result, in whole or in part, from the inaccuracy or
incompleteness of statements made or information provided to Sellers by the
Acquired Companies or their respective Representatives, then no such Breach
shall be considered to have occurred, to the extent that such Breach results
from the inaccuracy or incompleteness of such statements made or information
provided to Sellers, and neither Buyer nor any of the Acquired Companies shall
have a right of indemnification under this Agreement from Sellers with respect
to any such Breach.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
Except as set forth in Part 3.12 of the Disclosure Letter:
(a) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may constitute or result in a violation by
Sellers or any Sellers' Related Person, other than the Acquired Companies, of or
a failure on the part of Sellers or any Sellers' Related Person, other than the
Acquired Companies, to comply with, any Legal Requirement which will result in
any obligation or liability of Buyer or any of the Acquired Companies on or
after the Closing Date; and
(b) With respect to EAG and EIL, Sellers and Sellers' Related
Persons, other than the Acquired Companies, have taken no action to prevent
compliance with all legal and procedural requirements and other formalities
concerning:
(i) the Memorandum and Articles of Association
(including all resolutions passed or purported to have been passed);
(ii) the filing of all documents required by the UK
Companies Act 1985 to be filed at Companies House;
(iii) issues of shares, debentures or other securities;
(iv) payments of interest and dividends and making of
other distributions; and
(v) directors (including any shadow directors) and
other officers.
3.13 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.13(a) of the Disclosure Letter,
there is no pending Proceeding:
30
<PAGE>
(i) that has been commenced by or against Sellers or any
Sellers' Related Person, other than the Acquired Companies, that otherwise
relates to or may be reasonably expected to affect the business of, or any of
the assets owned or used by, any Acquired Company and to Sellers' Knowledge, no
such Proceeding has been Threatened;
(ii) that challenges, or that may be reasonably expected to
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions and to Sellers'
Knowledge, no such Proceeding has been Threatened; and
(iii) there is no Order to which Sellers or any Sellers'
Related Person, other than the Acquired Companies, is subject which in any way
involves or following the Closing Date will involve the Acquired Companies, or
any of the assets owned or used by any Acquired Company.
3.14 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.14 of the Disclosure Letter, since the date
of the Interim Balance Sheets, there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) material change in the accounting methods used in preparation of
the financial statements for any Acquired Company; or
(d) agreement, whether oral or written, by any Acquired Company to
do any of the foregoing.
3.15 CONTRACTS; NO DEFAULTS
Except as set forth in Part 5.9 and 6.3 of the Disclosure Letter, which
Contracts will be the subject of mutual releases, except as set forth in Part
3.7 of the Disclosure Letter, and except as may be contemplated pursuant to any
transition of employee benefits contemplated pursuant to Section 5.6, there are
no Contracts to which Sellers or any Sellers' Related Person, other than the
Acquired Companies, is a party, which following the Closing Date:
31
<PAGE>
(a) the Buyer or any of the Acquired Companies will continue to be a party
to or by which the Buyer or any of the Acquired Companies will be bound;
(b) will create an Encumbrance on any of the assets of any of the
Acquired Companies; or
(c) will result in any obligation or liability for the Buyer or any of the
Acquired Companies.
3.16 INSURANCE
(a) Part 3.16 of the Disclosure Letter sets forth all policies of
insurance to which any Acquired Company is a party or under which any Acquired
Company, or any director, officer, or employee of any Acquired Company, is
covered (the "Policies").
(b) All Policies shall remain in full force and effect up to and
including the Closing Date; provided that APBI's professional liability
insurance in effect prior to the Closing Date shall continue in effect
subsequent to the Closing Date and APBI shall be solely responsible for payment
of all premiums and any other costs associated with continuing said insurance
subsequent to the Closing Date.
3.17 ENVIRONMENTAL MATTERS
No Acquired Company has or following the Closing Date will have any
Environmental, Health or Safety Liabilities resulting from any action or
inaction by the Sellers, or any Sellers' Related Person, other than the Acquired
Companies.
3.18 INTELLECTUAL PROPERTY
The Acquired Companies shall be entitled to retain ownership of or
licenses to the Intellectual Property Assets which they own or have licensed,
free and clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims by or in favor of Sellers or any Sellers'
Related Person, other than the Acquired Companies. Sellers acknowledge and agree
that subsequent to the Closing Date they shall have no ownership interest in or
right or licenses to the names "APBI Environmental Sciences Group, Inc.", "TAS,"
"Technical Assessment Systems, Inc." "Environmental Assessment Group Limited"
"EAG", "EAG-Environ" "ENVIRON", any other corporate or trade name incorporating
the term "ENVIRON" or "Environ" and such other Intellectual Property Assets as
listed in Part 3.18 of the Disclosure Letter.
3.19 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and
no statement in the Disclosure Letter omits to state a material fact necessary
to make the statements herein or therein, in light of the circumstances in which
they were made, not misleading except as otherwise expressly limited by or
provided in this Agreement.
32
<PAGE>
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
3.20 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement other than to Lehman
Brothers for services rendered in connection with its preparation and delivery
of a fairness opinion addressed to Sellers, all of whose fees, commissions or
other payment shall be the entire responsibility and obligation of Sellers.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Buyer is authorized to do
business in every other jurisdiction in which it is doing business. Buyer has
full corporate power and authority to conduct its business as it is now being
conducted and to own or use the properties and assets that it purports to own or
use.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by general equitable principles and
bankruptcy, insolvency and other laws governing creditors' rights. Upon
execution and delivery by Buyer of the Promissory Note, the Security Agreement,
the Buyer's Releases, the Sublease and the Consulting Agreement (collectively,
the "Buyer's Closing Documents"), the Buyer's Closing Documents will constitute
the legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as enforceability may be limited
by general equitable principles and bankruptcy, insolvency, and other laws
governing creditors' rights. Buyer has the right, power, and authority to
execute and deliver this Agreement and the Buyer's Closing Documents and to
perform its obligations under this Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(i) any provision of Buyer's Organizational Documents;
33
<PAGE>
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound.
(c) Except as set forth in Schedule 4.2, Buyer is not and will not
be required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
4.3 CAPITALIZATION
The authorized equity securities of Buyer consists of 1,000,100 (One
Million One Hundred) shares consisting of 500,000 (Five Hundred Thousand) shares
of Class A Common Stock, no par value, of which 88,250 (Eighty-Eight Thousand
Two Hundred Fifty) shares are issued and outstanding, 100 shares of Class B
Common Stock, $1.00 par value, of which 0 (Zero) shares are issued and
outstanding, and 500,000 (Five Hundred Thousand) shares of Class C Common Stock,
no par value, of which 31 (Thirty-One) shares are issued and outstanding
(collectively, the "Buyer Shares"). The owners of the Buyer Shares and their
respective holdings are set forth in Schedule 4.3. All of the Buyer Shares are
owned free and clear of all Encumbrances by their respective holders. All of the
Buyer Shares have been duly authorized, validly issued and are fully paid and
nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of the Buyer Shares. None of the Buyer Shares was issued in violation
of the Securities Act or any other Legal Requirement.
4.4 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view to
their distribution within the meaning of Section 2(11) of the Securities Act.
4.5 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
34
<PAGE>
4.6 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement other
than to Raymond James & Associates, Inc., whose fees, commissions or other
payment shall be the entire responsibility of Buyer.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and
will cause their Representatives to, (a) afford Buyer and its Representatives
and prospective lenders and their Representatives (collectively, "Buyer's
Advisors") full and free access on a strictly confidential basis to Sellers' and
each Acquired Company's personnel, properties, contracts, books and records, and
other documents and data, (b) furnish Buyer and Buyer's Advisors with copies of
all such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating and other data and information as Buyer may
reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Sellers will
confer with Buyer concerning operational matters of a material nature and
cooperate with each Acquired Company so as to permit and will take no action to
prevent:
(a) the conduct of the business of such Acquired Company only in
the Ordinary Course of Business; and
(b) the preservation intact of the current business organization of
each such Acquired Company, the availability of the services of the current
officers, employees, and agents of each Acquired Company, and the maintenance of
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with such Acquired
Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, Sellers will not, and will take no
action to cause any Acquired Company, without the prior consent of Buyer, to
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.14 is likely to occur.
35
<PAGE>
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will
make all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions. Buyer and Sellers agree that no
filings under the HSR Act are required. Between the date of this Agreement and
the Closing Date, Seller will cooperate with Buyer and each Acquired Company in
making or obtaining, (a) all filings that Buyer elects to make or is required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(b) all consents Buyer may be required to obtain in connection with the
Contemplated Transactions as set forth in Schedule 4.2.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller becomes aware of any fact or
condition that causes or constitutes a Breach of any of Sellers' representations
and warranties as of the date of this Agreement, or if such Seller becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, Sellers will promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. During the
same period, each Seller will promptly notify Buyer of the occurrence of any
Breach of any covenant of Sellers in this Section 5.5 or of the occurrence of
any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
5.6 CERTAIN BENEFIT MATTERS
(a) Seller shall cause The Pharmaceutical Product Development, Inc.
Retirement Savings Plan (the "PPD 401(k) Plan") to transfer all of its assets
and liabilities attributable to those PPD 401(k) Plan participants who are
officers or employees of APBI on the transfer date described below (the "APBI
Employees") to a separate, new 401(k) plan which will be sponsored and
maintained by APBI and/or its affiliates (the "New Plan"). This plan spin-off
shall comply with Code Section 414(l), ERISA Section 208, and Sections 12.6(b)
and 12.3 of the PPD 401(k) Plan. The PPD 401(k) Plan assets transferred to the
New Plan shall include all rights of the PPD 401(k) Plan with respect to any
outstanding plan loans to APBI Employees; outstanding plan loans to APBI
Employees will not have to be paid off if kept current, but will continue in
effect (with the New Plan as the new creditor) in accordance with the terms of
the documents governing such loans. APBI Employees will not be given the right
to receive current distribution of their PPD 401(k) Plan accounts in connection
with the spin-off. APBI shall cause the New Plan to be established on or as soon
as practicable after the Closing Date, and the transfer shall occur as soon as
practicable following establishment of the New Plan, but in no event later than
December 31, 1999. The transfer shall be made in cash or cash equivalent, except
for the promissory notes representing the transferred participant loans. The
transfer shall
36
<PAGE>
include both the vested and non-vested PPD 401(k) Plan benefits of the APBI
Employees, and the PPD 401(k) Plan will not apply its forfeiture provisions to
the APBI Employees between the Closing Date and the transfer date. The New Plan
shall credit each APBI Employee with the vesting service that he or she had
accrued under the PPD 401(k) Plan as of the Closing Date (as well as vesting
service for his or her APBI employment after the Closing Date). APBI's
participation in the PPD 401(k) Plan shall terminate effective as of the Closing
Date in accordance with Section 12.6(a) of the PPD 401(k) Plan. Upon notice from
Sellers, APBI will cause the New Plan to distribute or forfeit elective deferral
and matching contributions included in the transfer to the extent that Sellers
reasonably determine is necessary to ensure the PPD 401(k) Plan's compliance
with the limitations of Code Sections 401(k), 401(m), 402(g) and 415 for plan
years during which APBI Employees participated in the PPD 401(k) Plan.
(b) Seller will cooperate with Buyer and take any such action within
its power as may be reasonably necessary to assure that sponsorship of the
Money-Purchase Pension Plan currently maintained by APBI remains with APBI.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Sellers will not, and will cause each of their Representatives not
to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Buyer) relating to any transaction involving the sale of the
business or assets (other than in the Ordinary Course of Business) of any
Acquired Company, or any of the capital stock of any Acquired Company, or any
merger, consolidation, business combination, or similar transaction involving
any Acquired Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use
their Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied,
provided that Sellers shall not be required to make any monetary payments in
order to obtain any consents or Seller's Release.
5.9 RELEASES
As of the Closing Date, Sellers will cause Buyer and Buyer's Related
Persons, to be released from any and all liability or obligation under any
Applicable Contract to which Seller or Seller's Related Person is a party (other
than Applicable Contracts set forth in Part 6.3 of the Disclosure Letter, with
respect to which Buyer will provide the Buyer's Releases to Seller), provided
that all of the Acquired Companies' right, title, and interest in and to such
Applicable Contracts shall have been validly transferred or assigned to Sellers.
All Applicable Contracts subject to releases required by this Section 5.9 are
set forth in Part 5.9 of the Disclosure Letter (collectively the "Sellers'
Releases").
37
<PAGE>
5.10 UK RESOLUTIONS AND WAIVERS
With respect to each Acquired Company incorporated in any part of the
United Kingdom:
(a) Sellers shall cooperate with Buyer and such Acquired Companies to hold
all meetings, or obtain all waivers and consents and pass all resolutions as are
required under the Companies Act 1985, or such Acquired Company's articles of
association, or otherwise to give effect to this Agreement under U.K. Legal
Requirements.
(b) For so long after the Closing Date as it remains the registered holder
of any of the shares of EAG or EIL, Sellers shall hold such shares and any
distributions, property and rights deriving from them in trust for the Buyer and
shall deal with such shares and any distributions, property and rights deriving
from them as the Buyer directs; in particular, Sellers shall exercise all voting
rights as the Buyer directs or shall execute an instrument of proxy or other
document which enables the Buyer or its Representative to attend and vote at any
meeting of EAG or EIL.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will
make all filings required by Legal Requirements to be made by it to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Buyer will (i) cooperate with Sellers with respect to all filings
that Sellers are required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Sellers in obtaining all
consents identified in Part 3.2 of the Disclosure Letter.
6.2 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Buyer will use
its Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied,
provided that Buyer shall not be required to make any monetary payments in order
to obtain any consents or Buyer's Release.
6.3 RELEASES
As of the Closing Date, Buyer will cause Sellers and any Sellers' Related
Person, other than an Acquired Company, to be released from any and all
liability or obligation under any Applicable Contract, including but not limited
to leases (a) to which any Acquired Company is a party, whether Sellers or any
Sellers' Related Person have entered into such Contract as a primary obligor,
guarantor, surety, accommodation party or otherwise, or (b) entered into
primarily for the benefit of an Acquired Company; provided that Sellers' and any
Sellers' Related Person's right, title and interest in and to such Applicable
Contract shall have been validly transferred or assigned to Buyer or one or more
of the Acquired Companies. All Applicable Contracts subject to releases required
by this Section 6.3 are set forth in Part 6.3 of the Disclosure Letter
(collectively the "Buyer's Releases").
38
<PAGE>
6.4 INSURANCE
Buyer shall obtain and keep in full force effective as of the Closing
Date, a binder or policy (i) providing the Acquired Companies and all of their
employees life, health, long-term disability and other insurance coverage
substantially comparable to the coverage being provided by PPDI to such
employees immediately prior to the Closing Date, and (ii) commercial general
liability, professional liability and hazard insurance covering the businesses,
operations and assets of the Acquired Companies; provided that Buyer shall be
entitled to continue at its sole expense, following the Closing Date, the
professional liability policy in effect for APBI in effect prior to the Closing
Date.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to Section 2.4
must have been delivered, and each of the other covenants and obligations in
Sections 5.4 and 5.8 must have been performed and complied with in all respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter and
each Consent identified in Schedule 4.2, must have been obtained and must be in
full force and effect.
7.4 ADDITIONAL DOCUMENTS
Sellers shall have delivered to Buyer such other documents as Buyer may
reasonably request for the purpose of (i) evidencing the accuracy of any of
Sellers' representations and
39
<PAGE>
warranties, (ii) evidencing the performance by either Seller of, or the
compliance by either Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iii) evidencing the satisfaction of
any condition referred to in this Section 7, or (iv) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
40
<PAGE>
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the cash payments
required to be made by Buyer pursuant to Section 2.4(b)(i).
8.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter must
have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer shall have delivered to Sellers such other documents as Sellers may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iii) evidencing the satisfaction of any
condition referred to in this Section 8, or (iv) otherwise facilitating the
consummation of any of the Contemplated Transactions.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
8.6 FAIRNESS OPINION
Sellers shall have received the opinion of a reputable investment banking
firm to the effect that the consideration received by Sellers in connection with
the Contemplated Transactions, specifically including the Purchase Price
received by Sellers for the Shares, is fair, from a financial point of view, to
Sellers.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
41
<PAGE>
(a) by either Buyer or Sellers if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in Section
8 has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before March
31, 1999, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 13.1 and
13.3 will survive; provided, however, that if this Agreement is terminated by a
party because of the Breach of this Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; WAIVER
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter and
any other certificate or document delivered pursuant to this Agreement will
survive the Closing. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
42
<PAGE>
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless Buyer,
the Acquired Companies, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any material Breach of any representation or warranty made by
Sellers in this Agreement (without giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter, the supplements to the Disclosure
Letter, or any other certificate or document delivered by Sellers pursuant to
this Agreement;
(b) any material Breach of any representation or warranty made by
Sellers in this Agreement as if such representation or warranty were made on or
as of the Closing Date without giving effect to any supplement to the Disclosure
Letter;
(c) any material Breach by either Seller of any covenant or
obligation of such Seller in this Agreement;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller (or any Person
acting on either Seller's behalf) in connection with any of the Contemplated
Transactions; and
(e) any matters relating to the ownership and/or operation of the
business of the Excluded Companies.
(f) notwithstanding anything in this Agreement to the contrary, to
the extent that a Breach of any of the representations or warranties of Sellers
contained in this Agreement otherwise would have occurred and such Breach
results, in whole or in part, from the inaccuracy or incompleteness of
statements made or information provided to Sellers by the Acquired Companies or
their respective Representatives, then no such Breach by Sellers shall be
considered to have occurred under this Agreement to the extent that such Breach
results from the inaccuracy or incompleteness of statements made or information
provided to Sellers, and neither Buyer nor any of the Acquired Companies shall
have a right of indemnification under this Agreement from Sellers with respect
to any such Breach.
(g) notwithstanding anything in this Agreement to the contrary,
neither Buyer nor any of the Acquired Companies shall have a right of
indemnification under this Agreement from Sellers with respect to any matter,
condition or event as to which Buyer, the Acquired Companies or any Related
Person (other than Sellers) or any Representative thereof had
43
<PAGE>
Knowledge, irrespective of whether Sellers also had Knowledge of such matter,
condition or event.
The remedies provided in this Section 10.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other Indemnified
Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--TAX MATTERS
In addition to the provisions of Section 10.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyer and the Indemnified Persons
for, and will pay to Buyer and the other Indemnified Persons the amount of, any
Damages arising, directly or indirectly, from or in connection with:
(a) the 1993 Reorganization Transaction, effected January 31, 1993,
pursuant to which APBI Finance Corporation sold all of the shares of capital
stock of Environ International Corporation ("Environ"), Environmental Testing
and Certification Corporation ("ETC") and Landis International, Inc. ("Landis")
to ESG Holding Company, and immediately thereafter ETC and Landis merged with
and into Environ. Environ then changed its name to APBI Environmental Sciences
Group, Inc.;
(b) any liability which may be imposed upon the Acquired Companies with
respect to consolidated federal income Tax Returns filed by PPDI for periods
ending on or before the Closing Date; provided, however, that this indemnity
shall not cover any amount attributable to the provision of erroneous or
incomplete information by the Acquired Companies or their Representatives to
Persons responsible for preparing the relevant Tax Returns; provided further
that Buyer shall indemnify Sellers against any income-Tax liability incurred by
Sellers with respect to taxable income of the Acquired Companies accrued after
January 31, 1999 and on or before the Actual Closing Date;
(c) any amount by which (i) actual liability of the Acquired Companies for
federal, state or local income Taxes incurred with respect to operations or
transactions occurring on or before the Closing Date exceeds (ii) the amount of
such Taxes paid, accrued, or reserved for by the Acquired Companies on their
financial statements, whether or not such Taxes were reported on Tax Returns as
filed; provided, however, that this indemnity shall not cover any amount
attributable to the provision of erroneous or incomplete information by the
Acquired Companies or their Representatives to the Persons responsible for
preparing the relevant Tax Returns; and
(d) the failure by PPDUK to perform any of its obligations under the Tax
Deed.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, their respective
Representatives, stockholders, controlling persons and affiliates (collectively,
the "Sellers' Indemnified Persons")
44
<PAGE>
for, and will pay to Sellers and the Sellers' Indemnified Persons the amount of
any Damages arising, directly or indirectly, from or in connection with:
(a) any material Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement,
(b) any material Breach by Buyer of any covenant or obligation of
Buyer in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions; and
(d) any matters relating to the ownership and/or operations of the
businesses of the Acquired Companies, to the extent that they were within the
management and control of the Acquired Companies or their Representatives,
except for ownership and operation of the businesses of the Excluded Companies,
prior or subsequent to the Closing Date.
The remedies provided in this Section 10.4 will not be exclusive of or
limit any other remedies that may be available to Sellers or the other Sellers'
Indemnified Persons.
10.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section
10.2, 10.3 or 10.4 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Tax be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by
45
<PAGE>
the indemnified party in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the indemnifying party assumes the
defense of a Proceeding, (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or any Related Person other than as a result
of monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
10.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
11. BUYER'S POST-CLOSING COVENANTS
Buyer covenants and agrees as follows (which covenants shall survive the
Closing):
11.1 LITIGATION SUPPORT
If PPDI, or one of its Subsidiaries, actively is contesting or defending
against any claim (other than a claim by Buyer or the Acquired Companies) or
Proceedings in connection with (i) the Contemplated Transactions, or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
any of the Acquired Companies, Buyer and each of the Acquired Companies shall
cooperate with PPDI or its Subsidiary, as applicable, and its counsel in the
defense or contest, make available their personnel, and provide such testimony
and access to their books and records as shall be reasonably necessary in
connection with the defense or contest, all at PPDI or such Subsidiary's
expense, unless PPDI or one of its Subsidiaries
46
<PAGE>
is entitled to indemnification therefor under this Agreement.
11.2 ACCESS TO BOOKS AND RECORDS
PPDI and its Subsidiaries shall be given access on a strictly confidential
basis to the books and records (including tax and financial records) of the
Acquired Companies and a right to make copies thereof at reasonable times after
the Closing in connection with any Legal Requirement or Order imposed upon PPDI
and its Subsidiaries and for any legitimate business purpose, including but not
limited to preparation of filings of any kind required by any Governmental Body,
or to contest or defend any claim or Proceedings related to ownership and/or
operation of the Acquired Companies.
11.3 TAX ELECTION
Provided Sellers have complied with their obligations under Section
12.3(b) to provide a calculation of the tax basis of APBI's assets as of the
Closing Date, Buyer agrees to make its decision on whether to make a 338(h)(10)
election pursuant to Section 3.10(a)(v), by two (2) months after the actual
Closing Date. If Buyer elects to make a 338(h)(10) election, Buyer will promptly
notify Sellers who will make corresponding adjustments in the Adjustment Amount
as described in section 2.5(b).
11.4 AUDITS
(a) In the event of an audit by or other communication from the IRS, or
any other Governmental Body with respect to a federal, state or local income Tax
Return filed by or on behalf of an Acquired Company (other than EAG or EIL) for
any Tax period ending prior to or at the Closing Date, Sellers shall control the
process of responding to any such audit or other communication from such
Governmental Body with respect to said Tax Return and corresponding Tax period,
with cooperation and input from Buyer and the Acquired Companies. Buyer shall
notify Sellers within three days after Buyer has Knowledge of any such audit by
or communication from such Governmental Body. Neither Buyer nor any of the
Acquired Companies will agree to any adjustments proposed by any Governmental
Body to any income Tax Returns that would impact any federal, state, local or
income Tax Return for any Tax period ending prior to or at the Closing Date
without Sellers' written consent. In addition, neither Buyer nor any of the
Acquired Companies shall agree to any adjustments proposed by any Governmental
Body to any federal, state, local or income Tax Returns for any Tax period
ending after the Closing Date that would impact adversely any federal, state,
local or income Tax Returns for any Tax periods ending prior to or at the
Closing Date without Sellers' written consent. Buyer agrees not to carry back
any Tax item (including without limitation net operating losses and income tax
credits) which will impact any federal, state, local or income Tax Return for a
Tax period ending prior to or at the Closing Date without Sellers' prior written
consent. Any federal, state, local or income Tax refunds that are received by
Buyer (and any amounts credited against such Tax to which Buyer is entitled)
that relate to Tax periods ending prior to or
47
<PAGE>
at the Closing Date and which are the result of an audit, examination or other
inquiry by any Governmental Body shall be paid to Sellers immediately upon
Buyer's receipt thereof.
(b) Buyer will cooperate with Sellers to make all consents necessary to
finalize the group relief claims related to the UK income Tax Returns for the
Tax period ending December 31, 1998.
(c) Buyer shall be responsible for all Taxes of the Acquired Companies
with respect to income earned after the Closing Date and shall indemnify Sellers
or any Sellers' Related Person against same.
11.5 SUBSEQUENT SALE
If the capital stock or assets of the Acquired Companies are sold in their
entirety or substantially in their entirety within 18 months following the
Closing Date, and the sale price is in excess of the Purchase Price, Buyer
agrees to pay, promptly following receipt of consideration for such sale as it
is paid, whether in a single lump sum, or pro rata as received in periodic
installments or otherwise, the difference between the Purchase Price and such
subsequent sale price as follows:
(a) 50% of the difference if the sale occurs within 6 months of the
Closing Date;
(b) 33 1/3% of the difference if the sale occurs following 6 months but
within 12 months of the Closing Date; and
(c) 25% of the difference if the sale occurs following 12 months but
within 18 months of the Closing Date.
11.6 JOINDER OF EAG
Buyer agrees that it will use its Best Efforts promptly following the
Closing Date to take such steps as are necessary under UK law to permit EAG to
execute a joinder to this Agreement. In the event that, despite Buyer's Best
Efforts, EAG is unable to execute such joinder promptly following the Closing
Date, but it becomes able to do so at a future date, Buyer undertakes to use its
Best Efforts to enable EAG to execute the joinder at such future date.
12. SELLER'S POST-CLOSING COVENANTS
Seller covenants and agrees as follows (which covenants shall survive the
Closing):
12.1 LITIGATION SUPPORT
If Buyer or any of the Acquired Companies actively is contesting or
defending against any claim (other than a claim by Sellers or their
Subsidiaries) or Proceedings in connection with (i) the Contemplated
Transactions, or (ii) any fact, situation, circumstance, status, condition,
48
<PAGE>
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction involving any of the Acquired Companies, Seller and its
Subsidiaries shall cooperate with Buyer or the Acquired Companies, as
applicable, and its counsel in the defense or contest, make available their
personnel and provide such testimony and access to their books and records as
shall be reasonably necessary in connection with the defense or contest, all at
Buyer's expense, unless Buyer or one of the Acquired Companies is entitled to
indemnification therefor under this Agreement.
12.2 ACCESS TO BOOKS AND RECORDS
Buyer and the Acquired Companies shall be given access on a strictly
confidential basis to the books and records (including tax and financial
records) of the Sellers and their Subsidiaries and a right to make copies
thereof at reasonable times after the Closing, in connection with any Legal
Requirement or Order imposed upon Buyer or the Acquired Companies and for any
legitimate business purpose, including but not limited to preparation of filings
of any kind required by any Governmental Body, or to contest or defend any claim
or Proceeding related to ownership and/or operation of the Acquired Companies.
12.3 DISCLOSURE OF TAX RETURNS
(a) Sellers shall provide Buyer with all such documentation as Buyer may
reasonably request in order to establish the amount of any indemnification due
from Buyer under Section 10.3(b) with respect to income-tax liability incurred
by the Sellers with respect to taxable income of the Acquired Companies accrued
after January 31, 1999 and on or before the Closing Date.
(b) Sellers shall deliver to Buyer no later than one (1) month after the
actual Closing Date a calculation of the tax basis of APBI's assets as of the
Closing Date. Sellers shall deliver to Buyer no later than the 15th day of the
eighth month after the Closing Date, a copy of APBI's definitive federal income
tax return as filed (or as it will be filed) for the APBI taxable year ending on
the Closing Date.
13. GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and Dispute Resolution Accountants. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a Breach of this Agreement by another
party.
49
<PAGE>
13.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer and Seller shall agree. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the Closing,
Sellers shall, and shall cause the Acquired Companies to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Buyer will consult with each other concerning the means by
which the Acquired Companies' employees, customers, and suppliers and others
having dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication. Notwithstanding anything in this Section 13.2 to the contrary,
Sellers shall have the right to make public announcements or such other
disclosure regarding this Agreement as Sellers determine, in good faith but in
their sole discretion, as are required by applicable securities laws or NASDAQ
National Market rules. Seller agrees to make copies of any such public
announcement disclosure available to Buyer in advance of release.
13.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers
will maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Acquired Companies to maintain in
confidence, any written, oral, or other information obtained in confidence from
another party or an Acquired Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
13.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
50
<PAGE>
Sellers: Pharmaceutical Product Development, Inc.
3151 Seventeenth Street Extension
Wilmington, North Carolina 28412
Attention: F. B. Davenport, Esquire
Facsimile No.: 910-772-6951
with a copy to: Murchison Taylor Kendrick & Gibson LLP
16 North Fifth Avenue
Wilmington, NC 28401-4593
Attention: G. Stephen Diab
Facsimile No.: 910-763-6561
Buyer: Environ International Corporation
4350 North Fairfax Drive
Suite 300
Arlington, VA 22203
Attention: Mitchell B. Smith
Facsimile No.: 703-516-2462
with a copy to: Obermayer Rebmann Maxwell & Hippel LLP
19th Floor
One Penn Center
1617 JFK Blvd.
Philadelphia, Pa. 19103
Attention: J. Rotwitt, Esquire
Facsimile No.: 215-665-3165
13.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
13.6 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given
51
<PAGE>
by a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
13.8 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in any
supplement thereto, must relate only to the representations and warranties in
the Section of this Agreement to which they expressly state they relate and not
to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
13.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties, except that either Buyer or Sellers may
assign any of its rights but not any of its obligations under this Agreement to
any Subsidiary of Buyer or Sellers, as the case may be. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
13.10 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
52
<PAGE>
13.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
13.12 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
13.13 GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of
Virginia without regard to conflicts of laws principles.
13.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
53
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer:
ENVIRON HOLDINGS, INC.
ATTEST:
By:_/S/ JOSEPH H. HIGHLAND DAVID A. NASATIR
NAME: JOSEPH h. hIGHLAND
Title: cHAIRMAN
Sellers:
APPLIED BIOSCIENCE
INTERNATIONAL INC. ATTEST:
By:_/S/ FRED B. DAVENPORT DAVID A. NASATIR
NAME: FRED B. DAVENPORT
TITLE: VICE PRESIDENT
PPD UK HOLDINGS LIMITED ATTEST
By:_/S/ FRED B. DAVENPORT DAVID A. NASATIR
NAME: FRED B. DAVENPORT
TITLE: DIRECTOR
54
<PAGE>
JOINDER OF APBI AS A PARTY
(a) For good and valuable consideration, to induce Sellers to enter into this
Agreement, and intending to be legally bound, APBI, executes this Agreement for
the purpose of making and agreeing to be bound by all of the representations,
warranties and covenants of Buyer set forth in this Agreement, including,
without limitation, those set forth in Sections 4 and 11. APBI further agrees to
indemnify and hold harmless the Sellers' Indemnified Persons pursuant to and in
accordance with the provisions of Section 10 of this Agreement.
(b) APBI represents and warrants to Sellers it has duly authorized and executed
this Joinder, and that this Joinder constitutes the legal, valid and binding
obligation of APBI, enforceable against APBI in accordance with its terms,
subject as to enforceability to general equitable principles and to the laws of
bankruptcy and insolvency or similar laws governing the rights of creditors. The
representations and warranties contained in this Joinder shall be deemed to be
made to Sellers pursuant to Section 4 of this Agreement.
APBI ENVIRONMENTAL SCIENCES GROUP, INC.
By:_/S/ MITCH B. SMITH
Name: MITCH B. SMITH
Title: PRESIDENT
1
<PAGE>
JOINDER OF PPDI AS A PARTY
(a) For good and valuable consideration, to induce Buyer to enter into this
Agreement with its Subsidiaries, and intending to be legally bound, PPDI
executes this Agreement for the purpose of making and agreeing to be bound by
all of the representations, warranties and covenants of Sellers set forth in
this Agreement. PPDI further agrees to indemnify and hold harmless the Buyer
Indemnified Persons pursuant to and in accordance with the provisions of Section
10 of this Agreement.
(b) PPDI represents and warrants to Buyer that it has duly authorized and
executed this Joinder, and that this Joinder constitutes the legal, valid and
binding obligation of PPDI enforceable against PPDI in accordance with its
terms, subject as to enforceability to general equitable principles and to the
laws of bankruptcy and insolvency or similar laws governing the rights of
creditors. The representations and warranties contained in this Joinder shall be
deemed to be made to Buyer pursuant to Section 3 of this Agreement.
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
By:_/S/ FRED B. DAVENPORT
Name: FRED B. DAVENPORT
Title: VICE PRESIDENT AND SECRETARY
1
