Exhibit 2.1
DATED 2000
(1) CARDIOTECH INTERNATIONAL INC
AND
(2) NERVATION LIMITED
--------------------------------
SHARE PURCHASE AGREEMENT
IN RESPECT OF
CARDIOTECH INTERNATIONAL LIMITED
--------------------------------
<PAGE>
INDEX TO CLAUSES CLAUSE PAGE
Interpretation 1 4
Agreement for sale 2 15
Purchase consideration 3 15
Conditions 4 15
Completion 5 17
Retention 6 20
Warranties Undertakings and Covenants 7 21
Provisions of Business Information 8 26
Restrictive Covenants 9 26
Vendor's Protection 10 28
Announcements 11 28
Effect of Completion 12 28
Remedies and Waivers 13 29
Assignment 14 29
Further Assurance 15 29
Entire Agreement 16 31
Notices 17 31
Confidentiality 18 31
Costs and Expenses 19 32
Counterparts 20 32
Invalidity 21 32
Choice of Governing Law 22 33
Jurisdiction 23 33
SCHEDULES
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Details of the Company Schedule
1
Warranties Schedule
2
Short particulars of Properties Schedule
3
Vendors' protection provisions Schedule
4
Intellectual Property Rights Schedule
5
<PAGE>
Parent Company Guarantees Schedule
6
Trade Creditors Schedule
7
AGREED FORM DOCUMENTS
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Disclosure Letter
Deed of Assignment
Business Name Licence
CABG Product Development, Supply and Purchase Agreement
CABG Option Agreement
Chronoflex Supply and Purchase Agreement
Chronoflex Patent and Know How Licence-
Escrow Agreement
Power of Attorney in respect of the Shares
Deed of Repayment and Release of Intra Group Indebtedness
Deed of Variation and Release of Parent Company Guarantees
Deed of Resignation and Release
Freemedic Assignment
Letters of Resignation
Deed of Indemnity
<PAGE>
THIS AGREEMENT is made on the day of 2000
BETWEEN:
(1) CARDIOTECH INTERNATIONAL INC, a US Corporation incorporated under the laws
of the State of Massachusetts and having its principal place of business at
78E Olympia Avenue, Woburn, Massachusetts MA 01801 ("the Vendor");
(2) NERVATION LIMITED (Company Number : 3961695) whose registered office is at
5/7 Grosvenor Court, Foregate Street, Chester, CH1 1HG ("the Purchaser").
WHEREAS:
(A) The Vendor is the legal and beneficial owner of the entire issued share
capital of the Company (as defined).
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Shares (as defined) on the terms and subject to the conditions set out in
this Agreement.
NOW IT IS AGREED as follows:-
1. INTERPRETATION
1.1. Definition
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the following words and expressions have the following meanings, unless
they are inconsistent with the context:
<TABLE>
<CAPTION>
<S> <C>
"Agreed Form" means the form agreed between the parties on or prior to the
date of this Agreement and initialled for the purpose of
identification by their respective solicitors;
"AMEX" means the American Stock Exchange;
"Ancillary Document" means a document between the parties in Agreed Form and
to be entered into on or pursuant to Completion;
"Associate" means any person firm or Company which is a connected
person (as defined in Section 839 ICTA) of the Vendor or
which is an associated Company of the Vendor within the
meaning of Section 416 ICTA but excluding the Company;
"Balance means the balance sheet comprising part of the Last
Sheet" Accounts;
"Business means the licence in the Agreed Form to be entered into by
Name Licence" the Vendor and the Purchaser on Completion ;
<PAGE>
"Business" means the business of research development, manufacturing
and marketing in relation to vascular access grafts and
peripheral grafts;
"Business Day" means a day (other than a Saturday or a Sunday) on which
clearing banks are open for business in London;
"Business means all information know how and records (whether or
Information" not confidential and in whatever form held) including
(without limitation) all formulae, designs, specifications,
quality assurance documents, production records, data,
drawings, manuals and instructions and all customer lists,
sales information, business plans and forecasts, and all
technical or other expertise and all computer software and
all accounting and tax records, correspondence, orders and
enquiries relating to the Business and any other business
carried on by the Company at Completion;
"CABG" means the Coronary Artery Bypass Graft known as "Cardio
Pass" and developed by the Vendor and/or the Company ;
"CABG Option means the option agreement in Agreed Form to be entered
Agreement into on Completion by the Vendor and the Purchaser and
giving the Purchaser the option to acquire certain
distribution rights in respect of CABG's;
"CABG Supply means the product development, supply and purchase
Agreement" agreement - in Agreed Form to be entered into by the
Vendor and the Purchaser on Completion for the
manufacture and supply of CABG's;
"Cambrian means the leasehold property occupied by the Company
House" brief details of which are set out in Part II of Schedule 3;
<PAGE>
"Chronoflex" means the family of bio-durable polymers manufactured by
the Vendor in accordance with specific formulations owned
by or licensed to the Vendor;
"Chronoflex means that formulation of Chronoflex referred to in Part II
RC" of Schedule 5 and more particularly described in the
Chronoflex Supply Agreements and the Ancillary
Documents; including the Escrow Agreement;
Chronoflex means the patent and know how licence in Agreed Form to
Licence be entered into on Completion by the Vendor and the
Purchaser and licensing to the Purchaser certain rights in
respect of Chronoflex RC:
"Chronoflex means the supply and purchase agreement in Agreed Form
Supply to be entered into on Completion by the Vendor and the
Agreement" Purchaser for the manufacture and supply of Chronoflex
RC, being one of the Retained Rights;
"Companies means the Companies Act 1985, the Companies Consolidation
Acts" (Consequential Provisions) Act 1985, Companies Act
1989 and part V of the Criminal Justice Act 1993;
"Company" means Cardiotech International Limited (Company Number
: 3198267) brief details of which are set out in Schedule 1;
"Completion" means completion of the sale and purchase of the Shares in
accordance with Clause 5;
"Completion means the date of fulfilment of the last of the Conditions,
Date" subject always to the other provisions of Clause 4;
"Conditions" means those conditions precedent to Completion and more
particularly set out in Clause 4;
<PAGE>
"Deed of means the deed of assignment between the Vendor and the
Assignment" Purchaser in respect of the Transferred Rights in the
Agreed Form;
"Deed of means the deed of indemnity between the Vendor, the
Indemnity" purchaser and the Company in respect of the Intellectual
Property Rights and in the Agreed Form;
"Deed of means the deed of repayment and release of intra group
Release" indebtedness in the Agreed Form;
"Deed of means the deed of resignation and release between Alan
Resignation" Edwards and the Vendor in the Agreed Form;
"Deed of means the deed of variation releasing the Vendor from its
Variation" obligations under the Parent Company Guarantees in the
Agreed form;
"Disclosure the bundle of copy documents in Agreed Form and annexed
Bundle" to the Disclosure Letter;
"Disclosure means the disclosure letter of the same date as this
Letter" Agreement from the Vendor to the Purchaser in the Agreed
form;.
"Dollar means the amount in US dollars resulting or that would
Equivalent" result from the conversion of the relevant amount in
Sterling at the relevant date;
"Existing means all Intellectual Property used in connection with or
Rights" otherwise relating to the Business and presently vesting in
the Company, including but not limited to those rights,
more particularly set out in Part I of Schedule 5;
Escrow Agreement means the Agreement to be entered into on Completion
between the Vendor, the Purchaser and the National
Computing Centre:
<PAGE>
"FA" means Finance Act;
"Freemedic means the -deed of assignment- between the -Vendor
Assignment - Freemedic and the Purchaser- -and in the Agreed Form:
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"ICTA" Income and Corporation Taxes Act 1988;
"Information means computer hardware, software, networks and/or any
Technology" aspect of a business which relies on computer hardware,
software, networks and/or other information technology
(whether embedded or otherwise);
"Intellectual Property" means any patents, trade marks, service marks, registered
designs, utility models, design rights, formulae,
specifications, copyright (including any copyright in
computer software), database rights, inventions, trade
secrets and other confidential information, know how, and
all other intellectual and industrial property and rights of a
similar or corresponding nature in any part of the world,
whether registered or not or capable of registration or not
and including the right to apply for and all applications for
any of the foregoing rights and the right to sue for
infringement of any of the foregoing rights;
"Intellectual means together the Retained Rights, the Existing Rights
Property and the Transferred Rights;
Rights"
"Intra Group means all debts liabilities or obligations outstanding as at
Indebtedness" Completion owed by the Company - on the one hand to the
Vendor or any of its Associates on the other hand and vice
versa;
"Investment means those documents between inter alia the Purchaser,
Documents" 3i's and Freemedic which will put the Purchaser in
sufficient funds to complete its obligations under this
Agreement;
"ITA" Inheritance Tax Act 1984;
<PAGE>
"Last the financial statement of the Company prepared in
Accounts" accordance with UK generally accepted accounting
principals for the accounting reference period ended on the
Last Accounts Date, which financial statements comprise an
audited balance sheet, profit and loss account, notes and
auditors and directors reports, copies of which are
scheduled to the Disclosure Letter;
"Last Accounts 31st March 2000;
Date"
"Loan" means the intra group loan due from the Company to the
Vendor in the sum of [ 1,671,659] and to be capitalized
prior to Completion;
"3i's" means 3i Plc, 91 Waterloo Road, London, SE1 8XP;
"Management means the management accounts of the Company prepared
Accounts" for the period up to the Management Accounts Date;
"Management means 30th September 2000;
Accounts
Date"
"Myolink" means the trade mark of the same name and being a
Transferred Right;
"Parent means those guarantees and share options given by the
Company Vendor in respect of the liabilities of the Company and
Guarantees" more particularly set out in Schedule 6
"Part I means those warranties set out in Part I of Schedule 2;
Warranties"
"Part II means those warranties set out in Part II of Schedule 2;
Warranties"
"Polymedica" means Polymedica Industries Inc. of State Street, Woburn,
Massachusetts, USA;
<PAGE>
"Properties" means together Tarvin Sands and Cambrian House;
"Purchaser's means BDO Stoy Hayward of
Accountants" St Peter House, St Peter Street, Manchester, M1 5BH;
"Purchaser's means Aaron & Partners of 5/7 Grosvenor Court, Foregate
Solicitors" Street, Chester, CH1 1HG;
"Retained means those Intellectual Property Rights remaining with the
Rights" Vendor following Completion and more particularly set out
in Part II of Schedule 7;
"SEC" means the US Securities and Exchange Commission;
"Shares" means the entire issued and allotted share capital of the
Company at Completion;
"Sterling means the amount in sterling resulting or that would result
Equivalent" from the conversion of the relevant amount in US dollars on
the relevant date;
"Subsidiary" shall have the meanings given to them in S736 Companies
and "Holding Act 1985;
Company"
"Tarvin Sands" means the property formerly occupied by the Company,
brief details of which are set out in Part I of Schedule 3;
<PAGE>
"Tax or means
Taxation" (a) within the United Kingdom, corporation tax,
advance corporation tax, income tax (including income tax
required to be deducted or withheld from or accounted
for in respect of any payment), capital gains tax,
development land tax, capital transfer tax, inheritance
tax, value added tax, national insurance contributions,
capital duty, stamp duty reserve tax, duties of customs
and excise, any liability arising under section 601 of the
Income and Corporation Taxes Act 1988, and any other
taxes, levies, duties, charges, imposts or withholdings
corresponding to, similar to, replaced by or replacing any
of them, together with all penalties, charges and interest
relating to any of them or to any failure to file any return
required for the purposes of any of them; and
(b) outside the United Kingdom, all taxes, levies,
duties, imposts, charges - and withholdings of any nature
whatsoever, including (without limitation) taxes on gross or
net income, profits or gains and taxes on receipts,
sales, use, occupation, franchise, value added and
personal property, together with all penalties, charges
and interest relating to any of them
regardless (in either case) of whether any such taxes, levies,
duties, imposts, charges, withholdings, penalties and interest
are chargeable directly or primarily against or attributable
directly or primarily to the Company or any other person
and of whether any amount in respect of any of them is
recoverable from any other person;
"Taxation means any taxing or other authority (whether within or
Authority" outside the United Kingdom) competent to impose any
liability in respect of Tax;
"Taxation includes statutes (and all Regulations and arrangements
Statutes" whatsoever made thereunder) whether of the United
Kingdom or elsewhere and whether enacted before or after
the date of this Agreement, providing for or imposing any
Taxation;
<PAGE>
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"Territory" means anywhere in the world;
"Thermedics" means Thermedics Inc, being a joint owner with Polymedica
of Patent no. USA5254662;
"Trade means those creditors set out in Schedule 7 where the
Creditors" liability for payment of the amounts set out in that schedule
has been assumed by the Vendor;
"Transferred means all Intellectual Property used in connection with or
Rights" otherwise relating to the Business, including but not limited
to those rights more particularly set out in Part III of
Schedule 7 but excluding the Retained Rights and Existing
Rights;
"Vasculink" means the trade mark of the same name and being a
Transferred Right;
"VATA" means Value Added Tax Act 1994;
"Vendor's means Wacks Caller of Steam Packet House, 76 Cross
Solicitors" Street, Manchester, M2 7JU;
"Warranties" means the warranties set out in Clause 7 and Parts I and II
of Schedule 2 and given by the Vendor and "Warranty"
shall be construed accordingly.
</TABLE>
1.2.
1.2.1. all references to a statutory provision shall be construed as
including references to:
(a) any statutory modification, consolidation or re-enactment
(whether before or after the date of this agreement) for the
time being in force;
<PAGE>
(b) all statutory instruments or orders made pursuant to a
statutory provision; any statutory provisions of which a
statutory provision is a consolidation, re-enactment or
modification;
1.2.2. any reference to the Vendor includes, where appropriate, its
successors and assigns;
1.2.3. a reference to an SSAP is a reference to a Statement of
Standard Accounting Practice established by the Accounting
Standard Board;
1.2.4. except where the context otherwise requires words denoting the
singular include the plural and vice versa; words denoting any
one gender include all genders; words denoting persons include
firms and corporations and vice versa;
1.2.5. unless otherwise stated, a reference to a clause or sub-clause
or a Schedule is a reference to a clause or sub-clause of or a
Schedule to this agreement.
1.3. Clause headings in this agreement and in the Schedules are for ease of
reference only and do not affect the construction of any provision.
2. AGREEMENT FOR SALE
2.1. Subject to the terms of this Agreement, the Vendor shall sell with
full title guarantee and the Purchaser shall purchase the Shares free
from all claims, liens, charges, encumbrances and equities and with
all rights attaching to them with effect from the Completion Date.
2.2. For the avoidance of doubt, Part 1 of the Law of Property
(Miscellaneous Provisions) Act 1994 shall not apply for the purposes
of this Clause.
3. CONSIDERATION
The consideration for the Shares shall be the sum of $2,900,000or the Sterling
Equivalent which shall be paid by the Purchaser to the Vendor in accordance
with the provision of Clause 5.4 below.
4. CONDITIONS
4.1. Completion of this Agreement is in all respects conditional upon the
following:
4.1.1. confirmation of a resolution having been being passed by the
holders in excess of 50% of the common stock of the Vendor
approving in principle the transaction proposed hereby;
4.1.2. a letter in a form satisfactory to the Purchaser being provided
by Dresdner Kleinwort Benson and consenting to the aforementioned
principal terms;
4.1.3. an opinion being provided to the Purchaser by such party and in
such form as the Purchaser shall reasonably require that:-
4.1.3.1. all legal and beneficial rights to the Transferred
Rights vest in the Vendor absolutely;
4.1.3.2. the Transferred Rights are freely transferable into the
name of the Purchaser in accordance with the term of this
Agreement and the Deed of Assignment;
<PAGE>
4.1.3.3. all Intellectual Property in respect of Chronoflex RC is
immediately prior to Completion legally and beneficially
owned by the Vendor and that such Intellectual Property
includes the trade secrets relating to the formulation and
manufacture of Chronoflex RC
4.1.3.4. the Vendor is legally and beneficially entitled to grant
to the Purchaser in respect of the Retained Rights under USA
Patent no. 5254662 the rights specified in the Ancillary
Documents.;
4.1.4. a legal opinion from the Vendor's US Securities Counsel in a
form satisfactory to, and addressed to the Purchaser that the
terms of the Agreement and the Ancillary Documents comply with
and have been approved by all regulatory bodies including but not
limited to AMEX and the SEC or that no such approval is
necessary;
4.1.5. the completion by the parties thereto of the Investment
Documents;
4.1.6. the capitalisation by the Vendor and the Company of the Loan;
and
4.1.7. the completion by the parties named therein of the Freemedic
Assignment-
4.2. Each party shall use its reasonable endeavours to ensure that this
Agreement becomes unconditional by the date specified in Clause 4.4.2
below, and will notify the Purchaser forthwith upon the satisfaction
of such Conditions.
4.3. The Purchaser shall be entitled to rescind this agreement by notice in
writing to the Vendors or the Vendors' Solicitors if prior to
Completion it appears that any of the Warranties is not or was not
true and accurate in all material respects or if any act or event
occurs which, had it occurred before the date of this Agreement, would
have constituted a breach of any of the Warranties which (being
capable of remedy) is not remedied prior to Completion.
4.4. If:-
4.4.1. any fact which would prevent any Condition from being satisfied
(whether it does so because of any disclosure made in Clause 7-.4
or not) comes to the knowledge of the Purchaser; or
4.4.2. any other conditions is not fulfilled (notwithstanding the
required best endeavours in Clause 4.2) or waived on or before
17th- November 2000; either party the Purchaser may terminate
this Agreement at any time thereafter by written notice to the
other.
4.5. The Purchaser may waive any of the Conditions or extend the period in
which such conditions are to be satisfied by notice in writing to the
Vendor or the Vendor's Solicitors.
<PAGE>
5. COMPLETION
5.1. Provided that this Agreement has not been rescinded in accordance with
Clause 4 Completion shall take place at the offices of the Purchaser's
Solicitors within 2 working days after this Agreement has ceased to be
conditional under Clause 4.1 when all the matters mentioned in the
following sub-clauses shall take place.
5.2. The Vendor shall deliver to the Purchaser:
5.2.1. a duly completed and signed transfer in favour of the Purchaser
(or as it may direct) in respect of the Shares together with the
share certificate therefor.
5.2.2. the resignations of the directors (other than Alan Edwards)
from their respective offices in the Company, with a written
acknowledgement from each of them in -agreed form that he has no
claim against the Company in respect of breach of contract,
compensation for loss of office, redundancy, unfair dismissal or
on any other grounds whatsoever;
5.2.3. the statutory books of the Company - its certificate of
incorporation and company seal (if any);
5.2.4. the title deeds if any, relating to the Company's leasehold
interest in the Property;
5.2.5. the appropriate forms to amend the mandate given by the Company
to its bankers;
5.2.6. a duly executed power of attorney in the Agreed Form;
5.2.7. a duly executed print of the CABG Supply Agreement;
5.2.8. a duly executed print of the CABG Option Agreement;
5.2.9. a duly executed print of the Business Name Licence;
5.2.10. a duly executed print of the Chronoflex Supply Agreement;
5.2.11. a duly executed print of the Chronoflex Licence
5.2.12. all other records, lists, information and data whether in
respect of customers, suppliers, taxation or otherwise in
relation to the Business which are in the possession of the
Vendor, including but limited to the Business Information;
5.2.13. a duly executed print of the Deed of Assignment;
5.2.14. a duly executed print of the Deed of Release;
5.2.15. a duly executed print of the Freemedic Assignment; and
5.2.16. a duly executed print of the Deed of Indemnity.
5.3. A Board meeting of the Company shall be held at which:
5.3.1. such persons as the Purchaser may nominate shall be appointed
additional directors;
5.3.2. the Company shall procure the delivery to the Vendor of a duly
executed print of the Deed of Release ;
5.3.3. the transfer referred to in clause 5.2.1 shall be approved
(subject to stamping); and
5.3.4. the resignations referred to in clauses 5.2.2 shall be
submitted and accepted.
5.4. Upon completion of the matters referred to in clauses 5.1 to 5.3
(inclusive);
5.4.1. the Purchaser shall provide to the Vendor's Solicitors:-
<PAGE>
(a) by way of telegraphic transfer the balance of the
consideration referred to Clause 3 (or its Dollar
Equivalent) after payment of those monies referred to in
Clause 5.4.2 to 5.4.4 (inclusive).
(b) a duly executed print of the CABG Supply Agreement;
(c) a duly executed print of the Business Name Licence;
(d) a duly executed print of the Chronoflex Supply Agreement;
(e) a duly executed print of the Chronoflex Licence
(f) a duly executed print of the Deed of Assignment;
(g) a duly executed print of the CABG Option Agreement;
(h) a duly executed print of the Freemedic Assignment; and
(i) a duly executed print of the Deed of Indemnity.
5.4.2. the Purchaser shall advance to the Company the sum of $130,459
(or its Sterling Equivalent) in satisfaction of the Vendor's
liability to the Trade Creditors such sum being part payment of
the consideration referred to in Clause 3;
5.4.3. the Purchaser shall pay the sum of $700,000 or its Sterling
Equivalent to such account and in such manner as is referred to
in Clause 6 below, such sum being part payment of the
consideration referred to in Clause 3; and.
5.4.4. the Purchaser shall pay the sum of $2,053,713 plus any accrued
but unaccounted for interest directly to Dresdner Kleinwort
Benson, to such account and in such manner as they reasonably
require, such sums being the balance of the consideration
referred to in Clause 3 .
5.5. The Purchaser may in its absolute discretion waive any requirement
contained in clauses 5.1 to 5.3, and shall not be obliged to complete
the purchase of any of the Shares unless the purchase of all the
Shares is completed in accordance with this Agreement, but may instead
rescind this agreement without prejudice to any other remedy it may
have.
5.6. On or as soon as reasonably practicable following Completion, the
Purchaser shall deliver to the Vendor duly executed Deeds of Variation
in respect of the Parent Company Guarantees, and pending such
execution the Purchaser shall indemnify and hold harmless the Vendor
from and against any liability, claims, damages, awards and reasonable
costs properly incurred by or made against the Vendor directly as a
result of any calls made pursuant to such Parent Company Guarantees.
6. RETENTION
6.1. In accordance with Clause 5.4.3 above, upon Completion, the Purchaser
shall pay the Sterling Equivalent of the sum of US$700,000 into a
designated deposit account in joint names of the Vendor's Solicitor
and the Purchaser's Solicitors, such funds to be dealt with in
accordance with this Clause 6.
<PAGE>
6.2. Subject as provided herein, the Purchaser may apply all or part of the
retention referred to above in recouping any amount lawfully due to it
under or by reason of any claim either pursuant to those Part I
Warranties contained in paragraph 4 thereof, or those obligations and
warranties contained in the Deed of Assignment, any amount so applied
shall pro tanto satisfy the liability concerned.
6.3. Any interest earned on the retention shall accrue to and form part of
the retention and shall be available to satisfy any such claims, and
such interest (net of any tax required by law to be deducted
therefrom) shall accordingly belong to the Vendor subject to the
provisions of this Agreement.
6.4. In the event that the Purchaser shall not have notified the Vendor in
writing of any claim referred to in Clause 6.2 above and issued
proceedings in respect thereof within 18 months following the
Completion Date, the retention shall be released to the Vendor. If the
Purchaser shall have so notified any such claim the Vendor and the
Purchaser shall -agree the amount claimed or in the absence of any
agreement shall be referred by either of them to the President for the
time being of the Institute of Chartered Accountants in England and
Wales who shall act as expert not as arbitrator and whose opinion
shall be binding on the parties and any balance shall be so released
on that date. Upon final determination of the total amount (if any)
falling to be applied by the Purchaser under this Clause 6, any
balance of the retention shall be released to the Vendor provided that
no amount shall be released before the expiry of such 18 month period.
6.5. Any sums paid out from the retention to satisfy a liability arising
pursuant to Clause 6.2 shall only be made either upon an order of any
court of competent jurisdiction or pursuant to a consent order or
other written agreement between the parties.
7. WARRANTIES AND UNDERTAKINGS
7.1. The Vendor hereby warrants and undertakes to the Purchaser that:
7.1.1. the Vendor has and will at Completion have full power and
authority to enter into and perform this Agreement;
7.1.2. The Shares will at Completion constitute the whole of the
issued and allotted share capital of the Company;
7.1.3. there is and at Completion will be no pledge, lien or other
encumbrance on, over or affecting the Shares and there is and at
Completion will be no agreement or arrangement to give or create
any such encumbrance and no claim has been or will be made any
person to be entitled to any of the foregoing;
7.1.4. the Vendor will be entitled to transfer the full legal and
beneficial ownership of the Shares to the Purchaser on the terms
of this Agreement;
<PAGE>
7.1.5. save - as clearly and -fairly set out in the Disclosure Letter,
the Part II Warranties and those set out in paragraphs 6 to 23 of
the Part I Warranties are true and accurate in all material
respects at the date of this Agreement, and will continue to be
so up to and including the Completion Date;
7.1.6. the Purchaser shall not be entitled to claim that any fact,
matter or circumstance causes any of the Part II Warranties or
those Warranties in paragraphs 6 to 23 of Part I to be breached
if and to the extent that such fact, matter or circumstance has
been properly disclosed to the Purchaser in accordance with
Clause 7.1.5 above, save in the case of any fraud or dishonesty
on the part of the Vendor or its agents or advisers.
7.1.7. For the avoidance of doubt, those Warranties set out in
paragraph 1 to 5 (inclusive of Part I of Schedule 2) are true and
accurate in all respects at the date of this Agreement and will
continue to be so up to and including the Completion Date.
7.2. The Vendor undertakes in relation to any Warranty which refers to the
knowledge, information belief or awareness of the Vendor, that it has
made all reasonable enquiry into the subject matter of that Warranty,
and that where reference is made to actual knowledge no specific
enquiry into the subject matter of that Warranty has been made.
7.3. Each of the Warranties is without prejudice to any other Warranty and,
except where expressly stated otherwise, no clause contained in this
agreement shall govern or limit the extent or application of any other
clause.
7.4. The Vendor undertakes with the Purchaser that it will promptly
disclose in writing to the Purchaser any event or circumstance, which
becomes known to it after the date of this Agreement and prior to
Completion, which is inconsistent with any of the Warranties or the
contents of the Disclosure Letter or which might be material to be
known by a purchaser for value of the Shares.
7.5.
7.5.1. The rights and remedies of the Purchaser in respect of any
breach of the Warranties shall not be affected by Completion, by
any investigation made by it or on its behalf into the affairs of
the Company, by its rescinding, or failing to rescind this
Agreement, or failing to exercise or delaying the exercise of any
right or remedy or by any other event or matter whatsoever,
except a specific and duly authorised written waiver or release,
and no single or partial exercise of any right or remedy shall
preclude any further or other exercise.
<PAGE>
7.5.2. The Purchaser shall not be entitled to make any claim for
breach of Warranty where it has actual knowledge of any matter or
thing as at the date of this Agreement which would give rise to
any such claim, provided that the limitations contained in this
Clause 7.5.2 shall not apply to any claim made pursuant to those
warranties contained in paragraph 4 of the Part I Warranties or
those obligations and warranties contained in the Deed of
Assignment.
7.6. If following Completion, the Purchaser becomes aware that there has
been any breach of the Warranties or any other term of this Agreement,
the Purchaser shall not be entitled to rescind or terminate this
Agreement for breach of any of the Warranties or under the provisions
of the Misrepresentation Act 1967 or for any other reason whatsoever,
but shall be entitled to claim damages or exercise any other right,
power or remedy under this Agreement or as otherwise provided by law.
7.7. None of the information supplied by the Company or its professional
advisers prior to the date of this Agreement to the Vendor or its
agents, representatives or advisers in connection with the Warranties
and the contents of the Disclosure Letter, or otherwise in relation to
the business affairs of the Company, shall be deemed a representation,
warranty or guarantee of its accuracy by the Company to the Vendor,
and the Vendor waives any claims against the Company which it might
otherwise have in respect of it.
7.8. For the avoidance of doubt, neither the Disclosure Letter nor any
matter revealed by it shall apply to, or in any way limit any
liability of the Vendor pursuant to paragraphs 1 to 5 (inclusive) of
the Part I Warranties.
7.9. The Vendor agrees to indemnify and keep indemnified the Purchaser and
by way of a separate indemnity the Company from and against all
losses, liabilities, costs, charges, expenses, actions, proceedings,
claims and demands which it or they may suffer or incur arising out of
any breach of the Part I Warranties.
7.10.Whether in its capacity as shareholder or through its appointees to
the board of directors thereof, the Vendor shall exercise its voting
rights so as to procure so far as it is able, that the Company shall
not at any time prior to Completion without the prior written consent
of the Purchaser:
7.10.1. incur any expenditure on capital account or enter into any
commitments so to do;
7.10.2. dispose of or agree to dispose of or grant any option in
respect of any part of its assets except in the ordinary course
of trading;
7.10.3. borrow any money or make any payments out of or drawings on
its bank accounts other than routine payments;
7.10.4. enter into any unusual or abnormal contract or commitments or:
(i) grant or agree to grant any lease or third party right in
respect of the Properties or either of them or assign or
agree to assign or otherwise dispose of the same;
(ii) make any loan;
<PAGE>
(iii)enter into any leasing, hire purchase or other finance
agreement.
7.10.5. declare, make or pay any dividend or other distribution to the
Vendor;
7.10.6. grant or issue or agree to grant or issue any mortgages,
charges, debentures or other securities for money or redeem or
agree to redeem any such securities or give or agree to give any
guarantees or indemnities;
7.10.7. make any change in the terms and conditions of employment or
pension benefits of any of its directors or employees or employ
or terminate (other than for good cause) the employment of any
person;
7.10.8. create issue or grant any option in respect of any class of
share or loan capital or agree to do so; or
7.10.9. in any other way depart from the ordinary course of its
respective day to day business either as regards the nature scope
or the manner of conducting the same; and
7.11.The Vendor shall not at any time prior to Completion without the prior
written consent of the Purchaser:-
7.11.1. dispose or purport to dispose of any interest in the Shares or
any of them or grant any option over or mortgage, charge or
otherwise encumber the Shares or any of them;
7.11.2. permit the Company to pass any resolution in general meeting:
7.11.3. raise any management or other charge against the Company
7.12. Pending Completion the Vendor shall procure that:-
7.12.1. the Purchaser its agents and representatives are given full
access to Cambrian House and to the books, records and Business
Information of the Company upon reasonable notice during normal
business hours:
7.12.2. the Purchaser is furnished with weekly cash returns and profit
and loss accounts and such other information regarding the
business and affairs of the Company as the Purchaser may
reasonably require;
7.12.3. the Purchaser is furnished with a list of all proposed
payments together with a copy of the invoice to which each
payment relates prior to payment being made;
7.12.4. no cheque payments are made and no new standing order or
direct debit payments are entered into by the Company without the
prior written approval of the Purchaser which shall not be
unreasonably withheld or delayed where payment is in accordance
with the Company's normal credit terms;
7.12.5. the Company maintains in force all the insurance policies
referred to in the Disclosure Letter.
<PAGE>
7.13.In accordance with Clause 14, the rights or benefits of or under the
Warranties and the covenants in Clause 7.1 may be assigned (together
with any cause of action arising in connection with any Warranty or
covenant) by the Purchaser to its successors in title or any purchaser
from the Purchaser or to any Subsidiary or Holding Company or a fellow
Subsidiary of the same Holding Company of the Purchaser.
7.14.If in respect of or in connection with any breach of any of the
Warranties any amount payable to the Purchaser and/or the Company by
the Vendor is subject to Taxation, such additional amounts should be
paid to the Purchaser and/or the Company by the Vendor so as to ensure
that the net amount received by the Purchaser and/or the Company is
equal to the full amount payable to the Purchaser and/or the Company
under this Agreement.
8. PROVISION OF BUSINESS INFORMATION
During the period 2 years after Completion:
8.1. if any Business Information required for the Business is not in the
possession of the Purchaser or the Company or is readily discoverable
by the Purchaser or the Company, but is in the possession of or under
the control of or available to the Vendor, the Vendor shall procure so
far as reasonably practicable that such Business Information is
provided to the Purchaser promptly on request; and
8.2. if any books or records of the Vendor contain Business Information
required for the Business the Vendor shall procure that copies of such
books or records are given to the Purchaser promptly on request.
9. RESTRICTIVE COVENANTS
9.1. For the purpose of assuring to the Purchaser the full benefit of the
businesses and goodwill of the Company, the Vendor undertakes by way
of further consideration for the obligations of the Purchaser under
this Agreement as separate and independent agreements that it will not
directly or indirectly without the Purchasers consent, not to be
unreasonably withheld or delayed:
9.1.1. at any time after Completion disclose to any person, or itself
use for any purpose, and shall use its best endeavours to prevent
the publication or disclosure of, any Business Information which
may, or may have, come to its knowledge;
9.1.2. for a period of 3 years after Completion either on its own
account or for any other person directly or indirectly solicit,
interfere with or endeavour to entice away from the Company or
provide in competition with the Company any service or product
involving or in connection with the Business to any person who to
its knowledge is now or has during the 12 months preceding the
date of this Agreement been a client or customer , or is or has
been in the habit of dealing with, the Company;
9.1.3. for a period of 3 years after Completion, either alone or
jointly with or as manager, agent for or employee of any person,
directly or indirectly carry on or be engaged or concerned or
interested in the Business within the Territory.
<PAGE>
9.1.4. for a period of 12 months after Completion, solicit or entice
away from the employment of the Company any person who is a
senior employee, consultant to or officer of the Company; or
9.1.5. knowingly assist any other person to do any of the foregoing
things.
9.2. Each undertaking contained in this Clause 9 shall be construed as a
separate undertaking and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an
unreasonable restraint of trade, the remaining undertakings shall
continue to bind the Vendor.
9.3. The restrictions contained in this Agreement shall be in addition to
and not in substitution for any other restrictions upon the Vendor
contained in the Ancillary Document, provided that in the event of any
conflict between the provisions of this Clause 9 and the terms of such
Ancillary Document the provisions of the latter documents shall
prevail, and provided further that the restrictions in this Clause 9
shall not apply to matters done by the Vendor in carrying out its
obligations or exercising its rights pursuant to such Ancillary
Documents
10. VENDOR'S PROTECTION
10.1.The Vendor and the Purchaser agree that the provisions of Schedule 4
shall apply in respect of the Part II Warranties.
10.2.The Vendor and the Purchaser further agree that Clauses 1,2,3, 4, 5
and 6 of Schedule 4 (but for the avoidance of doubt no other
provisions of that Schedule) shall apply in respect of the Part I
Warranties.
11. ANNOUNCEMENTS
11.1.Subject to Clause 11.2 no announcement concerning the sale of the
Shares or any ancillary matter shall be made by the Vendor without the
prior written approval of the Purchaser, such approval not to be
unreasonably withheld or delayed.
11.2.Each party may make an announcement concerning the sale of the Shares
or any ancillary matter if required by:-
(i) the law of any relevant jurisdiction; or
(ii) any securities exchanged or regulatory or governmental body to
which either party is subject or submits, wherever situated,
including (without limitation) the London Stock Exchange (or its
successor or assign), SEC or AMEX, whether or not the
requirements has the force of law
PROVIDED THAT any such announcement shall be made only after
consultation with the other parties.
<PAGE>
11.3.The restrictions contained in this clause shall continue to apply
after the Completion of the sale and purchase of the Shares under this
Agreement without limit in time.
12. EFFECT OF COMPLETION
Any provision of this Agreement and other document referred to in it and any
matter contemplated thereby which is capable of being performed after but
which has not been performed at or before Completion and all Warranties and
covenants and other undertakings contained in or entered into pursuant to
this Agreement shall remain in full force and effect notwithstanding
completion.
13. REMEDIES AND WAIVERS
13.1.No delay or omission on the part of either party to this Agreement in
existing any right, power or remedy provided by law or under this
Agreement or any other documents referred to in it shall:-
(i) impair such right, power or remedy; or
(ii) operate as a waiver thereof;
13.2.The single or partial exercise of any right, power or remedy provided
by law or under this agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
13.3.The rights, powers and remedies provided in this agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law.
14. ASSIGNMENT
14.1.All or any part of the rights or benefits of or under this Agreement
and any Ancillary Documents, including without limitation the
Warranties, may be assigned (together with any cause of action arising
in connection with any of them) by the Purchaser to a Subsidiary or
Holding Company, or a fellow Subsidiary of the same Holding Company,
of the Purchaser, but are otherwise non assignable.
14.2. Obligations under this Agreement shall not be assignable.
15. FURTHER ASSURANCE
The Vendor shall from time to time at its own cost, on being required to do so
by the Purchaser, do or procure the doing of all such acts and/or things
within its power including the execution of all such documents in a form
satisfactory to the Purchaser as are necessary for giving full effect to
this agreement and securing to the Purchaser the full benefit of the
rights, powers and remedies conferred upon the Purchaser in this agreement.
<PAGE>
16. ENTIRE AGREEMENT
16.1.For the purpose of this Clause, "Pre-contractual Statement" means a
draft, agreement, undertaking, representation, warranty, promise,
assurance or arrangement of any nature whatsoever, whether or not in
writing, relating to the Share Purchase Documents or any of them (as
defined in Clause 16.2 below) made or given by a party to any of the
Share Purchase Documents or any other person at any time prior to
execution of the Share Purchase Documents.
16.2.This Agreement, and the Ancillary Documents (together the "Share
Purchase Documents") constitute the whole and only agreement between
the parties relating to the sale and purchase of the Shares.
16.3.Except to the extent repeated in any of the Share Purchase Documents,
the Share Purchase Documents supersede and extinguish any prior
Pre-Contractual Statement relating thereto.
16.4.Each of the parties acknowledges that in entering into the Share
Purchase Documents or any of them on the terms set out therein, it is
not relying upon any Pre-contractual Statement which is not expressly
set out therein.
16.5.No party shall have any right of action against any other party to
any of the Share Purchase Documents arising out of or in connection
with any Pre-Contractual Statement (except in the case of fraud).
16.6. This Agreement may only be varied in writing signed by each party.
17. NOTICES
17.1.A notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered by hand or sent
by first class post, pre-paid recorded delivery (or by airmail if sent
to an address outside the United Kingdom) or by facsimile to the party
due to receive the notice or communication, at its address set out in
this Agreement or at such other address specified by that party by
prior written notice to the other.
17.2.In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:-
(i) if delivered by hand, at the time of actual delivery to the
address referred to in this Agreement;
(ii) if sent by mail except airmail, two Business Days after posting
it;
(iii) if sent by airmail, ten Business Days after posting it; and
(iv) if sent by facsimile, on production of a transmission report from
the machine which sent the facsimile indicating that the
facsimile was sent in its entirety to the facsimile number of the
recipient.
<PAGE>
17.3.The Vendor agrees that for the purposes of this Agreement, or any
Ancillary Documents, any notice to be made or given to the Vendor
shall be deemed to have been validly made or given if sent to the
Vendor's Solicitors notwithstanding any failure to send any such
notice to the Vendor or the non-receipt of any such notice by the
Vendor.
18. CONFIDENTIALITY
18.1.Subject to Clause 18.2 each party shall treat as strictly confidential
all information received or obtained as a result of entering into or
performing this agreement which relates to:-
(i) the provisions of this Agreement;
(ii) the negotiations relating to this Agreement; or
(iii) the other party
18.2.A party may disclose information which would otherwise be confidential
if and to the extent such disclosure is:-
(i) required by the law of any relevant jurisdiction;
(ii) required by any securities exchange or regulatory or governmental
body to which any party is subject or submits, wherever situated,
including (without limitation) the London Stock Exchange (or its
successor or assign) the SEC or AMEX whether or not the
requirement for information has the force of law;
(iii)required to vest the full benefit of this Agreement in any
party;
(iv) disclosed to the professional advisers, auditors and bankers of
such party;
(v) of information which has already come into the public domain
through no fault of that party; or
(vi) approved by all the other parties having given prior written
approval to the disclosure, such approval not to be unreasonably
withheld or delayed.
PROVIDED THAT any such information disclosed pursuant to paragraphs 18.1
and 18.2 shall be disclosed only after consultation with the other
party.
19. COSTS AND EXPENSES
Each of the parties shall pay its own costs and expenses (including, but not
limited to, the fees of all external legal advisers and their out-of-pocket
expenses) in relation to the negotiations leading up to the sale of the
Shares and to the preparation, execution and carrying into effect of this
agreement and all other documents referred to in it and the Vendor confirms
that no expense of whatever nature relating to the sale of the Shares has
been borne or is payable by the Company.
20. COUNTERPARTS
20.1.This Agreement may be executed in any number of counterparts, and by
the parties on separate counterparts, but shall not be effective until
each party has executed at least one counterpart.
<PAGE>
20.2.Each counterpart shall constitute an original of this agreement, but
all the counterparts shall together constitute but one and the same
instrument.
21. INVALIDITY
If at any time any provision of this agreement is or becomes illegal, invalid
or unenforceable in any respect under the law of any jurisdiction, that
shall not affect or impair:-
(i) the legality, validity or enforceability in that jurisdiction of any
other provision of this agreement; or
(ii) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.
22. CHOICE OF GOVERING LAW
This agreement shall be governed by and construed in accordance with English
law.
23. JURISDICTION
The parties to this agreement irrevocably agree that the courts of England are
to have non-exclusive jurisdiction to settle any disputes which may arise
out of or in connection with this agreement and that accordingly any
Proceedings may be brought in such courts. Nothing contained in this Clause
shall limit the right of the Purchaser or the Vendor to take proceedings in
any other court of competent jurisdiction, nor shall the taking of
proceedings in one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction, whether concurrently or not, to the extent
permitted by the law of such other jurisdiction.
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and
year first before written.
<PAGE>
SIGNED by or on behalf of
CARDIOTECH
INTERNATIONAL INC
in the presence of:-
Signature
Witness
Address
Full Name
Occupation
Title
SIGNED by or on behalf of
NERVATION LIMITED
in the presence of:-
Signature
Witness
Address
Full Name
Occupation
Title
<PAGE>
SCHEDULE 1
----------
DETAILS OF THE COMPANY
----------------------
NAME : CARDIOTECH INTERNATIONAL LIMITED
------- ----------------------------------
REGISTERED NO. : 3198267
------------------ -------
REGISTERED OFFICE : 5/7 GROSVENOR COURT
--------------------- ---------------------
FOREGATE STREET
----------------
CHESTER
-------
CH1 1HG
--------
DIRECTORS : ALAN EDWARDS
------------ -------------
MICHAEL SZYCHER
----------------
MICHAEL ADAMS
--------------
SECRETARY : IAN VICARY
------------ -----------
AUTHORISED SHARE CAPITAL : [ 1,671,759]
------------------------------------------
ISSUED SHARE CAPITAL : [ 1,671,759 ORDINARY SHARES OF 1.00 EACH]
----------------------------------------------------------------------------
SHAREHOLDERS [ CARDIOTECH INTERNATIONAL INC.]
---------------------------------------------------------------
<PAGE>
SCHEDULE 2
----------
(WARRANTIES)
------------
PART I WARRANTIES
-----------------
1. OWNERSHIP OF THE SHARES
The Vendor is thesole legal and beneficial owner of the Shares.
2. CAPACITY OF THE VENDOR
---------------
The Vendor has the requisite power and authority to enter into and perform its
obligations under this Agreement.
3. PROPERTY
-------
The Company is under no liability whether actual or contingent in respect of
Tarvin Sands and whether arising directly or indirectly as a result of the
occupation of that property by the Company, the Vendor or by any other
party.
4. INTELLECTUAL PROPERTY
----------------------
4.1. The Vendor is legally and beneficially entitled to the Retained Rights
and has full right title and authority to perform its obligations
whether under this Agreement or the Ancillary Documents to the extent
that those obligations relate to the Retained Rights.
4.2. The use by the Vendor of the Retained Rights in the performance of its
obligations pursuant to this Agreement and the Ancillary Documents
does not infringe the Intellectual Property rights of any third party.
4.3. The rights to Chronoflex RC are wholly owned by the Vendor, are
confidential and proprietary in nature and constitute a valid and
enforceable trade secret.
4.4. The Intellectual Property Rights are all of the rights necessary for
the Company to carry on the Business.
4.5. The Vendor is neither the legal owner nor licensee of any Intellectual
Property rights and will not assert against the Company any
Intellectual Property rights, other than the Retained Rights, which
will or could affect the Company's ability to carry on the Business.
4.6. The Existing Rights are a definitive list of of all rights in any
Intellectual Property (other than copyright and unregistered designs)
owned by the Company.
4.7. Details of all licences granted to or by the Company in respect of any
Intellectual Property are scheduled to the Disclosure Letter.
4.8. All rights in all Intellectual Property and Business Information owned
or otherwise required for the Business are beneficially owned, vested
in or validly granted or licensed by third parties to the Company and
are not subject to any limit as to time or any other material
limitation, right of termination (including, without limitation, on
any change in the underlying ownership or control of the Company) or
restriction and all renewal fees and steps required by the Company to
be paid or taken for their maintenance or protection have been paid
and taken.
<PAGE>
4.9. All rights in Intellectual Property and all Business Information owned
or otherwise required for the Business is in the possession of the
Company and the Company is not a party to any confidentiality or other
agreement or subject to any duty (other than any statutory duties)
which restricts the free use or disclosure of any of that Business
Information.
4.10.Except as set out in the Disclosure Letter, the Company has not
granted any licence or permitted any sub-licence nor is it obliged to
grant any licence, consent for sub-licence or assignment in respect of
any Intellectual Property owned or otherwise required for the Business
nor has it disclosed or is obliged to disclose any Business
Information required for the Business to any person, other than its
employees for the purpose of carrying on its business or its
professional advisers.
4.11.The Company is not in breach of any licence, sub-licence or
assignment to which it is a party in respect of any Intellectual
Property owned or required for the Business or of any agreement to
which the Company is a party under which any Business Information was
or is to be made available to it.
4.12.The Company has not at any time during the past four years, received
notice of any unauthorised use or infringement by any person of any of
the Intellectual Property or Confidential Business Information owned
or otherwise required for the Business.
4.13.So far as the Vendor is aware the Company's records, systems,
controls, data or information are not recorded, stored, maintained,
operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process
whether computerised or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and
direct control of the Company.
4.14.So far as the Vendor is aware the Company has, if required to do so
under the Data Protection Act 1998, duly registered as a data user and
has complied with the data protection principles as set out in that
Act.
4.15.So far as the Vendor is aware all computer hardware, software
networks or other information technology used by or required to carry
on the Business and fulfil its existing contracts and commitments is
either owned by or validly leased or licensed to the Company
5. PRE 1996 ACCOUNTS AND TAX
In respect of the period prior to March 1996, the Vendor hereby repeats those
Warranties set out in paragraphs 6 to 23 (inclusive) below mutatis
mutandis, provided that where any reference is made to the knowledge of the
Vendor (whether actual or not) such knowledge limitation shall not be
deemed to apply to those pre March 1996 warranties referred to herein.
6. THE ACCOUNTS AND TAX
So far as Vendor is aware:
-----------
6.1. Save for Taxation on the profits of the Company attributable to the
period after the Last Accounts Date, the Company has no liability in
respect of Taxation (whether actual or contingent) and, in particular,
has no outstanding liability for:-
6.1.1. Taxation in any part of the world assessable or payable by
reference to profits, gains, income or distributions earned,
received or paid or arising or deemed to arise on or at any time
prior to the Last Accounts Date or in respect of any period
starting before the Last Accounts Date; or
<PAGE>
6.1.2. for purchase, value added, sales or other similar tax in any
part of the world referable to transactions effected on or before
the Last Accounts Date that is not disclosed, noted or provided
for in the Last Accounts.
6.2. The amount of the provision for deferred Taxation in respect of the
Company contained in the Last Accounts was, at the Last Accounts Date,
in accordance with accountancy practices generally accepted in the
United Kingdom and commonly adopted by companies carrying on
businesses similar to those carried on by the Company and, in
particular, was in accordance with SSAP 15 (or any replacement of it
instituted by the Accounting Standard Board).
6.3. If all facts and circumstances which are now known to the Company or
the Vendor had been known at the time the Last Accounts were drawn up,
the provision for deferred Taxation that would be contained in the
Last Accounts would be no greater than the provision which is so
contained.
7. TAX EVENTS SINCE THE LAST ACCOUNTS DATE
So far as the Vendor is aware, since the Last Accounts Date:-
7.1. the Company has not declared, made or paid any distribution within the
meaning of ICTA 1988;
7.2. no accounting reference period of the Company has ended;
7.3. there has been no disposal by the Company of any asset (including
trading stock) or supply of any service or business facility of any
kind (including a loan of money or the letting, hiring or licensing of
any property whether tangible or intangible) in circumstances where
the consideration actually received or receivable for such disposal or
supply was less than the consideration which could be deemed to have
been received for tax purposes;
7.4. no disposal by the Company has taken place or other event occurred
which will or may have the effect of crystallising a liability to
Taxation which should have been included in the provision for deferred
Taxation contained in the Last Accounts if such disposal or other
event had been planned or predicted at the Last Accounts Date;
7.5. the Company has not made any payment or incurred any obligation to
make a payment which will not be deductible in computing trading
profits for the purposes of corporation tax, or be deductible as a
management expense of an investment company;
7.6. the Company has not been a party to any transaction for which any tax
clearance provided for by statute could have been obtained where such
a tax clearance has not been obtained;
7.7. the Company has not paid or become liable to pay any interest or
penalty in connection with any tax, has otherwise paid any tax after
its due date for payment or owes any tax the due date for payment of
which has passed;
7.8. no event has occurred which will give rise to a tax liability on the
Company calculated by reference to deemed (as opposed to actual)
income, profits or gains or which will result in the Company becoming
liable to pay or bear a tax liability directly or primarily chargeable
against or attributable to another person, firm or company.
<PAGE>
8. TAX RETURNS, DISPUTES, RECORDS AND CLAIMS.
So far as the Vendor is aware:
8.1. The Company has made or caused to be made all returns required to be
made, and has supplied or caused to be supplied all information
required to be supplied, to any revenue authority, including (but
without limitation) the Inland Revenue and the Customs & Excise;
8.2. There is no dispute or disagreement outstanding nor is any
contemplated at the date of this Agreement with any revenue authority
regarding liability or potential liability to any tax or duty
(including in each case penalties or interest) recoverable from the
Company or regarding the availability of any relief from tax or duty
to the Company and there are no circumstances which make it likely
that any such dispute or disagreement will commence;
8.3. The Company has sufficient records relating to past events, including
any elections made, to calculate the tax liability or relief which
would arise on any disposal or on the realisation of any asset owned
at the Last Accounts Date by the Company or acquired by the Company
since that date but before Completion;
8.4. The Company has submitted all claims and disclaimers or withdrawals of
claims which have been assumed to have been made for the purposes of
the Last Accounts;
8.5. The Company has not made any election to waive exemption in relation
to any land in accordance with paragraph 2 of Schedule 10 VATA 1994;
8.6. The amount of tax chargeable on the Company during any accounting
period since the incorporation of the Company has not, to any material
extent, depended upon any concession, agreement or other formal or
informal arrangement with any revenue authority, including (but
without limitation) the Inland Revenue or the Customs and Excise.
9. STAMP DUTY AND STAMP DUTY RESERVE TAX
9.1. All documents which cannot be relied upon all or certain legal
proceedings or which are not eligible for registration unless stamped
and which are in the possession of the Company or by virtue of which
the Company has any right have been duly stamped;
9.2. Since the Last Accounts Date the Company has not incurred any
liability to stamp duty reserve tax.
10. VALUE ADDED TAX
10.1.The Company is registered for the purpose of VATA 1994 and has made,
given, obtained and kept full, complete, correct and up-to-date
returns, records, invoices and other documents appropriate or required
for those purposes and is not in arrears with any payments or returns
due and has not been required by the Commission of Customs & Excise to
give security under paragraph 4 of Schedule 11 VATA 1994.
10.2.The Company has never been treated as a member of a group under
section 43 VATA 1994 and no application has ever been made for the
Company to be so treated.
10.3.The Company has not within the two years ending on the Last Accounts
Date been in default in respect of any prescribed accounting period as
mentioned in section 59 or section 59A VATA 1994.
10.4.Full details of any claim for bad debt relief made by the Company
under section 36 VATA 1994 have been disclosed in writing to the
Purchaser in the Disclosure Letter.
10.5.The Company has not made any election to waive exemption in relation
to any land in accordance with paragraph 2 of Schedule 10 VATA 1994.
<PAGE>
10.6.The Disclosure Letter contains full details of any assets of the
Company to which the provisions of Part XV Value Added Tax Regulations
1995 (the Capital Goods Scheme) apply and in particular:-
10.6.1. the identity (including in the case of leasehold property, the
term of years), date of acquisition and cost of the asset; and
10.6.2. the proportion of input tax for which credit has been claimed
(either provisionally or finally in a tax year and stating
which).
11. DUTIES
So far as the Vendor is aware, to the extent that such payments are due from
the Company, all value added tax, import duty and other taxes or charges
payable to H.M. Customs & Excise upon the importation of goods and all
excise duties payable to H.M. Customs & Excise in respect of any assets
(including trading stock) imported, owned or used by the Company have been
paid in full.
12. TAX ON DISPOSAL OF ASSETS
So far as the Vendor is aware, on a disposal of all its assets by the Company
for:-
12.1.in the case of each asset owned by the Company at the Last Accounts
Date, a consideration equal to the value attributed to that asset in
preparing the Last Accounts; or
12.2.in the case of each asset acquired since the Last Accounts Date, a
consideration equal to the consideration given for the acquisition
then either:-
12.2.1. in respect of any asset falling within (i) above, the
liability to tax (if any) which would be incurred by the Company
in respect of that asset would not exceed the amount taken into
account in respect of that asset in computing the maximum
liability to deferred Taxation as stated in the Last Accounts; or
12.2.2. in respect of any asset within (ii) above, no tax liability
would be incurred by the Company in respect of that asset.
13. REPLACEMENT OF BUSINESS ASSETS
So far as the Vendor is aware, full particulars of each claim under section
115 or 116 CGTA 1979 or under sections 152 or 153 of the TCGA 1992 made
prior to the date of this Agreement to which section 117 CGTA 1979 or
section 154 TCGA 1992 applies and which affects any asset which was owned
by the Company on or after the Last Accounts Date (except where the held
over gain is treated as having accrued prior to the Last Accounts Date)
have been disclosed in writing to the Purchaser in the Disclosure Letter.
14. DISTRIBUTIONS
14.1.Since its incorporation, the Company has not made any repayment of
share capital to which Section 210(1) ICTA 1988 applies or issued any
share capital or other security as paid up otherwise than by the
receipt of new consideration within the meaning of Part VI ICTA 1988;
14.2.No part of the amount payable on redemption of any share capital or
security of the Company will be a distribution, as defined in ICTA
1988.
<PAGE>
15. CLOSE COMPANY
15.1.So far as the Vendor is aware, the Company has requested its Inspector
of Taxes to proceed under paragraph 16 of Schedule 19 ICTA 1988 in
relation to every accounting period ended within six years before the
date of this Agreement, and to which this paragraph applies, no
apportionment in respect of any such period can now be made and no
such apportionment will become possible otherwise than in consequence
of the cessation of any trade or business after the date of this
agreement;
15.2.The Company has no outstanding loan to which the provisions of
section 419 ICTA 1988 would apply (loans to participators etc);
15.3.The Company is not a close investment holding company as defined in
section 13A ICTA 1988.
16. NON DEDUCTIBLE REVENUE OUTGOINGS
So far as the Vendor is aware, the Company is not under any obligation to make
any future payment which will be prevented (whether on the grounds of being
a distribution, or for any other reason) from being deductible for
corporation tax purposes, whether as a deduction in computing the profits
of a trade or as an expense of management or as a charge on income or as a
non-trading debit under Chapter II Part IV Finance Act 1996, by reason of
any statutory provision, other than section 74(f) ICTA 1988 (capital)
17. DEDUCTIONS AND WITHHOLDINGS
So far as the Vendor is aware, The Company has made all deductions in respect,
or on account, of any tax from any payments made by it which it is obliged
or entitled to make and has accounted in full to the appropriate authority
for all amounts so deducted.
18. RESIDENCE
So far as the Vendor is aware, the United Kingdom is the only country whose
tax authorities seek to charge tax on the world-wide profits or gains of
the Company and the Company has never paid tax on income profits or gains
to any tax authority in any other country except the United Kingdom.
19. DEMERGER
So far as the Vendor is aware, the Company has not been concerned in an exempt
distribution (as defined in section 214( 4) ICT A 1988)
20. NON-ARM'S LENGTH TRANSACTIONS
So far as the Vendor is aware, the Company is not a party to any transaction
or arrangement under which it may be required to pay for any asset or any
services or facilities of any kind an amount which is in excess of the
market value of that asset or services or facilities or will receive any
payment for an asset or any services or facilities of any kind that it has
supplied or provided or is liable to supply or provide which is less than
the market value of that asset, services or facilities.
21. INTRA-GROUP TRANSACTIONS
So far as the Vendor is aware, the Company has not, at any time since its
incorporation, acquired any asset from any other company which was, at the
time of the acquisition, a member of the same group of companies as that
member for the purposes of any tax.
22. ASSOCIATED COMPANIES
So far as the Vendor is aware, neither the Vendor nor any person or persons
connected with it has control of an associated company of the Company
within the meaning of section 13 ICTA 1988.
<PAGE>
23. INHERITANCE TAX
So far as the Vendor is aware:
23.1.There is no Inland Revenue charge as defined in section 237 of the
Inheritance Tax Act 1984 outstanding in respect of any asset of the
Company or in respect of the Shares.
23.2.There are not in any existence any circumstances whereby the power
mentioned in section 212(1) Inheritance Tax Act 1984 could be
exercised in relation to any assets of the Company or in relation to
the Shares.
<PAGE>
PART II WARRANTIES
------------------
1. CAPACITY OF THE VENDOR
2.1 The execution and delivery of, and the performance by the Vendor of
its obligations under this Agreement and the Ancillary Documents, will
not:-
(i) result in a breach of, or constitute a default under, any
instrument to which the Vendor or the Company is a party or by
which the Vendor or the Company is bound;
(ii) result in a breach of any order, judgment or decree of any court
or governmental agency to which the Vendor or the Company is a
party or by which the Vendor or the Company is bound; or
(iii)require the consent of the shareholders of the Company or of any
other persons.
2. ARRANGEMENTS BETWEEN THE COMPANY AND THE VENDOR
No indebtedness (actual or contingent) and no contract or arrangement
is outstanding between the Company and the Vendor.
3. OTHER INTERESTS OF VENDOR
Save for the business carried on by the Vendor as contemplated by any
of the Agreed Form documents, the Vendor has no interest, direct or
indirect, in any business which competes with the Business or intends to
acquire any such interest. No person connected with the Vendor has any such
interest or, so far as the Vendor is aware, intends to acquire any such
interest.
4. GROUP STRUCTURE, ETC.
4.1 The Shares comprise the whole of the issued and allotted share capital
of the Company and all of them are fully paid up or credited as fully
paid up.
4.2 There is no agreement or commitment outstanding to which the Vendor is
a party which calls for the allotment, issue or transfer of, or
affords to any person the right to call for the allotment or issue of,
any shares (including the Shares) or debentures in or securities of
the Company.
4.3 So far as the Vendor is actually aware the Company does not act or
carry on business in partnership with any other person nor is it a
member of any corporate or unincorporated body, undertaking or
association nor holds or is liable on any share or security which is
not fully paid up or which carries any liability.
4.4 So far as the Vendor is actually aware the Company does not have any
branch., agency, place of business or permanent establishment outside
the United Kingdom.
<PAGE>
5. OPTIONS, MORTGAGES AND OTHER ENCUMBRANCES
There is no option, right to acquire, mortgage, charge, pledge, lien
or other form of security or encumbrance or equity on, over or
affecting the Shares and there is no agreement or commitment to give
or create any and no claim has been made by any person to be entitled to any.
6. ACCURACY AND ADEQUACY OF INFORMATION
6.1 The information given in Schedule 1 is true and accurate in all
respects.
6.2 The copy of the memorandum and articles of association of the Company
is contained in the Disclosure Bundle.
7. ACCOUNTS
7.1 The Accounts:.
(i) were prepared in accordance with the provisions of the Companies
Acts and accountancy principles generally accepted in the United
Kingdom at the Last Accounts Date and commonly adopted by
companies carrying on businesses similar to those carried on by
the Company;
(ii) make provision reasonably regarded as adequate for bad and
doubtful debts and make proper provision for Taxation on profits
(whether of an income or capital nature) relating to any period
ending on or before the date to which they are made up;
(iii)showed a true and fair view of the assets and liabilities of the
Company at the Last Accounts Date; and
(iii) are not affected by any unusual or non-recurring items.
7.2 So far as the Vendor is aware at the Last Accounts Date the Company
had no outstanding capital commitment which is not adequately
disclosed or provided for in the last Accounts;
7.3 So far as the Vendor is aware the accounting records of the Company
have been kept on a proper and consistent basis (no change in the
methods or bases of valuation or accountancy treatment having been
made since incorporation), are up-to-date and contain all matters
required by the Companies Acts to be entered in them.
7.4 So far as the Vendor is aware the Management Accounts were prepared
after due and careful enquiry in accordance with the accounting
principles generally accepted in the United Kingdom and accurately
represent the state of affairs and profits or losses of the Business
as at the Management Accounts Date.
<PAGE>
8. EVENTS SINCE THE LAST ACCOUNTS DATE
8.1 Since the Last Accounts Date so far as the Vendor is aware:- (i) save
for the losses incurred in the ordinary course of trading there has
been no material adverse change in the financial or trading position
of the Company;
(ii) the business of the Company has been carried on in the ordinary
and usual course and no unusual or unduly onerous contract
differing from the routine contracts necessitated by the nature
of its trade has been entered into by the Company;
(iii)no asset of a value in excess of 7500 has and no assets with an
aggregate value in excess of 15,000 have been acquired or
disposed of on capital account or has been agreed to be acquired
or disposed of
(iv) no debts or other receivables of the Company have been factored
or sold or agreed to be sold;
(v) no resolution of the Company in general meeting has been passed
other than resolutions relating to the routine business of annual
general meetings;
(vi) no change in the accounting reference period of the Company has
been made; and
8.2 So far as the Vendor is aware all book debts shown in the Last
Accounts have been realised for an aggregate sum not being less than
that shown in the Last Accounts.
9. CONTRACTS AND COMMITMENTS
9.1 So far as the Vendor is actually aware the Company is not under any
obligation, nor is it a party to any contract, which cannot readily be
fulfilled or performed by it on time and without undue or unusual
expenditure of money or effort.
9.2 So far as the Vendor is actually aware the Company is not a party to
nor has any liability (present or future) under any guarantee or
indemnity or letter of credit or any leasing, hiring, hire purchase,
credit sale or conditional sale agreement or has entered into any
contract or commitments involving, or likely to involve, obligations
or expenditure of an unusual or exceptional nature or magnitude.
9.3 So far as the Vendor is actually aware the Company is not a party to
any contract or arrangement which restricts its freedom to carry on
the Business, or any agency, distribution or management agreement.
9.4 So far as the Vendor is actually aware neither the Company nor the
Vendor is aware of any breach of, or any invalidity, or grounds for
determination, rescission, avoidance or repudiation of, any contract
to which the Company is a party or of any allegation of such a thing,
9.5 So far as the Vendor is actually aware the Company has no outstanding
bid or tender or sale or service proposal which is substantial in
relation to its Business.
9.6 So far as the Vendor is actually aware except for any guarantee or
warranty implied by law or contained in its standard terms of business
(a copy of which is attached to the Disclosure Letter) the Company has
not given any guarantee, indemnity, warranty or made any material
representation, in respect of services supplied or contracted to be
supplied by it or accepted any liability or obligation that would
apply after any such services had been supplied by it.
<PAGE>
9.7 So far as the Vendor is actually aware the Company is not a party to
any joint venture agreement or arrangements or any agreement or
arrangements under which it is to participate with any other in any
business.
9.8 So far as the Vendor is actually aware the Company is not a party to
any agreement or arrangement or under any obligation under which it is
or may become liable to make any investment (as defined in section
1(1) of the Financial Services Act 1986) with, or to deposit any money
with, or to provide any loan or financial accommodation or credit
(other than normal trade credit) to any person, or to subscribe,
convert, acquire, dispose of or underwrite any investment.
9.9 So far as the Vendor is actually aware the Company is not a party to
any contract which falls within any of the cases specified below:-
(i) the contract relates to matters not within the ordinary business
of the Company;
(ii) the contract is of one year or greater duration; or
(iii)the contract can be terminated by reason of any change in the
underlying ownership or control of the Company, and for this
purpose "contract" includes any understanding, arrangement or
commitment however described.
10. INSIDER CONTRACTS
So far as the Vendor is aware:-
(i) there is not, and there has not at any time since incorporation been,
any contract or arrangement to which the Company is, or was, a party
and in which the Vendor, or any director of the Company is, or has
been, interested, either directly or indirectly; and
(ii) the Company is not a party to, nor have its profits or financial
position during that period been affected by, any contract or
arrangement which is not of an arm's length nature.
11. POWERS OF ATTORNEY
So far as the Vendor is aware the Company has not given any power of
attorney or other authority which is still outstanding or effective to any
person to enter into any contract or commitment on its behalf other than to
its employees or directors to enter into routine trading contracts in the
normal course of their duties.
12. GRANTS AND ALLOWANCES
So far as the Vendor is aware the Company has not applied for or received
any grant, allowance, aid or subsidy from any supranational, national or
local authority or government agency during the last six years.
13. SUPPLY OF SERVICES
No client of the Company has during the 12 months preceding the date of
this Agreement , indicated to the Vendor an intention to cease to use the
services of the Company.
<PAGE>
14. LICENCES
14.1 In respect of products supplied by the Vendor to the Company or on its
behalf, the Vendor has obtained all necessary licences, consents,
permissions or approvals required of the Vendor by law.
14.2 So far as the Vendor is aware the Company has obtained and maintained all
other licences, consents or other permissions or approvals required for or
in connection with the carrying on of the business now being carried on by
the Company and, the Vendor is not aware of any which circumstances
indicate that any licence, consent, permission or approval required for the
carrying on of the Business is likely to be revoked or which may confer a
right of revocation.
15. BANK ACCOUNTS AND BORROWINGS
15.1 The Vendor is not aware of any bank accounts maintained or used by the
Company other than those set out in the Disclosure Letter by reference
to the name and address of the bank and the number and nature of the
account.
15.2 So far as the Vendor is aware the Company does not have outstanding
any loan capital and has not incurred or agreed to incur on behalf of
the Company any borrowing which the Company has not repaid or
satisfied, nor has the Vendor on behalf of the Company it lent or
agreed to lend any money which has not been repaid to it nor owns the
benefit of any debt present or future (excluding debts due to it in
the normal course of trading) nor is it a party to or has any
obligation under:
(i) any loan agreement, debenture, acceptance credit facility, bill
of exchange, promissory note, finance lease. debt or inventory
financing, discounting or factoring arrangement or sale and lease
back arrangement; or
(ii) any other arrangement the purpose of which is to raise money or
provide finance or credit.
15.3 So far as the Vendor is actually aware, No event which is an event of
default under or any breach of any of the terms of any loan capital,
borrowing, debenture or financial facility of the Company or would
entitle any third party to call for repayment prior to normal maturity
has occurred or, been alleged.
15.4 So far as the Vendor is aware the Company has not granted any security
over its assets, whether to its bankers or otherwise and whether by
way of charge, debenture or any other instrument.
16. INSOLVENCY
16.1 So far as the Vendor is aware no order has been made and no resolution
has been passed for the winding up of the Company or for a provisional
liquidator to be appointed in respect of the Company and no petition
has been presented and no meeting has been convened for the purpose of
winding up the Company.
16.2 No administration order has been made and, no petition for such an
order has been presented in respect of the Company.
16.3 No receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or all or any
of its assets.
<PAGE>
16.4 No voluntary arrangement has been proposed under section 1 Insolvency
Act 1986 in respect of the Company.
16.5 So far as the Vendor is aware no unsatisfied judgment, order or award
is outstanding against the Company.
16.6 No application has been made in respect of the Vendor for an interim
order under section 253 Insolvency Act 1986.
16.7 No interim receiver has been appointed of the property of the Vendor
under section 286 Insolvency Act 1986.
16.8 No person has been appointed by the court to prepare a report in
respect of the Vendor under section 273 Insolvency Act 1986.
16.9 No event analogous to any of the foregoing has occurred in or outside
England.
16.10 No guarantee or loan capital, of the Company is overdue for payment.
17. LITIGATION
So far as the Vendor is aware the Company is not engaged in any litigation,
mediation or arbitration, administrative or criminal proceedings, whether
as claimant, defendant or otherwise, and so far as the Vendor is aware no
litigation, mediation or arbitration, administrative or criminal
proceedings by or against the Company is pending, threatened or expected
and, so far as the Vendor is aware there is no fact or circumstance likely
to give rise to any such litigation, mediation or arbitration,
administrative or criminal proceedings or to any proceedings against any
director or employee (past or present) of the Company in respect of any act
or default for which the Company might be vicariously liable.
18. OWNERSHIP AND CONDITION OF ASSETS
18.1 Save for assets supplied on normal retention of the terms, each of the
assets included in the Last Accounts or acquired by the Company (other
than current assets sold, realised or applied in the normal course of
trading or business) is owned both legally and beneficially by the
Company free from any third party rights and each of those assets
capable of possession is in the possession of the Company.
18.2 Save for assets supplied on normal retention of title terms, the
Company has not agreed so far as the Vendor is aware to acquire any
asset on terms that the property in it does not pass until full
payment is made.
19. PROPERTY
19.1 Cambrian House is the only property owned, used or occupied by the
Company or in respect of which the Company has any estate, interest,
right or liability at the date hereof. Cambrian House is used and
occupied for the purpose of the Business.
19.2 So far as the Vendor is aware all necessary permissions and consents
in respect of use for the purpose referred to above and for any
development at Cambrian House have been obtained and all such use and
development has been carried out in accordance with any such
permissions and consents and with applicable planning legislation.
<PAGE>
19.3 So far as the Vendor is aware there are no outstanding disputes,
actions, claims, demands or complaints in respect of Cambrian House
nor does the Vendor expect any.
19.4 So far as the Vendor is aware no notice affecting Cambrian House has
been given or received by the Vendor.
19.5 The Company has not at any time:-
(i) had vested in it (whether as original tenant or undertenant or as
an assignee or transferee or otherwise) any freehold or leasehold
property other than Cambrian House, nor
(ii) given any covenant or entered into any agreement, deed or other
document (whether as a tenant or undertenant or as an assignee,
transferee, guarantor or otherwise) in respect of any freehold or
leasehold property other than those disclosed to the Purchaser in
the Disclosure Letter.
20. COMPETITION AND TRADE REGULATION LAW
20.1 So far as the Vendor is aware, the Company is not and has not been a
party to or is or has been concerned in any agreement or arrangement
or is conducting or has conducted itself (whether by omission or
otherwise) in any manner which:-
(i) has been registered under the RTPA 1976;
(ii) contravenes the provisions of the Resale Prices Act 1976 or any
secondary legislation adopted under the Fair Trading Act 1973;
(iii)is registrable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of ally anti-trust or similar legislation
in any jurisdiction in which the Company intends to carry on
business or where its activities may have an effect; or
(iv) is likely to infringe the provisions of Chapter l or Chapter II
of the Competition Act 1998.
20.2 So far as the Vendor is aware, the Company has not been a party to nor
has it been concerned in any agreement or arrangement in respect of
which any undertaking has been given by or any order made against the
Company pursuant to the RTPA 1976 or in respect of which an
undertaking has been given by or an order made against the Company
pursuant to the Resale Prices Act 1976.
<PAGE>
21. EMPLOYMENT
21.1 Neither the Vendor nor its appointees to the board of directors of the
Company have received any notices, engaged any employees or
consultants nor have they agreed any variations relating to the
contracts of employment of any employee of, or the contracts for
service of any consultant to the Company.
<PAGE>
SCHEDULE 3
----------
SHORT PARTICULARS OF PROPERTY
-----------------------------
PART I
------
TARVIN SANDS
------------
TARVIN SANDS INDUSTRIAL ESTATE
------------------------------
BARROW LANE
-----------
TARVIN
------
NR CHESTER
----------
CH3 8JF
-------
PART II
-------
CAMBRIAN HOUSE
--------------
HARWOOD ROAD
------------
BRYMBO
------
WREXHAM
-------
LL11 5EA
--------
<PAGE>
SCHEDULE 4
----------
LIMITATION ON CLAIMS UNDER THE PART II WARRANTIES (AND WHERE SPECIFIED, THE PART
I WARRANTIES)
1. NO CLAIM FOR MATTERS DISCLOSED OR DONE AT PURCHASER'S REQUEST
----------------------------------------------------------------------
The Purchaser shall not be entitled to claim against the Vendor under the
Warranties in respect of any matter or thing after the date of this
Agreement done or omitted to be done at the written request of or with the
prior written approval of the Purchaser
2. TIME LIMIT ON CLAIMS
-----------------------
No claim shall be brought by the Purchaser for any breach of any of the
Warranties:
2.1. unless in the case of the Part II Warranties it shall have given
notice in writing of such claim specifying in reasonably sufficient
detail the nature of the breach and so far as practicable the amount
claimed the Vendor not later than 18 months after the date of this
Agreement;
2.2. unless in the case of those Part I Warranties numbers 1 to 4
(inclusive) and any warranties in the Ancillary Documents, it shall
have given notice in writing of such claim specifying in reasonably
sufficient detail the nature of the breach and so far as practicable
the amount claimed the Vendor not later than 36 months after the date
of this Agreement;
2.3. unless in the case of those Part I Warranties numbered 5 to 23 it
shall have given notice in writing of such claim specifying in
reasonably sufficient detail the nature of the breach and so far as
practicable the amount claimed the Vendor not later than 7 years after
the date of this Agreement;
2.4. where notice in writing of such claim shall have been given, if
proceedings in respect of such claim containing full particulars shall
not have been issued and served on the Vendor within 4 months after
the date of such notice being received.
3. MINIMUM CLAIM
The Vendor shall only be liable in respect of any claim brought by the
Purchaser for breach of any of the Warranties including any warranties in
the Ancillary Documents.:
3.1. if the amount of the claim (or all such related claims) exceeds 2000
3.2. if the amount of the claim, when aggregated with the amount of all
claims for which the Vendor is liable under this Agreement exceeds
25,000 and in the event that any such claims exceed 25,000 the Vendor
shall be liable for the full amount of the claims and not just the
excess over 25,000.
4. MAXIMUM CLAIM
4.1. The liability of the Vendor in respect of claims brought by the
Purchaser for breaches of the Warranties (including any warranties
contained in the Ancillary Documents) shall not exceed the sum of
$7,000,000 or the Sterling Equivalent.
<PAGE>
5. NO DOUBLE CLAIM
The Vendor shall not be liable for any breach of any Warranty if and to the
extent that the loss occasioned by such breach of warranty has been
recovered pursuant to a claim brought under any other warranties (whether
contained in the Ancillary Documents or otherwise) and vice versa the
warranties contained in the other Agreed Form documents and vice versa.
6. REIMBURSEMENT OF SUMS RECOVERED FROM THIRD PARTIES
If the Vendor pays at any time to the Purchaser an amount pursuant to a claim
under the Warranties and either before or after such payment is made by the
Vendor the Purchaser recovers from a third party any sum in respect of any
matter giving rise to such Warranty claim, then subject always to the
Purchaser's right to set off such amount against any other unsatisfied
Warranty claim, the Purchaser shall forthwith either reduce the amount of
the relevant claim payable by the Vendor or pay to the Vendor so much of
the amount paid to the Purchaser as does not exceed the sum recovered from
such third party as the case may be, and in each such case less the
reasonable costs, charges and expenses incurred by the Purchaser in
recovering that sum from such third party.
7. SPECIFIC LIMITATIONS
The Purchaser shall not be entitled to claim for breach of the Part II
Warranties if and to the extent that:
7.1. the claim would not have arisen but for any act, omission, transaction
or arrangement (or any combination of any of the same) of the
Purchaser or any subsidiary of the Purchaser or the Company or any
successor in title to the Shares or their respective directors,
employees or agents after Completion otherwise than in the ordinary
course of business, including any change in the accounting policy or
practice of the Company having effect after Completion;
7.2. the claim arises or is increased as a result of the passing of, or any
change in or any change in the interpretation of, any law, rule,
regulation or administrative practice of any government, government
department, local or state agency, authority regulatory or fiscal body
after the date of this Agreement and having retrospective effect;
8. SET OFF
8.1. The liability of the Vendor shall be reduced if and to the extent that
provision is made in the Last Accounts for the circumstances giving
rise to such liability.
9. DEEMED REDUCTION OF PURCHASE PRICE
The amount of any successful claim against the Vendor under this Agreement or
pursuant to any warranties contained in the Ancillary Documents shall
constitute or be deemed to constitute a reduction in the price paid for the
Shares, and under any of the Ancillary Documents shall be deemed to
constitute a reduction in the relevant consideration thereunder.
10. RETENTION OF RECORDS
The Purchaser will procure that the Company will retain and preserve all books
records documents and information (including information recorded or
retained in any electronic form) of or relating to the Company and its
business which are or may be relevant in connection with any claim brought
by the Purchaser against the Vendor under this Agreement] for three years
after the Last Accounts Date.
<PAGE>
10.1.The Purchaser shall inform the Vendor in writing of any event which
comes to the notice of the Purchaser whereby it appears that the
Vendor is or is likely to become liable for a claim under a Part II
Warranty as soon as reasonably practicable after the date upon which
such event comes to the notice of the Purchaser. Subject always to the
indemnity referred to below, the Purchaser shall (and shall procure
that the Company shall) take such reasonable action and give such
assistance in connection with any claim under a Part II Warranty as
the Vendor may reasonably request in writing to avoid dispute, resist,
litigate, compromise, defend or appeal against any claim or
adjudication in respect thereof at the request of the Vendor. The
conduct of any proceedings of whatsoever nature arising in connection
with any such claim shall be delegated entirely to the Vendor and in
that connection the Purchaser shall give or cause to be given to the
Vendor such assistance as it may reasonably require in disputing any
such claim. The Vendor hereby fully and effectively indemnifies the
Purchaser and as a separate indemnity the Company from and against all
reasonable costs and expenses and liabilities incurred by or awarded
against them in compliance with their obligations under this clause.
10.2.The Purchaser shall not make any admission or compromise in respect
of any claim under a Part II Warranty save with the prior written
consent of the Vendor (such consent not to be unreasonably withheld or
delayed).
10.3.If any claim under a Part II Warranty arises by reason of some
liability which at the time the Vendor is notified shall be contingent
only, then the Vendor shall not be under any obligation to make
payment to the Purchaser or the company thereunder until such time as
such contingent liability ceases to be so contingent, provided that
the time limits set out in Clause 2 above shall only begin to run from
the date such contingent liability ceases to be so contingent.
10.4.The Purchaser shall in respect of any and all claims under Part II of
the Warranties be under a duty to the Vendor to mitigate its loss in
accordance with normal common law principals.
<PAGE>
SCHEDULE 5
----------
INTELLECTUAL PROPERTY RIGHTS
----------------------------
PART 1
------
RETAINED RIGHTS
---------------
PATENT NO. COUNTRY ISSUE DATE TITLE
----------- ---------- ---------- -----------------------------------
5549860 USA 27.08.1996 Method of forming a vascular
prosthesis (CABG)
EP0495869B1 EU& German 03.01.1996 Polymer products (CABG)
National
5,863,627 USA 26.01.1999 Hydrolytically and Proteolytically
[stable] silicon co-polymers
5,254662 USA 19.10.1993 Biostable Polyurethene Products
NATURE TITLE
Proprietary Trade Secret Chronoflex AR family of solution based
polycarbonate urethanes
<TABLE>
<CAPTION>
Part 2
------
Transferred Rights
------------------
[PATENT NO. COUNTRY ISSUE DATE TITLE
<S> <C> <C> <C>
63-78318 Japan 01.02. 1993 Arterial Prosthesis (vascular graft -
process patent)
0286220B1 EU includes 31.03. 1993 Methods and apparatus for making
Austria, polymer materials (vascular graft -
Belgium, process patent)
Denmark,
France,
Germany, Great
Britain, Ireland,
Italy, Japan,
Luxembourg,
Netherlands,
Portugal, Spain,
Sweden,
Switzerland]
<PAGE>
5132066 USA 21.07.1992 Method of forming a bio
compatible vascular prosthesis
(vascular graft - process patent)
5756035 USA 31.04.1993 Method of making an access graft
and a vascular prosthesis
6,117,535 USA 26.05.1998 Bio compatible devices (process for
fibre covering)
EP0807425A1 EU including 12.09.2000 Making an access graft
[Austria,
Belgium,
Denmark,
France,
Germany, Great
Britain, Ireland,
Italy, Japan,
Luxembourg,
Netherlands,
Portugal, Spain,
Sweden,
Switzerland]
TRADE MARK COUNTRY REGISTERED NO. SPECIFICATION RENEWAL DATE
---------- ------- -------------- ------------- ------------
Myolink
VascuLink
</TABLE>
All unregistered rights anywhere in the world relating to the trademarks
Vasculink and Myolink.
The results of all pre-clinical and clinical trials relating to the vascular
access graft produced by the Company under the name Vasculink, the peripheral
bypass graft developed by the Company under the name Myolink and the coronary
bypass graft developed by the Company under the name Cardiopass ("the Products")
together with any copyright relating to such results.
Any and all copyright and design right in design document for the Products. Any
and all design rights relating to the Products.
<PAGE>
Part 3
------
Existing Rights
---------------
Implied licence to use Chronoflex in respect of the Business.
<PAGE>
SCHEDULE 6
----------
PARENT COMPANY GUARANTEES
-------------------------
GUARANTEED PARTY NATURE OF OBLIGATION
----------------- ----------------------
Black Arrow Finance Guarantee of Company's obligations
Polybiomed Guarantee of obligations of Company
to Polybiomed Limited - share options
OPTIONS GRANTED TO SIGNING DISTRIBUTION ACHIEVEMENT OF TERMINATION OF
-------------------- -------------------- -------------- ---------------
AGREEMENT SALES AGREEMENT DUE TO
--------- ----- ----------------
STRATEGIC ALLIANCE
------------------
BY CTI
-------
[ * ]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE>
SCHEDULE 7
----------
Trade Creditors
[ * ]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE>
