<PAGE>
Draft
08/13/98
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998 Commission File number 0 - 27698
CHIREX INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3296309
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 ATLANTIC STREET
SUITE 402
STAMFORD, CONNECTICUT 06901
(Address of principle executive office) (Zip Code)
(203) 351-2300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes X No
----------- -----------
Number of shares outstanding of the issuer's classes of common stock as of
August 12, 1998.
Class Number of Shares Outstanding
- -------------------------------------- ----------------------------
Common Stock, par value $.01 per share 11,817,336
1
<PAGE>
CHIREX INC.
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1997 and June 30, 1998 3
Consolidated Statements of Operations and Comprehensive Income (loss) for
the three-month and six-month periods ended June 30, 1997 and 1998 4
Consolidated Statements of Cash Flows for the
six-month periods ended June 30, 1997 and 1998 5
Notes to Consolidated Interim Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 12
</TABLE>
This Quarterly Report on Form 10-Q contains forward-looking
statements. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. Many important factors could cause actual results to differ
materially from those indicated by forward-looking statements made herein and
presented elsewhere by management from time to time.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CHIREX INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND JUNE 30, 1998
(dollars in thousands except per-share amounts)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash $ 5,347 $ 2,361
Trade and other receivables 18,811 14,129
Inventories 23,225 29,188
Other current assets 3,774 4,802
------------- -------------
Total current assets 51,157 50,480
Property, plant and equipment, net 120,755 132,273
Other non-current assets 3,591 2,497
Intangible assets, net 27,564 26,980
------------- -------------
TOTAL ASSETS $ 203,067 $ 212,230
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 8,763 $ 14,570
Accrued expenses 11,587 12,029
Income taxes payable 348 -
Current portion of long-term debt 7,311 14,844
------------- -------------
Total current liabilities 28,009 41,443
Long-term debt 69,675 63,312
Deferred income taxes 7,955 8,917
Deferred income 4,333 5,778
Contingencies - -
------------- -------------
Total liabilities 109,972 119,450
------------- -------------
Stockholders' equity:
Common stock ($.01 par value, 30,000,000 shares authorized,
11,792,990 and 11,802,719 shares issued and outstanding
on December 31, 1997 and June 30, 1998, respectively) 118 118
Additional paid-in capital 100,788 101,010
Retained earnings (11,411) (11,898)
Cumulative translation adjustment 3,600 3,550
------------- -------------
Total stockholders' equity 93,095 92,780
============= =============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 203,067 $ 212,230
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
CHIREX INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED
JUNE 30, 1997 AND 1998
(UNAUDITED)
(in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------- -----------------------------
1997 1998 1997 1998
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF OPERATIONS
Revenues:
Product sales $ 19,996 $ 28,359 $ 46,280 $ 51,960
License fee and royalty
income 161 195 383 252
------------ -------------- ------------ ------------
Total revenues 20,157 28,554 46,663 52,212
------------ -------------- ------------ ------------
Costs and expenses:
Cost of goods sold 14,107 21,456 34,778 40,758
Selling, general and
administrative 2,272 3,151 4,566 6,277
Research and development 974 1,085 2,081 2,286
Other expenses - 221 - 221
Restructuring charge net
of proceeds from
disposition of
Acetaminophen
business 6,593 - 6,593 -
------------ -------------- ------------ ------------
Total costs
and expenses 23,946 25,913 48,018 49,542
------------ -------------- ------------ ------------
Operating profit (3,789) 2,641 (1,355) 2,670
Interest expense - net 59 (1,425) (75) (2,829)
Amortization of goodwill (291) (291) (582) (582)
------------ -------------- ------------ ------------
Income (loss) before
income taxes (4,021) 925 (2,012) (741)
Benefit (provision) for
income taxes 1,327 (316) 516 254
============ ============== ============ ============
Net income (loss) $ (2,694) $ 609 $ (1,496) $ (487)
============ ============== ============ ============
Weighted average number
of common shares
outstanding 11,352 11,809 11,149 11,803
============ ============== ============ ============
Basic and diluted net
income (loss) per
common share $ (0.24) $ 0.05 $ (0.13) $ (0.04)
============ ============== ============ ============
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE
INCOME (LOSS)
Net income (loss) $ (2,694) $ 609 $ (1,496) $ (487)
Change in cumulative
translation adjustment 244 (845) (1,372) (50)
============ ============== ============ ============
Comprehensive net loss $ (2,450) $ (236) $ (2,868) $ (537)
============ ============== ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
CHIREX INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1998
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31
---------------------------------
1997 1998
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,496) $ (487)
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation & amortization 4,785 6,246
Deferred tax provision (benefit) - 868
Restructuring and impairment charge 12,901 -
Proceeds from sale of acetaminophen business (6,308) -
Changes in assets and liabilities:
Receivables (2,572) 4,911
Inventories (3,828) (6,350)
Other current assets (105) 1,036
Accounts payable and accrued expenses (1,288) 5,911
Income taxes payable 1,458 (1,200)
Deferred income (2,250) 1,374
-------------- -------------
Net cash provided from operating activities 1,297 12,309
-------------- -------------
Cash flows from investing activities:
Proceeds from disposition of acetaminophin business 4,100 -
Capital expenditures (3,709) (15,477)
-------------- -------------
Net cash provided from (used in) investing activities 391 (15,477)
-------------- -------------
Cash flows from financing activities:
Borrowings on line of credit and revolving credit
facility, net (3,771) (25)
Proceeds from issuance of stock 4,180 -
Proceeds from exercise of stock options 98 222
-------------- -------------
Net cash provided from financing activities 507 197
-------------- -------------
Effect of exchange rate changes on cash 257 (15)
-------------- -------------
Net increase (decrease) in cash 2,452 (2,986)
Cash at beginning of period 291 5,347
-------------- -------------
Cash at end of period $ 2,743 $ 2,361
============== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
CHIREX INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
NATURE OF OPERATIONS
ChiRex Inc. (the "Company" or "ChiRex") is a Contract Manufacturing
Organization ("CMO") serving the out-sourcing needs of the pharmaceutical
industry through its extensive pharmaceutical fine chemical manufacturing and
process development capabilities and proprietary technologies. The Company
supports and supplements the in-house development and manufacturing capabilities
of its pharmaceutical and biotechnology customers with a broad range of fully
integrated services, accelerating the time from drug discovery to
commercialization. The Company manufactures products at its world-class FDA
cGMP manufacturing facilities located in Dudley, England and Annan, Scotland.
ChiRex holds over 50 patents and patent applications in the field of chiral
chemistry.
PRINCIPLES OF CONSOLIDATION
The financial statements of the Company include the historical results of its
subsidiaries for the entire period presented or from the date of acquisition.
The interim financial statements, in the opinion of management, reflect all
adjustments (including normal recurring adjustments) necessary for a fair
presentation of the results for the interim period ended June 30, 1998. The
results of operations for the interim period are not necessarily indicative of
the results of operations expected for the fiscal year.
See Form 10-K filed as of and for the year ended December 31, 1997 for
additional information.
2. RECENT ACCOUNTING DEVELOPMENTS:
Net Income (Loss) per Common Share
Basic income (loss) per common share for the second quarter and six-month
periods ended June 30, 1997 and 1998 were computed by dividing the net income
(loss) by the weighted average shares outstanding during the period in
accordance with Statement of Financial Accounting Standards No. 128, Earnings
per Share ("SFAS 128"). Since the effect of the assumed exercise of stock
options of 605,000 shares and 525,000 shares for the second quarter and first
six months of 1998, respectively, were either diminimus or anti-dilutive, basic
and diluted income (loss) per common share as presented on the statement of
operations are the same. Upon adoption of SFAS 128 at year-end 1997, the
Company's reported earnings per common share for the second quarter and first
half of 1997 were required to be restated. There was no effect on net loss per
common share for the second quarter and first half of 1997 from the adoption of
SFAS 128.
Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). This statement establishes standards for reporting and display of
comprehensive income and its components. Components of comprehensive income are
net income and all other non-owner changes in equity such as the change in the
cumulative translation adjustment. This statement requires that an enterprise:
(a) classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a balance sheet. SFAS 130 is effective for financial statements
issued for periods beginning after December 15, 1997. Presentation of
comprehensive income for earlier periods provided for comparative purposes is
required and has been presented in these financial statements.
6
<PAGE>
3. SUBSEQUENT EVENT
In July 1998, the Company and its lenders agreed to an amendment of the
Facilities Agreement entered into in October 1997. The amendment modified
certain terms contained in the Facilities Agreement. Management believes the
Company is in compliance with all terms and covenants of the Facilities
Agreement as amended.
4. RECLASSIFICATION
Certain amounts in the prior period's financial statements have been
reclassified to be consistent with the current period presentation.
7
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
historical consolidated financial statements and the notes thereto included
elsewhere herein.
INTRODUCTION
ChiRex Inc. is a CMO serving the out-sourcing needs of the pharmaceutical
industry through its extensive pharmaceutical fine chemical manufacturing and
process development capabilities and proprietary technologies. The Company
supports and supplements the in-house development and manufacturing capabilities
of its pharmaceutical and biotechnology customers with a broad range of fully
integrated services, accelerating the time from drug discovery to
commercialization. The Company manufactures products at its world-class FDA cGMP
manufacturing facilities located in Dudley, England and Annan, Scotland. ChiRex
holds over 50 patents and patent applications in the field of chiral chemistry.
In April 1997, the Company disposed of its acetaminophen (paracetamol, an
over-the-counter analgesic) business and in September 1997, the Company ceased
production of acetaminophen. At the time of the disposition, acetaminophen was
the largest volume product manufactured by the Company, representing
approximately 31% of the Company's 1996 pro-forma revenues, but was not highly
profitable at the gross margin level. In connection with the disposition of the
business, the Company recorded a $6.6 million pre-tax restructuring charge net
of proceeds on disposition in the second quarter of 1997, and implemented
measures designed to offset the effect of the disposal on operating performance.
The Company's decision to dispose of its acetaminophen business followed a
strategic review of several alternatives and was based on a number of factors,
including the continued domination of the acetaminophen business by high volume,
low cost manufacturers and the Company's expectation that the market price of
acetaminophen would continue to erode.
On October 31, 1997, the Company completed the purchase of a Glaxo Wellcome
FDA cGMP pharmaceutical production facility located in Annan, Scotland. The
Company paid approximately $66.8 million (40.0 million) for the facility plus an
additional payment for certain working capital of approximately $1.7 million
((Pounds)1.0 million). As part of the transaction, Glaxo Wellcome awarded the
Company a five-year contract to supply certain pharmaceutical intermediates and
active ingredients with an aggregate sales value of approximately $450 million.
Under the Asset Purchase Agreement, ChiRex purchased all of the buildings, land
and equipment at the 154-acre Annan, Scotland property, encompassing three main
production facilities plus certain working capital. The Company plans to invest
approximately $25 million over two years to accommodate newly contracted
products and to modify the facility for general-purpose pharmaceutical fine
chemical manufacturing. Under the Supply Agreement, ChiRex will manufacture up
to ten products at Annan and Dudley. The acquisition has been accounted for as
a purchase and, accordingly, the operating results of the Annan facility have
been included in the Company's consolidated financial statements from the date
of acquisition.
Substantially all of the Company's revenues and expenses are denominated in
Great Britain pounds sterling, and to prepare the Company's financial statements
such amounts are translated into U. S. dollars at average exchange rates in
accordance with generally accepted accounting principles.
8
<PAGE>
RESULTS OF OPERATIONS
Three-month period ended June 30, 1997 and 1998
Total revenues increased $8.4 million, or 41.7% to $28.6 million in the second
quarter of 1998, from $20.2 million in the comparable period in 1997, as new
products came on stream and shipments under the Glaxo Wellcome supply contract
expanded, partly offset by the unfavorable effect on revenues from the sale of
the acetaminophen business which contributed $5.1 million in revenues in the
second quarter of 1997.
Cost of goods sold increased $7.3 million, or 52.1% to $21.4 million in the
three-month period ended June 30, 1998 from $14.1 million in last year's second
quarter. This increase is due to the higher volume of new product sales partly
offset by lower acetaminophen sales, expenses associated with new product
introductions and the under-utilization of the Annan facility acquired in the
fourth quarter of 1997 during its re-conditioning into a general purpose
pharmaceutical fine chemical manufacturing facility. The Company also
experienced production interruptions for one product during the second quarter
that resulted in unfavorable manufacturing variances. The production
difficulties for this product were resolved and full-scale production resumed in
mid-July 1998. As a result of the above factors, gross margin percentage in the
second quarter of 1998 decreased to 24.9% from 30.0% in 1997.
Research and development expenses increased $0.1 million, or 11.3% to $1.1
million in the second quarter of 1998. This increase was due mainly to the cost
of additional research chemists and pilot plant costs to support the new product
pipeline.
Selling, general and administrative expenses increased $0.9 million or 38.7%,
to $3.2 million in three-month period ended June 30, 1998 from $2.3 million last
year. This increase is due primarily to additional expenses associated with the
Annan facility acquired in the fourth quarter of 1997 and expenses incurred
related to the search for a Chief Operating Officer.
Interest expense was $1.4 million in the second quarter of 1998 compared to
interest income of $0.1 million in last year's second quarter. This is a result
of higher borrowing levels resulting from the acquisition of the Annan facility
in the fourth quarter of 1997 and significant capital improvement projects.
Other expenses in the second quarter of 1998 of $0.2 million represents costs
incurred by a special committee of the Company's board of directors whose work
culminated in a restructuring announced in July 1998. ChiRex expects to post a
one-time after-tax restructuring charge of approximately $3.3 million, or $0.28
cents per share, in the third quarter of 1998.
In connection with the disposition of the Company's acetaminophen business,
the Company recorded a $6.6 million pre-tax restructuring charge, net of
proceeds on disposition in the second quarter of 1997
The provision for income taxes was $0.3 million in the three-month period
ended June 30, 1998, which is $1.6 million higher than the $1.3 million benefit
for income taxes in the comparable prior-year period. This represents an
effective rate of 34.2% in 1998 compared to an effective rate of 33.0% in the
same period in 1997. The higher effective tax rate in 1998 is the result of
profitability expectations for 1998.
As a result of the factors described above, the Company reported net income of
$0.6 million in the second quarter of 1998 compared to net loss of $2.7 million
for the comparable prior-year period.
Six-month period ended June 30, 1997 and 1998
Total revenues increased $5.5 million, or 11.9% to $52.2 million in the first
half of 1998, from $46.7 million in the comparable period in 1997, as new
products came on stream and shipments under the Glaxo Wellcome supply contract
expanded, partly offset by the unfavorable effect on revenues from the sale of
the acetaminophen business which contributed $12.1 million in revenues to the
first six months of 1997.
9
<PAGE>
Cost of goods sold increased $6.0 million, or 17.2% to $40.8 million in the
six-month period ended June 30, 1998 from $34.8 million in last year's first
half. This increase is due to the higher volume of new product sales partly
offset by lower acetaminophen sales, expenses associated with new product
introductions, and the under-utilization of the Annan facility acquired in the
fourth quarter of 1997 during its re-conditioning into a general-purpose
pharmaceutical fine chemical manufacturing facility. The Company also
experienced production interruptions for one product during the second quarter
that resulted in unfavorable manufacturing variances. The production
difficulties for this product were resolved and full-scale production resumed in
mid-July 1998. As a result of the above factors, gross margin percentage in the
first half of 1998 decreased to 21.9% from 25.5% in 1997.
Research and development expenses increased $0.2 million, or 9.8% to $2.3
million in the first six months of 1998. This increase was due mainly to the
cost of additional research chemists and pilot plant costs to support the new
product pipeline.
Selling, general and administrative expenses increased $1.7 million or 37.5%,
to $6.3 million in six-month period ended June 30, 1998 from $4.6 million last
year. This increase is due primarily to additional expenses associated with the
Annan facility acquired in the fourth quarter of 1997 and expenses incurred
related to the search for a Chief Operating Officer.
Interest expense was $2.8 million in the first half of 1998 compared to $0.1
million last year. This is a result of higher borrowing levels resulting from
the acquisition of the Annan facility in the fourth quarter of 1997 and
significant capital improvement projects.
The benefit for income taxes was $0.3 million in the six-month period ended
June 30, 1998, which is $0.2 million lower than the $0.5 million benefit for
income taxes in the comparable prior-year period. This represents an effective
rate of 34.2% in 1998 compared to an effective rate of 25.7% in the same period
in 1997. The higher effective tax rate in 1998 is the result of profitability
expectations for 1998.
As a result of the factors described above, the Company reported net loss of
$0.5 million in the first half of 1998 compared to net loss of $1.5 million for
the comparable prior-year period.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations for the first six months of 1998 of $12.3
million is $11.0 million higher than the $1.3 million provided in the same
period in 1997 and reflects a $5.8 million reduction in the Company's net
investment in operating assets.
Net cash used in investing activities in the first half of 1998 was $15.4
million compared to $0.4 million source of funds in the same period of 1997.
Capital spending in 1998 includes expenditures for plant maintenance, alteration
of equipment at Dudley to accommodate new products, and modification of the
Annan facility. The majority of these expenditures are to accommodate newly
contracted products at Dudley and Annan, and to convert the Annan facility to a
general-purpose pharmaceutical fine chemical manufacturing facility.
Net cash provided from financing activities for the first half of 1998 of $0.2
million is the result of proceeds received from the exercise of stock options.
The Company expects to satisfy its cash requirements, including the
requirements of its subsidiaries, through internally generated cash and
borrowings.
FOREIGN CURRENCY
The Company currently expects that sales of its products outside the United
States will continue to be a substantial
10
<PAGE>
percentage of its net sales. The Company currently intends to hedge its foreign
exchange exposure to a certain extent by entering into forward contracts with
banks to the extent that the timing of the currency flows can reasonably be
anticipated. The Company believes it has a natural currency hedge because its
operating expenses tend to be denominated in matched currencies. Also the
Company has partly offset foreign currency-denominated assets with foreign
currency-denominated liabilities.
Financial results of the Company could be adversely or beneficially affected
by fluctuations in foreign exchange rates. Fluctuations in the value of foreign
currencies will affect the U. S. dollar value of the Company's net investment in
its foreign subsidiaries, with related effects included in a separate component
of stockholders' equity titled Cumulative Translation Adjustments. Operating
results of foreign subsidiaries are translated into U. S. dollars at average
monthly exchange rates and balance sheet amounts are translated at period-end
exchange rates. In addition, the U. S. dollar value of transactions based in
foreign currency also fluctuates with exchange rates. The Company expects that
the largest foreign currency exposure will result from activity in Great Britain
pounds sterling, German marks and Dutch guilders.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a vote of Security Holders.
----------------------------------------------------
-NONE-
ITEM 5. Other Information
-----------------
-NONE-
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits. The exhibits listed on the accompanying Exhibit Index
are filed as part of this Quarterly Report on Form 10-Q.
(b) Current Reports on Form 8-K:
On July 7, 1998, the Company filed a Current Report on Form
8-K reporting management changes and restructuring.
SIGNATURE
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.
CHIREX INC.
Date: August 14, 1998 By: /s/ Michael A. Griffith
-----------------------
Michael A. Griffith
Co-Chief Executive Officer
and Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
4.4 First Amendment Dated 30 July 1998 to Facilities Agreement Dated 30
October 1997
10.41 Consulting Agreement with W. Dieter Zander
10.42 Consulting Agreement with Elizabeth M. Greetham
27 Financial Data Schedule.
13
<PAGE>
Exhibit 4.4
CONFORMED COPY
FIRST AMENDMENT DATED 30 JULY 1998
TO
FACILITIES AGREEMENT DATED 30 OCTOBER 1997
THIS FIRST AMENDMENT (this "AMENDMENT") is dated 30 July 1998 and entered
into by and among:
(1) CHIREX (HOLDINGS) LIMITED, a limited company organised under the laws of
England with registered number 3080257 with its registered office at
Dudley, Cramlington, Northumberland NE23 7QG (the "BORROWER");
(2) BANKERS TRUST INTERNATIONAL PLC and MIDLAND BANK PLC, as Joint Arrangers
("JOINT ARRANGERS");
(3) BANKERS TRUST COMPANY, as Agent ("AGENT");
(4) BANKERS TRUST COMPANY, as Security Agent ("SECURITY AGENT");
(5) the Lenders referred to in the Facilities Agreement, as defined below (the
"LENDERS"); and
(6) for purposes of Section 5 hereof, CHIREX INC., a corporation organised
under the laws of the State of Delaware with its principal office at 300
Atlantic Street, Suite 402, Stamford, CT 06901, U.S.A., CHIREX (DUDLEY)
LIMITED., a limited company organised under the laws of England with
registered number 857670 with its registered office at Dudley, Cramlington,
Northumberland NE23 7QG, and CHIREX (ANNAN) LIMITED., a limited company
organised under the laws of England with registered number 3417229 with its
registered office at Dudley, Cramlington, Northumberland NE23 7QG, each as
Guarantors ("GUARANTORS").
R E C I T A L S
WHEREAS, the parties listed above, among others, are parties to that
certain GBP 62,000,000 Facilities Agreement dated 30th October 1997 (the
"FACILITIES AGREEMENT"). Capitalised terms used in this Amendment without
definition shall have the same meanings herein as set forth in the Facilities
Agreement;
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Facilities Agreement;
<PAGE>
NOW THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein and the receipt of (Pounds)1, the
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENTS
----------
1.1. CLAUSE 1.1 OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY DELETING THE
WORD "AND" AT THE END OF SUB-CLAUSE (A) AND ADDING THE FOLLOWING SUB-CLAUSES (C)
AND (D) AT THE END OF THE DEFINITION OF "MARGIN" THEREIN:-
"(c) the Margin shall be 1.50% upon the Total Debt/EBITDA
Ratio of ChiRex Inc. (on a consolidated basis), tested and
calculated as set forth above, being equal to or greater than 3.75:1
but less than 4.25:1; and
(d) the Margin shall be 2.00% upon the Total Debt/EBITDA Ratio of ChiRex
Inc. (on a consolidated basis), tested and calculated as set forth
above, being equal to or greater than 4.25:1;"
1.2. CLAUSE 7.2.1 OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY DELETING
"GBP 2,500,000" IN SUBCLAUSE (B) THEREOF AND SUBSTITUTING "GBP 1,500,000"
THEREFOR.
1.3. CLAUSE 13.3.4(D) OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY ADDING
AT THE END THEREOF THE FOLLOWING TEXT: "; PROVIDED THAT THE OPERATING BUDGET FOR
THE ACCOUNTING REFERENCE PERIOD BEGINNING 1ST JANUARY, 1999 SHALL BE DELIVERED
TO THE AGENT AT LEAST 20 DAYS PRIOR TO THE BEGINNING OF SUCH ACCOUNTING
REFERENCE PERIOD."
1.4. CLAUSE 13.4.1(A) OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY
DELETING THE CLAUSE IN ITS ENTIRETY AND SUBSTITUTING THE FOLLOWING THEREFOR:-
"(a) Maximum Total Debt / EBITDA Ratio
---------------------------------
ChiRex Inc. shall maintain, as of the end of each Accounting Quarter to
occur during the periods shown below, a Total Debt/EBITDA Ratio of not
more than the maximum Total Debt/EBITDA Ratio shown below:
PERIOD MAXIMUM TOTAL DEBT/EBITDA
RATIO
1st April, 1998 to 30th June, 1998 4.75 : 1
1st July, 1998 to 30th September, 1998 4.75 : 1
1st October, 1998 to 31st December, 1998 4.00 : 1
Thereafter 2.5 : 1
<PAGE>
provided, that for the periods set forth below, the Total Debt/EBITDA
--------
Ratio, tested as at the end of the relevant three-month period, shall not
exceed the maximum Total Debt/EBITDA Ratio shown below, for which
purpose, notwithstanding the other provisions of this Agreement, EBITDA
shall be calculated in accordance with Clause 13.4.1(c):-
Period MAXIMUM TOTAL DEBT/EBITDA
RATIO
1st May, 1998 to 31st July, 1998 4:75 : 1
1st June, 1998 to 31st August, 1998 4.75 : 1
1st August, 1998 to 31st October, 1998 4.75 : 1
1st September, 1998 to 30th November, 1998 4.75 : 1"
1.5. CLAUSE 13.4.1(C) OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY
DELETING "THIS CLAUSE 13.4.1" IN THE FIRST LINE AND SUBSTITUTING "CLAUSES
13.4.1(A) AND 13.4.1(B)" THEREFOR.
1.6. CLAUSE 13.4.1 OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING SUB-CLAUSE (D) AT THE END THEREOF:-
"(d) Minimum EBITDA
--------------
ChiRex Inc. shall maintain, for each Accounting Quarter to occur
during the periods shown below, minimum EBITDA of not less than the
minimum EBITDA shown below:
PERIOD Minimum EBITDA
1st July, 1998 to 30th September, 1998 $ 5,000,000
1st October, 1998 to 31st December, 1998 $6,500,000"
1.7. CLAUSE 13.4.2 OF THE FACILITIES AGREEMENT IS HEREBY AMENDED BY DELETING
CLAUSE (A) THEREOF IN ITS ENTIRETY AND SUBSTITUTING THE FOLLOWING THEREFOR:-
"(a) Before the Achievement Date only, ChiRex Inc. shall procure that the
Capital Expenditures (determined in accordance with Approved
<PAGE>
Accounting Principles) of the ChiRex Group in each Accounting
Reference Period ending after the date of this Agreement do not
exceed (i) for the Accounting Reference Period ending on 31st
December, 1998, the sum of USD 33,700,000 plus the amount of
----
capitalised interest attributable to the members of the ChiRex Group
in that Accounting Reference Period and less the amount (being not
----
less than USD 5,900,000) received in cash as reimbursement from
customers of the ChiRex Group for certain Capital Expenditures, and
(ii) for the Accounting Reference Period ending on 31st December,
1999 and each Accounting Reference Period thereafter, the sum of (x)
the amount set forth for the relevant Accounting Reference Period in
the Business Plan plus (y) an amount which, when added to any other
----
Restricted Payments, does not exceed in aggregate the Available
Amount; provided that for any Accounting Reference Period of less
than twelve months, the permitted amount of Capital Expenditures
shall be pro-rated accordingly."
2. REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Borrower and the Guarantors hereby represents and warrants to
the Agent and the Lenders that:
2.1. AS OF THE DATE HEREOF, THERE EXISTS NO EVENT OF DEFAULT OR POTENTIAL
EVENT OF DEFAULT UNDER THE FACILITIES AGREEMENT, AND AFTER GIVING EFFECT TO THIS
AMENDMENT, THERE WILL EXIST NO EVENT OF DEFAULT OR POTENTIAL EVENT OF DEFAULT
UNDER THE FACILITIES AGREEMENT;
2.2. ALL REPRESENTATIONS AND WARRANTIES CONTAINED IN THE FACILITIES AGREEMENT
AND THE OTHER FINANCE DOCUMENTS ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL
RESPECTS ON AND AS OF THE DATE HEREOF EXCEPT TO THE EXTENT SUCH REPRESENTATIONS
AND WARRANTIES SPECIFICALLY RELATE TO AN EARLIER DATE, IN WHICH CASE THEY WERE
TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS ON AND AS OF SUCH EARLIER
DATE;
2.3. AS OF THE DATE HEREOF, THE BORROWER HAS PERFORMED ALL AGREEMENTS TO BE
PERFORMED ON ITS PART AS SET FORTH IN THE FACILITIES AGREEMENT;
2.4. IT IS DULY ORGANISED AND VALIDLY EXISTING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANISATION, AND HAS ALL NECESSARY POWER AND AUTHORITY TO
EXECUTE AND DELIVER THIS AMENDMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY;
2.5. NEITHER THE EXECUTION AND DELIVERY OF THIS AMENDMENT, NOR THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, VIOLATES (I) ANY LAW,
REGULATION, DECREE OR OTHER LEGAL RESTRICTION APPLICABLE TO IT, (II) ITS
CHARTER, BY-LAWS OR OTHER CONSTITUTIONAL DOCUMENTS OR (III)
<PAGE>
ANY INSTRUMENT OR AGREEMENT TO WHICH IT OR ANY OF ITS ASSETS IS SUBJECT OR BY
WHICH IT IS BOUND;
2.6. THERE IS NO LEGAL REQUIREMENT OF ANY GOVERNMENTAL AUTHORITY (INCLUDING
ANY REQUIREMENT TO MAKE ANY DECLARATION, FILING OR REGISTRATION OR TO OBTAIN ANY
CONSENT, APPROVAL, LICENSE OR ORDER) WHICH IS NECESSARY TO BE MET BY IT IN
CONNECTION WITH ITS EXECUTION, DELIVERY OR PERFORMANCE OF THIS AMENDMENT; AND
2.7. THIS AMENDMENT HAS BEEN DULY AUTHORISED, EXECUTED AND DELIVERED ON ITS
BEHALF AND THE FACILITIES AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND THE OTHER
FINANCE DOCUMENTS TO WHICH IT IS A PARTY CONSTITUTE ITS LEGAL, VALID AND BINDING
OBLIGATION, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS
LIMITED BY THE RESERVATIONS.
3. COUNTERPARTS; EFFECTIVENESS
3.1. THIS AMENDMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS AND BY
DIFFERENT PARTIES HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN SO
EXECUTED AND DELIVERED SHALL BE DEEMED AN ORIGINAL, BUT ALL SUCH COUNTERPARTS
TOGETHER SHALL CONSTITUTE BUT ONE AND THE SAME INSTRUMENT; SIGNATURE PAGES MAY
BE DETACHED FROM MULTIPLE SEPARATE COUNTERPARTS AND ATTACHED TO A SINGLE
COUNTERPART SO THAT ALL SIGNATURE PAGES ARE PHYSICALLY ATTACHED TO THE SAME
DOCUMENT.
3.2. THIS AMENDMENT SHALL BECOME EFFECTIVE ON THE DATE (THE "First Amendment
Effective Date") when the conditions have been satisfied that (i) each of the
Borrower, the Guarantors, the Agent, the Security Agent and the Majority Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent, (ii) the Borrower shall have paid to the
Agent for the account of each Lender an amendment fee equal to 0.25% of the
Facility Amount and (iii) the Borrower shall have delivered to the Agent
favorable opinions of Cravath, Swaine & Moore, U.S. legal advisers to the ChiRex
Group, and Dibb Lupton Alsop, English legal advisers to the ChiRex Group, in
each case addressed to the Agent and the Lenders, dated the effective date of
this Amendment and in form and substance satisfactory to the Agent.
3.3. ON AND AFTER THE FIRST AMENDMENT EFFECTIVE DATE, EACH REFERENCE IN THE
FACILITIES AGREEMENT TO "THIS AGREEMENT", "HEREUNDER", "HEREOF", "HEREIN" OR
WORDS OF LIKE IMPORT REFERRING TO THE FACILITIES AGREEMENT, AND EACH REFERENCE
IN THE OTHER FINANCE DOCUMENTS TO THE "FACILITIES AGREEMENT", "THEREUNDER",
"THEREOF" OR WORDS OF LIKE IMPORT REFERRING TO THE FACILITIES AGREEMENT SHALL
MEAN AND BE A REFERENCE TO THE FACILITIES AGREEMENT AS AMENDED BY THIS
AMENDMENT.
<PAGE>
3.4. THIS AMENDMENT IS LIMITED AS SPECIFIED AND SHALL NOT CONSTITUTE A
MODIFICATION, ACCEPTANCE OR WAIVER OF ANY OTHER PROVISION OF THE FACILITIES
AGREEMENT, ANY PROVISION OF ANY OTHER FINANCE DOCUMENT OR ANY RIGHT, POWER OR
REMEDY OF THE AGENT OR ANY LENDER UNDER THE FACILITIES AGREEMENT OR ANY OTHER
FINANCE DOCUMENT. EXCEPT AS SPECIFICALLY AMENDED OR WAIVED BY THIS AMENDMENT,
THE FACILITIES AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AND IS HEREBY
RATIFIED AND CONFIRMED.
3.5. CLAUSE HEADINGS IN THIS AMENDMENT ARE INCLUDED HEREIN FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL NOT CONSTITUTE A PART OF THIS AMENDMENT FOR ANY OTHER
PURPOSE OR BE GIVEN ANY SUBSTANTIVE EFFECT.
4. GOVERNING LAW; JURISDICTION
4.1. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF ENGLAND.
4.2. EACH GUARANTOR AND BORROWER HEREBY RATIFIES AND CONFIRMS THE APPLICATION
OF THE PROVISIONS OF CLAUSE 30 OF THE FACILITIES AGREEMENT TO THIS AMENDMENT.
5. ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each of the Guarantors hereby acknowledges that it has read this
Amendment and consents to the terms thereof and further hereby confirms and
agrees that, notwithstanding the effectiveness of this Amendment, the
obligations of such Guarantor under its respective Guarantee shall not be
impaired or affected and such Guarantee is, and shall continue to be, in full
force and effect and is hereby confirmed and ratified in all respects.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
CHIREX (HOLDINGS) LIMITED, in its capacity as the Borrower
By: /s/ MICHAEL GRIFFITHS
---------------------
Print Name: MICHAEL GRIFFITHS
-----------------
Title: DIRECTOR
--------
CHIREX INC., in its capacity as a Guarantor
By: /s/ MICHAEL GRIFFITHS
---------------------
Print Name: MICHAEL GRIFFITHS
-----------------
Title: CFO, CO-CEO, DIRECTORS
----------------------
CHIREX (DUDLEY) LIMITED, in its capacity as a Guarantor
By: /s/ MICHAEL GRIFFITHS
---------------------
Print Name: MICHAEL GRIFFITHS
-----------------
Title: DIRECTOR
--------
CHIREX (ANNAN) LIMITED, in its capacity as a Guarantor
By: /s/ MICHAEL GRIFFITHS
---------------------
Print Name: MICHAEL GRIFFITHS
-----------------
Title: DIRECTOR
--------
<PAGE>
BANKERS TRUST INTERNATIONAL PLC, in its capacity as a Joint Arranger
By: /s/ STEPHEN ROBERTSON
---------------------
Print Name: STEPHEN ROBERTSON
------------------
Title: DIRECTOR
--------
MIDLAND BANK PLC, in its capacity as a Joint Arranger and a Lender
By: /s/ GRAHAM CRADDOCK
-------------------
Print Name: GRAHAM CRADDOCK
----------------
Title: AREA MANAGER
-------------
BANKERS TRUST COMPANY, in its capacities as a Lender, Agent and Security Agent
By: /s/ BARRY JEFFERIES
-------------------
Print Name: BARRY JEFFERIES
----------------
Title: VICE PRESIDENT
--------------
BANK OF IRELAND, in its capacity as a Lender
By: _______________________________
Print Name: _______________________
Title: _____________________________
<PAGE>
BANQUE ET CAISSE D'EPARGNE DE L'ETAT, in its capacity as a Lender
By: /s/ JOHN DHUR
-------------
Print Name: JOHN DHUR
----------
Title: SOUS-DIRECTAUR
---------------
By: /s/ JEAN-PIERRE THEIN
---------------------
Print Name: JENA-PIERRE THEIN
------------------
Title: ATTACHE DE DIRECTION 1ER EN RANG
---------------------------------
DE NATIONALE INVESTERINGSBANK N.V., in its capacity as a Lender
By: /s/ TIM A CROSSLEY
------------------
Print Name: TIM A CROSSLEY
---------------
Title: SENIOR MANAGER
---------------
By: /s/ BAS VAN DER VEGTE
---------------------
Print Name: BAS VAN DER VEGTE
------------------
Title: GENERAL MANAGER
----------------
IKB DEUTSCHE INDUSTRIEBANK AG, in its capacity as a Lender
By: /s/ E. BRECHT
-------------
Print Name: E. BRECHT
----------
Title: DIRECTOR
---------
By: /s/ MANFRED ZINWAY
------------------
Print Name: MANFRED ZINWAY
---------------
Title: DIRECTOR
---------
AIB CAPITAL MARKETS PLC, in its capacity as a Lender
<PAGE>
By: _______________________________
Print Name: _______________________
Title: _____________________________
MITSUBISHI TRUST & BANKING CORPORATION, in its capacity as a Lender
By: /s/ EILEEN LEYDEN
-----------------
Print Name: EILEEN LEYDEN
--------------
Title: CHIEF MANAGER
--------------
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, in its capacity as a
Lender
By: /s/ T. D. PRESTWICH
-------------------
Print Name: T. D. PRESTWICH
----------------
Title: RELATIONSHIP MANAGER
---------------------
By: /s/ J. DUNTON
-------------
Print Name: J. DUNTON
----------
Title: RELATIONSHIP MANAGER
---------------------
NATIONAL WESTMINSTER BANK PLC, in its capacity as a Lender
By: _______________________________
Print Name: _______________________
Title: _____________________________
<PAGE>
EXHIBIT 10.41
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Agreement") shall be effective as of
April 18, 1998 (the "Effective Date"), by and between CHIREX INC. (the
"Company"), and W. Dieter Zander ("Consultant").
WHEREAS, the Consultant has expertise as a financial and international
business consultant;
WHEREAS, the Company desires to obtain the services of Consultant to
consult with and perform services as an independent contractor with respect to
certain business opportunities, and Consultant desires to provide services to
the Company upon the terms and conditions set forth in this Agreement;
WHEREAS, this Agreement supersedes any previous agreement concerning
this subject entered into by the parties.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the adequacy and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Consulting Services. The Company hereby engages Consultant as an
-------------------
independent contractor, and not as an employee, to render consulting services to
the Company as hereinafter provided, and Consultant hereby accepts such
engagement. During the term of this Agreement, Consultant shall render such
consulting services to the Company in connection with the Company's business
opportunities as the Company from time to time requests.
2. Compensation. In consideration of Consultant's consulting
------------
services set forth in Paragraph 1 above, the Company will pay to Consultant
beginning on the Effective Date, U.S. $10,000 per week. The weekly fees referred
to herein will be paid to Consultant on the last day of each month this
Agreement is in effect beginning April 30, 1998. The Company's obligation to
pay these weekly fees shall terminate upon the earlier to occur of (a) notice
of termination given by the Company pursuant to Paragraph 4 herein; or (b) June
27, 1998 (ten weeks from the Effective Date, the "Expiration Date").
3. Confidential Information. Consultant acknowledges that the
------------------------
information, observations and data relating to the business of the Company and
its respective affiliates which Consultant will obtain during the course of his
association
1
<PAGE>
with the Company and its affiliates and his performance under this Agreement are
the property of the Company. Consultant agrees that he will not use for his own
purposes or disclose to any third party any of such information, observations or
data without the prior written consent of the Company, unless and to the extent
that the aforementioned matters become generally known to and available for use
to the public other than as a result of Consultant's acts or omissions to act.
Upon the termination of this Agreement, Consultant agrees to deliver to the
Company at the end of the Consulting Period, or at any other time the Company
may request, all memoranda, notes, plans, records and other documentation (and
copies thereof) relating to the business of the Company and its affiliates which
Consultant may then possess or have under its control.
4. Term and Termination. This Agreement shall commence on the
--------------------
Effective Date and unless earlier terminated pursuant to this Paragraph 4, shall
terminate on the Expiration Date. The Company may terminate this Agreement at
any time upon 2 days written notice by the Company to Consultant.
5. Entire Agreement. This Agreement contains the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
6. Governing Law. This Agreement shall be governed by and construed
-------------
and interpreted in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the laws of any jurisdiction other than the
State of Connecticut.
7. Consultant Representation. Consultant represents and warrants to
-------------------------
the Company that its execution and delivery of this Agreement does not conflict
with, or result in the breach of or violation of, any other agreement, order,
judgement or decree to which it is bound, nor does it conflict with any position
or office Consultant may hold with any other organization.
* * * * * * * * * * *
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
CHIREX INC.
- ----------------------------------
By: Michael A. Griffith
Title: Chief Financial Officer
W. DIETER ZANDER
- ----------------------------------
3
<PAGE>
EXHIBIT 10.42
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Agreement") shall be effective as of
April 18, 1998 (the "Effective Date"), by and between CHIREX INC. (the
"Company"), and Elizabeth M. Greetham ("Consultant").
WHEREAS, the Consultant has expertise as a financial and international
business consultant;
WHEREAS, the Company desires to obtain the services of Consultant to
consult with and perform services as an independent contractor with respect to
certain business opportunities, and Consultant desires to provide services to
the Company upon the terms and conditions set forth in this Agreement;
WHEREAS, this Agreement supersedes any previous agreement concerning
this subject entered into by the parties.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the adequacy and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Consulting Services. The Company hereby engages Consultant as an
-------------------
independent contractor, and not as an employee, to render consulting services to
the Company as hereinafter provided, and Consultant hereby accepts such
engagement. During the term of this Agreement, Consultant shall render such
consulting services to the Company in connection with the Company's business
opportunities as the Company from time to time requests.
2. Compensation. In consideration of Consultant's consulting
------------
services set forth in Paragraph 1 above, the Company will pay to Consultant
beginning on the Effective Date, U.S. $10,000 per week. The weekly fees referred
to herein will be paid to Consultant on the last day of each month this
Agreement is in effect beginning April 30, 1998. The Company's obligation to
pay these weekly fees shall terminate upon the earlier to occur of (a) notice
of termination given by the Company pursuant to Paragraph 4 herein; or (b) June
27, 1998 (ten weeks from the Effective Date, the "Expiration Date").
3. Confidential Information. Consultant acknowledges that the
------------------------
information, observations and data relating to the business of the Company and
its respective affiliates which Consultant will obtain during the course of his
association
1
<PAGE>
with the Company and its affiliates and his performance under this Agreement are
the property of the Company. Consultant agrees that he will not use for his own
purposes or disclose to any third party any of such information, observations or
data without the prior written consent of the Company, unless and to the extent
that the aforementioned matters become generally known to and available for use
to the public other than as a result of Consultant's acts or omissions to act.
Upon the termination of this Agreement, Consultant agrees to deliver to the
Company at the end of the Consulting Period, or at any other time the Company
may request, all memoranda, notes, plans, records and other documentation (and
copies thereof) relating to the business of the Company and its affiliates which
Consultant may then possess or have under its control.
4. Term and Termination. This Agreement shall commence on the
--------------------
Effective Date and unless earlier terminated pursuant to this Paragraph 4, shall
terminate on the Expiration Date. The Company may terminate this Agreement at
any time upon 2 days written notice by the Company to Consultant.
5. Entire Agreement. This Agreement contains the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes any
previous understandings or agreements, whether written or oral, regarding such
subject matter.
6. Governing Law. This Agreement shall be governed by and construed
-------------
and interpreted in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the laws of any jurisdiction other than the
State of Connecticut.
7. Consultant Representation. Consultant represents and warrants to
-------------------------
the Company that its execution and delivery of this Agreement does not conflict
with, or result in the breach of or violation of, any other agreement, order,
judgement or decree to which it is bound, nor does it conflict with any position
or office Consultant may hold with any other organization.
* * * * * * * * * * *
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
CHIREX INC.
- ----------------------------------
By: Michael A. Griffith
Title: Chief Financial Officer
ELIZABETH M. GREETHAM
- ----------------------------------
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM CHIREX INC.'S SECOND
QUARTER 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,361
<SECURITIES> 0
<RECEIVABLES> 14,129
<ALLOWANCES> 0
<INVENTORY> 29,188
<CURRENT-ASSETS> 4,802
<PP&E> 155,360
<DEPRECIATION> 23,087
<TOTAL-ASSETS> 212,230
<CURRENT-LIABILITIES> 41,443
<BONDS> 0
0
0
<COMMON> 118
<OTHER-SE> 92,662
<TOTAL-LIABILITY-AND-EQUITY> 212,230
<SALES> 51,960
<TOTAL-REVENUES> 52,212
<CGS> 40,758
<TOTAL-COSTS> 49,542
<OTHER-EXPENSES> 582
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,829
<INCOME-PRETAX> (741)
<INCOME-TAX> 254
<INCOME-CONTINUING> (487)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (487)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
